1
Exhibit 99.3
AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
AIP-SWAG OPERATING PARTNERSHIP, L.P.
DATED AS OF OCTOBER 3, 1997
2
TABLE OF CONTENTS
ARTICLE I.
DEFINED TERMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
ARTICLE II.
ORGANIZATIONAL MATTERS . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 2.1 ORGANIZATION; CONTINUATION. . . . . . . . . . . . . . . 12
SECTION 2.2 NAME . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 2.3 REGISTERED OFFICE AND AGENT; PRINCIPAL OFFICE . . . . . 13
SECTION 2.4 POWER OF ATTORNEY . . . . . . . . . . . . . . . . . . . 13
SECTION 2.5 TERM. . . . . . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE III.
PURPOSE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 3.1 PURPOSE AND BUSINESS. . . . . . . . . . . . . . . . . . 14
SECTION 3.2 POWERS . . . . . . . . . . . . . . . . . . . . . . . . 15
ARTICLE IV.
CAPITAL CONTRIBUTIONS AND ISSUANCES
OF PARTNERSHIP INTERESTS . . . . . . . . . . . . . . . . . . . . . . .15
SECTION 4.1 CAPITAL CONTRIBUTIONS OF THE PARTNERS . . . . . . . . .15
SECTION 4.2 LOANS . . . . . . . . . . . . . . . . . . . . . . . . .16
SECTION 4.3 NO PREEMPTIVE RIGHTS . . . . . . . . . . . . . . . . .16
SECTION 4.4 OTHER CONTRIBUTION PROVISIONS . . . . . . . . . . . . .16
SECTION 4.5 NO INTEREST ON CAPITAL . . . . . . . . . . . . . . . .16
SECTION 4.6 ADDITIONAL PARTNERSHIP UNITS, ADDITIONAL PARTNERS. . . .16
ARTICLE V.
DISTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . .17
SECTION 5.1 REQUIREMENT AND CHARACTERIZATION OF DISTRIBUTIONS. . . .17
SECTION 5.2 AMOUNTS WITHHELD . . . . . . . . . . . . . . . . . . . .17
ARTICLE VI.
ALLOCATIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18
(i)
3
ARTICLE VII.
MANAGEMENT AND OPERATIONS OF BUSINESS . . . . . . . . . . . . . . . .19
SECTION 7.1 MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . .19
SECTION 7.2 CERTIFICATE OF LIMITED PARTNERSHIP . . . . . . . . . . .23
SECTION 7.3 RESTRICTIONS ON GENERAL PARTNER'S AUTHORITY. . . . . . .24
SECTION 7.4 REIMBURSEMENT OF THE GENERAL PARTNER . . . . . . . . . .25
SECTION 7.5 OUTSIDE ACTIVITIES OF THE GENERAL PARTNER. . . . . . . .26
SECTION 7.6 INDEMNIFICATION. . . . . . . . . . . . . . . . . . . . .26
SECTION 7.7 LIABILITY OF THE GENERAL PARTNER . . . . . . . . . . . .29
SECTION 7.8 OTHER MATTERS CONCERNING THE GENERAL PARTNER . . . . . .29
SECTION 7.9 TITLE TO PARTNERSHIP ASSETS. . . . . . . . . . . . . . .30
SECTION 7.10 RELIANCE BY THIRD PARTIES. . . . . . . . . . . . . . . .30
ARTICLE VIII.
RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS . . . . . . . . . . . . . .31
SECTION 8.1 LIMITATION OF LIABILITY. . . . . . . . . . . . . . . . .31
SECTION 8.2 MANAGEMENT OF BUSINESS . . . . . . . . . . . . . . . . .31
SECTION 8.3 OUTSIDE ACTIVITIES OF LIMITED PARTNERS . . . . . . . . .31
SECTION 8.4 RETURN OF CAPITAL. . . . . . . . . . . . . . . . . . . .32
SECTION 8.5 RIGHTS OF LIMITED PARTNERS RELATING TO THE PARTNERSHIP .32
SECTION 8.6 PUT RIGHT. . . . . . . . . . . . . . . . . . . . . . . .32
SECTION 8.7 NOTICE OF CERTAIN EVENTS . . . . . . . . . . . . . . . .34
ARTICLE IX.
BOOKS, RECORDS, ACCOUNTING AND REPORTS . . . . . . . . . . . . . . . .35
SECTION 9.1 RECORDS AND ACCOUNTING . . . . . . . . . . . . . . . . .35
SECTION 9.2 FISCAL YEAR . . . . . . . . . . . . . . . . . . . . . .35
SECTION 9.3 REPORTS . . . . . . . . . . . . . . . . . . . . . . . .35
ARTICLE X.
TAX MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . .36
SECTION 10.1 PREPARATION OF TAX RETURNS . . . . . . . . . . . . . . .36
SECTION 10.2 TAX ELECTIONS . . . . . . . . . . . . . . . . . . . . .36
SECTION 10.3 TAX MATTERS PARTNER . . . . . . . . . . . . . . . . . .36
SECTION 10.4 ORGANIZATIONAL EXPENSES. . . . . . . . . . . . . . . . .37
SECTION 10.5 WITHHOLDING . . . . . . . . . . . . . . . . . . . . . .37
(ii)
4
ARTICLE XI.
TRANSFERS AND WITHDRAWALS . . . . . . . . . . . . . . . . . . . . . .38
SECTION 11.1 TRANSFER . . . . . . . . . . . . . . . . . . . . . . . .38
SECTION 11.2 LIMITED PARTNERS' RIGHTS TO TRANSFER . . . . . . . . . .39
SECTION 11.3 SUBSTITUTED LIMITED PARTNERS . . . . . . . . . . . . . .40
SECTION 11.4 ASSIGNEES . . . . . . . . . . . . . . . . . . . . . . .40
SECTION 11.5 GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . .41
ARTICLE XII.
ADMISSION OF PARTNERS . . . . . . . . . . . . . . . . . . . . . . . .41
SECTION 12.1 ADMISSION OF SUCCESSOR GENERAL PARTNER . . . . . . . .41
SECTION 12.2 AMENDMENT OF AGREEMENT AND CERTIFICATE OF
LIMITED PARTNERSHIP. . . . . . . . . . . . . . . . . . .42
ARTICLE XIII.
DISSOLUTION AND LIQUIDATION . . . . . . . . . . . . . . . . . . . . .42
SECTION 13.1 DISSOLUTION . . . . . . . . . . . . . . . . . . . . . .42
SECTION 13.2 WINDING UP . . . . . . . . . . . . . . . . . . . . . .43
SECTION 13.3 DEFICIT CAPITAL ACCOUNTS . . . . . . . . . . . . . . .45
SECTION 13.4 DEEMED DISTRIBUTION AND RECONTRIBUTION . . . . . . . .45
SECTION 13.5 RIGHTS OF LIMITED PARTNERS . . . . . . . . . . . . . .45
SECTION 13.6 NOTICE OF DISSOLUTION . . . . . . . . . . . . . . . . .45
SECTION 13.7 TERMINATION OF PARTNERSHIP AND CANCELLATION
OF CERTIFICATE OF LIMITED PARTNERSHIP. . . . . . . . . .45
SECTION 13.8 REASONABLE TIME FOR WINDING UP . . . . . . . . . . . .46
SECTION 13.9 WAIVER OF PARTITION . . . . . . . . . . . . . . . . . .46
SECTION 13.10 LIABILITY OF LIQUIDATOR. . . . . . . . . . . . . . . . .46
ARTICLE XIV.
AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS . . . . . . . . . . . . .46
SECTION 14.1 AMENDMENTS . . . . . . . . . . . . . . . . . . . . . .46
SECTION 14.2 MEETINGS OF THE PARTNERS . . . . . . . . . . . . . . .48
ARTICLE XV.
GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . .48
SECTION 15.1 ADDRESSES AND NOTICE . . . . . . . . . . . . . . . . . .48
SECTION 15.2 TITLE AND CAPTIONS . . . . . . . . . . . . . . . . . . .49
SECTION 15.3 PRONOUNS AND PLURALS . . . . . . . . . . . . . . . . . .49
(iii)
5
SECTION 15.4 FURTHER ACTION. . . . . . . . . . . . . . . . . . . . . .49
SECTION 15.5 BINDING EFFECT. . . . . . . . . . . . . . . . . . . . . .49
SECTION 15.6 CREDITORS . . . . . . . . . . . . . . . . . . . . . . . .49
SECTION 15.7 WAIVER. . . . . . . . . . . . . . . . . . . . . . . . . .49
SECTION 15.8 COUNTERPARTS. . . . . . . . . . . . . . . . . . . . . . .50
SECTION 15.9 ARBITRATION . . . . . . . . . . . . . . . . . . . . . . .50
SECTION 15.10 INVALIDITY OF PROVISIONS . . . . . . . . . . . . . . . .50
SECTION 15.11 ENTIRE AGREEMENT. . . . . . . . . . . . . . . . . . . . .50
SECTION 15.12 NO RIGHTS AS SHAREHOLDERS . . . . . . . . . . . . . . . .50
EXHIBIT A PARTNERS, CAPITAL ACCOUNTS AND PARTNERSHIP INTERESTS
EXHIBIT B CAPITAL ACCOUNT MAINTENANCE RULES
EXHIBIT C SPECIAL ALLOCATION RULES
EXHIBIT D FORM OF PUT NOTICE
EXHIBIT E FORM OF PARTNERSHIP UNIT CERTIFICATE
(iv)
6
AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
AIP - SWAG OPERATING PARTNERSHIP, L.P.
This Amended and Restated Agreement of Limited Partnership, dated as of
October 3, 1997 (this "Agreement"), is entered into by and among American
Industrial Properties REIT, a Texas real estate investment trust, as General
Partner, AG Industrial Investors, L.P., a Delaware Limited Partnership, ("AG"),
as a Limited Partner, and Xxxxxxx West Acquisition Company, LLC, a California
limited liability company ("Xxxxxxx West"), as a Limited Partner.
WHEREAS, AIP-SWAG Operating Partnership, L.P. (the "Partnership") was
formed under the Delaware Revised Uniform Limited Partnership Act pursuant to
an Agreement of Limited Partnership dated September 12, 1997; and
WHEREAS, the original partners in the Partnership desire to admit
Xxxxxxx West to the Partnership as a Limited Partner upon the terms and
conditions set forth herein in connection with the withdrawal of the initial
limited partner of the Partnership:
NOW, THEREFORE, in consideration of the mutual covenants set forth
herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree
to continue the Partnership upon the following terms and conditions:
ARTICLE I.
DEFINED TERMS
The following definitions shall be for all purposes, unless otherwise
clearly indicated to the contrary, applied to the terms used in this Agreement.
"Act" means the Delaware Revised Uniform Limited Partnership Act, as it
may be amended from time to time, and any successor to such statute.
"Adjusted Capital Account" means the Capital Account maintained for each
Partner as of the end of each Partnership Year (i) increased by any amounts
which such Partner is obligated to restore pursuant to any provision of this
Agreement or is deemed to be obligated to restore pursuant to the penultimate
sentences of Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5) and (ii)
decreased by the items described in Regulations Sections
1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5) and 1.704-1(b)(2)(ii)(d)(6).
The foregoing definition of Adjusted Capital Account is intended to comply with
the provisions of Regulations Section 1.704-1(b)(2)(ii)(d) and shall be
interpreted consistently therewith.
1
7
"Adjusted Capital Account Deficit" means, with respect to any Partner,
the deficit balance, if any, in such Partner's Adjusted Capital Account as of
the end of the relevant Partnership Year.
"Adjusted Property" means any property the Carrying Value of which has
been adjusted pursuant to Exhibit B hereto.
"Affiliate" means, with respect to any Person, (i) any Person directly
or indirectly controlling, controlled by or under common control with such
Person, (ii) any Person owning or controlling ten percent (10%) or more of the
outstanding voting interests of such Person, (iii) any Person of which such
Person owns or controls ten percent (10%) or more of the voting interests or
(iv) any officer, director, general partner or trustee of such Person or any
Person referred to in clauses (i), (ii), and (iii) above. For purposes of this
definition, "control," when used with respect to any Person, means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise,
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Agreed Value" means (i) in the case of any Contributed Property, the
704(c) Value of such property as of the time of its contribution to the
Partnership, reduced by any liabilities either assumed by the Partnership upon
such contribution or to which such property is subject when contributed; (ii)
in the case of the Contract Rights, $2,740,000 (which shall be allocated among
the various properties constituting the Property pro rata in accordance with
the allocation of the "Purchase Price" set forth in the Purchase Agreements,
and (iii) in the case of any property distributed to a Partner by the
Partnership, the Partnership's Carrying Value of such property at the time such
property is distributed, reduced by any indebtedness either assumed by such
Partner upon such distribution or to which such property is subject at the time
of distribution as determined under Section 752 of the Code and the Regulations
thereunder.
"Agreement" means this Amended and Restated Agreement of Limited
Partnership, as it may be amended, supplemented or restated from time to time.
"Assignee" means a Person to whom one or more Partnership Units have
been transferred in a manner permitted under this Agreement, but who has not
become a Substituted Limited Partner, and who has only the rights set forth in
Section 11.4 hereof.
"Book-Tax Disparities" means, with respect to any item of Contributed
Property or Adjusted Property, as of the date of any determination, the
difference between the Carrying Value of such Contributed Property or Adjusted
Property and the adjusted basis thereof for federal income tax purposes as of
such date. A Partner's share of the Partnership's Book-Tax Disparities in all
of its Contributed Property and Adjusted Property will be reflected by the
difference between such Partner's Capital Account balance as maintained
pursuant to Exhibit B hereto and the hypothetical balance of such Partner's
Capital Account computed as if it had been maintained, with respect to each
such Contributed Property or Adjusted Property, strictly in accordance with
federal income tax accounting principles.
2
8
"Business Day" means any day except a Saturday, Sunday or other day on
which commercial banks in Dallas, Texas are authorized or required by law to
close.
"Capital Account" means the Capital Account maintained for a Partner
pursuant to Exhibit B hereto. The Capital Account balance of each Partner who
is a Partner on the Effective Date shall be set forth opposite such Partner's
name on Exhibit A hereto.
"Capital Contribution" means, with respect to any Partner, any cash,
cash equivalents or the Agreed Value of Contributed Property which such Partner
contributes or is deemed to contribute to the Partnership pursuant to Section
4.1 hereof.
"Carrying Value" means (i) with respect to a Contributed Property or
Adjusted Property, the 704(c) Value of such property reduced (but not below
zero) by all Depreciation with respect to such Contributed Property or Adjusted
Property, as the case may be, charged to the Partners' Capital Accounts and
(ii) with respect to any other Partnership property, the adjusted basis of such
property for federal income tax purposes, all as of the time of determination.
The Carrying Value of any property shall be adjusted from time to time in
accordance with Exhibit B hereto, and to reflect changes, additions or other
adjustments to the Carrying Value for dispositions and acquisitions of
Partnership properties, as reasonably deemed appropriate by the General
Partner.
"Cash Amount" means an amount of cash equal to the average of the daily
market price per share of Shares for the ten consecutive trading days prior to
the Valuation Date multiplied by the number of Shares which comprise the Share
Consideration as of the Valuation Date. The market price for each such trading
day shall be the closing price per Share for such trading day as listed on the
New York Stock Exchange.
"Certificate" means the Certificate of Limited Partnership relating to
the Partnership filed in the office of the Delaware Secretary of State, as
amended from time to time in accordance with the terms hereof and the Act.
"Code" means the Internal Revenue Code of 1986, as amended and in effect
from time to time, as interpreted by the applicable regulations thereunder. Any
reference herein to a specific section or sections of the Code shall be deemed
to include a reference to any corresponding provision of future law.
"Consent" means the consent or approval of a proposed action by a
Partner given in accordance with Section 14.2 hereof.
"Consideration" means (i) the Cash Amount or (ii) the Share
Consideration, the choice of which may be determined by the General Partner, in
its sole discretion.
3
9
"Contract Rights" means the rights of SWIC contributed to the
Partnership pursuant to the Contribution Agreement.
"Contributed Property" means each property or other asset contributed to
the Partnership (including the Contract Rights), in such form as may be
permitted by this Agreement and the Act, but excluding cash contributed or
deemed contributed to the Partnership. Once the Carrying Value of a
Contributed Property is adjusted pursuant to Exhibit B hereto, such property
shall no longer constitute a Contributed Property for purposes of Exhibit B
hereto, but shall be deemed an Adjusted Property for such purposes.
"Contribution Agreement" has the meaning assigned to it in Section 4.1.
"Debt" means, as to any Person, as of any date of determination, (i) all
indebtedness of such Person for borrowed money or for the deferred purchase
price of property or services, (ii) all amounts owed by such Person to banks or
other Persons in respect of reimbursement obligations under letters of credit,
surety bonds and other similar instruments guaranteeing payment or other
performance of obligations by such Person, (iii) all indebtedness for borrowed
money or for the deferred purchase price of property or services secured by any
lien on any property owned by such Person, to the extent attributable to such
Person's interest in such property, even though such Person has not assumed or
become liable for the payment thereof, and (iv) obligations of such Person
incurred in connection with entering into a lease which, in accordance with
generally accepted accounting principles, should be capitalized.
