--------------------------------------------------------------------------------
AGREEMENT OF LIMITED PARTNERSHIP
OF
NORTHSTAR REALTY FINANCE LIMITED PARTNERSHIP
a Delaware limited partnership
----------------------
THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"),
OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD,
TRANSFERRED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH
REGISTRATION, UNLESS THE TRANSFEROR DELIVERS TO THE PARTNERSHIP
AN OPINION OF COUNSEL SATISFACTORY TO THE PARTNERSHIP, IN FORM
AND SUBSTANCE SATISFACTORY TO THE PARTNERSHIP, TO THE EFFECT
THAT THE PROPOSED SALE, TRANSFER OR OTHER DISPOSITION MAY BE
EFFECTED WITHOUT REGISTRATION UNDER THE ACT AND UNDER
APPLICABLE STATE SECURITIES OR "BLUE SKY" LAWS.
dated as of [_____________________]
--------------------------------------------------------------------------------
TABLE OF CONTENTS
-----------------
Page
----
ARTICLE I DEFINED TERMS...............................................................................1
ARTICLE II ORGANIZATIONAL MATTERS.....................................................................20
Section 2.1 Organization..........................................................20
Section 2.2 Name..................................................................20
Section 2.3 Registered Office and Agent; Principal Office.........................20
Section 2.4 Power of Attorney.....................................................21
Section 2.5 Term..................................................................22
ARTICLE III PURPOSE....................................................................................22
Section 3.1 Purpose and Business..................................................22
Section 3.2 Powers................................................................22
Section 3.3 Partnership Only for Partnership Purposes.............................23
Section 3.4 Representations and Warranties by the Parties.........................23
ARTICLE IV CAPITAL CONTRIBUTIONS......................................................................26
Section 4.1 Capital Contributions of the Partners.................................26
Section 4.2 Issuances of Additional Partnership Interests.........................26
Section 4.3 Additional Funds and Capital Contributions............................27
Section 4.4 Stock Option Plan.....................................................29
Section 4.5 LTIP Units............................................................29
Section 4.6 No Interest; No Return................................................32
Section 4.7 Conversion or Redemption of Preferred Shares..........................32
Section 4.8 Conversion or Redemption of Junior Shares.............................32
Section 4.9 Conversion of LTIP Units..............................................33
Section 4.10 Other Contribution Provisions.........................................36
Section 4.11 Not Publicly Traded...................................................36
ARTICLE V DISTRIBUTIONS..............................................................................36
Section 5.1 Requirement and Characterization of Distributions.....................36
Section 5.2 Distributions in Kind.................................................37
Section 5.3 Amounts Withheld......................................................37
Section 5.4 Distributions Upon Liquidation........................................37
Section 5.5 Distributions to Reflect Issuance of Additional Partnership Units.....37
i
Page
----
Section 5.6 Restricted Distributions..............................................37
ARTICLE VI ALLOCATIONS................................................................................38
Section 6.1 Timing and Amount of Allocations of Net Income and Net Loss...........38
Section 6.2 General Allocations...................................................38
Section 6.3 Additional Allocation Provisions......................................38
Section 6.4 Tax Allocations.......................................................42
ARTICLE VII MANAGEMENT AND OPERATIONS OF BUSINESS......................................................43
Section 7.1 Management............................................................43
Section 7.2 Certificate of Limited Partnership....................................46
Section 7.3 Restrictions on General Partner's Authority...........................47
Section 7.4 Reimbursement of the General Partner..................................49
Section 7.5 Outside Activities of the General Partner.............................50
Section 7.6 Contracts with Affiliates.............................................50
Section 7.7 Indemnification.......................................................51
Section 7.8 Liability of the General Partner......................................53
Section 7.9 Other Matters Concerning the General Partner..........................54
Section 7.10 Title to Partnership Assets...........................................55
Section 7.11 Reliance by Third Parties.............................................55
ARTICLE VIII RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS.................................................56
Section 8.1 Limitation of Liability...............................................56
Section 8.2 Management of Business................................................56
Section 8.3 Outside Activities of Limited Partners................................56
Section 8.4 Return of Capital.....................................................57
Section 8.5 Rights of Limited Partners Relating to the Partnership................57
Section 8.6 Redemption Rights of Qualifying Parties...............................58
ARTICLE IX BOOKS, RECORDS, ACCOUNTING AND REPORTS.....................................................64
Section 9.1 Records and Accounting................................................64
Section 9.2 Partnership Year......................................................64
Section 9.3 Reports...............................................................65
ARTICLE X TAX MATTERS................................................................................65
Section 10.1 Preparation of Tax Returns............................................65
Section 10.2 Tax Elections.........................................................65
ii
Page
----
Section 10.3 Tax Matters Partner...................................................66
Section 10.4 Withholding...........................................................67
Section 10.5 Organizational Expenses...............................................68
ARTICLE XI TRANSFERS AND WITHDRAWALS..................................................................68
Section 11.1 Transfer..............................................................68
Section 11.2 Transfer of General Partner's Partnership Interest....................69
Section 11.3 Limited Partners' Rights to Transfer..................................69
Section 11.4 Substituted Limited Partners..........................................71
Section 11.5 Assignees.............................................................72
Section 11.6 General Provisions....................................................72
ARTICLE XII ADMISSION OF PARTNERS......................................................................74
Section 12.1 Admission of Successor General Partner................................74
Section 12.2 Admission of Additional Limited Partners..............................74
Section 12.3 Amendment of Agreement and Certificate................................75
Section 12.4 Admission of Initial Limited Partners.................................75
Section 12.5 Limit on Number of Partners...........................................75
ARTICLE XIII DISSOLUTION, LIQUIDATION AND TERMINATION...................................................75
Section 13.1 Dissolution...........................................................75
Section 13.2 Winding Up............................................................76
Section 13.3 Deemed Distribution and Recontribution................................78
Section 13.4 Rights of Limited Partners............................................78
Section 13.5 Notice of Dissolution.................................................78
Section 13.6 Cancellation of Certificate of Limited Partnership....................79
Section 13.7 Reasonable Time for Winding-Up........................................79
ARTICLE XIV PROCEDURES FOR ACTIONS AND CONSENTS OF PARTNERS; AMENDMENTS; MEETINGS......................79
Section 14.1 Procedures for Actions and Consents of Partners.......................79
Section 14.2 Amendments............................................................79
Section 14.3 Meetings of the Partners..............................................80
Section 14.4 Voting Rights of LTIP Units...........................................80
ARTICLE XV GENERAL PROVISIONS.........................................................................81
Section 15.1 Addresses and Notice..................................................81
Section 15.2 Titles and Captions...................................................82
iii
Page
----
Section 15.3 Pronouns and Plurals..................................................82
Section 15.4 Further Action........................................................82
Section 15.5 Binding Effect........................................................82
Section 15.6 Waiver................................................................82
Section 15.7 Counterparts..........................................................83
Section 15.8 Applicable Law........................................................83
Section 15.9 Entire Agreement......................................................83
Section 15.10 Invalidity of Provisions..............................................83
Section 15.11 Limitation to Preserve REIT Status....................................83
Section 15.12 No Partition..........................................................84
Section 15.13 No Third-Party Rights Created Hereby..................................84
Section 15.14 No Rights as Stockholders.............................................85
Exhibit A
PARTNERS AND PARTNERSHIP UNITS.....................................................................A-1
Exhibit B
EXAMPLES REGARDING ADJUSTMENT FACTOR...............................................................B-1
Exhibit C
NOTICE OF REDEMPTION...............................................................................C-1
Exhibit D
FORM OF UNIT CERTIFICATE...........................................................................D-1
Exhibit E
NOTICE OF ELECTION BY PARTNER TO CONVERT LTIP UNITS INTO PARTNERSHIP COMMON UNITS..................E-1
Exhibit F
NOTICE OF ELECTION BY PARTNERSHIP TO FORCE CONVERSION OF LTIP UNITS INTO PARTNERSHIP COMMON UNITS..F-1
iv
AGREEMENT OF
LIMITED PARTNERSHIP OF NORTHSTAR REALTY FINANCE LIMITED
THIS AGREEMENT OF LIMITED PARTNERSHIP OF NORTHSTAR REALTY FINANCE
LIMITED PARTNERSHIP, dated as of [___________________] is entered into by and
among NorthStar Realty Finance Corp., a Maryland corporation (the "General
Partner") and the limited partners that are a party hereto from time to time.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
ARTICLE I
DEFINED TERMS
The following definitions shall be for all purposes, unless otherwise
clearly indicated to the contrary, applied to the terms used in this Agreement.
"Act" means the Delaware Revised Uniform Limited Partnership Act, as it
may be amended from time to time, and any successor to such statute.
"Actions" has the meaning set forth in Section 7.7 hereof.
"Additional Funds" has the meaning set forth in Section 4.3(a) hereof.
"Additional Limited Partner" means a Person who is admitted to the
Partnership as a Limited Partner pursuant to Section 4.2, Section 4.5 and
Section 12.2 hereof and who is shown as such on the books and records of the
Partnership.
"Adjusted Capital Account Deficit" means, with respect to any Partner,
the deficit balance, if any, in such Partner's Capital Account as of the end of
the relevant Partnership Year, after giving effect to the following adjustments:
(i) decrease such deficit by any amounts that such Partner is
obligated to restore pursuant to this Agreement or by operation of law upon
liquidation of such Partner's Partnership Interest or is deemed to be
obligated to restore pursuant to the penultimate sentence of each of
Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5); and
(ii) increase such deficit by the items described in Regulations
Section 1.704-1(b)(2)(ii)(d)(4),(5) and (6).
The foregoing definition of "Adjusted Capital Account Deficit" is intended to
comply with the provisions of Regulations Section 1.704-1(b)(2)(ii)(d) and shall
be interpreted consistently therewith.
"Adjustment Event" has the meaning set forth in Section 4.5(b) hereof.
"Adjustment Factor" means 1.0; provided, however, that in the event
that:
(i) the General Partner (a) 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, (b) splits or
subdivides its outstanding REIT Shares or (c) effects a reverse stock split
or otherwise combines its outstanding REIT Shares into a smaller number of
REIT Shares, the Adjustment Factor shall be adjusted by multiplying the
Adjustment Factor previously in effect by a fraction, (i) the numerator of
which shall be the number of REIT Shares issued and outstanding on the
record date for such dividend, distribution, split, subdivision, reverse
split or combination (assuming for such purposes that such dividend,
distribution, split, subdivision, reverse split or combination has occurred
as of such time) and (ii) 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, split,
subdivision, reverse split or combination;
(ii) the General Partner distributes any rights, options or
warrants to all holders of its REIT Shares to subscribe for or to purchase
or to otherwise acquire REIT Shares (or other securities or rights
convertible into, exchangeable for or exercisable for REIT Shares) at a
price per share less than the Value of a REIT Share on the record date for
such distribution (each a "Distributed Right"), then the Adjustment Factor
shall be adjusted by multiplying the Adjustment Factor previously in effect
by a fraction (a) the numerator of which shall be the number of REIT Shares
issued and outstanding on the record date plus the maximum number of REIT
Shares purchasable under such Distributed Rights and (b) the denominator of
which shall be the number of REIT Shares issued and outstanding on the
record date plus a fraction (1) the numerator of which is the maximum
number of REIT Shares purchasable under such Distributed Rights times the
minimum purchase price per REIT Share under such Distributed Rights and (2)
the denominator of which is the Value of a REIT Share as of the record
date; provided, however, that, if any such Distributed Rights expire or
become no longer exercisable, then the Adjustment Factor shall be adjusted,
effective retroactive to the date of distribution of the Distributed
Rights, to reflect a reduced maximum number of REIT Shares or any change in
the minimum purchase price for the purposes of the above fraction; and
(iii) the General Partner shall, by dividend or otherwise,
distribute to all holders of its REIT Shares evidences of its indebtedness
or assets
2
(including securities, but excluding any dividend or distribution referred
to in subsection (i) above), which evidences of indebtedness or assets
relate to assets not received by the General Partner pursuant to a pro rata
distribution by the Partnership, then the Adjustment Factor shall be
adjusted to equal the amount determined by multiplying the Adjustment
Factor in effect immediately prior to the close of business on the date
fixed for determina tion of shareholders entitled to receive such
distribution by a fraction (i) the numerator of which shall be such Value
of a REIT Share on the date fixed for such determination and (ii) the
denominator of which shall be the Value of a REIT Share on the dates fixed
for such determination less the then fair market value (as determined by
the General Partner, whose determination shall be conclusive) of the
portion of the evidences of indebtedness or assets so distributed
applicable to one REIT Share.
Any adjustments to the Adjustment Factor shall become effective immediately
after the effective date of such event, retroactive to the record date, if any,
for such event, provided, however, that any Limited Partner may waive, by
written notice to the General Partner, the effect of any adjustment to the
Adjustment Factor applicable to the Partnership Common Units held by such
Limited Partner, and, thereafter, such adjustment will not be effective as to
such Partnership Common Units. For illustrative purposes, examples of
adjustments to the Adjustment Factor are set forth on Exhibit B attached hereto.
"Affiliate" means, with respect to any Person, any Person directly or
indirectly controlling or controlled by or under common control with such
Person. For the purposes of this definition, "control" when used with respect to
any Person means the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of such Person, whether
through the ownership of voting securities, by contract or otherwise, and the
terms "controlling" and "controlled" have meanings correlative to the foregoing.
"Agreement" means this Agreement of Limited Partnership of NorthStar
Realty Finance Limited Partnership, as it may be amended, supplemented or
restated from time to time.
"Applicable Percentage" has the meaning set forth in Section 8.6(b)
hereof.
"Appraisal" means, with respect to any assets, the written opinion of
an independent third party experienced in the valuation of similar assets,
selected by the General Partner in good faith. Such opinion may be in the form
of an opinion by such independent third party that the value for such property
or asset as set by the General Partner is fair, from a financial point of view,
to the Partnership.
"Assignee" means a Person to whom one or more Partnership Common 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 hereof.
3
"Available Cash" means, with respect to any period for which such
calculation is being made,
(i) the sum, without duplication, of:
(1) the Partnership's Net Income or Net Loss (as the case
may be) for such period,
(2) Depreciation and all other noncash charges to the extent
deducted in determining Net Income or Net Loss for such period,
(3) the amount of any reduction in reserves of the
Partnership referred to in clause (ii)(6) below (including, without
limitation, reductions resulting because the General Partner determines
such amounts are no longer necessary),
(4) the excess, if any, of the net cash proceeds from the
sale, exchange, disposition, financing or refinancing of Partnership
property for such period over the gain (or loss, as the case may be)
recognized from such sale, exchange, disposition, financing or refinancing
during such period (excluding Terminating Capital Transactions), and
(5) all other cash received (including amounts previously
accrued as Net Income and amounts of deferred income) or any net amounts
borrowed by the Partnership for such period that was not included in
determining Net Income or Net Loss for such period;
(ii) less the sum, without duplication, of:
(1) all principal debt payments made during such period by
the Partnership,
(2) capital expenditures made by the Partnership during such
period,
(3) investments in any entity (including loans made thereto)
to the extent that such investments are not otherwise described in clause
(ii)(1) or clause (ii)(2) above,
(4) all other expenditures and payments not deducted in
determining Net Income or Net Loss for such period (including amounts paid
in respect of expenses previously accrued),
4
(5) any amount included in determining Net Income or Net
Loss for such period that was not received by the Partnership during such
period,
(6) the amount of any increase in reserves (including,
without limitation, working capital reserves) established during such
period that the General Partner determines are necessary or appropriate in
its sole and absolute discretion, and
(7) any amount distributed or paid in redemption of any
Limited Partner Interest or Partnership Units including, without
limitation, any Cash Amount paid.
Notwithstanding the foregoing, Available Cash shall not include (a) any cash
received or reductions in reserves, or take into account any disbursements made,
or reserves established, after dissolution and the commencement of the
liquidation and winding up of the Partnership or (b) any Capital Contributions,
whenever received.
"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, with respect to any Partner, the Capital
Account maintained by the General Partner for such Partner on the Partnership's
books and records in accordance with the following provisions:
(a) To each Partner's Capital Account, there shall be added such
Partner's Capital Contributions, such Partner's distributive share of Net Income
and any items in the nature of income or gain that are specially allocated
pursuant to Section 6.3 hereof, and the principal amount of any Partnership
liabilities assumed by such Partner or that are secured by any property
distributed to such Partner.
(b) From each Partner's Capital Account, there shall be
subtracted the amount of cash and the Gross Asset Value of any property
distributed to such Partner pursuant to any provision of this Agreement, such
Partner's distributive share of Net Losses and any items in the nature of
expenses or losses that are specially allocated pursuant to Section 6.3 hereof,
and the principal amount of any liabilities of such Partner assumed by the
Partnership or that are secured by any property contributed by such Partner to
the Partnership.
(c) In the event any interest in the Partnership is Transferred
in accordance with the terms of this Agreement, the transferee shall succeed to
the Capital Account of the transferor to the extent that it relates to the
Transferred interest.
5
(d) In determining the principal amount of any liability for
purposes of subsections (a) and (b) hereof, there shall be taken into account
Code Section 752(c) and any other applicable provisions of the Code and
Regulations.
(e) The provisions of this Agreement relating to the maintenance
of Capital Accounts are intended to comply with Regulations Sections 1.704-1(b)
and 1.704-2, and shall be interpreted and applied in a manner consistent with
such Regulations. If the General Partner shall determine that it is prudent to
modify the manner in which the Capital Accounts are maintained in order to
comply with such Regulations, the General Partner may make such modification
provided that such modification will not have a material effect on the amounts
distributable to any Partner without such Partner's Consent. 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 that unanticipated
events might otherwise cause this Agreement not to comply with Regulations
Section 1.704-1(b) or Section 1.704-2.
"Capital Account Deficit" has the meaning set forth in Section 13.2(c)
hereof.
"Capital Account Limitation" has the meaning set forth in Section 4.9
hereof.
"Capital Contribution" means, with respect to any Partner, the amount
of money and the initial Gross Asset Value of any Contributed Property that such
Partner contributes to the Partnership pursuant to Section 4.1, 4.2 or 4.3
hereof or is deemed to contribute pursuant to Section 4.4 hereof.
"Cash Amount" means the lesser of (a) an amount of cash equal to the
product of (i) the Value of a REIT Share and (ii) the REIT Shares Amount
determined as of the applicable Valuation Date or (b) in the case of a
Declination followed by an Offering Funding, the Offering Funding Amount.
"Certificate" means the Certificate of Limited Partnership of the
Partnership filed in the office of the Secretary of State of the State of
Delaware, as amended from time to time in accordance with the terms hereof and
the Act.
"Charter" means the [Articles of Incorporation] of the General Partner
filed with the State Department of Assessments and Taxation of Maryland, on the
Effective Date, as amended, supplemented or restated from time to time.
"Code" means the Internal Revenue Code of 1986, as amended and in
effect from time to time or any successor statute thereto, 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.
6
"Consent" means the consent to, approval of, or vote in favor of a
proposed action by a Partner given in accordance with Article 14 hereof.
"Consent of the Limited Partners" means the Consent of a Majority in
Interest of the Limited Partners, which Consent shall be obtained prior to the
taking of any action for which it is required by this Agreement and, except as
otherwise provided in this Agreement, may be given or withheld by a Majority in
Interest of the Limited Partners.
"Constituent Person" has the meaning set forth in Section 4.9 hereof.
"Contributed Property" means each item of 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 by the Partnership
to a "new" partnership pursuant to Code Section 708).
"Controlled Entity" means, as to any Limited Partner, (a) any
corporation more than fifty percent (50%) of the outstanding voting stock of
which is owned by such Limited Partner or such Limited Partner's Family Members,
(b) any trust, whether or not revocable, of which such Limited Partner or such
Limited Partner's Family Members are the sole beneficiaries, (c) any partnership
of which such Limited Partner is the managing partner and in which such Limited
Partner or such Limited Partner's Family Members hold partnership interests
representing at least twenty-five percent (25%) of such partnership's capital
and profits and (d) any limited liability company of which such Limited Partner
is the manager and in which such Limited Partner or such Limited Partner's
Family Members hold membership interests representing at least twenty-five
percent (25%) of such limited liability company's capital and profits.
"Conversion Date" has the meaning set forth in Section 4.9 hereof.
"Conversion Notice" has the meaning set forth in Section 4.9 hereof.
"Conversion Right" has the meaning set forth in Section 4.9 hereof.
"Cut-Off Date" means the fifth (5th) Business Day after the General
Partner's receipt of a Notice of Redemption.
"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
7
has not assumed or become liable for the payment thereof; and (iv) lease
obligations of such Person that, in accordance with generally accepted
accounting principles, should be capitalized.
"Declination" has the meaning set forth in Section 8.6(d) hereof.
"Depreciation" means, for each Partnership Year or other applicable
period, an amount equal to the federal income tax depreciation, amortization or
other cost recovery deduction allowable with respect to an asset for such year
or other period, except that if the Gross Asset Value of an asset differs from
its adjusted basis for federal income tax purposes at the beginning of such year
or period, Depreciation shall be in an amount that bears the same ratio to such
beginning Gross Asset Value as the federal income tax depreciation, amortization
or other cost recovery deduction for such year or other period bears to such
beginning adjusted tax basis; provided, however, that if the federal income tax
depreciation, amortization or other cost recovery deduction for such year or
period is zero, Depreciation shall be determined with reference to such
beginning Gross Asset Value using any reasonable method selected by the General
Partner.
"Distributed Right" has the meaning set forth in the definition of
"Adjustment Factor."
"Economic Capital Account Balance" has the meaning set forth in Section
6.3(b) hereof.
"Effective Date" means [_______________].
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations of the SEC promulgated thereunder.
"Family Members" means, as to a Person that is an individual, such
Person's spouse, ancestors, descendants (whether by blood or by adoption),
brothers and sisters and inter vivos or testamentary trusts of which only such
Person and his spouse, ancestors, descendants (whether by blood or by adoption),
brothers and sisters are beneficiaries.
"Forced Conversion" has the meaning set forth in Section 4.9 hereof.
"Forced Conversion Notice" has the meaning set forth in Section 4.9
hereof.
"Funding Debt" means any Debt incurred by or on behalf of the General
Partner for the purpose of providing funds to the Partnership.
"Funds from Operations" is as defined by the National Association of
Real Estate Investment Trusts ("NAREIT") and means net income (computed in
accordance with GAAP)
8
excluding gains (or losses) from debt restructuring and sales of property, plus
depreciation and amortization on real estate assets, and after adjustments for
unconsolidated partnerships and joint ventures.
"General Partner" means NorthStar Realty Finance Corp., a Maryland
corporation, and its successors and assigns, as the general partner of the
Partnership in their capacities as general partner of the Partnership.
"General Partner Interest" means the Partnership Interest held by the
General Partner in its capacity as General Partner, which Partnership Interest
is an interest as a general partner under the Act. A General Partner Interest
may be expressed as a number of Partnership Common Units, Partnership Preferred
Units or any other Partnership Units.
"General Partner Loan" has the meaning set forth in Section 4.3(d)
hereof.
"Gross Asset Value" means, with respect to any asset, the asset's
adjusted basis for federal income tax purposes, except as follows:
(a) The initial Gross Asset Value of any asset contributed by a
Partner to the Partnership shall be the gross fair market value of such asset as
determined by the General Partner and agreed to by the contributing Partner. In
any case in which the General Partner and the contributing Partner are unable to
agree as to the gross fair market value of any contributed asset or assets, such
gross fair market value shall be determined by Appraisal.
(b) The Gross Asset Values of all Partnership assets immediately
prior to the occurrence of any event described in clause (i), clause (ii),
clause (iii), clause (iv) or clause (v) hereof shall be adjusted to equal their
respective gross fair market values, as determined by the General Partner using
such reasonable method of valuation as it may adopt, as of the following times:
(i) the acquisition of an additional interest in the
Partnership (other than in connection with the execution of this Agreement
but including, without limitation, acquisitions pursuant to Section 4.2
hereof or contributions or deemed contributions by the General Partner
pursuant to Section 4.2 hereof) by a new or existing Partner in exchange
for more than a de minimis Capital Contribution, if the General Partner
reasonably determines that such adjustment is necessary or appropriate to
reflect the relative economic interests of the Partners in the Partnership;
(ii) the distribution by the Partnership to a Partner of
more than a de minimis amount of Partnership property as consideration for
an interest in the Partnership, if the General Partner reasonably
determines that such adjustment
9
is necessary or appropriate to reflect the relative economic interests of
the Partners in the Partnership;
(iii) the liquidation of the Partnership within the meaning
of Regulations Section 1.704-1(b)(2)(ii)(g);
(iv) upon the admission of a successor General Partner
pursuant to Section 12.1 hereof; and
(v) at such other times as the General Partner shall
reasonably determine to be necessary and advisable if permitted by, or
required in order to comply with, Regulations Sections 1.704-1(b) and
1.704-2.
(c) The Gross Asset Value of any Partnership asset distributed to
a Partner shall be the gross fair market value of such asset on the date of
distribution as determined by the distributee and the General Partner provided
that, if the distributee is the General Partner or if the distributee and the
General Partner cannot agree on such a determination, such gross fair market
value shall be determined by Appraisal.
(d) The Gross Asset Values of Partnership assets shall be
increased (or decreased) to reflect any adjustments to the adjusted basis of
such assets pursuant to Code Section 734(b) or Code Section 743(b), but only to
the extent that such adjustments are taken into account in determining Capital
Accounts pursuant to Regulations Section 1.704-1(b)(2)(iv)(m); provided,
however, that Gross Asset Values shall not be adjusted pursuant to this
subsection (d) to the extent that the General Partner reasonably determines that
an adjustment pursuant to subsection (b) above is necessary or appropriate in
connection with a transaction that would otherwise result in an adjustment
pursuant to this subsection (d).
(e) If the Gross Asset Value of a Partnership asset has been
determined or adjusted pursuant to subsection (a), subsection (b) or subsection
(d) above, such Gross Asset Value shall thereafter be adjusted by the
Depreciation taken into account with respect to such asset for purposes of
computing Net Income and Net Losses.
"Holder" means either (a) a Partner or (b) an Assignee, owning a
Partnership Unit, that is treated as a member of the Partnership for federal
income tax purposes.
"Incapacity" or "Incapacitated" means, (i) as to any Partner who is an
individual, death, total physical disability or entry by a court of competent
jurisdiction adjudicating such Partner incompetent to manage his or her person
or his or her estate; (ii) as to any Partner that is a corporation or limited
liability company, the filing of a certificate of dissolution, or its
equivalent, for the corporation or the revocation of its charter; (iii) as to
any Partner that is a partnership, the dissolution and commencement of winding
up of the partnership; (iv) as to any Partner that is an estate, the
distribution by the fiduciary of the estate's entire interest in the
Partnership; (v) as to any
10
trustee of a trust that 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 of or against such Partner
under any bankruptcy, insolvency or other similar law now or hereafter in
effect, (b) the Partner is adjudged as bankrupt or insolvent, or a final and
nonappealable order for relief under any bankruptcy, insolvency or similar law
now or hereafter in effect has been entered against the Partner, (c) the Partner
executes and delivers a general assignment for the benefit of the Partner's
creditors, (d) the Partner files an answer or other pleading admitting or
failing to contest the material allegations of a petition filed against the
Partner in any proceeding of the nature described in clause (b) above, (e) the
Partner seeks, consents to or acquiesces in the appointment of a trustee,
receiver or liquidator for the Partner or for all or any substantial part of the
Partner's 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 or liquidator has not been
vacated or stayed within ninety (90) days of such appointment, or (h) an
appointment referred to in clause (g) above 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 its status as (A) the General Partner or (B) a director of the General
Partner or an officer or employee 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 (whether
before or after the event giving rise to potential liability), in its sole and
absolute discretion.
"Independent Director" has the meaning ascribed thereto in the Charter.
"Interest" means interest, original issue discount and other similar
payments or amounts paid by the Partnership for the use or forbearance of money.
"IRS" means the Internal Revenue Service, which administers the
internal revenue laws of the United States.
"Junior Share" means a share of capital stock of the General Partner
now or hereafter authorized or reclassified that has dividend rights, or rights
upon liquidation, winding up and dissolution, that are inferior or junior to the
REIT Shares.
"Limited Partner" means any Person named as a Limited Partner in
Exhibit A attached hereto, as such Exhibit A 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 Partner 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
11
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
Partner Interest may be expressed as a number of Partnership Common Units,
Partnership Preferred Units or other Partnership Units.
"Liquidating Event" has the meaning set forth in Section 13.1 hereof.
"Liquidating Gains" has the meaning set forth in Section 6.3(b) hereof.
"Liquidator" has the meaning set forth in Section 13.2(a) hereof.
"LTIP Unit" means a Partnership Unit which is designated as an LTIP
Unit and which has the rights, preferences and other privileges designated in
Section 4.5 hereof and elsewhere in this Agreement in respect of Holders of LTIP
Units. The allocation of LTIP Units among the Partners shall be set forth on
Exhibit A, as may be amended from time to time.
"LTIP Unitholder" means a Partner that holds LTIP Units.
"Majority in Interest of the Limited Partners" means Limited Partners
holding more than fifty percent (50%) of the outstanding Partnership Common
Units held by all Limited Partners.
"Net Income" or "Net Loss" means, for each Partnership Year of the
Partnership, an amount equal to the Partnership's taxable income or loss for
such year, determined in accordance with Code Section 703(a) (for this purpose,
all items of income, gain, loss or deduction required to be stated separately
pursuant to Code Section 703(a)(1) shall be included in taxable income or loss),
with the following adjustments:
(a) Any income of the Partnership that is exempt from federal
income tax and not otherwise taken into account in computing Net Income (or Net
Loss) pursuant to this definition of "Net Income" or "Net Loss" shall be added
to (or subtracted from, as the case may be) such taxable income (or loss);
(b) Any expenditure of the Partnership described in Code Section
705(a)(2)(B) or treated as a Code Section 705(a)(2)(B) expenditure pursuant to
Regulations Section 1.704-1(b)(2)(iv)(i), and not otherwise taken into account
in computing Net Income (or Net Loss) pursuant to this definition of "Net
Income" or "Net Loss," shall be subtracted from (or added to, as the case may
be) such taxable income (or loss);
(c) In the event the Gross Asset Value of any Partnership asset
is adjusted pursuant to subsection (b) or subsection (c) of the definition of
"Gross Asset Value," the amount of such adjustment shall be taken into account
as gain or loss from the disposition of such asset for purposes of computing Net
Income or Net Loss;
12
(d) Gain or loss resulting from any disposition of property with
respect to which gain or loss is recognized for federal income tax purposes
shall be computed by reference to the Gross Asset Value of the property disposed
of, notwithstanding that the adjusted tax basis of such property differs from
its Gross Asset Value;
(e) In lieu of the depreciation, amortization and other cost
recovery deductions that would otherwise be taken into account in computing such
taxable income or loss, there shall be taken into account Depreciation for such
Partnership Year;
(f) To the extent that an adjustment to the adjusted tax basis of
any Partnership asset pursuant to Code Section 734(b) or Code Section 743(b) is
required pursuant to Regulations Section 1.704-1(b)(2)(iv)(m)(4) to be taken
into account in determining Capital Accounts as a result of a distribution other
than in liquidation of a Partner's interest in the Partnership, the amount of
such adjustment shall be treated as an item of gain (if the adjustment increases
the basis of the asset) or loss (if the adjustment decreases the basis of the
asset) from the disposition of the asset and shall be taken into account for
purposes of computing Net Income or Net Loss; and
(g) Notwithstanding any other provision of this definition of
"Net Income" or "Net Loss," any item that is specially allocated pursuant to
Section 6.3 hereof shall not be taken into account in computing Net Income or
Net Loss. The amounts of the items of Partnership income, gain, loss or
deduction available to be specially allocated pursuant to Section 6.3 hereof
shall be determined by applying rules analogous to those set forth in this
definition of "Net Income" or "Net Loss."
"New Securities" means (i) any rights, options, warrants or convertible
or exchangeable securities having the right to subscribe for or purchase REIT
Shares or Preferred Shares, excluding Preferred Shares, Junior Shares and grants
under the Stock Option Plans, or (ii) any Debt issued by the General Partner
that provides any of the rights described in clause (i).
"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 C attached to this Agreement.
"Offering Funding" has the meaning set forth in Section 8.6(d)(ii)
hereof.
13
"Offering Funding Amount" means the dollar amount equal to (i) the
product of (x) the number of Offering Funding Shares sold in an Offering Funding
and (y) the offering price per share of such Offering Funding Shares in such
Offering Funding, less (ii) the aggregate underwriting discounts and commissions
in such Offering Funding.
"Offering Funding Shares" has the meaning set forth in Section
8.6(d)(ii) hereof.
"Ownership Limit" means the applicable restriction or restrictions on
ownership of shares of the General Partner imposed under the Charter.
"Partner" means the General Partner or a Limited Partner, and
"Partners" means the General Partner and the Limited Partners.
"Partner Minimum Gain" means an amount, with respect to each Partner
Nonrecourse Debt, equal to the Partnership Minimum Gain that would result if
such Partner Nonrecourse Debt were treated as a Nonrecourse Liability,
determined in accordance with Regulations Section 1.704-2(i)(3).
"Partner Nonrecourse Debt" has the meaning set forth in Regulations
Section 1.704- 2(b)(4).
"Partner Nonrecourse Deductions" has the meaning set forth in
Regulations Section 1.704- 2(i)(2), and the amount of Partner Nonrecourse
Deductions with respect to a Partner Nonrecourse Debt for a Partnership Year
shall be determined in accordance with the rules of Regulations Section 1.704-
2(i)(2).
"Partnership" means the limited partnership formed under the Act and
pursuant to this Agreement, and any successor thereto.
"Partnership Common Unit" means a fractional share of the Partnership
Interests of all Partners issued pursuant to Sections 4.1 and 4.2 hereof, but
does not include any Partnership Preferred Unit or any other Partnership Unit
specified in a Partnership Unit Designation as being other than a Partnership
Common Unit; provided, however, that the General Partner Interest and the
Limited Partner Interests shall have the differences in rights and privileges as
specified in this Agreement. The ownership of Partnership Common Units may (but
need not, in the sole and absolute discretion of the General Partner) be
evidenced by the form of certificate for Partnership Common Units attached
hereto as Exhibit D.
"Partnership Common Unit Economic Balance" has the meaning set forth in
Section 6.3(b) hereof.
"Partnership Interest" means an ownership interest in the Partnership
held by either a Limited Partner or the General Partner and includes any and all
benefits to which the holder of such
14
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 Common Units, Partnership Preferred Units or other Partnership
Units.
"Partnership Junior Unit" means a fractional share of the Partnership
Interests that the General Partner has authorized pursuant to Section 4.1 or
Section 4.2 or Section 4.3 hereof that has distribution rights, or rights upon
liquidation, winding up and dissolution, that are inferior or junior to the
Partnership Common 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 Preferred Unit" means a fractional share of the
Partnership Interests that the General Partner has authorized pursuant to
Section 4.1 or Section 4.2 or Section 4.3 hereof that has distribution rights,
or rights upon liquidation, winding up and dissolution, that are superior or
prior to the Partnership Common Units.
"Partnership Record Date" means the record date established by the
General Partner for the distribution of Available Cash pursuant to Section 5.1
hereof, which record date shall generally 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" shall mean a Partnership Common Unit, a Partnership
Preferred Unit, a Partnership Junior Unit or any other fractional share of the
Partnership Interests that the General Partner has authorized pursuant to
Section 4.1 or Section 4.2 or Section 4.3 hereof.
"Partnership Unit Designation" shall have the meaning set forth in
Section 4.2 hereof.
"Partnership Year" means the fiscal year of the Partnership, which
shall be the calendar year.
"Percentage Interest" means, as to each Partner, its interest in the
Partnership Units as determined by dividing the Partnership Units owned by such
Partner by the total number of Partnership Units then outstanding.
"Permitted Transfer" has the meaning set forth in Section 11.3(a)
hereof.
"Person" means an individual or a corporation, partnership, trust,
unincorporated organization, association, limited liability company or other
entity.
15
"Pledge" has the meaning set forth in Section 11.3(a) hereof.
"Preferred Share" means a share of capital stock of the General Partner
now or hereafter authorized or reclassified that has dividend rights, or rights
upon liquidation, winding up and dissolution, that are superior or prior to the
REIT Shares.
"Primary Offering Notice" has the meaning set forth in Section
8.6(f)(iv) hereof.
"Properties" means any assets and property of the Partnership such as,
but not limited to, interests in real property and personal property, including,
without limitation, fee interests, interests in ground leases, interests in
limited liability companies, joint ventures or partnerships, interests in
mortgages, and Debt instruments as the Partnership may hold from time to time
and "Property" shall mean any one such asset or property.
"Qualified REIT Subsidiary" means a qualified REIT subsidiary of the
General Partner within the meaning of Code Section 856(i)(2).
"Qualified Transferee" means an "accredited investor" as defined in
Rule 501 promulgated under the Securities Act.
"Qualifying Party" means (a) an Additional Limited Partner, (b) a
Family Member, or a lending institution as the pledgee of a Pledge, who is the
transferee in a Permitted Transfer or (c) a Substituted Limited Partner
succeeding to all or part of the Limited Partner Interest of (i) an Additional
Limited Partner or (ii) a Family Member, or a lending institution who is the
pledgee of a Pledge, who is the transferee in a Permitted Transfer.
"Redemption" has the meaning set forth in Section 8.6(a) hereof.
"Regulations" means the applicable income tax regulations under the
Code, whether such regulations are in proposed, temporary or final form, as such
regulations may be amended from time to time (including corresponding provisions
of succeeding regulations).
"Regulatory Allocations" has the meaning set forth in Section
6.3(c)(viii) hereof.
"REIT" means a real estate investment trust qualifying under Code
Section 856.
"REIT Partner" means (a) a Partner, including, without limitation, the
General Partner, that is a REIT or has made an election to qualify as a REIT,
(b) any Qualified REIT Subsidiary of any Partner that is a REIT or has made an
election to qualify as a REIT and (c) any Partner that is a Qualified REIT
Subsidiary of a REIT.
"REIT Payment" has the meaning set forth in Section 15.11 hereof.
16
"REIT Requirements" has the meaning set forth in Section 5.1 hereof.
"REIT Share" means a share of the General Partner's Common Shares, par
value $.01 per share. Where relevant in this Agreement, "REIT Shares" includes
shares of the General Partner's Common Shares, par value $.01 per share, issued
upon conversion of Preferred Shares or Junior Shares.
"REIT Shares Amount" means a number of REIT Shares equal to the product
of (a) the number of Tendered Units and (b) the Adjustment Factor; provided,
however, that, in the event that the General Partner issues to all holders of
REIT Shares as of a certain record date rights, options, warrants or convertible
or exchangeable securities entitling the General Partner's shareholders to
subscribe for or purchase REIT Shares, or any other securities or property
(collectively, the "Rights"), with the record date for such Rights issuance
falling within the period starting on the date of the Notice of Redemption and
ending on the day immediately preceding the Specified Redemption Date, which
Rights will not be distributed before the relevant Specified Redemption Date,
then the REIT Shares Amount shall also include such Rights that a holder of that
number of REIT Shares would be entitled to receive, expressed, where relevant
hereunder, in a number of REIT Shares determined by the General Partner in good
faith.
"Related Party" means, with respect to any Person, any other Person
whose ownership of shares of the General Partner's capital stock would be
attributed to the first such Person under Code Section 544 (as modified by Code
Section 856(h)(1)(B)).
"Rights" has the meaning set forth in the definition of "REIT Shares
Amount."
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations of the SEC promulgated thereunder.
"Services Agreement" means any management, development or advisory
agreement with a property and/or asset manager for the provision of property
management, asset management, leasing, development and/or similar services with
respect to the Properties and any agreement for the provision of services of
accountants, legal counsel, appraisers, insurers, brokers, transfer agents,
registrars, developers, financial advisors and other professional services.
"Single Funding Notice" has the meaning set forth in Section
8.6(d)(iii) hereof.
"Specified Redemption Date" means the later of (a) the tenth (10th)
Business Day after the receipt by the General Partner of a Notice of Redemption
or (b) in the case of a Declination followed by an Offering Funding, the
Business Day next following the date of the closing of the Offering Funding;
provided, however, that no Specified Redemption Date shall occur during the
first Twelve Month Period; provided, further, that the Specified Redemption
Date, as well as the closing
17
of a Redemption, or an acquisition of Tendered Units by the General Partner
pursuant to Section 8.6 hereof, on any Specified Redemption Date, may be
deferred, in the General Partner's sole and absolute discretion, for such time
(but in any event not more than one hundred fifty (150) days in the aggregate)
as may reasonably be required to effect, as applicable, (i) an Offering Funding
or other necessary funding arrangements, (ii) compliance with the Securities Act
or other law (including, but not limited to, (a) state "blue sky" or other
securities laws and (b) the expiration or termination of the applicable waiting
period, if any, under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976,
as amended) and (iii) satisfaction or waiver of other commercially reasonable
and customary closing conditions and requirements for a transaction of such
nature.
"Stock Option Plan" means any stock option plan hereafter adopted by
the Partnership or the General Partner.
"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; provided, however, that, with respect to the
Partnership, "Subsidiary" means solely a partnership or limited liability
company (taxed, for federal income tax purposes, as a partnership and not as an
association or publicly traded partnership taxable as a corporation) of which
the Partnership is a member unless the General Partner has received an
unqualified opinion from independent counsel of recognized standing, or a ruling
from the IRS, that the ownership of shares of stock of a corporation or other
entity will not jeopardize the General Partner's status as a REIT, in which
event the term "Subsidiary" shall include the corporation or other entity which
is the subject of such opinion or ruling.
"Substituted Limited Partner" means a Person who is admitted as a
Limited Partner to the Partnership pursuant to Section 11.4 hereof.
"Tax Items" has the meaning set forth in Section 6.4(a) hereof.
"Tendered Units" has the meaning set forth in Section 8.6(a) hereof.
"Tendering Party" has the meaning set forth in Section 8.6(a) hereof.
"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.
"Transaction" has the meaning set forth in Section 4.9 hereof.
"Transfer," when used with respect to a Partnership Unit or all or any
portion of a Partnership Interest, means any sale, assignment, bequest,
conveyance, devise, gift (outright or in trust), Pledge, encumbrance,
hypothecation, mortgage, exchange, transfer or other disposition or act of
alienation, whether voluntary or involuntary or by operation of law; provided,
however, that when
18
the term is used in Article 11 hereof, "Transfer" does not include (a) any
Redemption of Partnership Common Units by the Partnership, or acquisition of
Tendered Units by the General Partner, pursuant to Section 8.6 hereof or (b) any
redemption of Partnership Units pursuant to any Partnership Unit Designation.
The terms "Transferred" and "Transferring" have correlative meanings.
"Twelve-Month Period" means as to any Qualifying Party, a twelve-month
period ending on the day before the first (1st) anniversary of such Qualifying
Party's becoming a Holder of Partnership Common Units or on the day before a
subsequent anniversary thereof; provided, however, that the General Partner may,
in its sole and absolute discretion, by written agreement with a Qualifying
Party, shorten or lengthen the first Twelve-Month Period to a period of shorter
or longer than twelve (12) months with respect to a Qualifying Party.
"Unitholder" means the General Partner or any Holder of Partnership
Units.
"Unvested Incentive Units" has the meaning set forth in Section 4.9
hereof.
"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 immediately
preceding Business Day.
"Value" means, on any Valuation Date with respect to a REIT Share, the
average of the daily Market Prices for ten (10) consecutive trading days
immediately preceding the Valuation Date (except that, as provided in Section
4.4(c) hereof, the Market Price for the trading day immediately preceding the
date of exercise of a stock option under any Stock Option Plans shall be
substituted for such average of daily market prices for purposes of Section 4.4
hereof). The term "Market Price" on any date shall mean, with respect to any
class or series of outstanding REIT Shares, the Closing Price for such REIT
Shares on such date. The "Closing Price" on any date shall mean the last sale
price for such REIT Shares, regular way, or, in case no such sale takes place on
such day, the average of the closing bid and asked prices, regular way, for such
REIT Shares, in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed or admitted to
trading on the New York Stock Exchange or, if such REIT Shares are not listed or
admitted to trading on the New York Stock Exchange, as reported on the principal
consolidated transaction reporting system with respect to securities listed on
the principal national securities exchange on which such REIT Shares are listed
or admitted to trading or, if such REIT Shares are not listed or admitted to
trading on any national securities exchange, the last quoted price, or, if not
so quoted, the average of the high bid and low asked prices in the
over-the-counter market, as reported by the National Association of Securities
Dealers, Inc. Automated Quotation System or, if such system is no longer in use,
the principal other automated quotation system that may then be in use or, if
such REIT Shares are not quoted by any such organization, the average of the
closing bid and asked prices as furnished by a professional market maker making
a market in such REIT Shares selected by the Board of Directors of the General
Partner or, in the event that no trading price is available for such REIT
Shares, the fair market value of the REIT Shares, as determined in good faith by
the Board of Directors of the General Partner.
19
In the event that the REIT Shares Amount includes Rights (as defined in
the definition of "REIT Shares Amount") 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.
"Vested LTIP Units" has the meaning set forth in Section 4.9 hereof.
"Vesting Agreement" means each or any, as the context implies, Long
Term Incentive Plan (LTIP) Vesting Agreement entered into by a LTIP Unitholder
upon acceptance of an award of LTIP Units under the Stock Option Plan (as such
agreement may be amended, modified or supplemented from time to time).
ARTICLE II
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 subject
to the conditions set forth in this Agreement. Except as expressly provided
herein to the contrary, the rights and obligations of the Partners and the
administration and termination of the Partnership shall be governed by the Act.
The Partnership Interest of each Partner shall be personal property for all
purposes.
Section 2.2 Name. The name of the Partnership is "NORTHSTAR REALTY
FINANCE LIMITED PARTNERSHIP" 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 Partners of such change in the next regular
communication to the 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 Corporation Service Company, 0000 Xxxxxx Xxxx, Xxxxxxxxxx, Xxxxxxxx 00000,
and the registered agent for service of process on the Partnership in the State
of Delaware at such registered office is Corporation Service Company, 0000
Xxxxxx Xxxx, Xxxxxxxxxx Xxxxxxxx, 00000. The principal office of the Partnership
is located at 000 Xxxxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000 or such
other place as the General Partner may from time to time designate by notice to
the Limited Partners. The Partnership may maintain offices at such other place
or places within or outside the State of Delaware as the General Partner deems
advisable.
20
Section 2.4 Power of Attorney.
(a) Each Limited Partner and each Assignee hereby irrevocably
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:
(i) execute, swear to, seal, acknowledge, deliver, file and
record in the appropriate public offices (a) all certificates, documents
and other instruments (including, without limitation, this Agreement and
the Certificate and all amendments, supplements 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 to the extent provided by applicable law)
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 or the Liquidator 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 or the Liquidator 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 conveyances and other
instruments or documents that the General Partner or the Liquidator deems
appropriate or necessary to reflect the distribution or exchange of assets
of the Partnership pursuant to the terms of this Agreement; (e) all
instruments relating to the admission, withdrawal, removal or substitution
of any Partner pursuant to, or other events described in, Article 11,
Article 12 or Article 13 hereof or the Capital Contribution of any Partner;
and (f) all certificates, documents and other instruments relating to the
determination of the rights, preferences and privileges relating to
Partnership Interests; and
(ii) 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 or the Liquidator, to make, evidence, give, confirm or
ratify any vote, consent, approval, agreement or other action that is made
or given by the Partners hereunder or is consistent with the terms of this
Agreement or appropriate or necessary, in the sole and absolute discretion
of the General Partner or the Liquidator, to effectuate the terms or intent
of this Agreement.
Nothing contained herein shall be construed as authorizing the General Partner
or the Liquidator to amend this Agreement except in accordance with Article 14
hereof or as may be otherwise expressly provided for in this Agreement.
21
(b) The foregoing power of attorney is hereby declared to be
irrevocable and a special power coupled with an interest, in recognition of the
fact that each of the Limited Partners and Assignees will be relying upon the
power of the General Partner or the Liquidator to act as contemplated by this
Agreement in any filing or other action by it on behalf of the Partnership, and
it shall survive and not be affected by the subsequent Incapacity of any Limited
Partner or Assignee and the Transfer of all or any portion of such Limited
Partner's or Assignee's Partnership Units or Partnership Interest and shall
extend to such Limited Partner's or Assignee's heirs, successors, assigns and
personal representatives. Each such Limited Partner or Assignee hereby agrees to
be bound by any representation made by the General Partner or the Liquidator,
acting in good faith pursuant to such power of attorney; and each such Limited
Partner or Assignee hereby waives any and all defenses that may be available to
contest, negate or disaffirm the action of the General Partner or the
Liquidator, taken in good faith under such power of attorney. Each Limited
Partner or Assignee shall execute and deliver to the General Partner or the
Liquidator, within fifteen (15) days after receipt of the General Partner's or
the Liquidator'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
[_______________], the date that the original Certificate was filed in the
office of the Secretary of State of Delaware in accordance with the Act, and
shall continue until the Partnership is dissolved pursuant to the provisions of
Article 13 hereof or as otherwise provided by law.
ARTICLE III
PURPOSE
Section 3.1 Purpose and Business. The purpose and nature of the
Partnership is to conduct any business, enterprise or activity permitted by or
under the Act; provided, however, such business and arrangements and interests
may be limited to and conducted in such a manner as to permit the General
Partner, in the sole and absolute discretion of the General Partner, at all
times to be classified as a REIT. The Partnership shall have all powers
necessary or desirable to accomplish the purposes enumerated. In connection with
the foregoing, the Partnership shall have full power and authority to enter
into, perform and carry out contracts of any kind, to borrow and lend money and
to issue evidence of indebtedness, whether or not secured by mortgage, deed of
trust, pledge or other lien and, directly or indirectly, to acquire and
construct additional Properties necessary, useful or desirable in connection
with its business.
Section 3.2 Powers.
(a) The Partnership shall be empowered to do any and all acts and
things necessary, appropriate, proper, advisable, incidental to or convenient
for the furtherance and
22
accomplishment of the purposes and business described herein and for the
protection and benefit of the Partnership.
(b) The Partnership may contribute from time to time Partnership
capital to one or more newly formed entities solely in exchange for equity
interests therein (or in a wholly-owned subsidiary entity thereof).
(c) Notwithstanding any other provision in this Agreement, the
General Partner may cause the Partnership not to take, or to refrain from
taking, any action that, in the judgment of the General Partner, in its sole and
absolute discretion, (i) could adversely affect the ability of the General
Partner to continue to qualify as a REIT, (ii) could subject the General Partner
to any additional taxes under Code Section 857 or Code Section 4981 or any other
related or successor provision of the Code, or (iii) could violate any law or
regulation of any governmental body or agency having jurisdiction over the
General Partner, its securities or the Partnership, unless such action (or
inaction) under clause (i), clause (ii) or clause (iii) above shall have been
specifically consented to by the General Partner in writing.
Section 3.3 Partnership Only for Partnership Purposes. This Agreement
shall not be deemed to create a company, venture or partnership between or among
the Partners with respect to any activities whatsoever other than the activities
within the purposes of the Partnership as specified in Section 3.1 hereof.
Except as otherwise provided in this Agreement, no Partner shall have any
authority to act for, bind, commit or assume any obligation or responsibility on
behalf of the Partnership, its properties or any other Partner. No Partner, in
its capacity as a Partner under this Agreement, shall be responsible or liable
for any indebtedness or obligation of another Partner, and the Partnership shall
not be responsible or liable for any indebtedness or obligation of any Partner,
incurred either before or after the execution and delivery of this Agreement by
such Partner, except as to those responsibilities, liabilities, indebtedness or
obligations incurred pursuant to and as limited by the terms of this Agreement
and the Act.
Section 3.4 Representations and Warranties by the Parties.
(a) Each Partner (including, without limitation, each Additional
Limited Partner or Substituted Limited Partner as a condition to becoming an
Additional Limited Partner or a Substituted Limited Partner) that is an
individual represents and warrants to each other Partner(s) that (i) the
consummation of the transactions contemplated by this Agreement to be performed
by such Partner will not result in a breach or violation of, or a default under,
any material agreement by which such Partner or any of such Partner's property
is bound, or any statute, regulation, order or other law to which such Partner
is subject, (ii) subject to the last sentence of this Section 3.4(a), such
Partner is neither a "foreign person" within the meaning of Code Section 1445(f)
nor a "foreign partner" within the meaning of Code Section 1446(e), (iii) such
Partner does not own, directly or indirectly, (a) nine and eight tenths percent
(9.8%) or more of the total combined voting power of all classes of stock
entitled to vote, or nine and eight tenths percent (9.8%) or more of the total
number of shares of all classes of stock, of any corporation that is a tenant of
either (I) the General
23
Partner or any Qualified REIT Subsidiary, (II) the Partnership or (III) any
partnership, venture or limited liability company of which the General Partner,
any Qualified REIT Subsidiary or the Partnership is a member or (b) an interest
of nine and eight tenths percent (9.8%) or more in the assets or net profits of
any noncorporate tenant of either (I) the General Partner or any Qualified REIT
Subsidiary, (II) the Partnership or (III) any partnership, venture, or limited
liability company of which the General Partner, any Qualified REIT Subsidiary or
the Partnership is a member and (iv) this Agreement is binding upon, and
enforceable against, such Partner in accordance with its terms. Notwithstanding
anything contained herein to the contrary, in the event that the representation
contained in clause (ii) foregoing would be inaccurate if given by a Partner,
such Partner (w) shall not be required to make and shall not be deemed to have
made such representation, (x) shall deliver to the General Partner in connection
with or prior to its execution of this Agreement written notice that it may not
truthfully make such representation, (y) hereby agrees that it is subject to,
and hereby authorizes the General Partner to withhold, all withholdings to which
such a "foreign person" or "foreign partner", as applicable, is subject under
the Code and (z) hereby agrees to cooperate fully with the General Partner with
respect to such withholdings, including by effecting the timely completion and
delivery to the General Partner of all internal revenue forms required in
connection therewith.
(b) Each Partner (including, without limitation, each Additional
Limited Partner or Substituted Limited Partner as a condition to becoming an
Additional Limited Partner or a Substituted Limited Partner) that is not an
individual represents and warrants to each other Partner(s) that (i) all
transactions contemplated by this Agreement to be performed by it have been duly
authorized by all necessary action, including, without limitation, that of its
general partner(s), committee(s), trustee(s), beneficiaries, directors and/or
shareholder(s), as the case may be, as required, (ii) the consummation of such
transactions shall not result in a breach or violation of, or a default under,
its partnership or operating agreement, trust agreement, articles, charter or
bylaws, as the case may be, any material agreement by which such Partner or any
of such Partner's properties or any of its partners, members, beneficiaries,
trustees or shareholders, as the case may be, is or are bound, or any statute,
regulation, order or other law to which such Partner or any of its partners,
members, trustees, beneficiaries or shareholders, as the case may be, is or are
subject, (iii) subject to the last sentence of this Section 3.4(b), such Partner
is neither a "foreign person" within the meaning of Code Section 1445(f) nor a
"foreign partner" within the meaning of Code Section 1446(e), (iv) such Partner
does not own, directly or indirectly, (a) nine and eight tenths percent (9.8%)
or more of the total combined voting power of all classes of stock entitled to
vote, or nine and eight tenths percent (9.8%) or more of the total number of
shares of all classes of stock, of any corporation that is a tenant of either
(I) the General Partner, or any Qualified REIT Subsidiary , (II) the Partnership
or (III) any partnership, venture or limited liability company of which the
General Partner, any Qualified REIT Subsidiary or the Partnership is a member or
(b) an interest of nine and eight tenths percent (9.8%) or more in the assets or
net profits of any noncorporate tenant of either (I) the General Partner or any
Qualified REIT Subsidiary , (II) the Partnership or (III) any partnership,
venture or limited liability company for which the General Partner, any
Qualified REIT Subsidiary or the Partnership is a member and (v) this Agreement
is binding upon, and enforceable against, such Partner in accordance with its
terms. Notwithstanding anything contained herein to the
24
contrary, in the event that the representation contained in clause (iii)
foregoing would be inaccurate if given by a Partner, such Partner (w) shall not
be required to make and shall not be deemed to have made such representation,
(x) shall deliver to the General Partner in connection with or prior to its
execution of this Agreement written notice that it may not truthfully make such
representation, (y) hereby agrees that it is subject to, and hereby authorizes
the General Partner to withhold, all withholdings to which such a "foreign
person" or "foreign partner", as applicable, is subject under the Code and (z)
hereby agrees to cooperate fully with the General Partner with respect to such
withholdings, including by effecting the timely completion and delivery to the
General Partner of all internal revenue forms required in connection therewith.
(c) Each Partner (including, without limitation, each Substituted
Limited Partner as a condition to becoming a Substituted Limited Partner)
represents, warrants and agrees that it has acquired and continues to hold its
interest in the Partnership for its own account for investment purposes only and
not for the purpose of, or with a view toward, the resale or distribution of all
or any part thereof, and not with a view toward selling or otherwise
distributing such interest or any part thereof at any particular time or under
any predetermined circumstances. Each Partner further represents and warrants
that it is a sophisticated investor, able and accustomed to handling
sophisticated financial matters for itself, particularly real estate
investments, and that it has a sufficiently high net worth that it does not
anticipate a need for the funds that it has invested in the Partnership in what
it understands to be a highly speculative and illiquid investment.
(d) The representations and warranties contained in Sections
3.4(a), 3.4(b) and 3.4(c) hereof shall survive the execution and delivery of
this Agreement by each Partner (and, in the case of an Additional Limited
Partner or a Substituted Limited Partner, the admission of such Additional
Limited Partner or Substituted Limited Partner as a Limited Partner in the
Partnership) and the dissolution, liquidation and termination of the
Partnership.
(e) Each Partner (including, without limitation, each Substituted
Limited Partner as a condition to becoming a Substituted Limited Partner) hereby
acknowledges that no representations as to potential profit, cash flows, funds
from operations or yield, if any, in respect of the Partnership or the General
Partner have been made by any Partner or any employee or representative or
Affiliate of any Partner, and that projections and any other information,
including, without limitation, financial and descriptive information and
documentation, that may have been in any manner submitted to such Partner shall
not constitute any representation or warranty of any kind or nature, express or
implied.
(f) Notwithstanding the foregoing, the General Partner may, in
its sole and absolute discretion, permit the modification of any of the
representations and warranties contained in Sections 3.4(a), 3.4(b) and 3.4(c)
above as applicable to any Partner (including, without limitation any Additional
Limited Partner or Substituted Limited Partner or any transferee of either)
provided that such representations and warranties, as modified, shall be set
forth in either (i) a Partnership Unit Designation applicable to the Partnership
Units held by such Partner or (ii) a separate writing addressed to the
Partnership and the General Partner.
25
ARTICLE IV
CAPITAL CONTRIBUTIONS
Section 4.1 Capital Contributions of the Partners. The Partners shall
make Capital Contributions to the Partnership, whereupon each Partner shall own
Partnership Units in the amount set forth for such Partner on Exhibit A, as the
same may be amended from time to time by the General Partner to the extent
necessary to reflect accurately sales, exchanges or other Transfers,
redemptions, Capital Contributions, the issuance of additional Partnership
Units, or similar events having an effect on a Partner's ownership of
Partnership Units. Except as provided by law or in Sections 4.2, 4.3 or 10.4
hereof, the Partners shall have no obligation or right to make any additional
Capital Contributions or loans to the Partnership.
Section 4.2 Issuances of Additional Partnership Interests.
(a) General. The General Partner is hereby authorized to cause
the Partnership to issue additional Partnership Interests, in the form of
Partnership Units, for any Partnership purpose, at any time or from time to
time, to the Partners (including the General Partner) or to other Persons, and
to admit such Persons as Additional Limited Partners, for such consideration and
on such terms and conditions as shall be established by the General Partner in
its sole and absolute discretion, all without the approval of any Limited
Partners. Without limiting the foregoing, the General Partner is expressly
authorized to cause the Partnership to issue Partnership Units (i) upon the
conversion, redemption or exchange of any Debt, Partnership Units or other
securities issued by the Partnership, (ii) for less than fair market value, so
long as the General Partner concludes in good faith that such issuance is in the
best interests of the General Partner and the Partnership, and (iii) in
connection with any merger of any other Person into the Partnership if the
applicable merger agreement provides that Persons are to receive Partnership
Units in exchange for their interests in the Person merging into the
Partnership. Subject to Delaware law, any additional Partnership Interests may
be issued in one or more classes, or one or more series of any of such classes,
with such designations, preferences and relative, participating, optional or
other special rights, powers and duties as shall be determined by the General
Partner, in its sole and absolute discretion without the approval of any Limited
Partner, and set forth in a written document thereafter attached to and made an
exhibit to this Agreement (each, a "Partnership Unit Designation"). Without
limiting the generality of the foregoing, the General Partner shall have
authority to specify (a) the allocations of items of Partnership income, gain,
loss, deduction and credit to each such class or series of Partnership
Interests; (b) the right of each such class or series of Partnership Interests
to share in Partnership distributions; (c) the rights of each such class or
series of Partnership Interests upon dissolution and liquidation of the
Partnership; (d) the voting rights, if any, of each such class or series of
Partnership Interests; and (e) the conversion, redemption or exchange rights
applicable to each such class or series of Partnership Interests. Upon the
issuance of any additional Partnership Interest, the General Partner shall amend
Exhibit A as appropriate to reflect such issuance.
26
(b) Issuances to the General Partner. No additional Partnership
Units shall be issued to the General Partner unless (i) the additional
Partnership Units are issued to all Partners in proportion to their respective
Percentage Interests with respect to the class of Partnership Units so issued,
(ii) (a) the additional Partnership Units are (x) Partnership Common Units
issued in connection with an issuance of REIT Shares, or (y) Partnership Units
(other than Partnership Common Units) issued in connection with an issuance of
Preferred Shares, New Securities or other interests in the General Partner
(other than REIT Shares), which Preferred Shares, New Securities or other
interests have designations, preferences and other rights, terms and provisions
that are substantially the same as the designations, preferences and other
rights, terms and provisions of the additional Partnership Units issued to the
General Partner, and (b) the General Partner contributes to the Partnership the
cash proceeds or other consideration received in connection with the issuance of
such REIT Shares, Preferred Shares, New Securities or other interests in the
General Partner, (iii) the additional Partnership Units are issued upon the
conversion, redemption or exchange of Debt, Partnership Units or other
securities issued by the Partnership, or (iv) the additional Partnership Units
are issued pursuant to Section 4.7 or Section 4.8.
(c) No Preemptive Rights. No Person, including, without
limitation, any Partner or Assignee, shall have any preemptive, preferential,
participation or similar right or rights to subscribe for or acquire any
Partnership Interest.
Section 4.3 Additional Funds and Capital Contributions.
(a) General. The General Partner may, at any time and from time
to time, determine that the Partnership requires additional funds ("Additional
Funds") for the acquisition or development of additional Properties, for the
redemption of Partnership Units or for such other purposes as the General
Partner may determine in its sole and absolute discretion. Additional Funds may
be obtained by the Partnership, at the election of the General Partner, in any
manner provided in, and in accordance with, the terms of this Section 4.3
without the approval of any Limited Partners.
(b) Additional Capital Contributions. The General Partner, on
behalf of the Partnership, may obtain any Additional Funds by accepting Capital
Contributions from any Partners or other Persons. In connection with any such
Capital Contribution (of cash or property), the General Partner is hereby
authorized to cause the Partnership from time to time to issue additional
Partnership Units (as set forth in Section 4.2 above) in consideration therefor
and the Percentage Interests of the General Partner and the Limited Partners
shall be adjusted to reflect the issuance of such additional Partnership Units .
(c) Loans by Third Parties. The General Partner, on behalf of the
Partnership, may obtain any Additional Funds by causing the Partnership to incur
Debt to any Person upon such terms as the General Partner determines
appropriate, including making such Debt convertible, redeemable or exchangeable
for Partnership Units; provided, however, that the Partnership shall not incur
any such Debt if (i) a breach, violation or default of such Debt would be
27
deemed to occur by virtue of the Transfer of any Partnership Interest, or (ii)
such Debt is recourse to any Partner (unless the Partner otherwise agrees).
(d) General Partner Loans. The General Partner, on behalf of the
Partnership, may obtain any Additional Funds by causing the Partnership to incur
Debt with the General Partner (each, a "General Partner Loan") if (i) such Debt
is, to the extent permitted by law, on substantially the same terms and
conditions (including interest rate, repayment schedule, and conversion,
redemption, repurchase and exchange rights) as Funding Debt incurred by the
General Partner, the net proceeds of which are loaned to the Partnership to
provide such Additional Funds, or (ii) such Debt is on terms and conditions no
less favorable to the Partnership than would be available to the Partnership
from any third party; provided, however, that the Partnership shall not incur
any such Debt if (a) a breach, violation or default of such Debt would be deemed
to occur by virtue of the Transfer of any Partnership Interest, or (b) such Debt
is recourse to any Partner (unless the Partner otherwise agrees).
(e) Issuance of Securities by the General Partner. The General
Partner shall not issue any additional REIT Shares, Preferred Shares, Junior
Shares or New Securities unless the General Partner contributes the cash
proceeds or other consideration received from the issuance of such additional
REIT Shares, Preferred Shares, Junior Shares or New Securities, as the case may
be, and from the exercise of the rights contained in any such additional New
Securities, to the Partnership in exchange for (x) in the case of an issuance of
REIT Shares, Partnership Common Units, or (y) in the case of an issuance of
Preferred Shares, Junior Shares or New Securities, Partnership Units with
designations, preferences and other rights, terms and provisions that are
substantially the same as the designations, preferences and other rights, terms
and provisions of such Preferred Shares, Junior Shares or New Securities;
provided, however, that notwithstanding the foregoing, the General Partner may
issue REIT Shares, Preferred Shares, Junior Shares or New Securities (a)
pursuant to Section 4.4 or Section 8.6(b) hereof, (b) pursuant to a dividend or
distribution (including any stock split) of REIT Shares, Preferred Shares,
Junior Shares or New Securities to all of the holders of REIT Shares, Preferred
Shares, Junior Shares or New Securities, as the case may be, (c) upon a
conversion, redemption or exchange of Preferred Shares, (d) upon a conversion of
Junior Shares into REIT Shares, (e) upon a conversion, redemption, exchange or
exercise of New Securities, or (f) in connection with an acquisition of a
property or other asset to be owned, directly or indirectly, by the General
Partner if the General Partner determines that such acquisition is in the best
interests of the Partnership. In the event of any issuance of additional REIT
Shares, Preferred Shares, Junior Shares or New Securities by the General
Partner, and the contribution to the Partnership, by the General Partner, of the
cash proceeds or other consideration received from such issuance, the
Partnership shall pay the General Partner's expenses associated with such
issuance, including any underwriting discounts or commissions.
28
Section 4.4 Stock Option Plan.
(a) Options Granted to Independent Directors. If at any time or
from time to time, in connection with the Stock Option Plan, a stock option
granted to an Independent Director is duly exercised:
(i) the General Partner shall, as soon as practicable after
such exercise, make a Capital Contribution to the Partnership in an amount
equal to the exercise price paid to the General Partner by such exercising
party in connection with the exercise of such stock option.
(ii) Notwithstanding the amount of the Capital Contribution
actually made pursuant to Section 4.4(b)(i) hereof, the General Partner
shall be deemed to have contributed to the Partnership as a Capital
Contribution, in consideration of an additional Limited Partner Interest
(expressed in and as additional Partnership Common Units), an amount equal
to the Value of a REIT Share as of the date of exercise multiplied by the
number of REIT Shares then being issued in connection with the exercise of
such stock option.
(iii) An equitable Percentage Interest adjustment shall be
made in which the General Partner shall be treated as having made a cash
contribution equal to the amount described in Section 4.4(b)(ii) hereof.
(b) Special Valuation Rule. For purposes of this Section 4.4, in
determining the Value of a REIT Share, only the trading date immediately
preceding the exercise of the relevant stock option under the Stock Option Plan
shall be considered.
(c) Future Stock Incentive Plans. Nothing in this Agreement shall
be construed or applied to preclude or restrain the General Partner from
adopting, modifying or terminating stock incentive plans, in addition to the
Stock Option Plan, for the benefit of employees, directors or other business
associates of the General Partner, the Partnership or any of their Affiliates.
The Limited Partners acknowledge and agree that, in the event that any such plan
is adopted, modified or terminated by the General Partner amendments to this
Section 4.4 may become necessary or advisable and that any approval or consent
to any such amendments requested by the General Partner shall not be
unreasonably withheld or delayed.
Section 4.5 LTIP Units.
(a) Issuance of LTIP Units. The General Partner may from time to
time issue LTIP Units to Persons who provide services to the Partnership, for
such consideration as the General Partner may determine to be appropriate, and
admit such Persons as Limited Partners. Subject to the following provisions of
this Section and the special provisions of Sections 4.9, 6.3(b) and 14.4, LTIP
Units shall be treated as Partnership Common Units, with all of the rights,
privileges
29
and obligations attendant thereto. For purposes of computing the Partners'
Percentage Interests, LTIP Units shall be treated as Partnership Common Units.
(b) Adjustments to LTIP Units. The Partnership shall maintain at
all times a one-to-one correspondence between LTIP Units and Partnership Common
Units for conversion, distribution and other purposes, including without
limitation complying with the following procedures: If an Adjustment Event (as
defined below) occurs, then the General Partner shall make a corresponding
adjustment to the LTIP Units to maintain a one-for-one conversion and economic
equivalence ratio between Partnership Common Units and LTIP Units. The following
shall be "Adjustment Events": (A) the Partnership makes a distribution on all
outstanding Partnership Common Units in Partnership Units, (B) the Partnership
subdivides the outstanding Partnership Common Units into a greater number of
units or combines the outstanding Partnership Common Units into a smaller number
of units, or (C) the Partnership issues any Partnership Units in exchange for
its outstanding Partnership Common Units by way of a reclassification or
recapitalization of its Partnership Common Units. If more than one Adjustment
Event occurs, the adjustment to the LTIP Units need be made only once using a
single formula that takes into account each and every Adjustment Event as if all
Adjustment Events occurred simultaneously. For the avoidance of doubt, the
following shall not be Adjustment Events: (x) the issuance of Partnership Units
in a financing, reorganization, acquisition or other similar business
transaction, (y) the issuance of Partnership Units pursuant to any employee
benefit or compensation plan or distribution reinvestment plan, or (z) the
issuance of any Partnership Units to the General Partner in respect of a capital
contribution to the Partnership of proceeds from the sale of securities by the
General Partner. If the Partnership takes an action affecting the Partnership
Common Units other than actions specifically described above as "Adjustment
Events" and in the opinion of the General Partner such action would require an
adjustment to the LTIP Units to maintain the one-to-one correspondence described
above, the General Partner shall have the right to make such adjustment to the
LTIP Units, to the extent permitted by law and by the [Stock Option Plan], in
such manner and at such time as the General Partner, in its sole discretion, may
determine to be appropriate under the circumstances. If an adjustment is made to
the LTIP Units as herein provided the Partnership shall promptly file in the
books and records of the Partnership an officer's certificate setting forth such
adjustment and a brief statement of the facts requiring such adjustment, which
certificate shall be conclusive evidence of the correctness of such adjustment
absent manifest error. Promptly after filing of such certificate, the
Partnership shall mail a notice to each LTIP Unitholder setting forth the
adjustment to his or her LTIP Units and the effective date of such adjustment.
(c) Priority. The LTIP Units shall rank pari passu with the
Partnership Common Units as to the payment of regular and special periodic or
other distributions and distribution of assets upon liquidation, dissolution or
winding up. As to the payment of distributions and as to distribution of assets
upon liquidation, dissolution or winding up, any class or series of Partnership
Units or Partnership Interests which by its terms specifies that it shall rank
junior to, on a parity with, or senior to the Partnership Common Units shall
also rank junior to, or pari passu with, or senior to, as the case may be, the
LTIP Xxxxx.
00
(x) Special Provisions. LTIP Units shall be subject to the
following special provisions:
(i) Vesting Agreements and Transferability. LTIP Units may,
in the sole discretion of the General Partner, be issued subject to
vesting, forfeiture and additional restrictions on transfer pursuant to the
terms of a Vesting Agreement. The terms of any Vesting Agreement may be
modified by the General Partner from time to time in its sole discretion,
subject to any restrictions on amendment imposed by the relevant Vesting
Agreement or by the [Stock Option Plan], if applicable. LTIP Units that
have vested under the terms of a Vesting Agreement are referred to as
"Vested LTIP Units"; all other LTIP Units shall be treated as "Unvested
Incentive Units." Subject to the terms of any Vesting Agreement, a LTIP
Unitholder shall be entitled to transfer his or her LTIP Units to the same
extent, and subject to the same restrictions as holders of Partnership
Common Units are entitled to transfer their Partnership Common Units
pursuant to Article XI.
(ii) Forfeiture. Unless otherwise specified in the Vesting
Agreement, upon the occurrence of any event specified in a Vesting
Agreement as resulting in either the right of the Partnership or the
General Partner to repurchase LTIP Units at a specified purchase price or
some other forfeiture of any LTIP Units, then if the Partnership or the
General Partner exercises such right to repurchase or forfeiture in
accordance with the applicable Vesting Agreement, then the relevant LTIP
Units shall immediately, and without any further action, be treated as
cancelled and no longer outstanding for any purpose. Unless otherwise
specified in the Vesting Agreement, no consideration or other payment shall
be due with respect to any LTIP Units that have been forfeited, other than
any distributions declared with respect to a Partnership Record Date prior
to the effective date of the forfeiture. In connection with any repurchase
or forfeiture of LTIP Units, the balance of the portion of the Capital
Account of the Holder that is attributable to all of his or her LTIP Units
shall be reduced by the amount, if any, by which it exceeds the target
balance contemplated by Section 6.3(b), calculated with respect to the
Holder's remaining LTIP Units, if any.
(iii) Allocations. LTIP Units shall generally be treated as
Partnership Common Units for purposes of Article VI, but shall also be
entitled to certain special allocations of gain under Section 6.3(b).
(iv) Redemption. The Redemption Right provided to Limited
Partners under Section 8.6 shall not apply with respect to LTIP Units
unless and until they are converted to Partnership Common Units as provided
in Section 4.9.
31
(v) Legend. Any certificate evidencing an LTIP Unit shall
bear an appropriate legend indicating that additional terms, conditions and
restrictions on transfer, including without limitation any Vesting
Agreement, apply to the LTIP Unit.
(vi) Conversion to Partnership Common Units. Vested LTIP
Units are eligible to be converted into Partnership Common Units under
Section 4.9.
(vii) Voting. LTIP Units shall have the voting rights
provided in Section 14.4.
Section 4.6 No Interest; No Return. No Partner shall be entitled to
interest on its Capital Contribution or on such Partner's Capital Account.
Except as provided herein or by law, no Partner shall have any right to demand
or receive the return of its Capital Contribution from the Partnership.
Section 4.7 Conversion or Redemption of Preferred Shares.
(a) Conversion of Preferred Shares. If, at any time, any of the
Preferred Shares are converted into REIT Shares, in whole or in part, then a
number of Partnership Preferred Units equal to the number of Preferred Shares so
converted shall automatically be converted into a number of Partnership Common
Units equal to (i) the number of REIT Shares issued upon such conversion divided
by (ii) the Adjustment Factor then in effect, and the Percentage Interests of
the General Partner and the Limited Partners shall be adjusted to reflect such
conversion.
(b) Redemption of Preferred Shares. If, at any time, any
Preferred Shares are redeemed (whether by exercise of a put or call,
automatically or by means of another arrangement) by the General Partner for
cash, the Partnership shall, immediately prior to such redemption of Preferred
Shares, redeem an equal number of Partnership Preferred Units held by the
General Partner, upon the same terms and for the same price per Partnership
Preferred Unit, as such Preferred Shares are redeemed.
Section 4.8 Conversion or Redemption of Junior Shares.
(a) Conversion of Junior Shares. If, at any time, any of the
Junior Shares are converted into REIT Shares, in whole or in part, then a number
of Partnership Common Units equal to (i) the number of REIT Shares issued upon
such conversion divided by (ii) the Adjustment Factor then in effect shall be
issued to the General Partner, and the Percentage Interests of the General
Partner and the Limited Partners shall be adjusted to reflect such conversion.
(b) Redemption of Junior Shares. If, at any time, any Junior
Shares are redeemed (whether by exercise of a put or call, automatically or by
means of another arrangement) by the General Partner for cash, the Partnership
shall, immediately prior to such redemption of Junior
32
Shares, redeem an equal number of Partnership Junior Units held by the General
Partner, upon the same terms and for the same price per Partnership Junior Unit,
as such Junior Shares are redeemed.
Section 4.9 Conversion of LTIP Units.
(a) Right to Convert LTIP Units into Partnership Common Units. A
Holder of LTIP Units shall have the right (the "Conversion Right"), at his or
her option, at any time to convert all or a portion of his or her Vested LTIP
Units into Partnership Common Units; provided, however, that a Holder may not
exercise the Conversion Right for fewer than [one thousand (1,000)] Vested LTIP
Units or, if such Holder holds fewer than [one thousand] Vested LTIP Units, all
of the Holder's Vested LTIP Units. Holders of LTIP Unitholders shall not have
the right to convert Unvested Incentive Units into Partnership Common Units
until they become Vested LTIP Units; provided, however, that when a Holder of
LTIP Units is notified of the expected occurrence of an event that will cause
his or her Unvested Incentive Units to become Vested LTIP Units, such Person may
give the Partnership a Conversion Notice conditioned upon and effective as of
the time of vesting, and such Conversion Notice, unless subsequently revoked by
the Holder of the Units, shall be accepted by the Partnership subject to such
condition. The General Partner shall have the right at any time to cause a
conversion of Vested LTIP Units into Partnership Common Units. In all cases, the
conversion of any LTIP Units into Partnership Common Units shall be subject to
the conditions and procedures set forth in this Section 4.9.
(b) Number of Units Convertible. A Holder of Vested LTIP Units
may convert such Units into an equal number of fully paid and non-assessable
Partnership Common Units, giving effect to all adjustments (if any) made
pursuant to Section 4.2(b). Notwithstanding the foregoing, in no event may a
Holder of Vested LTIP Units convert a number of Vested LTIP Units that exceeds
(x) the Economic Capital Account Balance of such Holder, to the extent
attributable to its ownership of LTIP Units, divided by (y) the Partnership
Common Unit Economic Balance, in each case as determined as of the effective
date of conversion (the "Capital Account Limitation").
(c) Notice. In order to exercise his or her Conversion Right, a
Holder of LTIP Units shall deliver a notice (a "Conversion Notice") in the form
attached as Exhibit E to the Partnership (with a copy to the General Partner)
not less than 10 nor more than 60 days prior to a date (the "Conversion Date")
specified in such Conversion Notice; provided, however, that if the General
Partner has not given to the LTIP Unitholders notice of a proposed or upcoming
Transaction (as defined below) at least thirty (30) days prior to the effective
date of such Transaction, then Holders of LTIP Unit shall have the right to
deliver a Conversion Notice until the earlier of (x) the tenth (10th) day after
such notice from the General Partner of a Transaction or (y) the third business
day immediately preceding the effective date of such Transaction. A Conversion
Notice shall be provided in the manner provided in Section 15.1. Each Holder of
LTIP Units covenants and agrees with the Partnership that all Vested LTIP Units
to be converted pursuant to this Section 4.9 shall be free and clear of all
liens. Notwithstanding anything herein to the contrary, a Holder of LTIP Units
may deliver a Redemption Notice pursuant to Section 8.6 of the Partnership
Agreement relating to those Partnership Common Units that will be issued to such
holder upon conversion of such LTIP
33
Units into Partnership Common Units in advance of the Conversion Date; provided,
however, that the redemption of such Partnership Common Units by the Partnership
shall in no event take place until after the Conversion Date. For clarity, it is
noted that the objective of this paragraph is to put a Holder of LTIP Units in a
position where, if he or she so wishes, the Partnership Common Units into which
his or her Vested LTIP Units will be converted can be redeemed by the
Partnership simultaneously with such conversion, with the further consequence
that, if the General Partner elects to assume the Partnership's redemption
obligation with respect to such Partnership Common Units under Section 8.6 of
the Partnership Agreement by delivering to such holder REIT Shares rather than
cash, then such holder can have such REIT Shares issued to him or her
simultaneously with the conversion of his or her Vested LTIP Units into
Partnership Common Units. The General Partner shall cooperate with a Holder of
LTIP Units to coordinate the timing of the different events described in the
foregoing sentence.
(d) Forced Conversion. The Partnership, at any time at the
election of the General Partner, may cause any number of Vested LTIP Units held
by a Holder of LTIP Units to be converted (a "Forced Conversion") into an equal
number of Partnership Common Units, giving effect to all adjustments (if any)
made pursuant to Section 4.2(b); provided, that the Partnership may not cause
Forced Conversion of any LTIP Units that would not at the time be eligible for
conversion at the option of such LTIP Unitholder pursuant to paragraph (b)
above. In order to exercise its right of Forced Conversion, the Partnership
shall deliver a notice (a "Forced Conversion Notice") in the form attached as
Exhibit F to the applicable Holder not less than 10 nor more than 60 days prior
to the Conversion Date specified in such Forced Conversion Notice. A Forced
Conversion Notice shall be provided in the manner provided in Section 15.1.
(e) Conversion Procedures. A conversion of Vested LTIP Units for
which the Holder has given a Conversion Notice or the Partnership has given a
Forced Conversion Notice shall occur automatically after the close of business
on the applicable Conversion Date without any action on the part of such Holder
of LTIP Units, as of which time such Holder of LTIP Units shall be credited on
the books and records of the Partnership with the issuance as of the opening of
business on the next day of the number of Partnership Common Units issuable upon
such conversion. After the conversion of LTIP Units as aforesaid, the
Partnership shall deliver to such Holder of LTIP Units, upon his or her written
request, a certificate of the General Partner certifying the number of
Partnership Common Units and remaining LTIP Units, if any, held by such Person
immediately after such conversion.15.1.
(f) Treatment of Capital Account. For purposes of making future
allocations under Section 6.3(b) and applying the Capital Account Limitation,
the portion of the Economic Capital Account balance of the applicable Holder
that is treated as attributable to his or her LTIP Units shall be reduced, as of
the date of conversion, by the product of the number of LTIP Units converted and
the Partnership Common Unit Economic Balance.
(g) Mandatory Conversion in Connection with a Transaction. If the
Partnership or the General Partner shall be a party to any transaction
(including without limitation
34
a merger, consolidation, unit exchange, self tender offer for all or
substantially all Partnership Common Units or other business combination or
reorganization, or sale of all or substantially all of the Partnership's assets,
but excluding any transaction which constitutes an Adjustment Event), in each
case as a result of which Partnership Common Units shall be exchanged for or
converted into the right, or the Holders of such Units shall otherwise be
entitled, to receive cash, securities or other property or any combination
thereof (each of the foregoing being referred to herein as a "Transaction"),
then the General Partner shall, immediately prior to the Transaction, exercise
its right to cause a Forced Conversion with respect to the maximum number of
LTIP Units then eligible for conversion, taking into account any allocations
that occur in connection with the Transaction or that would occur in connection
with the Transaction if the assets of the Partnership were sold at the
Transaction price or, if applicable, at a value determined by the General
Partner in good faith using the value attributed to the Partnership Units in the
context of the Transaction (in which case the Conversion Date shall be the
effective date of the Transaction).
In anticipation of such Forced Conversion and the consummation of the
Transaction, the Partnership shall use commercially reasonable efforts to cause
each Holder of LTIP Units to be afforded the right to receive in connection with
such Transaction in consideration for the Partnership Common Units into which
his or her LTIP Units will be converted the same kind and amount of cash,
securities and other property (or any combination thereof) receivable upon the
consummation of such Transaction by a Holder of the same number of Partnership
Common Units, assuming such Holder of Partnership Common Units is not a Person
with which the Partnership consolidated or into which the Partnership merged or
which merged into the Partnership or to which such sale or transfer was made, as
the case may be (a "Constituent Person"), or an affiliate of a Constituent
Person. In the event that Holders of Partnership Common Units have the
opportunity to elect the form or type of consideration to be received upon
consummation of the Transaction, prior to such Transaction the General Partner
shall give prompt written notice to each Holder of LTIP Units of such election,
and shall use commercially reasonable efforts to afford such Holders the right
to elect, by written notice to the General Partner, the form or type of
consideration to be received upon conversion of each LTIP Unit held by such
Holder into Partnership Common Units in connection with such Transaction. If a
Holder of LTIP Units fails to make such an election, such Holder (and any of its
transferees) shall receive upon conversion of each LTIP Unit held him or her (or
by any of his or her transferees) the same kind and amount of consideration that
a Holder of a Partnership Common Unit would receive if such Partnership Common
Unit Holder failed to make such an election.
Subject to the rights of the Partnership and the General Partner under
any Vesting Agreement and the [Stock Option Plan], the Partnership shall use
commercially reasonable effort to cause the terms of any Transaction to be
consistent with the provisions of this Section 4.9 and to enter into an
agreement with the successor or purchasing entity, as the case may be, for the
benefit of any Holders of LTIP Units whose LTIP Units will not be converted into
Partnership Common Units in connection with the Transaction that will (i)
contain provisions enabling the Holders of LTIP Units that remain outstanding
after such Transaction to convert their LTIP Units into securities as comparable
as reasonably possible under the circumstances to the Partnership Common Units
and (ii) preserve as
35
far as reasonably possible under the circumstances the distribution, special
allocation, conversion, and other rights set forth in the Partnership Agreement
for the benefit of the Holders of LTIP Units.
Section 4.10 Other Contribution Provisions. In the event that any
Partner is admitted to the Partnership and is given a Capital Account in
exchange for services rendered to the Partnership, such transaction shall be
treated by the Partnership and the affected Partner as if the Partnership had
compensated such partner in cash and such Partner had contributed the cash to
the capital of the Partnership. In addition, with the consent of the General
Partner, one or more Limited Partners may enter into contribution agreements
with the Partnership which have the effect of providing a guarantee of certain
obligations of the Partnership.
Section 4.11 Not Publicly Traded. The General Partner, on behalf of the
Partnership, shall use its best efforts not to take any action which would
result in the Partnership being a "publicly traded partnership" under and as
such term is defined in Section 7704(b) of the Code. Subject to this Section
4.11, it is expressly acknowledged and agreed by the Partners that the General
Partner may, in its sole and absolute discretion, waive or otherwise modify the
application with respect to any Partner(s) or Assignee(s) of any provision
herein restricting, prohibiting or otherwise relating to (i) the Transfer of a
Limited Partnership Interest or the Partnership Units evidencing the same, (ii)
the admission of any Limited Partners and (iii) the Redemption Rights of such
Partners, and that such waivers or modifications may be made by the General
Partner at any time or from time to time, including, without limitation,
concurrently with the issuance of any Partnership Units pursuant to the terms of
the Partnership Agreement and which may be set forth in a Partnership Unit
Designation.
ARTICLE V
DISTRIBUTIONS
Section 5.1 Requirement and Characterization of Distributions. Subject
to the terms of any Partnership Unit Designation, the General Partner shall
cause the Partnership to distribute quarterly, after payments of distributions
pursuant to Section 5.7 hereof, all, or such portion as the General Partner may
in its sole and absolute discretion determine, of Available Cash generated by
the Partnership during such quarter to the Holders of Partnership Units on such
Partnership Record Date with respect to such quarter: (i) first, with respect to
any Partnership Interests that are entitled to any preference in distribution,
in accordance with the rights of such class(es) of Partnership Interests (and,
within such class(es), pro rata in proportion to the respective Percentage
Interests on such Partnership Record Date), and (ii) second, with respect to any
Partnership Interests that are not entitled to any preference in distribution,
in accordance with the rights of such class of Partnership Interests (and,
within such class, pro rata in proportion to the respective Percentage Interests
on such Partnership Record Date). Distributions payable with respect to any
Partnership Units that were not outstanding during the entire quarterly period
in respect of which any distribution is made shall be prorated based on the
portion of the period that such units
36
were outstanding. The General Partner in its sole and absolute discretion may
distribute to the Unitholders Available Cash on a more frequent basis and
provide for an appropriate record date. The General Partner shall make such
reasonable efforts, as determined by it in its sole and absolute discretion and
consistent with the General Partner's qualification as a REIT, to cause the
Partnership to distribute sufficient amounts to enable the General Partner to
pay shareholder dividends that will (a) satisfy the requirements for
qualification as a REIT under the Code and Regulations (the "REIT Requirements")
and (b) except to the extent otherwise determined by the General Partner, avoid
any federal income or excise tax liability of the General Partner.
Section 5.2 Distributions in Kind. No right is given to any Unitholder
to demand and receive property other than cash as provided in this Agreement.
The General Partner may determine, in its sole and absolute discretion, to make
a distribution in kind of Partnership assets to the Unitholders, and such assets
shall be distributed in such a fashion as to ensure that the fair market value
is distributed and allocated in accordance with Articles 5, 6 and 10 hereof.
Section 5.3 Amounts Withheld. All amounts withheld pursuant to the Code
or any provisions of any state or local tax law and Section 10.4 hereof with
respect to any allocation, payment or distribution to any Unitholder shall be
treated as amounts paid or distributed to such Unitholder pursuant to Section
5.1 hereof for all purposes under this Agreement.
Section 5.4 Distributions Upon Liquidation. Notwithstanding
the other provisions of this Article 5, net proceeds from a Terminating Capital
Transaction, and any other cash received or reductions in reserves made after
commencement of the liquidation of the Partnership, shall be distributed to the
Unitholders in accordance with Section 13.2 hereof.
Section 5.5 Distributions to Reflect Issuance of Additional Partnership
Units. In the event that the Partnership issues additional Partnership Units
pursuant to the provisions of Article 4 hereof, Subject to Section 7.3(d), the
General Partner is hereby authorized to make such revisions to this Article 5 as
it determines are necessary or desirable to reflect the issuance of such
additional Partnership Units, including, without limitation, making preferential
distributions to certain classes of Partnership Units. Subject to the terms of a
Partnership Unit Designation, such preferential distributions may be required to
be made by the Partnership regardless of whether there is Available Cash
available for the payment thereof.
Section 5.6 Restricted Distributions. Notwithstanding any provision to
the contrary contained in this Agreement, neither the Partnership nor the
General Partner, on behalf of the Partnership, shall make a distribution to any
Unitholder on account of its Partnership Interest or interest in Partnership
Units if such distribution would violate Section 17-607 of the Act or other
applicable law.
37
ARTICLE VI
ALLOCATIONS
Section 6.1 Timing and Amount of Allocations of Net Income and Net
Loss. Net Income and Net Loss of the Partnership shall be determined and
allocated with respect to each Partnership Year of the Partnership as of the end
of each such year. Except as otherwise provided in this Article 6, and subject
to Section 11.6(c) hereof, an allocation to a Unitholder of a share of Net
Income or Net Loss shall be treated as an allocation of the same share of each
item of income, gain, loss or deduction that is taken into account in computing
Net Income or Net Loss.
Section 6.2 General Allocations.
(a) In General. Subject to the terms of any Partnership Unit
Designation, except as otherwise provided in this Article 6 and subject to
Section 11.6(c) hereof, Net Income and Net Loss shall be allocated to each of
the Holders of Partnership Units holding the same class of Partnership Units in
accordance with their respective Percentage Interests in such class at the end
of each Partnership Year.
(b) Allocations to Reflect Issuance of Additional Partnership
Units. In the event that the Partnership issues additional Partnership Units
pursuant to the provisions of Article 4 hereof, the General Partner is hereby
authorized to make such revisions to this Section 6.2 as it determines are
necessary or desirable to reflect the terms of the issuance of such additional
Partnership Units, including, without limitation, making preferential
allocations to certain classes of Partnership Units.
Section 6.3 Additional Allocation Provisions. Notwithstanding the
foregoing provisions of this Article 6:
(a) Special Allocations Regarding Partnership Preferred Units. If
any Partnership Preferred Units are redeemed pursuant to Section 4.7(b) hereof
(treating a full liquidation of the General Partner Interest for purposes of
this Section 6.3(a) as including a redemption of any then outstanding
Partnership Preferred Units pursuant to Section 4.7(b) hereof), for the
Partnership Year that includes such redemption (and, if necessary, for
subsequent Partnership Years) (a) gross income and gain shall be allocated to
the General Partner to the extent that the Redemption Amounts paid or payable
with respect to the Partnership Preferred Units so redeemed (or treated as
redeemed) exceeds the aggregate Capital Contributions (net of liabilities
assumed or taken subject to by the Partnership) per Partnership Preferred Unit
allocable to the Partnership Preferred Units so redeemed (or treated as
redeemed) and (b) deductions and losses shall be allocated to the General
Partner to the extent that the aggregate Capital Contributions (net of
liabilities assumed or taken subject to by the Partnership) per Partnership
Preferred Unit allocable to the Partnership Preferred Units so redeemed (or
treated as redeemed) exceeds the Redemption Amount paid or payable with respect
to the Partnership Preferred Units so redeemed (or treated as redeemed).
38
(b) Special Allocations Regarding LTIP Units. Notwithstanding the
provisions of Section 6.2 above, but subject to the prior allocation of income,
gain, deduction and loss under paragraph (a) above and to the terms of any
Partnership Unit Designation in respect of any class of Partnership Interests
ranking senior to the LTIP units with respect to return of capital or any
preferential or priority return, any Liquidating Gains shall first be allocated
to the Holders of LTIP Units until the Economic Capital Account Balances of such
Holders, to the extent attributable to their ownership of LTIP Units, are equal
to (i) the Partnership Common Unit Economic Balance, multiplied by (ii) the
number of their LTIP Units; provided that no such Liquidating Gains will be
allocated with respect to any particular LTIP Unit unless and to the extent that
the Partnership Common Unit Economic Balance exceeds the Partnership Common Unit
Economic Balance in existence at the time such LTIP Unit was issued. For this
purpose, "Liquidating Capital Gains" means net capital gains realized in
connection with the actual or hypothetical sale of all or substantially all of
the assets of the Partnership, including but not limited to net capital gain
realized in connection with an adjustment to the Gross Asset Value of
Partnership assets under Section 704(b) of the Code. The "Economic Capital
Account Balances" of the Holders of LTIP Units will be equal to their Capital
Account balances, plus the amount of their shares of any Partner Minimum Gain or
Partnership Minimum Gain, in either case to the extent attributable to their
ownership of LTIP Units. Similarly, the "Partnership Common Unit Economic
Balance" shall mean (i) the Capital Account Balance of the General Partner, plus
the amount of the General Partner's share of any Partner Minimum Gain or
Partnership Minimum Gain, in either case to the extent attributable to the
General Partner's ownership of Partnership Common Units and computed on a
hypothetical basis after taking into account all allocations through the date on
which any allocation is made under this Section 6.3(b), divided by (ii) the
number of the General Partner's Partnership Common Units. Any such allocations
shall be made among the LTIP Unitholders in proportion to the amounts required
to be allocated to each under this Section 6.3(b). The parties agree that the
intent of this Section 6.3(b) is to make the Capital Account balance associated
with each LTIP Unit to be economically equivalent to the Capital Account balance
associated with the General Partner's Partnership Common Units (on a per-Unit
basis), but only if and to the extent that the Capital Account balance
associated with the General Partner's Partnership Common Units has increased on
a per-Unit basis since the issuance of the relevant LTIP Unit.
(c) Regulatory Allocations.
(i) Minimum Gain Chargeback. Except as otherwise provided in
Regulations Section 1.704-2(f), notwithstanding the provisions of Section
6.2 hereof, or any other provision of this Article 6, if there is a net
decrease in Partnership Minimum Gain during any Partnership Year, each
Holder of Partnership Common Units shall be specially allocated items of
Partnership income and gain for such year (and, if necessary, subsequent
years) in an amount equal to such Holder'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
39
Holder pursuant thereto. The items to be allocated shall be determined in
accordance with Regulations Sections 1.704-2(f)(6) and 1.704-2(j)(2). This
Section 6.3(c)(i) is intended to qualify as a "minimum gain chargeback"
within the meaning of Regulations Section 1.704-2(f) and shall be
interpreted consistently therewith.
(ii) Partner Minimum Gain Chargeback. Except as otherwise
provided in Regulations Section 1.704-2(i)(4) or in Section 6.3(c)(i)
hereof, if there is a net decrease in Partner Minimum Gain attributable to
a Partner Nonrecourse Debt during any Partnership Year, each Holder of
Partnership Common Units 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 Holder's share of the net decrease in
Partner Minimum Gain attributable to such Partner Nonrecourse Debt,
determined in accordance with Regulations Section 1.704-2(i)(4).
Allocations pursuant to the previous sentence shall be made in proportion
to the respective amounts required to be allocated to each General Partner,
Limited Partner and other Holder pursuant thereto. The items to be so
allocated shall be determined in accordance with Regulations Sections
1.704-2(i)(4) and 1.704-2(j)(2). This Section 6.3(c)(ii) is intended to
qualify as a "chargeback of partner nonrecourse debt minimum gain" within
the meaning of Regulations Section 1.704-2(i) and shall be interpreted
consistently therewith.
(iii) Nonrecourse Deductions and Partner Nonrecourse
Deductions. Any Nonrecourse Deductions for any Partnership Year shall be
specially allocated to the Holders of Partnership Common Units in
accordance with their Partnership Common Units. Any Partner Nonrecourse
Deductions for any Partnership Year shall be specially allocated to the
Holder(s) 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).
(iv) Qualified Income Offset. If any Holder of Partnership
Common Units unexpectedly receives an adjustment, allocation or
distribution described in Regulations Section 1.704-1(b)(2)(ii)(d)(4), (5)
or (6), items of Partnership income and gain shall be allocated, in
accordance with Regulations Section 1.704-1(b)(2)(ii)(d), to such Holder in
an amount and manner sufficient to eliminate, to the extent required by
such Regulations, the Adjusted Capital Account Deficit of such Holder as
quickly as possible, provided that an allocation pursuant to this Section
6.3(c)(iv) shall be made if and only to the extent that such Holder would
have an Adjusted Capital Account Deficit after all other allocations
provided in this Article 6 have been tentatively made as if this Section
6.3(c)(iv) were not in the Agreement. It is intended that this Section
6.3(c)(iv) qualify and be construed as a
40
"qualified income offset" within the meaning of Regulations Section 1.704-
1(b)(2)(ii)(d) and shall be interpreted consistently therewith.
(v) Gross Income Allocation. In the event that any Holder of
Partnership Common Units has a deficit Capital Account at the end of any
Partnership Year that is in excess of the sum of (1) the amount (if any)
that such Holder is obligated to restore to the Partnership upon complete
liquidation of such Holder's Partnership Interest (including, the Holder's
interest in outstanding Partnership Preferred Units and other Partnership
Units) and (2) the amount that such Holder 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), each such Holder shall be specially
allocated items of Partnership income and gain in the amount of such excess
to eliminate such deficit as quickly as possible, provided that an
allocation pursuant to this Section 6.3(c)(v) shall be made if and only to
the extent that such Holder would have a deficit Capital Account in excess
of such sum after all other allocations provided in this Article 6 have
been tentatively made as if this Section 6.3(c)(v) and Section 6.3(c)(iv)
hereof were not in the Agreement.
(vi) Limitation on Allocation of Net Loss. To the extent
that any allocation of Net Loss would cause or increase an Adjusted Capital
Account Deficit as to any Holder of Partnership Common Units, such
allocation of Net Loss shall be reallocated among the other Holders of
Partnership Common Units in accordance with their respective Partnership
Common Units, subject to the limitations of this Section 6.3(c)(vi).
(vii) Section 754 Adjustment. To the extent that an
adjustment to the adjusted tax basis of any Partnership asset pursuant to
Code Section 734(b) or Code Section 743(b) is required, pursuant to
Regulations Section1.704-1(b)(2) (iv)(m)(2) or Regulations Section
1.704-1(b)(2)(iv)(m)(4), to be taken into account in determining Capital
Accounts as the result of a distribution to a Holder of Partnership Common
Units in complete liquidation of its interest in the Partnership, the
amount of such adjustment to the Capital Accounts shall be treated as an
item of gain (if the adjustment increases the basis of the asset) or loss
(if the adjustment decreases such basis), and such gain or loss shall be
specially allocated to the Holders in accordance with their Partnership
Common Units in the event that Regulations Section 1.704-1(b)(2)(iv)(m)(2)
applies, or to the Holders to whom such distribution was made in the event
that Regulations Section 1.704- 1(b)(2)(iv)(m)(4) applies.
(viii) Curative Allocations. The allocations set forth in
Sections 6.3(c)(i), (ii), (iii), (iv), (v), (vi) and (vii) hereof (the
"Regulatory Allocations") are intended to comply with certain regulatory
requirements, including the requirements of Regulations Sections 1.704-1(b)
and 1.704-2. Notwithstanding the
41
provisions of Section 6.1 hereof, the Regulatory Allocations shall be taken
into account in allocating other items of income, gain, loss and deduction
among the Holders of Partnership Common Units so that to the extent
possible without violating the requirements giving rise to the Regulatory
Allocations, the net amount of such allocations of other items and the
Regulatory Allocations to each Holder of a Partnership Common Unit shall be
equal to the net amount that would have been allocated to each such Holder
if the Regulatory Allocations had not occurred.
(d) Special Allocations Upon Liquidation. Notwithstanding any
provision in this Article VI to the contrary, in the event that the Partnership
disposes of all or substantially all of its assets in a transaction that will
lead to a liquidation of the Partnership pursuant to Article 13 hereof, then any
Net Income or Net Loss realized in connection with such transaction and
thereafter (and, if necessary, constituent items of income, gain, loss and
deduction) shall be specially allocated among the Partners as required so as to
cause liquidating distributions pursuant to Section 13.2(a)(iv) hereof to be
made in the same amounts and proportions as would have resulted had such
distributions instead been made pursuant to Article 5 hereof.
(e) Allocation of Excess Nonrecourse Liabilities. For purposes of
determining a Holder's proportional share of the "excess nonrecourse
liabilities" of the Partnership within the meaning of Regulation Section
1.752-3(a)(3), the General Partner may use any method of allocation described in
Regulation Section 1.752-3(a)(3) and the relevant interpretative authorities.
Section 6.4 Tax Allocations.
(a) In General. Except as otherwise provided in this Section 6.4,
for income tax purposes under the Code and the Regulations each Partnership item
of income, gain, loss and deduction (collectively, "Tax Items") shall be
allocated among the Holders of Partnership Common Units in the same manner as
its correlative item of "book" income, gain, loss or deduction is allocated
pursuant to Sections 6.2 and 6.3 hereof.
(b) Allocations Respecting Section 704(c) Revaluations.
Notwithstanding Section 6.4(a) hereof, Tax Items with respect to Property that
is contributed to the Partnership with a Gross Asset Value that varies from its
basis in the hands of the contributing Partner immediately preceding the date of
contribution shall be allocated among the Holders of Partnership Common Units
for income tax purposes pursuant to Regulations promulgated under Code Section
704(c) so as to take into account such variation. The Partnership shall account
for such variation under any method approved under Code Section 704(c) and the
applicable Regulations as chosen by the General Partner, including, without
limitation, the "remedial allocation method" as described in Regulations Section
1.704-3(d). In the event that the Gross Asset Value of any partnership asset is
adjusted pursuant to subsection (b) of the definition of "Gross Asset Value"
(provided in Article 1 hereof), subsequent allocations of Tax Items with respect
to such asset shall take account of the variation, if any, between the adjusted
basis of such asset and its Gross Asset Value in the same manner as under Code
Section 704(c) and the applicable Regulations.
42
ARTICLE VII
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 and shall
be exclusively vested in the General Partner, and no Limited Partner shall have
any right to participate in or exercise control or management power over the
business and affairs of the Partnership. The General Partner may not be removed
by the Partners with or without cause, except with the Consent of the General
Partner. In addition to the powers now or hereafter granted a general partner of
a limited partnership under applicable law or that are granted to the General
Partner under any other provision of this Agreement, the General Partner,
subject to the other provisions hereof including Section 7.3, 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:
(i) the making of any expenditures, the lending or borrowing
of money (including, without limitation, making prepayments on loans and
borrowing money or selling assets 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 Code Section 4981) and to make distributions to its
shareholders sufficient to permit the General Partner to maintain REIT
status or otherwise to satisfy the REIT Requirements), the assumption or
guarantee of, or other contracting for, indebtedness and other liabilities,
the issuance of evidences of indebtedness (including the securing of same
by deed to secure debt, mortgage, deed of trust or other lien or
encumbrance on the Partnership's assets) and the incurring of any
obligations that it deems necessary for the conduct of the activities of
the Partnership;
(ii) 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;
(iii) the acquisition, sale, transfer, exchange or other
disposition of any, all or substantially all of the assets of the
Partnership (including, but not limited to, the exercise or grant of any
conversion, option, privilege or subscription right or any other right
available in connection with any assets at any
43
time held by the Partnership) or the merger, consolidation, reorganization
or other combination of the Partnership with or into another entity;
(iv) the mortgage, pledge, encumbrance or hypothecation of
any assets of the Partnership, 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 that it sees fit,
including, without limitation, the financing of the operations and
activities of the General Partner, the Partnership or any of the
Partnership's Subsidiaries, the lending of funds to other Persons
(including, without limitation, the Partnership's Subsidiaries) and the
repayment of obligations of the Partnership, its Subsidiaries and any other
Person in which the Partnership has an equity investment, and the making of
capital contributions to and equity investments in the Partnership's
Subsidiaries;
(v) the management, operation, leasing, landscaping, repair,
alteration, demolition, replacement or improvement of any Property,
including, without limitation, any Contributed Property, or other asset of
the Partnership or any Subsidiary;
(vi) the negotiation, execution and performance of any
contracts, leases, conveyances or other instruments that the General
Partner considers useful or necessary to the conduct of the Partnership's
operations or the implementation of the General Partner's powers under this
Agreement, including contracting with contractors, developers, consultants,
accountants, legal counsel, other professional advisors and other agents
and the payment of their expenses and compensation out of the Partnership's
assets;
(vii) the distribution of Partnership cash or other
Partnership assets in accordance with this Agreement, the holding,
management, investment and reinvestment of cash and other assets of the
Partnership, and the collection and receipt of revenues, rents and income
of the Partnership;
(viii) the maintenance of such insurance for the benefit of
the Partnership and the Partners as it deems necessary or appropriate,
including, without limitation, (i) casualty, liability and other insurance
on the Properties of the Partnership and (ii) liability insurance for the
Indemnitees hereunder;
(ix) the formation of, or acquisition of an interest in, and
the contribution of property to, any further limited or general
partnerships, limited liability companies, joint ventures or other
relationships that it deems desirable (including, without limitation, the
acquisition of interests in, and the contributions of property to, any
Subsidiary and any other Person in which it has an equity investment from
time to time); provided, however, that, as long as the General
44
Partner has determined to continue to qualify as a REIT, the General
Partner may not engage in any such formation, acquisition or contribution
that would cause the General Partner to fail to qualify as a REIT within
the meaning of Code Section 856(a);
(x) the control of any matters affecting the rights and
obligations of the Partnership, including the settlement, compromise,
submission to arbitration or any other form of dispute resolution, or
abandonment, of any claim, cause of action, liability, debt or damages, due
or owing to or from the Partnership, the commencement or defense of suits,
legal proceedings, administrative proceedings, arbitrations or other forms
of dispute resolution, and the representation of the Partnership in all
suits or legal proceedings, administrative proceedings, arbitrations or
other forms of dispute resolution, the incurring of legal expense, and the
indemnification of any Person against liabilities and contingencies to the
extent permitted by law;
(xi) the undertaking of any action in connection with the
Partnership's direct or indirect investment in any Subsidiary or any other
Person (including, without limitation, the contribution or loan of funds by
the Partnership to such Persons);
(xii) except as otherwise specifically set forth in this
Agreement, the determination of the fair market value of any Partnership
property distributed in kind using such reasonable method of valuation as
it may adopt; provided that such methods are otherwise consistent with the
requirements of this Agreement;
(xiii) the enforcement of any rights against any Partner
pursuant to representations, warranties, covenants and indemnities relating
to such Partner's contribution of property or assets to the Partnership;
(xiv) the exercise, directly or indirectly, through any
attorney-in- fact acting under a general or limited power of attorney, of
any right, including the right to vote, appurtenant to any asset or
investment held by the Partnership;
(xv) the exercise of any of the powers of the General
Partner enumerated in this Agreement on behalf of or in connection with any
Subsidiary of the Partnership or any other Person in which the Partnership
has a direct or indirect interest, or jointly with any such Subsidiary or
other Person;
(xvi) the exercise of any of the powers of the General
Partner enumerated in this Agreement on behalf of any Person in which the
Partnership does not have an interest, pursuant to contractual or other
arrangements with such Person;
45
(xvii)the making, execution and delivery of any and all
deeds, leases, notes, deeds to secure debt, mortgages, deeds of trust,
security agreements, conveyances, contracts, guarantees, warranties,
indemnities, waivers, releases or legal instruments or agreements in
writing necessary or appropriate in the judgment of the General Partner for
the accomplishment of any of the powers of the General Partner enumerated
in this Agreement;
(xviii) the issuance of additional Partnership Units, as
appropriate and in the General Partner's sole and absolute discretion, in
connection with Capital Contributions by Additional Limited Partners and
additional Capital Contributions by Partners pursuant to Article 4 hereof;
and
(xix) an election to dissolve the Partnership pursuant to
Section 13.1(c) hereof.
(b) Each of the Limited Partners agrees that, except as provided
in Section 7.3 hereof, 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, 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 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 establish and maintain working capital and
other reserves in such amounts as the General Partner, in its sole and absolute
discretion, deems appropriate and reasonable from time to time.
(d) In exercising its authority under this Agreement, the General
Partner may, but shall be under no obligation to, take into account the tax
consequences to any Partner (including the General 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. 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, the
District of Columbia or
46
any other jurisdiction, in which the Partnership may elect to do business or own
property. Subject to the terms of Section 8.5(a)(iv) 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 to the extent
provided by applicable law) in the State of Delaware and any other state, or the
District of Columbia or other jurisdiction, 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 take any action in contravention
of this Agreement, including, without limitation:
(i) taking any action that would make it impossible to carry
on the ordinary business of the Partnership, except as otherwise provided
in this Agreement;
(ii) possessing Partnership property, or assigning any
rights in specific Partnership property, for other than a Partnership
purpose except as otherwise provided in this Agreement, including, without
limitation, Section 7.10;
(iii) admitting a Person as a Partner, except as otherwise
provided in this Agreement;
(iv) performing any act that would subject a Limited Partner
to liability as a general partner in any jurisdiction or any other
liability except as provided Section 10.4 hereof or under the Act; or
(v) entering into any contract, mortgage, loan or other
agreement that prohibits or restricts, or has the effect of prohibiting or
restricting, the ability of (a) the General Partner, or the Partnership
from satisfying its obligations under Section 8.6 hereof in full or (b) a
Limited Partner from exercising its rights under Section 8.6 hereof to
effect a Redemption in full, except, in either case, with the written
consent of such Limited Partner affected by the prohibition or restriction.
(b) The General Partner shall not, without the prior Consent of
the Limited Partners, undertake, on behalf of the Partnership, any of the
following actions or enter into any transaction that would have the effect of
such transactions:
(i) except as provided in Sections 4.2(a), 5.5, 6.2(b) and
7.3(c) hereof, amend, modify or terminate this Agreement other than to
reflect the
47
admission, substitution, termination or withdrawal of Partners pursuant to
Article 11 or Article 12 hereof;
(ii) make a general assignment for the benefit of creditors
or appoint or acquiesce in the appointment of a custodian, receiver or
trustee for all or any part of the assets of the Partnership; or
(iii) institute any proceeding for bankruptcy on behalf of
the Partnership.
(c) Notwithstanding Section 7.3(b) hereof, 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:
(i) 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;
(ii) to reflect the admission, substitution or withdrawal of
Partners or the termination of the Partnership in accordance with this
Agreement, and to amend Exhibit A in connection with such admission,
substitution or withdrawal;
(iii) 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;
(iv) 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;
(v) (a) to reflect such changes as are reasonably necessary
(i) for the General Partner to maintain its status as a REIT or to satisfy
the REIT Requirements; (b) to reflect the Transfer of all or any part of a
Partnership Interest between the General Partner and any Qualified REIT
Subsidiary;
(vi) to modify the manner in which Capital Accounts are
computed (but only to the extent set forth in the definition of "Capital
Account" or contemplated by the Code or the Regulations); and
48
(vii) to issue additional Partnership Interests in
accordance with Section 4.2.
The General Partner will provide notice to the Limited Partners when any action
under this Section 7.3(c) is taken.
(d) Notwithstanding Sections 7.3(b) and 7.3(c) hereof, this
Agreement shall not be amended, and no action may be taken by the General
Partner, without the Consent of each Partner adversely affected thereby, if such
amendment or action would (i) convert a Limited Partner Interest in the
Partnership into a General Partner Interest (except as a result of the General
Partner acquiring such Partnership Interest), (ii) modify the limited liability
of a Limited Partner, (iii) alter the rights of any Partner to receive the
distributions to which such Partner is entitled, pursuant to Article 5 or
Section 13.2(a)(iv) hereof, or alter the allocations specified in Article 6
hereof (except, in any case, as permitted pursuant to Sections 4.2, 5.5, 6.2(b)
and 7.3(c) hereof), (iv) alter or modify the Redemption rights, Cash Amount or
REIT Shares Amount as set forth in Sections 8.6 and 11.2 hereof, or amend or
modify any related definitions, or (v) amend this Section 7.3(d); provided,
however, that the Consent of each Partner adversely affected shall not be
required for any amendment or action that affects all Partners holding the same
class or series of Partnership Units on a uniform or pro rata basis. Further, no
amendment may alter the restrictions on the General Partner's authority set
forth elsewhere in this Section 7.3 without the Consent specified therein. Any
such amendment or action consented to by any Partner shall be effective as to
that Partner, notwithstanding the absence of such consent by any other Partner.
Section 7.4 Reimbursement of the General Partner.
(a) The General Partner shall not be compensated for its services
as general partner of the Partnership except as provided in this Agreement
(including the provisions of Articles 5 and 6 hereof regarding distributions,
payments and allocations to which it may be entitled in its capacity as the
General Partner).
(b) Subject to Sections 7.4(c) and 15.11 hereof, the Partnership
shall be liable for, and shall reimburse the General Partner on a monthly basis,
or such other basis as the General Partner may determine in its sole and
absolute discretion, for all sums expended in connection with the Partnership's
business, including, without limitation, (i) expenses relating to the ownership
of interests in and management and operation of, or for the benefit of, the
Partnership, (ii) compensation of officers and employees, including, without
limitation, payments under future compensation plans of the General Partner that
may provide for stock units, or phantom stock, pursuant to which employees of
the General Partner will receive payments based upon dividends on or the value
of REIT Shares, (iii) director fees and expenses and (iv) all costs and expenses
of the General Partner being a public company, including costs of filings with
the SEC, reports and other distributions to its shareholders; provided, however,
that the amount of any reimbursement shall be reduced by any interest earned by
the General Partner with respect to bank accounts or other instruments or
accounts held by it on behalf of the Partnership as permitted pursuant to
Section 7.5
49
hereof. Such reimbursements shall be in addition to any reimbursement of the
General Partner as a result of indemnification pursuant to Section 7.7 hereof.
(c) To the extent practicable, Partnership expenses shall be
billed directly to and paid by the Partnership and, subject to Section 15.11
hereof, reimbursements to the General Partner or any of its Affiliates by the
Partnership pursuant to this Section 7.4 shall be treated as non-income
reimbursements, and not as "guaranteed payments" within the meaning of Code
Section 707(c) or other form of gross income.
Section 7.5 Outside Activities of the General Partner. The General
Partner shall not directly or indirectly enter into or conduct any business,
other than in connection with (a) the ownership, acquisition and disposition of
Partnership Interests as General Partner, (b) the management of the business of
the Partnership, (c) the operation of the General Partner as a reporting company
with a class (or classes) of securities registered under the Exchange Act, (d)
the General Partner's operations as a REIT, (e) the offering, sale, syndication,
private placement or public offering of stock, bonds, securities or other
interests, (f) financing or refinancing of any type related to the Partnership
or its assets or activities, (g) any of the foregoing activities as they relate
to a Subsidiary of the Partnership or of the General Partner and (h) such
activities as are incidental thereto. Nothing contained herein shall be deemed
to prohibit the General Partner from executing guarantees of Partnership debt
for which it would otherwise be liable in its capacity as General Partner.
Subject to Section 7.3(b) hereof, the General Partner shall not own any assets
or take title to assets (other than temporarily in connection with an
acquisition prior to contributing such assets to the Partnership) other than
interests in Subsidiaries of the Partnership and the General Partner and
Partnership Interests as the General Partner and other than such cash and cash
equivalents, bank accounts or similar instruments or accounts as the General
Partner deems reasonably necessary, taking into account Section 7.1(d) hereof
and the requirements necessary for the General Partner to carry out its
responsibilities contemplated under this Agreement and the Charter and to
qualify as a REIT. Notwithstanding the foregoing, if the General Partner
acquires assets in its own name and owns Property other than through the
Partnership, the Partners agree to negotiate in good faith to amend this
Agreement, including, without limitation, the definition of "Adjustment Factor,"
to reflect such activities and the direct ownership of assets by the General
Partner. The General Partner and any Affiliates of the General Partner may
acquire Limited Partner Interests and shall be entitled to exercise all rights
of a Limited Partner relating to such Limited Partner Interests.
Section 7.6 Contracts with Affiliates.
(a) The Partnership may lend or contribute funds or other assets
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.
50
(b) Except as provided in Section 7.5 hereof and subject to
Section 3.1 hereof, the Partnership may transfer assets to joint ventures,
limited liability companies, partnerships, corporations, business trusts or
other business entities in which it is or thereby becomes a participant upon
such terms and subject to such conditions consistent with this Agreement and
applicable law as the General Partner, in its sole and absolute discretion,
believes to be advisable.
(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 the Partnership, directly or indirectly, except pursuant to
transactions that are determined by the General Partner in good faith to be fair
and reasonable.
(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 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, any Services Agreement with
Affiliates of any of the Partnership or the General Partner, on such terms as
the General Partner, in its sole and absolute discretion, believes are
advisable.
Section 7.7 Indemnification.
(a) To the fullest extent permitted by applicable law, the
Partnership shall indemnify each Indemnitee from and against any and all losses,
claims, damages, liabilities (whether joint or several), expenses (including,
without limitation, attorney's fees and other legal fees and expenses),
judgments, fines, settlements and other amounts arising from any and all claims,
demands, actions, suits or proceedings, civil, criminal, administrative or
investigative, that relate to the operations of the Partnership ("Actions") as
set forth in this Agreement in which such Indemnitee may be involved, or is
threatened to be involved, as a party or otherwise; provided, however, that the
Partnership shall not indemnify an Indemnitee (i) for willful misconduct or a
knowing violation of the law or (ii) for any transaction for which such
Indemnitee received an improper personal benefit in violation or breach of any
provision of this Agreement. Without limitation, the foregoing indemnity shall
extend to any liability of any Indemnitee, pursuant to a loan guaranty or
otherwise, for any indebtedness of the Partnership or any Subsidiary of the
Partnership (including, without limitation, any indebtedness which the
Partnership or any Subsidiary of the Partnership has assumed or taken subject
to), and the General Partner is hereby authorized and empowered, on behalf of
the Partnership, to enter into one or more indemnity agreements consistent with
the provisions of this Section 7.7 in favor of any Indemnitee having or
potentially having liability for any such indebtedness. It is the intention of
this Section 7.7(a) that the Partnership indemnify each Indemnitee to the
fullest extent permitted by law. The termination of any proceeding by judgment,
order or
51
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 of an Indemnitee or upon a plea of nolo
contendere or its equivalent by an Indemnitee, or an entry of an order of
probation against an Indemnitee prior to judgment, does not create a presumption
that such Indemnitee acted in a manner contrary to that specified in this
Section 7.7(a) with respect to the subject matter of such proceeding. Any
indemnification pursuant to this Section 7.7 shall be made only out of the
assets of the Partnership, and neither the General Partner nor any Limited
Partner shall have any obligation to contribute to the capital of the
Partnership or otherwise provide funds to enable the Partnership to fund its
obligations under this Section 7.7.
