1
EXHIBIT 10.1
FIRST INDUSTRIAL, L.P.
SIXTH AMENDED AND RESTATED
LIMITED PARTNERSHIP AGREEMENT
THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND
RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, AND THE APPLICABLE STATE
SECURITIES LAWS PURSUANT TO A REGISTRATION OR EXEMPTION THEREFROM.
2
TABLE OF CONTENTS
Page
----
ARTICLE I - INTERPRETIVE PROVISIONS
Section 1.1 Certain Definitions .................................. 1
Section 1.2 Rules of Construction ................................12
ARTICLE II - CONTINUATION
Section 2.1 Continuation .........................................13
Section 2.2 Name .................................................13
Section 2.3 Place of Business; Registered Agent ..................14
ARTICLE III - BUSINESS PURPOSE
Section 3.1 Business .............................................14
Section 3.2 Authorized Activities ................................14
ARTICLE IV - CAPITAL CONTRIBUTIONS
Section 4.1 Capital Contributions ................................14
Section 4.2 Additional Partnership Interests .....................15
Section 4.3 No Third Party Beneficiaries .........................15
Section 4.4 Capital Accounts .....................................15
Section 4.5 Return of Capital Account; Interest ..................17
Section 4.6 Preemptive Rights ....................................17
Section 4.7 REIT Share Purchases .................................17
ARTICLE V - ALLOCATIONS AND DISTRIBUTIONS
Section 5.1 Limited Liability ....................................17
Section 5.2 Profits, Losses and Distributive Shares ..............18
Section 5.3 Distributions ........................................23
Section 5.4 Distribution upon Redemption..........................24
Section 5.5 Distributions upon Liquidation .......................24
Section 5.6 Amounts Withheld .....................................24
ARTICLE VI - PARTNERSHIP MANAGEMENT
Section 6.1 Management and Control of Partnership Business........25
Section 6.2 No Management by Limited Partners; Limitation
of Liability .........................................25
Section 6.3 Limitations on Partners ..............................26
Section 6.4 Business with Affiliates .............................26
Section 6.5 Compensation; Reimbursement of Expenses ..............26
Section 6.6 Liability for Acts and Omissions .....................27
Section 6.7 Indemnification ......................................27
ARTICLE VII - ADMINISTRATIVE, FINANCIAL AND TAX MATTERS
Section 7.1 Books and Records ....................................28
Section 7.2 Annual Audit and Accounting ..........................28
Section 7.3 Partnership Funds ....................................28
Section 7.4 Reports and Notices ..................................28
-i-
3
Page
----
Section 7.5 Tax Matters ..........................................29
Section 7.6 Withholding ..........................................29
ARTICLE VIII - TRANSFER OF PARTNERSHIP INTERESTS; ADMISSIONS
OF PARTNERS
Section 8.1 Transfer by General Partner ..........................30
Section 8.2 Obligations of a Prior General Partner ...............30
Section 8.3 Successor General Partner ............................30
Section 8.4 Restrictions on Transfer and Withdrawal by Limited
Partner ..............................................30
Section 8.5 Substituted Limited Partner ..........................31
Section 8.6 Timing and Effect of Transfers .......................32
Section 8.7 Additional Limited Partners ..........................32
Section 8.8 Amendment of Agreement and Certificate ...............32
ARTICLE IX - REDEMPTION
Section 9.1 Right of Redemption ..................................32
Section 9.2 Timing of Redemption .................................33
Section 9.3 Redemption Price .....................................33
Section 9.4 Assumption of Redemption Obligation ..................34
Section 9.5 Further Assurances; Certain Representations ..........34
Section 9.6 Effect of Redemption .................................34
Section 9.7 Registration Rights ..................................34
ARTICLE X - DISSOLUTION AND LIQUIDATION
Section 10.1 Term and Dissolution .................................35
Section 10.2 Liquidation of Partnership Assets ....................35
Section 10.3 Effect of Treasury Regulations .......................36
Section 10.4 Time for Winding-Up ..................................37
ARTICLE XI - AMENDMENTS AND MEETINGS
Section 11.1 Amendment Procedure ..................................37
Section 11.2 Meetings and Voting ..................................38
Section 11.3 Voting of LB Units....................................38
ARTICLE XII - MISCELLANEOUS PROVISIONS
Section 12.1 Title to Property ....................................38
Section 12.2 Other Activities of Limited Partners .................38
Section 12.3 Power of Attorney ....................................39
Section 12.4 Notices ..............................................40
Section 12.5 Further Assurances ...................................40
Section 12.6 Titles and Captions ..................................40
Section 12.7 Applicable Law .......................................40
Section 12.8 Binding Agreement ....................................40
Section 12.9 Waiver of Partition ..................................40
Section 12.10 Counterparts and Effectiveness .......................40
Section 12.11 Survival of Representations ..........................40
Section 12.12 Entire Agreement .....................................41
-ii-
4
Exhibit 1A - First Highland Partners
Exhibit 1B - Schedule of Partners
Exhibit 1C - LB Partners
Exhibit 1D - Contributor Partners
Exhibit 2 - Form of Redemption Notice
Exhibit 3 - Form of Registration Rights Agreement
5
FIRST INDUSTRIAL, L.P.
SIXTH AMENDED AND RESTATED
LIMITED PARTNERSHIP AGREEMENT
The undersigned, being the sole general partner of First Industrial, L.P.
(the "Partnership"), a limited partnership formed under the Delaware Revised
Uniform Limited Partnership Act, does hereby amend and restate the Fifth Amended
and Restated Partnership Agreement (as described below) this 18th day of March
1998 as follows:
R E C I T A L S:
A. The Partnership was formed pursuant to a Certificate of Limited
Partnership filed on November 23, 1993 with the Secretary of State of the State
of Delaware under the name "ProVest, L.P." and a Limited Partnership Agreement
dated November 23, 1993 (the "Original Partnership Agreement").
B. The Original Partnership Agreement was amended and restated as of
January 28, 1994 (such amended and restated partnership agreement, the "Prior
Partnership Agreement").
C. A Second Amended and Restated Limited Partnership Agreement was executed
as of June 30, 1994, a Third Amended and Restated Partnership Agreement was
executed as of May 14, 1997, a Fourth Amended and Restated Partnership Agreement
was executed as of June 6, 1997 and a Fifth Amended and Restated Partnership
Agreement was executed as of February 4, 1998 (the "Fifth Partnership
Agreement").
D. The General Partner desires to amend and restate the Fifth Partnership
Agreement to (i) reflect the interests granted to the Class E Limited Partner
(as hereinafter defined) and (ii) set forth the understandings and agreements,
including certain rights and obligations, among the Partners (as hereinafter
defined) with respect to the Partnership.
--------------------------------------------------------------------------------
ARTICLE I - INTERPRETIVE PROVISIONS
--------------------------------------------------------------------------------
SECTION 1.1 CERTAIN DEFINITIONS. The following terms have the
definitions hereinafter indicated whenever used in this Agreement with initial
capital letters:
ACT: The Delaware Revised Uniform Limited Partnership Act, Sections
17-101 to 17-1109 of the Delaware Code Annotated, Title 6, as amended from time
to time.
ADDITIONAL LIMITED PARTNER: A Person admitted to the Partnership as a
Limited Partner in accordance with Section 8.7 hereof and who is shown as such
on the books and records of the Partnership.
ADJUSTED CAPITAL ACCOUNT: With respect to any Partner, such Partner's
Capital Account maintained in accordance with Section 4.4 hereof, as of the end
of the relevant Fiscal Year of the Partnership, after giving effect to the
following adjustments:
(A) Credit to such Capital Account such Partner's share of Partnership
Minimum Gain determined in accordance with Treasury Regulations Section
1.704-2(g)(1) and such Partner's share of Partner Minimum Gain determined in
accordance with Treasury Regulations Section 1.704-2(i)(5).
6
-2-
(B) Debit to such Capital Account the items described in Treasury
Regulations Section 1.704- 1(b)(2)(ii)(d)(4), (5) and (6).
The foregoing definition of "Adjusted Capital Account" is intended to
comply with the provisions of Treasury Regulations Sections 1.704-1(b)(2)(ii)
and 1.704-2 and shall be interpreted consistently therewith.
ADJUSTED CAPITAL ACCOUNT DEFICIT: With respect to any Partner, the
deficit balance, if any, in that Partner's Adjusted Capital Account as of the
end of the relevant Fiscal Year of the Partnership.
AFFILIATE: With respect to any referenced Person, (i) a member of such
Person's immediate family; (ii) any Person who directly or indirectly owns,
controls or holds the power to vote ten percent (10%) or more of the outstanding
voting securities of the Person in question; (iii) any Person ten percent (10%)
or more of whose outstanding securities are directly or indirectly owned,
controlled, or held with power to vote by the Person in question; (iv) any
Person directly or indirectly controlling, controlled by, or under direct or
indirect common control with the Person in question; (v) if the Person in
question is a corporation, any executive officer or director of such Person or
of any corporation directly or indirectly controlling such Person; and (vi) if
the Person in question is a partnership, any general partner of the partnership
or any limited partner owning or controlling ten percent (10%) or more of either
the capital or profits interest in such partnership. As used herein, "control"
shall mean the possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of a Person, whether through
the ownership of voting securities, by contract, or otherwise.
AGGREGATE PROTECTED AMOUNT: With respect to the Contributor Partners,
as a group, the aggregate balances of the Protected Amounts, if any, of the
Contributor Partners, as determined on the date in question.
AGREED VALUE: In the case of any (i) Contributed Property acquired
pursuant to a Contribution Agreement, the value of such Contributed Property as
set forth in such Contribution Agreement or, if no such value is set forth for
such Contributed Property, the portion of the consideration provided for under
such Contribution Agreement allocable to such Contributed Property, as
determined by the General Partner in its reasonable discretion, (ii) Contributed
Property acquired other than pursuant to a Contribution Agreement, the fair
market value of such property at the time of contribution, as determined by the
General Partner using such method of valuation as it may adopt in its reasonable
discretion and (iii) property distributed to a Partner by the Partnership, the
Partnership's Book Value of such property at the time such property is
distributed without taking into account, in the case of each of (i), (ii) and
(iii), the amount of any related indebtedness assumed by the Partnership (or the
Partner in the case of clause (iii)) or to which the Contributed Property (or
distributed property in the case of clause (iii)) is taken subject.
AGREEMENT: This Sixth Amended and Restated Limited Partnership
Agreement and all Exhibits attached hereto, as the same may be amended or
restated and in effect from time to time.
ASSIGNEE: Any Person to whom one or more Partnership Units have been
Transferred as permitted under this Agreement but who has not become a
Substituted Limited Partner in accordance with the provisions hereof.
BANKRUPTCY: Either (i) a referenced Person's making an assignment for
the benefit of creditors, (ii) the filing by a referenced Person of a voluntary
petition in bankruptcy, (iii) a referenced Person's being adjudged insolvent or
having entered against him an order for relief in any bankruptcy or insolvency
proceeding, (iv) the filing by a referenced Person of an answer seeking any
reorganization, composition, readjustment, liquidation, dissolution, or similar
relief under any law or regulation, (v) the filing by a referenced Person of an
answer or other pleading admitting or failing to contest the material
allegations of a petition filed against him in any proceeding of
7
-3-
reorganization, composition, readjustment, liquidation, dissolution, or for
similar relief under any statute, law or regulation or (vi) a referenced
Person's seeking, consenting to, or acquiescing in the appointment of a trustee,
receiver or liquidator for all or substantially all of his property (or court
appointment of such trustee, receiver or liquidator).
BOOK-TAX DISPARITY: With respect to any item of Contributed Property,
or property the Book Value of which has been adjusted in accordance with Section
4.4(D), as of the date of determination, the difference between the Book Value
of such property and the adjusted basis of such property for federal income tax
purposes.
BOOK VALUE: With respect to any Contributed Property, the Agreed Value
of such property reduced (but not below zero) by all Depreciation with respect
to such property properly charged to the Partners' Capital Accounts, and with
respect to any other asset, the asset's adjusted basis for federal income tax
purposes; provided, however, (a) the Book Value of all Partnership Assets shall
be adjusted in the event of a revaluation of Partnership Assets in accordance
with Section 4.4(D) hereof, (b) the Book Value of any Partnership Asset
distributed to any Partner shall be the fair market value of such asset on the
date of distribution as determined by the General Partner and (c) such Book
Value shall be adjusted by the Depreciation taken into account with respect to
such asset for purposes of computing Profits and Losses.
CAPITAL ACCOUNT: The account maintained by the Partnership for each
Partner described in Section 4.4 hereof.
CAPITAL CONTRIBUTION: The total amount of cash or cash equivalents and
the Agreed Value (reduced to take into account the amount of any related
indebtedness assumed by the Partnership, or to which the Contributed Property is
subject) of Contributed Property which a Partner contributes or is deemed to
contribute to the Partnership pursuant to the terms of this Agreement.
CASH PAYMENT: The payment to a Redeeming Party of a cash amount
determined by multiplying (i) the number of Partnership Units tendered for
redemption by such Redeeming Party pursuant to a validly proffered Redemption
Notice by (ii) the Unit Value on the date the Redemption Notice is received by
the General Partner.
CERTIFICATE: The Partnership's Certificate of Limited Partnership filed
in the office of the Secretary of State of the State of Delaware, as amended
from time to time.
CLASS B DEEMED ORIGINAL ISSUE DATE: (i) in the case of any Class B Unit
which is part of the first issuance of such units or part of a subsequent
issuance of such units prior to July 1, 1997, the date of such first issuance
and (ii) in the case of any such unit which is part of a subsequent issuance of
such units on or after July 1, 1997, the later of (x) July 1, 1997 and (y) the
last Class B Distribution Period Commencement Date which precedes the date of
issuance of such unit and which succeeds the last Class B Distribution Period
for which full cumulative Class B Priority Return Amounts have been paid;
provided, however, that, in the case of any such unit which is part of a
subsequent issuance on or after July 1, 1997, the date of issuance of which
falls between (a) the record date for dividends payable on the Series B
Preferred Shares on the first succeeding dividend payment date on such stock and
(b) such dividend payment date, the "Class B Deemed Original Issue Date" means
the date of the Class B Distribution Period Commencement Date that immediately
follows the date of issuance of such unit.
CLASS B DISTRIBUTION PERIOD: The Class B Initial Distribution Period,
and each quarterly distribution period thereafter, commencing on January 1,
April 1, July 1 and October 1 of each year and ending on and including the day
preceding the next Class B Distribution Period Commencement Date.
8
-4-
CLASS B DISTRIBUTION PERIOD COMMENCEMENT DATE: January 1, April 1, July
1 and October 1 of each year, commencing on July 1, 1997.
CLASS B INITIAL DISTRIBUTION PERIOD: The period from the Class B Deemed
Original Issue Date for a Class B Unit to, but excluding, July 1, 1997.
CLASS B LIMITED PARTNER: First Industrial Realty Trust, Inc., a
Maryland corporation, in its capacity as a limited partner in the Partnership
holding Class B Units.
CLASS B PRIORITY RETURN AMOUNT: With respect to each Class B Unit, (i)
for the Class B Initial Distribution Period, the pro rata portion of the amount
referred to in clause (ii) of this definition, computed in accordance with the
last sentence of Section 5.3(A) hereof, and (ii) for each Class B Distribution
Period thereafter, an amount equal to 2.1875% of that portion of the Capital
Contribution of the Class B Limited Partner allocable to each such unit. Class B
Priority Return Amounts on each Class B Unit that are not distributed as
provided in Section 5.3(A) shall be cumulative from the Class B Deemed Original
Issue Date of such unit.
CLASS B REDEMPTION: As defined in Section 9.1(C) hereof.
CLASS B REDEMPTION PRICE: As defined in Section 9.1(C) hereof.
CLASS B UNIT: The Partnership Interest held by the Class B Limited
Partner, each full Class B Unit representing a $2,500 Capital Contribution.
CLASS C DEEMED ORIGINAL ISSUE DATE: (i) in the case of any Class C Unit
which is part of the first issuance of such units or part of a subsequent
issuance of such units prior to October 1, 1997, the date of such first issuance
and (ii) in the case of any such unit which is part of a subsequent issuance of
such units on or after October 1, 1997, the later of (x) October 1, 1997 and (y)
the last Class C Distribution Period Commencement Date which precedes the date
of issuance of such unit and which succeeds the last Class C Distribution Period
for which full cumulative Class C Priority Return Amounts have been paid;
provided, however, that, in the case of any such unit which is part of a
subsequent issuance on or after October 1, 1997, the date of issuance of which
falls between (a) the record date for dividends payable on the Series C
Preferred Shares on the first succeeding dividend payment date on such stock and
(b) such dividend payment date, the "Class C Deemed Original Issue Date" means
the date of the Class C Distribution Period Commencement Date that immediately
follows the date of issuance of such unit.
CLASS C DISTRIBUTION PERIOD: The Class C Initial Distribution Period
and each quarterly distribution period thereafter, commencing on January 1,
April 1, July 1 and October 1 of each year and ending on and including the day
preceding the next Class C Distribution Period Commencement Date.
CLASS C DISTRIBUTION PERIOD COMMENCEMENT DATE: January 1, April 1, July
1 and October 1 of each year commencing October 1, 1997.
CLASS C INITIAL DISTRIBUTION PERIOD: The period from the Class C Deemed
Original Issue Date for a Class C Unit to, but excluding, October 1, 1997.
CLASS C LIMITED PARTNER: First Industrial Realty Trust, Inc., a
Maryland corporation, in its capacity as a limited partner in the Partnership
holding Class C Units.