"Declaration of Trust" means the Third Amended and Restated Declaration
of Trust of the General Partner, as amended.
"Depreciation" means, for each Partnership Year, an amount equal to the
federal income tax depreciation, amortization, or other cost recovery deduction
allowable with respect to an asset for such year, except that if the Carrying
Value of an asset differs from its adjusted basis for federal income tax
purposes at the beginning of such year or other period, Depreciation shall be
an amount which bears the same ratio to such beginning Carrying Value as the
federal income tax depreciation, amortization, or other cost recovery deduction
for such year bears to such beginning adjusted tax basis; provided, however,
that if the federal income tax depreciation, amortization, or other cost
recovery deduction for such year is zero, Depreciation shall be determined with
reference to such beginning Carrying Value using any reasonable method selected
by the General Partner.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"General Partner" means American Industrial Properties REIT, a Texas
real estate investment trust.
"General Partner Interest" means the Partnership Interest held by the
General Partner. The General Partner Interest may be expressed as a number of
Partnership Units.
4
10
"GP Capital Contribution" means that certain Capital Contribution made
by the General Partner to the Partnership as of the effective date hereof equal
to the sum of cash necessary to fully-fund the obligations of the General
Partner under the Contribution Agreement, and shall include and be increased by
any Capital Contributions made by the General Partner under Section 4.1.C.
"GP Return" means an amount which accrues and accumulates at the rate of
twenty percent (20%) per annum on the balance of the General Partner's
Unreturned Capital.
"IRS" means the Internal Revenue Service, which administers the internal
revenue laws of the United States.
"Immediate Family" means, with respect to any natural Person, such
natural Person's spouse, parent's, descendants, nephews, nieces, brothers and
sisters.
"Incapacity" or "Incapacitated" means, (i) as to any individual Partner,
death, total physical disability or entry by a court of competent jurisdiction
adjudicating such Partner incompetent to manage such Person's affairs or
estate, (ii) 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, (iii) as to any partnership which is a Partner, the
dissolution and commencement of winding up of the partnership, (iv) 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 (v) as to any Partner, the bankruptcy of
such Partner. For purposes of this definition, bankruptcy of a Partner shall be
deemed to have occurred when (a) the Partner commences a voluntary proceeding
seeking liquidation, reorganization or other relief of or against such Partner
under any bankruptcy, insolvency or other similar law now or hereafter in
effect, (b) the Partner is adjudged as bankrupt or insolvent, or a final and
nonappealable order for relief under any bankruptcy, insolvency or similar law
now or hereafter in effect has been entered against the Partner, (c) the
Partner executes and delivers a general assignment for the benefit of the
Partner's creditors, (d) the Partner files an answer or other pleading
admitting or failing to contest the material allegations of a petition filed
against the Partner in any proceeding of the nature described in clause (b)
above, (e) the Partner seeks, consents to or acquiesces in the appointment of a
trustee, receiver or liquidator for the Partner or for all or any substantial
part of the Partner's assets, (f) 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 within one hundred twenty (120) days after the commencement thereof,
(g) the appointment without the Partner's consent or acquiescence of a trustee,
receiver or liquidator that has not been vacated or stayed within ninety (90)
days of such appointment or (h) an appointment referred to in clause (g) is not
vacated within ninety (90) days after the expiration of any such stay.
"Indemnitee" means (i) any Person made a party to a proceeding or
threatened with being made a party to a proceeding by reason of the Person's
status as (A) the General Partner, (B) a Limited Partner or (C) a trustee,
director, officer, employee or agent of the Partnership or the General Partner
or any Limited Partner or an Affiliate and (ii) such other Persons (including
Affiliates of the General Partner, a Limited Partner or the Partnership) as the
General Partner may designate from
5
11
time to time (whether before or after the event giving rise to potential
liability), in its reasonable discretion.
"Limited Partners" means each Person who is identified as a Limited
Partner on Exhibit A of this Agreement and shall include any Substituted
Limited Partners admitted to the Partnership in accordance with the provisions
of Section 11.3 of this Agreement.
"Limited Partner Interest" means a Partnership Interest held by a
Limited Partner in the Partnership in the capacity of a limited partner
representing a fractional part of the Partnership Interests of all Limited
Partners. A Limited Partner Interest may be expressed as a number of
Partnership Units.
"Liquidating Event" has the meaning set forth in Section 13.1 hereof.
"Liquidator" has the meaning set forth in Section 13.2.A hereof.
"LP Capital Contribution" means the Agreed Value of the Contract Rights
contributed by the Limited Partners to the Partnership under Section 4.1.A.
"LP Return" means with regard to any fiscal period of the Partnership, a
cash amount equal in value to the aggregate cash dividends that would have been
payable to the Limited Partners in the event that the Limited Partners owned
Shares equal in number to the Share Consideration during such entire fiscal
period of the Partnership.
"LP Return Accrual" means with regard to any fiscal period of the
Partnership, an amount, calculated like interest, which accrues and
accumulates at the Prime Rate (compounded quarterly) on the portion of a
Partner's Unpaid LP Return which is not paid concurrently with the
corresponding dividend distribution (i.e., the dividend distribution which
results in such Unpaid LP Return) made by the General Partner during such
fiscal period. Under no circumstances shall any LP Return Accrual accrue or
become payable during any fiscal period of the Partnership in which no Unpaid
LP Return is owing as of the beginning of such fiscal period and all amounts of
LP Return which subsequently accrue and become payable during such fiscal
period are fully satisfied concurrently with the payment of the dividends by
the General Partner which result in the accrual of such LP Return.
"Net Capital Proceeds" means the net cash proceeds received by the
Partnership in connection with (i) any condemnation or deeding in lieu of
condemnation of all or a portion of any Partnership asset, (ii) any collection
in respect of property, hazard, or casualty insurance (but not business
interruption insurance) or any damage award; or (iii) any other transaction the
proceeds of which, in accordance with generally accepted accounting principles,
are considered to be capital in nature (other than a transaction described in
the definition of "Net Financing Proceeds" or the definition of "Net Sale
Proceeds"), after deduction of (a) all costs and expenses incurred by the
Partnership with regard to such transactions and not included within the term
"Expenditures" for purposes of calculating Net Cash Flow from Operations and
(b) all amounts expended by the
6
12
Partnership for the acquisition of additional Partnership assets or for capital
repairs or improvements to the Property with such cash proceeds and not
included within the term "Expenditures" for purposes of calculating Net Cash
Flow from Operations.
"Net Cash Flow from Capital Transactions" means for any fiscal period of
the Partnership, Net Financing Proceeds, plus Net Sale Proceeds, plus Net
Capital Proceeds.
"Net Cash Flow from Operations" shall mean, with respect to any fiscal
period of the Partnership, the excess, if any, of "Operating Receipts" over
"Expenditures." For purposes hereof, the term "Operating Receipts" means the
sum of (i) all cash receipts of the Partnership from all sources for such
period, other than Net Cash Flow from Capital Transactions and Capital
Contributions, plus (ii) any amounts held as reserves as of the last day of the
period immediately prior to such fiscal period that the General Partner deems
to no longer be necessary for any capital or operating expenditure permitted
hereunder. The term "Expenditures" means the sum of (a) all expenses of the
Partnership of any nature for such period other than expenses that are
capitalized under GAAP and considered in the calculation of Net Cash Flow from
Capital Transactions, (b) all amounts attributable to principal payments and
interest on account of any indebtedness of the Partnership including principal
payments and interest on account of any indebtedness owed to a Partner during
such period, (c) any amounts attributable to reserves (including, without
limitation, reserves for expenses which may be paid on an annual, semi-annual
or other basis which occurs less frequently than the fiscal period of the
Partnership in question) which the General Partner in its sole discretion deems
necessary for any capital or operating expenditures permitted hereunder or
reserves for any other purpose that the General Partner in its sole discretion
shall determine to be appropriate, and (d) any amounts attributable to working
capital accounts or other cash or similar balances which the General Partner
determines to be necessary or appropriate in its sole discretion.
"Net Financing Proceeds" shall mean the cash proceeds received by the
Partnership in connection with any borrowing or refinancing of borrowing by or
on behalf of the Partnership (whether or not secured), after deduction of (i)
all costs and expenses incurred by the Partnership in connection with such
borrowing and not included within the term "Expenditures" for purposes of
calculating Net Cash Flow from Operations, (ii) that portion of such proceeds
used to repay any other indebtedness of the Partnership, or any interest or
premium thereon, and (iii) that portion of such proceeds used to acquire
additional property or assets for the Partnership in accordance with the
provisions hereof or to make any capital improvement or repair on the Property.
"Net Sale Proceeds" means the cash proceeds received by the Partnership
in connection with a sale of any asset by or on behalf of the Partnership after
deduction of (i) any costs or expenses incurred by the Partnership and not
included within the term "Expenditures" for purposes of calculating Net Cash
Flow from Operations, or payable specifically out of the proceeds of such sale
(including, without limitation, any repayment of any indebtedness required to
be repaid as a result of such sale or which the General Partner elects to repay
out of the proceeds of such sale, together with accrued interest and premium,
if any, thereon and any sales commissions or other costs and expenses due and
payable to any Person in connection with a sale, including to a Partner or its
Affiliates), or (ii) any such proceeds reinvested in the Property for capital
repairs or improvements
7
13
or otherwise used to acquire additional assets for the Partnership in
accordance with the provisions hereof.
"Net Income" means, for any taxable period, the excess, if any, of the
Partnership's items of income and gain for such taxable period over the
Partnership's items of loss and deduction for such taxable period. The items
included in the calculation of Net Income shall be determined in accordance
with Exhibit B hereto. If an item of income, gain, loss or deduction that has
been included in the initial computation of Net Income is subjected to the
special allocation rules in Exhibit C hereto, Net Income or the resulting Net
Loss, whichever the case may be, shall be recomputed without regard to such
item.
"Net Loss" means, for any taxable period, the excess, if any, of the
Partnership's items of loss and deduction for such taxable period over the
Partnership's items of income and gain for such taxable period. The items
included in the calculation of Net Loss shall be determined in accordance with
Exhibit B hereto. If an item of income, gain, loss or deduction that has been
included in the initial computation of Net Loss is subjected to the special
allocation rules in Exhibit C hereto, Net Loss or the resulting Net Income,
whichever the case may be, shall be recomputed without regard to such item.
"Nonrecourse Built-in Gain" means, with respect to any Contributed
Properties or Adjusted Properties that are subject to a mortgage or negative
pledge securing a Nonrecourse Liability, the amount of any taxable gain that
would be allocated to the Partners pursuant to Section 2.B of Exhibit C hereto
if such properties were disposed of in a taxable transaction in full
satisfaction of such liabilities and for no other consideration.
"Nonrecourse Deductions" has the meaning set forth in Regulations
Section 1.704-2(b)(1), and the amount of Nonrecourse Deductions for a
Partnership Year shall be determined in accordance with the rules of
Regulations Section 1.704-2(c).
"Nonrecourse Liability" has the meaning set forth in Regulations Section
1.752-1(a)(2).
"Partner" means the General Partner or a Limited Partner, and "Partners"
means the General Partner and the Limited Partners.
"Partner Minimum Gain" means an amount, with respect to each Partner
Nonrecourse Debt, equal to the Partnership Minimum Gain that would result if
such Partner Nonrecourse Debt were treated as a Nonrecourse Liability,
determined in accordance with Regulations Section 1.704-2(i)(3).
"Partner Nonrecourse Debt" has the meaning set forth in Regulations
Section 1.704-2(b)(4).
"Partner Nonrecourse Deductions" has the meaning set forth in
Regulations Section 1.704-2(i)(2), and the amount of Partner Nonrecourse
Deductions with respect to a Partner Nonrecourse Debt for a Partnership Year
shall be determined in accordance with the rules of Regulations Section
1.704-2(i)(2).
8
14
"Partnership" means the limited partnership formed under the Act and
continued upon the terms and conditions set forth in this Agreement.
"Partnership Interest" means a Limited Partner Interest or the General
Partner Interest and includes any and all benefits to which the holder of such
may be entitled as provided in this Agreement, together with all obligations of
such Person to comply with the terms and provisions of this Agreement. A
Partnership Interest may be expressed as a number of Partnership Units.
"Partnership Minimum Gain" has the meaning set forth in Regulations
Section 1.704-2(b)(2), and the amount of Partnership Minimum Gain, as well as
any net increase or decrease in Partnership Minimum Gain, for a Partnership
Year shall be determined in accordance with the rules of Regulations Section
1.704-2(d).
"Partnership Unit" means a fractional, undivided share of the
Partnership Interests of all Partners issued pursuant to Section 4.1 hereof,
and includes any classes or series of Partnership Units established after the
date hereof. The number of Partnership Units outstanding is set forth in
Exhibit A hereto, as such Exhibit A may be amended and restated from time to
time. The ownership of Partnership Units may be evidenced by a Partnership
Unit Certificate.
"Partnership Unit Certificate" means a certificate representing the
Partnership Interest of a Partner and issued in the form attached hereto as
Exhibit E.
"Partnership Year" means the fiscal year of the Partnership, which shall
be the calendar year.
"Permitted Transferee" shall mean with regard to any transfer of
Partnership Units by Xxxxxxx West, (i) Xxxxx Xxxxxxxx, (ii) Xxxx Xxxxxxx, (iii)
Xxx Xxxxxxx, and (iv) any Affiliate of the Persons identified in clauses (i),
(ii) and (iii) hereof, and such term shall mean with regard to any transfer of
Partnership Units by AG, any investment fund managed by Xxxxxx, Xxxxxx & Co.
Notwithstanding any contrary provision hereof, the term "Permitted Transferee"
shall also be deemed to include any institutional lender to whom any of the
Partnership Units are pledged as security for a loan to a Limited Partner
(whether in its capacity as the holder of a security interest or as a holder of
Partnership Units as successor to such Limited Partner); and provided further,
prior to obtaining any Partnership Units, each Permitted Transferee shall
provide the General Partner with such assurances and certifications regarding
its sophistication and financial wherewithal as the General Partner shall
reasonably request.
"Person" means a natural person, partnership (whether general or
limited), trust, real estate investment trust, business trust, estate,
association, corporation, limited liability company, unincorporated
organization, custodian, nominee or any other individual or entity in its own
or any representative capacity.
"Prime Rate" means the "prime," "reference" or "base" rate of interest
for commercial loans as announced by Citibank, New York, N.Y. on the first
business day following the date upon which
9
15
the event occurs requiring reference to the Prime Rate and adjusted thereafter
on the first day of each calendar year.
"Property" means the land and improvements to be acquired by the
Partnership in accordance with the Contract Rights described in the
Contribution Agreement.
"Put Notice" means a Put Notice substantially in the form of Exhibit D.
"Put Right" has the meaning assigned to it in Section 8.6.A.
"Recapture Income" means any gain recognized by the Partnership
(computed without regard to any adjustment required by Sections 734, 743, and
754 of the Code) upon the disposition of any property or asset of the
Partnership, which gain is characterized as ordinary income because it
represents the recapture of deductions previously taken with respect to such
property or asset.
"Regulations" means the Income Tax Regulations promulgated under the
Code, as such regulations may be amended from time to time (including
corresponding provisions of succeeding regulations).
"REIT" means a real estate investment trust under Sections 856 through
859 of the Code.
"Residual Gain" or "Residual Loss" means any item of gain or loss, as
the case may be, of the Partnership recognized for federal income tax purposes
resulting from a sale, exchange or other disposition of Contributed Property or
Adjusted Property, to the extent such item of gain or loss is not allocated
pursuant to Section 2.B.(1)(b) or 2.B.(2)(b) of Exhibit C hereto to eliminate
Book-Tax Disparities.
"Residual Percentages" shall mean (i) with regard to the General Partner
ninety-eight percent (98%) and (ii) with regard to the Limited Partners two
percent (2%). The initial Residual Interest of each Limited Partner shall
equal two percent (2%) multiplied by a fraction, the numerator of which is the
Unpaid LP Return owing such Limited Partner and the denominator of which is the
total amount of the LP Return owing all Limited Partners. In the event that
any Partnership Units shall be transferred in accordance with the applicable
provisions of this Agreement, the transferee shall obtain the allocable
portion of the Residual Percentage of the transferor represented by the
Partnership Units transferred to such transferee (based upon the number of
Partnership Units transferred compared to the total number of Partnership Units
held by the transferor) and the transferor's Residual Percentage shall be
reduced accordingly.
"Return on Capital" means, collectively, the GP Return, the LP Return
and the LP Return Accrual.
"Securities Act" means the Securities Act of 1933, as amended.
10
16
"704(c) Value" means with respect to any Contributed Property the fair
market value of such property at the time of contribution as determined by the
General Partner using such reasonable method of valuation as it may adopt. The
General Partner shall, in its sole and absolute discretion, use such method as
it deems reasonable and appropriate to allocate the aggregate of the 704(c)
Values of Contributed Properties in a single or integrated transaction among
each separate property on a basis proportional to their fair market values.
"Share" means a common share of beneficial interest (or other comparable
common equity interest) of the General Partner.
"Share Consideration" initially means one Share for each Partnership
Unit for which a Put Right is exercised in accordance with the terms hereof.
The number of Shares which constitute the Share Consideration hereunder shall
automatically be adjusted in the event of merger, consolidation,
reorganization, recapitalization, reclassification, Share dividend, Share split
or other special distribution combination of interests or other similar event
(collectively, an "Equity Adjustment"). In the event that an Equity Adjustment
occurs with respect to the Shares prior to the exercise of the Put Right, the
Share Consideration shall automatically be adjusted to equal that number of
Shares into which the number of Shares which constitute the Share Consideration
(prior to the foregoing adjustment) would have been converted following the
Equity Adjustment, if each Limited Partner were the owner of such Shares
immediately prior to such Equity Adjustment.
"SWIC" shall mean Xxxxxxx West Investment Corporation, a Delaware
corporation.
"Subsidiary" means, with respect to any Person, any corporation, limited
liability company, partnership or joint venture, or other entity of which a
majority of (i) the voting power of the voting equity securities or (ii) the
value of outstanding equity interests is owned, directly or indirectly, by such
Person.
"Substituted Limited Partner" means a Person who is admitted as a
Limited Partner to the Partnership pursuant to Section 11.3 hereof.
"Unpaid Additional Return" means the Additional Preferred Return owing
the General Partner reduced by all amounts distributed to the General Partner
in reduction thereof.
"Unpaid LP Return" means the aggregate unpaid LP Return owing the
Limited Partners less all amounts distributed by the Partnership to the Limited
Partners in reduction thereof.
"Unpaid LP Return Accrual" shall mean the aggregate LP Return Accrual
owing the Limited Partners less all amounts distributed to the Limited Partners
in reduction thereof.
"Unpaid GP Return" means the accrued and unpaid GP Preferred Return on
the General Partner's Unreturned Capital reduced by all amounts distributed to
the General Partner in reduction thereof.
11
17
"Unrealized Gain" means, with respect to any item of Partnership
property as of any date of determination, the excess, if any, of (i) the fair
market value of such property (as determined under Exhibit B hereto) as of such
date, over (ii) the Carrying Value of such property (prior to any adjustment to
be made pursuant to Exhibit B hereto) as of such date.
"Unrealized Loss" means, with respect to any item of Partnership
property as of any date of determination, the excess, if any, of (i) the
Carrying Value of such property (prior to any adjustment to be made pursuant to
Exhibit B hereto) as of such date, over (ii) the fair market value of such
property (as determined under Exhibit B hereto) as of such date.
"Unreturned Capital" means (i) with respect to the General Partner the
GP Capital Contribution, increased by any Capital Contributions made by the
General Partner under Section 4.1.C and less all amounts distributed by the
Partnership to the General Partner under Section 5.1.A(iii) and Section
13.2.A(6), in reduction thereof; (ii) with respect to Xxxxxxx West, $1,370,000
less all amounts distributed by the Partnership to Xxxxxxx West under Section
13.2.A(7) in reduction thereof; and (iii) with respect to AG, $1,370,000 less
all amounts distributed by the Partnership to AG under Section 13.2.A(7) in
reduction thereof.
"Valuation Date" means with respect to the Put Right, the date upon
which the General Partner receives the Put Notice.
ARTICLE II.
ORGANIZATIONAL MATTERS
SECTION 2.1 ORGANIZATION; CONTINUATION.
The Partnership is a limited partnership which is organized pursuant to
the provisions of the Act and continued upon the terms and conditions set forth
in this Agreement. Except as expressly provided herein to the contrary, the
rights and obligations of the Partners and the administration and termination
of the Partnership shall be governed by the Act. The Partnership Interest of
each Partner shall be personal property for all purposes.
SECTION 2.2 NAME.
The name of the Partnership is AIP-SWAG Operating Partnership, L.P. The
Partnership's business may be conducted under any other name or names deemed
advisable by the General Partner, including the name of the General Partner or
any Affiliate thereof. The words "Limited Partnership," "L.P.," "Ltd." or
similar words or letters shall be included in the Partnership's name where
necessary for the purposes of complying with the laws of any jurisdiction that
so requires. The General Partner in its sole and absolute discretion may change
the name of the Partnership at any time and from time to time and shall notify
the Limited Partners of such change in the next regular communication to the
Limited Partners.
12
18
SECTION 2.3 REGISTERED OFFICE AND AGENT; PRINCIPAL OFFICE.
The registered office of the Partnership in the State of Delaware shall
be located at The Corporation Trust Center, 0000 Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxx
Xxxxxx Xxxxxx, Xxxxxxxx 00000 and the registered agent for service of process
on the Partnership in the State of Delaware at such registered office shall be
The Corporation Trust Company. The principal office of the Partnership shall
be 0000 X. Xxxxxxxx Xx., Xxxxx 000, Xxxxxx, Xxxxx 00000, or such other place as
the General Partner may from time to time designate by notice to the Limited
Partners. The Partnership may maintain offices at such other place or places
within or outside the State of Delaware as the General Partner deems advisable.
SECTION 2.4 POWER OF ATTORNEY.
A. GENERAL. Each Limited Partner and each Assignee who accepts
Partnership Units (or any rights, benefits or privileges associated therewith)
is deemed to irrevocably constitute and appoint the General Partner, any
Liquidator and authorized officers and attorneys-in-fact of each, and each of
those acting singly, in each case with full power of substitution, as its true
and lawful agent and attorney-in-fact, with full power and authority in its
name, place and stead to:
(1) execute, swear to, acknowledge, deliver, file and record
in the appropriate public offices (a) all certificates, documents and other
instruments (including, without limitation, this Agreement and the Certificate
and all amendments or restatements thereof) that the General Partner or any
Liquidator reasonably deems appropriate or necessary to form, qualify or
continue the existence or qualification of the Partnership as a limited
partnership (or a partnership in which the limited partners have limited
liability) in the State of Delaware and in all other jurisdictions in which the
Partnership may or plans to conduct business or own property, (b) all
instruments that the General Partner or any Liquidator reasonably deems
appropriate or necessary to reflect any amendment, change, modification or
restatement of this Agreement in accordance with its terms, (c) all deeds,
other conveyance documents and other instruments or documents that the General
Partner or any Liquidator reasonably deems appropriate or necessary to reflect
the dissolution and liquidation of the Partnership pursuant to the terms of
this Agreement, including, without limitation, a certificate of cancellation,
and (d) all instruments reasonably necessary to reflect the admission,
withdrawal, removal or substitution of any Partner pursuant to, or other events
described in, Article XI, XII or XIII hereof or the Capital Contribution of any
Partner and (e) subject to Article XIV, all certificates, documents and other
instruments relating to the determination of the rights, preferences and
privileges of Partnership Interests; and
(2) execute, swear to, seal, acknowledge and file all ballots,
consents, approvals, waivers, certificates and other instruments that the
General Partner or any Liquidator reasonably deems appropriate or necessary, to
make, evidence, give, confirm or ratify any vote, Consent, approval, agreement
or other action which is made or given by the Partners pursuant to the terms
hereof.
13
19
B. IRREVOCABLE NATURE. The foregoing power of attorney is hereby
declared to be irrevocable and a power coupled with an interest, in recognition
of the fact that each of the Partners will be relying upon the power of the
General Partner or any Liquidator to act as contemplated by this Agreement in
any filing or other action by it on behalf of the Partnership, and it shall
survive and not be affected by the subsequent Incapacity of any Limited Partner
or Assignee and the transfer of all or any portion of such Limited Partner's or
Assignee's Partnership Units and shall extend to such Limited Partner's or
Assignee's heirs, successors, assigns and personal representatives. Each such
Limited Partner or Assignee hereby agrees to be bound by any representation
made by the General Partner or any Liquidator, acting in good faith pursuant to
such power of attorney; and each such Limited Partner or Assignee hereby waives
any and all defenses which may be available to contest, negate or disaffirm the
action of the General Partner or any Liquidator, taken in good faith under such
power of attorney. Each Limited Partner or Assignee shall execute and deliver
to the General Partner or the Liquidator, within fifteen (15) days after
receipt of the General Partner's or Liquidator's request therefor, such further
designations, powers of attorney and other instruments as the General Partner
or the Liquidator, as the case may be, reasonably deems necessary to effectuate
this Agreement and the purposes of the Partnership.
SECTION 2.5 TERM.
The term of the Partnership commenced upon the date on which the
Certificate was filed in the office of the Secretary of State of the State of
Delaware in accordance with the Act, and shall continue until December 31,
2047, unless the Partnership is dissolved sooner pursuant to the provisions of
Article XIII hereof or as otherwise provided by law.
ARTICLE III.
PURPOSE
SECTION 3.1 PURPOSE AND BUSINESS.
The purpose and nature of the business to be conducted by the
Partnership is (i) to acquire, own, develop, improve, lease, manage, operate,
finance, refinance, transfer, sell or otherwise dispose of the Property;
provided, however, that such activities shall be limited to and conducted in
such a manner as to permit the General Partner at all times to be classified as
a REIT, unless the General Partner ceases to qualify, or is not qualified, as a
REIT for any reason or reasons not related to the business conducted by the
Partnership; (ii) to enter into any corporation, partnership, joint venture or
limited liability company to engage in any of the foregoing or the ownership of
interests in any entity engaged directly in any of the foregoing; and (iii) to
do anything reasonably necessary or incidental to the foregoing. In connection
with the foregoing, and without limiting the General Partner's right in its
sole discretion to cease qualifying as a REIT, the Partners acknowledge that
the status of the General Partner as a REIT inures to the benefit of all the
Partners and not solely the General Partner or its Affiliates.
SECTION 3.2 POWERS.
14
20
The Partnership is 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, full power and authority, directly or through its ownership
interest in other entities, to enter into, perform and carry out contracts of
any kind, borrow money and issue evidences of indebtedness whether or not
secured by mortgage, deed of trust, pledge or other lien, acquire, own, manage,
improve and develop real property, and lease, sell, transfer and dispose of
real property; provided, however, that the Partnership shall not take, or shall
refrain from taking, any action which, in the judgment of the General Partner,
in its sole and absolute discretion, (i) could adversely affect the ability of
the General Partner to continue to qualify as a REIT, (ii) could subject the
General Partner to any additional taxes under Section 857 or Section 4981 of
the Code or (iii) could violate any law or regulation of any governmental body
or agency having jurisdiction over the General Partner or its securities,
unless such action (or inaction) shall have been specifically consented to by
the General Partner in writing.
ARTICLE IV.
CAPITAL CONTRIBUTIONS AND ISSUANCES
OF PARTNERSHIP INTERESTS
SECTION 4.1 CAPITAL CONTRIBUTIONS OF THE PARTNERS.
A. CAPITAL CONTRIBUTIONS TO THE PARTNERSHIP. Upon the
effective date hereof, (i) the General Partner shall make a cash contribution
to the Partnership in the sum of the GP Capital Contribution (which such amount
together with any additional sums contributed by the General Partner to the
Partnership under Section 4.1.C shall constitute the "GP Capital
Contribution"), and SWIC, acting on the behalf of AG and Xxxxxxx West, shall
assign and contribute the Contract Rights to the Partnership, pursuant to the
terms and provisions of that certain Contribution and Exchange Agreement dated
September 25, 1997 by and between SWIC, the General Partner and the Partnership
(the "Contribution Agreement"). Upon the effective date hereof, the General
Partner shall prepare a completed Exhibit A which reflects the Partners'
Capital Accounts and the Partnership Units assigned to each Partner.
B. GENERAL PARTNER INTEREST. All of the Partnership Units
held by the General Partner shall be deemed to be the Partnership Units of the
General Partner and shall constitute the General Partner Interest.
C. NO OBLIGATION TO MAKE ADDITIONAL CAPITAL CONTRIBUTIONS.
Except as provided in Section 10.5 hereof, the Partners shall have no
obligation to make any additional Capital Contributions or provide any
additional funding to the Partnership (whether in the form of loans, repayments
of loans or otherwise). No Partner shall have any obligation to restore any
deficit that may exist in its Capital Account, either upon a liquidation of the
Partnership or otherwise. However, if necessary for the operation of the
Partnership, the General Partner shall have the right but not the
15
21
obligation to make additional Capital Contributions to the Partnership, and in
such case, (i) the GP Capital Contribution shall be increased by the amount of
any such Capital Contributions, and (ii) the General Partner shall be issued
and shall receive additional Partnership Units equal to the amount of any such
Capital Contributions divided by the average closing price of Shares for the 10
trading days preceding any such Capital Contributions (as the same shall be
adjusted in good faith by the General Partner to take into account any Equity
Adjustment which may occur during such period).
SECTION 4.2 LOANS.
A. LOANS BY THE GENERAL PARTNER. The General Partner may
solicit and accept loans to the Partnership at such times, in such amounts and
upon such terms as the General Partner, in its sole and absolute discretion,
may determine to be advisable; provided, however, that any such loans made by
the General Partner or any of its Affiliates to the Partnership shall be upon
terms which shall be commercially reasonable as determined in the reasonable
discretion of the General Partner.
SECTION 4.3 NO PREEMPTIVE RIGHTS.
Except as expressly set forth herein, no Person shall have any
preemptive, preferential or other similar rights with respect to (i) additional
Capital Contributions or loans to the Partnership or (ii) the issuance or sale
of any Partnership Units or other Partnership Interests.
SECTION 4.4 OTHER CONTRIBUTION PROVISIONS.
In the event that any Partner is admitted to the Partnership and is
given a Capital Account in exchange for services rendered to the Partnership,
such transaction shall be treated by the Partnership and the affected Partner
as if the Partnership had compensated such Partner in cash, and the Partner had
contributed such cash to the capital of the Partnership, unless the General
Partner and such affected Partner specifically agree otherwise.
SECTION 4.5 NO INTEREST ON CAPITAL.
Except as otherwise expressly set forth herein, no Partner shall be
entitled to interest on its Capital Contributions or its Capital Account.
Under no circumstances shall the Return on Capital to which a Partner may be
entitled hereunder be construed as interest.
SECTION 4.6 ADDITIONAL PARTNERSHIP UNITS, ADDITIONAL PARTNERS.
Except as expressly provided to the contrary herein, without the prior
consent of each Limited Partner, the General Partner may not admit any
additional Partners other than such Substituted Limited Partners as shall be
permitted hereunder and may only issue Additional Partnership Units as provided
in Section 4.1C.
16
22
ARTICLE V.
DISTRIBUTIONS
SECTION 5.1 REQUIREMENT AND CHARACTERIZATION OF DISTRIBUTIONS.
A. NET CASH FLOW FROM OPERATIONS. The General Partner shall
distribute at least quarterly Net Cash Flow from Operations in such amounts as
shall be determined by the General Partner in its reasonable discretion in the
following manner: (i) first to the Limited Partners in an amount equal to the
Unpaid LP Return Accrual owing the Limited Partners, pro rata in accordance
with the amount of the Unpaid LP Return Accrual owing each such Limited
Partner; (ii) second, to the Limited Partners in an amount equal to the Unpaid
LP Return owing the Limited Partners, pro rata in accordance with the amount of
the Unpaid LP Return owing each such Limited Partner; (iii) third, to the
General Partner in repayment of any Unpaid GP Return owing the General Partner;
(iv) fourth, to the General Partner in return of any Unreturned Capital due the
General Partner; and (v) finally, to the Partners in accordance with their
Residual Percentages.
B. NET CASH FLOW FROM CAPITAL TRANSACTIONS. The General
Partner shall distribute at least quarterly Net Cash Flow from Capital
Transactions in such amount as shall be determined by the General Partner in
its reasonable discretion in accordance with the provisions of Section 13.2.A
hereof.
C. PUT DISTRIBUTIONS. If the exercise of the Put Right
entitles a Limited Partner to any dividend on Shares owned or deemed owned by
such Limited Partner on or after the record date for such dividend no LP Return
Accrual shall accrue or become payable with regard to such dividends and the
distributions pursuant to this Article V and Article XIII with respect to any
Unpaid LP Return to which such Limited Partner would otherwise be entitled for
the period including such record date shall be offset (and the LP Return to
such Limited Partner reduced) by any such dividend to which such Limited
Partner is entitled.
SECTION 5.2 AMOUNTS WITHHELD.
All amounts withheld pursuant to the Code or any provisions of any state
or local tax law and Section 10.5 hereof with respect to any allocation,
payment or distribution to the General Partner, the Limited Partners or
Assignees shall be treated as amounts distributed to the General Partner,
Limited Partners or Assignees pursuant to Section 5.1 above for all purposes
under this Agreement.
17
23
ARTICLE VI.
ALLOCATIONS
SECTION 6.1 ALLOCATIONS FOR CAPITAL ACCOUNT PURPOSES
For purposes of maintaining the Capital Accounts and in determining the
rights of the Partners among themselves, the Partnership's items of income,
gain, loss and deduction (computed in accordance with Exhibit B hereto) shall
be allocated among the Partners in each taxable year (or portion thereof) as
provided herein below.
