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EXHIBIT 10.1
THIRD AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
CAMDEN OPERATING, L.P.
Dated as of ____________, 1997
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Dated as of _________, 1997
TABLE OF CONTENTS
ARTICLE I DEFINED TERMS..............................................1
ARTICLE II ORGANIZATIONAL MATTERS....................................11
Section 2.1 Organization.........................................11
Section 2.2 Name.................................................12
Section 2.3 Registered Office and Agent; Principal Office........12
Section 2.4 Power of Attorney....................................12
Section 2.5 Term.................................................13
ARTICLE III PURPOSE..................................................13
Section 3.1 Purpose and Business.................................13
Section 3.2 Powers...............................................14
ARTICLE IV CAPITAL CONTRIBUTIONS AND ISSUANCES OF
PARTNERSHIP INTERESTS............................................14
Section 4.1 Capital Contributions of the Partners................14
Section 4.2 Issuances of Partnership Interests...................15
Section 4.3 Minimum Percentage Interest of General Partner.......16
Section 4.4 No Preemptive Rights.................................16
Section 4.5 Other Contribution Provisions........................17
Section 4.6 No Interest on Capital...............................17
ARTICLE V DISTRIBUTIONS..............................................17
Section 5.1 Requirement and Characterization of Distributions....17
Section 5.2 Amounts Withheld.....................................20
Section 5.3 Distributions Upon Liquidation.......................20
Section 5.4 Amendments to Reflect Issuance of Additional
Partnership Interests......................................20
ARTICLE VI ALLOCATIONS...............................................20
Section 6.1 Allocations For Capital Account Purposes.............20
Section 6.2 Amendments to Allocations to Reflect Issuance
of Additional Partnership Interests........................22
ARTICLE VII MANAGEMENT AND OPERATIONS OF BUSINESS....................22
Section 7.1 Management...........................................22
Section 7.2 Certificate of Limited Partnership...................25
Section 7.3 Restrictions on General Partner's Authority..........25
Section 7.4 Reimbursement of the General Partner.................26
Section 7.5 Outside Activities of the General Partner............27
Section 7.6 Contracts with Affiliates............................27
Section 7.7 Indemnification......................................28
Section 7.8 Liability of the General Partner.....................30
Section 7.9 Other Matters Concerning the General Partner.........30
Section 7.10 Title to Partnership Assets.........................31
Section 7.11 Reliance by Third Parties...........................31
ARTICLE VIII RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS..............32
Section 8.1 Limitation of Liability..............................32
Section 8.2 Management of Business...............................32
Section 8.3 Outside Activities of Limited Partners...............32
Section 8.4 Return of Capital....................................32
Section 8.5 Rights of Limited Partners Relating to the
Partnership................................................33
Section 8.6 Redemption Right.....................................34
ARTICLE IX BOOKS, RECORDS, ACCOUNTING AND REPORTS....................36
Section 9.1 Records and Accounting...............................36
Section 9.2 Fiscal Year..........................................36
Section 9.3 Reports..............................................36
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ARTICLE X TAX MATTERS................................................37
Section 10.1 Preparation of Tax Returns..........................37
Section 10.2 Tax Elections.......................................37
Section 10.3 Tax Matters Partner.................................37
Section 10.4 Organizational Expenses.............................38
Section 10.5 Withholding.........................................38
ARTICLE XI TRANSFERS AND WITHDRAWALS.................................39
Section 11.1 Transfer............................................39
Section 11.2 Transfers of Partnership Interests of
General Partner............................................39
Section 11.3 Limited Partners' Rights to Transfer................40
Section 11.4 Substituted Limited Partners........................41
Section 11.5 Assignees...........................................42
Section 11.6 General Provisions..................................42
ARTICLE XII ADMISSION OF PARTNERS....................................43
Section 12.1 Admission of Successor General Partner..............43
Section 12.2 Admission of Additional Limited Partners............43
Section 12.3 Amendment of Agreement and Certificate of Limited
Partnership................................................44
ARTICLE XIII DISSOLUTION AND LIQUIDATION.............................44
Section 13.1 Dissolution.........................................44
Section 13.2 Winding Up..........................................45
Section 13.3 Compliance with Timing Requirements of
Regulations................................................46
Section 13.4 Deemed Distribution and Recontribution..............46
Section 13.5 Rights of Limited Partners..........................47
Section 13.6 Notice of Dissolution...............................47
Section 13.7 Termination of Partnership and Cancellation
of Certificate of Limited Partnership......................47
Section 13.8 Reasonable Time for Winding Up......................47
Section 13.9 Waiver of Partition.................................47
Section 13.10 Liability of Liquidator............................47
ARTICLE XIV AMENDMENT OF PARTNERSHIP AGREEMENT;
MEETINGS.........................................................48
Section 14.1 Amendments..........................................48
Section 14.2 Meetings of the Partners............................49
ARTICLE XV GENERAL PROVISIONS........................................50
Section 15.1 Addresses and Notice................................50
Section 15.2 Titles and Captions.................................50
Section 15.3 Pronouns and Plurals................................50
Section 15.4 Further Action......................................50
Section 15.5 Binding Effect......................................50
Section 15.6 Creditors...........................................50
Section 15.7 Waiver..............................................51
Section 15.8 Counterparts........................................51
Section 15.9 Applicable Law......................................51
Section 15.10 Invalidity of Provisions...........................51
Section 15.11 Entire Agreement...................................51
Section 15.12 Guaranty by CPT....................................51
Section 15.13 No Rights as Shareholders..........................51
Section 15.14 Limitation to Preserve REIT Status.................52
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EXHIBIT A
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PARTNERS AND
PARTNERSHIP INTERESTS
EXHIBIT B
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CAPITAL ACCOUNT MAINTENANCE
EXHIBIT C
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SPECIAL ALLOCATION RULES
EXHIBIT D
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NOTICE OF REDEMPTION
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THIRD AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
CAMDEN OPERATING, L.P.
THIS THIRD AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP,
dated as of , 1997, is entered into by and among CPT-GP, Inc. ("CPT GP"), a
Delaware corporation and a wholly owned subsidiary of Camden Subsidiary, Inc.
("Camden Subsidiary"), a Delaware corporation, in turn a wholly owned subsidiary
of Camden Property Trust ("CPT"), a Texas real estate investment trust, as the
General Partner of the Partnership, and (i) PGI Associates, L.P., ("PGI
Associates") a Texas limited partnership, (ii) CPT-LP, Inc. ("CPT LP"), a
Delaware corporation and a wholly owned subsidiary of Camden Subsidiary, and
(iii) FWP, L.P., a Texas limited partnership, each as a Limited Partner,
together with those other Persons whose names are set forth on EXHIBIT A
attached hereto as additional Limited Partners and any other Persons who become
Partners in the Partnership as provided herein. CPT is a party to this Agreement
solely for purposes of Sections 4.2.B, 5.1.C, 7.4, 7.5, 7.7, 7.8, 8.6, 11.2, and
15.12.
WHEREAS, the Partnership was formed on December 31, 1993, and on July 27,
1994, the Partnership adopted the First Amended and Restated Agreement of
Limited Partnership of Paragon Group L.P. and on November 1, 1994, the
Partnership adopted the Second Amended and Restated Agreement of Limited
Partnership of Paragon Group L.P. (the "Prior Agreement"); and
WHEREAS, the Partnership desires to amend and restate the Prior Agreement
to change the name of the Partnership to Camden Operating, L.P. and to implement
various other changes in connection with the merger of Paragon Group, Inc., the
former parent corporation of CPT GP, with Camden Subsidiary pursuant to the
Merger Agreement (as defined);
WHEREAS, in connection with this amendment and restatement, the
Partnership desires to restate the number of Partnership Units held by each
Partner so that, after giving effect to this amendment and restatement, the
number of Partnership Units held by each Partner shall be equal to the product
of (i) the number of Partnership Units held by such Partner immediately prior to
the Effective Date multiplied by (ii) the fraction of a share of CPT that each
holder of one share of Paragon Group, Inc. received in connection with the
merger of Paragon Group, Inc. with Camden Subsidiary pursuant to the Merger
Agreement (determined without regard to provisions of the Merger Agreement
related to fractional shares);
NOW, THEREFORE, in consideration of the mutual covenants set forth herein,
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto hereby amend and restate the
Prior Agreement in its entirety and agree to continue the Partnership as a
limited partnership under the Delaware Revised Uniform Limited Partnership Act,
as amended from time to time, 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.
"ADDITIONAL LIMITED PARTNER" means a Person admitted to the
Partnership as a Limited Partner pursuant to Section 12.2 hereof and who is
shown as such on the books and records of the Partnership.
"ADJUSTED CAPITAL ACCOUNT" means the Capital Account maintained for
each Partner as of the end of each Partnership Year (i) increased by any amounts
which such Partner is obligated to restore pursuant to any provision of this
Agreement or is deemed to be obligated to restore pursuant to the penultimate
sentences of Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5) and (ii)
decreased by the items described in Regulations Sections
1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5) and 1.704-1(b)(2)(ii)(d)(6).
The foregoing definition of Adjusted Capital Account is intended to comply with
the provisions of Regulations Section 1.704-1(b)(2)(ii)(d) and shall be
interpreted consistently therewith.
"ADJUSTED CAPITAL ACCOUNT DEFICIT" means, with respect to any
Partner, the deficit balance, if any, in such Partner's Adjusted Capital Account
as of the end of the relevant Partnership Year.
"ADJUSTED PROPERTY" means any property the Carrying Value of which
has been adjusted pursuant to EXHIBIT B hereto. [Once an Adjusted Property is
deemed distributed by, and recontributed to, the Partnership for federal income
tax purposes upon a termination thereof pursuant to Section 708 of the Code,
such property shall thereafter constitute a Contributed Property until the
Carrying Value of such property is further adjusted pursuant to Section 1.D of
EXHIBIT B hereto.] [TO BE DELETED IF PROPOSED REGULATIONS ARE ADOPTED.]
"AFFILIATE" means, with respect to any Person, (i) any Person
directly or indirectly controlling, controlled by or under common control with
such Person, (ii) any Person owning or controlling ten percent (10%) or more of
the outstanding voting interests of such Person, (iii) any Person of which such
Person owns or controls ten percent (10%) or more of the voting interests or
(iv) any officer, director, general partner or trustee of such Person or any
Person referred to in clauses (i), (ii), and (iii) above. 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.
"AGREED VALUE" means (i) in the case of any Contributed Property,
the 704(c) Value of such property as of the time of its contribution to the
Partnership, reduced by any liabilities either assumed by the Partnership upon
such contribution or to which such property is subject when contributed; and
(ii) 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 Third Amended and Restated Agreement of
Limited Partnership, as it may be amended, supplemented or restated from time to
time.
"ASSIGNEE" means a Person to whom one or more Partnership Units have
been transferred in a manner permitted under this Agreement, but who has not
become a Substituted Limited Partner, and who has the rights set forth in
Section 11.5 hereof.
"AVAILABLE CASH" means, with respect to any period for which such
calculation is being made:
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(a) all cash received by the Partnership from whatever source
(excluding the proceeds of any Capital Contribution) plus the amount of any
reduction (including, without limitation, a reduction resulting because the
General Partner determines such amounts are no longer necessary) in reserves of
the Partnership, which reserves are referred to in clause (b)(iv) below;
(b) less the sum of the following (except to the extent made with
the proceeds of any Capital Contribution):
(i) all interest, principal and other debt payments made
during such period by the Partnership,
(ii) all cash expenditures (including capital expenditures)
made by the Partnership during such period (including any payments made by the
Partnership as the result of the exercise by a Limited Partner of the Redemption
Right),
(iii) investments in any entity (including loans made thereto)
to the extent that such investments are permitted under this Agreement and are
not otherwise described in clauses (b)(i) or (ii),
(iv) the amount of any increase in reserves (whether for
contingencies, working capital or otherwise) established during such period
which the General Partner determines is necessary or appropriate in its
reasonable discretion, and
(v) all distributions previously made by the Partnership with
respect to such period.
Notwithstanding the foregoing, Available Cash shall not include any cash
received or reductions in reserves, or take into account any disbursements made
or reserves established, after commencement of the dissolution and liquidation
of the Partnership.
"BOOK-TAX DISPARITIES" means, with respect to any item of
Contributed Property or Adjusted Property, as of the date of any determination,
the difference between the Carrying Value of such Contributed Property or
Adjusted Property and the adjusted basis thereof for federal income tax purposes
as of such date. A Partner's share of the Partnership's Book-Tax Disparities in
all of its Contributed Property and Adjusted Property will be reflected by the
difference between such Partner's Capital Account balance as maintained pursuant
to EXHIBIT B hereto and the hypothetical balance of such Partner's Capital
Account computed as if it had been maintained, with respect to each such
Contributed Property or Adjusted Property, strictly in accordance with federal
income tax accounting principles.
"BUSINESS DAY" means any day except a Saturday, Sunday or other day
on which commercial banks in New York, New York are authorized or required by
law to close.
"CAPITAL ACCOUNT" means the Capital Account maintained for a Partner
pursuant to EXHIBIT B hereto. The Capital Account balance of each Partner who is
a Partner on the Effective Date shall be set forth opposite such Partner's name
on EXHIBIT A hereto.
"CAPITAL CONTRIBUTION" means, with respect to any Partner, any cash,
cash equivalents or the Agreed Value of Contributed Property which such Partner
contributes or is deemed to contribute to the Partnership pursuant to Section
4.1, 4.2, or 4.3 hereof.
"CARRYING VALUE" means (i) with respect to a Contributed Property or
Adjusted Property, the 704(c) Value of such property reduced (but not below
zero) by all Depreciation with
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respect to such Contributed Property or Adjusted Property, as the case may be,
charged to the Partners' Capital Accounts and (ii) with respect to any other
Partnership property, the adjusted basis of such property for federal income tax
purposes, all as of the time of determination. The Carrying Value of any
property shall be adjusted from time to time in accordance with EXHIBIT B
hereto, and to reflect changes, additions or other adjustments to the Carrying
Value for dispositions and acquisitions of Partnership properties, as deemed
appropriate by the General Partner.
"CASH AMOUNT" means an amount of cash equal to the Value on the
Valuation Date of the Shares Amount.
"CERTIFICATE" means the Certificate of Limited Partnership relating
to the Partnership filed in the office of the Delaware Secretary of State, as
amended from time to time in accordance with the terms hereof and the Act.
"CLASS A" has the meaning set forth in Section 5.1.D hereof.
"CLASS A SHARE" has the meaning set forth in Section 5.1.D hereof.
"CLASS A UNIT" means any Partnership Unit that is not specifically
designated by the General Partner as being of another specified class of
Partnership Units.
"CLASS B" has the meaning set forth in Section 5.1.D hereof.
"CLASS B SHARE" has the meaning set forth in Section 5.1.D hereof.
"CLASS B UNIT" means a Partnership Unit that is specifically
designated by the General Partner as being a Class B Unit.
"CODE" means the Internal Revenue Code of 1986, as amended and in
effect from time to time, as interpreted by the applicable regulations
thereunder. Any reference herein to a specific section or sections of the Code
shall be deemed to include a reference to any corresponding provision of future
law.
"CONSENT" means the consent or approval of a proposed action by a
Partner given in accordance with Section 14.2 hereof.
"CONSENT OF THE OUTSIDE LIMITED PARTNERS" means the Consent of
Limited Partners (excluding for this purpose any Limited Partner Interests held
by the General Partner, by CPT LP, by any Person of which either the General
Partner or CPT LP owns or controls more than fifty percent (50%) of the voting
interests, or by any Person owning or controlling, directly or indirectly, more
than fifty percent (50%) of the outstanding voting interests of either the
General Partner or CPT LP) holding Percentage Interests that are greater than
fifty percent (50%) of the aggregate Percentage Interests of all Limited
Partners who are not excluded for the purposes hereof.
"CONTRIBUTED PROPERTY" means each property or other asset
contributed to the Partnership, in such form as may be permitted by the Act, but
excluding cash contributed or deemed contributed to the Partnership [(and also
excluding deemed contributions to the Partnership on termination and
recontribution thereof pursuant to Section 708 of the Code)]. [TO BE DELETED IF
PROPOSED REGULATIONS ARE ADOPTED.] Once the Carrying Value of a Contributed
Property is adjusted pursuant to EXHIBIT B hereto, such property shall no longer
constitute a Contributed Property for purposes of EXHIBIT B hereto, but shall be
deemed an Adjusted Property for such purposes.
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"CONVERSION FACTOR" means 1.0; PROVIDED that in the event that the
General Partner Entity (i) declares or pays a dividend on its outstanding Shares
in Shares or makes a distribution to all holders of its outstanding Shares in
Shares, (ii) subdivides its outstanding Shares or (iii) combines its outstanding
Shares into a smaller number of Shares, the Conversion Factor shall be adjusted
by multiplying the Conversion Factor by a fraction, the numerator of which shall
be the number of Shares issued and outstanding on the record date for such
dividend, distribution, subdivision or combination (assuming for such purposes
that such dividend, distribution, subdivision or combination has occurred as of
such time) and the denominator of which shall be the actual number of Shares
(determined without the above assumption) issued and outstanding on the record
date for such dividend, distribution, subdivision or combination and; PROVIDED
FURTHER that in the event that one entity shall cease to be the General Partner
Entity (the "Predecessor Entity") and another entity shall become the General
Partner Entity (the "Successor Entity"), the Conversion Factor shall be adjusted
by multiplying the Conversion Factor by a fraction, the numerator of which is
the Value of one Share of the Predecessor Entity, determined as of the time
immediately prior to when the Successor Entity becomes the General Partner
Entity, and the denominator of which is the Value of one Share of the Successor
Entity, determined as of that same date. (For purposes of the second proviso in
the preceding sentence, in the event that any shareholders of the Predecessor
Entity will receive consideration in connection with the transaction in which
the Successor Entity becomes the General Partner Entity, the numerator in the
fraction described above for determining the adjustment to the Conversion Factor
(that is, the Value of one Share of the Predecessor Entity) shall be the sum of
the greatest amount of cash and the fair market value of any securities and
other consideration that the holder of one Share in the Predecessor Entity could
have received in such transaction (determined without regard to any provisions
governing fractional shares)). Any adjustment to the Conversion Factor shall
become effective immediately after the effective date of the event giving rise
thereto, retroactive to the record date, if any, for such event; it being
intended that (x) adjustments to the Conversion Factor are to be made in order
to avoid unintended dilution or anti-dilution as a result of transactions in
which Shares are issued, redeemed, or exchanged without a corresponding
issuance, redemption or exchange of Partnership Units and (y) if a Specified
Redemption Date shall fall between the record date and the effective date of any
event of the type described above, that the Conversion Factor applicable to such
redemption shall be adjusted to take into account such event.
"DEBT" means, as to any Person, as of any date of determination, (i)
all indebtedness of such Person for borrowed money or for the deferred purchase
price of property or services, (ii) all amounts owed by such Person to banks or
other Persons in respect of reimbursement obligations under letters of credit,
surety bonds and other similar instruments guaranteeing payment or other
performance of obligations by such Person, (iii) all indebtedness for borrowed
money or for the deferred purchase price of property or services secured by any
lien on any property owned by such Person, to the extent attributable to such
Person's interest in such property, even though such Person has not assumed or
become liable for the payment thereof, and (iv) obligations of such Person
incurred in connection with entering into a lease which, in accordance with
generally accepted accounting principles, should be capitalized.
"DECLARATION OF TRUST" means the Amended and Restated Declaration of
Trust of CPT filed in the office of the Secretary of State of Texas on July 19,
1993, as amended, or other organizational document governing CPT or any
successor General Partner Entity, as amended or restated from time to time.
"DEPRECIATION" means, for each Partnership 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
5
adjusted tax basis; PROVIDED, HOWEVER, that if the federal income tax
depreciation, amortization, or other cost recovery deduction for such year is
zero, Depreciation shall be determined with reference to such beginning Carrying
Value using any reasonable method selected by the General Partner.
"DISTRIBUTION PERIOD" has the meaning set forth in Section 5.1.D
hereof.
"EFFECTIVE DATE" means the date on which the merger of Paragon
Group, Inc. with Camden Subsidiary, as contemplated by the Merger Agreement, is
consummated.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
"GENERAL PARTNER" means CPT GP, a Delaware corporation, or its
successors as general partner of the Partnership.
"GENERAL PARTNER ENTITY" means CPT; PROVIDED, HOWEVER, that if (i)
the shares of beneficial interest (or other comparable common equity interests)
of CPT or any successor General Partner Entity are at any time not Publicly
Traded and (ii) the shares of common stock (or other comparable equity
interests) of an entity that owns, directly or indirectly, fifty percent (50%)
or more of the shares of common stock (or other comparable equity interests) of
either the General Partner, CPT, or any other successor General Partner Entity
are Publicly Traded, the term "General Partner Entity" shall refer to such
entity whose shares of common stock (or other comparable equity securities) are
Publicly Traded.
"GENERAL PARTNER PAYMENT" has the meaning set forth in Section 15.14
hereof.
"GENERAL PARTNER INTEREST" means a Partnership Interest held by the
General Partner in the capacity of a general partner. A General Partner Interest
may be expressed as a number of Partnership Units.
"IRS" means the Internal Revenue Service, which administers the
internal revenue laws of the United States.
"IMMEDIATE FAMILY" means, with respect to any natural Person, such
natural Person's spouse, parent's, descendants, nephews, nieces, brothers and
sisters.
"INCAPACITY" or "INCAPACITATED" means, (i) as to any individual
Partner, death, total physical disability or entry by a court of competent
jurisdiction adjudicating such Partner incompetent to manage such Person's
affairs 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 which is a Partner, the
dissolution and commencement of winding up of the partnership, (iv) 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 (v) as to any Partner, the bankruptcy of such
Partner. For purposes of this definition, bankruptcy of a Partner shall be
deemed to have occurred when (a) the Partner commences a voluntary proceeding
seeking liquidation, reorganization or other relief of or against such Partner
under any bankruptcy, insolvency or other similar law now or hereafter in
effect, (b) the Partner is adjudged as bankrupt or insolvent, or a final and
nonappealable order for relief under any bankruptcy, insolvency or similar law
now or hereafter in effect has been entered against the Partner, (c) the Partner
executes and delivers a general assignment for the benefit of the Partner's
creditors, (d) the Partner files an answer or other pleading admitting or
failing to contest the material allegations of a petition filed against the
Partner in any proceeding of the nature described in clause (b) above, (e) the
Partner seeks, consents to or acquiesces in the appointment of a trustee,
receiver or liquidator for the Partner or for all or any substantial part of the
Partner's
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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 that
has not been vacated or stayed within ninety (90) days of such appointment or
(h) an appointment referred to in clause (g) is not vacated within ninety (90)
days after the expiration of any such stay.
"INDEMNITEE" means (i) any Person made a party to a proceeding or
threatened with being made a party to a proceeding by reason of the Person's
status as (A) the General Partner, (B) a Limited Partner or (C) a director,
officer, employee or agent of the Partnership or the General Partner or an
Affiliate and (ii) such other Persons (including Affiliates of the General
Partner, a Limited 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.
"LIMITED PARTNER" means PGI Associates, CPT LP, FWP, L.P. and any
other Person named as a Limited Partner in EXHIBIT A attached hereto, as such
Exhibit may be amended and restated from time to time, or any Substituted
Limited Partner or Additional Limited Partner, in such Person's capacity as a
Limited Partner in the Partnership.
"LIMITED PARTNER INTEREST" means a Partnership Interest held by a
Limited Partner in the Partnership in the capacity of a limited partner
representing a fractional part of the Partnership Interests of all Limited
Partners. A Limited Partner Interest may be expressed as a number of Partnership
Units.
"LIQUIDATING EVENT" has the meaning set forth in Section 13.1
hereof.
"LIQUIDATOR" has the meaning set forth in Section 13.2.A hereof.
"MERGER AGREEMENT" means the Agreement and Plan of Merger, dated as
of December 16, 1996, among Paragon Group, Inc., CPT, and Camden Subsidiary.
"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
EXHIBIT B hereto. If an item of income, gain, loss or deduction that has been
included in the initial computation of Net Income is subjected to the special
allocation rules in EXHIBIT C hereto, Net Income or the resulting Net Loss,
whichever the case may be, shall be recomputed without regard to such item.
"NET LOSS" means, for any taxable period, the excess, if any, of the
Partnership's items of loss and deduction for such taxable period over the
Partnership's items of income and gain for such taxable period. The items
included in the calculation of Net Loss shall be determined in accordance with
EXHIBIT B hereto. If an item of income, gain, loss or deduction that has been
included in the initial computation of Net Loss is subjected to the special
allocation rules in EXHIBIT C hereto, Net Loss or the resulting Net Income,
whichever the case may be, shall be recomputed without regard to such item.
"NEW SECURITIES" means any rights, options, warrants or convertible
or exchangeable securities having the right to subscribe for or purchase Shares
or other shares of capital stock (or other comparable equity interest) of the
General Partner Entity.
"NONRECOURSE BUILT-IN GAIN" means, with respect to any Contributed
Properties or Adjusted Properties that are subject to a mortgage or negative
pledge securing a Nonrecourse Liability, the amount of any taxable gain that
would be allocated to the Partners pursuant to
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Section 2.B of EXHIBIT C hereto if such properties were disposed of in a taxable
transaction in full satisfaction of such liabilities and for no other
consideration.
"NONRECOURSE DEDUCTIONS" has the meaning set forth in Regulations
Section 1.704-2(b)(1), and the amount of Nonrecourse Deductions for a
Partnership Year shall be determined in accordance with the rules of Regulations
Section 1.704-2(c).
"NONRECOURSE LIABILITY" has the meaning set forth in Regulations
Section 1.752- 1(a)(2).
"NOTICE OF REDEMPTION" means a Notice of Redemption substantially in
the form of EXHIBIT D hereto.
"PARTNER" means the General Partner or a Limited Partner, and
"Partners" means the General Partner and the Limited Partners.
"PARTNER MINIMUM GAIN" means an amount, with respect to each Partner
Nonrecourse Debt, equal to the Partnership Minimum Gain that would result if
such Partner Nonrecourse Debt were treated as a Nonrecourse Liability,
determined in accordance with Regulations Section 1.704-2(i)(3).
"PARTNER NONRECOURSE DEBT" has the meaning set forth in Regulations
Section 1.704-2(b)(4).
"PARTNER NONRECOURSE DEDUCTIONS" has the meaning set forth in
Regulations Section 1.704-2(i)(2), and the amount of Partner Nonrecourse
Deductions with respect to a Partner Nonrecourse Debt for a Partnership Year
shall be determined in accordance with the rules of Regulations Section
1.704-2(i)(2).
"PARTNERSHIP" means the limited partnership formed under the Act and
continued upon the terms and conditions set forth in this Agreement, and any
successor thereto.
"PARTNERSHIP INTEREST" means a Limited Partner Interest or the
General Partner Interest and includes any and all benefits to which the holder
of such may be entitled as provided in this Agreement, together with all
obligations of such Person to comply with the terms and provisions of this
Agreement. A Partnership Interest may be expressed as a number of Partnership
Units.
"PARTNERSHIP MINIMUM GAIN" has the meaning set forth in Regulations
Section 1.704-2(b)(2), and the amount of Partnership Minimum Gain, as well as
any net increase or decrease in Partnership Minimum Gain, for a Partnership Year
shall be determined in accordance with the rules of Regulations Section
1.704-2(d).
"PARTNERSHIP RECORD DATE" means the record date established by the
General Partner either (i) for the distribution of Available Cash pursuant to
Section 5.1 hereof, which record date shall be the same as the record date
established by the General Partner Entity for a distribution to its
shareholders, or (ii) if applicable, for determining the Partners entitled to
vote on or consent to any proposed action for which the Consent or approval of
the Partners is sought pursuant to Section 14.2 hereof.
"PARTNERSHIP UNIT" means a fractional, undivided share of the
Partnership Interests of all Partners issued pursuant to Sections 4.1 and 4.2
hereof, and includes Class A Units, Class B Units and any other classes or
series of Partnership Units established after the date hereof. The number of
Partnership Units outstanding and the Percentage Interests in the Partnership
represented by such Partnership Units are set forth in EXHIBIT A hereto, as such
Exhibit may be
8
amended and restated from time to time. The term Partnership Units as used in
this Agreement refers to the Partnership Units as restated on the Effective Date
pursuant to Section 4.1.A. The ownership of Partnership Units may be evidenced
by a certificate in a form approved by the General Partner.
"PARTNERSHIP YEAR" means the fiscal year of the Partnership, which
shall be the calendar year.
"PERCENTAGE INTEREST" means, as to a Partner holding a class of
Partnership Interests, its interest in such class, determined by dividing the
Partnership Units of such class owned by such Partner by the total number of
Partnership Units of such class then outstanding as specified in EXHIBIT A
attached hereto, as such exhibit may be amended and restated from time to time,
multiplied by the aggregate Percentage Interest allocable to such class of
Partnership Interests. In the event that the Partnership shall at any time have
outstanding more than one class of Partnership Interests, the Percentage
Interest attributable to each class of Partnership Interests, relative to other
classes of Partnership Interests, shall be determined by the General Partner,
using its reasonable discretion, based upon the relative economic rights of such
classes of Partnership Interests.
"PERSON" means a natural person, partnership (whether general or
limited), trust, estate, association, corporation, limited liability company,
unincorporated organization, custodian, nominee or any other individual or
entity in its own or any representative capacity.
"PRIOR AGREEMENT" means the Second Amended and Restated Agreement of
Limited Partnership of Paragon Group L.P., dated as of November 1, 1994, as
amended and restated prior to the date hereof, which Prior Agreement is amended
and restated in its entirety by this Agreement.
"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 System, or
any successor to any of the foregoing.
"RECAPTURE INCOME" means any gain recognized by the Partnership
(computed without regard to any adjustment required by Sections 734, 743, and
754 of the Code) upon the disposition of any property or asset of the
Partnership, which gain is characterized as ordinary income because it
represents the recapture of deductions previously taken with respect to such
property or asset.
"REDEEMING PARTNER" has the meaning set forth in Section 8.6.A
hereof.
"REDEMPTION AMOUNT" means either the Cash Amount or the Shares
Amount, as determined by the General Partner in its sole and absolute
discretion; PROVIDED that in the event that the Shares are not Publicly Traded
at the time a Redeeming Partner exercises its Redemption Right, the Redemption
Amount shall be paid only in the form of the Cash Amount unless the Redeeming
Partner and the General Partner agree to the contrary.
"REDEMPTION RIGHT" has the meaning set forth in Section 8.6.A
hereof.
"REGULATIONS" means the Income Tax Regulations promulgated under the
Code, as such regulations may be amended from time to time (including
corresponding provisions of succeeding regulations).
"REIT" means a real estate investment trust under Sections 856
through 859 of the Code.
9
"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)(b) or 2.B.(2)(b) of EXHIBIT C hereto to
eliminate Book- Tax Disparities.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"704(C) VALUE" means with respect to any 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 hereto, 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 each separate property on a basis proportional to
their fair market values.
"SHARE" means a share of beneficial interest (or other comparable
common equity interest) of the General Partner Entity. Shares may be issued in
one or more classes or series in accordance with the terms of the Declaration of
Trust (or, if CPT is not the General Partner Entity, the organizational
documents of the General Partner Entity). In the event that there is more than
one class or series of Shares, the term "Shares" shall, as the context requires,
be deemed to refer to the class or series of Shares that correspond to the class
or series of Partnership Interests, if any, for which the reference to Shares is
made.
"SHARES AMOUNT" means a number of Shares equal to the product of the
number of Partnership Units offered for redemption by a Redeeming Partner times
the Conversion Factor; PROVIDED THAT, in the event the General Partner Entity
issues to all holders of Shares rights, options, warrants or convertible or
exchangeable securities entitling such holders to subscribe for or purchase
Shares or any other securities or property (collectively, the "rights"), then
the Shares Amount shall also include such rights that a holder of that number of
Shares would be entitled to receive.
"SPECIFIED REDEMPTION DATE" means the tenth Business Day after
receipt by the General Partner of a Notice of Redemption; PROVIDED that if the
Shares are not Publicly Traded, the Specified Redemption Date means the
thirtieth Business Day after receipt by the General Partner of a Notice of
Redemption.
"SUBSIDIARY" means, with respect to any Person, any corporation,
limited liability company, partnership or joint venture, or other entity of
which a majority of (i) the voting power of the voting equity securities or (ii)
the outstanding equity interests is owned, directly or indirectly, by such
Person.
"SUBSTITUTED LIMITED PARTNER" means a Person who is admitted as a
Limited Partner to the Partnership pursuant to Section 11.4 hereof.
"TERMINATING CAPITAL TRANSACTION" means any sale or other
disposition of all or substantially all of the assets of the Partnership for
cash or a related series of transactions that, taken together, result in the
sale or other disposition of all or substantially all of the assets of the
Partnership for cash.
"TERMINATION TRANSACTION" has the meaning set forth in Section
11.2.B hereof.
"UNREALIZED GAIN" means, with respect to any item of Partnership
property as of any date of determination, the excess, if any, of (i) the fair
market value of such property (as determined under EXHIBIT B hereto) as of such
date, over (ii) the Carrying Value of such property (prior to any adjustment to
be made pursuant to EXHIBIT B hereto) as of such date.
10
"UNREALIZED LOSS" means, with respect to any item of Partnership
property 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 hereto) as of such date, over (ii) the fair market value of such
property (as determined under EXHIBIT B hereto) as of such date.
"VALUATION DATE" means the date of receipt by the General Partner of
a Notice of Redemption or, if such date is not a Business Day, the first
Business Day thereafter.
"VALUE" means, with respect to any outstanding Shares of the General
Partner Entity that are Publicly Traded, the average of the daily market price
for the ten (10) consecutive trading days immediately preceding the date with
respect to which value must be determined or, if such date is not a Business
Day, the immediately preceding Business Day. The market price for each such
trading day shall be the closing price, regular way, on such day, or if no such
sale takes place on such day, the average of the closing bid and asked prices on
such day. In the event that the outstanding Shares of the General Partner Entity
are Publicly Traded and the Shares Amount includes rights that a holder of
Shares would be entitled to receive, then the Value of such rights shall be
determined by the General Partner acting in good faith on the basis of such
quotations and other information as it considers, in its reasonable judgment,
appropriate. In the event that the Shares of the General Partner Entity are not
Publicly Traded, the Value of the Shares Amount per Partnership Unit offered for
redemption (which will be the Cash Amount payable pursuant to Section 8.6A
hereof) means the amount that a holder of one Partnership Unit would receive if
each of the assets of the Partnership were to be sold for its fair market value
on the Specified Redemption Date, the Partnership were to pay all of its
outstanding liabilities, and the remaining proceeds were to be distributed to
the Partners in accordance with Section 13.2. Such Value shall be determined by
the General Partner, acting in good faith and based upon a commercially
reasonable estimate of the net amount of cash that would be received by the
Partnership if each asset of the Partnership were sold to an unrelated purchaser
in an arms' length transaction where neither the purchaser nor the seller were
under economic compulsion to enter into the transaction and all Partnership Debt
was paid in full.
ARTICLE II
ORGANIZATIONAL MATTERS
SECTION 2.1 ORGANIZATION
The Partnership is a limited partnership organized pursuant to the
provisions of the Act and upon the terms and conditions set forth in the Prior
Agreement, as amended prior to the date hereof. The Partners hereby continue the
Partnership and amend and restate the Prior Agreement, as amended prior to the
date hereof in its entirety. Except as expressly provided herein to the
contrary, the rights and obligations of the Partners and the administration and
termination of the Partnership shall be governed by the Act. The Partnership
Interest of each Partner shall be personal property for all purposes.
SECTION 2.2 NAME
The name of the Partnership is Camden Operating, L.P. The
Partnership's business may be conducted under any other name or names deemed
advisable by the General Partner, including the name of the General Partner or
any Affiliate thereof. The words "Limited Partnership," "L.P.," "Ltd." or
similar words or letters shall be included in the Partnership's name where
necessary for the purposes of complying with the laws of any jurisdiction that
so requires. The General Partner in its sole and absolute discretion may change
the name of the Partnership at any
11
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 registered office of the Partnership in the State of Delaware
shall be located at National Registered Agents, Inc., 0 Xxxx Xxxxxxxxxx Xxxxxx,
Xxxxx, Xxxxxxxx 00000 and the registered agent for service of process on the
Partnership in the State of Delaware at such registered office shall be National
Registered Agents, Inc. The principal office of the Partnership shall be 0000
Xxxxxxxxx Xxxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxx 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.
SECTION 2.4 POWER OF ATTORNEY
A. GENERAL. Each Limited Partner and each Assignee who accepts
Partnership Units (or any rights, benefits or privileges associated therewith)
is deemed to irrevocably constitute and appoint the General Partner, any
Liquidator and authorized officers and attorneys-in-fact of each, and each of
those acting singly, in each case with full power of substitution, as its true
and lawful agent and attorney-in-fact, with full power and authority in its
name, place and stead to:
(1) execute, swear to, acknowledge, deliver, file and record in
the appropriate public offices (a) all certificates, documents
and other instruments (including, without limitation, this
Agreement and the Certificate and all amendments or
restatements thereof) that the General Partner or any
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 or any Liquidator deems appropriate
or necessary to reflect any amendment, change, modification or
restatement of this Agreement in accordance with its terms,
(c) all conveyances and other instruments or documents that
the General Partner or any 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 the
Capital Contribution of any Partner and (e) all certificates,
documents and other instruments relating to the determination
of the rights, preferences and privileges of Partnership
Interests; and
(2) execute, swear to, 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.
12
Nothing contained in this Section 2.4 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. IRREVOCABLE NATURE. The foregoing power of attorney is hereby
declared to be irrevocable and a power coupled with an interest, in recognition
of the fact that each of the Partners will be relying upon the power of the
General Partner or 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
or Assignee and the transfer of all or any portion of such Limited Partner's or
Assignee's Partnership Units and shall extend to such Limited Partner's or
Assignee's heirs, successors, assigns and personal representatives. Each such
Limited Partner or Assignee hereby agrees to be bound by any representation made
by the General Partner or any Liquidator, acting in good faith pursuant to such
power of attorney; and each such Limited Partner or Assignee hereby waives any
and all defenses which may be available to contest, negate or disaffirm the
action of the General Partner or any Liquidator, taken in good faith under such
power of attorney. Each Limited Partner or Assignee shall execute and deliver to
the General Partner or the Liquidator, within fifteen (15) days after receipt of
the General Partner's or Liquidator's request therefor, such further
designations, powers of attorney and other instruments as the General Partner or
the Liquidator, as the case may be, deems necessary to effectuate this Agreement
and the purposes of the Partnership.
SECTION 2.5 TERM
The term of the Partnership commenced on December 31 1993, the date
on which the Certificate was filed in the office of the Secretary of State of
the State of Delaware in accordance with the Act, and shall continue until
December 31, 2093, unless the Partnership is dissolved sooner pursuant to the
provisions of Article XIII hereof or as otherwise provided by law.
ARTICLE III
PURPOSE
SECTION 3.1 PURPOSE AND BUSINESS
The purpose and nature of the business to be conducted by the
Partnership is (i) to conduct any business that may be lawfully conducted by a
limited partnership organized pursuant to the Act; PROVIDED, HOWEVER, that such
business shall be limited to and conducted in such a manner as to permit the
General Partner Entity at all times to be classified as a REIT, unless the
General Partner Entity ceases to qualify, or is not qualified, as a REIT for any
reason or reasons not related to the business conducted by the Partnership; (ii)
to enter into any partnership, joint venture, limited liability company or other
similar arrangement to engage in any of the foregoing or the ownership of
interests in any entity engaged, directly or indirectly, in any of the
foregoing; and (iii) to do anything necessary or incidental to the foregoing. In
connection with the foregoing, and without limiting the General Partner Entity's
right in its sole discretion to cease qualifying as a REIT, the Partners
acknowledge that the status of the General Partner Entity as a REIT inures to
the benefit of all the Partners and not solely the General Partner or its
Affiliates.
SECTION 3.2 POWERS
The Partnership is empowered to do any and all acts and things
necessary, appropriate, proper, advisable, incidental to or convenient for the
furtherance and accomplishment of the purposes and business described herein and
for the protection and benefit of the Partnership, including, without
limitation, full power and authority, directly or through its ownership interest
in
13
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 lease, sell, transfer and dispose of real property;
PROVIDED, HOWEVER, that the Partnership shall not take, or shall refrain from
taking, any action which, in the judgment of the General Partner, in its sole
and absolute discretion, (i) could adversely affect the ability of the General
Partner Entity to continue to qualify as a REIT, (ii) could subject the General
Partner Entity to any additional taxes under Section 857 or Section 4981 of the
Code or (iii) could violate any law or regulation of any governmental body or
agency having jurisdiction over the General Partner Entity or its securities,
unless such action (or inaction) shall have been specifically consented to by
the General Partner in writing.
ARTICLE IV
CAPITAL CONTRIBUTIONS AND ISSUANCES
OF PARTNERSHIP INTERESTS
SECTION 4.1 CAPITAL CONTRIBUTIONS OF THE PARTNERS
A. CAPITAL CONTRIBUTIONS TO THE PARTNERSHIP PRIOR TO OR ON THE
EFFECTIVE DATE. The Partners previously made Capital Contributions to the
Partnership, as set forth in the books and records of the Partnership. On the
Effective Date, the General Partner shall complete EXHIBIT A hereto to reflect
the Capital Accounts, the Partnership Units assigned to each Partner and the
Percentage Interest in the Partnership represented by such Partnership Units. On
the Effective Date, the Partnership shall restate the number of Partnership
Units held by each Partner so that, after giving effect to such restatement, the
number of Partnership Units held by each Partner shall be equal to the product
of (i) the number of Partnership Units held by such Partner immediately prior to
the Effective Date multiplied by (ii) the fraction of a share of CPT that each
holder of one share of Paragon Group, Inc. received in connection with the
merger of Paragon Group, Inc. with Camden Subsidiary pursuant to the Merger
Agreement (determined without regard to provisions of the Merger Agreement
related to fractional shares). The number of Partnership Units, as restated,
held by each Partner shall be set forth on EXHIBIT A hereto. The Capital
Accounts of the Partners and the Carrying Values of the Partnership's Assets
shall be restated as of the Effective Date pursuant to Section I.D of EXHIBIT B
hereto to reflect the Capital Contributions made prior to or on the Effective
Date, with each Partner having a Capital Account on the Effective Date, after
giving effect to any Capital Contributions to be made on the Effective Date,
equal to the product of (i) the number of Partnership Units owned by such
Partner multiplied by (ii) the Value, on the Effective Date, of one (1) Share.
B. GENERAL PARTNER INTEREST. A number of Partnership Units held by
the General Partner equal to one percent (1%) of all outstanding Partnership
Units from time to time shall be deemed to be the Partnership Units of the
General Partner and shall be the General Partner Interest. All other Partnership
Units held by the General Partner shall be deemed to be Limited Partner
Interests and shall be held by the General Partner in its capacity as a Limited
Partner in the Partnership.
C. CAPITAL CONTRIBUTIONS BY MERGER. To the extent the Partnership
acquires any property by the merger of any other Person into the Partnership,
Persons who receive Partnership Interests in exchange for their interests in the
Person merging into the Partnership shall become Partners and shall be deemed to
have made Capital Contributions as provided in the applicable merger agreement
and as set forth in EXHIBIT A hereto, as amended by the General Partner in good
faith in connection with such merger.
D. NO OBLIGATION TO MAKE ADDITIONAL CAPITAL CONTRIBUTIONS. Except as
provided in Section 10.5 hereof, the Partners shall have no obligation to make
any additional Capital
14
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 ISSUANCES OF PARTNERSHIP INTERESTS
A. GENERAL. The General Partner is hereby authorized to cause the
Partnership from time to time to issue to Partners (including the General
Partner and its Affiliates) or other Persons (including, without limitation, in
connection with the contribution of property to the Partnership) Partnership
Units in one or more classes, or in one or more series of any of such classes,
with such designations, preferences and relative, participating, optional or
other special rights, powers and duties, including rights, powers and duties
senior to Limited Partner Interests, all as shall be determined by the General
Partner in its sole and absolute discretion, including, without limitation, (i)
the allocations of items of Partnership income, gain, loss, deduction and credit
to each such class or series of Partnership Interests, (ii) the right of each
such class or series of Partnership Interests to share in Partnership
distributions and (iii) the rights of each such class or series of Partnership
Interests upon dissolution and liquidation of the Partnership. In the event that
the Partnership issues Partnership Interests pursuant to this Section 4.2.A, the
General Partner shall make such amendments to this Agreement (including but not
limited to the amendments described in Section 5.4, Section 6.2 and Section
8.6.E hereof) as it deems necessary to reflect the issuance of such additional
Partnership Interests.
B. ADDITIONAL CAPITAL CONTRIBUTIONS BY THE GENERAL PARTNER. The
General Partner may make Capital Contributions to the Partnership at such times
and in such amounts as the General Partner, in its sole and absolute discretion,
may determine to be advisable, but under no circumstances shall the General
Partner be obligated to make any such Capital Contribution. In exchange for each
such Capital Contribution, the Partnership shall issue to the General Partner
(i) that number of Class A or Class B Units equal to (a) the amount of the
Capital Contribution divided by (b) the per Partnership Unit fair market value,
as determined by the General Partner, in its reasonable judgment, of the
underlying assets of the Partnership, or (ii) additional Partnership Units or
other Partnership Interests, other than Class A or Class B Units, in one or more
classes, or one or more series of any such classes, with such designations,
preferences and relative, participating, optional or other special rights,
powers and duties, including rights, powers and duties senior to Limited Partner
Interests, all as shall be determined by the General Partner in its reasonable
judgment, including, without limitation, (x) the allocations of items of
Partnership income, gain, loss, deduction and credit to each such class or
series of Partnership Interests, (y) the rights of each such class or series of
Partnership Interests to share in Partnership distributions, and (z) the rights
of each such class or series of Partnership Interests upon dissolution and
liquidation of the Partnership; PROVIDED that in connection with an issuance of
Partnership Units and/or Partnership Interests pursuant to clause (ii) of this
Section 4.2.B, (1) such Partnership Units and/or Partnership Interests are
issued in connection with an issuance of shares of the General Partner Entity,
which shares have designations, preferences and other rights such that the
economic interests created thereby are substantially similar to the
designations, preferences and other rights of the additional Partnership Units
and/or Partnership Interests issued to the General Partner in accordance with
clause (ii) of this Section 4.2.B, and (2) the General Partner shall make a
Capital Contribution to the Partnership in an amount equal to the proceeds
raised in connection with the issuance of such Shares.
C. NO REQUIREMENT THAT GENERAL PARTNER ENTITY CONTRIBUTE PROCEEDS OF
EQUITY OFFERINGS. The General Partner Entity may issue additional Shares or
rights, options, warrants or convertible or exchangeable securities containing
the right to subscribe for or purchase Shares ("New Securities") at such times
and in such amounts and for such consideration as the General Partner Entity, in
its sole and absolute discretion, determines. Under no circumstances shall the
General
15
Partner Entity be obligated to contribute to the Partnership all or any part of
the proceeds from any issuance of such New Securities or from the exercise of
rights, contained in such New Securities, and the General Partner Entity may, in
its sole and absolute discretion, retain all such proceeds, to be used by the
General Partner Entity as it determines, in its sole and absolute discretion, to
be advisable.
D. CLASSES OF PARTNERSHIP UNITS. Subject to Section 4.2.A above, the
Partnership shall have two classes of Partnership Units entitled "Class A Units"
and "Class B Units." Either Class A Units or Class B Units, at the election of
the General Partner, in its sole and absolute discretion, may be issued to newly
admitted Partners in exchange for the contribution by such Partners of cash,
real estate partnership interests, stock, notes or other assets or
consideration; PROVIDED, that any Partnership Unit that is not specifically
designated by the General Partner as being of a particular class shall be deemed
to be a Class A Unit. Each Class B Unit shall be converted automatically into a
Class A Unit on the day immediately following the Partnership Record Date for
the Distribution Period (as defined in Section 5.1.D hereof) in which such Class
B Unit was issued, without the requirement for any action by either the
Partnership or the Partner holding the Class B Unit.
SECTION 4.3 MINIMUM PERCENTAGE INTEREST OF GENERAL PARTNER
The provisions of Section 4.2 shall be applied so that in all events
the Percentage Interest of the General Partner shall be equal to at least 1.00%.
In the event the issuance of additional Partnership Units pursuant to Section
4.2.A would (but for this Section 4.3) have the effect of reducing the
Percentage Interest of the General Partner to less than 1.00%, CPT LP shall
transfer Partnership Units to the General Partner (and, as of the effective date
of such issuance, CPT LP shall be deemed to hold Partnership Units for the
benefit of the General Partner) to the extent necessary to cause the General
Partner's Percentage Interest, after giving effect to such issuance, to be equal
to at least 1.00%. In the event any additional Capital Contributions are made or
deemed made to the Partnership by the General Partner and CPT LP pursuant to
Section 4.2.B, such additional Capital Contributions or deemed Capital
Contributions shall be allocated between the General Partner and CPT LP in the
amounts necessary to cause the General Partner's Percentage Interest, after
giving effect to such Capital Contributions, to be equal to at least 1.00%.
SECTION 4.4 NO PREEMPTIVE RIGHTS
Except to the extent expressly granted by the Partnership pursuant
to another agreement (as determined in good faith by the General Partner), no
Person shall have any preemptive, preferential or other similar right with
respect to (i) additional Capital Contributions or loans to the Partnership or
(ii) issuance or sale of any Partnership Units or other Partnership Interests.
SECTION 4.5 OTHER CONTRIBUTION PROVISIONS
In the event that any Partner is admitted to the Partnership and is
given a Capital Account in exchange for services rendered to the Partnership,
such transaction shall be treated by the Partnership and the affected Partner as
if the Partnership had compensated such Partner in cash, and the Partner had
contributed such cash to the capital of the Partnership, unless the General
Partner and such affected Partner specifically agree otherwise.
16
SECTION 4.6 NO INTEREST ON CAPITAL
No Partner shall be entitled to interest on its Capital
Contributions or its Capital Account.
ARTICLE V
DISTRIBUTIONS
SECTION 5.1 REQUIREMENT AND CHARACTERIZATION OF DISTRIBUTIONS
A. GENERAL. The General Partner shall distribute at least quarterly
Available Cash in such amount as shall be determined by the General Partner in
its reasonable discretion (subject to Section 5.1.C below), to the Partners who
are Partners on the Partnership Record Date, with such distribution to be made
as provided in Sections 5.1.B, 5.1.D and 5.1.E below. Notwithstanding anything
to the contrary contained herein, in no event may a Partner receive a
distribution of Available Cash with respect to a Partnership Unit for a quarter
or shorter period if such Partner is entitled to receive a distribution with
respect to a Share for which such Partnership Unit has been redeemed or
exchanged. Unless otherwise expressly provided for herein or in an agreement at
the time a new class of Partnership Interests is created in accordance with
Article IV hereof, no Partnership Interest shall be entitled to a distribution
in preference to any other Partnership Interest. The General Partner shall make
such reasonable efforts, as determined by it in its sole and absolute discretion
and consistent with the qualification of the General Partner Entity as a REIT,
to distribute Available Cash to Limited Partners so as to preclude any such
distribution or portion thereof from being treated as part of a sale of property
of the Partnership by a Limited Partner under Section 707 of the Code or the
Regulations thereunder; PROVIDED that the General Partner and the Partnership
shall not have liability to a Limited Partner under any circumstances as a
result of any distribution to a Limited Partner being so treated.
B. METHOD. (i) Each holder of Partnership Interests that are
entitled to any preference in distribution shall be entitled to a distribution
in accordance with the rights of any such class of Partnership Interests (and,
within such class, pro rata in proportion to the respective Percentage Interests
on such Partnership Record Date); and
(ii) To the extent there is Available Cash remaining after the
payment of any preference in distribution in accordance with the foregoing
clause (i), with respect to Partnership Interests that are not entitled to any
preference in distribution, pro rata to each such class in accordance with the
terms of such class (and, within each such class, pro rata in proportion to the
respective Percentage Interests on such Partnership Record Date).
C. CONDUCT OF PARTNERSHIP OPERATIONS TO MAINTAIN LEVEL OF
DISTRIBUTIONS. The General Partner intends to use reasonable efforts to cause
the Partnership to operate in a manner (including, without limitation, incurring
Debt, establishing and maintaining cash reserves, and undertaking and financing
recurring and non-recurring capital expenditures) that enables the Partnership
to maintain a distribution rate per Class A Unit that is equal to the
distribution rate per Share of the General Partner Entity (after taking into
account any appropriate adjustments in Class A Units and Shares to reflect stock
splits, stock dividends, and other similar adjustments and to reflect the effect
of any other transactions resulting in a change in the Conversion Factor). The
General Partner shall act in good faith in attempting to accomplish the
foregoing objective, but there is no assurance that such objective will be
accomplished, and neither the General Partner nor the Partnership shall have any
liability for the failure to achieve such objective so long as the General
Partner acts in good faith. In furtherance of the foregoing, the General Partner
and the General Partner Entity further agree that if there is any loan or
advance outstanding from the Partnership to the General Partner Entity or to any
Affiliate of the General Partner or the General Partner Entity
17
and the Partnership is unable to make a distribution with respect to the Class A
Units in the amount contemplated by the first sentence of this Section 5.1.C,
the General Partner and the General Partner Entity shall immediately cause such
loan(s) and advance(s) to be repaid to the extent necessary to provide the
Partnership with the funds to make such contemplated distributions. Furthermore,
in the event the General Partner determines that the distribution rate per Class
A Unit for any calendar quarter will not at least equal the distribution rate
per Share of the General Partner Entity (as described above) for the same
quarter, then, at least ten (10) Business Days prior to the record date to
determine holders of Shares of the General Partner Entity eligible to receive
such distribution, the General Partner shall provide notice to the Limited
Partners identifying the projected distribution per Unit and the projected
distribution per Share for such calendar quarter. Such notice shall be subject
to the same limitations, restrictions, and covenants as set forth in Section
8.5.C with respect to extraordinary transactions.
D. DISTRIBUTIONS WHEN CLASS B UNITS ARE OUTSTANDING. If for any
quarter or shorter period with respect to which a distribution is to be made (a
"Distribution Period") Class B Units are outstanding on the Partnership Record
Date for such Distribution Period, the General Partner shall allocate the
Available Cash with respect to such Distribution Period available for
distribution with respect to the Class A Units and Class B Units collectively
between the Partners who are holders of Class A Units ("Class A") and the
Partners who are holders of Class B Units ("Class B") as follows:
(1) Class A shall receive that portion of the Available
Cash (the "Class A Share") determined by multiplying the
amount of Available Cash by the following fraction:
A x Y
---------------
(A x Y)+(B x X)
(2) Class B shall receive that portion of the Available
Cash (the "Class B Share") determined by multiplying the
amount of Available Cash by the following fraction:
B x X
---------------
(A x Y)+(B x X)
(3) For purposes of the foregoing formulas, (i) "A"
equals the number of Class A Units outstanding on the
Partnership Record Date for such Distribution Period; (ii) "B"
equals the number of Class B Units outstanding on the
Partnership Record Date for such Distribution Period; (iii)
"Y" equals the number of days in the Distribution Period; and
(iv) "X" equals the number of days in the Distribution Period
for which the Class B Units were issued and outstanding.
The Class A Share shall be distributed among Partners holding Class
A Units on the Partnership Record Date for the Distribution Period in accordance
with the number of Class A Units held by each Partner on such Partnership Record
Date. In no event may a Partner receive a
18
distribution of Available Cash with respect to a Class A Unit if a Partner is
entitled to receive a distribution out of such Available Cash with respect to a
Share for which such Class A Unit has been redeemed or exchanged. The Class B
Share shall be distributed among the Partners holding Class B Units on the
Partnership Record Date for the Distribution Period in accordance with the
number of Class B Units held by each Partner on such Partnership Record Date. In
no event shall any Class B Units be entitled to receive any distribution of
Available Cash for any Distribution Period ending prior to the date on which
such Class B Units are issued.
E. DISTRIBUTIONS WHEN CLASS B UNITS HAVE BEEN ISSUED ON DIFFERENT
DATES. In the event that Class B Units which have been issued on different dates
are outstanding on the Partnership Record Date for any Distribution Period, then
the Class B Units issued on each particular date shall be treated as a separate
series of Partnership Units for purposes of making the allocation of Available
Cash for such Distribution Period among the holders of Partnership Units (and
the formula for making such allocation, and the definitions of variables used
therein, shall be modified accordingly). Thus, for example, if two series of
Class B Units are outstanding on the Partnership Record Date for any
Distribution Period, the allocation formula for each series, "Series
B1" and "Series B2" would be as follows:
(1) Series B1 shall receive that portion of the
Available Cash determined by multiplying the amount of
Available Cash by the following fraction:
B1 x X1
---------------------------
(A x Y)+(B1 x X1)+(B2 x X2)
(2) Series B2 shall receive that portion of the
Available Cash determined by multiplying the amount of
Available Cash by the following fraction:
B2 x X2
---------------------------
(A x Y)+(B1 x X1)+(B2 x X2)
(3) For purposes of the foregoing formulas the
definitions set forth in Section 5.1.C.3 above remain the same
except that (i) "B1" equals the number of Partnership Units in
Series B1 outstanding on the Partnership Record Date for such
Distribution Period; (ii) "B2" equals the number of
Partnership Units in Series B2 outstanding on the Partnership
Record Date for such Distribution Period; (iii) "X1" equals
the number of days in the Distribution Period for which the
Partnership Units in Series B1 were issued and outstanding;
and (iv) "X2" equals the number of days in the Distribution
Period for which the Partnership Units in Series B2 were
issued and outstanding.
F. MINIMUM DISTRIBUTIONS IF GENERAL PARTNER ENTITY NOT PUBLICLY
TRADED ENTITY. In addition (and without regard to the amount of Available Cash),
if the Shares of the General Partner Entity are not Publicly Traded, the
Partnership shall make cash distributions with respect to the Class A Units at
least annually for each taxable year of the Partnership beginning prior to the
fifteenth (15th) anniversary of the Effective Date in an aggregate amount with
respect to each such taxable year at least equal to 95% of the Partnership's
taxable income for such year
19
allocable to the Class A Units, with such distributions to be made not later
than 60 days after the end of such year; PROVIDED, HOWEVER, neither the General
Partner nor any of its Affiliates shall be obligated to make any Capital
Contributions, loans, advances or other funds available to the Partnership
(other than to repay any outstanding loans or advances from the Partnership to
the General Partner or its Affiliates) in order to satisfy the distribution
requirement of this Section 5.1.F. Notwithstanding Section 14.1.C.(iii), this
Section 5.1.F may be amended with the Consent of the Outside Limited Partners.
SECTION 5.2 AMOUNTS WITHHELD
All amounts withheld pursuant to the Code or any provisions of any
state or local tax law and Section 10.5 hereof with respect to any allocation,
payment or distribution to the General Partner, the Limited Partners or
Assignees shall be treated as amounts distributed to the General Partner,
Limited Partners or Assignees pursuant to Section 5.1 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 reduction in reserves made after commencement of the liquidation of
the Partnership shall be distributed to the Partners in accordance with Section
13.2 hereof.
SECTION 5.4 AMENDMENTS TO REFLECT ISSUANCE OF ADDITIONAL PARTNERSHIP
INTERESTS
In the event that the Partnership issues additional Partnership
Interests to the General Partner or any Additional Limited Partner pursuant to
Article IV hereof, the General Partner shall make such amendments to this
Article V as it deems necessary to reflect the issuance of such additional
Partnership Interests.
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 herein below.
A. NET INCOME. After giving effect to the special allocations set
forth in Section 1 of EXHIBIT C and Section 6.2 below, Net Income shall be
allocated (i) first, to the General Partner to the extent that Net Losses
previously allocated to the General Partner pursuant to the last sentence of
Section 6.1.B below exceed Net Income previously allocated to the General
Partner pursuant to this clause (i) of Section 6.1.A, (ii) second, to the
holders of any Partnership Interests that are entitled to any preference in
distribution in accordance with the rights of any such class of Partnership
Interests until each such Partnership Interest has been allocated, on a
cumulative basis pursuant to this clause (ii), Net Income equal to the amount of
distributions received which are attributable to the preference of such class of
Partnership Interests (and, within such class, pro rata in proportion to the
respective Percentage Interests as of the last day of the period for which such
allocation is being made) and (iii) third, with respect to Partnership Interests
that are not entitled to any preference in the allocation of Net Income, pro
rata to each such class in accordance with the
20
terms of such class (and, within such class, pro rata in proportion to the
respective Percentage Interests as of the last day of the period for which such
allocation is being made).
B. NET LOSSES. After giving effect to the special allocations set
forth in Section 1 of EXHIBIT C and Section 6.2, Net Losses shall be allocated
(i) first, to the holders of any Partnership Interests that are entitled to any
preference in distribution in accordance with the rights of any such class of
Partnership Interests to the extent that any prior allocations of Net Income to
such class of Partnership Interests pursuant to Section 6.1.A(ii) above exceed,
on a cumulative basis, distributions with respect to such Partnership Interests
pursuant to clause (i) of Section 5.1.B hereof (and, within such class, pro rata
in proportion to the respective Percentage Interests as of the last day of the
period for which such allocation is being made) and (ii) second, with respect to
classes of Partnership Interests that are not entitled to any preference in
distribution, pro rata to each such class in accordance with the terms of such
class (and, within such class, pro rata in proportion to the respective
Percentage Interests as of the last day of the period for which such allocation
is being made); PROVIDED that Net Losses shall not be allocated to any Limited
Partner pursuant to this Section 6.1.B to the extent that such allocation would
cause such Limited Partner to have an Adjusted Capital Account Deficit (or
increase any existing Adjusted Capital Account Deficit) at the end of such
taxable year (or portion thereof). All Net Losses in excess of the limitations
set forth in this Section 6.1.B shall be allocated to the General Partner.
C. ALLOCATION OF NONRECOURSE DEBT. For purposes of Regulations
Section 1.752-3(a), the Partners agree that Nonrecourse Liabilities of the
Partnership in excess of the sum of (i) the amount of Partnership Minimum Gain
and (ii) the total amount of Nonrecourse Built- in Gain shall be allocated among
the Partners in accordance with their respective Percentage Interests.
D. RECAPTURE INCOME. Any gain allocated to the Partners upon the
sale or other taxable disposition of any Partnership asset shall, to the extent
possible after taking into account other required allocations of gain pursuant
to EXHIBIT C hereto, 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.
E. ALLOCATIONS BY GENERAL PARTNER TO REFLECT ECONOMIC RIGHTS. In the
event the General Partner shall determine, in its good faith judgment, that it
is necessary to modify the manner in which the Partnership's items of income,
gain, loss and deduction shall be allocated among the Partners in a taxable year
(or portion thereof) in order to cause such allocation to reflect accurately the
relative economic rights of the Partners, the General Partner may make such a
modification; PROVIDED that such modification is not reasonably expected to have
an adverse effect on the amounts distributable to any Partner pursuant to
Section 13.2 hereof upon the dissolution of the Partnership (assuming for this
purpose that such distributions are intended to be made as set forth in Article
V hereof).
SECTION 6.2 AMENDMENTS TO ALLOCATIONS TO REFLECT ISSUANCE OF ADDITIONAL
PARTNERSHIP INTERESTS
In the event that the Partnership issues additional Partnership
Interests to the General Partner or any Additional Limited Partner pursuant to
Article IV hereof, the General Partner shall make such amendments to this
Article VI as it deems necessary to reflect the terms of the issuance of such
additional Partnership Interests, including making preferential allocations to
classes of Partnership Interests that are entitled thereto.
21
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 not be removed by the Limited Partners with or without cause. In
addition to the powers now or hereafter granted a general partner of a limited
partnership under applicable law or which are granted to the General Partner
under any other provision of this Agreement, the General Partner, subject to
Sections 7.3 and 7.6 below, shall have full power and authority to do all things
deemed necessary or desirable by it to conduct the business of the Partnership,
to exercise all powers set forth in Section 3.2 hereof and to effectuate the
purposes set forth in Section 3.1 hereof, including, without limitation:
(1) the making of any expenditures, the lending or borrowing of
money (including, without limitation, making prepayments on
loans and borrowing money to permit the Partnership to make
distributions to its Partners in such amounts as will permit
the General Partner Entity (as long as the General Partner
Entity qualifies as a REIT) to avoid the payment of any
federal income tax (including, for this purpose, any excise
tax pursuant to Section 4981 of the Code) and to make
distributions to its shareholders sufficient to permit the
General Partner Entity to maintain REIT status), the
assumption or guarantee of, or other contracting for,
indebtedness and other liabilities, the issuance of evidences
of indebtedness (including the securing of same by deed to
secure debt, mortgage, deed of trust or other lien or
encumbrance on the Partnership's assets) and the incurring of
any obligations the General Partner deems necessary for the
conduct of the activities of the Partnership;
(2) the making of tax, regulatory and other filings, or rendering
of periodic or other reports to governmental or other agencies
having jurisdiction over the business or assets of the
Partnership;
(3) the acquisition, disposition, mortgage, pledge, encumbrance,
hypothecation or exchange of any or all of the assets of the
Partnership (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 the merger or other combination of the
Partnership with or into another entity, on such terms as the
General Partner deems proper (all of the foregoing subject to
any prior approval only to the extent required by Section 7.3
hereof);
(4) the use of the assets of the Partnership (including, without
limitation, cash on hand) for any purpose consistent with the
terms of this Agreement and on any terms it sees fit,
including, without limitation, the financing of the conduct of
the operations of the Partnership or any of the Partnership's
Subsidiaries, the lending of funds to other Persons
(including, without limitation, the General Partner, the
General Partner Entity, and the Subsidiaries of either the
General Partner or the General Partner Entity) and the
repayment of obligations of the Partnership and its
Subsidiaries and any
22
other Person in which the Partnership has an equity investment
and the making of capital contributions to its Subsidiaries;
(5) 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;
(6) 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;
(7) the distribution of Partnership cash or other Partnership
assets in accordance with this Agreement;
(8) the holding, managing, investing and reinvesting of cash and
other assets of the Partnership;
(9) the collection and receipt of revenues and income of the
Partnership;
(10) the establishment of one or more divisions of the Partnership,
the selection and dismissal of employees of the Partnership,
any division of the Partnership, or the General Partner
(including, without limitation, employees having titles such
as "president," "vice president," "secretary" and "treasurer")
and agents, outside attorneys, accountants, consultants and
contractors of the General Partner, the Partnership, or any
division of the Partnership and the determination of their
compensation and other terms of employment or hiring;
(11) the maintenance of such insurance for the benefit of the
Partnership and the Partners as it deems necessary or
appropriate;
(12) the formation of, or acquisition of an interest in, and the
contribution of property to, any corporation, 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);
(13) 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;
23
(14) the undertaking of any action in connection with the
Partnership's direct or indirect investment in its
Subsidiaries or any other Person (including, without
limitation, the contribution or loan of funds by the
Partnership to such Persons), the incurrence of indebtedness
on behalf of such Persons or the guarantee of the obligations
of such Persons;
(15) 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;
(16) 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;
(17) 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;
(18) 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;
(19) 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;
(20) the distribution of cash to acquire Partnership Units held by
a Limited Partner in connection with a Limited Partner's
exercise of its Redemption Right under Section 8.6 hereof; and
(21) the amendment and restatement of EXHIBIT A hereto to reflect
accurately at all times the Capital Accounts, Partnership
Units, 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
Partnership Units, the admission of any Additional Limited
Partner or any Substituted Limited Partner or otherwise, as
long as the matter or event being reflected in EXHIBIT A
hereto otherwise is authorized by this Agreement.
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 (except as provided in Section 7.3), 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.
24
C. INSURANCE. At all times from and after the date hereof, the
General Partner, at the expense of the Partnership, 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
reasonable 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 from time to
time.
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 (including the General 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 pursuant to its authority under this Agreement.
SECTION 7.2 CERTIFICATE OF LIMITED PARTNERSHIP
PGI Associates, as the original general partner of the Partnership,
has previously filed the Certificate with the Secretary of State of Delaware
which Certificate was amended to reflect the admission of the General Partner to
the Partnership and the withdrawal of PGI Associates as a general partner. The
General Partner shall use all reasonable efforts to cause to be filed such other
certificates or documents as may be reasonable and necessary or appropriate for
the formation, continuation, qualification and operation of a limited
partnership (or a partnership in which the limited partners have limited
liability) in the State of Delaware and any other state, the District of
Columbia or other jurisdiction in which the Partnership may elect to do business
or own property. To the extent that such action is determined by the General
Partner to be reasonable and necessary or appropriate, the General Partner shall
file amendments to and restatements of the Certificate and do all the things to
maintain the Partnership as a limited partnership (or a partnership in which the
limited partners have limited liability) under the laws of the State of Delaware
and each other state, the District of Columbia or other jurisdiction in which
the Partnership may elect to do business or own property. Subject to the terms
of Section 8.5.A(4) hereof, the General Partner shall not be required, before or
after filing, to deliver or mail a copy of the Certificate or any amendment
thereto to any Limited Partner.
SECTION 7.3 RESTRICTIONS ON GENERAL PARTNER'S AUTHORITY
A. CONSENT REQUIRED. The General Partner may not take any action in
contravention of an express prohibition or limitation of this Agreement or any
action that reasonably could be expected to cause the Partnership not to qualify
as a "partnership" for federal income tax purposes without the written Consent
of (i) all of the Limited Partners (including Limited Partner Interests held by
the General Partner) or (ii) such lower percentage of the Limited Partner
Interests as may be specifically provided for under a provision of this
Agreement or the Act.
B. SALE OF ALL ASSETS OF THE PARTNERSHIP. Except as provided in
Article XIII hereof, the General Partner may not sell, exchange, transfer or
otherwise dispose of all or substantially all of the Partnership's assets in a
single transaction or a series of related transactions (including by way of
merger, consolidation or other combination with any other Persons) (i) if such
sale, merger, or other transaction is in connection with a Termination
Transaction permitted under Section 11.2.B, or if the transaction is a merger in
which the Partnership will be the surviving entity
25
and any changes to the Partnership Agreement resulting in connection therewith
have received the approvals of the Partners required under Section 14.1
(treating all such changes in connection with such merger as amendments for the
purposes thereof), without the Consent of the Partners holding two-thirds (2/3)
or more of the then outstanding Partnership Units (including any Partnership
Units held by the General Partner and CPT LP), or (ii) otherwise, without the
Consent of the Outside Limited Partners.
SECTION 7.4 REIMBURSEMENT OF THE GENERAL PARTNER
A. NO COMPENSATION. Except as provided in this Section 7.4 and
elsewhere in this Agreement (including the provisions of Articles V and VI
hereof regarding distributions, payments and allocations to which it may be
entitled), the General Partner shall not be compensated for its services as
general partner of the Partnership.
B. RESPONSIBILITY FOR PARTNERSHIP EXPENSES. The Partnership shall be
responsible for and shall pay all expenses relating to the Partnership's
organization, the ownership of its assets and its operations. The General
Partner shall be reimbursed on a monthly basis, or such other basis as the
General Partner may determine in its good faith discretion, for all expenses it,
the General Partner Entity, Camden Subsidiary and/or CPT LP incur relating to
the operation of, or for the benefit of, the Partnership. The General Partner
shall determine in good faith the amount of expenses incurred by it related to
the operation of, or for the benefit of, the Partnership. In the event that
certain expenses are incurred for the benefit of both the Partnership and other
entities (including the General Partner or the General Partner Entity or any of
their respective Subsidiaries), such expenses will be allocated to the
Partnership and such other entities in such a manner as the General Partner in
its good faith discretion deems fair and reasonable. Such reimbursements shall
be in addition to any reimbursement to the General Partner, the General Partner
Entity, Camden Subsidiary and/or CPT LP pursuant to Section 10.3.C hereof and 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, the General Partner Entity Camden Subsidiary and/or CPT LP.
C. PARTNERSHIP INTEREST ISSUANCE EXPENSES. The General Partner shall
also be reimbursed for all expenses it incurs relating to any issuance of
additional Partnership Interests, Debt of the Partnership, or rights, options,
warrants or convertible or exchangeable securities of the Partnership pursuant
to Article IV hereof (including, without limitation, all costs, expenses,
damages and other payments resulting from or arising in connection with
litigation related to any of the foregoing), all of which expenses are
considered by the Partners to constitute expenses of, and for the benefit of,
the Partnership.
D. REIMBURSEMENT NOT A DISTRIBUTION. If and to the extent any
reimbursement made pursuant to this Section 7.4 is determined for federal income
tax purposes not to constitute a payment of expenses of the Partnership, the
amount so determined shall constitute a guaranteed payment with respect to
capital within the meaning of Section 707(c) of the Code, shall be treated
consistently therewith by the Partnership and all Partners and shall not be
treated as a distribution for purposes of computing the Partners' Capital
Accounts.
SECTION 7.5 OUTSIDE ACTIVITIES OF THE GENERAL PARTNER
A. GENERAL. The General Partner shall devote to the Partnership such
time as may be necessary for the proper performance of its duties as General
Partner, but the General Partner is not required, and is not expected, to devote
its full time to the performance of such duties. Subject to any agreement
entered into pursuant to Section 7.6.D hereof and any other agreements entered
into by the General Partner or its Affiliates with the Partnership or a
Subsidiary, the
26
General Partner, the General Partner Entity, and any officer, director,
employee, agent, trustee, Affiliate or shareholder of the General Partner or the
General Partner Entity shall be entitled to and may have business interests and
engage in business activities in addition to those relating to the Partnership
(including, without limitation, owning and operating real estate and incurring
indebtedness in its own name, whether or not the proceeds of such indebtedness
are used for the benefit of the Partnership), including, without limitation,
engaging in other business interests and activities in direct or indirect
competition with the Partnership. Neither the Partnership nor any Partners shall
have any right by virtue of this Agreement or the partnership relationship
established hereby in or to such other ventures or activities or to the income
or proceeds derived therefrom, and the pursuit of such ventures, even if
competitive with the business of the Partnership, shall not be deemed wrongful
or improper. Neither the General Partner, the General Partner Entity, nor any
Affiliate of the General Partner or the General Partner Entity shall be
obligated to present any particular opportunity to the Partnership even if such
opportunity is of a character which, if presented to the Partnership, could be
taken by the Partnership, and, regardless of whether or not such opportunity is
competitive with the Partnership, the General Partner, the General Partner
Entity, or any Affiliate of the General Partner or the General Partner Entity
shall have the right to take for its own account (individually or as a trustee,
partner or fiduciary), or to recommend to others, any such particular
opportunity. The General Partner, the General Partner Entity, and any Affiliates
of the General Partner and the General Partner Entity may acquire Limited
Partner Interests and shall be entitled to exercise all rights of a Limited
Partner relating to such Limited Partner Interests.
B. PURCHASES OF SHARES BY THE GENERAL PARTNER OR THE GENERAL PARTNER
ENTITY. The General Partner and/or the General Partner Entity may, from time to
time in their/its sole and absolute discretion, purchase and/or redeem Shares
(including, without limitation, in connection with a stock repurchase or similar
program). In the event that the General Partner or the General Partner Entity
purchases and/or redeems Shares, then the General Partner or the General Partner
Entity, as the case may be, shall purchase and/or redeem such Shares with its
own funds and not from the proceeds of any sale of Partnership Units to the
Partnership; PROVIDED, HOWEVER, that if the Partnership purchases Partnership
Units pro rata from all Partners, with their consent, the General Partner or the
General Partner Entity may use the proceeds it receives from any such sale of
Partnership Units to purchase and/or redeem Shares.
SECTION 7.6 CONTRACTS WITH AFFILIATES
A. PERMITTED TRANSACTIONS. Subject to Section 7.6.B below, the
Partnership may lend or contribute funds to, borrow funds from, and enter into
any other transactions with, the Partnership's Subsidiaries or other Persons in
which it has an equity investment, on terms and conditions established in the
sole and absolute discretion of the General Partner. The foregoing authority
shall not create any right or benefit in favor of any Subsidiary or any other
Person in which the Partnership has an equity investment.
B. TRANSACTIONS WITH CERTAIN AFFILIATES. Except as expressly
permitted by this Agreement, the Partnership shall not, directly or indirectly,
sell, transfer or convey any property to, or purchase any property from, or
borrow funds from, or lend funds to, any Partner or any Affiliate of the General
Partner or the General Partner Entity, except pursuant to transactions that are
on terms that are fair and reasonable and no less favorable to the Partnership
than would be obtained from an unaffiliated third party, as determined by the
General Partner in its reasonable judgment.
C. 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
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services performed, directly or indirectly, for the benefit of the Partnership
or any of the Partnership's Subsidiaries.
D. CONFLICT AVOIDANCE. The General Partner is expressly authorized
to enter into, in the name and on behalf of the Partnership, a right of first
opportunity arrangement and other conflict avoidance agreements with various
Affiliates of the Partnership and General Partner on such terms as the General
Partner, in its sole and absolute discretion, believes are advisable.
SECTION 7.7 INDEMNIFICATION
A. GENERAL. 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 or in
connection with any and all claims, demands, actions, suits or proceedings,
civil, criminal, administrative or investigative incurred by the Indemnitee and
relating to the Partnership, or its operations, as set forth in this Agreement,
in which any 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 guarantee, contractual
obligations for any indebtedness or other obligations 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 judgment, order or settlement
does not create a presumption that the Indemnitee did not meet the requisite
standard of conduct set forth in this Section 7.7.A. The termination of any
proceeding by criminal conviction or upon a plea of nolo contendere or its
equivalent, or an entry of an order of probation prior to judgment, creates a
rebuttable presumption that the Indemnitee acted in a manner contrary to that
specified in this Section 7.7.A with respect to the subject matter of such
proceeding. Any indemnification pursuant to this Section 7.7 shall be made only
out of the assets of the Partnership, and any insurance proceeds from the
liability policy covering the General Partner and any Indemnitees, 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. ADVANCEMENT 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 upon receipt by the Partnership of (i) a
written affirmation by the Indemnitee of the Indemnitee's good faith belief that
the standard of conduct necessary for indemnification by the Partnership as
authorized in this Section 7.7.A has been met and (ii) a written undertaking by
or on behalf of the Indemnitee to repay the amount if it shall ultimately be
determined that the standard of conduct has not been met.
C. 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
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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 which is not
opposed to the best interests of the Partnership.
F. NO PERSONAL LIABILITY FOR LIMITED PARTNERS. In no event may an
Indemnitee subject any of the Partners to personal liability by reason of the
indemnification provisions set forth in this Agreement.
G. 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
Partnership's obligation 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.
I. INDEMNIFICATION PAYMENTS NOT DISTRIBUTIONS. If and to the extent
any payments to any Partner pursuant to this Section 7.7 constitute gross income
to such Partner (as opposed to the repayment of advances made on behalf of the
Partnership), such amounts shall constitute guaranteed payments within the
meaning of Section 707(c) of the Code, shall be treated consistently therewith
by the Partnership and all Partners, and shall not be treated as distributions
for purposes of computing the Partners' Capital Accounts.
SECTION 7.8 LIABILITY OF THE GENERAL PARTNER
A. GENERAL. Notwithstanding anything to the contrary set forth in
this Agreement, neither the General Partner, the General Partner Entity, nor the
directors and officers of the General Partner, the General Partner Entity, or
any Affiliate of the foregoing, shall be liable for monetary damages to the
Partnership, any Partners or any Assignees for losses sustained, liabilities
incurred or benefits not derived as a result of errors in judgment or mistakes
of fact or law or of any act or omission if the General Partner acted in good
faith.
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B. NO OBLIGATION TO CONSIDER SEPARATE INTERESTS OF LIMITED PARTNERS
OR SHAREHOLDERS. The Limited Partners expressly acknowledge that the General
Partner is acting on behalf of the Partnership, CPT LP, the General Partner
Entity, Camden Subsidiary and the General Partner Entity's shareholders
collectively, that the General Partner is under no obligation to consider the
separate interests of the Limited Partners (including, without limitation, the
tax consequences to Limited Partners or Assignees) in deciding whether to cause
the Partnership to take (or decline to take) any actions, and that none of the
General Partner, the General Partner Entity, or any Affiliate of the foregoing,
shall 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 has 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. None of the General Partner, the General Partner Entity, or any
Affiliate of the foregoing, shall 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, the
General Partner Entity, or any Affiliate of the foregoing, 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,
architects, engineers, environmental consultants and other consultants and
advisors selected by it, and any act taken or omitted to be taken in reliance
upon the opinion of such Persons as to matters which the General Partner
reasonably believes to be within such Person's professional or expert competence
shall be conclusively presumed to have been done or omitted in good faith and in
accordance with such opinion.
C. ACTION THROUGH AGENTS. The General Partner shall have the right,
in respect of any of its powers or obligations hereunder, to act through any of
its duly authorized officers and a duly appointed attorney or attorneys-in-fact.
Each such attorney shall, to the extent provided by the General Partner in the
power of attorney, have full power and authority to do and perform all and every
act and duty which is permitted or required to be done by the General Partner
hereunder.
D. ACTIONS TO MAINTAIN REIT STATUS OR AVOID TAXATION OF THE GENERAL
PARTNER ENTITY. Notwithstanding any other provisions of this Agreement or the
Act, any action of the General Partner on behalf of the Partnership or any
decision of the General Partner to refrain from acting on behalf of the
Partnership undertaken in the good faith belief that such action or omission is
necessary or advisable in order (i) to protect the ability of the General
Partner Entity to continue to qualify as a REIT or (ii) to allow the General
Partner Entity to avoid incurring any liability for taxes
30
under Section 857 or 4981 of the Code, is expressly authorized under this
Agreement and is deemed approved by all of the Limited Partners.
SECTION 7.10 TITLE TO PARTNERSHIP ASSETS
Title to Partnership assets, whether real, personal or mixed and
whether tangible or intangible, shall be deemed to be owned by the Partnership
as an entity, and no Partner, individually or collectively, shall have any
ownership interest in such Partnership assets or any portion thereof. Title to
any or all of the Partnership assets may be held in the name of the Partnership,
the General Partner or one or more nominees, as the General Partner may
determine, including Affiliates of the General Partner. The General Partner
hereby declares and warrants that any Partnership assets for which legal title
is held in the name of the General Partner or any nominee or Affiliate of the
General Partner shall be held by the General Partner for the use and benefit of
the Partnership in accordance with the provisions of this Agreement; PROVIDED,
HOWEVER, that the General Partner shall use its best efforts to cause beneficial
and record title to such assets to be vested in the Partnership as soon as
reasonably practicable. All Partnership assets shall be recorded as the property
of the Partnership in its books and records, irrespective of the name in which
legal title to such Partnership assets is held.
SECTION 7.11 RELIANCE BY THIRD PARTIES
Notwithstanding anything to the contrary in this Agreement, any
Person dealing with the Partnership shall be entitled to assume that the General
Partner has full power and authority, 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, to enter into any contracts on behalf of the
Partnership and to 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.
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 10.5 hereof,
or under the Act.
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SECTION 8.2 MANAGEMENT OF BUSINESS
No Limited Partner or Assignee (other than the General Partner, any
of its Affiliates or any officer, director, employee, partner, agent or trustee
of the General Partner, the Partnership or any of their Affiliates, in their
capacity as such) shall take part in the operation, management or control
(within the meaning of the Act) of the Partnership's business, transact any
business in the Partnership's name or have the power to sign documents for or
otherwise bind the Partnership. The transaction of any such business by the
General Partner, any of its Affiliates or any officer, director, employee,
partner, agent or trustee of the General Partner, the Partnership or any of
their Affiliates, in their capacity as such, shall not affect, impair or
eliminate the limitations on the liability of the Limited Partners or Assignees
under this Agreement.
SECTION 8.3 OUTSIDE ACTIVITIES OF LIMITED PARTNERS
Subject to any agreements entered into pursuant to Section 7.6.D
hereof and to any other agreements entered into by a Limited Partner or its
Affiliates with the Partnership or a Subsidiary, any Limited Partner and any
officer, director, employee, agent, trustee, Affiliate or shareholder of any
Limited Partner shall be entitled to and may have business interests and engage
in business activities in addition to those relating to the Partnership,
including business interests and activities in direct or indirect competition
with the Partnership. Neither the Partnership nor any Partners shall have any
rights by virtue of this Agreement in any business ventures of any Limited
Partner or Assignee. None of the Limited Partners nor any other Person shall
have any rights by virtue of this Agreement or the partnership relationship
established hereby in any business ventures of any other Person, and such Person
shall have no obligation pursuant to this Agreement to offer any interest in any
such business ventures to the Partnership, any Limited Partner or any such other
Person, even if such opportunity is of a character which, if presented to the
Partnership, any Limited Partner or such other Person, could be taken by such
Person.
SECTION 8.4 RETURN OF CAPITAL
Except pursuant to the right of redemption set forth in Section 8.6
below, no Limited Partner shall be entitled to the withdrawal or return of its
Capital Contribution, except to the extent of distributions made pursuant to
this Agreement or upon termination of the Partnership as provided herein. Except
to the extent provided by EXHIBIT C hereto or as permitted by Sections 4.2.B,
5.1.B(i), 6.1.A(ii) and 6.1.B(i) hereof or otherwise expressly provided in this
Agreement, no Limited Partner or Assignee shall have priority over any other
Limited Partner or Assignee either as to the return of Capital Contributions or
as to profits, losses, distributions or credits.
SECTION 8.5 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 8.5.D below, each Limited
Partner shall have the right, for a purpose reasonably related to such Limited
Partner's Partnership Interest, upon written demand with a statement of the
purpose of such demand and at such Limited Partner's own expense:
(1) to obtain a copy of the most recent annual and quarterly
reports filed with the Securities and Exchange Commission by
the General Partner Entity pursuant to the Exchange Act;
(2) to obtain a copy of the Partnership's federal, state and local
income tax returns for each Partnership Year;
32
(3) to obtain a current list of the name and last known business,
residence or mailing address of each Partner;
(4) to obtain a copy of this Agreement and the Certificate and all
amendments thereto, together with executed copies of all
powers of attorney pursuant to which this Agreement, the
Certificate and all amendments thereto have been executed; and
(5) to obtain true and full information regarding the amount of
cash and a description and statement of any other property or
services contributed by each Partner to the Partnership and
which each Partner has agreed to contribute to the Partnership
in the future, and the date on which each became a Partner.
B. NOTICE OF CONVERSION FACTOR. The Partnership shall notify each
Limited Partner upon request of the then current Conversion Factor and any
changes that have been made thereto.
C. NOTICE OF EXTRAORDINARY TRANSACTION OF GENERAL PARTNER ENTITY.
Neither the General Partner nor the General Partner Entity shall make any
extraordinary distributions of cash or property to its shareholders, or effect a
merger (including, without limitation, a triangular merger), a sale of all or
substantially all of its assets, or any other similar extraordinary transaction
without notifying the Limited Partners of its intention to make such
distribution or effect such merger, sale, or other extraordinary transaction at
least ten (10) Business Days prior to the record date to determine shareholders
eligible to receive such distribution or to vote upon the approval of such
merger, sale, or other extraordinary transaction (or, if no such record date is
applicable, at least ten (10) business days before consummation of such merger,
sale, or other extraordinary transaction). In addition, pursuant to Section
5.1.C, the General Partner must provide notice to the Limited Partners prior to
making a distribution per Share to the shareholders of the General Partner
Entity that is not equal to the distribution per Unit to be made to the Limited
Partners for the same calendar quarter. This provision for such notice shall not
be deemed either (i) to permit any transaction that otherwise is prohibited by
this Agreement or requires a Consent of the Partners or (ii) to require a
Consent of the Limited Partners to a transaction that does not otherwise require
Consent under this Agreement. Each Limited Partner agrees, as a condition to the
receipt of the notice pursuant hereto, to keep confidential the information set
forth therein until such time as the General Partner Entity has made public
disclosure thereof and to use such information during such period of
confidentiality solely for purposes of determining whether or not to exercise
the Redemption Right; PROVIDED that a Limited Partner may disclose such
information to its attorney, accountant and/or financial advisor for purposes of
obtaining advice with respect to such exercise so long as such attorney,
accountant and/or financial advisor agrees to receive and hold such information
subject to this confidentiality requirement.
D. CONFIDENTIALITY. Notwithstanding any other provision of this
Section 8.5, the General Partner may keep confidential from the Limited
Partners, for such period of time as the General Partner determines in its sole
and absolute discretion to be reasonable, any information that (i) the General
Partner 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.
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SECTION 8.6 REDEMPTION RIGHT
A. GENERAL. (i) Subject to Section 8.6.C below, a Limited Partner,
on or after the date one (1) year after the issuance of a Partnership Unit to a
Limited Partner pursuant to Article IV hereof (or pursuant to a prior version of
this Agreement), or such other period as may be specified by the General Partner
with respect to Partnership Units issued after the Effective Date, the holder of
a Partnership Unit if other than the General Partner, CPT LP, the General
Partner Entity or any Subsidiary of the foregoing) shall have the right (the
"Redemption Right") to require the Partnership to redeem on a Specified
Redemption Date all or a portion of the Partnership Units held by such Limited
Partner at a redemption price equal to and in the form of the Cash Amount to be
paid by the Partnership. The Redemption Right shall be exercised pursuant to a
Notice of Redemption delivered to the Partnership (with a copy to the General
Partner) by the Limited Partner who is exercising the Redemption Right (the
"Redeeming Partner"). A Limited Partner may not exercise the Redemption Right
for less than one thousand (1,000) Partnership Units or, if such Redeeming
Partner holds less than one thousand (1,000) Partnership Units, for less than
all of the Partnership Units held by such Redeeming Partner.
(ii) The Redeeming Partner shall have no right with respect to any
Partnership Units so redeemed to receive any distributions paid after the
Specified Redemption Date.
(iii) The Assignee of any Limited Partner may exercise the rights of
such Limited Partner pursuant to this Section 8.6, and such Limited Partner
shall be deemed to have assigned such rights to such Assignee and shall be bound
by the exercise of such rights by such Limited Partner's Assignee. In connection
with any exercise of the such rights by such Assignee on behalf of such Limited
Partner, the Cash Amount shall be paid by the Partnership directly to such
Assignee and not to such Limited Partner.
(iv) In the event that the General Partner provides notice to the
Limited Partners, pursuant to Section 8.5.C or Section 5.1.C, with respect to
Partnership Units outstanding on the Effective Date, the Redemption Right shall
be exercisable, without regard to whether the Partnership Units have been
outstanding for one year, during the period commencing on the date on which the
General Partner provides such notice and ending on the record date to determine
shareholders eligible to receive such distribution or to vote upon the approval
of such merger, sale, or other extraordinary transaction (or, if no such record
date is applicable, at least ten (10) business days before the consummation of
such merger, sale, or other extraordinary transaction). In the event that this
subparagraph (iv) applies, the Specified Redemption Date is the date on which
the Partnership and the General Partner receive notice of exercise of the
Redemption Right, rather than ten (10) Business Days after receipt of the Notice
of Redemption.
B. GENERAL PARTNER ASSUMPTION OF RIGHT. (i) If a Limited Partner has
delivered a Notice of Redemption, the General Partner Entity may, in its sole
and absolute discretion (subject to any limitations on ownership and transfer of
Shares set forth in the Articles of Incorporation), elect to assume directly and
satisfy a Redemption Right by paying to the Redeeming Partner either the Cash
Amount or the Shares Amount, as the General Partner Entity determines in its
sole and absolute discretion (PROVIDED that payment of the Redemption Amount in
the form of Shares shall be in Shares registered under Section 12 of the
Exchange Act and listed for trading on the exchange or national market on which
the Shares are Publicly Traded, and PROVIDED FURTHER that in the event that the
Shares are not Publicly Traded at the time a Redeeming Partner exercises its
Redemption Right, the Redemption Amount shall be paid only in the form of the
Cash Amount unless the Redeeming Partner and the General Partner, in their sole
and absolute discretion, consent to payment of the Redemption Amount in the form
of the Shares Amount), on the Specified Redemption Date, whereupon the General
Partner Entity shall acquire the Partnership Units offered for redemption by the
Redeeming Partner and shall be treated for all purposes of this Agreement as the
owner of such Partnership Units. Unless the General Partner Entity, in its sole
and absolute
34
discretion, shall exercise its right to assume directly and satisfy the
Redemption Right, neither the General Partner nor the General Partner Entity
shall have any obligation to the Redeeming Partner or to the Partnership with
respect to the Redeeming Partner's exercise of the Redemption Right. In the
event the General Partner Entity shall exercise its right to satisfy the
Redemption Right in the manner described in the first sentence of this Section
8.6.B and shall fully perform its obligations in connection therewith, the
Partnership shall have no right or obligation to pay any amount to the Redeeming
Partner with respect to such Redeeming Partner's exercise of the Redemption
Right, and each of the Redeeming Partner, the Partnership and the General
Partner shall, for federal income tax purposes, treat the transaction between
the General Partner and the Redeeming Partner as a sale of the Redeeming
Partner's Partnership Units to the General Partner.
(ii) In the event that the General Partner Entity determines to pay
the Redeeming Partner the Redemption Amount in the form of Shares, the total
number of Shares to be paid to the Redeeming Partner in exchange for the
Redeeming Partner's Partnership Units shall be the applicable Shares Amount. In
the event this amount is not a whole number of Shares, the Redeeming Partners
shall be paid (i) that number of Shares which equals the nearest whole number
less than such amount plus (ii) an amount of cash which the General Partner
determines, in its reasonable discretion, to represent the fair value of the
remaining fractional Share which would otherwise be payable to the Redeeming
Partner.
(iii) Each Redeeming Partner agrees to execute such documents as the
General Partner may reasonably require in connection with the issuance of Shares
upon exercise of the Redemption Right.
C. EXCEPTIONS TO EXERCISE OF REDEMPTION RIGHT. Notwithstanding the
provisions of Sections 8.6.A and 8.6.B above, a Partner shall not be entitled to
exercise the Redemption Right pursuant to Section 8.6.A above if (but only so
long as) the delivery of Shares to such Partner on the Specified Redemption Date
(i) would be prohibited under the Articles of Incorporation or (ii) as long as
the Shares are Publicly Traded, would be prohibited under applicable federal or
state securities laws or regulations (in each case regardless of whether the
General Partner would in fact assume and satisfy the Redemption Right).
D. NO LIENS ON PARTNERSHIP UNITS DELIVERED FOR REDEMPTION. Each
Limited Partner covenants and agrees with the General Partner that all
Partnership Units delivered for redemption shall be delivered to the Partnership
or the General Partner, as the case may be, free and clear of all liens, and,
notwithstanding anything contained herein to the contrary, neither the General
Partner nor the Partnership shall be under any obligation to acquire Partnership
Units which are or may be subject to any liens. Each Limited Partner further
agrees that, in the event any state or local property transfer tax is payable as
a result of the transfer of its Partnership Units to the Partnership or the
General Partner, such Limited Partner shall assume and pay such transfer tax.
E. ADDITIONAL PARTNERSHIP INTERESTS. In the event that the
Partnership issues Partnership Interests to any Additional Limited Partner
pursuant to Article IV hereof, the General Partner shall make such amendments to
this Section 8.6 as it determines are necessary to reflect the issuance of such
Partnership Interests (including setting forth any restrictions on the exercise
of the Redemption Right with respect to such Partnership Interests).
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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,
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 on an accrual basis in accordance with generally accepted accounting
principles for financial reporting purposes and in accordance with tax
accounting principles for tax reporting purposes.
SECTION 9.2 FISCAL YEAR
The fiscal year of the Partnership shall be the calendar year.
SECTION 9.3 REPORTS
A. ANNUAL REPORTS. As soon as practicable, but in no event later
than the date on which the General Partner Entity mails its annual report to its
stockholders, the General Partner shall cause to be mailed to each Limited
Partner an annual report, as of the close of the most recently ended Partnership
Year, containing financial statements of the Partnership, or of the General
Partner Entity if such statements are prepared on a consolidated basis with 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.
B. QUARTERLY REPORTS. If and to the extent that the General Partner
Entity mails quarterly reports to its stockholders, as soon as practicable, but
in no event later than the date on which such reports are mailed, the General
Partner shall cause to be mailed to each Limited Partner a report containing
unaudited financial statements, as of the last day of such calendar quarter, of
the Partnership, or of the General Partner Entity if such statements are
prepared solely on a consolidated basis with the Partnership, and such other
information as may be required by applicable law or regulation, or as the
General Partner determines to be appropriate.
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.
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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 (including, without limitation, the election under
Section 754 of the Code previously made) 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
6223(c)(3) of the Code, upon receipt of notice from the IRS of the beginning of
an administrative proceeding with respect to the Partnership, the tax matters
partner shall furnish the IRS with the name, address, taxpayer identification
number and profit interest of each of the Limited Partners and any Assignees;
PROVIDED, HOWEVER, that such information is provided to the Partnership by the
Limited Partners.
X. XXXXXX. The tax matters partner is authorized, but not required:
(1) to enter into any settlement with the IRS with respect
to any administrative or judicial proceedings for the
adjustment of Partnership items required to be taken
into account by a 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;
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(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 ORGANIZATIONAL EXPENSES
The Partnership shall elect to deduct expenses, if any, incurred by
it in organizing the Partnership ratably over a sixty (60) month period as
provided in Section 709 of the Code.
SECTION 10.5 WITHHOLDING
Each Limited Partner hereby authorizes the Partnership to withhold
from or pay on behalf of or with respect to such Limited Partner any amount of
federal, state, local, or foreign taxes that the General Partner determines that
the Partnership is required to withhold or pay with respect to any amount
distributable or allocable to such Limited Partner pursuant to this Agreement,
including, without limitation, any taxes required to be withheld or paid by the
Partnership pursuant to Section 1441, 1442, 1445, or 1446 of the Code. Any
amount paid on behalf of or with respect to a Limited Partner shall constitute a
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 Partnership Interest to secure
such Limited Partner's obligation to pay to the Partnership any amounts required
to be paid pursuant to this Section 10.5. In the event that a Limited Partner
fails to pay any amounts owed to the Partnership pursuant to this Section 10.5
when due, the General Partner may, in its sole and absolute discretion, elect to
make the payment to the Partnership on behalf of such defaulting Limited
Partner, and in such event shall be deemed to have loaned such amount to such
defaulting Limited Partner and shall succeed to all rights and remedies of the
Partnership as against such defaulting Limited Partner. In such event the
General Partner shall have the right to receive distributions that would
otherwise be distributable to such defaulting Limited Partner until such time as
such loan, together with all interest thereon, has been paid in full, and any
such
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distributions so received by the General Partner shall be treated as having been
distributed to the defaulting Limited Partner and immediately paid by the
defaulting Limited Partner to the General Partner in repayment of such loan. Any
amounts payable by a Limited Partner hereunder shall bear interest at the lesser
of (A) 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 or (B) the maximum lawful rate of interest on
such obligation, such interest to accrue from the date such amount is due (I.E.,
fifteen (15) days after demand) until such amount is paid in full. Each Limited
Partner shall take such actions as the Partnership or the General Partner shall
request in order to perfect or enforce the security interest created hereunder.
ARTICLE XI
TRANSFERS AND WITHDRAWALS
SECTION 11.1 TRANSFER
A. DEFINITION. The term "transfer," when used in this Article XI
with respect to a Partnership Interest or a Partnership Unit, shall be deemed to
refer to a transaction by which the General Partner purports to assign all or
any part of its General Partner Interest to another Person or by which a Limited
Partner purports to assign all or any part of its Limited Partner Interest to
another Person, and includes a sale, assignment, gift, pledge, encumbrance,
hypothecation, mortgage, exchange or any other disposition by law or otherwise.
The term "transfer" when used in this Article XI does not include (i) any
redemption or repurchase of Partnership Units by the Partnership from a Partner
(including the General Partner) otherwise permitted under this Agreement or (ii)
any acquisition of Partnership Units from a Limited Partner (other than CPT LP)
by the General Partner Entity or the General Partner pursuant to Section 8.6
hereof or otherwise.
B. GENERAL. No Partnership Interest 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 Partnership Interest not
made in accordance with this Article XI shall be null and void.
SECTION 11.2 TRANSFERS OF PARTNERSHIP INTERESTS OF GENERAL PARTNER
A. Neither the General Partner, CPT LP, nor the General Partner
Entity may transfer any of its Partnership Interest (except for a transfer of
Partnership Units by CPT LP to the General Partner pursuant to Section 4.3 or in
connection with a transaction described in Section 11.2.B below or as otherwise
expressly permitted under this Agreement), nor shall the General Partner
withdraw as General Partner except in connection with a transaction described in
Section 11.2.B below.
B. Neither the General Partner, CPT LP, nor the General Partner
Entity shall engage in any merger (including a triangular merger), consolidation
or other combination with or into another person, sale of all or substantially
all of its assets or any reclassification, recapitalization or change of
outstanding Shares (other than a change in par value, or from par value to no
par value, or as a result of a subdivision or combination as described in the
definition of "Conversion Factor") ("Termination Transaction"), unless either:
(i) the Termination Transaction has been approved by the
Consent of the Outside Limited Partners; or
(ii) in connection with such Termination Transaction, all
Limited Partners either will receive, or will have the right to elect to
receive, for each Partnership Unit an amount of cash, securities, or other
property equal to the product of the Conversion Factor and the
39
greatest amount of cash, securities or other property paid to a holder of Shares
corresponding to such Partnership Unit in consideration of one such Share at any
time during the period from and after the date on which the Termination
Transaction is consummated (as determined by the General Partner, in its
reasonable judgment); PROVIDED that if, in connection with the Termination
Transaction, a purchase, tender or exchange offer shall have been made to and
accepted by the holders of more than fifty percent (50%) of the outstanding
Shares, each holder of Partnership Units must receive, or must have the right to
elect to receive, the greatest amount of cash, securities, or other property
which such holder would have received had it exercised the Redemption Right and
received Shares in exchange for its Partnership Units immediately prior to the
expiration of such purchase, tender or exchange offer and had thereupon accepted
such purchase, tender or exchange offer.
SECTION 11.3 LIMITED PARTNERS' RIGHTS TO TRANSFER
A. GENERAL. Except to the extent expressly permitted in Sections
11.3.B and 11.3.C or in connection with the exercise of a Redemption Right
pursuant to Section 8.6, a Limited Partner may not transfer all or any portion
of its Partnership Interest, or any of such Limited Partner's economic rights as
a Limited Partner, without the prior written consent of the General Partner,
which consent may be withheld by the General Partner, in its sole and absolute
discretion, for any reason or for no reason. Any transfer otherwise permitted
under Section 11.3.B and 11.3.C shall be subject to the conditions set forth in
Sections 11.3.D, 11.3.E, and 11.3.F, and all permitted transfers shall be
subject to Section 11.4.
B. INCAPACITATED LIMITED PARTNERS. 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.
C. PERMITTED TRANSFERS. A Limited Partner (other than CPT LP) may
transfer, with or without the consent of the General Partner, all or a portion
of its Partnership Units (i) in the case of a Limited Partner who is an
individual, to a member of his Immediate Family, any trust formed solely for the
benefit of himself and/or members of his Immediate Family, or any partnership,
limited liability company, joint venture, corporation or other business entity
comprised only of himself and/or members of his Immediate Family and entities
the ownership interests in which are owned by or for the benefit of himself
and/or members of his Immediate Family, (ii) in the case of a Limited Partner
which is a trust, to the beneficiaries of such trust, (iii) in the case of a
Limited Partner which is a partnership, limited liability company, joint
venture, corporation or other business entity to which Partnership Units were
transferred pursuant to (i) above, to its partners, owners, or stockholders, as
the case may be, who are members of the Immediate Family of or are actually the
Person(s) who transferred Partnership Units to it pursuant to (i) above, (iv) in
the case of a Limited Partner which owned Partnership Units as of the Effective
Date and which is a partnership, limited liability company, joint venture,
corporation or other business entity, to its partners, owners, or stockholders,
as the case may be, or the Persons owning the beneficial interests in any of its
partners, owners or stockholders which are entities, in each case, as of the
Effective Date, (v) pursuant to a gift or other transfer without consideration,
(vi) pursuant to applicable laws of descent or distribution, (vii) to another
Limited Partner, and (viii) pursuant to a grant of security interest or other
encumbrance affected in a BONA FIDE transaction or as a result of the exercise
of remedies related thereto, subject to the provisions of Section 11.3.F hereof.
A trust or other entity will be considered formed "solely for the benefit" of a
Partner's Immediate Family even though some other Person has a remainder
interest under or with respect to such trust or other entity. A Limited
40
Partner that makes a transfer under this Section 11.3.C, shall provide written
notice to the General Partner of such transfer.
D. NO TRANSFERS VIOLATING SECURITIES LAWS. The General Partner may
prohibit any transfer of Partnership Units by a Limited Partner if, in the
opinion of legal counsel to the Partnership, such transfer would require filing
of a registration statement under the Securities Act or would otherwise violate
any federal, or state securities laws or regulations applicable to the
Partnership or the Partnership Unit.
E. NO TRANSFERS AFFECTING TAX STATUS OF PARTNERSHIP. No transfer of
Partnership Units by a Limited Partner may be made to any Person if (i) in the
opinion of legal counsel for the Partnership, it would result in the Partnership
being treated as an association taxable as a corporation for federal income tax
purposes or would result in a termination of the Partnership for federal income
tax purposes, (ii) in the opinion of legal counsel for the Partnership, it would
adversely affect the ability of the General Partner Entity to continue to
qualify as a REIT or would subject the General Partner Entity to any additional
taxes under Section 857 or Section 4981 of the Code or (iii) such transfer is
effectuated through an "established securities market" or a "secondary market
(or the substantial equivalent thereof)" within the meaning of Section 7704 of
the Code.
F. NO TRANSFERS TO HOLDERS OF NONRECOURSE LIABILITIES. No pledge or
transfer of any Partnership Units may be made to a lender to the Partnership or
any Person who is related (within the meaning of Section 1.752-4(b) of the
Regulations) to any lender to the Partnership whose loan constitutes a
Nonrecourse Liability without the consent of the General Partner, in its sole
and absolute discretion; PROVIDED that as a condition to such consent the lender
will be required to enter into an arrangement with the Partnership and the
General Partner to exchange or redeem for the Redemption Amount any Partnership
Units in which a security interest is held simultaneously with the time at which
such lender would be deemed to be a partner in the Partnership for purposes of
allocating liabilities to such lender under Section 752 of the Code.
SECTION 11.4 SUBSTITUTED LIMITED PARTNERS
A. CONSENT OF GENERAL PARTNER. No Limited Partner shall have the
right to substitute a transferee as a Limited Partner in its place (whether or
not the transfer of the Limited Partner's Partnership Interest is permitted
under Section 11.3). The General Partner shall, however, have the right to
consent to the admission of a transferee of the interest of a Limited Partner
pursuant to this Section 11.4 as a Substituted Limited Partner, which consent
may be given or withheld by the General Partner in its sole and absolute
discretion and for any reason or no reason. The General Partner's failure or
refusal to permit a transferee of any such interests to become a Substituted
Limited Partner shall not give rise to any cause of action against the
Partnership or any Partner.
B. RIGHTS OF SUBSTITUTED LIMITED PARTNER. A transferee who has been
admitted as a Substituted Limited Partner in accordance with this Article XI
shall have all the rights and powers and be subject to all the restrictions and
liabilities of a Limited Partner under this Agreement. The admission of any
transferee as a Substituted Limited Partner shall be conditioned upon the
transferee executing and delivering to the Partnership an acceptance of all the
terms and conditions of this Agreement (including, without limitation, the
provisions of Section 2.4 and such other documents or instruments as may be
required to effect the admission).
C. 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 Partnership
Units, and Percentage Interest of such Substituted Limited Partner and to
eliminate or adjust, if necessary, the name, address, Capital
41
Account and Percentage Interest of the predecessor of such Substituted Limited
Partner (and any other Partner, as necessary.)
SECTION 11.5 ASSIGNEES
If the General Partner, in its sole and absolute discretion, does
not consent to the admission of any permitted transferee under Section 11.3
above as a Substituted Limited Partner, as described in Section 11.4 above, such
transferee shall be considered an Assignee for purposes of this Agreement. An
Assignee shall be entitled to all the rights of an assignee of a limited partner
interest under the Act, including the right to receive distributions from the
Partnership and the share of Net Income, Net Losses, gain, loss and Recapture
Income attributable to the Partnership Units assigned to such transferee, and
shall have the rights granted to the Limited Partners under Section 8.6, but
shall not be deemed to be a holder of Partnership Units for any other purpose
under this Agreement, and shall not be entitled to vote such Partnership Units
in any matter presented to the Limited Partners for a vote (such Partnership
Units being deemed to have been voted in the same manner as CPT LP voted, or if
CPT LP is not eligible to vote, then as recommended by the General Partner). In
the event any such transferee desires to make a further assignment of any such
Partnership Units, such transferee shall be subject to all the provisions of
this Article XI to the same extent and in the same manner as any Limited Partner
desiring to make an assignment of Partnership Units. The General Partner shall
have no liability under any circumstances with respect to any Assignee as to
which it does not have notice.
SECTION 11.6 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 Partnership Units in accordance with this Article XI or
pursuant to redemption of all of its Partnership Units under Section 8.6 hereof.
B. TERMINATION OF STATUS AS LIMITED PARTNER. Any Limited Partner who
shall transfer all of its Partnership Units in a transfer permitted pursuant to
this Article XI or pursuant to redemption of all of its Partnership Units under
Section 8.6 hereof 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.
D. ALLOCATIONS. If any Partnership Interest is transferred during
any quarterly segment of the Partnership's fiscal year in compliance with the
provisions of this Article XI or redeemed or transferred pursuant to Section 8.6
hereof, 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 method, 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). Solely for purposes of making such allocations, each of
such items for the calendar month in which the transfer or redemption occurs
shall be allocated to the Person who is a Partner as of midnight on the last day
of said month. All distributions of Available Cash attributable to any
Partnership Unit with respect to which the Partnership Record Date is before the
date of such transfer, assignment or redemption shall be made to the transferor
Partner or the Redeeming Partner, as the case may be, and, in the case of a
transfer
42
or assignment other than a redemption, all distributions of Available Cash
thereafter attributable to such Partnership Unit shall be made to the transferee
Partner.
ARTICLE XII
ADMISSION OF PARTNERS
SECTION 12.1 ADMISSION OF SUCCESSOR GENERAL PARTNER
A successor to all of the General Partner's General Partner Interest
pursuant to Section 11.2 hereof who is proposed to be admitted as a successor
General Partner shall be admitted to the Partnership as the General Partner,
effective upon such transfer. Any such transferee shall carry on the business of
the Partnership without dissolution. In each case, the admission shall be
subject to the successor General Partner's executing and delivering to the
Partnership an acceptance of all of the terms and conditions of this Agreement
and such other documents or instruments as may be required by Limited Partners
holding a majority of the Percentage Interests held by the Limited Partners to
effect the admission.
SECTION 12.2 ADMISSION OF ADDITIONAL LIMITED PARTNERS
A. GENERAL. No Person shall be admitted as an Additional Limited
Partner without the consent of the General Partner, which consent shall be given
or withheld in the General Partner's sole and absolute discretion. A Person who
makes a Capital Contribution to the Partnership in accordance with this
Agreement, including, without limitation, pursuant to Section 4.1.C hereof, or
who exercises an option to receive Partnership Units shall be admitted to the
Partnership as an Additional Limited Partner only with the consent of the
General Partner, which consent may be given its sole and absolute discretion,
and only upon furnishing to the General Partner (i) evidence of acceptance in
form satisfactory to the General Partner of all of the terms and conditions of
this Agreement, including, without limitation, the power of attorney granted in
Section 15.11 hereof and (ii) such other documents or instruments as may be
required in the discretion of the General Partner in order to effect such
Person's admission as an Additional Limited Partner. 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.
B. ALLOCATIONS TO ADDITIONAL LIMITED PARTNERS. If any Additional
Limited Partner is admitted to the Partnership on any day other than the first
day of a Partnership Year, then Net Income, Net Losses, each item thereof and
all other items allocable among Partners and Assignees for such Partnership Year
shall be allocated among such Additional Limited Partner and all other Partners
and Assignees by taking into account their varying interests during the
Partnership Year in accordance with 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 monthly proration
method, in which event Net Income, Net Losses, and each item thereof would be
prorated based upon the applicable period selected by the General Partner).
Solely for purposes of making such allocations, each of such items for the
calendar month in which an admission of any Additional Limited Partner occurs
shall be allocated among all the Partners and Assignees including such
Additional Limited Partner. All distributions of Available Cash with respect to
which the Partnership Record Date is before the date of such admission shall be
made solely to Partners and Assignees other than the Additional Limited Partner,
and all distributions of Available Cash thereafter shall be made to all the
Partners and Assignees including such Additional Limited Partner.
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SECTION 12.3 AMENDMENT OF AGREEMENT AND CERTIFICATE OF LIMITED PARTNERSHIP
For the admission to the Partnership of any Partner, the General
Partner shall take all steps necessary and appropriate under the Act to amend
the records of the Partnership (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 and may for this purpose exercise the power of
attorney granted pursuant to Section 2.4 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, upon the first to occur of any of the following
("Liquidating Events") :
(i) the expiration of its term as provided in Section 2.5
hereof;
(ii) an event of withdrawal of the General Partner, as defined
in the Act (other than an event of bankruptcy), unless, within ninety (90) days
after the withdrawal a "majority in interest" (as defined below) of the
remaining Partners Consent in writing to continue the business of the
Partnership and to the appointment, effective as of the date of withdrawal, of a
substitute General Partner;
(iii) through December 31, 2043, an election to dissolve the
Partnership made by the General Partner with the Consent of Limited Partners
holding two-thirds (2/3) or more of the Partnership Units then held by Limited
Partners (including Partnership Units held by the General Partner as a Limited
Partner and Units held by CPT LP);
(iv) on or after January 1, 2044, an election to dissolve the
Partnership made by the General Partner, in its sole and absolute discretion;
(v) entry of a decree of judicial dissolution of the
Partnership pursuant to the provisions of the Act;
(vi) the sale of all or substantially all of the assets and
properties of the Partnership for cash or for marketable securities; or
(vii) 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 days after of the entry of such order
or judgment a "majority in interest" (as defined below) of the remaining
Partners Consent 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.
44
As used herein, a "majority in interest" shall refer to Partners (excluding the
General Partner) who hold more than fifty percent (50%) of the outstanding
Percentage Interests.
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 a majority in interest of
the Limited Partners (the "Liquidator")) shall be responsible for overseeing the
winding up and dissolution of the Partnership and shall take full account of the
Partnership's liabilities and property and the Partnership property shall be
liquidated as promptly as is consistent with obtaining the fair value thereof,
and the proceeds therefrom (which may, to the extent determined by the General
Partner, include 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
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.
C. LIQUIDATING TRUST. In the discretion of the General Partner, a
pro rata portion of the distributions that would otherwise be made to the
General Partner and Limited Partners pursuant to this Article XIII may be: (A)
distributed to a trust established for the benefit of the General Partner and
Limited Partners for the purposes of liquidating Partnership assets, collecting
amounts owed to the Partnership and paying any contingent or unforeseen
liabilities or obligations of the Partnership or of the General Partner arising
out of or in connection with the Partnership (in which case the assets of any
such trust shall be distributed to the General Partner
45
and Limited Partners from time to time, in the reasonable discretion of the
General Partner, in the same proportions as the amount distributed to such trust
by the Partnership would otherwise have been distributed to the General Partner
and Limited Partners pursuant to this Agreement); or (B) withheld to provide a
reasonable reserve for Partnership liabilities (contingent or otherwise) and to
reflect the unrealized portion of any installment obligations owed to the
Partnership, provided that such withheld amounts shall be distributed to the
General Partner and Limited Partners in the manner and order of priority set
forth in Section 13.2.A as soon as practicable.
SECTION 13.3 COMPLIANCE WITH TIMING REQUIREMENTS OF REGULATIONS
Subject to Section 13.4 below, 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 General Partner
and Limited Partners who have positive Capital Accounts in compliance with
Regulations Section 1.704-1(b)(2)(ii)(b)(2). If any Partner has a deficit
balance in 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.
SECTION 13.4 DEEMED DISTRIBUTION AND RECONTRIBUTION
Notwithstanding any other provision of this Article XIII, in the
event the Partnership is deemed liquidated within the meaning of Regulations
Section 1.704-1(b)(2)(ii)(g) but no Liquidating Event has occurred, the
Partnership's property shall not be liquidated, the Partnership's liabilities
shall not be paid or discharged and the Partnership's affairs shall not be wound
up. Instead, for federal income tax purposes and for purposes of maintaining
Capital Accounts pursuant to EXHIBIT B hereto, the Partnership shall be deemed
to have distributed its assets in kind to the General Partner and Limited
Partners, who shall be deemed to have assumed and taken such assets subject to
all Partnership liabilities, all in accordance with their respective Capital
Accounts. Immediately thereafter, the General Partner and Limited Partners shall
be deemed to have recontributed the Partnership assets in kind to the
Partnership, which shall be deemed to have assumed and taken such assets subject
to all such liabilities.
SECTION 13.5 RIGHTS OF LIMITED PARTNERS
Except as otherwise provided in this Agreement, each Limited Partner
shall look solely to the assets of the Partnership for the return of its Capital
Contributions and shall have no right or power to demand or receive property
other than cash from the Partnership. Except as otherwise provided in this
Agreement, no Limited Partner shall have priority over any other Partner as to
the return of its Capital Contributions, distributions, or allocations.
SECTION 13.6 NOTICE OF DISSOLUTION
In the event a Liquidating Event occurs or an event occurs that
would, but for provisions of 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.
46
SECTION 13.7 TERMINATION OF PARTNERSHIP AND 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, all Partnership Units shall be
cancelled, including the Redemption Right associated therewith, the Partnership
shall be terminated, the Certificate and all qualifications of the Partnership
as a foreign limited partnership in jurisdictions other than the State of
Delaware shall be canceled, and such other actions as may be necessary to
terminate the Partnership shall be taken.
SECTION 13.8 REASONABLE TIME FOR WINDING UP
A reasonable time shall be allowed for the orderly winding up of the
business and affairs of the Partnership and the liquidation of its assets
pursuant to Section 13.2 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 13.9 WAIVER OF PARTITION
Each Partner hereby waives any right to partition of the Partnership
property.
SECTION 13.10 LIABILITY OF LIQUIDATOR
The Liquidator shall be indemnified and held harmless by the
Partnership from and against any and all claims, liabilities, costs, damages,
and causes of action of any nature whatsoever arising out of or incidental to
the Liquidator's taking of any action authorized under or within the scope of
this Agreement; provided, however, that the Liquidator shall not be entitled to
indemnification, and shall not be held harmless, where the claim, demand,
liability, cost, damage or cause of action at issue arises out of (A) a matter
entirely unrelated to the Liquidator's action or conduct pursuant to the
provisions of this Agreement or (B) the proven willful misconduct or gross
negligence of the Liquidator.
ARTICLE XIV
AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS
SECTION 14.1 AMENDMENTS
A. GENERAL. Amendments to this Agreement may be proposed by the
General Partner or by any Limited Partners holding twenty-five percent (25%) or
more of the Partnership Interests. Following such proposal (except an amendment
pursuant to Section 14.1.B below), the General Partner shall submit any proposed
amendment to the Limited Partners. The General Partner shall seek the written
vote of the Partners on the proposed amendment or shall call a meeting to vote
thereon and to transact any other business that it may deem appropriate. For
purposes of obtaining a written vote, the General Partner may require a response
within a reasonable specified time, but not less than fifteen (15) days, and
failure to respond in such time period shall constitute a vote which is
consistent with the General Partner's recommendation with respect to the
proposal. Except as provided in Section 14.1.B, 14.1.C or 14.1.D below, a
proposed amendment shall be adopted and be effective as an amendment hereto if
it is approved by the General Partner and it receives the Consent of Partners
holding a majority of the Partnership Units
47
then held by Limited Partners (including Limited Partner Interests held by the
General Partner and CPT LP).
B. AMENDMENTS NOT REQUIRING LIMITED PARTNER APPROVAL.
Notwithstanding Section 14.1.A or Section 14.1.C hereof, the General Partner
shall have the power, without the Consent of the Limited Partners, to amend this
Agreement as may be required to facilitate or implement any of the following
purposes:
(1) to add to the obligations of the General Partner or surrender
any right or power granted to the General Partner or any
Affiliate of the General Partner for the benefit of the
Limited Partners;
(2) to reflect the admission, substitution, termination, or
withdrawal of any Partner in accordance with this Agreement;
(3) to set forth the designations, rights, powers, duties, and
preferences of the holders of any additional Partnership
Interests issued pursuant to Article IV hereof (including,
without limitation, to reflect amendments expressly permitted
under Sections 5.4, 6.2, and 8.6.E);
(4) to reflect a change that does not adversely affect any of the
Limited Partners in any material respect, or to cure any
ambiguity, correct or supplement any provision in this
Agreement not inconsistent with law or with other provisions,
or make other changes with respect to matters arising under
this Agreement that will not be inconsistent with law or with
the provisions of this Agreement or as may be expressly
provided by any other provisions of this Agreement; and
(5) to satisfy any requirements, conditions, or guidelines
contained in any order, directive, opinion, ruling or
regulation of a federal, state or local agency or contained in
federal, state or local law.
The General Partner shall notify the Limited Partners when any action under this
Section 14.1.B is taken.
C. OTHER AMENDMENTS REQUIRING CERTAIN LIMITED PARTNER APPROVAL.
Notwith standing anything in this Section 14.1 to the contrary, this Agreement
shall not be amended without the Consent of such Partner adversely affected if
such amendment would (i) convert a Limited Partner's interest in the Partnership
into a general partner's interest, (ii) modify the limited liability of a
Limited Partner, (iii) alter rights of Partners to receive distributions
pursuant to Article V or the allocations specified in Article VI (except as
permitted pursuant to Sections 4.2, 5.1.F, 5.4, 6.2 and 14.1(B)(3)), (iv) amend
Section 8.6 or any defined terms set forth in Article I that relate to the
Redemption Right (except as permitted in Section 8.6.E), (v) cause the
termination of the Partnership prior to the time set forth in Sections 2.5 or
13.1, or (vi) amend this Section 14.1.C.
D. AMENDMENTS REQUIRING LIMITED PARTNER APPROVAL (EXCLUDING GENERAL
PARTNER AND CPT LP). Notwithstanding Section 14.1.A or Section 14.1.B hereof,
the General Partner shall not amend Sections 4.2.A, 7.5, 7.6, 11.2, 13.1, 14.1.C
or 14.2 without the Consent of the Outside Limited Partners.
E. 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(21) hereof
48
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 the Limited Partners.
SECTION 14.2 MEETINGS OF THE PARTNERS
A. GENERAL. Meetings of the Partners may be called by the General
Partner and shall be called upon the receipt by the General Partner of a written
request by Limited Partners holding twenty-five percent (25%) or more of the
Partnership Interests. The call shall state the nature of the business to be
transacted. Notice of any such meeting shall be given to all Partners not less
than seven (7) days nor more than thirty (30) days prior to the date of such
meeting. Partners may vote in person or by proxy at such meeting. Whenever the
vote or Consent of Partners is permitted or required under this Agreement, such
vote or Consent may be given at a meeting of Partners or may be given in
accordance with the procedure prescribed in Section 14.1.A above. Except as
otherwise expressly provided in this Agreement, the Consent of holders of a
majority of the Percentage Interests held by Limited Partners (including Limited
Partner Interests held by the General Partner) shall control.
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 a majority of the
Percentage Interests of the Partners (or such other percentage as is expressly
required by this Agreement). Such consent may be in one instrument or in several
instruments, and shall have the same force and effect as a vote of a majority of
the Percentage Interests of the Partners (or such other percentage as is
expressly required by this Agreement). Such consent shall be filed with the
General Partner. An action so taken shall be deemed to have been taken at a
meeting held on the effective date so certified.
C. PROXY. Each Limited Partner may authorize any Person or Persons
to act for him by proxy on all matters in which a Limited Partner is entitled to
participate, including waiving notice of any meeting, or voting or participating
at a meeting. Every proxy must be signed by the Limited Partner or 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 written notice
thereof.
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 in its sole discretion.
ARTICLE XV
GENERAL PROVISIONS
SECTION 15.1 ADDRESSES AND NOTICE
Any notice, demand, request or report required or permitted to be
given or made to a Partner or Assignee under this Agreement shall be in writing
and shall be deemed given or made when delivered in person or when sent by first
class United States mail or by other means of written communication to the
Partner or Assignee at the address set forth in EXHIBIT A hereto or such other
address as the Partners shall notify the General Partner in writing. Such
communications shall be deemed sufficiently given, served, sent or received for
all purposes at such time as delivered to the addressee (with the return receipt
or delivery receipt being deemed conclusive evidence of such delivery) or at
such time as delivery is refused by the addressee upon presentation.
49
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 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 of the Partnership.
SECTION 15.7 WAIVER
No failure by any party to insist upon the strict performance of any
covenant, duty, agreement or condition of this Agreement or to exercise any
right or remedy consequent upon a breach thereof shall constitute waiver of any
such breach or any other covenant, duty, agreement or condition.
SECTION 15.8 COUNTERPARTS
This Agreement may be executed in counterparts, all of which
together shall constitute one agreement binding on all the parties hereto,
notwithstanding that all such parties are not signatories to the original or the
same counterpart. Each party shall become bound by this Agreement immediately
upon affixing its signature hereto.
SECTION 15.9 APPLICABLE LAW
This Agreement shall be construed and enforced in accordance with
and governed by the laws of the State of Delaware, without regard to the
principles of conflicts of law.
50
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 contains the entire understanding and agreement among
the Partners with respect to the subject matter hereof and supersedes the Prior
Agreement and any prior written oral understandings or agreements among them
with respect thereto.
SECTION 15.12 GUARANTY BY CPT
CPT hereby unconditionally and irrevocably guarantees to the Limited
Partners the performance by the General Partner of the General Partner's
obligations under this Agreement. This guarantee, which shall be binding upon
the successors and assigns of CPT, is exclusively for the benefit of the Limited
Partners and shall not extend to the benefit of any creditor of the Partnership.
SECTION 15.13 NO RIGHTS AS SHAREHOLDERS
Nothing contained in this Agreement shall be construed as conferring
upon the holders of the Partnership Units any rights whatsoever as shareholders
of the General Partner Entity, including, without limitation, any right to
receive dividends or other distributions made to shareholders of the General
Partner Entity or to vote or to consent or receive notice as shareholders in
respect to any meeting of shareholders for the election of directors of the
General Partner Entity or any other matter.
SECTION 15.14 LIMITATION TO PRESERVE REIT STATUS
To the extent that any amount paid or credited to the General
Partner or its officers, directors, employees or agents pursuant to Section 7.4
or Section 7.7 hereof would constitute gross income to the General Partner
Entity for purposes of Section 856(c)(2) or 856(c)(3) of the Code (a "General
Partner Payment"), as determined by the General Partner, then, notwithstanding
any other provision of this Agreement, the amount of such General Partner
Payments for any fiscal year shall not exceed the lesser of:
(i) an amount equal to the excess, if any, of (a) 4.20% of the
General Partner Entity's total gross income (but not including the amount of any
General Partner Payments) for the fiscal year which is described in subsections
(A) though (H) of Section 856(c)(2) of the Code over (b) the amount of gross
income (within the meaning of Section 856(c)(2) of the Code) derived by the
General Partner Entity from sources other than those described in subsections
(A) through (H) of Section 856(c)(2) of the Code (but not including the amount
of any General Partner Payments); or
(ii) an amount equal to the excess, if any of (a) 25% of the General
Partner Entity's total gross income (but not including the amount of any General
Partner Payments) for the fiscal year which is described in subsections (A)
through (I) of Section 856(c)(3) of the Code over (b) the amount of gross income
(within the meaning of Section 856(c)(3) of the Code) derived by the General
Partner Entity from sources other than those described in subsections (A)
through (I) of Section 856(c)(3) of the Code (but not including the amount of
any General Partner Payments);
51
PROVIDED, HOWEVER, that General Partner Payments in excess of the amounts set
forth in subparagraphs (i) and (ii) above may be made if the General Partner
Entity, as a condition precedent, obtains an opinion of tax counsel that the
receipt of such excess amounts would not adversely affect the General Partner
Entity's ability to qualify as a REIT. To the extent General Partner Payments
may not be made in a year due to the foregoing limitations, such General Partner
Payments shall carry over and be treated as arising in the following year,
PROVIDED, HOWEVER, that such amounts shall not carry over for more than five
years, and if not paid within such five year period, shall expire; PROVIDED
FURTHER, that (i) as General Partner Payments are made, such payments shall be
applied first to carry over amounts outstanding, if any, and (ii) with respect
to carry over amounts for more than one Partnership Year, such payments shall be
applied to the earliest Partnership Year first.
52
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the date first written above.
GENERAL PARTNER:
CPT-GP, INC.
By: ______________________________
Name: ____________________________
Title: ___________________________
LIMITED PARTNERS:
By: CPT-GP, Inc., as
Attorney-in-Fact for the Limited
Partners
By: ______________________________
Name: ____________________________
Title: ___________________________
CAMDEN PROPERTY TRUST, for purposes of
Section 4.2.B, 5.1.C, 7.4, 7.5, 7.7, 7.8,
8.6, 11.2 and 15.12
By: ______________________________
Name: ____________________________
Title: ___________________________
53
EXHIBIT A
PARTNERS AND PARTNERSHIP INTERESTS
Class A Class B Agreed
Partnership Partnership Capital Percentage
NAME AND ADDRESS OF PARTNER UNITS* UNITS* ACCOUNT** INTEREST
GENERAL PARTNER:
LIMITED PARTNERS:
TOTAL 100.00%
============= =========== ========= ==========
-------------------
* The Partnership Units are as restated as of the Effective Date, as set
forth in Section 4.1.A. Such restatement was applied in the same manner to
each Partner and did not result in a change to any Partner's Percentage
Interest.
** As of the Effective Date
EXHIBIT B
CAPITAL ACCOUNT MAINTENANCE
1. CAPITAL ACCOUNTS OF THE PARTNERS
A. The Partnership shall maintain for each Partner a separate
Capital Account in accordance with the rules of Regulations Section
l.704-l(b)(2)(iv). Such Capital Account shall be increased by (i) the amount of
all Capital Contributions and any other 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 1.B hereof and allocated to such Partner pursuant to
Section 6.1 of the Agreement and EXHIBIT C hereof, and decreased by (x) the
amount of cash or Agreed Value of all actual and deemed distributions of
cash or property made to such Partner pursuant to this Agreement and (y) all
items of Partnership deduction and loss computed in accordance with Section 1.B
hereof and allocated to such Partner pursuant to Section 6.1 of the Agreement
and EXHIBIT C hereof.
B. For purposes of computing the amount of any item of income, gain,
deduction or loss to be reflected in the Partners' Capital Accounts, unless
otherwise specified in this Agreement, the determination, recognition and
classification of any such item shall be the same as its determination,
recognition and classification for federal income tax 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 Partner (to
the extent that such adjustments have not previously been
reflected in the Partners' Capital Accounts) shall be
reflected in the Capital Accounts of the Partners in the
manner and subject to the limitations prescribed in
Regulations Section l.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)(l)(B) or 705(a)(2)(B) of the Code are not
includable in gross income or are neither currently deductible
nor capitalized for federal income tax purposes.
(3) Any income, gain or loss attributable to the taxable
disposition of any Partnership property shall be determined as
if the adjusted basis of such property as of such date of
disposition were equal in amount to the Partnership's Carrying
Value with respect to such property as of such date.
(4) In lieu of the depreciation, amortization, and other 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 1.D hereof, the amount of any
such adjustment shall be taken into account as gain or loss
from the disposition of such asset.
(6) Any items specially allocated under Section 2 of EXHIBIT C
hereof shall not be taken into account.
C. Generally, a transferee (including any Assignee) of a Partnership
Unit shall succeed to a pro rata portion of the Capital Account of the
transferor [; PROVIDED, HOWEVER, that if the transfer causes a termination of
the Partnership under Section 708(b)(1)(B) of the Code, the Partnership's
properties shall be deemed, solely for federal income tax purposes, to have been
distributed in liquidation of the Partnership to the holders of the Partnership
Units (including transferees) and recontributed by such Partnership in
reconstitution of the Partnership. In such event, the Carrying Value of
Partnership properties shall be adjusted immediately prior to such deemed
distribution pursuant to Section 1.D (2) hereof]. [TO BE DELETED IF PROPOSED
REGULATIONS ARE ADOPTED.] The Capital Accounts of such reconstituted Partnership
shall be maintained in accordance with the principles of this EXHIBIT B.
D. (1) Consistent with the provisions of Regulations Section
1.704-1(b)(2)(iv)(f), and as provided in Section 1.D(2), the
Carrying Values of all Partnership assets shall be adjusted
upward or downward to reflect any Unrealized Gain or
Unrealized Loss attributable to such Partnership property, as
of the times of the adjustments provided in Section 1.D(2)
hereof, as if such Unrealized Gain or Unrealized Loss had been
recognized on an actual sale of each such property and
allocated pursuant to Section 6.1 of the Agreement.
(2) Such adjustments shall be made as of the following times: (a)
immediately prior to the acquisition of an additional interest
in the Partnership by any new or existing Partner in exchange
for more than a de minimis Capital Contribution; (b)
immediately prior to the distribution by the Partnership to a
Partner of more than a de minimis amount of property as
consideration for an interest in the Partnership; and (c)
immediately prior to the liquidation of the Partnership within
the meaning of Regulations Section 1.704-l(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- l(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 using
such reasonable method of valuation as it may adopt, or in the
case of a liquidating distribution pursuant to Article XIII of
the Agreement, shall be determined and allocated by the
Liquidator using such reasonable methods of valuation as it
may adopt. The General Partner, or the Liquidator, as the case
may be, shall allocate such aggregate fair market 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 the Agreement (including this EXHIBIT B and the
other Exhibits to the 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
B-2
with such Regulations. In the event the General Partner shall determine that it
is prudent to modify the manner in which the Capital Accounts, or any debits or
credits thereto (including, without limitation, debits or credits relating to
liabilities which are secured by contributed or distributed property or which
are assumed by the Partnership, the General Partner, or the Limited Partners)
are computed in order to comply with such Regulations, the General Partner may
make such modification 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 Partners and the amount of Partnership capital reflected on the
Partnership's balance sheet, as computed for book purposes, in accordance with
Regulations Section l.704-l(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 l.704-1(b).
2. NO INTEREST
No interest shall be paid by the Partnership on Capital
Contributions or on balances in Partners' Capital Accounts.
3. NO WITHDRAWAL
No Partner shall be entitled to withdraw any part of its Capital
Contribution or Capital Account or to receive any distribution from the
Partnership, except as provided in Articles IV, V, VII and XIII of the
Agreement.
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 Year, each
Partner shall be specially allocated items of Partnership income and gain for
such year (and, if necessary, subsequent years) in an amount equal to such
Partner's share of the net decrease in Partnership Minimum Gain, as determined
under Regulations Section 1.704-2(g). Allocations pursuant to the previous
sentence shall be made in proportion to the respective amounts required to be
allocated to each Partner pursuant thereto. The items to be so allocated shall
be determined in accordance with Regulations Section 1.704-2(f)(6). This Section
1.A is intended to comply with the minimum gain chargeback requirements in
Regulations Section 1.704-2(f) and for purposes of this Section 1.A only, each
Partner's Adjusted Capital Account Deficit shall be determined prior to any
other allocations pursuant to Section 6.1 of this Agreement with respect to such
Partnership Year and without regard to any decrease in Partner Minimum Gain
during such Partnership 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
Year, each Partner who has a share of the Partner Minimum Gain attributable to
such Partner Nonrecourse Debt, determined in accordance with Regulations Section
1.704-2(i) (5), shall be specially allocated items of Partnership income and
gain for such year (and, if necessary, subsequent years) in an amount equal to
such Partner's share of the net decrease in Partner Minimum Gain attributable to
such Partner Nonrecourse Debt, determined in accordance with Regulations Section
1.704-2(i) (5). Allocations pursuant to the previous sentence shall be made in
proportion to the respective amounts required to be allocated to each General
Partner and Limited Partner pursuant thereto. The items to be so allocated shall
be determined in accordance with Regulations Section 1.704-2(i) (4). This
Section 1.B is intended to comply with the minimum gain chargeback requirement
in such Section of the Regulations and shall be interpreted consistently
therewith. Solely for purposes of this Section 1.B, each Partner's Adjusted
Capital Account Deficit shall be determined prior to any other allocations
pursuant to Section 6.1 of the Agreement or this Exhibit with respect to such
Partnership Year, other than allocations pursuant to Section 1.A hereof.
C. QUALIFIED INCOME OFFSET. In the event any Partner unexpectedly
receives any adjustments, allocations or distributions described in Regulations
Sections 1.704-l(b)(2)(ii)(d)(4), l.704-1(b)(2)(ii)(d)(5), or
1.704-l(b)(2)(ii)(d)(6), and after giving effect to the allocations required
under Sections 1.A and 1.B hereof with respect to such Partnership Year, such
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,
including gross income and gain for the Partnership Year) shall be specially
allocated to such Partner in an amount and manner sufficient to eliminate, to
the extent required by the Regulations, its Adjusted Capital Account Deficit
created by such adjustments, allocations or distributions as quickly as
possible. This Section 1.C is intended to constitute a "qualified income offset"
under Regulations Section 1.704-1(b)(2)(ii)(d) and shall be interpreted
consistently therewith.
X. XXXXX INCOME ALLOCATION. In the event that any Partner has an
Adjusted Capital Account Deficit at the end of any Partnership Year (after
taking into account allocations to
be made under the preceding paragraphs hereof with respect to such Partnership
Year), each such 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 Year) in an amount
and manner sufficient to eliminate, to the extent required by the Regulations,
its Adjusted Capital Account Deficit.
E. NONRECOURSE DEDUCTIONS. Nonrecourse Deductions for any
Partnership Year shall be allocated to the Partners in accordance with their
respective Percentage Interests. If the General Partner determines in its good
faith discretion that the Partnership's Nonrecourse Deductions must be allocated
in a different ratio to satisfy the safe harbor requirements of the Regulations
promulgated under Section 704(b) of the Code, the General Partner is authorized,
upon notice to the Limited Partners, to revise the prescribed ratio for such
Partnership Year to the numerically closest ratio which would satisfy such
requirements.
F. PARTNER NONRECOURSE DEDUCTIONS. Any Partner Nonrecourse
Deductions for any Partnership Year shall be specially allocated to the Partner
who bears the economic risk of loss with respect to the Partner Nonrecourse Debt
to which such Partner Nonrecourse Deductions are attributable in accordance with
Regulations Sections 1.704-2(b)(4) and 1.704-2(i).
G. 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-l(b)(2)(iv)(m),
to be taken into account in determining Capital Accounts, the amount of such
adjustment to the Capital Accounts shall be treated as an item of gain (if the
adjustment increases the basis of the asset) or loss (if the adjustment
decreases such basis), and such item of gain or loss shall be specially
allocated to the Partners in a manner consistent with the manner in which their
Capital Accounts are required to be adjusted pursuant to such Section of the
Regulations.
2. ALLOCATIONS FOR TAX PURPOSES
A. Except as otherwise provided in this Section 2, for federal
income tax purposes, each item of income, gain, loss and deduction shall be
allocated among the Partners in the same manner as its correlative item of
"book" income, gain, loss or deduction is allocated pursuant to Section 6.1 of
the Agreement and Section 1 of this EXHIBIT C.
B. In an attempt to eliminate Book-Tax Disparities attributable to a
Contributed Property or Adjusted Property, items of income, gain, loss, and
deduction shall be allocated for federal income tax purposes among the Partners
as follows:
(1) (a) In the case of a Contributed Property, such items
attributable thereto shall be allocated among the
Partners consistent with the principles of Section
704(c) of the Code to take into account the variation
between the 704(c) Value of such property and its
adjusted basis at the time of contribution (taking into
account Section 2.C of this EXHIBIT C); and
(b) any item of Residual Gain or Residual Loss attributable
to a Contributed Property shall be allocated among the
Partners in the same manner as its correlative item of
"book" gain or loss is allocated 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
(i) first, be allocated among the Partners in a manner
consistent with the principles of Section 704(c) of the
Code to take into account the Unrealized Gain or
Unrealized Loss attributable to such property and the
allocations thereof pursuant to EXHIBIT B;
(ii) second, in the event such property was originally a
Contributed Property, be allocated among the Partners in
a manner consistent with Section 2.B(1) of this EXHIBIT
C; and
(b) any item of Residual Gain or Residual Loss attributable
to an Adjusted Property shall be allocated among the
Partners in the same manner 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. To the extent Regulations promulgated pursuant to Section 704(c)
of the Code permit a Partnership to utilize alternative methods to eliminate the
disparities between the Carrying Value of property and its adjusted basis, the
General Partner shall, subject to the following, have the authority to elect the
method to be used by the Partnership and such election shall be binding on all
Partners. With respect to any Contributed Properties held by the Partnership on
the Effective Date, the Partnership shall elect to use the "traditional method"
set forth in Treasury Regulation ss. 1.704- 3(b).
EXHIBIT D
NOTICE OF REDEMPTION
The undersigned hereby irrevocably (i) redeems _________ Partnership
Units in Camden Operating, L.P. in accordance with the terms of the Third
Amended and Restated Agreement of Limited Partnership of Camden Operating, L.P.,
as amended, and the Redemption Right referred to therein, (ii) surrenders such
Partnership Units and all right, title and interest therein and (iii) directs
that the Cash Amount or Shares Amount (as determined by the General Partner)
deliverable upon exercise of the Redemption Right be delivered to the address
specified below, and if Shares are to be delivered, such Shares be registered or
placed in the name(s) and at the address(es) specified below. The undersigned
hereby represents, warrants, and certifies that the undersigned (a) has
marketable and unencumbered title to such Partnership Units, free and clear of
the rights of or interests of any other person or entity, (b) has the full
right, power and authority to redeem and surrender such Partnership Units as
provided herein and (c) has obtained the consent or approval of all persons or
entities, if any, having the right to consult or approve such redemption and
surrender.
Dated:____________________ Name of Limited Partner:________________________
__________________________________
(Signature of Limited Partner)
__________________________________
__________________________________
(Street Address)
__________________________________
(City) (State) (Zip Code)
Signature Guaranteed by:_______________________
IF SHARES ARE TO BE ISSUED, ISSUE TO:
Name:
Please insert social security or identifying number:
