EXHIBIT 10.1
THIRD AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF U.S. RESTAURANT PROPERTIES MASTER L.P.
(FORMERLY BURGER KING INVESTORS MASTER L.P.)
TABLE OF CONTENTS
PAGE
----
ARTICLE I - CERTAIN DEFINITIONS. . . . . . . . . . . . . . . . . . . . . 2
ARTICLE II - FORMATION; NAME; PLACE OF BUSINESS. . . . . . . . . . . . . 16
2.1 Formation of Partnership; Certificate of Limited
Partnership. . . . . . . . . . . . . . . . . . . . . . 16
2.2 Name of Partnership. . . . . . . . . . . . . . . . . . . 16
2.3 Place of Business. . . . . . . . . . . . . . . . . . . . 17
2.4 Registered Office and Registered Agent.. . . . . . . . . 17
ARTICLE III - PURPOSES, NATURE OF BUSINESS, AND POWERS OF PARTNERSHIP. . 17
3.1 Purposes and Business. . . . . . . . . . . . . . . . . . 17
3.2 Powers.. . . . . . . . . . . . . . . . . . . . . . . . . 18
ARTICLE IV - TERM OF PARTNERSHIP . . . . . . . . . . . . . . . . . . . . 19
4.1 Term.. . . . . . . . . . . . . . . . . . . . . . . . . . 19
ARTICLE V - CAPITAL. . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.1 Capital Contributions of Managing General Partner. . . . 19
5.2 Capital Contributions of Special General Partner.. . . . 19
5.3 Capital Contribution of Organizational Limited Partner.. 20
5.4 Capital Contributions of Initial Limited Partners. . . . 20
5.5 Additional Issuances of Units and Capital Contributions. 20
5.6 No Fractional Units. . . . . . . . . . . . . . . . . . . 21
5.7 Splits and Combinations. . . . . . . . . . . . . . . . . 21
5.8 Capital Accounts.. . . . . . . . . . . . . . . . . . . . 22
5.9 Negative Capital Accounts. . . . . . . . . . . . . . . . 25
5.10 No Interest on Amounts in Capital Account. . . . . . . . 26
5.11 Advances to Partnership. . . . . . . . . . . . . . . . . 26
5.12 Liability of Limited Partners. . . . . . . . . . . . . . 26
5.13 Return of Capital. . . . . . . . . . . . . . . . . . . . 26
5.14 Exchange of Units. . . . . . . . . . . . . . . . . . . . 26
5.15 No Preemptive Rights . . . . . . . . . . . . . . . . . . 27
ARTICLE VI - ALLOCATION OF PROFITS AND LOSSES; DISTRIBUTIONS OF
CASH FLOW AND CERTAIN PROCEEDS . . . . . . . . . . . . . 27
6.1 Certain Definitions. . . . . . . . . . . . . . . . . . . 27
6.2 Allocations for Capital Account Purposes.. . . . . . . . 31
6.3 Allocations for Tax Purposes.. . . . . . . . . . . . . . 37
6.4 Allocation of Income and Less with Respect to Interests
Transferred. . . . . . . . . . . . . . . . . . . . . . . 38
-i-
TABLE OF CONTENTS
(Continued)
PAGE
----
6.5 Distributions of Cash Flow.. . . . . . . . . . . . . . . 39
6.6 Distribution of Proceeds from Interim Capital
Transactions . . . . . . . . . . . . . . . . . . . . . 40
6.7 Distribution of Proceeds from Terminating Capital
Transactions; Liquidation Distributions. . . . . . . . 41
ARTICLE VII - MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . 41
7.1 Management and Control of Partnership. . . . . . . . . . 41
7.2 Powers of Managing General Partner.. . . . . . . . . . . 42
7.3 Restrictions on Authority of Managing General Partner. . 48
7.4 Title to Partnership Assets. . . . . . . . . . . . . . . 50
7.5 Working Capital Reserve. . . . . . . . . . . . . . . . . 50
7.6 Other Business Activities of Partners. . . . . . . . . . 51
7.7 Transactions with Managing General Partner or
Affiliates . . . . . . . . . . . . . . . . . . . . . . 51
7.8 Net Worth Representation; Independent Judgment.. . . . . 51
7.9 Liability of General Partners to Partnership and
Limited Partners.. . . . . . . . . . . . . . . . . . . 52
7.10 Indemnification of General Partners and Affiliates . . . 52
7.11 No Management by Limited Partners and Assignees. . . . . 53
7.12 Other Matters Concerning General Partners. . . . . . . . 54
7.13 Revolving Line of Credit; Other Loans to or from
a General Partner. . . . . . . . . . . . . . . . . . . 54
7.14 Purchase or Sale of Units; Registration Rights of
General Partners.. . . . . . . . . . . . . . . . . . . 55
7.15 Periodic Consideration of Sale or Refinancing. . . . . . 57
7.16 Other Limitations. . . . . . . . . . . . . . . . . . . . 57
ARTICLE VIII - ACQUISITION, OPERATION, AND DISPOSITION OF
RESTRICTED RESTAURANT PROPERTIES . . . . . . . . . . . 58
8.1 General. . . . . . . . . . . . . . . . . . . . . . . . . 58
8.2 Contribution to Operating Partnership; Acquisition
of Restaurant Properties . . . . . . . . . . . . . . . 59
8.3 Use and Other Restrictions . . . . . . . . . . . . . . . 59
8.4 Restrictions on Transfer of Restricted Restaurant
Properties.. . . . . . . . . . . . . . . . . . . . . . 65
8.5 Rent Relief. . . . . . . . . . . . . . . . . . . . . . . 67
8.6 Successor Policy.. . . . . . . . . . . . . . . . . . . . 69
8.7 Competitive Facilities.. . . . . . . . . . . . . . . . . 71
8.8 Acquisition of Restricted Restaurant Properties By
the General Partners or Affiliates . . . . . . . . . . 72
8.9 Termination of Lease for Restricted Restaurant Property
Following Termination of BKC Franchise Agreement . . . 72
8.10 Independent Consultant.. . . . . . . . . . . . . . . . . 73
8.11 Consent to Use of Name and Trademarks. . . . . . . . . . 75
8.12 Acquisition of Fee Title to Properties Subject to
Primary Leases . . . . . . . . . . . . . . . . . . . . 75
-ii-
TABLE OF CONTENTS
(Continued)
PAGE
----
8.13 Location of Other Restaurant Properties. . . . . . . . . 75
ARTICLE IX - COMPENSATION OF GENERAL PARTNERS: PAYMENT OF
PARTNERSHIP EXPENSES . . . . . . . . . . . . . . . . . . 76
9.1 Compensation to General Partners.. . . . . . . . . . . . 76
9.2 Expenses in Connection With Organization of
Partnership and Initial Public Offering. . . . . . . . 77
9.3 Operational Expenses.. . . . . . . . . . . . . . . . . . 78
9.4 Reimbursement of the General Partners. . . . . . . . . . 81
ARTICLE X - BANK ACCOUNTS; BOOKS AND RECORDS; FISCAL YEAR;
STATEMENTS; TAX MATTERS. . . . . . . . . . . . . . . . . . 81
10.1 Bank Accounts. . . . . . . . . . . . . . . . . . . . . . 81
10.2 Books and Records. . . . . . . . . . . . . . . . . . . . 82
10.3 Fiscal Year. . . . . . . . . . . . . . . . . . . . . . . 83
10.4 Financial Statements and Information.. . . . . . . . . . 83
10.5 Accounting Decisions.. . . . . . . . . . . . . . . . . . 84
10.6 Where Maintained.. . . . . . . . . . . . . . . . . . . . 85
10.7 Preparation of Tax Returns.. . . . . . . . . . . . . . . 85
10.8 Tax Elections. . . . . . . . . . . . . . . . . . . . . . 85
10.9 Tax Controversies. . . . . . . . . . . . . . . . . . . . 85
10.10 Organizational Expense . . . . . . . . . . . . . . . . . 86
10.11 Taxation as a Partnership. . . . . . . . . . . . . . . . 86
10.12 Determination of Adjusted Basis in Connection with
Section 754 Election . . . . . . . . . . . . . . . . . 86
10.13 Withholding in Respect of Foreign Partners . . . . . . . 86
10.14. Qualification as a REIT. . . . . . . . . . . . . . . . . 88
ARTICLE XI - ISSUANCE AND DEPOSIT OF CERTIFICATE OF PARTNERSHIP
INTEREST. . . . . . . . . . . . . . . . . . . . . . . . . 89
11.1 Issuance of Certificates of Partnership Interest.. . . . 89
11.2 Deposit of Certificates of Partnership Interest;
Issuance of Depositary Receipts. . . . . . . . . . . . 89
11.3 Lost, Stolen, or Destroyed Certificates. . . . . . . . . 89
11.4 Record Holder. . . . . . . . . . . . . . . . . . . . . . 90
ARTICLE XII - TRANSFER OF INTERESTS AND UNITS. . . . . . . . . . . . . . 90
12.1 Transfer.. . . . . . . . . . . . . . . . . . . . . . . . 90
12.2 Transfer of Interests of General Partners. . . . . . . . 91
12.3 Transfer of Units. . . . . . . . . . . . . . . . . . . . 92
12.4 Transfer of Depositary Receipts. . . . . . . . . . . . . 92
-iii-
TABLE OF CONTENTS
(Continued)
PAGE
----
12.5 Restrictions on Transfer.. . . . . . . . . . . . . . . . 93
ARTICLE XIII - ADMISSION OF PARTNERS . . . . . . . . . . . . . . . . . . 94
13.1 Admission of Initial Limited Partners. . . . . . . . . . 94
13.2 Admission of Substituted Limited Partners. . . . . . . . 94
13.3 Admission of a Successor General Partner.. . . . . . . . 95
ARTICLE XIV - WITHDRAWAL OR REMOVAL OF GENERAL PARTNERS;
WITHDRAWAL OF LIMITED PARTNERS . . . . . . . . . . . . . 96
14.1 Withdrawal of General Partners.. . . . . . . . . . . . . 96
14.2 Removal of General Partners. . . . . . . . . . . . . . . 97
14.3 Limitations on Withdrawal or Removal of a General
Partner and Election of a Successor General Partner. . 97
14.4 Amendment of Agreement and Certificate of Limited
Partnership. . . . . . . . . . . . . . . . . . . . . . 97
14.5 Interest of Departing Partner and Successor. . . . . . . 98
14.6 Withdrawal of Limited Partners.. . . . . . . . . . . . . 100
ARTICLE XV - DISSOLUTION AND LIQUIDATION . . . . . . . . . . . . . . . . 100
15.1 No Dissolution.. . . . . . . . . . . . . . . . . . . . . 100
15.2 Events Causing Dissolution.. . . . . . . . . . . . . . . 100
15.3 Right to Continue Business of Partnership. . . . . . . . 101
15.4 Dissolution. . . . . . . . . . . . . . . . . . . . . . . 102
15.5 Liquidation. . . . . . . . . . . . . . . . . . . . . . . 102
15.6 Reasonable Time for Winding Up.. . . . . . . . . . . . . 103
15.7 Termination of Partnership.. . . . . . . . . . . . . . . 104
ARTICLE XVI - AMENDMENTS; MEETINGS; RECORD DATE. . . . . . . . . . . . . 104
16.1 Amendment to be Adopted Solely by the Managing
General Partner. . . . . . . . . . . . . . . . . . . . 104
16.2 Amendment Procedures.. . . . . . . . . . . . . . . . . . 105
16.3 Amendment Restrictions.. . . . . . . . . . . . . . . . . 106
16.4 Meetings.. . . . . . . . . . . . . . . . . . . . . . . . 106
16.5 Notice of a Meeting. . . . . . . . . . . . . . . . . . . 107
16.6 Record Date. . . . . . . . . . . . . . . . . . . . . . . 107
16.7 Adjournment. . . . . . . . . . . . . . . . . . . . . . . 107
16.8 Waiver of Notice; Consent to Meeting; Approval
of Minutes . . . . . . . . . . . . . . . . . . . . . . 108
16.9 Quorum.. . . . . . . . . . . . . . . . . . . . . . . . . 108
16.10 Conduct of Meeting . . . . . . . . . . . . . . . . . . . 108
16.11 Voting and Other Rights. . . . . . . . . . . . . . . . . 109
16.12 Action Without a Meeting . . . . . . . . . . . . . . . . 109
-iv-
TABLE OF CONTENTS
(Continued)
PAGE
----
ARTICLE XVII - POWER OF ATTORNEY . . . . . . . . . . . . . . . . . . . . 110
ARTICLE XVIII - MISCELLANEOUS PROVISIONS . . . . . . . . . . . . . . . . 111
18.1 Additional Actions and Documents.. . . . . . . . . . . . 111
18.2 Notices. . . . . . . . . . . . . . . . . . . . . . . . . 111
18.3 Severability.. . . . . . . . . . . . . . . . . . . . . . 112
18.4 Survival.. . . . . . . . . . . . . . . . . . . . . . . . 113
18.5 Waivers. . . . . . . . . . . . . . . . . . . . . . . . . 113
18.6 Exercise of Rights.. . . . . . . . . . . . . . . . . . . 113
18.7 Binding Effect.. . . . . . . . . . . . . . . . . . . . . 113
18.8 Limitation on Benefits of this Agreement.. . . . . . . . 113
18.9 Force Majeure. . . . . . . . . . . . . . . . . . . . . . 114
18.10 Consent of Limited Partners and Assignees. . . . . . . . 114
18.11 Entire Agreement . . . . . . . . . . . . . . . . . . . . 114
18.12 Pronouns . . . . . . . . . . . . . . . . . . . . . . . . 114
18.13 Headings . . . . . . . . . . . . . . . . . . . . . . . . 114
18.14 Governing Law. . . . . . . . . . . . . . . . . . . . . . 115
18.15 Execution in Counterparts. . . . . . . . . . . . . . . . 115
ARTICLE XIX - EXECUTION. . . . . . . . . . . . . . . . . . . . . . . . . 116
-v-
Dated as of ___________________, 1997
THIRD AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF U.S. RESTAURANT PROPERTIES MASTER L.P.
(FORMERLY BURGER KING INVESTORS MASTER L.P.)
THIS THIRD AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP (this
"Agreement") is entered into as of ______________, 1997, by and among QSV
Properties Inc., a Delaware corporation having its principal office at 0000
Xxxxxxx Xxxx Xxxx, Xxxxx 000, Xxxxxx, Xxxxx 00000 (the "Managing General
Partner") (or any other person or entity who shall in the future execute and
deliver this Agreement as a Substituted General Partner pursuant to the
provisions hereof) as the general partner (the "General Partner"), and all other
persons and entities who are or shall in the future become limited partners of
this limited partnership in accordance with the provisions hereof (the "Limited
Partners") (the Limited Partners are sometimes hereinafter referred to as a
"Limited Partner," individually, and the "Limited Partners," collectively, and
the General Partner and the Limited Partners sometimes hereinafter referred to
as a "Partner," individually, and as the "Partners," collectively).
WHEREAS, the Partners and Burger King Corporation, a Florida corporation
("BKC"), as the Special General Partner, heretofore have entered into an
Agreement of Limited Partnership dated as of December 10, 1985;
WHEREAS, the Partners and BKC amended and restated such Agreement of
Limited Partnership in its entirety as of January 6, 1986 and February 3, 1986,
and further amended such Agreement of Limited Partnership by Amendments Nos. 1
through 100 thereto through February 28, 1995;
WHEREAS, BKC has withdrawn as Special General Partner effective as of
November 30, 1994;
WHEREAS, the Partners amended and restated such Agreement of Limited
Partnership in its entirety as of March 17, 1995 (the "Second Amended and
Restated Agreement"); and
WHEREAS, the Partners desire to further amend and restate such Second
Amended and Restated Agreement in its entirety as hereinafter set forth;
NOW, THEREFORE, for and in consideration of the foregoing, and of the
covenants and agreements hereinafter set forth, it is hereby agreed as follows:
-1-
ARTICLE I
CERTAIN DEFINITIONS
Unless the context otherwise specifies or requires, the terms defined in
this Article I shall, for the purposes of this Agreement, have the meanings
herein specified. Certain other capitalized terms used in this Agreement are
defined in Articles VI, VIII and XIV. Unless otherwise specified, all
references herein to Articles or Sections are to Articles or Sections of this
Agreement.
ACCOUNTING FIRM: The independent public accountants who are
responsible for assisting in maintaining Partnership tax accounting and
allocation records and advising the Managing General Partner with respect
thereto, as selected and approved by the Managing General Partner from time
to time, in its sole and absolute discretion. The Accounting Firm and the
Auditing Firm are not required to be the same.
ADDITIONAL LIMITED PARTNER. A Person who is admitted to the
Partnership as a Limited Partner pursuant to Sections 5.5(a) and 13.1.
ADJUSTED BASIS: The basis for determining gain or loss for federal
income tax purposes from the sale or other disposition of property, as
defined in Section 1011 of the Code.
ADJUSTED CAPITAL ACCOUNT DEFICIT: With respect to a Partner or Assignee,
the deficit balance, if any, in that Partner's or Assignee's Capital Account as
of the end of the relevant taxable year, after giving effect to the following
adjustments:
(a) The Capital Account will be increased by any amount that the
Partner or Assignee is obligated to restore, if any, including any amount he
is deemed to be obligated to restore under the penultimate sentences of
Treasury Regulations Section 1.704-2(g)(1) or 1.704-2(i)(5); and
(b) The Capital Account will be decreased by the items described in
Treasury Regulations Sections 1.704-1(b)(2) (ii)(d)(4), (5) and (6).
This definition of Adjusted Capital Account Deficit is intended to
comply with the provisions of Treasury Regulations Section 1.704-1(b)(2)(ii)(d).
ADJUSTED PROPERTY: Any property the Carrying Value of which has been
adjusted pursuant to Section 5.8(d)(i) or Section 5.8(d)(ii), in the case of a
distribution described in Section 5.8(d)(ii)(A).
AFFILIATE: (a) Any Person (as hereinafter defined) directly or
indirectly owning, controlling, or holding power to vote ten percent (10%) or
more of the outstanding voting securities of the Person in question; (b) any
Person ten percent (10%) or more of whose outstanding voting securities are
directly or indirectly owned, controlled, or held with power to
-2-
vote by the Person in question; (c) any Person directly or indirectly
controlling, controlled by, or under common control with the Person in
question; (d) if the Person in question is a corporation, any executive
officer or director of the Person in question or of any corporation directly
or indirectly controlling the Person in question; and (e) if the Person in
question is a partnership, any general partner owning or controlling ten
percent (10%) or more of either the capital or profits interests in such
partnership. As used in this definition of "Affiliate," the term "control"
means 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 OFFERING PROCEEDS: The total amount of proceeds received by
the Partnership from the Initial Public Offering (including any proceeds
received pursuant to Section 5.4(b) in connection with the over-allotment
option described therein).
AGREEMENT: This Third Amended and Restated Agreement of Limited
Partnership, as it may be further amended or supplemented from time to time.
AMENDED AGREEMENT: The Amended and Restated Agreement of Limited
Partnership of Burger King Investors Master L.P., dated as of February 3, 1986,
entered into by and among the Managing General Partner, BKC, the Organizational
Limited Partner, and the Limited Partners, as amended through February 28, 1995.
ANCILLARY PROPERTY: Personal property (other than personal property
included in the definitions of "Other Restaurant Properties," "Restricted
Restaurant Properties" and "Retail Properties") of whatever kind used in
connection with a Partnership Property, including, without limitation, supplies,
furnishings, equipment, trade dress and franchise, license and other rights.
APPRAISER: Real Estate Research Corporation or its successor, or in the
event that Real Estate Research Corporation or its successor is not available
for any reason to provide an appraisal with respect to any matter hereunder,
Xxxxxx X. Xxxxxx and Company or its successor, or in the event that both Real
Estate Research Corporation or its successor and Xxxxxx X. Xxxxxx and Company or
its successor are not available for any reason to provide an appraisal with
respect to any matter hereunder, Xxxxxxxx and Xxxxxxx, Incorporated or its
successor, or in the event that all of the foregoing companies are not available
for any reason to provide an appraisal with respect to any matters hereunder,
such other independent, nationally recognized real estate valuation firm
selected by the Managing General Partner in its reasonable discretion.
ASSIGNEE: A Person to whom one or more Units or Depositary Units
have been transferred, by assignment of a Depositary Receipt or otherwise, in
a manner permitted under this Agreement, but who has not been admitted to the
Partnership as a Substituted Limited Partner with respect to such Units. The
rights of any such Person in the Partnership with respect to Units for which
such Person has not been admitted to the Partnership as a Substituted Limited
Partner shall be (i) limited to the rights and obligations appurtenant to
such Units to share in the allocations and distributions of the Partnership,
including liquidating distributions of the
-3-
Partnership, and (ii) except as expressly provided herein, otherwise subject
to the limitations under the Delaware RULPA on the rights of an assignee who
has not become a substitute limited partner. An Assignee shall not be
entitled to vote on any matter requiring the vote of Limited Partners, unless
such Assignee has been admitted as a Substituted Limited Partner.
AUDITING FIRM: The independent public accountants who are responsible
for auditing the financial statements of the Partnership as set forth in
Section 10.4, as selected and approved by the Managing General Partner from
time to time, in its sole and absolute discretion. The Auditing Firm and the
Accounting Firm are not required to be the same.
BKC: Burger King Corporation, and the successors and assigns of Burger
King Corporation.
BKC FRANCHISE AGREEMENT: A franchise agreement, whether now existing or
hereafter entered into, between a BKC Franchisee and BKC authorizing the BKC
Franchisee to operate a BK Restaurant, as the same may be amended, renewed, or
extended by BKC.
BKC FRANCHISEES: Persons who operate BK Restaurants pursuant to BKC
Franchise Agreements.
BK RESTAURANTS: Burger King "fast food" restaurants, whether operated by
BKC, an Affiliate of BKC, or a BKC Franchisee. "BK Restaurant" means any one of
the BK Restaurants.
BUSINESS DAY: Monday through Friday of each week, except that a legal
holiday recognized as such by the Government of the United States or the State
of Texas shall not be regarded as a Business Day.
CAPITAL ACCOUNT: The capital account established and maintained for each
Partner and Assignee pursuant to Section 5.8.
CAPITAL CONTRIBUTION: Any property (including cash) contributed to the
Partnership by or on behalf of a Partner.
CARRYING VALUE: (a) With respect to a property contributed to the
Partnership, the fair market value of such propeRty at the time of contribution,
reduced (but not below zero) by all deductions for depreciation, amortization,
cost recovery, and expense in lieu of depreciation debited to the Capital
Accounts of Partners and Assignees, pursuant to Section 5.8(a) with respect to
such property as of the time of determination, and (b) with respect to any other
property, the Adjusted Basis of such property as of the time of determination.
The Carrying Value of any property shall be adjusted from time to time in
accordance with Sections 5.8(b) and 5.8(c), and to reflect changes, additions or
other adjustments to the Carrying Value for dispositions, acquisitions or
improvements of Partnership properties, as deemed to be necessary or appropriate
by the Managing General Partner.
-4-
CERTIFICATE: A non-negotiable certificate issued by the Partnership,
substantially in the form of Exhibit A to this Agreement, evidencing ownership
of one or more Units.
CERTIFICATE OF LIMITED PARTNERSHIP: The Certificate of Limited
Partnership, and any and all amendments thereto, filed on behalf of the
Partnership with the Recording Office as required under the Delaware RULPA.
CLOSING: The "closing time" as defined in the Underwriters Purchase
Agreement.
CLOSING DATE: The date on which the Closing occurs.
CODE: The Internal Revenue Code of 1986, as amended to date and
hereafter amended. Any reference herein to a specific section or sections of
the Code shall be deemed to include a reference to any corresponding
provision of future law.
COMMISSION: The Securities and Exchange Commission.
COMMON STOCK: The common stock, par value $.001 per share, of the REIT.
CONTRIBUTED PROPERTY: Each Contributing Partner's interest in each
property (or interest therein), or other consideration, but excluding cash
and cash equivalents, contributed directly or indirectly to the Partnership
by such Contributing Partner (or deemed contributed to the Partnership upon
termination thereof pursuant to Section 708 of the Code). Once the Carrying
Value of a Contributed Property is adjusted pursuant to Section 5.8(d), such
Property shall no longer constitute a Contributed Property for purposes of
Section 6.3(b), but shall be deemed an Adjusted Property for such purposes.
CONTRIBUTING PARTNER: Each Partner or Assignee contributing directly or
indirectly (or deemed to have contributed upon termination of the Partnership
pursuant to Section 708 of the Code) a Contributed Property to the Partnership
in exchange for a Partnership Interest.
CONVERSION FACTOR: 1.0, provided that in the event that the REIT (a)
declares or pays a dividend on its outstanding shares of Common Stock in shares
of Common Stock or makes a distribution to all holders of its outstanding shares
of Common Stock; (b) subdivides its outstanding shares of Common Stock; or (c)
combines its outstanding shares of Common Stock into a smaller number of shares
of Common Stock, the Conversion Factor shall be adjusted by multiplying the
Conversion Factor by a fraction, the numerator of which shall be the number of
shares of Common Stock issued and outstanding on the record date for such
dividend, distribution, subdivision or combination, assuming for such purpose
that such dividend, distribution, subdivision or combination has occurred as of
such time, and the denominator of which shall be the actual number of shares of
Common Stock (determined without the above assumption) issued and outstanding on
the record date for such dividend, distribution, subdivision or combination.
Any adjustment to the Conversion Factor shall become effective immediately after
the effective date of such event retroactive to the record date, if any, for
such event.
-5-
DATE OF DELIVERY: The "date of delivery," as defined in the Underwriters
Purchase Agreement.
DELAWARE RULPA: The Delaware Revised Uniform Limited Partnership Act
(Del. Code Xxx. tit. 6 Section 17-101 ET SEQ.), as amended to date and as it
may be amended from time to time hereafter, and any successor to such Act.
DEPARTING PARTNER: A General Partner who has withdrawn or been removed
pursuant to Section 14.1 or 14.2, as the case may be, as of the effective date
of the withdrawal or removal of such General Partner.
DEPOSIT ACCOUNT: The account established by the Depositary pursuant to
the Deposit Agreement.
DEPOSIT AGREEMENT: The agreement so designated, to be entered into
by and among the Managing General Partner, for itself and in its capacity
both as Managing General Partner and as attorney-in-fact of the Initial
Limited Partners, and the Depositary, as it may be amended or supplemented
from time to time.
DEPOSITARY: The Partnership's depositary, as selected and approved
by the Managing General Partner from time to time, in its sole and absolute
discretion, or any successor to it as depositary under the Deposit Agreement.
DEPOSITARY RECEIPT: A depositary receipt, issued by the Depositary or
agents appointed by the Depositary in accordance with the Deposit Agreement,
evidencing ownership of one or more Depositary Units.
DEPOSITARY UNIT: A Unit on deposit with the Depositary pursuant to the
Deposit Agreement.
DRIP: A distribution reinvestment plan under which the Partnership
issues Units to electing Limited Partners and Assignees in lieu of making
cash distributions to them, which Units could either be issued directly to
such Limited Partners and Assignees or deposited with the Depositary and be
evidenced by Depositary Receipts issued to them.
EFFECTIVE DATE: The date as of which the Managing General Partner on
its own behalf and the Managing General Partner on behalf of the Limited
Partners execute this Agreement after the approval of this Agreement by a
Majority Vote of the Limited Partners.
EXCHANGE ACT: Securities Exchange Act of 1934, as amended, and the
regulations of the Commission promulgated thereunder.
EXTRAORDINARY INCOME AND EXTRAORDINARY LOSS: For each taxable year or
shorter period, the positive sum, in the case of Extraordinary Income, and the
negative sum, in the case of
-6-
Extraordinary Loss, of all items of gain or loss recognized by the
Partnership from Capital Transactions (other than items allocated pursuant to
the Special Allocations) occurring in such taxable period and determined in
accordance with Section 5.8(b).
FISCAL YEAR: The fiscal year of the Partnership for financial
accounting purposes, and for federal, state, and local income tax purposes,
which shall be the calendar year unless changed by the Managing General
Partner in accordance with Section 10.3.
FOREIGN PARTNER: Any Partner or Assignee who is a foreign person
(within the meaning of Section 1445 or 1446 of the Code and Treasury
Regulations promulgated thereunder) and/or who is not a citizen or resident
of the United States (within the meaning of Section 1.1441-5 of the Treasury
Regulations).
GENERAL PARTNERS: The Managing General Partner and any Substituted
General Partner. "General Partner" means one of the General Partners.
IMMEDIATE FAMILY: With respect to any natural Person, such natural
Person's spouse and such natural Person's natural Person's adoptive Parents,
descendants (whether natural or adopted), nephews, nieces, brothers, sisters,
sons and daughters-in-law.
INCAPACITY OR INCAPACITATED: (a) As to any individual Partner, death,
total physical disability or entry by a court of competent jurisdiction
adjudicating him or her incompetent to manage his or her Person or his or her
estate; (b) as to any corporation which is a Partner, the filing of a
certificate of dissolution, or its equivalent, for the corporation or the
revocation of its charter; (c) as to any partnership which is a Partner, the
dissolution and commencement of winding up of the partnership; (d) as to any
estate which is a Partner, the distribution by the fiduciary of the estate's
entire interest in the Partnership; (e) as to any trustee of a trust which is
a Partner, the termination of the trust (but not the substitution of a new
trustee); or (f) as to any Partner, the bankruptcy of such Partner. For
purposes of this definition, bankruptcy of a Partner shall be deemed to have
occurred when (i) the Partner commences a voluntary proceeding seeking
liquidation, reorganization or other relief under any bankruptcy, insolvency
or other similar law nor or thereafter in effect, (ii) the Partner is
adjudged as bankrupt or insolvent, or a final and nonappealable order for
relief under any bankruptcy, insolvency or similar law now or thereafter in
effect has been entered against the Partner, (iii) the Partner executes and
delivers a general assignment for the benefit of the Partner's creditors,
(iv) the Partner files an answer or other pleading admitting or failing to
contest the material allegations of a petition filed against the Partner in
any proceeding of the nature described in clause (ii) above, (v) the Partner
seeks, consents to or acquiesces in the appointment of a trustee, receiver or
liquidator for the Partner or for all or any substantial part of the
Partner's properties, (vi) any proceeding seeking liquidation, reorganization
or other relief of or against such Partner under any bankruptcy, insolvency
or other similar law now or hereafter in effect has not been dismissed
without one hundred twenty (120) days after the commencement thereof, (vii)
the appointment without the Partner's consent or acquiescence of a trustee,
receiver or liquidator has not been vacated or stayed within ninety (90) days
of such appointment, or (viii) an appointment referred to in clause
-7-
(g) which has been stayed is not vacated within ninety (90) days after the
expiration of any such stay.
INDEPENDENT CONSULTANT: Agribusiness Associates, Inc., or in the
event Agribusiness Associates, Inc. is unable or unwilling to advise the
Managing General Partner on a particular matter or informs the Managing
General Partner that it no longer is willing to serve as Independent
Consultant, or in the event Agribusiness Associates, Inc., is terminated as
the Independent Consultant in accordance with Section 8.10(b), any substitute
consultant selected by the Managing General Partner in accordance with
Section 8.10(b).
INITIAL LIMITED PARTNERS: Each Underwriter purchasing Units in the
Initial Public Offering in accordance with Section 5.4 and the Underwriters
Purchase Agreement.
INITIAL PUBLIC OFFERING: The initial public offering of Units, completed
on _________________.
INITIAL UNIT PRICE: Twenty Dollars ($20).
LIMITED PARTNERS: The Organizational Limited Partner, the Initial
Limited Partners, the Additional Limited Partners and the Substituted Limited
Partners, each for so long as they are limited partners hereunder. "Limited
Partner" means one of the Limited Partners. An Assignee who has not been
admitted as a Substituted Limited Partner with respect to some or all of the
Units owned by such Assignee shall not be considered a Limited Partner with
respect to such Units for the purposes of this Agreement.
LIQUIDATING TRUSTEE: The Managing General Partner, unless the
dissolution of the Partnership is caused by the withdrawal, bankruptcy,
removal, or dissolution of the Managing General Partner, in which event the
Liquidating Trustee shall be the Person or Persons selected pursuant to
Section 15.5.
MAJORITY VOTE OF THE LIMITED PARTNERS: The written consent of, or an
affirmative vote in accordance with Section 16.4 by, Limited Partners of record
who are Limited Partners (and not Assignees) with respect to more than fifty
percent (50%) of the total number of all outstanding Units held by all Limited
Partners of record, as Limited Partners (rather than as Assignees).
MANAGING GENERAL PARTNER: QSV or any successor appointed pursuant to
Section 12.2, 14.1, 14.2 or 15.3 hereof, as the case may be.
NASDAQ: The National Association of Securities Dealers Automated
Quotations System.
NATIONAL SECURITIES EXCHANGE: An exchange registered with the Commission
under Section 6(a) of the Exchange Act.
-8-
NET INCOME AND NET LOSS: For each taxable year or shorter period, the
positive sum, in the case of Net Income, or the negative sum, in the case of Net
Loss, of all items of income, gain, deduction and loss (other than items
included in computing Extraordinary Income and Extraordinary Loss or allocated
pursuant to the Special Allocations) recognized by the Partnership during such
taxable period and determined in accordance with Section 5.8(b).
NON-FOREIGN CERTIFICATE: The certificate issued by any Partner or
Assignee who is not a Foreign Partner pursuant to Section 10.13 to the
Partnership by such. Partner or Assignee. Such Certificate shall (i)
provide that such Partner or Assignee is not a foreign person (within the
meaning of Section 1445 or 1446 of the Code) and be in the form prescribed in
the Treasury Regulations promulgated under Sections 1445 and 1446 of the Code
or (ii) provide that such Partner or Assignee is a citizen or resident of the
United States.
NONRECOURSE DEDUCTIONS: The meaning ascribed to it in Treasury
Regulations Section 1.704-2(b)(1).
NOTICE OF EXCHANGE: The Notice of Exchange substantially in the form of
EXHIBIT ___ to this Agreement.
OPERATING PARTNERSHIP: U.S. Restaurant Properties Operating L.P., a
Delaware limited partnership (formerly Burger King Operating Limited
Partnership) which was formed concurrently herewith for the purpose of
acquiring, holding, operating and disposing of the Partnership Properties, and
any successor limited partnership.
OPERATING PARTNERSHIP AGREEMENT. The third amended and restated limited
partnership agreement, dated concurrently herewith, by and among the Managing
General Partner, as general partner, and the Partnership, as sole limited
partner, pursuant to which the Operating Partnership was organized and is
existing, as it may be further amended or supplemented from time to time.
OPINION OF INDEPENDENT COUNSEL: A written opinion of the law firm of
Xxxxxxxx Xxxxxxxx & Xxxxxx P.C. or other counsel designated by or acceptable to
the Managing General Partner, in its sole and absolute discretion.
ORGANIZATIONAL LIMITED PARTNER: QSV.
ORIGINAL AGREEMENT: The Agreement of Limited Partnership of Burger King
Investors Master L.P., dated as of December 10, 1985, entered into by and among
the General Partner, BKC and the Organizational Limited Partner.
OTHER RESTAURANT PROPERTIES: Those certain properties for which food
sales account for 10% or more of the gross revenues generated by the
improvements on such properties (a) properties (regardless of use) acquired
adjacent to such properties or acquired in conjunction with the use or
ownership of such properties, (b) properties that were formerly such type of
properties which are not currently being used for any purpose, and (c) any
unimproved land which is
-9-
adjacent to such a property or on which such a property is reasonably
expected to be constructed within one (1) year following the date of
acquisition of such land, in any case in which the Partnership, the REIT or
any Affiliate or either of them has acquired or acquires an interest, whether
consisting of land to be held in fee simple or as a leasehold and any
improvements thereon (including all real property and certain personal
property associated therewith), together with (i) any other properties
acquired pursuant to Section 7.2(v) with respect to such properties, (ii) any
properties adjacent to such properties, (iii) any buildings, improvements or
other structures situated on such properties, and (iv) any further right,
title or interest acquired in such properties. "Other Restaurant Property"
means any one of the Other Restaurant Properties.
PARTNER: A General Partner or a Limited Partner. "Partners" means the
General Partners and all Limited Partners. An Assignee who has not been
admitted as a Substituted Limited Partner with respect to some or all of the
Units held by such Assignee shall not be considered a Partner with respect to
such Units for purposes of this Agreement.
PARTNER MINIMUM GAIN: The meaning ascribed to it in Treasury Regulations
Section 1.704-2(i)(2).
PARTNER NONRECOURSE DEBT: The meaning ascribed to it in Treasury
Regulations Section 1.704-2(b)(4).
PARTNER NONRECOURSE DEDUCTIONS: The meaning ascribed to it in Treasury
Regulations Section 1.704-2(i)(2).
PARTNERSHIP: The limited partnership created by this Agreement and any
successor partnership thereto continuing the business of the Partnership which
is a reformation or reconstitution of the partnership governed by this
Agreement.
PARTNERSHIP ASSETS: All assets and property, whether tangible or
intangible and whether real, personal, or mixed, at any time owned by the
Partnership, including, without limitation the Partnership's limited
partnership interest in the Operating Partnership and its proportionate
interest in all assets and properties (including, without limitation, the
Partnership Properties) owned by the Operating Partnership.
PARTNERSHIP INTEREST: As to any Partner, all of the interests of that
Partner in the Partnership, including, without limitation, such Partner's (a)
right to a distributive share of the profits and losses of the Partnership, (b)
right to a distributive share of Partnership Assets, and (c) right, if a General
Partner, to participate in the management of the business and affairs of the
Partnership.
PARTNERSHIP MINIMUM GAIN: The meaning ascribed to it in Treasury
Regulations Section 1.704-2(b)(2).
-10-
PARTNERSHIP PROPERTIES: The Other Restaurant Properties, the Restricted
Restaurant Properties and the Retail Properties. "Partnership Property" means
any one of the Partnership Properties.
PERCENTAGE INTEREST: As to any Partner, its interest in the Partnership
as determined by dividing the Units owned by such Partner by the total number of
Units then outstanding.
PERSON: Any individual, corporation, association, partnership, joint
venture, trust, estate, or other entity or organization.
PRICE INDEX: The Consumer Price Index for Urban Wage Earners and
Clerical Workers, all items, All Urban, Base 1967 = 100, issued by the Bureau
of Labor Statistics of the U.S. Department of Labor; provided, however, that
if such Consumer Price Index shall be discontinued with no successor or
comparable successor consumer price index, the Managing General Partner, in
its sole and absolute discretion, shall designate a substitute formula.
PRIMARY LEASE: A lease, whether now existing or hereafter entered into,
pursuant to which the Operating Partnership, as the lessee (either in its own
name or as an assignee of BKC pursuant to the Real Estate Purchase Agreement or
otherwise), holds the right to occupy and use a Partnership Property or any
portion thereof.
QSV: QSV Properties Inc., a Delaware corporation.
