EXHIBIT 10.3
AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
XXXX OPERATING PARTNERSHIP II, LP
SEPTEMBER 16, 2005
TABLE OF CONTENTS
Page
----
ARTICLE I DEFINED TERMS....................................................................... 1
ARTICLE II PARTNERSHIP FORMATION AND IDENTIFICATION........................................... 9
2.01 FORMATION................................................................... 9
2.02 NAME, OFFICE AND REGISTERED AGENT........................................... 9
2.03 PARTNERS.................................................................... 9
2.04 TERM AND DISSOLUTION........................................................ 9
2.05 FILING OF CERTIFICATE AND PERFECTION OF LIMITED PARTNERSHIP................. 10
2.06 CERTIFICATES DESCRIBING PARTNERSHIP UNITS................................... 10
ARTICLE III BUSINESS OF THE PARTNERSHIP....................................................... 10
ARTICLE IV CAPITAL CONTRIBUTIONS AND ACCOUNTS................................................. 11
4.01 CAPITAL CONTRIBUTIONS....................................................... 11
4.02 ADDITIONAL CAPITAL CONTRIBUTIONS AND ISSUANCES OF ADDITIONAL
PARTNERSHIP INTERESTS....................................................... 11
4.03 ADDITIONAL FUNDING.......................................................... 13
4.04 CAPITAL ACCOUNTS............................................................ 13
4.05 PERCENTAGE INTERESTS........................................................ 13
4.06 NO INTEREST ON CONTRIBUTIONS................................................ 13
4.07 RETURN OF CAPITAL CONTRIBUTIONS............................................. 13
4.08 NO THIRD-PARTY BENEFICIARY.................................................. 13
ARTICLE V PROFIT AND LOSS; DISTRIBUTIONS.......................................................14
5.01 ALLOCATION OF PROFIT AND LOSS............................................... 14
5.02 DISTRIBUTIONS OF CASH....................................................... 16
5.03 REIT DISTRIBUTION REQUIREMENTS.............................................. 17
5.04 NO RIGHT TO DISTRIBUTIONS IN KIND........................................... 17
5.05 LIMITATIONS ON RETURN OF CAPITAL CONTRIBUTIONS.............................. 17
5.06 DISTRIBUTIONS UPON LIQUIDATION.............................................. 17
5.07 SUBSTANTIAL ECONOMIC EFFECT................................................. 17
ARTICLE VI RIGHTS, OBLIGATIONS AND POWERS OF THE GENERAL PARTNER.............................. 18
6.01 MANAGEMENT OF THE PARTNERSHIP............................................... 18
6.02 DELEGATION OF AUTHORITY..................................................... 21
6.03 INDEMNIFICATION AND EXCULPATION OF INDEMNITEES.............................. 21
6.04 LIABILITY OF THE GENERAL PARTNER............................................ 22
6.05 REIMBURSEMENT OF GENERAL PARTNER............................................ 24
6.06 OUTSIDE ACTIVITIES.......................................................... 24
6.07 EMPLOYMENT OR RETENTION OF AFFILIATES....................................... 24
6.08 GENERAL PARTNER PARTICIPATION............................................... 26
6.09 TITLE TO PARTNERSHIP ASSETS................................................. 26
6.10 MISCELLANEOUS............................................................... 26
ARTICLE VII CHANGES IN GENERAL PARTNER........................................................ 26
7.01 TRANSFER OF THE GENERAL PARTNER'S PARTNERSHIP INTEREST...................... 26
7.02 ADMISSION OF A SUBSTITUTE OR ADDITIONAL GENERAL PARTNER..................... 28
i
Page
----
7.03 EFFECT OF BANKRUPTCY, WITHDRAWAL, DEATH OR DISSOLUTION OF A GENERAL
PARTNER .................................................................... 28
7.04 REMOVAL OF A GENERAL PARTNER................................................ 29
ARTICLE VIII RIGHTS AND OBLIGATIONS OF THE LIMITED PARTNERS................................... 30
8.01 MANAGEMENT OF THE PARTNERSHIP............................................... 30
8.02 POWER OF ATTORNEY........................................................... 30
8.03 LIMITATION ON LIABILITY OF LIMITED PARTNERS................................. 30
8.04 OWNERSHIP BY LIMITED PARTNER OF CORPORATE GENERAL PARTNER OR AFFILIATE...... 30
8.05 EXCHANGE RIGHT.............................................................. 30
8.06 CALL RIGHT.................................................................. 32
8.07 DUTIES AND CONFLICTS........................................................ 33
ARTICLE IX TRANSFERS OF LIMITED PARTNERSHIP INTERESTS......................................... 33
9.01 PURCHASE FOR INVESTMENT..................................................... 33
9.02 RESTRICTIONS ON TRANSFER OF LIMITED PARTNERSHIP INTERESTS................... 34
9.03 ADMISSION OF SUBSTITUTE LIMITED PARTNER..................................... 35
9.04 RIGHTS OF ASSIGNEES OF PARTNERSHIP INTERESTS................................ 36
9.05 EFFECT OF BANKRUPTCY, DEATH, INCOMPETENCE OR TERMINATION OF A LIMITED
PARTNER .................................................................... 36
9.06 JOINT OWNERSHIP OF INTERESTS................................................ 36
ARTICLE X BOOKS AND RECORDS; ACCOUNTING; TAX MATTERS.......................................... 37
10.01 BOOKS AND RECORDS........................................................... 37
10.02 CUSTODY OF PARTNERSHIP FUNDS; BANK ACCOUNTS................................. 37
10.03 FISCAL AND TAXABLE YEAR..................................................... 37
10.04 ANNUAL TAX INFORMATION AND REPORT........................................... 37
10.05 TAX MATTERS PARTNER; TAX ELECTIONS; SPECIAL BASIS ADJUSTMENTS............... 37
10.06 REPORTS TO LIMITED PARTNERS................................................. 38
ARTICLE XI AMENDMENT OF AGREEMENT; MEETINGS................................................... 38
11.01 AMENDMENT................................................................... 38
11.02 MEETINGS OF PARTNERS........................................................ 39
ARTICLE XII MERGER, EXCHANGE OR CONVERSION.................................................... 40
12.01 Merger, Exchange or Conversion of Partnership............................... 40
12.02 APPROVAL OF PLAN OF MERGER, EXCHANGE OR CONVERSION.......................... 41
12.03 RIGHTS OF DISSENTING LIMITED PARTNERS....................................... 42
ARTICLE XIII GENERAL PROVISIONS............................................................... 43
13.01 NOTICES .................................................................... 43
13.02 SURVIVAL OF RIGHTS.......................................................... 43
13.03 ADDITIONAL DOCUMENTS........................................................ 44
13.04 SEVERABILITY................................................................ 44
13.05 ENTIRE AGREEMENT............................................................ 44
13.06 PRONOUNS AND PLURALS........................................................ 44
13.07 HEADINGS.................................................................... 44
13.08 COUNTERPARTS................................................................ 44
13.09 GOVERNING LAW.............................................................. 44
13.10 ARBITRATION................................................................. 44
13.11 VOTE OF AFFILIATED LIMITED PARTNERS......................................... 45
ii
Page
----
INDEX OF EXHIBITS............................................................................. 47
iii
AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP
OF
XXXX OPERATING PARTNERSHIP II, LP
SEPTEMBER 16, 2005
This Amended and Restated Agreement of Limited Partnership (this
"AGREEMENT") is entered into effective as of the 16th day of September, 2005, by
and among Xxxx Credit Property Trust II, Inc., a Maryland corporation (the
"GENERAL PARTNER"), Xxxx REIT Advisors II, LLC, a Delaware limited liability
company (the "ORIGINAL LIMITED PARTNER"), and the Limited Partner(s) set forth
or which may, in the future, be set forth on Exhibit A hereto, as amended from
time to time, with respect to Xxxx Operating Partnership II, LP (the
"Partnership"), a limited partnership formed under the laws of the State of
Delaware, pursuant to a Certificate of Limited Partnership filed with the Office
of the Secretary of State of the State of Delaware effective as of September 28,
2004.
RECITALS
WHEREAS, the parties desire to enter into this Agreement in order to
set forth the terms and conditions under which the Partnership will be operated
as well as the rights, obligations, and limitations of the General Partner and
the Limited Partners with respect to each other and the Partnership as a whole;
NOW, THEREFORE, in consideration of the foregoing, of the mutual
covenants between the parties to this Agreement, and of other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged by
the parties, the parties agree as follows:
AGREEMENT
ARTICLE I
DEFINED TERMS
The following defined terms used in this Agreement shall have the
meanings specified below:
"ACT" means the Delaware Revised Uniform Limited Partnership Act, as it may be
amended from time to time.
"ADDITIONAL FUNDS" has the meaning set forth in Section 4.03 hereof.
"ADDITIONAL LIMITED PARTNER" means a Person admitted to the Partnership as a
Limited Partner pursuant to Section 4.02 hereof and who is shown as such on the
books and records of the Partnership.
"ADDITIONAL SECURITIES" means any additional REIT Shares (other than REIT Shares
issued in connection with an exchange pursuant to Section 8.05 hereof) or
rights, options, warrants or convertible or exchangeable securities containing
the right to subscribe for or purchase REIT Shares, as set forth in Section
4.02(a)(ii).
"ADMINISTRATIVE EXPENSES" means (i) all administrative and operating costs and
expenses incurred by the Partnership, (ii) those administrative costs and
expenses of the General Partner, including any salaries or other payments to
directors, officers or employees of the General Partner, and any accounting and
legal expenses of the General Partner, which expenses, the Partners have agreed,
are expenses of the
Partnership and not the General Partner, and (iii) to the extent not included in
clause (ii) above, REIT Expenses; provided, however, that Administrative
Expenses shall not include any administrative costs and expenses incurred by the
General Partner that are attributable to Properties or partnership interests in
a Subsidiary Partnership that are owned by the General Partner directly.
"ADVISOR" or "ADVISORS" means the Person or Persons, if any, appointed, employed
or contracted with by the General Partner pursuant to its Articles of
Incorporation and responsible for directing or performing the day-to-day
business affairs of the General Partner, including any Person to whom the
Advisor subcontracts all or substantially all of such functions.
"AFFILIATE" or "AFFILIATED" means, with respect to any Person, (i) any Person
directly or indirectly owning, controlling or holding, with the power to vote,
10% or more of the outstanding voting securities of such other Person; (ii) any
Person 10% or more of whose outstanding voting securities are directly or
indirectly owned, controlled or held, with the power to vote, by such other
Person; (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; and (v) any legal
entity for which such Person acts as an executive officer, director, trustee or
general partner.
"AGREED VALUE" means (i) the fair market value of a Partner's non-cash Capital
Contribution as of the date of contribution as agreed to by such Partner and the
General Partner as of the date of contribution as set forth on Exhibit A hereto,
as it may be amended from time to time, or (ii) in the case of any contribution
or distribution of property other than cash not set forth on Exhibit A, the fair
market value of such property as determined by the General Partner at the time
such property is contributed or distributed, reduced by liabilities either
assumed by the Partnership or Partner upon such contribution or distribution or
to which such property is subject when the property is contributed or
distributed.
"AGREEMENT" means this Agreement of Limited Partnership, as it may be amended or
restated from time to time.
"ARTICLES OF INCORPORATION" means the Articles of Incorporation of the General
Partner filed with the Maryland State Department of Assessments and Taxation, as
amended or restated from time to time.
"CALL NOTICE" means a Call Notice, as defined in Section 8.06(a) hereof and
substantially in the form of Exhibit C hereto.
"CALL RIGHT" has the meaning provided in Section 8.06(a) hereof.
"CAPITAL ACCOUNT" has the meaning provided in Section 4.04 hereof.
"CAPITAL CONTRIBUTION" means the total amount of cash, cash equivalents, and the
Agreed Value of any Property or other asset contributed or agreed to be
contributed, as the context requires, to the Partnership by each Partner
pursuant to the terms of the Agreement. Any reference to the Capital
Contribution of a Partner shall include the Capital Contribution made by a
predecessor holder of the Partnership Interest of such Partner.
"CASH AMOUNT" means an amount of cash equal to the Value of the REIT Shares
Amount on the date of receipt by the General Partner of an Exchange Notice.
"CERTIFICATE" means any instrument or document that is required under the laws
of the State of Delaware, or any other jurisdiction in which the Partnership
conducts business, to be signed and sworn to by the Partners of the Partnership
(either by themselves or pursuant to the power-of-attorney granted to the
2
General Partner in Section 8.02 hereof) and filed for recording in the
appropriate public offices within the State of Delaware or such other
jurisdiction to perfect or maintain the Partnership as a limited partnership, to
effect the admission, withdrawal, or substitution of any Partner from or to the
Partnership, or to protect the limited liability of the Limited Partners as
limited partners under the laws of the State of Delaware or such other
jurisdiction.
"CODE" means the Internal Revenue Code of 1986, as amended, and as hereafter
amended from time to time. Reference to any particular provision of the Code
shall mean that provision in the Code at the date hereof and any successor
provision of the Code.
"XXXX CREDIT PROPERTY TRUST" means Xxxx Credit Property Trust II, Inc., a
Maryland corporation.
"COMMISSION" means the U.S. Securities and Exchange Commission.
"COMPETENT INDEPENDENT EXPERT" shall mean a Person with no material current or
prior business or personal relationship with the General Partner or the
Partnership who is engaged to a substantial extent in the business of rendering
opinions regarding the value of the assets of the type held by the Partnership
and who is qualified to perform such work. Membership in a nationally recognized
appraisal society such as the American Institute of Real Estate Appraisers or
the Society of Real Estate Appraisers shall be conclusive evidence of such
qualification.
"CONVERSION FACTOR" means 1.0, provided, that in the event that the General
Partner (i) declares or pays a dividend on its outstanding REIT Shares in REIT
Shares or makes a distribution to all holders of its outstanding REIT Shares in
REIT Shares, (ii) subdivides its outstanding REIT Shares, or (iii) combines its
outstanding REIT Shares into a smaller number of REIT Shares, the Conversion
Factor shall be adjusted by multiplying the Conversion Factor by a fraction, the
numerator of which shall be the number of REIT Shares issued and outstanding on
the record date for such dividend, distribution, subdivision or combination
(assuming for such purposes that such dividend, distribution, subdivision or
combination has occurred as of such time), and the denominator of which shall be
the actual number of REIT Shares (determined without the above assumption)
issued and outstanding on such record date, and provided further, that in the
event that an entity other than an Affiliate of the General Partner shall become
General Partner pursuant to any merger, consolidation or combination of the
General Partner with or into another entity (the "SUCCESSOR ENTITY"), the
Conversion Factor shall be adjusted by multiplying the Conversion Factor by the
number of shares of the Successor Entity into which one REIT Share is converted
pursuant to such merger, consolidation or combination, determined as of the date
of such merger, consolidation or combination. Any adjustment to the Conversion
Factor shall become effective immediately after the effective date of such event
retroactive to the record date, if any, for such event; provided, however, that
if the General Partner receives an Exchange Notice after the record date, but
prior to the effective date of such dividend, distribution, subdivision or
combination, the Conversion Factor shall be determined as if the General Partner
had received the Exchange Notice immediately prior to the record date for such
dividend, distribution, subdivision or combination.
"DISSENTING LIMITED PARTNER" has the meaning provided in Section 12.03(a)
hereof.
"EVENT OF BANKRUPTCY" as to any Person means (i) the filing of a petition for
relief as to such Person as debtor or bankrupt under the Bankruptcy Code of 1978
or similar provision of law of any jurisdiction (except if such petition is
contested by such Person and has been dismissed within 90 days); (ii) the
insolvency or bankruptcy of such Person as finally determined by a court
proceeding; (iii) the filing by such Person of a petition or application to
accomplish the same or for the appointment of a receiver or a trustee for such
Person or a substantial part of his assets; and (iv) the commencement of any
proceedings relating to such Person as a debtor under any other reorganization,
arrangement, insolvency, adjustment
3
of debt or liquidation law of any jurisdiction, whether now in existence or
hereinafter in effect, either by such Person or by another, provided, that if
such proceeding is commenced by another, such Person indicates his approval of
such proceeding, consents thereto or acquiesces therein, or such proceeding is
contested by such Person and has not been finally dismissed within 90 days.
"EXCHANGE AMOUNT" means either the Cash Amount or the REIT Shares Amount, as
selected by the General Partner in its sole and absolute discretion pursuant to
Section 8.05(b) hereof.
"EXCHANGE NOTICE" means a Notice of Exercise of Exchange Right, as defined in
Section 8.05(a) hereof and substantially in the form of Exhibit B hereto.
"EXCHANGE RIGHT" has the meaning provided in Section 8.05(a) hereof.
"EXCHANGING PARTNER" has the meaning provided in Section 8.05(a) hereof.
"GENERAL PARTNER" means Xxxx Credit Property Trust, and any Person who becomes a
substitute or additional General Partner as provided herein, and any successors
thereto.
"GENERAL PARTNERSHIP INTEREST" means a Partnership Interest held by the General
Partner that is a general partnership interest.
"GP CAPITAL" means the aggregate of Capital Contributions of cash made by the
General Partner in accordance with Sections 4.01 and 4.02 hereof.
"GP MINIMUM RETURN" means such amount as may be necessary or required to allow
the General Partner to meet its distribution requirement for qualification as a
REIT as set forth in Section 857 of the Code and to avoid any federal income or
excise tax liability imposed by the Code.
"HOLDING PERIOD" means, with respect to Partnership Units acquired by Additional
Limited Partners hereunder, the period commencing on the date of issuance of
such Units through and including the fourth anniversary of such date of
acquisition.
"INDEMNITEE" means (i) any Person made a party to a proceeding by reason of its
status as the General Partner or a director, officer or employee of the General
Partner or the Partnership, and (ii) such other Persons (including Affiliates of
the General Partner or the Partnership) as the General Partner may designate
from time to time, in its sole and absolute discretion.
"JOINT VENTURE" means any joint venture or partnership arrangement in which the
Partnership is a co-venturer or general partner established to acquire or hold
Properties, Mortgages or other investments of the General Partner.
"LIMITED PARTNER" means the Original Limited Partner, any Person named as a
Limited Partner on Exhibit A attached hereto, and any Person who becomes a
Substitute or Additional Limited Partner in such person's capacity as a Limited
Partner in the Partnership.
"LIMITED PARTNERSHIP INTEREST" means the ownership interest of a Limited Partner
in the Partnership at any particular time, including the right of such Limited
Partner to any and all benefits to which such Limited Partner may be entitled as
provided in this Agreement and in the Act, together with the obligations of such
Limited Partner to comply with all the provisions of this Agreement and of such
Act.
"LIQUIDATING EVENT" has the meaning set forth in Section 2.04 hereof.
4
"LOSS" has the meaning provided in Section 5.01(f) hereof.
