Exhibit 10.2
----------
FOURTH AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP
OF
XXXX REALTY, L.P.
----------
July 31, 2002
TABLE OF CONTENTS
ARTICLE 1 DEFINED TERMS.......................................................1
ARTICLE 2 ORGANIZATIONAL MATTERS..............................................12
Section 2.1 Organization..............................................12
Section 2.2 Name......................................................12
Section 2.3 Registered Office and Agent; Principal Office.............12
Section 2.4 Power of Attorney.........................................13
Section 2.5 Term......................................................14
ARTICLE 3 PURPOSE............................................................14
Section 3.1 Purpose and Business......................................14
Section 3.2 Powers....................................................14
ARTICLE 4 CAPITAL CONTRIBUTIONS...............................................15
Section 4.1 Capital Contributions of the Partners.....................15
Section 4.2 Issuances of Additional Partnership Interests.............15
Section 4.3 No Preemptive Rights......................................17
ARTICLE 5 DISTRIBUTIONS.......................................................18
Section 5.1 Requirement and Characterization of Distributions.........18
Section 5.2 Guaranteed Payment........................................20
Section 5.3 Amounts Withheld..........................................20
Section 5.4 Distributions Upon Liquidation............................20
ARTICLE 6 ALLOCATIONS.........................................................21
Section 6.1 Allocations For Capital Account Purposes..................21
ARTICLE 7 MANAGEMENT AND OPERATIONS OF BUSINESS...............................21
Section 7.1 Management................................................21
Section 7.2 Certificate of Limited Partnership........................24
Section 7.3 Restrictions on General Partner's Authority...............24
Section 7.4 Reimbursement of the General Partner......................25
Section 7.5 Outside Activities of the General Partner.................25
Section 7.6 Contracts with Affiliates.................................26
Section 7.7 Indemnification...........................................27
Section 7.8 Liability of the General Partner..........................28
Section 7.9 Other Matters Concerning the General Partner..............29
Section 7.10 Title to Partnership Assets...............................30
Section 7.11 Reliance by Third Parties.................................30
Section 7.12 Partnership Operations....................................31
ARTICLE 8 RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS..........................31
Section 8.1 Limitation of Liability...................................31
Section 8.2 Management of Business....................................31
i
Section 8.3 Outside Activities of Limited Partners....................32
Section 8.4 Return of Capital.........................................32
Section 8.5 Rights of Limited Partners Relating to the
Partnership............................................32
Section 8.6 Redemption Right..........................................33
ARTICLE 9 BOOKS, RECORDS, ACCOUNTING AND REPORTS..............................34
Section 9.1 Records and Accounting....................................34
Section 9.2 Fiscal Year...............................................34
Section 9.3 Reports...................................................34
ARTICLE 10 TAX MATTERS........................................................35
Section 10.1 Preparation of Tax Returns................................35
Section 10.2 Tax Elections.............................................35
Section 10.3 Tax Matters Partner.......................................35
Section 10.4 Organizational Expenses...................................37
Section 10.5 Withholding...............................................37
ARTICLE 11 TRANSFERS AND WITHDRAWALS..........................................38
Section 11.1 Transfer..................................................38
Section 11.2 Transfer of General Partner's Partnership Interest........38
Section 11.3 Limited Partners' Rights to Transfer......................39
Section 11.4 Substituted Limited Partners..............................39
Section 11.5 Assignees.................................................40
Section 11.6 General Provisions........................................40
ARTICLE 12 ADMISSION OF PARTNERS..............................................41
Section 12.1 Admission of Successor General Partner....................41
Section 12.2 Admission of Additional Limited Partners..................41
Section 12.3 Amendment of Agreement and Certificate of Limited
Partnership............................................42
ARTICLE 13 DISSOLUTION AND LIQUIDATION........................................42
Section 13.1 Dissolution...............................................42
Section 13.2 Winding Up................................................43
Section 13.3 Compliance with Timing Requirements of Regulations........44
Section 13.4 Deemed Distribution and Recontribution....................45
Section 13.5 Rights of Limited Partners................................45
Section 13.6 Notice of Dissolution.....................................45
Section 13.7 Cancellation of Certificate of Limited Partnership........45
Section 13.8 Reasonable Time for Winding-Up............................46
Section 13.9 Waiver of Partition.......................................46
ARTICLE 14 AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS.......................46
Section 14.1 Amendments................................................46
Section 14.2 Meetings of the Partners..................................47
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ARTICLE 15 GENERAL PROVISIONS.................................................48
Section 15.1 Addresses and Notice......................................48
Section 15.2 Titles and Captions.......................................48
Section 15.3 Pronouns and Plurals......................................48
Section 15.4 Further Action............................................49
Section 15.5 Binding Effect............................................49
Section 15.6 Creditors.................................................49
Section 15.7 Waiver....................................................49
Section 15.8 Counterparts..............................................49
Section 15.9 Applicable Law............................................49
Section 15.10 Invalidity of Provisions..................................50
EXHIBIT A
INTENTIONALLY OMITTED
EXHIBIT B
CAPITAL ACCOUNT MAINTENANCE
EXHIBIT C
SPECIAL ALLOCATION RULES
EXHIBIT D
VALUE OF CONTRIBUTED PROPERTY
EXHIBIT E
NOTICE OF REDEMPTION
iii
FOURTH AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP
OF
XXXX REALTY, L.P.
THIS FOURTH AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP, dated as
of July 31, 2002, is entered into by CarrAmerica Realty Corporation, a Maryland
corporation, as the General Partner, for itself and on behalf of the Limited
Partners of the Partnership.
WHEREAS, pursuant to Sections 14.1.A and 14.2.B of the Third Amended and
Restated Agreement of Limited Partnership of the Partnership (the "Partnership
Agreement"), on July 31, 2002, the General Partner and holders of a majority of
the Percentage Interests of the Limited Partners, acting by written consent, (i)
approved amendments to the Partnership Agreement (the "Amendments"), and (ii)
approved a restatement of the Partnership Agreement, as amended by the
Amendments, in its entirety.
NOW, THEREFORE, in consideration of the mutual covenants set forth herein,
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto hereby agree to continue the
Partnership as a limited partnership under the Act, as follows:
ARTICLE 1
DEFINED TERMS
The following definitions shall be for all purposes, unless otherwise
clearly indicated to the contrary, applied to the terms used in this Agreement.
"Act" means the Delaware Revised Uniform Limited Partnership Act, as
it may be amended from time to time, and any successor to such statute.
"Additional Limited Partner" means a Person admitted to the
Partnership as a Limited Partner pursuant to Section 4.2 hereof and who is shown
as such on the books and records of the Partnership.
"Adjusted Capital Account" means the Capital Account maintained for
each Partner as of the end of each Partnership Year (i) increased by any amounts
which such Partner is obligated to restore pursuant to any provision of this
Agreement or is deemed to be obligated to restore pursuant to the penultimate
sentences of Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5) and (ii)
decreased by the items described in Regulations Sections
1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5), and 1.704-1(b)(2)(ii)(d)(6).
The foregoing definition of Adjusted Capital Account is intended to comply with
the provisions of Regulations Section 1.704-1(b)(2)(ii)(d) and shall be
interpreted consistently therewith.
"Adjusted Capital Account Deficit" means, with respect to any Partner,
the deficit balance, if any, in such Partner's Adjusted Capital Account as of
the end of the relevant Partnership Year
"Adjusted Property" means any property the Carrying Value of which has
been adjusted pursuant to Exhibit B hereof. Once an Adjusted Property is deemed
distributed by, and recontributed to, the Partnership for federal income tax
purposes upon a termination thereof pursuant to Section 708 of the Code, such
property shall thereafter constitute a Contributed Property until the Carrying
Value of such property is further adjusted pursuant to Exhibit B hereof.
"Affiliate" means, with respect to any Person, (i) any Person directly
or indirectly controlling, controlled by or under common control with such
Person, (ii) any Person owning or controlling ten percent (10%) or more of the
outstanding voting interests of such Person, (iii) any Person of which such
Person owns or controls ten percent (10%) or more of the voting interests, or
(iv) any officer, director, general partner or trustee of such Person or any
Person referred to in clauses (i), (ii), and (iii) above.
"Agreed Value" means (i) in the case of any Contributed Property set
forth in Exhibit D and as of the time of its contribution to the Partnership,
the Agreed Value of such property as set forth in Exhibit D, (ii) in the case of
any Contributed Property not set forth in Exhibit D and as of the time of its
contribution to the Partnership, the 704(c) Value of such property or other
consideration, reduced by any liabilities either assumed by the Partnership upon
such contribution or to which such property is subject when contributed, and
(iii) in the case of any property distributed to a Partner by the Partnership,
the Partnership's Carrying Value of such property at the time such property is
distributed, reduced by any indebtedness either assumed by such Partner upon
such distribution or to which such property is subject at the time of
distribution as determined under Section 752 of the Code and the regulations
thereunder.
"Agreement" means this Fourth Amended and Restated Agreement of
Limited Partnership, as it may be amended, supplemented or restated from time to
time.
"Articles of Incorporation" means the Articles of Incorporation of the
General Partner filed in the State of Maryland on July 9, 1992, as amended or
restated from time to time.
"Assignee" means a Person to whom one or more Partnership Units have
been transferred in a manner permitted under this Agreement, but who has not
become a Substituted Limited Partner, and who has the rights set forth in
Section 11.5.
"Available Cash" means, with respect to any period for which such
calculation is being made, (i) the sum of:
(a) the Partnership's Net Income or Net Loss (as the case may be)
for such period, taking into account all Guaranteed Payments deducted
with respect to such period (without regard to adjustments resulting
from allocations described in Sections 1.A-E of Exhibit C),
(b) Depreciation and all other noncash charges deducted in
determining Net Income or Net Loss for such period,
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(c) the amount of any reduction in reserves of the Partnership
referred to in clause (ii)(f) below (including, without limitation,
reductions resulting because the General Partner determines such
amounts are no longer necessary),
(d) the excess of proceeds from the sale, exchange, disposition,
or refinancing of Partnership property for such period over the gain
(or loss, as the case may be) recognized from such sale, exchange,
disposition, or refinancing during such period (excluding Terminating
Capital Transactions), and
(e) all other cash received by the Partnership for such period
that was not included in determining Net Income or Net Loss for such
period;
(ii) less the sum of:
(a) all principal debt payments made during such period by the
Partnership,
(b) capital expenditures made by the Partnership during such
period,
(c) investments in any entity (including loans made thereto) to
the extent that such investments are not otherwise described in
clauses (ii)(a) or (b),
(d) all other expenditures and payments not deducted in
determining Net Income or Net Loss for such period,
(e) any amount included in determining Net Income or Net Loss for
such period that was not received by the Partnership during such
period, and
(f) the amount of any increase in reserves established during
such period which the General Partner determines are necessary or
appropriate in its sole and absolute discretion.
Notwithstanding the foregoing, Available Cash shall not include any
cash received or reductions in reserves, or take into account any disbursements
made or reserves established, after commencement of the dissolution and
liquidation of the Partnership.
"Book-Tax Disparities" means, with respect to any item of Contributed
Property or Adjusted Property, as of the date of any determination, the
difference between the Carrying Value of such Contributed Property or Adjusted
Property and the adjusted basis thereof for federal income tax purposes as of
such date. A Partner's share of the Partnership's Book-Tax Disparities in all of
its Contributed Property and Adjusted Property will be reflected by the
difference between such Partner's Capital Account balance as maintained pursuant
to Exhibit B and the hypothetical balance of such Partner's
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Capital Account computed as if it had been maintained strictly in accordance
with federal income tax accounting principles.
"Business Day" means any day except a Saturday, Sunday or other day on
which commercial banks in New York, New York are authorized or required by law
to close.
"Capital Account" means the Capital Account maintained for a Partner
pursuant to Exhibit B hereof.
"Capital Contribution" means, with respect to any Partner, any cash,
cash equivalents or the Agreed Value of Contributed Property which such Partner
contributes or is deemed to contribute to the Partnership pursuant to Section
4.1 or 4.2 hereof.
"Carrying Value" means (i) with respect to a Contributed Property or
Adjusted Property, the 704(c) Value of such property reduced (but not below
zero) by all Depreciation with respect to such Property charged to the Partners'
Capital Accounts and (ii) with respect to any other Partnership property, the
adjusted basis of such property for federal income tax purposes, all as of the
time of determination. The Carrying Value of any property shall be adjusted from
time to time in accordance with Exhibit B hereof, and to reflect changes,
additions or other adjustments to the Carrying Value for dispositions and
acquisitions of Partnership properties, as deemed appropriate by the General
Partner.
"Cash Amount" means an amount of cash per Partnership Unit equal to
the Value on the Valuation Date of the REIT Shares Amount.
"Certificate" means the Certificate of Limited Partnership relating to
the Partnership filed in the office of the Delaware Secretary of State, as
amended from time to time in accordance with the terms hereof and the Act.
"Class A" means the Partners who are holders of Class A Units.
"Class A Share" means that portion of Available Cash for a
Distribution Period to be distributed with respect to Class A as determined by
multiplying the amount of Available Cash for such Distribution Period by the
fraction set forth in Section 5.1.B.1 hereof.
"Class A Unit" means a Partnership Unit other than any other
Partnership Unit that is specifically designated by the General Partner pursuant
to Section 4.2 as being of another class of Partnership Units.
"Class C" means the Partners who are holders of Class C Units.
"Class C Share" means that portion of Available Cash for a
Distribution Period to be distributed with respect to Class C as determined by
multiplying the amount of Available Cash for such Distribution Period by the
fraction set forth in Section 5.1.B.2 hereof (as such fraction may be adjusted
in accordance with Section 5.1.B hereof).
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"Class C Unit" means a Partnership Unit with such designations,
preferences, rights, powers and duties as are described in or pursuant to
Section 4.2.F hereof.
"Code" means the Internal Revenue Code of 1986, as amended and in
effect from time to time, as interpreted by the applicable regulations
thereunder. Any reference herein to a specific section or sections of the Code
shall be deemed to include a reference to any corresponding provision of future
law.
"Consent" means the consent or approval of a proposed action by a
Partner given in accordance with Section 14.2 hereof.
"Contributed Property" means each property or other asset, in such
form as may be permitted by the Act, but excluding cash contributed or deemed
contributed to the Partnership (or deemed contributed to the Partnership on
termination and reconstitution thereof pursuant to Section 708 of the Code).
Once the Carrying Value of a Contributed Property is adjusted pursuant to
Exhibit B hereof, such property shall no longer constitute a Contributed
Property for purposes of Exhibit B hereof, but shall be deemed an Adjusted
Property for such purposes.
"Conversion Factor" means 1.0, provided that in the event that the
General Partner (i) declares or pays a dividend on its outstanding REIT Shares
in REIT Shares or makes a distribution to all holders of its outstanding REIT
Shares in REIT Shares, (ii) subdivides its outstanding REIT Shares, or (iii)
combines its outstanding REIT Shares into a smaller number of REIT Shares, the
Conversion Factor shall be adjusted by multiplying the Conversion Factor by a
fraction, the numerator of which shall be the number of REIT Shares issued and
outstanding on the record date (assuming for such purposes that such dividend,
distribution, subdivision or combination has occurred as of such time), and the
denominator of which shall be the actual number of REIT Shares (determined
without the above assumption) issued and outstanding on the record date for such
dividend, distribution, subdivision or combination. 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.
"Debt" means, as to any Person, as of any date of determination, (i)
all indebtedness of such Person for borrowed money or for the deferred purchase
price of property or services, (ii) all amounts owed by such Person to banks or
other Persons in respect of reimbursement obligations under letters of credit,
surety bonds and other similar instruments guaranteeing payment or other
performance of obligations by such Person, (iii) all indebtedness for borrowed
money or for the deferred purchase price of property or services secured by any
lien on any property owned by such Person, to the extent attributable to such
Person's interest in such property, even though such Person has not assumed or
become liable for the payment thereof, and (iv) lease obligations of such Person
which, in accordance with generally accepted accounting principles, should be
capitalized.
"Depreciation" means, for each fiscal year, an amount equal to the
federal income tax depreciation, amortization, or other cost recovery deduction
allowable with
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respect to an asset for such year, except that if the Carrying Value of an asset
differs from its adjusted basis for federal income tax purposes at the beginning
of such year or other period, Depreciation shall be an amount which bears the
same ratio to such beginning Carrying Value as the federal income tax
depreciation, amortization, or other cost recovery deduction for such year bears
to such beginning adjusted tax basis; provided, however, that if the federal
income tax depreciation, amortization, or other cost recovery deduction for such
year is zero, Depreciation shall be determined with reference to such beginning
Carrying Value using any reasonable method selected by the General Partner.
"Distribution Period" means any calendar quarter or shorter period
with respect to which a distribution of Available Cash is to be made to the
Partners by the Partnership.
"Effective Date" means February 16, 1993.
"General Partner" means CarrAmerica Realty Corporation or its
successors as general partner of the Partnership.
"General Partner Interest" means a Partnership Interest held by the
General Partner that is a general partnership interest. A General Partner
Interest may be expressed as a number of Partnership Units.
"Guaranteed Payment" means, with respect to each Partner holding Class
A Units, an amount equal to the product of (x) twenty-eight and three quarters
cents ($0.2875) (except for the distribution made with respect to the quarter
ended June 30, 2002, for which the number shall be thirty-two and one half cents
($0.325)) and (y) the number of Class A Units held as of the Partnership Record
Date by the Partner to whom a Guaranteed Payment is being made pursuant to
Section 5.2. "Guaranteed Payment" means, with respect to each Partner holding
Class C Units, an amount equal to the product of (x) twenty-eight and three
quarters cents ($0.2875), (y) the number of Class C Units held as of the
Partnership Record Date by the Partner to whom a Guaranteed Payment is being
made pursuant to Section 5.2, and (z) a fraction, the numerator of which is
equal to the number of days in the calendar quarter to which the Partnership
Record Date relates for which the Class C Units held by such Partner were issued
and outstanding and the denominator of which is the number of days in such
calendar quarter. In the event that Class C Units which have been issued on
different dates are outstanding on the last day of a calendar quarter, then the
Class C Units issued on each particular date shall be treated as a separate
series of Partnership Units for purposes of determining the amount of the
Guaranteed Payment (and the formula set forth in the preceding sentence shall be
modified for each separate series of Class C Units).
"IRS" means the Internal Revenue Service, which administers the
internal revenue laws of the United States.
"Immediate Family" means, with respect to any natural Person, such
natural Person's spouse, parents, descendants, nephews, nieces, brothers, and
sisters.
"Incapacity" or "Incapacitated" means, (i) as to any individual
Partner, death, total physical disability or entry by a court of competent
jurisdiction adjudicating
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him incompetent to manage his Person or his estate, (ii) as to any corporation
which is a Partner, the filing of a certificate of dissolution, or its
equivalent, for the corporation or the revocation of its charter, (iii) as to
any partnership which is a Partner, the dissolution and commencement of winding
up of the partnership, (iv) as to any 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. For purposes of this definition,
bankruptcy of a Partner shall be deemed to have occurred when (a) the Partner
commences a voluntary proceeding seeking liquidation, reorganization or other
relief under any bankruptcy, insolvency or other similar law now or hereafter in
effect, (b) the Partner is adjudged as bankrupt or insolvent, or a final and
nonappealable order for relief under any bankruptcy, insolvency or similar law
now or hereafter in effect has been entered against the Partner, (c) the Partner
executes and delivers a general assignment for the benefit of the Partner's
creditors, (d) the Partner files an answer or other pleading admitting or
failing to contest the material allegations of a petition filed against the
Partner in any proceeding of the nature described in clause (b) above, (e) the
Partner seeks, consents to or acquiesces in the appointment of a trustee,
receiver or liquidator for the Partner or for all or any substantial part of the
Partner's properties, (f) any proceeding seeking liquidation, reorganization or
other relief under any bankruptcy, insolvency or other similar law now or
hereafter in effect has not been dismissed within one hundred twenty (120) days
after the commencement thereof, (g) the appointment without the Partner's
consent or acquiescence of a trustee, receiver of liquidator has not been
vacated or stayed within ninety (90) days of such appointment, or (h) an
appointment referred to in clause (g) is not vacated within ninety (90) days
after the expiration of any such stay.
"Indemnitee" means (i) any Person made a party to a proceeding by
reason of his status as (A) the General Partner or (B) a director or officer of
the Partnership or the General Partner, and (ii) such other Persons (including
Affiliates of the General Partner or the Partnership) as the General Partner may
designate from time to time, in its sole and absolute discretion.
"Limited Partner" means any Person named as a Limited Partner in the
Partner Register, as such Partner Register may be amended from time to time, or
any Substituted Limited Partner or Additional Limited Partner, in such Person's
capacity as a Limited Partner in the Partnership.
"Limited Partnership Interest" means 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 with
the terms and provisions of this Agreement. A Limited Partnership Interest may
be expressed as a number of Partnership Units.
"Liquidator" has the meaning set forth in Section 13.2.
"Net Income" means, for any taxable period, the excess, if any, of the
Partnership's items of income and gain for such taxable period over the
Partnership's items
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of loss and deduction for such taxable period. The items included in the
calculation of Net Income shall be determined in accordance with Exhibit B. Once
an item of income, gain, loss or deduction that has been included in the initial
computation of Net Income is subjected to the special allocation rules in
Exhibit C, Net Income or the resulting Net Loss, whichever the case may be,
shall be recomputed without regard to such item.
"Net Loss" means, for any taxable period, the excess, if any, of the
Partnership's items of loss and deduction for such taxable period over the
Partnership's items of income and gain for such taxable period. The items
included in the calculation of Net Loss shall be determined in accordance with
Exhibit B. Once an item of income, gain, loss or deduction that has been
included in the initial computation of Net Loss is subjected to the special
allocation rules in Exhibit C, Net Loss or the resulting Net Income, whichever
the case may be, shall be recomputed without regard to such item.
"Nonrecourse Built-in Gain" means, with respect to any Contributed
Properties or Adjusted Properties that are subject to a mortgage or negative
pledge securing a Nonrecourse Liability, the amount of any taxable gain that
would be allocated to the Partners pursuant to Section 2.B of Exhibit C if such
properties were disposed of in a taxable transaction in full satisfaction of
such liabilities and for no other consideration.
"Nonrecourse Deductions" has the meaning set forth in Regulations
Section 1.704-2(b)(1), and the amount of Nonrecourse Deductions for a
Partnership Year shall be determined in accordance with the rules of Regulations
Section 1.704-2(c).
"Nonrecourse Liability" has the meaning set forth in Regulations
Section 1.752-1(a)(2).
"Notice of Redemption" means the Notice of Redemption substantially in
the form of Exhibit E to this Agreement.
"Original Limited Partner" means a Limited Partner who became a
limited partner on the Effective Date, and who owns one or more Original Limited
Partnership Units on the date action is called for under Section 13.1.
"Original Limited Partnership Unit" means a Partnership Unit acquired
by a Limited Partner on the Effective Date, and held by such Original Limited
Partner on the date action is called for under Section 13.1.
"Partner" means a General Partner or a Limited Partner, and "Partners"
means the General Partner and the Limited Partners.
"Partner Minimum Gain" means an amount, with respect to each Partner
Nonrecourse Debt, equal to the Partnership Minimum Gain that would result if
such Partner Nonrecourse Debt were treated as a Nonrecourse Liability,
determined in accordance with Regulations Section 1.704-2(i)(3).
"Partner Nonrecourse Debt" has the meaning set forth in Regulations
Section 1.704-2(b)(4).
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"Partner Nonrecourse Deductions" has the meaning set forth in
Regulations Section 1.704-2(i)(2), and the Amount of Partner Nonrecourse
Deductions with respect to a Partner Nonrecourse Debt for a Partnership Year
shall be determined in accordance with the rules of Regulations Section
1.704-2(i)(2).
"Partner Register" means the register of Partners maintained by the
General Partner in the books and records of the Partnership, which shall include
the name, address, number of Partnership Units, deemed capital contributions and
Percentage Interest of each Partner.
"Partnership" means the limited partnership formed under the Act and
continued pursuant to this Agreement, and any successor thereto.
"Partnership Interest" means an ownership interest in the Partnership
representing a Capital Contribution by either a Limited Partner or the General
Partner and includes any and all benefits to which the holder of such a
Partnership Interest may be entitled as provided in this Agreement, together
with all obligations of such Person to comply with the terms and provisions of
this Agreement. A Partnership Interest may be expressed as a number of
Partnership Units.
"Partnership Minimum Gain" has the meaning set forth in Regulations
Section 1.704-2(b)(2), and the amount of Partnership Minimum Gain, as well as
any net increase or decrease in Partnership Minimum Gain, for a Partnership Year
shall be determined in accordance with the rules of Regulations Section
1.704-2(d).
"Partnership Record Date" means the record date established by the
General Partner for the distribution of Available Cash pursuant to Section 5.1
hereof or Guaranteed Payments pursuant to Section 5.2 hereof, which record date
shall be the same as the record date established by the General Partner for a
distribution to its shareholders of some or all of its portion of such
distribution.
"Partnership Unit" means a fractional, undivided share of the
Partnership Interests of all Partners issued pursuant to Sections 4.1 and 4.2.
The number of Partnership Units outstanding and the Percentage Interests in the
Partnership represented by such Partnership Units are set forth in the Partner
Register, as such Partner Register may be amended from time to time. The
ownership of Partnership Units may be evidenced by a certificate in a form
approved by the General Partner.
"Partnership Year" means the fiscal year of the Partnership, which
shall be the calendar year.
"Percentage Interest" means, as to a Partner, its interest in the
Partnership as determined by dividing the Partnership Units owned by such
Partner by the total number of Partnership Units then outstanding and as
specified in the Partner Register, as such Partner Register may be amended from
time to time.
"Person" means an individual or a corporation, partnership, trust,
unincorporated organization, association or other entity.
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"Recapture Income" means any gain recognized by the Partnership
(computed without regard to any adjustment required by Section 734 or 743 of the
Code) upon the disposition of any property or asset of the Partnership, which
gain is characterized as ordinary income because it represents the recapture of
deductions previously taken with respect to such property or asset.
"Redeeming Partner" has the meaning set forth in Section 8.6 hereof.
"Redemption Amount" means either the Cash Amount or the REIT Shares
Amount, as determined by the General Partner in its sole and absolute
discretion. A Redeeming Partner shall have no right, without the General
Partner's consent, to receive the Redemption Amount in the form of the REIT
Shares Amount.
"Redemption Right" shall have the meaning set forth in Section 8.6
hereof.
"Regulations" means the Income Tax Regulations promulgated under the
Code, as such regulations may be amended from time to time (including
corresponding provisions of succeeding regulations).
"REIT" means a real estate investment trust under Section 856 of the
Code.
"REIT Share" shall mean a share of common stock of the General
Partner.
"REIT Shares Amount" shall mean a number of REIT Shares equal to the
product of the number of Partnership Units offered for redemption by a Redeeming
Partner, multiplied by the Conversion Factor; provided that in the event the
General Partner issues to all holders of REIT Shares rights, options, warrants
or convertible or exchangeable securities entitling the shareholders to
subscribe for or purchase REIT Shares, or any other securities or property
(collectively, the "rights") then the REIT Shares Amount shall also include such
rights that a holder of that number of REIT Shares would be entitled to receive.
"Residual Gain" or "Residual Loss" means any item of gain or loss, as
the case may be, of the Partnership recognized for federal income tax purposes
resulting from a sale, exchange or other disposition of Contributed Property or
Adjusted Property, to the extent such item of gain or loss is not allocated
pursuant to Section 2.B.1(a) or 2.B.2(a) of Exhibit C to eliminate Book-Tax
Disparities.
"704(c) Value" of any Contributed Property means the value of such
property as set forth in Exhibit D, or if no value is set forth in Exhibit D,
the fair market value of such property or other consideration at the time of
contribution as determined by the General Partner using such reasonable method
of valuation as it may adopt; provided, however, that the 704(c) Value of any
property deemed contributed to the Partnership for federal income tax purposes
upon termination and reconstitution thereof pursuant to Section 708 of the Code
shall be determined in accordance with Exhibit B hereof. Subject to Exhibit B
hereof, the General Partner shall, in its sole and absolute discretion, use such
method as it deems reasonable and appropriate to allocate the aggregate of the
704(c) Value of Contributed Properties in a single or integrated transaction
among each separate property on a basis proportional to its fair market values.
- 10 -
"Specified Redemption Date" means the tenth Business Day after receipt
by the General Partner of a Notice of Redemption; provided that no Specified
Redemption Date shall occur before one (1) year from the Effective Date;
provided further that if the General Partner combines its outstanding REIT
Shares into a smaller number of REIT Shares, no Specified Redemption Date shall
occur prior to the effective date of such combination.
"Subsidiary" means, with respect to any Person, any corporation or
other entity of which a majority of (i) the voting power of the voting equity
securities or (ii) the outstanding equity interests is owned, directly or
indirectly, by such Person.
"Substituted Limited Partner" means a Person who is admitted as a
Limited Partner to the Partnership pursuant to Section 11.4.
"Terminating Capital Transaction" means any sale or other disposition
of all or substantially all of the assets of the Partnership or a related series
of transactions that, taken together, result in the sale or other disposition of
all or substantially all of the assets of the Partnership.
"Unrealized Gain" attributable to any item of Partnership property
means, as of any date of determination, the excess, if any, of (i) the fair
market value of such property (as determined under Exhibit B hereof) as of such
date, over (ii) the Carrying Value of such property (prior to any adjustment to
be made pursuant to Exhibit B hereof) as of such date.
"Unrealized Loss" attributable to any item of Partnership property
means, as of any date of determination, the excess, if any, of (i) the Carrying
Value of such property (prior to any adjustment to be made pursuant to Exhibit B
hereof) as of such date, over (ii) the fair market value of such property (as
determined under Exhibit B hereof) as of such date.
"Valuation Date" means the date of receipt by the General Partner of a
Notice of Redemption or, if such date is not a Business Day, the first Business
Day thereafter.
"Value" means, with respect to a REIT Share, the average of the daily
market price for the ten (10) consecutive trading days immediately preceding the
Valuation Date. The market price for each such trading day shall be: (i) if the
REIT Shares are listed or admitted to trading on any securities exchange or the
NASDAQ-National Market System, the closing price, regular way, on such day, or
if no such sale takes place on such day, the average of the closing bid and
asked prices on such day, (ii) if the REIT Shares are not listed or admitted to
trading on any securities exchange or the NASDAQ-National Market System, the
last reported sale price on such day or, if no sale takes place on such day, the
average of the closing bid and asked prices on such day, as reported by a
reliable quotation source designated by the General Partner, or (iii) if the
REIT Shares are not listed or admitted to trading on any securities exchange or
the NASDAQ-National Market System and no such last reported sale price or
closing bid and asked prices are available, the average of the reported high bid
and low asked prices on such day, as reported by a
- 11 -
reliable quotation source designated by the General Partner, or if there shall
be no bid and asked prices on such day, the average of the high bid and low
asked prices, as so reported, on the most recent day (not more than ten (10)
days prior to the date in question) for which prices have been so reported;
provided that if there are no bid and asked prices reported during the ten (10)
days prior to the date in question, the Value of the REIT Shares shall be
determined by the General Partner acting in good faith on the basis of such
quotations and other information as it considers, in its reasonable judgment,
appropriate. In the event the REIT Shares Amount includes rights that a holder
of REIT 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.
ARTICLE 2
ORGANIZATIONAL MATTERS
Section 2.1 Organization
The Partnership is a limited partnership organized pursuant to the
provisions of the Act and upon the terms and conditions set forth in the
Agreement of Limited Partnership, dated as of October 16, 1992, as amended prior
to the date hereof. The Partners hereby continue the Partnership and amend and
restate such Agreement of Limited Partnership, as amended prior to the date
hereof, in its entirety. Except as expressly provided herein to the contrary,
the rights and obligations of the Partners and the administration and
termination of the Partnership shall be governed by the Act. The Partnership
Interest of each Partner shall be personal property for all purposes.
Section 2.2 Name
The name of the Partnership is Xxxx Realty, L.P. The Partnership's
business may be conducted under any other name or names deemed advisable by the
General Partner, including the name of the General Partner or any Affiliate
thereof. The words "Limited Partnership," "L.P.," "Ltd." or similar words or
letters shall be included in the Partnership's name where necessary for the
purposes of complying with the laws of any jurisdiction that so requires. The
General Partner in its sole and absolute discretion may change the name of the
Partnership at any time and from time to time and shall notify the Limited
Partners of such change in the next regular communication to the Limited
Partners.
Section 2.3 Registered Office and Agent; Principal Office
The address of the registered office of the Partnership in the State
of Delaware is located at 0000 Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx, and the
registered agent for service of process on the Partnership in the State of
Delaware at such registered office is Corporation Trust Company. The principal
office of the Partnership is 0000 X Xxxxxx, X.X., Xxxxxxxxxx, X.X., or such
other place as the General Partner may from time to time designate by notice to
the Limited Partners. The Partnership may maintain offices
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at such other place or places within or outside the State of Delaware as the
General Partner deems advisable.
Section 2.4 Power of Attorney
A. Each Limited Partner and each Assignee constitutes and appoints the
General Partner, any Liquidator, and authorized officers and attorneys-in-fact
of each, and each of those acting singly, in each case with full power of
substitution, as its true and lawful agent and attorney-in-fact, with full power
and authority in its name, place and stead to:
(1) execute, swear to, acknowledge, deliver, file and record in the
appropriate public offices (a) all certificates, documents and
other instruments (including, without limitation, this Agreement
and the Certificate and all amendments or restatements thereof)
that the General Partner or the Liquidator deems appropriate or
necessary to form, qualify or continue the existence or
qualification of the Partnership as a limited partnership (or a
partnership in which the limited partners have limited liability)
in the State of Delaware and in all other jurisdictions in which
the Partnership may conduct business or own property, (b) all
instruments that the General Partner deems appropriate or
necessary to reflect any amendment, change, modification 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, Article 11, 12 or 13
hereof or the Capital Contribution of any Partner, and (e) all
certificates, documents and other instruments relating to the
determination of the rights, preferences and privileges of
Partnership Interests; and
(2) execute, swear to, acknowledge and file all ballots, consents,
approvals, waivers, certificates and other instruments
appropriate or necessary, in the sole and absolute 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.
Nothing contained herein shall be construed as authorizing the General
Partner to amend this Agreement except in accordance with Article 14 hereof or
as may be otherwise expressly provided for in this Agreement.
- 13 -
B. The foregoing power of attorney is hereby declared to be
irrevocable and a power coupled with an interest, in recognition of the fact
that each of the Partners will be relying upon the power of the General Partner
to act as contemplated by this Agreement in any filing or other action by it on
behalf of the Partnership, and it shall survive and not be affected by the
subsequent Incapacity of any Limited Partner or Assignee and the transfer of all
or any portion of such Limited Partner's or Assignee's Partnership Units and
shall extend to such Limited Partner's or Assignee's heirs, successors, assigns
and personal representatives. Each such Limited Partner or Assignee hereby
agrees to be bound by any representation made by the General Partner, 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 Liquidator, within fifteen (15) days after
receipt of the General Partner's request therefor, such further designation,
powers of attorney and other instruments as the General Partner or the
Liquidator, as the case may be, deems necessary to effectuate this Agreement and
the purposes of the Partnership.
Section 2.5 Term
The term of the Partnership commenced on October 16, 1992 and shall
continue until December 31, 2091, unless it is dissolved sooner pursuant to the
provisions of Article 13 or as otherwise provided by law.
ARTICLE 3
PURPOSE
Section 3.1 Purpose and Business
The purpose and nature of the business to be conducted by the
Partnership is (i) to conduct any business that may be lawfully conducted by a
limited partnership organized pursuant to the Act, provided, however, that such
business shall be limited to and conducted in such a manner as to permit the
General Partner at all times to be classified as a REIT, unless the General
Partner ceases to qualify as a REIT, (ii) to enter into any partnership, joint
venture or other similar arrangement to engage in any of the foregoing or the
ownership of interests in any entity engaged in any of the foregoing, and (iii)
to do anything necessary or incidental to the foregoing.
Section 3.2 Powers
The Partnership is empowered to do any and all acts and things
necessary, appropriate, proper, advisable, incidental to or convenient for the
furtherance and accomplishment of the purposes and business described herein and
for the protection and benefit of the Partnership, provided that the Partnership
shall not take, or refrain from taking, any action which, in the judgment of the
General Partner, in its sole and absolute discretion, (i) could adversely affect
the ability of the General Partner to continue to qualify
- 14 -
as a REIT, (ii) could subject the General Partner to any additional taxes under
Section 857 or 4981 of the Code, or (iii) could violate any law or regulation of
any governmental body or agency having jurisdiction over the General Partner or
its securities, unless such action (or inaction) shall have been specifically
consented to by the General Partner in writing.
ARTICLE 4
CAPITAL CONTRIBUTIONS
Section 4.1 Capital Contributions of the Partners
On the Effective Date, the Partners made the Capital Contributions set
forth in the Partner Register. To the extent the Partnership acquires any
property by the merger of any other Person into the Partnership, Persons who
receive Partnership Interests in exchange for their interests in the Person
merging into the Partnership shall become Partners and shall be deemed to have
made Capital Contributions as provided in the applicable merger agreement and as
set forth in the Partner Register, as amended to reflect such deemed Capital
Contributions. The Partners shall own Partnership Units in the amounts set forth
in the Partner Register and shall have a Percentage Interest in the Partnership
as set forth in the Partner Register, which Percentage Interest shall be
adjusted in the Partner Register from time to time by the General Partner to the
extent necessary to reflect accurately redemptions, Capital Contributions, the
issuance of additional Partnership Units, or similar events having an effect on
a Partner's Percentage Interest. A number of Partnership Units held by the
General Partner equal to one percent (1%) of all outstanding Partnership Units
shall be deemed to be the General Partner Partnership Units and shall be the
General Partnership Interest. Except as provided in Sections 4.2 and 10.5, the
Partners shall have no obligation to make any additional Capital Contributions
or loans to the Partnership.
Section 4.2 Issuances of Additional Partnership Interests
A. The General Partner is hereby authorized to cause the Partnership
from time to time to issue to Partners or other Persons other than the General
Partner (including, without limitation, in connection with the contribution of
property to the Partnership) additional Partnership Units or other Partnership
Interests 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 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.
B. The General Partner may make Capital Contributions to the
Partnership at such times and in such amounts as the General Partner, in its
sole and absolute discretion, may determine advisable, but under no
circumstances shall the
- 15 -
General Partner be obligated to make any such Capital Contribution. In exchange
for each such Capital Contribution, the Partnership shall issue to the General
Partner (i) that number of Class A or Class C Units equal to (a) the amount of
the Capital Contribution divided by (b) the per Unit fair market value, as
determined in good faith by the General Partner, of the underlying assets of the
Partnership or (ii) additional Partnership Units or other Partnership Interests,
other than Class A or Class C Units, 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 good faith, subject to Delaware law,
including, without limitation, (x) the allocations of items of Partnership
income, gain, loss, deduction and credit to each such class or series of
Partnership Interests, (y) the right of each such class or series of Partnership
Interests to share in Partnership distributions, and (z) the rights of each such
class or series of Partnership Interests upon dissolution and liquidation of the
Partnership; provided that, in connection with an issuance of Partnership Units
and/or Partnership Interests, pursuant to clause (ii) of this Section 4.2.B, (q)
such Partnership Units and/or Partnership Interests are issued in connection
with an issuance of shares of the General Partner, which shares 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 Units and/or Partnership Interests issued to the
General Partner in accordance with clause (ii) of this Section 4.2.B, and (r)
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 the General Partner.
C. The General Partner may issue additional REIT Shares or rights,
options, warrants or convertible or exchangeable securities containing the right
to subscribe for or purchase REIT Shares ("New Securities") at such times and in
such amounts and for such consideration as the General Partner, in its sole and
absolute discretion, determines. Under no circumstances shall the General
Partner be obligated to contribute to the Partnership all or any part of the
proceeds from any issuance of such New Securities or from the exercise of rights
contained in such New Securities, and the General Partner may, in its sole and
absolute discretion, retain all such proceeds, to be used by the General Partner
as it determines, in its sole and absolute discretion, to be advisable.
D. The General Partner shall cause the Partnership to issue up to
1,266,900 Partnership Units upon the exercise of the options granted pursuant to
the 1993 Xxxx Realty Option Plan or the 1993 Xxxx Services Option Plan (together
"the Plans") in accordance with the terms of the Plans. Units issued upon the
exercise of options granted under the Xxxx Realty Option Plan shall be issued to
the holder of such option for an amount equal to the exercise price with respect
to such option. Units issued in connection with the exercise of an option under
the Xxxx Services Option Plan shall be sold to Xxxx Real Estate Services, Inc.
("CRES"), for delivery to the employee exercising an option under the CRES Plan
at a price equal to the Value of a REIT Share on the date of exercise (as
defined in the Plans) of an option by such employee. Notwithstanding Section
11.3, Partnership Units delivered to CRES in connection with the exercise of an
option by a CRES employee may be transferred to such employee, whereupon such
employee shall be admitted as an Additional Limited Partner for all purposes
hereunder.
- 16 -
E. [Intentionally omitted]
F. Under the authority granted to it by Section 4.2.A, the General
Partner has established an additional class of Partnership Units entitled "Class
C Units" that is available to be issued in lieu of Class A Units, at the
election of the General Partner, in its sole and absolute discretion, to newly
admitted Partners in exchange for the contribution by such Partners of cash,
real estate partnership interests, stock, notes, other assets or other
consideration. Except as otherwise provided below and in Section 5.1.B hereof,
each Class C Unit shall have the same designations, rights, preferences, powers
and duties as each Class A Unit:
(1) The amount of Available Cash distributable with respect to Class
C Units shall be determined in accordance with Section 5.1.B
hereof, and the Guaranteed Payment with respect to Class C Units
shall be computed as set forth in the definition of "Guaranteed
Payment" as set forth in Article 1 of this Agreement.
(2) Each Class C Unit shall be converted automatically into a Class A
Unit on the day immediately following the Partnership Record Date
for the Distribution Period (as defined in Section 5.1.B) in
which the Class C Unit was issued, without the requirement for
any action by either the Partnership or the Partner holding the
Class C Unit.
(3) Intentionally Omitted.
(4) A holder of either Class C Units or Class A Units into which
Class C Units have been converted pursuant to clause (2) above
shall be subject to the restrictions on transfer imposed by
Section 11.3 of this Agreement (in addition to any other
restrictions on transfer as may be set forth in the contribution
agreement or amendment to this Agreement pursuant to which such
Class C Units were issued).
(5) The General Partner shall cause Class C Units to be issued by the
Partnership only pursuant to an amendment to this Agreement,
which amendment shall designate that the newly issued Partnership
Units are Class C Units. The General Partner shall have the
right, in its sole and absolute discretion, subject to Section
4.2.A above, to determine whether the Partnership should issue
Class A Units, Class C Units (or one or more series thereof), or
another class of Partnership Interests in connection with a
contribution of property, other assets or other consideration, to
the Partnership.
Section 4.3 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 Units.
- 17 -
ARTICLE 5
DISTRIBUTIONS
Section 5.1 Requirement and Characterization of Distributions
A. Except as set forth in Section 5.1.B, the General Partner shall
distribute at least quarterly an amount equal to one hundred percent (100%) of
Available Cash generated by the Partnership during such quarter or shorter
period to the Partners who are Partners on the Partnership Record Date with
respect to such quarter or shorter period. Except as set forth in Section 5.1.B
and in Exhibit G, all distributions of Available Cash shall be made to the
Partners in accordance with their respective Percentage Interests on such
Partnership Record Date; provided that in no event may a Partner receive a
distribution of Available Cash with respect to a Partnership Unit if such
Partner is entitled to receive a distribution out of such Available Cash with
respect to a REIT Share for which such Unit has been redeemed or exchanged. The
General Partner shall take such reasonable efforts, as determined by it in its
sole and absolute discretion and consistent with its qualification as a REIT, to
distribute Available Cash to the Limited Partners so as to preclude any such
distribution or portion thereof from being treated as part of a sale of property
to the Partnership by a Limited Partner under Section 707 of the Code or the
Regulations thereunder; provided that the General Partner and the Partnership
shall not have liability to a Limited Partner under any circumstances as a
result of any distribution to a Limited Partner being so treated.
B. If for any quarter or shorter period with respect to which a
distribution is to be made (a "Distribution Period") Class C Units are
outstanding on the Partnership Record Date for such Distribution Period, the
General Partner shall allocate the Available Cash with respect to such
Distribution Period between the Partners who are holders of Class A Units
("Class A") and the Partners who are holders of Class C Units ("Class C") as
follows:
(1) Class A shall receive that portion of the Available Cash (the
"Class A Share") determined by multiplying the amount of
Available Cash by the following fraction:
A x Y
---------------
(A x Y)+(C x X)
(2) Class C shall receive that portion of the Available Cash (the
"Class C Share") determined by multiplying the amount of
Available Cash by the following fraction:
C x X
---------------
(A x Y)+(C x X)
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(3) For purposes of the foregoing formulas, (i) "A" equals the number
of Class A Units outstanding on the Partnership Record Date for
such Distribution Period; (ii) "C" equals the number of Class C
Units outstanding on the Partnership Record Date for such
Distribution Period; (iii) "Y" equals the number of days in the
Distribution Period; and (iv) "X" equals the number of days in
the Distribution Period for which the Class C Units were issued
and outstanding.
