Exhibit 10.1
AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
XXXXX REIT PROPERTIES, L.P.
TABLE OF CONTENTS
PAGE
ARTICLE I PARTNERSHIP........................................................1
1.1 CREATION OF PARTNERSHIP: PARTNERSHIP INTERESTS................1
1.2 NAME..........................................................2
1.3 APPROVAL OF ASSIGNMENT TO, AND ADMISSION OF, HREH.............2
ARTICLE II DEFINITIONS.......................................................2
2.1 DEFINITIONS...................................................2
ARTICLE III CAPITALIZATION...................................................12
3.1 INITIAL CAPITAL...............................................12
3.2 ISSUANCE AND REDEMPTION OF PARTNERSHIP INTERESTS..............12
3.3 ADDITIONAL FUNDS..............................................19
3.4 CAPITAL ACCOUNTS..............................................20
3.5 INTEREST ON AND RETURN OF CAPITAL.............................21
3.6 NEGATIVE CAPITAL ACCOUNTS.....................................21
3.7 LIMIT ON CONTRIBUTIONS AND OBLIGATIONS OF PARTNERS............21
3.8 REDEMPTION AND REPURCHASE OF UNITS............................21
ARTICLE IV OFFICE AND REGISTERED AGENT.......................................22
ARTICLE V PURPOSES AND POWERS OF PARTNERSHIP.................................22
5.1 PURPOSES OF THE PARTNERSHIP...................................22
5.2 POWERS........................................................22
5.3 REIT REQUIREMENTS.............................................22
ARTICLE VI TERM..............................................................23
ARTICLE VII ALLOCATIONS......................................................23
7.1 PROFITS.......................................................23
7.2 LOSSES........................................................24
7.3 SPECIAL ALLOCATIONS...........................................25
7.4 CURATIVE ALLOCATIONS..........................................27
7.5 TAX ALLOCATIONS: CODE SECTION 704(C)..........................27
ARTICLE VIII CASH AVAILABLE FOR DISTRIBUTION.................................28
8.1 DEFINITION OF AVAILABLE CASH..................................28
8.2 TIMING AND PRIORITY OF DISTRIBUTIONS OF AVAILABLE CASH........28
8.3 CONSENT TO ALLOCATIONS AND DISTRIBUTIONS......................28
8.4 RIGHT TO LIMIT DISTRIBUTIONS..................................28
i
ARTICLE IX MANAGEMENT OF PARTNERSHIP.........................................28
9.1 GENERAL PARTNER...............................................28
9.2 LIMITATIONS ON POWER AND AUTHORITY OF PARTNERS................30
9.3 LIMITED PARTNERS..............................................30
9.4 LIABILITY OF GENERAL PARTNER..................................30
9.5 INDEMNITY.....................................................30
9.6 OTHER ACTIVITIES OF PARTNERS AND AGREEMENTS WITH RELATED
PARTIES.......................................................31
9.7 OTHER MATTERS CONCERNING THE GENERAL PARTNER..................31
9.8 PARTNER EXCULPATION...........................................32
9.9 GENERAL PARTNER EXPENSES AND LIABILITIES......................32
ARTICLE X BANKING............................................................33
ARTICLE XI ACCOUNTING........................................................33
11.1 FISCAL YEAR...................................................33
11.2 BOOKS OF ACCOUNT..............................................33
11.3 METHOD OF ACCOUNTING..........................................33
11.4 TAX MATTERS...................................................33
ARTICLE XII TRANSFERS OF PARTNERSHIP INTERESTS...............................34
12.1 GENERAL PARTNER...............................................34
12.2 LIMITED PARTNER...............................................35
12.3 ADMISSION ADJUSTMENTS.........................................36
12.4 TRANSFERS TO LENDERS..........................................37
ARTICLE XIII ADMISSION OF NEW PARTNERS.......................................37
ARTICLE XIV TERMINATION, LIQUIDATION AND DISSOLUTION OF PARTNERSHIP..........37
14.1 TERMINATION EVENTS............................................37
14.2 METHOD OF LIQUIDATION.........................................37
14.3 DATE OF TERMINATION...........................................38
14.4 RECONSTITUTION UPON BANKRUPTCY................................38
14.5 DEATH, LEGAL INCOMPETENCY, ETC. OF A LIMITED PARTNER..........39
ARTICLE XV POWER OF ATTORNEY.................................................39
ARTICLE XVI AMENDMENT OF AGREEMENT...........................................40
ARTICLE XVII MISCELLANEOUS...................................................41
17.1 NOTICES.......................................................41
17.2 MODIFICATIONS.................................................41
17.3 SUCCESSORS AND ASSIGNS........................................41
17.4 DUPLICATE ORIGINALS...........................................41
17.5 CONSTRUCTION..................................................41
17.6 GOVERNING LAW.................................................41
17.7 OTHER INSTRUMENTS.............................................42
17.8 GENERAL PARTNER WITH INTEREST AS LIMITED PARTNER..............42
ii
17.9 LEGAL CONSTRUCTION............................................42
17.10 GENDER........................................................42
17.11 PRIOR AGREEMENTS SUPERSEDED...................................42
17.12 NO THIRD PARTY BENEFICIARY....................................42
17.13 PURCHASE FOR INVESTMENT.......................................42
17.14 ACCESS TO RECORDS.............................................42
17.15 WAIVER........................................................43
17.16 COUNTERPARTS..................................................43
Schedule A - Partners, Capital Accounts and Partnership Interests
iii
AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
XXXXX REIT PROPERTIES, L.P.
THIS AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP (this
"Agreement") has been executed and delivered effective as of the ___ day of
_______________, 2004 (the "Effective Date"), by Xxxxx Real Estate Investment
Trust, Inc., a Maryland corporation (the "General Partner" or the "Company"),
and those persons and entities identified as "Limited Partners" in Schedule A
(the "Limited Partners"), (the General Partner and each Limited Partner being a
"Partner" and collectively, the "Partners").
RECITALS
WHEREAS, effective as of August 20, 2003, the General Partner and HALP
Associates Limited Partnership entered into that certain Agreement of Limited
Partnership (the "Original Agreement") of Xxxxx REIT Properties, L.P. in
accordance with the Delaware Revised Uniform Limited Partnership Act as amended
(the "Act").
WHEREAS, as of August 27, 2003, the Original Agreement was amended
pursuant to the First Amendment to Agreement of Limited Partnership for Xxxxx
REIT Properties, L.P. (the "First Amendment").
WHEREAS, the Partners deem it to be in their best interest to amend and
restate the Original Agreement, as amended by the First Amendment, in accordance
with the Act and this Agreement.
THEREFORE, in consideration of the mutual covenants contained in this
Agreement, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Partners agree as follows:
ARTICLE I
PARTNERSHIP
1.1 CREATION OF PARTNERSHIP: PARTNERSHIP INTERESTS. The General Partner is
the sole general partner and the Limited Partners are the sole limited partners
of the Partnership. All Partnership profits, losses, and distributive shares of
tax items accruing prior to the date of this Agreement shall be allocated in
accordance with, and the respective rights and obligations of the Partners with
respect to the period prior to the date of this Agreement shall be governed by,
the Agreement of Limited Partnership of the Partnership that existed prior to
this Agreement. No Partner has any interest in any Partnership property solely
as a result of being a Partner and the interests of all Partners in the
Partnership are, for all purposes, personal property.
1
1.2 NAME. The Partnership name shall be "Xxxxx REIT Properties,
L.P.," but the General Partner may from time to time change the name of the
Partnership or may adopt such trade or fictitious names as it may determine.
1.3 APPROVAL OF ASSIGNMENT TO, AND ADMISSION OF, HREH. Effective as
of the date hereof, HALP has made an assignment of 20,000 OP Units (representing
all of the OP Units owned by HALP) to HREH. Such assignment is hereby approved
and HREH is hereby admitted as a limited partner of the Partnership.
ARTICLE II
DEFINITIONS
2.1 DEFINITIONS. As used in this Agreement, the following terms
shall have the meanings set forth respectively after each:
"Act" shall mean the Delaware Revised Uniform Limited Partnership Act, as
amended from time to time, and any successor statute.
"Adjusted Capital Account" shall mean, at any time, the then balance in
the Capital Account of a Partner, after giving effect to the following
adjustments:
(i) add to such Capital Account any amounts that such Partner is
obligated to restore or is deemed obligated to restore under any provision
of this Agreement or as described in the penultimate sentences of
Regulations Section 1.704-2(g)(1) and Regulations Section 1.704-2(i)(5),
or any successor provisions; and
(ii) subtract from such Capital Account the items described in
Regulations Sections 1.704-1(b)(2)(ii)(d)(4), (5) and (6).
"Adjusted Capital Account Deficit" shall mean, with respect to any
Partner, the deficit balance, if any, in that Partner's Adjusted Capital
Account.
"Affiliate" means (i) any Person directly or indirectly owning,
controlling, or holding, with power to vote ten percent or more of the
outstanding voting securities of such other Person, (ii) any Person ten percent
or more of whose outstanding voting securities are directly or indirectly owned,
controlled, or held, with the power to vote, by such other Persons, (iii) any
Person directly or indirectly controlling, controlled by, or under common
control with such other Person, (iv) any executive officer, director, trustee or
general partner of such other person, or (v) any legal entity for which such
Person acts as an executive officer, director, trustee or general partner.
"Agreement" shall mean this Agreement of Limited Partnership, as it may be
amended from time to time.
"Articles of Incorporation" means the Articles of Incorporation of the
Company.
2
"Available Cash" shall have the meaning provided in Section 8.1.
"Bankruptcy" of a Partner shall mean (a) the filing by a Partner of a
voluntary petition seeking liquidation, reorganization, arrangement or
readjustment, in any form, of its debts under Title 11 of the United States Code
(or corresponding provisions of future laws) or any other federal or state
insolvency law, or a Partner's filing an answer consenting to or acquiescing in
any such petition, (b) the making by a Partner of any assignment for the benefit
of its creditors or the admission by a Partner in writing of its inability to
pay its debts as they mature, or (c) the expiration of sixty (60) days after the
filing of any involuntary petition under Title 11 of the United States Code (or
corresponding provisions of future laws), seeking liquidation, reorganization,
arrangement or readjustment of its debts under any other Federal or state
insolvency law, provided that the same shall not have been vacated, set aside or
stayed within such 60-day period.
"Board of Directors" means the Board of Directors of the Company.
"Business Day" means any day other than Saturday or Sunday during which
national banks located in Houston, Texas are customarily open for business.
"Capital Account" shall mean the capital account maintained by the
Partnership for each Partner as described in Section 3.4 below.
"Capital Contribution" shall mean, when used in respect of a Partner, if
applicable, the initial capital contribution of such Partner as set forth in
Section 3.1 below, and any other amounts of money and/or the Gross Asset Value
of other property contributed by such Partner to the capital of the Partnership
with respect to the Partner's interest in the Partnership, including the Capital
Contribution made by any predecessor holder of the Partnership Interest of such
Partner.
"Capital Transaction Gain or Loss" shall mean any Profits or Losses
described in paragraphs (iii), (iv) and (vi) of the definition of Profits and
Losses contained in this Article 2.
"Cash Amount" means an amount of cash equal to the value of the REIT
Shares Amount, which shall be based upon Net Asset Value on the date of receipt
by the General Partner of a Notice of Redemption.
"Code" shall mean the Internal Revenue Code of 1986, as the same may be
amended from time to time, and any successor statute.
"Common Share" means a share of common stock, $.001 par value per share,
of the Company.
"Company" means Xxxxx Real Estate Investment Trust, Inc., a Maryland
corporation and the General Partner of the Partnership.
"Contributing Partner" shall have the meaning provided in Section
3.2(B)(v).
3
"Depreciation" shall mean for any fiscal year or portion thereof, an
amount equal to the depreciation, amortization or other cost recovery deduction
allowable with respect to an asset for such period for Federal income tax
purposes, 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 period,
Depreciation shall be an amount that bears the same relationship to such
beginning Gross Asset Value as the depreciation, amortization or cost recovery
deduction in such period for Federal income tax purposes bears to the beginning
adjusted tax basis; provided, however, that if the adjusted basis for Federal
income tax purposes of an asset at the beginning of such period is zero,
Depreciation shall be determined with reference to such beginning Gross Asset
Value using any reasonable method selected by the General Partner.
"Effective Date" shall have the meaning provided in the introductory
paragraph of this Agreement.
"Exchange Date" shall have the meaning provided in Section 3.2(G).
"General Partner" means Xxxxx Real Estate Investment Trust, Inc., a
Maryland corporation, sometimes also referred to in this Agreement as the
"Company."
"Gross Asset Value" means, with respect to any Partnership asset, the
asset's adjusted basis for Federal income tax purposes, except as follows:
(i) The initial Gross Asset Value of any asset contributed by a
Partner to the Partnership shall be the gross fair market value of such
asset, as agreed to by the General Partner and the Contributing Partner;
(ii) The Gross Asset Value of all Partnership assets shall be
adjusted to equal their respective gross fair market values, which shall
be determined in a manner consistent with the determination of Net Asset
Value, as of the following times: (a) the acquisition of an additional
interest in the Partnership by any new or existing Partner in exchange for
more than a de minimis Capital Contribution; (b) 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; (c) the
liquidation of the Partnership within the meaning of Regulations Section
1.704-1(b)(2)(ii)(g); and (d) upon the occurrence of any other event for
which an adjustment to Gross Asset Value is permitted under the
Regulations; provided, however, that adjustments pursuant to clauses (a),
(b) and (d) above shall be made only if the General Partner reasonably
determines that such adjustments are necessary or appropriate to reflect
the relative economic interests of the Partners in the Partnership;
(iii) The Gross Asset Value of any Partnership asset distributed to
any Partner shall be adjusted to equal the gross fair market value of such
asset on the date of distribution, which shall be determined in a manner
consistent with the determination of Net Asset Value; and
4
(iv) The Gross Asset Value 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) and
paragraph (vi) of the definition of Profits and Losses in this Article II
below; provided, however, that Gross Asset Value shall not be adjusted
pursuant to this paragraph (iv) to the extent the General Partner
determines that an adjustment pursuant to paragraph (ii) above is
necessary or appropriate in connection with a transaction that would
otherwise result in an adjustment pursuant to this paragraph (iv).
(v) If the Gross Asset Value of an asset has been determined or
adjusted pursuant to paragraphs (i), (ii) or (iv) above, such Gross Asset
Value shall thereafter be adjusted by the Depreciation taken into account
with respect to such asset for purposes of computing Profits and Losses.
"HALP" shall mean HALP Associates Limited Partnership.
"Hines Controlled Entity" shall mean any partnership, limited liability
company, corporation, trust or other entity which is, directly or indirectly,
controlled by (a) Xxxxx Interests Limited Partnership, and/or (b) Xxxxxxx X.
Xxxxx and/or Xxxxxx X. Xxxxx or, in the event of the death or disability of
Xxxxxxx X. Xxxxx and/or Xxxxxx X. Xxxxx, the heirs, legal representatives or
estates of either or both of them.
"HREH" shall mean Hines Real Estate Holdings Limited Partnership.
"Issuance Date" means with respect to OP Units or the Participation
Interest owned by a Partner, the date upon which such OP Units or the
Participation Interest are issued to such Partner (and with respect to
Preference Units, shall have the meaning set forth in the applicable Preference
Unit Term Sheet).
"Limited Partner" shall mean any Person (i) whose name is set forth as a
Limited Partner on Schedule A attached hereto or who has become a Limited
Partner pursuant to the terms and conditions of this Agreement, and (ii) who
holds a partnership interest. "Limited Partners" means all such persons.
"Listing Date" shall mean the date on which the Common Shares are first
listed on a national securities exchange or included for quotation on a national
market system.
"Majority-in-Interest of the Limited Partners" shall mean, as of any given
time, Limited Partners who own more than fifty percent (50%) of the Percentage
Interests in the Partnership held by Limited Partners.
"Market Price" means, with respect to any Specified Redemption Date: (a)
the last reported sales price per share of the Common Shares at the close of
trading (whether or not the last reported sale occurred on such date) as
reported in the Wall Street Journal on the first Business Day of the calendar
quarter immediately preceding the date of receipt by the General
5
Partner of the Notice of Redemption, or (b) if the Common Shares are not traded
on a national exchange, the Net Asset Value per Common Share as of the date of
receipt by the General Partner of the Notice of Redemption.
"Net Asset Value" as of a particular date means the net fair market value
of the Partnership's equity as of such date, as approved by the Board of
Directors, which shall generally equal the net proceeds that would be available
for distribution by the Partnership if all assets owned directly or indirectly
(through one or more special purpose entities) by the Partnership were sold at
their fair market value in an all cash sale as of such date, and all expected
transaction costs (including all closing costs customarily borne by a seller in
the market where each Property is located and estimated legal fees and expenses)
were paid, and all liabilities were repaid, out of such proceeds.
"Nonrecourse Deductions" has the meaning set forth in Regulations Section
1.704-2(c).
"Nonrecourse Liability" has the meaning set forth in Regulations Section
1.752-1(a)(2).
"Notice of Redemption" means a written notice delivered by a Redeeming
Partner to the Partnership (with a copy to the General Partner) under Section
3.2(C), pursuant to which the Redeeming Partner exercises the Redemption Right
with respect to all or a portion of its OP Units or Participation Interest in
accordance with the provisions of Section 3.2(C).
"OP Units" are units of Partnership Interest more particularly described
in Section 3.2.
"OP Unit Value" shall mean, as of any given time, the number of OP Units
into which a Preference Unit is convertible (whether or not the conversion can
then be effected), or the value of the Preference Unit expressed in OP Units if
the Preference Unit is not convertible into OP Units, as provided for in the
applicable Preference Unit Term Sheet.
"Other Securities" shall have the meaning set forth in Section 3.2(B)(iv).
"Participation Interest" shall have the meaning set forth in Section
3.2(A).
"Participation Interest Unit Equivalents" shall mean, as of any Specified
Redemption Date with respect to part or all of the Participation Interest, the
lesser of (i) the number of outstanding OP Units of the Partnership, multiplied
by a fraction whose numerator is the Percentage Interest attributable to the
Participation Interest as of such date and whose denominator is 100% minus the
Percentage Interest attributable to the Participation Interest as of such date
or (ii) the number of outstanding OP Units of the Partnership, multiplied by a
fraction (a) whose numerator is the aggregate amount that would be distributed
in respect of the Participation Interest if an amount equal to Net Asset Value
as of such date were distributed among the Partners in accordance with Section
14.2(C) hereof and (b) whose denominator equals (x) the aggregate amount that
would be distributed to all Partners if an amount equal to Net Asset Value as of
such date were distributed among the Partners in accordance with Section
14.2(C), minus (y) the amount determined under clause (a).
6
"Partner Nonrecourse Debt" has the meaning set forth in Regulations
Section 1.704-2(b)(4).
"Partner Nonrecourse Debt Minimum Gain" has the meaning set forth in
Regulations Section 1.704-2(i)(3).
"Partner Nonrecourse Deductions" has the meaning set forth in Regulations
Section 1.704-2(i)(2).
"Partners" shall mean, collectively, the General Partner and the Limited
Partners, or any additional or successor partners of the Partnership admitted to
the Partnership in accordance with the terms of this Agreement. References to a
Partner shall be to any one of the Partners.
"Partnership Interest" shall mean the ownership interest of a Partner in
the Partnership at any particular time, including the right of such Partner to
any and all benefits to which such Partner may be entitled as provided in this
Agreement, and to the extent not inconsistent with this Agreement, under the
Act, together with the obligations of such Partner to comply with all of the
terms and provisions of this Agreement and the Act.
"Partnership Minimum Gain" has the meaning set forth in Regulations
Sections 1.704-2(b)(2) and 1.704-2(d).
"Percentage Interest" shall mean a percentage that is determined for each
Partner in the following manner:
(i) End of Month Calculation of Percentage Interest Attributable to
Participation Interest. As of the end of each calendar month, the holder
of the Participation Interest shall have a Percentage Interest in respect
of its Participation Interest equal to the sum of (a) the Percentage
Interest of the holder of the Participation Interest as of the end of the
immediately preceding month (which shall be 0% in the case of each
calendar month beginning prior to the Effective Date), adjusted as
provided in clause (iii) below for OP Units issued or redeemed during the
calendar month just ended, and further adjusted for any redemptions of
such Participation Interest during the calendar month just ended, plus (b)
0.0625% of the net equity invested in those real estate investments
reflected on the balance sheet of the Partnership as of the end of such
month, divided by the Equity Value (as defined below) of the Partnership
as of the end of the current month, plus (c) 0.5% of the Gross Real Estate
Investments (as defined below) made by the Partnership during the current
month, divided by the Equity Value of the Partnership as of the end of the
current month; provided, however, that no adjustment shall be made under
either clause (b) or clause (c) as of the end of any calendar month if,
during such calendar month or any prior calendar month, the Advisory
Agreement, dated as of May __, 2004, by and between the Partnership, Xxxxx
Advisors Limited Partnership, and the Company, has expired or otherwise
been terminated.
- "Equity Value" of the Partnership as of the end of a
particular month shall mean (i) in cases where the Company has
an offering of Common Shares in
7
effect, the product of (A) the per-share offering price for
the Common Shares that are the subject of such offering, net
of selling commissions, dealer manager fees and the per share
estimate of organization and offering costs (based on the
maximum number of Common Shares being sold in the offering),
multiplied by (B) a number equal to the number of OP Units
outstanding as of the end of such month, divided by the
difference between 100% and the Percentage Interest
attributable to the Participation Interest as of the end of
such month, and (ii) in cases where the Company does not have
an offering of Common Shares in effect, the Net Asset Value of
the Partnership as of the end of the current month.
- "Gross Real Estate Investments" of the Partnership shall
generally mean the gross amount invested by the Partnership in
any real estate investments (either directly or indirectly
through one or more partnerships, limited liability companies,
or special purpose entities and including any real estate
investments contributed to the Partnership in exchange for
Units), including any debt attributable to such investments;
provided, however, that in the case of amounts invested by the
Partnership in any entity that is not wholly-owned by the
Partnership, "Gross Real Estate Investments" shall mean the
sum of the amount invested by the Partnership in such entity,
plus the Partnership's allocable share of the debt of such
entity that is attributable to real estate investments by such
entity.
(ii) When Change to Participation Interest Becomes Effective. The
Percentage Interest determined under clause (i) as of the end of a particular
month shall become effective as of the beginning of the immediately following
month.
(iii) Adjustment of Percentage Interest Attributable to Participation
Interest Following Issuance or Redemption of OP Units. Immediately after the
issuance or redemption by the Partnership of any OP Units, the Percentage
Interest attributable to the Participation Interest shall be adjusted so that it
equals (a) the Percentage Interest attributable to the Participation Interest
immediately prior to the issuance or redemption of such OP Units, multiplied by
(b) a fraction whose numerator is (1) the number of OP Units outstanding
immediately prior to the issuance or redemption of such OP Units and whose
denominator equals (2) the number of OP Units outstanding immediately after the
issuance or redemption of such OP Units.
(iv) Calculation of Percentage Interests of Partners Holding OP Units. The
Percentage Interest as of a particular time for each Partner holding OP Units
shall equal (a) 100% minus the Percentage Interest attributable to the
Participation Interest, multiplied by (b) the sum of the OP Unit Value of any
Preference Units held by that Partner and the number of OP Units held by that
Partner, divided by (c) the sum of the OP Unit Value of all Preference Units
issued and outstanding at the time and the total number of OP Units issued and
outstanding at the time.
8
The respective Percentage Interests of the Partners as of the date of this
Agreement are set forth in Schedule A attached to this Agreement.
"Person" means an individual, corporation, partnership, estate, trust, a
portion of a trust set aside for or to be used exclusively for the purposes
described in Section 642(c) of the Code, association, private foundation within
the meaning of Section 509(a) of the Code, joint stock company or other entity
and also includes a group as that term is used for purposes of Section 13(d)(3)
of the Securities Exchange Act of 1934, as amended.
"Preference Units" are units of Partnership Interest more particularly
described in Section 3.2(A)(ii).
"Preference Unit Term Sheet" shall have the meaning provided in Section
3.2(B)(1).
"Private Placement PTP Exemption" shall mean the exemption from publicly
traded partnership status provided in Regulations Section 1.7704-1(h) (which
generally applies if (i) all interests in a partnership are issued in a
transaction or series of transactions that are not required to be registered
under the Securities Act and (ii) the partnership does not have more than 100
partners at any time during taxable year of the partnership).
"Private Transfer" shall mean:
(i) transfers in which the basis of the Partnership Interest in the
hands of the transferee is determined, in whole or in part, by reference
to its basis in the hands of the transferor or is determined under Code
Section 732;
(ii) transfers at death, including transfers from an estate or
testamentary trust;
(iii) transfers between members of a family;
(iv) transfers involving the issuance of interests by (or on behalf
of) the Partnership in exchange for cash, property, or services;
(v) transfers involving distributions from a qualified retirement
plan or an individual retirement account;
(vi) the transfer by a Partner and any related persons (within the
meaning of Code Section 267(b) or 707(b)(1)) in one or more transactions
during any 30 calendar day period of Partnership Interests representing in
the aggregate more than 2 percent of the total interests in Partnership
capital or profits;
(vii) transfers by one or more Partners of interests representing in
the aggregate 50 percent or more of the total interests in Partnership
capital and profits in one transaction or a series of related
transactions; and
9
(viii) transfers not recognized by the Partnership within the
meaning of Regulations Section 1.7704-1(d)(2) (i.e., transfers in cases
where the Partnership neither admits the transferee as a partner nor
recognizes any rights of the transferee as a partner).
"Profits" and "Losses" shall mean for each fiscal year or portion thereof,
an amount equal to the Partnership's items of taxable income or loss for such
year or period, determined by the General Partner in accordance with Code
Section 703(a) with the following adjustments:
(i) any income which is exempt from Federal income tax and not
otherwise taken into account in computing Profits or Losses shall be added
to taxable income or loss;
(ii) any expenditures of the Partnership described in Code Section
705(a)(2)(B) or treated as Code Section 705(a)(2)(B) expenditures under
Regulations Section 1.704-1(b)(2)(iv)(i) and not otherwise taken into
account in computing Profits or Losses, will be subtracted from taxable
income or loss;
(iii) in the event that the Gross Asset Value of any Partnership
asset is adjusted pursuant to the definition of Gross Asset Value
contained in this Article 2, the amount of such adjustment shall be taken
into account as gain or loss from the disposition of such asset for
purposes of computing Profits and Losses;
(iv) gain or loss resulting from any disposition of Partnership
assets 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;
(v) in lieu of the depreciation, amortization and other cost
recovery deductions taken into account in computing such taxable income or
loss, there shall be taken into account Depreciation for such fiscal year
or other period;
(vi) to the extent an adjustment to the adjusted tax basis of any
Partnership asset pursuant to Code Section 734(b) or Code Section 743(b)
is required pursuant to Regulations Section 1.704-1(b)(2)(iv)(m)(4) to be
taken into account in determining Capital Accounts as a result of a
distribution other than in complete liquidation of a Partner's Partnership
Interest, is required pursuant to the last sentence of Regulations Section
1.704-1(b)(2)(iv)(m)(2) to be taken into account in determining Capital
Accounts, 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 Profits or
Losses; and
(vii) any items specially allocated pursuant to Section 7.3 or
Section 7.4 shall not be considered in determining Profits or Losses.
10
"Recapitalization" shall have the meaning provided in Section 3.2(F).
"Record Date" shall have the meaning provided in Section 9.1.
"Redeeming Partner" shall have the meaning provided in Section 3.2(C).
"Redemption Amount" means either the Cash Amount or the REIT Shares Amount
as determined pursuant to Section 3.2 hereof.
"Redemption Right" shall have the meaning provided in Section 3.2(C).
"Regulations" shall mean the Income Tax Regulations, including Temporary
Regulations, promulgated under the Code, as such regulations may be amended from
time to time (including corresponding provisions of succeeding regulations).
"REIT" shall have the meaning provided in Section 5.3.
"REIT Requirements" shall have the meaning provided in Section 5.3.
"REIT Shares Amount" means a number of Common Shares equal to (i) in the
case of a Partner redeeming OP Units, the number of OP Units offered for
redemption by a Redeeming Partner, as adjusted pursuant to Sections 3.2(F) and
(G) and (ii) in the case of a Partner redeeming part or all of the Participation
Interest, the number of Participation Interest Unit Equivalents.
"Rights" shall have the meaning provided in Section 3.2(G).
"Shareholder" means a holder of the Common Shares.
"Specified Redemption Date" means with respect to a Redeeming Partner, the
date that is ten Business Days after receipt by the General Partner of the
Notice of Redemption from such Partner.
"TMP" shall have the meaning provided in Section 11.4.
"Transfer" shall mean any sale, transfer, gift, exchange, assignment,
devise or other disposition, any pledge or collateral assignment, and any other
event that causes any Person to acquire beneficial ownership, or any agreement
to take any such actions or cause any such events, with respect to Units or
other Partnership Interests, or the right to vote or receive distributions with
respect to Units or other Partnership Interests, including (a) the granting or
exercise of any option (or any disposition of any option), (b) any disposition
of any securities or rights convertible into or exchangeable for Units or other
Partnership Interests or any interest in Units or other Partnership Interests or
any exercise of any such conversion or exchange right, and (c) Transfers of
interests in other entities that result in changes in beneficial ownership of
Units or other Partnership Interests; in each case, whether voluntary or
involuntary, whether owned of record or beneficially owned, and whether by
operation of law or otherwise; provided, however,
11
neither the conversion of a Preference Unit into one or more OP Units nor the
redemption of an OP Unit or Participation Interest in accordance with Section
3.2 constitutes a Transfer. The terms "Transferor," "Transferee," "Transferred"
and "Transferring" have correlative meanings.
"Units" has the meaning set forth in Section 3.2(A).
ARTICLE III
CAPITALIZATION
3.1 INITIAL CAPITAL. As of the effective date hereof, the Partners have
made or will make contributions of cash and/or property to the Partnership, and
the amount of such cash contributions and the Gross Asset Value of such in-kind
Capital Contributions are reflected in the Capital Account balance of each such
Partner as set forth opposite such Partner's name on the attached Schedule A, as
amended from time to time, under the heading "Agreed Capital Account".
3.2 ISSUANCE AND REDEMPTION OF PARTNERSHIP INTERESTS.
A. The interest of a Partner in the Partnership that has been
received in exchange for Capital Contributions is referred to as being
evidenced by one or more "Units." Units may be either "OP Units" or
"Preference Units":
(i) An "OP Unit" is a unit of Partnership Interest that has
been received in exchange for Capital Contributions and that, as
more particularly provided for below in Section 3.2(C), may be
redeemed for the Redemption Amount. The General Partner may create
separate classes or series of OP Units having privileges,
variations, and designations as may be determined by the General
Partner in its sole and absolute discretion.
(ii) A "Preference Unit" is a unit of Partnership Interest
having such rights, preferences and other privileges, variations and
designations as may be determined by the General Partner in its sole
and absolute discretion (but not in violation of the provisions of
Section 3.2(B) or the terms of any other Preference Unit(s) Term
Sheets). There may be more than one series or class of Preference
Units having differing terms and conditions, but all Preference
Units within a given series or class shall have the same rights,
preferences and other privileges, variations and designations. With
respect to each series or class of Preference Units, the General
Partner may also, in its discretion, determine and fix, among other
terms and conditions, any of the following: (a) the series to which
such Preference Units shall belong, (b) the distribution rate
therefor, (c) the price at and the terms and conditions on which
such Preference Units may be redeemed, (d) the amount payable in
respect of such Preference Units in the event of involuntary or
voluntary liquidation, (e) the terms and conditions on which such
Preference Units may be converted and the securities into which such
Preference Units may be converted (and/or the valuation of such
Preference Units as measured in OP Units), if such Preference Units
are issued with the privilege of conversion, and
12
(f) the number of such Preference Units to be issued as a part of
such series. Once determined and fixed as herein provided, however,
the terms and conditions of a particular series or class of
Preference Units may not be changed without the written consent of
the holders of at least 67% of the Preference Units within the class
or series (or such greater percentage as may be provided for in any
the applicable Preference Unit Term Sheet).
The aggregate total of all Units outstanding as of the date of this Agreement is
21,000, all of which consist of OP Units. As of the date of this Agreement, each
Partner is deemed to hold Units as shown on Schedule A.
Effective as of the date hereof, the Partnership is issuing to HALP a
limited partnership interest denominated as a "Participation Interest." The
Participation Interest is in addition to, and distinct from, the Units described
above and any references to "Units" or OP Units shall not be deemed to include
the Participation Interest. It is intended that the Participation Interest
constitute a profits interest within the meaning of Section 2.02 of IRS Revenue
Procedure 93-27, 1993-2 C.B. 343.
B. From time to time hereafter, subject to and in accordance with the
provisions of this Section 3.2(B), the General Partner shall cause the
Partnership to issue additional Units as follows:
(i) OP Units to the Company upon the issuance by the Company
of additional Common Shares (other than in exchange for OP Units)
and the contribution of the net proceeds thereof as a Capital
Contribution to the Partnership as provided for in Section 3.3(B)
below, it being understood, however, that the Company may issue
Common Shares in connection with share option plans, dividend
reinvestment plans, restricted share plans or other benefit or
compensation plans without receiving any proceeds and that the
issuance of such Common Shares shall nonetheless entitle the Company
to receive additional OP Units pursuant to this clause (i);
(ii) OP Units to Partners (including the General Partner) that
hold Preference Units that are convertible into OP Units, upon the
exercise of such conversion in accordance with the terms and
conditions of the Preference Unit Term Sheet applicable thereto;
(iii) OP Units to Partners holding OP Units (including the
General Partner) if and to the extent of each such Partner's
participation in any reinvestment program contemplated by Section
3.3(C) below;
(iv) Preference Units to the Company upon the issuance by the
Company of securities other than Common Shares whether debt or
equity securities ("Other Securities") and the contribution of the
net proceeds thereof as a Capital Contribution to the Partnership as
provided for in Section 3.3(B) below; and
13
(v) in all other cases, OP Units and/or Preference Units, as
determined by the General Partner, in its discretion, to existing or
newly-admitted Partners (including the General Partner), in exchange
for the contribution by a Partner (the "Contributing Partner") of
Capital Contributions to the Partnership.
Issuance of OP Units as aforesaid shall be in accordance with the following:
(a) the number of OP Units issued to the Company under clause (i) of this
Section 3.2(B) shall be equal to the number of Common Shares issued;
(b) the number of OP Units issued to a Partner under clause (ii) of this
Section 3.2(B) shall be as provided for in the Preference Unit Term Sheet
pursuant to which the Preference Units being converted exist;
(c) the number of OP Units issued to a Limited Partner under clause (iii)
of this Section 3.2(B) shall be as provided for in the applicable reinvestment
program; and
(d) the number of OP Units issued to a Contributing Partner under clause
(v) of this Section 3.2(B) shall be equal to the quotient (rounded to the
nearest whole number) arrived at by dividing (x) the initial Gross Asset Value
of the property contributed as additional Capital Contributions (net of any debt
to which such property is subject or assumed by the Partnership in connection
with such contribution) by (y) the Net Asset Value attributable to each OP Unit.
Issuance of Preference Units as aforesaid shall be in accordance with the
following:
(1) Preference Units issued pursuant to clause (v) of this Section 3.2(B)
shall have the terms and conditions specified in an agreement (a "Preference
Unit Term Sheet") executed by and between the Partnership (at the direction or
in the discretion of the General Partner) and the Contributing Partner. The
number of Preference Units issued to a Contributing Partner under clause (v) of
this Section 3.2(B) shall be equal to the quotient (rounded to the nearest whole
number) arrived at by dividing (x) the net fair market value of any property or
assets contributed as additional capital contributions by (y) price per
Preference Unit provided for in the Preference Unit Term Sheet; and
(2) Preference Units issued pursuant to clause (iv) of this Section 3.2(B)
shall have economic terms substantially identical to those of the applicable
Other Securities.
Units may also be issued to some or all of the Partners holding Preference Units
if and to the extent of such Partner's participation in any reinvestment program
contemplated by Section 3.3(C). Upon the issuance of additional OP Units and/or
Preference Units in accordance with the provisions of this Section 3.2(B), each
recipient of such Units shall either execute this Agreement or a joinder to this
Agreement (which joinder, as to Preference Units, may be a part of any
applicable Preference Unit Term Sheet) and, as applicable, the Percentage
Interest of all of the Partners shall thereupon be appropriately adjusted by the
General Partner.
14
C. Subject to the provisions of Sections 3.2(D) and (F), on or after the
later of (i) the date which is one year after the Issuance Date or (ii) upon the
commencement of an initial public offering of the Common Shares of the Company
pursuant to a registration statement filed with the Securities and Exchange
Commission, each Limited Partner shall have the right (the "Redemption Right")
to require the Partnership to redeem on a Specified Redemption Date all or a
portion of the OP Units or Participation Interest held by such Limited Partner
at a redemption price equal to and in the form of the Redemption Amount. The
Redemption Right shall be exercised pursuant to a Notice of Redemption delivered
to the Partnership (with a copy to the General Partner) by the Limited Partner
who is exercising the Redemption Right (the "Redeeming Partner"); provided,
however, that the Partnership shall not be obligated to satisfy such Redemption
Right if the Company elects to purchase the OP Units or Participation Interest
subject to the Notice of Redemption pursuant to Section 3.2(E). Notwithstanding
the foregoing provisions of this Section 3.2(C), the Company agrees to use its
best efforts to cause the closing of the acquisition of redeemed Partnership
Interests hereunder to occur as quickly as reasonably possible. The Redeeming
Partner shall have no right, with respect to any OP Units or Participation
Interest so redeemed, to receive any distribution paid with respect to such OP
Units or Participation Interest if the Record Date for such distribution is on
or after the Specified Redemption Date. If, and beginning with the first day of
the first taxable year in which, the Partnership no longer qualifies for the
Private Placement PTP Exemption, the Redemption Right shall comply with the
requirements of Regulations Section 1.7704-1(f) and shall be construed and
administered in accordance therewith.
D. In addition to other restrictions set forth on the Redemption Rights in
any other provision of this Agreement, the following restrictions apply to
Redemption Rights:
(i) Notwithstanding any other provision of this Article 3, but
subject to the last sentence of clause (iii) below, a Limited Partner
shall be entitled to exercise the Redemption Right only if (x) the
redemption or purchase of the Limited Partner's OP Units or Participation
Interest would constitute a Private Transfer or (y) the Percentage
Interest attributable to the OP Units or Participation Interest to be
purchased or redeemed, when aggregated with other Transfers of Partnership
Interests within the same taxable year of the Partnership (but not
including Private Transfers), would constitute a Percentage Interest of
ten percent (10%) or less.
(ii) The General Partner may establish such policies and procedures
as it may deem necessary or desirable in its discretion to administer the
10% Percentage Interest limit set forth in subparagraph (i) above,
including without limitation imposing further limitations on the OP Units
or Participation Interest with respect to which the Redemption Right may
be exercised during any period of time shorter than a calendar year and
establishing procedures to allocate the ability to exercise the Redemption
Right among the Limited Partners.
15
(iii) The restrictions set forth in clauses (i) and (ii) above shall
continue in effect until such time as the Partnership is no longer
potentially subject to classification as a publicly traded partnership, as
defined in Code Section 7704, in the absence of such restrictions, as
determined by the General Partner in its discretion. The restrictions set
forth in clauses (i) and (ii) above, together with the restrictions on the
Transfer of Partnership Interests set forth in Section 12(B), are intended
to limit transfers of interests in the Partnership in such a manner as to
permit the Partnership to qualify for the safe harbors from treatment as a
publicly traded partnership set forth in Regulations Sections 1.7704-1(d),
(e), (f) and (j) and shall be construed and administered in accordance
therewith. The General Partner may modify the restrictions set forth in
clauses (i) and (ii) above, and the provisions of Section 12(B), from time
to time in its discretion to ensure that the Partnership complies and
continues to comply with the Code and Regulations requirements described
above. Notwithstanding anything herein to the contrary, the provisions of
subparagraphs (i)-(iii) shall only apply if, and beginning with the first
day of the first taxable year in which, the Partnership no longer
qualifies for the Private Placement PTP Exemption.
(iv) A Limited Partner shall not be entitled to exercise either a
Redemption Right or any right to convert a Preference Unit into an OP Unit
if such exercise would (a) result in the total Common Shares and any other
ownership or beneficial interests in the Company being owned by fewer than
one hundred persons within the meaning of Code Section 856(a)(5); (b)
result in such Limited Partner or any other person owning, directly or
constructively under Code Section 856(d)(5), in excess of 9.9% of the
total Common Shares (and any other ownership or beneficial interests) in
the Company; (c) cause more than 50% of the value of the Company's Common
Shares (and any other ownership or beneficial interests) to be held by
five or fewer individuals and certain organizations under Code Section
856(h) and 542(a)(2); (d) cause the Company to own, directly or
constructively, 10% or more of the ownership interests of any person that
is a tenant with respect to any real property owned or constructively
owned by the Company (so as to prevent the application of Code Section
856(d)(2)); or (e) cause the acquisition of Common Shares (and any other
ownership or beneficial interests) in the Company by such Limited Partner
to be "integrated" with any other distribution of interests in the Company
for purposes of complying with the registration provisions of the
Securities Act of 1933. The General Partner may modify the restrictions
set forth in this Section 3.2(D)(iv) from time to time in its discretion
to ensure that the Partnership complies and continues to comply with Code
Section 856. The General Partner may, in its sole discretion, waive the
restrictions on redemption set forth in this Section 3.2(D)(iv); provided,
however, that in the event a restriction is waived, the redeeming partner
shall be paid the Cash Amount.
(v) A Limited Partner shall not be entitled to exercise a Redemption
Right if it prejudices or affects the continuity of the Partnership for
purposes of Code Section 708. Prior to any such redemption described in
the preceding sentence, the General Partner may require an opinion of
counsel
16
satisfactory to the General Partner to the effect that such redemption
will not cause adverse tax consequences to the nonredeeming Partners, and
such Limited Partner exercising the Redemption Right shall be responsible
for paying said counsel's fee for his opinion.
Provided, however, that the General Partner may exempt a Limited Partner from
the foregoing restrictions to the same extent, and under the same circumstances,
that the General Partner may waive similar restrictions pursuant to its Articles
of Incorporation.
E. Notwithstanding the provisions of Section 3.2(C), a Limited Partner
that exercises the Redemption Right shall be deemed to have offered to sell the
OP Units or Participation Interest described in the Notice of Redemption to the
Company, and the Company (or any designee thereof) may, in its sole and absolute
discretion, elect to purchase directly and acquire such OP Units or
Participation Interest by paying to the Redeeming Partner either the Cash Amount
or the REIT Shares Amount, as elected by the Company or any designee thereof
(each in its sole and absolute discretion), on the Specified Redemption Date,
whereupon the Company or any designee thereof shall acquire the OP Units or
Participation Interest offered for redemption by the Redeeming Partner and shall
be treated for all purposes of this Agreement as the owner of such OP Units or
Participation Interest. If the Company or any designee thereof shall elect to
exercise its right to purchase OP Units or a Participation Interest under this
Section 3.2(E) with respect to a Notice of Redemption, it shall so notify the
Redeeming Partner within five Business Days after the receipt by the General
Partner of such Notice of Redemption. Unless the Company or any designee thereof
(each in its sole and absolute discretion) shall exercise its right to purchase
OP Units or a Participation Interest from the Redeeming Partner pursuant to this
Section 3.2(E), neither the Company nor any designee thereof shall have any
obligation to the Redeeming Partner or the Partnership with respect to such
Redeeming Partner's exercise of such Redemption Right. In the event that the
Company or any designee thereof shall exercise its right to purchase OP Units or
a Participation Interest with respect to the exercise of a Redemption Right in
the manner described in the first sentence of this Section 3.2(E), the
Partnership shall have no obligation to pay any amount to the Redeeming Partner
with respect to such Redeeming Partner's exercise of such Redemption Right, and
each of the Redeeming Partner, the Partnership, and the Company or any designee
thereof, as the case may be, shall treat the transaction between the Company or
any designee thereof, as the case may be, and the Redeeming Partner for federal
income tax purposes as a sale of the Redeeming Partner's OP Units or
Participation Interest to the Company or any designee thereof. Each Redeeming
Partner agrees to execute such documents as the General Partner may reasonably
require in connection with the issuance of Common Shares upon exercise of the
Redemption Right. Any OP Units or Participation Interest acquired by the General
Partner pursuant to such Redemption Right shall, upon and after such
acquisition, be treated as a general partner interest.
F. The Company shall at all times reserve and keep available out of its
authorized but unissued Common Shares, solely for the purpose of effecting the
exchange of OP Units and the Participation Interest for Common Shares, such
number of Common Shares as shall from time to time be sufficient to effect the
redemption of the
17
Participation Interest and all outstanding OP Units not owned by the Company,
and any Preference Units not owned by the Company that are convertible into OP
Units (whether or not the conversion can then be effected). No Limited Partner
shall, by virtue of being the holder of the Participation Interest or one or
more OP Units and/or Preference Units be deemed to be a shareholder of or have
any other interest in the Company. In the event of any change in the outstanding
Common Shares of the Company or its successor by reason of any share dividend,
split, recapitalization, merger, consolidation, combination, exchange of shares
or other similar corporate change other than the issuance of Rights, as further
described in Section 3.2(G) (a "Recapitalization"), the number of OP Units held
by each Partner shall be adjusted upward or downward to equal such number of
Common Shares of the Company (or as applicable, the Common Shares or equivalent
class of securities of the successor thereto) as would have been held by the
Partner immediately following the Recapitalization if such Partner had held a
number of Common Shares equal to such number of OP Units immediately prior to
such Recapitalization. In the event the Company or any designee thereof acquires
OP Units or a Participation Interest pursuant to such Section 3.2(E), the
General Partner shall record the transfer on the books of the Partnership so
that the Company or any designee thereof, as applicable, is thereupon the owner
and holder of such OP Units or Participation Interest. As is more particularly
described in Section 3.2(D)(iv), notwithstanding any other provisions of this
Section 3.2, a Limited Partner shall not have the right to exercise a Redemption
Right if, upon payment of the REIT Shares Amount to such Limited Partner, (i)
the Company would, as a result thereof, no longer qualify (or it would be
reasonably possible in the judgement of the General Partner that the Company no
longer would qualify) as a real estate investment trust under the Code; or (ii)
the payment of such REIT Shares Amount to the Limited Partner would constitute
or be reasonably possible in the judgment of the General Partner to constitute a
violation of applicable federal or state securities laws or would violate any
applicable provisions of the organizational documents of the Company (including
without limitation any restrictions on ownership of securities of the Company
set forth in the Articles of Incorporation or Bylaws of the Company). In either
such event, to the extent the consequences described in (i) or (ii) could be
eliminated by reasonable action of the General Partner or the Company without
any material detriment to the General Partner or the Company and at the expense
of such Limited Partner(s) requesting such exchange, the Company or the General
Partner shall take all such reasonable action to effect the exchange of OP Units
or a Participation Interest for Common Shares by such Limited Partner(s) as
herein provided.
G. In the event that a Redeeming Partner exercises the Redemption Right,
and the Company or any designee thereof elects to make the payment of the REIT
Shares Amount to the Redeeming Partner referenced in accordance with the first
sentence of Section 3.2(E), and in the event that the Company issues to all of
its holders of Common Shares as of a certain record date rights, options,
warrants or convertible or exchangeable securities entitling such shareholders
to subscribe for or purchase Common Shares or any other securities or property
(collectively, "Rights"), with the record date for such Rights issuance falling
within the period starting on the date that the Company receives the Redemption
Notice from the Redeeming Partner and ending on the day immediately preceding
the date upon which the Company or its designee delivers the Common Shares to
the Redeeming Partner in exchange for such Redeeming Partner's OP
18
Units (the date upon which such exchange occurs being
referred to herein as the "Exchange Date"), which Rights will not be distributed
before the Exchange Date, then the amount payable by the Company or its designee
to the Redeeming Partner in exchange for its OP Units or Participation Interest
under this Section 3.2 shall also include such Rights that the Redeeming Partner
would have received if it had been the owner of the Common Shares to be
delivered by the Company to the Redeeming Partner prior to the record date for
the issuance of the Rights (as the same may be expressed for any purpose
hereunder in a number of OP Units or Common Shares as determined by the General
Partner).
3.3 ADDITIONAL FUNDS.
A. No Partner shall be assessed or, except as otherwise provided in
this Agreement, be required to contribute additional funds or other property to
the Partnership. Any additional funds or other property required by the
Partnership, as determined by the General Partner in its sole discretion, may,
at the option of the General Partner and without an obligation to do so (except
as provided for in Section 3.3(B) below), be contributed by the General Partner
or any other Partner (provided such other Partner is willing to do so and the
General Partner consents thereto, each in its sole and absolute discretion) as
additional Capital Contributions. If and as the General Partner or any other
Partner makes additional Capital Contributions to the Partnership, each such
Partner shall receive additional OP Units and/or Preference Units as provided
for in Section 3.2(B) above. The General Partner shall also have the right (but
not the obligation) to raise any additional funds required for the Partnership
in accordance with the provisions of Section 9.7(E) below and/or by causing the
Partnership to borrow the necessary funds from third parties on such terms and
conditions as the General Partner shall deem appropriate in its sole discretion.
If the General Partner elects to cause the Partnership to borrow the additional
funds, or if the Partnership issues a guaranty, indemnity or similar undertaking
in connection with the indebtedness of the Company as aforesaid, in any such
case one or more of the Partnership's assets may be encumbered to secure the
loan or undertaking. Except as provided for in Section 3.3(C) below, no Limited
Partner shall have the right to make additional Capital Contributions to the
Partnership without the prior written consent of the General Partner.
B. Except for (i) the capitalization of any wholly-owned entity of
the General Partner which is the general partner of a partnership having the
Partnership as a limited partner, (ii) the net proceeds generated by the
issuance of Other Securities that evidence debt (and are not equity securities)
that are loaned by the Company to the Partnership, and (iii) where the Company
determines that the net proceeds generated by the issuance of Common Shares or
Other Securities (whether for debt or equity) are to be retained by the Company
for a valid business reason consistent with the purposes of the Partnership and
such retention does not materially adversely affect the Limited Partners, the
net proceeds of any and all funds raised by or through the Company through the
issuance of Common Shares or Other Securities shall be contributed to the
Partnership as additional Capital Contributions, and in such event the Company
shall be issued additional Units pursuant to Section 3.2(B) above.
19
C. If the General Partner creates and administers a reinvestment
program in substantial conformance with a dividend reinvestment program which
may be available from time to time to holders of the Common Shares, each Limited
Partner holding OP Units shall have the right to reinvest any or all cash
distributions payable to it from time to time pursuant to this Agreement
(subject to the restrictions described in Article 12), by having some or all (as
the Limited Partner elects) of such distributions contributed to the Partnership
as additional Capital Contributions, and in such event the Partnership shall
issue to each such Limited Partner additional OP Units pursuant to Section
3.2(B)(iii) above, or the General Partner, in its sole discretion, may elect to
cause distributions with respect to which a Limited Partner has elected
reinvestment to be contributed to the Company in exchange for the issuance of
Common Shares. At the option of the General Partner, such a program may also be
made available with respect to Preference Units.
3.4 CAPITAL ACCOUNTS. A separate capital account ("Capital Account") shall
be maintained for each Partner.
A. To each Partner's Capital Account there shall be added the amount
of cash and the Gross Asset Value of any property contributed by such
Partner to the Partnership pursuant to any provision of this Agreement,
such Partner's distributive share of Profits and any items in the nature
of income or gain which are specially allocated pursuant to Section 7.3,
Section 7.4 or Section 14.2(C) hereof, and the amount of any Partnership
liabilities assumed by such Partner or which are secured by any
Partnership 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 Partnership property
distributed to such Partner pursuant to any provision of this Agreement,
such Partner's distributive share of losses and any items in the nature of
expenses or losses which are specially allocated pursuant to Section 7.3,
Section 7.4 or Section 14.2(C) hereof, and the amount of any liabilities
of such Partner assumed by the Partnership or which are secured by any
property contributed by such Partner to the Partnership.
C. In the event all or a portion of a Partnership Interest is
transferred in accordance with the terms of this Agreement (including a
transfer of OP Units or a Participation Interest in exchange for Common
Shares, pursuant to Section 3.2(E)), the transferee shall succeed to the
Capital Account of the transferor to the extent it relates to the
transferred Partnership Interest.
D. In determining the amount of any liability for purposes of
Sections 3.4(A) and 3.4(B) above, there shall be taken into account Code
Section 752(c) and any other applicable provisions of the Code and
Regulations.
E. This Section 3.4 and the other provisions of this Agreement
relating to the maintenance of Capital Accounts are intended to comply
with Regulations Section 1.704-1(b), and shall be interpreted and applied
in a manner consistent with such Regulations. In the event the General
Partner shall determine that it is prudent to modify
20
the manner in which the Capital Accounts, or any debits or credits thereto
(including, without limitation, debits or credits relating to liabilities
which are secured by contributed or distributed property or which are
assumed by the Partnership, or the Partners) are computed in order to
comply with such Regulations, the General Partner may make such
modification, provided that it is not likely to have a material effect on
the amounts distributed to any Partner pursuant to Section 14.2 upon the
liquidation of the Partnership. The General Partner also shall (i) make
any adjustments that are necessary or appropriate to maintain equality
between the Capital Accounts of the Partners and the amount of Partnership
capital reflected on the Partnership's balance sheet, as computed for book
purposes, in accordance with Regulations Section 1.704-1(b)(2)(iv)(g), and
(ii) make any appropriate modifications in the event unanticipated events
might otherwise cause this Agreement not to comply with Regulations
Section 1.704-1(b).
3.5 INTEREST ON AND RETURN OF CAPITAL.
A. No Partner shall be entitled to any interest on its Capital
Account or on its Capital Contributions to the Partnership.
B. Except as expressly provided for in this Agreement, no Partner
shall have the right to demand or to receive the return of all or any part
of its Capital Contributions to the Partnership and there shall be no
priority of one Partner over another Partner as to the return of capital
contributions or withdrawals or distributions of profits and losses. No
Partner shall have the right to demand or receive property other than cash
in return for the contributions of such Partner to the Partnership.
3.6 NEGATIVE CAPITAL ACCOUNTS. Upon the liquidation of the Partnership or
the liquidation of the Participation Interest, the holder of the Participation
Interest shall be required to pay to the Partnership any deficit or negative
balance which may exist in its Capital Account at such time (determined after
taking into account the allocations described in Article 7 or Section 14.2(C)
for the year in which such liquidation or redemption occurs). Subject to the
provisions of any guarantee or other written agreement between a Partner and the
Partnership, or except as provided in the preceding sentence, no Partner shall
otherwise be required to pay to the Partnership any deficit or negative balance
which may exist in its Capital Account.
3.7 LIMIT ON CONTRIBUTIONS AND OBLIGATIONS OF PARTNERS. Except as provided
in Sections 3.1, 3.2 and 3.3 (or the provisions of any guarantee or other
written agreement between a Partner and the Partnership), no Partner shall be
required to make any additional advances or contributions to or on behalf of the
Partnership or guarantee any obligations of the Partnership.
3.8 REDEMPTION AND REPURCHASE OF UNITS3.9 . Notwithstanding any other
provision of this Agreement which may be contrary to this Section 3.8, in the
event of the proposed repurchase or redemption for cash by the Company of (i)
Common Shares or (ii) Other Securities with respect to which the Partnership had
previously issued Preference Units pursuant to Section 3.2(B)(iv) of this
Agreement, then, in such event, the Partnership shall provide cash to the
Company concurrently with such repurchase or redemption or for such purpose
equal to the proposed repurchase or redemption price, and one OP Unit owned by
the General Partner (or, in
21
the case of redemption or repurchase by the Company of Other Securities
contemplated by clause (ii) above, one Preference Unit owned by the General
Partner which had been issued with respect to such Other Securities) shall be
canceled with respect to each Common Share (or share of Other Securities) so
repurchased or redeemed.
ARTICLE IV
OFFICE AND REGISTERED AGENT
The address of the registered office of the Partnership in the State of
Delaware is located at 0000 Xxxxxx Xxxxxx, Xxxx xx Xxxxxxxxxx, Xxxxxx of Xxx
Xxxxxx, Xxxxx xx Xxxxxxxx 00000, and the registered agent for service of process
on the Partnership in the State of Delaware at such registered office is the
Corporation Trust Company. The principal office of the Partnership is located at
0000 Xxxx Xxx Xxxxxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxx 00000-0000 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 may deem
advisable.
ARTICLE V
PURPOSES AND POWERS OF PARTNERSHIP
5.1 PURPOSES OF THE PARTNERSHIP. The objects and purposes of the
Partnership are to engage in any lawful business activities in which a
partnership formed under the Act may engage or participate, with its primary
objectives and purposes being, either as a partner in a partnership or joint
venture or otherwise, to purchase, own, maintain, mortgage, encumber, equip,
manage, lease, finance, operate, dispose of or otherwise deal with real
property, interests in real property or mortgages secured by real property.
5.2 POWERS. The Partnership purposes may be accomplished by taking any
action which is not prohibited under the Act.
5.3 REIT REQUIREMENTS. Each Limited Partner understands and acknowledges
that the General Partner intends to elect to be treated as a real estate
investment trust ("REIT") under Code Section 856. Each Limited Partner further
understands and acknowledges that in order to maintain its status as a REIT, the
General Partner must comply with numerous and complex rules and regulations set
forth in the Code and the Regulations, many of which are applied on a quarterly
and/or annual basis (the "REIT Requirements"), and that the management and
operation of the Partnership will have a material effect on the ability of the
General Partner to continue to maintain its status as a REIT. Accordingly,
notwithstanding any other provision of this Agreement or any non-mandatory
provision of the Act, the Partnership shall not take any action which (or fail
to take any action, the omission of which) (i) could adversely affect the
ability of the General Partner to qualify or continue to qualify as a REIT, (ii)
could subject the General Partner to any additional taxes under Code Section 857
or Code Section 4981 or other potentially adverse consequences under the Code,
or (iii) otherwise could cause the General Partner to violate the REIT
Requirements, specifically including, but not limited to, restrictions on
Redemption Rights in Section 3.2(D)(iv). In addition, notwithstanding any other
provision of this Agreement or any non-mandatory provision of the Act, any
action of the General Partner on behalf of the Partnership or any decision of
the General Partner to refrain from acting on behalf of the Partnership,
undertaken in the General Partner's business judgement that such action or
omission is necessary or advisable in order (i) to protect the ability of the
General Partner to continue to qualify as a REIT or (ii) to avoid the General
Partner incurring any taxes under Code Section 857 or Code Section 4981, is
expressly authorized under this Agreement and is approved by all of the Limited
Partners.
22
ARTICLE VI
TERM
The term of the Partnership shall continue until the Partnership is
terminated upon the occurrence of an event described in Section 14.1 below.
ARTICLE VII
ALLOCATIONS
7.1 PROFITS.
A. After giving effect to the special allocations set forth in
Sections 7.3, 7.4, and 14.2(C), Profits for any fiscal year other than
Capital Transactions Gains shall be allocated as follows:
(i) first, gross profits shall be allocated to the holder of
the Participation Interest, until the cumulative amount of Profits
allocated to such holder pursuant to this Section 7.1(A) with
respect to its Participation Interest equals the cumulative amount
of distributions, other than distributions of proceeds from
transactions resulting in Capital Transaction Gains or Losses, made
to such holder pursuant to Section 8.2 hereof with respect to its
Participation Interest; and
(ii) thereafter, remaining Profits shall be allocated among
the Partners in proportion to the number of OP Units held by each
such Partner.
B. After giving effect to the allocations set forth in Sections 7.3,
7.4 and 14.2(C), Capital Transaction Gains shall be computed separately
with respect to each property and shall be allocated among the Partners as
follows:
(i) first, among the Partners in proportion to, and to the
extent of, any deficit balance in each such Partner's Capital
Account;
(ii) second, to the holder of the Participation Interest in
the minimum amount needed so as to cause its Capital Account balance
to equal the product of the Percentage Interest attributable to the
Participation Interest and the aggregate Capital Account balances of
all the Partners (after giving effect to the allocation in this
clause (ii)); and
(iii) thereafter, among the Partners in proportion to their
respective Percentage Interests.
23
C. In the event that the Partnership issues additional Units to the
General Partner or any Limited Partner pursuant to Section 3.2 hereof, the
General Partner shall make such revisions to this Section 7.1 as it
determines are necessary to reflect the terms of the issuance of such
additional Units, including such revisions as are needed to ensure that
such allocations (i) will comply with the terms of Regulations Sections
1.704-1 and -2 and Code Section 514(c)(9)(E), (ii) will properly reflect
the varying interests of the Partners in the Partnership, and (iii) will
cause the Capital Accounts of the Partners held by them to be in the
ratios in which the Partners are entitled to receive distributions with
respect to their Partnership Interests pursuant to Article 8 hereof.
7.2 LOSSES.
A. After giving effect to the special allocations set forth in
Sections 7.3, 7.4, and 14.2(C), all Losses (including Capital Transaction
Losses, which shall be computed and allocated separately with respect to
each property) shall be allocated among the Partners as follows:
(i) first, among the Partners in proportion to the number of
OP Units held by each such Partner, until the aggregate Capital
Account balances of the Partners holding OP Units is reduced to an
amount equal to the product of (a) 100% minus the Percentage
Interest attributable to the Participation Interest and (b) the
aggregate Capital Account balances of all the Partners (after giving
effect to the allocation in this clause (i));
(ii) second, among the Partners in proportion to their
respective positive Capital Account balances; and
(iii) thereafter, among the Partners in proportion to the
number of OP Units held by each such Partner.
B. The Losses allocated pursuant to Section 7.2(A) above shall not
exceed the maximum amount of Losses that can be so allocated without
causing any Limited Partner to have an Adjusted Capital Account Deficit at
the end of any fiscal year. All Losses in excess of the limitations set
forth in this Section 7.2(B) shall be allocated among the other Partners
in proportion to the number of OP Units held by each such other Partner.
C. In the event that the Partnership issues additional Units to the
General Partner or any Limited Partner pursuant to Section 3.2 hereof, the
General Partner shall make such revisions to this Section 7.2 as it
determines are necessary to reflect the terms of the issuance of such
additional Units, including such revisions as are needed to ensure that
such allocations (i) will comply with the terms of Regulations Sections
1.704-1 and -2 and Code Section 514(c)(9)(E), (ii) will properly reflect
the varying interests of the Partners in the Partnership, and (iii) will
cause the Capital Accounts of the Partners to be in the ratios in which
the Partners are entitled to receive distributions with respect to their
Partnership Interests pursuant to Article 8 hereof.
24
7.3 SPECIAL ALLOCATIONS. The following special allocations shall be made
in the following order:
A. Except as otherwise provided in Regulations Section 1.704-2(f),
and notwithstanding any other provision of this Article 7, if there is a
net decrease in Partnership Minimum Gain during any fiscal year, each
Partner shall be specially allocated items of Partnership income and gain
for such fiscal year (and, if necessary, subsequent fiscal years) in an
amount equal to such Partner's share of the net decrease in Partnership
Minimum Gain, determined in accordance with Regulations Section
1.704-2(g). The items to be so allocated shall be determined in accordance
with Regulations Sections 1.704-2(f)(6) and 1.704-2(j)(2). This Section
7.3(A) is intended to comply with the minimum gain chargeback requirement
in Regulations Section 1.704-2(f) and shall be interpreted consistently
therewith.
B. Except as otherwise provided in Regulations Section
1.704-2(i)(4), and notwithstanding any other provision of this Article 7,
if there is a net decrease in Partner Nonrecourse Debt Minimum Gain
attributable to a Partner Nonrecourse Debt during any Partnership fiscal
year, each Partner who has a share of the Partner Nonrecourse Debt 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 fiscal year (and,
if necessary, subsequent fiscal years) in an amount equal to such
Partner's share of the net decrease in Partner Nonrecourse Debt Minimum
Gain attributable to such Partner Nonrecourse Debt, determined in
accordance with Regulations Section 1.704-2(i)(4). The items to be so
allocated shall be determined in accordance with Regulations Sections
1.704-2(i)(4) and 1.704-2(i)(2). This Section 7.3(B) is intended to comply
with the minimum gain chargeback requirement in Regulations Section
1.704-2(i)(4) and shall be interpreted consistently therewith.
C. In the event any Partner unexpectedly receives any adjustments,
allocations, or distributions described in Regulations Sections
1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5), or
1.704-1(b)(2)(ii)(d)(6), items of Partnership income and gain shall be
specially allocated to each such Partner in an amount and manner
sufficient to eliminate, to the extent required by the Regulations, the
Adjusted Capital Account Deficit of such Partner as quickly as possible,
provided that an allocation pursuant to this Section 7.3(C) shall be made
only if and to the extent that such Partner would have an Adjusted Capital
Account Deficit after all other allocations provided for in this Article 7
have been tentatively made, as if this Section 7.3(C) were not in this
Agreement.
D. In the event any Partner has a deficit Capital Account at the end
of any Partnership fiscal year which is in excess of the sum of (i) the
amount such Partner is obligated to restore pursuant to any provision of
this Agreement, and (ii) the amount such Partner 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 Partner shall be specially
allocated items of Partnership income and gain in the amount of such
excess as quickly as possible, provided that an allocation pursuant to
this Section 7.3(D) shall be made only if and to the extent that such
Partner would have a deficit Capital Account after all other
25
allocations provided for in this Article 7 have been made as if Section
7.3(C) hereof and this Section 7.3(D) were not in the Agreement.
E. If and to the extent Partners holding Preference Units receive
preferred distributions from the Partnership (other than distributions
pursuant to Section 14.2(C) in final liquidation of the Partnership), each
such Partner shall be allocated Partnership gross income in an amount
equal to the amount of preferred distributions received with respect to
such Preference Units, prior to any allocations of Profit and Loss
pursuant to Sections 7.1 and 7.2 above. For purposes of this Section
7.3(E), any payment with respect to a Preference Unit that, under the
applicable Preference Unit Term Sheet, constitutes a payment in redemption
of such Preference Unit (and a return of the Partner's Capital
Contribution with respect to such Preference Unit) shall not result in a
special allocation of gross income to the Partner receiving such payments
under this Section 7.3(E), except to the extent such payment is
specifically attributable to accrued and unpaid preferred distributions
with respect to such Preference Unit provided for in such Preference Unit
Term Sheet.
F. Nonrecourse Deductions for any fiscal year shall be allocated
among the Partners in accordance with their respective Percentage
Interests.
G. Any Partner Nonrecourse Deductions for any fiscal year shall be
specially allocated to the Partner who bears the economic risk of loss
with respect to the Partner Nonrecourse Debt to which such Partner
Nonrecourse Deductions are attributable, in accordance with Regulations
Section 1.704-2(i)(1).
H. To the extent an adjustment to the adjusted tax basis of any
Partnership asset pursuant to Code Section 734(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 the result of a distribution to a Partner
in complete liquidation of its interest in the Partnership, the amount of
such adjustment to Capital Accounts shall be treated as an item of gain
(if the adjustment increases the basis of the asset) or loss (if the
adjustment decreases such basis) and such gain or loss shall be
specifically allocated to the Partner to whom such distribution was made.
