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AGREEMENT OF LIMITED PARTNERSHIP
OF
ARDEN REALTY LIMITED PARTNERSHIP
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TABLE OF CONTENTS
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ARTICLE 1 - DEFINED TERMS. . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.1 Definitions. . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE 2 - ORGANIZATIONAL MATTERS . . . . . . . . . . . . . . . . . . . . . 15
Section 2.1 Organization . . . . . . . . . . . . . . . . . . . . . . 15
Section 2.2 Name . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 2.3 Resident Agent; Principal Office . . . . . . . . . . . . 15
Section 2.4 Power of Attorney. . . . . . . . . . . . . . . . . . . . 15
Section 2.5 Term . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 2.6 Number of Partners . . . . . . . . . . . . . . . . . . . 17
ARTICLE 3 - PURPOSE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 3.1 Purpose and Business . . . . . . . . . . . . . . . . . . 17
Section 3.2 Powers . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 3.3 Partnership Only for Purposes Specified. . . . . . . . . 18
Section 3.4 Representations and Warranties by the Parties. . . . . . 18
ARTICLE 4 - CAPITAL CONTRIBUTIONS. . . . . . . . . . . . . . . . . . . . . . 20
Section 4.1 Capital Contributions of the Partners. . . . . . . . . . 20
Section 4.2 Loans by Third Parties . . . . . . . . . . . . . . . . . 20
Section 4.3 Additional Funding and Capital Contributions . . . . . . 20
Section 4.4 Stock Plan . . . . . . . . . . . . . . . . . . . . . . . 23
Section 4.5 Other Contribution Provisions . . . . . . . . . . . . . . . 23
ARTICLE 5 - DISTRIBUTIONS. . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 5.1 Requirement and Characterization of Distributions. . . . 24
Section 5.2 Distributions in Kind. . . . . . . . . . . . . . . . . . 24
Section 5.3 Distributions Upon Liquidation . . . . . . . . . . . . . 24
Section 5.4 Distributions to Reflect Issuance of Additional
Partnership Interests. . . . . . . . . . . . . . . . . . 24
ARTICLE 6 - ALLOCATIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 6.1 Timing and Amount of Allocations of Net Income and Net
Loss . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 6.2 General Allocations. . . . . . . . . . . . . . . . . . . 25
Section 6.3 Additional Allocation Provisions . . . . . . . . . . . . 25
Section 6.4 Tax Allocations. . . . . . . . . . . . . . . . . . . . . 28
ARTICLE 7 - MANAGEMENT AND OPERATIONS OF BUSINESS. . . . . . . . . . . . . . 28
Section 7.1 Management . . . . . . . . . . . . . . . . . . . . . . . 28
Section 7.2 Certificate of Limited Partnership . . . . . . . . . . . 32
Section 7.3 Restrictions on General Partner's Authority. . . . . . . 32
Section 7.4 Reimbursement of the General Partner . . . . . . . . . . 34
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Section 7.5 Outside Activities of the General Partner. . . . . . . . 35
Section 7.6 Contracts with Affiliates. . . . . . . . . . . . . . . . 36
Section 7.7 Indemnification. . . . . . . . . . . . . . . . . . . . . 36
Section 7.8 Liability of the General Partner . . . . . . . . . . . . 38
Section 7.9 Other Matters Concerning the General Partner . . . . . . 39
Section 7.10 Title to Partnership Assets. . . . . . . . . . . . . . . 40
Section 7.11 Reliance by Third Parties. . . . . . . . . . . . . . . . 40
ARTICLE 8 - RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS . . . . . . . . . . . 40
Section 8.1 Limitation of Liability. . . . . . . . . . . . . . . . . 40
Section 8.2 Management of Business . . . . . . . . . . . . . . . . . 41
Section 8.3 Outside Activities of Limited Partners . . . . . . . . . 41
Section 8.4 Return of Capital. . . . . . . . . . . . . . . . . . . . 41
Section 8.5 Rights of Limited Partners Relating to the Partnership . 41
Section 8.6 Redemption Rights. . . . . . . . . . . . . . . . . . . . 42
ARTICLE 9 - BOOKS, RECORDS, ACCOUNTING AND REPORTS . . . . . . . . . . . . . 44
Section 9.1 Records and Accounting . . . . . . . . . . . . . . . . . 44
Section 9.2 Fiscal Year. . . . . . . . . . . . . . . . . . . . . . . 45
Section 9.3 Reports. . . . . . . . . . . . . . . . . . . . . . . . . 45
ARTICLE 10 - TAX MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Section 10.1 Preparation of Tax Returns . . . . . . . . . . . . . . . 45
Section 10.2 Tax Elections. . . . . . . . . . . . . . . . . . . . . . 45
Section 10.3 Tax Matters Partner. . . . . . . . . . . . . . . . . . . 46
Section 10.4 Organizational Expenses. . . . . . . . . . . . . . . . . 47
Section 10.5 Withholding. . . . . . . . . . . . . . . . . . . . . . . 47
ARTICLE 11 - TRANSFERS AND WITHDRAWALS . . . . . . . . . . . . . . . . . . . 48
Section 11.1 Transfer . . . . . . . . . . . . . . . . . . . . . . . . 48
Section 11.2 Transfer of General Partner's Partnership Interest . . . 48
Section 11.3 Limited Partners' Rights to Transfer . . . . . . . . . . 49
Section 11.4 Substituted Limited Partners . . . . . . . . . . . . . . 51
Section 11.5 Assignees. . . . . . . . . . . . . . . . . . . . . . . . 51
Section 11.6 General Provisions . . . . . . . . . . . . . . . . . . . 51
ARTICLE 12 - ADMISSION OF PARTNERS . . . . . . . . . . . . . . . . . . . . . 53
Section 12.1 Admission of Successor General Partner . . . . . . . . . 53
Section 12.2 Admission of Additional Limited Partners . . . . . . . . 54
Section 12.3 Amendment of Agreement and Certificate of Limited
Partnership. . . . . . . . . . . . . . . . . . . . . . . 54
ARTICLE 13 - DISSOLUTION AND LIQUIDATION . . . . . . . . . . . . . . . . . . 55
Section 13.1 Dissolution. . . . . . . . . . . . . . . . . . . . . . . 55
Section 13.2 Winding Up . . . . . . . . . . . . . . . . . . . . . . . 55
Section 13.3 Compliance with Timing Requirements of Regulations . . . 56
Section 13.4 Deemed Distribution and Recontribution . . . . . . . . . 57
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Section 13.5 Rights of Limited Partners . . . . . . . . . . . . . . . 57
Section 13.6 Notice of Dissolution. . . . . . . . . . . . . . . . . . 57
Section 13.7 Cancellation of Certificate of Limited Partnership . . . 58
Section 13.8 Reasonable Time for Winding-Up . . . . . . . . . . . . . 58
Section 13.9 Waiver of Partition. . . . . . . . . . . . . . . . . . . 58
ARTICLE 14 - AMENDMENT OF PARTNERSHIP AGREEMENT; . . . . . . . . . . . . . . 58
Section 14.1 Amendments . . . . . . . . . . . . . . . . . . . . . . . 58
Section 14.2 Action by the Partners . . . . . . . . . . . . . . . . . 59
ARTICLE 15 - GENERAL PROVISIONS. . . . . . . . . . . . . . . . . . . . . . . 59
Section 15.1 Addresses and Notice . . . . . . . . . . . . . . . . . . 59
Section 15.2 Titles and Captions. . . . . . . . . . . . . . . . . . . 60
Section 15.3 Pronouns and Plurals . . . . . . . . . . . . . . . . . . 60
Section 15.4 Further Action . . . . . . . . . . . . . . . . . . . . . 60
Section 15.5 Binding Effect . . . . . . . . . . . . . . . . . . . . . 60
Section 15.6 Creditors. . . . . . . . . . . . . . . . . . . . . . . . 60
Section 15.7 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . 60
Section 15.8 Counterparts . . . . . . . . . . . . . . . . . . . . . . 60
Section 15.9 Applicable Law . . . . . . . . . . . . . . . . . . . . . 61
Section 15.10 Invalidity of Provisions . . . . . . . . . . . . . . . . 61
Section 15.11 Limitation to Preserve REIT Status . . . . . . . . . . . 61
Section 15.12 Entire Agreement . . . . . . . . . . . . . . . . . . . . 62
Section 15.13 No Rights as Stockholders. . . . . . . . . . . . . . . . 62
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AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
ARDEN REALTY LIMITED PARTNERSHIP
THIS AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP, dated as
of October __, 1996, is entered into by and among Arden Realty, Inc., a Maryland
corporation (the "REIT"), as the General Partner and the Persons whose names are
set forth on Exhibit A attached hereto, as the Limited Partners, together with
any other Persons who become Partners in the Partnership as provided herein.
WHEREAS, the limited partnership was formed on May 20, 1996 and an
original agreement of limited partnership was entered into between the REIT, as
general partner, and Xxxxxx Xxxxxxx, as limited partner;
WHEREAS, the REIT proposes to effect a public offering of its common
stock, to acquire and cause the Partnership to acquire direct and indirect
interests in 24 office properties and other assets, to cause the Partnership to
enter into certain mortgage financing transactions, and to contribute the
remaining net proceeds from the public offering to the Partnership;
WHEREAS, the Partnership will issue Partnership Interests to the REIT
and other persons in accordance with the foregoing transactions;
WHEREAS, upon the completion of the foregoing transactions, the
Partnership shall return the original capital contributions made by the REIT and
Xx. Xxxxxxx and any ongoing interest in the Partnership of the REIT and Xx.
Xxxxxxx shall be based on their respective contributions as contemplated below;
WHEREAS, by virtue of their respective execution of this Agreement the
REIT and Xx. Xxxxxxx hereby consent to the amendment and restatement of the
original agreement of limited partnership;
NOW, THEREFORE, BE IT RESOLVED, that for good and adequate
consideration, the receipt of which is hereby acknowledged, the parties hereto
agree as follows:
ARTICLE 1
DEFINED TERMS
Section 1.1 DEFINITIONS.
The following definitions shall be for all purposes, unless otherwise
clearly indicated to the contrary, applied to the terms used in this Agreement.
"ACT" means the Maryland Revised Uniform Limited Partnership Act, as
it may be amended from time to time, and any successor to such statute.
"ADDITIONAL FUNDS" shall have the meaning set forth in Section 4.3.A.
"ADDITIONAL LIMITED PARTNER" means a Person admitted to the
Partnership as a Limited Partner pursuant to Section 12.2 hereof and who is
shown as such on the books and records of the Partnership.
"ADJUSTED CAPITAL ACCOUNT DEFICIT" means, with respect to any Partner,
the deficit balance, if any, in such Partner's Capital Account as of the end of
the relevant fiscal year, after giving effect to the following adjustments:
(i) decrease such deficit by any amounts which such Partner is
obligated to restore pursuant to this Agreement or is deemed to
be obligated to restore pursuant to Regulations Section 1.704-
1(b)(2)(ii)(c) or the penultimate sentence of each of Regulations
Sections 1.704-2(i)(5) and 1.704-2(g); and
(ii) increase such deficit by the items described in Regulations
Section 1.704-1(b)(2)(ii)(d)(4), (5) and (6).
The foregoing definition of Adjusted Capital Account Deficit is
intended to comply with the provisions of Regulations Section 1.704-
1(b)(2)(ii)(d) and shall be interpreted consistently therewith.
"ADJUSTMENT DATE" means, with respect to any Capital Contribution, the
close of business on the Business Day last preceding the date of the Capital
Contribution, PROVIDED, THAT if such Capital Contribution is being made by the
General Partner in respect of the proceeds from the issuance of REIT Shares (or
the issuance of the General Partner's securities exercisable for, convertible
into or exchangeable for REIT Shares), then the Adjustment Date shall be as of
the close of business on the Business Day last preceding the date of the
issuance of such securities.
"AFFILIATE" means, with respect to any Person, any Person directly or
indirectly controlling, controlled by or under common control with such Person.
"AGREED VALUE" means (i) in the case of any Contributed Property set
forth in Exhibit A and as of the time of its contribution to the Partnership,
the Agreed Value of such property as set forth in Exhibit A; (ii) in the case of
any Contributed Property not set forth in Exhibit A and as of the time of its
contribution to the Partnership, the fair market value of such property or other
consideration as determined by the General Partner, reduced by any liabilities
either assumed by the Partnership upon such contribution or to which such
property is subject when contributed; and (iii) in the case of any property
distributed to a Partner by the Partnership, the fair market value of such
property as determined by the General Partner at the time such property is
distributed, reduced by any liabilities either assumed by such Partner upon
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such distribution or to which such property is subject at the time of the
distribution as determined under Section 752 of the Code and the Regulations
thereunder.
"AGREEMENT" means this Agreement of Limited Partnership, as it may be
amended, supplemented or restated from time to time.
"APPRAISAL" means with respect to any assets, the opinion of an
independent third party experienced in the valuation of similar assets, selected
by the General Partner in good faith, such opinion may be in the form of an
opinion by such independent third party that the value for such property or
asset as set by the General Partner is fair, from a financial point of view, to
the Partnership.
"ASSIGNEE" means a Person to whom one or more Partnership Units have
been transferred in a manner permitted under this Agreement, but who has not
become a Substituted Limited Partner, and who has the rights set forth in
Section 11.5.
"AVAILABLE CASH" means, with respect to any period for which such
calculation is being made, (i) the sum of:
a. the Partnership's Net Income or Net Loss (as the case may
be) for such period,
b. Depreciation and all other noncash charges deducted in
determining Net Income or Net Loss for such period,
c. the amount of any reduction in reserves of the Partnership
referred to in clause (ii)(f) below (including, without limitation,
reductions resulting because the General Partner determines such
amounts are no longer necessary),
d. the excess of the net proceeds from the sale, exchange,
disposition, or refinancing of Partnership property for such period
over the gain (or loss, as the case may be) recognized from any such
sale, exchange, disposition, or refinancing during such period
(excluding Terminating Capital Transactions), and
e. all other cash received by the Partnership for such period
that was not included in determining Net Income or Net Loss for such
period;
(ii) less the sum of:
a. all principal debt payments made during such period by the
Partnership,
b. capital expenditures made by the Partnership during such
period,
c. investments in any entity (including loans made thereto) to
the extent that such investments are not otherwise described in
clauses (ii)(a) or (b),
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d. all other expenditures and payments not deducted in
determining Net Income or Net Loss for such period,
e. any amount included in determining Net Income or Net Loss
for such period that was not received by the Partnership during such
period,
f. the amount of any increase in reserves established during
such period which the General Partner determines are necessary or
appropriate in its sole and absolute discretion, and
g. the amount of any working capital accounts and other cash or
similar balances which the General Partner determines to be necessary
or appropriate in its sole and absolute discretion.
Notwithstanding the foregoing, Available Cash shall not include any
cash received or reductions in reserves, or take into account any disbursements
made or reserves, established, after commencement of the dissolution and
liquidation of the Partnership.
"BUSINESS DAY" means any day except a Saturday, Sunday or other day on
which commercial banks in New York, New York are authorized or required by law
to be closed.
"CAPITAL ACCOUNT" means, with respect to any Partner, the Capital
Account maintained for such Partner in accordance with the following provisions:
(a) To each Partner's Capital Account there shall be added such
Partner's Capital Contributions, such Partner's share of Net Income and any
items in the nature of income or gain which are specially allocated pursuant to
Section 6.3 hereof, and the amount of any Partnership liabilities assumed by
such Partner or which are secured by any property distributed to such Partner.
(b) From each Partner's Capital Account there shall be subtracted the
amount of cash and the Gross Asset Value of any property distributed to such
Partner pursuant to any provision of this Agreement, such Partner's distributive
share of Net Losses and any items in the nature of expenses or losses which are
specially allocated pursuant to Section 6.3 hereof, and the amount of any
liabilities of such Partner assumed by the Partnership or which are secured by
any property contributed by such Partner to the Partnership.
(c) In the event any interest in the Partnership is transferred in
accordance with the terms of this Agreement (which does not result in a
termination of the Partnership for federal income tax purposes), the transferee
shall succeed to the Capital Account of the transferor to the extent it relates
to the transferred interest.
(d) In determining the amount of any liability for purposes of
subsections (a) and (b) hereof, there shall be taken into account Code section
752(c) and any other applicable provisions of the Code and Regulations.
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(e) The foregoing provisions and the other provisions of this
Agreement relating to the maintenance of Capital Accounts are intended to comply
with Regulations Sections 1.704-1(b) and 1.704-2, and shall be interpreted and
applied in a manner consistent with such Regulations. In the event the General
Partner shall determine that it is prudent to modify the manner in which the
Capital Accounts, or any debits or credits thereto (including, without
limitation, debits or credits relating to liabilities which are secured by
contributed or distributed property or which are assumed by the Partnership, the
General Partner, or the Limited Partners) are computed in order to comply with
such Regulations, the General Partner may make such modification, PROVIDED THAT
it is not likely to have a material effect on the amounts distributable to any
Person pursuant to Article 13 of the Agreement upon the dissolution of the
Partnership. The General Partner also shall (i) make any adjustments that are
necessary or appropriate to maintain equality between the Capital Accounts of
the Partners and the amount of Partnership capital reflected on the
Partnership's balance sheet, as computed for book purposes, in accordance with
Regulations Section 1.704-1(b)(2)(iv)(q), and (ii) make any appropriate
modifications in the event unanticipated events might otherwise cause this
Agreement not to comply with Regulations Section 1.704-1(b) or Section 1.704-2.
"CAPITAL CONTRIBUTION" means, with respect to any Partner, the amount
of money and the initial Gross Asset Value of any property (other than money)
contributed to the Partnership by such Partner.
"CASH AMOUNT" means, with respect to any Partnership Units subject to
a Redemption, an amount of cash equal to the Deemed Partnership Interest Value
attributable to such Partnership Units.
"CERTIFICATE" means the Certificate of Limited Partnership relating to
the Partnership filed in the office of the Maryland State Department of
Assessments and Taxation, as amended from time to time in accordance with the
terms hereof and the Act.
"CHARTER" means the Articles of Incorporation of the General Partner
filed with the Maryland State Department of Assessments and Taxation on May 1,
1996, as amended or restated from time to time.
"CODE" means the Internal Revenue Code of 1986, as amended from time
to time or any successor statute thereto, as interpreted by the applicable
regulations thereunder. Any reference herein to a specific section or sections
of the Code shall be deemed to include a reference to any corresponding
provision of future law.
"CONSENT" means the consent to, approval of, or vote on a proposed
action by a Partner given in accordance with Article 14 hereof.
"CONSENT OF THE LIMITED PARTNERS" means the Consent of a Majority In
Interest of the Limited Partners, which Consent shall be obtained prior to the
taking of any action for which it is required by this Agreement and may be given
or withheld by a Majority in Interest of the Limited Partners, unless otherwise
expressly provided herein, in their sole and absolute discretion.
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"CONSENT OF THE PARTNERS" means the Consent of Partners holding
Percentage Interests that are greater than 66 2/3% of the aggregate Percentage
Interests of all Partners, which Consent shall be obtained prior to the taking
of any action for which it is required by this Agreement and may be given or
withheld by such Partners, in their sole and absolute discretion.
"CONSTRUCTIVELY OWN" means ownership under the constructive ownership
rules described in Exhibit C.
"CONTRIBUTED PROPERTY" means each property or other asset, in such
form as may be permitted by the Act, but excluding cash, contributed or deemed
contributed to the Partnership (or deemed contributed to the Partnership on
termination and reconstitution thereof pursuant to Section 708 of the Code).
"DEBT" means, as to any Person, as of any date of determination,
(i) all indebtedness of such Person for borrowed money or for the deferred
purchase price of property or services; (ii) all amounts owed by such Person to
banks or other Persons in respect to reimbursement obligations under letters of
credit, surety bonds and other similar instruments guaranteeing payment or other
performance of obligations by such Person; (iii) all indebtedness for borrowed
money or for the deferred purchase price of property or services secured by any
lien on any property owned by such Person, to the extent attributable to such
Person's interest in such property, even though such Person has not assumed or
become liable for the payment thereof; and (iv) lease obligations of such Person
which, in accordance with generally accepted accounting principles, should be
capitalized.
"DEEMED PARTNERSHIP INTEREST VALUE" means, as of any date with respect
to any class of Partnership Interests, the Deemed Value of the Partnership
Interests of such class multiplied by the applicable Partner's Percentage
Interest of such class.
"DEEMED VALUE OF THE PARTNERSHIP INTERESTS" means, as of any date with
respect to any class of Partnership Interests, (i) the total number of shares of
capital stock of the General Partner corresponding to such class of Partnership
Interests (as provided for in Sections 4.1 and 4.3.D) issued and outstanding as
of the close of business on such date (excluding any treasury shares) multiplied
by the Fair Market Value of a share of such capital stock on such date;
(ii) DIVIDED BY the Percentage Interest of the General Partner in such class of
Partnership Interests on such date.
"DEPRECIATION" means, for each fiscal year or other period, an amount
equal to the depreciation, amortization or other cost recovery deduction
allowable with respect to an asset for such year or other period, except that if
the Gross Asset Value of an asset differs from its adjusted basis for federal
income tax purposes at the beginning of such year or other period, Depreciation
shall be an amount which bears the same ratio to such beginning Gross Asset
Value as the federal income tax depreciation, amortization or other cost
recovery deduction for such year or other period bears to such beginning
adjusted tax basis; PROVIDED, HOWEVER, that if the federal income tax
depreciation, amortization or other cost recovery deduction for such year is
zero, Depreciation shall be determined with reference to such beginning Gross
Asset Value using any reasonable method selected by the General Partner.
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"EFFECTIVE DATE" means the date of closing of the initial public
offering of REIT Shares, upon which contributions set forth on Exhibit A that
are to be effective on the Effective Date shall become effective.
"ELECTION NOTICE" shall have the meaning set forth in Section 4.3.F.
"FAIR MARKET VALUE" means, with respect to any share of capital stock
of the General Partner, the average of the daily market price for the ten (10)
consecutive trading days immediately preceding the date with respect to which
"Fair Market Value" must be determined hereunder or, if such date is not a
Business Day, the immediately preceding Business Day. The market price for each
such trading day shall be: (i) if such shares are listed or admitted to trading
on any securities exchange or the Nasdaq National Market, the closing price,
regular way, on such day, or if no such sale takes place on such day, the
average of the closing bid and asked prices on such day, (ii) if such shares are
not listed or admitted to trading on any securities exchange or the Nasdaq
National Market, the last reported sale price on such day or, if no sale takes
place on such day, the average of the closing bid and asked prices on such day,
as reported by a reliable quotation source designated by the General Partner, or
(iii) if such shares are not listed or admitted to trading on any securities
exchange or the Nasdaq National Market and no such last reported sale price or
closing bid and asked prices are available, the average of the reported high bid
and low asked prices on such day, as reported by a reliable quotation source
designated by the General Partner, or if there shall be no bid and asked prices
on such day, the average of the high bid and low asked prices, as so reported,
on the most recent day (not more than 10 days prior to the date in question) for
which prices have been so reported; PROVIDED THAT, if there are no bid and asked
prices reported during the 10 days prior to the date in question, the Fair
Market Value of such shares shall be determined by the General Partner acting in
good faith on the basis of such quotations and other information as it
considers, in its reasonable judgment, appropriate. In the event the REIT
Shares Amount for such shares includes rights that a holder of such shares would
be entitled to receive, then the Fair Market Value of such rights shall be
determined by the General Partner acting in good faith on the basis of such
quotations and other information as it considers, in its reasonable judgment,
appropriate; and PROVIDED FURTHER THAT, in connection with determining the
Deemed Value of the Partnership Interests for purposes of determining the number
of additional Partnership Units issuable upon a Capital Contribution funded by
an underwritten public offering of shares of capital stock of the General
Partner, the Fair Market Value of such shares shall be the public offering price
per share of such class of capital stock sold.
"FUNDING DEBT" means the incurrence of any Debt by or on behalf of the
General Partner for the purpose of providing funds to the Partnership.
"FUNDING NOTICE" shall have the meaning set forth in Section 4.3.B.
"GENERAL PARTNER" means the REIT or its successors as general partner
of the Partnership.
"GENERAL PARTNER INTEREST" means a Partnership Interest held by the
General Partner. A General Partner Interest may be expressed as a number of
Partnership Units.
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"GENERAL PARTNER LOAN" shall have the meaning set forth in Section
4.3.C.
"GENERAL PARTNER PAYMENT" shall have the meaning set forth in Section
15.11.
"GROSS ASSET VALUE" means, with respect to any asset, the asset's
adjusted basis for federal income tax purposes, except as follows:
(a) The initial Gross Asset Value of any asset contributed by a
Partner to the Partnership shall be the gross fair market value of such asset,
as determined by the contributing Partner and the General Partner (as set forth
on Exhibit A attached hereto, as such Exhibit may be amended from time to time);
PROVIDED THAT, if the contributing Partner is the General Partner then, except
with respect to the General Partner's initial Capital Contribution which shall
be determined as set forth on Exhibit A, or capital contributions of cash, REIT
Shares or other shares of capital stock of the General Partner, the
determination of the fair market value of the contributed asset shall be
determined by (i) the price paid by the General Partner if the asset is acquired
by the General Partner contemporaneously with its contribution to the
Partnership and (ii) by Appraisal, if otherwise acquired by the General Partner.
(b) The Gross Asset Values of all Partnership assets shall be
adjusted to equal their respective gross fair market values, as determined by
the General Partner using such reasonable method of valuation as it may adopt,
PROVIDED HOWEVER, that for such purpose, the net value of all of the Partnership
assets, in the aggregate, shall be equal to the Deemed Value of the Partnership
Interests of all classes of Partnership Interests then outstanding, regardless
of the method of valuation adopted by the General Partner, as of the times
listed below:
(i) the acquisition of an additional interest in the Partnership by a
new or existing Partner in exchange for more than a de minimis
Capital Contribution, if the General Partner reasonably
determines that such adjustment is necessary or appropriate to
reflect the relative economic interests of the Partners in the
Partnership;
(ii) the distribution by the Partnership to a Partner of more than a
de minimis amount of Partnership property as consideration for an
interest in the Partnership if the General Partner reasonably
determines that such adjustment is necessary or appropriate to
reflect the relative economic interests of the Partners in the
Partnership;
(iii) the liquidation of the Partnership within the meaning of
Regulations Section 1.704-1(b)(2)(ii)(g); and
(iv) at such other times as the General Partner shall reasonably
determine necessary or advisable in order to comply with
Regulations Sections 1.704-1(b) and 1.704-2.
(c) The Gross Asset Value of any Partnership asset distributed to a
Partner shall be the gross fair market value of such asset on the date of
distribution as determined by
8
the distributee and the General Partner, or if the distributee and the General
Partner cannot agree on such a determination, by Appraisal.
(d) The Gross Asset Values of Partnership assets shall be increased
(or decreased) to reflect any adjustments to the adjusted basis of such assets
pursuant to Code Section 734(b) or Code Section 743(b), but only to the extent
that such adjustments are taken into account in determining Capital Accounts
pursuant to Regulations Section 1.704-1(b)(2)(iv)(m); PROVIDED, HOWEVER, that
Gross Asset Values shall not be adjusted pursuant to this subparagraph (d) to
the extent that the General Partner reasonably determines that an adjustment
pursuant to subparagraph (b) is necessary or appropriate in connection with a
transaction that would otherwise result in an adjustment pursuant to this
subparagraph (d).
(e) If the Gross Asset Value of a Partnership asset has been
determined or adjusted pursuant to subparagraph (a), (b) or (d), such Gross
Asset Value shall thereafter be adjusted by the Depreciation taken into account
with respect to such asset for purposes of computing Net Income and Net Losses.
"HOLDER" means either the Partner or Assignee owning a Partnership
Unit.
"IRS" means the Internal Revenue Service, which administers the
internal revenue laws of the United States.
"IMMEDIATE FAMILY" means, with respect to any natural Person, such
natural Person's estate or heirs or current spouse, parents, parents-in-law,
children, siblings and grandchildren and any trust or estate, all of the
beneficiaries of which consist of such Person or such Person's spouse, parents,
parents-in-law, children, siblings or grandchildren.
"INCAPACITY" or "INCAPACITATED" means, (i) as to any individual
Partner, death, total physical disability or entry by a court of competent
jurisdiction adjudicating him or her incompetent to manage his or her Person or
his or her estate; (ii) as to any corporation which is a Partner, the filing of
a certificate of dissolution, or its equivalent, for the corporation or the
revocation of its charter; (iii) as to any partnership which is a Partner, the
dissolution and commencement of winding up of the partnership; (iv) as to any
estate which is a Partner, the distribution by the fiduciary of the estate's
entire interest in the Partnership; (v) as to any trustee of a trust which is a
Partner, the termination of the trust (but not the substitution of a new
trustee); or (vi) as to any Partner, the bankruptcy of such Partner. For
purposes of this definition, bankruptcy of a Partner shall be deemed to have
occurred when (a) the Partner commences a voluntary proceeding seeking
liquidation, reorganization or other relief under any bankruptcy, insolvency or
other similar law now or hereafter in effect, (b) the Partner is adjudged as
bankrupt or insolvent, or a final and nonappealable order for relief under any
bankruptcy, insolvency or similar law now or hereafter in effect has been
entered against the Partner, (c) the Partner executes and delivers a general
assignment for the benefit of the Partner's creditors, (d) the Partner files an
answer or other pleading admitting or failing to contest the material
allegations of a petition filed against the Partner in any proceeding of the
nature described in clause (b) above, (e) the Partner seeks, consents to or
acquiesces in the appointment of a trustee, receiver or liquidator for the
Partner or for all or any substantial part
9
of the Partner's properties, (f) any proceeding seeking liquidation,
reorganization or other relief under any bankruptcy, insolvency or other similar
law now or hereafter in effect has not been dismissed within 120 days after the
commencement thereof, (g) the appointment without the Partner's consent or
acquiescence of a trustee, receiver of liquidator has not been vacated or stayed
within 90 days of such appointment, or (h) an appointment referred to in clause
(g) is not vacated within 90 days after the expiration of any such stay.
"INDEMNITEE" means (i) any Person made a party to a proceeding by
reason of his or her status as (A) the General Partner or (B) a director or
officer of the Partnership or the General Partner, and (ii) such other Persons
(including Affiliates of the General Partner or the Partnership) as the General
Partner may designate from time to time, in its sole and absolute discretion.
"LIMITED PARTNER" means any Person named as a Limited Partner in
Exhibit A attached hereto, as such Exhibit may be amended from time to time, or
any Substituted Limited Partner or Additional Limited Partner, in such Person's
capacity as a Limited Partner in the Partnership.
"LIMITED PARTNERSHIP INTEREST" means a Partnership Interest of a
Limited Partner representing a fractional part of the Partnership Interests of
all Limited Partners and includes any and all benefits to which the holder of
such a Partnership Interest may be entitled as provided in this Agreement,
together with all obligations of such Person to comply with the terms and
provisions of this Agreement. A Limited Partnership Interest may be expressed
as a number of Partnership Units.
"LIQUIDATING EVENTS" shall have the meaning set forth in Section 13.1.
"LIQUIDATOR" shall have the meaning set forth in Section 13.2.A.
"MAJORITY IN INTEREST OF THE LIMITED PARTNERS" means Limited Partners
(other than any Limited Partner 50% or more of whose equity is owned, directly
or indirectly, by the General Partner) holding Percentage Interests that are
greater than fifty percent (50%) of the aggregate Percentage Interests of all
Limited Partners (other than any Limited Partner 50% or more whose equity is
owned, directly or indirectly, by the General Partner).
"MAJORITY OF REMAINING PARTNERS" means Partners other than the General
Partner owning (i) greater than fifty percent (50%) of the profits interests in
the Partnership held by all Partners other than the General Partner, determined
and allocated based on any reasonable estimate of profits from the relevant date
to the projected termination of the Partnership and taking into account present
and future allocations of profits under this Agreement as it is in effect on the
relevant date, and (ii) greater than fifty percent (50%) of the capital
interests in the Partnership, determined as of the relevant date under this
Agreement, owned by all the Partners other than the General Partner.
"MISCELLANEOUS RIGHTS AGREEMENT" means the Miscellaneous Rights
Agreement dated ___________ __, 1996 by and among the General Partner and
certain Limited Partners
10
including the Specified Limited Partner, as such agreement may be amended,
modified or restated from time to time.
"NET INCOME" or "NET LOSS" means for each fiscal year of the
Partnership, an amount equal to the Partnership's taxable income or loss for
such fiscal year, determined in accordance with Code Section 703(a) (for this
purpose, all items of income, gain loss, or deduction required to be stated
separately pursuant to Code Section 703(a)(1) shall be included in taxable
income or loss), with the following adjustments:
(a) Any income of the Partnership that is exempt from federal income
tax and not otherwise taken into account in computing Net Income or Net Loss
pursuant to this definition of Net Income or Net Loss shall be added to such
taxable income or loss;
(b) Any expenditures of the Partnership described in Code Section
705(a)(2)(B) or treated as Code Section 705(a)(2)(B) expenditures pursuant to
Regulations Section 1.704-1(b)(2)(iv)(i), and not otherwise taken into account
in computing Net Income or Net Loss pursuant to this definition of Net Income or
Net Loss shall be subtracted from such taxable income or loss;
(c) In the event the Gross Asset Value of any Partnership asset is
adjusted pursuant to subparagraph (b) or subparagraph (c) of the definition of
Gross Asset Value, the amount of such adjustment shall be taken into account as
gain or loss from the disposition of such asset for purposes of computing Net
Income or Net Loss;
(d) Gain or loss resulting from any disposition of property with
respect to which gain or loss is recognized for federal income tax purposes
shall be computed by reference to the Gross Asset Value of the property disposed
of, notwithstanding that the adjusted tax basis of such property differs from
its Gross Asset Value;
(e) In lieu of the depreciation, amortization, and other cost
recovery deductions taken into account in computing such taxable income or loss,
there shall be taken into account Depreciation for such fiscal year;
(f) To the extent an adjustment to the adjusted tax basis of any
Partnership asset pursuant to Code Section 734(b) or Code Section 743(b) is
required pursuant to Regulations Section 1.704-1(b)(2)(iv)(m)(4) to be taken
into account in determining Capital Accounts as a result of a distribution other
than in liquidation of a Partner's interest in the Partnership, the amount of
such adjustment shall be treated as an item of gain (if the adjustment increases
the basis of the asset) or loss (if the adjustment decreases the basis of the
asset) from the disposition of the asset and shall be taken into account for
purposes of computing Net Income or Net Loss; and
(g) Notwithstanding any other provision of this definition of Net
Income or Net Loss, any items which are specially allocated pursuant to Section
6.3 hereof shall not be taken into account in computing Net Income or Net Loss.
The amounts of the items of Partnership income, gain, loss, or deduction
available to be specially allocated pursuant to
11
Section 6.3 hereof shall be determined by applying rules analogous to those set
forth in this definition of Net Income or Net Loss.
"NEW SECURITIES" means (1) any rights, options, warrants or
convertible or exchangeable securities having the right to subscribe for or
purchase REIT Shares or other shares of capital stock of the General Partner,
excluding grants under any Stock Plan, or (ii) any Debt issued by the General
Partner that provides any of the rights described in clause (i).
"NONRECOURSE DEDUCTIONS" shall have the meaning set forth in
Regulations Section 1.704-2(b)(1), and the amount of Nonrecourse Deductions for
a Partnership Year shall be determined in accordance with the rules of
Regulations Section 1.704-2(c).
"NONRECOURSE LIABILITY" shall have the meaning set forth in
Regulations Section 1.752-1(a)(2).
"NOTICE OF REDEMPTION" means the Notice of Redemption substantially in
the form of Exhibit B to this Agreement.
"PARTNER" means a General Partner or a Limited Partner, and "PARTNERS"
means the General Partner and the Limited Partners.
"PARTNER MINIMUM GAIN" means an amount, with respect to each Partner
Nonrecourse Debt, equal to the Partnership Minimum Gain that would result if
such Partner Nonrecourse Debt were treated as a Nonrecourse Liability,
determined in accordance with Regulations Section 1.704-2(i)(3).
"PARTNER NONRECOURSE DEBT" shall have the meaning set forth in
Regulations Section 1.704-2(b)(4).
"PARTNER NONRECOURSE DEDUCTIONS" shall have the meaning set forth in
Regulations Section 1.704-2(i)(2), and the amount of Partner Nonrecourse
Deductions with respect to a Partner Nonrecourse Debt for a Partnership Year
shall be determined in accordance with the rules of Regulations Section 1.704-
2(i)(2).
"PARTNERSHIP" means the limited partnership formed under the Act and
pursuant to this Agreement, and any successor thereto.
"PARTNERSHIP INTEREST" means, an ownership interest in the Partnership
of either a Limited Partner or the General Partner and includes any and all
benefits to which the holder of such a Partnership Interest may be entitled as
provided in this Agreement, together with all obligations of such Person to
comply with the terms and provisions of this Agreement. There may be one or
more classes of Partnership Interests as provided in Section 4.3. A Partnership
Interest may be expressed as a number of Partnership Units. Unless otherwise
expressly provided for by the General Partner at the time of the original
issuance of any Partnership Interests, all Partnership Interests (whether of a
Limited Partner or a General Partner) shall be of the same class.
12
"PARTNERSHIP MINIMUM GAIN" shall have the meaning set forth in
Regulations Section 1.704-2(b)(2), and the amount of Partnership Minimum Gain,
as well as any net increase or decrease in Partnership Minimum Gain, for a
Partnership Year shall be determined in accordance with the rules of Regulations
Section 1.704-2(d).
"PARTNERSHIP RECORD DATE" means the record date established by the
General Partner for the distribution of Available Cash pursuant to Section 5.1
hereof which record date shall be the same as the record date established by the
General Partner for a distribution to its stockholders of some or all of its
portion of such distribution.
"PARTNERSHIP UNIT" means, with respect to any class of Partnership
Interest, a fractional, undivided share of such class of Partnership Interest
issued pursuant to Sections 4.1 and 4.3. The ownership of Partnership Units may
be evidenced by a certificate for units substantially in the form of Exhibit D
hereto or as the General Partner may determine with respect to any class of
Partnership Units issued from time to time under Section 4.1 and 4.3.
"PARTNERSHIP YEAR" means the fiscal year of the Partnership, which
shall be the calendar year.
"PERCENTAGE INTEREST" means, as to a Partner holding a class of
Partnership Interests, its interest in the Partnership as determined by dividing
the Partnership Units of such class owned by such Partner by the total number of
Partnership Units of such class then outstanding as specified in Exhibit A
attached hereto, as such Exhibit may be amended from time to time.
"PERSON" means an individual or a corporation, partnership, trust,
unincorporated organization, association or other entity.
"PLEDGE" shall have the meaning set forth in Section 11.3.A.
"PROPERTIES" means such interests in real property and personal
property including without limitation, fee interests, interests, in ground
leases, interests in joint ventures, interests in mortgages, and Debt
instruments as the Partnership may hold from time to time.
"PRO RATA CONTRIBUTION" shall have the meaning set forth in Section
4.3.F.
"PRO RATA PARTICIPATION" shall have the meaning set forth in Section
4.3.F.
"QUALIFIED REIT SUBSIDIARY" means any Subsidiary of the General
Partner that is a "qualified REIT subsidiary" within the meaning of Section
856(i) of the Code.
"QUALIFIED TRANSFEREE" means an "Accredited Investor" as defined in
Rule 501 promulgated under the Securities Act.
"REDEMPTION" shall have the meaning set forth in Section 8.6.A.
13
"REGULATIONS" means the Income Tax Regulations promulgated under the
Code, as such regulations may be amended from time to time (including
corresponding provisions of succeeding regulations).
"REGULATORY ALLOCATIONS" shall have the meaning set forth in Section
6.3.A(viii) of this Agreement.
"REIT" means a real estate investment trust under Section 856 of the
Code.
"REIT REQUIREMENTS" shall have the meaning set forth in Section 5.1.
"REIT SHARE" means a share of common stock of the General Partner.
"REIT SHARES AMOUNT" means, as of any date, an aggregate number of
REIT Shares equal to the number of Tendered Units, as adjusted pursuant to
Section 7.5 (in the event the General Partner acquires material assets, other
than on behalf of the Partnership) and for stock dividends and distributions,
stock splits and subdivisions, reverse stock splits and combinations,
distributions of rights, warrants or options, and distributions of evidences of
indebtedness or assets relating to assets not received by the General Partner
pursuant to a PRO RATA distribution by the Partnership.
"SECURITIES ACT" means the Securities Act of 1933, as amended, and the
rules and regulations of the Securities and Exchange Commission promulgated
thereunder.
"SECURITIES EXCHANGE ACT" means the Securities Act of 1934, as
amended, and the rules and regulations of the Securities and Exchange Commission
promulgated thereunder.
"SPECIFIED LIMITED PARTNER" means Xxxxxxx X. Xxxxx so long as Xx.
Xxxxx serves as the Chief Executive Officer of the General Partner.
"SPECIFIED REDEMPTION DATE" means the day of receipt by the General
Partner of a Notice of Redemption.
"STOCK PLAN" means any stock incentive, stock option, stock ownership
or employee benefits plan of the General Partner.
"SUBSIDIARY" means, with respect to any Person, any corporation or
other entity of which a majority of (i) the voting power of the voting equity
securities or (ii) the outstanding equity interests is owned, directly or
indirectly, by such Person.
"SUBSIDIARY PARTNERSHIP" means any partnership that is a Subsidiary of
the Partnership.
"SUBSTITUTED LIMITED PARTNER" means a Person who is admitted as a
Limited Partner to the Partnership pursuant to Section 11.4.
14
"TAX ITEMS" shall have the meaning set forth in Section 6.4.A.
"TENANT" means any tenant from which the General Partner derives rent
either directly or indirectly through partnerships, including the Partnership.
"TENDERED UNITS" shall have the meaning set forth in Section 8.6.A.
"TENDERING PARTNER" shall have the meaning set forth in Section 8.6.A.
"TERMINATING CAPITAL TRANSACTION" means any sale or other disposition
of all or substantially all of the assets of the Partnership or a related series
of transactions that, taken together, result in the sale or other disposition of
all or substantially all of the assets of the Partnership.
ARTICLE 2
ORGANIZATIONAL MATTERS
Section 2.1 ORGANIZATION
The Partnership is a limited partnership formed pursuant to the
provisions of the Act and upon the terms and conditions set forth in this
Agreement. Except as expressly provided herein, the rights and obligations of
the Partners and the administration and termination of the Partnership shall be
governed by the Act. The Partnership Interest of each Partner shall be personal
property for all purposes.
Section 2.2 NAME
The name of the Partnership is Arden Realty Limited Partnership. The
Partnership's business may be conducted under any other name or names deemed
advisable by the General Partner, including the name of the General Partner or
any Affiliate thereof. The words "Limited Partnership," "L.P.," "Ltd." or
similar words or letters shall be included in the Partnership's name where
necessary for the purposes of complying with the laws of any jurisdiction that
so requires. The General Partner in its sole and absolute discretion may change
the name of the Partnership at any time and from time to time and shall notify
the Limited Partners of such change in the next regular communication to the
Limited Partners.
Section 2.3 RESIDENT AGENT; PRINCIPAL OFFICE
The name and address of the resident agent of the Partnership in the
State of Maryland are The Corporation Trust Incorporated, 00 Xxxxx Xxxxxx,
Xxxxxxxxx, Xxxxxxxx 00000. The address of the principal office of the
Partnership in the State of Maryland is c/o The Corporation Trust Incorporated
at such address. The principal office of the Partnership is located at 0000
Xxxxxxxx Xxxxxxxxx, Xxxx Tower, Suite 700, Beverly Hills, California 90212, or
such other place as the General Partner may from time to time designate by
notice to the
15
Limited Partners. The Partnership may maintain offices at such other place or
places within or outside the State of Maryland as the General Partner deems
advisable.
Section 2.4 POWER OF ATTORNEY
A. Each Limited Partner and each Assignee constitutes and appoints
the General Partner, any Liquidator, and authorized officers and attorneys-in-
fact of each, and each of those acting singly, in each case with full power of
substitution, as its true and lawful agent and attorney-in-fact, with full power
and authority in its name, place and stead to:
(1) execute, swear to, acknowledge, deliver, file and record in the
appropriate public offices (a) all certificates, documents and
other instruments (including, without limitation, this Agreement
and the Certificate and all amendments or restatements thereof)
that the General Partner or the Liquidator deems appropriate or
necessary to form, qualify or continue the existence or
qualification of the Partnership as a limited partnership (or a
partnership in which the Limited Partners have limited liability)
in the State of Maryland and in all other jurisdictions in which
the Partnership may conduct business or own property; (b) all
instruments that the General Partner or any Liquidator deems
appropriate or necessary to reflect any amendment, change,
modification or restatement of this Agreement in accordance with
its terms; (c) all conveyances and other instruments or documents
that the General Partner or any Liquidator deems appropriate or
necessary to reflect the dissolution and liquidation of the
Partnership pursuant to the terms of this Agreement, including,
without limitation, a certificate of cancellation; (d) all
instruments relating to the admission, withdrawal, removal or
substitution of any Partner pursuant to, or other events
described in, Article 11, 12 or 13 hereof or the Capital
Contribution of any Partner; and (e) all certificates, documents
and other instruments relating to the determination of the
rights, preferences and privileges of Partnership Interests; and
(2) execute, swear to, acknowledge and file all ballots, consents,
approvals, waivers, certificates and other instruments
appropriate or necessary, in the sole and absolute discretion of
the General Partner or any Liquidator, to make, evidence, give,
confirm or ratify any vote, consent, approval, agreement or other
action which is made or given by the Partners hereunder or is
consistent with the terms of this Agreement or appropriate or
necessary, in the sole discretion of the General Partner or any
Liquidator, to effectuate the terms or intent of this Agreement.
Nothing contained herein shall be construed as authorizing the General Partner
or any Liquidator to amend this Agreement except in accordance with Article 14
hereof or as may be otherwise expressly provided for in this Agreement.
16
B. The foregoing power of attorney is hereby declared to be
irrevocable and a power coupled with an interest, in recognition of the fact
that each of the Partners will be relying upon the power of the General Partner
and any Liquidator to act as contemplated by this Agreement in any filing or
other action by it on behalf of the Partnership, and it shall survive and not be
affected by the subsequent Incapacity of any Limited Partner or Assignee and the
transfer of all or any portion of such Limited Partner's or Assignee's
Partnership Units and shall extend to such Limited Partner's or Assignee's
heirs, successors, assigns and personal representatives. Each such Limited
Partner or Assignee hereby agrees to be bound by any representation made by the
General Partner or any Liquidator, acting in good faith pursuant to such power
of attorney; and each such Limited Partner or Assignee hereby waives any and all
defenses which may be available to contest, negate or disaffirm the action of
the General Partner or any Liquidator, taken in good faith under such power of
attorney. Each Limited Partner or Assignee shall execute and deliver to the
General Partner or any Liquidator, within 15 days after receipt of the General
Partner's or Liquidator's request therefor, such further designation, powers of
attorney and other instruments as the General Partner or the Liquidator, as the
case may be, deems necessary to effectuate this Agreement and the purposes of
the Partnership.
Section 2.5 TERM
The term of the Partnership commenced on May 20, 1996 and shall
continue until December 31, 2096 unless it is dissolved sooner pursuant to the
provisions of Article 13 or as otherwise provided by law.
Section 2.6 NUMBER OF PARTNERS
The Partnership shall not at any time have more than 100 partners
(including as partners those persons indirectly owning an interest in the
Partnership through a partnership, limited liability company, S corporation or
grantor trust (such entity, a "flow through entity"), but only if substantially
all of the value of such person's interest in the flow through entity is
attributable to the flow through entity's interest (direct or indirect) in the
Partnership).
ARTICLE 3
PURPOSE
Section 3.1 PURPOSE AND BUSINESS
The purpose and nature of the business to be conducted by the
Partnership is (i) to conduct any business that may be lawfully conducted by a
limited partnership organized pursuant to the Act, PROVIDED, HOWEVER, that such
business shall be limited to and conducted in such a manner as to permit the
General Partner at all times to be classified as a REIT for federal income tax
purposes, unless the General Partner ceases to qualify as a REIT for reasons
other than the conduct of the business of the Partnership, (ii) to enter into
any partnership, joint venture or other similar arrangement to engage in any
business described in the foregoing clause (i) or to own interests in any entity
engaged, directly or indirectly, in any such business and (iii) to do anything
necessary or incidental to the foregoing. In connection with the foregoing,
17
and without limiting the General Partner's right in its sole discretion to cease
qualifying as a REIT, the Partners acknowledge that the General Partner's
current status as a REIT inures to the benefit of all the Partners and not
solely the General Partner.
Section 3.2 POWERS
The Partnership is empowered to do any and all acts and things
necessary, appropriate, proper, advisable, incidental to or convenient for the
furtherance and accomplishment of the purposes and business described herein and
for the protection and benefit of the Partnership, including, without
limitation, full power and authority, directly or through its ownership interest
in other entities, to enter into, perform and carry out contracts of any kind,
borrow money and issue evidences of indebtedness, whether or not secured by
mortgage, deed of trust, pledge or other lien, acquire and develop real
property, and lease, sell, transfer and dispose of real property; PROVIDED,
HOWEVER, that the Partnership shall not take, or refrain from taking, any action
which, in the judgment of the General Partner, in its sole and absolute
discretion, (i) could adversely affect the ability of the General Partner to
continue to qualify as a REIT, (ii) could subject the General Partner to any
taxes under Section 857 or Section 4981 of the Code, or (iii) could violate any
law or regulation of any governmental body or agency having jurisdiction over
the General Partner or its securities, unless any such action (or inaction)
under (i), (ii) or (iii) shall have been specifically consented to by the
General Partner in writing.
Section 3.3 PARTNERSHIP ONLY FOR PURPOSES SPECIFIED
The Partnership shall be a partnership only for the purposes specified
in Section 3.1 hereof, and this Agreement shall not be deemed to create a
partnership among the Partners with respect to any activities whatsoever other
than the activities within the purposes of the Partnership as specified in
Section 3.1 hereof. Except as otherwise provided in this Agreement, no Partner
shall have any authority to act for, bind, commit or assume any obligation or
responsibility on behalf of the Partnership, its properties or any other
Partner. No Partner, in its capacity as a Partner under this Agreement, shall
be responsible or liable for any indebtedness or obligation of another Partner,
nor shall the Partnership be responsible or liable for any indebtedness or
obligation of any Partner, incurred either before or after the execution and
delivery of this Agreement by such Partner, except as to those responsibilities,
liabilities, indebtedness or obligations incurred pursuant to and as limited by
the terms of this Agreement and the Act.
Section 3.4 REPRESENTATIONS AND WARRANTIES BY THE PARTIES
A. Each Partner that is an individual represents and warrants to
each other Partner that (i) such Partner has the legal capacity to enter into
this Agreement and perform such Partner's obligations hereunder, (ii) the
consummation of the transactions contemplated by this Agreement to be performed
by such Partner will not result in a breach or violation of, or a default under,
any agreement by which such Partner or any of such Partner's property is or are
bound, or any statute, regulation, order or other law to which such Partner is
subject, (iii) such Partner is neither a "foreign person" within the meaning of
Section 1445(f) of the Code nor a
18
"foreign partner" within the meaning of Section 1446(e) of the Code, and
(iv) this Agreement is binding upon, and enforceable against, such Partner in
accordance with its terms.
B. Each Partner that is not an individual represents and warrants to
each other Partner that (i) all transactions contemplated by this Agreement to
be performed by it have been duly authorized by all necessary action, including
without limitation, that of its general partner(s), committee(s), trustee(s),
beneficiaries, directors and/or stockholder(s), as the case may be, as required,
(ii) the consummation of such transactions shall not result in a breach or
violation of, or a default under, its partnership agreement, trust agreement,
charter or by-laws, as the case may be, any agreement by which such Partner or
any of such Partner's properties or any of its partners, beneficiaries, trustees
or stockholders, as the case may be, is or are bound, or any statute,
regulation, order or other law to which such Partner or any of its partners,
trustees, beneficiaries or stockholders, as the case may be, is or are subject,
(iii) such Partner is neither a "foreign person" within the meaning of Section
1445(f) of the Code nor a "foreign partner" within the meaning of Section
1446(e) of the Code, and (iv) this Agreement is binding upon, and enforceable
against, such Partner in accordance with its terms.
C. Each Partner represents, warrants and agrees that it has acquired
and continues to hold its interest in the Partnership for its own account for
investment only and not for the purpose of, or with a view toward, the resale or
distribution of all or any part thereof, nor with a view toward selling or
otherwise distributing such interest or any part thereof at any particular time
or under any predetermined circumstances. Each Partner further represents and
warrants that it is a sophisticated investor, able and accustomed to handling
sophisticated financial matters for itself, particularly real estate
investments, and that it has a sufficiently high net worth that it does not
anticipate a need for the funds it has invested in the Partnership in what it
understands to be a highly speculative and illiquid investment.
D. Each Partner further represents, warrants and agrees as follows:
(i) Except as provided in Exhibit E, it does not and will not,
without the prior written consent of the General Partner, actually own or
Constructively Own (a) with respect to any Tenant that is a corporation, any
stock of such Tenant, and (b) with respect to any Tenant that is not a
corporation, any interests in either the assets or net profits of such Tenant;
PROVIDED, HOWEVER, that so long as there are fewer than 20 Partners, each
Partner may own or Constructively Own (x) with respect to any Tenant that is a
corporation, stock of such Tenant possessing up to, but not more than, one-half
of one percent (0.5%) of the total combined voting power of all classes of stock
entitled to vote and one-half of one percent (0.5%) of the total number of
shares of all classes of stock of such Tenant and (y) with respect to any Tenant
that is not a corporation, interests in such Tenant representing up to, but not
more than, one-half of one percent (0.5%) of the assets and one-half of one
percent (0.5%) of the net profits of such Tenant, so long as such actual or
Constructive Ownership otherwise permitted under clause (x) or (y) would not
cause the General Partner to receive amounts described in Section 856 (d)(2)(B)
of the Code.
(ii) Except as provided in Exhibit F, it does not, and agrees
that it will not without the prior written consent of the General Partner,
actually own or Constructively
19
Own, any stock in the General Partner, other than any REIT Shares or other
shares of capital stock of the General Partner such Partner may acquire (a) as a
result of an exchange of Tendered Units pursuant to Section 8.6, (b) upon the
exercise of options granted or delivery of REIT Shares pursuant to any Stock
Plan or (c) pursuant to the Miscellaneous Rights Agreement.
(iii) Upon request of the General Partner, it will disclose
to the General Partner the amount of REIT Shares or other shares of capital
stock of the General Partner that it actually owns or Constructively Owns.
(iv) It understands that if, for any reason, (a) the
representations, warranties or agreements set forth in D(i) or (ii) above are
violated, or (b) the Partnership's actual or Constructive ownership of REIT
Shares or other shares of capital stock of the General Partner violates the
limitations set forth in the Charter, then (1) some or all of the Redemption
rights of the Partners may become non-exercisable, and (2) some or all of the
REIT Shares owned by the Partners may be automatically transferred to a trust
for the benefit of a charitable beneficiary, as provided in the Charter.
E. The representations and warranties contained in Sections 3.4.A,
3.4.B, 3.4.C and 3.4.D hereof shall survive the execution and delivery of this
Agreement by each Partner and the dissolution and wind up of the Partnership.
F. Each Partner hereby acknowledges that no representations as to
potential profit, cash flows, funds from operations or yield, if any, in respect
of the Partnership or the General Partner have been made by any Partner or any
employee or representative or Affiliate of any Partner, and that projections and
any other information, including, without limitation, financial and descriptive
information and documentation, which may have been in any manner submitted to
such Partner shall not constitute any representation or warranty of any kind or
nature, express or implied.
ARTICLE 4
CAPITAL CONTRIBUTIONS
Section 4.1 CAPITAL CONTRIBUTIONS OF THE PARTNERS
At the time of their respective execution of this Agreement, the
Partners shall make Capital Contributions as set forth in Exhibit A to this
Agreement. The Partners shall own Partnership Units of the class and in the
amounts set forth in Exhibit A and shall have a Percentage Interest in the
Partnership as set forth in Exhibit A, which Percentage Interest shall be
adjusted in Exhibit A from time to time by the General Partner to the extent
necessary to reflect accurately exchanges, redemptions, Capital Contributions,
the issuance of additional Partnership Units or similar events having an effect
on a Partner's Percentage Interest. Except as required by law or as otherwise
provided in Sections 4.3, 4.4 and 10.5, no Partner shall be required or
permitted to make any additional Capital Contributions or loans to the
Partnership. Unless otherwise specified by the General Partner at the time of
the creation of any class of
20
Partnership Interests, the corresponding class of capital stock for any
Partnership Units issued shall be REIT Shares.
Section 4.2 LOANS BY THIRD PARTIES
Subject to Section 4.3, the Partnership may incur Debt, or enter into
other similar credit, guarantee, financing or refinancing arrangements for any
purpose (including, without limitation, in connection with any further
acquisition of Properties) with any Person that is not the General Partner upon
such terms as the General Partner determines appropriate; PROVIDED THAT, the
Partnership shall not incur any Debt that is recourse to the General Partner,
except to the extent otherwise agreed to by the General Partner in its sole
discretion.
Section 4.3 ADDITIONAL FUNDING AND CAPITAL CONTRIBUTIONS
A. GENERAL. The General Partner may, at any time and from time to
time determine that the Partnership requires additional funds ("Additional
Funds") for the acquisition of additional Properties or for such other
Partnership purposes as the General Partner may determine. Additional Funds may
be raised by the Partnership, at the election of the General Partner, in any
manner provided in, and in accordance with, the terms of this Section 4.3. No
Person shall have any preemptive, preferential or similar right or rights to
subscribe for or acquire any Partnership Interest, except as set forth in this
Section 4.3.
B. FUNDING NOTICE. The General Partner shall give written notice
(the "Funding Notice") to the Specified Limited Partner of the need for
Additional Funds and the anticipated source(s) thereof. No notice shall be
given to any Partners with respect to Capital Contributions pursuant to Section
4.4 below.
C. GENERAL PARTNER LOANS. Upon delivery of a Funding Notice to the
Specified Limited Partner, the General Partner, subject to Section 4.3.F below,
may enter into a Funding Debt, including, without limitation, a Funding Debt
that is convertible into REIT shares, and lend the Additional Funds to the
Partnership (a "General Partner Loan"); PROVIDED, HOWEVER, that the General
Partner shall not be obligated to lend the net proceeds of any Funding Debt to
the Partnership in a manner that would be inconsistent with the General
Partner's ability to remain qualified as a REIT. If the General Partner enters
into such a Funding Debt, the General Partner Loan will consist of the net
proceeds from such Funding Debt and will be on comparable terms and conditions,
including interest rate, repayment schedule and costs and expenses, as shall be
applicable with respect to or incurred in connection with such Funding Debt.
D. ISSUANCE OF ADDITIONAL PARTNERSHIP INTERESTS. Upon delivery of a
Funding Notice to the Specified Limited Partner, the General Partner, in its
sole and absolute discretion, may raise all or any portion of the Additional
Funds by accepting additional Capital Contributions, subject to Section 4.3.F in
the event additional Capital Contributions are made in cash. In connection with
any such additional Capital Contributions (of cash or property), the General
Partner is hereby authorized to cause the Partnership from time to time to issue
to Partners (including the General Partner) or other persons (including, without
limitation, in
21
connection with the contribution of property to the Partnership) additional
Partnership Units or other Partnership Interests in one or more classes, or one
or more series of any of such classes, with such designations, preferences and
relative, participating, optional or other special rights, powers, and duties,
including rights, powers, and duties senior to then existing Limited Partnership
Interests, all as shall be determined by the General Partner in its sole and
absolute discretion subject to Maryland law, including without limitation, (i)
the allocations of items of Partnership income, gain, loss, deduction, and
credit to such class or series of Partnership Interests; (ii) the right of each
such class or series of Partnership Interests to share in Partnership
distributions; and (iii) the rights of each such class or series of Partnership
Interests upon dissolution and liquidation of the Partnership; PROVIDED THAT no
such additional Partnership Units or other Partnership Interests shall be issued
to the General Partner unless either (a) the additional Partnership Interests
are issued in connection with the grant, award, or issuance of shares of the
General Partner pursuant to Section 4.3.E below, which shares have designations,
preferences, and other rights (except voting rights) such that the economic
interests attributable to such shares are substantially similar to the
designations, preferences and other rights of the additional Partnership
Interests issued to the General Partner in accordance with this Section 4.3.D,
or (b) the additional Partnership Interests are issued to all Partners holding
Partnership Interests in the same class in proportion to their respective
Percentage Interests in such class. In the event that the Partnership issues
additional Partnership Interests pursuant to this Section 4.3.D, the General
Partner shall make such revisions to this Agreement (including but not limited
to the revisions described in Section 5.5, Section 6.2.B, and Section 8.6) as it
determines are necessary to reflect the issuance of such additional Partnership
Interests.
E. ISSUANCE OF REIT SHARES OR OTHER SECURITIES BY THE GENERAL
PARTNER. The General Partner shall not issue any additional REIT Shares (other
than REIT Shares issued pursuant to Section 8.6 hereof or pursuant to a dividend
or distribution (including any stock split) of REIT Shares to all of its
stockholders), other shares of capital stock of the General Partner or New
Securities unless (i) the General Partner shall make a Capital Contribution of
the net proceeds from the issuance of such additional REIT Shares, other shares
of capital stock or New Securities, as the case may be, and from the exercise of
the rights contained in such additional New Securities, as the case may be, and
(ii) except with respect to securities to be issued pursuant to any Stock Plan
or dividend reinvestment plan, the General Partner shall have delivered to the
Specified Limited Partner a Funding Notice regarding the securities to be
issued.
F. PARTICIPATION RIGHTS OF SPECIFIED LIMITED PARTNER. The Funding
Notice delivered by the General Partner prior to its making or accepting (on
behalf of the Partnership) any additional cash Capital Contributions pursuant to
Section 4.3.D or 4.3.E hereof herein shall contain the total amount of
additional Capital Contributions sought to be made to the Partnership, and the
terms and conditions pertaining thereto. Provided that the Specified Limited
Partner is then holding a Limited Partner Interest, the Specified Limited
Partner may elect to make an additional Capital Contribution not to exceed the
product of (i) the total amount of additional Capital Contributions being
sought, and (ii) the Specified Limited Partner's Percentage Interest (with such
product deemed the "Pro Rata Contribution"). For purposes of determining the
Specific Limited Partner's Pro Rata Contribution (or the Pro Rata Participation
(as defined below)), the Specified Limited Partner's Percentage Interest shall
mean the Percentage Interest with respect to the class of Partnership Interests
issued to the Specified Limited Partner on the
22
Effective Date, whether the Partnership proposes to issue the same class or a
new class of Partnership Interests in connection with such additional Capital
Contributions. The Funding Notice delivered by the General Partner prior to its
making any loans to the Partnership pursuant to Section 4.3.C herein shall
contain the total amount of the loan to be made to the Partnership. Provided
that the Specified Limited Partner is then holding a Limited Partner Interest,
the Specified Limited Partner may elect to participate in such loan in an amount
not to exceed the product of (i) the total amount of the loan, and (ii) the
Specified Limited Partner's Percentage Interest (with such product deemed the
"Pro Rata Participation"). Either such election shall be made, if at all, by
providing written notice thereof (the "Election Notice") to the General Partner
within five (5) days after delivery of the Funding Notice. Failure to respond
to such Funding Notice shall be deemed to be an election by the Specified
Limited Partner not to make such Capital Contribution or participate in such
loan. Such Election Notice shall contain the amount of the additional Capital
Contribution or the loan participation, if any, the Specified Limited Partner is
to make (such additional Capital Contribution not to exceed the Pro Rata
Contribution and such loan participation not to exceed the Pro Rata
Participation) equal to all or any portion of its Pro Rata Contribution or Pro
Rata Participation. Notwithstanding anything in this Section 4.3.F to the
contrary, (a) the Pro Rata Contribution right and the Pro Rata Participation
right of the Specified Limited Partner under this Section 4.3.F shall be reduced
to the extent that the Specified Limited Partner has exercised rights under the
Miscellaneous Rights Agreement with respect to the issuance of REIT Shares or
other shares of capital stock of the General Partner that has resulted in an
additional Capital Contribution by the General Partner; and (b) if, at any time,
the Specified Limited Partner ceases to serve as the Chief Executive Officer of
the General Partner, then effective as of such time, the Specified Limited
Partner shall no longer be entitled to the Pro Rata Contribution right or the
Pro Rata Participation right under this Section 4.3.F. or entitled to receive
Funding Notices pursuant to Sections 4.3.B. or 4.3.C.
G. PERCENTAGE INTEREST ADJUSTMENTS IN THE CASE OF CAPITAL
CONTRIBUTIONS FOR PARTNERSHIP UNITS. Upon the acceptance of additional Capital
Contributions in exchange for Partnership Units, the Percentage Interest related
thereto shall be equal to a fraction, the numerator of which is equal to the
amount of cash and the Agreed Value of the Property contributed as of the
Business Day immediately preceding the date on which the additional Capital
Contributions are made (an "Adjustment Date") and the denominator of which is
equal to the sum of (i) the Deemed Value of the Partnership Interests of such
class (computed as of the Business Day immediately preceding the Adjustment
Date) and (ii) the aggregate amount of additional Capital Contributions
contributed to the Partnership on such Adjustment Date in respect of such class
of Partnership Interests. The Percentage Interest of each other Partner holding
Partnership Interests of such class not making a full PRO RATA Capital
Contribution shall be adjusted to equal to a fraction, the numerator of which is
equal to the sum of (i) the Deemed Partnership Interest Value of such Limited
Partner of such class (computed as of the Business Day immediately preceding the
Adjustment Date) and (ii) the amount of additional Capital Contributions made by
such Partner to the Partnership in respect of such class of Partnership
Interests as of such Adjustment Date, and the denominator of which is equal to
the sum of (i) the Deemed Value of the Partnership Interests of such class
(computed as of the Business Day immediately preceding the Adjustment Date),
PLUS (ii) the aggregate amount of additional Capital Contributions contributed
by all Partners and/or third parties to the Partnership on such Adjustment Date
in respect of such class. Provided, however, solely for purposes of calculating
23
a Partner's Percentage Interest pursuant to this Section 4.3.G, cash Capital
Contributions by the General Partner will be deemed to equal the cash
contributed by the General Partner plus, in the case of cash contributions
funded by an offering of any capital stock of the General Partner, the offering
costs attributable to the cash contributed to the Partnership. The General
Partner shall promptly give each Partner written notice of its Percentage
Interest, as adjusted.
Section 4.4 STOCK PLAN
If at any time or from time to time the General Partner sells REIT
Shares pursuant to any Stock Plan, the General Partner shall contribute the
proceeds therefrom to the Partnership as an additional Capital Contribution
pursuant to Section 4.3 in exchange for an amount of additional Partnership
Units equal to the number of REIT Shares so sold. The General Partner's Capital
Account shall be increased by the amount of cash so contributed.
Section 4.5 OTHER CONTRIBUTION PROVISIONS
In the event that any Partner is admitted to the Partnership and is
given a Capital Account in exchange for services rendered to the Partnership,
such transaction shall be treated by the Partnership and the affected Partner as
if the Partnership had compensated such Partner in cash, and the Partner had
contributed such cash to the capital of the Partnership. In addition, with the
consent of the General Partner, one or more Limited Partners may enter into
contribution agreements with the Partnership which have the effect of providing
a guarantee of certain obligations of the Partnership.
ARTICLE 5
DISTRIBUTIONS
Section 5.1 REQUIREMENT AND CHARACTERIZATION OF DISTRIBUTIONS
The General Partner shall cause the Partnership to distribute
quarterly all, or such portion as the General Partner may in its discretion
determine, of Available Cash generated by the Partnership during such quarter to
the Partners who are Partners on the Partnership Record Date with respect to
such quarter, (1) first, with respect to any Partnership Interests that are
entitled to any preference in distribution, in accordance with the rights of
such class of Partnership Interests (and within such class, pro rata in
proportion to the respective Percentage Interests on such Partnership Record
Date), and, (2) second, with respect to Partnership Interests that are not
entitled to any preference in distribution, pro rata to each such class in
accordance with the terms of such class (and within each such class, pro rata in
proportion with the respective Percentage Interests on such Partnership Record
Date). Unless otherwise expressly provided for herein or in an agreement at the
time a new class of Partnership Interests is created in accordance with Article
4 hereof, no Partnership Interest shall be entitled to a distribution in
preference to any other Partnership Interest. The General Partner shall take
such reasonable efforts, as determined by it in its sole and absolute discretion
and consistent with its qualification as a REIT, to cause the Partnership to
distribute sufficient amounts to enable the General Partner to pay stockholder
dividends that will (a) satisfy the requirements for qualifying as a REIT under
24
the Code and Regulations ("REIT Requirements"), and (b) avoid any federal income
or excise tax liability of the General Partner.
Section 5.2 DISTRIBUTIONS IN KIND
No right is given to any Partner to demand and receive property other
than cash. The General Partner may determine, in its sole and absolute
discretion, to make a distribution in kind to the Partners of Partnership
assets, and such assets shall be distributed in such a fashion as to ensure that
the fair market value is distributed and allocated in accordance with
Articles 5, 6 and 10.
Section 5.3 DISTRIBUTIONS UPON LIQUIDATION
Proceeds from a Terminating Capital Transaction shall be distributed
to the Partners in accordance with Section 13.2.
Section 5.4 DISTRIBUTIONS TO REFLECT ISSUANCE OF ADDITIONAL
PARTNERSHIP INTERESTS. In the event that the Partnership issues additional
Partnership Interests to the General Partner or any Additional Limited Partner
pursuant to Section 4.3.D or 4.4 hereof, the General Partner shall make such
revisions to this Article 5 as it determines are necessary to reflect the
issuance of such additional Partnership Interests.
ARTICLE 6
ALLOCATIONS
Section 6.1 TIMING AND AMOUNT OF ALLOCATIONS OF NET INCOME AND NET
LOSS
Net Income and Net Loss of the Partnership shall be determined and
allocated with respect to each fiscal year of the Partnership as of the end of
each such year. Subject to the other provisions of this Article 6, an
allocation to a Partner of a share of Net Income or Net Loss shall be treated as
an allocation of the same share of each item of income, gain, loss or deduction
that is taken into account in computing Net Income or Net Loss.
Section 6.2 GENERAL ALLOCATIONS
A. IN GENERAL. Except as otherwise provided in this Article 6, Net
Income and Net Loss shall be allocated to each of the Partners holding the same
class of Partnership Interests in accordance with their respective Percentage
Interest of such class.
B. ALLOCATIONS TO REFLECT ISSUANCE OF ADDITIONAL PARTNERSHIP
INTERESTS. In the event that the Partnership issues additional Partnership
Interests to the General Partner, the Specified Limited Partner or any
Additional Limited Partner pursuant to Section 4.3 or 4.4 hereof, the General
Partner shall make such revisions to this Section 6.2 as it determines are
necessary to reflect the terms of the issuance of such additional Partnership
Interests, including making preferential allocations to certain classes of
Partnership Interests.
25
C. Notwithstanding Section 6.2.A., but subject to the other
provisions of this Article 6, the following special allocations shall be made:
(i) The deduction attributable to the Partnership's payment of
specified interest under certain loans made to predecessor entities, which
were assumed or taken subject to by the Partnership, shall be allocated as
set forth in Exhibit G.
(ii) The cancellation of indebtedness income of the Partnership
attributable to the repayment of certain loans made to predecessor
entities, which were assumed or taken subject to by the Partnership, shall
be allocated as set forth in Exhibit H.
Section 6.3 ADDITIONAL ALLOCATION PROVISIONS
Notwithstanding the foregoing provisions of this Article 6:
A. REGULATORY ALLOCATIONS.
(i) MINIMUM GAIN CHARGEBACK. Except as otherwise provided in
Regulations Section 1.704-2(f), notwithstanding the provisions of Section
6.2 of the Agreement, or any other provision of this Article 6, if there is
a net decrease in Partnership Minimum Gain during any fiscal year, each
Partner shall be specially allocated items of Partnership income and gain
for such year (and, if necessary, subsequent years) in an amount equal to
such Partner's share of the net decrease in Partnership Minimum Gain, as
determined under Regulations Section 1.704-2(g). Allocations pursuant to
the previous sentence shall be made in proportion to the respective amounts
required to be allocated to each Partner pursuant thereto. The items to be
allocated shall be determined in accordance with Regulations Sections
1.704-2(f)(6) and 1.704-2(j)(2). This Section 6.3.A(i) is intended to
qualify as a "minimum gain chargeback" within the meaning of Regulation
Section 1.704-2(f) which shall be controlling in the event of a conflict
between such Regulation and this Section 6.3.A(i).
(ii) PARTNER MINIMUM GAIN CHARGEBACK. Except as otherwise
provided in Regulations Section 1.704-2(i)(4), and notwithstanding the
provisions of Section 6.2 of the Agreement, or any other provision of this
Article 6 (except Section 6.3.A(i)), if there is a net decrease in Partner
Minimum Gain attributable to a Partner Nonrecourse Debt during any fiscal
year, each Partner who has a share of the Partner Minimum Gain attributable
to such Partner Nonrecourse Debt, determined in accordance with Regulations
Section 1.704-2(i)(5), shall be specially allocated items of Partnership
income and gain for such year (and, if necessary, subsequent years) in an
amount equal to such Partner's share of the net decrease in Partner Minimum
Gain attributable to such Partner Nonrecourse Debt, determined in
accordance with Regulations Section 1.704-2(i)(4). Allocations pursuant to
the previous sentence shall be made in proportion to the respective amounts
required to be allocated to each General Partner and Limited Partner
pursuant thereto. The items to be so allocated shall be determined in
accordance with Regulations Sections 1.704-2(i)(4) and 1.704-2(j)(2). This
Section 6.3.A(ii) is intended
26
to qualify as a "chargeback of partner nonrecourse debt minimum gain"
within the meaning of Regulation Section 1.704-2(i) which shall be
controlling in the event of a conflict between such Regulation and this
Section 6.3.A(ii).
(iii) NONRECOURSE DEDUCTIONS AND PARTNER NONRECOURSE DEDUCTIONS.
Any Nonrecourse Deductions for any fiscal year shall be specially allocated
to the Partners in accordance with their Percentage Interests. Any Partner
Nonrecourse Deductions for any fiscal year shall be specially allocated to
the Partner(s) who bears the economic risk of loss with respect to the
Partner Nonrecourse Debt to which such Partner Nonrecourse Deductions are
attributable, in accordance with Regulations Sections 1.704-2(b)(4) and
1.704-2(i).
(iv) QUALIFIED INCOME OFFSET. If any Partner unexpectedly
receives an adjustment, allocation or distribution described in Regulations
Section 1.704-1(b)(2)(ii)(d)(4), (5) or (6), items of Partnership income
and gain shall be allocated, in accordance with Regulations Section 1.704-
1(b)(2)(ii)(d), to the Partner in an amount and manner sufficient to
eliminate, to the extent required by such Regulations, the Adjusted Capital
Account Deficit of the Partner as quickly as possible provided that an
allocation pursuant to this Section 6.3.A(iv) shall be made if and only to
the extent that such Partner would have an Adjusted Capital Account Deficit
after all other allocations provided in this Article 6 have been
tentatively made as if this Section 6.3.A(iv) were not in the Agreement.
It is intended that this Section 6.3.A(iv) qualify and be construed as a
"qualified income offset" within the meaning of Regulations 1.704-
1(b)(2)(ii)(d), which shall be controlling in the event of a conflict
between such Regulations and this Section 6.3.A(iv).
(v) GROSS INCOME ALLOCATION. In the event any Partner has a
deficit Capital Account at the end of any fiscal year which is in excess of
the sum of (1) the amount (if any) such Partner is obligated to restore to
the Partnership, and (2) the amount such Partner is deemed to be obligated
to restore pursuant to Regulations Section 1.704-1(b)(2)(ii)(c) or the
penultimate sentences of Regulations Sections 1.704-2(g)(1) and 1.704-
2(i)(5), each such Partner shall be specially allocated items of
Partnership income and gain in the amount of such excess as quickly as
possible, PROVIDED THAT an allocation pursuant to this Section 6.3.A(v)
shall be made if and only to the extent that such Partner would have a
deficit Capital Account in excess of such sum after all other allocations
provided in this Article 6 have been tentatively made as if this Section
6.3.A(v) and Section 6.3.A(iv) were not in the Agreement.
(vi) LIMITATION ON ALLOCATION OF NET LOSS. To the extent any
allocation of Net Loss would cause or increase an Adjusted Capital Account
Deficit as to any Partner, such allocation of Net Loss shall be reallocated
among the other Partners in accordance with their respective Percentage
Interests, subject to the limitations of this Section 6.3.A(vi).
(vii) SECTION 754 ADJUSTMENT. To the extent an adjustment to the
adjusted tax basis of any Partnership asset pursuant to Code Section 734(b)
or Code
27
Section 743(b) is required, pursuant to Regulations Section 1.704-
1(b)(2)(iv)(m)(2) or Regulations Section 1.704-1(b)(2)(iv)(m)(4), to be
taken into account in determining Capital Accounts as the result of a
distribution to a Partner in complete liquidation of his interest in the
Partnership, the amount of such adjustment to the Capital Accounts shall be
treated as an item of gain (if the adjustment increases the basis of the
asset) or loss (if the adjustment decreases such basis) and such gain or
loss shall be specially allocated to the Partners in accordance with their
interests in the Partnership in the event that Regulations Section 1.704-
1(b)(2)(iv)(m)(2) applies, or to the Partners to whom such distribution was
made in the event that Regulations Section 1.704-1(b)(2)(iv)(m)(4) applies.
(viii) CURATIVE ALLOCATION. The allocations set forth in
Sections 6.3.A(i), (ii), (iii), (iv), (v), (vi), and (vii) (the "Regulatory
Allocations") are intended to comply with certain regulatory requirements,
including the requirements of Regulations Sections 1.704-1(b) and 1.704-2.
Notwithstanding the provisions of Sections 6.1 and 6.2, the Regulatory
Allocations shall be taken into account in allocating other items of
income, gain, loss and deduction among the Partners so that, to the extent
possible, the net amount of such allocations of other items and the
Regulatory Allocations to each Partner shall be equal to the net amount
that would have been allocated to each such Partner if the Regulatory
Allocations had not occurred.
B. For purposes of determining a Partner's proportional share of the
"excess nonrecourse liabilities" of the Partnership within the meaning of
Regulations Section 1.752-3(a)(3), each Partner's interest in Partnership
profits shall be such Partner's Percentage Interest.
Section 6.4 TAX ALLOCATIONS
A. IN GENERAL. Except as otherwise provided in this Section 6.4,
for income tax purposes each item of income, gain, loss and deduction
(collectively, "Tax Items") shall be allocated among the Partners in the same
manner as its correlative item of "book" income, gain, loss or deduction is
allocated pursuant to Sections 6.2 and 6.3.
B. ALLOCATIONS RESPECTING SECTION 704(C) REVALUATIONS.
Notwithstanding Section 6.4.A, Tax Items with respect to Partnership property
that is contributed to the Partnership by a Partner shall be shared among the
Partners for income tax purposes pursuant to Regulations promulgated under
Section 704(c) of the Code, so as to take into account the variation, if any,
between the basis of the property to the Partnership and its initial Gross Asset
Value. With respect to Partnership property that is initially contributed to
the Partnership upon its formation pursuant to Section 4.1, such variation
between basis and initial Gross Asset Value shall be taken into account under
the "_____________ method" as described in Regulations Section 1.704-3. With
respect to properties subsequently contributed to the Partnership, the
Partnership shall account for such variation under any method approved under
Section 704(c) of the Code and the applicable regulations as chosen by the
General Partner. In the event the Gross Asset Value of any Partnership asset is
adjusted pursuant to subparagraph (b) of the definition of Gross Asset Value
(provided in Article 1 of this Agreement), subsequent allocations of Tax Items
with respect to such asset shall take account of the variation, if any, between
the
28
adjusted basis of such asset and its Gross Asset Value in the same manner as
under Section 704(c) of the Code and the applicable regulations consistent with
the requirements of Regulations Section 1.704-1(b)(2)(iv)(g) using any method
approved under 704(c) of the Code and the applicable regulations as chosen by
the General Partner.
ARTICLE 7
MANAGEMENT AND OPERATIONS OF BUSINESS
Section 7.1 MANAGEMENT
A. Except as otherwise expressly provided in this Agreement, all
management powers over the business and affairs of the Partnership are
exclusively vested in the General Partner, and no Limited Partner shall have any
right to participate in or exercise control or management power over the
business and affairs of the Partnership. The General Partner may not be removed
by the Limited Partners with or without cause, except with the consent of the
General Partner. In addition to the powers now or hereafter granted a general
partner of a limited partnership under applicable law or which are granted to
the General Partner under any other provision of this Agreement, the General
Partner, subject to the other provisions hereof including Section 7.3, shall
have full power and authority to do all things deemed necessary or desirable by
it to conduct the business of the Partnership, to exercise all powers set forth
in Section 3.2 hereof and to effectuate the purposes set forth in Section 3.1
hereof, including, without limitation:
(1) the making of any expenditures, the lending or borrowing of money
(including, without limitation, making prepayments on loans and
borrowing money to permit the Partnership to make distributions
to its Partners in such amounts as will permit the General
Partner (so long as the General Partner has determined to qualify
as a REIT) to avoid the payment of any federal income tax
(including, for this purpose, any excise tax pursuant to Section
4981 of the Code) and to make distributions to its stockholders
sufficient to permit the General Partner to maintain REIT
status), the assumption or guarantee of, or other contracting
for, indebtedness and other liabilities, the issuance of
evidences of indebtedness (including the securing of same by
mortgage, deed of trust or other lien or encumbrance on the
Partnership's assets) and the incurring of any obligations it
deems necessary for the conduct of the activities of the
Partnership;
(2) the making of tax, regulatory and other filings, or rendering of
periodic or other reports to governmental or other agencies
having jurisdiction over the business or assets of the
Partnership;
(3) the acquisition, disposition, mortgage, pledge, encumbrance,
hypothecation or exchange of any assets of the Partnership or the
merger or other combination of the Partnership with or into
another entity;
29
(4) the mortgage, pledge, encumbrance or hypothecation of any assets
of the Partnership, and the use of the assets of the Partnership
(including, without limitation, cash on hand) for any purpose
consistent with the terms of this Agreement and on any terms it
sees fit, including, without limitation, the financing of the
conduct or the operations of the General Partner or the
Partnership, the lending of funds to other Persons (including,
without limitation, the General Partner (if necessary to permit
the financing or capitalization of a subsidiary of the General
Partner or the Partnership) or any Subsidiaries of the
Partnership) and the repayment of obligations of the Partnership,
any of its Subsidiaries and any other Person in which it has an
equity investment;
(5) the negotiation, execution, and performance of any contracts,
leases, conveyances or other instruments that the General Partner
considers useful or necessary to the conduct of the Partnership's
operations or the implementation of the General Partner's powers
under this Agreement;
(6) the distribution of Partnership cash or other Partnership assets
in accordance with this Agreement;
(7) the selection and dismissal of employees of the Partnership
(including, without limitation, employees having titles such as
"president," "vice president," "secretary" and "treasurer"), and
agents, outside attorneys, accountants, consultants and
contractors of the Partnership, the determination of their
compensation and other terms of employment or hiring, including
waivers of conflicts of interest and the payment of their
expenses and compensation out of the Partnership's assets;
(8) the maintenance of such insurance for the benefit of the
Partnership and the Partners as it deems necessary or
appropriate;
(9) the formation of, or acquisition of an interest in, and the
contribution of property to, any further limited or general
partnerships, joint ventures or other relationships that it deems
desirable (including, without limitation, the acquisition of
interests in, and the contributions of property to any Subsidiary
and any other Person in which it has an equity investment from
time to time); PROVIDED THAT, as long as the General Partner has
determined to continue to qualify as a REIT, the Partnership may
not engage in any such formation, acquisition or contribution
that would cause the General Partner to fail to qualify as a
REIT;
(10) the control of any matters affecting the rights and obligations
of the Partnership, including the conduct of litigation and the
incurring of legal expense and the settlement of claims and
litigation, and the indemnification of any Person against
liabilities and contingencies to the extent permitted by law;
30
(11) the undertaking of any action in connection with the
Partnership's direct or indirect investment in any Person
(including, without limitation, contributing or loaning
Partnership funds to, incurring indebtedness on behalf of, or
guarantying the obligations of any such Persons);
(12) subject to the other provisions in this Agreement, the
determination of the fair market value of any Partnership
property distributed in kind using such reasonable method of
valuation as it may adopt, PROVIDED THAT such methods are
otherwise consistent with requirements of this Agreement;
(13) the management, operation, leasing, landscaping, repair,
alteration, demolition or improvement of any real property or
improvements owned by the Partnership or any Subsidiary of the
Partnership or any Person in which the Partnership has made a
direct or indirect equity investment;
(14) holding, managing, investing and reinvesting cash and other
assets of the Partnership;
(15) the collection and receipt of revenues and income of the
Partnership;
(16) the exercise, directly or indirectly through any attorney-in-fact
acting under a general or limited power of attorney, of any
right, including the right to vote, appurtenant to any asset or
investment held by the Partnership;
(17) the exercise of any of the powers of the General Partner
enumerated in this Agreement on behalf of or in connection with
any Subsidiary of the Partnership or any other Person in which
the Partnership has a direct or indirect interest, or jointly
with any such Subsidiary or other Person;
(18) the exercise of any of the powers of the General Partner
enumerated in this Agreement on behalf of any Person in which the
Partnership does not have an interest pursuant to contractual or
other arrangements with such Person; and
(19) the making, execution and delivery of any and all deeds, leases,
notes, deeds to secure debt, mortgages, deeds of trust, security
agreements, conveyances, contracts, guarantees, warranties,
indemnities, waivers, releases or legal instruments or agreements
in writing necessary or appropriate in the judgment of the
General Partner for the accomplishment of any of the powers of
the General Partner enumerated in this Agreement.