The Class A Share shall be distributed among Partners holding Class A
Units on the Partnership Record Date for the Distribution Period in accordance
with the number of Class A Units held by each Partner on such Partnership Record
Date; provided that in no event may a Partner receive a distribution of
Available Cash with respect to a Class A Unit if a Partner is entitled to
receive a distribution out of such Available Cash with respect to a REIT Share
for which such Class A Unit has been redeemed or exchanged. The Class C Share
shall be distributed among the Partners holding Class C Units on the Partnership
Record Date for the Distribution Period in accordance with the number of Class C
Units held by each Partner on such Partnership Record Date. In no event shall
any Class C Units be entitled to receive any distribution of Available Cash for
any Distribution Period ending prior to the date on which such Class C Units are
issued.
C. In the event that Class C Units which have been issued on different
dates are outstanding on the Partnership Record Date for any Distribution
Period, then the Class C Units issued on each particular date shall be treated
as a separate series of Partnership Units for purposes of making the allocation
of Available Cash for such Distribution Period among the holders of Partnership
Units (and the formula for making such allocation, and the definitions of
variables used therein, shall be modified accordingly). Thus, for example, if
two series of Class C Units are outstanding on the Partnership Record Date for
any Distribution Period, the allocation formula for each series, "Series C//1//"
and "Series C//2//," would be as follows:
(1) Series C//1// shall receive that portion of the Available
Cash determined by multiplying the amount of Available Cash
by the following fraction:
C//1// x X//1//
-------------------------------------------
(A x Y)+(C//1// x X//1//)+(C//2// x X//2//)
(2) Series C//2// shall receive that portion of the Available Cash
determined by multiplying the amount of Available Cash by the
following fraction:
C//2// x X//2//
-------------------------------------------
(A x Y)+(C//1// x X//1//)+(C//2// x X//2//)
- 19 -
(3) For purposes of the foregoing formulas the definitions set forth
in Section 5.1.B.3 remain the same except that (i) "C//1//"
equals the number of Partnership Units in Series C//1//
outstanding on the Partnership Record Date for such Distribution
Period; (ii) "C//2//" equals the number of Partnership Units in
Series C//2// outstanding on the Partnership Record Date for such
Distribution Period; (iii) "X//1//" equals the number of days in
the Distribution Period for which the Partnership Units in Series
C//1// were issued and outstanding; and (iv) "X//2//" equals the
number of days in the Distribution Period for which the
Partnership Units in Series C//2// were issued
Section 5.2 Guaranteed Payment
The Partnership shall pay quarterly to each Partner who is a Partner
on the Partnership Record Date with respect to such quarter an amount of cash
equal to such Partner's Guaranteed Payment; provided that under no circumstance
shall the General Partner or any Limited Partner (i) be obligated to loan or
contribute or otherwise make available money or property to the Partnership in
order to enable the Partnership to make a Guaranteed Payment or (ii) otherwise
have personal liability for the payment of the Guaranteed Payment. Amounts paid
pursuant to this Section 5.2 are intended to constitute guaranteed payments
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
distributions for purposes of computing the Partners' Capital Accounts.
Section 5.3 Amounts Withheld
All amounts withheld pursuant to the Code or any provisions of any
state or local tax law and Section 10.5 hereof with respect to any allocation,
payment or distribution to the General Partner, the Limited Partners or
Assignees shall be treated as amounts distributed to the General Partner,
Limited Partners, or Assignees pursuant to Section 5.1 for all purposes under
this Agreement.
Section 5.4 Distributions Upon Liquidation
Proceeds from a Terminating Capital Transaction shall be distributed
to the Partners in accordance with Section 13.2.
- 20 -
ARTICLE 6
ALLOCATIONS
Section 6.1 Allocations For Capital Account Purposes
For purposes of maintaining the Capital Accounts and in determining
the rights of the Partners among themselves, the Partnership's items of income,
gain, loss and deduction (computed in accordance with Exhibit B hereof) shall be
allocated among the Partners in each taxable year (or portion thereof) as
provided herein below.
A. Net Income. After giving effect to the special allocations set
forth in Section 1 of Exhibit C, Net Income shall be allocated (i) first, to the
General Partner to the extent that Net Losses previously allocated to the
General Partner pursuant to the last sentence of Section 6.1.B exceed Net Income
previously allocated to the General Partner pursuant to this clause (i) of
Section 6.1.A, and (ii) thereafter, Net Income shall be allocated to the
Partners in accordance with their respective Percentage Interests.
B. Net Losses. After giving effect to the special allocations set
forth in Section 1 of Exhibit C, Net Losses shall be allocated to the Partners
in accordance with their respective Percentage Interests, provided that Net
Losses shall not be allocated to any Limited Partner pursuant to this Section
6.1.B to the extent that such allocation would cause such Limited Partner to
have an Adjusted Capital Account Deficit at the end of such taxable year (or
increase any existing Adjusted Capital Account Deficit). All Net Losses in
excess of the limitations set forth in this Section 6.1.B shall be allocated to
the General Partner.
C. Allocation of Nonrecourse Debt. For purposes of Regulations Section
1.752-3(a), the Partners agree that Nonrecourse Liabilities of the Partnership
in excess of the sum of (i) the amount of Partnership Minimum Gain and (ii) the
total amount of Nonrecourse Built-in Gain shall be allocated among the Partners
in accordance with their respective Percentage Interests.
D. Recapture Income. Any gain allocated to the Partners upon the sale
or other taxable disposition of any Partnership asset shall to the extent
possible, after taking into account other required allocations of gain pursuant
to Exhibit C, be characterized as Recapture Income in the same proportions and
to the same extent as such Partners have been allocated any deductions directly
or indirectly giving rise to the treatment of such gains as Recapture Income.
ARTICLE 7
MANAGEMENT AND OPERATIONS OF BUSINESS
Section 7.1 Management
A. Except as otherwise expressly provided in this Agreement, all
management powers over the business and affairs of the Partnership are
exclusively vested in the General Partner, and no Limited Partner shall have any
right to participate in or
- 21 -
exercise control or management power over the business and affairs of the
Partnership. The General Partner may not be removed by the Limited Partners with
or without cause. In addition to the powers now or hereafter granted a general
partner of a limited partnership under applicable law or which are granted to
the General Partner under any other provision of this Agreement, the General
Partner, subject to Section 7.3 hereof, shall have full power and authority to
do all things deemed necessary or desirable by it to conduct the business of the
Partnership, to exercise all powers set forth in Section 3.2 hereof and to
effectuate the purposes set forth in Section 3.1 hereof, including, without
limitation:
(1) the making of any expenditures, the lending or borrowing of money
(including, without limitation, making prepayments on loans and
borrowing money to permit the Partnership to make distributions
to its Partners in such amounts as will permit the General
Partner (so long as the General Partner qualifies as a REIT) to
avoid the payment of any federal income tax (including, for this
purpose, any excise tax pursuant to Section 4981 of the Code) and
to make distributions to its shareholders sufficient to permit
the General Partner to maintain REIT status), the assumption or
guarantee of, or other contracting for, indebtedness and other
liabilities, the issuance of evidences of indebtedness (including
the securing of same by mortgage, deed of trust or other lien or
encumbrance on the Partnership's assets) and the incurring of any
obligations it deems necessary for the conduct of the activities
of the Partnership;
(2) the making of tax, regulatory and other filings, or rendering of
periodic or other reports to governmental or other agencies
having jurisdiction over the business or assets of the
Partnership;
(3) the acquisition, disposition, mortgage, pledge, encumbrance,
hypothecation or exchange of any assets of the Partnership or the
merger or other combination of the Partnership with or into
another entity (all of the foregoing subject to any prior
approval which may be required by Section 7.3 hereof);
(4) the use of the assets of the Partnership (including, without
limitation, cash on hand) for any purpose consistent with the
terms of this Agreement and on any terms it sees fit, including,
without limitation, the financing of the conduct of the
operations of the General Partner, the Partnership or any of the
Partnership's Subsidiaries, the lending of funds to other Persons
(including the Partnership's Subsidiaries) and the repayment of
obligations of the Partnership and its Subsidiaries and any other
Person in which it has an equity investment and the making of
Capital Contributions to its Subsidiaries;
(5) the negotiation, execution, and performance of any contracts,
conveyances or other instruments that the General Partner
considers
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useful or necessary to the conduct of the Partnership's
operations or the implementation of the General Partner's powers
under this Agreement;
(6) the distribution of Partnership cash or other Partnership assets
in accordance with this Agreement;
(7) the selection and dismissal of employees of the Partnership or
the General Partner (including, without limitation, employees
having titles such as "president", vice president", "secretary"
and "treasurer"), and agents, outside attorneys, accountants,
consultants and contractors of the General Partner or the
Partnership and the determination of their compensation and other
terms of employment or hiring;
(8) the maintenance of such insurance for the benefit of the
Partnership and the Partners as it deems necessary or
appropriate;
(9) the formation of, or acquisition of an interest in, and the
contribution of property to, any further limited or general
partnerships, joint ventures or other relationships that it deems
desirable (including, without limitation, the acquisition of
interests in, and the contributions of property to its
Subsidiaries and any other Person in which it has an equity
investment from time to time);
(10) the control of any matters affecting the rights and obligations
of the Partnership, including the conduct of litigation and the
incurring of legal expense and the settlement of claims and
litigation, and the indemnification of any Person against
liabilities and contingencies to the extent permitted by law;
(11) the undertaking of any action in connection with the
Partnership's direct or indirect investment in its Subsidiaries
or any other Person (including, without limitation, the
contribution or loan of funds by the Partnership to such
Persons); and
(12) the determination of the fair market value of any Partnership
property distributed in kind using such reasonable method of
valuation as it may adopt.
B. Each of the Limited Partners agrees that the General Partner is
authorized to execute, deliver and perform the above-mentioned agreements and
transactions on behalf of the Partnership without any further act, approval or
vote of the Partners, notwithstanding any other provision of this Agreement
(except as provided in Section 7.3), the Act or any applicable law, rule or
regulation. The execution, delivery or performance by the General Partner or the
Partnership of any agreement authorized or permitted under this Agreement shall
not constitute a breach by the General Partner of
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any duty that the General Partner may owe the Partnership or the Limited
Partners or any other Persons under this Agreement or of any duty stated or
implied by law or equity.
C. At all times from and after the date hereof, the General Partner
may cause the Partnership to obtain and maintain (i) casualty, liability and
other insurance on the properties of the Partnership and (ii) liability
insurance for the Indemnitees hereunder.
D. At all times from and after the date hereof, the General Partner
may cause the Partnership to establish and maintain working capital reserves in
such amounts as the General Partner, in its sole and absolute discretion, deems
appropriate and reasonable from time to time.
E. In exercising its authority under this Agreement, the General
Partner may, but shall be under no obligation to, take into account the tax
consequences to any Partner of any action taken by it. The General Partner and
the Partnership shall not have liability to a Limited Partner under any
circumstances as a result of an income tax liability incurred by such Limited
Partner as a result of an action (or inaction) by the General Partner pursuant
to its authority under this Agreement.
Section 7.2 Certificate of Limited Partnership
The General Partner has previously filed the Certificate with the
Secretary of State of Delaware. To the extent that such action is determined by
the General Partner to be reasonable and necessary or appropriate, the General
Partner shall file amendments to and restatements of the Certificate and do all
the things to maintain the Partnership as a limited partnership (or a
partnership in which the limited partners have limited liability) under the laws
of the State of Delaware and each other state or the District of Columbia, in
which the Partnership may elect to do business or own property. Subject to the
terms of Section 8.5.A(4) hereof, the General Partner shall not be required,
before or after filing, to deliver or mail a copy of the Certificate or any
amendment thereto to any Limited Partner. The General Partner shall use all
reasonable efforts to cause to be filed such other certificates or documents as
may be reasonable and necessary or appropriate for the formation, continuation,
qualification and operation of a limited partnership (or a partnership in which
the limited partners have limited liability) in the State of Delaware and any
other state, or the District of Columbia, in which the Partnership may elect to
do business or own property.
Section 7.3 Restrictions on General Partner's Authority
A. The General Partner may not, without the written Consent of all of
the Limited Partners, take any action in contravention of this Agreement,
including, without limitation:
(1) take any action that would make it impossible to carry on the
ordinary business of the Partnership, except as otherwise
provided in this Agreement;
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(2) possess Partnership property, or assign any rights in specific
Partnership property, for other than a Partnership purpose except
as otherwise provided in this Agreement;
(3) admit a Person as a Partner, except as otherwise provided in this
Agreement; or
(4) perform any act that would subject a Limited Partner to liability
as a general partner in any jurisdiction or any other liability
except as provided herein or under the Act.
B. Except as provided in Article 13 hereof, the General Partner may
not sell, exchange, transfer or otherwise dispose of all or substantially all of
the Partnership's assets in a single transaction or a series of related
transactions (including by way of merger, consolidation or other combination
with any other Person) without the Consent of holders of two-thirds of the
outstanding Partnership Units.
Section 7.4 Reimbursement of the General Partner
A. Except as provided in this Section 7.4 and elsewhere in this
Agreement (including the provisions of Articles 5 and 6 regarding distributions,
payments, and allocations to which it may be entitled), the General Partner
shall not be compensated for its services as general partner of the Partnership.
B. The General Partner shall be reimbursed on a monthly basis, or such
other basis as the General Partner may determine in its sole and absolute
discretion, for all expenses it incurs relating to the operation of, or for the
benefit of, the Partnership. The General Partner shall determine in good faith
the amount of expenses incurred by it related to the 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 7.7 hereof.
C. The General Partner also shall be reimbursed for all expenses it
incurs relating to any issuance of additional Partnership Interests or REIT
Shares (in such case based on the percentage of the net proceeds therefrom
contributed or otherwise made available to the Partnership) pursuant to Section
4.2 hereof.
Section 7.5 Outside Activities of the General Partner
A. The General Partner shall devote to the Partnership such time as
may be necessary for the proper performance of its duties as General Partner,
but the General Partner is not required, and is not expected, to devote its full
time to the performance of such duties. Subject to any agreement entered into
pursuant to Section 7.6.E hereof and any other agreements entered into by the
General Partner or its Affiliates
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with the Partnership or a Subsidiary, the General Partner and any officer,
director, employee, agent, trustee, Affiliate or shareholder of the General
Partner shall be entitled to and may have business interests and engage in
business activities in addition to those relating to the Partnership (including,
without limitation, owning and operating real estate and incurring indebtedness
in its own name, whether or not the proceeds of such indebtedness are used for
the benefit of the Partnership), including, without limitation, engaging in
other business interests and activities in direct or indirect competition with
the Partnership. Neither the Partnership nor any Partners shall have any right
by virtue of this Agreement or the partnership relationship established hereby
in or to such other ventures or activities or to the income or proceeds derived
therefrom, and the pursuit of such ventures, even if competitive with the
business of the Partnership, shall not be deemed wrongful or improper. Neither
the General Partner nor any Affiliate of the General Partner shall be obligated
to present any particular opportunity to the Partnership even if such
opportunity is of a character which, if presented to the Partnership, could be
taken by the Partnership, and, regardless of whether or not such opportunity is
competitive with the Partnership, the General Partner or any Affiliate of the
General Partner shall have the right to take for its own account (individually
or as a trustee, partner or fiduciary), or to recommend to others, any such
particular opportunity. The General Partner and any Affiliates of the General
Partner may acquire Limited Partnership Interests and shall be entitled to
exercise all rights of a Limited Partner relating to such Limited Partnership
Interests.
