HOME PROPERTIES OF NEW YORK, L.P.
SECOND AMENDED AND RESTATED
AGREEMENT OF LIMITED
PARTNERSHIP
THE UNITS (AS DEFINED HEREIN) HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR UNDER THE
SECURITIES LAWS OF ANY STATE. THE UNITS ARE BEING OFFERED AND SOLD UNDER THE
EXEMPTION PROVIDED BY SECTION 4(2) OF THE SECURITIES ACT AND PURSUANT TO RULE
506 OF REGULATION D OF THE SECURITIES AND EXCHANGE COMMISSION.
A PURCHASER OF THE UNITS MUST BE PREPARED TO BEAR THE ECONOMIC RISK
OF THE INVESTMENT FOR AN INDEFINITE PERIOD OF TIME BECAUSE THE UNITS HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OR UNDER THE SECURITIES LAWS OF ANY
STATE AND, THEREFORE, CANNOT BE SOLD UNLESS THEY ARE SUBSEQUENTLY REGISTERED
OR AN EXEMPTION FROM REGISTRATION IS AVAILABLE. THERE IS NO OBLIGATION OF
THE PARTNERSHIP TO REGISTER THE UNITS UNDER THE SECURITIES ACT OR UNDER THE
SECURITIES LAWS OF ANY STATE.
THIS LIMITED PARTNERSHIP AGREEMENT PROVIDES FOR FURTHER
RESTRICTIONS ON THE TRANSFER OF THE UNITS.
TABLE OF CONTENTS
Page
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ARTICLE I DEFINITIONS. . .. . . . . . . . . . . . . . . . 1
Section 1.01 Act . . . . .. . . . . . . . . . . . . . . . 1
Section 1.02 Additional Limited Partner.
Section 1.03 Additional Partnerships . . .. . . . . . . . 1
Section 1.04 Adjusted Capital Account Deficit . . . . . . 1
Section 1.05 Assignee. . . . . . . . . . . . . . . . . . 2
Section 1.06 Affiliated Person . . . . . . . . . . . . . 2
Section 1.07 Assignment of Limited Partnership
Interest . . . . . . . . . . . . . . . . . . . 2
Section 1.08 Assignment of Home Leasing Assets . . . . . 2
Section 1.09 Available Cash. . . . . . . . . . . . . . . 2
Section 1.10 Business Day. . . . . . . . . . . . . . . . 3
Section 1.11 Capital Account . . . . . . . . . . . . . . 3
Section 1.12 Capital Contribution. . . . . . . . . . . . 4
Section 1.13 Cash Amount . . . . . . . . . . . . . . . . 4
Section 1.14 Certificate . . . . . . . . . . . . . . . . 4
Section 1.15 Closing Date. . . . . . . . . . . . . . . . 4
Section 1.16 Code. . . . . . . . . . . . . . . . . . . . 4
Section 1.17 Conifer . . . . . . . . . . . . . . . . . . 4
Section 1.18 Contributed Interests . . . . . . . . . . . 4
Section 1.19 Contribution Agreements . . . . . . . . . . 4
Section 1.20 Conversion Factor . . . . . . . . . . . . . 5
Section 1.21 Distribution . . . . . . . .. . . . . . . . 5
Section 1.22 Equivalent HP Share . . . . . . . . . . . . 5
Section 1.23 Existing Partnerships . . . . . . . . . . . 5
Section 1.24 Fiscal Year . . . . . . . . . . . . . . . . 5
Section 1.25 General Partner . . . . . . . . . . . . . . 5
Section 1.26 General Partner Interest. . . . . . . . . . 5
Section 1.27 Home Leasing Assets . . . . . . . . . . . . 5
Section 1.28 Home Leasing Corporation. . . . . . . . . . 6
Section 1.29 Home Properties . . . . . . . . . . . . . . 6
Section 1.30 HP Management . . . . . . . . . . . . . . . 6
Section 1.31 HP Securities . . . . . . . . . . . . . . . 6
Section 1.32 HP Share. . . . . . . . . . . . . . . . . . 6
Section 1.33 HP Shares Amount. . . . . . . . . . . . . . 6
Section 1.34 Immediate Family. . . . . . . . . . . . . . 6
Section 1.35 Income Or Loss. . . . . . . . . . . . . . . . 6
Section 1.36 Indemnified Persons . . . . . . . . . . . .. 7
Section 1.37 Limited Partner . . . . . . . . . . . . . .. 7
Section 1.38 Limited Partners. . . . . . . . . . . . . .. 7
Section 1.39 Limited Partnership Interest. . . . . . . .. 7
Section 1.40 Liquidator. . . . . . . . . . . . . . . . .. 7
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Section 1.41 Majority of Limited Partners. . . . . . . .. 7
Section 1.42 Management Agreements . . . . . . . . . . .. 7
Section 1.43 Market Value. . . . . . . . . . . . . . . .. 7
Section 1.44 Merged Partnerships . . . . . . . . . . . .. 8
Section 1.45 Mergers . . . . . . . . . . . . . . . . . .. 8
Section 1.46 New HP Securities . . . . . . . . . . . . .. 8
Section 1.47 Nonrecourse Deductions. . . . . . . . . . .. 8
Section 1.48 Nonrecourse Liability . . . . . . . . . . .. 8
Section 1.49 Notice of Sale. . . . . . . . . . . . . . .. 9
Section 1.50 Original Limited Partners . . . . . . . . .. 9
Section 1.51 Original Agreement. . . . . . . . . . . . .. 9
Section 1.52 Partner . . . . . . . . . . . . . . . . . .. 9
Section 1.53 Partner Minimum Gain. . . . . . . . . . . .. 9
Section 1.54 Partner Nonrecourse Debt. . . . . . . . . .. 9
Section 1.55 Partner Nonrecourse Deductions. . . . . . .. 9
Section 1.56 Partners. . . . . . . . . . . . . . . . . .. 9
Section 1.57 Partnership . . . . . . . . . . . . . . . .. 9
Section 1.58 Partnership Agreement or Agreement. . . . .. 9
Section 1.59 Partnership Interest. . . . . . . . . . . .. 9
Section 1.60 Partnership Minimum Gain. . . . . . . . . .. 10
Section 1.61 Percentage Interest . . . . . . . . . . . .. 10
Section 1.62 Person. . . . . . . . . . . . . . . . . . .. 10
Section 1.63 Purchase Right. . . . . . . . . . . . . . .. 10
Section 1.64 QRS . . . . . . . . . . . . . . . . . . . .. 10
Section 1.65 Record Date . . . . . . . . . . . . . . . .. 10
Section 1.66 Regulations . . . . . . . . . . . . . . . .. 10
Section 1.67 Regulatory Allocations. . . . . . . . . . .. 10
Section 1.68 REIT. . . . . . . . . . . . . . . . . . . .. 11
Section 1.69 Reserves. . . . . . . . . . . . . . . . . .. 11
Section 1.70 Selling Partner . . . . . . . . . . . . . .. 11
Section 1.71 Specified Purchase Date . . . . . . . . . .. 11
Section 1.72 Substitute Limited Partner. . . . . . . . .. 11
Section 1.70 Unit. . . . . . . . . . . . . . . . . . . .. 11
ARTICLE II ORGANIZATION AND CONTINUATION. . . . . . . . .. 11
Section 2.01 Formation and Continuation. . . . . . . . .. 11
Section 2.02 Name. . . . . . . . . . . . . . . . . . . .. 11
Section 2.03 Purpose . . . . . . . . . . . . . . . . . .. 11
Section 2.04 Principal Office. . . . . . . . . . . . . .. 12
Section 2.05 Term. . . . . . . . . . . . . . . . . . . .. 12
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ARTICLE III CAPITAL CONTRIBUTIONS. . . . . . . . . . . . . 12
Section 3.01 Initial Capitalization. . . . . . . . . . . 12
Section 3.02 Issuance of Additional Units. . . . . . . . 13
Section 3.03 Issuance of Other Partnership
Interests. . . . . . . . . . . .. . . . . . . . 13
Section 3.04 Issuance of Securities by General
Partner. . . . . . . . . . . . .. . . . . . . . 14
Section 3.05 Admission of Additional Limited
Partners . . . . . . . . . . . .. . . . . . . . 15
Section 3.06 Return of Capital Contributio. . . . . . . . 15
Section 3.07 No Preemptive Rights. . . . .. . . . . . . . 15
ARTICLE IV ALLOCATIONS AND DISTRIBUTIONS. . . . . . . . . 15
Section 4.01 Allocations Of Income Or Loss . . . . . . . 15
Section 4.02 Special Allocations . . . . . . . . . . . . 15
Section 4.03 Curative Allocations. . . . . . . . . . . . 17
Section 4.04 Other Allocation Rules. . . . . . . . . . . 17
Section 4.05 Distributions . . . . . . . . . . . . . . . 18
ARTICLE V MANAGEMENT OF PARTNERSHIP BUSINESS . . . . .. . 20
Section 5.01 Powers of General Partner . . . . . . . .. . 20
Section 5.02 Duties of General Partner . . . . . . . .. . 22
Section 5.03 Partnership Tax Matters . . . . . . . . .. . 23
Section 5.04 Indemnification . . . . . . . . . . . . .. . 23
Section 5.05 Liabilities of General Partner. . . . . . . 24
Section 5.06 Title to Partnership Assets . . . . . . . . 25
Section 5.07 Authority of General Partner. . . . . . . . 25
Section 5.08 Contracts with Affiliated Persons . . . . . 26
Section 5.09 Reimbursement of the General Partner. . . . 26
Section 5.10 Resignation, Withdrawal and Removal of
General Partner. . . . . . . . . . . . . . 27
Section 5.11 Outside Activities of the General
Partner. . . . . . . . . . . . . . . . . . . . 28
ARTICLE VI THE LIMITED PARTNERS . . . . . . .. . . . . . . 29
Section 6.01 Liability of Limited Partners .. . . . . . . 29
Section 6.02 Management of Business. . . . .. . . . . . . 29
Section 6.03 Outside Activities of Limited Partners. .. . 29
Section 6.04 Rights of Limited Partners Relating
to the Partnership . . . . . . . . . .. . . . . 30
Section 6.05 Transfer of Partnership Interests .. . . . . 31
Section 6.06 Substitute Limited Partners . . . .. . . . . 32
Section 6.07 Meetings of Partners and Consent. .. . . . . 32
Section 6.08 Purchase Right. . . . . . . . . . .. . . . . 34
Section 6.09 Withdrawal. . . . . . . . . . . . .. . . . . 35
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ARTICLE VII DISSOLUTION. . . . . . . . . . . . . . .. . . . 35
Section 7.01 Dissolution . . . . . . . . . . . . .. . . . 35
Section 7.02 Liquidation . . . . . . . . . . . . . . . . 36
Section 7.03 Final Statement . . . . . . . . . . . . . . 37
ARTICLE VIII BOOKS AND ACCOUNTS . . . . . . . . . . . . . . 38
Section 8.01 Books . . . . . . . . . . . . . . . . . . . 38
Section 8.02 Reports . . . . . . . . . . . . . . . . . . 38
Section 8.03 Bank Accounts . . . . . . . . . . . . . . . 38
ARTICLE IX GENERAL. . . . . . . . . . . . . . . . . . . . 39
Section 9.01 Notices . . . . . . . . . . . . . . . . . . 39
Section 9.02 Captions. . . . . . . . . . . . . . . . . . 39
Section 9.03 Pronouns and Plurals. . . . . . . . . . . . 40
Section 9.04 Entire Agreement. . . . . . . . . . . . . 40
Section 9.05 Further Action. . . . . . . . . . . . . . . 40
Section 9.06 Binding Effect. . . . . . . . . . . . . . . 40
Section 9.07 Creditors . . . . . . . . . . . . . . . . . 40
Section 9.08 Validity. . . . . . . . . . . . . . . . . . 40
Section 9.09 Governing Law . . . . . . . . . . . . . . . 40
Section 9.10 Amendment . . . . . . . . . . . . . . . . . 40
Section 9.11 Power of Attorney . . . . . . . . . . . . . 42
ARTICLE X CLASS A LIMITED PARTNERSHIP INTERESTS. . . . 43
Section 10.01 Name . . . . . . . . . . . . . . . . . . . 43
Section 10.02 Capital Contribution . . . . . . . . . . . 43
Section 10.03 Status of Holders. . . . . . . . . . . . . 43
Section 10.04 Preferred Return . . . . . . . . . . . . . 44
Section 10.05 Transfer Rights. . . . . . . . . . . . . . 46
Section 10.06 Conversion Rights. . . . . . . . . . . . . 46
Section 10.07 Voting Rights. . . . . . . . . . . . . . . 53
Section 10.08 Calculation of Percentage Interest . . . . 59
Section 10.09 Liquidation. . . . . . . . . . . . . . . . 59
Section 10.10 Redemption of the Class A Limited
Partnership Interest . . . . . . . . . .. . 60
Section 10.11 Notices. . . . . . . . . . . . . . . . .. . 60
EXHIBIT A NOTICE OF SALE
EXHIBIT B ASSIGNMENT OF CLASS A INTEREST
EXHIBIT C CLASS A LIMITED PARTNERSHIP
SCHEDULE A PARTNERS, UNITS AND PERCENTAGE INTEREST
SCHEDULE B DEFICIT RESTORATION SCHEDULE
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HOME PROPERTIES OF NEW YORK, L.P.
SECOND AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
This Second Amended and Restated Agreement of Limited Partnership
is entered into as of this 23rd day of September, 1997, by and among Home
Properties of New York, Inc., a Maryland corporation, as the general
partner, and each of the persons whose names are set forth on Schedule A
hereto, as the limited partners.
Home Properties of New York, L.P. was formed as a limited
partnership under the laws of the State of New York pursuant to an
Agreement of Limited Partnership dated as of December 17, 1993 by and
between the General Partner and the Original Limited Partners and a
Certificate of Limited Partnership dated December 17, 1993 and filed with
the Secretary of State of the State of New York on December 20, 1993. An
Amended and Restated Agreement of Limited Partnership was entered into on
August 4, 1994 to reflect the reorganization of the Partnership in
connection with the initial public offering of the General Partner's Common
Stock. The General Partner has entered into twelve amendments to the
Amended and Restated Agreement of Limited Partnership, all of which are
reflected in this Second Amendment Restated Agreement of Limited
Partnership as well as additional amendments to: (a) convert all but 1%
of the interest of Home Properties of New York, Inc. (the "General
Partner") into a limited partnership interest and to transfer that limited
partnership interest to a newly formed entity in which the General Partner
is the sole beneficial owner and which is treated for federal income tax
purposes as a "qualified REIT subsidiary" ("QRS"), (b) admit the General
Partner's QRS as a limited partner of the Partnership, (c) amend the
definition of "Specified Purchase Date" and related provisions to provide
that the Market Value used in calculating the amount to be received by a
Limited Partner exercising his Purchase Right under the Partnership
Agreement will be based on the ten consecutive trading days prior to the
date on which the Limited Partner gives Notice of Sale relating to his
intention to exercise the Purchase Right and to provide that the purchase
will occur within five business days after the Limited Partner's notice,
(d) add a provision for special allocation of tax losses to certain
limited partners who voluntarily agree to make a cash contribution, upon
the liquidation of the Partnership, of an amount equal to the amount of any
deficit in their capital account or their agreed percentage of certain
Partnership recourse liabilities, whichever would result in the smaller
contribution, and to amend the provisions governing allocation of
nonrecourse liabilities to provide that the General Partner may allocate
excess nonrecourse liabilities among the Partners in any manner permitted
under the regulations and rulings of the Internal Revenue Service, (e) make
other amendments to conform the Partnership Agreement to the foregoing,
(f) reflect the issuance of Units to former partners and holders of
interests in properties in connection with the merger of the Partnership
with P-K Partnership, Glenvwk Partnership, Exmark Partnership, [Curren
Partnership], Valspring Partnership and Chesterfield Partnership, each a
Pennsylvania limited partnership, and New Orleans East Limited Partnership,
a New Jersey limited partnership or, in the event that New Orleans East
Limited Partnership is dissolved prior to the merger and its assets
distributed to its partners, the merger of the Partnership with Norpark
Partnership, a Pennsylvania limited partnership, which is the limited
partner of New Orleans East Limited Partnership, and the acquisition of
Xxxxxxxx Court Apartments and Xxxxx Court Apartments
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(in part through the merger with P-K Partnership and in part directly from the
other partner) and two additional properties known as Xxxxxxxx House and
Xxxxxx Court, and (g) restate the Partnership Agreement, as so amended, as
the Second Amended and Restated Agreement of Limited Partnership.
In consideration of the mutual covenants set forth below, the
Partners agree as follows:
ARTICLE I
DEFINITIONS
As used in this Second Amended and Restated Agreement of Limited
Partnership, including the preamble hereof, the following terms shall have
the meanings indicated:
Section 1.01 Act. Article 8-A of the New York Partnership Law,
known as the New York Revised Limited Partnership Act, as such Act may be
amended from time to time, and any successor thereto.
Section 1.02 Additional Limited Partner. A Person admitted to
the Partnership as a Limited Partner pursuant to Section 3.05 hereof.
Section 1.03 Additional Partnerships. Those limited or general
partnership interests in which are acquired by the Partnership from time to
time by contribution, merger or otherwise.
Section 1.04 Adjusted Capital Account Deficit. The deficit
balance, if any, in a Partner's Capital Account as of the end of any Fiscal
Year after such Capital Account has been: (a) increased by any amounts
which such Partner (i) is obligated to restore pursuant to the terms of
this Agreement; (ii) is otherwise treated as being obligated to restore
under Section 1.704-1(b)(2)(ii)(c) of the Regulations; or (iii) is deemed
to be obligated to restore pursuant to the penultimate sentences of
Sections 1.704-2(g)(1) and 1.704-2(i)(5) of the Regulations; and
(b) decreased by the items described in Sections 1.704-1(b)(2)(ii)(d)(4),
(5) and (6) of the Regulations. The foregoing definition of Adjusted
Capital Account Deficit is intended to comply with the provisions of
Section 1.704-1(b)(2)(ii)(d) of the Regulations and shall be interpreted
consistently therewith.
Section 1.05 Assignee. A Person to whom a Limited Partnership
Interest is transferred, but who has not become a Substitute Limited
Partner pursuant to Section 6.06 hereof.
Section 1.06 Affiliated Person. Any Person who is the General
Partner or that controls, or is controlled by or is under common control
with, the General Partner and
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any officer, director, general partner or
trustee of any such Person. For purposes of this definition, "control"
shall mean the possession, direct or indirect, of the power to direct or
cause the direction of the management and policies of a Person, whether
through the ownership of voting securities, by contract, or otherwise, and,
for purposes hereof, the ownership of ten percent or more of the
outstanding voting interests of a Person shall be deemed to be "control".
Section 1.07 Assignment of Limited Partnership Interest. A duly
completed and executed assignment of limited partnership interest, in a
form reasonably acceptable to the General Partner.
Section 1.08 Assignment of Home Leasing Assets. The Assignment,
dated August 4, 1994, pursuant to which Home Leasing Corporation
transferred the Home Leasing Assets to the Partnership.
