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SECOND AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP
OF
AIMCO PROPERTIES, L.P.
a Delaware limited partnership
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THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"),
OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD,
TRANSFERRED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH
REGISTRATION, UNLESS THE TRANSFEROR DELIVERS TO THE PARTNERSHIP
AN OPINION OF COUNSEL SATISFACTORY TO THE PARTNERSHIP, IN FORM
AND SUBSTANCE SATISFACTORY TO THE PARTNERSHIP, TO THE EFFECT
THAT THE PROPOSED SALE, TRANSFER OR OTHER DISPOSITION MAY BE
EFFECTED WITHOUT REGISTRATION UNDER THE ACT AND UNDER
APPLICABLE STATE SECURITIES OR "BLUE SKY" LAWS.
dated as of July 29, 1994
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TABLE OF CONTENTS
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ARTICLE 1 DEFINED TERMS. . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE 2 ORGANIZATIONAL MATTERS . . . . . . . . . . . . . . . . . . . . . 17
Section 2.1 Organization. . . . . . . . . . . . . . . . . . . 17
Section 2.2 Name. . . . . . . . . . . . . . . . . . . . . . . 17
Section 2.3 Registered Office and Agent; Principal Office . . 17
Section 2.4 Power of Attorney . . . . . . . . . . . . . . . . 18
Section 2.5 Term. . . . . . . . . . . . . . . . . . . . . . . 19
ARTICLE 3 PURPOSE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 3.1 Purpose and Business. . . . . . . . . . . . . . . 19
Section 3.2 Powers. . . . . . . . . . . . . . . . . . . . . . 19
Section 3.3 Partnership Only for Purposes Specified . . . . . 20
Section 3.4 Representations and Warranties by the Parties . . 20
ARTICLE 4 CAPITAL CONTRIBUTIONS. . . . . . . . . . . . . . . . . . . . . . 22
Section 4.1 Capital Contributions of the Partners . . . . . . 22
Section 4.2 Issuances of Additional Partnership Interests . . 22
Section 4.3 Additional Funds. . . . . . . . . . . . . . . . . 23
Section 4.4 Stock Option Plans. . . . . . . . . . . . . . . . 24
Section 4.5 No Interest; No Return. . . . . . . . . . . . . . 25
Section 4.6 Conversion of Junior Shares . . . . . . . . . . . 25
ARTICLE 5 DISTRIBUTIONS. . . . . . . . . . . . . . . . . . . . . . . . . . .26
Section 5.1 Requirement and Characterization of Distributions 26
Section 5.2 Distributions in Kind . . . . . . . . . . . . . . 26
Section 5.3 Amounts Withheld. . . . . . . . . . . . . . . . . 26
Section 5.4 Distributions Upon Liquidation. . . . . . . . . . 26
Section 5.5 Restricted Distributions. . . . . . . . . . . . . 26
ARTICLE 6 ALLOCATIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 6.1 Timing and Amount of Allocations of
Net Income and Net Loss . . . . . . . . . . . . . 27
Section 6.2 General Allocations . . . . . . . . . . . . . . . 27
Section 6.3 Additional Allocation Provisions. . . . . . . . . 27
Section 6.4 Tax Allocations.. . . . . . . . . . . . . . . . . 29
i
ARTICLE 7 MANAGEMENT AND OPERATIONS OF BUSINESS. . . . . . . . . . . . . . 30
Section 7.1 Management. . . . . . . . . . . . . . . . . . . . 30
Section 7.2 Certificate of Limited Partnership. . . . . . . . 33
Section 7.3 Restrictions on General Partner's Authority . . . 33
Section 7.4 Reimbursement of the General Partner. . . . . . . 35
Section 7.5 Outside Activities of the Previous
General Partner and the General Partner . . . . . 36
Section 7.6 Contracts with Affiliates . . . . . . . . . . . . 36
Section 7.7 Indemnification . . . . . . . . . . . . . . . . . 37
Section 7.8 Liability of the General Partner. . . . . . . . . 39
Section 7.9 Other Matters Concerning the General Partner. . . 40
Section 7.10 Title to Partnership Assets . . . . . . . . . . . 40
Section 7.11 Reliance by Third Parties . . . . . . . . . . . . 40
ARTICLE 8 RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS . . . . . . . . . . . 41
Section 8.1 Limitation of Liability . . . . . . . . . . . . . 41
Section 8.2 Management of Business. . . . . . . . . . . . . . 41
Section 8.3 Outside Activities of Limited Partners. . . . . . 41
Section 8.4 Return of Capital . . . . . . . . . . . . . . . . 42
Section 8.5 Rights of Limited Partners Relating to the
Partnership . . . . . . . . . . . . . . . . . . . 42
Section 8.6 Redemption Rights of Qualifying Parties . . . . . 43
Section 8.7 Partnership Right to Call Limited Partner
Interests . . . . . . . . . . . . . . . . . . . . 47
ARTICLE 9 BOOKS, RECORDS, ACCOUNTING AND REPORTS . . . . . . . . . . . . . 47
Section 9.1 Records and Accounting. . . . . . . . . . . . . . 47
Section 9.2 Fiscal Year . . . . . . . . . . . . . . . . . . . 47
Section 9.3 Reports . . . . . . . . . . . . . . . . . . . . . 48
ARTICLE 10 TAX MATTERS. . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Section 10.1 Preparation of Tax Returns. . . . . . . . . . . . 48
Section 10.2 Tax Elections . . . . . . . . . . . . . . . . . . 48
Section 10.3 Tax Matters Partner . . . . . . . . . . . . . . . 48
Section 10.4 Withholding . . . . . . . . . . . . . . . . . . . 49
ARTICLE 11 TRANSFERS AND WITHDRAWALS. . . . . . . . . . . . . . . . . . . . 50
Section 11.1 Transfer. . . . . . . . . . . . . . . . . . . . . 50
Section 11.2 Transfer of General Partner's Partnership
Interest. . . . . . . . . . . . . . . . . . . . . 51
Section 11.3 Limited Partners' Rights to Transfer. . . . . . . 51
Section 11.4 Substituted Limited Partners. . . . . . . . . . . 53
Section 11.5 Assignees . . . . . . . . . . . . . . . . . . . . 54
ii
Section 11.6 General Provisions. . . . . . . . . . . . . . . . 54
ARTICLE 12 ADMISSION OF PARTNERS. . . . . . . . . . . . . . . . . . . . . . 55
Section 12.1 Admission of Successor General Partner. . . . . . 55
Section 12.2 Admission of Additional Limited Partners. . . . . 56
Section 12.3 Amendment of Agreement and Certificate of
Limited Partnership . . . . . . . . . . . . . . . 56
Section 12.4 Admission of Initial Limited Partners . . . . . . 56
Section 12.5 Limit on Number of Partners . . . . . . . . . . . 56
ARTICLE 13 DISSOLUTION, LIQUIDATION AND TERMINATION . . . . . . . . . . . . 57
Section 13.1 Dissolution . . . . . . . . . . . . . . . . . . . 57
Section 13.2 Winding Up. . . . . . . . . . . . . . . . . . . . 57
Section 13.3 Deemed Distribution and Recontribution. . . . . . 59
Section 13.4 Rights of Limited Partners. . . . . . . . . . . . 59
Section 13.5 Notice of Dissolution . . . . . . . . . . . . . . 59
Section 13.6 Cancellation of Certificate of Limited
Partnership . . . . . . . . . . . . . . . . . . . 59
Section 13.7 Reasonable Time for Winding-Up. . . . . . . . . . 59
ARTICLE 14 PROCEDURES FOR ACTIONS AND CONSENTS OF PARTNERS;
AMENDMENTS; MEETINGS . . . . . . . . . . . . . . . . . . . . . . 60
Section 14.1 Procedures for Actions and Consents of Partners . 60
Section 14.2 Amendments. . . . . . . . . . . . . . . . . . . . 60
Section 14.3 Meetings of the Partners. . . . . . . . . . . . . 60
ARTICLE 15 GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . 61
Section 15.1 Addresses and Notice. . . . . . . . . . . . . . . 61
Section 15.2 Titles and Captions . . . . . . . . . . . . . . . 61
Section 15.3 Pronouns and Plurals. . . . . . . . . . . . . . . 61
Section 15.4 Further Action. . . . . . . . . . . . . . . . . . 61
Section 15.5 Binding Effect. . . . . . . . . . . . . . . . . . 61
Section 15.6 Waiver. . . . . . . . . . . . . . . . . . . . . . 61
Section 15.7 Counterparts. . . . . . . . . . . . . . . . . . . 62
Section 15.8 Applicable Law. . . . . . . . . . . . . . . . . . 62
Section 15.9 Entire Agreement. . . . . . . . . . . . . . . . . 62
Section 15.10 Invalidity of Provisions. . . . . . . . . . . . . 62
Section 15.11 Limitation to Preserve REIT Status. . . . . . . . 62
Section 15.12 No Partition. . . . . . . . . . . . . . . . . . . 63
Section 15.13 No Third-Party Rights Created Hereby. . . . . . . 63
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EXHIBIT A PARTNERS AND PARTNERSHIP UNITS . . . . . . . . . . . . . . . . . A-1
EXHIBIT B EXAMPLES REGARDING ADJUSTMENT FACTOR . . . . . . . . . . . . . . B-1
EXHIBIT C LIST OF DESIGNATED PARTIES . . . . . . . . . . . . . . . . . . . C-1
EXHIBIT D SUB-ALLOCATION OF GROSS FAIR MARKET VALUES . . . . . . . . . . . D-1
EXHIBIT E NOTICE OF REDEMPTION . . . . . . . . . . . . . . . . . . . . . . E-1
EXHIBIT F FORM OF UNIT CERTIFICATE . . . . . . . . . . . . . . . . . . . . F-1
iv
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SECOND AMENDED AND RESTATED AGREEMENT OF
LIMITED PARTNERSHIP OF AIMCO PROPERTIES, L.P.
THIS SECOND AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP
OF AIMCO PROPERTIES, L.P., dated as of July 29, 1994, is entered into by and
among Apartment Investment and Management Company, a Maryland corporation
(the "PREVIOUS GENERAL PARTNER"), AIMCO-GP, Inc., a Delaware corporation (the
"GENERAL PARTNER"), AIMCO-LP, Inc., a Delaware corporation (the "SPECIAL
LIMITED PARTNER"), and the other Limited Partners (as defined below).
WHEREAS, the General Partner has submitted, and the Limited
Partners have approved, an amendment and restatement of the Agreement of
Limited Partnership of AIMCO Properties, L.P. on the terms set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
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.
"ACTIONS" has the meaning set forth in Section 7.7 hereof.
"ADDITIONAL FUNDS" has the meaning set forth in Section 4.3.A hereof.
"ADDITIONAL LIMITED PARTNER" means a Person who is admitted to the
Partnership as a Limited Partner pursuant to Section 4.2 and Section 12.2
hereof and who is shown as such on the books and records of the Partnership.
"ADJUSTED CAPITAL ACCOUNT DEFICIT" means, with respect to any
Partner, the deficit balance, if any, in such Partner's Capital Account as of
the end of the relevant Fiscal Year, after giving effect to the following
adjustments:
(i) decrease such deficit by any amounts that such
Partner is obligated to restore pursuant to this Agreement or by
operation of law upon liquidation of such Partner's Partnership
Interest or is deemed to be obligated to restore pursuant to the
penultimate sentence of each of Regulations Sections 1.704-2(g)(1) and
1.704-2(i)(5); and
(ii) increase such deficit by the items described in
Regulations Section 1.704-1(b)(2)(ii)(d)(4), (5) and (6).
The foregoing definition of "Adjusted Capital Account Deficit" is intended to
comply with the provisions of Regulations Section 1.704-1(b)(2)(ii)(d) and
shall be interpreted consistently therewith.
"ADJUSTMENT FACTOR" means 1.0; PROVIDED, HOWEVER, that in the event
that:
(i) the Previous General Partner (a) declares or pays a
dividend on its outstanding REIT Shares in REIT Shares or makes a
distribution to all holders of its outstanding REIT Shares in
REIT Shares, (b) splits or subdivides its outstanding REIT Shares
or (c) effects a reverse stock split or otherwise combines its
outstanding REIT Shares into a smaller number of REIT Shares, the
Adjustment Factor shall be adjusted by multiplying the Adjustment
Factor previously in effect by a fraction, (i) the numerator of
which shall be the number of REIT Shares issued and outstanding
on the record date for such dividend, distribution, split,
subdivision, reverse split or combination (assuming for such
purposes that such dividend, distribution, split, subdivision,
reverse split or combination has occurred as of such time) and
(ii) the denominator of which shall be the actual number of REIT
Shares (determined without the above assumption) issued and
outstanding on the record date for such dividend, distribution,
split, subdivision, reverse split or combination;
(ii) the Previous General Partner distributes any rights,
options or warrants to all holders of its REIT Shares to
subscribe for or to purchase or to otherwise acquire REIT Shares
(or other securities or rights convertible into, exchangeable for
or exercisable for REIT Shares) at a price per share less than
the Value of a REIT Share on the record date for such
distribution (each a "DISTRIBUTED RIGHT"), then the Adjustment
Factor shall be adjusted by multiplying the Adjustment Factor
previously in effect by a fraction (a) the numerator of which
shall be the number of REIT Shares issued and outstanding on the
record date plus the maximum number of REIT Shares purchasable
under such Distributed Rights and (b) the denominator of which
shall be the number of REIT Shares issued and outstanding on the
record date plus a fraction (1) the numerator of which is the
maximum number of REIT Shares purchasable under such Distributed
Rights times the minimum purchase price per REIT Share under such
Distributed Rights and (2) the denominator of which is the Value
of a REIT Share as of the record date; PROVIDED, HOWEVER, that,
if any such Distributed Rights expire or become no longer
exercisable, then the Adjustment Factor shall be adjusted,
effective retroactive to the date of distribution of the
Distributed Rights, to reflect a reduced maximum number of REIT
Shares or any change in the minimum purchase price for the
purposes of the above fraction; and
(iii) the Previous General Partner shall, by dividend or
otherwise, distribute to all holders of its REIT Shares evidences
of its indebtedness or assets (including securities, but
excluding any dividend or distribution referred to in subsection
(i) above), which evidences of indebtedness or assets relate to
assets not received by the Previous General Partner, the General
Partner and/or the Special Limited Partner pursuant to a pro rata
distribution by the Partnership, then the Adjustment Factor shall
be adjusted to equal the amount determined by multiplying the
Adjustment Factor in effect immediately prior to the close of
business on the date fixed for determination of shareholders
entitled to receive such distribution by a fraction (i) the
numerator shall be such Value of a REIT Share on the date fixed
for such determination and (ii) the denominator shall be the
Value of a REIT
2
Share on the dates fixed for such determination less the then fair
market value (as determined by the General Partner, whose
determination shall be conclusive) of the portion of the evidences
of indebtedness or assets so distributed applicable to one REIT
Share.
Any adjustments to the Adjustment Factor shall become effective immediately
after the effective date of such event, retroactive to the record date, if
any, for such event, PROVIDED, HOWEVER, that any Limited Partner may waive,
by written notice to the General Partner, the effect of any adjustment to the
Adjustment Factor applicable to the Partnership Common Units held by such
Limited Partner, and, thereafter, such adjustment will not be effective as to
such Partnership Common Units. For illustrative purposes, examples of
adjustments to the Adjustment Factor are set forth on EXHIBIT B attached
hereto.
"AFFILIATE" means, with respect to any Person, any Person directly
or indirectly controlling or controlled by or under common control with such
Person. For the purposes of this definition, "CONTROL" when used with
respect to any Person means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of such
Person, whether through the ownership of voting securities, by contract or
otherwise, and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
"AGREEMENT" means this Second Amended and Restated Agreement of
Limited Partnership of AIMCO Properties, L.P., as it may be amended,
supplemented or restated from time to time.
"APPLICABLE PERCENTAGE" has the meaning set forth in Section 8.6.B
hereof.
"APPRAISAL" means, with respect to any assets, the written opinion
of an independent third party experienced in the valuation of similar assets,
selected by the General Partner in good faith. Such opinion may be in the
form of an opinion by such independent third party that the value for such
property or asset as set by the General Partner is fair, from a financial
point of view, to the Partnership.
"ASSIGNEE" means a Person to whom one or more Partnership Common
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 hereof.
"AVAILABLE CASH" means, with respect to any period for which such
calculation is being made,
(i) the sum, without duplication, of:
(1) the Partnership's Net Income or Net Loss (as the
case may be) for such period,
(2) Depreciation and all other noncash charges to the
extent deducted in determining Net Income or Net Loss for such
period,
(3) the amount of any reduction in reserves of the
Partnership referred to in clause (ii)(6) below (including,
without limitation, reductions resulting because the General
Partner determines such amounts are no longer necessary),
3
(4) the excess, if any, of the net cash proceeds from
the sale, exchange, disposition, financing or refinancing of
Partnership property for such period over the gain (or loss, as
the case may be) recognized from such sale, exchange,
disposition, financing or refinancing during such period
(excluding Terminating Capital Transactions), and
(5) all other cash received (including amounts
previously accrued as Net Income and amounts of deferred income)
or any net amounts borrowed by the Partnership for such period
that was not included in determining Net Income or Net Loss for
such period;
(ii) less the sum, without duplication, of:
(1) all principal debt payments made during such
period by the Partnership,
(2) capital expenditures made by the Partnership
during such period,
(3) investments in any entity (including loans made
thereto) to the extent that such investments are not otherwise
described in clause (ii)(1) or clause (ii)(2) above,
(4) all other expenditures and payments not deducted
in determining Net Income or Net Loss for such period (including
amounts paid in respect of expenses previously accrued),
(5) any amount included in determining Net Income or
Net Loss for such period that was not received by the Partnership
during such period,
(6) the amount of any increase in reserves (including,
without limitation, working capital reserves) established during
such period that the General Partner determines are necessary or
appropriate in its sole and absolute discretion, and
(7) any amount distributed or paid in redemption of
any Limited Partner Interest or Partnership Units including,
without limitation, any Cash Amount paid.
Notwithstanding the foregoing, Available Cash shall not include (a) any cash
received or reductions in reserves, or take into account any disbursements
made, or reserves established, after dissolution and the commencement of the
liquidation and winding up of the Partnership or (b) any Capital
Contributions, whenever received.
"BUSINESS DAY" means any day except a Saturday, Sunday or other day
on which commercial banks in Denver, Colorado, Los Angeles, California or New
York, New York are authorized or required by law to close.
4
"CAPITAL ACCOUNT" means, with respect to any Partner, the Capital
Account maintained by the General Partner for such Partner on the
Partnership's books and records in accordance with the following provisions:
(a) To each Partner's Capital Account, there shall be added
such Partner's Capital Contributions, such Partner's distributive share of
Net Income and any items in the nature of income or gain that are specially
allocated pursuant to Section 6.3 hereof, and the principal amount of any
Partnership liabilities assumed by such Partner or that are secured by any
property distributed to such Partner.
(b) From each Partner's Capital Account, there shall be
subtracted the amount of cash and the Gross Asset Value of any property
distributed to such Partner pursuant to any provision of this Agreement, such
Partner's distributive share of Net Losses and any items in the nature of
expenses or losses that are specially allocated pursuant to Section 6.3
hereof, and the principal amount of any liabilities of such Partner assumed
by the Partnership or that are secured by any property contributed by such
Partner to the Partnership.
(c) In the event any interest in the Partnership is
Transferred in accordance with the terms of this Agreement, the transferee
shall succeed to the Capital Account of the transferor to the extent that it
relates to the Transferred interest.
(d) In determining the principal amount of any liability for
purposes of subsections (a) and (b) hereof, there shall be taken into account
Code Section 752(c) and any other applicable provisions of the Code and
Regulations.
(e) The provisions of this Agreement relating to the
maintenance of Capital Accounts are intended to comply with Regulations
Sections 1.704-1(b) and 1.704-2, and shall be interpreted and applied in a
manner consistent with such Regulations. If the General Partner shall
determine that it is prudent to modify the manner in which the Capital
Accounts are maintained in order to comply with such Regulations, the General
Partner may make such modification provided that such modification will not
have a material effect on the amounts distributable to any Partner without
such Partner's Consent. The General Partner also shall (i) make any
adjustments that are necessary or appropriate to maintain equality between
the Capital Accounts of the Partners and the amount of Partnership capital
reflected on the Partnership's balance sheet, as computed for book purposes,
in accordance with Regulations Section 1.704-1(b)(2)(iv)(q) and (ii) make any
appropriate modifications in the event that unanticipated events might
otherwise cause this Agreement not to comply with Regulations Section
1.704-1(b) or Section 1.704-2.
"CAPITAL CONTRIBUTION" means, with respect to any Partner, the
amount of money and the initial Gross Asset Value of any Contributed Property
that such Partner contributes to the Partnership pursuant to Section 4.1, 4.2
or 4.3 hereof or is deemed to contribute pursuant to Section 4.4 hereof.
"CASH AMOUNT" means the lesser of (a) an amount of cash equal to
the product of (i) the Value of a REIT Share and (ii) the REIT Shares Amount
determined as of the applicable Valuation Date or (b) in the case of a
Declination followed by a Public Offering Funding, the Public Offering
Funding Amount.
"CERTIFICATE" means the Certificate of Limited Partnership of the
Partnership filed in the office of the Secretary of State of the State of
Delaware, as amended from time to time in accordance with the terms hereof
and the Act.
5
"CHARTER" means the Articles of Amendment and Restatement of the
Previous General Partner filed with the Maryland State Department of
Assessments and Taxation on July 19, 1994, as amended, supplemented or
restated from time to time.
"CODE" means the Internal Revenue Code of 1986, as amended and in
effect from time to time or any successor statute thereto, as interpreted by
the applicable Regulations thereunder. Any reference herein to a specific
section or sections of the Code shall be deemed to include a reference to any
corresponding provision of future law.
"COMPANY EMPLOYEE" has the meaning ascribed thereto in the Previous
General Partner's 1994 Stock Option Plan.
"CONSENT" means the consent to, approval of, or vote in favor of a
proposed action by a Partner given in accordance with Article 14 hereof.
"CONSENT OF THE LIMITED PARTNERS" means the Consent of a Majority
in Interest of the Limited Partners, which Consent shall be obtained prior to
the taking of any action for which it is required by this Agreement and,
except as otherwise provided in this Agreement, may be given or withheld by a
Majority in Interest of the Limited Partners, in their reasonable discretion.
"CONTRIBUTED PROPERTY" means each Property or other asset, in such
form as may be permitted by the Act, but excluding cash, contributed or
deemed contributed to the Partnership (or deemed contributed to the
Partnership on termination and reconstitution thereof pursuant to Code
Section 708).
"CONTROLLED ENTITY" means, as to any Limited Partner, (a) any
corporation more than fifty percent (50%) of the outstanding voting stock of
which is owned by such Limited Partner or such Limited Partner's Family
Members, (b) any trust, whether or not revocable, of which such Limited
Partner or such Limited Partner's Family Members are the sole beneficiaries,
(c) any partnership of which such Limited Partner is the managing partner and
in which such Limited Partner or such Limited Partner's Family Members hold
partnership interests representing at least twenty-five percent (25%) of such
partnership's capital and profits and (d) any limited liability company of
which such Limited Partner is the manager and in which such Limited Partner
or such Limited Partner's Family Members hold membership interests
representing at least twenty-five percent (25%) of such limited liability
company's capital and profits.
"CONTROLLING PERSON" means any Person, whatever his or her title,
who performs executive or senior management functions for the General Partner
or its Affiliates similar to those of directors, executive management and
senior management, or any Person who either holds a two percent (2%) or more
equity interest in the General Partner or its Affiliates, or has the power to
direct or cause the direction of the General Partner or its Affiliates,
whether through the ownership of voting securities, by contract or otherwise,
or, in the absence of a specific role or title, any Person having the power
to direct or cause the direction of the management-level employees and
policies of the General Partner or its Affiliates. It is not intended that
every Person who carries a title such as vice president, senior vice
president, secretary or treasurer be included in the definition of
"Controlling Person."
"CUT-OFF DATE" means the fifth (5th) Business Day after the General
Partner's receipt of a Notice of Redemption.
6
"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) lease obligations of such Person that, in
accordance with generally accepted accounting principles, should be
capitalized.
"DECLINATION" has the meaning set forth in Section 8.6.D hereof.
"DEPRECIATION" means, for each Fiscal Year or other applicable
period, an amount equal to the federal income tax depreciation, amortization
or other cost recovery deduction allowable with respect to an asset for such
year or other period, except that if the Gross Asset Value of an asset
differs from its adjusted basis for federal income tax purposes at the
beginning of such year or period, Depreciation shall be in an amount that
bears the same ratio to such beginning Gross Asset Value as the federal
income tax depreciation, amortization or other cost recovery deduction for
such year or other period bears to such beginning adjusted tax basis;
PROVIDED, HOWEVER, that if the federal income tax depreciation, amortization
or other cost recovery deduction for such year or period is zero,
Depreciation shall be determined with reference to such beginning Gross Asset
Value using any reasonable method selected by the General Partner.
"DESIGNATED PARTIES" means the Persons designated on EXHIBIT C
attached hereto. The General Partner may, in its sole and absolute
discretion, amend EXHIBIT C to add Persons to be designated as Designated
Parties.
"DISTRIBUTED RIGHT" has the meaning set forth in the definition of
"Adjustment Factor."
"EFFECTIVE DATE" means July 29, 1994.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the SEC promulgated thereunder.
"FAMILY MEMBERS" means, as to a Person that is an individual, such
Person's spouse, ancestors, descendants (whether by blood or by adoption),
brothers, sisters and inter vivos or testamentary trusts of which only such
Person and his spouse, ancestors, descendants (whether by blood or by
adoption), brothers and sisters are beneficiaries.
"FISCAL YEAR" means the fiscal year of the Partnership, which shall
be the calendar year.
"FUNDING DEBT" means any Debt incurred by or on behalf of the
Previous General Partner, the General Partner or the Special Limited Partner
for the purpose of providing funds to the Partnership.
"GENERAL PARTNER" means AIMCO-GP, Inc., a Delaware corporation, and
its successors and assigns, as the general partner of the Partnership in
their capacities as general partner of the Partnership.
7
"GENERAL PARTNER INTEREST" means the Partnership Interest held by
the General Partner, which Partnership Interest is an interest as a general
partner under the Act. A General Partner Interest may be expressed as a
number of Partnership Common Units, Partnership Preferred Units or any other
Partnership Units.
"GENERAL PARTNER LOAN" has the meaning set forth in Section 4.3.D
hereof.
"GROSS ASSET VALUE" means, with respect to any asset, the asset's
adjusted basis for federal income tax purposes, except as follows:
(a) The initial Gross Asset Value of any asset contributed by
a Partner to the Partnership shall be the gross fair market values of such
assets as determined by the General Partner and agreed to by the contributing
Partner. In any case in which the General Partner and the contributing
Partner are unable to agree as to the gross fair market value of any
contributed asset or assets, such gross fair market value shall be determined
by Appraisal. The sub-allocation of gross fair market value is indicated on
EXHIBIT D attached hereto, as amended.
(b) The Gross Asset Values of all Partnership assets
immediately prior to the occurrence of any event described in clause (i),
clause (ii), clause (iii), clause (iv) or clause (v) hereof shall be adjusted
to equal their respective gross fair market values, as determined by the
General Partner using such reasonable method of valuation as it may adopt, as
of the following times:
(i) the acquisition of an additional interest in the
Partnership (other than in connection with the execution of this
Agreement but including, without limitation, acquisitions pursuant to
Section 4.2 hereof or contributions or deemed contributions by the
General Partner pursuant to Section 4.2 hereof) by a new or existing
Partner in exchange for more than a de minimis Capital Contribution,
if the General Partner reasonably determines that such adjustment is
necessary or appropriate to reflect the relative economic interests of
the Partners in the Partnership;
(ii) the distribution by the Partnership to a Partner
of more than a de minimis amount of Partnership property as
consideration for an interest in the Partnership, if the General
Partner reasonably determines that such adjustment is necessary or
appropriate to reflect the relative economic interests of the Partners
in the Partnership;
(iii) the liquidation of the Partnership within the
meaning of Regulations Section 1.704-1(b)(2)(ii)(g);
(iv) upon the admission of a successor General Partner
pursuant to Section 12.1 hereof; and
(v) at such other times as the General Partner shall
reasonably determine necessary or advisable in order to comply with
Regulations Sections 1.704-1(b) and 1.704-2.
(c) The Gross Asset Value of any Partnership asset
distributed to a Partner shall be the gross fair market value of such asset
on the date of distribution as determined by the distributee and the General
Partner provided that, if the distributee is the General Partner or if the
distributee and the General Partner cannot agree on such a determination,
such gross fair market value shall be determined by Appraisal.
8
(d) The Gross Asset Values of Partnership assets shall be
increased (or decreased) to reflect any adjustments to the adjusted basis of
such assets pursuant to Code Section 734(b) or Code Section 743(b), but only
to the extent that such adjustments are taken into account in determining
Capital Accounts pursuant to Regulations Section 1.704-1(b)(2)(iv)(m);
PROVIDED, HOWEVER, that Gross Asset Values shall not be adjusted pursuant to
this subsection (d) to the extent that the General Partner reasonably
determines that an adjustment pursuant to subsection (b) above is necessary
or appropriate in connection with a transaction that would otherwise result
in an adjustment pursuant to this subsection (d).
(e) If the Gross Asset Value of a Partnership asset has been
determined or adjusted pursuant to subsection (a), subsection (b) or
subsection (d) above, such Gross Asset Value shall thereafter be adjusted by
the Depreciation taken into account with respect to such asset for purposes
of computing Net Income and Net Losses.
"HOLDER" means either (a) a Partner or (b) an Assignee, owning a
Partnership Unit, that is treated as a member of the Partnership for federal
income tax purposes.
"INCAPACITY" or "INCAPACITATED" means, (i) as to any Partner who is
an individual, death, total physical disability or entry by a court of
competent jurisdiction adjudicating such Partner incompetent to manage his or
her person or his or her estate; (ii) as to any Partner that is a corporation
or limited liability company, the filing of a certificate of dissolution, or
its equivalent, for the corporation or the revocation of its charter; (iii)
as to any Partner that is a partnership, the dissolution and commencement of
winding up of the partnership; (iv) as to any Partner that is an estate, the
distribution by the fiduciary of the estate's entire interest in the
Partnership; (v) as to any trustee of a trust that is a Partner, the
termination of the trust (but not the substitution of a new trustee); or (vi)
as to any Partner, the bankruptcy of such Partner. For purposes of this
definition, bankruptcy of a Partner shall be deemed to have occurred when (a)
the Partner commences a voluntary proceeding seeking liquidation,
reorganization or other relief of or against such Partner 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 or liquidator has not been vacated or stayed within ninety (90) days
of such appointment, or (h) an appointment referred to in clause (g) above 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 Previous General Partner or the General
Partner or (B) a director of the Previous General Partner or the General
Partner or an officer or employee of the Partnership or the Previous General
Partner or the General Partner and (ii) such other Persons (including
Affiliates of the General Partner or the Partnership) as the General Partner
may designate from time to time (whether before or after the event giving
rise to potential liability), in its sole and absolute discretion.
9
"INDEPENDENT DIRECTOR" has the meaning ascribed thereto in the
Previous General Partner's 1994 Stock Option Plan.
"INTEREST" means interest, original issue discount and other
similar payments or amounts paid by the Partnership for the use or
forbearance of money.
"IRS" means the Internal Revenue Service, which administers the
internal revenue laws of the United States.
"JUNIOR SHARE" means a share of the Previous General Partner's
Class B Common Stock, par value $.01 per share.
"LIMITED PARTNER" means the Special Limited Partner and any Person
named as a Limited Partner in EXHIBIT A attached hereto, as such EXHIBIT A
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 PARTNER 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 Partner
Interest may be expressed as a number of Partnership Common Units,
Partnership Preferred Units or other Partnership Units.
"LIQUIDATING EVENT" has the meaning set forth in Section 13.1
hereof.
"LIQUIDATOR" has the meaning set forth in Section 13.2.A hereof.
"MAJORITY IN INTEREST OF THE LIMITED PARTNERS" means Limited
Partners (other than (i) the Special Limited Partner and (ii) any Limited
Partner fifty percent (50%) or more of whose equity is owned, directly or
indirectly, by the (a) General Partner or (b) any REIT as to which the
General Partner is a "qualified REIT subsidiary" (within the meaning of Code
Section 856(i)(2))) holding more than fifty percent (50%) of the outstanding
Partnership Common Units held by all Limited Partners (other than (i) the
Special Limited Partner and (ii) any Limited Partner fifty percent (50%) or
more of whose equity is owned, directly or indirectly, by (a) the General
Partner or (b) any REIT as to which the General Partner is a "qualified REIT
subsidiary" (within the meaning of Code Section 856(i)(2))).
"NET INCOME" or "NET LOSS" means, for each Fiscal Year of the
Partnership, an amount equal to the Partnership's taxable income or loss for
such year, determined in accordance with Code Section 703(a) (for this
purpose, all items of income, gain, loss or deduction required to be stated
separately pursuant to Code Section 703(a)(1) shall be included in taxable
income or loss), with the following adjustments:
(a) Any income of the Partnership that is exempt from federal
income tax and not otherwise taken into account in computing Net Income (or
Net Loss) pursuant to this definition of "Net Income" or "Net Loss" shall be
added to (or subtracted from, as the case may be) such taxable income (or
loss);
(b) Any expenditure of the Partnership described in Code
Section 705(a)(2)(B) or treated as a Code Section 705(a)(2)(B) expenditure
pursuant to Regulations Section 1.704-1(b)(2)(iv)(i), and not otherwise
10
taken into account in computing Net Income (or Net Loss) pursuant to this
definition of "Net Income" or "Net Loss," shall be subtracted from (or added
to, as the case may be) such taxable income (or loss);
(c) In the event the Gross Asset Value of any Partnership
asset is adjusted pursuant to subsection (b) or subsection (c) of the
definition of "Gross Asset Value," the amount of such adjustment shall be
taken into account as gain or loss from the disposition of such asset for
purposes of computing Net Income or Net Loss;
(d) Gain or loss resulting from any disposition of property
with respect to which gain or loss is recognized for federal income tax
purposes shall be computed by reference to the Gross Asset Value of the
property disposed of, notwithstanding that the adjusted tax basis of such
property differs from its Gross Asset Value;
(e) In lieu of the depreciation, amortization and other cost
recovery deductions that would otherwise be taken into account in computing
such taxable income or loss, there shall be taken into account Depreciation
for such Fiscal Year;
(f) To the extent that an adjustment to the adjusted tax
basis of any Partnership asset pursuant to Code Section 734(b) or Code
Section 743(b) is required pursuant to Regulations Section
1.704-1(b)(2)(iv)(m)(4) to be taken into account in determining Capital
Accounts as a result of a distribution other than in liquidation of a
Partner's interest in the Partnership, the amount of such adjustment shall be
treated as an item of gain (if the adjustment increases the basis of the
asset) or loss (if the adjustment decreases the basis of the asset) from the
disposition of the asset and shall be taken into account for purposes of
computing Net Income or Net Loss; and
(g) Notwithstanding any other provision of this definition of
"Net Income" or "Net Loss," any item that is specially allocated pursuant to
Section 6.3 hereof shall not be taken into account in computing Net Income or
Net Loss. The amounts of the items of Partnership income, gain, loss or
deduction available to be specially allocated pursuant to Section 6.3 hereof
shall be determined by applying rules analogous to those set forth in this
definition of "Net Income" or "Net Loss."
"NEW SECURITIES" means (i) any rights, options, warrants or
convertible or exchangeable securities having the right to subscribe for or
purchase REIT Shares or Preferred Shares, excluding Junior Shares, Preferred
Shares and grants under the Previous General Partner's Stock Option Plans, or
(ii) any Debt issued by the Previous General Partner that provides any of the
rights described in clause (i).
"NONRECOURSE DEDUCTIONS" has the meaning set forth in Regulations
Section 1.704-2(b)(1), and the amount of Nonrecourse Deductions for a Fiscal
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 the Notice of Redemption substantially
in the form of EXHIBIT E attached to this Agreement.
"OPTIONEE" means a Company Employee, Partnership Employee or
Independent Director to whom a stock option is granted under the Previous
General Partner's Stock Option Plans.
11
"ORIGINAL LIMITED PARTNERS" means the Persons listed as the Limited
Partners on EXHIBIT A originally attached to this Agreement, without regard to
any amendment thereto, and does not include any Assignee or other transferee,
including, without limitation, any Substituted Limited Partner succeeding to all
or any part of the Partnership Interest of any such Person.
"OWNERSHIP LIMIT" means the applicable restriction on ownership of
shares of the Previous General Partner imposed under the Charter.
"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)(2), and the amount of Partner Nonrecourse
Deductions with respect to a Partner Nonrecourse Debt for a Fiscal Year shall be
determined in accordance with the rules of Regulations Section 1.704-2(i)(2).
"PARTNERSHIP" means the limited partnership formed under the Act and
pursuant to this Agreement, and any successor thereto.
"PARTNERSHIP COMMON UNIT" means a fractional share of the Partnership
Interests of all Partners issued pursuant to Sections 4.1 and 4.2 hereof, but
does not include any Partnership Preferred Unit or any other Partnership Unit
specified in a Partnership Unit Designation as being other than a Partnership
Common Unit; PROVIDED, HOWEVER, that the General Partner Interest and the
Limited Partner Interests shall have the differences in rights and privileges as
specified in this Agreement. The ownership of Partnership Common Units may (but
need not, in the sole and absolute discretion of the General Partner) be
evidenced by the form of certificate for Partnership Common Units attached
hereto as EXHIBIT F.
"PARTNERSHIP EMPLOYEE" has the meaning ascribed thereto in the
Previous General Partner's 1994 Stock Option Plan.
"PARTNERSHIP INTEREST" means an ownership interest in the Partnership
held by either a Limited Partner or the General Partner and includes any and all
benefits to which the holder of such a Partnership Interest may be entitled as
provided in this Agreement, together with all obligations of such Person to
comply with the terms and provisions of this Agreement. A Partnership Interest
may be expressed as a number of Partnership Common Units, Partnership Preferred
Units or other 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 Fiscal Year
shall be determined in accordance with the rules of Regulations Section
1.704-2(d).
12
"PARTNERSHIP PREFERRED UNIT" means a fractional share of the
Partnership Interests that the General Partner has authorized pursuant to
Section 4.2 hereof that has distribution rights, or rights upon liquidation,
winding up and dissolution, that are superior or prior to the Partnership
Common Units.
"PARTNERSHIP RECORD DATE" means the record date established by the
General Partner for the distribution of Available Cash pursuant to Section 5.1
hereof, which record date shall generally be the same as the record date
established by the Previous General Partner for a distribution to its
shareholders of some or all of its portion of such distribution.
"PARTNERSHIP SUBSIDIARY" has the meaning ascribed thereto in the
Apartment Investment and Management Company 1997 Stock Award and Incentive Plan.
"PARTNERSHIP UNIT" shall mean a Partnership Common Unit, a Partnership
Preferred Unit or any other fractional share of the Partnership Interests that
the General Partner has authorized pursuant to Section 4.2 hereof.
"PARTNERSHIP UNIT DESIGNATION" shall have the meaning set forth in
Section 4.2 hereof.
"PERCENTAGE INTEREST" means, as to each Partner, its interest in the
Partnership Units as determined by dividing the Partnership Units owned by such
Partner by the total number of Partnership Units then outstanding.
"PERMITTED TRANSFER" has the meaning set forth in Section 11.3.A
hereof.
"PERSON" means an individual or a corporation, partnership, trust,
unincorporated organization, association, limited liability company or other
entity.
"PLEDGE" has the meaning set forth in Section 11.3.A hereof.
"PREFERRED SHARE" means a share of capital stock of the Previous
General Partner now or hereafter authorized or reclassified that has dividend
rights, or rights upon liquidation, winding up and dissolution, that are
superior or prior to the REIT Shares.
"PREVIOUS GENERAL PARTNER" means Apartment Investment and Management
Company, a Maryland corporation.
"PREVIOUS GENERAL PARTNER'S 1994 STOCK OPTION PLAN" means the 1994
Stock Option Plan of Apartment Investment and Management Company and Affiliates.
"PREVIOUS GENERAL PARTNER'S STOCK OPTION PLANS" means the Previous
General Partner's 1994 Stock Option Plan, the Apartment Investment and
Management Company 1996 Stock Award and Incentive Plan, the Amended and Restated
Apartment Investment and Management Company Non-Qualified Employee Stock Option
Plan, the Apartment Investment and Management Company 1997 Stock Award and
Incentive Plan and any other stock option plan hereafter adopted by the Previous
General Partner.
"PRIMARY OFFERING NOTICE" has the meaning set forth in Section
8.6.F(4) hereof.
13
"PROPERTIES" means any assets and property of the Partnership such as,
but not limited to, interests in real property and personal property, including,
without limitation, fee interests, interests in ground leases, interests in
limited liability companies, joint ventures or partnerships, interests in
mortgages, and Debt instruments as the Partnership may hold from time to time.
"PUBLIC OFFERING FUNDING" has the meaning set forth in Section
8.6.D(2) hereof.
"PUBLIC OFFERING FUNDING AMOUNT" means the dollar amount equal to (i)
the product of (x) the number of Registrable Shares sold in a Public Offering
Funding and (y) the public offering price per share of such Registrable Shares
in such Public Offering Funding, LESS (ii) the aggregate underwriting discounts
and commissions in such Public Offering Funding.
"QUALIFIED TRANSFEREE" means an "accredited investor" as defined in
Rule 501 promulgated under the Securities Act.
"QUALIFYING PARTY" means (a) an Original Limited Partner, (b) an
Additional Limited Partner, (c) a Designated Party that is either a Substituted
Limited Partner or an Assignee, (d) a Family Member, or a lending institution as
the pledgee of a Pledge, who is the transferee in a Permitted Transfer or (e)
with respect to any Notice of Redemption delivered to the General Partner within
the time period set forth in Section 11.3.A(4) hereof, a Substituted Limited
Partner succeeding to all or part of the Limited Partner Interest of (i) an
Original Limited Partner, (ii) an Additional Limited Partner, (iii) a Designated
Party that is either a Substituted Limited Partner or an Assignee or (iv) a
Family Member, or a lending institution who is the pledgee of a Pledge, who is
the transferee in a Permitted Transfer.
"REDEEMABLE UNITS" means those Partnership Common Units issued to the
Original Limited Partners as of the Effective Date together with such additional
Partnership Common Units that, after the Effective Date, may be issued to
Additional Limited Partners pursuant to Section 4.2 hereof.
"REDEMPTION" has the meaning set forth in Section 8.6.A hereof.
"REGISTRABLE SHARES" has the meaning set forth in Section 8.6.D(2)
hereof.
"REGULATIONS" means the applicable income tax regulations under the
Code, whether such regulations are in proposed, temporary or final form, as such
regulations may be amended from time to time (including corresponding provisions
of succeeding regulations).
"REGULATORY ALLOCATIONS" has the meaning set forth in Section
6.3.B(viii) hereof.
"REIT" means a real estate investment trust qualifying under Code
Section 856.
"REIT PARTNER" means (a) a Partner that is, or has made an election to
qualify as, a REIT, (b) any "qualified REIT subsidiary" (within the meaning of
Code Section 856(i)(2)) of any Partner that is, or has made an election to
qualify as, a REIT and (c) any Partner, including, without limitation, the
General Partner and the Special Limited Partner, that is a "qualified REIT
subsidiary" (within the meaning of Code Section 856(i)(2)) of a REIT.
"REIT PAYMENT" has the meaning set forth in Section 15.11 hereof.
14
"REIT REQUIREMENTS" has the meaning set forth in Section 5.1.A hereof.
"REIT SHARE" means a share of the Previous General Partner's Class A
Common Stock, par value $.01 per share. Where relevant in this Agreement, "REIT
SHARES" includes shares of the Previous General Partner's Class A Common Stock,
par value $.01 per share, issued upon conversion of Preferred Shares or Junior
Shares.
"REIT SHARES AMOUNT" means a number of REIT Shares equal to the
product of (a) the number of Tendered Units and (b) the Adjustment Factor;
PROVIDED, HOWEVER, that, in the event that the Previous General Partner issues
to all holders of REIT Shares as of a certain record date rights, options,
warrants or convertible or exchangeable securities entitling the Previous
General Partner's shareholders to subscribe for or purchase REIT Shares, or any
other securities or property (collectively, the "RIGHTS"), with the record date
for such Rights issuance falling within the period starting on the date of the
Notice of Redemption and ending on the day immediately preceding the Specified
Redemption Date, which Rights will not be distributed before the relevant
Specified Redemption Date, then the REIT Shares Amount shall also include such
Rights that a holder of that number of REIT Shares would be entitled to receive,
expressed, where relevant hereunder, in a number of REIT Shares determined by
the Previous General Partner in good faith.
"RELATED PARTY" means, with respect to any Person, any other Person
whose ownership of shares of the Previous General Partner's capital stock would
be attributed to the first such Person under Code Section 544 (as modified by
Code Section 856(h)(1)(B)).
"RIGHTS" has the meaning set forth in the definition of "REIT Shares
Amount."
"SEC" means the Securities and Exchange Commission.
"SECURITIES ACT" means the Securities Act of 1933, as amended, and the
rules and regulations of the SEC promulgated thereunder.
"SINGLE FUNDING NOTICE" has the meaning set forth in Section 8.6.D(3)
hereof.
"SPECIAL LIMITED PARTNER" means AIMCO-LP, Inc., a Delaware
corporation.
"SPECIFIED REDEMPTION DATE" means the later of (a) the tenth (10th)
Business Day after the receipt by the General Partner of a Notice of Redemption
or (b) in the case of a Declination followed by a Public Offering Funding, the
Business Day next following the date of the closing of the Public Offering
Funding; PROVIDED, HOWEVER, that no Specified Redemption Date shall occur during
the first Twelve-Month Period; PROVIDED, FURTHER, that the Specified Redemption
Date, as well as the closing of a Redemption, or an acquisition of Tendered
Units by the Previous General Partner pursuant to Section 8.6.B hereof, on any
Specified Redemption Date, may be deferred, in the General Partner's sole and
absolute discretion, for such time (but in any event not more than one hundred
fifty (150) days in the aggregate) as may reasonably be required to effect, as
applicable, (i) a Public Offering Funding or other necessary funding
arrangements, (ii) compliance with the Securities Act or other law (including,
but not limited to, (a) state "blue sky" or other securities laws and (b) the
expiration or termination of the applicable waiting period, if any, under the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended) and (iii)
satisfaction or waiver of other commercially reasonable and customary closing
conditions and requirements for a transaction of such nature.
15
"SUBSIDIARY" means, with respect to any Person, any corporation or
other entity of which a majority of (i) the voting power of the voting equity
securities or (ii) the outstanding equity interests is owned, directly or
indirectly, by such Person; PROVIDED, HOWEVER, that, with respect to the
Partnership, "SUBSIDIARY" means solely a partnership or limited liability
company (taxed, for federal income tax purposes, as a partnership and not as an
association or publicly traded partnership taxable as a corporation) of which
the Partnership is a member unless the General Partner has received an
unqualified opinion from independent counsel of recognized standing, or a ruling
from the IRS, that the ownership of shares of stock of a corporation or other
entity will not jeopardize the Previous General Partner's status as a REIT or
the General Partner's or the Special Limited Partner's status as a "qualified
REIT subsidiary" (within the meaning of Code Section 856(i)(2)), in which event
the term "SUBSIDIARY" shall include the corporation or other entity which is the
subject of such opinion or ruling.
"SUBSTITUTED LIMITED PARTNER" means a Person who is admitted as a
Limited Partner to the Partnership pursuant to Section 11.4 hereof.
"TAX ITEMS" has the meaning set forth in Section 6.4.A hereof.
"TENDERED UNITS" has the meaning set forth in Section 8.6.A hereof.
"TENDERING PARTY" has the meaning set forth in Section 8.6.A hereof.
"TERMINATING CAPITAL TRANSACTION" means any sale or other disposition
of all or substantially all of the assets of the Partnership or a related series
of transactions that, taken together, result in the sale or other disposition of
all or substantially all of the assets of the Partnership.
"TRANSFER," when used with respect to a Partnership Unit, or all or
any portion of a Partnership Interest, means any sale, assignment, bequest,
conveyance, devise, gift (outright or in trust), Pledge, encumbrance,
hypothecation, mortgage, exchange, transfer or other disposition or act of
alienation, whether voluntary or involuntary or by operation of law; PROVIDED,
HOWEVER, that when the term is used in Article 11 hereof, "TRANSFER" does not
include (a) any Redemption of Partnership Common Units by the Partnership, or
acquisition of Tendered Units by the Previous General Partner, pursuant to
Section 8.6 hereof or (b) any redemption of Partnership Units pursuant to any
Partnership Unit Designation. The terms "Transferred" and "Transferring" have
correlative meanings.
"TWELVE-MONTH PERIOD" means (a) as to an Original Limited Partner or
any successor-in-interest that is a Qualifying Party, a twelve-month period
ending on the day before the first (1st) anniversary of the Effective Date or on
the day before a subsequent anniversary thereof and (b) as to any other
Qualifying Party, a twelve-month period ending on the day before the first (1st)
anniversary of such Qualifying Party's becoming a Holder of Partnership Common
Units or on the day before a subsequent anniversary thereof; PROVIDED, HOWEVER,
that the General Partner may, in its sole and absolute discretion, by written
agreement with a Qualifying Party, shorten the first Twelve-Month Period to a
period of less than twelve (12) months with respect to a Qualifying Party other
than an Original Limited Partner or successor-in-interest.
"UNITHOLDER" means the General Partner or any Holder of Partnership
Units.
"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 immediately
preceding Business Day.
16
"VALUE" means, on any Valuation Date with respect to a REIT Share, the
average of the daily market prices for ten (10) consecutive trading days
immediately preceding the Valuation Date (except that, as provided in Section
4.4.C. hereof, the market price for the trading day immediately preceding the
date of exercise of a stock option under the Previous General Partner's Stock
Option Plans shall be substituted for such average of daily market prices for
purposes of Section 4.4 hereof). The market price for any such trading day
shall be:
(i) if the REIT Shares are listed or admitted to trading on any
securities exchange or The Nasdaq Stock Market's National Market System,
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,
in either case as reported in the principal consolidated transaction
reporting system,
(ii) if the REIT Shares are not listed or admitted to trading on any
securities exchange or The Nasdaq Stock Market's National Market System,
the last reported sale price on such day or, if no sale takes place on such
day, the average of the closing bid and asked prices on such day, as
reported by a reliable quotation source designated by the General Partner,
or
(iii) if the REIT Shares are not listed or admitted to trading on any
securities exchange or The Nasdaq Stock Market's National Market System and
no such last reported sale price or closing bid and asked prices are
available, the average of the reported high bid and low asked prices on
such day, as reported by a reliable quotation source designated by the
General Partner, or if there shall be no bid and asked prices on such day,
the average of the high bid and low asked prices, as so reported, on the
most recent day (not more than ten (10) days prior to the date in question)
for which prices have been so reported;
PROVIDED, HOWEVER, that, if there are no bid and asked prices reported during
the ten (10) days prior to the date in question, the Value of the REIT Shares
shall be determined by the General Partner acting in good faith on the basis of
such quotations and other information as it considers, in its reasonable
judgment, appropriate. In the event that the REIT Shares Amount includes Rights
(as defined in the definition of "REIT Shares Amount") that a holder of REIT
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.
ARTICLE 2
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 subject
to the conditions 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 "AIMCO Properties,
L.P." The Partnership's business may be conducted under any other name or names
deemed advisable by the General Partner, including the name of the General
Partner or any Affiliate thereof. The words "Limited Partnership," "L.P.,"
"Ltd." or similar words or letters shall be included in the Partnership's name
where necessary for the purposes of complying with the laws of any jurisdiction
that so requires. The General Partner in its sole and absolute discretion may
change
17
the name of the Partnership at any time and from time to time and shall notify
the Partners of such change in the next regular communication to the Partners.
Section 2.3 REGISTERED OFFICE AND AGENT; PRINCIPAL OFFICE. The
address of the registered office of the Partnership in the State of Delaware is
located at 00 Xxxxxxxxx Xxxxxx, Xxxxx X-000, Xxxxx, Xxxxxxxx 00000, and the
registered agent for service of process on the Partnership in the State of
Delaware at such registered office is The Xxxxxxxx-Xxxx Corporation System, Inc.
The principal office of the Partnership is located at 0000 Xxxxx Xxxxxxxx
Xxxxxx, Xxxxxx, 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 POWER OF ATTORNEY.
A. Each Limited Partner and each Assignee hereby irrevocably
constitutes and appoints the General Partner, any Liquidator, and authorized
officers and attorneys-in-fact of each, and each of those acting singly, in each
case with full power of substitution, as its true and lawful agent and attorney-
in-fact, with full power and authority in its name, place and stead to:
(1) execute, swear to, seal, 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, supplements or restatements thereof) that
the General Partner or the Liquidator deems appropriate or necessary to
form, qualify or continue the existence or qualification of the Partnership
as a limited partnership (or a partnership in which the limited partners
have limited liability to the extent provided by applicable law) 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 deems appropriate or necessary to reflect any amendment, change,
modification or restatement of this Agreement in accordance with its terms;
(c) all conveyances and other instruments or documents that the General
Partner or the 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 conveyances and other instruments or documents that
the General Partner or the Liquidator deems appropriate or necessary to
reflect the distribution or exchange of assets of the Partnership pursuant
to the terms of this Agreement; (e) all instruments relating to the
admission, withdrawal, removal or substitution of any Partner pursuant to,
or other events described in, Article 11, Article 12 or Article 13 hereof
or the Capital Contribution of any Partner; and (f) all certificates,
documents and other instruments relating to the determination of the
rights, preferences and privileges relating to 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, to
make, evidence, give, confirm or ratify any vote, consent, approval,
agreement or other action that is made or given by the Partners hereunder
or is consistent with the terms of this Agreement or appropriate or
necessary, in the sole and absolute discretion of the General Partner, to
effectuate the terms or intent of this Agreement.
Nothing contained herein shall be construed as authorizing the General Partner
to amend this Agreement except in accordance with Article 14 hereof or as may be
otherwise expressly provided for in this Agreement.
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B. The foregoing power of attorney is hereby declared to be
irrevocable and a special power coupled with an interest, in recognition of the
fact that each of the Limited Partners and Assignees will be relying upon the
power of the General Partner or the 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 or Partnership Interest 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 the Liquidator,
acting in good faith pursuant to such power of attorney; and each such Limited
Partner or Assignee hereby waives any and all defenses that may be available to
contest, negate or disaffirm the action of the General Partner or the
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
the Liquidator's request therefor, such further designation, powers of attorney
and other instruments as the General Partner or the Liquidator, as the case may
be, deems necessary to effectuate this Agreement and the purposes of the
Partnership.
Section 2.5 TERM. The term of the Partnership commenced on May 16,
1994, the date that the original Certificate was filed in the office of the
Secretary of State of Delaware in accordance with the Act, and shall continue
until December 31, 2093 unless the Partnership is dissolved sooner pursuant to
the provisions of Article 13 hereof or as otherwise provided by law.
ARTICLE 3
PURPOSE
Section 3.1 PURPOSE AND BUSINESS. The purpose and nature of the
Partnership is to conduct any business, enterprise or activity permitted by or
under the Act, including, but not limited to, (i) to conduct the business of
ownership, construction, development and operation of multifamily rental
apartment communities, (ii) to enter into any partnership, joint venture,
business trust arrangement, limited liability company or other similar
arrangement to engage in any business permitted by or under the Act, or to own
interests in any entity engaged in any business permitted by or under the Act,
(iii) to conduct the business of providing property and asset management and
brokerage services, whether directly or through one or more partnerships, joint
ventures, subsidiaries, business trusts, limited liability companies or other
similar arrangements, and (iv) to do anything necessary or incidental to the
foregoing; PROVIDED, HOWEVER, such business and arrangements and interests may
be limited to and conducted in such a manner as to permit the Previous General
Partner, in the sole and absolute discretion of the General Partner, at all
times to be classified as a REIT.
Section 3.2 POWERS.
A. The Partnership shall be 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.
B. Notwithstanding any other provision in this Agreement, the
General Partner may cause the Partnership not to take, or to refrain from
taking, any action that, in the judgment of the General Partner, in its sole and
absolute discretion, (i) could adversely affect the ability of the Previous
General Partner to continue to qualify as a REIT, (ii) could subject the
Previous General Partner to any additional taxes under Code Section 857 or Code
Section 4981 or (iii) could violate any law or regulation of any governmental
body or agency having
19
jurisdiction over the Previous General Partner, the General Partner, their
securities or the Partnership, unless such action (or inaction) under clause
(i), clause (ii) or clause (iii) above shall have been specifically consented
to by the Previous General Partner and the General Partner in writing.
Section 3.3 PARTNERSHIP ONLY FOR PURPOSES SPECIFIED. The Partnership
shall be a limited partnership only for the purposes specified in Section 3.1
hereof, and this Agreement shall not be deemed to create a company, venture or
partnership between or among the Partners with respect to any activities
whatsoever other than the activities within the purposes of the Partnership as
specified in Section 3.1 hereof. Except as otherwise provided in this
Agreement, no Partner shall have any authority to act for, bind, commit or
assume any obligation or responsibility on behalf of the Partnership, its
properties or any other Partner. No Partner, in its capacity as a Partner under
this Agreement, shall be responsible or liable for any indebtedness or
obligation of another Partner, nor shall the Partnership be responsible or
liable for any indebtedness or obligation of any Partner, incurred either before
or after the execution and delivery of this Agreement by such Partner, except as
to those responsibilities, liabilities, indebtedness or obligations incurred
pursuant to and as limited by the terms of this Agreement and the Act.
Section 3.4 REPRESENTATIONS AND WARRANTIES BY THE PARTIES.
A. Each Partner that is an individual (including, without
limitation, each Additional Limited Partner or Substituted Limited Partner as a
condition to becoming an Additional Limited Partner or a Substituted Limited
Partner) represents and warrants to each other Partner(s) that (i) the
consummation of the transactions contemplated by this Agreement to be performed
by such Partner will not result in a breach or violation of, or a default under,
any material agreement by which such Partner or any of such Partner's property
is bound, or any statute, regulation, order or other law to which such Partner
is subject, (ii) such Partner is neither a "foreign person" within the meaning
of Code Section 1445(f) nor a "foreign partner" within the meaning of Code
Section 1446(e), (iii) such Partner does not own, directly or indirectly, (a)
five percent (5%) or more of the total combined voting power of all classes of
stock entitled to vote, or five percent (5%) or more of the total number of
shares of all classes of stock, of any corporation that is a tenant of either
(I) the Previous General Partner, the General Partner, the Special Limited
Partner or any "qualified REIT subsidiary" (within the meaning of Code Section
856(i)(2)) with respect to the Previous General Partner, (II) the Partnership or
(III) any partnership, venture or limited liability company of which the
Previous General Partner, the General Partner, the Special Limited Partner, any
"qualified REIT subsidiary" (within the meaning of Code Section 856(i)(2)) with
respect to the Previous General Partner or the Partnership is a member or (b) an
interest of five percent (5%) or more in the assets or net profits of any tenant
of either (I) the Previous General Partner, the General Partner, the Special
Limited Partner or any "qualified REIT subsidiary" (within the meaning of Code
Section 856(i)(2)) with respect to the Previous General Partner, (II) the
Partnership or (III) any partnership, venture, or limited liability company of
which the Previous General Partner, the General Partner, the Special Limited
Partner, any "qualified REIT subsidiary" (within the meaning of Code Section
856(i)(2)) with respect to the Previous General Partner or the Partnership is a
member and (iv) this Agreement is binding upon, and enforceable against, such
Partner in accordance with its terms.
B. Each Partner that is not an individual (including, without
limitation, each Additional Limited Partner or Substituted Limited Partner as a
condition to becoming an Additional Limited Partner or a Substituted Limited
Partner) represents and warrants to each other Partner(s) that (i) all
transactions contemplated by this Agreement to be performed by it have been duly
authorized by all necessary action, including, without limitation, that of its
general partner(s), committee(s), trustee(s), beneficiaries, directors and/or
shareholder(s), as the case may be, as required, (ii) the consummation of such
transactions shall not result in a breach or violation of, or a default under,
its partnership or operating agreement, trust agreement, charter or bylaws, as
the case may be,
20
any material agreement by which such Partner or any of such Partner's
properties or any of its partners, members, beneficiaries, trustees or
shareholders, as the case may be, is or are bound, or any statute,
regulation, order or other law to which such Partner or any of its partners,
members, trustees, beneficiaries or shareholders, as the case may be, is or
are subject, (iii) such Partner is neither a "foreign person" within the
meaning of Code Section 1445(f) nor a "foreign partner" within the meaning of
Code Section 1446(e), (iv) such Partner does not own, directly or indirectly,
(a) five percent (5%) or more of the total combined voting power of all
classes of stock entitled to vote, or five percent (5%) or more of the total
number of shares of all classes of stock, of any corporation that is a tenant
of either (I) the Previous General Partner, the General Partner, the Special
Limited Partner or any "qualified REIT subsidiary" (within the meaning of
Code Section 856(i)(2)) with respect to the Previous General Partner, (II)
the Partnership or (III) any partnership, venture or limited liability
company of which the Previous General Partner, the General Partner, the
Special Limited Partner, any "qualified REIT subsidiary" (within the meaning
of Code Section 856(i)(2)) with respect to the Previous General Partner or
the Partnership is a member or (b) an interest of five percent (5%) or more
in the assets or net profits of any tenant of either (I) the Previous General
Partner, the General Partner the Special Limited Partner or any "qualified
REIT subsidiary" (within the meaning of Code Section 856(i)(2)) with respect
to the Previous General Partner, (II) the Partnership or (III) any
partnership, venture or limited liability company for which the Previous
General Partner, the General Partner, the Special Limited Partner, any
"qualified REIT subsidiary" (within the meaning of Code Section 856(i)(2))
with respect to the Previous General Partner or the Partnership is a member
and (v) this Agreement is binding upon, and enforceable against, such Partner
in accordance with its terms.
C. Each Partner (including, without limitation, each Substituted
Limited Partner as a condition to becoming a Substituted Limited Partner)
represents, warrants and agrees that it has acquired and continues to hold its
interest in the Partnership for its own account for investment only and not for
the purpose of, or with a view toward, the resale or distribution of all or any
part thereof, nor with a view toward selling or otherwise distributing such
interest or any part thereof at any particular time or under any predetermined
circumstances. Each Partner further represents and warrants that it is a
sophisticated investor, able and accustomed to handling sophisticated financial
matters for itself, particularly real estate investments, and that it has a
sufficiently high net worth that it does not anticipate a need for the funds
that it has invested in the Partnership in what it understands to be a highly
speculative and illiquid investment.
D. The representations and warranties contained in Sections 3.4.A,
3.4.B and 3.4.C hereof shall survive the execution and delivery of this
Agreement by each Partner (and, in the case of an Additional Limited Partner or
a Substituted Limited Partner, the admission of such Additional Limited Partner
or Substituted Limited Partner as a Limited Partner in the Partnership) and the
dissolution, liquidation and termination of the Partnership.
E. Each Partner (including, without limitation, each Substituted
Limited Partner as a condition to becoming a Substituted Limited Partner) hereby
acknowledges that no representations as to potential profit, cash flows, funds
from operations or yield, if any, in respect of the Partnership or the General
Partner have been made by any Partner or any employee or representative or
Affiliate of any Partner, and that projections and any other information,
including, without limitation, financial and descriptive information and
documentation, that may have been in any manner submitted to such Partner shall
not constitute any representation or warranty of any kind or nature, express or
implied.
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ARTICLE 4
CAPITAL CONTRIBUTIONS
Section 4.1 CAPITAL CONTRIBUTIONS OF THE PARTNERS. The Partners
have heretofore made Capital Contributions to the Partnership. Each Partner
owns Partnership Units in the amount set forth for such Partner on EXHIBIT A,
as the same may be amended from time to time by the General Partner to the
extent necessary to reflect accurately sales, exchanges or other Transfers,
redemptions, Capital Contributions, the issuance of additional Partnership
Units, or similar events having an effect on a Partner's ownership of
Partnership Units. Except as provided by law or in Section 4.2, 4.3 or 10.4
hereof, the Partners shall have no obligation or right to make any additional
Capital Contributions or loans to the Partnership.
Section 4.2 ISSUANCES OF ADDITIONAL PARTNERSHIP INTERESTS.
A. GENERAL. The General Partner is hereby authorized to cause the
Partnership to issue additional Partnership Interests, in the form of
Partnership Units, for any Partnership purpose, at any time or from time to
time, to the Partners (including the General Partner and the Special Limited
Partner) or to other Persons, and to admit such Persons as Additional Limited
Partners, for such consideration and on such terms and conditions as shall be
established by the General Partner in its sole and absolute discretion, all
without the approval of any Limited Partners. Without limiting the
foregoing, the General Partner is expressly authorized to cause the
Partnership to issue Partnership Units (i) upon the conversion, redemption or
exchange of any Debt, Partnership Units or other securities issued by the
Partnership, (ii) for less than fair market value, so long as the General
Partner concludes in good faith that such issuance is in the best interests
of the General Partner and the Partnership, and (iii) in connection with any
merger of any other Person into the Partnership if the applicable merger
agreement provides that Persons are to receive Partnership Units in exchange
for their interests in the Person merging into the Partnership. Subject to
Delaware law, any additional Partnership Interests may be issued in one or
more classes, or one or more series of any of such classes, with such
designations, preferences and relative, participating, optional or other
special rights, powers and duties as shall be determined by the General
Partner, in its sole and absolute discretion without the approval of any
Limited Partner, and set forth in a written document thereafter attached to
and made an exhibit to this Agreement (each, a "PARTNERSHIP UNIT
DESIGNATION"). Without limiting the generality of the foregoing, the General
Partner shall have authority to specify (a) the allocations of items of
Partnership income, gain, loss, deduction and credit to each such class or
series of Partnership Interests; (b) the right of each such class or series
of Partnership Interests to share in Partnership distributions; (c) the
rights of each such class or series of Partnership Interests upon dissolution
and liquidation of the Partnership; (d) the voting rights, if any, of each
such class or series of Partnership Interests; and (e) the conversion,
redemption or exchange rights applicable to each such class or series of
Partnership Interests. Upon the issuance of any additional Partnership
Interest, the General Partner shall amend EXHIBIT A as appropriate to reflect
such issuance.
B. ISSUANCES TO THE GENERAL PARTNER OR SPECIAL LIMITED PARTNER.
No additional Partnership Units shall be issued to the General Partner or the
Special Limited Partner unless (i) the additional Partnership Units are
issued to all Partners in proportion to their respective Percentage
Interests, (ii) (a) the additional Partnership Units are (x) Partnership
Common Units issued in connection with an issuance of REIT Shares, or (y)
Partnership Units (other than Partnership Common Units) issued in connection
with an issuance of Preferred Shares, New Securities or other interests in
the Previous General Partner (other than REIT Shares), which Preferred
Shares, New Securities or other interests have designations, preferences and
other rights, terms and provisions that are substantially the same as the
designations, preferences and other rights, terms and provisions of the
additional Partnership Units issued to the General Partner or the Special
Limited Partner, and (b) the General Partner or the Special Limited Partner,
as the case may be, contributes to the Partnership the cash proceeds or other
consideration received in
22
connection with the issuance of such REIT Shares, Preferred Shares, New
Securities or other interests in the Previous General Partner, (iii) the
additional Partnership Units are issued upon the conversion, redemption or
exchange of Debt, Partnership Units or other securities issued by the
Partnership, or (iv) the additional Partnership Units are issued pursuant to
Section 4.6.
C. NO PREEMPTIVE RIGHTS. No Person, including, without
limitation, any Partner or Assignee, shall have any preemptive, preferential,
participation or similar right or rights to subscribe for or acquire any
Partnership Interest.
Section 4.3 ADDITIONAL FUNDS.
A. GENERAL. The General Partner may, at any time and from time
to time, determine that the Partnership requires additional funds
("ADDITIONAL FUNDS") for the acquisition or development of additional
Properties, for the redemption of Partnership Units or for such other
purposes as the General Partner may determine. Additional Funds may be
obtained by the Partnership, at the election of the General Partner, in any
manner provided in, and in accordance with, the terms of this Section 4.3
without the approval of any Limited Partners.
B. ADDITIONAL CAPITAL CONTRIBUTIONS. The General Partner, on
behalf of the Partnership, may obtain any Additional Funds by accepting
Capital Contributions from any Partners or other Persons and issuing
additional Partnership Units in consideration therefor.
C. LOANS BY THIRD PARTIES. The General Partner, on behalf of the
Partnership, may obtain any Additional Funds by causing the Partnership to
incur Debt to any Person (other than the Previous General Partner, the
General Partner or the Special Limited Partner) upon such terms as the
General Partner determines appropriate, includng making such Debt
convertible, redeemable or exchangeable for Partnership Units; PROVIDED,
HOWEVER, that the Partnership shall not incur any such Debt if (i) a breach,
violation or default of such Debt would be deemed to occur by virtue of the
Transfer of any Partnership Interest, or (ii) such Debt is recourse to any
Partner (unless the Partner otherwise agrees).
D. GENERAL PARTNER LOANS. The General Partner, on behalf of the
Partnership, may obtain any Additional Funds by causing the Partnership to
incur Debt with the Previous General Partner, the General Partner or the
Special Limited Partner (each, a "GENERAL PARTNER LOAN") if (i) such Debt is,
to the extent permitted by law, on substantially the same terms and
conditions (including interest rate, repayment schedule, and conversion,
redemption, repurchase and exchange rights) as Funding Debt incurred by the
Previous General Partner, the General Partner or the Special Limited Partner,
the net proceeds of which are loaned to the Partnership to provide such
Additional Funds, or (ii) such Debt is on terms and conditions no less
favorable to the Partnership than would be available to the Partnership from
any third party; PROVIDED, HOWEVER, that the Partnership shall not incur any
such Debt if (a) a breach, violation or default of such Debt would be deemed
to occur by virtue of the Transfer of any Partnership Interest, or (b) such
Debt is recourse to any Partner (unless the Partner otherwise agrees).
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E. ISSUANCE OF SECURITIES BY THE PREVIOUS GENERAL PARTNER. The
Previous General Partner shall not issue any additional REIT Shares,
Preferred Shares, Junior Shares or New Securities unless (i) the Previous
General Partner contributes the cash proceeds or other consideration received
from the issuance of such additional REIT Shares, Preferred Shares, Junior
Shares or New Securities, as the case may be, and from the exercise of the
rights contained in any such additional New Securities, to either or both of
the General Partner and the Special Limited Partner, and (ii) it or they, as
the case may be, contribute such cash proceeds or other consideration to the
Partnership in exchange for (x) in the case of an issuance of REIT Shares,
Partnership Common Units, or (y) in the case of an issuance of Preferred
Shares, Junior Shares or New Securities, Partnership Units with designations,
preferences and other rights, terms and provisions that are substantially the
same as the designations, preferences and other rights, terms and provisions
of such Preferred Shares, Junior Shares or New Securities; PROVIDED, HOWEVER,
that notwithstanding the foregoing, the Previous General Partner may issue
REIT Shares, Preferred Shares, Junior Shares or New Securities (a) pursuant
to Section 4.4 or Section 8.6.B hereof, (b) pursuant to a dividend or
distribution (including any stock split) of REIT Shares, Preferred Shares,
Junior Shares or New Securities to all of the holders of REIT Shares,
Preferred Shares, Junior Shares or New Securities, as the case may be, (c)
upon a conversion, redemption or exchange of Preferred Shares, (d) upon a
conversion of Junior Shares into REIT Shares, (e) upon a conversion,
redemption, exchange or exercise of New Securities, or (f) in connection with
an acquisition of a property or other asset to be owned, directly or
indirectly, by the Previous General Partner if the General Partner determines
that such acquisition is in the best interests of the Partnership. In the
event of any issuance of additional REIT Shares, Preferred Shares, Junior
Shares or New Securities by the Previous General Partner, and the
contribution to the Partnership, by the General Partner or the Special
Limited Partner, of the cash proceeds or other consideration received from
such issuance, the Partnership shall pay the Previous General Partner's
expenses associated with such issuance, including any underwriting discounts
or commissions.
Section 4.4 STOCK OPTION PLANS.
A. OPTIONS GRANTED TO COMPANY EMPLOYEES AND INDEPENDENT
DIRECTORS. If at any time or from time to time, in connection with the
Previous General Partner's Stock Option Plans, a stock option granted to a
Company Employee or Independent Director is duly exercised:
(1) The Special Limited Partner shall, as soon as practicable after
such exercise, make a Capital Contribution to the Partnership in an amount
equal to the exercise price paid to the Previous General Partner by such
exercising party in connection with the exercise of such stock option.
(2) Notwithstanding the amount of the Capital Contribution
actually made pursuant to Section 4.4.A(1) hereof, the Special Limited
Partner shall be deemed to have contributed to the Partnership as a
Capital Contribution, in consideration of an additional Limited Partner
Interest (expressed in and as additional Partnership Common Units), an
amount equal to the Value of a REIT Share as of the date of exercise
MULTIPLIED BY the number of REIT Shares then being issued in connection
with the exercise of such stock option.
(3) An equitable Percentage Interest adjustment shall be made in
which the Special Limited Partner shall be treated as having made a cash
contribution equal to the amount described in Section 4.4.A(2) hereof.
B. OPTIONS GRANTED TO PARTNERSHIP EMPLOYEES. If at any time or
from time to time, in connection with the Previous General Partner's Stock
Option Plans, a stock option granted to a Partnership Employee is duly
exercised:
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(1) The General Partner shall cause the Previous General Partner
to sell to the Partnership, and the Partnership shall purchase from the
Previous General Partner, the number of REIT Shares as to which such
stock option is being exercised. The purchase price per REIT Share for
such sale of REIT Shares to the Partnership shall be the Value of a REIT
Share as of the date of exercise of such stock option.
(2) The Partnership shall sell to the Optionee (or if the Optionee
is an employee of a Partnership Subsidiary, the Partnership shall sell
to such Partnership Subsidiary, which in turn shall sell to the
Optionee), for a cash price per share equal to the Value of a REIT Share
at the time of the exercise, the number of REIT Shares equal to (a) the
exercise price paid to the Previous General Partner by the exercising
party in connection with the exercise of such stock option DIVIDED BY
(b) the Value of a REIT Share at the time of such exercise.
(3) The Partnership shall transfer to the Optionee (or if the
Optionee is an employee of a Partnership Subsidiary, the Partnership
shall transfer to such Partnership Subsidiary, which in turn shall
transfer to the Optionee) at no additional cost, as additional
compensation, the number of REIT Shares equal to the number of REIT
Shares described in Section 4.4.B(1) hereof LESS the number of REIT
Shares described in Section 4.4.B(2) hereof.
(4) The Special Limited Partner shall, as soon as practicable
after such exercise, make a Capital Contribution to the Partnership of
an amount equal to all proceeds received (from whatever source, but
excluding any payment in respect of payroll taxes or other withholdings)
by the Previous General Partner, the General Partner or the Special
Limited Partner in connection with the exercise of such stock option.
An equitable Percentage Interest adjustment shall be made in which the
Special Limited Partner shall be treated as having made a cash
contribution equal to the amount described in Section 4.4.B(1) hereof.
C. SPECIAL VALUATION RULE. For purposes of this Section 4.4, in
determining the Value of a REIT Share, only the trading date immediately
preceding the exercise of the relevant stock option under the Previous
General Partner's Stock Option Plans shall be considered.
D. FUTURE STOCK INCENTIVE PLANS. Nothing in this Agreement shall
be construed or applied to preclude or restrain the Previous General Partner,
the General Partner or the Special Limited Partner from adopting, modifying
or terminating stock incentive plans, in addition to the Previous General
Partner's Stock Option Plans, for the benefit of employees, directors or
other business associates of the Previous General Partner, the General
Partner, the Special Limited Partner, the Partnership or any of their
Affiliates. The Limited Partners acknowledge and agree that, in the event
that any such plan is adopted, modified or terminated by the Previous General
Partner, the General Partner or the Special Limited Partner amendments to
this Section 4.4 may become necessary or advisable and that any approval or
consent to any such amendments requested by the Previous General Partner, the
General Partner or the Special Limited Partner shall not be unreasonably
withheld or delayed.
Section 4.5 NO INTEREST; NO RETURN. No Partner shall be entitled
to interest on its Capital Contribution or on such Partner's Capital Account.
Except as provided herein or by law, no Partner shall have any right to
demand or receive the return of its Capital Contribution from the Partnership.
Section 4.6 CONVERSION OF JUNIOR SHARES. If, at any time, any of
the Junior Shares are converted into REIT Shares, in whole or in part, then a
number of Partnership Common Units equal to (i) the number of REIT Shares
issued upon such conversion DIVIDED BY (ii) the Adjustment Factor then in
effect shall be issued to the General Partner and the Special Limited Partner
(and between the General Partner and the Special Limited Partner
25
in proportion to their ownership of Partnership Common Units immediately
preceding such conversion), and the Percentage Interests of the General
Partner and the Limited Partners (including the Special Limited Partner)
shall be adjusted to reflect such conversion.
ARTICLE 5
DISTRIBUTIONS
Section 5.1 REQUIREMENT AND CHARACTERIZATION OF DISTRIBUTIONS.
Subject to the terms of any Partnership Unit Designation, the General Partner
shall cause the Partnership to distribute quarterly all, or such portion as
the General Partner may in its sole and absolute discretion determine, of
Available Cash generated by the Partnership during such quarter to the
Holders of Partnership Common Units in accordance with their respective
Partnership Common Units held on such Partnership Record Date. Distributions
payable with respect to any Partnership Units that were not outstanding
during the entire quarterly period in respect of which any distribution is
made shall be prorated based on the portion of the period that such units
were outstanding. The General Partner in its sole and absolute discretion
may distribute to the Unitholders Available Cash on a more frequent basis and
provide for an appropriate record date. The General Partner shall take such
reasonable efforts, as determined by it in its sole and absolute discretion
and consistent with the Previous General Partner's qualification as a REIT,
to cause the Partnership to distribute sufficient amounts to enable (i) the
General Partner and the Special Limited Partner to transfer funds to the
Previous General Partner and (ii) the Previous General Partner to pay
shareholder dividends that will (a) satisfy the requirements for qualifying
as a REIT under the Code and Regulations (the "REIT REQUIREMENTS") and (b)
avoid any federal income or excise tax liability of the Previous General
Partner.
Section 5.2 DISTRIBUTIONS IN KIND. No right is given to any
Unitholder to demand and receive property other than cash as provided in this
Agreement. The General Partner may determine, in its sole and absolute
discretion, to make a distribution in kind of Partnership assets to the
Unitholders, and such assets shall be distributed in such a fashion as to
ensure that the fair market value is distributed and allocated in accordance
with Articles 5, 6 and 10 hereof.
Section 5.3 AMOUNTS WITHHELD. All amounts withheld pursuant to
the Code or any provisions of any state or local tax law and Section 10.4
hereof with respect to any allocation, payment or distribution to any
Unitholder shall be treated as amounts paid or distributed to such Unitholder
pursuant to Section 5.1 hereof for all purposes under this Agreement.
Section 5.4 DISTRIBUTIONS UPON LIQUIDATION. Notwithstanding the
other provisions of this Article 5, net proceeds from a Terminating Capital
Transaction, and any other cash received or reductions in reserves made after
commencement of the liquidation of the Partnership, shall be distributed to
the Unitholders in accordance with Section 13.2 hereof.
Section 5.5 RESTRICTED DISTRIBUTIONS. Notwithstanding any
provision to the contrary contained in this Agreement, neither the
Partnership nor the General Partner, on behalf of the Partnership, shall make
a distribution to any Unitholder on account of its Partnership Interest or
interest in Partnership Units if such distribution would violate Section
17-607 of the Act or other applicable law.
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ARTICLE 6
ALLOCATIONS
Section 6.1 TIMING AND AMOUNT OF ALLOCATIONS OF NET INCOME AND NET
LOSS. Net Income and Net Loss of the Partnership shall be determined and
allocated with respect to each Fiscal Year of the Partnership as of the end
of each such year. Except as otherwise provided in this Article 6, and
subject to Section 11.6.C hereof, an allocation to a Unitholder of a share of
Net Income or Net Loss shall be treated as an allocation of the same share of
each item of income, gain, loss or deduction that is taken into account in
computing Net Income or Net Loss.
Section 6.2 GENERAL ALLOCATIONS. Subject to the terms of any
Partnership Unit Designation, except as otherwise provided in this Article 6
and subject to Section 11.6.C hereof, Net Income and Net Loss shall be
allocated to each of the Holders of Partnership Common Units in accordance
with their respective Partnership Common Units at the end of each Fiscal Year.
Section 6.3 ADDITIONAL ALLOCATION PROVISIONS. Notwithstanding the
foregoing provisions of this Article 6:
A. INTENTIONALLY OMITTED.
B. REGULATORY ALLOCATIONS.
(i) MINIMUM GAIN CHARGEBACK. Except as otherwise provided in
Regulations Section 1.704-2(f), notwithstanding the provisions of
Section 6.2 hereof, or any other provision of this Article 6, if there
is a net decrease in Partnership Minimum Gain during any Fiscal Year,
each Holder of Partnership Common Units shall be specially allocated
items of Partnership income and gain for such year (and, if necessary,
subsequent years) in an amount equal to such Holder'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 Holder pursuant thereto. The items to be allocated shall be
determined in accordance with Regulations Sections 1.704-2(f)(6) and
1.704-2(j)(2). This Section 6.3.B(i) is intended to qualify as a
"minimum gain chargeback" within the meaning of Regulations Section
1.704-2(f) and shall be interpreted consistently therewith.
(ii) PARTNER MINIMUM GAIN CHARGEBACK. Except as otherwise
provided in Regulations Section 1.704-2(i)(4) or in Section 6.3.B(i)
hereof, if there is a net decrease in Partner Minimum Gain attributable
to a Partner Nonrecourse Debt during any Fiscal Year, each Holder of
Partnership Common Units 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 Holder's share of the net
decrease in Partner Minimum Gain attributable to such Partner
Nonrecourse Debt, determined in accordance with Regulations Section
1.7042(i)(4). Allocations pursuant to the previous sentence shall be
made in proportion to the respective amounts required to be allocated to
each General Partner, Limited Partner and other Holder pursuant thereto.
The items to be so allocated shall be determined in accordance with
Regulations Sections 1.704-2(i)(4) and 1.704-2(j)(2). This Section
6.3.B(ii) is
27
intended to qualify as a "chargeback of partner nonrecourse debt minimum
gain" within the meaning of Regulations Section 1.704-2(i) and shall be
interpreted consistently therewith.
(iii) NONRECOURSE DEDUCTIONS AND PARTNER NONRECOURSE
DEDUCTIONS. Any Nonrecourse Deductions for any Fiscal Year shall be
specially allocated to the Holders of Partnership Common Units in
accordance with their Partnership Common Units. Any Partner Nonrecourse
Deductions for any Fiscal Year shall be specially allocated to the
Holder(s) who bears the economic risk of loss with respect to the
Partner Nonrecourse Debt to which such Partner Nonrecourse Deductions
are attributable, in accordance with Regulations Section 1.704-2(i).
(iv) QUALIFIED INCOME OFFSET. If any Holder of Partnership
Common Units unexpectedly receives an adjustment, allocation or
distribution described in Regulations Section 1.704-1(b)(2)(ii)(d)(4),
(5) or (6), items of Partnership income and gain shall be allocated, in
accordance with Regulations Section 1.704-1(b)(2)(ii)(d), to such Holder
in an amount and manner sufficient to eliminate, to the extent required
by such Regulations, the Adjusted Capital Account Deficit of such Holder
as quickly as possible, provided that an allocation pursuant to this
Section 6.3.B(iv) shall be made if and only to the extent that such Holder
would have an Adjusted Capital Account Deficit after all other allocations
provided in this Article 6 have been tentatively made as if this Section
6.3.B(iv) were not in the Agreement. It is intended that this Section
6.3.B(iv) qualify and be construed as a "qualified income offset" within
the meaning of Regulations Section 1.704-1(b)(2)(ii)(d) and shall be
interpreted consistently therewith.
(v) GROSS INCOME ALLOCATION. In the event that any Holder of
Partnership Common Units has a deficit Capital Account at the end of any
Fiscal Year that is in excess of the sum of (1) the amount (if any) that
such Holder is obligated to restore to the Partnership upon complete
liquidation of such Holder's Partnership Interest (including, the
Holder's interest in outstanding Partnership Preferred Units and other
Partnership Units) and (2) the amount that such Holder 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), each such Holder
shall be specially allocated items of Partnership income and gain in the
amount of such excess to eliminate such deficit as quickly as possible,
provided that an allocation pursuant to this Section 6.3.B(v) shall be
made if and only to the extent that such Holder would have a deficit
Capital Account in excess of such sum after all other allocations
provided in this Article 6 have been tentatively made as if this Section
6.3.B(v) and Section 6.3.B(iv) hereof were not in the Agreement.
(vi) LIMITATION ON ALLOCATION OF NET LOSS. To the extent
that any allocation of Net Loss would cause or increase an Adjusted
Capital Account Deficit as to any Holder of Partnership Common Units,
such allocation of Net Loss shall be reallocated among the other Holders
of Partnership Common Units in accordance with their respective
Partnership Common Units, subject to the limitations of this Section
6.3.B(vi).
(vii) SECTION 754 ADJUSTMENT. To the extent that an
adjustment to the adjusted tax basis of any Partnership asset pursuant
to Code Section 734(b) or Code Section 743(b) is required, pursuant to
Regulations Section 1.704-1(b)(2) (iv)(m)(2) or Regulations Section
1.704-1(b)(2)(iv)(m)(4), to be taken into account in determining Capital
Accounts as the result of a distribution to a Holder of Partnership
Common Units in complete liquidation of its interest in the Partnership,
the amount of such adjustment to the Capital Accounts shall be treated
as an item of
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gain (if the adjustment increases the basis of the asset) or loss (if
the adjustment decreases such basis), and such gain or loss shall be
specially allocated to the Holders in accordance with their Partnership
Common Units in the event that Regulations Section
1.704-1(b)(2)(iv)(m)(2) applies, or to the Holders to whom such
distribution was made in the event that Regulations Section
1.704-1(b)(2)(iv)(m)(4) applies.
(viii) CURATIVE ALLOCATIONS. The allocations set forth in
Sections 6.3.B(i), (ii), (iii), (iv), (v), (vi) and (vii) hereof (the
"REGULATORY ALLOCATIONS") are intended to comply with certain regulatory
requirements, including the requirements of Regulations Sections
1.704-1(b) and 1.704-2. Notwithstanding the provisions of Section 6.1
hereof, the Regulatory Allocations shall be taken into account in
allocating other items of income, gain, loss and deduction among the
Holders of Partnership Common Units so that to the extent possible
without violating the requirements giving rise to the Regulatory
Allocations, the net amount of such allocations of other items and the
Regulatory Allocations to each Holder of a Partnership Common Unit shall
be equal to the net amount that would have been allocated to each such
Holder if the Regulatory Allocations had not occurred.
C. SPECIAL ALLOCATIONS UPON LIQUIDATION. Notwithstanding any
provision in this Article VI to the contrary, in the event that the
Partnership disposes of all or substantially all of its assets in a
transaction that will lead to a liquidation of the Partnership pursuant to
Article XIII hereof, then any Net Income or Net Loss realized in connection
with such transaction and thereafter (and, if necessary, constituent items of
income, gain, loss and deduction) shall be specially allocated among the
Partners as required so as to cause liquidating distributions pursuant to
Section 13.2.A(4) hereof to be made in the same amounts and proportions as
would have resulted had such distributions instead been made pursuant to
Section 5.1 hereof.
D. ALLOCATION OF EXCESS NONRECOURSE LIABILITIES. For purposes of
determining a Holder's proportional share of the "excess nonrecourse
liabilities" of the Partnership within the meaning of Regulations Section
1.752-3(a)(3), each Holder's interest in Partnership profits shall be such
Holder's share of Partnership Common Units.
Section 6.4 TAX ALLOCATIONS.
A. IN GENERAL. Except as otherwise provided in this Section 6.4,
for income tax purposes under the Code and the Regulations each Partnership
item of income, gain, loss and deduction (collectively, "TAX ITEMS") shall be
allocated among the Holders of Partnership Common Units in the same manner as
its correlative item of "book" income, gain, loss or deduction is allocated
pursuant to Sections 6.2 and 6.3 hereof.
B. ALLOCATIONS RESPECTING SECTION 704(c) REVALUATIONS.
Notwithstanding Section 6.4.A hereof, Tax Items with respect to Property that
is contributed to the Partnership with a Gross Asset Value that varies from
its basis in the hands of the contributing Partner immediately preceding the
date of contribution shall be allocated among the Holders of Partnership
Common Units for income tax purposes pursuant to Regulations promulgated
under Code Section 704(c) so as to take into account such variation. The
Partnership shall account for such variation under any method approved under
Code Section 704(c) and the applicable Regulations as chosen by the General
Partner, including, without limitation, the "traditional method" as described
in Regulations Section 1.704-3(b). In the event that the Gross Asset Value
of any partnership asset is adjusted pursuant to subsection (b) of the
definition of "Gross Asset Value" (provided in Article 1 hereof), subsequent
allocations of Tax Items with
29
respect to such asset shall take account of the variation, if any, between
the adjusted basis of such asset and its Gross Asset Value in the same manner
as under Code Section 704(c) and the applicable Regulations.
ARTICLE 7
MANAGEMENT AND OPERATIONS OF BUSINESS
Section 7.1 MANAGEMENT.
A. Except as otherwise expressly provided in this Agreement, all
management powers over the business and affairs of the Partnership are 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 Partners with or without cause, except with the
Consent of the General Partner. In addition to the powers now or hereafter
granted a general partner of a limited partnership under applicable law or
that are granted to the General Partner under any other provision of this
Agreement, the General Partner, subject to the other provisions hereof
including Section 7.3, shall have full power and authority to do all things
deemed necessary or desirable by it to conduct the business of the
Partnership, to exercise all powers set forth in Section 3.2 hereof and to
effectuate the purposes set forth in Section 3.1 hereof, including, without
limitation:
(1) the making of any expenditures, the lending or borrowing
of money (including, without limitation, making prepayments on loans and
borrowing money to permit the Partnership to make distributions to its
Partners in such amounts as will permit the Previous General Partner (so
long as the Previous General Partner qualifies as a REIT) to avoid the
payment of any federal income tax (including, for this purpose, any
excise tax pursuant to Code Section 4981) and to make distributions to
its shareholders sufficient to permit the Previous General Partner to
maintain REIT status or otherwise to satisfy the REIT Requirements), 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 deed to secure debt, mortgage, deed of trust or
other lien or encumbrance on the Partnership's assets) and the incurring
of any obligations that it deems necessary for the conduct of the
activities of the Partnership;
(2) the making of tax, regulatory and other filings, or
rendering of periodic or other reports to governmental or other agencies
having jurisdiction over the business or assets of the Partnership;
(3) the acquisition, sale, transfer, exchange or other
disposition of any assets of the Partnership (including, but not limited
to, the exercise or grant of any conversion, option, privilege or
subscription right or any other right available in connection with any
assets at any time held by the Partnership) or the merger,
consolidation, reorganization or other combination of the Partnership
with or into another entity;
(4) the mortgage, pledge, encumbrance or hypothecation of any
assets of the Partnership, 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 that it sees fit,
including, without limitation, the financing of the operations and
activities of the General Partner, the Partnership or any of the
Partnership's Subsidiaries, the lending of funds to other Persons
30
(including, without limitation, the Partnership's Subsidiaries) and the
repayment of obligations of the Partnership, its Subsidiaries and any
other Person in which it has an equity investment, and the making of
capital contributions to and equity investments in the Partnership's
Subsidiaries;
(5) the management, operation, leasing, landscaping, repair,
alteration, demolition, replacement or improvement of any Property,
including, without limitation, any Contributed Property, or other asset
of the Partnership or any Subsidiary;
(6) the negotiation, execution and performance of any
contracts, leases, conveyances or other instruments that the General
Partner considers useful or necessary to the conduct of the
Partnership's operations or the implementation of the General Partner's
powers under this Agreement, 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 distribution of Partnership cash or other Partnership
assets in accordance with this Agreement, the holding, management,
investment and reinvestment of cash and other assets of the Partnership,
and the collection and receipt of revenues, rents and income of the
Partnership;
(8) the selection and dismissal of employees of the
Partnership or the General Partner (including, without limitation,
employees having titles or offices such as "president," "vice
president," "secretary" and "treasurer"), and agents, outside attorneys,
accountants, consultants and contractors of the Partnership or the
General Partner and the determination of their compensation and other
terms of employment or hiring;
(9) the maintenance of such insurance for the benefit of the
Partnership and the Partners as it deems necessary or appropriate;
(10) the formation of, or acquisition of an interest in, and
the contribution of property to, any further limited or general
partnerships, limited liability companies, joint ventures or other
relationships that it deems desirable (including, without limitation,
the acquisition of interests in, and the contributions of property to,
any Subsidiary and any other Person in which it has an equity investment
from time to time); PROVIDED, HOWEVER, that, as long as the Previous
General Partner has determined to continue to qualify as a REIT, the
General Partner may not engage in any such formation, acquisition or
contribution that would cause the Previous General Partner to fail to
qualify as a REIT or the General Partner to fail to qualify as a
"qualified REIT subsidiary" within the meaning of Code Section 856(i)(2);
(11) 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, and 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;
31
(12) the undertaking of any action in connection with the
Partnership's direct or indirect investment in any Subsidiary or any
other Person (including, without limitation, the contribution or loan of
funds by the Partnership to such Persons);
(13) the determination of the fair market value of any
Partnership property distributed in kind using such reasonable method of
valuation as it may adopt; PROVIDED that such methods are otherwise
consistent with the requirements of this Agreement;
(14) the enforcement of any rights against any Partner
pursuant to representations, warranties, covenants and indemnities
relating to such Partner's contribution of property or assets to the
Partnership;
(15) the exercise, directly or indirectly, through any
attorney- in-fact acting under a general or limited power of attorney,
of any right, including the right to vote, appurtenant to any asset or
investment held by the Partnership;
(16) the exercise of any of the powers of the General Partner
enumerated in this Agreement on behalf of or in connection with any
Subsidiary of the Partnership or any other Person in which the
Partnership has a direct or indirect interest, or jointly with any such
Subsidiary or other Person;
(17) the exercise of any of the powers of the General Partner
enumerated in this Agreement on behalf of any Person in which the
Partnership does not have an interest, pursuant to contractual or other
arrangements with such Person;
(18) the making, execution and delivery of any and all deeds,
leases, notes, deeds to secure debt, mortgages, deeds of trust, security
agreements, conveyances, contracts, guarantees, warranties, indemnities,
waivers, releases or legal instruments or agreements in writing
necessary or appropriate in the judgment of the General Partner for the
accomplishment of any of the powers of the General Partner enumerated in
this Agreement;
(19) the issuance of additional Partnership Units, as
appropriate and in the General Partner's sole and absolute discretion,
in connection with Capital Contributions by Additional Limited Partners
and additional Capital Contributions by Partners pursuant to Article 4
hereof; and
(20) an election to dissolve the Partnership pursuant to
Section 13.1.C hereof.
B. Each of the Limited Partners agrees that, except as provided
in Section 7.3 hereof, 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 (except as provided in
Section 7.3 hereof), the Act or any applicable law, rule or regulation. The
execution, delivery or performance by the General Partner or the Partnership
of any agreement authorized or permitted under this Agreement shall not
constitute a breach by the General Partner of any duty that the General
Partner may owe the Partnership or the Limited Partners or any other Persons
under this Agreement or of any duty stated or implied by law or equity.
32
C. At all times from and after the date hereof, the General Partner
may cause the Partnership to obtain and maintain (i) casualty, liability and
other insurance on the Properties of the Partnership and (ii) liability
insurance for the Indemnitees hereunder.
D. At all times from and after the date hereof, the General Partner
may cause the Partnership to establish and maintain working capital and other
reserves in such amounts as the General Partner, in its sole and absolute
discretion, deems appropriate and reasonable from time to time.
E. In exercising its authority under this Agreement, the General
Partner may, but shall be under no obligation to, take into account the tax
consequences to any Partner (including the General Partner) of any action taken
by it. The General Partner and the Partnership shall not have liability to a
Limited Partner under any circumstances as a result of an income tax liability
incurred by such Limited Partner as a result of an action (or inaction) by the
General Partner pursuant to its authority under this Agreement so long as the
action or inaction is taken in good faith.
Section 7.2 CERTIFICATE OF LIMITED PARTNERSHIP. To the extent that
such action is determined by the General Partner to be reasonable and necessary
or appropriate, the General Partner shall file amendments to and restatements of
the Certificate and do all the things to maintain the Partnership as a limited
partnership (or a partnership in which the limited partners have limited
liability) under the laws of the State of Delaware and each other state, the
District of Columbia or any other jurisdiction, in which the Partnership may
elect to do business or own property. Subject to the terms of Section 8.5.A(4)
hereof, the General Partner shall not be required, before or after filing, to
deliver or mail a copy of the Certificate or any amendment thereto to any
Limited Partner. The General Partner shall use all reasonable efforts to cause
to be filed such other certificates or documents as may be reasonable and
necessary or appropriate for the formation, continuation, qualification and
operation of a limited partnership (or a partnership in which the limited
partners have limited liability to the extent provided by applicable law) in the
State of Delaware and any other state, or the District of Columbia or other
jurisdiction, in which the Partnership may elect to do business or own property.
Section 7.3 RESTRICTIONS ON GENERAL PARTNER'S AUTHORITY.
A. The General Partner may not take any action in contravention of
this Agreement, including, without limitation:
(1) take any action that would make it impossible to carry
on the ordinary business of the Partnership, except as otherwise
provided in this Agreement;
(2) possess Partnership property, or assign any rights in
specific Partnership property, for other than a Partnership purpose
except as otherwise provided in this Agreement;
(3) admit a Person as a Partner, except as otherwise
provided in this Agreement;
(4) perform any act that would subject a Limited Partner to
liability as a general partner in any jurisdiction or any other
liability except as provided herein or under the Act; or
33
(5) enter into any contract, mortgage, loan or other
agreement that prohibits or restricts, or has the effect of
prohibiting or restricting, the ability of (a) the General Partner,
the Previous General Partner or the Partnership from satisfying its
obligations under Section 8.6 hereof in full or (b) a Limited Partner
from exercising its rights under Section 8.6 hereof to effect a
Redemption in full, except, in either case, with the written consent
of such Limited Partner affected by the prohibition or restriction.
B. The General Partner shall not, without the prior Consent of the
Limited Partners, undertake, on behalf of the Partnership, any of the following
actions or enter into any transaction that would have the effect of such
transactions:
(1) except as provided in Section 7.3.C hereof, amend,
modify or terminate this Agreement other than to reflect the
admission, substitution, termination or withdrawal of Partners
pursuant to Article 11 or Article 12 hereof;
(2) make a general assignment for the benefit of creditors
or appoint or acquiesce in the appointment of a custodian, receiver or
trustee for all or any part of the assets of the Partnership;
(3) institute any proceeding for bankruptcy on behalf of the
Partnership; or
(4) subject to the rights of Transfer provided in Sections
11.1.C and 11.2 hereof, approve or acquiesce to the Transfer of the
Partnership Interest of the General Partner, or admit into the
Partnership any additional or successor General Partners.
C. Notwithstanding Section 7.3.B hereof, 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 or withdrawal of
Partners or the termination of the Partnership in accordance with this
Agreement, and to amend EXHIBITS A and C in connection with such
admission, substitution or withdrawal;
(3) to reflect a change that is of an inconsequential
nature and does not adversely affect the Limited Partners in any
material respect, or to cure any ambiguity, correct or supplement any
provision in this Agreement not inconsistent with law or with other
provisions, or make other changes with respect to matters arising
under this Agreement that will not be inconsistent with law or with
the provisions of this Agreement;
(4) to satisfy any requirements, conditions or guidelines
contained in any order, directive, opinion, ruling or regulation of a
federal or state agency or contained in federal or state law;
34
(5) (a) to reflect such changes as are reasonably necessary
(i) for either the General Partner or the Special Limited Partner, as
the case may be, to maintain its status as a "qualified REIT
subsidiary" within the meaning of Code Section 856(i)(2) or (ii) for
the Previous General Partner to maintain its status as a REIT or to
satisfy the REIT Requirement; (b) to reflect the Transfer of all or
any part of a Partnership Interest among the Previous General Partner,
the General Partner, the Special Limited Partner or any other
"qualified REIT subsidiary" (within the meaning of Code Section
856(i)(2)) with respect to the Previous General Partner;
(6) to modify the manner in which Capital Accounts are
computed (but only to the extent set forth in the definition of
"Capital Account" or contemplated by the Code or the Regulations); and
(7) the issuance of additional Partnership Interests in
accordance with Section 4.2.
The General Partner will provide notice to the Limited Partners when any action
under this Section 7.3.C is taken.
D. Notwithstanding Sections 7.3.B and 7.3.C hereof, this Agreement
shall not be amended, and no action may be taken by the General Partner, without
the Consent of each Partner adversely affected, if such amendment or action
would (i) convert a Limited Partner Interest in the Partnership into a General
Partner Interest (except as a result of the General Partner acquiring such
Partnership Interest), (ii) modify the limited liability of a Limited Partner,
(iii) alter the rights of any Partner to receive the distributions to which such
Partner is entitled, pursuant to Article 5 or Section 13.2.A(4) hereof, or alter
the allocations specified in Article 6 hereof (except, in any case, as permitted
pursuant to Sections 4.2 and 7.3.C hereof), (iv) alter or modify the Redemption
rights, Cash Amount or REIT Shares Amount as set forth in Sections 8.6 and 11.2
hereof, or amend or modify any related definitions, or (v) amend this Section
7.3.D; PROVIDED, HOWEVER, that the Consent of each Partner adversely affected
shall not be required for any amendment or action that affects all Partners
holding the same class or series of Partnership Units on a uniform or pro rata
basis. Further, no amendment may alter the restrictions on the General
Partner's authority set forth elsewhere in this Section 7.3 without the Consent
specified therein. Any such amendment or action consented to by any Partner
shall be effective as to that Partner, notwithstanding the absence of such
consent by any other Partner.
Section 7.4 REIMBURSEMENT OF THE GENERAL PARTNER.
A. The General Partner shall not be compensated for its services as
general partner of the Partnership except as provided in elsewhere in this
Agreement (including the provisions of Articles 5 and 6 hereof regarding
distributions, payments and allocations to which it may be entitled in its
capacity as the General Partner).
B. Subject to Sections 7.4.C and 15.11 hereof, the Partnership shall
be liable for, and shall reimburse the General Partner on a monthly basis, or
such other basis as the General Partner may determine in its sole and absolute
discretion, for all sums expended in connection with the Partnership's business,
including, without limitation, (i) expenses relating to the ownership of
interests in and management and operation of, or for the benefit of, the
Partnership, (ii) compensation of officers and employees, including, without
limitation, payments under future compensation plans of the General Partner that
may provide for stock units, or other phantom stock, pursuant to which employees
of the General Partner will receive payments based upon dividends on or the
value of REIT Shares, (iii) director fees and expenses and (iv) all costs and
expenses of the General Partner being a public
35
company, including costs of filings with the SEC, reports and other
distributions to its shareholders; PROVIDED, HOWEVER, that the amount of any
reimbursement shall be reduced by 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 pursuant to Section 7.5 hereof. Such
reimbursements shall be in addition to any reimbursement of the General
Partner as a result of indemnification pursuant to Section 7.7 hereof.
C. To the extent practicable, Partnership expenses shall be billed
directly to and paid by the Partnership and, subject to Section 15.11 hereof,
reimbursements to the General Partner or any of its Affiliates by the
Partnership pursuant to this Section 7.4 shall be treated as "guaranteed
payments" within the meaning of Code Section 707(c).
Section 7.5 OUTSIDE ACTIVITIES OF THE PREVIOUS GENERAL PARTNER AND
THE GENERAL PARTNER. Neither the General Partner nor the Previous General
Partner shall directly or indirectly enter into or conduct any business, other
than in connection with (a) the ownership, acquisition and disposition of
Partnership Interests as General Partner, (b) the management of the business of
the Partnership, (c) the operation of the Previous General Partner as a
reporting company with a class (or classes) of securities registered under the
Exchange Act, (d) the Previous General Partner's operations as a REIT, (e) the
offering, sale, syndication, private placement or public offering of stock,
bonds, securities or other interests, (f) financing or refinancing of any type
related to the Partnership or its assets or activities, (g) the General
Partner's qualification as a "qualified REIT subsidiary" (within the meaning of
Code Section 856(i)(2)) and (h) such activities as are incidental thereto.
Nothing contained herein shall be deemed to prohibit the General Partner or the
Previous General Partner from executing guarantees of Partnership debt for which
it would otherwise be liable in its capacity as General Partner. Subject to
Section 7.3.B hereof, the General Partner, the Previous General Partner, the
Special Limited Partner and all "qualified REIT subsidiaries" (within the
meaning of Code Section 856(i)(2)), taken as a group, shall not own any assets
or take title to assets (other than temporarily in connection with an
acquisition prior to contributing such assets to the Partnership) other than
Partnership Interests as the General Partner or Special Limited Partner and
other than such cash and cash equivalents, bank accounts or similar instruments
or accounts as such group deems reasonably necessary, taking into account
Section 7.1.D hereof and the requirements necessary for the Previous General
Partner to qualify as a REIT and for the Previous General Partner, the General
Partner and the Special Limited Partner to carry out their respective
responsibilities contemplated under this Agreement and the Charter.
Notwithstanding the foregoing, if the Previous General Partner or the General
Partner acquires assets in its own name and owns Property other than through the
Partnership, the Partners agree to negotiate in good faith to amend this
Agreement, including, without limitation, the definition of "Adjustment Factor,"
to reflect such activities and the direct ownership of assets by the Previous
General Partner or the General Partner. The General Partner and any Affiliates
of the General Partner may acquire Limited Partner Interests and shall be
entitled to exercise all rights of a Limited Partner relating to such Limited
Partner Interests.
Section 7.6 CONTRACTS WITH AFFILIATES.
A. The Partnership may lend or contribute funds or other assets to
its Subsidiaries or other Persons in which it has an equity investment, and such
Persons may borrow funds from the Partnership, on terms and conditions
established in the sole and absolute discretion of the General Partner. The
foregoing authority shall not create any right or benefit in favor of any
Subsidiary or any other Person.
B. Except as provided in Section 7.5 hereof and subject to Section
3.1 hereof, the Partnership may transfer assets to joint ventures, limited
liability companies, partnerships, corporations, business trusts or other
business entities in which it is or thereby becomes a participant upon such
terms and subject to such conditions
36
consistent with this Agreement and applicable law as the General Partner, in
its sole and absolute discretion, believes to be advisable.
C. Except as expressly permitted by this Agreement, neither the
General Partner nor any of its Affiliates shall sell, transfer or convey any
property to the Partnership, directly or indirectly, except pursuant to
transactions that are determined by the General Partner in good faith to be fair
and reasonable.
D. 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 in respect of services performed,
directly or indirectly, for the benefit of the Partnership or any of the
Partnership's Subsidiaries.
E. The General Partner is expressly authorized to enter into, in the
name and on behalf of the Partnership, a right of first opportunity arrangement
and other conflict avoidance agreements with various Affiliates of the
Partnership and the General Partner, on such terms as the General Partner, in
its sole and absolute discretion, believes are advisable.
Section 7.7 INDEMNIFICATION.
A. To the fullest extent permitted by applicable law, the
Partnership shall indemnify each Indemnitee from and against any and all losses,
claims, damages, liabilities, joint or several, expenses (including, without
limitation, attorney's fees and other legal fees and expenses), judgments,
fines, settlements and other amounts arising from any and all claims, demands,
actions, suits or proceedings, civil, criminal, administrative or investigative,
that relate to the operations of the Partnership ("ACTIONS") as set forth in
this Agreement in which such Indemnitee may be involved, or is threatened to be
involved, as a party or otherwise; PROVIDED, HOWEVER, that the Partnership shall
not indemnify an Indemnitee (i) for willful misconduct or a knowing violation of
the law or (ii) for any transaction for which such Indemnitee received an
improper personal benefit in violation or breach of any provision of this
Agreement. Without limitation, the foregoing indemnity shall extend to any
liability of any Indemnitee, pursuant to a loan guaranty or otherwise, for any
indebtedness of the Partnership or any Subsidiary of the Partnership (including,
without limitation, any indebtedness which the Partnership or any Subsidiary of
the Partnership has assumed or taken subject to), and the General Partner is
hereby authorized and empowered, on behalf of the Partnership, to enter into one
or more indemnity agreements consistent with the provisions of this Section 7.7
in favor of any Indemnitee having or potentially having liability for any such
indebtedness. It is the intention of this Section 7.7.A that the Partnership
indemnify each Indemnitee to the fullest extent permitted by law. 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 of an Indemnitee or upon a plea of nolo contendere or its equivalent
by an Indemnitee, or an entry of an order of probation against an Indemnitee
prior to judgment, does not create a presumption that such 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 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. To the fullest extent permitted by law, expenses incurred by an
Indemnitee who is a party to a proceeding or otherwise subject to or the focus
of or is involved in any Action shall be paid or reimbursed by
37
the Partnership as incurred by the Indemnitee in advance of the final
disposition of the Action upon receipt by the Partnership of (i) a written
affirmation by the Indemnitee of the Indemnitee's good faith belief that the
standard of conduct necessary for indemnification by the Partnership as
authorized in this Section 7.7.A has been met, and (ii) a written undertaking
by or on behalf of the Indemnitee to repay the amount if it shall ultimately
be determined that the standard of conduct has not been met.
C. The indemnification provided by this Section 7.7 shall be in
addition to any other rights to which an Indemnitee or any other Person may be
entitled under any agreement, pursuant to any vote of the Partners, as a matter
of law or otherwise, and shall continue as to an Indemnitee who has ceased to
serve in such capacity and shall inure to the benefit of the heirs, successors,
assigns and administrators of the Indemnitee unless otherwise provided in a
written agreement with such Indemnitee or in the writing pursuant to which such
Indemnitee is indemnified.
D. The Partnership may, but shall not be obligated to, purchase and
maintain insurance, on behalf of any 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. Any liabilities which an Indemnitee incurs as a result of acting
on behalf of the Partnership or the General Partner (whether as a fiduciary or
otherwise) in connection with the operation, administration or maintenance of an
employee benefit plan or any related trust or funding mechanism (whether such
liabilities are in the form of excise taxes assessed by the IRS, penalties
assessed by the Department of Labor, restitutions to such a plan or trust or
other funding mechanism or to a participant or beneficiary of such plan, trust
or other funding mechanism, or otherwise) shall be treated as liabilities or
judgments or fines under this Section 7.7, unless such liabilities arise as a
result of (i) such Indemnitee's intentional misconduct or knowing violation of
the law, or (ii) any transaction in which such Indemnitee received a personal
benefit in violation or breach of any provision of this Agreement or applicable
law.
F. 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. An Indemnitee shall not be denied indemnification in whole or in
part under this Section 7.7 because the Indemnitee had an interest in the
transaction with respect to which the indemnification applies if the transaction
was otherwise permitted by the terms of this Agreement.
