EXHIBIT 10-(a)
The Amended and Restated Agreement of Limited Partnership of
American Real Estate Investment, L.P., dated as of December 12, 1997, as
amended, by and among American Real Estate Investment Corporation, a Maryland
corporation, as general partner, and the Persons whose names are set forth on
EXHIBIT A attached thereto and any other Persons who may have become partners in
such partnership as provided therein, as limited partners, is hereby amended and
restated in its entirety as of October 13, 1999 to reflect (i) the change of the
name of the Partnership from "American Real Estate Investment, L.P." to
"Keystone Operating Partnership, L.P.", (ii) the admission of Keystone Property
Trust, a Maryland statutory real estate investment trust (the "COMPANY"),
successor to all of the General Partner Interest originally held by American
Real Estate Investment Corporation pursuant to Section 9.2 hereof, as the
successor General Partner and (iii) certain other changes that do not adversely
affect the limited partners in any material respect.
ARTICLE I
DEFINED TERMS
Except as otherwise herein expressly provided, the following
terms and phrases shall have the meanings set forth below:
"ACCOUNTANTS" shall mean the firm or firms of independent
certified public accountants selected by the General Partner on behalf of the
Partnership to audit the books and records of the Partnership and to prepare
statements and reports in connection therewith.
"ACT" shall mean the Revised Uniform Limited Partnership Act
as enacted in the State of Delaware, and as the same may hereafter be amended
from time to time.
"ADDITIONAL PARTNERSHIP INTERESTS" shall have the meaning set
forth in Section 4.2(a) hereof.
"ADDITIONAL LIMITED PARTNER" shall have the meaning set forth
in Section 4.2(b) hereof.
"ADJUSTED CAPITAL ACCOUNT DEFICIT" shall mean, with respect to
any Partner, the deficit balance, if any, in such Partner's Capital Account as
of the end of the relevant Partnership Fiscal Year, after giving effect to the
following adjustments:
(i) Credit to such Capital Account any amounts which
such Partner is obligated to restore pursuant to this Agreement or is deemed to
be obligated to restore to the Partnership pursuant to the second to last
sentences of Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5).
(ii) Debit to such Capital Account the items
described in Regulations Sections 1.704-1(b)(2)(ii)(d)(4), (5) and (6).
1
The foregoing definition of Adjusted Capital Account Deficit is intended to
comply with Regulation Section 1.704-1(b)(2)(ii)(d) and shall be interpreted
consistently therewith.
"ADJUSTED CURRENT PER SHARE MARKET PRICE" shall mean the
Current Per Share Market Price multiplied by the Conversion Factor.
"ADJUSTMENT DATE" shall have the meaning set forth in Section
4.2(b) hereof.
"AFFILIATE" shall mean, with respect to any Partner (or as to
any other person the affiliates of whom are relevant for purposes of any of the
provisions of this Agreement), (i) any member of the Immediate Family of such
Partner; (ii) any trustee or beneficiary of a Partner; (iii) any legal
representative, successor, or assignee of any Person referred to in the
preceding clauses (i) and (ii); (iv) any trustee or trust for the benefit of any
Person referred to in the preceding clauses (i) through (iii); or (v) any Entity
which directly or indirectly through one or more intermediaries, Controls, is
Controlled by, or is under common Control with, any Person referred to in the
preceding clauses (i) through (iv).
"AFFILIATE FINANCING" shall mean financing or refinancing
obtained from a Partner or an Affiliate of a Partner by the Partnership.
"AGREEMENT" shall mean this Agreement of Limited Partnership,
as originally executed and as amended, modified, supplemented or restated from
time to time, as the context requires.
"ASSIGNEE" shall mean 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 the rights set forth
in Section 9.5.
"BANKRUPTCY" shall mean, with respect to any Partner, (i) the
commencement by such Partner of any proceeding seeking relief under any
provision or chapter of the federal Bankruptcy Code or any other federal or
state law relating to insolvency, bankruptcy or reorganization; (ii) an
adjudication that such Partner is insolvent or bankrupt; (iii) the entry of an
order for relief under the federal Bankruptcy Code with respect to such Partner;
(iv) the filing of any such petition or the commencement of any such case or
proceeding against such Partner, unless such petition and the case or proceeding
initiated thereby are dismissed within one hundred twenty (120) days from the
date of such filing; (v) the filing of an answer by such Partner admitting the
allegations of any such petition; (vi) the appointment of a trustee, receiver or
custodian for all or substantially all of the assets of such Partner unless such
appointment is vacated or dismissed within ninety (90) days from the date of
such appointment but not less than five (5) days before the proposed sale of any
assets of such Partner; (vii) the insolvency of such Partner or the execution by
such Partner of a general assignment for the benefit of creditors; (viii) the
failure of such Partner to pay its debts as they mature; (ix) the levy,
attachment, execution or other seizure of substantially all of the assets of
such Partner where such seizure is not discharged within thirty (30) days
thereafter, or (x) the admission by such Partner in writing of its inability to
pay its debts as they mature or that it is generally not paying its debts as
they become due.
2
"CAPITAL ACCOUNT" shall mean a book account established and
maintained for each Partner in accordance with the following provisions:
(i) To each Partner's Capital Account there shall be
credited such Partner's Capital Contributions, such Partner's
distributive share of Profits and any items in the nature of
income or gain which are allocated to such Partner pursuant to
Section 5.2, and the amount of any Partnership liabilities that
are assumed by such Partner or that are secured by any Partnership
property distributed to such Partner.
(ii) To each Partner's Capital Account there shall be
debited the amount of cash and the Gross Asset Value of any
Partnership asset distributed to such Partner pursuant to any
provision of this Agreement (except for distributions made in
repayment of loans made by such Partner to the Partnership), such
Partner's distributive share of Losses and any items in the nature
of expenses or losses which are allocated to such Partner pursuant
to Section 5.2, and the amount of any liabilities of such Partner
that are assumed by the Partnership or which are secured by any
property contributed to the Partnership by such Partner (except to
the extent already reflected in the amount of the Partner's
Capital Contributions).
In the event that the Gross Asset Value of Partnership assets
are adjusted pursuant to paragraph (ii), (iii) or (iv) of the definition of
Gross Asset Value, the Capital Accounts of the Partners shall be adjusted to
reflect the aggregate net adjustments as if the Partnership sold all of its
assets for their fair market values, and recognized gain or loss for federal
income tax purposes equal to the aggregate amount of such net adjustment.
The foregoing provisions and the other provisions of this
Agreement relating to the maintenance of Capital Accounts are intended to comply
with Code Section 704(b) and the Regulations thereunder, and shall be
interpreted and applied in a manner consistent with such Regulations. In the
event the General Partner determines that it is prudent to modify the manner in
which the Capital Accounts, or any debits or credits thereto, are computed in
order to comply with such Regulations, the General Partner may make such
modification, PROVIDED THAT it is not likely to have a material effect on the
amounts distributable to any Partner pursuant to Section 8.2 upon the
liquidation of the Partnership. Any questions with respect to a Partner's
Capital Account shall be resolved by the General Partner in its reasonable
discretion, applying principles consistent with this Agreement.
Any transferee of a Partnership Interest or a portion thereof
shall succeed to the Capital Account relating to the Partnership Interest
transferred or the corresponding portion thereof.
"CAPITAL CONTRIBUTIONS" shall mean, with respect to any
Partner, the amount of cash and the initial Gross Asset Value of any other
property contributed to the capital of the Partnership by or on behalf of such
Partner reduced by the amount of any liability assumed by the Partnership
relating to such property and any liability to which such property is subject.
3
"CERTIFICATE" shall mean the Certificate of Limited
Partnership establishing the Partnership, as filed with the office of the
Delaware Secretary of State, as it may be amended from time to time in
accordance with the terms of this Agreement and the Act.
"CHARTER" shall mean the Company's Articles of Incorporation,
as amended from time to time.
"CLOSING DATE" shall mean December 12, 1997.
"CLOSING PRICE" on any date shall mean (A) the last reported
sale price of the Shares on the principal stock exchange on which the Shares are
listed, or (B) if the Shares are not listed on a stock exchange, the last
reported sale price of the Shares on the principal automated securities price
quotation system on which sale prices of the Shares are reported, or (C) if the
Shares are not listed on a stock exchange and sale prices of the Shares are not
reported on an automated quotation system, the mean of the high bid and low
asked price quotations for the Shares as reported by National Quotation Bureau
Incorporated if at least two securities dealers have inserted both bid and asked
quotations for the Shares on at least five of the ten preceding Trading Days. If
the Shares are not traded or quoted as described in any of clause (A), (B) or
(C), the Closing Price of the Shares on a day will be the fair market value of
the Shares on that day as determined by a member firm of the New York Stock
Exchange, Inc. selected by the Board of Directors of the General Partner. In the
event that the Shares received upon exercise of the Conversion Rights include
rights that a holder of Shares would be entitled to receive, then the value of
such rights shall be determined by the General Partner acting in good faith on
the basis of such quotations and other information as it considers, in its
reasonable judgment, appropriate.
"CODE" shall mean the Internal Revenue Code of 1986, as
amended.
"CONSENT OF THE LIMITED PARTNERS" shall mean the written
consent of a Majority-In-Interest of the Limited Partners, which consent shall
be obtained prior to the taking of any action for which it is required by this
Agreement and may be given or withheld by a Majority-In-Interest of the Limited
Partners, unless otherwise expressly provided herein, in their sole and absolute
discretion.
"CONSENTING PARTNERS" shall have the meaning set forth in
Section 8.1(a) hereof.
"CONTRIBUTED FUNDS" shall have the meaning set forth in
Section 4.2(b) hereof.
"CONTRIBUTED LIMITED PARTNER ASSETS" shall mean properties or
interests in entities owning such properties, interests in certain property
management and related assets, or cash, contributed by the Limited Partners.
"CONTRIBUTION DATE" shall have the meaning set forth in
Section 4.2(b) hereof.
"CONTROL" shall mean the ability, whether by the direct or
indirect ownership of shares or other equity interests, by contract or
otherwise, to elect a majority of the directors of a corporation, to select the
managing partner of a partnership, or otherwise to select, or have the power to
remove and then select, a majority of those persons exercising governing
authority over an Entity. In the case of a limited partnership, the sole general
partner, all of the general partners
4
to the extent each has equal management control and authority, or the managing
general partner or managing general partners thereof shall be deemed to have
control of such partnership and, in the case of a trust, any trustee thereof or
any Person having the right to select any such trustee shall be deemed to have
control of such trust.
"CONVERSION FACTOR" means 1.0; PROVIDED THAT, in the event
that the General Partner (i) declares or pays a dividend on its outstanding
Shares in Shares or makes a distribution to all holders of its outstanding
Shares in Shares; (ii) subdivides its outstanding Shares, or (iii) combines its
outstanding Shares into a smaller number of Shares, the Conversion Factor shall
be adjusted by multiplying the Conversion Factor then in effect by a fraction,
the numerator of which shall be the number of Shares issued and outstanding on
the record date for such dividend, distribution, subdivision or combination
(assuming for such purposes that such dividend, distribution, subdivision or
combination has occurred as of such time), and the denominator of which shall be
the actual number of Shares (determined without the above assumption) issued and
outstanding on the record date for such dividend, distribution, subdivision or
combination. Any adjustment to the Conversion Factor shall become effective
immediately after the effective date of such event retroactive to the record
date, if any, for such event; PROVIDED, HOWEVER, that if the General Partner
receives an Exercise Notice after the record date, but prior to the effective
date of such dividend, distribution, subdivision or combination, the Conversion
Factor shall be determined as if the General Partner has received the Exercise
Notice immediately prior to the record date for such dividend, distribution,
subdivision or combination.
"CONVERSION RIGHT" shall have the meaning set forth in Section
12.1 hereof.
"CURRENT PER SHARE MARKET PRICE" on any date shall mean the
average of the Closing Price for the ten (10) consecutive Trading Days ending on
such date.
"DEPRECIATION" shall mean for each Partnership Fiscal Year or
other period, an amount equal to the depreciation, amortization, or other cost
recovery deduction allowable under the Code with respect to an asset for such
year or other period, except that if the Gross Asset Value of an asset differs
from its adjusted basis for federal income tax purposes at the beginning of such
year or other period, Depreciation shall be an amount which bears the same ratio
to such beginning Gross Asset Value as the federal income tax depreciation,
amortization, or other cost recovery deduction for such year or other period
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 Gross Asset Value using any reasonable method selected by the General
Partner.
"DESIGNATED PROPERTIES" shall mean those properties known as
0000 Xxxxxx Xxxx, 0 Xxxxxxxx Xxxx and Urban Farms Shopping Center.
"ENTITY" shall mean any general partnership, limited
partnership, limited liability company, corporation, joint venture, trust,
business trust, cooperative or association.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended from time to time (or any corresponding provisions of
succeeding laws).
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
5
"EXERCISE NOTICE" shall have the meaning set forth in Section
12.2 hereof.
"EXERCISING PARTNERS" shall have the meaning set forth in
Section 12.2 hereof.
"GAAP" shall mean generally accepted accounting principles
consistently applied.
"GENERAL PARTNER" shall mean Keystone Property Trust, a
Maryland statutory real estate investment trust, its duly admitted successors
and assigns and any other Person who is a general partner of the Partnership at
the time of reference thereto.
"GENERAL PARTNER CAPITAL CONTRIBUTION" shall have the meaning
set forth in Section 4.1 hereof.
"GENERAL PARTNER INTEREST" shall mean a Partnership Interest
held by the General Partner. A General Partner Interest shall be expressed as a
number of Partnership Units, with such Partnership Units being designated as
either OP Units or Preferred Units.
"GROSS ASSET VALUE" shall mean, with respect to any asset, the
asset's adjusted basis for federal income tax purposes, except as follows:
(i) The initial Gross Asset Value of any asset contributed
by a Partner to the Partnership shall be (a) in the case of any
asset described on attached EXHIBIT A, the gross fair market value
ascribed thereto on such EXHIBIT A and (b) in the case of any
other asset hereafter contributed by a Partner, the gross fair
market value of such asset at the time of contribution, as
reasonably determined by the General Partner;
(ii) The Gross Asset Values of all Partnership assets shall
be adjusted to equal their respective gross fair market values, as
reasonably determined by the General Partner, as of the following
times: (a) the acquisition of an additional interest in the
Partnership by any new or existing Partner in exchange for more
than a DE MINIMIS Capital Contribution; (b) the distribution by
the Partnership to a Partner of more than a DE MINIMIS amount of
property as consideration for an interest in the Partnership; and
(c) the liquidation of the Partnership within the meaning of
Regulations Section 1.704-1(b)(2)(ii)(g);
(iii) The Gross Asset Value of any Partnership Asset
distributed to any Partner shall be the gross fair market value of
such asset on the date of distribution; and
(iv) The Gross Asset Values of Partnership Assets shall be
increased (or decreased) to reflect any adjustments to the
adjusted basis of such assets pursuant to Code Section 734(b) or
Code Section 743(b), but only to the extent that such adjustments
are taken into account in determining Capital Accounts pursuant to
Regulations Section 1.704-1(b)(2)(iv)(m).
If the Gross Asset Value of an asset has been determined or adjusted pursuant to
this provision, such Gross Asset Value shall thereafter be adjusted by the
Depreciation taken into account with
6
respect to such asset for purposes of computing Profits and Losses. Any
adjustment to the Gross Asset Values of Partnership Assets shall require an
adjustment to the Partner's Capital Account as provided in the definition of
Capital Account.
"XXXX-XXXXX ACT" shall mean the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended.
"IMMEDIATE FAMILY" shall mean, with respect to any Person,
such Person's spouse, parents, parents-in-law, descendants by blood or adoption,
nephews, nieces, brothers, sisters, brothers-in-law, sisters-in-law and
children-in-law.
"INCAPACITY" or "INCAPACITATED" shall mean, (i) as to any
individual Partner, death, total physical disability or entry by a court of
competent jurisdiction adjudicating him or her incompetent to manage his or her
Person or estate; (ii) as to any corporation which is a Partner, the filing of a
certificate or articles 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 estate which is a Partner, the distribution by the fiduciary of the
estate's entire interest in the Partnership; (v) 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 (vi) as to any Partner, the Bankruptcy of such Partner.
"INCENTIVE OPTION" shall mean an option to purchase Shares
granted under the Stock Incentive Plan.
"INCENTIVE OPTION AGREEMENT" shall mean the form or forms of
Incentive Option Agreement to be used under the Stock Incentive Plan.
"INDEMNITEE" shall mean (i) any Person made a party to a
proceeding by reason of his status as (a) a General Partner, (b) a director or
officer of a General Partner, or (c) an officer of the Partnership, and (ii)
such other Persons (including Affiliates of the General Partner or the
Partnership) as the General Partner may designate from time to time (whether
before or after the event giving rise to potential liability), in its sole
discretion.
"LIEN" shall mean any liens, security interests, mortgages,
deeds of trust, charges, claims, encumbrances, restrictions, pledges, options,
rights of first offer or first refusal and any other rights or interests of
others of any kind or nature, actual or contingent, or other similar
encumbrances of any nature whatsoever.
"LIMITED PARTNER" shall mean any Person listed under the
heading "Limited Partners" on the signature page hereto who have executed (in
person or pursuant to power of attorney) this Agreement in their respective
capacities as limited partners of the Partnership, their permitted successors or
assigns as a limited partner hereof, or any Person who, at the time of reference
thereto, is a limited partner of the Partnership.
"LIMITED PARTNER INTEREST" shall mean a Partnership Interest
of a Limited Partner in the Partnership representing a fractional part of the
Partnership Interests of all Limited Partners and includes any and all benefits
to which the holder of such a Partnership Interest may be entitled as provided
in this Agreement, together with all obligations of such Person to comply
7
with the terms and provisions of this Agreement. A Limited Partner Interest
shall be expressed as a number of Partnership Units, with such Partnership Units
being designated as either OP Units or Preferred Units.
"LIQUIDATING TRUSTEE" shall mean such individual or Entity as
is selected as the Liquidating Trustee hereunder by the General Partner, which
individual or Entity may include the General Partner or an Affiliate of the
General Partner, PROVIDED such Liquidating Trustee agrees in writing to be bound
by the terms of this Agreement. The Liquidating Trustee shall be empowered to
give and receive notices, reports and payments in connection with the
dissolution, liquidation and/or winding-up of the Partnership and shall hold and
exercise such other rights and powers as are necessary or required to permit all
parties to deal with the Liquidating Trustee in connection with the dissolution,
liquidation and/or winding-up of the Partnership.
"MAJOR DECISIONS" shall have the meaning set forth in Section
7.2 hereof.
"MAJORITY-IN-INTEREST OF THE LIMITED PARTNERS" shall mean
Limited Partner(s) who hold in the aggregate more than fifty percent (50%) of
the OP Units then allocable to and held by the Limited Partners, as a class.
"NASD" means the National Association of Securities Dealers,
Inc.
"NET FINANCING PROCEEDS" shall mean the cash proceeds received
by the Partnership in connection with any borrowing by or on behalf of the
Partnership (whether or not secured), after deduction of all costs and expenses
incurred by the Partnership in connection with such borrowing, and after
deduction of that portion of such proceeds used to repay any other indebtedness
of the Partnership, or any interest or premium thereon.
"NET OPERATING CASH FLOW" shall mean, with respect to any
fiscal period of the Partnership, the excess, if any, of "Receipts" over
"Expenditures". For purposes hereof, the term "Receipts" means the sum of all
cash receipts of the Partnership from all sources for such period, including Net
Sale Proceeds and Net Financing Proceeds but excluding Capital Contributions,
and any amounts held as reserves as of the last day of such period which the
General Partner reasonably deems to be in excess of necessary reserves as
determined below. The term "Expenditures" means the sum of (i) all cash expenses
of the Partnership for such period; (ii) the amount of all payments of principal
and interest on account of any indebtedness of the Partnership, or amounts due
on such indebtedness during such period; and (iii) such additional cash reserves
as of the last day of such period as the General Partner deems necessary for any
capital or operating expenditure permitted hereunder.
"NET SALE PROCEEDS" shall mean 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 any costs or expenses incurred by the
Partnership, 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).
8
"NONRECOURSE DEDUCTIONS" shall have the meaning set forth in
Regulations Section 1.704-2(b)(1). The amount of Nonrecourse Deductions for a
Partnership Fiscal Year equals the net increase, if any, in the amount of
Partnership Minimum Gain during such Partnership Fiscal Year reduced by any
distributions during such Partnership Fiscal Year of proceeds of a Nonrecourse
Liability that are allocable to an increase in Partnership Minimum Gain,
determined according to the provisions of Regulations Sections 1.704-2(c) and
1.704-2(h).
"NONRECOURSE LIABILITY" shall have the meaning set forth in
Regulations Section 1.704-2(b)(3).
"OP UNITS" shall have the meaning set forth in Section 4.1.
"OFFERED UNITS" shall have the meaning set forth in
Section 12.2.
"ORIGINAL PROPERTIES" means the Americana Lakewood apartments,
the Emerald Pointe apartments, the Sedona apartments and the Quadrangles Village
apartments (or any property the federal income tax basis of which is determined
in whole or in part by reference to the basis of the foregoing).
"OWNERSHIP LIMIT" shall have the meaning set forth in Section
12.4 hereof.
"PARTNERS" shall mean the General Partner and the Limited
Partners, their duly admitted successors or assigns or any Person who is a
partner of the Partnership at the time of reference thereto.
"PARTNER MINIMUM GAIN" shall mean 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" shall have the meaning set forth in
Regulations Section 1.704-2(b)(4).
"PARTNER NONRECOURSE DEDUCTIONS" shall have the meaning set
forth in Regulations Section 1.704-2(i)(2). The amount of Partner Nonrecourse
Deductions with respect to a Partner Nonrecourse Debt for a Partnership Fiscal
Year equals the net increase, if any, in the amount of Partner Minimum Gain
during such Partnership Fiscal Year attributable to such Partner Nonrecourse
Debt, reduced by any distributions during that Partnership Fiscal Year to the
Partner that bears the economic risk of loss for such Partner Nonrecourse Debt
to the extent that such distributions are from the proceeds of such Partner
Nonrecourse Debt and are allocable to an increase in Partner Minimum Gain
attributable to such Partner Nonrecourse Debt, determined according to the
provisions of Regulations Sections 1.704-2(h) and 1.704-2(i).
"PARTNERSHIP" shall mean the limited partnership hereby
constituted, as such limited partnership may from time to time be constituted.
"PARTNERSHIP FISCAL YEAR" shall mean the calendar year.
9
"PARTNERSHIP INTEREST" shall mean with respect to a Partner,
such Partner's right to the allocations (and each item thereof) specified in
Article V hereof and all distributions from the Partnership, and its rights of
management, consent, approval or participation, if any, as provided in this
Agreement.
"PARTNERSHIP MINIMUM GAIN" shall have the meaning set forth in
Regulations Section 1.704-2(d).
"PARTNERSHIP UNIT" means a fractional, undivided share of
Partnership Interests of all Partners issued pursuant to Sections 4.1 and 4.2,
with such Partnership Units being designated as either OP Units or Preferred
Units.
"PARTNERSHIP UNIT DESIGNATION" shall have the meaning set
forth in Section 4.2.
"PERCENTAGE INTEREST" shall mean, with respect to any Partner
holding a class or series of Partnership Interests, its interest in such class
or series, determined by dividing the number of Partnership Units of such class
or series owned by such Partner by the total number of Partnership Units of such
class or series then outstanding.
"PERSON" shall mean any individual or Entity.
"PLEDGE shall mean a pledge or grant of a mortgage, security
interest, lien or other encumbrance in respect of a Partnership Interest.
"PREFERRED UNIT" shall mean a Partnership Unit, which may be
issued in one or more series or classes, having such rights, powers, duties and
preferences as may be determined by the General Partner in its sole and absolute
discretion (but not in violation of the provisions of Section 4.2 or the terms
of any other Preferred Units).
"PRIOR AGREEMENT" shall mean the Agreement of Limited
Partnership of the Partnership, dated as of November 10, 1993, and amended as of
June 30, 1997 and August 11, 1997, between the Company, as the sole general
partner, and the limited partners listed on the signature page thereto, which
Prior Agreement is amended and restated in its entirety by this Agreement as of
the Closing Date.
"PROFITS" and "LOSSES" shall mean, for each Partnership Fiscal
Year or other period, an amount equal to the Partnership's taxable income or
loss for such Partnership Fiscal Year or period, determined in accordance with
Code Section 703(a) (for this purpose, all items of income, gain, loss, or
deduction required to be stated separately pursuant to Code Section 703(a)(1)
shall be included in taxable income or loss), with the following adjustments:
(i) Any income of the Partnership that is exempt from
federal income tax or excluded from federal gross income and not
otherwise taken into account in computing Profits or Losses
pursuant to this Section shall be added to such taxable income or
loss;
(ii) Any expenditures of the Partnership described in Code
Section 705(a)(2)(B) or treated as Code Section 705(a)(2)(B)
expenditures pursuant to Regulations
10
Section 1.704-1(b)(2)(iv)(i), and not otherwise taken into account
in computing Profits or Losses pursuant to this Section, shall be
subtracted from such taxable income or loss;
(iii) In the event the Gross Asset Value of any Partnership
Asset is adjusted pursuant to any provision of this Agreement in
accordance with the definition of Gross Asset Value, the amount of
such adjustment shall be taken into account as gain or loss from
the disposition of such Asset for purposes of computing Profits or
Losses;
(iv) Gain or loss resulting from any disposition of any
Partnership Asset with respect to which gain or loss is recognized
for federal income tax purposes shall be computed by reference to
the Gross Asset Value of the property disposed of, notwithstanding
that the adjusted tax basis of such Asset differs from its Gross
Asset Value;
(v) In lieu of the depreciation, amortization, and other
cost recovery deductions taken into account in computing such
taxable income or loss, there shall be taken into account
Depreciation for such Partnership Fiscal Year or other period,
computed in accordance with the definition of Depreciation; and
(vi) Notwithstanding any other provision of this Section,
any items which are allocated pursuant to Section 5.2 shall not be
taken into account in computing Profits or Losses.
"PROPERTY" shall mean any real estate in which the
Partnership, directly or indirectly, acquires ownership of a fee or leasehold
interest.
"PROSPECTUS" means a prospectus included in the Shelf
Registration Statement, including any preliminary prospectus, and any such
prospectus as amended or supplemented by any prospectus supplement with respect
to the terms of the offering of any portion of the Registrable Securities
covered by the Shelf Registration Statement, and by all other amendments and
supplements to such prospectus, including post-effective amendments, and in each
case including all material incorporated by reference therein.
"PURCHASE PRICE" shall have the meaning set forth in Section
12.2.
"REGISTRABLE SECURITIES" means Shares issued or issuable to
Limited Partners upon exchange of their OP Units, excluding (i) Shares for which
the Shelf Registration Statement shall have become effective under the
Securities Act and which have been disposed of under the Shelf Registration
Statement, and (ii) Shares sold or otherwise distributed pursuant to Rule 144
under the Securities Act.
"REGISTRATION EXPENSES" means any and all expenses incident to
performance of or compliance with Article XV of this Agreement, including,
without limitation: (i) all SEC, stock exchange or NASD registration and filing
fees, (ii) all fees and expenses incurred in connection with compliance with
state securities or blue sky laws (including reasonable fees and disbursements
of counsel in connection with blue sky qualification of any of the Registrable
Securities and the preparation of a Blue Sky Memorandum, if necessary) and
compliance with the rules of the NASD, (iii) all expenses of any Persons in
preparing or assisting in preparing,
11
word processing, printing and distributing the Shelf Registration Statement, any
Prospectus, certificates and other documents relating to the performance of and
compliance with Article XV of this Agreement, (iv) all fees and expenses
incurred in connection with the listing, if any, of any of the Registrable
Securities on any securities exchange or exchanges pursuant to Section 3(k)
hereof, and (v) the fees and disbursements of counsel for the Company and of the
independent public accountants of the Company, including the expenses of any
special audits or "cold comfort" letters, if any, required by or incident to
such performance and compliance. Registration Expenses shall specifically
exclude underwriting discounts and commissions, brokerage or dealer fees, the
fees and disbursements of counsel, accountants or other representatives of a
selling Limited Partner, and transfer taxes, if any, relating to the sale or
disposition of Registrable Securities by a selling Limited Partner, all of which
shall be borne by such Limited Partner in all cases.
"REGISTRATION RIGHTS AGREEMENT" shall mean the Registration
Agreement dated November 10, 1993 by and between the Company and the
Partnership, relating to the registration of Shares issued upon exercise of the
Conversion Rights granted herein.
"REGULATIONS" shall mean the Income Tax Regulations
promulgated under the Code as such regulations may be amended from time to time
(including Temporary Regulations).
"REIT" shall mean a real estate investment trust as defined in
Section 856 of the Code.
"REQUIRED FUNDS" shall have the meaning set forth in Section
4.2 hereof.
"RIGHTS" shall have the meaning set forth in Section 12.1
hereof.
"SALE PERIOD" shall mean the 45-day period immediately
following the filing with the SEC by the Company of an annual report of the
Company on Form 10-K or a quarterly report of the Company on Form 10-Q or such
other period as the Company may determine.
"SEC" shall mean the United States Securities and Exchange
Commission.
"SECTION 0000 XXXXXXXX" means, with respect to any property,
the exchange of such property for property of like kind in a transaction
qualifying under Section 1031 of the Code in which not more than 10% of the
built-in gain associated with such property is required to be recognized by the
partners of the Operating Partnership for federal income tax purposes.
"SECURITIES ACT" shall mean the Securities Act of 1933, as
amended.
"SHARES" shall mean the shares of Common Stock, par value
$.001 per share, of the Company.
"SHARE VALUE" as of any date shall mean the total number of
Shares issued and outstanding at the close of business on such date (and
excluding any treasury shares) multiplied by the Current Per Share Market Price
on such date.
12
"SHELF REGISTRATION STATEMENT" shall mean a "shelf"
registration statement of the Company and any other entity required to be a
registrant with respect to such shelf registration statement pursuant to the
requirements of the Securities Act which covers all of the Registrable
Securities on an appropriate form under Rule 415 under the Securities Act, or
any similar rule that may be adopted by the SEC, and all amendments and
supplements to such registration statement, including post-effective amendments,
in each case including the Prospectus contained therein, all exhibits thereto
and all materials incorporated by reference therein.
"SPECIAL CONSENTING PARTNERS" means, initially, XxXxxxx Xxxxxx
Bay, L.P., until XxXxxxx Xxxxxx Bay, L.P. notifies the Partnership of its
successors to the rights of the Special Consenting Partners under this
Agreement.
"STOCK INCENTIVE PLAN" shall mean the General Partner's 1993
Omnibus Incentive Plan, and any other stock incentive plan adopted in the future
by the General Partner.
"SUBSTITUTED LIMITED PARTNER" shall have the meaning set forth
in Section 9.4 hereof.
"THIRD PARTY" or "THIRD PARTIES" shall mean a Person or
Persons who is or are neither a Partner or Partners nor an Affiliate or
Affiliates of a Partner or Partners.
"THIRD PARTY FINANCING" shall mean financing or refinancing
obtained from a Third Party by the Partnership.
"TRADING DAY" shall mean (x) if the Shares are listed on at
least one stock exchange, a day on which there is trading on the principal stock
exchange on which the Shares are listed, (y) if the Shares are not listed on a
stock exchange, but sale prices of the Shares are reported on an automated
quotation system, a day on which trading is reported on the principal automated
quotation system on which sales of the Shares are reported, or (z) if the Shares
are not listed on a stock exchange and sale prices of the Shares are not
reported on an automated quotation system, a day on which quotations are
reported by National Quotation Bureau Incorporated.
"TRANSFER" shall mean any assignment, sale, transfer,
conveyance, Pledge, grant of an option or proxy, or other disposition or act of
alienation, whether voluntary or involuntary, or by operation of law.
ARTICLE II
ORGANIZATIONAL MATTERS
2.1. ORGANIZATION AND CONTINUATION. The Partnership is continued as a
limited partnership organized pursuant to the provisions of the Act and upon the
terms and conditions set forth in the Prior Agreement. The Partners hereby amend
and restate the Prior Agreement in its entirety as of the Closing Date. Except
as expressly provided herein to the contrary, the rights and obligations of the
Partners and the administration and termination of the Partnership shall
13
continue to be governed by the Act. The Partnership Interest of each Partner
shall be personal property for all purposes.
2.2. NAME. The name of the Partnership is Keystone 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. Subject to the condition set forth in the
second sentence of this Section 2.2, the General Partner in its sole 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 by the Partnership to the Limited Partners.
2.3. REGISTERED OFFICE AND AGENT, PRINCIPAL OFFICE. The name and
address of the Partnership's registered agent is Corporation Service Company,
0000 Xxxxxx Xxxx, Xxxxxxxxxx, Xxxxxxxx 00000. Such registered agent may be
changed as the General Partner may from time to time designate by notice to the
Limited Partners. The principal executive office of the Partnership is located
at 200 Four Falls Xxxxxxxxx Xxxxxx, Xxxxx 000, Xxxx Xxxxxxxxxxxx, Xxxxxxxxxxxx
00000, and may be changed to such other place as the General Partner may from
time to time designate. The Partnership may maintain offices at such other place
or places within or outside the State of Delaware as the General Partner deems
advisable.
2.4. Power of Attorney; Compliance with Act.
(a) The Limited Partners hereby irrevocably constitute and
appoint the General Partner, with full power of substitution and resubstitution,
as the Limited Partners' true and lawful attorney-in-fact with full power and
authority to act in the Limited Partners' name, place and stead to:
(1) make, execute, swear to, seal, 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 the Liquidating Trustee 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 to the extent provided by applicable law) 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 deems
appropriate or necessary to reflect any amendment or restatement of this
Agreement in accordance with its terms; (c) all conveyances and other
instruments or documents that the General Partner 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; (d) all instruments relating to the admission, withdrawal, removal
or substitution of any Partner pursuant to, or other events described in,
Articles VIII or IX, or the Capital Contribution of any Partner; (e) any
agreements, waivers or other instruments required by any state or local tax
authority to enable the Partnership to file combined, consolidated or similar
state or local income tax returns and/or to pay state and
14
local taxes on behalf of the Partnership or all of the Partners; (f) all
documents and other instruments relating to the determination of the rights,
preferences and privileges of Partnership Interests; and (g) the Registration
Rights Agreement and all amendments to such agreement approved in accordance
with its respective terms; and
(2) execute, swear to, seal, acknowledge and file all
ballots, consents, approvals, waivers, certificates and other instruments
appropriate or necessary, in the sole discretion of the General Partner, to
make, evidence, give, confirm or ratify any vote, consent, approval, agreement
or other action which is made or given by the Partners hereunder or is
consistent with the terms of this Agreement or appropriate or necessary, in the
sole discretion of the General Partner, to effectuate the terms or intent of
this Agreement.
(b) The foregoing power of attorney is irrevocable and coupled
with an interest, in recognition of the fact that each of the Partners will be
relying upon the power of the General Partner 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 Interest 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, 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, taken in good faith under such power of attorney.
Each Limited Partner or Assignee shall execute and deliver to the General
Partner or the Liquidating Trustee, within fifteen (15) days after receipt of
the General Partner's or Liquidating Trustee's request therefor, such further
designation, powers of attorney and other instruments as the General Partner or
the Liquidating Trustee, as the case may be, deems necessary to effectuate this
power of attorney.
2.5. TERM. The term of the Partnership commenced on the date the
Certificate was filed in the office of the Delaware Secretary of State in
accordance with the Act and shall continue until dissolved and terminated
pursuant to the provisions of Article VIII or as otherwise provided by law.
2.6. FILING OF CERTIFICATE AND PERFECTION OF LIMITED PARTNERSHIP. The
General Partner shall execute, acknowledge, record and file at the expense of
the Partnership, the Certificate and any and all amendments thereto and all
requisite fictitious name statements and notices in such places and
jurisdictions as may be necessary to cause the Partnership to be treated as a
limited partnership under, and otherwise to comply with, the laws of each state
or other jurisdiction in which the Partnership conducts business.