"LP CAPITAL" means the aggregate of Capital Contributions in cash or cash
equivalents and the Agreed Value of any non-cash contributions to the
Partnership made by a Limited Partner in accordance with Sections 4.01 and 4.02.
"LP RETURN" means, with regard to any Limited Partner, an amount equal to the
aggregate cash dividends that would have been payable to such Limited Partner
with respect to the applicable fiscal period if such Limited Partner had owned
REIT Shares equal in number to the number of Partnership Units owned by such
Limited Partner during such fiscal period.
"MORTGAGE" means, in connection with mortgage financing provided, invested in or
purchased by the Partnership, any note, deed of trust, security interest or
other evidence of indebtedness or obligations, which is secured or
collateralized by real property owned by the borrower under such note, deed of
trust, security interest or other evidence of indebtedness or obligations.
"NET CAPITAL PROCEEDS" means the net cash proceeds received by the Partnership
in connection with (i) any Sale, (ii) any borrowing or refinancing of
borrowing(s) by the Partnership, (iii) any condemnation or deeding in lieu of
condemnation of all or a portion of any Property, (iv) any collection in respect
of property, hazard, or casualty insurance (but not business interruption
insurance) or any damage award; or (v) any other transaction the proceeds of
which, in accordance with generally accepted accounting principles, are
considered to be capital in nature, in each case, after deduction of (a) all
costs and expenses incurred by the Partnership with regard to such transactions
(including, without limitation, any repayment of any indebtedness required to be
repaid as a result of such transaction or which the General Partner elects to
pay out of the proceeds of such transaction, together with accrued interest and
premium, if any, thereon and any sales commissions or other costs or expenses
due and payable to any Person in connection therewith, including to a Partner or
its Affiliates), and (b) all amounts expended by the Partnership for the
acquisition of additional Properties, Mortgages or other investments or for
capital repairs or improvements to any Property with such cash proceeds.
"NEW ALLOCATIONS" has the meaning set forth in Section 5.07.
"OFFER" has the meaning set forth in Section 7.01(c)(ii).
"OFFERING" means the initial offer and sale by the General Partner of REIT
Shares to the public.
"ORIGINAL LIMITED PARTNER" means the Limited Partner designated as such on
Exhibit A hereto.
"PARTNER" means any General Partner or Limited Partner.
"PARTNER NONRECOURSE DEBT MINIMUM GAIN" has the meaning set forth in Regulations
Section 1.704-2(i). A Partner's share of Partner Nonrecourse Debt Minimum Gain
shall be determined in accordance with Regulations Section 1.704-2(i)(5).
"PARTNERSHIP" means Xxxx Operating Partnership II, LP, a Delaware limited
partnership.
"PARTNERSHIP INTEREST" means an ownership interest in the Partnership held by
either a Limited Partner or the General Partner and includes any and all
benefits to which the holder of such a Partnership Interest may be entitled as
provided in this Agreement, together with all obligations of such Person to
comply with the terms and provisions of this Agreement.
5
"PARTNERSHIP MINIMUM GAIN" has the meaning set forth in Regulations Section
1.704-2(b)(2). In accordance with Regulations Section 1.704-2(d), the amount of
Partnership Minimum Gain is determined by first computing, for each Partnership
nonrecourse liability, any gain the Partnership would realize if it disposed of
the property subject to that liability for no consideration other than full
satisfaction of the liability, and then aggregating the separately computed
gains. A Partner's share of Partnership Minimum Gain shall be determined in
accordance with Regulations Section 1.704-2(g)(1).
"PARTNERSHIP RECORD DATE" means the record date established by the General
Partner for the distribution of cash pursuant to Section 5.02, which record date
shall be the same as the record date established by the General Partner for a
distribution to its stockholders.
"PARTNERSHIP UNIT" means a fractional, undivided share of the Partnership
Interests of all Partners issued hereunder. The allocation of Partnership Units
among the Partners shall be as set forth on Exhibit A, as it may be amended from
time to time.
"PERCENTAGE INTEREST" means the percentage ownership interest in the Partnership
of each Partner, as determined by dividing the number of Partnership Units owned
by a Partner by the aggregate number of Partnership Units owned by all Partners.
"PERSON" means any individual, partnership, corporation, joint venture, limited
liability company, trust or other entity.
"PROFIT" has the meaning provided in Section 5.01(f).
"PROPERTY" means any real property in which the Partnership holds an ownership
interest, either directly or pursuant to the Partnership's ownership of an
interest in a subsidiary that owns an interest in any such real property.
"PROSPECTUS" means the final prospectus delivered to purchasers of REIT Shares
in the Offering.
"REGULATIONS" means the Federal Income Tax Regulations, including temporary or
proposed regulations, issued under the Code, as amended and as hereafter amended
from time to time. Reference to any particular provision of the Regulations
shall mean that provision of the Regulations on the date of this Agreement and
any successor provision of the Regulations.
"REIT" means a real estate investment trust under Sections 856 through 860 of
the Code.
"REIT EXPENSES" means (i) costs and expenses relating to the formation and
continuity of existence and operation of the General Partner and any
Subsidiaries thereof (which Subsidiaries shall, for purposes of this Agreement,
be included within the definition of General Partner), including taxes, fees and
assessments associated therewith, any and all costs, expenses or fees payable to
any director, officer, or employee of the General Partner, (ii) costs and
expenses relating to (A) any registration and public offering of securities by
the General Partner, the net proceeds of which were used to make a contribution
to the Partnership, and (B) all statements and reports incidental thereto,
including, without limitation, underwriting discounts and selling commissions
applicable to any such offering of securities, and any costs and expenses
associated with any claims made by any holders of such securities or any
underwriters or placement agents thereof, (iii) costs and expenses associated
with any repurchase of any securities by the General Partner, (iv) costs and
expenses associated with the preparation and filing, of any periodic or other
reports and communications by the General Partner under federal, state or local
laws or regulations, including filings with the Commission, (v) costs and
expenses associated with compliance by the General Partner with laws, rules and
regulations promulgated by any regulatory body, including the Commission
6
and any securities exchange, (vi) costs and expenses associated with any section
401(k) plan, incentive plan, bonus plan or other plan providing for compensation
for the employees of the General Partner, (vii) costs and expenses incurred by
the General Partner relating to any issuance or redemption of Partnership
Interests or REIT Shares, and (viii) all other operating or administrative costs
of the General Partner incurred in the ordinary course of its business on behalf
of or in connection with the Partnership.
"REIT SHARE" means a share of common stock in the General Partner (or Successor
Entity, as the case may be).
"REIT SHARES AMOUNT" means a number of REIT Shares equal to the product of the
number of Partnership Units offered for exchange by an Exchanging Partner,
multiplied by the Conversion Factor as adjusted to and including the Specified
Exchange Date; provided that in the event the General Partner issues to all
holders of REIT Shares rights, options, warrants or convertible or exchangeable
securities entitling the stockholders to subscribe for or purchase REIT Shares,
or any other securities or property (collectively, the "RIGHTS"), and the rights
have not expired at the Specified Exchange Date, then the REIT Shares Amount
shall also include the rights issuable to a holder of the REIT Shares on the
record date fixed for purposes of determining the holders of REIT Shares
entitled to Rights.
"SALE" means any transaction or series of transactions whereby (i) the
Partnership directly or indirectly (except as described in other subsections of
this definitions) sells, grants, transfers, conveys or relinquishes its
ownership of any Property or portion thereof, including the lease of any
Property consisting of a building only, and including any event with respect to
any Property which gives rise to a significant amount of insurance proceeds or
condemnation awards; (ii) the Partnership directly or indirectly (except as
described in other subsections of this definition) sells, grants, transfers,
conveys or relinquishes its ownership of all or substantially all the interest
of the Partnership in any Joint Venture in which it is a co-venturer or partner;
(iii) any Joint Venture directly or indirectly (except as described in other
subsections of this definition) in which the Partnership as a co-venturer or
partner sells, grants, transfers, conveys or relinquishes its ownership of any
Property or portion thereof, including any event with respect to any Property
which gives rise to insurance claims or condemnation awards; (iv) the
Partnership directly or indirectly (except as described in other subsections of
this definition) sells, grants, conveys or relinquishes its interest in any
Mortgage or portion thereof (including with respect to any Mortgage, all
payments thereunder or in satisfaction thereof other than regularly scheduled
interest payments) of amounts owed pursuant to such Mortgage and any event with
respect to a Mortgage which gives rise to a significant amount of insurance
proceeds or similar awards, or (v) the Partnership directly or indirectly
(except as described in other subsections of this definition) sells, grants,
transfers, conveys or relinquishes its ownership of any other asset (other than
investments in bank accounts, money market funds or other current assets) not
previously described in this definition or any portion thereof.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SERVICE" means the Internal Revenue Service.
"SPECIFIED EXCHANGE DATE" means the first business day of the month first
occurring after the expiration of 60 business days from the date of receipt by
the General Partner of the Exchange Notice.
"SPONSOR" means any Person which (i) is directly or indirectly instrumental in
organizing, wholly or in part, Xxxx Credit Property Trust, (ii) will manage or
participate in the management of Xxxx Credit Property Trust, and any Affiliate
of any such Person, other than a Person whose only relationship with Xxxx Credit
Property Trust is that of an independent property manager and whose only
compensation is as such, (iii) takes the initiative, directly or indirectly, in
founding or organizing Xxxx Credit Property Trust, either alone or in
conjunction with one or more other Persons, (iv) receives a material
participation in
7
Xxxx Credit Property Trust in connection with the founding or organizing of the
business of Xxxx Credit Property Trust, in consideration of services or
property, or both services and property, (v) has a substantial number of
relationships and contacts with Xxxx Credit Property Trust, (vi) possesses
significant rights to control Properties, (vii) receives fees for providing
services to Xxxx Credit Property Trust which are paid on a basis that is not
customary in the industry, or (viii) provides goods or services to Xxxx Credit
Property Trust on a basis which was not negotiated at arm's-length with Xxxx
Credit Property Trust.
"SUBSIDIARY" means, with respect to any Person, any corporation or other entity
of which a majority of (i) the voting power of the voting equity securities or
(ii) the outstanding equity interests is owned, directly or indirectly, by such
Person.
"SUBSIDIARY PARTNERSHIP" means any partnership, limited liability company or
other entity taxed as a partnership for federal income tax purposes in which
interests are owned by the General Partner or by a wholly-owned Subsidiary or
Subsidiaries of the General Partner.
"SUBSTITUTE LIMITED PARTNER" means any Person admitted to the Partnership as a
Limited Partner pursuant to Section 9.03.
"SUCCESSOR ENTITY" has the meaning provided in the definition of "Conversion
Factor" contained herein.
"SURVIVOR" has the meaning set forth in Section 7.01(d).
"TRANSACTION" has the meaning set forth in Section 7.01(c).
"TRANSFER" has the meaning set forth in Section 9.02(a).
"TRANSFER RESTRICTION DATE" means the effective date upon which Xxxx REIT
Advisors II, LLC, a Delaware limited liability company, shall cease acting as
the advisor to the General Partner under the terms of an advisory agreement
entered into between Xxxx REIT Advisors II, LLC and the General Partner.
"UNPAID RETURN" means any accrued but unpaid LP Return or GP Minimum Return less
all amounts distributed by the Partnership to a Limited Partner or the General
Partner in reduction thereof.
"VALUE" means, with respect to any security, the average of the daily market
price of such security for the ten consecutive trading days immediately
preceding the date as of which such Value is to be determined. The market price
for each such trading day shall be: (i) if the security is listed or admitted to
trading on any securities exchange, the sale price, regular way, on such day, or
if no such sale takes place on such day, the average of the closing bid and
asked prices, regular way, on such day; (ii) if the security is not listed or
admitted to trading on any securities exchange, the last reported sale price on
such day or, if no sale takes place on such day, the average of the closing bid
and asked prices on such day, as reported by a reliable quotation source
designated by the General Partner; or (iii) if the security is not listed or
admitted to trading on any securities exchange and no such last reported sale
price or closing bid and asked prices are available, the average of the reported
high bid and low asked prices on such day, as reported by a reliable quotation
source designated by the General Partner, or if there shall be no bid and asked
prices on such day, the average of the high bid and low asked prices, as so
reported, on the most recent day (not more than ten days prior to the date in
question) for which prices have been so reported; provided, that if there are no
bid and asked prices reported during the ten days prior to the date in question,
the value of the security shall be determined by the General Partner acting in
good faith on the basis of such quotations and other information as it
considers, in its reasonable judgment, appropriate. In the event the security
8
includes any additional rights, then the value of such rights shall be
determined by the General Partner acting in good faith on the basis of such
quotations and other information as it considers, in its reasonable judgment,
appropriate.
ARTICLE II
PARTNERSHIP FORMATION AND IDENTIFICATION
2.01 FORMATION. The Partnership is a limited partnership formed
pursuant to the Act and upon the terms and conditions set forth in this
Agreement.
2.02 NAME, OFFICE AND REGISTERED AGENT. The name of the Partnership is
"Xxxx Operating Partnership II, LP." The principal place of business of the
Partnership shall be 0000 Xxxx Xxxxxxxxx Xxxx, Xxxxx 000, Xxxxxxx, Xxxxxxx
00000. The General Partner may at any time change the location of such office,
provided the General Partner gives notice to the Partners of any such change.
The name and address of the Partnership's registered agent, and the registered
office of this Partnership, is National Registered Agents, Inc., 0 Xxxx
Xxxxxxxxxx Xxxxxx, Xxxxx 0X, Xxxxx, XX 00000. The sole duty of the registered
agent as such is to forward to the Partnership any notice that is served on it
as registered agent.
2.03 PARTNERS.
(a) The General Partner of the Partnership is Xxxx Credit Property
Trust II, Inc., a Maryland corporation. Its principal place of business is the
same as that of the Partnership.
(b) The Limited Partners are those Persons identified as Limited
Partners (including the Original Limited Partner) on Exhibit A hereto, as it may
be amended from time to time.
2.04 TERM AND DISSOLUTION.
(a) The Partnership shall have perpetual duration, except that the
Partnership shall be dissolved earlier upon the first to occur of any of the
following events ("LIQUIDATING EVENTS"):
(i) the occurrence of an Event of Bankruptcy as to a General
Partner or the dissolution, death, removal or withdrawal of a General
Partner unless the business of the Partnership is continued pursuant to
Section 7.03(b), provided, that if a General Partner is on the date of
such occurrence a partnership, the dissolution of such General Partner
as a result of the dissolution, death, withdrawal, removal or Event of
Bankruptcy of a partner in such partnership shall not be an event of
dissolution of the Partnership if the business of such General Partner
is continued by the remaining partner or partners thereof, either alone
or with additional partners, and such General Partner and such partners
comply with any other applicable requirements of this Agreement;
(ii) the passage of 90 days after the sale or other
disposition of all or substantially all of the assets of the
Partnership (provided, that if the Partnership receives an installment
obligation as consideration for such sale or other disposition, the
Partnership shall continue, unless sooner dissolved under the
provisions of this Agreement, until such time as such obligation is
paid in full);
(iii) the exchange of all Limited Partnership Interests (other
than any of such interests held by the General Partner or Affiliates of
the General Partner); or
(iv) the election by the General Partner that the Partnership
should be dissolved.
9
(b) Upon dissolution of the Partnership (unless the business of the
Partnership is continued pursuant to Section 7.03(b)), the General Partner (or
its trustee, receiver, successor or legal representative) shall amend or cancel
the Certificate and liquidate the Partnership's assets and apply and distribute
the proceeds thereof in accordance with Section 5.06. Notwithstanding the
foregoing, the liquidating General Partner may either (i) defer liquidation of,
or withhold from distribution for a reasonable time, any assets of the
Partnership (including those necessary to satisfy the Partnership's debts and
obligations), or (ii) distribute the assets to the Partners in kind.
2.05 FILING OF CERTIFICATE AND PERFECTION OF LIMITED PARTNERSHIP. The
General Partner shall execute, acknowledge, record and file, at the expense of
the Partnership, the Certificate and any and all amendments thereto and all
requisite fictitious name statements and notices in such places and
jurisdictions as may be necessary to cause the Partnership to be treated as a
limited partnership under, and otherwise to comply with, the laws of each state
or other jurisdiction in which the Partnership conducts business.
2.06 CERTIFICATES DESCRIBING PARTNERSHIP UNITS. At the request of a
Limited Partner, the General Partner may, at its option and in its discretion,
issue a certificate summarizing the terms of such Limited Partner's interest in
the Partnership, including the number of Partnership Units owned as of the date
of such certificate. If issued, any such certificates (a) shall be in form and
substance as approved by the General Partner, (b) shall not be negotiable, and
(c) shall bear a legend substantially similar to the following:
"THIS CERTIFICATE IS NOT NEGOTIABLE. THE PARTNERSHIP UNITS
REPRESENTED BY THIS CERTIFICATE ARE GOVERNED BY AND
TRANSFERABLE ONLY IN ACCORDANCE WITH THE PROVISIONS OF THE
AGREEMENT OF LIMITED PARTNERSHIP OF XXXX OPERATING PARTNERSHIP
II, LP, AS AMENDED FROM TIME TO TIME."
ARTICLE III
BUSINESS OF THE PARTNERSHIP
The purpose and nature of the business to be conducted by the
Partnership is (a) to conduct any business that may be lawfully conducted by a
limited partnership organized pursuant to the Act, provided, however, that such
business shall be limited to and conducted in such a manner as to permit the
General Partner at all times to qualify as a REIT, unless the General Partner
otherwise ceases to qualify as a REIT, (b) to enter into any partnership, joint
venture or other similar arrangement to engage in any of the foregoing or the
ownership of interests in any entity engaged in any of the foregoing, and (c) to
do anything necessary or incidental to the foregoing. In connection with the
foregoing, and without limiting the General Partner's right in its sole and
absolute discretion to cease qualifying as a REIT, the Partners acknowledge that
the General Partner's current status as a REIT and the avoidance of income and
excise taxes on the General Partner inures to the benefit of all the Partners
and not solely to the General Partner. Notwithstanding the foregoing, the
Limited Partners agree that the General Partner may terminate its status as a
REIT under the Code at any time to the full extent permitted under its Articles
of Incorporation. The General Partner shall also be empowered to do any and all
acts and things necessary or prudent to ensure that the Partnership will not be
classified as a "publicly traded partnership" for purposes of Section 7704 of
the Code.
10
ARTICLE IV
CAPITAL CONTRIBUTIONS AND ACCOUNTS
4.01 CAPITAL CONTRIBUTIONS. The General Partner and the Original
Limited Partner have made Capital Contributions to the Partnership in exchange
for the Partnership Units set forth opposite their names on Exhibit A. At such
time as Additional Limited Partners are admitted to the Partnership, each shall
make Capital Contributions as set forth opposite their names on Exhibit A, as it
may be amended from time to time.