H. The provisions of this Section 7.7 are for the benefit of the
Indemnitees, their heirs, successors, assigns and administrators and shall not
be deemed to create any rights for the benefit of any other Persons. Any
amendment, modification or repeal of this Section 7.7 or any provision hereof
shall be prospective only and shall not in any way affect the limitations on the
Partnership's liability to any Indemnitee under this Section 7.7 as in effect
immediately prior to such amendment, modification or repeal with respect to
claims arising from or relating to matters occurring, in whole or in part, prior
to such amendment, modification or repeal, regardless of when such claims may
arise or be asserted.
I. It is the intent of the Partners that any amounts paid by the
Partnership to the General Partner pursuant to this Section 7.7 shall be treated
as "guaranteed payments" within the meaning of Code Section 707(c).
38
Section 7.8 LIABILITY OF THE GENERAL PARTNER.
A. Notwithstanding anything to the contrary set forth in this
Agreement, neither the General Partner nor any of its directors or officers
shall be liable or accountable in damages or otherwise to the Partnership, any
Partners or any Assignees for losses sustained, liabilities incurred or benefits
not derived as a result of errors in judgment or mistakes of fact or law or of
any act or omission if the General Partner or such director or officer acted in
good faith.
B. The Limited Partners expressly acknowledge that the General
Partner is acting for the benefit of the Partnership, the Limited Partners and
the General Partner's shareholders collectively and that the General Partner is
under no obligation to give priority to the separate interests of the Limited
Partners or the General Partner's shareholders (including, without limitation,
the tax consequences to Limited Partners, Assignees or the General Partner's
shareholders) in deciding whether to cause the Partnership to take (or decline
to take) any actions.
C. Subject to its obligations and duties as General Partner set
forth in Section 7.1.A hereof, the General Partner may exercise any of the
powers granted to it by this Agreement and perform any of the duties imposed
upon it hereunder either directly or by or through its employees or agents
(subject to the supervision and control of the General Partner). The General
Partner shall not be responsible for any misconduct or negligence on the part of
any such agent appointed by it in good faith.
D. Any amendment, modification or repeal of this Section 7.8 or any
provision hereof shall be prospective only and shall not in any way affect the
limitations on the General Partner's, and its officers' and directors',
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.
E. Notwithstanding anything herein to the contrary, except for
fraud, willful misconduct or gross negligence, or pursuant to any express
indemnities given to the Partnership by any Partner pursuant to any other
written instrument, no Partner shall have any personal liability whatsoever, to
the Partnership or to the other Partner(s), for the debts or liabilities of the
Partnership or the Partnership's obligations hereunder, and the full recourse of
the other Partner(s) shall be limited to the interest of that Partner in the
Partnership. To the fullest extent permitted by law, no officer, director or
shareholder of the General Partner shall be liable to the Partnership for money
damages except for (i) active and deliberate dishonesty established by a non-
appealable final judgment or (ii) actual receipt of an improper benefit or
profit in money, property or services. Without limitation of the foregoing, and
except for fraud, willful misconduct or gross negligence, or pursuant to any
such express indemnity, no property or assets of any Partner, other than its
interest in the Partnership, shall be subject to levy, execution or other
enforcement procedures for the satisfaction of any judgment (or other judicial
process) in favor of any other Partner(s) and arising out of, or in connection
with, this Agreement. This Agreement is executed by the officers of the General
Partner solely as officers of the same and not in their own individual
capacities.
F. To the extent that, at law or in equity, the General Partner has
duties (including fiduciary duties) and liabilities relating thereto to the
Partnership or the Limited Partners, the General Partner shall not be liable to
the Partnership or to any other Partner for its good faith reliance on the
provisions of this Agreement. The provisions of this Agreement, to the extent
that they restrict the duties and liabilities of the General Partner
39
otherwise existing at law or in equity, are agreed by the Partners to replace
such other duties and liabilities of such General Partner.
Section 7.9 OTHER MATTERS CONCERNING THE GENERAL PARTNER.
A. The General Partner may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement, instrument,
opinion, report, notice, request, consent, order, bond, debenture or other paper
or document believed by it in good faith to be genuine and to have been signed
or presented by the proper party or parties.
B. The General Partner may consult with legal counsel, accountants,
appraisers, management consultants, investment bankers, architects, engineers,
environmental consultants 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 that 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. 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 that
is permitted or required to be done by the General Partner hereunder.
D. Notwithstanding any other provision 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 Previous General Partner to
continue to qualify as a REIT, (ii) for the Previous General Partner otherwise
to satisfy the REIT Requirements, (iii) to avoid the Previous General Partner
incurring any taxes under Code Section 857 or Code Section 4981 or (iv) for the
General Partner or the Special Limited Partner to continue to qualify as a
"qualified REIT subsidiary" (within the meaning of Code Section 856(i)(2)), is
expressly authorized under this Agreement and is deemed approved by all of the
Limited Partners.
Section 7.10 TITLE TO PARTNERSHIP ASSETS. Title to Partnership
assets, whether real, personal or mixed and whether tangible or intangible,
shall be deemed to be owned by the Partnership as an entity, and no Partner,
individually or collectively with other Partners or Persons, shall have any
ownership interest in such Partnership assets or any portion thereof. Title to
any or all of the Partnership assets may be held in the name of the Partnership,
the General Partner or one or more nominees, as the General Partner may
determine, including Affiliates of the General Partner. The General Partner
hereby declares and warrants that any Partnership assets for which legal title
is held in the name of the General Partner or any nominee or Affiliate of the
General Partner shall be held by the General Partner for the use and benefit of
the Partnership in accordance with the provisions of this Agreement; PROVIDED,
HOWEVER, that the General Partner shall use its best efforts to cause beneficial
and record title to such assets to be vested in the Partnership as soon as
reasonably practicable. All Partnership assets shall be recorded as the
property of the Partnership in its books and records, irrespective of the name
in which legal title to such Partnership assets is held.
Section 7.11 RELIANCE BY THIRD PARTIES. Notwithstanding anything to
the contrary in this Agreement, any Person dealing with the Partnership shall be
entitled to assume that the General Partner has full power and authority,
without the consent or approval of any other Partner or Person, to encumber,
sell or otherwise use
40
in any manner any and all assets of the Partnership and to enter into any
contracts on behalf of the Partnership, and take any and all actions on
behalf of the Partnership, and such Person shall be entitled to deal with the
General Partner as if it were the Partnership's sole party in interest, both
legally and beneficially. Each Limited Partner hereby waives any and all
defenses or other remedies that may be available against such Person to
contest, negate or disaffirm any action of the General Partner in connection
with any such dealing. In no event shall any Person dealing with 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
expediency of any act or action of the General Partner or its
representatives. Each and every certificate, document or other instrument
executed on behalf of the Partnership by the General Partner or its
representatives shall be conclusive evidence in favor of any and every Person
relying thereon or claiming thereunder that (i) at the time of the execution
and delivery of such certificate, document or instrument, this Agreement was
in full force and effect, (ii) the Person executing and delivering such
certificate, document or instrument was duly authorized and empowered to do
so for and on behalf of the Partnership and (iii) such certificate, document
or instrument was duly executed and delivered in accordance with the terms
and provisions of this Agreement and is binding upon the Partnership.
ARTICLE 8
RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS
Section 8.1 LIMITATION OF LIABILITY. The Limited Partners shall have
no liability under this Agreement except as expressly provided in this Agreement
(including, without limitation, Section 10.4 hereof) 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,
member, employee, partner, agent or trustee of the General Partner, the
Partnership or any of their Affiliates, in their capacity as such) shall take
part in the operations, management or control (within the meaning of the Act) of
the Partnership's business, transact any business in the Partnership's name or
have the power to sign documents for or otherwise bind the Partnership. The
transaction of any such business by the General Partner, any of its Affiliates
or any officer, director, member, employee, partner, agent, representative, or
trustee of the General Partner, the Partnership or any of their Affiliates, in
their capacity as such, shall not affect, impair or eliminate the limitations on
the liability of the Limited Partners or Assignees under this Agreement.
Section 8.3 OUTSIDE ACTIVITIES OF LIMITED PARTNERS. Subject to any
agreements entered into pursuant to Section 7.6.D hereof and any other
agreements entered into by a Limited Partner or its Affiliates with the General
Partner, the Partnership or a Subsidiary (including, without limitation, any
employment agreement), any Limited Partner and any Assignee, 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 that are in direct or indirect competition with the Partnership
or that are enhanced by the activities of the Partnership. Neither the
Partnership nor any Partners shall have any rights by virtue of this Agreement
in any business ventures of any Limited Partner or Assignee. Subject to such
agreements, none of the Limited Partners nor any other Person shall have any
rights by virtue of this Agreement or the partnership relationship established
hereby in any business ventures of any other Person (other than the General
Partner, to the extent expressly provided herein), and such Person shall have no
obligation pursuant to this Agreement, subject to Section 7.6.D hereof and any
other agreements entered into by a Limited Partner or its Affiliates with the
General Partner, the Partnership or a Subsidiary, to offer any interest in any
such business ventures to the Partnership, any Limited Partner or any such other
Person, even if such
41
opportunity is of a character that, if presented to the Partnership, any
Limited Partner or such other Person, could be taken by such Person.
Section 8.4 RETURN OF CAPITAL. Except pursuant to the rights of
Redemption set forth in Section 8.6 hereof, 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. Except to the extent provided in Article 6
hereof or otherwise expressly provided in this Agreement, no Limited Partner or
Assignee shall have priority over any other Limited Partner or Assignee either
as to the return of Capital Contributions or as to profits, losses or
distributions.
Section 8.5 RIGHTS OF LIMITED PARTNERS RELATING TO THE PARTNERSHIP.
A. In addition to other rights provided by this Agreement or by the
Act, and except as limited by Section 8.5.C hereof, each Limited Partner shall
have the right, for a purpose reasonably related to such Limited Partner's
interest as a limited partner in the Partnership, upon written demand with a
statement of the purpose of such demand and at such Limited Partner's own
expense:
(1) to obtain a copy of (i) the most recent annual and quarterly
reports filed with the SEC by the Previous General Partner or the General
Partner pursuant to the Exchange Act and (ii) each report or other written
communication sent to the shareholders of the Previous General Partner;
(2) to obtain a copy of the Partnership's federal, state and
local income tax returns for each Fiscal Year;
(3) to obtain a current list of the name and last known
business, residence or mailing address of each Partner;
(4) to obtain a copy of this Agreement and the Certificate and
all amendments thereto, together with executed copies of all powers of
attorney pursuant to which this Agreement, the Certificate and all
amendments thereto have been executed; and
(5) to obtain true and full information regarding the amount of
cash and a description and statement of any other property or services
contributed by each Partner and that each Partner has agreed to contribute
in the future, and the date on which each became a Partner.
B. The Partnership shall notify any Limited Partner that is a
Qualifying Party, on request, of the then current Adjustment Factor or any
change made to the Adjustment Factor.
C. Notwithstanding any other provision of this Section 8.5, the
General Partner may keep confidential from the Limited Partners, for such period
of time as the General Partner determines in its sole and absolute discretion to
be reasonable, any information that (i) the General Partner believes to be in
the nature of trade secrets or other information the disclosure of which the
General Partner in good faith believes is not in the best interests of the
Partnership or the General Partner or (ii) the Partnership or the General
Partner is required by law or by agreements with unaffiliated third parties to
keep confidential.
42
Section 8.6 REDEMPTION RIGHTS OF QUALIFYING PARTIES.
A. After the first Twelve-Month Period, a Qualifying Party, but no
other Limited Partner or Assignee, shall have the right (subject to the terms
and conditions set forth herein) to require the Partnership to redeem all or a
portion of the Redeemable Units held by such Tendering Party (such Redeemable
Units being hereafter "TENDERED UNITS") in exchange (a "REDEMPTION") for the
Cash Amount payable on the Specified Redemption Date. Any Redemption shall be
exercised pursuant to a Notice of Redemption delivered to the General Partner by
the Qualifying Party when exercising the Redemption right (the "TENDERING
PARTY"). The Partnership's obligation to effect a Redemption, however, shall
not arise or be binding against the Partnership (i) until and unless there has
been a Declination and (ii) before the Business Day following the Cut-Off Date.
Regardless of the binding or non-binding nature of a pending Redemption, a
Tendering Party shall have no right to receive distributions with respect to any
Tendered Units (other than the Cash Amount) paid after delivery of the Notice of
Redemption, whether or not the Partnership Record Date for such distribution
precedes or coincides with such delivery of the Notice of Redemption. In the
event of a Redemption, the Cash Amount shall be delivered as a certified check
payable to the Tendering Party or, in the General Partner's sole and absolute
discretion, in immediately available funds.
B. Notwithstanding the provisions of Section 8.6.A hereof, on or
before the close of business on the Cut-Off Date, the General Partner may, in
its sole and absolute discretion but subject to the Ownership Limit and the
transfer restrictions and other limitations of the Charter, elect to cause the
Previous General Partner to acquire some or all (such percentage being referred
to as the "APPLICABLE PERCENTAGE") of the Tendered Units from the Tendering
Party in exchange for REIT Shares. In making such election to cause the
Previous General Partner to acquire Tendered Units, the General Partner shall
act in a fair, equitable and reasonable manner that neither prefers one group or
class of Qualifying Parties over another nor discriminates against a group or
class of Qualifying Parties. If the General Partner so elects, on the Specified
Redemption Date the Tendering Party shall sell such number of the Tendered Units
to the Previous General Partner in exchange for a number of REIT Shares equal to
the product of the REIT Shares Amount and the Applicable Percentage. The
Tendering Party shall submit (i) such information, certification or affidavit as
the Previous General Partner may reasonably require in connection with the
application of the Ownership Limit and other restrictions and limitations of the
Charter to any such acquisition and (ii) such written representations,
investment letters, legal opinions or other instruments necessary, in the
Previous General Partner's view, to effect compliance with the Securities Act.
In the event of a purchase of the Tendered Units by the Previous General Partner
pursuant to this Section 8.6.B, the Tendering Party shall no longer have the
right to cause the Partnership to effect a Redemption of such Tendered Units,
and, upon notice to the Tendering Party by the General Partner or the Previous
General Partner, given on or before the close of business on the Cut-Off Date,
that the Previous General Partner has elected to acquire some or all of the
Tendered Units pursuant to this Section 8.6.B, the obligation of the Partnership
to effect a Redemption of the Tendered Units as to which the General Partner's
notice relates shall not accrue or arise. The product of the Applicable
Percentage and the REIT Shares Amount, if applicable, shall be delivered by the
Previous General Partner as duly authorized, validly issued, fully paid and
accessible REIT Shares and, if applicable, Rights, free of any pledge, lien,
encumbrance or restriction, other than the Ownership Limit and other
restrictions provided in the Charter, the Bylaws of the Previous General
Partner, the Securities Act and relevant state securities or "blue sky" laws.
Neither any Tendering Party whose Tendered Units are acquired by the Previous
General Partner pursuant to this Section 8.6.B, any Partner, any Assignee nor
any other interested Person shall have any right to require or cause the
Previous General Partner or the General Partner to register, qualify or list any
REIT Shares owned or held by such Person, whether or not such REIT Shares are
issued pursuant to this Section 8.6.B, with the SEC, with any state securities
commissioner, department or agency, under the Securities Act or the Exchange Act
or with any stock exchange; PROVIDED, HOWEVER, that this limitation shall not be
in derogation of any registration or similar rights
43
granted pursuant to any other written agreement between the Previous General
Partner and any such Person. Notwithstanding any delay in such delivery, the
Tendering Party shall be deemed the owner of such REIT Shares and Rights for
all purposes, including, without limitation, rights to vote or consent,
receive dividends, and exercise rights, as of the Specified Redemption Date.
REIT Shares issued upon an acquisition of the Tendered Units by the Previous
General Partner pursuant to this Section 8.6.B may contain such legends
regarding restrictions under the Securities Act and applicable state
securities laws as the Previous General Partner in good faith determines to
be necessary or advisable in order to ensure compliance with such laws.
C. Notwithstanding the provisions of Section 8.6.A and 8.6.B hereof,
the Tendering Parties (i) where the Redemption would consist of less than all
the Partnership Common Units held by Partners other than the General Partner and
the Special Limited Partner, shall not be entitled to elect or effect a
Redemption to the extent that the aggregate Percentage Interests of the Limited
Partners (other than the Special Limited Partner) would be reduced, as a result
of the Redemption (or the acquisition of the Tendered Units by the Previous
General Partner pursuant to Section 8.6.B hereof), to less than one percent (1%)
and (ii) shall have no rights under this Agreement that would otherwise be
prohibited under the Charter. To the extent that any attempted Redemption or
acquisition of the Tendered Units by the Previous General Partner pursuant to
Section 8.6.B hereof would be in violation of this Section 8.6.C, it shall be
null and void ab initio, and the Tendering Party shall not acquire any rights or
economic interests in REIT Shares otherwise issuable by the Previous General
Partner under Section 8.6.B hereof.
D. In the event that the Previous General Partner declines or fails
to exercise its purchase rights pursuant to Section 8.6.B hereof following
receipt of a Notice of Redemption (a "DECLINATION"):
(1) The Previous General Partner or the General Partner shall
give notice of such Declination to the Tendering Party on or before
the close of business on the Cut-Off Date. The failure of both the
Previous General Partner and the General Partner to give notice of
such Declination by the close of business on the Cut-Off Date shall
itself constitute a Declination.
(2) The Partnership may elect to raise funds for the payment of
the Cash Amount either (a) by requiring that the General Partner
contribute such funds from the proceeds of a registered public
offering (a "PUBLIC OFFERING FUNDING") by the Previous General Partner
of a number of REIT Shares ("REGISTRABLE SHARES") equal to the REIT
Shares Amount with respect to the Tendered Units or (b) from any other
sources (including, but not limited to, the sale of any Property and
the incurrence of additional Debt) available to the Partnership.
(3) Promptly upon the General Partner's receipt of the Notice of
Redemption and the Previous General Partner or the General Partner
giving notice of the Previous General Partner's Declination, the
General Partner shall give notice (a "SINGLE FUNDING NOTICE") to all
Qualifying Parties then holding a Partnership Interest (or an interest
therein) and having Redemption rights pursuant to this Section 8.6 and
require that all such Qualifying Parties elect whether or not to
effect a Redemption of their Partnership Common Units to be funded
through such Public Offering Funding. In the event that any such
Qualifying Party elects to effect such a Redemption, it shall give
notice thereof and of the number of Partnership Common Units to be
made subject thereon in writing to the General Partner within ten (10)
Business Days after receipt of the Single Funding Notice, and such
Qualifying Party shall be treated as a Tendering Party for all
purposes of this Section 8.6. In the event that a Qualifying Party
does not so elect, it shall be deemed to have waived its right to
effect a Redemption for the current Twelve-Month Period;
44
PROVIDED, HOWEVER, that the Previous General Partner shall not be
required to acquire Partnership Common Units pursuant to this
Section 8.6.D more than twice within a Twelve-Month Period.
Any proceeds from a Public Offering Funding that are in excess of the Cash
Amount shall be for the sole benefit of the Previous General Partner and/or the
General Partner. The General Partner and/or the Special Limited Partner shall
make a Capital Contribution of such amounts to the Partnership for an additional
General Partner Interest and/or Limited Partner Interest. Any such contribution
shall entitle the General Partner and the Special Limited Partner, as the case
may be, to an equitable Percentage Interest adjustment.
E. Notwithstanding the provisions of Section 8.6.B hereof, the
Previous General Partner shall not, under any circumstances, elect to acquire
Tendered Units in exchange for the REIT Shares Amount if such exchange would be
prohibited under the Charter.
F. Notwithstanding anything herein to the contrary (but subject to
Section 8.6.C hereof), with respect to any Redemption (or any tender of
Redeemable Units for Redemption if the Tendered Units are acquired by the
Previous General Partner pursuant to Section 8.6.B hereof) pursuant to this
Section 8.6:
(1) All Partnership Common Units acquired by the Previous
General Partner pursuant to Section 8.6.B hereof shall be
contributed by the Previous General Partner to either or both of
the General Partner and the Special Limited Partner in such
proportions as the Previous General Partner, the General Partner
and the Special Limited Partner shall determine. Any Partnership
Common Units so contributed to the General Partner shall
automatically, and without further action required, be converted
into and deemed to be a General Partner Interest comprised of the
same number of Partnership Common Units. Any Partnership Common
Units so contributed to the Special Limited Partner shall remain
outstanding.
(2) Subject to the Ownership Limit, no Tendering Party may
effect a Redemption for less than five hundred (500) Redeemable
Units or, if such Tendering Party holds (as a Limited Partner or,
economically, as an Assignee) less than five hundred (500)
Redeemable Units, all of the Redeemable Units held by such
Tendering Party.
(3) Each Tendering Party (a) may effect a Redemption only
once in each fiscal quarter of a Twelve-Month Period and (b) may
not effect a Redemption during the period after the Partnership
Record Date with respect to a distribution and before the record
date established by the Previous General Partner for a
distribution to its shareholders of some or all of its portion of
such Partnership distribution.
(4) Notwithstanding anything herein to the contrary, with
respect to any Redemption or acquisition of Tendered Units by the
Previous General Partner pursuant to Section 8.6.B hereof, in the
event that the Previous General Partner or the General Partner
gives notice to all Limited Partners (but excluding any
Assignees) then owning Partnership Interests (a "PRIMARY OFFERING
NOTICE") that the Previous General Partner desires to effect a
primary offering of its equity securities then, unless the
Previous General Partner and the General Partner otherwise
consent, commencement of the actions denoted in Section 8.6.E
hereof as to a Public Offering Funding with respect to any
45
Notice of Redemption thereafter received, whether or not the
Tendering Party is a Limited Partner, may be delayed until the
earlier of (a) the completion of the primary offering or (b) ninety
(90) days following the giving of the Primary Offering Notice.
(5) Without the Consent of the Previous General Partner, no
Tendering Party may effect a Redemption within ninety (90) days
following the closing of any prior Public Offering Funding.
(6) The consummation of such Redemption (or an acquisition
of Tendered Units by the Previous General Partner pursuant to
Section 8.6.B hereof, as the case may be) shall be subject to the
expiration or termination of the applicable waiting period, if
any, under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended.
(7) The Tendering Party shall continue to own (subject, in
the case of an Assignee, to the provision of Section 11.5 hereof)
all Redeemable Units subject to any Redemption, and be treated as
a Limited Partner or an Assignee, as applicable, with respect to
such Redeemable Units for all purposes of this Agreement, until
such Redeemable Units are either paid for by the Partnership
pursuant to Section 8.6.A hereof or transferred to the Previous
General Partner (or directly to the General Partner or Special
Limited Partner) and paid for, by the issuance of the REIT
Shares, pursuant to Section 8.6.B hereof on the Specified
Redemption Date. Until a Specified Redemption Date and an
acquisition of the Tendered Units by the Previous General Partner
pursuant to Section 8.6.B hereof, the Tendering Party shall have
no rights as a shareholder of the Previous General Partner with
respect to the REIT Shares issuable in connection with such
acquisition.
For purposes of determining compliance with the restrictions set forth in this
Section 8.6.F, all Partnership Common Units beneficially owned by a Related
Party of a Tendering Party shall be considered to be owned or held by such
Tendering Party.
G. In connection with an exercise of Redemption rights pursuant to
this Section 8.6, the Tendering Party shall submit the following to the General
Partner, in addition to the Notice of Redemption:
(1) A written affidavit, dated the same date as the Notice
of Redemption, (a) disclosing the actual and constructive
ownership, as determined for purposes of Code Sections 856(a)(6)
and 856(h), of REIT Shares by (i) such Tendering Party and (ii)
any Related Party and (b) representing that, after giving effect
to the Redemption or an acquisition of the Tendered Units by the
Previous General Partner pursuant to Section 8.6.B hereof,
neither the Tendering Party nor any Related Party will own REIT
Shares in excess of the Ownership Limit;
(2) A written representation that neither the Tendering
Party nor any Related Party has any intention to acquire any
additional REIT Shares prior to the closing of the Redemption or
an acquisition of the Tendered Units by the Previous General
Partner pursuant to Section 8.6.B hereof on the Specified
Redemption Date; and
46
(3) An undertaking to certify, at and as a condition to the
closing of (i) the Redemption or (ii) the acquisition of the
Tendered Units by the Previous General Partner pursuant to
Section 8.6.B hereof on the Specified Redemption Date, that
either (a) the actual and constructive ownership of REIT Shares
by the Tendering Party and any Related Party remain unchanged
from that disclosed in the affidavit required by Section 8.6.G(1)
or (b) after giving effect to the Redemption or an acquisition of
the Tendered Units by the Previous General Partner pursuant to
Section 8.6.B hereof, neither the Tendering Party nor any Related
Party shall own REIT Shares in violation of the Ownership Limit.
Section 8.7 PARTNERSHIP RIGHT TO CALL LIMITED PARTNER INTERESTS.
Notwithstanding any other provision of this Agreement, on and after the date on
which the aggregate Percentage Interests of the Limited Partners (other than the
Special Limited Partner) are less than one percent (1%), the Partnership shall
have the right, but not the obligation, from time to time and at any time to
redeem any and all outstanding Limited Partner Interests (other than the Special
Limited Partner's Limited Partner Interest) by treating any Limited Partner as a
Tendering Party who has delivered a Notice of Redemption pursuant to Section 8.6
hereof for the amount of Partnership Common Units to be specified by the General
Partner, in its sole and absolute discretion, by notice to such Limited Partner
that the Partnership has elected to exercise its rights under this Section 8.7.
Such notice given by the General Partner to a Limited Partner pursuant to this
Section 8.7 shall be treated as if it were a Notice of Redemption delivered to
the General Partner by such Limited Partner. For purposes of this Section 8.7,
(a) any Limited Partner (whether or not otherwise a Qualifying Party) may, in
the General Partner's sole and absolute discretion, be treated as a Qualifying
Party that is a Tendering Party and (b) the provisions of Sections 8.6.C(1),
8.6.F(2), 8.6.F(3) and 8.6.F(5) hereof shall not apply, but the remainder of
Section 8.6 hereof shall apply, MUTATIS MUTANDIS.
ARTICLE 9
BOOKS, RECORDS, ACCOUNTING AND REPORTS
Section 9.1 RECORDS AND ACCOUNTING.
A. The General Partner shall keep or cause to be kept at the
principal office of the Partnership those records and documents required to be
maintained by the Act and other books and records deemed by the General Partner
to be appropriate 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 8.5.A or Section 9.3 hereof. Any records maintained by or on behalf
of the Partnership in the regular course of its business may be kept on, or be
in the form for, 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.
B. 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, or on such other basis as the General Partner
determines to be necessary or appropriate. To the extent permitted by sound
accounting practices and principles, the Partnership, the General Partner and
the Previous General Partner may operate with integrated or consolidated
accounting records, operations and principles.
Section 9.2 FISCAL YEAR. The Fiscal Year of the Partnership shall be
the calendar year.
47
Section 9.3 REPORTS.
A. As soon as practicable, but in no event later than one hundred
five (105) days after the close of each Fiscal Year, the General Partner shall
cause to be mailed to each Limited Partner, of record as of the close of the
Fiscal Year, an annual report containing financial statements of the
Partnership, or of the Previous General Partner if such statements are prepared
solely on a consolidated basis with the Previous General Partner, for such
Fiscal 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.
B. As soon as practicable, but in no event later than one hundred
five (105) days after the close of each calendar quarter (except the last
calendar quarter of each year), the General Partner shall cause to be mailed to
each Limited Partner, of record as of the last day of the calendar quarter, a
report containing unaudited financial statements of the Partnership, or of the
Previous General Partner if such statements are prepared solely on a
consolidated basis with the Previous General Partner, and such other information
as may be required by applicable law or regulation or as the General Partner
determines to be appropriate. At the request of any Limited Partner, the
General Partner shall provide access to the books, records and workpapers upon
which the reports required by this Section 9.3 are based, to the extent required
by the Act.
ARTICLE 10
TAX MATTERS
Section 10.1 PREPARATION OF TAX RETURNS. The General Partner shall
arrange for the preparation and timely filing of all returns with respect to
Partnership income, gains, deductions, losses and other items required of the
Partnership for federal and state income tax purposes and shall use all
reasonable effort 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. The Limited Partners shall
promptly provide the General Partner with such information relating to the
Contributed Properties, including tax basis and other relevant information, as
may be reasonably requested by the General Partner from time to time.
Section 10.2 TAX ELECTIONS. Except as otherwise provided herein, the
General Partner shall, in its sole and absolute discretion, determine whether to
make any available election pursuant to the Code, including, but not limited to,
the election under Code Section 754 and the election to use the "recurring item"
method of accounting provided under Code Section 461(h) with respect to property
taxes imposed on the Partnership's Properties; PROVIDED, HOWEVER, that, if the
"recurring item" method of accounting is elected with respect to such property
taxes, the Partnership shall pay the applicable property taxes prior to the date
provided in Code Section 461(h) for purposes of determining economic
performance. The General Partner shall have the right to seek to revoke any
such election (including, without limitation, any election under Code Sections
461(h) and 754) 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. The General Partner shall be the "tax matters partner" of the
Partnership for federal income tax purposes. 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 in
addition to any reimbursement pursuant to Section 7.4
48
hereof. Nothing herein shall be construed to restrict the Partnership from
engaging an accounting firm to assist the tax matters partner in discharging
its duties hereunder, so long as the compensation paid by the Partnership for
such services is reasonable. At the request of any Limited Partner, the
General Partner agrees to consult with such Limited Partner with respect to
the preparation and filing of any returns and with respect to any subsequent
audit or litigation relating to such returns; PROVIDED, HOWEVER, that the
filing of such returns shall be in the sole and absolute discretion of the
General Partner.
B. The tax matters partner is authorized, but not required:
(1) to enter into any settlement with the IRS with respect to
any administrative or judicial proceedings for the adjustment of
Partnership items required to be taken into account by a Partner for income
tax purposes (such administrative proceedings being referred to as a "TAX
AUDIT" and such judicial proceedings being referred to as "JUDICIAL
REVIEW"), and in the settlement agreement the tax matters partner may
expressly state that such agreement shall bind all Partners, except that
such settlement agreement shall not bind any Partner (i) who (within the
time prescribed pursuant to the Code and Regulations) files a statement
with the IRS providing that the tax matters partner shall not have the
authority to enter into a settlement agreement on behalf of such Partner or
(ii) who is a "notice partner" (as defined in Code Section 6231) or a
member of a "notice group" (as defined in Code Section 6223(b)(2));
(2) in the event that a notice of a final administrative
adjustment at the Partnership level of any item required to be taken into
account by a Partner for tax purposes (a "FINAL ADJUSTMENT") is mailed to
the tax matters partner, to seek judicial review of such final adjustment,
including the filing of a petition for readjustment with the United States
Tax Court or the United States Claims Court, or the filing of a complaint
for refund with the District Court of the United States for the district in
which the Partnership's principal place of business is located;
(3) to intervene in any action brought by any other Partner for
judicial review of a final adjustment;
(4) to file a request for an administrative adjustment with the
IRS at any time and, if any part of such request is not allowed by the IRS,
to file an appropriate pleading (petition or complaint) for judicial review
with respect to such request;
(5) to enter into an agreement with the IRS to extend the period
for assessing any tax that 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 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 hereof shall be fully applicable to the tax matters partner in
its capacity as such.
Section 10.4 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
49
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 Code
Section 1441, Code Section 1442, Code Section 1445 or Code Section 1446. 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 that 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 that would, but for such payment, be
distributed to the 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 10.4. In the event that a Limited Partner
fails to pay any amounts owed to the Partnership pursuant to this Section
10.4 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) 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 in order to perfect or
enforce the security interest created hereunder.
ARTICLE 11
TRANSFERS AND WITHDRAWALS
Section 11.1 TRANSFER.
A. No part of the interest of a Partner shall be subject to the
claims of any creditor, to any spouse for alimony or support, or to legal
process, and may not be voluntarily or involuntarily alienated or encumbered
except as may be specifically provided for in this Agreement.
B. No Partnership Interest shall be Transferred, in whole or in
part, except in accordance with the terms and conditions set forth in this
Article 11. Any Transfer or purported Transfer of a Partnership Interest not
made in accordance with this Article 11 shall be null and void ab initio.
C. Notwithstanding the other provisions of this Article 11 (other
than Section 11.6.D hereof), the Partnership Interests of the General Partner
and the Special Limited Partner may be Transferred, in whole or in part, at any
time or from time to time, to or among the Previous General Partner, the General
Partner, the Special Limited Partner, and any other Person that is, at the time
of such Transfer, a "QUALIFIED REIT SUBSIDIARY" (within the meaning of Code
Section 856(i)(2)) with respect to the Previous General Partner. Any transferee
of the entire General Partner Interest pursuant to this Section 11.1.C shall
automatically become, without further action or Consent of any Limited Partners,
the sole general partner of the Partnership, subject to all the rights,
privileges, duties and obligations under this Agreement and the Act relating to
a general partner. Any transferee of a Limited Partner Interest pursuant to
this Section 11.1.C shall automatically become, without further action or
Consent of any Limited Partners, a Substituted Limited Partner. Upon any
Transfer permitted by this Section 11.1.C, the
50
transferor Partner shall be relieved of all its obligations under this
Agreement. The provisions of Section 11.2.B (other than the last sentence
thereof), 11.3, 11.4.A and 11.5 hereof shall not apply to any Transfer
permitted by this Section 11.1.C.
Section 11.2 TRANSFER OF GENERAL PARTNER'S PARTNERSHIP INTEREST.
A. The General Partner may not Transfer any of its General Partner
Interest or withdraw from the Partnership except as provided in Sections 11.2.B
and 11.2.C hereof.
B. The General Partner shall not withdraw from the Partnership and
shall not Transfer all or any portion of its interest in the Partnership
(whether by sale, disposition, statutory merger or consolidation, liquidation or
otherwise) without the Consent of the Limited Partners, which Consent may be
given or withheld in the sole and absolute discretion of the Limited Partners.
Upon any Transfer of such a Partnership Interest pursuant to the Consent of the
Limited Partners and otherwise in accordance with the provisions of this Section
11.2.B, the transferee shall become a successor General Partner for all purposes
herein, and shall be vested with the powers and rights of the transferor General
Partner, and shall be liable for all obligations and responsible for all duties
of the General Partner, once such transferee has executed such instruments as
may be necessary to effectuate such admission and to confirm the agreement of
such transferee to be bound by all the terms and provisions of this Agreement
with respect to the Partnership Interest so acquired. It is a condition to any
Transfer otherwise permitted hereunder that the transferee assumes, by operation
of law or express agreement, all of the obligations of the transferor General
Partner under this Agreement with respect to such Transferred Partnership
Interest, and such Transfer shall relieve the transferor General Partner of its
obligations under this Agreement without the Consent of the Limited Partners.
In the event that the General Partner withdraws from the Partnership, in
violation of this Agreement or otherwise, or otherwise dissolves or terminates,
or upon the bankruptcy of the General Partner, a Majority in Interest of the
Limited Partners may elect to continue the Partnership business by selecting a
successor General Partner in accordance with the Act.
C. The General Partner may merge with another entity if immediately
after such merger substantially all of the assets of the surviving entity, other
than the General Partner Interest held by the General Partner, are contributed
to the Partnership as a Capital Contribution in exchange for Partnership Units.
Section 11.3 LIMITED PARTNERS' RIGHTS TO TRANSFER.
A. GENERAL. Prior to the end of the first Twelve-Month Period, no
Limited Partner shall Transfer all or any portion of its Partnership Interest to
any transferee without the Consent of the General Partner, which Consent may be
withheld in its sole and absolute discretion; PROVIDED, HOWEVER, that any
Limited Partner may, at any time, without the consent of the General Partner,
(i) Transfer all or part of its Partnership Interest to any Designated Party,
any Family Member, any Controlled Entity or any Affiliate, provided that the
transferee is, in any such case, a Qualified Transferee, or (ii) pledge (a
"PLEDGE") all or any portion of its Partnership Interest to a lending
institution, that 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 (any Transfer or
Pledge permitted by this proviso is hereinafter referred to as a "PERMITTED
TRANSFER"). After such first Twelve-Month Period, each Limited Partner, and
each transferee of Partnership Units or Assignee pursuant to a Permitted
Transfer, shall have the right to Transfer all or any portion of its Partnership
Interest to any Person, subject to the provisions of Section 11.6 hereof and to
satisfaction of each of the following conditions:
51
(1) 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) Business 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) Business Days after giving notice of such election;
PROVIDED, HOWEVER, that in the event that the proposed terms involve a
purchase for cash, the General Partner may at its election deliver in lieu
of all or any portion of such cash a note payable to the Transferring
Partner at a date as soon as reasonably practicable, but in no event later
than one hundred eighty (180) days after such purchase, and bearing
interest at an annual rate equal to the total dividends declared with
respect to one (1) REIT Share for the four (4) preceding fiscal quarters of
the General Partner, DIVIDED BY the Value as of the closing of such
purchase; PROVIDED, FURTHER, that such closing may be deferred to the
extent necessary to effect compliance with the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, if applicable, and any other applicable
requirements of law. If it does not so elect, the Transferring Partner may
Transfer such Partnership Units to a third party, on terms no more
favorable to the transferee than the proposed terms, subject to the other
conditions of this Section 11.3.
(2) QUALIFIED TRANSFEREE. Any Transfer of a Partnership
Interest shall be made only to a single Qualified Transferee; PROVIDED,
HOWEVER, that, for such purposes, all Qualified Transferees that are
Affiliates, or that comprise investment accounts or funds managed by a
single Qualified Transferee and its Affiliates, shall be considered
together to be a single Qualified Transferee; PROVIDED, FURTHER, that each
Transfer meeting the minimum Transfer restriction of Section 11.3.A(3)
hereof may be to a separate Qualified Transferee.
(3) MINIMUM TRANSFER RESTRICTION. Any Transferring Partner must
Transfer not less than the lesser of (i) the greater of five hundred (500)
Partnership Units or one-third (1/3) of the number of Partnership Units
owned by such Partner as of the Effective Date or (ii) all of the remaining
Partnership Units owned by such Transferring Partner; PROVIDED, HOWEVER,
that, for purposes of determining compliance with the foregoing
restriction, all Partnership Units owned by Affiliates of a Limited Partner
shall be considered to be owned by such Limited Partner.
(4) TRANSFEREE AGREEMENT TO EFFECT A REDEMPTION. Any proposed
transferee shall deliver to the General Partner a written agreement
reasonably satisfactory to the General Partner to the effect that the
transferee will, within six (6) months after consummation of a Partnership
Common Units Transfer, tender its Partnership Common Units for Redemption
in accordance with the terms of the Redemption rights provided in Section
8.6 hereof.
(5) NO FURTHER TRANSFERS. The transferee (other than a
Designated Party) shall not be permitted to effect any further Transfer of
the Partnership Units, other than to the General Partner.
(6) EXCEPTION FOR PERMITTED TRANSFERS. The conditions of
Sections 11.3.A(1) through 11.3.A(5) hereof shall not apply in the case of
a Permitted Transfer.
It is a condition to any Transfer otherwise permitted hereunder (whether or not
such Transfer is effected during or after the first Twelve-Month Period) 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
52
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 sole and absolute discretion. Notwithstanding the foregoing, any
transferee of any Transferred Partnership Interest shall be subject to any
and all ownership limitations (including, without limitation, the Ownership
Limit) contained in the Charter that may limit or restrict such transferee's
ability to exercise its Redemption rights, including, without limitation, the
Ownership Limit. 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 Substituted Limited Partner, no transferee,
whether by a voluntary Transfer, by operation of law or otherwise, shall have
any rights hereunder, other than the rights of an Assignee as provided in
Section 11.5 hereof.
B. INCAPACITY. 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. OPINION OF COUNSEL. In connection with any Transfer of a Limited
Partner Interest, the General Partner shall have the right to receive an opinion
of counsel reasonably satisfactory to it to the effect that the proposed
Transfer may be effected without registration under the Securities Act and will
not otherwise violate any federal or state securities laws or regulations
applicable to the Partnership or the Partnership Interests Transferred. If, in
the opinion of such counsel, such Transfer would require the filing of a
registration statement under the Securities Act or would otherwise violate any
federal or state securities laws or regulations applicable to the Partnership or
the Partnership Units, the General Partner may prohibit any Transfer otherwise
permitted under this Section 11.3 by a Limited Partner of Partnership Interests.
D. ADVERSE TAX CONSEQUENCES. No Transfer by a Limited Partner of
its Partnership Interests (including any Redemption, any other acquisition of
Partnership Units by the General Partner or any acquisition of Partnership Units
by the Partnership) may be made to any person if (i) in the opinion of legal
counsel for the Partnership, it would result in the Partnership being treated as
an association taxable as a corporation, or (ii) such Transfer is effectuated
through an "established securities market" or a "secondary market (or the
substantial equivalent thereof)" within the meaning of Code Section 7704.
Section 11.4 SUBSTITUTED LIMITED PARTNERS.
A. No Limited Partner shall have the right to substitute a
transferee (including any Designated Party or other transferees pursuant to
Transfers permitted by Section 11.3 hereof) as a Limited Partner in its place.
A transferee (including, but not limited to, any Designated Party) of the
interest of a Limited Partner may be admitted as a Substituted Limited Partner
only with the Consent of the General Partner, which Consent may be given or
withheld by the General Partner in its sole and absolute discretion. The
failure or refusal by the General Partner 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 the General Partner. Subject to the
foregoing, an Assignee shall not be admitted as a Substituted Limited Partner
until and unless it furnishes to the General Partner (i) evidence of acceptance,
in form and substance satisfactory to the General Partner, of all the terms,
conditions and applicable obligations of this Agreement, (ii) a counterpart
signature page to this Agreement executed by such Assignee and (iii) such other
documents and instruments as may be required or advisable, in the sole and
absolute discretion of the General Partner, to effect such Assignee's admission
as a Substituted Limited Partner.
53
B. A transferee who has been admitted as a Substituted Limited
Partner in accordance with this Article 11 shall have all the rights and
powers and be subject to all the restrictions and liabilities of a Limited
Partner under this Agreement.
C. Upon the admission of a Substituted Limited Partner, the
General Partner shall amend EXHIBIT A to reflect the name, address and number
of Partnership Units of such Substituted Limited Partner and to eliminate or
adjust, if necessary, the name, address and number of Partnership Units 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 hereof as a Substituted Limited Partner, as
described in Section 11.4 hereof, 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 and other items of income, gain, loss,
deduction and credit of the Partnership attributable to the Partnership Units
assigned to such transferee and the rights to Transfer the Partnership Units
provided in this Article 11, but shall not be deemed to be a holder of
Partnership Units for any other purpose under this Agreement (other than as
expressly provided in Section 8.6 hereof with respect to a Qualifying Party
that becomes a Tendering Party), and shall not be entitled to effect a
Consent or vote with respect to such Partnership Units on any matter
presented to the Limited Partners for approval (such right to Consent or
vote, to the extent provided in this Agreement or under the Act, fully
remaining with the transferor Limited Partner). In the event that any such
transferee desires to make a further assignment of any such Partnership
Units, such transferee shall be subject to all the provisions of this Article
11 to the same extent and in the same manner as any Limited Partner desiring
to make an assignment of Partnership Units.
Section 11.6 GENERAL PROVISIONS.
A. No Limited Partner may withdraw from the Partnership other
than as a result of a permitted Transfer of all of such Limited Partner's
Partnership Units in accordance with this Article 11, with respect to which
the transferee becomes a Substituted Limited Partner, or pursuant to a
redemption (or acquisition by the Previous General Partner) of all of its
Partnership Units pursuant to a Redemption under Section 8.6 hereof and/or
pursuant to any Partnership Unit Designation.
B. Any Limited Partner who shall Transfer all of its Partnership
Units in a Transfer (i) permitted pursuant to this Article 11 where such
transferee was admitted as a Substituted Limited Partner, (ii) pursuant to
the exercise of its rights to effect a redemption of all of its Partnership
Units pursuant to a Redemption under Section 8.6 hereof and/or pursuant to
any Partnership Unit Designation or (iii) to the Previous General Partner or
the General Partner, whether or not pursuant to Section 8.6.B hereof, shall
cease to be a Limited Partner.
C. If any Partnership Unit is Transferred in compliance with the
provisions of this Article 11, or is redeemed by the Partnership, or acquired
by the Previous General Partner pursuant to Section 8.6 hereof, on any day
other than the first day of a Fiscal Year, then Net Income, Net Losses, each
item thereof and all other items of income, gain, loss, deduction and credit
attributable to such Partnership Unit for such Fiscal Year shall be allocated
to the transferor Partner or the Tendering Party, as the case may be, and, in
the case of a Transfer or assignment other than a Redemption, to the
transferee Partner (including, without limitation, the General Partner and
the Special Limited Partner as transferees of the Previous General Partner in
the case of an acquisition of Partnership Common Units pursuant to Section
8.6 hereof), by taking into account their varying interests during the Fiscal
Year in accordance with Code Section 706(d), using the "interim closing of
the books" method or another
54
permissible method selected by the General Partner. Solely for purposes of
making such allocations, each of such items for the calendar month in which a
Transfer occurs shall be allocated to the transferee Partner and none of such
items for the calendar month in which a Transfer or a Redemption occurs shall
be allocated to the transferor Partner or the Tendering Party, as the case
may be, if such Transfer occurs on or before the fifteenth (15th) day of the
month, otherwise such items shall be allocated to the transferor. All
distributions of Available Cash attributable to such 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 Tendering Party, as the case may be, and, in the case of a Transfer other
than a Redemption, all distributions of Available Cash thereafter
attributable to such Partnership Unit shall be made to the transferee Partner.
D. In addition to any other restrictions on Transfer herein
contained, in no event may any Transfer or assignment of a Partnership
Interest by any Partner (including any Redemption, any acquisition of
Partnership Units by the Previous General Partner or any other acquisition of
Partnership Units by the Partnership) be made (i) to any person or entity who
lacks the legal right, power or capacity to own a Partnership Interest; (ii)
in violation of applicable law; (iii) of any component portion of a
Partnership Interest, such as the Capital Account, or rights to
distributions, separate and apart from all other components of a Partnership
Interest; (iv) in the event that such Transfer would cause either (a) the
Previous General Partner to cease to comply with the REIT Requirements or (b)
the General Partner or the Special Limited Partner to cease to qualify as a
"qualified REIT subsidiary" (within the meaning of Code Section 856(i)(2);
(v) if such Transfer would, in the opinion of counsel to the Partnership or
the General Partner, cause a termination of the Partnership for federal or
state income tax purposes (except as a result of the Redemption (or
acquisition by the Previous General Partner) of all Partnership Common Units
held by all Limited Partners other than the Special Limited Partner); (vi) if
such Transfer would, in the opinion of legal counsel to the Partnership,
cause the Partnership to cease to be classified as a partnership for federal
income tax purposes (except as a result of the Redemption (or acquisition by
the Previous General Partner) of all Partnership Common Units held by all
Limited Partners other than the Special Limited Partner); (vii) if such
Transfer would cause the Partnership to become, with respect to any employee
benefit plan subject to Title I of ERISA, a "party-in-interest" (as defined
in ERISA Section 3(14)) or a "disqualified person" (as defined in Code
Section 4975(c)); (viii) if such Transfer would, in the opinion of legal
counsel to the Partnership, cause any portion of the assets of the
Partnership to constitute assets of any employee benefit plan pursuant to
Department of Labor Regulations Section 2510.2-101; (ix) if such Transfer
requires the registration of such Partnership Interest pursuant to any
applicable federal or state securities laws; (x) if such Transfer causes the
Partnership to become a "publicly traded partnership," as such term is
defined in Code Section 469(k)(2) or Code 7704(b); (xi) if such Transfer
would cause the Partnership to have more than five hundred (500) partners
(including as partners those persons indirectly owning an interest in the
Partnership through a partnership, limited liability company, subchapter S
corporation or grantor trust); (xii) if such Transfer causes the Partnership
(as opposed to the Previous General Partner or the General Partner) to become
a reporting company under the Exchange Act; or (xiii) 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.
ARTICLE 12
ADMISSION OF PARTNERS
Section 12.1 ADMISSION OF SUCCESSOR GENERAL PARTNER. A successor
to all of the General Partner's General Partner Interest pursuant to Section
11.2 hereof who is proposed to be admitted as a successor General Partner
shall be admitted to the Partnership as the General Partner, effective
immediately prior to such Transfer. Any such successor shall carry on the
business of the Partnership without dissolution. In each case, the admission
55
shall be subject to the successor General Partner executing and delivering to
the Partnership an acceptance of all of the terms and conditions of this
Agreement and such other documents or instruments as may be required to
effect the admission.
Section 12.2 ADMISSION OF ADDITIONAL LIMITED PARTNERS.
A. After the admission to the Partnership of an Original Limited
Partner on the date hereof, a Person (other than an existing Partner) who
makes a Capital Contribution to the Partnership in accordance with this
Agreement shall be admitted to the Partnership as an Additional Limited
Partner only upon furnishing to the General Partner (i) evidence of
acceptance, in form and substance satisfactory to the General Partner, of all
of the terms and conditions of this Agreement, including, without limitation,
the power of attorney granted in Section 2.4 hereof, (ii) a counterpart
signature page to this Agreement executed by such Person and (iii) such other
documents or instruments as may be required in the sole and absolute
discretion of the General Partner in order to effect such Person's admission
as an Additional Limited Partner.
B. Notwithstanding anything to the contrary in this Section 12.2,
no Person shall be admitted as an Additional Limited Partner without the
consent of the General Partner, which consent may be given or withheld in the
General Partner's sole and absolute discretion. The admission of any Person
as an Additional Limited Partner shall become effective on the date upon
which the name of such Person is recorded on the books and records of the
Partnership, following the consent of the General Partner to such admission.
C. If any Additional Limited Partner is admitted to the
Partnership on any day other than the first day of a Fiscal Year, then Net
Income, Net Losses, each item thereof and all other items of income, gain,
loss, deduction and credit allocable among Partners and Assignees for such
Fiscal Year shall be allocated among such Additional Limited Partner and all
other Partners and Assignees by taking into account their varying interests
during the Fiscal Year in accordance with Code Section 706(d), using the
"interim closing of the books" method or another permissible method 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, in accordance with the
principles described in Section 11.6.C hereof. 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 2.4 hereof.
Section 12.4 ADMISSION OF INITIAL LIMITED PARTNERS. The Persons
listed on EXHIBIT A as limited partners of the Partnership shall be admitted
to the Partnership as Limited Partners upon their execution and delivery of
this Agreement.
Section 12.5 LIMIT ON NUMBER OF PARTNERS. No Person shall be
admitted to the Partnership as an Additional Limited Partner if the effect of
such admission would be to cause the Partnership to have a number of Partners
(including as Partners for this purpose those Persons indirectly owning an
interest in the Partnership
56
through another partnership, a limited liability company, a subchapter S
corporation or a grantor trust) that would cause the Partnership to become a
reporting company under the Exchange Act.
ARTICLE 13
DISSOLUTION, LIQUIDATION AND TERMINATION
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 without dissolution. However, the Partnership shall dissolve,
and its affairs shall be wound up, upon the first to occur of any of the
following (each a "LIQUIDATING EVENT"):
A. the expiration of its term as provided in Section 2.5 hereof;
B. an event of withdrawal, as defined in the Act (including,
without limitation, bankruptcy), of the sole General Partner unless, within
ninety (90) days after the withdrawal, a "majority in interest" (as such
phrase is used in Section 17-801(3) of the Act) of the remaining Partners
agree in writing, in their sole and absolute discretion, to continue the
business of the Partnership and to the appointment, effective as of the date
of withdrawal, of a successor General Partner:
C. an election to dissolve the Partnership made by the General
Partner in its sole and absolute discretion, with or without the Consent of
the Limited Partners;
D. entry of a decree of judicial dissolution of the Partnership
pursuant to the provisions of the Act;
E. the occurrence of a Terminating Capital Transaction;
F. the Redemption (or acquisition by the Previous General
Partner, the General Partner and/or the Special Limited Partner) of all
Partnership Common Units other than Partnership Common Units held by the
General Partner or the Special Limited Partner; or
G. the Redemption (or acquisition by the General Partner) of all
Partnership Common Units other than Partnership Common Units held by the
General Partner.
Section 13.2 WINDING UP.
A. Upon the occurrence of a Liquidating Event, the Partnership
shall continue solely for the purposes of winding up its affairs in an
orderly manner, liquidating its assets and satisfying the claims of its
creditors and Partners. After the occurrence of a Liquidating Event, no
Partner shall take any action that is inconsistent with, or not necessary to
or appropriate for, the winding up of the Partnership's business and affairs.
The General Partner (or, in the event that there is no remaining General
Partner or the General Partner has dissolved, become bankrupt within the
meaning of the Act or ceased to operate, any Person elected by a Majority in
Interest of the Limited Partners (the General Partner or such other Person
being referred to herein as 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
57
as is consistent with obtaining the fair value thereof, and the proceeds
therefrom (which may, to the extent determined by the General Partner,
include shares of stock in the Previous General Partner) shall be applied and
distributed in the following order:
(1) First, to the satisfaction of all of the Partnership's
debts and liabilities to creditors other than the Partners and their
Assignees (whether by payment or the making of reasonable provision for
payment thereof);
(2) Second, to the satisfaction of all of the Partnership's
debts and liabilities to the General Partner (whether by payment or the
making of reasonable provision for payment thereof), including, but not
limited to, amounts due as reimbursements under Section 7.4 hereof;
(3) Third, to the satisfaction of all of the Partnership's
debts and liabilities to the other Partners and any Assignees (whether
by payment or the making of reasonable provision for payment thereof);
and
(4) Subject to the terms of any Partnership Unit Designation,
the balance, if any, to the General Partner, the Limited Partners and
any Assignees in accordance with and in proportion to their positive
Capital Account balances, 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 13.
B. Notwithstanding the provisions of Section 13.2.A hereof that
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
creditors) and/or distribute to the Partners, in lieu of cash, as tenants in
common and in accordance with the provisions of Section 13.2.A hereof,
undivided interests in such Partnership assets as the Liquidator deems not
suitable for liquidation. Any such distributions in kind shall be made only
if, in the good faith judgment of the Liquidator, such distributions in kind
are in the best interest of the Partners, and shall be subject to such
conditions relating to the disposition and management of such properties as
the Liquidator deems reasonable and equitable and to any agreements governing
the operation of such properties at such time. The Liquidator shall
determine the fair market value of any property distributed in kind using
such reasonable method of valuation as it may adopt.
C. In the event that the Partnership is "liquidated" within the
meaning of Regulations Section 1.704-1(b)(2)(ii)(g), distributions shall be
made pursuant to this Article 13 to the Partners and Assignees that have
positive Capital Accounts in compliance with Regulations Section
1.704-1(b)(2)(ii)(b)(2) to the extent of, and in proportion to, positive
Capital Account balances. 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. In the sole and absolute
discretion of the General Partner or the Liquidator, a pro rata portion of
the distributions that would otherwise be made to the Partners pursuant to
this Article 13 may be withheld or escrowed to provide a reasonable reserve
for Partnership liabilities (contingent or
58
otherwise) and to reflect the unrealized portion of any installment
obligations owed to the Partnership, provided that such withheld or escrowed
amounts shall be distributed to the General Partner and Limited Partners in
the manner and order of priority set forth in Section 13.2.A hereof as soon
as practicable.
Section 13.3 DEEMED DISTRIBUTION AND RECONTRIBUTION.
Notwithstanding any other provision of this Article 13, in the event that the
Partnership is liquidated within the meaning of Regulations Section
1.704-1(b)(2)(ii)(G), but no Liquidating Event has occurred, the
Partnership's Property shall not be liquidated, the Partnership's liabilities
shall not be paid or discharged and the Partnership's affairs shall not be
wound up. Instead, for federal income tax purposes the Partnership shall be
deemed to have distributed the Property in kind to the Partners and the
Assignees, who shall be deemed to have assumed and taken such Property
subject to all Partnership liabilities, all in accordance with their
respective Capital Accounts. Immediately thereafter, the Partners and the
Assignees shall be deemed to have recontributed the Partnership Property in
kind to the Partnership, which shall be deemed to have assumed and taken such
Property subject to all such liabilities; PROVIDED, HOWEVER, that nothing in
this Section 13.3 shall be deemed to have constituted any Assignee as a
Substituted Limited Partner without compliance with the provisions of Section
11.4 hereof.
Section 13.4 RIGHTS OF LIMITED PARTNERS. Except as otherwise
provided in this Agreement, (a) each Limited Partner shall look solely to the
assets of the Partnership for the return of its Capital Contribution, (b) no
Limited Partner shall have the right or power to demand or receive property
other than cash from the Partnership and (c) 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. In the event that a
Liquidating Event occurs or an event occurs that would, but for an election
or objection by one or more Partners pursuant to Section 13.1 hereof, 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, in the General Partner's sole and absolute discretion or as required by
the Act, to all other parties with whom the Partnership regularly conducts
business (as determined in the sole and absolute discretion of the General
Partner), and the General Partner may, or, if required by the Act, shall,
publish notice thereof in a newspaper of general circulation in each place in
which the Partnership regularly conducts business (as determined in the sole
and absolute 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 hereof, the Partnership shall be terminated, a
certificate of cancellation shall be filed with the State of Delaware, all
qualifications of the Partnership as a foreign limited partnership or
association in jurisdictions other than the State of Delaware shall be
cancelled, 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
hereof, in order to minimize any losses otherwise attendant upon such
winding-up, and the provisions of this Agreement shall remain in effect
between the Partners during the period of liquidation.
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ARTICLE 14
PROCEDURES FOR ACTIONS AND CONSENTS
OF PARTNERS; AMENDMENTS; MEETINGS
Section 14.1 PROCEDURES FOR ACTIONS AND CONSENTS OF PARTNERS. The
actions requiring consent or approval of Limited Partners pursuant to this
Agreement, including Section 7.3 hereof, or otherwise pursuant to applicable
law, are subject to the procedures set forth in this Article 14.
Section 14.2 AMENDMENTS. Amendments to this Agreement may be
proposed by the General Partner or by a Majority in Interest of the Limited
Partners. Following such proposal, the General Partner shall submit any
proposed amendment to the Limited Partners. The General Partner shall seek
the written consent of the Limited Partners on the proposed amendment or
shall call a meeting to vote thereon and to transact any other business that
the General Partner may deem appropriate. For purposes of obtaining a
written consent, the General Partner may require a response within a
reasonable specified time, but not less than fifteen (15) days, and failure
to respond in such time period shall constitute a consent that is consistent
with the General Partner's recommendation with respect to the proposal;
PROVIDED, HOWEVER, that an action shall become effective at such time as
requisite consents are received even if prior to such specified time.
Section 14.3 MEETINGS OF THE PARTNERS.
A. Meetings of the Partners may be called by the General Partner
and shall be called upon the receipt by the General Partner of a written
request by a Majority in Interest of the Limited Partners. The call shall
state the nature of the business to be transacted. Notice of any such
meeting shall be given to all Partners not less than seven (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 14.3.B hereof.
B. Any action required or permitted to be taken at a meeting of
the Partners may be taken without a meeting if a written consent setting
forth the action so taken is signed by a majority of the Percentage Interests
of the Partners (or such other percentage as is expressly required by this
Agreement for the action in question). Such consent may be in one instrument
or in several instruments, and shall have the same force and effect as a vote
of 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. Each Limited Partner may authorize any Person or Persons to
act for it 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 (or there is receipt of a proxy authorizing a later
date). 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 of such revocation from the Limited Partner executing such
proxy.
D. Each meeting of Partners shall be conducted by the General
Partner or such other Person as the General Partner may appoint pursuant to
such rules for the conduct of the meeting as the General Partner or such
other Person deems appropriate in its sole and absolute discretion. Without
limitation, meetings of Partners
60
may be conducted in the same manner as meetings of the General Partner's
shareholders and may be held at the same time as, and as part of, the
meetings of the General Partner's shareholders.
ARTICLE 15
GENERAL PROVISIONS
Section 15.1 ADDRESSES AND NOTICE. Any notice, demand, request or
report required or permitted to be given or made to a Partner or Assignee
under this Agreement shall be in writing and shall be deemed given or made
when delivered in person or when sent by first class United States mail or by
other means of written communication (including by telecopy, facsimile, or
commercial courier service) to the Partner or Assignee at the address set
forth in EXHIBIT A or such other address of which the Partner 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" or "Sections" are to Articles
and Sections of this Agreement.
Section 15.3 PRONOUNS AND PLURALS. Whenever the context may
require, any pronouns 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 WAIVER.
A. 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.
B. The restrictions, conditions and other limitations on the
rights and benefits of the Limited Partners contained in this Agreement, and
the duties, covenants and other requirements of performance or notice by the
Limited Partners, are for the benefit of the Partnership and, except for an
obligation to pay money to the Partnership, may be waived or relinquished by
the General Partner, in its sole and absolute discretion, on behalf of the
Partnership in one or more instances from time to time and at any time;
PROVIDED, HOWEVER, that any such waiver or relinquishment may not be made if
it would have the effect of (i) creating liability for any other Limited
Partner, (ii) causing the Partnership to cease to qualify as a limited
partnership, (iii) reducing the amount of cash otherwise distributable to the
Limited Partners, (iv) resulting in the classification of the Partnership as
an association or publicly traded partnership taxable as a corporation or (v)
violating the Securities Act, the Exchange Act or any state "blue sky" or
other securities laws; PROVIDED,
61
FURTHER, that any waiver relating to compliance with the Ownership Limit or
other restrictions in the Charter shall be made and shall be effective only
as provided in the Charter.
Section 15.7 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 15.8 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. In the event
of a conflict between any provision of this Agreement and any non-mandatory
provision of the Act, the provisions of this Agreement shall control and take
precedence.
Section 15.9 ENTIRE AGREEMENT. This Agreement contains all of the
understandings and agreements between and among the Partners with respect to
the subject matter of this Agreement and the rights, interests and
obligations of the Partners with respect to the Partnership.
Section 15.10 INVALIDITY OF PROVISIONS. If any provision of this
Agreement is or becomes invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein shall not be affected thereby.
Section 15.11 LIMITATION TO PRESERVE REIT STATUS. Notwithstanding
anything else in this Agreement, to the extent that the amount paid,
credited, distributed or reimbursed by the Partnership to any REIT Partner or
its officers, directors, employees or agents, whether as a reimbursement,
fee, expense or indemnity (a "REIT PAYMENT"), would constitute gross income
to the REIT Partner for purposes of Code Section 856(c)(2) or Code Section
856(c)(3), then, notwithstanding any other provision of this Agreement, the
amount of such REIT Payments, as selected by the General Partner in its
discretion from among items of potential distribution, reimbursement, fees,
expenses and indemnities, shall be reduced for any Fiscal Year so that the
REIT Payments, as so reduced, for or with respect to such REIT Partner shall
not exceed the lesser of:
(i) an amount equal to the excess, if any, of (a) four
and nine-tenths percent (4.9%) of the REIT Partner's total gross income
(but excluding the amount of any REIT Payments) for the Fiscal Year that
is described in subsections (A) through (H) of Code Section 856(c)(2)
over (b) the amount of gross income (within the meaning of Code Section
856(c)(2)) derived by the REIT Partner from sources other than those
described in subsections (A) through (H) of Code Section 856(c)(2) (but
not including the amount of any REIT Payments); or
(ii) an amount equal to the excess, if any, of (a)
twenty-four percent (24%) of the REIT Partner's total gross income (but
excluding the amount of any REIT Payments) for the Fiscal Year that is
described in subsections (A) through (I) of Code Section 856(c)(3) over
(b) the amount of gross income (within the meaning of Code Section
856(c)(3)) derived by the REIT Partner from sources other than those
described in subsections (A) through (I) of Code Section 856(c)(3) (but
not including the amount of any REIT Payments);
PROVIDED, HOWEVER, that REIT Payments in excess of the amounts set forth in
clauses (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
62
excess amounts shall not adversely affect the REIT Partner's ability to
qualify as a REIT. To the extent that REIT Payments may not be made in a
Fiscal Year as a consequence of the limitations set forth in this Section
15.11, such REIT Payments shall carry over and shall be treated as arising in
the following Fiscal Year. The purpose of the limitations contained in this
Section 15.11 is to prevent any REIT Partner from failing to qualify as a
REIT under the Code by reason of such REIT Partner's share of items,
including distributions, reimbursements, fees, expenses or indemnities,
receivable directly or indirectly from the Partnership, and this Section
15.11 shall be interpreted and applied to effectuate such purpose.
Section 15.12 NO PARTITION. No Partner nor any
successor-in-interest to a Partner shall have the right while this Agreement
remains in effect to have any property of the Partnership partitioned, or to
file a complaint or institute any proceeding at law or in equity to have such
property of the Partnership partitioned, and each Partner, on behalf of
itself and its successors and assigns hereby waives any such right. It is
the intention of the Partners that the rights of the parties hereto and their
successors-in-interest to Partnership property, as among themselves, shall be
governed by the terms of this Agreement, and that the rights of the Partners
and their successors-in-interest shall be subject to the limitations and
restrictions as set forth in this Agreement.
Section 15.13 NO THIRD-PARTY RIGHTS CREATED HEREBY. The
provisions of this Agreement are solely for the purpose of defining the
interests of the Partners, INTER SE; and no other person, firm or entity
(I.E., a party who is not a signatory hereto or a permitted successor to such
signatory hereto) shall have any right, power, title or interest by way of
subrogation or otherwise, in and to the rights, powers, title and provisions
of this Agreement. No creditor or other third party having dealings with the
Partnership shall have the right to enforce the right or obligation of any
Partner to make Capital Contributions or loans to the Partnership or to
pursue any other right or remedy hereunder or at law or in equity. None of
the rights or obligations of the Partners herein set forth to make Capital
Contributions or loans to the Partnership shall be deemed an asset of the
Partnership for any purpose by any creditor or other third party, nor may any
such rights or obligations be sold, transferred or assigned by the
Partnership or pledged or encumbered by the Partnership to secure any debt or
other obligation of the Partnership or any of the Partners.
[THE NEXT PAGE IS THE SIGNATURE PAGE]
63
IN WITNESS WHEREOF, this Agreement has been executed as of the date
first written above.
PREVIOUS GENERAL PARTNER:
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
By: /S/ XXXXX XXXXXXXXX
--------------------------
Name: Xxxxx Xxxxxxxxx
Title: Vice Chairman
GENERAL PARTNER:
AIMCO-GP, INC.
By: /s/ Xxxxx Xxxxxxxxx
--------------------------
Name: Xxxxx Xxxxxxxxx
Title: Vice President
SPECIAL LIMITED PARTNER:
AIMCO-LP, INC.
By: /s/ Xxxxx Xxxxxxxxx
--------------------------
Name: Xxxxx Xxxxxxxxx
Title: Vice President
LIMITED PARTNERS:
By: AIMCO-GP, INC.,
as attorney-in-fact
By: /s/ Xxxxx Xxxxxxxxx
--------------------------
Name: Xxxxx Xxxxxxxxx
Title: Vice President