B. The General Partner may, from time to time in its sole and absolute
discretion, purchase and/or redeem REIT Shares (including, without limitation,
in connection with a stock repurchase or similar program). In the event that the
General Partner purchases and/or redeems REIT Shares, then the General Partner
shall purchase and/or redeem such REIT Shares with its own funds and not from
the proceeds of any sale of Units to the Partnership; provided, however, that if
the Partnership purchases Units pro rata from all Partners, the General Partner
may use the proceeds it receives from any such sale of Units to purchase and/or
redeem REIT Shares.
C. The General Partner shall not make any extraordinary distributions
of cash or property to its shareholders or effect a merger or sale of all or
substantially all of its assets without notifying the Limited Partners of its
intention to make such distribution or effect such merger or sale at least 20
business days prior to the record date to determine shareholders eligible to
receive such distribution or to vote upon the approval of such merger or sale.
Section 7.6 Contracts with Affiliates
A. The Partnership may lend or contribute to its Subsidiaries or other
Persons in which it has an equity investment, and such Persons may borrow funds
from the Partnership, on terms and conditions established in the sole and
absolute discretion of the General Partner. The foregoing authority shall not
create any right or benefit in favor of any Subsidiary or any other Person.
B. Except as provided in Section 7.5.A, the Partnership may transfer
assets to joint ventures, other partnerships, corporations or other business
entities in
- 26 -
which it is or thereby becomes a participant upon such terms and
subject to such conditions consistent with this Agreement and applicable law.
C. 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, or borrow funds from, or lend funds
to, the Partnership, directly or indirectly, except pursuant to transactions
that are on terms that are fair and reasonable and no less favorable to the
Partnership than would be obtained from an unaffiliated third party.
D. The General Partner, in its sole and absolute discretion and
without the approval of the Limited Partners, may propose and adopt on behalf of
the Partnership employee benefit plans funded by the Partnership for the benefit
of employees of the General Partner, the Partnership, Subsidiaries of the
Partnership or any Affiliate of any of them in respect of services performed,
directly or indirectly, for the benefit of the Partnership, the General Partner,
or any of the Partnership's Subsidiaries.
E. The General Partner is expressly authorized to enter into, in the
name and on behalf of the Partnership, a right of first opportunity arrangement
and other conflict avoidance agreements with various Affiliates of the
Partnership and the General Partner, on such terms as the General Partner, in
its sole and absolute discretion, believes are advisable.
Section 7.7 Indemnification
A. The Partnership shall indemnify an Indemnitee from and against any
and all losses, claims, damages, liabilities, joint or several, expenses
(including legal fees and expenses), judgments, fines, settlements, and other
amounts arising from any and all claims, demands, actions, suits or proceedings,
civil, criminal, administrative or investigative, that relate to the operations
of the Partnership as set forth in this Agreement in which any Indemnitee may be
involved, or is threatened to be involved, as a party or otherwise, unless it is
established that: (i) the act or omission of the Indemnitee was material to the
matter giving rise to the proceeding and either was committed in bad faith or
was the result of active and deliberate dishonesty, (ii) the Indemnitee actually
received an improper personal benefit in money, property or services, or (iii)
in the case of any criminal proceeding, the Indemnitee had reasonable cause to
believe that the act or omission was unlawful. 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 7.7.A. The termination of any proceeding by conviction or upon a plea of
nolo contendere or its equivalent, or an entry of an order of probation prior to
judgment, creates a rebuttable presumption that the Indemnitee acted in a manner
contrary to that specified in this Section 7.7.A. Any indemnification pursuant
to this Section 7.7 shall be made only out of the assets of the Partnership.
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
- 27 -
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 this Section 7.7.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 7.7 shall be in
addition to any other rights to which an Indemnitee or any other Person may be
entitled under any agreement, pursuant to any vote of the Partners, as a matter
of law or otherwise, and shall continue as to an Indemnitee who has ceased to
serve in such capacity.
D. The Partnership may purchase and maintain insurance, on behalf of
the Indemnitees and such other Persons as the General Partner shall determine,
against any liability that may be asserted against or expenses that may be
incurred by such Person in connection with the Partnership's activities,
regardless of whether the Partnership would have the power to indemnify such
Person against such liability under the provisions of this Agreement.
E. For purposes of this Section 7.7, (i) the Partnership shall be
deemed to have requested an Indemnitee to serve as fiduciary of an employee
benefit plan whenever the performance by it of its duties to the Partnership
also imposes duties on, or otherwise involves services by, it to the plan or
participants or beneficiaries of the plan, (ii) excise taxes assessed on an
Indemnitee with respect to an employee benefit plan pursuant to applicable law
shall constitute fines within the meaning of Section 7.7, and (iii) actions
taken or omitted by the Indemnitee with respect to an employee benefit plan in
the performance of its duties for a purpose reasonably believed by it to be in
the interest of the participants and beneficiaries of the plan shall be deemed
to be for a purpose which is not opposed to the best interests of the
Partnership.
F. In no event may an Indemnitee subject the Limited Partners to
personal liability by reason of the indemnification provisions set forth in this
Agreement.
G. An Indemnitee shall not be denied indemnification in whole or in
part under this Section 7.7 because the Indemnitee had an interest in the
transaction with respect to which the indemnification applies if the transaction
was otherwise permitted by the terms of this Agreement.
H. The provisions of this Section 7.7 are for the benefit of the
Indemnitees, their heirs, successors, assigns and administrators and shall not
be deemed to create any rights for the benefit of any other Persons.
Section 7.8 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 losses sustained or liabilities
incurred as a result of errors in judgment or of any act or omission if the
General Partner acted in good faith.
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B. The Limited Partners expressly acknowledge that the General Partner
is acting on behalf of the Partnership and the General Partner's shareholders
collectively, that the General Partner is under no obligation to consider the
separate interests of the Limited Partners (including, without limitation, the
tax consequences to Limited Partners or Assignees) in deciding whether to cause
the Partnership to take (or decline to take) any actions, and that the General
Partner shall not be liable for monetary damages for losses sustained,
liabilities incurred, or benefits not derived by Limited Partners in connection
with such decisions, provided that the General Partner has acted in good faith.
C. Subject to its obligations and duties as General Partner set forth
in Section 7.1.A 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 misconduct or negligence on the part of any such
agent appointed by it in good faith.
D. Any amendment, modification or repeal of this Section 7.8 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 7.8 as in effect immediately prior to such
amendment, modification or repeal with respect to claims arising from or
relating to matters occurring, in whole or in part, prior to such amendment,
modification or repeal, regardless of when such claims may arise or be asserted.
Section 7.9 Other Matters Concerning the General Partner
A. The General Partner may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement, instrument,
opinion, report, notice, request, consent, order, bond, debenture, or other
paper or document believed by it 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 and other consultants and
advisers selected by it, and any act taken or omitted to be taken in reliance
upon the opinion of such Persons as to matters which such General Partner
reasonably believes to be within 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 attorneys-in-fact. Each such attorney
shall, to the extent provided by the General Partner in the power of attorney,
have full power and authority to do and perform all and every act and duty which
is permitted or required to be done by the General Partner hereunder.
- 29 -
D. Notwithstanding any other provisions of this Agreement or the Act,
any action of the General Partner on behalf of the Partnership or any decision
of the General Partner to refrain from acting on behalf of the Partnership,
undertaken in the good faith belief that such action or omission is necessary or
advisable in order (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 Section 857 or 4981 of the Code, is expressly authorized under this
Agreement and is deemed approved by all of the Limited Partners.
Section 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 for the use and benefit of
the Partnership in accordance with the provisions of this Agreement; provided,
however, 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.
Section 7.11 Reliance by Third Parties
Notwithstanding anything to the contrary in this Agreement, any Person
dealing with the Partnership shall be entitled to assume that the General
Partner has full power and authority to encumber, sell or otherwise use in any
manner any and all assets of the Partnership and to enter into any contracts on
behalf of the Partnership, and such Person shall be entitled to deal with the
General Partner as if it were the Partnership's sole party in interest, both
legally and beneficially. Each Limited Partner hereby waives any and all
defenses or other remedies which may be available against such Person to
contest, negate or disaffirm any action of the General Partner in connection
with any such dealing. In no event shall any Person dealing with the General
Partner or its representatives be obligated to ascertain that the terms of this
Agreement have been complied with or to inquire into the necessity or expedience
of any act or action of the General Partner or its representatives. Each and
every certificate, document or other instrument executed on behalf of the
Partnership by the General Partner or its representatives shall be conclusive
evidence in favor of any and every Person relying thereon or claiming thereunder
that (i) at the time of the execution and delivery of such certificate, document
or instrument, this Agreement was in full force and effect, (ii) the Person
executing and delivering such certificate, document or instrument was duly
authorized and empowered to do so for and on behalf of the Partnership, and
(iii) such
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certificate, document or instrument was duly executed and delivered in
accordance with the terms and provisions of this Agreement and is binding upon
the Partnership.
Section 7.12 Partnership Operations
A. The General Partner intends to use reasonable efforts to cause the
Partnership to operate in a manner (including, without limitation, incurring
indebtedness, establishing and maintaining cash reserves, and undertaking and
financing recurring and non-recurring capital expenditures) that enables the
Partnership to maintain a distribution rate per Class A Unit that is equal to
the distribution rate per REIT Share payable to holders of common stock of the
General Partner (after taking into account any appropriate adjustments in Class
A Units and REIT Shares to reflect stock splits, stock dividends and other
similar adjustments). The General Partner agrees that it will act in good faith
in attempting to accomplish the foregoing objective, but there is no assurance
that such objective will be accomplished and neither the General Partner nor the
Partnership shall have any liability for the failure to achieve such objective
so long as the General Partner acts in good faith.
B. Notwithstanding Section 14.1.A hereof, the General Partner shall
not amend this Section 7.12 in a manner that adversely affects the Limited
Partners without the Consent of a majority of the Percentage Interests of the
Limited Partners, excluding Limited Partnership Interests held by the General
Partner.
ARTICLE 8
RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS
Section 8.1 Limitation of Liability
The Limited Partners shall have no liability under this Agreement
except as expressly provided in this Agreement, including Section 10.5 hereof,
or under the Act.
Section 8.2 Management of Business
No Limited Partner or Assignee (other than the General Partner, any of
its Affiliates or any officer, director, employee, partner, agent or trustee of
the General Partner, the Partnership or any of their Affiliates, in their
capacity as such) shall take part in the operation, management or control
(within the meaning of the Act) of the Partnership's business, transact any
business in the Partnership's name or have the power to sign documents for or
otherwise bind the Partnership. The transaction of any such business by the
General Partner, any of its Affiliates or any officer, director, employee,
partner, agent or trustee of the General Partner, the Partnership or any of
their Affiliates, in their capacity as such, shall not affect, impair or
eliminate the limitations on the liability of the Limited Partners or Assignees
under this Agreement.
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Section 8.3 Outside Activities of Limited Partners
Subject to any agreements entered into pursuant to Section 7.6.E
hereof and any other agreements entered into by a Limited Partner or its
Affiliates with the Partnership or a Subsidiary, any Limited Partner and any
officer, director, employee, agent, trustee, Affiliate or shareholder of any
Limited Partner shall be entitled to and may have business interests and engage
in business activities in addition to those relating to the Partnership,
including business interests and activities in direct or indirect competition
with the Partnership. Neither the Partnership nor any Partners shall have any
rights by virtue of this Agreement in any business ventures of any Limited
Partner or Assignee. None of the Limited Partners nor any other Person shall
have any rights by virtue of this Agreement or the partnership relationship
established hereby in any business ventures of any other Person and such Person
shall have no obligation pursuant to this Agreement to offer any interest in any
such business ventures to the Partnership, any Limited Partner or any such other
Person, even if such opportunity is of a character which, if presented to the
Partnership, any Limited Partner or such other Person, could be taken by such
Person.
Section 8.4 Return of Capital
Except pursuant to the right of redemption set forth in Section 8.6,
no Limited Partner shall be entitled to the withdrawal or return of his Capital
Contribution, except to the extent of distributions made pursuant to this
Agreement or upon termination of the Partnership as provided herein. No Limited
Partner or Assignee shall have priority over any other Limited Partner or
Assignee either as to the return of Capital Contributions or, except to the
extent provided by Exhibit C hereof or as permitted by Section 4.2.B, or
otherwise expressly provided in this Agreement, as to profits, losses or
distributions.
Section 8.5 Rights of Limited Partners Relating to the Partnership
A. In addition to other rights provided by this Agreement or by the
Act, and except as limited by Section 8.5.C hereof, each Limited Partner shall
have the right, for a purpose reasonably related to such Limited Partner's
interest as a limited partner in the Partnership, upon written demand with a
statement of the purpose of such demand and at such Limited Partner's own
expense:
(1) to obtain a copy of the most recent annual and quarterly reports
filed with the Securities and Exchange Commission by the General
Partner pursuant to the Securities Exchange Act of 1934;
(2) to obtain a copy of the Partnership's federal, state and local
income tax returns for each Partnership Year;
(3) to obtain a current list of the name and last known business,
residence or mailing address of each Partner;
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(4) to obtain a copy of this Agreement and the Certificate and all
amendments thereto, together with executed copies of all powers
of attorney pursuant to which this Agreement, the Certificate and
all amendments thereto have been executed; and
(5) to obtain true and full information regarding the amount of cash
and a description and statement of any other property or services
contributed by each Partner and which each Partner has agreed to
contribute in the future, and the date on which each became a
Partner.
B. The Partnership shall notify each Limited Partner in writing of any
change made to the Conversion Factor within ten (10) Business Days of the date
such change becomes effective.
C. Notwithstanding any other provision of this Section 8.5, the
General Partner may keep confidential from the Limited Partners, for such period
of time as the General Partner determines in its sole and absolute discretion to
be reasonable, any information that (i) the General Partner believes to be in
the nature of trade secrets or other information the disclosure of which the
General Partner in good faith believes is not in the best interests of the
Partnership or (ii) the Partnership is required by law or by agreements with
unaffiliated third parties to keep confidential.
Section 8.6 Redemption Right
A. Subject to Section 8.6.C, on or after the date one (1) year after
the Effective Date, each Limited Partner or Assignee, other than the General
Partner, shall have the right (the "Redemption Right") to require the
Partnership to redeem on a Specified Redemption Date all or a portion of the
Partnership Units held by such Limited Partner at a redemption price equal to
and in the form of the Redemption Amount to be paid by the Partnership. The
Redemption Right shall be exercised pursuant to a Notice of Redemption delivered
to the General Partner by the Limited Partner who is exercising the redemption
right (the "Redeeming Partner"). A Limited Partner may not exercise the
Redemption Right for less than one thousand (1,000) Partnership Units or, if
such Limited Partner holds less than one thousand (1,000) Partnership Units, all
of the Partnership Units held by such Partner. The Redeeming Partner shall have
no right, with respect to any Partnership Units so redeemed, to receive any
distributions or Guaranteed Payments paid after the Specified Redemption Date.
B. Notwithstanding the provisions of Section 8.6.A, the General
Partner may, in its sole and absolute discretion, assume directly and satisfy a
Redemption Right by paying to the Redeeming Partner the Redemption Amount on the
Specified Redemption Date, whereupon the General Partner shall acquire the
Partnership Units offered for redemption by the Redeeming Partner and shall be
treated for all purposes of this Agreement as the owner of such Partnership
Units. In the event the General Partner shall exercise its right to satisfy the
Redemption Right in the manner described in the preceding sentence, the
Partnership shall have no obligation to pay any amount to the Redeeming
- 33 -
Partner with respect to such Redeeming Partner's exercise of the Redemption
Right, and each of the Redeeming Partner, the Partnership, and the General
Partner shall treat the transaction between the General Partner and the
Redeeming Partner as a sale of the Redeeming Partner's Partnership Units to the
General Partner for federal income tax purposes. Each Redeeming Partner agrees
to execute such documents as the General Partner may reasonably require in
connection with the issuance of REIT Shares upon exercise of the Redemption
Right.