A. NET INCOME. After giving effect to the special
allocations set forth in Section 1 of Exhibit C, Net Income (and to the extent
necessary to accomplish the purposes hereof, items of gross income and gain)
shall be allocated (i) first, to the Limited Partners, pro rata in accordance
with and in an amount equal to the cumulative distributions by the Partnership
to the Limited Partners which are attributable to the LP Return Accrual payable
to the Limited Partners less the cumulative allocations of Net Income made
previously to the Limited Partners under this clause (i), (ii) second, to the
Limited Partners, pro rata in accordance with and in an amount equal to the
cumulative distributions by the Partnership to the Limited Partners which are
attributable to the LP Return payable to the Limited Partners less the
cumulative allocations of Net Income made previously to the Limited Partners
under this clause (ii); (iii) third, to the General Partner in an amount equal
to the cumulative distributions by the Partnership to the General Partner which
are attributable to the GP Return payable to the General Partner less the
cumulative allocations of Net Income made previously to the General Partner
under this clause (iii); (iv) fourth, to the General Partner in an amount equal
to the cumulative Net Losses allocated to the General Partner pursuant to
clause (iii) of Section 6.1.B below less the cumulative allocations of Net
Income made previously to the General Partner under this clause (iv); (v)
fifth, to the Limited Partners, pro rata in accordance with and in an amount
equal to the cumulative Net Losses allocated to the Limited Partners under
clause (ii) of Section 6.1.B less the cumulative allocations of Net Income made
previously by the Partnership to the Limited Partners under this clause (v);
and (vi) finally, the balance, if any, shall be allocated to the Partners in
accordance with and in proportion to their respective Residual Percentages.
B. NET LOSSES. After giving effect to the special
allocations set forth in Section 1 of Exhibit C, Net Losses (and to the extent
necessary to accomplish the purposes hereof, items of loss, expense and
deduction) shall be allocated (i) first, to the Partners until the cumulative
Net Losses allocated to the Partners under this clause (i) equal the cumulative
Net Income allocated to each Partner under clause (vi) of Section 6.1.A.; (ii)
second, to the Limited Partners, pro rata in accordance with and in an amount
equal to each such Limited Partner's Adjusted Capital Account balance prior to
the allocation under this clause (ii); (iii) third, to the General Partner, in
an amount equal to the General Partner's Adjusted Capital Account balance prior
to the allocation under this clause (iii); (iv) fourth, to the General Partner,
to the extent that any further allocation of Net Losses to the Limited Partners
would result in any Limited Partner having an Adjusted Capital Account Deficit.
18
24
C. ALLOCATION OF NONRECOURSE DEBT. For purposes of
Regulations Section 1.752-3(a), the Partners agree that Nonrecourse Liabilities
of the Partnership in excess of the sum of (i) the amount of Partnership
Minimum Gain and (ii) the total amount of Nonrecourse Built-in Gain shall be
allocated among the Partners in accordance with their respective Residual
Percentages.
D. RECAPTURE INCOME. Any gain allocated to the Partners upon
the sale or other taxable disposition of any Partnership asset shall, to the
extent possible after taking into account other required allocations of gain
pursuant to Exhibit C hereto, be characterized as Recapture Income in the same
proportions and to the same extent as such Partners have been allocated any
deductions directly or indirectly giving rise to the treatment of such gains as
Recapture Income.
E. ALLOCATIONS BY GENERAL PARTNER TO REFLECT ECONOMIC RIGHTS.
In the event the General Partner shall determine, in its good faith judgment,
that it is necessary to modify the manner in which the Partnership's items of
income, gain, loss and deduction shall be allocated among the Partners in a
taxable year (or portion thereof) in order to cause such allocation to reflect
accurately the relative economic rights of the Partners, the General Partner
may make such a modification; provided that such modification is reasonably
consistent with the Partners' respective interests in the Partnership within
the meaning of Section 704(b) of the Code and the Treasury Regulations
thereunder.
ARTICLE VII.
MANAGEMENT AND OPERATIONS OF BUSINESS
SECTION 7.1 MANAGEMENT.
X. XXXXXX OF GENERAL PARTNER. Except as otherwise expressly
provided in this Agreement, all management powers over the business and affairs
of the Partnership are and shall be exclusively vested in the General Partner,
and no Limited Partner shall have any right to participate in or exercise
control or management power over the business and affairs of the Partnership.
The General Partner may not be removed by the Limited Partners with or without
cause. In addition to the powers now or hereafter granted a general partner of
a limited partnership under applicable law or which are granted to the General
Partner under any other provision of this Agreement, the General Partner,
subject to Section 7.3 below, shall have full power and authority to do all
things deemed necessary or desirable by it to conduct the business of the
Partnership, to exercise all powers set forth in Section 3.2 hereof and to
effectuate the purposes set forth in Section 3.1 hereof, including, without
limitation:
(1) the making of any expenditures, the lending or borrowing
of money (including, without limitation, making prepayments on loans and
borrowing money to permit the Partnership to make distributions to its Partners
in such amounts as will permit the General Partner (as long as the General
Partner qualifies as a REIT) to avoid the payment of any federal income tax
(including, for this purpose, any excise tax pursuant to Section 4981 of the
Code) and to make distributions to its shareholders sufficient to permit the
General Partner to maintain REIT status),
19
25
the assumption or guarantee of, or other contracting for, indebtedness and
other liabilities, the issuance of evidences of indebtedness (including the
securing of same by deed to secure debt, mortgage, deed of trust or other lien
or encumbrance on the Partnership's assets) and the incurring of any
obligations the General Partner deems necessary for the conduct of the
activities of the Partnership;
(2) the making of tax, regulatory and other filings, or
rendering of periodic or other reports to governmental or other agencies having
jurisdiction over the business or assets of the Partnership;
(3) the acquisition, disposition, mortgage, pledge,
encumbrance, hypothecation or exchange of any or all of the assets of the
Partnership (including the exercise or grant of any conversion, option,
privilege or subscription right or other right available in connection with any
assets at any time held by the Partnership) or the merger or other combination
of the Partnership with or into another entity, on such terms as the General
Partner deems proper (all of the foregoing subject to any prior approval only
to the extent required by Section 7.3 hereof);
(4) the use of the assets of the Partnership (including,
without limitation, cash on hand) for any purpose consistent with the terms of
this Agreement and on any terms it sees fit, including, without limitation, the
financing of the conduct of the operations of the Partnership or any of the
Partnership's Subsidiaries, the lending of funds to other Persons (including,
without limitation, the General Partner, and its Subsidiaries) and the
repayment of obligations of the Partnership and its Subsidiaries and any other
Person in which the Partnership has an equity investment and the making of
capital contributions to its Subsidiaries;
(5) the management, operation, leasing, landscaping, repair,
alteration, demolition or improvement of any real property or improvements
owned by the Partnership or any Subsidiary of the Partnership;
(6) the negotiation, execution, and performance of any
contracts, conveyances or other instruments that the General Partner considers
useful or necessary to the conduct of the Partnership's operations or the
implementation of the General Partner's powers under this Agreement, including
contracting with contractors, developers, consultants, accountants, legal
counsel, other professional advisors and other agents and the payment of their
expenses and compensation out of the Partnership's assets;
(7) the distribution of Partnership cash or other Partnership
assets in accordance with this Agreement;
(8) the holding, managing, investing and reinvesting of cash
and other assets of the Partnership;
(9) the collection and receipt of revenues and income of the
Partnership;
20
26
(10) the establishment of one or more divisions of the
Partnership, the selection and dismissal of employees of the Partnership, any
division of the Partnership, or the General Partner (including, without
limitation, employees having titles such as "president," "vice president,"
"secretary" and "treasurer") and agents, outside attorneys, accountants,
consultants and contractors of the General Partner, the Partnership, or any
division of the Partnership and the determination of their compensation and
other terms of employment or hiring;
(11) the maintenance of such insurance for the benefit of the
Partnership and the Partners as it deems necessary or appropriate;
(12) the formation of, or acquisition of an interest in, and
the contribution of property to, any corporation, limited or general
partnerships, joint ventures, limited liability companies or other
relationships that it deems desirable (including, without limitation, the
acquisition of interests in, and the contributions of property to its
Subsidiaries and any other Person in which may have an equity investment from
time to time);
(13) the control of any matters affecting the rights and
obligations of the Partnership, including the settlement, compromise,
submission to arbitration or any other form of dispute resolution or
abandonment of any claim, cause of action, liability, debt or damages due or
owing to or from the Partnership, the commencement or defense of suits, legal
proceedings, administrative proceedings, arbitrations or other forms of dispute
resolution, the representation of the Partnership in all suits or legal
proceedings, administrative proceedings, arbitrations or other forms of dispute
resolution, the incurring of legal expense and the indemnification of any
Person against liabilities and contingencies to the extent permitted by law;
(14) the undertaking of any action in connection with the
Partnership's direct or indirect investment in its Subsidiaries or any other
Person (including, without limitation, the contribution or loan of funds by the
Partnership to such Persons), incurring indebtedness on behalf of such Persons
or the guarantee of the obligations of such Persons;
(15) the determination of the fair market value of any
Partnership property distributed in kind, using such reasonable method of
valuation as the General Partner may adopt;
(16) the exercise, directly or indirectly, through any
attorney-in-fact acting under a general or limited power of attorney, of any
right, including the right to vote, appurtenant to any assets or investment
held by the Partnership;
(17) the exercise of any of the powers of the General Partner
enumerated in this Agreement on behalf of or in connection with any Subsidiary
of the Partnership or any other Person in which the Partnership has a direct or
indirect interest, individually or jointly with any such Subsidiary or other
Person;
21
27
(18) the exercise of any of the powers of the General Partner
enumerated in this Agreement on behalf of any Person in which the Partnership
does not have any interest pursuant to contractual or other arrangements with
such Person;
(19) the making, executing and delivering of any and all deeds,
leases, notes, deeds to secure debt, mortgages, deeds of trust, security
agreements, conveyances, contracts, guarantees, warranties, indemnities,
waivers, releases or other legal instruments or agreements in writing necessary
or appropriate in the judgment of the General Partner for the accomplishment of
any of the powers of the General Partner under this Agreement;
(20) the amendment and restatement of Exhibit A hereto to
reflect accurately at all times the Capital Accounts and Partnership Units of
the Partners as the same are adjusted from time to time to the extent necessary
to reflect redemptions, Capital Contributions, the issuance of Partnership
Units, the admission of any Substituted Limited Partner or otherwise, as long
as the matter or event being reflected in Exhibit A hereto otherwise is
authorized by this Agreement; and
(21) the employment and compensation of Persons to provide
goods and/or services to the Partnership and the adoption on behalf of the
Partnership, of employee benefit plans for the benefit of employees of the
General Partner, the Partnership or any Affiliate or Subsidiary of either of
them in respect of services performed for the benefit of the Partnership or its
Subsidiaries.
B. NO APPROVAL BY LIMITED PARTNERS. Each of the Limited
Partners agrees that the General Partner is authorized to execute, deliver and
perform the above-mentioned agreements and transactions on behalf of the
Partnership without any further act, approval or vote of the Partners,
notwithstanding any other provision of this Agreement (except as expressly
provided to the contrary in Section 7.3), the Act or any applicable law, rule
or regulation, to the full extent permitted under the Act or other applicable
law. The good faith execution, delivery or performance by the General Partner
or the Partnership of any agreement authorized or permitted under this
Agreement shall not constitute a breach by the General Partner of any duty that
the General Partner may owe the Partnership or the Limited Partners or any
other Persons under this Agreement or of any duty stated or implied by law or
equity.
C. INSURANCE. At all times from and after the date hereof,
the General Partner, at the expense of the Partnership, may cause the
Partnership to obtain and maintain (i) casualty, liability and other insurance
on the properties of the Partnership, (ii) liability insurance for the
Indemnities hereunder and (iii) such other insurance as the General Partner, in
its reasonable discretion, determines to be necessary.
D. WORKING CAPITAL AND OTHER RESERVES. At all times from and
after the date hereof, the General Partner may cause the Partnership to
establish and maintain working capital reserves in such amounts as the General
Partner, in its sole and absolute discretion, deems appropriate and reasonable
from time to time.
22
28
E. NO OBLIGATIONS TO CONSIDER TAX CONSEQUENCES OF LIMITED
PARTNERS. In exercising its authority under this Agreement, the General
Partner may, but shall be under no obligation to, take into account the tax
consequences to any Partner (including the Limited Partners) of any action
taken (or not taken) by it. The General Partner and the Partnership shall not
have liability to any Limited Partner for monetary damages or otherwise for
losses sustained, liabilities incurred or benefits not derived by such Limited
Partner in connection with such decisions.
F. REOC STATUS.
(1) The General Partner shall use good faith reasonable
efforts to conduct the affairs and operations of the Partnership in such a
manner that the Partnership will qualify as a "real estate operating company"
("REOC") within the meaning of 29 C.F.R. 2510.3-101(e), such that none of the
Partnership's assets would be deemed to be "plan assets" for purposes of ERISA.
(2) The Partnership's first investment shall be in
"real estate" which the Partnership shall have the right to substantially
participate directly in the management or development activities thereof.
(3) The Partnership shall, in the ordinary course of
its business, engage in the management or development of real estate.
(4) The General Partner is hereby authorized to take
any action it has determined in good faith to be necessary or desirable in
order for (i) the Partnership not to be in violation of ERISA, (ii) the
Partnership to qualify as a REOC for purposes of ERISA, and (iii) the assets of
the Partnership not to be deemed "plan assets" of any ERISA entity which may
directly or indirectly invest in the Partnership, including, but not limited
to, making structural, operating or other changes in the Partnership, and
making structural or other changes in any Partnership investment; provided
however, the General Partner shall under no circumstances be required to take
any action hereunder which may adversely affect the status of the General
Partner as a REIT, or result in the violation of applicable provisions of
federal or state securities laws. Under no circumstances shall the General
Partner have any liability to the Partnership or any Partner for any action or
any failure to take any action which results in the Partnership failing to
qualify as a REOC, a violation of ERISA or the assets of the Partnership
constituting "plan assets" for purposes of ERISA.
SECTION 7.2 CERTIFICATE OF LIMITED PARTNERSHIP.
The General Partner shall use all reasonable efforts to cause to be
filed a Certificate of Limited Partnership and such certificates or documents
as may be reasonable and necessary or appropriate for the formation,
qualification and operation of a limited partnership (or a partnership in which
the limited partners have limited liability) in the State of Delaware and any
other state, the District of Columbia or other jurisdiction in which the
Partnership may elect to do business or own property. To the extent that such
action is determined by the General Partner to be reasonable and necessary or
appropriate, the General Partner shall file amendments to and restatements of
the
23
29
Certificate and do all the things to maintain the Partnership as a limited
partnership (or a partnership in which the limited partners have limited
liability) under the laws of the State of Delaware and each other state, the
District of Columbia or other jurisdiction in which the Partnership may elect
to do business or own property. The General Partner shall not be required,
before or after filing, to deliver or mail a copy of the Certificate or any
amendment thereto to any Limited Partner.
SECTION 7.3 RESTRICTIONS ON GENERAL PARTNER'S AUTHORITY.
A. CONSENT REQUIRED. The General Partner may not take any
action in contravention of an express prohibition or limitation of this
Agreement or any action that reasonably could be expected to cause the
Partnership not to qualify as a "partnership" for federal income tax purposes
without the written Consent of all of the Limited Partners (which consent may
be given, conditioned or withheld in each such Limited Partner's sole and
absolute discretion) or (ii) such lower percentage of the Limited Partner
Interests as may be specifically provided for under a provision of this
Agreement or the Act.
B. SALE OR PROPERTY. Except as provided in Article XIII
hereof, the General Partner may not sell, exchange, transfer or otherwise
dispose of the Property at any time before October 3, 1999, without the prior
written consent of all of the Limited Partners, which consent may be given,
conditioned or withheld in each such Limited Partner's sole and absolute
discretion. Notwithstanding any provision herein to the contrary, the General
Partner shall have complete authority, acting singly and without the necessity
of joinder of any other Person, to sell, exchange, transfer or otherwise
dispose of all or any portion of the Property (including a transfer of such
Property pursuant to a merger) (i) at any time on or after October 3, 1999 as
long as the acquiror of the Property is not the General Partner or any
Affiliate thereof; (ii) at any time on or after October 3, 2003 to any Person
(subject to the provisions of Section 7.3.E hereof); and (iii) at any time in a
transaction that pursuant to a nonrecognition provision in the Code does not
result in current recognition of any gain by any Limited Partner (including
without limitation the contribution of the Property to a wholly-owned
corporation under Code Section 351, the contribution of the Property to a
partnership under Code Section 721 and the exchange of the Property for like-
kind property under Code Section 1031, provided that in the event of any such
like-kind exchange, the acquired property shall be subject to the same
restrictions herein as if such acquired property were the original Property
hereunder). Notwithstanding any provision to the contrary herein, the General
Partner shall not distribute the Property or any portion thereof, to the
Limited Partners if such distribution would result in any tax liability under
Section 737 of the Code prior to October 3, 1999, without the prior written
consent of all of the Limited Partners, which consent may be given, conditioned
or withheld in each Limited Partner's sole and absolute discretion.
C. DISSOLUTION. The General Partner shall not voluntarily
take any action that would cause, result in or lead to the dissolution of the
Partnership prior to October 3, 2003, without the prior written consent of all
of the Limited Partners, which consent may be given, conditioned or withheld in
each Limited Partner's sole and absolute discretion; provided that the
foregoing provision shall not limit the General Partner's ability to sell,
exchange, transfer or otherwise dispose of the Property to a Person other than
the General Partner or an Affiliate of the General Partner at
24
30
any time after October 3, 1999 and to distribute the proceeds therefrom in
liquidation of the Partnership under Article XIII.