B. Each of the Limited Partners agrees that the General Partner is
authorized to execute, deliver and perform the above-mentioned agreements and
transactions on behalf of the Partnership without any further act, approval or
vote of the partners, notwithstanding any
31
other provisions of this Agreement (except as provided in Section 7.3), the Act
or any applicable law, rule or regulation. The execution, delivery or
performance by the General Partner or the Partnership of any agreement
authorized or permitted under this Agreement shall not constitute a breach by
the General Partner of any duty that the General Partner may owe the Partnership
or the Limited Partners or any other Persons under this Agreement or of any duty
stated or implied by law or equity.
C. At all times from and after the date hereof, the General Partner
may cause the Partnership to obtain and maintain (i) casualty, liability and
other insurance on the properties of the Partnership and (ii) liability
insurance for the Indemnities hereunder.
D. At all times from and after the date hereof, the General Partner
may cause the Partnership to establish and maintain working capital reserves in
such amounts as the General Partner, in it sole and absolute discretion, deems
appropriate and reasonable from time to time.
E. In exercising its authority under this Agreement, the General
Partner may, but shall be under no obligation to, take into account the tax
consequences to any Partner (including the General Partner) of any action taken
by it. The General Partner and the Partnership shall not have liability to a
Partner under any circumstances as a result of an income tax liability incurred
by such Limited Partner as a result of an action (or inaction) by the General
Partner pursuant to its authority under this Agreement.
Section 7.2 CERTIFICATE OF LIMITED PARTNERSHIP
To the extent that such action is determined by the General Partner to
be reasonable and necessary or appropriate, the General Partner shall file
amendments to and restatements of the Certificate and do all the things to
maintain the Partnership as a limited partnership (or a partnership in which the
limited partners have limited liability) under the laws of the State of Maryland
and each other state, the District of Columbia or other jurisdiction, in which
the Partnership may elect to do business or own property. Subject to the terms
of Section 8.5.A(4) hereof, the General Partner shall not be required, before or
after filing, to deliver or mail a copy of the Certificate or any amendment
thereto to any Limited Partner. The General Partner shall use all reasonable
efforts to cause to be filed such other certificates or documents as may be
reasonable and necessary or appropriate for the formation, continuation,
qualification and operation of a limited partnership (or a partnership in which
the limited partners have limited liability) in the State of Maryland, any other
state, or the District of Columbia or other jurisdiction, in which the
Partnership may elect to do business or own property.
Section 7.3 RESTRICTIONS ON GENERAL PARTNER'S AUTHORITY
A. The General Partner may not take any action in contravention of
an express prohibition or limitation of this Agreement, including, without
limitation:
(1) take any action that would make it impossible to carry on the
ordinary business of the Partnership, except as otherwise
provided in this Agreement;
32
(2) possess Partnership property, or assign any rights in specific
Partnership property, for other than a Partnership purpose except
as otherwise provided in this Agreement;
(3) admit a Person as a Partner, except as otherwise provided in this
Agreement;
(4) perform any act that would subject a Limited Partner to liability
as a general partner in any jurisdiction or any other liability
except as provided herein or under the Act; or
(5) enter into any contract, mortgage, loan or other agreement that
expressly prohibits or restricts the ability of a Limited Partner
to exercise its rights to a Redemption in full, except with the
written consent of such Limited Partner.
B. The General Partner shall not, without the prior Consent of the
Partners, undertake, on behalf of the Partnership, any of the following actions
or enter into any transaction which would have the effect of such transactions:
(1) except as provided in Section 7.3.C, amend, modify or terminate
this Agreement other than to reflect the admission, substitution,
termination or withdrawal of partners pursuant to Article 12
hereof;
(2) make a general assignment for the benefit of creditors or appoint
or acquiesce in the appointment of a custodian, receiver or
trustee for all or any part of the assets of the Partnership;
(3) institute any proceeding for bankruptcy on behalf of the
Partnership;
(4) confess a judgment against the Partnership;
(5) approve or acquiesce to the transfer of the Partnership Interest
of the General Partner to any Person other than the Partnership;
or
(6) admit into the Partnership any Additional or Substitute General
Partners.
C. Notwithstanding Section 7.3.B, the General Partner shall have the
exclusive power to amend this Agreement as may be required to facilitate or
implement any of the following purposes:
(1) to add to the obligations of the General Partner or surrender any
right or power granted to the General Partner or any Affiliate of
the General Partner for the benefit of the Limited Partners;
33
(2) to reflect the issuance of additional Partnership Interests
pursuant to Section 4.3.D or the admission, substitution,
termination, or withdrawal of Partners in accordance with this
Agreement;
(3) to reflect a change that is of an inconsequential nature and does
not adversely affect the Limited Partners in any material
respect, or to cure any ambiguity, correct or supplement any
provision in this Agreement not inconsistent with law or with
other provisions, or make other changes with respect to matters
arising under this Agreement that will not be inconsistent with
law or with the provisions of this Agreement;
(4) to satisfy any requirements, conditions, or guidelines contained
in any order, directive, opinion, ruling or regulation of a
federal or state agency or contained in federal or state law;
(5) to reflect such changes as are reasonably necessary for the
General Partner to maintain status as a REIT, including changes
which may be necessitated due to a change in applicable law (or
an authoritative interpretation thereof) or a ruling of the IRS;
and
(6) to modify, as set forth in the definition of "Capital Account,"
the manner in which Capital Accounts are computed.
The General Partner will provide notice to the Limited Partners when any action
under this Section 7.3.C is taken.
D. Notwithstanding Section 7.3.B and 7.3.C hereof, this Agreement
shall not be amended with respect to any Partner adversely affected, and no
action may be taken by the General Partner, without the Consent of such Partner
adversely affected if such amendment or action would (i) convert a Limited
Partner's interest in the Partnership into a general partner's interest (except
as the result of the General Partner acquiring such interest), (ii) modify the
limited liability of a Limited Partner, (iii) alter rights of the Partner to
receive distributions pursuant to Article 5 or Section 13.2.A(4), or the
allocations specified in Article 6 (except as permitted pursuant to Section 4.3
and Section 7.3.C(3) hereof), (iv) materially alter or modify the rights to a
Redemption or the REIT Shares Amount as set forth in Section 8.6, and related
definitions hereof or (v) amend this Section 7.3.D. Further, no amendment may
alter the restrictions on the General Partner's authority set forth elsewhere in
this Section 7.3 without the Consent specified in such section. This Section
7.3D does not require unanimous consent of all Partners adversely affected
unless the amendment is to be effective against all partners adversely affected.
E. So long as the Limited Partners own at least 5% of the aggregate
Percentage Interests of the Partnership, the General Partner shall not, on
behalf of the Partnership, take any of the following actions without the prior
Consent of the Limited Partners:
34
(1) dissolve the Partnership, other than incident to (i) a sale,
disposition, conveyance or other transfer of all or substantially
all of the assets of the Partnership, in one or a series of
related transactions (an "Asset Sale"), (ii) a merger,
consolidation, reorganization or other business combination to
which the Partnership is a party, or (iii) a Termination
Transaction (as defined in Section 11.2); or
(2) prior to the expiration of seven (7) years from the Effective
Date, sell, dispose, convey or otherwise transfer or refinance
the Partnership's property located at 0000 Xxxx Xxxx Xxxxxxxxx,
Xxx Xxxxxxx, Xxxxxxxxxx and commonly known as Century Park
Center, other than incident to a merger, consolidation,
reorganization or other business combination to which the
Partnership is a party or an Asset Sale.
Section 7.4 REIMBURSEMENT OF THE GENERAL PARTNER
A. Except as provided in this Section 7.4 and elsewhere in this
Agreement (including the provisions of Articles 5 and 6 regarding distributions,
payments and allocations to which it may be entitled), the General Partner shall
not be compensated for its services as general partner of the Partnership.
B. Subject to Section 15.11, the General Partner shall be reimbursed
on a monthly basis, or such other basis as the General Partner may determine in
its sole and absolute discretion, for all expenses it incurs relating to the
ownership of interests in and operation of, or for the benefit of, the
Partnership. The Limited Partners acknowledge that the General Partner's sole
business is the ownership of interests in and operation of the Partnership and
that such expenses are incurred for the benefit of the Partnership; PROVIDED
THAT, the General Partner shall not be reimbursed for expenses it incurs
relating to the organization of the Partnership and the General Partner or the
initial public offering or subsequent public offerings of REIT Shares, other
shares of capital stock or Funding Debt by the General Partner, but shall be
reimbursed for expenses it incurs with respect to any other issuance of
additional Partnership Interests pursuant to the provisions hereof. Such
reimbursements shall be in addition to any reimbursement to the General Partner
as a result of indemnification pursuant to Section 7.7 hereof.
C. If and to the extent any reimbursements to the General Partner
pursuant to this Section 7.4 constitute gross income of the General Partner (as
opposed to the repayment of advances made by the General Partner on behalf of
the Partnership), such amounts shall constitute guaranteed payments within the
meaning of Section 707(c) of the Code, shall be treated consistently therewith
by the Partnership and all Partners, and shall not be treated as distributions
for purposes of computing the Partners' Capital Accounts.
Section 7.5 OUTSIDE ACTIVITIES OF THE GENERAL PARTNER
A. Except in connection with a transaction authorized in Section
11.2 hereof, without the Consent of the Limited Partners, the General Partner
shall not, directly or indirectly,
35
enter into or conduct any business, other than in connection with the ownership,
acquisition and disposition of Partnership Interests as a General Partner and
the management of the business of the Partnership, its operation as a public
reporting company with a class (or classes) of securities registered under the
Exchange Act, its operation as a REIT and such activities as are incidental to
the same. Without the Consent of the Limited Partners, the General Partner
shall not, directly or indirectly, participate in or otherwise acquire any
interest in any real or personal property, except its General Partner Interest,
its minority interest in any Subsidiary Partnership(s) (held directly or
indirectly through a Qualified REIT Subsidiary) that the General Partner holds
in order to maintain such Subsidiary Partnership's status as a partnership, and
such bank accounts, similar instruments or other short-term investments as it
deems necessary to carry out its responsibilities contemplated under this
Agreement and the Charter. Any Limited Partner Interests acquired by the
General Partner, whether pursuant to exercise by a Limited Partner of its right
of Redemption, or otherwise, shall be automatically converted into a General
Partner Interest comprised of an identical number of Partnership Units of the
same class. If, at any time, the General Partner acquires material assets
(other than on behalf of the Partnership) the definition of "REIT Shares Amount"
shall be adjusted, as reasonably agreed to by the General Partner and the
Limited Partners, to reflect the relative Fair Market Value of a share of
capital stock of the General Partner relative to the Deemed Partnership Interest
Value of the related Partnership Unit. The General Partner's General Partner
Interest in the Partnership, its minority interest in any Subsidiary
Partnership(s) (held directly or indirectly through a Qualified REIT Subsidiary)
that the General Partner holds in order to maintain such Subsidiary
Partnership's status as a partnership, and interests in such short-term liquid
investments, bank accounts or similar instruments as the General Partner deems
necessary to carry out its responsibilities contemplated under this Agreement
and the Charter are interests which the General Partner is permitted to acquire
and hold for purposes of this Section 7.5.A.
B. In the event the General Partner exercises its rights under the
Charter to purchase REIT Shares, then the General Partner shall cause the
Partnership to purchase from it a number of Partnership Units of the appropriate
class as determined based on the REIT Shares Amount equal to the number of REIT
Shares so purchased on the same terms that the General Partner purchased such
REIT Shares.
Section 7.6 CONTRACTS WITH AFFILIATES
A. The Partnership may lend or contribute to Persons in which it has
an equity investment, and such Persons may borrow funds from the Partnership, on
terms and conditions established in the sole and absolute discretion of the
General Partner. The foregoing authority shall not create any right or benefit
in favor of any Person.
B. Except as provided in Section 7.5.A, the Partnership may transfer
assets to joint ventures, other partnerships, corporations or other business
entities in which it is or thereby becomes a participant upon such terms and
subject to such conditions consistent with this Agreement and applicable law.
C. The General Partner, in its sole and absolute discretion and
without the approval of the Limited Partners, may propose and adopt on behalf of
the Partnership employee
36
benefit plans funded by the Partnership for the benefit of employees of the
General Partner, the Partnership, Subsidiaries of the Partnership or any
Affiliate of any of them in respect of services performed, directly or
indirectly, for the benefit of the Partnership, the General Partner, or any of
the Partnership's Subsidiaries. The General Partner also is expressly
authorized to cause the Partnership to issue to it Partnership Units
corresponding to REIT Shares issued by the General Partner pursuant to any Stock
Plan or any similar or successor plan and to repurchase such Partnership Units
from the General Partner to the extent necessary to permit the General Partner
to repurchase such REIT Shares in accordance with such plan.
D. The General Partner is expressly authorized to enter into, in the
name and on behalf of the Partnership, a right of first opportunity arrangement
and other conflict avoidance agreements with various Affiliates of the
Partnership and the General Partner, on such terms as the General Partner, in
its sole and absolute discretion, believes are advisable.
Section 7.7 INDEMNIFICATION
A. The Partnership shall indemnify an Indemnitee from and against
any and all losses, claims, damages, liabilities, joint or several, expenses
(including legal fees and expenses), judgments, fines, settlements, and other
amounts arising from any and all claims, demands, actions, suits or proceedings,
civil, criminal, administrative or investigative, that relate to the operations
of the Partnership as set forth in this Agreement in which any Indemnitee may be
involved, or is threatened to be involved, as a party or otherwise, unless it is
established that: (i) the act or omission of the Indemnitee was material to the
matter giving rise to the proceeding and either was committed in bad faith or
was the result of active and deliberate dishonesty; (ii) the Indemnitee actually
received an improper personal benefit in money, property or services; or
(iii) in the case of any criminal proceeding, the Indemnitee had reasonable
cause to believe that the act or omission was unlawful. Without limitation, the
foregoing indemnity shall extend to any liability of any Indemnitee, pursuant to
a loan guaranty or otherwise, for any indebtedness of the Partnership or any
Subsidiary of the Partnership (including, without limitation, any indebtedness
which the Partnership or any Subsidiary of the Partnership has assumed or taken
subject to), and the General Partner is hereby authorized and empowered, on
behalf of the Partnership, to enter into one or more indemnity agreements
consistent with the provisions of this Section 7.7 in favor of any Indemnitee
having or potentially having liability for any such indebtedness. The
termination of any proceeding by judgment, order or settlement does not create a
presumption that the Indemnitee did not meet the requisite standard of conduct
set forth in this Section 7.7.A. The termination of any proceeding by
conviction or upon a plea of nolo contendere or its equivalent, or any entry of
an order of probation prior to judgment, creates a rebuttable presumption that
the Indemnitee acted in a manner contrary to that specified in this Section
7.7.A. Any indemnification pursuant to this Section 7.7 shall be made only out
of the assets of the Partnership.
B. Reasonable expenses incurred by an Indemnitee who is a party to a
proceeding may be paid or reimbursed by the Partnership in advance of the final
disposition of the proceeding upon receipt by the Partnership of (i) a written
affirmation by the Indemnitee of the Indemnitee's good faith belief that the
standard of conduct necessary for indemnification by the Partnership as
authorized in this Section 7.7.A has been met, and (ii) a written undertaking
37
by or on behalf of the Indemnitee to repay the amount if it shall ultimately be
determined that the standard of conduct has not been met.
C. The indemnification provided by this Section 7.7 shall be in
addition to any other rights to which an Indemnitee or any other Person may be
entitled under any agreement, pursuant to any vote of the Partners, as a matter
of law or otherwise, and shall continue as to an Indemnitee who has ceased to
serve in such capacity.
D. The Partnership may purchase and maintain insurance, on behalf of
the Indemnities and such other Persons as the General Partner shall determine,
against any liability that may be asserted against or expenses that may be
incurred by such Person in connection with the Partnership's activities,
regardless of whether the Partnership would have the power to indemnify such
Person against such liability under the provisions of this Agreement.
E. For purposes of this Section 7.7, the Partnership shall be deemed
to have requested an Indemnitee to serve as fiduciary of an employee benefit
plan whenever the performance by it of its duties to the Partnership also
imposes duties on, or otherwise involves services by, it to the plan or
participants or beneficiaries of the plan; excise taxes assessed on an
Indemnitee with respect to an employee benefit plan pursuant to applicable law
shall constitute fines within the meaning of Section 7.7; and actions taken or
omitted by the Indemnitee with respect to an employee benefit plan in the
performance of its duties for a purpose reasonably believed by it to be in the
interest of the participants and beneficiaries of the plan shall be deemed to be
for a purpose which is not opposed to the best interests of the Partnership.
F. In no event may an Indemnitee subject the Limited Partners to
personal liability by reason of the indemnification provisions set forth in this
Agreement.
G. An Indemnitee shall not be denied indemnification in whole or in
part under this Section 7.7 because the Indemnitee had an interest in the
transaction with respect to which the indemnification applies if the transaction
was otherwise permitted by the terms of this Agreement.
H. The provisions of this Section 7.7 are for the benefit of the
Indemnities, their heirs, successors, assigns and administrators and shall not
be deemed to create any rights for the benefit of any other Persons. Any
amendment, modification or repeal of this Section 7.7 or any provision hereof
shall be prospective only and shall not in any way affect the limitations on the
Partnership's liability to any Indemnitee under this Section 7.7 as in effect
immediately prior to such amendment, modification or repeal with respect to
claims arising from or relating to matters occurring, in whole or in part, prior
to such amendment, modification or repeal, regardless of when such claims may
arise or be asserted.
I. If and to the extent any reimbursements to the General Partner
pursuant to this Section 7.7 constitute gross income of the General Partner (as
opposed to the repayment of advances made by the General Partner on behalf of
the Partnership) such amounts shall constitute guaranteed payments within the
meaning of Section 707(c) of the Code, shall be
38
treated consistently therewith by the Partnership and all Partners, and shall
not be treated as distributions for purposes of computing the Partners' Capital
Accounts.
J. Any indemnification hereunder is subject to, and limited by, the
provisions of Section 10-107 of the Act.
Section 7.8 LIABILITY OF THE GENERAL PARTNER
A. Notwithstanding anything to the contrary set forth in this
Agreement, the General Partner shall not be liable or accountable in damages or
otherwise to the Partnership, any Partners or any Assignees for losses
sustained, liabilities incurred or benefits not derived as a result of errors in
judgment or mistakes of fact or law or any act or omission if the General
Partner acted in good faith.
B. The Limited Partners expressly acknowledge that the General
Partner is acting for the benefit of the Partnership, the Limited Partners and
the General Partner's stockholders collectively, that the General Partner is
under no obligation to give priority to the separate interests of the Limited
Partners or the General Partner's stockholders (including, without limitation,
the tax consequences to Limited Partners or Assignees or to stockholders) in
deciding whether to cause the Partnership to take (or decline to take) any
actions and that the General Partner shall not be liable to the Partnership or
to any Partner for monetary damages for losses sustained, liabilities incurred,
or benefits not derived by Limited Partners in connection with such decisions,
PROVIDED THAT the General Partner has acted in good faith.
C. Subject to its obligations and duties as General Partner set
forth in Section 7.1.A hereof, the General Partner may exercise any of the
powers granted to it by this Agreement and perform any of the duties imposed
upon it hereunder either directly or by or through its agents. The General
Partner shall not be responsible for any misconduct or negligence on the part of
any such agent appointed by it in good faith.
D. Any amendment, modification or repeal of this Section 7.8 or any
provision hereof shall be prospective only and shall not in any way affect the
limitations on the General Partner's liability to the Partnership and the
Limited Partners under this Section 7.8 as in effect immediately prior to such
amendment, modification or repeal with respect to claims arising from or
relating to matters occurring, in whole or in part, prior to such amendment,
modification or repeal, regardless of when such claims may arise or be asserted.
Section 7.9 OTHER MATTERS CONCERNING THE GENERAL PARTNER
A. The General Partner may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement, instrument,
opinion, report, notice, request, consent, order, bond, debenture, or other
paper or document believed by it to be genuine and to have been signed or
presented by the proper party or parties.
B. The General Partner may consult with legal counsel, accountants,
appraisers, management consultants, investment bankers and other consultants and
advisers
39
selected by it, and any act taken or omitted to be taken in reliance upon the
opinion of such Persons as to matters which such General Partner reasonably
believes to be within such Person's professional or expert competence shall be
conclusively presumed to have been done or omitted in good faith and in
accordance with such opinion.
C. The General Partner shall have the right, in respect of any of
its powers or obligations hereunder, to act through any of its duly authorized
officers and a duly appointed attorney or attorneys-in-fact. Each such attorney
shall, to the extent provided by the General Partner in the power of attorney,
have full power and authority to do and perform all and every act and duty which
is permitted or required to be done by the General Partner hereunder.
D. Notwithstanding any other provisions of this Agreement or any
non-mandatory provision of the Act, any action of the General Partner on behalf
of the Partnership or any decision of the General Partner to refrain from acting
on behalf of the Partnership, undertaken in the good faith belief that such
action or omission is necessary or advisable in order (i) to protect the ability
of the General Partner to continue to qualify as a REIT or (ii) to avoid the
General Partner incurring any taxes under Section 857 or Section 4981 of the
Code, is expressly authorized under this Agreement and is deemed approved by all
of the Limited Partners.
Section 7.10 TITLE TO PARTNERSHIP ASSETS
Title to Partnership assets, whether real, personal or mixed and
whether tangible or intangible, shall be deemed to be owned by the Partnership
as an entity, and no Partners, individually or collectively, shall have any
ownership interest in such Partnership assets or any portion thereof. Title to
any or all of the Partnership assets may be held in the name of the Partnership,
the General Partner or one or more nominees, as the General Partner may
determine, including Affiliates of the General Partner. The General Partner
hereby declares and warrants that any Partnership assets for which legal title
is held in the name of the General Partner or any nominee or Affiliate of the
General Partner shall be held by the General Partner for the use and benefit of
the Partnership in accordance with the provisions of this Agreement; PROVIDED,
HOWEVER, that the General Partner shall use its best efforts to cause beneficial
and record title to such assets to be vested in the Partnership as soon as
reasonably practicable. All Partnership assets shall be recorded as the
property of the Partnership in its books and records, irrespective of the name
in which legal title to such Partnership assets is held.
Section 7.11 RELIANCE BY THIRD PARTIES
Notwithstanding anything to the contrary in this Agreement, any Person
dealing with the Partnership shall be entitled to assume that the General
Partner has full power and authority to encumber, sell or otherwise use in any
manner any and all assets of the Partnership and to enter into any contracts on
behalf of the Partnership, and such Person shall be entitled to deal with the
General Partner as if it were the Partnership's sole party in interest, both
legally and beneficially. Each Limited Partner hereby waives any and all
defenses or other remedies which may be available against such Person to
contest, negate or disaffirm any action of the General Partner in connection
with any such dealing. In no event shall any Person dealing with
40
the General Partner or its representatives be obligated to ascertain that the
terms of this Agreement have been complied with or to inquire into the necessity
or expedience of any act or action of the General Partner or its
representatives. Each and every certificate, document or other instrument
executed on behalf of the Partnership by the General Partner or its
representatives shall be conclusive evidence in favor of any and every Person
relying thereon or claiming thereunder that (i) at the time of the execution and
delivery of such certificate, document or instrument, this Agreement was in full
force and effect, (ii) the Person executing and delivering such certificate,
document or instrument was duly authorized and empowered to do so for and on
behalf of the Partnership and (iii) such certificate, document or instrument was
duly executed and delivered in accordance with the terms and provisions of this
Agreement and is binding upon the Partnership.
ARTICLE 8
RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS
Section 8.1 LIMITATION OF LIABILITY
The Limited Partners shall have no liability under this Agreement
except as expressly provided in this Agreement or under the Act.
Section 8.2 MANAGEMENT OF BUSINESS
No Limited Partner or Assignee (other than the General Partner, any of
its Affiliates or any officer, director, employee, partner, agent or trustee of
the General Partner, the Partnership or any of their Affiliates, in their
capacity as such) shall take part in the operations, management or control
(within the meaning of the Act) of the Partnership's business transact any
business in the Partnership's name or have the power to sign documents for or
otherwise bind the Partnership. The transaction of any such business by the
General Partner, any of its Affiliates or any officer, director, employee,
partner, agent or trustee of the General Partner, the Partnership or any of
their Affiliates, in their capacity as such, shall not affect, impair or
eliminate the limitations on the liability of the Limited Partners or Assignees
under this Agreement.
Section 8.3 OUTSIDE ACTIVITIES OF LIMITED PARTNERS
Subject to any agreements entered into by a Limited Partner or its
Affiliates with the General Partner, Partnership or a Subsidiary, any Limited
Partner and any officer, director, employee, agent, trustee, Affiliate or
stockholder of any Limited Partner shall be entitled to and may have business
interests and engage in business activities in addition to those relating to the
Partnership, including business interests and activities in direct competition
with the Partnership or that are enhanced by the activities of the Partnership.
Neither the Partnership nor any Partners shall have any rights by virtue of this
Agreement in any business ventures of any Limited Partner or Assignee. Subject
to such agreements, none of the Limited Partners nor any other Person shall have
any rights by virtue of this Agreement or the partnership relationship
established hereby in any business ventures of any other Person, other than the
Limited Partners
41
benefitting from the business conducted by the General Partner, and such Person
shall have no obligation pursuant to this Agreement to offer any interest in any
such business ventures to the Partnership, any Limited Partner or any such other
Person, even if such opportunity is of a character which, if presented to the
Partnership, any Limited Partner or such other Person, could be taken by such
Person.
Section 8.4 RETURN OF CAPITAL
Except pursuant to the rights of Redemption set forth in Section 8.6,
no Limited Partner shall be entitled to the withdrawal or return of his or her
Capital Contribution, except to the extent of distributions made pursuant to
this Agreement or upon termination of the Partnership as provided herein. No
Limited Partner or Assignee shall have priority over any other Limited Partner
or Assignee either as to the return of Capital Contributions, or otherwise
expressly provided in this Agreement, as to profits, losses, distributions or
credits.
Section 8.5 RIGHTS OF LIMITED PARTNERS RELATING TO THE PARTNERSHIP
A. In addition to other rights provided by this Agreement or by the
Act, and except as limited by Section 8.5.C hereof, each Limited Partner shall
have the right, for a purpose reasonably related to such Limited Partner's
interest as a limited partner in the Partnership, upon written demand with a
statement of the purpose of such demand and at the Partnership's expense:
(1) to obtain a copy of the most recent annual and quarterly reports
filed with the Securities and Exchange Commission by the General
Partner pursuant to the Securities Exchange Act, and each
communication sent to the stockholders of the General Partner;
(2) to obtain a copy of the Partnership's federal, state and local
income tax returns for each Partnership Year;
(3) to obtain a current list of the name and last known business,
residence or mailing address of each Partner;
(4) to obtain a copy of this Agreement and the Certificate and all
amendments thereto, together with executed copies of all powers
of attorney pursuant to which this Agreement, the Certificate and
all amendments thereto have been executed; and
(5) to obtain true and full information regarding the amount of cash
and a description and statement of any other property or services
contributed by each Partner and which each Partner has agreed to
contribute in the future, and the date on which each became a
Partner.
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B. The Partnership shall notify each Limited Partner in writing of
any adjustment made in the calculation of the REIT Shares Amount within 10
Business Days of the date such change becomes effective.
C. Notwithstanding any other provision of this Section 8.5, the
General Partner may keep confidential from the Limited Partners, for such period
of time as the General Partner determines in its sole and absolute discretion to
be reasonable, any information that (i) the General Partner believes to be in
the nature of trade secrets or other information the disclosure of which the
General Partner in good faith believes is not in the best interests of the
Partnership or (ii) the Partnership or the General Partner is required by law or
by agreements with unaffiliated third parties to keep confidential.
Section 8.6 REDEMPTION RIGHTS
A. On or after the date one year after the Effective Date, each
Limited Partner shall have the right (subject to the terms and conditions set
forth herein) to require the Partnership to redeem all or a portion of the
Partnership Units held by such Limited Partner (such Partnership Units being
hereafter referred to as "Tendered Units") in exchange for the Cash Amount (a
"Redemption"); provided that the terms of such Partnership Units do not provide
that such Partnership Units are not entitled to a right of Redemption. Unless
otherwise expressly provided in this Agreement or in a separate agreement
entered into between the Partnership and the holders of such Partnership Units,
all Partnership Units shall be entitled to a right of Redemption hereunder. Any
Redemption shall be exercised pursuant to a Notice of Redemption delivered to
the General Partner by the Limited Partner who is exercising the right (the
"Tendering Partner"). The Cash Amount shall be delivered as a certified check
payable to the Tendering Partner within ten (10) days of the Specified
Redemption Date.
B. Notwithstanding Section 8.6.A above, if a Limited Partner has
delivered to the General Partner a Notice of Redemption then the General Partner
may, in its sole and absolute discretion, (subject to the limitations on
ownership and transfer of REIT Shares set forth in the Charter) elect to acquire
some or all of the Tendered Units from the Tendering Partner in exchange for the
REIT Shares Amount (as of the Specified Redemption Date) and, if the General
Partner so elects, the Tendering Partner shall sell the Tendered Units to the
General Partner in exchange for the REIT Shares Amount. In such event, the
Tendering Partner shall have no right to cause the Partnership to redeem such
Tendered Units. The General Partner shall promptly give such Tendering Partner
written notice of its election, and the Tendering Partner may elect to withdraw
its redemption request at any time prior to the acceptance of the cash or REIT
Shares Amount by such Tendering Partner.
C. The REIT Shares Amount, if applicable, shall be delivered as duly
authorized, validly issued, fully paid and nonassessable REIT Shares and, if
applicable, free of any pledge, lien, encumbrance or restriction, other than
those provided in the Charter, the Bylaws of the General Partner, the Securities
Act, relevant state securities or blue sky laws and any applicable registration
rights agreement with respect to such REIT Shares entered into by the Tendering
Partner. Notwithstanding any delay in such delivery (but subject to Section
8.6.D), the Tendering Partner shall be deemed the owner of such REIT Shares for
all purposes,
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including without limitation, rights to vote or consent, and receive dividends,
as of the Specified Redemption Date.
D. Notwithstanding the provisions of Section 8.6.A, 8.6.B, 8.6.C or
any other provision of this Agreement, a Limited Partner (i) shall not be
entitled to effect a Redemption for cash or an exchange for REIT Shares to the
extent the ownership or right to acquire REIT Shares pursuant to such exchange
by such Partner on the Specified Redemption Date would cause such Partner or any
other Person to violate the restrictions on ownership and transfer of REIT
Shares set forth in the Charter and (ii) shall have no rights under this
Agreement to acquire REIT Shares which would otherwise be prohibited under the
Charter. To the extent any attempted Redemption or exchange for REIT Shares
would be in violation of this Section 8.6.D, it shall be null and void AB INITIO
and such Limited Partner shall not acquire any rights or economic interest in
the cash otherwise payable upon such Redemption or the REIT Shares otherwise
issuable upon such exchange.
E. Notwithstanding anything herein to the contrary (but subject to
Section 8.6.D), with respect to any Redemption or exchange for REIT Shares
pursuant to this Section 8.6:
(1) All Partnership Units acquired by the General Partner pursuant
thereto shall automatically, and without further action required,
be converted into and deemed to be General Partner Interests
comprised of the same number and class of Partnership Units.
(2) Without the consent of the General Partner, each Limited Partner
may not effect a Redemption for less than 500 Partnership Units
or, if the Limited Partner holds less than 500 Partnership Units,
all of the Partnership Units held by such Limited Partner.
(3) Without the consent of the General Partner, each Limited Partner
may not effect a Redemption during the period after the
Partnership Record Date with respect to a distribution and before
the record date established by the General Partner for a
distribution to its stockholders of some or all of its portion of
such distribution.
(4) The consummation of any Redemption or exchange for REIT Shares
shall be subject to the expiration or termination of the
applicable waiting period, if any, under the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976, as amended.
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(5) Each Tendering Partner shall continue to own all Partnership
Units subject to any Redemption or exchange for REIT Shares, and
be treated as a Limited Partner with respect to such Partnership
Units for all purposes of this Agreement, until such Partnership
Units are transferred to the General Partner and paid for or
exchanged on the Specified Redemption Date. Until a Specified
Redemption Date, the Tendering Partner shall have no rights as a
stockholder of the General Partner with respect to such Tendering
Partner's Partnership Units.
F. In the event that the Partnership issues additional Partnership
Interests to any Additional Limited Partner pursuant to Section 4.3.D hereof,
the General Partner shall make such revisions to this Section 8.6 as it
determines are necessary to reflect the issuance of such additional Partnership
Interests.
ARTICLE 9
BOOKS, RECORDS, ACCOUNTING AND REPORTS
Section 9.1 RECORDS AND ACCOUNTING
The General Partner shall keep or cause to be kept at the principal
office of the Partnership appropriate books and records with respect to the
Partnership's business, including without limitation, all books and records
necessary to provide to the Limited Partners any information, lists and copies
of documents required to be provided pursuant to Section 9.3 hereof. Any
records maintained by or on behalf of the Partnership in the regular course of
its business may be kept on, or be in the form of, punch cards, magnetic tape,
photographs, micrographics or any other information storage device, PROVIDED
THAT the records so maintained are convertible into clearly legible written form
within a reasonable period of time. The books of the Partnership shall be
maintained, for financial and tax reporting purposes, on an accrual basis in
accordance with generally accepted accounting principles.
Section 9.2 FISCAL YEAR
The fiscal year of the Partnership shall be the calendar year.
Section 9.3 REPORTS
A. As soon as practicable, but in no event later than 105 days after
the close of each Partnership Year, or such earlier date as they are filed with
the Securities and Exchange Commission, the General Partner shall cause to be
mailed to each Limited Partner as of the close of the Partnership Year, an
annual report containing financial statements of the Partnership, or of the
General Partner if such statements are prepared solely on a consolidated basis
with the General Partner, for such Partnership Year, presented in accordance
with generally accepted accounting principles, such statements to be audited by
a nationally recognized firm of independent public accountants selected by the
General Partner.
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B. As soon as practicable, but in no event later than 45 days after
the close of each calendar quarter (except the last calendar quarter of each
year), or such earlier date as they are filed with the Securities and Exchange
Commission, the General Partner shall cause to be mailed to each Limited Partner
as of the last day of the calendar quarter, a report containing unaudited
financial statements of the Partnership, or of the General Partner, if such
statements are prepared solely on a consolidated basis with the applicable law
or regulation, or as the General Partner determines to be appropriate.
ARTICLE 10
TAX MATTERS
Section 10.1 PREPARATION OF TAX RETURNS
The General Partner shall arrange for the preparation and timely
filing of all returns of Partnership income, gains, deductions, losses and other
items required of the Partnership for federal and state income tax purposes and
shall use all reasonable efforts to furnish, within 90 days of the close of each
taxable year, the tax information reasonably required by Limited Partners for
federal and state income tax reporting purposes.
Section 10.2 TAX ELECTIONS
Except as otherwise provided herein, the General Partner shall, in its
sole and absolute discretion, determine whether to make any available election
pursuant to the Code, including the election under Section 754 of the Code. The
General Partner shall have the right to seek to revoke any such election
(including without limitation, any election under Section 754 of the Code) upon
the General Partner's determination in its sole and absolute discretion that
such revocation is the best interests of the Partners.
Section 10.3 TAX MATTERS PARTNER
A. The General Partner shall be the "tax matters partner" of the
Partnership for federal income tax purposes. Pursuant to Section 6223(c) of the
Code, upon receipt of notice from the IRS of the beginning of an administrative
proceeding with respect to the Partnership, the tax matters partner shall
furnish the IRS with the name, address and profit interest of each of the
Limited Partners and Assignees; PROVIDED, HOWEVER, that such information is
provided to the Partnership by the Limited Partners and Assignees.
B. The tax matters partner is authorized, but not required:
(1) to enter into any settlement with the IRS with respect to any
administrative or judicial proceedings for the adjustment of
Partnership items required to be taken into account by a Partner
for income tax purposes (such administrative proceedings being
referred to as a "tax audit" and such judicial proceedings being
referred to as "judicial review"), and in the settlement
agreement the tax matters partner may expressly state that such
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agreement shall bind all Partners, except that such settlement
agreement shall not bind any Partner (i) who (within the time
prescribed pursuant to the Code and Regulations) files a
statement with the IRS providing that the tax matters partner
shall not have the authority to enter into a settlement agreement
on behalf of such Partner or (ii) who is a "notice partner" (as
defined in Section 6231 of the Code) or a member of a "notice
group" (as defined in Section 6223(b)(2) of the Code);
(2) in the event that a notice of a final administrative adjustment
at the Partnership level of any item required to be taken into
account by a Partner for tax purposes (a "final adjustment") is
mailed to the tax matters partner, to seek judicial review of
such final adjustment, including the filing of a petition for
readjustment with the Tax Court or the United States Claims
Court, or the filing of a complaint for refund with the District
Court of the United States for the district in which the
Partnership's principal place of business is located;
(3) to intervene in any action brought by any other Partner for
judicial review of a final adjustment;
(4) to file a request for an administrative adjustment with the IRS
at any time and, if any part of such request is not allowed by
the IRS, to file an appropriate pleading (petition or complaint)
for judicial review with respect to such request;
(5) to enter into an agreement with the IRS to extend the period for
assessing any tax which is attributable to any item required to
be taken into account by a Partner for tax purposes, or an item
affected by such item; and
(6) to take any other action on behalf of the Partners of the
Partnership in connection with any tax audit or judicial review
proceeding to the extent permitted by applicable law or
regulations.
The taking of any action and the incurring of any expense by the tax
matters partner in connection with any such proceeding, except to the extent
required by law, is a matter in the sole and absolute discretion of the tax
matters partner and the provisions relating to indemnification of the General
Partner set forth in Section 7.7 of this Agreement shall be fully applicable to
the tax matters partner in its capacity as such.
C. The tax matters partner shall receive no compensation for its
services. All third party costs and expenses incurred by the tax matters
partner in performing his duties as such (including legal and accounting fees)
shall be borne by the Partnership. Nothing herein shall be construed to
restrict the Partnership from engaging an accounting firm to assist the tax
matters partner in discharging his duties hereunder, so long as the compensation
paid by the Partnership for such services is reasonable.
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Section 10.4 ORGANIZATIONAL EXPENSES
The Partnership shall elect to deduct expenses, if any, incurred by it
in organizing the Partnership ratably over a 60-month period as provided in
Section 709 of the Code.
Section 10.5 WITHHOLDING
Each Limited Partner hereby authorizes the Partnership to withhold
from or pay on behalf of or with respect to such Limited Partner any amount of
federal, state, local, or foreign taxes that the General Partner determines that
the Partnership is required to withhold or pay with respect to any amount
distributable or allocable to such Limited Partner pursuant to this Agreement,
including, without limitation, any taxes required to be withheld or paid by the
Partnership pursuant to Sections 1441, 1442, 1445 or 1446 of the Code. Any
amount paid on behalf of or with respect to a Limited Partner shall constitute a
loan by the Partnership to such Limited Partner, which loan shall be repaid by
such Limited Partner within 15 days after notice from the General Partner that
such payment must be made unless (i) the Partnership withholds such payment from
a distribution which would otherwise be made to the Limited Partner or (ii) the
General Partner determines, in its sole and absolute discretion, that such
payment may be satisfied out of the available funds of the Partnership which
would, but for such payment, be distributed to the Limited Partner. Any amounts
withheld pursuant to the foregoing clauses (i) or (ii) shall be treated as
having been distributed to such Limited Partner. Each Limited Partner hereby
unconditionally and irrevocably grants to the Partnership a security interest in
such Limited Partner's Partnership Interest to secure such Limited Partner's
obligation to pay to the Partnership any amounts required to be paid pursuant to
this Section 10.5. In the event that a Limited Partner fails to pay any amounts
owed to the Partnership pursuant to this Section 10.5 when due, the General
Partner may, in its sole and absolute discretion, elect to make the payment to
the Partnership on behalf of such defaulting Limited Partner, and in such event
shall be deemed to have loaned such amount to such defaulting Limited Partner
and shall succeed to all rights and remedies of the Partnership as against such
defaulting Limited Partner (including, without limitation, the right to receive
distributions). Any amounts payable by a Limited Partner hereunder shall bear
interest at the base rate on corporate loans at large United States money center
commercial banks, as published from time to time in the WALL STREET JOURNAL,
plus two percentage points (but not higher than the maximum lawful rate) from
the date such amount is due (I.E., 15 days after demand) until such amount is
paid in full. Each Limited Partner shall take such actions as the Partnership
or the General Partner shall request in order to perfect or enforce the security
interest created hereunder.
ARTICLE 11
TRANSFERS AND WITHDRAWALS
Section 11.1 TRANSFER
A. The term "transfer," when used in this Article 11 with respect to
a Partnership Interest, shall be deemed to refer to a transaction by which the
General Partner purports to assign its General Partner Interest to another
Person or by which a Limited Partner
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purports to assign its Limited Partnership Interest to another Person, and
includes a sale, assignment, gift (outright or in trust), pledge, encumbrance,
hypothecation, mortgage, exchange or any other disposition by law or otherwise.
The term "transfer" when used in this Article 11 does not include any Redemption
or exchange for REIT Shares pursuant to Section 8.6. No part of the interest of
a Limited Partner shall be subject to the claims of any creditor, any spouse for
alimony or support, or to legal process, and may not be voluntarily or
involuntarily alienated or encumbered except as may be specifically provided for
in this Agreement.
B. No Partnership Interest shall be transferred, in whole or in
part, except in accordance with the terms and conditions set forth in this
Article 11. Any transfer or purported transfer of a Partnership Interest not
made in accordance with this Article 11 shall be null and void.
Section 11.2 TRANSFER OF GENERAL PARTNER'S PARTNERSHIP INTEREST
A. Except in connection with a transaction described in Section
11.2.B or Section 11.2.C, the General Partner shall not withdraw from the
Partnership and shall not transfer all or any portion of its interest in the
Partnership (whether by sale, statutory merger or consolidation, liquidation or
otherwise) without the consent of all of the Limited Partners, which may be
given or withheld by each Limited Partner in its sole and absolute discretion,
and only upon the admission of a successor General Partner pursuant to Section
12.1. Upon any transfer of a Partnership Interest in accordance with the
provisions of this Section 11.2, the transferee shall become a Substitute
General Partner for all purposes herein, and shall be vested with the powers and
rights of the transferor General Partner, and shall be liable for all
obligations and responsible for all duties of the General Partner, once such
transferee has executed such instruments as may be necessary to effectuate such
admission and to confirm the agreement of such transferee to be bound by all the
terms and provisions of this Agreement with respect to the Partnership Interest
so acquired. It is a condition to any transfer otherwise permitted hereunder
that the transferee assumes, by operation of law or express agreement, all of
the obligations of the transferor General Partner under this Agreement with
respect to such transferred Partnership interest, and no such transfer (other
than pursuant to a statutory merger or consolidation wherein all obligations and
liabilities of the transferor General Partner are assumed by a successor
corporation by operation of law) shall relieve the transferor General Partner of
its obligations under this Agreement without the Consent of the Limited
Partners, in their reasonable discretion. In the event the General Partner
withdraws from the Partnership, in violation of this Agreement or otherwise, or
otherwise dissolves or terminates, or upon the Incapacity of the General
Partner, all of the remaining Partners may elect to continue the Partnership
business by selecting a Substitute General Partner in accordance with the Act.
B. Except as otherwise provided in Section 11.2.C, the General
Partner shall not engage in any merger, consolidation or other combination with
or into another person, sale of all or substantially all of its assets or any
reclassification, recapitalization or change of its outstanding equity interests
("Termination Transaction"), unless the Termination Transaction has been
approved by a Consent of the Partners and in connection with which all Limited
Partners either will receive, or will have the right to elect to receive, for
each Partnership Unit an amount of cash, securities, or other property equal to
the product of the REIT Shares Amount and the
49
greatest amount of cash, securities or other property paid to a holder of one
REIT Share in consideration of one REIT Share at any time during the period from
and after the date on which the Termination Transaction is consummated; PROVIDED
THAT, if, in connection with the Termination Transaction, a purchase, tender or
exchange offer shall have been made to and accepted by the holders of more than
fifty percent (50%) of the outstanding REIT Shares, each holder of Partnership
Units shall receive, or shall have the right to elect to receive, the greatest
amount of cash, securities, or other property which such holder would have
received had it exercised its right to Redemption (as set forth in Section 8.6)
and received REIT Shares
in exchange for its Partnership Units immediately prior to the expiration of
such purchase, tender or exchange offer and had thereupon accepted such
purchase, tender or exchange offer; and, PROVIDED FURTHER THAT, unless a Consent
of the Limited Partners has been obtained, no more than forty-nine percent (49%)
of the equity securities of the acquired Person in such Termination Transaction
shall be owned, after consummation of such Termination Transaction, by the
General Partner or Persons who are Affiliates of the Partnership or the General
Partner immediately prior to the date on which the Termination Transaction is
consummated.
C. Notwithstanding Section 11.2.B, the General Partner may merge, or
otherwise combine its assets, with another entity if, immediately after such
merger or other combination, substantially all of the assets of the surviving
entity, other than Partnership Units held by such General Partner, are
contributed to the Partnership as a Capital Contribution in exchange for
Partnership Units with a fair market value, as reasonably determined by the
General Partner, equal to the Agreed Value of the assets so contributed.
D. In connection with any transaction permitted by Section 11.2.B or
Section 11.2.C hereof, the General Partner shall use its commercially reasonable
efforts to structure such Termination Transaction to avoid causing the Limited
Partners to recognize gain for federal income tax purposes by virtue of the
occurrence of or their participation in such Termination Transaction. The sole
remedy for a breach by the General Partner of this section 11.2.D. shall be a
claim for damages.
Section 11.3 LIMITED PARTNERS' RIGHTS TO TRANSFER
A. Prior to the first anniversary of the closing of the initial
public offering of REIT Shares, no Limited Partner shall transfer all or any
portion of its Partnership Interest to any transferee without the consent of the
General Partner, which consent may be withheld in its sole and absolute
discretion; PROVIDED, HOWEVER, that any Limited Partner may, at any time
(whether prior to or after such first anniversary), without the consent of the
General Partner, (i) transfer all or any portion of its Partnership Interest to
the General Partner, (ii) transfer all or any portion of its Partnership
Interest to an Affiliate, another original Limited Partner or to an Immediate
Family member, subject to the provisions of Section 11.6, (iii) transfer all or
any portion of its Partnership Interest to a trust for the benefit of a
charitable beneficiary or to a charitable foundation, subject to the provisions
of Section 11.6, and (iv) subject to the provisions of Section 11.6, pledge (a
"Pledge") all or any portion of its Partnership Interest to a lending
institution, which is not an Affiliate of such Limited Partner, as collateral or
security for a bona fide loan or other extension of credit, and transfer such
pledged Partnership Interest to such lending institution in connection with the
exercise of remedies under such loan or extension or
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credit, and the transfer of such pledged Partnership Interest by the lender to
any transferee. After such first anniversary, each Limited Partner or Assignee
(resulting from a transfer made pursuant to clauses (i)-(iv) of the proviso of
the preceding sentence) shall have the right to transfer all or any portion of
its Partnership Interest, subject to the provisions of Section 11.6 and the
satisfaction of each of the following conditions (in addition to the right of
each such Limited Partner or Assignee to continue to make any such transfer
permitted by clauses (i)-(iv) of such proviso without satisfying either of the
following conditions):
(a) GENERAL PARTNER RIGHT OF FIRST REFUSAL. The transferring Partner
shall give written notice of the proposed transfer to the General
Partner, which notice shall state (i) the identity of the
proposed transferee, and (ii) the amount and type of
consideration proposed to be received for the transferred
Partnership Units. The General Partner shall have ten (10) days
upon which to give the transferring Partner notice of its
election to acquire the Partnership Units on the proposed terms.
If it so elects, it shall purchase the Partnership Units on such
terms within ten (10) days after giving notice of such election.
If it does not so elect, the transferring Partner may transfer
such Partnership Units to a third party, on economic terms no
more favorable to the transferee than the proposed terms, subject
to the other conditions of this Section 11.3.
(b) QUALIFIED TRANSFEREE. Any transfer of a Partnership Interest
shall be made only to Qualified Transferees.
It is a condition to any transfer otherwise permitted hereunder that
the transferee assumes by operation of law or express agreement all of the
obligations of the transferor Limited Partner under this Agreement with respect
to such transferred Partnership Interest and no such transfer (other than
pursuant to a statutory merger or consolidation wherein all obligations and
liabilities of the transferor Partner are assumed by a successor corporation by
operation of law) shall relieve the transferor Partner of its obligations under
this Agreement without the approval of the General Partner, in its reasonable
discretion. Notwithstanding the foregoing, any transferee of any transferred
Partnership Interest shall be subject to any and all ownership limitations
contained in the Charter and the representations in Section 3.4.D. Any
transferee, whether or not admitted as a Substituted Limited Partner, shall take
subject to the obligations of the transferor hereunder. Unless admitted as a
Substitute Limited Partner, no transferee, whether by a voluntary transfer, by
operation of law or otherwise, shall have rights hereunder, other than the
rights of an Assignee as provided in Section 11.5.
B. If a Limited Partner is subject to Incapacity, the executor,
administrator, trustee, committee, guardian, conservator, or receiver of such
Limited Partner's estate shall have all the rights of a Limited Partner, but not
more rights than those enjoyed by other Limited Partners, for the purpose of
settling or managing the estate, and such power as the Incapacitated Limited
Partner possessed to transfer all or any part of his or its interest in the
Partnership. The Incapacity of a Limited Partner, in and of itself, shall not
dissolve or terminate the Partnership.
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C. The General Partner may prohibit any transfer otherwise permitted
under Section 11.3 by a Limited Partner of his or her Partnership Units if, in
the opinion of legal counsel to the Partnership, such transfer would require the
filing of a registration statement under the Securities Act by the Partnership
or would otherwise violate any federal or state securities laws or regulations
applicable to the Partnership or the Partnership Unit.
D. No transfer by a Limited Partner of his or her Partnership Units
(including any Redemption or exchange for REIT Shares pursuant to Section 8.6)
may be made to any person if (i) in the opinion of legal counsel for the
Partnership, it would result in the Partnership being treated as an association
taxable as a corporation, or (ii) such transfer is effectuated through an
"established securities market" or a "secondary market (or the substantial
equivalent thereof)" within the meaning of Section 7704 of the Code.
E. No transfer of any Partnership Units may be made to a lender to
the Partnership or any Person who is related (within the meaning of Section
1.752-4(b) of the Regulations) to any lender to the Partnership whose loan
constitutes a Nonrecourse Liability, without the consent of the General Partner,
in its sole and absolute discretion; PROVIDED THAT, as a condition to such
consent, the lender will be required to enter into an arrangement with the
Partnership and the General Partner to redeem or exchange for the REIT Shares
Amount any Partnership Units in which a security interest is held simultaneously
with the time at which such lender would be deemed to be a partner in the
Partnership for purposes of allocating liabilities to such lender under Section
752 of the Code.
Section 11.4 SUBSTITUTED LIMITED PARTNERS
A. No Limited Partner shall have the right to substitute a
transferee as a Limited Partner in his or her place (including any transferee
permitted by Section 11.3). The General Partner shall, however, have the right
to consent to the admission of a transferee of the interest of a Limited Partner
pursuant to this Section 11.4 as a Substituted Limited Partner, which consent
may be given or withheld by the General Partner in its sole and absolute
discretion. The General Partner's failure or refusal to permit a transferee of
any such interests to become a Substituted Limited Partner shall not give rise
to any cause of action against the Partnership or any Partner.
B. A transferee who has been admitted as a Substituted Limited
Partner in accordance with this Article 11 shall have all the rights and powers
and be subject to all the restrictions and liabilities of a Limited Partner
under this Agreement. The admission of any transferee as a Substituted Limited
Partner shall be subject to the transferee executing and delivering to the
Partnership an acceptance of all of the terms and conditions of this Agreement
(including without limitation, the provisions of Section 2.4 and such other
documents or instruments as may be required to effect the admission).
C. Upon the admission of a Substituted Limited Partner, the General
Partner shall amend Exhibit A to reflect the name, address, number of
Partnership Units, and Percentage Interest of such Substituted Limited Partner
and to eliminate or adjust, if necessary, the name, address and interest of the
predecessor of such Substituted Limited Partner.
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Section 11.5 ASSIGNEES
If the General Partner, in its sole and absolute discretion, does not
consent to the admission of any permitted transferee under Section 11.3 as a
Substituted Limited Partner, as described in Section 11.4, such transferee shall
be considered an Assignee for purposes of this Agreement. An Assignee shall be
entitled to all the rights of an assignee of a limited partnership interest
under the Act, including the right to receive distributions from the Partnership
and the share of Net Income, Net Losses, gain and loss attributable to the
Partnership Units assigned to such transferee, the rights to transfer the
Partnership Units provided in this Article 11, and the right of Redemption
provided in Section 8.6, but shall not be deemed to be a holder of Partnership
Units for any other purpose under this Agreement, and shall not be entitled to
effect a Consent with respect to such Partnership Units on any matter presented
to the Limited Partners for approval (such Consent remaining with the transferor
Limited Partner). In the event any such transferee desires to make a further
assignment of any such Partnership Units, such transferee shall be subject to
all the provisions of this Article 11 to the same extent and in the same manner
as any Limited Partner desiring to make an assignment of Partnership Units.
Section 11.6 GENERAL PROVISIONS
A. No Limited Partner may withdraw from the Partnership other than
as a result of (i) a permitted transfer of all of such Limited Partner's
Partnership Units in accordance with this Article 11 and the transferee(s) of
such Units being admitted to the Partnership as a Substituted Limited Partner or
(ii) pursuant to the exercise of its right of Redemption of all of such Limited
Partner's Partnership Units under Section 8.6.
B. Any Limited Partner who shall transfer all of such Limited
Partner's Partnership Units in a transfer permitted pursuant to this Article 11
where such transferee was admitted as a Substituted Limited Partner or pursuant
to the exercise of its rights of Redemption of all of such Limited Partner's
Partnership Units under Section 8.6 shall cease to be a Limited Partner.
C. Transfers pursuant to this Article 11 may only be made on the
first day of a fiscal quarter of the Partnership, unless the General Partner
otherwise agrees.
D. If any Partnership Interest is transferred, assigned or redeemed
during any quarterly segment of the Partnership's fiscal year in compliance with
the provisions of this Article 11 or transferred pursuant to Section 8.6, on any
day other than the first day of a Partnership Year, then Net Income, Net Losses,
each item thereof and all other items attributable to such interest for such
fiscal year shall be divided and allocated between the transferor Partner and
the transferee Partner by taking into account their varying interests during the
fiscal year in accordance with Section 706(d) of the Code, using the interim
closing of the books method. Except as otherwise required by Section 706(d) of
the Code, solely for purposes of making such allocations, each of such items for
the calendar month in which the transfer, assignment or redemption occurs shall
be allocated to the Person who is a Partner as of midnight on the last day of
said month and none of such items for the calendar month in which a redemption
occurs will be allocated to the redeeming Partner. All distributions of
Available
53
Cash with respect to which the Partnership Record Date is before the date of
such transfer, assignment or redemption shall be made to the transferor Partner,
and all distributions of Available Cash thereafter, in the case of a transfer or
assignment other than a redemption, shall be made to the transferee Partner.
E. In addition to any other restrictions on transfer herein
contained, including without limitation the provisions of this Article 11 and
Section 2.6, in no event may any transfer or assignment of a Partnership
Interest by any Partner (including by way of a Redemption) be made (i) to any
person or entity who lacks the legal right, power or capacity to own a
Partnership Interest; (ii) in violation of applicable law; (iii) of any
component portion of a Partnership Interest, such as the Capital Account, or
rights to distributions, separate and apart from all other components of a
Partnership Interest; (iv) if in the opinion of legal counsel to the Partnership
such transfer would cause a termination of the Partnership for federal or state
income tax purposes (except as a result of the Redemption or exchange for REIT
Shares of all Partnership Units held by all Limited Partners or pursuant to a
transaction expressly permitted under Section 11.2); (v) if in the opinion of
counsel to the Partnership such transfer would cause the Partnership to cease to
be classified as a partnership for federal income tax purposes (except as a
result of the Redemption or exchange for REIT Shares of all Partnership Units
held by all Limited Partners); (vi) if such transfer would cause the Partnership
to become, with respect to any employee benefit plan subject to Title I of
ERISA, a "party-in-interest" (as defined in Section 3(14) of ERISA) or a
"disqualified person" (as defined in Section 4975(c) of the Code); (vii) if such
transfer would, in the opinion of counsel to the Partnership, cause any portion
of the assets of the Partnership to constitute assets of any employee benefit
plan pursuant to Department of Labor Regulations Section 2510.2-101; (viii) if
such transfer requires the registration of such Partnership Interest pursuant to
any applicable federal or state securities laws; (ix) if such transfer is
effectuated through an "established securities market" or a "secondary market"
(or the substantial equivalent thereof) within the meaning of Section 7704 of
the Code or such transfer causes the Partnership to become a "Publicly Traded
Partnership," as such term is defined in Sections 469(k)(2) or 7704(b) of the
Code; (x) if such transfer subjects the Partnership to be regulated under the
Investment Company Act of 1940, the Investment Advisors Act of 1940 or the
Employee Retirement Income Security Act of 1974, each as amended; (xi) if the
transferee or assignee of such Partnership Interest is unable to make the
representations set forth in Section 3.4.D or such transfer could otherwise
adversely affect the ability of the General Partner to remain qualified as a
REIT; or (xii) if in the opinion of legal counsel for the Partnership such
transfer would adversely affect the ability of the General Partner to continue
to qualify as a REIT or subject the General Partner to any additional taxes
under Section 857 or Section 4981 of the Code.
F. The General Partner shall monitor the transfers of interests in
the Partnership to determine (i) if such interests are being traded on an
"established securities market" or a "secondary market (or the substantial
equivalent thereof)" within the meaning of Section 7704 of the Code, and (ii)
whether additional transfers of interests would result in the Partnership being
unable to qualify for at least one of the "safe harbors" set forth in
Regulations Section 1.7704-1 (or such other guidance subsequently published by
the IRS setting forth safe harbors under which interests will not be treated as
"readily tradable on a secondary market (or the substantial equivalent thereof)"
within the meaning of Section 7704 of the Code) (the "Safe
54
Harbors"). The General Partner shall take all steps reasonably necessary or
appropriate to prevent any trading of interests or any recognition by the
Partnership of transfers made on such markets and, except as otherwise provided
herein, to insure that at least one of the Safe Harbors is met.
ARTICLE 12
ADMISSION OF PARTNERS
Section 12.1 ADMISSION OF SUCCESSOR GENERAL PARTNER
A successor to all of the General Partner's General Partner Interest
pursuant to Section 11.2 hereof who is proposed to be admitted as a successor
General Partner shall be admitted to the Partnership as the General Partner,
effective upon such transfer. Any such transferee shall carry on the business
of the Partnership without dissolution. In each case, the admission shall be
subject to the successor General Partner executing and delivering to the
Partnership an acceptance of all of the terms and conditions of this Agreement
and such other documents or instruments as may be required to effect the
admission. In the case of such admission on any day other than the first day of
a Partnership Year, all items attributable to the General Partner Interest for
such Partnership Year shall be allocated between the transferring General
Partner and such successor as provided in Article 11 hereof.
Section 12.2 ADMISSION OF ADDITIONAL LIMITED PARTNERS
A. After the admission to the Partnership of the initial Limited
Partners on the date hereof, a Person who makes a Capital Contribution to the
Partnership in accordance with this Agreement shall be admitted to the
Partnership as an Additional Limited Partner only upon furnishing to the General
Partner (i) evidence of acceptance in form satisfactory to the General Partner
of all of the terms and conditions of this Agreement, including, without
limitation, the power of attorney granted in Section 2.4 hereof and (ii) such
other documents or instruments as may be required in the discretion of the
General Partner in order to effect such Person's admission as an Additional
Limited Partner.
B. Notwithstanding anything to the contrary in this Section 12.2, no
Person shall be admitted as an Additional Limited Partner without the consent of
the General Partner, which consent may be given or withheld in the General
Partner's sole and absolute discretion. The admission of any Person as an
Additional Limited Partner shall become effective on the date upon which the
name of such Person is recorded on the books and records of the Partnership,
following the receipt of the Capital Contribution in respect of such Limited
Partner and the consent of the General Partner to such admission. If any
Additional Limited Partner is admitted to the Partnership on any day other than
the first day of a Partnership Year, then Net Income, Net Losses, each item
thereof and all other items allocable among Partners and Assignees for such
Partnership Year shall be allocated among such Limited Partner and all other
Partners and Assignees by taking into account their varying interests during the
Partnership Year in accordance with Section 706(d) of the Code, using the
interim closing books method. Solely for purposes of making such allocations,
each of such items for the calendar month in which an
55
admission of an Additional Limited Partner occurs shall be allocated among all
the Partners and Assignees including such Additional Limited Partner. All
distributions of Available Cash with respect to which the Partnership Record
Date is before the date of such admission shall be made solely to Partners and
Assignees other than the Additional Limited Partner (other than in its capacity
as an Assignee) and, except as otherwise agreed to by the Additional Limited
Partners and the General Partner, all distributions of Available Cash thereafter
shall be made to all Partners and Assignees including such Additional Limited
Partner.
Section 12.3 AMENDMENT OF AGREEMENT AND CERTIFICATE OF LIMITED
PARTNERSHIP
For the admission to the Partnership of any Partner, the General
Partner shall take all steps necessary and appropriate under the Act to amend
the records of the Partnership and, if necessary, to prepare as soon as
practical an amendment of this Agreement (including an amendment of Exhibit A)
and, if required by law, shall prepare and file an amendment to the Certificate
and may for this purpose exercise the power of attorney granted pursuant to
Section 2.4 hereof.
ARTICLE 13
DISSOLUTION AND LIQUIDATION
Section 13.1 DISSOLUTION
The Partnership shall not be dissolved by the admission of Substituted
Limited Partners or Additional Limited Partners or by the admission of a
successor General Partner in accordance with the terms of this Agreement. Upon
the withdrawal of the General Partner, any successor General Partner (selected
as described in Section 13.1.B below) shall continue the business of the
Partnership. The Partnership shall dissolve, and its affairs shall be wound up,
upon the first to occur of any of the following ("Liquidating Events"):
A. the expiration of its term as provided in Section 2.5 hereof;
B. an event of withdrawal of the General Partner, as defined in the
Act, unless, within 90 days after the withdrawal, all of the remaining Partners
agree in writing, in their sole and absolute discretion, to continue the
business of the Partnership and to the appointment, effective as of the date of
withdrawal, of a substitute General Partner;
C. subject to compliance with Section 7.3.E(1) an election to
dissolve the Partnership made by the General Partner, in its sole and absolute
discretion,
D. entry of a decree of judicial dissolution of the Partnership
pursuant to the provisions of the Act;
E. the sale of all or substantially all of the assets and properties
of the Partnership for cash or marketable securities;
56
F. the Incapacity of the General Partner, unless all of the
remaining Partners in their sole and absolute discretion agree in writing to
continue the business of the Partnership and to the appointment, effective as of
a date prior to the date of such Incapacity, of a substitute General Partner; or
G. the Redemption or exchange for REIT Shares of all Partnership
Units (other than those of the General Partner).
Section 13.2 WINDING UP
A. Upon the occurrence of a Liquidating Event, the Partnership shall
continue solely for the purposes of winding up its affairs in an orderly manner,
liquidating its assets, and satisfying the claims of its creditors and Partners.
No Partner shall take any action that is inconsistent with, or not necessary to
or appropriate for, the winding up of the Partnership's business and affairs.
The General Partner (or, in the event there is no remaining General Partner, any
Person elected by a Majority in Interest of the Limited Partners (the
"Liquidator")) shall be responsible for overseeing the winding up and
dissolution of the Partnership and shall take full account of the Partnership's
liabilities and property and the Partnership property shall be liquidated as
promptly as is consistent with obtaining the fair value thereof, and the
proceeds therefrom (which may, to the extent determined by the General Partner,
include shares of stock in the General Partner) shall be applied and distributed
in the following order:
(1) First, to the payment and discharge of all of the Partnership's
debts and liabilities to creditors other than the Partners;
(2) Second, to the payment and discharge of all of the Partnership's
debts and liabilities to the General Partner;
(3) Third, to the payment and discharge of all of the Partnership's
debts and liabilities to the other Partners; and
(4) The balance, if any, to the General Partner and Limited Partners
in accordance with their positive Capital Account balances,
determined after taking into account all Capital Account
adjustments for the Partnership taxable year during which the
liquidation occurs (other than those made as a result of the
liquidating distribution set forth in this Section 13.2.A(4)).
The General Partner shall not receive any additional compensation for any
services performed pursuant to this Article 13 other than reimbursement of its
expenses as provided in Section 7.4.
B. Notwithstanding the provisions of Section 13.2.A hereof which
require liquidation of the assets of the Partnership, but subject to the order
of priorities set forth therein, if prior to or upon dissolution of the
Partnership the Liquidator determines that an immediate sale of part or all of
the Partnership's assets would be impractical or would cause undue loss to the
Partners, the Liquidator may, in its sole and absolute discretion, defer for a
reasonable time
57
the liquidation of any assets except those necessary to satisfy liabilities of
the Partnership (including to those Partners as creditors) and/or distribute to
the Partners, in lieu of cash, as tenants in common and in accordance with the
provisions of Section 13.2.A hereof, undivided interests in such Partnership
assets as the Liquidator deems not suitable for liquidation. Any such
distributions in kind shall be made only if, in the good faith judgment of the
Liquidator, such distributions in kind are in the best interest of the Partners,
and shall be subject to such conditions relating to the disposition and
management of such properties as the Liquidator deems reasonable and equitable
and to any agreements governing the operation of such properties at such time.
The Liquidator shall determine the fair market value of any property distributed
in kind using such reasonable method of valuation as it may adopt.
Section 13.3 COMPLIANCE WITH TIMING REQUIREMENTS OF REGULATIONS
In the event the Partnership is "liquidated" within the meaning of
Regulations Section 1.704-1(b)(2)(ii)(g), distributions shall be made pursuant
to this Article 13 to the General Partner and Limited Partners who have positive
Capital Accounts in compliance with Regulations Section 1.704-1(b)(2)(ii)(b)(2).
If any Partner has a deficit balance in his or her Capital Account (after giving
effect to all contributions, distributions and allocations for the taxable
years, including the year during which such liquidation occurs), such Partner
shall have no obligation to make any contribution to the capital of the
Partnership with respect to such deficit, and such deficit shall not be
considered a debt owed to the Partnership or to any other Person for any purpose
whatsoever. In the discretion of the General Partner, a pro rata portion of the
distributions that would otherwise be made to the General Partner and Limited
Partners pursuant to this Article 13 may be:
A. distributed to a trust established for the benefit of the General
Partner and Limited Partners for the purposes of liquidating Partnership assets,
collecting amounts owed to the Partnership, and paying any contingent or
unforeseen liabilities or obligations of the Partnership or of the General
Partner arising out of or in connection with the Partnership. The assets of any
such trust shall be distributed to the General Partner and Limited Partners from
time to time, in the reasonable discretion of the General Partner, in the same
proportions and the amount distributed to such trust by the Partnership would
otherwise have been distributed to the General Partner and Limited Partners
pursuant to this Agreement; or
B. withheld to provide a reasonable reserve for Partnership
liabilities (contingent or otherwise) and to reflect the unrealized portion of
any installment obligations owed to the Partnership, PROVIDED THAT such withheld
amounts shall be distributed to the General Partner and Limited Partners as soon
as practicable.
Section 13.4 DEEMED DISTRIBUTION AND RECONTRIBUTION
Notwithstanding any other provision of this Article 13, in the event
the Partnership is liquidated within the meaning of Regulations Section 1.704-
1(b)(2)(ii)(g) but no Liquidating Event has occurred, the Partnership's property
shall not be liquidated, the Partnership's liabilities shall not be paid or
discharged, and the Partnership's affairs shall not be wound up. Instead, the
Partnership shall be deemed to have distributed the Partnership
58
property in kind to the General Partner and Limited Partners, who shall be
deemed to have assumed and taken such property subject to all Partnership
liabilities, all in accordance with their respective Capital Accounts.
Immediately thereafter, the General Partner and Limited Partners shall be deemed
to have recontributed the Partnership property in kind to the Partnership, which
shall be deemed to have assumed and taken such property subject to all such
liabilities.
Section 13.5 RIGHTS OF LIMITED PARTNERS
Except as otherwise provided in this Agreement, each Limited Partner
shall look solely to the assets of the Partnership for the return of his Capital
Contribution and shall have no right or power to demand or receive property from
the General Partner. No Limited Partner shall have priority over any other
Limited Partner as to the return of his Capital Contributions, distributions or
allocations.
Section 13.6 NOTICE OF DISSOLUTION
In the event a Liquidating Event occurs or an event occurs that would,
but for provisions of Section 13.1, result in a dissolution of the Partnership,
the General Partner shall, within 30 days thereafter, provide written notice
thereof to each of the Partners and to all other parties with whom the
Partnership regularly conducts business (as determined in the discretion of the
General Partner) and shall publish notice thereof in a newspaper of general
circulation in each place in which the Partnership regularly conducts business
(as determined in the discretion of the General Partner).
Section 13.7 CANCELLATION OF CERTIFICATE OF LIMITED PARTNERSHIP
Upon the completion of the liquidation of the Partnership cash and
property as provided in Section 13.2 hereof, the Partnership shall be terminated
and the Certificate and all qualifications of the Partnership as a foreign
limited partnership in jurisdictions other than the State of Maryland shall be
cancelled and such other actions as may be necessary to terminate the
Partnership shall be taken.
Section 13.8 REASONABLE TIME FOR WINDING-UP
A reasonable time shall be allowed for the orderly winding-up of the
business and affairs of the Partnership and the liquidation of its assets
pursuant to Section 13.2 hereof, in order to minimize any losses otherwise
attendant upon such winding-up, and the provisions of this Agreement shall
remain in effect between the Partners during the period of liquidation.
Section 13.9 WAIVER OF PARTITION
Each Partner hereby waives any right to partition of the Partnership
property.
59
ARTICLE 14
AMENDMENT OF PARTNERSHIP AGREEMENT; CONSENTS
Section 14.1 AMENDMENTS
A. The actions requiring consent or approval of Limited Partners
pursuant to this Agreement, including Section 7.3, or otherwise pursuant to
applicable law, are subject to the procedures in this Article 14.
B. Amendments to this Agreement may be proposed by the General
Partner or by any Limited Partner. Following such proposal, the General Partner
shall submit any proposed amendment to the Limited Partners. The General
Partner shall seek the written consent of the Limited Partners on the proposed
amendment or shall call a meeting to vote thereon and to transact any other
business that it may deem appropriate. For purposes of obtaining a written
consent, the General Partner may require a response within a reasonable
specified time, but not less than 15 days, and failure to respond in such time
period shall constitute a consent which is consistent with the General Partner's
recommendation (if so recommended) with respect to the proposal; PROVIDED, THAT,
an action shall become effective at such time as requisite consents are received
even if prior to such specified time.
Section 14.2 ACTION BY THE PARTNERS
A. Meetings of the Partners may be called by the General Partner and
shall be called upon the receipt by the General Partner of a written request by
Limited Partners holding 25 percent or more of the Partnership Interests held by
Limited Partners. The call shall state the nature of the business to be
transacted. Notice of any such meeting shall be given to all Partners not less
than seven days nor more than 30 days prior to the date of such meeting.
Partners may vote in person or by proxy at such meeting. Whenever the vote or
Consent of the Limited Partners or of the Partners is permitted or required
under this Agreement, such vote or Consent may be given at a meeting of Partners
or may be given in accordance with the procedure prescribed in Section 14.1
hereof.
B. Any action required or permitted to be taken at a meeting of the
Partners may be taken without a meeting if a written consent setting forth the
action so taken is signed by the percentage as is expressly required by this
Agreement for the action in question. Such consent may be in one instrument or
in several instruments, and shall have the same force and effect as a vote of
the Percentage Interests of the Partners (expressly required by this Agreement).
Such consent shall be filed with the General Partner. An action so taken shall
be deemed to have been taken at a meeting held on the effective date so
certified.
C. Each Limited Partner may authorize any Person or Persons to act
for him by proxy on all matters in which a Limited Partner is entitled to
participate, including waiving notice of any meeting, or voting or participating
at a meeting. Every proxy must be signed by the Limited Partner or his
attorney-in-fact. No proxy shall be valid after the expiration of 11 months
from the date thereof unless otherwise provided in the proxy. Every proxy shall
be revocable at the pleasure of the Limited Partner executing it.
60
D. Each meeting of Partners shall be conducted by the General
Partner or such other Person as the General Partner may appoint pursuant to such
rules for the conduct of the meeting as the General Partner or such other Person
deems appropriate.
ARTICLE 15
GENERAL PROVISIONS
Section 15.1 ADDRESSES AND NOTICE
Any notice, demand, request or report required or permitted to be
given or made to a Partner or Assignee under this Agreement shall be in writing
and shall be deemed given or made when delivered in person or when sent by first
class United States mail or by other means of written communication to the
Partner or Assignee at the address set forth in Exhibit A or such other address
as the Partners shall notify the General Partner in writing.
Section 15.2 TITLES AND CAPTIONS
All article or section titles or captions in this Agreement are for
convenience only. They shall not be deemed part of this Agreement and in no way
define, limit, extend or describe the scope or intent of any provisions hereof.
Except as specifically provided otherwise, references to "Articles" and
"Sections" are to Articles and Sections of this Agreement.
Section 15.3 PRONOUNS AND PLURALS
Whenever the context may require, any pronoun used in this Agreement
shall include the corresponding masculine, feminine or neuter forms, and the
singular form of nouns, pronouns and verbs shall include the plural and vice
versa.
Section 15.4 FURTHER ACTION
The parties shall execute and deliver all documents, provide all
information and take or refrain from taking action as may be necessary or
appropriate to achieve the purposes of this Agreement.
Section 15.5 BINDING EFFECT
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their heirs, executors, administrators, successors, legal
representatives and permitted assigns.
Section 15.6 CREDITORS
Other than as expressly set forth herein with respect to Indemnitees,
none of the provisions of this Agreement shall be for the benefit of, or shall
be enforceable by, any creditor of the Partnership.
61
Section 15.7 WAIVER
No failure by any party to insist upon the strict performance of any
covenant, duty, agreement or condition of this Agreement or to exercise any
right or remedy consequent upon any breach thereof shall constitute waiver of
any such breach or any other covenant, duty, agreement or condition.
Section 15.8 COUNTERPARTS
This Agreement may be executed in counterparts, all of which together
shall constitute one agreement binding on all the parties hereto,
notwithstanding that all such parties are not signatories to the original or the
same counterpart. Each party shall become bound by this Agreement immediately
upon affixing its signature hereto.
Section 15.9 APPLICABLE LAW
This Agreement shall be construed in accordance with and governed by
the laws of the State of Maryland, without regard to the principles of conflicts
of law.
Section 15.10 INVALIDITY OF PROVISIONS
If any provision of this Agreement is or becomes invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein shall not be affected thereby.
Section 15.11 LIMITATION TO PRESERVE REIT STATUS
To the extent that any amount paid or credited to the General Partner
or its officers, directors, employees or agents pursuant to Section 7.4 or
Section 7.7 would constitute gross income to the General Partner for purposes of
Sections 856(c)(2) or 856(c)(3) of the Code (a "General Partner Payment") then,
notwithstanding any other provision of this Agreement, the amount of such
General Partner Payments for any fiscal year shall not exceed the lesser of:
(i) an amount equal to the excess, if any, of (a) 4.17% of the
General Partners' total gross income (but not including the
amount of any General Partner Payments) for the fiscal year which
is described in subsections (A) through (H) of Section 856(c)(2)
of the Code over (b) the amount of gross income (within the
meaning of Section 856(c)(2) of the Code) derived by the General
Partner from sources other than those described in subsections
(A) through (H) of Section 856(c)(2) of the Code (but not
including the amount of any General Partner Payments); or
(ii) an amount equal to the excess, if any, of (a) 25% of the General
Partners' total gross income (but not including the amount of any
General Partner Payments) for the fiscal year which is described
in subsections (A) through (I) of Section 856(c)(3) of the Code
over (b) the amount of gross
62
income (within the meaning of Section 856(c)(3) of the Code)
derived by the General Partner from sources other than those
described in subsections (A) through (I) of Section 856(c)(3) of
the Code (but not including the amount of any General Partner
Payments);
PROVIDED, HOWEVER, that General Partner Payments in excess of the amounts set
forth in subparagraphs (i) and (ii) above may be made if the General Partner, as
a condition precedent, obtains an opinion of tax counsel that the receipt of
such excess amounts would not adversely affect the General Partner's ability to
qualify as a REIT. To the extent General Partner Payments may not be made in a
year due to the foregoing limitations, such General Partner Payments shall carry
over and be treated as arising in the following year, PROVIDED, HOWEVER, that
such amounts shall not carry over for more than five years, and if not paid
within such five year period, shall expire; PROVIDED FURTHER, that (i) as
General Partner Payments are made, such payments shall be applied first to carry
over amounts outstanding, if any, and (ii) with respect to carry over amounts
for more than one Partnership Year, such payments shall be applied to the
earliest Partnership Year first.
Section 15.12 ENTIRE AGREEMENT
This Agreement contains the entire understanding and agreement among
the Partners with respect to the subject matter hereof and supersedes any other
prior written or oral understandings or agreements among them with respect
thereto.
Section 15.13 NO RIGHTS AS STOCKHOLDERS
Nothing contained in this Agreement shall be construed as conferring
upon the holders of Partnership Units any rights whatsoever as stockholders of
the General Partner, including without limitation any right to receive dividends
or other distributions made to stockholders of the General Partner or to vote or
to consent or to receive notice as stockholders in respect of any meeting of
stockholders for the election of directors of the General Partner or any other
matter.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.
ARDEN REALTY LIMITED PARTNERSHIP
By: Arden Realty, Inc.,
a Maryland corporation
Its General Partner
By:
-------------------------------------
Title:
----------------------------------
63
-------------------------------------
Xxxxxx Xxxxxxx
LIMITED PARTNERS:
By: Arden Realty, Inc.
Attorney-in-Fact for the
Limited Partners
By:
-------------------------------------
Title:
----------------------------------
64
EXHIBIT A
PARTNERS, CONTRIBUTIONS AND PARTNERSHIP INTERESTS
I. Initial Contributions
Agreed Value of Percentage
Name and Address Cash Contributed Gross Asset Total Partnership Interest
of Partner Contributions Property* Value Contributions Units
---------------- ------------- --------------- ----------- ------------- ----------- ----------
[1]
GENERAL PARTNER
Arden Realty, Inc. [$1.00] - [$1.00]
--------------------
--------------------
--------------------
LIMITED PARTNERS
Arden Realty, Inc. [$1.00] - [$1.00] [1]
Attorney-in-Fact for
the Limited Partners
--------------------
--------------------
--------------------
* Net of Debt (if any)
II. Contributions To Be Made On Effective Date
Agreed Value of Percentage
Name and Address Cash Contributed Gross Asset Total Partnership Interest
of Partner Contributions Property* Value Contributions Units
---------------- ------------- --------------- ----------- ------------- ----------- ----------
GENERAL PARTNER
Arden Realty, Inc.
Limited Partners
--------------------
--------------------
* Net of Debt (if any)
A-1
EXHIBIT B
NOTICE OF REDEMPTION
The undersigned hereby [irrevocably] (i) transfers ____________
Limited Partnership Units in Arden Realty Limited Partnership in accordance with
the terms of the Limited Partnership Agreement of Arden Realty Limited
Partnership and the rights of Redemption referred to therein, (ii) surrenders
such Limited Partnership Units and all right, title and interest therein, and
(iii) directs that the cash (or, if applicable, REIT Shares) deliverable upon
Redemption or exchange be delivered to the address specified below, and if
applicable, that such REIT Shares be registered or placed in the name(s) and at
the address(es) specified below.
Dated:
------------------------
Name of Limited Partner:
---------------------------------------
(Signature of Limited Partner)
---------------------------------------
(Street Address)
---------------------------------------
(City) (State) (Zip Code)
Signature Guaranteed by:
---------------------------------------
Issue REIT Shares to:
Please insert social security or identifying number:
Name:
B-1
EXHIBIT C
CONSTRUCTIVE OWNERSHIP DEFINITION
The term "Constructively Owns" means ownership determined through the
application of the constructive ownership rules of Section 318 of the Code, as
modified by Section 856(d)(5) of the Code. Generally, these rules provide the
following:
a. an individual is considered as owning the Ownership Interest that is
owned, actually or constructively, by or for his spouse, his children, his
grandchildren, and his parents;
b. an Ownership Interest that is owned, actually or constructively, by or
for a partnership or estate is considered as owned proportionately by its
partners or beneficiaries;
c. an Ownership Interest that is owned, actually or constructively, by or
for a trust is considered as owned by its beneficiaries in proportion to the
actuarial interest of such beneficiaries (provided, however, that in the case of
a "grantor trust" the Ownership Interest will be considered as owned by the
grantors);
d. if 10 percent or more in value of the stock in a corporation is owned,
actually or constructively, by or for any person, such person shall be
considered as owning the Ownership Interest that is owned, actually or
constructively, by or for such corporation in that proportion which the value of
the stock which such person so owns bears to the value of all the stock in such
corporation;
e. an Ownership Interest that is owned, actually or constructively, by or
for a partner of a partnership or a beneficiary of an estate or trust shall be
considered as owned by the partnership, estate, or trust (or, in the case of a
grantor trust, the grantors);
f. if 10 percent or more in value of the stock in a corporation is owned,
actually or constructively, by or for any person, such corporation shall be
considered as owning the Ownership Interest that is owned, actually or
constructively, by or for such person;
g. if any person has an option to acquire an Ownership Interest
(including an option to acquire an option or any one of a series of such
options), such Ownership Interest shall be considered as owned by such person;
h. an Ownership Interest that is constructively owned by a person by
reason of the application of the rules described in paragraphs (a) through (g)
above shall, for purposes of applying paragraphs (a) through (g), be considered
as actually owned by such person provided, however, that (i) an Ownership
Interest constructively owned by an individual by reason of paragraph (a) shall
not be considered as owned by him for purposes of again applying paragraph (a)
in order to make another the constructive owner of such Ownership Interest, (ii)
an Ownership Interest constructively owned by a partnership, estate, trust, or
corporation by reason of the application of paragraphs (e) or (f) shall not be
considered as owned by it for purposes of applying paragraphs (b), (c), or (d)
in order to make another the constructive owner of such Ownership Interest,
(iii) if an Ownership Interest may be considered as owned by an individual under
paragraphs (a) or (g), it shall be considered as owned by him under paragraph
(g), and (iv) for purposes of the above described rules, an S corporation shall
be treated as a partnership and any stockholder of the S corporation shall be
treated as a partner of such partnership except that this rule shall not apply
for purposes of determining whether stock in the S corporation is constructively
owned by any person.
i. For purposes of the above summary of the constructive ownership rules,
the term "Ownership Interest" means the ownership of stock with respect to a
corporation and, with respect to any other type of entity, the ownership of an
interest in either its assets or net profits.
C-1
EXHIBIT D
FORM OF PARTNERSHIP UNIT CERTIFICATE
CERTIFICATE FOR PARTNERSHIP UNITS OF
ARDEN REALTY LIMITED PARTNERSHIP
No. COMMON UNITS
-------------------- ----------------------
Arden Realty, Inc., as the General Partner of Arden Realty Limited
Partnership, a Maryland limited partnership (the "Operating Partnership"),
hereby certifies that ______________________________________________________ is
a Limited Partner of the Operating Partnership whose Partnership Interests
therein, as set forth in the Agreement of Limited Partnership of Arden Realty
Limited Partnership, (the "Partnership Agreement"), under which the Operating
Partnership is existing and as filed in the office of the Maryland State
Department of Assessments and Taxation (copies of which are on file at the
Operating Partnership's principal office at 0000 Xxxxxxxx Xxxxxxxxx, Xxxx Tower,
Suite 700, Xxxxxxx Xxxxx, Xxxxxxxxxx 00000, represent ______________ units of
limited partnership interest in the Operating Partnership.
THE COMMON UNITS REPRESENTED BY THIS CERTIFICATE OR INSTRUMENT MAY NOT BE
TRANSFERRED, SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF
UNLESS SUCH TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER
DISPOSITION COMPLIES WITH THE PROVISIONS OF THE PARTNERSHIP AGREEMENT AS OF
________________, 1996 AS IT MAY BE AMENDED FROM TIME TO TIME (A COPY OF WHICH
IS ON FILE WITH THE OPERATING PARTNERSHIP). EXCEPT AS OTHERWISE PROVIDED IN
SUCH AGREEMENT, NO TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER
DISPOSITION OF THE OP UNITS REPRESENTED BY THIS CERTIFICATE MAY BE MADE EXCEPT
(A) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "ACT"), OR (B) IF THE OPERATING PARTNERSHIP HAS BEEN
FURNISHED WITH A SATISFACTORY OPINION OF COUNSEL FOR THE HOLDER THAT SUCH
TRANSFER, SALE ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION IS EXEMPT
FROM THE PROVISIONS OF SECTION 5 OF THE ACT AND THE RULES AND REGULATIONS IN
EFFECT THEREUNDER.
DATED: , 1996.
-----------------------------
ARDEN REALTY, INC..
General Partner of
Arden Realty Limited Partnership
ATTEST:
By: By:
------------------------------- ------------------------------------
D-1
EXHIBIT E
SCHEDULE OF PARTNERS' OWNERSHIP
WITH RESPECT TO TENANTS
E-1
EXHIBIT F
SCHEDULE OF REIT SHARES
ACTUALLY OR CONSTRUCTIVELY OWNED BY LIMITED PARTNERS
OTHER THAN THOSE ACQUIRED PURSUANT TO AN EXCHANGE
F-1
EXHIBIT G
SPECIAL ALLOCATIONS OF DEDUCTIONS
ATTRIBUTABLE TO THE REPAYMENT OF SPECIFIED INTEREST
[Add Description of Each Loan]
Total Interest Deduction to be Specially Allocated $
Allocation of Deduction to Partners: -------
[Name of Partners] $
-------
$
-------
$
-------
G-1
EXHIBIT H
SPECIAL ALLOCATIONS OF CANCELLATION
OF INDEBTEDNESS INCOME
[Add Description of Each Loan]
Total COD Income $
Allocation of Income to Partners: -------
[Name of Partners] $
-------
$
-------
$
-------
H-1