2.7. CERTIFICATES DESCRIBING PARTNERSHIP UNITS. At the request of a
Limited Partner, the General Partner, at its option, may issue a certificate
summarizing the terms of such Limited Partner's interest in the Partnership,
including the number of Partnership Units owned and the Percentage Interest
represented by such Partnership Units as of the date of such certificate. Any
such certificate (i) shall be in form and substance as approved by the General
Partner; (ii) shall not be negotiable and (iii) shall bear a legend to the
following effect:
15
This certificate is not negotiable. The Partnership Units
represented by this certificate are governed by and transferable
only in accordance with the provisions of the Amended and Restated
Agreement of Limited Partnership of Keystone Operating
Partnership, L.P., as amended and restated.
ARTICLE III
PURPOSE
3.1. PURPOSE AND BUSINESS. The purpose and nature of the business to be
conducted by the Partnership is as follows: (i) to conduct any business that may
be lawfully conducted by a limited partnership organized pursuant to the Act,
including, without limitation, investing in (either directly or through the
acquisition of interest in partnerships or other entities), purchasing (either
directly or through the acquisition of interest in partnerships or other
entities), developing, owning, managing, leasing and disposing of real estate
and any improvements thereon, entering into any partnership, joint venture, or
similar arrangement to engage in any of the foregoing, or to own interests in
any entity engaged in any of the foregoing, as well as any other activity as the
General Partner may from time to time approve, and to do anything necessary or
appropriate to accomplish the foregoing; PROVIDED THAT, such business 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 as a REIT for reasons other than the conduct of the business of the
Partnership; (ii) to enter into any partnership, joint venture or other similar
arrangement to engage in any of the foregoing or to own interests in any entity
engaged in any of the foregoing; and (iii) to do anything necessary or
incidental to the foregoing. In connection with the foregoing, the Partners
acknowledge that the General Partner's status as a REIT inures to the benefit of
all the Partners and not solely the General Partner.
3.2. POWERS. The Partnership shall be empowered to do any and all acts
and things necessary, appropriate, proper, advisable, incidental to or
convenient for the furtherance and accomplishment of the purposes and business
described herein and for the protection and benefit of the Partnership; PROVIDED
THAT, the Partnership shall not take, or refrain from taking, any action which,
in the judgment of the General Partner, in its sole discretion, (i) could
adversely affect the ability of the General Partner to continue to qualify as a
REIT, unless the General Partner determines to terminate its qualification as a
REIT; (ii) could subject the General Partner to any additional taxes under Code
Section 857 or 4981, or (iii) could violate any law or regulation of any
governmental body or agency having jurisdiction over the General Partner or its
securities, unless such action (or inaction) shall have been specifically
consented to by the General Partner in writing.
ARTICLE IV
CAPITAL CONTRIBUTIONS
16
4.1. CAPITAL CONTRIBUTIONS OF THE PARTNERS. The General Partner has
contributed to the capital of the Partnership the amount set forth on EXHIBIT A
(the "General Partner Capital Contribution"). Each Limited Partner has
contributed or has caused to be contributed as its initial Capital Contribution
to the capital of the Partnership, the Contributed Limited Partner Assets, with
the values as set forth opposite their names on attached EXHIBIT A. The
agreed-to gross fair market value of each of the Contributed Limited Partner
Assets, which shall be their initial Gross Asset Value, is as set forth opposite
the contributing Limited Partner's name on attached EXHIBIT A. Each Partner
shall own Partnership Units, which shall be designated under this Agreement as
either "OP Units" or "Preferred Units," in the amount set forth for such Partner
in EXHIBIT A and shall have a Percentage Interest in such class or series of
Partnership Units as set forth for such Partner in EXHIBIT A, which Percentage
Interest shall be adjusted in EXHIBIT A from time to time by the General Partner
to the extent necessary in accordance with the terms of this Agreement to
reflect (a) exchanges of OP Units for Shares in accordance with Article XII; (b)
transfers of Partnership Units that result in the admission of a Substituted
Limited Partner; (c) withdrawals of Partners; (d) Capital Contributions or (e)
issuances of additional Partnership Units (pursuant to any merger or otherwise).
Except as otherwise provided herein, the Partners shall have no obligation to
make any additional Capital Contributions or loans to the Partnership.
4.2. ISSUANCES OF ADDITIONAL PARTNERSHIP INTERESTS; ADDITIONAL
PARTNERS.
(a) The General Partner is hereby authorized to cause the
Partnership to issue such additional Partnership Interests ("Additional
Partnership Interests") in the form of Partnership Units for any Partnership
purpose at any time or from time to time, to the Partners (including the General
Partner) or to other Persons for such consideration and on such terms and
conditions as shall be established by the General Partner in its sole and
absolute discretion, all without the approval of any Limited Partner. Any
Additional Partnership Interests issued thereby may be issued in one or more
classes, or one or more series of any of such classes, with such designations,
preferences and relative, participating, optional or other special rights,
powers and duties, including rights, powers and duties senior to Limited
Partnership Interests, all as shall be determined by the General Partner in its
sole and absolute discretion and without the approval of any Limited Partner,
subject to Delaware law, including, without limitation, (i) the allocations of
items of Partnership income, gain, loss, deduction and credit to each such class
or series of Partnership Interests; (ii) the right of each such class or series
of Partnership Interests to share in Partnership distributions; and (iii) the
rights of each such class or series of Partnership Interests upon dissolution
and liquidation of the Partnership; provided that a written designation of
preferences setting forth the rights, powers, duties and preferences of each
class or series of Preferred Units shall be set forth as a schedule to EXHIBIT C
to this Agreement on or prior to the date of issuance of such Preferred Units
(each a "Partnership Unit Designation"); PROVIDED, HOWEVER, that no additional
Partnership Units or other Partnership Interests shall be issued to the General
Partner unless either:
(1) (A) the Additional Partnership Interests are issued in
connection with an issuance of shares of capital stock of or other interests in
the General Partner, which shares or interests have designations, preferences
and other rights, all such that the economic interests are substantially similar
to the designations, preferences and other rights of the Additional Partnership
Interests issued to the General Partner by the
17
Partnership and (B) the General Partner shall make a Capital Contribution to the
Partnership in an amount equal to the proceeds raised in connection with the
issuance of such shares of capital stock of or other interests in the General
Partner, or
(2) the Additional Partnership Interests are issued to all
Partners in proportion to their respective Percentage Interests, or
(3) the General Partner makes an additional Capital
Contribution to the Partnership, other than as specified in (1) above.
If as a result of (3) above the number of OP Units held by the General Partner
would not equal the number of Shares then outstanding, the number of OP Units
outstanding shall be adjusted so that the General Partner will own its
Percentage Interest of the total OP Units outstanding by owning a number of OP
Units equal to the number of Shares then outstanding, and the number of OP Units
owned by each Limited Partner will accordingly be adjusted to equal its current
Percentage Interest.
Without limiting the foregoing, the General Partner is
expressly authorized to cause the Partnership to issue Partnership Units for
less than fair market value, so long as the General Partner concludes in good
faith that such issuance is in the best interests of the General Partner and the
Partnership.
Anything in this Section 4.2(a) to the contrary
notwithstanding, the actions of the General Partner authorized in this Section
4.2(a) shall be subject to the approval of Limited Partners holding Preferred
Units of any series or class to the extent provided in the Partnership Unit
Designation for such series or class of Preferred Units.
(b) The General Partner may cause the Partnership to issue
additional Partnership Units to and admit as an additional Limited Partner
("Additional Limited Partner"), any Person in exchange for the Capital
Contribution by such Person of cash and/or property. In the event that the
Partnership issues Additional Partnership Units pursuant to this Section 4.2,
the number of Partnership Units issued shall be determined by dividing the U.S.
dollar amount of cash plus the agreed value of the property contributed as of
the date of contribution to the Partnership (the "CONTRIBUTION DATE") by the
Adjusted Current Per Share Market Price, computed as of the Trading Day
immediately preceding the Contribution Date.
(c) Notwithstanding anything contained herein to the contrary,
an Additional Limited Partner that acquires an Additional Partnership Interest
pursuant to this Section 4.2 shall not acquire any interest in, and may not
exercise or otherwise participate in, any Conversion Rights pursuant to Article
XII, without the Agreement of the General Partner.
4.3. ISSUANCE OF SHARES.
(a) UPON ISSUANCE OF ADDITIONAL SECURITIES. The Company shall
not issue any additional Shares (other than Shares issued in connection with an
exchange pursuant to Article XII hereof) or rights, options, warrants or
convertible or exchangeable securities containing the right to subscribe for or
purchase Shares (collectively, "Additional Securities") other than to all
holders of Shares, unless (A) the Company shall cause the Partnership to issue
to
18
the Company, Partnership Interests or rights, options, warrants or convertible
or exchangeable securities of the Partnership having designations, preferences
and other rights, all such that the economic interests are substantially similar
to those of the Additional Securities, and (B) the Company contributes the
proceeds from the issuance of such Additional Securities and from any exercise
of rights contained in such Additional Securities, directly and through the
Company, to the Partnership; PROVIDED, HOWEVER, that the Company is allowed to
issue Additional Securities in connection with an acquisition of a property to
be held directly by the Company, but if and only if, such direct acquisition and
issuance of Additional Securities have been approved and determined to be in the
best interests of the Company and the Partnership by a majority of the Directors
(as defined in the Charter). Without limiting the foregoing, the Company is
expressly authorized to issue Additional Securities for less than fair market
value, and to cause the Partnership to issue to the Company corresponding
Partnership Interests, so long as (x) the Company concludes in good faith that
such issuance is in the best interests of the Company and the Partnership,
including without limitation, the issuance of Shares and corresponding
Partnership Units pursuant to an employee share purchase plan providing for
employee purchases of Shares at a discount from fair market value or employee
stock options that have an exercise price that is less than the fair market
value of the Shares, either at the time of issuance or at the time of exercise,
and (y) the Company contributes all proceeds from such issuance to the
Partnership. For example, in the event the Company issues Shares for a cash
purchase price and contributes all of the proceeds of such issuance to the
Partnership as required hereunder, the Company shall be issued a number of
additional Partnership Units equal to the product of (A) the number of such
Shares issued by the Company, the proceeds of which were so contributed,
multiplied by (B) a fraction, the numerator of which is 100%, and the
denominator of which is the Conversion Factor in effect on the date of such
contribution.
(b) CERTAIN DEEMED CONTRIBUTIONS OF PROCEEDS OF ISSUANCE OF
SHARES. In connection with any and all issuance of Shares, the Company shall
make Capital Contributions to the Partnership of the proceeds therefrom,
PROVIDED THAT if the proceeds actually received and contributed by the Company
are less than the gross proceeds of such issuance as a result of any
underwriter's discount or other expenses paid or incurred in connection with
such issuance, then the Company shall be deemed to have made Capital
Contributions to the Partnership in the aggregate amount of the gross proceeds
of such issuance and the Partnership shall be deemed simultaneously to have paid
such offering expenses in accordance with Section 7.7 hereof and in connection
with the required issuance of additional Partnership Units to the Company for
such Capital Contributions pursuant to Section 4.3(a) hereof.
4.4. STOCK INCENTIVE PLAN. If at any time or from time to time
Incentive Options granted in connection with the Company's Stock Incentive Plan
are exercised in accordance with the terms of the Incentive Option Agreement,
the Company shall, as soon as practicable after such exercise, contribute to the
capital of the Partnership an amount equal to the exercise price paid to the
Company by such exercising party in connection with the exercise of the
Incentive Option.
4.5. NO THIRD PARTY BENEFICIARY. No creditor or other third party
having dealings with the Partnership shall have the right to enforce the right
or obligation of any Partner to make Capital Contributions or to pursue any
other right or remedy hereunder or at law or in equity, it being understood and
agreed that the provisions of this Agreement shall be solely for
19
the benefit of, and may be enforced solely by, the parties hereto and their
respective successors and assigns. None of the rights or obligations of the
Partners herein set forth to make Capital Contributions to the Partnership shall
be deemed an asset of the Partnership for any purpose by any creditor or other
third party, nor may such rights or obligations be sold, transferred or assigned
by the Partnership or pledged or encumbered by the Partnership to secure any
debt or other obligation of the Partnership or of any of the Partners.
Notwithstanding the foregoing, the stockholders of the Company shall not be
considered creditors or third parties for the purposes of this Agreement but
shall be considered third party beneficiaries with the right to enforce this
Agreement.
4.6. NO INTEREST; NO RETURN. No Partner shall be entitled to interest
on its Capital Contribution or on such Partner's Capital Account. Except as
provided herein or by law, no Partner shall have any right to withdraw any part
of its Capital Account or to demand or receive the return of its Capital
Contribution from the Partnership.
4.7. NO PREEMPTIVE RIGHTS. No Person shall have any preemptive,
preferential or other similar right with respect to (i) additional Capital
Contributions or loans to the Partnership; or (ii) issuance or sale of any
Partnership Interests.
4.8. PERCENTAGE INTERESTS. If the number of outstanding Partnership
Units of a class or series increases or decreases during the taxable year, each
Partner's Percentage Interest of such class or series of Partnership Units shall
be adjusted by the General Partner effective as of the effective date of such
increase or decrease to a percentage equal to the number of Partnership Units of
such class or series held by such Partner divided by the aggregate number of
Partnership Units of such class or series outstanding after giving effect to
such increase or decrease. If the Partners' Percentage Interests are adjusted
pursuant to this Section 4.8, the Profits and Losses for the taxable year in
which the adjustment occurs shall be allocated between the part of the year
ending on the day when the Partnership's property is revalued by the General
Partner and the part of the year beginning on the following day either (i) as if
the taxable year had ended on the date of the adjustment or (ii) based on the
number of days in each part. The General Partner, in its sole discretion, shall
determine which method shall be used to allocate Profits and Losses for the
taxable year in which the adjustment occurs. The allocation of Profits and
Losses for the earlier part of the year shall be based on the Percentage
Interests before adjustment, and the allocation of Profits and Losses for the
later part shall be based on the adjusted Percentage Interests.
ARTICLE V
ALLOCATIONS, DISTRIBUTIONS AND
OTHER TAX AND ACCOUNTING MATTERS
5.1. PROFITS AND LOSSES.
After giving effect to the mandatory Partnership allocations
set forth in Section 5.2, Profits and Losses for any Fiscal Year or other
applicable period shall be allocated to the holders of OP Units pro rata in
accordance with their Percentage Interests.
20
5.2. MANDATORY ALLOCATIONS.
(a) (1) Minimum Gain Chargeback. Notwithstanding any other
provision of this Article 5, if there is a net decrease in Partnership Minimum
Gain during any Partnership Fiscal Year or other applicable period, then,
subject to the exceptions set forth in Regulations Section 1.704-2(f)(2), (3),
(4) and (5), each Partner shall be specially allocated items of Partnership
income and gain for such Partnership Fiscal Year (and, if necessary, subsequent
Partnership Fiscal Years) in an amount equal to such Partner's share of the net
decrease in Partnership Minimum Gain, as determined in accordance with
Regulations Section 1.704-2(g). Allocations pursuant to the previous sentence
shall be determined in accordance with Regulations Section 1.704-2(f). This
Section 5.2(a)(1) is intended to comply with the minimum gain chargeback
requirement in Regulations Section 1.704-2(f) shall be interpreted consistently
therewith.
(2) Partner Minimum Gain Chargeback. Notwithstanding any
other provision of this Article 5 except Section 5.2(a)(1), if there is a net
decrease in Partner Minimum Gain attributable to a Partner Nonrecourse Debt
during any Partnership Fiscal Year or other applicable period, then, subject to
the exceptions set forth in Regulations Section 1.704-2(i)(4), each Partner who
has a share of the Partner Minimum Gain attributable to such Partner Nonrecourse
Debt, determined in accordance with Regulations Section 1.704-2(i)(5) shall be
specially allocated items of Partnership income and gain for such Partnership
Fiscal Year (and, if necessary, subsequent Partnership Fiscal Years) in an
amount equal to such Partner's share of the net decrease in Partner Minimum Gain
attributable to such Partner Nonrecourse Debt, determined in accordance with
Regulations Section 1.704-2(i)(4). Allocations pursuant to the previous sentence
shall be made in proportion to the respective amounts required to be allocated
to each Partner pursuant thereto. The items to be so allocated shall be
determined in accordance with Regulations Section 1.704-2(i)(4). This Section
5.2(a)(2) is intended to comply with the minimum gain chargeback requirement in
Regulations Section 1.704-2(i)(4) and shall be interpreted consistently
therewith.
(b) Qualified Income Offset. Notwithstanding any provision of this
Article 5, except Section 5.2(a), in the event any Partner receives any
adjustments, allocations, or distributions described in Regulations Sections
1.704-1(b)(2)(ii)(d)(4), (5) or (6), that cause or increase an Adjusted Capital
Account Deficit of such Partner, items of Partnership income and gain shall be
specially allocated to such Partner in an amount and manner sufficient to
eliminate, to the extent required by the Regulations, the Adjusted Capital
Account Deficit of such Partner as quickly as possible. This Section 5.2(b) is
intended to comply with the qualified income offset provision of Regulations
Section 1.704-1(b)(2)(ii)(d) and shall be interpreted consistently therewith.
(c) No Excess Deficit. To the extent that any Partner has or
would have, as a result of an allocation of Loss (or item thereof) an Adjusted
Capital Account Deficit, such amount of Loss (or item thereof) shall be
allocated to the holders of Preferred Units so as to cause the Capital Account
balances of such holders of Preferred Units (adjusted as described in the
definition of Adjusted Capital Account Deficit) to be in proportion to their
aggregate respective liquidation preferences with respect to such Preferred
Units (taking into account any preferences which may exist among such Preferred
Units). To the extent an allocation of Loss (or item thereof) would result in
all Partners having Adjusted Capital Account Deficits, any Loss
21
causing or creating such Adjusted Capital Account Deficit shall be allocated to
the General Partner. Any allocations of Loss pursuant to this Section 5.2(c)
shall be reversed with a corresponding amount of Profits in subsequent years.
(d) Nonrecourse Deductions. Nonrecourse Deductions for any
Partnership Fiscal Year or other applicable period shall be allocated to the
holders of OP Units pro rata in accordance with their Percentage Interests.