7.4 CURATIVE ALLOCATIONS. The allocations set forth in Sections 7.2(C),
7.3(A), 7.3(B), 7.3(C), 7.3(D), 7.3(F), 7.3(G), and 7.3(H) above (the
"Regulatory Allocations") are intended to comply with certain requirements of
the Regulations under Code Section 704(b). It is the intent of the Partners
that, to the extent possible, all Regulatory Allocations shall be offset either
with other Regulatory Allocations or with special allocations of other items of
Partnership income, gain, loss, or deduction pursuant to this Section 7.4.
Therefore, notwithstanding any other provision of this Article 7 (other than the
Regulatory Allocations), the General Partner shall make such offsetting special
allocations of Partnership income, gain, loss, or deduction in whatever manner
it determines appropriate so that, after such offsetting allocations are made,
each Partner's Capital Account balance is, to the extent possible, equal to the
Capital Account balance such Partner would have had if the Regulatory
Allocations were not part of the Agreement and all Partnership items were
allocated pursuant to Section 7.1(A)(ii) and 7.2(A) (subject, however, to
Section 7.3(E) above). In exercising its discretion under this
26
Section 7.4, the General Partner shall take into account future Regulatory
Allocations under Section 7.3(A) and 7.3(B) that, although not yet made, are
likely to offset other Regulatory Allocations previously made under Sections
7.3(F) and 7.3(G).
7.5 TAX ALLOCATIONS: CODE SECTION 704(C).
A. Income, gain, loss, and deduction with respect to any property
contributed to the capital of the Partnership shall, solely for tax
purposes, be allocated among the Partners so as to take account of any
variation between the adjusted basis of such property to the Partnership
for Federal income tax purposes and its initial Gross Asset Value in
accordance with any permissible method or methods under Code Section
704(c) and the Regulations thereunder, as determined in the sole
discretion of the General Partner.
B. In the event the Gross Asset Value of any Partnership asset is
adjusted pursuant to the definition of "Gross Asset Value" contained in
Article 2 above, subsequent allocations of income, gain, loss and
deduction with respect to such asset shall take account of any variation
between the adjusted basis of such asset for Federal income tax purposes
and its Gross Asset Value in the same manner or manners permitted under
Code Section 704(c) and the Regulations thereunder.
C. The portion of any gain recognized by the Partnership on the
disposition of property which is classified as ordinary income under
Sections 751, 1245 or 1250 of the Code, or which is classified as
"unrecaptured section 1250 gain" under Section 1(h)(7) of the Code, shall
be allocated among the Partners in the ratio in which the deductions
giving rise to such ordinary income or unrecaptured section 1250 gain were
allocated; provided, however, that the amount of ordinary income or
unrecaptured section 1250 gain so allocated shall not exceed the gain from
such sale or disposition that is so allocable to the Partner.
D. Any elections or other decisions relating to the allocations
provided under this Section 7.5 shall be made by the General Partner using
any permissible manner under the Code or the Regulations that the General
Partner may elect in its sole discretion. Allocations pursuant to this
Section 7.5 are solely for purposes of Federal, state, and local taxes and
shall not affect, or in any way be taken into account in computing, any
Partner's Capital Account or share of Profits, Losses, other items, or
distributions pursuant to any provision in this Agreement.
ARTICLE VIII
CASH AVAILABLE FOR DISTRIBUTION
8.1 DEFINITION OF AVAILABLE CASH. As used in this Agreement, "Available
Cash" shall mean and be defined as all cash receipts of the Partnership from
whatever source during the period in question in excess of all items of
Partnership expense (other than non-cash expenses such as depreciation) and
other cash needs of the Partnership, including, without limitation, investments
by the Partnership, amounts paid by the Partnership as principal on debts and
advances during such period, capital expenditures, payments to any dealer
manager, advisor
27
or property manager under any dealer manager, advisory and/or property
management agreement, other fees and expense reimbursements, funds used for
redemptions, and any reserves (as determined by the General Partner) established
or increased during such period. In the discretion of the General Partner, but
subject to Section 5.3, reserves may include cash held for future acquisitions.
8.2 TIMING AND PRIORITY OF DISTRIBUTIONS OF AVAILABLE CASH. Available Cash
shall be distributed to or for the benefit of the Partners of record as of the
applicable Record Date not less frequently than quarterly. All such
distributions shall, subject to the rights of any holder of Preference Units, be
distributed among the Partners holding OP Units and Participation Interests in
proportion to their respective Percentage Interests as of the applicable Record
Date.
8.3 CONSENT TO ALLOCATIONS AND DISTRIBUTIONS. Each of the Partners hereby
consents to the allocations and distributions provided for in this Agreement.
8.4 RIGHT TO LIMIT DISTRIBUTIONS. The right of any Partner to receive
distributions of any nature pursuant to the terms of this Agreement shall be
subject to the terms of any agreement between such Partner and the Partnership
limiting, restricting or providing rights of set-off with respect to such
distributions.
ARTICLE IX
MANAGEMENT OF PARTNERSHIP
9.1 GENERAL PARTNER. The General Partner shall be the sole manager of the
Partnership business, and shall have the right and power to make all decisions
and take any and every action with respect to the property, the business and
affairs of the Partnership and shall have all the rights, power and authority
generally conferred by law, or necessary, advisable or consistent with
accomplishing the purposes of the Partnership. All such decisions or actions
made or taken by the General Partner hereunder shall be binding upon all of the
Partners and the Partnership. The powers of the General Partner to manage the
Partnership business shall include, without limitation, the power and authority
to, directly or indirectly:
(i) operate any business normal or customary for the owner of or
investor in commercial property of the type held by the Partnership;
(ii) perform any and all acts necessary or appropriate to the
operation of the Partnership's assets, including, but not limited to,
preparing, negotiating, executing and delivering leases and rental
agreements with regard to real and personal property owned by the
Partnership, preparing applications for rezoning, preparing objections to
rezoning of other property and establishing bank accounts in the name of
the Partnership;
(iii) improve, renovate and/or perform construction activities with
regard to the properties owned by the Partnership and to retain such
contractors, subcontractors and other persons or entities as may be
required in connection with such activities;
28
(iv) procure and maintain such insurance as may be available in such
amounts and covering such risks as are deemed appropriate by the General
Partner;
(v) take and hold all real, personal and mixed property of the
Partnership in the name of the Partnership or in the name of a nominee;
(vi) negotiate, execute and deliver agreements on behalf of and in
the name of the Partnership;
(vii) borrow money (whether on a secured or unsecured basis),
finance and refinance the assets of the Partnership or any part thereof or
interest therein, and in connection therewith, issue notes, bonds,
securities and other undertakings and evidences of indebtedness and
documents related thereto (including, without limitation, guaranties,
indemnities and similar undertakings to support loans obtained or debt
securities issued by the Company);
(viii) coordinate all accounting and clerical functions of the
Partnership and employ such accountants, lawyers, property managers,
leasing agents and other management or service personnel as may from time
to time be required to carry on the business of the Partnership;
(ix) acquire any assets, and encumber, sell, assign, transfer,
ground lease or otherwise dispose of any or all of the assets of the
Partnership, or any part thereof or interest therein including, without
limitation, by way of any Unit dividend, split, recapitalization, merger,
consolidation, combination, exchange of Units or other similar Partnership
organizational change;
(x) organize one or more partnerships, corporations, limited
liability companies or other business entities which are controlled,
directly or indirectly, by the Partnership and make any capital
contributions (in cash or in kind) required pursuant to the organizational
documents or subscription agreements relating to any such partnerships,
corporations, limited liability companies or other business entities; and
(xi) establish the date (the "Record Date") for the purpose of
making any proper determination in connection with, but not limited to,
the following matters: (a) which Partners are entitled to receive
distributions, (b) consent to any matter for which the consent of Partners
is permitted or required under any provision hereof, or (c) otherwise when
Partners are allocated rights hereunder.
9.2 LIMITATIONS ON POWER AND AUTHORITY OF PARTNERS. Notwithstanding the
powers of the General Partner set forth in Section 9.1 above, the General
Partner shall not have the right or power to do any of the following unless any
such action is approved by a Majority-in-Interest of the Limited Partners:
29
A. do any act in contravention of this Agreement, or any amendment
hereto; or
B. do any act which would make it impossible to carry on the
ordinary business of the Partnership, except to the extent that such act
is specifically permitted by the terms hereof (it being understood and
agreed that a sale of any or all of the assets of the Partnership, for
example, would be an ordinary part of the Partnership's business and
affairs and is specifically permitted hereby).
9.3 LIMITED PARTNERS. The Limited Partners shall have no right or
authority to act for or to bind the Partnership and no Limited Partner (other
than the General Partner if the General Partner is also a Limited Partner) shall
participate in the conduct or control of the Partnership's affairs or business.
9.4 LIABILITY OF GENERAL PARTNER. The General Partner shall not be liable
or accountable, in damages or otherwise, to the Partnership or to any other
Partner for any error of judgment or for any mistakes of fact or law or for
anything which it may do or refrain from doing hereafter in connection with the
business and affairs of the Partnership except (i) in the case of fraud, willful
misconduct (such as an intentional breach of fiduciary duty or an intentional
breach of this Agreement) or gross negligence, and (ii) for other breaches of
this Agreement, but the liability of the General Partner under this clause (ii)
shall be limited to its interest in the Partnership as more particularly
provided for in Section 9.8. The General Partner shall not have any personal
liability for the return of any Limited Partner's Capital Contributions.
9.5 INDEMNITY. The Partnership shall indemnify and shall hold the General
Partner (and the officers and directors thereof) harmless from any liability,
loss, cost or damage, including without limitation reasonable legal fees and
court costs, incurred by it by reason of anything it may do or refrain from
doing hereafter for and on behalf of the Partnership or in connection with its
business or affairs; provided, however, that the Partnership shall not be
required to indemnify (i) the General Partner for any liability, loss, cost or
damage which it might incur as a result of its fraud, willful misconduct or
gross negligence in the performance of its duties hereunder, (ii) any officer or
director (other than "Independent Directors", as such term is defined in the
Articles of Incorporation) of the General Partner for any liability, loss, cost
or damage which it might incur as a result of misconduct or negligence of such
person, and (iii) any Independent Directors of the General Partner for any
liability, loss, cost or damage which it might incur as a result of willful
misconduct or gross negligence of such person. In addition, the General Partner
shall be entitled to reimbursement from the Partnership for any amounts paid by
it in satisfaction of indemnification obligations owed by the General Partner to
present or former officers or directors of the General Partner or its
predecessors, as provided for in or pursuant to the Articles of Incorporation
and Bylaws of the General Partner. The right of indemnification set forth in
this Section 9.5 shall be in addition to any rights to which the person or
entity seeking indemnification may otherwise be entitled and shall inure to the
benefit of the successors and assigns of any such person or entity. No Partner
shall be personally liable with respect to any claim for indemnification
pursuant to this Section 9.5, but such claim shall be satisfied solely out of
assets of the Partnership.
30
9.6 OTHER ACTIVITIES OF PARTNERS AND AGREEMENTS WITH RELATED PARTIES.
Except as may otherwise be agreed to in writing, each Limited Partner, and its
affiliates, shall be free to engage in, to conduct or to participate in any
business or activity whatsoever, including, without limitation, the acquisition,
development, management and exploitation of real and personal property (other
than property of the Partnership), without any accountability, liability or
obligation whatsoever to the Partnership or to any other Partner, even if such
business or activity competes with or is enhanced by the business of the
Partnership. The General Partner, in the exercise of its power and authority
under this Agreement, may contract and otherwise deal with or otherwise obligate
the Partnership to entities in which the General Partner or any one or more of
the officers, directors or shareholders of the General Partner may have an
ownership or other financial interest, whether direct or indirect.
9.7 OTHER MATTERS CONCERNING THE GENERAL PARTNER.
A. The General Partner shall be protected in relying, acting or
refraining from acting on any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, bond,
debenture, or other paper or document believed by it to be genuine and to
have been executed or presented by the proper party or parties.
B. The General Partner may exercise any of the powers granted or
perform any of the duties imposed by this Agreement either directly or
through agents. The General Partner may consult with legal counsel,
accountants, appraisers, management consultants, investment bankers and
other consultants selected by it, each of whom may serve as consultants
for the Partnership. An opinion by any consultant on a matter which the
General Partner believes to be within its professional or expert
competence shall be full and complete protection as to any action taken or
omitted by the General Partner based on the opinion and actions taken or
omitted in accordance therewith. The General Partner shall not be
responsible for the misconduct, negligence, acts or omissions of any
consultant or contractor of the Partnership or of the General Partner, and
shall assume no obligation other than to use due care in the selection of
all consultants and contractors.
C. No mortgagee, grantee, creditor or any other person dealing with
the Partnership shall be required to investigate the authority of the
General Partner or secure the approval of or confirmation by any Limited
Partner of any act of the General Partner in connection with the conduct
of any ordinary or extraordinary Partnership business.
D. The General Partner may retain such persons or entities as it
shall determine (including the General Partner or any entity in which the
General Partner shall have an interest or with which it is affiliated) to
provide services to or on behalf of the Partnership. The General Partner
shall be entitled to reimbursement from the Partnership for its
out-of-pocket expenses (including, without limitation, amounts paid or
payable to the General Partner or any entity in which the General Partner
shall have an interest or with which it is affiliated) incurred in
connection with Partnership business. Such expenses shall be deemed to
include without limitation those expenses required in
31
connection with the administration of the Partnership such as the
maintenance of Partnership books and records, management of the
Partnership property and assets and preparation of information respecting
the Partnership needed by the Partners in the preparation of their
individual tax returns.
E. The General Partner may loan to the Partnership the net proceeds
of loans obtained or debt securities issued by the Company so long as the
terms of such loan to the Partnership are substantially equivalent to the
corresponding loan obtained or debt securities issued by the Company.
9.8 PARTNER EXCULPATION. Except for fraud, willful misconduct and gross
negligence, no Partner shall have any personal liability whatsoever, whether to
the Partnership or to any other Partner, for the debts or liabilities of the
Partnership or its obligations hereunder, and the full recourse of any Partner
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 final judgment, order or
decree of a court of competent jurisdiction 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 and gross negligence, 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
Partners and arising out of, or in connection with, this Agreement. No advisor,
trustee, manager, trust manager, member, director, officer, partner, employee,
beneficiary, shareholder, participant or agent of any Partner (or of any partner
of a Partner) shall be personally liable in any matter or to any extent under or
in connection with this Agreement, and the Partnership, each Partner and their
respective successors and assigns shall look solely to the interest of the other
Partner in the Partnership for the payment of any claim or for any performance
hereunder.
9.9 GENERAL PARTNER EXPENSES AND LIABILITIES. The Partnership will pay or
reimburse the General Partner for all ongoing accounting and administrative
expenses of the General Partner so that, absent extraordinary circumstances, the
General Partner will not bear any expenses beyond those borne by the
Partnership. The Partnership shall pay all out-of-pocket costs and expenses
(including legal, accounting, tax, consulting and other professional fees and
expenses and travel and entertainment expenses) incurred by the Partnership, the
General Partner, and the General Partner and its Affiliates in connection with
the structuring and organization of the Partnership and the General Partner and
the offering and sale of Units and Common Shares and Other Securities.
ARTICLE X
BANKING
The funds of the Partnership shall be kept in accounts designated by the
General Partner and all withdrawals therefrom shall be made on such signature or
signatures as shall be designated by the General Partner.
32
ARTICLE XI
ACCOUNTING
11.1 FISCAL YEAR. The fiscal year and taxable year of the Partnership (the
"fiscal year") shall end on the last day of December of each year, unless
another fiscal year end is selected by the General Partner.
11.2 BOOKS OF ACCOUNT. The Partnership books of account shall be
maintained at the principal office designated in Article 4 or at such other
locations and by such person or persons as may be designated by the General
Partner. The Partnership shall pay the expense of maintaining its books of
account. Each Partner shall have, during reasonable business hours and upon
reasonable prior notice, access to the books of the Partnership and in addition,
at its expense, shall have the right to copy such books. The General Partner, at
the expense of the Partnership, shall cause to be prepared and distributed to
the Partners annual financial data sufficient to reflect the status and
operations of the Partnership and its assets and to enable each Partner to file
its federal income tax return.
11.3 METHOD OF ACCOUNTING. The Partnership books of account shall be
maintained and kept, and its income, gains, losses and deductions shall be
accounted for, in accordance with generally accepted accounting principles
consistently applied, or such other method of accounting as may be adopted
hereafter by the General Partner.
11.4 TAX MATTERS.
A. The General Partner is hereby designated the Tax Matters Partner
(hereinafter referred to as the "TMP") of the Partnership and shall have
all rights and obligations of the TMP under the Code. The Partnership
shall reimburse the TMP for any and all out-of-pocket costs and expenses
(including attorneys' and accountants' fees) incurred or sustained by it
in its capacity as TMP. The Partnership shall indemnify, defend and hold
the TMP harmless from and against any loss, liability, damage, cost or
expense (including attorneys' and accountants' fees) sustained or incurred
as a result of any act or decision concerning the Partnership tax matters
and within the scope of its responsibility as TMP. If the Partnership is
the subject of an income tax audit by any federal, state, local or foreign
authority, then to the extent the Partnership is treated as an entity for
purposes of the audit, including administrative settlement and judicial
review, the TMP shall be authorized to act for, and its decision shall be
final and binding upon, the Partnership and each Partner.
B. The General Partner shall take such steps as are necessary to
ensure that the Partnership is taxed as a partnership under the Code.
Subject to the preceding sentence, the General Partner shall have the
exclusive right to make any determination whether the Partnership shall
make available elections (including any election pursuant to Code Section
754 to adjust the tax basis of Partnership assets) for federal, state, or
local tax purposes, and the General Partner shall be absolved from all
liability and other consequences from its making or failing to make any
such election. All decisions and other matters concerning the computation
and allocation or tax items and attributes which are not otherwise
specifically provided for by the terms of this Agreement shall be
33
determined by the General Partner, and the General Partner shall be
absolved from all liability and other consequences from any such decisions
which are made in good faith.
C. The General Partner shall take all such actions as are reasonably
necessary for the Partnership to comply with any withholding or comparable
requirements under federal, state, local and foreign law and shall remit
any amounts withheld to, and file required forms with, the applicable
taxing jurisdictions. All amounts withheld from distributions shall be
treated as having been distributed to the Partner with respect to whom the
withholding was made. Any amounts that are required to be withheld by the
Partnership with respect to a Partner which are in excess or in advance of
distributions to such Partnership shall be paid over by such Partner to
the Partnership. Each Partner agrees to furnish the Partnership with such
representations and forms as the General Partner shall reasonably request
to assist in complying with the Partnership's withholding obligations. A
Partner subject to withholding shall pay to or reimburse the Partnership
for taxes, related interest and penalties, and all other costs and
expenses incurred by the Partnership in connection with such withholding
obligation, except for interest, penalties or costs (but not taxes) that
are incurred as a result of the gross negligence or willful misconduct of
the Partnership or the General Partner
ARTICLE XII
TRANSFERS OF PARTNERSHIP INTERESTS
12.1 GENERAL PARTNER. The General Partner may not Transfer its interest in
the Partnership without the consent of a Majority-in-Interest of the Limited
Partners unless (i) the Transfer of such interest is to a Xxxxx Controlled
Entity or to an entity that is, directly or indirectly, wholly-owned by the
Company and/or a Xxxxx Controlled Entity, or (ii) the Transfer of such interest
is pursuant to or in connection with a Recapitalization and either (a) the
Recapitalization has been approved by the consent of a Majority-in-Interest of
the Limited Partners, or (b) an appropriate adjustment to the number of OP Units
held by each Partner has been made in accordance with Section 3.2(F).
12.2 LIMITED PARTNER.
A. No Limited Partner or substituted Limited Partner may Transfer
all or any part of its interest in the Partnership, unless each of the
following conditions are met:
(i) The Limited Partner obtains the prior written consent of
the General Partner (which consent may be given or withheld in the
sole discretion of the General Partner), except for (x) the exchange
of OP Units or a Participation Interest for Common Shares, pursuant
to Section 3.2(C) above or (y) the Transfer of Units or
Participation Interests by any Xxxxx Controlled Entity to any other
Xxxxx Controlled Entity.
(ii) Either (x) the Partnership qualifies for the Private
Placement PTP Exemption for the entire taxable year of such Transfer
and for all prior taxable years, (y) the Transfer is a Private
Transfer, or (z) the Partnership is no longer
34
potentially subject to classification as a publicly traded
partnership, as defined in Section 7704 of the Code, as determined
by the General Partner in its sole discretion.
(iii) Such Transfer is not limited or prohibited by, and
complies with, any restrictions on transferability contained in the
Articles of Incorporation and Bylaws of the Company and/or any
applicable agreement executed by the transferor.
(iv) Such Transfer would not violate the securities laws of
any jurisdiction applicable to the Partnership or the Partnership
Interest to be assigned or transferred;
(v) Such Transfer would not cause the Partnership to lose its
status as a partnership for U.S. federal income tax purposes or
cause the Partnership to become subject to the Investment Company
Act;
(vi) Such Transfer would not cause (A) all or any portion of
the assets of the Partnership (1) to constitute "plan assets" (under
ERISA, the Code or the applicable provisions of any similar law) of
any existing or contemplated investor, or (2) to be subject to the
provisions of ERISA, the Code or any applicable similar law, or (B)
the General Partner to become a fiduciary with respect to any
existing or contemplated investor, pursuant to ERISA or the
applicable provisions of any similar law, or otherwise.
(vii) Such Transfer would not cause a termination of the
Partnership under Code Section 708.
(viii) The Transferor delivers opinions of counsel regarding
the foregoing matters in form and substance reasonably acceptable to
the General Partner as a condition to any such Transfer.
(ix) The Transfer would not, in the opinion of the General
Partner, (y) by treating the interest in the Partnership so
transferred as if it had been exchanged for Common Shares in
accordance with Section 3.2(C) above, violate the limitations on
ownership of Common Shares contained in the Articles of
Incorporation and/or Bylaws of the Company, or (z) violate any State
or Federal securities laws.
(x) The Transferee shall have agreed to be bound by the terms
of this Agreement and shall have executed a counterpart hereof or
joinder hereto.
B. A Limited Partner shall notify the General Partner of any
Transfer of beneficial interest or other interest which occurs without a
transfer of record ownership, as well as any pledge or other collateral
transfer.
35
C. No part of the interest of a Limited Partner shall be subject to
the claims of any creditor, any spouse for alimony or support, or to legal
process, and may not be voluntarily or involuntarily alienated or
encumbered except as may be specifically provided for in this Agreement. A
Limited Partner shall not be permitted to retire or withdraw from the
Partnership except as expressly permitted by this Agreement.
D. Any Transferee of all or any portion of a Limited Partner's
interest in the Partnership in accordance and compliance with the
provisions of this Section 12.2 shall be entitled to receive Profits,
Losses and distributions hereunder attributable to such interest acquired
by reason of such Transfer, from and after the effective date of the
Transfer of such interest; provided, however, anything in this Agreement
to the contrary notwithstanding, (i) without the prior written consent of
the General Partner, no Transferee shall be considered a substituted
Limited Partner; (ii) the Partnership and the General Partner shall be
entitled to treat the Transferor of such interest as the absolute owner
thereof in all respects, and shall incur no liability for the allocation
of Profits and Losses or distributions which are made to such Transferor
until such time as the written instrument of Transfer has been received by
the General Partner and the "effective date" of the Transfer has passed,
and (c) the General Partner shall have the right to require any such
Transferor to exchange such Partnership Interest for Common Shares or
cash, pursuant to Section 3.2(C) above. The "effective date" of any
Transfer shall be the last day of the month set forth on the written
instrument of Transfer or such other date consented to in writing by the
General Partner as the "effective date."
12.3 ADMISSION ADJUSTMENTS. The General Partner shall, when necessary,
cause this Agreement to be amended from time to time (and shall cause Schedule A
to be revised), to reflect the admission or withdrawal of Partners, and the
issuance, conversion and redemption of any Preference Units and/or OP Units
(including the corresponding adjustment to Percentage Interests).
12.4 TRANSFERS TO LENDERS. Notwithstanding any other provision of this
Agreement to the contrary, no transfer of any Units or Participation Interest
may be made to a lender to the Partnership or any person who is related (within
the meaning of Regulations Section 1.752-4(b)) to any lender to the Partnership
whose loan constitutes a Nonrecourse Liability, without the consent of the
General Partner, which consent may be given or withheld by the General Partner
in its sole and absolute discretion, provided that as a condition to such
consent being granted the lender will be required to enter into an arrangement
with the Partnership and the General Partner to exchange or redeem for the Cash
Amount or the REIT Shares Amount any Units or Participation Interest in which a
security interest is held simultaneously with the time at which such lender
would be deemed to be a partner in the Partnership for purposes of allocating
liabilities to such lender under Code Section 752.
ARTICLE XIII
ADMISSION OF NEW PARTNERS
The General Partner shall admit to the Partnership as limited partners
those persons and entities who are not already Partners and who receive a
Participation Interest, OP Units and/or Preference Units in accordance with the
provisions of this Agreement.
36
ARTICLE XIV
TERMINATION, LIQUIDATION AND DISSOLUTION OF PARTNERSHIP
14.1 TERMINATION EVENTS. The Partnership shall be dissolved and its
affairs wound up in the manner hereinafter provided upon the earliest to occur
of the following events:
A. the sale of all or substantially all of the assets of the
Partnership; or
B. subject to Section 14.4 below, the entry of a final judgment,
order or decree of a court of competent jurisdiction adjudicating as
bankrupt either the Partnership or the General Partner, and the expiration
without appeal of the period, if any, allowed by applicable law to appeal
therefrom.
14.2 METHOD OF LIQUIDATION. Upon the happening of any of the events
specified in Section 14.1 above, the General Partner (or if there be no General
Partner, a liquidating trustee selected by a Majority-in-Interest of the Limited
Partners) shall immediately commence to wind up the Partnership's affairs and
shall liquidate the assets of the Partnership as promptly as possible, unless
the General Partner, or the liquidating trustee, shall determine that an
immediate sale of Partnership assets would cause undue loss to the Partnership,
in which event the liquidation may be deferred for a reasonable time. The
Partners shall continue to share distributions, Profits and Losses during the
period of liquidation in the same proportions as before dissolution (subject to
Section 14.2(C) below). The proceeds from liquidation of the Partnership,
including repayment of any debts of Partners to the Partnership, shall be
applied in the following order:
A. Debts of the Partnership, including repayments of principal and
interest on loans and advances made by the General Partner pursuant to
Sections 3.3 and/or 9.7 above; then
B. To the establishment of any reserves deemed necessary or
appropriate by the General Partner, or by the person(s) winding up the
affairs of the Partnership in the event there is no remaining General
Partner of the Partnership, for any contingent or unforeseen liabilities
or obligations of the Partnership. Such reserves established hereunder
shall be held for the purpose of paying any such contingent or unforeseen
liabilities or obligations and, at the expiration of such period as the
General Partner, or such person(s) deems advisable, the balance of such
reserves shall be distributed in the manner provided hereinafter in this
Section 14.2 as though such reserves had been distributed
contemporaneously with the other funds distributed hereunder; and then
C. To the Partners in accordance with their respective positive
Capital Account balances, after giving effect to all contributions,
distributions and allocations for all periods. In connection therewith,
income, gain and loss of the Partnership (and to the extent necessary to
achieve the purposes hereof, items of gross income and deduction) with
respect to the sale or other disposition of all or substantially all of
the Partnership's assets and/or the Partnership's operations in connection
therewith (whether or not attributable to the taxable year in which the
distribution pursuant to this Section 14.2(C)
37
is to be made or a preceding taxable year) shall be allocated among the
Partners so that each Partner's Capital Account shall equal, after taking
into account the prior balance (positive or negative) in such Partner's
Capital Account and the effect of such allocation, the amount that such
Partner would be entitled to receive if the Partnership were to make a
distribution to the Partners pursuant to the provisions of Section 8.2
hereof in an amount equal to the remaining liquidation proceeds to be
distributed under this Section 14.2(C).
14.3 DATE OF TERMINATION. The Partnership shall be terminated when all
notes received in connection with any liquidating sales or other dispositions
have been paid or distributed and all of the cash or property available for
application and distribution under Section 14.2 above (including reserves) shall
have been applied and distributed in accordance therewith.
14.4 RECONSTITUTION UPON BANKRUPTCY.
A. Notwithstanding any dissolution of the Partnership under Section
14.1(D) above, if the Partnership is reconstituted as set forth in this
Section 14.4, then the business of the Partnership shall be continued with
the Partnership's property and the Partnership's assets shall not be
liquidated.
B. If the Partnership is dissolved by reason of the bankruptcy of
the General Partner, a successor general partner may, in the discretion of
the General Partner hereunder with the written consent of a
Majority-in-Interest of the Limited Partners, be admitted within 90 days
after the dissolution, effective as of the date of dissolution. Upon the
admission of such successor general partner, without any further consent
or approval of any other Partner, the Partnership shall be reconstituted
as a successor limited partnership.
C. If the Partnership is dissolved by reason of the bankruptcy of
the Partnership in a proceeding for the reorganization (and not the
liquidation) of the Partnership, then, with the consent of the Company and
a Majority-in-Interest of the Limited Partners, the Partnership may be
reconstituted within 90 days after dissolution, effective as of the date
of dissolution, whereupon the Partnership shall be reconstituted as a
successor limited partnership.
A. The successor limited partnership reconstituted in accordance
with the foregoing provisions of this Section 14.4 shall continue the
business of the Partnership with the Partnership's property. The
Percentage Interests of the Partners in the successor limited partnership
shall be in proportion to their respective Percentage Interests in the
dissolved Partnership. Such successor limited partnership shall be
governed by the terms and provisions of this Agreement and references in
this Agreement to the Partnership or to the Partners or their rights and
obligations shall be understood to comprehend such successor limited
partnership and the Partners thereof and their rights and obligations.
14.5 DEATH, LEGAL INCOMPETENCY, ETC. OF A LIMITED PARTNER. The death,
legal incompetency, insolvency, dissolution or bankruptcy of a Limited Partner
shall not dissolve or terminate the Partnership. Upon the death or incapacity of
an individual Limited Partner, such
38
individual Limited Partner's interest in the Partnership shall be transferred
either by will, the laws of intestacy or otherwise to the legal representative
or successor of such individual Limited Partner.
ARTICLE XV
POWER OF ATTORNEY
Each Limited Partner hereby irrevocably constitutes and appoints the
General Partner, with full power of substitution, its true and lawful attorney,
for it and in its name, place and stead and for its use and benefit, to sign,
swear to, acknowledge, file and record:
A. this Agreement, and subject to Article 16 below, amendments to
this Agreement;
B. any certificates, instruments and documents (including assumed
and fictitious name certificates) as may be required by, or may be
appropriate under, the laws of the State of Delaware, the State of Texas
or any other State or jurisdiction in which the Partnership is doing or
intends to do business, in order to discharge the purposes of the
Partnership or otherwise in connection with the use of the name or names
used by the Partnership;
C. any other instrument which may be required to be filed or
recorded by the Partnership on behalf of the Partners under the laws of
any State or by any governmental agency in order for the Partnership to
conduct its business;
D. any documents which may be required to effect the continuation of
the Partnership, the admission of a substitute or additional Partner, the
dissolution and termination of the Partnership or the amendment and
restatement of Schedule A, provided such continuation, admission,
dissolution and termination or amendment and restatement of Schedule A, is
not in violation of any provision of this Agreement; and
E. any documents which may be required or desirable to have the
General Partner appointed, and act as, the TMP.
The foregoing grant of authority is a special power of attorney coupled with an
interest, is irrevocable and shall survive the death or incapacity of any
individual Limited Partner, and shall survive the delivery of any assignment by
a Limited Partner of the whole or any portion of his interest in the
Partnership.
ARTICLE XVI
AMENDMENT OF AGREEMENT
A. Each Limited Partner, by his execution of or joinder in this
Agreement, hereby irrevocably appoints the General Partner with power of
substitution, as his true and lawful attorney coupled with an interest, in
his name, place and xxxxx to amend this Agreement in any respect other
than:
39
(i) to enlarge the obligation of any Partner to make
contributions to the capital of the Partnership; or
(ii) except as otherwise provided for in this Agreement or as
required by law, to modify the allocation of Profits or Losses or
distributions among the Partners as provided for in Articles 7 and 8
above, respectively; or
(iii) to amend Articles 1 or 12 or Section 9.2; or
(iv) to amend this Article 16.
B. With respect to amendments regarding Sections 16(A)(ii) or
16(A)(iii), this Agreement may be amended with the written consent of the
General Partner and those Limited Partners holding not less than 67% of
the aggregate of Percentage Interests held by all Limited Partners.
Notwithstanding the foregoing, the terms and conditions of a particular
series of Preference Units may not be changed without the written consent
of the holders of at least 67% of the Preference Units within the class or
series (or such greater percentage as may be provided for in the
applicable Preference Unit Term Sheet).
C. With respect to amendments regarding Section 16(A)(i), this
Agreement may be amended only with the written consent of the General
Partner and any Partner adversely affected by such amendment. With respect
to amendments regarding Section 16(A)(iv) this Agreement may be amended
only with the written consent of all Partners.
In the event this Agreement shall be amended pursuant to this Article 16,
the General Partner shall cause this Agreement to be amended to reflect the
amendment.
ARTICLE XVII
MISCELLANEOUS
17.1 NOTICES. Any notice, election or other communication provided for or
required by this Agreement shall be in writing and shall be deemed to have been
given when delivered by hand or by telecopy or other facsimile transmission, the
first business day after sent by overnight courier (such as Federal Express), or
on the second business day after deposit in the United States Mail, certified or
registered, return receipt requested, postage prepaid, properly addressed to the
Partner to whom such notice is intended to be given at the address for the
Partner set forth on Schedule A of this Agreement, or at such other address as
such person may have previously furnished in writing to the Partnership and each
Partner with copies to the General Partner at 0000 Xxxx Xxx Xxxxxxxxx, Xxxxx
0000, Xxxxxxx, Xxxxx 00000-0000.
17.2 MODIFICATIONS. Except as otherwise provided in this Agreement, no
change or modification of this Agreement, nor any waiver of any term or
condition in the future, shall be valid or binding upon a Partner unless such
change or modification shall be in writing and signed by such Partner.
40
17.3 SUCCESSORS AND ASSIGNS. Any person acquiring or claiming an interest
in the Partnership, in any manner whatsoever, shall be subject to and bound by
all of the terms, conditions and obligations of this Agreement to which his
predecessor-in-interest was subject or bound, without regard to whether such a
person has executed a counterpart hereof or any other document contemplated
hereby. No person, including the legal representative, heir or legatee of a
deceased Partner, shall have any rights or obligations greater than those set
forth in this Agreement, and no person shall acquire an interest in the
Partnership or become a Partner thereof except as expressly permitted by and
pursuant to the terms of this Agreement. Subject to the foregoing, and the
provisions of Article 12 above, this Agreement shall be binding upon and inure
to the benefit of the Partners and their respective successors, assigns, heirs,
legal representatives, executors and administrators.
17.4 DUPLICATE ORIGINALS. For the convenience of the Partners, any number
of counterparts hereof may be executed, and each such counterpart shall be
deemed to be an original instrument, and all of which taken together shall
constitute one agreement.
17.5 CONSTRUCTION. The titles of the Articles, Sections and subsections
herein have been inserted as a matter of convenience of reference only and shall
not control or affect the meaning or construction of any terms or provisions
herein.
17.6 GOVERNING LAW. This Agreement shall be governed by the laws of the
State of Delaware. Except to the extent the Act is inconsistent with the
provisions of this Agreement, the provisions of such Act shall apply to the
Partnership.
17.7 OTHER INSTRUMENTS. The parties hereto covenant and agree that they
will execute such other and further instruments and documents as, in opinion of
the General Partner, are or may become necessary or desirable to effectuate and
carry out the Partnership as provided for by this Agreement.
17.8 GENERAL PARTNER WITH INTEREST AS LIMITED PARTNER. If the General Partner
ever has an interest as a Limited Partner in the Partnership, the General
Partner shall, with respect to such interest, enjoy all of the rights and be
subject to all of the obligations and duties of a Limited Partner.
17.9 LEGAL CONSTRUCTION. In case any one or more of the provisions
contained in this Agreement shall for any reason be held to be invalid, illegal
or unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provision hereof and this Agreement shall be
construed as if such invalid, illegal or unenforceable provision had never been
contained herein
17.10 GENDER. Whenever the context shall so require, all words herein in
any gender shall be deemed to include the masculine, feminine or neuter gender,
all singular words shall include the plural, and all plural words shall include
the singular.
17.11 PRIOR AGREEMENTS SUPERSEDED. This Agreement supersedes any prior
understandings or written or oral agreements among the Partners, or any of them,
respecting the within subject matter and contains the entire understanding
amongst the Partners with respect thereto.
41
17.12 NO THIRD PARTY BENEFICIARY. The terms and provisions of this
Agreement are for the exclusive use and benefit of General Partner and the
Limited Partners and shall not inure to the benefit of any other person or
entity.
17.13 PURCHASE FOR INVESTMENT. Each Partner represents, warrants and
agrees that it has acquired and will hold its interest in the Partnership for
its own account for investment only and not for the purpose of, or with a view
toward, the resale or distribution of all or any part thereof, nor with a view
toward selling or otherwise distributing such interest or any part thereof at
any particular time or under any predetermined circumstances. Each Partner
further represents and warrants that it is a sophisticated investor, able and
accustomed to handling sophisticated financial matters for itself, particularly
real estate investments, and that it has a sufficiently high net worth that it
does not anticipate a need for the funds it has invested in the Partnership in
what it understands to be a highly speculative and illiquid investment.
17.14 ACCESS TO RECORDS. Any Shareholder and any designated representative
thereof shall be permitted reasonable access to all the records of the
Partnership at and during reasonable times, and may inspect and copy any of them
for a reasonable charge.
17.15 WAIVER. No consent or waiver, express or implied, by any Partner to
or of any breach or default by any other Partner in the performance by such
other Partner of its obligations hereunder shall be deemed or construed to be a
consent to or waiver of any other breach or default in the performance by such
other Partner of the same or any other obligations of such Partner hereunder.
Failure on the part of any Partner to complain of any act or failure to act on
the part of any other Partner or to declare any other Partner in default,
irrespective of how long such failure continues, shall not constitute a waiver
by such Partner of its rights hereunder. 17.16 COUNTERPARTS. This Agreement may
be executed in one or more counterparts, which when taken together, shall
constitute but one original.
42
IN WITNESS WHEREOF, this Agreement has been executed and sworn to as of
the day and year first above written by the General Partner and the undersigned
Limited Partners.
GENERAL PARTNER:
---------------
HINES REAL ESTATE INVESTMENT TRUST, INC.,
a Maryland corporation
By: /s/ XXXXXXX X. XXXXXX
--------------------------------------
Name: Xxxxxxx X. Xxxxxx
------------------------------------
Title: Chief Executive Officer
-----------------------------------
LIMITED PARTNERS:
----------------
HINES REAL ESTATE HOLDINGS LIMITED
PARTNERSHIP
By: JCH Investments, Inc.,
its General Partner
By: /s/ XXXXXXX X. XXXXX
--------------------------------------
Name: Xxxxxxx X. Xxxxx
------------------------------------
Title: Authorized Person
-----------------------------------
HALP ASSOCIATES LIMITED PARTNERSHIP
By: Xxxxx Interests Limited Partnership,
its General Partner
By: Xxxxx Holdings, Inc.,
its General Partner
By: /s/ X. XXXXXXXX XXXXXXX
--------------------------------------
Name: X. Xxxxxxxx Xxxxxxx
------------------------------------
Title: Authorized Person
-----------------------------------
43
SCHEDULE A
Partners, Capital Accounts and Partnership Interests
AGREED
PREFERENCE CAPITAL PERCENTAGE
NAME AND ADDRESS OF PARTNERS OP UNITS UNITS ACCOUNT INTEREST
---------------------------- -------- ---------- ------- --------
General Partner:
Xxxxx Real Estate Investment
Trust, Inc. 1,000 $ 10,000 4.7619%
Limited Partners:
Xxxxx Real Estate Holdings
Limited Partnership 20,000 $200,000 95.2381%
HALP Associates Limited
Partnership Participation $ 0 0%
Interest
44