(b) To the fullest extent permitted by law, expenses incurred by
an Indemnitee who is a party to a proceeding or otherwise subject to or the
focus of or is involved in any Action shall be paid or reimbursed by the
Partnership as incurred by the Indemnitee in advance of the final disposition of
the Action upon receipt by the Partnership of (i) a written affirmation by the
Indemnitee of the Indemnitee's good faith belief that the standard of conduct
necessary for indemnification by the Partnership as authorized in 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 and shall inure to the benefit of the heirs, successors,
assigns and administrators of the Indemnitee unless otherwise provided in a
written agreement with such Indemnitee or in the writing pursuant to which such
Indemnitee is indemnified.
(d) The Partnership may, but shall not be obligated to, purchase
and maintain insurance, on behalf of any of the 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) Any liabilities which an Indemnitee incurs as a result of
acting on behalf of the Partnership or the General Partner (whether as a
fiduciary or otherwise) in connection with the operation, administration or
maintenance of an employee benefit plan or any related trust or funding
mechanism (whether such liabilities are in the form of excise taxes assessed by
the IRS, penalties assessed by the Department of Labor, restitutions to such a
plan or trust or other funding mechanism or to a participant or beneficiary of
such plan, trust or other funding mechanism, or otherwise) shall be treated as
liabilities or judgments or fines under this Section 7.7, unless such
liabilities arise as a result of (i) such Indemnitee's intentional misconduct or
knowing violation of the law, or (ii) any transaction in which such Indemnitee
received a personal benefit in violation or breach of any provision of this
Agreement or applicable law.
52
(f) In no event may an Indemnitee subject any of the Partners to
personal liability by reason of the indemnification provisions set forth in this
Agreement.
(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. Any
amendment, modification or repeal of this Section 7.7 or any provision hereof
shall be prospective only and shall not in any way affect the limitations on the
Partnership's liability to any Indemnitee under this Section 7.7 as in effect
immediately prior to such amendment, modification or repeal with respect to
claims arising from or relating to matters occurring, in whole or in part, prior
to such amendment, modification or repeal, regardless of when such claims may
arise or be asserted.
(i) It is the intent of the Partners that any amounts paid by the
Partnership to the General Partner pursuant to this Section 7.7 shall be treated
as "guaranteed payments" within the meaning of Code Section 707(c).
Section 7.8 Liability of the General Partner.
(a) Notwithstanding anything to the contrary set forth in this
Agreement, neither the General Partner nor any of its directors or officers
shall be liable or accountable in damages or otherwise to the Partnership, any
Partners or any Assignees for losses sustained, liabilities incurred or benefits
not derived as a result of errors in judgment or mistakes of fact or law or of
any act or omission if the General Partner or such director or officer acted in
good faith.
(b) The Limited Partners expressly acknowledge that the General
Partner is acting for the benefit of the Partnership, the Limited Partners and
the General Partner's shareholders collectively and that the General Partner is
under no obligation to give priority to the separate interests of the Limited
Partners or the General Partner's shareholders (including, without limitation,
the tax consequences to Limited Partners, Assignees or the General Partner's
shareholders) in deciding whether to cause the Partnership to take (or decline
to take) any actions.
(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 employees or agents
(subject to the supervision and control of the General Partner). 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.
53
(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, and its officers' and directors',
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.
(e) Notwithstanding anything herein to the contrary, except for
fraud, willful misconduct or gross negligence, or pursuant to any express
indemnities given to the Partnership by any Partner pursuant to any other
written instrument, no Partner shall have any personal liability whatsoever, to
the Partnership or to the other Partner(s), for the debts or liabilities of the
Partnership or the Partnership's obligations hereunder, and the full recourse of
the other Partner(s) shall be limited to the interest of that Partner in the
Partnership. To the fullest extent permitted by law, no officer, director or
shareholder of the General Partner shall be liable to the Partnership for money
damages except for (i) active and deliberate dishonesty established by a
non-appealable final judgment or (ii) actual receipt of an improper benefit or
profit in money, property or services. Without limitation of the foregoing, and
except for fraud, willful misconduct or gross negligence, or pursuant to any
such express indemnity, no property or assets of any Partner, other than its
interest in the Partnership, shall be subject to levy, execution or other
enforcement procedures for the satisfaction of any judgment (or other judicial
process) in favor of any other Partner(s) and arising out of, or in connection
with, this Agreement. This Agreement is executed by the officers of the General
Partner solely as officers of the same and not in their own individual
capacities.
(f) To the extent that, at law or in equity, the General Partner
has duties (including fiduciary duties) and liabilities relating thereto to the
Partnership or the Limited Partners, the General Partner shall not be liable to
the Partnership or to any other Partner for its good faith reliance on the
provisions of this Agreement. The provisions of this Agreement, to the extent
that they restrict the duties and liabilities of the General Partner otherwise
existing at law or in equity, are agreed by the Partners to replace such other
duties and liabilities of such General Partner.
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 in good faith to be genuine and to have
been signed or presented by the proper party or parties.
(b) The General Partner may consult with legal counsel,
accountants, appraisers, management consultants, investment bankers, architects,
engineers, environmental consultants and other consultants and advisers selected
by it, and any act taken or omitted to be taken in reliance upon the opinion of
such Persons as to matters that the General Partner reasonably
54
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 that is permitted or required to be done by the General Partner
hereunder.
(d) Notwithstanding any other provision 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, (ii) for the General Partner otherwise
to satisfy the REIT Requirements, (iii) to avoid the General Partner incurring
any taxes under Code Section 857 or Code Section 4981, 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 with other Partners or Persons, 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. 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,
without the consent or approval of any other Partner or Person, to encumber,
sell or otherwise use in any manner any and all assets of the Partnership and to
enter into any contracts on behalf of the Partnership, and take any and all
actions 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 that 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 expediency of any
act or action of the General Partner or its representatives. Each and every
certificate, document
55
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 in good faith thereon or claiming thereunder that (i) at the time
of the execution and delivery of such certificate, document or instrument, this
Agreement was in full force and effect, (ii) the Person executing and delivering
such certificate, document or instrument was duly authorized and empowered to do
so for and on behalf of the Partnership and (iii) such certificate, document or
instrument was duly executed and delivered in accordance with the terms and
provisions of this Agreement and is binding upon the Partnership.
ARTICLE VIII
RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS
Section 8.1 Limitation of Liability. The Limited Partners shall have no
liability under this Agreement (other than for breach thereof) except as
expressly provided in Section 10.4 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,
member, 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 operations, 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, member, employee, partner, agent, representative, or
trustee of the General Partner, the Partnership or any of their Affiliates, in
their capacity as such, shall not affect, impair or eliminate the limitations on
the liability of the Limited Partners or Assignees under this Agreement.
Section 8.3 Outside Activities of Limited Partners. 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 General
Partner, the Partnership or a Subsidiary (including, without limitation, any
employment agreement), any Limited Partner and any Assignee, officer, director,
employee, agent, trustee, Affiliate, member 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 that are in direct or indirect competition
with the Partnership or that are enhanced by the activities of the Partnership.
Neither the Partnership nor any Partner shall have any rights by virtue of this
Agreement in any business ventures of any Limited Partner or Assignee. Subject
to such agreements, 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 (other than the
General Partner, to the extent expressly provided herein), and such Person shall
have no obligation pursuant to this Agreement, subject to Section 7.6(e) hereof
and any other agreements entered into by a Limited Partner or its
56
Affiliates with the General Partner, the Partnership or a Subsidiary, 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
that, 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 rights of
Redemption set forth in Section 8.6 hereof, no Limited Partner shall be entitled
to the withdrawal or return of its Capital Contribution, except to the extent of
distributions made pursuant to this Agreement or upon termination of the
Partnership as provided herein. Except to the extent provided in Article 6
hereof or otherwise expressly provided in this Agreement, no Limited Partner or
Assignee shall have priority over any other Limited Partner or Assignee either
as to the return of Capital Contributions or 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:
(i) to obtain a copy of (i) the most recent annual and
quarterly reports filed with the SEC by the General Partner pursuant to the
Exchange Act and (ii) each report or other written communication sent to
the shareholders of the General Partner;
(ii) to obtain a copy of the Partnership's federal, state
and local income tax returns for each Partnership Year;
(iii) to obtain a current list of the name and last known
business, residence or mailing address of each Partner;
(iv) 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
(v) 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 that each Partner has agreed to contribute
in the future, and the date on which each became a Partner.
57
(b) The Partnership shall notify any Limited Partner that is a
Qualifying Party, on request, of the then current Adjustment Factor or any
change made to the Adjustment Factor.
(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 the General Partner or (ii) the Partnership or the General
Partner is required by law or by agreements with unaffiliated third parties to
keep confidential.
Section 8.6 Redemption Rights of Qualifying Parties.
(a) After the applicable Twelve-Month Period, a Qualifying Party,
but no other Limited Partner or Assignee, shall have the right (subject to the
terms and conditions set forth herein) to require the Partnership to redeem all
or a portion of the Partnership Common Units held by such Tendering Party (such
Partnership Common Units being hereafter "Tendered Units") in exchange (a
"Redemption") for the Cash Amount payable on the Specified Redemption Date. Any
Redemption shall be exercised pursuant to a Notice of Redemption delivered to
the General Partner by the Qualifying Party when exercising the Redemption right
(the "Tendering Party"). The Partnership's obligation to effect a Redemption,
however, shall not arise or be binding against the Partnership (i) until and
unless there has been a Declination and (ii) before the Business Day following
the Cut-Off Date. Regardless of the binding or non-binding nature of a pending
Redemption, a Tendering Party shall have no right to receive distributions with
respect to any Tendered Units (other than the Cash Amount) paid after delivery
of the Notice of Redemption, whether or not the Partnership Record Date for such
distribution precedes or coincides with such delivery of the Notice of
Redemption; provided, however, that in the event that the General Partner on
behalf of the Partnership elects to fund the Cash Amount with the proceeds of an
Offering Funding pursuant to Section 8.6(d) hereof, the Tendering Party's right
to receive distributions shall not be suspended as hereinbefore provided and
such Tendering Party shall have the right to receive distributions actually made
hereunder prior to the date of the closing of the Offering Funding whose
proceeds are used to pay the Cash Amount. In the event of a Redemption, the Cash
Amount shall be delivered as a certified check payable to the Tendering Party
or, in the General Partner's sole and absolute discretion, in immediately
available funds.
(b) Notwithstanding the provisions of Section 8.6(a) hereof other
than the last sentence thereof, on or before the close of business on the
Cut-Off Date, the General Partner may, in its sole and absolute discretion but
subject to the Ownership Limit and the transfer restrictions and other
limitations of the Charter, elect to acquire some or all (such percentage being
referred to as the "Applicable Percentage") of the Tendered Units from the
Tendering Party in exchange for the REIT Shares Amount calculated based on the
portion of Tendered Units it elects to acquire in exchange for REIT Shares. In
making such election, the General Partner shall act in
58
a fair, equitable and reasonable manner that neither prefers one group or class
of Qualifying Parties over another nor discriminates against a group or class of
Qualifying Parties. If the General Partner so elects, on the Specified
Redemption Date the Tendering Party shall sell such number of the Tendered Units
to the General Partner in exchange for a number of REIT Shares equal to the
product of the REIT Shares Amount and the Applicable Percentage. The Tendering
Party shall submit (i) such information, certification or affidavit as the
General Partner may reasonably require in connection with the application of the
Ownership Limit and other restrictions and limitations of the Charter to any
such acquisition and (ii) such written representations, investment letters,
legal opinions or other instruments necessary, in the General Partner's view, to
effect compliance with the Securities Act. In the event of a purchase of the
Tendered Units by the General Partner pursuant to this Section 8.6(b), the
Tendering Party shall no longer have the right to cause the Partnership to
effect a Redemption of such Tendered Units, and, upon notice to the Tendering
Party by the General Partner, given on or before the close of business on the
Cut-Off Date, that the General Partner has elected to acquire some or all of the
Tendered Units pursuant to this Section 8.6(b), the obligation of the
Partnership to effect a Redemption of the Tendered Units as to which the General
Partner's notice relates shall not accrue or arise. The product of the
Applicable Percentage and the REIT Shares Amount, if applicable, shall be
delivered by the General Partner as duly authorized, validly issued, fully paid
and accessible REIT Shares and, if applicable, Rights, free of any pledge, lien,
encumbrance or restriction, other than the Ownership Limit and other
restrictions provided in the Charter, the Bylaws of the General Partner, the
Securities Act and relevant state securities or "blue sky" laws. Neither any
Tendering Party whose Tendered Units are acquired by the General Partner
pursuant to this Section 8.6(b), any Partner, any Assignee nor any other
interested Person shall have any right to require or cause the General Partner
to register, qualify or list any REIT Shares owned or held by such Person,
whether or not such REIT Shares are issued pursuant to this Section 8.6(b), with
the SEC, with any state securities commissioner, department or agency, under the
Securities Act or the Exchange Act or with any stock exchange; provided,
however, that this limitation shall not be in derogation of any registration or
similar rights granted pursuant to any other written agreement between the
General Partner and any such Person. Notwithstanding any delay in such delivery,
the Tendering Party shall be deemed the owner of such REIT Shares and Rights for
all purposes, including, without limitation, rights to vote or consent, receive
dividends, and exercise rights, as of the Specified Redemption Date. REIT Shares
issued upon an acquisition of the Tendered Units by the General Partner pursuant
to this Section 8.6(b) may contain such legends regarding restrictions under the
Securities Act and applicable state securities laws as the General Partner in
good faith determines to be necessary or advisable in order to ensure compliance
with such laws. The parties agree to treat the exchange of Tendered Units for
REIT Shares pursuant to this Section 8.6(b) as a sale or exchange for all tax
purposes.
(c) Notwithstanding the provisions of Section 8.6(a) and 8.6(b)
hereof, the Tendering Parties shall have no rights under this Agreement that
would otherwise be prohibited under the Charter with respect to the Ownership
Limit. To the extent that any attempted Redemption or acquisition of the
Tendered Units by the General Partner pursuant to Section 8.6(b) hereof would be
in violation of this Section 8.6(c), it shall be null and void ab initio, and
the Tendering Party shall
59
not acquire any rights or economic interests in REIT Shares otherwise issuable
by the General Partner under Section 8.6(b) hereof.
(d) In the event that the General Partner declines or fails to
exercise its purchase rights pursuant to Section 8.6(b) hereof following receipt
of a Notice of Redemption (a "Declination"):
(i) The General Partner shall give notice of such
Declination to the Tendering Party on or before the close of business on
the Cut-Off Date. The failure of the General Partner to give notice of such
Declination by the close of business on the Cut-Off Date shall itself
constitute a Declination.
(ii) Subject to Section 11.6(d), the General Partner on
behalf of the Partnership may elect to raise funds for the payment of the
Cash Amount either (a) by contribution by the General Partner of funds from
the proceeds of a private placement or registered public offering (each, an
"Offering Funding") by the General Partner of a number of REIT Shares or
other securities of the REIT ("Offering Funding Shares") equal to the REIT
Shares Amount with respect to the Tendered Units or (b) from any other
sources (including, but not limited to, the sale of any Property and the
incurrence of additional Debt) available to the Partnership.
(iii) Promptly upon the General Partner's receipt of the
Notice of Redemption and the General Partner giving notice of its
Declination, the General Partner shall give notice (a "Single Funding
Notice") to all Qualifying Parties then holding a Partnership Interest (or
an interest therein) and having Redemption rights pursuant to this Section
8.6 and require that all such Qualifying Parties elect whether or not to
effect a Redemption of their Partnership Common Units to be funded through
an Offering Funding (if an Offering Funding has been elected by the General
Partner) or otherwise. In the event that any such Qualifying Party elects
to effect such a Redemption, it shall give notice thereof and of the number
of Partnership Common Units to be made subject thereto in writing to the
General Partner within ten (10) Business Days after receipt of the Single
Funding Notice, and such Qualifying Party shall be treated as a Tendering
Party for all purposes of this Section 8.6. In the event that a Qualifying
Party does not so elect, it shall be deemed to have waived its right to
effect a Redemption for the current Twelve-Month Period; provided, however,
that the General Partner shall not be required to acquire Partnership
Common Units pursuant to this Section 8.6(d) more than twice within a
calendar year.
Any proceeds from an Offering Funding that are in excess of the Cash Amount
shall be for the sole benefit of the General Partner. The General Partner shall
make a Capital Contribution of such amounts to the Partnership for an additional
General Partner Interest and/or Limited Partner Interest.
60
Any such contribution shall entitle the General Partner to an equitable
Percentage Interest adjustment.
(e) Notwithstanding the provisions of Section 8.6(b) hereof, the
General Partner shall not, under any circumstances, elect to acquire Tendered
Units in exchange for the REIT Shares Amount if such exchange would be
prohibited under the Charter.
(f) Notwithstanding anything herein to the contrary (but subject
to Section 8.6(c) hereof), with respect to any Redemption (or any tender of
Partnership Common Units for Redemption if the Tendered Units are acquired by
the General Partner pursuant to Section 8.6(b) hereof) pursuant to this Section
8.6:
(i) All Partnership Common Units acquired by the General
Partner pursuant to Section 8.6(b) hereof shall automatically, and without
further action required, be converted into and deemed to be a General
Partner Interest comprised of the same number of Partnership Common Units.
(ii) Subject to the Ownership Limit, no Tendering Party may
effect a Redemption for less than five hundred (500) Partnership Common
Units or, if such Tendering Party holds (as a Limited Partner or,
economically, as an Assignee) less than five hundred (500) Partnership
Common Units, all of the Partnership Common Units held by such Tendering
Party.
(iii) Each Tendering Party (a) may effect a Redemption only
once in each fiscal quarter of a Twelve-Month Period and (b) may not effect
a Redemption during the period after the Partnership Record Date with
respect to a distribution and before the record date established by the
General Partner for a distribution to its shareholders of some or all of
its portion of such Partnership distribution.
(iv) Notwithstanding anything herein to the contrary, with
respect to any Redemption or acquisition of Tendered Units by the General
Partner pursuant to Section 8.6(b) hereof, in the event that the General
Partner gives notice to all Limited Partners (but excluding any Assignees)
then owning Partnership Interests (a "Primary Offering Notice") that the
General Partner desires to effect a primary offering of its equity
securities then, unless the General Partner otherwise consents,
commencement of the actions denoted in Section 8.6(d) hereof as to an
Offering Funding, if any, with respect to any Notice of Redemption
thereafter received, whether or not the Tendering Party is a Limited
Partner, may be delayed until the earlier of (a) the completion of the
primary offering or (b) ninety (90) days following the giving of the
Primary Offering Notice.
61
(v) Without the Consent of the General Partner, no Tendering
Party may effect a Redemption within ninety (90) days following the closing
of any prior Offering Funding.
(vi) The consummation of such Redemption (or an acquisition
of Tendered Units by the General Partner pursuant to Section 8.6(b) hereof,
as the case may be) shall be subject to the expiration or termination of
the applicable waiting period, if any, under the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976, as amended.
(vii) The Tendering Party shall continue to own (subject, in
the case of an Assignee, to the provision of Section 11.5 hereof) all
Partnership Common Units subject to any Redemption, and be treated as a
Limited Partner or an Assignee, as applicable, with respect to such
Partnership Common Units for all purposes of this Agreement, until such
Partnership Common Units are either paid for by the Partnership pursuant to
Section 8.6(a) hereof or transferred to the General Partner and paid for,
by the issuance of the REIT Shares, pursuant to Section 8.6(b) hereof on
the Specified Redemption Date. Until a Specified Redemption Date and an
acquisition of the Tendered Units by the General Partner pursuant to
Section 8.6(b) hereof, the Tendering Party shall have no rights as a
shareholder of the General Partner with respect to the REIT Shares issuable
in connection with such acquisition.
For purposes of determining compliance with the restrictions set forth in this
Section 8.6(f), all Partnership Common Units beneficially owned by a Related
Party of a Tendering Party shall be considered to be owned or held by such
Tendering Party.
(g) In connection with an exercise of Redemption rights pursuant
to this Section 8.6, the Tendering Party shall submit the following to the
General Partner, in addition to the Notice of Redemption:
(i) A written affidavit, dated the same date as the Notice
of Redemption, (a) disclosing the actual and constructive ownership, as
determined for purposes of Code Sections 856(a)(6) and 856(h), of REIT
Shares by (i) such Tendering Party and (ii) any Related Party and (b)
representing that, after giving effect to the Redemption or an acquisition
of the Tendered Units by the General Partner pursuant to Section 8.6(b)
hereof, neither the Tendering Party nor any Related Party will own REIT
Shares in excess of the Ownership Limit;
(ii) A written representation that neither the Tendering
Party nor any Related Party has any intention to acquire any additional
REIT Shares prior to the closing of the Redemption or an acquisition of the
Tendered Units by the General Partner pursuant to Section 8.6(b) hereof on
the Specified Redemption Date; and
62
(iii) An undertaking to certify, at and as a condition to
the closing of (i) the Redemption or (ii) the acquisition of the Tendered
Units by the General Partner pursuant to Section 8.6(b) hereof on the
Specified Redemption Date, that either (a) the actual and constructive
ownership of REIT Shares by the Tendering Party and any Related Party
remain unchanged from that disclosed in the affidavit required by Section
8.6(g)(i) or (b) after giving effect to the Redemption or an acquisition of
the Tendered Units by the General Partner pursuant to Section 8.6(b)
hereof, neither the Tendering Party nor any Related Party shall own REIT
Shares in violation of the Ownership Limit.
(h) If the General Partner shall be a party to any transaction
(including, without limitation, a merger, consolidation, statutory exchange,
self tender offer for all or substantially all REIT Shares, sale of all or
substantially all of its assets or recapitalization of the REIT Shares (each of
the foregoing being referred to herein as a "Fundamental Change"), in each case
as a result of which REIT Shares shall be converted into the right to receive
stock, partnership units, securities or other property (including cash or any
combination thereof), each Partnership Common Unit that is not converted into
the right to receive stock, partnership units, securities or other property
(including cash or any combination thereof) in connection with such Fundamental
Change shall thereafter be convertible into the kind and amount of shares of
stock, partnership units, securities or other property (including cash or any
combination thereof) receivable upon the consummation of such Fundamental Change
by a holder of that number of REIT Shares into which one Partnership Common Unit
was convertible immediately prior to such Fundamental Change, assuming such
holder of REIT Shares (i) is not a Person with which the General Partner
consolidated or into which the General Partner merged or which merged into the
General Partner or to which such sale or transfer was made (a "Constituent
Person") or an Affiliate of a Constituent Person and (ii) failed to exercise his
or her rights of the election, if any, as to the kind and amount of stock,
partnership units, securities or other property (including cash or any
combination thereof) receivable upon such Fundamental Change (provided that if
the stock, partnership units, securities or other property (including cash or
any combination thereof) receivable upon such Fundamental Change is not the same
for each REIT Share held immediately prior to such Transaction by other than a
Constituent Person or an Affiliate thereof and in respect of which such rights
of election shall not have been exercised ("Non-Electing Shares"), then for
purposes of this Section 8.6(h) the kind and amount of stock, partnership units,
securities or other property (including cash or any combination thereof)
receivable upon such Fundamental Change by each Non-Electing Share shall be
deemed to be the kind and amount so receivable per share by a plurality of the
Non-Electing Shares. The General Partner shall not be a party to any Fundamental
Change unless the terms of such Fundamental Change are consistent with the
provisions of this Section 8.6(h). The provisions of this Section 8.6(h) shall
similarly apply to successive Fundamental Changes.
(i) In the event that the General Partner shall take any action
affecting the REIT Shares that, in the opinion of the Independent Directors of
the General Partner, would materially adversely affect the redemption rights of
the Limited Partners, the General Partner shall,
63
without the Consent of the Limited Partners, make any amendment to the
definitions of "Adjustment Factor," "REIT Shares Amount" and/or "Cash Amount"
that a majority of the Independent Directors of the General Partner determine in
their good faith discretion is equitable under the circumstances as a result of
such event, such that the intent of the Partners that one Partnership Common
Unit be redeemable for the Value of one REIT Share, without dilution, pursuant
to this Section 8.6 is properly effected.
(j) The General Partner may elect in its sole discretion, to hold
such Partnership Units as part of its General Partner Interest or as a part of
its Limited Partner Interest, or in any combination thereof and such ownership
will be reflected on Exhibit A to the Partnership Agreement.
ARTICLE IX
BOOKS, RECORDS, ACCOUNTING AND REPORTS
Section 9.1 Records and Accounting.
(a) The General Partner shall keep or cause to be kept at the
principal office of the Partnership those records and documents required to be
maintained by the Act and other books and records deemed by the General Partner
to be appropriate with respect to the Partnership's business, including, without
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 8.5(a) or 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 for, 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.
(b) 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, or on such other basis as the General
Partner determines to be necessary or appropriate. To the extent permitted by
sound accounting practices and principles, the Partnership and the General
Partner may operate with integrated or consolidated accounting records,
operations and principles.
Section 9.2 Partnership Year. The Partnership 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 cause to be mailed to each Limited Partner, of record 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
64
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.
(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 cause to be
mailed to each Limited Partner, of record 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. At the request of any Limited Partner, the General Partner
shall provide access to the books, records and workpapers upon which the reports
required by this Section 9.3 are based, to the extent required by the Act.
ARTICLE X
TAX MATTERS
Section 10.1 Preparation of Tax Returns. The General Partner shall
arrange for the preparation and timely filing of all returns with respect to
Partnership income, gains, deductions, losses and other items required of the
Partnership for federal and state income tax purposes and shall use all
reasonable effort 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. The Limited Partners shall
promptly provide the General Partner with such information relating to the
Contributed Properties, including tax basis and other relevant information, as
may be reasonably requested by the General Partner from time to time.
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, including, but not limited to,
the election under Code Section 754 and the election to use the "recurring item"
method of accounting provided under Code Section 461(h). The General Partner
shall have the right to seek to revoke any such election (including, without
limitation, any election under Code Sections 461(h) and 754) 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. The tax matters partner shall
receive no compensation for its services. All third-party costs and expenses
incurred by the tax matters partner in performing its duties as such (including
legal and accounting fees and expenses) shall be borne by the
65
Partnership in addition to any reimbursement pursuant to Section 7.4 hereof.
Nothing herein shall be construed to restrict the Partnership from engaging an
accounting firm to assist the tax matters partner in discharging its duties
hereunder, so long as the compensation paid by the Partnership for such services
is reasonable. At the request of any Limited Partner, the General Partner agrees
to consult with such Limited Partner with respect to the preparation and filing
of any returns and with respect to any subsequent audit or litigation relating
to such returns; provided, however, that the filing of such returns shall be in
the sole and absolute discretion of the General Partner.
(b) The tax matters partner is authorized, but not required:
(i) to enter into any settlement with the IRS with respect
to any administrative or judicial proceedings for the adjustment of
Partnership items required to be taken into account by a Partner for income
tax purposes (such administrative proceedings being referred to as a "tax
audit" and such judicial proceedings being referred to as "judicial
review"), and in the settlement agreement the tax matters partner may
expressly state that such agreement shall bind all Partners, except that
such settlement agreement shall not bind any Partner (i) who (within the
time prescribed pursuant to the Code and Regulations) files a statement
with the IRS providing that the tax matters partner shall not have the
authority to enter into a settlement agreement on behalf of such Partner or
(ii) who is a "notice partner" (as defined in Code Section 6231) or a
member of a "notice group" (as defined in Code Section 6223(b)(2));
(ii) 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 United States
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;
(iii) to intervene in any action brought by any other
Partner for judicial review of a final adjustment;
(iv) 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;
(v) to enter into an agreement with the IRS to extend the
period for assessing any tax that 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
66
(vi) to take any other action on behalf of the Partners 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 hereof shall be fully applicable to the tax matters partner in
its capacity as such.
Section 10.4 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 Code Sections 1441, 1442,
1445 or (1446. 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 that 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 that would, but for such payment, be distributed to the
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 10.4. In
the event that a Limited Partner fails to pay any amounts owed to the
Partnership pursuant to this Section 10.4 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 (4) 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.
Section 10.5 Organizational Expenses. The Partnership shall elect to
deduct expenses, if any, incurred by it in organizing the Partnership ratably
over a 60 month period as provided in Section 709 of the Code.
67
ARTICLE XI
TRANSFERS AND WITHDRAWALS
Section 11.1 Transfer.
(a) No part of the interest of a Partner shall be subject to the
claims of any creditor, to any spouse for alimony or support, or to legal
process, and may not be voluntarily or involuntarily alienated or encumbered
except as may be specifically provided for in this Agreement.
(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 ab initio.
(c) Notwithstanding the other provisions of this Article 11
(other than Section 11.6(d) hereof), the Partnership Interests of the General
Partner may be Transferred, in whole or in part, at any time or from time to
time, to any Person that is, at the time of such Transfer, a Qualified REIT
Subsidiary. Any transferee of the entire General Partner Interest pursuant to
this Section 11.1(c) shall automatically become, without further action or
Consent of any Limited Partners, the sole general partner of the Partnership,
subject to all the rights, privileges, duties and obligations under this
Agreement and the Act relating to a general partner. Upon any Transfer permitted
by this Section 11.1(c), the transferor Partner shall be relieved of all its
obligations under this Agreement. The provisions of Section 11.2(b) (other than
the last sentence thereof), 11.3, 11.4(a) and 11.5 hereof shall not apply to any
Transfer permitted by this Section 11.1(c).
(d) No Transfer of any Partnership Interest 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 redeem or exchange for the REIT Shares
Amount any Partnership Units in which a security interest is held by such lender
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 11.2 Transfer of General Partner's Partnership Interest.
(a) The General Partner may not Transfer any of its General
Partner Interest or withdraw from the Partnership except as provided in Sections
11.1(c), 11.2(b) and 11.2(c) hereof.
68
(b) Except as set forth in Section 11.2(c) below, the General
Partner shall not withdraw from the Partnership and shall not Transfer all or
any portion of its interest in the Partnership (whether by sale, disposition,
statutory merger or consolidation, liquidation or otherwise) without the Consent
of the Limited Partners, which Consent may be given or withheld in the sole and
absolute discretion of the Limited Partners. Upon any Transfer of such a
Partnership Interest pursuant to the Consent of the Limited Partners and
otherwise in accordance with the provisions of this Section 11.2(b), the
transferee shall become a successor General Partner for all purposes herein, and
shall be vested with the powers and rights of the transferor General Partner,
and shall be liable for all obligations and responsible for all duties of the
General Partner, once such transferee has executed such instruments as may be
necessary to effectuate such admission and to confirm the agreement of such
transferee to be bound by all the terms and provisions of this Agreement with
respect to the Partnership Interest so acquired. It is a condition to any
Transfer otherwise permitted hereunder that the transferee assumes, by operation
of law or express agreement, all of the obligations of the transferor General
Partner under this Agreement with respect to such Transferred Partnership
Interest, and such Transfer shall relieve the transferor General Partner of its
obligations under this Agreement without the Consent of the Limited Partners. In
the event that the General Partner withdraws from the Partnership, in violation
of this Agreement or otherwise, or otherwise dissolves or terminates, or upon
the bankruptcy of the General Partner, a Majority in Interest of the Limited
Partners may elect to continue the Partnership business by selecting a successor
General Partner in accordance with the Act.
(c) The General Partner may merge with another entity if
immediately after such merger substantially all of the assets of the surviving
entity, other than the General Partner Interest held by the General Partner, are
contributed to the Partnership as a Capital Contribution in exchange for
Partnership Units.
Section 11.3 Limited Partners' Rights to Transfer.
(a) General. Prior to the end of the first Twelve-Month Period,
no Limited Partner shall Transfer all or any portion of its Partnership Interest
to any transferee without the Consent of the General Partner, which Consent may
be withheld in its sole and absolute discretion; provided, however, that any
Limited Partner may, at any time, without the consent of the General Partner,
(i) Transfer all or part of its Partnership Interest to any Family Member, any
Controlled Entity or any Affiliate, provided that the transferee is, in any such
case, a Qualified Transferee, or (ii) pledge (a "Pledge") all or any portion of
its Partnership Interest to a lending institution, that is not an Affiliate of
such Limited Partner, as collateral or security for a bona fide loan or other
extension of credit, and Transfer such pledged Partnership Interest to such
lending institution in connection with the exercise of remedies under such loan
or extension or credit (any Transfer or Pledge permitted by this proviso is
hereinafter referred to as a "Permitted Transfer"). After such first
Twelve-Month Period, each Limited Partner, and each transferee of Partnership
Units or Assignee pursuant to a Permitted Transfer, shall have the right to
Transfer all or any portion of its Partnership Interest to any Person, subject
to the provisions of Section 11.6 hereof and the satisfaction of each of the
following conditions (except in the case of a Transfer pursuant to clauses (i)
or (ii) above):
69
(i) Qualified Transferee. Any Transfer of a Partnership
Interest shall be made only to a single Qualified Transferee; provided,
however, that, for such purposes, all Qualified Transferees that are
Affiliates, or that comprise investment accounts or funds managed by a
single Qualified Transferee and its Affiliates, shall be considered
together to be a single Qualified Transferee; provided, further, that each
Transfer meeting the minimum Transfer restriction of Section 11.3(a)(2)
hereof may be to a separate Qualified Transferee.
(ii) Minimum Transfer Restriction. Any Transferring Partner
must Transfer not less than the lesser of (i) the greater of five hundred
(500) Partnership Units or one-third (1/3) of the number of Partnership
Units owned by such Partner as of the Effective Date or (ii) all of the
remaining Partnership Units owned by such Transferring Partner; provided,
however, that, for purposes of determining compliance with the foregoing
restriction, all Partnership Units owned by Affiliates of a Limited Partner
shall be considered to be owned by such Limited Partner.
(iii) Exception for Permitted Transfers. The conditions of
Sections 11.3(a)(i) and 11.3(a)(ii) hereof shall not apply in the case of a
Permitted Transfer.
It is a condition to any Transfer otherwise permitted hereunder (whether or not
such Transfer is effected during or after the first Twelve-Month Period) that
the transferee assumes by operation of law or express agreement all of the
obligations of the transferor Limited Partner under this Agreement with respect
to such Transferred Partnership Interest, and no such Transfer (other than
pursuant to a statutory merger or consolidation wherein all obligations and
liabilities of the transferor Partner are assumed by a successor corporation by
operation of law) shall relieve the transferor Partner of its obligations under
this Agreement without the approval of the General Partner, in its sole and
absolute discretion. Notwithstanding the foregoing, any transferee of any
Transferred Partnership Interest shall be subject to any and all ownership
limitations (including, without limitation, the Ownership Limit) contained in
the Charter that may limit or restrict such transferee's ability to exercise its
Redemption rights, including, without limitation, the Ownership Limit. Any
transferee, whether or not admitted as a Substituted Limited Partner, shall take
subject to the obligations of the transferor hereunder. Unless admitted as a
Substituted Limited Partner, no transferee, whether by a voluntary Transfer, by
operation of law or otherwise, shall have any rights hereunder, other than the
rights of an Assignee as provided in Section 11.5 hereof.
(b) Incapacity. 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
70
Limited Partner possessed to Transfer all or any part of its interest in the
Partnership. The Incapacity of a Limited Partner, in and of itself, shall not
dissolve or terminate the Partnership.
(c) Opinion of Counsel. In connection with any proposed Transfer
of a Limited Partner Interest, the General Partner shall have the right to
receive an opinion of counsel reasonably satisfactory to it to the effect that
the proposed Transfer may be effected without registration under the Securities
Act and will not otherwise violate any federal or state securities laws or
regulations applicable to the Partnership or the Partnership Interests
Transferred. If, in the opinion of such counsel, such Transfer would require the
filing of a registration statement under the Securities Act or would otherwise
violate any federal or state securities laws or regulations applicable to the
Partnership or the Partnership Units, the General Partner may prohibit any
Transfer otherwise permitted under this Section 11.3 by a Limited Partner of
Partnership Interests.
(d) Adverse Tax Consequences. No Transfer by a Limited Partner of
its Partnership Interests, any Redemption, or any other acquisition of
Partnership Units by the Partnership or the General Partner) may be made to or
by 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 would result in a termination of the Partnership under Code
Section 708, or (ii) such Transfer would be effectuated through an "established
securities market" or a "secondary market (or the substantial equivalent
thereof)" within the meaning of Code Section 7704.
Section 11.4 Substituted Limited Partners.
(a) No Limited Partner shall have the right to substitute a
transferee (including transferees pursuant to Transfers permitted by Section
11.3 hereof) as a Limited Partner in its place. A transferee of the interest of
a Limited Partner may be admitted as a Substituted Limited Partner only with the
Consent of the General Partner, which Consent may be given or withheld by the
General Partner in its sole and absolute discretion. The failure or refusal by
the General Partner 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 the General Partner. Subject to the foregoing, an Assignee
shall not be admitted as a Substituted Limited Partner until and unless it
furnishes to the General Partner (i) evidence of acceptance, in form and
substance satisfactory to the General Partner, of all the terms, conditions and
applicable obligations of this Agreement, (ii) a counterpart signature page to
this Agreement executed by such Assignee and (iii) such other documents and
instruments as may be required or advisable, in the sole and absolute discretion
of the General Partner, to effect such Assignee's admission as a Substituted
Limited 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 Exhibit A to reflect the name, address and number of
Partnership Units of such
71
Substituted Limited Partner and to eliminate or adjust, if necessary, the name,
address and number of Partnership Units 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 hereof as a Substituted Limited Partner, as
described in Section 11.4 hereof, 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 and other items of income, gain, loss, deduction and
credit of the Partnership attributable to the Partnership Units assigned to such
transferee and the rights to Transfer the Partnership Units provided in this
Article 11, 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 effect a
Consent or vote or effect a Redemption with respect to such Partnership Units on
any matter presented to the Limited Partners for approval (such right to Consent
or vote or effect a Redemption, to the extent provided in this Agreement or
under the Act, fully remaining with the transferor Limited Partner). In the
event that 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, with respect to which the
transferee becomes a Substituted Limited Partner, or pursuant to a redemption
(or acquisition by the General Partner) of all of its Partnership Units pursuant
to a Redemption under Section 8.6 hereof and/or pursuant to any Partnership Unit
Designation.
(b) Any Limited Partner who shall Transfer all of its Partnership
Units in a Transfer (i) permitted pursuant to this Article 11 where such
transferee was admitted as a Substituted Limited Partner, (ii) pursuant to the
exercise of its rights to effect a redemption of all of its Partnership Units
pursuant to a Redemption under Section 8.6 hereof and/or pursuant to any
Partnership Unit Designation or (iii) to the General Partner, whether or not
pursuant to Section 8.6(b) hereof, shall cease to be a Limited Partner.
(c) If any Partnership Unit is Transferred in compliance with the
provisions of this Article 11, or is redeemed by the Partnership, or acquired by
the General Partner pursuant to Section 8.6 hereof, on any day other than the
first day of a Partnership Year, then Net Income, Net Losses, each item thereof
and all other items of income, gain, loss, deduction and credit attributable to
such Partnership Unit for such Partnership Year shall be allocated to the
transferor Partner or the Tendering Party, as the case may be, and, in the case
of a Transfer or assignment other than a Redemption, to the transferee Partner,
by taking into account their varying interests during the
72
Partnership Year in accordance with Code Section 706(d), using the "interim
closing of the books" method or another permissible method selected by the
General Partner. Solely for purposes of making such allocations, each of such
items for the calendar month in which a Transfer occurs shall be allocated to
the transferee Partner and none of such items for the calendar month in which a
Transfer or a Redemption occurs shall be allocated to the transferor Partner or
the Tendering Party, as the case may be, if such Transfer occurs on or before
the fifteenth (15th) day of the month, otherwise such items shall be allocated
to the transferor. All distributions of Available Cash attributable to such
Partnership Unit with respect to which the Partnership Record Date is before the
date of such Transfer, assignment or Redemption shall be made to the transferor
Partner or the Tendering Party, as the case may be, and, in the case of a
Transfer other than a Redemption, all distributions of Available Cash thereafter
attributable to such Partnership Unit shall be made to the transferee Partner.
(d) In addition to any other restrictions on Transfer herein
contained, in no event may any Transfer or assignment of a Partnership Interest
by any Partner (including any Redemption, any acquisition of Partnership Units
by the General Partner or any other acquisition of Partnership Units by the
Partnership) be made (i) to any person or entity who lacks the legal right,
power or capacity to own a Partnership Interest; (ii) in violation of applicable
law; (iii) of any component portion of a Partnership Interest, such as the
Capital Account, or rights to distributions, separate and apart from all other
components of a Partnership Interest; (iv) in the event that such Transfer would
cause the General Partner to cease to comply with the REIT Requirements; (v) if
such Transfer would, in the opinion of counsel to the Partnership or the General
Partner, cause a termination of the Partnership for federal or state income tax
purposes (except as a result of the Redemption (or acquisition by the General
Partner) of all Partnership Common Units held by all Limited Partners); (vi) if
such Transfer would, in the opinion of legal counsel to the Partnership, cause
the Partnership to cease to be classified as a partnership for federal income
tax purposes (except as a result of the Redemption (or acquisition by the
General Partner) of all Partnership Common Units held by all Limited Partners);
(vii) if such Transfer would cause the Partnership to become, with respect to
any employee benefit plan subject to Title I of ERISA, a "party-in-interest" (as
defined in ERISA Section 3(14)) or a "disqualified person" (as defined in Code
Section 4975(c)); (viii) if such Transfer would, in the opinion of legal counsel
to the Partnership, cause any portion of the assets of the Partnership to
constitute assets of any employee benefit plan pursuant to Department of Labor
Regulations Section 2510.2-101; (ix) if such Transfer requires the registration
of such Partnership Interest pursuant to any applicable federal or state
securities laws; (x) if such Transfer causes the Partnership to become a
"publicly traded partnership," as such term is defined in Code Section 469(k)(2)
or Code 7704(b); (xi) if such Transfer would cause the Partnership to have more
than one hundred (100) partners within the meaning of Regulations Section
1.7704-1(h); (xii) if such Transfer causes the Partnership (as opposed to the
General Partner) to become a reporting company under the Exchange Act; or (xiii)
if such Transfer subjects the Partnership to regulation under the Investment
Company Act of 1940, the Investment Advisors Act of 1940 or ERISA, each as
amended.
73
(e) 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.
ARTICLE XII
ADMISSION OF PARTNERS
Section 12.1 Admission of Successor General Partner. A successor to all
of the General Partner's General Partner Interest pursuant to Section 11.2
hereof who is proposed to be admitted as a successor General Partner shall be
admitted to the Partnership as the General Partner, effective immediately prior
to such Transfer. Any such successor 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 (other than an existing Partner) who makes a Capital
Contribution to the Partnership in accordance with this Agreement shall be
admitted to the Partnership as an Additional Limited Partner only upon
furnishing to the General Partner (i) evidence of acceptance, in form and
substance 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, (ii) a counterpart signature page to
this Agreement executed by such Person and (iii) such other documents or
instruments as may be required in the sole and absolute 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 and records of the Partnership,
following the consent of the General Partner to such admission.
(c) If any Additional Limited Partner is admitted to the
Partnership on any day other than the first day of a Partnership Year, then Net
Income, Net Losses, each item thereof and all other items of income, gain, loss,
deduction and credit allocable among Partners and Assignees for such Partnership
Year shall be allocated pro rata among such Additional Limited Partner and all
other Partners and Assignees by taking into account their varying interests
during the Partnership Year in accordance with Code Section 706(d), using the
"interim closing of the books" method or another permissible method selected by
the General Partner. Solely for purposes of making such allocations, each of
such items for the calendar month in which an admission of any
74
Additional Limited Partner occurs shall be allocated among all the Partners and
Assignees including such Additional Limited Partner, in accordance with the
principles described in Section 11.6(c) hereof. All distributions of Available
Cash with respect to which the Partnership Record Date is before the date of
such admission shall be made solely to Partners and Assignees other than the
Additional Limited Partner, and all distributions of Available Cash thereafter
shall be made to all the Partners and Assignees including such Additional
Limited Partner.
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 Exhibit A)
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.
Section 12.4 Admission of Initial Limited Partners. The Persons listed
on Exhibit A as limited partners of the Partnership shall be admitted to the
Partnership as Limited Partners upon their execution and delivery of this
Agreement.
Section 12.5 Limit on Number of Partners. Unless otherwise permitted by
the General Partner, no Person shall be admitted to the Partnership as an
Additional Limited Partner if the effect of such admission would be to cause the
Partnership to have a number of Partners (including as Partners for this purpose
those Persons indirectly owning an interest in the Partnership through another
partnership, a limited liability company, a subchapter S corporation or a
grantor trust) that would cause the Partnership to become a reporting company
under the Exchange Act.
ARTICLE XIII
DISSOLUTION, LIQUIDATION AND TERMINATION
Section 13.1 Dissolution. The Partnership shall not be dissolved by the
admission of 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 without dissolution. However, the Partnership
shall dissolve, and its affairs shall be wound up, upon the first to occur of
any of the following (each a "Liquidating Event"):
(a) an event of withdrawal, as defined in the Act (including,
without limitation, bankruptcy), of the sole General Partner unless, within
ninety (90) days after the withdrawal, a "majority in interest" (as such phrase
is used in Section 17-801(3) of the Act) of the remaining Partners agree in
writing, in their sole and absolute discretion, to continue the business of the
Partnership and to the appointment, effective as of the date of withdrawal, of a
successor General Partner:
75
(b) an election to dissolve the Partnership made by the General
Partner in its sole and absolute discretion, with or without the Consent of the
Limited Partners;
(c) entry of a decree of judicial dissolution of the Partnership
pursuant to the provisions of the Act;
(d) the occurrence of a Terminating Capital Transaction; or
(e) the Redemption (or acquisition by the General Partner) of all
Partnership Units other than Partnership Units held by the 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. After the occurrence of a Liquidating Event, 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 that there is no remaining General Partner or the General Partner
has dissolved, become bankrupt within the meaning of the Act or ceased to
operate, any Person elected by a Majority in Interest of the Limited Partners
(the General Partner or such other Person being referred to herein as 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, subject to the terms of
any Partnership Unit Designation, be applied and distributed in the following
order:
(i) First, to the satisfaction of all of the Partnership's
debts and liabilities to creditors (including, without limitation, the
Partners and their Assignees) (whether by payment or the making of
reasonable provision for payment thereof); and
(ii) Second, the balance, if any, to the General Partner,
the Limited Partners and any Assignees in accordance with and in proportion
to their positive Capital Account balances, after giving effect to all
contributions, distributions and allocations for all periods.
The General Partner shall not receive any additional compensation for any
services performed pursuant to this Article XIII.
76
(b) Notwithstanding the provisions of Section 13.2(a) hereof that
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.
(c) In the event that 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 Partners and Assignees that have positive
Capital Accounts in compliance with Regulations Section 1.704- 1(b)(2)(ii)(b)(2)
to the extent of, and in proportion to, positive Capital Account balances. If
the General Partner has a deficit balance in its Capital Account (after giving
effect to all contributions, distributions and allocations for all taxable
years, including the year during which such liquidation occurs) (a "Capital
Account Deficit"), the General Partner shall make a contribution to the capital
of the Partnership equal to the amount of such deficit. No Partner other than
the General Partner shall be required to make any contribution to the capital of
the Partnership with respect to a Capital Account Deficit, if any, of such
Partner, and such Capital Account Deficit shall not be considered a debt owed to
the Partnership or any other person for any purpose whatsoever. In the sole and
absolute discretion of the General Partner or the Liquidator, a pro rata portion
of the distributions that would otherwise be made to the Partners pursuant to
this Article 13 may be:
(i) distributed to a trust established for the benefit of
the General Partner and the Limited Partners for the purpose 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 and/or Partnership activities. The assets of any such trust
shall be distributed to the General Partner and the Limited Partners, from
time to time, in the reasonable discretion of the General Partner, in the
same proportions and amounts as would otherwise have been distributed to
the General Partner and the Limited Partners pursuant to this Agreement; or
(ii) withheld or escrowed 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 or escrowed amounts shall be distributed to the
General Partner and Limited Partners
77
in the manner and order of priority set forth in Section 13.2(a) hereof as
soon as practicable.
(d) In the event that the Partnership issues additional
Partnership Units pursuant to the provisions of Article IV hereof, subject to
Section 7.3(d), the General Partner is hereby authorized to make such revisions
to this Section 13.2 as it determines are necessary or desirable to reflect the
issuance and terms of such additional Partnership Units, including, without
limitation, making preferential liquidating distributions to certain classes of
Partnership Units or otherwise altering the priorities for distributions,
regardless of the positive Capital Accounts of any Partner receiving such
preferential liquidating distribution. Such revisions may be made by amendment
to this Agreement or may be established in the Partnership Unit Designation
applicable to such Partnership Units.
Section 13.3 Deemed Distribution and Recontribution. Notwithstanding
any other provision of this Article 13, in the event that 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, for federal income tax
purposes the Partnership shall be deemed to have distributed the Property in
kind to the Partners and the Assignees, who shall be deemed to have contributed
all of its assets and liabilities to a new partnership in exchange for an
interest in the new partnership; and, immediately thereafter, distributed
interests in the new partnership to the Partners in accordance with their
respective Capital Accounts in liquidation of the Partnership, and the new
partnership is deemed to continue the business of the Partnership. Nothing in
this Section 13.3 shall be deemed to have constituted any Assignee as a
Substituted Limited Partner without compliance with the provisions of Section
11.4 hereof.
Section 13.4 Rights of Limited Partners. Except as otherwise provided
in this Agreement, (a) each Limited Partner shall look solely to the assets of
the Partnership for the return of its Capital Contribution, (b) no Limited
Partner shall have the right or power to demand or receive property other than
cash from the Partnership and (c) no Limited Partner shall have priority over
any other Limited Partner as to the return of its Capital Contributions,
distributions or allocations.
Section 13.5 Notice of Dissolution. In the event that a Liquidating
Event occurs or an event occurs that would, but for an election or objection by
one or more Partners pursuant to Section 13.1 hereof, 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, in the General
Partner's sole and absolute discretion or as required by the Act, to all other
parties with whom the Partnership regularly conducts business (as determined in
the sole and absolute discretion of the General Partner), and the General
Partner may, or, if required by the Act, shall, publish notice thereof in a
newspaper of general circulation in each place in which the Partnership
regularly conducts business (as determined in the sole and absolute discretion
of the General Partner).
78
Section 13.6 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, a
certificate of cancellation shall be filed with the State of Delaware, all
qualifications of the Partnership as a foreign limited partnership or
association in jurisdictions other than the State of Delaware shall be
cancelled, and such other actions as may be necessary to terminate the
Partnership shall be taken.
Section 13.7 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.
ARTICLE XIV
PROCEDURES FOR ACTIONS AND CONSENTS
OF PARTNERS; AMENDMENTS; MEETINGS
Section 14.1 Procedures for Actions and Consents of Partners. The
actions requiring consent or approval of Limited Partners pursuant to this
Agreement, including Section 7.3 hereof, or otherwise pursuant to applicable
law, are subject to the procedures set forth in this Article 14.
Section 14.2 Amendments. Amendments to this Agreement may be proposed
by the General Partner or by a Majority in Interest of the Limited Partners.
Following such proposal, the General Partner shall submit any proposed amendment
to the Limited Partners. The General Partner shall seek the written consent of
the Limited Partners on the proposed amendment or shall call a meeting to vote
thereon and to transact any other business that the General Partner may deem
appropriate. For purposes of obtaining a written consent, 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
consent that is consistent with the General Partner's recommendation with
respect to the proposal; provided, however, that an action shall become
effective at such time as requisite consents are received even if prior to such
specified time. Any waiver, amendment or other modification of any provisions of
the Partnership Agreement with respect to the rights or interests of holders of
a class of Partnership Units (the "Affected Units") which is set forth in a
Partnership Unit Designation shall, unless the contrary is expressly provided
therein, apply equally to the holders (including any transferees) of any
Partnership Units which may from time to time be received upon conversion of
such Affected Units.
79
Section 14.3 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 a Majority in Interest of the Limited Partners. The call shall state the
nature of the business to be transacted. Notice of any such meeting shall be
given to all Partners not less than seven (7) days nor more than thirty (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 in Section
14.3(b) hereof.
(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
for the action in question). 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 it 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 its
attorney-in-fact. No proxy shall be valid after the expiration of eleven (11)
months from the date thereof unless otherwise provided in the proxy (or there is
receipt of a proxy authorizing a later date). Every proxy shall be revocable at
the pleasure of the Limited Partner executing it, such revocation to be
effective upon the Partnership's receipt of written notice of such revocation
from the Limited Partner executing such proxy.
(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 in its sole and absolute discretion. Without limitation,
meetings of Partners may be conducted in the same manner as meetings of the
General Partner's shareholders and may be held at the same time as, and as part
of, the meetings of the General Partner's shareholders.
Section 14.4 Voting Rights of LTIP Units. LTIP Unitholders shall (a)
have those voting rights required from time to time by applicable law, if any,
(b) have the same voting rights as a holder of Partnership Common Units, with
the LTIP Units voting as a single class with the Partnership Common Units and
having one vote per LTIP Unit; and (c) have the additional voting rights that
are expressly set forth below. So long as any LTIP Units remain outstanding, the
Partnership shall not, without the affirmative vote of the LTIP Unitholders who
hold at least a majority of the LTIP Units outstanding at the time, given in
person or by proxy, either in writing or
80
at a meeting (voting separately as a class), amend, alter or repeal, whether by
merger, consolidation or otherwise, the provisions of the Partnership Agreement
applicable to LTIP Units so as to materially and adversely affect any right,
privilege or voting power of the LTIP Units or the LTIP Unitholders as such,
unless such amendment, alteration, or repeal affects equally, ratably and
proportionately the rights, privileges and voting powers of the holders of
Partnership Common Units; but subject, in any event, to the following
provisions:
(i) With respect to any Transaction, so long as the LTIP
Units are treated in accordance with Section 4.9 hereof, the consummation
of such Transaction shall not be deemed to materially and adversely affect
such rights, preferences, privileges or voting powers of the LTIP Units or
the LTIP Unitholders as such; and
(ii) Any creation or issuance of any Partnership Units or of
any class or series of Partnership Interest including without limitation
additional Partnership Common Units, LTIP Units or Partnership Preferred
Units, whether ranking senior to, junior to, or on a parity with the LTIP
Units with respect to distributions and the distribution of assets upon
liquidation, dissolution or winding up, shall not be deemed to materially
and adversely affect such rights, preferences, privileges or voting powers
of the LTIP Units or the LTIP Unitholders as such.
The foregoing voting provisions will not apply if, at or prior to the time
when the act with respect to which such vote would otherwise be required will be
effected, all outstanding LTIP Units shall have been converted into Partnership
Common Units.
ARTICLE XV
GENERAL PROVISIONS
Section 15.1 Addresses and Notice. Any notice, demand, request or
report required or permitted to be given or made to a Partner or Assignee under
this Agreement shall be in writing and shall be deemed given or made when
delivered in person or when sent by first class United States mail or by other
means of written communication (including by telecopy, facsimile, or commercial
courier service) to the Partner or Assignee at the address set forth in Exhibit
A or such other address of which the Partner 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" or "Sections" are to Articles and Sections of this
Agreement.
81
Section 15.3 Pronouns and Plurals. Whenever the context may require,
any pronouns 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 Waiver.
(a) 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.
(b) The restrictions, conditions and other limitations on the
rights and benefits of the Limited Partners contained in this Agreement, and the
duties, covenants and other requirements of performance or notice by the Limited
Partners, are for the benefit of the Partnership and, except for an obligation
to pay money to the Partnership, may be waived or relinquished by the General
Partner, in its sole and absolute discretion, on behalf of the Partnership in
one or more instances from time to time and at any time; provided, however, that
any such waiver or relinquishment may not be made if it would have the effect of
(i) creating liability for any other Limited Partner, (ii) causing the
Partnership to cease to qualify as a limited partnership, (iii) reducing the
amount of cash otherwise distributable to the Limited Partners, (iv) resulting
in the classification of the Partnership as an association or publicly traded
partnership taxable as a corporation or (v) violating the Securities Act, the
Exchange Act or any state "blue sky" or other securities laws; provided,
further, that any waiver relating to compliance with the Ownership Limit or
other restrictions in the Charter shall be made and shall be effective only as
provided in the Charter.
Section 15.7 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.
82
Section 15.8 Applicable Law. This Agreement shall be construed and
enforced in accordance with and governed by the laws of the State of Delaware,
without regard to the principles of conflicts of law. In the event of a conflict
between any provision of this Agreement and any non- mandatory provision of the
Act, the provisions of this Agreement shall control and take precedence.
Section 15.9 Entire Agreement. This Agreement contains all of the
understandings and agreements between and among the Partners with respect to the
subject matter of this Agreement and the rights, interests and obligations of
the Partners with respect to the Partnership.
Section 15.10 Invalidity of Provisions. If any provision of this
Agreement is or becomes invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein shall not be affected thereby.
Section 15.11 Limitation to Preserve REIT Status. Notwithstanding
anything else in this Agreement, to the extent that the amount paid, credited,
distributed or reimbursed by the Partnership to any REIT Partner or its
officers, directors, employees or agents, whether as a reimbursement, fee,
expense or indemnity (a "REIT Payment"), would otherwise cause the REIT Partner
to fail to satisfy the requirements of Code Section 856(c)(2) or Code Section
856(c)(3), then, notwithstanding any other provision of this Agreement, the
amount of such REIT Payments, as selected by the General Partner in its
discretion from among items of potential distribution, reimbursement, fees,
expenses and indemnities, shall be reduced for any Partnership Year so that the
REIT Payments, as so reduced, for or with respect to such REIT Partner shall not
exceed the lesser of:
(i) an amount equal to the excess, if any, of (a) four and
nine-tenths percent (4.9%) of the REIT Partner's total gross income (but
excluding the amount of any REIT Payments) for the Partnership Year that is
described in subsections (A) through (H) of Code Section 856(c)(2) over (b)
the amount of gross income (within the meaning of Code Section 856(c)(2))
derived by the REIT Partner from sources other than those described in
subsections (A) through (H) of Code Section 856(c)(2) (but not including
the amount of any REIT Payments); or
(ii) an amount equal to the excess, if any, of (a)
twenty-four percent (24%) of the REIT Partner's total gross income (but
excluding the amount of any REIT Payments) for the Partnership Year that is
described in subsections (A) through (I) of Code Section 856(c)(3) over (b)
the amount of gross income (within the meaning of Code Section 856(c)(3))
derived by the REIT Partner from sources other than those described in
subsections (A) through (I) of Code Section 856(c)(3) (but not including
the amount of any REIT Payments);
83
provided, however, that REIT Payments in excess of the amounts set forth in
clauses (i) and (ii) above may be made if the General Partner, as a condition
precedent, obtains an opinion of tax counsel or a ruling from the IRS that the
receipt of such excess amounts shall not adversely affect the REIT Partner's
ability to qualify as a REIT. To the extent that REIT Payments may not be made
in a Partnership Year as a consequence of the limitations set forth in this
Section 15.11, such REIT Payments shall carry over and shall be treated as
arising in the following Partnership Year. The purpose of the limitations
contained in this Section 15.11 is to prevent any REIT Partner from failing to
qualify as a REIT under the Code by reason of such REIT Partner's share of
items, including distributions, reimbursements, fees, expenses or indemnities,
receivable directly or indirectly from the Partnership, and this Section 15.11
shall be interpreted and applied to effectuate such purpose.
Section 15.12 No Partition. No Partner nor any successor-in-interest to
a Partner shall have the right while this Agreement remains in effect to have
any property of the Partnership partitioned, or to file a complaint or institute
any proceeding at law or in equity to have such property of the Partnership
partitioned, and each Partner, on behalf of itself and its successors and
assigns hereby waives any such right. It is the intention of the Partners that
the rights of the parties hereto and their successors-in-interest to Partnership
property, as among themselves, shall be governed by the terms of this Agreement,
and that the rights of the Partners and their successors-in-interest shall be
subject to the limitations and restrictions as set forth in this Agreement.
Section 15.13 No Third-Party Rights Created Hereby. The provisions of
this Agreement are solely for the purpose of defining the interests of the
Partners, inter se; and no other person, firm or entity (i.e., a party who is
not a signatory hereto or a permitted successor to such signatory hereto) shall
have any right, power, title or interest by way of subrogation or otherwise, in
and to the rights, powers, title and provisions of this Agreement. No creditor
or other third party having dealings with the Partnership (other than as
expressly set forth herein with respect to Indemnitees) shall have the right to
enforce the right or obligation of any Partner to make Capital Contributions or
loans to the Partnership or to pursue any other right or remedy hereunder or at
law or in equity. None of the rights or obligations of the Partners herein set
forth to make Capital Contributions or loans to the Partnership shall be deemed
an asset of the Partnership for any purpose by any creditor or other third
party, nor may any such rights or obligations be sold, transferred or assigned
by the Partnership or pledged or encumbered by the Partnership to secure any
debt or other obligation of the Partnership or any of the Partners.
Section 15.14 No Rights as Stockholders. Nothing contained in this
Agreement shall be construed as conferring upon the Holders of Partnership Units
any rights whatsoever as stockholders of the General Partner, including without
limitation any right to receive dividends or other distributions made to
stockholders of the General Partner or to vote or to consent or receive notice
as stockholders in respect of any meeting of stockholders for the election of
directors of the General Partner or any other matter.
84
[the next page is the signature page]
85
IN WITNESS WHEREOF, this Agreement has been executed as of the date
first written above.
GENERAL PARTNER:
NORTHSTAR REALTY FINANCE CORP.
By:
-------------------------------
Name:
Title:
LIMITED PARTNERS:
NORTHSTAR PARTNERSHIP, L.P.,
a Delaware limited partnership
By: NorthStar Capital Investment Corp.,
a Maryland corporation,
its General Partner
By:
----------------------------------
Name:
Title:
[OTHER LIMITED PARTNERS TO BE
IDENTIFIED]
AS OF [________________]
EXHIBIT A
PARTNERS AND PARTNERSHIP UNITS
-----------------------------------------------------------------------------------------------------------
NAME AND ADDRESS OF PARTNERS PARTNERSHIP UNITS (TYPE AND AMOUNT)
-----------------------------------------------------------------------------------------------------------
GENERAL PARTNER:
NORTHSTAR REALTY FINANCE [______________] Partnership Common
CORP. Xxxxx
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
-----------------------------------------------------------------------------------------------------------
LIMITED PARTNERS:
-----------------------------------------------------------------------------------------------------------
NORTHSTAR REALTY FINANCE [______________] Partnership Common
CORP. Xxxxx
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
-----------------------------------------------------------------------------------------------------------
NORTHSTAR PARTNERSHIP, L.P. [______________] Partnership Common
000 Xxxxxxx Xxxxxx, 00xx Xxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
-----------------------------------------------------------------------------------------------------------
[ADDITIONAL LIMITED PARTNERS TO [______________] Partnership Common
BE IDENTIFIED] Units
-----------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------
A-1
-----------------------------------------------------------------------------------------------------------
NAME AND ADDRESS OF PARTNERS PARTNERSHIP UNITS (TYPE AND AMOUNT)
-----------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------
TOTALS
-----------------------------------------------------------------------------------------------------------
A-2
Exhibit B
EXAMPLES REGARDING ADJUSTMENT FACTOR
For purposes of the following examples, it is assumed that (a) the
Adjustment Factor in effect on [_______________] is 1.0 and (b) on
[_______________] (the "Partnership Record Date" for purposes of these
examples), prior to the events described in the examples, there are 100 REIT
Shares issued and outstanding.
Example 1
---------
On the Partnership Record Date, the General Partner declares a dividend
on its outstanding REIT Shares in REIT Shares. The amount of the dividend is one
REIT Share paid in respect of each REIT Share owned. Pursuant to Paragraph (i)
of the definition of "Adjustment Factor," the Adjustment Factor shall be
adjusted on the Partnership Record Date, effective immediately after the stock
dividend is declared, as follows:
200
1.0 * ----- = 2.0
100
Accordingly, the Adjustment Factor after the stock dividend is declared
is 2.0.
Example 2
---------
On the Partnership Record Date, the General Partner distributes options
to purchase REIT Shares to all holders of its REIT Shares. The amount of the
distribution is one option to acquire one REIT Share in respect of each REIT
Share owned. The strike price is $4.00 a share. The Value of a REIT Share on the
Partnership Record Date is $5.00 per share. Pursuant to Paragraph (ii) of the
definition of "Adjustment Factor," the Adjustment Factor shall be adjusted on
the Partnership Record Date, effective immediately after the options are
distributed, as follows:
(100+100)
1.0 * ---------------------- = 1.1111
100*$4.00
(100 + ------------- )
$5.00
Accordingly, the Adjustment Factor after the options are distributed is
1.1111. If the options expire or become no longer exercisable, then the
retroactive adjustment specified in Paragraph (ii) of the definition of
"Adjustment Factor" shall apply.
X-0
Xxxxxxx 0
---------
Xx the Partnership Record Date, the General Partner distributes assets
to all holders of its REIT Shares. The amount of the distribution is one asset
with a fair market value (as determined by the General Partner) of $1.00 in
respect of each REIT Share owned. It is also assumed that the assets do not
relate to assets received by the General Partner pursuant to a pro rata
distribution by the Partnership. The Value of a REIT Share on the Partnership
Record Date is $5.00 a share. Pursuant to Paragraph (iii) of the definition of
"Adjustment Factor," the Adjustment Factor shall be adjusted on the Partnership
Record Date, effective immediately after the assets are distributed, as follows:
$5.00
1.0 * ------------- = 1.25
$5.00 - $1.00
Accordingly, the Adjustment Factor after the assets are distributed is
1.25.
B-2
Exhibit C
NOTICE OF REDEMPTION
To: NorthStar Realty Finance Corp.
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
The undersigned Limited Partner or Assignee hereby irrevocably tenders
for Redemption _______ Partnership Common Units in NorthStar Realty Finance
Limited Partnership in accordance with the terms of the Agreement of Limited
Partnership of NorthStar Realty Finance Limited Partnership, dated ed as of
[__________________] as amended (the "Agreement"), and the Redemption rights
referred to therein. The undersigned Limited Partner or Assignee:
(a) undertakes (i) to surrender such Partnership Common Units and
any certificate therefor at the closing of the Redemption and (ii) to furnish to
the General Partner, prior to the Specified Redemption Date, the documentation,
instruments and information required under Section 8.6(g) of the Agreement;
(b) directs that the certified check representing the Cash
Amount, or the REIT Shares Amount, as applicable, deliverable upon the closing
of such Redemption be delivered to the address specified below;
(c) represents, warrants, certifies and agrees that:
(i) the undersigned Limited Partner or Assignee is a
Qualifying Party,
(ii) the undersigned Limited Partner or Assignee has, and at
the closing of the Redemption will have, good, marketable and unencumbered
title to such Partnership Common Units, free and clear of the rights or
interests of any other person or entity,
(iii) the undersigned Limited Partner or Assignee has, and
at the closing of the Redemption will have, the full right, power and
authority to tender and surrender such Partnership Common Units as provided
herein, and
(iv) the undersigned Limited Partner or Assignee has
obtained the consent or approval of all persons and entities, if any,
having the right to consent to or approve such tender and surrender; and
C-1
(d) acknowledges that he will continue to own such Partnership
Common Units until and unless either (1) such Partnership Common Units are
acquired by the General Partner pursuant to Section 8.6(b) of the Agreement or
(2) such redemption transaction closes.
C-2
All capitalized terms used herein and not otherwise defined shall
have the same meaning ascribed to them respectively in the Agreement.
Dated: __________________
Name of Limited Partner or Assignee:
----------------------------------------
----------------------------------------
(Signature of Limited Partner or Assignee)
----------------------------------------
(Street Address)
----------------------------------------
(City) (State) (Zip Code)
Signature Guaranteed by:
--------------------------------------------
Issue Check Payable to:
--------------------------------------------
Please insert social security
or identifying number:
--------------------------------------------
C-3
Exhibit D
FORM OF UNIT CERTIFICATE
THE SECURITY EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "ACT"), OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT
BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH
REGISTRATION, UNLESS THE TRANSFEROR DELIVERS TO THE PARTNERSHIP AN OPINION OF
COUNSEL SATISFACTORY TO THE PARTNERSHIP, IN FORM AND SUBSTANCE SATISFACTORY TO
THE PARTNERSHIP, TO THE EFFECT THAT THE PROPOSED SALE, TRANSFER OR OTHER
DISPOSITION MAY BE EFFECTED WITHOUT REGISTRATION UNDER THE ACT AND UNDER
APPLICABLE STATE SECURITIES OR "BLUE SKY" LAWS. IN ADDITION, THE LIMITED
PARTNERSHIP INTEREST EVIDENCED BY THIS CERTIFICATE MAY BE SOLD OR OTHERWISE
TRANSFERRED ONLY IN COMPLIANCE WITH THE RESTRICTIONS ON TRANSFER SET FORTH IN
THE FIRST AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF NORTHSTAR
REALTY FINANCE LIMITED PARTNERSHIP, DATED AS OF [ ], A COPY OF WHICH MAY BE
OBTAINED FROM NORTHSTAR REALTY FINANCE CORP., THE GENERAL PARTNER, AT ITS
PRINCIPAL EXECUTIVE OFFICE.
Certificate Number ________
NORTHSTAR REALTY FINANCE LIMITED PARTNERSHIP
FORMED UNDER THE LAWS OF THE STATE OF DELAWARE
This certifies that
-----------------------------------------------------------------------
is the owner of
-------------------------------------------------------------------------
FULLY PAID PARTNERSHIP COMMON UNITS
OF
NORTHSTAR REALTY FINANCE LIMITED PARTNERSHIP,
transferable on the books of the Partnership in person or by duly authorized
attorney on the surrender of this Certificate properly endorsed. This
Certificate and the Partnership Common Units represented hereby are issued and
shall be held subject to all of the provisions of the Agreement of Limited
Partnership, as the same may be amended and/or supplemented from time to time.
IN WITNESS WHEREOF, the undersigned has signed this Certificate.
Dated:
By
--------------------------------
D-1
Exhibit E
NOTICE OF ELECTION BY PARTNER TO CONVERT LTIP UNITS INTO PARTNERSHIP
COMMON UNITS
The undersigned Holder of LTIP Units hereby irrevocably (i) elects to
convert the number of LTIP Units in NorthStar Realty Finance (the "Partnership")
set forth below into Partnership Common Units in accordance with the terms of
the Agreement of Limited Partnership of the Partnership, as amended; and (ii)
directs that any cash in lieu of Partnership Common Units that may be
deliverable upon such conversion be delivered to the address specified below.
The undersigned hereby represents, warrants, and certifies that the undersigned
(a) has title to such LTIP Units, free and clear of the rights or interests of
any other person or entity other than the Partnership; (b) has the full right,
power, and authority to cause the conversion of such LTIP Units as provided
herein; and (c) has obtained the consent or approval of all persons or entities,
if any, having the right to consent or approve such conversion.
Name of Holder:
-----------------------------------------------------------------
(Please Print: Exact Name as Registered with Partnership)
Number of LTIP Units to be Converted:
----------------------
Date of this Notice:
--------------------------------------
-----------------------------------------------------------------------
(Signature of Holder: Sign Exact Name as Registered with Partnership)
-----------------------------------------------------------------------
(Street Address)
-----------------------------------------------------------------------
(City) (State) (Zip Code)
Signature Guaranteed by:
-----------------------------------------------
E-1
Exhibit F
NOTICE OF ELECTION BY PARTNERSHIP TO FORCE CONVERSION OF LTIP UNITS INTO
PARTNERSHIP COMMON UNITS
NorthStar Realty Finance (the "Partnership") hereby irrevocably elects
to cause the number of LTIP Units held by the Holder of LTIP Units set forth
below to be converted into Partnership Common Units in accordance with the terms
of the Agreement of Limited Partnership of the Partnership, as amended.
Name of Holder:
-----------------------------------------------------------------
(Please Print: Exact Name as Registered with Partnership)
Number of LTIP Units to be Converted:
----------------------------
Date of this Notice:
---------------------------------------------
F-1