9
-5-
CLASS C PRIORITY RETURN AMOUNT: With respect to each Class C Unit, (i)
for the Class C Initial Distribution Period, the pro rata portion of the amount
referred to in clause (ii) of this definition, computed in accordance with the
last sentence of Section 5.3(B) hereof, and (ii) for each Class C Distribution
Period thereafter, an amount equal to 2.15625% of that portion of the Capital
Contribution of the Class C Limited Partner allocable to each such unit. Class C
Priority Return Amounts on each Class C Unit that are not distributed as
provided in Section 5.3(B) shall be cumulative from the Class C Deemed Original
Issue Date of such unit.
CLASS C REDEMPTION: As defined in Section 9.1(D) hereof.
CLASS C REDEMPTION PRICE: As defined in Section 9.1(D) hereof.
CLASS C UNIT: The Partnership Interest held by the Class C Limited
Partner, each full Class C Unit representing a $2,500 Capital Contribution.
CLASS D DEEMED ORIGINAL ISSUE DATE: (i) in the case of any Class D Unit
which is part of the first issuance of such units or part of a subsequent
issuance of such units prior to April 1, 1998, the date of such first issuance
and (ii) in the case of any such unit which is part of a subsequent issuance of
such units on or after April 1, 1998, the later of (x) April 1, 1998 and (y) the
last Class D Distribution Period Commencement Date which precedes the date of
issuance of such unit and which succeeds the last Class D Distribution Period
for which full cumulative Class D Priority Return Amounts have been paid;
provided, however, that, in the case of any such unit which is part of a
subsequent issuance on or after April 1, 1998, the date of issuance of which
falls between (a) the record date for dividends payable on the Series D
Preferred Shares on the first succeeding dividend payment date on such stock and
(b) such dividend payment date, the "Class D Deemed Original Issue Date" means
the date of the Class D Distribution Period Commencement Date that immediately
follows the date of issuance of such unit.
CLASS D DISTRIBUTION PERIOD: The Class D Initial Distribution Period
and each quarterly distribution period thereafter, commencing on January 1,
April 1, July 1 and October 1 of each year and ending on and including the day
preceding the next Class D Distribution Period Commencement Date.
CLASS D DISTRIBUTION PERIOD COMMENCEMENT DATE: January 1, April 1, July
1 and October 1 of each year commencing April 1, 1998.
CLASS D INITIAL DISTRIBUTION PERIOD: The period from the Class D Deemed
Original Issue Date for a Class D Unit to, but excluding, April 1, 1998.
CLASS D LIMITED PARTNER: First Industrial Realty Trust, Inc., a
Maryland corporation, in its capacity as a limited partner in the Partnership
holding Class D Units.
CLASS D PRIORITY RETURN AMOUNT: With respect to each Class D Unit, (i)
for the Class D Initial Distribution Period, the pro rata portion of the amount
referred to in clause (ii) of this definition, computed in accordance with the
last sentence of Section 5.3(B) hereof, and (ii) for each Class D Distribution
Period thereafter, an amount equal to 1.9875% of that portion of the Capital
Contribution of the Class D Limited Partner allocable to each such unit. Class D
Priority Return Amounts on each Class D Unit that are not distributed as
provided in Section 5.3(B) shall be cumulative from the Class D Deemed Original
Issue Date of such unit.
CLASS D REDEMPTION: As defined in Section 9.1(E) hereof.
CLASS D REDEMPTION PRICE: As defined in Section 9.1(E) hereof.
10
-6-
CLASS D UNIT: The Partnership Interest held by the Class D Limited
Partner, each full Class D Unit representing a $2,500 Capital Contribution.
CLASS E DEEMED ORIGINAL ISSUE DATE: (i) in the case of any Class E Unit
which is part of the first issuance of such units or part of a subsequent
issuance of such units prior to July 1, 1998, the date of such first issuance
and (ii) in the case of any such unit which is part of a subsequent issuance of
such units on or after July 1, 1998, the later of (x) July 1, 1998 and (y) the
last Class E Distribution Period Commencement Date which precedes the date of
issuance of such unit and which succeeds the last Class E Distribution Period
for which full cumulative Class E Priority Return Amounts have been paid;
provided, however, that, in the case of any such unit which is part of a
subsequent issuance on or after July 1, 1998, the date of issuance of which
falls between (a) the record date for dividends payable on the Series E
Preferred Shares on the first succeeding dividend payment date on such stock and
(b) such dividend payment date, the "Class E Deemed Original Issue Date" means
the date of the Class E Distribution Period Commencement Date that immediately
follows the date of issuance of such unit.
CLASS E DISTRIBUTION PERIOD: The Class E Initial Distribution Period
and each quarterly distribution period thereafter, commencing on January 1,
April 1, July 1 and October 1 of each year and ending on and including the day
preceding the next Class E Distribution Period Commencement Date.
CLASS E DISTRIBUTION PERIOD COMMENCEMENT DATE: January 1, April 1, July
1 and October 1 of each year commencing July 1, 1998.
CLASS E INITIAL DISTRIBUTION PERIOD: The period from the Class E Deemed
Original Issue Date for a Class E Unit to, but excluding, July 1, 1998.
CLASS E LIMITED PARTNER: First Industrial Realty Trust, Inc., a
Maryland corporation, in its capacity as a limited partner in the Partnership
holding Class E Units.
CLASS E PRIORITY RETURN AMOUNT: With respect to each Class E Unit, (i)
for the Class E Initial Distribution Period, the pro rata portion of the amount
referred to in clause (ii) of this definition, computed in accordance with the
last sentence of Section 5.3(B) hereof, and (ii) for each Class E Distribution
Period thereafter, an amount equal to 7.90% of that portion of the Capital
Contribution of the Class E Limited Partner allocable to each such unit. Class E
Priority Return Amounts on each Class E Unit that are not distributed as
provided in Section 5.3(B) shall be cumulative from the Class E Deemed Original
Issue Date of such unit.
CLASS E REDEMPTION: As defined in Section 9.1(F) hereof.
CLASS E REDEMPTION PRICE: As defined in Section 9.1(F) hereof.
CLASS E UNIT: The Partnership Interest held by the Class E Limited
Partner, each full Class E Unit representing a $2,500 Capital Contribution.
CODE: The Internal Revenue Code of 1986, as amended from time to time.
CONSENT: Either the written consent of a Person or the affirmative vote
of such Person at a meeting duly called and held pursuant to this Agreement, as
the case may be, to do the act or thing for which the consent is required or
solicited, or the act of granting such consent, as the context may require.
11
-7-
CONTRIBUTED PROPERTY: Each property or other asset (excluding cash and
cash equivalents) contributed or deemed contributed to the Partnership.
CONTRIBUTION AGREEMENTS: Those certain agreements among one or more of
the Initial Limited Partners (or Persons in which such Initial Limited Partners
have direct or indirect interests) and the Partnership pursuant to which, inter
alia, the Initial Limited Partners (or such Persons), directly or indirectly,
are contributing property to the Partnership on the Effective Date in exchange
for Partnership Units.
CONTRIBUTOR PARTNER(S): That or those Limited Partner(s) listed as
Contributor Partner(s) on Exhibit 1D attached hereto and made a part hereof, as
such Exhibit may be amended from time to time by the General Partner, whether by
express amendment to this Partnership Agreement or by execution of a written
instrument by and between any additional Contributor Partner(s) being affected
thereby and the General Partner, acting on behalf of the Partnership and without
the prior consent of the Limited Partners (whether or not Contributor Partners
other than the Contributor Partner(s) being affected thereby). For purposes
hereof, any successor, assignee, or transferee of the Interest of a Contributor
Partner (other than the Partnership in connection with a redemption pursuant to
Article IX hereof) shall be considered a Contributor Partner for purposes
hereof.
CONVERSION FACTOR: The factor applied for converting Partnership Units
to REIT Shares, which shall initially be 1.0; provided, however, in the event
that the REIT (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 (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 the record date for such
dividend, distribution, subdivision or combination; provided, further, in the
event that the Partnership (a) declares or pays a distribution on the
outstanding Partnership Units in Partnership Units or makes a distribution to
all Partners in Partnership Units, (b) subdivides the outstanding Partnership
Units or (c) combines the outstanding Partnership Units into a smaller number of
Partnership Units, the Conversion Factor shall be adjusted by multiplying the
Conversion Factor by a fraction, the numerator of which shall be the actual
number of Partnership Units issued and outstanding on the record date
(determined without giving effect to such dividend, distribution, subdivision or
combination), and the denominator of which shall be the actual number of
Partnership Units (determined after giving effect to such dividend,
distribution, subdivision or combination) issued and outstanding on such record
date. 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.
DEPRECIATION: For each Fiscal Year or other period, an amount equal to
the depreciation, amortization or other cost recovery deduction allowable with
respect to an asset for such year or other period, except that if the Book Value
of an asset differs from its adjusted basis for federal income tax purposes at
the beginning of such year or other period, Depreciation shall be adjusted as
necessary so as to be an amount which bears the same ratio to such beginning
Book Value as the federal income tax depreciation, amortization, or other cost
recovery deduction for such year or other period bears to the beginning adjusted
tax basis; provided, however, that if the federal income tax depreciation,
amortization or other cost recovery deduction for such year or other period is
zero, Depreciation for such year or other period shall be determined with
reference to such beginning Book Value using any reasonable method approved by
the General Partner.
00
-0-
XXXXXXXXXXXXX XXXX: with respect to any period, and without
duplication:
(i) all cash receipts of the Partnership during such period
from all sources;
(ii) less all cash disbursements of the Partnership during
such period, including, without limitation, disbursements for operating
expenses, taxes, debt service (including, without limitation, the payment of
principal, premium and interest), redemption of Partnership Interests and
capital expenditures;
(iii) less amounts added to reserves in the sole discretion of
the General Partner, plus amounts withdrawn from reserves in the reasonable
discretion of the General Partner.
EFFECTIVE DATE: June 30, 1994.
ERISA: The Employee Retirement Income Security Act of 1976, as amended
from time to time.
FIRST HIGHLAND LIMITED PARTNERS: Those Limited Partners identified on
Exhibit 1A hereto.
FIRST HIGHLAND PROPERTIES: Those certain properties acquired by the
Partnership pursuant to that certain Contribution Agreement, dated as of March
19, 1996.
FIRST HIGHLAND UNITS: The Partnership Units issued to the First
Highland Limited Partners in connection with the acquisition of the First
Highland Properties by the Partnership.
FISCAL YEAR: The calendar year or in the event of a termination of the
Partnership pursuant to Code Section 708, an appropriate portion of such year.
GENERAL PARTNER: First Industrial Realty Trust, Inc., a Maryland
corporation, and its respective successor(s) who or which become Successor
General Partner(s) in accordance with the terms of this Agreement.
GENERAL PARTNER INTEREST: A Partnership Interest held by the General
Partner including both its General Partner and Limited Partner Interests. A
General Partner Interest may be expressed as a number of Partnership Units.
INVOLUNTARY WITHDRAWAL: As to any (i) individual shall mean such
individual's death, incapacity or adjudication of incompetence, (ii) corporation
shall mean its dissolution or revocation of its charter (unless such revocation
is promptly corrected upon notice thereof), (iii) partnership shall mean the
dissolution and commencement of winding up of its affairs, (iv) trust shall mean
the termination of the trust (but not the substitution of trustees), (v) estate
shall mean the distribution by the fiduciary of the estate's complete interest
in the Partnership and (vi) any Partner shall mean the Bankruptcy of such
Partner.
IRS: The Internal Revenue Service, which administers the internal
revenue laws of the United States.
LB CLOSING DATE: January 31, 1997.
LB PARTNERS: The persons identified on Exhibit 1C hereto, following
their admission to the Partnership as Additional Limited Partners.
13
-9-
LB UNITS: The Partnership Units issued to the LB Partners in connection
with the acquisition by the Partnership of certain properties on the LB Closing
Date.
LIMITED PARTNER: Those Persons listed as such on Exhibit 1B attached
hereto and made a part hereof, as such Exhibit may be amended from time to time,
including any Person who becomes a Substituted Limited Partner or an Additional
Limited Partner in accordance with the terms of this Agreement; provided such
term shall not include the Class B Limited Partner, the Class C Limited Partner,
the Class D Limited Partner or the Class E Limited Partner.
LIMITED PARTNER INTEREST: A Partnership Interest held by a Limited
Partner that is a limited partner interest. A Limited Partner Interest may be
expressed as a number of Partnership Units.
NONRECOURSE LIABILITY: A liability as defined in Treasury Regulations
Section 1.704-2(b)(3).
NOTICE: A writing containing the information required by this Agreement
to be communicated to a Person and delivered to such Person in accordance with
Section 12.4; provided, however, that any written communication containing such
information actually received by such Person shall constitute Notice for all
purposes of this Agreement.
PARTNER MINIMUM GAIN: The gain (regardless of character) which would be
realized by the Partnership if property of the Partnership subject to a partner
nonrecourse debt (as such term is defined in Treasury Regulations Section
1.704-2(b)(4)) were disposed of in full satisfaction of such debt on the
relevant date. The adjusted basis of property subject to more than one partner
nonrecourse debt shall be allocated in a manner consistent with the allocation
of basis for purposes of determining Partnership Minimum Gain hereunder. Partner
Minimum Gain shall be computed hereunder using the Book Value, rather than the
adjusted tax basis, of the Partnership property in accordance with Treasury
Regulations Section 1.704-2(d)(3).
PARTNER NONRECOURSE DEDUCTIONS: With respect to any partner nonrecourse
debt (as such term is defined in Treasury Regulations Section 1.704-2(b)(4)),
the increase in Partner Minimum Gain during the tax year plus any increase in
Partner Minimum Gain for a prior tax year which has not previously generated a
Partner Nonrecourse Deduction hereunder. The determination of which Partnership
items constitute Partner Nonrecourse Deductions shall be made in a manner
consistent with the manner in which Partnership Nonrecourse Deductions are
determined hereunder.
PARTNERS: The General Partner, the Class B Limited Partner, the Class C
Limited Partner, the Class D Limited Partner, the Class E Limited Partner and
the Limited Partners as a group. The term "Partner" shall mean a General
Partner, the Class B Limited Partner, the Class C Limited Partner, the Class D
Limited Partner, the Class E Limited Partner or a Limited Partner. Such terms
shall be deemed to include such other Persons who become Partners pursuant to
the terms of this Agreement.
PARTNERSHIP: The Delaware limited partnership referred to herein as
First Industrial, L.P., as such partnership may from time to time be
constituted.
PARTNERSHIP ASSETS: At any particular time, any assets or property
(tangible or intangible, xxxxxx or inchoate, fixed or contingent) owned by the
Partnership.
PARTNERSHIP INTEREST OR INTEREST: As to any Partner, such Partner's
ownership interest in the Partnership and including such Partner's right to
distributions under this Agreement and any other rights or benefits which such
14
-10-
Partner has in the Partnership, together with any and all obligations of such
Person to comply with the terms and provisions of this Agreement. A Partnership
Interest may be expressed as a number of Partnership Units.
PARTNERSHIP MINIMUM GAIN: The aggregate gain (regardless of character)
which would be realized by the Partnership if all of the property of the
Partnership subject to nonrecourse debt (other than partner nonrecourse debt as
such term is defined in Treasury Regulations Section 1.704-2(b)(4)) were
disposed of in full satisfaction of such debt and for no other consideration on
the relevant date. In the case of any Nonrecourse Liability of the Partnership
which is not secured by a mortgage with respect to any specific property of the
Partnership, any and all property of the Partnership to which the holder of said
liability has recourse shall be treated as subject to such Nonrecourse Liability
for purposes of the preceding sentence. Partnership Minimum Gain shall be
computed separately for each Nonrecourse Liability of the Partnership. For this
purpose, the adjusted basis of property subject to two or more liabilities of
equal priority shall be allocated among such liabilities in proportion to the
outstanding balance of such liabilities, and the adjusted basis of property
subject to two or more liabilities of unequal priority shall be allocated to the
liability of inferior priority only to the extent of the excess, if any, of the
adjusted basis of such property over the outstanding balance of the liability of
superior priority. Partnership Minimum Gain shall be computed hereunder using
the Book Value, rather than the adjusted tax basis, of the Partnership property
in accordance with Treasury Regulations Section 1.704-2(d)(3).
PARTNERSHIP NONRECOURSE DEDUCTIONS: The amount of Partnership
deductions equal to the increase, if any, in the amount of the aggregate
Partnership Minimum Gain during the tax year (plus any increase in Partnership
Minimum Gain for a prior tax year which has not previously generated a
Partnership Nonrecourse Deduction) reduced (but not below zero) by the aggregate
distributions made during the tax year of the proceeds of a Nonrecourse
Liability of the Partnership which are attributable to an increase in
Partnership Minimum Gain within the meaning of Treasury Regulations Section
1.704-2(d). The Partnership Nonrecourse Deductions for a Partnership tax year
shall consist first of depreciation or cost recovery deductions with respect to
each property of the Partnership giving rise to such increase in Partnership
Minimum Gain on a pro rata basis to the extent of each such increase, with any
excess made up pro rata of all items of deduction.
PARTNERSHIP UNIT: A fractional, undivided share of the Partnership
Interests of all Partners (other than the Class B Limited Partner, the Class C
Limited Partner, the Class D Limited Partner and the Class E Limited Partner)
issued pursuant to Section 4.1 hereof.
PERCENTAGE INTEREST: As to any Partner, the percentage in the
Partnership, as determined by dividing the Partnership Units then owned by such
Partner by the total number of Partnership Units then outstanding, as the same
may be automatically adjusted from time to time to reflect the issuance and
redemption of Partnership Units in accordance with this Agreement, without
requiring the amendment of Exhibit 1B to reflect any such issuance or
redemption.
PERSON: Any individual, partnership, corporation, trust or other
entity.
PROFITS AND LOSSES: For each Fiscal Year or other period, an amount
equal to the Partnership's taxable income or loss (as the case may be) for such
year or period, determined in accordance with Code Section 703(a) (for this
purpose, all items of income, gain, loss or deduction required to be stated
separately pursuant to Code Section 703(a)(1) shall be included in taxable
income or loss), with the following adjustments:
a. Any income of the Partnership that is exempt from federal
income tax and not otherwise taken into account in computing Profits or
Losses pursuant to this definition shall be added to such taxable income or
loss;
15
-11-
b. Any expenditures of the Partnership described in Code Section
705(a)(2)(B) or treated as Code Section 705(a)(2)(B) expenditures pursuant
to Treasury Regulations Section 1.704-1(b)(2)(iv)(i), and not otherwise
taken into account in computing Profits or Losses pursuant to this
definition, shall be subtracted from such taxable income or loss;
c. Gain or loss resulting from any disposition of Partnership
property with respect to which gain or loss is recognized for federal
income tax purposes shall be computed by reference to the Book Value of the
property disposed of notwithstanding that the adjusted tax basis of such
property differs from such Book Value;
d. In lieu of the depreciation, amortization, and other cost
recovery deductions taken into account in computing such taxable income or
loss, there shall be taken into account Depreciation for such Fiscal Year
or other period, computed in accordance with the definition of
"Depreciation" herein; and
e. In the event that any item of income, gain, loss or deduction
that has been included in the initial computation of Profit or Loss is
subject to the special allocation rules of Sections 5.2(C) and 5.2(D),
Profit or Loss shall be recomputed without regard to such item.
PROTECTED AMOUNT: With respect to any Contributor Partner, the amount
set forth or otherwise described opposite the name of such Contributor Partner
on Exhibit 1D attached hereto and made a part hereof, as such Exhibit may be
modified from time to time by an amendment to the Partnership Agreement or by
execution of a written instrument by and between the Contributor Partner being
affected thereby and the General Partner, acting on behalf of the Partnership
and without the prior written consent of the Limited Partners (whether or not
Contributor Partners other than the Contributor Partner being affected thereby);
provided, however, that no Contributor Partner shall be considered to have a
Protected Amount from and following the first date upon which such Partner is no
longer a Partner of the Partnership.
RECORD DATE: The record date established by the General Partner for
distributions pursuant to Section 5.3 hereof, which record date shall be the
same as the record date established by the General Partner for a distribution to
its stockholders of some or all of its portion of such distribution.
RECOURSE LIABILITIES: The amount of liabilities owed by the Partnership
(other than nonrecourse liabilities and liabilities to which Partner Nonrecourse
Deductions are attributable in accordance with Treasury Regulations Section
1.704-2(i)).
REDEEMING PARTY: A Limited Partner or Assignee (other than the General
Partner) who tenders Partnership Units for redemption pursuant to a Redemption
Notice.
REDEMPTION DATE: The date for redemption of Partnership Units as set
forth in Section 9.2.
REDEMPTION EFFECTIVE DATE: The first date on which a Redeeming Party
may elect to redeem Partnership Units, which date shall be the later of (i) the
first anniversary of the date such Partnership Units are issued and (ii) the
effective date of any registration statement filed by the Partnership with
respect to the REIT Shares to be issued upon redemption of Partnership Units by
a Redeeming Party.
REDEMPTION NOTICE: A Notice to the General Partner by a Redeeming
Party, substantially in the form attached as Exhibit 2, pursuant to which the
Redeeming Party requests the redemption of Partnership Units in accordance with
Article IX.
16
-12-
REDEMPTION OBLIGATION: The obligation of the Partnership to redeem the
Partnership Units as set forth in Section 9.1(A).
REDEMPTION PERIOD: The 45-day period immediately following the filing
with the SEC by the General Partner of an annual report of the General Partner
on Form 10-K or a quarterly report of the General Partner on Form 10-Q or such
other period or periods as the General Partner may otherwise determine.
REDEMPTION PRICE: As defined in Section 8.4 hereof.
REDEMPTION RESTRICTION: A restriction on the ability of the Partnership
to redeem the Partnership Units as set forth in Section 9.1(A).
REGISTRATION RIGHTS AGREEMENT: A Registration Rights Agreement,
substantially in the form of Exhibit 3 hereto, pursuant to which First
Industrial will agree to register under the Securities Act of 1933, as amended,
REIT Shares issued in connection with Share Payments made under Article IX
hereof.
REIT: A real estate investment trust, as defined in Code Section 856.
REIT CHARTER: The Articles of Incorporation of First Industrial filed
with the Department of Assessments and Taxation of the State of Maryland on
August 10, 1993, as the same may be amended or restated and in effect from time
to time.
REIT SHARE: A share of common stock representing an ownership interest
in the General Partner.
REIT SHARE RIGHTS: Rights to acquire additional REIT Shares issued to
all holders of REIT Shares, whether in the form of rights, options, warrants or
convertible or exchangeable securities, to the extent the same have been issued
without additional consideration after the initial acquisition of such REIT
Shares.
SEC: The Securities and Exchange Commission.
SERIES B PREFERRED SHARES: 8 3/4% Series B Cumulative Preferred Stock
of First Industrial Realty Trust, Inc.
SERIES C PREFERRED SHARES: 8 5/8% Series C Cumulative Preferred Stock
of First Industrial Realty Trust, Inc.
SERIES D PREFERRED SHARES: 7.95% Series D Cumulative Preferred Stock of
First Industrial Realty Trust, Inc.
SERIES E PREFERRED SHARES: 7.90% Series E Cumulative Preferred Stock of
First Industrial Realty Trust, Inc.
SHARE PAYMENT: The payment to a Redeeming Party of a number of REIT
Shares determined by multiplying (i) the number of Partnership Units tendered
for redemption by such Redeeming Party pursuant to a validly proffered
Redemption Notice by (ii) the Conversion Factor. In the event the General
Partner grants any REIT Share Rights prior to such payment, any Share Payment
shall include for the Redeeming Party his ratable share of such REIT Share
Rights other than REIT Share Rights which have expired.
17
-13-
SUBSIDIARY: 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.
SUBSTITUTED LIMITED PARTNER: That Person or those Persons admitted to
the Partnership as substitute Limited Partner(s), in accordance with the
provisions of this Agreement. A Substituted Limited Partner, upon his admission
as such, shall succeed to the rights, privileges and liabilities of his
predecessor in interest as a Limited Partner.
SUCCESSOR GENERAL PARTNER: Any Person who is admitted to the
Partnership as substitute General Partner pursuant to this Agreement. A
Successor General Partner, upon its admission as such, shall succeed to the
rights, privileges and liabilities of its predecessor in interest as General
Partner, in accordance with the provisions of the Act.
TAX MATTERS PARTNER: The General Partner or such other Partner who
becomes Tax Matters Partner pursuant to the terms of this Agreement.
TERMINATING CAPITAL TRANSACTION: The sale or other disposition of all
or substantially all of the Partnership Assets or a related series of
transactions that, taken together, result in the sale or other disposition of
all or substantially all of the Partnership Assets.
THRESHOLD PERCENTAGE: A percentage equal to 85% on the LB Closing Date
and thereafter adjusted upwards (but not downwards) immediately prior to each
solicitation of any vote of, or the seeking of any consent, approval or waiver
from, the Limited Partners generally, to the sum of (i) 85% and (ii) the number
of percentage points equal to the positive difference, if any, between (a) the
aggregate Percentage Interest represented by the LB Units immediately following
the LB Closing Date and (b) the aggregate Percentage Interest represented by the
LP Units immediately prior to any such solicitation. For example, if on the LB
Closing Date the LB Units represent a 10% aggregate Percentage Interest, and if
immediately prior to a solicitation the Threshold Percentage is 85% and the
aggregate Percentage Interest represented by the LB Units is 8%, the Threshold
Percentage would be increased to 87% (85% + (10% - 8%)).
TRANSFER: With respect to any Partnership Unit shall mean a transaction
in which a Partner assigns his Partnership Interest to another Person and
includes any sale, assignment, gift, pledge, mortgage, exchange, hypothecation,
encumbrance or other disposition by law or otherwise; provided, however, the
redemption of any Partnership Interest pursuant to Article IX hereof shall not
constitute a "transfer" for purposes hereof.
TRANSFER RESTRICTION DATE: June 23, 1995.
TREASURY REGULATIONS: The Income Tax Regulations promulgated under the
Code, as such regulations may be amended from time to time (including
corresponding provisions of succeeding regulations).
UNIT VALUE: With respect to any Partnership Unit, the average of the
daily market price for a REIT Share for the ten (10) consecutive trading days
immediately preceding the date of receipt of a Redemption Notice by the General
Partner multiplied by the Conversion Factor. If the REIT Shares are traded on a
securities exchange or the NASDAQ-National Market System, the market price for
each such trading day shall be the reported last sale price on such day or, if
no sales take place on such day, the average of the closing bid and asked prices
on such day. If the REIT Shares are not traded on a securities exchange or the
NASDAQ-National Market System, the market price for each such trading day shall
be determined by the General Partner using any reasonable method of
18
-14-
valuation. If a Share Payment would include any REIT Share Rights, the value of
such REIT Share Rights shall be determined by the General Partner using any
reasonable method of valuation, taking into account the Unit Value determined
hereunder and the factors used to make such determination and the value of such
REIT Share Rights shall be included in the Unit Value.
VOTING TERMINATION DATE: The first date after the LB Closing Date on
which either (i) the General Partner holds 90% or more of all Partnership Units
or (ii) the aggregate number of Partnership Units held by the General Partner
and the LB Partners is less than the product of the Threshold Percentage and the
total number of Partnership Units then outstanding.
SECTION 1.2 RULES OF CONSTRUCTION. The following rules of construction
shall apply to this Agreement:
(A) All section headings in this Agreement are for convenience of
reference only and are not intended to qualify the meaning of any section.
(B) All personal pronouns used in this Agreement, whether used in
the masculine, feminine or neuter gender, shall include all other genders, the
singular shall include the plural, and vice versa, as the context may require.
(C) Each provision of this Agreement shall be considered severable
from the rest, and if any provision of this Agreement or its application to any
Person or circumstances shall be held invalid and contrary to any existing or
future law or unenforceable to any extent, the remainder of this Agreement and
the application of any other provision to any Person or circumstances shall not
be affected thereby and shall be interpreted and enforced to the greatest extent
permitted by law so as to give effect to the original intent of the parties
hereto.
(D) Unless otherwise specifically and expressly limited in the
context, any reference herein to a decision, determination, act, action,
exercise of a right, power or privilege, or other procedure by the General
Partner shall mean and refer to the decision, determination, act, action,
exercise or other procedure by the General Partner in its sole and absolute
discretion.
--------------------------------------------------------------------------------
ARTICLE II - CONTINUATION
--------------------------------------------------------------------------------
SECTION 2.1 CONTINUATION. The Partners hereby continue the Partnership
as a limited partnership under the Act. The General Partner shall take all
action required by law to perfect and maintain the Partnership as a limited
partnership under the Act and under the laws of all other jurisdictions in which
the Partnership may elect to conduct business, including but not limited to the
filing of amendments to the Certificate with the Delaware Secretary of State,
and qualification of the Partnership as a foreign limited partnership in the
jurisdictions in which such qualification shall be required, as determined by
the General Partner. The General Partner shall also promptly register the
Partnership under applicable assumed or fictitious name statutes or similar
laws.
SECTION 2.2 NAME. The name of the Partnership is First Industrial, L.P.
The General Partner may adopt such assumed or fictitious names as it deems
appropriate in connection with the qualifications and registrations referred to
in Section 2.1.
19
-15-
SECTION 2.3 PLACE OF BUSINESS; REGISTERED AGENT. The principal office
of the Partnership is located at 000 X. Xxxxxx Xxxxx, Xxxxx 0000, Xxxxxxx,
Xxxxxxxx 00000, which office may be changed to such other place as the General
Partner may from time to time designate. The Partnership may establish offices
for the Partnership within or without the State of Delaware as may be determined
by the General Partner. The initial registered agent for the Partnership in the
State of Delaware is The Corporation Trust Company, whose address is c/o
Corporation Trust Center, 0000 Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000.
--------------------------------------------------------------------------------
ARTICLE III - BUSINESS PURPOSE
--------------------------------------------------------------------------------
SECTION 3.1 BUSINESS. The business of the Partnership shall be (i)
conducting any business that may be lawfully conducted by a limited partnership
pursuant to the Act including, without limitation, acquiring, owning, managing,
developing, leasing, marketing, operating and, if and when appropriate, selling,
industrial properties, (ii) entering into any partnership, joint venture or
other relationship to engage in any of the foregoing or the ownership of
interests in any entity engaged in any of the foregoing, (iii) making loans,
guarantees, indemnities or other financial accommodations and borrowing money
and pledging its assets to secure the repayment thereof, (iv) to do any of the
foregoing with respect to any Affiliate or Subsidiary and (v) doing anything
necessary or incidental to the foregoing; provided, however, that business of
the Partnership shall be limited so as to permit the General Partner to elect
and maintain its status as a REIT (unless the General Partner determines no
longer to qualify as a REIT).
SECTION 3.2 AUTHORIZED ACTIVITIES. In carrying out the purposes of the
Partnership, but subject to all other provisions of this Agreement, the
Partnership is authorized to engage in any kind of lawful activity, and perform
and carry out contracts of any kind, necessary or advisable in connection with
the accomplishment of the purposes and business of the Partnership described
herein and for the protection and benefit of the Partnership; provided that the
General Partner shall not be obligated to cause the Partnership to take, or
refraining from taking, any action which, in the judgment of the General
Partner, (i) could adversely affect the ability of the General Partner to
qualify and continue to qualify as a REIT, (ii) could subject the General
Partner to additional taxes under Code Section 857 or 4981 or (iii) could
violate any law or regulation of any governmental body or agency having
jurisdiction over the General Partner or its securities.
--------------------------------------------------------------------------------
ARTICLE IV - CAPITAL CONTRIBUTIONS
--------------------------------------------------------------------------------
SECTION 4.1 CAPITAL CONTRIBUTIONS.
(A) Upon the contribution to the Partnership of property in
accordance with a Contribution Agreement, Partnership Units shall be issued in
accordance with, and as contemplated by, such Contribution Agreement, and the
Persons receiving such Partnership Units shall become Partners and shall be
deemed to have made a Capital Contribution as set forth on Exhibit 1. Exhibit 1
also sets forth the initial number of Partnership Units owned by each Partner
and the Percentage Interest of each Partner, which Percentage Interest shall be
adjusted from time to time by the General Partner to reflect the issuance of
additional Partnership Units, the redemption of Partnership Units, additional
Capital Contributions and similar events having an effect on a Partner's
Percentage Interest. Except as set forth in Section 4.2 (regarding issuance of
additional Partnership Units) or Section 7.6 (regarding withholding
obligations), no Partner shall be required under any circumstances to contribute
to the capital of the Partnership any amount beyond that sum required pursuant
to this Article IV.
20
-16-
(B) Anything in the foregoing Section 4.1(A) or elsewhere in this
Agreement notwithstanding, the Partnership Units held by the General Partner
shall, at all times, be deemed to be General Partner units and shall constitute
the General Partner Interest.
SECTION 4.2 ADDITIONAL PARTNERSHIP INTERESTS.
(A) The Partnership may issue additional limited partnership
interests in the form of Partnership Units for any Partnership purpose at any
time or from time to time, to any Partner or other Person (other than the
General Partner, except in accordance with Section 4.2(B) below).
(B) The Partnership also may from time to time issue to the
General Partner additional Partnership Units or other Partnership Interests in
such classes and having such designations, preferences and relative rights
(including preferences and rights senior to the existing Limited Partner
Interests) as shall be determined by the General Partner in accordance with the
Act and governing law. Except as provided in Article IX, any such issuance of
Partnership Units or Partnership Interests to the General Partner shall be
conditioned upon (i) the undertaking by the General Partner of a related
issuance of its capital stock (with such shares having designations, rights and
preferences such that the economic rights of the holders of such capital stock
are substantially similar to the rights of the additional Partnership Interests
issued to the General Partner) and the General Partner making a Capital
Contribution (a) in an amount equal to the net proceeds raised in the issuance
of such capital stock, in the event such capital stock is sold for cash or cash
equivalents or (b) the property received in consideration for such capital
stock, in the event such capital stock is issued in consideration for other
property or (ii) the issuance by the General Partner of capital stock under any
stock option or bonus plan and the General Partner making a Capital Contribution
in an amount equal to the exercise price of the option exercised pursuant to
such stock option or other bonus plan.
(C) Except as contemplated by Article IX (regarding redemptions)
or Section 4.2(B), the General Partner shall not issue any (i) additional REIT
Shares, (ii) rights, options or warrants containing the right to subscribe for
or purchase REIT Shares or (iii) securities convertible or exchangeable into
REIT Shares (collectively, "Additional REIT Securities") other than to all
holders of REIT Shares, pro rata, unless (x) the Partnership issues to the
General Partner (i) Partnership Interests, (ii) rights, options or warrants
containing the right to subscribe for or purchase Partnership Interests or (iii)
securities convertible or exchangeable into Partnership Interests such that the
General Partner receives an economic interest in the Partnership substantially
similar to the economic interest in the General Partner represented by the
Additional REIT Securities and (y) the General Partner contributes to the
Partnership the net proceeds from, or the property received in consideration
for, the issuance of the Additional REIT Securities and the exercise of any
rights contained in any Additional REIT Securities.
SECTION 4.3 NO THIRD PARTY BENEFICIARIES. The foregoing provisions of
this Article IV are not intended to be for the benefit of any creditor of the
Partnership or other Person to whom any debts, liabilities or obligations are
owed by (or who otherwise has any claim against) the Partnership or any of the
Partners and no such creditor or other Person shall obtain any right under any
such foregoing provision against the Partnership or any of the Partners by
reason of any debt, liability or obligation (or otherwise).
SECTION 4.4 CAPITAL ACCOUNTS.
(A) The Partnership shall establish and maintain a separate
Capital Account for each Partner in accordance with Code Section 704 and
Treasury Regulations Section 1.704-1(b)(2)(iv). The Capital Account of each
Partner shall be credited with:
21
-17-
(1) the amount of all Capital Contributions made to the
Partnership by such Partner in accordance with this Agreement; plus
(2) all income and gain of the Partnership computed in
accordance with this Section 4.4 and allocated to such Partner pursuant to
Article V (including for purposes of this Section 4.4(A), income and gain exempt
from tax);
and shall be debited with the sum of:
(1) all losses or deductions of the Partnership computed in
accordance with this Section 4.4 and allocated to such Partner pursuant to
Article V,
(2) such Partner's distributive share of expenditures of the
Partnership described in Code Section 705(a)(2)(B), and
(3) all cash and the Agreed Value (reduced to take into
account the amount of any related indebtedness assumed by the Partner, or to
which the distributed property is subject) of any property actually distributed
or deemed distributed by the Partnership to such Partner pursuant to the terms
of this Agreement.
Any reference in any section or subsection of this Agreement to the
Capital Account of a Partner shall be deemed to refer to such Capital Account as
the same may be credited or debited from time to time as set forth above.
(B) For purposes of computing the amount of any item of income,
gain, deduction or loss to be reflected in the Partners' Capital Accounts, the
determination, recognition and classification of each such item shall be the
same as its determination, recognition and classification for federal income tax
purposes, determined in accordance with Code Section 703(a) and accounting for
those adjustments set forth in the definition of Profits and Losses, with the
following additional adjustments:
(1) the computation of all items of income, gain, loss and
deduction shall be made without regard to any Code Section 754 election that may
be made by the Partnership, except to the extent required in accordance with the
provisions of Treasury Regulations Section 1.704-1(b)(2)(iv)(m); and
(2) in the event the Book Value of any Partnership Asset is
adjusted pursuant to Section 4.4(D) below, the amount of such adjustment shall
be treated as gain or loss from the disposition of such asset.
(C) Any transferee of a Partnership Interest shall succeed to a
pro rata portion of the transferor's Capital Account transferred.
(D) Consistent with the provisions of Treasury Regulations Section
1.704-1(b)(2)(iv)(f), (i) immediately prior to the acquisition of an additional
Partnership Interest by any new or existing Partner in connection with the
contribution of money or other property (other than a de minimis amount) to the
Partnership, (ii) immediately prior to the distribution by the Partnership to a
Partner of Partnership property (other than a de minimis amount) as
consideration for a Partnership Interest and (iii) immediately prior to the
liquidation of the Partnership as defined in Treasury Regulations Section
1.704-1(b)(2)(ii)(g), the Book Value of all Partnership Assets shall be revalued
upward or downward to reflect the fair market value of each such Partnership
Asset as determined by the General Partner using such reasonable method of
valuation as it may adopt.
22
-18-
(E) The foregoing provisions of this Section 4.4 are intended to
comply with Treasury Regulations Section 1.704-1(b) and shall be interpreted and
applied in a manner consistent with such Treasury Regulations. In the event the
General Partner shall determine that it is prudent to modify the manner in which
the Partners' Capital Accounts are computed hereunder in order to comply with
such Treasury Regulations, the General Partner may make such modification if
such modification is not likely to have a material effect on the amount
distributable to any Partner under the terms of this Agreement and the General
Partner notifies the other Partners in writing of such modification prior to
making such modification.
SECTION 4.5 RETURN OF CAPITAL ACCOUNT; INTEREST. Except as otherwise
specifically provided in this Agreement, (i) no Partner shall have any right to
withdraw or reduce its Capital Contributions or Capital Account, or to demand
and receive property other than cash from the Partnership in return for its
Capital Contributions or Capital Account; (ii) no Partner shall have any
priority over any other Partners as to the return of its Capital Contributions
or Capital Account; (iii) any return of Capital Contributions or Capital
Accounts to the Partners shall be solely from the Partnership Assets, and no
Partner shall be personally liable for any such return; and (iv) no interest
shall be paid by the Partnership on Capital Contributions or on balances in
Partners' Capital Accounts.
SECTION 4.6 PREEMPTIVE RIGHTS. No Person shall have any preemptive or
similar rights with respect to the issuance or sale of additional Partnership
Units.
SECTION 4.7 REIT SHARE PURCHASES. If the General Partner acquires
additional REIT Shares pursuant to Article IX of the REIT Charter, the
Partnership shall purchase from the General Partner that number of Partnership
Units determined by applying the Conversion Multiple to the number of REIT
Shares purchased by the General Partner at the same price and on the same terms
as those upon which the General Partner purchased such REIT Shares.
--------------------------------------------------------------------------------
ARTICLE V - ALLOCATIONS AND DISTRIBUTIONS
--------------------------------------------------------------------------------
SECTION 5.1 LIMITED LIABILITY. For bookkeeping purposes, the Profits of
the Partnership shall be shared, and the Losses of the Partnership shall be
borne, by the Partners as provided in Section 5.2 below; provided, however, that
except as expressly provided in this Agreement, neither any Limited Partner (in
its capacity as a Limited Partner), the Class B Limited Partner (in its capacity
as Class B Limited Partner), the Class C Limited Partner (in its capacity as
Class C Limited Partner), the Class D Limited Partner (in its capacity as Class
D Limited Partner) nor the Class E Limited Partner (in its capacity as Class E
Limited Partner) shall be personally liable for losses, costs, expenses,
liabilities or obligations of the Partnership in excess of its Capital
Contribution required under Article IV hereof.
SECTION 5.2 PROFITS, LOSSES AND DISTRIBUTIVE SHARES.
(A) PROFITS. After giving effect to the special allocations, if
any, provided in Section 5.2(C), (D), (I), (J) and (K) Profits in each Fiscal
Year shall be allocated in the following order:
(1) First, to the General Partner until the cumulative Profits
allocated to the General Partner under this Section 5.2(A)(1), whether in the
current or in any prior Fiscal Year equal the cumulative Losses allocated to
such Partner under Section 5.2(B)(6), whether in the current or in any prior
Fiscal Year;
23
-19-
(2) Second, to the Class B Limited Partner, Class C Limited
Partner, Class D Limited Partner and Class E Limited Partner, in proportion to
the cumulative Losses allocated to each such Partner under Section 5.2(B)(5),
whether in the current or in any prior Fiscal Year until the Cumulative Profits
allocated to each such Partner under this Section 5.2(A)(2) equal the cumulative
Losses allocated to each such Partner under Section 5.2(B)(5), whether in the
current or in any prior Fiscal Year;
(3) Third, to each Partner in proportion to the cumulative
Losses allocated to such Partner under Section 5.2(B)(4), whether in the current
or in any prior Fiscal Year, until the cumulative Profits allocated to such
Partner under this Section 5.2(A)(3) equal the cumulative Losses allocated to
such Partner under Section 5.2(B)(4), whether in the current or in any prior
Fiscal Year;
(4) Fourth, to the General Partner until the cumulative
Profits allocated to the General Partner under this Section 5.2(A)(4), whether
in the current or in any prior Fiscal Year equal the cumulative Losses allocated
to such Partner under Section 5.2(B)(3), whether in the current or in any prior
Fiscal Year;
(5) Fifth, to each Partner in proportion to the cumulative
Losses allocated to such Partner under Section 5.2(B)(2), whether in the current
or in any prior Fiscal Year, until the cumulative Profits allocated to such
Partner under this Section 5.2(A)(5) equal the cumulative Losses allocated to
such Partner under Section 5.2(B)(2), whether in the current or in any prior
Fiscal Year;
(6) Sixth, to each Partner in proportion to the cumulative
Losses allocated to such Partner under Section 5.2(B)(1), whether in the current
or in any prior Fiscal Year, until the cumulative Profits allocated to such
Partner under this Section 5.2(A)(6) equal the cumulative Losses allocated to
such Partner under Section 5.2(B)(1), whether in the current or in any prior
Fiscal Year; and
(7) Then, the balance, if any, to the Partners in proportion
to their respective Percentage Interests.
(B) LOSSES. After giving effect to the special allocations, if
any, provided in Section 5.2(C), (D), (I), (J) and (K), Losses in each Fiscal
Year shall be allocated in the following order of priority:
(1) First, to the Partners (other than the Class B Limited
Partner, the Class C Limited Partner, the Class D Limited Partner and the Class
E Limited Partner), in proportion to their respective Percentage Interests, but
not in excess of the positive Adjusted Capital Account balance of any Partner
prior to the allocation provided for in this Section 5.2(B)(1);
(2) Second, to the Partners (other than the Class B Limited
Partner, the Class C Limited Partner, the Class D Limited Partner and the Class
E Limited Partner) with positive Adjusted Capital Account balances prior to the
allocation provided for in this Section 5.2(B)(2), in proportion to the amount
of such balances until all such balances are reduced to zero;
(3) Third, to the General Partner until (i) the excess of (a)
the cumulative Losses allocated under this Section 5.2(B)(3), whether in the
current or in any prior Fiscal Year, over (b) the cumulative Profits allocated
under Section 5.2(a)(4), whether in the current or in any prior Fiscal Year,
equals (ii) the excess of (a) the amount of Recourse Liabilities over (b) the
Aggregate Protected Amount;
(4) Fourth, to and among the Contributor Partners, in
accordance with their respective Protected Amounts, until the excess of (a) the
cumulative Losses allocated under this Section 5.2(B)(4), whether in the current
24
-20-
or in any prior Fiscal Year, over (b) the cumulative Profits allocated under
5.2(A)(3), whether in the current or in any prior Fiscal Year, equals the
Aggregate Protected Amount (as of the close of the Fiscal Year to which such
allocation relates);
(5) Fifth, to the Class B Limited Partner, the Class C Limited
Partner, the Class D Limited Partner and the Class E Limited Partner, in
accordance with their respective Adjusted Capital Accounts, until their Adjusted
Capital Accounts are reduced to zero; and
(6) Thereafter, to the General Partner;
provided, however, (i) that, from and following the first Fiscal Year upon which
a Contributor Partner is no longer a Partner of the Partnership, the provisions
of this Section 5.2(B) shall be null, void and without further force and effect
with respect to such Contributor Partner; (ii) that, this Section 5.2(B) shall
control, notwithstanding any reallocation or adjustment of taxable income, loss
or other items by the Internal Revenue Service or any other taxing authority;
provided, however, that neither the Partnership nor the General Partner (nor any
of their respective affiliates) is required to indemnify any Contributor Partner
(or its affiliates) for the loss of any tax benefit resulting from any
reallocation or adjustment of taxable income, loss or other items by the
Internal Revenue Service or other taxing authority; and (iii) that, during such
period as there are Contributor Partners in the Partnership, the provisions of
Section 5.2(B)(4) shall not be amended in a manner which adversely affects the
Contributor Partners (without the consent of each Contributor Partner so
affected).
(C) SPECIAL ALLOCATIONS. Except as otherwise provided in this
Agreement, the following special allocations will be made in the following order
and priority:
(1) PARTNERSHIP MINIMUM GAIN CHARGEBACK. Notwithstanding any
other provision of this Article V, if there is a net decrease in Partnership
Minimum Gain during any tax year or other period for which allocations are made,
each Partner will be specially allocated items of Partnership income and gain
for that tax year or other period (and, if necessary, subsequent periods) in an
amount equal to such Partner's share of the net decrease in Partnership Minimum
Gain during such tax year or other period determined in accordance with Treasury
Regulations Section 1.704-2(g). Allocations pursuant to the preceding sentence
shall be made in proportion to the respective amounts required to be allocated
to each Partner pursuant thereto. The items to be so allocated shall be
determined in accordance with Treasury Regulations Sections 1.704-2(f)(6) and
1.704-2(j)(2). This Section 5.2(C)(1) is intended to comply with the minimum
gain chargeback requirements set forth in Treasury Regulations Section
1.704-2(f) and shall be interpreted consistently therewith, including the
exceptions to the minimum gain chargeback requirement set forth in Treasury
Regulations Section 1.704-2(f) and (3). If the General Partner concludes, after
consultation with tax counsel, that the Partnership meets the requirements for a
waiver of the minimum gain chargeback requirement as set forth in Treasury
Regulations Section 1.704-2(f)(4), the General Partner may take steps reasonably
necessary or appropriate in order to obtain such waiver.
(2) PARTNER NONRECOURSE DEBT MINIMUM GAIN CHARGEBACK.
Notwithstanding any other provision of this Section (other than Section
5.2(C)(1) which shall be applied before this Section 5.2(C)(2)), if there is a
net decrease in Partner Minimum Gain during any tax year or other period for
which allocations are made, each Partner with a share of Partner Minimum Gain
determined in accordance with Treasury Regulations Section 1.704- 2(i)(5) shall
be specially allocated items of Partnership income and gain for that period
(and, if necessary, subsequent periods) in an amount equal to such Partner's
share of the net decrease in Partner Minimum Gain determined in accordance with
Treasury Regulations Section 1.704-2(i)(4). The items to be so allocated shall
be determined in accordance with Treasury Regulations Sections 1.704-2(i)(4) and
1.704-2(j)(2)(ii). This Section 5.2(C)(2) is intended to comply with the minimum
gain chargeback requirements of Treasury Regulations Section
25
-21-
1.704-2(i)(4) and shall be interpreted consistently therewith, including the
exceptions set forth in Treasury Regulations Section 1.704-2(f)(2) and (3) to
the extent such exceptions apply to Treasury Regulations Sections 1.704-2(i)(4).
If the General Partner concludes, after consultation with tax counsel, that the
Partnership meets the requirements for a waiver of the Partner Minimum Gain
chargeback requirement set forth in Treasury Regulation 1.704-2(f), but only to
the extent such exception applies to Treasury Regulations Section 1.704-2(i)(4),
the General Partner may take steps necessary or appropriate to obtain such
waiver.
(3) QUALIFIED INCOME OFFSET. A Partner who unexpectedly
receives any adjustment, allocation or distribution described in Treasury
Regulations Section 1.704-1(b)(2)(ii)(d)(4), (5) or (6) will be specially
allocated items of Partnership income and gain in an amount and manner
sufficient to eliminate, to the extent required by Treasury Regulations
1.704-1(b)(2)(ii)(d), the Adjusted Capital Account Deficit of the Partner as
quickly as possible, provided that an allocation pursuant to this Section
5.2(C)(3) shall be made if and only to the extent that such Partner would have
an Adjusted Capital Account Deficit after all other allocations provided for in
this Article V have been tentatively made as if this Section 5.2(C)(3) were not
contained in this Agreement.
(4) PARTNERSHIP NONRECOURSE DEDUCTIONS. Partnership
Nonrecourse Deductions for any taxable year or other period for which
allocations are made will be allocated among the Partners in proportion to their
respective Partnership Interests in the Partnership.
(5) PARTNER NONRECOURSE DEDUCTIONS. Notwithstanding anything
to the contrary in this Agreement, any Partner Nonrecourse Deductions for any
taxable year or other period for which allocations are made will be allocated to
the Partner who bears the economic risk of loss with respect to the liability to
which the Partner Nonrecourse Deductions are attributable in accordance with
Treasury Regulations Section 1.704-2(i).
(6) CODE SECTION 754 ADJUSTMENTS. To the extent an adjustment
to the adjusted tax basis of any Partnership asset under Code Section 734(b) or
743(b) is required to be taken into account in determining Capital Accounts
under Treasury Regulations Section 1.704-1(b)(2)(iv)(m)(2) or (4), the amount of
the adjustment to the Capital Accounts will be treated as an item of gain (if
the adjustment increases the basis of the asset) or loss (if the adjustment
decreases the basis of the asset), and the gain or loss will be specially
allocated to the Partners in a manner consistent with the manner in which their
Capital Accounts are required to be adjusted under Treasury Regulations Section
1.704-1(b)(2)(iv)(m).
(7) DEPRECIATION RECAPTURE. In the event there is any
recapture of Depreciation or investment tax credit, the allocation thereof shall
be made among the Partners in the same proportion as the deduction for such
Depreciation or investment tax credit was allocated.
(8) INTEREST IN PARTNERSHIP. Notwithstanding any other
provision of this Agreement, no allocation of Profit or Loss (or item of Profit
or Loss) will be made to a Partner if the allocation would not have "economic
effect" under Treasury Regulations Section 1.704-1(b)(2)(ii)(a) or otherwise
would not be in accordance with the Partner's interest in the Partnership within
the meaning of Treasury Regulations Section 1.704-1(b)(3).
(D) CURATIVE ALLOCATIONS. The allocations set forth in Section
5.2(C)(1) through (8) (the "Regulatory Allocations") are intended to comply with
certain requirements of Treasury Regulations Sections 1.704-1(b) and 1.704-2.
The Regulatory Allocations may not be consistent with the manner in which the
Partners intend to divide Partnership distributions. Accordingly, the General
Partner is authorized to further allocate Profits, Losses, and other items among
the Partners in a reasonable manner so as to prevent the Regulatory Allocations
from distorting the manner in which Partnership distributions would be divided
among the Partners under Section 5.3, but for application of the Regulatory
Allocations. In general, the reallocation will be accomplished by specially
allocating
26
-22-
other Profits, Losses and items of income, gain, loss and deduction, to the
extent they exist, among the Partners so that the net amount of the Regulatory
Allocations and the special allocations to each Partner is zero. The General
Partner may accomplish this result in any reasonable manner that is consistent
with Code Section 704 and the related Treasury Regulations.
(E) TAX ALLOCATIONS.
(1) Except as otherwise provided in Section 5.2(E)(2), each
item of income, gain, loss and deduction shall be allocated for federal income
tax purposes in the same manner as each correlative item of income, gain, loss
or deduction, is allocated for book purposes pursuant to the provisions of
Section 5.1 hereof.
(2) Notwithstanding anything to the contrary in this Article
V, in an attempt to eliminate any Book-Tax Disparity with respect to a
Contributed Property, items of income, gain, loss or deduction with respect to
each such property shall be allocated for federal income tax purposes among the
Partners as follows:
(a) Depreciation, Amortization and Other Cost Recovery
Items. In the case of each Contributed Property with a
Book-Tax Disparity, any item of depreciation, amortization or
other cost recovery allowance attributable to such property
shall be allocated as follows: (x) first, to Partners (the
"Non-Contributing Partners") other than the Partners who
contributed such property to the Partnership (or are deemed to
have contributed the property pursuant to Section 4.1(A) (the
"Contributing Partners") in an amount up to the book
allocation of such items made to the NonContributing Partners
pursuant to Section 5.1 hereof, pro rata in proportion to the
respective amount of book items so allocated to the
Non-Contributing Partners pursuant to Section 5.1 hereof; and
(y) any remaining depreciation, amortization or other cost
recovery allowance to the Contributing Partners in proportion
to their Percentage Interests. In no event shall the total
depreciation, amortization or other cost recovery allowance
allocated hereunder exceed the amount of the Partnership's
depreciation, amortization or other cost recovery allowance
with respect to such property.
(b) Gain or Loss on Disposition. In the event the
Partnership sells or otherwise disposes of a Contributed
Property with a Book-Tax Disparity, any gain or loss
recognized by the Partnership in connection with such sale or
other disposition shall be allocated among the Partners as
follows: (x) first, any gain or loss shall be allocated to the
Contributing Partners in proportion to their Percentage
Interests to the extent required to eliminate any Book-Tax
Disparity with respect to such property; and (y) any remaining
gain or loss shall be allocated among the Partners in the same
manner that the correlative items of book gain or loss are
allocated among the Partners pursuant to Section 5.1 hereof.
(3) In the event the Book Value of a Partnership Asset
(including a Contributed Property) is adjusted pursuant to Section 4.4(D)
hereof, all items of income, gain, loss or deduction in respect of such property
shall be allocated for federal income tax purposes among the Partners in the
same manner as provided in Section 5.2(E)(2) hereof to take into account any
variation between the fair market value of the property, as determined by the
General Partner using such reasonable method of valuation as it may adopt, and
the Book Value of such property, both determined as of the date of such
adjustment.
(4) The General Partner shall have the authority to elect
alternative methods to eliminate the Book- Tax Disparity with respect to one or
more Contributed Properties, as permitted by Treasury Regulations Sections
1.704-3 and 1.704-3T, and such election shall be binding on all of the Partners.
27
-23-
(5) The Partners hereby intend that the allocation of tax
items pursuant to this Section 5.2(E) comply with the requirements of Code
Section 704(c) and Treasury Regulations Sections 1.704-3 and 1.704-3T.
(6) The allocation of items of income, gain, loss or deduction
pursuant to this Section 5.2(E) are solely for federal, state and local income
tax purposes, and the Capital Account balances of the Partners shall be adjusted
solely for allocations of "book" items in respect of Partnership Assets pursuant
to Section 5.1 hereof.
(F) OTHER ALLOCATION RULES. The following rules will apply to the
calculation and allocation of Profits, Losses and other items:
(1) Except as otherwise provided in the Agreement, all
Profits, Losses and other items allocated to the Partners will be allocated
among them in proportion to their Percentage Interests.
(2) For purposes of determining the Profits, Losses or any
other item allocable to any period, Profits, Losses and other items will be
determined on a daily, monthly or other basis, as determined by the General
Partner using any permissible method under Code Section 706 and the related
Treasury Regulations.
(3) Except as otherwise provided in this Agreement, all items
of Partnership income, gain, loss and deduction, and other allocations not
provided for in this Agreement will be divided among the Partners in the same
proportions as they share Profits and Losses, provided that any credits shall be
allocated in accordance with Treasury Regulations Section 1.704-1(b)(4)(ii).
(4) For purposes of Treasury Regulations Section 1.752-3(a),
the Partners hereby agree that any Nonrecourse Liabilities of the Partnership in
excess of the sum of (i) the Partnership Minimum Gain and (ii) the aggregate
amount of taxable gain that would be allocated to the Partners under Section
704(c) (or in the same manner as Section 704(c) in connection with a revaluation
of Partnership property) if the Partnership disposed of (in a taxable
transaction) all Partnership property subject to one or more Nonrecourse
Liabilities of the Partnership in full satisfaction of such Liabilities and for
no other consideration, shall be allocated among the Partners in accordance with
their respective shares of Profits. The General Partner shall have discretion in
any Fiscal Year to allocate such excess Nonrecourse Liabilities among the
Partners (a) in a manner reasonably consistent with allocations (that have
substantial economic effect) of some other significant item of Partnership
income or gain or (b) in accordance with the manner in which it is reasonably
expected that the deductions attributable to the excess Nonrecourse Liabilities
will be allocated.
(G) PARTNER ACKNOWLEDGMENT. The Partners agree to be bound by the
provisions of this Section 5.2 in reporting their shares of Partnership income,
gain, loss, deduction and credit for income tax purposes.
(H) REGULATORY COMPLIANCE. The foregoing provisions of this
Section 5.2 relating to the allocation of Profits, Losses and other items for
federal income tax purposes are intended to comply with Treasury Regulations
Sections 1.704-1(b), 1.704-2, 1.704-3 and 1.704-3T and shall be interpreted and
applied in a manner consistent with such Treasury Regulations.
(I) CLASS B PRIORITY ALLOCATION. The holders of the Class B Units
shall be allocated gross income such that, from the inception of the Partnership
through the end of the Fiscal Year to which the allocation relates, including
the year of liquidation of the Partnership in accordance with Article X, the sum
of all priority allocations pursuant to this Section 5.2(I) equals (or
approaches as nearly as possible) the sum of all Class B Priority Return Amounts
accrued through the end of the Fiscal Year to which the allocation relates.
28
-24-
(J) CLASS C PRIORITY ALLOCATION. The holders of the Class C Units
shall be allocated gross income such that, from the inception of the partnership
through the end of the Fiscal Year to which the allocation relates, including
the year of liquidation of the Partnership in accordance with Article X, the sum
of all priority allocations pursuant to this Section 5.2(J) equals (or
approaches as nearly as possible) the sum of all Class C Priority Return Amounts
accrued through the end of the fiscal year to which the allocation relates.
(K) CLASS D PRIORITY ALLOCATION. The holders of Class D Units
shall be allocated gross income such that, from the inception of the partnership
through the end of the fiscal year to which the allocation relates, including
the year of liquidation of the Partnership in accordance with Article X, the sum
of all priority allocations pursuant to this Section 5.2(K) equals (or
approaches as nearly as possible) the sum of all Class D Priority Return Amounts
accrued through the end of the fiscal year to which the allocation relates.
(L) CLASS E PRIORITY ALLOCATION. The holders of Class E Units
shall be allocated gross income such that, from the inception of the partnership
through the end of the fiscal year to which the allocation relates, including
the year of liquidation of the Partnership in accordance with Article X, the sum
of all priority allocations pursuant to this Section 5.2(L) equals (or
approaches as nearly as possible) the sum of all Class E Priority Return Amounts
accrued through the end of the fiscal year to which the allocation relates.
SECTION 5.3 DISTRIBUTIONS.
(A) The General Partner shall cause the Partnership to distribute
to the holder of each Class B Unit an amount in cash equal to the cumulative
undistributed Class B Priority Return Amount with respect to each such unit
(provided that the amount distributable pursuant to this Section 5.3(A) shall
not be in excess of the Distributable Cash) on March 31, June 30, September 30
and December 31 of each year, commencing on June 30, 1997 (or in the case of a
Class B Unit with a Class B Deemed Original Issue Date after June 30, 1997, on
the first such distribution date following the applicable Class B Deemed
Original Issue Date); provided that, if any such distribution date shall be a
Saturday, Sunday or day on which banking institutions in the State of New York
are authorized or obligated by law to close, or a day which is declared a
national or New York State holiday (any of the foregoing, a "Non-business Day"),
then such distribution shall be made on the next succeeding day which is not a
Non-business Day. Class B Priority Return Amounts that are distributable with
respect to a period greater or less than a full Class B Distribution Period
shall be computed on the basis of a 360-day year consisting of 12 30-day months.
(B) The General Partner shall cause the Partnership to distribute
to the holder of each Class C Unit an amount in cash equal to the cumulative
undistributed Class C Priority Return Amount with respect to each such unit
(provided that the amount distributable pursuant to this Section 5.3(B) shall
not be in excess of the Distributable Cash) on March 31, June 30, September 30
and December 31 of each year, commencing on September 30, 1997 (or in the case
of a Class C Unit with a Class C Deemed Original Issue Date after September 30,
1997, on the first such distribution date following the applicable Class C
Deemed Original Issue Date); provided that, if any such distribution date shall
be a Saturday, Sunday or day on which banking institutions in the State of New
York are authorized or obligated by law to close, or a day which is declared a
national or New York State holiday (any of the foregoing, a "Non-business Day"),
then such distribution shall be made on the next succeeding day which is not a
Non-business Day. Class C Priority Return Amounts that are distributable with
respect to a period greater or less than a full Class C Distribution Period
shall be computed on the basis of a 360-day year consisting of 12 30-day months.
(C) The General Partner shall cause the Partnership to distribute
to the holder of each Class D Unit an amount in cash equal to the cumulative
undistributed Class D Priority Return Amount with respect to each such
29
-25-
unit (provided that the amount distributable pursuant to this Section 5.3(C)
shall not be in excess of the Distributable Cash) on March 31, June 30,
September 30 and December 31 of each year, commencing on March 31, 1998 (or in
the case of a Class D Unit with a Class D Deemed Original Issue Date after March
31, 1998, on the first such distribution date following the applicable Class D
Deemed Original Issue Date); provided that, if any such distribution date shall
be a Saturday, Sunday or day on which banking institutions in the State of New
York are authorized or obligated by law to close, or a day which is declared a
national or New York State holiday (any of the foregoing, a "Non-business Day"),
then such distribution shall be made on the next succeeding day which is not a
Non-business Day. Class D Priority Return Amounts that are distributable with
respect to a period greater or less than a full Class D Distribution Period
shall be computed on the basis of a 360-day year consisting of 12 30-day months.
(D) The General Partner shall cause the Partnership to distribute
to the holder of each Class E Unit an amount in cash equal to the cumulative
undistributed Class E Priority Return Amount with respect to each such unit
(provided that the amount distributable pursuant to this Section 5.3(D) shall
not be in excess of the Distributable Cash) on March 31, June 30, September 30
and December 31 of each year, commencing on June 30, 1998 (or in the case of a
Class E Unit with a Class E Deemed Original Issue Date after June 30, 1998, on
the first such distribution date following the applicable Class E Deemed
Original Issue Date); provided that, if any such distribution date shall be a
Saturday, Sunday or day on which banking institutions in the State of New York
are authorized or obligated by law to close, or a day which is declared a
national or New York State holiday (any of the foregoing, a "Non-business Day"),
then such distribution shall be made on the next succeeding day which is not a
Non-business Day. Class E Priority Return Amounts that are distributable with
respect to a period greater or less than a full Class E Distribution Period
shall be computed on the basis of a 360-day year consisting of 12 30-day months.
(E) After giving effect to Sections 5.3(A), (B), (C) and (D), if
applicable, the General Partner shall have the authority to cause the
Partnership to make distributions from time to time as it determines, including
without limitation, distributions which are sufficient to enable the General
Partner to (i) maintain its status as a REIT, (ii) avoid the imposition of any
tax under Code Section 857 and (iii) avoid the imposition of any excise tax
under Code Section 4981. Except as otherwise expressly set forth in this Section
5.3(E), all Distributions pursuant to this Section 5.3 shall be made on a pari
passu basis.
(F) Distributions pursuant to Section 5.3(E) shall be made pro
rata among the Partners of record on the Record Date established by the General
Partner for the distribution, in accordance with their respective Percentage
Interests, without regard to the length of time the record holder has been such
except that the first distribution paid on Units issued after June 1, 1996 shall
be pro rated to reflect the actual portion of the period for which the
distribution is being paid during which such Units were outstanding, or shall be
in such other amount or computed on such other basis as may be agreed by the
General Partner and the holders of such Units, provided that such other amount
or the amount so computed, as applicable, may not exceed the aforementioned pro
rated amount.
(G) The General Partner shall use its reasonable efforts to make
distributions to the Partners so as to preclude any distribution or portion
thereof from being treated as part of a sale of property to the Partnership by a
Partner under Section 707 of the Code or the Treasury Regulations thereunder;
provided that the General Partner and the Partnership shall not have liability
to a Limited Partner under any circumstances as a result of any distribution to
a Partner being so treated.
SECTION 5.4 DISTRIBUTION UPON REDEMPTION. Notwithstanding any other
provision hereof, proceeds of (i) a Class B Redemption shall be distributed to
the Class B Limited Partner in accordance with Section 9.1(C), (ii) a Class C
Redemption shall be distributed to the Class C Limited Partner in accordance
with Section 9.1(D),
30
-26-
(iii) a Class D Redemption shall be distributed to the Class D Limited Partner
in accordance with Section 9.1(E) and (iv) a Class E Redemption shall be
distributed to the Class E Limited Partner in accordance with Section 9.1(F).
SECTION 5.5 DISTRIBUTIONS UPON LIQUIDATION. Notwithstanding any other
provision hereof, proceeds of a Terminating Capital Transaction shall be
distributed to the Partners in accordance with Section 10.2.
SECTION 5.6 AMOUNTS WITHHELD. All amounts withheld pursuant to the Code
or any provision of state or local tax law and Section 7.6 of this Agreement
with respect to any allocation, payment or distribution to the General Partner,
the Class B Limited Partner, the Class C Limited Partner, the Class D Limited
Partner, the Class E Limited Partner, the Limited Partners or Assignees shall be
treated as amounts distributed to such General Partner, the Class B Limited
Partner, the Class C Limited Partner, the Class D Limited Partner, the Class E
Limited Partner, the Limited Partners or Assignees, as applicable, pursuant to
Section 5.3 of this Agreement.
--------------------------------------------------------------------------------
ARTICLE VI - PARTNERSHIP MANAGEMENT
--------------------------------------------------------------------------------
SECTION 6.1 MANAGEMENT AND CONTROL OF PARTNERSHIP BUSINESS.
(A) Except as otherwise expressly provided or limited by the
provisions of this Agreement, the General Partner shall have full, exclusive and
complete discretion to manage the business and affairs of the Partnership, to
make all decisions affecting the business and affairs of the Partnership and to
take all such action as it deems necessary or appropriate to accomplish the
purposes of the Partnership as set forth herein. Except as set forth in this
Agreement, the Limited Partners shall not have any authority, right, or power to
bind the Partnership, or to manage, or to participate in the management of the
business and affairs of the Partnership in any manner whatsoever. Such
management shall in every respect be the full and complete responsibility of the
General Partner alone as herein provided.
(B) In carrying out the purposes of the Partnership, the General
Partner shall be authorized to take all actions it deems necessary and
appropriate to carry on the business of the Partnership. The Limited Partners,
the Class B Limited Partner, the Class C Limited Partner, the Class D Limited
Partner and the Class E Limited Partner, by execution hereof, agree that the
General Partner is authorized to execute, deliver and perform any agreement
and/or transaction on behalf of the Partnership.
(C) The General Partner and its Affiliates may acquire Limited
Partner Interests from Limited Partners who agree so to transfer Limited Partner
Interests or from the Partnership in accordance with Section 4.2(a). Any Limited
Partner Interest acquired by the General Partner shall be converted into a
General Partner Interest. Upon acquisition of any Limited Partner Interest, any
Affiliate of the General Partner shall have all the rights of a Limited Partner.
SECTION 6.2 NO MANAGEMENT BY LIMITED PARTNERS; LIMITATION OF
LIABILITY.
(A) Neither the Limited Partners, in their capacity as Limited
Partners, the Class B Limited Partner, in its capacity as Class B Limited
Partner, the Class C Limited Partner, in its capacity as Class C Limited
Partner, the Class D Limited Partner, in its capacity as Class D Limited
Partner, nor the Class E Limited Partner, in its capacity as Class E Limited
Partner, shall take part in the day-to-day management, operation or control of
the business and affairs of the Partnership or have any right, power, or
authority to act for or on behalf of or to bind the Partnership or transact any
business in the name of the Partnership. Neither the Limited Partners, the Class
B
31
-27-
Limited Partner, in its capacity as Class B Limited Partner, the Class C Limited
Partner, in its capacity as Class C Limited Partner, the Class D Limited
Partner, in its capacity as Class D Limited Partner, nor the Class E Limited
Partner, in its capacity as Class E Limited Partner, shall have any rights other
than those specifically provided herein or granted by law where consistent with
a valid provision hereof. Any approvals rendered or withheld by the Limited
Partners, the Class B Limited Partner, the Class C Limited Partner, the Class D
Limited Partner or the Class E Limited Partner pursuant to this Agreement shall
be deemed as consultation with or advice to the General Partner in connection
with the business of the Partnership and, in accordance with the Act, shall not
be deemed as participation by the Limited Partners, the Class B Limited Partner,
the Class C Limited Partner, the Class D Limited Partner or the Class E Limited
Partner in the business of the Partnership and are not intended to create any
inference that the Limited Partners, the Class B Limited Partner, the Class C
Limited Partner, the Class D Limited Partner or the Class E Limited Partner
should be classified as general partners under the Act.
(B) Neither the Limited Partner, the Class B Limited Partner, the
Class C Limited Partner, the Class D Limited Partner nor the Class E Limited
Partner shall have any liability under this Agreement except with respect to
withholding under Section 7.6, in connection with a violation of any provision
of this Agreement by such Limited Partner, the Class B Limited Partner, the
Class C Limited Partner, the Class D Limited Partner or the Class E Limited
Partner or as provided in the Act.
(C) The General Partner shall not take any action which would
subject a Limited Partner (in its capacity as Limited Partner), the Class B
Limited Partner (in its capacity as Class B Limited Partner), the Class C
Limited Partner (in its capacity as Class C Limited Partner), the Class D
Limited Partner (in its capacity as Class D Limited Partner) or the Class E
Limited Partner (in its capacity as Class E Limited Partner) to liability as a
general partner.
SECTION 6.3 LIMITATIONS ON PARTNERS.
(A) No Partner or Affiliate of a Partner shall have any authority
to perform (i) any act in violation of any applicable law or regulation
thereunder, (ii) any act prohibited by Section 6.2(C), or (iii) any act which is
required to be Consented to or ratified pursuant to this Agreement without such
Consent or ratification.
(B) No action shall be taken by a Partner if it would cause the
Partnership to be treated as an association taxable as a corporation for federal
income tax purposes or, without the consent of the General Partner, as a
publicly-traded partnership within the meaning of Section 7704 of the Code. A
determination of whether such action will have the above described effect shall
be based upon a declaratory judgment or similar relief obtained from a court of
competent jurisdiction, a favorable ruling from the IRS or the receipt of an
opinion of counsel.
SECTION 6.4 BUSINESS WITH AFFILIATES.
(A) The General Partner, in its discretion, may cause the
Partnership to transact business with any Partner or its Affiliates for goods or
services reasonably required in the conduct of the Partnership's business;
provided that any such transaction shall be effected only on terms competitive
with those that may be obtained in the marketplace from unaffiliated Persons.
The foregoing proviso shall not apply to transactions between the Partnership
and its Subsidiaries. In addition, neither the General Partner nor any Affiliate
of the General Partner may sell, transfer or otherwise convey any property to,
or purchase any property from, the Partnership, except (i) on terms competitive
with those that may be obtained in the marketplace from unaffiliated Persons or
(ii) where the General Partner determines, in its sole judgment, that such sale,
transfer or conveyance confers benefits on the General Partner or the
Partnership in respect of matters of tax or corporate or financial structure;
provided, in the
32
-28-
case of this clause (ii), such sale, transfer, or conveyance is not being
effected for the purpose of materially disadvantaging the Limited Partners.
(B) In furtherance of Section 6.4(A), the Partnership may lend or
contribute to its Subsidiaries on terms and conditions established by the
General Partner.
SECTION 6.5 COMPENSATION; REIMBURSEMENT OF EXPENSES. In consideration
for the General Partner's services to the Partnership in its capacity as General
Partner, the Partnership shall pay on behalf of or reimburse to the General
Partner (i) all expenses of the General Partner incurred in connection with the
management of the business and affairs of the Partnership, including all
employee compensation of employees of the General Partner and indemnity or other
payments made pursuant to agreements entered into in furtherance of the
Partnership's business, (ii) all amounts payable by the General Partner under
the Registration Rights Agreement and (iii) all general and administrative
expenses incurred by the General Partner. Except as otherwise set forth in this
Agreement, the General Partner shall be fully and entirely reimbursed by the
Partnership for any and all direct and indirect costs and expenses incurred in
connection with the organization and continuation of the Partnership pursuant to
this Agreement. In addition, the General Partner shall be reimbursed for all
expenses incurred by the General Partner in connection with (i) the initial
public offering of REIT Shares by the General Partner and (ii) any other
issuance of additional Partnership Interests or REIT Shares.
SECTION 6.6 LIABILITY FOR ACTS AND OMISSIONS.
(A) The General Partner shall not be liable, responsible or
accountable in damages or otherwise to the Partnership or any of the other
Partners for any act or omission performed or omitted in good faith on behalf of
the Partnership and in a manner reasonably believed to be (i) within the scope
of the authority granted by this Agreement and (ii) in the best interests of the
Partnership or the stockholders of the General Partner. In exercising its
authority hereunder, the General Partner may, but shall not be under any
obligation to, take into account the tax consequences to any Partner of any
action it undertakes on behalf of the Partnership. Neither the General Partner
nor the Partnership shall have any liability as a result of any income tax
liability incurred by a Partner as a result of any action or inaction of the
General Partner hereunder and, by their execution of this Agreement, the Limited
Partners acknowledge the foregoing.
(B) Unless otherwise prohibited hereunder, the General Partner
shall be entitled to exercise any of the powers granted to it and perform any of
the duties required of it under this Agreement directly or through any agent.
The General Partner shall not be responsible for any misconduct or negligence on
the part of any agent; provided that the General Partner selected or appointed
such agent in good faith.
(1) The General Partner acknowledges that it owes fiduciary
duties both to its stockholders and to the Limited Partners and it shall use its
reasonable efforts to discharge such duties to each; provided, however, that in
the event of a conflict between the interests of the stockholders of the General
Partner and the interests of the Limited Partners, the Limited Partners agree
that the General Partner shall discharge its fiduciary duties to the Limited
Partners by acting in the best interests of the General Partner's stockholders.
Nothing contained in the preceding sentence shall be construed as entitling the
General Partner to realize any profit or gain from any transaction between the
General Partner and the Partnership (except in connection with a distribution in
accordance with this Agreement), including from the lending of money by the
General Partner to the Partnership or the contribution of property by the
General Partner to the Partnership, it being understood that in any such
transaction the General Partner shall be entitled to cost recovery only.
33
-29-
SECTION 6.7 INDEMNIFICATION.
(A) The Partnership shall indemnify the General Partner and each
director, officer and stockholder of the General Partner and each Person
(including any Affiliate) designated as an agent by the General Partner in its
reasonable discretion (each, an "Indemnified Party") to the fullest extent
permitted under the Act (including any procedures set forth therein regarding
advancement of expenses to such Indemnified Party) from and against any and all
losses, claims, damages, liabilities, expenses (including reasonable attorneys'
fees), judgments, fines, settlements and any other amounts arising out of or in
connection with any claims, demands, actions, suits or proceedings (civil,
criminal or administrative) relating to or resulting (directly or indirectly)
from the operations of the Partnership, in which such Indemnified Party becomes
involved, or reasonably believes it may become involved, as a result of the
capacity referred to above.
(B) The Partnership shall have the authority to purchase and
maintain such insurance policies on behalf of the Indemnified Parties as the
General Partner shall determine, which policies may cover those liabilities the
General Partner reasonably believes may be incurred by an Indemnified Party in
connection with the operation of the business of the Partnership. The right to
procure such insurance on behalf of the Indemnified Parties shall in no way
mitigate or otherwise affect the right of any such Indemnified Party to
indemnification pursuant to Section 6.7(A) hereof.
(C) The provisions of this Section 6.7 are for the benefit of the
Indemnified Parties, their heirs, successors, assigns and administrators and
shall not be deemed to create any rights in or benefit to any other Person.
--------------------------------------------------------------------------------
ARTICLE VII - ADMINISTRATIVE, FINANCIAL AND TAX MATTERS
--------------------------------------------------------------------------------
SECTION 7.1 BOOKS AND RECORDS. The General Partner shall maintain at
the office of the Partnership full and accurate books of the Partnership showing
all receipts and expenditures, assets and liabilities, profits and losses, names
and current addresses of Partners, and all other records necessary for recording
the Partnership's business and affairs. Each Limited Partner shall have, upon
written demand and at such Limited Partner's expense, the right to receive true
and complete information regarding Partnership matters to the extent required
(and subject to the limitations) under Delaware law.
SECTION 7.2 ANNUAL AUDIT AND ACCOUNTING. The books and records of the
Partnership shall be kept for financial and tax reporting purposes on the
accrual basis of accounting in accordance with generally accepted accounting
principles ("GAAP"). The accounts of the Partnership shall be audited annually
by a nationally recognized accounting firm of independent public accountants
selected by the General Partner (the "Independent Accountants").
SECTION 7.3 PARTNERSHIP FUNDS. The General Partner shall have
responsibility for the safekeeping and use of all funds and assets of the
Partnership, whether or not in its direct or indirect possession or control. All
funds of the Partnership not otherwise invested shall be deposited in one or
more accounts maintained in such banking institutions as the General Partner
shall determine, and withdrawals shall be made only in the regular course of
Partnership business on such signatures as the General Partner may from time to
time determine.
SECTION 7.4 REPORTS AND NOTICES. The General Partner shall provide all
Partners with the following reports no later than the dates indicated or as soon
thereafter as circumstances permit:
34
-30-
(A) By March 31 of each year, IRS Form 1065 and Schedule K-1, or
similar forms as may be required by the IRS, stating each Partner's allocable
share of income, gain, loss, deduction or credit for the prior Fiscal Year;
(B) Within ninety (90) days after the end of each of the first
three (3) fiscal quarters, as of the last day of the fiscal quarter, a report
containing unaudited financial statements of the Partnership, or of the General
Partner if such statements are prepared on a consolidated basis with the General
Partner, and such other information as may be legally required or determined to
be appropriate by the General Partner; and
(C) Within one hundred twenty (120) days after the end of each
Fiscal Year, as of the close of the Fiscal Year, an annual report containing
audited financial statements of the Partnership, or of the General Partner if
such statements are prepared on a consolidated basis with the General Partner,
presented in accordance with GAAP and certified by the Independent Accountants.
SECTION 7.5 TAX MATTERS.
(A) The General Partner shall be the Tax Matters Partner of the
Partnership for federal income tax matters pursuant to Code Section
6231(a)(7)(A). The Tax Matters Partner is authorized and required to represent
the Partnership (at the expense of the Partnership) in connection with all
examinations of the affairs of the Partnership by any federal, state, or local
tax authorities, including any resulting administrative and judicial
proceedings, and to expend funds of the Partnership for professional services
and costs associated therewith. The Tax Matters Partner shall deliver to the
Limited Partners within ten (10) business days of the receipt thereof a copy of
any notice or other communication with respect to the Partnership received from
the IRS (or other governmental tax authority), or any court, in each case with
respect to any administrative or judicial proceeding involving the Partnership.
The Partners agree to cooperate with each other in connection with the conduct
of all proceedings pursuant to this Section 7.5(A).
(B) The Tax Matters Partner shall receive no compensation for its
services in such capacity. If the Tax Matters Partner incurs any costs related
to any tax audit, declaration of any tax deficiency or any administrative
proceeding or litigation involving any Partnership tax matter, such amount shall
be an expense of the Partnership and the Tax Matters Partner shall be entitled
to full reimbursement therefor.
(C) The General Partner shall cause to be prepared all federal,
state and local income tax returns required of the Partnership at the
Partnership's expense.
(D) Except as set forth herein, the General Partner shall
determine whether to make (and, if necessary, revoke) any tax election available
to the Partnership under the Code or any state tax law; provided, however, upon
the request of any Partner, the General Partner shall make the election under
Code Section 754 and the Treasury Regulations promulgated thereunder. The
Partnership shall elect to deduct expenses, if any, incurred by it in organizing
the Partnership in accordance with the provisions of Code Section 709.
SECTION 7.6 WITHHOLDING. Each Partner hereby authorizes the Partnership
to withhold from or pay to any taxing authority on behalf of such Partner any
tax that the General Partner determines the Partnership is required to withhold
or pay with respect to any amount distributable or allocable to such Partner.
Any amount paid to any taxing authority which does not constitute a reduction in
the amount otherwise distributable to such Partner shall be treated as a loan
from the Partnership to such Partner, which loan shall bear interest at the
"prime rate" as published from time to time in The Wall Street Journal plus two
(2) percentage points, and shall be repaid within ten (10) business days after
request for repayment from the General Partner. The obligation to repay any such
loan
35
-31-
shall be secured by such Partner's Partnership Interest and each Partner hereby
grants the Partnership a security interest in his Partnership Interest for the
purposes set forth in this Section 7.6, this Section 7.6 being intended to serve
as a security agreement for purposes of the Uniform Commercial Code with the
General Partner having in respect hereof all of the remedies of a secured party
under the Uniform Commercial Code. Each Partner agrees to take such reasonable
actions as the General Partner may request to perfect and continue the
perfection of the security interest granted hereby. In the event any Partner
fails to repay any deemed loan pursuant to this Section 7.6 the Partnership
shall be entitled to avail itself of any rights and remedies it may have.
Furthermore, upon the expiration of ten (10) business days after demand for
payment, the General Partner shall have the right, but not the obligation, to
make the payment to the Partnership on behalf of the defaulting Partner and
thereupon be subrogated to the rights of the Partnership with respect to such
defaulting Partner.
--------------------------------------------------------------------------------
ARTICLE VIII - TRANSFER OF PARTNERSHIP INTERESTS; ADMISSIONS OF PARTNERS
--------------------------------------------------------------------------------
SECTION 8.1 TRANSFER BY GENERAL PARTNER. The General Partner may not
voluntarily withdraw or Transfer all or any portion of its General Partner
Interest. Notwithstanding the foregoing, the General Partner may pledge its
General Partner Interest in furtherance of the Partnership's business (including
without limitation, in connection with a loan agreement under which the
Partnership is a borrower) without the consent of any Partner.
SECTION 8.2 OBLIGATIONS OF A PRIOR GENERAL PARTNER. Upon an Involuntary
Withdrawal of the General Partner and the subsequent Transfer of the General
Partner's Interest, such General Partner shall (i) remain liable for all
obligations and liabilities (other than Partnership liabilities payable solely
from Partnership Assets) incurred by it as General Partner before the effective
date of such event and (ii) pay all costs associated with the admission of its
Successor General Partner. However, such General Partner shall be free of and
held harmless by the Partnership against any obligation or liability incurred on
account of the activities of the Partnership from and after the effective date
of such event, except as provided in this Agreement.
SECTION 8.3 SUCCESSOR GENERAL PARTNER. A successor to all of a General
Partner's General Partner Interest who is proposed to be admitted to the
Partnership as a Successor General Partner shall be admitted as the General
Partner, effective upon the Transfer. Any such transferee shall carry on the
business of the Partnership without dissolution. In addition, the following
conditions must be satisfied:
(A) The Person shall have accepted and agreed to be bound by all
the terms and provisions of this Agreement by executing a counterpart thereof
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; and
(B) An amendment to this Agreement evidencing the admission of
such Person as a General Partner shall have been executed by all General
Partners and an amendment to the Certificate shall have been filed for
recordation as required by the Act.
(C) Any consent required under Section 10.1(A) shall have been
obtained.
SECTION 8.4 RESTRICTIONS ON TRANSFER AND WITHDRAWAL BY LIMITED
PARTNER.
(A) Subject to the provisions of Section 8.4(D), no Limited
Partner may Transfer all or any portion of his Partnership Interest without
first obtaining the Consent of the General Partner, which Consent may be granted
or withheld in the sole and absolute discretion of the General Partner. Any such
purported transfer undertaken
36
-32-
without such Consent shall be considered to be null and void ab initio and shall
not be given effect. Each Limited Partner acknowledges that the General Partner
has agreed not to grant any such consent prior to the Transfer Restriction Date.
(B) No Limited Partner may withdraw from the Partnership other
than as a result of a permitted Transfer (i.e., a Transfer consented to as
contemplated by clause (A) above or clause (D) below or a Transfer pursuant to
clause (C) below) of all of his Partnership Units pursuant to this Article VIII
or pursuant to a redemption or exchange of all of his Partnership Units pursuant
to Article IX. 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) Upon the Involuntary Withdrawal of any Limited Partner (which
shall under no circumstance cause the dissolution of the Partnership), the
executor, administrator, trustee, guardian, receiver or conservator of such
Limited Partner's estate shall become a Substituted Limited Partner upon
compliance with the provisions of Section 8.5(A)(1)-(3).
(D) Subject to clause (E) below, a Limited Partner may Transfer,
with the Consent of the General Partner, all or a portion of his Partnership
Units to (a) a parent or parents, spouse, natural or adopted descendant or
descendants, spouse of such a descendant, or brother or sister, or a trust
created by such Limited Partner for the benefit of such Limited Partner and/or
any such person(s), of which trust such Limited Partner or any such person(s) is
a trustee, (b) a corporation controlled by a Person or Persons named in (a)
above, or (c) if the Limited Partner is an entity, its beneficial owners, and
the General Partner shall grant its Consent to any Transfer pursuant to this
Section 8.4(D) unless such Transfer, in the reasonable judgment of the General
Partner, would cause (or have the potential to cause) the General Partner to
fail to qualify for taxation as a REIT, in which case the General Partner shall
have the absolute right to refuse to permit such Transfer, and any purported
Transfer in violation of this Section 8.4(D) shall be null and void ab initio.
(E) No Transfer of Limited Partnership Units shall be made if such
Transfer would (i) in the opinion of Partnership counsel, cause the Partnership
to be terminated for federal income tax purposes or to be treated as an
association taxable as a corporation (rather than a partnership) for federal
income tax purposes; (ii) be effected through an "established securities market"
or a "secondary market (or the substantial equivalent thereof)" within the
meaning of Code Section 7704 and the Treasury Regulations thereunder, (iii) in
the opinion of Partnership counsel, violate the provisions of applicable
securities laws; (iv) violate the terms of (or result in a default or
acceleration under) any law, rule, regulation, agreement or commitment binding
on the Partnership; (v) cause the Partnership to become, with respect to any
employee benefit plan subject to Title I of ERISA, a "party-in-interest" (as
defined in Section 3(14) of ERISA) or a "disqualified person" (as defined in
Section 4975(e) of the Code); (vi) in the opinion of counsel to the Partnership,
cause any portion of the underlying assets of the Partnership to constitute
assets of any employee benefit plan pursuant to Department of Labor Regulations
Section 2510.3-101; or (vii) result in a deemed distribution to any Partner
attributable to a failure to meet the requirements of Treasury Regulations
Section 1.752-2(d)(1), unless such Partner consents thereto.
(F) Prior to the consummation of any Transfer under this Section
8.4, 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.
SECTION 8.5 SUBSTITUTED LIMITED PARTNER.
(A) No transferee shall become a Substituted Limited Partner in
place of his assignor unless and until the following conditions have been
satisfied:
37
-33-
(1) The assignor and transferee file a Notice or other
evidence of Transfer and such other information reasonably required by the
General Partner, including, without limitation, names, addresses and telephone
numbers of the assignor and transferee;
(2) The transferee executes, adopts and acknowledges this
Agreement, or a counterpart hereto, and such other documents as may be
reasonably requested by the General Partner, including without limitation, all
documents necessary to comply with applicable tax and/or securities rules and
regulations;
(3) The assignor or transferee pays all costs and fees
incurred or charged by the Partnership to effect the Transfer and substitution;
and
(4) The assignor or transferee obtains the written Consent of
the General Partner, which may be given or withheld in its sole and absolute
discretion.
(B) If a transferee of a Limited Partner does not become a
Substituted Limited Partner pursuant to Section 8.5(A), such transferee shall be
an Assignee and shall not have any rights to require any information on account
of the Partnership's business, to inspect the Partnership's books or to vote or
otherwise take part in the affairs of the Partnership (such Partnership Units
being deemed to have been voted in the same proportion as all other Partnership
Units held by Limited Partners have been voted). Such Assignee shall be
entitled, however, to all the rights of an assignee of a limited partnership
interest under the Act. Any Assignee wishing to Transfer the Partnership Units
acquired shall be subject to the restrictions set forth in this Article VIII.
SECTION 8.6 TIMING AND EFFECT OF TRANSFERS. Unless the General Partner
agrees otherwise, Transfers under this Article VIII may only be made as of the
first day of a fiscal quarter of the Partnership. Upon any Transfer of a
Partnership Interest in accordance with this Article VIII or redemption of a
Partnership Interest in accordance with Article IX, the Partnership shall
allocate all items of Profit and Loss between the assignor Partner and the
transferee Partner in accordance with Section 5.2(F)(2) hereof. The assignor
Partner shall have the right to receive all distributions as to which the Record
Date precedes the date of Transfer and the transferee Partner shall have the
right to receive all distributions thereafter.
SECTION 8.7 ADDITIONAL LIMITED PARTNERS. Other than in accordance with
the transactions specified in the Contribution Agreements, after the initial
execution of this Agreement and the admission to the Partnership of the Initial
Limited Partners, any Person making a Capital Contribution to the Partnership in
accordance herewith shall be admitted as an Additional Limited Partner of the
Partnership only (i) with the Consent of the General Partner and (ii) upon
execution, adoption and acknowledgment of this Agreement, or a counterpart
hereto, and such other documents as may be reasonably requested by the General
Partner, including without limitation, the power of attorney required under
Section 12.3. Upon satisfaction of the foregoing requirements, such Person shall
be admitted as an Additional Limited Partner effective on the date upon which
the name of such Person is recorded on the books of the Partnership.
SECTION 8.8 AMENDMENT OF AGREEMENT AND CERTIFICATE. Upon any admission
of a Person as a Partner to the Partnership, the General Partner shall make any
necessary amendment to this Agreement to reflect such admission and, if required
by the Act, to cause to be filed an amendment to the Certificate.
38
-34-
--------------------------------------------------------------------------------
ARTICLE IX - REDEMPTION
--------------------------------------------------------------------------------
SECTION 9.1 RIGHT OF REDEMPTION.
(A) Subject to any restriction on the General Partner, which
restriction may arise as a result of the REIT Charter, the laws governing the
General Partner or otherwise (a "Redemption Restriction"), beginning on the
Redemption Effective Date, during each Redemption Period each Redeeming Party
shall have the right to require the Partnership to redeem all or a portion of
the Partnership Units held by such Redeeming Party by providing the General
Partner with a Redemption Notice. A Limited Partner may invoke its rights under
this Article IX with respect to 100 Partnership Units or an integral multiple
thereof or all of the Partnership Units held by such Limited Partner. Upon the
General Partner's receipt of a Redemption Notice from a Redeeming Party, the
Partnership shall be obligated (subject to the existence of any Redemption
Restriction) to redeem the Partnership Units from such Redeeming Party (the
"Redemption Obligation").
(B) Upon receipt of a Redemption Notice from a Redeeming
Party, the General Partner shall either (i) cause the Partnership to redeem the
Partnership Units tendered in the Redemption Notice, (ii) assume the Redemption
Obligation, as set forth in Section 9.4, or (iii) provide written Notice to the
Redeeming Party of each applicable Redemption Restriction.
(C) On and after May 14, 2002 at any time or from time to
time, the Partnership may redeem all or such other number of Class B Units (any
such redemption, a "Class B Redemption") at a cash redemption price per Class B
Unit equal to that portion of the Capital Contribution of the Class B Limited
Partner allocable to each such unit, plus all accumulated and unpaid Priority
Return Amounts to the date of Class B Redemption (such price, the "Class B
Redemption Price"). Upon any Class B Redemption, an amount equal to the product
of the Class B Redemption Price and the number of Class B Units redeemed by the
Partnership shall be distributed by the Partnership to the Class B Limited
Partner.
(D) On and after June 6, 2007 at any time or from time to
time, the Partnership may redeem all or such other number of Class C Units (any
such redemption, a "Class C Redemption") at a cash redemption price per Class C
Unit equal to that portion of the Capital Contribution of the Class C Limited
Partner allocable to each such unit, plus all accumulated and unpaid Class C
Priority Return Amounts to the date of Class C Redemption (such price, the
"Class C Redemption Price"). Upon any Class C Redemption, an amount equal to the
product of the Class C Redemption Price and the number of Class C Units redeemed
by the Partnership shall be distributed by the Partnership to the Class C
Limited Partner.
(E) On and after February 4, 2003 at any time or from time to
time, the Partnership may redeem all or such other number of Class D Units (any
such redemption, a "Class D Redemption") at a cash redemption price per Class D
Unit equal to that portion of the Capital Contribution of the Class D Limited
Partner allocable to each such unit, plus all accumulated and unpaid Class D
Priority Return Amounts to the date of Class D Redemption (such price, the
"Class D Redemption Price"). Upon any Class D Redemption, an amount equal to the
product of the Class D Redemption Price and the number of Class D Units redeemed
by the Partnership shall be distributed by the Partnership to the Class D
Limited Partner. The Class D Redemption Price (other than the portion thereof
consisting of accumulated and unpaid Class D Priority Return Amounts) is payable
solely out of the sale proceeds of an issuance of capital stock of the General
Partner. For purposes of the immediately preceding sentence "capital stock"
means any common stock, preferred stock, depositary shares, interests,
participations or
39
-35-
other ownership interests (however designated) and any rights (other than debt
securities convertible into or exchangeable for equity interests or options to
purchase any of the foregoing).
(F) On and after March 18, 2003 at any time or from time to
time, the Partnership may redeem all or such other number of Class E Units (any
such redemption, a "Class E Redemption") at a cash redemption price per Class E
Unit equal to that portion of the Capital Contribution of the Class E Limited
Partner allocable to each such unit, plus all accumulated and unpaid Class E
Priority Return Amounts to the date of Class E Redemption (such price, the
"Class E Redemption Price"). Upon any Class E Redemption, an amount equal to the
product of the Class E Redemption Price and the number of Class E Units redeemed
by the Partnership shall be distributed by the Partnership to the Class E
Limited Partner. The Class E Redemption Price (other than the portion thereof
consisting of accumulated and unpaid Class E Priority Return Amounts) is payable
solely out of the sale proceeds of an issuance of capital stock of the General
Partner. For purposes of the immediately preceding sentence "capital stock"
means any common stock, preferred stock, depositary shares, interests,
participations or other ownership interests (however designated) and any rights
(other than debt securities convertible into or exchangeable for equity
interests or options to purchase any of the foregoing).
SECTION 9.2 TIMING OF REDEMPTION. The Redemption Obligation (or the
obligation to provide Notice of an applicable Redemption Restriction, if one
exists) shall mature on the date which is seven (7) business days after the
receipt by the General Partner of a Redemption Notice from the Redeeming Party
(the "Redemption Date").
SECTION 9.3 REDEMPTION PRICE. On or before the Redemption Date, the
Partnership (or the General Partner if it elects pursuant to Section 9.4) shall
deliver to the Redeeming Party, in the sole and absolute discretion of the
General Partner either (i) a Share Payment or (ii) a Cash Payment. In order to
enable the Partnership to effect a redemption by making a Share Payment pursuant
to this Section 9.3, the General Partner in its sole and absolute discretion may
issue to the Partnership the number of REIT Shares required to make such Share
Payment in exchange for the issuance to the General Partner of Partnership Units
equal in number to the quotient of the number of REIT Shares issued and
Conversion Factor.
SECTION 9.4 ASSUMPTION OF REDEMPTION OBLIGATION. Upon receipt of a
Redemption Notice, the General Partner, in its sole and absolute discretion,
shall have the right to assume the Redemption Obligation of the Partnership. In
such case, the General Partner shall be substituted for the Partnership for all
purposes of this Article IX and, upon acquisition of the Partnership Units
tendered by the Redeeming Party pursuant to the Redemption Notice shall be
treated for all purposes of this Agreement as the owner of such Partnership
Units. Such exchange transaction shall be treated for federal income tax
purposes by the Partnership, the General Partner and the Redeeming Party as a
sale by the Redeeming Party as seller to the General Partner as purchaser.
SECTION 9.5 FURTHER ASSURANCES; CERTAIN REPRESENTATIONS. Each party to
this Agreement agrees to execute any documents deemed reasonably necessary by
the General Partner to evidence the issuance of any Share Payment to a Redeeming
Party. Notwithstanding anything herein to the contrary, each holder of First
Highland Units agrees that, if the General Partner shall elect to satisfy a
Redemption Obligation with respect to First Highland Units by making a Share
Payment, such Redemption Obligation shall mature on the date which is seven (7)
business days after receipt by the Partnership and the General Partner of
documents similar to the "Investor Materials" submitted in connection with the
sale of the First Highland Properties to the Partnership and any other similar
documents reasonably required by, and in form reasonably satisfactory to, the
Partnership. Each Limited Partner, by executing this Agreement, shall be deemed
to have represented to the General Partner and the Partnership that (i) its
acquisition of its Partnership Interest on the date hereof is made as a
principal for its own account, for investment purposes only and not with a view
to the resale or distribution of such Partnership Interest and (ii) if
40
-36-
it shall receive REIT Shares pursuant to this Article IX other than pursuant to
an effective registration statement under the Securities Act of 1933, as
amended, that its acquisition of such REIT Shares is made as a principal for its
own account, for investment purposes only and not with a view to the resale or
distribution of such REIT Shares and agrees that such REIT Shares may bear a
legend to the effect that such REIT Shares have not been so registered and may
not be sold other than pursuant to such a registration statement or an exemption
from the registration requirements of such Act.
SECTION 9.6 EFFECT OF REDEMPTION. Upon the satisfaction of the
Redemption Obligation by the Partnership or the General Partner, as the case may
be, the Redeeming Party shall have no further right to receive any Partnership
distributions in respect of the Partnership Units so redeemed and shall be
deemed to have represented to the Partnership and the General Partner that the
Partnership Units tendered for redemption are not subject to any liens, claims
or encumbrances. Upon a Class B Redemption by the Partnership, the Class B
Limited Partner shall have no further right to receive any Partnership
distributions or allocations in respect of the Class B Units so redeemed. Upon a
Class C Redemption by the Partnership, the Class C Limited Partner shall have no
further right to receive any Partnership distributions or allocations in respect
of the Class C Units so redeemed. Upon a Class D Redemption by the Partnership,
the Class D Limited Partner shall have no further right to receive any
Partnership distributions in respect of the Class D Units so redeemed. Upon a
Class E Redemption by the Partnership, the Class E Limited Partner shall have no
further right to receive any Partnership distributions in respect of the Class E
Units so redeemed.
SECTION 9.7 REGISTRATION RIGHTS. In the event a Limited Partner
receives REIT Shares in connection with a redemption of Partnership Units
originally issued to Initial Limited Partners on June 30, 1994 pursuant to this
Article IX, such Limited Partner shall be entitled to have such REIT Shares
registered under the Securities Act of 1933, as amended, as provided in the
Registration Rights Agreement.
--------------------------------------------------------------------------------
ARTICLE X - DISSOLUTION AND LIQUIDATION
--------------------------------------------------------------------------------
SECTION 10.1 TERM AND DISSOLUTION. The Partnership commenced as of
November 23, 1993, and shall continue until December 31, 2092, at which time the
Partnership shall dissolve or until dissolution occurs prior to that date for
any one of the following reasons:
(A) An Involuntary Withdrawal or a voluntary withdrawal, even
though in violation of this Agreement, of the General Partner unless, within
ninety (90) days after such event of withdrawal all the remaining Partners agree
in writing to the continuation of the Partnership and to the appointment of a
Successor General Partner;
(B) Entry of a decree of judicial dissolution of the Partnership
under the Act; or
(C) The sale, exchange or other disposition of all or
substantially all of the Partnership Assets.
SECTION 10.2 LIQUIDATION OF PARTNERSHIP ASSETS.
(A) Subject to Section 10.2(E), in the event of dissolution
pursuant to Section 10.1, the Partnership shall continue solely for purposes of
winding up the affairs of, achieving a final termination of, and satisfaction of
the creditors of, the Partnership. The General Partner (or, if there is no
General Partner remaining, any Person elected by a majority in interest of the
Limited Partners (the "Liquidator")) shall be responsible for oversight of the
winding up and dissolution of the Partnership. The Liquidator shall obtain a
full accounting of the assets and
41
-37-
liabilities of the Partnership and such Partnership Assets shall be liquidated
(including, at the discretion of the Liquidator, in exchange, in whole or in
part, for REIT Shares) as promptly as the Liquidator is able to do so without
any undue loss in value, with the proceeds therefrom applied and distributed in
the following order:
(1) First, to the discharge of Partnership debts and
liabilities to creditors other than Partners;
(2) Second, to the discharge of Partnership debts and
liabilities to the Partners;
(3) Third, after giving effect to all contributions,
distributions, and allocations for all periods, to (i) the Class B Limited
Partner in an amount equal to any unpaid Class B Priority Return Amounts, (ii)
the Class C Limited Partner in an amount equal to any unpaid Class C Priority
Return Amounts, (iii) the Class D Limited Partner in an amount equal to any
unpaid Class D Priority Return Amounts, and (iv) the Class E Limited Partner in
an amount equal to any unpaid Class E Priority Return Amounts, provided, that if
the proceeds are inadequate to pay all of the unpaid Class B Priority Return
Amounts, the unpaid Class C Priority Return Amounts, the unpaid Class D Priority
Return Amounts, and the unpaid Class E Priority Return Amounts, such proceeds
shall be distributed to the Class B Limited Partner, the Class C Limited
Partner, the Class D Limited Partner and the Class E Limited Partner pro rata
based on the unpaid Class B Priority Return Amounts, the unpaid Class C Priority
Return Amounts, the unpaid Class D Priority Return Amounts, and the unpaid Class
E Priority Return Amounts;
(4) The balance, if any, to the Partners in accordance with
their positive Capital Accounts after giving effect to all contributions,
distributions and allocations for all periods.
(B) In accordance with Section 10.2(A), the Liquidator shall
proceed without any unnecessary delay to sell and otherwise liquidate the
Partnership Assets; provided, however, that if the Liquidator shall determine
that an immediate sale of part or all of the Partnership Assets would cause
undue loss to the Partners, the Liquidator may defer the liquidation except (i)
to the extent provided by the Act or (ii) as may be necessary to satisfy the
debts and liabilities of the Partnership to Persons other than the Partners.