(e) Partner Nonrecourse Deductions. Any Partner Nonrecourse
Deductions for any Partnership Fiscal Year or other applicable period shall be
specially allocated to the Partner who bears the economic risk of loss with
respect to the Partner Nonrecourse Debt to which such Partner Nonrecourse
Deductions are attributable in accordance with Regulations Section
1.704-2(i)(1).
(f) Code Section 754 Adjustments. To the extent an adjustment
to the adjusted tax basis of any Partnership asset pursuant to Code Section
734(b) or Code Section 743(b) is required, pursuant to Regulations Sections
1.704-1(b)(2)(iv)(m), to be taken into account in determining Capital Accounts,
the amount of such adjustment to the Capital Accounts shall be treated as an
item of gain (if the adjustment increases the basis of the asset) or loss (if
the adjustment decreases such basis) and such gain or loss shall be specially
allocated to the Partners in a manner consistent with the manner in which their
Capital Accounts are required to be adjusted pursuant to such Section of the
Regulations.
Each Partner hereby agrees to provide the Partnership with all
information necessary to give effect to an election made under Code Section 754
if the General Partner determines to make such an election. With respect to such
election:
(1) Any change in the amount of the depreciation deducted
by the partnership and any change in the gain or loss of the Partnership, for
federal income tax purposes, resulting from an adjustment pursuant to Section
743(b) or the Code shall be allocated entirely to the transferee of the
Partnership Interest or portion thereof so transferred. Neither the capital
contribution obligations of, nor the Partnership Interest of, nor the amount of
any cash distributions to, the Partners shall be affected as a result of such
election, and except as provided in Regulations Section 1.704-1(b)(2)(iv)(m),
the making of such election shall have no effect except for federal and (if
applicable) state and local income tax purposes.
(2) Solely for federal and (if applicable) state and local
income tax purposes and not for the purpose of maintaining the Partners' Capital
Accounts (except as provided in Regulations Section 1.704-1(b)(2)(iv)(m)), the
Partnership shall keep a written record for those assets, the bases of which is
adjusted as a result of such election, and the amount at which such assets are
carried on such record shall be debited (in the case of an increase in basis) or
credited (in the case of a decrease in basis) by the amount of such basis
adjustment. Any change in the amount of the depreciation deducted by the
Partnership and any change in the gain or loss of the Partnership, for federal
and (if applicable) state and local income tax purposes, attributable to the
basis adjustment
22
made as a result of such election shall be debited or credited, as the case may
be, on such record.
(g) Curative Allocations. Any mandatory allocations of items
of income, gain, loss or deduction pursuant to Sections 5.2(a), (b), (c) and (e)
above shall be taken into account for the purpose of equitably adjusting
subsequent allocations of income, gain, loss or deduction so that the net
allocations, in the aggregate, allocated to each Partner pursuant to this
Article 5, and the Capital Accounts of each Partner, shall as quickly as
possible and to the extent possible, be the same as if no mandatory allocations
had been made.
(h) Preferential Income Allocations. After giving effect to
the mandatory allocations set forth above, gross income of the Partnership shall
be allocated to the holders of Partnership Interests of a class or series that
are entitled to a preference in distribution (and within such class or series,
pro rata in accordance with their respective Percentage Interests) until the
cumulative amount allocated to each such holder pursuant to this Section 5.2(h)
equals the cumulative amount for the current and all prior years of the sum of
(A) the distributions made to each such holder, pursuant to Section 5.6(b)(i)
and (B) the portions of the distributions made to each such holder pursuant to
the redemption section of such Partnership Unit Designation, if any, that exceed
the liquidation preference (excluding any accrued but unpaid distributions
thereon) per Preferred Unit established for such Preferred Units in the
applicable Partnership Unit Designation.
(i) Allocations Upon Liquidation. Gain of the Partnership from
a sale or other disposition of all or substantially all of the assets of the
Partnership shall be allocated (A) first, to the holders of Partnership
Interests of a class or series that is entitled to a preference in distribution
(and, within such class or series, pro rata in accordance with their respective
Percentage Interests) in an amount necessary to cause the Capital Account
balances of such holders to equal the amount payable to such holders upon a
liquidation (each a "Liquidation Preference") pursuant to the applicable
Partnership Unit Designation for such Partnership Interests (taking into account
preferences which may exist among such Preferred Units); (B) second, to the
Partners, to the extent of and in proportion to the amounts required to cause
the Capital Account balance of the Company in excess of its aggregate
Liquidation Preferences and the Capital Account balance of each other Partner to
be in proportion to the Percentage Interests of OP Units held by the Company and
such other Partners, and (C) thereafter, to the holders of OP Units pro rata in
proportion to their respective Percentage Interests.
5.3. OTHER ALLOCATION RULES.
(a) Pursuant to Regulations Section 1.752-3(a), for the
purpose of determining each Partner's share of excess Nonrecourse Liabilities of
the Partnership, and solely for such purpose, each Partner's interest in
partnership profits shall equal such Partner's Percentage Interest.
(b) The allocation of Profits and Losses for any Partnership
Year during which a person acquires a Partnership Interest (other than upon
formation of the Partnership), or during which there is a change in the
Partners' Percentage Interests, shall take into account the Partners' varying
interests for such Partnership Year pursuant to any method
23
permissible under Code Section 706 that is selected by the General Partner. The
method selected by the General Partner shall not apply notwithstanding any
agreement between the assignor and assignee of such Partnership Interest
although the General Partner may recognize any such agreement.
(c) To the extent permitted by Regulations Section
1.704-2(h)(3) and 1.704-2(i)(6), the General Partner shall endeavor to treat
distributions as having been made from the proceeds of Nonrecourse Liabilities
or Partner Nonrecourse Debt only to the extent that such distributions would
cause or increase a deficit balance in any Partner's Capital Account that
exceeds the amount such Partner is otherwise obligated to restore (within the
meaning of Regulations Section 1.704-1(b)(ii)(c)) as of the end of the
Partnership's taxable year in which the distribution occurs.
5.4. ALLOCATIONS FOR TAX PURPOSES.
(a) Except as otherwise provided in this Section 5.4, for
federal income tax purposes, each item of income, gain, loss and deduction shall
be allocated among the Partners in the same manner as its correlative item of
"book" income, gain, loss or deduction is allocated pursuant to Sections 5.1,
5.2 and 5.3 above.
(b) In accordance with Code Section 704(b) and 704(c) and the
Regulations thereunder, income, gain, loss and deduction with respect to any
property contributed to the capital of the Partnership shall, solely for federal
income tax purposes, be allocated among the Partners so as to take into account
any variation between the adjusted basis of such property to the Partnership for
federal income tax purposes and the initial Gross Asset Value of such property.
If the Gross Asset Value of any Partnership property is adjusted as described in
the definition of Gross Asset Value, subsequent allocations of income, gain,
loss and deduction with respect to such asset shall take account of any
variation between the adjusted basis of such asset for federal income tax
purposes and the Gross Asset Value of such asset in the manner prescribed under
Code Section 704(b) and 704(c) and the Regulations thereunder. In accordance
with the foregoing, the Partnership shall elect to use the "traditional method"
set forth in Regulation Section 1.704-3(b) with respect to the properties
contributed by or on behalf of the Special Consenting Partners.
5.5. REVISIONS TO ALLOCATIONS TO REFLECT ISSUANCE OF ADDITIONAL
PARTNERSHIP INTERESTS.
In the event that the Partnership issues Additional
Partnership Interests to the General Partner or any Additional Limited Partner
pursuant to Article IV hereof, the General Partner shall make such revisions to
this Article V as it deems necessary to reflect the terms of the issuance of
such Partnership Interests, including any preferential allocations to classes of
Partnership Interests that are entitled thereto.
5.6. DISTRIBUTIONS. Except with respect to a liquidation of the
Partnership pursuant to Article VIII hereof:
(a) The General Partner shall cause the Partnership to
distribute all or a portion of Net Operating Cash Flow to the Partners from time
to time as determined by the
24
General Partner, but in any event not less frequently than quarterly in such
amounts as the General Partner shall determine;
(b) For each Partnership Fiscal Year, all distributions made
pursuant to this Section 5.6 shall be made to the Partners (i) first, at the
time and in the manner set forth in the applicable Partnership Unit Designation,
to each holder of Partnership Interests of a class or series that is entitled to
a preference in distribution in accordance with the rights of such class or
series of Partnership Interests (and, within such class or series, pro rata in
accordance with their respective Partnership Interests); and (ii) thereafter, to
the holders of OP Units pro rata in proportion to their respective Percentage
Interests; PROVIDED that the General Partner shall use its best efforts to cause
the Partnership to make distributions such that the cumulative distributions per
OP Unit shall equal the cumulative distributions per Share; PROVIDED FURTHER
that in no event may a Partner receive a distribution of Net Operating Cash Flow
with respect to an OP Unit if such Partner is entitled to receive a distribution
out of such Net Operating Cash Flow with respect to a Share for which such
Partnership Unit has been exchanged and such distribution shall be made to the
Company; and
(c) Notwithstanding the provisions of Section 5.6 (a) and (b),
the General Partner shall use its best efforts to cause the Partnership to
distribute sufficient amounts to enable the General Partner to pay shareholder
dividends that will (1) satisfy the requirements for qualification as a REIT
under the Code and the Regulations (the "REIT Requirements") and (2) avoid any
federal income or excise tax liability of the General Partner.
ARTICLE VI
TAX MATTERS
6.1. 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
by Limited Partners for federal and state income tax reporting purposes.
6.2. TAX ELECTIONS.
Except as otherwise provided herein, the General Partner
shall, in its sole and absolute discretion, determine whether to make any
available election pursuant to the Code; PROVIDED THAT the General Partner shall
make the election under Code Section 754 in accordance with applicable
Regulations thereunder. The General Partner shall have the right to seek to
revoke any such elections (including, without limitation, the election under
Code Section 754) upon the General Partner's determination in its sole and
absolute discretion that such revocation is in the best interests of the
Partners.
6.3. TAX MATTERS PARTNER.
25
(a) The General Partner shall be the "tax matters partner" of
the Partnership for federal income tax purposes within the meaning of Code
Section 6231(a)(7). Pursuant to Code Section 6223(c)(3), 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 and profit interest of each of the Limited Partners and the Assignees to
the extent that such information is provided to the Partnership by the Limited
Partners and the Assignees. The General Partner is authorized to take any action
in connection with any tax audit or continuing judicial action as it determines
in good faith is in the best interests of the Partners.
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 7.5 of this Agreement shall be fully
applicable to the tax matters partner in its capacity as such.
(b) The tax matters partner shall receive no compensation for
its services. All third party costs and expenses incurred by the tax matters
partner in performing its duties as such (including legal and accounting fees
and expenses) shall be borne by the Partnership. Nothing herein shall be
construed to restrict the Partnership from engaging an independent accounting
firm or the accountants for the Partnership to assist the tax matters partner in
discharging its duties hereunder, so long as the compensation paid by the
Partnership for such services is reasonable.
6.4. 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 Code Section 709.
6.5. WITHHOLDING; COMBINED RETURNS
(a) Each Partner hereby authorizes the Partnership to withhold
from or pay on behalf of or with respect to such Partner and Assignee 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 Partner or Assignee pursuant to
this Agreement, including, without limitation, any taxes required to be withheld
or paid by the Partnership pursuant to Code Section 1441, 1442, 1445, or 1446.
Any amount paid on behalf of or with respect to a Partner or Assignee shall
constitute a loan by the Partnership to such Partner or Assignee, which loan
shall be repaid through withholding of subsequent distributions to such Partner
or Assignee. In the event that a Limited Partner fails to pay any amounts owed
to the Partnership pursuant to this Section 6.5 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. Without limitation, 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
26
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 (i) the base rate on corporate loans at large United States money
center commercial banks, as published from time to time in THE WALL STREET
JOURNAL or (ii) the maximum lawful rate of interest on such obligation, such
interest to accrue from the date such amount is due (which shall be fifteen (15)
days after demand) until such amount is paid in full.
(b) The General Partner is authorized, if it determines in
good faith that such action is in the interests to both it and the Limited
Partners, to negotiate with state and local tax authorities and/or file state
and local combined or consolidated income tax returns on behalf of the
Partnership and for all of the Partners and Assignees in respect of income of
the Partnership. To the extent any payment or accrual of state or local income
taxes result in a federal, state or local tax credit to one or more Partners,
such credit shall be allocated between the Partners in proportion to their
respective average daily Percentage Interests for the Partnership Fiscal Year
for which such tax is paid or accrued and the amount allocated to each Partner
shall be treated as a distribution to such Partner and shall reduce the amount
of available cash otherwise distributable to such Partners under Article 5.
ARTICLE VII
RIGHTS, DUTIES AND RESTRICTIONS OF THE GENERAL PARTNER
7.1. MANAGEMENT. The General Partner shall be responsible for the
management of the Partnership's business and affairs. Except as otherwise herein
expressly provided, and subject to the limitations contained in Section 7.2
hereof with respect to Major Decisions, the General Partner shall have, and is
hereby granted, full and complete power to the fullest extent permissible under
the Act, authority and discretion to take such action for and on behalf of the
Partnership and in its name as the General Partner shall, in its sole and
absolute discretion, deem necessary or appropriate to carry out the purposes for
which the Partnership was organized. Except as otherwise expressly provided
herein, and subject to Section 7.2 hereof, the General Partner shall have the
right, power and authority:
(a) To manage, control, invest, lend, reinvest, acquire by
purchase, lease or otherwise, sell, contract to purchase or sell, grant, obtain,
or exercise options to purchase, options to sell or conversion rights, assign,
transfer, convey, deliver, endorse, exchange, pledge, mortgage, abandon,
improve, repair, maintain, insure, lease for any term and otherwise deal with
any and all property of whatsoever kind and nature, and wheresoever situated, in
furtherance of the purposes of the Partnership;
(b) To acquire, directly or indirectly, interests in real or
personal property of any kind and of any type, and any and all kinds of
interests therein, and to determine the manner in which title thereto is to be
held; to manage, insure against loss, protect and subdivide any of the real or
personal property, interests therein or parts thereof; to improve, develop or
redevelop any such real or personal property; to participate in the ownership
and development of any property; to dedicate for public use, to vacate any
subdivisions or parts thereof, to resubdivide, to contract to sell, to grant
options to purchase or lease, to sell on any
27
terms; to convey, to mortgage, pledge or otherwise encumber said property, or
any part thereof; to lease said property or any part thereof from time to time,
upon any terms and for any period of time, and to renew or extend leases, to
amend, change or modify the terms and provisions of any leases and to grant
options to lease and options to renew leases and options to purchase; to
partition or to exchange said real property, or any part thereof, for other real
or personal property; to grant easements or charges of any kind; to release,
convey or assign any right, title or interest in or about or easement
appurtenant to said property or any part thereof; to construct and reconstruct,
remodel, alter, repair, add to or take from buildings on said property; to
insure any Person having an interest in or responsibility for the care,
management or repair of such property; to direct the trustee of any land trust
to mortgage, lease, convey or contract to convey the real estate held in such
land trust or to execute and deliver deeds, mortgages, notes, and any and all
documents pertaining to the property subject to such land trust or in any matter
regarding such trust; to execute assignments of all or any part of the
beneficial interest in such land trust;
(c) To employ, engage or contract with or dismiss from
employment or engagement Persons to the extent deemed necessary by the General
Partner for the operation and management of the Partnership business, including
but not limited to, contractors, subcontractors, engineers, architects,
surveyors, mechanics, consultants, accountants, attorneys, insurance brokers,
real estate brokers and others;
(d) To enter into contracts on behalf of the Partnership;
(e) To borrow or lend money, procure loans and advances from
any Person for Partnership purposes, and to apply for and secure, from any
Person, credit or accommodations; to contract liabilities and obligations,
direct or contingent and of every kind and nature with or without security; and
to repay, discharge, settle, adjust, compromise, or liquidate any such loan,
advance, credit, obligation or liability;
(f) To Pledge, hypothecate, mortgage, assign, deposit,
deliver, enter into sale and leaseback arrangements or otherwise give as
security or as additional or substitute security, or for sale or other
disposition any and all Partnership property, tangible or intangible, including,
but not limited to, real estate and beneficial interests in land trusts, and to
make substitutions thereof, and to receive any proceeds thereof upon the release
or surrender thereof; to sign, execute and deliver any and all assignments,
deeds and other contracts and instruments in writing; to authorize, give, make,
procure, accept and receive moneys, payments, property, notices, demands,
vouchers, receipts, releases, compromises and adjustments; to waive notices,
demands, protests and authorize and execute waivers of every kind and nature; to
enter into, make, execute, deliver and receive written agreements, undertakings
and instruments of every kind and nature; to give oral instructions and make
oral agreements; and generally to do any and all other acts and things
incidental to any of the foregoing or with reference to any dealings or
transactions which any attorney may deem necessary, proper or advisable;
(g) To acquire and enter into any contract of insurance which
the General Partner deems necessary or appropriate for the protection of the
Partnership, for the conservation of the Partnership's assets or for any purpose
convenient or beneficial to the Partnership;
28
(h) To conduct any and all banking transactions on behalf of
the Partnership; to adjust and settle checking, savings, and other accounts with
such institutions as the General Partner shall deem appropriate; to draw, sign,
execute, accept, endorse, guarantee, deliver, receive and pay any checks,
drafts, bills of exchange, acceptances, notes, obligations, undertakings and
other instruments for or relating to the payment of money in, into, or from any
account in the Partnership's name; to execute, procure, consent to and authorize
extensions and renewals of the same; to make deposits and withdraw the same and
to negotiate or discount commercial paper, acceptances, negotiable instruments,
bills of exchange and dollar drafts;
(i) To demand, xxx for, receive, and otherwise take steps to
collect or recover all debts, rents, proceeds, interests, dividends, goods,
chattels, income from property, damages and all other property, to which the
Partnership may be entitled or which are or may become due the Partnership from
any Person; to commence, prosecute or enforce, or to defend, answer or oppose,
contest and abandon all legal proceedings in which the Partnership is or may
hereafter be interested; and to settle, compromise or submit to arbitration any
accounts, debts, claims, disputes and matters which may arise between the
Partnership and any other Person and to grant an extension of time for the
payment or satisfaction thereof on any terms, with or without security;
(j) To make arrangements for financing, including the taking
of all action deemed necessary or appropriate by the General Partner to cause
any approved loans to be closed;
(k) To take all reasonable measures necessary to insure
compliance by the Partnership with applicable arrangements, and other
contractual obligations and arrangements entered into by the Partnership from
time to time in accordance with the provisions of this Agreement, including
periodic reports as required to lenders and using all due diligence to insure
that the Partnership is in compliance with its contractual obligations;
(l) To maintain the Partnership's books and records; and
(m) To prepare and deliver, or cause to be prepared and
delivered by the Accountants, all financial and other reports with respect to
the operations of the Partnership, and preparation and filing of all federal and
state tax returns and reports.