C. Notwithstanding the provisions of Sections 8.6.A and 8.6.B, a
Partner shall not be entitled to exercise the Redemption Right pursuant to
Section 8.6.A if the delivery of REIT Shares to such Partner on the Specified
Redemption Date would be prohibited under the Articles of Incorporation.
ARTICLE 9
BOOKS, RECORDS, ACCOUNTING AND REPORTS
Section 9.1 Records and Accounting
The General Partner shall keep or cause to be kept at the principal
office of the Partnership appropriate books and records with respect to the
Partnership's business, including, without 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 9.3 hereof. Any records
maintained by or on behalf of the Partnership in the regular course of its
business may be kept on, or be in the form of, punch cards, magnetic tape,
photographs, micrographics or any other information storage device, provided
that the records so maintained are convertible into clearly legible written form
within a reasonable period of time. The books of the Partnership shall be
maintained, for financial and tax reporting purposes, on an accrual basis in
accordance with generally accepted accounting principles.
Section 9.2 Fiscal Year
The fiscal year of the Partnership shall be the calendar year.
Section 9.3 Reports
A. As soon as practicable, but in no event later than one hundred five
(105) days after the close of each Partnership Year, the General Partner shall
make available to each Limited Partner, if requested, 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 generally accepted accounting principles, such
statements to be audited by a nationally recognized firm of independent public
accountants selected by the General Partner.
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B. As soon as practicable, but in no event later than one hundred five
(105) days after the close of each calendar quarter (except the last calendar
quarter of each year), the General Partner shall make available to each Limited
Partner, if requested, 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.
ARTICLE 10
TAX MATTERS
Section 10.1 Preparation of Tax Returns
The General Partner shall arrange for the preparation and timely
filing of all returns of Partnership income, gains, deductions, losses and other
items required of the Partnership for federal and state income tax purposes and
shall use all reasonable efforts to furnish, within ninety (90) days of the
close of each taxable year, the tax information reasonably required by Limited
Partners for federal and state income tax reporting purposes.
Section 10.2 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, however, that the General Partner shall make the
election under Section 754 of the Code in accordance with applicable regulations
thereunder. The General Partner shall have the right to seek to revoke any such
election (including, without limitation, the election under Section 754 of the
Code) upon the General Partner's determination in its sole and absolute
discretion that such revocation is in the best interests of the Partners.
Section 10.3 Tax Matters Partner
A. The General Partner shall be the "tax matters partner" of the
Partnership for federal income tax purposes. Pursuant to Section 6223(c)(3) of
the Code, upon receipt of notice from the IRS of the beginning of an
administrative proceeding with respect to the Partnership, the tax matters
partner shall furnish the IRS with the name, address and profit interest of each
of the Limited Partners; provided, however, that such information is provided to
the Partnership by the Limited Partners.
B. The tax matters partner is authorized, but not required:
1) to enter into any settlement with the IRS with respect to
any administrative or judicial proceedings for the
adjustment of Partnership items required to be taken into
account by a
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Partner for income tax purposes (such administrative
proceedings being referred to as a "tax audit" and such
judicial proceedings being referred to as "judicial
review"), and in the settlement agreement the tax matters
partner may expressly state that such agreement shall bind
all Partners, except that such settlement agreement shall
not bind any Partner (i) who (within the time prescribed
pursuant to the Code and Regulations) files a statement with
the IRS providing that the tax matters partner shall not
have the authority to enter into a settlement agreement on
behalf of such Partner or (ii) who is a "notice partner" (as
defined in Section 6231 of the Code) or a member of a
"notice group" (as defined in Section 6223(b)(2) of the
Code);
2) in the event that a notice of a final administrative
adjustment at the Partnership level of any item required to
be taken into account by a Partner for tax purposes (a
"final adjustment") is mailed to the tax matters partner, to
seek judicial review of such final adjustment, including the
filing of a petition for readjustment with the Tax Court or
the United States Claims Court, or the filing of a complaint
for refund with the District Court of the United States for
the district in which the Partnership's principal place of
business is located;
3) to intervene in any action brought by any other Partner for
judicial review of a final adjustment;
4) to file a request for an administrative adjustment with the
IRS at any time and, if any part of such request is not
allowed by the IRS, to file an appropriate pleading
(petition or complaint) for judicial review with respect to
such request;
5) to enter into an agreement with the IRS to extend the period
for assessing any tax which is attributable to any item
required to be taken into account by a Partner for tax
purposes, or an item affected by such item; and
6) to take any other action on behalf of the Partners of the
Partnership in connection with any tax audit or judicial
review proceeding to the extent permitted by applicable law
or regulations.
The taking of any action and the incurring of any expense by the tax
matters partner in connection with any such proceeding, except to the extent
required by law, is a matter in the sole and absolute discretion of the tax
matters partner and the provisions relating to indemnification of the General
Partner set forth in Section 7.7 of this Agreement shall be fully applicable to
the tax matters partner in its capacity as such.
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C. 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 his duties as such (including legal and accounting fees) shall be
borne by the Partnership. Nothing herein shall be construed to restrict the
Partnership from engaging an accounting firm to assist the tax matters partner
in discharging his duties hereunder, so long as the compensation paid by the
Partnership for such services is reasonable.
Section 10.4 Organizational Expenses
The Partnership shall elect to deduct expenses, if any, incurred by it
in organizing the Partnership ratably over a sixty (60) month period as provided
in Section 709 of the Code.
Section 10.5 Withholding
Each Limited Partner hereby authorizes the Partnership to withhold
from or pay on behalf of or with respect to such Limited Partner any amount of
federal, state, local, or foreign taxes that the General Partner determines that
the Partnership is required to withhold or pay with respect to any amount
distributable or allocable to such Limited Partner pursuant to this Agreement,
including, without limitation, any taxes required to be withheld or paid by the
Partnership pursuant to Section 1441, 1442, 1445, or 1446 of the Code. Any
amount paid on behalf of or with respect to a Limited Partner shall constitute a
loan by the Partnership to such Limited Partner, which loan shall be repaid by
such Limited Partner within fifteen (15) days after notice from the General
Partner that such payment must be made unless (i) the Partnership withholds such
payment from a distribution which would otherwise be made to the Limited Partner
or (ii) the General Partner determines, in its sole and absolute discretion,
that such payment may be satisfied out of the available funds of the Partnership
which would, but for such payment, be distributed to the Limited Partner. Any
amounts withheld pursuant to the foregoing clauses (i) or (ii) shall be treated
as having been distributed to such Limited Partner. Each Limited Partner hereby
unconditionally and irrevocably grants to the Partnership a security interest in
such Limited Partner's Partnership Interest to secure such Limited Partner's
obligation to pay to the Partnership any amounts required to be paid pursuant to
this Section 10.5. In the event that a Limited Partner fails to pay any amounts
owed to the Partnership pursuant to this Section 10.5 when due, the General
Partner may, in its sole and absolute discretion, elect to make the payment to
the Partnership on behalf of such defaulting Limited Partner, and in such event
shall be deemed to have loaned such amount to such defaulting Limited Partner
and shall succeed to all rights and remedies of the Partnership as against such
defaulting Limited Partner (including, without limitation, the right to receive
distributions). Any amounts payable by a Limited Partner hereunder shall bear
interest at the base rate on corporate loans at large United States money center
commercial banks, as published from time to time in the Wall Street Journal,
plus four percentage points (but not higher than the maximum lawful rate) from
the date such amount is due (i.e., fifteen (15) days after demand) until such
amount is paid in full. Each Limited Partner shall take such actions as the
Partnership or the General Partner shall request in order to perfect or enforce
the security interest created hereunder.
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ARTICLE 11
TRANSFERS AND WITHDRAWALS
Section 11.1 Transfer
A. The term "transfer," when used in this Article 11 with respect to a
Partnership Unit, shall be deemed to refer to a transaction by which the General
Partner purports to assign its General Partner Interest to another Person or by
which a Limited Partner purports to assign its Limited Partnership 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 11 does not include any redemption
of Partnership Units by a Limited Partner or acquisition of Partnership Units
from a Limited Partner by the General Partner pursuant to Section 8.6.
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 11.
Any transfer or purported transfer of a Partnership Interest not made in
accordance with this Article 11 shall be null and void.
Section 11.2 Transfer of General Partner's Partnership Interest
A. The General Partner may not transfer any of its General Partner
Interest or Limited Partnership Interests or withdraw as General Partner except
as provided in Section 11.2.B or in connection with a transaction described in
Section 11.2.C or 11.2.D.
B. The General Partner may transfer Limited Partnership Interests held
by it either to the Partnership in accordance with Section 7.5.B hereof or to a
purported holder of REIT Shares in accordance with the provisions of Article 5
of the Articles of Incorporation.
C. Except as otherwise provided in Section 11.2.D, the General Partner
shall not engage in any merger, consolidation or other business combination with
or into another Person or a sale of all or substantially all of its assets (a
"Transaction"), unless either (i) the Board of Directors of the General Partner
determines in good faith that the Transaction likely will not have a material
adverse effect on the value of the Limited Partnership Interests (determined
without regard to any tax consequences to Limited Partners as a result of the
Transaction) or (ii) a majority of the Percentage Interests of the Limited
Partners, excluding Limited Partnership Interests held by the General Partner,
Consents to the Transaction.
D. Notwithstanding Section 11.2.C, the General Partner may engage in a
merger, consolidation or other business combination if (i) substantially all of
the consideration that stockholders of the General Partner are retaining or
receiving in connection with the Transaction is a common equity interest in the
surviving company and
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(ii) the surviving company (if not the General Partner) is assuming all of the
obligations of the General Partner under the Partnership Agreement.
Section 11.3 Limited Partners' Rights to Transfer
A. Subject to the provisions of Sections 11.3.C, 11.3.D, 11.3.E and
11.4, a Limited Partner (other than the General Partner) may transfer, with or
without the consent of the General Partner, all or any portion of his
Partnership Interest, or any of such Limited Partner's rights as a Limited
Partner, provided that prior written notice of such proposed transfer is
delivered to the General Partner.
B. 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.
C. The General Partner may prohibit any transfer by a Limited Partner
of his Partnership Units if, in the opinion of legal counsel to the Partnership,
such transfer would require filing of a registration statement under the
Securities Act of 1933 or would otherwise violate any federal or state
securities laws or regulations applicable to the Partnership or the Partnership
Unit.
D. No transfer by a Limited Partner of his Partnership Units may be
made to any Person if (i) in the opinion of legal counsel for the Partnership,
it would result in the Partnership being treated as an association taxable as a
corporation, or (ii) such transfer is effectuated through an "established
securities market" or a "secondary market (or the substantial equivalent
thereof)" within the meaning of Section 7704 of the Code.
E. No transfer of any Partnership Units may be made to a lender to the
Partnership or any Person who is related (within the meaning of Section
1.752-4(b) of the Regulations) to any lender to the Partnership whose loan
constitutes a Nonrecourse Liability without the consent of the General Partner,
in its sole and absolute discretion, provided that as a condition to such
consent the lender will be required to enter into an arrangement with the
Partnership and the General Partner to exchange or redeem for the Redemption
Amount any Partnership Units in which a security interest is held simultaneously
with the time at which such lender would be deemed to be a partner in the
Partnership for purposes of allocating liabilities to such lender under Section
752 of the Code.
Section 11.4 Substituted Limited Partners
A. No Limited Partner shall have the right to substitute a transferee
as a Limited Partner in his place. The General Partner shall, however, have the
right to consent to the admission of a transferee of the interest of a Limited
Partner pursuant to
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this Section 11.4 as a Substituted Limited Partner, which consent may be given
or withheld by the General Partner in its sole and absolute discretion. The
General Partner's failure or refusal to permit a transferee of any such
interests to become a Substituted Limited Partner shall not give rise to any
cause of action against the Partnership or any Partner.
B. A transferee who has been admitted as a Substituted Limited Partner
in accordance with this Article 11 shall have all the rights and powers and be
subject to all the restrictions and liabilities of a Limited Partner under this
Agreement.
C. Upon the admission of a Substituted Limited Partner, the General
Partner shall amend the Partner Register to reflect the name, address, number of
Partnership Units, and Percentage Interest of such Substituted Limited Partner
and to eliminate or adjust, if necessary, the name, address and interest of the
predecessor of such Substituted Limited Partner.
Section 11.5 Assignees
If the General Partner, in its sole and absolute discretion, does not
consent to the admission of any permitted transferee under Section 11.3 as a
Substituted Limited Partner, as described in Section 11.4, such transferee shall
be considered an Assignee for purposes of this Agreement. An Assignee shall be
entitled to all the rights of an assignee of a limited partnership interest
under the Act, including the right to receive distributions from the Partnership
and the share of Net Income, Net Losses, gain, loss and Recapture Income
attributable to the Partnership Units assigned to such transferee, but shall not
be deemed to be a holder of Partnership Units for any other purpose under this
Agreement, and shall not be entitled to vote such Partnership Units in any
matter presented to the Limited Partners for a vote (such Partnership Units
being deemed to have been voted on such matter in the same proportion as all
Partnership Units held by Limited Partners are voted). 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 11 to the
same extent and in the same manner as any Limited Partner desiring to make an
assignment of Partnership Units.
Section 11.6 General Provisions
A. No Limited Partner may withdraw from the Partnership other than as
a result of a permitted transfer of all of such Limited Partner's Partnership
Units in accordance with this Article 11 or pursuant to redemption of all of its
Partnership Units under Section 8.6.
B. Any Limited Partner who shall transfer all of his Partnership Units
in a transfer permitted pursuant to this Article 11 or pursuant to redemption of
all of its Partnership Units under Section 8.6 shall cease to be a Limited
Partner.
C. Transfers pursuant to this Article 11 may only be made on the first
day of a fiscal quarter of the Partnership, unless the General Partner otherwise
agrees.
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D. If any Partnership Interest is transferred during any quarterly
segment of the Partnership's fiscal year in compliance with the provisions of
this Article 11 or redeemed or transferred pursuant to Section 8.6, Net Income,
Net Losses, each item thereof and all other items attributable to such interest
(other than Guaranteed Payments payable under Section 5.2) for such fiscal year
shall be divided and allocated between the transferor Partner and the transferee
Partner by taking into account their varying interests during the fiscal year in
accordance with Section 706(d) of the Code, using the interim closing of the
books method. Solely for purposes of making such allocations, each of such items
for the calendar month in which the transfer or redemption occurs shall be
allocated to the Person who is a Partner as of midnight on the last day of said
month. All distributions of Available Cash and payments of Guaranteed Payments
with respect to which the Partnership Record Date is before the date of such
transfer or redemption shall be made to the transferor Partner, and all
distributions of Available Cash and payments of Guaranteed Payments thereafter
shall be made to the transferee Partner.
ARTICLE 12
ADMISSION OF PARTNERS
Section 12.1 Admission of Successor General Partner
A successor to all of the General Partner's General Partner Interest
pursuant to Section 11.2 hereof who is proposed to be admitted as a successor
General Partner shall be admitted to the Partnership as the General Partner,
effective upon such transfer. Any such transferee shall carry on the business of
the Partnership without dissolution. In each case, the admission shall be
subject to the successor General Partner 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.
Section 12.2 Admission of Additional Limited Partners
A. A Person who makes a Capital Contribution to the Partnership in
accordance with this Agreement or who exercises an option to receive Partnership
Units shall be admitted to the Partnership as an Additional Limited Partner only
upon furnishing to the General Partner (i) evidence of acceptance in form
satisfactory to the General Partner of all of the terms and conditions of this
Agreement, including, without limitation, the power of attorney granted in
Section 2.4 hereof and (ii) such other documents or instruments as may be
required in the discretion of the General Partner in order to effect such
Person's admission as an Additional Limited Partner.
B. Notwithstanding anything to the contrary in this Section 12.2, no
Person shall be admitted as an Additional Limited Partner without the consent of
the General Partner, which consent may be given or withheld in the General
Partner's sole and absolute discretion. The admission of any Person as an
Additional Limited Partner shall become effective on the date upon which the
name of such Person is recorded on the books
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and records of the Partnership, following the consent of the General Partner to
such admission.
Section 12.3 Amendment of Agreement and Certificate of Limited
Partnership
For the admission to the Partnership of any Partner, the General
Partner shall take all steps necessary and appropriate under the Act to amend
the records of the Partnership and, if necessary, to prepare as soon as
practical an amendment of this Agreement (including an amendment of the Partner
Register) and, if required by law, shall prepare and file an amendment to the
Certificate and may for this purpose exercise the power of attorney granted
pursuant to Section 2.4 hereof.
ARTICLE 13
DISSOLUTION AND LIQUIDATION
Section 13.1 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. the expiration of its term as provided in Section 2.5 hereof;
B. an event of withdrawal of the General Partner, as defined in the
Act (other than an event of bankruptcy), unless, within ninety (90) days after
the withdrawal all the remaining Partners agree in writing to continue the
business of the Partnership and to the appointment, effective as of the date of
withdrawal, of a substitute General Partner;
C. from and after the Effective Date through December 31, 2012, an
election to dissolve the Partnership made by the General Partner, unless any
Original Limited Partner who holds one or more Original Limited Partnership
Units objects in writing to such dissolution within thirty (30) days of
receiving written notice of such election from the General Partner;
D. from and after January 1, 2013 through December 31, 2042, an
election to dissolve the Partnership made by the General Partner, unless
Original Limited Partners holding at least five percent (5%) of the Original
Limited Partnership Units object in writing to such dissolution within thirty
(30) days of receiving written notice of such election from the General Partner;
E. on or after January 1, 2043, an election to dissolve the
Partnership made by the General Partner, in its sole and absolute discretion;
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F. entry of a decree of judicial dissolution of the Partnership
pursuant to the provisions of the Act;
G. the sale of all or substantially all of the assets and properties
of the Partnership; or
H. a final and non-appealable judgment is entered by a court with
appropriate jurisdiction ruling that the General Partner is bankrupt or
insolvent, or a final and non-appealable order for relief is entered by a court
with appropriate jurisdiction against the General Partner, in each case under
any federal or state bankruptcy or insolvency laws as now or hereafter in
effect, unless prior to the entry of such order or judgment all of the remaining
Partners agree in writing to continue the business of the Partnership and to the
appointment, effective as of a date prior to the date of such order or judgment,
of a substitute General Partner.
Section 13.2 Winding Up
A. 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 General Partner (or, in the event there is no remaining General Partner, any
Person elected by a majority in interest of the Limited Partners (the
"Liquidator")) shall be responsible for overseeing the winding up and
dissolution of the Partnership and shall take full account of the Partnership's
liabilities and property and the Partnership property shall be liquidated as
promptly as is consistent with obtaining the fair value thereof, and the
proceeds therefrom (which may, to the extent determined by the General Partner,
include shares of stock in the General Partner) shall be applied and distributed
in the following order:
(1) First, to the payment and discharge of all of the Partnership's
debts and liabilities to creditors other than the Partners;
(2) Second, to the payment and discharge of all of the Partnership's
debts and liabilities to the General Partner (other than the
Guaranteed Payment);
(3) Third, to the payment and discharge of all of the Partnership's
debts and liabilities to the Partners (other than the Guaranteed
Payment);
(4) Fourth, to the payment of the Guaranteed Payment; and
(5) The balance, if any, to the General Partner and Limited Partners
in accordance with their Capital Accounts, after giving effect to
all contributions, distributions, and allocations for all
periods.
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The General Partner shall not receive any additional compensation for any
services performed pursuant to this Article 13.
B. Notwithstanding the provisions of Section 13.2.A hereof which
require liquidation of the assets of the Partnership, but subject to the order
of priorities set forth therein, if prior to or upon dissolution of the
Partnership the Liquidator determines that an immediate sale of part or all of
the Partnership's assets would be impractical or would cause undue loss to the
Partners, the Liquidator may, in its sole and absolute discretion, defer for a
reasonable time the liquidation of any assets except those necessary to satisfy
liabilities of the Partnership (including to those Partners as creditors) and/or
distribute to the Partners, in lieu of cash, as tenants in common and in
accordance with the provisions of Section 13.2.A hereof, undivided interests in
such Partnership assets as the Liquidator deems not suitable for liquidation.
Any such distributions in kind shall be made only if, in the good faith judgment
of the Liquidator, such distributions in kind are in the best interest of the
Partners, and shall be subject to such conditions relating to the disposition
and management of such properties as the Liquidator deems reasonable and
equitable and to any agreements governing the operation of such properties at
such time. The Liquidator shall determine the fair market value of any property
distributed in kind using such reasonable method of valuation as it may adopt.
Section 13.3 Compliance with Timing Requirements of Regulations
In the event the Partnership is "liquidated" within the meaning of
Regulations Section 1.704-1(b)(2)(ii)(g), distributions shall be made pursuant
to this Article 13 to the General Partner and Limited Partners who have positive
Capital Accounts in compliance with Regulations Section 1.704-1(b)(2)(ii)(b)(2).
If any Partner has a deficit balance in his Capital Account (after giving effect
to all contributions, distributions and allocations for all taxable years,
including the year during which such liquidation occurs), such Partner shall
have no obligation to make any contribution to the capital of the Partnership
with respect to such deficit, and such deficit shall not be considered a debt
owed to the Partnership or to any other Person for any purpose whatsoever. In
the discretion of the General Partner, a pro rata portion of the distributions
that would otherwise be made to the General Partner and Limited Partners
pursuant to this Article 13 may be:
(A) distributed to a trust established for the benefit of the General
Partner and Limited Partners for the purposes of liquidating Partnership assets,
collecting amounts owed to the Partnership, and paying any contingent or
unforeseen liabilities or obligations of the Partnership or of the General
Partner arising out of or in connection with the Partnership. The assets of any
such trust shall be distributed to the General Partner and Limited Partners from
time to time, in the reasonable discretion of the General Partner, in the same
proportions as the amount distributed to such trust by the Partnership would
otherwise have been distributed to the General Partner and Limited Partners
pursuant to this Agreement; or
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(B) withheld to provide a reasonable reserve for Partnership
liabilities (contingent or otherwise) and to reflect the unrealized portion of
any installment obligations owed to the Partnership, provided that such withheld
amounts shall be distributed to the General Partner and Limited Partners as soon
as practicable.
Section 13.4 Deemed Distribution and Recontribution
Notwithstanding any other provision of this Article 13, in the event
the Partnership is liquidated within the meaning of Regulations Section
1.704-1(b)(2)(ii)(g) but no Liquidating Event has occurred, the Partnership's
property shall not be liquidated, the Partnership's liabilities shall not be
paid or discharged, and the Partnership's affairs shall not be wound up.
Instead, the Partnership shall be deemed to have distributed the Property in
kind to the General Partner and Limited Partners, who shall be deemed to have
assumed and taken such property subject to all Partnership liabilities, all in
accordance with their respective Capital Accounts. Immediately thereafter, the
General Partner and Limited Partners shall be deemed to have recontributed the
Partnership property in kind to the Partnership, which shall be deemed to have
assumed and taken such property subject to all such liabilities.
Section 13.5 Rights of Limited Partners
Except as otherwise provided in this Agreement, each Limited Partner
shall look solely to the assets of the Partnership for the return of his Capital
Contribution and shall have no right or power to demand or receive property
other than cash from the Partnership. No Limited Partner shall have priority
over any other Limited Partner as to the return of his Capital Contributions,
distributions, or allocations.
Section 13.6 Notice of Dissolution
In the event a Liquidating Event occurs or an event occurs that would,
but for provisions of Section 13.1, result in a dissolution of the Partnership,
the General Partner shall, within thirty (30) days thereafter, provide written
notice thereof to each of the Partners and to all other parties with whom the
Partnership regularly conducts business (as determined in the discretion of the
General Partner) and shall publish notice thereof in a newspaper of general
circulation in each place in which the Partnership regularly conducts business
(as determined in the discretion of the General Partner).
Section 13.7 Cancellation of Certificate of Limited Partnership
Upon the completion of the liquidation of the Partnership cash and
property as provided in Section 13.2 hereof, the Partnership shall be terminated
and the Certificate and all qualifications of the Partnership as a foreign
limited partnership in jurisdictions other than the State of Delaware shall be
canceled and such other actions as may be necessary to terminate the Partnership
shall be taken.
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Section 13.8 Reasonable Time for Winding-Up
A reasonable time shall be allowed for the orderly winding-up of the
business and affairs of the Partnership and the liquidation of its assets
pursuant to Section 13.2 hereof, in order to minimize any losses otherwise
attendant upon such winding-up, and the provisions of this Agreement shall
remain in effect between the Partners during the period of liquidation.
Section 13.9 Waiver of Partition
Each Partner hereby waives any right to partition of the Partnership
property.
ARTICLE 14
AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS
Section 14.1 Amendments
A. Amendments to this Agreement may be proposed by the General Partner
or by any Limited Partners holding twenty-five percent (25%) or more of the
Partnership Interests. Following such proposal, the General Partner shall submit
any proposed amendment to the Limited Partners. The General Partner shall seek
the written vote of the Partners on the proposed amendment or shall call a
meeting to vote thereon and to transact any other business that it may deem
appropriate. For purposes of obtaining a written vote, the General Partner may
require a response within a reasonable specified time, but not less than fifteen
(15) days, and failure to respond in such time period shall constitute a vote
which is consistent with the General Partner's recommendation with respect to
the proposal. Except as provided in Section 14.1.B, 14.1.C or 14.1.D, a proposed
amendment shall be adopted and be effective as an amendment hereto if it is
approved by the General Partner and it receives the Consent of Partners holding
a majority of the Percentage Interests of the Limited Partners (including
Limited Partnership Interests held by the General Partner).
B. Notwithstanding Section 14.1.A, 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:
(1) to add to the obligations of the General Partner or surrender any
right or power granted to the General Partner or any Affiliate of
the General Partner for the benefit of the Limited Partners;
(2) to reflect the admission, substitution, termination, or
withdrawal of Partners in accordance with this Agreement;
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(3) to set forth the rights, powers, duties, and preferences of the
holders of any additional Partnership Interests issued pursuant
to Section 4.2.A or Section 4.2.B hereof;
(4) to reflect a change that is of an inconsequential nature and 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, or make other changes with respect to matters
arising under this Agreement that will not be inconsistent with
law or with the provisions of this Agreement; and
(5) 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 when any action
under this Section 14.1.B is taken.
C. Notwithstanding Section 14.1.A 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 Partner to receive distributions pursuant to Article
5, or the allocations specified in Article 6 (except as permitted pursuant to
Section 4.2 and Section 14.1.B(3) hereof), (iv) alter or modify the Redemption
Right and REIT Shares Amount as set forth in Sections 8.6 and 11.2.B, and
related definitions hereof, (v) cause the termination of the Partnership prior
to the time set forth in Sections 2.5 or 13.1, or (vi) amend this Section
14.1.C. Further, no amendment may alter the restrictions on the General
Partner's authority set forth in Section 7.3 without the Consent specified in
that section.
D. Notwithstanding Section 14.1.A hereof, the General Partner shall
not amend Section 4.2.B, 7.5, 7.6, 11.2 or 14.2 without the Consent of a
majority of the Percentage Interests of the Limited Partners excluding Limited
Partnership Interests held by the General Partner.
Section 14.2 Meetings of the Partners
A. Meetings of the Partners may be called by the General Partner and
shall be called upon the receipt by the General Partner of a written request by
Limited Partners holding 25 percent or more of the Partnership Interests. The
call shall state the nature of the business to be transacted. Notice of any such
meeting shall be given to all Partners not less than seven days nor more than 30
days prior to the date of such meeting. Partners may vote in person or by proxy
at such meeting. Whenever the vote or Consent of Partners is permitted or
required under this Agreement, such vote or Consent may be given at a meeting of
Partners or may be given in accordance with the procedure prescribed
- 47 -
in Section 14.1 hereof. Except as otherwise expressly provided in this
Agreement, the Consent of holders of a majority of the Percentage Interests
shall control.
B. Any action required or permitted to be taken at a meeting of the
Partners may be taken without a meeting if a written consent setting forth the
action so taken is signed by a majority of the Percentage Interests of the
Partners (or such other percentage as is expressly required by this Agreement).
Such consent may be in one instrument or in several instruments, and shall have
the same force and effect as a vote of a majority of the Percentage Interests of
the Partners (or such other percentage as is expressly required by this
Agreement). Such consent shall be filed with the General Partner. An action so
taken shall be deemed to have been taken at a meeting held on the effective date
so certified.
C. Each Limited Partner may authorize any Person or Persons to act for
him by proxy on all matters in which a Limited Partner is entitled to
participate, including waiving notice of any meeting, or voting or participating
at a meeting. Every proxy must be signed by the Limited Partner or his
attorney-in-fact. No proxy shall be valid after the expiration of 11 months from
the date thereof unless otherwise provided in the proxy. Every proxy shall be
revocable at the pleasure of the Limited Partner executing it.
D. Each meeting of Partners shall be conducted by the General Partner
or such other Person as the General Partner may appoint pursuant to such rules
for the conduct of the meeting as the General Partner or such other Person deems
appropriate.
ARTICLE 15
GENERAL PROVISIONS
Section 15.1 Addresses and Notice
Any notice, demand, request or report required or permitted to be
given or made to a Partner or Assignee under this Agreement shall be in writing
and shall be deemed given or made when delivered in person or when sent by first
class United States mail or by other means of written communication to the
Partner or Assignee at the address set forth in the Partner Register or such
other address as the Partners shall notify the General Partner in writing.
Section 15.2 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.
Section 15.3 Pronouns and Plurals
- 48 -
Whenever the context may require, any pronoun used in this Agreement
shall include the corresponding masculine, feminine or neuter forms, and the
singular form of nouns, pronouns and verbs shall include the plural and vice
versa.
Section 15.4 Further Action
The parties shall execute and deliver all documents, provide all
information and take or refrain from taking action as may be necessary or
appropriate to achieve the purposes of this Agreement.
Section 15.5 Binding Effect
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their heirs, executors, administrators, successors, legal
representatives and permitted assigns.
Section 15.6 Creditors
None of the provisions of this Agreement shall be for the benefit of,
or shall be enforceable by, any creditor of the Partnership.
Section 15.7 Waiver
No failure by any party to insist upon the strict performance of any
covenant, duty, agreement or condition of this Agreement or to exercise any
right or remedy consequent upon a breach thereof shall constitute waiver of any
such breach or any other covenant, duty, agreement or condition.
