FIRST AMENDED AND RESTATED AGREEMENT
OF LIMITED PARTNERSHIP
OF
GOLF TRUST OF AMERICA, L.P.
TABLE OF CONTENTS
ARTICLE I
DEFINED TERMS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II
PARTNERSHIP CONTINUATION AND IDENTIFICATION. . . . . . . . . . . . . . . . 9
2.01 Continuation. . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.02 Name, Office and Registered Agent . . . . . . . . . . . . . . . . 9
2.03 Partners. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.04 Term and Dissolution. . . . . . . . . . . . . . . . . . . . . . . 9
2.05 Filing of Certificate and Perfection of Limited Partnership . . . 10
ARTICLE III
BUSINESS OF THE PARTNERSHIP. . . . . . . . . . . . . . . . . . . . . . . . 11
ARTICLE IV
CAPITAL CONTRIBUTIONS AND ACCOUNTS . . . . . . . . . . . . . . . . . . . . 11
4.01 Capital Contributions . . . . . . . . . . . . . . . . . . . . . . 11
4.02 Additional Capital Contributions and Issuances of Additional
Partnership Interests . . . . . . . . . . . . . . . . . . . . . . 11
4.03 General Partner Loans . . . . . . . . . . . . . . . . . . . . . . 14
4.04 Capital Accounts. . . . . . . . . . . . . . . . . . . . . . . . . 14
4.05 Percentage Interests. . . . . . . . . . . . . . . . . . . . . . . 14
4.06 No Interest on Contributions. . . . . . . . . . . . . . . . . . . 15
4.07 Return of Capital Contributions . . . . . . . . . . . . . . . . . 15
4.08 No Third Party Beneficiary. . . . . . . . . . . . . . . . . . . . 15
4.09 Stock Incentive Plans . . . . . . . . . . . . . . . . . . . . . . 15
ARTICLE V
PROFITS AND LOSSES; DISTRIBUTIONS. . . . . . . . . . . . . . . . . . . . . 16
5.01 Allocation of Profit and Loss . . . . . . . . . . . . . . . . . . 16
5.02 Distribution of Cash. . . . . . . . . . . . . . . . . . . . . . . 18
5.03 REIT Distribution Requirements. . . . . . . . . . . . . . . . . . 19
5.04 No Right to Distributions in Kind . . . . . . . . . . . . . . . . 19
5.05 Limitations on Return of Capital Contributions. . . . . . . . . . 19
5.06 Distributions Upon Liquidation. . . . . . . . . . . . . . . . . . 20
5.07 Substantial Economic Effect . . . . . . . . . . . . . . . . . . . 20
ARTICLE VI
RIGHTS, OBLIGATIONS AND
POWERS OF THE GENERAL PARTNER. . . . . . . . . . . . . . . . . . . . . . . 20
6.01 Management of the Partnership . . . . . . . . . . . . . . . . . . 20
6.02 Delegation of Authority . . . . . . . . . . . . . . . . . . . . . 23
6.03 Indemnification and Exculpation of Indemnitees. . . . . . . . . . 23
6.04 Liability of the General Partner. . . . . . . . . . . . . . . . . 25
6.05 Expenditures by the Partnership . . . . . . . . . . . . . . . . . 26
6.06 Outside Activities. . . . . . . . . . . . . . . . . . . . . . . . 26
6.07 Employment or Retention of Affiliates . . . . . . . . . . . . . . 26
6.08 General Partner Participation . . . . . . . . . . . . . . . . . . 27
6.09 Title to Partnership Assets . . . . . . . . . . . . . . . . . . . 27
6.10 Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . 27
6.11 Maintenance of Indebtedness . . . . . . . . . . . . . . . . . . . 27
ARTICLE VII
CHANGES IN GENERAL PARTNER . . . . . . . . . . . . . . . . . . . . . . . . 28
7.01 Transfer of the General Partner's Partnership Interest. . . . . . 28
7.02 Admission of a Substitute or Successor General Partner. . . . . . 29
7.03 Effect of Bankruptcy, Withdrawal, Death or Dissolution of a
General Partner . . . . . . . . . . . . . . . . . . . . . . . . . 30
7.04 Removal of a General Partner. . . . . . . . . . . . . . . . . . . 30
ARTICLE VIII
RIGHTS AND OBLIGATIONS OF THE LIMITED PARTNERS . . . . . . . . . . . . . . 32
8.01 Management of the Partnership . . . . . . . . . . . . . . . . . . 32
8.02 Power of Attorney . . . . . . . . . . . . . . . . . . . . . . . . 32
8.03 Limitation on Liability of Limited Partners . . . . . . . . . . . 32
8.04 Ownership by Limited Partner of Corporate
General Partner or Affiliate. . . . . . . . . . . . . . . . . . . 32
8.05 Redemption Right. . . . . . . . . . . . . . . . . . . . . . . . . 32
8.06 Registration. . . . . . . . . . . . . . . . . . . . . . . . . . . 35
8.07 "Piggyback" Registration Rights . . . . . . . . . . . . . . . . . 36
8.08 Sale of Initial Golf Course . . . . . . . . . . . . . . . . . . . 41
8.09 Execution of Pledge Agreement . . . . . . . . . . . . . . . . . . 42
ARTICLE IX
TRANSFERS OF LIMITED PARTNERSHIP INTERESTS . . . . . . . . . . . . . . . . 42
9.01 Purchase for Investment . . . . . . . . . . . . . . . . . . . . . 42
9.02 Restrictions on Transfer of Limited Partnership Interests . . . . 42
9.03 Admission of Substitute Limited Partner . . . . . . . . . . . . . 44
9.04 Rights of Assignees of Partnership Interests. . . . . . . . . . . 45
9.05 Effect of Bankruptcy, Death, Incompetence or
Termination of a Limited Partner. . . . . . . . . . . . . . . . . 46
9.06 Joint Ownership of Interests. . . . . . . . . . . . . . . . . . . 46
ARTICLE X
BOOKS AND RECORDS; ACCOUNTING; TAX MATTERS . . . . . . . . . . . . . . . . 46
10.01 Books and Records . . . . . . . . . . . . . . . . . . . . . . . 46
10.02 Custody of Partnership Funds; Bank Accounts . . . . . . . . . . 46
10.03 Fiscal and Taxable Year . . . . . . . . . . . . . . . . . . . . 47
10.04 Annual Tax Information and Report . . . . . . . . . . . . . . . 47
10.05 Tax Matters Partner; Tax Elections; Special Basis Adjustments . 47
10.06 Reports to Limited Partners . . . . . . . . . . . . . . . . . . 48
ARTICLE XI
AMENDMENT OF AGREEMENT;
SALE OF ALL OR SUBSTANTIALLY ALL OF COMPANY'S ASSETS . . . . . . . . . . . 48
11.01 Amendment of Agreement. . . . . . . . . . . . . . . . . . . . . 48
11.02 Sale of All or Substantially all of the Assets
of the Partnership; Change in Control . . . . . . . . . . . . . 49
ARTICLE XII
GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
12.01 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
12.02 Survival of Rights. . . . . . . . . . . . . . . . . . . . . . . 49
12.03 Additional Documents. . . . . . . . . . . . . . . . . . . . . . 49
12.04 Severability. . . . . . . . . . . . . . . . . . . . . . . . . . 49
12.05 Entire Agreement. . . . . . . . . . . . . . . . . . . . . . . . 50
12.06 Pronouns and Plurals. . . . . . . . . . . . . . . . . . . . . . 50
12.07 Headings. . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
12.08 Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . 50
12.09 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . 50
12.10 Guaranty by Company . . . . . . . . . . . . . . . . . . . . . . 50
FIRST AMENDED AND RESTATED AGREEMENT
OF LIMITED PARTNERSHIP
OF
GOLF TRUST OF AMERICA, L.P.
THIS FIRST AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF GOLF
TRUST OF AMERICA, L.P. (this "Agreement"), dated as of _______________, 1996,
is entered into by and between GTA GP, INC., a Maryland corporation (in its
capacity as General Partner, the "General Partner"), and each of the Limited
Partners signatory hereto.
THE PARTIES ENTER THIS AGREEMENT on the basis of the following facts,
understandings and intentions:
A. Golf Trust of America, L.P. (the "Partnership") was formed as a
limited partnership under the laws of the State of Delaware by a Certificate
of Limited Partnership filed with the Secretary of State of Delaware on
November 8, 1996. The Partnership is governed by a Limited Partnership
Agreement dated October 31, 1996 maintained at the offices of the Partnership
(the "Original Agreement"). The current parties to the Original Agreement
are the General Partner, GTA LP, Inc., and Xxxxx X. Xxxx, as original limited
partners (the "Original Limited Partners").
B. The General Partner and the Original Limited Partners desire to (i)
admit additional Limited Partners to the Partnership and (ii) restate the
Original Agreement in its entirety.
NOW, THEREFORE, in consideration of the foregoing, and the covenants and
agreements between the parties hereto, and of other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto agree to amend the Original Agreement to read in its
entirety as follows:
ARTICLE I
DEFINED TERMS
The following defined terms used in this Agreement shall have the
meanings specified below:
"ACT" means the Delaware Revised Uniform Limited Partnership Act, as it
may be amended from time to time.
"ADDITIONAL LIMITED PARTNER" means a Person admitted to this Partnership
as a Limited Partner pursuant to Section 4.02 hereof.
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"ADMINISTRATIVE EXPENSES" means (i) all administrative and operating
costs and expenses incurred by the Partnership, (ii) all administrative and
operating costs and expenses of the General Partner, including any salaries
or other payments to directors, officers and/or employees of the General
Partner, and any accounting and legal expenses of the General Partner, all of
which costs and expenses, the Partners have agreed, are expenses of the
Partnership and not the General Partner, and (iii) to the extent not included
in clause (ii) above, REIT Expenses.
"AFFILIATE" means, (i) any Person that, directly or indirectly, controls
or is controlled by or is under common control with such Person, (ii) any
other Person that owns, beneficially, directly or indirectly, 5% or more of
the outstanding capital stock, shares or equity interests of such Person, or
(iii) any officer, director, employee, partner or trustee of such Person or
any Person controlling, controlled by or under common control with such
Person (excluding trustees and persons serving in similar capacities who are
not otherwise an Affiliate of such Person). For the purposes of this
definition, "control" (including the correlative meanings of the terms
"controlled by" and "under common control with"), as used with respect to any
Person, shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of such Person,
through the ownership of voting securities, partnership interests or other
equity interests.
"AGREED VALUE" means the fair market value of a Partner's non-cash
Capital Contribution as of the date hereof as agreed to by the Partners. For
purposes of this Partnership Agreement, the Agreed Value of a Partner's
non-cash Capital Contribution shall be equal to the number of Partnership
Units received by such Partner in exchange for an Initial Golf Course or an
interest therein or in connection with the merger of a partnership of which
such person is a partner with and into the Partnership, or for any other
non-cash asset so contributed, multiplied by the Public Offering Price or, if
the contribution is made after the date hereof, the "Market Price" on the
date of the contribution calculated in accordance with the second and third
sentences of the definition of "Cash Amount." The names and addresses of the
Partners, number of Partnership Units issued to each Partner, and the Agreed
Value of non-cash Capital Contributions is set forth on EXHIBIT A.
"AGREEMENT" means this First Amended and Restated Agreement of Limited
Partnership of the Partnership.
"CAPITAL ACCOUNT" has the meaning provided in Section 4.04 hereof.
"CAPITAL CONTRIBUTION" means the total amount of capital initially
contributed or agreed to be contributed, as the context requires, to the
Partnership by each Partner pursuant to the terms of the Agreement. Any
reference to the Capital Contribution of a Partner shall include the Capital
Contribution made by a predecessor holder of the Partnership Interest of such
Partner. The paid-in Capital Contribution shall mean the cash amount or the
Agreed Value of other assets actually contributed by each Partner to the
capital of the Partnership.
2
"CAPITAL TRANSACTION" means the refinancing, sale, exchange,
condemnation, recovery of a damage award or insurance proceeds (other than
business or rental interruption insurance proceeds not reinvested in the
repair or reconstruction of Properties), or other disposition of any Property
(or the Partnership's interest therein).
"CASH AMOUNT" means an amount of cash per Partnership Unit equal to the
value of the REIT Shares Amount on the date of receipt by the General Partner
of a Notice of Redemption. The value of the REIT Shares Amount shall be
based on the average of the daily market price of REIT Shares for the ten
consecutive trading days immediately preceding the date of receipt by the
General Partner of a Notice of Redemption. The market price for each such
trading day shall be: (i) if the REIT Shares are listed or admitted to
trading on any securities exchange or the NYSE, the sale 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, regular way, on such day, (ii) if the REIT
Shares are not listed or admitted to trading on any securities exchange or
the NYSE, the last reported sale price on such day or, if no sale takes place
on such day, the average of the closing bid and asked prices on such day, as
reported by a reliable quotation source designated by the General Partner, or
(iii) if the REIT Shares are not listed or admitted to trading on any
securities exchange or the NYSE and no such last reported sale price or
closing bid and asked prices are available, the average of the reported high
bid and low asked prices on such day, as reported by a reliable quotation
source designated by the General Partner, or if there shall be no bid and
asked prices on such day, the average of the high bid and low asked prices,
as so reported, on the most recent day (not more than 10 days prior to the
date in question) for which prices have been so reported; PROVIDED THAT if
there are no bid and asked prices reported during the ten days prior to the
date in question, the value of the REIT Shares shall be determined by the
General Partner acting in good faith on the basis of such quotations and
other information as it considers, in its reasonable judgment, appropriate.
In the event the REIT Shares Amount includes rights that a holder of REIT
Shares would be entitled to receive, then the value of such rights shall be
determined by the Company acting in good faith on the basis of such
quotations and other information as it considers, in its reasonable judgment,
appropriate.
"CERTIFICATE" means any instrument or document that is required under the
laws of the State of Delaware, or any other jurisdiction in which the
Partnership conducts business, to be signed and sworn to by the Partners of
the Partnership (either by themselves or pursuant to the power-of-attorney
granted to the General Partner in Section 8.02 hereof) and filed for
recording in the appropriate public offices within the State of Delaware or
such other jurisdiction to perfect or maintain the Partnership as a limited
partnership, to effect the admission, withdrawal, or substitution of any
Partner of the Partnership, or to protect the limited liability of the
Limited Partners as limited partners under the laws of the State of Delaware
or such other jurisdiction.
"CHARTER" means the Charter of the Company filed with the Secretary of
State of the State of Maryland, as amended or restated from time to time.
3
"CODE" means the Internal Revenue Code of 1986, as amended, and as
hereafter amended from time to time. Reference to any particular provision
of the Code shall mean that provision in the Code at the date hereof and any
succeeding provision of the Code.
"COMMISSION" means the U.S. Securities and Exchange Commission.
"COMPANY" means Golf Trust of America, Inc., a Maryland corporation.
"CONTRIBUTION AND LEASEBACK AGREEMENT" means, as to each Limited Partner
contributing interests in an Initial Golf Course, that certain Contribution
and Leaseback Agreement by and between the Partnership and such Limited
Partner.
"CONVERSION FACTOR" means 1.0, PROVIDED THAT in the event that the
Company (i) declares or pays a dividend on its outstanding REIT Shares in
REIT Shares or makes a distribution to all holders of its outstanding REIT
Shares in REIT Shares, (ii) subdivides its outstanding REIT Shares, or (iii)
combines its outstanding REIT Shares into a smaller number of REIT Shares,
the Conversion Factor shall be adjusted by multiplying the Conversion Factor
by a fraction, the numerator of which shall be the number of REIT Shares
issued and outstanding on the record date 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 REIT Shares
(determined without the above assumption) issued and outstanding on such
date. Any adjustment to the Conversion Factor shall become effective
immediately after the effective date of such event retroactive to the record
date, if any, for such event; PROVIDED, HOWEVER, that if the Company receives
a Notice of Redemption after the record date, but prior to the effective date
of such dividend, distribution, subdivision or combination, the Conversion
Factor shall be determined as if the Company had received the Notice of
Redemption immediately prior to the record date for such dividend,
distribution, subdivision or combination.
