1
-----------------------------------------
SECOND AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
EOP OPERATING LIMITED PARTNERSHIP
-----------------------------------------
Dated as of June 19, 2000
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TABLE OF CONTENTS
ARTICLE I DEFINED TERMS.......................................................2
ARTICLE II ORGANIZATIONAL MATTERS............................................16
Section 2.1 Organization..............................................16
Section 2.2 Name......................................................16
Section 2.3 Registered Office and Agent; Principal Office.............17
Section 2.4 Term......................................................17
ARTICLE III PURPOSE..........................................................17
Section 3.1 Purpose and Business......................................17
Section 3.2 Powers....................................................17
ARTICLE IV CAPITAL CONTRIBUTIONS AND ISSUANCES OF
PARTNERSHIP INTERESTS...................................................18
Section 4.1 Capital Contributions of the Partners.....................18
Section 4.2 Issuances of Partnership Interests........................18
Section 4.3 No Preemptive Rights......................................20
Section 4.4 Other Contribution Provisions.............................20
Section 4.5 No Interest on Capital....................................20
Section 4.6 Separate Agreements.......................................21
ARTICLE V DISTRIBUTIONS......................................................21
Section 5.1 Requirement and Characterization of Distributions.........21
Section 5.2 Amounts Withheld..........................................24
Section 5.3 Distributions Upon Liquidation............................24
Section 5.4 Revisions to Reflect Issuance of Partnership Interests....25
ARTICLE VI ALLOCATIONS.......................................................25
Section 6.1 Allocations For Capital Account Purposes..................25
Section 6.2 Revisions to Allocations to Reflect Issuance of
Partnership Interests............................................27
ARTICLE VII MANAGEMENT AND OPERATIONS OF BUSINESS............................28
Section 7.1 Management................................................28
Section 7.2 Certificate of Limited Partnership........................32
Section 7.3 Title to Partnership Assets...............................33
Section 7.4 Reimbursement of the General Partner......................33
Section 7.5 Outside Activities of the General Partner;
Relationship of Shares to Partnership Units; Funding Debt........35
Section 7.6 Transactions with Affiliates..............................37
Section 7.7 Indemnification...........................................38
Section 7.8 Liability of the General Partner..........................40
Section 7.9 Other Matters Concerning the General Partner..............41
Section 7.10 Reliance by Third Parties.................................42
Section 7.11 Restrictions on General Partner's Authority...............43
Section 7.12 Loans by Third Parties....................................44
ARTICLE VIII RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS......................44
Section 8.1 Limitation of Liability...................................44
Section 8.2 Management of Business....................................44
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Section 8.3 Outside Activities of Limited Partners....................45
Section 8.4 Return of Capital.........................................45
Section 8.5 Rights of Limited Partners Relating to the Partnership....45
Section 8.6 Redemption Right..........................................47
ARTICLE IX BOOKS, RECORDS, ACCOUNTING AND REPORTS............................50
Section 9.1 Records and Accounting....................................50
Section 9.2 Fiscal Year...............................................50
Section 9.3 Reports...................................................50
ARTICLE X TAX MATTERS........................................................51
Section 10.1 Preparation of Tax Returns................................51
Section 10.2 Tax Elections.............................................51
Section 10.3 Tax Matters Partner.......................................51
Section 10.4 Organizational Expenses...................................53
Section 10.5 Withholding...............................................53
ARTICLE XI TRANSFERS AND WITHDRAWALS.........................................54
Section 11.1 Transfer..................................................54
Section 11.2 Transfers of Partnership Interests of General Partner.....54
Section 11.3 Limited Partners' Rights to Transfer......................55
Section 11.4 Substituted Limited Partners..............................57
Section 11.5 Assignees.................................................58
Section 11.6 General Provisions........................................58
ARTICLE XII ADMISSION OF PARTNERS............................................60
Section 12.1 Admission of a Successor General Partner..................60
Section 12.2 Admission of Additional Limited Partners..................61
Section 12.3 Amendment of Agreement and Certificate of Limited
Partnership......................................................61
ARTICLE XIII DISSOLUTION AND LIQUIDATION.....................................62
Section 13.1 Dissolution...............................................62
Section 13.2 Winding Up................................................63
Section 13.3 Compliance with Timing Requirements of Regulations;
Restoration of Deficit Capital Accounts..........................64
Section 13.4 Rights of Limited Partners................................66
Section 13.5 Notice of Dissolution.....................................66
Section 13.6 Cancellation of Certificate of Limited Partnership........66
Section 13.7 Reasonable Time for Winding Up............................66
Section 13.8 Waiver of Partition.......................................67
Section 13.9 Liability of Liquidator...................................67
ARTICLE XIV AMENDMENT OF PARTNERSHIP AGREEMENT;
MEETINGS................................................................67
Section 14.1 Amendments................................................67
Section 14.2 Meetings of the Partners..................................69
ARTICLE XV GENERAL PROVISIONS................................................70
Section 15.1 Addresses and Notice......................................70
Section 15.2 Titles and Captions.......................................70
Section 15.3 Pronouns and Plurals......................................70
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Section 15.4 Further Action............................................70
Section 15.5 Binding Effect............................................70
Section 15.6 Creditors.................................................70
Section 15.7 Waiver....................................................71
Section 15.8 Counterparts..............................................71
Section 15.9 Applicable Law............................................71
Section 15.10 Invalidity of Provisions..................................71
Section 15.11 Power of Attorney.........................................71
Section 15.12 Entire Agreement..........................................73
Section 15.13 No Rights as Shareholders.................................73
Section 15.14 Limitation to Preserve REIT Status........................73
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EXHIBIT A
PARTNERS AND PARTNERSHIP INTERESTS
EXHIBIT B
CAPITAL ACCOUNT MAINTENANCE
EXHIBIT C
SPECIAL ALLOCATION RULES
EXHIBIT D
NOTICE OF REDEMPTION
EXHIBIT E
PROTECTED PARTNERS AND PROTECTED AMOUNTS
EXHIBIT E-1
(CAP Agreement)
EXHIBIT E-2
(1120 Agreement)
EXHIBIT E-3
(Xxxxxx Runstad Agreement)
EXHIBIT E-4
(Xxxxxxxxx Agreement)
EXHIBIT E-5
(Palo Alto Square Agreement)
EXHIBIT E-6
(Cornerstone Agreement)
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ATTACHMENT A
(Series A Preferred Units)
ATTACHMENT B
(Series B Preferred Units)
ATTACHMENT C
(Series C Preferred Units)
ATTACHMENT D
(Series D Preferred Units)
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SECOND AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
EOP OPERATING LIMITED PARTNERSHIP
THIS SECOND AMENDED AND RESTATED AGREEMENT OF LIMITED
PARTNERSHIP, dated as of June 19, 2000, is entered into by and among Equity
Office Properties Trust, a Maryland real estate investment trust, as the General
Partner, and the Persons whose names are set forth on Exhibit A hereto as
Limited Partners, together with any other Persons who become Partners in the
Partnership as provided herein.
WHEREAS, Equity Office Properties Trust, Xxxx/Xxxxxxx Xxxxx Real
Estate Opportunity Partners Limited Partnership II, an Illinois limited
Partnership, and certain other persons named therein entered into an Agreement
of Limited Partnership of EOP Operating Limited Partnership dated as of July 3,
1997, pursuant to which the Partnership was formed (the "Original Partnership
Agreement");
WHEREAS, the General Partner and the other Partners in the
Partnership entered into eleven amendments to the Original Partnership Agreement
(the "Prior Amendments") and 20 addenda to the Original Partnership Agreement
effecting the admission of Additional Limited Partners to the Partnership, the
withdrawal of certain Partners from the Partnership, and, in some cases, certain
amendments to provisions of the Original Partnership Agreement made in
connection therewith (the "Prior Addenda");
WHEREAS, the General Partner and the Persons named on Exhibit A
hereto as Limited Partners entered into the First Amended and Restated Agreement
of Limited Partnership, dated as of May 1, 2000, to incorporate the Original
Partnership Agreement, the Prior Amendments, and the Addenda (the "First Amended
and Restated Agreement"); and
WHEREAS, in connection with the merger of Cornerstone Properties
Limited Partnership, the General Partner and the other Partners in the
Partnership now desire to enter into amendments to the First Amended and
Restated Agreement of Limited Partnership by entering into this Second Amended
and Restated Agreement of Limited Partnership;
NOW, THEREFORE, in consideration of the mutual covenants set
forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby amend
and restate the First Amended and Restated Agreement of Limited Partnership in
its entirety and agree to continue the Partnership as a limited partnership
under the Delaware Revised Uniform Limited Partnership Act, as amended from time
to time, as follows:
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ARTICLE I
DEFINED TERMS
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 Delaware Revised Uniform Limited Partnership Act,
as it may be amended from time to time, and any successor to such statute.
"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" means the Capital Account maintained
for each Partner as of the end of each Partnership Year (i) increased by any
amounts which such Partner is obligated to restore pursuant to any provision of
this Agreement or is deemed to be obligated to restore pursuant to the
penultimate sentences of Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5)
and (ii) decreased by the items described in Regulations Sections
1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5) and 1.704-1(b)(2)(ii)(d)(6).
The foregoing definition of Adjusted Capital Account is intended to comply with
the provisions of Regulations Section 1.704-1(b)(2)(ii)(d) and shall be
interpreted consistently therewith.
"Adjusted Capital Account Deficit" means, with respect to any
Partner, the deficit balance, if any, in such Partner's Adjusted Capital Account
as of the end of the relevant Partnership Year.
"Adjusted Property" means any property the Carrying Value of
which has been adjusted pursuant to Exhibit B.
"Adjustment Date" has the meaning set forth in Section 4.2.B.
"Affiliate" means, with respect to any Person, (i) any Person
directly or indirectly controlling, controlled by or under common control with
such Person, (ii) any Person owning or controlling ten percent (10%) or more of
the outstanding voting interests of such Person, (iii) any Person of which such
Person owns or controls ten percent (10%) or more of the voting interests or
(iv) any officer, director, general partner or trustee of such Person or any
Person referred to in clauses (i), (ii), and (iii) above. For purposes of this
definition, "control," when used with respect to any Person, means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise,
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Aggregate Protected Amount" means the aggregate balances of the
Protected Amounts, if any, of all Protected Partners, as determined on the date
in question.
"Agreed Value" means (i) in the case of any Contributed Property,
the 704(c) Value of such property as of the time of its contribution to the
Partnership, reduced by any liabilities either assumed by the Partnership upon
such contribution or to which such
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property is subject when contributed, as the same is reflected in the books and
records of the Partnership; and (ii) in the case of any property distributed to
a Partner by the Partnership, the Partnership's Carrying Value of such property
at the time such property is distributed, reduced by any indebtedness either
assumed by such Partner upon such distribution or to which such property is
subject at the time of distribution as determined under Section 752 of the Code
and the regulations thereunder.
"Agreement" means this Second Amended and Restated Agreement of
Limited Partnership, as it may be amended, supplemented or restated from time to
time.
"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:
(a) all cash revenues and funds received by the Partnership from
whatever source (excluding the proceeds of any Capital Contribution) plus the
amount of any reduction (including, without limitation, a reduction resulting
because the General Partner determines such amounts are no longer necessary) in
reserves of the Partnership, which reserves are referred to in clause (b)(iv)
below;
(b) less the sum of the following (except to the extent made with
the proceeds of any Capital Contribution):
(i) all interest, principal and other debt payments made
during such period by the Partnership,
(ii) all cash expenditures (including capital expenditures)
made by the Partnership during such period,
(iii) investments in any entity (including loans made
thereto) to the extent that such investments are permitted under this Agreement
and are not otherwise described in clauses (b)(i) or (ii), and
(iv) the amount of any increase in reserves established
during such period which the General Partner determines is 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.
"Book-Tax Disparities" means, with respect to any item of
Contributed Property or Adjusted Property, as of the date of any determination,
the difference between the Carrying Value of such Contributed Property or
Adjusted Property and the adjusted basis thereof for federal income tax purposes
as of such date. A Partner's share of the
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Partnership's Book-Tax Disparities in all of its Contributed Property and
Adjusted Property will be reflected by the difference between such Partner's
Capital Account balance as maintained pursuant to Exhibit B and the hypothetical
balance of such Partner's Capital Account computed as if it had been maintained
strictly in accordance with federal income tax accounting principles.
"Business Day" means any day except a Saturday, Sunday or other
day on which commercial banks in Chicago, Illinois are authorized or required by
law to close.
"Capital Account" means the Capital Account maintained for a
Partner pursuant to Exhibit B.
"Capital Contribution" means, with respect to any Partner, any
cash, cash equivalents or the Agreed Value of Contributed Property which such
Partner contributes or is deemed to contribute to the Partnership pursuant to
Section 4.1 or 4.2.
"Carrying Value" means (i) with respect to a Contributed Property
or Adjusted Property, the 704(c) Value of such property reduced (but not below
zero) by all Depreciation with respect to such Contributed Property or Adjusted
Property, as the case may be, charged to the Partners' Capital Accounts and (ii)
with respect to any other Partnership property, the adjusted basis of such
property for federal income tax purposes, all as of the time of determination.
The Carrying Value of any property shall be adjusted from time to time in
accordance with Exhibit B, and to reflect changes, additions (including capital
improvements thereto) or other adjustments to the Carrying Value for
dispositions and acquisitions of Partnership properties, as deemed appropriate
by the General Partner.
"Cash Amount" means an amount of cash equal to the Value on the
Valuation Date of the Shares Amount.
"Certificate" means the Certificate of Limited Partnership
relating to the Partnership filed in the office of the Delaware Secretary of
State, as amended from time to time in accordance with the terms hereof and the
Act.
"Class A" has the meaning set forth in Section 5.1.C.
"Class A Share" has the meaning set forth in Section 5.1.C.
"Class A Unit" means any Partnership Unit that is not
specifically designated by the General Partner as being of another specified
class of Partnership Units.
"Class B" has the meaning set forth in Section 5.1.C.
"Class B Share" has the meaning set forth in Section 5.1.C.
"Class B Unit" means a Partnership Unit that is specifically
designated by the General Partner as being a Class B Unit.
"Code" means the Internal Revenue Code of 1986, as amended and in
effect from time to time, as interpreted by the applicable regulations
thereunder. Any reference
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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 or approval of a proposed action by a
Partner given in accordance with Section 14.2.
"Consent of the Outside Limited Partners" means the Consent of
Limited Partners (excluding for this purpose any Limited Partnership Interests
held by the General Partner, any Person of which the General Partner owns or
controls more than fifty percent (50%) of the voting interests and any Person
directly or indirectly owning or controlling more than fifty percent (50%) of
the outstanding voting interests of the General Partner) holding Percentage
Interests that are greater than fifty percent (50%) of the aggregate Percentage
Interest of all Limited Partners who are not excluded for the purposes hereof.
"Consolidation" means (i) the transactions whereby the
Partnership acquired interests in certain office properties owned by the
Opportunity Partnerships and certain asset management and property management
businesses that provided services to those properties and to other office
properties, in exchange for Partnership Units, and (ii) the merger of the ZML
Investors, Inc., ZML Investors II, Inc., Xxxx/Xxxxxxx Xxxxx Real Estate
Opportunity Partners III Trust and Xxxx/Xxxxxxx Xxxxx Real Estate Opportunity
Partners IV Trust with and into Equity Office Properties Trust, all as described
in a Joint Proxy Statement/Offering Memorandum dated March 25, 1997.
"Contributed Property" means each property or other asset
contributed to the Partnership, in such form as may be permitted by the Act, but
excluding cash contributed or deemed contributed to the Partnership. Once the
Carrying Value of a Contributed Property is adjusted pursuant to Exhibit B, such
property shall no longer constitute a Contributed Property for purposes of
Exhibit B, but shall be deemed an Adjusted Property for such purposes.
"Conversion Factor" means 1.0; provided that, if the General
Partner Entity (i) declares or pays a dividend on its outstanding Shares in
Shares or makes a distribution to all holders of its outstanding Shares in
Shares, (ii) subdivides its outstanding Shares or (iii) combines its outstanding
Shares into a smaller number of Shares, the Conversion Factor shall be adjusted
by multiplying the Conversion Factor by a fraction, the numerator of which shall
be the number of Shares issued and outstanding on the record date for such
dividend, distribution, subdivision or combination (assuming for such purposes
that such dividend, distribution, subdivision or combination has occurred as of
such time) and the denominator of which shall be the actual number of Shares
(determined without the above assumption) issued and outstanding on the record
date for such dividend, distribution, subdivision or combination; and provided
further that if an entity shall cease to be the General Partner Entity (the
"Predecessor Entity") and another entity shall become the General Partner Entity
(the "Successor Entity"), the Conversion Factor shall be adjusted by multiplying
the Conversion Factor by a fraction, the numerator of which is the Value of one
Share of the Predecessor Entity, determined as of the date when the Successor
Entity becomes the General Partner Entity, and the denominator of which is the
Value of one Share of the Successor Entity, determined as of that same date.
(For purposes of the second proviso in the preceding sentence, if any
shareholders of the Predecessor Entity will
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receive consideration in connection with the transaction in which the Successor
Entity becomes the General Partner Entity, the numerator in the fraction
described above for determining the adjustment to the Conversion Factor (that
is, the Value of one Share of the Predecessor Entity) shall be the sum of the
greatest amount of cash and the fair market value (as determined in good faith
by the General Partner) of any securities and other consideration that the
holder of one Share in the Predecessor Entity could have received in such
transaction (determined without regard to any provisions governing fractional
shares).) Any adjustment to the Conversion Factor shall become effective
immediately after the effective date of the event retroactive to the record
date, if any, for the event giving rise thereto, it being intended that (x)
adjustments to the Conversion Factor are to be made to avoid unintended dilution
or anti-dilution as a result of transactions in which Shares are issued,
redeemed or exchanged without a corresponding issuance, redemption or exchange
of Partnership Units and (y) if a Specified Redemption Date shall fall between
the record date and the effective date of any event of the type described above,
that the Conversion Factor applicable to such redemption shall be adjusted to
take into account such event.
"Convertible Funding Debt" has the meaning set forth in Section
7.5.F.
"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 of 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) obligations of such Person
incurred in connection with entering into a lease which, in accordance with
generally accepted accounting principles, should be capitalized.
"Declaration of Trust" means the Articles of Amendment and
Restatement of Declaration of Trust of Equity Office Properties Trust filed in
the State of Maryland on July 9, 1997, as amended or restated from time to time.
"Deemed Partnership Interest Value" means, as of any date with
respect to any class of Partnership Interests, the Deemed Value of the
Partnership Interest of such class multiplied by the applicable Partner's
Percentage Interest of such class.
"Deemed Value of the Partnership Interest" means, as of any date
with respect to any class of Partnership Interests, (a) if the common shares of
beneficial interest (or other comparable equity interests) of the General
Partner Entity are Publicly Traded (i) the total number of shares of beneficial
interest (or other comparable equity interest) of the General Partner Entity
corresponding to such class of Partnership Interest (as provided for in Section
4.2.B) issued and outstanding as of the close of business on such date
(excluding any treasury shares) multiplied by the Value of a share of such
beneficial interest (or other comparable equity interest) on such date divided
by (ii) the Percentage Interests of the General Partner, held directly or
indirectly through another entity, in such
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class of Partnership Interests on such date, and (b) otherwise, the aggregate
Value of such class of Partnership Interests determined as set forth in the
fourth and fifth sentences of the definition of Value. For purposes of clause
(a) of the preceding sentence, "Value" means the average of the daily market
price of such corresponding shares of beneficial interest (or other comparable
equity interests) of the General Partner Entity for such number of consecutive
trading days or the Business Day immediately preceding the date with respect to
which Value must be determined (which number of days or the Business Day shall
be determined by the General Partner in its sole discretion), with the market
price for each such trading day being 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. Notwithstanding any of the foregoing, with respect
to any class or series of Partnership Interests that is entitled to a preference
as compared to the class of Partnership Interests corresponding to common shares
of beneficial interests (or other comparable equity interests) of the General
Partner Entity, "Value" means the stated liquidation preference or value of such
class or series of Partnership Interests provided in the instrument establishing
such class or series of Partnership Interests (unless otherwise provided in such
instrument).
"Depreciation" means, for each fiscal year, an amount equal to
the federal income tax depreciation, amortization, or other cost recovery
deduction allowable with respect to an asset for such year, except that if the
Carrying 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 Carrying Value as the
federal income tax depreciation, amortization, or other cost recovery deduction
for such year 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 Carrying Value using any reasonable method selected
by the General Partner.
"Distribution Period" has the meaning set forth in Section 5.1.C.
"Effective Date" means the date of the closing of the Consolidation.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended.
"ERISA Partner" means either any (a) Limited Partner or (b)
holder of shares of beneficial interest in the General Partner that received
such Shares in the mergers of ZML Investors, Inc., ZML Investors II, Inc.,
Xxxx/Xxxxxxx Xxxxx Real Estate Opportunity Partners III Trust, and Xxxx/Xxxxxxx
Xxxxx Real Estate Opportunity Partners IV Trust into the General Partner, and
which Limited Partner or shareholder is either (i) an employee benefit plan
subject to Title I of ERISA or section 4975 of the Code, or (ii) a nominee for
or a trust established pursuant to such employee benefit plan, or (iii) which is
an entity whose underlying assets include assets of such employee benefit plan
by reason of such plan's investment in such entity.
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"ERISA Plan" means an "employee benefit plan" as that term is
defined in 29 U.S.C. sec. 1002(3), and which is not exempt from regulation under
ERISA by virtue of 29 U.S.C. sec. 1003(b).
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Fair Value" shall have the meaning described in Section
7.09.E(iv).
"Funding Debt" means the incurrence of any Debt by or on behalf
of the General Partner Entity for the purpose of providing funds to the
Partnership.
"General Partner" means Equity Office Properties Trust, a
Maryland real estate investment trust, or its successor, as general partner of
the Partnership.
"General Partner Entity" means the General Partner; provided,
however, that if (i) the common shares of beneficial interest (or other
comparable equity interests) of the General Partner are at any time not Publicly
Traded and (ii) the common shares of beneficial interest (or other comparable
equity interests) of an entity that owns, directly or indirectly, fifty percent
(50%) or more of the common shares of beneficial interest (or other comparable
equity interests) of the General Partner are Publicly Traded, the term "General
Partner Entity" shall refer to such entity whose common shares of beneficial
interest (or other comparable equity securities) are Publicly Traded. If both
requirements set forth in clauses (i) and (ii) above are not satisfied, then the
term "General Partner Entity" shall mean the General Partner.
"General Partnership Interest" means a Partnership Interest held
by the General Partner that is a general partnership interest. A General
Partnership Interest may be expressed as a number of Partnership Units.
"General Partner Payment" has the meaning set forth in Section
15.14 hereof.
"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 spouse, parents, descendants, nephews, nieces, brothers,
and sisters.
"Incapacity" or "Incapacitated" means, (i) as to any individual
who is a Partner, death, total physical disability or entry by a court of
competent jurisdiction adjudicating such Partner incompetent to manage his or
her Person or 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 or limited liability
company which is a Partner, the dissolution and commencement of winding up of
the partnership or limited liability company, (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
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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 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 one hundred twenty (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 ninety (90) days of such appointment or (h) an
appointment referred to in clause (g) is not vacated within ninety (90) days
after the expiration of any such stay.
"Indemnitee" means (i) any Person made a party to a proceeding by
reason of its status as (A) the General Partner, (B) a Limited Partner, or (C) a
trustee, director or officer of the Partnership, or the General Partner and (ii)
such other Persons (including Affiliates of the General Partner, a Limited
Partner or the Partnership) as the General Partner may designate from time to
time (whether before or after the event giving rise to potential liability), in
its sole and absolute discretion.
"Limited Partner" means any Person named as a Limited Partner in
Exhibit A, 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 in the Partnership 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 Event" has the meaning set forth in Section 13.1.
"Liquidator" has the meaning set forth in Section 13.2.A.
"Net Income" means, for any taxable period, the excess, if any,
of the Partnership's items of income and gain for such taxable period over the
Partnership's items of loss and deduction for such taxable period. The items
included in the calculation of Net Income shall be determined in accordance with
Exhibit B. If an item of income, gain, loss or deduction that has been included
in the initial computation of Net Income is subjected to the special allocation
rules in Exhibit C, Net Income or the resulting Net Loss, whichever the case may
be, shall be recomputed without regard to such item.
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"Net Loss" means, for any taxable period, the excess, if any, of
the Partnership's items of loss and deduction for such taxable period over the
Partnership's items of income and gain for such taxable period. The items
included in the calculation of Net Loss shall be determined in accordance with
Exhibit B. If an item of income, gain, loss or deduction that has been included
in the initial computation of Net Loss is subjected to the special allocation
rules in Exhibit C, Net Loss or the resulting Net Income, whichever the case may
be, shall be recomputed without regard to such item.
"New Securities" means (i) any rights, options, warrants or
convertible or exchangeable securities having the right to subscribe for or
purchase Shares, excluding grants under any Share Option Plan, or (ii) any Debt
issued by the General Partner Entity that provides any of the rights described
in clause (i).
"Nonrecourse Built-in Gain" means, with respect to any
Contributed Properties or Adjusted Properties that are subject to a mortgage or
negative pledge securing a Nonrecourse Liability, the amount of any taxable gain
that would be allocated to the Partners pursuant to Section 2.B of Exhibit C if
such properties were disposed of in a taxable transaction in full satisfaction
of such liabilities and for no other consideration.
"Nonrecourse Deductions" has 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" has the meaning set forth in Regulations
Section 1.752-1(a)(2).
"Notice of Redemption" means a Notice of Redemption substantially
in the form of Exhibit D.
"Opportunity Partnerships" means, Xxxx/Xxxxxxx Xxxxx Real Estate
Opportunity Partners Limited Partnership, Xxxx/Xxxxxxx Xxxxx Real Estate
Opportunity Partners Limited Partnership II, Xxxx/Xxxxxxx Xxxxx Real Estate
Opportunity Partners Limited Partnership III, and Xxxx/Xxxxxxx Xxxxx Real Estate
Opportunity Partners Limited Partnership IV.
"Partner" means the 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" has the meaning set forth in
Regulations Section 1.704-2(b)(4).
"Partner Nonrecourse Deductions" has the meaning set forth in
Regulations Section 1.704-2(i), and the amount of Partner Nonrecourse Deductions
with respect to a
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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
upon the terms and conditions set forth in the Original Partnership Agreement
and continued pursuant to this Agreement, or any successor to such limited
partnership.
"Partnership Interest" means a Limited Partnership Interest or a
General Partnership Interest 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 Partnership Interest may be expressed as a
number of Partnership Units.
"Partnership Minimum Gain" has 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 either (i) 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 Entity for a distribution to its shareholders
of some or all of its portion of such distribution, or (ii) if applicable, for
determining the Partners entitled to vote on or consent to any proposed action
for which the consent or approval of the Partners is sought pursuant to Section
14.2 hereof.
"Partnership Unit" means a fractional, undivided share of the
Partnership Interests of all Partners issued pursuant to Sections 4.1 and 4.2,
and includes Class A Units, Class B Units, Series A Preferred Units, Series B
Preferred Units, Series C Preferred Units, and any other classes or series of
Partnership Units established after the date hereof. The number of Partnership
Units outstanding and the Percentage Interests in the Partnership represented by
such Partnership Units are set forth in Exhibit A, as such Exhibit may be
amended from time to time.
"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 such class, 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, as
such exhibit may be amended from time to time, multiplied by the aggregate
Percentage Interest allocable to such class of Partnership Interests. If the
Partnership shall at any time have outstanding more than one class of
Partnership Interests, the Percentage Interest attributable to each class of
Partnership Interests shall be determined as set forth in Section 4.2.B.
"Person" means a natural person, partnership (whether general or
limited), trust, estate, association, corporation, limited liability company,
unincorporated
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organization, custodian, nominee or any other individual or entity in its own or
any representative capacity.
"Predecessor Entity" has the meaning set forth in the
definition of "Conversion Factor" herein.
"Protected Amount" means the amount specified on Exhibit E with
respect to any Protected Partner, as such Exhibit may be amended from time to
time.
"Protected Partner" means a Partner designated as a Protected
Partner on Exhibit E, as such Exhibit may be amended from time to time, which
Protected Partner is obligated to make certain contributions, not in excess of
such Protected Partner's Protected Amount, to the Partnership with respect to
any deficit balance in such Partner's Capital Account upon the occurrence of
certain events. A Protected Partner who is obligated to make any such
contribution only upon liquidation of the Partnership shall be designated on
Exhibit E as a Part I Protected Partner and a Protected Partner who is obligated
to make any such contribution to the Partnership either upon liquidation of the
Partnership or upon liquidation of such Protected Partner's Partnership Interest
shall be designated on Exhibit E as a Part II Protected Partner.
"Publicly Traded" means listed or admitted to trading on the New
York Stock Exchange, the American Stock Exchange or another national securities
exchange or designated for quotation on the NASDAQ National Market, or any
successor to any of the foregoing.
"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.
"Recapture Income" means any gain recognized by the Partnership
(computed without regard to any adjustment required by Section 734 or Section
743 of the Code) upon the disposition of any property or asset of the
Partnership, which gain is characterized either as ordinary income or as
"unrecaptured Section 1250 gain" (as defined in Section 1(h)(7) of the Code
because it represents the recapture of deductions previously taken with respect
to such property or asset.
"Recourse Liabilities" means the amount of liabilities owed by
the Partnership (other than Nonrecourse Liabilities and liabilities to which
Partner Nonrecourse Deductions are attributable in accordance with Section
1.704-(2)(i) of the Regulations).
"Redeeming Partner" has the meaning set forth in Section 8.6.A.
"Redemption Amount" means either the Cash Amount or the Shares
Amount, as determined by the General Partner, in its sole and absolute
discretion; provided that if the Shares are not Publicly Traded at the time a
Redeeming Partner exercises its Redemption Right, the Redemption Amount shall be
paid only in the form of
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the Cash Amount unless the Redeeming Partner, in its sole and absolute
discretion, consents to payment of the Redemption Amount in the form of the
Shares Amount. A Redeeming Partner shall have no right, without the General
Partner's consent, in its sole and absolute discretion, to receive the
Redemption Amount in the form of the Shares Amount.