REAL ESTATE PURCHASE AGREEMENT: The amended and restated Purchase
and Sale Agreement entered into concurrently with the execution of the
Amended Agreement by and between the Operating Partnership, as purchaser, and
BKC, as seller, pursuant to which the Operating Partnership purchased from
BKC, and BKC sold to the Operating Partnership, certain of the Partnership
Properties.
RECAPTURE INCOME: Any gain recognized by the Partnership (but computed
without regard to any adjustment required by Section 734 or 743 of the Code)
upon the disposition of any property or asset of the Partnership that does not
constitute capital gain for federal income tax purposes because such gain
represents the recapture of deductions previously taken with respect to such
property or assets (determined without regard to Section 291(a)(1) of the Code).
RECORDING OFFICE: The Secretary of State of the State of Delaware.
RECORD DATE: The date established by the Managing General Partner, in
its discretion, subject to Section 6.5(b) in the case of the Record Date for
a distribution pursuant to Article VI, for determining (i) the identity of
Limited Partners entitled to notice of or to vote at any meeting of Limited
Partners or entitled to exercise rights in respect of any other lawful action
of Limited Partners, or (ii) the identity of Partners and Assignees entitled
to receive any report pursuant to Section 10.4 or distribution pursuant to
Article VI.
-11-
RECORD HOLDER: As applied to the Limited Partners, the Persons shown as
Limited Partners on the records of the Partnership as of the close of business
on a particular day; as applied to a Depositary Receipt, the Person in whose
name the Depositary Receipt is issued, and in whose name the Depositary Units
evidenced thereby are registered on the books of the Depositary or a Transfer
Agent as of the close of business on a particular day; and as applied to the
holder of a Unit that is not on deposit in the Deposit Account, the Person shown
as the owner of such Unit on the records of the Partnership as of the close of
business on a particular day. For purposes of Section 6.5, a Unitholder who
acquires a Depositary Unit in a transaction on a National Securities Exchange
and who is registered on the books of the Depositary or a Transfer Agent as the
owner thereof shall be considered to be a Record Holder as of the close of
business on the "trade date" pursuant to which such Unitholder acquired such
Depositary Unit, irrespective of the actual date on which such Unitholder's name
is entered on the books of the Depositary or a Transfer Agent, and a Unitholder
who disposes of a Depositary Unit in a transaction on a National Securities
Exchange that subsequently is registered on the books of the Depositary or a
Transfer Agent shall cease to be considered to be a Record Holder prior to the
close of business on the "trade date" pursuant to which such Unitholder
transferred such Depositary Unit, irrespective of the actual date on which such
transfer is recorded on the books of the Depositary or a Transfer Agent. For
purposes of determining the Record Holder of a Unit or Depositary Unit entitled
to a distribution of Cash Flow pursuant to Section 6.5 or Net Proceeds of a
Capital Transaction pursuant to Section 6.6 or 6.7, the Partnership shall adopt
and apply conventions from time to time that conform with the conventions
applied by the National Securities Exchange on which the Depositary Units are
listed for ascertaining the entitlement between a selling shareholder and a
purchasing shareholder to dividends declared by a corporation.
REIT: U.S. Restaurant Properties, Inc., a Maryland corporation.
REIT STOCK AMOUNT: A number of shares of Common Stock equal to the
product of the number of Units offered for exchange by a Partner, multiplied
by the Conversion Factor, provided that in the event the REIT issues to all
holders of Common Stock rights, options, warrants or convertible or
exchangeable securities entitling the stockholders to subscribe for or
purchase shares of Common Stock, or any other securities or property
(collectively, the "rights"), then the REIT Stock Amount shall also include
such rights that a holder of that number of shares of Common Stock would be
entitled to receive.
RESTRICTED RESTAURANT PROPERTIES: Those certain restaurant properties,
consisting of the land in which the Partnership holds fee simple title or a
leasehold interest and the improvements thereon (including all real property and
certain personal property associated therewith), (a) held as of the Effective
Date or (b) if (and so long as) a BK Restaurant is located thereon, acquired
after the Effective Date, together with (i) any other properties acquired
pursuant to Section 7.2(w) with respect to such properties after the Effective
Date, (ii) any properties adjacent to such properties that are acquired by the
Partnership after the Effective Date, (iii) any buildings, improvements, or
other structures situated on such properties after the Effective Date, and (iv)
any further right, title or interest acquired in such properties after the
Effective Date (including,
-12-
without limitation, fee title acquired pursuant to Section 8.12). "Restricted
Restaurant Property" means any one of the Restricted Restaurant Properties.
RETAIL PROPERTIES: Those certain properties, other than Other
Restaurant Properties and Restricted Restaurant Properties, for which the
sales of goods or services to the public account for substantially all of the
gross revenues generated by the improvements on such properties and (a)
properties (regardless of use) acquired adjacent to such properties or
acquired in conjunction with the use or ownership of such properties, (b)
properties that were formerly such type of properties which are not currently
being used for any purpose, and (c) any unimproved land which is adjacent to
such a property or on which such a property is reasonably expected to be
constructed within one (1) year following the date of acquisition of such
land, in any case in which the Partnership, the REIT or any Affiliate of
either of them has acquired or acquires an interest, whether consisting of
land to be held in fee simple or as a leasehold and any improvements thereon
(including all real property and certain personal property associated
therewith), together with (i) any other properties acquired pursuant to
Section 7.2(v) with respect to such properties, (ii) any properties adjacent
to such properties, (iii) any buildings, improvements or other structures
situated on such properties, and (iv) any further right, title or interest
acquired in such properties. "Retail Property" means any one of the Retail
Properties.
SECTION 754 ELECTION: An election under Section 754 of the Code
relating to the adjustment of Adjusted Basis of Partnership Assets, as
provided in Sections 734 and 743 of the Code.
SECURITIES ACT: Securities Act of 1933, as amended, and the
regulations of the Commission promulgated thereunder.
SHARE PRICE: As of any date of determination: (a) if the shares of
Common Stock are listed or admitted to trading on one or more National
Securities Exchanges, the average of the last reported sale prices per share
regular way or, in case no such reported sale takes place on any such day,
the average of the last reported bid and asked prices per share regular way,
in either case on the principal National Securities Exchange on which the
shares of Common Stock are listed or admitted to trading, for the five (5)
trading days immediately preceding the date of determination; (b) if the
shares of Common Stock are not listed or admitted to trading on a National
Securities Exchange but are quoted by Nasdaq, the average of the last
reported sales prices per share regular way or, in case no reported sale
takes place on any such day or the last reported sales prices are not then
quoted, the average of the closing bid prices per share, for the five (5)
trading days immediately preceding such date of determination, as furnished
by the National Quotation Bureau Incorporated or such other nationally
recognized quotation service as may be selected by the Managing General
Partner for such purpose, if such Bureau is not at the time furnishing
quotations; or (c) if the shares of Common Stock are not listed or admitted
to trading on a National Securities Exchange or quoted by Nasdaq, an amount
equal to the fair market value of a share as of such date of determination,
as determined by the Managing General Partner using any reasonable method of
valuation.
-13-
SPECIAL ALLOCATIONS: The special allocations of items of income, gain,
deduction and loss pursuant to Sections 6.2(d) and (e).
SUBSTITUTED GENERAL PARTNER: A Person who is admitted to the
Partnership as an additional or successor General Partner in accordance with
Section 13.3.
SUBSTITUTED LIMITED PARTNER: A Person who is admitted to the
Partnership as a Limited Partner pursuant to this Agreement in place of, and
with all the rights of, a Limited Partner pursuant to Section 13.2.
SUCCESSOR POLICY: The "successor policy" of BKC relating to the
extension and/or renewal of BKC Franchise Agreements with BKC Franchisees,
which policy, in connection with such extensions and/or renewals, makes
provision for replacing, reconstructing, expanding, and/or otherwise
improving BK Restaurants. All references are to the "successor policy" as in
effect on the date hereof, as the same may be modified, amended,
supplemented, superseded, or replaced by BKC from time to time in its sole
and absolute discretion.
SUPER-MAJORITY VOTE OF THE LIMITED PARTNERS: The written consent of,
or an affirmative vote in accordance with Section 16.4 by, Limited Partners
of record who are Limited Partners (and not Assignees) with respect to more
than eighty percent (80%) of the total number of all outstanding Units held
by all Limited Partners of record, as Limited Partners (rather than as
Assignees).
TERMINATION DATE: December 31, 2035.
TPC: The Pillsbury Company, a Delaware corporation and the owner on the
date of the Amended Agreement of all of the issued and outstanding stock of BKC.
TRANSFER AGENT: The Depositary or any bank, trust company, or other
Person (including the Managing General Partner or any of its affiliates)
appointed by the Managing General Partner from time to time, in its sole and
absolute discretion, to act as transfer agent for Depositary Receipts.
TRANSFER APPLICATION: An application and agreement for transfer of
Depositary Units in the form set forth on the back of the Depositary Receipt
or in a form substantially to the same effect in a separate instrument by
which an Assignee (or his broker, dealer, or nominee holder acting on his
behalf) requests admission to the Partnership as a Substituted Limited
Partner, agrees to be bound by the terms and conditions of this Agreement and
the Deposit Agreement, and grants a power of attorney to the Managing General
Partner pursuant to Article XVII.
TREASURY REGULATIONS: The Income Tax Regulations promulgated under
the Code, as hereafter amended. Any reference herein to a specific section
or sections of specific Treasury Regulations shall be deemed to include a
reference to any corresponding provision of future Treasury Regulations.
-14-
TREATY CERTIFICATE: Any certificate or statement issued pursuant to
Section 10.13 to the Partnership by a Foreign Partner. Such certificate or
statement shall be in the form either (i) prescribed in the United States
Income Tax Convention under which such Foreign Partner is entitled to an
exemption from withholding of United States income tax or to a reduction in
the otherwise applicable United States withholding rate or (ii) prescribed in
Treasury Regulations Section 1.1441-6.
UNDERWRITERS: Those underwriting firms listed in the Underwriters
Purchase Agreement or in an exhibit or schedule thereto that purchased Units
distributed in the Initial Public Offering in accordance with the terms of
the Underwriters Purchase Agreement.
UNDERWRITERS PURCHASE AGREEMENT: That agreement entered into prior to
the Closing Date by and among the Partnership, the Operating Partnership,
BKC, and the Underwriters with respect to the purchase of certain Units by
the Underwriters in connection with the Initial Public Offering.
UNIT: A unit representing an equal undivided interest in a Limited
Partner's Partnership Interest.
UNIT PRICE: Of a Unit or a Depositary Unit, as of any date of
determination: (a) if the Depositary Units are listed or admitted to trading
on one or more National Securities Exchanges, the average of the last
reported sale prices per Depositary Unit regular way or, in case no such
reported sale takes place on any such day, the average of the last reported
bid and asked prices per Depositary Unit regular way, in either case on the
principal National Securities Exchange on which the Depositary Units are
listed or admitted to trading, for the five (5) trading days immediately
preceding the date of determination; (b) if the Depositary Units are not
listed or admitted to trading on a National Securities Exchange but are
quoted by Nasdaq, the average of the last reported sales prices per
Depositary Unit regular way or, in case no reported sale takes place on any
such day or the last reported sales prices are not then quoted, the average
of the closing bid prices per Depositary Unit, for the five (5) trading days
immediately preceding such date of determination, as furnished by the
National Quotation Bureau Incorporated or such other nationally recognized
quotation service as may be selected by the Managing General Partner for such
purpose, if such Bureau is not at the time furnishing quotations; or (c) if
the Depositary Units are not listed or admitted to trading on a National
Securities Exchange or quoted by Nasdaq, an amount equal to the fair market
value of a Unit as of such date of determination, as determined by the
Managing General Partner using any reasonable method of valuation.
UNREALIZED GAIN: The excess, if any, of the fair market value of such
Partnership Asset as of the date of determination over the Carrying Value of
the Partnership Asset as of such date of determination.
UNREALIZED LOSS: The excess, if any, of the Carrying Value of a
Partnership Asset as of the date of determination over the fair market value
of such Partnership Asset as of the date of determination.
-15-
WITHHOLDING CERTIFICATE: A certificate that provides for reduction or
elimination of the withholding rates or taxes provided for in Section 1445 or
1446 of the Code and Treasury Regulations promulgated thereunder.
WORKING CAPITAL RESERVE: The reserve for working capital established
by the Managing General Partner pursuant to Section 7.5.
ARTICLE II
FORMATION; NAME; PLACE OF BUSINESS
2.1 FORMATION OF PARTNERSHIP; CERTIFICATE OF LIMITED PARTNERSHIP.
The General Partner, BKC and the Organizational Limited Partner
agreed to continue the limited partnership formed as of December 10, 1985,
pursuant to the provisions of the Delaware RULPA and the terms and conditions
of the Original Agreement and the Amended Agreement. Promptly after the
execution of the Original Agreement, the Managing General Partner, in
accordance with the Delaware RULPA, filed with the Recording Office the
Certificate of Limited Partnership. Subsequently, the Managing General
Partner, in accordance with the Delaware RULPA, filed with the Recording
Office amendments to the Certificate of Limited Partnership regarding the
withdrawal of BKC as the Special General Partner and the change in the name
of the Partnership. If the laws of any jurisdiction in which the Partnership
transacts business so require, the Managing General Partner also shall file
with the appropriate office in that jurisdiction a copy of the Certificate of
Limited Partnership and any other necessary for the Partnership to qualify to
transact business in such jurisdiction and shall use its best efforts to file
with the appropriate office in that jurisdiction a copy of the Certificate of
Limited Partnership and any other documents necessary to establish and
maintain the Limited Partners' limited liability in such jurisdiction. The
Partners further agree and obligate themselves to execute, acknowledge, and
cause to be filed for record, in the place or places and manner prescribed by
law, any amendments to the Certificate of Limited Partnership as may be
required, either by the Delaware RULPA, by the laws of a jurisdiction in
which the Partnership transacts business, or by this Agreement, to reflect
changes in the information contained therein or otherwise to comply with the
requirements of law for the continuation, preservation, and operation of the
Partnership as a limited partnership under the Delaware RULPA.
2.2 NAME OF PARTNERSHIP.
The name under which the Partnership shall conduct its business is
U.S. Restaurant Properties Master L.P. The business of the Partnership may be
conducted under any other name deemed necessary or desirable by the Managing
General Partner, in its sole and absolute discretion, except that such other
name may not include the surname of any Limited Partner unless such surname
is also the name or surname of the Managing General Partner. The words
"Limited Partnership" shall be included in the name of the Partnership where
necessary for complying with the laws of any jurisdiction that so requires.
The Managing General Partner
-16-
(and, if necessary, any other General Partners) promptly shall execute, file,
and record any assumed or fictitious name certificates required by the laws
of Delaware or any other state in which the Partnership transacts business,
and shall publish such certificates or other statements or certificates as
are required by the laws of Delaware or any other state in which the
Partnership transacts business.
2.3 PLACE OF BUSINESS.
The principal place of business of the Partnership on the date hereof
is located at 0000 Xxxxxxx Xxxx Xxxx, Xxxxx 000, Xxxxxx, Xxxxx 00000. The
Managing General Partner may hereafter change the principal place of business
of the Partnership to such other place or places within the United States as
the Managing General Partner may determine from time to time, in its sole and
absolute discretion, provided that the Managing General Partner shall give
written notice thereof to the Limited Partners within ninety (90) days after
the effective date of any such change and, in connection therewith, shall, if
necessary, amend the Certificate of Limited Partnership in accordance with
applicable requirements of the Delaware RULPA. The Managing General Partner
may, in its sole and absolute discretion, establish and maintain such other
offices and additional places of business of the Partnership, either within
or without the State of Delaware, as it deems appropriate.
2.4 REGISTERED OFFICE AND REGISTERED AGENT.
The street address of the registered office of the Partnership shall
be at 0000 Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000, and the Partnership's
registered agent at such address shall be The Corporation Trust Company.
ARTICLE III
PURPOSES, NATURE OF BUSINESS, AND POWERS OF
PARTNERSHIP
3.1 PURPOSES AND BUSINESS.
The purposes of the Partnership shall be (a) to invest in, acquire, own,
hold a leasehold interest in, manage, maintain, operate, lease, sublease,
improve, finance, reconstruct, sell, exchange, franchise and otherwise dispose
of Partnership Properties and Ancillary Property, whether through the Operating
Partnership, other Persons or otherwise; (b) originate loans secured by liens on
real estate; (c) in connection therewith, to exercise all of the rights and
powers conferred upon the Partnership as the limited partner in the Operating
Partnership pursuant to the Operating Partnership Agreement; and (d) to enter
into any lawful transaction and engage in any lawful activities in furtherance
of the foregoing purposes. The Partnership shall not engage in any business or
activity except as set forth above without the written consent of the General
Partner and a Majority Vote of the Limited Partners.
-17-
3.2 POWERS.
The Partnership shall be empowered to do any and all acts and things
necessary, appropriate, proper, advisable, incidental to, or convenient for
the furtherance and accomplishment of the purposes and business described
herein and for the protection and benefit of the Partnership, including,
without limitation, the following:
(a) To borrow money and issue evidences of indebtedness, and to
secure the same by mortgages, deeds of trust, security interests,
pledges, or other liens on all or any part of the Partnership Assets;
(b) To secure and maintain insurance against liability or other
loss with respect to the activities and assets of the Partnership
(including, without limitation, insurance against liabilities under
Section 7.10);
(c) To employ or retain such persons as may be necessary or
appropriate for the conduct of the Partnership's business, including
permanent, temporary, or part-time employees and independent attorneys,
accountants, consultants, and contractors;
(d) To acquire, own, hold a leasehold interest in, maintain,
use, lease, sublease, manage, operate, sell, exchange, transfer, or
otherwise deal in assets and property as may be necessary or convenient
for the purposes and business of the Partnership;
(e) To incur expenses and to enter into, guarantee, perform,
and carry out contracts or commitments of any kind, to assume
obligations, and to execute, deliver, acknowledge, and file documents
in furtherance of the purposes and business of the Partnership;
(f) To pay, collect, compromise, arbitrate, litigate, or
otherwise adjust, contest, or settle any and all claims or demands of
or against the Partnership;
(g) To invest in interest-bearing accounts and short-term
investments, including, without limitation, obligations of Federal,
state, and local governments and their agencies, mutual funds
(including money market funds), commercial paper, time deposits, and
certificates of deposit of commercial banks, savings banks, or
savings and loan associations;
(h) To originate loans secured by liens on real estate; and
(i) To engage in any kind of activity and to enter into and
perform obligations of any kind necessary to or in connection with,
or incidental to, the accomplishment of the purposes and business of
the Partnership, so long as said activities and obligations may be
lawfully engaged in or performed by a limited partnership under the
Delaware RULPA.
-18-
ARTICLE IV
TERM OF PARTNERSHIP
4.1 TERM.
The Partnership commenced on the date upon which the Certificate of
Limited Partnership was duly filed with the Recording Office pursuant to
Section 2.1 and shall continue until the Termination Date unless dissolved
and liquidated before the Termination Date in accordance with the provisions
of Article XV.
ARTICLE V
CAPITAL
5.1 CAPITAL CONTRIBUTIONS OF MANAGING GENERAL PARTNER.
(a) INITIAL CONTRIBUTION. Concurrently with the execution of
the Original Agreement, the Managing General Partner made a Capital
Contribution in the amount of One Thousand Dollars ($1,000) in cash.
(b) ADDITIONAL CONTRIBUTION. Concurrently with the Closing
(and, in the case of the over-allotment option described in Section 5.4(b),
concurrently with the Date of Delivery), the Managing General Partner
contributed to the Partnership an amount equal to the excess of (i) one and
one-hundredth percent (1.01%) of the Aggregate Offering Proceeds (including
any proceeds received pursuant to Section 5.4(b) in connection with the
over-allotment option), over (ii) One Thousand Dollars ($1,000).
5.2 CAPITAL CONTRIBUTIONS OF SPECIAL GENERAL PARTNER.
(a) INITIAL CONTRIBUTION. Concurrently with the execution of
the Original Agreement, BKC, as Special General Partner, made a Capital
Contribution in the amount of One Thousand Dollars ($1,000) in cash.
(b) ADDITIONAL CONTRIBUTION. Concurrently with the Closing
(and, in the case of the over-allotment option described in Section 5.4(b),
concurrently with the Date of Delivery), BKC, as the Special General Partner,
contributed to the Partnership an amount equal to the excess of (i) .01
percent (.01%) of the Aggregate Offering Proceeds (including any proceeds
received pursuant to Section 5.4(b) in connection with the over-allotment
option), over (ii) One Thousand Dollars ($ 1,000).
(c) WITHDRAWAL. Effective as of November 30, 1994, BKC
withdrew as a General Partner pursuant to Section 14.1(a)(ii). The
Partnership paid BKC not more than $8,000 for BKC's right to receive the fair
market value of its former Partnership Interest in Units as contemplated
under Section 14.5.
-19-
5.3 CAPITAL CONTRIBUTION OF ORGANIZATIONAL LIMITED PARTNER.
Concurrently with the execution of the Original Agreement, the
Organizational Limited Partner made a Capital Contribution in the amount of One
Hundred Dollars ($100) in cash. Concurrently with the Closing, the Capital
Contribution of the Organizational Limited Partner was returned to it, without
interest, the Organizational Limited Partner withdrew from the Partnership, and
the Organizational Limited Partner, as such, has no further rights, claims, or
interests as a Partner in and to the Partnership.
5.4 CAPITAL CONTRIBUTIONS OF INITIAL LIMITED PARTNERS.
(a) INITIAL PUBLIC OFFERING. Pursuant to the Underwriters
Purchase Agreement, the Underwriters purchased Units from the Partnership in
connection with the Initial Public Offering, as more fully described in the
Registration Statement. Concurrently with the Closing, each Underwriter, as
an Initial Limited Partner, contributed to the Partnership, in exchange for
that number of Units designated in the Underwriters Purchase Agreement to be
purchased by each such Underwriter, cash in an amount equal to the product of
the Initial Unit Price multiplied by the number of Units designated in the
Underwriters Purchase Agreement to be purchased by each such Underwriter.
(b) OVER-ALLOTMENT OPTION. On the Date of Delivery, in
addition to Units purchased pursuant to Section 5.4(a), to cover
over-allotments as provided in the Underwriters Purchase Agreement, each
Underwriter contributed to the Partnership, in exchange for that number of
Units purchased by such Underwriter pursuant to the exercise of such option,
cash in an amount equal to the product of the Initial Unit Price multiplied
by the number of Units purchased by each such Underwriter pursuant to the
exercise of such option. For purposes of this Agreement all Units issued
pursuant to this Section 5.4(b) shall be deemed issued concurrently with the
Closing irrespective of whether or not the Date of Delivery coincided with
the Closing Date.
5.5 ADDITIONAL ISSUANCES OF UNITS AND CAPITAL CONTRIBUTIONS.
(a) In order to raise additional capital or to acquire
property or for or in furtherance of any other Partnership purpose, the
Managing General Partner is authorized to cause the Partnership to issue
Units (and Depositary Units), with such characteristics as may be required
under Section 6.3, in addition to those issued pursuant to Section 5.4, at
any time or from time to time to Partners, holders of Units or Depositary
Units, holders of options to purchase Units or Depositary Units, Assignees or
other Persons and, in its sole and complete discretion, to admit them to the
Partnership as Additional Limited Partners, all without any consent or
approval of any Limited Partner. The Managing General Partner shall have
sole and absolute discretion in determining the Capital Contribution to be
made or other consideration to be received (which may be property) and terms
and conditions with respect to any such future issuance of Units. The
Managing General Partner is also authorized to cause the Partnership to issue
options, rights, warrants or appreciation rights to purchase or relating to
any Units or debt
-20-
obligations of the Partnership convertible into any Units from time to time
on terms and conditions established in the sole and absolute discretion of
the Managing General Partner without the approval at the time of any Limited
Partner; provided that any such issuance to the Managing General Partner or
its executive officers, directors or employees, shall be approved by a
Majority Vote of the Limited Partners unless issued pursuant to a plan or
arrangement approved by a Majority Vote of the Limited Partners. The
Managing General Partner shall do all things it deems to be appropriate or
necessary to comply with the Delaware RULPA and is authorized and directed to
do things it deems to be necessary or advisable in connection with any such
future issuances, including compliance with any statute, rule, regulation or
guideline of any federal, state or other governmental agency or securities
exchange on which the Units are listed for trading. No Limited Partner or
Assignee or any other Person shall have any preemptive right with respect to
the issuance or sale of any Units or any debt obligations or any options,
rights, warrants or appreciation rights relating thereto.
(b) Except as specifically provided for in Sections 5.5(a),
5.7 and 14.5(b) or in Section 13.3(b) of the Operating Partnership Agreement,
no Units except those Units issued by the Partnership pursuant to Section 5.4
shall be offered for sale or issued by the Partnership.
(c) No Partner or Assignee shall be required or allowed to
make any Capital Contribution, except as specifically set forth in Sections
5.1, 5.2, 5.3, 5.4, or 5.5(a), 5.9(b), 6.5(b), 10.13 or in Section 13.3(a) of
the Operating Partnership Agreement. AR Capital Contributions provided for
in Section 5.4 shall be paid on the Closing Date or the Date of Delivery, as
the case may be, and shall not be deferred for any reason.
5.6 NO FRACTIONAL UNITS.
No fractional Units shall be issued by the Partnership.
5.7 SPLITS AND COMBINATIONS.
(a) The Managing General Partner may (i) make a distribution
in Units to all Record Holders or may effect a subdivision or combination of
Units, but in each case only on a pro rata basis so that, after such
distribution, subdivision, or combination, each Partner and Assignee shall,
subject to Section 5.7(d), have the same Percentage Interest (as defined in
Article VI) in the Partnership as before such distribution, subdivision, or
combination.
(b) Whenever such a distribution, subdivision, or combination
is declared , the Managing General Partner shall select a Record Date as of
which the distribution, subdivision, or combination shall be effective and
shall send notice of the distribution, subdivision, or combination at least
twenty (20) days prior to such Record Date to each Record Holder as of the
date ten (10) days prior to the date of such notice. The Managing General
Partner also may cause the Accounting Firm or another firm of independent
public accountants selected by it to calculate the number of Units to be held
by each Record Holder after giving effect to such distribution, subdivision,
or combination. The Managing General Partner shall be entitled to rely
-21-
on any certificate provided by such firm as conclusive evidence of the
correctness of such a calculation.
(c) Promptly following any such distribution, subdivision, or
combination, the Managing General Partner may cause Certificates or
Depositary Receipts, as the case may be, to be issued to the Record Holders
of Units as of the applicable Record Date representing the new number of
Units or Depositary Units held by such Record Holder, or the Managing General
Partner may adopt such other procedures as it may deem appropriate to reflect
such distribution, subdivision, or combination; provided, however, that in
the event any such distribution, subdivision, or combination results in a
smaller total number of Units outstanding, the Managing General Partner shall
require, as a condition to the delivery to a Record Holder of such new
Certificate or Depositary Receipt, the surrender of any Certificate or
Depositary Receipt representing the Units held by such Record Holder
immediately prior to such Record Date.
(d) The Partnership shall not be required to issue fractional
Units upon any distribution, subdivision, or combination of Units. In the
event any distribution, subdivision, or combination of Units would result in
the issuance of fractional Units but for the provisions of Section 5.6 and
this Section 5.7(d), each fractional Unit shall be rounded to the nearest
whole Unit.
5.8 CAPITAL ACCOUNTS.
(a) A separate Capital Account shall be established and
maintained for each Partner and Assignee. The Capital Account of each
Partner and Assignee shall be (i) credited with (A) the cash and the initial
Carrying Value of any property (net of liabilities secured by such
Contributed Property that the Partnership is considered to assume or take
subject to under Section 752 of the Code) contributed to the Partnership by
such Partner or Assignee, and (B) all items of Partnership income or gain
(including income or gain exempt from tax) computed in accordance with
Section 5.8(b) and allocated to such Partner or Assignee pursuant to Article
VI, and shall be (ii) debited with (A) all items of Partnership deduction and
loss computed in accordance with Section 5.8(b) and allocated to such Partner
or Assignee pursuant to Article VI, and (B) all cash and the fair market
value of any property (net of liabilities secured by such distributed
property that such Partner or Assignee is considered to assume or take
subject to under Code Section 752) distributed by the Partnership to such
Partner or Assignee pursuant to Article VI. Notwithstanding anything to the
contrary contained herein, the Capital Account of a Partner or Assignee shall
be determined in all events solely in accordance with the rules set forth in
Treasury Regulations Section 1.704-1(b)(2)(iv), as the same may be amended or
revised thereafter. Any references in any Section or subsection of this
Agreement to the Capital Account of a Partner or Assignee 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 Capital Accounts, the
determination, recognition and classification of each such item shall be the
same as its determination, recognition and
-22-
classification for federal income tax purposes (including any method of
depreciation, cost recovery or amortization used for this purpose), provided
that:
(i) Solely for purposes of the application of the
provisions hereof, the Partnership shall be treated as owning
directly its proportionate share of all property owned by the
Operating Partnership (as determined by the Managing General
Partner based on the provisions of the Operating Partnership
Agreement).
(ii) In accordance with the requirements of Treasury
Regulations Section 1.704-1(b)(2)(iv)(g), any deductions for
depreciation, cost recovery or amortization, attributable to
a Partnership Asset contributed to the Partnership shall be
determined as if the Adjusted Basis of such Partnership Asset
on the date it was acquired by the Partnership were equal to
the Carrying Value of such Partnership Asset as of such date.
Upon an adjustment pursuant to Section 5.8(d) to the
Carrying Value of any Partnership property subject to
depreciation, cost recovery or amortization, any further
deductions for such depreciation, cost recovery or
amortization attributable to such property shall be
determined (A) as if the Adjusted Basis of such property were
equal to the Carrying Value of such property immediately
following such adjustment and (B) using a predetermined rate
of depreciation, cost recovery or amortization derived from
the same method for useful life as is applied for federal
income tax purposes. As a result, the amount of depreciation,
cost recovery or amortization deductions computed for
purposes of this Section 5.8(b) with respect to any Adjusted
Property shall bear the same relationship to the Carrying
Value of such property as the depreciation, cost recovery or
amortization computed for federal income tax purposes with
respect to such property bears to the Adjusted Basis of such
property. Solely for the purposes of this Section 5.8(b),
depreciation, cost recovery or amortization deductions with
respect to property with an Adjusted Basis of zero shall be
at the rate which would apply for tax purposes if (1) in the
case of Contributed Property, such property were placed in
service on the date contributed, and (2) in the case of
Adjusted Property, such property were placed in service on
the date of adjustment required pursuant to Section 5.8(d)(i)
or 5.8(d)(ii), provided that if such Adjusted Property was
Contributed Property, which was contributed with the tax
basis of zero and such property is not fully depreciated for
Capital Account purposes at the day of the adjustment, all
deductions for depreciation, cost recovery or amortization of
such property shall be derived from the method and useful
life theretofore determined pursuant to clause (1) above;
(iii) Any income, gain, or loss attributable to the
taxable disposition of any Partnership Asset shall be determined
by the Partnership as if the Adjusted Basis of such Partnership
Asset as of such date of disposition were equal in amount to
the Partnership's Carrying Value with respect to such
Partnership Asset as of such date;
-23-
(iv) If the Partnership's Adjusted Basis in any depreciable
property is reduced pursuant to Section 48(q) of the Code, then the
amount of such reduction shall be treated as an expense for the
year in which such reduction occurs and allocated to the Partners
and Assignees in the ratio in which depreciation with respect to
such property is allocable. Any restoration of any such reduction
in Adjusted Basis shall be allocated to the Partners and Assignees
to whom the expense was chargeable;
(v) Immediately prior to the distribution of any Partnership
Asset, any Unrealized Gain or Unrealized Loss attributable to such
Partnership Asset shall, for purposes hereof, be deemed to be gain
or loss recognized by the Partnership and shall be allocated among
the Partners in accordance with Article VI. In determining such
Unrealized Gain or Unrealized Loss, the fair market value of such
Partnership Asset shall be determined pursuant to Section 8.8;
(vi) All fees and other expenses incurred (or treated as
incurred) by the Partnership to promote the sale of (or to sell)
interests in the Partnership that can neither be deducted nor
amortized under Section 709 of the Code shall, for purposes of
Capital Account maintenance, be treated as an item of deduction and
shall be allocated among the Partners and Assignees, pursuant to
Article VI; and
(vii) Except as otherwise provided in Treasury Regulations
1.707-1(b)(2)(iv)(m), the computation of all items of income, gain,
loss, and deduction shall be made without regard to any Section 754
Election that may be made by the Partnership, and as to those items
described in Section 705(a)(1)(A) or 705(a)(2)(B) of the Code,
without regard to the fact that such items are not included in
gross income or are neither currently deductible nor capitalized
for federal income tax purposes.
(c) Generally, a transferee (including any Assignee) of a
Partnership Interest will succeed to the Capital Account relating to the
Partnership Interest transferred. However, if the transfer causes a
termination of the Partnership under Section 708(b)(1)(B) of the Code,
the Partnership properties shall be deemed to have been distributed in
liquidation of the Partnership to the Partners and Assignees and deemed
recontributed by such Partners and Assignees in reconstitution of the
Partnership. In such event, the Carrying Values of the Partnership
properties shall be adjusted immediately prior to such deemed
distribution pursuant to Section 5.8(d)(ii). The Capital Accounts of
such reconstituted Partnership shall be maintained in accordance with
the principles of this Section 5.8.
(d) (i) Consistent with the provisions of Treasury Regulation
Section 1.704-1(b)(2)(iv)(f), upon an issuance of additional Partnership
Interests for cash or Contributed Property, the Capital Accounts of all
Partners and Assignees shall,
-24-
immediately prior to such issuance, be adjusted (consistent with the
provisions hereof) upwards or downwards to reflect any Unrealized Gain
or Unrealized Loss attributable to each Partnership property (as if such
Unrealized Gain or Unrealized Loss had been recognized upon an actual
sale of each such property, immediately prior to such issuance, and had
been allocated to the Partners and Assignees, at such time, pursuant to
Section 6.2). In determining such Unrealized Gain or Unrealized Loss,
the aggregate fair market value of Partnership properties as of any date
of determination shall be determined in the discretion of the Managing
General Partner. The Carrying Values of all Partnership properties
shall be adjusted to reflect their relative fair market values, as
determined hereunder by the Managing General Partner in its sole and
absolute discretion. Once the aggregate fair market value has been
determined, the Managing General Partner shall allocate such aggregate
value among the properties of the Partnership, in a manner it deems
reasonable, to determine a fair market value for individual properties.
(ii) In accordance with Treasury Regulations Section
1.704-1(b)(2)(iv)(f), immediately prior to the actual or deemed
distribution of any Partnership property, the Capital Accounts of all
Partners and Assignees shall, immediately prior to any such
distribution, be adjusted (consistent with the provisions hereof)
upwards or downwards to reflect any Unrealized Gain or Unrealized Loss
attributable to each Partnership property, as if such Unrealized Gain or
Unrealized Loss had been recognized upon an actual sale of each
property, immediately prior to such distribution, and had been allocated
to the Partners and Assignees, at such time, pursuant to Section 6.2. In
determining such Unrealized Gain or Unrealized Loss, the aggregate fair
market value of Partnership properties as of any date of determination
shall be determined in the discretion of the Managing General Partner.
The Managing General Partner shall allocate such aggregate market value
among the properties of the Partnership, in a manner it deems
reasonable, to determine a fair market value for individual properties.
5.9 NEGATIVE CAPITAL ACCOUNTS.
(a) Except to the extent provided in Section 5.9(b), and except to the
extent that the Partners are required to make Capital Contributions under
Sections 5.1, 5.2, 5.3, 5.4, and 5.5(a), no Partner or Assignee shall be
required to pay to the Partnership or any other Partner or Assignee any
deficit or negative balance which may exist from time to time in such
Partner's or Assignee's Capital Account.
(b) Notwithstanding the foregoing, if any General Partner has a deficit
balance in its Capital Account following the liquidation of its Partnership
Interest, as determined after taking into account all Capital Account
adjustments for the Partnership Fiscal Year during which such liquidation
occurs, it is unconditionally obligated to restore the amount of such deficit
or negative balance to the Partnership by the end of such Fiscal Year (or, if
later, within 90 days after the date of such liquidation), which such amount
shall, upon liquidation of the Partnership, be paid to creditors of the
Partnership or distributed to other Partners or Assignees in accordance with
their positive Capital Account balances.
-25-
5.10 NO INTEREST ON AMOUNTS IN CAPITAL ACCOUNT.
No Partner or Assignee shall be entitled to receive any interest on its
outstanding Capital Account balance.
5.11 ADVANCES TO PARTNERSHIP.
If any Partner or Assignee shall advance funds to the Partnership in
excess of the amounts required hereunder to be contributed by it to the
capital of the Partnership, the making of such advances shall not result in
any increase in the amount of the Capital Account of such Partner or Assignee
or entitle such Partner or Assignee to any increase in its Percentage Interest
(as defined in Article VI), First-Tier Residual Interest (as defined in
Article VI), or Second-Tier Residual Interest (as defined in Article VI). The
amounts of any such advances shall be a debt of the Partnership to such
Partner or Assignee and shall be payable or collectible only out of the
Partnership Assets in accordance with the terms and conditions upon which such
advances are made.
5.12 LIABILITY OF LIMITED PARTNERS.
Except as provided in the Delaware RULPA, Section 7.10(e) and Section
10.13, (a) none of the Limited Partners or Assignees shall be personally liable
for any debts, liabilities, contracts, or obligations of the Partnership; (b) a
Limited Partner shall be liable only to make payments of such Limited Partner's
Capital Contribution pursuant to Section 5.4 or 5.5(a); and (c) after such
Limited Partner's Capital Contribution shall be fully paid, no Limited Partner
shall be required to make any further Capital Contributions or to lend any funds
to the Partnership.
5.13 RETURN OF CAPITAL.
Except upon the dissolution of the Partnership or as otherwise
specifically provided in this Agreement, no Partner or Assignee shall have the
right to demand or to receive the return of all or any part of the Capital
Account or Capital Contributions of such Partner or Assignee.
5.14 EXCHANGE OF UNITS.
(a) Subject to Section 5.14(b), on or after the date hereof, each
Limited Partner shall have the right (the "Exchange Right") to require the
REIT to acquire all or a portion of the Units held by such Limited Partner in
exchange for the REIT Stock Amount. The Exchange Right shall be exercised
pursuant to a Notice of Exchange delivered to the REIT (with a copy to the
Partnership) by the Limited Partner who is exercising the Exchange Right (the
"Exchanging Partner"). A Limited Partner may not exercise the Exchange Right
for fewer than one hundred (100) Units or, if such Limited Partner holds fewer
than one hundred (100) Units, all of the Units held by such Partner. The
Exchanging Partner shall have no right, with respect to any Partnership Units
so exchanged, to receive any distributions paid with respect to the
Partnership Units on or after the date of the Notice of Exchange. The
Assignee of any Limited Partner may
-26-
exercise the rights of such Limited Partner pursuant to this Section 5.14(a),
and such Limited Partner shall be deemed to have assigned such rights to such
Assignee and shall be bound by the exercise of such rights by such Assignee.
In connection with any exercise of such rights by an Assignee on behalf of a
Limited Partner, the REIT Stock Amount shall be paid by the REIT directly to
such Assignee and not to such Limited Partner.
(b) Notwithstanding the provisions of Section 5.14(a), a Partner shall
not be entitled to exercise the Exchange Right pursuant to Section 5.14(a) if
the delivery of shares of Common Stock to such Partner by the REIT pursuant to
Section 5.14(a) would be prohibited under the Amended Articles of
Incorporation of the REIT.
5.15 NO PREEMPTIVE RIGHTS.
No Person shall have any preemptive, preferential or other similar right
with respect to (a) additional Capital Contributions or loans to the
Partnership; or (b) issuance or sale of any Units.
ARTICLE VI
ALLOCATION OF PROFITS AND LOSSES;
DISTRIBUTIONS OF CASH FLOW AND CERTAIN PROCEEDS
6.1 CERTAIN DEFINITIONS.
(a) "Cash Flow" shall mean and refer to the sum of the following:
(i) the taxable income (or loss) of the Partnership for federal
income tax purposes as shown on the books of the Partnership for the
period for which such determination is being made, excluding taxable
income or gain or loss from Capital Transactions (as defined in Section
6.1(b)); increased by (A) the amount of cost recovery or depreciation
deductions or amortization or similar deductions in lieu thereof
deductible by the Partnership in computing such taxable income, and any
other non-cash accruals deductible in determining federal taxable income
or loss, for such period and (B) any non-taxable income or receipts of
the Partnership for such period (including, without limitation, any
amounts received during such period that were included in taxable income
in a prior period) except (1) Capital Contributions to the Partnership
pursuant to Article V and (2) the proceeds of any loans to the
Partnership; and reduced by (w) payments from the sum of the foregoing
upon the principal of any loans to the Partnership, (x) expenditures
from the sum of the foregoing for the acquisition, improvement or
replacement of property (including, without limitation, expenditures in
connection with the Successor Policy pursuant to Section 8.6), the
financing of tenants or other reinvestment or use in the business of the
Partnership (all as determined by the Managing General Partner in its
sole and absolute discretion) not financed through Capital Contributions
to the Partnership, loans to the Partnership, or any
-27-
reserves previously set aside by the Partnership for such purposes, and
for the payment of items attributable to the acquisition, improvement,
or replacement of property which are not deductible in determining
federal taxable income when paid, (y) any amounts included in
determining gross income for such period that were not received by the
Partnership during such period, and (z) transfers from the sum of the
foregoing to reserves for the acquisition, improvement, or replacement
of property, for the repayment of loans and other indebtedness, for
security deposits or other necessary escrows or deposits, to meet
anticipated expenses, and/or for other reinvestment or use as the
Managing General Partner shall deem to be necessary or advisable in its
sole and absolute discretion (including, without limitation,
expenditures to purchase or otherwise acquire Units or Depositary Units
by purchasing or acquiring the respective Depositary Receipts, and the
creation of or additions to the Working Capital Reserve established
pursuant to Section 7.5 and any reserves established by the Managing
General Partner either to implement the Successor Policy pursuant to
Section 8.6, to acquire title to any Restaurant Property subject to a
Primary Lease pursuant to Section 8.12, or to set aside cash for the
purpose of making future distributions of Cash Flow to the Partners and
Assignees consistent with a policy of avoiding fluctuations in the
amount of quarterly distributions of Cash Flow to the extent
practicable); plus
(ii) any other funds (including amounts previously set aside as
reserves by the Managing General Partner if and to the extent the
Managing General Partner no longer regards such reserves as reasonably
necessary in the efficient conduct of the business of the Partnership)
deemed available for distribution and designated as Cash Flow by the
Managing General Partner.
The Managing General Partner shall determine, in its sole and absolute
discretion, whether funds are derived from or financed through a particular
source or used for a particular purpose for purposes of determining Partnership
Cash Flow for any period. In determining the Cash Flow for any quarterly period
within a Fiscal Year, the Managing General Partner shall have the authority to
apportion expenses and revenues of the Partnership among quarterly periods
within the Fiscal Year in any reasonable manner consistent with the principles
applied in determination of the Partnership's Net Income or Net Loss, as the
case may be, for such Fiscal Year.
(b) "CAPITAL TRANSACTION" means an "Interim Capital Transaction" or a
"Terminating Capital Transaction," as the case may be. An "Interim Capital
Transaction" shall refer to (i) a transaction pursuant to which the
Partnership borrows funds, (ii) a sale, condemnation, exchange, abandonment,
casualty not followed by reconstruction, or other disposition, whether by
foreclosure or otherwise, of a portion (but less than substantially all) of
the Partnership Assets, or (iii) an insurance recovery or any other
transaction which, in accordance with generally accepted accounting
principles, is considered capital in nature, but which is not a Terminating
Capital Transaction. Notwithstanding the foregoing, no transaction shall be
considered to be an Interim Capital Transaction for purposes of this Agreement
if the "net proceeds" thereof ("net proceeds" shall mean the proceeds received
by the Partnership after the payment of all costs and expenses of any kind or
nature incurred by the Partnership in
-28-
connection with such transaction) are not material in amount and, in such
instance, any income, gain or loss, and any proceeds attributable to such
transaction shall be included in computing Net Income or Net Loss, as the case
may be, and Cash Flow. A "Terminating Capital Transaction" shall refer to any
sale, condemnation, exchange, abandonment, or other disposition, whether by
foreclosure or otherwise, of all or substantially all of the then remaining
Partnership Assets and/or any other transaction which will result in a
dissolution and liquidation of the Partnership. Any sale or other disposition
of any Partnership Assets in connection with the dissolution and liquidation
of the Partnership pursuant to Article XV shall be considered a "Terminating
Capital Transaction" for purposes of this Article VI.
(c) "NET PROCEEDS OF A CAPITAL TRANSACTION" means the proceeds received
by the Partnership in connection with a Capital Transaction, after (i) the
payment of all costs and expenses of any kind or nature incurred by the
Partnership in connection with such Capital Transaction, (ii) the utilization
of any such proceeds in connection with the discharge of debts and other
obligations of the Partnership required or intended (as determined by the
Managing General Partner, in its sole and absolute discretion) to be
discharged with the proceeds of such Capital Transaction, (iii) the purchase
or other acquisition of Units or Depositary Units by purchasing or acquiring
the respective Depositary Receipts, the retention of such proceeds or a
portion thereof in connection with creation of or addition to the Working
Capital Reserve established pursuant to Section 7.5 or the acquisition,
improvement or replacement of property, the financing of tenants or
reinvestment or other use in the business of the Partnership (all determined
by the Managing General Partner, in its sole and absolute discretion), (iv)
the retention of such proceeds or a portion thereof in connection with the
creation of or addition to any reserves established by the Managing General
Partner to provide for any amounts required to be paid by the Partnership
either pursuant to Section 8.6 in connection with the "Successor Policy,"
pursuant to Section 8.12 in connection with the purchase of a title to any
Restricted Restaurant Property subject to a Primary Lease or for other
reinvestment or use, all as the Managing General Partner shall deem necessary
or advisable in its sole and absolute discretion. In the event the proceeds of
any Interim Capital Transaction are to be paid in more than one installment,
then each such installment shall be treated as a separate Interim Capital
Transaction for purposes of this Article VI.
(d) "UNRECOVERED CAPITAL" means, with respect to Units issued in the
Initial Public Offering, the Aggregate Offering Proceeds, reduced, as and when
made, by the previous distributions, if any, made to the Limited Partners and
Assignees pursuant to Section 6.6(a). If the Partnership issues additional
Units, the amount of Unrecovered Capital, if any, attributable to such new
Units shall be the amount necessary to preserve the uniformity of Units,
unless the Managing General Partner shall decide in its sole and absolute
discretion that a different amount of Unrecovered Capital is more appropriate.
-29-
(e) "PERCENTAGE INTEREST" of the Managing General Partner and the
Limited Partners and Assignees are as follows:
Managing General Partner--1.00 percent (1.00%)
Limited Partners and Assignees--99.00 percent (99.00%)
The Percentage Interest of each Limited Partner or Assignee is equal to the
product of (i) 99.00 percent (99.00%) multiplied by (ii) a fraction, the
numerator of which is the number of Depositary Units and undeposited Units held
by such Limited Partner or Assignee as of the date of such determination and the
denominator of which is the total number of Depositary Units and undeposited
Units outstanding as of the date of such determination (the "Unit Fraction").
(f) "FIRST-TIER RESIDUAL INTERESTS" of the Managing General Partner
and the Limited Partners and Assignees, are as follows:
Managing General Partner-24.00 percent (24.00%)
Limited Partners and Assignees-76.00 percent (76.00%)
The First-Tier Residual Interest of each Limited Partner or Assignee is equal to
the product of (i) 76.00 percent (76.00%) multiplied by (ii) the Unit Fraction.
(g) "Second-Tier Residual Interests" of the Managing General Partner
and the Limited Partners and Assignees are as follows:
Managing General Partner-39.00 percent (39.00%)
Limited Partners and Assignees-61.00 percent (61.00%)
The Second-Tier Residual Interest of each Limited Partner or Assignee is equal
to the product of (i) 61.00 percent (61.00%) multiplied by (ii) the Unit
Fraction.
(h) "PRIMARY PREFERENCE" means, with respect to Units issued in the
Initial Public Offering, an amount equal to the product of (i) twelve percent
(12%) per annum (applied using the simple interest method for the period from
the Closing Date through the date for which such determination is being made on
the basis of a 365/366-day year and the actual number of days elapsed)
multiplied by (ii) the total daily average outstanding balance of the
Unrecovered Capital (taking into account the distributions, if any, made to the
Limited Partners and Assignees pursuant to Section 6.6(a) which distributions
shall result in a reduction of the Unrecovered Capital on the date made). If
the Partnership issues additional Units, the amount of Primary Preference and
Unrecovered Primary Preference, if any, attributable to such new Units shall be
the amount necessary to preserve the uniformity of Units, unless the Managing
General Partner
-30-
shall decide in its sole and absolute discretion that a different amount of
Primary Preference and Unrecovered Primary Preference is appropriate.
(i) Except as may be determined by the Managing General Partner in
the case of new Units, pursuant to Section 6.1(h), "UNRECOVERED PRIMARY
PREFERENCE" means at any given time an amount equal to the excess of (i) the
Primary Preference over (ii) the sum of all previous distributions made to the
Limited Partners and Assignees by the Partnership pursuant to Sections 6.5 and
6.6(b).
(j) "SECONDARY PREFERENCE" means, with respect to Units issued in
the Initial Public Offering, an amount equal to the product of (i) five and one-
half percent (51/2%) per annum (applied using the simple interest method for the
period from the Closing Date through the date for which such determination is
being made on the basis of a 365/366-day year and the actual number of days
elapsed) multiplied by (ii) the total daily average outstanding balance of the
Unrecovered Capital (taking into account the distributions, if any, made to the
Limited Partners and Assignees pursuant to Section 6.6(a), which distributions
shall result in a reduction of the Unrecovered Capital on the date made). If
the Partnership issues additional Units, the amount of Secondary Preference and
Unrecovered Secondary Preference, if any, attributable to such new Units shall
be the amount necessary to preserve the uniformity of Units, unless the Managing
General Partner shall decide in its sole and absolute discretion that a
different amount of Secondary Preference and Unrecovered Secondary Preference is
appropriate.
(k) Except as may be determined by the Managing General Partner in
the case of new Units, pursuant to Section 6.10), "UNRECOVERED SECONDARY
PREFERENCE" means at any given time an amount equal to (i) the sum of the
Primary Preference and the Secondary Preference, less (ii) the sum of all
previous distributions made to the Limited Partners and Assignees by the
Partnership pursuant to Sections 6.5, 6.6(b), and 6.6(c).
(l) "PROPORTIONATE SHARE" means, as to any Limited Partner or
Assignee with respect to the Unrecovered Capital, the Unrecovered Primary
Preference, or the Unrecovered Secondary Preference, as the case may be, an
amount equal to the product of (i) the Unrecovered Capital, Unrecovered Primary
Preference, or Unrecovered Secondary Preference, as the case may be, multiplied
by (ii) the Unit Fraction.
6.2 ALLOCATIONS FOR CAPITAL ACCOUNT PURPOSES.
For purposes of maintaining the Capital Accounts and in determining the
rights of the Partners and Assignees among themselves, the following allocations
shall be made:
(a) Each item of income, gain, loss and deduction attributable to
operations of the Partnership conducted during any taxable period, determined in
accordance with Section 5.8(b) and taken into account in computing Net Income or
Net Loss, shall be allocated among the Partners and Assignees, pro rata, in
proportion to the distributions of Cash Flow to the Partners and Assignees with
respect to such taxable period in accordance with Section 6.5
-31-
(including distributions of Cash Flow made in the first ninety (90) days of a
subsequent taxable period with respect to the last quarter of the taxable
period for -which the Net Income is being allocated); provided, however, that
if the Net Income or Net Loss to be allocated pursuant to this Section 6.2 for
such taxable period exceeds the Cash Flow distributions made with respect to
such taxable period, such excess Net Income or such Net Loss, as the case may
be, of the Partnership for such taxable period shall be allocated among the
Partners and Assignees, pro rata, in accordance with the manner in which the
same amount of Cash Flow would have been distributed to the Partners and
Assignees with respect to such taxable period in accordance with Section 6.5.
(b) Each item of income, gain, loss and deduction taken into
account in computing Extraordinary Income or Extraordinary Loss attributable
to Interim Capital Transactions, determined in accordance with Section 5.8(b),
shall be allocated in the manner described below. All allocations under this
Section 6.2(b) shall be made after Capital Account balances have been adjusted
by Net Income and Net Loss allocations under Section 6.2(a).
(i) Extraordinary Income of the Partnership resulting from an
Interim Capital Transaction shall be allocated as follows and in the
following order of priority:
(A) FIRST: to the extent that the Extraordinary Income
resulting from an Interim Capital Transaction exceeds the Net
Proceeds of such Interim Capital Transaction, an amount of such
Extraordinary Income in excess of Net Proceeds equal to the
aggregate negative balances in the Capital Accounts of the Partners
and Assignees, if any, shall be allocated to the Partners and
Assignees having such negative balances, such income being
allocated to such Partners and Assignees, pro rata, in proportion
to the respective negative balances in their Capital Accounts;
(B) SECOND: an amount of Extraordinary Income resulting
from such Interim Capital Transaction equal to the Net Proceeds of
such Interim Capital Transaction shall be allocated to the Partners
and Assignees, pro rata, in the same proportion that the Net
Proceeds of such Interim Capital Transaction are distributable to
the Partners and Assignees in accordance with Section 6.6; and
(C) THIRD: any remaining Extraordinary Income from such
Interim Capital Transaction shall be allocated among the Partners
and Assignees, pro rata, in accordance with the manner in which the
same amount of Net Proceeds from such Interim Capital Transaction
would have been distributed to the Partners and Assignees, in
accordance with Section 6.6, taking into consideration (for
purposes of determining the level of distributions under Section
6.6 at which any such Net Proceeds from Interim Capital
Transactions would have been distributed) allocations of
Extraordinary Income under this Section 6.2(b)(i)(C) for previous
taxable periods, as subsequently reduced by distributions
-32-
of Net Proceeds from Interim Capital Transactions for any taxable
period in excess of Extraordinary Income for such taxable period.
(ii) Extraordinary Loss of the Partnership resulting from an
Interim Capital Transaction shall be allocated as follows and in the
following order of priority:
(A) Until the Unrecovered Capital and the Unrecovered Primary
Preference are equal to zero, Extraordinary Losses from an Interim
Capital Transaction shall be allocated, first, to the Partners and
Assignees, if any, having positive Capital Account balances, so as
to cause their respective Capital Accounts (after giving effect to
such allocation) to be in the same proportion to each other as are
their respective Percentage Interests, then to Partners and
Assignees, pro rata, in accordance with their respective Percentage
Interests until all such positive balances have been eliminated,
and thereafter, to all Partners and Assignees, pro rata in
accordance with their respective Percentage Interests; or
(B) If the Unrecovered Capital and the Unrecovered Primary
Preference both are equal to zero but the Unrecovered. Secondary
Preference is not equal to zero, Extraordinary Losses from an
Interim Capital Transaction shall be allocated, first, to the
Partners and Assignees, if any, having positive Capital Account
balances so as to cause their respective Capital Accounts (after
giving effect to such allocation) to be in the same proportion to
each other as are their respective First-Tier Residual Interests,
then to Partners and Assignees, pro rata, in accordance with their
respective First-Tier Residual Interests until all such positive
balances have been eliminated, and thereafter, to all Partners and
Assignees, pro rata, in accordance with their respective First-Tier
Residual Interests; or
(C) If the Unrecovered Capital, the Unrecovered Primary
Preference, and the Unrecovered Secondary Preference are each equal
to zero, Extraordinary Losses from an Interim Capital Transaction
shall be allocated, first, to the Partners and Assignees, if any,
having positive Capital Account balances so as to cause their
respective Capital Accounts (after giving effect to such
allocation) to be in the same proportion to each other as are their
respective Second-Tier Residual Interests, then to Partners and
Assignees, pro rata, in accordance with their respective
Second-Tier Residual Interests until all such positive balances
have been eliminated, and thereafter, to all Partners and
Assignees, pro rata, in accordance with their respective
Second-Tier Residual Interests.
(iii) In the event the proceeds of any Interim Capital
Transaction are to be paid in more than one installment, then
Extraordinary Income or Loss, as the case may be, recognized on the
payment of each such installment shall be treated as Extraordinary
-33-
Income or Loss, as the case may be, from a separate Interim Capital
Transaction for purposes of this Section 6.2(b).
(c) Extraordinary Income or Loss of the Partnership resulting
from a Terminating Capital Transaction (and, if necessary, individual items
of income, gain, deduction or loss making up such Extraordinary Income or
Extraordinary Loss) shall be allocated to the Partners and Assignees (after
allocating to the Partners and Assignees the appropriate portion of all Net
Income or Xxxx and Extraordinary Income or Loss of the Partnership for the
then current taxable period in accordance with Sections 6.2(a) and 6.2(b) and
after reducing their respective Capital Accounts for all cash distributed (or
distributable during or with respect to such taxable period under Sections
6.5 and 6.6) in a manner that, to the maximum extent possible, will adjust
their respective Capital Account balances so that the Net Proceeds of a
Terminating Capital Transaction and any other remaining assets of the
Partnership that are available for distribution will be distributed to the
Partners and Assignees under Section 6.7 in the manner and priority indicated
in Section 6.6.
(d) SPECIAL ALLOCATIONS. Except as otherwise provided in
this Agreement, the following special allocations will be made in the
following order and priority:
(i) Notwithstanding any other provision of this
Section 6.2) if there is a net decrease in Partner Minimum Gain during
any taxable year or other period for which allocations are made, each
Partner or Assignee will be specially allocated items of Partnership
income and gain for that period (and, if necessary, subsequent periods)
in accordance with the requirements of Treasury Regulations Section
1.704-2(i)(4). This Section 6.2(d)(i) is intended to comply with the
minimum gain charge-back requirements of Treasury Regulations Section
1.704-2(i)(4).
(ii) Notwithstanding any other provision of this
Section 6.2, if there is a net decrease in Partnership Minimum Gain
during any taxable year or other period for which allocations are made,
each Partner or Assignee will be specially allocated items of
Partnership income and gain for that period (and, if necessary,
subsequent periods) in accordance with the requirements of Treasury
Regulations Section 1.704-2(f). This Section 6.2(d)(ii) is intended
to comply with the minimum gain charge-back requirements of Treasury
Regulations Section 1.704-2(f).
(iii) A Partner or Assignee who unexpectedly receives
any adjustment, allocation or distribution described in Treasury
Regulations Sections 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 the
Treasury Regulations, the Adjusted Capital Account Deficit of the
Partner or Assignee as quickly as possible, provided that any allocation
pursuant to this Section 6.2(d)(iii) will be made if and only to the
extent that such Partner or Assignee would have an Adjusted Capital
Account Deficit after all other allocations provided for in Section 6.2
have been tentatively made as if this Section 6.2(d)(iii) were not in
this Agreement.
-34-
(iv) Each Partner or Assignee who has a deficit Capital
Account at the end of any Partnership taxable year that is in excess of
the amount such Partner or Assignee is deemed to be obligated to restore
under the penultimate sentences of Treasury Regulations Sections
1.704-2(g)(1) and 1.704-2(i)(5) will be specially allocated items of
Partnership income and gain in the amount of the excess as quickly as
possible, provided that any allocation pursuant to this Section
6.2(d)(iv) will be made if and only to the extent that such Partner or
Assignee would have a deficit Capital Account in excess of such sum
after all other allocations provided for in Section 6.2 have been
tentatively made as if Section 6.2(d)(iii) and this Section 6.2(d)(iv)
were not in this Agreement.
(v) Nonrecourse Deductions for any taxable year or
other period for which allocations are made will be allocated among the
Partners or Assignees in proportion to their respective Percentage
Interests.
(vi) Any Partner Nonrecourse Deductions for any
taxable year or other period for which allocations are made will be
allocated to the Partner or Assignee who bears the economic risk of
loss with respect to the Partner Nonrecourse Debt to which such Partner
Nonrecourse Deductions are attributable in accordance with Treasury
Regulations Section 1.704-2(i)(1).
(vii) To the extent an adjustment to the adjusted tax
basis of any Partnership asset under Code Sections 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), 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), and the gain or loss will be specially
allocated to the Partners or Assignees 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).
(viii) To the extent any item of deduction or loss
allocated to a Partner or Assignee would cause the Partner or Assignee
to have an Adjusted Capital Account Deficit at the end of any taxable
period, the item of deduction or loss will be reallocated to the
Managing General Partner.
(ix) In the event that any fees, interest, or other
amounts paid to any General Partner pursuant to this Agreement, or any
agreement between the Partnership and the General Partner providing
for the payment of such amount, and deducted by the Partnership in
reliance on Sections 707(a) and/or 707(c) of the Code, are disallowed
as deductions to the Partnership on its federal income tax return and
are treated as Partnership distributions, then there shall be allocated
to the General Partner to which such fees, interest, or other amounts
were paid, prior to the allocations pursuant to this Section 6.2(d),
an amount of gross income, for the year in which such fees, interest, or
-35-
other amounts were paid, equal to the amount of such fees, interest, or
other amounts that are treated as Partnership distributions.
(x) In the event that, upon the exercise of any
options granted by the Partnership, a sale of Partnership assets is
deemed to result by virtue of the value of the interest in the
Partnership received upon exercise of the option exceeding the
exercise price of the option, any gain or loss resulting from such
deemed sale, and any compensation or other deductions of the Partnership
in connection with the exercise of such option, shall be allocated
among the Partners and Assignees in accordance with the provisions of
Section 6.2(a) without consideration of any change in the Percentage
Interests of the Partners and Assignees resulting from the exercise of
the option.
(xi) Notwithstanding an other provision of this
Agreement, no allocation of any item of income, gain, loss or deduction
will be made to a Partner or Assignee if the allocation would not have
"economic effect" under Treasury Regulations Section 1.704-1(b)(2)(ii)
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). The Managing General Partner will have the authority
in its sole and absolute discretion to reallocate any item in
accordance with this Section 6.2(d)(xi).
(e) CURATIVE ALLOCATIONS. The allocations set forth in
Section 6.2(d) (the "Regulatory Allocations") are intended to comply with
certain requirements of Treasury Regulations Section 1.704-2. The Regulatory
Allocations may not be consistent with the manner in which the Partners and
Assignees intend to divide Partnership distributions. Accordingly, the
Managing General Partner is authorized to divide other allocations of items
of income, gain, deduction and loss among the Partners and Assignees so as to
prevent the Regulatory Allocations from distorting the manner in which
Partnership distributions would be divided among the Partners but for
application of the Regulatory Allocations. In general, the reallocation will
be accomplished by specially allocating other items of income, gain,
deduction and loss, to the extent they exist, among the Partners and
Assignees, so that the net amount of the Regulatory Allocations and the
special allocations to each Partner and Assignee is zero. However, the
Managing General Partner will have discretion to accomplish this result in
any reasonable manner that is consistent with Code Section 704 and the
related Treasury Regulations.
(f) MINIMUM ALLOCATIONS TO MANAGING GENERAL PARTNER.
Notwithstanding anything in this Agreement (other than allocations contained
in Section 6.2(d) required by Sections 704(b) and 704(c) of the Code) to the
contrary, the interest of the Managing General Partner in each material item
of Partnership income, gain, deduction and loss shall equal at least 1% of
each such item at all times during the existence of the Partnership
(determined by excluding any Units owned by the Managing General Partner in
its capacity as a Limited Partner).
-36-
6.3 ALLOCATIONS FOR TAX PURPOSES.
(a) Except as otherwise provided in this Section 6.3, for
federal income tax purposes, each item of income, gain, loss and deduction
shall be allocated among the Partners and Assignees in the same manner as its
correlative item of "book" income, gain, loss or deduction has been allocated
pursuant to Section 6.2.
(b) In an attempt to eliminate any disparities between the
Carrying Value and the Adjusted Basis of Contributed Property or Adjusted
Property, items of income, gain, loss, depreciation and cost recovery
deductions shall be allocated for federal income tax purposes among the
Partners and Assignees, as follows:
(i) In the case of a Contributed Property, such items
attributable thereto shall be allocated among the Partners and Assignees
in the manner provided under Section 704(c)(1) of the Code that takes
into account the variation between the Carrying Value of such property
and its Adjusted Basis at the time of contribution.
(ii) In the case of an Adjusted Property, such items
attributable thereto shall (A) first, be allocated among the Partners
and Assignees in a manner consistent with the principles of Section
704(c)(1) of the Code to take into account the Unrealized Gain or
Unrealized Loss attributable to such property and the allocations
thereof pursuant to Section 5.8(d), and (B) second, in the event such
property was originally a Contributed Property, be allocated among
the Partners and Assignees in a manner consistent with Section
6.3(b)(i).
(iii) Except as otherwise provided in Section
6.3(b)(iv), in the case of all other properties, items of income, gain,
loss and deduction attributable to such property shall be allocated
among the Partners and Assignees in accordance with Section 6.3(a).
(iv) Any items of income, gain, loss or deduction
otherwise allocable under Sections 6.3(a) or 6.3(b)(iii) shall be
subject to allocation by the Managing General Partner in any reasonable
manner designed to eliminate, to the maximum extent possible, any
disparities between the Carrying Value and the Adjusted Basis in a
Contributed Property or an Adjusted Property otherwise resulting from
the application of the ceiling limitation (under Section 704(c)(1) of
the Code or Section 704(c)(1) principles) to the allocations provided
under Sections 6.3(b)(i) or 6.3(b)(ii).
(c) To the extent of any Recapture Income resulting from
the sale or other taxable disposition of Partnership Assets, the amount of
any gain from such disposition allocated to (or recognized by) a Partner or
Assignee for federal income tax purposes pursuant to the above provisions
shall be deemed to be Recapture Income to the extent such Partner or Assignee
(or its predecessors in interest) has been allocated or has claimed any
deduction directly or indirectly giving rise to the treatment of such gain as
Recapture Income.
-37-
(d) All items of income, gain, loss and deduction
recognized by the Partnership for federal income tax purposes and allocated
to the Partners and Assignees in accordance with the provisions hereof and
all basis allocations shall be determined without regard to any election
under Section 754 of the Code which may be made by the Partnership.
(e) It is intended that the allocations prescribed in
Sections 6.3(b)(i) and (b)(H) constitute allocations for federal income tax
purposes that are consistent with Section 704 of the Code and comply with any
limitations or restrictions therein. To preserve the uniformity of Units, in
addition to the allocation provided in Section 6.3(b)(iv), the Managing
General Partner shall have sole discretion to adopt such conventions as it
deems appropriate in determining the amount of depreciation and cost recovery
deductions and amend the provisions of this Agreement as appropriate (i) to
reflect the proposal or promulgation of Treasury Regulations under Section
704(c)(1) of the Code, or (ii) otherwise to preserve the uniformity of the
intrinsic tax characteristics of the Units issued or sold from time to time.
The Managing General Partner may adopt such conventions, make such
allocations and make such amendments to this Agreement as provided in this
Section 6.3(e) only if they would not have a material adverse effect on the
Limited Partners and Assignees. The Managing General Partner may use any
reasonable depreciation convention to preserve the uniformity of the
intrinsic tax characteristics of Units that would not have a material adverse
effect on the Limited Partners and Assignees. If the Managing General
Partner determines, based upon advice of counsel, that no reasonable
reporting position exists that the Units have, as a substantive matter, like
intrinsic tax characteristics, in all material respects, in the hands of a
purchaser, then the Units may be separately identified, to the extent
practicable, to reflect intrinsic differences in tax consequences, regardless
of the cause of any such nonuniformity.
(f) Solely for purposes of the interpretation and
application of this Article VI, the Partnership shall be treated as owning
its proportionate share of all properties owned by the Operating Partnership.
6.4 ALLOCATION OF INCOME AND LESS WITH RESPECT TO INTERESTS TRANSFERRED.
(a) If any Partnership Interest is transferred during any
Fiscal Year, the Net Income or Net Loss attributable to such interest for
such Fiscal Year shall be divided and allocated proportionately between the
transferor and the transferee based upon the number of days during such
Fiscal Year for which each party was the Record Holder of the Partnership
Interest transferred. For the purpose of accounting simplicity, the
Partnership will treat Partners and Assignees who are Record Holders as of
the close of business on the last day of a calendar month (commencing with
the month in which the Partnership is formed) as having been Partners or
Assignees, as the case may be, for the entire month. Similarly, a Partner or
Assignee who is not a Record Holder as of the close of business on the last
day of a calendar month will not be treated for purposes of this Section 6.4
as a Partner or Assignee, as the case may be, for such calendar month. The
Managing General Partner is authorized to alter this accounting convention to
conform with any regulations issued by the Treasury Department or rulings or
advice of the Internal Revenue Service, as the Managing General Partner shall
deem necessary or appropriate.
-38-
(b) Extraordinary Income or Loss of the Partnership
realized in connection with an Interim Capital Transaction shall be allocated
only to those Partners and Assignees who are Record Holders as of the close
of business on the last day of the calendar month in which such Interim
Capital Transaction occurs. Extraordinary Income or Loss of the Partnership
realized in connection with a Terminating Capital Transaction shall be
allocated only to Persons who are the Record Holders of Partnership Interests
as of the date such Terminating Capital Transaction occurs.
(c) Distributions of Partnership assets (including cash)
in respect of a Unit or Depositary Unit shall be made only to the Person who,
according to the books and records of the Partnership, is the Record Holder
of such Unit or Depositary Unit in respect of which such distribution is made
as of the Record Date for such distribution. The Record Dates for all
distributions of Cash Flow shall be selected so that each Unitholder who
receives a distribution of Cash Flow for a fiscal quarter will be allocated
Net Income or Net Loss, as the case may be, for at least one month.
(d) The Managing General Partner shall incur no liability
for making allocations and distributions in accordance with the provisions of
this Section 6.4, whether or not the Managing General Partner has knowledge
or notice of any transfer or purported transfer of ownership of any Unit,
Depositary Unit, or Partnership Interest.
6.5 DISTRIBUTIONS OF CASH FLOW.
(a) ALLOCATION AND DISTRIBUTION. Cash Flow of the
Partnership shall be determined for each calendar quarter of each Fiscal
Year. Cash Flow as so determined shall be distributed in cash to the
Partners and Assignees as follows and in the following order of priority:
(i) FIRST: to the Partners and Assignees, pro rata,
in accordance with their respective Percentage Interests, until
the Limited Partners and Assignees collectively shall have
received in the aggregate with respect to such Fiscal Year an
amount of Cash Flow equal to the product of (x) twelve percent
(12%) multiplied by (y) the outstanding balance of the
Unrecovered Capital as of the first day of such Fiscal Year;
(ii) SECOND: to the Partners and Assignees, pro rata,
in accordance with their respective First-Tier Residual
Interests, until the Limited Partners and Assignees collectively
shall have received, in the aggregate pursuant to Section
6.5(a)(i) and this Section 6.5(a)(ii) with respect to such
Fiscal Year, an amount of Cash Flow equal to the product of
(x) seventeen and one-half percent (17 1/2%) multiplied by
(y) the outstanding balance of the Unrecovered Capital as of
the first day of such Fiscal Year; and
(iii) THIRD: to the Partners and Assignees, pro rata,
in accordance with their respective Second-Tier Residual
Interests.
-39-
Distributions of Cash Flow within the first ninety (90) days of a subsequent
Fiscal Year designated by the Managing General Partner as made with respect to
the last quarter of the immediately prior Fiscal Year shall be considered made
with respect to such prior Fiscal Year for purposes of this Section 6.5(a).
(b) TIMING OF DISTRIBUTIONS. Cash Flow shall be distributed
quarterly, within seventy-five (75) days after the end of each calendar quarter
of a Fiscal Year, commencing with the calendar quarter ended March 31, 1986,
with such distribution to be made to Record Holders of Units and Depositary
Units as of the close of business on the Record Date for such distribution. The
Partners and Assignees agree that, within thirty (30) days after determination
by the Partnership that an overpayment was made to any Partner or Assignee for
any Fiscal Year pursuant to this Section 6.5, such Partner or Assignee shall
repay, allow as a credit against future distributions, or make such other
adjustments as may be appropriate to remedy such overpayment. Likewise,
appropriate adjustments shall be made to remedy any underpayment.
6.6 DISTRIBUTION OF PROCEEDS FROM INTERIM CAPITAL TRANSACTIONS.
The Net Proceeds of an Interim Capital Transaction shall be
distributed to the Partners and Assignees as follows and in the following
order of priority:
(a) FIRST: to the Partners and Assignees, pro rata, in
accordance with their respective Percentage Interests, until the Limited
Partners and Assignees collectively shall have received in the aggregate
pursuant to this Section 6.6(a) an amount equal to the Unrecovered Capital;
(b) SECOND: to the Partners and Assignees, pro rata, in
accordance with their respective Percentage Interests, until the Limited
Partners and Assignees collectively shall have received in the aggregate
pursuant to this Section 6.6(b) an amount equal to their then outstanding
Unrecovered Primary Preference;
(c) THIRD: to the Partners and Assignees, pro rata, in
accordance with their respective First-Tier Residual Interests, until the
Limited Partners and Assignees collectively shall have received in the
aggregate pursuant to Section 6.6(b) and this Section 6.6(c) an amount equal
to their then outstanding Unrecovered Secondary Preference; and
(d) FOURTH: to the Partners and Assignees, pro rata, in
accordance with their respective Second-Tier Residual Interests.
Distributions pursuant to this Section 6.6 shall be made within seventy-five
(75) days of the receipt of proceeds with respect to an Interim Capital
Transaction, with such distribution to be made to the Record Holders of Units
and Depositary Units as of the close of business on the Record Date for such
distribution.
-40-
6.7 DISTRIBUTION OF PROCEEDS FROM TERMINATING CAPITAL TRANSACTIONS;
LIQUIDATION DISTRIBUTIONS.
(a) The Net Proceeds of a Terminating Capital Transaction
and any other remaining assets of the Partnership to be distributed to the
Partners and Assignees in connection with dissolution and liquidation of the
Partnership pursuant to Article XV, after the payment of all debts,
liabilities, and obligations of the Partnership in the manner provided in
Section 15.5 hereof (including, without limitation, all amounts owing to the
General Partners under this Agreement (other than this Article VI) or under
any agreement between the Partnership and the General Partners entered into
by the General Partners other than in their capacity as Partners in the
Partnership), including, without limitation, the payment of expenses of
liquidation of the Partnership, and the establishment of a reasonable reserve
(including an amount estimated by the Managing General Partner to be
sufficient to pay an amount reasonably anticipated to be required to be paid
pursuant to Section 7.10 hereof), shall be distributed to the Partners and
Assignees, pro rata, in proportion to the positive balances, if any, in their
respective Capital Accounts. A distribution pursuant to this Section 6.7
shall be made to the Record Holders of Units and Depositary Units as of the
close of business on the Record Date for such distribution.
(b) Notwithstanding any provision in this Section 6.7 to the
contrary, in the event that the Net Proceeds of the Terminating Capital
Transaction are to be paid to the Partnership in more than one installment, each
such installment (including any interest thereon) shall be allocated among the
Partners and Assignees in accordance with their respective "Installment
Percentages." The "Installment Percentage" of each Partner and Assignee shall be
equal to (i) the aggregate amount of cash that would have been distributed to
that Partner or Assignee under Sections 6.7(a) and (b) had the Net Proceeds of
the Terminating Capital Transaction been paid in one lump sum, divided by (ii)
the total Net Proceeds that would have been distributed to all of the Partners
and Assignees under those Sections.
ARTICLE VII
MANAGEMENT
7.1 MANAGEMENT AND CONTROL OF PARTNERSHIP.
Except as otherwise expressly provided or limited by the provisions
of this Agreement (including, without limitation, the provisions of Article
VIII), the Managing General Partner shall have full, exclusive, and complete
discretion to manage and control the business and affairs of the Partnership
and the Operating Partnership, to make all decisions affecting the business
and affairs of the Partnership and the Operating Partnership, and to take all
such actions as it deems necessary or appropriate to accomplish the purposes
of the Partnership and the Operating Partnership as set forth herein and in
the Operating Partnership Agreement. The Managing General Partner shall use
reasonable efforts to carry out the purposes of the Partnership and shall
devote to the management of the business and affairs of the Partnership and
the Operating Partnership such time as the Managing General Partner, in its
reasonable discretion, shall deem
-41-
to be reasonably required for the operation thereof. No Limited Partner or
Assignee shall have any authority, right, or power to bind the Partnership or
the Operating Partnership, or to manage or control, or to participate in the
management or control of, the business and affairs of the Partnership or the
Operating Partnership in any manner whatsoever.
7.2 POWERS OF MANAGING GENERAL PARTNER.
Subject to the limitation of Section 7.3, which vests certain voting
rights in the Limited Partners, and to the limitations and restrictions set
forth in Article VIII, the Managing General Partner (acting on behalf of the
Partnership and the Operating Partnership) shall have the right, power, and
authority, in the management of the business and affairs of the Partnership
and Operating Partnership, to do or cause to be done any and all acts, at the
expense of the Partnership or Operating Partnership, as the case may be,
deemed by the Managing General Partner to be necessary or appropriate to
effectuate the business, purposes, and objectives of the Partnership and the
Operating Partnership. The power and authority of the Managing General
Partner pursuant to this Agreement and the Operating Partnership Agreement
shall be liberally construed to encompass all acts and activities in which a
partnership may engage under the Delaware RULPA. The power and authority of
the Managing General Partner shall include, without limitation, the power and
authority on behalf of the Partnership and the Operating Partnership:
(a) To serve as managing general partner of the Operating
Partnership and, as Managing General Partner of the Partnership, to exercise
all rights of the Partnership as limited partner in the Operating Partnership
pursuant to the Operating Partnership Agreement;
(b) Upon consummation of the Closing, to cause the
Partnership to contribute the Aggregate Offering Proceeds and the Capital
Contributions of the General Partners to the Operating Partnership as
provided for in the Operating Partnership Agreement, to cause the Operating
Partnership to acquire certain Restaurant Properties from BKC pursuant to the
Real Estate Purchase Agreement, to cause the Operating Partnership to pay to
BKC the purchase price for such Restaurant Properties specified in the Real
Estate Purchase Agreement, and to take all other actions and make all other
decisions in connection with the acquisition of any Partnership Properties by
the Operating Partnership from BKC as the Managing General Partner, in its
sole and absolute discretion, shall deem necessary or appropriate;
(c) To acquire, own, lease, sublease, manage, hold, deal in,
control or dispose of any interests or rights in personal property or real
property, including interests in any Partnership Property, whether realty or
personalty, including, without limitation, the powers to sell, exchange,
lease, sublease, mortgage, pledge, convey in trust, enter into joint ventures
or partnerships respecting or otherwise hypothecate or dispose of all or any
portion of any Partnership Property or any other Partnership Asset or any
interest therein, and to contribute all or any Partnership Assets to the
Operating Partnership; provided, however, that the use of any Restricted
Restaurant Property and any sale or other disposition of any Restricted
Restaurant Property shall be subject to the restrictions and limitations set
forth in Sections 8.3 and 8.4;
-42-
(d) Subject to the restrictions and limitations set forth in
Section 8.3 but without limiting the generality of Section 7.2(c), to
negotiate, enter into, renegotiate, extend, renew, terminate, modify, amend,
waive, execute, acknowledge, or take any other action on behalf of the
Partnership or the Operating Partnership with respect to any Primary Lease
(including, without limitation, to exercise any right of the Partnership
under any Primary Lease to acquire title to a Partnership Property pursuant
to a right of first refusal) or any lease or sublease of a Partnership
Property whether to a BKC Franchisee or otherwise, or any provision thereof;
(e) Subject to the restrictions and limitations set forth in
Sections 8.3 and 8.4 hereof, to create, by grant or otherwise, easements,
servitudes, rights-of-way, and other rights in and to any Partnership
Property;
(f) To alter, improve, expand, repair, raze, replace, or
reconstruct a Partnership Property; provided, however, that any improvement,
expansion, replacement, or reconstruction of a Partnership Property pursuant
to the "Successor Policy" of BKC as then in effect (as further described in
Section 8.6) shall be subject to the terms and conditions of Section 8.6;
(g) Subject to the restrictions and limitations set forth in
Sections 8.3 and 8.4, to let or lease, or sublet or sublease, any Partnership
Property for any period, and for any purpose;
(h) To apply proceeds of any sale, exchange, mortgage,
pledge, or other disposition of any Partnership Property or any other
Partnership Asset to payment of liabilities of the Partnership or the
Operating Partnership and to pay, collect, compromise, arbitrate, or
otherwise adjust any and all other claims or demands of or against the
Partnership or the Operating Partnership or to hold such proceeds against the
payment of contingent liabilities, known or unknown;
(i) To maintain or cause to be maintained records of all
rights and interests acquired or disposed of by the Partnership or the
Operating Partnership, all correspondence relating to the business of the
Partnership or the Operating Partnership, and the original records (or copies
on such media as the Managing General Partner may deem appropriate) of all
statements, bills, and other instruments furnished the Partnership or the
Operating Partnership in connection with their respective businesses;
(j) To maintain records and accounts of all operations and
expenditures, make all filings and reports required under applicable rules
and regulations of any governmental department, bureau, or agency, any
securities exchange, and any automated quotation system of a registered
securities association, and furnish the Partners and Assignees with all
necessary United States federal, state, or local income tax reporting
information or such information with respect to any other jurisdiction;
-43-
(k) To purchase and maintain (either directly or through
participation under insurance contracts purchased and maintained by any
Affiliate), in its sole and absolute discretion and at the expense of the
Partnership or the Operating Partnership, liability, indemnity, and any other
insurance (including, without limitation, errors and omissions insurance and
insurance to cover the obligations of the Partnership under Section 7.10),
sufficient to protect the Partnership, the Operating Partnership, the General
Partners, their officers, directors, employees, agents, and Affiliates, or any
other Person, from those liabilities and hazards which may be insured against in
the conduct of the business and in the management of the business and affairs of
the Partnership or the Operating Partnership;
(l) To make, execute, assign, acknowledge, and file on
behalf of the Partnership or the Operating Partnership any and all documents
or instruments of any kind which the Managing General Partner may deem
necessary or appropriate in carrying out the purposes and business of the
Partnership or the Operating Partnership, including, without limitation,
powers of attorney, agreements of indemnification, sales contracts, deeds,
options, loan obligations, mortgages, deeds of trust, notes, documents, or
instruments of any kind or character, and amendments thereto. Any person,
firm, or corporation dealing with the Managing General Partner shall not be
required to determine or inquire into the authority or power of the Managing
General Partner to bind the Partnership or the Operating Partnership or to
execute, acknowledge, or deliver any and all documents in connection
therewith;
(m) To borrow money or to obtain credit in such amounts, on
such terms and conditions, and at such rates of interest and upon such other
terms and conditions as the Managing General Partner deems appropriate, from
banks, other lending institutions, or any other Person, including the
Partners and Assignees, for any purpose of the Partnership or the Operating
Partnership, including, without limitation, any loan incurred for the purpose
of making one or more distributions to any or all Partners and Assignees,
including any distributions which are, in whole or in part, a return of
Capital Contributions; and subject to the restrictions and limitations set
forth in Section 8.4, in connection with such loans to mortgage, pledge,
assign, or otherwise encumber or alienate any or all of the Partnership
Properties or other Partnership Assets, including any income therefrom, to
secure or provide for the repayment thereof As between any lender and the
Partnership or the Operating Partnership, it shall be conclusively presumed
that the proceeds of such loans are to be and win be used for the purposes
authorized herein and that the Managing General Partner has the full power
and authority to borrow such money and to obtain such credit;
(n) To originate loans or otherwise provide financing,
whether through guarantees, letters of credit or otherwise, secured by liens
on real estate to borrowers who meet the Partnership's underwriting criteria,
which shall be established by the Managing General Partner;
(o) To assume obligations, enter into contracts, including
contracts of guaranty or suretyship, incur liabilities, lend money, and
otherwise use the credit of the Partnership or the Operating Partnership,
and, subject to the restrictions and limitations set forth in Sections 8.3
and
-44-
8.4, to secure any of the obligations, contracts, or liabilities of the
Partnership or the Operating Partnership, by mortgage, pledge or other
encumbrance of all or any part of the property, franchises, and income of the
Partnership or the Operating Partnership;
(p) To invest funds of the Partnership or the Operating
Partnership in interest-bearing accounts and short-term investments
including, without limitation, obligations of the federal, state, and local
governments and their agencies, mutual funds (including money market funds),
time deposits, commercial paper, and certificates of deposit of commercial
banks, savings banks, or savings and loan associations; provided that the
Managing General Partner shall not invest Partnership funds in such a manner
that the Partnership will be considered to be holding itself out as being
engaged primarily in the business of investing, reinvesting, or trading in
securities or will otherwise be deemed to be an investment company under the
Investment Company Act of 1940, as amended;
(q) To make any election on behalf of the Partnership or the
Operating Partnership as is or may be permitted under the Code or under the
taxing statute or rule of any state, local, foreign, or other jurisdiction,
and to supervise the preparation and filing of all tax and information
returns which the Partnership or the Operating Partnership may be required to
file;
(r) To maintain the buildings, appurtenances, and grounds of
the Partnership Properties in accordance with acceptable standards, including
within such maintenance, without limitation thereof, interior and exterior
cleaning, painting and decorating, plumbing, carpentry, and such other normal
maintenance and repair work as may be appropriate;
(s) To collect all rents and other charges from lessees of
the Partnership Properties due the Operating Partnership. The Managing
General Partner shall have full power and authority to request, demand,
collect, receive, and receipt for all such rents and other charges, to
institute legal proceedings in the name of the Operating Partnership for the
collection thereof and for the dispossession of any Person from a Partnership
Property, to settle or compromise all such legal proceedings and any other
disputes with respect to such rents and other charges, and to incur such
expenses in connection therewith as the Managing General Partner shall
determine to be necessary or appropriate, which expenses may include the
costs of counsel for any such matter;
(t) To cause to be disbursed (i) the aggregate amount
required to be paid pursuant to any indebtedness of the Partnership or the
Operating Partnership, including therein amounts due under any mortgages or
deeds of trust for interest, amortization of principal, and for allocation to
reserve or escrow funds; (ii) the amount of rent payable by the terms of any
Primary Lease; (iii) the amount of all real estate taxes and other
impositions levied by appropriate authorities (including, without limitation,
amounts required to be paid by any BKC Franchisee pursuant to any lease with
respect to a Restricted Restaurant Property); and (iv) amounts otherwise due
and payable as expenses of the Partnership or the Operating Partnership
incurred in furtherance of the purposes of this Agreement or the Operating
Partnership Agreement (including, without limitation, amounts payable to the
General Partners);
-45-
(u) To employ and engage suitable agents, employees, advisers,
consultants, and counsel (including any custodian, investment adviser,
accountant, attorney, corporate fiduciary, bank, or other reputable financial
institution, or any other agents, employees, or Persons who may serve in such
capacity for the Managing General Partner or any Affiliate of the Managing
General Partner) to carry out any activities which the Managing General
Partner is authorized or required to carry out or conduct under this
Agreement or the Operating Partnership Agreement, including, without
limitation, a Person who may be engaged to undertake some or all of the
general management, property management, financial accounting and record
keeping, or other duties of the Managing General Partner, to indemnity such
Persons against liabilities incurred by them in acting in such capacities on
behalf of the Partnership or the Operating Partnership, and to rely on the
advice given by such Persons, it being agreed and understood that the
Managing General Partner shall not be responsible for any acts or omissions
of any such Persons and shall assume no obligations in connection therewith
other than the obligation to use due care in the selection thereof;
(v) To enter into an agreement or agreements with real estate brokers
or agents, investment banking firms, appraisers, or others providing for the
engagement of such Persons on an exclusive or non-exclusive basis to advise
or represent the Partnership or the Operating Partnership in the valuation,
sale, transfer, assignment, lease, sublease, mortgaging, or other encumbering
of, or other dealings in, the Partnership Properties, it being understood
that the Managing General Partner shall not be responsible for any acts or
omissions of any such Person and shall assume no obligations in connection
therewith other than the obligation to use due care in the selection thereof;
provided, however, that no commission in connection with any sale or other
disposition of a Partnership Property shall exceed six percent (6%) of the
gross proceeds from such sale or disposition, and that no commission in
connection with any such sale or other disposition shall be payable to a
General Partner or any of its Affiliates-;
(w) To consult with the Independent Consultant pursuant to the
provisions of Section 8.10 with respect to any matter related to the business
and affairs of the Partnership or the Operating Partnership;
(x) To take such actions and make such decisions as may be necessary or
appropriate, in the reasonable judgment of the Managing General Partner, to
resolve or avoid any actual or potential conflict of interest between the
Partnership or the Operating Partnership and any General Partners or any
Affiliates thereof, including, without limitation, subject to Section 8.8, to
cause the Operating Partnership to accept from BKC or a third party, in
exchange or substitution for one or more Restricted Restaurant Properties,
one or more other properties on which a BK Restaurant leased to a BKC
Franchisee is located; provided, however, that, so long as Section 1031 of
the Code or any similar provision shall remain in effect, any such
substitution or exchange must qualify as an exchange of property of a
like-kind in- which no gain or loss is recognized to the Partnership except
to the extent of any cash received in connection therewith;
(y) To hold Partnership Properties or other Partnership Assets in the
name of one or more nominees, with or without disclosure of the fiduciary
relationship;
-46-
(z) To pay, extend, renew, modify, adjust, submit to arbitration,
prosecute, defend, or compromise, upon such terms as it may determine and
upon such evidence as it may deem sufficient, any obligation, suit,
liability, cause of action, or claim, including taxes, either in favor of or
against the Partnership or the Operating Partnership;
(aa) To register, qualify, list, or report, or cause to be registered,
qualified, listed, or reported, this Agreement or Depositary Units issued
hereunder pursuant to the Securities Act, the Exchange Act, any other
securities laws of the United States, the securities laws of any state of the
United States, the laws of any other jurisdiction, with any securities
exchange, or pursuant to an automated quotation system of a registered
securities association, as the Managing General Partner deems appropriate;
(bb) To qualify the Partnership or the Operating Partnership to do
business in any state, territory, dependency, or foreign country;
(cc) To purchase any Partnership Property subject to a Primary Lease,
whether pursuant to a first right of refusal under such Primary Lease or
otherwise;
(dd) To enter into a property management agreement with BKC pursuant to
which BKC agrees on behalf of the Managing General Partner, at no additional
expense to the Partnership, to exercise certain day-to-day management
responsibilities with respect to the Partnership Properties and to perform
related administrative services upon the terms and conditions set forth
therein, to extend, renew, terminate, modify, amend, or waive such agreement
or any provision thereof, and to take such action pursuant to or in
connection with such agreement as the Managing General Partner shall
determine appropriate; provided, however, that the Managing General Partner
shall have no obligation to enter into any such agreement;
(ee) To distribute money or Partnership Assets to Partners and Assignees
in accordance with Article VI, regardless of the source of such money or
Partnership Assets, including, without limitation, money borrowed by the
Partnership or by the Managing General Partner on behalf of the Partnership;
(ff) To acquire fee simple title or a leasehold interest in any
Partnership Property and Ancillary Property related thereto and to provide
for the purchase price for such property from funds otherwise constituting
Cash Flow or the Net Proceeds of a Capital Transaction, whether at the time
of acquisition or thereafter to pay principal, interest or other amounts
payable in respect of any financing related to such acquisition;
(gg) To lease, sell or otherwise transfer Ancillary Property to any
tenant of Partnership Property, to provide financing, whether through loans,
guarantees or otherwise, for any tenant of Partnership Property and to
provide the funds for such transactions from funds otherwise constituting
Cash Flow or the Net Proceeds of a Capital Transaction, whether at the time
of such transaction or thereafter to pay principal, interest or other amounts
payable in respect of any financing undertaken for such purpose;
-47-
(hh) To mortgage, lien or otherwise encumber or restrict any Restricted
Restaurant Property and use the proceeds thereof in respect of Other
Restaurant Properties, Retail Properties or for any other Partnership
purpose; and to mortgage, lien or otherwise encumber or restrict any Other
Restaurant Property or Retail Property and use the proceeds thereof in
respect of Restricted Restaurant Properties or for any other Partnership
purpose;
(ii) To operate or franchise any Partnership Property, whether directly
or through any Affiliates or other Persons;
(jj) To reinvest or otherwise use funds otherwise constituting Cash Flow
or the Net Proceeds of a Capital Transaction in or for Partnership
Properties, Ancillary Property or other Partnership Assets or for any other
Partnership purpose, including the purchase of Units or Depositary Units by
purchasing the respective Depositary Receipts for subsequent re-issuance
under a DRIP or for any other purpose;
(kk) To effect any underwriting, placement or other issuance of Units
for such consideration (which may be property) and on such terms and
conditions as it may deem necessary or appropriate, pay the discounts, costs
and expenses associated therewith, apply any proceeds thereof for or in
furtherance of any Partnership purpose and take all other actions and make
all other decisions in connection therewith as it in its sole and absolute
discretion, shall deem necessary or appropriate;
(ll) To possess and exercise any additional rights and powers of a
general partner under the partnership laws of Delaware (including, without
limitation, the Delaware RULPA) and any other applicable laws, to the extent
not inconsistent with this Agreement; and
(mm) In general, to exercise in full all of the powers of the
Partnership as set forth in Section 3.2 and to do any and all acts and
conduct all proceedings and execute all rights and privileges, contracts, and
agreements of any kind whatsoever, although not specifically mentioned in
this Agreement, that the Managing General Partner in its sole and absolute
discretion may deem necessary or appropriate to the conduct of the business
and affairs of the Partnership or the Operating Partnership or to carry out
the purposes of the Partnership or the Operating Partnership. The expression
of any power or authority of the Managing General Partner in this Agreement
shall not in any way limit or exclude any other power or authority which is
not specifically or expressly set forth in this Agreement.
7.3 RESTRICTIONS ON AUTHORITY OF MANAGING GENERAL PARTNER.
(a) Anything in this Agreement to the contrary notwithstanding, the
Managing General Partner shall have no authority to:
(i) pay for any services performed by a General Partner or an
Affiliate of a General Partner, except as otherwise expressly
permitted in this Agreement;
-48-
(ii) take any action on any matter with respect to which a
Majority Vote of the Limited Partners or a Super-Majority Vote of the
Limited Partners, as the case may be, is specifically required under
this Agreement without such Vote approving such action having
occurred; or
(iii) cause the Partnership to terminate the Deposit Agreement
unless such termination (A) is in connection with the Partnership
entering into a similar agreement with another depositary selected by
the Managing General Partner, in its sole and absolute discretion, (B)
results from the receipt of an Opinion of Independent Counsel to the
effect that such termination is necessary in order for the Partnership
to avoid being treated as an association taxable as a corporation for
federal income tax purposes or to avoid being in violation of any
applicable federal or state securities laws, or (C) is in connection
with the dissolution of the Partnership pursuant to Article XV.
(b) Notwithstanding any other provision of this Agreement, the Managing
General Partner shall not, without the prior Majority Vote of the Limited
Partners (or in the event of an amendment or action described in Section
7.3(b)(iii)(D) below, a Super-Majority Vote of the Limited Partners if such
amendment of, or action pursuant to, a corresponding provision of this
Agreement would have required a prior Super-Majority Vote of the Limited
Partners under such corresponding provision):
(i) except upon dissolution and liquidation pursuant to Article XIV,
cause the Partnership to sell, exchange, assign, lease, sublease, or
otherwise dispose of all or substantially all of the Partnership Assets
other than in ordinary course of business of the Partnership; provided,
however, that this provision shall not be interpreted to preclude or limit
the contribution of the Aggregate Offering Proceeds to the Operating
Partnership in accordance with Section 8.2 and the terms of the Operating
Partnership Agreement, or to preclude or limit the mortgage, pledge,
hypothecation, or grant of a security interest in all or substantially all
of the Partnership Assets, and shall not apply to any forced sale of any
or all of the Partnership Assets pursuant to the foreclosure of, or other
realization upon, any such encumbrance;
(ii) cause the Partnership to merge or consolidate with any other
partnership (other than the Operating Partnership) or other entity; or
(iii) acting on behalf of the Partnership,
(A) except upon dissolution and liquidation pursuant to the
applicable provisions of the Operating Partnership Agreement, consent
to the sale, exchange, assignment, lease, sublease, or other
disposition by the Operating Partnership of all or substantially all
of the assets of the Operating Partnership other than in the ordinary
course of business of the Operating Partnership; provided, however,
that this provision shall not be
-49-
interpreted to preclude or limit the payment to BKC of the purchase
price for the Restaurant Properties specified in the Real Estate
Purchase Agreement, or to preclude or limit the mortgage, pledge,
hypothecation, or grant of a security interest in all or substantially
all of the assets of the Operating Partnership, and shall not apply to
any forced sale of any or all of the assets of the Operating
Partnership pursuant to the foreclosure of, or other realization upon,
any such encumbrance;
(B) consent to a merger or consolidation of the Operating
Partnership with any other partnership (other than the Partnership) or
other entity; or
(C) consent to the dissolution of the Operating Partnership
pursuant to Section 14.2(e) of the Operating Partnership Agreement; or
(D) consent to any amendment of the Operating Partnership
Agreement or any action of the Managing General Partner pursuant to or
in connection with the Operating Partnership Agreement if such
amendment of the corresponding provision of this Agreement or action
pursuant to a corresponding provision of this Agreement would have
required the prior approval of either a Majority Vote of the Limited
Partners or a Super-Majority Vote of the Limited Partners.
7.4 TITLE TO PARTNERSHIP ASSETS.
Title to Partnership Assets, whether real, personal, or mixed or tangible
or intangible, shall be deemed to be owned by the Partnership as an entity, and
no Partner or Assignee, individually or collectively, shall have any ownership
interest in such Partnership Assets or any portion thereof. Title to any or all
of the Partnership Assets may be held in the name of the Partnership, of the
Managing General Partner, or of one or more nominees, as the Managing General
Partner may determine. The Managing General Partner hereby declares and
warrants that any Partnership Assets for which legal title is held in the name
of the Managing General Partner shall BE held in trust by the Managing General
Partner for the use and benefit of the Partnership in accordance with the terms
or provisions of this Agreement. All Partnership Assets shall be recorded as
the property of the Partnership on its books and records, irrespective of the
name in which legal title to such Partnership Assets is held.
7.5 WORKING CAPITAL RESERVE.
The Managing General Partner shall have the right to cause the Partnership
and the Operating Partnership to set up a Working Capital Reserve and to set
aside therein such funds as the Managing General Partner, in its sole and
absolute discretion, shall determine to be reasonable in connection with the
operation of the business of the Partnership and the Operating Partnership. Any
funds set aside for such Working Capital Reserve may be invested by the
-50-
Managing General Partner with a view to the appropriate degree of safety of
and return on such invested funds, and such funds shall not be available for
current distribution under Section 6.5; provided, however, that some or all
of such funds may subsequently be made available for distribution pursuant to
Section 6.5 should the Managing General Partner, in its sole and absolute
discretion, so elect. The Working Capital Reserve established and maintained
pursuant to this Section 7.5 shall be in addition to any reserves established
and maintained by the Managing General Partner to implement Burger King's
"Successor Policy" pursuant to Section 8.6.
7.6 OTHER BUSINESS ACTIVITIES OF PARTNERS.
Any Partner or Affiliate (including, without limitation, the Managing
General Partner and any Affiliate thereof) may have other business interests
or may engage in other business ventures of any nature or description
whatsoever, whether presently existing or hereafter created, including,
without limitation, the ownership, leasing, management, operation,
franchising, syndication, and/or development of commercial real estate and/or
restaurants, and may compete, directly or indirectly, with the business of
the Partnership or the Operating Partnership. No Partner or Affiliate
thereof shall incur any liability to the Partnership as the result of such
Partner's or Affiliate's pursuit of such other business interests and
ventures and competitive activity, and neither the Partnership nor any of the
other Partners or any Assignees shall have any right to participate in such
other business interests or ventures or to receive or share in any income or
profits derived therefrom.
7.7 TRANSACTIONS WITH MANAGING GENERAL PARTNER OR AFFILIATES.
In addition to transactions specifically contemplated by the terms and
provisions of this Agreement, including, without limitation, Articles VIII
and IX, the Partnership and the Operating Partnership are expressly permitted
to enter into other transactions (including, without limitation, the
acquisition of goods or services) with the Managing General Partner, or any
Affiliates thereof, provided that the price and other terms of such other
transactions are fair to the Partnership and that the price and other terms
of such transactions are not less favorable to the Partnership or the
Operating Partnership, as the case may be, than those generally prevailing
with respect to comparable transactions between unrelated parties.
7.8 NET WORTH REPRESENTATION; INDEPENDENT JUDGMENT.
In addition to their other duties and obligations, the General Partners
further agree as follows:
(a) The General Partners shall use their best efforts to maintain
a combined net worth equal to the total amount, if any, that could reasonably
be expected to be required in order for the Partnership and the Operating
Partnership to be treated as partnerships for federal income tax purposes; and
-51-
(b) in acting on behalf of the Partnership, the Managing General
Partner will not act under the direction of or as an agent of or "dummy" for the
Limited Partners.
7.9 LIABILITY OF GENERAL PARTNERS TO PARTNERSHIP AND LIMITED PARTNERS.
The General Partners, their Affiliates and all officers, directors,
employees, and agents of the General Partners and their Affiliates shall not be
liable to the Partnership or to the Limited Partners or Assignees for any losses
sustained or liabilities incurred as a result of any act or omission of the
General Partners or their Affiliates if (i) the General Partner or Affiliate
acted (or failed to act) in good faith and in a manner it believed to be in, or
not opposed to, the interests of the Partnership, and (ii) the conduct of the
General Partner or Affiliate did not constitute actual fraud, gross negligence,
or willful or wanton misconduct.
7.10 INDEMNIFICATION OF GENERAL PARTNERS AND AFFILIATES.
(a) The Partnership shall indemnify and hold harmless the General
Partners, their Affiliates, and all officers, directors, employees, and agents
of the General Partners and their Affiliates (individually, an "Indemnitee")
from and against any and all losses, claims, demands, costs, damages,
liabilities, joint and several, expenses of any nature (including attorneys'
fees and disbursements), judgments, fines, settlements, and other amounts
arising from any and all claims, demands, actions, suits, or proceedings, civil,
criminal, administrative or investigative, in which the Indemnitee may be
involved, or threatened to be involved, as a party or otherwise, arising out of
or incidental to the Initial Public Offering or the business of the Partnership
or Operating Partnership, including, without limitation, liabilities under the
federal and state securities laws, regardless of whether the Indemnitee
continues to be a General Partner, an Affiliate, or an officer, director,
employee, or agent of a General Partner or of an Affiliate at the time any such
liability or expense is paid or incurred, if (i) the Indemnitee acted in good
faith and in a manner it believed to be in, or not opposed to, the interests of
the Partnership, and, with respect to any criminal proceeding, had no reasonable
cause to believe its conduct was unlawful, and (H) the Indemnitee's conduct did
not constitute actual fraud, gross negligence, or willful or wanton misconduct.
The termination of any action, suit, or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contenders, or its equivalent,
shall not, in and of itself, create a presumption or otherwise constitute
evidence that the Indemnitee acted in a manner contrary to that specified in (i)
or (ii) above.
(b) Expenses incurred by an Indemnitee in defending any claim,
demand, action, suit, or proceeding subject to this Section 7.10 shall, from
time to time, be advanced by the Partnership prior to the final disposition of
such claim, demand, action, suit, or proceeding upon receipt by the Partnership
of an undertaking by or on behalf of the Indemnitee to repay such amount unless
it shall be determined that such Person is entitled to be indemnified as
authorized in this Section 7.10.
(c) The indemnification provided by this Section 7.10 shall be in
addition to any other rights to which those indemnified may be entitled under
any agreement, vote of the
-52-
Partners, as a matter of law or equity, or otherwise, both as to an action in
the Indemnitee's capacity as a General Partner, an Affiliate, or as an officer,
director, employee or agent of a General Partner or an Affiliate, and as to an
action in another capacity, and shall continue as to an Indemnitee who has
ceased to serve in such capacity and shall inure to the benefit of the heirs,
successors, assigns, and administrators of the Indemnitee.
(d) The Partnership may purchase and maintain insurance (either
directly or through participation under insurance contracts purchased and
maintained by any Affiliate) on behalf of the General Partners and such other
Persons as the Managing General Partner shall determine against any liability
that may be asserted against or expense that may be incurred by such Person in
connection with the Initial Public Offering and the activities of the
Partnership or the Operating Partnership, regardless of whether the Partnership
or the Operating Partnership would have the power to indemnify such Person
against such liability under the provisions of this Agreement.
(e) Except as set forth in the next sentence below, any
indemnification hereunder shall be satisfied solely out of the assets of the
Partnership and the Operating Partnership. The Limited Partners or Assignees
shall not be subject to personal liability by reason of these indemnification
provisions; provided, however, that to the extent that any Limited Partner or
Assignee or former Limited Partner or Assignee shall recover from any
Indemnitee any amount that is subject to indemnification hereunder, such
Limited Partner or Assignee or former Limited Partner or Assignee shall have
personal liability to the Partnership and the Indemnitee under this Section
7.10 for and to the extent of such amount.
(f) An Indemnitee shall not be denied indemnification in whole or
in part under this Section 7.10 by reason of the fact that the Indemnitee had
an interest in the transaction with respect to which the indemnification
applies if the action was otherwise permitted by the terms of this Agreement.
(g) The provisions of this Section 7.10 are for the benefit of the
Indemnitees and shall not be deemed to create any rights for the benefit of
any other Persons.
7.11 NO MANAGEMENT BY LIMITED PARTNERS AND ASSIGNEES.
No Limited Partner or Assignee (other than the Managing General Partner
or any agent or employee of the Managing General Partner, in its capacity as
such, if such Person shall also be a Limited Partner or Assignee) shall take
part in the day-to-day management, operation or control of the business and
affairs of the Partnership or the Operating Partnership. The Limited
Partners and Assignees shall not have any right, power, or authority to
transact any business in the name of the Partnership or the Operating
Partnership or to act for or on behalf of or to bind the Partnership or the
Operating Partnership. The Limited Partners and Assignees, shall have no
rights other than those specifically provided herein or granted by law where
consistent with a valid provision hereof. In the event any laws, rules, or
regulations applicable to the Partnership, or to the sale or issuance of the
Units in connection with the Initial Public Offering, require a
-53-
Limited Partner, or any group or class thereof, to have certain rights, options,
privileges, or consents not granted by the terms of this Agreement, then such
Limited Partners shall have and enjoy such rights, options, privileges, and
consents so long as (but only so long as) the existence thereof does not result
in a loss of the limitation on liability enjoyed by the Limited Partners under
the Delaware RULPA or the applicable laws of any other jurisdiction.
7.12 OTHER MATTERS CONCERNING GENERAL PARTNERS.
(a) The General Partners may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement, instrument,
opinion, report, notice, request, consent, order, bond, debenture, or other
paper or document believed by them to be genuine and to have been signed or
presented by the proper party or parties.
(b) The General Partners may consult with legal counsel, accountants,
consultants, investment bankers, and other consultants and advisers selected by
them and any opinion of such Person as to matters that the General Partners
reasonably believe to be within its professional or expert competence
(including, without limitation, any opinion of legal counsel to the effect that
the Partnership or Operating Partnership would "more likely than not" prevail
with respect to any matter) shall be full and complete authorization and
protection in respect to any action taken or suffered or omitted by a General
Partner hereunder in good faith and in accordance with such opinion.
(c) The General Partners shall have the right, in respect of any of
their powers or obligations hereunder, to act through a duly appointed attorney
or attorneys-in-fact. Each such attorney or attorney-in-fact shall, to the
extent provided by the General Partner in the power of attorney, have full power
and authority to do and perform all and every act and duty which is permitted or
required to be done by the General Partner hereunder. Each such appointment
shall be evidenced by a duly executed power of attorney giving and granting to
each such attorney or attorney-in-fact full power and authority to do and
perform all and every act and thing requisite and necessary to be done by the
General Partner in connection with the Partnership.
7.13 REVOLVING LINE OF CREDIT; OTHER LOANS TO OR FROM A GENERAL PARTNER.
(a) Pursuant to this Section 7.13 and Section 7.13 of the Operating
Partnership Agreement, the Managing General Partner shall make available to the
Partnership and the Operating Partnership, jointly, on an "as needed" basis an
unsecured, interest-free, revolving line of credit in the aggregate principal
amount of Five Hundred Thousand Dollars ($500,000). The proceeds of the
revolving line of credit may be used by the Partnership and/or the Operating
Partnership solely for purposes of providing to the Partnership and/or the
Operating Partnership funds determined by the Managing General Partner to be
necessary for purposes of (i) maintaining sufficient working capital, (ii)
maintaining level quarterly distributions of Net Cash Flow, and/or (iii) for the
Fiscal Year ending December 31, 1986, making anticipated distributions of Cash
Flow for such Fiscal Year described in the Registration Statement. The
Partnership and the Operating Partnership may borrow, repay, and reborrow under
the revolving line of credit
-54-
from time to time (subject to the maximum aggregate principal amount
limitation). Nothing herein shall be construed to require the Managing
General Partner to cause the Partnership or the Operating Partnership to
retain cash (or to cause the Partnership or the Operating Partnership to
borrow under the revolving line of credit in order to retain cash) in excess
of the immediate working capital needs of the Partnership or the Operating
Partnership, as the case may be. In addition, nothing shall be construed to
require the Partnership to use or exhaust the financing available under the
revolving line of credit before obtaining other financing permitted by this
Agreement, whether for acquisitions, reinvestment, working capital or
otherwise. This revolving line of credit shall terminate upon removal or
withdrawal of the Managing General Partner.
(b) In addition to the revolving line of credit described in
Section 7.13(a), any of the General Partners or any of their Affiliates may
lend to the Partnership or the Operating Partnership funds needed by the
Partnership or the Operating Partnership, as the case may be, for such
periods of time as the Managing General Partner may determine; provided,
however, that (i) interest payable on such indebtedness shall be calculated
at a rate not to exceed the rate announced by Xxxxxx Guaranty Trust Company
from time to time as its "prime rate" plus one percent (1%) (as in effect on
the first day of each calendar quarter, as adjusted as of the first day of
each succeeding calendar quarter to reflect such rate in effect on such date)
or the highest lawful rate, whichever is less, and (ii) in no event shall
such indebtedness be on terms and conditions less favorable to the
Partnership or the Operating Partnership, as the case may be, than the
Partnership or the Operating Partnership, as the case may be, could obtain
from unaffiliated third parties or banks for the same purpose (without
reference to the General Partners' financial abilities or guarantees). In
the event that Xxxxxx Guaranty Trust Company should during the term of this
Agreement abandon or abolish the practice of announcing an established "prime
rate," the "prime rate" used during the remainder of said term for purposes
of this Agreement shall be the rate from time to time charged by Xxxxxx
Guaranty Trust Company to its preferred commercial customers for unsecured
short-term loans. A certificate signed by an officer of Xxxxxx Guaranty
Trust Company shall be binding and conclusive evidence of the "prime rate" in
effect from time to time.
(c) No loans shall be made by the Partnership or the Operating
Partnership to a General Partner or any of its Affiliates.
7.14 PURCHASE OR SALE OF UNITS; REGISTRATION RIGHTS OF GENERAL PARTNERS.
(a) The Managing General Partner may, on behalf of and for the
account of the Partnership or the Operating Partnership, purchase or
otherwise acquire Units or Depositary Units by purchasing or acquiring the
respective Depositary Receipts and, following any such purchase or
acquisition, may sell or otherwise dispose of such Units and Depositary Units
in connection with a DRIP or otherwise. So long as such Units or Depositary
Units shall be held by or on behalf of the Partnership or the Operating
Partnership, such Units or Depositary Units shall not be considered
outstanding for any purpose. In addition to the foregoing, the General
Partners and their Affiliates from time to time also may purchase or
otherwise acquire Units or
-55-
Depositary Units for their own account and may, subject to the provisions of
Sections 12.3 and 12.4, sell or otherwise dispose of such Units or Depositary
Units.
(b) In the event that (i) a General Partner or an Affiliate holds
Units of the Partnership which it desires to sell, including but not limited
to Units of the Partnership acquired pursuant to the exercise of options
issued by the Partnership to such General Partner or Affiliate, and (ii) Rule
144 of the Securities Act (or any successor rule or regulation to Rule 144)
is not available to enable such General Partner or Affiliate to dispose of
the number of Units it desires to sell at the time and in the manner that it
desires to do so, then upon the request of such General Partner or Affiliate,
the Partnership shall file with the Commission as promptly as practicable
after receiving such request, and shall use its best efforts to cause to
become effective, a registration statement under the Securities Act on the
appropriate form registering the offering and sale of the number of Units
specified by the requesting General Partner or Affiliate. In connection with
any such registration pursuant to the preceding sentence, the Partnership
promptly shall prepare and file such documents as may be necessary to
register or qualify the Units subject to such registration and under the
securities laws of such states as the requesting General Partner or Affiliate
shall reasonably request, and shall do any and all other acts and things that
may reasonably be necessary or advisable to enable such General Partner or
Affiliate to consummate a public sale of such Units in such states.
Notwithstanding the foregoing, in no event shall the Partnership be required
to effect a registration relating to the Units pursuant to this Section
7.14(b) for less than 180,000 Units or more frequently than once in any
calendar year. Any registration statement filed pursuant hereto shall be
continued in effect for a period of not less than ninety (90) days following
its effective date.
(c) Except as expressly prohibited under the Blue Sky or securities
laws of any jurisdiction under which a registration or qualification is being
effected the Partnership shall pay all fees and expenses in connection with any
registration or qualification effected pursuant to this Section 7.14 other than
any underwriting discounts, fees, commissions, or similar charges relating to
the securities of a General Partner or Affiliate being qualified or registered
and the fees and expenses of legal counsel for the General Partner or Affiliate
requesting registration hereunder.
(d) In the event of any registration under the Securities Act of any
Units pursuant to this Section 7.14, then, in addition to and not in limitation
of the Partnership's obligation under Section 7.10, the Partnership shall
indemnify and hold harmless the General Partners and their Affiliates and any
underwriter engaged in connection with any registration referred to in this
Section 7.14, and each other person, if any, who controls any such underwriter
within the meaning of the Securities Act, against any losses, claims, demands,
actions, causes of action, assessments, damages, liabilities joint or several),
cost, and expenses (including, without limitation, interest, penalties, and
reasonable attorneys' fees and disbursements), resulting to, imposed upon, or
incurred by any indemnified person, directly or indirectly, under the Securities
Act or otherwise (hereinafter referred to in this Section 7.14(d) as a "claim"
and in the plural as "claims"), based upon, arising out of, or resulting from
any untrue statement or alleged untrue statement of any material fact contained
in any registration statement under which any Units were registered under the
Securities Act or any state securities or Blue Sky laws, in any preliminary
-56-
prospectus (if used prior to the effective date of such registration statement),
or in any summary or final prospectus or in any amendment or supplement thereto
(if used during the period the Partnership is required to keep the registration
statement current), or arising out of, based upon, or resulting from the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements made therein not misleading;
provided, however, that the Partnership shall not be liable to the extent that
any such claim arises out of, is based upon, or results from an untrue statement
or alleged untrue statement or omission or alleged omission made in such
registration statement, such preliminary, summary, or final prospectus, or such
amendment or supplement in reliance upon and in conformity with written
information with respect to the indemnified Person furnished to the Partnership
by or on behalf of such indemnified Person specifically for use in the
preparation thereof.
7.15 PERIODIC CONSIDERATION OF SALE OR REFINANCING.
Commencing with the year 2000 and continuing once every five (5) years
thereafter, the Managing General Partner may consider whether or not, in the
reasonable judgment of the Managing General Partner, it would be in the interest
of the Partnership and the Operating Partnership to effectuate a sale or
refinancing of all or a portion of the Restricted Restaurant Properties held as
of the Effective Date, with the proceeds of any such sale or financing to be
distributed to the Partners and Assignees in accordance with Article VI. If the
Managing General Partner, in its reasonable judgment, determines that such a
sale or financing would be in the interest of the Partnership and the Operating
Partnership, then the Managing General Partner intends to use reasonable efforts
to cause the Operating Partnership to effectuate such a sale or financing;
provided, however, that any such sale or other disposition of part or all of
such Restricted Restaurant Properties shall be subject to Sections 7.3 and 8.4.
This Section 7.15 does not constitute an obligation of the Managing General
Partner, but merely represents an expression of intent by the Managing General
Partner as of the time of the Amended Agreement as to the manner in which it
expected to manage the Partnership and the Operating Partnership. In no event
shall any sale or financing transaction in connection with this Section 7.15
involve or require any direct or indirect financial obligation or other
financial support on the part of the Managing General Partner, BKC, TPC, or any
Affiliate of the foregoing.
7.16 OTHER LIMITATIONS.
The following additional limitations shall apply to the operation and
management of the Partnership and the Operating Partnership:
(a) No General Partner shall receive for its account any kickbacks or
rebates with respect to expenditures made by or on behalf of the Partnership,
nor shall any General Partner enter into any reciprocal arrangement that has the
effect of circumventing this Section 7.16(a) or Section 9.1;
-57-
(b) Neither the Operating Partnership nor the Partnership shall grant
any General Partner an exclusive right, as agent, to sell any Restaurant
Property or other Partnership Asset;
(c) No commission or other fee shall be payable to a General Partner,
directly or indirectly, in connection with the distribution or reinvestment of
any Net Proceeds of a Capital Transaction, except as provided in Section 9.3;
and
(d) No General Partner shall, directly or indirectly, pay or award
any commissions or other compensation to any Person for encouraging or inducing
any other Person to purchase Units; provided, however, that nothing herein shall
prohibit the payment of normal sales commissions and fees to (i) any underwriter
in connection with any public offering of Units or any underwriter who
undertakes to sell on behalf of a General Partner or on Affiliate Units held by
such General Partner or Affiliate for its own account, whether or not such sale
is pursuant to the registration rights provided for in Sections 7.14 and
14.5(c), or (ii) any finder, broker or consultant (other than the General
Partners or their Affiliates) in connection with the acquisition of Restaurant
Property and Ancillary Property related thereto.
ARTICLE VIII
ACQUISITION, OPERATION, AND DISPOSITION OF
RESTRICTED RESTAURANT PROPERTIES
8.1 GENERAL.
(a) The Partners and any Assignees hereby expressly agree that, in
addition to any other provisions of this Agreement or the Operating Partnership
Agreement, the acquisition, ownership, operation, and disposition of the
Partnership Properties by the Operating Partnership shall be in accordance with,
and shall be subject to, the provisions, restrictions, and limitations set forth
in this Article VIII; provided that, except for Section 8.13, this Article VIII
shall not apply to any of the Other Restaurant Properties or the Retail
Properties. The Partners and any Assignees further expressly agree that any
action taken by a General Partner or Affiliate thereof in accordance with, or
pursuant to, the provisions of this Article VIII conclusively shall be deemed to
be fair to and in the best interests of the Partnership, the Operating
Partnership, the Partners, and any Assignees, and the fact that an action of a
General Partner or an Affiliate is undertaken in accordance with, or pursuant
to, this Article VIII shall be a complete and absolute defense to any claim or
action asserting the invalidity of such action or any claim or action for
damages or other relief based upon an assertion that such action resulted in a
breach by a General Partner or an Affiliate of this Agreement or any duty,
fiduciary or otherwise, owed by the General Partners and their Affiliates to the
Partnership, the Operating Partnership, the Limited Partners, or any Assignees.
(b) The Partners and any Assignees expressly acknowledge and agree
that the provisions, restrictions, and limitations set forth in this Article
VIII are reasonable in all respects,
-58-
are pursuant to and consistent with the purposes of the Partnership and the
Operating Partnership, are necessary to induce BKC to enter into the Real
Estate Purchase Agreement and to otherwise deal with Restricted Restaurant
Properties, and are necessary to protect the business and interests of BKC,
the Partnership, and the Operating Partnership. In the event that the
Partnership or the Operating Partnership shall breach or violate or fail to
perform any of its obligations set forth in this Article VIII, then, at the
option of BKC, BKC shall be entitled to proceed to enforce the obligations of
the Partnership and the Operating Partnership hereunder by any action at law,
suit in equity, or other appropriate proceeding, whether for damages, for
specific performance of an obligation contained herein, or for an injunction
or other equitable remedy against any violation of the provisions hereof.
The Partnership hereby agrees to indemnify and hold harmless BKC from and
against any assessment, payment, damage, expense, loss, cost, liability, or
deficiency (including, without limitation, interest, penalties, and
reasonable attorneys' fees and disbursements) incurred by BKC in enforcing or
sustaining the provisions hereof or resulting from or in connection with any
such breach, violation, or failure.
8.2 CONTRIBUTION TO OPERATING PARTNERSHIP; ACQUISITION OF RESTAURANT
PROPERTIES.
On the Closing Date or as soon as practicable thereafter, the Managing
General Partner caused the Partnership to contribute the Aggregate Offering
Proceeds and the Capital Contributions of the General Partners to the
Operating Partnership, as provided for in the Operating Partnership
Agreement. On the Closing Date or as soon as practicable thereafter, the
Managing General Partner caused the Operating Partnership to acquire the
Restaurant Properties from BKC in accordance with and subject to the terms
and conditions set forth in the Real Estate Purchase Agreement, including the
exhibits thereto, and caused the Operating Partnership to pay to BKC the
purchase price for the Restaurant Properties specified in the Real Estate
Purchase Agreement.
8.3 USE AND OTHER RESTRICTIONS.
(a) Except as otherwise expressly provided in this Section 8.3, the
Operating Partnership shall not, without the prior written consent of BKC, in
its sole and absolute discretion, use any Restricted Restaurant Property or
permit any Restricted Restaurant Property to be used for any purpose other than
the operation thereon of a BK Restaurant and other uses related thereto.
(b)(i) In furtherance of the provisions of Section 8.3(a), in the
event that BKC renews or extends a BKC Franchise Agreement with respect to a
Restricted Restaurant Property at any time at or prior to the expiration of such
BKC Franchise Agreement, then, regardless of the duration of such renewal or
extension, the Operating Partnership promptly shall, without additional charge,
renew or extend the lease of the Restricted Restaurant Property to such BKC
Franchisee for a period coterminous with the period of such renewal or extension
and for and upon substantially the same rental and other terms and conditions as
and upon which BKC is then renewing or extending leases with BKC Franchises for
properties owned or leased (as the case may be) by BKC, or in the event BKC at
such time is no longer renewing or extending
-59-
leases with BKC Franchisees for properties owned or leased, as the case may
be, by BKC, then upon substantially the same rental and other terms and
conditions and upon which BKC most recently was renewing or extending such
leases with BKC Franchisees (except that, for purposes of determining the
guaranteed minimum rental thereunder, the lessor's "investment" in Restricted
Restaurant Properties held as of the Effective Date shall be deemed to be
equal to the sum of the investment of BKC with respect to such Restricted
Restaurant Property prior to the date of its acquisition plus any investment
by the Operating Partnership with respect to such Restricted Restaurant
Property after such date (and in no event shall such "investment" include the
purchase price paid by the Operating Partnership to BKC for such Restricted
Restaurant Property pursuant to the Real Estate Purchase Agreement));
provided that the rental for such lease may be greater than the rental upon
which BKC is then (or, if applicable, was) so renewing or extending such
leases. Notwithstanding anything to the contrary contained herein, any
extension or renewal of a lease of a Restricted Restaurant Property pursuant
to the "Successor Policy" shall be in accordance with the "Successor Policy"
as then in effect and Section 8.6 (including, without limitation, the
provisions of Section 8.6(b) relating to determination of the annual minimum
rental under a lease extended or renewed in accordance with the "Successor
Policy"). Without limiting the foregoing, the Managing General Partner, in
its sole and absolute discretion, at the request of BKC or a BKC Franchisee,
shall be permitted to consent to a renewal or extension of a lease of a
Restricted Restaurant Property for a rental less favorable to the Partnership
than the rental upon which BKC is then renewing or extending leases with BKC
Franchisees for properties owned or leased (as the case may be) by BKC (or,
if applicable, the rental upon which BKC most recently was renewing or
extending such leases with BKC Franchisees) if BKC agrees to treat the excess
of the rental at which BKC is then renewing or extending such leases (or, if
applicable, the rental at which BKC most recently was renewing or extending
such leases) over the rental payable to the Partnership in connection with
such renewal or extension as "rent relief" subject to the provisions of
Section 8.5.
(ii) In the event that (A) either (I) a BKC Franchise Agreement
authorizing the operation of a BK Restaurant on a Restricted
Restaurant Property is terminated automatically, is terminated by BKC,
or is terminated by the mutual agreement of the parties thereto prior
to the expiration of the stated term thereof, OR (II) a BKC Franchise
Agreement expires according to the terms thereof and is not renewed or
extended by BKC at or prior to the expiration of such BKC Franchise
Agreement, AND (B) during the six (6) month period commencing on the
date of such termination or expiration, either (1) BKC and a Person
that meets BKC's then existing franchisee financial capability
requirements enter into a BKC Franchise Agreement authorizing such
Person to operate a BK Restaurant on the Restaurant Property, and BKC
notifies the Operating Partnership thereof, OR (II) BKC notifies the
Operating Partnership that BKC desires to operate a BK Restaurant on
the Restaurant Property, then the Operating Partnership promptly shall
terminate any lease of the Restaurant Property with the terminated BKC
Franchisee (if such Lease has not terminated or expired) and enter
into a new lease of the Restaurant Property with the new BKC
Franchisee or with BKC, as the case may be. The rental, duration, and
other terms and conditions of any such
-60-
new lease shall be substantially the same as the rental, duration,
and other terms and conditions as and upon which BKC is then entering
into new leases with BKC Franchisees for properties owned or leased
(as the case may be) by BKC, or in the event BKC at such time is no
longer entering into new leases with BKC Franchisees for properties
owned or leased, as the case may be, by BKC, then substantially the
same rental, duration, and other terms and conditions as and upon
which BKC most recently was entering such leases with BKC Franchisees
(except that, for purposes of determining the guaranteed annual
minimum rental thereunder, the lessor's "investment" in Restricted
Restaurant Properties held as of the Effective Date shall be deemed
to be equal to the sum of the investment of BKC with respect to such
Restaurant Property prior to the date of its acquisition plus any
investment of the Operating Partnership with respect to such
Restricted Restaurant Property after such date (and in no event shall
such "investment" include the purchase price paid by the Operating
Partnership to BKC for such Restricted Restaurant Property pursuant
to the Real Estate Purchase Agreement)). Without limiting the
foregoing, the Managing General Partner, in its sole and absolute
discretion, at the request of BKC or a BKC Franchisee, shall be
permitted to enter into a new lease of a Restricted Restaurant
Property for a rental less favorable to the Partnership than the
rental upon which BKC is then entering into leases with BKC
Franchisees for properties owned or leased (as the case may be) by
BKC (or, if applicable, the rental upon which BKC most recently was
entering into such leases with BKC Franchisees) if BKC agrees to treat
the excess of the rental at which BKC is then entering into such
leases (or, if applicable, the rental at which BKC most recently was
entering into such leases) over the rental payable to the Partnership
in connection with such new lease as "rent relief" subject to the
provisions of Section 8.5. During the period (the "Determination
Period") that BKC is considering whether to enter into a new BKC
Franchise Agreement with respect to the Restricted Restaurant Property
or operate itself a BK Restaurant on the Restricted Restaurant
Property (but in no event after the expiration of the six (6) month
period described in clause (B) above), BKC shall pay to the Operating
Partnership an amount equal to the excess of the guaranteed minimum
rental payable to the Operating Partnership under the terminated BKC
Franchisee's lease for the Determination Period (computed without
regard to any termination or expiration of such lease) over the amount
of rent, if any, actually collected by the Operating Partnership
thereunder for the Determination Period. The Operating Partnership
shall, at the expense of BKC, take all such actions as BKC reasonably
may request to enforce the provisions of the terminated BKC
Franchisee's lease applicable during the Determination Period. If BKC
does not, prior to the end of the Determination Period, enter into a
new BKC Franchise Agreement with respect to the Restricted Property or
elect to operate itself a BK Restaurant on the Restricted Restaurant
Property, then subject to Section 8.9 hereof, the Operating
Partnership shall be free to take such actions with respect to the
terminated BKC Franchisee's lease as the Operating Partnership may
deem appropriate. Notwithstanding anything to the contrary contained
herein, BKC shall have the
-61-
right at any time upon written notice to the Operating Partnership, to
terminate the Determination Period with respect to any Restricted
Restaurant Property, in which event all rights and obligations of BKC
in connection with such terminated Determination Period shall
terminate, effective as of the date on which the Operating Partnership
receives such notice and as of the payment by BKC of all amounts
payable hereunder with respect to the Determination Period.
(iii) In the event that BKC approves the assignment by a BKC
Franchisee of a BKC Franchise Agreement with respect to a Restricted
Restaurant Property to another person or entity that meets BKC's then
existing franchisee financial capability requirements or to BKC, then,
subject to the assumption by such new BKC Franchisee or BKC, as the
case may be, of all of the former BKC Franchisee's obligations and
liabilities thereafter accruing under the former BKC Franchisee's
lease of the Restricted Restaurant Property, the Operating Partnership
promptly shall, without additional charge, approve and permit the
assignment of such lease with respect to such Restricted Restaurant
Property to the new BKC Franchisee or to BKC, as the case may be.
Upon such assignment and assumption, the former BKC Franchisee, at the
request of BKC, shall be released from all obligations and liabilities
thereafter accruing under such lease; provided, however, that a
release in connection with an assignment or assumption shall be
required pursuant hereto only if BKC, as a matter of policy, then is
granting such releases in connection with the assignment or assumption
of leases with BKC Franchises for properties owned or leased, as the
case may be by BKC. In addition to the foregoing, in the event that
BKC consents to the assignment by a BKC Franchisee of a Franchise
Agreement with respect to a Restricted Restaurant Property to a
corporation in which such BKC Franchisee has a financial interest,
then, upon the request of such BKC Franchisee, the Operating
Partnership shall approve the assignment of the BKC Franchisee's lease
of such Restricted Restaurant Property to such corporation upon the
condition that such BKC Franchisee shall remain fully responsible for
all liabilities and obligations accruing under such lease subsequent
to such assignment.
(iv) The Operating Partnership shall give BKC prompt written
notice of the occurrence of any default by a BKC Franchisee under any
lease of a Restricted Restaurant Property. BKC shall have the right
(but not the obligation), within the longer of thirty (30) days after
the receipt by BKC of such written notice of such default or any
applicable grace period provided to the lessee under such lease, to
cure any default by the lessee under such lease, and the Operating
Partnership shall not terminate such lease unless such default is not
cured within such applicable period. The Operating Partnership also
shall give BKC prompt written notice of the occurrence of any event
which results automatically in the termination of any such lease. BKC
shall have the right (but not the obligation), within thirty (30) days
after receipt of such notice, to assume all obligations and
liabilities of the lessee under such lease accruing from the date of
such automatic
-62-
termination. If BKC exercises such right, then, as between BKC and
the Operating Partnership, such termination shall be of no force or
effect and shall be deemed not to have occurred.
(v) In furtherance of the provisions of Section 8.3(a), in the
event the Partnership or the Operating Partnership acquires any
Restricted Restaurant Property after the Effective Date, the rental,
duration, and other terms and conditions in the lease for the BKC
Franchisee for such property shall be substantially the same as the
rental, duration, and other terms and conditions as and upon which BKC
is then entering into new leases with BKC Franchisees for properties
owned or leased, as the case may be, by BKC, or in the event BKC at
such time is no longer entering into new leases with BKC Franchisees
for properties owned or leased, as the case may be, by BKC, then upon
substantially the same rental, duration, and other terms and
conditions as upon which BKC most recently was entering into such
leases with BKC Franchisees. Notwithstanding the foregoing, the
rental for such leases may be greater than that which BKC is then
setting (or, if appropriate, was setting) for BKC Franchisees.
(c) Notwithstanding anything to the contrary contained in any
lease of a Restricted Restaurant Property to which a BKC Franchisee is a
party, (i) BKC shall have the right at any time, without obtaining the
consent of the Operating Partnership, to assume the obligations and
liabilities of the lessee thereafter accruing under such lease, and
thereupon, at the request of BKC, such lessee shall be released from all
obligations and liabilities thereafter accruing thereunder; provided,
however, that a release in connection with such an assumption shall be
required pursuant hereto only if BKC, as a matter of policy, then is granting
such releases in connection with the assumption by BKC of leases with BKC
Franchisees for properties owned or leased, as the case may be, by BKC; and
(ii) at any time after any such assumption by BKC, BKC shall have the right,
without obtaining the consent of the Operating Partnership, to assign such
lease to a Person that meets BKC's then existing franchisee financial
capability requirements and upon such assignment and the assumption by such
Person of all obligations and liabilities of BKC thereafter accruing under
such lease, BKC shall be released from all obligations and liabilities
thereafter accruing thereunder.
(d)(i) In the event that BKC notifies the Operating Partnership
that BKC has extended or renewed a BKC Franchise Agreement with respect to a
Restricted Restaurant Property that is subject to a Primary Lease for a term
continuous with one or more permitted renewal terms available under such
Primary Lease, OR (ii) in the event that BKC notifies the Operating
Partnership that EITHER (A) BKC has entered into a new BKC Franchise
Agreement with a Person that meets BKC's then existing financial capabilities
requirements authorizing such Person to operate a BK Restaurant on a
Restricted Restaurant Property that is subject to Primary Lease for a term
coterminous with one or more permitted renewal terms available under such
Primary Lease, OR (B) BKC has decided to operate a BK Restaurant on a
Restricted Restaurant Property that is subject to a Primary Lease for a term
coterminous with one or more permitted renewal terms available under such
Primary Lease, then in any such event, in addition to any
-63-
other requirements of this Section 8.3, the Operating Partnership promptly
shall renew the applicable Primary Lease for a term no shorter than the term
of the extended, renewed, or new BKC Franchise Agreement, as the case may be,
or in the case of BKC's election to operate a BK Restaurant at such
Restricted Restaurant Property, for a term no shorter than the term of BKC's
lease with the Operating Partnership with respect to such Restricted
Restaurant Property.
(e) Unless otherwise expressly waived by BKC in writing, the
restrictions and other provisions of this Section 8.3 shall remain in effect
and shall be enforceable with respect to each Restricted Restaurant Property
by BKC during the period commencing on the date of the Amended Agreement and
ending on the earliest of (i) a transfer by the Operating Partnership of all
of its right, title, and interest in and to all of such Restricted Restaurant
Property pursuant to Section 8.4(f) following the failure of BKC to elect to
acquire all of the Restricted Restaurant Property pursuant to an offer
thereof to BKC under Section 8.4(d) or the failure of BKC to close the
acquisition thereof on the date required by Section 8.4(e); (ii) a BKC
Franchise Agreement is terminated by BKC or by the mutual agreement of the
parties thereto prior to the expiration of the stated term thereof and BKC
does not, prior to the end of the Determination Period, enter into a new BKC
Franchise Agreement with respect to the Restricted Restaurant Property or
elect to operate itself a BK Restaurant on the Restricted Restaurant
Property; or (iii) a BKC Franchise Agreement with respect to a Restricted
Restaurant Property expires according to the terms thereof and BKC does not
either (A) renew or extend the same at or prior to the expiration thereof or
(B) prior to the end of the Determination Period, enter into a new BKC
Franchise Agreement with respect to the Restricted Restaurant Property or
elect to operate itself a BK Restaurant on the Restricted Restaurant
Property; provided, however, if the duration of such period would render the
restrictions or other provisions of this Section 8.3 invalid or unenforceable
under any law of the jurisdiction in which a Restricted Restaurant Property
is located limiting the period during which such restrictions or other
provisions may endure, then such period shall continue with respect to such
Restricted Restaurant Property only for such term as may be prescribed by the
laws of such jurisdiction. It is the express intent of BKC, the Partnership,
and the Operating Partnership that such restrictions and other provisions
shall be valid and enforceable to the fullest extent permitted by the laws of
such jurisdiction.
(f) Notwithstanding anything to the contrary in this Section 8.3
or elsewhere in this Agreement, nothing contained herein or elsewhere shall
affect the right of BKC, in its sole and absolute discretion, to terminate a
BKC Franchise Agreement, to renew or extend or fail to renew or extend a BKC
Franchise Agreement, to approve or disapprove any assignment of a BKC
Franchise Agreement, to elect to enter into a new BKC Franchise Agreement
with respect to a Restricted Restaurant Property, or to operate itself a BK
Restaurant on the Restricted Restaurant Property, to amend or modify a BKC
Franchise Agreement, or to take or fail to take any other action in
connection with a BKC Franchise Agreement.
(g) Notwithstanding any other provision of this Agreement, the
Partners and any Assignees hereby expressly agree that the Managing General
Partner shall have no duty, under any circumstances whatsoever, to seek to
sell, or to consider any offer to purchase, any Restricted Restaurant
Property so long as such Restricted Restaurant Property is subject to the
-64-
restrictions and other provisions of this Section 8.3, and the fact that a
Restricted Restaurant Property is subject to the restrictions and provisions
of this Section 8.3 shall be a complete and absolute defense to any claim or
action for damages or other relief based upon a failure of the Managing
General Partner to solicit or consider offers to purchase such Restricted
Restaurant Property, irrespective of the terms of any such offer that may be
received by the Managing General Partner.
8.4 RESTRICTIONS ON TRANSFER OF RESTRICTED RESTAURANT PROPERTIES.
(a) For purposes of this Section 8.4, the term "transfer," with
respect to a Restricted Restaurant Property, shall include a sale, lease,
sublease, gift, mortgage, deed of trust, exchange, assignment, or other
disposition, including a disposition under judicial order, process,
execution, attachment, or enforcement or foreclosure of an encumbrance, but
shall not include the following: (i) a mortgage, deed of trust, grant of
security interest, or other encumbrance effected in a bona fide transaction
with an unrelated and unaffiliated secured party or with BKC, the Managing
General Partner, or any Affiliate thereof to secure indebtedness of the
Operating Partnership for money borrowed from such party, which mortgage,
deed of trust, grant of security interest, or other encumbrance is made
pursuant to a written security agreement, mortgage, deed of trust, or other
agreement that assures that, before any foreclosure may be had thereon or
other transfer may occur thereunder or in connection therewith, the secured
party shall first notify BKC in writing of its intent to foreclose or effect
another transfer and shall first offer the Restricted Restaurant Property to
BKC at the price and on the other terms and conditions specified in a written
offer from a prospective purchaser (which may be the secured party) in
connection with such foreclosure or other transfer; (ii) a lease or sublease
to BKC or a BKC Franchisee in order to permit the operation of a BK
Restaurant on a Restricted Restaurant Property; (iii) a grant of an easement,
right of way, or other right with respect to a Restricted Restaurant Property
to any public utility or other governmental authority in connection with the
provision of utility or other public services (but such grant shall comply
with the provisions of Section 8.4(b)); or (iv) a transfer to a governmental
authority pursuant to or in connection with a condemnation or other exercise
of the power of eminent domain.
(b) The Operating Partnership shall not, without the prior written
consent of BKC, in BKC's sole and absolute discretion: (i) at any time that a
Restricted Restaurant Property is being leased to BKC or a BKC Franchisee in
order to permit BKC or such BKC Franchisee to operate a BK Restaurant on the
Restricted Restaurant Property or during any applicable Determination Period,
lease or sublease all or any part of a Restricted Restaurant Property to any
other Person, whether or not such other lease would be subject or subordinate
to the lease to BKC or the BKC Franchisee; or (ii) grant or convey any
easement, right-of-way, or other right with respect to such Restricted
Restaurant Property if the grant or use thereof would have a material adverse
effect upon the operation of a BK Restaurant on the Restricted Restaurant
Property.
(c) Except as provided in Section 8.4(b), the Operating Partnership
shall not transfer (as defined in Section 8.4(a)) any right, title, or interest
in or to any Restricted Restaurant
-65-
Property, or any part thereof, to any person or entity without first offering
it to BKC in accordance with the provisions of this Section 8.4(c). Subject
to the provisions of Section 8.4(b), if the Operating Partnership receives a
bona fide written offer from an independent third party to acquire in a
transfer all or any part of any Restricted Restaurant Property that the
Operating Partnership intends to accept, subject to this Section 8.4(c),
then, the Operating Partnership shall offer such Restricted Restaurant
Property to BKC at the price and on the terms and conditions (including
timing and manner of payment) contained in such bona fide written offer. The
offer of such Restricted Restaurant Property to BKC (the "Offer") shall be
made in writing and shall be accompanied by a true and correct copy of the
bona fide written offer. The Operating Partnership promptly shall provide or
cause to be provided to BKC such information relating to the Offer or the
third party offer or as BKC reasonably may request.
(d) In order to accept the Offer, BKC shall, within thirty (30) days
after receipt of the Offer (or, if later, within five (5) business days after
receipt of all additional information reasonably requested by BKC pursuant to
Section 8.4(c) (such 30-day period and any extension under this Section 8.4(c)
to be referred to as the "Election Period")), notify the Operating Partnership
in writing of its election to acquire such Restricted Restaurant Property;
provided, however, that BKC shall not be required to acquire such Restricted
Restaurant Property upon the terms and conditions of any third-party offer the
consideration for which is not practicably obtainable by BKC (such as, by way of
example and not of limitation, specific land, stock in a closely held
corporation, or stock in a publicly held corporation that cannot be acquired by
BKC without an increase in the trading price thereof or without registration or
filing under any federal or state securities law), but BKC shall have the right
to acquire such Restricted Restaurant Property upon terms and conditions
(including consideration) reasonably equivalent to those contained in such
offer; and provided further, that the failure of BKC to acquire such Restricted
Restaurant Property upon any such reasonably equivalent terms or conditions
shall not permit the Operating Partnership to transfer such Restricted
Restaurant Property pursuant to Section 8.4(f). Failure of BKC to provide such
written notice within the Election Period shall constitute a refusal by BKC to
purchase such Restricted Restaurant Property pursuant to the Offer.
(e) The closing date of any acquisition of such Restricted
Restaurant Property by BKC hereunder shall be on the date fixed in the
third-party offer unless such closing date would occur prior to the
expiration of twenty (20) business days after the last day of the Election
Period, in which event the closing date shall occur on such twentieth (20th)
business day or on such other date to which BKC and the Operating Partnership
may agree.
(f) If BKC shall fail to elect to acquire such Restricted
Restaurant Property pursuant to Section 8.4(d), or shall fail to close the
acquisition on the date required by Section 8.4(e), then the Operating
Partnership shall be free for a period of sixty (60) days after either such
failure, to transfer such Restricted Restaurant Property to the bona fide
third-party offeror for a price and on other terms and conditions contained
in such third-party offer. If such Restricted Restaurant Property is not so
transferred by the Operating Partnership with-in such sixty (60) day period,
all rights of the Operating Partnership to transfer such Restricted
Restaurant
-66-
Property free of the foregoing restrictions shall terminate and such
Restricted Restaurant Property again shall be subject to the provisions of
this Section 8.4.
(g) Unless otherwise expressly waived by BKC in writing, the
provisions of this Section 8.4 shall remain in effect and the rights granted
hereunder shall be exercisable and enforceable by BKC with respect to each
Restricted Restaurant Property during the period commencing on the date of
the Amended Agreement and ending on the earlier of (i) the date that the
Operating Partnership first ceases to hold any right, title, or interest
(including a interest as a creditor) in or to such Restricted Restaurant
Property or (ii) the date that the use restrictions set forth in Section 8.3
terminate or would have terminated but for a early termination pursuant to
the proviso contained in Section 8.3(e); provided, however, that if the
duration of such period would render the provisions of this Section 8.4 or
the rights of BKC hereunder invalid or unenforceable under the rule against
perpetuities as applied in the jurisdiction in which a Restricted Restaurant
Property is located, then such period shall continue with respect to such
Restricted Restaurant Property only until the expiration of the longest of
the following periods which shall be valid under the rule against
perpetuities as applied in such jurisdiction: (i) the period ending
twenty-one (21) years after the death of the survivor of the legitimate
natural or adopted children and grandchildren of U.S. Presidents Kennedy,
Johnson, Xxxxx, Ford, Carter, and Xxxxxx alive on the date of the Amended
Agreement; (ii) twenty-one (21) years after the date of the Amended
Agreement; or (iii) such other term as may be statutorily prescribed in such
jurisdiction. It is the express intent of BKC, the Operating Partnership,
and the Partnership that the provisions hereof and rights of BKC hereunder
shall be exercisable and enforceable by BKC to the fullest extent permitted
by the laws of such jurisdiction.
8.5 RENT RELIEF.
(a) The Managing General Partner, in its sole and absolute
discretion, at the request of BKC or a BKC Franchisee, shall be permitted to
cause the Partnership and the Operating Partnership to grant "rent relief"
(as defined in Section 8.5(b)) to a BKC Franchisee with respect to any
Restricted Restaurant Property upon the condition that BKC agree to make a
quarterly payment to the Operating Partnership for each fiscal quarter (with
such payment to be due and payable thirty (30) days after the end of each
such fiscal quarter) during which such "rent relief" is in effect,
irrespective of whether or not the Operating Partnership subsequently sells
or otherwise disposes of such Restricted Restaurant Property while such "rent
relief" is in effect in an amount equal to the product of (a) the total
dollar amount of the rent reduction with respect to such Restricted
Restaurant Property effective for such fiscal quarter pursuant to such "rent
relief" multiplied by (b) a fraction, (i) the numerator of which is the
dollar amount of the franchise royalty fee payable to BKC with respect to
such Restricted Restaurant Property for such fiscal quarter (exclusive of any
amount required under the applicable BKC Franchise Agreement to be expended
by BKC for advertising and any other income to BKQ (the "Franchise Royalty
Fee") and (ii) the denominator of which is the sum of the Franchise Royalty
Fee and the dollar amount of rent payable with respect to such Restricted
Restaurant Property for such fiscal quarter (determined without regard to any
"rent relief" applicable with respect to such Restricted Restaurant Property)
(the "Rental Amount"). By way of illustration, if the applicable Franchise
-67-
Royalty Fee for a Restricted Restaurant Property for a particular fiscal
quarter were $35,000 and the applicable Rental Amount for such Restricted
Restaurant Property for such fiscal quarter were $100,000, and if the
Operating Partnership, at the request of BKC or at the request of a BKC
Franchisee and with the consent of BKC, were to grant "rent relief" with
respect to such Restricted Restaurant Property for such fiscal quarter in the
amount of $20,000, then BKC would be obligated to pay to the Operating
Partnership $5,185 (the product of $35,000/$135,000 multiplied by $-20,000)
within thirty (30) days after the end of such fiscal quarter. The obligation
of BkC to make payments to the Operating Partnership in connection with "rent
relief" granted hereunder shall continue until the "rent relief" terminates
(or, if sooner, the lease with respect to which the "rent relief" is granted
terminates or expires), notwithstanding any intervening sale or other
disposition by the Operating Partnership of the Restricted Restaurant
Property with respect to which such "rent relief" is granted.
(b) As used herein, the term "rent relief" shall mean (i) any
permanent reduction in rent payable with respect to a Restricted Restaurant
Property, (ii) any temporary reduction in rent payable with respect to a
Restricted Restaurant Property (A) if such temporary reduction is for a
period in excess of either ninety (90) consecutive days or ninety (90) days,
whether or not consecutive, in any Fiscal Year, (B) if such temporary
reduction is granted while a BK Restaurant is being replaced, reconstructed,
expanded, or otherwise improved under the BKC "Successor Policy" to take into
account the fact that such BK Restaurant is not operating or is operating on
a limited basis during such period, or (C) if such temporary reduction is for
a period of ninety (90) consecutive days or less and the Managing General
Partner specifically designates such reduction as "rent relief" subject to
this Section 8.5; provided, however, that in no event shall the term "rent
relief" include any reduction in rent payable with respect to a Restricted
Restaurant Property granted in connection with the BKC "Successor Policy" if
such reduction in rent payable is subject to Section 8.6(b). Notwithstanding
anything to the contrary herein, the Managing General Partner shall not be
considered to have caused the Operating Partnership to grant "rent relief"
hereunder, and no payment from BKC to the Operating Partnership shall be due
hereunder, as the result of or in connection with any failure of a BKC
Franchisee, without the express written consent of the Managing General
Partner, to make any payment of rent due the Operating Partnership with
respect to a Restricted Restaurant Property (i) if such failure does not
continue for a period in excess of ninety (90) consecutive days, or (ii) if
either the lease with such BKC Franchisee shall have automatically terminated
or the Managing General Partner shall have caused the Operating Partnership
to seek to terminate the Operating Partnership's lease with such BKC
Franchisee with respect to such Restricted Restaurant Property and in either
event, the Managing General Partner shall have caused the Operating
Partnership to initiate and pursue such action (including litigation, if
appropriate) against such defaulting BKC Franchisee as the Managing General
Partner, in its sole and absolute discretion, shall determine to be
appropriate under the circumstances in order to obtain payment of amounts
(including lost rent) due the Operating Partnership under its lease with the
defaulting BKC Franchisee. In the event that BKC makes any payment to the
Operating Partnership pursuant to this Section 8.5 in connection with "rent
relief" deemed granted hereunder and the Operating Partnership subsequently
shall collect such "rent relief" from the BKC Franchisee, then the
-68-
Operating Partnership shall refund to BKC the amount paid by BKC in connection
with such "rent relief."
8.6 SUCCESSOR POLICY.
BKC maintains a "Successor Policy" relating to the extension and/or
renewal of BKC Franchise Agreements with BKC Franchisees. In connection with
such extensions and/or renewals, the "Successor Policy," in order to help
ensure that the BK Restaurant system remains competitive, makes provision for
the replacement, reconstruction, expansion, and/or other improvement
(collectively "rebuilding") of existing BK Restaurants owned or leased by BKC
and leased or subleased to BKC Franchisees if such BK Restaurants meet
certain criteria established by BKC. Under the BKC "Successor Policy" as
currently in effect, BKC must determine whether or not a BK Restaurant should
be rebuilt. If BKC determines that a BK Restaurant should be rebuilt under
the "Successor Policy" and BKC elects to pay the cost of rebuilding, then the
term of the lease with respect to such BK Restaurant is extended and the BKC
Franchisee's guaranteed "minimum rental" payable under such lease is
adjusted. In the event BKC does not elect to pay the cost of rebuilding a BK
Restaurant designated by BKC to be rebuilt under the "Successor Policy,"
then, with the consent of BKC, the BKC Franchisee can elect to pay such cost,
in which event the percentage rent payable with respect to such BK Restaurant
is reduced from 8.5 percent (8.5%) to 5.5 percent (5.5%) of annual gross
sales at such BK Restaurant, the term of the lease with respect to such BK
Restaurant is extended and the guaranteed minimum rent payable under such
lease is adjusted. The Managing General Partner shall cause the Partnership
and the Operating Partnership to implement, with respect to the Restricted
Restaurant Properties, those aspects of BKC's "Successor Policy" related to
the rebuilding of BK Restaurants, as such policy is currently in effect and
as such policy may be modified, amended, supplemented, superseded, or
replaced by BKC from time to time in its sole and absolute discretion, in
order to cause those Restricted Restaurant Properties designated by BKC, its
sole and absolute discretion, to be rebuilt under such "Successor Policy" to
be rebuilt, subject to satisfaction by BKC of the following conditions:
(a) In the event that the BKC Franchisee for a Restricted Restaurant
Property that is designated by BKC to be rebuilt under the "Successor Policy"
does not pay the cost of such rebuilding, then the Managing General Partner
shall cause the Operating Partnership to rebuild such Restricted Restaurant
Property upon the condition that BKC pay to the Partnership, at the time such
rebuilding is commenced, an amount equal to the product of (i) the total dollar
amount of funds to be expended by the Operating Partnership for purposes of
rebuilding such Restricted Restaurant Property multiplied by (ii) a fraction,
(A) the numerator of which is the weighted annual average of the percentage
rates applicable for determining the franchise royalty fees payable to BKC with
respect to such Restricted Restaurant Property over the remaining term of the
lease under the BKC Franchise Agreement in effect with respect to such
Restricted Restaurant Property (exclusive of any amounts required under the
applicable BKC Franchise Agreement to be expended by BKC for advertising and
other income to BKC (the "Average Franchise Royalty Rate") and (B) the
denominator of which is the sum of the Average Franchise Royalty Rate and the
weighted annual average of the percentage rates applicable for determining
-69-
the percentage rent payable to the Operating Partnership with respect to such
Restricted Restaurant Property on the basis of sales over the remaining term
of the lease with the BKC Franchisee in effect with respect to such Restricted
Restaurant Property (the "Average Percentage Rent Rate"). By way of
illustration, if the applicable Average Percentage Rent Rate for a particular
Restricted Restaurant Property were 8.5 percent and the applicable Average
Franchise Royalty Rate for such Restricted Restaurant Property were 3.5
percent, and if the total cost to rebuild such Restricted Restaurant Property
pursuant to the "Successor Policy" were $500,000, then BKC would be obligated
to pay to the Operating Partnership, at the time the rebuilding of such
Restricted Restaurant Property commenced, $145,833 (the product of 3.5/12
multiplied by $500,000). The Managing General Partner shall cause the
Operating Partnership to pay the Operating Partnership's share of the cost of
rebuilding a Restricted Restaurant Property to be rebuilt under the "Successor
Policy," in its sole and absolute discretion, (i) from current operating cash
flow of the Operating Partnership or otherwise to the extent available or (ii)
with funds borrowed from a lender (including, subject to Section 7.13, BKC or
any Affiliate of BKQ, on such terms and conditions as the Managing General
Partner shall, in its sole and absolute discretion, determine advisable, with
the payments of principal and interest required with respect to any such loan
to be paid from operating cash flow or otherwise to the extent available; and
(b) In the event that the BKC Franchisee for a Restricted Restaurant
Property that is designated by BKC to be rebuilt under the "Successor Policy"
pays the cost of such rebuilding and thus would be entitled to a reduction in
rent payable with respect to such Restricted Restaurant Property, then BKC would
make a quarterly payment to the Operating Partnership for each fiscal quarter
during the period during which such rent reduction is in effect, irrespective of
whether or not the Operating Partnership subsequently sells or otherwise
disposes of such Restricted Restaurant Property while such rent reduction is in
effect (with such payment to be due and payable thirty (30) days after the end
of each such fiscal quarter) in an amount equal to the product of (i) the total
dollar amount of the rent reduction effective with respect to such fiscal
quarter pursuit to the "Successor Policy" multiplied by (ii) a fraction, (A) the
numerator of which is the percentage rate for determining the franchise royalty
fee payable to BKC with respect to such Restricted Restaurant Property for such
fiscal quarter (exclusive of any amount required under the applicable BKC
Franchise Agreement to be expended by BKC for advertising and other income to
BKQ (the "Franchise Royalty Rate"), and (B) the denominator of which is the sum
of the Franchise Royalty Rate and the percentage rate for determining the rent
payable to the Operating Partnership with respect to such Restricted Restaurant
Property on the basis of sales for such fiscal quarter (the "Percentage Rent
Rate"). By way of illustration, if the applicable Percentage Rent Rate for a
Restricted Restaurant Property for a particular fiscal quarter were 8.5 percent
and the applicable Franchise Royalty Rate for such Restricted Restaurant
Property for such fiscal quarter were 3.5 percent, and if the BKC Franchisee for
such Restricted Restaurant Property were to be entitled under the "Successor
Policy" to a reduction in the applicable Percentage Rent Rate to 5.5 percent if
such BKC Franchisee were to rebuild such Restricted Restaurant Property pursuit
to the "Successor Policy," then, assuming that such BKC Franchisee's rent
payable following such rent reduction exceeds the minimum base rent payable to
the Operating Partnership with respect to such fiscal quarter, BKC would be
obligated to pay to the Operating Partnership an amount equal to the product of
(i) 3.5/12 multiplied by (ii) the
-70-
product of (A) 3 percent multiplied by (B) the gross sales at such Restricted
Restaurant Property for such fiscal quarter. The obligation of BKC to make
payments to the Operating Partnership under this Section 8.6(b) in connection
with a rent reduction granted hereunder shall continue until the lease under
which such rent reduction is granted, terminates or expires, notwithstanding
any intervening sale or other disposition by the Operating Partnership of the
Restricted Restaurant Property with respect to which such rent reduction is
granted.
In the event the guaranteed minimum rent payable pursuant to any lease
with respect to a Restricted Restaurant Property is adjusted in connection
with the rebuilding of a BK Restaurant pursuant to the "Successor Policy,"
then notwithstanding any other provision of the Agreement or of the "Successor
Policy," the "fair market of the original property for purposes of determining
the amount of such adjustment shall be equal to the replacement cost of such
property, as determined by the Appraiser. Notwithstanding anything to the
contrary herein, BKC, in its sole and absolute discretion, may elect not to
designate a particular Restricted Restaurant Property to be rebuilt under the
"Successor Policy," in which event the BKC Franchisee for such Restricted
Restaurant Property shall be solely responsible for the cost of any rebuilding
and shall not be entitled to any reduction in rent payable with respect to
such Restricted Restaurant Property. BKC in no event shall be entitled to any
fee or other payment from the Partnership in connection with the rebuilding of
a Restricted Restaurant Property under the "Successor Policy."
In addition to the foregoing, BKC, separate and apart from implementation
of the "Successor Policy," from time to time may request that the Operating
Partnership acquire property adjacent to a Restricted Restaurant Property for
purposes of permitting expansion of the BK Restaurant or related facilities
(such as parking) located on such Restricted Restaurant Property. The Managing
General Partner shall cause the Operating Partnership to acquire any such
adjacent property upon the request of BKC, upon the condition that BKC pay to
the Operating Partnership, at the time such acquisition occurs, an amount
determined in accordance with the formula set forth in paragraph 8.6(a) above.
8.7 COMPETITIVE FACILITIES.
Without in any way limiting the generality of Section 7.6, the Limited
Partners and any Assignees recognize that BKC, TPC, and Affiliates thereof are
in the business of establishing, leasing, operating, managing, and franchising
restaurants, including, without limitation, BK Restaurants, and that in
connection with such businesses, BKC, TPC, and/or Affiliates thereof may from to
time establish, own, lease, operate, manage, and/or franchise new restaurants,
including, without limitation, BK Restaurants. Both such existing restaurants
and any such new restaurants may be competitive with one or more of the
Partnership Properties and may adversely affect the revenues of the Partnership
with respect to one or more of the Partnership Properties. The Limited Partners
and Assignees expressly consent to all actions of BKC, TPC, and any Affiliate of
either in connection both with existing restaurants and with any new restaurants
and agree that neither BKC, TPC, the Managing General Partner, nor any Affiliate
of them shall incur any liability to the Operating Partnership, the Partnership,
or any Limited Partner or Assignee as the result of or in connection with any
such action.
-71-
8.8 ACQUISITION OF RESTRICTED RESTAURANT PROPERTIES BY THE GENERAL PARTNERS OR
AFFILIATES.
Notwithstanding any provision of this Agreement, including, without
limitation, Sections 7.2(x) and 8.4(d), (e), and (f), no Person that is a
General Partner or an Affiliate of a General Partner shall acquire any
Restricted Restaurant Property from the Operating Partnership, whether by
purchase, exchange, or substitution, unless the consideration received by the
Operating Partnership for such Restricted Restaurant Property is at least equal
to the "fair market value" (as hereinafter defined) of such Restricted
Restaurant Property, as determined by the Appraiser; provided, however, that
this Section 8.8 shall have no application to any acquisition of a Restricted
Restaurant Property by BKC pursuant to Section 8.4 if, at the time of such
acquisition, neither BKC nor any Affiliate of BKC is a General Partner. Any
acquisition of a Restricted Restaurant Property, whether by purchase, exchange,
or substitution, by a Person who is a General Partner or an Affiliate of a
General Partner for consideration that is at least equal to the "fair value" (as
hereinafter defined) of such Restricted Restaurant Property, as determined by
the Appraiser, conclusively shall be deemed to be fair and in the best interests
of the Partnership. As used herein, the term "fair market value" shall mean the
value that would be obtained in an arm's-length transaction between an informed
and willing purchaser under no compulsion to buy and an informed and willing
seller under no compulsion to sell, as determined by the Appraiser, using such
method or methods of valuation as the Appraiser determines most accurately
reflect the value of the particular Restricted Restaurant Property in question
under the circumstances, provided that for a period of five (5) years from the
Closing Date, the Appraiser shall use the "capitalization of income" method
(applying such capitalization rate and other assumptions and adjustments as the
Appraiser determines appropriate under the circumstances) unless the Appraiser
determines that such method would result in an understatement of the value of
the Restricted Restaurant Property with respect to which such appraisal is being
performed. For purposes of this Section 8.8, in the event that any
consideration to be received by the Operating Partnership in exchange or
substitution for any Restricted Restaurant Property is in any form other than
money, then the "fair market value" of such consideration, as determined by the
Appraiser (or if such other consideration is in the form of property other than
real estate, by an appraiser experienced in valuing such other property
designated by the Appraiser), shall be required to be at least equal to the
"fair market value" of the Restricted Restaurant Property or Properties to be
transferred.
8.9 TERMINATION OF LEASE FOR RESTRICTED RESTAURANT PROPERTY FOLLOWING
TERMINATION OF BKC FRANCHISE AGREEMENT.
(a) In the event that (i) either (A) a BKC Franchise Agreement
authorizing the operation of a BK Restaurant is terminated by BKC or by the
mutual agreement of the parties thereto prior to the expiration of the stated
term thereof, or (B) a BKC Franchise Agreement expires according to the terms
thereof and is not renewed by BKC at or prior to the expiration of such BKC
Franchise Agreement, and (ii) BKC does not, prior to the end of the
Determination Period (as defined in Section 8.3) enter into a new BKC Franchise
Agreement with respect to the Restricted Restaurant Property or elect to operate
a BK Restaurant on the Restricted Restaurant Property, as provided for in
Section 8.3(b)(ii), then the Managing General Partner, in its sole and
-72-
absolute discretion, shall be permitted to cause the Operating Partnership to
terminate any lease with a BKC Franchisee with respect to such Restricted
Restaurant Property if a default has occurred under such lease and either (i)
the Managing General Partner shall have caused the Operating Partnership to
initiate and pursue such action (including, if appropriate, litigation)
against such defaulting lessee as the Managing General Partner, in its sole
and absolute discretion, shall determine to be reasonable under the
circumstances in order to obtain payment of amounts (including lost rent) due
the Operating Partnership under such lease, or (ii) the Managing General
Partner or the defaulting lessee shall have located a new lessee for the
Restricted Restaurant Property for a term at least as long as the remaining
unexpired term under the lease to be terminated and for a rent not lower than
the minimum base rent payable under such lease (or if the rent is lower than
the minimum base rent payable under the lease to be terminated, the defaulting
lessee shall have agreed to be contractually obligated to continue to pay to
the Operating Partnership an amount equal to the difference between the rent
payable under the new lease and the minimum base rent payable under the lease
to be terminated and shall have provided adequate security, as determined by
the Managing General Partner to be reasonable under the circumstances, for
such obligation).
(b) In addition to any termination in accordance with Section 8.9(a)
and any termination in accordance with Section 8.3(b)(ii), the Managing General
Partner, in its sole and absolute discretion, shall be permitted, without
limitation, to cause the Operating Partnership to terminate a lease with a BKC
Franchisee with respect to a Restricted Restaurant Property if the BKC Franchise
Agreement with respect to such Restricted Restaurant Property is terminated in
connection with or as a result of a condemnation involving all or substantially
all of a Restricted Restaurant Property or a casualty materially adversely
affecting the use of such Restricted Restaurant Property for the purpose of
operating a BK Restaurant for a period in excess of six (6) months.
(c) The provisions of this Section 8.9 shall not limit or affect in
any way the termination of a lease with respect to a Restricted Restaurant
Property with a Person that is not and was not a BKC Franchisee. The provisions
of this Section 8.9 are for the benefit of the Partnership, the Operating
Partnership, the Partners, and any Assignees, and shall not be deemed to create
any rights for the benefit of any other Persons, including, without limitation,
any lessees under leases with the Operating Partnership.
8.10 INDEPENDENT CONSULTANT.
(a) The Managing General Partner, in its sole and absolute
discretion, shall be entitled, but not required, to consult with the Independent
Consultant with respect to any action or proposed action affecting or relating
to the Partnership or the Operating Partnership or their business. In the event
that the Managing General Partner shall elect to consult with the Independent
Consultant with respect to any such action or proposed action, then the
Independent Consultant shall advise the Managing General Partner whether such
action or proposed action is contrary to the interests of the Partnership or the
Operating Partnership, as the case may be, taking into account, with respect to
the Restricted Restaurant Properties, that the original purposes
-73-
of the Partnership and the Operating Partnership was to acquire and hold real
estate that was leased to BKC Franchisees for the purpose of operating BK
Restaurants to derive revenues therefrom. The Limited Partners and Assignees
expressly agree that any actions taken by the Managing General Partner in
accordance with the advice of the Independent Consultant conclusively shall be
deemed to be fair to and in the best interests of the Partnership, the
Operating Partnership, the Limited Partners and any Assignees, and the fact
that an action of the Managing General Partner is undertaken in accordance
with the advice of the Independent Consultant shall be a complete and absolute
defense to any claim or action asserting the invalidity of such action or any
claim or action for damages or other relief based on an assertion that such
action resulted in a breach by the Managing General Partner or any of its
Affiliates of this Agreement or any duty, fiduciary or otherwise, owed by the
Managing General Partner or any Affiliate to the Operating Partnership, the
Partnership, the Limited Partners, or any Assignees. The Limited Partners and
Assignees further acknowledge that the purpose of this Section 8.10 is to
provide an arrangement to facilitate outside consultation by the Managing
General Partner with respect to potential problems arising in connection with
the management of the Partnership and the Operating Partnership and express
agree that, in order to induce the Managing General Partner to consent to this
Section 11.10 and to undertake such consultation from time to time as it
determines appropriate, neither the failure of the Managing General Partner to
consult with the Independent Consultant on any particular action or proposed
action, nor the failure of the Managing General Partner to act in accordance
with the advice of the Independent Consultant on any action or proposed action
with respect to which the Managing General Partner shall elect to consult with
the Independent Consultant, shall create any inference or presumption or
otherwise constitute evidence with respect to the failure of such action or
proposed action to the Partnership, the Operating Partnership, the Limited
Partners, or Assignees as the case may be.
(b) In the event that the Independent Consultant designated in this
Agreement at any time is unable or unwilling to advise the Managing General
Partner on a particular matter or should inform the Managing General Partner
that it no longer is willing to serve as Independent Consultant, then the
Managing General Partner shall designate a substitute Independent Consultant, as
provided for below. The Managing General Partner shall have the right at any
time, in its sole and absolute discretion, to terminate the Independent
Consultant and to designate a substitute Independent Consultant, as provided for
below; provided, however, that the Managing General Partner shall have no
obligation to the Partnership, the Operating Partnership, the Limited Partners,
or Assignees, as the case may be, to terminate the Independent Consultant under
any circumstances, and provided further that any termination of the Independent
Consultant pursuant to this Section 8.10(b) conclusively shall be deemed to be
fair to and in the best interests of the Partnership, the Operating Partnership,
the Limited Partners, and any Assignees. Any substitute Independent Consultant
designated by the Managing General Partner pursuant to this Section 8.10(b)
shall have experience in advising or consulting about the "fast-food" business
and shall be "financially independent" (as hereinafter defined) of the Managing
General Partner. A Person conclusively shall be deemed "financially
independent" of the Managing General Partner for purposes of this Section
8.10(b) if (i) such Person is not, and during the preceding four (4) years has
not been, a BKC Franchisee or an affiliate of the
-74-
Managing General Partner, of BKC, of TPC, or of a BKC Franchisee; and (ii)
such Person has not derived more than fifteen percent (15%) of such Person's
average annual gross revenues over the preceding four (4) years from the
Managing General Partner, BKC, TPC, any BKC Franchisee, and any Affiliate of
any of the foregoing.
(c) The Managing General Partner, in its sole and absolute
discretion, either (i) may cause the Partnership to indemnify and hold harmless
the Independent Consultant upon such terms and conditions as the Managing
General Partner shall determine appropriate or (ii) may indemnify and hold
harmless the Independent Consultant upon such terms and conditions as the
Managing General Partner shall determine appropriate, in which event the
Partnership shall indemnify the Managing General Partner for any amounts
required to be paid under such indemnification; provided, however, that in
either case, the terms and conditions of such indemnification shall be no more
favorable to the Independent Consultant than the terms and conditions pursuant
to which the General Partners, their Affiliates, and officers, directors,
employees, and agents of the General Partners and their Affiliates are
indemnified and held harmless pursuant to Section 7.10.
8.11 CONSENT TO USE OF NAME AND TRADEMARKS.
BKC's consent to the Partnership's use of the words "Burger King" in the
name of the Partnership and to the Partnership's use of the registered
trademarks and service marks Burger King-Registered Trademark-, Whopper-
Registered Trademark-, Whopper Junior-Registered Trademark-, and the Burger King
bun halves logo in the Registration Statement, all sales materials and other
documents prepared for use in connection with the Initial Public Offering, any
reports to or written communications with Limited Partners and Assignees, and
any reports filed by the Partnership with any federal, state, or local
regulatory agency terminated upon the withdrawal of BKC as the Special General
Partner.
8.12 ACQUISITION OF FEE TITLE TO PROPERTIES SUBJECT TO PRIMARY LEASES.
The Managing General Partner shall have the right, in its sole and
absolute discretion, to cause the Operating Partnership to acquire fee title
to any Restricted Restaurant Property that is subject to a Primary Lease,
either pursuant to a right of first refusal on behalf of the Operating
Partnership set forth in such Primary Lease or otherwise. BKC shall have no
obligation to the Operating Partnership or the Partnership in connection with
any such acquisition.
8.13 LOCATION OF OTHER RESTAURANT PROPERTIES.
Neither the Partnership nor the Operating Partnership may acquire any
Other Restaurant Properties within a two-mile radius of any Restricted
Restaurant Property held as of March 17, 1995.
-75-
ARTICLE IX
COMPENSATION OF GENERAL PARTNERS: PAYMENT OF
PARTNERSHIP EXPENSES
9.1 COMPENSATION TO GENERAL PARTNERS.
Except as permitted under Section 5.5 or expressly provided in Section 9.3
or 9.4, no General Partner shall receive any compensation from the Partnership
or the Operating Partnership for services rendered in its capacity as a general
partner of the Partnership or the Operating Partnership. Notwithstanding
anything herein to the contrary, at such time as QSV ceases to be the Managing
General Partner or the managing general partner of the Operating Partnership,
whether as a result of the transfer of QSV's Partnership Interest pursuant to
Section 12.2 (or Section 11.2 of the Operating Partnership Agreement) or the
withdrawal or removal of QSV pursuant to Section 14.1 or 14.2 (or Section 13.1
of the Operating Partnership Agreement) (other than removal for "cause"), then
QSV shall have the option, in its sole discretion, to convert its Partnership
Interest and its partnership interest in the Operating Partnership and to either
assign to the Partnership or convert its rights (the "Rights") under the
provisions of Section 9.3 (and Section 9.3 of the Operating Partnership
Agreement) (collectively, the "Conversion") for the Acquisition Price (as
defined below), effective as of the date of such transfer, withdrawal or
removal, and upon such Conversion, the successor Managing General Partner shall
cause the Partnership to issue to QSV Units, and the Partnership shall cause the
Operating Partnership to issue interests therein, in the aggregate amounts
provided for below.
In exchange for the Conversion of the Rights, as provided for above, and
the conversion of QSV's partnership interest in the Operating Partnership, in
the event QSV elects to effect the Conversion, QSV will receive the "Acquisition
Price," consisting of (a) the Initial Unit Consideration and (b) the Contingent
Unit Consideration. The Initial Unit Consideration consists of 850,000 Units
and/or interests in the Operating Partnership (which number or classification
shall be adjusted to give effect to any reclassification or change of the Units,
including, without limitation, a split, or any merger or consolidation of the
Partnership, except the merger of the Partnership with the REIT or a subsidiary
thereof, or sale of assets to another entity, occurring after March 31, 1997),
which number of Units or interests in the Operating Partnership shall be reduced
(on a one-for-one basis) by the number of Units received by QSV in connection
with the conversion of its Partnership Interest pursuant to the provisions of
this Section 9.1. In connection with the Conversion, QSV's Partnership Interest
shall be converted into such number of Units as at such time represents 1% of
the then outstanding Units, after giving effect to the conversion of QSV's
Partnership Interest. The Initial Unit Consideration, including the number of
Units issuable upon the conversion of QSV's Partnership Interest, shall be
issued by the Partnership, and the Partnership shall cause the Operating
Partnership to issue its interests, as soon as practicable following the date of
the Conversion, but in no event no later than 30 days thereafter.
-76-
The Contingent Share Consideration consists of up to a maximum number of
550,000 Units and/or interests in the Operating Partnership (which number or
classification shall be adjusted to give effect to any reclassification or
change in the Common Stock or the Units, including, without limitation, a split,
or any merger or consolidation of the REIT or the Partnership, except the merger
of the Partnership with the REIT or any subsidiary thereof, or sale of assets to
another entity, occurring after March 31, 1997). The type and number of
securities issuable as the Contingent Share Consideration (subject to the next
sentence) shall be at the sole discretion of QSV. The exact number of Units
and/or interests in the Operating Partnership to be issued will be determined by
the dividing (i) the amount by which the MGP Net Income (as defined below) for
the 2000 Fiscal Year exceeds $3,612,500 by (ii) $4.25 and rounding the resulting
number up to the nearest whole number. "MGP Net Income" means the dollar amount
which would have been payable to QSV, as Managing General Partner and as
managing general partner of the Operating Partnership, by the Partnership and
Operating Partnership for the 2000 Fiscal Year, pursuant to the Rights, had QSV
operated the Partnership and the Operating Partnership on a continuous basis
from the date of the Conversion to December 31, 2000 plus the amounts that have
been payable to QSV pursuant to its aggregate 1.98% general partnership interest
in the Partnership and the Operating Partnership, less $775,000.
For example, if the MGP Net Income for the 2000 Fiscal Year would have
been $5,100,000 ($5,875,000 of revenues less $775,000) then the Contingent
Unit Consideration would be an additional 350,000 Units and/or interests in
the Operating Partnership.
The Contingent Unit Consideration, if any, shall be issued by the
Partnership, and the Partnership shall cause the Operating Partnership to so
issue any such consideration, as soon as practicable following the end of the
2000 Fiscal Year, but in no event later than March 31, 2001.
9.2 EXPENSES IN CONNECTION WITH ORGANIZATION OF PARTNERSHIP AND INITIAL PUBLIC
OFFERING.
As set forth in the Real Estate Purchase Agreement, BKC as the special
general partner of the Partnership at such time reimbursed the Partnership for
all fees, costs, and expenses actually incurred by the General Partners and
their Affiliates, in connection with the organization of the Partnership, the
Operating Partnership, and the Managing Partner; the qualification of the
Partnership, the Operating Partnership and the Managing General Partner to do
business in any state in which the Managing General Partner determined that such
qualification was advisable; the registration of the Depositary Units under
applicable federal and state securities laws in connection with the Initial
Public Offering; the offering, sale, and distribution of the Depositary Units
pursuant to the Initial Public Offering; the listing of the Depositary Receipts
evidencing Depositary Units on a National Securities Exchange; the purchase of
the Partnership Properties by the Operating Partnership; and planning and
preparing for the operation and management of the Partnership and the Operating
Partnership following the Initial Public Offering, including, without
limitation, (i) printing, mailing, filing, and recording expenses; (ii) charges
of agents, depositories, appraisers, and the Underwriters; (iii) expenses of
registration and qualification of the Units under applicable federal and state
securities laws; (iv) legal (including tax advice) and
-77-
accounting fees and disbursements; (v) remuneration paid to officers or
employees of any General Partner or any Affiliate that is allocable to time
spent on such activities; and (vi) other expenses of a similar nature incurred
by any General Partner or any Affiliate in connection with such activities.
9.3 OPERATIONAL EXPENSES.
In addition to any reimbursement pursuant to the indemnification set forth
in Section 7.10, the Partnership shall cause the Operating Partnership, pursuant
to Section 9.3 of the Operating Partnership Agreement, to pay the following:
(a) With respect to (i) the Partnership Properties held as of March
17, 1995 and (ii) the Partnership Properties and Ancillary Property related
thereto acquired thereafter with respect to the Partnership Properties referred
to in clause (i) above whether pursuant to Section 8.12 or otherwise, the
Partnership shall cause to be paid to the Managing General Partner with respect
to each Fiscal Year an aggregate amount equal to Four Hundred Thousand Dollars
($400,000) adjusted annually as set forth in Section 9.3(c), which amount shall
be in lieu of any reimbursement for expenses related to the management of the
business affairs of the Partnership and the Operating Partnership (other than
expenses described in clause (c) hereof) that are incurred by the Managing
General Partner or its Affiliates with respect to such Partnership Properties,
which amount shall be payable in equal quarterly installments within sixty (60)
days after the end of each fiscal quarter.
(b) With respect to any Partnership Property and Ancillary Property
related thereto acquired after March 17, 1995 (other than those referred to in
clause (a) above) and mortgage loans, if any, originated by the Partnership or
the Operating Partnership, (i) the Partnership shall cause to be paid to the
Managing General Partner (A) fee equal to 1% of the purchase price paid by the
Partnership or the Operating Partnership for such Partnership Property and
Ancillary Property related thereto, payable on the date of acquisition or
origination, as applicable, and (B) with respect to each Fiscal Year, an amount,
adjusted annually as set forth in the next paragraph below, accruing while such
property is held at the rate of 1% per annum (applied using the simple interest
method on the basis of a 365/366-day year and the actual number of days elapsed)
on the purchase price paid by the Partnership or the Operating Partnership for
such Partnership Property and Ancillary Property related thereto, and (ii) if
the Rate of Return attributable to all Partnership Properties and Ancillary
Property related thereto acquired after March 17, 1995 (other than those
referred to in clause (a) above) in respect of any Fiscal Year shall exceed 12%
per annum, the Partnership shall cause to be paid to the Managing General
Partner an amount equal to 25% of the amount of cash received by the Operating
Partnership representing such excess, which amounts shall be in lieu of any
reimbursement of expenses related to the management of the business affairs of
the Partnership and the Operating Partnership (other than expenses described in
clause (c) hereof) that are incurred by the Managing General Partner or its
Affiliates with respect to such Partnership Properties and (except as provided
in clause (i)(A) of this clause (b)) shall be payable in quarterly installments
within sixty (60) days after the end of each fiscal quarter (which may be
estimated in the case of the first
-78-
three fiscal quarters); provided that there shall be credited against the
amounts, if any, payable pursuant to clause (ii) of this clause (b) in respect
of any Fiscal Year amounts payable to the Managing General Partner in respect
of its First Tier Residual Interest or Second-Tier Residual Interest pursuant
to Sections 6.5 and 6.6 in respect of such Fiscal Year. For purposes of the
calculations provided for in this Section 9.3, in the event of a mortgage loan
origination, the term "Partnership Properties" shall be deemed to include any
originated mortgage loans and the "purchase price" of such mortgage loans will
be the principal balances thereof at the beginning of any Fiscal Year.
(c) The Partnership shall either cause to be paid to the Managing
General Partner on a monthly basis, or cause the Managing General Partner to be
reimbursed for the payment of, all amounts payable to any Person for providing
goods or performing services (including, without limitation, legal, accounting,
auditing, record keeping, reporting, depositary, transfer agent, printing,
appraisal, servicing and consulting services) for or on behalf of the
Partnership or the Operating Partnership; provided, however, that the Operating
Partnership shall not cause to be paid to the Managing General Partner, or cause
the Managing General Partner to be reimbursed, for the payment of any amount to
an Affiliate or an officer, director, or employee of an Affiliate for legal,
accounting, managerial, or consulting services; and provided further, that the
Operating Partnership shall cause to be paid to, or shall cause the Managing
General Partner to be reimbursed for a payment to, an Affiliate or an officer,
director, or employee of an Affiliate for goods or other services only if the
price and the terms upon which such goods or services are provided to the
Partnership or the Operating Partnership are fair to the Partnership or the
Operating Partnership, as the case may be, and are not less favorable to the
Partnership or the Operating Partnership, as the case may be, than would be
incurred if the Partnership or the Operating Partnership were to obtain such
goods or services from an unrelated third party or were to engage employees to
provide such goods or services directly.
For 1987 and for each Fiscal Year thereafter, the amount payable pursuant
to Section 9.3(a) shall be increased by an amount equal to the product of Four
Hundred Thousand Dollars ($400,000) multiplied by the percentage increase in the
Price Index from January 1, 1986, through the last day of the immediately
preceding Fiscal Year. For each year after the year in which a Partnership
Property is acquired, the amount otherwise payable pursuant to Section
9.3(b)(i)(B) (the "Clause (b)(i)(B) Amount") shall be increased by an amount
equal to the product of the Clause (b)(i)(B) Amount multiplied by the percentage
increase in the Price Index from the first day of the immediately preceding
Fiscal Year or, in the case of the first year after the year in which the
Partnership Property is acquired, the first day of the month in which the
acquisition occurred through the last day of the Fiscal Year immediately
preceding such year or, if earlier, the last day of the month in which such
Partnership Property was disposed of. The percentage increase in the Price
Index through the last day of a particular period shall be determined by
calculating the increase, if any, in the Price Index for the last time period
during such period (the "Price Index Determination Period") with respect to
which the Price Index is published (currently a monthly period) over the Price
Index for the time period immediately preceding the first day of the Price Index
Determination Period, and expressing the amount of such increase as a
-79-
percentage of the Price Index for said time period immediately preceding the
first day of the Price Index Determination Period.
"RATE OF RETURN" in respect of any period shall mean and refer to the
quotient obtained by dividing (1) the aggregate revenues (calculated in
accordance with generally accepted accounting principles and before amortization
of unearned income on direct financing leases) received by the Partnership or
the Operating Partnership from the Partnership Properties and Ancillary Property
referred to in Section 9.3(b) above for such period, whether through operations,
sale or other disposition, less (without duplication) (i) the aggregate fees
payable pursuant to Section 9.3(b)(i)(B) for such period in respect of such
properties, (ii) the aggregate expenses of the Partnership (other than interest
expense, depreciation, amortization and other non-cash expenses and charges, and
expenses described in Sections 9.3(b) and (c) directly attributable to such
property and interest expense on any debt allocated thereto for such period,
(iii) the general and administrative expenses of the Partnership (other than
non-cash expenses and charges and expenses described in clauses (a) and (b)
above) for such period allocated to such properties (based on the ratio of
Average Partnership Equity in such property to the aggregate Average Partnership
Equity in all Partnership Properties) and (iv) the principal amount of debt
allocated to such properties repaid during such period and, if applicable, the
cash costs and expenses of any Kind or nature incurred in respect of the sale or
other disposition thereof, by (2) the Average Partnership Equity in such
property during such period. "AVERAGE PARTNERSHIP EQUITY" shall mean and refer
to (A) the average of the sums of the aggregate purchase prices therefor, the
aggregate fees paid pursuant to Section 9.3(b)(i)(A) above in respect thereof
and all other cash costs and expenses of any kind or nature incurred in
connection with the acquisitions thereof ("Property Costs") as of the last day
of each calendar month occurring during the period of determination, less (B)
the average outstanding principal amount of debt of the Partnership outstanding
as of the last day of each calendar month during such period and allocated to
such properties. The Rate of Return for any outstanding mortgage loans will be
evaluated separately with the mortgage loans constituting a separate pool of
"properties" for such calculation. The general and administrative expenses
allocable to such mortgage loans shall be equal to the total amount of such
expenses for any Fiscal Year multiplied by a fraction, the numerator of which
shall be the aggregate principal amount of all mortgage loans outstanding at the
beginning of such Fiscal Year and the denominator of which shall be the total of
all Property Costs and such aggregate principal amount.
For the purposes of the foregoing, debt of the Partnership shall be
allocated among the Partnership Properties as follows: (1) non-recourse debt
shall be allocated to the property secured thereby and, if such debt is secured
by more than one property, such debt shall be allocated among the properties
secured thereby based on the relative Property Costs thereof-, and (2) recourse
debt shall be allocated to all of the Partnership Properties based on the
relative Property Costs thereof (reduced for this purpose by the amounts of
non-recourse debt allocated thereto in accordance with clause (1) above).
-80-
9.4 REIMBURSEMENT OF THE GENERAL PARTNERS.
In the event that the provisions of Section 9.3 are terminated in
accordance with the terms of Section 9.1, the following compensation provisions
shall apply, to be effective upon the date of such termination.
(a) The General Partners shall not be compensated for their services as
general partner of the Partnership except as provided in elsewhere in this
Agreement (including the provisions of Article VI regarding distributions,
payments and allocations to which it may be entitled in its capacity as the
General Partner).
(b) Subject to Section 9.4(c), the Partnership shall be liable for, and
shall reimburse the General Partners on a monthly basis, or such other basis as
the General Partners may determine in their sole and absolute discretion, for
all sums expended in connection with the Partnership's business or for the
benefit of the Partnership, including, without limitation, (i) expenses relating
to the ownership of interests in, and management and operation of, or for the
benefit of, the Partnership, (ii) compensation of officers and employees,
including, without limitation, payments under future employee benefit plans of
any General Partner, (iii) director fees and expenses, and (iv) all costs and
expenses of any General Partner being a public company, including costs of
filings with the Commission, reports and other distributions to its
stockholders.
(c) To the extent practicable, Partnership expenses shall be billed
directly to and paid by the Partnership reimbursements to the General Partner of
any of their Affiliates by the Partnership pursuant to this Section 9.4 shall be
treated as "guaranteed payments" within the meaning of Section 707(c) of the
Code.
ARTICLE X
BANK ACCOUNTS; BOOKS AND RECORDS; FISCAL YEAR;
STATEMENTS; TAX MATTERS
10.1 BANK ACCOUNTS.
All funds of the Partnership shall be deposited in its name in such
checking and savings accounts, time deposits, certificates of deposit, or other
accounts at such banks or other financial institutions as shall be designated by
the Managing General Partner from time to time, and the Managing General Partner
shall arrange for the appropriate conduct of any such account or accounts. The
Managing General Partner shall have fiduciary responsibility for the safekeeping
and use of the funds of the Partnership, whether or not in the possession and
control of the Managing General Partner, and the Managing General Partner shall
not employ or permit any other Person to employ such funds except in accordance
with the terms of this Agreement. The Managing General Partner shall not permit
funds of the Partnership to be commingled with funds of the Managing General
Partner, any Affiliate, or any other Person; provided, however, that nothing
herein shall prohibit the Partnership's investment in the Operating Partnership;
and
-81-
provided further that nothing herein shall preclude any investment of
Partnership funds in a mutual fund or similar entity for which a separate
account is maintained on behalf of each participant.
10.2 BOOKS AND RECORDS.
(a) The Managing General Partner shall keep, or cause to be kept,
accurate, full, and complete books and accounts with respect to the Partnership,
showing assets, liabilities, income, operations, transactions, and the financial
condition of the Partnership. Such books and accounts shall be prepared and
maintained on the accrual basis of accounting in accordance with generally
accepted accounting principles. The Managing General Partner shall maintain and
preserve all Partnership books and records for such period as the Managing
General Partner, in its reasonable discretion, shall determine necessary or
appropriate, subject to any requirements of state or federal law; provided,
however, that all appraisal reports obtained by the Partnership, whether in
connection with the acquisition of the Partnership Properties or otherwise,
shall be retained by the Partnership for at least five (5) years from the date
thereof.
(b) Each Limited Partner, and each such Limited Partner's duly
authorized representatives, shall have the right, at reasonable times and at
such Limited Partner's own expense, but only upon twenty (20) days prior written
notice to the Managing General Partner in accordance with Section 18.2, and only
for a valid business purpose related to the conduct of the Partnership's
business, (i) to have true and full information regarding the status of the
business and financial condition of the Partnership; (ii) to inspect and copy
the books of the Partnership and other reasonably available records and
information concerning the operation of the Partnership, including copies of any
appraisal reports described in Section 10.2(a) and copies of the federal, state,
and local income tax returns of the Partnership; (iii) to have a current list of
the name and last known business, residence, or mailing address of each Partner;
(iv) to have true and full information regarding the amount of cash and a
description and statement of the Carrying Value of any property or services
contributed by any Partner to the Partnership and the date upon which each
Partner became a Partner; and (v) to have a copy of this Agreement, the
Certificate of Limited Partnership, and all amendments or certificates of
amendment, as the case may be, thereto, together with copies of any powers of
attorney pursuant to which any such amendment or certificate of amendment has
been executed.
(c) Anything in this Section 10.2 to the contrary notwithstanding,
the Managing General Partner, in its sole and absolute discretion, may refuse
any Limited Partner or its representative access to any information, records,
documents, or data it determines to be confidential, including, without
limitation, any records relating to the sales or revenues or projected sales or
revenues of one or more specific BK Restaurants, information related to the
financial condition or circumstances of any BKC Franchisee or BKC's relationship
with any BKC Franchisee, and any other information provided to the Partnership
or the Operating Partnership by BKC and specifically designated by BKC, in its
reasonable discretion, to be confidential and/or proprietary.
-82-
10.3 FISCAL YEAR.
The Fiscal Year of the Partnership for financial and federal, state, and
local income tax purposes initially shall be the calendar year. The Managing
General Partner shall have authority to change the beginning and ending dates of
the Fiscal Year if the Managing General Partner, in its sole and absolute
discretion, subject to approval by the Internal Revenue Service, shall determine
such change to be necessary or appropriate to the business of the Partnership,
and shall give written notice of any such change to the Limited Partners within
thirty (30) days after the occurrence thereof.
10.4 FINANCIAL STATEMENTS AND INFORMATION.
(a) All financial statements shall be accurate and complete in all
material respects, shall present fairly the financial position and operating
results of the Partnership, and shall be prepared on the accrual basis as
provided in Section 10.2 for each Fiscal Year of the Partnership during the term
of this Agreement.
(b) No later than forty-five (45) days after the end of each fiscal
quarter of each Fiscal Year (except the last fiscal quarter of each Fiscal
Year), commencing with the fiscal quarter ending June 30, 1986, the Managing
General Partner shall prepare and mail, or cause to be prepared and mailed, to
each Record Holder of a Depositary Unit or Unit as of a date specified by the
Managing General Partner (which date shall not be earlier than the last day of
such fiscal quarter), an unaudited statement of income for the Partnership for
such fiscal quarter, an unaudited statement of changes in cash flows for the
period between the end of the most recent Fiscal Year and the end of such fiscal
quarter, and an unaudited balance sheet of the Partnership dated as of the end
of such fiscal quarter, in each case prepared in accordance with generally
accepted accounting principles, together with a statement setting forth any
transactions between the Partnership and any of the General Partners or any
Affiliate thereof, the amount of any fees, commissions, compensation and other
remuneration paid or accrued to any of the General Partners or any Affiliate
thereof for services rendered to the Partnership, and a description of such
services, any other information required by Form 10-Q under the Exchange Act,
and such other information (financial or otherwise) as the Managing General
Partner, in its discretion, shall deem necessary or appropriate.
(c) No later than ninety (90) days after the end of each Fiscal Year
during the term of this Agreement, the Managing General Partner shall prepare
and mail, or cause to be prepared and mailed, to each Record Holder of a
Depositary Unit or Unit as of a date specified by the Managing General Partner
(which date shall not be earlier than the last day of such Fiscal Year): (i) a
balance sheet, together with statements of income, Partners' equity, and changes
in cash flows for the Partnership during such Fiscal Year, which financial
statements shall be audited by the Auditing Xxxx (such financial statements to
contain a report of the Auditing Firm which shall include: (A) a statement that
an audit of such financial statements has been made in accordance with generally
accepted auditing standards and that such financial statements are in conformity
with generally accepted accounting principles; (B) a statement of the opinion of
the
-83-
Auditing Firm with respect to the financial statements and the accounting
principles and practices reflected therein and in regard to the consistency of
the application of such accounting principles; and (C) an identification of any
matters reflected in such financial statements to which the Auditing Firm takes
exception); (ii) a report summarizing any transactions between the Partnership
and any of the General Partners or any Affiliate thereof, the amount of any
fees, commissions, compensation and other remuneration (including, without
limitation, reimbursements of expenses pursuant to Section 9.3) paid or accrued
by the Partnership for such Fiscal Year to any of the General Partners and any
Affiliates thereof, and the services rendered to the Partnership in connection
therewith; (iii) a report of the activities of the Partnership during the Fiscal
Year; and (iv) a statement (which statement need not be audited) showing any
Cash Flow and any Net Proceeds of a Capital Transaction distributed or to be
distributed to the Partners and any Assignees in respect of such Fiscal Year.
(d) The Managing General Partner shall provide to each Record Holder
of a Depositary Unit as of a date specified by the Managing Partner, no later
than seventy-five (75) days after the close of the period covered thereby, an
earnings statement (in form complying with the provisions of Rule 158 under the
Securities Act) covering a period of twelve (12) months beginning not later than
the first day of the Partnership's fiscal quarter next following the effective
date of the Registration Statement.
(e) The Managing General Partner shall provide to each Record Holder
of a Depositary Unit or Units such other reports and information concerning the
business and affairs of the Partnership (i) as the Managing General Partner, in
its sole and absolute discretion, may deem necessary or appropriate, or (ii) to
the extent not provided for in Sections 10.4(b) or (c), as may be specifically
required by the Delaware RULPA or by any other law or any regulation of any
regulatory body applicable to the Partnership.
(f) The Managing General Partner shall provide any of the reports or
other information referred to in this Section 10.4 to such federal, state, or
local governments, governmental agencies, or other regulatory entities as the
Managing General Partner, in its sole and absolute discretion, may deem
necessary or appropriate.
10.5 ACCOUNTING DECISIONS.
All decisions as to accounting matters, except as specifically provided to
the contrary herein, shall be made by the Managing General Partner.
10.6 WHERE MAINTAINED.
The books, accounts, and records of the Partnership at all times shall be
maintained at the Partnership's principal office or, at the option of the
Managing General Partner, at the principal place of business of the Managing
General Partner.
-84-
10.7 PREPARATION OF TAX RETURNS.
The Managing General Partner, at the expense of the Partnership, shall
arrange for the preparation and timely filing of all returns of the Partnership
and the Operating Partnership showing all income, gains, deductions, and losses
necessary for federal and state income tax purposes, and shall furnish to the
Limited Partners and any Assignees within seventy-five (75) days of the close of
the Fiscal Year the tax information reasonably required for federal and state
income tax reporting purposes. The classification, realization, and recognition
of income, gains, losses, and deductions, and other items of the Partnership and
the Operating Partnership shall be on the accrual method of accounting for
federal income tax purposes.
10.8 TAX ELECTIONS.
Except as otherwise specifically provided herein, the Managing General
Partner shall, in its sole and absolute discretion, determine whether to make
any available election (including, without limitation, the elections provided
for in Sections 48(q)(4), 168 and 754 of the Code on behalf of the Partnership
and the Operating Partnership). The Managing General Partner shall have the
right to seek to revoke any such election upon the Managing General Partner's
determination that such revocation is- in the interests of the Limited Partners;
provided that the Managing General Partner shall not seek to revoke any such
election unless the Managing General Partner has received an Opinion of
Independent Counsel to the effect that such revocation would not cause (a) the
loss of limited liability of the Partnership under the Operating Partnership
Agreement or of the Limited Partners under this Agreement, or (b) the
Partnership or the Operating Partnership to be treated as an association taxable
as a corporation for federal income tax purposes.
10.9 TAX CONTROVERSIES.
Subject to the provisions hereof the Managing General Partner is
designated as the "tax matters partner" (as defined in the Code) of the
Partnership and the Operating Partnership and is authorized and required to
represent the Partnership and the Operating Partnership (at the expense of the
Partnership or the Operating Partnership, as the case may be) in connection
with all examinations of the affairs of the Partnership or the Operating
Partnership, as the case may be, by any federal, state, or local tax
authorities, including any resulting administrative and judicial proceedings,
and to expend funds of the Partnership or the Operating Partnership, as the
case may be, for professional services and costs associated therewith. Each
Partner and any Assignee agrees to cooperate with the Managing General Partner
and to do or refrain from doing any or all things reasonably required by the
Managing General Partner in connection with the conduct of all such
proceedings.
10.10 ORGANIZATIONAL EXPENSE.
The Partnership shall elect to deduct expenses considered incurred in
organizing the Partnership ratably over a sixty-month period as provided in
Section 709 of the Code.
-85-
10.11 TAXATION AS A PARTNERSHIP.
No election shall be made by the Partnership, the Operating Partnership,
the General Partners, or any Limited Partner or Assignee to be excluded from the
application of any of the provisions of Subchapter K, Chapter I of Subtitle A of
the Code or from any similar provisions of any state tax laws.
10.12 DETERMINATION OF ADJUSTED BASIS IN CONNECTION WITH SECTION 754
ELECTION.
In determining adjustments to any Partner's or Assignee's proportional
share of the Adjusted Basis of Partnership Assets or assets of the Operating
Partnership in connection with the Section 754 Election, if such election shall
be made, the Managing General Partner, for purposes of accounting simplicity,
shall treat each Partner or Assignee who acquires one or more Units or
Depositary Units at any time during a calendar month as having acquired all such
Units or Depositary Units on the first day of such calendar month at a price
equal to the lowest Unit Price of the Units or Depositary Units during such
month, irrespective of the date on or price at which such Units or Depositary
Units actually were acquired by such Partner or Assignee during such month. The
Managing General Partner shall be authorized to alter these accounting
conventions to conform with any regulations issued by the Treasury Department or
rulings or advice of the Internal Revenue Service, as the Managing General
Partner shall determine necessary or appropriate. To the extent the Managing
General Partner is required to determine the Adjusted Basis of any Partnership
Assets or assets of the Operating Partnership with respect to which the Code
requires that records of such Adjusted Basis be kept and maintained by the
Limited Partners or Assignees, the General Partner may request information
regarding such Adjusted Basis from such Limited Partners or Assignees, in
writing, and such Limited Partners shall furnish such information to the
Managing General Partner within thirty (30) calendar days after such request is
mailed by the Managing General Partner.
10.13 WITHHOLDING IN RESPECT OF FOREIGN PARTNERS.
(a) The Partnership shall comply with any and all withholding
obligations and requirements imposed under applicable federal, state and local
law, including Sections 1441, 1442, 1445 and 1446 of the Code and Regulations
promulgated thereunder and Rev. Proc. 89-31, 1989-1 C.B. 895, as well as all
other requirements of the Code applicable to foreign persons (within the meaning
of Sections 1445 or 1446 of the Code and Regulations promulgated thereunder),
and the Managing General Partner shall not be liable for the Partnership's
compliance with such obligations and requirements. Each Partner or Assignee who
is not a Foreign Partner shall, within thirty (30) days of such Partner's or
Assignee's receipt of a written request of the Managing General Partner, deliver
to the Managing General Partner a Non-Foreign Certificate. If applicable each
Partner or Assignee who is a Foreign Partner shall, within thirty (30) days of
such Foreign Partner's receipt of a written request of the Managing General
Partner, deliver to the Managing General Partner a Treaty Certificate. If the
Managing General Partner does not receive any response to the written request
within the indicated period of time, the Managing General Partner shall have the
right to presume that any such non-responding Partner or Assignee
-86-
is a Foreign Partner ineligible for any benefits described in a Treaty
Certificate. Each Non-Foreign Certificate and Treaty Certificate received by
the Managing General Partner shall be maintained by the Managing General
Partner as part of the Partnership books and records in accordance with the
Treasury Regulations promulgated under Sections 1441, 1445 and 1446 of the
Code. Any Partner or Assignee who has previously delivered a Non-Foreign
Certificate or Treaty Certificate to the Managing General Partner shall
immediately notify the Managing General Partner in the event such Partner
becomes a Foreign Partner or ineligible for the benefits described in the
Treaty Certificate. Prior to any distribution or allocation made pursuant to
Article VI hereof or any disposition of part or all of the Partnership
properties, the Partnership shall have the right to require any Partner or
Assignee to deliver or redeliver a Non-Foreign Certificate or Treaty
Certificate as a condition to such Partner or Assignee taking part in such
allocation or distribution or as a condition to the Partnership's disposition
of part or all of the Partnership properties. The Partnership shall also have
the authority and power, to the extent qualified, to request and obtain from
the IRS a Withholding Certificate. The Managing General Partner shall not be
required to request a Withholding Certificate and shall not be liable for
either the Managing General Partner's or the Partnership's failure to request
a Withholding Certificate. Each Partner or Assignee shall, within thirty (30)
days of such Partner's or Assignee's receipt of a written request of the
Managing General Partner, deliver to the Managing General Partner information
necessary to obtain a Withholding Certificate.
(b) For purposes of this Agreement, any withholding tax that is paid
by the Partnership with respect to a Partner or Assignee shall be treated as a
recourse loan by the Partnership to such Partner or Assignee. All loans made
hereunder with respect to a Partner or Assignee shall be payable by the Partner
or Assignee on fifteen (15) days' notice from the Partnership, bear interest at
the highest lawful rate, not to exceed a rate per annum equal to the base rate
announced by Citibank, N.A. from time to time plus two percent (2%) and be
secured by such Partner's or Assignee's interest in the Partnership. So long as
any principal or interest is owing to the Partnership by a Partner or Assignee
in respect of any such loan, any amounts of money which would otherwise be
distributable to such Partner or Assignee pursuant to Article VI shall instead
be retained by the Partnership and applied against the amounts owing by the
Partner or Assignee in respect of all such loans until all amounts of principal
and interest owing in respect of all such loans have been paid or satisfied. A
Partner or Assignee shall have the right to prepay the amounts owing by such
Partner or Assignee in respect of any loan made on such Partner's or Assignee's
behalf at any time without premium or penalty. No funds transferred to the
Partnership pursuant to this Section 10.13(b) shall be treated as a Capital
Contribution to the Partnership. All amounts paid or applied in respect of such
loan shall be applied first against the accrued but unpaid interest thereon and
then to the principal balance thereof.
(c) In the event that a loan is deemed to be made by the Partnership
to a Partner or Assignee pursuant to Section 10.13(b), such Partner or Assignee
shall have full personal liability to pay all amounts of principal and interest
owing to the Partnership in respect of such loan. A Partner or Assignee shall
have fifteen (15) days to cure any default committed by such Partner or Assignee
in respect of any loan deemed to have been made to such Partner or Assignee,
said cure period to commence upon the sending of written notice by the
Partnership
-87-
to such Partner or Assignee specifying the default that has occurred. If a
Partner or Assignee is indebted to the Partnership with respect to any loans
upon the liquidation of such Partner's or Assignee's Partnership Interest,
such loan shall be absolutely due and payable by such Partner or Assignee to
the Partnership on the tenth (10th) day following the liquidation of such
Partner's or Assignee's interest in the Partnership. Each Partner or Assignee
hereby acknowledges that the withholding obligations referred to in this
Section 10.13 may require the Managing General Partner, on behalf of the
Partnership, to remit to the applicable taxing authority cash that is in
excess of the amounts that would be distributable to such Partner or Assignee
under Article VI if no withholding tax were due with respect to such Partner
or Assignee.
(d) If the Partnership makes a distribution of money to a Partner or
Assignee pursuant to Article VI and the Partnership determines that it is
required to pay withholding tax (the amount of such tax being referred to herein
as the "Withholding Amount") to a taxing authority in connection therewith, the
Managing General Partner shall have the right to withhold from the amount
otherwise distributable to such Partner or Assignee the Withholding Amount and
to remit the Withholding Amount to the applicable taxing authority. It is
hereby acknowledged and agreed that if the Managing General Partner withholds
and remits to the applicable taxing authority a Withholding Amount with respect
to any Partner or Assignee, the amount so withheld shall be deemed to have been
actually distributed by the Partnership to such Partner or Assignee (and then
paid by such Partner or Assignee to the applicable taxing authority), for all
purposes of this Agreement. The provisions of this Section 10.13(d) are
intended to ensure that regardless of whether Withholding Amounts are remitted
to a taxing authority, all amounts distributable to a Partner or Assignee
pursuant to Article VI shall be treated as actually having been distributed to
the Partners or Assignee according to the distribution priorities of said
sections and that the withholding requirements imposed on the Partnership shall
not result in Cash Flow or Net Proceeds of Capital Transactions being
distributed to the Partners or Assignee in a manner that is inconsistent with
the provisions of Article VI.
10.14 QUALIFICATION AS A REIT.
In the event that the Managing General Partner at any time shall determine
that either the Partnership or the Operating Partnership does not qualify, or no
longer will qualify, as a partnership for federal income tax purposes, then the
Managing General Partner shall have the right, but not the obligation, to take
any such action as it, in its sole and absolute discretion, determines to be in
the interests of the Limited Partners and Assignees in connection therewith or
as a result thereof, including, without limitation to cause the Partnership and
the Operating Partnership to be reorganized so as to qualify as a "real estate
investment trust" within the meaning of Section 856 of the Code.
-88-
ARTICLE XI
ISSUANCE AND DEPOSIT OF CERTIFICATE OF PARTNERSHIP INTEREST
11.1 ISSUANCE OF CERTIFICATES OF PARTNERSHIP INTEREST.
Upon the issuance of the Units in connection with the Initial Public
Offering, the Managing General Partner shall cause the Partnership to issue one
or more Certificates in the names of the Initial Limited Partners owning such
Units. Upon any subsequent issuance of Units, the Managing General Partner
shall cause the Partnership to issue additional Certificates therefor. Each
such Certificate shall be denominated in terms of the number of Units evidenced
by such Certificate. Upon the transfer of a Unit that is not a Depositary Unit
in accordance with Article XII, the Managing General Partner shall cause the
Partnership to issue replacement Certificates, in accordance with such
procedures as the Managing General Partner, in its sole and absolute discretion,
may establish. No Certificate shall be issued representing a fraction of a
Unit.
11.2 DEPOSIT OF CERTIFICATES OF PARTNERSHIP INTEREST; ISSUANCE OF DEPOSITARY
RECEIPTS.
The Initial Limited Partners shall cause all Certificates issued to them
in connection with the Initial Public Offering to be deposited with the
Depositary to be held under and pursuant to the terms of the Deposit
Agreement. In exchange for the Certificates transferred to the Depositary,
and pursuant to the Deposit Agreement, the Initial Limited Partners shall
receive Depositary Receipts evidencing their ownership of the Units held by
the Depositary. The Managing General Partner shall cause any subsequently
issued Units to be subject to the Deposit Agreement and Depositary Receipts to
be issued in exchange therefor pursuant to the Deposit Agreement, with such
changes in such arrangements with the Depositary as the Managing General
Partner deems necessary or appropriate.
11.3 LOST, STOLEN, OR DESTROYED CERTIFICATES.
The Partnership shall issue a new Certificate in place of any Certificate
previously issued if the Record Holder of such Certificate:
(a) makes proof by affidavit, in form and substance satisfactory to
the Managing General Partner, that such previously issued Certificate has been
lost, destroyed, or stolen;
(b) requests the issuance of a new Certificate before the Partnership
has noticed that such previously issued Certificate has been acquired by a
purchaser for value in good faith and without notice of an adverse claim;
-89-
(c) if requested by the Managing General Partner, delivers to the
Partnership a bond, in form and substance satisfactory to the Managing General
Partner, with such surety or sureties and with fixed or open penalty, as the
Managing General Partner may direct, to indemnify the Partnership and the
Depositary against any claim that may be made on account of the alleged loss,
destruction, or theft of such previously issued Certificate; and
(d) satisfies any other reasonable requirements imposed by the
Managing General Partner. When a previously issued Certificate has been lost,
destroyed, or stolen, and the Partner fails to notify the Partnership within a
reasonable time after he has notice of such event, and a transfer of Units
represented by the Certificate is registered before such Partnership receives
such notification, the Partner shall be precluded from making any claim against
the Partnership, the Depositary, or any Transfer Agent with respect to such
transfer or for a new Certificate.
11.4 RECORD HOLDER.
The Partnership shall be entitled to treat each Record Holder as the
Limited Partner or Assignee in fact of any Units or Depositary Units, as the
case may be, and, accordingly, shall not be required to recognize any equitable
or other claim or interest in or with respect to such Units or Depositary Units
on the part of any other Person, regardless of whether it shall have actual or
other notice thereof, except as otherwise required by law or any applicable
rule, regulation, guideline, or requirement of any stock exchange on which the
Units or Depositary Units are listed for trading.
ARTICLE XII
TRANSFER OF INTERESTS AND UNITS
12.1 TRANSFER.
(a) The term "transfer," when used in this Article XIII with respect
to a Partnership Interest, Units, or Depositary Units, shall include any sale,
assignment, gift, pledge, hypothecation, mortgage, exchange, or other
disposition.
(b) No Partnership Interest, Unit, or Depositary Unit shall be
transferred, in whole or in part, except in accordance with the terms and
conditions set forth in this Article XII. Any transfer or purported transfer of
any Partnership Interest, Unit, or Depositary Unit not made in accordance with
this Article XII shall be null and void.
12.2 TRANSFER OF INTERESTS OF GENERAL PARTNERS.
(a) If a General Partner desires to sell or transfer all or any
portion of such General Partner's Partnership Interest as a General Partner to a
Person who is not a General Partner, such transfer shall be permitted if (and
only if):
-90-
(i) such transfer and the admission of the transferee as a
general partner of the Partnership is approved by a Majority Vote
of the Limited Partners, unless the transferee is (A) an Affiliate
of the transferring General Partner or (B) a Limited Partner or an
Affiliate of a Limited Partner, in which case no such approval of
the Limited Partners shall be required; and
(ii) the Partnership receives an Opinion of Independent
Counsel that such transfer and admission (A) would not cause the
loss of limited liability of the Partnership under the Operating
Partnership Agreement or the Limited Partners under this Agreement,
and (B) would not cause the Partnership or the Operating
Partnership to be treated as an association taxable as a
corporation for federal income tax purposes.
(b) Neither Section 12.2(a) nor any other provision of this
Agreement shall be construed to prevent (and each Partner, by requesting and
being granted admission to the Partnership, is deemed to consent to):
(i) the transfer by any corporate General Partner of such
corporate General Partner's Partnership Interest as a General
Partner upon its merger or consolidation with another Person or the
transfer by it of all or substantially all of its assets to another
Person, and the assumption of the rights and duties of such a
corporate General Partner by such Person, provided such Person
furnishes to the Partnership an Opinion of Independent Counsel to
the effect that such merger, consolidation, transfer, or assumption
(1) would not cause the loss of limited liability of the
Partnership under the Operating Partnership Agreement or the
Limited Partners under this Agreement, and (2) would not cause the
Partnership or the Operating Partnership to be treated as an
association taxable as a corporation for federal income tax
purposes;
(ii) the transfer by a General Partner of all or any part of
its interest in items of Partnership income, gains, losses,
deduction, credits, distributions, or surplus; or
(iii) a General Partner's mortgaging, pledging, hypothecating,
or granting a security interest in all or any part of its
Partnership Interest as a General Partner as collateral for a loan
or loans.
12.3 TRANSFER OF UNITS.
Units that have never been deposited in the Deposit Account or that have
been withdrawn from the Deposit Account and not redeposited in the Deposit
Account are not transferable except upon death or by operation of law or by
transfer to the Managing General Partner for the account of the Partnership or
the Operating Partnership.
-91-
12.4 TRANSFER OF DEPOSITARY RECEIPTS.
(a) Except as specifically provided in Section 12.3, the
Partnership shall not recognize any transfer of Units or interests therein
except by a transfer of Depositary Receipts representing Depositary Units.
Depositary Receipts may be transferred only in the manner provided in and
subject to the conditions set forth in the Deposit Agreement.
(b) A transferee who has completed and delivered a Transfer
Application shall be deemed (i) to have applied to be admitted to the
Partnership as a Substituted Limited Partner pursuant to Article XIII with
respect to the Units transferred; (ii) to have agreed to comply with and be
bound by this Agreement, whether or not such transferee is admitted as a
Substituted Limited Partner with respect to the Units transferred, and to
execute any document that the Managing General Partner may reasonably require to
be executed in connection with such transfer or with the admission of such
transferee as a Substituted Limited Partner pursuant to Article XIII with
respect to the Units transferred; and (iii) to have appointed the Managing
General Partner and authorized officers and attorneys-in-fact of the Managing
General Partner as attorney-in-fact for such transferee to execute, swear to,
acknowledge, and file any document, including any amendment of the Certificate
of Limited Partnership, necessary or appropriate in any jurisdiction for, and
relating to, the transferee's admission as a Substituted Limited Partner with
respect to the Units transferred and the transferee becoming a party to this
Agreement, as more fully set forth in Article XVII. Unless and until admitted
as a Substituted Limited Partner pursuant to Article XIII with respect to
Depositary Units transferred pursuant to this Section 12.4, the Record Holder of
a Depositary Unit transferred pursuant to this Section 12.4 shall be an Assignee
in respect of such Depositary Unit, whether or not such Record Holder is a
Limited Partner with respect to other Depositary Units.
(c) Each distribution in respect of a Depositary Unit (or a
Unit withdrawn from the Deposit Account) shall be paid by the Partnership,
directly or through the Depositary or through any other person or agent, only
to the Record Holder of such Depositary Unit (or such Unit withdrawn from the
Deposit Account) as of the Record Date set for such distribution. Such
payment shall constitute full payment and satisfaction of the Partnership's
liability in respect of such payment, regardless of any claim of any Person
who may have an interest in or with respect to such payment by reason of any
assignment or otherwise.
(d) Notwithstanding anything to the contrary herein, the
Partnership shall not recognize for any purpose any purported transfer by a
Limited Partner or Assignee of all or any part of a Depositary Unit held by
such Limited Partner or Assignee until the Partnership shall have received
(A) the written advice by the Depositary, pursuant to Section 4.5 of the
Deposit Agreement, of the transfer of the Depositary Receipts evidencing such
Depositary Units or (B) in the case of Depositary Units held by the same
nominee for the transferor and the transferee, the receipt of written
notification in accordance with Section 18.2 hereof from the nominee holder
of the date of the transfer of such Depositary Units.
-92-
(e) Any holder of a Unit or a Depositary Receipt (including a
transferee thereof) conclusively shall be deemed to have agreed to comply with
and be bound by all terms and conditions of this Agreement, with the same effect
as if such holder had executed a Transfer Application, whether or not such
holder in fact has executed such a Transfer Application. A request by any
broker, dealer, bank, trust company, clearing corporation, or nominee holder, to
register transfer of a Depositary Receipt, however signed (including by any
xxxxx, xxxx, or symbol executed or adopted with intent to authenticate the
Depositary Receipt), shall be deemed to be execution of a Transfer Application
by and on behalf of the beneficial owner of such Depositary Receipt.
(f) Notwithstanding anything to the contrary herein, no
purchaser of a Depositary Receipt from an Initial Limited Partner in
connection with or pursuant to the Initial Public Offering shall be required
to execute a Transfer Application in order to effect the transfer of such
Depositary Receipt or to become a Substituted Limited Partner with respect to
the Units evidenced thereby. Each such purchaser, by acquiring such
Depositary Receipt in connection with or pursuant to the Initial Public
Offering, shall be deemed to have agreed to comply with and to be bound by
all terms and conditions of this Agreement, the Deposit Agreement, and the
Depositary Receipt and to have taken the other actions specified in the
Transfer Application and Section 12.4(b) above as if such purchaser had
executed the Transfer Application. The Managing General Partner shall admit
to the Partnership as Substituted Limited Partners all purchasers of
Depositary Receipts from the Initial Limited Partners in connection with or
pursuant to the Initial Public Offering.
12.5 RESTRICTIONS ON TRANSFER.
Notwithstanding the other provisions of this Article XII, no transfer of
any Unit, Depositary Unit, or the Partnership Interest of any Limited Partner in
the Partnership shall be made if such transfer (a) would violate the then
applicable federal and state securities laws or rules and regulations of the
Commission, state securities commissions, and any other governmental authorities
with jurisdiction over such transfer; (b) would result in the Partnership being
treated as an association taxable as a corporation for federal income tax
purposes; or (c) would affect the Partnership's existence or qualification as a
limited partnership under the Delaware RULPA.
ARTICLE XIII
ADMISSION OF PARTNERS
13.1 ADMISSION OF INITIAL LIMITED PARTNERS.
(a) On the Closing Date and, if applicable, the Date of
Delivery, the Managing General Partner admitted to the Partnership as Limited
Partners the Initial Limited Partners.
-93-
(b) At the consummation of any issuance of additional Units
pursuant to Section 5.5(a), the Persons acquiring such Units may, in the sole
and absolute discretion of the Managing General Partner, be admitted to the
Partnership as Additional Limited Partners upon furnishing to the Managing
General Partner an acceptance of, and an agreement to be bound by, all of the
terms and provisions of this Agreement, in form and substance satisfactory to
the Managing General Partner, and such other documents or instruments as may
be required in order to effect such admission, and such admission shall be
effective when the Managing General Partner determines in its sole and
absolute discretion and such admission is shown on the books and records of
the Partnership.
13.2 ADMISSION OF SUBSTITUTED LIMITED PARTNERS.
(a) Upon a transfer of a Depositary Unit of a Limited
Partner or Assignee in accordance with Article XII, the transferor shall,
subject to the provisions of Section 12.4(d), have the power to give, and by
transfer of a Depositary Receipt, shall be deemed to have given, the
transferee of such Person's Depositary Unit the right to apply to become a
Substituted Limited Partner with respect to the Depositary Unit acquired,
subject to the conditions of and in the manner permitted under this
Agreement. Subject to the foregoing, each transferee of a Depositary Unit
(including any Person, such as a broker, dealer, bank, trust company,
clearing corporation, other nominee holder, or an agent of any of the
foregoing, acquiring such Depositary Unit for the account of another Person)
shall be deemed to have applied to become a Substituted Limited Partner with
respect to the Depositary Unit transferred to such Person by executing and
delivering a Transfer Application at the time of such transfer as provided in
Section 12.4(b). A transferee of a Depositary Unit shall be an Assignee with
respect to the Depositary Unit acquired in a transfer (whether or not such
transferee is a Limited Partner or Substituted Limited Partner with respect
to other previously acquired Units or Depositary Units) unless and until the
Managing General Partner, in its sole and absolute discretion, consents to
the admission of such Assignee as a Substituted Limited Partner with respect
to the Depositary Unit acquired in the transfer and amends (or causes to be
amended) this Agreement to reflect such admission, after which time such
transferee shall be a Substituted Limited Partner with respect to such
Depositary Unit.
(b) Under the terms of the Deposit Agreement, the Depositary is
obligated to prepare as of the close of business on the last Business Day of
each month, a list or other appropriate evidence of all transfers of Depositary
Units registered by all Transfer Agents since the last Business Day of the
preceding month (hereinafter called the "transfer record") and, as promptly as
practicable after the last Business Day of each month, to submit the transfer
record to the Managing General Partner. Within thirty (30) days after receipt
of the transfer record by the Managing General Partner, the Managing General
Partner shall determine whether or not to admit as a Substituted Limited Partner
any one or more of the Assignees listed in such transfer record, and shall amend
(or cause to be amended) this Agreement in accordance with Section 16.1 and
shall prepare and record (or cause to be prepared and recorded) in such
jurisdictions (if any) as shall be necessary, an amendment to the Certificate of
Limited Partnership pursuant to Section 2.1, or to any other filing made in such
jurisdiction, to reflect the admission as
-94-
Substituted Limited Partners those Assignees that the Managing General
Partner, in its sole and absolute discretion, determines shall be admitted as
Substituted Limited Partners.
(c) Anything in this Section 13.2 to the contrary
notwithstanding, no Person shall be admitted as a Substituted Limited Partner
with respect to a Depositary Unit acquired by transfer without the written
consent of the Managing General Partner (whether or not such Record Holder is
a Limited Partner with respect to other Units or Depositary Units), which
consent may be withheld or granted in the sole and absolute discretion of the
Managing General Partner. Each Limited Partner consents to the admission of
each Substituted Limited Partner pursuant to the terms of this Agreement, and
no further consent of the Partners, other than that of the Managing General
Partner as aforesaid, shall be required to effect such admission.
(d) The admission of an Assignee as a Substituted Limited
Partner with respect to a Depositary Unit acquired by transfer shall become
effective on the date that the Managing General Partner gives its written
consent to such admission and amends this Agreement to reflect such admission.
(e) Any Limited Partner who transfers all of his Units and
Depositary Units with respect to which he had been admitted as a Limited
Partner shall cease to be a Limited Partner of the Partnership upon a
transfer of such Units and Depositary Units in accordance with Article XII
and shall have no further rights as a Partner in or with respect to the
Partnership (whether or not the Assignee of such former Limited Partner is
admitted to the Partnership as a Substituted Limited Partner).
(f) No person shall be entitled to become a Substituted Limited
Partner with respect to any Units or Depositary Units except in accordance with
this Section 13.2.
13.3 ADMISSION OF A SUCCESSOR GENERAL PARTNER.
A successor General Partner selected or designated pursuant to
Section 14.1 or 14.2 or the transferee of all or any portion of the
Partnership Interest of a General Partner pursuant to Section 12.2 shall be
admitted to the Partnership as a General Partner (in the place, in whole or
in part, of the transferor or former General Partner), effective as of the
date that an amendment of the Certificate of Limited Partnership, adding the
name of such successor General Partner and other required information, is
recorded pursuant to Section 2.1 (which date, in the event the successor
General Partner is in the place in whole of the transferor or former General
Partner, shall be contemporaneous with the withdrawal of such transferor or
former General Partner), and upon receipt by the transferor or former General
Partner of all of the following:
(a) the successor General Partner's acceptance of, and
agreement to be bound by, all of the terms and provisions of this Agreement,
in form and substance satisfactory to the transferor or former General
Partner;
-95-
(b) evidence of the authority of such successor General
Partner to become a General Partner and to be bound by all of the terms and
conditions of this Agreement;
(c) the written agreement of the successor General Partner
to continue the business of the Partnership in accordance with the terms and
provisions of this Agreement; and
(d) such other documents or instruments as may be required
in order to effect the admission of the successor General Partner as a
General Partner under this Agreement.
ARTICLE XIV
WITHDRAWAL OR REMOVAL OF GENERAL PARTNERS;
WITHDRAWAL OF LIMITED PARTNERS
14.1 WITHDRAWAL OF GENERAL PARTNERS.
(a) The Managing General Partner shall not withdraw from the
Partnership unless (i) the Managing General Partner shall have transferred all
of its Partnership Interest as a General Partner in accordance with Section
12.2; or (ii) such withdrawal shall have been approved by a Majority Vote of the
Limited Partners; provided, however, that if QSV withdraws or is removed as the
Managing General Partner, and in either case, elects to convert its Partnership
Interest for the Acquisition Price, as provided for in Section 9.1, the REIT or
an Affiliate of the REIT, as designated by the REIT shall automatically succeed
QSV and shall be admitted to the Partnership pursuant to Section 13.3.
(b) Upon the occurrence of any one of the foregoing
conditions, a General Partner may withdraw from the Partnership' effective on
at least thirty (30) days' advance written notice to the Limited Partners,
such withdrawal to take effect on the date specified in such notice. The
withdrawal of a General Partner pursuant to this Section 14.1 also shall
constitute the withdrawal of such General Partner as a general partner of the
Operating Partnership. The General Partners shall have no liability to the
Partnership or the Partners and Assignees on account of any withdrawal in
accordance with the terms of this Section 14.1. If a General Partner shall
give a notice of withdrawal pursuant to this Section 14.1, then a Majority
Vote of the Limited Partners, with the separate written concurrence of any
remaining General Partner, may elect a successor General Partner. If no
successor General Partner shall be elected in accordance with this Section
14.1 and there shall be no remaining General Partner, then the Partnership
shall be dissolved pursuant to Article XV.
14.2 REMOVAL OF GENERAL PARTNERS.
(a) A General Partner may be removed as general partner (i) for
"cause" (as hereinafter defined), upon an affirmative Majority Vote of the
Limited Partners, or (ii) upon an affirmative Super-Majority Vote of the Limited
Partners. Any such action by the Limited Partners also must provide for the
election of a successor General Partner and shall become
-96-
effective only upon admission of the successor General Partner pursuant to
Article XIII. The removal of a General Partner pursuant to this Section 14.2
also shall constitute the removal of that Person as a general partner of the
Operating Partnership, and the Person elected as successor General Partner in
connection therewith also shall automatically become the successor general
partner of the Operating Partnership. As used herein, "cause" shall mean
actual fraud, gross negligence, or willful or wanton misconduct.
(b) Written notice of the removal of a General Partner
pursuant to this Section 14.2 shall be served upon such General Partner in
the manner set forth in Section 18.2. Such notice shall set forth the day
upon which such removal is to become effective, which date shall not be less
than thirty (30) days after the service of the written notice upon the
General Partner.
(c) A General Partner removed as a General Partner pursuant
to this Section 14.2 shall not have any right to participate in the
management or affairs of the Partnership upon the effective date of such
removal.
14.3 LIMITATIONS ON WITHDRAWAL OR REMOVAL OF A GENERAL PARTNER AND ELECTION
OF A SUCCESSOR GENERAL PARTNER.
Notwithstanding the provisions of Sections 14.1 and 14.2, the rights
of the Limited Partners under Section 14.1 or 14.2 shall not be exercised
until such time as the Partnership shall have received an Opinion of
Independent Counsel that the action in question (i) may be taken without the
concurrence of all Partners, (ii) would not cause the loss of limited
liability of the Partnership under the Operating Partnership Agreement or of
the Limited Partners under this Agreement, and (iii) would NOT cause the
Partnership or the Operating Partnership to be treated as an association
taxable as a corporation for federal income tax purposes.
14.4 AMENDMENT OF AGREEMENT AND CERTIFICATE OF LIMITED PARTNERSHIP.
This Agreement and the Certificate of the Limited Partnership shall be
amended to reflect the withdrawal, removal, or succession of a General Partner.
14.5 INTEREST OF DEPARTING PARTNER AND SUCCESSOR.
(a) Except as provided in Section 9.1 with respect to QSV,
upon the withdrawal or removal of a Departing Partner, such Departing Partner
shall become a Limited Partner and its Partnership Interest as a General
Partner shall be converted into the number of Units determined by dividing
(i) the "fair market value" of such General Partner's Partnership Interest as
a General Partner herein, determined as set forth in Section 14.5(b) as of
the effective date of its departure, by (ii) the Unit Price determined as of
the effective date of its departure.
(b) For purposes of this Section 14.5, the "fair market
value" of the Departing Partner's Partnership Interest as a General Partner
shall be the amount that would be distributed to the Departing Partner
pursuant to Section 6.8 if the Partnership Assets and the assets of the
-97-
Operating Partnership were sold for cash in an orderly liquidation of the
Partnership Assets and the assets of the Operating Partnership commencing on
the effective date of the Departing Partner's departure, with such
liquidation being effected through arm's-length sales between informed and
willing purchasers under no compulsion to buy and informed and willing
sellers under no compulsion to sell, with the proceeds from such hypothetical
sales to be discounted (at a rate equal to the interest rate on U.S. Treasury
obligations with a term of one (1) year issued on the date nearest the
effective date of the Departing Partner's departure) to the effective date of
the Departing Partner's departure to reflect the time period reasonably
anticipated to be necessary to consummate such sales, as such "fair market
value" is agreed upon by the Departing Partner and the Partnership within
thirty (30) days after the effective date of the Departing Partner's
departure or, in the absence of such an agreement, as determined by the
Appraiser. The Appraiser shall use such method or methods of valuation as
the Appraiser determines most accurately reflect the value of the Partnership
Properties under the circumstances, provided that for a period of five (5)
years from the Closing Date, the Appraiser shall use the "capitalization of
income" method (applying such capitalization rate and other assumptions and
adjustments as the Appraiser determines appropriate under the circumstances)
unless the Appraiser determines that use of such method would result in an
understatement of the value of the Partnership Properties. Any appraisal
pursuant to this Section 14.5(b) shall be completed as soon as practicable
after the Appraiser is notified of the requirement for such appraisal, and in
any event within forty-five (45) days after such notice, and the report of
the Appraiser setting forth the appraised fair market value of Partnership
Assets and assets of the Operating Partnership as of such date shall be final
and binding upon the Departing Partner and the Partnership. The amount that
would be distributed to the Departing Partner pursuant to Section 6.8 if the
Partnership Assets and the assets of the Operating Partnership were so sold
shall be determined by the Accounting Firm within fifteen (15) days after the
report of the Appraiser is received by the Partnership. The closing of the
conversion of the Departing Partner's Partnership Interest into Units
pursuant to Section 14.5(a) shall occur within ten (10) days after the date
on which the Accounting Firm shall have determined the amount distributable
to the Departing Partner pursuant to Section 6.7 for purposes of this Section
14.5(b).
(c) At any time after the departure of a Departing Partner,
upon the request of such Departing Partner, the Partnership shall, as long as
the Units are still listed on the New York Stock Exchange, Inc., file with
the Commission as promptly as practicable after receiving such request, and
shall use its best efforts to cause to become effective, a registration
statement under the Securities Act registering the offering and sale of the
Units owned by the Departing Partner or any Affiliate at the time of such
Departing Partner's departure, including any Units that were received by the
Departing Partner pursuant to Section 14.5(a) and are included in such
request, provided that the Partnership shall be required to file no more than
two (2) such registration statements at the request of any one Departing
Partner. In connection with any registration pursuit to the preceding
sentence, the Partnership promptly shall prepare and file such documents as
may be necessary to register or qualify the Units subject to such
registration under the securities laws of such states as the Departing
Partner shall reasonably request and do any and all other acts and things
that may reasonably be necessary or advisable to enable such Departing
Partner to consummate a public sale of such Units in such states. The first
registration
-98-
effected under this paragraph shall be effected at the expense of the
Partnership, except for underwriting discounts, fees, and commissions, and
fees and expenses of legal counsel for the Departing Partner or its
Affiliates, and any subsequent registrations shall be at the expense of the
Departing Partner. Any registration statement filed pursuant hereto shall be
continued in effect for a period of not less than ninety (90) days following
its effective date. In the event of any registration of any Units pursuant
to this Section 14.5(c), the Partnership shall indemnify the Departing
Partner and its Affiliates and any underwriter engaged in connection with
such registration and each other person, if any, who controls any such
underwriter within the meaning of the Securities Act, in the manner and to
the extent set forth in Section 7.14(d).
(d) Any successor General Partner other than by reason of the
transfer of a Partnership Interest, shall, at the effective date of its
admission to the Partnership as a General Partner, contribute to the capital of
the Partnership cash in an amount equal to (i) the product of the aggregate
number of Units and shares of Common Stock outstanding immediately prior to the
effective date of such successor General Partner's admission (but after giving
effect to the conversion described in Section 14.5(a)), multiplied by the Share
Price or the Unit Price, as applicable, determined as of the effective date of
such successor General Partner's admission, multiplied by (ii) a fraction, the
numerator of which shall be the excess (the "Percentage Interest Excess") of 1%
over the Percentage Interest of any remaining General Partners, and the
denominator of which shall be 99%. Thereafter, such successor General Partner
shall, notwithstanding any other provision of this Agreement, be entitled to the
Percentage Interest Excess of all Partnership allocations and distributions.
(e) If, at the time of the Departing Partner's departure, the
Partnership is indebted to the Departing Partner under this Agreement or any
other instrument or agreement for funds advanced, properties sold, services
rendered, or costs and expenses incurred by the Departing Partner (including,
without limitation, any amounts advanced pursuant to the revolving line of
credit described in Section 7.13), the Partnership shall, within sixty (60) days
after the effective date of such Departing Partner's departure, pay to the
Departing Partner the full amount of such indebtedness. The successor to the
Departing Partner shall assume all obligations theretofore included by the
Departing Partner, a General Partner of the Partnership, and the Partnership and
such successor shall take all such action as shall be necessary to terminate any
guarantees of the Departing Partner, and any of its Affiliates, of any
obligations of the Partnership. If, for whatever reason, the creditors of the
Partnership shall not consent to such termination of any such guarantees, the
successor to the Departing Partner and the Partnership shall be required to
indemnify the Departing Partner for any liabilities and expenses incurred by the
Departing Partner on account of such guarantees.
14.6 WITHDRAWAL OF LIMITED PARTNERS.
No Limited Partner shall have any right to withdraw from the
Partnership; provided, however, that upon a transfer of a Limited Partner's
Units in accordance with Article XII, such Limited Partner shall cease to be
a Limited Partner with respect to the Units so transferred. No
-99-
Limited Partner shall be entitled to receive any distribution from the
Partnership for any reason or upon any event except as expressly set forth in
Articles VI and XV.
ARTICLE XV
DISSOLUTION AND LIQUIDATION
15.1 NO DISSOLUTION.
The Partnership shall not be dissolved by the admission of additional
Limited Partners or Substituted Limited Partners or by the admission of
additional General Partners or Substituted General Partners in accordance with
the terms of this Agreement.
15.2 EVENTS CAUSING DISSOLUTION.
The Partnership shall be dissolved and its affairs wound up upon the
occurrence of any of the following events:
(a) the expiration of the term of the Partnership, as provided
in Section 4.1;
(b) the withdrawal of the Managing General Partner or the
occurrence of any other event that results in the Managing General Partner
ceasing to be the Managing General Partner (other than by reason of a
transfer pursuant to Section 12.2 or a withdrawal occurring upon or after, or
a removal effective upon or after, selection of a successor pursuant to
Section 14.1 or 14.2, as the case may be);
(c) the "Bankruptcy" (as hereinafter defined) of the
Managing General Partner;
(d) a written determination by the Managing General Partner
that projected future revenues of the Partnership will be insufficient to
enable payment of projected Partnership costs and expenses or, if sufficient,
will be such that continued operation of the Partnership is not in the best
interests of the Partners;
(e) an election by a Majority Vote of Limited Partners, with
the approval of the General Partners, to terminate, liquidate, and dissolve
the Partnership; or
(f) the occurrence of any other event that, under the
Delaware RULPA, would cause the dissolution of the Partnership or that would
make it unlawful for the business of the Partnership to be continued.
For purposes of this Agreement, the term "Bankruptcy" shall mean, and
the Managing General Partner shall be deemed "Bankrupt" upon, (i) the entry
of a decree or order for relief of the Managing General Partner by a court of
competent jurisdiction in any involuntary case involving the Managing General
Partner under any bankruptcy, insolvency, or other similar law
-100-
now or hereafter in effect; (ii) the appointment of a receiver, liquidator,
assignee, custodian, trustee, sequestrator, or other similar agent for the
Managing General Partner or for any substantial part of the Managing General
Partner's assets or property; (iii) the ordering of the winding up or
liquidation of the Managing General Partner's affairs; (iv) the filing with
respect to the Managing General Partner of a petition in any such involuntary
bankruptcy case, which petition remains undismissed for a period of ninety
(90) days or which is dismissed or suspended pursuant to Section 305 of the
Federal Bankruptcy Code (or any corresponding provision of any future United
States bankruptcy law); (v) the commencement by the Managing General Partner
of a voluntary case under any bankruptcy, insolvency, or other similar law
now or hereafter in effect; (vi) the consent by the Managing General Partner
to the entry of an order for relief in an involuntary case under any such law
or to the appointment of or taking possession by a receiver, liquidator,
assignee, trustee, custodian, sequestrator, or other similar agent for the
Managing General Partner or for any substantial part of the Managing General
Partner's assets or property; (vii) the making by the Managing General
Partner of any general assignment for the benefit of creditors; or (viii) the
failure by the Managing General Partner generally to pay its debts as such
debts become due.
15.3 RIGHT TO CONTINUE BUSINESS OF PARTNERSHIP.
Upon an event described in Sections 15.2(b), 15.2(c), or 15.2(f) (but
not an event described in Section 15.2(f) that makes it unlawful for the
business of the partnership to be continued), the Partnership thereafter
shall be dissolved and liquidated unless, within ninety (90) days after the
event described in any of such Sections, an election to reconstitute and
continue the business of the Partnership shall be made in writing by (i) the
remaining General Partner, if any, in its sole and absolute discretion; or
(ii) in the event there is no remaining General Partner, or in the event that
any remaining General Partner does not so elect to reconstitute and continue
the business of the Partnership, then, subject to receipt by the Partnership
of an Opinion of Independent Counsel to the effect described in Section 14.3,
by the unanimous written agreement of all remaining Partners; provided that
by a Super-Majority Vote of the Limited Partners the Limited Partners may
elect to reconstitute and continue the business of the Partnership upon
receipt of an Opinion from Independent Counsel that unanimous written
agreement of the Limited Partners is not required for the Partnership or
Operating Partnership to be treated as a partnership for federal income tax
purposes. If such an election to continue the Partnership is made, then:
(i) if such election was made by all remaining Partners, a
successor Managing General Partner shall be selected unanimously by
all remaining Partners;
(ii) if such election was made by the remaining General Partner,
such Person shall be the Managing General Partner (and if not
previously the Managing General Partner, shall serve as Managing
General Partner until a successor to the Managing General Partner is
admitted to the Partnership);
-101-
(iii) the Partnership shall continue until another event
causing dissolution in accordance with this Article XV shall occur;
(iv) the Partnership Interest of the former General Partner
shall be subject to disposition, at the option of the former General
Partner, in the manner provided in Section 14.5(a) (which option shall
be exercised contemporaneously with the selection of the successor
General Partner); and
(v) all necessary steps shall be taken to amend this Agreement
and the Certificate of Limited Partnership to reflect the
reconstitution and continuation of the business of the Partnership.
15.4 DISSOLUTION.
Except as otherwise provided in Section 15.3, upon the dissolution of
the Partnership, the Certificate of Limited Partnership shall be canceled in
accordance with the provisions of the Delaware RULPA, and the Managing
General Partner (or, if the dissolution is caused by the withdrawal,
bankruptcy, dissolution, or removal of the Managing General Partner, then the
Person designated as Liquidating Trustee in Section 15.5 hereof) promptly
shall notify the Partners and Assignees of such dissolution.
15.5 LIQUIDATION.
Upon dissolution of the Partnership, unless an election to continue the
business of the Partnership is made pursuant to Section 15.3, the Managing
General Partner, or, in the event the dissolution is caused by an event
described in Section 15.2(b) or 15.2(c), a Person or Persons selected by a
Majority Vote of the Limited Partners, shall be the Liquidating Trustee. The
Liquidating Trustee shall proceed without any unnecessary delay to sell or
otherwise liquidate the Partnership Assets and shall apply and distribute the
proceeds of such sale or liquidation in the following order of priority, unless
otherwise required by mandatory provisions of applicable law:
(a) to pay (or to make provision for the payment of) all
creditors of the Partnership, including current and former Partners, in the
order of priority provided by law other than obligations to make
distributions to current and former Partners;
(b) to pay, on a pro rata basis, all current and former
Partners with respect to obligations to make distributions thereto; and
(c) after the payment (or the provision for payment) of all
debts, liabilities, and obligations of the Partnership, including, without
limitation, the payment of expenses of liquidation of the Partnership, and
the establishment of a reasonable reserve (including an amount estimated by
the Liquidating Trustee to be sufficient to pay an amount reasonably
anticipated to
-102-
be required to be paid pursuant Section 7.10 hereof), to the Partners and
Assignees in accordance with Section 6.7.
The Liquidating Trustee, if other than the Managing General Partner,
shall be entitled to receive such compensation for its services as Liquidating
Trustee as may be approved by a Majority Vote of the Limited Partners. The
Liquidating Trustee shall agree not to resign at any time without sixty (60)
days prior written notice and, if other than the Managing General Partner, may
be removed at any time, with or without cause, by written notice of removal
approved by a Majority Vote of the Limited Partners. Upon dissolution, removal,
or resignation of the Liquidating Trustee, a successor and substitute
Liquidating Trustee (who shall have and succeed to all rights, powers and duties
of the original Liquidating Trustee) shall be selected within ninety (90) days
thereafter by a Majority Vote of the Limited Partners. The right to appoint a
successor or substitute Liquidating Trustee in the manner provided herein shall
be recurring and continuing for so long as the functions and services of the
Liquidating Trustee are authorized to continue under the provisions hereof, and
every reference herein to the Liquidating Trustee will be deemed to refer also
to any such successor or substitute Liquidating Trustee appointed in the manner
herein provided. Except as expressly provided in this Article XV, the
Liquidating Trustee appointed in the manner provided herein shall have and may
exercise, without further authorization or consent of any of the parties hereto,
all of the powers conferred upon the Managing General Partner under the terms of
this Agreement (but subject to all of the applicable limitations, contractual
and otherwise, upon the exercise of such powers) to the extent necessary or
desirable in the good faith judgment of the Liquidating Trustee to carry out the
duties and functions of the Liquidating Trustee hereunder (including the
establishment of reserves for liabilities that are contingent or uncertain in
amount) for and during such period of time as shall be reasonably required in
the good faith judgment of the Liquidating Trustee to complete the winding up
and liquidation of the Partnership as provided for herein. In the event that no
Person is selected to be the Liquidating Trustee as herein provided within one
hundred twenty (120) days following the event of dissolution, or in the event
the Limited Partners fail to select a successor or substitute Liquidating
Trustee within the time periods set forth above, any Partner may make
application to a Court of Chancery of the State of Delaware to wind up the
affairs of the Partnership and, if deemed appropriate, to appoint a Liquidating
Trustee.
15.6 REASONABLE TIME FOR WINDING UP.
A reasonable time shall be allowed for the orderly winding up of the
business and affairs of the Partnership and the liquidation of its assets
pursuant to Section 15.5 in order to minimize any losses otherwise attendant
upon such a winding up.
15.7 TERMINATION OF PARTNERSHIP.
Except as otherwise provided in this Agreement, the Partnership shall
terminate when all of the assets of the Partnership shall have been converted
into cash, the net proceeds therefrom, as well as any other liquid assets of the
Partnership, after payment of or due provision for all debts, liabilities and
obligations of the Partnership, shall have been distributed to the Partners as
-103-
provided for in Sections 6.7 and 15.5, and the Certificate of Limited
Partnership shall have been canceled in the manner required by the Delaware
RULPA.
ARTICLE XVI
AMENDMENTS; MEETINGS; RECORD DATE
16.1 AMENDMENT TO BE ADOPTED SOLELY BY THE MANAGING GENERAL PARTNER.
The Managing General Partner (pursuant to the Managing General Partner's
powers of attorney from the Limited Partners and Assignees described in Article
XVII), without the consent or approval at the time of any Limited Partner or
Assignee (each Limited Partner and Assignee, by acquiring a Unit or Depositary
Unit and requesting admission to the Partnership, being deemed to consent to any
such amendment), may amend any provision of this Agreement, and execute, swear
to, acknowledge, deliver, file, and record all documents required or desirable
in connection therewith, to reflect:
(a) a change in the name of the Partnership or the location of
the principal place of business of the Partnership;
(b) the admission, substitution, termination, or withdrawal of
Partners in accordance with this Agreement;
(c) a change that is necessary to qualify the Partnership as a
limited partnership or a partnership in which the Limited Partners have limited
liability under the laws of any state or that is necessary or advisable in the
opinion of the Managing General Partner to ensure that the Partnership will not
be treated as an association taxable as a corporation for federal income tax
purposes;
(d) a change that is (i) of an inconsequential nature and
does not adversely affect the Limited Partners or any Assignees in any
material respect; (ii) necessary or desirable to cure any ambiguity, to
correct or supplement any provision herein that would be inconsistent with
any other provision herein, or to make any other provision with respect to
matters or questions arising under this Agreement that will not be
inconsistent with the provision of this Agreement; (iii) necessary or
desirable to satisfy any requirements, conditions, or guidelines contained in
any opinion, directive, order, ruling, or regulation of any federal or state
agency or contained in any federal or state statute; (iv) necessary or
desirable to facilitate the trading of the Depositary Units or comply with
any rule, regulation, guideline, or requirement of any securities exchange on
which the Depositary Units are or will be listed for trading, compliance with
any of which the Managing General Partner deems to be in the interests of the
Partnership, the Limited Partners, and any Assignees; or (v) required or
contemplated by this Agreement;
(e) a change in any provision of this Agreement which requires
any action to be taken by or on behalf of the Managing General Partner or the
Partnership pursuant to the
-104-
requirements of applicable Delaware law if the provisions of applicable
Delaware law are amended, modified, or revoked so that the taking of such
action is no longer required; or
(f) any other amendments similar to the foregoing.
The authority set forth in Section 16.1(e) shall specifically include the
authority to make such amendments to this Agreement and to the Certificate of
Limited Partnership as the Managing General Partner deems is necessary or
desirable in the event the Delaware RULPA is amended to eliminate or change any
provision now in effect.
16.2 AMENDMENT PROCEDURES.
Except as specifically provided in Sections 16.1 and 16.3, all
amendments to this Agreement shall be made solely in accordance with the
following procedures:
(a) Any amendments of this Agreement must be proposed either:
(i) by the Managing General Partner, by submitting the
text of the proposed amendment to all Limited Partners in
writing; or
(ii) by Limited Partners owning (as Limited Partners and
not as Assignees) at least twenty-five percent (25%) of the total
Units and Depositary Units owned by Limited Partners (as Limited
Partners and not as Assignees), by submitting their proposed
amendment in writing to the Managing General Partner. The
Managing General Partners shall, within sixty (60) days after
the receipt of any such proposed amendment, or as soon thereafter
as is reasonably practicable, submit the text of the proposed
amendment to all Limited Partners. The Managing General Partner
may include in such submission its recommendation as to the
proposed amendment.
(b) If an amendment is proposed pursuant to this Section
16.2, the Managing General Partner shall seek the written consent of the
Limited Partners to such amendment or shall call a meeting of the Limited
Partners to consider and vote on the proposed amendment, unless, in the
Opinion of Independent Counsel, such proposed amendment would be illegal
under Delaware law if adopted, in which case the Managing General Partner
shall not be required to take any further action with respect thereto. A
proposed amendment shall be effective only if approved by the General
Partners in writing and by a Majority Vote of the Limited Partners, unless a
greater percentage vote of the Limited Partners is required by law or any
other provision of this Agreement. The Managing General Partner shall keep
all Partners advised of the status of any proposed amendment and shall notify
all Partners upon final adoption or rejection of any proposed amendment.
-105-
16.3 AMENDMENT RESTRICTIONS.
Notwithstanding the provisions of Sections 16.1 and 16.2, (a) no amendment
to this Agreement shall be permitted without a unanimous vote of the Limited
Partners if such amendment, in the Opinion of Independent Counsel, (i) would
cause the loss of limited liability of the Partnership under the Operating
Partnership Agreement or of the Limited Partners under this Agreement, or (ii)
would cause the Partnership or the Operating Partnership to be treated as an
association taxable as a corporation for federal income tax purposes; and (b) no
amendment to any provision of Article VIII shall be permitted without the
written consent of BKC, whether or not BKC is a General Partner at the time of
such amendment.
16.4 MEETINGS.
Meetings of the Limited Partners may be called by the Managing General
Partner or by Limited Partners owning (as Limited Partners and not as Assignees)
at least twenty percent (20%) of the Units and Depositary Units owned by Limited
Partners as Limited Partners (and not as Assignees). Any Partner calling a
meeting shall specify the number of Units and Depositary Units as to which the
Partner is exercising the right to call a meeting and only those specified Units
and Depositary Units shall be counted for the purpose of determining whether the
required twenty percent (20%) standard of the preceding sentence has been met.
Limited Partners desiring to call a meeting shall deliver to the Managing
General Partner one or more calls in writing stating that the Limited Partners
signing such writing wish to call a meeting and indicating the specific purposes
for which the meeting is to be called. Action at the meeting shall be limited
to those specific matters specified in the call of the meeting. Within sixty
(60) days after receipt of such a call from Limited Partners, or within such
greater time as may be reasonably necessary for the Partnership to comply with
any statutes, rules, regulations, listing agreements, or similar requirements
governing the holding of a meeting or the solicitation of proxies for use at
such a meeting, the Managing General Partner shall send a notice of the meeting
to the Limited Partners either directly or indirectly through the Depositary. A
meeting shall be held at a reasonable time and convenient place determined by
the Managing General Partner or the Liquidating Trustee, as the case may be, on
a date not more than sixty (60) days after the mailing of notice of the meeting.
Except as otherwise expressly specified by this Agreement (such as in the case
of matters requiring a Majority Vote of the Limited Partners or a Super-Majority
Vote of the Limited Partners), matters submitted to the Limited Partners for
determination at a meeting at which a quorum is present shall be determined by
the affirmative vote of a majority of the Units and Depositary Units present and
voting at such meeting. Limited Partners may vote either in person or by proxy
at any meeting. No action shall be taken at any meeting unless the Partnership
has received an Opinion of Independent Counsel that such action (i) would not
cause the loss of limited liability of the Partnership under the Operating
Partnership Agreement or of the Limited Partners under this Agreement and (ii)
would not cause the Partnership or the Operating Partnership to be treated as an
association taxable as a corporation for federal income tax purposes. Each
Limited Partner shall have one vote for each Unit or Depositary Unit as to which
he has been admitted to the Partnership as a Limited Partner. A Limited Partner
may cast its vote at any meeting in person or by proxy. No action shall be
taken by the Limited Partners
-106-
without a meeting duly called and held or without written consent in
accordance with Section 16.12.
16.5 NOTICE OF A MEETING.
Notice of a meeting called pursuant to Section 16.4 shall be given either
personally in writing or by mail or other means of written communication
addressed to each Limited Partner at the address of the Limited Partner
appearing on the books of the Depositary or the Partnership. An affidavit or
certificate of mailing of any notice or report in accordance with the provisions
of this Article XVI executed by the Managing General Partner, Depositary,
Transfer Agent, registrar of Depositary Units, or mailing organization shall
constitute conclusive (but not exclusive) evidence of the giving of notice. If
any notice addressed to a Limited Partner at the address of such Limited Partner
appearing on the books of the Partnership or Depositary is returned to the
Partnership by the United States Postal Service marked to indicate that the
United States Postal Service is unable to deliver such notice, the notice and
any subsequent notices or reports shall be deemed to have been duly given
without further mailing if they are available for the Limited Partner at the
principal office of the Partnership for a period of one year from the date of
the giving of the notice to all other Limited Partners.
16.6 RECORD DATE.
For purposes of determining the Limited Partners entitled to notice of or
to vote at a meeting of the Limited Partners or to give consents without a
meeting as provided in Section 16.12, the Managing General Partner or the
Liquidating Trustee, if any, may set a Record Date, which Record Date, shall not
be less than ten (10) days nor more than sixty (60) days prior to the date of
such meeting (unless such requirement conflicts with any rule, regulation,
guideline, or requirement of any securities exchange on which the Depositary
Units are listed for trading, in which case the rule, regulation, guidelines, or
requirement of such securities exchange shall govern).
16.7 ADJOURNMENT.
When a meeting is adjourned to another time or place, notice need not be
given of the adjourned meeting and a new Record Date need not be fixed if the
time and place of such adjourned meeting are announced at the meeting at which
such adjournment is taken, unless such adjournment shall be for more than
forty-five (45) days. At the adjourned meeting, the Partnership may transact
any business that would have been permitted to be transacted at the original
meeting. If the adjournment is for more than forty-five (45) days, or if a new
Record Date is fixed for the adjourned meeting, a notice of the adjourned
meeting shall be given in accordance with this Article XVI.
-107-
16.8 WAIVER OF NOTICE; CONSENT TO MEETING; APPROVAL OF MINUTES.
The transactions of any meeting of Limited Partners, however called and
noticed, and wherever held, are as valid as though they had been approved at a
meeting duly held after regular call and notice, if a quorum is present either
in person or by proxy, and if, either before or after the meeting, each of the
Limited Partners entitled to vote, not present in person or by proxy, signs a
written waiver of notice, or a consent to the holding of the meeting, or an
approval of the minutes thereof. All such waivers, consents, and approvals
shall be filed with the Partnership records or made a part of the minutes of
such meeting. Attendance of a Limited Partner at a meeting shall constitute a
waiver of notice of the meeting; provided, however, that no such waiver shall
occur when the Limited Partner objects, at the beginning of the meeting, to the
transaction of any business at such meeting because the meeting is not lawfully
called or convened; and provided further, that attendance at a meeting is not a
waiver of any right to object to the consideration of any matters required to be
included in the notice of the meeting, but not so included, if the objection is
expressly made at the meeting.
16.9 QUORUM.
Limited Partners of record who are Limited Partners (rather than
Assignees) with respect to more than fifty percent (50%) of the total number
of all outstanding Units and Depositary Units held by all Limited Partners (as
Limited Partners rather than Assignees) of record, whether represented in
person or by proxy, shall constitute a quorum at a meeting of Limited
Partners. The Limited Partners present at a duly called or held meeting at
which a quorum is present may continue to transact business until adjournment
of such meeting, notwithstanding the withdrawal of enough Limited Partners to
leave less than a quorum, if any action taken (other than adjournment) is
approved by the requisite number of Limited Partners specified in this
Agreement. In the absence of a quorum, any meeting of Limited Partners may be
adjourned from time to time by the affirmative vote of a majority of the Units
and Depositary Units represented either in person or by proxy at such meeting,
but no other business may be transacted, except as provided in Section 16.4.
16.10 CONDUCT OF MEETING.
The Managing General Partner or the Liquidating Trustee, as the case may
be, shall be solely responsible for convening, conducting, and adjourning any
meeting of Limited Partners, including, without limitation, the determination of
Persons entitled to vote at such meeting, the existence of a quorum for such
meeting, the satisfaction of the requirements of Section 16.4 with respect to
such meeting, the conduct of voting at such meeting, the validity and effect of
any proxies represented at such meeting, and the determination of any
controversies, votes, or challenges arising in connection with or during such
meeting or voting. The Managing General Partner, or the Liquidating Trustee, as
the case may be, shall designate a Person to serve as chairman of any meeting
and further shall designate a Person to take the minutes of any meeting, which
Person, in either case, may be, without limitation, a Partner or any employee or
agent of the Managing General Partner. The Managing General Partner or the
Liquidating Trustee, as the
-108-
case may be, may make all such other regulations, consistent with applicable
law and this Agreement, as it may deem advisable concerning the conduct of any
meeting of the Limited Partners, including regulations in regard to the
appointment of proxies, the appointment and duties of inspectors of votes, and
the submission and examination of proxies and other evidence of the right to
vote.
16.11 VOTING AND OTHER RIGHTS.
(a) Only those Limited Partners who are Record Holders of Depositary
Receipts or Units on the Record Date set pursuant to Section 16.6 shall be
entitled to notice of, or to vote at, a meeting of Limited Partners.
(b) With respect to Depositary Units that are held for a Person's
account by another Person (such as a broker, dealer, bank, trust company, or
clearing corporation, or an agent of any of the foregoing), in whose name the
Depositary Receipts evidencing such Depositary Units are registered, such
broker, dealer, or other agent shall, in exercising any voting rights in respect
of such Depositary Units on any matter, vote such Depositary Units in favor of,
and at the direction of, the Person on whose behalf such broker, dealer, or
other agent is holding such Depositary Units, and the Partnership shall be
entitled to assume it is so acting without further inquiry.
16.12 ACTION WITHOUT A MEETING.
Any action that may be taken at a meeting of the Limited Partners may be
taken without a meeting if a consent in writing setting forth the action so
taken is signed by Limited Partners owning not less than the minimum number of
Units or Depositary Units that would be necessary to authorize or take such
action at a meeting at which all of the Limited Partners were present and voted.
Prompt notice of the taking of action without a meeting shall be given to the
Limited Partners who have not consented thereto in writing. The Managing
General Partner may specify that any written ballot submitted to Limited
Partners for the purpose of taking any action without a meeting shall be
returned to the Partnership within the time, not less than twenty (20) days,
specified by the Managing General Partner. If a ballot returned to the
Partnership does not vote all of the Units held by the Limited Partner, as a
Limited Partner (rather than Assignee), the Partnership shall be deemed to have
failed to receive a ballot for the Units that were not voted. If consent to the
taking of any action by the Limited Partners is solicited by any person other
than by or on behalf of the Managing General Partner, the written consents shall
have no force and effect unless and until (i) they are deposited with the
Partnership in care of the Managing General Partner, and (ii) consents
sufficient to take the action proposed are dated as of a date not more than
ninety (90) days prior to the date sufficient consents are deposited with the
Partnership.
-109-
ARTICLE XVII
POWER OF ATTORNEY
Each Limited Partner (including any additional or Substituted Limited
Partner) and each Assignee who accepts Depositary Units is deemed to irrevocably
constitute, appoint, and empower the Managing General Partner (and any successor
by merger, transfer, election, or otherwise), and each of the Managing General
Partner's authorized officers and attorneys-in-fact, with full power of
substitution, as the true and lawful agent and attorney-in-fact of such Limited
Partner or Assignee, with full power and authority in such Limited Partner's or
Assignee's name, place, and stead and for such Limited Partner's or Assignee's
use of benefit:
(a) to make, execute, verify, consent to, swear to, acknowledge,
make oath as to, publish, deliver, file, and/or record in the
appropriate public offices (i) all certificates and other instruments,
including, at the option of the Managing General Partner, this Agreement
and the Certificate of Limited Partnership and all amendments and
restatements thereof, that the Managing General Partner deems
appropriate or necessary to qualify, or continue the qualification of,
the Partnership as a limited partnership (or a partnership in which the
Limited Partners have limited liability) in the State of Delaware and
all jurisdictions in which the Partnership may or may intend to conduct
business or own property; (ii) all other certificates, instruments, and
documents as may be requested by, or may be appropriate under the laws
of any state or other jurisdiction in which the Partnership may or may
intend to conduct business or own property; (iii) all instruments that
the Managing General Partner deems appropriate or necessary to reflect
any amendment, change, or modification of this Agreement in accordance
with the terms hereof, (iv) all conveyances and other instruments or
documents that the Managing General Partner deems appropriate or
necessary to effectuate or reflect the dissolution, termination, and
liquidation of the Partnership pursuant to the terms of this Agreement;
(v) any and all financing statements, continuation statements,
mortgages, or other documents necessary to grant to or perfect for
secured creditors of the Partnership, including the General Partners and
Affiliates, a security interest, mortgage, pledge or lien on all or any
of the Partnership Assets; (vi) all instrument or papers required to
continue the business of the Partnership pursuant to Article XV; (vii)
all instruments (including this Agreement and the Certificate of Limited
Partnership and amendments and restatements thereof) relating to the
admission of any Partner pursuant to Article XII; and (viii) all other
instruments as the attorneys-in-fact or any one of them may deem
necessary or advisable to carry out fully the provisions of this
Agreement in accordance with its terms; and
(b) to enter into the Deposit Agreement and deposit all Units of
such Limited Partner in the Deposit Account established by the
Depositary pursuant to the Deposit Agreement. The execution and
delivery by any of said attorneys-in-fact of any such agreements,
amendments, consents, certificates, or other instruments shall be
conclusive evidence that such execution and delivery was authorized
hereby.
-110-
Nothing herein contained shall be construed as authorizing any Person
acting as attorney-in-fact pursuant to this Article XVII to take action as a
attorney-in-fact for any Limited Partner or Assignee to increase in any Way the
liability of such Limited Partner or Assignee beyond the liability expressly set
forth in this Agreement, or to amend this Agreement except in accordance with
Article XVI.
The appointment by each Limited Partner and Assignee of the Persons
designated in this Article XVIII as attorneys-in-fact shall be deemed to be a
power of attorney coupled with an interest in recognition of the fact that each
of the Limited Partners and Assignees under this Agreement will be relying upon
the power of such Persons to act pursuant to this power of attorney for the
orderly administration of the affairs of the Partnership. The foregoing power
of attorney is hereby declared to be irrevocable, and it shall survive, and
shall not be affected by, the subsequent death, incompetency, dissolution,
disability, incapacity, bankruptcy, or termination of any Limited Partner or
Assignee and it shall extend to such Limited Partner's or Assignee's heirs'
successors, and assigns. Each Limited Partner and Assignee hereby agrees to be
bound by any representations made by any Person acting as attorney-in-fact
pursuant to this power of attorney in accordance with this Agreement. Each
Limited Partner and Assignee hereby waives any and all defenses that may be
available to contest, negate, or disaffirm the action of any Person taken as
attorney-in-fact under this power of attorney in accordance with this Agreement.
Each Limited Partner and Assignee shall execute and deliver to the Managing
General Partner, within fifteen (15) days after receipt of the Managing General
Partner's request therefor, all such further designations, powers of attorney,
and other instruments as the Managing General Partner deems necessary to
effectuate this Agreement and the purposes of the Partnership.
ARTICLE XVIII
MISCELLANEOUS PROVISIONS
18.1 ADDITIONAL ACTIONS AND DOCUMENTS.
Each of the Partners hereby agrees to take or cause to be taken such
further actions, to execute, acknowledge, deliver, and file or cause to be
executed, acknowledged, delivered, and filed such further documents and
instruments, and to use best efforts to obtain such consents, as may be
necessary or as may be reasonably requested in order to fully effectuate the
purposes, terms and conditions of this Agreement, whether before, at, or after
the closing of the transactions contemplated by this Agreement.
18.2 NOTICES.
All notices, demands, requests, or other communications which may be or
are required to be given, served, or sent by a Partner or the Partnership
pursuant to this Agreement shall be in writing and shall be personally
delivered, mailed by first-class mail, postage prepaid, or transmitted by
facsimile, telegram or telex, addressed as follows:
-111-
(a) If to the Managing General Partner:
QSV Properties Inc.
Attn: Chairman or President
0000 Xxxxxxx Xxxx Xxxx
Xxxxx 000
Xxxxxx, Xxxxx 00000
Facsimile No.: (000) 000-0000
(b) If to a Limited Partner or Assignee:
The Last Known Business Residence or Mailing Address of Such
Limited Partner or Assignee Reflected in the Records of the
Partnership or the Depositary.
(c) If to the Partnership:
U.S. Restaurant Properties Master L.P.
Attn: Managing General Partner
0000 Xxxxxxx Xxxx Xxxx
Xxxxx 000
Xxxxxx, Xxxxx 00000
Facsimile No.: (000) 000-0000
(d) If to the REIT:
U.S. Restaurant Properties, Inc.
Attn: Chief Executive Officer
0000 Xxxxxxx Xxxx Xxxx
Xxxxx 000
Xxxxxx, Xxxxx 00000
Facsimile No.: (000) 000-0000
Each Partner and Assignee and the Partnership may designate by notice in writing
a new address to which any notice, demand, request or communication may
thereafter be so given, served or sent. Each notice, demand, request, or
communication which shall be delivered, mailed or transmitted in the manner
described above shall be deemed to have been duly given when delivered in
person, sent by first class mail, or transmitted by facsimile, telegram, or
telex.
18.3 SEVERABILITY.
The invalidity of any one or more provisions hereof or of any other
agreement or instrument given pursuant to or in connection with this Agreement
shall not affect the remaining portions of this Agreement or any such other
agreement or instrument or any part thereof, all of
-112-
which are inserted conditionally on their being held valid in law; and in the
event that one or more of the provisions contained herein or therein should be
invalid, or should operate to render this Agreement or any such other
agreement or instrument invalid, this Agreement and such other agreements and
instruments shall be construed as if such invalid provisions had not been
inserted.
18.4 SURVIVAL.
It is the express intention and agreement of the Partners that all
covenants, agreements, statements, representations, warranties and indemnities
made in this Agreement shall survive the execution and delivery of this
Agreement.
18.5 WAIVERS.
Neither the waiver by a Partner of a breach of or a default under any of
the provisions of this Agreement, nor the failure of a Partner, on one or more
occasions, to enforce any of the provisions of this Agreement or to exercise any
right, remedy, or privilege hereunder shall thereafter be construed as a waiver
of any subsequent breach or default of a similar nature, or as a waiver of any
such provisions, rights, remedies, or privileges hereunder.
18.6 EXERCISE OF RIGHTS.
No failure or delay on the part of a Partner or the Partnership in
exercising any right, power, or privilege hereunder and no course of dealing
between the Partners or between a Partner and the Partnership shall operate as a
waiver thereof, nor shall any single or partial exercise of any right, power, or
privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right, power, or privilege. The rights and remedies
herein expressly provided are cumulative and not exclusive of any other rights
or remedies which a Partner or the Partnership would otherwise have at law or in
equity or otherwise.
18.7 BINDING EFFECT.
Subject to any provisions hereof restricting assignment, this Agreement
shall be binding upon and shall inure to the benefit of the Partners (and BKC
and its successors and assigns for purposes of Article VIII and Section 16.3(b))
and their respective heirs, devisees, executors, administrators, legal
representatives, successors, and assigns.
18.8 LIMITATION ON BENEFITS OF THIS AGREEMENT.
It is the explicit intention of the Partners that, with the exception of
the rights of BKC, its successors and assigns, in connection with Article VIII
and Section 16.3(b), no person or entity other than the Partners and the
Partnership is or shall be entitled to bring any action to enforce any provision
of this Agreement against any Partner or the Partnership, and that except as set
forth in Section 8.1(b), the covenants, undertakings, and agreements set forth
in this
-113-
Agreement shall be solely for the benefit of, and shall be enforceable only
by, the Partners (or their respective successors and assigns permitted
hereunder) and the Partnership.
18.9 FORCE MAJEURE.
If the Managing General Partner is rendered unable, wholly or in part, by
"force majeure" (as herein defined) to carry out any of its obligations under
this Agreement, other than the obligation hereunder to make money payments, the
obligations of the Managing General Partner, insofar as they are affected by
such force majeure, shall be suspended during, but no longer than, the
continuance of such force majeure. The term "force majeure" as used herein
shall mean an act of God, strike, lockout or other industrial disturbance, act
of public enemy, war, blockade, public riot, lightning, fire, storm, flood,
explosion, governmental restraint, unavailability of equipment, and any other
cause, whether of the kind specifically enumerated above or otherwise, which is
not reasonably within the control of the Managing General Partner.
18.10 CONSENT OF LIMITED PARTNERS AND ASSIGNEES.
By acceptance of a Unit or Depositary Unit, each Limited Partner and each
Assignee expressly consents and agrees that whenever in this Agreement it is
specified that an action may be taken upon the affirmative vote of less than all
of the Limited Partners, such action may be so taken upon the concurrence of
less than all of the Limited Partners and each such Limited Partner and Assignee
shall be bound by the results of such action.
18.11 ENTIRE AGREEMENT.
This Agreement contains the entire agreement among the Partners with
respect to the transactions contemplated herein, and supersedes all prior oral
or written agreements, commitments, or understandings with respect to the
matters provided for herein.
18.12 PRONOUNS.
All pronouns and any variations thereof shall be deemed to refer to the
masculine, feminine, neuter, singular, or plural, as the identity of the person
or entity may require.
18.13 HEADINGS.
Article, Section and subsection headings contained in this Agreement are
inserted for convenience of reference only, shall not be deemed to be a part of
this Agreement for any purpose, and shall not in any way define or affect the
meaning, construction or scope of any of the provisions hereof.
-114-
18.14 GOVERNING LAW.
This Agreement, the rights and obligations of the parties hereto, and any
claims or disputes relating thereto, shall be governed by and construed in
accordance with the laws of Delaware (but not including the choice of law rules
thereof).
18.15 EXECUTION IN COUNTERPARTS.
To facilitate execution, this Agreement may be executed in as many
counterparts as may be required; and it shall not be necessary that the
signatures of, or on behalf of, each party, or that the signatures of all
persons required to bind any party, appear on each counterpart; but it shall be
sufficient that the signature of, or on behalf of, each party, or that the
signatures of the persons required to bind any party, appear on one or more of
the counterparts. All counterparts shall collectively constitute a single
agreement. It shall not be necessary in making proof of this Agreement to
produce or account for more than a number of counterparts containing the
respective signatures of, or on behalf of, all of the parties hereto.
-115-
ARTICLE XIX
EXECUTION
IN WITNESS WHEREOF, the undersigned have duly executed this Agreement or
have caused this Agreement to be duly executed on their behalf, as of the day
and year first hereinabove set forth.
MANAGING GENERAL PARTNER:
ATTEST: QSV PROPERTIES INC.
By: By:
------------------------------ -------------------------------
Name: Xxxx X. Xxxxxxxx Name: Xxxxxx X. Xxxxxxx
Title: Secretary Title: President and Chief
Executive Officer
LIMITED PARTNERS:
ATTEST: QSV PROPERTIES INC., as Managing
General Partner, Attorney-in-Fact for
the Limited Partners and Assignees
By: By:
------------------------------ -------------------------------
Name: Xxxx X. Xxxxxxxx Name: Xxxxxx X. Xxxxxxx
Title: Secretary Title: President and Chief
Executive Officer
-116-
EXHIBIT A
TO AGREEMENT OF
LIMITED PARTNERSHIP
OF U.S. RESTAURANT
PROPERTIES MASTER L.P.
CERTIFICATE
FOR
LIMITED PARTNERSHIP UNITS
OF
U.S. RESTAURANT PROPERTIES MASTER L.P.
NO. _______ ______ UNITS
QSV Properties Inc., as the Managing General Partner of U.S. Restaurant
Properties Master L.P. (the "Partnership"), a Delaware limited partnership,
hereby certifies that ______________________ is the registered owner of ______
units of limited partnership interest in the Partnership ("Units"). The rights,
preferences, and limitations of the Units are set forth in the Second Amended
and Restated Agreement of Limited Partnership under which the Partnership is
existing, and in the Certificate of Limited Partnership filed for record in the
Office of the Secretary of State of the State of Delaware, copies of which are
on file at the Managing General Partner's principal office at 0000 Xxxxxxx Xxxx
Xxxx, Xxxxx 000, Xxxxxx, Xxxxx 00000. THIS CERTIFICATE IS NONNEGOTIABLE AND IS
NOT TRANSFERABLE EXCEPT UPON DEATH OR BY OPERATION OF LAW.
QSV PROPERTIES INC.
Managing General Partner of
U.S. Restaurant Properties Master L.P.
Dated: By:
--------------------- ---------------------------------
Title:
------------------------------
BY ACCEPTANCE OF THIS CERTIFICATE FOR LIMITED PARTNERSHIP UNITS, AND AS A
CONDITION TO BEING ENTITLED TO ANY RIGHTS IN OR BENEFITS WITH RESPECT TO THE
UNITS EVIDENCED HEREBY, A HOLDER HEREOF (INCLUDING ANY TRANSFEREE HEREOF) IS
DEEMED TO HAVE AGREED, WHETHER OR NOT SUCH
-117-
HOLDER IS ADMITTED TO THE PARTNERSHIP AS A SUBSTITUTED LIMITED PARTNER WITH
RESPECT TO THE UNITS EVIDENCED HEREBY, TO COMPLY WITH AND BE BOUND BY ALL
TERMS AND CONDITIONS OF THE AGREEMENT OF LIMITED PARTNERSHIP UNDER WHICH THE
PARTNERSHIP WAS FORMED AND IS EXISTING (INCLUDING, WITHOUT LIMITATION,
PROVISIONS THEREOF RELATING TO CONFLICTS OF INTEREST, LIMITATIONS ON
LIABILITY, AND INDEMNIFICATION OF THE GENERAL PARTNERS THEREOF), A COPY OF
WHICH HAS BEEN AVAILABLE FOR INSPECTION AND MAY BE OBTAINED UPON REQUEST (FREE
OF CHARGE) FROM THE PARTNERSHIP.
-118-