4.02 ADDITIONAL CAPITAL CONTRIBUTIONS AND ISSUANCES OF ADDITIONAL
PARTNERSHIP INTERESTS. Except as provided in this Section 4.02 or in Section
4.03, the Partners shall have no right or obligation to make any additional
Capital Contributions or loans to the Partnership. The General Partner may
contribute additional capital to the Partnership, from time to time, and receive
additional Partnership Units in respect thereof in the manner contemplated by
this Section 4.02.
(a) Issuances of Additional Partnership Interests.
(i) General. The General Partner is hereby authorized to cause
the Partnership to issue additional Partnership Interests in the form
of Partnership Units for any Partnership purpose, at any time or from
time to time, to the Partners (including the General Partner) or to
other Persons for such consideration and on such terms and conditions
as shall be established by the General Partner in its sole and absolute
discretion, all without the approval of any Limited Partners. Any
additional Partnership Interests issued thereby may be issued in one or
more classes, or one or more series of any of such classes, with such
designations, preferences and relative participating, optional or other
special rights, powers and duties, including rights, powers and duties
senior to Limited Partnership Interests, all as shall be determined by
the General Partner in its sole and absolute discretion and without the
approval of any Limited Partner, subject to Delaware law, including,
without limitation, (A) the allocations of items of Partnership income,
gain, loss, deduction and credit to each such class or series of
Partnership Interests; (B) the right of each such class or series of
Partnership Interests to share in Partnership distributions; and (C)
the rights of each such class or series of Partnership Interests upon
dissolution and liquidation of the Partnership; provided, however, that
no additional Partnership Interests shall be issued to the General
Partner or any Affiliate of the General Partner unless:
1. the additional Partnership Interests are issued in connection
with an issuance of REIT Shares or other interests in, the
General Partner, which shares or interests have designations,
preferences and other rights such that the economic interests
are substantially similar to the designations, preferences and
other rights of the additional Partnership Interests issued to
the General Partner by the Partnership in accordance with this
Section 4.02, and the General Partner, on its own or with an
Affiliate, shall make a Capital Contribution to the
Partnership in an amount equal to the aggregate proceeds
raised in connection with the issuance of such shares of stock
of or other interests in the General Partner;
2. the additional Partnership Interests are issued in exchange
for property or other assets owned by the General Partner or
its Affiliate with a fair market value, as determined by the
General Partner, in good faith, equal to the value of the
Partnership Interests; or
3. the additional Partnership Interests are issued to all
Partners in proportion to their respective Percentage
Interests.
11
Without limiting the foregoing, the General Partner is expressly
authorized to cause the Partnership to issue Partnership Units for less than
fair market value, so long as the General Partner concludes in good faith that
such issuance is in the best interests of the General Partner and the
Partnership.
(ii) Issuance of Additional Securities. The General Partner
shall not issue any additional REIT Shares (other than REIT Shares
issued in connection with an exchange made pursuant to Section 8.05) or
rights, options, warrants or convertible or exchangeable securities
containing the right to subscribe for or purchase REIT Shares
(collectively, "Additional Securities") other than to all holders of
REIT Shares, unless (A) the General Partner shall cause the Partnership
to issue to the General Partner (or to the General Partner and an
Affiliate of the General Partner), as the General Partner may
designate, Partnership Interests or rights, options, warrants or
convertible or exchangeable securities of the Partnership having
designations, preferences and other rights such that the economic
interests are substantially similar to those of the Additional
Securities, and (B) the General Partner (or the General Partner and an
Affiliate of the General Partner) contributes the proceeds from the
issuance of such Additional Securities and from any exercise of rights
contained in such Additional Securities, directly and through the
General Partner (or the General Partner and an Affiliate of the General
Partner), to the Partnership; provided, however, that the General
Partner is allowed to issue Additional Securities in connection with an
acquisition of a Property or other asset to be held directly by the
General Partner. Without limiting the foregoing, the General Partner is
expressly authorized to issue Additional Securities for less than fair
market value, and to cause the Partnership to issue to the General
Partner (or to the General Partner and an Affiliate of the General
Partner) corresponding Partnership Interests, so long as (1) the
General Partner concludes in good faith that such issuance is in the
best interests of the General Partner and the Partnership, including
without limitation, the issuance of REIT Shares and corresponding
Partnership Units pursuant to an employee share purchase plan providing
for employee purchases of REIT Shares at a discount from fair market
value or employee stock options that have an exercise price that is
less than the fair market value of the REIT Shares, either at the time
of issuance or at the time of exercise, and (2) the General Partner
contributes directly or directly and through an Affiliate of the
General Partner all proceeds from such issuance to the Partnership.
(b) Certain Deemed Contributions of Proceeds of Issuance of REIT
Shares. In connection with any and all issuances of REIT Shares, the General
Partner shall make directly or directly and through one or more of its
Affiliates Capital Contributions to the Partnership of the proceeds from such
issuances, provided, that if the proceeds actually received and contributed by
the General Partner are less than the gross proceeds of such issuance as a
result of any underwriter's discount or other fees or expenses paid or incurred
in connection with such issuance, then the General Partner (or the General
Partner together with one or more of its Affiliates, as applicable) shall be
deemed to have made Capital Contributions to the Partnership in the aggregate
amount of the gross proceeds of such issuance and the Partnership shall be
deemed simultaneously to have paid such offering expenses in accordance with
Section 6.05 and in connection with the required issuance of additional
Partnership Units for such Capital Contributions pursuant to Section 4.02(a).
12
4.03 ADDITIONAL FUNDING. If the General Partner determines that it is
in the best interests of the Partnership to provide for additional Partnership
funds ("ADDITIONAL FUNDS") for any Partnership purpose, the General Partner may
(a) cause the Partnership to obtain such funds from outside borrowings, or (b)
elect to have the General Partner or any of its Affiliates provide such
Additional Funds to the Partnership through loans or otherwise.
4.04 CAPITAL ACCOUNTS. A separate capital account (a "CAPITAL ACCOUNT")
shall be established and maintained for each Partner in accordance with
Regulations Section 1.704-1(b)(2)(iv). If (a) a new or existing Partner acquires
an additional Partnership Interest in exchange for more than a de minimis
Capital Contribution, (b) the Partnership distributes to a Partner more than a
de minimis amount of Partnership property as consideration for the redemption of
a Partnership Interest, or (c) the Partnership is liquidated within the meaning
of Regulations Section 1.704-1(b)(2)(ii)(g), the General Partner shall revalue
the property of the Partnership to its fair market value (as determined by the
General Partner, in its sole and absolute discretion, and taking into account
Section 7701(g) of the Code) in accordance with Regulations Section 1.704-
l(b)(2)(iv)(f). When the Partnership's property is revalued by the General
Partner, the Capital Accounts of the Partners shall be adjusted in accordance
with Regulations Sections 1.704-1(b)(2)(iv)(f) and (g), which generally require
such Capital Accounts to be adjusted to reflect the manner in which the
unrealized gain or loss inherent in such property (that has not been reflected
in the Capital Accounts previously) would be allocated among the Partners
pursuant to Section 5.01 if there were a taxable disposition of such property
for its fair market value (as determined by the General Partner, in its sole and
absolute discretion, and taking into account Section 7701(g) of the Code) on the
date of the revaluation.
4.05 PERCENTAGE INTERESTS. If the number of outstanding Partnership
Units increases or decreases during a taxable year, each Partner's Percentage
Interest shall be adjusted by the General Partner effective as of the date of
each such increase or decrease to a percentage equal to the number of
Partnership Units held by such Partner divided by the aggregate number of
Partnership Units outstanding after giving effect to such increase or decrease.
In such event, the General Partner shall revalue the property of the Partnership
and the Capital Account for each Partner shall be adjusted as set forth in
Section 4.04. If the Partners' Percentage Interests are adjusted pursuant to
this Section 4.05, the Profit and Loss for the taxable year in which the
adjustment occurs shall be prorated between the part of the year ending on the
day when the Partnership's property is revalued by the General Partner and the
part of the year beginning on the following day and, as so divided, shall be
allocated to the Partners based on their Percentage Interests before adjustment,
and their adjusted Percentage Interests, respectively, either (a) as if the
taxable year had ended on the date of the adjustment or (b) based on the number
of days in each part. The General Partner, in its sole and absolute discretion,
shall determine which method shall be used to allocate Profit and Loss for the
taxable year in which an adjustment occurs, as may be required or permitted
under Section 706 of the Code.
4.06 NO INTEREST ON CONTRIBUTIONS. No Partner shall be entitled to
interest on its Capital Contribution.
4.07 RETURN OF CAPITAL CONTRIBUTIONS. No Partner shall be entitled to
withdraw any part of its Capital Contribution or its Capital Account or to
receive any distribution from the Partnership, except as specifically provided
in this Agreement. Except as otherwise provided herein, there shall be no
obligation to return to any Partner or withdrawn Partner any part of such
Partner's Capital Contribution for so long as the Partnership continues in
existence.
4.08 NO THIRD-PARTY BENEFICIARY. No creditor or other third party
having dealings with the Partnership shall have the right to enforce the right
or obligation of any Partner to make Capital Contributions or loans or to pursue
any other right or remedy hereunder or at law or in equity, it being
13
understood and agreed that the provisions of this Agreement shall be solely for
the benefit of, and may be enforced solely by, the parties hereto and their
respective successors and assigns. None of the rights or obligations of the
Partners herein set forth to make Capital Contributions or loans to the
Partnership shall be deemed an asset of the Partnership for any purpose by any
creditor or other third party, nor may such rights or obligations be sold,
transferred or assigned by the Partnership or pledged or encumbered by the
Partnership to secure any debt or other obligation of the Partnership or of any
of the Partners. In addition, it is the intent of the parties hereto that no
distribution to any Limited Partner shall be deemed a return of money or other
property in violation of the Act. However, if any court of competent
jurisdiction holds that, notwithstanding the provisions of this Agreement, any
Limited Partner is obligated to return such money or property, such obligation
shall be the obligation of such Limited Partner and not of the General Partner.
Without limiting the generality of the foregoing, a deficit Capital Account of a
Partner shall not be deemed to be a liability of such Partner nor an asset or
property of the Partnership.
ARTICLE V
PROFIT AND LOSS; DISTRIBUTIONS
5.01 ALLOCATION OF PROFIT AND LOSS.
(a) After giving effect to the special allocations set forth in
Sections 5.01(b), (c) and (d), Profit for each fiscal year of the Partnership
shall be allocated as follows: (i) first to the Partners, pro rata, in
accordance with and in proportion to their respective Percentage Interests, in
amounts equal to the amount of cash distributed to the Partners pursuant to
Section 5.02(a) with respect to such fiscal year; (ii) second, to the extent the
amount of Profit for such fiscal year exceeds the amount of cash distributed to
the Partners pursuant to Section 5.02(a), such excess shall be allocated to the
General Partner and the Limited Partners in amounts and in proportion to the
cumulative Loss allocated to the General Partner pursuant to clause (y) of this
Section 5.01(a) and the cumulative Loss allocated to the Limited Partners
pursuant to clause (x) of this Section 5.01(a), respectively; and (iii) finally,
the balance, if any, of Profit shall be allocated to the Partners in accordance
with and in proportion to their respective Percentage Interests. Notwithstanding
the foregoing, however, it is the intent of the Partners that allocations of
Profit to the Limited Partners be such that the amount of Profit allocated to
each Limited Partner be equal to the amount of income that would have been
allocated to such Limited Partner with respect to the applicable fiscal period
if such Limited Partner had owned REIT Shares equal in number to the number of
Partnership Units owned by such Limited Partner during such fiscal period, and
if, for any reason, the foregoing allocations of Profit result in any material
variation from this concept, Profit shall be allocated to each Limited Partner
in an amount equal to the aggregate amount of income that would have been
allocated to such Limited Partner with respect to the applicable fiscal period
if such Limited Partner had owned REIT Shares equal in number to the number of
Partnership Units owned by such Limited Partner during such fiscal period. After
giving effect to the special allocations set forth in Sections 5.01(b), (c) and
(d), Loss for a fiscal year of the Partnership shall be allocated as follows:
(w) first, to the Partners, pro rata, in accordance with and in proportion to
their respective Percentage Interests, until the cumulative Loss allocated to
each Partner under this clause (w) equals the cumulative Profit allocated to
each Partner under clause (ii) of this Section 5.01(a); (x) second, to the
Limited Partners in an amount equal to each such Limited Partner's Capital
Account balance prior to the allocation made under this clause (x); (y) third,
to the General Partner in an amount equal to the General Partner's Capital
Account balance prior to the allocation made under this clause (y); and (z)
fourth, to the General Partner to the extent that any further allocation of Loss
to Limited Partners would result in any such Limited Partners having a deficit
balance in their Capital Accounts.
(b) Notwithstanding any provision to the contrary herein, (i) any
expense of the Partnership that is a "nonrecourse deduction" within the meaning
of Regulations Section 1.704-2(b)(1) shall be allocated in accordance with the
Partners' respective Percentage Interests, (ii) any expense of the
14
Partnership that is a "partner nonrecourse deduction" within the meaning of
Regulations Section 1.704-2(i)(2) shall be allocated to the Partner that bears
the "economic risk of loss" of such deduction in accordance with Regulations
Section 1.704- 2(i)(1), (iii) if there is a net decrease in Partnership Minimum
Gain within the meaning of Regulations Section 1.704-2(f)(1) for any Partnership
taxable year, then, subject to the exceptions set forth in Regulations Section
1.704-2(f)(2), (3), (4) and (5), items of gain and income shall be allocated
among the Partners in accordance with Regulations Section 1.704-2(f) and the
ordering rules contained in Regulations Section 1.704-2(j), and (iv) if there is
a net decrease in Partner nonrecourse debt minimum gain within the meaning of
Regulations Section 1.704-2(i)(4) for any Partnership taxable year, then,
subject to the exceptions set forth in Regulations Section 1.704-2(g), items of
gain and income shall be allocated among the Partners, in accordance with
Regulations Section 1.704-2(i)(4) and the ordering rules contained in
Regulations Section 1.704-2(j). A Partner's "interest in partnership profits"
for purposes of determining its share of the nonrecourse liabilities of the
Partnership within the meaning of Regulations Section 1.752- 3(a)(3) shall be
such Partner's Percentage Interest.
(c) If a Partner receives in any taxable year an adjustment,
allocation, or distribution described in subparagraphs (4), (5), or (6) of
Regulations Section 1.704-1(b)(2)(ii)(d) that causes or increases a deficit
balance in such Partner's Capital Account that exceeds the sum of such Partner's
shares of Partnership Minimum Gain and Partner nonrecourse debt minimum gain, as
determined in accordance with Regulations Sections 1.704-2(g) and 1.704-2(i),
such Partner shall be allocated specially for such taxable year (and, if
necessary, later taxable years) items of income and gain in an amount and manner
sufficient to eliminate such deficit Capital Account balance as quickly as
possible as provided in Regulations Section 1.704-1(b)(2)(ii)(d). After the
occurrence of an allocation of income or gain to a Partner in accordance with
this Section 5.01(c), to the extent permitted by Regulations Section 1.704-1(b),
items of expense or loss shall be allocated to such Partner in an amount
necessary to offset the income or gain previously allocated to such Partner
under this Section 5.01(c).
(d) Loss shall not be allocated to a Limited Partner to the extent
that such allocation would cause a deficit in such Partner's Capital Account
(after reduction to reflect the items described in Regulations Section
1.704-1(b)(2)(ii)(d)(4), (5) and (6)) to exceed the sum of such Partner's shares
of Partnership Minimum Gain and Partner nonrecourse debt minimum gain. Any Loss
in excess of that limitation shall be allocated to the General Partner. After
the occurrence of an allocation of Loss to the General Partner in accordance
with this Section 5.01(d), to the extent permitted by Regulations Section
1.704-1(b), Profit shall be allocated to the General Partner in an amount
necessary to offset the Loss previously allocated to the General Partner under
this Section 5.01(d).
(e) If a Partner transfers any part or all of its Partnership
Interest, the distributive shares of the various items of Profit and Loss
allocable among the Partners during such fiscal year of the Partnership shall be
allocated between the transferor and the transferee Partner either (i) as if the
Partnership's fiscal year had ended on the date of the transfer, or (ii) based
on the number of days of such fiscal year that each was a Partner without regard
to the results of Partnership activities in the respective portions of such
fiscal year in which the transferor and the transferee were Partners. The
General Partner, in its sole and absolute discretion, shall determine which
method shall be used to allocate the distributive shares of the various items of
Profit and Loss between the transferor and the transferee Partner.
(f) "PROFIT" and "LOSS" and any items of income, gain, expense, or
loss referred to in this Agreement shall be determined in accordance with
federal income tax accounting principles, as modified by Regulations Section
1.704-(b)(2)(iv), except that Profit and Loss shall not include items of income,
gain and expense that are specially allocated pursuant to Sections 5.01(b),
5.01(c), or 5.01(d). All allocations of income, Profit, gain, Loss, and expense
(and all items contained therein) for federal income tax purposes shall be
identical to all allocations of such items set forth in this Section 5.01,
except as otherwise required by Section 704(c) of the Code and Regulations
Section 1.704-1(b)(4). The General
15
Partner shall have the authority, in its sole and absolute discretion and
without the need for consent from any Partner, to elect the method or methods to
be used by the Partnership for allocating items of income, gain, expense and
deductions as required by Section 704(c) of the Code, including election of a
method that may result in one or more Partners receiving or being allocated a
disproportionately larger share of items of Partnership income, gain, expense or
deduction, and any such election shall be binding on all Partners.
5.02 DISTRIBUTIONS OF CASH.
(a) The Partnership shall distribute cash on a quarterly (or, at
the election of the General Partner, more frequent) basis, in an amount
determined by the General Partner in its sole and absolute discretion, to the
Partners who are Partners on the Partnership Record Date with respect to such
quarter (or other distribution period) in the following manner: (i) first, to
the General Partner in an amount equal to the GP Minimum Return with respect to
the fiscal year of the General Partner; (ii) second, to the establishment of
reasonable cash reserves to meet REIT Expenses and other obligations of the
Partnership, as determined in the sole and absolute discretion of the General
Partner, (iii) third, to the Limited Partners pro rata among them in proportion
to the their respective Unpaid Return, if any, owing to each such Limited
Partners with respect to prior fiscal years, in an amount equal to their
respective Unpaid Return for such prior fiscal years owing to each such Limited
Partner; (iv) fourth, to the General Partner and the Limited Partners in such
aggregate amount as may be determined by the General Partner in its sole and
absolute discretion to be allocated among the General Partner and the Limited
Partners such that the General Partner receives its Unpaid Return from all prior
fiscal years and each Limited Partner will receive an amount equal to its LP
Return for such fiscal year; and (v) finally, to the Partners in accordance with
and in proportion to their respective Percentage Interests; provided, however,
that if a new or existing Partner acquires an additional Partnership Interest in
exchange for a Capital Contribution on any date other than a Partnership Record
Date, the cash distribution attributable to such additional Partnership Interest
relating to the Partnership Record Date next following the issuance of such
additional Partnership Interest shall be reduced to the proportion thereof which
equals (i) the number of days that such additional Partnership Interest is held
by such Partner divided by (ii) the number of days between such Partnership
Record Date and the immediately preceding Partnership Record Date.
(b) Notwithstanding any other provision of this Agreement, the
General Partner is authorized to take any action that it determines to be
necessary or appropriate to cause the Partnership to comply with any withholding
requirements established under the Code or any other federal, state or local law
including, without limitation, the requirements of Sections 1441, 1442, 1445 and
1446 of the Code. To the extent that the Partnership is required to withhold and
pay over to any taxing authority any amount resulting from the allocation or
distribution of income to a Partner or its assignee (including by reason of
Section 1446 of the Code), either (i) if the actual amount to be distributed to
the Partner or assignee equals or exceeds the amount required to be withheld by
the Partnership, the amount withheld shall be treated as a distribution of cash
in the amount of such withholding to such Partner or assignee, or (ii) if the
actual amount to be distributed to the Partner or assignee is less than the
amount required to be withheld by the Partnership, the amount required to be
withheld shall be treated as a loan (a "PARTNERSHIP LOAN") from the Partnership
to the Partner or assignee on the day the Partnership pays over such amount to a
taxing authority. A Partnership Loan shall be repaid through withholding by the
Partnership with respect to subsequent distributions to the applicable Partner
or assignee. In the event that a Limited Partner (a "DEFAULTING LIMITED
PARTNER") fails to pay any amount owed to the Partnership with respect to the
Partnership Loan within 15 days after demand for payment thereof is made by the
Partnership on the Limited Partner, the General Partner, in its sole and
absolute discretion, may elect to make the payment to the Partnership on behalf
of such Defaulting Limited Partner. In such event, on the date of payment, the
General Partner shall be deemed to have extended a loan (a "GENERAL PARTNER
LOAN") to the Defaulting Limited Partner in the amount of the payment made by
the General Partner and shall
16
succeed to all rights and remedies of the Partnership against the Defaulting
Limited Partner as to that amount. Without limitation, the General Partner shall
have the right to receive any distributions that otherwise would be made by the
Partnership to the Defaulting Limited Partner until such time as the General
Partner Loan has been paid in full, and any such distributions so received by
the General Partner shall be treated as having been received by the Defaulting
Limited Partner and immediately paid to the General Partner. Any amounts treated
as a Partnership Loan or a General Partner Loan pursuant to this Section 5.02(b)
shall bear interest at the lesser of (A) the base rate on corporate loans at
large United States money center commercial banks, as published from time to
time in The Wall Street Journal, or (B) the maximum lawful rate of interest on
such obligation, such interest to accrue from the date the Partnership or the
General Partner, as applicable, is deemed to extend the loan until such loan is
repaid in full.
(c) To the extent not utilized for expenses of the Partnership or
for investment in additional Properties, the General Partner may, in its
discretion, cause the Partnership to distribute Net Capital Proceeds in such
amount as shall be determined by the General Partner in its discretion in
accordance with the provisions of Section 5.02(a).
(d) In no event may a Partner receive a distribution of cash with
respect to a Partnership Unit if such Partner is entitled to receive a cash
dividend as the holder of record of a REIT Share for which all or part of such
Partnership Unit has been or will be exchanged, and the Unpaid Return with
respect to such Partnership Unit shall be deemed to be reduced by the amount of
any such cash dividend.
5.03 REIT DISTRIBUTION REQUIREMENTS. The General Partner shall use
its reasonable efforts to cause the Partnership to distribute amounts sufficient
to enable the General Partner to pay stockholder dividends that will allow the
General Partner to (a) meet its distribution requirement for qualification as a
REIT as set forth in Section 857 of the Code and (b) avoid any federal income or
excise tax liability imposed by the Code.
5.04 NO RIGHT TO DISTRIBUTIONS IN KIND. No Partner shall be
entitled to demand property other than cash in connection with any distributions
by the Partnership.
5.05 LIMITATIONS ON RETURN OF CAPITAL CONTRIBUTIONS. Notwithstanding
any of the provisions of this Article V, no Partner shall have the right to
receive and the General Partner shall not have the right to make a distribution
that includes a return of all or part of a Partner's Capital Contributions,
unless after giving effect to the return of a Capital Contribution, the sum of
all Partnership liabilities, other than the liabilities to a Partner for the
return of its Capital Contribution, does not exceed the fair market value of the
Partnership's assets.
5.06 DISTRIBUTIONS UPON LIQUIDATION. Upon liquidation of the
Partnership, after payment of, or adequate provision for, debts and obligations
of the Partnership, including any Partner loans, any remaining assets of the
Partnership shall be distributed to all Partners with positive Capital Accounts
in accordance with their respective positive Capital Account balances. For
purposes of the preceding sentence, the Capital Account of each Partner shall be
determined after all adjustments made in accordance with Sections 5.01 and 5.02
resulting from Partnership operations and from all sales and dispositions of all
or any part of the Partnership's assets have been made. To the extent deemed
advisable by the General Partner, appropriate arrangements (including the use of
a liquidating trust) may be made to assure that adequate funds are available to
pay any contingent debts or obligations.
5.07 SUBSTANTIAL ECONOMIC EFFECT. It is the intent of the Partners
that the allocations of Profit and Loss under this Agreement have substantial
economic effect (or be consistent with the Partners' interests in the
Partnership in the case of the allocation of losses attributable to nonrecourse
debt) within
17
the meaning of Section 704(b) of the Code as interpreted by the Regulations
promulgated pursuant thereto. Article V and other relevant provisions of this
Agreement shall be interpreted in a manner consistent with such intent. If, for
any reason, the General Partner deems it necessary in order to comply with the
Code, the General Partner may, and hereby is, authorized and directed to
allocate income, gain, loss, deduction or credit (or items thereof) arising in
any year differently than as provided for in this Article if, and to the extent,
(i) that allocating income, gain, loss, deduction or credit (or item thereof)
would cause the determinations and allocations of each Partner's distributive
share of income, gain, loss, deduction or credit (or item thereof) not to be
permitted by the Code and any Regulations promulgated thereunder, or (ii) such
allocation would be inconsistent with a Partner's interest in the Partnership
taking into consideration all facts and circumstances. Any allocation made
pursuant to this Section shall be deemed to be a complete substitute for any
allocation otherwise provided for in this Agreement, and no further amendment of
this Agreement or approval by any Partner shall be required to effectuate such
allocation. In making any such allocations ("New Allocations") under this
Section, the General Partner is authorized to act in reliance upon advice of
counsel to the Partnership or the Partnership's regular certified public
accountants that, in their opinion, after examining the relevant provisions of
the Code and any current or future proposed or final Regulations thereunder, the
New Allocations are necessary in order to ensure that, in either the
then-current year or in any preceding year, each Partner's distributive share of
income, gain, loss, deduction or credit (or items thereof) are determined and
allocated in accordance with the Code and the Partner's interests in the
Partnership. New Allocations made by the General Partner in reliance upon the
advice of counsel and accountants as described above shall be deemed to be made
in the best interests of the Partnership and all of the Partners consistent with
the duties of the General Partner hereunder and any such New Allocations shall
not give rise to any claim or cause of action by any Partner against the
Partnership or the General Partner.
ARTICLE VI
RIGHTS, OBLIGATIONS AND
POWERS OF THE GENERAL PARTNER
6.01 MANAGEMENT OF THE PARTNERSHIP.
(a) Except as otherwise expressly provided in this Agreement, the
General Partner shall have full, complete and exclusive discretion to manage and
control the business of the Partnership for the purposes herein stated, and
shall make all decisions affecting the business and assets of the Partnership.
Subject to the restrictions specifically contained in this Agreement, the powers
and obligations, as the context requires, of the General Partner shall include,
without limitation, the authority to take the following actions on behalf of the
Partnership:
(i) to acquire, purchase, own, operate, lease and dispose of
any real property and any other property or assets including, but not
limited to notes, Mortgages, partnership or joint venture interests or
securities, that the General Partner determines are necessary or
appropriate or in the best interests of the business of the
Partnership;
(ii) to construct buildings and make other improvements on the
Properties owned or leased by the Partnership;
(iii) to authorize, issue, sell, redeem or otherwise purchase
any Partnership Interests or any securities (including secured and
unsecured debt obligations of the Partnership, debt obligations of the
Partnership convertible into any class or series of Partnership
Interests, or options, rights, warrants or appreciation rights relating
to any Partnership Interests) of the Partnership;
18
(iv) to borrow or lend money for the Partnership, issue or
receive evidences of indebtedness in connection therewith, refinance,
increase the amount of, modify, amend or chance the terms of, or extend
the time for the payment of, any such indebtedness, and secure such
indebtedness by mortgage, deed of trust, pledge or other lien on the
Partnership's assets;
(v) to pay, either directly or by reimbursement, for all
operating costs and general administrative expenses of the Partnership
to third parties or to the General Partner or its Affiliates as set
forth in this Agreement;
(vi) to guarantee or become a co-maker of indebtedness of the
General Partner or any Subsidiary thereof, refinance, increase the
amount of, modify, amend or change the terms of, or extend the time for
the payment of, any such guarantee or indebtedness, and secure such
guarantee or indebtedness by mortgage, deed of trust, pledge or other
lien on the Partnership's assets;
(vii) to use assets of the Partnership (including, without
limitation, cash on hand) for any purpose consistent with this
Agreement, including, without limitation, payment, either directly or
by reimbursement, of all operating costs and general administrative
expenses of the General Partner, the Partnership or any Subsidiary of
either, to third parties or to the General Partner as set forth in this
Agreement;
(viii) to lease all or any portion of any of the Partnership's
assets, whether or not the terms of such leases extend beyond the
termination date of the Partnership and whether or not any portion of
the Partnership's assets so leased are to be occupied by the lessee,
or, in turn, subleased in whole or in part to others, for such
consideration and on such terms as the General Partner may determine;
(ix) to prosecute, defend, arbitrate, or compromise any and
all claims or liabilities in favor of or against the Partnership, on
such terms and in such manner as the General Partner may reasonably
determine, and similarly, to prosecute, settle or defend litigation
with respect to the Partners, the Partnership, or the Partnership's
assets;
(x) to file applications, communicate, and otherwise deal with
any and all governmental agencies having jurisdiction over, or in any
way affecting, the Partnership's assets or any other aspect of the
Partnership business;
(xi) to make or revoke any election permitted or required of
the Partnership by any taxing authority;
(xii) to maintain such insurance coverage for public
liability, fire and casualty, and any and all other insurance for the
protection of the Partnership, for the conservation of Partnership
assets, or for any other purpose convenient or beneficial to the
Partnership, in such amounts and such types, as it shall determine from
time to time;
(xiii) to determine whether or not to apply any insurance
proceeds for any Property to the restoration of such Property or to
distribute the same;
(xiv) to establish one or more divisions of the Partnership,
to hire and dismiss employees of the Partnership or any division of the
Partnership, and to retain legal counsel, accountants, consultants,
real estate brokers, and such other persons, as the General Partner may
19
deem necessary or appropriate in connection with the Partnership
business and to pay such persons remuneration as the General Partner
may deem reasonable and proper;
(xv) to retain other services of any kind or nature in
connection with Partnership business and to pay such remuneration as
the General Partner may deem reasonable and proper for same;
(xvi) to negotiate and conclude agreements on behalf of the
Partnership with respect to any of the rights, powers and authority
conferred upon the General Partner;
(xvii) to maintain accurate accounting records and to file
promptly all federal, state and local income tax returns on behalf of
the Partnership;
(xviii) to distribute Partnership cash or other Partnership
assets in accordance with this Agreement;
(xix) to form or acquire an interest in, and contribute
property to, any further limited or general partnerships, joint
ventures, limited liability companies or other entities or
relationships that it deems desirable (including, without limitation,
the acquisition of interests in, and the contributions of property to,
its Subsidiaries and any other Person in which it has an equity
interest from time to time);
(xx) to establish Partnership reserves for working capital,
capital expenditures, contingent liabilities, or any other valid
Partnership purpose;
(xxi) to merge, consolidate or combine the Partnership with or
into another Person;
(xxii) to do any and all acts and things necessary or prudent
to ensure that the Partnership will not be classified as a "publicly
traded partnership" for purposes of Section 7704 of the Code; and
(xxiii) to take such other action, execute, acknowledge, swear
to or deliver such other documents and instruments, and perform any and
all other acts that the General Partner deems necessary or appropriate
for the formation, continuation and conduct of the business and affairs
of the Partnership (including, without limitation, all actions
consistent with allowing the General Partner at all times to qualify as
a REIT unless the General Partner voluntarily terminates its REIT
status) and to possess and enjoy all of the rights and powers of a
general partner as provided by the Act.
(b) Except as otherwise provided herein, to the extent the duties
of the General Partner require expenditures of funds to be paid to third
parties, the General Partner shall not have any obligations hereunder except to
apply Partnership funds to the extent that Partnership funds are reasonably
available to it for the performance of such duties, and nothing herein contained
shall be deemed to authorize or require the General Partner, in its capacity as
such, to expend its individual funds for payment to third parties or to
undertake any individual liability or obligation on behalf of the Partnership.
(c) Any actions taken by the General Partner pursuant to its
authority under this Agreement on behalf of the Partnership regarding the
approval of any transaction between the Partnership and the Sponsor, Advisor, a
member of the Board of Directors of Xxxx Credit Property Trust or any Affiliate
thereof, shall require approval by a majority of the members of the Board of
Directors of Xxxx Credit Property Trust as being fair and reasonable to Xxxx
Credit Property Trust and the Partnership on terms
20
and conditions not less favorable to Xxxx Credit Property Trust or the
Partnership, as applicable, than those available from unaffiliated third
parties.
6.02 DELEGATION OF AUTHORITY. The General Partner may delegate any
or all of its powers, rights and obligations hereunder, and may appoint, employ,
contract or otherwise deal with any Person (including without limitation
officers or other agents of the Partnership or the General Partner appointed by
the General Partner) for the transaction of the business of the Partnership,
which Person may, under supervision of the General Partner, perform any acts or
services for the Partnership as the General Partner may approve.
6.03 INDEMNIFICATION AND EXCULPATION OF INDEMNITEES.
(a) The Partnership shall indemnify an Indemnitee from and against
any and all losses, claims, damages, liabilities, joint or several, expenses
(including reasonable legal fees and expenses), judgments, fines, settlements,
and other amounts arising from any and all claims, demands, actions, suits or
proceedings, civil, criminal, administrative or investigative, that relate to
the operations of the Partnership as set forth in this Agreement in which any
Indemnitee may be involved, or is threatened to be involved, as a party or
otherwise, as a result of acting on behalf of or performing services for the
Partnership, only if it is determined that (i) the Indemnitee acted in good
faith and (ii) that the Indemnitee determined in good faith that the act or
omission was in the Partnership's best interests, or if the act or omission was
outside the Indemnitee's official capacity as a general partner of the
Partnership, that the act or omission was at least not opposed to the
Partnership's best interests. Notwithstanding the foregoing, each Indemnitee
shall be liable, responsible and accountable, and the Partnership shall not be
liable to an Indemnitee, other than for reasonable expenses actually incurred by
the Indemnitee with respect to a proceeding in which (i) the Indemnitee is found
liable on the basis that the Indemnitee improperly received personal benefit,
whether or not the benefit resulted from an action taken in the Indemnitee's
official capacity, or (ii) the Indemnitee is found liable to the Partnership or
the Limited Partners. The Partnership shall not indemnify or hold harmless the
Indemnitee: (a) in the case in which the Indemnitee is an Independent Director,
if the loss or liability was the result of gross negligence or willful
misconduct by the Indemnitee, or (b) in any other case, if the loss or liability
was the result of negligence or misconduct by the Indemnitee.
(b) Notwithstanding anything to the contrary contained in the
provisions of subsection (a) of this Section, the Partnership shall not provide
indemnification for any loss, liability or expense arising from or out of an
alleged violation of federal or state securities laws by an Indemnitee unless
one or more of the following conditions are met: (i) there has been a successful
adjudication on the merits of each count involving alleged securities law
violations as to the particular Indemnitee, (ii) such claims have been dismissed
with prejudice on the merits by a court of competent jurisdiction as to the
particular Indemnitee, or (iii) a court of competent jurisdiction approves a
settlement of the claims against a particular Indemnitee and finds that
indemnification of the settlement and the related costs should be made, and the
court considering the request for indemnification has been advised of the
position of the SEC and of the published position of any state securities
regulatory authority in which securities of the Partnership were offered or sold
as to indemnification for violations of securities laws.
(c) The Partnership shall pay or reimburse reasonable legal
expenses and other costs incurred by an Indemnitee in advance of final
disposition of a proceeding if all of the following are satisfied: (i)
21
the proceeding relates to acts or omissions with respect to the performance of
duties for services on behalf of the Partnership, (ii) the Indemnitee provides
the Partnership with written affirmation of the Indemnitee's good faith belief
that the Indemnitee has met the standard of conduct necessary for
indemnification by the Partnership as authorized in this Section 6.03, (iii) the
legal proceeding was initiated by a third party who is not a stockholder of the
General Partner or, if by a stockholder of the General Partner acting in his or
her capacity as such, a court of competent jurisdiction approves such
advancement, and (iv) the Indemnitee provides the Partnership with a written
agreement to repay the amount paid or reimbursed by the Partnership, together
with the applicable legal rate of interest thereon, if it is ultimately
determined that the Indemnitee did not comply with the requisite standard of
conduct and is not entitled to indemnification.
(d) The Partnership may purchase and maintain insurance or
establish other arrangements, including without limitation trust arrangements
and letters of credit on behalf of or to secure indemnification obligations owed
to the Indemnitees and such other Persons as the General Partner shall determine
against any liability that may be asserted against or expenses that may be
incurred by such Person in connection with the Partnership's activities,
regardless of whether the Partnership would have the power to indemnify such
Person against such liability under the provisions of this Agreement.
(e) For purposes of this Section 6.03, (i) the Partnership shall
be deemed to have requested an Indemnitee to serve as a fiduciary of an employee
benefit plan whenever the performance by the Indemnitee of its duties to the
Partnership also imposes duties on the Indemnitee, or otherwise involves
services by the Indemnitee to the plan or participants or beneficiaries of the
plan; (ii) excise taxes assessed on an Indemnitee with respect to an employee
benefit plan pursuant to applicable law shall constitute fines within the
meaning of this Section 6.03; and (iii) actions taken or omitted by the
Indemnitee with respect to an employee benefit plan in the performance of its
duties for a purpose reasonably believed by it to be in the interest of the
participants and beneficiaries of the plan shall be deemed to be for a purpose
which is not opposed to the best interests of the Partnership.
(f) In no event may an Indemnitee subject the Limited Partners to
personal liability by reason of the indemnification provisions set forth in this
Agreement.
(g) The provisions of this Section 6.03 are for the benefit of the
Indemnitees, their heirs, successors, assigns and administrators and shall not
be deemed to create any rights in or be for the benefit of any other Persons.
6.04 LIABILITY OF THE GENERAL PARTNER.
(a) Notwithstanding anything to the contrary set forth in this
Agreement, the General Partner shall not be liable for monetary damages to the
Partnership or any Partners for losses sustained or liabilities incurred as a
result of errors in judgment or any act or omission if the General Partner acted
in good faith. The General Partner shall not be in breach of any duty that the
General Partner may owe to the Limited Partners or the Partnership or any other
Persons under this Agreement or of any duty stated or
22
implied by law or equity, provided, the General Partner, acting in good faith,
abides by the terms of this Agreement. In addition, to the extent the General
Partner or any officer, director, employee, agent or stockholder of the General
Partner performs its duties in accordance with the standards provided by the
Act, as it may be amended from time to time, or under any successor statute
thereto, such Person or Persons shall have no liability by reason of being or
having been the General Partner, or by reason of being an officer, director,
employee, agent or stockholder of the General Partner. To the maximum extent
that the Act and the general laws of the State of Delaware, in effect from time
to time, permit limitation of the liability of general partners of a limited
partnership, the General Partner and its officers, directors, employees, agents
and stockholders shall not be liable to the Partnership or to any Partner for
money damages except to the extent that (i) the General Partner or its officers,
directors, employees, agents or stockholders actually received an improper
benefit or profit in money, property or services, in which case the liability
shall not exceed the amount of the benefit or profit in money, property or
services actually received; or (ii) a judgment or other final adjudication
adverse to the General Partner or one or more of its officers, directors,
employees, agents or stockholders is entered in a proceeding based on a finding
in the proceeding that the action or failure to act of the General Partner or
one or more of its officers, directors, employees, agents or stockholders was
the result of active and deliberate dishonesty and was material to the cause of
action adjudicated in the proceeding. Neither the amendment nor repeal of this
Section 6.04(a), nor the adoption or amendment of any other provision of this
Agreement inconsistent with this Section 6.04(a), shall apply to or affect in
any respect the applicability of the preceding sentence with respect to any act
or failure to act which occurred prior to such amendment, repeal or adoption. In
the absence of any Delaware statute limiting the liability of the General
Partner or its directors or officers for money damages in a suit by or on behalf
of the Partnership or by any Partner, the General Partner and the officers,
directors, employees, agents and stockholders of the General Partner shall not
be liable to the Partnership or to any Partner for money damages except to the
extent that (i) the General Partner or one or more of its officers, directors,
employees, agents or stockholders actually received an improper benefit or
profit in money, property or services, in which case the liability shall not
exceed the amount of the benefit or profit in money, property or services
actually received; or (ii) a judgment or other final adjudication adverse to the
General Partner or one or more of its officers, directors, employees, agents or
stockholders is entered in a proceeding based on a finding in the proceeding
that the action of the General Partner or one or more of its officers,
directors, employees or stockholders action or failure to act was the result of
active and deliberate dishonesty and was material to the cause of action
adjudicated in the proceeding.
(b) The Limited Partners expressly acknowledge that the General
Partner is acting on behalf of the Partnership, itself and its stockholders
collectively, that the General Partner is under no obligation to consider the
separate interests of the Limited Partners (including, without limitation, the
tax consequences to Limited Partners or the tax consequences of some, but not
all, of the Limited Partners) in deciding whether to cause the Partnership to
take (or decline to take) any actions. In the event of a conflict between the
interests of its stockholders on the one hand and the Limited Partners on the
other, the General Partner shall endeavor in good faith to resolve the conflict
in a manner not adverse to either its stockholders or the Limited Partners;
provided, however, that for so long as the General Partner directly owns a
controlling interest in the Partnership, any such conflict that the General
Partner, in its sole and absolute discretion, determines cannot be resolved in a
manner not adverse to either its stockholders or the Limited Partners shall be
resolved in favor of its stockholders. The General Partner shall not be liable
for monetary damages for losses sustained, liabilities incurred, or benefits not
derived by Limited Partners in connection with such decisions, provided that the
General Partner has acted in good faith.
(c) Subject to its obligations and duties as General Partner set
forth in Section 6.01, the General Partner may exercise any of the powers
granted to it under this Agreement and perform any of the duties imposed upon it
hereunder either directly or by or through its agents. The General Partner shall
23
not be responsible for any misconduct or negligence on the part of any such
agent appointed by it in good faith.
(d) Notwithstanding any other provisions of this Agreement or the
Act, any action of the General Partner on behalf of the Partnership or any
decision of the General Partner to refrain from acting on behalf of the
Partnership, undertaken in the good faith belief that such action or omission is
necessary or advisable in order to (i) protect the ability of the General
Partner to continue to qualify as a REIT or (ii) prevent the General Partner
from incurring any taxes under Section 857, Section 4981, or any other provision
of the Code, is expressly authorized under this Agreement and is deemed approved
by all of the Limited Partners.
(e) Any amendment, modification or repeal of this Section 6.04 or
any provision shall be prospective only and shall not in any way affect the
limitations on the General Partner's liability to the Partnership and the
Limited Partners under this Section 6.04 as in effect immediately prior to such
amendment, modification or repeal with respect to matters occurring, in whole or
in part, prior to such amendment, modification or repeal, regardless of when
claims relating to such matters may arise or be asserted.
6.05 REIMBURSEMENT OF GENERAL PARTNER.
(a) Except as provided in this Section 6.05 and elsewhere in this
Agreement (including the provisions of Articles V and VI regarding
distributions, payments, and allocations to which it may be entitled), the
General Partner shall not be compensated for its services as general partner of
the Partnership.
(b) The General Partner shall be reimbursed on a monthly basis, or
such other basis as the General Partner may determine in its sole and absolute
discretion, for all REIT Expenses and Administrative Expenses.
6.06 OUTSIDE ACTIVITIES. Subject to Section 6.08, the Articles of
Incorporation and any agreements entered into by the General Partner or its
Affiliates with the Partnership or a Subsidiary, or any officer, director,
employee, agent, trustee, Affiliate or stockholder of the General Partner, the
General Partner shall be entitled to and may have business interests and engage
in business activities in addition to those relating to the Partnership,
including business interests and activities substantially similar or identical
to those of the Partnership. Neither the Partnership nor any of the Limited
Partners shall have any rights by virtue of this Agreement in any such business
ventures, interests or activities. None of the Limited Partners or any other
Person shall have any rights by virtue of this Agreement or the partnership
relationship established hereby in any such business ventures, interests or
activities, and the General Partner shall have no obligation pursuant to this
Agreement to offer any interest in any such business ventures, interests and
activities to the Partnership or any Limited Partner, even if such opportunity
is of a character which. if presented to the Partnership or any Limited Partner,
could be taken by such Person.
6.07 EMPLOYMENT OR RETENTION OF AFFILIATES.
(a) Any Affiliate of the General Partner may be employed or
retained by the Partnership and may otherwise deal with the Partnership (whether
as an advisor, buyer, lessor, lessee, manager, property management agent, asset
manager, furnisher of goods or services, broker, agent, lender or otherwise) and
may receive from the Partnership any compensation, price, or other payment
therefor which the General Partner determines to be fair and reasonable.
24
(b) The Partnership may lend or contribute to its Subsidiaries or
other Persons in which it has an equity investment, and such Persons may borrow
funds from the Partnership, on terms and conditions established in the sole and
absolute discretion of the General Partner. The foregoing authority shall not
create any right or benefit in favor of any Subsidiary or any other Person.
(c) The Partnership may transfer assets to joint ventures, limited
liability companies, other partnerships, corporations or other business entities
in which it is or thereby becomes a participant upon such terms and subject to
such conditions as the General Partner deems to be consistent with this
Agreement and applicable law.
(d) Except as expressly permitted by this Agreement, neither the
General Partner nor any of its Affiliates shall sell, transfer or convey any
property to, or purchase any property from, the Partnership, directly or
indirectly, except pursuant to transactions that are on terms that are fair and
reasonable to the Partnership.
25
6.08 GENERAL PARTNER PARTICIPATION. The General Partner agrees that all
business activities of the General Partner, including activities pertaining to
the acquisition, development or ownership of commercial real property or other
property, including Mortgages, shall be conducted through the Partnership or one
or more Subsidiary Partnerships; provided, however, that the General Partner is
allowed to make a direct acquisition, but if and only if, such acquisition is
made in connection with the issuance of Additional Securities, which direct
acquisition and issuance have been approved and determined to be in the best
interests of the General Partner and the Partnership by a majority of the its
directors.
6.09 TITLE TO PARTNERSHIP ASSETS. Partnership assets, whether real,
personal or mixed and whether tangible or intangible, shall be deemed to be
owned by the Partnership as an entity, and no Partner, individually or
collectively, shall have any ownership interest in such Partnership assets or
any portion thereof; provided, that title to any or all of the Partnership
assets may be held in the name of the Partnership, the General Partner or one or
more nominees, as the General Partner may determine, including Affiliates of the
General Partner. The General Partner hereby declares and warrants that any
Partnership assets for which legal title is held in the name of the General
Partner or any nominee or Affiliate of the General Partner shall be held by such
Person for the use and benefit of the Partnership in accordance with the
provisions of this Agreement; provided, that the General Partner shall use its
best efforts to cause legal title to such assets to be vested in the Partnership
as soon as reasonably practicable. All Partnership assets shall be recorded as
the property of the Partnership in its books and records, irrespective of the
name in which legal title to such Partnership assets is held.
6.10 MISCELLANEOUS. In the event the General Partner redeems any REIT
Shares, then the General Partner shall cause the Partnership to purchase from
the General Partner or any Affiliate of the General Partner a number of
Partnership Units determined by, and based upon, the application of the
Conversion Factor on the same terms upon which the General Partner redeemed such
REIT Shares. Moreover, if the General Partner makes a cash tender offer or other
offer to acquire REIT Shares, then the General Partner shall cause the
Partnership to make a corresponding offer to the General Partner or an Affiliate
of the General Partner to acquire an equal number of Partnership Units held by
the General Partner or an Affiliate of the General Partner. In the event any
REIT Shares are redeemed by the General Partner pursuant to such offer, the
Partnership shall redeem an equivalent number of the General Partner's or such
Affiliate's Partnership Units for an equivalent purchase price based on the
application of the Conversion Factor.
ARTICLE VII
CHANGES IN GENERAL PARTNER
7.01 TRANSFER OF THE GENERAL PARTNER'S PARTNERSHIP INTEREST.
(a) The General Partner shall not transfer all or any portion of its
General Partnership Interest or withdraw as General Partner except as provided
in or in connection with a transaction contemplated by Sections 7.01(c), 7.01(d)
or 7.01(e).
(b) The General Partner agrees that the Percentage Interest for it will
at all times, be in the aggregate, at least 0.1%.
(c) Except as otherwise provided in Section 7.01(d) or (e), the General
Partner shall not engage in any merger, consolidation or other combination with
or into another Person or sale of all or substantially all of its assets (other
than in connection with a change in the General Partner's state of incorporation
or organizational form), which, in any such case, results in a change of control
of the General Partner (a "TRANSACTION"), unless:
26
(i) the consent of Limited Partners holding more than 50% of
the Percentage Interests of the Limited Partners is obtained; or
(ii) as a result of such Transaction all Limited Partners are
granted the right to receive for each Partnership Unit an amount of
cash, securities, or other property equal to the product of the
Conversion Factor and the greatest amount of cash, securities or other
property paid in the Transaction to a holder of one REIT Share in
consideration of the transfer of one REIT Share; provided, that if, in
connection with the Transaction, a purchase, tender or exchange offer
("OFFER") shall have been made to and accepted by the holders of more
than 50% of the outstanding REIT Shares, each holder of Partnership
Units shall be given the option to exchange its Partnership Units for
the greatest amount of cash, securities, or other property which a
Limited Partner would have received had it (A) exercised its Exchange
Right and (B) sold, tendered or exchanged pursuant to the Offer the
REIT Shares received upon exercise of the Exchange Right immediately
prior to the expiration of the Offer; or
(iii) the General Partner is the surviving entity in the
Transaction and either (A) the holders of REIT Shares do not receive
cash, securities, or other property in the Transaction or (B) all
Limited Partners (other than the General Partner or any Subsidiary)
receive an amount of cash, securities, or other property (expressed as
an amount per REIT Share) that is no less than the product of the
Conversion Factor and the greatest amount of cash, securities, or other
property (expressed as an amount per REIT Share) received in the
Transaction by any holder of REIT Shares.
(d) Notwithstanding Section 7.01(c), the General Partner may merge with
or into or consolidate with another entity if immediately after such merger or
consolidation (i) substantially all of the assets of the successor or surviving
entity (the "Survivor"), other than Partnership Units held by the General
Partner, are contributed, directly or indirectly, to the Partnership as a
Capital Contribution in exchange for Partnership Units with a fair market value
equal to the value of the assets so contributed as determined by the Survivor in
good faith and (ii) the Survivor expressly agrees to assume all obligations of
the General Partner, as appropriate, hereunder. Upon such contribution and
assumption, the Survivor shall have the right and duty to amend this Agreement
as set forth in this Section 7.01(d). The Survivor shall in good faith arrive at
a new method for the calculation of the Cash Amount, the REIT Shares Amount and
the Conversion Factor for a Partnership Unit after any such merger or
consolidation so as to approximate the existing method for such calculation as
closely as reasonably possible. Such calculation shall take into account, among
other things, the kind and amount of securities, cash and other property that
was receivable upon such merger or consolidation by a holder of REIT Shares or
options, warrants or other rights relating thereto, and which a holder of
Partnership Units could have acquired had such Partnership Units been exchanged
immediately prior to such merger or consolidation. Such amendment to this
Agreement shall provide for adjustments to such method of calculation, which
shall be as nearly equivalent as may be practicable to the adjustments provided
for herein with respect to the Conversion Factor. The Survivor also shall in
good faith modify the definition of REIT Shares and make such amendments to
Section 8.05 so as to approximate the existing rights and obligations set forth
in Section 8.05 as closely as reasonably possible. The above provisions of this
Section 7.01(d) shall similarly apply to successive mergers or consolidations
permitted hereunder.
In respect of any transaction described in the preceding paragraph, the
General Partner is required to use its commercially reasonable efforts to
structure such transaction to avoid causing the Limited Partners to recognize a
gain for federal income tax purposes by virtue of the occurrence of or their
participation in such transaction, provided, such efforts are consistent with
the exercise of the Board of Directors' fiduciary duties to the stockholders of
the General Partner under applicable law.
27
(e) Notwithstanding Section 7.01(c),
(i) a General Partner may transfer all or any portion of its
General Partnership Interest to (A) a wholly-owned Subsidiary of such
General Partner or (B) the owner of all of the ownership interests of
such General Partner, and following a transfer of all of its General
Partnership Interest, may withdraw as General Partner; and
(ii) the General Partner may engage in a transaction not
required by law or by the rules of any national securities exchange on
which the REIT Shares are listed to be submitted to the vote of the
holders of the REIT Shares.
7.02 ADMISSION OF A SUBSTITUTE OR ADDITIONAL GENERAL PARTNER.
A Person shall be admitted as a substitute or additional General Partner of the
Partnership only if the following terms and conditions are satisfied:
(a) the Person to be admitted as a substitute or additional General
Partner shall have accepted and agreed to be bound by all the terms and
provisions of this Agreement by executing a counterpart and such other documents
or instruments as may be required or appropriate in order to effect the
admission of such Person as a General Partner, a certificate evidencing the
admission of such Person as a General Partner shall have been filed for
recordation and all other actions required by Section 2.05 in connection with
such admission shall have been performed;
(b) if the Person to be admitted as a substitute or additional General
Partner is a corporation or a partnership, it shall have provided the
Partnership with evidence satisfactory to counsel for the Partnership of such
Person's authority to become a General Partner and to be bound by the terms and
provisions of this Agreement; and
(c) counsel for the Partnership shall have rendered an opinion (relying
on such opinions from other counsel in the state or any other jurisdiction as
may be necessary) that the admission of the Person to be admitted as a
substitute or additional General Partner is in conformity with the Act, and that
none of the actions taken in connection with the admission of such Person as a
substitute or additional General Partner will cause (i) the Partnership to be
classified other than as a partnership for federal income tax purposes, or (ii)
the loss of any Limited Partner's limited liability.
7.03 EFFECT OF BANKRUPTCY, WITHDRAWAL, DEATH OR DISSOLUTION OF A
GENERAL PARTNER.
(a) Upon the occurrence of an Event of Bankruptcy as to a General
Partner (and its removal pursuant to Section 7.04(a)) or the death, withdrawal,
removal or dissolution of a General Partner (except that, if a General Partner
is, on the date of such occurrence a partnership, the withdrawal, death,
dissolution, Event of Bankruptcy as to, or removal of a partner in, such
partnership shall be deemed not to be a dissolution of such General Partner if
the business of such General Partner is continued by the remaining partner or
partners thereof), the Partnership shall be dissolved and terminated unless the
Partnership is continued pursuant to Section 7.03(b). The merger of the General
Partner with or into any entity that is admitted as a substitute or successor
General Partner pursuant to Section 7.02 shall not be deemed to be the
withdrawal, dissolution or removal of the General Partner.
(b) Following the occurrence of an Event of Bankruptcy as to a General
Partner (and its removal pursuant to Section 7.04(a)) or the death, withdrawal,
removal or dissolution of a General Partner (except that, if a General Partner
is, on the date of such occurrence a partnership, the withdrawal, death,
dissolution, Event of Bankruptcy as to, or removal of a partner in, such
partnership shall be deemed not to be a dissolution of such General Partner if
the business of such General Partner is continued by the
28
remaining partner or partners thereof), the Limited Partners, within 90 days
after such occurrence, may elect to continue the business of the Partnership for
the balance of the term specified in Section 2.04 by selecting, subject to
Section 7.02 and any other provisions of this Agreement, a substitute General
Partner by consent of a majority in interest of the Limited Partners. If the
Limited Partners elect to continue the business of the Partnership and admit a
substitute General Partner, the relationship with the Partners and of any Person
who has acquired an interest of a Partner in the Partnership shall be governed
by this Agreement.
7.04 REMOVAL OF A GENERAL PARTNER.
(a) Upon the occurrence of an Event of Bankruptcy as to, or the
dissolution of, a General Partner, such General Partner shall be deemed to be
removed automatically; provided, however, that if a General Partner is on the
date of such occurrence a partnership, the withdrawal, death, dissolution, Event
of Bankruptcy as to or removal of a partner in such partnership shall be deemed
not to be a dissolution of the General Partner if the business of such General
Partner is continued by the remaining partner or partners thereof. The Limited
Partners may not remove the General Partner, with or without cause.