Except as otherwise provided herein, to the extent the duties
of the General Partner require expenditures of funds to be paid to third
parties, the General Partner shall not have any obligations hereunder except to
the extent that Partnership funds are reasonably available to it for the
performance of such duties, and nothing herein contained shall be deemed to
authorize or require the General Partner, in its capacity as such, to expend its
individual funds for payment to third parties or to undertake any individual
liability or obligation on behalf of the Partnership.
7.2. MAJOR DECISIONS. The General Partner shall not, without the prior
Consent of the Limited Partners, on behalf of the Partnership, undertake any of
the following actions (the "Major Decisions"):
29
(a) Amend, modify or terminate this Agreement other than to
reflect the admission of Additional Limited Partners pursuant to Section 4.2
hereof or as otherwise described in Article XIV.
(b) Make a general assignment for the benefit of creditors or
appoint or acquiesce in the appointment of a custodian, receiver or trustee for
all or any part of the assets of the Partnership.
(c) Take title to any personal or real property, other than in
the name of the Partnership or pursuant to Section 7.10 hereof.
(d) Institute any proceeding for Bankruptcy on behalf of the
Partnership.
(e) Act or cause the taking of any action with respect to the
following matters:
(1) the dissolution and winding up of the Partnership or an
election to continue the Partnership or to continue the business
of the Partnership;
(2) a change in the nature of the business of the
Partnership.
7.3. PROSCRIPTIONS. The General Partner shall not have the authority
to:
(a) Do any act in contravention of this Agreement or which
would make it impossible to carry on the ordinary business of the Partnership;
(b) Possess any Partnership property or assign rights in
specific Partnership property for other than Partnership purposes; or
(c) Do any act in contravention of applicable law.
Nothing herein contained shall impose any obligation on any Person or firm doing
business with the Partnership to inquire as to whether or not the General
Partner has properly exercised its authority in executing any contract, lease,
mortgage, deed or any other instrument or document on behalf of the Partnership,
and any such Third Person shall be fully protected in relying upon such
authority.
7.4. OUTSIDE ACTIVITIES OF GENERAL PARTNER. Without Consent of the
Limited Partners, the General Partner shall not, directly or indirectly, enter
into or conduct any business other than in connection with the ownership,
acquisition and disposition of Partnership Interests as a General Partner or
Limited Partner and the management of the business of the Partnership and such
activities as are incidental thereto. Without the Consent of the Limited
Partners, the assets of the General Partner shall be limited to Partnership
Interests and permitted debt obligations of the Partnership, so that Shares and
Partnership Units are completely fungible except as otherwise specifically
provided herein; PROVIDED, THAT the General Partner shall be permitted to (i)
hold such bank accounts or similar instruments or accounts in its own name as it
deems necessary to carry out its responsibilities and purposes as contemplated
under this
30
Agreement and its organizational documents; (ii) acquire, directly or through
any subsidiary of the General Partner that is a qualified REIT subsidiary within
the meaning of Section 856(i) of the Code, up to a one percent (1%) interest in
any partnership or limited liability company at least ninety-nine percent (99%)
of the equity of which is owned by the Partnership; and (iii) own all of the
equity interest in FLIP/BRE II, Inc., and the property known as 000 Xxx Xxxx
Xxxx. The General Partner and any of its Affiliates may acquire Limited Partner
Interests and shall be entitled to exercise all rights of a Limited Partner
relating to such Limited Partner Interests.
7.5. INDEMNIFICATION.
(a) The Partnership shall indemnify each Indemnitee from and
against any and all losses, claims, damages, liabilities, joint or several,
expenses (including, without limitation, reasonable attorney's fees and other
legal fees and expenses), judgments, fines, settlements, and other amounts
arising from any and all claims, demands, actions, suits or proceedings, civil,
criminal, administrative or investigative, that relate to the operations of the
Partnership or the activities of such Indemnitee acting on behalf of the
Partnership, an Affiliate of the Partnership or an entity in which the
Partnership holds an interest as set forth in this Agreement in which such
Indemnitee may be involved, or is threatened to be involved, as a party or
otherwise; PROVIDED THAT, the Partnership shall not indemnify an Indemnitee for
any such losses, claims, damages, liabilities, expenses, judgments, fines,
settlements or other amounts arising out of or resulting from (i) fraud, gross
negligence, intentional misconduct by such Indemnitee, or a violation of law by
such Indemnitee when the Indemnitee has reasonable cause to believe such action
was unlawful; (ii) the violation or breach by such Indemnitee of the provisions
of this Agreement or (iii) any transaction from which such Indemnitee received a
personal benefit in violation or breach of any provision of this Agreement. 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 7.5(a). The termination of any proceeding by
conviction of an Indemnitee or upon a plea of NOLO CONTENDERE or its equivalent
by an Indemnitee, or an entry of an order of probation against an Indemnitee
prior to judgment, creates a rebuttable presumption that such Indemnitee acted
in a manner contrary to that specified in this Section 7.5(a) with respect to
the subject matter of such proceeding. Any indemnification pursuant to this
Section 7.5 shall be made only out of the assets of the Partnership, and neither
the General Partner nor any Limited Partners 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 7.5.
(b) Reasonable expenses incurred by an Indemnitee who is a
party to a proceeding may be paid or reimbursed by the Partnership in advance of
the final disposition of the proceeding 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 7.5(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.
(c) The indemnification provided by this Section 7.5 shall be
in addition to any other rights to which an Indemnitee 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
31
Indemnitee who has ceased to serve in such capacity unless otherwise provided in
a written agreement with such Indemnitee or in the writing pursuant to which
such Indemnitee is indemnified.
(d) The Partnership may, but shall not be obligated to,
purchase and maintain insurance on behalf of any 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 Person in
connection with the Partnership's activities, regardless of whether the
Partnership would have the power to indemnify such Person against such liability
under the provisions of this Agreement.
(e) Any liabilities which an Indemnitee incurs as a result of
acting on behalf of the Partnership or the General Partner (whether as a
fiduciary or otherwise) in connection with the operation, administration or
maintenance of an employee benefit plan or any related trust or funding
mechanism (whether such liabilities are in the form of excise taxes, penalties,
restitutions or other funding mechanism or to a participant or beneficiary of
such plan, trust or other funding mechanism, or otherwise) shall be treated as
liabilities or judgments or fines under this Section 7.5.
(f) The provisions of this Section 7.5 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 7.5 or any provision hereof
shall be prospective only and shall not in any way affect the limitations on the
Partnership's liability to any Indemnitee under this Section 7.5 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.
7.6. LIABILITY OF THE GENERAL PARTNER.
(a) Notwithstanding anything to the contrary set forth in this
Agreement, the General Partner shall not be liable for monetary damages to the
Partnership, any Partners or any Assignees for any losses, claims, damages,
liabilities, expenses, judgments, fines, settlements or other amounts incurred
due to acts or omissions of the General Partner, except if such losses, claims,
damages, liabilities, expenses, judgments, fines, settlements or other amounts
arose out of or resulted from (i) fraud, gross negligence, intentional
misconduct or a knowing violation of law by the General Partner when it had
reasonable cause to believe such action giving rise to the violation was
unlawful; (ii) the violation or breach by the General Partner of the provisions
of this Agreement or (iii) any transaction in which the General Partner received
a personal benefit in violation or breach of any provision of this Agreement.
(b) Subject to its obligations and duties as General Partner
set forth in Section 7.1 hereof, 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. The General
Partner shall not be responsible for any acts or omissions on the part of any
agent appointed by it in good faith.
32
(c) 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 limitations on the General Partner's liability to the Partnership and
the Limited Partners under this Section 7.6 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.
(d) The Limited Partners expressly acknowledge that the
General Partner is acting on behalf of the Partnership and the General Partner's
stockholders collectively, that the General Partner is under no obligation to
consider the separate interest of the Limited Partners (including, without
limitation, the tax consequences to Limited Partnerships or Assignees) in
deciding whether to cause the Partnerships to take (or decline to take) any
actions, and that the General Partner shall not be liable for monetary damages
to the Partnership or any Partner for Losses sustained, liabilities incurred, or
benefits not derived by Limited Partners in connection with such decisions, so
long as the General Partner has acted in good faith.
7.7. REIMBURSEMENT OF THE GENERAL PARTNER.
(a) No Compensation. Except as provided in this Section 7.7
and elsewhere in this Agreement, the General Partner shall not be compensated
for its services as general partner to 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 sole and absolute discretion, for all
expenses it incurs relating to the ownership and operation of, or for the
benefit of, the Partnership (including, without limitation, expenses related to
the management and administration of any subsidiaries of the General Partner or
the Partnership or Affiliates of the Partnership such as auditing expenses and
filing fees); PROVIDED THAT, the amount of any such reimbursement shall be
reduced by (i) any interest earned by the General Partner with respect to bank
accounts or other instruments or accounts held by it as permitted elsewhere in
this Agreement and (ii) any amount derived by the General Partner from any
investments as permitted elsewhere in this Agreement (including, without
limitation, amounts derived from its ownership of those subsidiaries described
in Section 7.4) and; PROVIDED FURTHER, that the General Partner shall not be
reimbursed for (i) income tax liabilities or (ii) filing or similar fees in
connection with maintaining the General Partner's continued corporate existence
that are incurred by the General Partner. The General Partner shall determine in
good faith the amount of expenses incurred by it related to the ownership and
operation of, or for the benefit of, the Partnership. In the event that certain
expenses are incurred for the benefit of the Partnership and other entities
(including the General Partner), such expenses will be allocated to the
Partnership and such other entities in such a manner as the General Partner in
its sole and absolute discretion deems fair and reasonable. Such reimbursements
shall be in addition to any reimbursement to the General Partner as a result of
indemnification pursuant to Section 7.5. 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.
33
(c) Partnership Interest Issuance Expenses. The General
Partner shall also be reimbursed for all expenses it incurs relating to any
issuance of Additional Partnership Interests, Shares, debt of the Partnership or
the General Partner or rights, options, warrants or convertible or exchangeable
securities pursuant to this Agreement (including, without limitation, all costs,
expenses, damages and other payments resulting from or arising in connection
with litigation related to any of the foregoing), all of which expenses are
considered by the Partners to constitute expenses of, and for the benefit of,
the Partnership.
(d) Purchases of Shares by the General Partner. In the event
that the General Partner exercises its obligation under Article XII hereof to
purchase Shares or otherwise elects to purchase from its shareholders Shares in
connection with a stock repurchase or similar program or for the purpose of
delivering such Shares to satisfy an obligation under any dividend reinvestment
or stock purchase program adopted by the General Partner, any employee stock
purchase plan adopted by the General Partner or any similar obligation or
arrangement undertaken by the General Partner in the future, the purchase price
paid by the General Partner for such Shares and any other expenses incurred by
the General Partner in connection with such purchase shall be considered
expenses of the Partnership and shall be reimbursable to the General Partner,
subject to the conditions that: (i) if such Shares subsequently are to be sold
by the General Partner, the General Partner pays to the Partnership any proceeds
received by the General Partner for such Shares (PROVIDED THAT a transfer of
Shares for Partnership Units pursuant to Section 12.5 hereof would not be
considered a sale for such purposes); and (ii) if such Shares are not
retransferred by the General Partner within thirty (30) days after the purchase
thereof, the General Partner shall cause the Partnership to cancel a number of
Partnership Units of the appropriate class (rounded to the nearest whole
Partnership Unit) held by the General Partner equal to the product attained by
multiplying the number of such Shares by a fraction, the numerator of which is
one and the denominator of which is the Conversion Factor.
(e) Reimbursement not a Distribution. If and to the extent any
reimbursement made pursuant to this Section 7.7 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 with respect to
capital within the meaning of Section 707(c) 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.
7.8. REIT QUALIFICATION 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
avoid the General Partner incurring any taxes under Code Section 857 or 4981, is
expressly authorized under this Agreement and is deemed approved by all of the
Limited Partners. Nothing, however, in this Agreement shall be deemed to give
rise to any liability on the part of the Limited Partners for the General
Partner's failure to qualify or continue to qualify as a REIT or failure to
avoid incurring any taxes under the foregoing Sections of the Code, or to give
rise to any liability of the General Partner for such failure so to qualify.
7.9. EMPLOYMENT OR RETENTION OF AFFILIATES.
34
(a) Any Affiliate of the General Partner may be employed or
retained by the Partnership and may otherwise deal with the Partnership (whether
as a buyer, lessor, lessee, manager, furnisher of goods or services, broker,
agent, lender or otherwise) and may receive from the Partnership any
compensation, price, or other payment therefor which the General Partner
determines to be fair and reasonable.
(b) The Partnership may lend or contribute to its subsidiaries
or other Persons in which it has an equity investment, and such Persons may
borrow funds from he Partnership, on terms and conditions established in the
sole and absolute discretion of the General Partner. The foregoing authority
shall not create any right or benefit in favor of any subsidiary or any other
Person.
(c) The Partnership may transfer assets to joint ventures,
other partnerships, corporations or other business entities in which it is or
thereby becomes a participant upon such terms and subject to such conditions as
the General Partner deems are consistent with this Agreement and applicable law.
(d) Except as expressly permitted by this Agreement, neither
the General Partner nor any of its Affiliates shall sell, transfer or convey any
property to, or purchase any property from, the Partnership, directly or
indirectly, except pursuant to transactions that are on terms that are fair and
reasonable to the Partnership.
7.10. 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. Title to any or all of the Partnership assets may be held
in the name of the Partnership, the General Partner or one or more nominees, as
the General Partner may determine, including Affiliates of the General Partner.
The General Partner hereby declares and warrants that any Partnership assets for
which legal title is held in the name of the General Partner or any nominee or
Affiliate of the General Partner shall be held by the General Partner, or such
nominee or Affiliate for the use and benefit of the Partnership in accordance
with the provisions of this Agreement; PROVIDED THAT, the General Partner shall
use its best efforts to cause beneficial and record title to such assets to be
vested in the Partnership as soon as reasonably practicable. All Partnership
assets shall be recorded as the property of the Partnership in its books and
records, irrespective of the name in which legal title to such Partnership
assets is held.
7.11. OTHER MATTERS CONCERNING THE GENERAL PARTNER.
(a) The General Partner 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.
(b) The General Partner may consult with legal counsel,
accountants, appraisers, management consultants, investment bankers, architects,
engineers, environmental consultants and other consultants and advisers selected
by it and any act taken or omitted to be
35
taken in reliance upon the opinion of such Persons as to matters which such
General Partner reasonably believes to be with such Person's professional or
expert competence shall be conclusively presumed to have been done or omitted in
good faith and in accordance with such opinion.
(c) 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 attorney-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 all and every act and
duty which is permitted or required to be done by the General Partner hereunder.
7.12. ORIGINAL PROPERTIES. The General Partner shall use all commercially
reasonable efforts in disposing of any of the Original Properties to structure
such transaction as one or more Section 1031 Exchanges.
ARTICLE VIII
DISSOLUTION, LIQUIDATION AND WINDING-UP
8.1. DISSOLUTION. The Partnership shall not be dissolved by the admission
of Substituted Limited Partners or Additional Limited Partners 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"):
(a) an event of withdrawal of the last remaining General
Partner, as defined in the Act, unless within ninety (90) days following such
event of withdrawal, the remaining Partners representing a majority of the
Partnership Units held by such remaining Partners (the "CONSENTING PARTNERS")
(i) agree in writing to continue the Partnership and designate a successor
General Partner whose Partnership Interest in the Partnership shall be derived,
on an equitable basis, from the Partnership Interests of all remaining Partners
on terms to be determined by the Consenting Partners and (ii) provide written
notice of such agreement and designation to all other Partners;
(b) entry of a decree of judicial dissolution of the
Partnership pursuant to the provisions of the Act;
(c) the sale or other disposition of all or substantially all
of the assets and properties of the Partnership;
(d) the exchange of all Limited Partnership Interests; or
(e) the election by the General Partner that the Partnership
should be dissolved (in accordance with Section 7.2(e)(1).
36
8.2. DISTRIBUTION ON DISSOLUTION. Upon the occurrence of a Liquidating
Event, 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 Liquidating Trustee 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:
(a) Payment of creditors of the Partnership (other than
Partners) in the order of priority as provided by law;
(b) Establishment of reserves as provided by the General
Partner to provide for contingent liabilities, if any;
(c) Payment of debts of the Partnership to Partners, if any,
in the order of priority provided by law;
(d) To the Partners in accordance with the positive balances
in their Capital Accounts (after giving effect to all contributions,
distributions and allocations for all periods pursuant to this Section 8.2(d)
hereof).
Whenever the Liquidating Trustee reasonably determines that any reserves
established pursuant to paragraph (b) above are in excess of the reasonable
requirements of the Partnership, the amount determined to be excess shall be
distributed to the Partners in accordance with the above provisions.
8.3. SALE OF PARTNERSHIP ASSETS. In the event of the liquidation of the
Partnership in accordance with the terms of this Agreement, the Liquidating
Trustee may sell Partnership property; PROVIDED, HOWEVER, all sales, leases,
encumbrances or transfers of Partnership assets shall be made by the Liquidating
Trustee solely on an "arm's-length" basis, at the best price and on the best
terms and conditions as the Liquidating Trustee in good faith believes are
reasonably available at the time and under the circumstances and on a
non-recourse basis to the Limited Partners. The liquidation of the Partnership
shall not be deemed finally terminated until the Partnership shall have received
cash payments in full with respect to obligations such as notes, purchase money
mortgages, installment sale contracts or other similar receivables received by
the Partnership in connection with the sale of Partnership assets and all
obligations of the Partnership have been satisfied or assumed by the General
Partner. The Liquidating Trustee shall continue to act to enforce all of the
rights of the Partnership pursuant to any such obligations until paid in full.