Section 1.09 Available Cash. Available cash means, with respect
to any period for which such calculation is being made,
(a) the sum of:
(i) the Partnership's Income or Loss (as the case may be)
for such period (without regard to adjustments resulting from
allocations described in Sections 4.02, 4.03 and 4.04 hereof);
(ii) depreciation and all other noncash charges deducted in
determining Income or Loss for such period;
(iii) the amount of any reduction in the Reserves
(including, without limitation, reductions resulting because the
General Partner determines such amounts are no longer necessary);
and
(iv) all other cash received by the Partnership for such
period that was not included in determining Income or Loss for
such period,
less (b) the sum of:
(i) all principal payments on debt made by the Partnership
during such period;
(ii) capital expenditures made by the Partnership during
such period;
(iii) investments made by the Partnership during such
period in any entity (including loans made thereto) to the extent
that such investments are not otherwise described in clause (b)
(i) or (b) (ii);
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(iv) all other expenditures and payments not deducted in
determining Income or Loss for such period;
(v) any amount included in determining Income or Loss for
such period that was not received by the Partnership during such
period;
(vi) the amount of any increase in Reserves during such
period which the General Partner determines to be necessary or
appropriate in its sole discretion; and
(vii) the amount of any working capital accounts and
other cash or similar balances which the General Partner
determines to be necessary or appropriate, in its sole
discretion.
Section 1.10 Business Day. 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.
Section 1.11 Capital Account. The Capital Account of each
Partner shall be the amount of cash or the fair market value of any
property contributed by such Partner to the Partnership pursuant to
Article III hereof:
(a) increased by: (i) the amount of any other cash and the fair
market value (as determined by the Contributing Partner and the
Partnership) of any other property contributed by the Partner to the
Partnership; (ii) the amount of Income allocated to the Partner and any
items in the nature of income or gain which are specially allocated to the
Partner pursuant to Sections 4.02, 4.03 and 4.04 (except as provided in the
last sentence of paragraph (b) of Section 4.04); and (iii) the amount of
any Partnership liabilities assumed by the Partner, including, without
limitation, the amount of such Partner's deficit restoration obligation set
forth on Schedule B to this Partnership Agreement, if any, or which are
secured by any Partnership property distributed to such Partner; and
(b) decreased by: (i) the amount of cash and the fair market
value (as determined by the General Partner in its sole discretion) of any
Partnership property distributed to the Partner as a Distribution; (ii) the
amount of Losses allocated to the Partner and any items in the nature of
expenses or losses that are specially allocated pursuant to Sections 4.02,
4.03 and 4.04 (except as provided in the last sentence of paragraph (b) of
Section 4.04); and (iii) the amount of any liabilities of such Partner
assumed by the Partnership or which are secured by any property contributed
by such Partner to the Partnership.
Capital Accounts shall be maintained and adjusted in accordance with the
provisions of Section 1.704-1(b)(2)(iv) of the Regulations. In the event
that any interest in the Partnership is transferred in accordance with the
terms of this Agreement, the transferee shall succeed to
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the Capital
Account of the transferor to the extent it relates to the transferred
interest. The foregoing provisions and the other provisions of this
Agreement relating to the maintenance of Capital Accounts are intended to
comply with Section 1.704-1(b) of the Regulations, and shall be interpreted
and applied in a manner consistent with such Regulations.
Section 1.12 Capital Contribution. The cash, cash equivalent or
other property contributed to the Partnership by a Partner in accordance
with Article III hereof.
Section 1.13 Cash Amount. An amount of cash equal to the Market
Value of the HP Shares Amount on the date the General Partner receives the
Notice of Sale.
Section 1.14 Certificate. The Certificate of Limited
Partnership of the Partnership filed with the Secretary of State of the
State of New York on December 20, 1993, as such may be amended from time to
time.
Section 1.15 Closing Date. August 4, 1994, the date the sale by
the General Partner of HP Shares in its initial public offering was
consummated.
Section 1.16 Code. The Internal Revenue Code of 1986, as
amended.
Section 1.17 Conifer. Conifer Realty Corporation, a Maryland
corporation with its principal office at 000 Xxxxxxx Xxxxxx, Xxxxxxxxx, Xxx
Xxxx 00000.
Section 1.18 Contributed Interests. The limited partnership
interests in the Existing Partnerships and any Additional Partnerships
contributed to the Partnership by the Limited Partners as described in the
Contribution Agreements entered into from time to time with the
Partnership.
Section 1.19 Contribution Agreements. The agreements between
the Partnership and certain Limited Partners pursuant to which the Limited
Partners have agreed to contribute the Contributed Interests and Home
Leasing Assets to the Partnership.
Section 1.20 Conversion Factor means 1.0, provided that in the
event that the General Partner (a) declares or pays a dividend on its
outstanding HP Shares in HP Shares or makes a distribution to all holders
of its outstanding HP Shares in HP Shares; (b) subdivides its outstanding
HP Shares; or (c) combines its outstanding HP Shares into a smaller number
of HP Shares, the Conversion Factor shall be adjusted by multiplying the
Conversion Factor by a fraction, the numerator of which shall be the number
of HP Shares issued and outstanding on the record date for such dividend,
distribution, subdivision or combination assuming for such purpose that
such dividend, distribution, subdivision or combination has occurred as of
such time, and the denominator of which shall be the actual number of HP
Shares (determined without the above assumption) issued and outstanding on
the record date for such dividend, distribution, subdivision or
combination. Any adjustment of the
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Conversion Factor shall become
effective immediately after the effective date of such event retroactive to
the record date, if any, for such event.
Section 1.21 Distribution. Any transfer of money or other
property to a Partner, in his capacity as a Partner, from the Partnership.
The term "Distribution" shall not include amounts paid to the General
Partner pursuant to Sections 5.04 or 5.09 hereof. For purposes of this
definition, property is to be valued at its fair market value on the date
of transfer.
Section 1.22 Equivalent HP Share. A share of stock of the
General Partner which has such rights and powers that the economic
interests attributable to such share are substantially similar to the
rights and powers of a particular class or group of Partnership Interests
established by the General Partner pursuant to Section 3.03 hereof.
Section 1.23 Existing Partnerships. Fairview Associates, II;
Finger Lakes Manor Associates; Newcastle Associates; Perinton Manor
Associates; Raintree Island Associates; Riverton Knolls Associates; 1600
Elmwood Associates; Springcreek Associates; Waterfalls Village Associates;
Wedgewood Shopping Center Limited Partnership; Wedgewood Park Limited
Partnership and Williamstowne Associates.
Section 1.24 Fiscal Year. From January 1 to December 31 of each
year or such portion thereof as the Partnership shall be in existence.
Section 1.25 General Partner. Home Properties or its successors
as general partner of the Partnership.
Section 1.26 General Partner Interest. The 1% Partnership
Interest held by the General Partner. The General Partner Interest may be
expressed as a number of Units.
Section 1.27 Home Leasing Assets. The assets of Home Leasing
Corporation contributed to the Partnership by Home Leasing Corporation and
more fully described in the Assignment of Home Leasing Assets, dated August
4, 1994.
Section 1.28 Home Leasing Corporation. Home Leasing
Corporation, a New York corporation with its principal office at
000 Xxxxxxx Xxxxxx, Xxxxxxxxx, Xxx Xxxx 00000.
Section 1.29 Home Properties. Home Properties of New York,
Inc., a Maryland corporation with its principal office at 000 Xxxxxxx
Xxxxxx, Xxxxxxxxx, Xxx Xxxx 00000, the initial General Partner of the
Partnership.
Section 1.30 HP Management. Home Properties Management, Inc., a
Maryland corporation with its principal office at 000 Xxxxxxx Xxxxxx,
Xxxxxxxxx, Xxx Xxxx 00000.
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Section 1.31 HP Securities. HP Shares or New HP Securities
issued by the General Partner (including without limitation any Equivalent
HP Shares).
Section 1.32 HP Share. A share of Common Stock of the General
Partner.
Section 1.33 HP Shares Amount. A number of HP Shares equal to
the product of the number of Units offered for redemption by a Selling
Partner, multiplied by the Conversion Factor; provided that in the event
the General Partner issues to all holders of HP Shares transferable rights,
options, warrants or convertible or exchangeable securities entitling the
shareholders to subscribe for or purchase HP Shares, or any other
securities or property (collectively, the "rights") then, the HP Shares
Amount shall also include such rights that a holder of that number of HP
Shares would be entitled to receive.
Section 1.34 Immediate Family. With respect to any natural
Person, such natural Person's spouse, parents, descendants, nephews,
nieces, brothers and sisters.
Section 1.35 Income or Loss. Income or Loss for any Fiscal Year
means the Partnership's taxable income or loss for the Fiscal Year,
determined in accordance with Section 703(a) of the Code (for this purpose,
all items of income, gain, loss or deduction required to be stated
separately pursuant to Section 703(a)(1) of the Code shall be included in
taxable income or loss), with the following adjustments:
(a) Any expenditures of the Partnership described in
Section 705(a)(2)(B) of the Code or treated as Code Section 705(a)(2)(B)
expenditures pursuant to Section 1.704-1(b)(2)(iv)(i) of the Regulations
shall be subtracted from such taxable income or loss;
(b) Any income of the Partnership that is exempt from federal
income tax and not otherwise taken into account in computing Income or Loss
pursuant to this definition shall be added to such taxable income or loss;
(c) Any gain or loss which would have been realized by the
Partnership on the sale of assets distributed in kind to Partners,
determined with reference to the fair market value and the adjusted tax
basis of such property for federal income tax purposes immediately prior to
such distribution, shall be added to or subtracted from such taxable income
of loss;
(d) Income or Loss does not include any amount allocated
pursuant to paragraph (b) of Section 4.04; and
(e) The computation of all items of income, gain, loss or
deduction shall be made without regard to any adjustment to the adjusted
tax basis of a Partnership asset resulting from an election under
Section 754 of the Code (except to the extent required under
Section 1.704-1(b)(2)(iv)(m) of the Regulations).
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Section 1.36 Indemnified Persons. Any Person made a party to a
proceeding by reason of his status as the General Partner or as a director
or officer of the General Partner of the Partnership and any other Persons
(including Affiliated Persons) as the General Partner may designate in
writing from time to time, in its sole discretion.
Section 1.37 Limited Partner. Any Person named as a Limited
Partner in Schedule A attached hereto, as such Schedule may be amended from
time to time, or any Substitute Limited Partner or Additional Limited
Partner, in such person's capacity as a Limited Partner of the Partnership.
Section 1.38 Limited Partners. All of the Limited Partners.
Section 1.39 Limited Partnership Interest. The Partnership
Interest held by a Limited Partner in the Partnership representing a
fractional part of the Partnership Interests of all Limited Partners. A
Limited Partnership Interest may be expressed as a number of Units.
Section 1.40 Liquidator. The General Partner or other Person
appointed to liquidate the assets of the Partnership pursuant to Section
7.02 hereof.
Section 1.41 Majority of Limited Partners. Limited Partners
holding a majority of the Units held by all Limited Partners.
Section 1.42 Management Agreements. The agreements for the
management of properties owned by affiliates of Home Leasing Corporation,
C.O.F., Inc. and Conifer Development, Inc. and third parties to be entered
into by such persons and HP Management or Conifer or assigned or
subcontracted by Home Leasing Corporation, C.O.F., Inc. or Conifer
Development, Inc. to HP Management or Conifer.
Section 1.43 Market Value. (a) With respect to an HP Share, the
average of the daily market price for the ten (10) consecutive trading days
immediately preceding the date on which the Market Value is to be
determined. The market price for each such trading day shall be: (i) if
the HP Shares are listed or admitted to trading on any securities exchange
or the NASDAQ-National Market System, the closing price, regular way, on
such day, or if no such sale takes place on such day, the average of the
closing bid and asked prices on such day, or (ii) if the HP Shares are not
listed or admitted to trading on any securities exchange or the NASDAQ-
National Market System, the last reported sale price on such day or, if no
sale takes place on such day, the average of the closing bid and asked
prices on such day, as reported by a reliable quotation source designated
by the General Partner, or if no such last reported sale price or closing
bid and asked prices are available, the average of the reported high bid
and low asked prices on such day, as reported by a reliable quotation
source designated by the General Partner, or if there shall be no bid and
asked prices on such day, the average of the high bid and low asked prices,
as so reported, on the most recent day (not more than 10 days prior to the
date in question) for which prices have been so reported;
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provided that if
there are no bid and asked prices reported during the 10 days prior to the
date in question, the Market Value of the HP Shares shall be determined by
the General Partner acting in good faith on the basis of such quotations
and other information as it considers, in its reasonable judgment,
appropriate.
(b) In the event the HP Shares Amount includes rights that
a holder of HP Shares would be entitled to receive, then the Market 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.
Section 1.44 Merged Partnerships. All of the Existing
Partnerships other than Wedgewood Shopping Center Limited Partnership and
Wedgewood Park Limited Partnership and any Additional Partnerships merged
with and into the Partnership.
Section 1.45 Mergers. The transactions pursuant to which the
Merged Partnerships are merged into the Partnership.
Section 1.46 New HP Securities. The meaning set forth in
Section 3.04(b) hereof.
Section 1.47 Nonrecourse Deductions. For any Fiscal Year, an
amount equal to the excess, if any, of the net increase, if any, in the
amount of Partnership Minimum Gain during that Fiscal Year over the
aggregate amount of any Distributions during that Fiscal Year of proceeds
of a Nonrecourse Liability that are allocable to an increase in Partnership
Minimum Gain, determined according to the provisions of Section 1.704-2(c)
of the Regulations.
Section 1.48 Nonrecourse Liability. Any Partnership liability
(or portion thereof) for which no Partner bears the economic risk of loss,
determined in accordance with Section 1.704-2(b)(3) of the Regulations.
Section 1.49 Notice of Sale. A Notice of Sale substantially in
the form of Exhibit A hereto.
Section 1.50 Original Limited Partners. Xxxxxx X. Xxxxxxxxx and
Xxxxxx X. Xxxxxxxxx.
Section 1.51 Original Agreement. The Agreement of Limited
Partnership of the Partnership entered into by and among Home Properties,
as the General Partner, and Xxxxxx X. Xxxxxxxxx and Xxxxxx X. Xxxxxxxxx, as
the Limited Partners, dated as of December 17, 1993.
Section 1.52 Partner. The General Partner or any Limited
Partner.
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Section 1.53 Partner Minimum Gain. 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 Section 1.704-2(i)(3) of the
Regulations.
Section 1.54 Partner Nonrecourse Debt. Any Nonrecourse
Liability of the Partnership for which any Partner bears the economic risk
of loss, determined in accordance with Section 1.704-2(b)(4) of the
Regulations.
Section 1.55 Partner Nonrecourse Deductions. For any Fiscal
Year, any amount with respect to a Partner Nonrecourse Debt equal to the
excess of the net increase in the amount of Partner Minimum Gain
attributable to such Partner Nonrecourse Debt during that Fiscal Year over
the aggregate amount of any Distributions during that Fiscal Year to the
Partner that bears the economic risk of loss for such Partner Nonrecourse
Debt to the extent such Distributions are from the proceeds of such Partner
Nonrecourse Debt and are allocable to an increase in Partner Minimum Gain
attributable to such Partner Nonrecourse Debt, determined in accordance
with Section 1.704-2(i)(2) of the Regulations.
Section 1.56 Partners. The General Partner and the Limited
Partners.
Section 1.57 Partnership. The limited partnership formed under
the Act and pursuant to the Certificate and the Original Agreement, as
amended and continued by the Amended and Restated Agreement of Limited
Partnership, dated August 4, 1994, as amended and as further amended and
continued this Partnership Agreement, and any successor thereto.
Section 1.58 Partnership Agreement or Agreement. This Second
Amended and Restated Agreement of Limited Partnership, as such may be
amended from time to time.
Section 1.59 Partnership Interest. An ownership interest in the
Partnership representing a Capital Contribution by a Partner, including any
and all benefits to which the holder of such a Partnership Interest may be
entitled as provided in this Partnership Agreement, together with all
obligations of such Person to comply with the terms and provisions of this
Partnership Agreement. The Partnership Interest of each Partner shall be
personal property for all purposes. A Partnership Interest may be
expressed as a number of Units.
Section 1.60 Partnership Minimum Gain. The aggregate of the
amount of any gain that would be realized by the Partnership if it disposed
of the Partnership property subject to each Nonrecourse Liability in a
taxable transaction in full satisfaction of such Liability and for no other
consideration. It is intended that Partnership Minimum Gain be determined
in accordance with Section 1.704-2(d) of the Regulations.
Section 1.61 Percentage Interest. The proportionate interest of
a Partner in the allocations of Income or Loss and Distributions of the
Partnership. With respect to
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allocations of Income or Loss and
Distributions available for Units, the Partner's interest is determined by
dividing the Units owned by such Partner by the total number of Units then
outstanding. With respect to allocations of Income or Loss and
Distributions available for Partnership Interests not expressed as Units,
the Partner's Percentage Interest is as set forth in the amendment to this
Partnership Agreement pursuant to Section 3.03 establishing such
Partnership Interests.
Section 1.62 Person. An individual, or a corporation,
partnership, trust, unincorporated organization, association or other
entity or a government or an agency or political subdivision thereof.
Section 1.63 Purchase Right. The meaning set forth in
Section 6.08 hereof.
Section 1.64 QRS. Home Properties Trust, a Maryland real estate
investment trust formed by the General Partner, or any other entity, all of
the equity interests of which are held, directly or indirectly by the
General Partner and which is a "qualified REIT subsidiary" as such term is
used in Section 856(i) of the Code, or any replacement or subsequent
provision of the Code.
Section 1.65 Record Date. With respect to Distributions, the
first day of the month during which a Distribution is made, after
reflecting assignments effective as of such day. With respect to voting,
the date specified in the notice of meeting described in Section 6.07(b)
hereof.
Section 1.66 Regulations. The federal income tax regulations
promulgated under the Code, including Temporary Regulations, promulgated
under the Code, as such regulations may be amended from time to time
(including corresponding provisions of succeeding regulations).
Section 1.67 Regulatory Allocations. The allocations set forth
in paragraphs (c), (d) and (e) of Section 4.02.
Section 1.68 REIT. A real estate investment trust as defined
in Section 856 of the Code.
Section 1.69 Reserves. Reserves established by the General
Partner pursuant to Section 5.01(a)(xi) hereof.
Section 1.70 Selling Partner. The meaning set forth in Section
6.08 hereof.
Section 1.71 Specified Purchase Date. The fifth Business Day
after receipt by the General Partner of a Notice of Sale; provided that if
the General Partner combines its outstanding HP Shares, no Specified
Purchase Date shall occur after the record date and prior to the effective
date of such combination.
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Section 1.72 Substitute Limited Partner. A Person who is
admitted to the Partnership as a Limited Partner pursuant to Section 6.06
hereof.
Section 1.70 Unit. A fractional, undivided share of the
Partnership Interests of all Partners issued pursuant to Section 3.01 and
3.02 hereof.
ARTICLE II
ORGANIZATION AND CONTINUATION
Section 2.01 Formation and Continuation. The Partnership was
formed pursuant to the Act and, except where otherwise provided in this
Partnership Agreement and permitted by the Act, shall be operated in
accordance with the provisions thereof. The Partners hereby agree to
continue the Partnership upon the terms and conditions of this Partnership
Agreement.
Section 2.02 Name. The name of the Partnership is Home
Properties of New York, L.P. The Partnership may conduct its business
under such other name or names as the General Partner may deem advisable,
and the General Partner, in its sole discretion, may change the name of the
Partnership at any time and from time to time; provided, however, that the
words "Limited Partnership" or "L.P." or similar words or letters shall be
included in the Partnership's name where necessary for purposes of
complying with the applicable laws of any jurisdiction that so requires.
The General Partner shall notify the Limited Partners of any change in the
name of the Partnership in the next regular communication to the Limited
Partners.
Section 2.03 Purpose. The purpose of the Partnership is to
engage in any lawful act or activity for which limited partnerships may be
organized under the Act, including, but not limited to, the acquisition,
financing, development, holding, management and disposition of real
property with a view to generating Distributions and long-term capital
appreciation, and to perform any acts necessary or appropriate to
accomplish the foregoing purposes; provided, however, that such activities
shall be limited to and conducted in such a manner as to permit the General
Partner at all times to be treated as a REIT for federal income tax
purposes, unless and until such time as the General Partner ceases to
qualify as a REIT for reasons other than the conduct of the business of the
Partnership and is not seeking to re-elect REIT status.
Section 2.04 Principal Office. The principal office of the
Partnership shall be located at 000 Xxxxxxx Xxxxxx, Xxxxxxxxx, Xxx Xxxx
00000 or at such other place as the General Partner may from time to time
designate by written notice to the Limited Partners. The Partnership may
maintain offices at such other place or places within or outside the State
of New York as the General Partner deems advisable.
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Section 2.05 Term. The Partnership commenced on December 20,
1993 and shall continue through December 31, 2093, unless sooner dissolved
in accordance with the terms of this Partnership Agreement or as otherwise
provided by law.
ARTICLE III
CAPITAL CONTRIBUTIONS
Section 3.01 Current Capitalization.
(a) On the Closing Date, the General Partner contributed cash in
the amount equal to the net proceeds received by it from the sale of HP
Shares and received the number of Units equal to the number of HP Shares
sold.
(b) From time to time, certain Limited Partners named on
Schedule A hereto transferred the Contributed Interests and Home Leasing
Assets to the Partnership in accordance with the provisions of the
Contribution Agreements and have received the number of Units and the
amount of cash set forth in the respective Contribution Agreements.
(c) From time to time, upon the consummation of the Mergers
(i) Home Leasing Corporation was deemed to have contributed to the
Partnership its general partnership interests in the Merged Partnerships,
(ii) the holders of certain partnership interests were deemed to have
contributed to the Partnership their limited partnership interests in the
Merged Partnerships, and (iii) each partner of the Merged Partnerships
received the number of Units or amount of cash set forth in the respective
agreements with respect to the Mergers.
(d) In consideration of the Capital Contributions described in
subsections (a) through (c) of this Section 3.01, each Partner received the
number of Units and shall have the Percentage Interests in the Partnership
as set forth on Schedule A hereto as amended from time to time by the
General Partner to the extent necessary to reflect accurately such Capital
Contributions, any additional Capital Contributions, the issuance of
additional Units or other Partnership Interests, the admission of
Additional Limited Partners or other similar events affecting a Partner's
Percentage Interest.
Section 3.02 Issuance of Additional Units.
(a) Subject to subsection (b) of this Section 3.02, the General
Partner is hereby authorized to cause the Partnership to issue Units (in
addition to those issued pursuant to Section 3.01 hereof) to Partners or
other Persons from time to time and to require such Partners or other
Persons to make such Capital Contributions as consideration for such Units
as it shall determine in its sole discretion.
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(b) The General Partner shall not issue any additional Units to
itself or to the QRS unless the additional Units are issued in connection
with the issuance of HP Shares by the General Partner and the General
Partner makes or causes the QRS an additional Capital Contribution to the
Partnership in an amount equal to the net proceeds raised in connection
with the issuance of such HP Shares by the General Partner.
Section 3.03 Issuance of Other Partnership Interests.
(a) Subject to subsection (b) of this Section 3.03, the General
Partner is hereby authorized to cause the Partnership to issue additional
Partnership Interests (other than Units) to Partners or other Persons from
time to time and to require such Partners or other Persons to make such
Capital Contributions as consideration for such Partnership Interests as it
shall determine in its sole discretion. Any such additional Partnership
Interests shall consist of one or more classes or groups having such name
and relative rights and powers, including rights and powers senior to Units
or other outstanding classes or groups of Partnership Interests, as shall
be determined by the General Partner in its sole discretion. Prior to
issuing any such additional Partnership Interests, the General Partner
shall have executed an amendment to this Partnership Agreement setting
forth the relative rights and powers of the class or group of Partnership
Interests to be issued, including, at a minimum, (i) the name of the class
or group of Partnership Interests, (ii) the allocations of items of
Partnership income, gain, loss, deduction and credit to the Partners
holding such class or group of Partnership Interests, (iii) the right of
the Partners holding such class or group of Partnership Interests to share
in Distributions, (iv) the right of the Partners holding such class or
group of Partnership Interests to share in the assets of the Partnership
upon its dissolution and liquidation, (v) the right, if any, of the
Partners holding such class or group of Partnership Interests to vote or
consent to certain transactions by the Partnership, and (vi) the right, if
any, of the Partners holding such class or group of Partnership Interests
to convert such Partnership Interests into Units or another class or group
of Partnership Interests.
(b) The General Partner shall not issue any additional
Partnership Interests to itself pursuant to Section 3.03(a) hereof unless
the additional Partnership Interests are issued in connection with the
issuance of Equivalent HP Shares by the General Partner and the General
Partner makes an additional Capital Contribution to the Partnership in an
amount equal to the net proceeds raised in connection with the issuance of
such Equivalent HP Shares by the General Partner.
(c) The Partnership Interest held by the General Partner
immediately prior to the date of this Partnership Agreement in excess of
its 1% General Partnership Interest shall be a Limited Partnership Interest
which may be held either by the General Partner or by the QRS (or in part
by both).
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Section 3.04 Issuance of Securities by General Partner.
(a) After the initial public offering of HP Shares, the General
Partner shall not issue any HP Shares to any Persons, other than to all of
the holders of HP Shares on a pro rata basis or to Limited Partners
pursuant to Section 6.08(b) hereof, unless it (i) causes the Partnership to
issue one additional Unit to itself or, following the date of this
Partnership Agreement, to the QRS for each HP Share so issued, and
(ii) contributes, or causes the QRS to contribute, the net proceeds from
the issuance of each HP Share to the Partnership as a Capital Contribution.
(b) The General Partner shall not issue any shares of stock
other than HP Shares or any rights, options, warrants or convertible or
exchangeable securities containing the right to subscribe for or purchase
HP Shares or any other shares of stock of the General Partner
(collectively, "New HP Securities"), other than to all of the holders of HP
Shares on a pro rata basis, unless it (i) causes the Partnership to issue
to itself or, following the date of this Partnership Agreement, to the QRS
additional Partnership Interests or rights, options, warrants or
convertible or exchangeable securities of the Partnership having rights and
powers such that the economic interests are substantially similar to those
of the New HP Securities, and (ii) contributes, or causes the QRS to
contribute, the net proceeds from the issuance of such New HP Securities
and from the exercise of rights contained in such New HP Securities to the
Partnership.
(c) Without limiting Section 3.04(a) or (b) hereof, the General
Partner is expressly authorized to issue HP Shares or New HP Securities for
less than fair market value, and the General Partner is expressly
authorized to cause the Partnership to issue to the General Partner or,
following the date of this Partnership Agreement, to the QRS corresponding
Units or other Partnership Interests pursuant to Section 3.04(a) or (b)
hereof, as applicable, so long as the General Partner concludes in good
faith that such issuance is in the interests of the General Partner and the
Partnership (for example, and not by way of limitation, the General Partner
may issue HP Shares and corresponding Units pursuant to an employee stock
purchase plan providing for employee purchases of HP Shares at a discount
from fair market value or employee stock options that have an exercise
price that is less than the fair market value of the HP Shares either at
the time of issuance or at the time of exercise).
Section 3.05 Admission of Additional Limited Partners. The
General Partner may admit Persons who are issued Units or other Partnership
Interests pursuant to Section 3.02 or 3.03 hereof as Additional Limited
Partners of the Partnership. Such Persons shall be admitted to the
Partnership as an Additional Limited Partners only upon furnishing to the
General Partner: (a) evidence, in form satisfactory to the General
Partner, of acceptance of all the terms and conditions of this Agreement;
(b) a Power of Attorney substantially identical to that contained in
Section 9.11 hereof; and (c) such other documents or instruments as may be
required, in the sole discretion of the General Partner, to effect such
admission. Such Persons shall be deemed admitted to the Partnership
pursuant to this Section 3.05 upon the
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execution by the General Partner of
an amendment to this Partnership Agreement adding the name or names of such
Persons to Schedule A hereto and reflecting such other changes to such
Schedule A as are appropriate in connection therewith.
Section 3.06 Return of Capital Contributions. Neither the
Partnership nor any Partner shall have personal liability for the return of
the Capital Contribution of any Partner, or any portion thereof. No
Partner shall be entitled to interest on his Capital Contribution.
Section 3.07 No Preemptive Rights. No Person shall have any
preemptive, preferential or other similar right with respect to the
issuance or sale of any Units or other Partnership Interests as a result of
this Partnership Agreement.
ARTICLE IV
ALLOCATIONS AND DISTRIBUTIONS
Section 4.01 Allocations Of Income Or Loss.
(a) Except as provided in sections 4.02, 4.03 and 4.04, Income
shall be allocated as follows: (i) first, to each Class A Interest Holder
to the extent of, and in proportion to, the excess of the cumulative Losses
allocated to such Class A Interest Holder pursuant to Section 4.01(b)(ii)
hereof over the cumulative amount of Income allocated to such Class A
Interest Holders pursuant to this Section 4.01(a)(i); and (ii) thereafter,
to the Partners who hold Units, pro rata in accordance with their
respective Percentage Interests.
(b) Except as provided in Sections 4.02, 4.03 and 4.04, Loss
shall be allocated as follows: (i) first, to the Partners who hold Units,
pro rata in accordance with their respective Percentage Interests, until
each such Partner has a zero Capital Account; (ii) second, to the Class A
Interest Holders to the extent of, and in proportion to, the positive
balance in their Capital Accounts; (iii) third, to the General Partner
until the General Partner has a negative Capital Account balance equal to
the excess, if any, of the amount of the Partnership's recourse liabilities
over the aggregate amount of Limited Partners' deficit restoration
obligations as set forth on Schedule B, as amended from time to time; (iv)
fourth to the Limited Partners listed on Schedule B in proportion to each
such Limited Partner's deficit restoration to the aggregate of the deficit
restoration obligations set forth on Schedule B until the sum of such
Limited Partners' negative Capital Account balances equals the aggregate of
the deficit restoration obligations set forth on Schedule B, and (v)
thereafter, to the General Partner.
Section 4.02 Special Allocations. The following special
allocations shall be made in the following order:
(a) Minimum Gain Chargeback. Notwithstanding any other
provision of this Article IV, if there is a net decrease in Partnership
Minimum Gain during any Fiscal
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Year, each Partner shall be specially
allocated items of Partnership income and gain for such Fiscal Year (and,
if necessary, subsequent Fiscal Years) in an amount equal to such Partner's
share of the net decrease in Partnership Minimum Gain during that Fiscal
Year, determined in accordance with Section 1.704-2(g) of the Regulations.
It is intended that items to be so allocated shall be determined and the
allocations made in accordance with the minimum gain chargeback requirement
of Section 1.704-2(f) of the Regulations, and this paragraph (a) shall be
interpreted consistently therewith.
(b) Partner Minimum Gain Chargeback. Notwithstanding any other
provision of this Article IV except paragraph (a) of this Section 4.02, if
there is a net decrease in Partner Minimum Gain during any Fiscal Year,
each Partner who has a share of the net decrease in Partner Minimum Gain
determined in accordance with Section 1.704-2(i)(5) of the Regulations,
shall be specially allocated items of Partnership income and gain for such
Fiscal Year (and, if necessary, subsequent Fiscal Years) in an amount equal
to such Partner's share of the net decrease in Partner Minimum Gain during
that Fiscal Year, determined in accordance with Section 1.704-2(i)(4) of
the Regulations. It is intended that the items to be so allocated shall be
determined and the allocations made in accordance with the minimum gain
chargeback requirement of Section 1.704-2(i)(4) of the Regulations, and
this paragraph (b) shall be interpreted consistently therewith.
(c) Qualified Income Offset. In the event any Partner
unexpectedly receives in any Fiscal Year any adjustments, allocations or
distributions described in Section 1.704-1(b)(2)(ii)(d)(4), (5) or (6) of
the Regulations, items of Partnership income and gain shall be specially
allocated to such Partner in such Fiscal Year (and, if necessary, in
subsequent Fiscal Years) in an amount and manner sufficient to eliminate,
to the extent required by the Regulations, the Adjusted Capital Account
Deficit of such Partner as quickly as possible.
(d) Limit on Loss Allocations. No Loss or item of Partnership
deduction for any Fiscal Year shall be allocated to any Partner to the
extent such allocation (i) would cause such Partner to have an Adjusted
Capital Account Deficit, or (ii) would increase such Partner's Adjusted
Capital Account Deficit. Any Loss or item of Partnership deduction which
cannot be allocated as a result of the restrictions contained in this
paragraph (d) shall be allocated to the General Partner.
(e) Gross Income Allocation. In the event that any Partner has
a deficit Capital Account at the end of any Fiscal Year that is in excess
of the sum of (i) the amount, if any, such Partner is obligated to restore
under Section 121-607 of the Act, and (ii) the amount such Partner is
deemed to be obligated to restore pursuant to the penultimate sentences of
Sections 1.704-2(g)(i) and 1.704-2(i)(5) of the Regulations, each such
Partner shall be specially allocated items of Partnership gross income and
gain in the amount of such excess as soon thereafter as possible, provided
that an allocation pursuant to this paragraph (e) shall be made if and only
to the extent that such Partner would have a deficit Capital Account in
excess of such sum after all other allocations provided for in this
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Article IV have been tentatively made as if paragraph (c) of this
Section 4.02 and this paragraph (e) were not in the Agreement.
(f) Nonrecourse Deductions. Nonrecourse Deductions for any
Fiscal Year shall be specially allocated to the Partners first, in
accordance with each Partner's share of the portion of any Section 704(c)
gain (as determined pursuant to Section 4.04 of this Agreement) in excess
of Section 7.04(c) minimum gain (as determined pursuant to Section 1.752-
3(a)(2) of the Regulations) with respect to the Partnership's property that
is subject to Nonrecourse Liabilities, and thereafter in accordance with
each Partner's Percentage Interest.
(g) Partner Nonrecourse Deductions. Any Partner Nonrecourse
Deductions for any Fiscal Year shall be specially allocated to the Partner
who bears the economic risk of loss with respect to the Partner Nonrecourse
Debt to which such Partner Nonrecourse Deductions are attributable in
accordance with Section 1.704-2(i)(1) of the Regulations.
(h) Preferred Return. For each Fiscal Year or other applicable
period, Income, and if necessary gross income, (after taking into account
any adjustments allocated to each Class A Interest Holder to the extent not
included in the computation of Income) shall be allocated to each Class A
Interest Holder to the extent of, and in proportion to, the excess of the
cumulative Preferred Return, Accrued Return or other distributions paid to
such Class A Interest Holder pursuant to Section 10.04 hereof over the
cumulative amount of Income allocated to such Class A Interest Holder
pursuant to this Section 4.02(h).
Section 4.03 Curative Allocations. The Regulatory Allocations
are intended to comply with certain requirements of Sections 1.704-1(b) of
the Regulations. Notwithstanding any other provisions of this Article IV
(other than Sections 4.02(a), (b), (c), (d), (e), (f) and (g) and
Sections 4.04(b) and (c)), the General Partner shall, to the extent
possible, make allocations of Income or Loss simultaneously with or
subsequent to such Regulatory Allocations to the extent necessary so that
the net amount of such allocations of Income and Loss and the Regulatory
Allocations to each Partner shall be equal to the net amount that would
have been allocated to each such Partner if the Regulatory Allocations had
not occurred.
Section 4.04 Other Allocation Rules.
(a) In the event of the admission of additional Partners or an
assignment of a Unit or other Partnership Interest in any Fiscal Year,
Income or Loss for that Fiscal Year shall be allocated among the Partners
to reflect their varying interests during the Fiscal Year. In accordance
with Section 706 of the Code, for purposes of computing the varying
interests of each Partner, the Partnership shall make an interim closing of
its books as of the effective date of the admission of a Partner or the
assignment of a Unit or other Partnership Interest and compute the items of
Income or Loss applicable to the period of time before and
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after that date
using the accrual method of accounting. Any assignment of a Unit or other
Partnership Interest, if consented to by the General Partner, shall be
effective as of the first day of the calendar month nearest the date of
assignment.
(b) Except as provided in the following sentence, for federal
income tax purposes each item of income, gain, loss or deduction shall be
allocated in the same manner as the corresponding item is allocated for
Capital Account purposes. In accordance with Sections 704(c) and 704(b) of
the Code and the Regulations thereunder, items of income, gain, loss or
deduction with respect to any asset contributed to the capital of the
Partnership shall, solely for tax purposes, be allocated among the Partners
so as to take account of any variation between the adjusted basis of such
property to the Partnership for federal income tax purposes and the fair
market value of such asset at the time of contribution, as determined by
the contributing Partner and the Partnership. The amount of income, gain,
loss or deduction allocated under the immediately preceding sentence of
this paragraph (b) shall not increase or decrease the Capital Accounts of
the contributing Partners to the extent that the fair market value of such
asset has been previously added to the Capital Accounts.
(c) The General Partner shall allocate "excess nonrecourse
liabilities" in any manner authorized under the Regulations and applicable
rulings by the Internal Revenue Service, including, without limitation,
Revenue Ruling 95-41.
Section 4.05 Distributions.
(a) The General Partner shall cause the Partnership to make
Distributions of all or a portion of Available Cash from time to time as
determined by the General Partner, but in any event not less frequently
than quarterly, in such amounts as the General Partner shall determine in
its sole discretion. Such Distributions shall be made to the Partners who
are Partners on the applicable Record Date in accordance with their
respective Percentage Interests on such Record Date subject to any
withholding required pursuant to the Code or any provisions of applicable
state or local tax law, except as otherwise provided in any agreement
between the General Partner or the Partnership and such Partner, and
subject to any special distribution to holders of any other Partnership
Interests issued pursuant to Section 3.03.
(b) All amounts withheld pursuant to the Code or any provisions
of any state or local tax law with respect to any allocation, payment or
Distribution to a Partner shall be treated as Distributions to such Partner
for all purposes under this Agreement.
(c) The General Partner may from time to time, in its sole
discretion, make, and the Limited Partners shall accept, Distributions in
the form of property of the Partnership. The General Partner shall
reasonably determine in good faith the fair market value attributable to
such property and may distribute different types of property to different
Partners; provided, that the fair market value of the property distributed
to each Partner is
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equal to the amount of the Distribution such Partner is
entitled to based on the fair market value of the property distributed to
all Partners.
(d) The General Partner shall take such reasonable efforts, as
determined by it in its sole discretion and consistent with its
qualification as a REIT, to make Distributions to the Limited Partners in a
manner which will preclude any such Distribution or portion thereof from
being treated as part of a sale of property to the Partnership by a Limited
Partner under Section 707 of the Code or the Regulations thereunder;
provided, that the General Partner and the Partnership shall have no
liability to a Limited Partner under any circumstances as a result of any
Distribution to a Limited Partner being so treated.
ARTICLE V
MANAGEMENT OF PARTNERSHIP BUSINESS
Section 5.01 Powers of General Partner.