"Redemption Right" has the meaning set forth in Section 8.6.A.
"Regulations" means the Treasury Regulations promulgated under
the Code, as such regulations may be amended from time to time (including
corresponding provisions of succeeding regulations).
"REIT" means a real estate investment trust under Section 856 of
the Code.
"REIT Requirements" has the meaning set forth in Section 5.1.A.
"Residual Gain" or "Residual Loss" means any item of gain or
loss, as the case may be, of the Partnership recognized for federal income tax
purposes resulting from a sale, exchange or other disposition of Contributed
Property or Adjusted Property, to the extent such item of gain or loss is not
allocated pursuant to Section 2.B.1(a) or 2.B.2(a) of Exhibit C to eliminate
Book-Tax Disparities.
"Safe Harbor" has the meaning set forth in Section 11.6.F.
"Securities Act" means the Securities Act of 1933, as amended.
"Series A Preferred Shares" means the 8.98% Series A Cumulative
Redeemable Preferred Shares of Equity Office Properties Trust issued in
connection with the merger of Beacon Properties Corporation into Equity Office
Properties Trust on December 19, 1997.
"Series A Preferred Units" means the series of Partnership Units
representing units of Limited Partnership Interest designated as the 8.98%
Series A Cumulative Redeemable Preferred Units with the designations,
preferences and other rights set forth in Attachment A hereto.
"Series B Preferred Shares" means the 5.25% Series B Convertible,
Cumulative Preferred Shares of the Company, with the preferences, conversion and
other rights, voting powers , restrictions, limitations as to distributions,
qualifications and terms and conditions of redemption of shares as described in
the Articles Supplementary to the Declaration of Trust filed with the State
Department of Assessments and Taxation of Maryland on February 19, 1998,
establishing the series of preferred shares, designated Series B Preferred
Shares.
"Series B Preferred Units" means the series of Partnership Units
representing units of Limited Partnership Interest designated as the 5.25% B
Convertible, Cumulative Preferred Units, with the preferences, conversion and
other rights, voting powers, restrictions, limitations as to distributions,
qualification and terms and conditions of redemption of units set forth in
Attachment B hereto.
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"Series C Preferred Shares" means the 8 5/8% Series C Cumulative
Redeemable Preferred Shares of Beneficial Interest of the Company issued and
sold in the underwritten public offering made pursuant to the Company's
effective shelf registration statement on Form S-3 (Reg. No. 333-58729), its
prospectus dated July 22, 1998, and its related prospectus supplement dated
December 1, 1998.
"Series C Preferred Units" means the series of Partnership Units
representing units of Limited Partnership Interest designated as the 8 5/8%
Series C Cumulative Redeemable Preferred Units, with the designations,
preferences and other rights set forth in Attachment C hereto.
"Series D Preferred Units" means the series of Partnership Units
representing units of Limited Partnership Interest designated as the 7%
Cumulative Convertible Preferred Units, with the designations, preferences and
other rights set forth in Attachment D hereto.
"704(c) Value" of any Contributed Property means the fair market
value of such property at the time of contribution as determined by the General
Partner using such reasonable method of valuation as they may adopt; provided,
however, subject to Exhibit B, the General Partner shall, in its sole and
absolute discretion, use such method as it deems reasonable and appropriate to
allocate the aggregate of the 704(c) Value of Contributed Properties in a single
or integrated transaction among each separate property on a basis proportional
to its fair market values.
"Share" means a share of beneficial interest (or other comparable
equity interest) of the General Partner Entity. Shares may be issued in one or
more classes or series in accordance with the terms of the Declaration of Trust
(or, if the General Partner is not the General Partner Entity, the
organizational documents of the General Partner Entity). If there is more than
one class or series of Shares, the term "Shares" shall, as the context requires,
be deemed to refer to the class or series of Shares that correspond to the class
or series of Partnership Interests for which the reference to Shares is made.
When used with reference to Class A Units, the term "Shares" refers to common
shares of beneficial interest (or other comparable equity interest) of the
General Partner Entity.
"Shares Amount" means a number of Shares equal to the product of
the number of Partnership Units offered for redemption by a Redeeming Partner
times the Conversion Factor; provided that, if the General Partner Entity issues
to all holders of Shares rights, options, warrants or convertible or
exchangeable securities entitling such holders to subscribe for or purchase
Shares or any other securities or property (collectively, the "rights"), then
the Shares Amount shall also include such rights that a holder of that number of
Shares would be entitled to receive.
"Share Option Plan" means any equity incentive plan of the
General Partner, the General Partner Entity, the Partnership and/or any
Affiliate of the Partnership.
"Specified Redemption Date" means the tenth Business Day after
receipt by the General Partner of a Notice of Redemption; provided that, if the
Shares are not
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Publicly Traded, the Specified Redemption Date means the thirtieth Business Day
after receipt by the General Partner of a Notice of Redemption.
"Subsidiary" means, with respect to any Person, any corporation,
limited liability company, trust, partnership or joint venture, 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.
"Substituted Limited Partner" means a Person who is admitted as a
Limited Partner to the Partnership pursuant to Section 11.4.
"Successor Entity" has the meaning set forth in the definition of
"Conversion Factor" herein.
"Terminating Capital Transaction" means any sale or other
disposition of all or substantially all of the assets of the Partnership for
cash 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 for cash.
"Termination Transaction" has the meaning set forth in Section
11.2.B.
"Unrealized Gain" attributable to any item of Partnership
property means, as of any date of determination, the excess, if any, of (i) the
fair market value of such property (as determined under Exhibit B) as of such
date, over (ii) the Carrying Value of such property (prior to any adjustment to
be made pursuant to Exhibit B) as of such date.
"Unrealized Loss" attributable to any item of Partnership
property means, as of any date of determination, the excess, if any, of (i) the
Carrying Value of such property (prior to any adjustment to be made pursuant to
Exhibit B) as of such date, over (ii) the fair market value of such property (as
determined under Exhibit B) as of such date.
"Valuation Date" means the date of receipt by the General Partner
of a Notice of Redemption or, if such date is not a Business Day, the first
Business Day thereafter.
"Value" means, with respect to any outstanding Shares of the
General Partner Entity that are Publicly Traded, the average of the daily market
price for the ten consecutive trading days immediately preceding the date with
respect to which value must be determined. The market price for each such
trading day shall be 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. If the outstanding Shares of the General Partner Entity are Publicly
Traded and the Shares Amount includes rights that a holder of Shares would be
entitled to receive, then the 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. If the
Shares of the General Partner Entity are not Publicly Traded, the Value of the
Shares Amount per Partnership Unit offered for redemption (which will be the
Cash Amount per Partnership Unit offered for redemption payable pursuant to
Section 8.6.A) means the amount that a holder of one Partnership Unit would
receive if each of the assets of the Partnership were to be sold for
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its fair market value on the Specified Redemption Date, the Partnership were to
pay all of its outstanding liabilities, and the remaining proceeds were to be
distributed to the Partners in accordance with the terms of this Agreement. Such
Value shall be determined by the General Partner, acting in good faith and based
upon a commercially reasonable estimate of the amount that would be realized by
the Partnership if each asset of the Partnership (and each asset of each
partnership, limited liability company, trust, joint venture or other entity in
which the Partnership owns a direct or indirect interest) were sold to an
unrelated purchaser in an arms' length transaction where neither the purchaser
nor the seller were under economic compulsion to enter into the transaction
(without regard to any discount in value as a result of the Partnership's
minority interest in any property or any illiquidity of the Partnership's
interest in any property). In connection with determining the Deemed Value of
the Partnership Interest for purposes of determining the number of additional
Partnership Units issuable upon a Capital Contribution funded by an underwritten
public offering or an arm's length private placement of shares of beneficial
interest (or other comparable equity interest) of the General Partner, the Value
of such shares shall be the public offering or arm's length private placement
price per share of such class of beneficial interest (or other comparable equity
interest) sold.
ARTICLE II
ORGANIZATIONAL MATTERS
SECTION 2.1 ORGANIZATION
The Partnership is a limited partnership organized pursuant to
the provisions of the Act and upon the terms and conditions set forth in the
Original Agreement, as amended by the Prior Amendments, the Prior Addenda, and
the First Amended and Restated Agreement. The Partners hereby agree to continue
the business of the Partnership on the terms set forth in this Agreement. Except
as expressly provided herein to the contrary, 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 EOP Operating 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 any 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.
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SECTION 2.3 REGISTERED OFFICE AND AGENT; PRINCIPAL OFFICE
The address of the registered office of the Partnership in the
State of Delaware shall be located at Corporation Trust Center, 0000 Xxxxxx
Xxxxxx, Xxxxxxxxxx, Xxxxxx of Xxx Xxxxxx, Xxxxxxxx 00000, and the registered
agent for service of process on the Partnership in the State of Delaware at such
registered office shall be Corporation Trust Company. The principal office of
the Partnership shall be Xxx Xxxxx Xxxxxxxxx Xxxxx, Xxxxx 0000, Xxxxxxx,
Xxxxxxxx 00000, or such other place as the General Partner may from time to time
designate by notice to the Limited Partners. The Partnership may maintain
offices at such other place or places within or outside the State of Delaware as
the General Partner deems advisable.
SECTION 2.4 TERM
The term of the Partnership commenced on November 1, 1996, and
shall continue until December 31, 2095, unless it is dissolved sooner pursuant
to the provisions of Article XIII or as otherwise provided by law.
ARTICLE III
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 Entity at all times to be classified as a REIT, unless the
General Partner Entity ceases to qualify or is not qualified as a REIT for any
reason or reasons not related to the business conducted by the Partnership, (ii)
to enter into any corporation, partnership, joint venture, trust, limited
liability company or other similar arrangement to engage in any of the foregoing
or the ownership of interests in any entity engaged, directly or indirectly, in
any of the foregoing and (iii) to do anything necessary or incidental to the
foregoing. In connection with the foregoing, the Partners acknowledge that the
status of the General Partner Entity as a REIT inures to the benefit of all the
Partners and not solely to the General Partner Entity or its Affiliates.
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, own, manage, improve and
develop real property, and lease, sell, transfer and dispose of real property;
provided,
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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 Entity
to continue to qualify as a REIT, (ii) could subject the General Partner Entity
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 either the General Partner or the General Partner Entity or
its securities, unless such action (or inaction) shall have been specifically
consented to by the General Partner in writing.
ARTICLE IV
CAPITAL CONTRIBUTIONS AND ISSUANCES
OF PARTNERSHIP INTERESTS
SECTION 4.1 CAPITAL CONTRIBUTIONS OF THE PARTNERS
Prior to the execution of this Agreement, the Partners have made
the Capital Contributions as set forth in Exhibit A. The Partners own
Partnership Units in the amounts set forth in Exhibit A and have Percentage
Interests in the Partnership as set forth in Exhibit A, which number of
Partnership Units and Percentage Interest shall be adjusted in Exhibit A from
time to time by the General Partner to the extent necessary to reflect
accurately redemptions, Capital Contributions, the issuance of additional
Partnership Units or similar events having an effect on a Partner's Percentage
Interest occurring after the date hereof in accordance with the terms of this
Agreement. To the extent the Partnership acquires any property by the merger of
any other Person into the Partnership, Persons who receive Partnership Interests
in exchange for their interests in the Person merging into the Partnership shall
become Partners and shall be deemed to have made Capital Contributions as
provided in the applicable merger agreement and as set forth in Exhibit A. A
number of Partnership Units held by the General Partner equal to one percent
(1%) of the aggregate number of Partnership Units owned by the General Partner
shall be deemed to be the General Partner Partnership Units and shall be the
General Partnership Interest of the General Partner. All other Partnership Units
held by the General Partner shall be deemed to be Limited Partnership Interests
and shall be held by the General Partner in its capacity as a Limited Partner in
the Partnership. Except as provided in Sections 7.5, 10.5, and 13.3 hereof, the
Partners shall have no obligation to make any additional Capital Contributions
or provide any additional funding to the Partnership (whether in the form of
loans, repayments of loans or otherwise). Except as otherwise set forth in
Section 13.3 hereof, no Partner shall have any obligation to restore any deficit
that may exist in its Capital Account, either upon a liquidation of the
Partnership or otherwise.
SECTION 4.2 ISSUANCES OF PARTNERSHIP INTERESTS
A. General. The General Partner is hereby authorized to cause the
Partnership from time to time to issue to Partners (including the General
Partner and its Affiliates) or other Persons (including, without limitation, in
connection with the contribution of property to the Partnership) Partnership
Units or other Partnership Interests in one or more classes, or in one or more
series of any of such classes, with such
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designations, preferences and relative, participating, optional or other special
rights, powers and duties, including rights, powers and duties senior to Limited
Partnership Interests, all as shall be determined, subject to applicable
Delaware law, by the General Partner in its sole and absolute discretion,
including, without limitation, (i) the allocations of items of Partnership
income, gain, loss, deduction and credit to each 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 Partnership Units or other
Partnership Interests shall be issued to the General Partner unless either (a)
the Partnership Interests are issued in connection with the grant, award or
issuance of Shares or other equity interests in the General Partner having
designations, preferences and other rights such that the economic interests
attributable to such Shares or other equity interests are substantially similar
to the designations, preferences and other rights (except voting rights) of the
Partnership Interests issued to the General Partner in accordance with this
Section 4.2.A 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. If the Partnership issues
Partnership Interests pursuant to this Section 4.2.A, the General Partner shall
make such revisions to this Agreement (including but not limited to the
revisions described in Section 5.4, Section 6.2 and Section 8.6) as it deems
necessary to reflect the issuance of such Partnership Interests.
B. Percentage Interest Adjustments in the Case of Capital
Contributions for Partnership Units. Upon the acceptance of additional Capital
Contributions in exchange for Partnership Units and so long as the Partnership
shall have outstanding more than one class of Partnership Interests, the
Percentage Interest related thereto shall be equal to a fraction, the numerator
of which is equal to the amount of cash, if any, plus the Agreed Value of
Contributed Property, if any, contributed with respect to such additional
Partnership Units and the denominator of which is equal to the sum of (i) the
Deemed Value of the Partnership Interests for all outstanding classes (computed
as of the Business Day immediately preceding the date on which the additional
Capital Contributions are made (an "Adjustment Date")) plus (ii) the aggregate
amount of additional Capital Contributions contributed to the Partnership on
such Adjustment Date in respect of such additional Partnership Units. The
Percentage Interest of each other Partner holding Partnership Interests not
making a full pro rata Capital Contribution shall be adjusted to a fraction the
numerator of which is equal to the sum of (i) the Deemed Partnership Interest
Value of such Limited Partner (computed as of the Business Day immediately
preceding the Adjustment Date) plus (ii) the amount of additional Capital
Contributions (such amount being equal to the amount of cash, if any, plus the
Agreed Value of Contributed Property, if any, so contributed), if any, made by
such Partner to the Partnership in respect of such Partnership Interest 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 all outstanding classes (computed
as of the Business Day immediately preceding such Adjustment Date) plus (ii) the
aggregate amount of the additional Capital Contributions contributed to the
Partnership on such Adjustment Date in respect of such additional Partnership
Interests. For purposes of calculating a Partner's Percentage Interest pursuant
to this Section 4.2.B, cash Capital Contributions by the General Partner will be
deemed to equal the cash contributed by the General Partner plus (a) in the case
of
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cash contributions funded by an offering of any equity interests in or other
securities of the General Partner, the offering costs attributable to the cash
contributed to the Partnership, and (b) in the case of Partnership Units issued
pursuant to Section 7.5.E, an amount equal to the difference between the Value
of the Shares sold pursuant to any Share Option Plan and the net proceeds of
such sale.
C. Classes of Partnership Units. Subject to Section 4.2.A above
and Section 4.2.D below, the Partnership shall have two classes of Partnership
Units entitled "Class A Units" and "Class B Units." Either Class A Units or
Class B Units, at the election of the General Partner, in its sole and absolute
discretion, may be issued to newly admitted Partners in exchange for the
contribution by such Partners of cash, real estate partnership interests, stock,
notes or other assets or consideration; provided that any Partnership Unit that
is not specifically designated by the General Partner as being of a particular
class shall be deemed to be a Class A Unit. Each Class B Unit shall be converted
automatically into a Class A Unit on the day immediately following the
Partnership Record Date for the Distribution Period (as defined in Section
5.1.C) in which such Class B Unit was issued, without the requirement for any
action by either the Partnership or the Partner holding the Class B Unit.
D. Preferred Units Outstanding. Pursuant to Section 4.2.A, the
Partnership has heretofore established and issued Series A Preferred Units,
Series B Preferred Units, and Series C Preferred Units, and the Partnership is
establishing and issuing the Series D Preferred Units in connection with the
adoption of this Agreement. The terms and conditions of the Series A Preferred
Units, the Series B Preferred Units, the Series C Preferred Units, and the
Series D Preferred Units are set forth in Attachment A, Attachment B, Attachment
C, and Attachment D, respectively, attached hereto and made part hereof.
SECTION 4.3 NO PREEMPTIVE RIGHTS
Except to the extent expressly granted by the Partnership
pursuant to another agreement, no Person shall have any preemptive, preferential
or other similar right with respect to (i) additional Capital Contributions or
loans to the Partnership or (ii) issuance or sale of any Partnership Units or
other Partnership Interests.
SECTION 4.4 OTHER CONTRIBUTION PROVISIONS
If 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.
SECTION 4.5 NO INTEREST ON CAPITAL
No Partner shall be entitled to interest on its Capital
Contributions or its Capital Account.
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SECTION 4.6 SEPARATE AGREEMENTS
In connection with the issuance of Partnership Units to certain
Additional Limited Partners, the Partnership has entered into separate
agreements that set forth additional rights and obligations of such Additional
Limited Partners and additional terms and conditions of such Additional Limited
Partner's Partnership Interests. Such agreements are described in Exhibits E-1
through E-6 attached hereto and made part hereof.
ARTICLE V
DISTRIBUTIONS
SECTION 5.1 REQUIREMENT AND CHARACTERIZATION OF DISTRIBUTIONS
A. General. The General Partner shall distribute at least
quarterly an amount equal to one hundred percent (100%) of Available Cash
generated by the Partnership during such quarter or shorter period to the
Partners who are Partners on the Partnership Record Date with respect to such
quarter or shorter period as provided in Sections 5.1.B, 5.1.C and 5.1.D.
Notwithstanding anything to the contrary contained herein, in no event may a
Partner receive a distribution of Available Cash with respect to a Partnership
Unit for a quarter or shorter period if such Partner is entitled to receive a
distribution with respect to a Share for which such Partnership Unit has been
redeemed or exchanged. Unless otherwise expressly provided for herein, in
Attachment A, Attachment B, Attachment C, and Attachment D hereto, with respect
to Series A Preferred Units, Series B Preferred Units, Series C Preferred Units,
and Series D Preferred Units, respectively, or in an agreement at the time a new
class or series of Partnership Interests is created in accordance with Article
IV hereof, no Partnership Interest shall be entitled to a distribution in
preference to any other Partnership Interest. The General Partner shall make
such reasonable efforts, as determined by it in its sole and absolute discretion
and consistent with the qualification of the General Partner Entity as a REIT,
to distribute Available Cash (a) to Limited Partners so as to preclude any such
distribution or portion thereof from being treated as part of a sale of property
to the Partnership by a Limited Partner under Section 707 of the Code or the
Regulations thereunder; provided, that, the General Partner and the Partnership
shall not have liability to a Limited Partner under any circumstances as a
result of any distribution to a Limited Partner being so treated, and (b) to the
General Partner in an amount sufficient to enable the General Partner Entity to
make distributions to its shareholders that will enable the General Partner
Entity to (1) satisfy the requirements for qualification as a REIT under the
Code and the Regulations (the "REIT Requirements"), and (2) avoid any federal
income or excise tax liability.
B. Method. (i) Each holder of Partnership Interests that is
entitled to any preference in distribution (including, without limitation, the
preferences in distribution set forth in Attachment A, Attachment B, Attachment
C, and Attachment D hereto with respect to Series A Preferred Units, Series B
Preferred Units, Series C Preferred Units, and Series D Preferred Units,
respectively) shall be entitled to a distribution in accordance with the rights
of any such class of Partnership Interests (and,
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within such class, pro rata in proportion to the respective Percentage Interests
on such Partnership Record Date); and
(ii) To the extent there is Available Cash remaining after the
payment of any preference in distribution in accordance with the foregoing
clause (i), 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 to the
respective Percentage Interests on such Partnership Record Date).
C. Distributions When Class B Units Are Outstanding. If for any
quarter or shorter period with respect to which a distribution is to be made (a
"Distribution Period") Class B Units are outstanding on the Partnership Record
Date for such Distribution Period, the General Partner shall allocate the
Available Cash with respect to such Distribution Period available for
distribution with respect to the Class A Units and Class B Units collectively
between the Partners who are holders of Class A Units ("Class A") and the
Partners who are holders of Class B Units ("Class B") as follows:
(1) Class A shall receive that portion of the
Available Cash (the "Class A Share") determined by multiplying
the amount of Available Cash by the following fraction:
A x Y
----------------------
(A x Y)+(B x X)
(2) Class B shall receive that portion of the
Available Cash (the "Class B Share") determined by multiplying
the amount of Available Cash by the following fraction:
B x X
----------------------
(A x Y)+(B x X)
(3) For purposes of the foregoing formulas,
(i) "A" equals the number of Class A Units outstanding on the
Partnership Record Date for such Distribution Period; (ii) "B"
equals the number of Class B Units outstanding on the
Partnership Record Date for such
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Distribution Period; (iii) "Y" equals the number of days in
the Distribution Period; and (iv) "X" equals the number of
days in the Distribution Period for which the Class B Units
were issued and outstanding.
The Class A Share shall be distributed among Partners holding
Class A Units on the Partnership Record Date for the Distribution Period in
accordance with the number of Class A Units held by each Partner on such
Partnership Record Date; provided that in no event may a Partner receive a
distribution of Available Cash with respect to a Class A Unit if a Partner is
entitled to receive a distribution out of such Available Cash with respect to a
Share for which such Class A Unit has been redeemed or exchanged. The Class B
Shares shall be distributed among the Partners holding Class B Units on the
Partnership Record Date for the Distribution Period in accordance with the
number of Class B Units held by each Partner on such Partnership Record Date. In
no event shall any Class B Units be entitled to receive any distribution of
Available Cash for any Distribution Period ending prior to the date on which
such Class B Units are issued.
D. Distributions When Class B Units Have Been Issued on Different
Dates. If Class B Units which have been issued on different dates are
outstanding on the Partnership Record Date for any Distribution Period, then the
Class B Units issued on each particular date shall be treated as a separate
series of Partnership Units for purposes of making the allocation of Available
Cash for such Distribution Period among the holders of Partnership Units (and
the formula for making such allocation, and the definitions of variables used
therein, shall be modified accordingly). Thus, for example, if two series of
Class B Units are outstanding on the Partnership Record Date for any
Distribution Period, the allocation formula for each series, "Series B(1)" and
"Series B(2)" would be as follows:
(1) Series B(1) shall receive that portion of
the Available Cash determined by multiplying the amount of
Available Cash by the following fraction:
B(1) x X(1)
------------------------------
(A x Y)+(B(1) x X(1))+(B(2) x X(2))
(2) Series B(2) shall receive that portion of
the Available Cash determined by multiplying the amount of
Available Cash by the following fraction:
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B(2) x X(2)
------------------------------
(A x Y)+(B(1) x X(1))+(B(2) x X(2))
(3) For purposes of the foregoing formulas the
definitions set forth in Section 5.1.C.3 remain the same
except that (i) "B(1)" equals the number of Partnership Units
in Series B(1) outstanding on the Partnership Record Date for
such Distribution Period; (ii) "B(2)" equals the number of
Partnership Units in Series B(2) outstanding on the
Partnership Record Date for such Distribution Period; (iii)
"X(1)" equals the number of days in the Distribution Period
for which the Partnership Units in Series B(1) were issued and
outstanding; and (iv) "X(2)" equals the number of days in the
Distribution Period for which the Partnership Units in Series
B(2) were issued and outstanding.
E. Minimum Distributions if Shares Not Publicly Traded. In
addition (and without regard to the amount of Available Cash), if the Shares of
the General Partner Entity are not Publicly Traded, the General Partner shall
make cash distributions with respect to the Class A Units at least annually for
each taxable year of the Partnership beginning prior to the fifteenth (15th)
anniversary of the Effective Date in an aggregate amount with respect to each
such taxable year at least equal to 95% of the Partnership's taxable income for
such year allocable to the Class A Units, with such distributions to be made not
later than 60 days after the end of such year.
SECTION 5.2 AMOUNTS WITHHELD
All amounts withheld pursuant to the Code or any provisions of
any state or local tax law and Section 10.5 with respect to any allocation,
payment or distribution to the General Partner, the Limited Partners or
Assignees shall be treated as amounts distributed to the General Partner,
Limited Partners or Assignees pursuant to Section 5.1 for all purposes under
this Agreement.
SECTION 5.3 DISTRIBUTIONS UPON LIQUIDATION
Proceeds from a Terminating Capital Transaction shall be
distributed to the Partners in accordance with Section 13.2.
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SECTION 5.4 REVISIONS TO REFLECT ISSUANCE OF PARTNERSHIP INTERESTS
If the Partnership issues Partnership Interests to the General
Partner or any Additional Limited Partner pursuant to Article IV hereof, the
General Partner shall make such revisions to this Article V and Exhibit A as it
deems necessary to reflect the issuance of such additional Partnership Interests
without the requirements for any other consents or approvals.
ARTICLE VI
ALLOCATIONS
SECTION 6.1 ALLOCATIONS FOR CAPITAL ACCOUNT PURPOSES
For purposes of maintaining the Capital Accounts and in
determining the rights of the Partners among themselves, the Partnership's items
of income, gain, loss and deduction (computed in accordance with Exhibit B)
shall be allocated among the Partners in each taxable year (or portion thereof)
as provided herein below.
A. Net Income. After giving effect to the special
allocations set forth in Section 1 of Exhibit C of the Partnership Agreement,
Net Income shall be allocated:
(1) first, to the General Partner to the extent that
cumulative Net Losses previously allocated the General
Partner pursuant to Section 6.1.B(6) exceed cumulative Net
Income previously allocated to the General Partner
pursuant to this clause (1);
(2) second, to each Protected Partner until the cumulative
Net Income allocated such Protected Partner under this
clause (2) equals the cumulative Net Losses allocated such
Protected Partner under Section 6.1.B(5) (and, within the
class of Protected Partners, pro rata in proportion to
their respective percentages of the cumulative Net Losses
allocated all Protected Partners pursuant to Section
6.1.B(5) hereof);
(3) third, to the General Partner until the cumulative Net
Income allocated under this clause (3) equals the
cumulative Net Losses allocated the General Partner under
Section 6.1.B(4);
(4) fourth, to the holders of any Partnership Interests
that are entitled to any preference upon liquidation until
the cumulative Net Income allocated under this clause (4)
equals the cumulative Net Losses allocated to such
Partners under Section 6.1.B(3);
(5) fifth, to the holders of any Partnership Interests
that are entitled to any preference in distribution in
accordance with the rights of any such class of
Partnership Interests until each such Partnership Interest
has been allocated, on a cumulative basis pursuant to this
clause (5), Net Income equal to the amount of
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distributions received which are attributable to the
preference of such class of Partnership Interests (and,
within such class, pro rata in proportion to the
respective Percentage Interests as of the last day of the
period for which such allocation is being made); and
(6) finally, with respect to Partnership Interests that
are not entitled to any preference in the allocation of
Net Income, pro rata to each such class in accordance with
the terms of such class (and, within such class, pro rata
in proportion to the respective Percentage Interests as of
the last day of the period for which such allocation is
being made).
B. Net Losses. After giving effect to the special allocations set
forth in Section 1 of Exhibit C, Net Losses shall be allocated:
(1) first, to the holders of Partnership Interests, in
proportion to their share of the Net Income previously
allocated pursuant to Section 6.1.A(6), to the extent that
any prior allocations of Net Income to such Partners
pursuant to Section 6.1.A(6) exceed, on a cumulative
basis, distributions with respect to such Partnership
Interests pursuant to clause (ii) of Section 5.1.B;
(2) second, with respect to classes of Partnership
Interests that are not entitled to any preference in
distribution upon distribution, pro rata to each such
class in accordance with the terms of such class (and,
within such class, pro rata in proportion to the
respective Percentage Interests as of the last day of the
period for which such allocation is being made); provided
that Net Losses shall not be allocated to any Partner
pursuant to this Section 6.1.B(2) to the extent that such
allocation would cause such Partner to have an Adjusted
Capital Account Deficit (or increase any existing Adjusted
Capital Account Deficit) (determined in each case (i) by
not including in the Partners' Adjusted Capital Accounts
any amount that a Partner is obligated to contribute to
the Partnership with respect to any deficit in its Capital
Account pursuant to Section 13.3 and (ii) in the case of a
Partner who also holds classes of Partnership Interests
that are entitled to any preferences in distribution upon
liquidation, by subtracting from such Partners' Adjusted
Capital Account the amount of such preferred distribution
to be made upon liquidation) at the end of such taxable
year (or portion thereof);
(3) third, with respect to classes of Partnership
Interests that are entitled to any preference in
distribution upon liquidation, in reverse order of the
priorities of each such class (and within each such class,
pro rata in proportion to their respective Percentage
Interests as of the last day of the period for which such
allocation is being made; provided that Net Losses shall
not be allocated to any Partner pursuant to this Section
6.1.B(3) to the extent that such allocation
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would cause such Partner to have an Adjusted Capital
Account Deficit (or increase any existing Adjusted Capital
Account Deficit) (determined in each case by not including
in the Partners' Adjusted Capital Accounts any amount that
a Partner is obligated to contribute to the Partnership
with respect to any deficit in its Capital Account
pursuant to Section 13.3) at the end of such taxable year
(or portion thereof);
(4) fourth, to the General Partner in an amount equal to
the excess of (a) the amount of the Partnership Recourse
Liabilities over (b) the Aggregate Protected Amount;
(5) fifth, to and among the Protected Partners, in
proportion to their respective Protected Amounts, until
such time as the Protected Partners as a group have been
allocated cumulative Net Losses pursuant to this clause
(5) equal to the Aggregate Protected Amount; and
(6) thereafter, to the General Partner.