8.4. DISTRIBUTIONS IN KIND. In the event that it becomes necessary to
make a distribution of Partnership property in kind, the General Partner may,
with the Consent of the Limited Partners, transfer and convey such property to
the distributees as tenants in common, subject to any liabilities attached
thereto, so as to vest in them undivided interests in the whole of
37
such property in proportion to their respective rights to share in the
proceeds of the sale of such property (other than as a creditor) in
accordance with the provisions of Section 8.2 hereof.
8.5. DOCUMENTATION OF LIQUIDATION. Upon the completion of the
dissolution and liquidation of the Partnership, the Partnership shall terminate
and the Liquidating Trustee shall have the authority to execute and record any
and all documents or instruments required to effect the dissolution, liquidation
and termination of the Partnership.
8.6. LIABILITY OF THE LIQUIDATING TRUSTEE. The Liquidating Trustee
shall be indemnified and held harmless by the Partnership from and against any
and all claims, demands, liabilities, costs, damages and causes of action of any
nature whatsoever arising out of or incidental to the Liquidating Trustee' s
taking of any action authorized under or within the scope of this Agreement;
PROVIDED, HOWEVER, that the Liquidating Trustee 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 arose out of:
(a) A matter entirely unrelated to the Liquidating Trustee's
action or conduct pursuant to the provisions of this Agreement; or
(b) The proven misconduct or negligence of the Liquidating
Trustee.
8.7. ACCOUNTING. In the event of the dissolution, liquidating and
winding-up of the Partnership, a proper accounting (which shall be certified)
shall be made of the Capital Account of each Partner and of the Profits or
Losses of the Partnership from the date of the last previous accounting to the
date of dissolution. Financial statements presenting such accounting shall
include a report of a certified public accountant selected by the Liquidating
Trustee.
8.8. NEGATIVE CAPITAL ACCOUNTS. No Partner shall be liable to the
Partnership or to any other Partner for any deficit or negative balance which
may exist in such Partner's Capital Account, whether such negative Capital
Account results from the allocation of Losses or other items of deduction and
loss to such Partner or from distribution to such Partner.
8.9. RIGHTS OF PARTNERS. Except as otherwise provided in this
Agreement, each Partner shall look solely to the assets of the Partnership for
the return of such Partner's 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 Partner shall have priority over any
other Partner as to the return of his Capital Contributions, distributions, or
allocations.
8.10. NOTICE OF DISSOLUTION. In the event a Liquidating Event occurs or
an event occurs that would result in a dissolution of the Partnership, the
General Partner shall, within 30 days thereafter, provide written notice thereof
to each of the Partners.
8.11. TERMINATION OF PARTNERSHIP AND CANCELLATION OF CERTIFICATE OF
LIMITED PARTNERSHIP. Upon the completion of the liquidation of the Partnership
and the distribution of all cash and property as provided in Section 8.2 hereof,
the Partnership shall be terminated, a certificate of cancellation shall be
filed, and all qualifications of the Partnership as a foreign
38
limited partnership in any jurisdiction other than the State of Delaware shall
be cancelled and such other actions as may be necessary to terminate the
Partnership shall be taken.
8.12. WAIVER OF PARTITION. Each Partner hereby waives any right to
partition of the Partnership property.
ARTICLE IX
TRANSFER OF PARTNERSHIP INTERESTS
9.1. GENERAL.
(a) The term "transfer," when used in this Article IX with
respect to a Partnership Unit, shall be deemed to refer to a transaction by
which the General Partner purports to assign all or any part of its General
Partner Interest to another Person or by which a Limited Partner purports to
assign all or any part of its Limited Partner Interest to another Person, and
includes a sale, assignment, gift, pledge, encumbrance, hypothecation, mortgage,
exchange or any other disposition by law or otherwise. The term "transfer" when
used in this Article IX does not include any redemption of Partnership Units by
the Partnership from a Limited Partner or acquisition of Partnership Units from
a Limited Partner by the General Partner pursuant to the Conversion Rights.
(b) No Partnership Interest shall be transferred, in whole or
in part, except in accordance with the terms and conditions set forth in this
Article IX. Any transfer or purported transfer of a Partnership Interest not
made in accordance with this Article IX shall be null and void.
9.2. GENERAL PARTNER TRANSFER.
(a) The General Partner shall not withdraw from the
Partnership and shall not sell, assign, pledge, encumber or otherwise dispose of
all or any portion of its interest in the Partnership without the Consent of the
Limited Partners, which shall not be unreasonably withheld.
(b) Except for the merger with Fairlawn Industrial Park, Inc.
effected on the Closing Date, the General Partner shall not engage in any
merger, consolidation or other combination with or into another Person, or sale
of all or substantially all of its assets, or any reclassification, or
recapitalization or change of outstanding Shares (other than a reincorporation,
a change in par value, or from par value to no par value, or as a result of a
subdivision or combination as described in the definition of "Conversion
Factor," which require no Consent of the Limited Partners under this Agreement)
("Transaction"), unless the Transaction either:
(1) includes a merger of the Partnership or sale of
substantially all of the assets of the Partnership, as a result of
which all Limited Partners will receive for each OP Unit an amount
of cash, securities, or other property equal to the product of the
Conversion Factor and the greatest amount of cash, securities or
other property paid to a holder of one Share in consideration of
one Share at any time during the period from
39
and after the date on which the Transaction is consummated,
PROVIDED THAT if, in connection with the Transaction, a purchase,
tender or exchange offer shall have been made to and accepted by
the holders of more than fifty percent (50%) of the outstanding
Shares, the holders of OP Units shall receive the greatest amount
of cash, securities, or other property which a Limited Partner
would have received had it exercised the Conversion Right and
received Shares in exchange for all of its OP Units immediately
prior to the expiration of such purchase, tender or exchange
offer; or
(2) provides that the Partnership shall continue as a
separate entity and grants to the Limited Partners exchange rights
with respect to the ownership interests in the new entity that are
substantially equivalent to the Conversion Rights provided for in
Section 12.1.
(c) Upon any transfer of a Partnership Interest in accordance
with the provisions of this Section 9.2, the successor General Partner shall
become vested with the powers and rights of the transferor General Partner, and
shall be liable for all obligations and responsible for all duties of the
General Partner, once such successor has executed such instruments as may be
necessary to effectuate such admission and to confirm the agreement of such
successor to be bound by all the terms and provisions of this Agreement with
respect to the Partnership Interest so acquired. It is a condition to any
transfer otherwise permitted hereunder that the successor assumes by operation
of law or express agreement all of the obligations of the transferor General
Partner under this Agreement with respect to such transferred Partnership
Interest.
(d) In the event the General Partner withdraws from the
Partnership, in violation of this Agreement or otherwise, or dissolves,
terminates or upon the Bankruptcy of the General Partner, a Majority-In-Interest
of the Limited Partners may elect to continue the Partnership business by
selecting a successor general partner.
9.3. TRANSFERS BY LIMITED PARTNERS.
(a) No Limited Partner shall sell, assign, pledge, encumber,
or otherwise dispose of all or any portion of its Partnership Interest to any
transferee without the consent of the General Partner, which consent shall not
be unreasonably withheld; PROVIDED, HOWEVER, that each Limited Partner may at
any time, without the consent of the General Partner, transfer all or a portion
of its Partnership Interest to an Affiliate of such Limited Partner, subject to
the provisions of this Section 9.3 and Section 9.6 hereof.
(b) Nothing herein shall preclude a Limited Partner from
transferring its Limited Partnership Interest upon exercise of its Conversion
Rights under Article XII hereof.
(c) It is a condition to any transfer otherwise permitted
hereunder that the transferee assumes by operation of law or express agreement
all of the obligations of the transferor Limited Partner under this Agreement
with respect to such transferred Partnership Interest and no such transfer
(other than pursuant to a statutory merger or consolidation wherein all
obligations and liabilities of the transferor Partner are assumed by a successor
corporation by operation of law) shall relieve the transferor Partner of its
obligations under this Agreement without the approval of the General Partner, in
its reasonable discretion. Any transferee, whether
40
or not admitted as a Substituted Limited Partner, shall take subject to the
obligations of the transferor hereunder.
(d) If a Limited Partner is subject to Incapacity, 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 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 his or its interest in
the Partnership. The Incapacity of a Limited Partner, in and of itself, shall
not dissolve or terminate the Partnership.
9.4. SUBSTITUTED LIMITED PARTNERS.
(a) A Limited Partner shall have the right to substitute a
transferee as a Limited Partner in his place without the consent of the General
Partner in cases of transfer of all or a portion of its Partnership Interest to
an Affiliate of such Limited Partner, subject to the provisions of Section 9.6.
In all other situations, the General Partner shall have the right to consent to
the admission of a transferee of the interest of a Limited Partner as a
Substituted Limited Partner, which consent shall not be unreasonably withheld,
subject to the provisions of Section 9.6.
(b) A transferee who has been admitted as a Substituted
Limited Partner shall have all the rights and powers, including rights with
respect to the Conversion Rights, of the transferor Limited Partner, and be
subject to all the restrictions and liabilities of a Limited Partner under this
Agreement; PROVIDED, HOWEVER, that notwithstanding the foregoing, any transferee
shall be subject to any and all ownership limitations contained in the Charter.
(c) Unless admitted as a Substituted Limited Partner, no
transferee of a Partnership Interest pursuant to this Section 9.4, whether by a
voluntary transfer, by operation of law or otherwise, shall have rights
hereunder, other than to receive such portion of the distributions made by the
Partnership as are allocable to the Percentage Interest transferred.
9.5. ASSIGNEES. If the General Partner does not consent to the
admission of any permitted transferee as a Substituted Limited Partner, such
transferee shall be considered an Assignee for purposes of this Agreement. An
Assignee shall be deemed to have had assigned to it, and shall be entitled to
receive, distributions from the Partnership and the share of Profits, Losses,
and any other items of income, gain, loss, deduction and credit of the
Partnership attributable to the Partnership Units assigned to such transferee,
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 continuing to be voted by the Partner appearing in the records
of the Partnership as owning the same. 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 IX to the same extent and
in the same manner as any Limited Partner desiring to make an assignment of
Partnership Units.
41
9.6. RESTRICTIONS ON TRANSFER. In addition to any other restrictions on
transfer herein contained, in no event may any transfer or assignment of a
Partnership Interest by any Partner be made (i) to any person or entity who
lacks the legal right, power or capacity to own a Partnership Interest; (ii) in
violation of any provision of any mortgage or trust deed (or the note or bond
secured thereby) constituting a Lien against a Property or any part thereof, or
other instrument, document or agreement to which the Partnership or any Property
is a party or otherwise bound; (iii) in violation of applicable law; (iv) of any
component portion of a Partnership Interest, such as the Capital Account, or
rights to distributions, separate and apart from all other components of a
Partnership Interest; (v) in the event such transfer would immediately or with
the passage of time cause the Company to fail to comply with the REIT
Requirements, such determination to be made assuming that the Company does
comply with the REIT Requirements immediately prior to the proposed transfer;
(vi) if such transfer would cause a termination of the Partnership for federal
income tax purposes; (vii) if such transfer would, in the opinion of counsel to
the Partnership, cause the Partnership to cease to be classified as a
partnership, or to be classified as a "publicly traded partnership," for federal
income tax purposes; (viii) if such transfer would cause the Partnership to
become, with respect to any employee benefit plan subject to Title I of ERISA, a
"party-in-interest" (as defined in Section 3(14) of ERISA) or a "disqualified
person" (as defined in Section 4975(e) of the Code); (ix) if such transfer
would, in the opinion of counsel to the Partnership, cause any portion of the
underlying assets of the Partnership to constitute assets of any employee
benefit plan pursuant to Department of Labor Regulations Section 2510.3-101 or
(x) if such transfer would, in the opinion of counsel to the Partnership,
violate the Securities Act or applicable state blue sky laws.
ARTICLE X
ADMISSION OF PARTNERS
10.1. ADMISSION OF SUCCESSOR GENERAL PARTNER. A successor to all of the
General Partner Interest pursuant to Section 9.2 hereof shall be admitted to the
Partnership as the General Partner, effective as of the date of such transfer.
The successor General Partner shall carry on the business of the Partnership
without dissolution. In each case, the admission shall be subject to the
successor General Partner 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 required to effect the admission. In the case
of such admission on any day other than the first day of a Partnership Year, all
items attributable to the General Partner Interest for such Partnership Year
shall be allocated between the transferring Partner(s) and such successor as
provided in Section 5.1(g).
10.2. ADMISSION OF SUBSTITUTED OR ADDITIONAL LIMITED PARTNERS.
(a) An Additional Limited Partner shall be admitted only upon
furnishing to the General Partner (i) a written agreement of acceptance in form
satisfactory to the General Partner accepting all of the terms and conditions of
this Agreement, including, without limitation, the power of attorney granted in
Section 2.4 hereof and the Registration Rights Agreement; and (ii) such other
documents or instruments as may be required in the sole discretion of the
General Partner in order to effect such Person's admission as a Substituted or
Additional Limited Partner.
42
(b) The admission of any Person as a Substituted or Additional
Limited Partner shall become effective on the date upon which the name of such
Person is recorded in the books and records of the Partnership, following the
consent of the General Partner to such admission.
(c) If any Substituted or Additional Limited Partner is
admitted to the Partnership on any day other than the first day of a Partnership
Year, then Profits, Losses, each item thereof and all other items allocable
among Partners and Assignees for such Partnership Year shall be allocated among
such Additional Limited Partner and all other Partners and Assignees in
accordance with Section 5.1.
10.3. AMENDMENT OF AGREEMENT AND CERTIFICATE OF LIMITED PARTNERSHIP.
The General Partner shall take all steps necessary and appropriate under the Act
to amend the books and records of the Partnership and to prepare as soon as
practical an amendment of this Agreement (including an amendment of EXHIBIT A)
to reflect the admission to the Partnership of any Partner and any corresponding
changes in the Percentage Interests of the Partners, and, if required by law,
shall prepare and file an amendment to the Certificate and may for the purposes
of amending the Certificate exercise the power of attorney granted pursuant to
Section 2.4 hereof. The General Partner shall promptly deliver a copy of any
amendments to this Agreement or the Certificate to each Limited Partner.
ARTICLE XI
RIGHTS AND OBLIGATIONS OF THE LIMITED PARTNERS
11.1. NO PARTICIPATION IN MANAGEMENT. Except as expressly permitted
hereunder, the Limited Partners shall not take part in the management 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.
11.2. BANKRUPTCY OF A LIMITED PARTNER. The Bankruptcy of any Limited
Partner shall not cause a dissolution of the Partnership, but the rights of such
Limited Partner to share in the Profits or Losses of the Partnership and to
receive distributions of Partnership funds shall, on the happening of such
event, devolve on its successors or assigns, subject to the terms and conditions
of this Agreement, and the Partnership shall continue as a limited partnership.
However, in no event shall such assignee(s) become a Substituted Limited
Partner.
11.3. NO WITHDRAWAL. No Limited Partner may withdraw from the
Partnership without the prior written consent of the General Partner, other than
as expressly provided in this Agreement.
11.4. DUTIES AND CONFLICTS. The General Partner recognizes that the
Limited Partners and their Affiliates have or may have other business interests,
activities and investments, some of which may be in conflict or competition with
the business of the Partnership, and that, such persons are entitled to carry on
such other business interests, activities and investments. The Limited Partners
and their Affiliates may engage in or possess an interest in any other business
or venture of any kind, independently or with others, on their own behalf or
43
on behalf of other entities with which they are affiliated or associated, and
such persons may engage in any activities, whether or not competitive with the
Partnership, without any obligation to offer any interest in such activities to
the Partnership or to any Partner. Neither the Partnership nor any Partner shall
have any right, by virtue of this Agreement, in or to such activities, or the
income or profits derived therefrom, and the pursuit of such activities, even if
competitive with the business of the Partnership, shall not be deemed wrongful
or improper.
11.5. CONSENT OF CERTAIN LIMITED PARTNERS. At any time during the 7
year period following the Closing Date, the Partnership may not sell or
otherwise dispose of a Designated Property or a Successor Designated Property
(as hereinafter defined) in a transaction that causes gain recognition under
Sections 704(c) or 752 (or any other section) of the Code for the Special
Consenting Partners without the consent of the Special Consenting Partners. For
purposes of this Section 11.5, the term "Successor Designated Property" means a
property acquired by the Partnership upon the disposition of a Designated
Property in a Section 1031 like kind exchange or any other exchange transaction
that does not result in gain recognition. The provisions of this Section 11.5
shall not be applicable with respect to any Special Consenting Partner if at any
time such Special Consenting Partner beneficially owns fewer than 30% of the
number of Partnership Units beneficially owned by such Special Consenting
Partner on the Closing Date.
ARTICLE XII
CONVERSION RIGHT
12.1. GRANT OF RIGHTS. The General Partner does hereby grant to each of
the Limited Partners and the Limited Partners do hereby accept the right, but
not the obligation (hereinafter such right sometimes referred to as the "Rights"
or "Conversion Rights"), to convert all or any portion of their OP Units into
Shares or cash, as selected by the General Partner, at any time or from time to
time, on the terms and subject to the conditions and restrictions contained in
this Article XII. In the event the General Partner elects to cause the Offered
Units to be converted into Shares, upon the closing of the acquisition of the
Offered Units, the General Partner shall become the owner of such Offered Units
and be a Substituted Limited Partner pursuant to Section 9.4 hereof. In the
event the General Partner elects to cause the Offered Units to be converted into
cash, upon the closing of the acquisition of the Offered Units, the General
Partner shall effect such conversion by causing the Partnership to redeem the
Offered Units for cash.
12.2. DELIVERY OF EXERCISE NOTICES. The Conversion Rights granted
hereunder may be exercised by any one or more of the Limited Partners
("Exercising Partners"), on the terms and subject to the conditions and
restrictions contained in this Article XII, upon delivery to the General Partner
of a Exercise Notice (the "Exercise Notice") in the form of EXHIBIT B, which
notice shall specify the number of OP Units to be sold by such Limited Partner
(the "Offered Units"). Once delivered, the Exercise Notice shall be irrevocable,
subject to payment by the General Partner or the Partnership of the purchase
price in Shares or cash (the "Purchase Price") in respect of such Partnership
Interests in accordance with the terms hereof.
12.3. LIMITATION ON DELIVERY OF EXERCISE NOTICES. The ability of
Limited Partners to exercise Conversion Rights shall be restricted so that only
one (1) Exercise Notice
44
may be delivered to the General Partner during each calendar quarter period;
PROVIDED, HOWEVER, such Exercise Notice may be delivered by or on behalf of one
or more Exercising Parties.
12.4. LIMITATION ON EXERCISE OF CONVERSION RIGHTS. Conversion Rights
may be exercised at any time and from time to time, subject to the limitation
contained in Section 12.3 above and as provided herein. To the extent that the
delivery of Shares to an Exercising Partner would violate the ownership
limitations set forth in the Charter (the "Ownership Limit"), including without
limitation the restrictions set forth in Section 6.2.1 of the Charter, the
General Partner shall not deliver Shares to such Exercising Partner but may, in
its sole and absolute discretion, elect to either (i) pay the Purchase Price to
the Exercising Partner in cash, or (ii) refuse, in whole or in part, to accept
the Exercise Notice. A Limited Partner may not exercise the Conversion Right for
less than 1,000 Partnership Units, or, if such Limited Partner holds less than
1,000 Partnership Units, all of the Partnership Units held by such Partner.
12.5. PURCHASE PRICE UPON CONVERSION. If the General Partner elects to
pay the Purchase Price in Shares, then the General Partner shall acquire the
Offered Units in exchange for that number of Shares equal to the number of
Offered Units multiplied by the Conversion Factor. If the General Partner elects
to cause the Purchase Price to be paid in cash, then the Partnership shall
acquire the Offered Units in exchange for that amount of cash equal to such
number of Offered Units multiplied by the Adjusted Current Per Share Market
Price as of the date of the Exercise Notice.
12.6. CLOSING; DELIVERY OF ELECTION NOTICE. The closing of the
acquisition of Offered Units shall, unless otherwise mutually agreed, be held at
the principal offices of the General Partner, on the date agreed to by the
General Partner and the Exercising Partners, which date shall be as soon as
practicable but in no event be later than the date which is the later of (i)
twenty (20) days after the date of the Exercise Notice and (ii) the expiration
or termination of the waiting period applicable to each Exercising Partner, if
any, under the Xxxx-Xxxxx Act. Notwithstanding the foregoing, in the event that
the General Partner elects to cause the Purchase Price to be paid in cash
because payment in Shares would violate the Ownership Limit, then the General
Partner shall have up to one hundred eighty (180) days after the date of the
Exercise Notice to close the acquisition of the Offered Units; PROVIDED THAT
after twenty (20) days, interest shall be paid on the Purchase Price at the
prime rate as reported in the WALL STREET JOURNAL.
12.7. CLOSING DELIVERIES. At the closing of the acquisition of Offered
Units, payment of the Purchase Price shall be accompanied by proper instruments
of transfer and assignment to transfer and vest ownership of the Offered Units
in the General Partner or the Partnership, as the case may be, and by the
delivery of (i) representations and warranties of (A) the Exercising Partner
with respect to its due authority to sell all of the right, title and interest
in and to such Offered Units to the General Partner or the Partnership, as the
case may be, and with respect to the status of the Offered Unit being sold, free
and clear of all Liens, and (B) the General Partner with respect to its due
authority to acquire such Offered Units for Shares or to cause the Partnership
to redeem such Offered Units for cash; and (ii) to the extent that any Shares
are issued in payment of the Purchase Price or any portion thereof, (A) an
opinion of counsel for the General Partner, reasonably satisfactory to the
Exercising Partners, to the effect that such Shares have been duly authorized,
are validly issued, fully paid and non-assessable, and
45
(B) a stock certificate or certificates evidencing the Shares to be issued and
registered in the name of the Exercising Partner or its designee.
12.8. COVENANTS OF THE GENERAL PARTNER. To facilitate the General
Partner's ability to fully perform its obligations hereunder, the General
Partner covenants and agrees as follows:
(a) At all times during the pendency of the Conversion Rights,
the General Partner shall reserve for issuance such number of Shares as may be
necessary to enable the General Partner to issue such Shares in full payment of
the Purchase Price in regard to all Limited Partners' Partnership Interests
which are from time to time outstanding.
(b) As long as the General Partner shall be obligated to file
periodic reports under the Exchange Act, the General Partner will timely file
such reports in such manner as shall enable any recipient of Shares issued to
Limited Partners hereunder in reliance upon an exemption from registration under
the Securities Act to continue to be eligible to utilize Rule 144 promulgated by
the SEC pursuant to the Securities Act, or any successor rule or regulation or
statute thereunder, for the resale thereof.
(c) During the pendency of the Conversion Rights, the Limited
Partners shall receive in a timely manner all reports filed by the General
Partner with the SEC and all other communications transmitted from time to time
by the General Partner to the owners of its Shares.
(d) The General Partner shall, within five days after request
by a Limited Partner, notify such Limited Partner of the then current Conversion
Factor.
12.9. LIMITED PARTNERS' COVENANT. Each Limited Partner covenants and
agrees with the General Partner that all Offered Units tendered to the General
Partner or the Partnership, as the case may be, in accordance with the exercise
of Rights herein provided shall be delivered free and clear of all Liens and
should any Liens exist or arise with respect to such Offered Units, the General
Partner or the Partnership, as the case may be, shall be under no obligation to
acquire or redeem the same. Each Limited Partner further agrees that, in the
event any state or local property transfer tax is payable as a result of the
transfer of its Offered Units to the General Partner, the Partnership or their
respective designees, such Limited Partner shall assume and pay such transfer
tax.
ARTICLE XIII
BOOKS, RECORDS, ACCOUNTING AND REPORTS
13.1. RECORDS AND ACCOUNTING.
(a) The General Partner, at the cost and expense of the
Partnership, shall keep or cause to be kept at the principal executive office of
the Partnership those records and documents required to be maintained by the Act
and other books and records deemed by the General Partner to be appropriate with
respect to the Partnership's business, including, without
46
limitation, all books and records necessary to provide to the Limited Partners
any information, lists and copies of documents required to be provided pursuant
to Section 13.2 hereof. The books of the Partnership shall be maintained, for
financial and tax reporting purposes, on an accrual basis in accordance with
GAAP, or on such other basis as the General Partner determines to be necessary
or appropriate.
(b) All books and records of the Partnership shall be open to
inspection by any Limited Partner or duly authorized representative of such
Limited Partner on reasonable notice at any reasonable time during business
hours, for any purpose reasonably related to the Limited Partner's interest as a
Limited Partner, and such Limited Partner or its representative at its expense
shall have the further right to make copies or excerpts therefrom.
13.2. REPORTS.
(a) As soon as practicable after the close of each Partnership
Year, the General Partner shall cause to be mailed to each Limited Partner as of
the close of the Partnership Year, an annual report containing financial
statements of the Partnership, or of the General Partner if such statements are
prepared solely on a consolidated basis with the General Partner, for such
Partnership Year, presented in accordance with GAAP, such statements to be
audited by a nationally recognized firm of independent public accountants
selected by the General Partner.
(b) As soon as practicable after the close of each calendar
quarter (except the last calendar quarter of each year), the General Partner
shall cause to be mailed to each Limited Partner as of the last day of the
calendar quarter, a report containing unaudited financial statements of the
Partnership, or of the General Partner, if such statements are prepared solely
on a consolidated basis with the General Partner, and such other information as
may be required by applicable law or regulation, or as the General Partner
determines to be appropriate.
13.3. BANK ACCOUNTS.
(a) All funds of the Partnership not otherwise invested shall
be deposited in one or more accounts maintained in such banking or brokerage
institutions as the General Partner shall determine, and withdrawals shall be
made only on such signature or signatures as the General Partner may, from time
to time, determine.
(b) All deposits and other funds not needed in the operation
of the business of the Partnership may be invested by the General Partner in
investment grade instruments (or investment companies whose portfolio consists
primarily thereof), government obligations, certificates of deposit, bankers'
acceptances and municipal notes and bonds. The funds of the Partnership shall
not be commingled with the funds of any other Person except for such commingling
as may necessarily result from an investment in those investment companies
permitted by this Section 13.3 (b).
47
ARTICLE XIV
AMENDMENT OF PARTNERSHIP AGREEMENT
14.1. GENERAL. This Agreement may not be amended without the approval
of the General Partner and by the Consent of the Limited Partners, except as
provided below in this Article XIV.
14.2. AMENDMENT WITHOUT CONSENT. Notwithstanding Section 14.1, the
General Partner shall have the power, without the Consent of the Limited
Partners, to amend this Agreement as may be required to facilitate or implement
any of the following purposes:
(a) 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;
(b) to reflect the admission, substitution, termination, or
withdrawal of Partners in accordance with this Agreement;
(c) to set forth the rights, powers, duties, and preferences
of the holders of any Additional Partnership Interests issued pursuant to
Section 4.2 hereof;
(d) to reflect a change that does not adversely affect 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; and
(e) to satisfy any requirements, conditions, or guidelines
contained in any order, directive, opinion, ruling or regulation of a federal or
state agency or contained in federal or state law. The General Partner will
provide notice to the Limited Partners promptly after any action under this
Section 14.2(e) is taken.
14.3. SPECIAL CONSENT RIGHTS. Notwithstanding Section 14.1 hereof, this
Agreement shall not be amended without the consent of each 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 the Partners to receive allocations
and distributions pursuant to Articles V or VIII hereof (except as permitted
pursuant to Section 4.2 and Section 14.2(c) hereof); (iv) alter or modify the
Rights set forth in Article XII hereof, (v) alter or modify the rights set forth
in Article XV hereof; (vi) cause a termination of the Partnership prior to the
time set forth in Section 8.1; (vii) alter or modify Section 11.5; or (viii)
amend this Section 14.3.
ARTICLE XV
REGISTRATION RIGHTS
15.1. SHELF REGISTRATION UNDER THE SECURITIES ACT. (a) Filing of Shelf
Registration Statement. Within 24 months following the Closing Date, the Company
shall cause
48
to be filed a Shelf Registration Statement providing for the sale by the Limited
Partners of all of the Registrable Securities in accordance with the terms
hereof and will use its reasonable best efforts to cause such Shelf Registration
Statement to be declared effective by the SEC as soon as reasonably practicable.
The Company agrees to use its reasonable best efforts to keep the Shelf
Registration Statement continuously effective under the Securities Act until
such time as the aggregate number of OP Units held by Limited Partners and
Registrable Securities outstanding is less than 10% of the aggregate number of
OP Units held by Limited Partners and outstanding on the Closing Date and,
subject to Section 15.2(b) and Section 15.2(i), further agrees to supplement or
amend the Shelf Registration Statement, if and as required by the rules,
regulations or instructions applicable to the registration form used by the
Company for such Shelf Registration Statement or by the Securities Act or by any
other rules and regulations thereunder for Shelf Registration. Each Limited
Partner who sells Shares as part of the Shelf Registration shall be deemed to
have agreed to all of the terms and conditions of this Article XV and to have
agreed to perform any and all obligations of a Limited Partner hereunder.
(b) Expenses. The Company shall pay all Registration Expenses
in connection with the registration pursuant to Section 15.1(a). Each Limited
Partner shall pay all underwriting discounts and commissions, brokerage or
dealer fees, the fees and disbursements of counsel, accountants or other
representatives of such Limited Partner and transfer taxes, if any, relating to
the sale or disposition of such Limited Partner's Registrable Securities
pursuant to the Shelf Registration Statement or Rule 144 under the Securities
Act.
(c) Inclusion in Shelf Registration Statement. Not later than
30 days prior to filing the Shelf Registration Statement with the SEC, the
Company shall notify each Limited Partner of its intention to make such filing
and request advice from each Limited Partner as to whether such Limited Partner
desires to have Registrable Securities held by it or which it is entitled to
receive not later than the last day of the first Sale Period occurring in whole
or in part after the date of such notice included in the Shelf Registration
Statement at such time. Any Limited Partner who does not provide the information
reasonably requested by the Company in connection with the Shelf Registration
Statement as promptly as practicable after receipt of such notice, but in no
event later than 20 days thereafter, shall not be entitled to have its
Registrable Securities included in the Shelf Registration Statement at the time
it becomes effective, but shall have the right thereafter to deliver to the
Company a Registration Notice as contemplated by Section 15.2(b). The provisions
of this Article XV, and the obligations of the Company hereunder, apply only to
those Limited Partners who were Limited Partners as of the Closing Date, and
their permitted transferees and assignees.
15.2. REGISTRATION PROCEDURES. In connection with the obligations of
the Company with respect to the Shelf Registration Statement pursuant to Section
15.1 hereof, the Company shall:
(a) prepare and file with the SEC, within the time period set
forth in Section 15.1(a) hereof, a Shelf Registration Statement, which Shelf
Registration Statement (i) shall be available for the sale of the Registrable
Securities in accordance with the intended method or methods of distribution by
the selling Limited Partners thereof and (ii) shall comply as to form in all
material respects with the requirements of the applicable form and include all
financial statements required by the SEC to be filed therewith;
49
(b) subject to the last three sentences of this Section
15.2(b) and to Section 15.2(i) hereof, (i) prepare and file with the SEC such
amendments and post-effective amendments to the Shelf Registration Statement as
may be necessary to keep the Shelf Registration Statement effective for the
applicable period; (ii) cause each Prospectus to be supplemented by any required
prospectus supplement, and as so supplemented to be filed pursuant to Rule 424
or any similar rule that may be adopted under the Securities Act; (iii) respond
promptly to any comments received from the SEC with respect to the Shelf
Registration Statement, or any amendment, post-effective amendment or supplement
relating thereto; and (iv) comply with the provisions of the Securities Act with
respect to the disposition of all securities covered by the Shelf Registration
Statement during the applicable period in accordance with the intended method or
methods of distribution by the selling Limited Partners thereof. Notwithstanding
anything to the contrary contained herein, the Company shall not be required to
take any of the actions described in clauses (i), (ii) or (iii) above with
respect to each particular Limited Partner holding Registrable Securities unless
and until the Company has received either a written notice (a "Registration
Notice") from a Limited Partner that such Limited Partner intends to make offers
or sales under the Shelf Registration Statement as specified in such
Registration Notice or a written response from such Limited Partner of the type
contemplated by Section 15.1(c); provided, however, that the Company shall have
7 business days to prepare and file any such amendment or supplement after
receipt of a Registration Notice. Offers or sales under the Shelf Registration
Statement may be made only during a Sale Period. Such Limited Partner also shall
notify the Company in writing upon completion of such offer or sale or at such
time as such Limited Partner no longer intends to make offers or sales under the
Shelf Registration Statement;
(c) furnish to each Limited Partner holding Registrable
Securities that has delivered a Registration Notice to the Company, without
charge, as many copies of each applicable Prospectus, including each preliminary
Prospectus and any amendment or supplement thereto, and such other documents as
such Limited Partner may reasonably request, in order to facilitate the public
sale or other disposition of the Registrable Securities; the Company consents to
the use of such Prospectus, including each preliminary Prospectus, by each such
Limited Partner in connection with the offering and sale of the Registrable
Securities covered by such Prospectus or the preliminary Prospectus;
(d) use its reasonable best efforts to register or qualify the
Registrable Securities by the time the Shelf Registration Statement is declared
effective by the SEC under all applicable state securities or "blue sky" laws of
such jurisdictions as any Limited Partner holding Registrable Securities covered
by the Shelf Registration Statement shall reasonably request in writing, keep
each such registration or qualification effective during the period the Shelf
Registration Statement is required to be kept effective or during the period
offers or sales are being made by a Limited Partner that has delivered a
Registration Notice to the Company, whichever is shorter, and do any and all
other acts and things which may be reasonably necessary or advisable to enable
such Limited Partner to consummate the disposition in each such jurisdiction of
such Registrable Securities owned by such Limited Partner; provided, however,
that the Company shall not be required (i) to qualify generally to do business
in any jurisdiction or to register as a broker or dealer in such jurisdiction
where it would not be required so to qualify or register but for this Section
15.2(d), (ii) to subject itself to taxation in any such jurisdiction or (iii) to
submit to the general service of process in any such jurisdiction;
50
(e) notify each Limited Partner when the Shelf Registration
Statement has become effective and notify each Limited Partner holding
Registrable Securities that has delivered a Registration Notice to the Company
promptly and, if requested by such Limited Partner, confirm such advice in
writing (i) when any post-effective amendments and supplements to the Shelf
Registration Statement become effective, (ii) of the issuance by the SEC or any
state securities authority of any stop order suspending the effectiveness of the
Shelf Registration Statement or the initiation of any proceedings for that
purpose, (iii) if the Company receives any notification with respect to the
suspension of the qualification of the Registrable Securities for sale in any
jurisdiction or the initiation of any proceeding for such purpose and (iv) of
the happening of any event during the period the Shelf Registration Statement is
effective as a result of which the Shelf Registration Statement or a related
Prospectus contains any untrue statement of a material fact or omits to state
any material fact required to be stated therein or necessary to make the
statements therein (in the case of the Prospectus, in light of the circumstances
under which they were made) not misleading;
(f) make every reasonable effort to obtain the withdrawal of
any order suspending the effectiveness of the Shelf Registration Statement at
the earliest possible moment;
(g) furnish to each Limited Partner holding Registrable
Securities that has delivered a Registration Notice to the Company, without
charge, at least one conformed copy of the Shelf Registration Statement and any
post-effective amendment thereto (without documents incorporated therein by
reference or exhibits thereto, unless requested);
(h) cooperate with the selling Limited Partners holding
Registrable Securities to facilitate the timely preparation and delivery of
certificates representing Registrable Securities to be sold and not bearing any
Securities Act legend; and enable certificates for such Registrable Securities
to be issued for such numbers of shares and registered in such names as the
selling Limited Partners may reasonably request at least two business days prior
to any sale of Registrable Securities;
(i) subject to the last three sentences of Section 15.2(b)
hereof, upon the occurrence of any event contemplated by Section 15.2(e)(iv)
hereof, use its reasonable best efforts promptly to prepare and file a
supplement or prepare, file and obtain effectiveness of a post-effective
amendment to the Shelf Registration Statement or a related Prospectus or any
document incorporated therein by reference or file any other required document
so that, as thereafter delivered to the purchasers of the Registrable
Securities, such Prospectus will not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein, in the light of the circumstances under which
they were made, not misleading;
(j) a reasonable time prior to the filing of any Prospectus,
any amendment to the Shelf Registration Statement or amendment or supplement to
a Prospectus, provide copies of such document (not including any documents
incorporated by reference therein unless requested) to the Limited Partners
holding Registrable Securities that have provided a Registration Notice to the
Company;
51
(k) use its reasonable best efforts to cause all Registrable
Securities to be listed on any securities exchange on which similar securities
issued by the Company are then listed;
(l) otherwise use its reasonable efforts to comply with all
applicable rules and regulations of the SEC and make available to its security
holders, as soon as reasonably practicable, an earnings statement covering at
least 12 months which shall satisfy the provisions of Section 11(a) of the
Securities Act and Rule 158 thereunder; and
(m) use its reasonable best efforts to cause the Registrable
Securities covered by the Shelf Registration Statement to be registered with or
approved by such other governmental agencies or authorities as may be necessary
by virtue of the business and operations of the Company to enable Limited
Partners that have delivered Registration Notices to the Company to consummate
the disposition of such Registrable Securities.