(a) Except as limited by paragraph (b) of this Section 5.01 or
by the Act, the General Partner has complete discretion in the management
and control of the business of the Partnership and is hereby authorized to
take any and all actions on behalf of the Partnership which it could take
if the Partnership was a general partnership of which the General Partner
was a partner. Without limiting the generality of the foregoing, the
General Partner is hereby authorized to:
(i) make expenditures, lend or borrow money (including,
without limitation, the making of prepayments on loans
and borrowing of money to permit the Partnership to
make Distributions in such amounts as will permit the
General Partner (so long as the General Partner
qualifies as a REIT) to avoid the payment of any
federal income tax (including, for this purpose, any
excise tax pursuant to Section 4981 of the Code) and to
make distributions to its shareholders sufficient to
permit the General Partner to maintain its REIT
status), issue, assume or guarantee indebtedness and
other liabilities (including the securing of such
indebtedness or other liabilities by mortgage, deed of
trust or other lien or encumbrance on the Partnership's
assets) and incur obligations, all for and on behalf of
the Partnership as it deems necessary or desirable for
the conduct of the activities of the Partnership;
(ii) acquire, sell, transfer, convey, lease, make capital
improvements to, pledge, encumber, exchange or
otherwise deal with the assets of the Partnership;
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(iii) negotiate, enter into, execute, deliver and perform or
assign contracts on behalf of the Partnership;
(iv) repay in whole or in part, refinance, recast, modify or
extend any indebtedness of the Partnership and in
connection therewith to recast, modify or extend any
security interest relating to the assets of the
Partnership;
(v) make tax, regulatory and other filings and render
periodic or other reports to governmental or other
agencies having jurisdiction over the business or
assets of the Partnership;
(vi) determine the terms of any offering of additional Units
or other Partnership Interests, including the
commissions to be paid, if any, and the manner of
complying with applicable laws, and in connection
therewith to execute for and on behalf of the
Partnership any registration statement or other
document required under any federal or state securities
law and to take any additional action it shall deem
necessary or desirable to effectuate any such offering;
(vii) form, acquire an interest in and contribute property to
any limited or general partnerships, joint ventures,
corporations or other relationships or associations
that it deems desirable;
(viii) to hire and dismiss employees of the Partnership
(including, without limitation, employees having titles
such as "president," "vice president," "secretary" and
"treasurer") and agents, independent contractors,
attorneys and accountants and consultants of the
Partnership and to determine their compensation and
other terms of employment or hiring;
(ix) obtain and maintain insurance for the protection of the
Partnership and its assets and the Partners as it deems
necessary or appropriate including without limitation
casualty, liability and other insurance on the property
of the Partnership and liability insurance for
Indemnified Persons hereunder;
(x) commence, defend, compromise or settle any claims,
proceedings, actions or litigation for and on behalf of
the Partnership (including claims, proceedings, actions
or litigation involving the General Partner in its
capacity as General Partner), retain legal counsel in
connection therewith, and pay out of the property of
the Partnership any and all liabilities and expenses
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(including fees of legal counsel) incurred in
connection therewith;
(xi) establish such Reserves which it reasonably determines
in its sole discretion to be necessary or desirable to
provide for working capital, capital improvements to
the property of the Partnership and to satisfy any
contingent liabilities of the Partnership;
(xii) prepare, execute, file and deliver any document for and
on behalf of the Partnership; and
(xiii) expend Partnership funds, use Partnership assets, make
such decisions, enter into such agreements and take
such other actions as it may reasonably believe to be
necessary or desireable to conduct the business of the
Partnership and to carry out the purpose of the
Partnership.
(b) The General Partner shall not:
(i) sell, exchange, lease, or otherwise dispose of all or
substantially all of the assets of the Partnership in a
single transaction or a series of related transactions
(including by way of merger, consolidation or other
combination with any other Person) without the prior
consent of a Majority of Limited Partners;
(ii) merge, consolidate or otherwise reorganize the
Partnership or cause the Partnership to be dissolved
without the prior consent of a Majority of Limited
Partners;
(iii) take any action in contravention of any provision of
this Partnership Agreement without the prior consent of
each Limited Partner adversely affected thereby;
(iv) admit any Person as a general partner of the
Partnership without the prior consent of each Limited
Partner adversely affected thereby;
(v) use any Partnership property for other than a
Partnership purpose without the prior consent of each
Limited Partner adversely affected thereby; or
(vi) terminate its status as a REIT without the prior
consent of a Majority of Limited Partners.
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Section 5.02 Duties of General Partner.
(a) The General Partner shall have responsibility for, and
control over, the ordinary and usual day-to-day management and operation of
the Partnership business. The General Partner shall devote such of its
time as it deems necessary to the affairs of the Partnership and shall
indemnify and hold the Partnership harmless from any loss, damage or
liability due to, or arising out of, the General Partner's fraud, bad faith
or gross negligence. The General Partner shall keep, or cause to be kept,
all books and records required by this Partnership Agreement, prepare or
cause to be prepared all statements and reports, and obtain or cause to be
obtained and kept in force such insurance, in such amounts, on such terms,
and with such carriers as may be required to reasonably protect the
Partnership, the Partners and the assets of the Partnership.
(b) The General Partner shall at all times hold Units with a
Percentage Interest equal to not less than one percent (1%) and may hold
the balance of its Percentage Interest, whether designated as Units or
otherwise directly, or indirectly through the QRS, as a Limited Partner.
Section 5.03 Partnership Tax Matters. The General Partner is
designated as the tax matters partner for the Partnership for federal,
state and local purposes, pursuant to Section 6231(a)(7) of the Code and in
similar provisions in state and local law. The General Partner shall have
authority to make such elections (including but not limited to making an
election under Section 754 of the Code and selecting any reasonable method
to allocate income pursuant to Section 704(c) of the Code), take such
actions and enter into such agreements on behalf of the Partners as is
permitted by law or the Regulations. Any expense incurred by the
Partnership in contesting with the Internal Revenue Service or any state
income tax authorities any change in Income or Loss or the allocation of
Income or Loss to any Partner shall be an expense of the Partnership.
Section 5.04 Indemnification.
(a) The Partnership shall indemnify, save harmless and pay all
judgments and claims against the Indemnified Persons arising from any
liability, loss or damage incurred by them or the Partnership by reason of
any act performed or omitted to be performed by them when acting in
connection with the business of the Partnership as contemplated by this
Partnership Agreement, including costs and attorneys' fees and any amounts
expended in the settlement of any claims or liability, loss or damage;
provided, however, that, if such liability, loss or claim arises out of any
action or inaction of the Indemnified Persons, the Indemnified Persons must
have determined in good faith that such course of conduct was in the best
interests of the Partnership and did not constitute fraud, bad faith or
gross negligence by the Indemnified Persons. Notwithstanding the
foregoing, indemnification will not be available for any liability, loss or
damage resulting from the acts of an Indemnified Person if a judgment or
other final adjudication adverse to the Indemnified Person establishes that
his acts were committed in bad faith or were the result of active and
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deliberate dishonesty and were material to the cause of action so
adjudicated, or that he personally gained in fact a financial profit or
other advantage to which he was not legally entitled. Indemnified Persons
shall be entitled to receive advances for attorney's fees and other legal
costs and expenses arising out of claims made against them, provided that
no such advances may be made with respect to any claim unless the action
relates to the performance of duties or services by the Indemnified Person
on behalf of the Partnership and the Indemnified Person undertakes in
writing prior to receipt of such advances that such Person will repay in
full any such advanced funds if, upon the ultimate disposition of the
claim, the Indemnified Person is determined not to be entitled to
indemnification hereunder. Notwithstanding any other provision hereof,
Affiliated Persons will be indemnified only for liabilities arising out of
activities in which they engage on behalf of the Partnership or in
connection with its business which are (i) within the scope of activities
permitted to be performed by Affiliated Persons under this Agreement and
(ii) duly authorized by the General Partner.
(b) Notwithstanding paragraph (a) of this Section 5.04, the
Indemnified Persons shall not be indemnified from any liability, loss or
damage incurred by them in connection with any claim or settlement
involving violations of federal or state securities laws by the Indemnified
Persons or any liability for fraud, bad faith or gross negligence;
provided, however, that indemnification will be allowed for settlements and
related expenses of lawsuits alleging securities law violations, and for
expenses incurred in successfully defending such lawsuits, if (i) there has
been a successful adjudication on the merits of each count involving
alleged securities law violations as to the party seeking indemnification;
(ii) a court dismisses each count involving alleged securities law
violations with prejudice as to the party seeking indemnification; or
(iii) a court approves the settlement and finds that indemnification of any
payment in settlement and related costs should be made and, before seeking
court approval for indemnification, the party seeking indemnification shall
place before the court the position of the Securities and Exchange
Commission and any state securities administrators of any state in which
Units or other Partnership Interests have been offered or sold or in which
Partners then reside with respect to the issue of indemnification for
securities law violations.
(c) Any indemnification pursuant to this Section 5.04 shall be
recoverable only from the assets of the Partnership.
(d) Nothing contained herein shall constitute a waiver by a
Limited Partner of any right which he may have against any Indemnified
Person under federal or state securities laws.
Section 5.05 Liabilities of General Partner.
(a) The General Partner and Affiliated Persons shall not be
liable, responsible or accountable in damages or otherwise to the
Partnership or to any Partner or to any Assignee by reason of any acts or
omissions performed or omitted in good faith and
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reasonably believed to be
within the scope of the authority conferred by this Partnership Agreement.
(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 which the General
Partner reasonably believes to be within such Person's professional or
expert competence shall be conclusively presumed to have been done or
omitted in good faith and in accordance with such opinion.
(c) Notwithstanding any other provisions of this Agreement or
the Act, any action of the General Partner on behalf of the Partnership or
any decision of the General Partner to refrain from acting on behalf of the
Partnership, undertaken in the good faith belief that such action or
omission is necessary or advisable in order (i) to protect the ability of
the General Partner to continue to qualify as a REIT or (ii) to avoid the
General Partner incurring any federal income or excise taxes, is expressly
authorized under this Partnership Agreement and is deemed approved by all
of the Limited Partners. The Limited Partners expressly acknowledge that
the General Partner is acting on behalf of the Partnership and the General
Partner's shareholders collectively, that the General Partner may, but is
under no obligation to, consider the separate interests of the Limited
Partners (including, without limitation, the tax consequences to Limited
Partners, Additional Limited Partners or Assignees) in deciding whether to
cause the Partnership to take (or decline to take) any actions, and that
the General Partner shall not be liable for monetary damages for losses
sustained, liabilities incurred, or benefits not derived by Limited
Partners in connection with such decisions, provided that the General
Partner has acted in good faith.
Section 5.06 Title to Partnership Assets.
(a) Title to Partnership assets, whether real, personal or mixed
and whether tangible or intangible, shall be deemed to be owned by the
Partnership as an entity, and no Partner, individually or collectively,
shall have any ownership interest in such Partnership assets or any portion
thereof. No Partner shall have any right of partition with respect to the
assets of the Partnership.
(b) 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 Affiliated Persons. The
General Partner hereby declares and warrants that any Partnership assets
for which legal title is held in the name of the General Partner, any
nominee or Affiliated Persons, shall be held for the use and benefit of the
Partnership in accordance with the provisions of this Agreement; provided,
however, that the General Partner shall use its best efforts to cause
beneficial and record title to Partnership assets to be vested in the
Partnership as soon as reasonably practicable. All Partnership assets
shall be
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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 5.07 Authority of General Partner. In no event shall
any Person (other than an Affiliated Person) dealing with the General
Partner with respect to any property or business of the Partnership be
obligated to determine whether the terms of this Partnership Agreement have
been complied with or be obligated to inquire into the necessity or
expediency of any act or action of the General Partner, and every contract,
agreement, lease, promissory note, mortgage, certificate or other
instrument or document, executed by the General Partner with respect to the
property or business of the Partnership, shall be conclusive evidence in
favor of any and every Person (other than an Affiliated Person) relying
thereon or claiming thereunder that:
(a) at the time of the execution or delivery thereof, this
Partnership Agreement was in full force and effect;
(b) such instrument or document was duly executed in accordance
with the terms and provisions of this Partnership Agreement and is binding
upon the Partnership and the Partners; and
(c) the General Partner was duly authorized and empowered to
execute and deliver such instrument or document for and on behalf of the
Partnership.
Section 5.08 Contracts with Affiliated Persons.
(a) The Partnership may acquire property or services from, or
enter into other types of transactions with, an Affiliated Person, provided
that any such transaction between the Partnership and an Affiliated Person
shall be fully disclosed to the Limited Partners and, other than the loans
expressly authorized by paragraph (b) of this Section 5.08, shall be on
terms which are fair and competitive with those which may be obtained from
unaffiliated Persons.
(b) The Partnership may lend or contribute monies or property to
the General Partner, Affiliated Persons or other Persons in which it has an
equity investment, and such Persons may borrow funds from the Partnership,
all on terms and conditions established in the sole discretion of the
General Partner. The authority conferred in this Section 5.08(b) shall not
create any right or benefit in favor of any Affiliated Person or any other
Person.
(c) The Partnership has contributed certain of the Home Leasing
Assets and its right to require Home Leasing Corporation to enter into the
Management Agreements to HP Management in exchange for 9,900 shares of
non-voting common stock. HP Management and Conifer may enter into the
Management Agreements and into such
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other contracts, including contracts
with Affiliated Persons if such contracts are approved by a majority of the
independent directors of the General Partner.
Section 5.09 Reimbursement of the General Partner.
(a) Except as provided in this Section 5.09 and elsewhere in
this Agreement (including the provisions of Article IV regarding
Distributions to which the General Partner may be entitled), the General
Partner shall not be compensated for its services as general partner of the
Partnership.
(b) The General Partner shall be reimbursed on a monthly basis,
or such other basis as the General Partner may determine in its sole
discretion, for all expenses it incurs relating to the ownership and
operation of, or for the benefit of, the Partnership; provided, that the
amount of any such reimbursement shall be reduced by any interest earned by
the General Partner with respect to bank accounts or other instruments held
by it as permitted in Section 5.11(c) hereof. The Limited Partners
acknowledge that the General Partner's sole business is the ownership,
directly or through a QRS, of interests in and operation of the Partnership
and that all the General Partner's expenses are deemed incurred for the
benefit of the Partnership and that all reimbursements shall be in addition
to any amounts payable to the General Partner as a result of
indemnification pursuant to Section 5.04 hereof.
(c) The General Partner shall also be reimbursed for all
expenses it incurs relating to its organization and the organization of the
Partnership, the reorganization of the Partnership pursuant to this
Agreement, the Mergers, the initial public offering of HP Shares by the
General Partner, and any other issuance of Units or other Partnership
Interests or HP Securities pursuant to Article III hereof.
Section 5.10 Resignation, Withdrawal and Removal of General
Partner.
(a) The General Partner shall have no right to resign or
withdraw as the general partner of the Partnership, to transfer, assign,
grant, convey, mortgage, or otherwise encumber its Partnership Interest
other than to assign any portion of such interest in excess of its 1%
General Partner Interest to a QRS, or to enter into any agreement as a
result of which any other Person shall become interested in the Partnership
as a general partner without the prior consent of all Partners. If the
General Partner purports to resign or withdraw as the general partner of
the Partnership in violation of the foregoing provision, it shall remain
liable for the debts, obligations and liabilities of the Partnership to the
same extent as if it had not resigned or withdrawn and, in addition, shall
be liable to the Partnership and the Limited Partners for any damages
sustained by reason of such purported resignation or withdrawal. Any
amounts for which the General Partner is liable pursuant to this Section
5.10(a) may be setoff by the Partnership against any amounts due to the
General Partner pursuant to this Partnership Agreement.
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(b) If, pursuant to Section 7.01(a)(iii) hereof, the Partnership
shall continue after the occurrence of an event of withdrawal with respect
to the General Partner, whether such withdrawal is in violation of
Section 5.10(a) hereof or otherwise, the General Partnership Interest of
the General Partner shall automatically convert to a Limited Partnership
Interest, to the extent that such General Partnership Interest is not
acquired by the Person substituted as general partner of the Partnership
pursuant to Section 7.01(a)(iii) hereof. As a Limited Partner, the former
general partner of the Partnership shall be entitled to receive the
Distributions and allocations to which it is entitled by virtue of its
ownership of its Partnership Interests and shall not be entitled to receive
any Distribution with respect to the fair value of its Partnership
Interests pursuant to Section 121-604 of the Act except to the extent other
Limited Partners are entitled to receive such Distributions.
(c) The General Partner may not be removed as the general
partner of the Partnership, with or without cause.
(d) Except as otherwise provided in Section 5.10(e) hereof, the
General Partner shall not engage in any merger, consolidation or other
combination with or into another Person or sale of all or substantially all
of its assets, or any reclassification, or recapitalization or change of
outstanding HP Shares (other than a change in par value, or from par value
to no par value, or as a result of a subdivision or combination as
described in the definition of "Conversion Factor") (hereinafter referred
to as a "Transaction"), unless the Transaction has been approved by the
requisite consent of Limited Partners pursuant to Section 5.01(b) hereof
and as a result of which all Limited Partners will or may elect to receive
for each Unit an amount of cash, securities, or other property equal to the
greater of the Conversion Factor or the greatest amount of cash, securities
or other property paid to a holder of one HP Share in connection with the
Transaction is consummated, provided that if, in connection with the
Transaction, a purchase, tender or exchange offer shall have been made to
and accepted by the holders of more than 50 percent of the outstanding HP
Shares, the holders of Units shall or may elect to receive the greatest
amount of cash, securities, or other property which a Limited Partner would
have received had it exercised the Purchase Right and received HP Shares in
exchange for its Units immediately prior to the expiration of such
purchase, tender or exchange offer.
(e) Notwithstanding Section 5.10(d) hereof, the General Partner
may merge with another entity if immediately after such merger
substantially all of the assets of the surviving entity, other than
Partnership Interests held by the General Partner, are contributed,
directly or indirectly, to the Partnership as a capital contribution in
exchange for Partnership Interests issued to the General Partner or the QRS
with a fair market value equal to the fair market value of the assets so
contributed.
Section 5.11 Outside Activities of the General Partner.
(a) The General Partner shall not directly or indirectly enter
into any transactions or conduct any business or other activity other than
(i)in connection with the
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ownership, acquisition and disposition of
Units or other Partnership Interests as a General Partner or Limited
Partner, directly or indirectly through the QRS, (ii) the issuance or
redemption of HP Securities, (iii) the management of the business of the
Partnership, and (iv) such activities as are incidental thereto.
(b) The General Partner shall not incur any debts other than (i)
debts for which it is liable in its capacity as General Partner of the
Partnership and (ii) debts incurred where the proceeds thereof are
contributed to the Partnership as a loan.
(c) The General Partner shall not own any assets other than
Partnership Interests as a General Partner or Limited Partner, directly or
indirectly through the QRS and such bank accounts or similar instruments or
accounts as it deems necessary to carry out its responsibilities
contemplated under this Partnership Agreement and its Articles of
Incorporation.
(d) The General Partner and any Affiliated Persons may acquire
Limited Partnership Interests and shall be entitled to exercise all rights
of a Limited Partner relating to such Limited Partnership Interests held by
them, except as provided in Section 6.07(a) hereof.
ARTICLE VI
THE LIMITED PARTNERS
Section 6.01 Liability of Limited Partners. No Limited Partner
shall be obligated to make any contribution to the capital of the
Partnership in addition to the Capital Contributions specified in
Article III hereof, and no Limited Partner shall be obligated to make loans
to the Partnership. The Limited Partners shall not have any personal
liability with respect to the liabilities or obligations of the
Partnership, except as otherwise expressly provided under the Act.
Section 6.02 Management of Business. No Limited Partner or
Assignee (other than the General Partner or any Affiliated Person, or an
officer, director, employee, partner or agent of the General Partner, an
Affiliated Person or the Partnership in their capacity as such) shall take
part in the operation, management or control (within the meaning of the
Act) of the Partnership's business, transact any business in the
Partnership's name or have the power to sign documents for or otherwise
bind the Partnership. The transaction of any such business by the General
Partner or an Affiliated Person, or an officer, director, employee, partner
or agent of the General Partner, an Affiliated Person or the Partnership in
their capacity as such, shall not affect, impair or eliminate the
limitations on the liability of any Limited Partner or Assignee under this
Agreement.
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Section 6.03 Outside Activities of Limited Partners.
Subject to any agreements entered into by a Limited Partner with the
Partnership, any Limited Partner (other than the General Partner) and any
officer, director, employee, agent, trustee or shareholder of any Limited
Partner is entitled to have business interests and to engage in business
activities in addition to those relating to the Partnership, including
business interests and activities that are in direct competition with the
Partnership or that are enhanced by the activities of the Partnership, and
may engage in any other business, trade, profession, or employment
whatsoever, on his or her own account or in partnership, or as an employee,
officer, director, or stockholder of any other Person. Neither the
Partnership, the Partners nor any other Person shall have any rights by
virtue of this Partnership Agreement in any business ventures of any Limited
Partner. The Limited Partners shall have no obligation pursuant to this
Partnership Agreement to offer any interest in any business venture to the
Partnership, any Partner or any other Person.
Section 6.04 Rights of Limited Partners Relating to the
Partnership.
(a) In addition to other rights provided by this Partnership
Agreement or by the Act, and except as limited by Section 6.04(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 (including such copying and
administrative charges as the General Partner may establish from time to
time), to:
(i) obtain a copy of the most recent annual and quarterly
reports filed with the Securities and Exchange
Commission by the General Partner pursuant to the
Securities Exchange Act of 1934;
(ii) obtain a copy of the Partnership's financial statements
and federal, state and local income tax returns for
each of the three most recent Fiscal Years of the
Partnership;
(iii) obtain a current, alphabetical list of the name and
last known mailing address of each Partner with a
description of the Capital Contribution and the share
of profits and losses of each Partner; and
(iv) obtain a copy of this Partnership Agreement, the
Certificate and all amendments to either of them,
together with executed copies of all powers of attorney
pursuant to which any of the foregoing have been
executed.
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(b) The Partnership shall notify each Limited Partner in writing
of any change made to the Conversion Factor within 10 Business Days of the
date such change becomes effective.
(c) Notwithstanding any other provision of this Section 6.04 ,
the General Partner may keep confidential from the Limited Partners, for
such period of time as the General Partner determines in its sole
discretion to be reasonable, any information that (i) is material
information not otherwise required to be publicly disclosed at that time by
applicable law; (ii) the General Partner reasonably believes to be in the
nature of trade secrets or other confidential information the disclosure of
which the General Partner in good faith believes is not in the best
interests of the Partnership or could damage the Partnership or its
business; or (iii) the Partnership is required by law or by agreements with
an unaffiliated party to keep confidential.
Section 6.05 Transfer of Partnership Interests.
(a) Except as provided in Section 6.08 hereof, no Limited
Partner shall transfer, assign, grant, convey, pledge, or otherwise
encumber his Partnership Interests other than to the Partnership, or enter
into any agreement as a result of which any other Person shall become
interested in the Partnership (hereinafter, a "transfer") other than
pledges of Units owned directly or indirectly by Xxxxxx or Xxxxxx
Xxxxxxxxx, without the prior written consent of the General Partner, which
consent may be given or withheld by the General Partner in its sole
discretion.
(b) Upon the bankruptcy, assignment for the benefit of
creditors, dissolution, death, disability or legal incapacity of any
Partner, the executor, administrator, trustee, guardian, conservator or
other legal representative may exercise all of the Partner's rights for
settling his estate or administering his property, including the power
pursuant to Section 6.06 hereof of an Assignee to become a Substitute
Limited Partner.
(c) Notwithstanding the provisions of Section 6.05(a) hereof,
and subject to Section 6.05(d) hereof, a Limited Partner may transfer, with
or without the consent of the General Partner, all or a portion of such
Limited Partner's Limited Partnership Interest to (i) a person that
controls, is controlled by or is under common control with such Limited
Partner, (ii) a Person who is a member of such Limited Partner's Immediate
Family, (iii) a Person who is an equity holder of such Limited Partner,
(iv) any other Limited Partner, (v) any Person all of the beneficial owners
of which are Persons described in clauses (i), (ii) (iii) or (iv) hereof,
or (vi) any charitable organization qualified under Section 501(c)(3) of
the Code in a donative transfer that does not involve the receipt of any
consideration; unless, in each case, in the opinion of legal counsel to
the Partnership, such transfer would require filing of a registration
statement under the Securities Act of 1933 or would otherwise violate any
federal or state securities laws or regulations applicable to the
Partnership or the Limited Partnership Interests.
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(d) No transfer by a Limited Partner of its Limited Partnership
Interests may be made to any Person if (i) in the opinion of legal counsel
to the Partnership, it would result in the Partnership being treated as an
association, taxable as a corporation, or (ii) such transfer is effectuated
through an "established securities market" or a "secondary market (or the
substantial equivalent thereof)" within the meaning of Section 7704 of the
Code.
(e) No transfer of all or any portion of a Limited Partner's
Partnership Interests, though otherwise permitted by this Section 6.05,
shall be valid and effective, and the Partnership shall not recognize the
same for the purpose of Distributions or for the allocation of Income or
Loss until an Assignment of Limited Partnership Interest is delivered to
the General Partner. Upon the delivery of an Assignment of Limited
Partnership Interest and the consent of the General Partner to that
assignment, if required hereunder, the assignee identified therein shall
become an Assignee with respect to the Partnership Interests assigned
thereby.
(f) Unless admitted to the Partnership as a Limited Partner in
accordance with Section 6.06 hereof, an Assignee shall not be entitled to
any of the rights, powers, or privileges of his predecessor in interest,
except that such transferee shall be entitled to receive the Distributions
and have allocated to him Income or Loss attributable to the Partnership
Interests assigned.
Section 6.06 Substitute Limited Partners. No Limited
Partner shall have the right to substitute an Assignee as a Limited Partner
in his place. The General Partner shall, however, have the right to
consent to the admission of an Assignee as a Substitute Limited Partner,
which consent may be given or withheld by the General Partner in its sole
discretion. An Assignee may be admitted to the Partnership as a Limited
Partner upon furnishing to the General Partner all of the following:
(a) evidence, in form satisfactory to the General Partner, of
acceptance of all the terms of this Partnership Agreement including, if the
assigning Limited Partner has a deficit restoration obligation as set forth
on Schedule B, an assumption of that obligation;
(b) if it be a corporation or similar organization, a certified
copy of a resolution of its Board of Directors or comparable body
authorizing it to become a Limited Partner under the terms of this
Partnership Agreement and, if requested by the General Partner, a written
legal opinion regarding formation, good standing and authority to purchase
Partnership Interests;
(c) a Power of Attorney substantially identical to that
contained in Section 9.11;
(d) such other documents or instruments as may be required, in
the sole discretion of the General Partner, to effect the Assignee's
admission as a Limited Partner; and
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(e) payment of such reasonable expenses as may be incurred in
connection with such admission as a Limited Partner.
An Assignee shall be deemed admitted to the Partnership pursuant to this
Section 6.06 upon the execution by the General Partner of an amendment to
this Partnership Agreement amending Schedule A to reflect the name,
address, number of Units and Percentage Interest of such Substitute Limited
Partner and to eliminate or adjust, if necessary, the name, address and
interest of the predecessor of such Substitute Limited Partner.
Section 6.07 Meetings of Partners and Consent.
(a) Whenever the vote or consent of Limited Partners is
permitted or required under this Agreement, the General Partner shall
obtain such vote or consent at a meeting of Partners or in the manner
provided in subparagraph (e) of this Section 6.07. Except as otherwise
expressly provided in this Agreement, or required by the Act, (i) the
consent of holders of a majority of the Units held by Limited Partners
entitled to vote or consent with respect to a proposed action shall
constitute consent; and (ii) if the General Partner is also a Limited
Partner, directly or indirectly through the QRS, neither the General
Partner nor the QRS shall be entitled to vote or consent to an action as a
Limited Partner and its Limited Partnership Interest shall be disregarded
in determining whether the requisite consent has been obtained. The voting
rights of holders of Partnership Interests other than Units shall be set
forth in the amendment to this Agreement described in Section 3.03.
(b) 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 of Limited Partners. Written notice of any
such meeting shall be given to the Partners not less than seven (7) days
nor more than thirty (30) days prior to the date of such meeting and shall
state the Record Date, which date shall be a date determined by the General
Partner which is no earlier than the date of such notice, and the nature of
the business to be transacted at such meeting. Partners may vote in person
or by proxy at such meeting. A Partner may waive the notice required by
this Section 6.07(b) in writing before, during or after any meeting, and
any Partner who attends a meeting without contesting the meeting for a
failure to give notice shall be deemed to have waived the notice
requirement.
(c) Each Limited Partner may authorize any Person or Persons to
act for him by proxy on all matters in which a Limited Partner is entitled
to participate, including waiving notice of any meeting, or voting or
participating at a meeting. Every proxy must be signed by the Limited
Partner or his attorney-in-fact. No proxy shall be valid after the
expiration of eleven (11) months from the date thereof unless otherwise
provided in the proxy. Every proxy shall be revocable at the pleasure of
the Limited Partner executing it, such revocation to be effective upon the
General Partner's receipt of written notice of such revocation from the
Limited Partner executing such proxy.
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(d) The General Partner or such other Person as the General
Partner may appoint shall preside at each meeting of Partners, and each
meeting shall be conducted pursuant to such rules for the conduct of the
meeting as the Person presiding at the meeting deems appropriate.
(e) 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 holders of a majority of the Units
held by Partners entitled to vote or consent to such action, (or such other
percentage as is expressly required by this Agreement). Such written
consent may be in one instrument or in several instruments and shall have
the same force and effect as a vote taken at a meeting of the Partners held
in accordance with subparagraph (b) hereof on the effective date set forth
in such written consent. Such written consent shall be delivered to the
General Partner and maintained by the General Partner with the records of
the Partnership.
Section 6.08 Purchase Right.
(a) Subject to Section 6.08(c) hereof, at any time on or before
30 days preceding any dissolution of the Partnership under subparagraph (i)
or (ii) of Section 7.01(a) hereof, each Limited Partner (other than the
General Partner or the QRS, if the General Partner or the QRS is also a
Limited Partner) shall have the right (the "Purchase Right") to require the
Partnership to purchase on the Specified Purchase Date all or a portion of
the Units held by such Limited Partner at a price equal to and in the form
of the Cash Amount to be paid by the Partnership. The Purchase Right shall
be exercised pursuant to a Notice of Sale delivered to the General Partner
by the Limited Partner who is exercising the Purchase Right (the "Selling
Partner"). A Limited Partner may not exercise the Purchase Right for fewer
than One Thousand (1,000) Units or, if such Limited Partner holds fewer
than One Thousand (1,000) Units, all of the Units held by such Partner.
The Selling Partner shall have no right, with respect to any Units so
purchased, to receive any Distributions with a Record Date after the
Specified Purchase Date. The Assignee of any Limited Partner may exercise
the rights of such Limited Partner pursuant to this Section 6.08, and such
Limited Partner shall be deemed to have assigned such rights to such
Assignee and shall be bound by the exercise of such rights by such Limited
Partner's Assignee. In connection with any exercise of such rights by such
Assignee on behalf of such Limited Partner, the Cash Amount shall be paid
by the Partnership directly to such Assignee and not to such Limited
Partner.
(b) Notwithstanding the provisions of Section 6.08(a) hereof,
the General Partner may, in its sole discretion, on written notice given to
the Selling Partner on or before the second day prior to the Specified
Purchase Date, elect to purchase the Units subject to the Purchase Right by
delivering HP Shares Amount. In that event, on the Specified Purchase
Date, the General Partner shall issue and deliver to the Selling Partners
HP Shares in an amount equal to the HP Shares Amount, whereupon the General
Partner shall, directly or indirectly through the QRS, acquire the Units
offered for sale by the Selling Partner and shall be treated for all
purposes of this Agreement as the owner of such Units. If the
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General
Partner gives notice of its intent to deliver the HP Shares Amount, the
Limited Partner may revoke his Notice of Sale in a written notice to the
General Partner on or prior to the Specified Purchase Date and accompanied
by any certificate for the HP Shares that has been delivered to the Selling
Partner by the General Partner. Each Selling Partner agrees to execute
such documents as the General Partner may reasonably require in connection
with the issuance of HP Shares Amount upon exercise of the Purchase Right.
(c) Notwithstanding the provisions of Section 6.08(a) and
Section 6.08(b) hereof, a Partner shall not be entitled to exercise the
Purchase Right pursuant to Section 6.08(a) if (i) the delivery of HP Shares
Amount to such Partner on the Specified Purchase Date by the General
Partner pursuant to Section 6.08(b) would cause the General Partner to be
taxed as a corporation rather than as a real estate investment trust for
federal income tax purposes, or (ii) the exercise of the Purchase Right
would cause the sum of the Units that have been sold, assigned,
transferred, redeemed or otherwise disposed of (other than transfers at
death, transfers between certain family members, and other transfers
described in Section II.B of IRS Notice 88-75) in the Fiscal Year to exceed
ten (10) percent of all Units outstanding. This Section 6.08(c)(ii) is
intended to satisfy the safe harbor in Section II.E.1 of IRS Notice 88-75
under which transfers of partnership interests pursuant to a redemption or
repurchase agreement will be disregarded for purposes of determining
whether interests in the partnership will be treated as readily tradeable
on a secondary market (or the substantial equivalent thereof) within the
meaning of Section 7704 of the Code.
Section 6.09 Withdrawal. No Limited Partner shall have the
right to withdraw from the Partnership other than as a result of a
permitted transfer of all or a portion of such Limited Partner's Limited
Partnership Interest in accordance with Section 6.05 hereof or pursuant to
the redemption of all or a portion of such Limited Partner's Limited
Partnership Interest in accordance with Section 6.08 hereof. If a Limited
Partner withdraws or attempts to withdraw from the Partnership in violation
of this Section 6.09, such Limited Partner shall only have the rights of an
Assignee with respect to the Limited Partnership Interest held by such
Limited Partner at the time of withdrawal or attempted withdrawal and,
notwithstanding Section 121-604 of the Act, shall not be entitled to
receive (i) any Distribution other than such Limited Partner's share of any
Distribution made to all Limited Partners and Assignees pursuant to this
Partnership Agreement or (ii) the fair value of his interest as would
otherwise be provided by Section 121-604 of the Act.
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ARTICLE VII
DISSOLUTION
Section 7.01 Dissolution.
(a) In addition to any other causes stated herein or in the Act,
the Partnership shall be dissolved upon the first to occur of any of the
following events:
(i) the disposal of all or substantially all of the
Partnership's assets, provided that if the Partnership
receives a purchase money mortgage or other non-cash
consideration in connection with such disposal or sale,
the Partnership shall not dissolve until the non-cash
consideration is converted into cash or distributed to
the Partners;
(ii) the dissolution of the Partnership is approved by the
General Partner and consented to by a Majority of
Limited Partners;
(iii) the occurrence of an event of withdrawal with respect
to the General Partner as defined in Section 121-402 of
the Act (other than an event of bankruptcy) unless
within 90 days after that event all remaining Partners
consent in writing to the continuation of the
Partnership and to the appointment, effective as of the
date of such event, of a new general partner;
(iv) entry of a decree of judicial dissolution of the
Partnership pursuant to the provisions of the Act;
(v) a final and non-appealable judgment is entered by a
court of competent jurisdiction ruling that the General
Partner is bankrupt or insolvent, or a final and non-
appealable order for relief is entered by a court with
appropriate jurisdiction against the General Partner,
in each case under any federal or state bankruptcy or
insolvency laws as now or hereafter in effect, unless
prior to the entry of such order or judgment all of the
remaining Partners agree in writing to continue the
business of the Partnership and to the appointment,
effective as of a date prior to the date of such order
or judgment, of a substitute General Partner; or
(vi) the expiration of the term of the Partnership.
(b) Prior to obtaining the approval of the Limited Partners
required by subparagraph (a)(ii) of this Section 7.01, the General Partner
shall transmit to all Limited
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Partners a written notice setting forth the
advantages and disadvantages of dissolution, estimated liquidation values
and specific recommendations concerning liquidation of the Partnership at
any time the General Partner believes dissolution to be in the interest of
the Partnership.
Section 7.02 Liquidation.
(a) Upon the dissolution of the Partnership, the Partnership
shall continue solely for the purposes of winding up its affairs in an
orderly manner, liquidating its assets, and satisfying the claims of its
creditors and Partners. No Partner shall take any action that is
inconsistent with, or not necessary to or appropriate for, the winding up
of the Partnership's business and affairs. The General Partner or, in the
event there is no remaining General Partner, any Person elected by a
majority in interest of the Limited Partners (the "Liquidator") shall be
responsible for overseeing the winding up and dissolution of the
Partnership and shall take full account of the Partnership's liabilities
and assets and the Partnership's assets shall be liquidated as promptly as
is consistent with obtaining the fair value thereof, and the proceeds
therefrom (which may, to the extent determined by the General Partner,
include shares of stock in the General Partner) shall be applied and
distributed in the following order of priority: (1) first, to the payment
and discharge of all debts, liabilities and obligations of the Partnership
to creditors other than Partners and the expenses of liquidation; (2) next,
to the payment and discharge of all debts, liabilities and obligations of
the Partnership to the Partners; (3) next, to the establishment of such
reserves as the General Partner may reasonably deem necessary for any
contingent liabilities of the Partnership; and (4) the balance, if any, to
the Partners in proportion to their positive Capital Account balances
(determined after giving effect to all allocations of Income or Loss for
all Fiscal Years of the Partnership and to all prior Distributions). The
liquidation of the Partnership shall be carried out in conformity with the
timing requirements of Section 1.704-1(b)(2)(b) of the Regulations.
(b) Notwithstanding the provisions of Section 7.02(a) hereof
which require liquidation of the assets of the Partnership, but subject to
the order of priorities set forth therein, if prior to or upon dissolution
of the Partnership the Liquidator determines that an immediate sale of part
or all of the Partnership's assets would be impractical or would cause
undue loss to the Partners, the Liquidator may, in its sole discretion,
defer for a reasonable period of 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 7.02(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
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value of any property distributed in kind using such reasonable
method of valuation as it may adopt.
(c) If there shall be a deficit balance in any Partner's Capital
Account (after giving effect to all contributions, distributions and
allocations for all Fiscal Periods, including the Fiscal Period in which
liquidation occurs), such Partner shall have no obligation to make any
contribution to the capital of the Partnership with respect to such deficit
balance, provided, however, that if such Partner has a deficit restoration
obligation as shown on Schedule B, such Partner shall be obligated to
contribute cash to the capital of the Partnership in an amount equal to the
lessor of: (i) the amount required to increase such Partner's Capital
Account as of such date to zero, and (ii) such Partner's deficit
restoration obligation as shown on Schedule B. Any contribution required
of a Partner with respect to such Partner's deficit restoration obligation
shall be made on or before the later of (y) the end of the Fiscal Year in
which the liquidation occurs, or (z) the 90th day following the date of
such liquidation and shall only be paid to any then creditors of the
Partnership, including Partners which are Partnership creditors and shall
not be distributed to other Partners then having positive balances in their
Capital Accounts. After the death or incompetency of any Limited Partner
or the dissolution of any entity which is a Limited Partner (or the death
of any of its partners) which has a deficit restoration obligation set
forth on Schedule B, the legal representative of such deceased, incompetent
or dissolved partner may elect to reduce or eliminate the deficit
restoration guarantee of such Limited Partner by delivering to the General
Partner a notice setting forth the maximum amount, if any, which the
persons taking the Partnership Interest of such deceased, incompetent or
dissolved Limited Partner are willing to restore (regardless of whether
such Partner has at that time a negative Capital Account balance). The
notice must be given by the legal representative within 270 days of the
death, determination of incompetence or dissolution of such Limited Partner
or the deficit restoration obligation shall be an obligation of the persons
taking the Partnership Interests of such Limited Partner.
Section 7.03 Final Statement. As soon as practicable after the
dissolution of the Partnership, a final statement of its assets and
liabilities shall be prepared by an independent certified public accountant
and furnished to all Partners.
ARTICLE VIII
BOOKS AND ACCOUNTS
Section 8.01 Books. The General Partner shall keep or cause to
be kept at the principal office of the Partnership appropriate books and
records with respect to the Partnership's business in which the
transactions of the Partnership shall be entered fully and accurately. 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.
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Section 8.02 Reports.
(a) As soon as practicable, but in no event later than one
hundred five (105) days after the close of each Fiscal Year, the General
Partner shall cause to be mailed to each Limited Partner an annual report
containing financial statements of the Partnership, or of the General
Partner if such statements are prepared solely on a consolidated basis with
the General Partner, for such Fiscal 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 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, for
such calendar quarter and such other information as may be required by this
Partnership Agreement or by applicable law or regulation, or as the General
Partner determines to be appropriate.
(c) The General Partner shall use all reasonable efforts to
furnish each of the Limited Partners, within ninety (90) days of the close
of each Fiscal Year, with the tax information reasonably required by
Limited Partners for federal and state income tax reporting purposes.
Section 8.03 Bank Accounts. The General Partner shall, in the
name of the Partnership, open and maintain accounts with one or more
financial institutions in which shall be deposited all funds of the
Partnership. Amounts on deposit in such Partnership accounts shall be used
solely for the business of the Partnership. Withdrawals from such accounts
may be made only upon the signature of any Person authorized by the General
Partner to make withdrawals.
ARTICLE IX
GENERAL
Section 9.01 Notices. Unless otherwise specified in a writing
sent to the Partnership, the address of each Partner for all purposes shall
be as set forth in Schedule A hereto, as amended. Any notices and demands
required to be given hereunder other than any Notice of Sale pursuant to
Section 6.08 shall be in writing and delivered in person or sent by first
class, certified or registered mail or overnight delivery service, postage
or delivery charges prepaid, to such address or addresses and shall be
deemed given when so delivered or sent.
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Any Notice of Sale given by a Limited Partner shall be sent in
triplicate by recognized overnight delivery service and shall be deemed
given on the business day following the date it was sent addressed as
follows:
Notice of Sale
Home Properties of New York, Inc.
000 Xxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
With a copy to:
General Counsel
Home Properties of New York, Inc.
000 Xxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
And a copy to:
Xxxxxx X. Xxxxxxxxx, Chairman
Home Properties of New York, Inc.
000 Xxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Section 9.02 Captions. The Article and Section titles and
captions contained in this Partnership Agreement are for convenience only
and shall not be deemed part of the context of this Partnership Agreement.
Section 9.03 Pronouns and Plurals. Whenever the context may
require, any pronoun used herein 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 9.04 Entire Agreement. This Partnership Agreement and
the schedules and exhibits hereto, and the documents referred to herein
contain the entire understanding among the Partners and supersede any prior
understandings or written or oral agreements between or among any of them
with respect to the within subject matter. There are no representations,
agreements, arrangements or understandings, oral or written, between or
among any of the Partners relating to the subject matter of this
Partnership Agreement which are not fully expressed herein.
Section 9.05 Further Action. The Partners shall execute and
deliver all documents, provide all information and take or forebear from
all such action as may be necessary or appropriate to achieve the purpose
of this Partnership Agreement.
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Section 9.06 Binding Effect. This Partnership Agreement shall
be binding on and inure to the benefit of the Partners and their heirs,
executors, administrators, successors, legal representatives and permitted
assigns.
Section 9.07 Creditors. None of the provisions of this
Partnership Agreement shall be for the benefit of, or enforceable by, any
creditor of the Partnership.
Section 9.08 Validity. In the event that any provision of this
Partnership Agreement shall be held to be invalid, the same shall not
affect in any respect whatsoever the validity of the remainder of this
Partnership Agreement.
Section 9.09 Governing Law. This Partnership Agreement shall be
governed by the laws of the State of New York without regard to its
conflicts of law principles.
Section 9.10 Amendment.
(a) Amendments to this Agreement may be proposed by the General
Partner or by a Majority of Limited Partners. Except as provided by
Section 9.10(b) and (c) hereof, this Partnership Agreement may be amended
or modified only by the consent of the General Partner and of a Majority of
Limited Partners.
(b) Notwithstanding Section 9.10(a) 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 Affiliated Persons for the benefit of
the Limited Partners;
(ii) to reflect the admission, substitution, termination, or
withdrawal of Partners in accordance with this
Agreement;
(iii) to set forth the rights, powers, duties, and
preferences of the holders of any additional
Partnership Interests issued pursuant to
Section 3.03 hereof;
(iv) to reflect a change that is of an inconsequential
nature and does not adversely affect the Limited
Partners in any material respect, or to cure any
ambiguity, correct or supplement any provision in this
Agreement not inconsistent with law or with other
provisions, or make other changes with respect to
matters arising under this Agreement that will not be
inconsistent with law or with the provisions of this
Agreement; and
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(v) to satisfy any requirements, conditions, or guidelines
contained in any order, directive, opinion, ruling or
regulation of a federal or state agency or contained in
federal or state law.
The General Partner will provide notice to the Limited Partners when any
action under this Section 9.10(b) is taken.
(c) Notwithstanding Section 9.10(a) hereof, this Agreement shall
not be amended without the consent of each Partner adversely affected if
such amendment would (i) convert a Limited Partner's interest in the
Partnership into a general partner's interest, (ii) modify the limited
liability of a Limited Partner, (iii) alter the rights of a Partner to
receive allocations or Distributions specified in Article IV hereof (except
as permitted pursuant to Sections 3.02, 3.03, 3.04 and 3.05 and
Section 9.10(b)(3) hereof), (iv) alter or modify the Purchase Right and HP
Shares Amount, (v) cause the termination of the Partnership prior to the
time set forth in Sections 2.05 or 7.01 hereof, or (vi) amend this
Section 9.10(c). Further, no provision of this Partnership Agreement
requiring the vote or consent of Limited Partners may be amended without
the consent of Limited Partners specified in such provision.
(d) All amendments to this Partnership Agreement shall be in
writing and executed by the General Partner on its own behalf and by the
Limited Partners on their own behalf or pursuant to the powers of attorney
granted to the General Partner pursuant to this Agreement.
(e) Schedule A to the Partnership Agreement shall be deemed to
be automatically amended to reflect the increase in the number of Units
held by Home Properties, directly or indirectly through the QRS, pursuant
to Section 3.04 of this Agreement on each occasion that an additional Unit
or Units are issued to Home Properties, or the QRS in connection with the
issuance of additional HP Shares by Home Properties pursuant to its
Dividend Reinvestment, Stock Purchase, Resident Stock Purchase and Employee
Stock Purchase Plan. Home Properties shall keep a schedule of the number
of additional Units issued to it and the date on which such Units were
issued and on each occasion that it causes the Partnership Agreement to be
amended for any other reason, it will cause Schedule A thereto to be
revised to reflect the current number of Units, including fractional Units,
then held by Home Properties or the QRS.
Section 9.11 Power of Attorney.
(a) Each Limited Partner 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 his true and lawful attorney-in-fact,
with full power and authority in his name, place and xxxxx, to:
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(i) execute, swear to, acknowledge, deliver, file and
record in the appropriate public offices (A) all
certificates, documents and other instruments
(including, without limitation, this Agreement and the
Certificate and all amendments or restatements thereof)
that the General Partner or the Liquidator deems
appropriate or necessary to form, qualify or continue
the existence or qualification of the Partnership as a
limited partnership (or a partnership in which the
limited partners have limited liability) in the State
of New York and in all other jurisdictions in which the
Partnership may conduct business or own property; (B)
all instruments that the General Partner deems
appropriate or necessary to reflect any amendment,
change, modification or restatement of this Agreement
in accordance with its terms; (C) all conveyances and
other instruments or documents that the General Partner
deems appropriate or necessary to reflect the
dissolution and liquidation of the Partnership pursuant
to the terms of this Agreement, including, without
limitation, a certificate of cancellation; (D) all
instruments relating to the admission, withdrawal,
removal or substitution of any Partner pursuant to the
terms of this Agreement; and (E) all certificates,
documents and other instruments relating to the
determination of the rights, preferences and privileges
of Partnership Interests issued pursuant to
Section 3.03 hereof; and
(ii) execute, swear to, acknowledge and file all ballots,
consents, approvals, waivers, certificates and other
instruments appropriate or necessary, in the sole
discretion of the General Partner, to make, evidence,
give, confirm or ratify any vote, consent, approval,
agreement or other action which is made or given by the
Partners hereunder or is consistent with the terms of
this Agreement or appropriate or necessary, in the sole
discretion of the General Partner, to effectuate the
terms or intent of this Agreement.
Nothing contained herein shall be construed as authorizing the General
Partner to amend this Agreement except in accordance with Section 9.10
hereof or as may be otherwise expressly provided for in this Agreement.
(b) This power of attorney is hereby declared to be irrevocable
and a power coupled with an interest and shall survive an assignment by any
Limited Partner of all or any part of his or Partnership Interest until
such time as the General Partner has taken the action necessary or
appropriate to effect the substitution of the Assignee as a Limited
Partner.
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(c) This power of attorney shall, to the extent permitted by
law, survive any death, disability, incompetence, merger, bankruptcy,
receivership or dissolution of a Limited Partner.
(d) Each Limited Partner shall execute such instruments as the
General Partner may request in order to give evidence of, and to
effectuate, the granting of this power of attorney, whether by executing a
separate counterpart thereof or otherwise.
ARTICLE X
CLASS A LIMITED PARTNERSHIP INTERESTS
Section 10.01 Name. Pursuant to Section 3.03 of this
Partnership Agreement there is hereby created and issued a new class of
Partnership Interest to be known as the Class A Limited Partnership
Interest (the "Class A Interest").
Section 10.02 Capital Contribution. State Treasurer of the
State of Michigan, Custodian of Michigan Public School Employees'
Retirement System, State Employees' Retirement System, Michigan State
Police Retirement System and Michigan Judges' Retirement System ("SMRS")
shall contribute $35,000,000 (the "Original Investment") to the Partnership
in consideration for the issuance to it by the Partnership of the Class A
Interest. The Original Investment shall be deemed to be the Capital
Contribution of the Class A Interest Holder(s).
Section 10.03 Status of Holders. Holder(s) of all or any
portion of the Class A Interest shall be Limited Partners of the
Partnership and, except as otherwise provided herein, shall be entitled to
all of the rights and privileges of the other Limited Partners, as well as
the additional rights and privileges described below. For purposes of
voting on matters that must be approved by the Limited Partners, the Class
A Interest Holder(s) shall be deemed to hold the number of Units equal to
$35,000,000 divided by the Conversion Price times the percentage of the
Class A Interest originally issued hereby that has not been converted into
HP Shares (as defined in, and subject to adjustment in accordance with,
Section 10.06(b) below).
Section 10.04 Preferred Return.
(a) The Partnership shall pay the Class A Interest Holder(s) on
a quarterly basis in accordance with Section 10.04(c), prior to payment of
any Distributions to the holders of any Units, including but not limited to
the General Partner, a distribution equal to the preferred return described
below (the "Preferred Return"). Except as described in this Section 10.04,
the Partnership shall not be obligated to pay to the Class A Interest
Holder(s) any Distributions pursuant to Section 4.05 of this Partnership
Agreement.
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(i) Commencing on the date that the Class A Interest is
originally issued (the "Class A Closing Date") and
continuing to the second anniversary of the Closing
Date (the "9.25% Preferred Return Period"), the holders
of the Class A Interest shall receive, on a quarterly
basis in accordance with Section 10.04(c), a
distribution equal to the greater of: (a) $809,375; or
(b) an amount equal to the dividends and other
distributions that would have been paid on the number
of HP Shares equal to $35,000,000 divided by the
Conversion Price (the "9.25% Preferred Return").
(ii) Commencing on the date following the end of the 9.25%
Preferred Return Period and, except as provided below
in this subparagraph (ii), continuing to the seventh
anniversary of the Closing Date (the "9.0% Preferred
Return Period"), the holders of the Class A Interest
shall receive, on a quarterly basis in accordance with
Section 10.04(c), a distribution equal to the greater
of: (x) $787,500 or (y) an amount equal to the
dividends and other distributions that would have been
paid on the number of HP Shares equal to $35,000,000
divided by the Conversion Price (the "9.0% Preferred
Return"). Notwithstanding the above, if on the seventh
anniversary of the Class A Closing Date the Class A
Interest Holder(s) have not been paid actual
distributions of at least $809,375 on each of the prior
eight (8) consecutive Preferred Return Payment Dates
(defined below) or any distribution of a Preferred
Return from any prior period remains unpaid, the 9.0%
Preferred Return Period shall continue until the
Preferred Return Payment Date which shall be the eighth
(8th) consecutive Preferred Return Payment Date
thereafter occurring on which the Class A Interest
Holder(s) have been paid actual distributions of at
least $809,375 and until there remains outstanding no
unpaid distribution of a Preferred Return.
(b) After the end of the periods described in (i) and (ii)
above, the holders of the Class A Interest shall continue to receive, on a
quarterly basis in accordance with Section 10.04(c), a distribution equal
to the dividends and other distributions that would have been paid on the
number of HP Shares equal to $35,000,000 divided by the Conversion Price
times the percentage of the Class A Interest originally issued hereby that
has not been converted into HP Shares.
(c) The distributions required by this Section 10.04 shall be
payable to the holders of the Class A Interest on a quarterly basis on the
same date that the General Partner pays a quarterly dividend or other
distribution to the holders of HP Shares. If the General
-46-
Partner does not
pay a distribution to the holders of HP Shares, the distributions required
by this Section 10.04 shall be payable on the fourth Tuesday of each of
February, May, August and November or on the next Business Day thereafter
if such day shall not be a Business Day. Each of the dates on which such a
distribution shall be so payable shall be a "Preferred Return Payment
Date." The first Preferred Return Payment Date shall be determined in
accordance with this paragraph (c) and shall occur in the first calendar
quarter following the Class A Closing Date. The first distribution payable
to the holders of the Class A Interest shall be pro-rated for the number of
days occurring from the Class A Closing Date to and including the last day
of the calendar quarter in which the Class A Closing Date occurs. To the
extent that the Class A Closing Date is not the last day of a calendar
quarter, the following rules shall apply to the proration of any
distribution of a Preferred Return in those calendar quarters in which the
rate of payment of such distribution is adjusted pursuant to Section
10.04(a) and (b); (i) the distribution payable with respect to the quarter
in which the second anniversary of the Class A Closing Date occurs shall be
pro-rated such that the 9.25% Preferred Return shall be payable for the
number of days occurring between the first day of that quarter to and
including the second anniversary of the Class A Closing Date and the 9.0%
Preferred Return shall be payable for the number of days occurring from the
day after the second anniversary of the Class A Closing Date to and
including the last day of quarter in which the second anniversary of the
Class A Closing Date occurs; and (ii) the distribution payable with respect
to the quarter in which the 9.0% Preferred Return Period terminates shall
be pro-rated such that the 9.0% Preferred Return shall be payable for the
number of days occurring from the first day of that quarter to and
including the day on which the 9.0% Preferred Return Period terminates and
the distribution described in paragraph (b) of this Section 10.04 shall be
payable for the number of days occurring from the day after the day on
which the 9.0% Preferred Return Period terminates to and including the last
day of the quarter in which the 9.0% Preferred Return Period terminates.
(d) To the extent that the Class A Interest Holder(s) convert
any portion of the Class A Interest held by them to HP Shares as permitted
by Section 10.06 below, the distributions described in subparagraphs (i)
and (ii) of paragraph (a) above shall terminate with respect to the portion
of the Class A Interest so converted.
(e) To the extent that a distribution required by this Section
10.04 is not paid on any Preferred Return Payment Date, the amount not paid
shall accrue interest at the rate of 9.25% per annum during the 9.25%
Preferred Return Period and at the rate of 9.0% per annum during the 9.0%
Preferred Return Period, compounded quarterly on each Preferred Return
Payment Date that it remains unpaid (the "Accrued Return"). Thereafter,
any distributions paid by the Partnership shall first be applied to pay any
Accrued Return previously due, but not paid. While any distribution owing
to the holders of the Class A Interest remains unpaid, no distributions
shall be paid to the holders of any Units, including but no limited to the
General Partner.
Section 10.05 Transfer Rights. The Class A Interest may be
transferred at any time providing that: (a) no transfer of all or a portion
of the Class A Interest may be
made to a person if, in the written opinion
of legal counsel to the Partnership, it would result in the Partnership
being treated as an association taxable as a corporation; (b) such transfer
is effectuated through an "established securities market" or a "secondary
market" (or substantial equivalent thereof) within the meaning of Section
7704 of the Code; and (c) no transfer of all or a portion of the Class A
Interest shall be valid and effective and the Partnership shall not
recognize the same for the payment of the Preferred Return, allocation of
Income or Loss or Approval Rights (as hereafter defined) until an
Assignment of Class A Interest is delivered to the General Partner. The
Assignment of Class A Interest shall be in substantially the form attached
to this Partnership Agreement as Exhibit B. With respect to the transfer
of all or any portion of the Class A Interest, the provisions of this
Section 10.05 shall apply in substitution for the provisions of Sections
6.05 and 6.06 of the Partnership Agreement. Upon receipt of a duly
executed Assignment of Class A Interest, and the furnishing of the
additional documents described in Section 3.05 of the Partnership
Agreement, the General Partner shall execute an amendment to this
Partnership Agreement adding the name or names of such Persons to Schedule
A and the assignee shall be admitted to the Partnership as an Additional
Limited Partner.
Section 10.06 Conversion Rights.
(a) Any Class A Interest Holder shall have the right to convert
all or any portion of its Class A Interest into HP Shares (the "Conversion
Right"). In the event that any Class A interest Holder wishes to exercise
its Conversion Right, it shall so notify the General Partner in writing
(the"Conversion Notice"), specifying the percentage of the Class A Interest
that it wishes to convert. Within ten (10) days after the receipt of a
Conversion Notice (the "Conversion Date"), the General Partner will issue
and deliver to the holder, on the holder's written order, a certificate or
certificates representing the number of full HP Shares issuable upon the
conversion of the specified portion of the Class A Interest. Any
fractional HP Shares arising upon a conversion will be settled as provided
in paragraph (e) of this Section 10.06. Each conversion will be deemed to
have been effected on the Conversion Date and the person in whose name a
certificate for HP Shares is to be issued upon a conversion will be deemed
to have become the holder of record of the HP Shares represented by that
certificate at such effective time. All HP Shares delivered upon
conversion of all or any portion of the Class A Interest will, upon
delivery, be duly and validly issued and fully paid and nonassessable, free
of all liens and charges and not subject to any preemptive rights. The
portion of the Class A Interest so converted will no longer be deemed to be
outstanding and all rights of the holder with respect to that portion so
converted will immediately terminate, except the right to receive the HP
Shares and any Accrued Return.
(b) Upon conversion, the holder of the Class A Interest so
converted will receive that number of HP Shares as shall equal the
percentage of the Class A Interest originally issued hereby represented by
such Class A Interest so converted times $35,000,000 divided by the
conversion price, which will initially be $21.00 and will be adjusted as
follows from time to time if any of the events described below occurs (the
"Conversion Price"):
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(i) If the General Partner: (x) pays a dividend or makes a
distribution on HP Shares in HP Shares; (y) subdivides
the outstanding HP Shares into a greater number of HP
Shares; or (z) combines the outstanding HP Shares into
a smaller number of HP Shares, the Conversion Price in
effect immediately prior to that event will be adjusted
so that the holder of all or a portion of the Class A
Interest to be converted after that event will receive
the number of HP Shares which such holder would have
received as a result of the event if the portion of the
Class A Interest to be converted had been converted
immediately before the happening of such event (or, if
there is more than one such event, if the portion of
the Class A Interest to be converted had been converted
immediately before the first of those events and the
holder had retained all the HP Shares or other
securities or assets received after the conversion).
An adjustment made pursuant to this Section 10.6(b)(i)
will become effective immediately after the record date
in the case of a dividend or distribution, and will
become effective immediately after the effective date
in the case of a subdivision or combination. If such
dividend or distribution is declared but is not paid or
made, the Conversion Price then in effect will be
appropriately readjusted. However, a readjustment of
the Conversion Price will not affect any conversion
which takes place before the readjustment.
(ii) If the General Partner issues rights or warrants to the
holders of the HP Shares as a class entitling them to
subscribe for or purchase HP Shares at a price per
share less than the Conversion Price in effect on the
record date for the determination of shareholders
entitled to receive the rights or warrants, the
Conversion Price in effect immediately before the
issuance of the rights or warrants will be reduced in
accordance with the equation set forth on Exhibit C
hereto, which is hereby incorporated by reference
herein. The adjustment provided for this Section
10.6(b)(ii) will be made successively whenever any
rights or warrants are issued, and will become
effective immediately after each record date. In
determining whether any rights or warrants entitle the
holders of HP Shares to subscribe for or purchase HP
Shares at less than the Conversion Price, and in
determining the aggregate sale price of the HP Shares
issuable on the exercise of rights or warrants, there
will be taken into account any consideration received
by the General Partner for the rights or warrants, with
the value of that consideration, if other than cash, to
be determined by the Board of Directors of
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the General
Partner (whose determination, if made in good faith,
will be conclusive). If any rights or warrants which
lead to an adjustment of the Conversion Price expire or
terminate without having been exercised, the Conversion
Price than if effect will be appropriately readjusted.
However, a readjustment of the Conversion Price will
not affect any conversions which take place before the
readjustment.
(iii) If the General Partner distributes to the holders of
the HP Shares as a class any shares of stock of the
General Partner (other than HP Shares) or evidences of
indebtedness or assets (other than cash dividends or
distributions) or rights or warrants (other than those
referred to in Section 10.6(b)(ii)) to subscribe for or
purchase any of its securities, then, in each such
case, the Conversion Price will be reduced so that it
will equal the price determined by multiplying the
Conversion Price in effect immediately prior to the
record date for the distribution by a fraction of which
the numerator is the Market Value of the HP Shares on
the record date for the distribution less the then fair
market value (as determined by the Board of Directors,
whose determination, if made in good faith, will be
conclusive) of the stock, evidences of indebtedness,
assets, rights or warrants which are distributed with
respect to one HP Share, and of which the denominator
is the Market Value of the HP Shares on that record
date. Each adjustment will become effective
immediately after the record date for the determination
of the shareholders entitled to receive the
distribution. If any distribution is declared but not
made, or if any rights or warrants expire or terminate
without having been exercised, effective immediately
after the decision is made not to make the distribution
or the rights or warrants expire or terminate, the
Conversion Price then in effect will be appropriately
readjusted. However, a readjustment will not affect
any conversions which take place before the
readjustment.
(iv) If the General Partner issues or sells (or the
Partnership issues or sells) any equity or debt
securities which are convertible, directly or
indirectly, into or exchangeable for HP Shares
("Convertible Securities") or any rights, options
(other than the issuance or exercise after the date
hereof of stock options covering no more than 699,778
HP Shares, the exercise price of which will be no less
than the Market Value of the HP Shares on the date of
grant as determined in good faith by the Board of
Directors, which number of HP Shares shall be subject
to
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appropriate adjustment to the extent that the
Corporation: (x) pays a dividend or makes a
distribution on the HP Shares; (y) subdivides the
outstanding HP Shares into a greater number of shares;
or (z) combines the outstanding HP Shares into a
smaller number of shares, issued to employees or
directors of the General Partner and its subsidiaries
under the General Partner's existing employee stock
incentive plans) or warrants to purchase HP Shares at a
conversion, exchange or exercise price per share which
is less than the Conversion Price, unless the
provisions of Section 10.6(b)(ii) or (iii) are
applicable, the General Partner will be deemed to have
issued or sold, on the later of the date on which the
Convertible Securities, rights, options or warrants are
issued or the date on which they first may be
converted, exchanged or exercised, the maximum number
of HP Shares into or for which the Convertible
Securities may then be converted or exchanged or which
are then issuable upon the exercise of the rights,
options or warrants immediately prior to the close of
business on the later of the date on which the
Convertible Securities, rights, options or warrants are
issued or the date on which they may first be
converted, exchanged or exercised, and the Conversion
Price shall be adjusted downward as if it were an event
covered by Section 10.6(b)(v). However, no further
adjustment of the Conversion Price will be made as a
result of the actual issuance of HP Shares upon
conversion, exchange or exercise of the Convertible
Securities, rights, options or warrants. If any
Convertible Securities, rights, options or warrants to
which this Section applies are redeemed, retired or
otherwise extinguished or expire without any HP Shares
having been issued upon conversion, exchange or
exercise thereof, effective immediately after the
Convertible Securities, rights, options or warrants
expire, the Conversion Price then in effect will be
readjusted to what it would have been if those
Convertible Securities, rights options or warrants had
not been issued. However, a readjustment will not
affect any conversion which takes place before the
readjustment. For the purposes of this Section
10.6(b)(iv), (x) the price of HP Shares issued or sold
upon conversion or exchange of Convertible Securities
or upon exercise of rights, options or warrants will
be: (A) the consideration paid to the General Partner
for the Convertible Securities, rights, options or
warrants, plus: (B) the consideration contemplated to
be paid to the General Partner upon conversion,
exchange or exercise of the Convertible Securities,
rights, options or warrants, with the value of the
consideration, if other than cash, to be determined
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by
the Board of Directors of the General Partner (whose
determination, if made in good faith, will be
conclusive) and (y) any change in the conversion or
exchange price of Convertible Securities or the
exercise price of rights, options or warrants will be
treated as an extinguishment, when the change becomes
effective, of the Convertible Securities, rights,
options or warrants which had the old conversion,
exchange or exercise price and an immediate issuance of
new Convertible Securities, rights, options or warrants
with the new conversion, exchange or exercise price.
(v) If the General Partner issues or sells any HP Shares
(other than on conversion or exchange of Convertible
Securities or exercise of rights, options or warrants
to which Section 10.6(b)(ii), (iii) or (iv) applies)
for a consideration per share less than the Conversion
Price on the date of the issuance or sale (or on
exercise of options or warrants, for less than the
Conversion Price on the day the options or warrants are
issued), upon consummation of the issuance or sale, the
Conversion Price in effect immediately prior to the
issuance or sale will be reduced in accordance with the
equation set forth on Exhibit C hereto, which is hereby
incorporated by reference herein.
(vi) If there is a reclassification or change of outstanding
HP Shares (other than a change in par value, or as a
result of a subdivision or combination), or a merger or
consolidation of the General Partner with any other
entity that results in a reclassification, change,
conversion, exchange or cancellation of outstanding HP
Shares, or a sale or transfer of all or substantially
all of the assets of the Corporation, upon any
subsequent conversion of any portion of the Class A
Interest, each holder of the Class A Interest so
converted will be entitled to receive the kind and
amount of securities, cash and other property which the
holder would have received if the holder had converted
the Class A Interest into HP Shares immediately before
the first of any of the foregoing events and had
retained all the securities, cash and other assets
received as a result of such events. In the event that
a transaction may be viewed as causing this
Section 10.6(b)(vi) to be applicable and
Section 10.6(b)(iii) is also applicable, then Section
10.6(b)(iii) will be applied and this Section
10.6(b)(vi) will not be applied.
(vii) Notwithstanding anything to the contrary above, no
adjustment in the Conversion Price will be required in
the following
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situations: (x) the General Partner
issues (or the Partnership issues) any HP Shares or
Partnership Interests or any equity or debt securities
which are convertible, directly or indirectly, into or
exchangeable for HP Shares at a price or exchange or
exercise price per share which is less than the
Conversion Price as consideration for all or a portion
of the purchase price in connection with the
acquisition of property or real estate operating
businesses; (y) the General Partner issues or sells (or
the Partnership issues or sells) to the Class A
Interest Holders any HP Shares or Partnership Interests
or any equity or debt securities which are convertible,
directly or indirectly, into or exchangeable for HP
Shares at a price or exchange or exercise price per
share which is less than the Conversion Price; and (z)
the General Partner issues HP Shares at less than the
Conversion Price pursuant to the dividend reinvestment
portion of the General Partner's Dividend Reinvestment,
Stock Purchase, Resident Stock Purchase and Employee
Stock Purchase Plan.
(viii) No adjustment in the Conversion Price will be required
unless the adjustment would require a change of at
least 1% in the Conversion Price; provided, however,
that any adjustments which are not made because of this
Section 10.6(b)(viii) will be carried forward and taken
into account in any subsequent adjustments. All
calculations under this Section 10.06 will be made to
the nearest cent or to the nearest one hundredth of a
share, as the case may be.
(ix) Whenever the Conversion Price is adjusted, the
Corporation will promptly send each Class A Interest
Holder a notice of the adjustment of the Conversion
Price setting forth the adjusted Conversion Price and
the date on which the adjustment becomes effective and
containing a brief description of the events which
caused the adjustment.
(c) If any one of the events in Section 10.6(b)(i) through
10.6(b)(v) occurs, then the General Partner will mail to each of the
Class A Interest Holders of record, no later than 15 Business Days after
the applicable date specified below, a notice stating, as applicable, one
of the following: (i) the date on which a record was taken for the purpose
of the dividend, distribution or grant of rights or warrants, or, if no
record was taken, the date as of which the holders of HP Shares of record
who were entitled to the dividend, distribution or rights or warrants was
determined; (ii) the date on which the Convertible Securities were issued
or the date on which the change in the conversion, exchange or exercise
price of the Convertible Securities, rights, options or warrants was
effective; (iii) the date on which the General Partner sold HP Shares for
less than the Conversion Price on the
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date of the sale; or (vi) the date on
which the reclassification, consolidation, merger, share exchange, sale,
transfer, dissolution, liquidation or winding up became effective, and the
date on which holders of record of HP Shares were entitled to exchange
their HP Shares for securities or other property deliverable upon the
reclassification, consolidation, merger, share exchange, sale, transfer,
dissolution, liquidation or winding up. Failure to give any such notice or
any defect in the notice will not affect the legality or validity of the
reclassification, consolidation, merger, share exchange, sale, transfer,
dissolution, liquidation or winding up.
(d) (i) The General Partner will at all times reserve and keep
available, free from preemptive rights, out of the
authorized but unissued HP Shares, for the purpose of
effecting conversion of the Class A Interest, the
maximum number of HP Shares which the General Partner
would be required to deliver upon the conversion of all
the outstanding Class A Interest. For the purpose of
this Section 10.6(d)(i), the number of HP Shares which
the General Partner would be required to deliver upon
the conversion of all the outstanding Class A Interests
will be computed as if at the time of the computation
all the outstanding Class A Interests were held by a
single holder.
(ii) Before taking any such action which would cause an
adjustment reducing the Conversion Price below the then
par value (if any) of the HP Shares deliverable upon
conversion of the Class A Interest, the General Partner
will take all corporate action which may, in the
written opinion of its counsel, be necessary in order
that the General Partner may validly and legally issue
fully paid and non-assessable HP Shares at the adjusted
Conversion Price.
(e) No fractional HP Shares will be issued upon conversion of
the Class A Interest. Any fractional interest in an HP Share resulting
from conversion of the Class A Interest will be paid in cash (computed to
the nearest cent) based on the Market Value of the HP Shares on the trading
day next preceding the Conversion Date.
(f) As of the Closing Date, the HP Shares to be issued upon
conversion of all or any portion of the Class A Interest will be approved
for listing on the New York Stock Exchange subject to official notice of
issuance. After the Closing Date, the General Partner will continue the
listing of the HP Shares required to be delivered upon conversion of all or
any portion of the Class A Interest on the New York Stock Exchange or on
each national securities exchange, if any, upon which the outstanding HP
Shares are listed at the time of delivery.
(g) With respect to Conversion Dates occurring on or after the
fifth anniversary of the Issuance Date, the Class A Interest Holder of the
portion of the Class A Interest so converted shall receive, in addition to
the HP Shares to be issued pursuant to
-54-
Section 10.6(b), that additional
number of HP Shares, if any, as shall be necessary in order that such
holder will receive, on the next date on which dividends are paid by the
General Partner with respect to HP Shares, dividends equal to $7,875 for
each 1% of the Class A Interest converted, assuming that the dividend paid
per HP Share did not change from that applicable on the dividend payment
date immediately preceding the Conversion Date.
Section 10.07 Voting Rights.
(a) As used in this Section 10.07 and elsewhere in this
Partnership Agreement, the following terms shall have the indicated
meanings:
(i) Affiliate of SMRS. Any Person that controls, is
controlled by or is under common control with SMRS, as
evidenced by contract or agreement.
(ii) Approval Rights. The Right Holders' right to approve
certain matters as described in Section 10.07 of this
Partnership Agreement and pursuant to Section 6 of the
Partnership Interest Agreement.
(iii) Change of Control. The occurrence of any of the
following events: (i) the General Partner takes or
fails to take any action such that it ceases to be
required to file reports under Section 13 of the
Securities Exchange Act of 1934, as amended (the
"Exchange Act"), or any successor to that Section;
(ii) any "person" (as defined in Sections 13(d) and
14(d) of the Exchange Act) is permitted by the General
Partner or the Subsidiaries, or their respective Boards
of Directors, to become the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, of either (a) 30% of more of the
outstanding HP Shares, or (b) 30% or more (by right to
vote or grant or withhold any approval) of the
outstanding securities of any other class or classes
which individually or together have the power to elect
a majority of the members of such Board of Directors;
(iii) either of the Boards of Directors of the General
Partner or the Subsidiaries determine to recommend the
acceptance of any proposal set forth in a tender offer
statement or proxy statement filed by any person with
the Securities and Exchange Commission which indicates
the intention on the part of that person acquiring,
control of the General Partner or the Subsidiaries;
(iv) the General Partner ceases to be the sole general
partner of the Partnership or grants or sells to any
third party the power to control or direct the actions
of the Partnership as if such third party were a
general
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partner of the Partnership; or (v) the
Partnership is a party to any entity conversion or any
merger or consolidation in which the Partnership is not
the surviving entity in such merger or consolidation.
(iv) Equity Capitalization. The aggregate of the Value of
the Interest, the Value of the Units not owned by the
General Partner and the Market Value of all outstanding
HP Shares at the time the determination is made.
(v) HP Conversion Shares. The HP Shares received on
conversion of all or any portion of the Class A
Interest that have not previously been sold or
otherwise transferred on a Public Basis.
(vi) Investor Group Representative. The Person appointed by
the Rights Holders to act as their representative as
described in paragraph (c) of this Section 10.07.
(vii) Market/Offer Price. The product of: (i) the greater
of (a) the highest price (or value of other
consideration) per HP Share agreed upon during such
12-month period pursuant to any Business Combination
Transaction, which was made during such 12-month period
and was not terminated or withdrawn prior to the end of
such period; and (b) the average closing price per HP
Share as shown on the composite tape of the New York
Stock Exchange over such 12-month period; and (ii) the
number of such HP Shares.
(viii) Market Value. As defined in Section 1.41 of this
Partnership Agreement, provided that the Rights
Holders, by accepting the issuance or assignment to
them of all or a portion of the Class A Interest or the
HP Conversion Shares, covenant and agree that, during
the ten (10) consecutive trading days immediately
preceding the date on which the Market Value is to be
determined, they will not purchase or sell any HP
Shares, cause the purchase and sale of any HP Shares or
take any other actions that are intended to or that
actually affect the market price of HP Shares.
(ix) Partnership Interest Agreement. The Partnership
Interest Purchase Agreement, dated as of December 20th,
1996 by and between the Partnership, the General
Partner and SMRS.
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(x) Public Basis. The sale of any HP Shares by means of
any public stock exchange or in any Public Offering.
(xi) Public Offering. A public offering of HP Shares,
preferred shares of the General Partner or Partnership
Interests (including Units), other than a registration
relating solely to the sale of securities to
participants in a dividend reinvestment plan, a
registration on Form S-4 relating to a business
combination or similar transaction permitted to be
registered on such Form S-4, a registration on Form S-8
relating solely to the sale of securities to
participants in a stock or employee benefit plan, or a
registration permitted under Rule 462 under the
Securities Act registering additional securities of the
same class as were included in an earlier registration
statement for the same offering and declared effective.
(xii) Related Entity. The Partnership, the General Partner
or any Person in which the Partnership or the General
Partner has beneficial ownership, whether direct or
indirect, of: (x) 50% or more of the outstanding
shares of any class of stock or any class of ownership
interest or (y) such lower percentage of the
outstanding shares of any class of stock or any class
of such other ownership interest as is sufficient to
render such Person a subsidiary of the Partnership or
the General Partner for purposes of generally accepted
accounting principles as in effect at the time of
determination of the status of such Person for purposes
of this definition.
(xiii) Rights Holders. The Class A Interest Holders and the
holders of the HP Conversion Shares.
(xiv) Rights Termination Date. The date on which the
combined Value of the Class A Interest and the Value of
the HP Conversion Shares held by the Rights Holders:
(i) shall be less than $35,000,000; and (ii) cease to
exceed 8% of the Equity Capitalization of the
Partnership for a period of 30 consecutive trading
days.
(xv) Total Capitalization. The aggregate of the Equity
Capitalization plus the aggregate outstanding principal
amount at the time the determination is made of all
liabilities of the Partnership and the General Partner
arising from the borrowing of any money or the deferral
of any of the purchase price of any asset or pursuant
to any capital lease.
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(xvi) Value of the HP Conversion Shares. Market Value of the
equivalent number of HP Shares.
(xvii) Value of the Class A Interest. Market Value of the HP
Shares to which the Class A Interest can be converted.
(xviii) Value of the Units. Market Value of the HP Shares to
which the outstanding Units can be converted.
(b) Prior to the Rights Termination Date, the General Partner or
the Partnership, as the case may be, shall not take any of the actions
described in Section 6.4 of the Partnership Interest Agreement or any of
the following actions without obtaining the prior written approval of the
Rights Holders, voting as a group:
(i) permit the outstanding principal liabilities of Related
Entities arising from the borrowing of any money (for
this purpose, any indebtedness or other liability which
is guaranteed, endorsed or discounted with recourse by
a Related Entity shall be deemed to be a principal
liability of such Related Entity) or the deferral of
the purchase price of any asset or pursuant to any
capital lease to exceed 50% of the Total
Capitalization;
(ii) purchase of any assets in a single transaction or
series of related transactions (including by way of
merger, consolidation or other combination with any
other Person or the purchase of equity interests in the
entity owning such assets) if the consideration to be
paid for those assets exceeds 25% of Total
Capitalization;
(iii) sell, exchange, lease or otherwise dispose of any
assets or securities in a single transaction or a
series of related transactions (including by way of
merger, consolidation or other combination with any
other Person or the sale of equity interests in the
entity owning such assets) if the assets or securities
to be sold, exchanged, leased or otherwise disposed of
have a value exceeding 25% of the Total Capitalization;
(iv) amend any provision of the Articles of Incorporation or
By-laws of the General Partner or this Partnership
Agreement if such amendment would adversely affect the
rights of the Class A Interest Holders;
(v) liquidate or dissolve any Related Entity;
-58-
(vi) with respect to any Related Entity, commence a
voluntary case under any applicable bankruptcy,
insolvency or other similar law now or hereafter in
effect, or consent to the entry of an order for relief
in an involuntary case under any such law;
(vii) terminate the election, or take any action which would
cause termination other than by election, of the
General Partner as a real estate investment trust under
the Code;
(viii) alter any business purpose (as may be stated in the
Articles of Incorporation of the General Partner and
the Subsidiaries, the Partnership Agreement or
otherwise) of, or allow a Change of Control to occur
with respect to, any Related Entity;
(ix) create or issue any security which would be pari passu
or senior in right, either as to distributions or upon
liquidation, to the Class A Interest or reclassify the
Class A Interest or any Units if such creation,
issuance or reclassification would adversely affect the
rights or benefits of the holders of the Class A
Interest;
(x) increase the size of the Board of Directors of the
General Partner, except to the extent necessary to add
an Investor Nominee (as defined in the Partnership
Interest Agreement) pursuant to the Partnership
Interest Agreement; and
(xi) except as otherwise provided in this Article X, require
the exchange of the Class A Interest for other
securities.
(c) The General Partner shall provide the Investor Group
Representative with a written request for the approval of any matter
described in paragraph (b) of this Section 10.07. Such written notice
shall include a reasonable description of the matter for which approval is
sought and shall be made in accordance with the provisions of
Section 10.11. If the Investor Group Representative does not respond
within fifteen (15) Business Days after the date of receipt of such a
written request the Rights Holders shall be deemed to have approved the
matter as to which their approval was sought.
(d) With respect to their approval rights pursuant to
paragraph (b) of this Section 10.07, the Rights Holders shall only be
permitted to act as a group. In the event that there is more than one
Rights Holder, the Rights Holder shall select one Person to act as their
Investor Group Representative and shall so notify the General Partner.
SMRS shall be the initial Investor Group Representative. Upon failure of
the Rights Holders to select an Investor Group Representative, the largest
single holder of Class A Interests shall be designated by the General
Partner as the Investor Group Representative. The General Partner and the
Partnership shall be entitled and obligated to rely on any and all
notifications
-59-
and directions given to it by the Investor Group
Representative and shall have no obligation to verify that such
notifications and directions constitute the consensus of the Rights
Holders. In addition, upon receipt of notice from any or all other Rights
Holders that such notifications and directions do not constitute the
consensus of the Rights Holders, the General Partner and the Partnership
shall still be obligated to follow the directions of the Investor Group
Representatives.
(e) In addition to their rights under this Section 10.07, the
Rights Holders shall have the right to appoint and nominate one or more
Investor Nominees and to approve the other matters as described in
Section 6 of the Partnership Interest Agreement.
(f) If the General Partner solicits the approval of the Rights
Holders for any of the matters described in paragraph (b) of Section 6.4 of
the Partnership Interest Agreement or this Section 10.07 of this Agreement
and is informed by the Investor Group Representative that the Rights
Holders do not approve of the matter submitted, then the Partnership shall
have the right to purchase the remaining portion of the Class A Interest
from the holders thereof at a price (the "Interest Purchase Price") that is
equal to 105% of the greater of: (i) the Value of the Class A Interests as
of the date of purchase (the "Purchase Closing"), including any Accrued
Return; and (ii) the Original Investment, including any Accrued Return,
times the percentage of the Class A Interest originally issued hereby that
has not been converted to HP Shares. Upon full payment of the purchase
right described in this paragraph (f) of Section 10.07 (the "Purchase
Right") the holder of any HP Conversion Shares shall cease to be a Rights
Holder and a Class A Interest Holder for purposes of this Partnership
Agreement and the Partnership Interest Agreement. If the Partnership
intends to exercise its Purchase Right, it shall so notify the Class A
Interest Holders in writing within five (5) Business Days after receipt of
notice that the Rights Holders have not approved any matter submitted to
them for approval pursuant to Section 10.07 of this Partnership Agreement
of Section 6.4 of the Partnership Interest Agreement. Payment of the
Interest Purchase Price as described above shall be made in cash within
twenty (20) Business Days after receipt of that notice by the Class A
Interest Holders. In the event that the Partnership exercises its Purchase
Right in connection with the refusal of the Rights Holders to approve any
tender or exchange offer or merger, consolidation, share exchange, business
combination, or similar transaction involving the General Partner (each, a
"Business Combination"), then at the completion of the 12-month period
following the Purchase Closing, the General Partner shall determine the
Market/Offer Price for such HP Shares. If the Market/Offer Price is higher
than the Interest Purchase Price paid at the Purchase Closing, the
Partnership shall pay over to the holders of record of the Class A
Interest as of the date of the Purchase Closing, an additional amount (the
"Additional Amount") equal to such difference. The payment of the
Additional Amount shall be due on the earlier of: (i) ten days after the
end of such 12-month period; or (ii) the closing date of any Business
Combination Transaction closed during such period. In the event that the
Rights Holders on two occasions do not approve a matter submitted for their
approval pursuant to paragraph (b) of Section 6.4 of the Partnership
Interest Purchase Agreement or this Section 10.07 and the Partnership does
not exercise its Purchase Right, then the Rights
-60-
Holders may request from
the General Partner a waiver of the Volume Limitation, as defined i n the
letter agreement from SMRS to the General Partner whereby SMRS acknowledges
certain restrictions on the sale of HP Shares received on conversion of all
or a portion of the Class A Interest. The General Partner shall not
unreasonably withhold its approval of such a waiver, provided that it shall
not be unreasonable for the General Partner to withhold its approval if the
sale of HP Shares beyond the Volume Limitation is reasonably anticipated to
have a material negative effect on the market for, and the market price of,
HP Shares.
Section 10.08 Calculation of Percentage Interest. The
Percentage Interest of the entire Class A Interest shall initially be
58.07838 as of the Class A Closing Date. That percentage is calculated
based on total Partnership Interests (including Units) deemed to be
outstanding, as of the Class A Closing Date, of 2,869,686. To the extent
that the number of Units or other Partnership Interests changes (thus
changing the denominator), or any portion of the Class A Interest is
converted to HP Shares (thus changing the numerator), the Percentage
Interest associated with the Class A Interest shall be proportionately
adjusted.
Section 10.09 Liquidation. Notwithstanding the provisions of
Section 7.02 of this Partnership Agreement, upon liquidation of the
Partnership, the General Partner shall, to the extent of funds available,
pay to the holder(s) of the Class A Interest prior to making any
distribution to any other security holder in the aggregate the amount of
the original Investment times the percentage of the Class A Interest
originally issued hereby that has not been converted into HP Shares as
described in Section 10.06 above, plus any Accrued Return. Such payment is
to be made to each such holder in proportion to its then current percentage
interest in the remaining Class A Interest and such payment to be made
prior to and in lieu of the payment to Partners described in sub-
paragraph (4) of paragraph (a) of Section 7.02 of this Partnership
Agreement. For purposes of this Section 10.09, a consolidation or a merger
of the Partnership with another entity wherein the Partnership is not the
surviving entity, or a sale of all or substantially all of the
Partnership's assets for cash or securities, will be considered a
liquidation of the Partnership.
Section 10.10 Redemption of the Class A Limited Partnership
Interest. From and after the tenth anniversary of the Issuance Date, the
Partnership shall have the right to redeem the remaining portion of the
Class A Interest for a redemption price equal to 100% of the amount of
Original Investment times the percentage of the Class A Interest that had
not as yet been converted into HP Shares as described in Section 10.06
above (the "Redemption Price"), plus any Accrued Return. The Partnership
shall give the Interest Holder(s) no less than thirty-five (35) Business
Days prior written notice of its intention to exercise the redemption right
described above. Within thirty (30) Business Days after receipt of the
above described notice of intention from the Partnership, the Interest
Holder(s) shall notify the Partnership as to whether they plan to exercise
their Conversion Right with respect to the remaining portion of the Class A
Interest prior to the redemption of the Class A Interest. If the holder(s)
do not so exercise their Conversion Right, then upon payment of the
Redemption Price, all of the rights of the holders of the Class A Interest,
under this Partnership Agreement and the Partnership Interest Agreement
shall terminate.
-61-
Section 10.11 Notices. All notices and other communications
under this Article X shall be sufficiently given for all purposes hereunder
if in writing and delivered personally, sent by documented overnight
delivery service or, to the extent receipt is confirmed, telecopy, telefax
or other electronic transmission serviced to the appropriate address or
number as set forth below. Notices to the General Partner and the
Partnership shall be addressed to:
Home Properties of New York, Inc.
000 Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxx Xxxx 00000
Attn: Xxx X. Xxxx
(000) 000-0000
Telecopier No.: (000) 000-0000
with a copy to:
Xxx X. XxXxxxxxx, Esq.
c/o Home Properties of New York, Inc.
000 Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxx Xxxx 00000
(000) 000-0000
Telecopier No.: (000) 000-0000
or at such other address and to the attention of such other person as the
General Partner or the Partnership may designate by written notice to SMRS.
Notices to SMRS shall be addressed to:
Express Mail:
Mortgage and Real Estate Division
Michigan Department of Treasury
000 Xxxx Xxxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attn: Administrator
(000) 000-0000
Telecopier No.: (000) 000-0000
Other Mail:
Mortgage and Real Estate Division
Michigan Department of Treasury
X.X. Xxx 00000
Xxxxxxx, Xxxxxxxx 00000
Attn: Administrator
-62-
with a copy to:
Michigan Department of Attorney General
Finance and Development Division
One Michigan Avenue Building
000 Xxxxx Xxxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attn: Assistant in Charge
(000) 000-0000
Telecopier No.: (000) 000-0000
and an additional copy to:
Xxxxxx & Xxxxx
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attn: Xxx Xxxxxxxxx
or at such other address and to the attention of such other person as SMRS
may designate by written notice to the General Partner.
Notices to other Rights Holders, holders of the Class A Interest
and the Investor Group Representative shall be by the above means and to
such addresses and to the attention of such person as the Rights Holders,
holders of the Class A Interest and the Investor Group Representative may
designate by written notice to the General Partner.
For purposes of this Agreement, the Investor Group Representative
will only be deemed to have received any notice upon the written
acknowledgment by one individual designated by the Investor Group
Representative with authority to acknowledge such receipt or upon refusal
by any such designee to accept receipt of any notice. The Investor Group
Representative shall at all times provide the General Partner with a
written designation of at least two individuals or titles of positions that
are so designated with authority to acknowledge receipt of written notice.
In all cases where a failure by the Rights Holders, Class A
Interest Holders and/or the Investor Group Representative to respond within
a specified time frame shall be deemed to be their approval pursuant to
this Partnership Agreement, then the written notice or request provided by
the General Partner shall specifically state that a failure to respond
within the indicated time frame shall be deemed to be an approval of the
matter for which approval was sought.
IN WITNESS WHEREOF, this Second Amended and Restated Agreement of
Limited Partnership of Home Properties of New York, L.P. is hereby executed
as of the date first above written.
-63-
GENERAL PARTNER
HOME PROPERTIES OF NEW YORK, INC.
By: /S/ Xxxxxx X. Xxxxxxxxx
_______________________________________
Xxxxxx X. Xxxxxxxxx
Its: Chairman
LIMITED PARTNERS LISTED ON ATTACHED SCHEDULE
A:
By: Home Properties of New York, Inc.,
as attorney-in-fact
By: /s/ Xxxxxx X. Xxxxxxxxx
________________________
Title: Chairman
EXHIBIT A
NOTICE OF SALE
The undersigned hereby irrevocably (i) tenders
____________________ Units in Home Properties of New York, L.P. in
accordance with the terms of the Amended and Restated Agreement of Limited
Partnership of Home Properties of New York, L.P. (the "Partnership
Agreement") and the Purchase Right referred to therein, (ii) surrenders
such Units and all right, title and interest therein, and (iii) directs
that the Cash Amount or HP Shares Amount (as determined by the General
Partner) deliverable upon exercise of the Purchase Right be delivered to
the address specified below, and if HP Shares Amount are to be delivered,
such HP Shares Amount be registered or placed in the name(s) and at the
address(es) specified below, provided, however, that if the General Partner
determines to deliver HP Amount, this Notice of Sale may be revoked as
provided in Section 6.08(b) of the Partnership Agreement.
Dated: ____________________
Name of Limited Partner: ___________________________
--------------------------------
(Signature of Limited Partner)
--------------------------------
(Street Address)
--------------------------------
(City) (State) (Zip)
Signature Guaranteed by:
If HP Shares Amount are to be issued, issue to: _________________________
Please insert social security or identifying number: _________________
Address: _________________________
_________________________
_________________________
EXHIBIT B
TO
SECOND AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
ASSIGNMENT OF CLASS A INTEREST
In consideration for $____________________ and other good and
valuable consideration, __________________________________________________
(the "Assignor"), hereby assigns to
__________________________________________________ the ("Assignee"), all of
the Assignor's right, title and interest in and to _____% of the Class A
Interest originally issued to State Treasurer of the State of Michigan,
Custodian of Michigan Public School Employees' Retirement System, State
Employees' Retirement System, Michigan State Police Retirement
System and Michigan Judges' Retirement System (the "Class A Interest") in
Home Properties of New York, L.P. (the "Partnership") a limited partnership
organized under the laws of the State of New York, and directs that,
effective ____________________, all future distributions and allocations of
taxable income or loss on account of such _____% of the Class A Interest be
paid or allocated to such Assignee.
Assignee hereby accepts the _____% of the Class A Interest
subject to all terms, covenants and conditions of the Partnership's Amended
and Restated Agreement of Limited Partnership as the same may have been
amended from time to time.
ASSIGNOR:
Dated: ____________________ _______________________________
By:____________________________
Title:_________________________
ASSIGNEE:
_______________________________
By:____________________________
_______________________________
Assignee's Address
_______________________________
Assignee's Social Security or Taxpayer
Identification Number
[Appropriate Notary Block Depending on Type of Entity]
EXHIBIT C
SECOND AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
HOME PROPERTIES OF NEW YORK, L.P.
CLASS A LIMITED PARTNERSHIP INTEREST
Adjustment Formula Pursuant to Section 10.06(b)(ii) and (v) ("Adjustment
Formula")
OBJECTIVE: To keep the Class A Interest Holders' relative ownership
percentage constant (as compared to a transaction consummated at the
Conversion Price), upon the issuance of a "New Dilutive Security" (see
definition below), the then applicable Conversion Price of the Class A
Interest will be adjusted as follows:
PRIOR ANTI-DILUTION ADJUSTED
CONVERSION ADJUSTMENT CONVERSION
PRICE FORMULA PRICE
------------ ----- ------------- ----- ----------
PCP X (A+B+C)+EX = ACP
----------
(A+B+C*)+EX*
. .must be solved for per calculation
included in example below
DEFINITIONS:
PCP - Conversion Price of Class A Interest prior to issuance of "New
Dilutive Security."
"New Dilutive Security" - A common stock or common stock equivalent
issuance
at a price below PCP.
ACP - Conversion Price of Class A Interest adjusted for issuance of "New
Dilutive Security".
A- The number of common stock equivalent shares outstanding which
includes: (i) HP Shares issued and outstanding; (ii) all Dilutive
(defined below) convertible securities outstanding, excluding Units
and the number of HP Shares issuable upon conversion of the Class A
Interest; and (iii) all Dilutive options issued and outstanding on
an as-exercised basis (excluding stock options covering
699,778 shares of Common Stock) prior to issuance of "New Dilutive
Security". For purposes of this definition, a security described
under (ii) or (iii) will be considered "Dilutive" in all subsequent
applications of the Adjustment Formula if it triggers the Adjustment
Formula upon issuance.
B - HP Shares issuable upon conversion of all Units outstanding prior to
issuance of "New Dilutive Security"
C - HP Shares issuable upon conversion of the entire Class A Interest,
assuming the prior Conversion Price (or PCP).
C* - HP Shares issuable upon conversion of the entire Class A Interest,
assuming the adjusted Conversion Price for the New Dilutive Security
issuance (or ACP).
-2-
EX - "New Dilutive Security" equivalent common shares, assuming the prior
Conversion Price (or PCP).
EX* - "New Dilutive Security" equivalent common shares, based on actual
conversion of security.
EXAMPLE:
Assume a 1.5 million share common stock issuance at $19.50/share (the "New
Dilutive Security") following an investment of $35 million for the Class A
Interest at a $21.00 Conversion Price:
SOLUTION:
Prior to solving for C*, the following table must be created:
POST NEW DILUTIVE SECURITY POST NEW DILUTIVE SECURITY
ISSUANCE AT $19.50/SHARE ISSUANCE AT $21.00/SHARE
ADJUSTED
-------------------- -------------------------- --------------------------
SHARE # OF SHARES PERCENTAGE # OF SHARES PERCENTAGE
CAPITALIZATION
-------------------- ------------- ----------- ----------- ------------
HP shares (A) 5,900,000 58.0328 5,900,000 58.6509
Partnership Units (B) 1,100,000 10.8197 1,100,000 10.9349
Class A Interest 1,666,667 16.3934 1,666,667 16.5681
Equivalent Shares (C)
New Dilutive Security 1,500,000 14.7541 1,392,857 18.8461
Shares (EX*/EX)
TOTAL 10,166,667 100.00% 10,059,524 100.00%
C* is the number of HP Shares into which the outstanding Class A Interest
must convert in order to maintain the Class A Interest Holders' ownership
percentage at 16.5681 (i.e., as if the issuance were done at the Conversion
Price prior to the issuance (or PCP) given the new Dilutive Security
issuance at $19.50 per common share. To solve for C*, the following
calculations must be made:
-3-
# OF COMMON EQUIVALENT
SHARES
Share Capitalization, post New 10,166,667
Dilutive Security Issuance as
issued at $19.50 per share and
unadjusted
- (C) (1,666,667)
= Share Capitalization less 8,500,000
Class A Interest/(100% - ---------
16.5681) or 100% less .834319
ownership percentage holders
of Class A Interest are to
maintain
= Total Share Capitalization 10,187,950
Requires for Class A Interest
to maintain ownership
percentage at 16.5681%
x Requires ownership 16.5681%
percentage pursuant to above
=C* 1,687,950
GIVEN C*, ONE SOLVES FOR ACP AS FOLLOWS:
----------------------------------------
PRICE
CONVERSION ADJUSTMENT FORMULA
PRICE OR PCP
--------------- ----- ----------------------------------------------------
$21.00 X (5,900,000+1,100,000+1,666,667)+($29,250,000/21)
--------------------------------------------------
(5,900,000+1,100,000+1,687,950)+($29,250,000/19.50)=
$21.00 X 98.7394% =
$20.74 = ACP
-4-
PROOF OF CALCULATION:
--------------------
POST-NEW DILUTIVE SECURITY ISSUANCE AS
ISSUED AT $19.50 PER SHARE AND AS
ADJUSTED
# of Shares %
-------------------- ---------------- ---------------
Share Capitalization 5,900,000 57.9115
of HP Shares (A)
Partnership Units (B) 1,100,000 10.7971
Class A Interest 1,687,950 16.5681
Equivalent Shares
(C*/C)
New Dilutive Security 1,500,000 14.7233
Shares (EX*/EX)
TOTAL 10,187,950 100.00%
NOTE: Some of the numbers included in this Exhibit C are not the actual
numbers and are included for illustration purposes only.
-5-
SCHEDULE A
[From Home Properties]
SCHEDULE B
LIMITED PARTNER DEFICIT RESTORATION SCHEDULE
Name of Limited Partner Amount of Deficit Restoration Obligation
----------------------- ----------------------------------------