Section 15.8 Counterparts
This Agreement may be executed in counterparts, all of which together
shall constitute one agreement binding on all the parties hereto,
notwithstanding that all such parties are not signatories to the original or the
same counterpart. Each party shall become bound by this Agreement immediately
upon affixing its signature hereto.
Section 15.9 Applicable Law
This Agreement shall be construed in accordance with and governed by
the laws of the State of Delaware, without regard to the principles of conflicts
of law.
- 49 -
Section 15.10 Invalidity of Provisions
If any provision of this Agreement is or becomes invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein shall not be affected thereby.
- 50 -
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.
CARRAMERICA REALTY CORPORATION
By: /s/ Xxxxx X. Xxxxxx
-------------------------------
Name: Xxxxx X. Xxxxxx
Title: Managing Director - General
Counsel & Corp. Secretary
LIMITED PARTNERS:
By: CarrAmerica Realty Corporation, as
Attorney-in-Fact for the Limited
Partners
By: /s/ Xxxxx X. Xxxxxx
---------------------------
Name: Xxxxx X. Xxxxxx
Title: Managing Director - General
Counsel & Corp. Secretary
- 51 -
EXHIBIT A
Intentionally Omitted
EXHIBIT B
CAPITAL ACCOUNT MAINTENANCE
1. Capital Accounts of the Partners
A. The Partnership shall maintain for each Partner a separate Capital
Account in accordance with the rules of Regulations Section 1.704-1 (b)(2)(iv).
Such Capital Account shall be increased by (i) the amount of all Capital
Contributions made by such Partner to the Partnership pursuant to this Agreement
and (ii) all items of Partnership income and gain (including income and gain
exempt from tax) computed in accordance with Section 1.B hereof and allocated to
such Partner pursuant to Section 6.1.A of the Agreement and Exhibit C hereof,
and decreased by (x) the amount of cash or Agreed Value of all actual and deemed
distributions of cash or property made to such Partner pursuant to this
Agreement and (y) all items of Partnership deduction and loss computed in
accordance with Section 1.B hereof and allocated to such Partner pursuant to
Section 6.1.B of the Agreement and Exhibit C hereof.
B. For purposes of computing the amount of any item of income, gain,
deduction or loss to be reflected in the Partners' Capital Accounts, unless
otherwise specified in this Agreement, the determination, recognition and
classification of any such item shall be the same as its determination,
recognition and classification for federal income tax purpose determined in
accordance with Section 703(a) of the Code (for this purpose all items of
income, gain, loss or deduction require to be stated separately pursuant to
Section 703(a)(1) of the Code shall be included in taxable income or loss), with
the following adjustments:
(1) Except as otherwise provided in Regulations Section
1.704-1(b)(2)(iv)(m), the computation of all items of income,
gain, loss and deduction shall be made without regard to any
election under Section 754 of the Code which may be made by the
Partnership, provided that the amounts of any adjustments to the
adjusted bases of the assets of the Partnership made pursuant to
Section 734 of the Code as a result of the distribution of
property by the Partnership to a Partner (to the extent that such
adjustments have not previously been reflected in the Partners'
Capital Accounts) shall be reflected in the Capital Accounts of
the Partners in the manner and subject to the limitations
prescribed in Regulations Section 1.704-1(b)(2)(iv)(m).
(2) The computation of all items of income, gain, loss and deduction
shall be made without regard to the fact that items described in
Sections 705(a)(1)(B) or 705(a)(2)(B) of the Code are not
includable in gross income or are neither currently deductible
nor capitalized for federal income tax purposes.
(3) Any income, gain or loss attributable to the taxable disposition
of any Partnership property shall be determined as if the
adjusted basis of such property as of such date of disposition
were equal in amount to
the Partnership's Carrying Value with respect to such property as
of such date.
(4) In lieu of the depreciation, amortization, and other cash
recovery deductions taken into account in computing such taxable
income or loss, there shall be taken into account Depreciation
for such fiscal year.
(5) In the event the Carrying Value of any Partnership Asset is
adjusted pursuant to Section 1.D hereof, the amount of any such
adjustment shall be taken into account as gain or loss from the
disposition of such asset.
(6) Any items specially allocated under Section 2 of Exhibit C hereof
shall not be taken into account.
C. Generally, a transferee of a Partnership Unit shall succeed to a
pro rata portion of the Capital Account of the transferor; provided, however,
that, if the transfer causes a termination of the Partnership under Section
708(b)(1)(B) of the Code, the Partnership's properties shall be deemed to have
been distributed in liquidation of the Partnership to the Partners (including
the transferee of a Partnership Interest) and recontributed by such Partners in
reconstitution of the Partnership. In any event, the Carrying Values of the
Partnership properties shall be adjusted immediately prior to such deemed
distribution pursuant to Section 1.D.(2) hereof. The Capital Accounts of such
reconstituted Partnership shall be maintained in accordance with the principles
of this Exhibit B.
D. (1) Consistent with the provisions of Regulations Section
1.704-1(b)(2)(iv)(f), and as provided in Section 1.D.(2), the Carrying Values of
all Partnership assets shall be adjusted upward or downward to reflect any
Unrealized Gain or Unrealized Loss attributable to such Partnership property, as
of the times of the adjustments provided in Section 1.D.(2) hereof, as if such
Unrealized Gain or Unrealized Loss had been recognized on an actual sale of each
such property and allocated pursuant to Section 6.1 of the Agreement.
(2) Such adjustments shall be made as of the following times: (a)
immediately prior to 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) immediately
prior to 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) immediately prior to the
liquidation of the Partnership within the meaning of Regulations
Section 1.704-1(b)(2)(ii)(g), provided however that adjustments
pursuant to clauses (a) and (b) above shall be made only if the
General Partner determines that such adjustments are necessary or
appropriate to reflect the relative economic interests of the
Partners in the Partnership.
- 3 -
(3) In accordance with Regulations Section 1.704-1(b)(2)(iv)(e), the
Carrying Value of Partnership assets distributed in kind shall be
adjusted upward or downward to reflect any Unrealized Gain or
Unrealized Loss attributable to such Partnership property, as of
the time any such asset is distributed.
(4) In determining such unrealized Gain or Unrealized Loss, the
aggregate cash amount and fair market value of all Partnership
assets (including cash or cash equivalents) shall be determined
by the General Partner using such reasonable method of valuation
as it may adopt, or in the case of a liquidating distribution
pursuant to article 13 of the Agreement, be determined and
allocated by the Liquidator using such reasonable methods of
valuation as it may adopt. The General Partner, or the
Liquidator, as the case may be, shall allocate such aggregate
value among the assets of the Partnership (in such manner as it
determines in its sole and absolute discretion to arrive at a
fair market value for individual properties).
E. The provisions of this Agreement relating to the maintenance of
Capital Accounts are intended to comply with Regulations Section 1.704-1(b), and
shall be interpreted and applied in a manner consistent with such Regulations.
In the event the General Partner shall determine that it is prudent to modify
the manner in which the Capital Accounts, or any debits or credits thereto
(including, without limitation, debits or credits relating to liabilities which
are secured by contributed or distributed property or which are assumed by the
Partnership, the General Partner, or the Limited Partners) 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 Person pursuant to Article 13 of the Agreement upon the
dissolution of the Partnership. The General Partner also shall (i) make any
adjustments that are necessary or appropriate to maintain equality between the
Capital Accounts of the Partners and the amount of Partnership capital reflected
on the Partnership's balance sheet, as computed for book purposes, in accordance
with Regulations Section 1.704-1(b)(2)(iv)(q), and (ii) make any appropriate
modifications in the event unanticipated events might otherwise cause this
Agreement not to comply with Regulations Section 1.704-(b).
2. No Interest
No interest shall be paid by the Partnership on Capital Contributions
or on balances in Partners' Capital Accounts.
3. No Withdrawal
No Partner shall be entitled to withdraw any part of his Capital
Contribution or his Capital Account or to receive any distribution from the
Partnership, except as provided in Articles 4, 5, 7 and 13 hereof.
- 4 -
EXHIBIT C
SPECIAL ALLOCATION RULES
1. Special Allocation Rules
Notwithstanding any other provision of the Agreement or this Exhibit
C, the following special allocations shall be made in the following order:
A. Minimum Gain Chargeback. Notwithstanding the provisions of Section
6.1 of the Agreement or any other provisions of this Exhibit C, if there is a
net decrease in Partnership Minimum Gain during any Partnership Year, each
Partner shall be specially allocated items of Partnership income and gain for
such year (and, if necessary, subsequent years) in an amount equal to such
Partner's share of the net decrease in Partnership Minimum Gain, as determined
under Regulations Section 1.704-2(g). 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(f)(6). This Section
1.A. is intended to comply with the minimum gain chargeback requirements in
Regulations Section 1.704-2(f) and for purposes of this Section 1.A. only, each
Partner's Adjusted Capital Account Deficit shall be determined prior to any
other allocations pursuant to Section 6.1 of the Agreement with respect to such
fiscal year and without regard to any decrease in Partner Minimum Gain during
such fiscal year.
B. Partner Minimum Gain Chargeback. Notwithstanding any other
provision of Section 6.1 of the Agreement or any other provisions of this
Exhibit C (except Section 1.A. hereof), if there is a net decrease in Partner
Minimum Gain attributable to a Partner Nonrecourse Debt during any Partnership
fiscal year, 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 year (and, if necessary, subsequent 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)(5). Allocations pursuant to the
previous sentence shall be made in proportion to the respective amounts required
to be allocated to each General Partner and Limited Partner pursuant thereto.
The items to be so allocated shall be determined in accordance with Regulations
Section 1.704-2(i)(4). This Section 1.B. is intended to comply with the minimum
gain chargeback requirement in such Section of the Regulations and shall be
interpreted consistently therewith. Solely for purposes of this Section 1.B.,
each Partner's Adjusted Capital Account Deficit shall be determined prior to any
other allocations pursuant to Section 6.1 of the Agreement or this Exhibit with
respect to such fiscal year, other than allocation pursuant to Section 1.A.
hereof.
C. Qualified Income Offset. In the event any Partner unexpectedly
receives any adjustments, allocations or distributions described in Regulations
Sections 1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5), or
1.704-1(b)(2)(ii)(d)(6), and after giving effect to the allocations required
under Sections 1.A. and 1.B. hereof, such Partner has an Adjusted Capital
Account Deficit, items of Partnership income and gain shall be
specifically allocated to such Partner in an amount and manner sufficient to
eliminate, to the extent required by the Regulations, its Adjusted Capital
Account Deficit created by such adjustments, allocations or distributions as
quickly as possible.
D. Nonrecourse Deductions. Nonrecourse Deductions for any taxable
period shall be allocated to the Partners in accordance with their respective
Percentage Interests. If the General Partner determines in its good faith
discretion that the Partnership's Nonrecourse Deductions must be allocated in a
different ratio to satisfy the safe harbor requirements of the Regulations
promulgated under Section 704(b) of the Code, the General Partner is authorized,
upon notice to the Limited Partners, to revise the prescribed ratio to the
numerically closest ratio which does satisfy such requirements.
E. Partner Nonrecourse Deductions. Any Partner Nonrecourse Deductions
for any fiscal year 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)(2).
F. Code Section 754 Adjustments. To the extent an adjustment to the
adjusted tax basis of any Partnership asset pursuant to Section 734(b) or 743(b)
of the Code is required, pursuant to Regulations Section 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 item of 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.
2. Allocations for Tax Purposes
A. Except as otherwise provided in this Section 2, 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 Section 6.1 of the Agreement
and Section 1 of this Exhibit C.
B. In an attempt to eliminate Book-Tax Disparities attributable to a
Contributed Property or Adjusted Property, items of income, gain, loss, and
deduction shall be allocated for federal income tax purposes among the Partners
as follows:
(1) (a) In the case of a Contributed Property, such items
attributable thereto shall be allocated among the Partners
consistent with the principles of Section 704(c) of the Code that
takes into account the variation between the 704(c) Value of such
property and its adjusted basis at the time of contribution; and
(b) any item of Residual Gain or Residual Loss attributable to a
Contributed Property shall be allocated among the Partners in the
same manner as its correlative item of "book" gain or loss is
allocated
- 2 -
pursuant to Section 6.1 of the Agreement and Section 1 of this
Exhibit C.
(2) (a) In the case of an Adjusted Property, such items shall
(1) first, be allocated among the Partners in a manner
consistent with the principles of Section 704(c) of the Code
to take into account the Unrealized Gain or Unrealized Loss
attributable to such property and the allocations thereof
pursuant to Exhibit B and
(2) second, in the event such property was originally a
Contributed Property, be allocated among the Partners in a
manner consistent with Section 2.B.(1) of this Exhibit C;
and
(b) any item of Residual Gain or Residual Loss attributable to an
Adjusted Property shall be allocated among the Partners in the
same manner as its correlative items of "book" gain or loss is
allocated pursuant to Section 6.1 of the Agreement and Section 1
of this Exhibit C.
(3) All other items of income, gain, loss and deduction shall be
allocated among the Partners in the same manner as their
correlative item of "book" gain or loss is allocated pursuant to
Section 6.1 of the Agreement and Section 1 of this Exhibit C.
C. To the extent Treasury Regulations promulgated pursuant to Section
704(c) of the Code permit a Partnership to utilize alternative methods to
eliminate the disparities between the agreed value of property and its adjusted
basis, the General Partner shall have the authority to elect the method to be
used by the Partnership and such election shall be binding on all Partners.
- 3 -
EXHIBIT D
VALUE OF CONTRIBUTED PROPERTY
Underlying Property 704(c) Value Agreed Value
-------------------- ------------ ------------
International Square $143,457,708 $ 55,176,000
1730 Pennsylvania 33,668,893 13,497,385
0000 X Xxxxxx 27,332,666 11,919,666
000 00xx Xxxxxx 24,867,852 3,044,852
1747 Pennsylvania 27,120,302 12,319,802
0000 00xx Xxxxxx 30,475,660 2,626,844
0000 X Xxxxxx 27,391,434 8,632,734
AARP Headquarters 35,814,576 653,136
0000 Xxx Xxxxxx 2,582,156 332,156
Xxxxxxx Office/Hotel 6,436,750 1,954,150
0000 Xxx Xxxxxx 728,270 261,250
Bond Building 5,942,450 110,000
------------ ------------
$365,818,717 $110,527,975
============ ============
EXHIBIT E
NOTICE OF REDEMPTION
The undersigned hereby irrevocably (i) redeems
-------------------
Limited Partnership Units in Xxxx Realty, L.P. in accordance with the terms of
the Limited Partnership Agreement of Xxxx Realty, L.P. and the Redemption Right
referred to therein, (ii) surrenders such Limited Partnership Units and all
right, title and interest therein, and (iii) directs that the Cash Amount or
REIT Shares (as determined by the General Partner) deliverable upon exercise of
the Redemption Right be delivered to the address specified below, and if REIT
Shares are to be delivered, such REIT Shares be registered or placed in the
name(s) and at the address(es) specified below.
Dated:
-------------------
Name of Limited Partner:
--------------------------------------
(Signature of Limited Partner)
--------------------------------------
(Street Address)
--------------------------------------
(City) (State) (Zip Code)
Signature Guaranteed by:
--------------------------------------
If REIT Shares are to be issued, issue to:
Please insert social security or identifying number:
Name:
