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Exhibit 10.1
AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
PROLOGIS XXXXXX, X.X.
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TABLE OF CONTENTS
PAGE
ARTICLE I DEFINED TERMS..................................................... 1
ARTICLE II ORGANIZATIONAL MATTERS............................................ 11
Section 2.1.Organization; Application of Act............................... 11
Section 0.0.Xxxx........................................................... 11
Section 2.3.Registered Office and Agent; Principal Office.................. 11
Section 2.4.Term........................................................... 11
ARTICLE III PURPOSE........................................................... 12
Section 3.1.Purpose and Business........................................... 12
Section 3.2.Powers......................................................... 12
ARTICLE IV CAPITALIZATION.................................................... 12
Section 0.0.Xxxxxxx Contributions of the Partners.......................... 12
Section 4.2.Issuances of Additional Partnership Interests.................. 13
Section 0.0.Xx Preemptive Rights........................................... 14
Section 0.0.Xxxxxxx Accounts of the Partners............................... 14
ARTICLE V DISTRIBUTIONS..................................................... 16
Section 5.1.Requirement and Characterization of Distributions.............. 16
Section 5.2.Amounts Withheld............................................... 17
Section 5.3.Distributions Upon Liquidation................................. 17
ARTICLE VI ALLOCATIONS....................................................... 17
Section 6.1.Allocations For Capital Account Purposes....................... 17
Section 6.2.Special Allocation Rules....................................... 18
Section 6.3.Allocations for Tax Purposes................................... 20
ARTICLE VII MANAGEMENT AND OPERATIONS OF BUSINESS............................. 21
Section 0.0.Xxxxxxxxxx..................................................... 21
Section 7.2.Certificate of Limited Partnership............................. 24
Section 7.3.Restrictions on General Partner's Authority.................... 25
Section 7.4.Responsibility for Expenses.................................... 26
Section 7.5.Outside Activities of the General Partner and its Affiliates... 26
Section 7.6.Transactions with Affiliates................................... 27
Section 7.7.Indemnification................................................ 28
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TABLE OF CONTENTS
(continued)
PAGE
Section 7.8.Liability of the General Partner............................... 30
Section 7.9.Other Matters Concerning the General Partner................... 31
Section 7.10.Title to Partnership Assets................................... 31
Section 0.00.Xxxxxxxx by Third Parties..................................... 32
ARTICLE VIII RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS........................ 32
Section 8.1.Limitation of Liability........................................ 32
Section 0.0.Xxxxxxxxxx of Business......................................... 32
Section 8.3.Outside Activities of Limited Partners......................... 32
Section 8.4.Representations, Warranties and Covenants of ProLogis to
Limited Partners................................................... 33
Section 8.5.Rights of Limited Partners Relating to the Partnership......... 33
Section 8.6.Redemption of Partnership Units................................ 34
ARTICLE IX BOOKS, RECORDS, ACCOUNTING AND REPORTS............................ 36
Section 9.1.Records and Accounting......................................... 36
Section 9.2.Fiscal Year.................................................... 36
Section 9.3.Reports........................................................ 36
ARTICLE X TAX MATTERS....................................................... 36
Section 10.1.Preparation of Tax Returns.................................... 36
Section 00.0.Xxx Elections................................................. 36
Section 00.0.Xxx Matters Partner........................................... 37
Section 10.4.Organizational Expenses....................................... 37
Section 10.5.Withholding................................................... 37
ARTICLE XI TRANSFERS AND WITHDRAWALS......................................... 38
Section 11.1.Transfer...................................................... 38
Section 11.2.Transfer of ProLogis' Partnership Interest.................... 39
Section 00.0.Xxxxxxx Partners' Rights to Transfer.......................... 40
Section 11.4.Substituted Limited Partners.................................. 41
Section 11.5.Assignees..................................................... 42
Section 11.6.General Provisions............................................ 42
Section 11.7.Transfer Rights............................................... 43
ARTICLE XII ADMISSION OF PARTNERS............................................. 43
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TABLE OF CONTENTS
(continued)
PAGE
Section 12.1.Admission of Successor General Partner........................ 43
Section 12.2.Admission of Additional Limited Partners...................... 43
Section 12.3.Amendment of Agreement and Certificate........................ 44
ARTICLE XIII DISSOLUTION AND LIQUIDATION....................................... 44
Section 13.1.Dissolution................................................... 44
Section 13.2.Winding Up.................................................... 44
Section 13.3.Regulatory Compliance......................................... 45
Section 13.4.Rights of Limited Partners.................................... 46
Section 13.5.Notice of Dissolution......................................... 46
Section 13.6.Cancellation of Certificate of Limited Partnership............ 46
Section 13.7.Reasonable Time for Winding-Up................................ 46
Section 13.8.Liability of Liquidator....................................... 46
ARTICLE XIV AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS...................... 47
Section 14.1.Amendments.................................................... 47
Section 14.2.Meetings...................................................... 48
ARTICLE XV REGISTRATION RIGHTS............................................... 49
Section 15.1.Shelf Registration Under the Securities Act................... 49
Section 15.2.Registration.................................................. 50
Section 15.3.Restrictions on Public Sale by Holders of Registrable
Securities......................................................... 53
Section 15.4.Indemnification; Contribution................................. 54
Section 15.5.Rule 144 Sales................................................ 57
ARTICLE XVI GENERAL PROVISIONS................................................ 57
Section 16.1.Addresses and Notice.......................................... 57
Section 16.2.Titles and Captions........................................... 58
Section 16.3.Pronouns and Plurals.......................................... 58
Section 16.4.Further Action................................................ 58
Section 16.5.Binding Effect................................................ 58
Section 16.6.Waiver of Partition........................................... 58
Section 16.7.Entire Agreement.............................................. 58
Section 16.8.Securities Law Provisions..................................... 58
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TABLE OF CONTENTS
(continued)
PAGE
Section 16.9.Remedies Not Exclusive........................................ 59
Section 16.10.Time......................................................... 59
Section 16.11.Creditors.................................................... 59
Section 16.12.Waiver....................................................... 59
Section 16.13.Execution Counterparts....................................... 59
Section 16.14.Applicable Law............................................... 59
Section 16.15.Invalidity of Provisions..................................... 59
Section 16.16.Limitation of Liability...................................... 59
Section 00.00.Xx Rights as Shareholders.................................... 59
Section 16.18.Dividends on Shares.......................................... 59
ARTICLE XVII POWER OF ATTORNEY................................................. 60
Section 17.1.Power of Attorney............................................. 60
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AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
PROLOGIS XXXXXX, X.X.
THIS AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP (this
"Agreement"), dated as of August 4, 2004, of ProLogis Xxxxxx, X.X. (the
"Partnership") is entered into by and among ProLogis Xxxxxx XX LLC (the "General
Partner"), a Delaware limited liability company, ProLogis, a Maryland real
estate investment trust ("ProLogis"), as a Limited Partner, and the Person(s)
whose names are set forth on Exhibit A as attached hereto, as the Limited
Partners, together with any other Persons who become Partners in the Partnership
as provided herein.
WHEREAS, the Partnership has been formed by the filing of a certificate of
limited partnership with the Secretary of State of the State of Delaware as of
April 30, 2004; and
WHEREAS, the Partners wish to amend and restate the Agreement of Limited
Partnership of the Partnership dated as of April 30, 2004 (the "Original
Agreement") and in connection therewith have agreed to enter into this Agreement
to provide for the continuation of the Partnership as a limited partnership
under the Act (as hereafter defined) and on the terms provided herein.
NOW, THEREFORE, in consideration of the premises, the mutual promises and
agreements herein made, and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto hereby
agree as follows:
ARTICLE I
DEFINED TERMS
The following definitions shall be for all purposes, unless otherwise
clearly indicated to the contrary, applied to the terms used in this Agreement.
"Accrual Account" means an account maintained with respect to each Class A
Limited Partnership Unit to which shall be credited on a monthly basis an
amount, calculated like interest at a per annum rate equal to the Prime Rate (as
said rate may be adjusted from time to time), plus one percentage point, on the
average daily balance of such Class A Limited Partnership Unit's Unpaid
Distribution Account, and from which shall be debited the amount of any
distributions pursuant to Section 5.1(i) and Section 13.2(a)(3) to the extent
attributable to the Accrual Account. The amount to be credited to each Accrual
Account shall be cumulative and shall compound annually if unpaid.
Notwithstanding the foregoing, there shall be no further credits to the Accrual
Account with respect to a Class A Limited Partnership Unit from and after the
date that there has been a Step-Up Event (as defined in the following sentence)
with respect to such Class A Limited Partnership Unit. As used herein, a Step-Up
Event shall be deemed to have occurred with respect to any Class A Limited
Partnership Unit when the basis of such Class A Limited Partnership Unit for
federal income tax purposes is adjusted to "fair market value" by reason of a
transfer for value, death, or otherwise.
"Act" means the Delaware Revised Uniform Limited Partnership Act, as it
may be amended from time to time, and any successor to such statute.
"Additional Limited Partner" means a Person admitted to the Partnership as
a Limited Partner pursuant to Section 4.2(a) and who is shown as such on the
books and records of the Partnership.
"Adjusted Capital Account" means the Capital Account maintained for each
Partner as of the end of each Partnership taxable year (a) increased by any
amounts which such Partner is obligated to restore pursuant to any provision of
this Agreement or is deemed to be obligated to restore pursuant to Regulations
Section 1.704-1(b)(2)(ii)(c) or the penultimate sentences of Regulations
Sections 1.704-2(g)(1) and 1.704-2(i)(5) and (b) decreased by the items
described in Regulations Sections 1.704-1(b)(2)(ii)(d)(4),
1.704-1(b)(2)(ii)(d)(5), and 1.704-1(b)(2)(ii)(d)(6). The foregoing definition
of Adjusted Capital Account is intended to comply with the provisions of
Regulations Section 1.704-1(b)(2)(ii)(d) and shall be interpreted consistently
therewith.
"Adjusted Capital Account Deficit" means, with respect to any Partner, the
deficit balance, if any, in such Partner's Adjusted Capital Account as of the
end of the relevant Partnership taxable year.
"Adjusted Property" means any property the Carrying Value of which has
been adjusted pursuant to Section 4.4(d).
"Affiliate" means, with respect to any Person, any Person directly or
indirectly controlling, controlled by or under common control with such Person.
For purposes of this definition "control" when used with respect to any Person
means the power to direct the management and policies of such Person directly or
indirectly, whether through the ownership of voting securities by contract or
otherwise; the terms "affiliated," "controlling" and "controlled" shall have
meanings correlative to the foregoing. For purposes of clarity, a Person whose
shares are registered on a public securities exchange or who is controlled by a
Person (other than the General Partner) whose shares are so registered is not an
Affiliate of the General Partner.
"Agreed Value" means (a) in the case of any Contributed Property as of the
time of its contribution to the Partnership, the 704(c) Value of such property
or other consideration, reduced by any liabilities either assumed by the
Partnership upon such contribution or to which such property is subject when
contributed pursuant to Section 752 of the Code, and (b) in the case of any
property distributed to a Partner by the Partnership, the Partnership's Carrying
Value of such property at the time such property is distributed, reduced by any
indebtedness either assumed by such Partner upon such distribution or to which
such property is subject at the time of distribution as determined under Section
752 of the Code and the regulations thereunder.
"Agreement" means this Amended and Restated Agreement of Limited
Partnership, as it may be amended, supplemented or restated from time to time.
"Assignee" means a Person to whom one or more Partnership Units have been
transferred in a manner permitted under this Agreement, but who has not become a
Substituted Limited Partner, and who has the rights set forth in Section 11.5.
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"Available Cash" means with respect to any period for which such
calculation is being made:
(a) all cash revenues and funds received by the Partnership from
whatever source (excluding the proceeds of any Capital Contribution) plus
the amount of any reduction (including, without limitation, a reduction
resulting because the General Partner determines such amounts are no
longer necessary) in reserves of the Partnership, which reserves are
referred to in clause (b)(iv) below;
(b) less the sum of the following (except to the extent made with
the proceeds of any Capital Contribution):
(i) all interest, principal and other debt payments made
during such period by the Partnership,
(ii) all cash expenditures of whatever kind (including capital
expenditures) made by the Partnership during such period,
(iii) investments in any entity (including loans made thereto)
that are not otherwise described in clauses (b)(i) or (ii), and
(iv) the amount of any increase in reserves established during
such period which the General Partner determines is necessary or
appropriate in the exercise of its good faith judgment.
Notwithstanding the foregoing, Available Cash shall not include any cash
received or reductions in reserves, or take into account any disbursements made
or reserves established, after commencement of the dissolution and liquidation
of the Partnership.
"Book-Tax Disparities" means, with respect to any item of Contributed
Property or Adjusted Property, as of the date of any determination, the
difference between the Carrying Value of such Contributed Property or Adjusted
Property and the adjusted basis thereof for federal income tax purposes as of
such date.
"Business Day" means any day except a Saturday, Sunday or other day on
which commercial banks in New York City, New York are authorized or required by
law to close.
"Capital Account" means the Capital Account maintained for a Partner
pursuant to Section 4.4.
"Capital Contribution" means, with respect to any Partner, any cash, cash
equivalents or the Agreed Value of Contributed Property which such Partner
contributes or is deemed to contribute to the Partnership pursuant to Section
4.1 or 4.2.
"Carrying Value" means (a) with respect to a Contributed Property, the
704(c) Value of such property reduced (but not below zero) by all Depreciation
with respect to such property charged to the Partners' Capital Accounts, (b)
with respect to an Adjusted Property, the fair market value of such property
immediately following the latest adjustment to such property as
3
provided in Section 4.4(d) reduced (but not below zero) by all Depreciation with
respect to such property charged to the Partners' Capital Accounts, and (c) with
respect to any other Partnership property, the adjusted basis of such property
for federal income tax purposes, all as of the time of determination. The
Carrying Value of any property shall be adjusted from time to time in accordance
with Section 4.4(d), and to reflect changes, additions or other adjustments to
the Carrying Value for dispositions and acquisitions of Partnership properties,
as deemed appropriate by the General Partner.
"Cash Amount" means an amount of cash equal to the number of Partnership
Units that are the subject of a Notice of Redemption, multiplied by the Unit
Adjustment Factor, multiplied by the Value of a Share that the Partner
delivering the Notice of Redemption would have been entitled to receive under
Section 8.6.
"Certificate" means the Certificate of Limited Partnership relating to the
Partnership filed in the office of the Secretary of State of the State of
Delaware, as amended from time to time in accordance with the terms hereof and
the Act.
"Class A Limited Partnership Interest" means a Partnership Interest held
by a Limited Partner other than ProLogis or an Affiliate of ProLogis in the
Partnership representing a fractional part of the Partnership Interests of all
Limited Partners other than ProLogis or such Affiliate of ProLogis 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. A Class A
Limited Partnership Interest may be expressed as a number of Partnership Units.
"Code" means the Internal Revenue Code of 1986, as amended. Any reference
herein to a specific section or sections of the Code shall be deemed to include
a reference to any corresponding provision of future law.
"Common Share Rights" has the meaning set forth in Section 5.1.
"Consent" means the consent of or vote in favor by a Partner with respect
to a Partnership or General Partner action given in accordance with Article XIV.
"Contributed Property" means each property or other asset (but excluding
cash), in such form as may be permitted by the Act contributed or deemed
contributed to the Partnership. Once the Carrying Value of a Contributed
Property is adjusted pursuant to Section 4.4(d), such property shall no longer
constitute a Contributed Property for purposes of Section 4.4(d), but shall be
deemed an Adjusted Property for such purposes. The Contributed Properties as of
the date of this Agreement are set forth on Exhibit E hereto.
"Debt" means, as to any Person, as of any date of determination, (a) all
indebtedness of such Person for money borrowed or for the deferred purchase
price of property or services, which purchase price is due more than six months
after the date of placing such property in service or taking delivery and title
thereto or the completion of such services; (b) all amounts owed by such Person
to banks or other Persons in respect of reimbursement obligations under letters
of credit, surety bonds and other similar instruments guaranteeing payment or
other
4
performance of obligations by such Person; (c) all indebtedness for money
borrowed or for the deferred purchase price of property or services secured by
any lien on any property owned by such Person, to the extent attributable to
such Person's interest in such property, even though such Person has not assumed
or become liable for the payment thereof; and (d) lease obligations of such
Person which, in accordance with generally accepted accounting principles,
should be capitalized.
"Depreciation" means for each fiscal year or other period, an amount equal
to the federal income tax depreciation, amortization, or other cost recovery
deduction allowable with respect to an asset for such year or other period,
except that if the Carrying Value of an asset differs from its adjusted basis
for federal income tax purposes at the beginning of such year or other period,
Depreciation shall be an amount which bears the same ratio to such beginning
Carrying Value as the federal income tax depreciation, amortization, or other
cost recovery deduction for such year bears to such beginning adjusted tax
basis; provided, however, that if the federal income tax depreciation,
amortization, or other cost recovery deduction for such year is zero,
Depreciation shall be determined with reference to such beginning Carrying Value
using any reasonable method selected by the General Partner, provided that the
General Partner shall determine Depreciation consistently with the method used
in respect of real property owned directly by ProLogis.
"Event of Dissolution" has the meaning set forth in Section 13.1.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"General Partner" shall initially mean ProLogis Xxxxxx XX LLC and
thereafter shall mean such Person that holds the General Partnership Interest in
accordance with the terms hereof.
"General Partnership Interest" means a Partnership Interest held by a
General Partner that is a general partnership interest. A General Partnership
Interest may be expressed as a number of Partnership Units.
"Incapacity" or "Incapacitated" means, (a) as to any individual Partner,
death, total physical disability or entry by a court of competent jurisdiction
adjudicating him incompetent to manage his Person or his estate; (b) as to any
corporation which is a Partner, the filing of a certificate of dissolution, or
its equivalent, for the corporation or the revocation of its charter; (c) as to
any partnership which is a Partner, the dissolution and commencement of winding
up of the partnership; (d) as to any estate which is a Partner, the distribution
by the fiduciary of the estate's entire interest in the Partnership; (e) as to
any trustee of a trust which is a Partner, the termination of the trust (but not
the substitution of a new trustee); or (f) as to any Partner, the bankruptcy of
such Partner. For purposes of this definition, bankruptcy of a Partner shall be
deemed to have occurred when the Partner (i) makes an assignment for the benefit
of creditors, (ii) files a voluntary petition in bankruptcy, (iii) is adjudged a
bankrupt or insolvent, or has entered against him an order of relief in any
bankruptcy or insolvency proceeding, (iv) files a petition or answer seeking for
himself any reorganization, arrangement, composition, readjustment, liquidation,
dissolution or similar relief under any statute, law or regulation, (v) files an
answer or other pleading admitting or failing to contest the material
allegations of a petition filed against him in any proceeding of this nature,
(vi) seeks, consents to or acquiesces in
5
the appointment of a trustee, receiver or liquidator of the Partner or of all or
any substantial part of his properties, (vii) the Partner is the debtor in any
proceeding seeking reorganization, arrangement, composition, readjustment,
liquidation, dissolution or similar relief under any statute, law or regulation,
which has not been dismissed within one hundred twenty (120) days after the
commencement thereof, (viii) the appointment without the Partner's consent or
acquiescence of a trustee, receiver or liquidator has not been vacated or stayed
within ninety (90) days after the appointment or such appointment is not vacated
within ninety (90) days after the expiration of any such stay.
"Indemnitee" means (a) any Person made a party to a proceeding by reason
of his status as (i) the General Partner or an Affiliate of the General Partner,
(ii) a Limited Partner or (iii) a director or officer of the Partnership, the
General Partner or an Affiliate of the General Partner or a Partner, and (b)
such other Persons (including Affiliates of the General Partner or the
Partnership) acting in good faith on behalf of the Partnership as determined by
the General Partner in its good faith judgment.
"IRS" means the Internal Revenue Service, which administers the internal
revenue laws of the United States.
"Limited Partner" means any Person named as a Limited Partner in Exhibit A
attached hereto, as such Exhibit may be amended from time to time, or any
Substituted Limited Partner or Additional Limited Partner, in such Person's
capacity as a Limited Partner in the Partnership.
"Limited Partnership Interest" means a Partnership Interest held by a
Limited Partner in the Partnership representing a fractional part of the
Partnership Interests of all Limited Partners 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. A Limited Partnership Interest may
be expressed as a number of Partnership Units.
"Liquidator" has the meaning set forth in Section 13.2.
"Net Income" means for any taxable period, the excess, if any, of the
Partnership's items of income and gain for such taxable period over the
Partnership's items of loss and deduction for such taxable period. The items
included in the calculation of Net Income shall be determined in accordance with
Section 4.4. Once an item of income, gain, loss or deduction that has been
included in the initial computation of Net Income is subjected to the special
allocation rules in Section 6.2, Net Income or the resulting Net Loss, whichever
the case may be, shall be recomputed without regard to such item.
"Net Loss" means for any taxable period, the excess, if any, of the
Partnership's items of loss and deduction for such taxable period over the
Partnership's items of income and gain for such taxable period. The items
included in the calculation of Net Loss shall be determined in accordance with
Section 4.4. Once an item of income, gain, loss or deduction that has been
included in the initial computation of Net Loss is subjected to the special
allocation rules in Section 6.2, Net Loss or the resulting Net Income, whichever
the case may be, shall be recomputed without regard to such item.
6
"Nonrecourse Built-in Gain" means, with respect to any Contributed
Properties or Adjusted Properties that are subject to a mortgage or negative
pledge securing a Nonrecourse Liability, the amount of any taxable gain that
would be allocated to the Partners pursuant to Section 6.3(b) if such properties
were disposed of in a taxable transaction in full satisfaction of such
liabilities and for no other consideration.
"Nonrecourse Deductions" has the meaning set forth in Regulations Section
1.704-2(b)(1), and the amount of Nonrecourse Deductions for a Partnership
taxable year shall be determined in accordance with the rules of Regulations
Section 1.704-2(c).
"Nonrecourse Liability" has the meaning set forth in Regulations Section
1.752-1(a)(2).
"Notice of Redemption" means the Notice of Redemption substantially in the
form of Exhibit B to this Agreement.
"Partner" means a General Partner or a Limited Partner, and "Partners"
means the General Partner and the Limited Partners.
"Partner Minimum Gain" means an amount, with respect to each Partner
Nonrecourse Debt, equal to the Partnership Minimum Gain that would result if
such Partner Nonrecourse Debt were treated as a Nonrecourse Liability,
determined in accordance with Regulations Section 1.704-2(i)(3).
"Partner Nonrecourse Debt" has the meaning set forth in Regulations
Section 1.704-2(b)(4).
"Partner Nonrecourse Deductions" has the meaning set forth in Regulations
Section 1.704-2(i)(2), and the amount of Partner Nonrecourse Deductions with
respect to a Partner Nonrecourse Debt for a Partnership Year shall be determined
in accordance with the rules of Regulations Section 1.704-2(i)(2).
"Partnership" means the limited partnership formed under the Act and
pursuant to this Agreement, and any successor thereto.
"Partnership Interest" means an ownership interest in the Partnership
representing a Capital Contribution 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. A Partnership Interest may be expressed as a number of
Partnership Units.
"Partnership Minimum Gain" has the meaning set forth in Regulations
Section 1.704-2(b)(2), and the amount of Partnership Minimum Gain, as well as
any net increase or decrease in Partnership Minimum Gain, for a Partnership
taxable year shall be determined in accordance with the rules of Regulations
Section 1.704-2(d).
"Partnership Record Date" means the record date established by the General
Partner for the distribution of Available Cash pursuant to Section 5.1, which
record date shall be the same as the record date established by the General
Partner for a dividend to its shareholders.
7
"Partnership Units" means a fractional, undivided share of the Partnership
Interests of all Partners issued pursuant to Sections 4.1 and 4.2, in such
number as set forth on Exhibit A attached hereto, as such Exhibit may be amended
from time to time in accordance with the terms of this Agreement.
"Partnership Year" means the fiscal year of the Partnership, which shall
be the calendar year.
"Percentage Interest" means, as to a Partner, its interest in the
Partnership, expressed as a percentage, as determined by dividing the
Partnership Units owned by such Partner by the total number of Partnership Units
then outstanding and as specified in Exhibit A attached hereto, as such Exhibit
may be amended from time to time.
"Person" means an individual or a corporation, partnership, trust,
unincorporated organization, association or other entity.
"Prime Rate" means, for any day, the rate of interest announced from time
to time by Bank of America, N.A. (or any successor bank thereto) as its prime
commercial lending rate.
"Proceeding" has the meaning set forth in Section 7.8.
"Protected Partner Agreements" means the agreements set forth in Exhibit D
to this Agreement.
"Recapture Income" means any gain recognized by the Partnership (computed
without regard to any adjustment required by Section 734 or Section 743 of the
Code) upon the disposition of any property or asset of the Partnership, which
gain is characterized as ordinary income because it represents the recapture of
deductions previously taken with respect to such property or asset.
"Redeeming Partner" has the meaning set forth in Section 8.6.
"Redemption Right" has the meaning set forth in Section 8.6.
"Regulations" means the Income Tax Regulations promulgated under the Code,
as such regulations may be amended from time to time (including corresponding
provisions of succeeding regulations).
"REIT" means a real estate investment trust under Section 856 of the Code.
"Representative" means the General Partner, a trustee or officer of the
General Partner, or any Person serving at the request of the General Partner or
the Partnership as a director, officer, partner, venturer, proprietor, trustee,
employee, agent or similar functionary of another entity.
"Residual Gain" or "Residual Loss" means any item of gain or loss, as the
case may be, of the Partnership recognized for federal income tax purposes
resulting from a sale, exchange or other disposition of Contributed Property or
Adjusted Property, to the extent such item of gain or
8
loss is not allocated pursuant to Section 6.3(b)(1)(i) or 6.3(b)(2)(i) to
eliminate Book-Tax Disparities.
"Securities Act" means the Securities Act of 1933, as amended.
"704(c) Value" of any Contributed Property means the fair market value of
such property or other consideration at the time of contribution as determined
by the General Partner in its discretion using such reasonable method of
valuation as it may adopt; provided that the 704(c) value of the Contributed
Properties contributed on the date hereof and the indirect interest in the
properties of Keystone Operating Partnership, L.P. received in liquidation of
Keystone Operating Partnership, L.P. as of the date hereof shall be as set forth
on Schedule I and agreed to by the General Partner and the Limited Partners.
"Shares" means the common shares of beneficial interest, $0.01 par value
per share, of ProLogis or, in the event there is a Successor, the common or
equivalent equity interests of the Successor.
"Shares Amount" means a number of Shares equal to the number of
Partnership Units offered for redemption by a Redeeming Partner, multiplied by
the Unit Adjustment Factor.
"Specified Redemption Date" means the tenth Business Day after receipt by
the General Partner of a Notice of Redemption.
"Subsidiary" means, with respect to any Person, any corporation or other
entity of which a majority of (a) the voting power of the voting equity
securities or (b) the outstanding equity interests is owned, directly or
indirectly, by such Person.
"Substituted Limited Partner" means a Person who is admitted as a Limited
Partner to the Partnership pursuant to Section 11.4.
"Successor" means any Person succeeding to ProLogis pursuant to a
Transaction; provided, however, that, if the person succeeding to ProLogis
pursuant to a Transaction is a direct or indirect subsidiary of an entity which
has publicly traded common securities, ProLogis agrees to cause such public
entity to be, and such public entity shall be, the "Successor" solely for
purposes of the definitions of "Shares" and "Unit Adjustment Factor".
"Transaction" means any merger, consolidation, or other combination by
ProLogis with or into another Person or sale by ProLogis of all or substantially
all of its assets, or any reclassification, or recapitalization or change of
outstanding Shares (other than a change in par value, or from par value to no
par value, or as a result of a subdivision or combination as described in the
definition of "Unit Adjustment Factor").
"Unit Adjustment Factor" means initially 1.0; provided that in the event
that ProLogis (i) declares or pays a dividend on its outstanding Shares in
Shares or makes a distribution to all holders of its outstanding Shares in
Shares, (ii) subdivides its outstanding Shares, or (iii) combines its
outstanding Shares into a smaller number of Shares, the Unit Adjustment Factor
shall be adjusted by multiplying the Unit Adjustment Factor then in effect by a
fraction, the numerator of which shall be the number of Shares issued and
outstanding on the record date
9
for such dividend, distribution, subdivision or combination (assuming for such
purposes that such dividend, distribution, subdivision or combination has
occurred as of such time), and the denominator of which shall be the actual
number of Shares (determined without the above assumption) issued and
outstanding on the record date for such dividend, distribution, subdivision or
combination. Any adjustment to the Unit Adjustment Factor shall become effective
immediately after the effective date of such event retroactive to the record
date, if any, for such event; provided, further, that immediately subsequent to
any Transaction under which ProLogis (or, if the Unit Adjustment Factor has
previously been adjusted under this proviso, the applicable Successor) is not
the surviving party or in which ProLogis survives but becomes the subsidiary of
another Person, the Unit Adjustment Factor shall be adjusted by multiplying it
by the number of Shares of the Successor to which the holders of Shares of
ProLogis (or, if applicable, Shares of the Successor) are entitled to receive
for each such Share in connection with such Transaction.
"Unpaid Distribution Account" means an account maintained with respect to
each Class A Limited Partnership Unit to which shall be credited on a quarterly
basis, but only to the extent not distributed currently in accordance with
Section 5.1(iii), an amount per Class A Limited Partnership Unit (multiplied by
the Unit Adjustment Factor) equal to the dividend per Share paid by ProLogis for
such quarter, and from which shall be debited the amount of any distributions
pursuant to Section 5.1(ii) and Section 13.2(a)(3) to the extent attributable to
the Unpaid Distribution Account. For purposes hereof, a Limited Partner's Unpaid
Distribution Account will not be credited with respect to a quarter in which
such Partner redeems its Units under Section 8.6 but only to the extent it
receives a dividend for such quarter on Shares resulting from such redemption.
"Unrealized Gain" attributable to any item of Partnership property means,
as of any date of determination, the excess, if any, of (a) the fair market
value of such property (as determined under Section 4.4(d)) as of such date,
over (b) the Carrying Value of such property (prior to any adjustment to be made
pursuant to Section 4.4(d)) as of such date.
"Unrealized Loss" attributable to any item of Partnership property means,
as of any date of determination, the excess, if any, of (a) the Carrying Value
of such property (prior to any adjustment to be made pursuant to Section 4.4(d))
as of such date, over (b) the fair market value of such property (as determined
under Section 4.4(d)) as of such date.
"Value" means, with respect to a Share, the average of the daily market
price for the ten (10) consecutive trading days immediately preceding the date
of determination. The market price for each such trading day shall be: (a) if
the Shares are listed or admitted to trading on any securities exchange or the
NASDAQ-National Market System, the closing price, regular way, on such day, or
if no such sale takes place on such day, the average of the closing bid and
asked prices on such day, (b) if the Shares are not listed or admitted to
trading on any securities exchange or the NASDAQ-National Market System, the
last reported sale price on such day or, if no sale takes place on such day, the
average of the closing bid and asked prices on such day, as reported by a
reliable quotation source designated by the General Partner, or (c) if the
Shares are not listed or admitted to trading on any securities exchange or the
NASDAQ-National Market System 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
10
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 ten (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 (10) days prior to the
date in question, the Value of the Shares shall be determined by the board of
trustees of ProLogis acting in good faith on the basis of such quotations and
other information as it considers, in its reasonable judgment, appropriate.
ARTICLE II
ORGANIZATIONAL MATTERS
Section 2.1. Organization; Application of Act. The General Partner and the
Limited Partners do hereby continue the Partnership as a limited partnership
according to all of the terms and provisions of this Agreement and otherwise in
accordance with the Act. The General Partner is the sole general partner and the
Limited Partners are the sole limited partners of the Partnership. The
Partnership is a limited partnership pursuant to the provisions of the Act and
upon the terms and conditions set forth in this Agreement. Except as expressly
provided herein to the contrary, the rights and obligations of the Partners and
the administration and termination of the Partnership shall be governed by the
Act. No Partner has any interest in any Partnership property, and the
Partnership Interest of each Partner shall be personal property for all
purposes.
Section 2.2. Name. The name of the Partnership is "ProLogis Xxxxxx, X.X."
The Partnership's business may be conducted under any other name or names deemed
advisable by the General Partner, including the name of the General Partner or
any Affiliate thereof. The words "Limited Partnership," "L.P.," "Ltd." or
similar words or letters shall be included in the Partnership's name where
necessary for the purposes of complying with the laws of any jurisdiction that
so requires. The General Partner in its sole and absolute discretion may change
the name of the Partnership at any time and from time to time and shall promptly
notify the Limited Partners of such change; provided, that the name of the
Partnership may not be changed to include the name, or any variant thereof, of
any Limited Partner without the written consent of that Limited Partner.
Section 2.3. Registered Office and Agent; Principal Office. The address of
the registered office of the Partnership in the State of Delaware is located at
c/o Corporation Service Company, 0000 Xxxxxxxxxxx Xxxx, Xxxxx 000,, Xxxxxxxxxx,
Xxxxxxxx 00000, and the registered agent for service of process on the
Partnership in the State of Delaware at such registered office is Corporation
Service Company. The principal office of the Partnership is located at 00000
Xxxx 00xx Xxxxx, Xxxxxx, Xxxxxxxx 00000, or such other place as the General
Partner may from time to time designate by notice to the Limited Partners. The
Partnership may maintain offices at such other place or places within or outside
the State of Delaware as the General Partner deems advisable.
Section 2.4. Term. The term of the Partnership shall commence on the date
hereof and shall continue until it is dissolved pursuant to the provisions of
Article XIII or as otherwise provided by law.
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ARTICLE III
PURPOSE
Section 3.1. Purpose and Business. The purpose and nature of the business
to be conducted by the Partnership is (a) to conduct any business that may be
lawfully conducted by a limited partnership organized pursuant to the Act and in
connection therewith to sell or otherwise dispose of Partnership assets, (b) 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 (c) to do anything necessary or incidental to the
foregoing which, in each case, is not in breach of this Agreement; provided,
however, that each of the foregoing clauses (a), (b) and (c) shall be limited
and conducted in such a manner as to permit the sole member of the General
Partner at all times to be classified as a REIT, unless the sole member of the
General Partner provides notice to the Partnership that it intends to cease or
has ceased to qualify as a REIT.
Section 3.2. Powers. The Partnership is empowered to do any and all acts
and things necessary, appropriate, proper, advisable, incidental to or
convenient for the furtherance and accomplishment of the purposes and business
described herein and for the protection and benefit of the Partnership;
provided, that the Partnership shall not take any action which, in the judgment
of the General Partner, in its sole and absolute discretion, (a) could adversely
affect the ability of the sole member of the General Partner to continue to
qualify as a REIT, (b) could subject the sole member of the General Partner to
any additional taxes under Section 857 or Section 4981 of the Code or (c) could
violate any law or regulation of any governmental body or agency having
jurisdiction over the sole member of the General Partner or its securities,
unless the sole member of the General Partner shall have given its prior,
specific written consent to such action (or inaction).
ARTICLE IV
CAPITALIZATION
Section 4.1. Capital Contributions of the Partners.
(a) Partnership Units. The Partners shall own Partnership Units in
the amounts set forth in Exhibit A and shall have a Percentage Interest in
the Partnership as set forth in Exhibit A, which Percentage Interest shall
be adjusted in Exhibit A from time to time by the General Partner to the
extent necessary to reflect accurately redemptions, exchanges, Capital
Contributions, the issuance of additional Partnership Units, or similar
events having an effect on a Partner's Percentage Interest. Partnership
Units held by the General Partner shall be deemed to be the General
Partnership Interest.
(b) Additional Capital Contributions or Assessments. No Partner
shall be assessed or, except for any such amounts which a Limited Partner
may be obligated to repay under Section 10.5 and, except as provided in
Section 7.1, be required to contribute additional funds or other property
to the Partnership. If and as any Partner makes additional Capital
Contributions to the Partnership, each such Partner shall receive
additional Partnership Units as provided for in Section 4.2 and such
Partner's Capital Account shall be adjusted as provided in Section 4.4.
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(c) Return of Capital Contributions. Except as otherwise expressly
provided herein, the Capital Contribution of each Partner will be returned
to that Partner only in the manner and to the extent provided in Article V
and Article XIII, and no Partner may withdraw from the Partnership or
otherwise have any right to demand or receive the return of its Capital
Contribution to the Partnership (as such), except as specifically provided
herein. Under circumstances requiring a return of any Capital
Contribution, no Partner shall have the right to receive property other
than cash, except as specifically provided herein. No Partner shall be
entitled to interest on any Capital Contribution or Capital Account
notwithstanding any disproportion therein as between the Partners. Except
as specifically provided herein, the General Partner shall not be liable
for the return of any portion of the Capital Contribution of any Limited
Partner, and the return of such Capital Contributions shall be made solely
from Partnership assets.
(d) Liability of Limited Partners. No Limited Partner shall have any
further personal liability to contribute money to, or in respect of, the
liabilities or the obligations of the Partnership, nor shall any Limited
Partner be personally liable for any obligations of the Partnership,
except as otherwise provided in Section 4.1(b) or in the Act. No Limited
Partner shall be required to make any contributions to the capital of the
Partnership other than its Capital Contribution.
Section 4.2. Issuances of Additional Partnership Interests.
(a) General. Except as otherwise provided in this Agreement, the
General Partner is hereby authorized to cause the Partnership from time to
time to issue additional Partnership Units to Partners or 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,
additional Partnership Units or other Partnership Interests in one or more
classes, one or more series of any such classes, with such designations,
preferences and relative, participating, optional or other special rights,
powers and duties, including rights, powers and duties senior to Limited
Partnership Interests, all as shall be determined by the General Partner
in its sole and absolute discretion subject to Delaware law, including,
without limitation, (i) the allocations of items of Partnership income,
gain, loss, 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 Units or other Partnership Interests shall be
issued to the General Partner, ProLogis or any Affiliate of the General
Partner or ProLogis unless either: (1) the additional Partnership
Interests or Partnership Units are issued to all Partners in proportion to
their respective Percentage Interests, or (2) the General Partner,
ProLogis or such Affiliate makes an additional Capital Contribution to the
Partnership in an amount equal to the fair market value of the additional
Partnership Units or Partnership Interests, as determined in good faith by
the General Partner.
(b) Additional Capital Contributions by the General Partner. The
General Partner may make Capital Contributions to the Partnership at such
times and in such amounts as the General Partner, in its sole and absolute
discretion, may determine advisable, but
13
under no circumstances shall the General Partner be obligated to make any
such Capital Contributions.
Section 4.3. No Preemptive Rights. Except as may be specifically provided
in this Agreement, no Person shall have any preemptive, preferential or other
similar right with respect to (a) additional Capital Contributions or loans to
the Partnership or (b) issuance or sale of any Partnership Units.
Section 4.4. Capital Accounts of the Partners.
(a) General. The Partnership shall maintain for each Partner a
separate Capital Account in accordance with the rules of Regulations
Section 1.704-1(b)(2)(iv) and subject to such Regulations Section, such
Capital Account shall be increased by (i) the amount of all Capital
Contributions made by such Partner to the Partnership pursuant to this
Agreement and (ii) all items of Partnership income and gain (including
income and gain exempt from tax) computed in accordance with Section
4.4(b) and allocated to such Partner pursuant to Sections 6.1 and 6.2, and
decreased by (x) the amount of cash or Agreed Value of all actual and
deemed distributions of cash or property made to such Partner pursuant to
this Agreement and (y) all items of Partnership deduction and loss
computed in accordance with Section 4.4(b) and allocated to such Partner
pursuant to Sections 6.1 and 6.2.
(b) Income, Gains, Deductions, and Losses. For purposes of computing
the amount of any item of income, gain, loss or deduction to be reflected
in the Partners' Capital Accounts, unless otherwise specified in this
Agreement, the determination, recognition and classification of any such
item shall be the same as its determination, recognition and
classification for federal income tax purposes determined in accordance
with Section 703(a) of the Code (for this purpose all items of income,
gain, loss or deduction required to be stated separately pursuant to
Section 703(a)(1) of the Code shall be included in taxable income or
loss), with the following adjustments:
(1) Except as otherwise provided in Regulations Section
1.704-1(b)(2)(iv)(m), the computation of all items of income, gain,
loss and deduction shall be made without regard to any election
under Section 754 of the Code which may be made by the Partnership;
provided, that the amounts of any adjustments to the adjusted bases
of the assets of the Partnership made pursuant to Section 734 of the
Code as a result of the distribution of property by the Partnership
to a Partner (to the extent that such adjustments have not
previously been reflected in the Partners' Capital Accounts) shall
be reflected in the Capital Accounts of the Partners in the manner
and subject to the limitations prescribed in Regulations Section
1.704-1(b)(2)(iv)(m).
(2) The computation of all items of income, gain, loss and
deduction shall be made without regard to the fact that items
described in Sections 705(a)(1)(B) or 705(a)(2)(B) of the Code are
not includable in gross income or are neither currently deductible
nor capitalized for federal income tax purposes.
14
(3) Any income, gain or loss attributable to the taxable
disposition of any Partnership property shall be determined as if
the adjusted basis of such property as of such date of disposition
were equal in amount to the Partnership's Carrying Value with
respect to such property as of such date.
(4) In lieu of the depreciation, amortization, and other cost
recovery deductions taken into account in computing such taxable
income or loss, there shall be taken into account Depreciation for
such fiscal year.
(5) In the event the Carrying Value of any Partnership asset
is adjusted pursuant to Section 4.4(d), the amount of any Unrealized
Gain or Unrealized Loss as a result of any such adjustment shall be
taken into account as gain or loss from the disposition of such
asset.
(6) Any items specially allocated under Section 6.3 shall not
be taken into account.
(c) Transfers of Partnership Units. A transferee of a Partnership
Unit shall succeed to a pro rata portion of the Capital Account of the
transferor. The Capital Accounts of such reconstituted Partnership shall
be maintained in accordance with the principles of this Section 4.4.
(d) Unrealized Gains and Losses.
(1) Consistent with the provisions of Regulations Section
1.704-1(b)(2)(iv)(f), and as provided in Section 4.4(d)(2), the
Carrying Values of all Partnership assets shall be adjusted upward
or downward to reflect any Unrealized Gain or Unrealized Loss
attributable to such Partnership property, as of the times of the
adjustments provided in Section 4.4(d)(2), as if such Unrealized
Gain or Unrealized Loss had been recognized on an actual sale of
each such property and allocated pursuant to Section 6.1 and Section
6.2.
(2) Such adjustments shall be made as of the following times:
(i) immediately prior to the acquisition of an additional interest
in the Partnership by any new or existing Partner in exchange for
more than a de minimis Capital Contribution; (ii) immediately prior
to the distribution by the Partnership to a Partner of more than a
de minimis amount of property as consideration for an interest in
the Partnership; and (iii) immediately prior to the liquidation of
the Partnership or the General Partner's interest in the Partnership
within the meaning of Regulations Section 1.704-1(b)(2)(ii)(g);
provided, however, that adjustments pursuant to clauses (i) and (ii)
above shall be made only if such adjustments are necessary or
appropriate to reflect the relative economic interests of the
Partners in the Partnership.
(3) In accordance with Regulations Section
1.704-1(b)(2)(iv)(e) the Carrying Value of Partnership assets
distributed in kind shall be adjusted upward
15
or downward to reflect any Unrealized Gain or Unrealized Loss
attributable to such Partnership property, as of the time any such
asset is distributed.
(4) In determining such Unrealized Gain or Unrealized Loss the
aggregate cash amount and fair market value of all Partnership
assets (including cash or cash equivalents) shall be determined by
the General Partner using such reasonable method of valuation as it
may adopt, or in the case of a liquidating distribution pursuant to
Article XIII, be determined and allocated by the Liquidator using
such reasonable methods of valuation as it may adopt. The General
Partner, or the Liquidator, as the case may be, shall allocate such
aggregate value among the assets of the Partnership (in such manner
as it determines in its reasonable discretion to arrive at a fair
market value for individual properties).
(e) Modification by General Partner. The provisions of this
Agreement relating to the maintenance of Capital Accounts are intended to
comply with Regulations Section 1.704-1(b), and shall be interpreted and
applied in a manner consistent with such Regulations. In the event the
General Partner shall determine that it is prudent to (i) modify the
manner in which the Capital Accounts, or any debits or credits thereto
(including, without limitation, debits or credits relating to liabilities
which are secured by contributed or distributed property or which are
assumed by the Partnership, the General Partner, or any Limited Partners)
are computed in order to comply with such Regulations or (ii) (A) make any
adjustments that are necessary or appropriate to maintain equality between
the Capital Accounts of the Partners and the amount of Partnership capital
reflected on the Partnership's balance sheet, as computed for book
purposes, in accordance with Regulations Section 1.704-1(b)(2)(iv)(q), and
(B) make any appropriate modifications in the event unanticipated events
might otherwise cause this Agreement not to comply with Regulations
Section 1.704-1(b), the General Partner may make such modification;
provided, that the General Partner gives prompt written notice to each
Limited Partner of such modification and such modification will not have a
material effect on the amounts distributable to any Person pursuant to
Article V or Article XIII.
ARTICLE V
DISTRIBUTIONS
Section 5.1. Requirement and Characterization of Distributions. The
General Partner shall make distributions quarterly in an aggregate amount equal
to 100% of Available Cash generated by the Partnership during such quarter to
the Partners who are Partners on the Partnership Record Date with respect to
such quarter in the following order of priority and to the extent of such
Available Cash, subject to the rights and preferences of any Partnership
Interests issued pursuant to Section 4.2 (after obtaining the requisite consent
of the Class A Limited Partners): (i) first, to each Limited Partner to the
extent of and in proportion to the then unreturned balance of the Accrual
Account maintained with respect to each Partnership Unit held by such Limited
Partner; (ii) second, to each Limited Partner to the extent of and in proportion
to the then unreturned balance of the Unpaid Distribution Account maintained
with respect to each Partnership Unit held by such Limited Partner; (iii) third,
to each Limited Partner to the extent of and in proportion to an amount per
Class A Limited Partnership Unit (multiplied by the Xxxx
00
Xxxxxxxxxx Xxxxxx) held by such Limited Partner equal to the dividend per Share
paid by ProLogis for such quarter; and (iv) fourth, the balance, if any, of the
Available Cash for such quarter shall be distributed one percent (1%) to the
General Partner in respect of its Partnership Units and ninety-nine percent
(99%) to ProLogis in respect of its Limited Partnership Units, provided,
however, that in the event ProLogis issues by dividend to all holders of Shares
rights, options, warrants or convertible or exchangeable securities entitling
the shareholders to subscribe for or purchase Shares, or any other securities or
property (collectively, the "Common Share Rights"), then ProLogis agrees that
each Limited Partner holding Class A Limited Partnership Units (except to the
extent such rights have already been reflected in an adjustment to the Unit
Adjustment Factor) shall also be entitled to receive such Common Share Rights
that a holder of that number of Shares would be entitled to receive.
Notwithstanding anything to the contrary contained herein, in no event may a
Partner receive a distribution of Available Cash with respect to a Partnership
Unit if such Partner is entitled to receive a duplicative dividend from ProLogis
with respect to a Share for which such Partnership Unit has been redeemed or
exchanged.
Section 5.2. Amounts Withheld. All amounts withheld pursuant to the Code
or any provisions of any state or local tax law and Section 10.5 with respect to
any allocation, payment or distribution to the General Partner, or any Limited
Partners or Assignees shall be promptly paid, solely out of funds of the
Partnership, by the General Partner to the appropriate taxing authority and
treated as amounts distributed to the General Partner or such Limited Partners,
or Assignees pursuant to Section 5.1 for all purposes under this Agreement.
Section 5.3. Distributions Upon Liquidation. Proceeds from any sale or
other disposition of all or substantially all of the assets of the Partnership
or a related series of transactions that, taken together, results in the sale or
other disposition of all or substantially all of the assets of the Partnership
shall be distributed to the Partners in accordance with Section 13.2.
ARTICLE VI
ALLOCATIONS
Section 6.1. Allocations For Capital Account Purposes. For purposes of
maintaining the Capital Accounts and in determining the rights of the Partners
among themselves, the Partnership's items of income, gain, loss and deduction
(computed in accordance with Section 4.4) shall be allocated among the Partners
for each taxable year (or portion thereof) as provided herein below.
(a) Net Income. After giving effect to the special allocations set
forth in Section 6.2, Net Income shall be allocated in the following order
of priority: (i) first, to the General Partner until the aggregate amount
of Net Income allocated to the General Partner pursuant to this Section
6.1(a)(i) is equal to the aggregate amount of Excess Losses, if any,
allocated to the General Partner pursuant to the second sentence of
Section 6.1(b); (ii) second, to the Partners that have been previously
allocated Net Losses pursuant to Section 6.1(b)(ii) in amounts and among
such Partners in the reverse order (and in corresponding amounts) of all
Net Losses previously allocated to them until the aggregate amount of Net
Income allocated pursuant to this Section 6.1(a)(ii) equals the aggregate
amount of Net Losses theretofore allocated pursuant to Section 6.1(b)(ii);
17
(iii) third, to each Limited Partner holding Class A Limited Partnership
Units until each such Limited Partner has been allocated pursuant to this
Section 6.1(a)(i), on a cumulative basis, Net Income equal to the
distributions paid to such Limited Partner with respect to its Class A
Limited Partnership Units; and then (iv) fourth, one percent (1%) to the
General Partner and ninety-nine percent (99%) to ProLogis.
(b) Net Losses. After giving effect to the special allocations set
forth in Section 6.2, Net Losses shall be allocated in the following order
of priority: (i) first, one percent (1%) to the General Partner and
ninety-nine percent (99%) to ProLogis to the extent of any prior
allocations of Net Income to the General Partner and ProLogis pursuant to
Section 6.1(a)(iv); and then (ii) second, to the Partners in accordance
with their respective Percentage Interests; provided, that Net Losses
shall not be allocated to any Limited Partner pursuant to this Section
6.1(b) to the extent that such allocation would cause such Limited Partner
to have an Adjusted Capital Account Deficit at the end of such taxable
year (or increase any existing Adjusted Capital Account Deficit). All Net
Losses in excess of the limitations set forth in the preceding sentence of
this Section 6.1(b) ("Excess Losses") shall be allocated to the General
Partner.
(c) Nonrecourse Liabilities. For purposes of Regulations Section
1.752-3(a), the Partners agree that Nonrecourse Liabilities of the
Partnership in excess of the sum of (i) the amount of Partnership Minimum
Gain and (ii) the total amount of Nonrecourse Built-in Gain shall be
allocated among the Partners to the extent that any remaining
"built-in-gain" with respect to the Partnership's properties exceeds the
Nonrecourse Built-in-Gain (which will have the effect of increasing the
allocation of Nonrecourse Liabilities to the Partners who would be
allocated built-in-gain under Section 704(c)).
(d) Recapture Income. Any gain allocated to the Partners upon the
sale or other taxable disposition of any Partnership asset shall to the
extent possible, after taking into account other required allocations of
gain pursuant to Section 6.2, be characterized as Recapture Income in the
same proportions and to the same extent as such Partners have been
allocated any deductions directly or indirectly giving rise to the
treatment of such gains as Recapture Income.
Section 6.2. Special Allocation Rules. Notwithstanding any other provision
of the Agreement, the following special allocations shall be made in the
following order:
(a) Minimum Gain Chargeback. Notwithstanding any other provisions of
Article VI, if there is a net decrease in Partnership Minimum Gain during
any Partnership Year, each Partner shall be specially allocated items of
Partnership income and gain for such year (and, if necessary, subsequent
years) in an amount equal to such Partner's share of the net decrease in
Partnership Minimum Gain, as determined under Regulations Section
1.704-2(g). Allocations pursuant to the previous sentence shall be made in
proportion to the respective amounts required to be allocated to each
Partner pursuant thereto. The items to be so allocated shall be determined
in accordance with Regulations Section 1.704-2(f)(6). This Section 6.2(a)
is intended to comply with the minimum gain chargeback requirements in
Regulations Section 1.704-2(f) and shall be interpreted consistently
therewith.
18
(b) Partner Minimum Gain Chargeback. Notwithstanding any other
provision of Article VI (except Section 6.2(a)), if there is a net
decrease in Partner Minimum Gain attributable to a Partner Nonrecourse
Debt during any Partnership fiscal year, each Partner who has a share of
the Partner Minimum Gain attributable to such Partner Nonrecourse Debt,
determined in accordance with Regulations Section 1.704-2(i)(5), shall be
specially allocated items of Partnership income and gain for such year
(and, if necessary, subsequent years) in an amount equal to such Partner's
share of the net decrease in Partner Minimum Gain attributable to such
Partner Nonrecourse Debt, determined in accordance with Regulations
Section 1.704-2(i)(5). Allocations pursuant to the previous sentence shall
be made in proportion to the respective amounts required to be allocated
to each Partner pursuant thereto. The items to be so allocated shall be
determined in accordance with Regulations Section 1.704-2(i)(4). This
Section 6.2(b) is intended to comply with the minimum gain chargeback
requirement in such Section of the Regulations and shall be interpreted
consistently therewith.
(c) Qualified Income Offset. In the event any Limited Partner
unexpectedly receives any adjustments, allocations or distributions
described in Regulations Sections 1.704-1(b)(2)(ii)(d)(4),
1.704-1(b)(2)(ii)(d)(5), or 1.704-1(b)(2)(ii)(d)(6), as a result of which
such Partner has an Adjusted Capital Account Deficit, items of Partnership
income and gain shall be specially allocated to such Partner in an amount
and manner sufficient to eliminate, to the extent required by the
Regulations, its Adjusted Capital Account Deficit created by such
adjustments, allocations or distributions as quickly as possible; provided
that an allocation pursuant to this Section 6.2(c) shall be made only if
and to the extent that such Limited Partner would have an Adjusted Capital
Account Deficit after all allocations provided for in this Article VI have
been tentatively made as if Section 6.2(c) was not in the Agreement.
(d) Nonrecourse Deductions. Nonrecourse Deductions for any taxable
period shall be allocated to the Partners in accordance with their
respective Percentage Interests. If the General Partner determines in its
good faith discretion that the Partnership's Nonrecourse Deductions must
be allocated in a different ratio to satisfy the safe harbor requirements
of the Regulations promulgated under Section 704(b) of the Code, the
General Partner is authorized, upon notice to the Limited Partners, to
revise the prescribed ratio to the numerically closest ratio which does
satisfy such requirements.
(e) Partner Nonrecourse Deductions. Any Partner Nonrecourse
Deductions for any fiscal year shall be specially allocated to the Partner
who bears the economic risk of loss with respect to the Partner
Nonrecourse Debt to which such Partner Nonrecourse Deductions are
attributable in accordance with Regulations Section 1.704-2(i)(2).
(f) Code Section 754 Adjustments. To the extent an adjustment to the
adjusted tax basis of any Partnership asset pursuant to Section 734(b) or
743(b) of the Code is required, pursuant to Regulations Section
1.704-1(b)(2)(iv)(m), to be taken into account in determining Capital
Accounts, the amount of such adjustment to the Capital Accounts shall be
treated as an item of gain (if the adjustment increases the basis of the
asset) or loss (if the adjustment decreases such basis), and such item of
gain or loss shall be
19
specially allocated to the Partners in a manner consistent with the manner
in which their Capital Accounts are required to be adjusted pursuant to
such Section of the Regulations.
(g) Curative Allocation. The allocations set forth in Section 6.2
(the "Regulatory Allocations") are intended to comply with certain
regulatory requirements, including the requirements of Regulations
Sections 1.704-1(b) and 1.704-2. Notwithstanding the provisions of Section
6.1, the Regulatory Allocations shall be taken into account by the General
Partner in allocating other items of income, gain, loss and deduction
among the Partners so that, to the extent possible, the net amount of such
allocations of other items and the Regulatory Allocations to each Partner
shall be equal to the net amount that would have been allocated to each
such Partner if the Regulatory Allocations had not occurred.
(h) Allocations in Year of Liquidation. Notwithstanding Section 6.1,
for any taxable year in which the Partnership liquidates or sells all or
substantially all of its assets or, if necessary, the taxable year
preceding such event, any Net Income (or, if necessary, items thereof)
shall first be allocated to each Limited Partner holding Class A Limited
Partnership Units in an amount equal to the sum of (A) the then unreturned
balance of the Accrual Account maintained with respect to each Partnership
Unit held by such Limited Partner, plus (B) the then unreturned balance of
the Unpaid Distribution Account maintained with respect to each
Partnership Unit held by such Limited Partner, plus (C) the amount per
Class A Limited Partnership Unit (multiplied by the Unit Adjustment
Factor) held by such Limited Partner equal to the dividend per Share paid
by ProLogis for such quarter. Any remaining Net Income shall be allocated
in the manner set forth in Section 6.1(a), except that no additional Net
Income shall be allocated to the Limited Partners holding Class A Limited
Partnership Units.
Section 6.3. Allocations for Tax Purposes.
(a) General. Except as otherwise provided in this Section 6.3, for
federal income tax purposes, each item of income, gain, loss and deduction
shall be allocated among the Partners in the same manner as its
correlative item of "book" income, gain, loss or deduction is allocated
pursuant to Sections 6.1 and 6.2.
(b) To Eliminate Book-Tax Disparities. In an attempt to eliminate
Book-Tax Disparities attributable to a Contributed Property or Adjusted
Property, items of income, gain, loss, and deduction shall be allocated
for federal income tax purposes among the Partners as follows:
(1) (i) In the case of a Contributed Property, such items
attributable thereto shall be allocated among the Partners
consistent with the principles of Section 704(c) of the Code that
takes into account the variation between the 704(c) Value of such
property and its adjusted basis at the time of contribution; and
(ii) any item of Residual Gain or Residual Loss attributable to a
Contributed Property shall be allocated among the Partners in the
same manner as its correlative item of "book" gain or loss is
allocated pursuant to Sections 6.1 and 6.2.
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(2) (i) In the case of an Adjusted Property, such items shall
(A) first, be allocated among the Partners in a manner consistent
with the principles of Section 704(c) of the Code to take into
account the variation between the Carrying Value of such property
and its 704(c) Value and (B) second, in the event such property was
originally a Contributed Property, be allocated among the Partners
in a manner consistent with Section 6.3(b)(1)(i); and (ii) any item
of Residual Gain or Residual Loss attributable to an Adjusted
Property shall be allocated among the Partners in the same manner as
its correlative item of "book" gain or loss is allocated pursuant to
Sections 6.1 and 6.2.
(3) All other items of income, gain, loss and deduction shall
be allocated among the Partners in the same manner as their
correlative item of "book" gain or loss is allocated pursuant to
Sections 6.1 and 6.2.
(c) Power of General Partner to Elect Method. To the extent
Regulations promulgated pursuant to Section 704(c) of the Code permit a
partnership to utilize alternative methods to eliminate Book-Tax
Disparities, the General Partner shall have the authority to elect the
method used by the Partnership; provided that with respect to properties
that are the subject of a Protected Partner Agreement the Partnership
shall use the method set forth in the applicable Protected Partner
Agreement to account for Book-Tax Disparities with respect to such
property.
ARTICLE VII
MANAGEMENT AND OPERATIONS OF BUSINESS
Section 7.1. Management.
(a) Powers of General Partner. Except as otherwise expressly
provided in this Agreement, all management powers over the business and
affairs of the Partnership are exclusively vested in the General Partner,
and no Limited Partner shall have any right to participate in or exercise
control or management power over the business and affairs of the
Partnership. Notwithstanding anything to the contrary in this Agreement,
the General Partner may not be removed by the Limited Partners with or
without cause. In addition to the powers now or hereafter granted a
general partner of a limited partnership under applicable law or which are
granted to the General Partner under any other provision of this
Agreement, the General Partner shall have full power and authority to do
all things deemed necessary or desirable by it to conduct the business of
the Partnership, to exercise all powers set forth in Section 3.2 and to
effectuate the purposes set forth in Section 3.1, including, without
limitation:
(1) the making of any expenditures, the lending or borrowing
of money (including, without limitation, making prepayments on loans
and borrowing money to permit the Partnership to make distributions
to its Partners in such amounts as will permit the sole member of
the General Partner (so long as the sole member of the General
Partner desires to qualify as a REIT) to avoid the payment of any
federal income tax (including, for this purpose, any excise tax
pursuant to Section 4981 of the Code) and to make distributions to
its
21
shareholders sufficient to permit the sole member of the General
Partner to maintain REIT status), the assumption or guarantee of, or
other contracting for, indebtedness and other liabilities, the
issuance of evidences of indebtedness (including the securing of
same by mortgage, deed of trust or other lien or encumbrance on the
Partnership's assets) and the incurring of any obligations it deems
necessary for the conduct of the activities of the Partnership;
(2) the making of tax, regulatory and other filings, or
rendering of periodic or other reports to governmental or other
agencies having jurisdiction over the business or assets of the
Partnership;
(3) the acquisition, disposition, conveyance, mortgage,
pledge, encumbrance, hypothecation or exchange of any assets of the
Partnership or the merger or other combination of the Partnership
with or into another entity on such terms as the General Partner
deems proper, which powers shall include, without limitation, the
power to pledge any or all of the assets of the Partnership to
secure a loan or other financing to the General Partner or any
Affiliate (the proceeds of which are not required to be contributed
or loaned to the Partnership);
(4) the use of the assets of the Partnership (including,
without limitation, cash on hand) for any purpose consistent with
the terms of this Agreement and on any terms it sees fit, including,
without limitation, the financing of the conduct of the operations
of the General Partner or its sole member, the Partnership or any of
the Partnership's Subsidiaries, the lending of funds to other
Persons (including the Partnership's Subsidiaries) and the repayment
of obligations of the Partnership and its Subsidiaries and any other
Person in which it has an equity investment and the making of
capital contributions to its Subsidiaries, the holding of any real,
personal and mixed property of the Partnership in the name of the
Partnership or in the name of a nominee or trustee (subject to
Section 7.10), the creation, by grant or otherwise, of easements or
servitudes, and the performance of any and all acts necessary or
appropriate to the operation of the Partnership assets including,
but not limited to, applications for rezoning, objections to
rezoning, constructing, altering, improving, repairing, renovating,
rehabilitating, razing, demolishing or condemning any improvements
or property of the Partnership;
(5) the negotiation, execution, and performance of any
contracts, conveyances or other instruments (including with
Affiliates of the Partnership to the extent provided in Section 7.6)
that the General Partner considers useful or necessary to the
conduct of the Partnership's operations or the implementation of the
General Partner's powers under this Agreement, including, without
limitation, the execution and delivery of leases on behalf of or in
the name of the Partnership (including the lease of Partnership
property for any purpose and without limit as to the term thereof,
whether or not such term (including renewal terms) shall extend
beyond the date of termination of the Partnership and whether or not
the portion so leased is to be occupied by the lessee or, in turn,
subleased in whole or in part to others);
22
(6) the opening and closing of bank accounts, the investment
of Partnership funds in securities, certificates of deposit and
other instruments, and the distribution of Partnership cash or other
Partnership assets in accordance with this Agreement;
(7) the selection and dismissal of employees of the
Partnership or the General Partner (including, without limitation,
employees having titles such as "president," "vice president,"
"secretary" and "treasurer"), and the engagement and dismissal of
agents, outside attorneys, accountants, engineers, appraisers,
consultants, contractors and other professionals on behalf of the
General Partner or the Partnership and the determination of their
compensation and other terms of employment or hiring;
(8) the maintenance of insurance for the benefit of the
Partnership and the Partners as it deems necessary or appropriate;
(9) the formation of, or acquisition of an interest in, and
the contribution of 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 contribution of property to, its Subsidiaries
and any other Person in which it has an equity investment from time
to time);
(10) the control of any matters affecting the rights and
obligations of the Partnership, including the conduct of litigation
and the incurring of legal expense and the settlement of claims and
litigation, and the indemnification of any Person against
liabilities and contingencies to the extent permitted by law;
(11) the undertaking of any action in connection with the
Partnership's direct or indirect investment in its Subsidiaries or
any other Person (including, without limitation, the contribution or
loan of funds by the Partnership to such Persons);
(12) except as otherwise expressly required in this Agreement,
the determination of the fair market value of any Partnership
property distributed in kind using such reasonable method of
valuation as it may adopt; and
(13) the execution, acknowledgment and delivery of any and all
documents and instruments to effectuate any or all of the foregoing.
Notwithstanding anything in this Agreement to the contrary (including
without limitation the foregoing provisions of Section 7.1), if pursuant
to the powers granted it under this Agreement, the General Partner (x)
uses, takes or borrows Partnership assets (including without limitation a
mortgage, pledge, encumbrance or hypothecation of Partnership assets to
secure indebtedness of the General Partner or an Affiliate of the General
Partner) for other than an exclusive Partnership purpose or (y) causes the
Partnership to make a loan to the General Partner or to an Affiliate of
the General Partner or causes the Partnership to make an investment in any
other entity (in either case other than a loan to
23
or investment in the Partnership or an Affiliate of the Partnership), then
the General Partner shall indemnify and hold harmless the Partnership for
any loss, cost, expense or damage as a result of any such transaction
(including without limitation, loss of Partnership income and, without
duplication, loss in annual cash proceeds sufficient to pay the amounts
distributable pursuant to Section 5.1(i)-(iii) or payable pursuant to
Section 8.6(d)).
(b) No Approval Required for Above Powers. Each of the Limited
Partners agrees that the General Partner is authorized to execute, deliver
and perform the above-mentioned agreements and transactions on behalf of
the Partnership without any further act, approval or vote of the Partners,
notwithstanding any other provision of this Agreement (except where
Consent of the Limited Partners is expressly required herein), the Act or
any applicable law, rule or regulation. The execution, delivery or
performance by the General Partner or the Partnership of any agreement
authorized or permitted under this Agreement shall not constitute a breach
by the General Partner of any duty that the General Partner may owe the
Partnership or the Limited Partners or any other Persons under this
Agreement or of any duty stated or implied by law or equity.
(c) Insurance. At all times from and after the date hereof, the
General Partner may cause the Partnership to obtain and maintain casualty,
liability and other insurance on the properties of the Partnership and
liability insurance for the Indemnitees hereunder; provided, that in
maintaining liability insurance for the Indemnitees hereunder, the
Partnership shall be allocated the cost thereof on a fair and equitable
basis as determined by the General Partner.
(d) Working Capital Reserves. At all times from and after the date
hereof, the General Partner may cause the Partnership to establish and
maintain working capital reserves in such amounts as the General Partner,
in its sole and absolute discretion, deems appropriate and reasonable from
time to time.
(e) No Obligation to Consider Tax Consequences to Limited Partners.
Other than complying with the terms of the Protected Partner Agreements
and Section 8.5(e) hereof, in exercising its authority under this
Agreement, the General Partner may, but shall be under no obligation to,
take into account the tax consequences to any Partner of any action taken
by it and the General Partner and the Partnership shall not have liability
to a Limited Partner holding Class A Limited Partnership Units under any
circumstances as a result of an income tax liability incurred by such
Limited Partner as a result of an action (or inaction) by the General
Partner pursuant to its authority under this Agreement.
Section 7.2. Certificate of Limited Partnership. To the extent that such
action is determined by the General Partner to be reasonable and necessary or
appropriate, the General Partner shall file amendments to and restatements of
the Certificate and do all the things to maintain the Partnership as a limited
partnership (or a partnership in which the limited partners have limited
liability) under the laws of the State of Delaware and each other jurisdiction
in which the Partnership may elect to do business or own property. Within five
Business Days after filing, the General Partner will deliver or mail a copy of
the Certificate, as it may be amended or restated from time to time, to each
Limited Partner. The General Partner shall use all reasonable
24
efforts to cause to be filed such other certificates or documents as may be
reasonable and necessary or appropriate for the formation, continuation,
qualification and operation of a limited partnership (or a partnership in which
the Limited Partners have limited liability) in the State of Delaware and any
other jurisdiction in which the Partnership may elect to do business or own
property.
Section 7.3. Restrictions on General Partner's Authority. The General
Partner may not, without the Consent of all of the Limited Partners, take any
action in contravention of this Agreement including, without limitation:
(a) take any action that would make it impossible to carry on the
ordinary business of the Partnership, except as otherwise permitted in
this Agreement (provided that this restriction shall not be deemed to
restrict the sale, lease, transfer or disposition of all or substantially
all of the Partnership's assets or the merger or combination of the
Partnership with or into another entity, in each case as may otherwise be
permitted herein);
(b) possess Partnership property, or assign any rights in specific
Partnership property, for other than a Partnership purpose except as
otherwise permitted in this Agreement;
(c) admit a Person as a Partner, except as otherwise permitted in
this Agreement;
(d) perform any act that would subject a Limited Partner to
liability as a general partner in any jurisdiction or any other liability
except as permitted herein or under the Act;
(e) take any action or enter into any agreement that would conflict
with the ability of the Partnership to perform its obligations under
Section 8.6, conflict with the ability of the General Partner to exercise
its option under Section 8.6, or conflict with the ability of any Limited
Partner to exercise its rights under Section 8.6; or
(f) take any action which would cause the Partnership to become
taxable as a corporation for federal income tax purposes.
In addition, the Partnership may not, and the General Partner may not
cause the Partnership to, without the Consent of holders of at least
two-thirds of the Class A Limited Partnership Units:
(a) make a general assignment for the benefit of creditors or
appoint or acquiesce in the appointment of a custodian, receiver or
trustee for all or any part of the assets of the Partnership;
(b) institute any proceeding for bankruptcy on behalf of the
Partnership;
(c) act or cause the taking of any action with respect to the
dissolution and winding up of the Partnership or an election to continue
the Partnership or to continue the business of the Partnership;
25
(d) issue additional Limited Partnership Interests or Limited
Partnership Units (other than to Affiliates of the General Partner in
accordance with Section 4.2), authorize or create, or increase the
authorized or issued amount of, any Senior Units, or reclassify any equity
or equity-like security issued or to be issued by the Partnership into a
Senior Unit, or create, authorize or issue any obligations or security
convertible into or evidencing the right to purchase any Senior Units; or
(e) exchange equity securities with, consolidate with, merge into or
with, or convey, transfer or lease all or substantially all of its assets,
to any corporation or other entity where such transaction would adversely
affect the contractual protections of the Class A Limited Partnership
Units (including those contained in Exhibit D); provided, however, that
for purposes of this clause (e), the occurrence of an equity securities
exchange, merger, consolidation or a conveyance, transfer or lease of all
or substantially all of the Partnership's assets shall not be deemed to
adversely affect such contractual protections, so long as (w) Class A
Limited Partnership Interests (or securities of the surviving entity
corresponding thereto, in the case of an equity securities exchange,
merger or consolidation) remain outstanding with the terms thereof
unchanged, except as may be necessary to reflect the occurrence of such
transaction, (x) the surviving entity assumes the obligations of the
Partnership with respect to Class A Limited Partnership Interests, and (y)
such equity securities exchange, merger, consolidation, conveyance,
transfer or lease does not result in breach of Section 8.5(f).
Section 7.4. Responsibility for Expenses.
(a) No Compensation. Except as provided in this Section 7.4 and
elsewhere in this Agreement (including the provisions of Articles V and VI
regarding distributions, payments, and allocations to which it may be
entitled), the General Partner shall not be compensated for its services
as general partner of the Partnership.
(b) Responsibility for Ownership and Operation Expenses. The
Partnership shall be responsible for and shall pay all expenses relating
to the Partnership's ownership of its assets, and the operation of, or for
the benefit of, the Partnership, and the General Partner shall be
reimbursed on a monthly basis, or such other basis as the General Partner
may determine in its sole and absolute discretion, for all expenses it
incurs relating to the Partnership's ownership of its assets and the
operation of, or for the benefit of, the Partnership. Such reimbursements
shall be in addition to any reimbursement to the General Partner pursuant
to Section 10.3(c) and as a result of indemnification pursuant to Section
7.7.
(c) Responsibility for Organization Expenses. The General Partner
shall be responsible for and shall pay all expenses incurred relating to
the organization of the Partnership.
Section 7.5. Outside Activities of the General Partner and its Affiliates.
(a) General. Nothing contained in this Agreement shall prevent or
prohibit the General Partner or any officer, director, employee, agent,
trustee, Affiliate or shareholder
26
of the General Partner from having business interests and engaging in
business activities in addition to those relating to the Partnership
(including, without limitation, owning and operating real estate and
incurring indebtedness in its own name, whether or not the proceeds of
such indebtedness are used for the benefit of the Partnership), including,
without limitation, engaging in other business interests and activities in
direct or indirect competition with the Partnership. Neither the
Partnership nor any Partners shall have any right by virtue of this
Agreement or the partnership relationship established hereby in or to such
other ventures or activities or to the income or proceeds derived
therefrom, and the pursuit of such ventures, even if competitive with the
business of the Partnership (including, without limitation, causing
tenants to transfer from one of the Partnership's properties to other
properties in which the General Partner or any Affiliate of the General
Partner has an interest, directly or indirectly, without compensation to
the Partnership, or taking other actions for the benefit of the General
Partner or any Affiliate of the General Partner that are detrimental to
the Partnership), shall not be deemed wrongful or improper. Neither the
General Partner nor any Affiliate of the General Partner shall be
obligated to present any particular opportunity to the Partnership even if
such opportunity is of a character which, if presented to the Partnership,
could be taken by the Partnership, and, regardless of whether or not such
opportunity is competitive with the Partnership, the General Partner or
any Affiliate of the General Partner shall have the right to take for its
own account (individually or as a trustee, partner or fiduciary), or to
recommend to others, any such particular opportunity. The General Partner
and any Affiliate of the General Partner may acquire Limited Partnership
Interests and , except as otherwise provided in Article XIV, shall be
entitled to exercise all rights of a Limited Partner relating to such
Limited Partnership Interests.
(b) Sale and Purchase of Shares. ProLogis may issue additional
Shares or rights, options, warrants or convertible or exchangeable
securities containing the right to subscribe for or purchase Shares ("New
Securities"), or purchase or redeem Shares, at such times and in such
amounts and for such consideration as ProLogis, in its sole and absolute
discretion, determines. Under no circumstances shall ProLogis be obligated
to contribute to the Partnership all or any part of the proceeds from any
issuance of such New Securities or from the exercise of rights contained
in such New Securities, and ProLogis may, in its sole and absolute
discretion, retain all such proceeds, to be used by ProLogis as it
determines, in its sole and absolute discretion, to be advisable.
Section 7.6. Transactions with Affiliates.
(a) Permitted Transactions. Subject to Section 7.6(b) below, the
Partnership may lend or contribute funds to, borrow funds from, and enter
into any other transactions with (including, without limitation, the
purchase or sale of any property or the transfer of a tenant from one of
the Partnership's properties to other properties in which the General
Partner has an interest, directly or indirectly, without compensation to
the Partnership), the General Partner, the Partnership's Subsidiaries or
other Persons in which it has an equity investment, or Affiliates of the
Partnership, the General Partner or such Subsidiaries or other Persons, 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. The Partnership
may
27
transfer assets to joint ventures, other partnerships, corporations or
other business entities in which it is or thereby becomes a participant
upon such terms and subject to such conditions consistent with this
Agreement and applicable law.
(b) Transactions with Certain Affiliates. Except as expressly
permitted by this Agreement, the Partnership shall not, directly or
indirectly, sell, transfer or convey any property to, or purchase any
property from, or borrow funds from, or lend funds to, any Affiliate of
the Partnership or the General Partner that is not a Subsidiary of the
Partnership or the General Partner, except pursuant to transactions that
are on terms that are fair and reasonable and no less favorable to the
Partnership than would be obtained from an unaffiliated third party.
(c) Benefit Plans. The General Partner, in its sole and absolute
discretion and without the approval of the Limited Partners, may propose
and adopt on behalf of the Partnership employee benefit plans funded by
the Partnership for the benefit of employees of the General Partner, the
Partnership, Subsidiaries of the Partnership or any Affiliate of any of
them in respect of services performed, directly or indirectly, for the
benefit of the Partnership, the General Partner, or any of the
Partnership's Subsidiaries or any Affiliate of any of them.
Section 7.7. Indemnification.
(a) General. Each Person who was or is made a party or is threatened
to be made a party or is involved in any threatened, pending or completed
action, suit or proceeding, whether formal or informal, whether of a
civil, criminal, administrative or investigative nature (hereinafter a
"Proceeding"), by reason of the fact that the Person or a Person of whom
the Person is the legal representative, is or was a Representative,
whether the basis of such proceeding is an alleged action or inaction in
an official capacity or in any other capacity while serving in that
official capacity, shall be indemnified and held harmless by the
Partnership to the fullest extent permissible under Delaware law, as the
same exists or may hereafter exist in the future (but, in the case of any
future change, only to the extent that such change permits the Partnership
to provide broader indemnification rights than the law permitted prior to
such change), against all costs, charges, expenses, liabilities and losses
(including, without limitation, attorneys' fees, judgments, fines, ERISA
excise taxes or penalties and amounts paid or to be paid in settlement)
reasonably incurred or suffered by the Representative in connection
therewith and such indemnification shall continue as to a Person who has
ceased to serve in such capacity and shall inure to the benefit of the
Person's successors, heirs, executors and administrators.
(b) Advancement of Expenses. The Partnership shall pay expenses
actually incurred by a Representative in connection with any Proceeding in
advance of its final disposition; provided, however, that if Delaware law
then requires, the payment of such expenses incurred in advance of the
final disposition of a Proceeding shall be made only upon delivery to the
Partnership of an undertaking, by or on behalf of such Representative, to
repay all amounts so advanced if it shall ultimately be determined that
such Representative is not entitled to be indemnified.
28
(c) No Limitation of Rights. If a claim under Section 7.7(a) is not
paid in full by the Partnership within thirty (30) days after a written
claim has been received by the Partnership, the claimant may at any time
thereafter bring suit against the Partnership to recover the unpaid amount
of the claim and, if successful in whole or in part, the claimant shall be
entitled to be paid also the expense of prosecuting such claim. Neither
the failure of the Partnership (including its Partners or its independent
legal counsel) to have made a determination that indemnification of the
claimant is permissible in the circumstances because the claimant has met
the applicable standard of conduct, if any, nor an actual determination by
the Partnership (including its Partners or its independent legal counsel)
that the claimant has not met the standard of conduct, shall be a defense
to the action or create a presumption that the claimant has not met the
standard of conduct.
(d) Witness. To the extent that any trustee, officer, employee or
agent of the Partnership or the General Partner is by reason of such
position, or position with another entity at the request of the
Partnership or the General Partner, a witness in any action, suit or
proceeding, the Person shall be indemnified against all costs and expenses
actually and reasonably incurred by the Person on the Person's behalf in
connection therewith.
(e) Insurance. The Partnership may purchase and maintain insurance,
at its expense, to protect itself and any trustee, officer, employee or
agent of the Partnership or the General Partner or another corporation,
partnership, joint venture, trust or other enterprise against any such
expense, liability or loss, whether or not the Partnership or the General
Partner would have the power to indemnify such person against such
expense, liability or loss under the law governing their formation and
existence, respectively.
(f) Further Agreement. The Partnership may enter into agreements
with any trustee, officer, employee or agent of the Partnership or the
General Partner providing for indemnification to the fullest extent
permissible under Delaware law.
(g) Severability. Each and every paragraph, sentence, term and
provision of this Section 7.7 is separate and distinct, so that if any
paragraph, sentence, term or provision hereof shall be held to be invalid
or unenforceable for any reason, such invalidity or unenforceability shall
not affect the validity or unenforceability of any other paragraph,
sentence, term or provision hereof. To the extent required, any paragraph,
sentence, term or provision of this Section 7.7 may be modified by a court
of competent jurisdiction to preserve its validity and to provide the
claimant with, subject to the limitations set forth in this Section 7.7
and any agreement between the Partnership and claimant, the broadest
possible indemnification permitted under applicable law.
(h) Contract Right. Each of the rights conferred on Representatives
by paragraphs (a), (b), (c) and (d) of this Section 7.7 and on employees
or agents of the Partnership or the General Partner by Section 7.7(d)
shall be a contract right and any repeal or amendment of the provisions of
this Section 7.7 shall not adversely affect any right hereunder of any
Person existing at the time of such repeal or amendment with respect to
any act or omission occurring prior to the time of such repeal or
amendment, and, further, shall not apply to any proceeding, irrespective
of when the proceeding is initiated, arising from the service of such
Person prior to such repeal or amendment.
29
(i) Rights Not Exclusive. The rights conferred in this Section 7.7
shall not be exclusive of any other rights that any Person may have or
hereafter acquire under any statute, bylaw, agreement, vote of Partners or
otherwise.
(j) No Obligation to Contribute. No Limited Partner shall have any
obligation to contribute to the capital of the Partnership or otherwise
provide funds, to enable the Partnership to fund its obligations under
this Section 7.7.
(k) Interested Transaction. A Representative shall not be denied
indemnification in whole or in part under this Section 7.7 because the
Representative 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.
Section 7.8. Liability of the General Partner.
(a) General. Except as otherwise expressly provided herein, the
General Partner shall not be liable for monetary damages to the
Partnership, any Partners or any Assignees 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.
(b) No Obligation to Consider Interests of Limited Partners. Other
than complying with the terms of the Protected Partner Agreements and
Section 8.5(e) hereof, the Limited Partners holding Class A Limited
Partnership Units expressly acknowledge that the General Partner is acting
on behalf of the Partnership and the General Partner, its sole member and
the shareholders of its sole member collectively, that the General Partner
is under no obligation to consider the separate interests of such Limited
Partners (including, without limitation, the tax consequences to such
Limited Partners or Assignees) in deciding whether to cause the
Partnership to take (or decline to take) any actions which the General
Partner has undertaken in good faith on behalf of the Partnership, and
that the General Partner shall not be liable for monetary damages for
losses sustained, liabilities incurred, or benefits not derived by such
Limited Partners in connection with such decisions, provided that the
General Partner has acted in good faith. For purposes hereof, a Person
acting in a manner which does not violate the Protected Partner Agreements
and Section 8.5(e) hereof and either (i) is in the best interests of the
shareholders of ProLogis or (ii) furthers compliance by ProLogis with the
REIT requirements of the Code, shall be deemed to satisfy the standard of
conduct hereunder.
(c) Acts of Agents. Subject to its obligations and duties as General
Partner set forth in Section 7.1(a), the General Partner may exercise any
of the powers granted to it by this Agreement and perform any of the
duties imposed upon it hereunder either directly or by or through its
agents. The General Partner shall not be responsible for any misconduct or
negligence on the part of any such agent appointed by it in good faith.
(d) Effect of Amendment. Any amendment, modification or repeal of
this Section 7.8 or any provision hereof shall be prospective only and
shall not in any way affect the limitations on the General Partner's
liability to the Partnership and the Limited Partners under this Section
7.8 as in effect immediately prior to such amendment,
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modification or repeal with respect to claims arising from or relating to
matters occurring, in whole or in part, prior to such amendment,
modification or repeal, regardless of when such claims may arise or be
asserted.
Section 7.9. Other Matters Concerning the General Partner.
(a) Reliance on Documents. The General Partner may rely and shall be
protected in acting or refraining from acting upon any resolution,
certificate, statement, instrument, opinion, report, notice, request,
consent, order, bond, debenture, or other paper or document believed by it
to be genuine and to have been signed or presented by the proper party or
parties.
(b) Reliance on Consultants and Advisers. The General Partner may
consult with legal counsel, accountants, appraisers, management
consultants, investment bankers and other consultants and advisers
selected by it, and any act taken or omitted to be taken in reliance upon
and in accordance with the opinion of such Persons as to matters which
such General Partner reasonably believes to be within such Person's
professional or expert competence shall be conclusively presumed to have
been done or omitted in good faith and in accordance with such opinion.
(c) Action Through Officers and Attorneys. The General Partner shall
have the right, in respect of any of its powers or obligations hereunder,
to act through any of its duly authorized officers and a duly appointed
attorney or attorneys-in-fact. Each such attorney shall, to the extent
provided by the General Partner in the power of attorney, have full power
and authority to do and perform all and every act and duty which is
permitted or required to be done by the General Partner hereunder.
(d) Actions to Maintain REIT Status or Avoid Taxation.
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
ProLogis to continue to qualify as a REIT or (ii) except with respect to
the distribution of Available Cash to the Limited Partners in accordance
with Section 5.1 hereof, to allow ProLogis to avoid incurring any taxes
under Section 857 or Section 4981 of the Code, is expressly authorized
under this Agreement and is deemed approved by all of the Limited
Partners.
Section 7.10. Title to Partnership Assets. Title to Partnership assets,
whether real, personal or mixed and whether tangible or intangible, shall be
deemed to be owned by the Partnership as an entity, and no Partner, individually
or collectively, shall have any ownership interest in such Partnership assets or
any portion thereof. Title to any or all of the Partnership assets may be held
in the name of the Partnership, the General Partner or one or more nominees, as
the General Partner may determine, including Affiliates of the General Partner.
The General Partner hereby declares and warrants that any Partnership assets for
which legal title is held in the name of the General Partner or any nominee or
Affiliate of the General Partner shall be held by the General Partner for the
use and benefit of the Partnership in accordance with the provisions of this
Agreement; provided, however, that the General Partner shall use its best
31
efforts to cause beneficial and record title to such assets to be vested in the
Partnership as soon as reasonably practicable. All Partnership assets shall be
recorded as the property of the Partnership in its books and records,
irrespective of the name in which legal title to such Partnership assets is
held.
Section 7.11. Reliance by Third Parties. Notwithstanding anything to the
contrary in this Agreement, any Person dealing with the Partnership shall be
entitled to assume that the General Partner has full power and authority to
encumber, sell or otherwise use in any manner any and all assets of the
Partnership (including, without limitation, in connection with any pledge of
Partnership assets to secure a loan or other financing to the General Partner as
provided by Section 7.1(a)(3)) and to enter into any contracts on behalf of the
Partnership, and such Person shall be entitled to deal with the General Partner
as if it were the Partnership's sole party in interest, both legally and
beneficially. Each Limited Partner hereby waives any and all defenses or other
remedies which may be available against such Person (but not the General
Partner) to contest, negate or disaffirm any action of the General Partner in
connection with any such dealing. In no event shall any Person dealing with the
General Partner or its representatives be obligated to ascertain that the terms
of this Agreement have been complied with or to inquire into the necessity or
expedience of any act or action of the General Partner or its representatives.
Each and every certificate, document or other instrument executed on behalf of
the Partnership by the General Partner or its representatives shall be
conclusive evidence in favor of any and every Person relying thereon or claiming
thereunder that (a) at the time of the execution and delivery of such
certificate, document or instrument, this Agreement was in full force and
effect, (b) the Person executing and delivering such certificate, document or
instrument was duly authorized and empowered to do so for and on behalf of the
Partnership and (c) such certificate, document or instrument was duly executed
and delivered in accordance with the terms and provisions of this Agreement and
is binding upon the Partnership.
ARTICLE VIII
RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS
Section 8.1. Limitation of Liability. The Limited Partners shall have no
liability under this Agreement except as expressly provided in Section 10.5, or
under the Act or except as expressly agreed by any Limited Partner.
Section 8.2. Management of Business. No Limited Partner or Assignee (other
than the General Partner, any of its Affiliates or any officer, director,
employee, partner, agent or trustee of the General Partner, the Partnership or
any of their Affiliates, in their capacity as such) of a Limited Partner shall
take part in the operation, management or control (within the meaning of the
Act) of the Partnership's business, transact any business in the Partnership's
name or have the power to sign documents for or otherwise bind the Partnership.
The transaction of any such business by the General Partner, any of its
Affiliates or any officer, director, employee, partner, agent or trustee of the
General Partner, the Partnership or any of their Affiliates, in their capacity
as such, shall not affect, impair or eliminate the limitations on the liability
of the Limited Partners or Assignees of Limited Partners under this Agreement.
Section 8.3. Outside Activities of Limited Partners. Any Limited Partner
(including, without limitation, any Affiliate of the General Partner which is a
Limited Partner in the
32
Partnership) and any officer, director, employee, agent, trustee, Affiliate,
partner, beneficiary or shareholder of any Limited Partner shall be entitled to
and may have business interests and engage in business activities in addition to
those relating to the Partnership, including business interests and activities
in direct competition with the Partnership, the General Partner or their
Affiliates; neither the Partnership nor any Partners shall have any rights by
virtue of this Agreement in any business ventures of any Limited Partner or
Assignee. None of the Limited Partners nor any other Person shall have any
rights by virtue of this Agreement or the partnership relationship established
hereby in any business ventures of any other Person, and such Person shall have
no obligation pursuant to this Agreement to offer any interest in any such
business ventures to the Partnership, any Partner or any such other Person, even
if such opportunity is of a character which, if presented to the Partnership,
any Partner or such other Person, could be taken by such Person.
Section 8.4. Representations, Warranties and Covenants of ProLogis to
Limited Partners . ProLogis hereby makes the representations and warranties to
each holder of Class A Limited Partnership Units and covenants as set forth on
Exhibit C hereto.
Section 8.5. Rights of Limited Partners Relating to the Partnership.
(a) Copies of Business Records. In addition to other rights provided
by this Agreement or by the Act, and except as limited by Section 8.5(c),
each Limited Partner shall be provided the following without demand,
except as otherwise provided below, at the Partnership's expense:
(1) promptly after becoming available, a copy of the most
recent annual, quarterly and current reports and proxy statements
filed with the Securities and Exchange Commission by ProLogis
pursuant to the Exchange Act, if any;
(2) promptly after becoming available, a copy of the
Partnership's federal, state and local income tax returns for each
Partnership Year;
(3) upon demand and for a purpose reasonably related to such
Limited Partner's interest as a Limited Partner in the Partnership,
a current list of the name and last known business, residence or
mailing address of each Partner;
(4) a copy of this Agreement and the Certificate and all
amendments hereto and thereto, together with executed copies of all
powers of attorney pursuant to which this Agreement, the Certificate
and all amendments hereto and thereto have been executed; and
(5) upon demand, true and full information regarding the
amount of cash and a description and statement of any other property
or services contributed by each Partner and which each Partner has
agreed to contribute in the future, and the date on which each
became a Partner.
(b) Notification of Changes in Unit Adjustment Factor. The
Partnership shall notify each Limited Partner in writing of any change
made to the Unit Adjustment Factor within ten (10) Business Days of the
date such change becomes effective.
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(c) Notification of Extraordinary Transaction of the General
Partner. The General Partner shall not make any extraordinary
distributions of cash or property to its shareholders or effect a merger
or sale of all or substantially all of its assets without notifying the
Limited Partners of its intention to make such distribution or effect such
merger or sale at least twenty (20) Business Days prior to the record date
to determine shareholders eligible to receive such distribution or to vote
upon the approval of such merger or sale.
(d) Confidential Information. Notwithstanding any other provision of
this Section 8.5, the General Partner may keep confidential from the
Limited Partners, for such period of time as the General Partner
determines in its sole and absolute discretion to be reasonable, any
information relating to the General Partner or the conduct of its business
that the General Partner believes, in its good faith judgment, the
disclosure of which information would adversely affect a material
financing, acquisition, disposition of assets or securities or other
comparable transaction to which the General Partner is a party. Nothing
contained in this Section 8.5(c) shall permit the General Partner to keep
confidential from the Limited Partners any information relating to the
Partnership or its business.
(e) Debt Maintenance and Allocation. The General Partner shall cause
the Partnership to have a sufficient amount of indebtedness to be
allocated to Limited Partners to enable them to avoid recognizing gain
pursuant to Section 731(a)(1) of the Code as a result of a deemed
distribution of money to such Limited Partner pursuant to Section 752(b)
of the Code or as a result of a minimum gain chargeback, and may allow any
Limited Partner to guarantee on a "bottom dollar basis" an amount of
indebtedness of the Partnership or any successor thereto, as is necessary
from time to time to provide an allocation of debt to such Limited
Partner; provided that the Partnership shall not be required to have
indebtedness in excess of $75,000,000.
Section 8.6. Redemption of Partnership Units.
(a) Redemption Right. Subject to the further provisions of this
Section 8.6, on or after the date hereof, each Limited Partner shall have
the right from time to time and at any time (the "Redemption Right") to
require the Partnership to redeem on a Specified Redemption Date all or a
portion of the Class A Limited Partnership Units held by such Limited
Partner at a redemption price equal to and in the form of the Cash Amount
to be paid by the Partnership. The Redemption Right shall be exercised
pursuant to a Notice of Redemption delivered to the Partnership (with a
copy to ProLogis) 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 ProLogis
elects, pursuant to Section 8.6(b), to purchase the Class A Limited
Partnership Units subject to the Notice of Redemption. A Limited Partner
may not exercise the Redemption Right for less than five hundred (500)
Class A Limited Partnership Units or, if such Limited Partner holds less
than five hundred (500) Class A Limited Partnership Units, all of the
Class A Limited Partnership Units held by such Partner.
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(b) The ProLogis Acquisition Right. Notwithstanding the provisions
of Section 8.6(a), a Limited Partner that exercises the Redemption Right
shall be deemed to have offered to sell the Class A Limited Partnership
Units described in the Notice of Redemption to ProLogis, and ProLogis may,
in its sole and absolute discretion, elect to assume directly and satisfy
a Redemption Right, and acquire such Class A Limited Partnership Units by
paying to the Redeeming Partner either the Cash Amount, or the Shares
Amount, as elected by ProLogis (in its sole and absolute discretion), on
the Specified Redemption Date, whereupon ProLogis shall acquire the Class
A Limited Partnership Units offered for redemption by the Redeeming
Partner. In the event ProLogis acquires any Class A Limited Partnership
Units pursuant to this Section 8.6(b), any such Class A Limited
Partnership Units so acquired by ProLogis shall thereafter become a part
of ProLogis' Partnership Interest for all purposes of this Agreement and
shall no longer represent Class A Limited Partnership Units. If ProLogis
shall elect to exercise its right to purchase Class A Limited Partnership
Units under this Section 8.6(b) with respect to a Notice of Redemption, it
shall so notify the Redeeming Partner within five Business Days after the
receipt by the Partnership of such Notice of Redemption by delivering an
irrevocable written notice to the Redeeming Partner. In the event ProLogis
shall exercise its right to purchase Class A Limited Partnership Units
with respect to the exercise of a Redemption Right in the manner described
in the first sentence of this Section 8.6(b), the Partnership shall have
no obligation to pay, except as provided in Section 8.6(d) below, any
amount to the Redeeming Partner with respect to Redeeming Partner's
exercise of the Redemption Right, and each of the Redeeming Partner, the
Partnership, the General Partner and ProLogis shall treat the transaction
between ProLogis and the Redeeming Partner for federal income tax purposes
as a sale of the Redeeming Partner's Class A Limited Partnership Units to
ProLogis. Each Redeeming Partner agrees to execute such documents as the
General Partner and ProLogis may reasonably require in connection with the
issuance of Shares upon exercise of the Redemption Right.
(c) Payment of Cash Amount or Shares Amount. Any Cash Amount or
Shares Amount to be paid to a Redeeming Partner pursuant to this Section
8.6 shall be paid on the Specified Redemption Date relating to the
Partnership Units to be redeemed.
(d) Payment of Accrued and Unpaid Distributions. On any Specified
Redemption Date, the Partnership shall pay to any Redeeming Partner, in
addition to the Cash Amount or the Shares Amount pursuant to the preceding
provisions of this Section 8.6, the amount of the outstanding balance in
the Accrual Account and the Unpaid Distribution Account maintained with
respect to the Partnership Units being redeemed.
(e) No Shareholder Rights. No Limited Partner shall, solely by
virtue of being the holder of one or more Partnership Units, be deemed to
be a shareholder of or have any other interest in the General Partner.
(f) Reservation of Shares. At all times during the pendency of the
Redemption Rights, ProLogis shall reserve for issuance such number of
Shares as may be necessary to enable it to issue such Shares in full
satisfaction of the Redemption Rights in regard to all Class A Limited
Partnership Interests which are from time to time outstanding.
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ARTICLE IX
BOOKS, RECORDS, ACCOUNTING AND REPORTS
Section 9.1. Records and Accounting. The General Partner shall keep or
cause to be kept at the principal office of the Partnership appropriate books
and records with respect to the Partnership's business, including, without
limitation, all books and records necessary to provide to the Limited Partners
any information, lists and copies of documents required to be provided pursuant
to Sections 8.5 or 9.3. Any records maintained by or on behalf of the
Partnership in the regular course of its business may be kept on, or be in the
form of, magnetic tape, photographs, micrographics or any other information
storage device; provided, that the records so maintained are convertible into
clearly legible written form within a reasonable period of time. The books of
the Partnership shall be maintained for financial purposes on an accrual basis
in accordance with generally accepted accounting principles and for tax
reporting purposes on the accrual basis.
Section 9.2. Fiscal Year. The fiscal year of the Partnership shall be the
calendar year.
Section 9.3. Reports.
(a) Annual Reports. As soon as practicable, but in no event later
than the date when mailed to the shareholders of ProLogis, the General
Partner shall cause to be mailed to each Limited Partner as of the close
of the Partnership Year, an annual report containing financial statements
of the Partnership, or of ProLogis if such statements are prepared solely
on a consolidated basis with ProLogis for such Partnership Year, presented
in accordance with generally accepted accounting principles, such
statements to be audited by a nationally recognized firm of independent
public accountants selected by the General Partner.
(b) Quarterly Reports. As soon as practicable, but in no event later
than the date when mailed to the shareholders of ProLogis, the General
Partner shall cause to be mailed to each Limited Partner as of the last
day of the calendar quarter (except the last calendar quarter of each
year), a report containing unaudited financial statements of the
Partnership, or of ProLogis, if such statements are prepared solely on a
consolidated basis with ProLogis, and such other information as may be
required by applicable law or regulation, or as the General Partner
determines to be appropriate.
ARTICLE X
TAX MATTERS
Section 10.1. Preparation of Tax Returns. The General Partner shall
arrange for the preparation and timely filing of all returns of Partnership
income, gains, deductions, losses and other items required of the Partnership
for federal and state income tax purposes and shall use all reasonable efforts
to furnish, within ninety (90) days of the close of each taxable year, the tax
information reasonably required by Limited Partners for federal and state income
tax reporting purposes.
Section 10.2. Tax Elections. Except as otherwise provided herein, the
General Partner shall, in its sole and absolute discretion, determine whether to
make any available election
36
pursuant to the Code; provided, however, that the General Partner shall make the
election under Section 754 of the Code in accordance with applicable Regulations
thereunder and shall do so effective for its first taxable year. The General
Partner shall have the right to seek to revoke any such election (including,
without limitation, the election under Section 754 of the Code) upon the General
Partner's determination in its sole and absolute discretion that such revocation
is in the best interests of the Partners but in no event in the first taxable
year.
Section 10.3. Tax Matters Partner.
(a) General. The General Partner shall be the "tax matters partner"
of the Partnership for federal income tax purposes. Pursuant to Section
6223(c) of the Code, upon receipt of notice from the IRS of the beginning
of an administrative proceeding with respect to the Partnership, the tax
matters partner shall furnish the IRS with the name, address and profit
interest of each of the Limited Partners; provided, however, that such
information is provided to the Partnership by the Limited Partners.
(1) Powers. The tax matters partner shall have the rights and
obligations to take all actions authorized and required,
respectively, by the Code.
The taking of any action and the incurring of any expense by the tax matters
partner in connection with any such proceeding, except to the extent required by
law, is a matter in the sole and absolute discretion of the tax matters partner,
and the provisions relating to indemnification of the General Partner set forth
in Section 7.7 shall be fully applicable to the tax matters partner in its
capacity as such.
(b) Reimbursement. The tax matters partner shall receive no
compensation for its services. All third-party costs and expenses incurred
by the tax matters partner in performing its duties as such (including
legal and accounting fees) shall be borne by the Partnership. Nothing
herein shall be construed to restrict the Partnership from engaging an
accounting firm and a law firm to assist the tax matters partner in
discharging his duties hereunder, so long as the compensation paid by the
Partnership for such services is reasonable.
Section 10.4. Organizational Expenses. The Partnership shall elect to
deduct expenses, if any, incurred by it in organizing the Partnership ratably
over a 60 month period as provided in Section 709 of the Code.
Section 10.5. Withholding. Each Limited Partner hereby authorizes the
Partnership to withhold from or pay on behalf of or with respect to such Limited
Partner any amount of federal, state, local, or foreign taxes that the General
Partner determines that the Partnership is required to withhold or pay with
respect to any amount distributable or allocable to such Limited Partner
pursuant to this Agreement, including, without limitation, any taxes required to
be withheld or paid by the Partnership pursuant to Section 1441, 1442, 1445, or
1446 of the Code. Any amount paid on behalf of or with respect to a Limited
Partner shall constitute a loan by the Partnership to such Limited Partner,
which loan shall be repaid by such Limited Partner within fifteen (15) days
after notice from the General Partner that such payment must be made unless (a)
the Partnership withholds such payment from a distribution which would otherwise
be made to the Limited
37
Partner or (b) the General Partner determines, in its sole and absolute
discretion, that such payment may be satisfied out of the available funds of the
Partnership which would, but for such payment, be distributed to the Limited
Partner. Any amounts withheld pursuant to the foregoing clauses (a) or (b) shall
be treated as having been distributed to such Limited Partner and shall be
promptly paid, solely out of funds of the Partnership, by the General Partner to
the appropriate taxing authority. Each Limited Partner hereby unconditionally
and irrevocably grants to the Partnership a security interest in such Limited
Partner's Partnership Interest to secure such Limited Partner's obligation to
pay to the Partnership any amounts required to be paid pursuant to this Section
10.5. In the event that a Limited Partner fails to pay any amounts owed to the
Partnership pursuant to this Section 10.5 when due, the General Partner may, in
its sole and absolute discretion, elect to make the payment to the Partnership
on behalf of such defaulting Limited Partner, and in such event shall be deemed
to have loaned such amount to such defaulting Limited Partner and shall succeed
to all rights and remedies of the Partnership as against such defaulting Limited
Partner (including, without limitation, the right to receive distributions). Any
amounts payable by a Limited Partner hereunder shall bear interest at the base
rate on corporate loans at large United States money center commercial banks, as
published from time to time in the Wall Street Journal, plus four percentage
points (but not higher than the maximum lawful rate) from the date such amount
is due (i.e., fifteen (15) days after demand) until such amount is paid in full.
Each Limited Partner shall take such actions as the Partnership or the General
Partner shall request in order to perfect or enforce the security interest
created hereunder.
ARTICLE XI
TRANSFERS AND WITHDRAWALS
Section 11.1. Transfer.
(a) Definition. The term "transfer," when used in this Article XI
with respect to a Partnership Unit, shall be deemed to refer to a
transaction by which the General Partner purports to assign all or a
portion of its General Partnership Interest to another Person or by which
a Limited Partner purports to assign all or a portion of its Limited
Partnership Interest to another Person, and includes a sale, assignment,
gift, pledge, encumbrance, hypothecation, mortgage, exchange or any other
disposition by law or otherwise. The term "transfer" when used in this
Article XI does not include any exchange or redemption of Partnership
Units by a Limited Partner pursuant to Section 8.6 or acquisition of
Partnership Units from a Limited Partner by ProLogis pursuant to Section
8.6. The General Partner shall not transfer its General Partnership
Interest to any Person other than an Affiliate without the Consent of the
Limited Partners.
(b) Requirements. No Partnership Interest shall be transferred, in
whole or in part, except in accordance with the terms and conditions set
forth in this Article XI. Any transfer or purported transfer of a
Partnership Interest not made in accordance with this Article XI shall be
null and void.
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Section 11.2. Transfer of ProLogis' Partnership Interest.
(a) General. ProLogis shall not be permitted to transfer its
Partnership Interest except (i) to an Affiliate of ProLogis, (ii) in
connection with a sale of all or substantially all of ProLogis' assets, or
(iii) in connection with a merger, consolidation or other business
combination involving ProLogis; provided, that the foregoing transfers
shall be permitted only if the Person succeeding ProLogis pursuant to
clause (i), (ii) or (iii) above assumes all of the obligations of ProLogis
under the Partnership Agreement and provided further, any transfers by
ProLogis pursuant to clause (ii) or (iii) above must meet the conditions
of Section 11.2(c) below.
(b) Pledge. The General Partner and ProLogis may transfer their
Partnership Interests in connection with a pledge to a lender to secure a
loan to the General Partner or ProLogis, as the case may be. The General
Partner shall indemnify and hold harmless the Partnership for any loss,
cost, expense or damage as a result of any such pledge (including without
limitation, loss of Partnership income and, without duplication, loss in
annual cash proceeds sufficient to pay the amounts distributable pursuant
to Section 5.1(i)-(iii) or payable pursuant to Section 8.6(d)).
(c) Transfer in Connection with a Transaction. ProLogis shall not
engage in any Transaction unless as a result of the Transaction one of the
following conditions is met:
(i) all Limited Partners either will receive, or will have the
right to elect to receive, for each Class A Limited Partnership Unit
an amount of cash, securities, or other property equal to the
product of the Shares Amount and the greatest amount of cash,
securities or other property paid to a holder of one Share in
consideration of one Share pursuant to the terms of the Transaction;
provided that, if a purchase, tender or exchange offer shall have
been made to and accepted by holders of the outstanding Shares as
part of a Transaction, each holder of Class A Limited Partnership
Units shall receive, or shall have the right to elect to receive,
the greatest amount of cash, securities, or other property which
such holder would have received had it exercised its Redemption
Right (as set forth in Section 8.6) and received Shares in exchange
for its Class A Limited Partnership Units immediately prior to the
expiration of such purchase, tender or exchange offer and had
thereupon accepted such purchase, tender or exchange offer and then
such Transaction shall have been consummated; or
(ii) (A) immediately after such merger or other combination,
substantially all of the assets directly or indirectly owned by the
Partnership immediately prior to such Transaction are owned directly
or indirectly by the Partnership or another limited partnership or
limited liability company which is the survivor of a merger,
consolidation or combination of assets with the Partnership (in each
case, the "Surviving Partnership"); (B) the Limited Partners own a
percentage interest of the Surviving Partnership based on the
relative fair market value of the net assets of the Partnership (as
determined pursuant to Section 11.2(d)) and the other net assets of
the Surviving Partnership (as determined pursuant to Section
11.2(d)) immediately prior to the consummation
39
of such transaction; (C) the rights preferences and privileges of
the Limited Partners in the Surviving Partnership are at least as
favorable as those in effect immediately prior to the consummation
of such transaction and as those applicable to any other limited
partners or non-managing members of the Surviving Partnership; and
(D) such rights of the Limited Partners include the right to
exchange their interest in the Surviving Partnership for at least
one of: (i) the consideration available to such Limited Partners
pursuant to Section 11.2(c)(i) or (ii) if the ultimate controlling
person of the Surviving Partnership has publicly traded common
equity securities, such common equity securities, with an exchange
ratio based on the relative fair market value of such securities (as
determined pursuant to Section 11.2(d)) and the Shares.
(d) Determination of Relative Values. In connection with any
Transaction permitted by Section 11.2(c), the relative fair market values
shall be reasonably determined by the General Partner as of the time of
such Transaction and, to the extent applicable, shall be no less favorable
to the Limited Partners than the relative values reflected in the terms of
such Transaction.
Section 11.3. Limited Partners' Rights to Transfer.
(a) General. Subject to the remaining provisions of this Section
11.3 as well as Section 11.4, a Limited Partner may transfer all or any
portion of his Class A Limited Partnership Interest, or any of such
Limited Partner's rights as a Limited Partner, without the prior written
consent of the General Partner. In order to effect such transfer, the
Limited Partner must deliver to the General Partner a duly executed copy
of the instrument making such transfer and such instrument must evidence
the written acceptance by the assignee of all of the terms and conditions
of this Agreement and represent that such assignment was made in
accordance with all applicable laws and regulations. The Limited Partner
shall provide the General Partner ten days prior written notice of a
proposed transfer that provides information sufficient to enable the
General Partner to make the determinations described under Section 11.3
(c) and (d).
(b) Incapacitated Limited Partners. If a Limited Partner is subject
to Incapacity, the executor, administrator, trustee, committee, guardian,
conservator or receiver of such Limited Partner's estate shall have all
the rights of a Limited Partner, but not more rights than those enjoyed by
other Limited Partners for the purpose of settling or managing the estate
and such power as the Incapacitated Limited Partner possessed to transfer
all or any part of his or its interest in the Partnership. The Incapacity
of a Limited Partner, in and of itself, shall not dissolve or terminate
the Partnership.
(c) Transfers Contrary to Securities Laws. The General Partner may
prohibit any transfer otherwise permitted under this Section 11.3 by a
Limited Partner of its Class A Limited Partnership Units if, in the
opinion of legal counsel to the Partnership, such transfer would require
filing of a registration statement under the Securities Act, or would
otherwise violate any Federal, state or foreign securities laws or
regulations applicable to the Partnership or the Partnership Units.
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(d) Transfers Resulting in Corporation Status; Transfers Through
Established Securities or Secondary Markets. No transfer by a Partner of
his Class A Limited Partnership Units (or any economic or other interest,
right or attribute therein) may be made to any Person if (i) in the
opinion of legal counsel for the Partnership, it would result in the
Partnership being treated as an association taxable as a corporation, 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. Notwithstanding anything
to the contrary in this Agreement, any admission (or purported admission)
of a Partner and any transfer or assignment (or purported transfer or
assignment) of all or part of a Partner's interest (or any interest or
right or attribute therein) in the Partnership, whether to another Partner
or to a third party, shall not be effective, and any such transfer or
assignment (or purported transfer or assignment) shall be void ab initio,
and no person shall otherwise become a Partner if after such transfer or
assignment (or purported transfer or assignment) the Partnership would
have more than 100 Partners. For purposes of determining whether the
Partnership will have more than 100 Partners, each person indirectly
owning an interest in the Partnership through a partnership (including any
entity treated as a partnership for federal income tax purposes), a
grantor trust or an S corporation (each such entity a "flow-through
entity") shall be treated as a Partner unless the General Partner
determines in its sole and absolute discretion that less than
substantially all of the value of the beneficial owner's interest in the
flow-through entity is attributable to the flow-through entity's interest
(direct or indirect) in the Partnership. Notwithstanding anything to the
contrary in this Section 11.3(d), the exercise of the Redemption Right by
a Limited Partner will not be subject to the restrictions set forth in
this Section 11.3(d).
(e) Transfers to Holders of Nonrecourse Liabilities. No transfer or
pledge of any Class A Limited Partnership Units may be made to a lender to
the Partnership or any Person who is related (within the meaning of
Section 1.752-4(b) of the Regulations) to any lender to the Partnership
whose loan constitutes a Nonrecourse Liability without the prior written
consent of the General Partner, provided that as a condition to such
consent the lender will be required to enter into an arrangement with the
Partnership and the General Partner to exchange or redeem for the
Redemption Amount any Class A Limited Partnership Units in which a
security interest is held simultaneously with the time at which such
lender would be deemed to be a partner in the Partnership for purposes of
allocating liabilities to such lender under Section 752 of the Code.
Section 11.4. Substituted Limited Partners.
(a) Consent of General Partner Required. Subject to Section 11.3, a
Limited Partner shall have the right in its discretion to substitute a
transferee as a Limited Partner in his place, in which event such
substitution shall occur if the Limited Partner so provides, subject to
compliance with Section 12.2(a); provided, however, that any transferee
desiring to become a Substituted Limited Partner must furnish to the
General Partner (i) evidence of acceptance in form satisfactory to the
General Partner of all of the terms and conditions of this Agreement,
including, without limitation, the power of attorney granted in Article
XVI and (ii) such other documents or instruments as may be
41
required in the discretion of the General Partner in order to effect such
Person's admission as a Substituted Limited Partner.
(b) Rights and Duties of Substituted Limited Partners. A transferee
who has been admitted as a Substituted Limited Partner in accordance with
this Article XI shall have all the rights and powers and be subject to all
the restrictions and liabilities of a Limited Partner under this
Agreement.
(c) Amendment of Exhibit A. Upon the admission of a Substituted
Limited Partner, the General Partner shall amend Exhibit A to reflect the
name, address, number of Partnership Units, and Percentage Interest of
such Substituted Limited Partner and to eliminate or adjust, if necessary,
the name, address and interest of the predecessor of such Substituted
Limited Partner.
Section 11.5. Assignees. If a transferee under Section 11.4(a) is not a
Substituted Limited Partner, as described in Section 11.4, such transferee shall
be considered an Assignee for purposes of this Agreement. An Assignee shall be
entitled to all the rights of an assignee of a limited partnership interest
under the Act, including the right to redeem or exchange Class A Limited
Partnership Units for Shares or cash under Section 8.6, the right to receive
distributions from the Partnership and the share of Net Income, Net Losses,
gain, loss and Recapture Income attributable to the Partnership Units assigned
to such transferee, but shall not be deemed to be a holder of Partnership Units
for any other purpose under this Agreement, and shall not be entitled to vote
such Partnership Units in any matter presented to the Limited Partners for a
vote (such Partnership Units being deemed to have been voted on such matter in
the same proportion as all Partnership Units held by Limited Partners are
voted). In the event any such transferee desires to make a further assignment of
any such Partnership Units, such transferee shall be subject to all the
provisions of this Article XI to the same extent and in the same manner as any
Limited Partner desiring to make an assignment of Partnership Units.
Section 11.6. General Provisions.
(a) Withdrawal of Limited Partner. No Limited Partner may withdraw
from the Partnership other than as a result of a permitted transfer of all
of such Limited Partner's Partnership Units in accordance with this
Article XI or pursuant to the exchange or redemption of all of its
Partnership Units under Section 8.6.
(b) Transfer of All Partnership Units by Limited Partner. Any
Limited Partner who shall transfer all of its Partnership Units in a
transfer permitted pursuant to this Article XI or pursuant to the exchange
or redemption of all of its Partnership Units under Section 8.6 shall
cease to be a Limited Partner.
(c) Timing of Transfers. Transfers pursuant to this Article XI may
be made only on the first day of a calendar month, unless the General
Partner otherwise agrees.
(d) Allocation When Transfer Occurs. If any Partnership Interest is
transferred during any quarterly segment of the Partnership's fiscal year
in compliance with the provisions of this Article XI or exchanged or
redeemed pursuant to Section 8.6, Net
42
Income, Net Losses, each item thereof and all other items attributable to
such interest for such fiscal year shall be divided and allocated between
the transferor Partner and the transferee Partner by taking into account
their varying interests during the fiscal year in accordance with Section
706(d) of the Code, using the interim closing of the books method (other
than Net Income attributable to a capital transaction, which shall be
allocated as of the date of the capital transaction). Solely for purposes
of making such allocations, each of such items for the calendar month in
which the transfer or redemption occurs shall be allocated to the Person
who is a Partner as of midnight on the last day of said month. All
distributions of Available Cash with respect to which the Partnership
Record Date is before the date of such transfer or redemption shall be
made to the transferor Partner, and all distributions of Available Cash
thereafter shall be made to the transferee Partner.
Section 11.7. Transfer Rights. Except as otherwise provided in Section
11.3(d) hereof, notwithstanding anything else to the contrary set forth in this
Agreement, an Affiliate of the General Partner may transfer all or any portion
of its Limited Partnership Interests, or any of the rights associated with such
Limited Partnership Interests, to any party without the Consent of the
Partnership or any Partner (regardless of whether such transfer triggers a
termination of the Partnership for tax purposes under Section 708 of the Code).
ARTICLE XII
ADMISSION OF PARTNERS
Section 12.1. Admission of Successor General Partner. A successor to all
of the General Partner's General Partnership Interest pursuant to Section 11.1
who is proposed to be admitted as a successor General Partner shall be admitted
to the Partnership as the General Partner, effective upon such transfer. Any
such transferee shall carry on the business of the Partnership without
dissolution. In each case, the admission shall be subject to the successor
General Partner executing and delivering to the Partnership an acceptance of all
of the terms and conditions of this Agreement and such other documents or
instruments as may be required to effect the admission.
Section 12.2. Admission of Additional Limited Partners.
(a) General. A Person who makes a Capital Contribution to the
Partnership in accordance with this Agreement shall be admitted to the
Partnership as an Additional Limited Partner upon furnishing to the
General Partner (i) evidence of acceptance in form satisfactory to the
General Partner of all of the terms and conditions of this Agreement,
including, without limitation, the power of attorney granted in Article
XVI and (ii) such other documents or instruments as may be required in the
discretion of the General Partner in order to effect such Person's
admission as an Additional Limited Partner.
(b) Consent of General Partner Required. Notwithstanding anything to
the contrary in this Section 12.2, no Person shall be admitted as an
Additional Limited Partner without the prior written consent of the
General Partner, which consent may be given or withheld in the General
Partner's sole and absolute discretion. The admission of any Person as an
Additional Limited Partner shall become effective on the date upon
43
which the name of such Person is recorded on the books and records of the
Partnership, following the consent of the General Partner to such
admission.
Section 12.3. Amendment of Agreement and Certificate. For the admission to
the Partnership of any Partner, the General Partner shall take all steps
necessary and appropriate under the Act to amend the records of the Partnership
and, if necessary, to prepare as soon as practical an amendment of this
Agreement (including an amendment of Exhibit A) and, if required by law, shall
prepare and file an amendment to the Certificate and may for this purpose
exercise the power of attorney granted pursuant to Article XVI.
ARTICLE XIII
DISSOLUTION AND LIQUIDATION
Section 13.1. Dissolution. The Partnership shall not be dissolved by the
admission of Substituted Limited Partners or Additional Limited Partners or by
the admission of a successor General Partner in accordance with the terms of
this Agreement. The Partnership shall dissolve, and its affairs shall be wound
up, upon the first to occur of any of the following (each an "Event of
Dissolution"):
(a) Withdrawal of General Partner -- an event of withdrawal of the
last remaining General Partner, as defined in the Act (other than an event
of bankruptcy), unless, within ninety (90) days after the withdrawal all
the remaining Partners agree in writing to continue the business of the
Partnership and to the appointment, effective as of the date of
withdrawal, of a substitute General Partner;
(b) Judicial Dissolution Decree -- entry of a decree of judicial
dissolution of the Partnership pursuant to the provisions of the Act;
(c) Sale of Partnership's Assets -- the sale of all or substantially
all of the assets and properties of the Partnership in exchange for cash;
(d) Bankruptcy or Insolvency of General Partner -- a final and
non-appealable judgment is entered by a court of competent jurisdiction
ruling that the General Partner is bankrupt or insolvent, or a final and
non-appealable order for relief is entered by a court with appropriate
jurisdiction against the General Partner, in each case under any federal
or state bankruptcy or insolvency laws as now or hereafter in effect,
unless prior to the entry of such order or judgment all of the remaining
Partners agree in writing to continue the business of the Partnership and
to the appointment, effective as of a date prior to the date of such order
or judgment, of a substitute General Partner; or
(e) Election to Dissolve -- an election to dissolve the Partnership
made by the General Partner.
Section 13.2. Winding Up.
(a) General. Upon the occurrence of an Event of Dissolution, the
Partnership shall continue solely for the purposes of winding up its
affairs in an orderly manner, liquidating its assets, and satisfying the
claims of its creditors and Partners. No Partner
44
shall take any action that is inconsistent with, or not necessary to or
appropriate for, the winding up of the Partnership's business and affairs.
The General Partner (or, in the event there is no remaining General
Partner, any Person elected by a majority in interest of the Limited
Partners (the "Liquidator")) shall be responsible for overseeing the
winding up and dissolution of the Partnership and shall take full account
of the Partnership's liabilities and property and the Partnership property
shall be liquidated as promptly as is consistent with obtaining the fair
value thereof, and the proceeds therefrom shall be applied and distributed
in the following order:
(1) First, to the payment and discharge of all of the
Partnership's debts and liabilities to creditors other than the
Partners;
(2) Second, to the payment and discharge of all of the
Partnership's debts and liabilities to the Partners, pro rata in
accordance with amounts owed to each such Partner; and
(3) The balance, if any, to the Partners in accordance with
their Capital Accounts, after giving effect to all contributions,
distributions, adjustments and allocations for all periods.
Prior to the forgoing distributions, the General Partner shall have made
adjustments to Capital Accounts of the Partners to reflect the fair market
value of the Partnership assets as of the date of the Partnership's
liquidation in a manner consistent with Regulations Section
1.704-1(b)(2)(iv)(f). The General Partner shall not receive any additional
compensation for any services performed pursuant to this Article XIII.
(b) Where Immediate Sale of Partnership's Assets Impractical.
Notwithstanding the provisions of Section 13.2(a) which require
liquidation of the assets of the Partnership, but subject to the order of
priorities set forth therein, if prior to or upon dissolution of the
Partnership the Liquidator determines that an immediate sale of part or
all of the Partnership's assets would be impractical or would cause undue
loss to the Partners, the Liquidator may, in its sole and absolute
discretion, defer for a reasonable time the liquidation of any assets
except those necessary to satisfy liabilities of the Partnership
(including to those Partners as creditors) or, with the consent of all
Limited Partners, distribute to the Partners, in lieu of cash, as tenants
in common and in accordance with the provisions of Section 13.2(a),
undivided interests in such Partnership assets as the Liquidator deems not
suitable for liquidation. Any such distributions in kind shall be made
only if, in the good faith judgment of the Liquidator, such distributions
in kind are in the best interest of the Partners, and shall be subject to
such conditions relating to the disposition and management of such
properties as the Liquidator deems reasonable and equitable and to any
agreements governing the operation of such properties at such time. The
Liquidator shall determine the fair market value of any property
distributed in kind using such reasonable method of valuation as it may
adopt.
Section 13.3. Regulatory Compliance. In the discretion of the General
Partner, a pro rata portion of the distributions that would otherwise be made to
the General Partner and Limited Partners pursuant to this Article XIII may be:
(i) distributed to a liquidating trust established for
45
the benefit of the General Partner and Limited Partners for the purposes of
liquidating Partnership assets, collecting amounts owed to the Partnership, and
paying any contingent or unforeseen liabilities or obligations of the
Partnership or of the General Partner arising out of or in connection with the
Partnership (the assets of any such trust shall be distributed to the General
Partner and Limited Partners from time to time, in the reasonable discretion of
the General Partner, in the same proportions as the amount distributed to such
trust by the Partnership would otherwise have been distributed to the General
Partner and Limited Partners pursuant to this Agreement); or (ii) withheld to
provide a reasonable reserve for Partnership liabilities (contingent or
otherwise) and to reflect the unrealized portion of any installment obligations
owed to the Partnership; provided, that such withheld amounts shall be
distributed to the General Partner and Limited Partners as soon as practicable.
Section 13.4. Rights of Limited Partners. Except as specifically provided
in this Agreement, each Limited Partner shall look solely to the assets of the
Partnership for the return of his Capital Contribution and shall have no right
or power to demand or receive property other than cash from the Partnership.
Except as specifically provided in this Agreement, no Limited Partner shall have
priority over any other Limited Partner as to the return of his Capital
Contributions, distributions, or allocations.
Section 13.5. Notice of Dissolution. In the event an Event of Dissolution
or an event occurs that would, but for provisions of Section 13.1, result in a
dissolution of the Partnership, the General Partner shall, within ten (10) days
thereafter, provide written notice thereof to each of the Partners and to all
other parties with whom the Partnership regularly conducts business (as
determined in the discretion of the General Partner) and shall publish notice
thereof in a newspaper of general circulation in each place in which the
Partnership regularly conducts business (as determined in the discretion of the
General Partner).
Section 13.6. Cancellation of Certificate of Limited Partnership. Upon the
completion of the liquidation of the Partnership as provided in Section 13.2,
the Partnership shall be terminated and the Certificate and all qualifications
of the Partnership as a foreign limited partnership in jurisdictions other than
the State of Delaware shall be canceled and such other actions as may be
necessary to terminate the Partnership shall be taken.
Section 13.7. Reasonable Time for Winding-Up. A reasonable time shall be
allowed for the orderly winding-up of the business and affairs of the
Partnership and the liquidation of its assets pursuant to Section 13.2, in order
to minimize any losses otherwise attendant upon such winding-up, and the
provisions of this Agreement shall remain in effect between the Partners during
the period of liquidation.
Section 13.8. Liability of Liquidator. The Liquidator shall be indemnified
and held harmless by the Partnership from and against any and all claims,
demands, liabilities, costs, damages and causes of action of any nature
whatsoever arising out of or incidental to the Liquidator's taking of any action
authorized under or within the scope of this Agreement; provided, however, that
the Liquidator shall not be entitled to indemnification, and shall not be held
harmless, where the claim, demand, liability, cost, damage or cause of action at
issue arises out of (i) a matter entirely unrelated to the Liquidator's action
or conduct pursuant to the
46
provisions of this Agreement, or, (ii) the proven willful misconduct or gross
negligence of the Liquidator.
ARTICLE XIV
AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS
Section 14.1. Amendments.
(a) General. Amendments to this Agreement may be proposed by the
General Partner or by any Limited Partners holding 25 percent or more of
the Percentage Interests. Following such proposal, the General Partner
shall submit any proposed amendment to the Limited Partners. The General
Partner shall seek the written vote of the Partners on the proposed
amendment or shall call a meeting to vote thereon and to transact any
other business that it may deem appropriate. For purposes of obtaining a
written vote, the General Partner may require a response within a
reasonable specified time, but not less than fifteen (15) days, and
failure to respond in such time period shall constitute a vote which is
consistent with the General Partner's recommendation with respect to the
proposal. Except as provided in Section 14.1(b), 14.1(c), or 14.1(d), a
proposed amendment shall be adopted and be effective as an amendment
hereto if it is approved by the General Partner and it receives the
Consent of the Partners holding a majority of the Percentage Interests of
the Limited Partners (excluding any Limited Partnership Interest held by
the General Partner or any Affiliate of the General Partner).
(b) General Partner's Power to Amend. Notwithstanding Section
14.1(a), the General Partner shall have the power, without the Consent of
the Limited Partners, to amend this Agreement as may be required to
facilitate or implement any of the following purposes:
(1) to add to the obligations of the General Partner or
surrender any right or power granted to the General Partner or any
Affiliate of the General Partner for the benefit of the Limited
Partners;
(2) to reflect the admission, substitution, termination, or
withdrawal of Partners in accordance with this Agreement;
(3) to set forth the rights, powers, duties and preferences of
the holders of any additional Partnership Interests issued pursuant
to Section 4.2(a) or (b), which rights, powers, duties and
preferences may be set forth in one or more exhibits to this
Agreement, which shall be incorporated herein and made a part
hereof.
(4) to reflect a change that does not adversely affect the
Limited Partners, or to cure any ambiguity, correct or supplement
any provision in this Agreement not inconsistent with law or with
other provisions, or make other changes with respect to matters
arising under this Agreement that will not be inconsistent with law
or with the provisions of this Agreement; and
47
(5) to satisfy any requirements, conditions, or guidelines
contained in any order, directive, opinion, ruling or regulation of
a federal or state agency or contained in federal or state law.
Without limiting the other limitations on the General Partner's right to
take action under this Section 14.1(b), the General Partner will not make
any amendment to Section 8.6 that would materially and adversely affect
any Limited Partner's rights thereunder without the Consent of such
Limited Partner.
(c) Amendments Requiring Unanimous Limited Partner Approval.
Notwithstanding anything in this Section 14.1, this Agreement shall not be
amended without the Consent of each Partner adversely affected if such
amendment would (i) convert a Limited Partner's interest in the
Partnership into a General Partnership Interest, (ii) modify the limited
liability of a Limited Partner, (iii) alter the rights of the Partner to
receive distributions pursuant to Article V or the allocations specified
in Article IV (except as permitted in Section 4.2 and Section 14.1(b)(3))
or (iv) alter or modify the Redemption Right as set forth in Section 8.6.
Section 14.2. Meetings.
(a) General. Meetings of the Partners may be called by the General
Partner and shall be called upon the receipt by the General Partner of a
written request by Limited Partners holding 25% or more of the Partnership
Interests. The request shall state the nature of the business to be
transacted. Within sixty (60) days after receipt of such a call from
Limited Partners or within such greater time as may be reasonably
necessary for the Partnership to comply with any statutes, rules,
regulations, listing agreements or similar requirements governing the
holding of a meeting, or the solicitation of proxies for use at such a
meeting, the General Partner shall send a notice of the meeting to the
Limited Partners. Notice of any such meeting shall be given to all
Partners not less than ten (10) days nor more than thirty (30) days prior
to the date of such meeting. Partners may vote in person or by proxy at
such meeting. Whenever the vote or consent of the Partners is permitted or
required under this Agreement, such vote or consent may be given at a
meeting of the Partners or may be given in accordance with the procedures
prescribed in Section 14.1(a). Except as otherwise expressly provided in
this Agreement, the vote or consent of holders of a majority of the
Partnership Interests held by Limited Partners (excluding any Limited
Partnership Interest held by the General Partner or any Affiliate of the
General Partner) shall control. The Limited Partners shall not vote on
matters that would cause the Limited Partners to be deemed to be taking
part in the management and control of the business and affairs of the
Partnership so as to subject the Limited Partners to unlimited liability
therefor.
(b) Notice; Record Date. Notice of a meeting shall be given either
personally, in writing or by mail or other means of written communication
addressed to the Limited Partner at the address of the Limited Partner
appearing on the books of the Partnership. The notice shall be deemed to
have been given when personally delivered or, if mailed or otherwise sent,
on the third business day after such notice is mailed or otherwise sent to
such address. For purposes of determining Limited Partners entitled to
notice of or to
48
vote at a meeting of the Limited Partners or to give consents without a
meeting, the General Partner may set a record date, which shall not be
less than ten (10) days nor more than thirty (30) days before the date of
the meeting.
(c) Quorum. A majority of the Partnership Interests held by Limited
Partners, represented in person or by proxy shall constitute a quorum at a
meeting of Limited Partners. The Limited Partners present at a duly called
or held meeting at which a quorum is present may continue to transact
business until adjournment, notwithstanding the withdrawal of enough
Limited Partners to leave less than a quorum, if any action taken (other
than adjournment) is approved by the requisite percentage of Partnership
Interests held by the Limited Partners specified in this Agreement. In the
absence of a quorum, any meeting of the Limited Partners may be adjourned
from time to time by the affirmative vote of a majority of the Partnership
Interests represented either in person or by proxy, but no other business
may be transacted.
(d) Action Without a Meeting. Any action required or permitted to be
taken at a meeting of the Limited Partners may be taken without a meeting
if a written consent setting forth the action so taken is signed by the
holders of a majority of the Partnership Interests of the Limited Partners
(or such other percentage as is expressly required by this Agreement).
Such consent may be in one instrument or in several instruments, and shall
have the same force and effect as a vote of the holders of a majority of
the Partnership Interests of the Limited Partners (or such other
percentage as is expressly required by this Agreement). Such consent shall
be filed with the General Partner. An action so taken shall be deemed to
have been taken at a meeting held on the effective date so certified.
(e) Proxies. Each Limited Partner may authorize any Person or
Persons to act for him by proxy on all matters in which a Limited Partner
is entitled to participate, including waiving notice of any meeting, or
voting or participating at a meeting. Every proxy must be signed by the
Limited Partner or his attorney-in-fact. No proxy shall be valid after the
expiration of eleven (11) months from the date hereof unless otherwise
provided in the proxy. Every proxy shall be revocable at the pleasure of
the Limited Partner executing it, such revocation to be effective upon the
Partnership's receipt of written notice of such revocation from the
Limited Partner executing such proxy.
(f) Conduct of Meeting. Each meeting of the Partners shall be
conducted by the General Partner or such other Person as the General
Partner may appoint pursuant to such rules for the conduct of the meeting
as the General Partner or such other Person deems appropriate. Without
limitation, meetings of Partners may be conducted in the same manner as
meetings of the shareholders of the General Partner and may be held at the
same time, and as part of, meetings of the shareholders of the General
Partner.
ARTICLE XV
REGISTRATION RIGHTS
Section 15.1. Shelf Registration Under the Securities Act. Filing of Shelf
Registration Statement. Within 120 days following the date of this Agreement,
ProLogis shall cause to be filed a Shelf Registration Statement providing for
the resale by the Class A Limited Partners on
49
the date of this Agreement (together with their permitted transferees and
assigns, the "Registration Partners") of all of the Registrable Securities in
accordance with the terms hereof and will use its commercially reasonable
efforts to cause such Shelf Registration Statement to be declared effective by
the SEC as soon as reasonably practicable. ProLogis agrees to use its
commercially reasonable efforts to keep the Shelf Registration Statement
continuously effective under the Securities Act until such time as the aggregate
number of Class A Limited Partnership Units held by Registration Partners and
Registrable Securities outstanding is less than 10% of the aggregate number of
Class A Limited Partnership Units held by Registration Partners and outstanding
on the date of this Agreement and, subject to Section 15.2(b) and Section
15.2(i), further agrees to supplement or amend the Shelf Registration Statement,
if and as required by the rules, regulations or instructions applicable to the
registration form used by ProLogis for such Shelf Registration Statement or by
the Securities Act or by any other rules and regulations thereunder for Shelf
Registration. Each Registration Partner who sells Shares as part of the Shelf
Registration shall be deemed to have agreed to all of the terms and conditions
of this Article XV and to have agreed to perform any and all obligations of a
Registration Partner hereunder.
(a) Expenses. ProLogis shall pay all Registration Expenses in
connection with the registration pursuant to Section 15.1(a). Each
Registration Partner shall pay all underwriting discounts and commissions,
brokerage or dealer fees, the fees and disbursements of counsel,
accountants or other representatives of such Registration Partner and
transfer taxes, if any, relating to the sale or disposition of such
Registration Partner's Registrable Securities pursuant to the Shelf
Registration Statement or Rule 144 under the Securities Act.
(b) Inclusion in Shelf Registration Statement. Any Registration
Partner who does not provide information reasonably requested by ProLogis
in connection with the Shelf Registration Statement as promptly as
practicable after receipt of such request, but in no event later than 20
days thereafter, shall not be entitled to have its Registrable Securities
included in the Shelf Registration Statement at the time it becomes
effective.
Section 15.2. Registration. Procedures. In connection with the obligations
of ProLogis with respect to the Shelf Registration Statement pursuant to Section
15.1 hereof, ProLogis shall:
(a) prepare and file with the SEC, within the time period set forth
in Section 15.1(a) hereof, a Shelf Registration Statement, which Shelf
Registration Statement (i) shall be available for the sale of the
Registrable Securities in accordance with the intended method or methods
of distribution by the selling Registration Partners thereof and (ii)
shall comply as to form in all material respects with the requirements of
the applicable form and include all financial statements required by the
SEC to be filed therewith;
(b) subject to the last three sentences of this Section 15.2(b) and
to Section 15.2(i) hereof, (i) prepare and file with the SEC such
amendments and post-effective amendments to the Shelf Registration
Statement as may be necessary to keep the Shelf Registration Statement
effective for the applicable period; (ii) cause each Prospectus to be
supplemented by any required prospectus supplement, and as so supplemented
to be filed pursuant to Rule 424 or any similar rule that may be adopted
50
under the Securities Act; (iii) respond promptly to any comments received
from the SEC with respect to the Shelf Registration Statement, or any
amendment, post-effective amendment or supplement relating thereto; and
(iv) comply with the provisions of the Securities Act with respect to the
disposition of all securities covered by the Shelf Registration Statement
during the applicable period in accordance with the intended method or
methods of distribution by the selling Registration Partners thereof.
Notwithstanding anything to the contrary contained herein, ProLogis shall
not be required to take any of the actions described in clauses (i), (ii)
or (iii) above with respect to each particular Registration Partner
holding Registrable Securities unless and until ProLogis has received
either a written notice (a "Registration Notice") from a Registration
Partner that such Registration Partner intends to make offers or sales
under the Shelf Registration Statement as specified in such Registration
Notice or a written response from such Registration Partner of the type
contemplated by Section 15.1(c); provided, however, that ProLogis shall
have 15 business days to prepare and file any such amendment or supplement
after receipt of a Registration Notice. Offers or sales under the Shelf
Registration Statement may be made only during a Sale Period. Such
Registration Partner also shall notify ProLogis in writing upon completion
of such offer or sale or at such time as such Registration Partner no
longer intends to make offers or sales under the Shelf Registration
Statement;
(c) furnish to each Registration Partner holding Registrable
Securities that has delivered a Registration Notice to ProLogis, without
charge, as many copies of each applicable Prospectus, including each
preliminary Prospectus and any amendment or supplement thereto, and such
other documents as such Registration Partner may reasonably request, in
order to facilitate the public sale or other disposition of the
Registrable Securities; ProLogis consents to the use of such Prospectus,
including each preliminary Prospectus, by each such Registration Partner
in connection with the offering and sale of the Registrable Securities
covered by such Prospectus or the preliminary Prospectus;
(d) use its commercially reasonable efforts to register or qualify
the Registrable Securities by the time the Shelf Registration Statement is
declared effective by the SEC under all applicable state securities or
"blue sky" laws of such jurisdictions as any Registration Partner holding
Registrable Securities covered by the Shelf Registration Statement shall
reasonably request in writing, keep each such registration or
qualification effective during the period the Shelf Registration Statement
is required to be kept effective or during the period offers or sales are
being made by a Registration Partner that has delivered a Registration
Notice to ProLogis, whichever is shorter, and do any and all other acts
and things which may be reasonably necessary or advisable to enable such
Registration Partner to consummate the disposition in each such
jurisdiction of such Registrable Securities owned by such Registration
Partner; provided, however, that ProLogis shall not be required (i) to
qualify generally to do business in any jurisdiction or to register as a
broker or dealer in such jurisdiction where it would not be required so to
qualify or register but for this Section 15.2(d), (ii) to subject itself
to taxation in any such jurisdiction or (iii) to submit to the general
service of process in any such jurisdiction;
51
(e) notify each Registration Partner when the Shelf Registration
Statement has become effective and notify each Registration Partner
holding Registrable Securities that has delivered a Registration Notice to
ProLogis promptly and, if requested by such Registration Partner, confirm
such advice in writing (i) when any post-effective amendments and
supplements to the Shelf Registration Statement become effective, (ii) of
the issuance by the SEC or any state securities authority of any stop
order suspending the effectiveness of the Shelf Registration Statement or
the initiation of any proceedings for that purpose, (iii) if ProLogis
receives any notification with respect to the suspension of the
qualification of the Registrable Securities for sale in any jurisdiction
or the initiation of any proceeding for such purpose and (iv) of the
happening of any event during the period the Shelf Registration Statement
is effective as a result of which the Shelf Registration Statement or a
related Prospectus contains any untrue statement of a material fact or
omits to state any material fact required to be stated therein or
necessary to make the statements therein (in the case of the Prospectus,
in light of the circumstances under which they were made) not misleading;
(f) make every reasonable effort to obtain the withdrawal of any
order suspending the effectiveness of the Shelf Registration Statement at
the earliest possible moment;
(g) furnish to each Registration Partner holding Registrable
Securities that has delivered a Registration Notice to ProLogis, without
charge, at least one conformed copy of the Shelf Registration Statement
and any post-effective amendment thereto (without documents incorporated
therein by reference or exhibits thereto, unless requested);
(h) cooperate with the selling Registration Partners holding
Registrable Securities to facilitate the timely preparation and delivery
of certificates representing Registrable Securities to be sold and not
bearing any Securities Act legend; and enable certificates for such
Registrable Securities to be issued for such numbers of shares and
registered in such names as the selling Registration Partners may
reasonably request;
(i) subject to the last three sentences of Section 15.2(b) hereof,
upon the occurrence of any event contemplated by Section 15.2(e)(iv)
hereof, use its commercially reasonable efforts promptly to prepare and
file a supplement or prepare, file and obtain effectiveness of a
post-effective amendment to the Shelf Registration Statement or a related
Prospectus or any document incorporated therein by reference or file any
other required document so that, as thereafter delivered to the purchasers
of the Registrable Securities, such Prospectus will not contain any untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading;
(j) a reasonable time prior to the filing of any Prospectus, any
amendment to the Shelf Registration Statement or amendment or supplement
to a Prospectus, provide copies of such document (not including any
documents incorporated by reference therein unless requested) to the
Registration Partners holding Registrable Securities that have provided a
Registration Notice to ProLogis;
52
(k) use its commercially reasonable efforts to cause all Registrable
Securities to be listed on any securities exchange on which similar
securities issued by ProLogis are then listed;
(l) otherwise use its reasonable efforts to comply with all
applicable rules and regulations of the SEC and make available to its
security holders, as soon as reasonably practicable, an earnings statement
covering at least 12 months which shall satisfy the provisions of Section
11(a) of the Securities Act and Rule 158 thereunder; and
(m) use its commercially reasonable efforts to cause the Registrable
Securities covered by the Shelf Registration Statement to be registered
with or approved by such other governmental agencies or authorities as may
be necessary by virtue of the business and operations of ProLogis to
enable Registration Partners that have delivered Registration Notices to
ProLogis to consummate the disposition of such Registrable Securities.
ProLogis may require each Registration Partner holding Registrable
Securities to furnish to ProLogis in writing such information regarding the
proposed distribution by such Registration Partner as ProLogis may from time to
time reasonably request in writing.
In connection with and as a condition to ProLogis' obligations with
respect to the Shelf Registration Statement pursuant to Section 15.1 hereof and
this Section 15.2, each Registration Partner agrees that (i) it will not offer
or sell its Registrable Securities under the Shelf Registration Statement until
(A) it has either (1) provided a Registration Notice pursuant to Section 15.2(b)
hereof or (2) had Registrable Securities included in the Shelf Registration
Statement at the time it became effective pursuant to Section 15.1(c) hereof and
(B) it has received copies of the supplemented or amended Prospectus
contemplated by Section 15.2(b) hereof and receives notice that any
post-effective amendment has become effective; (ii) upon receipt of any notice
from ProLogis of the happening of any event of the kind described in Section
15.2(b)(iv) hereof, such Registration Partner will forthwith discontinue
disposition of Registrable Securities pursuant to the Shelf Registration
Statement until such Registration Partner receives copies of the supplemented or
amended Prospectus contemplated by Section 15.2(i) hereof and receives notice
that any post-effective amendment has become effective, and, if so directed by
ProLogis, such Registration Partner will deliver to ProLogis (at the expense of
ProLogis) all copies in its possession, other than permanent file copies then in
such Registration Partner's possession, of the Prospectus covering such
Registrable Securities current at the time of receipt of such notice; and (iii)
all offers and sales under the Shelf Registration Statement shall be completed
within forty-five (45) days after the first date on which offers or sales can be
made pursuant to clause (i) above, and upon expiration of such forty-five (45)
day period the Registration Partner will not offer or sell its Registrable
Securities under the Shelf Registration Statement until it has again complied
with the provisions of clause (i)(B) above.
Section 15.3. Restrictions on Public Sale by Holders of Registrable
Securities. Each Registration Partner agrees with ProLogis that:
53
(a) If the Board of Trustees of ProLogis determines in its good
faith judgment that the filing of the Shelf Registration Statement under
Section 15.1 hereof or the use of any Prospectus would materially impede,
delay or interfere with any pending material financing, acquisition or
corporate reorganization or other material corporate development involving
ProLogis or any of its subsidiaries, or require the disclosure of
important information which ProLogis has a bona fide business purpose for
preserving as confidential or the disclosure of which would impede
ProLogis' ability to consummate a significant transaction, upon written
notice of such determination by ProLogis, the rights of the Registration
Partners to offer, sell or distribute any Registrable Securities pursuant
to the Shelf Registration Statement or to require ProLogis to take action
with respect to the registration or sale of any Registrable Securities
pursuant to the Shelf Registration Statement (including any action
contemplated by Section 15.2 hereof) will be suspended until the date upon
which ProLogis notifies the Registration Partners in writing that
suspension of such rights for the grounds set forth in this Section
15.3(a) is no longer necessary, but no such period shall extend for longer
than 90 days.
(b) In the case of the registration of any underwritten equity
offering proposed by ProLogis (other than any registration by ProLogis on
Form S-8, or a successor or substantially similar form, of (i) an employee
stock option, stock purchase or compensation plan or of securities issued
or issuable pursuant to any such plan or (ii) a dividend reinvestment
plan), each Registration Partner agrees, if requested in writing by the
managing underwriter or underwriters administering such offering, not to
effect any offer, sale or distribution of Registrable Securities (or any
option or right to acquire Registrable Securities) during the period
commencing on the 7th day prior to the expected effective date (which date
shall be stated in such notice) of the registration statement covering
such underwritten primary equity offering and ending on the date specified
by such managing underwriter in such written request to such Registration
Partner, which date shall not be later than 90 days after such expected
date of effectiveness.
(c) In the event that any Registration Partner uses a Prospectus in
connection with the offering and sale of Registrable Securities covered by
such Prospectus, such Registration Partner will use only the latest
version of such Prospectus provided to it by ProLogis.
Section 15.4. Indemnification; Contribution.
(a) Indemnification by ProLogis. ProLogis agrees to indemnify and
hold harmless each Registration Partner and its officers and directors and
each person, if any, who controls any Registration Partner within the
meaning of Section 15 of the Securities Act as follows:
(1) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, arising out of any untrue statement
or alleged untrue statement of a material fact contained in the
Shelf Registration Statement (or any amendment thereto) or any
Prospectus, including all documents incorporated therein by
reference, or the omission or alleged omission therefrom of a
material
54
fact necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading;
(2) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, to the extent of the aggregate
amount paid in settlement of any litigation, or investigation or
proceeding by any governmental agency or body, commenced or
threatened, or of any claim whatsoever based upon any untrue
statement or omission, or any alleged untrue statement or omission
contained in the Shelf Registration Statement (or any amendment
thereto) or any Prospectus, including all documents incorporated
therein by reference, if such settlement is effected with the
written consent of ProLogis; and
(3) against any and all expense whatsoever, as incurred
(including reasonable fees and disbursements of counsel), reasonably
incurred in investigating, preparing or defending against any
litigation, or investigation or proceeding by any governmental
agency or body, commenced or threatened, in each case whether or not
a party, or any claim whatsoever based upon any untrue statement or
omission, or any alleged untrue statement or omission contained in
the Shelf Registration Statement (or any amendment thereto) or any
Prospectus, including all documents incorporated therein by
reference, to the extent that any such expense is not paid under
clause (i) or (ii) above;
provided, however, that the indemnity provided pursuant to this
Section 15.4(a) does not apply to any Registration Partner with
respect to any loss, liability, claim, damage or expense to the
extent arising out of any untrue statement or omission or alleged
untrue statement or omission contained in the Shelf Registration
Statement (or any amendment thereto) or any Prospectus, including
all documents incorporated therein by reference made in reliance
upon and in conformity with written information furnished to
ProLogis by such Registration Partner expressly for use in the Shelf
Registration Statement (or any amendment thereto) or any Prospectus.
(b) Indemnification by Registration Partners. Each Registration
Partner severally agrees to indemnify and hold harmless ProLogis and the
other selling Registration Partners, and each of their respective
directors and officers (including each director and officer of ProLogis
who signed the Shelf Registration Statement), and each person, if any, who
controls ProLogis or any other selling Registration Partner within the
meaning of Section 15 of the Securities Act, to the same extent as the
indemnity contained in Section 15.4(a) hereof (except that any settlement
described in Section 15.4(a)(2) shall be effected with the written consent
of such Registration Partner), but only insofar as such loss, liability,
claim, damage or expense arises out of or is based upon any untrue
statement or omission, or alleged untrue statement or omission, made in
the Shelf Registration Statement (or any amendment thereto) or any
Prospectus in reliance upon and in conformity with written information
furnished to ProLogis by such selling Registration Partner expressly for
use in the Shelf Registration Statement (or any amendment thereto) or such
Prospectus. In no event shall the liability of any Registration Partner
under this Section 15.4(b) be greater in amount than the dollar amount of
the
55
proceeds received by such Registration Partner upon the sale of the
Registrable Securities giving rise to such indemnification obligation.
(c) Each indemnified party shall give reasonably prompt notice to
each indemnifying party of any action or proceeding commenced against it
in respect of which indemnity may be sought hereunder, but failure so to
notify an indemnifying party (i) shall not relieve it from any liability
which it may have under the indemnity agreement provided in Section
15.4(a) or (b) unless and to the extent it did not otherwise learn of such
action and the lack of notice by the indemnified party results in the
forfeiture by the indemnifying party of substantial rights and defenses
and (ii) shall not, in any event, relieve the indemnifying party from any
obligations to any indemnified party other than the indemnification
obligation provided under Section 15.4(a) or (b). If the indemnifying
party so elects within a reasonable time after receipt of such notice, the
indemnifying company may assume the defense of such action or proceeding
at such indemnifying party's own expense with counsel chosen by the
indemnifying party; provided, however, that, if such indemnified party or
parties reasonably determine that a conflict of interest exists where it
is advisable for such indemnified party or parties to be represented by
separate counsel or that, upon advice of counsel, there may be legal
defenses available to them which are different from or in addition to
those available to the indemnifying party, then the indemnifying party
shall not be entitled to assume such defense and the indemnified party or
parties in the aggregate shall be entitled to one separate counsel at the
indemnifying party's expense. If an indemnifying party is not so entitled
to assume the defense of such action or does not assume such defense,
after having received the notice referred to in the first sentence of this
Section 15.4(c), the indemnifying party or parties will pay the reasonable
fees and expenses of counsel for the indemnified party or parties. In such
event however, no indemnifying party will be liable for any settlement
effected without the written consent of such indemnifying party. If an
indemnifying party is entitled to assume, and assumes, the defense of such
action or proceeding in accordance with this paragraph, such indemnifying
party shall not be liable for any fees and expenses of counsel for the
indemnified parties incurred thereafter in connection with such action or
proceeding.
(d) In order to provide for just and equitable contribution in
circumstances in which the indemnity agreement provided for in this
Section 15.4 is for any reason held to be unenforceable although
applicable in accordance with its terms, ProLogis and the selling
Registration Partners shall contribute to the aggregate losses,
liabilities, claims, damages and expenses of the nature contemplated by
such indemnity agreement incurred by ProLogis and the selling Registration
Partners, in such proportion as is appropriate to reflect the relative
fault of and benefits to ProLogis on the one hand and the selling
Registration Partners on the other (in such proportions that the selling
Registration Partners are severally, not jointly, responsible for the
balance), in connection with the statements or omissions which resulted in
such losses, liabilities, claims, damages or expenses, as well as any
other relevant equitable considerations. The relative benefits to the
indemnifying party and indemnified parties shall be determined by
reference to, among other things, the total proceeds received by the
indemnifying party and indemnified parties in connection with the offering
to which such losses, liabilities, claims, damages, or expenses relate.
The relative fault of the indemnifying party and
56
indemnified parties shall be determined by reference to, among other
things, whether the 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 the indemnified parties, and the
parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such action.
ProLogis and the Registration Partners agree that it would not be just or
equitable if contribution pursuant to this Section 15.4(d) 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. Notwithstanding the provisions of this Section 15.4(d), no selling
Registration Partner shall be required to contribute any amount in excess of the
amount by which the total price at which the Registrable Securities of such
selling Registration Partner were sold to the public, exceeds the amount of any
damages which such selling Registration Partner is otherwise required to pay by
reason of such untrue statement or omission.
Notwithstanding the foregoing, 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. For purposes of this Section 15.4(d), each Person,
if any, who controls a Registration Partner within the meaning of Section 15 of
the Securities Act and directors and officers of a Registration Partner shall
have the same rights to contribution as such Registration Partner, and each
director of ProLogis, each officer of ProLogis who signed the Shelf Registration
Statement and each Person, if any, who controls ProLogis within the meaning of
Section 15 of the Securities Act shall have the same rights to contribution as
ProLogis.
Section 15.5. Rule 144 Sales.
(a) ProLogis covenants that it will file the reports required to be
filed by ProLogis under the Securities Act and the Exchange Act, so as to
enable any Limited Partner to sell Registrable Securities pursuant to Rule
144 under the Securities Act.
(b) In connection with any sale, transfer or other disposition by
any Limited Partner of any Registrable Securities pursuant to Rule 144
under the Securities Act, ProLogis shall cooperate with such Limited
Partner to facilitate the timely preparation and delivery of certificates
representing Registrable Securities to be sold and not bearing any
Securities Act legend, and enable certificates for such Registrable
Securities to be for such number of shares and registered in such names as
the selling Limited Partners may reasonably request.
ARTICLE XVI
GENERAL PROVISIONS
Section 16.1. Addresses and Notice. All notices and demands under this
Agreement shall be in writing, and may be either delivered personally (which
shall include deliveries by courier) by U.S. mail or a nationally recognized
overnight courier, by telefax, telex or other wire
57
transmission (with request for assurance of receipt in a manner appropriate with
respect to communications of that type; provided, that a confirmation copy is
concurrently sent by a nationally recognized express courier for overnight
delivery) or mailed, postage prepaid, by certified or registered mail, return
receipt requested, directed to the parties at their respective addresses set
forth on Exhibit A attached hereto, as it may be amended from time to time, and,
if to the Partnership, such notices and demands sent in the aforesaid manner
must be delivered at its principal place of business set forth above. Unless
delivered personally or by telefax, telex or other wire transmission as above
(which shall be effective on the date of such delivery or transmission), any
notice shall be deemed to have been made three (3) days following the date so
mailed. Any party hereto may designate a different address to which notices and
demands shall thereafter be directed by written notice given in the same manner
and directed to the Partnership at its office hereinabove set forth, except
that, if the General Partner has provided notice of a different address in
accordance with this Section 15.1, such notice shall be sent to such different
address.
Section 16.2. Titles and Captions. All article or section titles or
captions in this Agreement are for convenience only. They shall not be deemed
part of this Agreement and in no way define, limit, extend or describe the scope
or intent of any provisions hereof. Except as specifically provided otherwise,
references to "Articles" and "Sections" are to Articles and Sections of this
Agreement.
Section 16.3. Pronouns and Plurals. Whenever the context may require, any
pronoun used in this Agreement shall include the corresponding masculine,
feminine or neuter forms, and the singular form of nouns, pronouns and verbs
shall include the plural and vice versa.
Section 16.4. Further Action. The parties shall execute and deliver all
documents, provide all information and take or refrain from taking action as may
be necessary or appropriate to achieve the purposes of this Agreement.
Section 16.5. Binding Effect. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their heirs, executors,
administrators, successors, legal representatives and permitted assigns. Each
party shall be bound by this Agreement immediately upon affixing its signature
hereto.
Section 16.6. Waiver of Partition. The Partners hereby agree that the
Partnership properties are not and will not be suitable for partition.
Accordingly, each of the Partners hereby irrevocably waives any and all rights
(if any) that it may have to maintain any action for partition of any of the
Partnership properties.
Section 16.7. Entire Agreement. This Agreement constitutes the entire
agreement among the parties with respect to the matters contained herein; it
supersedes any prior agreements or understandings among them with respect to the
matters contained herein and it may not be modified or amended in any manner
other than pursuant to Article XIV.
Section 16.8. Securities Law Provisions. The Partnership Units have not
been registered under the federal or state securities laws of any state and,
therefore, may not be resold unless
58
appropriate federal and state securities laws, as well as the provisions of
Article XI, have been complied with.
Section 16.9. Remedies Not Exclusive. Any remedies herein contained for
breaches of obligations hereunder shall not be deemed to be exclusive and shall
not impair the right of any party to exercise any other right or remedy, whether
for damages, injunction or otherwise.
Section 16.10. Time. Time is of the essence of this Agreement.
Section 16.11. Creditors. None of the provisions of this Agreement shall
be for the benefit of, or shall be enforceable by, any creditor of the
Partnership.
Section 16.12. Waiver. No failure by any party to insist upon the strict
performance of any covenant, duty, agreement or condition of this Agreement or
to exercise any right or remedy consequent upon a breach thereof shall
constitute waiver of any such breach or any other covenant, duty, agreement or
condition.
Section 16.13. Execution Counterparts. This Agreement may be executed in
counterparts, all of which together shall constitute one agreement binding on
all the parties hereto, notwithstanding that all such parties are not
signatories to the original or the same counterpart.
Section 16.14. Applicable Law. This Agreement shall be construed in
accordance with and governed by the laws of the State of Delaware, without
regard to the principles of conflicts of law.
Section 16.15. Invalidity of Provisions. If any provision of this
Agreement is or becomes invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein shall not be affected thereby.
Section 16.16. Limitation of Liability. Any obligation or liability
whatsoever of the General Partner which may arise at any time under this
Agreement or any obligation or liability which may be incurred by it pursuant to
any other instrument, transaction or undertaking contemplated hereby shall be
satisfied, if at all, out of the General Partner's assets only. No such
obligation or liability shall be personally binding upon, nor shall resort for
the enforcement thereof be had to, the property of any of its shareholders,
trustees, officers, employees or agents, regardless of whether such obligation
or liability is in the nature of contract, tort or otherwise.
Section 16.17. No Rights as Shareholders. Nothing contained in this
Agreement shall be construed as conferring upon the holders of the Partnership
Units any rights whatsoever as shareholders of the General Partner, including,
without limitation, any right to receive dividends or other distributions made
to shareholders of the General Partner or to vote or to consent or receive
notice as shareholders in respect to any meeting of shareholders for the
election of directors of the General Partner or any other matter.
Section 16.18. Dividends on Shares. Notwithstanding anything contained in
this Agreement to the contrary, any reference herein to dividends paid or
payable by the General
59
Partner on Shares shall be deemed to be a reference to such dividends as have
been paid or are payable by the General Partner.
ARTICLE XVII
POWER OF ATTORNEY
Section 17.1. Power of Attorney.
(a) Scope. Each Limited Partner and each Assignee constitutes and
appoints the General Partner, any Liquidator, and authorized officers and
attorneys-in-fact of each, and each of those acting singly, in each case
with full power of substitution, as its true and lawful agent and
attorney-in-fact, with full power and authority in its name, place and
stead to:
(1) execute, swear to, acknowledge, deliver, file and record
in the appropriate public offices (i) all certificates, documents
and other instruments (including, without limitation, this Agreement
and the Certificate and all amendments or restatements thereof) that
the General Partner or the Liquidator deems appropriate or necessary
to form, qualify or continue the existence or qualification of the
Partnership as a limited partnership (or a partnership in which the
limited partners have limited liability) in the State of Delaware
and in all other jurisdictions in which the Partnership may conduct
business or own property; (ii) all instruments that the General
Partner deems appropriate or necessary to reflect any amendment,
change, modification or restatement of this Agreement in accordance
with its terms; (iii) all conveyances and other instruments or
documents that the General Partner deems appropriate or necessary to
reflect the dissolution and liquidation of the Partnership pursuant
to the terms of this Agreement, including, without limitation, a
certificate of cancellation; (iv) all instruments or documents and
all certificates and acknowledgments relating to any mortgage,
pledge, or other form of encumbrance in connection with any loan or
other financing to the General Partner as provided by Section
7.1(a)(3); (v) all instruments relating to the admission,
withdrawal, removal or substitution of any Partner pursuant to, or
other events described in, Article XI, XII or XIII or the Capital
Contribution of any Partner; and (vi) all certificates, documents
and other instruments relating to the determination of the rights,
preferences and privileges of Partnership Interests; and
(2) execute, swear to, acknowledge and file all ballots,
consents, approvals, waivers, certificates and other instruments
appropriate or necessary, in the sole and absolute discretion of the
General Partner, to make, evidence, give, confirm or ratify any
vote, consent, approval, agreement or other action which is made or
given by the Partners hereunder or is consistent with the terms of
this Agreement or appropriate or necessary, in the sole and absolute
discretion of the General Partner, to effectuate the terms or intent
of this Agreement.
60
Nothing contained herein shall be construed as authorizing the
General Partner to amend this Agreement except in accordance with
Article XIV or as may be otherwise expressly provided for in this
Agreement.
(b) Irrevocable. The foregoing power of attorney is hereby
declared to be irrevocable and a power coupled with an interest, in
recognition of the fact that each of the Partners will be relying
upon the power of the General Partner to act as contemplated by this
Agreement in any filing or other action by it on behalf of the
Partnership, and it shall survive and not be affected by the
subsequent Incapacity of any Limited Partner or Assignee and the
transfer of all or any portion of such Limited Partner's or
Assignee's Partnership Units and shall extend to such Limited
Partner's or Assignee's heirs, successors, assigns and personal
representatives. Each such Limited Partner or Assignee hereby agrees
to be bound by any representation made by the General Partner,
acting in good faith pursuant to such power of attorney; and each
such Limited Partner or Assignee hereby waives any and all defenses
which may be available to contest, negate or disaffirm the action of
the General Partner, taken in good faith under such power of
attorney. Each Limited Partner or Assignee shall execute and deliver
to the General Partner or the Liquidator, within fifteen (15) days
after receipt of the General Partner's request therefor, such
further designations, powers of attorney and other instruments as
the General Partner or the Liquidator, as the case may be, deems
necessary to effectuate this Agreement and the purposes of the
Partnership; provided, however, that no such designations, powers of
attorney or other instruments shall obligate any Partner to make any
additional Capital Contribution or increase the personal liability
of any Partner for the obligations of the Partnership.
*****
61
SIGNATURE PAGE TO AGREEMENT OF LIMITED PARTNERSHIP
OF PROLOGIS XXXXXX, X.X.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date written below.
GENERAL PARTNER:
PROLOGIS XXXXXX XX LLC
By: ProLogis, its sole member
By: /s/ XXXXXX X. XXXXXXX
----------------------------------
Name: Xxxxxx X. Xxxxxxx
Title Managing Director and Secretary
LIMITED PARTNER:
PROLOGIS
By: /s/ XXXXXX X. XXXXXXX
----------------------------------
Name: Xxxxxx X. Xxxxxxx
Title Managing Director and Secretary
Dated: August 4, 2004
EXHIBIT A
PARTNERS, CONTRIBUTIONS,
PARTNERSHIP UNITS, AND PERCENTAGE INTERESTS
(As of September 3, 2004)
AGREED VALUE OF
NAME AND ADDRESS CASH CONTRIBUTED TOTAL PARTNERSHIP
OF PARTNER CONTRIBUTION PROPERTY CONTRIBUTION UNITS
---------------- ------------ --------------- ------------ -----------
GENERAL PARTNER:
ProLogis Xxxxxx XX LLC $ 2,072,568.95 -- $ 2,072,568.95 61,336.72
c/o ProLogis
00000 Xxxx 00xx Xxxxx
Xxxxxx, XX 00000
LIMITED PARTNERS:
ProLogis $205,184,325.72 -- $205,184,325.72 6,072,335.22
00000 Xxxx 00xx Xxxxx
Xxxxxx, XX 00000
Xxxxxxx X. Xxxxxx -- $ 4,999,999.20 $ 4,999,999.20 147,972.66
00 Xxxx Xxxx Xxxx
Xxxx Xxxx, XX 00000
Xxxxxx X. Xxxxxx -- $ 532,977.20 $ 532,977.20 15,773.21
000 Xxxx Xxx Xxx. #0X
Xxx Xxxx, XX 00000
Northeastern Industrial -- $10,453,697.80 $ 10,453,697.80 309,372.35
Park, Inc.
Xxxxxxxxx Xxxxxxxxxx Xxxx,
Xxxxxxxx 0
Xxxxxxxxxxx, XX00000
Washington Avenue -- $ 1,272,348.00 $ 1,272,348.00 37,654.55
Ventures, Inc.
Xxxxxxxxx Xxxxxxxxxx Xxxx,
Xxxxxxxx 0
Xxxxxxxxxxx, XX 00000
Rotterdam Ventures, Inc. -- $ 2,292,011.40 $ 2,292,011.40 67,831.02
Rotterdam Industrial Park,
Building 6
Xxxxxxxxxxx, XX 00000
Xxxxxxx X. Xxxxx -- $ 1,898,621.20 $ 1,898,621.20 56,188.82
X.X. Xxx 00000
Xxxxxx, XX 00000-0000
NAME AND ADDRESS DATE ADMITTED PERCENTAGE
OF PARTNER TO PARTNERSHIP INTEREST
---------------- -------------- ----------
GENERAL PARTNER:
ProLogis Xxxxxx XX LLC April 30, 2004 0.875%
c/o ProLogis
00000 Xxxx 00xx Xxxxx
Xxxxxx, XX 00000
LIMITED PARTNERS:
ProLogis April 30, 2004 86.587%
00000 Xxxx 00xx Xxxxx
Xxxxxx, XX 00000
Xxxxxxx X. Xxxxxx August 4, 2004 2.110%
00 Xxxx Xxxx Xxxx
Xxxx Xxxx, XX 00000
Xxxxxx X. Xxxxxx August 4, 2004 0.225%
000 Xxxx Xxx Xxx. #0X
Xxx Xxxx, XX 00000
Northeastern Industrial August 4, 2004 4.411%
Park, Inc.
Xxxxxxxxx Xxxxxxxxxx Xxxx,
Xxxxxxxx 0
Xxxxxxxxxxx, XX00000
Washington Avenue August 4, 2004 0.537%
Ventures, Inc.
Xxxxxxxxx Xxxxxxxxxx Xxxx,
Xxxxxxxx 0
Xxxxxxxxxxx, XX 00000
Rotterdam Ventures, Inc. August 4, 2004 0.967%
Rotterdam Industrial Park,
Building 6
Xxxxxxxxxxx, XX 00000
Xxxxxxx X. Xxxxx August 4, 2004 0.801%
X.X. Xxx 00000
Xxxxxx, XX 00000-0000
A-1
AGREED VALUE OF
NAME AND ADDRESS CASH CONTRIBUTED TOTAL PARTNERSHIP DATE ADMITTED PERCENTAGE
OF PARTNER CONTRIBUTION PROPERTY CONTRIBUTION UNITS TO PARTNERSHIP INTEREST
----------------------------- --------------- --------------- --------------- ------------ -------------- ----------
Xxxx X. Xxxxxxxxxxx -- $ 815,150.00 $ 815,150.00 24,123.99 August 4, 2004 0.344%
0000 Xxxxxxxxx Xxxx
Xxxxxxx, XX 00000
Xxxxxxx X. Xxxxxxxx -- $ 5,769,381.80 $ 5,769,381.80 170,742.19 August 4, 2004 2.435%
c/o Browning Investments
000 Xxxxx Xxxxxxxx Xxxxxx,
Xxx 000
Xxxxxxxxxxxx, XX 00000
Airtech Parkway -- $ 1,676,805.20 $ 1,676,805.20 49,624.27 August 4, 2004 0.708%
Associates, LLC
000 X. Xxxxxxxx Xxxxxx,
Xxx. 000
Xxxxxxxxxxxx, XX 00000
TOTAL $207,256,894.67 $ 29,710,991.80 $236,967,886.47 7,012,954.99 -- 100.000%
=============== =============== =============== ============ =======
A-2
EXHIBIT B
NOTICE OF REDEMPTION
The undersigned hereby irrevocably (i) redeems _______________ Partnership
Units in ProLogis Xxxxxx, X.X. (the "Partnership"), in accordance with the terms
of the Limited Partnership Agreement of the Partnership (the "Agreement") and
the redemption rights referred to therein, (ii) surrenders such Partnership
Units and all right, title and interest therein and (iii) directs that the Cash
Amount or Shares Amount (as determined by the General Partner) deliverable upon
exercise of the Redemption Right be delivered to, and registered or placed in,
the name and at the address specified below, and, if applicable, that a new
certificate representing ownership of Partnership Units not so redeemed be
issued and delivered to the undersigned, and, if Shares are to be delivered,
such 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)
_____________________________________________
(Street Address)
_____________________________________________
(City) (State) (Zip Code)
_____________________________________________
(Social Security or Taxpayer Identification
Number)
If the Shares are to be issued in another person's name, fill in the form below
and have your signature guaranteed.
Please insert social security or identifying number of other person:
__________________________
Name in which Shares are to be
issued:________________________________________________
Address:_________________________________________________________________
Signature Guaranteed by:
_____________________________________________
EXHIBIT C
REPRESENTATIONS, WARRANTIES AND COVENANTS
I. Representations and Warranties
ProLogis hereby represents and warrants to each holder of Class A Limited
Partnership Units, as of the date of this Agreement, as follows:
(a) Capital Structure of the Partnership.
(i) Partnership Units.
(A) As of the date of this Agreement, no Class A Limited Partnership
Units are outstanding and all Class A Limited Partnership Units to be
issued in the transactions contemplated by the Merger Agreement will, when
issued be, validly issued and outstanding, fully paid and nonassessable
and not subject to preemptive rights.
(B) The General Partner owns all of the General Partnership Units
(comprising 0.1% of all outstanding Partnership Units) and is the sole
general partner of the Partnership. ProLogis owns all of the Partnership
Common Units (comprising 99.9% of all outstanding Partnership Units) and
is the sole limited partner of the Partnership. Except for ProLogis and
the Contributing OP Unit Holders, the Partnership shall have no other
limited partners as of the Closing Date.
(ii) Miscellaneous.
(A) Except as set forth in this Agreement, including this Exhibit C,
there are issued and outstanding or reserved for issuance: (1) no
partnership interests, bonds, debentures, notes or other indebtedness
having the right to vote (or convertible not, or exchangeable for,
securities having the right to vote) on any matters on which holders of
Class A Limited Partnership Units may vote ("Voting Debt"), or other
voting securities of the Partnership; (2) no securities of the Partnership
or securities or assets of any other entity convertible into or
exchangeable for Partnership Interests, Voting Debt or other voting
securities of the Partnership and (3) no options, warrants, calls, rights
(including preemptive rights), commitments or agreements to which the
Partnership is a party or by which it is bound in any case obligating the
Partnership to issue, deliver, sell, purchase, redeem or acquire, or cause
to be issued, delivered, sold, purchased, redeemed or acquired, additional
Partnership Interests, Voting Debt or other voting securities of the
Partnership, or obligating the Partnership to grant, extend or enter into
any such option, warrant, call, right, commitment or agreement.
(B) The Partnership has no Subsidiaries and owns no capital stock or
other ownership interest in any Person.
(C) Except as set forth in this Agreement, there are no agreements,
voting trusts or other agreements or understandings to which the
Partnership is a party or by
C-1
which it is bound relating to the voting of any Partnership Interests or
other securities of the Partnership.
(b) Authority; No Violations; Consents and Approvals.
(i) Each of ProLogis and the General Partner has all requisite power
and authority to enter into this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this and
the consummation of the transactions contemplated hereby have been duly
authorized by all necessary action on the part of the General Partner and
ProLogis.
(ii) This Agreement has been duly executed and delivered by each of
the General Partner and ProLogis, and assuming this Agreement constitutes
the valid and binding obligation of the holders of Class A Limited
Partnership Units, constitutes a valid and binding obligation of each of
the General Partner and ProLogis, enforceable in accordance with its
terms, subject as to enforceability, to bankruptcy, insolvency,
reorganization, moratorium and other Laws of general applicability
relating to or affecting creditors' rights and to general principles of
equity (regardless of whether such enforceability is considered in a
proceeding in equity or at law).
(iii) The execution and delivery of this Agreement do not, and the
consummation of the transactions contemplated hereby, and compliance with
the provisions hereof, will not, conflict with, or result in any violation
of, or default (with or without notice or lapse of time, or both) under,
or give rise to a right of termination, cancellation or acceleration of
any material obligation, or give rise to a right of purchase under, result
in the creation of any Lien (as such term is defined in the Merger
Agreement) upon any of the properties or assets of any of the General
Partner or ProLogis under, or require the consent or approval of any
third-party lender under any provision of (A) the organizational documents
of the General Partner or ProLogis or, (B) any Material Contract (as such
term is defined in the Merger Agreement) applicable to the General Partner
or ProLogis, the respective properties or assets of the General Partner or
ProLogis, or any guarantee by the General Partner or ProLogis, (C) any
joint venture or other ownership arrangement to which the General Partner
or ProLogis is a party or (D) any judgment, order, decree or law
applicable to the General Partner or ProLogis or any of their respective
properties or assets, other than, in the case of clauses (B), (C) and (D),
any such conflicts, violations, defaults, rights or Liens that,
individually or in the aggregate, (x) would not have, or would not be
reasonably likely to have, a material adverse effect on the business,
properties, condition (financial or otherwise), or results of operations
of ProLogis or its Subsidiaries taken as a whole or (y) would not, or
would not be reasonably likely to, prevent or materially delay the
performance by the General Partner or ProLogis of any of their respective
obligations under this Agreement (a "Material Adverse Effect").
(iv) No consent, approval, order or authorization of, or
registration, declaration or filing with, or permit from any Governmental
Entity (as defined in the Merger Agreement) is required by or with respect
to the General Partner or ProLogis in connection with the execution and
delivery by the General Partner or ProLogis of this
C-2
Agreement or the consummation by the General Partner or ProLogis of the
transactions contemplated hereby, except for: (A) the filing with the SEC
of such reports under Section 13(a) of the Exchange Act and such other
compliance with the Securities Act and the Exchange Act and the rules and
regulations thereunder as may be required in connection with this
Agreement and the transactions contemplated hereby; and (B) any such
consent, approval, order, authorization, registration, declaration, filing
or permit that the failure to obtain or make would not reasonably be
expected to materially impair the ability of the General Partner or
ProLogis to perform its obligations hereunder or prevent the consummation
of any of the transactions contemplated hereby or result in a Material
Adverse Effect.
(c) Litigation. There is no suit, action or proceeding pending, or, to the
knowledge of the General Partner or ProLogis, threatened against or affecting
the General Partner or ProLogis that would be likely to prevent the consummation
of the transactions contemplated by this Agreement.
(d) Interim Operations of the Partnership. The Partnership was formed
solely for the purpose of engaging in the transactions contemplated hereby and,
except for obligations or liabilities incurred in connection with its
organization and the transactions, agreements and arrangements contemplated by
this Agreement and the Merger Agreement, has engaged in no other business or
activities, has incurred no other obligations or liabilities, has no assets and
has conducted its operations only as contemplated hereby.
(e) SEC Documents. ProLogis has made available to each holder of Class A
Limited Partnership Units (by public filing with the SEC or otherwise) a true
and complete copy of each report, schedule, registration statement and
definitive proxy statement filed by ProLogis or any ProLogis Subsidiary, with
the SEC since January 1, 2001 (the "ProLogis SEC Documents"), which are all of
the documents required to have been filed by any of them with the SEC since that
date. As of their respective dates, the ProLogis SEC Documents complied in all
material respects with the requirements of the Securities Act or the Exchange
Act, as the case may be, and the rules and regulations of the SEC thereunder
applicable to such ProLogis SEC Documents and none of the ProLogis SEC Documents
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading, except
to the extent such statements have been modified or superseded by later ProLogis
SEC Documents filed and publicly available prior to the date of this Agreement.
Neither ProLogis nor any ProLogis Subsidiary has any outstanding and unresolved
comments from the SEC with respect to the ProLogis SEC Documents. The
consolidated financial statements of ProLogis included in the ProLogis SEC
Documents complied as to form in all material respects with the applicable
accounting requirements and the published rules and regulations of the SEC with
respect thereto, have been prepared in accordance with generally accepted
accounting principles ("GAAP") applied on a consistent basis during the periods
involved (except as may be indicated in the notes thereto, or, in the case of
the unaudited statements, as permitted by Rule 10-01 of Regulation S-X under the
Exchange Act) and fairly presented, in accordance with applicable requirements
of GAAP and the applicable rules and regulations of the SEC (subject, in the
case of the unaudited statements, to normal, recurring adjustments, none of
which are material), the consolidated financial position of ProLogis and the
ProLogis Subsidiaries, taken as a whole, as
C-3
of their respective dates and the consolidated statements of income and the
consolidated cash flows of ProLogis and the ProLogis Subsidiaries for the
periods presented therein. Other than ProLogis no other ProLogis Subsidiary is
required to make any filing with the SEC.
II. Covenants
ProLogis hereby agrees for the benefit of the holders of Class A Limited
Partnership Units that ProLogis shall be liable for any violation or default by
Keystone Operating Partnership, L.P. or any successor entity of the Protected
Partner Agreements and any violation or default by Keystone Operating
Partnership, L.P. of Section 8.5(e) of this Agreement, in each case from and
after the date of this Agreement.
C-4
EXHIBIT D
PROPERTIES WITH TAX PROTECTION AGREEMENTS
PENNSYLVANIA
000 Xxxxxxxxxxxx Xxxxxx
0000 Xxxxx Xxxxx Xxxxxx
XXXXXXX
8677 Logo Court
EXHIBIT E
CONTRIBUTED PROPERTIES
KOP UNITS
CONTRIBUTED
-----------
Xxxxxxx X. Xxxxxx 210,084
Xxxxxx X. Xxxxxx 22,394
Northeastern Industrial Park, Inc. 439,231
Washington Avenue Ventures, Inc. 53,460
Rotterdam Ventures, Inc. 96,303
Xxxxxxx X. Xxxxx 79,774
Xxxx X. Xxxxxxxxxxx 34,250
Xxxxxxx X. Xxxxxxxx 242,411
Airtech Parkway Associates, LLC 70,454
---------
TOTAL 1,248,361
=========
SCHEDULE I
704(c) VALUES
KOP UNITS CONTRIBUTED 704(c) VALUE
--------------------- --------------
Xxxxxxx X. Xxxxxx 210,084 $ 4,999,999.20
Xxxxxx X. Xxxxxx 22,394 532,977.20
Northeastern Industrial Park, Inc. 439,231 10,453,697.80
Washington Avenue Ventures, Inc. 53,460 1,272,348.00
Rotterdam Ventures, Inc. 96,303 2,292,011.40
Xxxxxxx X. Xxxxx 79,774 1,898,621.20
Xxxx X. Xxxxxxxxxxx 34,250 815,150.00
Xxxxxxx X. Xxxxxxxx 242,411 5,769,381.80
Airtech Parkway Associates, LLC 70,454 1,676,805.20
--------- --------------
TOTAL 1,248,361 $29,710,991.80
========= ==============
PROPERTY DESCRIPTION 704(c) VALUE
------------------------------------------------------------- -------------
0000 Xxxx Xxxxx Xxxxxxxxxxxx XX $ 21,788,617
Goldstar South Brunswick Township NJ 12,000,166
Xxxxxx Land South Brunswick Township NJ 600,008
0000 Xxxxxxxxxx Xxxx Xxxxxxxxx XX 3,383,991
0000 Xxxxxxx Xxxxx Xxxxxxxxx XX 2,689,289
0000 Xxxxxx Xxxxx Xxxxxxxxx XX 1,066,682
0000 Xxxxxxxxxx Xxxxxxxxx Xxxxxxxxx XX 11,878,698
0000 Xxxxxx Xxxxx Xxxxxxxxx XX 22,304,022
0000 Xxxxxx Xxxxx Xxxxxxxxx XX 14,703,891
0000 Xxxxxx Xxxxx Xxxxxxxxx XX 4,723,955
000 Xxxxxxxxxxxx Xxxxxx Xxxxxxxxxx XX 14,167,971
0000 Xxxxx Xxxxx Xxxxxx Xxxxxxxxxx XX 26,679,453
------------
Subtotal 135,986,743
------------
JOINT VENTURE INTERESTS
-------------------------------------------------------
20% managing partner interest
in KPJV, LLP,* which indirectly
owns:
000 Xxxxxxx Xxxxxxx Xxxxxxxxxxxx XX 7,231,908
000 Xxxxxxx Xxxxxxx Xxxxxxxxxxxx XX 5,977,278
000 Xxxxx Xxxx Xxxxxxxxxxxx XX 3,415,068
000 Xxxxxxxx Xxxx Xxxxxxxxxxxx XX 2,581,389
000 Xxxxxxxx Xxxx Xxxxxxxxxxxx XX 2,420,680
000 Xxxxxxxx Xxxx Xxxxxxxxxxxx XX 1,104,875
0000 Xxxx 00xx Xxxxxx Xxxxxxxxxxxx XX 2,531,168
0000 Xxxxxxx Xxxxxxxxx Xxxxxxxxxxxx XX 1,124,963
00 Xxxxxxxxx Xxxxx Xxxxxxxx XX 2,511,079
000 Xxxxxx Xxx Xxxxxxxxxxxxx XX 9,240,771
0000 - 00 Xxxxxxxxxx Xxxx Xxxxxxxxx XX 1,888,332
0000 Xxxxxx Xxxxx Xxxxxxxxx XX 1,787,888
0000 Xxxxxx Xxxxx Xxxxxxxxx XX 1,225,407
----------
Subtotal 43,040,806
----------
* Net value of the 20% managing partner interest in KPJV, LLP is equal to
$32,442,827 ($43,040,806 gross asset value less $10,597,979 debt)
704(c) VALUE
--------------
20% managing member interest in
Keystone New Jersey Associates,
LLC,** which owns:
00 Xxxxxxx Xxxx Xxxxxxxx XX 9,182,046
00 Xxxxxxx Xxxx Xxxxxxxxx Xxxx Xxxx 0-X XX 1,000,014
000-000 Xxxxx Xxxx Xxxxxx XX 14,294,777
000 Xxxxxxxxx Xxxxxx Xxxxxxxxx XX 5,008,389
000-000 Xxxxxxx Xxxxx Xxxxxxxxxx XX 2,253,775
000 Xxxxxxxx Xxxx Xxxxxxx XX 2,399,853
000-000 Xxxxxxx Xxxxx Xxxxxxxxxx XX 2,232,907
000 Xxxxxxx Xxxxx Xxxxxxxxxx XX 2,817,219
000 Xxxxxxx Xxxxx Xxxxxxxxxx XX 3,005,033
000 Xxxxxxxxxx Xxxxxx Xxxxxxxxx XX 1,460,780
0000 Xxxxxx Xxxxx Xxxxxx Xxxxxxxxx XX 2,900,692
0000 Xxxxxx Xxxxx Xxxxxx Xxxxxxxxx XX 2,921,560
One Xxxxx Xxxx Edison NJ 2,504,194
----------
Subtotal 51,981,239
----------
** Net value of the 20% managing member interest in Keystone New Jersey
Associates, LLC is equal to $37,094,038 ($51,981,239 gross asset value
less $14,887,201 debt)
50% non-managing member interest in 5 Points Associates, LLC,*** which owns:
000 Xxxxxxx Xxxxxxx Xxxxxxxxxxxx IN 14,245,992
*** Net value of the 50% non-managing member interest in 5 Points Associates,
LLC is equal to $7,574,836 ($14,245,992 gross asset value less $6,671,156
debt)
$27 million non-controlling preferred equity interest
in Nocha LLC 27,000,000
------------
TOTAL $272,254,780
============