(b) If a General Partner has been removed pursuant to this Section 7.04
and the Partnership is continued pursuant to Section 7.03, such General Partner
shall promptly transfer and assign its General Partnership Interest in the
Partnership to the substitute General Partner approved by a majority in interest
of the Limited Partners in accordance with Section 7.03(b) and otherwise
admitted to the Partnership in accordance with Section 7.02. At the time of
assignment, the removed General Partner shall be entitled to receive from the
substitute General Partner the fair market value of the General Partnership
Interest of such removed General Partner as reduced by any damages caused to the
Partnership by such General Partner's removal. Such fair market value shall be
determined by an appraiser mutually agreed upon by the General Partner and
Limited Partners holding more than 50% of the Percentage Interests of the
Limited Partners within 10 days following the removal of the General Partner. In
the event that the parties are unable to agree upon an appraiser, the removed
General Partner and Limited Partners holding more than 50% of the Percentage
Interests of the Limited Partners shall each select an appraiser. Each such
appraiser shall complete an appraisal of the fair market value of the removed
General Partner's General Partnership Interest within 30 days of the General
Partner's removal, and the fair market value of the removed General Partner's
General Partnership Interest shall be the average of the two appraisals;
provided, however, that if the higher appraisal exceeds the lower appraisal by
more than 20% of the amount of the lower appraisal, the two appraisers, no later
than 40 days after the removal of the General Partner, shall select a third
appraiser who shall complete an appraisal of the fair market value of the
removed General Partner's General Partnership Interest no later than 60 days
after the removal of the General Partner. In such case, the fair market value of
the removed General Partner's General Partnership Interest shall be the average
of the two appraisals closest in value.
(c) The General Partnership Interest of a removed General Partner,
during the time after removal until the date of transfer under Section 7.04(b),
shall be converted to that of a special Limited Partner; provided, however, such
removed General Partner shall not have any rights to participate in the
management and affairs of the Partnership, and shall not be entitled to any
portion of the income, expense, Profit, gain or Loss allocations or cash
distributions allocable or payable, as the case may be, to the Limited Partners.
Instead, such removed General Partner shall receive and be entitled only to
retain distributions or allocations of such items that it would have been
entitled to receive in its capacity as General Partner, until the transfer is
effective pursuant to Section 7.04(b).
(d) All Partners shall have given and hereby do give such consents,
shall take such actions and shall execute such documents as shall be legally
necessary and sufficient to effect all the foregoing provisions of this Section
7.04.
29
ARTICLE VIII
RIGHTS AND OBLIGATIONS
OF THE LIMITED PARTNERS
8.01 MANAGEMENT OF THE PARTNERSHIP. The Limited Partners shall not
participate in the management or control of Partnership business nor shall they
transact any business for or on behalf of the Partnership, nor shall they have
the power to sign for or bind the Partnership, such powers being vested solely
and exclusively in the General Partner.
8.02 POWER OF ATTORNEY. Each Limited Partner hereby irrevocably
appoints the General Partner its true and lawful attorney-in-fact, who may act
for each Limited Partner and in its name, place and stead, and for its use and
benefit, sign, acknowledge, swear to, deliver, file or record, at the
appropriate public offices, any and all documents, certificates, and instruments
as may be deemed necessary or desirable by the General Partner to carry out
fully the provisions of this Agreement and the Act in accordance with their
terms, which power of attorney is coupled with an interest and shall survive the
death, dissolution or legal incapacity of the Limited Partner, or the transfer
by the Limited Partner of any part or all of its Partnership Interest.
8.03 LIMITATION ON LIABILITY OF LIMITED PARTNERS. No Limited Partner
shall be liable for any debts, liabilities, contracts or obligations of the
Partnership. A Limited Partner shall be liable to the Partnership only to make
payments of its Capital Contribution, if any, as and when due hereunder. After
its Capital Contribution is fully paid, no Limited Partner shall, except as
otherwise required by the Act, be required to make any further Capital
Contributions or other payments or lend any funds to the Partnership.
8.04 OWNERSHIP BY LIMITED PARTNER OF CORPORATE GENERAL PARTNER OR
AFFILIATE. No Limited Partner shall at any time, either directly or indirectly,
own any stock or other interest in the General Partner or in any Affiliate
thereof, if such ownership by itself or in conjunction with other stock or other
interests owned by other Limited Partners would, in the opinion of counsel for
the Partnership, jeopardize the classification of the Partnership as a
partnership for federal income tax purposes. The General Partner shall be
entitled to make such reasonable inquiry of the Limited Partners as is required
to establish compliance by the Limited Partners with the provisions of this
Section 8.04.
8.05 EXCHANGE RIGHT.
(a) Subject to Sections 8.05(b), 8.05(c), 8.05(d) and 8.05(e), and
subject to the potential modification of any rights or obligations provided for
herein by agreement(s) between the Partnership and any one or more Limited
Partners with respect to Partnership Units held by them, each Limited Partner
shall have the right (the "EXCHANGE RIGHT") to require the Partnership to redeem
on a Specified Exchange Date all or a portion of the Partnership Units held by
such Limited Partner at an exchange price equal to and in the form of the Cash
Amount or the REIT Shares Amount to be paid by the Partnership; provided, that
such Partnership Units shall have been outstanding for at least one year. The
Exchange Right shall be exercised pursuant to the delivery of an Exchange Notice
to the Partnership (with a copy to the General Partner) by the Limited Partner
who is exercising the Exchange Right (the "EXCHANGING PARTNER"); provided,
however, that the Partnership shall not be obligated to satisfy such Exchange
Right if the General Partner elects to purchase the Partnership Units subject to
the Exchange Notice pursuant to Section 8.05(b); and provided further, that no
Limited Partner may deliver more than two Exchange Notices during each calendar
year. A Limited Partner may not exercise the Exchange Right for less than 1,000
Partnership Units or, if such Limited Partner holds less than 1,000 Partnership
Units, all of the Partnership Units held by such Partner. The Exchanging Partner
shall have no right, with respect to any
30
Partnership Units so exchanged, to receive any distribution paid with respect to
such Partnership Units if the record date for such distribution is on or after
the Specified Exchange Date.
(b) Notwithstanding the provisions of Section 8.05(a), a Limited
Partner that exercises the Exchange Right shall be deemed to have also offered
to sell the Partnership Units described in the Exchange Notice to the General
Partner, and the General Partner may, in its sole and absolute discretion, elect
to purchase directly and acquire such Partnership Units by paying to the
Exchanging Partner either the Cash Amount or the REIT Shares Amount, as elected
by the General Partner (in its sole and absolute discretion), on the Specified
Exchange Date, whereupon the General Partner shall acquire the Partnership Units
offered for exchange by the Exchanging Partner and shall be treated for all
purposes of this Agreement as the owner of such Partnership Units. If the
General Partner shall elect to exercise its right to purchase Partnership Units
under this Section 8.05(b) with respect to an Exchange Notice, it shall so
notify the Exchanging Partner within five business days after the receipt by the
General Partner of such Exchange Notice. Unless the General Partner (in its sole
and absolute discretion) shall exercise its right to purchase Partnership Units
from the Exchanging Partner pursuant to this Section 8.05(b), the General
Partner shall have no obligation to the Exchanging Partner or the Partnership
with respect to the Exchanging Partner's exercise of an Exchange Right. In the
event the General Partner shall exercise its right to purchase Partnership Units
with respect to the exercise of an Exchange Right in the manner described in the
first sentence of this Section 8.05(b), the Partnership shall have no obligation
to pay any amount to the Exchanging Partner with respect to such Exchanging
Partner's exercise of such Exchange Right, and each of the Exchanging Partner
and the General Partner shall treat the transaction between the General Partner
and the Exchanging Partner for federal income tax purposes as a sale of the
Exchanging Partner's Partnership Units to the General Partner. Each Exchanging
Partner agrees to execute such documents as the General Partner may reasonably
require in connection with the issuance of REIT Shares to such Exchanging
Partner upon exercise of its Exchange Right.
(c) Notwithstanding the provisions of Sections 8.05(a) and 8.05(b), a
Limited Partner shall not be entitled to exercise the Exchange Right if the
delivery of REIT Shares to such Partner on the Specified Exchange Date by the
General Partner pursuant to Section 8.05(b) (regardless of whether or not the
General Partner would in fact exercise its rights under Section 8.05(b)) would
(i) result in such Partner or any other person owning, directly or indirectly,
REIT Shares in excess of the ownership limitations described in the Articles of
Incorporation and calculated in accordance therewith, (ii) result in REIT Shares
being owned by fewer than 100 persons (determined without reference to any rules
of attribution), except as provided in the Articles of Incorporation, (iii)
result in the General Partner being "closely held" within the meaning of Section
856(h) of the Code, (iv) cause the General Partner to own, directly or
constructively, 10% or more of the ownership interests in a tenant of the
General Partner's, the Partnership's, or a Subsidiary Partnership's real
property within the meaning of Section 856(d)(2)(B) of the Code, or (v) cause
the acquisition of REIT Shares by such Partner to be "integrated" with any other
distribution of REIT Shares for purposes of complying with the registration
provisions of the Securities Act. The General Partner, in its sole and absolute
discretion, may waive any of the restrictions on exchange set forth in this
Section 8.05(c); provided, however, that in the event any such restriction is
waived, the Exchanging Partner shall be paid the Cash Amount.
(d) Any Cash Amount to be paid to an Exchanging Partner pursuant to
this Section 8.05 shall be paid on the Specified Exchange Date; provided,
however, that the General Partner may elect to cause the Specified Exchange Date
to be delayed for up to 180 days to the extent required for the General Partner
to cause additional REIT Shares to be issued to provide financing to be used to
make such payment of the Cash Amount. Notwithstanding the foregoing, the General
Partner agrees to use its best efforts to cause the closing of the acquisition
of exchanged Partnership Units hereunder to occur as quickly as reasonably
possible.
31
(e) Notwithstanding any other provision of this Agreement, the General
Partner shall place appropriate restrictions on the ability of the Limited
Partners to exercise their Exchange Rights as and if deemed necessary to ensure
that the Partnership does not constitute a "publicly traded partnership" under
Section 7704 of the Code. If and when the General Partner determines that
imposing such restrictions is necessary, the General Partner shall give prompt
written notice thereof (a "RESTRICTION NOTICE") to each of the Limited Partners,
which notice shall be accompanied by a copy of an opinion of counsel to the
Partnership which states that, in the opinion of such counsel, restrictions are
necessary in order to avoid the Partnership being treated as a "publicly traded
partnership" under Section 7704 of the Code.
8.06 CALL RIGHT.
(a) Subject to Section 8.06(c) below, and subject to the modification
of any rights or obligations provided for herein by agreement(s) between the
General Partner and any one or more Limited Partners with respect to the
Partnership Units held by them, at any time after the expiration of the Holding
Period for the Partnership Units in question, the General Partner shall have the
right (the "CALL RIGHT") to purchase all of the Partnership Units held by a
Limited Partner at a price equal to the Cash Amount; provided, however, that the
General Partner may, in its sole and absolute discretion, elect to purchase such
Partnership Units by paying to the Partner in question the REIT Shares Amount in
lieu of the Cash Amount. The Call Right shall be exercised pursuant to a Call
Notice delivered by the General Partner to any such Limited Partner. The General
Partner may not exercise the Call Right for less than the entire interest of a
Limited Partner in the Partnership. A Limited Partner receiving the Call Notice
described above shall have no rights with respect to any interest in the
Partnership other than the right to receive payment for its interest in the
Partnership in cash or REIT Shares in accordance with this Section 8.06. An
assignee of a Limited Partner shall be bound by and subject to the Call Right of
the General Partner pursuant to this Section 8.06. In connection with any
exercise of such Call Right by the General Partner with respect to an assignee,
the Cash Amount (or REIT Shares Amount) shall be paid by the General Partner
directly to such assignee and not to the Limited Partner from which such
assignee acquired its Partnership Units. The General Partner shall be unable to
exercise the Call Right and the Call Right shall lapse upon the occurrence of a
Liquidating Event unless and until the Partners shall continue the business of
the Partnership under Section 7.03.
(b) (i) Within 30 days after the delivery of the Call Notice by the
General Partner to a Limited Partner under this Section 8.06, the General
Partner (subject to the limitations set forth in Section 8.06(c)) shall transfer
and deliver the Cash Amount (or the REIT Shares Amount) to such Limited Partner
or, as applicable, its assignee, whereupon the General Partner (or its designee)
shall acquire the Partnership Units of such Limited Partner or, as applicable,
its assignee, and shall be treated for all purposes of this Agreement as the
owner of such Partnership Units (and as a Limited Partner with respect to such
Partnership Units).
(ii) In the event that the General Partner elects to pay such
Limited Partner in the form of the REIT Shares Amount and such REIT
Shares Amount is not a whole number of REIT Shares, the Limited Partner
shall be paid (A) the number of REIT Shares which equals the nearest
whole number less than such amount plus (B) an amount of cash which the
General Partner determines, in its reasonable discretion, to represent
the fair value of the remaining fractional REIT Share which would
otherwise be payable to the Limited Partner.
(iii) Each Limited Partner agrees to deliver to the General
Partner the Partnership Unit Certificate(s) representing its Limited
Partnership Interest and to execute such documents as the General
Partner may reasonably require in connection with the issuance of REIT
Shares upon exercise of the Call Right (including without limitation an
assignment of Partnership Units pursuant to the terms of which such
Limited Partner (A) represents, warrants and certifies that it
32
has marketable and unencumbered title to its Partnership Units, free
and clear of the rights of or interest of any other person or entity,
that it has the full right, power and authority to transfer and
surrender its Partnership Units, and that it has obtained the consent
or approval of all persons or entities, if any, having the right to
consent to or approve of such transfer and surrender, and (B) agrees to
indemnify and hold the General Partner harmless from and against any
and all liabilities, charges, costs and expenses relating to such
Limited Partner's Partnership Units which are subject to the Call Right
or the exercise of the Call Right).
(c) Notwithstanding the provisions of Sections 8.06(a) and 8.06(b)
above, the General Partner shall not be entitled to exercise the Call Right if
(i) a Liquidating Event has occurred with regard to the Partnership and the
Partnership has not been continued under Section 7.03; or (ii) the delivery of
REIT Shares to the Limited Partner (A) would be prohibited under the Articles of
Incorporation, (B) would adversely affect the ability of the General Partner to
continue to qualify as a REIT or subject the General Partner to any additional
taxes under Section 857 or Section 4981 of the Code, or (C) would be prohibited
under applicable federal or state securities laws or regulations.
(d) Each Limited Partner covenants and agrees with the General Partner
that all Partnership Units delivered in connection with the Call Right shall be
delivered to the General Partner free and clear of all liens and encumbrances
and, notwithstanding anything contained herein to the contrary, the General
Partner shall not be under any obligation to acquire a Limited Partner's
Partnership Units (i) to the extent that any such Partnership Units are subject
to any such liens or encumbrances or (ii) in the event that the Limited Partner
shall fail to give the General Partner adequate assurances that such Partnership
Units are not subject to any such liens or encumbrances or shall fail to agree
to fully indemnify the General Partner from any such liens or encumbrances as
well as the liabilities, charges, costs and expenses referenced in the last
section of Section 8.06(b)(iii). Each Limited Partner further agrees that, in
the event any state or local transfer tax is payable as a result of the transfer
of its Partnership Units to the General Partner, such Limited Partner shall
assume and pay such transfer tax.
8.07 DUTIES AND CONFLICTS. The General Partner recognizes that the
Limited Partners and their Affiliates have or may have other business interests,
activities and investments, some of which may be in conflict or competition with
the business of the Partnership, and that such Persons are entitled to carry on
such other business interests, activities and investments. The Limited Partners
and their Affiliates may engage in or possess an interest in any other business
or venture of any kind, independently or with others, on their own behalf or on
behalf of other entities with which they are affiliated or associated, and such
Persons may engage in any activities, whether or not competitive with the
Partnership, without any obligation to offer any interest in such activities to
the Partnership or to any Partner. Neither the Partnership nor any Partner shall
have any right, by virtue of this Agreement, in or to such activities, or the
income or profits derived therefrom, and the pursuit of such activities, even if
competitive with the business of the Partnership, and such activities shall not
be deemed wrongful or improper.
ARTICLE IX
TRANSFERS OF LIMITED PARTNERSHIP INTERESTS
9.01 PURCHASE FOR INVESTMENT.
(a) Each Limited Partner hereby represents and warrants to the General
Partner and to the Partnership that the acquisition of its Partnership Interest
is made as a principal for its account for investment purposes only and not with
a view to the resale or distribution of such Partnership Interest.
33
(b) Each Limited Partner agrees that it will not sell, assign or
otherwise transfer its Partnership Interest or any fraction thereof, whether
voluntarily or by operation of law or at judicial sale or otherwise, to any
Person who does not make the representations and warranties to the General
Partner set forth in Section 9.01(a) above.
9.02 RESTRICTIONS ON TRANSFER OF LIMITED PARTNERSHIP INTERESTS.
(a) Subject to the provisions of Sections 9.02(b), 9.02(c) and
9.02(d), no Limited Partner may offer, sell, assign, hypothecate, pledge or
otherwise transfer all or any portion of its Limited Partnership Interest, or
any of such Limited Partner's economic rights as a Limited Partner, whether
voluntarily or by operation of law or at judicial sale or otherwise
(collectively, a "TRANSFER"), without the consent of the General Partner, which
consent may be granted or withheld in its sole and absolute discretion. Any such
purported transfer undertaken without such consent shall be considered to be
null and void ab initio and shall not be given effect. The Original Limited
Partner acknowledges that the General Partner has agreed not to grant its
consent with respect to any Transfer by the Original Limited Partner prior to
the Transfer Restriction Date; provided, that the Original Limited Partner shall
not be prohibited from a Transfer of its Partnership Interest pursuant to the
exercise of its right to exchange its Partnership Interest for REIT Shares
pursuant to Section 8.05 above, in which case the Original Limited Partner
acknowledges that the General Partner has also agreed not to grant its consent
with respect to any Transfer of said REIT Shares prior to the Transfer
Restriction Date. The General Partner may require, as a condition of any
Transfer to which it consents, that the transferor assume all costs incurred by
the Partnership in connection therewith.
(b) No Limited Partner may withdraw from the Partnership other than as
a result of: (i) a permitted Transfer (i.e., a Transfer consented to as
contemplated by paragraph (a) above or paragraph (c) below or a Transfer made
pursuant to Section 9.05 below) of all of its Partnership Units pursuant to this
Article IX pursuant to an exchange of all of its Partnership Units pursuant to
Section 8.05 above; or (iii) a Transfer made pursuant to the sale of all its
Partnership Units pursuant to Section 8.06 above. Upon the permitted Transfer or
redemption of all of a Limited Partner's Partnership Units, such Limited Partner
shall cease to be a Limited Partner.
