Exhibit 4.1
AGREEMENT OF LIMITED PARTNERSHIP
OF
THE XXXXXXX MASTER LIMITED PARTNERSHIP
TABLE OF CONTENTS
Page
----
ARTICLE I DEFINED TERMS................................................2
ARTICLE II ORGANIZATIONAL MATTERS.......................................9
Section 2.1 Organization.................................................9
Section 2.2 Name.........................................................9
Section 2.3 Registered Office and Agent; Principal Office................9
Section 2.4 Term........................................................10
Section 2.5 Power of Attorney...........................................10
ARTICLE III PURPOSE.....................................................11
Section 3.1 Purpose and Business........................................11
Section 3.2 Powers......................................................11
Section 3.3 Partnership Only for Purposes Specified.....................11
ARTICLE IV CAPITAL CONTRIBUTIONS AND ISSUANCES OF
UNITS.......................................................12
Section 4.1 Capital Accounts and Capital Contributions of the Partners..12
Section 4.2 Additional Issuances of Units...............................12
Section 4.3 No Preemptive Rights........................................13
Section 4.4 Other Contribution Provisions...............................13
Section 4.5 No Interest on Capital......................................13
ARTICLE V DISTRIBUTIONS...............................................14
Section 5.1 Requirement and Characterization of Distributions...........14
Section 5.2 Amounts Withheld............................................14
Section 5.3 Distributions Upon Liquidation..............................14
Section 5.4 Revisions to Reflect Issuance of Additional Units...........14
ARTICLE VI ALLOCATIONS.................................................14
Section 6.1 Allocations For Capital Account Purposes....................14
Section 6.2 Revisions to Allocations to Reflect Issuance of
Additional Units..........................................15
ARTICLE VII MANAGEMENT AND OPERATIONS OF BUSINESS.......................15
Section 7.1 Management..................................................15
Section 7.2 Certificate of Limited Partnership..........................19
Section 7.3 Title to Partnership Assets.................................20
Section 7.4 Partnership Expenses........................................20
Section 7.5 Outside Activities of the General Partner...................20
Section 7.6 Transactions with Affiliates................................20
Section 7.7 Indemnification.............................................21
Section 7.8 Liability of the General Partner............................23
Section 7.9 Other Matters Concerning the General Partner................23
Section 7.10 REIT Restrictions...........................................24
Section 7.11 Reliance by Third Parties...................................24
(i)
TABLE OF CONTENTS
Page
----
ARTICLE VIII RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS..................25
Section 8.1 Limitation of Liability.....................................25
Section 8.2 Management of Business......................................25
Section 8.3 [Intentionally Left Blank]..................................25
Section 8.4 Outside Activities of Limited Partners......................25
Section 8.5 Return of Capital...........................................25
Section 8.6 Rights of Limited Partners Relating to the Partnership......26
ARTICLE IX BOOKS, RECORDS, ACCOUNTING AND REPORTS......................26
Section 9.1 Records and Accounting......................................26
Section 9.2 Fiscal Year.................................................27
Section 9.3 Reports.....................................................27
ARTICLE X TAX MATTERS.................................................27
Section 10.1 Preparation of Tax Returns..................................27
Section 10.2 Tax Elections...............................................27
Section 10.3 Tax Matters Partner.........................................27
Section 10.4 Withholding.................................................28
ARTICLE XI TRANSFERS AND WITHDRAWALS...................................29
Section 11.1 Transfer....................................................29
Section 11.2 Limited Partners' Rights to Transfer........................30
Section 11.3 Substituted Limited Partners................................31
Section 11.4 General Provisions..........................................31
ARTICLE XII WITHDRAWAL OR REMOVAL OF GENERAL PARTNER;
ADMISSION OF PARTNERS.......................................32
Section 12.1 Withdrawal of the General Partner...........................32
Section 12.2 Removal of General Partner..................................32
Section 12.3 Amendment of Agreement and Certificate of
Limited Partnership.......................................33
Section 12.4 Admission of Successor General Partner......................33
Section 12.5 Admission of Additional Limited Partners....................33
Section 12.6 Amendment of Agreement and Certificate of
Limited Partnership.......................................34
ARTICLE XIII DISSOLUTION AND LIQUIDATION.................................34
Section 13.1 Dissolution.................................................34
Section 13.2 Winding Up..................................................35
Section 13.3 Compliance with Timing Requirements of Regulations..........36
Section 13.4 Rights of Limited Partners..................................36
Section 13.5 Notice of Dissolution.......................................36
Section 13.6 Cancellation of Certificate of Limited Partnership..........37
Section 13.7 Reasonable Time for Winding Up..............................37
Section 13.8 Waiver of Partition.........................................37
Section 13.9 Liability of Liquidator.....................................37
(ii)
TABLE OF CONTENTS
Page
----
ARTICLE XIV AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS................37
Section 14.1 Amendments..................................................37
Section 14.2 Meetings of the Partners; Actions Without a Meeting.........38
Section 14.3 Voting Rights...............................................39
ARTICLE XV GENERAL PROVISIONS..........................................40
Section 15.1 Addresses and Notices.......................................40
Section 15.2 Titles and Captions.........................................41
Section 15.3 Pronouns and Plurals........................................41
Section 15.4 Further Action..............................................41
Section 15.5 Binding Effect..............................................41
Section 15.6 Creditors; Other Third Parties..............................41
Section 15.7 Waiver......................................................41
Section 15.8 Counterparts................................................42
Section 15.9 Applicable Law..............................................42
Section 15.10 Invalidity of Provisions....................................42
Section 15.11 Entire Agreement............................................42
(iii)
AGREEMENT OF LIMITED PARTNERSHIP
OF
THE XXXXXXX MASTER LIMITED PARTNERSHIP
THIS AGREEMENT OF LIMITED PARTNERSHIP OF The Xxxxxxx Master Limited
Partnership (the "Partnership"), dated as of October 23, 2001, is entered into
by and among MLP GP LLC (the "General Partner"), a Delaware limited liability
company, as the general partner of the Partnership, Xxxxxxx Manager Corp., as
the organizational limited partner (the "Organizational Limited Partner") and
all other persons and entities who shall, pursuant to the Exchange (as defined
below) or otherwise become limited partners of the Partnership in accordance
with the provisions hereof (the "Limited Partners").
RECITALS
WHEREAS, the General Partner and Organizational Limited Partner have
formed the Partnership pursuant to the laws of the State of Delaware;
WHEREAS, the Partnership was formed to facilitate the series of
transactions (collectively, the "Exchange") whereby, as described in a Consent
Solicitation Statement/Offering Circular of, among other things, the Merger
Partnerships (as defined below) and the Partnership, dated October 23, 2001 (the
"Consent Solicitation Statement"), among other things, (i) certain limited
partnerships (the "Merger Partnerships") that are managed by the Xxxxxxx Group
will be merged into separate newly-formed limited partnerships that are
wholly-owned by the Partnership, (ii) certain entities that are part of the
Xxxxxxx Group (as defined below) (the "Contributing Entities") will contribute
certain assets or entities that own certain assets relating to the management or
capital structure of the Merger Partnerships and other limited partnerships
which are managed by the Xxxxxxx Group (the "Contributed Xxxxxxx Assets") to the
Partnership or subsidiaries of the Partnership, and (iii) limited partners in
non-Participating Partnerships (as defined below) who are Accredited Investors
and who vote to approve the Exchange ("Electing Investors") will contribute
their limited partnership interests to the Partnership; and
WHEREAS, as part of the Exchange, partners in the Merger
Partnerships and Electing Investors will receive units of limited partnership
interest in the Partnership in exchange for their partnership interests in the
Merger Partnerships and Non-Participating Partnerships, respectively, and the
Contributing Entities will receive units of limited partnership interest in the
Partnership in exchange for the Contributed Xxxxxxx Assets.
NOW, THEREFORE, in consideration of the mutual covenants set forth
herein, and for other good and valuable consideration, the parties hereby agree
as follows:
ARTICLE I
DEFINED TERMS
The following definitions shall be for all purposes, unless
otherwise clearly indicated to the contrary, applied to the terms used in this
Agreement.
"Act" means the Delaware Revised Uniform Limited Partnership Act, as
it may be amended from time to time, and any successor to such statute.
"Accredited Investor" has the meaning set forth in Regulation D
under the Securities Act of 1933, as amended, which generally provides that
(with respect to individuals) a person is an accredited investor if such person
(i) has a net worth (or joint net worth with such person's spouse) in excess of
$1,000,000 or (ii) had an individual income in excess of $200,000 in each of the
two most recent years or joint income with the person's spouse in excess of
$300,000 in each of those years and has a reasonable expectation of reaching the
same income level in the current year.
"Additional Limited Partner" means a Person admitted to the
Partnership as a Limited Partner pursuant to Sections 4.2 and 12.5 hereof and
who is shown as such on the books and records of the Partnership.
"Adjusted Capital Account" means the Capital Account maintained for
each Partner as of the end of each Partnership taxable year (i) increased by any
amounts which such Partner is obligated to restore pursuant to any provision of
this Agreement or is deemed to be obligated to restore pursuant to the
penultimate sentences of Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5);
and (ii) decreased by the items described in Regulations Sections 1.704-
1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5), and 1.704-1(b)(2)(ii)(d)(6). The
foregoing definition of Adjusted Capital Account is intended to comply with the
provisions of Regulations Section 1.704-1(b)(2)(ii)(d) and shall be interpreted
consistently therewith.
"Adjusted Capital Account Deficit" means, with respect to any
Partner, the deficit balance, if any, in such Partner's Adjusted Capital Account
as of the end of the relevant Partnership taxable year.
"Adjusted Property" means any property the Carrying Value of which
has been adjusted pursuant to Exhibit B hereof.
"Affiliate" means, with respect to any Person, (i) any Person
directly or indirectly controlling, controlled by or under common control with
such Person; (ii) any Person owning or controlling ten percent (10%) or more of
the outstanding voting interests of such Person; (iii) any Person of which such
Person owns or controls ten percent (10%) or more of the voting interests; or
(iv) any officer, director, general partner or trustee of such Person or of any
Person referred to in clauses (i), (ii), and (iii) above. For purposes of this
definition, "control," when used with respect to any Person, means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise,
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
2
"Agreed Value" means (i) in the case of any Contributed Property as
of the time of its contribution to the Partnership, the 704(c) Value of such
property, (ii) in the case of any Adjusted Property, its fair market value (as
determined under Exhibit B hereto) on the date of adjustment and (iii) in the
case of any property distributed to a Partner by the Partnership, the
Partnership's Carrying Value of such property at the time such property is
distributed, reduced by any indebtedness either assumed by such Partner upon
such distribution or to which such property is subject at the time of
distribution as determined under Section 752 of the Code and the Regulations
thereunder.
"Agreement" means this Agreement of Limited Partnership, as it may
be amended, supplemented or restated from time to time.
"Book-Tax Disparities" means, with respect to any item of
Contributed Property or Adjusted Property, as of the date of any determination,
the difference between the Carrying Value of such Contributed Property or
Adjusted Property and the adjusted basis thereof for federal income tax purposes
as of such date. A Partner's share of the Partnership's Book-Tax Disparities in
all of its Contributed Property and Adjusted Property will be reflected by the
difference between such Partner's Capital Account balance as maintained pursuant
to Exhibit B and the hypothetical balance of such Partner's Capital Account
computed as if it had been maintained strictly in accordance with federal income
tax accounting principles.
"Business Day" means any day except a Saturday, Sunday or other day
on which commercial banks in New York, New York are authorized or required by
law or executive order to close.
"Capital Account" means the Capital Account maintained for a Partner
pursuant to Exhibit B hereof.
"Capital Contribution" means, with respect to any Partner, any cash,
cash equivalents or the Agreed Value of Contributed Property which such Partner
contributes to the Partnership pursuant to Section 4.1 or 4.2 hereof.
"Carrying Value" means (i) with respect to a Contributed Property or
an Adjusted Property, the Agreed Value of such property, reduced in either case
(but not below zero) by all Depreciation with respect to such Contributed
Property or Adjusted Property, as the case may be, charged to the Partners'
Capital Accounts following the contribution of or adjustment with respect to
such property, and (ii) with respect to any other Partnership property, the
adjusted basis of such property for federal income tax purposes, all as of the
time of determination. The Carrying Value of any property shall be adjusted from
time to time in accordance with Exhibit B hereof, and to reflect changes,
additions or other adjustments to the Carrying Value for dispositions and
acquisitions of Partnership properties, as deemed appropriate by the General
Partner.
"Certificate of Limited Partnership" means the Certificate of
Limited Partnership relating to the Partnership filed in the office of the
Delaware Secretary of State, as amended from time to time in accordance with the
terms hereof and the Act.
3
"Code" means the Internal Revenue Code of 1986, as amended and in
effect from time to time, as interpreted by the applicable regulations
thereunder. Any reference herein to a specific section or sections of the Code
shall be deemed to include a reference to any corresponding provision of future
law.
"Consent Solicitation Statement" has the meaning set forth in the
Recitals hereof.
"Contributed Xxxxxxx Assets" has the meaning set forth in the
Recitals.
"Contributed Property" means each property or other asset, in such
form as may be permitted by the Act (but excluding cash), contributed to the
Partnership, including all non-cash property acquired by the Partnership in the
Exchange. Once the Carrying Value of a Contributed Property is adjusted pursuant
to Exhibit B hereof, such property shall no longer constitute a Contributed
Property for purposes of Exhibit B hereof, but shall be deemed an Adjusted
Property for such purposes.
"Depreciation" means, for each taxable year, an amount equal to the
federal income tax depreciation, amortization, or other cost recovery deduction
allowable with respect to an asset for such year, except that if the Carrying
Value of an asset differs from its adjusted basis for federal income tax
purposes at the beginning of such year or other period, Depreciation shall be an
amount which bears the same ratio to such beginning Carrying Value as the
federal income tax depreciation, amortization, or other cost recovery deduction
for such year bears to such beginning adjusted tax basis; provided, however,
that if the federal income tax depreciation, amortization, or other cost
recovery deduction with respect to such asset for such year is zero,
Depreciation shall be determined with reference to such beginning Carrying Value
using any reasonable method selected by the General Partner.
"Disregarded Entity" means a limited liability company or other
unincorporated entity which is wholly owned by the General Partner and whose
existence is disregarded for federal income tax purposes under Treasury
Regulation Section 1.7701-3.
"Effective Time" means 12:01 a.m. on January 1, 2002.
"Electing Investors" has the meaning set forth in the Recitals
hereto.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended.
"Exchange" has the meaning set forth in the Recitals hereto.
"Exchange Value" means the value assigned to each Merger Partnership
or Contributed Asset in the Exchange.
"General Partner" means MLP GP LLC, in its capacity as the general
partner of the Partnership, or its successors as general partner of the
Partnership.
"Immediate Family" means, with respect to any natural Person, such
natural Person's estate or heirs or current spouse, parents, parents-in-law,
children, siblings and grandchildren (in each case whether by adoption or not)
and any trust or estate, all of the beneficiaries of which consist of such
Person or such Person's spouse, parents, parents-in-law, children, siblings or
grandchildren.
4
"Incapacity" or "Incapacitated" means, (i) as to any individual
Partner, death, total physical disability or entry by a court of competent
jurisdiction of an order adjudicating him or her incompetent to manage his or
her Person or estate; (ii) as to any corporation which is a Partner, the filing
of a certificate of dissolution, or its equivalent, for the corporation or the
revocation of its charter; (iii) as to any partnership or limited liability
company which is a Partner, the dissolution and commencement of winding up of
the partnership or limited liability company; (iv) as to any estate which is a
Partner, the distribution by the fiduciary of the estate's entire interest in
the Partnership; (v) as to any trustee of a trust which is a Partner, the
termination of the trust (but not the substitution of a new trustee); or (vi) as
to any Partner, the bankruptcy of such Partner. For purposes of this definition,
bankruptcy of a Partner shall be deemed to have occurred when (a) the Partner
commences a voluntary proceeding seeking liquidation, reorganization or other
relief under any bankruptcy, insolvency or other similar law now or hereafter in
effect; (b) the Partner is adjudged as bankrupt or insolvent, or a final and
nonappealable order for relief under any bankruptcy, insolvency or similar law
now or hereafter in effect has been entered against the Partner; (c) the Partner
executes and delivers a general assignment for the benefit of the Partner's
creditors; (d) the Partner files an answer or other pleading admitting or
failing to contest the material allegations of a petition filed against the
Partner in any proceeding of the nature described in clause (b) above; (e) the
Partner seeks, consents to or acquiesces in the appointment of a trustee,
receiver or liquidator for the Partner or for all or any substantial part of the
Partner's properties; (f) any proceeding seeking liquidation, reorganization or
other relief of or against such Partner under any bankruptcy, insolvency or
other similar law now or hereafter in effect has not been dismissed within one
hundred twenty (120) days after the commencement thereof; (g) the appointment
without the Partner's consent or acquiescence of a trustee, receiver or
liquidator has not been vacated or stayed within ninety (90) days of such
appointment; or (h) an appointment referred to in clause (g) which has been
stayed is not vacated within ninety (90) days after the expiration of any such
stay.
"Indemnitee" means (i) any Person made a party to a proceeding by
reason of (A) his or its status as the General Partner or the Manager, or as a
director, officer, shareholder or member of the Partnership, the General Partner
or the Manager, (B) his or its status as the general partner of a Merger
Partnership, or as a director, officer, shareholder or member of a Merger
Partnership or of the general partner of a Merger Partnership or (C) his or its
liabilities, pursuant to a loan guarantee or otherwise, for any indebtedness of
the Partnership or any Subsidiary of the Partnership (including, without
limitation, any indebtedness which the Partnership or any Subsidiary of the
Partnership has assumed or taken assets subject to); and (ii) such other Persons
(including Affiliates of the General Partner or the Partnership) as the General
Partner may designate from time to time (whether before or after the event
giving rise to potential liability), in its sole and absolute discretion.
"IRS" means the Internal Revenue Service, which administers the
internal revenue laws of the United States.
5
"Limited Partner" means any Person named as a Limited Partner in
Exhibit A attached hereto, as such Exhibit may be amended from time to time, or
any Substituted Limited Partner or Additional Limited Partner, in such Person's
capacity as a Limited Partner of the Partnership.
"Liquidating Event" has the meaning set forth in Section 13.1.
"Liquidator" has the meaning set forth in Section 13.2.
"Manager" shall mean the manager of the General Partner.
"Merger Partnerships" has the meaning set forth in the Recitals
hereof.
"Net Income" means, for any taxable period, the excess, if any, of
the Partnership's items of income and gain for such taxable period over the
Partnership's items of loss and deduction for such taxable period. The items
included in the calculation of Net Income shall be determined in accordance with
federal income tax accounting principles, subject to the specific adjustments
provided for in Exhibit B.
"Net Loss" means, for any taxable period, the excess, if any, of the
Partnership's items of loss and deduction for such taxable period over the
Partnership's items of income and gain for such taxable period. The items
included in the calculation of Net Loss shall be determined in accordance with
federal income tax accounting principles, subject to the specific adjustments
provided for in Exhibit B.
"Xxxxxxx Associates Agreement" means the agreement, dated as of July
8, 1998, among Apollo Real Estate Investment Fund III, L.P., WEM-Brynmawr
Associates LLC, Xxxxxxx XX Holdings LLC, Xxxxxxx RE Holdings LLC, Vornado
Xxxxxxx L.L.C. and Vornado Realty L.P.
"Xxxxxxx Group" means affiliates of each of Apollo Real Estate Fund
III, L.P., Vornado Realty Trust and senior executives of Winthrop Financial
Associates, A Limited Partnership.
"Non-Participating Partnerships" means those partnerships whose
consent to the Exchange was sought pursuant to the Consent Solicitation
Statement that did not obtain the requisite consent of their limited partners to
participate in the Exchange.
"Nonrecourse Built-in Gain" means, with respect to any Contributed
Properties that are subject to a Nonrecourse Liability, the amount of taxable
gain that would be allocated to the contributing Partners pursuant to Section
2.B(1)(a) of Exhibit C if such properties were disposed of in a taxable
transaction for their 704(c) Value and for no other consideration.
"Nonrecourse Deductions" has the meaning set forth in Regulations
Section 1.704-2(b)(1), and the amount of Nonrecourse Deductions for a
Partnership taxable year shall be determined in accordance with the rules of
Regulations Section 1.704-2(c).
6
"Nonrecourse Liability" has the meaning set forth in Regulations
Section 1.752-1(a)(2).
"Organizational Limited Partner" means Xxxxxxx Manager Corp.
"Partner" means a General Partner or a Limited Partner, and
"Partners" means the General Partner and the Limited Partners collectively.
"Partner Minimum Gain" means an amount, with respect to each Partner
Nonrecourse Debt, equal to the Partnership Minimum Gain that would result if
such Partner Nonrecourse Debt were treated as a Nonrecourse Liability,
determined in accordance with Regulations Section 1.704-2(i)(3).
"Partner Nonrecourse Debt" has the meaning set forth in Regulations
Section 1.704-2(b)(4).
"Partner Nonrecourse Deductions" has the meaning set forth in
Regulations Section 1.704-2(i)(2), and the amount of Partner Nonrecourse
Deductions with respect to a Partner Nonrecourse Debt for a Partnership taxable
year shall be determined in accordance with the rules of Regulations Section
1.704-2(i)(2).
"Partnership" means the limited partnership formed under the Act and
pursuant to this Agreement and the Certificate of Limited Partnership, as the
same may be amended and/or restated, and any successor thereto.
"Partnership Minimum Gain" has the meaning set forth in Regulations
Section 1.704-2(b)(2), and the amount of Partnership Minimum Gain, as well as
any net increase or decrease in a Partnership Minimum Gain, for a Partnership
taxable year shall be determined in accordance with the rules of Regulations
Section 1.704-2(d).
"Partnership Record Date" means the record date established by the
General Partner either (i) for a distribution pursuant to Section 5.1 hereof or
(ii) if applicable for determining the Partners entitled to vote or consent to
any proposed action for which the consent or approval of the Partners is sought
pursuant to Section 14.2 hereto.
"Partnership Year" means the fiscal year of the Partnership, which
shall be the calendar year.
"Percentage Interest" means, as to a Limited Partner, its interest
in the Partnership as determined by dividing the Units owned by such Limited
Partner by the total number of Units then outstanding and as specified in
Exhibit A attached hereto, as such Exhibit may be amended from time to time, and
as to the General Partner is zero.
"Person" means an individual or a corporation, partnership, trust,
unincorporated organization, association or other entity.
7
"Publicly Traded" means listed or admitted to trading on the New
York Stock Exchange, the American Stock Exchange or another national securities
exchange or designated for quotation on the NASDAQ National Market, or any
successor to any of the foregoing.
"Recapture Income" means any gain recognized by the Partnership upon
the disposition of any property or asset of the Partnership that is
characterized as ordinary income (because it represents the recapture of
deductions previously taken with respect to such property or asset) or as gain
subject to a 25% tax rate under the Code (because it is attributable to
straight-line depreciation deductions previously taken with respect to such
property or asset).
"Regulations" means the Income Tax Regulations promulgated under the
Code, as such regulations may be amended from time to time (including
corresponding provisions of succeeding regulations).
"Residual Gain" or "Residual Loss" means any item of gain or loss,
as the case may be, of the Partnership recognized for federal income tax
purposes resulting from a sale, exchange or other disposition of Contributed
Property or Adjusted Property, to the extent such item of gain or loss is not
allocated pursuant to Section 2.B.1(a) or 2.B.2(a) of Exhibit C to eliminate
Book-Tax Disparities.
"Sale or Disposition" means any of the following transactions:
sales, exchanges or other dispositions of real or personal property,
condemnations or any recovery or damage awards, and insurance proceeds (other
than business or rental interruption insurance proceeds).
"704(c) Value" of any Contributed Property means (1) in the case of
all Contributed Property acquired by the Partnership in the Exchange, the gross
value of such property used to determine the number of Units issued in exchange
therefor, and (2) for all other Contributed Property, the fair market value of
such property at the time of contribution, as determined by the General Partner
using such reasonable method of valuation as it may adopt. Subject to Exhibit B
hereof, the General Partner shall, in its sole and absolute discretion, use such
method as it deems reasonable and appropriate to allocate the aggregate of the
704(c) Values of Contributed Properties in a single or integrated transaction
among the separate properties on a basis proportional to their respective fair
market values.
"Subsidiary" means, with respect to any Person, any corporation,
partnership, limited liability company, business trust or other entity of which
a majority of (i) the voting power of the voting equity securities or (ii) the
outstanding equity interests, is owned, directly or indirectly, by such Person.
"Substituted Limited Partner" means a Person who is admitted as a
Limited Partner to the Partnership pursuant to Section 11.3.
"Terminating Capital Transaction" means any Sale or Disposition of
all or substantially all of the assets of the Partnership (directly or
indirectly) or a related series of such transactions that, taken together,
result in the Sale or Disposition of all or substantially all of the assets of
the Partnership.
8
"Unit" means a unit of limited partnership interest in the
Partnership issued pursuant to Sections 4.1 or 4.2. The number of Units
outstanding and the Percentage Interest in the Partnership represented by such
Units are set forth in Exhibit A attached hereto, as such Exhibit may be amended
from time to time. The Units shall be uncertificated securities unless the
General Partner determines that the Units shall be evidenced by certificates.
"Unrealized Gain" attributable to any item of Partnership property
means, as of any date of determination, the excess, if any, of (i) the fair
market value of such property (as determined under Exhibit B hereof) as of such
date over (ii) the Carrying Value of such property (prior to any adjustment to
be made pursuant to Exhibit B hereof) as of such date.
"Unrealized Loss" attributable to any item of Partnership property
means, as of any date of determination, the excess, if any, of (i) the Carrying
Value of such property (prior to any adjustment to be made pursuant to Exhibit B
hereof) as of such date over (ii) the fair market value of such property (as
determined under Exhibit B hereof) as of such date.
ARTICLE II
ORGANIZATIONAL MATTERS
Section 2.1 Organization
The Partnership is a limited partnership organized pursuant to the
provisions of the Act. Except as expressly provided herein to the contrary, the
rights and obligations of the Partners and the administration and termination of
the Partnership shall be governed by the Act. The Units shall be personal
property for all purposes.
Section 2.2 Name
The name of the Partnership is The Xxxxxxx Master Limited
Partnership. The Partnership's business may be conducted under any other name or
names deemed advisable by the General Partner, including the name of the General
Partner or any of its Affiliates. The words "Limited Partnership," "L.P.,"
"Ltd." or similar words or letters shall be included in the Partnership's name
where necessary for the purposes of complying with the laws of any jurisdiction
that so requires. The General Partner in its sole and absolute discretion may
change the name of the Partnership at any time and from time to time and shall
notify the Limited Partners of such change in the next regular communication to
the Limited Partners.
Section 2.3 Registered Office and Agent; Principal Office
The address of the registered office of the Partnership in the State
of Delaware shall be located at Corporation Service Company, 0000 Xxxxxxxxxxx
Xxxx, Xxxxx 000, Xxxxxxxxxx, Xxxxxx of Xxx Xxxxxx, Xxxxxxxx 00000, and the
registered agent for service of process on the Partnership in the State of
Delaware at such registered office shall be Corporation Service Company. The
principal office of the Partnership shall be 0 Xxxxxxxx Xxxxx, Xxxxx 000,
Xxxxxx, Xxxxxxxxxxxxx 00000 or such other place as the General Partner may from
time to time designate by notice to the Limited Partners. The Partnership may
maintain offices at such other place or places within or outside the State of
Delaware as the General Partner deems advisable.
9
Section 2.4 Term
The term of the Partnership commenced on the date on which the
Certificate of Limited Partnership was filed in the office of the Secretary of
State of the State of Delaware in accordance with the Act, and shall continue in
perpetuity, unless it is dissolved pursuant to the provisions of Article XIII
hereof or as otherwise provided by law.
Section 2.5 Power of Attorney
A. Each Limited Partner hereby constitutes and appoints the General
Partner, any Liquidator, and authorized officers and attorneys-in- fact of each,
and each of those acting singly, in each case with full power of substitution,
as its true and lawful agent and attorney-in-fact, with full power and authority
in its name, place and stead to:
i. execute, swear to, 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 of Limited Partnership and all amendments or restatements
thereof) that the General Partner or the Liquidator deems appropriate or
necessary to form, qualify or continue the existence or qualification of
the Partnership as a limited partnership (or a partnership in which the
Limited Partners have limited liability) in the State of Delaware and in
all other jurisdictions in which the Partnership may or plans to 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 or the Liquidator deems appropriate or necessary to
reflect the dissolution and liquidation of the Partnership pursuant to the
terms of this Agreement, including, without limitation, a certificate of
cancellation; (d) all instruments relating to the admission, withdrawal,
removal or substitution of any Partner pursuant to, or other events
described in, Article XI, XII or XIII hereof or relating to the Capital
Contribution of any Partner; and (e) all certificates, documents and other
instruments relating to the determination of the rights, preferences and
privileges of Units; and
ii. execute, swear to, seal, acknowledge and file all ballots,
consents, approvals, waivers, certificates and other instruments
appropriate or necessary, in the sole and absolute discretion of the
General Partner or any Liquidator, 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 or any Liquidator, to effectuate the terms or intent of
this Agreement.
Nothing contained herein shall be construed as authorizing the General Partner
or any Liquidator to amend this Agreement except in accordance with Article XIV
hereof or as may be otherwise expressly provided for in this Agreement.
B. The foregoing power of attorney is hereby declared to be
irrevocable and a power coupled with an interest, in recognition of the fact
that each of the Partners will be relying
10
upon the power of the General Partner and any Liquidator to act as contemplated
by this Agreement in any filing or other action by it on behalf of the
Partnership, and it shall survive and not be affected by the subsequent
Incapacity of any Limited Partner and the transfer of all or any portion of such
Limited Partner's Units and shall extend to such Limited Partner's heirs,
successors, assigns and personal representatives. Each such Limited Partner
hereby agrees to be bound by any representation made by the General Partner or
any Liquidator, acting in good faith pursuant to such power of attorney, and
each such Limited Partner hereby waives any and all defenses which may be
available to contest, negate or disaffirm the action of the General Partner or
any Liquidator, taken in good faith under such power of attorney. Each Limited
Partner shall execute and deliver to the General Partner or the Liquidator,
within fifteen (15) days after receipt of the General Partner's or Liquidator's
request therefor, such further designation, powers of attorney and other
instruments as the General Partner or the Liquidator, as the case may be, deems
necessary to effectuate this Agreement and the purposes of the Partnership.
ARTICLE III
PURPOSE
Section 3.1 Purpose and Business
The purpose of the Partnership shall be to (i) facilitate and
consummate the Exchange, (ii) directly or indirectly (whether through a
Subsidiary or otherwise) invest in, acquire, own, hold, manage, operate, sell,
exchange and otherwise dispose of interests in real estate and assets related to
real estate and (iii) to otherwise engage in any lawful act or activity for
which limited partnerships may be formed under the laws of the State of Delaware
and to conduct such activities and transactions as the General Partner deems
necessary or advisable to promote the business of the Partnership.
Section 3.2 Powers
The Partnership shall have full power and authority to do any and
all acts and things necessary, appropriate, proper, advisable, incidental to or
convenient for the furtherance and accomplishment of the purposes and business
described herein and for the protection and benefit of the Partnership,
including, without limitation, directly or through its ownership interest in
other entities, to enter into, perform and carry out contracts of any kind,
borrow money and issue evidences of indebtedness whether or not secured by
mortgage, deed of trust, pledge or other lien, acquire, own, manage, improve and
develop real property and other real estate-related assets, and lease, sell,
transfer and dispose of real property and other real estate-related assets.
Section 3.3 Partnership Only for Purposes Specified
The Partnership shall be a partnership only for the purposes
specified in Section 3.1 above, and this Agreement shall not be deemed to create
a partnership among the Partners with respect to any activities whatsoever other
than the activities within the purposes of the Partnership as specified in
Section 3.1 above.
11
ARTICLE IV
CAPITAL CONTRIBUTIONS AND ISSUANCES
OF UNITS
Section 4.1 Capital Accounts and Capital Contributions of the Partners
A. Capital Contribution of Organizational Limited Partner. Upon the
formation of the Partnership, the Organizational Limited Partner made a Capital
Contribution in the amount of One-Hundred Dollars ($100) in cash. Concurrently
with the effective time of the Exchange, the Capital Contribution of the
Organizational Limited Partner shall be returned, without interest, the
Organizational Limited Partner shall withdraw from the Partnership, and the
Organizational Limited Partner, as such, shall have no further rights, claims or
interests as a Partner in and to the Partnership.
B. Initial Capital Contributions. At the Effective Time each
Accredited Investor that was a Partner in a Merger Partnership or was an
Electing Investor immediately prior to the Exchange, and each Contributing
Entity, respectively, will be deemed to have made a Capital Contribution equal
to $100 multiplied by the number of Units issued to such Person in the Exchange.
C. Capital Accounts. Capital Accounts shall be maintained for each
Partner pursuant to Exhibit B hereof. On the Effective Date, the Capital Account
balances of each Limited Partner shall equal the amount of Capital Contribution
deemed made by such Limited Partner on the Effective Date in accordance with
Section 4.1.B hereof.
D. No Obligation of General Partner to Contribute. The General
Partner as such shall be under no obligation to make any Capital Contributions
and shall have no Capital Account. Nothing contained herein shall in any way
restrict the General Partner or any of its Affiliates from owning Units or any
other securities in the Partnership.
E. No Obligation to Make Additional Capital Contributions. Except as
provided in Section 10.4 hereof or elsewhere in this Agreement, the Partners
shall have no obligation to make any additional Capital Contributions or provide
any additional funding to the Partnership (whether in the form of loans,
repayments of loans or otherwise). No Partner shall have any obligation to
restore any deficit that may exist in its Capital Account, either upon a
liquidation of the Partnership or otherwise.
Section 4.2 Additional Issuances of Units
The General Partner is hereby authorized to cause the Partnership
from time to time to issue to the Partners or other Persons (including, without
limitation, in connection with the contribution of property to the Partnership
or a Subsidiary or the exercise of any conversion or exchange rights granted by
the Partnership) additional Units in one or more classes, or one or more series
of any of such classes, with such designations, preferences and relative,
participating, optional or other special rights, powers and duties, including
rights, powers and duties senior to any then outstanding Units issued on the
Effective Date, all as shall be determined by the General Partner in its sole
and absolute discretion subject to Delaware law, including, without limitation,
(i) the allocations of items of Partnership income, gain, loss,
12
deduction and credit to each such class or series of Units; (ii) the right of
each such class or series of Units to share in Partnership distributions; (iii)
the rights of each such class or series of Units upon dissolution and
liquidation of the Partnership; (iv) whether such class of Units is redeemable
by the Partnership and, if so, the price at, and the terms and conditions on,
which such class of Units may be redeemed by the Partnership; (v) whether such
class of Units is issued with the privilege of conversion and, if so, the rate
at and the terms and conditions upon which such class of Units may be converted
into any other class of Units; (vi) the terms and conditions of the issuance of
such class of Units, and all other matters relating to the assignment thereof;
and (vii) the rights of such class of Units to vote on matters relating to the
Partnership and this Agreement. In the event that the Partnership issues Units
pursuant to this Section 4.2, the General Partner shall make such revisions to
this Agreement (without any requirement of receiving approval of the Limited
Partners) including but not limited to the revisions described in Section 5.4
and Section 6.2 hereof, as it deems necessary to reflect the issuance of such
additional Units and the special rights, powers and duties associated therewith.
Unless specifically set forth otherwise by the General Partner, any Units issued
after the Effective Date shall have the same rights, powers and duties as the
Units issued on the Effective Date. The General Partner is also authorized to
cause the issuance of any other type of security of the Partnership from time to
time to Partners or other Persons on terms and conditions established in the
sole and absolute discretion of the General Partner. Such securities may
include, without limitation, unsecured and secured debt obligations of the
Partnership, debt obligations of the Partnership convertible into any class of
Units that may be issued by the Partnership, options, rights or warrants to
purchase any such class of Units or any combination of any of the foregoing.
Section 4.3 No Preemptive Rights
Except to the extent expressly granted by the General Partner (on
behalf of the Partnership) pursuant to another agreement, no Person shall have
any preemptive, preferential or other similar right with respect to (i)
additional Capital Contributions or loans to the Partnership or (ii) issuance or
sale of any Units.
Section 4.4 Other Contribution Provisions
In the event that any Partner is admitted to the Partnership and is
given a Capital Account in exchange for services rendered to the Partnership,
such transaction shall be treated by the Partnership and the affected Partner as
if the Partnership had compensated such Partner in cash for the fair market
value of such services, and the Partner had contributed such cash to the capital
of the Partnership.
Section 4.5 No Interest on Capital
No Partner shall be entitled to interest on its Capital
Contributions or its Capital Account.
13
ARTICLE V
DISTRIBUTIONS
Section 5.1 Requirement and Characterization of Distributions
The General Partner shall have the exclusive right and authority to
declare and cause the Partnership to make distributions as and when and in such
amounts as the General Partner deems appropriate or desirable in its sole
discretion. Except as otherwise provided in Section 13.2 or in an agreement at
the time a new class of Units is created in accordance with Article IV hereof,
no Units shall be entitled to a distribution in preference to any other Units
and all distributions shall be made to Persons who are Partners at the close of
business on the Partnership Record Date in accordance with their respective
Percentage Interests at the close of business on such Partnership Record Date.
Section 5.2 Amounts Withheld
All amounts withheld pursuant to Section 10.4 hereof with respect to
any allocation, payment or distribution to the Limited Partners shall be treated
as amounts distributed to Limited Partners pursuant to Section 5.1 above for all
purposes under this Agreement.
Section 5.3 Distributions Upon Liquidation
Proceeds from a Terminating Capital Transaction and any other cash
received or reductions in reserves made after commencement of the liquidation of
the Partnership shall be distributed to the Limited Partners in accordance with
Section 13.2.
Section 5.4 Revisions to Reflect Issuance of Additional Units
In the event that the Partnership issues additional Units pursuant
to Article IV hereof, the General Partner shall make such revisions to this
Article V as it deems necessary to reflect the issuance of such additional
Units.
ARTICLE VI
ALLOCATIONS
Section 6.1 Allocations For Capital Account Purposes
For purposes of maintaining the Capital Accounts and in determining
the rights of the Partners among themselves, the Partnership's items of income,
gain, loss and deduction (computed in accordance with Exhibit B hereto) shall be
allocated among the Partners in each taxable year (or portion thereof) as
provided below.
A. Net Income. After giving effect to the special allocations set
forth in Section 1 of Exhibit C hereto, Net Income shall be allocated (i) first,
to each Partner to the extent that Net Losses previously allocated to such
Partner pursuant to the proviso of Section 6.1.B exceed Net Income previously
allocated to such Partner pursuant to this clause (i) of Section 6.1.A, and (ii)
thereafter, to the Partners in accordance with their respective Percentage
Interests.
14
B. Net Losses. After giving effect to the special allocations set
forth in Section 1 of Exhibit C hereto, Net Losses shall be allocated to the
Partners in proportion to their Percentage Interests, provided that Net Losses
shall not be allocated to any Partner pursuant to this Section 6.1.B to the
extent that such allocation would cause such Partner to have an Adjusted Capital
Account Deficit (or to increase an existing Adjusted Capital Account Deficit) at
the end of such taxable year (or portion thereof), and shall instead be
allocated to the other Partners, pro rata to their Unit ownership, subject to
the same limitation.
C. Allocation of Nonrecourse Debt. The Partners agree that
Nonrecourse Liabilities of the Partnership in excess of the amount of
Partnership Minimum Gain relating thereto shall be allocated first, to each
Partner with a share of Nonrecourse Built-in Gain, up to the amount thereof, and
then among the Partners in accordance with their respective Percentage
Interests.
D. Recapture Income. Any gain allocated to the Partners upon a Sale
or Disposition of any Partnership property shall, to the extent possible, after
taking into account other required allocations of gain pursuant to Exhibit C, be
characterized as Recapture Income in the same proportions and to the same extent
as such Partners have been allocated any deductions directly or indirectly
giving rise to the treatment of such gains as Recapture Income.
Section 6.2 Revisions to Allocations to Reflect Issuance of Additional
Units
In the event that the Partnership issues additional Units pursuant
to Article IV hereof, the General Partner shall make such revisions to this
Article VI as it deems necessary to reflect the terms of the issuance of such
additional Units.
ARTICLE VII
MANAGEMENT AND OPERATIONS OF BUSINESS
Section 7.1 Management
X. Xxxxxx of General Partner. Except as otherwise expressly provided
in this Agreement, all management powers over the business and affairs of the
Partnership are and shall be exclusively vested in the General Partner, and no
Limited Partner shall have any right to participate in or exercise control or
management power over the business and affairs of the Partnership. The General
Partner may be removed by the Limited Partners with or without cause only upon
the affirmative vote or written consent of Limited Partners owning a majority of
the Percentage Interests. In addition to the powers now or hereafter granted a
general partner of a limited partnership under applicable law or which are
granted to the General Partner under any other provision of this Agreement, the
General Partner, subject to Section 7.10 below, shall have full power and
authority to do all things deemed necessary or desirable by it on such terms and
conditions as the General Partner in its sole discretion deems appropriate, to
conduct the business of the Partnership, to exercise all powers set forth in
Section 3.2 hereof and to effectuate the purposes set forth in Section 3.1
hereof, including, without limitation:
15
i. the making of any expenditures, the lending or borrowing of
money, including, without limitation, making prepayments on loans, the
assumption or guarantee of, or other contracting for, indebtedness and
other liabilities, the issuance of evidences of indebtedness (including
the securing of same by mortgage, deed of trust or other lien or
encumbrance on the Partnership's assets) and the incurring of any
obligations it deems necessary or desirable for the conduct of the
activities of the Partnership;
ii. the making of tax, regulatory and other filings, or
rendering of periodic or other reports to governmental or other agencies
having jurisdiction over the business or assets of the Partnership, the
registration of any class of securities of the Partnership under the
Securities Exchange Act of 1934, as amended, and the listing of any debt
securities of the Partnership on any exchange;
iii. subject to Sections 14.3.A.(iv) and 14.3.A.(viii), the
acquisition, disposition, sale, mortgage, pledge, encumbrance,
hypothecation or exchange of any or all of the assets of the Partnership
or any Subsidiary (including the exercise or grant of any conversion,
option, privilege or subscription right or other right available in
connection with any assets at any time held by the Partnership or such
Subsidiary) or the merger or other combination of the Partnership with or
into another entity, on such terms as the General Partner deems proper in
its sole and absolute discretion; provided, however, that except in the
case of a sale of property in connection with a tenant's exercise of a
purchase option or economic discontinuance right provided in the
applicable lease or a lease termination, the General Partner will not
cause the Partnership to sell any of its properties acquired in the
Exchange (whether owned directly or indirectly through any of the
Partnership's Subsidiaries) prior to January 15, 2004 or, if earlier, the
expiration of the primary term of the applicable lease, unless the General
Partner determines, in the exercise of its fiduciary responsibility, that
a sale is necessary in order to avoid the loss of the Partnership's
investment in a property.
iv. the use of the assets of the Partnership (including,
without limitation, cash on hand) for any purpose consistent with the
terms of this Agreement, including, without limitation, the financing of
the conduct of the operations of the Partnership or any of the
Partnership's Subsidiaries, the lending of funds to other Persons
(including, without limitation, the Subsidiaries of the Partnership) and
the repayment of obligations of the Partnership and its Subsidiaries and
any other Person in which the Partnership has an equity investment and the
making of capital contributions to its Subsidiaries;
v. the management, operation, leasing, landscaping, repair,
alteration, demolition or improvement of any real property or improvements
owned by the Partnership or any Subsidiary of the Partnership or any other
Person in which the Partnership has made a direct or indirect equity
investment;
vi. the negotiation, execution, and performance of any
contracts, conveyances or other instruments that the General Partner
considers useful or necessary to the conduct of the Partnership's
operations or the implementation of the General Partner's powers under
this Agreement, including contracting with contractors, developers,
consultants, accountants, legal counsel, other professional advisors and
other agents and the payment of their expenses and compensation out of the
Partnership's assets;
16
vii. the distribution of Partnership cash or other Partnership
assets in accordance with this Agreement;
viii. the holding, managing, investing and reinvesting of cash
and other assets of the Partnership and, in connection therewith, the
opening, maintaining and closing of bank and brokerage accounts and the
drawing of checks or other orders for the payment of moneys;
ix. the collection and receipt of revenues and income of the
Partnership;
x. the selection and dismissal of employees of the Partnership
(including, without limitation, employees having titles such as
"president," "vice president," "secretary" and "treasurer") and agents,
outside attorneys, accountants, consultants and contractors of the
Partnership, and the determination of their compensation and other terms
of employment or hiring;
xi. the maintenance of such insurance for the benefit of the
Partnership, the Partners and directors and officers thereof as it deems
necessary and appropriate;
xii. the formation of, or acquisition of an interest in, and
the contribution of property to, any further limited or general
partnerships, joint ventures, limited liability companies or other
relationships that it deems desirable (including, without limitation, the
acquisition of interests in, and the contributions of property to its
Subsidiaries and any other Person in which it has an equity investment
from time to time);
xiii. the control of any matters affecting the rights and
obligations of the Partnership, including the settlement, compromise,
submission to arbitration or any other form of dispute resolution or
abandonment of any claim, cause of action, liability, debt or damages due
or owing to or from the Partnership, the commencement or defense of suits,
legal proceedings, administrative proceedings, arbitrations or other forms
of dispute resolution, the representation of the Partnership in all suits
or legal proceedings, administrative proceedings, arbitrations or other
forms of dispute resolution, the incurring of legal expense and the
indemnification of any Person against liabilities and contingencies to the
extent permitted by law;
xiv. the determination of the fair market value of any
Partnership property distributed in kind, using such reasonable method of
valuation as the General Partner may adopt;
17
xv. the exercise, directly or indirectly, through any
attorney-in-fact acting under a general or limited power of attorney, of
any right, including the right to vote, appurtenant to any assets or
investment held by the Partnership;
xvi. the exercise of any of the powers of the General Partner
enumerated in this Agreement on behalf of or in connection with any
Subsidiary of the Partnership or any other Person in which the Partnership
has a direct or indirect interest, individually or jointly with any such
Subsidiary or other Person;
xvii. the exercise of any of the powers of the General Partner
enumerated in this Agreement on behalf of any Person in which the
Partnership does not have any interest pursuant to contractual or other
arrangements with such Person;
xviii. the making, executing and delivering of any and all
deeds, leases, notes, deeds to secure debt, mortgages, deeds of trust,
security agreements, conveyances, contracts, guarantees, warranties,
indemnities, waivers, releases or other legal instruments or agreements in
writing necessary or appropriate in the judgment of the General Partner
for the accomplishment of any of the powers of the General Partner under
this Agreement;
xix. the amendment and restatement of Exhibit A hereto to
reflect accurately at all times the Capital Contributions and Percentage
Interests of the Partners as the same are adjusted from time to time to
the extent necessary to reflect redemptions, Capital Contributions, the
issuance of Units, the admission of any Additional Limited Partner or any
Substituted Limited Partner or otherwise, which amendment and restatement,
notwithstanding anything in this Agreement to the contrary, shall not be
deemed an amendment of this Agreement, as long as the matter or event
being reflected in Exhibit A hereto otherwise is authorized by this
Agreement;
xx. subject to Section 14.3.A(viii), the approval and/or
implementation of any merger (including a triangular merger),
consolidation or other combination between the Partnership and another
person that is not prohibited under this Agreement; the terms of Section
17-211(g) of the Act shall be applicable such that the General Partner
shall have the right to effect any amendment to this Agreement or effect
the adoption of a new partnership agreement for a limited partnership if
it is the surviving or resulting limited partnership of the merger or
consolidation (except as may be expressly prohibited under Section
14.1.C);
xxi. causing the Partnership to convert into a limited
liability company without obtaining the consent of any other Partner
provided that the terms of the operating agreement of such limited
liability company are substantially similar to those contained herein; and
xxii. the taking of any and all actions necessary or desirable
in furtherance of, in connection with or incidental to the foregoing.
B. No Approval by Limited Partners. Each of the Limited Partners
agrees that the General Partner is authorized to execute, deliver and perform
the above-mentioned agreements and transactions on behalf of the Partnership
without any further act, approval or vote of the Partners, notwithstanding any
other provision of this Agreement, the Act or any applicable law, rule or
regulation, to the full extent permitted under the Act or other applicable law.
The execution, delivery or performance by the General Partner or the Partnership
of any agreement authorized or permitted under this Agreement shall not
constitute a breach by the General Partner of any duty that the General Partner
may owe the Partnership or the Limited Partners or any other Persons under this
Agreement or of any duty stated or implied by law or equity.
18
C. Insurance. At all times from and after the date hereof, the
General Partner may cause the Partnership to obtain and maintain (i) casualty,
liability and other insurance on the properties of the Partnership, (ii)
liability insurance for the Indemnitees hereunder and (iii) such other insurance
as the General Partner, in its sole and absolute discretion, determines to be
necessary.
D. Working Capital and Other Reserves. At all times from and after
the date hereof, the General Partner may cause the Partnership to establish and
maintain working capital reserves in such amounts as the General Partner, in its
sole and absolute discretion, deems appropriate and reasonable (both in purpose
and amount) from time to time, including upon liquidation of the Partnership
pursuant to Section 13.2 hereof.
E. No Obligations to Consider Tax Consequences of Limited Partners.
In exercising its authority under this Agreement, the General Partner may, but
shall be under no obligation to, take into account the tax consequences to any
Partner of any action taken (or not taken) by it. The General Partner and the
Partnership shall not have liability to a Limited Partner for monetary damages
or otherwise for losses sustained, liabilities incurred or benefits not derived
by such Limited Partner in connection with such decisions, provided that the
General Partner has acted in good faith and not beyond its authority under this
Agreement.
Section 7.2 Certificate of Limited Partnership
The Partnership has previously caused the Certificate of Limited
Partnership to be filed with the Secretary of State of Delaware. To the extent
that such action is determined by the General Partner to be reasonable and
necessary or appropriate, the General Partner shall file amendments to and
restatements of the Certificate of Limited Partnership and do all the things to
maintain the Partnership as a limited partnership (or a partnership in which the
limited partners have limited liability) under the laws of the State of Delaware
and each other state, the District of Columbia or other jurisdiction in which
the Partnership may elect to do business or own property. The General Partner
shall use all reasonable efforts to cause to be filed such other certificates or
documents as may be reasonable and necessary or appropriate for the formation,
continuation, qualification and operation of a limited partnership (or a
partnership in which the limited partners have limited liability) in the State
of Delaware and any other state, the District of Columbia or other jurisdiction
in which the Partnership may elect to do business or own property. Subject to
the terms of Section 8.6.A(iv) hereof, the General Partner shall not be
required, before or after filing, to deliver or mail a copy of the Certificate
of Limited Partnership or any amendment thereto to any Limited Partner.
19
Section 7.3 Title to Partnership Assets
Title to Partnership assets, whether real, personal or mixed and
whether tangible or intangible, shall be deemed to be owned by the Partnership
as an entity, and no Partners, individually or collectively, shall have any
ownership interest in such Partnership assets or any portion thereof. Title to
any or all of the Partnership assets may be held in the name of the Partnership,
the General Partner or one or more nominees, as the General Partner may
determine, including Affiliates of the General Partner. The General Partner
hereby declares and warrants that any Partnership assets for which legal title
is held in the name of the General Partner or any nominee or Affiliate of the
General Partner shall be held by the General Partner for the use and benefit of
the Partnership in accordance with the provisions of this Agreement. All
Partnership assets shall be recorded as the property of the Partnership in its
books and records, irrespective of the name in which legal title to such
Partnership assets is held.
Section 7.4 Partnership Expenses
A. No Compensation. The General Partner as such shall not be
compensated for its services as general partner of the Partnership.
B. Responsibility for Partnership Expenses. The Partnership shall be
responsible for and shall pay all expenses relating to the Exchange, the
ownership of its assets, and its management, administration and operations. The
General Partner shall be reimbursed for all expenses it incurs relating to the
ownership, management, administration and operation of, or for the benefit of,
the Partnership (including, without limitation, expenses related to the
ownership, management and administration of any Subsidiaries of the Partnership
or Affiliates of the Partnership). The General Partner shall determine in good
faith the amount of expenses incurred by it related to the ownership and
operation of, or for the benefit of, the Partnership. Such reimbursements shall
be in addition to any reimbursement as a result of indemnification pursuant to
Section 7.7 below. All payments and reimbursements hereunder shall be
characterized for federal income tax purposes as expenses of the Partnership
incurred on its behalf, and not as expenses of the General Partner.
Section 7.5 Outside Activities of the General Partner
The General Partner and any of its Affiliates may have other
business interests or may engage in other business ventures of any nature or
description whatsoever, whether presently existing or hereinafter created,
including, without limitation, the ownership, leasing, management, operation,
franchising, syndication and/or development of real estate, and may compete,
directly or indirectly, with the business of the Partnership. The General
Partner or Affiliate thereof shall not incur any liability to the Partnership as
the result of its pursuit of such other business interests and ventures and
competitive activity, and neither the Partnership nor any Partners shall have
any right pursuant to this Agreement to participate in such other business
interests or ventures or to receive or share in any income or profits derived
therefrom.
Section 7.6 Transactions with Affiliates
A. Transactions with Affiliates. The Partnership may enter into
transactions with, or obtain services from, Affiliates of the General Partner
provided that the General Partner has reasonably determined that the terms of
such transactions are fair to the Partnership and comparable to those that could
be obtained from unaffiliated third parties.
20
B. Benefit Plans. The General Partner, in its sole and absolute
discretion and without the approval of the Limited Partners, may propose and
adopt on behalf of the Partnership employee benefit plans funded by the
Partnership for the benefit of employees of the General Partner, the
Partnership, Subsidiaries of the Partnership or any Affiliate of any of them in
respect of services performed, directly or indirectly, for the benefit of the
Partnership, the General Partner, or any of the Partnership's Subsidiaries.
C. Transfers of Assets. The Partnership may transfer assets to joint
ventures, other partnerships, corporations or other business entities in which
it is or thereby becomes a participant upon such terms and subject to such
conditions consistent with this Agreement and applicable law as the General
Partner, in its sole and absolute discretion, believes are advisable.
Section 7.7 Indemnification
A. General. To the fullest extent permitted by Delaware law, the
Partnership shall indemnify each Indemnitee from and against any and all losses,
claims, damages, liabilities, joint or several, expenses (including, without
limitation, attorneys fees and other legal fees and expenses), judgments, fines,
settlements, and other amounts arising from any and all claims, demands,
actions, suits or proceedings, civil, criminal, administrative or investigative,
that relate to the Exchange or the operations of the Partnership, in which such
Indemnitee may be involved, or is threatened to be involved, as a party or
otherwise, unless it is established by a final determination of a court of
competent jurisdiction that: (i) the act or omission of the Indemnitee was
material to the matter giving rise to the proceeding and either was committed in
bad faith or was the result of active and deliberate dishonesty; (ii) the
Indemnitee actually received an improper personal benefit in money, property or
services; or (iii) in the case of any criminal proceeding, the Indemnitee had
reasonable cause to believe that the act or omission was unlawful. Without
limitation, the foregoing indemnity shall extend to any liability of any
Indemnitee, pursuant to a loan guaranty or otherwise, for any indebtedness of
the Partnership or any Subsidiary of the Partnership (including without
limitation, any indebtedness which the Partnership or any Subsidiary of the
Partnership has assumed or taken subject to), and the General Partner is hereby
authorized and empowered, on behalf of the Partnership, to enter into one or
more indemnity agreements consistent with the provisions of this Section 7.7 in
favor of any Indemnitee having or potentially having liability for any such
indebtedness. The termination of any proceeding by conviction of an Indemnitee
or upon a plea of nolo contendere or its equivalent by an Indemnitee, or an
entry of an order of probation against an Indemnitee prior to judgment, creates
a rebuttable presumption that such Indemnitee acted in a manner that would
preclude indemnification under this Section 7.7. Any indemnification pursuant to
this Section 7.7 shall be made only out of the assets of the Partnership, and
neither the General Partner nor any Limited Partner shall have any obligation to
contribute to the capital of the Partnership, or otherwise provide funds, to
enable the Partnership to fund its obligations under this Section 7.7.
B. Advance of Expenses. Reasonable expenses expected to be incurred
by an Indemnitee shall be paid or reimbursed by the Partnership in advance of
the final disposition of any and all claims, demands, actions, suits or
proceedings, civil, criminal, administrative or investigative made or threatened
against an Indemnitee.
21
C. No Limitation of Rights. The indemnification provided by this
Section 7.7 shall be in addition to any other rights to which an Indemnitee or
any other Person may be entitled under any agreement, pursuant to any vote of
the Partners, as a matter of law or otherwise, and shall continue as to an
Indemnitee who has ceased to serve in such capacity unless otherwise provided in
a written agreement pursuant to which such Indemnitee is indemnified.
D. Insurance. The Partnership may purchase and maintain insurance on
behalf of the Indemnitees and such other Persons as the General Partner shall
determine against any liability that may be asserted against or expenses that
may be incurred by such Person in connection with the Partnership's activities,
regardless of whether the Partnership would have the power to indemnify such
Person against such liability under the provisions of this Agreement.
E. Benefit Plan Fiduciary. For purposes of this Section 7.7, (i) the
Partnership shall be deemed to have requested an Indemnitee to serve as
fiduciary of an employee benefit plan whenever the performance by it of its
duties to the Partnership also imposes duties on, or otherwise involves services
by, it to the plan or participants or beneficiaries of the plan, (ii) excise
taxes assessed on an Indemnitee with respect to an employee benefit plan
pursuant to applicable law shall constitute fines within the meaning of this
Section 7.7 and (iii) actions taken or omitted by the Indemnitee with respect to
an employee benefit plan in the performance of its duties for a purpose
reasonably believed by it to be in the interest of the participants and
beneficiaries of the plan shall be deemed to be for a purpose that is not
opposed to the best interests of the Partnership
F. No Personal Liability for Limited Partner. In no event may an
Indemnitee subject any of the Partners to liability by reason of the
indemnification provisions set forth in this Agreement.
G. Interested Transactions. An Indemnitee shall not be denied
indemnification in whole or in part under this Section 7.7 because the
Indemnitee had an interest in the transaction with respect to which the
indemnification applies if the transaction was otherwise permitted by the terms
of this Agreement.
H. Benefit. The provisions of this Section 7.7 are for the benefit
of the Indemnitees, their heirs, successors, assigns and administrators and
shall not be deemed to create any rights for the benefit of any other Persons.
Any amendment, modification or repeal of this Section 7.7, or any provision
hereof, shall be prospective only and shall not in any way affect the obligation
of the Partnership to any Indemnitee under this Section 7.7 as in effect
immediately prior to such amendment, modification or repeal with respect to
claims arising from or related to matters occurring, in whole or in part, prior
to such amendment, modification or repeal, regardless of when such claims may
arise or be asserted.
22
Section 7.8 Liability of the General Partner and Manager
A. General. Notwithstanding anything to the contrary set forth in
this Agreement, the General Partner, the Manager and their respective directors,
officers and members shall not be liable for monetary damages to the Partnership
or any Partners for losses sustained, liabilities incurred or benefits not
derived as a result of errors in judgment or mistakes of fact or law or of any
act or omission if the General Partner or such persons acted in good faith
including in connection with any transaction with Affiliates.
B. No Obligation to Consider Separate Interests of Limited Partners.
The Limited Partners expressly acknowledge that the General Partner and those
acting on its behalf are acting on behalf of the Partnership, that the General
Partner and those acting on its behalf are under no obligation to consider the
separate interests of the Limited Partners (including, without limitation, the
tax consequences to Limited Partners) in deciding whether to cause the
Partnership to take (or decline to take) any actions and that the General
Partner and those acting on its behalf shall not be liable for monetary damages
or otherwise for losses sustained, liabilities incurred or benefits not derived
by Limited Partners in connection with such decisions, provided that the General
Partner or such persons have acted in good faith.
C. Actions of Agents. Subject to its obligations and duties as
General Partner set forth in Section 7.1.A above, the General Partner may
exercise any of the powers granted to it by this Agreement and perform any of
the duties imposed upon it hereunder either directly or by or through its
agents. The General Partner shall not be responsible for any misconduct or
negligence on the part of any such agent appointed by the General Partner in
good faith.
D. Effect of Amendment. Any amendment, modification or repeal of
this Section 7.8 or any provision hereof shall be prospective only and shall not
in any way affect the limitations on the liability of the General Partner and
those acting on its behalf to the Partnership and the Limited Partners under
this Section 7.8 as in effect immediately prior to such amendment, modification
or repeal with respect to claims arising from or relating to matters occurring,
in whole or in part, prior to such amendment, modification or repeal, regardless
of when such claims may arise or be asserted.
Section 7.9 Other Matters Concerning the General Partner
A. Reliance on Documents. The General Partner may rely and shall be
protected in acting or refraining from acting upon any resolution, certificate,
statement, instrument, opinion, report, notice, request, consent, order, bond,
debenture or other paper or document believed by it in good faith to be genuine
and to have been signed or presented by the proper party or parties.
B. Reliance on Advisors. The General Partner may consult with legal
counsel, accountants, appraisers, management consultants, investment bankers and
other consultants and advisors selected by it, and any act taken or omitted to
be taken in reliance upon the advice of such Persons as to matters which the
General Partner reasonably believes to be within such Persons' professional or
expert competence shall be conclusively presumed to have been done or omitted in
good faith and in accordance with such advice.
23
C. Action Through Agents. The General Partner shall have the right,
in respect of any of its powers or obligations hereunder, to employ persons in
the operation and management of the business of the Partnership, including but
not limited to, supervisory managing agents, building management agents,
insurance, real estate and loan brokers, agents, employees, managers,
accountants, attorneys, consultants and others, on such terms and for such
compensation as the General Partner shall determine. In addition, the General
Partner may act through any of its duly authorized members, officers, the
Manager or a duly appointed attorney or attorneys-in-fact. Each such attorney
shall, to the extent provided by the General Partner in the power of attorney,
have full power and authority to do and perform all and every act and duty which
is permitted or required to be done by the General Partner hereunder.
D. Actions to Avoid Publicly Traded Partnership Status.
Notwithstanding any other provision of this Agreement, 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 to ensure that the
Partnership will not be classified as a "publicly traded partnership" for
purposes of Sections 351(e), 469(k) or 7704 of the Code, including without
limitation imposing restrictions on transfers of Units hereunder, is expressly
authorized under this Agreement and is deemed approved by all the Limited
Partners; provided however, that the General Partner shall be under no
obligation to avoid publicly traded partnership status for the Partnership if
the General Partner determines, in its sole and absolute discretion, that the
avoidance of such status is no longer in the best interests of the Partners
taken as a whole.
Section 7.10 REIT Restrictions
Notwithstanding anything herein to the contrary, the General Partner
may not, without the consent of Limited Partners owning a majority of the
Percentage Interests, take any action, directly or indirectly, in any manner,
that would result in a violation of Section 6.8 of the Xxxxxxx Associates
Agreement, as amended, substituting "the Partnership" for "the Company" in each
place in said Section in which the words "the Company" appears.
Section 7.11 Reliance by Third Parties
Notwithstanding anything to the contrary in this Agreement, any
Person dealing with the Partnership shall be entitled to assume that the General
Partner has full power and authority, without consent or approval of any other
Partner or Person, to encumber, sell or otherwise use in any manner any and all
assets of the Partnership and to enter into any contracts on behalf of the
Partnership, and take any and all actions on behalf of the Partnership and such
Person shall be entitled to deal with the General Partner as if the General
Partner were the Partnership's sole party in interest, both legally and
beneficially. Each Limited Partner hereby waives any and all defenses or other
remedies which may be available against such Person to contest, negate or
disaffirm any action of the General Partner in connection with any such dealing.
In no event shall any Person dealing with the General Partner or its
representatives be obligated to ascertain that the terms of this Agreement have
been complied with or to inquire into the necessity or expedience of any act or
action of the General Partner or its representatives. Each and every
certificate, document or other instrument executed on behalf of the Partnership
by the General Partner or its representatives shall be conclusive evidence in
favor of any and every Person relying thereon or claiming thereunder that (i) at
the time of the execution and delivery of such certificate, document or
instrument, this Agreement was in full force and effect; (ii) the Person
executing and delivering such certificate, document or instrument was duly
authorized and empowered to do so for and on behalf of the Partnership; and
(iii) such certificate, document or instrument was duly executed and delivered
in accordance with the terms and provisions of this Agreement and is binding
upon the Partnership.
24
ARTICLE VIII
RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS
Section 8.1 Limitation of Liability
The Limited Partners shall have no liability under this Agreement
except as expressly provided in this Agreement, including Section 10.4 hereof,
or under the Act.
Section 8.2 Management of Business
No Limited Partner (other than the General Partner, any of its
Affiliates or any officer, director, employee, partner or agent of the General
Partner, the Partnership or any of their Affiliates, in their capacity as such)
shall take part in the operation, management or control (within the meaning of
the Act) of the Partnership's business, transact any business in the
Partnership's name or have the power to sign documents for or otherwise bind the
Partnership. The transaction of any such business by the General Partner, any of
its Affiliates or any officer, director, employee, partner or agent of the
General Partner, the Partnership or any of their Affiliates, in their capacity
as such, shall not affect, impair or eliminate the limitations on the liability
of the Limited Partners or Assignees under this Agreement.
Section 8.3 [Intentionally Left Blank]
Section 8.4 Outside Activities of Limited Partners
The Limited Partners and any of their Affiliates may have business
interests and engage in business activities in addition to those relating to the
Partnership, including business interests and activities that are in direct
competition with the Partnership or that are enhanced by the activities of the
Partnership. Neither the Partnership nor any Partners shall have any rights by
virtue of this Agreement in any business ventures of any Limited Partner or its
Affiliates. None of the Limited Partners nor any other Person shall have any
rights by virtue of this Agreement or the Partnership relationship established
hereby in any business ventures of any other Person and such Person shall have
no obligation pursuant to this Agreement to offer any interest in any such
business ventures to the Partnership, any Limited Partner or any such other
Person, even if such opportunity is of a character which, if presented to the
Partnership, any Limited Partner or such other Person, could be taken by such
Person.
Section 8.5 Return of Capital
No Limited Partner shall be entitled to the withdrawal or return of
its Capital Contribution, except to the extent of distributions made pursuant to
this Agreement or upon termination of the Partnership as provided herein. Except
as permitted by Section 4.2 hereof, no Limited Partner shall have priority over
any other Limited Partner, either as to the return of Capital Contributions or
as to profits, losses or distributions.
25
Section 8.6 Rights of Limited Partners Relating to the Partnership
A. General. In addition to other rights provided by this Agreement
or by the Act, and except as limited by Section 8.6.B below, each Limited
Partner shall have the right, for a purpose reasonably related to such Limited
Partner's interest as a limited partner in the Partnership, upon written demand
with a statement of the purpose of such demand and at such Limited Partner's own
expense:
i. to obtain a copy of the most recent annual reports filed
with the Securities and Exchange Commission by the Partnership pursuant to the
Securities Exchange Act of 1934;
ii. to obtain a copy of the Partnership's federal, state and
local income tax returns for each Partnership Year,
iii. to obtain a current list of the name and last known
business, residence or mailing address of each Partner, and
iv. to obtain a copy of this Agreement and the Certificate of
Limited Partnership and all amendments thereto, together with executed copies of
all powers of attorney pursuant to which this Agreement, the Certificate of
Limited Partnership and all amendments thereto have been executed.
B. Confidentiality. Notwithstanding any other provision of this
Section 8.6, the General Partner may keep confidential from the Limited
Partners, for such period of time as the General Partner determines in its sole
and absolute discretion to be reasonable, any information that (i) the General
Partner reasonably believes to be in the nature of trade secrets or other
information the disclosure of which the General Partner in good faith believes
is not in the best interests of the Partnership or could damage the Partnership
or its business or (ii) the Partnership is required by law or by agreements with
unaffiliated third parties to keep confidential.
ARTICLE IX
BOOKS, RECORDS, ACCOUNTING AND REPORTS
Section 9.1 Records and Accounting
The General Partner shall keep or cause to be kept at the principal
office of the Partnership appropriate books and records with respect to the
Partnership's business, including, without limitation, all books and records
necessary to provide to the Limited Partners any information, lists and copies
of documents required to be provided pursuant to Section 9.3 below. Any records
maintained by or on behalf of the Partnership in the regular course of its
business may be kept on, or be in the form of, punch cards, magnetic tape,
computer disk, photographs, micrographics or any other information storage
device, provided that the records so maintained are convertible into clearly
legible written form within a reasonable period of time. The books of the
Partnership shall be maintained, for financial and tax reporting purposes, on an
accrual basis in accordance with generally accepted accounting principles.
26
Section 9.2 Fiscal Year
The fiscal year of the Partnership shall be the calendar year.
Section 9.3 Reports
As soon as practicable, but in no event later than one hundred five
(105) days after the close of each Partnership Year, the General Partner shall
cause to be mailed to each Limited Partner as of the close of the Partnership
Year, an annual report containing financial statements of the Partnership for
such Partnership Year, presented in accordance with generally accepted
accounting principles, such statements to be audited by a nationally recognized
firm of independent public accountants selected by the General Partner.
ARTICLE X
TAX MATTERS
Section 10.1 Preparation of Tax Returns
The General Partner shall arrange for the preparation and timely
filing of all returns of Partnership income, gains, deductions, losses and other
items required of the Partnership for federal and state income tax purposes and
shall use all reasonable efforts to furnish, within ninety (90) days of the
close of each taxable year, the tax information reasonably required by Limited
Partners for federal and state income tax reporting purposes.
Section 10.2 Tax Elections
Except as otherwise provided herein, the General Partner shall, in
its sole and absolute discretion, determine whether to make any available
election pursuant to the Code. The General Partner shall have the right to seek
to revoke any such election upon the General Partner's determination in its sole
and absolute discretion that such revocation is in the best interests of the
Partners.
Section 10.3 Tax Matters Partner
A. General. The General Partner shall be the "tax matters partner"
of the Partnership for federal income tax purposes. Pursuant to Section 6230(e)
of the Code, upon receipt of notice from the IRS of the beginning of an
administrative proceeding with respect to the Partnership, the tax matters
partner shall furnish the IRS with the name, address, taxpayer identification
number and profits interest of each of the Limited Partners.
X. Xxxxxx. The tax matters partner is authorized, but not required:
27
(1) to enter into any settlement with the IRS with respect to
any administrative or judicial proceedings for the adjustment of Partnership
items required to be taken into account by a Partner for income tax purposes
(such administrative proceedings being referred to as a "tax audit" and such
judicial proceedings being referred to as "judicial review"), and in the
settlement agreement the tax matters partner may expressly state that such
agreement shall bind all Partners, except that such settlement agreement shall
not bind any Partner (i) who (within the time prescribed pursuant to the Code
and Regulations) files a statement with the IRS providing that the tax matters
partner shall not have the authority to enter into a settlement agreement on
behalf of such Partner or (ii) who is a "notice partner" (as defined in Section
6231(a)(8) of the Code) or a member of a "notice group" (as defined in Section
6223(b)(2) of the Code);
(2) in the event that a notice of a final administrative
adjustment at the Partnership level of any item required to be taken into
account by a Partner for tax purposes (a "final adjustment") is mailed to the
tax matters partner, to seek judicial review of such final adjustment, including
the filing of a petition for readjustment with the Tax Court or the filing of a
complaint for refund with the United States Claims Court or the District Court
of the United States for the district in which the Partnership's principal place
of business is located;
(3) to intervene in any action brought by any other Partner
for judicial review of a final adjustment;
(4) to file a request for an administrative adjustment with
the IRS at any time and, if any part of such request is not allowed by the IRS,
to file an appropriate pleading (petition or complaint) for judicial review with
respect to such request;
(5) to enter into an agreement with the IRS to extend the
period for assessing any tax which is attributable to any item required to be
taken into account by a Partner for tax purposes, or an item affected by such
item; and
(6) to take any other action on behalf of the Partners of the
Partnership in connection with any tax audit or judicial review proceeding to
the extent permitted by applicable law or regulations.
The taking of any action and the incurring of any expense by the tax
matters partner in connection with any such proceeding, except to the extent
required by law, is a matter in the sole and absolute discretion of the tax
matters partner and the provisions relating to indemnification of the General
Partner set forth in Section 7.7 hereof shall be fully applicable to the tax
matters partner in its capacity as such.
C. Reimbursement. The tax matters partner shall receive no
compensation for its services. All third party costs and expenses incurred by
the tax matters partner in performing its duties as such (including legal and
accounting fees and expenses) shall be borne by the Partnership. Nothing herein
shall be construed to restrict the Partnership from engaging an accounting firm
or a law firm to assist the tax matters partner in discharging its duties
hereunder, as long as the compensation paid by the Partnership for such services
is reasonable.
Section 10.4 Withholding
Each Limited Partner hereby authorizes the Partnership to withhold
from or pay on behalf of or with respect to such Limited Partner any amount of
federal, state, local, or foreign taxes that the General Partner determines that
the Partnership is required to withhold or pay with respect to any amount
28
distributable or allocable to such Limited Partner pursuant to this Agreement,
including, without limitation, any taxes required to be withheld or paid by the
Partnership pursuant to Section 1441, 1442, 1445, or 1446 of the Code. Any
amount paid on behalf of or with respect to a Limited Partner shall constitute a
recourse loan by the Partnership to such Limited Partner, which loan shall be
repaid by such Limited Partner within fifteen (15) days after notice from the
General Partner that such payment must be made unless (i) the Partnership
withholds such payment from a distribution which would otherwise be made to the
Limited Partner or (ii) the General Partner determines, in its sole and absolute
discretion, that such payment may be satisfied out of the available funds of the
Partnership which would, but for such payment, be distributed to the Limited
Partner. Any amounts withheld pursuant to the foregoing clauses (i) or (ii)
shall be treated as having been distributed to such Limited Partner. Each
Limited Partner hereby unconditionally and irrevocably grants to the Partnership
a security interest in such Limited Partner's Units to secure such Limited
Partner's obligation to pay to the Partnership any amounts required to be paid
pursuant to this Section 10.4. In the event that a Limited Partner fails to pay
all amounts owed to the Partnership pursuant to this Section 10.4 when due, the
General Partner may, in its sole and absolute discretion, elect to make the
payment to the Partnership on behalf of such defaulting Limited Partner, and in
such event shall be deemed to have loaned such amount to such defaulting Limited
Partner and shall succeed to all rights and remedies of the Partnership as
against such defaulting Limited Partner (including, without limitation, the
right to receive distributions). Any amounts payable by a Limited Partner
hereunder shall bear interest at the base rate on corporate loans at large
United States money center commercial banks, as published from time to time in
the Wall Street Journal, plus four (4) percentage points (but not higher than
the maximum lawful rate) from the date such amount is due (i.e., fifteen (15)
days after demand) until such amount is paid in full. Each Limited Partner shall
take such actions as the General Partner shall request in order to perfect,
maintain or enforce the security interest created hereunder.
ARTICLE XI
TRANSFERS AND WITHDRAWALS
Section 11.1 Transfer
A. Definition. The word "transfer," when used in this Article XI
with respect to a Unit, shall be deemed to refer to a transaction by which a
Limited Partner purports to transfer or assign all or any part of its Units to
another Person, and includes a sale, assignment, gift, pledge, encumbrance,
hypothecation, mortgage, exchange or any other disposition by law or otherwise.
No part of a Limited Partner's Units shall be subject to the claims of any
creditor, any spouse for alimony or support, or to legal process, and no part of
a Limited Partner's Units may be voluntarily or involuntarily alienated or
encumbered except as may be specifically provided for in this Agreement.
29
B. General. No Units shall be transferred, in whole or in part,
except in accordance with the terms and conditions set forth in this Article XI.
Any transfer or purported transfer of a Unit not made in accordance with this
Article XI shall be null and void.
Section 11.2 Limited Partners' Rights to Transfer
A. General. Subject to the provisions of Section 11.2.B below, a
Limited Partner may not transfer or assign all or any portion of its Units to
any person unless: (i) such transferee or assignee delivers a written
representation (which may be accepted or rejected by the General Partner in its
sole discretion) to the effect that such transferee is an Accredited Investor
and that the Units are being acquired for the transferee's own account and for
investment purposes, and (ii) the General Partner consents in writing to such
transfer or assignment and to the admission of such transferee or assignee as a
Substituted Limited Partner, which consent, subject to the provisions of Section
11.2.D below, may not be unreasonably withheld. Subject to the provisions of
Section 11.2.D below, the General Partner intends to permit on an annual basis
transfers of up to 2% of the outstanding Units (exclusive of Units held by any
person "related," within the meaning of Section 267(b) or 707(b) of the Code to
the General Partner), but not less than an aggregate of 6% of the outstanding
Units (exclusive of Units held by members of the Xxxxxxx Group) for Unitholders
other than members of the Xxxxxxx Group. Any purported transfer attempted in
violation of this Section 11.2A shall be deemed void ab initio and shall have no
force or effect.
B. Incapacitated Limited Partners.
(i) Subject to subsection 11.B.(ii) below, if a Limited Partner is
subject to Incapacity, the executor, administrator, trustee, committee,
guardian, conservator or receiver of such Limited Partner's estate shall have
all the rights of a Limited Partner, but not more rights than those enjoyed by
other Limited Partners for the purpose of settling or managing the estate and
such power as the Incapacitated Limited Partner possessed to transfer all or any
part of its interest in the Partnership. The Incapacity of a Limited Partner, in
and of itself, shall not dissolve or terminate the Partnership.
(ii) Subject to Section 11.3.A. below, if a Limited Partner is
subject to Incapacity, the General Partner shall consent to the admittance of
the legal representatives and/or the ultimate distributees, legatees or
beneficiaries, as the case may be, of such Limited Partner as a Substituted
Limited Partner.
C. No Transfers Violating Securities Laws. The General Partner may
prohibit any transfer of Units by a Limited Partner that it reasonably believes
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 Units.
D. No Transfers Affecting Tax Status of Partnership. The General
Partner may prohibit any transfer of Units by a Limited Partner if (i) the
General Partner determines that such transfer may result in the Partnership
being treated as an association taxable as a corporation for federal income tax
purposes; (ii) the General Partner determines that such transfer is being
effectuated through an "established securities market" or a "secondary market"
(or the substantial equivalent thereof) within the meaning of Section 7704 of
the Code, or would otherwise violate any restrictions imposed by the General
Partner pursuant to Section 7.9.D hereof; (iii) such transfer may cause the
Partnership to become, with respect to any employee benefit plan subject to
Title I of ERISA, a "party-in-interest" (as defined in Section 3(14) of ERISA)
or a "disqualified person" (as defined in Section 4975(c) of the Code); (iv)
such transfer may cause any portion of the assets of the Partnership to
constitute assets of any employee benefit plan pursuant to Department of Labor
Regulations Section 2510.2-101; (v) such transfer would have adverse tax
consequences to the Partners; or (vi) such transfer may subject the Partnership
to be regulated under the Investment Company Act of 1940, the Investment
Advisors Act of 1940 or ERISA, each as amended.
30
Section 11.3 Substituted Limited Partners
A. Rights of Substituted Limited Partner. To the extent a transfer
or assignment has been consented to by the General Partner in accordance with
Section 11.2, or upon an event described in Section 11.2.B(ii) above, such
transferee or assignee or legal representative, ultimate distributee, legatee or
beneficiary, as the case may be, shall be admitted as a Substituted Limited
Partner in accordance with this Article XI and shall have all the rights and
powers and subject to all the restrictions and liabilities of a Limited Partner
under this Agreement. The admission of any transferee or assignee or legal
representative, ultimate distributee, legatee or beneficiary, as the case may
be, as a Substituted Limited Partner shall be conditioned upon the transferee or
assignee or legal representative, ultimate distributee, legatee or beneficiary,
as the case may be, executing and delivering to the Partnership an acceptance of
all the terms and conditions of this Agreement (including, without limitation,
the provisions of Section 2.5 hereof) and such other documents or instruments as
may be required to effect the admission.
B. Amendment and Restatement of Exhibit A. Upon the admission of a
Substituted Limited Partner, the General Partner shall amend and restate Exhibit
A hereto to reflect the name, address, Capital Account, number of Units, and
Percentage Interest of such Substituted Limited Partner and to eliminate or
adjust, if necessary, the name, address, Capital Account and Percentage Interest
of the predecessor of such Substituted Limited Partner.
Section 11.4 General Provisions
A. Withdrawal of Limited Partner. No Limited Partner may withdraw
from the Partnership other than as a result of a permitted transfer of all of
such Limited Partner's Units in accordance with this Article XI.
B. Termination of Status as Limited Partner Any Limited Partner who
shall transfer all of its Units in a transfer permitted pursuant to this Article
XI shall cease to be a Limited Partner.
C. Timing of Transfers. Transfers pursuant to this Article XI may
only be made on the first day of a fiscal quarter of the Partnership, unless the
General Partner otherwise agrees.
31
D. Allocations. If any Units are transferred during any quarterly
segment of the Partnership's fiscal year in compliance with the provisions of
this Article XI, Net Income, Net Losses, each item thereof and all other items
attributable to such interest for such fiscal year shall be divided and
allocated between the transferor Partner and the transferee Partner by taking
into account their varying interests during the fiscal year in accordance with
Section 706(d) of the Code, using the interim closing of the books method
(unless the General Partner, in its sole and absolute discretion, elects to
adopt a daily, weekly, or a monthly proration period, in which event Net Income,
Net Losses, each item thereof and all other items attributable to such interest
for such fiscal year shall be prorated based upon the applicable method selected
by the General Partner). All distributions attributable to any Unit with respect
to which the Partnership Record Date is before the date of such transfer shall
be made to the transferor Partner, and all distributions thereafter attributable
to the Unit shall be made to the transferee Partner.
E. Additional Restrictions. In addition to any other restrictions on
transfer herein contained, including without limitation the provisions of this
Article XI, in no event may any transfer or assignment of a Unit by any Partner
be made without the express consent of the General Partner, in its sole and
absolute discretion, (i) to any person or entity who lacks the legal right,
power or capacity to own a Unit; (ii) in violation of applicable law; or (iii)
of any component portion of a Unit, such as the Capital Account, or rights to
distributions, separate and apart from all other components of a Unit.
ARTICLE XII
WITHDRAWAL OR REMOVAL OF GENERAL PARTNER;
ADMISSION OF PARTNERS
Section 12.1 Withdrawal of the General Partner.
The General Partner may withdraw from the Partnership effective on
at least sixty (60) days' advance written notice to the Limited Partners, such
withdrawal to take effect on the date specified in such notice. The General
Partner shall have no liability to the Partnership or the Limited Partners on
account of any withdrawal in accordance with the terms of this Section 12.1. If
the General Partner shall give a notice of withdrawal pursuant to this Section
12.1, then a successor General Partner may be elected upon the written consent
or affirmative vote of Limited Partners owning a majority of the Percentage
Interests, who shall be admitted as a successor General Partner pursuant to
Section 12.4. If no successor General Partner shall be elected in accordance
with this Section 12.1 and there shall be no remaining General Partner, then the
Partnership shall be dissolved pursuant to Article XIII.
Section 12.2 Removal of General Partner.
(a) The General Partner may be removed as General Partner, with or
without cause, only upon the written consent or affirmative vote of Limited
Partners owning a majority of the Percentage Interests. Any such action by the
Limited Partners also must provide for the election of a successor General
Partner and shall become effective only upon admission of the successor General
Partner pursuant to Section 12.4.
32
(b) Written notice of the removal of the General Partner pursuant to
this Section 12.2 shall be served upon such General Partner in the manner set
forth in Section 15.1. Such notice shall set forth the day upon which such
removal is to become effective, which date shall not be less than thirty (30)
days after the service of the notice upon the General Partner.
(c) A General Partner removed as a General Partner pursuant to this
Section 12.2 shall not have any right to participate in the management or
control of the business of the Partnership from and after the effective date of
such removal.
Section 12.3 Amendment of Agreement and Certificate of Limited
Partnership.
This Agreement and the Certificate of Limited Partnership shall be
amended to reflect the withdrawal, removal or succession of a General Partner.
Section 12.4 Admission of Successor General Partner.
A successor General Partner selected pursuant to Sections 12.1 or
12.2 shall be admitted to the Partnership as a General Partner (in the place, in
whole or in part, of the transferor or former General Partner), effective as of
the date that an amendment of the Certificate of Limited Partnership, adding the
name of such successor General Partner and other required information, is filed
with the Secretary of State of the State of Delaware (which date shall be
contemporaneous with the withdrawal of such former General Partner), and upon
receipt by the former General Partner of all of the following:
(a) the successor General Partner's acceptance of, and agreement to
be bound by, all of the terms and provisions of this Agreement;
(b) evidence of the authority of such successor General Partner to
become a General Partner and to be bound by all of the terms and conditions of
this Agreement;
(c) the written agreement of the successor General Partner to
continue the business of the Partnership in accordance with the terms and
provisions of this Agreement; and
(d) such other documents or instruments as may be required in order
to effect the admission of the successor General Partner as the General Partner
under this Agreement and applicable law.
Section 12.5 Admission of Additional Limited Partners
A Person who makes a Capital Contribution to the Partnership in
accordance with this Agreement shall be admitted to the Partnership as an
Additional Limited Partner only upon furnishing to the General Partner evidence
of acceptance in form and substance satisfactory to the General Partner of all
of the terms and conditions of this Agreement (including without limitation, the
provisions of Section 2.5 hereof) and such other documents or instruments as may
be required in the discretion of the General Partner in order to effect such
Person's admission as an Additional Limited Partner. Notwithstanding anything to
the contrary in this Section 12.5, no Person shall be admitted as an Additional
Limited Partner without the consent of the General Partner, which consent may be
given or withheld in the General Partner's sole and absolute discretion. The
admission of any Person as an Additional Limited Partner shall become effective
on the date upon which the name of such Person is recorded on the books and
records of the Partnership, following the consent of the General Partner to such
admission.
33
Section 12.7 Amendment of Agreement and Certificate of Limited Partnership
For the admission to the Partnership of any Partner, the General
Partner shall take all steps necessary and appropriate under the Act to amend
the records of the Partnership (including an amendment and restatement of
Exhibit A hereto) and, if necessary, to prepare as soon as practical an
amendment of this Agreement and, if required by law, shall prepare and file an
amendment to the Certificate of Limited Partnership and may for this purpose
exercise the power of attorney granted pursuant to Section 2.5 hereof.
ARTICLE XIII
DISSOLUTION AND LIQUIDATION
Section 13.1 Dissolution
The Partnership shall not be dissolved by the admission of
Substituted Limited Partners or Additional Limited Partners or by the admission
of a successor General Partner in accordance with the terms of this Agreement.
Upon the withdrawal of the General Partner, any successor General Partner shall
continue the business of the Partnership. The Partnership shall dissolve, and
its affairs shall be wound up, only upon the first to occur of any of the
following ("Liquidating Events"):
A. an event of withdrawal of the General Partner, as defined in the
Act (other than an event of bankruptcy), unless, within ninety (90) days after
such event of withdrawal Limited Partners owning a majority of the Percentage
Interests of the Limited Partners agree in writing to continue the business of
the Partnership and to the appointment, effective as of the date of withdrawal,
of a successor General Partner;
B. an election to dissolve the Partnership made by the General
Partner with the consent of Limited Partners owning a majority of the Percentage
Interests;
C. entry of a decree of judicial dissolution of the Partnership
pursuant to the provisions of the Act;
D. subject to Section 14.3.A hereof, the sale, exchange or other
disposition of all or substantially all of the assets and properties of the
Partnership for cash or marketable securities upon the election of the General
Partner and consent of Limited Partners owning a majority of the Percentage
Interests; or
E. a final and non-appealable judgment is entered by a court of
competent jurisdiction ruling that the General Partner is bankrupt or insolvent,
or a final and non-appealable order for relief is entered by a court with
appropriate jurisdiction against the General Partner, in each case under any
federal or state bankruptcy or insolvency laws as now or hereafter in effect,
unless prior to or within ninety (90) days after the entry of such order or
judgment Limited Partners owning more than a majority of the Percentage
Interests 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.
34
Section 13.2 Winding Up
A. General. Upon the occurrence of a Liquidating Event, the
Partnership shall continue solely for the purposes of winding up its affairs in
an orderly manner, liquidating its assets, and satisfying the claims of its
creditors and Partners. No Partner shall take any action that is inconsistent
with, or not necessary to or appropriate for, the winding up of the
Partnership's business and affairs. The General Partner (or, in the event there
is no remaining General Partner, any Person elected by Limited Partners owning a
majority of the Percentage Interests held by Limited Partners (the
"Liquidator")) shall be responsible for overseeing the winding up and
dissolution of the Partnership and shall take full account of the Partnership's
liabilities and property and the Partnership property shall be liquidated as
promptly as is consistent with obtaining the fair value thereof, and the
proceeds therefrom (which may, to the extent determined by the General Partner,
include equity or other securities of the General Partner or any other entity)
shall be applied and distributed in the following order:
(1) First, to the payment and discharge of all of the
Partnership's debts and liabilities to creditors other than the Partners;
(2) Second, to the payment and discharge of all of the
Partnership's debts and liabilities to the Partners; and
(3) The balance, if any, to the Partners in accordance with
their positive Capital Accounts, after giving effect to all contributions,
distributions, and allocations for all periods.
The General Partner shall not receive any additional compensation for any
services performed pursuant to this Article XIII.
B. Deferred Liquidation. Notwithstanding the provisions of Section
13.2.A above which require liquidation of the assets of the Partnership, but
subject to the order of priorities set forth therein, if prior to or upon
dissolution of the Partnership the Liquidator determines that an immediate sale
of part or all of the Partnership's assets would be impractical or would cause
undue loss to the Partners, the Liquidator may, in its sole and absolute
discretion, defer for a reasonable time the liquidation of any assets except
those necessary to satisfy liabilities of the Partnership (including to those
Partners as creditors) or distribute to the Partners, in lieu of cash, as
tenants in common and in accordance with the provisions of Section 13.2.A above,
undivided interests in such Partnership assets as the Liquidator deems not
suitable for liquidation. Any such distributions in kind shall be made only if,
in the good faith judgment of the Liquidator, such distributions in kind are in
the best interest of the Partners, and shall be subject to such conditions
relating to the disposition and management of such properties as the Liquidator
deems reasonable and equitable and to any agreements governing the operation of
such properties at such time. The Liquidator shall determine the fair market
value of any property distributed in kind using such reasonable method of
valuation as it may adopt.
35
Section 13.3 Compliance with Timing Requirements of Regulations
In the event the Partnership is "liquidated" within the meaning of
Regulations Section 1.704-1(b)(2)(ii)(g), distributions shall be made pursuant
to this Article XIII to the Limited Partners who have positive Capital Accounts
in compliance with Regulations Section 1.704-1(b)(2)(ii)(b)(2). If any Partner
has a deficit balance in its Capital Account (after giving effect to all
contributions, distributions and allocations for all taxable years, including
the year during which such liquidation occurs), such Partner shall have no
obligation to make any contribution to the capital of the Partnership with
respect to such deficit, and such deficit shall not be considered a debt owed to
the Partnership or to any other Person for any purpose whatsoever. In the
discretion of the General Partner, a pro rata portion of the distributions that
would otherwise be made to the Limited Partners pursuant to this Article XIII
may be: (A) distributed to a trust established for the benefit of the Limited
Partners for the purposes of liquidating Partnership assets, collecting amounts
owed to the Partnership and paying any contingent or unforeseen liabilities or
obligations of the Partnership or of the General Partner arising out of or in
connection with the Partnership (in which case the assets of any such trust
shall be distributed to the Limited Partners from time to time, in the
reasonable discretion of the General Partner, in the same proportions as the
amount distributed to such trust by the Partnership would otherwise have been
distributed to the Limited Partners pursuant to this Agreement); or (B) withheld
to provide a reasonable reserve for Partnership liabilities (contingent or
otherwise) and to reflect the unrealized portion of any installment obligations
owed to the Partnership; that such withheld amounts shall be distributed to the
Limited Partners as soon as practicable.
Section 13.4 Rights of Limited Partners
Except as otherwise provided in this Agreement, each Limited Partner
shall look solely to the assets of the Partnership for the return of its Capital
Contributions and shall have no right or power to demand or receive property
other than cash from the Partnership. Except as otherwise expressly provided in
this Agreement, no Limited Partner shall have priority over any other Limited
Partner as to the return of its Capital Contributions, distributions, or
allocations.
Section 13.5 Notice of Dissolution
In the event a Liquidating Event occurs or an event occurs that
would, but for provisions of an election or objection by one or more Partners
pursuant to Section 13.1 above, result in a dissolution of the Partnership, the
General Partner shall, within thirty (30) days thereafter, provide written
notice thereof to each of the Partners and to all other parties with whom the
Partnership regularly conducts business (as determined in the discretion of the
General Partner) and shall publish notice thereof in a newspaper of general
circulation in each place in which the Partnership regularly conducts business
(as determined in the discretion of the General Partner).
Section 13.6 Cancellation of Certificate of Limited Partnership
Upon the completion of the liquidation of the Partnership cash and
property as provided in Section 13.2 above, the Partnership shall be terminated
and the Certificate of Limited Partnership and all qualifications of the
Partnership as a foreign limited partnership in jurisdictions other than the
State of Delaware shall be canceled and such other actions as may be necessary
to terminate the Partnership shall be taken.
36
Section 13.7 Reasonable Time for Winding Up
A reasonable time shall be allowed for the orderly winding up of the
business and affairs of the Partnership and the liquidation of its assets
pursuant to Section 13.2 above, in order to minimize any losses otherwise
attendant upon such winding-up, and the provisions of this Agreement shall
remain in effect among the Partners during the period of liquidation.
Section 13.8 Waiver of Partition
Each Partner hereby waives any right to partition of the Partnership
property.
Section 13.9 Liability of Liquidator
The Liquidator shall be indemnified and held harmless by the
Partnership in the same manner and to the same degree as an Indemnitee may be
indemnified pursuant to Section 7.7 hereof.
ARTICLE XIV
AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS
Section 14.1 Amendments
A. General. Amendments to this Agreement may be proposed only by the
General Partner. Following such proposal, the General Partner shall submit any
proposed amendment to the Limited Partners. The General Partner shall seek the
consent of the Partners on the proposed amendment or shall call a meeting to
vote thereon and to transact any other business that it may deem appropriate.
Except as provided in Section 14.1.B or 14.1.C, a proposed amendment shall be
adopted and be effective as an amendment hereto if it is approved by the General
Partner and it receives the consent of Limited Partners owning a majority of the
Percentage Interests.
B. Amendments Not Requiring Limited Partner Approval.
Notwithstanding Section 14.1.A, the General Partner shall have the power,
without the consent of the Limited Partners, to amend this Agreement as may be
required to facilitate or implement any provision of this Agreement which is
within the General Partner's discretion hereunder, including without limitation,
the following:
(a) to reflect a change in the name or location of the principal
office of the Partnership;
(b) to reflect the admission, substitution, termination, or
withdrawal of Limited Partners in accordance with this Agreement;
37
(c) to reflect a change that is of an inconsequential nature and
does not adversely affect 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;
(d) 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;
(e) to make any change required or contemplated by this Agreement;
(f) to amend any provisions requiring any action by the General
Partner if applicable provisions of the Act related to the Partnership are
amended or changed so that such action is no longer necessary; or
(g) to authorize the Partnership to issue Units or other securities
in one or more additional classes, or one or more series of classes, with any
designations, preferences and relative, participating, optional or other special
rights as shall be fixed by the General Partner.
C. Amendments Requiring Limited Partner Approval. Notwithstanding
Section 14.1.A or Section 14.1.B hereof, the General Partner shall not (except
in connection with amendments made to reflect the issuance of additional Units
or other securities and the relative rights, powers and duties incident thereto)
amend this Section 14.1.C or Section 14.3 without the consent of Limited
Partners owning a majority of the Percentage Interests.
D. Amendment and Restatement of Exhibit A Not An Amendment.
Notwithstanding anything in this Article XIV or elsewhere in this Agreement to
the contrary, any amendment and restatement of Exhibit A hereto by the General
Partner to reflect events or changes otherwise authorized or permitted by this
Agreement, whether pursuant to Section 7.1.A(xix) hereof or otherwise, shall not
be deemed an amendment of this Agreement and may be done at any time and from
time to time, as necessary by the General Partner without the consent of Limited
Partners.
Section 14.2 Meetings of the Partners; Actions Without a Meeting
A. General. Meetings of the Partners may be called only by the
General Partner. The call shall state the nature of the business to be
transacted. Notice of any such meeting shall be given to all Partners not less
than seven (7) days nor more than thirty (30) days prior to the date of such
meeting; provided that a Partner's attendance at any meeting of Partners shall
be deemed a waiver of the foregoing notice requirement with respect to such
Partner. Partners may vote in person or by proxy at such meeting. Whenever the
vote or consent of Partners is permitted or required under this Agreement, such
vote or consent may be given at a meeting of Partners or may be given in
accordance with the procedure prescribed in Section 14.2.B, below. Except as
otherwise expressly provided in this Agreement, the consent of Limited Partners
owning a majority of the Percentage Interests shall control.
38
B. Actions Without a Meeting. Any action required or permitted to be
taken at a meeting of the Partners may be taken without a meeting if a written
consent setting forth the action so taken is signed by Limited Partners owning a
majority of the Percentage Interests (or such other percentage as is expressly
required by this Agreement). For purposes of obtaining written consent, the
General Partner may require a response within a reasonable specified time, but
not less than fifteen (15) days, and failure to respond in such time period
shall constitute a vote which is consistent with the General Partner's
recommendation with respect to the proposal. The consent procedure described in
the preceding sentence shall not be available for purposes of obtaining any
consent required by Section 12.2. Such consent may be in one instrument or in
several instruments, and shall have the same force and effect as a vote of
Limited Partners owning a majority of the Percentage Interests of the Partners
(or such other percentage as is expressly required by this Agreement). Such
consent shall be filed with the General Partner. An action so taken shall be
deemed to have been taken at a meeting held on the effective date so certified.
C. Proxy. Each Limited Partner may authorize any Person or Persons
to act for such Limited Partner by proxy on all matters in which a Limited
Partner is entitled to participate, including waiving notice of any meeting, or
voting or participating at a meeting. Every proxy must be signed by the Limited
Partner or its attorney-in-fact. No proxy shall be valid after the expiration of
eleven (11) months from the date thereof unless otherwise provided in the proxy.
Every proxy shall be revocable at the pleasure of the Limited Partner executing
it, such revocation to be effective upon the Partnership's receipt of notice
thereof in writing.
D. Conduct of Meeting. Each meeting of Partners shall be conducted
by the General Partner or such other Person as the General Partner may appoint
pursuant to such rules for the conduct of the meeting as the General Partner or
such other Person deems appropriate.
Section 14.3 Voting Rights
A. Limited Partners shall have the right to vote on all matters
specified below and the actions specified therein may be taken by the General
Partner only with the consent of Limited Partners owning a majority of the
Percentage Interests:
(i) amendment of this Agreement, except as set forth in
Section 14.1.B;
(ii) dissolution of the Partnership pursuant to Section
13.1.B;
(iii) selection of a Liquidating Trustee pursuant to Section
13.2.A;
(iv) approval or disapproval of a sale or other disposition,
except upon dissolution and liquidation pursuant to Article XIII, of all
or substantially all of the assets of the Partnership in a single sale or
in a related series of multiple sales; provided, however, that this
provision shall not be interpreted to preclude or limit the mortgage,
pledge, hypothecation or grant of a security interest in all or
substantially all of the assets of the Partnership and shall not apply to
any forced sale of any or all of the assets of the Partnership pursuant to
the foreclosure of, or other realization upon, any such encumbrance;
39
(v) election of a successor General Partner pursuant to
Section 12.1;
(vi) removal of the General Partner pursuant to Section 12.2;
(vii) when the Partnership would otherwise dissolve and its
business would not otherwise be continued pursuant to Article XIII,
election to reconstitute and continue the business of the Partnership
pursuant to Section 13.1.A or 13.1.E; and
(viii) approval or disapproval of the merger or other
combination of the Partnership with another entity in which the
Partnership is not the surviving entity.
B. Except as expressly provided in this Agreement, Limited Partners
shall have no voting rights.
ARTICLE XV
GENERAL PROVISIONS
Section 15.1 Addresses and Notices
All notices, demands, requests or other communications which may be
or are required to be given, served, or sent by a Limited Partner or the
Partnership pursuant to this Agreement shall be in writing and shall be
personally delivered, mailed by first-class, registered or certified mail,
return receipt requested, postage prepaid, or transmitted by telegram or telex,
addressed as follows:
If to the General Partner:
MLP GP LLC
X.X. Xxx 0000
Xxxxxx, XX 00000-0000
If to a Limited Partner:
The Last Known Business, Residence or
Mailing Address of Such Limited Partner
Reflected in the Records of the
Partnership
If to the Partnership:
The Xxxxxxx Master Limited Partnership
X.X. Xxx 0000
Xxxxxx, XX 00000-0000
40
The General Partner and each Limited Partner and the Partnership may designate
by notice in writing a new address to which any notice, demand, request or
communication may thereafter be so given, served or sent. Each notice, demand,
request, or communication which shall be delivered, mailed or transmitted in the
manner described above shall be deemed sufficiently given, served, sent or
received for all purposes at such time as it is delivered to the addressee (with
an affidavit of personal delivery, the return receipt, the delivery receipt, or
(with respect to a telex) the answerback being deemed conclusive (but not
exclusive) evidence of such delivery) or at such time as delivery is refused by
the addressee upon presentation.
Section 15.2 Titles and Captions
All article or section titles or captions in this Agreement are for
convenience only. They shall not be deemed part of this Agreement and in no way
define, limit, extend or describe the scope or intent of any provisions hereof.
Except as specifically provided otherwise, references to "Articles" and
"Sections" are to Articles and Sections of this Agreement.
Section 15.3 Pronouns and Plurals
Whenever the context may require, any pronoun used in this Agreement
shall include the corresponding masculine, feminine or neuter forms, and the
singular form of nouns, pronouns and verbs shall include the plural and vice
versa.
Section 15.4 Further Action
The parties shall execute and deliver all documents, provide all
information and take or refrain from taking action as may be necessary or
appropriate to achieve the purposes of this Agreement.
Section 15.5 Binding Effect
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their heirs, executors, administrators, successors, legal
representatives and permitted assigns.
Section 15.6 Creditors; Other Third Parties
Other than as expressly set forth herein with regard to any
Indemnitee, none of the provisions of this Agreement shall be for the benefit
of, or shall be enforceable by, any creditor or other third party having
dealings with the Partnership.
Section 15.7 Waiver
No failure by any parry to insist upon the strict performance of any
covenant, duty, agreement or condition of this Agreement or to exercise any
right or remedy consequent upon a breach thereof shall constitute waiver of any
such breach or any other covenant, duty, agreement or condition.
Section 15.8 Counterparts
To facilitate execution, this Agreement may be executed in as many
counterparts as may be required; and it shall not be necessary that the
signatures of, or on behalf of, each party, or that the signatures of all
41
persons required to bind any party, appear on each counterpart; but it shall be
sufficient that the signature of, or on behalf of, each party, or that the
signatures of the persons required to bind any party, appear on one or more of
the counterparts. All counterparts shall collectively constitute a single
agreement. It shall not be necessary in making proof of this Agreement to
produce or account for more than a number of counterparts containing the
respective signatures of, or on behalf of, all of the parties hereto.
Section 15.9 Applicable Law
This Agreement shall be construed and enforced in accordance with
and governed by the laws of the State of Delaware, without regard to the
principles of conflicts of law.
Section 15.10 Invalidity of Provisions
If any provision of this Agreement is or becomes invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein shall not be affected thereby.
Section 15.11 Entire Agreement
This Agreement and all Exhibits attached hereto (which Exhibits are
incorporated herein by reference as if fully set forth herein) contains the
entire understanding and agreement among the Partners with respect to the
subject matter hereof and supersedes any prior written oral understandings or
agreements among them with respect thereto.
42
IN WITNESS WHEREOF, the General Partner and the Organizational
Limited Partner have executed this Agreement as of the date first written above.
GENERAL PARTNER:
MLP GP LLC
By: Xxxxxxx MLP Corp., Manager
By: /s/ Xxxxxxx X. Xxxxxx
-------------------------------
Chief Executive Officer
ORGANIZATIONAL LIMITED PARTNER:
XXXXXXX MANAGER CORP.
By: /s/ Xxxxx Xxxxxxxxx
-------------------------------
Executive Vice President
43
EXHIBIT A
Partners, Units and Percentage Interest
Name Number of Units Percentage Interest
---- --------------- -------------------
Xxxxxxx Manager Corp. 100 100%
EXHIBIT B
CAPITAL ACCOUNT MAINTENANCE
A. The Partnership shall maintain for each Partner a separate
Capital Account in accordance with the rules of Regulations Section
1.704-1(b)(2)(iv). The initial Capital Account balance of each Person who is a
Limited Partner on the Effective Time shall be as set forth in Section 4.1.B of
the Agreement. Such Capital Account shall be increased by (i) the amount of all
Capital Contributions and any deemed contributions made by such Partner to the
Partnership pursuant to this Agreement; and (ii) all items of Partnership income
and gain (including income and gain exempt from tax) computed in accordance with
Section B of this Exhibit B and allocated to such Partner pursuant to Section
6.1.A of the Agreement and Section 1 of Exhibit C hereof, and decreased by (x)
the amount of cash or Agreed Value of all actual and deemed distributions of
cash or property made to such Limited Partner pursuant to this Agreement and (y)
all items of Partnership deduction and loss computed in accordance with Section
B of this Exhibit B and allocated to such Limited Partner pursuant to Section
6.1.B of the Agreement and Section 1 of Exhibit C hereof.
B. For purposes of computing the amount of any item of income, gain,
deduction or loss to be reflected in the Limited Partners' Capital Accounts,
unless otherwise specified in this Agreement, the determination, recognition and
classification of any such item shall be the same as its determination,
recognition and classification for federal income tax purposes 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:
(1) Except as otherwise provided in Regulations Section
1.704-1(b)(2)(iv)(m), the computation of all items of income, gain, loss
and deduction shall be made without regard to any election under Section
754 of the Code which may be made by the Partnership, provided that the
amounts of any adjustments to the adjusted bases of the assets of the
Partnership made pursuant to Section 734 of the Code as a result of the
distribution of property by the Partnership to a Limited Partner (to the
extent that such adjustments have not previously been reflected in the
Limited Partners' Capital Accounts) shall be reflected in the Capital
Accounts of the Limited Partners in the manner and subject to the
limitations prescribed in Regulations Section 1.704-1(b)(2)(iv)(m)(4).
(2) The computation of all items of income, gain, and deduction
shall be made without regard to the fact that items described in Sections
705(a)(1)(B) or 705(a)(2)(B) of the Code are not includable in gross
income or are neither currently deductible nor capitalized for federal
income tax purposes.
(3) Any income, gain or loss attributable to the taxable disposition
of any Partnership property shall be determined as if the adjusted basis
of such property as of such date of disposition were equal in amount to
the Carrying Value of such property as of such date.
B-1
(4) In lieu of the depreciation, amortization, and other cost
recovery deductions taken into account in computing such taxable income or
loss, there shall be taken into account Depreciation for such fiscal year.
(5) In the event the Carrying Value of any partnership asset is
adjusted pursuant to Section D of this Exhibit B, the amount of any such
adjustment shall be taken into account as gain or loss from the
disposition of such asset.
C. A transferee of a Unit shall succeed to a pro rata portion of the
Capital Account of the transferor.
D. (1) Consistent with the provisions of Regulations Section 1.704-
1(b)(2)(iv)(f), and as provided in Section D(2), the Carrying Value of all
Partnership assets shall be adjusted upward or downward to reflect any
Unrealized Gain or Unrealized Loss attributable to such Partnership
property, as of the times of the adjustments provided in Section D(2)
hereof, as if such Unrealized Gain or Unrealized Loss had been recognized
on an actual sale of each such property and allocated pursuant to Section
6.1 of the Agreement.
(2) Such adjustments shall be made as of the following times: (a)
immediately prior to the acquisition of an additional interest in the
Partnership by any new or existing Limited Partner in exchange for more
than a de minimis Capital Contribution; (b) immediately prior to the
distribution by the Partnership to a Partner of more than a de minimis
amount of property as consideration for an interest in the Partnership;
and (c) immediately prior to the liquidation of the Partnership within the
meaning of Regulations Section 1.704-1(b)(2)(ii)(g); provided, however,
that adjustments pursuant to clauses (a) and (b) above shall be made only
if the General Partner determines that such adjustments are necessary or
appropriate to reflect the relative economic interests of the Partners in
the Partnership.
(3) In accordance with Regulations Section 1.704-1(b)(2)(iv)(e), the
Carrying Value of Partnership assets distributed in kind shall be adjusted
upward or downward to reflect any Unrealized Gain or Unrealized Loss
attributable to such Partnership property as of the time any such asset is
distributed.
(4) In determining Unrealized Gain or Unrealized Loss for purposes
of this Exhibit B, the aggregate cash amount and fair market value of all
Partnership assets (including cash or cash equivalents) shall be
determined by the General Partner (or the Liquidator, if applicable) using
such reasonable method of valuation as it may adopt. The General Partner
(or the Liquidator, if applicable) shall allocate such aggregate value
among the assets of the Partnership (in such manner as it determines in
its sole and absolute discretion) to arrive at a fair market value for
individual properties.
E. The provisions of this Agreement (including this Exhibit B and
other Exhibits to this Agreement) relating to the maintenance of Capital
Accounts are intended to comply with Regulations Section 1.704-1(b), and shall
be interpreted and applied in a manner consistent with such Regulations. In the
event the General Partner shall determine that it is prudent to modify (i) the
manner in which the Capital Accounts, or any debits or credits thereto
B-2
(including, without limitation, debits or credits relating to liabilities which
are secured by contributed or distributed property or which are assumed by the
Partnership or the Limited Partners) are computed; or (ii) the manner in which
items are allocated among the Partners for federal income tax purposes in order
to comply with such Regulations or to comply with Section 704(c) of the Code,
the General Partner may make such modification without regard to Article XIV of
the Agreement, provided that it is not likely to have a material effect on the
amounts distributable to any Person pursuant to Article XIII of the Agreement
upon the dissolution of the Partnership. The General Partner also shall (i) make
any adjustments that are necessary or appropriate to maintain equality between
the Capital Accounts of the Limited Partners and the amount of Partnership
capital reflected on the Partnership's balance sheet, as computed for book
purposes, in accordance with Regulations Section 1.704-1(b)(2)(iv)(q); and (ii)
make any appropriate modifications in the event unanticipated events might
otherwise cause this Agreement not to comply with Regulations Section
1.704-1(b). In addition, the General Partner may adopt and employ such methods
and procedures for (i) the maintenance of book and tax capital accounts; (ii)
the determination and allocation of adjustments under Sections 704(c), 734 and
743 of the Code; (iii) the determination of Net Income, Net Loss, taxable loss
and items thereof under this Agreement and pursuant to the Code; (iv) the
adoption of reasonable conventions and methods for the valuation of assets and
the determination of tax basis; (v) the allocation of asset value and tax basis;
and (vi) conventions for the determination of cost recovery, depreciation and
amortization deductions, as it determines in its sole discretion are necessary
or appropriate to effect the provisions of this Agreement, to comply with
federal and state tax laws, and are in the best interests of the Limited
Partners taken as a whole.
B-3
EXHIBIT C
SPECIAL ALLOCATION RULES
1. Special Allocation Rules
Notwithstanding any other provision of the Agreement or this Exhibit
C, the following special allocations shall be made in the following order:
A. Minimum Gain Chargeback. Notwithstanding the provisions of
Section 6.1 of the Agreement or any other provisions of this Exhibit C, if there
is a net decrease in Partnership Minimum Gain during any Partnership taxable
year, each Limited Partner shall be specially allocated items of Partnership
income and gain for such year (and, if necessary, subsequent years) in an amount
equal to such Limited Partner's share of the net decrease in Partnership Minimum
Gain, as determined under Regulations Section 1.704-2(g). Allocations pursuant
to the previous sentence shall be made in proportion to the respective amounts
required to be allocated to each Limited Partner pursuant thereto. The items to
be so allocated shall be determined in accordance with Regulations Section
1.704-2(f)(6). This Section 1.A is intended to comply with the minimum gain
chargeback requirements in Regulations Section 1.704-2(f) and shall be
interpreted consistently therewith. Solely for purposes of this Section 1.A,
each Limited Partner's Adjusted Capital Account Deficit shall be determined
prior to any other allocations pursuant to Section 6.1 of the Agreement or this
Exhibit for such Partnership taxable year and without regard to any decrease in
Partner Minimum Gain during such Partnership taxable year.
B. Partner Minimum Gain Chargeback. Notwithstanding any other
provision of Section 6.1 of this Agreement or any other provisions of this
Exhibit C (except Section 1.A hereof), if there is a net decrease in Partner
Minimum Gain attributable to a Partner Nonrecourse Debt during any Partnership
taxable year, each Limited Partner who has a share of the Partner Minimum Gain
attributable to such Partner Nonrecourse Debt, determined in accordance with
Regulations Section 1.702-2(i)(5), shall be specially allocated items of
Partnership income and gain for such year (and, if necessary, subsequent years)
in an amount equal to such Limited Partner's share of the net decrease in
Partner Minimum Gain attributable to such Partner Nonrecourse Debt, determined
in accordance with Regulations Section 1.704-2(i)(5). Allocations pursuant to
the previous sentence shall be made in proportion to the respective amounts
required to be allocated to each Limited Partner pursuant thereto. The items to
be so allocated shall be determined in accordance with Regulations Section
1.704-2(i)(4). This Section 1.B is intended to comply with the minimum gain
chargeback requirement in such Section of the Regulations and shall be
interpreted consistently therewith. Solely for purposes of this Section 1.B,
each Limited Partner's Adjusted Capital Account Deficit shall be determined
prior to any other allocations pursuant to Section 6.1 of the Agreement or this
Exhibit with respect to such Partnership taxable year, other than allocations
pursuant to Section 1.A hereof.
C. Qualified Income Offset. In the event any Limited Partner
unexpectedly receives any adjustments, allocations or distributions described in
Regulations Sections 1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5), or
1.704-1(b)(2)(ii)(d)(6), and, after giving effect to the allocations required
under Sections 1.A and 1.B hereof, such Limited Partner has an Adjusted Capital
Account Deficit, items of Partnership income and gain (consisting of a pro rata
portion of each item of Partnership income and gain for the Partnership taxable
year) shall be specially allocated to such Limited Partner in an amount and
manner sufficient to eliminate, to the extent required by the Regulations, its
Adjusted Capital Account Deficit created by such adjustments, allocations or
distributions as quickly as possible.
X. Xxxxx Income Allocation. In the event that any Limited Partner
has an Adjusted Capital Account Deficit at the end of any Partnership taxable
year (after taking into account allocations to be made under the preceding
paragraphs hereof with respect to such Partnership taxable year) each such
Limited Partner shall be specially allocated items of Partnership income and
gain (consisting of a pro rata portion of each item of Partnership income,
including gross income and gain for the Partnership taxable year) in an amount
and manner sufficient to eliminate, to the extent required by the Regulations,
its Adjusted Capital Account Deficit.
E. Partner Nonrecourse Deductions. Any Partner Nonrecourse
Deductions for any Partnership taxable year shall be specially allocated to the
Limited Partner who bears the economic risk of loss with respect to the Partner
Nonrecourse Debt to which such Partner Nonrecourse Deductions are attributable
in accordance with Regulations Section 1.704-2(i).
F. Code Section 754 Adjustments. To the extent an adjustment to the
adjusted tax basis of any Partnership asset pursuant to Section 734(b) or 743(b)
of the Code is required, pursuant to Regulations Section 1.704-1(b)(2)(iv)(m),
to be taken into account in determining Capital Accounts, the amount of such
adjustment to the Capital Accounts shall be treated as an item of gain (if the
adjustment increases the basis of the asset) or loss (if the adjustment
decreases such basis) and such item of gain or loss shall be specially allocated
to the Limited Partners in a manner consistent with the manner in which their
Capital Accounts are required to be adjusted pursuant to such Section of the
Regulations.
G. Curative Allocations. The allocations set forth in Section 1.A
through 1.E of this Exhibit C (the "Regulatory Allocations") are intended to
comply with certain requirements of the Regulations under Section 704(b) of the
Code. The Regulatory Allocations may not be consistent with the manner in which
the Partners intend to divide Partnership distributions. Accordingly, the
General Partner is hereby authorized to divide other allocations of income,
gain, deduction and loss among the Limited Partners so as to prevent the
Regulatory Allocations from distorting the manner in which Partnership
distributions will be divided among the Limited Partners. In general, the
Limited Partners anticipate that, if necessary, this will be accomplished by
specially allocating other items of income, gain, loss and deduction among the
Limited Partners so that the net amount of the Regulatory Allocations and such
special allocations to each person is zero. However, the General Partner will
have discretion to accomplish this result in any reasonable manner; provided,
however, that no allocation pursuant to this Section 1.G shall cause the
Partnership to fail to comply with the requirements of Regulations Sections
1.704-1(b)(2)(ii)(d), -2(e) or -2(i).
2. Allocations for Tax Purposes
A. Except as otherwise provided in this Section 2, for federal
income tax purposes, each item of income, gain, loss and deduction shall be
allocated among the Limited Partners in the same manner as its correlative item
of "book" income, gain, loss or deduction is allocated pursuant to Section 6.1
of the Agreement and Section 1 of this Exhibit C.
B. In an attempt to eliminate Book-Tax Disparities attributable to a
Contributed Property or Adjusted Property, items of income, gain, loss, and
deduction shall be allocated for federal income tax purposes among the Limited
Partners as follows:
(1)(a) In the case of a Contributed Property, such items
attributable thereto shall be allocated among the Limited Partners,
consistent with the principles of Section 704(c) of the Code and the
Regulations thereunder, to take into account the variation between the
704(c) Value of such property and its adjusted basis at the time of
contribution; and
(b) Any item of Residual Gain or Residual Loss attributable to a
Contributed Property shall be allocated among the Limited Partners in the
same manner as its correlative item of "book" gain or loss is allocated
pursuant to Section 6.1 of the Agreement and Section 1 of this Exhibit C.
(2)(a) In the case of an Adjusted Property, such items shall first
be allocated among the Limited Partners in a manner consistent with the
principles of Section 704(c) of the Code and the Regulations thereunder to
take into account the Unrealized Gain or Unrealized Loss attributable to
such property and the allocations thereof pursuant to Exhibit B; and
(b) Second, in the event such property was originally a Contributed
Property, be allocated among the Limited Partners in a manner consistent
with Section 2.B(1) of this Exhibit C; and
(c) Any item of Residual Gain or Residual Loss attributable to an
Adjusted Property that was not originally a Contributed Property shall be
allocated among the Limited Partners in the same manner as its correlative
item of "book" gain or loss is allocated pursuant to Section 6.1 of the
Agreement and Section 1 of this Exhibit C.
C. The General Partner shall have the authority to elect the Section
704(c) allocation method to be used by the Partnership, and such election shall
be binding on all Partners.