C. Allocation of Nonrecourse Debt. For purposes of Regulation
Section 1.752-3(a), the Partners agree that Nonrecourse Liabilities of the
Partnership in excess of the sum of (i) the amount of Partnership Minimum Gain
and (ii) the total amount of Nonrecourse Built-in Gain shall be allocated by the
General Partner by taking into account facts and circumstances relating to each
Partner's respective interest in the profits of the Partnership. For this
purpose, the General Partner will have discretion in any fiscal year to allocate
such excess Nonrecourse Liabilities among the Partners in any manner permitted
under Code Section 752 and the Regulations thereunder.
D. Recapture Income. Any gain allocated to the Partners upon the
sale or other taxable disposition of any Partnership asset shall, to the extent
possible after taking into account other required allocations of gain pursuant
to Exhibit C, be characterized as Recapture Income in the same proportions and
to the same extent as such Partners have been allocated any deductions directly
or indirectly giving rise to the treatment of such gains as Recapture Income.
SECTION 6.2 REVISIONS TO ALLOCATIONS TO REFLECT ISSUANCE OF PARTNERSHIP
INTERESTS
If the Partnership issues Partnership Interests to the General
Partner or any Additional Limited Partner pursuant to Article IV hereof, the
General Partner shall make such revisions to this Article VI and Exhibit A as it
deems necessary to reflect the terms of the issuance of such Partnership
Interests, including making preferential allocations to classes of Partnership
Interests that are entitled thereto. Such revisions shall not require the
consent or approval of any other Partner.
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ARTICLE VII
MANAGEMENT AND OPERATIONS OF BUSINESS
SECTION 7.1 MANAGEMENT
X. Xxxxxx of General Partner. Except as otherwise expressly
provided in this Agreement, all management powers over the business and affairs
of the Partnership are and shall be 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. 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 Section 7.11, 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 and to effectuate the purposes
set forth in Section 3.1, 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 are required under
Section 5.1.E or will permit the General Partner
Entity (so long as the General Partner Entity
qualifies as 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 shareholders
sufficient to permit the General Partner Entity 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 the General Partner
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 or
all of the assets of the Partnership (including the
exercise or grant of any conversion, option,
privilege or subscription right or other right
available in connection with any assets at any time
held by the Partnership) or the merger or other
combination of the
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Partnership with or into another entity on such
terms as the General Partner deems proper;
(4) 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 of
the operations of the General Partner, the
Partnership or any of the Partnership's
Subsidiaries, the lending of funds to other Persons
(including, without limitation, the General
Partner, its Subsidiaries and the Partnership's
Subsidiaries) and the repayment of obligations of
the Partnership and its Subsidiaries and any other
Person in which the Partnership has an equity
investment and the making of capital contributions
to its Subsidiaries;
(5) 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;
(6) the negotiation, execution, and performance of any
contracts, 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, including contracting with
contractors, developers, consultants, accountants,
legal counsel, other professional advisors and
other agents and the payment of their expenses and
compensation out of the Partnership's assets;
(7) 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, 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;
(8) the distribution of Partnership cash or other
Partnership assets in accordance with this
Agreement;
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(9) the holding, managing, investing and reinvesting of
cash and other assets of the Partnership;
(10) the collection and receipt of revenues and income
of the Partnership;
(11) the selection, designation of powers, authority and
duties and the 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 and the
determination of their compensation and other terms
of employment or hiring;
(12) the maintenance of such insurance for the benefit
of the Partnership and the Partners as it deems
necessary or appropriate;
(13) the formation of, or acquisition of an interest
(including non-voting interests in entities
controlled by Affiliates of the Partnership or
third parties) in, and the contribution of property
to, any further limited or general partnerships,
joint ventures, limited liability companies or
other relationships that it deems desirable
(including, without limitation, the acquisition of
interests in, and the contributions of funds or
property to, or making of loans to, its
Subsidiaries and any other Person in which it has
an equity investment from time to time, or the
incurrence of indebtedness on behalf of such
Persons or the guarantee of the obligations of such
Persons); 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;
(14) the control of any matters affecting the rights and
obligations of the Partnership, including the
settlement, compromise, submission to arbitration
or any other form of dispute resolution or
abandonment of any claim, cause of action,
liability, debt or damages due or owing to or from
the Partnership, the commencement or defense of
suits, legal proceedings, administrative
proceedings, arbitrations or other forms of dispute
resolution, the representation of the Partnership
in all suits or legal proceedings, administrative
proceedings, arbitrations or other forms of dispute
resolution, the incurring of legal expense and the
indemnification of any Person against liabilities
and contingencies to the extent permitted by law;
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(15) the determination of the fair market value of any
Partnership property distributed in kind, using
such reasonable method of valuation as the General
Partner may adopt;
(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 assets 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,
individually 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
any interest pursuant to contractual or other
arrangements with such Person;
(19) the making, executing and delivering 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 other 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; and
(20) the distribution of cash to acquire Partnership
Units held by a Limited Partner in connection with
a Limited Partner's exercise of its Redemption
Right under Section 8.6; and
(21) the amendment and restatement of Exhibit A to
reflect accurately at all times the Capital
Contributions and Percentage Interests of the
Partners as the same are adjusted from time to time
to the extent necessary to reflect redemptions,
Capital Contributions, the issuance of Partnership
Units, the admission of any Additional Limited
Partner or any Substituted Limited Partner or
otherwise, which amendment and restatement,
notwithstanding anything in this Agreement to the
contrary, shall not be deemed an amendment of this
Agreement, as long as the matter or event being
reflected in Exhibit A otherwise is authorized by
this Agreement.
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B. No Approval by Limited Partners. Except as provided in Section
7.11, 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 other provision of this Agreement, the Act or any
applicable law, rule or regulation, to the full extent permitted under the Act
or other applicable law. 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. Insurance. 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 Indemnitees hereunder and (iii) such other insurance
as the General Partner, in its sole and absolute discretion, determines to be
necessary.
D. Working Capital and Other Reserves. 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 its sole and absolute discretion, deems appropriate and reasonable
from time to time, including upon liquidation of the Partnership under Section
13.
E. No Obligations to Consider Tax Consequences of Limited
Partners. In exercising their 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
(or not taken) by any of them. The General Partner and the Partnership shall not
have liability to a Limited Partner for monetary damages or otherwise for losses
sustained, liabilities incurred or benefits not derived by such Limited Partner
in connection with such decisions, provided that the General Partner has acted
in good faith and pursuant to its authority under this Agreement.
SECTION 7.2 CERTIFICATE OF LIMITED PARTNERSHIP
The General Partner has previously filed the Certificate with the
Secretary of State of Delaware. 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 Delaware 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), 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 Delaware
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and any other state, the District of Columbia or other jurisdiction in which the
Partnership may elect to do business or own property.
SECTION 7.3 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. 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 7.4 REIMBURSEMENT OF THE GENERAL PARTNER
A. No Compensation. Except as provided in this Section 7.4 and
elsewhere in this Agreement (including the provisions of Articles V and VI
regarding distributions, payments and allocations to which it may be entitled),
the General Partner shall not be compensated for its services as the general
partner of the Partnership.
B. Responsibility for Partnership Expenses. The Partnership shall
be responsible for and shall pay all expenses relating to the Partnership's
organization, the ownership of its assets and its operations. 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 and operation of, or for the
benefit of, the Partnership (including, without limitation, expenses related to
the operations of the General Partner and to the management and administration
of any Subsidiaries of the General Partner or the Partnership or Affiliates of
the Partnership, such as auditing expenses and filing fees); provided that the
amount of any such reimbursement shall be reduced by (i) any interest earned by
the General Partner with respect to bank accounts or other instruments or
accounts held by it on behalf of the Partnership as permitted in Section 7.5.A
(which interest is considered to belong to the Partnership and shall be paid
over to the Partnership to the extent not applied to reimburse the General
Partner for expenses hereunder); and (ii) any amount derived by the General
Partner from any investments permitted in Section 7.5.A. The General Partner
shall determine in good faith the amount of expenses incurred by it related to
the ownership and operation of, or for the benefit of, the Partnership. If
certain expenses are incurred for the benefit of the Partnership and other
entities (including the General Partner), such expenses will be allocated to the
Partnership and such other entities in such a manner as the General Partner in
its sole and absolute discretion deems fair and reasonable. Such reimbursements
shall be in addition to any reimbursement to the General Partner pursuant to
Section 10.3.C and as a result of indemnification pursuant to
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Section 7.7. All payments and reimbursements hereunder shall be characterized
for federal income tax purposes as expenses of the Partnership incurred on its
behalf, and not as expenses of the General Partner.
C. Partnership Interest Issuance Expenses. The General Partner
shall also be reimbursed for all expenses it incurs relating to any issuance of
Partnership Interests, Shares, Debt of the Partnership or the General Partner or
rights, options, warrants or convertible or exchangeable securities pursuant to
Article IV (including, without limitation, all costs, expenses, damages and
other payments resulting from or arising in connection with litigation related
to any of the foregoing), all of which expenses are considered by the Partners
to constitute expenses of, and for the benefit of, the Partnership.
D. Purchases of Shares by the General Partner. If the General
Partner exercises its rights under the Declaration of Trust to purchase Shares
or otherwise elects to purchase from its shareholders Shares in connection with
a share repurchase or similar program or for the purpose of delivering such
Shares to satisfy an obligation under any dividend reinvestment or equity
purchase program adopted by the General Partner, any employee equity purchase
plan adopted by the General Partner or any similar obligation or arrangement
undertaken by the General Partner in the future, the purchase price paid by the
General Partner for those Shares and any other expenses incurred by the General
Partner in connection with such purchase shall be considered expenses of the
Partnership and shall be reimbursable to the General Partner, subject to the
conditions that: (i) if those Shares subsequently are to be sold by the General
Partner, the General Partner shall pay to the Partnership any proceeds received
by the General Partner for those Shares (provided that a transfer of Shares for
Partnership Units pursuant to Section 8.6 would not be considered a sale for
such purposes); and (ii) if such Shares are not retransferred by the General
Partner within thirty (30) days after the purchase thereof, the General Partner
shall cause the Partnership to cancel a number of Partnership Units (rounded to
the nearest whole Partnership Unit) held by the General Partner equal to the
product attained by multiplying the number of those Shares by a fraction, the
numerator of which is one and the denominator of which is the Conversion Factor.
E. Reimbursement not a Distribution. If and to the extent any
reimbursement made pursuant to this Section 7.4 is determined for federal income
tax purposes not to constitute a payment of expenses of the Partnership, the
amount so determined shall constitute a guaranteed payment with respect to
capital 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 a distribution for purposes of computing the Partners' Capital
Accounts.
F. Funding for Certain Capital Transactions. In the event that
the General Partner shall undertake to acquire (whether by merger,
consolidation, purchase, or otherwise) the assets or equity interests of another
Person and such acquisition shall require the payment of cash by the General
Partner (whether to such Person or to any other selling party or parties in such
transaction or to one or more creditors, if any, of such Person or such selling
party or parties), (i) the Partnership shall advance to the General Partner the
cash required to consummate such acquisition if, and to the extent that, such
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cash is not to be obtained by the General Partner through an issuance of Shares
described in Section 4.2 or pursuant to a transaction described in Section
7.5.B, (ii) the General Partner shall immediately, upon consummation of such
acquisition, transfer to the Partnership (or cause to be transferred to the
Partnership), in full and complete satisfaction of such advance and as required
by Section 7.5, the assets or equity interests of such Person acquired by the
General Partner in such acquisition, and (iii) pursuant to and in accordance
with Section 4.2 and Section 7.5.B, the Partnership shall issue to the General
Partner Partnership Interests and/or rights, options, warrants or convertible or
exchangeable securities of the Partnership having designations, preferences and
other rights that are substantially the same as those of any additional Shares,
other equity securities, New Securities and/or Convertible Funding Debt, as the
case may be, issued by the General Partner in connection with such acquisition
(whether issued directly to participants in the acquisition transaction or to
third parties in order to obtain cash to complete the acquisition). In addition
to, and without limiting the foregoing, in the event that the General Partner
engages in a transaction in which (x) the General Partner (or a wholly owned
direct or indirect Subsidiary of the General Partner) merges with another entity
(referred to as the "Parent Entity") that is organized in the "UPREIT format"
(i.e., where the Parent Entity holds substantially all of its assets and
conducts substantially all of its operations through a partnership, limited
liability company or other entity (referred to as an "Operating Entity")) and
the General Partner survives such merger, (y) such Operating Entity merges with
or is otherwise acquired by the Partnership in exchange in whole or in part for
Partnership Interests, and (z) the General Partner is required or elects to pay
part of the consideration in connection with such merger involving the Parent
Entity in the form of cash and part of the consideration in the form of Shares,
the Partnership shall distribute to the General Partner with respect to its
existing Partnership Interest an amount of cash sufficient to complete such
transaction and the General Partner shall cause the Partnership to cancel a
number of Partnership Units (rounded to the nearest whole number) held by the
General Partner equal to the product attained by multiplying the number of
additional Shares of the General Partner that the General Partner would have
issued to the Parent Entity or the owners of the Parent Entity in such
transaction if the entire consideration therefor were to have been paid in
Shares by a fraction, the numerator of which is one and the denominator of which
is the Conversion Factor.
SECTION 7.5 OUTSIDE ACTIVITIES OF THE GENERAL PARTNER; RELATIONSHIP OF
SHARES TO PARTNERSHIP UNITS; FUNDING DEBT
A. General. Without the Consent of the Outside Limited Partners,
the General Partner shall not, directly or indirectly, enter into or conduct any
business other than in connection with the ownership, acquisition and
disposition of Partnership Interests as General Partner or Limited Partner and
the management of the business of the Partnership and such activities as are
incidental thereto. Without the Consent of the Outside Limited Partners, the
assets of the General Partner shall be limited to Partnership Interests and
permitted debt obligations of the Partnership (as contemplated by Section
7.5.F), so that Shares and Partnership Units are completely fungible except as
otherwise specifically provided herein; provided that the General Partner shall
be permitted to hold such bank accounts or similar instruments or accounts in
its name as it deems necessary to carry out its responsibilities and purposes as
contemplated under this
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Agreement and its organizational documents (provided that accounts held on
behalf of the Partnership to permit the General Partner to carry out its
responsibilities under this Agreement shall be considered to belong to the
Partnership and the interest earned thereon shall, subject to Section 7.4.B, be
applied for the benefit of the Partnership); and, provided further that, the
General Partner shall be permitted to acquire, directly or through a Qualified
REIT Subsidiary or limited liability company, up to a one percent (1%) interest
in any partnership or limited liability company at least ninety-nine percent
(99%) of the equity of which is owned, directly or indirectly, by the
Partnership. The General Partner and any of its Affiliates may acquire Limited
Partnership Interests and shall be entitled to exercise all rights of a Limited
Partner relating to such Limited Partnership Interests.
B. Repurchase of Shares. If the General Partner exercises its
rights under the Declaration of Trust to purchase Shares or otherwise elects to
purchase from its shareholders Shares in connection with a share repurchase or
similar program or for the purpose of delivering such shares to satisfy an
obligation under any dividend reinvestment or share purchase program adopted by
the General Partner, any employee share purchase plan adopted by the General
Partner or any similar obligation or arrangement undertaken by the General
Partner in the future, then the General Partner shall cause the Partnership to
purchase from the General Partner that number of Partnership Units of the
appropriate class equal to the product obtained by multiplying the number of
Shares purchased by the General Partner times a fraction, the numerator of which
is one and the denominator of which is the Conversion Factor, on the same terms
and for the same aggregate price that the General Partner purchased such Shares.
C. Forfeiture of Shares. If the Partnership or the General
Partner acquires Shares as a result of the forfeiture of such Shares under a
restricted or similar share plan, then the General Partner shall cause the
Partnership to cancel that number of Partnership Units equal to the number of
Shares so acquired, and, if the Partnership acquired such Shares, it shall
transfer such Shares to the General Partner for cancellation.
D. Issuances of Shares. After the Effective Date, the General
Partner shall not grant, award, or issue any additional Shares (other than
Shares issued pursuant to Section 8.6 hereof, pursuant to a dividend or
distribution (including any share split) of Shares to all of its shareholders),
or in connection with any acquisition permitted by Section 7.5.A hereof of up to
a one percent (1%) interest in any partnership or limited liability company at
least ninety-nine percent (99%) of the equity of which is owned, directly or
indirectly, by the Partnership), other equity securities of the General Partner,
New Securities or Convertible Funding Debt unless (i) the General Partner shall
cause, pursuant to Section 4.2.A hereof, the Partnership to issue to the General
Partner Partnership Interests or rights, options, warrants or convertible or
exchangeable securities of the Partnership having designations, preferences and
other rights, all such that the economic interests are substantially the same as
those of such additional Shares, other equity securities,
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New Securities or Convertible Funding Debt, as the case may be, and (ii) the
General Partner transfers to the Partnership, as an additional Capital
Contribution, the proceeds from the grant, award, or issuance of such additional
Shares, other equity securities, New Securities or Convertible Funding Debt, as
the case may be, or from the exercise of rights contained in such additional
Shares, other equity securities, New Securities or Convertible Funding Debt, as
the case may be. Without limiting the foregoing, the General Partner is
expressly authorized to issue additional Shares, other equity securities, New
Securities or Convertible Funding Debt, as the case may be, for less than fair
market value, and the General Partner is expressly authorized, pursuant to
Section 4.2.A hereof, to cause the Partnership to issue to the General Partner
corresponding Partnership Interests, as long as (a) the General Partner
concludes in good faith that such issuance is in the interests of the General
Partner and the Partnership (for example, and not by way of limitation, the
issuance of Shares and corresponding Partnership Units pursuant to a share
purchase plan providing for purchases of Shares, either by employees or
shareholders, at a discount from fair market value or pursuant to employee share
options that have an exercise price that is less than the fair market value of
the Shares, either at the time of issuance or at the time of exercise) and (b)
the General Partner transfers all proceeds from any such issuance or exercise to
the Partnership as an additional Capital Contribution.
E. Share Option Plan. If at any time or from time to time, the
General Partner sells Shares pursuant to any Share Option Plan, the General
Partner shall transfer the net proceeds of the sale of such Shares to the
Partnership as an additional Capital Contribution in exchange for an amount of
additional Partnership Units equal to the number of Shares so sold divided by
the Conversion Factor.
F. Funding Debt. The General Partner may incur a Funding Debt,
including, without limitation, a Funding Debt that is convertible into Shares or
otherwise constitutes a class of New Securities ("Convertible Funding Debt"),
subject to the condition that the General Partner lend to the Partnership the
net proceeds of such Funding Debt; provided that Convertible Funding Debt shall
be issued pursuant to Section 7.5.D above; and, provided further 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 any Funding Debt, the loan to the Partnership shall be on comparable terms
and conditions, including interest rate, repayment schedule and costs and
expenses, as are applicable with respect to or incurred in connection with such
Funding Debt.
SECTION 7.6 TRANSACTIONS WITH AFFILIATES
A. Transactions with Certain Affiliates. Except as expressly
permitted by this Agreement, the Partnership shall not, directly or indirectly,
sell, transfer or convey any property to, or purchase any property from, or
borrow funds from, or lend funds to, any Partner or any Affiliate of the
Partnership that is not also a Subsidiary of the Partnership, except pursuant to
transactions that are on terms that are fair and reasonable and no less
favorable to the Partnership than would be obtained from an unaffiliated third
party.
B. Conflict Avoidance. 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 General Partner on such terms as the
General Partner, in its sole and absolute discretion, believes are advisable.
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C. Benefit Plans Sponsored by the Partnership. 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
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.
SECTION 7.7 INDEMNIFICATION
A. General. The Partnership shall indemnify each Indemnitee to
the fullest extent provided by the Act from and against any and all losses,
claims, damages, liabilities, joint or several, expenses (including, without
limitation, attorneys fees and other legal fees and expenses), judgments, fines,
settlements and other amounts arising from or in connection with any and all
claims, demands, actions, suits or proceedings, civil, criminal, administrative
or investigative, incurred by the Indemnitee and relating to the Partnership or
the General Partner or the operation of, or the ownership of property by, the
Partnership or the General Partner as set forth in this Agreement in which any
such Indemnitee may be involved, or is threatened to be involved, as a party or
otherwise, unless it is established by a final determination of a court of
competent jurisdiction 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 guarantee, contractual obligation for any
indebtedness or other obligation 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 an 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
with respect to the subject matter of such proceeding. Any indemnification
pursuant to this Section 7.7 shall be made only out of the assets of the
Partnership, and any insurance proceeds from the liability policy covering the
General Partner and any Indemnitee, and neither the General Partner nor any
Limited Partner shall have any obligation to contribute to the capital of the
Partnership or otherwise provide funds to enable the Partnership to fund its
obligations under this Section 7.7.
B. Advancement of Expenses. Reasonable expenses expected to be
incurred by an Indemnitee shall be paid or reimbursed by the Partnership in
advance of the final disposition of any and all claims, demands, actions, suits
or proceedings, civil, criminal, administrative or investigative made or
threatened against an Indemnitee upon receipt by the Partnership of (i) a
written affirmation by the Indemnitee of the
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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 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. No Limitation of Rights. 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 unless otherwise provided in
a written agreement pursuant to which such Indemnitee is indemnified.
D. Insurance. The Partnership may purchase and maintain insurance
on behalf of the Indemnitees 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. Benefit Plan Fiduciary. For purposes of this Section 7.7, (i)
excise taxes assessed on an Indemnitee, of for which the Indemnitee is otherwise
found liable, with respect to an ERISA Plan pursuant to applicable law shall
constitute fines within the meaning of this Section 7.7, and (iii) actions taken
or omitted by the Indemnitee with respect to an ERISA 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 such ERISA Plan shall be deemed to be for a
purpose which is not opposed to the best interests of the Partnership.
F. No Personal Liability for Limited Partners. In no event may an
Indemnitee subject any of the Partners to personal liability by reason of the
indemnification provisions set forth in this Agreement.
G. Interested Transactions. 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. Benefit. The provisions of this Section 7.7 are for the
benefit of the Indemnitees, their employees, officers, directors, trustees,
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 limitation 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 related
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. Indemnification Payments Not Distributions. If and to the
extent any payments to the General Partner pursuant to this Section 7.7
constitute gross income to
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the General Partner (as opposed to the repayment of advances made 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.
J. Exception to Indemnification. Notwithstanding anything to the
contrary in this Agreement, the General Partner shall not be entitled to
indemnification hereunder for any loss, claim, damage, liability or expense for
which the General Partner is obligated to indemnify the Partnership under any
other agreement between the General Partner and the Partnership.
SECTION 7.8 LIABILITY OF THE GENERAL PARTNER
A. General. Notwithstanding anything to the contrary set forth in
this Agreement, the General Partner shall not be liable for monetary damages 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 of any act or omission unless the General Partner acted in bad
faith and the act or omission was material to the matter giving rise to the
loss, liability or benefit not derived.
B. No Obligation to Consider Separate Interests of Limited
Partners or Shareholders. The Limited Partners expressly acknowledge that the
General Partner is acting on behalf of the Partnership, that the General Partner
is under no obligation to consider the separate interests of the Limited
Partners (including, without limitation, the tax consequences to Limited
Partners or Assignees) in deciding whether to cause the Partnership to take (or
decline to take) any actions, and that the General Partner shall not be liable
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. Actions of Agents. Subject to its obligations and duties as
General Partner set forth in Section 7.1.A, 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 the General Partner in good faith.
D. Effect of Amendment. Notwithstanding any other provision
contained herein, 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.
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SECTION 7.9 OTHER MATTERS CONCERNING THE GENERAL PARTNER
A. Reliance on Documents. 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 in good faith
to be genuine and to have been signed or presented by the proper party or
parties.
B. Reliance on Advisors. The General Partner may consult with
legal counsel, accountants, appraisers, management consultants, investment
bankers and other consultants and advisers selected by it, and any act taken or
omitted to be taken in reliance upon the opinion of such Persons as to matters
which the 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. Action Through Agents. 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. Actions to Maintain REIT Status or Avoid Taxation of the
General Partner Entity. Notwithstanding any other provisions of this Agreement
or 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 Entity to qualify as a REIT or (ii) to allow the General Partner Entity
to avoid incurring any liability for taxes under Section 857 or 4981 of the
Code, is expressly authorized under this Agreement and is deemed approved by all
of the Limited Partners.
E. Actions to Maintain REOC Status. If and so long as the
Partnership Interests of "benefit plan investors" is "significant" (as such
terms, or terms succeeding thereto with the same objective, are used in 29
C.F.R. ss. 2510.3-101(f) (such regulation or successor regulation being known as
the "Plan Assets Regulation")), or if necessary so that the underlying assets of
the General Partner will not be "plan assets" (as such term is defined in the
Plan Assets Regulations) of any ERISA Partner, then the General Partner shall
conduct the affairs of the Partnership in such manner so that the Partnership
shall qualify as a "real estate operating company" (REOC"), as that term is used
in the Plan Assets Regulations, and so that the assets of the Partnership will
not be plan assets of any ERISA Partner.
(i) If the General Partner, pursuant to this Section
7.09.E, intends to conduct the affairs of the Partnership as a REOC, the General
Partner shall deliver to each ERISA Partner an opinion of counsel reasonably
acceptable to each ERISA Partner and upon which such ERISA Partner may rely with
respect to the Partnership's REOC status
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as of the "initial valuation date" and, if requested in writing by an ERISA
Partner, as of each "annual valuation period" (as those terms, or terms
succeeding thereto with the same objective, are defined in the Plan Assets
Regulation). Such opinion of counsel shall state, (A) as to the opinion
respecting the "initial valuation date," that the Partnership shall qualify as a
REOC for the period beginning on such "initial valuation date" and ending on the
last day of the first "annual valuation period," and (B) as to each annual
opinion respecting each "annual valuation period," that the Partnership shall
qualify as a REOC for the 12-month period following the last day of such "annual
valuation period." Such opinion of counsel may rely upon, among other things, a
certificate of the General Partner as to the exercise of management rights with
respect to one or more investments (other than short-term investments pending
long-term commitment or distribution to investors) during the appropriate period
and as to a description of such investments, and also shall state whether the
Partnership has included in a certification to the opinion a statement to the
effect that on such "initial valuation date" or during such "annual valuation
period" at least 50 percent of Partnership assets (other than short-term
investments pending long-term commitment or distribution to investors), valued
at cost, were invested in real estate investments as described in the Plan
Assets Regulation.
(ii) If the opinion described in this subsection is not
provided in the affirmative, or if any ERISA Partner shall obtain and deliver to
the General Partner an opinion of counsel to such ERISA Partner (which opinion
shall be reasonably satisfactory to the General Partner) that there is a
reasonable probability that either the Partnership was not or will not be a REOC
for a period in which either (i) participation by benefit plan investors in the
Partnership is significant or (ii) REOC status is necessary so that the
underlying assets of the General Partner will not be plan assets and the General
Partner does not obtain an opinion to the contrary reasonably acceptable to each
such ERISA Partner within fifteen (15) days of its receipt of the opinion
delivered by the ERISA Partner (it being understood that the existence or
reaffirmation of the opinion delivered by the ERISA Partner to the General
Partner shall not constitute the sole basis of any ERISA Partner's determination
that the opinion delivered within fifteen days by the General Partner is not
reasonably satisfactory), then the General Partner is hereby authorized and
empowered to take such actions as it deems necessary and appropriate to
mitigate, prevent, or cure such adverse consequences as might result to an ERISA
Partner from the underlying assets of the Partnership being assets of an ERISA
Partner or the underlying assets of the General Partner being assets of any
ERISA Partner.
SECTION 7.10 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, without consent or approval of any other
Partner or Person, to encumber, sell or otherwise use in any manner any and all
assets of the Partnership, to enter into any contracts on behalf of the
Partnership and to take any and all actions on behalf of the Partnership, and
such Person shall be entitled to deal with the General Partner as if the General
Partner 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
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Person dealing with 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.
SECTION 7.11 RESTRICTIONS ON GENERAL PARTNER'S AUTHORITY
A. Consent Required. The General Partner may not take any action
in contravention of an express prohibition or limitation of this Agreement
without the written Consent of (i) all Partners adversely affected or (ii) such
lower percentage of the Limited Partnership Interests as may be specifically
provided for under a provision of this Agreement or the Act.
B. Sale of All Assets of the Partnership. Except as provided in
Article XIII, the General Partner may not, directly or indirectly, cause the
Partnership to sell, exchange, transfer or otherwise dispose of all or
substantially all of the Partnership's assets in a single transaction or a
series of related transactions (including by way of merger (including a
triangular merger), consolidation or other combination with any other Persons)
(i) if such merger, sale or other transaction is in connection with a
Termination Transaction permitted under Section 11.2.B hereof, without the
Consent of the Partners holding at least a majority of the then outstanding
Partnership Units (including any Partnership Units held by the General Partner),
or (ii) otherwise, without the Consent of the Outside Limited Partners.
C. Communications Act Investors. Unless otherwise approved in
writing by each affected Communications Act Investor (hereinafter defined), the
General Partner may not, directly or indirectly, cause the Partnership to invest
in any Property or otherwise take any action that (i) would result in the
Communications Act Investor being placed in a position whereby it would have or
be deemed to have the right to act for any third party in selecting or dealing
with any interexchange carrier (which, for purposes hereof, shall include
satellite telecommunication service) in providing long distance service between
local access and transport areas which originates in any State within the region
in which the affected Communications Act Investor (or the operating company
affiliate thereof) provides wireline telephone local exchange service, (but in
no event shall the foregoing be deemed to prohibit the Partnership from
contracting with a third party to perform such functions on a discretionary
basis as part of its property management duties where such activity is a
necessary adjunct to an investment and such activities, in the aggregate, are
not significant in relation to the Partnership's business activities taken as a
whole), or (ii) would cause a significant percentage of the Partnership's gross
income from any Property to be attributable to either the provision or resale of
long distance service
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between local access and transport areas which originates in any State within
the region in which the affected Communications Act Investor (or the operating
company affiliate thereof) provides wireline telephone local exchange service,
or the manufacture of telecommunications, customer premises or related
equipment. In addition, the Partnership will not engage in any
telecommunications activities other than those that may be ancillary to the
ownership or operation of its investments or make an investment in a cable
television system that would violate the cable-telephone cross-ownership
restriction in the Communications Act of 1934, as amended, with regard to the
local exchange service area of a Communications Act Investor (or the operating
company affiliate thereof). Notwithstanding the foregoing, the Partnership is
not precluded from engaging in any telecommunications business or cable business
unless such business is found to place the Communications Act Investor in
violation of law. The General Partner shall have a period of 120 days following
a finding by a court or regulatory body that such a violation exists to use its
reasonable best efforts to prevent or eliminate such violation, including, but
not limited to, correction of the condition giving rise to the violation,
amendment to this Agreement or sale of the relevant property or the interest of
the Communications Act Investor therein. A "Communications Act Investor" is a
Partner or shareholder of the General Partner that has notified the General
Partner that it is subject to the Communications Act of 1934, as amended.
SECTION 7.12 LOANS BY THIRD PARTIES
The Partnership may incur Debt, or enter into similar credit,
guarantee, financing or refinancing arrangements for any purpose (including,
without limitation, in connection with any acquisition of property) with any
Person upon such terms as the General Partner determines appropriate.
ARTICLE VIII
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, including Section 10.5, 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 operation, 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.
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SECTION 8.3 OUTSIDE ACTIVITIES OF LIMITED PARTNERS
Subject to Section 7.5 hereof, and subject to any agreements
entered into pursuant to Section 7.6.C hereof and to any other agreements
entered into by a Limited Partner or its Affiliates with the Partnership or a
Subsidiary, any Limited Partner (other than the General Partner) and any
officer, director, employee, agent, trustee, Affiliate or shareholder 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 or indirect competition
with 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. None of the Limited Partners (other than the General
Partner) or 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 General Partner to the extent expressly
provided herein), 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 right of redemption set forth in Section
8.6, no Limited Partner shall be entitled to the withdrawal or return of its
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 (except as
permitted by Section 4.2.A) or, except to the extent provided by Exhibit C or as
permitted by Sections 4.2.A, 5.1.B(i), 6.1.A(ii) and 6.1.B(i), 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. General. In addition to other rights provided by this
Agreement or by the Act, and except as limited by Section 8.5.D, 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 such Limited Partner's own
expense:
(1) to obtain a copy of the most recent annual and
quarterly reports filed with the Securities and
Exchange Commission by either the General Partner
Entity or the Partnership pursuant to the Exchange
Act;
(2) to obtain a copy of the Partnership's federal,
state and local income tax returns for each
Partnership Year;
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(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.
B. Notice of Conversion Factor. The Partnership shall notify each
Limited Partner upon request of the then current Conversion Factor and any
changes that have been made thereto.
C. Notice of Extraordinary Transaction of the General Partner
Entity. The General Partner Entity shall not make any extraordinary
distributions of cash or property to its shareholders or effect a merger
(including, without limitation, a triangular merger), a sale of all or
substantially all of its assets or any other similar extraordinary transaction
without notifying the Limited Partners of its intention to make such
distribution or effect such merger, sale or other extraordinary transaction at
least twenty (20) Business Days prior to the record date to determine
shareholders eligible to receive such distribution or to vote upon the approval
of such merger, sale or other extraordinary transaction (or, if no such record
date is applicable, at least twenty (20) business days before consummation of
such merger, sale or other extraordinary transaction); provided, however, that
the General Partner, in its sole discretion, may shorten the required notice
period of not less than twenty (20) business days prior to the record date to
determine the shareholders eligible to vote upon a merger transaction (but not
any of the other transactions covered by this Section 8.5.C.) by up to ten (10)
business days (thereby continuing to afford the holders of Units the opportunity
to redeem Units under Section 8.6 on or prior to the record date for the
shareholder vote on the merger transaction) so long as (i) the General Partner
Entity will be the surviving entity in such merger transaction, (ii) immediately
following the merger transaction, Persons who held voting securities of the
General Partner Entity immediately prior to such merger transaction will hold,
solely by reason of the ownership of voting securities of the General Partner
Entity immediately prior to the merger transaction, voting securities of the
General Partner Entity representing not less than fifty one percent (51%) of the
total combined voting power of all outstanding voting securities of the General
Partner Entity after such merger, and (iii) in the event that in connection with
such merger transaction the Partnership will merge with another entity, the
Partnership will be the surviving entity in such merger. This provision for such
notice shall not be deemed (i) to permit any transaction that otherwise is
prohibited by this Agreement or requires a Consent of the Partners or (ii) to
require a Consent on the part of any one or more of the Limited Partners to a
transaction that does not otherwise require Consent under this Agreement. Each
Limited Partner agrees, as a
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condition to the receipt of the notice pursuant hereto, to keep confidential the
information set forth therein until such time as the General Partner Entity has
made public disclosure thereof and to use such information during such period of
confidentiality solely for purposes of determining whether to exercise the
Redemption Right; provided, however, that a Limited Partner may disclose such
information to its attorney, accountant and/or financial advisor for purposes of
obtaining advice with respect to such exercise so long as such attorney,
accountant and/or financial advisor agrees to receive and hold such information
subject to this confidentiality requirement; provided, however, that the General
Partner, in its sole discretion, may shorten the required notice period of not
less than twenty (20) business days prior to the record date to determine the
shareholders eligible to vote upon a merger transaction (but not any of the
other transactions covered by this Section 8.5.C.) to a period of not less than
ten (10) calendar days (thereby continuing to afford the holders of Units the
opportunity to redeem Units under Section 8.6 on or prior to the record date for
the shareholder vote on the merger transaction) so long as (i) the General
Partner Entity will be the surviving entity in such merger transaction, (ii)
immediately following the merger transaction, Persons who held voting securities
of the General Partner Entity immediately prior to such merger transaction will
hold, solely by reason of the ownership of voting securities of the General
Partner Entity immediately prior to the merger transaction, voting securities of
the General Partner Entity representing not less than fifty-one percent (51%) of
the total combined voting power of all outstanding voting securities of the
General Partner Entity after such merger, and (iii) in the event that in
connection with such merger transaction the Partnership will merge with another
entity, the Partnership will be the surviving entity in such merger.
D. Confidentiality. 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 determine in its sole
and absolute discretion to be reasonable, any information that (i) the General
Partner reasonably 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 could damage the Partnership
or its business or (ii) the Partnership is required by law or by agreements with
unaffiliated third parties to keep confidential.
SECTION 8.6 REDEMPTION RIGHT
A. General. (i) Subject to Section 8.6.C, at any time on or after
the first anniversary date of the issuance of a Partnership Unit to a Limited
Partner pursuant to Article IV hereof (which one-year period shall commence upon
the issuance of such Partnership Unit regardless of whether such Partnership
Unit is designated upon issuance as a Class A Unit, a Class B Unit or otherwise
and shall include the period of time from the date such Partnership Unit is
issued to such Limited Partner as other than a Class A Unit until the date such
Partnership Unit is converted automatically to a Class A Unit pursuant to
Section 4.2.C hereof), or on or after such date prior to the expiration of such
one-year period as the General Partner, in its sole and absolute discretion,
designates with respect to any or all Class A Units then outstanding, the holder
of a Partnership Unit (if other than the General Partner or the General Partner
Entity or any Subsidiary of either the General Partner or the General Partner
Entity) shall have the right (the "Redemption Right") to require the Partnership
to redeem such Partnership Unit, with such redemption
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to occur on the Specified Redemption Date and at a redemption price equal to and
in the form of the Cash Amount to be paid by the Partnership. Any such
Redemption Right shall be exercised pursuant to a Notice of Redemption delivered
to the Partnership (with a copy to the General Partner) by the Limited Partner
who is exercising the Redemption Right (the "Redeeming Partner"). A Limited
Partner may exercise the Redemption Right from time to time, without limitation
as to frequency, with respect to part or all of the Units that it owns, as
selected by the Limited Partner, provided that a Limited Partner may not
exercise the Redemption Right for less than one thousand (1,000) Partnership
Units unless such Redeeming Partner then holds less than one thousand (1,000)
Partnership Units, in which event such Redeeming Partner must exercise the
Redemption Right for all of the Partnership Units held by such Redeeming
Partner.
(ii) The Redeeming Partner shall have no right with
respect to any Partnership Units so redeemed to receive any distributions paid
after the Specified Redemption Date with respect to such Partnership Units.
(iii) The Assignee of any Limited Partner may exercise the
rights of such Limited Partner pursuant to this Section 8.6, and such Limited
Partner shall be deemed to have assigned such rights to such Assignee and shall
be bound by the exercise of such rights by such Limited Partner's Assignee. In
connection with any exercise of such rights by such Assignee on behalf of such
Limited Partner, the Cash Amount shall be paid by the Partnership directly to
such Assignee and not to such Limited Partner.
(iv) If the General Partner Entity provides notice to the
Limited Partners, pursuant to Section 8.5.C hereof, the Redemption Right shall
be exercisable, without regard to whether the Partnership Units have been
outstanding for any specified period, during the period commencing on the date
on which the General Partner Entity provides such notice and ending on the
record date to determine shareholders eligible to receive such distribution or
to vote upon the approval of such merger, sale or other extraordinary
transaction (or, if no such record date is applicable, at least twenty (20)
business days before the consummation of such merger, sale or other
extraordinary transaction). If this subparagraph (iv) applies, the Specified
Redemption Date is the date on which the Partnership and the General Partner
receive notice of exercise of the Redemption Right, rather than ten (10)
Business Days after receipt of the notice of redemption.
B. General Partner Assumption of Right. (i) If a Limited Partner
has delivered a Notice of Redemption, the General Partner may, in its sole and
absolute discretion (subject to the limitations on ownership and transfer of
Shares set forth in the Declaration of Trust), elect to assume directly and
satisfy a Redemption Right by paying to the Redeeming Partner either the Cash
Amount or the Shares Amount, as the General Partner determines in its sole and
absolute discretion (provided that payment of the Redemption Amount in the form
of Shares shall be in Shares registered for resale under Section 12 of the
Exchange Act and listed for trading on the exchange or national market on which
the Shares are Publicly Traded and, provided further that, if the Shares are not
Publicly Traded at the time a Redeeming Partner exercises its Redemption Right,
the Redemption Amount shall be paid only in the form of the Cash Amount unless
the Redeeming Partner, in its sole and absolute discretion, consents to payment
of the
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Redemption Amount in the form of the Shares Amount), on the Specified Redemption
Date, whereupon the General Partner shall acquire the Partnership Units offered
for redemption by the Redeeming Partner and shall be treated for all purposes of
this Agreement as the owner of such Partnership Units. Unless the General
Partner, in its sole and absolute discretion, shall exercise its right to assume
directly and satisfy the Redemption Right, the General Partner shall not have
any obligation to the Redeeming Partner or to the Partnership with respect to
the Redeeming Partner's exercise of the Redemption Right. If the General Partner
shall exercise its right to satisfy the Redemption Right in the manner described
in the first sentence of this Section 8.6B and shall fully perform its
obligations in connection therewith, the Partnership shall have no right or
obligation to pay any amount to the Redeeming Partner with respect to such
Redeeming Partner's exercise of the Redemption Right, and each of the Redeeming
Partner, the Partnership and the General Partner shall, for federal income tax
purposes, treat the transaction between the General Partner and the Redeeming
Partner as a sale of the Redeeming Partner's Partnership Units to the General
Partner. Nothing contained in this Section 8.6.B shall imply any right of the
General Partner to require any Limited Partner to exercise the Redemption Right
afforded to such Limited Partner pursuant to Section 8.6.A.
(ii) If the General Partner determines to pay the
Redeeming Partner the Redemption Amount in the form of Shares, the total number
of Shares to be paid to the Redeeming Partner in exchange for the Redeeming
Partner's Partnership Units shall be the applicable Shares Amount. If this
amount is not a whole number of Shares, the Redeeming Partner shall be paid (i)
that number of Shares which equals the nearest whole number less than such
amount plus (ii) an amount of cash which the General Partner determines, in its
reasonable discretion, to represent the fair value of the remaining fractional
Share which would otherwise be payable to the Redeeming Partner.
(iii) Each Redeeming Partner agrees to execute such
documents as the General Partner may reasonably require in connection with the
issuance of Shares upon exercise of the Redemption Right.
C. Exceptions to Exercise of Redemption Right. Notwithstanding
the provisions of Sections 8.6.A and 8.6.B, a Partner shall not be entitled to
exercise the Redemption Right pursuant to Section 8.6.A if (but only as long as)
the delivery of Shares to such Partner on the Specified Redemption Date (i)
would be prohibited under the Declaration of Trust or (ii) would be prohibited
under applicable federal or state securities laws or regulations (in each case
regardless of whether the General Partner would in fact assume and satisfy the
Redemption Right).
D. No Liens on Partnership Units Delivered for Redemption. Each
Limited Partner covenants and agrees with the General Partner that all
Partnership Units delivered for redemption shall be delivered to the Partnership
or the General Partner, as the case may be, free and clear of all liens; and,
notwithstanding anything contained herein to the contrary, neither the General
Partner nor the Partnership shall be under any obligation to acquire Partnership
Units which are or may be subject to any liens. Each Limited Partner further
agrees that, if any state or local property transfer tax is payable as a result
of the transfer of its Partnership Units to the Partnership or the General
Partner, such Limited Partner shall assume and pay such transfer tax.
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E. Additional Partnership Interests. If the Partnership issues
Partnership Interests to any Additional Limited Partner pursuant to Article IV,
the General Partner shall make such revisions to this Section 8.6 as it
determines are necessary to reflect the issuance of such Partnership Interests
(including setting forth any restrictions on the exercise of the Redemption
Right with respect to such Partnership Interests).
ARTICLE IX
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. 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. Annual Reports. As soon as practicable, but in no event later
than the date on which the General Partner Entity mails its annual report to its
shareholders, the General Partner Entity shall cause to be mailed to each
Limited Partner an annual report, as of the close of the most recently ended
Partnership Year, containing financial statements of the Partnership, or of the
General Partner Entity if such statements are prepared solely on a consolidated
basis with the Partnership, 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 Entity.
B. Quarterly Reports. If and to the extent that the General
Partner Entity mails quarterly reports to its shareholders, as soon as
practicable, but in no event later than the date on such reports are mailed, the
General Partner Entity shall cause to be mailed to each Limited Partner a report
containing unaudited financial statements, as of the last day of such calendar
quarter, of the Partnership, or of the General Partner Entity if such statements
are prepared solely on a consolidated basis with the Partnership,
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and such other information as may be required by applicable law or regulation,
or as the General Partner determines to be appropriate.
ARTICLE X
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 ninety (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; provided, however, that the General Partner
shall make the election under Section 754 of the Code in accordance with
applicable regulations thereunder. The General Partner shall have the right to
seek to revoke any such election (including, without limitation, the election
under Section 754 of the Code) upon the General Partner's determination in its
sole and absolute discretion that such revocation is in the best interests of
the Partners.
SECTION 10.3 TAX MATTERS PARTNER
A. General. The General Partner shall be the "tax matters
partner" of the Partnership for federal income tax purposes. Pursuant to
Section 6223(c)(3) 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, taxpayer
identification number and profit interest of each of the Limited Partners and
any Assignees; provided, however, that such information is provided to the
Partnership by the Limited Partners.
X. Xxxxxx. 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 agreement shall bind all
Partners, except that such settlement agreement
shall not bind any Partner (i) who
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(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(a)(8) of the Code) or a member of a "notice
group" (as defined in Section 6223(b)(2) of the
Code);
(2) if 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 filing of a complaint for refund with the
United States Claims Court or 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 shall be fully applicable to the tax
matters partner in its capacity as such.
C. Reimbursement. 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 its duties as such (including legal and
accounting fees and expenses) shall be borne by the Partnership. Nothing herein
shall be construed to restrict the Partnership from engaging an accounting firm
and/or law firm to assist the tax matters
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partner in discharging its duties hereunder, so long as the compensation paid by
the Partnership for such services is reasonable.
SECTION 10.4 ORGANIZATIONAL EXPENSES
The Partnership shall elect to deduct expenses, if any, incurred
by it in organizing the Partnership ratably over a sixty (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 Section 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 fifteen (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. If 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 four (4) percentage points (but
not higher than the maximum lawful rate under the laws of the State of
Illinois) from the date such amount is due (i.e., fifteen (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 to perfect or
enforce the security interest created hereunder.
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ARTICLE XI
TRANSFERS AND WITHDRAWALS
SECTION 11.1 TRANSFER
A. Definition. The term "transfer," when used in this Article XI
with respect to a Partnership Interest or a Partnership Unit, shall be deemed
to refer to a transaction by which the General Partner purports to assign all
or any part of its General Partnership Interest to another Person or by which a
Limited Partner purports to assign all or any part of its Limited Partnership
Interest to another Person, and includes a sale, assignment, gift, pledge,
encumbrance, hypothecation, mortgage, exchange or any other disposition by law
or otherwise. The term "transfer" when used in this Article XI does not include
any redemption or repurchase of Partnership Units by the Partnership from a
Partner or acquisition of Partnership Units from a Limited Partner by the
General Partner pursuant to Section 8.6 or otherwise. 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. General. No Partnership Interest shall be transferred, in
whole or in part, except in accordance with the terms and conditions set forth
in this Article XI. Any transfer or purported transfer of a Partnership
Interest not made in accordance with this Article XI shall be null and void.
SECTION 11.2 TRANSFERS OF PARTNERSHIP INTERESTS OF GENERAL PARTNER
A. Except for transfers of Partnership Units to the Partnership
as provided in Section 7.5 or Section 8.6, the General Partner may not transfer
any of its Partnership Interest (including both its General Partnership
Interest and its Limited Partnership Interest) except in connection with a
transaction described in Section 11.2.B or as otherwise expressly permitted
under this Agreement, nor shall the General Partner withdraw as the General
Partner except in connection with a transaction described in Section 11.2.B.
B. The General Partner shall not engage in any merger (including
a triangular 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 outstanding Shares (other than a change in par
value, or from par value to no par value, or as a result of a subdivision or
combination as described in the definition of "Conversion Factor")
("Termination Transaction"), unless the Termination Transaction has been
approved by the Consent of the Partners holding at least a majority of the then
outstanding Partnership Units (including any Partnership Units held by the
General Partner) 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
Conversion Factor multiplied by the greatest amount of cash, securities or
other property paid to a holder of Shares corresponding to such Partnership
Unit in consideration of one such Share at any time during the period
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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 Shares, each holder of
Partnership Units shall receive, or shall have the right to elect to receive
without any right of Consent set forth above in this subsection B, the greatest
amount of cash, securities, or other property which such holder would have
received had it exercised the Redemption Right and received 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.
SECTION 11.3 LIMITED PARTNERS' RIGHTS TO TRANSFER
A. General. Subject to the provisions of Sections 11.3.C,
11.3.D, 11.3.E, 11.4 and 11.6, a Limited Partner (other than the General
Partner) may transfer with or without the consent of the General Partner, all
or any portion of its Partnership Interest, or any of such Limited Partner's
rights as a Limited Partner, provided that prior written notice of such
proposed transfer is delivered to the General Partner. Notwithstanding the
foregoing, any Limited Partner may, at any time, 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 credit. 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
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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
(excluding Pledges of a Partnership Interest, but including any transfer of the
pledged Partnership Interest, whether to the secured party or otherwise,
pursuant to the secured party's exercise of its remedies under such Pledge or
the related loan or extension of credit) 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
Declaration of Trust. 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. Incapacitated Limited Partners. 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 its interest in the Partnership. The Incapacity of a Limited
Partner, in and of itself, shall not dissolve or terminate the Partnership.
C. No Transfers Violating Securities Laws. The General Partner
may prohibit any transfer of Partnership Units by a Limited Partner unless it
receives a written opinion of legal counsel (which opinion and counsel shall be
reasonably satisfactory to the Partnership) to such Limited Partner that such
transfer would not require filing of a registration statement under the
Securities Act or would not otherwise violate any federal, or state securities
laws or regulations applicable to the Partnership or the Partnership Unit or,
at the option of the Partnership, an opinion of legal counsel to the
Partnership to the same effect.
D. No Transfers Affecting Tax Status of Partnership. No transfer
of Partnership Units by a Limited Partner (including a redemption or exchange
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 for federal income tax
purposes or would result in a termination of the
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Partnership for federal income tax purposes (except as a result of the
redemption or exchange for Shares of all Partnership Units held by all Limited
Partners other than the General Partner or the General Partner Entity or any
Subsidiary of the General Partner or the General Partner Entity or pursuant to a
transaction expressly permitted under Section 7.11.B or Section 11.2), (ii) in
the opinion of legal counsel for the Partnership, it would adversely affect the
ability of the General Partner Entity to continue to qualify as a REIT or would
subject the General Partner Entity to any additional taxes under Section 857 or
Section 4981 of the Code or (iii) 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 (provided
that this clause (iii) shall not be the basis for limiting or restricting in any
manner the exercise of the Redemption Right under Section 8.6 unless, and only
to the extent that, outside tax counsel provides to the General Partner an
opinion to the effect that, in the absence of such limitation or restriction,
there is a significant risk that the Partnership will be treated as a "publicly
traded partnership" and, by reason thereof, taxable as a corporation).
E. No Transfers to Holders of Nonrecourse Liabilities. No Pledge
or 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 unless (i) the General Partner is provided notice thereof
and (ii) the lender enters into an arrangement with the Partnership and the
General Partner to exchange or redeem for the Redemption 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. Consent of General Partner. No Limited Partner shall have the
right to substitute a transferee as a Limited Partner in its place. 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. The General Partner hereby grants its consent
to the admission as a Substituted Limited Partner to any bona fide financial
institution that loans money or otherwise extends credit to a holder of Units
and thereafter becomes the owner of such Units pursuant to the exercise by such
financial institution of its rights under a Pledge of such Units granted in
connection with such loan or extension of credit.
B. Rights of Substituted Limited Partner. A transferee who has
been admitted as a Substituted Limited Partner in accordance with this Article
XI 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 conditioned upon the
transferee executing and delivering to the Partnership an acceptance of all the
terms and conditions of this Agreement (including,
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without limitation, the provisions of Section 15.11) and such other documents or
instruments as may be required to effect the admission.
C. Amendment of Exhibit A. Upon the admission of a Substituted
Limited Partner, the General Partner shall amend Exhibit A to reflect the name,
address, Capital Account, number of Partnership Units, and Percentage Interest
of such Substituted Limited Partner and to eliminate or adjust, if necessary,
the name, address, Capital Account and Percentage Interest and interest of the
predecessor of such Substituted Limited Partner.
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, loss and Recapture Income attributable to the Partnership Units assigned
to such transferee, and shall have the rights granted to the Limited Partners
under 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 vote
such Partnership Units in any matter presented to the Limited Partners for a
vote (such Partnership Units being deemed to have been voted on such matter in
the same proportion as all other Partnership Units held by Limited Partners are
voted). If 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 XI 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. Withdrawal of Limited Partner. No Limited Partner may
withdraw from the Partnership other than as a result of a permitted transfer of
all of such Limited Partner's Partnership Units in accordance with this Article
XI or pursuant to redemption of all of its Partnership Units under Section 8.6.
B. Termination of Status as Limited Partner. Any Limited Partner
who shall transfer all of its Partnership Units in a transfer permitted
pursuant to this Article XI or pursuant to redemption of all of its Partnership
Units under Section 8.6 shall cease to be a Limited Partner.
C. Timing of Transfers. Transfers pursuant to this Article XI
may only be made upon three business days prior notice, unless the General
Partner otherwise agrees.
D. Allocations. If any Partnership Interest is transferred
during any quarterly segment of the Partnership's fiscal year in compliance
with the provisions of this Article XI or redeemed or transferred pursuant to
Section 8.6, Net Income, Net Losses,
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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 (unless the General Partner, in its sole
and absolute discretion, elects to adopt a daily, weekly, or a monthly
proration period, in which event Net Income, Net Losses, each item thereof and
all other items attributable to such interest for such fiscal year shall be
prorated based upon the applicable method selected by the General Partner).
Solely for purposes of making such allocations, each of such items for the
calendar month in which the transfer or redemption occurs shall be allocated to
the Person who is a Partner as of midnight on the last day of said month. All
distributions of Available Cash attributable to any Partnership Unit 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 or
the Redeeming Partner, as the case may be, and, in the case of a transfer or
assignment other than a redemption, all distributions of Available Cash
thereafter attributable to such Partnership Unit shall be made to the
transferee Partner.
E. Additional Restrictions. In addition to any other
restrictions on transfer herein contained, including without limitation the
provisions of this Article XI, in no event may any transfer or assignment of a
Partnership Interest by any Partner (including pursuant to Section 8.6) be made
without the express consent of the General Partner, in its sole and absolute
discretion, (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 Shares of all Partnership Units held by all Limited Partners or
pursuant to a transaction expressly permitted under Section 7.11.B or 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
Shares of all Partnership Units held by all Limited Partners or pursuant to a
transaction expressly permitted under Section 7.11.B or Section 11.2); (vi) if
such transfer would cause the Partnership Interests of "benefit plan investors"
to become "significant," as those terms are used in Section 7.9.E., or 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 2510.1-101; (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 Section
469(k)(2) or Section 7704(b) of the Code (provided that this clause (ix) shall
not be the basis for limiting or restricting in any manner the exercise of the
Redemption Right under Section 8.6 unless, and only to the extent that, outside
tax
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counsel provides to the General Partner an opinion to the effect that, in
the absence of such limitation or restriction, there is a significant risk that
the Partnership will be treated as a "publicly traded partnership" and, by
reason thereof, taxable as a corporation); (x) if such transfer subjects the
Partnership to regulation under the Investment Company Act of 1940, the
Investment Advisors Act of 1940 or ERISA, each as amended; (xi) such transfer
could adversely affect the ability of the General Partner Entity to remain
qualified as a REIT; or (xii) if in the opinion of legal counsel for the
transferring Partner (which opinion and counsel shall be reasonably
satisfactory to the Partnership) or legal counsel for the Partnership, such
transfer would adversely affect the ability of the General Partner Entity to
qualify as a REIT or subject the General Partner Entity to any taxes under
Section 857 or Section 4981 of the Code.
F. Avoidance of "Publicly Traded Partnership" Status. 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 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; provided, however, that the foregoing shall not
authorize the General Partner to limit or restrict in any manner the right of
any holder of a Partnership Unit to exercise the Redemption Right in accordance
with the terms of Section 8.6 unless, and only to the extent that, outside tax
counsel provides to the General Partner an opinion to the effect that, in the
absence of such limitation or restriction, there is a significant risk that the
Partnership will be treated as a "publicly traded partnership" and, by reason
thereof, taxable as a corporation.
ARTICLE XII
ADMISSION OF PARTNERS
SECTION 12.1 ADMISSION OF A SUCCESSOR GENERAL PARTNER
A successor to all of the General Partner's General Partnership
Interest pursuant to Section 11.2 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 successor shall carry on the business of
the Partnership without dissolution. In such case, the admission shall be
subject to such 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.
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SECTION 12.2 ADMISSION OF ADDITIONAL LIMITED PARTNERS
A. General. No Person shall be admitted as an Additional Limited
Partner without the consent of the General Partner, which consent shall be
given or withheld in the General Partner's sole and absolute discretion. A
Person who makes a Capital Contribution to the Partnership in accordance with
this Agreement, including without limitation, under Section 4.1.C, or who
exercises an option to receive Partnership Units shall be admitted to the
Partnership as an Additional Limited Partner only with the consent of the
General Partner and 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 15.11 and (ii) such other documents or instruments
as may be required in the discretion of the General Partner to effect such
Person's admission as an Additional Limited Partner. 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 consent of the General Partner to such admission.
B. Allocations to Additional Limited Partners. 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 Additional 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 of the books method (unless the General Partner, in its sole
and absolute discretion, elects to adopt a daily, weekly or monthly proration
method, in which event Net Income, Net Losses, and each item thereof would be
prorated based upon the applicable period selected by the General Partner).
Solely for purposes of making such allocations, each of such items for the
calendar month in which an admission of any 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, and all distributions of Available Cash thereafter shall be made to
all the 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 15.11 hereof.
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ARTICLE XIII
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 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"):
(i) the expiration of its term as provided in Section
2.4 hereof;
(ii) an event of withdrawal of the General Partner, as
defined in the Act (other than an event of bankruptcy), unless within ninety
(90) days after the withdrawal a "majority in interest" (as defined below) of
the remaining Partners Consent in writing to continue the business of the
Partnership and to the appointment, effective as of the date of withdrawal, of
a substitute General Partner;
(iii) through December 31, 2046, an election to dissolve
the Partnership made by the General Partner with the consent of Limited
Partners who hold ninety percent (90%) of the outstanding Units held by Limited
Partners (including Units held by the General Partner);
(iv) an election to dissolve the Partnership made by the
General Partner, in its sole and absolute discretion after December 31, 2046;
(v) entry of a decree of judicial dissolution of
the Partnership pursuant to the provisions of the Act;
(vi) the sale of all or substantially all of
the assets and properties of the Partnership for cash or for marketable
securities; or
(vii) a final and non-appealable judgment is entered by a
court of competent jurisdiction ruling that the General Partner is bankrupt or
insolvent, or a final and non-appealable order for relief is entered by a court
with appropriate jurisdiction against the General Partner, in each case under
any federal or state bankruptcy or insolvency laws as now or hereafter in
effect, unless prior to or at the time of the entry of such order or judgment a
"majority in interest" (as defined below) of the remaining Partners Consent in
writing to continue the business of the Partnership and to the appointment,
effective as of a date prior to the date of such order or judgment, of a
substitute General Partner.
As used in this Article XIII, a "majority in interest" shall
refer to Partners (excluding the General Partner) who hold more than fifty
percent (50%) of the outstanding Percentage Interests not held by the General
Partner.
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SECTION 13.2 WINDING UP
A. General. 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, if 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 equity or other securities of the General Partner or
any other entity) 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 Limited
Partners;
(4) Fourth, to the holders of Partnership Interests
that are entitled to any preference in
distribution upon liquidation in accordance with
the rights of any such class or series of
Partnership Interests, including without
limitation, Series A Preferred Units, Series B
Preferred Units, and Series C Preferred Units
(and, within each such class or series, to each
holder thereof pro rata based on the proportion of
the total number of outstanding units of such
class or series represented by such holder's units
of such series or class); and
(5) The balance, if any, to the Partners in accordance
with their Capital Accounts, after giving effect
to all contributions, distributions, and
allocations for all periods.
The General Partner shall not receive any additional
compensation for any services performed pursuant to this Article XIII.
B. Deferred Liquidation. Notwithstanding the provisions of
Section 13.2.A 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 the liquidation of any assets except
those necessary to satisfy liabilities of the Partnership (including to those
Partners as
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creditors) or distribute to the Partners, in lieu of cash, as tenants in common
and in accordance with the provisions of Section 13.2.A, 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;
RESTORATION OF DEFICIT CAPITAL ACCOUNTS
A. Timing of Distributions. If the Partnership is "liquidated"
within the meaning of Regulations Section 1.704-1(b)(2)(ii)(g), distributions
shall be made under this Article XIII 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). 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 XIII 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 (in which case 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 as 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.
B. Restoration of Deficit Capital Accounts Upon Liquidation of
the Partnership. If any Partner has a deficit balance in its Capital Account
(after giving effect to all contributions, distributions and allocations for
all 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, except as otherwise set forth in this Section 13.3.B, or as
otherwise expressly agreed in writing by the affected Partner and the
Partnership after the date hereof. Notwithstanding the foregoing, (i) if the
General Partner has a deficit balance in its Capital Account (after giving
effect to all contributions, distributions, and allocations for all Partnership
Years or portions thereof, including the year during which such liquidation
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occurs), the General Partner shall contribute to the capital of the Partnership
the amount necessary to restore such deficit balance to zero in compliance with
Regulations Section 1.704-1(b)(2)(ii)(b)(3); (ii) if a Protected Partner has a
deficit balance in its Capital Account (after giving effect to all
contributions, distributions, and allocations for all Partnership Years or
portions thereof, including the year during which such liquidation occurs),
such Protected Partner shall be obligated to make a contribution to the
Partnership with respect to any such deficit balance in such Protected
Partner's Capital Account upon a liquidation of the Partnership in an amount
equal to the lesser of such deficit balance or such Protected Partner's
Protected Amount; and (iii) the first sentence of this Section 13.3.B shall not
apply with respect to any other Partner to the extent, but only to such extent,
that such Partner previously has agreed in writing, with the consent of the
General Partner, to undertake an express obligation to restore all or any
portion of a deficit that may exist in its Capital Account upon a liquidation
of the Partnership (including, without limitations, those Partners who have
undertaken "deficit restoration obligations" as defined in Exhibit E). No
Limited Partner shall have any right to become a Protected Partner, to increase
its Protected Amount, or otherwise agree to restore any portion of any deficit
that may exist in its Capital Account, except, and only to the extent, provided
in Exhibits E-1 through E-6 (or the agreements described therein), without the
express written consent of the General Partners, in its sole and absolute
discretion. Any contribution required of a Partner under this Section 13.3.B.
shall be made on or before the later of (i) the end of the Partnership Year in
which the interest is liquidated or (ii) the ninetieth (90th) day following the
date of such liquidation. The proceeds of any contribution to the Partnership
made by a Protected Partner with respect to a deficit in such Protected
Partner's Capital Account balance shall be treated as a Capital Contribution by
such Protected Partner and the proceeds thereof shall be treated as assets of
the Partnership to be applied as set forth in Section 13.2.A.
C. Restoration of Deficit Capital Accounts Upon a Liquidation of
a Partner's Interest by Transfer. If a Protected Partner's interest in the
Partnership is "liquidated" within the meaning of Regulations Section
1.704-1(b)(2)(ii)(g) (other than in connection with a liquidation of the
Partnership) which term shall include a redemption by the Partnership of such
Protected Partner's interest upon exercise of the Redemption Right, and such
Protected Partner is designated on Exhibit E as Part II Protected Partner, such
Protected Partner shall be required to contribute cash to the Partnership equal
to the lesser of (i) the amount required to increase its Capital Account
balance as of such date to zero, or (ii) such Protected Partner's Protected
Amount. For this purpose, (i) the Protected Partner's deficit Capital Account
balance shall be determined by taking into account all contributions,
distributions, and allocations for the portion of the Partnership Year ending
on the date of the liquidation or redemption, and (ii) solely for purposes of
determining such Protected Partner's Capital Account balance, the General
Partner shall redetermine the Carrying Value of the Partnership's assets on
such date based upon the principles set forth in Sections 1.D.(3) and (4) of
Exhibit B hereto, and shall take into account the Protected Partner's allocable
share of any Unrealized Gain or Unrealized Loss resulting from such
redetermination in determining the balance of its Capital Account. The amount
of any payment required hereunder shall be due and payable within the time
period specified in the second to last sentence of Section 13.3.B.
D. Effect of the Death of a Protected Partner. After the death
of a Protected Partner who is an individual, the executor of the estate of such
Protected Partner may elect to reduce (or eliminate) the Protected Amount of
such Protected Partner. Such elections may be made by such executor by
delivering to the General Partner within two hundred and seventy (270) days of
the death of such Limited Partner, a written notice setting forth the maximum
deficit balance in its Capital Account that such executor agrees
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to restore under this Section 13.3, if any. If such executor does not make a
timely election pursuant to this Section 13.3 (whether or not the balance in
the applicable Capital Account is negative at such time), then the Protected
Partner's estate (and the beneficiaries thereof who receive distributions of
Partnership Interests therefrom) shall be deemed a Protected Partner with a
Protected Amount in the same amount as the deceased Protected Partner. Any
Protected Partner which itself is a partnership may likewise elect, after the
date of its partner's death to reduce (or eliminate) its Protected Amount by
delivering a similar notice to the General Partner within the time period
specified above, and in the absence of any such notice the Protected Amount of
such Protected Partner shall not be reduced to reflect the death of any of its
partners.
SECTION 13.4 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
its Capital Contributions and shall have no right or power to demand or receive
property other than cash from the Partnership. Except as otherwise expressly
provided in this Agreement, no Limited Partner shall have priority over any
other Limited Partner as to the return of its Capital Contributions,
distributions, or allocations.
SECTION 13.5 NOTICE OF DISSOLUTION
If a Liquidating Event occurs or an event occurs that would, but
for provisions of an election or objection by one or more Partners pursuant to
Section 13.1, result in a dissolution of the Partnership, the General Partner
shall, within thirty (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).
SECTION 13.6 CANCELLATION OF CERTIFICATE OF LIMITED PARTNERSHIP
Upon the completion of the liquidation of the Partnership cash
and property as provided in Section 13.2, 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 Delaware shall be
canceled and such other actions as may be necessary to terminate the
Partnership shall be taken.
SECTION 13.7 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, to minimize any losses otherwise attendant upon such
winding-up, and the provisions of this Agreement shall remain in effect among
the Partners during the period of liquidation.
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SECTION 13.8 WAIVER OF PARTITION
Each Partner hereby waives any right to partition of the
Partnership property.
SECTION 13.9 LIABILITY OF LIQUIDATOR
The Liquidator shall be indemnified and held harmless by the
Partnership in the same manner and to the same degree as an Indemnitee may be
indemnified pursuant to Section 7.7.
ARTICLE XIV
AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS
SECTION 14.1 AMENDMENTS
A. General. Amendments to this Agreement may be proposed by the
General Partner or by any Limited Partners holding twenty-five percent (25%) or
more of the Partnership Interests. Following such proposal (except an amendment
pursuant to Section 14.1.B), the General Partner shall submit any proposed
amendment to the Limited Partners. The General Partner shall seek the written
vote of the 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 vote, the General Partner may require a
response within a reasonable specified time, but not less than fifteen (15)
days, and failure to respond in such time period shall constitute a vote which
is consistent with the General Partner's recommendation with respect to the
proposal. Except as provided in Section 14.1.B, 14.1.C or 14.1.D, a proposed
amendment shall be adopted and be effective as an amendment hereto if it is
approved by the General Partner and it receives the Consent of Partners holding
a majority of the Percentage Interests of the Limited Partners (including
Limited Partnership Interests held by the General Partner).
B. Amendments Not Requiring Limited Partner Approval.
Notwithstanding Section 14.1.A or 14.1.C, the General Partner shall have the
power, without the consent of the Limited Partners, 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;
(2) to reflect the admission, substitution,
termination, or withdrawal of Partners in
accordance with this Agreement (which may be
effected through the replacement of Exhibit A with
an amended Exhibit A);
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(3) to set forth the designations, rights, powers,
duties, and preferences of the holders of any
additional Partnership Interests issued pursuant
to Article IV;
(4) to reflect a change that 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 of this Agreement, 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;
and
(5) to satisfy any requirements, conditions, or
guidelines contained in any order, directive,
opinion, ruling or regulation of a federal, state
or local agency or contained in federal, state or
local law.
The General Partner shall notify the Limited Partners when any
action under this Section 14.1.B is taken in the next regular communication to
the Limited Partners; provided, however, that no notice need be given of any
amendment of this Agreement to reflect the admission, substitution,
termination, or withdrawal of Partners in accordance with this Agreement
(whether or not effected through the replacement of Exhibit A with an amended
Exhibit A). For purposes of the immediately preceding sentence, notwithstanding
any other means by which the General Partner may provide any such notice to the
Limited Partners, such notice requirement shall be deemed to have been
satisfied upon the filing with the Securities and Exchange Commission by the
Partnership of any amendment to this Agreement permitted under this Section
14.1.B as an exhibit to (i) a registration statement filed by the Partnership
under the Securities Act or (ii) any report or other document filed by the
Partnership under the Exchange Act.
C. Amendments Requiring Limited Partner Approval (Excluding the
General Partner). Notwithstanding Section 14.1.A, without the Consent of the
Outside Limited Partners, the General Partner shall not amend Section 4.2.A,
Section 5.1.E, Section 7.1.A (second sentence only), Section 7.5, Section 7.6,
Section 7.8, Section 7.11.B, Section 11.2, Section 13.1 (other than Section
13.1(iii) which can be amended only with a Consent of 90% of the Partnership
Units (including Partnership Units held by the General Partner)), the last
sentence of Section 11.4.A (provided that no such amendment shall in any event
adversely affect the rights of any lender who made a loan or who extended
credit and received in connection therewith a Pledge of Units prior to the date
such amendment is adopted unless, and only to the extent such lender consents
thereto), this Section 14.1.C or Section 14.2.
D. Other Amendments Requiring Certain Limited Partner Approval.
Notwithstanding anything in this Section 14.1 to the contrary, this Agreement
shall not be amended with respect to any Partner adversely affected without the
Consent of such Partner, or any Assignee who is a bona fide financial
institution that loans money or otherwise extends credit to a holder of Units,
adversely affected if such amendment would (i) convert a Limited Partner's
interest in the Partnership into a general partner's interest,
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75
(ii) modify the limited liability of a Limited Partner, (iii) amend Section
7.11.A, (iv) amend Article V or Article VI (except as permitted pursuant to
Sections 4.2, 5.1.E, 5.4, 6.2 and 14.1(B)(3)), (v) amend Section 8.6 or any
defined terms set forth in Article I that relate to the Redemption Right
(except as permitted in Section 8.6.E), or (vi) amend Sections 11.3 or 11.5, or
any additional restrictions from Section 11.6.E or amend Sections 14.1.B(4) or
14.1.D. This Section 14.1.D does not require unanimous consent of all Partners
adversely affected unless the amendment is to be effective against all Partners
adversely affected.
SECTION 14.2 MEETINGS OF THE PARTNERS
A. General. 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 twenty-five percent (25%) or more
of the Partnership Interests. 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 (7) days nor more than thirty (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 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.A. Except as otherwise
expressly provided in this Agreement, the Consent of holders of a majority of
the Percentage Interests held by Limited Partners (including Limited
Partnership Interests held by the General Partner) shall control.
B. Actions Without a Meeting. 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 a majority of
the Percentage Interests of the Partners (or such other percentage as is
expressly required by this Agreement). Such consent may be in one instrument or
in several instruments, and shall have the same force and effect as a vote of a
majority of the Percentage Interests of the Partners (or such other percentage
as is 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. Proxy. 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 its attorney-in-fact. No proxy shall be valid after the expiration of eleven
(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,
such revocation to be effective upon the Partnership's receipt of written
notice thereof.
D. Conduct of Meeting. 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 deem appropriate.
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ARTICLE XV
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"
"Sections" and "Exhibits" are to Articles, Sections and Exhibits 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 regard to any
Indemnitee, none of the provisions of this Agreement shall be for the benefit
of, or shall be enforceable by, any creditor of the Partnership.
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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 a 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 and enforced in accordance
with and governed by the laws of the State of Delaware, 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 POWER OF ATTORNEY
A. General. Each Limited Partner and each Assignee who accepts
Partnership Units (or any rights, benefits or privileges associated therewith)
is deemed to irrevocably constitute and appoint 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 any
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 Delaware 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 deem appropriate or necessary to
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78
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 XI, XII or XIII
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 in this Section 15.11 shall be construed as
authorizing the General Partner or any Liquidator to amend this Agreement
except in accordance with Article XIV hereof or as may be otherwise expressly
provided for in this Agreement.
B. Irrevocable Nature. 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 or 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 the Liquidator, within fifteen (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.
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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
prior written oral understandings or agreements among them with respect
thereto.
SECTION 15.13 NO RIGHTS AS SHAREHOLDERS
Nothing contained in this Agreement shall be construed as
conferring upon the holders of the Partnership Units any rights whatsoever as
shareholders of the General Partner, including, without limitation, any right
to receive dividends or other distributions made to shareholders of the General
Partner or to vote or to consent or receive notice as shareholders in respect
to any meeting of shareholders for the election of trustees of the General
Partner or any other matter.
SECTION 15.14 LIMITATION TO PRESERVE REIT STATUS
To the extent that any amount paid or credited to the General
Partner or any of its officers, trustees, employees or agents pursuant to
Section 7.4 or Section 7.7 would constitute gross income to the General Partner
for purposes of Section 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 Payment for any fiscal year shall not exceed the
lesser of:
(i) an amount equal to the excess, if any, of
(a) 4.20% of the General Partner's total gross income (but not including the
amount of any General Partner Payments) for the fiscal year which is described
in subsections (A) though (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 Partner's 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
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
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80
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.
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IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first written above.
GENERAL PARTNER:
EQUITY OFFICE PROPERTIES TRUST
By: /s/ Xxxxxxx X. Xxxxxxx
-----------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Executive Vice
President, Chief
Legal Counsel and
Secretary
LIMITED PARTNERS:
By: Equity Office Properties
Trust, as Attorney-in-Fact
for the Limited Partners
By: /s/ Xxxxxxx X. Xxxxxxx
---------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Executive Vice
President,
Chief Legal
Counsel and
Secretary
For purposes of Section 8.6
hereof:
EQUITY OFFICE PROPERTIES TRUST
By: /s/ Xxxxxxx X. Xxxxxxx
------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Executive Vice President,
Chief Legal Counsel and
Secretary
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EXHIBIT A
PARTNERS AND PARTNERSHIP INTERESTS
CLASS A AND CLASS B UNITS
-------------------------
INITIAL PERCENTAGE
NAME AND ADDRESS OF PARTNER PARTNERSHIP UNITS CAPITAL ACCOUNT INTEREST (4)
--------------------------- ----------------- --------------- ------------
GENERAL PARTNER:
----------------
Equity Office Properties Trust
Xxx Xxxxx Xxxxxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
LIMITED PARTNERS:
-----------------
TOTAL CLASS A AND CLASS B UNITS 100.00000%
==========
83
SERIES A PREFERRED UNITS
------------------------
INITIAL
NAME AND ADDRESS OF PARTNER PARTNERSHIP CAPITAL PERCENTAGE
--------------------------- UNITS ACCOUNT INTEREST (4)
----------- ------- ------------
TOTAL SERIES A PREFERRED UNITS 100.00000%
==========
SERIES B PREFERRED UNITS
------------------------
INITIAL
NAME AND ADDRESS OF PARTNER PARTNERSHIP CAPITAL PERCENTAGE
--------------------------- UNITS ACCOUNT INTEREST (4)
----------- ------- ------------
TOTAL SERIES B PREFERRED UNITS 100.00000%
==========
SERIES C PREFERRED UNITS
------------------------
INITIAL
NAME AND ADDRESS OF PARTNER PARTNERSHIP CAPITAL PERCENTAGE
--------------------------- UNITS ACCOUNT INTEREST (4)
----------- ------- ------------
TOTAL SERIES C PREFERRED UNITS 100.00000%
==========
NOTES:
(1) 194 Class A Units were cancelled to provide cash for fractional share
amounts in connection with the merger of Beacon Properties Corporation into
Equity Office Properties Trust on December 19, 1997.
A-2
84
(2) Beacon Partner
(3) Class B Units.
(4) For purposes of this calculation, the Class A Units and Class B Units are
treated as one class. Of the aggregate Partnership Interests currently
outstanding, the percentage of each class and series are as follows:
Class A and B Units (collectively) %
Series A Preferred Units %
Series B Preferred Units %
Series C Preferred Units %
100.00%
(5) Acquired in connection with acquisition of Palo Alto.
A-3
85
EXHIBIT B
CAPITAL ACCOUNT MAINTENANCE
1. Capital Accounts of the Partners
A. The Partnership shall maintain for each Partner a separate Capital
Account in accordance with the rules of Regulations Section l.704-l(b)(2)(iv).
Such Capital Account shall be increased by (i) the amount of all Capital
Contributions and any other deemed contributions made by such Partner to the
Partnership pursuant to this Agreement and (ii) all items of Partnership income
and gain (including income and gain exempt from tax) computed in accordance with
Section 1.B hereof and allocated to such Partner pursuant to Section 6.1 of the
Agreement and Exhibit C thereof, and decreased by (x) the amount of cash or
Agreed Value of all actual and deemed distributions of cash or property made to
such Partner pursuant to this Agreement and (y) all items of Partnership
deduction and loss computed in accordance with Section 1.B hereof and allocated
to such Partner pursuant to Section 6.1 of the Agreement and Exhibit C thereof.
B. For purposes of computing the amount of any item of income, gain,
deduction or loss to be reflected in the Partners' Capital Accounts, unless
otherwise specified in this Agreement, the determination, recognition and
classification of any such item shall be the same as its determination,
recognition and classification for federal income tax purposes determined in
accordance with Section 703(a) of the Code (for this purpose all items of
income, gain, loss or deduction required to be stated separately pursuant to
Section 703(a) (1) of the Code shall be included in taxable income or loss),
with the following adjustments:
(1) Except as otherwise provided in Regulations Section
1.704-1(b)(2)(iv)(m), the computation of all items of
income, gain, loss and deduction shall be made without
regard to any election under Section 754 of the Code which
may be made by the Partnership, provided that the amounts
of any adjustments to the adjusted bases of the assets of
the Partnership made pursuant to Section 734 of the Code
as a result of the distribution of property by the
Partnership to a Partner (to the extent that such
adjustments have not previously been reflected in the
Partners' Capital Accounts) shall be reflected in the
Capital Accounts of the Partners in the manner and subject
to the limitations prescribed in Regulations Section
l.704-1(b)(2)(iv)(m)(4).
(2) The computation of all items of income, gain, and
deduction shall be made without regard to the fact that
items described in Sections 705(a)(l)(B) or 705(a)(2)(B)
of the Code are not includible in gross income or are
neither currently deductible nor capitalized for federal
income tax purposes.
(3) Any income, gain or loss attributable to the taxable
disposition of any Partnership property shall be
determined as if the adjusted basis of such property as of
such date of disposition were equal in amount to
86
the Partnership's Carrying Value with respect to such
property as of such date.
(4) 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.
(5) In the event the Carrying Value of any Partnership Asset
is adjusted pursuant to Section 1.D hereof, the amount of
any such adjustment shall be taken into account as gain or
loss from the disposition of such asset.
(6) Any items specially allocated under Section 2 of Exhibit C
to the Agreement hereof shall not be taken into account.
C. A transferee (including any Assignee) of a Partnership Unit shall
succeed to a pro rata portion of the Capital Account of the transferor.
D. (1) Consistent with the provisions of Regulations
Section 1.704-1(b)(2)(iv)(f), and as provided in
Section 1.D(2), the Carrying Values of all Partnership
assets shall be adjusted upward or downward to reflect
any Unrealized Gain or Unrealized Loss attributable to
such Partnership property, as of the times of the
adjustments provided in Section 1.D(2) hereof, as if
such Unrealized Gain or Unrealized Loss had been
recognized on an actual sale of each such property
and allocated pursuant to Section 6.1 of the Agreement.
(2) Such adjustments shall be made as of the following times:
(a) immediately prior to the acquisition of an additional
interest in the Partnership by any new or existing Partner
in exchange for more than a de minimis Capital
Contribution; (b) immediately prior to the distribution by
the Partnership to a Partner of more than a de minimis
amount of property as consideration for an interest in the
Partnership; and (c) immediately prior to the liquidation
of the Partnership within the meaning of Regulations
Section 1.704-l(b)(2)(ii)(g), provided, however, that
adjustments pursuant to clauses (a) and (b) above shall be
made only if the General Partner determines that such
adjustments are necessary or appropriate to reflect the
relative economic interests of the Partners in the
Partnership.
(3) In accordance with Regulations Section 1.704-
l(b)(2)(iv)(e), the Carrying Value of Partnership assets
distributed in kind shall be adjusted upward or downward
to reflect any Unrealized Gain or Unrealized Loss
attributable to such Partnership property, as of the time
any such asset is distributed.
B-2
87
(4) In determining Unrealized Gain or Unrealized Loss for
purposes of this Exhibit B, the aggregate cash amount and
fair market value of all Partnership assets (including
cash or cash equivalents) shall be determined by the
General Partner using such reasonable method of valuation
as it may adopt, or in the case of a liquidating
distribution pursuant to Article XIII of the Agreement,
shall be determined and allocated by the Liquidator using
such reasonable methods of valuation as it may adopt. The
General Partner, or the Liquidator, as the case may be,
shall allocate such aggregate fair market value among the
assets of the Partnership in such manner as it determines
in its sole and absolute discretion to arrive at a fair
market value for individual properties.
E. The provisions of the Agreement (including this Exhibit B and the
other Exhibits to the Agreement) relating to the maintenance of Capital Accounts
are intended to comply with Regulations Section 1.704-1(b), 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
without regard to Article XIV of the Agreement, provided that it is not likely
to have a material effect on the amounts distributable to any Person pursuant to
Article XIII 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
l.704-l(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 l.704-1(b).
2. No Interest
No interest shall be paid by the Partnership on Capital Contributions or
on balances in Partners' Capital Accounts.
3. No Withdrawal
No Partner shall be entitled to withdraw any part of its Capital
Contribution or Capital Account or to receive any distribution from the
Partnership, except as provided in Articles IV, V, VII and XIII of the
Agreement.
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EXHIBIT C
SPECIAL ALLOCATION RULES
1. Special Allocation Rules.
Notwithstanding any other provision of the Agreement or this
Exhibit C, the following special allocations shall be made in the following
order:
A. Minimum Gain Chargeback. Notwithstanding the provisions of
Section 6.1 of the Agreement or any other provisions of this Exhibit C, if there
is a net decrease in Partnership Minimum Gain during any Partnership 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 so allocated shall
be determined in accordance with Regulations Section 1.704-2(f)(6). This Section
1.A is intended to comply with the minimum gain chargeback requirements in
Regulations Section 1.704-2(f) and for purposes of this Section 1.A only, each
Partner's Adjusted Capital Account Deficit shall be determined prior to any
other allocations pursuant to Section 6.1 of this Agreement with respect to such
Partnership Year and without regard to any decrease in Partner Minimum Gain
during such Partnership Year.
B. Partner Minimum Gain Chargeback. Notwithstanding any other
provision of Section 6.1 of this Agreement or any other provisions of this
Exhibit C (except Section 1.A hereof), if there is a net decrease in Partner
Minimum Gain attributable to a Partner Nonrecourse Debt during any Partnership
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)(5). 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 Section 1.704-2(i)(4). This Section
1.B is intended to comply with the minimum gain chargeback requirement in such
Section of the Regulations and shall be interpreted consistently therewith.
Solely for purposes of this Section 1.B, each Partner's Adjusted Capital Account
Deficit shall be determined prior to any other allocations pursuant to Section
6.1 of the Agreement or this Exhibit with respect to such Partnership Year,
other than allocations pursuant to Section 1.A hereof.
C. Qualified Income Offset. In the event any Partner unexpectedly
receives any adjustments, allocations or distributions described in Regulations
Sections 1.704-l(b)(2)(ii)(d)(4), l.704-1(b)(2)(ii)(d)(5), or
1.704-l(b)(2)(ii)(d)(6), and after giving effect to the allocations required
under Sections 1.A and 1.B hereof with respect to such Partnership Year, such
Partner has an Adjusted Capital Account Deficit, items of
89
Partnership income and gain (consisting of a pro rata portion of each item of
Partnership income, including gross income and gain for the Partnership Year)
shall be specifically allocated to such Partner in an amount and manner
sufficient to eliminate, to the extent required by the Regulations, its
Adjusted Capital Account Deficit created by such adjustments, allocations or
distributions as quickly as possible. This Section 1.C is intended to
constitute a "qualified income offset" under Regulations Section
1.704-1(b)(2)(ii)(d) and shall be interpreted consistently therewith.
X. Xxxxx Income Allocation. In the event that any Partner has an
Adjusted Capital Account Deficit at the end of any Partnership Year (after
taking into account allocations to be made under the preceding paragraphs hereof
with respect to such Partnership Year), each such Partner shall be specially
allocated items of Partnership income and gain (consisting of a pro rata portion
of each item of Partnership income, including gross income and gain for the
Partnership Year) in an amount and manner sufficient to eliminate, to the extent
required by the Regulations, its Adjusted Capital Account Deficit.
E. Nonrecourse Deductions. Nonrecourse Deductions for any
Partnership Year shall be allocated to the Partners in accordance with their
respective Percentage Interests. If the General Partner determines in its good
faith discretion that the Partnership's Nonrecourse Deductions must be allocated
in a different ratio to satisfy the safe harbor requirements of the Regulations
promulgated under Section 704(b) of the Code, the General Partner is authorized,
upon notice to the Limited Partners, to revise the prescribed ratio for such
Partnership Year to the numerically closest ratio which would satisfy such
requirements.
F. Partner Nonrecourse Deductions. Any Partner Nonrecourse
Deductions for any Partnership Year shall be specially allocated to the Partner
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).
G. Code Section 754 Adjustments. To the extent an adjustment to
the adjusted tax basis of any Partnership asset pursuant to Section 734(b) or
743(b) of the Code is required, pursuant to Regulations Section
1.704-l(b)(2)(iv)(m), to be taken into account in determining Capital Accounts,
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 item of gain or loss shall be
specially allocated to the Partners in a manner consistent Exhibit E-1 with the
manner in which their Capital Accounts are required to be adjusted pursuant to
such Section of the Regulations.
2. Allocations for Tax Purposes
A. Except as otherwise provided in this Section 2, for federal
income tax purposes, each item of income, gain, loss and deduction shall be
allocated among the Partners in the same manner as its correlative item of
"book" income, gain, loss or
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deduction is allocated pursuant to Section 6.1 of the Agreement and Section 1
of this Exhibit C.
B. In an attempt to eliminate Book-Tax Disparities attributable
to a Contributed Property or Adjusted Property, items of income, gain, loss, and
deduction shall be allocated for federal income tax purposes among the Partners
as follows:
(1) (a) In the case of a Contributed Property, such
items attributable thereto shall be allocated among
the Partners consistent with the principles of
Section 704(c) of the Code to take into account the
variation between the 704(c) Value of such property
and its adjusted basis at the time of contribution
(taking into account Section 2.C of this Exhibit
C); and
(b) any item of Residual Gain or Residual Loss
attributable to a Contributed Property shall be
allocated among the Partners in the same manner as
its correlative item of "book" gain or loss is
allocated pursuant to Section 6.1 of the Agreement
and Section 1 of this Exhibit C.
(2) (a) In the case of an Adjusted Property, such items
shall (i) first, be allocated among the Partners
in a manner consistent with the principles of
Section 704(c) of the Code to take into account the
Unrealized Gain or Unrealized Loss attributable to
such property and the allocations thereof pursuant
to Exhibit B;
(ii) second, in the event such property was
originally a Contributed Property, be allocated
among the Partners in a manner consistent with
Section 2.B(1) of this Exhibit C; and
(b) any item of Residual Gain or Residual Loss
attributable to an Adjusted Property shall be
allocated among the Partners in the same manner its
correlative item of "book" gain or loss is
allocated pursuant to Section 6.1 of the Agreement
and Section 1 of this Exhibit C.
(3) all other items of income, gain, loss and deduction
shall be allocated among the Partners the same manner as
their correlative item of "book" gain or loss is allocated
pursuant to Section 6.1 of the Agreement and Section 1 of
this Exhibit C.
C. To the extent Regulations promulgated pursuant to Section
704(c) of the Code permit a Partnership to utilize alternative methods to
eliminate the disparities between the Carrying Value of property and its
adjusted basis, the General Partner shall, subject to the following, have the
authority to elect the method to be used by the Partnership and such election
shall be binding on all Partners; provided that, to the extent that the General
Partner has agreed to use a particular method with respect to a
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91
Contributed Property, the General Partner shall be bound by such agreement
(including, without limitation, the agreements set forth in Exhibit E hereto)
pursuant to the terms thereof. With respect to the Contributed Property
transferred to the Partnership in connection with the Consolidation and the
BRE/Worldwide L.L.C. purchase, the Partnership shall elect to use the
"traditional method" set forth in Treasury Regulation sec. 1.704-3(b).
C-4
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EXHIBIT D
NOTICE OF REDEMPTION
The undersigned hereby irrevocably (i) redeems _________
Partnership Units in EOP Operating Limited Partnership in accordance with the
terms of the Agreement of Limited Partnership of EOP Operating Limited
Partnership, as amended, and the Redemption Right referred to therein, (ii)
surrenders such Partnership Units and all right, title and interest therein and
(iii) directs that the Cash Amount or Shares Amount (as determined by the
General Partner) deliverable upon exercise of the Redemption Right be delivered
to the address specified below, and if Shares are to be delivered, such Shares
be registered or placed in the name(s) and at the address(es) specified below.
The undersigned hereby represents, warrants, and certifies that the undersigned
(a) has marketable and unencumbered title to such Partnership Units, free and
clear of the rights of or interests of any other person or entity, (b) has the
full right, power and authority to redeem and surrender such Partnership Units
as provided herein and (c) has obtained the consent or approval of all persons
or entities, if any, having the right to consult or approve such redemption and
surrender.
Dated: Name of Limited Partner:
------------ -----------------
--------------------------------------
(Signature of Limited Partner)
--------------------------------------
(Street Address)
--------------------------------------
(City) (State) (Zip Code)
Signature Guaranteed by:
--------------------------------------
IF SHARES ARE TO BE ISSUED, ISSUE TO:
Name:
-------------------------------------------------
Social Security or tax identifying number:
---------------------
93
EXHIBIT E
PROTECTED PARTNERS AND PROTECTED AMOUNTS
PART I PROTECTED PARTNERS PROTECTED AMOUNT
------------------------- ----------------
PART II PROTECTED PARTNERS
--------------------------
(1) Protected Amount is the Deficit Obligation or Indemnity Obligation, as
applicable, as provided in the First Prior Amendment to the Original
Partnership Agreement, as set forth in Exhibit E-1.
(2) Protected Amount is the Deficit Obligation or Indemnity Obligation, as
applicable, as provided in the Second Prior Amendment to the Original
Partnership Agreement, as set forth in Exhibit E-2.
(3) Protected Amount is the DRO Amount or any applicable Partner Contribution
Amount, as defined in the Third Prior Amendment to the Original Partnership
Agreement, as set forth in Exhibit E-3.
(4) Protected Amount is the Deficit Obligation as defined in the Prior Addendum,
dated April 21, 1998, to the Original Partnership Agreement, as set forth in
Exhibit E-4.
(5) Protected Amount is as defined in the Tenth Prior Amendment to the Original
Partnership Agreement, as set forth in Exhibit E-5.
(6) Protected Amount is as provided for in Exhibit E-6.
94
EXHIBIT E-1
(CAP AGREEMENT)
BACKGROUND
On September 2, 1997, pursuant to a closing under that certain
Agreement for Contribution of Real Estate and Related Property dated as of
August 1, 1997, by and among the Partnership, the General Partner, Columbus
America Properties, L.L.C. ("CAP"), and certain members of CAP (the
"Contribution Agreement"), CAP received 1,690,000 Class A Units, subject to
adjustment as provided in the Contribution Agreement, (referred to as the "CAP
Units"), in exchange for the office properties known as Texaco Center, LL&E
Tower and 601 Tchoupitoulas Garage (collectively, the "CAP Properties"). In
connection with the issuance of the CAP Units, the First Prior Amendment to the
Original Partnership Agreement was executed, which set forth specific agreements
regarding certain additional rights and obligations of CAP and which was later
amended by the Sixth Prior Amendment to the Original Partnership Agreement. Such
specific agreements are described below.
All capitalized terms used in this Exhibit E-1 and not otherwise
defined have the meanings assigned in the Agreement.
SPECIFIC AGREEMENTS
1. Notwithstanding any other provision in the Agreement to the
contrary and in addition to (and not in lieu thereof) any and all other rights
of CAP under the Agreement:
(i) The holders of the CAP Units shall have the
right at any time and from time to time, to exchange all or any number of such
CAP Units at the request of such holder for Shares in the form required in
Section 8.6.B(i) of the Agreement, but subject in all respects to the terms of
a certain Registration Rights Agreement dated as of September 2, 1997, by and
among the General Partner, CAP and the other signatories thereto; and
(ii) CAP shall have the right, exercisable upon written
notice to Partnership at any time and from time to time before the earlier to
occur of (a) September 3, 2000, or (b) the date that CAP shall have either
transferred or converted all of its CAP Units into Shares, to require the
Partnership or the General Partner to acquire all, or any portion or portions,
of the CAP Units at $29.00 per CAP Unit. The price for such CAP Units shall be
paid by the Partnership or the General Partner in immediately available funds
not less than five (5) days after receipt of such notice from CAP. The CAP
Units shall be conveyed to the Partnership or the General Partner, as
applicable, free and clear of all liens and encumbrances, other than those
liens and encumbrances, if any, in favor of General Partner or Partnership. At
the closing of the acquisition of the CAP Units by the Partnership or the
General Partner, the parties shall execute instruments of assignment and
conveyance in the form attached to the First Prior Amendment at "Exhibit B" and
an amendment to the Agreement evidencing the assignment of the CAP Units to the
95
Partnership, or the General Partner, as applicable, and the withdrawal of CAP
as a Limited Partner of the Partnership.
2. Notwithstanding any other provision of the First Prior
Amendment (as amended by the Sixth Prior Amendment) or the Agreement to the
contrary, upon liquidation of the Partnership, CAP shall be required to
contribute to the Partnership the deficit balance in its Capital Account
computed in accordance with Section 1.752-2(b)(1) and (2) of the Regulations,
provided, however, that such contribution obligation shall not exceed
$84,350,000 (the "Deficit Obligation"). CAP specifically waives any right of
contribution or subrogation with respect to such Deficit Obligation and neither
the General Partner nor any other Partner or other Person shall be required to
reimburse CAP for such contribution. Irrespective of the balance in the Capital
Account of CAP, CAP agrees to indemnify the Partnership and the General Partner
to the extent that the recourse obligations of the Partnership exceed the assets
of the Partnership available to satisfy such recourse obligations. This
indemnity obligation is intended to protect and hold the Partnership and the
General Partner harmless for such recourse obligations without regard to
obligations imposed on the General Partner under applicable state law or other
contract provisions. This indemnity obligation shall be limited to $84,350,000
(the "Indemnity Obligation"). CAP hereby specifically waives any right of
contribution from or subrogation against the General Partner or any other
Partner and neither the Partnership nor any other Partner shall be required to
contribute to or otherwise reimburse CAP with respect to such indemnity. Upon
payment of such indemnity, CAP's Capital Account shall be credited with such
payment only to the extent of any deficit in such Capital Account. Amounts paid
to the Partnership pursuant to the Deficit Obligation or the Indemnity
Obligation shall be used to satisfy the recourse obligations of the Partnership.
CAP's Deficit Obligation and Indemnity Obligation shall not in
the aggregate exceed $84,350,000 (subject to reduction as provided herein). In
addition, the Deficit Obligation and the Indemnity Obligation shall be forever
reduced to $6,350,000 immediately upon the first placing, after acquisition of
the CAP Properties by the Partnership, of a non-recourse third party mortgage on
the CAP Properties securing a third party non-recourse loan to the Partnership
in an amount not less than $78,000,000.
Upon the sale, redemption, conversion or other disposition of the
CAP Units, the Deficit Obligation and the Indemnity Obligation of CAP under this
provision shall terminate proportionately with the number of CAP Units sold,
redeemed, converted or otherwise disposed of; provided, however, that a
transferee of CAP may, in its sole discretion, assume the Deficit Obligation
and/or the Indemnity Obligation of CAP and, in such event, the Deficit
Obligation and the Indemnity Obligation shall be the obligations solely of such
transferee (but CAP's obligation shall in all events be proportionately
terminated as of the date of any such disposition of its interest in the
Partnership). Nothing in this paragraph 2 shall in any way affect the sale,
exchange, or conversion rights of CAP under the Agreement or under the First and
Sixth Prior Amendments.
X-0 - 0
00
XXXXXXX X-0
(1120 AGREEMENT)
BACKGROUND
On October 16, 1997, pursuant to a closing under that certain
Contribution Agreement dated September 4, 1997, as amended, by and between the
Partnership and 0000 00xx Xxxxxx Associates ("1120") (the "Contribution
Agreement"), 1120 received 1,645,885 Class A Units, subject to adjustment as
provided in the Contribution Agreement, (referred to as the "1120 Units") in
exchange for the office property known as Xxx Xxxxxxxxx Xxxxxx, 0000 00xx
Xxxxxx, X.X., Xxxxxxxxxx, X.X. (the "1120 Property"). In connection with the
issuance of the 1120 Units, the Second Prior Amendment to the Original
Partnership Agreement, which set forth specific agreements regarding certain
additional rights and obligations of 1120, was executed. Such specific
agreements are described below.
All capitalized terms used in this Exhibit E-2 and not otherwise
defined herein have the meanings assigned in the Agreement.
SPECIFIC AGREEMENTS
Notwithstanding any other provision of the Agreement to the
contrary, upon liquidation of the Partnership, 1120 shall be required to
contribute to the Partnership the deficit balance in its Capital Account
computed in accordance with Sections 1.752-2(b)(1) and (2) of the Regulations;
provided, however, that such contribution obligation shall not exceed
$14,000,000 (the "Deficit Obligation"). 1120 specifically waives any right of
contribution or subrogation with respect to such Deficit Obligation and neither
the General Partner nor any other Partner or other Person shall be required to
reimburse 1120 for such contribution. Irrespective of the balance in the Capital
Account of 1120, 1120 agrees to indemnify the Partnership and the General
Partner to the extent that the recourse obligations of the Partnership exceed
the assets of the Partnership available to satisfy such recourse obligations.
This indemnity obligation is intended to protect and hold the Partnership and
the General Partner harmless for such recourse obligations without regard to
obligations imposed on the General Partner under applicable state law or other
contract provisions. This indemnity obligation shall be limited to $14,000,000
(the "Indemnity Obligation"). 1120 specifically waives any right of contribution
from or subrogation against the General Partner or any other Partner and neither
the Partnership nor any other Partner shall be required to contribute to or
otherwise reimburse 1120 with respect to such indemnity. Upon payment of such
indemnity, 1120's Capital Amount shall be credited with such payment only to the
extent of any deficit in such Capital Account. Amounts paid to the Partnership
pursuant to the Deficit Obligation or the Indemnity Obligation shall be used to
satisfy the recourse obligations of the Partnership.
Upon the sale, redemption, conversion or other disposition of the
1120 Units, the Deficit Obligation and the Indemnity Obligation of 1120 under
this provision shall terminate; provided, however, a transferee of 1120 may, in
its sole discretion, assume the Deficit Obligation and/or the Indemnity
Obligation of 1120 and, in such event, the Deficit
97
Obligation and the Indemnity Obligation shall be the obligation solely of such
transferee (but 1120's obligation shall in all events be terminated as of the
date of any disposition of its interest in the Partnership). Nothing herein
shall in any way effect the sale, exchange or conversion rights of 1120 under
the Agreement or under the Second Prior Amendment.
X-0 - 0
00
XXXXXXX X-0
(XXXXXX RUNSTAD AGREEMENT)
BACKGROUND
On December 16, 1997, (i) pursuant to a closing under that
certain Contribution Agreement dated December 16, 1997, by and between the
Partnership, WRAM (as defined below), WRH (as defined below) and certain other
parties (the "Contribution Agreement") (a) Xxxxxx Runstad Asset Management
L.P., a Washington limited partnership ("WRAM"), received 446,890 Class B Units
in exchange for certain partnership interests ("Titleholder Interests") in
Xxxxxx Runstad Properties L.P., a Delaware limited partnership (the
"Titleholder") and (b) Xxxxxx Runstad Holdings L.P., a Washington limited
partnership ("WRH"), received 2,168,810 Class B Units in exchange for certain
Titleholder Interests; and (ii) pursuant to a closing under that certain
Investment Agreement dated December 16, 1997, by and among the Partnership,
Xxxxxx Runstad Associates Limited Partnership, a Washington limited
partnership, ("WRALP"), H. Xxx Xxxxxxx ("Runstad"), Xxxxxxx X. Xxxxxxx
("Xxxxxxx"), Xxxx X. Xxxxxx ("Xxxxxx"), and certain other parties (the
"Investment Agreement"), Runstad, Norberg, and Xxxxxx received, in the
aggregate, 137,427 Class B Units in exchange for certain limited partnership
interests in WRALP ("WRALP Interests"). WRAM and WRH are collectively referred
to herein as the "Contributors." Runstad, Norberg, Xxxxxx are collectively
referred to herein as the "Principals." The Class B Units issued as described
above are referred to herein as the WRP Units. Certain property owned by the
Titleholder as described in the Contribution Agreement is referred to herein as
the "WRP Property." In connection with the issuance of the WRP Units, the Third
Prior Amendment to the Original Partnership Agreement, which set forth specific
agreements regarding certain additional rights and obligations of the
Contributors and the Principals, was executed. Such specific agreements are
described below.
All capitalized terms used in this Exhibit E-3 and not otherwise
defined shall have the meanings assigned to them in the Agreement.
SPECIFIC AGREEMENTS
1. Right to Assign. Notwithstanding any other provision of this
Agreement or of the Third Prior Amendment, each Contributor shall have the
right to assign all or any portion of its WRP Units, together with any and all
other rights of such Contributor pursuant to the Third Prior Amendment and the
Agreement, to one or more of the constituent partners or shareholders, members,
partners, or beneficiaries of constituent partners of such Contributor on
December 16, 1997, without the need for the consent of the General Partner or
any Limited Partner and without being subject to the right of first refusal set
forth in Section 11.3.A(a) of the Agreement, but in each case subject to the
restrictions and conditions set forth in Sections 11.3.C, 11.3.D, 11.3.E,
11.6.E and 11.6.F of the Agreement. Upon the delivery of written notice of such
an assignment to the General Partner, each assignee of WRP Units pursuant to
the immediately preceding sentence shall be admitted to the Partnership as a
Substituted Limited Partner owning the
99
WRP Units so assigned and having all of the rights of a Limited Partner under
the Agreement and the Third Prior Amendment, subject only to such assignee
executing and delivering to the Partnership an acceptance of all of the terms
and conditions of the Agreement and such other documents or instruments as the
General Partner may reasonably require to effect such admission, in accordance
with Section 11.4.B of the Agreement. Each permitted assignee of any of the WRP
Units issued to a Contributor pursuant to the Contribution Agreement that is
admitted as a Substituted Limited Partner in accordance with this Section 1 or
Article XI of the Agreement, for so long as such Person owns any such WRP Units,
is referred to herein as a "Contributor Limited Partner." Upon satisfaction of
the condition described in the second sentence of this Section 1, the General
Partner shall amend Exhibit A to the Agreement in the manner described in
Section 11.4.C of the Agreement. For purposes of Section 8.6 of the Agreement,
each Contributor Limited Partner which is a permitted assignee of a Contributor
shall be entitled to exercise its right to require the Partnership to redeem all
or any portion of the WRP Units assigned to it by such Contributor at any time.
2. Adjustments to Carrying Values.
(a) Upon the admission of the Contributors and the
Principals to the Partnership and upon the distribution by the
Partnership of the Cash Amount to either Contributor or to any
Principal or any Contributor Limited Partner pursuant to the exercise
of the Redemption Right with respect to the WRP Units held by such
Contributor, Principal or Contributor Limited Partner, the Carrying
Values of the Assets of the Partnership shall be adjusted in accordance
with the procedures described in Section 1.D of Exhibit B to the
Agreement; provided, however, that in order to minimize the
administrative burden associated with the adjustments required by this
Section 2(a) in connection with the distribution of the Cash Amount to
a Contributor, a Principal or a Contributor Limited Partner, the
Partnership shall make the adjustments to the Carrying Values of the
Partnership's Assets (and the resulting adjustments to the Capital
Accounts of the Partners) only upon the happening of the most material
event during the calendar year that is described in Section 1.D(2) of
Exhibit B to the Agreement (the "Annual Adjustment"); and provided,
further, that upon the distribution of the Cash Amount to a
Contributor, a Principal or a Contributor Limited Partner or, at the
option of the General Partner, upon the occurrence of any other event
described in Section 1.D(2) of Exhibit B to the Agreement, that occurs
during any year other than as of the date of the Annual Adjustment, the
Partnership shall, at the time of such distribution, make adjustments
to the Carrying Values of the Partnership's Assets in accordance with
the procedures described in Section 1.D of Exhibit B to the Agreement
for purposes of adjusting the Capital Account of such Contributor, such
Principal or such Contributor Limited Partner who has exercised his
Redemption Right or such other affected Partner, but no such
adjustments shall be necessary at such time with respect to the Capital
Account balances of Partners who remain Partners through the date of
the Annual Adjustment or are otherwise not directly affected by any
such other event.
(b) Any determination of the fair market value of
Partnership assets pursuant to Section 1.D of Exhibit B to the
Agreement (for purposes of
E-3-2
100
calculating Unrealized Gain or Unrealized Loss), with respect
to adjusting the Carrying Values of Partnership assets in connection
with the exercise of Redemption Rights by a Contributor, any Principal
or any Contributor Limited Partner shall be made by assuming that the
aggregate fair market value of all Partnership assets is equal to the
aggregate Cash Amount that would be distributed by the Partnership if
all Partnership Units held by all Partners (including the General
Partner) were redeemed in exchange for the Cash Amount with respect to
each such Partnership Unit at such time, provided, however, such
valuation methodology shall not be utilized for purposes of determining
the fair market value of the Partnership's assets with respect to any
such exercise of Redemption Rights in contemplation of an assignment by
or reorganization of the Partnership for the benefit of creditors and
any liquidation of the Partnership related thereto or following the
filing by (or in contemplation of a filing) by the Partnership of a case
under Title 11 of the U.S. Code.
3. Allocations. Notwithstanding the provisions of Section 2.C of
Exhibit C to the Agreement, for purposes of allocating items of income, gain,
loss and deduction with respect to the WRP Property in the manner required by
Section 704(c) of the Code, the Partnership shall employ, and shall cause any
entity controlled by the Partnership which holds title to any of the WRP
Property to employ, the "traditional method" as set forth in Regulation Section
1.704-3(b).
4. Obligation to Restore Deficit Capital Account.
(a) For purposes of this Section 4, the following terms
shall have the meanings set forth below:
(i) "DRO Amount" means (A) with
respect to WRAM, $10,873,678, (B) with respect to WRH,
$63,014,285 and (C) with respect to each Scheduled Assignee, the
amount set forth opposite such Scheduled Assignee's name on
Schedule 1 hereto.
(ii) "Partner Contribution Agreement"
means one or more agreements in favor of that certain
partnership or those certain partnerships that are partners in
WRH, which were executed concurrently with the Third Prior
Amendment and have been assigned by such partnerships to WRH,
pursuant to which a Second-Tier Partner has agreed to make
certain capital contributions to WRH on the terms and subject to
the conditions set forth in such Partner Contribution Agreement.
(iii) "Partner Contribution Amount"
means, with respect to each Second-Tier Partner, the amount set
forth opposite such Second-Tier Partner's name on Schedule 1
hereto, which amount is the amount of capital contributions
agreed to be made by such Second-Tier Partner pursuant to the
Partner Contribution Agreement to which he is a party.
E-3-3
101
(iv) "Scheduled Assignee" means
each permitted assignee of any of the WRP Units of either WRAM
or WRH listed on Schedule 1 hereto and the successors and
assigns of such Scheduled Assignee.
(v) "Second-Tier Partners" means those
persons listed on Schedule 1 to the Third Prior Amendment who
are partners in certain general partnerships that are partners
in WRH and who have executed and delivered one or more Partner
Contribution Agreements.
(b) Notwithstanding any other provisions of
the Agreement, upon liquidation of the Partnership or upon the
liquidation of the Partnership Interest of a Contributor or a Scheduled
Assignee, each Contributor or Scheduled Assignee whose interest is
being liquidated shall contribute to the Partnership, in accordance
with Section 1.704-1(b)(2)(ii)(b)(2) of the Regulations, the deficit
balance, if any, in its Capital Account, calculated after the
allocation for such year of all items of Net Income, Net Losses, Gross
Income and Unrealized Gain or Unrealized Loss allocated in accordance
with Section 1.D of Exhibit B to the Agreement; provided, however, that
in no event shall such contribution obligation for any Contributor or
Scheduled Assignee exceed such Contributor's or Scheduled Assignee's
DRO Amount. In addition, WRH assigned and conveyed to the Partnership,
effective upon distribution of the WRP Units by WRH, all of WRH's
rights under each Partner Contribution Agreement provided by a
Second-Tier Partner; provided that in no event shall the contribution
obligation pursuant to such Partner Contribution Agreement exceed such
Second-Tier Partner's Partner Contribution Amount. The obligation
pursuant to this Section 4(b) shall be for the benefit of the
Partnership, the General Partner, the creditors of the Partnership or
any other person to whom any debts, liabilities or obligations are owed
by (or who otherwise has any claim against) the Partnership or the
General Partner in its capacity as the general partner of the
Partnership and shall be enforceable by such parties. Each Contributor
and Scheduled Assignee unconditionally and irrevocably waives any
subrogation, reimbursement or similar rights to which it might
otherwise be entitled as the result of its performance with respect to
the obligation created pursuant to Section 4(b), whether such rights
arise with respect to the Partnership, another Partner, or a third
party; provided, however, that the General Partner shall in all events
be entitled to enforce the contribution obligation of a Contributor or
Scheduled Assignee undertaken pursuant to Section 4(b).
(c) Notwithstanding the foregoing, in the
event that the General Partner, pursuant to Section 8.6.B of the
Agreement, elects to assume directly and satisfy a Redemption Right
exercised by a Contributor or a Scheduled Assignee (a "Tendering
Limited Partner"), the General Partner shall assume the obligation of
the Tendering Limited Partner pursuant to Section 4(b) above with
respect to the WRP Units transferred to the General Partner by such
Tendering Limited Partner; provided, however, that if the adjustment to
the Carrying Values of Partnership Assets and the related adjustments
to the Capital Accounts of the Partners pursuant to Section 2 hereof
and Section 1.D of Exhibit B to the Agreement that would have been
undertaken pursuant to Section 2 hereof had the
E-3-4
102
Partnership satisfied the Redemption Right exercised by such Tendering
Limited Partner would have resulted in the Capital Account of the
Tendering Limited Partner having a zero or positive balance, then, with
respect to such WRP Units acquired from the Tendering Limited Partner,
the General Partner shall have no obligation pursuant to Section 4(b)
hereof with respect to a liquidation of the Partnership or a liquidation
of the Partnership Interest reflected by such WRP Units that occurs more
than twelve months following the acquisition of such WRP Units by the
General Partner.
(d) In the event that the liquidation of
the Partnership Interest of a Tendering Limited Partner, other than in
connection with the liquidation of the Partnership, would trigger an
obligation pursuant to Section 4(b) hereof to contribute an amount to
the Partnership, then the Net Income of the Partnership for the portion
of such year ending on the Specified Redemption Date with respect to
such Tendering Limited Partner shall be specially allocated to such
Tendering Limited Partner in the amount necessary to eliminate the
deficit balance in its Capital Account remaining after all other
adjustments for such year (including any adjustments made pursuant to
Section 1.D of Exhibit B to the Agreement).
5. Maintenance of Recourse Debt. The Partnership shall maintain
unsecured liabilities as to which the creditor has recourse to the General
Partner, including any such unsecured recourse liabilities (as to which the
creditor has recourse to the General Partner in its capacity as General
Partner) of any other entity that is allocable to the Partnership, in an
aggregate amount not less than the amount necessary such that: (a) prior to the
distribution by WRAM and WRH of WRP Units issued to them pursuant to the
Contribution Agreement, the amount of Partnership recourse liabilities
allocated to each of WRAM and WRH shall be not less than its DRO Amount; and
(b) following the distribution by WRAM and WRH of WRP Units issued to them
pursuant to the Contribution Agreement, the amount of Partnership recourse
liabilities allocated directly or indirectly to all Scheduled Assignees and
Second-Tier Partners shall be not less than the sum of their respective DRO
Amounts and Partner Contribution Amounts. In making such determination, the
Partnership shall take into account any and all allocations of Partnership
recourse liabilities to other Partners by reason of any guarantees,
indemnities, restoration obligations or other, similar arrangements with
respect to any such Partners, and the liability by reason of any such Partner's
status as a general partner of the Partnership.
6. Amendments. Notwithstanding any provision in the Agreement to
the contrary, the provisions hereof and of the Third Prior Amendment may be
waived or amended or otherwise modified with the prior written consent of
holders of more than fifty percent (50%) of the WRP Units at the time
outstanding and without the consent of any other Limited Partner.
E-3-5
103
SCHEDULE 1
SCHEDULED ASSIGNEES AND SECOND-TIER PARTNERS
DRO Amount/
Scheduled Assignees/ Partner Contribution
Second-Tier Partners Amount
-------------------- ------
E-3-6
104
EXHIBIT E-4
(XXXXXXXXX AGREEMENT)
BACKGROUND
On April 21, 1998, Xxxxxxxxx-Denver Limited Partnership, an Ohio
limited partnership ("Xxxxxxxxx") and 0000 Xxxxxxxx Partnership, a Colorado
general partnership ("Broadway") (collectively the "Additional Limited
Partners") each was issued 1,684 Class B Units (referred to as the "Xxxxxxxxx
and Broadway Units"). In connection with the issuance of the Xxxxxxxxx and
Broadway Units, a Prior Addendum dated as of April 21, 1998, to the Original
Partnership Agreement, which set forth specific agreements regarding certain
additional rights and obligations of the Additional Limited Partners, was
executed. Such specific agreements are described below.
All capitalized terms used in this Exhibit E-4 and not otherwise
defined shall have the meanings assigned in the Agreement.
SPECIFIC AGREEMENTS
Notwithstanding any other provision of the Agreement to the
contrary, upon liquidation of the Partnership, each of the Additional Partners
shall be required to contribute to the Partnership the deficit balance in such
party's Capital Account computed in accordance with Sections 1.752-2(b)(1) and
(2) of the Regulations; provided, however, that such contribution obligation
shall not exceed the amount by which the recourse obligations of the
Partnership exceed the assets of the Partnership available to satisfy such
recourse obligations and shall not exceed $4,154,000 with respect to Xxxxxxxxx
and the lesser of the deficit balance in Broadway's Capital Account in "owner"
at the date of "closing" reduced by any income allocated to Broadway after the
date of Closing or $10,500,000 with respect to Broadway (collectively, the
"Deficit Obligation"). Each of the Additional Limited Partners specifically
waives any right of contribution or subrogation with respect to such Deficit
Obligation and neither the General Partner nor any other Partner or other
Person shall be required to reimburse the Additional Limited Partners for such
contributions. Upon payment of such Deficit Obligation, each Additional Limited
Partner's Capital Account shall be credited with such payment. Amounts paid to
the Partnership pursuant to the Deficit Obligation shall be used to satisfy the
recourse obligations of the Partnership.
Upon the sale, redemption, conversion or other disposition of
the Xxxxxxxxx and Broadway Units received by any Additional Limited Partner,
the Deficit Obligation of such Additional Limited Partner shall be reduced in
an amount equal to the percentage of the Xxxxxxxxx and Broadway Units owned by
such Additional Limited Partner which were sold, redeemed, converted or
otherwise disposed of by such Additional Limited Partner, and upon the sale,
redemption, conversion or other disposition of all the Xxxxxxxxx and Broadway
Units received by any Additional Limited Partner, the Deficit Obligation shall
be terminated with respect to such Additional Limited Partner. Nothing in this
Exhibit E-4
105
shall in any way effect the sale, exchange or conversion rights of
the Additional Limited Partners under the Agreement or this Exhibit E-4.
In the case of Xxxxxxxxx only, certain partners of Xxxxxxxxx
shall execute and deliver to the Partnership, and the Partnership shall accept,
a Guarantee in the form agreed to by such Xxxxxxxxx partners and the
Partnership.
E-4-2
106
EXHIBIT E-5
(PALO ALTO SQUARE AGREEMENT)
BACKGROUND
Pursuant to a closing under that certain Contribution Agreement
dated September 28, 1999, by and between Palo Alto Square Limited Partnership,
an Illinois limited partnership, ("Contributor") and the General Partner (the
"Contribution Agreement"), Contributor was issued 1,012,623 Class B Units
(referred to as the "Contributor Units") in exchange for certain real property
interests described in the Contribution Agreement (the "Property"). Contributor
has assigned the Contributor Units to the Equity Holders (as defined below). In
connection with the issuance of Contributor Units, the Tenth Prior Amendment to
the Original Partnership Agreement, which set forth specific agreements
regarding certain additional rights and obligations of the Contributor and its
constituent partners as set forth on Schedule 1 to such Tenth Prior Amendment
(the "Equity Holders"), was executed. Such specific agreements are described
below.
All capitalized terms used in this Exhibit E-5 and not otherwise
defined shall have the meanings assigned in the Agreement.
SPECIFIC AGREEMENTS
1. Right to Assign. Notwithstanding any other provision of this
Exhibit E-5 or of the Agreement, the Equity Holders shall have the right to
assign all or any portion of their Contributor Units, together with any and all
other rights of the Equity Holders pursuant to this Exhibit E-5 or the
Agreement, to one or more of the constituent partners or shareholders, members,
partners or beneficiaries of constituent partners of the Equity Holders as of
October 1, 1999, whether direct or indirect, without the need for the consent
of the General Partner or Limited Partners and without being subject to the
right of first refusal set forth in Section 11.3.A(a) of the Agreement, but in
each case subject to the restrictions and conditions set forth in Sections
11.3.C, 11.3.D, 11.3.E, 11.6.E and 11.6.F of the Agreement. Upon the delivery
of written notice of such an assignment to the General Partner, each assignee
of Contributor Units pursuant to the immediately preceding sentence shall be
admitted to the Partnership as a Substituted Limited Partner owning the
Contributor Units so assigned and having all of the rights of a Limited Partner
under the Agreement and this Exhibit E-5, subject only to such assignee
executing and delivering to the Partnership an acceptance of all of the terms
and conditions of the Agreement and such other documents or instruments as the
General Partner may reasonably require to effect such admission, in accordance
with Section 11.4.B of the Agreement. Each permitted assignee of any of the
Contributor Units, issued to the Contributor pursuant to the Contribution
Agreement and subsequently transferred to the Equity Holders, that is admitted
as a Substituted Limited Partner in accordance with this Section 1 or Article
XI of the Agreement, for so long as such Person owns any such Contributor
Units, is referred to in this Exhibit E-5 as an "Indirect Equity Holder." Upon
satisfaction of the condition described in the second sentence of this Section
1, the General Partner shall amend Exhibit A to the Agreement in the manner
described in Section 11.4.C of the Agreement. For purposes of Section 8.6 of
the Agreement, each Equity Holder and
107
Indirect Equity Holder shall be entitled to exercise its right to require the
Partnership to redeem all or any portion of the Contributor Units assigned to it
by an Equity Holder at any time on or after October 1, 1999.
2. Adjustments to Carrying Values. (a) The Carrying Values of
the Assets of the Partnership shall be adjusted in accordance with the
procedures described in Section 1.D of Exhibit B to the Agreement; provided,
however, that in order to minimize the administrative burden associated with
the adjustments required by this Section 2(a) in connection with the
distribution of the Cash Amount to an Equity Holder or an Indirect Equity
Holder, the Partnership shall make the adjustments to the Carrying Values of
the Partnership's assets (and the resulting adjustments to the Capital Accounts
of the Partners) only upon the happening of the most material event during the
calendar year that is described in Section 1.D(2) of Exhibit B to the Agreement
(the "Annual Adjustment") and; provided further that upon the distribution of
the Cash Amount to an Equity Holder or an Indirect Equity Holder or, at the
option of the General Partner, upon the occurrence of any other event described
in Section 1.D(2) of Exhibit B to the Agreement, that occurs during any year
other than as of the date of the Annual Adjustment, the Partnership shall, at
the time of such distribution, make adjustments to the Carrying Values of the
Partnership's assets in accordance with the procedures described in Section 1.D
of Exhibit B to the Agreement for purposes of adjusting the Capital Account of
an Equity Holder, or such Indirect Equity Holder who has exercised his
Redemption Right or such other affected Partner, but no such adjustments shall
be necessary at such time with respect to the Capital Account balances of
Partners who remain Partners through the date of the Annual Adjustment or are
otherwise not directly affected by any such other event.
(b) Any determination of the fair market value
of Partnership assets pursuant to Section 1.D of Exhibit B to the Agreement
(for purposes of calculating Unrealized Gain or, Unrealized Loss), with respect
to adjusting the Carrying Values of Partnership assets in connection with the
exercise of Redemption Rights by an Equity Holder or any Indirect Equity Holder
shall be made by assuming that the aggregate fair market value of all
Partnership assets is equal to the aggregate Cash Amount that would be
distributed by the Partnership if all Partnership Units held by all Partners
(including the General Partner) were redeemed in exchange for the Cash Amount
with respect to each such Partnership Unit at such time, provided, however,
such valuation methodology shall not be utilized for purposes of determining
the fair market value of the Partnership's assets with respect to any such
exercise of Redemption Rights in contemplation of an assignment by or
reorganization of the Partnership for the benefit of creditors and any
liquidation of the Partnership related thereto or following the filing by (or
in contemplation of a filing) by the Partnership of a case under Title 11 of
the U.S. Code.
3. Allocations. Notwithstanding the provisions of Section 2.C of
Exhibit C to the Agreement, for purposes of allocating, items of income, gain,
loss and deduction with respect to the Property in the manner required by
Section 704(c) of the Code, the Partnership shall employ, and shall cause any
entity controlled by the Partnership which holds title to any of the Property
to employ the "traditional method" as set forth in Regulation Section
1.704-3(b).
E-5-2
108
4. Obligation to Restore Deficit Capital Accounts. (a)
For purposes of this Section 4, the following terms shall have the meanings set
forth below:
(i) "Protected Amount" means, with respect
to any Protected Partner, an amount equal to (i) the
taxable gain, if any, that would be realized by such
Protected Partner if such Partner were to dispose of its
Partnership Interests for no consideration other than the
release or deemed release of liabilities of the
Partnership assumed by or otherwise allocable to such
Partner under Code Section 752, as such hypothetical gain
is determined from time to time, less (ii) such Partner's
share of "qualified nonrecourse financing" as defined in
Code Section 465(b)(6) and the Regulations thereunder, as
such share is determined from time to time in accordance
with Regulations Section 1.752-3(a). The Protected Amount
allocable to any Protected Partner may be modified from
time to time by an amendment to the Agreement or by
execution of a written instrument by and between such
Protected Partner and the General Partner, acting on
behalf of the Partnership and without the prior written
consent of any other Partner (whether or not Protected
Partners).
(ii) "Protected Partner(s)" means that or
those Limited Partner(s) designated as Protected
Partner(s) on Exhibit A attached to the Tenth Prior
Amendment, as such designation may be modified from time
to time by the General Partner, whether by express
amendment to the Agreement or by execution of a written
instrument by and between any Protected Partner(s) and
the General Partner, acting on behalf of the Partnership
and without the prior consent of other Limited Partners
(whether or not Protected Partners). For purposes hereof,
any successor, assignee, or transferee of Partnership
Interests from a Protected Partner, which successor,
assignee or transferee determines its basis in such Units
by reference to the basis of the predecessor, assignor or
transferor Protected Partner, shall be considered a
Protected Partner.
(b) Notwithstanding any provision of the Partnership Agreement
to the contrary (including, without limitation, the second sentence of Section
13.3 of the Partnership Agreement), upon liquidation of the Partnership or upon
the liquidation of the Partnership Interest of a Protected Partner, such
Protected Partner whose interest is being liquidated shall contribute to the
Partnership in accordance with Treasury Regulation Section
1.704-1(b)(2)(ii)(b)(2), the deficit balance, if any, in its Capital Account,
calculated after the allocation for such year of all items of Net Income, Net
Losses, Gross Income and Unrealized Gain or Unrealized Loss allocated in
accordance with Section 6.1 of the Agreement, Section 1.D of Exhibit B to the
Agreement, provided, however, that in no event shall such contribution
obligation for any Protected Partner exceed such Protected Partner's Protected
Amount. The obligation created pursuant to this Section 4(b) shall be for the
benefit of the Partnership, the General Partner, the creditors of the
Partnership or any other person to whom any debts, liabilities or obligations
are owed by (or who otherwise has any claim against) the Partnership or the
General Partner in its capacity as
E-5-3
109
general partner of the Partnership and shall be enforceable by such parties.
Each Protected Partner unconditionally and irrevocably waives any subrogation,
reimbursement or similar rights to which it might otherwise be entitled as the
result of its performance with respect to the obligation pursuant to this
Section 4(b), whether such rights arise with respect to the Partnership, another
Partner of the Partnership or a third party; provided, however, that the General
Partner shall in all events be entitled to enforce the contribution obligation
of a Protected Partner undertaken pursuant to Section 4(b). Notwithstanding
anything herein to the contrary, the obligation of a Protected Partner to
contribute amounts pursuant to this paragraph shall continue in full force and
effect in accordance with the terms hereof until one year following the transfer
or other disposition by such Protected Partner of its Partnership Interests
unless the Partnership and such Protected Partner agree otherwise. Unless
expressly agreed by the Partnership and the affected holders of Contributor
Units to the contrary in this or any other agreement, no holder of Contributor
Units who is not a Protected Partner shall have any obligation to contribute
amounts to the Partnership.
5. Amendments. Notwithstanding any provision in the Agreement to
the contrary, the provisions of the Tenth Prior Amendment may be waived or
amended or otherwise modified with the prior written consent of holders (being
either the Equity Holders and/or the Indirect Equity Holders) of more than
seventy-five percent (75%) of the Contributor Units at the time outstanding and
without the consent of any other Limited Partner.
E-5-4
110
EXHIBIT E-6
(CORNERSTONE AGREEMENT)
BACKGROUND
In connection with the closing of the merger of Cornerstone
Properties Limited Partnership ("Cornerstone Partnership") with and into the
Partnership on June 19, 2000, (the "Cornerstone Merger") pursuant to the
Agreement and Plan of Merger, dated as of February 11, 2000, as amended, among
the General Partner, the Partnership, Cornerstone Properties Inc. and
Cornerstone Partnership (the "Merger Agreement"), certain former limited
partners of Cornerstone Partnership who became Limited Partners as a result of
the Cornerstone Merger (referred to as "Former Cornerstone Limited Partners")
have elected to become Protected Partners and, as a group, the Former
Cornerstone Limited Partners have been given the right to increase their
Protected Amount after the closing of the Cornerstone Merger, subject to a
specified aggregate dollar limitation. In addition, the Partnership and
Cornerstone Partnership entered into certain other agreements with respect to
tax matters that affect the Former Cornerstone Limited Partners. The specific
agreements between the Partnership and Cornerstone Partnership with respect to
these various matters are described below.
All capitalized terms used and not otherwise defined in this
Exhibit E-6 shall have the meanings assigned in the Agreement.
SPECIFIC AGREEMENTS
1. Election by Certain Former Cornerstone Limited Partners to
Undertake Deficit Restoration Obligation. Each Former Cornerstone Limited
Partner who, prior to the closing of the Cornerstone Merger, had entered into
an agreement with Cornerstone Partnership to bear the economic risk of loss as
to a portion of Cornerstone Partnership's recourse indebtedness by undertaking
the obligation to restore a portion of its negative capital account balance
upon liquidation of such Former Cornerstone Limited Partner's interest in
Cornerstone Partnership was given the opportunity to become a Protected Partner
with a Protected Amount in an amount equal to the maximum amount such Former
Cornerstone Limited Partner was obligated to restore to Cornerstone Partnership
immediately prior to the closing of the Cornerstone Merger; provided, however,
that except as set forth in Paragraphs 2 and 3, below, no Former Cornerstone
Limited Partner has the right to increase its Protected Amount following the
Cornerstone Merger. The Former Cornerstone Limited Partners who have elected to
become Protected Partners under such provision of the Merger Agreement, along
with their specified Protected Amounts as of the closing of the Cornerstone
Merger, are set forth on Schedule 1 to this Exhibit E-6. Each such election by
a Former Cornerstone Limited Partner shall become effective upon the later of
receipt thereof by the General Partner or the "effective time" of the merger of
Cornerstone Partnership into the Partnership. Upon becoming effective, each
such election by a Former Cornerstone Limited Partner pursuant to this Section
1 or any other provision of this Exhibit E-6 shall be irrevocable, cannot be
reduced, and shall be binding upon successive transferees of the Former
Cornerstone Limited Partners, except as provided in Section 13.3.D of the
Agreement.
111
2. Election by Former Cornerstone Limited Partners to Increase
Protected Amount. Notwithstanding the proviso in Paragraph 1, above, Former
Cornerstone Limited Partners may, at any time following the Cornerstone Merger,
elect to become Protected Partners and/or increase their Protected Amounts (as
determined immediately prior to the Cornerstone Merger), as a group, by an
aggregate amount of up to $50 million, reduced by the amount of any increases
to the amounts that such former limited partners of Cornerstone Partnership
were obligated to restore to Cornerstone Partnership that occurred during the
period commencing on February 11, 2000, and ending at the closing of the
Cornerstone Merger.
3. Effect of Other Agreements With Former Cornerstone Limited
Partners. Pursuant to the Merger Agreement, the General Partner, the
Partnership, Cornerstone Properies Inc. and Cornerstone Partnership entered
into an Assignment and Assumption Agreement, dated as of June 19, 2000,
pursuant to which the Partnership assumed certain obligations of Cornerstone
Partnership made pursuant to certain tax protection agreements (the
"Cornerstone Tax Protection Agreements") described on Schedule A to such
Assignment and Assumption Agreement, a copy of which is attached as Schedule 2
to this Exhibit E-6. To the extent that the Cornerstone Tax Protection
Agreements included a right to enter into deficit restoration obligations with
respect to Cornerstone Partnership, such Former Cornerstone Limited Partners
who are beneficiaries of such Cornerstone Tax Protection Agreements are
Protected Partners and have Protected Amounts as provided in the Cornerstone
Tax Protection Agreements. Notwithstanding the limitations in Paragraphs 1 and
2 above, the Protected Partners who are beneficiaries of the Cornerstone Tax
Protection Agreements shall have the right to increase their Protected Amounts
if and to the extent provided in the applicable Cornerstone Tax Protection
Agreement and the amount of any such increase shall not be taken into account
in applying the limitation in Paragraph 2. The Cornerstone Tax Protection
Agreements pursuant to which certain Former Cornerstone Limited Partners have
the right to become Protected Partners or to increase their specified Protected
Amounts (subject to the limitations noted therein) are listed on Schedule 3 to
this Exhibit E-6.
4. Request to Increase Amount of Deficit Restoration Obligation.
The Partnership shall consider in good faith a request from a Former
Cornerstone Limited Partner to become a Protected Partner and/or to increase
its Protected Amount, as applicable, from time to time after the Cornerstone
Merger if such Former Cornerstone Limited Partner shall provide information
from its professional tax advisor satisfactory to the Partnership showing that,
in the absence of such increased Protected Amount, such Limited Partner likely
would not be allocated from the Partnership sufficient indebtedness under
Section 752 of the Code and the at-risk provisions under Section 465 of the
Code to avoid the recognition of gain (other than gain required to be
recognized by reason of actual cash distributions from the Partnership). The
Partnership and its professional tax advisors shall cooperate in good faith
with such Former Cornerstone Limited Partner and its professional tax advisor
to provide such information regarding the allocation of the Partnership
liabilities and the nature of such liabilities as is reasonably necessary in
order to determine the Former Cornerstone Limited Partner's adjusted tax basis
in its Partnership Interest and at-risk amount. In deciding whether or not to
grant such a request, the Partnership shall be entitled to take into account
all factors related to the Partnership, including, without limitation, the
existing and anticipated debt structure of
E-6-2
112
the Partnership, the tax situations of all other Partners, including the General
Partner (individually and as a group), and the effect that granting such a
request might have on their tax situation, and the anticipated long-term
business needs of the Partnership. The Partnership's only obligation with
respect to any such request from a Former Cornerstone Limited Partner pursuant
to this Paragraph 4 shall be to act in good faith. In the event the Partnership
fails to act in good faith with respect to any such request, the exclusive
remedy of the Former Cornerstone Limited Partner who made such request shall be
an action for specific performance, with no entitlement to monetary damages.
5. Manner of Electing to Become a Protected Partner or To
Increase Protected Amount. A Former Cornerstone Limited Partner who pursuant to
the rights set forth under the other Paragraphs of this Exhibit E-6, wishes to
become a Protected Partner or, if already a Protected Partner, to increase its
Protected Amount, shall provide a written notice to the General Partner
specifying the desired Protected Amount. If such election is made pursuant to
Paragraph 2, such election shall become effective upon the receipt thereof by
the General Partner unless (i) the General Partner determines that the
limitation set forth in Paragraph 2 would be exceeded by reason of such
election, or (ii) the General Partner reasonably determines, based on the
advice of its tax advisors and after consulting with the Former Cornerstone
Limited Partner and its tax advisors, that the amount specified in such Former
Cornerstone Limited Partner's election substantially exceeds the amount
necessary to cause such Former Cornerstone Limited Partner to be allocated
sufficient Partnership liabilities under Section 752 of the Code (taking into
account the effect of anticipated reductions in Partnership debt on such Former
Cornerstone Limited Partner's allocable share of Partnership liabilities) to
cover such Former Cornerstone Limited Partner's "negative tax capital account"
and reasonably projected changes therein. If such election is pursuant to a
Cornerstone Tax Protection Agreement, such election shall become effective upon
the receipt thereof by the General Partner unless the General Partner
reasonably determines, based on the advice of its tax advisors and after
consulting with the Former Cornerstone Limited Partner and its tax advisor,
that such Former Cornerstone Limited Partner does not have the right to
undertake such election without the consent of the General Partner. If such
election is not pursuant to Paragraph 2 or a Cornerstone Tax Protection
Agreement (or such is election does not become effective pursuant to the
provisions of one of the two preceding sentences), such election shall be
deemed to be a request pursuant to Paragraph 4 of this Exhibit E-6 and shall
become effective only upon approval by the General Partner in accordance with
the provisions of Paragraph 4. Upon becoming effective, such election shall be
irrevocable, cannot be reduced, and shall be binding upon successive
transferees of the Former Cornerstone Limited Partner except as provided in
Section 13.3.D of the Agreement.
6. No Obligation of the Partnership to Maintain Recourse Debt.
Notwithstanding any obligations of the Partnership referred to in this Exhibit
E-6, the Partnership shall not be obligated to maintain any level of
indebtedness that qualifies as a Recourse Liability or Partner Nonrecourse Debt
in excess of the amounts otherwise specifically required to be maintained under
the Cornerstone Tax Protection Agreements assumed by the Partnership pursuant
to the Merger Agreement.
7. Amendments of Exhibit E; Designation as Part II Protected
Partners. All Protected Partners and their respective Protected Amounts as
provided in this Exhibit
X-0-0
000
X-0 xxxxx xx reflected on Exhibit E, which shall be amended from time to time as
necessary to reflect any additional Protected Partners and/or increases in
Protected Amounts made pursuant to paragraphs 2, 3, or 4, above. Former
Cornerstone Partnership Limited Partners who are or become Protected Partners
pursuant to the provisions of this Exhibit E-6 shall be designated on Exhibit E
as Part II Protected Partners; provided, however, that any Former Cornerstone
Limited Partner who is only obligated to restore a deficit in its capital
account upon liquidation of the Partnership pursuant to a Cornerstone Tax
Protection Agreement shall be designated on Exhibit E as a Part I Protected
Partner.
8. Section 704(c) Method. Notwithstanding Paragraph 2.C. of
Exhibit C, the Partnership shall use the "traditional method" under Regulations
Section 1.704-3(b) for purposes of making allocations under Section 704(c) of
the Code with respect to each property in which Cornerstone Partnership owns a
direct or indirect interest at the time of the Cornerstone Merger (the
"Cornerstone Properties") to take into account the Book-Tax Disparities as of
the effective time of the Cornerstone Merger with respect to the Cornerstone
Properties, with no "curative allocations" to offset the effect of the "ceiling
rule," except to the extent that the Partnership expressly would be required to
use a different method under a Cornerstone Tax Protection Agreement assumed by
the Partnership pursuant to the Merger Agreement. The 704(c) Values of the
Cornerstone Properties shall be as determined by agreement between Cornerstone
Partnership and the Partnership prior to the effective time of the Cornerstone
Merger, or in the absence of such agreement, as determined by the General
Partner using such reasonable method of valuation as it shall adopt.
9. Allocations of "Tier 3" Nonrecourse Liabilities Pursuant to
Regulations Section 1.752-3(a)(3). Unless, and only to the extent, expressly
provided otherwise in the Cornerstone Tax Protection Agreements assumed by the
Partnership pursuant to the Merger Agreement, and notwithstanding Section
6.1.C. of the Agreement, the Partnership shall determine in its reasonable
discretion the method to be used for allocating "excess nonrecourse
liabilities" of the Partnership pursuant to Regulations Section 1.752-3(a)(3)
following the Cornerstone Merger, provided that (i) the Partnership shall not
use with respect to the Former Cornerstone Limited Partners a method that is
less favorable than the method used by the Partnership with respect to the
other Limited Partners of the Partnership who are not parties to an express
agreement specifying a particular method to be used for such purposes, and (ii)
in the case of a Former Cornerstone Limited Partner who, prior to the
Cornerstone Merger, had been specially allocated a portion of a Cornerstone
Partnership nonrecourse liability secured by a property with respect to which
such Cornerstone Partner has a built-in gain under Section 704(c) of the Code
to take into account such Former Cornerstone Limited Partner's share of such
built-in gain that was not taken into account in making the allocation of such
liability by Cornerstone Partnership under Regulations Section 1.752-3(a)(2),
the Partnership shall continue such method of allocating such liability
following the Cornerstone Merger.
E-6-4
114
SCHEDULE 1 TO
EXHIBIT E-6
FORMER CORNERSTONE LIMITED PARTNERS
WHO HAVE ELECTED TO BECOME PROTECTED PARTNERS
PURSUANT TO SECTION 1 OF EXHIBIT E-6
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NAME OF FORMER CORNERSTONE LIMITED 2/11/00 6/19/00
PARTNER: RECOURSE DEBT AMOUNT: PROTECTED AMOUNT:
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AGGREGATE RECOURSE DEBT AMOUNT
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E-6-5
115
SCHEDULE 2 TO
EXHIBIT E-6
ASSIGNMENT AND ASSUMPTION AGREEMENT
(Tax Protection Agreements)
This ASSIGNMENT AND ASSUMPTION AGREEMENT (this "Agreement") is
made and entered into on June 19, 2000, between Cornerstone Properties Inc., a
Nevada corporation ("Cornerstone"), Cornerstone Properties Limited Partnership,
a Delaware limited partnership ("Cornerstone Partnership"), Equity Office
Properties Trust, a Maryland real estate investment trust ("EOP"), and EOP
Operating Limited Partnership, a Delaware limited partnership ("EOP
Partnership").
RECITALS
WHEREAS, Cornerstone, Cornerstone Partnership, EOP and EOP
Partnership are parties to the Agreement and Plan of Merger dated as of
February 11, 2000, as amended (the "Merger Agreement"), pursuant to which (i)
Cornerstone will merge with and into EOP and (ii) Cornerstone Partnership will
merge with and into EOP Partnership;
WHEREAS, Cornerstone Partnership and/or Cornerstone is a party
to each of the agreements described on Schedule A attached hereto
(collectively, the "Cornerstone Tax Protection Agreements");
WHEREAS, in connection with the transactions contemplated by the
Merger Agreement and as required by Section 5.14 of the Merger Agreement,
Cornerstone Partnership and Cornerstone desire to assign to EOP Partnership and
EOP any and all of Cornerstone Partnership's and Cornerstone's rights and
interests under the Cornerstone Tax Protection Agreements (such rights and
interests hereinafter referred to as the "Cornerstone Rights") in exchange for
EOP Partnership's and EOP's assumption of any and all of Cornerstone
Partnership's and Cornerstone's remaining obligations under the Cornerstone Tax
Protection Agreements (such obligations hereinafter referred to as the
"Cornerstone Obligations"); and
WHEREAS, EOP Partnership and EOP desire to accept the
Cornerstone Rights and to assume the Cornerstone Obligations;
NOW, THEREFORE, in consideration of the mutual agreements
contained herein, and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
AGREEMENT
1. Assignment of Cornerstone Rights and Assumption of
Cornerstone Obligations. Cornerstone Partnership and Cornerstone hereby assign
to EOP Partnership
E-6-6
116
and EOP the Cornerstone Rights, and EOP Partnership and EOP hereby accept the
foregoing assignment and assume and agree to perform any and all of the
Cornerstone Obligations.
2. Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original, but all
of which together shall constitute only one instrument.
[Remainder of Page Intentionally Left Blank]
E-6-7
117
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
CORNERSTONE PROPERTIES INC.
By: /s/ Xxxxx X. Xxxxxxx
-------------------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Senior Vice President and
Chief Financial Officer
CORNERSTONE PROPERTIES
LIMITED PARTNERSHIP
By: Cornerstone Properties Inc.,
its general partner
By: /s/ Xxxxx X. Xxxxxxx
-------------------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Senior Vice President and
Chief Financial Officer
E-6-8
118
EQUITY OFFICE PROPERTIES TRUST
By: /s/ Xxxxxxx X. Xxxxxxx
-------------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Executive Vice President,
Chief Legal Counsel and Secretary
EOP OPERATING LIMITED PARTNERSHIP
By: Equity Office Properties Trust,
its general partner
By: /s/ Xxxxxxx X. Xxxxxxx
-------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Executive Vice President,
Chief Legal Counsel and Secretary
E-6-9
119
Schedule A
CORNERSTONE TAX PROTECTION AGREEMENTS
1. First Amendment to Agreement of Limited Partnership of
Cornerstone Properties Limited Partnership, dated as of January 29, 1997
(related to Corporate 500, Phase I, and Corporate 500, Phase II).
2. Second Amendment to Agreement of Limited Partnership
of Cornerstone Properties Limited Partnership, dated as of April 28, 1998.
3. Third Amendment to Agreement of Limited Partnership of
Cornerstone Properties Limited Partnership, dated as of June 3, 1998 (related
to 0000 Xxxxx Xxxxxx, Xxxxx Xxxxxx, Xxxxxxxxxx and 000 Xxxxxxxxxx Xxxxxx, Xxx
Xxxxxxxxx, Xxxxxxxxxx), and related Tax Reimbursement Agreement, dated as of
June 3, 1998, by and among Cornerstone Properties Limited Partnership, the New
Partners named therein and Xxxxxxx X. Xxxxxx.
4. Fifth Amendment to Agreement of Limited Partnership of
Cornerstone Properties Limited Partnership, dated as of January 21, 2000
(related to 000 Xxxxxxx Xxxx, Xxxxxxxxxx, Xxxxxxxxxx).
5. Contribution Agreement and Agreement and Plan of Merger,
dated as of June 22, 1998, as amended, by and among Cornerstone Properties
Inc., Cornerstone Properties Limited Partnership, Xxxxxxx Xxxxxx & Associates
and the entities listed on Schedule I thereto.
6. Letter, dated September 21, 1998, from Cornerstone
Properties Inc. and Cornerstone Properties Limited Partnership to
X'Xxxxx-Xxxxxxxxxx & Associates.
7. Letter, dated September 11, 1998, from Cornerstone
Properties Inc. and Cornerstone Properties Limited Partnership to Xxxxx Ranch
Company.
8. Agreement to Contribute, dated as of April 28, 1998, by
and between One Memorial Drive Limited Partnership, The Prudential Insurance
Company of America, Cornerstone Properties Limited Partnership and One Memorial
Cornerstone LLC.
E-6-10
120
SCHEDULE 3 TO
EXHIBIT E-6
CORNERSTONE TAX PROTECTION AGREEMENTS PURSUANT TO WHICH
CERTAIN FORMER CORNERSTONE LIMITED PARTNERS
HAVE THE RIGHT TO BECOME PROTECTED PARTNERS
SECTION 3 OF EXHIBIT E-6
1. Third Amendment to Agreement of Limited Partnership of Cornerstone
Properties Limited Partnership, dated as of June 3, 1998 (related to
0000 Xxxxx Xxxxxx, Xxxxx Xxxxxx, Xxxxxxxxxx and 000 Xxxxxxxxxx Xxxxxx,
Xxx Xxxxxxxxx, Xxxxxxxxxx), and related Tax Reimbursement Agreement,
dated as of June 3, 1998, by and among Cornerstone Properties Limited
Partnership, the New Partners named therein and Xxxxxxx X. Xxxxxx.
2. Contribution Agreement and Agreement and Plan of Merger, dated as of
June 22, 1998, as amended, by and among Cornerstone Properties Inc.,
Cornerstone Properties Limited Partnership, Xxxxxxx Xxxxxx & Associates
and the entities listed on Schedule I thereto.
X-0-00
000
XXXXXXXXXX A
(SERIES A PREFERRED UNITS)
In accordance with Sections 4.2.A and 4.2.D of the Partnership
Agreement, set forth below are the terms and conditions of the Series A
Preferred Units established and issued by the Partnership to the General Partner
on December 19, 1997, in connection with the merger of Beacon Properties L.P.
("Beacon Partnership") with and into the Partnership (the "Beacon Partnership
Merger"), in exchange for the then outstanding Series A Preferred Units of
Beacon Partnership (all of which had been acquired by the General Partner as a
result of the merger of Beacon Properties Corporation with and into the General
Partner). All capitalized terms used in this Attachment and not otherwise
defined shall have the meanings assigned in the Partnership Agreement.
A. Designation and Number. A series of Partnership Units,
designated as Series A Preferred Units, was established on December 19, 1997,
on which date 8,000,0000 Series A Preferred Units were issued to the General
Partner in the Beacon Partnership Merger.
B. Rank. The Series A Preferred Units shall, with respect to
distribution rights and rights upon liquidation, dissolution or winding up of
the Partnership, rank (a) senior to the Class A Units, Class B Units and all
Partnership Interests ranking junior to the Series A Preferred Units; (b) on a
parity with the Series B Preferred Units, the Series C Preferred Units, the
Series D Preferred Units and all Partnership Interests issued by the
Partnership the terms of which specifically provide that such Partnership
Interests rank on a parity with the Series A Preferred Units; and (c) junior to
all Partnership Interests issued by the Partnership the terms of which
specifically provide that such Partnership Interests rank senior to the Series
A Preferred Units.
C. Distributions.
(i) Pursuant to Section 5.1 of the Partnership Agreement,
holders of Series A Preferred Units shall be entitled to receive, out of
Available Cash, cumulative preferential distributions of Available Cash at the
rate of 8.98% of the $25.00 liquidation preference per annum (equivalent to a
fixed annual amount of $2.245 per unit). Such distributions shall be cumulative
from the last date on which any distributions were paid with respect to the
Series A Preferred Units of Beacon Partnership for which the
122
Series A Preferred Units were exchanged in connection with the Beacon
Partnership Merger and shall be payable quarterly in arrears on or before March
15, June 15, September 15 and December 15 of each year or, if not a business
day, the next succeeding business day (each a "Series A Preferred Unit
Distribution Payment Date"). Any distribution payable on the Series A Preferred
Units for any partial distribution period shall be computed on the basis of a
360-day year consisting of twelve 30-day months.
(ii) No distributions on Series A Preferred Units shall be
authorized or paid or set apart for payment at such time as the terms and
provisions of any agreement of the Partnership, including any agreement relating
to its indebtedness, prohibits such authorization, payment or setting apart for
payment or provides that such authorization, payment or setting apart for
payment would constitute a breach thereof, or a default thereunder, or if such
authorization or payment shall be restricted or prohibited by law.
(iii) Notwithstanding the foregoing, distributions with respect to
the Series A Preferred Units will accrue whether or not the terms and provisions
set forth in Section C.(ii) of this Attachment A at any time prohibit the
current payment of distributions, whether or not there is sufficient Available
Cash for such distributions and whether or not such distributions are
authorized. Accrued but unpaid distributions on the Series A Preferred Units
will accumulate as of the Series A Preferred Unit Distribution Payment Date on
which they first become payable.
(iv) When distributions are not paid in full (or a sum sufficient
for such full payment is not so set apart) upon the Series A Preferred Units and
any other Partnership Interests ranking on a parity as to distributions with the
Series A Preferred Units, all distributions authorized upon the Series A
Preferred Units and any other Partnership Interests ranking on a parity as to
distributions with the Series A Preferred Units shall be authorized pro rata so
that the amount of distributions authorized per Partnership Unit of Series A
Preferred Units and such other Partnership Interests shall in all cases bear to
each other the same ratio that accrued distributions per Partnership Unit on the
Series A Preferred Units and such other Partnership Interests (which shall not
include any accrual in respect of unpaid distributions for prior distribution
periods if such other Partnership Interests do not have a cumulative
distribution) bear to each other. No interest, or sum of money in lieu of
interest, shall be payable in respect of any distribution payment or payments on
Series A Preferred Units which may be in arrears.
Attachment A-2
123
(v) Except as provided in Section C.(iv) of this Attachment A,
unless full cumulative distributions on the Series A Preferred Units have been
or contemporaneously are authorized and paid or authorized and a sum sufficient
for the payment thereof is set apart for payment for all past distribution
periods and the then current distribution period, no distributions (other than
in Partnership Interests ranking junior to the Series A Preferred Units as to
distributions and upon liquidation) shall be authorized or paid or set aside for
payment nor shall any other distribution be authorized or made upon the Class A
Units, the Class B Units, or any other Partnership Interests ranking junior to
or on a parity with the Series A Preferred Units as to distributions or upon
liquidation, nor shall any Class A Units, Class B Units, or any other
Partnership Interests ranking junior to or on a parity with the Series A
Preferred Units as to distributions or upon liquidation be redeemed, purchased
or otherwise acquired for any consideration (or any moneys be paid to or made
available for a sinking fund for the redemption of any such units or other
Partnership Interests) by the Partnership (except by conversion into or exchange
for Partnership Interests ranking junior to the Series A Preferred Units as to
distributions and upon liquidation).
(vi) Holders of the Series A Preferred Units shall not be entitled
to any distribution, whether payable in cash, property or Partnership Units in
excess of full cumulative distributions on the Series A Preferred Units as
described above. Any distribution payment made on the Series A Preferred Units
shall first be credited against the earliest accrued but unpaid distribution due
with respect to such Series A Preferred Units which remains payable.
D. Allocations.
Allocations of the Partnership's items of income, gain, loss and
deduction shall be allocated among holders of Series A Preferred Units in
accordance with Article VI of the Agreement.
E. Liquidation Preference.
(i) Upon any voluntary or involuntary liquidation, dissolution or
winding up of the affairs of the Partnership, the holders of Series A Preferred
Units then outstanding are entitled to be paid out of the assets of the
Partnership available for distribution to the Partners pursuant to Section
13.2.A of the Agreement a liquidation preference of $25.00 per Series A
Preferred Unit, plus an amount equal to any accrued and unpaid distributions to
the date of payment, before any distribution of assets is made
Attachment A-3
124
to holders of Class A Units, Class B Units or any other Partnership Interests
that rank junior to the Series A Preferred Units as to liquidation rights.
(ii) In the event that, upon any such voluntary or involuntary
liquidation, dissolution or winding up, the available assets of the Partnership
are insufficient to pay the amount of the liquidating distributions on all
outstanding Series A Preferred Units and the corresponding amounts payable on
all other Partnership Interests ranking on a parity with the Series A Preferred
Units in the distribution of assets, then such assets shall be allocated among
the Series A Preferred Units, as a class, and each class or series of such other
such Partnership Interests, as a class, in proportion to the full liquidating
distributions to which they would otherwise be respectively entitled.
(iii) After payment of the full amount of the liquidating
distributions to which they are entitled, the holders of Series A Preferred
Units will have no right or claim to any of the remaining assets of the
Partnership.
(iv) The consolidation or merger of the Partnership with or into
any other partnership, corporation, trust or entity or of any other partnership,
corporation, trust or other entity with or into the Partnership or the sale,
lease or conveyance of all or substantially all of, the property or business of
the Partnership, shall not be deemed to constitute a liquidation, dissolution or
winding up of the Partnership for purposes of this Section E.
F. Redemption.
In connection with a redemption by the General Partner of any or
all of the Series A Preferred Shares of the General Partner, the Partnership
shall provide cash to the General Partner for such purpose which shall be equal
to redemption price of the Series A Preferred Shares to be redeemed and one
Series A Preferred Unit shall be canceled with respect to each Series A
Preferred Share so redeemed. From and after the date in which the Series A
Preferred Shares are redeemed, any Series A Preferred Units so canceled shall no
longer be outstanding and all rights hereunder, to distributions or otherwise,
with respect to such Series A Preferred Units shall cease.
Attachment A-4
125
ATTACHMENT B
(SERIES B PREFERRED UNITS)
In accordance with Sections 4.2.A and 4.2.D of the Agreement, set
forth below are the terms and conditions of the Series B Preferred Units
established and issued by the Partnership on February 19, 1998, in connection
with the issuance of Series B Preferred Shares by the General Partner.
Capitalized terms used herein and not otherwise defined shall have the meanings
given to them in the Agreement.
A. Designation and Number. A series of Partnership Units,
designated as Series B Preferred Units was established on February 19, 1998, on
which date 6,000,000 Series B Preferred Units were issued to the General
Partner.
B. Rank. The Series B Preferred Units shall, with respect to
distribution rights and rights upon voluntary or involuntary liquidation,
dissolution or winding up of the affairs of the Partnership, rank (a) senior to
the Class A Units, Class B Units and all Partnership Interests ranking junior to
the Series B Preferred Units; (b) on a parity with the Series A Preferred Units,
the Series C Preferred Units, the Series D Preferred Units, and all other
Partnership Interests issued by the Partnership the terms of which specifically
provide that such Partnership Interests rank on a parity with the Series B
Preferred Units; and (c) junior to all Partnership Interests issued by the
Partnership the terms of which specifically provide that such Partnership
Interests rank senior to the Series B Preferred Units.
C. Distributions.
(i) Pursuant to Section 5.1 of the Agreement, holders of Series B
Preferred Units shall be entitled to receive, out of Available Cash, cumulative
preferential cash distributions at the rate of 5.25% of the $50.00 liquidation
preference per annum (equivalent to a fixed annual amount of $2.625 per unit).
Distributions (which term as used herein shall include liquidated damages, if
any, payable pursuant to Section C.(vi) of this Attachment B) on the Series B
Preferred Units shall be payable quarterly and be cumulative from the fifteenth
day of each February, May, August and November or, if not a business day, the
next succeeding business day (each, a "Series B Preferred Unit Distribution
Payment Date"). Any distribution (including the initial distribution) payable on
the Series B Preferred Units for
126
any partial distribution period shall be prorated and computed on the basis of a
360-day year consisting of twelve 30-day months.
(ii) No distribution on the Series B Preferred Units shall be
authorized by the General Partner or paid or set apart for payment by the
Partnership at such time as the terms and provisions of any agreement of the
Partnership, including any agreement relating to its indebtedness, prohibits
such authorization, payment or setting apart for payment or provides that such
authorization, payment or setting apart for payment would constitute a breach
thereof, or a default thereunder, or if such authorization or payment shall be
restricted or prohibited by law. No interest, or sum of money in lieu of
interest, shall be payable in respect of any distribution payment or payments on
the Series B Preferred Units which may be in arrears.
Notwithstanding the foregoing, distributions with respect to the
Series B Preferred Units shall accumulate whether or not any of the foregoing
restrictions exist, whether or not there is sufficient Available Cash for the
payment thereof and whether or not such distributions are authorized.
Accumulated but unpaid distributions on the Series B Preferred Units shall not
bear interest and holders of the Series B Preferred Units shall not be entitled
to any distributions in excess of full cumulative distributions. Any
distribution payment made on the Series B Preferred Units shall first be
credited against the earliest accumulated but unpaid distribution due with
respect to such units which remains payable.
(iii) Except as provided in Section C.(iv) of this Attachment B,
if any Series B Preferred Units are outstanding, no distributions (other than in
Partnership Interests ranking junior to the Series B Preferred Units as to
distributions and upon liquidation, dissolution or winding up of the affairs of
the Partnership) shall be declared or paid or set apart for payment nor shall
any other distribution be declared or made upon the Class A Units, the Class B
Units, or any other Partnership Interests ranking junior to or on a parity with
the Series B Preferred Units as to distributions or upon liquidation,
dissolution or winding up of the affairs of the Partnership for any period
unless full cumulative distributions have been or contemporaneously are declared
and paid or declared and a sum sufficient for the payment thereof set apart for
such payment on the Series B Preferred Units for all past distribution periods
and the then current distribution period, nor shall any Class A Units, Class B
Units, or any other Partnership Interests ranking junior to or on a parity with
the Series B Preferred Units as to distributions or upon liquidation,
dissolution or winding up of the affairs of the Partnership, be redeemed,
purchased or otherwise acquired for any consideration (or any moneys be paid to
or made available for a sinking fund for the redemption of any such Partnership
Interests) by the Partnership
Attachment B-2
127
(except by conversion into or exchange for Partnership Interests ranking junior
to the Series B Preferred Units as to distributions and upon liquidation,
dissolution or winding up of the affairs of the Partnership).
(iv) When distributions are not paid in full (or a sum sufficient
for such full payment is not so set apart) upon the Series B Preferred Units and
any other Partnership Interests ranking on a parity as to distributions with the
Series B Preferred Units, all distributions declared upon the Series B Preferred
Units and any other Partnership Interests ranking on a parity as to
distributions with the Series B Preferred Units shall be declared pro rata so
that the amount of distributions declared per unit of Series B Preferred Units
and such other Partnership Interests shall in all cases bear to each other the
same ratio that accumulated distributions per unit on the Series B Preferred
Units and such other Partnership Interests (which shall not include any
accumulation in respect of unpaid distributions for prior distribution periods
if such other Partnership Interests do not have a cumulative distribution) bear
to each other.
(v) Holders of Series B Preferred Units shall not be entitled to
any distribution, whether payable in cash, property or Partnership Interests, in
excess of full cumulative distributions on the Series B Preferred Units as
described above. Accumulated but unpaid distributions on the Series B Preferred
Units will accumulate as of the Series B Preferred Unit Distribution Payment
Date on which they first become payable.
(vi) If the General Partner fails to maintain the effectiveness of
the registration statement as required by the Registration Rights Agreement
dated February 19, 1998 between the General Partner and Xxxxxx Brothers Inc.
(the "Registration Rights Agreement"), liquidated damages shall accumulate on
the $50.00 liquidation preference of the Series B Preferred Units at a rate of
0.25% per annum (equivalent to a fixed annual amount of $0.125 per unit) with
respect to the first quarter immediately following such failure and at a rate of
0.50% per annum (equivalent to a fixed annual amount of $0.25 per unit) with
respect to the second quarter and all subsequent quarters following such failure
("Liquidated Damages").
D. Allocations.
Allocations of the Partnership's items of income, gain, loss and
deduction shall be allocated among holders of Series B Preferred Units in
accordance with Article VI of the Agreement.
E. Liquidation Preference.
Attachment B-3
128
(i) In the event of any voluntary or involuntary liquidation,
dissolution or winding up of the affairs of the Partnership, the holders of the
Series B Preferred Units shall be entitled to receive out of the assets of the
Partnership available for distribution to the Partners pursuant to Section
13.2.A of the Agreement a liquidation preference of $50.00 per Series B
Preferred Unit, plus an amount equal to any accumulated and unpaid distributions
to the date of payment, before any distribution of assets is made to holders of
Class A Units, Class B Units or any other Partnership Interests that rank junior
to the Series B Preferred Units as to liquidation rights.
(ii) If upon any such voluntary or involuntary liquidation,
dissolution or winding up of the affairs of the Partnership, the assets of the
Partnership are insufficient to make such full payment to holders of the Series
B Preferred Units and the corresponding amounts payable on all other Partnership
Interests ranking on a parity with the Series B Preferred Units in the
distribution of assets, then the holders of such Partnership Interests shall
share ratably in any such distribution of assets in proportion to the full
liquidating distributions to which they would otherwise be respectively
entitled.
(iii) After payment of the full amount of the liquidating
distributions to which they are entitled, the holders of Series B Preferred
Units shall have no right or claim to any of the remaining assets of the
Partnership.
(iv) None of a consolidation or merger of the Partnership with or
into another entity, merger of another entity with or into the Partnership, a
statutory unit exchange by the Partnership or a sale, lease or conveyance of all
or substantially all of the Partnership's property or business shall be
considered a liquidation, dissolution or winding up of the affairs of the
Partnership.
F. Redemption.
In connection with redemption by the General Partner of any of
its Series B Preferred Shares in accordance with the provisions of the Articles
Supplementary to the Declaration of Trust filed with the State Department of
Assessments and Taxation of Maryland on February 19, 1998, establishing the
Series B Preferred Shares (the "Articles Supplementary"), the Partnership shall
provide cash to the General Partner for such purpose which shall be equal to the
redemption price (as set forth in the Articles Supplementary) and one Series B
Preferred Unit shall be canceled with respect to each Series B Preferred Share
so redeemed by the General Partner. From and after the Series B Preferred Share
Redemption Date (as defined in
Attachment B-4
129
the Articles Supplementary), any Series B Preferred Units so canceled shall no
longer be outstanding and all rights hereunder, to distributions or otherwise,
with respect to such Series B Preferred Units shall cease.
G. Conversion.
In connection with conversion into Shares of any Series B
Preferred Shares in accordance with the provisions of the Articles
Supplementary, the Partnership shall (i) issue to the General Partner a number
of Class A Units equal to the number of Shares issued by the General Partner
upon such conversion; and (ii) provide cash to the General Partner, if
necessary, in an amount equal to the amount of cash paid by the General Partner
upon conversion of any Series B Preferred Shares which would otherwise result in
the issuance of fractional Shares. One Series B Preferred Unit, or any fraction
thereof, shall be canceled with respect to each Series B Preferred Share, or any
fraction thereof, so converted, and from and after such conversion, any Series B
Preferred Units so canceled shall no longer be outstanding and all rights
hereunder, to distributions or otherwise, with respect to such Series B
Preferred Units shall cease.
Attachment B-5
130
ATTACHMENT C
(SERIES C PREFERRED UNITS)
In accordance with Sections 4.2.A and 4.2.D of the Agreement, set
forth below are the terms and conditions of the Series C Preferred Units
established and issued by the Partnership on December 14, 1998, in connection
with issuance of Series C Preferred Shares by the General Partner. Capitalized
terms used herein and not otherwise defined shall have the meanings given to
them in the Agreement.
A. Designation and Number. A series of Partnership Units,
designated as Series C Preferred Units was established on December 14, 1998, on
which date 4,600,000 Series C Preferred Units were issued to the General
Partner.
B. Rank. The Series C Preferred Units shall, with respect to
distribution rights and rights upon liquidation, dissolution or winding up of
the Partnership, rank (a) senior to the Class A, Units, Class B Units and all
Partnership Interests ranking junior to the Series C Preferred Units; (b) on a
parity with the Series A Preferred Units, the Series B Preferred Units, the
Series D Preferred Units, and all other Partnership Interests issued by the
Partnership the terms of which specifically provide that such Partnership
Interests rank on a parity with the Series C Preferred Units; and (c) junior to
all Partnership Interests issued by the Partnership the terms of which
specifically provide that such Partnership Interests rank senior to the Series C
Preferred Units.
C. Distributions.
(i) Pursuant to Section 5.1 of the Agreement, holders of Series C
Preferred Units shall be entitled to receive, out of Available Cash, cumulative
preferential distributions of Available Cash at the rate of 8 5/8% of the $25.00
liquidation preference per annum (equivalent to a fixed annual amount of
$2.15625 per unit). Such distributions shall accumulate on a daily basis and be
cumulative from the date of original issuance (December 8, 1998) and shall be
payable quarterly in arrears on March 15, June 15, September 15 and December 15
of each year or, if not a business day, the next succeeding business day (each a
"Series C Preferred Unit Distribution Payment Date"), commencing March 15, 1999.
Any distribution payable on the Series C Preferred Units for any partial
distribution period shall be computed on the basis of a 360-day year consisting
of twelve 30-day months.
131
(ii) No distributions on Series C Preferred Units shall be
authorized or paid or set apart for payment at such time as the terms and
provisions of any agreement of the Partnership, including any agreement relating
to its indebtedness, prohibits such authorization, payment or setting apart for
payment or provides that such authorization, payment or setting apart for
payment would constitute a breach thereof, or a default thereunder, or if such
authorization or payment shall be restricted or prohibited by law.
(iii) Notwithstanding the foregoing, distributions with respect
to the Series C Preferred Units will accumulate whether or not the terms and
provisions set forth in Section C.(ii) of this Attachment C at any time prohibit
the current payment of distributions, whether or not there is sufficient
Available Cash for such distributions and whether or not such distributions are
authorized. Accumulated but unpaid distributions on the Series C Preferred Units
will accumulate as of the Series C Preferred Unit Distribution Payment Date on
which they first become payable.
(iv) When distributions are not paid in full (or a sum sufficient
for such full payment is not so set apart) upon the Series C Preferred Units and
any other Partnership Interests ranking on a parity as to distributions with the
Series C Preferred Units, all distributions authorized upon the Series C
Preferred Units and any other Partnership Interests ranking on a parity as to
distributions with the Series C Preferred Units shall be authorized pro rata so
that the amount of distributions authorized per Partnership Unit of Series C
Preferred Units and such other Partnership Interests shall in all cases bear to
each other the same ratio that accumulated distributions per Partnership Unit on
the Series C Preferred Units and such other Partnership Interests (which shall
not include any accumulation in respect of unpaid distributions for prior
distribution periods if such other Partnership Interests do not have a
cumulative distribution) bear to each other. No interest, or sum of money in
lieu of interest, shall be payable in respect of any distribution payment or
payments on Series C Preferred Units which may be in arrears.
(v) Except as provided in Section C.(iv) of this Attachment C,
unless full cumulative distributions on the Series C Preferred Units have been
or contemporaneously are authorized and paid or authorized and a sum sufficient
for the payment thereof is set apart for payment for all past distribution
periods and the then current distribution period, no distributions (other than
in Partnership Interests ranking junior to the Series C Preferred Units as to
distributions and upon liquidation) shall be authorized or paid or set aside for
payment nor shall any other distribution be authorized or made upon the Class A
Units, the Class B Units, or any other Partnership Interests
Attachment C-2
132
ranking junior to or on a parity with the Series C Preferred Units as to
distributions or upon liquidation, nor shall any Class A Units, Class B Units,
or any other Partnership Interests ranking junior to or on a parity with the
Series C Preferred Shares as to distributions or upon liquidation be redeemed,
purchased or otherwise acquired for any consideration (or any moneys be paid to
or made available for a sinking fund for the redemption of any such units or
other Partnership Interests) by the Partnership (except by conversion into or
exchange for Partnership Interests ranking junior to the Series C Preferred
Units as to distributions and upon liquidation).
(vi) Holders of the Series C Preferred Units shall not be
entitled to any distribution, whether payable in cash, property or Partnership
Units in excess of full cumulative distributions on the Series C Preferred Units
as described above. Any distribution payment made on the Series C Preferred
Units shall first be credited against the earliest accumulated but unpaid
distribution due with respect to such Series C Preferred Units which remains
payable.
D. Allocations.
Allocations of the Partnership's items of income, gain, loss and
deduction shall be allocated among holders of Series C Preferred Units in
accordance with Article VI of the Agreement.
E. Liquidation Preference.
(i) Upon any voluntary or involuntary liquidation, dissolution or
winding up of the affairs of the Partnership, the holders of Series C Preferred
Units then outstanding are entitled to be paid out of the assets of the
Partnership available for distribution to the Partners pursuant to Section
13.2.A of the Agreement a liquidation preference of $25.00 per Series C
Preferred Unit, plus an amount equal to any accumulated and unpaid distributions
to the date of payment, before any distribution of assets is made to holders of
Class A Units, Class B Units or any other Partnership Interests that rank junior
to the Series C Preferred Units as to liquidation rights.
(ii) In the event that, upon any such voluntary or involuntary
liquidation, dissolution or winding up, the available assets of the Partnership
are insufficient to pay the amount of the liquidating distributions on all
outstanding Series C Preferred Units and the corresponding amounts payable on
all other Partnership Interests ranking on a parity with the Series C Preferred
Units in the distribution of assets, then such assets shall
Attachment C-3
133
be allocated among the Series C Preferred Units, as a class, and each class or
series of such other such Partnership Interests, as a class, in proportion to
the full liquidating distributions to which they would otherwise be respectively
entitled.
(iii) After payment of the full amount of the liquidating
distributions to which they are entitled, the holders of Series C Preferred
Units will have no right or claim to any of the remaining assets of the
Partnership.
(iv) The consolidation or merger of the Partnership with or into
any other partnership, corporation, trust or entity or of any other partnership,
corporation, trust or other entity with or into the Partnership or the sale,
lease or conveyance of all or substantially all of, the property or business of
the Partnership, shall not be deemed to constitute a liquidation, dissolution or
winding up of the Partnership for purposes of this Section E.
F. Redemption.
In connection with a redemption by the General Partner of any or
all of the Series C Preferred Shares, the Partnership shall provide cash to the
General Partner for such purpose which shall be equal to redemption price of the
Series C Preferred Shares to be redeemed and one Series C Preferred Unit shall
be canceled with respect to each Series C Preferred Share so redeemed. From and
after the date in which the Series C Preferred Shares are redeemed, the Series C
Preferred Units so canceled shall no longer be outstanding and all rights
hereunder, to distributions or otherwise, with respect to such Series C
Preferred Units shall cease.
Attachment C-4
134
ATTACHMENT D
(SERIES D PREFERRED UNITS)
In accordance with Sections 4.2.A and 4.2.D of the
Agreement, set forth below are the terms and conditions of the Series D
Preferred Units hereby established that will be issued by the Partnership to
Cornerstone Properties Inc. on June 19, 2000, in connection with the merger of
Cornerstone Properties Limited Partnership ("Cornerstone Partnership") with and
into the Partnership (the "Cornerstone Partnership Merger"), in exchange for the
then outstanding Series A Cumulative Convertible Preferred Units of Cornerstone
Partnership (all of which will be acquired by the General Partner in the merger
of Cornerstone Properties Inc. with and into General Partner (the "REIT Merger")
immediately following the Cornerstone Partnership Merger). All capitalized terms
used in this Attachment and not otherwise defined shall have the meanings
assigned in the Partnership Agreement.
A. Designation and Number. A series of Partnership Units,
designated as Series D 7.0% cumulative Convertible Preferred Units (the "Series
D Preferred Units") is hereby established. The number of Series D Partnership
Units shall be 3,030,303.
B. Rank. The Series D Preferred Units shall, with respect to
distribution rights and rights upon liquidation, dissolution or winding up of
the Partnership, rank (a) senior to the Class A Units, Class B Units and all
Partnership Interests ranking junior to the Series D Preferred Units; (b) on a
parity with the Series A Preferred Units, the Series B Preferred Units, the
Series C Preferred Units, and all Partnership Interests issued by the
Partnership the terms of which specifically provide that such Partnership
Interests rank on a parity with the Series D Preferred Units (each referred to
as "Parity Preferred Units"); and (c) junior to all Partnership Interests
issued by the Partnership the terms of which specifically provide that such
Partnership Interests rank senior to the Series D Preferred Units.
C. Distributions.
Pursuant to Section 5.1 of the Partnership Agreement,
holders of Series D Preferred Units will be entitled to receive, out of
Available Cash, cash distributions at the rate of 7% per annum on the $16.50
liquidation preference. Such distributions shall be cumulative from June 19,
2000, and will be payable annually on August 4 of each year (the "Series D
135
Preferred Unit Distribution Payment Date"). Distributions will be payable, in
arrears, to holders of record of Series D Preferred Units as they appear on the
books of the Partnership on such record dates, not more than 60 days nor less
than 10 days preceding the payment dates thereof, as shall be fixed by the
General Partner. The amount of distributions payable for the initial
distribution period or any period shorter or longer than a full distribution
period shall be calculated on the basis of a 360-day year of twelve 30-day
months. No distributions may be declared or paid or set apart for payment on
any Parity Partnership Preferred Units with regard to the payment of
distributions unless there shall also be or have been declared and paid or set
apart for payment on the Series D Preferred Units like distributions for all
distribution payment periods of the Series D Preferred Units ending on or
before the distribution payment date of such Parity Partnership Preferred
Units, ratably in proportion to the respective amounts of distributions (x)
accumulated and unpaid or payable on such Series D Preferred Units on the one
hand, and (y) accumulated and unpaid through the distribution payment period or
periods of the Series D Preferred Units next preceding such distribution
payment date, on the other hand.
Except as set forth in the preceding sentence, unless
full cumulative distributions on the Series D Preferred Units have been paid,
no distributions may be paid or declared and set aside for payment or other
distribution made upon the Class A Units, Class B Units or on any other
Partnership Units ranking junior to or on a parity with the Series D Preferred
Units as to distributions, nor any Class A Units, Class B Units, or any other
Partnership Units ranking junior to or on a parity with the Series D Preferred
Units as to distributions, may be redeemed, purchased or otherwise acquired for
any consideration (or any payment be made to or available for a sinking fund
for the redemption of any Units or other Partnership Interests); provided,
however, that any moneys therefore deposited in any sinking fund with respect
to any Partnership Unit in compliance with the provisions of such sinking fund
may thereafter be applied to the purchase or redemption of such Partnership
Unit in accordance with the terms of such sinking fund, regardless of whether,
at the time of such application full cumulative distributions upon Series D
Preferred Units outstanding to the last distribution payment date shall have
been paid or declared and set apart for payment) by the Partnership; provided
that any such junior Partnership Units may be converted into or exchanged for
Partnership Units ranking junior to the Series D Preferred Units as to
distributions, and, provided, further, that any such Partnership Units or
Parity Partnership Preferred Units or Partnership Units may be issued by the
Partnership to the General Partner in connection with a purchase of any
Attachment D-2
136
corresponding share of beneficial interest issued by the General Partner to
preserve the General Partner Entity's status as a real estate trust.
D. Allocations.
Allocations of the Partnership's items of income, gain,
loss and deduction shall be allocated among the holders of Series D Preferred
Units in accordance with Article VI of the Partnership Agreement.
E. Liquidation Preference.
The Series D Preferred Units shall rank, as to
liquidation, dissolution or winding up of the Partnership, prior to Class A
Units and Class B Units and any other class of Partnership Units of the
Partnership ranking junior to Series D Preferred Units as to rights upon
liquidation, dissolution or winding up of the Partnership, so that in the event
of any liquidation, dissolution or winding up of the Partnership, whether
voluntary or involuntary, the holders of the Series D Preferred Units shall be
entitled to receive out of the assets of the Partnership available for
distribution to holders of Partnership Units, whether from capital, surplus or
earnings, before any distribution is made to holders of Class A Units, Class B
Units or any other such junior Partnership Units, an amount equal to $16.50 per
unit (the "Liquidation Preference" of a Series D Preferred Units) plus an
amount equal to all distributions (whether or not earned or declared) accrued
and accumulated and unpaid on the Series D Preferred Units to the date of final
distribution. The holders of the Series D Preferred Units will not be entitled
to receive the Liquidation Preference until the liquidation preference of any
other class of Partnership Units of the Partnership ranking senior to the
Series D Preferred Units as to rights upon liquidation, dissolution or winding
up shall have been paid (or a sum set aside therefor sufficient to provide for
payment) in full. After payment of the full amount of the Liquidation
Preference and such distributions, the holders of Series D Preferred Units will
not be entitled to any further participation in any distribution of assets by
the Partnership. If, upon any liquidation, dissolution or winding up of the
Partnership, the assets of the Partnership, or proceeds thereof, distributable
among the holders of Parity Partnership Preferred Units shall be insufficient
to pay in full the preferential amount aforesaid, then such assets, or the
Proceeds thereof, shall be distributable among such holders ratably in
accordance with the respective amounts which would be payable on such units if
all amounts payable thereon were paid in full. For the purposes hereof, neither
a consolidation or merger of the Partnership with or into any other
partnership, limited liability company, corporation or any other entity, nor a
merger of any other partnership, limited liability company, corporation or any
other entity with or into the Partnership, nor a sale or transfer of all
Attachment D-3
137
or any part of the Partnership assets for cash or securities shall be considered
a liquidation, dissolution or winding up of the Partnership.
F. Conversion.
Each Series D Preferred Unit shall convertible at any
time, at the election of the holders, thereof, into a Class A Unit. In the
event that the REIT Merger is consummated and the Series A Cumulative
Convertible Preferred Stock of Cornerstone Properties, Inc. is redeemed to
extinguished in connection therewith, the Series D Preferred Units shall
automatically be converted into a number of Class A Units equal to the product
of (i) the number of Series D Preferred Units outstanding at such time,
multiplied by (ii) 0.7009.
G. Value.
For purposes of the definition of Deemed Value of
Partnership Interest, the Value on any date of the Series D Preferred Units
shall be the greater of (i) the Value of a Common Share of the General Partner
on such date or (ii) the Liquidation Preference of such Series D Preferred
Unit.
H. Voting Rights.
The holders of Series D Preferred Units shall have no
voting rights whatsoever, except for (i) any voting rights to which they may be
entitled under the laws of the State of Delaware and (ii) as follows:
So long as any Series D Partnership Preferred Units
remain outstanding, the consent of the holders of at least
two-thirds of the Series D Preferred Units outstanding at the
time and all other classes or series of Partnership Preferred
Units upon which like voting rights have been conferred and are
exercisable (voting together as a class) given in person or by
proxy, either in writing or at any meeting called for the
purpose, shall be necessary to permit, effect or validate any one
or more of the following:
(i) the issuance or increase of any class or series of
Partnership Units ranking senior to the Series D
Preferred Units; or
(ii) the amendment, alteration or repeal, whether by
merger, consolidation or otherwise, of any of the
provisions of this Agreement, (including this
Attachment X-0
000
Xxxxxxxxxx or any provision hereof) that would
materially and adversely affect any power,
preference, or special right of the Series D
Preferred Units or of the holders thereof;
provided, however, that any increase in the
number of any class or series of Partnership Units or the
creation and issuance of other classes or series of
Partnership Units, in each case ranking on a parity with
or junior to the Series D Preferred Units with respect to
the payment of dividends and the distribution of assets
upon liquidation, dissolution or winding up, shall not be
deemed to materially and adversely affect such powers,
preferences or special rights.
Attachment D-5