"DEFAULTING LIMITED PARTNER" has the meaning provided in Section 5.02(b)
hereof.
"EFFECTIVE DATE" means the date of closing of the Initial Offering.
"EVENT OF BANKRUPTCY" as to any Person means the filing of a petition for
relief as to such Person as debtor or bankrupt under the Bankruptcy Code of
1978 or similar provision of law of any jurisdiction (except if such petition
is contested by such Person and has been dismissed within 90 days);
insolvency or bankruptcy of such Person as finally determined by a court
proceeding; filing by such Person of a petition or application to accomplish
the same or for the appointment of a receiver or a trustee for such Person or
a substantial part of his assets; commencement of any proceedings relating to
such Person as a debtor under any other reorganization, arrangement,
insolvency, adjustment of debt or liquidation law of any jurisdiction,
whether now in existence or hereinafter in effect, either by such Person or
by another, provided that if such proceeding is commenced by another, such
Person indicates his
4
approval of such proceeding, consents thereto or acquiesces therein, or such
proceeding is contested by such Person and has not been finally dismissed
within 90 days.
"FUNDING LOAN" has the meaning provided in Section 4.03 hereof.
"GAAP" means generally accepted accounting principles, consistently
applied.
"GENERAL PARTNER" means GTA GP, Inc., a Maryland corporation, a
wholly-owned subsidiary of the Company, and any Person who becomes a
substitute or additional General Partner as provided herein, and any of their
successors as General Partner.
"GENERAL PARTNERSHIP INTEREST" means the Partnership Interest held by the
General Partner.
"GTA GP" means GTA GP, Inc., a Maryland corporation and wholly-owned
subsidiary of the Company.
"GTA LP" means GTA LP, Inc., a Maryland corporation and wholly-owned
subsidiary of the Company.
"INCENTIVE RIGHTS" has the meaning set forth in Section 4.02 hereof.
"INDEMNITEE" means (i) any Person made a party to a proceeding by reason
of his status as the General Partner or an affiliate of the General Partner
or a director or officer of the Partnership or the General Partner or an
affiliate of the General Partner or the Partnership and (ii) such other
Persons as the General Partner may designate in good faith from time to time,
in its reasonable discretion., giving consideration to the interest of the
Partnership.
"INDEPENDENT DIRECTOR" shall mean those individuals, who shall comprise a
majority of the Board of Directors of the Company, who are not officers or
employees of the Company or Affiliates of (i) any lessee of any property of
the Company or the Partnership, (ii) any subsidiary of the Company or (iii)
any partnership which is an Affiliate of the Company, including the
Partnership.
"INITIAL GOLF COURSES" means those properties listed on EXHIBIT B
attached hereto.
"INITIAL OFFERING" means the initial offer and sale by the Company and
the purchase by the Underwriters (as defined in the Prospectus) of the common
shares of the Company for sale to the public.
"LIMITED PARTNER" means any Person named as a Limited Partner on EXHIBIT
A attached hereto, and any Person who becomes a Substitute or Additional
Limited Partner, in such Person's capacity as a Limited Partner in the
Partnership.
5
"LIMITED PARTNERSHIP INTEREST" means the ownership interest of a Limited
Partner in the Partnership at any particular time, including the right of
such Limited Partner to any and all benefits to which such Limited Partner
may be entitled as provided in this Agreement and in the Act, together with
the obligations of such Limited Partner to comply with all the provisions of
this Agreement and of such Act.
"LOSS" has the meaning provided in Section 5.01(f) hereof.
"MINIMUM LIMITED PARTNERSHIP INTEREST" means the lesser of (i) 1% or (ii)
if the total Capital Contributions to the Partnership exceed $50 million, 1%
divided by the ratio of the total Capital Contributions to the Partnership to
$50 million; provided, however, that the Minimum Limited Partnership Interest
shall not be less than 0.2% at any time.
"NEW SECURITIES" has the meaning set forth in Section 4.02(a)(ii) hereof.
"NOTICE OF REDEMPTION" means the Notice of Exercise of Redemption Right
substantially in the form attached as EXHIBIT C hereto.
"NYSE" means the New York Stock Exchange.
"ORIGINAL LIMITED PARTNERS" has the meaning set forth in Recital A hereof.
"PARTNER" means any General Partner or Limited Partner.
"PARTNER NONRECOURSE DEBT MINIMUM GAIN" has the meaning set forth in
Regulations Section 1.704-2(i). A Partner's share of Partner Nonrecourse
Debt Minimum Gain shall be determined in accordance with Regulations Section
1.704-2(i)(5).
"PARTNERSHIP INTEREST" means an ownership interest in the Partnership by
either a Limited Partner or the General Partner and includes any and all
benefits to which the holder of such a Partnership Interest may be entitled
as provided in this Agreement, together with all obligations of such Person
to comply with the terms and provisions of this Agreement.
"PARTNERSHIP MINIMUM GAIN" has the meaning set forth in Regulations
Section 1.704-2(d). In accordance with Regulations Section 1.704-2(d), the
amount of Partnership Minimum Gain is determined by first computing, for each
Partnership nonrecourse liability, any gain the Partnership would realize if
it disposed of the property subject to that liability for no consideration
other than full satisfaction of the liability, and then aggregating the
separately computed gains. A Partner's share of Partnership Minimum Gain
shall be determined in accordance with Regulations Section 1.704-2(g)(1).
"PARTNERSHIP RECORD DATE" means the record date established by the
General Partner for the distribution of cash pursuant to Section 5.02 hereof,
which record date shall be the same as the record date established by the
Company for a distribution to its shareholders of some or all of its portion
of such distribution.
6
"PARTNERSHIP UNIT" means a fractional, undivided share of the Partnership
Interests of all Partners issued hereunder. The initial allocation of
Partnership Units among the Partners is as set forth on EXHIBIT A, as may be
amended from time to time.
"PERCENTAGE INTEREST" means the percentage ownership interest in the
Partnership of each Partner, as determined by dividing the Partnership Units
owned by a Partner by the total number of Partnership Units then outstanding.
The initial Percentage Interest of each Partner is as set forth opposite its
respective name on EXHIBIT A, as may be amended from time to time.
"PERSON" means any individual, partnership, corporation, joint venture,
trust or other entity.
"PLEDGE AGREEMENT" means a Pledge Agreement executed by a Limited Partner
contributing an Initial Golf Course to the Partnership, substantially in the
form of EXHIBIT E attached hereto.
"PROFIT" has the meaning provided in Section 5.01(f) hereof.
"PROPERTY" means any golf course property or other investment in which the
Partnership holds an ownership interest.
"PROSPECTUS" means the final prospectus delivered to purchasers of the
Company's common stock in the Initial Offering.
"PUBLIC OFFERING PRICE" shall mean the initial public offering price set
forth in the Prospectus.
"REDEEMING PARTNER" has the meaning provided in Section 8.05(a) hereof.
"REDEMPTION AMOUNT" means either the Cash Amount or the REIT Shares Amount,
as determined pursuant to Section 8.05(b) hereof.
"REDEMPTION RIGHT" has the meaning provided in Section 8.05(a) hereof.
"REDEMPTION SHARES" has the meaning provided in Section 8.06(a) hereof.
"REGULATIONS" means the Federal Income Tax Regulations issued under the
Code, as amended and as hereafter amended from time to time. Reference to any
particular provision of the Regulations shall mean that provision of the
Regulations on the date hereof and any succeeding provision of the Regulations.
"REIT" means a real estate investment trust under Sections 856 through 860
of the Code.
7
"REIT EXPENSES" means (i) costs and expenses relating to the formation and
continuity of existence of the Company and any Subsidiaries thereof including
GTA GP and GTA LP (which Subsidiaries shall, for purposes of this definition, be
included within the definition of Company), including taxes, fees and
assessments associated therewith, any and all costs, expenses or fees payable to
any Director, officer, or employee of the Company, (ii) costs and expenses
relating to the public offering and registration of securities by the, Company
and all statements, reports, fees and expenses incidental thereto, including
underwriting discounts and selling commissions applicable to any such offering
of securities, (iii) costs and expenses associated with the preparation and
filing of any periodic reports by the Company under federal, state or local laws
or regulations, including filings with the Commission, (iv) costs and expenses
associated with compliance by the Company with laws, rules and regulations
promulgated by any regulatory body, including the Commission, and (v) all other
operating or administrative costs of the Company incurred in the ordinary course
of its business on behalf of the Partnership.
"REIT SHARE" means a share of common stock of the Company.
"REIT SHARES AMOUNT" shall mean a number of REIT Shares equal to the number
of Partnership Units offered for redemption by a Redeeming Partner, multiplied
by the Conversion Factor; PROVIDED THAT in the event the Company issues to all
holders of REIT Shares rights, options, warrants or convertible or exchangeable
securities entitling the shareholders to subscribe for or purchase REIT Shares,
or any other securities or property (collectively, the "rights"), then the REIT
Shares Amount shall also include such rights that a holder of that number of
REIT Shares would be entitled to receive.
"RULE 144" has the meaning set forth in Section 8.06(a) hereof.
"SEC" means the United States Securities and Exchange Commission.
"SECURITIES ACT" has the meaning set forth in Section 8.05(b) hereof.
"SERVICE" means the Internal Revenue Service.
"STOCK INCENTIVE PLANS" means the Golf Trust of America, Inc. Incentive
Plan and the Golf Trust of America, Inc. Directors' Incentive Plan, as either
such plan may be amended from time to time, or any stock incentive plan adopted
in the future by the Company.
"SPECIFIED REDEMPTION DATE" means 30 days after the receipt by the Company
of the Notice of Redemption.
"SUBSIDIARY" means, with respect to any Person, any corporation or other
entity of which a majority of (i) the voting power of the voting equity
securities or (ii) the outstanding equity interests is owned, directly or
indirectly, by such Person.
8
"SUBSTITUTE LIMITED PARTNER" means any Person admitted to the Partnership
as a Limited Partner pursuant to Section 9.03 hereof.
"TRANSACTION" has the meaning set forth in Section 7.01(c) hereof.
"TRANSFER" has the meaning set forth in Section 9.02(a) hereof.
ARTICLE II
PARTNERSHIP CONTINUATION AND IDENTIFICATION
2.01 CONTINUATION. The Partners hereby agree to continue the Partnership
pursuant to the Act and upon the terms and conditions set forth in this
Agreement.
2.02 NAME, OFFICE AND REGISTERED AGENT. The name of the Partnership shall
be Golf Trust of America, L.P. The specified office and place of business of the
Partnership shall be ___________________________. The General Partner may at
any time change the location of such office, provided the General Partner gives
notice to the Partners of any such change. The name and address of the
Partnership's registered agent is Paracorp Incorporated, 00 Xxxx Xxxxx Xxxxxx,
Xxxxx, Xxxx Xxxxxx, Xxxxxxxx 00000. The sole duty of the registered agent as
such is to forward to the Partnership any notice that is served on him as
registered agent.
2.03 PARTNERS.
(a) As of the date hereof, the General Partner of the Partnership is
GTA GP, Inc., a Maryland corporation. Its principal place of business shall be
the same as that of the Partnership.
(b) The Limited Partners shall be those Persons identified as Limited
Partners in EXHIBIT A hereto, as amended from time to time. The Limited
Partners (other than the Original Limited Partner) hereby are admitted as
Limited Partners.
2.04 TERM AND DISSOLUTION.
(a) The term of the Partnership shall continue in full force and
effect until December 31, 2071 except that the Partnership shall be dissolved
upon the happening of any of the following events:
(i) The occurrence of an Event of Bankruptcy as to a General
Partner or the dissolution, death or withdrawal of a General Partner
unless the business of the Partnership is continued pursuant to
Section 7.03(b) hereof; PROVIDED THAT if a General Partner is on the
date of such occurrence a partnership, the dissolution of such General
Partner as a result of the dissolution, death, withdrawal, removal or
Event of Bankruptcy of a partner in such partnership shall not be an
event of dissolution of the Partnership if the
9
business of such General Partner is continued by the remaining
partner or partners, either alone or with additional partners, and
such General Partner and such partners comply with any other
applicable requirements of this Agreement;
(ii) The passage of 90 days after the sale or other disposition
of all or substantially all the assets of the Partnership; (provided
that if the Partnership receives an installment obligation as
consideration for such sale or other disposition, the Partnership
shall continue, unless sooner dissolved under the provisions of this
Agreement, until such time as such note or notes are paid in full);
(iii) The redemption of all Limited Partnership Interests (other
than any of such interests held by GTA LP); or
(iv) The election by the General Partner that the Partnership
should be dissolved.
(b) Upon dissolution of the Partnership (unless the business of the
Partnership is continued pursuant to Section 7.03(b) hereof), the General
Partner (or its trustee, receiver, successor or legal representative) shall
amend or cancel the Certificate and liquidate the Partnership's assets and apply
and distribute the proceeds thereof in accordance with Section 5.06 hereof.
Notwithstanding the foregoing, the liquidating General Partner may either (i)
defer liquidation of, or withhold from distribution, for a reasonable time, any
assets of the Partnership (including those necessary to satisfy the
Partnership's debts and obligations), or (ii) distribute the assets to the
Partners in kind.
2.05 FILING OF CERTIFICATE AND PERFECTION OF LIMITED PARTNERSHIP. The
General Partner shall execute, acknowledge, record and file at the expense of
the Partnership, the Certificate and any and all amendments thereto and all
requisite fictitious name statements and notices in such places and
jurisdictions as may be necessary to cause the Partnership to be treated as a
limited partnership under, and otherwise to comply with, the laws of each state
or other jurisdiction in which the Partnership conducts business.
10
ARTICLE III
BUSINESS OF THE PARTNERSHIP
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 Company at
all times to qualify as a REIT, unless the Company otherwise ceases to qualify
as a REIT, (ii) to enter into any partnership, joint venture or other similar
arrangement to engage in any of the foregoing or the ownership of interests in
any entity engaged in any of the foregoing and (iii) to do anything necessary or
incidental to the foregoing. The General Partner shall also be empowered to do
any and all acts and things necessary or prudent to ensure that the Partnership
will not be classified as a "publicly traded partnership" for purposes of
Section 7704 of the Code.
ARTICLE IV
CAPITAL CONTRIBUTIONS AND ACCOUNTS
4.01 CAPITAL CONTRIBUTIONS. The General Partner and GTA LP shall each
contribute to the capital of the Partnership cash in an amount set forth
opposite their names on EXHIBIT A, which shall represent the gross proceeds of
the Initial Offering. The Limited Partners, other than GTA LP, shall contribute
to the capital of the Partnership certain real and personal property interests
in one or more of the Initial Golf Courses as set forth opposite their names on
EXHIBIT A. The Agreed Values of the Limited Partners' ownership interests in
the Initial Golf Courses that are contributed to the Partnership are as set
forth opposite their names on EXHIBIT A.
4.02 ADDITIONAL CAPITAL CONTRIBUTIONS AND ISSUANCES OF ADDITIONAL
PARTNERSHIP INTERESTS. Except as provided in Sections 4.02 or 4.03, the Partners
shall have no right or obligation to make any additional Capital Contributions
or loans to the Partnership. The General Partner may contribute additional
capital to the Partnership, from time to time, and receive additional
Partnership Interests in respect thereof, in the manner contemplated in this
Section 4.02.
(a) ISSUANCES OF ADDITIONAL PARTNERSHIP INTERESTS.
(i) GENERAL. The General Partner is hereby authorized to cause
the Partnership to issue such additional Partnership Interests in the
form of Partnership Units for any Partnership purpose at any time or
from time to time, to the Partners (including the General Partner and
GTA LP) or to other Persons for such consideration and on such terms
and conditions as shall be established by the General Partner in its
sole and absolute discretion, all without the approval of any Limited
Partners. Any additional Partnership Interests issued thereby may be
issued in one or more classes, or one or more series of any of such
classes, with such designations, preferences and relative,
participating, optional or other special rights, powers and duties,
including
11
rights, powers and duties senior to Limited Partnership Interests,
all as shall be determined by the General Partner in its sole and
absolute discretion and without the approval of any Limited Partner,
subject to Delaware law, including, without limitation, (i) the
allocation 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; PROVIDED, HOWEVER, that no
additional Partnership Interests shall be issued to the General
Partner or GTA LP unless either:
(1) the additional Partnership Interests are issued in
connection with an issuance of shares of or other interests in
the Company, which shares or interests have designations,
preferences and other rights, all such that the economic
interests are substantially similar to the designations,
preferences and other rights of the additional Partnership
Interests issued to the General Partner or GTA LP by the
Partnership in accordance with this Section 4.02 and (B) except
as provided in Section 4.02(a)(ii) hereof, the General Partner or
GTA LP shall make a Capital Contribution to the Partnership in an
amount equal to the proceeds raised in connection with the
issuance of such shares of or other interests in the Company, or
(2) the additional Partnership Interests are issued to all
Partners in proportion to their respective Percentage Interests.
Without limiting the foregoing, the General Partner is expressly
authorized to cause the Partnership to issue Partnership Units for
less than fair market value, so long as the General Partner concludes
in good faith that such issuance is in the best interests of the
General Partner, the Company and the Partnership.
(ii) UPON ISSUANCE OF NEW SECURITIES. After the Initial
Offering, the Company shall not issue any additional REIT Shares
(other than REIT Shares issued in connection with a redemption
pursuant to Section 8.05 hereof) or rights, options, warrants or
convertible or exchangeable securities containing the right to
subscribe for or purchase REIT Shares (collectively, "New Securities")
other than to all holders of REIT Shares, unless (A) the General
Partner shall cause the Partnership to issue to the General Partner
and GTA LP, as the Company designate, Partnership Interests or rights,
options, warrants or convertible or exchangeable securities of the
Partnership having designations, preferences and other rights, all
such that the economic interests are substantially similar to those of
the New Securities, and (B) the Company, through the General Partner
and GTA LP, contributes the proceeds from the issuance of such New
Securities and from the exercise of rights contained in
12
such New Securities to the Partnership; provided, however, that the
Company is allowed to issue New Securities in connection with an
acquisition of a property to be held directly by the Company, but if
and only if, such direct acquisition and issuance of New Securities
have been approved and determined to be in the best interests of the
Company and the Partnership by a majority of the Independent
Directors. Without limiting the foregoing, the Company is expressly
authorized to issue New Securities for less than fair market value,
and to cause the Partnership to issue to the General Partner
corresponding Partnership Interests, so long as (x) the General
Partner concludes in good faith that such issuance is in the best
interests of the General Partner and the Partnership (for example,
and not by way of limitation, the issuance of REIT Shares and
corresponding Partnership Units pursuant to an employee stock
purchase plan providing for employee purchases of REIT Shares at a
discount from fair market value or employee stock options that have
an exercise price that is less than the fair market value of the
REIT Shares, either at the time of issuance or at the time of
exercise), and (y) the Company contributes all proceeds from such
issuance, through the General Partner and GTA LP, as the Company may
so designate to the Partnership. By way of example, in the event the
Company issues REIT Shares for a cash purchase price and contributes
all of the proceeds of such issuance, through the General Partner
and GTA LP, to the Partnership as required hereunder, the General
Partner and GTA LP, as the Company may so designate, shall be issued
a number of additional Partnership Units equal to the product of (A)
the number of such REIT Shares issued by the Company the proceeds of
which were so contributed, multiplied by (B) a fraction, the
numerator of which is one hundred percent (100%), and the
denominator of which is the Conversion Factor in effect on the date
of such contribution.
(b) CERTAIN DEEMED CONTRIBUTIONS OF PROCEEDS OF ISSUANCE OF SHARES.
In connection with any and all issuances of REIT Shares, the Company shall
contribute all of the proceeds raised in connection with such issuance to the
General Partner and GTA LP, as the Company determines and in turn, the General
Partner and GTA LP shall make capital contributions to the Partnership of such
proceeds, provided that if the proceeds actually received by and contributed by
the Company to the General Partner are less than the gross proceeds of such
issuance as a result of any underwriter's discount or other expenses paid or
incurred in connection with such issuance, then the General Partner and GTA LP
shall be deemed to have made a Capital Contribution to the Partnership in the
amount of the gross proceeds of such issuance and the Partnership shall be
deemed simultaneously to have paid such offering expenses in connection with the
required issuance of additional Partnership Units to General Partner and GTA LP
for such Capital Contribution pursuant to Section 4.02(a) hereof.
(c) MINIMUM LIMITED PARTNERSHIP INTEREST. In the event that either a
redemption pursuant to Section 8.05 hereof or an additional Capital Contribution
by the General Partner or GTA LP would result in the Limited Partners (other
than GTA LP), in
13
the aggregate, owning less than the Minimum Limited Partnership Interest, the
General Partner and the Limited Partners shall form another partnership and
contribute sufficient Limited Partnership Interests together with such other
Limited Partners so that the Limited Partners (other than GTA LP) own at
least the Minimum Limited Partnership Interest.
4.03 GENERAL PARTNER LOANS. The General Partner may from time to time
advance funds to the Partnership for any proper Partnership purpose as a loan
("Funding Loan"), provided that any such funds must first be obtained by the
General Partner from a third party lender, and then all of such funds must be
loaned by the General Partner to the Partnership on the same terms and
conditions, including principal amount, interest rate, repayment schedule and
costs and expenses, as shall be applicable with respect to or incurred in
connection with such loan with such third party lender. Except for Funding
Loans, the General Partner shall not incur any indebtedness for borrowed funds;
provided, however, that any loan proceeds received by the General Partner may be
distributed to the Company and, in turn, to the Company's shareholders or other
equity holders if such loan and distribution have been approved and determined
to be necessary to enable the Company to maintain its status as a REIT under
Sections 856-860 of the Code by a majority of the Independent Directors.
4.04 CAPITAL ACCOUNTS. A separate capital account (a "Capital Account")
shall be established and maintained for each Partner in accordance with
Regulations Section 1.704-1(b)(2)(iv). If (i) a new or existing Partner acquires
an additional Partnership Interest in exchange for more than a DE MINIMIS
Capital Contribution, (ii) the Partnership distributes to a Partner more than a
DE MINIMIS amount of Partnership property as consideration for a Partnership
Interest, or (iii) the Partnership is liquidated within the meaning of
Regulation Section 1.704-l(b)(2)(ii)(g), the General Partner shall revalue the
property of the Partnership to its fair market value (as determined by the
General Partner and taking into account Section 7701(g) of the Code) in
accordance with Regulations Section 1.704-l(b)(2)(iv)(f). When the Partnership's
property is revalued by the General Partner, the Capital Accounts of the
Partners shall be adjusted in accordance with Regulations Sections
1.704-1(b)(2)(iv)(f) and (g), which generally require such Capital Accounts to
be adjusted to reflect the manner in which the unrealized gain or loss inherent
in such property (that has not been reflected in the Capital Accounts
previously) would be allocated among the Partners pursuant to Section 5.01 if
there were a taxable disposition of such property for its fair market value (as
determined by the General Partner and taking into account Section 7701(g) of the
Code) on the date of the revaluation.
4.05 PERCENTAGE INTERESTS. If the number of outstanding Partnership Units
increases or decreases during a taxable year, each Partner's Percentage Interest
shall be adjusted to a percentage equal to the number of Partnership Units held
by such Partner divided by the aggregate number of Partnership Units outstanding
after giving effect to such increase or decrease. If the Partners' Percentage
Interests are adjusted pursuant to this Section 4.05, the Profits and Losses for
the taxable year in which the adjustment occurs shall be allocated between the
part of the year ending on the day of the adjustment and the part of the year
beginning on the following day either (i) as if the taxable year had ended on
the date of the
14
adjustment or (ii) based on the number of days in each part. The General
Partner, in its sole discretion, shall determine which method shall be used
to allocate Profits and Losses for the taxable year in which the adjustment
occurs. The allocation of Profits and Losses for the earlier part of the year
shall be based on the Percentage Interests before adjustment, and the
allocation of Profits and Losses for the later part shall be based on the
adjusted Percentage Interests.
4.06 NO INTEREST ON CONTRIBUTIONS. No Partner shall be entitled to
interest on its Capital Contribution.
4.07 RETURN OF CAPITAL CONTRIBUTIONS. No Partner shall be entitled to
withdraw any part of its Capital Contribution or its Capital Account or to
receive any distribution from the Partnership, except as specifically provided
in this Agreement. Except as otherwise provided herein, there shall be no
obligation to return to any Partner or withdrawn Partner any part of such
Partner's Capital Contribution for so long as the Partnership continues in
existence.
4.08 NO THIRD PARTY BENEFICIARY. No creditor or other third party having
dealings with the Partnership shall have the right to enforce the right or
obligation of any Partner to make Capital Contributions or loans or to pursue
any other right or remedy hereunder or at law or in equity, it being understood
and agreed that the provisions of this Agreement shall be solely for the benefit
of, and may be enforced solely by, the parties hereto and their respective
successors and assigns. None of the rights or obligations of the Partners herein
set forth to make Capital Contributions or loans to the Partnership shall be
deemed an asset of the Partnership for any purpose by any creditor or other
third party, nor may such rights or obligations be sold, transferred or assigned
by the Partnership or pledged or encumbered by the Partnership to secure any
debt or other obligation of the Partnership or of any of the Partners. In
addition, it is the intent of the parties hereto that no distribution to any
Limited Partner shall be deemed a return of money or other property in violation
of the Act.
4.09 STOCK INCENTIVE PLANS. (a) If grants of REIT Shares are made in
connection with a Stock Incentive Plan:
(i) The Company, through the General Partner and GTA LP, shall
contribute, as soon as practicable after such grant, to the Partnership (to be
thereafter taken into account for the purposes of calculating any cash
distributable to the Partners), an amount equal to the price, if any, paid to
the Company by the party receiving such REIT Shares;
(ii) The Partnership shall issue to the General Partner and
GTA LP an aggregate number of additional Partnership Units equal to the product
of (1) the number of such REIT Shares issued by the Company, MULTIPLIED BY (2) a
fraction, the numerator of which is 100%, and the denominator of which is the
Conversion Factor in effect on the date of such contribution; and
15
(iii) The General Partner's and GTA LP's Percentage Interest
and the Percentage Interests of the other Limited Partners shall be adjusted as
set forth in Section 4.02.
(b) If stock options or warrants granted in connection with a Stock
Incentive Plan are exercised:
(i) The Company, through the General Partner and GTA LP, shall
contribute, as soon as practicable after such exercise, to the Partnership (to
be thereafter taken into account for purposes of calculating any cash
distributable to the Partners), an amount equal to the exercise price, if any,
paid to the Company by the exercising party in connection with the exercise of
the option or warrant;
(ii) The Partnership shall issue to the General Partner and GTA
LP an aggregate number of additional Partnership Units equal to the product of
(1) the number of REIT Shares issued by the Company in satisfaction of such
exercised option or warrant, MULTIPLIED BY (2) a fraction, the numerator of
which is 100%, and the denominator of which is the Conversion Factor in effect
on the date of such contribution; and
(iii) The General Partner's and GTA LP's Percentage Interest
and the Percentage Interests of the other Limited Partners shall be adjusted as
set forth in Section 4.02.
(c) If the Company grants any director, officer or employee share
appreciation rights, performance share awards or other similar rights
("Incentive Rights"), then simultaneously, the Partnership shall grant the
General Partner and GTA LP corresponding and economically equivalent rights with
respect to their Partnership Units. Consequently, upon the cash payment by the
Company to its directors, officers or employees pursuant to such Incentive
Rights, the Partnership shall make an equal cash payment to the General Partner
and GTA LP.
ARTICLE V
PROFITS AND LOSSES; DISTRIBUTIONS
5.01 ALLOCATION OF PROFIT AND LOSS.
(a) GENERAL. Except as otherwise provided in this Section 5.01,
Profit and Loss of the Partnership for each fiscal year of the Partnership shall
be allocated among the Partners in accordance with their respective Percentage
Interests.
(b) MINIMUM GAIN CHARGEBACK. Notwithstanding any provision to the
contrary, (i) any expense of the Partnership that is a "nonrecourse deduction"
within the meaning of Regulations Section 1.704-2(b)(1) shall be allocated in
accordance with the
16
Partners' respective Percentage Interests, (ii) any expense of the
Partnership that is a "partner nonrecourse deduction" within the meaning of
Regulations Section 1.704-2(i)(2) shall be allocated in accordance with
Regulations Section 1.704-2(i)(1), (iii) if there is a net decrease in
Partnership Minimum Gain within the meaning of Regulations Section
1.704-2(f)(1) for any Partnership taxable year, items of gain and income
shall be allocated among the Partners in accordance with Regulations Section
1.704-2(f) and the ordering rules contained in Regulations Section
1.704-2(j), and (iv) if there is a net decrease in Partner Nonrecourse Debt
Minimum Gain within the meaning of Regulations Section 1.704-2(i)(4) for any
Partnership taxable year, items of gain and income shall be allocated among
the Partners in accordance with Regulations Section 1.704-2(i)(4) and the
ordering rules contained in Regulations Section 1.704-2(j). A Partner's
"interest in partnership profits" for purposes of determining its share of
the nonrecourse liabilities of the Partnership within the meaning of
Regulations Section 1.752-3(a)(3) shall be such Partner's Percentage Interest.
(c) QUALIFIED INCOME OFFSET. If a Limited Partner receives in any
taxable year an adjustment, allocation, or distribution described in
subparagraphs (4), (5), or (6) of Regulations Section 1.704-l(b)(2)(ii)(d) that
causes or increases a negative balance in such Partner's Capital Account that
exceeds the sum of such Partner's shares of Partnership Minimum Gain and Partner
Nonrecourse Debt Minimum Gain, as determined in accordance with Regulations
Sections 1.704-2(g) and 1.704-2(i), such Partner shall be allocated specially
for such taxable year (and, if necessary, later taxable years) items of income
and gain in an amount and manner sufficient to eliminate such negative Capital
Account balance as quickly as possible as provided in Regulations Section
1.704-l(b)(2)(ii)(d). After the occurrence of an allocation of income or gain to
a Limited Partner in accordance with this Section 5.01(c), to the extent
permitted by Regulations Section 1.704-l(b), items of expense or loss shall be
allocated to such Partner in an amount necessary to offset the income or gain
previously allocated to such Partner under this Section 5.01(c).
(d) CAPITAL ACCOUNT DEFICITS. Loss shall not be allocated to a
Limited Partner to the extent that such allocation would cause a deficit in such
Partner's Capital Account (after reduction to reflect the items described in
Regulations Section 1.704-1(b)(2)(ii)(d)(4), (5) and (6)) to exceed the sum of
such Partner's shares of Partnership Minimum Gain and Partner Nonrecourse Debt
Minimum Gain. Any Loss in excess of that limitation shall be allocated to the
General Partner. After the occurrence of an allocation of Loss to the General
Partner in accordance with this Section 5.01(d), to the extent permitted by
Regulations Section 1.704-l(b), Profit shall be allocated to such Partner in an
amount necessary to offset the Loss previously allocated to such Partner under
this Section 5.01(d).
(e) ALLOCATIONS BETWEEN TRANSFEROR AND TRANSFEREE. If a Partner
transfers any part or all of its Partnership Interest, and the transferee is
admitted as a substitute Partner as provided herein, the distributive shares of
the various items of Profit and Loss allocable among the Partners during such
fiscal year of the Partnership shall be allocated between the transferor and the
substitute Partner either (i) as if the Partnership's fiscal year had ended on
the date of the transfer, or (ii) based on the number of days of such fiscal
year that each was a Partner without regard to the results of Partnership
activities in the respective
17
portions of such fiscal year in which the transferor and the transferee were
Partners. The General Partner, in its sole discretion, shall determine which
method shall be used to allocate the distributive shares of the various items
of Profit and Loss between the transferor and the substitute Partner.
(f) DEFINITION OF PROFIT AND LOSS. "Profit" and "Loss" and any
items of income, gain, expense, or loss referred to in this Agreement shall
be determined in accordance with federal income tax accounting principles, as
modified by Regulations Section 1.704-l(b)(2)(iv), except that Profit and
Loss shall not include items of income, gain and expense that are specially
allocated pursuant to Section 5.01(b), 5.01(c), or 5.01(d). All allocations
of income, Profit, gain, Loss, and expense (and all items contained therein)
for federal income tax purposes shall be identical to all allocations of such
items set forth in this Section 5.01, except as otherwise required by Section
704(c) of the Code and Regulations Section 1.704-l(b)(4). The General Partner
shall have the authority to elect the method to be used by the Partnership
for allocating items of income, gain, and expense as required by Section
704(c) of the Code and such election shall be binding on all Partners.
5.02 DISTRIBUTION OF CASH.
(a) The General Partner shall distribute cash on a quarterly (or,
at the election of the General Partner, more frequent) basis, in an amount
determined by the General Partner in its sole discretion, to the Partners who
are Partners on the Partnership Record Date with respect to such quarter (or
other distribution period) in accordance with their respective Percentage
Interests on the Partnership Record Date; PROVIDED, HOWEVER, that if a new or
existing Partner acquires an additional Partnership Interest in exchange for
a Capital Contribution on any date other than a Partnership Record Date, the
cash distribution attributable to such additional Partnership Interest
relating to the Partnership Record Date next following the issuance of such
additional Partnership Interest shall be reduced in the proportion to (i) the
number of days that such additional Partnership Interest is held by such
Partner bears to (ii) the number of days between such Partnership Record Date
and the immediately preceding Partnership Record Date.
(b) Notwithstanding any other provision of this Agreement, the
general Partner is authorized to take any action that it determines to be
necessary or appropriate to cause the Partnership to comply with any
withholding requirements established under the Code or any other federal,
state or local law including, without limitation, pursuant to Sections 1441,
1442, 1445 and 1446 of the Code. To the extent that the Partnership is
required to withhold and pay over to any taxing authority any amount
resulting from the allocation or distribution of income to the Partner or
assignee (including by reason of Section 1446 of the Code), either (i) if the
actual amount to be distributed to the Partner or assignee equals or exceeds
the amount required to be withheld by the Partnership, the amount withheld
shall be treated as a distribution of cash in the amount of such withholding
to such Partner or assignee, or (ii) if the actual amount to be distributed
to the Partner or assignee is less than the amount required to be withheld by
the Partnership, the amount required to be withheld shall be treated as a
loan (a "Partnership Loan") from the Partnership to the Partner
18
on the day the Partnership pays over such amount to the applicable taxing
authority. A Partnership Loan shall be repaid through withholding by the
Partnership with respect to subsequent distributions to the applicable
Partner or assignee. In the event that a Limited Partner or assignee
(collectively, a "Defaulting Limited Partner") fails to pay any amount owed
to the Partnership with respect to the Partnership Loan within 15 days after
demand for payment thereof is made by the Partnership on the Defaulting
Limited Partner, the General Partner, in its sole discretion, may elect to
make the payment to the Partnership on behalf of such Defaulting Limited
Partner. In such event, on the date of payment, the General Partner shall be
deemed to have extended a loan (a "General Partner Loan") to the Defaulting
Limited Partner in the amount of the payment made by the General Partner and
shall succeed to all rights and remedies of the Partnership against the
Defaulting Limited Partner as to that amount. Without limitation, the
General Partner shall have the right to receive any distributions that
otherwise would be made by the Partnership to the Defaulting Limited Partner
until such time as the General Partner Loan has been paid in full, and any
such distributions so received by the General Partner shall be treated as
having been received by the Defaulting Limited Partner and immediately paid
to the General Partner.
Any amounts treated as a Partnership Loan or a General Partner
Loan pursuant to this Section 5.02(b) shall bear interest at the lesser of
(i) 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,
or (ii) the maximum lawful rate of interest on such obligation, such interest
to accrue from the date the Partnership or the General Partner, as
applicable, is deemed to extend the loan until such loan is repaid in full.
(c) In no event may a Partner receive a distribution of cash with
respect to a Partnership Unit if such Partner is entitled to receive a
dividend with respect to a REIT Share for which all or part of such
Partnership Unit has been or will be exchanged.
5.03 REIT DISTRIBUTION REQUIREMENTS. The General Partner shall use its
reasonable efforts to cause the Partnership to distribute amounts sufficient
to enable the Company (i) to meet its distribution requirement for
qualification as a REIT as set forth in Section 857(a)(1) of the Code and
(ii) to avoid any federal income or excise tax liability imposed by the Code.
5.04 NO RIGHT TO DISTRIBUTIONS IN KIND. No Partner shall be entitled to
demand property other than cash in connection with any distributions by the
Partnership.
5.05 LIMITATIONS ON RETURN OF CAPITAL CONTRIBUTIONS. Notwithstanding any
of the provisions of this Article V, no Partner shall have the right to
receive and the General Partner shall not have the right to make, a
distribution which includes a return of all or part of a Partner's Capital
Contributions, unless after giving effect to the return of a Capital
Contribution, the sum of all liabilities of the Partnership, other than the
liabilities to a Partner for the return of his Capital Contribution, does not
exceed the fair market value of the Partnership's assets.
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5.06 DISTRIBUTIONS UPON LIQUIDATION.
(a) Upon liquidation of the Partnership, after payment of, or
adequate provision for, debts and obligations of the Partnership, including
any Partner loans, any remaining assets of the Partnership shall be
distributed to all Partners with positive Capital Accounts in accordance with
their respective positive Capital Account balances. For purposes of the
preceding sentence, the Capital Account of each Partner shall be determined
after all adjustments made in accordance with Sections 5.01 and 5.02
resulting from Partnership operations and from all sales and dispositions of
all or any part of the Partnership's assets. Any distributions pursuant to
this Section 5.06 should be made by the end of the Partnership's taxable year
in which the liquidation occurs (or, if later, within 90 days after the date
of the liquidation). To the extent deemed advisable by the General Partner,
appropriate arrangements (including the use of a liquidating trust) may be
made to assure that adequate funds are available to pay any contingent debts
or obligations.
(b) If the General Partner has a negative balance in its Capital
Account following a liquidation of the Partnership, as determined after
taking into account all Capital Account adjustments in accordance with
Sections 5.01 and 5.02 resulting from Partnership operations and from all
sales and dispositions of all or any part of the Partnership's assets, the
General Partner shall contribute to the Partnership an amount of cash equal
to the negative balance in its Capital Account and such cash shall be paid or
distributed by the Partnership to creditors, if any, and then to the Limited
Partners in accordance with Section 5.06(a). Such contribution by the General
Partner shall be made by the end of the Partnership's taxable year in which
the liquidation occurs (or, if later, within 90 days after the date of the
liquidation).
5.07 SUBSTANTIAL ECONOMIC EFFECT. It is the intent of the Partners that
the allocations of Profit and Loss under the Agreement have substantial
economic effect (or be consistent with the Partners' interests in the
Partnership in the case of the allocation of losses attributable to
nonrecourse debt) within the meaning of Section 704(b) of the Code as
interpreted by the Regulations promulgated pursuant thereto. Article V and
other relevant provisions of this Agreement shall be interpreted in a manner
consistent with such intent.
ARTICLE VI
RIGHTS, OBLIGATIONS AND
POWERS OF THE GENERAL PARTNER
6.01 MANAGEMENT OF THE PARTNERSHIP.
(a) Except as otherwise expressly provided in this Agreement, the
General Partner shall have full, complete and exclusive discretion to manage
and control the business of the Partnership for the purposes herein stated,
and shall make all decisions affecting the business and assets of the
Partnership. Subject to the restrictions specifically contained in this
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Agreement, the powers of the General Partner shall include, without
limitation, the authority to take the following actions on behalf of the
Partnership:
(i) to acquire, purchase, own, lease and dispose of any real
property and any other property or assets that the General Partner
determines are necessary or appropriate or in the best interests of
the business of the Partnership;
(ii) subject to the terms of any applicable lease, to construct
buildings and make other improvements on the properties owned or
leased by the Partnership;
(iii) to borrow money for the Partnership, issue evidences
of indebtedness in connection therewith, refinance, guarantee,
increase the amount of, modify, amend or change the terms of, or
extend the time for the payment of, any indebtedness or obligation to
the Partnership, and secure such indebtedness by mortgage, deed of
trust, pledge or other lien on the Partnership's assets;
(iv) to pay, either directly or by reimbursement, for all
operating costs and general administrative expenses of the Company,
the General Partner, GTA LP or the Partnership, to third parties or to
the General Partner as set forth in this Agreement;
(v) to lease all or any portion of any of the Partnership's
assets, whether or not the terms of such leases extend beyond the
termination date of the Partnership and whether or not any portion of
the Partnership's assets so leased are to be occupied by the lessee,
or, in turn, subleased in whole or in part to others, for such
consideration and on such terms as the General Partner may determine;
(vi) to prosecute, defend, arbitrate, or compromise any and all
claims or Liabilities in favor of or against the Partnership, on such
terms and in such manner as the General Partner may reasonably
determine, and similarly to prosecute, settle or defend litigation
with respect to the Partners, the Partnership, or the Partnership's
assets; PROVIDED, HOWEVER, that the General Partner may not, without
the consent of all of the Partners, confess a judgment against the
Partnership;
(vii) to file applications, communicate, and otherwise deal
with any and all governmental agencies having jurisdiction over, or in
any way affecting, the Partnership's assets or any other aspect of the
Partnership business;
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(viii) to make or revoke any election permitted or required of
the Partnership by any taxing authority;
(ix) to maintain such insurance coverage for public liability,
fire and casualty, and any and all other insurance for the protection
of the Partnership, for the conservation of Partnership assets, or for
any other purpose convenient or beneficial to the Partnership, in such
amounts and such types, as it shall determine from time to time;
(x) to determine whether or not to apply any insurance proceeds
for any property to the restoration of such property or to distribute
the same;
(xi) to retain legal counsel, accountants, consultants, real
estate brokers, and such other persons, as the General Partner may
deem necessary or appropriate in connection with the Partnership
business and to pay therefor such reasonable remuneration as the
General Partner may deem reasonable and proper;
(xii) to retain other services of any kind or nature in
connection with the Partnership business, and to pay therefor such
remuneration as the General Partner may deem reasonable and proper;
(xiii) to negotiate and conclude agreements on behalf of the
Partnership with respect to any of the rights, powers and authority
conferred upon the General Partner;
(xiv) to maintain accurate accounting records and to file
promptly all federal, state and local income tax returns on behalf of
the Partnership;
(xv) to distribute Partnership cash or other Partnership assets
in accordance with this Agreement;
(xvi) to form or acquire an interest in, and contribute property
to, any further limited or general partnerships, joint ventures or
other relationships that it deems desirable (including, without
limitation, the acquisition of interests in, and the contributions of
property to, its Subsidiaries and any other Person in which it has an
equity interest from time to time);
(xvii) to establish Partnership reserves for working capital,
capital expenditures, contingent liabilities, or any other valid
Partnership purpose; and
(xviii) to take such other action, execute, acknowledge, swear to
or deliver such other documents and instruments, and perform any and
all other acts the General Partner deems necessary or appropriate for
the formation, continuation and conduct of the business and affairs of
the Partnership
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(including, without limitation, all actions consistent with allowing
the Company at all times to qualify as a REIT unless the Company
voluntarily terminates its REIT status) and to possess and enjoy all
of the rights and powers of a general partner as provided by the Act.
(c) Except as otherwise provided herein, to the extent the duties
of the General Partner require expenditures of funds to be paid to third
parties, the General Partner shall not have any obligations hereunder except
to the extent that Partnership funds are reasonably available to it for the
performance of such duties, and nothing herein contained shall be deemed to
authorize or require the General Partner, in its capacity as such, to expend
its individual funds for payment to third parties or to undertake any
individual liability or obligation on behalf of the Partnership.
6.02 DELEGATION OF AUTHORITY. The General Partner may delegate any or
all of its powers, rights and obligations hereunder, and may appoint, employ,
contract or otherwise deal with any Person for the transaction of the
business of the Partnership, which Person may, under supervision of the
General Partner, perform any acts or services for the Partnership as the
General Partner may approve.
6.03 INDEMNIFICATION AND EXCULPATION OF INDEMNITEES.
(a) The Partnership shall indemnify an Indemnitee from and against
any and all losses, claims, damages, liabilities (joint or several), expenses
(including reasonable legal fees and expenses), judgments, fines,
settlements, and other amounts arising from any and all claims, demands,
actions, suits or proceedings, civil, criminal, administrative or
investigative, that relate to the operations of the Partnership as set forth
in this Agreement in which any Indemnitee may be involved, or is threatened
to be involved, as a party or otherwise, unless it is established that: (i)
the act or omission of the Indemnitee was material to the matter giving rise
to the proceeding and either was committed in bad faith or was the result of
active and deliberate dishonesty; (ii) the Indemnitee actually received an
improper personal benefit in money, property or services; or (iii) in the
case of any criminal proceeding, the Indemnitee had reasonable cause to
believe that the act or omission was unlawful. The termination of any
proceeding by judgment, order or settlement does not create a presumption
that the Indemnitee did not meet the requisite standard of conduct set forth
in this Section 6.03(a). The termination of any proceeding by conviction or
upon a plea of nolo contendere or its equivalent, or an entry of an order of
probation prior to judgment, creates a rebuttable presumption that the
Indemnitee acted in a manner contrary to that specified in this Section
6.03(a). Any indemnification pursuant to this Section 6.03 shall be made only
out of the assets of the Partnership.
(b) The Partnership may reimburse an Indemnitee for reasonable
expenses incurred by an Indemnitee who is a party to a proceeding in advance
of the final disposition of the proceeding 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 6.03 has been met, and (ii) a
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written undertaking by or on behalf of the Indemnitee to repay the amount if
it shall ultimately be determined that the standard of conduct has not been
met.
(c) The indemnification provided by this Section 6.03 shall be in
addition to any other rights to which an Indemnitee or any other Person may
be entitled under any agreement, pursuant to any vote of the Partners, as a
matter of law or otherwise, and shall continue as to an Indemnitee who has
ceased to serve in such capacity.
(d) The Partnership may purchase and maintain insurance, on behalf
of the Indemnitees and such other Persons as the General Partner shall
determine, against any liability that may be asserted against or expenses
that may be incurred by such Person in connection with the Partnership's
activities, regardless of whether the Partnership would have the power to
indemnify such Person against such liability under the provisions of this
Agreement.
(e) For purposes of this Section 6.03, 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; 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 6.03; and
actions taken or omitted by the Indemnitee with respect to an employee
benefit plan in the performance of its duties for a purpose reasonably
believed by it to be in the interest of the participants and beneficiaries of
the plan shall be deemed to be for a purpose which is not opposed to the best
interests of the Partnership.
(f) In no event may an Indemnitee subject the Limited Partners to
personal liability by reason of the indemnification provisions set forth in
this Agreement.
(g) An Indemnitee shall not be denied indemnification in whole or
in part under this Section 6.03 because the Indemnitee had an interest in the
transaction with respect to which the indemnification applies if the
transaction was otherwise permitted by the terms of this Agreement.
(h) The provisions of this Section 6.03 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.
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6.04 LIABILITY OF THE GENERAL PARTNER.
(a) Notwithstanding anything to the contrary set forth in this
Agreement, the General Partner shall not be liable for monetary damages to
the Partnership or any Partners for losses sustained or liabilities incurred
as a result of errors in judgment or of any act or omission if the General
Partner acted in good faith. Additionally, the General Partner shall not be
in breach of any duty that the General Partner may owe to the Limited
Partners or the Partnership or any other Persons under this Agreement or of
any duty stated or implied by law or equity, provided the General Partner,
acting in good faith, abides by the terms of this Agreement.
(b) The Limited Partners expressly acknowledge that the General
Partner is acting on behalf of the Partnership, the Company and the Company'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 the Limited Partners) in deciding whether
to cause the Partnership to take (or decline to take) any actions. In the
event of a conflict between the interests of the shareholders of the Company
on one hand and the Limited Partners on the other, the General Partner shall
endeavor in good faith to resolve the conflict in a manner not adverse to
either the shareholders of the Company or the Limited Partners; provided the
General Partner shall not be liable for monetary damages for losses
sustained, liabilities incurred, or benefits not derived by Limited Partners
in connection with such decisions, provided that the General Partner has
acted in good faith.
(c) Subject to its obligations and duties as General Partner set
forth in Section 6.01 hereof, the General Partner may exercise any of the
powers granted to it under this Agreement and perform any of the duties
imposed upon it hereunder either directly or by or through its agents. The
General Partner shall not be responsible for any misconduct or negligence on
the part of any such agent appointed by it in good faith.
(d) 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 Company
to continue to qualify as a REIT or (ii) to prevent the Company from
incurring any taxes under Section 857, Section 4981, or any other provision
of the Code, is expressly authorized under this Agreement and is deemed
approved by all of the Limited Partners.
(e) Any amendment, modification or repeal of this Section 6.04 or
any provision hereof shall be prospective only and shall not in any way
affect the limitations on the General Partner's liability to the Partnership
and the Limited Partners under this Section 6.04 as in effect immediately
prior to such amendment, modification or repeal with respect to matters
occurring, in whole or in part, prior to such amendment, modification or
repeal, regardless of when claims relating to such matters may arise or be
asserted.
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6.05 EXPENDITURES BY THE PARTNERSHIP. The General Partner is hereby
authorized to pay compensation for accounting, administrative, legal,
technical, management and other services rendered to the Partnership. All of
the aforesaid expenditures (including Administrative Expenses) shall be
obligations of the Partnership, and the General Partner shall be entitled to
reimbursement by the Partnership for any expenditure (including
Administrative Expenses) incurred by it on behalf of the Partnership which
shall be made other than out of the funds of the Partnership. The Partnership
shall also assume, and pay when due, all Administrative Expenses.
6.06 OUTSIDE ACTIVITIES. Subject to Section 6.08 hereof, the Charter and
any agreements entered into by the General Partner or its Affiliates with the
Partnership or a Subsidiary, any officer, director, employee, agent, trustee,
Affiliate or shareholder of the General Partner shall be entitled to and may
have business interests and engage in business activities in addition to
those relating to the Partnership, including business interests and
activities substantially similar or identical to those of the Partnership.
Neither the Partnership nor any of the Limited Partners shall have any rights
by virtue of this Agreement in any such business ventures, interests or
activities. 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 such business ventures, interests or activities,
and the General Partner shall have no obligation pursuant to this Agreement
to offer any interest in any such business ventures, interests and activities
to the Partnership or any Limited Partner, even if such opportunity is of a
character which, if presented to the Partnership or any Limited Partner,
could be taken by such Person.
6.07 EMPLOYMENT OR RETENTION OF AFFILIATES.
(a) Any Affiliate of the General Partner may be employed or
retained by the Partnership and may otherwise deal with the Partnership
(whether as a buyer, lessor, lessee, manager, furnisher of goods or services,
broker, agent, lender or otherwise) and may receive from the Partnership any
compensation, price, or other payment therefor which the General Partner
determines to be fair and reasonable.
(b) The Partnership may lend or contribute to its Subsidiaries or
other Persons in which it has an equity investment, and such Persons may
borrow funds from the Partnership, on terms and conditions established in the
sole and absolute discretion of the General Partner. The foregoing authority
shall not create any right or benefit in favor of any Subsidiary or any other
Person.
(c) The Partnership may transfer assets to joint ventures, other
partnerships, corporations or other business entities in which it is or
thereby becomes a participant upon such terms and subject to such conditions
as the General Partner deems are consistent with this Agreement and
applicable law.
(d) Except as expressly permitted by this Agreement, neither the
General Partner nor any of its Affiliates shall sell, transfer or convey any
property to, or purchase
26
any property from, the Partnership, directly or indirectly, except pursuant
to transactions that are on terms that are fair and reasonable to the
Partnership.
6.08 GENERAL PARTNER PARTICIPATION. The General Partner agrees that all
business activities of the General Partner, including activities pertaining
to the acquisition, development and/or ownership of property, shall be
conducted through the Partnership or one or more subsidiary partnerships;
provided, however, that the Company is allowed to make a direct acquisition,
but if and only if, such acquisition is made in connection with the issuance
of New Securities, which direct acquisition and issuance have been approved
and determined to be in the best interests of the Company and the Partnership
by a majority of the Independent Directors. The General Partner also agrees
that all loans from the General Partner to the Partnership shall constitute
Funding Loans, subject to the exception set forth in Section 4.03 hereof.
6.09 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.
6.10 MISCELLANEOUS. In the event the Company redeems any REIT Shares,
then the General Partner shall cause the Partnership to purchase from the
General Partner and GTA LP a number of Partnership Units as determined based
on the application of the Conversion Factor on the same terms that the
Company redeemed such REIT Shares. Moreover, if the Company makes a cash
tender offer or other offer to acquire REIT Shares, then the General Partner
shall cause the Partnership to make a corresponding offer to the General
Partner and GTA LP to acquire an equal number of Partnership Units held by
the General Partner and GTA LP. In the event any REIT Shares are redeemed by
the Company pursuant to such offer, the Partnership shall redeem an
equivalent number of the General Partner's and GTA's Partnership Units for an
equivalent purchase price based on the application of the Conversion Factor.
6.11 MAINTENANCE OF INDEBTEDNESS. For a period of ten years following
the date hereof, the Partnership shall maintain indebtedness (the "Required
Indebtedness") in an amount equal to the lesser of approximately: (A)
$4,300,000 or (B) the aggregate negative capital account balances of the
contributor of Northgate Country Club (the "Northgate
27
Partner") at the time of the contribution of such golf course (the "Initial
Negative Capital Account"). The Required Indebtedness shall be reduced to the
extent that the Northgate Partner (or its partners, if the Northgate Partner
distributes its Partnership Units to its partners) redeem in whole or in
part, their Partnership Units in exchange for REIT Shares, redeem their
Partnership Units in full for cash or otherwise dispose of their Partnership
Units or dies (the Partnership Units that are so redeemed, disposed of, or
held by transferees of deceased holders are referred to as "Stepped-Up Basis
Units"). In such a case, the Required Indebtedness shall be reduced by an
amount equal to the original Required Indebtedness prior to any reduction
multiplied by a fraction equal to (i) the Initial Negative Capital Account,
minus the aggregate negative capital account balances associated with the
Stepped-Up Basis Units redeemed or transferred immediately prior to the
reduction of the Required Indebtedness, divided by (ii) the Initial Negative
Capital Account. If the Partnership fails to maintain such level of debt,
then the Partnership shall pay to the Northgate Partner the amount of federal
and state income taxes (together with interest and penalties) of that
Partner, which are created by the reduction in debt. To the extent at the
end of the ten (10) year period the Partnership has debt not otherwise
guaranteed, the Partnership, to the extent permitted by the lender, will
permit the Northgate Partner to guarantee such debt (or to enter into
reimbursement agreements with the Partnership or any Affiliate of the
Partnership to whom such debt is recourse, if any); provided, however, that
nothing contained herein shall prevent the Partnership or any such affiliate
from incurring, retiring, repaying, or prepaying such debt at any time after
such ten year period.
ARTICLE VII
CHANGES IN GENERAL PARTNER
7.01 TRANSFER OF THE GENERAL PARTNER'S PARTNERSHIP INTEREST.
(a) The General Partner may not transfer any of its General
Partnership Interest or withdraw as General Partner except as provided in
Section 7.01(c) or in connection with a transaction described in Section
7.01(d).
(b) The General Partner agrees that it and GTA LP will at all times
own in the aggregate at least a 20% Percentage Interest.
(c) Except as otherwise provided in Section 6.07(c) or Section
7.01(d) hereof, the Company shall not engage in any merger, consolidation or
other combination with or into another Person or sale of all or substantially
all of its assets, or any reclassification, or any recapitalization or change
of outstanding REIT 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 of REIT
Shares) (a "Transaction"), unless (i) the Transaction also includes a merger
of the Partnership or sale of substantially all of the assets of the
Partnership as a result of which all Limited Partners will receive for each
Partnership Unit an amount of cash, securities, or other property equal to
the product of the Conversion Factor and the greatest amount of cash,
securities or other property paid in the Transaction to a holder of
28
one REIT Share in consideration of one REIT Share, PROVIDED THAT if, in
connection with the Transaction, a purchase, tender or exchange offer
("Offer") shall have been made to and accepted by the holders of more than
50% of the outstanding REIT Shares, each holder of Partnership Units shall be
given the option to exchange its Partnership Units for the greatest amount of
cash, securities, or other property which a Limited Partner would have
received had it (A) exercised its Redemption Right and (B) sold, tendered or
exchanged pursuant to the Offer the REIT Shares received upon exercise of the
Redemption Right immediately prior to the expiration of the Offer; and (ii)
no more than 75% of the equity securities of the acquiring Person in such
Transaction shall be owned, after consummation of such Transaction, by the
General Partner or Persons who were Affiliates of the Partnership or the
General Partner immediately prior to the date on which the Transaction is
consummated.
(d) Notwithstanding Section 7.01(c), the Company may merge into or
consolidate with another entity if immediately after such merger or
consolidation (i) substantially all of the assets of the successor or surviving
entity (the "Surviving Entity"), other than Partnership Units held by the
General Partner, are contributed to the Partnership as a Capital Contribution in
exchange for Partnership Units with a fair market value equal to the value of
the assets so contributed as determined by the Surviving Entity in good faith
and (ii) the Surviving Entity expressly agrees to assume, or acknowledge and
ratify, all obligations of the General Partner hereunder. Upon such contribution
and assumption, the Surviving Entity shall have the right and duty to amend this
Agreement as set forth in this Section 7.01(d). The Surviving Entity shall in
good faith arrive at a new method for the calculation of the Cash Amount and
Conversion Factor for a Partnership Unit after any such merger or consolidation
so as to approximate the existing method for such calculation as closely as
reasonably possible. Such calculation shall take into account, among other
things, the kind and amount of securities, cash and other property that was
receivable upon such merger or consolidation by a holder of REIT Shares and/or
options, warrants or other rights relating thereto, and to which a holder of
Partnership Units could have acquired had such Partnership Units been redeemed
immediately prior to such merger or consolidation. Such amendment to this
Agreement shall provide for adjustment to such method of calculation which shall
be as nearly equivalent as may be practicable to the adjustments provided for
with respect to the Conversion Factor. The above provisions of this Section
7.01(d) shall similarly apply to successive mergers or consolidations permitted
hereunder.
7.02 ADMISSION OF A SUBSTITUTE OR SUCCESSOR GENERAL PARTNER. A Person shall
be admitted as a substitute or successor General Partner of the Partnership only
if the following terms and conditions are satisfied:
(a) a majority in interest of the Limited Partners (other than GTA
LP) shall have consented in writing to the admission of the substitute or
successor General Partner;
(b) the Person to be admitted as a substitute or additional General
Partner shall have accepted and agreed to be bound by all the terms and
provisions of this Agreement by executing a counterpart thereof and such other
documents or instruments as may be required or appropriate in order to effect
the admission of such Person as a General Partner,
29
and a certificate evidencing the admission of such Person as a General
Partner shall have been filed for recordation and all other actions required
by Section 2.05 hereof in connection with such admission shall have been
performed;
(c) if the Person to be admitted as a substitute or additional
General Partner is a corporation or a partnership it shall have provided the
Partnership with evidence satisfactory to counsel for the Partnership of such
Person's authority to become a General Partner and to be bound by the terms and
provisions of this Agreement; and
(d) counsel for the Partnership shall have rendered an opinion
(relying on such opinions from other counsel and the state or any other
jurisdiction as may be necessary) that the admission of the person to be
admitted as a substitute or additional General Partner is in conformity with the
Act, that none of the actions taken in connection with the admission of such
Person as a substitute or additional General Partner will cause (i) the
Partnership to be classified other than as a partnership for federal income tax
purposes, or (ii) the loss of any Limited Partner's limited liability.
7.03 EFFECT OF BANKRUPTCY, WITHDRAWAL, DEATH OR DISSOLUTION OF A GENERAL
PARTNER.
(a) Upon the occurrence of an Event of Bankruptcy as to a General
Partner (and its removal pursuant to Section 7.04(a) hereof) or the
withdrawal, death or dissolution of a General Partner (except that, if a
General Partner is on the date of such occurrence a partnership, the
withdrawal, death, dissolution, Event of Bankruptcy as to, or removal of a
partner in, such partnership shall be deemed not to be a dissolution of such
General Partner if the business of such General Partner is continued by the
remaining partner or partners), the Partnership shall be dissolved and
terminated unless the Partnership is continued pursuant to Section 7.03(b)
hereof.
(b) Following the occurrence of an Event of Bankruptcy as to a
General Partner (and its removal pursuant to Section 7.04(a) hereof) or the
death, withdrawal, removal or dissolution of a General Partner (except that, if
a General Partner is on the date of such occurrence a partnership, the
withdrawal, death, dissolution, Event of Bankruptcy as to, or removal of a
partner in, such partnership shall be deemed not to be a dissolution of such
General Partner if the business of such General Partner is continued by the
remaining partner or partners), the Limited Partners, within 90 days after such
occurrence, may elect to reconstitute the Partnership and continue the business
of the Partnership for the balance of the term specified in Section 2.04 hereof
by selecting, subject to Section 7.02 hereof and any other provisions of this
Agreement, a substitute General Partner by unanimous consent of the Limited
Partners. If the Limited Partners elect to reconstitute the Partnership and
admit a substitute General Partner, the relationship with the Partners and of
any Person who has acquired an interest of a Partner in the Partnership shall be
governed by this Agreement.
7.04 REMOVAL OF A GENERAL PARTNER.
30
(a) Upon the occurrence of an Event of Bankruptcy as to, or the
dissolution of, a General Partner, such General Partner shall be deemed to be
removed automatically; PROVIDED, HOWEVER, that if a General Partner is on the
date of such occurrence a partnership, the withdrawal, death, dissolution, Event
of Bankruptcy as to or removal of a partner in such partnership shall be deemed
not to be a dissolution of the General Partner if the business of such General
Partner is continued by the remaining partner or partners.
(b) If a General Partner has been removed pursuant to this Section
7.04 and the Partnership is continued pursuant to Section 7.03 hereof, such
General Partner shall promptly transfer and assign its General Partnership
Interest in the Partnership to the substitute General Partner approved by a
majority in interest of the Limited Partners (excluding GTA LP) in accordance
with Section 7.03(b) hereof and otherwise admitted to the Partnership in
accordance with Section 7.02 hereof. At the time of assignment, the removed
General Partner shall be entitled to receive from the substitute General Partner
the fair market value of the General Partnership Interest of such removed
General Partner as reduced by any damages caused to the Partnership Interest of
such removed General Partner. Such fair market value shall be determined by an
appraiser mutually agreed upon by the General Partner and a majority in interest
of the Limited Partners (excluding GTA LP) within 10 days following the removal
of the General Partner. In the event that the parties are unable to agree upon
an appraiser, the removed General Partner and a majority in interest of the
Limited Partners (excluding GTA LP) each shall select an appraiser. Each such
appraiser shall complete an appraisal of the fair market value of the removed
General Partner's General Partnership Interest within 30 days of the General
Partner's removal, and the fair market value of the removed General Partner's
General Partnership Interest shall be the average of the two appraisals;
PROVIDED, HOWEVER, that if the higher appraisal exceeds the lower appraisal by
more than 20% of the amount of the lower appraisal, the two appraisers, no later
than 40 days after the removal of the General Partner, shall select a third
appraiser who shall complete an appraisal of the fair market value of the
removed General Partner's General Partnership Interest no later than 60 days
after the removal of the General Partner. In such case, the fair market value
of the removed General Partner's General Partnership Interest shall be the
average of the two appraisals closest in value.
(c) The General Partnership Interest of a removed General Partner,
during the time after default until transfer under Section 7.04(b), shall be
converted to that of a special Limited Partner; PROVIDED, HOWEVER, such removed
General Partner shall not have any rights to participate in the management and
affairs of the Partnership, and shall not be entitled to any portion of the
income, expense, profit, gain or loss allocations or cash distributions
allocable or payable, as the case may be, to the Limited Partners. Instead,
such removed General Partner shall receive and be entitled only to retain
distributions or allocations of such items that it would have been entitled to
receive in its capacity as General Partner, until the transfer is effective
pursuant to Section 7.04(b).
(d) All Partners shall have given and hereby do give such consents,
shall take such actions and shall execute such documents as shall be legally
necessary and sufficient to effect all the foregoing provisions of this Section.
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ARTICLE VIII
RIGHTS AND OBLIGATIONS OF THE LIMITED PARTNERS
8.01 MANAGEMENT OF THE PARTNERSHIP. The Limited Partners shall not
participate in the management or control of Partnership business nor shall they
transact any business for the Partnership, nor shall they have the power to sign
for or bind the Partnership, such powers being vested solely and exclusively in
the General Partner.
8.02 POWER OF ATTORNEY. Each Limited Partner hereby irrevocably appoints
the General Partner his true and lawful attorney-in-fact, who may act for each
Limited Partner and in his name, place and xxxxx, and for his use and benefit,
to sign, acknowledge, swear to, deliver, file and record, at the appropriate
public offices, any and all documents, certificates, and instruments as may be
deemed necessary or desirable by the General Partner to carry out fully the
provisions of this Agreement and the Act in accordance with their terms, which
power of attorney is coupled with an interest and shall survive the death,
dissolution or legal incapacity of the Limited Partner, or the transfer by the
Limited Partner of any part or all of his Partnership Interest.
8.03 LIMITATION ON LIABILITY OF LIMITED PARTNERS. No Limited Partner shall
be liable for any debts, liabilities, contracts or obligations of the
Partnership. A Limited Partner shall be liable to the Partnership only to make
payments of his Capital Contribution, if any, as and when due hereunder. After
his Capital Contribution is fully paid, no Limited Partner shall, except as
otherwise required by the Act, be required to make any further Capital
Contributions or other payments or lend any funds to the Partnership.
8.04 OWNERSHIP BY LIMITED PARTNER OF CORPORATE GENERAL PARTNER OR
AFFILIATE. No Limited Partner shall at any time, either directly or indirectly,
own any stock or other interest in the General Partner or in any Affiliate
thereof, if such ownership by itself or in conjunction with other stock or other
interests owned by other Limited Partners would, in the opinion of counsel for
the Partnership, jeopardize the classification of the Partnership as a
partnership for federal income tax purposes. The General Partner shall be
entitled to make such reasonable inquiry of the Limited Partners as is required
to establish compliance by the Limited Partners with the provisions of this
Section.
8.05 REDEMPTION RIGHT.
(a) Subject to Sections 8.05(b)-(g), on or after the date which is
one (1) year after the Effective Date, each Limited Partner (other than GTA LP)
shall have the right (the "Redemption Right") to require the Partnership to
redeem on a Specified Redemption Date all or a portion of the Partnership Units
held by such Limited Partner at a redemption price equal to and in the form of
the Redemption Amount. 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"); provided, however, that the Partnership shall not be
obligated to satisfy such Redemption Right if the Company and/or the General
Partner elects to purchase
32
the Partnership Units subject to the Notice of Redemption pursuant to Section
8.05(b); and provided, further, that no Limited Partner may deliver to the
General Partner more than four (4) Notices of Redemption during each calendar
year. In addition to the restrictions on redemption set forth in Section
8.05(g), a Limited Partner may not exercise the Redemption Right for less
than one thousand (1,000) Partnership Units or, if such Limited Partner holds
less than one thousand (1,000) Partnership Units, all of the Partnership
Units held by such Partner. Notwithstanding the foregoing provisions of this
Section 8.05(a), the Company and the General Partner agree to use their best
efforts to cause the closing of the acquisition of redeemed Partnership Units
hereunder to occur as quickly as reasonably possible. The Redeeming Partner
shall have no right, with respect to any Partnership Units so redeemed, to
receive any distribution paid with respect to Partnership Units if the record
date for such distribution is on or after the Specified Redemption Date.
(b) Notwithstanding the provisions of Section 8.05(a), a Limited
Partner that exercises the Redemption Right shall be deemed to have offered to
sell the Partnership Units described in the Notice of Redemption to the General
Partner and the Company, and either of the General Partner or the Company (or
both) may, in its sole and absolute discretion, elect to purchase directly and
acquire such Partnership Units by paying to the Redeeming Partner either the
Cash Amount, or, provided that the REIT Shares have been registered pursuant to
a registration statement declared effective under the Securities Act of 1933, as
amended (the "Securities Act") the REIT Shares Amount, as elected by the General
Partner or the Company (in its sole and absolute discretion), on the Specified
Redemption Date, whereupon the General Partner or the Company 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. If the General Partner and/or the Company shall elect to exercise its
right to purchase Partnership Units under this Section 8.05(b) with respect to a
Notice of Redemption, they shall so notify the Redeeming Partner within five
Business Days after the receipt by the General Partner of such Notice of
Redemption. Unless the General Partner and/or the Company (in its sole and
absolute discretion) shall exercise its right to purchase Partnership Units from
the Redeeming Partner pursuant to this Section 8.05(b), neither the General
Partner nor the Company shall have any obligation to the Redeeming Partner or
the Partnership with respect to the Redeeming Partner's exercise of the
Redemption Right. In the event the General Partner or the Company shall
exercise its right to purchase Partnership Units with respect to the exercise of
a Redemption Right in the manner described in the first sentence of this Section
8.05(b), the Partnership shall have no obligation to pay any amount to the
Redeeming Partner with respect to such Redeeming Partner's exercise of such
Redemption Right, and each of the Redeeming Partner, the Partnership, and the
General Partner or the Company, as the case may be, shall treat the transaction
between the General Partner or the Company, as the case may be, and the
Redeeming Partner for federal income tax purposes as a sale of the Redeeming
Partner's Partnership Units to the General Partner or the Company, as the case
may be. Each Redeeming Partner agrees to execute such documents as the General
Partner may reasonably require in connection with the issuance of REIT Shares
upon exercise of the Redemption Right.
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(c) Notwithstanding the provisions of Section 8.05(a) and 8.05(b), a
Limited Partner shall not be entitled to exercise the Redemption Right if the
delivery of REIT Shares to such Partner on the Specified Redemption Date by the
General Partner or the Company pursuant to Section 8.05(b) (regardless of
whether or not the General Partner or the Company would in fact exercise its
rights under Section 8.05(b)) would (i) result in such Partner or any other
person owning, directly or indirectly, REIT Shares in excess of the Ownership
Limitation or the Look-Through Ownership Limitation, if applicable, (as defined
in the Charter) and calculated in accordance therewith, except as provided in
the Charter, (ii) result in REIT Shares being owned by fewer than 100 persons
(determined without reference to any rules of attribution), (iii) result in the
Company being "closely held" within the meaning of Section 856(h) of the Code,
(iv) cause the Company to own, directly or constructively, 10% or more of the
ownership interests in a tenant of the Company's, the General Partner's, the
Partnership's, or a subsidiary partnership's, real property, within the meaning
of Section 856(d)(2)(B) of the Code, or (v) cause the acquisition of REIT Shares
by such Partner to be "integrated" with any other distribution of REIT Shares
for purposes of complying with the registration provisions of the Securities
Act.
(d) Any Cash Amount to be paid to a Redeeming Partner pursuant to
this Section 8.05 shall be paid within 30 days after the initial date of receipt
by the Company of the Notice of Redemption relating to the Partnership Units to
be redeemed. Notwithstanding the foregoing, the Company and the General Partner
agree to use their best efforts to cause the closing of the acquisition of
redeemed Partnership Units hereunder to occur as quickly as reasonably possible.
(e) In the event that the General Partner permits the pledge of a
Limited Partner's Partnership Units to a lender, the General Partner may agree,
its sole discretion, to allow such lender, upon foreclosure of such Partnership
Units, to redeem such Partnership Units prior to the expiration of the one-year
period described in Section 8.05(a); provided, that any such redemption shall be
effected by the Partnership in the form of the Cash Amount.
(f) Notwithstanding any other provision of this Agreement, the
General Partner shall place appropriate restrictions on the ability of the
Limited Partners to exercise their Redemption Rights as and if deemed necessary
to ensure that the Partnership does not constitute a "publicly traded
partnership" under Section 7704 of the Code.
(g) In addition to the foregoing limitations, each Limited Partner
shall be limited in the number of Partnership Units that can be redeemed as
follows:
(i) After one (1) year, up to a maximum of 50% of a Limited
Partner's initial Partnership Units; and
(ii) After two (2) years, up to a maximum of 100% of a Limited
Partner's initial Partnership Units.
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8.06 REGISTRATION.
(a) SHELF REGISTRATION. Prior to or on the first date upon which the
Partnership Units owned by any Limited Partner may be redeemed, at the request
of a Limited Partner, the Company agrees to file with the Commission, a shelf
registration statement on Form S-3 under Rule 415 of the Securities Act, or any
similar rule that may be adopted by the Commission (the "Shelf Registration"),
with respect to all of the REIT Shares issued to the Limited Partners pursuant
to Section 8.05(b) hereof (the "Redemption Shares"). The Company will use its
best efforts to have the Shelf Registration declared effective under the
Securities Act and to keep the Shelf Registration continuously effective until a
date agreed upon by the Company and a majority of the Limited Partners or until
such time as all of the shares registered pursuant to such Shelf Registration
(i) have been disposed of pursuant to such Shelf Registration, (ii) have
otherwise been distributed pursuant to Rule 144 promulgated under the Securities
Act ("Rule 144"), or (iii) have been otherwise transferred in a transaction
resulting in the transferee receiving REIT Shares not deemed to be "restricted
securities" under Rule 144. The Company further agrees to supplement or make
amendments to the Shelf Registration, if required by the rules, regulations or
instructions applicable to the registration form utilized by the Company or by
the Securities Act or rules and regulations thereunder for the Shelf
Registration. No provision of this Agreement shall require the Company to file
a registration statement on any form other than Form S-3. The Company, in the
exercise of its reasonable judgment, shall have the right to delay the filing of
the Shelf Registration for up to 120 days.
(b) REGISTRATION AND QUALIFICATION PROCEDURES. The Company, upon the
written request of a Limited Partner, is required by the provisions of Section
8.06(a) hereof to use its best efforts to have the Shelf Registration declared
effective under the Securities Act. Accordingly, the Company will:
(i) prepare and file with the Commission a registration
statement, including amendments thereof and supplements relating
thereto, with respect to the Redemption Shares;
(ii) use its best efforts to cause the Shelf Registration to be
declared effective by the Commission;
(iii) keep the Shelf Registration effective and the related
prospectus current as described in Section 8.05(a) hereof; provided,
however, that the Company shall have no obligation to file any
amendment or supplement at its own expense or the Partnership's
expense more than 90 days after the effective date of the Shelf
Registration;
(iv) furnish to each holder of Redemption Shares such numbers of
copies of prospectuses, and supplements or amendments thereto, and
such other documents as such holder reasonably requests;
35
(v) register or qualify the securities covered by the
registration statement under the securities or blue sky laws of such
jurisdictions within the United States as any holder of Redemption
Shares shall reasonably request, and do such other reasonable acts and
things as may be required of it to enable such holders to consummate
the sale or other disposition in such jurisdictions of the Redemption
Shares; provided, however, that the Company shall not be required to
(i) qualify as a foreign corporation or consent to a general and
unlimited service or process in any jurisdictions in which it would
not otherwise be required to be qualified or so consent or (ii)
qualify as a dealer in securities; and
(vi) keep the holders of Redemption Shares advised as to the
initiation and progress of the registration.
(c) ALLOCATION OF EXPENSES. The Partnership shall pay all expenses in
connection with the Shelf Registration, including without limitation (i) all
expenses incident to filing with the National Association of Securities Dealers,
Inc., (ii) registration fees, (iii) printing expenses, (iv) accounting and legal
fees and expenses, except to the extent holders of Redemption Shares elect to
engage accountants or attorneys in addition to the accountants and attorneys
engaged by the Partnership or the Company, (v) accounting expenses incident to
or required by any such registration or qualification and (vi) expenses of
complying with the securities or blue sky laws of any jurisdictions in
connection with such registration or qualification; provided, however, the
Partnership shall not be liable for (A) any discounts or commissions to any
broker attributable to the sale of Redemption Shares, or (B) any fees or
expenses incurred by holders of Redemption Shares in connection with such
registration which, according to the written instructions of any regulatory
authority, the Partnership is not permitted to pay.
(d) SALE OF REDEMPTION SHARES. The Company may require in its sole
discretion that the Redemption Shares be sold in block trades through
underwriters or broker-dealers or that the sale of the Redemption Shares be
underwritten by investment banking firms selected by the Company.
(e) LISTING ON SECURITIES EXCHANGE. If the Company shall list or
maintain the listing of any REIT Shares on any securities exchange or national
market system, it will at its expense and as necessary to permit the
registration and sale of the Redemption Shares hereunder, list thereon, maintain
and, when necessary, increase such listing to include such Redemption Shares.
8.07 "PIGGYBACK" REGISTRATION RIGHTS.
(a) NOTICE OF REGISTRATION. It, at any time commencing upon the date
upon which all or any portion of the Partnership Units shall have been redeemed
for the Redemption Shares (but not if such Partnership Units shall have been
redeemed for cash in accordance with the provisions hereof), the Company files a
registration statement under
36
the Securities Act with respect to a firm commitment underwritten public
offering of any securities of the Company, the Company shall give thirty (30)
days prior written notice thereof to each Limited Partner and shall, upon the
written request of any or all of the Limited Partners, include in the
underwritten public offering the number of Redemption Shares that each such
Limited Partner may request (except as set forth in Section 8.07(b) below).
The Company will keep such registration statement effective and current under
the Securities Act permitting the sale of Redemption Shares covered thereby
for the same period that the registration statement is maintained effective
for the other persons (including the Company) selling thereunder. In any
underwritten offering, however, the Redemption Shares to be included will be
sold at the same time and at the same price as the Company's securities. In
the event that the Company fails to receive a written request from a Limited
Partner within thirty (30) days of its written notice, then the Company shall
have no obligation to include any of the Redemption Shares in the offering.
In connection with any registration statement or subsequent amendment or
similar document filed pursuant to this Section 8.07, the Company shall take
all reasonable steps to make the securities covered thereby eligible for
public offering and sale under the securities or blue sky laws of the
applicable jurisdictions by the effective date of such registration
statement; provided that in no event shall the Company be obligated to
qualify to do business in any jurisdiction where it is not so qualified at
the time of filing such documents or to take any action which would subject
it to unlimited service of process in any jurisdiction where it is not so
subject at such time. The Company shall keep such filing current for the
length of time it must keep any registration statement, post-effective
amendment, prospectus or offering circular effective pursuant hereto.
(b) UNDERWRITING. In the event of an offering by the Company in
which one or more Limited Partners wishes to include Redemption Shares under
this Section 8.07, and it is determined in good faith by the managing
underwriter of such offering, giving effect to the number of REIT Shares to be
offered by the Company, that the total number of Redemption Shares that would
consequently be offered is in excess of the number of Redemption Shares that can
be sold at the proposed price, then the number of Redemption Shares of the
Limited Partners to be offered will be reduced ratably, based upon the number of
Redemption Shares each Limited Partner has requested to include in such
registration; provided, however, that notwithstanding anything in this Section
8.07(b) to the contrary, the Limited Partners shall have the right to
contribute, on a pro-rata basis as described above, an aggregate of Redemption
Shares equalling at least fifteen percent (15%) of the total value of such
offering.
(c) OBLIGATION OF LIMITED PARTNERS UPON REGISTRATION. To include
Redemption Shares in any registration, each Limited Partner shall:
(i) Cooperate with the Company in preparing each such
registration and execute all such agreements as any underwriter may deem
reasonably necessary in favor of such underwriter;
37
(ii) Promptly supply the Company with all information,
documents, representations and agreements as such underwriter may deem
reasonably necessary in connection with such registration; and
(iii) Agree in writing not to sell or transfer any share of the
Redemption Shares not included in such underwritten offering for a period of
seven (7) days prior to and thirty (30) days after the effective date of such
registration without the underwriters' consent, but no Limited Partner shall
be required to make such agreement unless the other Limited Partners included
in any offering covered by such registration shall similarly agree.
(d) COMPANY'S OBLIGATIONS UPON REGISTRATION. If and whenever the
Company is obligated by the provisions of this Section 8.07 to effect the
registration of any offering of REIT Shares under the Securities Act, as
expeditiously as possible the Company will, or will use its best efforts to, as
the case may be:
(i) Prepare and file with the SEC a registration statement
with respect to such REIT Shares and, use its best efforts to cause such
registration statement to become effective;
(ii) Prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration statement
effective until the earlier of the sale of all securities covered thereby or
the date on which such REIT Shares may be sold into the market without
restriction under Rule 144;
(iii) Furnish to each Limited Partner so many copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Securities Act, and such other documents, as such Limited
Partner may reasonably request; and
(iv) Register or qualify the securities covered by such
registration statement under such other securities or blue sky laws of such
jurisdictions as such Limited Partner shall reasonably request, and do any
and all other acts and things that may be reasonably necessary or advisable
to enable the Limited Partners to consummate the disposition in such
jurisdictions of such securities.
(e) EXPENSES.
In connection with any filing or other registration hereunder the
Partnership shall bear all the expenses and professional fees which arise in
connection with such filings or registration (except for the Limited Partner's
pro rata share of any underwriters' discount) and all expenses incurred in
making such filings and keeping them effective and correct as provided hereunder
and shall also provide each Limited Partner with a reasonable number of printed
copies of the prospectus, offering circulars and/or supplemental prospectuses or
38
amended prospectuses in final and preliminary form; PROVIDED, HOWEVER, each
Limited Partner will pay its own direct out-of-pocket costs incurred with the
registration of REIT Shares, including but not limited to Limited Partner's
attorney and accountants; fees, travel expenses and any consulting fees.
(f) INDEMNIFICATION BY THE COMPANY. The Company will indemnify each
Limited Partner, each of its officers and directors, and each person controlling
the Limited Partner, with respect to which registration, qualification or
compliance has been effected pursuant to this Section 8.07, against all claims,
losses, damages, costs, expenses and liabilities whatsoever (or actions in
respect thereof) arising out of or based on (i) any untrue statement, (or
alleged untrue statement) of a material fact contained in any registration
statement, prospectus, offering circular or other similar document (including
any related registration statement, notification or the like) incident to any
such registration, qualification or compliance, or based on any omission (or
alleged omission) to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading in the light of the
circumstances under which they were made or (ii) any violation by the Company of
the Securities Act or any state securities law or of any rule or regulation
promulgated under the Securities Act or any state securities law applicable to
the Company and relating to action or inaction required of the Company in
connection with any such registration, qualification or compliance, and will
reimburse the Limited Partner, each of its officers and directors, and each
person controlling the Limited Partner, for any legal and any other expenses
reasonably incurred in connection with investigating or defending any such
claim, loss, damage, liability or action, provided, however, that (x) the
Company will not be liable in any such case to the extent that any such claim,
loss, damage, liability, or action arises out of or is based on any untrue
statement (or alleged untrue statement) or omission (or alleged omission) based
upon written information furnished to the Company by an instrument duly executed
by the Limited Partner and stated to be specifically for use therein or
furnished by the Limited Partner to the Company in response to a request by the
Company stating specifically that such information will be used by the Company
therein, and (y) such indemnity agreement shall not inure to the benefit of the
Limited Partner, insofar as it relates to any such untrue statement (or alleged
untrue statement) or omission (or alleged omission) made in the preliminary
prospectus or prospectus but eliminated or remedies in the amended prospectus on
file with the Commission at the time the registration statement becomes
effective or in the amended prospectus filed with the Commission pursuant to
Rule 424(b) under the Securities Act or in any subsequent amended prospectus
filed with the Commission prior to the written confirmation of the sale of the
Registrable Securities at issue (collectively, the "Final Prospectus"), if a
copy of the Final Prospectus was not furnished to the person or entity asserting
the loss, liability, claim or damage at or prior to the time such action is
required by the Securities Act.
(g) INDEMNIFICATION BY THE LIMITED PARTNERS. The Limited Partners
will, if Redemption Shares held by or issuable to such Limited Partners are
included in the REIT Shares to which such registration, qualification or
compliance is being effected, indemnify the Company, each of its directors and
officers, each underwriter, if any, of the REIT Shares covered by such
registration statement, and each person who controls the Company within
39
the meaning of the Securities Act against all claims, losses, damages, costs,
expenses and liabilities whatsoever (or actions in respect thereof) arising out
of or based on any untrue Statement (or alleged untrue statement) of a material
fact contained in any such registration statement, prospectus, offering circular
or other similar document (including any related registration statement,
notification or the like) incident to any such registration, qualification or
compliance, or based on any omission (or alleged omission) to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances under which they were made,
and will reimburse the Company, such directors, officers, persons or
underwriters for any legal or any other expenses reasonably incurred in
connection with investigation or defending any such claim, loss, damage, costs,
expense, liability or action, in each case to the extent, but only to the
extent, that such untrue statement (or alleged untrue statement or omission (or
alleged omission) is made in such registration statement, prospectus, offering
circular or other document in reliance upon and in conformity with written
information furnished to the Company by an instrument duly executed by the
Limited Partners and stated to be specifically for use therein or furnished by
any Limited Partner to the Company in response to a request by the Company
stating specifically that such information will be used by the Company therein,
provided, however, that the foregoing indemnity agreement is subject to the
condition that, such indemnity agreement shall not inure to the benefit of the
Company or any underwriter insofar as it relates to any such untrue statements
(or alleged untrue statements) or omission (or alleged omission) made in the
preliminary prospectus or prospectus but eliminated or remedied in the Final
Prospectus, if a copy of the Final Prospectus was not furnished to the person or
entity asserting the loss, liability, claim or damage at or prior to the time
such action is required by the Securities Act.
(h) INDEMNIFICATION PROCEDURES. Each party entitled to
indemnification under this Section 8.07 (the "Indemnified Party") shall give
notice to the party required to provide indemnification (the "Indemnifying
Party") promptly after such Indemnified Party has actual knowledge of any claim
as to which indemnity may be sought, and shall permit the Indemnifying party to
assume the defense of any such claim or any litigation resulting therefrom,
provided that counsel for the Indemnifying Party, who shall conduct the defense
of such claim or litigation, shall be approved by the Indemnified Party (whose
approval shall not unreasonably be withheld). The failure of any Indemnified
Party to give notice as provided herein shall relieve the Indemnifying Party of
its obligations under this Agreement only to the extent that such failure to
give notice shall materially prejudice the Indemnifying Party in the defense of
any such claim or any such litigation. No Indemnifying Party, in the defense of
any such claim or litigation, shall, except with the consent of each Indemnified
Party, consent to entry of any judgment or enter into any settlement that
attributes any liability to the Indemnified Party, unless the settlement
includes as an unconditional term thereof the giving by the claimant or
plaintiff to such Indemnified Party of a release from all liability in respect
to such claim or litigation. If any such Indemnified Party shall have been
advised by counsel chosen by it that there may be one or more legal defenses
available to such Indemnified Party that are different from or additional to
those available to the Indemnifying Party, the Indemnifying Party shall not have
the right to assume the defense of such action on behalf of such Indemnified
Party and will reimburse such Indemnified Party
40
and any person controlling such Indemnified Party for the reasonable fees and
expenses of any counsel retained by the Indemnified Party, it being
understood that the Indemnifying Party shall not, in connection with any one
action or separate but similar or related actions in the same jurisdiction
arising out of the same general allegations or circumstances, be liable for
the reasonable fees and expenses of more than one separate firm of attorneys
for each Indemnified Party or controlling person (and all other Indemnified
Parties and controlling persons which may be represented without conflict by
one counsel), which firm shall be designated in writing by the Indemnified
Party (or Indemnified Parties, if more than one Indemnified Party is to be
represented by such counsel) to the Indemnifying Party. The Indemnifying
Party shall not be subject to any liability for any settlement made without
its consent, which shall not be unreasonably withheld.
If the indemnification provided for in this Section 8.07 from the
Indemnifying Party is unavailable to an Indemnified Party hereunder in respect
of any losses, claims, damages, labilities or expenses referred to therein, then
the Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall
contribute to the amount paid or payable by such Indemnified Party as a result
of such losses, claims, damages, labilities or expenses in such proportion as is
appropriate to reflect the relative fault of the Indemnifying Party and
Indemnified Parties in connection with the actions which resulted in such
losses, claims, damages, liabilities or expenses, as well as any other relevant
equitable considerations. The relative fault of such Indemnifying Party and
Indemnified Parties shall be determined by reference to, among other things,
whether any action in question, including any untrue or alleged untrue statement
of a material fact or omission or alleged omission to state a material fact, has
been made by, or relates to information supplied by, such Indemnifying Party or
Indemnified Parties, and the parties, relative intent, knowledge, access to
information and opportunity to correct or prevent such action. The amount paid
or payable by a party as a result of the losses claims, damages, liabilities and
expenses referred to above shall be deemed to include any legal or other fees or
expenses reasonably incurred by such party in connection with any investigation
or proceeding.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 8.07 were determined by pro rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to in the immediately preceding
paragraph. No person guilty of fraudulent misrepresentation (within the meaning
of section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation).
8.08 SALE OF INITIAL GOLF COURSE. Notwithstanding anything herein to
the contrary, if the Partnership elects to sell an Initial Golf Course and
provided the lessee thereunder is not in default beyond any applicable notice
and cure periods provided in the applicable lease, then to the extent a
Limited Partner would recognize gain under Section 704(c) of the Code as a
result thereof, then the Partnership shall use reasonable efforts to
structure the sale as a like-kind exchange under Section 1031 of the Code.
41
8.09 EXECUTION OF PLEDGE AGREEMENT. Each Limited Partner contributing an
Initial Golf Course in exchange for its Partnership Interest shall execute and
deliver to the Partnership the Pledge Agreement whereby the Limited Partner
pledges to the Partnership Units having a value equal on the date of the Pledge
Agreement to fifteen percent (15%) of the initial value of the Initial Golf
Course contributed by such Limited Partner to secure the indemnification
obligations of such Limited Partner contained in Section 8.2 of the Contribution
and Leaseback Agreement to which such Limited Partner is a party. The pledge
with respect to such indemnification obligations shall be for a period of one
(1) year, and the General Partner acknowledges that the pledged Partnership
Units shall also serve as collateral for the lease obligations of the applicable
lessee under the leases for the Initial Golf Course as provided more
particularly in the Pledge Agreement.
ARTICLE IX
TRANSFERS OF LIMITED PARTNERSHIP INTERESTS
9.01 PURCHASE FOR INVESTMENT.
(a) Each Limited Partner hereby represents and warrants to the
Company, the General Partner and to the Partnership that the acquisition of his
Partnership Interest is made as a principal for his account for investment
purposes only and not with a view to the resale or distribution of such
Partnership Interest.
(b) Each Limited Partner agrees that he will not sell, assign or
otherwise transfer his Partnership Interest or any fraction thereof, whether
voluntarily or by operation of law or at judicial sale or otherwise, to any
Person who does not make the representations and warranties to the General
Partner set forth in Section 9.01(a) above and similarly agree not to sell,
assign or transfer such Partnership Interest or fraction thereof to any Person
who does not similarly represent, warrant and agree.
9.02 RESTRICTIONS ON TRANSFER OF LIMITED PARTNERSHIP INTERESTS.
(a) Except as otherwise provided in Section 9.02(d) hereof and except
for the pledge rights contained in Section 9.02(f) hereof, no Limited Partner
(other than the General Partner) may offer, sell, assign, hypothecate, pledge or
otherwise transfer his Limited Partnership Interest, in whole or in part,
whether voluntarily or by operation of law or at judicial sale or otherwise
(collectively, a "Transfer") without the written consent of the General Partner,
which consent may be withheld in the sole discretion of the General Partner.
The General Partner may require, as a condition of any Transfer, that the
transferor assume all costs incurred by the Partnership in connection therewith.
(b) No Limited Partner may effect a Transfer of his Limited
Partnership Interest, in whole or in part, if, in the opinion of legal counsel
for the Partnership, such proposed Transfer would require the registration of
the Limited Partnership Interest under the
42
Securities Act or would otherwise violate any applicable federal or state
securities or "Blue Sky" law (including investment suitability standards).
(c) No transfer by a Limited Partner of his Partnership Units, in
whole or in part, may be made to any Person if (i) in the opinion of legal
counsel for the Partnership, the transfer would result in the Partnership's
being treated as an association taxable as a corporation (other than a qualified
REIT subsidiary within the meaning of Section 856(i) of the Code), or (ii) such
transfer is effectuated through an "established securities market" or a
"secondary market (or the substantial equivalent thereof)" within the meaning of
Section 7704 of the Code.
(d) Section 9.02(a) shall not apply to the following transactions,
except that the General Partner may require that the transferor assume all costs
incurred by the Partnership in connection therewith:
(i) any Transfer by a Limited Partner pursuant to the exercise of
its Redemption Right under Section 8.05 hereof;
(ii) any Transfer by a Limited Partner that is a corporation or
other business entity to any of its Affiliates or subsidiaries or to
any successor in interest of such Limited Partner; or
(iii) any donative Transfer by an individual Limited Partner to
his immediate family members or any trust in which the individual or
his immediate family members own, collectively, 100% of the beneficial
interests. For purposes of this Section 9.02(d)(iii), the term
"immediate family member" shall be deemed to include only an
individual Limited Partner's spouse, children and grandchildren.
(e) Any Transfer in contravention of any of the provisions of this
Article IX shall be void and ineffectual and shall not be binding upon, or
recognized by, the Partnership.
(f) Notwithstanding Section 9.01(a), during the period in which all
or a portion of a Limited Partner's Partnership Units are restricted from
transfer pursuant to Article 9 hereof, the Limited Partner may pledge up to 85%
of its Partnership Units as collateral in any borrowing from an institutional
lender, provided complete copies of the commitment letter and all loan
documentation is delivered to the General Partner and the Company. After
satisfactory review of the documentation, the General Partner and the Company
will agree to issue a letter to such lender agreeing to allow the conversion of
such Limited Partner's Partnership Units to REIT Shares (or purchase by the
Company of such Partnership Units, at the Company's election) upon a default by
the applicable Limited Partner under such loan if (i) the lender and the
applicable Limited Partner each request that such letter be issued; (ii) such
loan transaction is deemed by the General Partner and the Company to be
arm's-length and not designed to circumvent the Agreement or restrictions
43
contained herein; (iii) the applicable Limited Partner acknowledges that any
such conversion could potentially cause a taxable event to such Limited
Partner; and (iv) such conversion cannot occur within the first year after the
closing of the Initial Offering. In no event will the Company or the
Partnership guarantee or be liable to the lender or others for any such
permissible loans wherein the Limited Partner's Partnership Units are used as
collateral.
(g) No transfer of any Partnership Units may be made to a lender to
the Partnership or to any Person who is related (within the meaning of
Regulations Section 1.752-4(b)) to any lender to the Partnership whose loan
constitutes a non-recourse liability (within the meaning of Regulations Section
1.752-1(a)(2)), without the consent of the General Partner, which may be
withheld in its sole and absolute discretion; PROVIDED, HOWEVER, 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 Cash Amount any Partnership Units in which a security interest is held
simultaneously with the time at which liabilities to 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.
9.03 ADMISSION OF SUBSTITUTE LIMITED PARTNER.
(a) Subject to the other provisions of this Article IX, an assignee
of the Limited Partnership Interest of a Limited Partner (which shall be
understood to include any purchaser, transferee, donee, or other recipient of
any disposition of such Limited Partnership Interest) shall be deemed admitted
as a Limited Partner of the Partnership only upon the satisfactory completion of
the following:
(i) The assignee shall have accepted and agreed to be bound by
the terms and provisions of this Agreement by executing a counterpart
or an amendment thereof, including a revised EXHIBIT A, and such other
documents or instruments as the General Partner may require in order
to effect the admission of such Person as a Limited Partner.
(ii) To the extent required, an amended Certificate evidencing
the admission of such Person as a Limited Partner shall have been
signed, acknowledged and filed for record in accordance with the Act.
(iii) The assignee shall have delivered a letter containing the
representation set forth in Section 9.01(a) hereof and the agreement
set forth in Section 9.01(b) hereof.
(iv) If the assignee is a corporation, partnership or trust, the
assignee shall have provided the General Partner with evidence
satisfactory to counsel for the Partnership of the assignee's
authority to become a Limited Partner under the terms and provisions
of this Agreement.
44
(v) The assignee shall have executed a power of attorney
containing the terms and provisions set forth in Section 8.02 hereof.
(vi) The assignee shall have paid all reasonable legal fees of
the Partnership and the General Partner and filing and publication
costs in connection with his substitution as a Limited Partner.
(vii) The assignee has obtained the prior written consent of the
General Partner to its admission as a Substitute Limited Partner,
which consent may be given or denied in the exercise of General
Partner's sole and absolute discretion.
(viii) In the case of an assignee of the Limited Partnership
Interest of the General Partner except in the case of a transaction
described in Section 7.01(c) or (d) (in which case no consent is
necessary), the assignee has obtained the prior written consent of a
majority-in-interest of the Limited Partners (other than the General
Partner) to its admission as a Substitute Limited Partner, which
consent may be given or denied in the exercise of such Limited
Partners' sole and absolute discretion.
(b) For the purpose of allocating profits and losses and distributing
cash received by the Partnership, a Substitute Limited Partner shall be treated
as having become, and appearing in the records of the Partnership as, a Partner
upon the filing of the Certificate described in Section 9.03(a)(ii) hereof or,
if no such filing is required, the later of the date specified in the transfer
documents or the date on which the General Partner has received all necessary
instruments of transfer and substitution.
(c) The General Partner shall cooperate with the Person seeking to
become a Substitute Limited Partner by preparing the documentation required by
this Section and making all official filings and publications. The Partnership
shall take all such action as promptly as practicable after the satisfaction of
the conditions in this Article IX to the admission of such Person as a Limited
Partner of the Partnership.
9.04 RIGHTS OF ASSIGNEES OF PARTNERSHIP INTERESTS.
(a) Subject to the provisions of Sections 9.01 and 9.02 hereof,
except as required by operation of law, the Partnership shall not be obligated
for any purposes whatsoever to recognize the assignment by any Limited Partner
of his Partnership Interest until the Partnership has received notice thereof.
(b) Any Person who is the assignee of all or any portion of a Limited
Partner's Limited Partnership Interest, but does not become a Substitute Limited
Partner and desires to make a further assignment of such Limited Partnership
Interest, shall be subject to all the provisions of this Article IX to the same
extent and in the same manner as any Limited Partner desiring to make an
assignment of his Limited Partnership Interest.
45
9.05 EFFECT OF BANKRUPTCY, DEATH, INCOMPETENCE OR TERMINATION OF A LIMITED
PARTNER. The occurrence of an Event of Bankruptcy as to a Limited Partner, the
death of a Limited Partner or a final adjudication that a Limited Partner is
incompetent (which term shall include, but not be limited to, insanity) shall
not cause the termination or dissolution of the Partnership, and the business of
the Partnership shall continue if an order for relief in a bankruptcy proceeding
is entered against a Limited Partner, the trustee or receiver of his estate or,
if he dies, his executor, administrator or trustee, or, if he is finally
adjudicated incompetent, his committee, guardian or conservator, shall have the
rights of such Limited Partner for the purpose of settling or managing his
estate property and such power as the bankrupt, deceased or incompetent Limited
Partner possessed to assign all or any part of his Partnership Interest and to
join with the assignee in satisfying conditions precedent to the admission of
the assignee as a Substitute Limited Partner.
9.06 JOINT OWNERSHIP OF INTERESTS. A Partnership Interest may be acquired
by two individuals as joint tenants with right of survivorship, provided that
such individuals either are married or are related and share the same home as
tenants in common. The written consent or vote of both owners of any such
jointly held Partnership Interest shall be required to constitute the action of
the owners of such Partnership Interest; provided, however, that the written
consent of only one joint owner will be required if the Partnership has been
provided with evidence satisfactory to the counsel for the Partnership that the
actions of a single joint owner can bind both owners under the applicable laws
of the state of residence of such joint owners. Upon the death of one owner of a
Partnership Interest held in a joint tenancy with a right of survivorship, the
Partnership Interest shall become owned solely by the survivor as a Limited
Partner and not as an assignee. The Partnership need not recognize the death of
one of the owners of a jointly-held Partnership Interest until it shall have
received notice of such death. Upon notice to the General Partner from either
owner, the General Partner shall cause the Partnership Interest to be divided
into two equal Partnership Interests, which shall thereafter be owned separately
by each of the former owners.
ARTICLE X
BOOKS AND RECORDS; ACCOUNTING; TAX MATTERS
10.01 BOOKS AND RECORDS. At all times during the continuance of the
Partnership, the Partners shall keep or cause to be kept at the Partnership's
specified office true and complete books of account in accordance with generally
accepted accounting principles, including: (a) a current list of the full name
and last known business address of each Partner, (b) a copy of the Certificate
of Limited Partnership and all certificates of amendment thereto, (c) copies of
the Partnership's federal, state and local income tax returns and reports, (d)
copies of the Agreement and any financial statements of the Partnership for the
three most recent years and (e) all documents and information required under the
Act. Any Partner or his duly authorized representative, upon paying the costs of
collection, duplication and mailing, shall be entitled to inspect or copy such
records during ordinary business hours.
10.02 CUSTODY OF PARTNERSHIP FUNDS; BANK ACCOUNTS.
46
(a) All funds of the Partnership not otherwise invested shall be
deposited in one or more accounts maintained in such banking or brokerage
institutions as the General Partner shall determine, and withdrawals shall be
made only on such signature or signatures as the General Partner may, from time
to time, determine.
(b) All deposits and other funds not needed in the operation of the
business of the Partnership may be invested by the General Partner in investment
grade instruments (or investment companies whose portfolio consists primarily
thereof), government obligations, certificates of deposit, bankers' acceptances
and municipal notes and bonds. The funds of the Partnership shall not be
commingled with the funds of any other Person except for such commingling as may
necessarily result from an investment in those investment companies permitted by
this Section 10.02(b).
10.03 FISCAL AND TAXABLE YEAR. The fiscal and taxable year of the
Partnership shall be the calendar year.
10.04 ANNUAL TAX INFORMATION AND REPORT. Within 75 days after the end of
each fiscal year of the Partnership, the General Partner shall furnish to each
person who was a Limited Partner at any time during such year the tax
information necessary to file such Limited Partner's individual tax returns as
shall be reasonably required by law.
10.05 TAX MATTERS PARTNER; TAX ELECTIONS; SPECIAL BASIS ADJUSTMENTS.
(a) The General Partner shall be the Tax Matters Partner of the
Partnership within the meaning of Section 6231(a)(7) of the Code. As Tax Matters
Partner, the General Partner shall have the right and obligation to take all
actions authorized and required, respectively, by the Code for the Tax Matters
Partner. The General Partner shall have the right to retain professional
assistance in respect of any audit of the Partnership by the Service and all
out-of-pocket expenses and fees incurred by the General Partner on behalf of the
Partnership as Tax Matters Partner shall constitute Partnership expenses. In the
event the General Partner receives notice of a final Partnership adjustment
under Section 6223(a)(2) of the Code, the General Partner shall either (i) file
a court petition for judicial review of such final adjustment within the period
provided under Section 6226(a) of the Code, a copy of which petition shall be
mailed to all Limited Partners on the date such petition is filed, or (ii) mail
a written notice to all Limited Partners, within such period, that describes the
General Partner's reasons for determining not to file such a petition.
(b) All elections required or permitted to be made by the Partnership
under the Code or under any applicable state law shall be made by the General
Partner in its sole discretion.
(c) In the event of a transfer of all or any part of the Partnership
Interest of any Partner, the Partnership, at the option of the General Partner,
may elect pursuant to Section 754 of the Code to adjust the basis of the
Properties. Notwithstanding anything contained in Article V of this Agreement,
any adjustments made pursuant to Section 754
47
shall affect only the successor in interest to the transferring Partner and in
no event shall be taken into account in establishing, maintaining or computing
Capital Accounts for the other Partners for any purpose under this Agreement.
Each Partner will furnish the Partnership with all information necessary to
give effect to such election.
10.06 REPORTS TO LIMITED PARTNERS.
(a) As soon as practicable after the close of each fiscal quarter,
but in no event later than 45 days (other than the last quarter of the fiscal
year), the General Partner shall cause to be mailed to each Limited Partner a
quarterly report containing financial statements of the Partnership, or of the
Company if such statements are prepared solely on a consolidated basis with the
Company, for such fiscal quarter, presented in accordance with generally
accepted accounting principles. As soon as practicable after the close of each
fiscal year, the General Partner shall cause to be mailed to each Limited
Partner an annual report containing financial statements of the Partnership, or
of the Company if such statements are prepared solely on a consolidated basis
with the Company for such fiscal year, prepared in accordance with generally
accepted accounting principles. The annual financial statements shall be
audited by accountants selected by the General Partner.
(b) Any Partner shall further have the right to a private audit of
the books and records of the Partnership, provided such audit is made for
Partnership purposes, at the expense of the Partner desiring it and is made
during normal business hours.
ARTICLE XI
AMENDMENT OF AGREEMENT;
SALE OF ALL OR SUBSTANTIALLY ALL OF COMPANY'S ASSETS
11.01 AMENDMENT OF AGREEMENT.
The General Partner, without the consent of the Limited Partners, may amend
this Agreement in any respect; provided, however, that the following amendments
shall require the consent of Limited Partners (other than GTA LP) holding at
least two-thirds (2/3rds) of the Percentage Interests of the Limited Partners
(other than GTA LP):
(a) any amendment affecting the operation of the Conversion Factor or
Redemption Right (except as provided in Section 8.05(d) hereof) in a manner
adverse to the Limited Partners;
(b) any amendment that would adversely affect the rights of the
Limited Partners to receive the distributions payable to them hereunder other
than with respect to the issuance of additional Partnership Units pursuant to
Section 4.02 of this Agreement;
(c) any amendment that would alter the Partnership's allocations of
Profit and Loss to the Limited Partners in a manner adverse to Limited Partners,
other than with
48
respect to the issuance of additional Partnership Units pursuant to Section
4.02 of this Agreement;
(d) any amendment that would impose on the Limited Partners any
obligation to make additional Capital Contributions to the Partnership;
(e) any amendment to Section 8.07 above in a manner adverse to any
Limited Partner; and
(f) any amendment to this Article XI.
11.02 SALE OF ALL OR SUBSTANTIALLY ALL OF THE ASSETS OF THE PARTNERSHIP;
CHANGE IN CONTROL.
The General Partner, without the consent of the Limited Partners (including
GTA LP) holding 66.67% of the Percentage Interests of the Limited Partners
(including GTA LP), may not sell, transfer, or convey all or substantially all
of the assets of the Partnership, including, without limitation, a sale,
assignment or transfer to another public or private company, or approve a merger
or consolidation of the Partnership.
ARTICLE XII
GENERAL PROVISIONS
12.01 NOTICES. All communications required or permitted under this
Agreement shall be in writing and shall be deemed to have been given when
delivered personally or upon deposit in the United States mail, registered,
postage prepaid return receipt requested, to the Partners at the addresses set
forth in EXHIBIT A attached hereto; provided, however, that any Partner may
specify a different address by notifying the General Partner in writing of such
different address. Notices to the Partnership shall be delivered at or mailed to
its specified office.
12.02 SURVIVAL OF RIGHTS. Subject to the provisions hereof limiting
transfers, this Agreement shall be binding upon and inure to the benefit of the
Partners and the Partnership and their respective legal representatives,
successors, transferees and assigns.
12.03 ADDITIONAL DOCUMENTS. Each Partner agrees to perform all further
acts and execute, swear to, acknowledge and deliver all further documents which
may be reasonable, necessary, appropriate or desirable to carry out the
provisions of this Agreement or the Act.
12.04 SEVERABILITY. If any provision of this Agreement shall be declared
illegal, invalid, or unenforceable in any jurisdiction, then such provision
shall be deemed to be severable from this Agreement (to the extent permitted by
law) and in any event such illegality, invalidity or unenforceability shall not
affect the remainder hereof.
49
12.05 ENTIRE AGREEMENT. This Agreement and exhibits attached hereto
constitute the entire Agreement of the Partners and supersede all prior written
agreements and prior and contemporaneous oral agreements, understandings and
negotiations with respect to the subject matter hereof.
12.06 PRONOUNS AND PLURALS. When the context in which words are used in
the Agreement indicates that such is the intent, words in the singular number
shall include the plural and the masculine gender shall include the neuter or
female gender as the context may require.
12.07 HEADINGS. The Article headings or sections in this Agreement are for
convenience only and shall not be used in construing the scope of this Agreement
or any particular Article.
12.08 COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original copy and all of
which together shall constitute one and the same instrument binding on all
parties hereto, notwithstanding that all parties shall not have signed the same
counterpart.
12.09 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware.
12.10 GUARANTY BY COMPANY. The Company unconditionally and irrevocably
guarantees to the Limited Partners the performance by the General Partner and
GTA LP of the respective obligations of the General Partner and GTA LP under
this Agreement. This guaranty is exclusively for the benefit of the Limited
Partners and shall not extend to the benefit of any creditor of the Partnership.
(Remainder of Page Intentionally Left Blank)
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IN WITNESS WHEREOF, the parties hereto have hereunder affixed their
signatures to this First Amended and Restated Agreement of Limited Partnership,
all as of the ________ day of ____________, 1996.
GENERAL PARTNER
GTA GP, INC., a
Maryland corporation
By: ______________________
Its: ______________________
LIMITED PARTNERS
GTA LP, INC., a
Maryland corporation
By: ______________________
Its: ______________________
[to be added]
Golf Trust of America, Inc., a Maryland corporation hereby executes this
Agreement for the sole purpose of being bound by the provisions of Sections
7.01(c), 8.06, 8.07 and 12.10 hereof.
GOLF TRUST OF AMERICA, INC., a
Maryland corporation
By: ______________________
Its: ______________________
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EXHIBIT A
SCHEDULE OF PARTNERS,
NUMBER OF PARTNERSHIP UNITS AND
THE AGREED VALUE OF NON-CASH CAPITAL CONTRIBUTIONS
1
EXHIBIT B
INITIAL GOLF COURSES
EXHIBIT C
NOTICE OF EXERCISE OF REDEMPTION RIGHT
In accordance with Section 8.05 of the First Amended and Restated Agreement of
Limited Partnership (the "Agreement") of Golf Trust of America, L.P., the
undersigned hereby irrevocably (i) presents for redemption ________ units of
limited partnership interest ("Units") in Golf Trust of America, L.P. (the
"Partnership") in accordance with the terms of the Agreement and the "Redemption
Right" referred to in Section 8.05 thereof, (ii) surrenders such Units and all
right, title and interest therein, (iii) surrenders herewith any certificate or
other writing evidencing the Units (and requests that any Units so evidenced
that are not redeemed be evidenced by the issuance of a new certificate or
writing) and (iv) directs that the "Cash Amount" or "REIT Shares Amount" (as
determined by the General Partner), as defined in the Agreement, deliverable
upon exercise of the Redemption Rights be delivered to the address specified
below, and if REIT Shares are to be delivered, such REIT Shares be registered or
placed in the name(s) and at the address(es) specified below.
Dated: ______________
Name of Limited Partner:
___________________________
(Signature of Limited Partner)
___________________________
(Mailing Address)
___________________________
(City) (State) (Zip Code)
Signature Guaranteed by:
___________________________
If REIT Shares are to be issued, issue to:
___________________________
___________________________
___________________________
Please insert social security or identifying number:
___________________________