(c) Subject to Sections 9.02(d), 9.02(e) and 9.02(f), a Limited Partner
may Transfer, with the consent of the General Partner, all or a portion of its
Partnership Units to (i) a parent or parent's spouse, natural or adopted
descendants, a spouse of any such descendant, a brother or sister, or a trust
created by such Limited Partner for the benefit of such Limited Partner and/or
any such person(s), for which trust such Limited Partner or any such person(s)
is a trustee, (ii) a corporation controlled by a Person or Persons named in (i)
above, or (iii) if the Limited Partner is an entity, its beneficial owners.
(d) No Limited Partner may effect a Transfer of its Limited Partnership
Interest, in whole or in part, if, in the opinion of legal counsel for the
Partnership, such proposed Transfer would require the registration of the
Limited Partnership Interest under the Securities Act, or would otherwise
violate any applicable federal or state securities or blue sky law (including
investment suitability standards).
(e) No Transfer by a Limited Partner of its Partnership Units, in whole
or in part, may be made to any Person if (i) in the opinion of legal counsel for
the Partnership, the transfer would result in the Partnership's being treated as
an association taxable as a corporation (other than a qualified REIT subsidiary
within the meaning of Section 856(i) of the Code), (ii) in the opinion of legal
counsel for the Partnership, it would adversely affect the ability of the
General Partner to continue to qualify as a REIT or subject the General Partner
to any additional taxes under Section 857 or Section 4981 of the Code, or (iii)
such transfer is effectuated through an "established securities market" or a
"secondary market" (or the substantial equivalent thereof) within the meaning of
Section 7704 of the Code.
34
(f) No transfer of any Partnership Units may be made to a lender to the
Partnership or any Person who is related (within the meaning of Regulations
Section 1.752-4(b)) to any lender to the Partnership whose loan constitutes a
nonrecourse liability (within the meaning of Regulations Section 1.752-1(a)(2)),
without the consent of the General Partner, which may be withheld in its sole
and absolute discretion; provided, that as a condition to such consent the
lender will be required to enter into an arrangement with the Partnership and
the General Partner to exchange or redeem for the Cash Amount any Partnership
Units in which a security interest is held simultaneously with the time at which
such lender would be deemed to be a partner in the Partnership for purposes of
allocating liabilities to such lender under Section 752 of the Code.
(g) Any Transfer in contravention of any of the provisions of this
Article IX shall be void and ineffectual and shall not be binding upon, or
recognized by, the Partnership.
(h) Prior to the consummation of any Transfer under this Article IX,
the transferor and/or the transferee shall deliver to the General Partner such
opinions, certificates and other documents as the General Partner shall request
in connection with such Transfer.
9.03 ADMISSION OF SUBSTITUTE LIMITED PARTNER.
(a) Subject to the other provisions of this Article IX, an assignee of
the Limited Partnership Interest of a Limited Partner (which shall be understood
to include any purchaser, transferee, donee or other recipient of any
disposition of such Limited Partnership Interest) shall be deemed admitted as a
Limited Partner of the Partnership only with the consent of the General Partner
and upon the satisfactory completion of the following:
(i) the assignee shall have accepted and agreed to be bound by
the terms and provisions of this Agreement by executing a counterpart
or an amendment thereof, including a revised Exhibit A, and such other
documents or instruments as the General Partner may require in order to
effect the admission of such Person as a Limited Partner;
(ii) to the extent required, an amended Certificate evidencing
the admission of such Person as a Limited Partner shall have been
signed, acknowledged and filed for record in accordance with the Act;
(iii) the assignee shall have delivered a letter containing
the representation set forth in Section 9.01(a) and the agreement set
forth in Section 9.01(b);
(iv) if the assignee is a corporation, partnership or trust,
the assignee shall have provided the General Partner with evidence
satisfactory to counsel for the Partnership of the assignee's authority
to become a Limited Partner under the terms and provisions of this
Agreement;
(v) the assignee shall have executed a power of attorney
containing the terms and provisions set forth in Section 8.02;
(vi) the assignee shall have paid all legal fees and other
expenses of the Partnership and the General Partner and filing and
publication costs in connection with its substitution as a Limited
Partner; and
35
(vii) the assignee shall have obtained the prior written
consent of the General Partner to its admission as a Substitute Limited
Partner, which consent may be given or denied in the exercise of the
General Partner's sole and absolute discretion.
(b) For the purpose of allocating Profit and Loss and distributing cash
received by the Partnership, a Substitute Limited Partner shall be treated as
having become, and appearing in the records of the Partnership as, a Partner
upon the filing of the Certificate described in Section 9.03(a)(ii) or, if no
such filing is required, the later of the date specified in the transfer
documents or the date on which the General Partner has received all necessary
instruments of transfer and substitution.
(c) The General Partner shall cooperate with the Person seeking to
become a Substitute Limited Partner by preparing the documentation required by
this Section 9.03 and making all official filings and publications. The
Partnership shall take all such action as promptly as practicable after the
satisfaction of the conditions in this Article IX to the admission of such
Person as a Limited Partner of the Partnership.
9.04 RIGHTS OF ASSIGNEES OF PARTNERSHIP INTERESTS.
(a) Subject to the provisions of Sections 9.01 and 9.02, except as
required by operation of law, the Partnership shall not be obligated for any
purposes whatsoever to recognize the assignment by any Limited Partner of its
Partnership Interest until the Partnership has received notice thereof.
(b) Any Person who is the assignee of all or any portion of a Limited
Partner's Limited Partnership Interest, but who does not become a Substitute
Limited Partner and desires to make a further assignment of such Limited
Partnership Interest, shall be subject to all the provisions of this Article IX
to the same extent and in the same manner as any Limited Partner desiring to
make an assignment of its Limited Partnership Interest.
9.05 EFFECT OF BANKRUPTCY, DEATH, INCOMPETENCE OR TERMINATION OF A
LIMITED PARTNER. The occurrence of an Event of Bankruptcy as to a Limited
Partner, the death of a Limited Partner or a final adjudication that a Limited
Partner is incompetent (which term shall include, but not be limited to,
insanity) shall not cause the termination or dissolution of the Partnership, and
the business of the Partnership shall continue if an order for relief in a
bankruptcy proceeding is entered against a Limited Partner, the trustee or
receiver of his estate or, if he dies, his executor, administrator or trustee,
or, if he is finally adjudicated incompetent, his committee, guardian or
conservator, and any such Person shall have the rights of such Limited Partner
for the purpose of settling or managing his estate property and such power as
the bankrupt, deceased or incompetent Limited Partner possessed to assign all or
any part of his Partnership Interest and to join with the assignee in satisfying
conditions precedent to the admission of the assignee as a Substitute Limited
Partner.
9.06 JOINT OWNERSHIP OF INTERESTS. A Partnership Interest may be
acquired by two individuals as joint tenants with right of survivorship,
provided, that such individuals either are married or are related and share the
same personal residence. The written consent or vote of both owners of any such
jointly-held Partnership Interest shall be required to constitute the action of
the owners of such Partnership Interest; provided, however, that the written
consent of only one joint owner will be required if the Partnership has been
provided with evidence satisfactory to the counsel for the Partnership that the
actions of a single joint owner can bind both owners under the applicable laws
of the state of residence of such joint owners. Upon the death of one owner of a
Partnership Interest held in a joint tenancy with a right of survivorship, the
Partnership Interest shall become owned solely by the survivor as a Limited
Partner and not as an assignee. The Partnership need not recognize the death of
one of the owners of a
36
jointly held Partnership Interest until it shall have received notice of such
death. Upon notice to the General Partner from either owner, the General Partner
shall cause the Partnership Interest to be divided into two equal Partnership
Interests, which shall thereafter be owned separately by each of the former
joint owners.
ARTICLE X
BOOKS AND RECORDS; ACCOUNTING; TAX MATTERS
10.01 BOOKS AND RECORDS. At all times during the continuance of the
Partnership, the Partners shall keep or cause to be kept at the Partnership's
specified office true and complete books of account maintained in accordance
with generally accepted accounting principles, including (a) a current list of
the full name and last-known business address of each Partner; (b) a copy of the
Certificate of Limited Partnership and all certificates of amendment thereto;
(c) copies of the Partnership's federal, state and local income tax returns and
reports; (d) copies of the Agreement and any financial statements of the
Partnership for the three most recent years; and (e) all documents and
information required under the Act. Any Partner or its duly authorized
representative, and any stockholder of the General Partner, upon paying the
costs of collection, duplication and mailing, shall be entitled to inspect or
copy such records during ordinary business hours.
10.02 CUSTODY OF PARTNERSHIP FUNDS; BANK ACCOUNTS.
(a) All funds of the Partnership not otherwise invested shall be
deposited in one or more accounts maintained in such banking or brokerage
institutions as the General Partner shall determine, and withdrawals shall be
made only on such signature or signatures as the General Partner may, from time
to time, determine.
(b) All deposits and other funds not needed in the operation of the
business of the Partnership may be invested by the General Partner in investment
grade instruments (or investment companies whose portfolio consists primarily
thereof, government obligations, certificates of deposit, bankers' acceptances
and municipal notes and bonds. The funds of the Partnership shall not be
commingled with the funds of any other Person except for such commingling as may
necessarily result from an investment in those investment companies permitted by
this Section 10.02(b).
10.03 FISCAL AND TAXABLE YEAR. The fiscal and taxable year of the
Partnership shall be the calendar year.
10.04 ANNUAL TAX INFORMATION AND REPORT. The General Partner will
use its best efforts to supply within 75 days after the end of each fiscal year
of the Partnership to each person who was a Limited Partner at any time during
such year the tax information necessary to file such Limited Partner's
individual tax returns as shall be reasonably required by law, and in all events
the General Partner shall furnish such information within the time required by
applicable law.
10.05 TAX MATTERS PARTNER; TAX ELECTIONS; SPECIAL BASIS ADJUSTMENTS.
(a) The General Partner shall be the Tax Matters Partner of the
Partnership within the meaning of Section 6231(a)(7) of the Code. As Tax Matters
Partner, the General Partner shall have the right and obligation to take all
actions authorized and required, respectively, by the Code for the Tax Matters
Partner. The General Partner shall have the right to retain professional
assistance in respect of any audit of the Partnership by the Service and all
out-of-pocket expenses and fees incurred by the General Partner on behalf of the
Partnership as Tax Matters Partner shall constitute Partnership expenses. In the
event the General Partner receives notice of a final Partnership adjustment
under Section
37
6223(a)(2) of the Code, the General Partner shall either (i) file a court
petition for judicial review of such final adjustment within the period provided
under Section 6226(a) of the Code, a copy of which petition shall be mailed to
all Limited Partners on the date such petition is filed, or (ii) mail a written
notice to all Limited Partners, within such period, that describes the General
Partner's reasons for determining not to file such a petition.
(b) All elections required or permitted to be made by the Partnership
under the Code or any applicable state or local tax law shall be made by the
General Partner in its sole and absolute discretion.
(c) In the event of a transfer of all or any part of the Partnership
Interest of any Partner, the Partnership, at the option and in the sole and
absolute discretion of the General Partner, may elect pursuant to Section 754 of
the Code to adjust the basis of the Properties. Notwithstanding anything
contained in Article V of this Agreement, any adjustments made pursuant to
Section 754 shall affect only the successor-in-interest to the transferring
Partner and in no event shall be taken into account in establishing, maintaining
or computing Capital Accounts for the other Partners for any purpose under this
Agreement. Each Partner will furnish the Partnership with all information
necessary to give effect to such election.
10.06 REPORTS TO LIMITED PARTNERS.
(a) As soon as practicable after the close of each fiscal quarter
(other than the last quarter of the fiscal year), the General Partner shall
cause to be mailed to each Limited Partner a quarterly report containing
financial statements of the Partnership, or of the General Partner if such
statements are prepared solely on a consolidated basis with the General Partner,
for such fiscal quarter presented in accordance with generally accepted
accounting principles. As soon as practicable after the close of each fiscal
year, the General Partner shall cause to be mailed to each Limited Partner an
annual report containing financial statements of the Partnership, or of the
General Partner if such statements are prepared solely on a consolidated basis
with the General Partner, for such fiscal year, presented in accordance with
generally accepted accounting principles. The annual financial statements shall
be audited by accountants selected by the General Partner.
(b) Any Partner shall further have the right to a private audit of the
books and records of the Partnership, provided such audit is made for
Partnership purposes and at the expense of the Partner desiring it, and it is
made during normal business hours.
ARTICLE XI
AMENDMENT OF AGREEMENT; MEETINGS
11.01 AMENDMENT. The General Partner's consent shall be required for
any amendment to this Agreement. The General Partner, without the consent of the
Limited Partners, may amend this Agreement in any respect; provided, however,
that the following amendments shall require the consent of Limited Partners
holding more than 50% of the Percentage Interests of the Limited Partners:
(a) any amendment affecting the operation of the Conversion Factor
or the Exchange Right (except as provided in Sections 8.05(d) or 7.01(d)) in a
manner adverse to the Limited Partners;
(b) any amendment that would adversely affect the rights of the Limited
Partners to receive the distributions payable to them hereunder, other than with
respect to the issuance of additional Partnership Units pursuant to Section
4.02;
38
(c) any amendment that would alter the Partnership's allocations of
Profit and Loss to the Limited Partners, other than with respect to the issuance
of additional Partnership Units pursuant to Section 4.02; or
(d) any amendment that would impose on the Limited Partners any
obligation to make additional Capital Contributions to the Partnership.
The foregoing notwithstanding, the approval of any amendment to this
Agreement that shall be part of a plan of merger, plan of exchange or plan of
conversion involving the Partnership or the Partnership Interests shall be
governed by Article XII.
11.02 MEETINGS OF PARTNERS.
(a) The Partners may but shall not be required to hold any annual,
periodic or other formal meetings. Meetings of the Partners may be called by the
General Partner or Limited Partners holding at least 10% of the Partnership
Units in the Partnership.
(b) The Partner or Partners calling the meeting may designate any place
within the State of Delaware as the place of meeting for any meeting of the
Partners; and Partners holding at least a majority of the Partnership Units in
the Partnership may designate any place outside the State of Delaware as the
place of meeting for any meeting of the Partners. If no designation is made, or
if a special meeting is called, the place of meeting shall be the principal
place of business of the Partnership.
(c) Except as provided in Section 11.02(d), written notice stating the
place, day and hour of the meeting and the purpose or purposes for which the
meeting is called shall be delivered not less than ten (10) nor more than ninety
(90) days before the date of the meeting, either personally or by mail, by or at
the direction of the Partner or Partners calling the meeting, to each Partner
entitled to vote at such meeting and to each Partner not entitled to vote who is
entitled to notice of the meeting.
(d) Anything in this Agreement to the contrary notwithstanding, with
respect to any meeting of the Partners, any Partner who in person or by proxy
shall have waived in writing notice of the meeting, either before or after such
meeting, or who shall attend the meeting in person or by proxy, shall be deemed
to have waived notice of such meeting unless such Partner attends for the
express purpose of objecting, at the beginning of the meeting, and does so
object to the transaction of any business because the meeting is not lawfully
called or convened.
(e) If all of the Partners shall meet at any time and place, either
within or outside of the State of Delaware, in person or by proxy, and consent
to the holding of a meeting at such time and place, such meeting shall be valid
without call or notice, and at such meeting lawful action may be taken.
(f) For the purpose of determining Partners entitled to notice of or to
vote at any meeting of Partners or any adjournment thereof, the date on which
notice of the meeting is mailed shall be the record date. When a determination
of Partners entitled to vote at any meeting of Partners has been made as
provided in this Section, such determination shall apply to any adjournment
thereof.
(g) Partners holding at least a majority of the Partnership Units
entitled to vote at a meeting, represented in person or by proxy, shall
constitute a quorum at any meeting of Partners. In the absence of a quorum at
any such meeting, Partners holding at least a majority of Partnership Units so
represented may adjourn the meeting to another time and place. Any business that
might have been transacted at the original meeting may be transacted at any
adjourned meeting at which a quorum is present. No notice of an adjourned
meeting need be given if the time and place are announced at the meeting at
which the
39
adjournment is taken unless the adjournment is for more than 120 days. The
Partners present at a duly organized meeting may continue to transact business
until adjournment, notwithstanding the withdrawal during such meeting of that
number Partnership Units whose absence would cause less than a quorum to be
present.
(h) If a quorum is present, the affirmative vote of Partners holding a
majority of the Partnership Units entitled to vote, present in person or
represented by proxy, shall be binding on all Partners, unless the vote of a
greater or lesser proportion or number of Partnership Units or Partners is
otherwise required by applicable law or by this Agreement. Unless otherwise
expressly provided herein or required under applicable law, Partners who have an
interest (economic or otherwise) in the outcome of any particular matter upon
which the Partners' vote or consent is required may vote or consent upon any
such matter and their Partnership Units, vote or consent, as the case may be,
shall be counted in the determination of whether the requisite matter was
approved by the Partners.
(i) At all meetings of Partners, a Partner may vote in person or by
proxy executed in writing by the Partner or by the Partner's duly authorized
attorney-in-fact. Such proxy shall be filed with the General Partner before or
at the time of the meeting. No proxy shall be valid after eleven months from the
date of its execution, unless otherwise provided in the proxy.
(j) Action required or permitted to be taken at a meeting of Partners
may be taken without a meeting if the action is evidenced by one or more written
consents or approvals describing the action taken and signed by sufficient
Partners or Partners holding sufficient Partnership Units, as the case may be,
to approve such action had such action been properly voted on at a duly called
meeting of the Partners. Action taken under this Section 11.02(j) is effective
when the requisite Partners or Partners with the requisite Partnership Units, as
the case may be, have signed the consent or approval, unless the consent
specifies a different effective date.
ARTICLE XII
MERGER, EXCHANGE OR CONVERSION
12.01 Merger, Exchange or Conversion of Partnership.
(a) The Partnership may (i) adopt a plan of merger and may merge with
or into one or more domestic or foreign limited partnerships or other entities
with the resulting entity being one or more surviving entities, (ii) adopt a
plan of exchange by which a domestic or foreign limited partnership or other
entity is to acquire all of the outstanding Partnership Interests of the
Partnership in exchange for cash, securities or other property of the acquiring
domestic or foreign limited partnership or other entity or (iii) adopt a plan of
conversion and convert to a foreign limited partnership or other entity. Any
such plan of merger, plan of exchange, or plan of conversion shall otherwise
comply with the requirements of this Agreement and the Act.
(b) Any merger pursuant to a plan of merger described in Section
12.01(a)(i) shall be conditioned upon the merger being permitted by the laws
under which each other entity that is a party to the merger is incorporated or
organized or by the constituent documents of such other entity that are not
inconsistent with such laws. Any exchange pursuant to a plan of exchange
described in Section 12.01(a)(ii) shall be conditioned upon the issuance of
shares or other interests of the acquiring foreign limited partnership or other
entity being permitted by the laws under which such foreign limited partnership
or other entity is incorporated or organized or is not inconsistent with such
laws. Any conversion pursuant to a plan of conversion described in Section
12.01(a)(iii) shall be conditioned upon such conversion being permitted by, or
not inconsistent with, the laws of the jurisdiction in which the
40
converted entity is to be incorporated, formed or organized and the
incorporation, formation or organization of the converted entity is effected in
compliance with such laws.
(c) The Partnership may adopt a plan of merger, plan of exchange or
plan of conversion if the General Partner acts upon and the Limited Partners (if
required by Section 12.02 below) approve the plan of merger, plan of exchange or
plan of conversion in the manner prescribed in Section 12.02 below.
12.02 APPROVAL OF PLAN OF MERGER, EXCHANGE OR CONVERSION.
(a) Except as provided by Section 12.02(g) below, after acting on a
plan of merger, plan of exchange or plan of conversion in the manner prescribed
by Section 12.02(b)(i), the General Partner shall submit the plan of merger,
plan of exchange or plan of conversion for approval by the Limited Partners.
(b) Except as provided by Section 12.02(f) below, for a plan of merger,
plan of exchange or plan of conversion to be approved:
(i) the General Partner shall adopt a resolution recommending
that the plan of merger, plan of exchange or plan of conversion be
approved by the Limited Partners, unless the General Partner determines
that for any reason it should not make that recommendation, in which
case the General Partner shall adopt a resolution directing that the
plan of merger, plan of exchange or plan of conversion be submitted to
the Limited Partners for approval without recommendation; and
(ii) the Limited Partners entitled to vote on the plan of
merger, plan of exchange or plan of conversion must approve the plan.
(c) The General Partner may condition its submission to the Limited
Partners of a plan of merger, plan of exchange or plan of conversion, and the
effectiveness of such plan, on any basis, including without limitation that a
specified percentage of the Percentage Interests of the Limited Partners in
excess of a majority of the Percentage Interests of the Limited Partners be
required for the approval of the plan of merger, plan of exchange or plan of
conversion.
(d) The General Partner shall notify each Limited Partner, whether or
not entitled to vote, of the meeting of the Limited Partners at which the plan
of merger, plan of exchange or plan of conversion is to be submitted for
approval in accordance with this Section 12.02 and applicable law. The notice
shall be given at least twenty (20) days before the meeting and shall state that
the purpose, or one of the purposes, of the meeting is to consider the plan of
merger, plan of exchange or plan of conversion and shall contain or be
accompanied by a copy or summary of the plan. Any such approval may be by
written consent of the requisite Limited Partners as would be required to
approve the plan at any meeting where all the Limited Partners are present.
(e) Unless the General Partner (acting pursuant to Section 12.02(c))
requires a greater vote, the vote of the Limited Partners required for approval
of a plan of merger, plan of exchange or plan of conversion shall be the
affirmative vote of the holders of more than 50% of the Percentage Interests
owned by the Limited Partners entitled to vote thereon.
(f) Unless applicable law otherwise requires (in which case the
approval of the Limited Partners shall continue to be required and the foregoing
provisions of this Section 12.02 shall continue to apply), (1) approval by the
Limited Partners on a plan of exchange shall not be required, and the foregoing
provisions of this Section 12.02 do not apply, if the Partnership is the
acquiring entity in the
41
plan of exchange, and (2) approval by the Limited Partners on a plan of merger
or a plan of conversion shall not be required and the foregoing provisions of
this Section 12.02 do not apply, if:
(i) a limited partnership is the sole surviving or resulting
entity;
(ii) the partnership agreement of the surviving or resulting
limited partnership will not materially differ from this Agreement
before the merger or conversion in any manner other than as to
applicable law or other insignificant conforming differences;
(iii) Limited Partners who held Limited Partnership Interests
immediately before the effective date of the merger or conversion will
hold interests in the surviving or resulting entity in the same
proportions, immediately after the effective date of the merger or
conversion; and
(iv) the General Partner adopts a resolution approving the
plan of merger or plan of conversion.
(g) After a plan of merger, plan of exchange or plan of conversion is
approved, and at any time before the merger, exchange or conversion has become
effective, the plan of merger, plan of exchange or plan of conversion may be
abandoned (subject to any contractual rights by any of the entities that are a
party thereto), without action by the Limited Partners, in accordance with the
procedures set forth in the plan of merger, plan of exchange or plan of
conversion or, if no such procedures are set forth in the plan, in the manner
determined by the General Partner.
12.03 RIGHTS OF DISSENTING LIMITED PARTNERS.
(a) In the absence of fraud in the transaction, the remedy provided by
this Section 12.03 to a Limited Partner voting against any merger, exchange or
conversion or objecting to a merger, exchange or conversion approved by the
written consent of Limited Partners (a "DISSENTING LIMITED PARTNER") is the
exclusive remedy for the recovery of the value of his Limited Partnership
interests or money damages with respect to the transaction. If the existing,
surviving, or new corporation or limited partnership (foreign or domestic) or
other entity, as the case may be, complies with the requirements of this Section
12.03, any Dissenting Limited Partner who fails to comply with the requirements
of this Section 12.03 shall not be entitled to bring suit for the recovery of
the value of his Limited Partnership interests or money damages with respect to
the transaction. A "Dissenting Limited Partner" in respect of any merger,
exchange or conversion shall expressly exclude any Limited Partner who votes in
favor of the related plan of merger, plan of exchange or plan of conversion or
who abstains or fails to timely vote therefor. In the event of a plan of merger,
plan of exchange or plan of conversion approved by written consent, a
"Dissenting Limited Partner" in respect of any related merger, exchange or
conversion shall expressly exclude Limited Partners who provide such written
consent and Limited Partners who fail to object to the merger, exchange or
conversion and demands payment for such Limited Partner's Limited Partnership
Interest in writing to the General Partner within twenty (20) days after notice
to the Limited Partners of the receipt by the Partnership of written consents
sufficient to approve such merger, exchange or conversion. All such Limited
Partners who are not included within the definition of Dissenting Limited
Partner in respect of any merger, exchange or conversion shall participate in
the merger, exchange or conversion according to the approved plan of merger,
plan of exchange or plan of conversion.
(b) Any Dissenting Limited Partner who has opted for payment for his
Limited Partnership interests shall not thereafter be entitled to vote or
exercise any other rights of a Limited Partner except the right to receive
payment for his Limited Partnership interests and the right to maintain an
appropriate action to obtain relief on the ground that the transaction would be
or was fraudulent. Limited Partnership
42
Interests of Dissenting Limited Partners for which payment has been made shall
not thereafter be considered outstanding for the purposes of any subsequent vote
of the Limited Partners.
(c) Within twenty (20) days after a Dissenting Limited Partner votes
against any plan of merger, plan of exchange or plan of conversion which is
approved by a vote of the Limited Partners, or in connection with a Limited
Partner's objection to any plan of merger, plan of exchange or plan of
conversion approved by the written consent of the Limited Partners, the
Dissenting Limited Partner may demand by written notice to the General Partner
that payment for his Limited Partnership Interest be made. Upon receipt of such
a payment demand, the General Partner shall (i) make a notation on the records
of the Partnership that such demand has been made and (ii) within a reasonable
period of time after the later of the receipt of a payment demand or the
consummation of the merger, exchange or conversion, cause the Partnership to pay
to the Dissenting Limited Partner the fair value of such Dissenting Limited
Partner's Partnership Interest without interest. The fair value of a Dissenting
Limited Partner's Partnership Interest shall be an amount equal to the
Dissenting Limited Partner's pro rata share (as would be determined under
Section 5.06 if the Partnership were liquidating) of the appraised value of the
net assets of the Partnership based on an appraisal of all assets of the
Partnership from a Competent Independent Expert. The assets of the Partnership
shall be appraised on a consistent basis. The appraisal shall be based on an
evaluation of all relevant information and shall include the current value of
the Partnership's assets as of the date immediately prior to the proposed
merger, exchange or conversion. The appraisal shall assume an orderly
liquidation of the Partnership's assets over a twelve (12) month period, shall
consider other balance sheet items, and shall be net of the assumed cost of
sale. The terms of the engagement of the appraiser shall clearly state that the
engagement is for the benefit of the Partnership and its Limited Partners. A
summary of the independent appraisal, including all material assumptions
underlying the appraisal, shall be provided to Dissenting Limited Partners in
connection with the payment of the fair value of their Limited Partnership
Interests.
(d) If a Dissenting Limited Partner shall fail to make a payment demand
within the period provided in Section 12.03(c) or, in respect of a plan of
merger, plan of exchange or plan of conversion approved by written consent of
the Limited Partners, shall fail to provide notice of dissent within the period
set forth in Section 12.03(a), such Dissenting Limited Partner and all persons
claiming under him shall be conclusively presumed to have approved and ratified
the merger, conversion or exchange and shall be bound thereby, the right of such
Dissenting Limited Partner to be paid the fair value of his Limited Partnership
Interest shall cease, and his status as a Limited Partner shall be restored
without prejudice to any proceedings which may have been taken during the
interim, and such Dissenting Limited Partner shall be entitled to receive any
distributions made to Limited Partners in the interim.
ARTICLE XIII
GENERAL PROVISIONS
13.01 NOTICES. All communications required or permitted under this
Agreement shall be in writing and shall be deemed to have been given when
delivered personally or upon deposit in the United States mail, registered,
postage prepaid return receipt requested, to the Partners at the addresses set
forth in Exhibit A attached hereto; provided, however, that any Partner may
specify a different address by notifying the General Partner in writing of such
different address. Notices to the Partnership shall be delivered at or mailed to
its specified office.
13.02 SURVIVAL OF RIGHTS. Subject to the provisions limiting transfers,
this Agreement shall be binding upon and inure to the benefit of the Partners
and the Partnership and their respective legal representatives, successors,
transferees and assigns.
43
13.03 ADDITIONAL DOCUMENTS. Each Partner agrees to perform all further
acts and execute, swear to, acknowledge and deliver all further documents that
may be reasonable, necessary, appropriate or desirable to carry out the
provisions of this Agreement or the Act.
13.04 SEVERABILITY. If any provision of this Agreement shall be
declared illegal, invalid, or unenforceable in any jurisdiction, then such
provision shall be deemed to be severable from this Agreement (to the extent
permitted by law) and in any event such illegality, invalidity or
unenforceability shall not affect the remainder.
13.05 ENTIRE AGREEMENT. This Agreement and exhibits attached hereto
constitute the entire Agreement of the Partners and supersede all prior written
agreements and prior and contemporaneous oral agreements, understandings and
negotiations with respect to the subject matter hereof, except as otherwise set
forth herein.
13.06 PRONOUNS AND PLURALS. When the context in which words are used in
the Agreement indicates that such is the intent, words in the singular number
shall include the plural and the masculine gender shall include the neuter or
female gender as the context may require.
13.07 HEADINGS. The Article and Section headings in this Agreement are
for convenience only and shall not be used in construing the scope of this
Agreement or any particular Article or Section.
13.08 COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original copy and all of
which together shall constitute one and the same instrument binding on all
parties hereto, notwithstanding that all parties shall not have signed the same
counterpart.
13.09 GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware; provided, however, that
any cause of action for violation of federal or state securities law shall not
be governed by this Section 13.09.
13.10 ARBITRATION. Notwithstanding anything to the contrary contained
in this Agreement, all claims, disputes and controversies between the parties
hereto (including, without limitation, any claims, disputes and controversies
between the Partnership and any one or more of the Partners and between or among
any Partners) arising out of or in connection with this Agreement or the
Partnership created hereby, or any act or failure to act by the General Partner
or any other Partner hereunder, shall be resolved by binding arbitration in
Phoenix, Arizona by the American Arbitration Association (the "AAA"), in
accordance with this Section 13.10. Any arbitration called for by this Section
13.10 shall be conducted in accordance with the following procedures:
(a) The Partnership or any Partner (the "REQUESTING PARTY") may demand
arbitration pursuant to this Section 13.10 at any time by giving written notice
of such demand (the "DEMAND NOTICE") to all other Partners and (if the
Requesting Party is not the Partnership) to the Partnership which Demand Notice
shall describe in reasonable detail the nature of the claim, dispute or
controversy.
(b) Within 15 days after the giving of a Demand Notice or such
additional time as required by the AAA, the AAA shall select and designate in
writing three reputable, disinterested individuals willing to act as an
arbitrator of the claim, dispute or controversy in question.
(c) The presentations of the parties hereto in the arbitration
proceeding shall be commenced and completed within sixty (60) days after the
selection of the arbitration panel pursuant to subsection B above, and the
arbitration panel shall render its decision (and specify in reasonable detail
its reasons
44
therefor) in writing within thirty (30) days after the completion of such
presentations. Any decision concurred in by any two (2) of the arbitrators shall
constitute the decision of the arbitration panel, and unanimity shall not be
required.
(d) The arbitration panel shall include in its decision a direction
that all of the attorneys' fees and costs of any party or parties and the costs
of such arbitration be paid by the losing party or parties in the arbitration.
On the application of a party before or after the initial decision of the
arbitration panel, and proof of its attorneys' fees and costs, the arbitration
panel shall order the other party to make any payments directed pursuant to the
preceding sentence.
Any decision rendered by the arbitration panel in accordance herewith
shall be final and binding on the parties hereto, and judgment thereon may be
entered by any state or federal court of competent jurisdiction. Arbitration
shall be the exclusive method available for resolution of claims, disputes and
controversies arising between and among the parties relating to this Agreement
and the conduct of the parties hereto in relation to Partnership matters, and
the Partnership and its Partners stipulate that the provisions of this Agreement
shall be a complete defense to any suit, action or proceeding in any court or
before any administrative or arbitration tribunal with respect to any such
claim, controversy or dispute. The provisions of this Section 13.10 shall
survive the dissolution of the Partnership.
Nothing contained herein shall be deemed to give the arbitrators any
authority, power or right to alter, change, amend, modify, add to, or subtract
from any of the provisions of this Agreement.
13.11 VOTE OF AFFILIATED LIMITED PARTNERS. Notwithstanding any
provision to the contrary set forth in this Agreement, in each instance in which
the consent, approval or vote of Limited Partners is required hereunder, any
Partnership Interest held as a Limited Partner by any Affiliate of the Sponsor
shall not be included for purposes of calculating whether the requisite approval
of Partners is obtained unless, as of the date of determination, there are no
Limited Partners entitled to vote or consent who are not Affiliates of the
Sponsor.
IN WITNESS WHEREOF, the parties hereto have hereunder affixed their
signatures to this Agreement of Limited Partnership this 16th day of September,
2005.
GENERAL PARTNER:
XXXX CREDIT PROPERTY TRUST II, INC.
By: /s/ Xxxxxxxxxxx X. Xxxx
---------------------------------------------------
Title: President and Chief Executive Officer
45
ORIGINAL LIMITED PARTNER:
XXXX REIT ADVISORS II, LLC
By: /s/ Xxxxxxxxxxx X. Xxxx
---------------------------------------------
Title: Chief Executive Officer and President
-------------------------------------
46
INDEX OF EXHIBITS
EXHIBIT A - Partners, Capital Contributions and Partnership Units
EXHIBIT B - Notice of Exercise of Exchange Right
EXHIBIT C - Call Notice
47
EXHIBIT A
PARTNERS, CAPITAL CONTRIBUTIONS AND PARTNERSHIP UNITS
As of December ___, 2004
Agreed Value
Cash of Property Partnership
Partners Contribution Contribution Units
-------- ------------ ------------ -----------
GENERAL PARTNER:
Xxxx Credit Property Trust II, Inc.
0000 Xxxx Xxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000 $900.00 N/A 9,000 Units
ORIGINAL LIMITED PARTNER:
Xxxx REIT Advisors II, LLC
0000 Xxxx Xxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000 $ 0.90 N/A 9 Units
Mail:
0000 Xxxx Xxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Hand Delivery:
0000 Xxxx Xxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
ADDITIONAL LIMITED PARTNERS:
EXHIBIT B
NOTICE OF EXERCISE OF EXCHANGE RIGHT
In accordance with the Agreement of Limited Partnership of Xxxx
Operating Partnership II, LP, as amended (the "AGREEMENT"), the undersigned
hereby irrevocably (i) presents for exchange ___________ Partnership Units in
Xxxx Operating Partnership II, LP in accordance with the terms of the Agreement
and the Exchange Right referred to therein; (ii) surrenders such Partnership
Units and all right, title and interest therein; and (iii) directs that the Cash
Amount or REIT Shares Amount (as defined in the Agreement) as determined by the
General Partner deliverable upon exercise of the Exchange Right be delivered to
the address specified below, and if REIT Shares (as defined in the Agreement)
are to be delivered, such REIT Shares be registered or placed in the name(s) and
at the address(es) specified below.
Dated:___________________ _________________________________
(Signature of Limited Partner)
_________________________________
(Printed Name of Limited Partner)
Mailing Address and Phone No.:
_________________________________
_________________________________
_________________________________
_________________________________
(_____) _____-___________________
Signature Guaranteed by: ____________________________________
If REIT Shares are to be issued, issue to:
Name: ____________________________
Mailing Address and Phone No.:
____________________________
____________________________
____________________________
____________________________
(_____) _____-______________
Social security or other tax identification number: ___________________________
EXHIBIT C
CALL NOTICE
In accordance with the Agreement of Limited Partnership of Xxxx
Operating Partnership II, LP, as amended (the "AGREEMENT"), the undersigned
hereby irrevocably exercises its Call Right (as defined in the Agreement) with
regard to all of the Partnership Units owned by _____________________ in Xxxx
Operating Partnership II, LP. The undersigned shall pay the [Cash Amount/REIT
Shares Amount] to _____________________ at the notice address of provided in the
Agreement upon receipt of (i) the duly executed Partnership Unit Certificate of
___________________ transferring all right, title and interest in Partnership
Units to the undersigned, (ii) if REIT Shares are to be delivered, instructions
as to the name, address and taxpayer identification number of the person to whom
such REIT Shares will be registered or placed, and (iii) the representation,
warranty and certification of that _____________________ (a) has marketable and
unencumbered title to such Partnership Units, free and clear of the rights of or
interests of any other person or entity; (b) has the full right, power and
authority to transfer and surrender such Partnership Units as provided herein;
and (c) has obtained the consent or approval of all persons or entities, if any,
having the right to consent to or approve of such transfer and surrender.
XXXX CREDIT PROPERTY TRUST II, INC.
By: _______________________________________________
Name: _____________________________________________
Title: ____________________________________________