D. TYPES OF FINANCING. For all fiscal periods of the
Partnership prior to October 3, 1999, (i) the General Partner shall use its
good faith reasonable efforts to ensure that the Partnership does not operate
in a manner which results in income allocable to the Limited Partners being
characterized as "unrelated debt-financed income" within the meaning of Section
514 of the Code; and (ii) the General Partner shall use its good faith
reasonable efforts to ensure that the Partnership minimizes the amount of any
"unrelated business taxable income" which it recognizes within the meaning of
Section 512 of the Code. For purposes of this Section 7.3.D, the General
Partner and each Limited Partner acknowledges that the determination regarding
whether the Partnership has "unrelated debt financed income" is highly complex;
and further, each Partner acknowledges and agrees that in fulfilling its duties
under this Section 7.3.D, the General Partner may assume, without any further
duty to inquire, that (i) any non-profit organization which owns an interest in
the Partnership is a qualified trust within the meaning of Section 401(a) of
the Code, (ii) any and all preferred returns payable to Limited Partners
hereunder are reasonable preferred returns within the meaning of Section
514(c)(9)(E) of the Code and all profit and loss allocations as expressly
provided herein shall satisfy the "fractions rule" under Section 514 of the
Code. Under no circumstances shall the General Partner have any liability to
the Partnership or any Partner for any action (including without limitation
taking any and all such action as may be necessary in connection with obtaining
that certain loan in the principal sum of $20,675,000.00 from Prudential
Securities Credit Corporation, a Delaware corporation) or failure to take any
action which results in any income of the Partnership being characterized as
"unrelated business taxable income" under Section 512 of the Code or "unrelated
debt-financed income" under Section 514 of the Code.
E. AFFILIATED TRANSACTIONS. The General Partner shall not
cause the Partnership to enter into any transaction with the General Partner or
any Affiliate of the General Partner unless the material terms and conditions
of such transactions are commercially reasonable as determined by the General
Partner in its reasonable discretion.
SECTION 7.4 REIMBURSEMENT OF THE GENERAL PARTNER.
A. NO COMPENSATION. Except as provided in this Section 7.4
and elsewhere in this Agreement (including the provisions of Articles V and VI
hereof regarding distributions, payments and allocations to which it may be
entitled), the General Partner shall not be compensated for its services as
general partner of the Partnership.
B. RESPONSIBILITY FOR PARTNERSHIP EXPENSES. The Partnership
shall be responsible for and shall pay all expenses relating to the
Partnership's organization, the ownership of its assets and its operations. The
General Partner shall be reimbursed on a monthly basis, or such other basis as
the General Partner may determine in its good faith discretion, for all
expenses it, and/or its Affiliates incur relating to the operation of, or for
the benefit of, the Partnership. The General Partner shall reasonably determine
the amount of expenses incurred by the General Partner and its Affiliates
related to the operation of, or for the benefit of, the Partnership. In the
event that
25
31
certain expenses are incurred for the benefit of both the Partnership and other
entities (including the General Partner or any of its Affiliates), such
expenses will be allocated to the Partnership and such other entities in a fair
and reasonable manner. Such reimbursements shall be in addition to any
reimbursement to the General Partner, and/or its Affiliates pursuant to Section
10.3.C hereof and as a result of indemnification pursuant to Section 7.6 below.
All payments and reimbursements hereunder shall be characterized for federal
income tax purposes as expenses of the Partnership incurred on its behalf, and
not as expenses of the General Partner, and/or its Affiliates.
C. REIMBURSEMENT NOT A DISTRIBUTION. If and to the extent
any reimbursement made pursuant to this Section 7.4 is determined for federal
income tax purposes not to constitute a payment of expenses of the Partnership,
the amount so determined shall constitute a guaranteed payment under Section
707 of the Code, shall be treated consistently therewith by the Partnership and
all Partners and shall not be treated as a distribution for purposes of
computing the Partners' Capital Accounts.
SECTION 7.5 OUTSIDE ACTIVITIES OF THE GENERAL PARTNER.
The General Partner shall devote to the Partnership such time as
may be necessary for the proper performance of its duties as General Partner,
but the General Partner is not required, and is not expected, to devote its
full time to the performance of such duties. It is understood that the General
Partner, and its officers, directors, employees, agents, trustees, Affiliates,
Subsidiaries and shareholders shall have substantial business interests and
engage in substantial business activities in addition to those relating to the
Partnership, including, without limitation, engaging in other business
interests and activities which are in direct or indirect competition with the
Partnership. Neither the Partnership nor any Partners shall have any right by
virtue of this Agreement or the partnership relationship established hereby in
or to such other ventures or activities or to the income or proceeds derived
therefrom, and the pursuit of such ventures, even if directly competitive with
the business of the Partnership, shall not be deemed wrongful or improper in
any manner. Neither the General Partner nor any Affiliate of the General
Partner shall be obligated to present any particular opportunity to the
Partnership even if such opportunity is of a character which, if presented to
the Partnership, could be taken by the Partnership, and, regardless of whether
or not such opportunity is competitive with the Partnership. The General
Partner, and any Affiliate of the General Partner shall have the right to take
for its own account (individually or as a shareholder, member, trustee, partner
or fiduciary), or to recommend to others, any such particular opportunity. The
General Partner, and its Affiliates may hold Limited Partner Interests and
shall be entitled to exercise all rights of a Limited Partner relating to such
Limited Partner Interests.
SECTION 7.6 INDEMNIFICATION.
A. GENERAL. THE PARTNERSHIP SHALL INDEMNIFY EACH INDEMNITEE
FROM AND AGAINST ANY AND ALL LOSSES, CLAIMS, DAMAGES, LIABILITIES, JOINT OR
SEVERAL, EXPENSES (INCLUDING, WITHOUT LIMITATION, ATTORNEYS' FEES AND OTHER
LEGAL FEES AND EXPENSES), JUDGMENTS, FINES, SETTLEMENTS AND OTHER AMOUNTS
ARISING FROM OR
26
32
IN CONNECTION WITH ANY AND ALL CLAIMS, DEMANDS, ACTIONS, SUITS OR PROCEEDINGS,
CIVIL, CRIMINAL, ADMINISTRATIVE OR INVESTIGATIVE INCURRED BY THE INDEMNITEE AND
RELATING TO THE PARTNERSHIP, OR ITS OPERATIONS, AS SET FORTH IN THIS AGREEMENT,
IN WHICH ANY SUCH INDEMNITEE MAY BE INVOLVED, OR IS THREATENED TO BE INVOLVED,
AS A PARTY OR OTHERWISE, UNLESS IT IS ESTABLISHED BY A FINAL DETERMINATION OF A
COURT OF COMPETENT JURISDICTION THAT: (I) THE ACT OR OMISSION OF THE INDEMNITEE
WAS MATERIAL TO THE MATTER GIVING RISE TO THE PROCEEDING AND EITHER WAS
COMMITTED IN BAD FAITH WAS THE RESULT OF ACTIVE AND DELIBERATE DISHONESTY, OR
CONSTITUTES GROSS NEGLIGENCE OR WILLFUL MISCONDUCT, (II) THE INDEMNITEE
ACTUALLY RECEIVED AN IMPROPER PERSONAL BENEFIT IN MONEY, PROPERTY OR SERVICES
OR (III) IN THE CASE OF ANY CRIMINAL PROCEEDING, THE INDEMNITEE HAD REASONABLE
CAUSE TO BELIEVE THAT THE ACT OR OMISSION WAS UNLAWFUL. WITHOUT LIMITATION, THE
FOREGOING INDEMNITY SHALL EXTEND TO ANY LIABILITY OF ANY INDEMNITEE, PURSUANT
TO A LOAN GUARANTEE, CONTRACTUAL OBLIGATIONS FOR ANY INDEBTEDNESS OR OTHER
OBLIGATIONS OR OTHERWISE, FOR ANY INDEBTEDNESS OF THE PARTNERSHIP OR ANY
SUBSIDIARY OF THE PARTNERSHIP (INCLUDING, WITHOUT LIMITATION, ANY INDEBTEDNESS
WHICH THE PARTNERSHIP OR ANY SUBSIDIARY OF THE PARTNERSHIP HAS ASSUMED OR TAKEN
SUBJECT TO), AND THE GENERAL PARTNER IS HEREBY AUTHORIZED AND EMPOWERED, ON
BEHALF OF THE PARTNERSHIP, TO ENTER INTO ONE OR MORE INDEMNITY AGREEMENTS
CONSISTENT WITH THE PROVISIONS OF THIS SECTION 7.6.A IN FAVOR OF ANY INDEMNITEE
HAVING OR POTENTIALLY HAVING LIABILITY FOR ANY SUCH INDEBTEDNESS. THE
TERMINATION OF ANY PROCEEDING BY JUDGMENT, ORDER OR SETTLEMENT DOES NOT CREATE
A PRESUMPTION THAT THE INDEMNITEE DID NOT MEET THE REQUISITE STANDARD OF
CONDUCT SET FORTH IN THIS SECTION 7.6.A. THE TERMINATION OF ANY PROCEEDING BY
CRIMINAL CONVICTION OR UPON A PLEA OF NOLO CONTENDERE OR ITS EQUIVALENT, OR AN
ENTRY OF AN ORDER OF PROBATION PRIOR TO JUDGMENT, CREATES A REBUTTABLE
PRESUMPTION THAT THE INDEMNITEE ACTED IN A MANNER CONTRARY TO THAT SPECIFIED IN
THIS SECTION 7.6.A WITH RESPECT TO THE SUBJECT MATTER OF SUCH PROCEEDING. ANY
INDEMNIFICATION PURSUANT TO THIS SECTION 7.6.A SHALL BE MADE ONLY OUT OF THE
ASSETS OF THE PARTNERSHIP, AND ANY INSURANCE PROCEEDS FROM THE LIABILITY POLICY
COVERING THE GENERAL PARTNER AND ANY INDEMNITIES, AND NEITHER THE GENERAL
PARTNER NOR ANY LIMITED PARTNER SHALL HAVE ANY OBLIGATION TO CONTRIBUTE TO THE
CAPITAL OF THE PARTNERSHIP OR OTHERWISE PROVIDE FUNDS TO ENABLE THE PARTNERSHIP
TO FUND ITS OBLIGATIONS UNDER THIS SECTION 7.6.A.
B. ADVANCEMENT OF EXPENSES. Reasonable expenses expected to
be incurred by an Indemnitee shall be paid or reimbursed by the Partnership in
advance of the final disposition
27
33
of any and all claims, demands, actions, suits or proceedings, civil, criminal,
administrative or investigative made or threatened against an Indemnitee upon
receipt by the Partnership of (i) a written affirmation by the Indemnitee of
the Indemnitee's good faith belief that the standard of conduct necessary for
indemnification by the Partnership as authorized in Section 7.6.A has been met
and (ii) a written undertaking by or on behalf of the Indemnitee to repay the
amount if it shall ultimately be determined that the standard of conduct has
not been met and provides reasonable security therefor.
C. NO LIMITATION OF RIGHTS. The indemnification provided by
this Section 7.6 shall be in addition to any other rights to which an
Indemnitee or any other Person may be entitled under any agreement, pursuant to
any vote of the Partners, as a matter of law or otherwise, and shall continue
as to an Indemnitee who has ceased to serve in such capacity unless otherwise
provided in a written agreement pursuant to which such Indemnitee is
indemnified.
D. INSURANCE. The Partnership may purchase and maintain
insurance on behalf of the Indemnities and such other Persons as the General
Partner shall determine against any liability that may be asserted against or
expenses that may be incurred by such Persons in connection with the
Partnership's activities, regardless of whether the Partnership would have the
power to indemnify such Persons against such liability under the provisions of
this Agreement.
E. NO PERSONAL LIABILITY FOR LIMITED PARTNERS. In no event
may an Indemnitee subject any of the Partners to personal liability by reason
of the indemnification provisions set forth in this Agreement. Notwithstanding
anything to the contrary contained herein, no member, manager, employee,
director, officer, agent, partner or shareholder of any Limited Partner shall
have any liability or obligation of any kind or nature whatsoever under this
agreement.
F. INTERESTED TRANSACTIONS. An Indemnitee shall not be
denied indemnification in whole or in part under this Section 7.6 because the
Indemnitee had an interest in the transaction with respect to which the
indemnification applies if the transaction was otherwise permitted by the terms
of this Agreement.
G. BENEFIT. The provisions of this Section 7.6 are for the
benefit of the Indemnities, their heirs, successors, assigns and administrators
and shall not be deemed to create any rights for the benefit of any other
Persons. Any amendment, modification or repeal of this Section 7.6, or any
provision hereof, shall be prospective only and shall not in any way affect the
Partnership's obligation to any Indemnitee under this Section 7.6 as in effect
immediately prior to such amendment, modification or repeal with respect to
claims arising from or related to matters occurring, in whole or in part, prior
to such amendment, modification or repeal, regardless of when such claims may
arise or be asserted.
H. INDEMNIFICATION PAYMENTS NOT DISTRIBUTIONS. If and to the
extent any payments to any Partner pursuant to this Section 7.6 constitute
gross income to such Partner (as opposed to the repayment of advances made on
behalf of the Partnership), such amounts shall constitute guaranteed payments
within the meaning of Section 707(c) of the Code, shall be treated
28
34
consistently therewith by the Partnership and all Partners, and shall not be
treated as distributions for purposes of computing the Partners' Capital
Accounts.
SECTION 7.7 LIABILITY OF THE GENERAL PARTNER.
A. GENERAL. Notwithstanding anything to the contrary set
forth in this Agreement, neither the General Partner, nor the trustees,
directors and officers of the General Partner, or any Affiliate of the General
Partner, shall be liable for monetary damages to the Partnership, any Partners
or any Assignees for losses sustained, liabilities incurred or benefits not
derived as a result of errors in judgment or mistakes of fact or law or of any
act or omission if the General Partner acted in good faith and such action did
not constitute gross negligence or willful misconduct.
B. NO OBLIGATION TO CONSIDER SEPARATE INTERESTS OF LIMITED
PARTNERS OR SHAREHOLDERS. The Limited Partners expressly acknowledge that the
General Partner is acting on behalf of the Partnership, and the shareholders of
the General Partner collectively, that the General Partner is under no
obligation to consider the separate interests of the Limited Partners
(including, without limitation, the tax consequences to Limited Partners or
Assignees) in deciding whether to cause the Partnership to take (or decline to
take) any actions permitted under this agreement and that neither of the
General Partner, nor any of its Affiliates, shall be liable for monetary
damages or otherwise for losses sustained, liabilities incurred or benefits not
derived by Limited Partners in connection with such decisions, provided that
the General Partner has acted in good faith and in accordance with the terms of
this Agreement.
C. ACTIONS OF AGENTS. The General Partner may exercise any of
the powers granted to it by this Agreement and perform any of the duties
imposed upon it hereunder either directly or by or through its agents. Neither
of the General Partner, nor any of its Affiliates, shall be responsible for any
misconduct or negligence on the part of any such agent appointed by the General
Partner in good faith.
D. EFFECT OF AMENDMENT. Any amendment, modification or
repeal of this Section 7.7 or any provision hereof shall be prospective only
and shall not in any way affect the limitations on the liability of the General
Partner, or any Affiliate of the General Partner, to the Partnership and the
Limited Partners under this Section 7.7 as in effect immediately prior to such
amendment, modification or repeal with respect to claims arising from or
relating to matters occurring, in whole or in part, prior to such amendment,
modification or repeal, regardless of when such claims may arise or be
asserted.
SECTION 7.8 OTHER MATTERS CONCERNING THE GENERAL PARTNER.
A. RELIANCE ON DOCUMENTS. The General Partner may rely and
shall be protected in acting or refraining from acting upon any resolution,
certificate, statement, instrument, opinion, report, notice, request, consent,
order, bond, debenture or other paper or document believed by it in good faith
to be genuine and to have been signed or presented by the proper party or
parties.
29
35
B. RELIANCE ON ADVISORS. The General Partner may consult with
legal counsel, accountants, appraisers, management consultants, investment
bankers, architects, engineers, environmental consultants and other consultants
and advisors selected by it, and any act taken or omitted to be taken in
reliance upon the opinion of such Persons as to matters which the General
Partner reasonably believes to be within such Persons' professional or expert
competence shall be conclusively presumed to have been done or omitted in good
faith and in accordance with such opinion.
C. ACTION THROUGH AGENTS. The General Partner shall have the
right, in respect of any of its powers or obligations hereunder, to act through
any of its duly authorized officers and a duly appointed attorney or
attorneys-in-fact. Each such attorney shall, to the extent provided by the
General Partner in the power of attorney, have full power and authority to do
and perform each and every act and duty which is permitted or required to be
done by the General Partner hereunder.
D. ACTIONS TO MAINTAIN REIT STATUS OR AVOID TAXATION OF THE
GENERAL PARTNER. Notwithstanding any other provisions of this Agreement or the
Act, any action of the General Partner on behalf of the Partnership or any
decision of the General Partner to refrain from acting on behalf of the
Partnership undertaken in the good faith belief that such action or omission is
necessary or advisable in order (i) to protect the ability of the General
Partner to continue to qualify as a REIT or (ii) to allow the General Partner
to avoid incurring any liability for taxes under Section 857 or 4981 of the
Code, is expressly authorized under this Agreement.
SECTION 7.9 TITLE TO PARTNERSHIP ASSETS.
Title to Partnership assets, whether real, personal or mixed and whether
tangible or intangible, shall be deemed to be owned by the Partnership as an
entity, and no Partner, individually or collectively, shall have any ownership
interest in such Partnership assets or any portion thereof.
SECTION 7.10 RELIANCE BY THIRD PARTIES.
Notwithstanding anything to the contrary in this Agreement, any Person
dealing with the Partnership shall be entitled to assume that the General
Partner has full power and authority, without consent or approval of any other
Partner or Person, to encumber, sell or otherwise use in any manner any and all
assets of the Partnership, to enter into any contracts on behalf of the
Partnership and to take any and all actions on behalf of the Partnership, and
such Person shall be entitled to deal with the General Partner as if the
General Partner were the Partnership's sole party in interest, both legally and
beneficially. Each Limited Partner hereby waives any and all defenses or other
remedies which may be available against such Person to contest, negate or
disaffirm any action of the General Partner in connection with any such
dealing, provided that the foregoing, shall not otherwise limit or affect the
General Partner's liability to any Limited Partner hereunder in the event that
the General Partner willfully breaches any of its material obligations
hereunder. In no event shall any Person dealing with the General Partner or its
representatives be obligated to ascertain that the terms of this Agreement have
been complied with or to inquire into the necessity or expedience of any act or
30
36
action of the General Partner or its representatives. Each and every
certificate, document or other instrument executed on behalf of the Partnership
by the General Partner or its representatives shall be conclusive evidence in
favor of any and every Person relying thereon or claiming thereunder that (i)
at the time of the execution and delivery of such certificate, document or
instrument, this Agreement was in full force and effect, (ii) the Person
executing and delivering such certificate, document or instrument was duly
authorized and empowered to do so for and on behalf of the Partnership, and
(iii) such certificate, document or instrument was duly executed and delivered
in accordance with the terms and provisions of this Agreement and is binding
upon the Partnership.
ARTICLE VIII.
RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS
SECTION 8.1 LIMITATION OF LIABILITY.
Except as provided to the contrary in Sections 10.5 and 8.6, the Limited
Partners' liability under this Agreement shall be limited to the amount of
their Capital Contributions to the Partnership and provided that the foregoing
shall not limit SWIC's obligation to make the LP Capital Contribution to the
Partnership on behalf of the Limited Partners pursuant to the Contribution
Agreement and Section 4.1A. Notwithstanding anything to the contrary herein,
no member, manager, employee, director, officer, agent, partner, or shareholder
of any Limited Partner shall have any liability or obligation of any kind or
nature whatsoever under this Agreement.
SECTION 8.2 MANAGEMENT OF BUSINESS.
No Limited Partner or Assignee (other than the General Partner, any of
its Affiliates or any trustee, officer, director, employee, partner, agent or
trustee of the General Partner, the Partnership or any of their Affiliates, in
their capacity as such) shall take part in the operation, management or control
(within the meaning of the Act) of the Partnership's business, transact any
business in the Partnership's name or have the power to sign documents for or
otherwise bind the Partnership. The transaction of any such business by the
General Partner, any of its Affiliates or any trustee, officer, director,
employee, partner, agent or trustee of the General Partner, the Partnership or
any of their Affiliates, in their capacity as such, shall not affect, impair or
eliminate the limitations on the liability of the Limited Partners or Assignees
under this Agreement.
SECTION 8.3 OUTSIDE ACTIVITIES OF LIMITED PARTNERS.
Any Limited Partner and any trustee, officer, director, employee, agent,
trustee, Affiliate or shareholder of any Limited Partner shall be entitled to
and may have business interests and engage in business activities in addition
to those relating to the Partnership, including business interests and
activities in direct or indirect competition with the Partnership. Neither the
Partnership nor any Partners shall have any rights by
31
37
virtue of this Agreement in any business ventures of any Limited Partner or
Assignee. None of the Limited Partners nor any other Person shall have any
rights by virtue of this Agreement or the partnership relationship established
hereby in any business ventures of any other Person, and such Person shall have
no obligation pursuant to this Agreement to offer any interest in any such
business ventures to the Partnership, any Limited Partner or any such other
Person, even if such opportunity is of a character which, if presented to the
Partnership, any Limited Partner or such other Person, could be taken by such
Partnership, Limited Partner or Person.
SECTION 8.4 RETURN OF CAPITAL.
No Limited Partner shall be entitled to the withdrawal or return of its
Capital Contributions, except to the extent of distributions made pursuant to
this Agreement or upon termination of the Partnership as provided herein.
Except to the extent expressly provided to the contrary by Exhibit C hereto or
as permitted by Sections 5.1., 6.1 and 13.2 hereof or otherwise expressly
provided in this Agreement, no Limited Partner or Assignee shall have priority
over any other Partner or Assignee either as to the return of Capital
Contributions or as to profits, losses, distributions or credits.
SECTION 8.5 RIGHTS OF LIMITED PARTNERS RELATING TO THE PARTNERSHIP.
A. GENERAL. In addition to other rights provided by this Agreement
or by the Act, each Limited Partner shall have the right, for a purpose
reasonably related to such Limited Partner's Partnership Interest, upon written
demand with a statement of the purpose of such demand and at such Limited
Partner's own expense:
(1) to obtain a copy of the Partnership's federal, state and
local income tax returns for each Partnership Year; and
(2) to obtain a copy of this Agreement and the Certificate and
all amendments thereto.
SECTION 8.6 PUT RIGHT.
A. GENERAL.
(1) Subject to Section 8.6.C below, on or after October 3,
1999 (as such date may be accelerated pursuant to subparagraph (4) below) each
Limited Partner shall have the right (the "Put Right") to require the General
Partner to purchase all or a portion of the Partnership Units held by the
Limited Partner at a price equal to and in the form of the Consideration. The
Put Right shall be exercised pursuant to a Put Notice delivered to the General
Partner by any such Limited Partner. No Limited Partner may exercise the Put
Right with regard to fewer than 100,000 Partnership Units; and provided that
with regard to the Partnership Units issued to AG hereunder, the holders
thereof (whether AG or any Assignee or transferee thereof) shall be limited to
exercising a total of two (2) separate Put Rights (counting in such limitation
any prior exercise of a Put Right by AG, or its Assignees or transferees), the
second of which must include all of such remaining Partnership Units, and with
regard to the Partnership Units issued to Xxxxxxx West hereunder, the holders
thereof (whether Xxxxxxx West or any Assignee or transferee thereof) shall be
limited to exercising a total
32
38
of two (2) separate Put Rights counting in such limitation any prior exercise
of a Put Right by Xxxxxxx West or its Assignees or transferees), the second of
which must include all of such remaining Partnership Units.
(2) A Limited Partner shall have no right with respect to any
interest in the Partnership Units specified in a Put Notice after providing
such Put Notice described above, other than the right to receive payment for
its interest in the Partnership in accordance with this Section 8.6.
(3) The Assignee of a Limited Partner may exercise the rights
of such Limited Partner pursuant to this Section 8.6, 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 Limited Partner's Assignee. In
connection with any exercise of such rights by such Assignee on behalf of such
Limited Partner, the Consideration shall, upon prior written notice to the
General Partner, be paid by the General Partner directly to such Assignee and
not to such Limited Partner.
(4) Notwithstanding anything to the contrary provided herein
(including subparagraph (1) of this Section 8.6A), in the event of the complete
liquidation, dissolution or winding up of the General Partner (other than
pursuant to a transaction in which the Limited Partners are granted the right
to exercise their Put Rights with regard to the common shares of the acquiror
or successor in interest to the General Partner upon the same terms and
conditions as set forth herein, subject to any applicable Equity Adjustment),
whether pursuant to a tender offer, exchange offer or otherwise, the Limited
Partners shall have the immediate right to exercise their Put Rights hereunder.
B. PAYMENT OF CONSIDERATION.
(1) Within thirty (30) days of the delivery of the Put Notice
by a Limited Partner under this Section 8.6 the General Partner (subject to the
limitations set forth in Section 8.6C) shall transfer and deliver the
Consideration to such Limited Partner or, as applicable, its Assignee whereupon
the General Partner (or its designee) shall acquire the Partnership Units
offered by such Limited Partner or, as applicable, its Assignee and shall be
treated for all purposes of this Agreement as the owner of such Partnership
Units.
(2) In the event that the General Partner elects to pay the
Consideration to a Limited Partner in the form of the Share Consideration and
such Share Consideration is not a whole number of Shares, such Limited Partner
shall be paid (i) that number of Shares which equals the nearest whole number
less than such amount plus (ii) an amount of cash which the General Partner
reasonably determines, in its reasonable discretion, to represent the fair
value of the remaining fractional Share which would otherwise be payable to
such Limited Partner.
(3) Each exercising Limited Partner agrees to deliver to the
General Partner the Partnership Unit Certificate(s) representing the
Partnership Units identified in the Put Notice and to execute such documents as
the General Partner may reasonably require in connection with the issuance of
Shares upon exercise of the Put Right (including without limitation an
assignment of
33
39
Partnership Units pursuant to the terms of which such Limited Partner agrees
to indemnify and hold General Partner harmless from any and all liens, claims
or encumbrances on such Partnership Units).
C. EXCEPTIONS TO EXERCISE OF PUT RIGHT.
No Limited Partner shall be entitled to exercise the Put Right pursuant
to Section 8.6.A above if the delivery of Shares to such Limited Partner (a)
would be prohibited under the Declaration of Trust, as amended, of the General
Partner, (b) would adversely affect the ability of the General Partner to
continue to qualify as a REIT or subject the General Partner to any additional
taxes under Section 857 or Section 4981 of the Code, or (c) would be prohibited
under applicable federal or state securities laws or regulations.
D. NO LIENS ON PARTNERSHIP UNITS DELIVERED.
Each exercising Limited Partner covenants and agrees with the General
Partner that all Partnership Units delivered in connection with the Put Right
shall be delivered to the General Partner, free and clear of all liens, claims
and encumbrances and, notwithstanding anything contained herein to the
contrary, the General Partner shall not be under any obligation to acquire any
Limited Partner's Partnership Units, (1) to the extent that any such
Partnership Units are subject to any liens, claims or encumbrances, or (2) in
the event that such Limited Partner shall fail to give the General Partner
adequate assurances that such Partnership Units are not subject to any such
liens, claims or encumbrances or shall fail to agree to fully indemnify the
General Partner from any such liens, claims or encumbrances. Each Limited
Partner further agrees that, in the event any state or local transfer tax is
payable as a result of the transfer of its Partnership Units to the General
Partner, such Limited Partner shall assume and pay such transfer tax.
SECTION 8.7 NOTICE OF CERTAIN EVENTS. In case at any time the General
Partner shall propose:
A. To fix a record date for the purpose of determining the holders
of Shares who are entitled to receive any dividend or distribution (other than
a regular periodic dividend or distribution payable in cash), or any right to
subscribe for, purchase or otherwise acquire any shares of beneficial interest
of any class or any other securities of the General Partner, or to receive any
other rights;
B. To effect any reorganization of the General Partner, any
reclassification or recapitalization of the shares of beneficial interest of
the General Partner or any cash tender offer (for more than 50% of the
outstanding Shares of the General Partner), consolidation, or merger involving
the General Partner and any other Person (pursuant to which the General Partner
is not the surviving entity) or any transfer of all or substantially all of the
assets of the Company to any other Person; or
C. To effect any liquidation, dissolution or winding up of the
General Partner or the Partnership then, and in any one or more of such cases,
the General Partner shall cause written notice thereof to be delivered to each
Limited Partner in accordance with the provisions of Section 15.1 at least 10
days prior to the date in which (1) the books of the Company shall close, or a
record date
34
40
be taken, for such dividend, distribution or right or (ii) such reorganization,
reclassification, recapitalization, consolidation, merger, transfer,
liquidation, dissolution or winding up shall be effective, as the case may be.
Failure to mail such notice or any defect therein shall not affect the validity
of the transaction, provided that the foregoing shall not otherwise limit or
affect the General Partner's liability to any Limited Partner hereunder in the
event that the General Partner willfully breaches any of its material
obligations hereunder.
ARTICLE IX.
BOOKS, RECORDS, ACCOUNTING AND REPORTS
SECTION 9.1 RECORDS AND ACCOUNTING.
The General Partner shall keep or cause to be kept at the principal
office of the Partnership appropriate books and records with respect to the
Partnership's business. Any records maintained by or on behalf of the
Partnership in the regular course of its business may be kept on, or be in the
form of, punch cards, magnetic tape or other media, photographs, micro graphics
or any other information storage device, provided that the records so
maintained are convertible into clearly legible written form within a
reasonable period of time. The books of the Partnership shall be maintained on
an accrual basis in accordance with generally accepted accounting principles
for financial reporting purposes and in accordance with tax accounting
principles for tax reporting purposes. The Limited Partners shall have the
right to inspect Partnership books and records during normal business hours and
upon prior written notice.
SECTION 9.2 FISCAL YEAR.
The fiscal year of the Partnership shall be the calendar year.
SECTION 9.3 REPORTS.
As soon as practicable after the conclusion of each Partnership Year,
the General Partner shall cause to be mailed to each Limited Partner an annual
report, as of the close of such Partnership Year, containing financial
statements of the Partnership, or of the General Partner if such statements are
prepared on a consolidated basis with the Partnership, for such Partnership
Year.
35
41
ARTICLE X.
TAX MATTERS
SECTION 10.1 PREPARATION OF TAX RETURNS.
The General Partner shall arrange for the preparation and timely filing
of all returns of Partnership income, gains, deductions, losses and other items
required of the Partnership for federal and state income tax purposes and shall
use all reasonable efforts to furnish, within ninety (90) days of the close of
each taxable year, the tax information reasonably required or reasonable
requested by Limited Partners for federal and state income tax reporting
purposes.
SECTION 10.2 TAX ELECTIONS.
The General Partner shall have the right to determine whether to make
any available election pursuant to the Code (including, without limitation, the
election available under Section 754 of the Code) on behalf of the Partnership.
Subject to the provisions of Section 7.7.B, any such election hereunder shall
be made by the General Partner upon its determination in its reasonable
discretion that such election is in the best interests of the Partners. The
General Partner shall have the right to seek to revoke any such election upon
the General Partner's determination in its reasonable discretion that such
revocation is in the best interests of the Partners.
SECTION 10.3 TAX MATTERS PARTNER.
A. GENERAL. The General Partner shall be the "tax matters partner"
of the Partnership for federal income tax purposes. Pursuant to Section
6223(c)(3) of the Code, upon receipt of notice from the IRS of the beginning of
an administrative proceeding with respect to the Partnership, the tax matters
partner shall furnish the IRS with the name, address, taxpayer identification
number and profit interest of each of the Limited Partners and any Assignees;
provided, however, that such information is provided to the Partnership by the
Limited Partners.
X. XXXXXX. The tax matters partner is authorized, but not required:
(1) to enter into any settlement with the IRS with respect to
any administrative or judicial proceedings for the adjustment of Partnership
items required to be taken into account by a Partner for income tax purposes
(such administrative proceedings being referred to as a "tax audit" and such
judicial proceedings being referred to as "judicial review"), and in the
settlement agreement the tax matters partner may expressly state that such
agreement shall bind all Partners, except that such settlement agreement shall
not bind any Partner (i) who (within the time prescribed pursuant to the Code
and Regulations) files a statement with the IRS providing that the tax matters
partner shall not have the authority to enter into a settlement agreement on
behalf of such Partner or (ii) who is a "notice partner" (as defined in Section
6231(a)(8) of the Code) or a member of a "notice group" (as defined in Section
6223(b)(2) of the Code);
36
42
(2) in the event that a notice of a final administrative
adjustment at the Partnership level of any item required to be taken into
account by a Partner for tax purposes (a "final adjustment") is mailed to the
tax matters partner, to seek judicial review of such final adjustment,
including the filing of a petition for readjustment with the Tax Court or the
filing of a complaint for refund with the United States Claims Court or the
District Court of the United States for the district in which the Partnership's
principal place of business is located;
(3) to intervene in any action brought by any other Partner
for judicial review of a final adjustment;
(4) to file a request for an administrative adjustment with
the IRS at any time and, if any part of such request is not allowed by the IRS,
to file an appropriate pleading (petition or complaint) for judicial review
with respect to such request;
(5) to enter into an agreement with the IRS to extend the
period for assessing any tax which is attributable to any item required to be
taken into account by a Partner for tax purposes, or an item affected by such
item; and
(6) to take any other action on behalf of the Partners of the
Partnership in connection with any tax audit or judicial review proceeding to
the extent permitted by applicable law or regulations.
The taking of any action and the incurring of any expense by the tax
matters partner in connection with any such proceeding, except to the extent
required by law, is a matter in the sole and absolute discretion of the tax
matters partner and the provisions relating to indemnification of the General
Partner set forth in Section 7.6 hereof shall be fully applicable to the tax
matters partner in its capacity as such.
C. REIMBURSEMENT.
The tax matters partner shall receive no compensation for its services.
All costs and expenses incurred by the tax matters partner in performing its
duties as such (including legal and accounting fees and expenses and expenses
reimbursable under Section 7.4 hereof) shall be borne by the Partnership.
Nothing herein shall be construed to restrict the Partnership from engaging an
accounting firm or a law firm to assist the tax matters partner in discharging
its duties hereunder.
SECTION 10.4 ORGANIZATIONAL EXPENSES.
The Partnership shall elect to deduct expenses, if any, incurred by it
in organizing the Partnership ratably over a sixty (60) month period as
provided in Section 709 of the Code.
37
43
SECTION 10.5 WITHHOLDING.
Each Limited Partner hereby authorizes the Partnership to withhold from
or pay on behalf of or with respect to such Limited Partner any amount of
federal, state, local, or foreign taxes that the General Partner reasonably
determines that the Partnership is required to withhold or pay with respect to
any amount distributable or allocable to such Limited Partner pursuant to this
Agreement, including, without limitation, any taxes required to be withheld or
paid by the Partnership pursuant to Section 1441, 1442, 1445, or 1446 of the
Code. Any amount paid on behalf of or with respect to a Limited Partner shall
constitute a recourse loan by the Partnership to such Limited Partner, which
loan shall be repaid by such Limited Partner within fifteen (15) days after
notice from the General Partner that such payment must be made unless (i) the
Partnership withholds such payment from a distribution which would otherwise be
made to the Limited Partner or (ii) the General Partner determines, in its sole
and absolute discretion, that such payment may be satisfied out of the
available funds of the Partnership which would, but for such payment, be
distributed to the Limited Partner. Any amounts withheld pursuant to the
foregoing clauses (i) or (ii) shall be treated as having been distributed to
such Limited Partner. Each Limited Partner hereby unconditionally and
irrevocably grants to the Partnership a security interest in such Limited
Partner's Partnership Interest to secure such Limited Partner's obligation to
pay to the Partnership any amounts required to be paid pursuant to this Section
10.5. In the event that a Limited Partner fails to pay any amounts owed to the
Partnership pursuant to this Section 10.5 when due, the General Partner may, in
its sole and absolute discretion, elect to make the payment to the Partnership
on behalf of such defaulting Limited Partner, and in such event shall be deemed
to have loaned such amount to such defaulting Limited Partner and shall succeed
to all rights and remedies of the Partnership as against such defaulting
Limited Partner. In such event the General Partner shall have the right to
receive distributions that would otherwise be distributable to such defaulting
Limited Partner until such time as such loan, together with all interest
thereon, has been paid in full, and any such distributions so received by the
General Partner shall be treated as having been distributed to the defaulting
Limited Partner and immediately paid by the defaulting Limited Partner to the
General Partner in repayment of such loan. Any amounts payable by a Limited
Partner hereunder shall bear interest at the lesser of (A) the base rate on
corporate loans at large United States money center commercial banks, as
published from time to time in the Wall Street Journal, plus four (4)
percentage points or (B) the maximum lawful rate of interest on such
obligation, such interest to accrue from the date such amount is due (i.e.,
fifteen (15) days after demand) until such amount is paid in full. Each Limited
Partner shall take such actions as the Partnership or the General Partner shall
request in order to perfect or enforce the security interest created hereunder.
38
44
ARTICLE XI.
TRANSFERS AND WITHDRAWALS
SECTION 11.1 TRANSFER.
A. DEFINITION. The term "transfer," when used in this Article XI
with respect to a Partnership Interest or a Partnership Unit, shall be deemed
to refer to a transaction by which a Partner purports to assign all or any part
of its interest in the Partnership to another Person, and includes a sale,
assignment, gift, pledge, encumbrance, hypothecation, mortgage, exchange or any
other disposition by law or otherwise. However, the term "transfer" when used
in this Article XI does not include any purchase of Partnership Units by the
General Partner from a Limited Partner pursuant to the exercise of the Put
Right in accordance with the provisions of Section 8.6 hereof.
B. GENERAL. No Partnership Interest held by a Limited Partner may
be transferred, in whole or in part, except in accordance with the terms and
conditions set forth in this Article XI. Any transfer or purported transfer of
a Limited Partner Interest not made in accordance with this Article XI shall be
null and void.
C. TRANSFER BY GENERAL PARTNER. The General Partner may not
transfer its General Partner Interest in the Partnership without the Consent of
all Limited Partners unless (1) the transfer of the General Partner Interest is
to an Affiliate of the General Partner, or (2) the transfer of the General
Partner Interest is pursuant to or in connection with a merger (including a
triangular merger), consolidation or other combination with or into another
Person, reclassification, recapitalization or change of outstanding Shares (a
"Business Combination"), and an Equity Adjustment is made to the Consideration
to be received by the Limited Partners, or (3) the transfer of the General
Partner Interest is pursuant to any transaction further described in Section
8.6.A(4) or 8.7 and the General Partner shall have provided requisite notice to
the Limited Partners.
SECTION 11.2 LIMITED PARTNERS' RIGHTS TO TRANSFER.
A. GENERAL. Except to the extent expressly permitted in Section
11.2.B or in connection with the exercise of a Put Right pursuant to Section
8.6, a Limited Partner may not transfer all or any portion of its Limited
Partner Interest, or any of such Limited Partner's economic rights as a Limited
Partner other than to a Permitted Transferee (subject to Sections 11.2.D and
11.2.E), without the prior written consent of the General Partner, which
consent may be withheld by the General Partner, in its sole and absolute
discretion, for any reason or for no reason. Any transfer otherwise permitted
under Section 11.2.B shall be subject to the conditions set forth in Sections
11.2.D and 11.2.E, and all permitted transfers shall be subject to Section 11.3
and Section 11.4.
B. INCAPACITATED LIMITED PARTNERS. If a Limited Partner is
Incapacitated, the executor, administrator, trustee, committee, guardian,
conservator or receiver of such Limited Partner's estate shall have all the
rights of a Limited Partner, but not more rights than those enjoyed by
other Limited
39
45
Partners for the purpose of settling or managing the estate and such power as
the Incapacitated Limited Partner possessed to transfer all or any part of its
interest in the Partnership. The Incapacity of a Limited Partner, in and of
itself, shall not dissolve or terminate the Partnership.
C. PERMITTED TRANSFERS. Subject to the provisions of Sections
11.2.D and 11.2.E a Limited Partner may, at any time, transfer its economic
rights as a Limited Partner to a Permitted Transferee. Any such Permitted
Transferee shall, following the closing of any such transfer of Partnership
Units, and upon provision of written notice thereof to the General Partner,
have the rights of an Assignee. Subject to the Provisions of Section 11.3 any
such Assignee shall only become a Substituted Limited Partner upon the prior
written consent of the General Partner.
D. NO TRANSFERS VIOLATING SECURITIES LAWS. The General Partner may
in its sole discretion, prohibit any transfer of Partnership Units by a Limited
Partner if, in the opinion of legal counsel to the Partnership, such transfer
would require filing of a registration statement under the Securities Act or
would otherwise violate any federal, or state securities laws or regulations
applicable to the Partnership or the Partnership Unit.
E. GENERAL PARTNER AUTHORITY WITH REGARD TO OTHER TRANSFERS. The
General Partner may, in its sole discretion, prohibit any transfer of
Partnership Units by a Limited Partner, if (i) in the opinion of legal counsel
it would result in the termination of the Partnership of the Partnership for
federal income tax purposes, (ii) in the opinion of legal counsel for the
Partnership, it would adversely affect the ability of the General Partner to
continue to qualify as a REIT or would subject the General Partner to any
additional taxes under Section 857 or Section 4981 of the Code or (iii) such
transfer is effectuated through an "established securities market" or a
"secondary market (or the substantial equivalent thereof)" within the meaning
of Section 7704 of the Code.
SECTION 11.3 SUBSTITUTED LIMITED PARTNERS.
A. CONSENT OF GENERAL PARTNER. No Limited Partner shall have the
right to substitute a transferee as a Limited Partner in its place (whether or
not the transfer of the Limited Partner's Partnership Interest is permitted
under Section 11.2). The General Partner shall, however, have the right to
consent to the admission of a transferee of the interest of a Limited Partner
pursuant to this Section 11.3 as a Substituted Limited Partner, which consent
may be given or withheld by the General Partner in its sole and absolute
discretion and for any reason or no reason. The General Partner's failure or
refusal to permit a transferee of any such interests to become a Substituted
Limited Partner shall not give rise to any cause of action against the
Partnership or any Partner.
B. RIGHTS OF SUBSTITUTED LIMITED PARTNER. A transferee who has been
admitted as a Substituted Limited Partner in accordance with this Article XI
shall have all the rights and powers and be subject to all the restrictions and
liabilities of a Limited Partner under this Agreement. The admission of any
transferee as a Substituted Limited Partner shall be conditioned upon the
transferee executing and delivering to the Partnership an acceptance of all the
terms and conditions of this Agreement (including, without limitation, the
provisions of Section 2.4) and such other documents or instruments as may be
required to effect the admission.
40
46
C. AMENDMENT AND RESTATEMENT OF EXHIBIT A. Upon the admission of a
Substituted Limited Partner, the General Partner shall amend and restate
Exhibit A hereto to reflect the name, address, Capital Account, number of
Partnership Units of such Substituted Limited Partner and to eliminate or
adjust, if necessary, the name, address, Capital Account and Percentage
Interest of the predecessor of such Substituted Limited Partner (and any other
Partner, as necessary).
SECTION 11.4 ASSIGNEES.
If the General Partner, in its sole and absolute discretion, does not
consent to the admission of any transferee under Section 11.3 as a Substituted
Limited Partner, such transferee shall be considered an Assignee for purposes
of this Agreement. An Assignee shall be entitled to all the rights of an
assignee of a limited partner interest under the Act, including the right to
receive distributions from the Partnership and the share of Net Income, Net
Losses, gain, loss and Recapture Income attributable to the Partnership Units
assigned to such transferee, and, as applicable shall have the rights granted
to the Limited Partners under Section 8.6, but shall not be deemed to be a
holder of Partnership Units for any other purpose under this Agreement, and
shall not be entitled to vote such Partnership Units in any matter presented to
the Limited Partners for a vote (such Partnership Units being deemed to have
been voted in the same manner as the Partnership Units held by the General
Partner). In the event any such transferee desires to make a further assignment
of any such Partnership Units, such transferee shall be subject to all the
provisions of this Article XI to the same extent and in the same manner as any
Limited Partner desiring to make an assignment of Partnership Units. The
General Partner shall have no liability under any circumstances with respect to
any Assignee as to which it does not have actual notice.
SECTION 11.5 GENERAL PROVISIONS.
A. WITHDRAWAL OF LIMITED PARTNER. No Limited Partner may withdraw
from the Partnership other than as a result of a permitted transfer of all of
such Limited Partner's Partnership Units in accordance with this Article XI or,
as applicable, pursuant to the transfer of all of its Partnership Units under
Section 8.6 hereof.
B. TERMINATION OF STATUS AS LIMITED PARTNER. Any Limited Partner
who shall transfer all of its Partnership Units in a transfer permitted
pursuant to this Article XI or pursuant to the exercise of the Put Right under
Section 8.6 hereof shall immediately cease to be a Limited Partner.
C. ALLOCATIONS. If any Partnership Interest is transferred in
compliance with the provisions of this Article XI or, as applicable,
transferred pursuant to Section 8.6 or hereof, Net Income, Net Losses, each
item thereof and all other items attributable to such interest shall be divided
and allocated between the transferor Partner and the transferee Partner by
taking into account their varying interests during the fiscal year in
accordance with Section 706 of the Code, using any permissible method of
allocation under such Code Section.
41
47
ARTICLE XII.
ADMISSION OF PARTNERS
SECTION 12.1 ADMISSION OF SUCCESSOR GENERAL PARTNER.
A successor to all of the General Partner's General Partner Interest
pursuant to Section 11.1.C hereof who is proposed to be admitted as a successor
General Partner shall be admitted to the Partnership as the General Partner.
Any such transferee shall carry on the business of the Partnership without
dissolution. In each case, the admission shall be subject to the successor
General Partner's executing and delivering to the Partnership an acceptance of
all of the terms and conditions of this Agreement and such other documents or
instruments as may be reasonably required by the Limited Partners to effect the
admission.
SECTION 12.2 AMENDMENT OF AGREEMENT AND CERTIFICATE OF LIMITED
PARTNERSHIP.
For the admission to the Partnership of any Partner in accordance with
the provisions hereof, the General Partner shall take all steps necessary and
appropriate under the Act to amend the records of the Partnership (including an
amendment and restatement of Exhibit A hereto and any requisite amendments to
this Agreement to reflect the Residual Percentage properly allocable to such
Partner)) and, if necessary, to prepare as soon as practicable an amendment of
this Agreement and, if required by law, shall prepare and file an amendment to
the Certificate and may for such purpose exercise the power of attorney granted
pursuant to Section 2.4 hereof.
ARTICLE XIII.
DISSOLUTION AND LIQUIDATION
SECTION 13.1 DISSOLUTION.
The Partnership shall not be dissolved by the admission of a Substituted
Limited Partner or by the admission of a successor General Partner in
accordance with the terms of this Agreement. Upon the withdrawal of the General
Partner, any successor General Partner shall continue the business of the
Partnership. The Partnership shall dissolve, and its affairs shall be wound up,
upon the first to occur of any of the following ("Liquidating Events") :
(1) the expiration of its term as provided in Section 2.5
hereof;
(2) an event of withdrawal of the General Partner, as defined
in the Act (other than an event of bankruptcy), unless, within ninety (90) days
after the withdrawal a "majority in interest" (as defined below) of the
remaining Partners Consent in writing to continue the business of the
Partnership and to the appointment, effective as of the date of withdrawal, of
a substitute General Partner;
42
48
(3) the sale of all or substantially all of the assets of the
Partnership;
(4) on or after October 3, 2003, the election of the General
Partner, in its sole discretion, to dissolve the Partnership;
(5) the entry of a decree of judicial dissolution of the
Partnership pursuant to the provisions of the Act;
(6) the sale of the Property;
(7) a final and non-appealable judgment is entered by a court
of competent jurisdiction ruling that the General Partner is bankrupt or
insolvent, or a final and non-appealable order for relief is entered by a court
with appropriate jurisdiction against the General Partner, in each case under
any federal or state bankruptcy or insolvency laws as now or hereafter in
effect, unless prior to or within ninety days after of the entry of such order
or judgment a "majority in interest" (as defined below) of the Partners Consent
in writing to continue the business of the Partnership and to the appointment,
effective as of a date prior to the date of such order or judgment, of a
substitute General Partner.
As used herein, a "majority in interest" shall refer to Partners (other than
the General Partner) who hold more than fifty percent (50%) of the outstanding
Partnership Units held by such Partners.
SECTION 13.2 WINDING UP.
A. GENERAL. Upon the occurrence of a Liquidating Event, and as
applicable, the failure of the Partners to continue the business of the
Partnership, the Partnership shall continue solely for the purposes of winding
up its affairs in an orderly manner, liquidating its assets, and satisfying the
claims of its creditors and Partners. No Partner shall take any action that is
inconsistent with, or not necessary to or appropriate for, the winding up of
the Partnership's business and affairs. The General Partner (or, in the event
there is no remaining General Partner, any Person elected by a majority in
interest of the Limited Partners (the "Liquidator")) shall be responsible for
overseeing the winding up and dissolution of the Partnership and shall take
full account of the Partnership's liabilities and property and the Partnership
property shall be liquidated as promptly as is consistent with obtaining the
fair value thereof, and the proceeds therefrom shall be applied and distributed
in the following order:
(1) first, to the payment and discharge of all of the
Partnership's debts and liabilities to creditors other than the Partners;
(2) second, to the payment and discharge of all of the
Partnership's debts and liabilities to the Partners;
43
49
(3) third, to the Limited Partners in an amount equal to any
LP Return Accrual owing such Limited Partners, pro rata in accordance with the
amount of such LP Return Accrual owing each such Limited Partner;
(4) fourth, to the Limited Partners in an amount equal to the
Unpaid LP Return owing such Limited Partners, pro rata in accordance with the
amount of such Unpaid LP Return owing each such Limited Partner;
(5) fifth, to the General Partner in an amount equal to any
Unpaid GP Return owing the General Partner;
(6) sixth, to the General Partner in an amount equal to the
Unreturned Capital owing the General Partner;
(7) seventh, to the Limited Partners in an amount equal to the
Unreturned Capital owing the Limited Partners pro rata in accordance with the
Unreturned Capital owing each such Limited Partner; and
(8) finally, the balance, if any, shall be distributed to the
Partners pro rata, in accordance with their respective Residual Percentages.
Provided, however, that under no circumstances shall a Limited Partner
receive any distributions under this Section 13.2.A with respect to any
Partnership Units with regard to which the Limited Partner has exercised the
Put Right.
B. DEFERRED LIQUIDATION. Notwithstanding the provisions of Section
13.2.A above which require liquidation of the assets of the Partnership, but
subject to the order of priorities set forth therein, if prior to or upon
dissolution of the Partnership the Liquidator determines that an immediate sale
of part or all of the Partnership's assets would be impractical or would cause
undue loss to the Partners, the Liquidator may, in its sole and absolute
discretion, defer for a reasonable time the liquidation of any assets except
those necessary to satisfy liabilities of the Partnership (including to those
Partners as creditors) or distribute to the Partners, in lieu of cash, as
tenants in common and in accordance with the provisions of Section 13.2.A
above, undivided interests in such Partnership assets as the Liquidator deems
not suitable for liquidation. Any such distributions in kind shall be made only
if, in the good faith judgment of the Liquidator, such distributions in kind
are in the best interest of the Partners, and shall be subject to such
conditions relating to the disposition and management of such properties as the
Liquidator deems reasonable and equitable and to any agreements governing the
operation of such properties at such time. The Liquidator shall determine the
fair market value of any property distributed in kind using such reasonable
method of valuation as it may adopt.
C. LIQUIDATING TRUST. In the discretion of the General Partner, a
pro rata portion of the distributions that would otherwise be made to the
General Partner and Limited Partners pursuant to this Article XIII may be: (A)
distributed to a trust established for the benefit of the General Partner
44
50
and Limited Partners for the purposes of liquidating Partnership assets,
collecting amounts owed to the Partnership and paying any contingent or
unforeseen liabilities or obligations of the Partnership or of the General
Partner arising out of or in connection with the Partnership (in which case the
assets of any such trust shall be distributed to the General Partner and
Limited Partners from time to time, in the reasonable discretion of the General
Partner, in the same proportions as the amount distributed to such trust by the
Partnership would otherwise have been distributed to the General Partner and
Limited Partners pursuant to this Agreement); or (B) withheld to provide a
reasonable reserve for Partnership liabilities (contingent or otherwise) and to
reflect the unrealized portion of any installment obligations owed to the
Partnership, provided that such withheld amounts shall be distributed to the
General Partner and Limited Partners in the manner and order of priority set
forth in Section 13.2.A as soon as practicable.
SECTION 13.3 DEFICIT CAPITAL ACCOUNTS.
If any Partner has a deficit balance in its Capital Account (after
giving effect to all contributions, distributions and allocations for all
taxable years, including the year during which such liquidation occurs), such
Partner shall have no obligation to make any contribution to the capital of the
Partnership with respect to such deficit, and such deficit shall not be
considered a debt owed to the Partnership or to any other Person for any
purpose whatsoever.
SECTION 13.4 DEEMED DISTRIBUTION AND RECONTRIBUTION.
Notwithstanding any other provision of this Article XIII, in the event
the Partnership is deemed liquidated within the meaning of Regulations Section
1.704-1(b)(2)(ii)(g) but no Liquidating Event has occurred, the Partnership's
property shall not be liquidated, the Partnership's liabilities shall not be
paid or discharged and the Partnership's affairs shall not be wound up.
Instead, for federal income tax purposes and for purposes of maintaining
Capital Accounts pursuant to Exhibit B hereto, the Partnership shall be deemed
to have distributed its assets in kind to the General Partner and Limited
Partners, who shall be deemed to have assumed and taken such assets subject to
all Partnership liabilities, all in accordance with their respective Capital
Accounts. Immediately thereafter, the General Partner and Limited Partners
shall be deemed to have recontributed the Partnership assets in kind to the
Partnership, which shall be deemed to have assumed and taken such assets
subject to all such liabilities.
SECTION 13.5 RIGHTS OF LIMITED PARTNERS.
Except as otherwise provided in this Agreement, each Limited Partner
shall look solely to the assets of the Partnership for the return of its
Capital Contributions and shall have no right or power to demand or receive
property other than cash from the Partnership. Except as otherwise provided in
this Agreement, no Limited Partner shall have priority over any other Partner
as to the return of its Capital Contributions, distributions, or allocations.
45
51
SECTION 13.6 NOTICE OF DISSOLUTION.
In the event a Liquidating Event occurs or an event occurs that would,
but for provisions of an election or objection by one or more Partners pursuant
to Section 13.1 above, result in a dissolution of the Partnership, the General
Partner shall, within thirty (30) days thereafter, provide written notice
thereof to each of the Partners.
SECTION 13.7 TERMINATION OF PARTNERSHIP AND CANCELLATION OF CERTIFICATE
OF LIMITED PARTNERSHIP.
Upon the completion of the liquidation of the Partnership cash and
property as provided in Section 13.2 above, all Partnership Units shall be
canceled, including the Put Right associated therewith, the Partnership shall
be terminated, the Certificate and all qualifications of the Partnership as a
foreign limited partnership in jurisdictions other than the State of Delaware
shall be canceled, and such other actions as may be necessary to terminate the
Partnership shall be taken.
SECTION 13.8 REASONABLE TIME FOR WINDING UP.
A reasonable time shall be allowed for the orderly winding up of the
business and affairs of the Partnership and the liquidation of its assets
pursuant to Section 13.2 above, in order to minimize any losses otherwise
attendant upon such winding-up, and the provisions of this Agreement shall
remain in effect among the Partners during the period of liquidation.
SECTION 13.9 WAIVER OF PARTITION.
Each Partner hereby waives any right to partition of the Partnership
property.
SECTION 13.10 LIABILITY OF LIQUIDATOR.
The Liquidator shall be indemnified and held harmless by the Partnership
from and against any and all claims, liabilities, costs, damages, and causes of
action of any nature whatsoever arising out of or incidental to the
Liquidator's taking of any action authorized under or within the scope of this
Agreement; provided, however, that the Liquidator shall not be entitled to
indemnification, and shall not be held harmless, where the claim, demand,
liability, cost, damage or cause of action at issue arises out of (i) a matter
entirely unrelated to the Liquidator's action or conduct pursuant to the
provisions of this Agreement or (ii) the proven willful misconduct or gross
negligence of the Liquidator.
46
52
ARTICLE XIV.
AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS
SECTION 14.1 AMENDMENTS.
A. GENERAL. Amendments to this Agreement may be proposed by the
General Partner or by any Limited Partners holding twenty-five percent (25%) or
more of the Partnership Interests held by Limited Partners. Following such
proposal (except an amendment pursuant to Section 14.1.B below), the General
Partner shall submit any proposed amendment to the Limited Partners. The
General Partner shall seek the written vote of the Partners on the proposed
amendment or shall call a meeting to vote thereon and to transact any other
business that it may deem appropriate. For purposes of obtaining a written
vote, the General Partner may require a response within a reasonable specified
time, but not less than ten (10) days, and failure to respond in such time
period shall constitute a vote against the General Partner's recommendation
with respect to the proposal. Except as provided in Section 14.1.B, 14.1.C or
14.1.D below, a proposed amendment shall be adopted and be effective as an
amendment hereto if it is approved by the General Partner and it receives the
Consent of Partners holding a majority of the Partnership Units then held by
Limited Partners.
B. AMENDMENTS NOT REQUIRING LIMITED PARTNER APPROVAL.
Notwithstanding Section 14.1.A or Section 14.1.C hereof, the General Partner
shall have the power, without the Consent of any Limited Partner, to amend this
Agreement as may be required to facilitate or implement any of the following
purposes:
(1) to add to the obligations of the General Partner or
surrender any right or power granted to the General Partner or any Affiliate of
the General Partner for the benefit of the Limited Partners;
(2) to reflect the admission, substitution, termination, or
withdrawal of any Partner in accordance with this Agreement;
(3) to reflect a change that does not adversely affect any of
the Limited Partners in any material respect, or to cure any ambiguity, correct
or supplement any provision in this Agreement not inconsistent with law or with
other provisions, or make other changes with respect to matters arising under
this Agreement that will not be inconsistent with law or with the provisions of
this Agreement or as may be expressly provided by any other provisions of this
Agreement; and
(4) to satisfy any requirements, conditions, or guidelines
contained in any order, directive, opinion, ruling or regulation of a federal,
state or local agency or contained in federal, state or local law.
The General Partner shall notify the Limited Partners when any action under
this Section 14.1.B is taken.
47
53
C. OTHER AMENDMENTS REQUIRING CERTAIN LIMITED PARTNER APPROVAL.
Notwithstanding anything in this Section 14.1 to the contrary, this Agreement
shall not be amended without the Consent of such Partner adversely affected if
such amendment would (i) convert a Limited Partner's interest in the
Partnership into a general partner's interest, (ii) modify the limited
liability of a Limited Partner, (iii) alter rights of Partners to receive
distributions pursuant to Article V or XIII or the allocations specified in
Article VI, (iv) amend Section 8.6 or any defined terms set forth in Article I
that relate to the Put Right, (v) amend the provisions of Section 7.3 or 8.7,
or (vi) amend this Section 14.1.C.
D. AMENDMENT AND RESTATEMENT OF EXHIBIT A NOT AN AMENDMENT.
Notwithstanding anything in this Article XIV or elsewhere in this Agreement to
the contrary, any amendment and restatement of Exhibit A hereto by the General
Partner to reflect events or changes otherwise authorized or permitted by this
Agreement, whether pursuant to Section 7.1.A(20) hereof or otherwise, shall not
be deemed an amendment of this Agreement and may be done at any time and from
time to time, as necessary by the General Partner without the Consent of any
Limited Partner.
SECTION 14.2 MEETINGS OF THE PARTNERS.
A. GENERAL. Meetings of the Partners may be called by the General
Partner and shall be called upon the receipt by the General Partner of a
written request by Limited Partners holding twenty-five percent (25%) or more
of the Partnership Interests held by the Limited Partners. The call shall state
the nature of the business to be transacted. Notice of any such meeting shall
be given to all Partners not less than five (5) days nor more than thirty (30)
business days prior to the date of such meeting. Partners may vote in person or
by proxy at such meeting. Whenever the vote or Consent of Limited Partners is
required under this Agreement, such vote or Consent may be given at a meeting
of Partners or may be given in accordance with the procedure prescribed in
Section 14.1.A above. Except as otherwise expressly provided in this Agreement,
the Consent of holders of a majority of the Partnership Units held by Limited
Partners shall constitute the "Consent" of the Limited Partners hereunder.
B. ACTIONS WITHOUT A MEETING. Any action required or permitted to be
taken at a meeting of the Partners may be taken without a meeting if a written
consent setting forth the action so taken is signed by Partners (including the
General Partner) who hold a majority of the Partnership Units held by the
Partners hereunder (or such other percentage as required by this Agreement).
Such consent may be in one instrument or in several instruments, and shall have
the same force and effect as a vote of a majority of the Partnership Units of
the Partners (or, as applicable, such other percentage as required by this
Agreement). Such consent shall be filed with the General Partner. An action so
taken shall be deemed to have been taken at a meeting held on the effective
date so certified. This Section 14.2.B shall not be construed as limiting the
approval rights granted to the Limited Partners under Section 7.3 hereof.
C. PROXY. Each Limited Partner may authorize any Person or Persons
to act for him by proxy on all matters in which a Limited Partner is entitled
to participate, including waiving notice of any meeting, or voting or
participating at a meeting. Every proxy must be signed by the Limited
48
54
Partner or its attorney-in-fact. No proxy shall be valid after the expiration
of eleven (11) months from the date thereof unless otherwise provided in the
proxy. Every proxy shall be revocable at the pleasure of the Limited Partner
executing it, such revocation to be effective upon the Partnership's receipt of
written notice thereof.
D. CONDUCT OF MEETING. Each meeting of Partners shall be conducted
by the General Partner or such other Person as the General Partner may appoint
pursuant to such rules for the conduct of the meeting as the General Partner
or such other Person deems appropriate in its sole discretion.
ARTICLE XV.
GENERAL PROVISIONS
SECTION 15.1 ADDRESSES AND NOTICE.
Any notice, demand, request or report required or permitted to be given
or made to a Partner or Assignee under this Agreement shall be in writing and
shall be deemed given or made when delivered in person or when sent by first
class United States mail or by other means of written communication to the
Partner or Assignee at the address set forth in Exhibit A hereto or such other
address as the Partners shall notify the General Partner in writing. Such
communications shall be deemed sufficiently given, served, sent or received for
all purposes at such time as delivered to the addressee (with the return
receipt or delivery receipt being deemed conclusive evidence of such delivery)
or at such time as delivery is refused by the addressee upon presentation.
SECTION 15.2 TITLE AND CAPTIONS.
All article or section titles or captions in this Agreement are for
convenience only. They shall not be deemed part of this Agreement and in no way
define, limit, extend or describe the scope or intent of any provisions hereof.
Except as specifically provided otherwise, references to "Articles" and
"Sections" are to Articles and Sections of this Agreement.
SECTION 15.3 PRONOUNS AND PLURALS.
Whenever the context may require, any pronoun used in this Agreement
shall include the corresponding masculine, feminine or neuter forms, and the
singular form of nouns, pronouns and verbs shall include the plural and vice
versa.
SECTION 15.4 FURTHER ACTION.
The parties shall execute and deliver all documents, provide all
information and take or refrain from taking action as may be necessary or
appropriate to achieve the purposes of this Agreement.
49
55
SECTION 15.5 BINDING EFFECT.
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their heirs, executors, administrators, successors, legal
representatives and permitted assigns.
SECTION 15.6 CREDITORS.
Other than as expressly set forth herein with regard to any Indemnitee,
none of the provisions of this Agreement shall be for the benefit of, or shall
be enforceable by, any creditor of the Partnership.
SECTION 15.7 WAIVER.
No failure by any party to insist upon the strict performance of any
covenant, duty, agreement or condition of this Agreement or to exercise any
right or remedy consequent upon a breach thereof shall constitute waiver of any
such breach or any other covenant, duty, agreement or condition.
SECTION 15.8 COUNTERPARTS.
This Agreement may be executed in counterparts, all of which together
shall constitute one agreement binding on all the parties hereto,
notwithstanding that all such parties are not signatories to the original or
the same counterpart. Each party shall become bound by this Agreement
immediately upon affixing its signature hereto.
SECTION 15.9 ARBITRATION.
ANY DISPUTE OR CLAIM IN LAW OR EQUITY ARISING OUT OF OR RELATED TO THIS
AGREEMENT (A "CLAIM") SHALL BE RESOLVED BY NEUTRAL BINDING ARBITRATION IN
ACCORDANCE WITH THE COMMERCIAL ARBITRATION RULES OF THE AMERICAN ARBITRATION
ASSOCIATION AND JUDGMENT ON THE AWARD RENDERED BY THE ARBITRATION PANEL MAY BE
ENTERED IN ANY COURT OR TRIBUNAL OF COMPETENT JURISDICTION. ANY ARBITRATION
OCCURRING UNDER THIS SECTION 15.9 SHALL BE HELD IN DALLAS, TEXAS. ANY PARTY
WHICH SHALL BE THE PREVAILING PARTY IN ANY ARBITRATION CONDUCTED HEREUNDER (AS
DETERMINED BY THE ARBITRATOR) SHALL BE ENTITLED TO RECOVER FROM THE NON-
PREVAILING PARTY REIMBURSEMENT OF ALL REASONABLE COSTS OF SUCH ARBITRATION
(INCLUDING REASONABLE ATTORNEYS' FEES). EACH PARTNER HEREBY WAIVES ITS RIGHT
TO COMMENCE ANY ACTION IN CONNECTION WITH ANY CLAIM IN ANY COURT (OTHER THAN AN
ACTION FOR THE SOLE PURPOSE OF ENFORCING THE OBLIGATION OF A PARTNER TO SUBMIT
TO BINDING ARBITRATION HEREUNDER OR THE ENFORCEMENT OF AN AWARD GRANTED BY
ARBITRATION HEREUNDER AND EXPRESSLY AGREES TO BE BOUND BY THE DETERMINATION OF
THE ARBITRATOR UNDER THIS SECTION 15.9.
50
56
SECTION 15.10 INVALIDITY OF PROVISIONS.
If any provision of this Agreement is or becomes invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein shall not be affected thereby.
SECTION 15.11 ENTIRE AGREEMENT.
This Agreement contains the entire understanding and agreement among the
Partners with respect to the subject matter hereof and supersedes the Prior
Agreement and any prior written oral understandings or agreements among them
with respect thereto.
SECTION 15.12 NO RIGHTS AS SHAREHOLDERS.
Nothing contained in this Agreement shall be construed as conferring
upon the holders of the Partnership Units any rights whatsoever as shareholders
of the General Partner, including, without limitation, any right to receive
dividends or other distributions made to shareholders of the General Partner or
to vote or to consent or receive notice as shareholders in respect to any
meeting of shareholders for the election of directors of the General Partner or
any other matter.
51
57
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.
GENERAL PARTNER:
AMERICAN INDUSTRIAL PROPERTIES REIT, a Texas
real estate investment trust
By: /s/ XXXXX X. XXXXXXXXX
------------------------
Name: Xxxxx X. Xxxxxxxxx
-----------------------
Title: Vice President
-----------------------
LIMITED PARTNERS:
XXXXXXX WEST ACQUISITION COMPANY, LLC,
a California limited liability company
By: /s/ XXXX X. XXXXXXX
------------------------
Name: Xxxx X. Xxxxxxx
-----------------------
Title: Managing Member
-----------------------
AG INDUSTRIAL INVESTORS, L.P.,
a Delaware limited partnership
By: AG Industrial Investors Acquisition
Corp., a Delaware corporation,
its General Partner
By: /s/ XXXX XXXXXXXX
-------------------------
Name: Xxxx Xxxxxxxx
------------------------
Title: Vice President
------------------------
52