(C) If, in the sole and absolute discretion of the Liquidator,
there are Partnership Assets that the Liquidator will not be able to liquidate,
or if the liquidation of such assets would result in undue loss to the Partners,
the Liquidator may distribute such Partnership Assets to the Partners in-kind,
in lieu of cash, as tenants-in-common in accordance with the provisions of
Section 10.2(A). The foregoing notwithstanding, such in-kind distributions shall
only be made if in the Liquidator's good faith judgment that is in the best
interest of the Partners.
(D) Upon the complete liquidation and distribution of the
Partnership Assets, the Partners shall cease to be Partners of the Partnership,
and the Liquidator shall execute, acknowledge and cause to be filed all
certificates and notices required by law to terminate the Partnership. Upon the
dissolution of the Partnership pursuant to Section 10.1, the Liquidator shall
cause to be prepared, and shall furnish to each Partner, a statement setting
forth the assets and liabilities of the Partnership. Promptly following the
complete liquidation and distribution of the Partnership Assets, the Liquidator
shall furnish to each Partner a statement showing the manner in which the
Partnership Assets were liquidated and distributed.
(E) Notwithstanding the foregoing provisions of this Section 10.2,
in the event that the Partnership shall dissolve as a result of the expiration
of the term provided for herein or as a result of the occurrence of an event of
the type described in Section 10.1(B) or (C), then each Limited Partner shall be
deemed to have delivered a Redemption Notice on the date of such dissolution. In
connection with each such Redemption Notice, the General Partner shall have the
option of either (i) complying with the redemption procedures contained in
Article IX or (ii) at the request of any Limited Partner, delivering to such
Limited Partner, Partnership property approximately equal
42
-38-
in value to the value of such Limited Partner's Partnership Units upon the
assumption by such Limited Partner of such Limited Partner's proportionate share
of the Partnership's liabilities and payment by such Limited Partner (or the
Partnership) of any excess (or deficiency) of the value of the property so
delivered over the value of such Limited Partner's Partnership Units. In lieu of
requiring such Limited Partner to assume its proportionate share of Partnership
liabilities, the General Partner may deliver to such Limited Partner
unencumbered Partnership property approximately equal in value to the net value
of such Limited Partner's Partnership Units.
SECTION 10.3 EFFECT OF TREASURY REGULATIONS.
(A) In the event the Partnership is "liquidated" within the
meaning of Treasury Regulations Section 1.704-1(b)(2)(ii)(g), distributions made
to Partners pursuant to Section 10.2 shall be made within the time period
provided in Treasury Regulations Section 1.704-1(b)(2)(ii)(b)(2). If any
Contributor Partner has a deficit balance in its Capital Account (after giving
effect to all contributions (without regard to this Section 10.3(A)),
distributions and allocations), each such Contributor Partner shall contribute
to the capital of the Partnership an amount equal to its respective deficit
balance, such obligation to be satisfied within ninety (90) days following the
liquidation and dissolution of the Partnership in accordance with the provisions
of this Article X hereof. Conversely, if any Partner other than a Contributor
Partner has a deficit balance in its Capital Account (after giving effect to all
contributions (without regard to this Section 10.3(A)), distributions and
allocations), such Partner shall have no obligation to make any contribution to
the capital of the Partnership. Any deficit restoration obligation pursuant to
the provisions hereof shall be for the benefit of creditors of the Partnership
or any other Person to whom any debts, liabilities, or obligations are owed by
(or who otherwise has any claim against) the Partnership or the general partner,
in its capacity as General Partner of the Partnership. For purposes of computing
each Contributor Partner's deficit balance in its Capital Account and its
corresponding obligations to contribute additional capital to the Partnership,
only items of income, gain and loss actually recognized shall be reflected.
(B) In the event the Partnership is "liquidated" within the
meaning of Treasury Regulations Section 1.704-1(b)(2)(ii)(g) but there has been
no dissolution of the Partnership under Section 10.1 hereof, then the
Partnership Assets shall not be liquidated, the Partnership's liabilities shall
not be paid or discharged and the Partnership's affairs shall not be wound up.
In the event of such a liquidation there shall be deemed to have been a
distribution of Partnership Assets in kind to the Partners in accordance with
Section 10.2 followed by a recontribution of such Partnership Assets by the
Partners in the same proportions.
SECTION 10.4 TIME FOR WINDING-UP. Anything in this Article X
notwithstanding, a reasonable time shall be allowed for the orderly winding-up
of the business and affairs of the Partnership and the liquidation of the
Partnership Assets in order to minimize any potential for losses as a result of
such process. During the period of winding-up, this Agreement shall remain in
full force and effect and shall govern the rights and relationships of the
Partners inter se.
--------------------------------------------------------------------------------
ARTICLE XI - AMENDMENTS AND MEETINGS
--------------------------------------------------------------------------------
SECTION 11.1 AMENDMENT PROCEDURE.
(A) Amendments to this Agreement may be proposed by the General
Partner. An amendment proposed at any time when the General Partner holds less
than 90% of all Partnership Units will be adopted and effective only if it
receives the Consent of the holders of a majority of the Partnership Units not
then held by the General Partner and an amendment proposed at any time when the
General Partner holds 90% or more of all
43
-39-
Partnership Units may be made by the General Partner without the Consent of any
Limited Partner; provided, however, no amendment shall be adopted if it would
(i) convert a Limited Partner's Interest in the Partnership into a general
partner interest, (ii) increase the liability of a Limited Partner under this
Agreement, (iii) except as otherwise permitted in this Agreement, alter the
Partner's rights to distributions set forth in Article V, or the allocations set
forth in Article V, (iv) alter or modify any aspect of the Partners' rights with
respect to redemption of Partnership Units, (v) cause the early termination of
the Partnership (other than pursuant to the terms hereof) or (vi) amend this
Section 11.1(A), in each case without the Consent of each Partner adversely
affected thereby. In connection with any proposed amendment of this Agreement
requiring Consent, the General Partner shall either call a meeting to solicit
the vote of the Partners or seek the written vote of the Partners to such
amendment. In the case of a request for a written vote, the General Partner
shall be authorized to impose such reasonable time limitations for response, but
in no event less than ten (10) days, with the failure to respond being deemed a
vote consistent with the vote of the General Partner.
(B) Notwithstanding the foregoing, amendments may be made to this
Agreement by the General Partner, without the Consent of any Limited Partner, to
(i) add to the representations, duties or obligations of the General Partner or
surrender any right or power granted to the General Partner herein; (ii) cure
any ambiguity, correct or supplement any provision herein which may be
inconsistent with any other provision herein or make any other provisions with
respect to matters or questions arising hereunder which will not be inconsistent
with any other provision hereof; (iii) reflect the admission, substitution,
termination or withdrawal of Partners in accordance with this Agreement; or (iv)
satisfy any requirements, conditions or guidelines contained in any order,
directive, opinion, ruling or regulation of a federal or state agency or
contained in federal or state law. The General Partner shall reasonably promptly
notify the Limited Partners whenever it exercises its authority pursuant to this
Section 11.1(B).
(C) Within ten (10) days of the making of any proposal to amend
this Agreement, the General Partner shall give all Partners Notice of such
proposal (along with the text of the proposed amendment and a statement of its
purposes).
SECTION 11.2 MEETINGS AND VOTING.
(A) Meetings of Partners may be called by the General Partner. The
General Partner shall give all Partners Notice of the purpose of such proposed
meeting not less than seven (7) days nor more than thirty (30) days prior to the
date of the meeting. Meetings shall be held at a reasonable time and place
selected by the General Partner. Whenever the vote or Consent of Partners is
permitted or required hereunder, such vote or Consent shall be requested by the
General Partner and may be given by the Partners in the same manner as set forth
for a vote with respect to an amendment to this Agreement in Section 11.1(A).
(B) Any action required or permitted to be taken at a meeting of
the Partners may be taken without a meeting if a written consent setting forth
the action to be taken is signed by the Partners owning Percentage Interests
required to vote in favor of such action, which consent may be evidenced in one
or more instruments. Consents need not be solicited from any other Partner if
the written consent of a sufficient number of Partners has been obtained to take
the action for which such solicitation was required.
(C) Each Limited Partner may authorize any Person or Persons,
including without limitation the General Partner, to act for him by proxy on all
matters on which a Limited Partner may participate. Every proxy (i) must be
signed by the Limited Partner or his attorney-in-fact, (ii) shall expire eleven
(11) months from the date thereof unless the proxy provides otherwise and (iii)
shall be revocable at the discretion of the Limited Partner granting such proxy.
44
-40-
SECTION 11.3 VOTING OF LB UNITS.
On any matter on which the Limited Partners shall be entitled to
vote, consent or grant an approval or waiver, following the admissions of the LB
Partners to the Partnership as Additional Limited Partners and through the
Voting Termination Date, each holder of the LB Units shall be deemed (i) in
connection with any matter submitted to a vote, to have cast all votes
attributable to such holder's LB Units in the same manner as the votes
attributable to the Units held by the General Partner are cast on such matter,
and (ii) in connection with any consent, approval or waiver, to have taken the
same action as the General Partner shall have taken with respect to its Units in
connection therewith. If the General Partner shall not have the right to vote,
consent or grant an approval or waiver on a matter, each holder of LB Units
shall vote or act as directed by the General Partner.
--------------------------------------------------------------------------------
ARTICLE XII - MISCELLANEOUS PROVISIONS
--------------------------------------------------------------------------------
SECTION 12.1 TITLE TO PROPERTY. All property owned by the Partnership,
whether real or personal, tangible or intangible, shall be deemed to be owned by
the Partnership as an entity, and no Partner, individually, shall have any
ownership of such property. The Partnership may hold any of its assets in its
own name or, in the name of its nominee, which nominee may be one or more
individuals, corporations, partnerships, trusts or other entities.
SECTION 12.2 OTHER ACTIVITIES OF LIMITED PARTNERS. Except as expressly
provided otherwise in this Agreement or in any other agreement entered into by a
Limited Partner or any Affiliate of a Limited Partner and the Partnership, the
General Partner or any Subsidiary of the Partnership or the General Partner, any
Limited Partner or any Affiliate of any Limited Partner may engage in, or
possess an interest in, other business ventures of every nature and description,
independently or with others, including, without limitation, real estate
business ventures, whether or not such other enterprises shall be in competition
with any activities of the Partnership, the General Partner or any Subsidiary of
the Partnership or the General Partner; and neither the Partnership, the General
Partner, any such Subsidiary nor the other Partners shall have any right by
virtue of this Agreement in and to such independent ventures or to the income or
profits derived therefrom.
SECTION 12.3 POWER OF ATTORNEY.
(A) Each Partner hereby irrevocably appoints and empowers the
General Partner (which term shall include the Liquidator, in the event of a
liquidation, for purposes of this Section 12.3) and each of their authorized
officers and attorneys-in-fact with full power of substitution as his true and
lawful agent and attorney-in-fact, with full power and authority in his name,
place and xxxxx to:
(1) make, execute, acknowledge, publish and file in the
appropriate public offices (a) any duly approved amendments to the Certificate
pursuant to the Act and to the laws of any state in which such documents are
required to be filed; (b) any certificates, instruments or documents as may be
required by, or may be appropriate under, the laws of any state or other
jurisdiction in which the Partnership is doing or intends to do business; (c)
any other instrument which may be required to be filed by the Partnership under
the laws of any state or by any governmental agency, or which the General
Partner deems advisable to file; (d) any documents which may be required to
effect the continuation of the Partnership, the admission, withdrawal or
substitution of any Partner pursuant to Article VIII, dissolution and
termination of the Partnership pursuant to Article X, or the surrender of any
rights or the assumption of any additional responsibilities by the General
Partner; (e) any document which may be required to effect an amendment to this
Agreement to correct any mistake, omission or inconsistency, or to cure
45
-41-
any ambiguity herein, to the extent such amendment is permitted by Section
11.1(B); and (f) all instruments (including this Agreement and amendments and
restatements hereof) relating to the determination of the rights, preferences
and privileges of any class or series of Partnership Units issued pursuant to
Section 4.2(B) of this Agreement; and
(2) sign, execute, swear to and acknowledge all voting
ballots, consents, approvals, waivers, certificates and other instruments
appropriate or necessary, in the sole discretion of the General Partner, to
make, evidence, give, confirm or ratify any vote, consent, approval, agreement
or other action which is made or given by the Partners hereunder or is
consistent with the terms of this Agreement and appropriate or necessary, in the
sole discretion of the General Partner, to effectuate the terms or intent of
this Agreement.
(B) Nothing herein contained shall be construed as authorizing the
General Partner to amend this Agreement except in accordance with Article XI or
as may be otherwise expressly provided for in this Agreement.
(C) The foregoing grant of authority (i) is a special power of
attorney, coupled with an interest, and it shall survive the Involuntary
Withdrawal of any Partner and shall extend to such Partner's heirs, successors,
assigns and personal representatives; (ii) may be exercised by the General
Partner for each and every Partner acting as attorney-in-fact for each and every
Partner; and (iii) shall survive the Transfer by a Limited Partner of all or any
portion of its Interest and shall be fully binding upon such transferee; except
that the power of attorney shall survive such assignment with respect to the
assignor Limited Partner for the sole purpose of enabling the General Partner to
execute, acknowledge and file any instrument necessary to effect the admission
of the transferee as a Substitute Limited Partner. Each Partner hereby agrees to
be bound by any representations made by the General Partner, acting in good
faith pursuant to such power of attorney. Each Partner shall execute and deliver
to the General Partner, within fifteen (15) days after receipt of the General
Partner's request therefor, such further designations, powers of attorney and
other instruments as the General Partner deems necessary to effectuate this
Agreement and the purposes of the Partnership.
(D) Each LB Partner hereby irrevocably appoints and empowers the
General Partner and the Liquidator, in the event of a liquidation, and each of
their authorized officers and attorneys-in-fact with full power of substitution,
as the true and lawful agent and attorney-in-fact of such LB Partner with full
power and authority in the name, place and stead of such LB Partner to take such
actions (including waivers under the Partnership Agreement) or refrain from
taking such action as the General Partner reasonably believes are necessary or
desirable to achieve the purposes of Section 11.3 of the Partnership Agreement.
SECTION 12.4 NOTICES. All notices and other communications provided for
or permitted hereunder shall be made in writing by hand delivery, registered
first-class mail, telex, telecopier, or any courier guaranteeing overnight
delivery, (i) if to a Limited Partner, at the most current address given by such
Limited Partner to the General Partner by means of a notice given in accordance
with the provisions of this Section 12.4, which address initially is the address
contained in the records of the General Partner, or (ii) if to the General
Partner, 000 X. Xxxxxx Xxxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxxx 00000, Attn:
President.
All such notices and communications shall be deemed to have been
duly given: at the time delivered by hand, if hand delivered; five business days
after being deposited in the mail, postage prepaid, if mailed; when answered
back, if telexed; or when receipt is acknowledged, if telecopied.
SECTION 12.5 FURTHER ASSURANCES. The parties agree to execute and
deliver all such documents, provide all such information and take or refrain
from taking any action as may be necessary or desirable to achieve the purposes
of this Agreement and the Partnership.
46
-42-
SECTION 12.6 TITLES AND CAPTIONS. All article or section titles or
captions in this Agreement are solely for convenience and shall not be deemed to
be part of this Agreement or otherwise define, limit or extend the scope or
intent of any provision hereof.
SECTION 12.7 APPLICABLE LAW. This Agreement, and the application or
interpretation thereof, shall be governed exclusively by its terms and by the
law of the State of Delaware, without regard to its principles of conflicts of
laws.
SECTION 12.8 BINDING AGREEMENT. This Agreement shall be binding upon
the parties hereto, their heirs, executors, personal representatives, successors
and assigns.
SECTION 12.9 WAIVER OF PARTITION. Each of the parties hereto
irrevocably waives during the term of the Partnership any right that it may have
to maintain any action for partition with respect to any property of the
Partnership.
SECTION 12.10 COUNTERPARTS AND EFFECTIVENESS. This Agreement may be
executed in several counterparts, which shall be treated as originals for all
purposes, and all so executed shall constitute one agreement, binding on all of
the parties hereto, notwithstanding that all the parties are not signatory to
the original or the same counterpart. Any such counterpart shall be admissible
into evidence as an original hereof against each Person who executed it. The
execution of this Agreement and delivery thereof by facsimile shall be
sufficient for all purposes, and shall be binding upon any party who so
executes.
SECTION 12.11 SURVIVAL OF REPRESENTATIONS. All representations and
warranties herein shall survive the dissolution and final liquidation of the
Partnership.
SECTION 12.12 ENTIRE AGREEMENT. This Agreement (and all Exhibits
hereto) contains the entire understanding among the parties hereto and
supersedes all prior written or oral agreements among them respecting the within
subject matter, unless otherwise provided herein. There are no representations,
agreements, arrangements or understandings, oral or written, among the Partners
hereto relating to the subject matter of this Agreement which are not fully
expressed herein and in said Exhibits.
47
-43-
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered
by the parties hereto as of the day and year first above written.
General Partner: FIRST INDUSTRIAL REALTY TRUST INC.,
as sole General Partner of the Partnership
By: /s/ Xxxxxxx X. Xxxxxx
-----------------------------------------
Class E Limited Partner FIRST INDUSTRIAL REALTY TRUST, INC.,
as Class E Limited Partner
By: /s/ Xxxxxxx X. Xxxxxx
-----------------------------------------