The Company may require each Limited Partner holding
Registrable Securities to furnish to the Company in writing such information
regarding the proposed distribution by such Limited Partner as the Company may
from time to time reasonably request in writing.
In connection with and as a condition to the Company's
obligations with respect to the Shelf Registration Statement pursuant to Section
15.1 hereof and this Section 15.2, each Limited Partner agrees that (i) it will
not offer or sell its Registrable Securities under the Shelf Registration
Statement until (A) it has either (1) provided a Registration Notice pursuant to
Section 15.2(b) hereof or (2) had Registrable Securities included in the Shelf
Registration Statement at the time it became effective pursuant to Section
15.1(c) hereof and (B) it has received copies of the supplemented or amended
Prospectus contemplated by Section 15.2(b) hereof and receives notice that any
post-effective amendment has become effective; (ii) upon receipt of any notice
from the Company of the happening of any event of the kind described in Section
15.2(b)(iv) hereof, such Limited Partner will forthwith discontinue disposition
of Registrable Securities pursuant to the Shelf Registration Statement until
such Limited Partner receives copies of the supplemented or amended Prospectus
contemplated by Section 15.2(i) hereof and receives notice that any
post-effective amendment has become effective, and, if so directed by the
Company, such Limited Partner will deliver to the Company (at the expense of the
Company) all copies in its possession, other than permanent file copies then in
such Limited Partner's possession, of the Prospectus covering such Registrable
Securities current at the time of receipt of such notice; and (iii) all offers
and sales under the Shelf Registration Statement shall be completed within
forty-five (45) days after the first date on which offers or sales can be made
pursuant to clause (i) above, and upon expiration of such forty-five (45) day
period the Limited Partner will not offer or sell its Registrable Securities
under the Shelf Registration Statement until it has again complied with the
provisions of clause (i)(B) above, except that if the applicable Registration
Notice was delivered to the Company at a time which was not part of a Sale
Period, such forty-five (45) day period shall be the next succeeding Sale
Period.
15.3. RESTRICTIONS ON PUBLIC SALE BY HOLDERS OF REGISTRABLE SECURITIES.
Each Limited Partner agrees with the Company that:
52
(a) If the Board of Directors of the Company determines in its
good faith judgment that the filing of the Shelf Registration Statement under
Section 15.1 hereof or the use of any Prospectus would materially impede, delay
or interfere with any pending material financing, acquisition or corporate
reorganization or other material corporate development involving the Company or
any of its subsidiaries, or require the disclosure of important information
which the Company has a bona fide business purpose for preserving as
confidential or the disclosure of which would impede the Company's ability to
consummate a significant transaction, upon written notice of such determination
by the Company, the rights of the Limited Partners to offer, sell or distribute
any Registrable Securities pursuant to the Shelf Registration Statement or to
require the Company to take action with respect to the registration or sale of
any Registrable Securities pursuant to the Shelf Registration Statement
(including any action contemplated by Section 15.2 hereof) will be suspended
until the date upon which the Company notifies the Limited Partners in writing
that suspension of such rights for the grounds set forth in this Section 15.3(a)
is no longer necessary, but no such period shall extend for longer than 90 days.
(b) In the case of the registration of any underwritten equity
offering proposed by the Company (other than any registration by the Company on
Form S-8, or a successor or substantially similar form, of (i) an employee stock
option, stock purchase or compensation plan or of securities issued or issuable
pursuant to any such plan or (ii) a dividend reinvestment plan), each Limited
Partner agrees, if requested in writing by the managing underwriter or
underwriters administering such offering, not to effect any offer, sale or
distribution of Registrable Securities (or any option or right to acquire
Registrable Securities) during the period commencing on the 7th day prior to the
expected effective date (which date shall be stated in such notice) of the
registration statement covering such underwritten primary equity offering and
ending on the date specified by such managing underwriter in such written
request to such Limited Partner, which date shall not be later than 90 days
after such expected date of effectiveness.
(c) In the event that any Limited Partner uses a Prospectus in
connection with the offering and sale of Registrable Securities covered by such
Prospectus, such Limited Partner will use only the latest version of such
Prospectus provided to it by the Company.
15.4. INDEMNIFICATION; CONTRIBUTION. (a) Indemnification by the
Company. The Company agrees to indemnify and hold harmless each Limited Partner
and its officers and directors and each person, if any, who controls any Limited
Partner within the meaning of Section 15 of the Securities Act as follows:
(1) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, arising out of any untrue
statement or alleged untrue statement of a material fact contained
in the Shelf Registration Statement (or any amendment thereto) or
any Prospectus, including all documents incorporated therein by
reference, or the omission or alleged omission therefrom of a
material fact necessary in order to make the statements therein,
in light of the circumstances under which they were made, not
misleading;
53
(2) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, to the extent of the aggregate
amount paid in settlement of any litigation, or investigation or
proceeding by any governmental agency or body, commenced or
threatened, or of any claim whatsoever based upon any such untrue
statement or omission, or any such alleged untrue statement or
omission, if such settlement is effected with the written consent
of the Company; and
(3) against any and all expense whatsoever, as incurred
(including reasonable fees and disbursements of counsel),
reasonably incurred in investigating, preparing or defending
against any litigation, or investigation or proceeding by any
governmental agency or body, commenced or threatened, in each case
whether or not a party, or any claim whatsoever based upon any
such untrue statement or omission, or any such alleged untrue
statement or omission, to the extent that any such expense is not
paid under clause (i) or (ii) above;
PROVIDED, HOWEVER, that the indemnity provided pursuant to this
Section 15.4(a) does not apply to any Limited Partner with respect
to any loss, liability, claim, damage or expense to the extent
arising out of any untrue statement or omission or alleged untrue
statement or omission made in reliance upon and in conformity with
written information furnished to the Company by such Limited
Partner expressly for use in the Shelf Registration Statement (or
any amendment thereto) or any Prospectus.
(b) Indemnification by Limited Partners. Each Limited Partner
severally agrees to indemnify and hold harmless the Company and the other
selling Limited Partners, and each of their respective directors and officers
(including each director and officer of the Company who signed the Shelf
Registration Statement), and each person, if any, who controls the Company or
any other selling Limited Partner within the meaning of Section 15 of the
Securities Act, to the same extent as the indemnity contained in Section 15.4(a)
hereof (except that any settlement described in Section 15.4(a)(2) shall be
effected with the written consent of such Limited Partner), but only insofar as
such loss, liability, claim, damage or expense arises out of or is based upon
any untrue statement or omission, or alleged untrue statement or omission, made
in the Shelf Registration Statement (or any amendment thereto) or any Prospectus
in reliance upon and in conformity with written information furnished to the
Company by such selling Limited Partner expressly for use in the Shelf
Registration Statement (or any amendment thereto) or such Prospectus. In no
event shall the liability of any Limited Partner under this Section 15.4(b) be
greater in amount than the dollar amount of the proceeds received by such
Limited Partner upon the sale of the Registrable Securities giving rise to such
indemnification obligation.
(c) Each indemnified party shall give reasonably prompt notice
to each indemnifying party of any action or proceeding commenced against it in
respect of which indemnity may be sought hereunder, but failure so to notify an
indemnifying party (i) shall not relieve it from any liability which it may have
under the indemnity agreement provided in Section 15.4(a) or (b) unless and to
the extent it did not otherwise learn of such action and the lack of notice by
the indemnified party results in the forfeiture by the indemnifying party of
substantial rights and defenses and (ii) shall not, in any event, relieve the
indemnifying party from any obligations to any indemnified party other than the
indemnification obligation provided
54
under Section 15.4(a) or (b). If the indemnifying party so elects within a
reasonable time after receipt of such notice, the indemnifying company may
assume the defense of such action or proceeding at such indemnifying party's own
expense with counsel chosen by the indemnifying party; PROVIDED, HOWEVER, that,
if such indemnified party or parties reasonably determine that a conflict of
interest exists where it is advisable for such indemnified party or parties to
be represented by separate counsel or that, upon advice of counsel, there may be
legal defenses available to them which are different from or in addition to
those available to the indemnifying party, then the indemnifying party shall not
be entitled to assume such defense and the indemnified party or parties in the
aggregate shall be entitled to one separate counsel at the indemnifying party's
expense. If an indemnifying party is not so entitled to assume the defense of
such action or does not assume such defense, after having received the notice
referred to in the first sentence of this Section 15.4(c), the indemnifying
party or parties will pay the reasonable fees and expenses of counsel for the
indemnified party or parties. In such event however, no indemnifying party will
be liable for any settlement effected without the written consent of such
indemnifying party. If an indemnifying party is entitled to assume, and assumes,
the defense of such action or proceeding in accordance with this paragraph, such
indemnifying party shall not be liable for any fees and expenses of counsel for
the indemnified parties incurred thereafter in connection with such action or
proceeding.
(d) In order to provide for just and equitable contribution in
circumstances in which the indemnity agreement provided for in this Section 15.4
is for any reason held to be unenforceable although applicable in accordance
with its terms, the Company and the selling Limited Partners shall contribute to
the aggregate losses, liabilities, claims, damages and expenses of the nature
contemplated by such indemnity agreement incurred by the Company and the selling
Limited Partners, in such proportion as is appropriate to reflect the relative
fault of and benefits to the Company on the one hand and the selling Limited
Partners on the other (in such proportions that the selling Limited Partners are
severally, not jointly, responsible for the balance), in connection with the
statements or omissions which resulted in such losses, liabilities, claims,
damages or expenses, as well as any other relevant equitable considerations. The
relative benefits to the indemnifying party and indemnified parties shall be
determined by reference to, among other things, the total proceeds received by
the indemnifying party and indemnified parties in connection with the offering
to which such losses, liabilities, claims, damages, or expenses relate. The
relative fault of the indemnifying party and indemnified parties shall be
determined by reference to, among other things, whether the action in question,
including any untrue or alleged untrue statement of a material fact or omission
or alleged omission to state a material fact, has been made by, or relates to
information supplied by, such indemnifying party or the indemnified parties, and
the parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such action.
The Company and the Limited Partners agree that it would not
be just or equitable if contribution pursuant to this Section 15.4(d) were
determined by pro rata allocation or by any other method of allocation which
does not take account of the equitable considerations referred to in the
immediately preceding paragraph. Notwithstanding the provisions of this Section
15.4(d), no selling Limited Partner shall be required to contribute any amount
in excess of the amount by which the total price at which the Registrable
Securities of such selling Limited Partner were sold to the public, exceeds the
amount of any damages which such selling Limited Partner is otherwise required
to pay by reason of such untrue statement or omission.
55
Notwithstanding the foregoing, no Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any Person who was not guilty of such
fraudulent misrepresentation. For purposes of this Section 15.4(d), each Person,
if any, who controls a Limited Partner within the meaning of Section 15 of the
Securities Act and directors and officers of a Limited Partner shall have the
same rights to contribution as such Limited Partner, and each director of the
Company, each officer of the Company who signed the Shelf Registration Statement
and each Person, if any, who controls the Company within the meaning of Section
15 of the Securities Act shall have the same rights to contribution as the
Company.
15.5. RULE 144 SALES. (a) The Company covenants that it will file the
reports required to be filed by the Company under the Securities Act and the
Exchange Act, so as to enable any Limited Partner to sell Registrable Securities
pursuant to Rule 144 under the Securities Act.
(b) In connection with any sale, transfer or other disposition
by any Limited Partner of any Registrable Securities pursuant to Rule 144 under
the Securities Act, the Company shall cooperate with such Limited Partner to
facilitate the timely preparation and delivery of certificates representing
Registrable Securities to be sold and not bearing any Securities Act legend, and
enable certificates for such Registrable Securities to be for such number of
shares and registered in such names as the selling Limited Partners may
reasonably request at least two business days prior to any sale of Registrable
Securities.
ARTICLE XVI
GENERAL PROVISIONS
16.1. 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,
received by facsimile or overnight courier, or upon deposit in the United States
mail, registered or certified, postage prepaid, and properly addressed to the
Partner or Assignee at the address set forth in EXHIBIT A, or such other address
of which the Partner or Assignee shall notify the General Partner in writing.
16.2. BINDING EFFECT. This Agreement and all the terms and provisions
hereof shall be binding upon and shall inure to the benefit of all Partners, and
their legal representatives, heirs, successors and permitted assigns, except as
expressly herein otherwise provided.
16.3. LIABILITY OF LIMITED PARTNERS. The liability of the Limited
Partners for their obligations, covenants, representations and warranties under
this Agreement shall be several and not joint.
16.4. EFFECT AND INTERPRETATION. This Agreement shall be governed by
and construed in conformity with the laws of the State of Delaware.
16.5. COUNTERPARTS. This Agreement may be executed in counterparts,
each of which shall be an original, but all of which shall constitute one and
the same instrument.
56
16.6. PARTNERS NOT AGENTS. Nothing contained herein shall be construed
to constitute any Partner the agent of another Partner, except as specifically
provided herein, or in any manner to limit the Partners in the carrying on of
their own respective businesses or activities.
16.7. TITLES 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.
16.8. 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.
16.9. SEVERABILITY. If any provision of this Agreement, or the
application of such provision to any person or circumstance, shall be held
invalid by a court of competent jurisdiction, the remainder of this Agreement,
or the application of such provision to persons or circumstances other than
those to which it is held invalid by such court, shall not be affected thereby.
16.10. ENTIRE AGREEMENT. This Agreement and all documents and
agreements referred to herein and therein contain the entire understanding and
agreement among the Partners with respect to the subject matter hereof and
supersede the Prior Agreement and any other prior written or oral understandings
or agreements among them with respect thereto.
16.11. ASSURANCES. Each of the Partners shall hereafter execute and
deliver such further instruments and do such further acts and things as may be
required or useful to carry out the intent and purpose of this Agreement and as
are not inconsistent with the terms hereof.
57
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement or caused this Agreement to be executed as of the date and year first
above written.
GENERAL PARTNER:
American Real Estate Investment Corporation
By: /s/ XXXX XXXXXX
---------------------------------------
Xxxx Xxxxxx, President
LIMITED PARTNERS:
Executed by the below named Limited Partners
constituting a Majority-In-Interest of
the Limited Partners:
/s/ XXXXX XXXXXXXXX
-------------------------------
Xxxxx Xxxxxxxxx
/s/ XXXX XXXXXXXXX
-------------------------------
Xxxx Xxxxxxxxx
/s/ XXXXXXXX XXXXXXXXXX
-------------------------------
Xxxxxxxx Xxxxxxxxxx
/s/ XXXX XXXXXX
-------------------------------
Xxxx Xxxxxx
Dated: December 12, 1997
58
ADMITTED LIMITED PARTNERS:
/s/ XXXXXXX XXXXXX
-------------------------------
Xxxxxxx Xxxxxx
XXXXXXX XXXXXX BAY, L.P.
By: Urban Farms Shopping Center, Inc.,
its General Partner
By: /s/ XXXXX X. XXXXXXX
-------------------------------
Name: Xxxxx X. XxXxxxx
Title: President
Dated: December 12, 1997
59
IN WITNESS WHEREOF, pursuant to the authority of the General
Partner contained in Sections 2.2 and 14.2 hereof, the General Partner has
caused this Amended and Restated Agreement of Limited Partnership to be executed
as of the date and year first above written.
GENERAL PARTNER:
----------------
Keystone Property Trust
By:/s/ Xxxxxxx X. Butte
Name: Xxxxxxx X. Butte
Title: Vice-President
IN WITNESS WHEREOF, pursuant to Section 10.1 hereof, Keystone
Property Trust as the successor to all of the General Partner Interest of
American Real Estate Investment Corporation pursuant to Section 9.2 hereof,
hereby acknowledges, accepts and agrees to be bound by all of the terms and
conditions of this Agreement and such other documents or instruments as may be
required to effect the admission of Keystone Property Trust as the successor
General Partner.
Keystone Property Trust
By:/s/ Xxxxxxx X. Xxxxxxxx
Name: Xxxxxxx X. Xxxxxxxx
Title: Secretary
Dated: October 13, 1999
60
EXHIBIT A
[To Follow]
A-1
EXHIBIT B
FORM OF EXERCISE NOTICE
Pursuant to Article XII of the Agreement of Limited
Partnership of Keystone Operating Partnership, L.P., a Delaware limited
partnership (the "Partnership"), the undersigned hereby irrevocably elects to
exercise the right to sell to Keystone Property Trust, a Maryland real estate
investment trust and the general partner of the Partnership, _________ OP Units
of the Partnership (the "Offered Units") and requests that certificates for the
Purchase Price be issued in the name of _________________ (social security
number ___________).
All terms used herein not otherwise defined shall be defined
as set forth in the aforesaid Agreement of Limited Partnership.
Dated:
--------------------------------------
(Signature)
Signature Guaranteed:
