Exhibit 10.3
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FORM OF
SECOND AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
DUKE-WEEKS REALTY LIMITED PARTNERSHIP
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Dated as of __________, 1999
TABLE OF CONTENTS
PAGE
ARTICLE I General Provisions.......................................................1
Section 1.01. Name.................................................................1
Section 1.02. Place of Business....................................................1
Section 1.03. Continuation and Term................................................1
Section 1.04. Definitions..........................................................1
ARTICLE II Members and Status......................................................10
Section 2.01. The Partners........................................................10
Section 2.02. Additional Partners.................................................10
Section 2.03. Classification and Ownership of Units...............................10
Section 2.04. Liability of General Partner........................................11
Section 2.05. Limitation Upon Liability of Limited Partners.......................12
ARTICLE III Scope of Partnership and Mode of Operation..............................14
Section 3.01. Scope of Partnership................................................14
Section 3.02. Powers of the Partnership...........................................14
Section 3.03. Management of the Partnership.......................................15
Section 3.04. Limitation on Powers................................................15
Section 3.05. Non-Participation in Management by Limited Partners.................15
Section 3.06. Time to be Devoted to Business......................................15
Section 3.07. Dealings With Related Entities......................................16
Section 3.08. Other Business......................................................16
Section 3.09. Restriction on Parent and Partnership Activities....................17
Section 3.10. Indemnification.....................................................18
Section 3.11. Voting Rights of Partners...........................................19
Section 3.12. Approval Procedures.................................................20
Section 3.13. Loans to and from the Partnership...................................20
Section 3.14. Reimbursement of Expenses...........................................21
Section 3.15. Indemnification of Certain Recourse Debt............................21
ARTICLE IV Capital Contributions, Profits and Losses and Distributions.............21
Section 4.01. Purchase of Units and Capital Contributions.........................21
Section 4.02. Issuance of Additional Partnership Interests........................21
Section 4.03. Distributable Cash..................................................22
Section 4.04. Distributions From Terminating Capital Transaction..................23
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TABLE OF CONTENTS
(CONTINUED)
PAGE
Section 4.05. Allocation of Profits and Losses....................................23
Section 4.06. Mandatory Allocations...............................................25
Section 4.07. Other Allocation Rules..............................................28
Section 4.08. Tax Allocations; Code Section 704(c)................................28
Section 4.09. General Provisions..................................................28
Section 4.10. No Interest on Capital Accounts.....................................28
Section 4.11. Distribution of Property............................................28
Section 4.12. Return of Capital Contribution......................................29
ARTICLE V Accounting, Reporting and Holding of Assets.............................29
Section 5.01. Fiscal Year.........................................................29
Section 5.02. Records, Accounting and Reports.....................................29
Section 5.03. Right to Inspection.................................................30
Section 5.04. Holding and Transfer of Assets......................................30
Section 5.05. Bank Accounts.......................................................31
Section 5.06. Tax Status; Notice of Tax Controversy...............................31
Section 5.07. Tax Matters Partner; Tax Elections; Tax Returns.....................31
Section 5.08. Tax Matters Partner Not Liable......................................33
Section 5.09. Withholding.........................................................33
ARTICLE VI Dissolution and Continuation of Partnership.............................33
Section 6.01. Dissolution.........................................................33
Section 6.02. Notice of Dissolution...............................................34
Section 6.03. Continuation of Partnership.........................................34
Section 6.04. Extension of Term...................................................34
ARTICLE VII Transfer of Units and Changes in Partners...............................34
Section 7.01. General Partner Transfers Restricted................................34
Section 7.02. Limited Partner Transfers Restricted................................35
Section 7.03. Transfer and Assignment of Partnership Interest.....................36
Section 7.04. Substitution as a Partner...........................................36
Section 7.05. Additional Conditions to Assignment and Substitution................37
Section 7.06. Allocation Upon Assignment or Redemption............................37
Section 7.07. Redemption Right....................................................37
Section 7.08. Effect of Transfer..................................................40
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TABLE OF CONTENTS
(CONTINUED)
PAGE
ARTICLE VIII Liquidation.............................................................40
Section 8.01. Liquidation Determination...........................................40
Section 8.02. Liquidation Procedure...............................................40
Section 8.03. Allocation of Liquidation Proceeds..................................40
ARTICLE IX Miscellaneous...........................................................40
Section 9.01. Notice..............................................................40
Section 9.02. Construction........................................................41
Section 9.03. Assigns and Successors in Interest..................................41
Section 9.04. Assignment..........................................................41
Section 9.05. Amendment...........................................................41
Section 9.06. Certificate of Limited Partnership..................................42
Section 9.07. Further Assurances..................................................42
Section 9.08. Warranties of Representatives.......................................42
Section 9.09. Computation of Time.................................................42
Section 9.10. Captions............................................................42
Section 9.11. Identification......................................................42
Section 9.12. Counterparts........................................................42
Section 9.13. Partners' Capability................................................43
Section 9.14. Severability........................................................43
Section 9.15. Approval or Consent.................................................43
Section 9.16. Meetings............................................................43
Section 9.17. Consent of Partners and Assignees...................................43
Section 9.18. Limitation on Benefits of this Agreement............................43
Section 9.19. Special Power of Attorney...........................................43
(exhibits not included)
EXHIBIT A................................................................................A-1
EXHIBIT B................................................................................B-1
EXHIBIT C................................................................................C-1
EXHIBIT K................................................................................K-1
EXHIBIT L................................................................................L-1
EXHIBIT M................................................................................M-1
EXHIBIT N................................................................................N-1
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FORM OF
SECOND AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP
OF
DUKE-WEEKS REALTY LIMITED PARTNERSHIP
Duke GP, Inc., an Indiana corporation, Duke Realty Investments, Inc., an
Indiana corporation to be known as Duke-Weeks Realty Corporation, and the
Persons whose names are set forth on EXHIBIT A hereto, hereby adopt and agree as
provided in the following Second Amended and Restated Agreement of Limited
Partnership (the "Agreement").
ARTICLE I
General Provisions
Section 1.01. Name. The name of the Partnership prior to the date of this
Agreement was Duke Realty Limited Partnership. From and after the date of this
Agreement, the name of the Partnership is Duke-Weeks Limited Partnership.
Section 1.02. Place of Business. The specified office of the Partnership
shall be 0000 Xxxxxxxx Xxxxxxxx, Xxxxx 0000, Xxxxxxxxxxxx, Xxxxxxx 00000, or
such location as may be selected from time to time by the General Partner.
Section 1.03. Continuation and Term. The Partners agree that (i) Duke GP,
Inc., a wholly owned subsidiary of Duke Realty Investments, Inc. ("Parent"), is
hereby admitted to the Partnership as the general partner of the Partnership to
replace Parent, which hereby withdraws as the general partner; (ii) [ ] of the
Units currently held by Parent as general partner are hereby transferred and
assigned to Duke GP, Inc. with Parent's remaining Units in the Partnership to be
held by Parent as a limited partner in the Partnership; (iii) the Persons listed
in EXHIBIT A-1 are hereby admitted to the Partnership as Limited Partners, with
the result that, at the date of this Agreement, the Limited Partners are the
Persons listed in Exhibit A; and (iv) the Amended and Restated Agreement of
Limited Partnership dated October 4, 1993 (the "Prior Partnership Agreement")
that previously evidenced the Partnership is hereby amended and restated in its
entirety, subject to the terms provided herein, and the Partnership is continued
without interruption under and pursuant to the terms and provisions of the Act;
provided however, this Second Amended and Restated Agreement of Limited
Partnership shall become effective only upon the effective time of the REIT
Merger (as hereinafter defined). If such effective time of the REIT Merger does
not occur, this Agreement shall have no effect and the Partnership will continue
pursuant to the terms and conditions set forth in the Prior Partnership
Agreement. The term of the Partnership shall extend until December 31, 2099,
subject to extension as provided in Section 6.05, unless sooner terminated as
hereinafter provided.
Section 1.04. Definitions. The following terms have the following meanings
herein:
"Act" means the Indiana Revised Uniform Limited Partnership Act, as now or
hereafter amended.
"Additional Limited Partner" means a Person admitted to the Partnership as
a Limited Partner pursuant to Sections 2.02 and 4.02, and who is shown as such
on the books and records of the Partnership.
"Adjusted Capital Account" means, with respect to any Partner, such
Partner's Capital Account as of the end of the relevant fiscal year or other
period, after giving effect to the following adjustments:
(i) Credit to such Capital Account any amounts which such Partner
is obligated to restore pursuant to this Agreement or an
Indemnity Agreement, deemed obligated to restore to the
Partnership pursuant to Section 1.704-1(b)(2)(ii)(c) of
the Treasury Regulations or deemed obligated to restore to
the Partnership pursuant to Sections 1.704-2(g)(1) and
1.704-2(i)(5) of the Treasury Regulations, and
(ii) Debit to such Capital Account the items described in Section
1.704-1(b)(2)(ii)(d)(4), (5) and (6) of the Treasury
Regulations.
"Affiliate" means a Person who, with respect to another person, directly or
indirectly controls, is controlled by or is under common control with such other
Person.
"Aggregate Indemnity Amount" means with respect to the Indemnitor Partners,
as a group, the aggregate amount of Indemnity Amounts, if any, of the Indemnitor
Partners, as determined on the date in question.
"Aggregate Restoration Amount" means with respect to the Obligated
Partners, as a group, the aggregate amount of the Restoration Amounts, if any,
of the Obligated Partners, as determined on the date in question.
"Agreed Value" means (i) in the case of any property owned by the
Partnership as of the date immediately prior to the Merger, the fair market
value of such property; and (ii) in the case of any Contributed Property
contributed pursuant to or subsequent to the Merger, the fair market value of
such property or other consideration at the time of contribution, in each case
as determined by the General Partner using such reasonable method of valuation
as it may adopt, reduced in either case by any liabilities either assumed by the
Partnership upon such contribution or to which such property is subject when
contributed.
"Assignee" means a Person who has acquired a direct beneficial interest in
the Partnership but who has not become a Substituted Partner.
"Assignee of Record" means an Assignee whose beneficial interest in the
Partnership has been recorded on the books of the Partnership and is the subject
of a written assignment, the effective date of which has passed.
"Assignment" means, for purposes of Article VII with regard to Units, any
sale, assignment, transfer, pledge, encumbrance or other disposition of, or the
granting of a security interest in, one or more Units, including without
limitation a transfer in connection with a dissolution, merger, consolidation or
similar action of a Partner or an Assignee, but does not include a redemption or
acquisition of Units from a Limited Partner pursuant to Section 7.07. "Assign"
means to effect an Assignment.
"Bankruptcy" means, with respect to a Person, the happening of any of the
following:
(i) The entry by a court or governmental agency having
jurisdiction in the premises of a decree or order for relief
in respect of the Person in an involuntary case under any
applicable bankruptcy, insolvency or other similar law now or
hereafter in effect or appointing a receiver, liquidator,
assignee, custodian, trustee, sequestrator or similar official
of such Person, or for any substantial part of such Person's
property or ordering the winding up or liquidation of such
Person's affairs, and such decree or order remaining unstayed
and in effect for a period of sixty (60) consecutive days; or
(ii) The consent by the Person to the appointment or taking
possession by a receiver, liquidator, assignee, custodian,
trustee, sequestrator or similar official of any substantial
part of such Person's property, or the filing of a pleading in
any court of record admitting in writing the inability of the
Person to pay his, her or its debts as they come due; or
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(iii) The commencement by the Person of a voluntary case under any
applicable bankruptcy, insolvency or other similar law now or
hereafter in effect, or the consent by such Person to the
entry of an order for relief in an involuntary case under any
such law; or
(iv) The making by the Person of a general assignment for the
benefit of creditors.
"Business Day" means any day except a Saturday, Sunday or other day on
which commercial banks in New York, New York or Indianapolis, Indiana are
authorized or required by law to close.
"Capital Account" means, as to any Partner, a book account maintained in
accordance with the following provisions:
To each Partner's Capital Account there shall be credited:
(i) the Agreed Value of any property other than cash such Partner
has contributed to the Partnership as a Capital Contribution;
(ii) the amount of cash such Partner has contributed to the
Partnership (including any contribution pursuant to Section
4.01 and Section 2.05, and including any payments in
satisfaction of Recourse Liabilities made by an Indemnitor
Partner pursuant to an Indemnity Agreement);
(iii) the amount of Profits allocated to such Partner and any items
in the nature of income or profits that are specifically
allocated to such Partner pursuant to Section 4.06; and
(iv) the amount of any liabilities of the Partnership that are
assumed by the Partner or are secured by any property
distributed by the Partnership to such Partner determined in
accordance with Treasury Regulations issued under Section 752
of the Code;
To each Partner's Capital Account there shall be debited:
(i) the amount of cash and the gross fair market value of any
Partnership asset distributed to such Partner with respect to
the Partner's Units pursuant to any provision of this
Agreement,
(ii) the amount of Losses allocated to such Partner and any items
in the nature of expenses or losses that are allocated to such
Partner pursuant to Section 4.06; and
(iii) any reimbursement by the Partnership to an Indemnitor Partner
pursuant to an Indemnity Agreement.
Each Partner's Capital Account shall be further maintained and adjusted in
accordance with the Code and Treasury Regulations thereunder, including any
other adjustments to Capital Accounts provided in the Treasury Regulations
issued under Section 704 of the Code, such as, but not limited to, increases or
decreases to reflect a revaluation of Partnership property on the Partnership's
books in accordance with the rules of Treasury Regulations Section
1.704-1(b)(2)(iv)(f). The foregoing provisions and other provisions of this
Agreement relating to the maintenance of Capital Accounts are intended to comply
with Treasury Regulations Section 1.704-1(b), and shall be interpreted and
applied in a manner consistent with such Treasury Regulations. Any questions
with respect to a Partner's Capital Account shall be resolved by the General
Partner in its reasonable discretion, applying principles consistent with this
Agreement. Generally, a transferee of a Partnership interest shall succeed to
the Capital Account relating to the Partnership interest transferred or the
corresponding portion thereof. The Capital Account of a Partner may, under
certain circumstances, be an amount less than zero.
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"Capital Contribution" means the total amount of cash and the Agreed Value
of any Contributed Property contributed to the Partnership by a Partner.
"Code" means the Internal Revenue Code of l986, as amended (or any
corresponding provision of succeeding law). A reference to a section of the Code
shall be deemed to include any amendatory or successor provision thereto.
"Code Section 705(a)(2)(B) Expenditures" mean expenditures described in
Code Section 705(a)(2)(B) and any amounts treated as Code Section 705(a)(2)(B)
expenditures under Treasury Regulations Section 1.704-1(b)(2)(iv)(i)(2).
"Common Units" means Units that are not Preferred Units.
"Contributed Property" means each property or other asset, in such form as
may be permitted by the Act, but excluding cash, contributed by any Partner or
deemed contributed by any Partner to the Partnership.
"Current Market Price" means for a REIT Share at any date, the average of
the daily closing prices for thirty (30) consecutive Business Days commencing
forty-five (45) Business Days before such date, where the closing price for each
day is (A) the last reported sale price or, in case no such reported sale takes
place on such day, the average of the last reported bid and asked prices, in
either case on the principal national securities exchange registered under the
Securities Exchange Act of 1934 on which the REIT Shares are admitted to trading
or listed; or (B) if not listed or admitted to trading on any national
securities exchange, the mean between the closing high bid and low asked
quotations of the REIT Shares on the National Association of Securities Dealers,
Inc. Automated Quotation System, or any similar system of automated
dissemination of quotations of securities prices then in common use, if so
quoted; or (C) if not so listed or admitted for trading on such exchange and if
not so quoted, the mean between the high bid and low asked quotations for REIT
Shares as reported by the National Quotation Bureau Incorporated or such other
nationally recognized quotation service selected by the General Partner for that
purpose (if said Bureau is not at the time furnishing quotations), if at least
two securities dealers have inserted both bid and asked quotations for the REIT
Shares on at least five (5) of the ten (10) trading days preceding such
valuation date; or (D) if none of the conditions set forth in (A), (B), or (C)
is met, unless the holder of the REIT Shares or Units and the General Partner
otherwise agree, the fair market value of such REIT Shares as determined by a
member firm of the New York Stock Exchange, Inc. mutually acceptable to such
holder and the General Partner.
"Depreciation" means for each fiscal year or other period, an amount equal
to the depreciation, amortization, or other cost recovery deduction allowable
for federal income tax purposes with respect to an asset for such year or other
period, except that if the Partnership asset is reflected on the books of the
Partnership at a book value that differs from the adjusted tax basis of such
asset pursuant to Section 1.704-1(b)(2)(iv)(d) or 1.704-1(b)(2)(iv)(f) of the
Treasury Regulations, depreciation, amortization, or other cost recovery
deductions shall be computed for book purposes with respect to such asset
pursuant to Section 1.704-1(b)(2)(iv)(g) or 1.704-3(d)(2) of the Treasury
Regulations.
"Distributable Cash" means, with respect to any period for which such
calculation is being made, the sum of:
(i) The Partnership's Profit or Loss (as the case may be, with any
Loss stated as a negative number) for such period;
(ii) Depreciation and all other noncash charges deducted in
determining Profit or Loss for such period;
4
(iii) The amount of any reduction in reserves of the Partnership
referred to in clause (xi) below (including, without
limitation, reductions resulting because the General Partner
determines such amounts are no longer necessary);
(iv) The excess of proceeds (net of transaction expenses) from the
sale, exchange, disposition, or financing or refinancing of
Partnership property for such period over any gain recognized
from such sale, exchange, disposition, or financing or
refinancing during such period (excluding Terminating Capital
Transactions);
(v) Any expense or loss amount included in determining Profit or
Loss for such period that was not disbursed by the Partnership
during such period; and
(vi) All other cash received by the Partnership for such period
that was not included in clauses (i) to (v) above with respect
to such period;
less the sum of:
(vii) All principal debt payments made during such period by the
Partnership;
(viii) Capital expenditures made by the Partnership during such
period;
(ix) Investments in any entity (including loans made thereto) to
the extent that such investments are not otherwise described
in clauses (vii) or (viii);
(x) Any income or gain amount included in determining Profit or
Loss for such period that was not received by the Partnership
during such period;
(xi) The amount of any increase in reserves established during such
period which the General Partner determines is necessary or
appropriate in its sole and absolute discretion; and
(xii) All other expenditures and payments not deducted in
determining Profit or Loss or included in clauses (vii) to
(xi) with respect to such period.
Notwithstanding the foregoing, Distributable 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.
"Distribution" means any cash or property distributed to a Partner or
Assignee arising from its interest in the Partnership.
"DSI" means Duke Services, Inc., an Indiana corporation.
"Duke Services" means Duke Realty Services Limited Partnership, an Indiana
limited partnership.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"GAAP" means generally accepted accounting principles as in effect from
time to time in the United States.
"General Partner" means Duke GP, Inc., a wholly owned subsidiary of Parent.
"Immediate Family" has the meaning given to such term in Rule 16a-1(e)
under the Exchange Act.
"Incapacity" or "Incapacitated" means, (i) as to any individual Partner,
death, total physical disability or entry by a court of competent jurisdiction
adjudicating him incompetent to manage his
5
Person or his estate; (ii) as to any corporation which is a Partner, the filing
of a certificate of dissolution, or its equivalent, for the corporation or the
revocation of its charter; (iii) as to any partnership which is a Partner, the
dissolution and commencement of winding up of the partnership; (iv) as to any
estate which is a Partner, the distribution by the fiduciary of the estate's
entire interest in the Partnership; (v) as to any trustee of a trust which is a
Partner, the termination of the trust (but not the substitution of a new
trustee); or (vi) as to any Partner, the Bankruptcy of such Partner.
"Indemnity Agreement" means an agreement between a Partner and the General
Partner and/or Parent pursuant to which such Partner has agreed to indemnify the
General Partner and/or Parent from and against payment of a portion of the
Partnership's Recourse Liabilities and which shifts the economic risk of loss,
within the meaning of Section 1.752-2 of the Treasury Regulations, to one or
more Partners. Each Partner who is a party to an Indemnity Agreement is listed
on EXHIBIT N attached hereto as an "Indemnitor," together with the Indemnity
Amount of such Indemnitor.
"Indemnity Amount" means the maximum amount of Partnership Recourse
Liabilities as to which an Indemnitor Partner (or a person related to an
Indemnitor Partner within the meaning of Section 1.752-4(b) of the Treasury
Regulations) has agreed to bear the economic risk of loss (within the meaning of
Section 1.752-2 of the Treasury Regulations) through an Indemnity Agreement.
"Indemnitor Partners" means those Partners who are allocated the economic
risk of loss as to a portion of the Partnership's Recourse Liabilities through
an Indemnity Agreement.
"Insolvent" means, with respect to a Person, a situation where (i) the
Person is unable to pay its debts as they become due in the ordinary course of
business, or (ii) the Person's liabilities exceed the Person's assets as
determined under GAAP.
"IRS" means the Internal Revenue Service.
"Limited Partners" means (i) the Partners listed in EXHIBIT A hereto other
than the General Partner, (ii) Additional Limited Partners and (iii) successors
who have complied with the requirements of Article VII and who have been
accepted as Substituted Partners pursuant to Section 7.04, in each case until
all of the Units owned by any such Person are transferred under Article VII.
"Liquidation Preference Amount" means with respect to any Preferred Unit,
the amount payable with respect to such Preferred Unit pursuant to the
applicable Partnership Unit Designation upon the voluntary or involuntary
dissolution, liquidation or winding up of the Partnership, as the case may be,
as determined under the applicable Partnership Unit Designation.
"Merger" means the merger between Weeks Realty, L.P., a Georgia limited
partnership, with and into the Partnership pursuant to an agreement and plan of
merger dated February 28, 1999; such merger being in connection with and in
contemplation of a merger between Weeks Corporation, a Georgia corporation, with
and into Parent.
"MWSB" means MWSB, Inc., a Delaware corporation.
"Nonrecourse Deductions" means the nonrecourse deductions as defined in
Section 1.704-2(b)(1) of the Treasury Regulations. The amount of Nonrecourse
Deductions for a fiscal year equals the net increase, if any, in the amount of
Partnership Minimum Gain during such fiscal year reduced by any distributions
during such fiscal year of proceeds of a Nonrecourse Liability that are
allocable to an increase in Partnership Minimum Gain, determined according to
the provisions of Sections 1.704-2(c) and 1.704-2(h) of the Treasury
Regulations.
"Nonrecourse Liability" means a liability described in Section
1.704-2(b)(3) of the Treasury Regulations.
6
"Notice of Redemption" means the Notice of Redemption substantially in the
form of EXHIBIT C to this Agreement.
"Obligated Partner(s)" means that or those Limited Partner(s) listed as
Obligated Partner(s) on EXHIBIT L attached hereto and made a part hereof, as
such Exhibit may be amended from time to time by the General Partner, whether by
express amendment to this Partnership Agreement or by execution of a written
instrument by and between any additional Obligated Partner(s) being directly
affected thereby and the General Partner, acting on behalf of the Partnership
and without the prior consent of the Limited Partners (whether or not such
Limited Partners are Obligated Partners or Indemnitor Partners other than the
Obligated Partner(s) being directly affected thereby). Any successor, Assignee,
or transferee of the entire Partnership Interest of an Obligated Partner shall
be considered an Obligated Partner; provided however, that (i) if an entity
Obligated Partner makes a distribution of all or any portion of its Units, the
General Partner shall, upon receipt of written notice from such Obligated
Partner and such distributee(s) of Units, amend EXHIBIT L to add any such
distributee(s) as an additional Obligated Partner in the manner set forth in
such notice, and (ii) the General Partner and Parent shall not become Obligated
Partners with respect to any Units acquired from an Obligated Partner pursuant
to Section 7.07 or otherwise.
"Obligated Partner-Controlled Partnership" means any of those certain
general partnerships that, on August 24, 1994, had as its sole partners an
Obligated Partner and a corporation that is wholly owned by such Obligated
Partner and that became a Limited Partner in Weeks Realty, L.P. at that date.
"Parent" means Duke-Weeks Realty Corporation.
"Partner" means the General Partner or any Limited Partner.
"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 Section 1.704-2(i)(3) of the Treasury Regulations.
"Partner Nonrecourse Debt" means a liability as defined in Section
1.704-2(b)(4) of the Treasury Regulations.
"Partner Nonrecourse Deductions" means the partner nonrecourse deductions
as defined in Section 1.704-2(i)(2) of the Treasury Regulations. The amount of
Partner Nonrecourse Deductions with respect to a Partner Nonrecourse Debt for a
fiscal year equals the net increase, if any, in the amount of Partner Minimum
Gain during such fiscal year attributable to such Partner Nonrecourse Debt,
reduced by any distributions during that fiscal year to the Partner that bears
the economic risk of loss for such Partner Nonrecourse Debt to the extent that
such distributions are from the proceeds of such Partner Nonrecourse Debt and
are allocable to an increase in Partner Minimum Gain attributable to such
Partner Nonrecourse Debt, determined according to the provisions of Sections
1.704-2(h) and 1.704-2(i) of the Treasury Regulations.
"Partnership" means the partnership governed by this Agreement.
"Partnership Minimum Gain" means the aggregate gain, if any, that would be
realized by the Partnership for purposes of computing Profits and Losses with
respect to each Partnership asset if each Partnership asset subject to a
Nonrecourse Liability were disposed of for the amount outstanding on the
Nonrecourse Liability by the Partnership in a taxable transaction. Partnership
Minimum Gain with respect to each Partnership asset shall be further determined
in accordance with Section 1.704-2(d) of the Treasury Regulations and any
subsequent rule or regulation governing the determination of minimum gain. A
Partner's share of Partnership Minimum Gain at the end of any Partnership year
shall equal the aggregate Nonrecourse Deductions allocated to such Partner (or
his predecessors in interest) up to that time, less such Partner's (and
predecessors') aggregate share of decreases in Partnership Minimum Gain
determined in accordance with Section 1.704-2(g) of the Treasury Regulations.
7
"Partnership Record Date" means the record date established by the General
Partner for the distribution of Distributable Cash pursuant to Section 4.03
hereof, which record date shall be the same as the record date established by
Parent for a distribution to its shareholders of some or all of its portion of
such distribution.
"Partnership Unit Designation" has the meaning set forth in Section 4.02.
"Percentage Share" means, with respect to each Partner, the product of 100%
and a fraction, the numerator of which is equal to the number of Common Units
owned by the Partner and the denominator of which is equal to the total number
of outstanding Common Units.
"Permitted Transaction" means a merger by Parent with another entity,
immediately after which substantially all of the assets of the surviving entity,
other than Units held by Parent, are contributed to the Partnership as a Capital
Contribution in exchange for Units with a fair market value equal to the net
fair market value of the assets so contributed.
"Person" means an individual, firm, partnership, corporation, estate,
trust, pension or profit-sharing plan or other entity.
"Preferred Units" means (i) the Units described in EXHIBITS D THROUGH J
that are outstanding on the date of this Agreement and (ii) all other Units
issued after the date of this Agreement pursuant to Section 4.02 that are
designated as Preferred Units.
"Principal Owners" means Xxxx X. Xxxx, Xxxxxxx Xxxxxxx, Xxxxxx X. Xxxxxx,
Xxxxx X. Xxxxxx, Xxxxxx X. Xxxxxx, Xxxx X. Xxxxx and Xxxxxx X. Xxxx, Xx.
"Profits" and "Losses" mean, for each fiscal year or other period, an
amount equal to the Partnership's taxable income or loss for such fiscal year or
period, determined in accordance with Code Section 703(a) (for this purpose, all
items of income, gain, loss or deduction required to be stated separately
pursuant to Code Section 703(a)(1) shall be included in taxable income or loss),
with the following adjustments:
(i) Any income of the Partnership that is exempt from federal
income tax and not otherwise taken into account in computing
Profits or Losses shall be added to such taxable income or
loss;
(ii) Any Code Section 705(a)(2)(B) Expenditures not otherwise taken
into account in computing Profits or Losses shall be
subtracted from such taxable income or loss;
(iii) In the event any asset of the Partnership is distributed to
any Partner or sold by the Partnership, the difference on such
date between (a) the gross fair market value and (b) either
(1) the adjusted basis of the asset for federal income tax
purposes, or (2) if the asset is reflected on the books of the
Partnership at a book value that differs from the adjusted tax
basis of such asset pursuant to Treasury Regulations Section
1.704-1(b)(2)(iv)(d) or 1.704-1(b)(2)(iv)(f), the gross fair
market value on the date of the contribution of the asset to
the Partnership or the gross fair market value of the asset on
the date of the asset's revaluation on the Partnership's
books, as the case may be (as determined by the General
Partner) less Depreciation, shall be taken into account as
gain or loss from the disposition of such asset for purposes
of computing Profits or Losses;
(iv) 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 or other period; and
8
(v) Notwithstanding any other provision of this definition, any
items which are allocated pursuant to Section 4.06 hereof
shall not be taken into account in computing Profits and
Losses.
"Recourse Liabilities" means, as of the date of determination, the amount
of indebtedness owed by the Partnership on that date other than Nonrecourse
Liabilities and Partner Nonrecourse Debt.
"Redeeming Partner" has the meaning set forth in Section 7.07.
"Redemption Amount" means either (i) the REIT Shares Amount, or (ii) upon a
determination by Parent in the reasonable exercise of its discretion that
transfer of the REIT Shares Amount to the Redeeming Partner could cause Parent
to fail to qualify as a REIT, an amount of cash equal to the REIT Shares Amount
times the Current Market Price per REIT Share as of the date of receipt by
Parent of the Notice of Redemption (or, if such date is not a Business Day, the
first Business Day thereafter).
"Redemption Ratio" means the amount determined in accordance with Section
7.07(d).
"Redemption Right" has the meaning set forth in Section 7.07.
"REIT" means a real estate investment trust under Section 856 of the Code.
"REIT Merger" means the proposed merger between Weeks Corporation, a
Georgia corporation, with and into Duke Realty Investments, Inc.
"REIT Share" means a share of common stock of Parent.
"REIT Shares Amount" means a number of REIT Shares equal to the product of
the number of Units offered for redemption by a Redeeming Partner, multiplied by
the Redemption Ratio; PROVIDED, THAT in the event Parent issues to all holders
of REIT Shares rights, options, warrants or convertible or exchangeable
securities entitling the shareholders to subscribe for or purchase REIT Shares,
or any other securities or property (collectively, "RIGHTS") and Parent can
issue such rights to Persons exercising the Redemption Right, then the REIT
Shares Amount also includes such rights that a holder of that number of REIT
Shares would be entitled to receive.
"Restoration Amount" means with respect to any Obligated Partner, the
amount set forth opposite the name of such Obligated Partner on EXHIBIT L hereto
and made a part hereof, as such Exhibit may be modified from time to time by an
amendment to the Partnership Agreement or by execution of a written instrument
by and between any additional Obligated Partner(s) being directly affected
thereby and the General Partner, acting on behalf of the Partnership and without
the prior written consent of the Limited Partners (whether or not such Limited
Partners are Obligated Partners or Indemnitor Partners other than the Obligated
Partner(s) being directly affected thereby). If an entity Obligated Partner
makes a distribution of all or any portion of its Units, and the General Partner
receives a written notice from such Obligated Partner and any distributee(s) of
Units to amend EXHIBIT L to add such distributee(s) as additional Obligated
Partner(s), the Restoration Amount of such additional Obligated Partner(s) shall
be increased by an amount equal to that amount set forth in such notice, and the
Restoration Amount of the Obligated Partner making such distribution shall be
reduced by such amount. Those Limited Partners who were limited partners of
Weeks Realty, L.P. immediately prior to the Merger shall be given proportionate
opportunities to increase any Restoration Amount which they have elected to
restore upon liquidation of their interest in the Partnership (as more
particularly provided in Section 2.05 hereof) on the same basis, if any, as is
provided generally to Limited Partners.
"Special Partner Approval" means the approval of Partners holding more than
ninety percent (90%) of the outstanding Common Units.
9
"Specified Redemption Date" means the tenth Business Day after receipt by
the General Partner of a Notice of Redemption; PROVIDED THAT if the General
Partner combines its outstanding REIT Shares into a smaller number of REIT
Shares, no Specified Redemption Date shall occur between the record date and the
effective date of such combination.
"Subsidiary" means, with respect to any Person, any corporation or other
entity of which a majority of (i) the voting power of the voting equity
securities or (ii) the fair market value of the outstanding equity interests is
owned, directly or indirectly, by such Person.
"Substituted Partner" means an Assignee of Record, or other Person, who
becomes a Partner pursuant to Article VII.
"Tax Matters Partner" means the General Partner, or any successor thereto
appointed by the General Partner.
"Terminating Capital Transaction" means either the sale, exchange or other
disposition of all or substantially all of the assets of the Partnership in a
single transaction or a related series of transactions or a dissolution of the
Partnership unless the Partnership is continued.
"Total Assets" means, as of the date of determination, all assets of the
Partnership on that date, determined on a consolidated basis in conformity with
GAAP.
"Total Liabilities" means, as of the date of determination, all liabilities
of the Partnership on that date, determined on a consolidated basis in
conformity with GAAP.
"Treasury Regulations" means the Income Tax Regulations promulgated under
the Code as such Treasury Regulations may be amended from time to time
(including Temporary Regulations). A reference to any Treasury Regulation shall
be deemed to include any amendatory or successor provision thereto.
"Unaffiliated Parent Directors" means the members of Parent's board of
directors who satisfy the definition of "Unaffiliated Directors" in the Parent's
Articles of Incorporation, as now or hereafter amended.
"Unit" means a unit of partner interest in the Partnership (including a
Preferred Unit), representing a Capital Contribution and/or a right to receive a
share of the Partnership's Profits, Losses or Distributions, and in all cases
the rights, powers and privileges appurtenant thereto in accordance with this
Agreement.
Such terms shall be used either in the singular or plural and may be
referred to in any gender as required by the context.
ARTICLE II
Members and Status
Section 2.01. The Partners. The Partners of the Partnership shall consist
of and be divided into a general partner and limited partners, with the General
Partner as the sole general partner and the Limited Partners as the limited
partners.
Section 2.02. Additional Partners. Except as provided in Section 6.04, no
additional general partners shall be admitted. Subject to the limitations of
Article VII, Persons who are issued Units by the Partnership, through purchase
or otherwise, may be admitted as Additional Limited Partners from time to time
by the General Partner subject to and as provided in this Agreement.
Section 2.03. Classification and Ownership of Units.
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(a) Units consist of Common Units and Preferred Units. The Partnership may
issue an unlimited number of Units. Units may be issued to, acquired and owned
by Limited Partners, the General Partner or Parent.
(b) The General Partner may, in its sole discretion and without the consent
of any other Partner, cause the Partnership to split the outstanding Units and
issue to each Partner an additional whole number of Units, such that thereafter
the Partner owns a number of Units equal to the number of Units previously owned
by such Partner times a fraction which is greater than one.
(c) The General Partner shall cause the Partnership to issue one or more
certificates in the names of the Partners owning Units to any Partner who
requests such a certificate. Each such certificate shall be denominated in terms
of the number of Units evidenced by such certificate. Each such certificate
shall contain legends specifying restrictions on transfer imposed by this
Agreement or by applicable law and noting the restrictions and agreements
contained in Article VII. Upon the transfer, in accordance with Article VII, of
a Unit evidenced by a certificate, the General Partner shall cause the
Partnership to issue replacement certificates, in accordance with such
procedures as the General Partner, in its sole and absolute discretion, may
establish. Holders of Units which are not evidenced by certificates will be
entitled to all the rights of ownership of such Units notwithstanding the fact
that they are not evidenced by certificates.
(d) The Partnership shall issue a new certificate in place of any
certificate previously issued if the record holder of such certificate:
(i) Makes proof by affidavit, in form and substance satisfactory
to the General Partner, that such previously issued
certificate has been lost, destroyed, or stolen;
(ii) Requests the issuance of a new certificate before the
Partnership has notice that such previously issued certificate
has been acquired by a purchaser for value in good faith and
without notice of an adverse claim;
(iii) If requested by the General Partner, delivers to the
Partnership a bond, in form and substance satisfactory to the
General Partner, with such surety or sureties and with fixed
or open penalty, as the General Partner may direct, to
indemnify the Partnership against any claim that may be made
on account of the alleged loss, destruction, or theft of such
previously issued certificate; and
(iv) Satisfies any other reasonable requirements imposed by the
General Partner.
When a previously issued certificate has been lost, destroyed, or stolen,
and the Partner fails to notify the Partnership within a reasonable time after
it has notice of such event, and a transfer of Units represented by the
certificate is registered before the Partnership receives such notification, the
Partner shall be precluded from making any claim against the Partnership with
respect to such transfer or for a new certificate.
(e) The Partnership shall be entitled to treat each record holder as the
Partner or Assignee of Record of any Units and, accordingly, shall not be
required to recognize any equitable or other claim or interest in or with
respect to such Units on the part of any other Person, regardless of whether the
Partnership shall have actual or other notice thereof and regardless of whether
such Person shall have possession of any certificate representing such Units,
except as otherwise required by law.
Section 2.04. Liability of General Partner.
(a) Subject to the limitations expressed in this Section, the General
Partner shall have unlimited liability for the repayment, satisfaction and
discharge of the obligations of the Partnership to third parties dealing with
the Partnership as prescribed by law, except for nonrecourse obligations of the
Partnership.
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The General Partner is not liable to the Partnership and the Limited Partners
(i) for return of the Capital Contribution or any portion thereof of any Limited
Partner, (ii) on account of any disallowance or adjustment by a taxing authority
of the allocation of taxable income, gain, losses, deductions or credits in
Partnership income tax returns, (iii) on account of any failure by the
Partnership to achieve any forecasted financial return or (iv) for any action or
omission to act not constituting willful misconduct or gross negligence.
(b) Notwithstanding anything to the contrary set forth in this Agreement,
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 any act or omission if the General Partner acted
in good faith.
(c) The Limited Partners (and Assignees by acceptance of an Assignment)
expressly acknowledge that the General Partner is acting on behalf of Parent's
shareholders collectively, that the General Partner is under no obligation to
consider the separate interests of the Limited Partners or Assignees (including,
without limitation, the tax consequences to Limited Partners or Assignees) in
deciding whether to cause the Partnership to take (or decline to take) any
actions, and that the General Partner shall not be liable for monetary damages
for losses sustained, liabilities incurred, or benefits not derived by Limited
Partners or Assignees in connection with such decisions, PROVIDED THAT the
General Partner has not acted in bad faith. The General Partner shall be
conclusively presumed not to have acted in bad faith if it reasonably believed
that its actions were in the best interests of Parent's shareholders.
(d) Subject to its obligations and duties as General Partner set forth in
Section 3.03 hereof, 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.
(e) Any amendment, modification or repeal of this Section 2.04, or any
provision hereof, shall be prospective only and shall not in any way affect the
limitations on the General Partner's liability to the Partnership and the
Limited Partners under this Section 2.04 as in effect immediately prior to such
amendment, modification or repeal with respect to claims arising from or
relating to matters occurring, in whole or in part, prior to such amendment,
modification or repeal, regardless of when such claims may arise or be asserted.
(f) 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.
(g) 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 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.
(h) The General Partner shall have the right, in respect of any of its
powers or obligations hereunder, to act through any of its or Parent's 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.
(i) 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
12
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 Parent
to continue to qualify as a REIT, (ii) to protect the tax classification of the
Partnership or any other partnership which is an Affiliate of the Partnership as
a partnership for tax purposes, or (iii) to avoid Parent incurring any taxes
under Section 857 of the Code, Section 4981 of the Code or under principles
announced in IRS Notice 88-19 is expressly authorized under this Agreement and
is deemed approved by all of the Limited Partners.
(j) A holder of Units shall not be deemed solely by virtue thereof to be a
shareholder of Parent or to have any interest therein, other than the Redemption
Right provided by Section 7.07.
(k) The rights and limitations of liability provided by this section to the
General Partner shall extend to the directors, officers, employees and agents of
the General Partner and of Parent; PROVIDED, HOWEVER, that nothing in this
section shall be construed to create or imply any liability of any director,
officer, employee or agent of the General Partner or Parent.
Section 2.05. Limitation Upon Liability of Limited Partners.
(a) The personal liability of each Limited Partner to the Partnership
(except as provided in Sections 2.05(b) and 2.05(c)), to the other Partners, to
the creditors of the Partnership or to any other third party for the losses,
debts or liabilities of the Partnership shall be limited to (i) the amount of
its Capital Contribution which has not theretofore been returned to it as a
Distribution (including a Distribution upon liquidation), and (ii) the amount of
any liability under I.C. 23-16-7-8 for any Capital Contribution returned to the
Limited Partner.
(b) Except as provided in the next sentence, Section 2.05(c) or any
Indemnity Agreement, no Partner shall be liable to the Partnership or to any
other Partner for any deficit or negative balance which may exist in such
Partner's Capital Account. If any Obligated Partner has a deficit balance in its
Capital Account (after giving effect to all contributions, distributions,
allocations and adjustments to Capital Accounts for all periods including such
Partner's share of any unrealized gain or loss with respect to the Partnership's
assets) on the date of "liquidation" of such Obligated Partner's respective
interest in the Partnership (within the meaning of Section 1.704-1(b)(2)(ii)(g)
of the Treasury Regulations), such Obligated Partner shall contribute to the
capital of the Partnership an amount equal to its respective deficit balance;
such obligation to be satisfied by the end of the Partnership's first taxable
year in which either the Partnership is dissolved or liquidated or such
Obligated Partner's interest in the Partnership is liquidated. To the extent
contributions are used to make payments to creditors of the Partnership, no
Obligated Partner shall be subrogated to the rights of any such creditor against
the General Partner, Parent, the Partnership, another Partner or any person
related thereto, and each Obligated Partner irrevocably waives any right to
reimbursement, contribution or similar right to which such Obligated Partner
might otherwise be entitled as a result of the performance of its obligations
under this Agreement.
(c) Except as otherwise agreed to in writing by the General Partner and an
Obligated Partner prior to the time of admission of such Obligated Partner to
the Partnership, notwithstanding any other provision of this Agreement other
than Section 2.05(d), an Obligated Partner shall not cease to be an Obligated
Partner for purposes of this Section 2.05 and shall continue to be subject to
the contribution obligations of this Section 2.05 as if such Obligated Partner
continued to hold Units upon a sale or redemption by such Obligated Partner of
all remaining Units for REIT Shares (pursuant to Section 7.07 or otherwise)
unless, at no time during the 12 month period following such sale or redemption,
the Partnership:
(i) is in Bankruptcy;
(ii) is Insolvent; or
(iii) fails to maintain a ratio of Total Liabilities to Total Assets
of less than 80%;
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PROVIDED THAT, after the passage of such 12 months, the Obligated Partner
shall cease to be an Obligated Partner at the first time, if any, the
Partnership is not subject to any of the conditions set forth in clauses (i),
(ii) and (iii) above.
(d) After the death of an Obligated Partner, the executor of the estate of
such Obligated Partner may elect to reduce (or eliminate) the deficit Capital
Account restoration obligation of such Obligated Partner pursuant to Section
2.05(b). Such election may be made by such executor by delivering to the General
Partner within two hundred seventy (270) days of the death of such Obligated
Partner a written notice setting forth the maximum deficit balance in his
Capital Account that such executor agrees to restore under Section 2.05(b), if
any. If such executor does not make a timely election pursuant to this Section
2.05(d) (whether or not the balance in his Capital Account is negative at such
time), then such Obligated Partner's estate (and the beneficiaries thereof who
receive distribution of Units therefrom) shall be deemed to have a deficit
Capital Account restoration obligation as set forth pursuant to the terms of
Section 2.05(b). Any Obligated Partner-Controlled Partnership may likewise
elect, after the death of its respective Obligated Partner, to reduce (or
eliminate) its deficit Capital Account restoration obligation pursuant to
Section 2.05(b) by delivering a similar written notice to the General Partner
within the time period specified herein. Any Obligated Partner-Controlled
Partnership that does not make any such timely election shall similarly be
deemed to have a deficit Capital Account restoration obligation as set forth
pursuant to the terms of Section 2.05(b).
ARTICLE III
Scope of Partnership and Mode of Operation
Section 3.01. Scope of Partnership. The purpose of the Partnership is to
engage, subject to the limitations in Sections 3.09(b) and 3.09(c), in any
business that may be lawfully conducted by a limited partnership organized
pursuant to the Act.
Section 3.02. Powers of the Partnership. Subject to the limitations in
Sections 3.09(b), 3.09(c) and 3.09(d), the Partnership shall have all the powers
permitted by law which are necessary or desirable in carrying out the purposes
and business of the Partnership, including, but not limited to, the following
powers:
(a) To acquire by purchase, exchange, lease, hire, or otherwise, real and
personal property of every kind, character and description whatsoever, and
wheresoever situated, and any interest therein, either alone or in conjunction
with others, and to hold for investment, own, use, develop, operate, lease,
mortgage, sell or otherwise dispose of, convey or otherwise deal in the same and
any interest therein;
(b) To perform all services related to the acquisition, development,
holding, management, financing, leasing and disposition of real and personal
property of every kind, character and description, including, but not limited
to, the performance of management and other services with respect to its
properties pursuant to contracts contributed to the Partnership;
(c) To borrow or raise money for any of the purposes of the Partnership,
and from time to time, without limitation as to amount, to draw, make, accept,
endorse, execute and issue promissory notes, drafts, bills of exchange,
warrants, bonds, debentures, evidences of indebtedness and other instruments,
and to secure the payment thereof, the interest thereon and any other
obligations or liabilities relating thereto, in any manner, including without
limitation by mortgage on, security interest in or pledge, or conveyance or
assignment in trust of, the whole or any part of the assets of the Partnership,
real, personal or mixed, including contract rights and options, whether at the
time owned or thereafter acquired, and future earnings, and to sell, pledge or
otherwise dispose of such securities or other obligations of the Partnership for
the furtherance of its purpose;
14
(d) To act in any state or nation in which the Partnership may lawfully
act, for itself or as principal, agent or representative for any individual,
association, partnership, corporation or legal entity, respecting business of
the Partnership;
(e) To enter into, make, amend, perform and carry out, or cancel and
rescind, contracts and other obligations for any lawful purpose pertaining to
the business of the Partnership, including, but not limited to, one or more
agreements to reimburse or be reimbursed by Duke Services for employee,
administrative or other costs associated with the Partnership's properties or
properties for which services are rendered by Duke Services;
(f) To become a partner or member in, and perform the obligations of a
partner or member of, any general or limited partnership or limited liability
company, including but not limited to Duke Services;
(g) To apply for, register, obtain, purchase or otherwise acquire
trademarks, trade names, labels and designs relating to or useful in connection
with any business of the Partnership, and to use, exercise, develop and license
the use of the same;
(h) To employ, on behalf of the Partnership, legal counsel; financial
counsel; accountants; professional advisors; and Persons or entities for the
operation and management of the business of the Partnership;
(i) To establish accounts and deposits and maintain funds in the name of
the Partnership in banks or other financial institutions and to invest funds of
the Partnership temporarily when not required for operation of its properties or
distribution to the Partners, in short-term debt obligations, including without
limitation obligations of federal and state governments, commercial paper and
certificates of deposit of banks and other financial institutions;
(j) To pay or reimburse any and all actual fees, costs and expenses
incurred in the formation and organization of the Partnership;
(k) To do all acts which are necessary, customary or appropriate for the
protection and preservation of the Partnership's assets, including the
establishment of reserves;
(l) To loan money to, borrow money from and engage in transactions with
Affiliates, subject to Sections 3.07 and 3.13;
(m) To compromise, submit to arbitration, xxx on, or defend claims in favor
of or against the Partnership; and
(n) In general, to exercise all of the general rights, privileges and
powers permitted to be had and exercised by the provisions of the Act.
Section 3.03. Management of the Partnership. Subject to the limitations of
this section, of Section 3.04 and of Section 3.09, the General Partner shall be
responsible for the management of the Partnership's business and shall have
full, exclusive and complete power and discretion, without the need for consent
or approval of any other Partner, to make all decisions and to do all things
which it deems necessary or desirable on behalf of the Partnership, including
but not limited to the exercise of the powers specified in Section 3.02 on
behalf of the Partnership.
Section 3.04. Limitation on Powers. As between the Partners and subject to
Section 2.04(c), no Partner shall:
(i) Use the Partnership name or assets in any way except for the
transaction of legitimate Partnership business or do any act
in contravention of this Agreement of Partnership; or
15
(ii) Do any act which would make it impossible to carry on the
business of the Partnership.
Section 3.05. Non-Participation in Management by Limited Partners. Except
as specifically provided in this Agreement, no Limited Partner as such shall
participate in the control or management of the business of the Partnership, nor
act for and on behalf of the Partnership in any manner whatsoever. No Limited
Partner shall be deemed to be participating in the management of the business of
the Partnership merely by consulting with or advising the General Partner or by
acting as an officer, director, employee, agent or shareholder of the General
Partner or as an employee or agent of the Partnership, Parent, Duke Services,
DSI or any Subsidiary of the Partnership, Parent, Duke Services or DSI.
Notwithstanding the foregoing, Parent shall not by reason of its ownership
interest in the General Partner be deemed for purposes of this Agreement to be a
limited partner engaging in activities proscribed in this Section 3.05.
Section 3.06. Time to be Devoted to Business. The General Partner and its
employees and agents shall devote such time to the Partnership's business as the
General Partner determines to be reasonably necessary to manage and supervise
the Partnership's business and affairs in an efficient manner. Nothing in this
Agreement shall preclude the employment, at the expense of the Partnership, of
any agent or third party to manage or provide other services with respect to the
Partnership's business, subject to the control of the General Partner. Unless
otherwise provided in a writing executed by the General Partner, any such
employment, or any appointment of any agent or authorization by the General
Partner shall in all cases be subject to immediate termination upon written
notice by the General Partner.
Section 3.07. Dealings With Related Entities.
(a) A Partner or any Affiliate of a Partner may contract or otherwise deal
with the Partnership for the purchase or sale of goods, property or services or
for other purposes, and the Partnership shall have the power to so contract or
deal, if the transaction is in the best interests of Parent and its
shareholders. The requirements of this subsection shall be deemed to be
satisfied with respect to any contract or dealing for which the approval of the
Unaffiliated Parent Directors has been obtained; however, the failure to obtain
such approval shall not be evidence that such requirements are not otherwise
satisfied. The validity of any transaction, agreement, or payment involving the
Partnership and an Affiliate of a Partner otherwise permitted by this Agreement
shall not be affected by reason of the relationship between the Partner and the
Affiliate or the approval of the transaction, agreement, or payment by the
Partner who is otherwise interested in or related to the Affiliate.
Specifically, and not by way of limitation, the Partnership is permitted to
contract or otherwise deal with Duke Services and Steel Frame Erectors, Inc.
(b) If a Partner is employed by or retained by the Partnership in any
capacity, compensation to such Partner shall be deemed to be for services
rendered not in the Partner's capacity as a member of the Partnership, and it
shall be treated for federal income tax purposes as a payment described by
Section 707(a) of the Code.
(c) 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 or Parent, the Partnership, Duke Services,
Subsidiaries of the Partnership or the General Partner or Parent 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 Parent,
Duke Services, or any of the Partnership's or the General Partner's or Parent's
Subsidiaries.
(d) The General Partner is expressly authorized to enter into, in the name
and on behalf of the Partnership, options, right of first opportunity
arrangements and other conflict avoidance agreements with
16
various Affiliates of the Partnership, the General Partner and Parent, on such
terms as the General Partner, in its sole and absolute discretion, believes are
advisable.
(e) In connection with the Merger, from and after the date of this
Agreement, the Partnership hereby assumes and agrees to perform the obligations
and undertakings of Weeks Realty, L.P. under the agreements described in EXHIBIT
K to this Agreement.
Section 3.08 Other Business.
(a) Subject to subsection (b) and Section 3.09, nothing contained in this
Agreement shall in any way or manner prohibit or restrict the right or freedom
of any Partner, any Affiliate of any Partner or any other Person to conduct or
participate in any business or activity individually or as a partner,
shareholder or owner of any partnership, corporation or other entity other than
the Partnership without any obligation or accountability to the Partnership or
any other Partner, even if such business or activity competes with the business
of the Partnership; and subject to Section 3.09, any entity which includes as a
partner, shareholder or other owner a Partner, any Affiliate of a Partner or any
other Person shall have the right at any time to own and operate any business
whatsoever other than the business of the Partnership, either individually or
with one or more parties, and shall not be required to obtain the consent
thereto by any other Partner or offer to any other Partner or the Partnership a
participation therein.
(b) Commencing upon their acceptance of one or more Units and admission to
the Partnership as Limited Partners, each of the Principal Owners agrees that so
long as he is employed by any of the Partnership, the General Partner, Parent,
Duke Services, DSI or any Subsidiary of the Partnership, the General Partner,
Parent, Duke Services or DSI, he will conduct all of his commercial real estate
business exclusively through the Partnership, the General Partner, Parent, Duke
Services, Duke Construction Limited Partnership, DSI, MWSB or a Subsidiary of
the Partnership, the General Partner, Parent, Duke Services, Duke Construction
Limited Partnership, DSI or MWSB, except (i) business with respect to whole or
partial interests in fifteen (15) properties, which number may change from time
to time, owned as of the date of this Agreement by Affiliates of the Principal
Owners which the Partnership has as of the date of this Agreement an option to
acquire, (ii) steel frame erecting business through Steel Frame Erectors, Inc.
or (iii) as approved by the directors of Parent who have no pecuniary interest
in such other business.
Section 3.09. Restriction on Parent and Partnership Activities.
(a) Unless Special Partner Approval is obtained, Parent shall not engage in
any of the following activities:
(i) Directly or indirectly enter into or conduct any business,
other than in connection with the ownership, acquisition and
disposition of Units as a Limited Partner, the management of
the business of the Partnership, activities in connection with
DSI and the General Partner (which shall be limited to
activities in connection with Duke Services and the
Partnership), Duke Services, and Duke Construction Limited
Partnership, and such activities as are incidental thereto.
(ii) Own any assets other than Units, its interest in the General
Partner, its interest in DSI and such bank accounts or similar
instruments as it deems necessary to carry out its
responsibilities contemplated under this Agreement and its
Articles of Incorporation.
(iii) Issue any additional shares of capital stock (other than REIT
Shares issued pursuant to Section 7.07 or REIT Shares issued
without consideration to all holders of REIT Shares);
provided, however, that no Special Partner Approval shall be
required if Parent contributes the net proceeds from the
issuance of such
17
shares of capital stock and from the exercise of rights
contained in any options, warrants or convertible or
exchangeable securities containing the right to subscribe for
or purchase such shares of capital stock to the Partnership in
exchange for additional Units at the value per Unit
established in Section 4.02(c) or to the General Partner which
shall then contribute such proceeds to the Partnership.
(iv) Engage in any merger, consolidation or other combination with
or into another Person or sale of all or substantially all of
its assets, or any reclassification, or recapitalization or
change of outstanding REIT Shares (other than a change in par
value, or from par value to no par value, or as a result of a
subdivision or combination as described in Section 7.07(d))
other than a Permitted Transaction.
(b) Unless Special Partner Approval is obtained, the Partnership shall not
engage in any of the following activities:
(i) Engage in any business other than business in which Parent is
permitted to engage by its Articles of Incorporation as in
effect on the date of this Agreement or which is incidental
thereto or reasonably necessary for the protection of the
Partnership.
(ii) Notwithstanding anything to the contrary herein, effect or
enter into an agreement to effect a voluntary sale, exchange
or other disposition by merger, consolidation or otherwise
(other than a disposition occurring upon a financing or
refinancing by the Partnership) of all or substantially all of
the assets of the Partnership in a single transaction or a
series of related transactions.
(c) Notwithstanding anything to the contrary herein, (i) the Partnership
shall not take, refrain from taking, or be required to take any action which, in
the judgment of the General Partner, in its sole and absolute discretion, (A)
could adversely affect the ability of Parent to continue to qualify as a REIT,
(B) subject to clause (A), could adversely effect the classification of the
Partnership or any partnership which is an Affiliate of the Partnership as a
partnership for tax purposes, (C) could subject Parent to any additional taxes
under Section 857 or Section 4981 of the Code, or (D) could violate any law or
regulation of any governmental body or agency having jurisdiction over Parent or
its securities, unless such action (or inaction) shall have been specifically
consented to by the General Partner in writing; and (ii) the Partnership, when
deemed necessary by the General Partner in its sole and absolute discretion to
continue Parent's qualification as a REIT, shall be required to make
distributions to its Partners, whether funded by available cash revenues,
borrowings or any other means, which are sufficient in amount to enable Parent
to meet the REIT distribution requirements contained in Code Section 857(a).
(d) Until the tenth anniversary of the Merger, the Partnership shall not
sell in any single transaction or series of related transactions, any real
property that was owned by Weeks Realty, L.P. immediately prior to the Merger
and that at the time of such sale has a fair market value (as determined in good
faith by the General Partner) in excess of $50 million without the prior
approval of the Asset Committee of the Board of Directors of Parent, if it is
reasonably likely that the proposed sale would result in adverse tax
consequences to the holders of Units who contributed such properties to Weeks
Realty, L.P.
(e) Until the tenth anniversary of the Merger, the Partnership shall use
commercially reasonable efforts to maintain at all times an amount of Recourse
Liabilities equal to or greater than the aggregate amount of Recourse
Liabilities as to which one or more current or future Partners have agreed, or
will agree in the future, to bear the economic risk of loss through deficit
Capital Account restoration obligations, Indemnity Agreements, or otherwise (the
"Target Recourse Debt Amount").
18
Notwithstanding the foregoing, the Partnership shall have the right to cause the
amount of outstanding Recourse Liabilities to fall below the Target Recourse
Debt Amount if the General Partner determines, in good faith, that such action
is in the best economic interest of the Partnership and its Partners (without
taking into account the tax consequences of taking such action).
Section 3.10. Indemnification.
(a) Each Person who is now or in the future (i) the General Partner, (ii)
Parent or (iii) an officer, director, shareholder, or Affiliate of the General
Partner or Parent, or (iii) an officer, employee or agent of the Partnership, or
(iv) any such Person's successors and assigns, shall be indemnified by the
Partnership against expenses (including, but not limited to, attorneys' fees,
related disbursements and removal of any liens affecting any property of the
indemnitee), judgments, fines, and amounts paid in settlement, actually and
reasonably incurred by such Person in connection with any action, suit or
proceeding to which such Person may be made a party by reason of being, or
having been, (i) the General Partner, (ii) Parent or (iii) an officer, director,
shareholder, employee, agent or Affiliate of the General Partner or Parent, or
(iii) an officer, employee or agent of the Partnership, or (iv) any such
Person's successor or assign (whether or not continuing to be such at the time
of incurring such expense), if such Person acted in good faith and in a manner
reasonably believed by such Person to be in, or at least not opposed to, the
best interests of the Partnership, and, with respect to any criminal action or
proceeding, such Person had either reasonable cause to believe his or its
conduct was lawful or had no reasonable cause to believe his or its conduct was
unlawful. An action shall be conclusively presumed to have been reasonably
believed by a Person to be in, or at least not opposed to, the best interests of
the Partnership if it was reasonably believed by such Person to be in, or at
least not opposed to, the best interests of the General Partner or its
shareholders. The termination of any proceeding by judgment, order or settlement
does not create a presumption that the indemnitee did not meet the requisite
standard of conduct set forth in this Section 3.10(a). The termination of any
proceeding by conviction or upon a plea of nolo contendere or its equivalent, or
an entry of an order of probation prior to judgment, creates a rebuttable
presumption that the indemnitee acted in a manner contrary to that specified in
this Section 3.10(a). If a judgment, order, settlement or any other document
which terminates a proceeding does not indicate whether the indemnitee met the
requisite standard of conduct set forth in this Section 3.10(a), such
determination shall be made by independent legal counsel unless the
disinterested Unaffiliated Parent Directors decide otherwise. Any such
indemnification shall be limited to the assets of the Partnership and shall not
impose any personal liability upon any Partner. This provision is intended to
provide such indemnification as is permitted under Indiana law; it shall not
operate to indemnify any person in any case in which such indemnification is for
any reason contrary to law.
(b) Reasonable expenses incurred by an indemnitee who is a party to a
proceeding may be paid or reimbursed by the Partnership in advance of the final
disposition of the proceeding upon receipt by the Partnership of (i) a written
affirmation by the indemnitee of the indemnitee's good faith belief that the
standard of conduct necessary for indemnification by the Partnership as
authorized in this Section 3.10 has been met, and (ii) a written undertaking by
or on behalf of the indemnitee to repay the amount if it shall ultimately be
determined that the standard of conduct has not been met.
(c) The indemnification provided by this Section 3.10 shall be in addition
to any other rights to which an indemnitee or any other Person may be entitled
under any agreement, pursuant to any vote of the Partners, as a matter of law or
otherwise, and shall continue as to an indemnitee who has ceased to serve in
such capacity.
(d) The Partnership may purchase and maintain insurance, on behalf of any
potential indemnitee and such other Persons as the General Partner shall
determine, against any liability that may be asserted against or expenses that
may be incurred by such Person in connection with the Partnership's activities,
regardless of whether the Partnership would have the power to indemnify such
Person against such liability under the provisions of this Agreement.
19
(e) For purposes of this Section 3.10, the Partnership shall be deemed to
have requested a Person to serve as fiduciary of an employee benefit plan, and
such Person shall be deemed to be within the class of indemnitees in subsection
(a), whenever the performance by the Person of the Person's duties to the
Partnership also imposes duties on, or otherwise involves services by, it to the
plan or participants or beneficiaries of the plan; excise taxes assessed on an
indemnitee with respect to an employee benefit plan pursuant to applicable law
shall constitute fines within the meaning of Section 3.10(a); and actions taken
or omitted by the indemnitee with respect to an employee benefit plan in the
performance of its duties for a purpose reasonably believed by it to be in the
interest of the participants and beneficiaries of the plan shall be deemed to be
for a purpose which is not opposed to the best interests of the Partnership.
(f) In no event may an indemnitee subject the Limited Partners to personal
liability by reason of the indemnification provisions set forth in this
Agreement.
(g) An indemnitee shall not be denied indemnification in whole or in part
under this Section 3.10 because the indemnitee had an interest in the
transaction with respect to which the indemnification applies if the transaction
was otherwise permitted by the terms of this Agreement.
(h) The provisions of this Section 3.10 are for the benefit of the
indemnitees and their heirs, successors, assigns and administrators and shall
not be deemed to create any rights for the benefit of any other Persons.
Section 3.11. Voting Rights of Partners.
(a) Subject to subsection (b), the following matters require Special
Partner Approval:
(i) The matters described in Section 3.09(b).
(ii) Permitting Parent to engage in the actions described in
Section 3.09(a).
(iii) Causing a dissolution of the Partnership as described in
Section 6.01(c).
(iv) Amending this Agreement as described in Section 9.05(b).
(b) The parties intend that the exercise of any rights granted to the
Limited Partners by this Agreement shall be deemed an action affecting only the
agreement among the Partners and not an action affecting the management and
control of the business or otherwise inconsistent with the Act. The exercise of
any rights of the Limited Partners under this Section shall, at the option of
the General Partner, be conditioned upon the prior receipt by the General
Partner of an opinion of legal counsel for the Partnership, satisfactory in form
and substance to the General Partner, to the effect that such exercise will not
have a material adverse federal or state income tax or other material adverse
legal impact on the Partnership. A Limited Partner may, however, and shall be
permitted to exercise any rights granted to the Limited Partners by this
Agreement relating to management and control of the business notwithstanding any
adverse effect on such Limited Partner.
Section 3.12. Approval Procedures. Any matter requiring the consent or
approval of all or any portion of the Partners shall be deemed to be approved if
Partners entitled to vote thereon holding the requisite number of Units consent
in writing pursuant to the terms of this Agreement to the proposed action. In
lieu thereof, such a matter shall be submitted to the Partners entitled to vote
thereon in the following manner:
(a) Within thirty (30) days of the proper proposal of the matter, the
General Partner shall send notice of the proposal, the text thereof, and a
ballot to each Partner entitled to vote thereon by first class United States
mail at the address contained in the records of the Partnership.
(b) The notice shall set forth the recommendation of the General Partner,
if any, with respect to the passage or rejection of the proposal and a brief
explanation of the reasons therefor.
20
(c) The ballot supplied with the notice of the proposal shall state that
the vote of each Partner is due at the offices of the Partnership in writing on
a date certain which shall be no less than ten (10) and no more than thirty (30)
days from the date of the notice (which shall be the date of the postmark of
such notice) and shall provide that those Partners whose ballots are not
received by said date shall be deemed to have voted in accordance with the
recommendation of the General Partner or, in the case of a proposal on which the
General Partner has not expressed a recommendation, shall provide that those
Partners whose ballots are not received by said date shall be deemed to have
voted against the proposal.
(d) A matter requiring the consent of a specified portion or portions of
the Partners in addition to the consent of the Partners as a whole may be voted
upon using the same notice and ballot, and it shall not be necessary for a
Partner to xxxx and return multiple ballots to vote in more than one capacity.
(e) If consent is given or the proposal is passed in accordance with the
foregoing procedure, the General Partner is expressly authorized and directed to
take such action as may be specified in the consent or proposal.
Section 3.13. Loans to and from the Partnership. In the event that
additional funds are required by the Partnership, one or more Partners (or any
Affiliate thereof) may, at the option of the General Partner, loan such funds to
the Partnership. Each such loan shall be made upon terms and conditions no less
favorable to the Partnership than those upon which a commercial lending
institution would make such a loan to an entity with financial and business
characteristics similar to the Partnership. The Partnership may loan funds to
the General Partner or Parent only to the extent such funds are needed by the
General Partner or Parent either (A) to fund a payment on the $1 million demand
note from Parent to DSI or (B) to make distributions to Parent's shareholders
required for Parent to qualify as a REIT or to avoid being subject to income or
excise taxes under the Code. Any such loan shall be repaid as soon as possible,
shall have a maximum term of one (1) year and shall be made on other terms and
conditions no less favorable to the Partnership than those upon which a
commercial lending institution would make such a loan to an entity with
financial and business characteristics similar to the General Partner or Parent.
To the extent that the Partnership loans funds to the General Partner pursuant
to this section, the Partnership may also, at the option of the General Partner,
loan to any other Partner funds in an amount up to the amount loaned to the
General Partner times the ratio of such Partner's Percentage Share to the
General Partner's Percentage Share, on the same terms as the loan to the General
Partner.
Section 3.14. Reimbursement of Expenses.
(a) Except as provided in this Section 3.14 and elsewhere in this Agreement
(including the provisions of Article IV 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) The General Partner and Parent 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 or Parent, as the case may be, incurs
in connection with the business of the Partnership and any other issuance of
additional Units or REIT Shares pursuant to this Agreement. Such reimbursements
shall be in addition to any reimbursement to the General Partner as a result of
indemnification pursuant to Section 3.10 hereof.
Section 3.15. Indemnification of Certain Recourse Debt. Towne Investment
Co. shall indemnify the General Partner for a portion of the Partnership's
Recourse Liabilities as specified in EXHIBIT M attached hereto.
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ARTICLE IV
Capital Contributions, Profits
and Losses and Distributions
Section 4.01. Purchase of Units and Capital Contributions.
(a) Prior to the date of this Agreement, the Partners have made the Capital
Contributions and in exchange therefor have received the Units specified in
EXHIBIT A hereto.
(b) Effective as of the date of this Agreement, Parent does hereby transfer
and assign to the new General Partner, Duke GP, Inc., the number of Units set
forth in the relevant part of EXHIBIT A and grants Duke GP, Inc. the right to be
a substituted General Partner. The remaining Units held by Parent will continue
to be held by it in its capacity as a Limited Partner. The General Partner
hereby assumes all of the obligations of Parent as the general partner of the
Partnership and agrees to be bound by all of the terms and conditions hereof.
Parent is not relieved of any obligation accruing to it as the general partner
of the Partnership prior to the date hereof. The Partners hereby consent to such
transfers, to the withdrawal of Parent as the general partner of the Partnership
and to the admission of the General Partner as the sole general partner of the
Partnership. The Partners agree that the withdrawal of Parent as the general
partner of the Partnership shall not dissolve the Partnership.
(c) From and after the date hereof, except as expressly provided in Section
2.05(b) or Indiana law, the Partners shall not be obligated to make further
contributions to the Partnership.
(d) After giving effect to the transfers referred to in Section 4.01(b),
Parent is no longer the general partner of the Partnership. By its execution and
delivery hereof, Parent becomes bound by and agrees to perform and comply with
all provisions hereof imposing obligations or limitations on Parent, and
guarantees to the Limited Partners (but not to or for the benefit of any Person
that is not a party to this Agreement) the due and punctual performance by the
General Partner of all the General Partner's obligations hereunder.
Section 4.02. Issuance of Additional Partnership Interests.
(a) Except as otherwise expressly provided in this Agreement, the General
Partner is hereby authorized to cause the Partnership to issue such additional
partnership interests in the form of Units for any Partnership purpose at any
time or from time to time, to Partners (other than the General Partner or
Parent) or to other Persons, for such consideration and on such terms and
conditions as shall be established by the General Partner in its sole and
absolute discretion, all without the approval of any Limited Partner. The
Partnership may also from time to time issue to the General Partner or Parent
additional Units in consideration of a contribution by Parent or the General
Partner as contemplated by Section 3.09(a)(iii) or in connection with a
Permitted Transaction. Any additional Units issued pursuant to this Section 4.02
may be Common Units or Preferred Units and if Preferred Units, may be issued in
one or more classes, or one or more series of any of such classes, with such
designations, preferences and relative, participating, optional or other special
rights, powers and duties, including rights, powers and duties senior to Common
or Preferred Units (subject to the terms of any existing Preferred Units) then
outstanding, all as shall be determined by the General Partner in its sole and
absolute discretion and without the approval of any Limited Partner, including,
without limitation, in respect of (i) the allocations of items of Partnership
income, gain, loss, deduction and credit to each such class or series of
Preferred Units; (ii) the right of each such class or series of Preferred Units
to share in Partnership distributions; and (iii) the rights of each such class
or series of Preferred Units upon dissolution and liquidation of the
Partnership; PROVIDED, THAT a written designation of preferences setting forth
the rights, powers, duties and preferences of each class or series of Preferred
Units shall be set forth as an additional Exhibit to this Agreement on or prior
to the date of issuance of such Preferred Units (together with the designations
set
22
forth in EXHIBITS D THROUGH J, the "Partnership Unit Designations" and each
a "Partnership Unit Designation"); and PROVIDED FURTHER, THAT with respect to
Preferred Units issued to the General Partner or Parent, (x) the additional
Preferred Units shall be issued in connection with an issuance and sale of
shares of capital stock of Parent having designations, preferences and other
rights that are substantially similar in economic effect to the designations,
preferences and other rights of such additional Preferred Units, and (y) the net
proceeds from the issuance of such shares by Parent shall be contributed by
Parent to the Partnership in exchange for additional Preferred Units at the
value per Preferred Unit established in Section 4.02(c) or to the General
Partner which shall then contribute such proceeds to the Partnership.
(b) No Person shall have any preemptive, preferential or other similar
right with respect to (i) additional Capital Contributions or loans to the
Partnership, or (ii) issuance or sale of any Units.
(c) The Capital Contribution required upon issuance of any Unit pursuant to
this Section will be equal to (i) in the case of a Unit issued in accordance
with the proviso contained in Section 3.09(a)(iii), the per share price (net of
discounts, commissions and any other related costs incurred by or on behalf of
Parent in connection with issuing such shares) of the applicable REIT Shares
issued by Parent divided by the Redemption Ratio at the time the Unit is issued,
or (ii) in any cases involving the issuance of a Unit to a Principal Owner or
Affiliate of a Principal Owner, the Current Market Price of a REIT Share divided
by the Redemption Ratio at the time the Unit is issued, or (iii) in all other
cases, an amount based on the range of quoted market prices of a REIT Share for
a reasonable period of time before the Unit is issued adjusted as determined by
the General Partner to recognize the possible effects of price fluctuations,
quantities traded, issue costs and other market factors and divided by the
Redemption Ratio at the time the Unit is issued.
Section 4.03. Distributable Cash. Distributions of Distributable Cash shall
be made when declared by the General Partner in its sole discretion to the
Partners who are Partners on the Partnership Record Date with respect to such
distribution; PROVIDED that for each fiscal year, all distributions made
pursuant to this Section 4.03 shall be made to the Partners (i) first, at the
time and in the manner set forth in the applicable Partnership Unit Designation,
to each holder of Preferred Units in accordance with the preferences set forth
in such Partnership Unit Designation; and (ii) thereafter, to the holders of
Common Units (and Preferred Units entitled pursuant to an applicable Partnership
Unit Designation to participate PARI PASSU with Common Units) pro rata in
proportion to their respective Percentage Shares (and, with respect to the
holders of Preferred Units, as provided in such applicable Partnership Unit
Designation); PROVIDED, that in no event may a Partner receive a distribution of
Distributable Cash with respect to a Unit if such Partner is entitled to receive
a distribution out of such Distributable Cash with respect to a REIT Share for
which such Unit has been redeemed and such distribution shall be made to Parent.
Section 4.04. Distributions From Terminating Capital Transaction. After the
occurrence of a Terminating Capital Transaction, and subject to Section 2.05,
all cash of the Partnership from all sources shall be applied and distributed in
the following order, after adjusting Capital Accounts for all Distributions
under Section 4.03 and all allocations of Profits and Losses:
(a) To the payment of debts and liabilities of the Partnership deemed
appropriate by the General Partner to pay at that time in the order of priority
as provided by law (other than those to Partners) including the expenses of or
relating to sale, refinancing, exchange, condemnation, destruction or other
disposition of assets of the Partnership;
(b) To the setting up of such reserves as are reasonably necessary for any
contingent liabilities or obligations of the Partnership or for the operation of
the Partnership, as determined solely by the General Partner in good faith;
(c) To the payment of debts and liabilities of the Partnership to the
Partners other than in respect to the balances in the Capital Accounts of
Partners; and
23
(d) To the Partners in proportion to the positive balances in their Capital
Accounts determined after taking into account all allocations of Profits, Losses
and items thereof through completion of the liquidation of the Partnership.
Section 4.05. Allocation of Profits and Losses.
(a) After giving effect to the allocations set forth in Section 4.06
hereof, for each fiscal year of the Partnership or portion thereof, Profits and
Losses shall be allocated as follows:
(i) Profits shall be allocated to the Partners in the following
manner and order of priority:
(A) First, to the General Partner to the extent that the
cumulative Losses allocated to the General Partner
pursuant to Section 4.05(a)(ii)(F) exceed the cumulative
Profits allocated to the General Partner pursuant to
this Section 4.05(a)(i)(A);
(B) Second, to each Partner to the extent of and in
proportion to the amount by which the cumulative Losses
allocated to such Partner pursuant to Section
4.05(a)(ii)(E) exceed the cumulative Profits allocated
to such Partner pursuant to this Section 4.05(a)(i)(B);
(C) Third, to the General Partner to the extent that the
cumulative Losses allocated to the General Partner
pursuant to Section 4.05(a)(ii)(D), exceed the
cumulative Profits allocated to the General Partner
pursuant to this Section 4.05(a)(i)(C);
(D) Fourth, to each holder of Preferred Units to the extent
of and in proportion to the amount by which the
cumulative Losses allocated to each such holder pursuant
to Section 4.05(a)(ii)(C) exceeds the cumulative
allocation of Profits to such holder pursuant to this
Section 4.05(a)(i)(D).
(E) Fifth, to each Partner to the extent of and in
proportion to the amount by which the cumulative Losses
allocated to such Partner pursuant to Section
4.05(a)(ii)(A), exceed the cumulative Profits allocated
to such Partner pursuant to this Section 4.05(a)(i)(E);
(F) Sixth, to the holders of the Series H Preferred Units
until the cumulative allocations of Profits allocated to
such holders under this Section 4.05(a)(i)(F), reduced
by the cumulative allocations of Losses allocated to
such holders under Section 4.05(a)(ii)(B), equal the
cumulative quarterly distributions that have accrued on
such Preferred Units for the current and all prior
fiscal years under Sections c(1) and c(2) of EXHIBIT J
hereto (irrespective of whether such accrued amounts
have been paid to such holders or remain unpaid as of
the time such allocation has been made); and
(G) Thereafter, to the Partners in accordance with their
respective Percentage Shares.
(ii) Losses shall be allocated to the Partners in the following
manner and order of priority:
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(A) First, to the Partners, in proportion to their
respective Percentage Shares; provided that Losses
allocated pursuant to this Section 4.05(a)(ii)(A) shall
not exceed the maximum amount of Losses that can be
allocated without causing any Partner to have a negative
Adjusted Capital Account (determined without regard to
any Partner's obligation to fund a deficit Capital
Account balance, including the obligation of an
Obligated Partner to fund a deficit Capital Account
balance pursuant to Section 2.05 hereof, an Indemnitor
Partner's obligation under an Indemnity Agreement, or
any other deemed obligation recognized under Section
1.704-1(b)(2)(ii)(c) of the Treasury Regulations and
without regard to the amounts credited to the Capital
Accounts of holders of Preferred Units for the capital
contributed in respect of such Preferred Units);
(B) Second, to the holders of the Series H Preferred Units
in an amount equal to the excess, if any, of (1) the
cumulative allocations of Profit to such holders
pursuant to Section 4.05(a)(i)(E), over (2) the sum of
(i) the cumulative distributions made to such holders
pursuant to Section c(1) of EXHIBIT J hereto and (ii)
the cumulative Losses allocated to such holders pursuant
to this Section 4.05(b)(ii)(B);
(C) Third, to the holders of Preferred Units in proportion
to their respective Liquidation Preference Amounts
(determined by excluding any amount of unpaid
distributions accrued and in respect of such Preferred
Units); provided that Losses allocated pursuant to this
Section 4.05(a)(ii)(C) shall not exceed the maximum
amount of Losses that can be allocated without causing
any holder of Preferred Units to have a negative
Adjusted Capital Account (determined without regard to
any such holder's obligation to fund a deficit Capital
Account balance, including the obligation of an
Obligated Partner to fund a deficit Capital Account
balance pursuant to Section 2.05 hereof, an Indemnitor
Partner's obligation under an Indemnity Agreement, or
any other deemed obligation recognized under Section
1.704-1(b)(2)(ii)(c) of the Treasury Regulations);
(D) Fourth, to the General Partner, until the General
Partner's Adjusted Capital Account (determined without
regard to any obligation of the General Partner to fund
a deficit Capital Account balance pursuant to this
Agreement, including Section 2.05 hereof, or any deemed
obligation recognized under Section 1.704-1(b)(2)(ii)(c)
of the Treasury Regulations) equals the excess of (i)
the amount of Recourse Liabilities over (ii) the sum of
the Aggregate Restoration Amount and the Aggregate
Indemnity Amount;
(E) Fifth, to the Obligated Partners and the Indemnitor
Partners, in proportion to their respective Restoration
Amounts and Indemnity Amounts, as applicable, until such
time as such Partners have been allocated an aggregate
amount of Losses pursuant to this Section 4.05(a)(ii)(D)
equal to the sum of the Aggregate Restoration Amount and
the Aggregate Indemnity Amount; provided that no Losses
shall be allocated to any such Partner to the extent
such allocation would cause or increase a deficit in
such Partner's Adjusted Capital Account; and
(F) Thereafter, to the General Partner.
25
This Section 4.05(a) shall control notwithstanding any reallocation or
adjustment of taxable income, loss or other items by the IRS or any other taxing
authority; provided, however, that neither the Partnership nor the General
Partner (nor any of their respective Affiliates) is required to indemnify any
Obligated Partner (or its affiliates) for the loss of any tax benefit resulting
from any reallocation or adjustment of taxable income, loss or other items by
the IRS or other taxing authority. The provisions of this Section 4.05(a) shall
not be amended in a manner which adversely affects an Obligated Partner (without
the consent of such Obligated Partner), provided that the General Partner may
amend EXHIBIT L to add additional Obligated Partners."
(b) In connection with any Terminating Capital Transaction treated as an
installment sale, Profits or Losses shall, for purposes of adjusting the
Partners' respective Capital Accounts, be allocated under the foregoing
provisions of this section as though the principal amount of the deferred
obligation were received in full at the time of sale. In connection with any
Terminating Capital Transaction properly treated as an installment sale under
the Code, the portion of the Profits or Losses in each installment allocable to
a given Partner shall, for federal income tax purposes, be in proportion to the
Partner's total share of Profits or Losses from the Terminating Capital
Transaction allocated to the Partner pursuant to the foregoing provisions of
this section.
Section 4.06. Mandatory Allocations.
(a) (i) MINIMUM GAIN CHARGEBACK. Notwithstanding any other
provision of this Article IV, if there is a net decrease in
Partnership Minimum Gain during any fiscal year, then, subject
to the exceptions set forth in Treasury Regulations Sections
1.704-2(f)(2), (3), (4) and (5), each Partner shall be
allocated items of Partnership income and gain for such fiscal
year (and, if necessary, subsequent fiscal years) in an amount
equal to such Partner's share of the net decrease in
Partnership Minimum Gain determined in accordance with Section
1.704-2(g) of the Treasury Regulations. The items to be so
allocated shall be determined in accordance with Section
1.704-2(f) of the Treasury Regulations. This Section
4.06(a)(i) is intended to comply with the minimum gain
chargeback requirement in such Section of the Treasury
Regulations and shall be interpreted consistently therewith.
(ii) PARTNER MINIMUM GAIN CHARGEBACK. Notwithstanding any other
provision of this Article IV except Section 4.06(a)(i), if
there is a net decrease in Partner Minimum Gain attributable
to a Partner Nonrecourse Debt during any fiscal year, then,
subject to the exceptions set forth in Treasury Regulations
Section 1.704-2(i)(4), each Partner who has a share of the
Partner Minimum Gain attributable to such Partner Nonrecourse
Debt, determined in accordance with Section 1.704-2(i)(5) of
the Treasury Regulations, shall be specially allocated items
of Partnership income and gain for such fiscal year (and, if
necessary, subsequent fiscal years) in an amount equal to the
portion of such Partner's share of the net decrease in Partner
Minimum Gain attributable to such Partner Nonrecourse Debt,
determined in accordance with Section 1.704-2(i)(4) of the
Treasury Regulations. The items to be so allocated shall be
determined in accordance with Section 1.704-2(i)(4) of the
Treasury Regulations. This Section 4.06 (a)(ii) is intended to
comply with the minimum gain chargeback requirement in such
Section of the Treasury Regulations and shall be interpreted
consistently therewith.
(b) QUALIFIED INCOME OFFSET. In the event any Partner would be allocated
Losses or other items of deduction or Code Section 705(a)(2)(B) Expenditures
hereunder or unexpectedly receives any adjustments, allocations, or
distributions described in Sections 1.704-1(b)(2)(ii)(d)(4), (5) or (6) of the
26
Treasury Regulations which would result in 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 Treasury Regulations, the Adjusted Capital Account deficit of such
Partner as quickly as possible, provided that an allocation pursuant to this
Section 4.06(b) shall be made only if and to the extent that such Partner would
have an Adjusted Capital Account deficit after all other allocations provided
for in this Article IV have been tentatively made as if this Section 4.06(b)
were not in the Agreement.
(c) NONRECOURSE DEDUCTIONS. Nonrecourse Deductions for any fiscal year or
other period shall be allocated among the Partners in accordance with their
Percentage Shares as of the end of such fiscal year or other period.
(d) PARTNER NONRECOURSE DEDUCTIONS. Any Partner Nonrecourse Deductions for
any fiscal year or other period shall be specially allocated to the Partner who
bears the economic risk of loss with respect to the Partner Nonrecourse Debt to
which such Partner Nonrecourse Deductions are attributable in accordance with
Section 1.704-2(i) of the Treasury Regulations.
(e) SECTION 754 ADJUSTMENTS. To the extent an adjustment to the adjusted
tax basis of any Partnership asset pursuant to Code Section 734(b) or Code
Section 743(b) is required, pursuant to Section 1.704-1(b)(2)(iv)(m) of the
Treasury Regulations, 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 gain or loss shall be specially
allocated to the Partners in a manner consistent with the manner in which their
Capital Accounts are required to be adjusted pursuant to such Section of the
Treasury Regulations.
(f) PREFERENTIAL INCOME ALLOCATIONS. After giving effect to the mandatory
allocations set forth above, gross income of the Partnership shall be allocated
to the holders of Preferred Units (other than Series H Preferred Units) until
the cumulative amount allocated to each such holder pursuant to this Section
4.06(f) equals the cumulative amount for the current and all prior fiscal years
of the sum of (A) the distributions made to each such holder, pursuant to
Sections 4.03 and (B) the portions, if any, of the distributions made to each
such holder pursuant to a redemption of a Preferred Unit under the terms of an
applicable Partnership Unit Designation that exceed the Liquidation Preference
Amount (other than any accrued but unpaid distribution thereon) per Preferred
Unit established for such Preferred Unit in the applicable Partnership Unit
Designation. Such allocations shall be made in proportion to the relative excess
amounts determined for each such holder. Solely for purposes of making the
required allocation under this Section 4.06(f) in the fiscal year in which the
Partnership is liquidated, the amount of any accrued but unpaid distributions in
arrears in respect of the Preferred Units (determined in accordance with the
relevant provisions in the applicable Partnership Unit Designation) and other
amounts payable to the holders of such Preferred Units pursuant to Section
(d)(1) of the applicable Partnership Unit Designation, shall be treated as
having been distributed to the holders of Preferred Units immediately prior to
such liquidation under Section 4.03 hereof.
(g) SPECIAL PREFERRED ALLOCATION WITH RESPECT TO SERIES G PREFERRED UNITS.
In addition to the priority allocations set forth in Section 4.06(f), the
following allocations shall be made only in the fiscal years as specified in
this Section 4.06(g), and shall be made prior to making the allocations in
Section 4.06(f), and in the following priority:
(A) Items of Partnership gross income or gain for the
Partnership fiscal year shall be specially allocated to
the holder of the outstanding Series G Preferred Units
until the cumulative allocations under this Section
4.06(g)(A) equal the difference between the aggregate
Liquidation Preference Amounts (other than accrued and
unpaid quarterly distributions in arrears) with respect
to such Units and the amount
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originally contributed to Weeks Realty, L.P. by the
holder in respect of the "Series C preferred units"
issued by Weeks Realty, L.P.
(B) If the Series G Preferred Units are redeemed pursuant to
Section e(1) or Section e(2) or put pursuant to Section
f of EXHIBIT I to this Partnership Agreement, additional
items of Partnership gross income or gain for the fiscal
year shall be specially allocated to the holder of the
redeemed Series G Preferred Units until such holder's
Capital Account balance equals (i) if the Series G
Preferred Units are redeemed pursuant to Section e(2) or
put pursuant to Section f, the Liquidation Preference
Amount (the "Target Balance"), and (ii) if the Series G
Preferred Units are redeemed pursuant to Section e(1),
the sum of (a) the Target Balance, plus (b) if the AEW
Warrant (as defined in EXHIBIT I to this Partnership
Agreement) has not been exercised on or before the
Expiration Date of the AEW Warrant, the Target Balance
with respect to the Series G Preferred Units redeemed,
multiplied by the following applicable percentage based
on the time of redemption of such Units:
REDEMPTION ON OR AFTER NOVEMBER 6, PERCENTAGE
2003 4%
2004 3%
2005 2%
2006 1%
2007 0%
(C) If the Series G Preferred Units are redeemed pursuant to
Section e(3) of EXHIBIT I to this Partnership Agreement,
additional items of Partnership gross income or gain for
the fiscal year shall be specially allocated to the
holder of the redeemed Series G Preferred Units until
such holder's Capital Account balance equals the sum of
(i) the Target Balance, plus (ii) the Target Balance
with respect to the Series G Preferred Units redeemed,
multiplied by the following applicable percentage based
on the time of redemption of such Preferred Units:
REDEMPTION ON OR AFTER NOVEMBER 6, PERCENTAGE
1998 10%
1999 9%
2000 8%
2001 7%
2002 6%
(D) The priority allocations provided by this Section
4.06(g) shall only be made with respect to: (i) any
fiscal year, or portion thereof, in which a Redemption
Date or Exchange Date falls (as defined in EXHIBIT I to
this Partnership Agreement); (ii) solely with respect to
the allocation provided by Section 4.06(g)(A) above, the
fiscal year in which the partnership interest of a
holder of Series G Preferred Units is "liquidated"
within the meaning of Treasury Regulations Section
1.704-1(b)(2)(ii)(g); and (iii) any fiscal year
immediately prior to any of the fiscal years referenced
in clauses (i) and (ii) to the extent that the Exchange
Date, the
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Redemption Date or liquidating distributions
occur on or before the due date (not including
extensions) for filing the Partnership's federal income
tax return for such prior fiscal year.
(h) CURATIVE ALLOCATIONS. Any allocations of items of income, gain, loss,
Code Section 705(a)(2)(B) Expenditures and deduction made pursuant to Sections
4.06(a), 4.06(b), 4.06(c), 406(d) and 4.06(e) hereof shall be taken into account
for the purpose of equitably adjusting subsequent allocations of income, gain,
loss, Code Section 705(a)(2)(B) Expenditures and deduction among the Partners so
that, to the extent possible, the net allocations in the aggregate, allocated to
each Partner pursuant to this Article IV and the Capital Accounts of each
Partner, shall as quickly as possible and to the extent possible consistent with
the requirements of Sections 4.06(a), 4.06(b), 4.06(c), 4.06(d) and 4.06(e) be
the same as if no allocations had been made under those sections. For purposes
of applying the foregoing sentence, allocations pursuant to this Section 4.06(h)
shall only be made with respect to allocations pursuant to Section 4.06(e)
hereof to the extent the Tax Matters Partner reasonably determines that such
allocations will otherwise be inconsistent with the economic agreement among the
parties to this Agreement.
Section 4.07. Other Allocation Rules. Solely for purposes of determining a
Partner's proportionate share of the "excess nonrecourse liabilities" of the
Partnership within the meaning of Section 1.752-3(a)(3) of the Treasury
Regulations, such excess nonrecourse liabilities shall be allocated among the
Partners in proportion to their respective Percentage Shares.
Section 4.08. Tax Allocations; Code Section 704(c).
(a) In the event any Partnership property is reflected on the books of the
Partnership at a book value that differs from the adjusted tax basis of such
property at the time of its contribution to the Partnership or its revaluation
pursuant to Treasury Regulations Sections 1.704-1(b)(2)(iv)(d) or
1.704-1(b)(2)(iv)(f), respectively, income, gain, loss, and deduction with
respect to such property shall, solely for tax purposes, be allocated among the
Partners in the manner required by Code Section 704(c) and Treasury Regulations
Sections 1.704-1(b)(4)(i) and 1.704-3. Consistent with the foregoing, with
respect to Partnership property owned as of the date hereof, depreciation,
amortization or other cost recovery deductions shall be allocated in accordance
with the traditional method contained in Treasury Regulations Section 1.704-3(b)
or any succeeding applicable provision, unless the General Partner and a
Contributing Partner have specifically agreed otherwise. For property acquired
by or contributed to the Partnership subsequent to the date hereof, the Tax
Matters Partner shall, at its sole discretion and on a property by property
basis, choose between any permissible method contained in Treasury Regulations
Section 1.704-3 or any similar succeeding applicable provision. For purposes of
allocating the Partnership's earnings and profits to corporate Partners,
depreciation, amortization and cost recovery deductions used in determining
earnings and profits shall be allocated among the Partners in the same manner as
allocations of depreciation, amortization and other cost recovery deductions for
regular tax purposes, adjusted for differences in earnings and profits, bases
and depreciation periods.
(b) Any elections or other decisions relating to such allocations shall be
made by the Tax Matters Partner in any manner that reasonably reflects the
purpose and intention of this Agreement. Allocations pursuant to this Section
4.08 are solely for purposes of federal, state, and local taxes and shall not
affect, or in any way be taken into account in computing, any Person's Capital
Account or share of Profits, Losses, other items, or distributions pursuant to
any provision of this Agreement.
Section 4.09. General Provisions. In the event of an increase or a decrease
in the Percentage Share of a Partner at any time after the Partnership's initial
fiscal quarter other than at the end of a fiscal quarter of the Partnership, the
share of the Profits and Losses and the Distributable Cash of the Partnership
shall be allocated among the Persons whose shares are changed as determined by
the General Partner pursuant to Code Section 706(d).
29
Section 4.10. No Interest on Capital Accounts. No Partner shall be entitled
to receive any interest from the Partnership on account of the amount of its
Capital Account.
Section 4.11. Distribution of Property. Unless the Partners otherwise
agree, in the event it becomes necessary to make a Distribution of Partnership
property in kind, then such property shall be transferred and conveyed to the
Partners, or their assigns, so as to vest in each of them as a tenant-in-common,
a percentage interest in the whole of said property equal to the percentage
interest he would have received had such property not been distributed in kind.
Section 4.12. Return of Capital Contribution.
(a) Except as provided in this Agreement, no Partner shall be entitled to
withdraw any part of its Capital Contribution or to receive any Distributions
from the Partnership. No Partner shall have the right to demand or receive
property other than cash in return for its Capital Contribution; and if upon
dissolution the Partnership property remaining after the payment or discharge of
debts and liabilities of the Partnership is insufficient to return said
contributions, no Limited Partner shall have any recourse against the General
Partner or any other Limited Partner.
(b) If Parent repurchases or redeems REIT Shares from the holders thereof
in accordance with its Articles of Incorporation as now or hereafter amended and
Indiana law, then the General Partner shall cause the Partnership to purchase
from Parent on the same terms as the repurchase or redemption of such REIT
Shares a number of Units equal to the number of REIT Shares so repurchased or
redeemed divided by the Redemption Ratio.
(c) Return of Capital Determination. For purposes of computing the return
on the capital of the holder of Series G Preferred Units, the capital of a
holder of the Series G Preferred Units attributable to each such Unit shall be
treated as returned (i) when the Unit is redeemed by the Partnership or (ii) to
the extent that the Partnership has distributed with respect to such Unit an
amount that exceeds the cumulative quarterly distributions accrued thereon, plus
the difference between $25 and the amount contributed to the Partnership with
respect to such Unit. Such return of capital determination is solely for the
internal tax accounting purposes of the holders of the Series G Preferred Units
and shall not in any way affect the distribution to the Partners under this
Agreement or the allocations of Profits and Losses.
ARTICLE V
Accounting, Reporting and Holding of Assets
Section 5.01. Fiscal Year. The fiscal year of the Partnership shall be the
calendar year.
Section 5.02. Records, Accounting and Reports.
(a) The books of account and records of the Partnership shall be located at
such place as may be specified by the General Partner and shall be kept and
maintained on an accrual basis in accordance with generally accepted accounting
principles.
(b) 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, computer
disks, 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.
(c) As soon as practicable, but in no event later than one hundred five
(105) days after the close of each Partnership Year, the General Partner shall
cause to be mailed to each Limited Partner as of the close of the Partnership
Year, an annual report containing financial statements of the Partnership, or of
Parent if such statements are prepared on a consolidated basis with Parent, for
such Partnership Year,
30
presented in accordance with GAAP, such statements to be audited by a
nationally recognized firm of independent public accountants selected by the
General Partner. The mailing of copies of Parent's or the Partnership's annual
report on Form 10-K to the Limited Partners shall constitute compliance with
this subsection.
(d) As soon as practicable, but in no event later than sixty (60) days
after the close of each calendar quarter (except the last calendar quarter of
each year), the General Partner shall cause to be mailed to each Limited Partner
as of the last day of the calendar quarter, a report containing unaudited
financial statements of the Partnership, or of Parent, if such statements are
prepared on a consolidated basis with Parent, and such other information as may
be required by applicable law or regulation, or as the General Partner
determines to be appropriate. The mailing of copies of Parent's or the
Partnership's quarterly report on Form 10-Q to the Limited Partners shall
constitute compliance with this subsection.
Section 5.03. Right to Inspection.
(a) Each Partner or his duly authorized agent shall at all reasonable times
have access to and the right at his expense to inspect and copy any of the books
and records of the Partnership.
(b) In addition to other rights provided by this Agreement or by the Act,
and except as limited by subsection (d) hereof, each Limited Partner shall have
the right, for a purpose reasonably related to such Limited Partner's interest
as a limited partner in the Partnership, upon written demand with a statement of
the purpose of such demand and at such Limited Partner's own expense:
(i) to obtain a copy of the most recent annual and quarterly
reports filed with the Securities and Exchange Commission by
Parent or the Partnership pursuant to the Securities Exchange
Act of 1934;
(ii) to obtain a copy of the Partnership's federal, state and local
income tax returns for each Partnership Year;
(iii) to obtain a current list of the name and last known business,
residence or mailing address of each Partner;
(iv) to obtain a copy of this Agreement and the Certificate and all
amendments thereto, together with executed copies of all
powers of attorney pursuant to which this Agreement, the
Certificate and all amendments thereto have been executed; and
(v) to obtain true and full information regarding the amount of
cash and a description and statement of any other property or
services contributed by each Partner and which each Partner
has agreed to contribute in the future, and the date on which
each became a Partner.
(c) The Partnership shall notify each Limited Partner in writing of any
change made to the Redemption Ratio within ten (10) Business Days of the date
such change becomes effective.
(d) Notwithstanding any other provision of this Section 5.03, the General
Partner may keep confidential from the Limited Partners, for such period of time
as the General Partner determines in its sole and absolute discretion to be
reasonable, any information that (i) the General Partner believes to be in the
nature of trade secrets or other information the disclosure of which the General
Partner in good faith believes is not in the best interests of the Partnership,
the General Partner or Parent, or (ii) the Partnership, Parent or the General
Partner is required by law or by agreements with unaffiliated third parties to
keep confidential.
31
Section 5.04. Holding and Transfer of Assets.
(a) All property, real or personal, owned by the Partnership shall be
deemed to be owned by the Partnership as an entity, and no Partner or Assignee,
individually or collectively, shall have any ownership interest in such
Partnership assets or any portion thereof. Title to any or all of the
Partnership assets may be held in the name of the Partnership, the General
Partner or one or more nominees, as the General Partner may determine, including
Affiliates of the General Partner. The General Partner hereby declares and
warrants that any Partnership assets for which legal title is held in the name
of the General Partner or any nominee or Affiliate of the General Partner shall
be held by the General Partner for the use and benefit of the Partnership in
accordance with the provisions of this Agreement; PROVIDED, HOWEVER, that the
General Partner shall use its best efforts to cause beneficial and record title
to such assets to be vested in the Partnership as soon as reasonably
practicable. All Partnership assets shall be recorded as the property of the
Partnership on its books and records, notwithstanding the name in which legal
title to such assets is held.
(b) 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 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 to
contest, negate or disaffirm any action of the General Partner in connection
with any such dealing. In no event shall any Person dealing with the General
Partner or its representatives be obligated to ascertain that the terms of this
Agreement have been complied with or to inquire into the necessity or expedience
of any act or action of the General Partner or its representatives. Each and
every certificate, document or other instrument executed on behalf of the
Partnership by the General Partner or its representatives shall be conclusive
evidence in favor of any and every Person relying thereon or claiming thereunder
that (i) at the time of the execution and delivery of such certificate, document
or instrument, this Agreement was in full force and effect, (ii) the Person
executing and delivering such certificate, document or instrument was duly
authorized and empowered to do so for and on behalf of the Partnership, and
(iii) such certificate, document or instrument was duly executed and delivered
in accordance with the terms and provisions of this Agreement and is binding
upon the Partnership.
Section 5.05. Bank Accounts. Funds of the Partnership may be deposited in
its name in such bank account or accounts as shall be designated from time to
time by the General Partner. All withdrawals from Partnership accounts shall be
made upon checks signed by or upon the authorization of the General Partner. The
General Partner may designate one or more Persons to sign checks upon its
authorization.
Section 5.06. Tax Status; Notice of Tax Controversy. The Partnership shall
be treated and shall file its tax returns as a partnership for federal, state
and municipal income tax and other tax purposes. If any Partner shall receive
notice of a tax examination of the Partnership by federal, state or local
authorities, he shall immediately give notice thereof to the General Partner.
Section 5.07. Tax Matters Partner; Tax Elections; Tax Returns.
(a) The General Partner is hereby designated as the Tax Matters Partner of
the Partnership under Subchapter C of Chapter 63 as contained in subtitle F of
the Code. Pursuant to Section 6223(c)(3) of the Code, upon receipt of notice
from the IRS of the beginning of an administrative proceeding with respect to
the Partnership, the Tax Matters Partner shall furnish the IRS with the name,
address and profit interest of each of the Limited Partners; PROVIDED, HOWEVER
that such information is provided to the Partnership by the Limited Partners.
32
(b) The Tax Matters Partner is authorized, but not required:
(i) To enter into any settlement with the IRS with respect to any
administrative or judicial proceedings for the adjustment of
Partnership items required to be taken into account by a
Partner for income tax purposes (such administrative
proceedings being referred to as a "tax audit" and such
judicial proceedings being referred to as "judicial review"),
and in the settlement agreement the Tax Matters Partner may
expressly state that such agreement shall bind all Partners,
except that such settlement agreement shall not bind any
Partner (A) who (within the time prescribed pursuant to the
Code and Regulations) files a statement with the IRS providing
that the Tax Matters Partner shall not have the authority to
enter into a settlement agreement on behalf of such Partner,
or (B) who is a "notice partner" (as defined in Section 6231
of the Code) or a member of a "notice group" (as defined in
Section 6223(b)(2) of the Code);
(ii) In the event that a notice of a final administrative
adjustment at the Partnership level of any item required to be
taken into account by a Partner for tax purposes (a "final
adjustment") is mailed to the Tax Matters Partner, to seek
judicial review of such final adjustment, including the filing
of a petition for readjustment with the Tax Court or the
United States Claims Court, or the filing of a complaint for
refund with the District Court of the United States for the
district in which the Partnership's principal place of
business is located;
(iii) To intervene in any action brought by any other Partner for
judicial review of a final adjustment;
(iv) To file a request for an administrative adjustment with the
IRS at any time and, if any part of such request is not
allowed by the IRS, to file an appropriate pleading (petition
or complaint) for judicial review with respect to such
request;
(v) To enter into an agreement with the IRS to extend the period
for assessing any tax which is attributable to any item
required to be taken into account by a Partner for tax
purposes, or an item affected by such item; and
(vi) To take any other action on behalf of the Partners of the
Partnership in connection with any tax audit or judicial
review proceeding to the extent permitted by applicable law or
regulations.
The taking of any action and the incurring of any expense by the Tax
Matters Partner in connection with any such proceeding, except to the extent
required by law, is a matter in the sole and absolute discretion of the Tax
Matters Partner, and the provisions relating to indemnification of the General
Partner set forth in Section 3.10 of this Agreement shall be fully applicable to
the Tax Matters Partner in its capacity as such.
(c) 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 or legal counsel to assist the Tax
Matters Partner in discharging its duties hereunder, so long as the compensation
paid by the Partnership for such services is reasonable.
(d) The Tax Matters Partner has the authority to make or not to make any
election permitted to be made by the Partnership under the Code. Without
limiting the generality of the foregoing, the Tax Matters Partner is authorized
to make an election on behalf of the Partnership under Section 754 of the
33
Code. The General Partner shall have the right to seek to revoke any such
election (including, without limitation, the election under Section 754 of the
Code) upon the General Partner's determination in its sole and absolute
discretion that such revocation is in the best interests of the Partners.
(e) 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 5.08. Tax Matters Partner Not Liable. The Tax Matters Partner shall
not be liable to any Partner or the Partnership on account of any action taken
or not taken so long as it shall act in good faith in such capacity. Without
limiting the generality thereof, the Tax Matters Partner shall be deemed to have
acted in good faith in taking any action which benefits Partners holding at
least ninety percent (90%) of the Units.
Section 5.09. 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 Sections 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 (i)
the Partnership withholds such payment from a Distribution which would otherwise
be made to the Limited Partner or (ii) the General Partner determines, in its
sole and absolute discretion, that such payment may be satisfied out of the
available funds of the Partnership which would, but for such payment, be
distributed to the Limited Partner. Any amounts withheld pursuant to the
foregoing clauses (i) and (ii) shall be treated as having been distributed to
such Limited Partner. Any tax credit available with respect to any withheld
amount shall be allocated to the Partner with respect to whom such amount was
withheld. Each Limited Partner hereby unconditionally and irrevocably grants to
the Partnership a security interest in such Limited Partner's Units to secure
such Limited Partner's obligation to pay to the Partnership any amounts required
to be paid pursuant to this Section 5.09 and authorizes the General Partner to
file a financing statement without such Limited Partner's signature in
connection with such security interest. In the event that a Limited Partner
fails to pay any amounts owed to the Partnership pursuant to this Section 5.09
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., 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 VI
Dissolution and Continuation of Partnership
Section 6.01. Dissolution. The Partnership shall be dissolved and, unless
continued, its assets shall be disposed of and its affairs wound up upon the
occurrence of any of the following events:
34
(a) The expiration of the term in Section 1.03, including any extension
thereof.
(b) The withdrawal or dissolution of the General Partner.
(c) Special Partner Approval and approval by the General Partner of a
voluntary agreement at any time to dissolve the Partnership.
(d) Entry of a decree of judicial dissolution of the Partnership pursuant
to the provisions of the Act.
(e) The sale or other disposition (other than a disposition occurring upon
a financing or refinancing) of all or substantially all of the assets and
properties of the Partnership.
Section 6.02. Notice of Dissolution. In the event a dissolution of the
Partnership occurs pursuant to Section 6.01, the General Partner shall, within
thirty (30) days thereafter, provide written notice thereof to each of the
Partners.
Section 6.03. Continuation of Partnership. In the event of the dissolution
or withdrawal of the General Partner, all powers granted to the General Partner
shall terminate and a new General Partner may be selected within ninety (90)
days of the date of dissolution and the business of the Partnership may be
continued as a successor limited partnership with the approval of (i) the
General Partner and (ii) Limited Partners other than the General Partner holding
more than 50% of the Units held by Partners other than the General Partner. If
the business of the Partnership is so continued, the successor limited
partnership shall be governed by the terms and provisions of this Agreement. If
the Partnership is not so continued, the Partnership shall be liquidated in
accordance with Article VIII.
Section 6.04. Extension of Term. The initial term of this Agreement as set
forth in Section 1.03 shall be extended to December 31, 2124 if prior to the
expiration of such initial term the extension is approved by Partners holding
more than fifty percent (50%) of the outstanding Units.
ARTICLE VII
Transfer of Units and Changes in Partners
Section 7.01. General Partner and Parent Transfers Restricted.
(a) Neither the General Partner nor Parent shall not voluntarily withdraw
from the Partnership or take any action described in item (B), (C) or (D) of the
definition of "Bankruptcy" in Section 1.04, or Assign any of its Units, or
dissolve or liquidate, except as provided in subsection (b) or as otherwise
permitted by this Agreement.
(b) Notwithstanding the provisions of subsection (a), the General Partner
or Parent may (i) Assign Units to another Person with Special Partner Approval,
or the General Partner and Parent may Assign Units to one another, or (ii) grant
a bona fide security interest in Units, and such Units may be Assigned to the
secured party pursuant to such a security interest; PROVIDED, however, that the
secured party will have no right to become a Substituted Partner except as
provided in this Agreement.
Section 7.02. Limited Partner Transfers Restricted.
(a) No Limited Partner shall Assign all or any portion of his Units, or any
of such Limited Partner's rights as a Limited Partner, without the prior written
consent of the General Partner, which consent may be given or withheld by the
General Partner in its sole and absolute discretion, except as follows (subject
in each such case to the satisfaction of the requirements of Sections 7.03, 7.04
and 7.05 and provided that the Assignee will have no right to become a
Substituted Partner except as provided in this Agreement):
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(i) 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 assign all or any part of his or
its interest in the Partnership; however, the Incapacity of a
Limited Partner, in and of itself, shall not dissolve or
terminate the Partnership.
(ii) If a Limited Partner is a partnership, corporation or trust,
the Limited Partner shall be permitted to distribute to any of
its equity owners such equity owner's PRO RATA share of Units.
(iii) A Limited Partner may Assign all or a portion of his Units to
a member of his Immediate Family or to an entity for the
benefit of one or more members of his Immediate Family.
(iv) A Limited Partner may Assign all or a portion of his Units to
a charitable organization within the meaning of Section
501(c)(3) of the Code in a donative transfer.
(v) A Limited Partner may redeem his Units as provided in Section
7.07.
(vi) A Limited Partner may Assign Units to another Limited Partner.
(vii) A Limited Partner may Assign Units to a trust for the benefit
of employees of (A) the Partnership, (B) any direct or
indirect Subsidiary of the General Partner or Parent, (C) Duke
Services or (D) any direct or indirect Subsidiary of Duke
Services.
(b) Any purported Assignment respecting a Partnership interest by a Limited
Partner in violation of Section 7.02(a) shall be void AB INITIO and shall not be
given effect for any purpose by the Partnership. Any Assignment of Units by
Parent is controlled by Section 7.01 and not by this section.
(c) Notwithstanding the provisions of subsection (a), no Assignment by a
Limited Partner may be permitted or recognized by the Partnership if the General
Partner determines, in its sole discretion, that such Assignment might result in
the disqualification of Parent as a REIT or the classification of the
Partnership as an association taxable as a corporation.
(d) Notwithstanding the provisions of subsection (a), a Limited Partner may
grant a bona fide security interest in Units, and such Units may be Assigned to
the secured party pursuant to such a security interest; PROVIDED, however, that
the secured party will have no right to become a Substituted Partner except as
provided in this Agreement.
(e) No Limited Partner may withdraw from the Partnership other than as a
result of a permitted Assignment and substitution with respect to all of such
Limited Partner's Units in accordance with this section.
Section 7.03. Transfer and Assignment of Partnership Interest.
(a) To the extent permitted by Section 7.02, a Limited Partner or Assignee
shall have the right to Assign all or any portion of its Units by a signed,
written assignment document in compliance with and subject to Sections 7.04 and
7.05, PROVIDED THAT (i) the terms of such assignment document are not in
contravention of any of the provisions of this Agreement; (ii) such assignment
document is fully executed by the assignor and Assignee; (iii) such assignment
document is received by the Partnership and recorded on the books thereof; (iv)
the General Partner, in its sole discretion, approves the Assignment
36
documents and, to the extent required by Section 7.02, approves the Assignment,
and (v) the Partner provides an opinion of counsel, if required by the General
Partner, satisfactory to the General Partner, that no material adverse tax or
securities law effects will result to the Partnership or the other Partners from
such Assignment.
(b) In the event of an Assignment of Units, the following rules shall
govern:
(i) The effective date of an Assignment of Units shall be that
date set forth on the written instrument of Assignment;
PROVIDED, however, that no Assignment shall be retroactive and
the effective date of an Assignment shall only be the first
day of a fiscal quarter of the Partnership, unless the General
Partner otherwise agrees.
(ii) Anything herein to the contrary notwithstanding, both the
Partnership and the General Partner shall be entitled to treat
the Partner or Assignee of Record with respect to such Units
as the absolute owner thereof in all respects and shall incur
no liability for Distributions of cash or other property made
in good faith to such Partner or Assignee of Record until such
time as a certificate for the Units Assigned, properly
endorsed, has been delivered to the Partnership for
registration of the Assignment and any required approvals are
given.
(iii) An Assignee shall be entitled to receive Distributions of cash
or other property from the Partnership attributable to the
Units acquired by reason of such Assignment from and after the
effective date of the Assignment of such Units to the Assignee
except as provided in subparagraph (ii) above.
(iv) The Profits, Losses, income, expense, deductions or credits
attributable to the interest acquired by reason of such
Assignment shall be divided among and allocated between the
assignor and Assignee of such Units in accordance with Section
7.06.
Section 7.04. Substitution as a Partner. No Assignee of the whole or any
portion of Units shall have the right to become a Substituted Partner in place
of the assignor unless all of the following conditions are satisfied:
(i) The assignor and Assignee execute a written instrument of
Assignment, together with such other instruments as the
General Partner may deem necessary or desirable to effect the
admission of the Assignee as a Substituted Partner, and by
which the Assignee agrees to be bound by this Agreement.
(ii) Such instrument of Assignment provided for herein has been
delivered to and received by the General Partner.
(iii) The conditions to such substitution in Section 7.05 have been
satisfied.
(iv) The written consent of the General Partner to such
substitution has been obtained, the granting or denial of
which shall be within the sole and absolute discretion of the
General Partner, PROVIDED THAT the consent of the General
Partner to such substitution shall be withheld if the General
Partner shall not have received evidence satisfactory to it
that the Substituted Partner is authorized to acquire the
interest so Assigned and has the appropriate financial
resources to acquire the Units Assigned to it.
(v) A transfer fee has been paid to the Partnership which is
sufficient to cover all reasonable expenses connected with
such Assignment and substitution, including, but not limited
to, legal and filing or recording fees.
37
Section 7.05. Additional Conditions to Assignment and Substitution. The
General Partner and the Partnership shall not recognize any Assignment or
substitution for any purpose if the Partnership shall not have received, if
required by the General Partner, an opinion of counsel regularly employed by the
Partnership (or other counsel reasonably satisfactory to the General Partner) to
the effect that such Assignment (A) will not result in termination of the
Partnership under the Act; (B) will not result in termination of the Partnership
for federal income tax purposes or, if it does result in such a termination,
such termination will not cause material adverse federal income tax consequences
to the Partnership or the other Partners; (C) will not change the status of the
Partnership as a partnership for federal income tax purposes; (D) will not give
rise to liability of the Partnership, any Partner or any agent or advisor of any
Partner for violation of the securities laws of the United States or any state
thereof; and (E) will not cause the Partnership to become subject to payment of
the Indiana Gross Income Tax.
Section 7.06. Allocation Upon Assignment or Redemption. If any Units are
Assigned during any quarterly segment of the Partnership's fiscal year in
compliance with the provisions of this Article VII or redeemed pursuant to
Section 7.07, Profits, Losses, each item thereof and all other items
attributable to such Units 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 4.09.
Section 7.07. Redemption Right.
(a) Subject to Section 7.07(b) and any other applicable agreement between
the Partnership and a Limited Partner, each Limited Partner, other than Parent,
shall have the right (the "Redemption Right") but not the obligation to require
the Partnership to redeem on a Specified Redemption Date all or a portion of the
Common Units held by such Limited Partner at a redemption price per Common Unit
equal to and in the form of the Redemption Amount. The Redemption Right shall be
exercised pursuant to one or more Notices of Redemption delivered to the General
Partner by the Limited Partner (or the Limited Partner's attorney-in-fact) who
is exercising the Redemption Right (the "Redeeming Partner"); PROVIDED, HOWEVER,
that the Partnership shall not be obligated to satisfy such Redemption Right if
Parent elects to purchase the Common Units subject to the Notice of Redemption
pursuant to Section 7.07(b). A Limited Partner may not exercise the Redemption
Right for less than 10 Units or, if such Limited Partner holds less than 10
Units, all of the Units held by such Partner. The Redeeming Partner shall have
no right, with respect to any Units so redeemed, to receive any Distributions
paid after the Specified Redemption Date.
(b) Notwithstanding the provisions of Section 7.07(a), a Limited Partner
that exercises the Redemption Right shall be deemed to have offered to sell the
Common Units described in the Notice of Redemption to Parent, and Parent may, in
its sole and absolute discretion, purchase directly and acquire such Units by
paying to the Redeeming Partner the Redemption Amount on the Specified
Redemption Date, whereupon Parent shall acquire the Units offered for redemption
by the Redeeming Partner and shall be treated for all purposes of this Agreement
as the owner of such Partnership Units. Unless Parent shall exercise its right
to purchase Units from the Redeeming Partner pursuant to this Section 7.07(b),
Parent shall not have any obligation to the Redeeming Partner or the Partnership
with respect to the Redeeming Partner's exercise of the Redemption Right. In the
event Parent shall exercise its right to purchase Units with respect to the
exercise of a Redemption Right in the manner described in the first sentence of
this Section 7.07(b), the Partnership shall have no obligation to pay any amount
to the Redeeming Partner with respect to such Redeeming Partner's exercise of
such Redemption Right, and each of the Redeeming Partner, the Partnership and
Parent shall treat the transaction between Parent and the Redeeming Partner as a
sale of the Redeeming Partner's Units to Parent for federal income tax purposes.
Each Redeeming Partner agrees to execute such documents as Parent may reasonably
require in connection with the issuance of REIT Shares upon exercise of the
Redemption Right including, but not limited to, written representations as to
tax or securities law matters, and any certificates representing
38
such REIT Shares may bear legends regarding federal and state securities
transfer restrictions and imposing reasonable requirements for any transfer.
(c) Parent shall at all times reserve and keep available for issuance upon
the exercise of the Redemption Right such number of its authorized but unissued
REIT Shares as will be sufficient to permit the exercise in full of the
Redemption Right by all holders of Units. All REIT Shares, when issued upon
exercise of a Redemption Right, shall be duly and validly issued and fully paid
and nonassessable, and not subject to preemptive rights.
(d) The Redemption Ratio is 1.0, subject to adjustments as follows:
(i) In case Parent shall (A) pay or make a dividend or other
distribution on the outstanding REIT Shares in REIT Shares,
(B) subdivide or reclassify the outstanding REIT Shares into a
greater number of REIT Shares, or (C) combine or reclassify
the outstanding REIT Shares into a smaller number of REIT
Shares, the Redemption Ratio in effect at the opening of
business on the day following the date fixed for the
determination of shareholders entitled to receive such
dividend or other distribution or subject to such subdivision,
combination or reclassification shall be proportionately
adjusted so that a holder of Units shall be entitled to
receive, upon redemption thereof, the number of REIT Shares
which the holder would have owned at the opening of business
on the day following the date fixed for such determination had
such Units been redeemed immediately prior to such
determination.
(ii) In case the Partnership shall subdivide or reclassify the
outstanding Units into a greater number of Units, the
Redemption Ratio in effect at the opening of business on the
day following the date fixed for the determination of Unit
holders subject to such subdivision or reclassification shall
be proportionately adjusted so that a holder of Units shall be
entitled to receive, upon redemption thereof, the number of
REIT Shares which the holder would have owned at the opening
of business on the day following the date fixed for such
determination had such Units been redeemed immediately prior
to such determination.
(iii) In case Parent (A) shall issue rights or warrants to all
holders of REIT Shares entitling them to subscribe for or
purchase REIT Shares at a price per share less than the
Current Market Price per REIT Share on the date fixed for the
determination of shareholders entitled to receive such rights
or warrants, (B) shall not issue similar rights or warrants to
all holders of Units entitling them to subscribe for or
purchase REIT Shares or Units at a comparable price
(determined, in the case of Units, by reference to the
Redemption Ratio), and (C) cannot issue such rights or
warrants to a Person exercising a Redemption Right as
otherwise required by the definition of REIT Shares Amount in
Section 1.04, then the Redemption Ratio in effect at the
opening of business on the day following the date fixed for
such determination shall be increased by multiplying such
Redemption Ratio by a fraction of which the numerator shall be
the number of REIT Shares outstanding at the close of business
on the date fixed for such determination plus the number of
REIT Shares so offered for subscription or purchase, and of
which the denominator shall be the number of REIT Shares
outstanding at the close of business on the date fixed for
such determination plus the number of REIT Shares which the
aggregate offering price of the total number of REIT Shares so
offered for subscription would purchase at such Current Market
Price per share, such increase of the
39
Redemption Ratio to become effective immediately after the
opening of business on the day following the date fixed for
such determination.
(iv) In case Parent shall, by dividend or otherwise, distribute to
all holders of its common stock (i) shares of capital stock of
any class other than its common stock, (ii) evidences of its
indebtedness or (iii) assets (excluding any rights or warrants
referred to in subparagraph (iii) of this subsection (d), any
cash dividend or distribution lawfully paid under the laws of
the state of incorporation of Parent, and any dividend or
distribution referred to in subsection (d)(i)) and the General
Partner shall not cause a corresponding distribution to be
made to all holders of Units, the Redemption Ratio shall be
adjusted so that the same shall equal the ratio determined by
multiplying the Redemption Ratio in effect immediately prior
to the close of business on the date fixed for the
determination of shareholders entitled to receive such
distribution by a fraction of which the numerator shall be the
Current Market Price per REIT Share on the date fixed for such
determination, and of which the denominator shall be such
Current Market Price per REIT Share less the fair market value
(as determined by the Board of Directors of Parent, whose
determination shall be conclusive and described in a Board
resolution certified by the Secretary of Parent and delivered
to the holders of the Units) of the portion of the shares of
capital stock or evidences of indebtedness or assets so
distributed applicable to one REIT Share, such adjustment to
become effective immediately prior to the opening of business
on the day following the date fixed for the determination of
shareholders entitled to receive such distribution.
(v) In case of any reclassification of the REIT Shares (including,
but not limited to, any reclassification upon a consolidation
or merger in which Parent is the continuing corporation) into
securities other than REIT Shares, the Units shall thereafter
be redeemable into the kind and amount of shares of such
securities receivable upon such reclassification by a holder
of the number of REIT Shares into which such Units would be
redeemable immediately prior to such reclassification.
(vi) For purposes of this subsection (d), if Parent receives
consideration other than cash for any of its securities, the
value of such consideration is to be determined by the Board
of Directors of Parent in the exercise of its reasonable
business judgment and the basis for such valuation shall be
included in any certificate delivered by the General Partner
pursuant to Section 5.03(c).
Section 7.08. Effect of Transfer. Any Assignee or other transferee of Units
or any interest therein shall take subject to the restrictions and conditions to
transfer imposed by this Article.
ARTICLE VIII
Liquidation
Section 8.01. Liquidation Determination. In the event of dissolution where
the Partnership is not continued pursuant to this Agreement or otherwise, the
Partnership shall be liquidated.
Section 8.02. Liquidation Procedure. A reasonable time, as determined by
the General Partner, from the date of an event of dissolution shall be allowed
for the orderly liquidation of the assets of the Partnership and the discharge
of its liabilities. Upon the completion of dissolution in accordance with the
terms hereof, the Partnership shall terminate and the General Partner shall
execute, acknowledge and
40
cause to be filed a certificate of cancellation of the Partnership whereupon it
shall cease to exist in all respects. In the event of a dissolution of the
Partnership, liquidation of the assets of the Partnership and discharge of its
liabilities may be carried out by a liquidation trustee or receiver, who shall
be a bank or trust company or other person or firm having experience in
managing, liquidating or otherwise handling property of the type then owned by
the Partnership. Such liquidation trustee or receiver shall be designated by the
General Partner (or in the absence of the General Partner, by the Limited
Partners holding more than 50% of the Units). A liquidation trustee shall be not
personally liable for the debts of the Partnership but otherwise shall have such
obligations and authorities as are given the General Partner pursuant to this
Agreement or as may be agreed upon between the Partners and said liquidation
trustee.
Section 8.03. Allocation of Liquidation Proceeds. Upon liquidation of the
Partnership, and subject to Section 2.05 hereof, the liquidation proceeds shall
be applied and distributed in the following manner and order of priority:
(i) To the payment of liabilities of creditors other than Partners
and to the expenses of liquidation;
(ii) To the setting up of any reserves which the General Partner
determines reasonably necessary for any contingent liabilities
of the Partnership or of any Partner arising out of or in
connection with a Partnership liability, which revenues shall
be paid over by the Partnership to an escrow agent or shall be
held for the purpose of disbursing such reserves in payment of
any such contingent liabilities and, at the expiration of such
period as the General Partner shall deem advisable, the
balance of which shall be distributed as otherwise provided in
this section;
(iii) To the payment of any liabilities to the Partners (other than
Capital Accounts), arising out of or in connection with a
Partnership liability, or if the amount available for such
payment is insufficient, a PRO RATA portion thereof; and
(iv) The remainder to the Partners in accordance with Section 4.04
of this Agreement.
ARTICLE IX
Miscellaneous
Section 9.01. Notice. All notices, elections, consents and approvals under
this Agreement shall be in writing, and shall be effectively given to any
Partner if delivered to the Partner or if mailed by certified mail, return
receipt requested, to such Partner at the address provided to the General
Partner. Any Partner may change his or its address for notice by giving notice
of such change to the General Partner.
Section 9.02. Construction. This Agreement shall be governed by and
construed in accordance with the laws of the State of Indiana.
Section 9.03. Assigns and Successors in Interest. Except as otherwise
provided herein, this Agreement shall be binding upon and shall run for the
benefit of the parties executing this Agreement, and the personal
representatives, heirs, legatees, devisees, assigns and successors in interest
of the Partners.
Section 9.04. Assignment. No Partner to this Agreement may Assign its Units
or any right therein to any other Person except as expressly permitted by this
Agreement. However, in the event of any Assignment of Units in accordance with
the provisions of this Agreement, the Partners agree to
41
execute such documents as may be necessary to effect such change, including
required changes to this Agreement and the Certificate described in Section
9.06.
Section 9.05. Amendment.
(a) The General Partner, without obtaining the consent of the other
Partners, may amend this Agreement at any time, in its sole and exclusive
discretion, but only to reflect:
(i) A change in the name of the Partnership;
(ii) A change in the principal place of business of the
Partnership;
(iii) The admission, substitution, termination, or withdrawal of
Partners in accordance with this Agreement, so long as any
Person admitted or substituted as a Partner executes a written
document agreeing to be bound by this Agreement;
(iv) A change that (A) is of an inconsequential nature and does not
adversely affect the Limited Partners or any Assignees in any
material respect or (B) is required by this Agreement;
(v) A change to set forth the rights, powers, duties, and
preferences of the holders of any additional Partnership
interests issued pursuant to Section 4.02(b) hereof;
(vi) A change to satisfy any requirements, or conditions contained
in any order, directive, opinion, ruling or regulation of a
federal or state agency or contained in federal or state law;
or
(vii) A change to EXHIBIT M in accordance with the terms of such
Exhibit.
(b) This Agreement may be otherwise amended with the consent of the General
Partner and Special Partner Approval. Notwithstanding the preceding sentence,
any amendment which would have any of the following effects must be consented to
in writing by each Partner whose rights or obligations as expressly provided in
this Agreement are directly and adversely affected by such amendment:
(i) Increase a Partner's obligation to contribute to the
Partnership or decrease the Capital Account of a Partner;
(ii) Alter the allocations of Profits and Losses;
(iii) Alter the manner of computing Distributions;
(iv) Alter the right of a Partner to Assign his Units and any
rights provided in this Agreement to substitute another Person
as a Partner;
(v) Alter the voting rights or status of Partners;
(vi) Alter or modify the Redemption Right and Redemption Amount as
set forth in Section 7.07 and related definitions;
(vii) Alter the procedures for amending this Agreement; or
(c) Notwithstanding the foregoing, the unanimous consent of the Partners is
required for any amendment which, in the opinion of counsel for the Partnership:
(i) Is in violation of the provisions of the Act;
(ii) Would cause the Limited Partners to incur liability as general
partners; or
42
(iii) Would result in the Partnership being treated as other than a
partnership for federal income tax purposes.
(d) Section 2.05 shall not be amended without the consent of two-thirds in
number of the Obligated Partners.
(e) Amendments to this Agreement may be proposed by the General Partner or
by a proposal in writing signed by Partners holding ten percent (10%) or more of
the outstanding Units, such proposal to be given to the General Partner and the
other Partners at the addresses appearing in the records of the Partnership.
(f) The General Partner shall provide written notice to the Limited
Partners when any action under subsection (a) is taken.
Section 9.06. Certificate of Limited Partnership. The Partnership shall
file a Certificate of Limited Partnership in such office or offices in such
jurisdiction or jurisdictions where such a filing is required by applicable law
or deemed desirable by the General Partner. In the event of any change requiring
the cancellation or amendment of such certificate under the Act or such other
applicable law, the General Partner shall cause the certificate to be cancelled
or amended in accordance with law by an appropriate filing, without the
necessity of first obtaining the prior consent of the other Partners.
Section 9.07. Further Assurances. The Partners will execute and deliver
such further instruments and do such further acts and things as may be necessary
to carry out the intent and purpose of this Agreement.
Section 9.08. Warranties of Representatives. Each Person executing this
Agreement on behalf of a party hereto represents and warrants that he has been
fully empowered to execute this Agreement, and that all necessary action for the
execution of this Agreement has been taken.
Section 9.09. Computation of Time. In computing any period of time pursuant
to this Agreement, the day of the act, event or default from which the
designated period of time begins to run shall not be included. The last day of
the period so computed shall be included, unless it is a Saturday, Sunday or a
legal holiday, in which event the period shall run until the end of the next day
that is not a Saturday, Sunday or legal holiday.
Section 9.10. Captions. Article and section titles or captions contained in
this Agreement are inserted only as a matter of convenience and for reference
and in no way define, limit, extend or describe the scope of this Agreement or
the intent of any provision hereof.
Section 9.11. Identification. Whenever the singular number is used in this
Agreement and when required by the context, the same shall include the plural;
and the masculine gender shall include the feminine and neuter genders.
Section 9.12. Counterparts. This Agreement may be executed in any number of
counterparts or by separate signature pages identified as such and all of such
counterparts or signature pages shall for all purposes constitute an agreement
binding on the parties hereto, notwithstanding that all parties are not
signatory to the same counterpart or signature page.
Section 9.13. Partners' Capability. Anything in this Agreement to the
contrary notwithstanding, no Partner, or any Assignee of the interests thereof,
shall be a Person or organization prohibited by law from becoming such. Any
assignment of an interest in the Partnership to any Person or organization not
meeting such standard shall be void and ineffective and shall not bind the
Partnership.
43
Section 9.14. Severability. If any provision of this Agreement shall be
declared invalid or unenforceable, the remainder of this Agreement will continue
in full force and effect so far as the intent of the parties can be carried out.
Section 9.15. Approval or Consent. Except as otherwise provided herein, any
approval or consent required in this Agreement by Partners holding Units shall
be deemed given upon the affirmative vote at a meeting, or the execution of a
written ballot or consent form indicating consent, by Partners holding more than
fifty percent (50%) of the Common Units. The term "consent" shall comprise the
word "approve" as used in the Act.
Section 9.16. Meetings. Meetings of the Partnership may be called by the
General Partner and shall be called by the General Partner upon the written
request of the Partners holding more than ten percent (10%) of the Units.
Section 9.17. Consent of Partners and Assignees. By acceptance of a Unit,
each Partner and each Assignee expressly consents and agrees that, whenever in
this Agreement it is specified that an action may be taken upon the affirmative
vote or consent of less than all of the Partners, such action may be so taken
upon the concurrence of less than all of the Partners, and each such Partner and
Assignee shall be bound by the results of such action.
Section 9.18. Limitation on Benefits of this Agreement. It is the explicit
intention of the Partners that no Person other than the Partners and the
Partnership (and, to the extent provided in Section 3.10, the Persons entitled
to be indemnified thereunder) is or shall be entitled to bring any action by or
on behalf of the Partnership to enforce any provision of this Agreement against
any Partner (or its successors and assigns) or the Partnership, and that the
covenants, undertakings, and agreements set forth in this Agreement shall be
solely for the benefit of, and shall be enforceable only by, the Partners (or
their respective successors and assigns as permitted hereunder) and the
Partnership (and, to the extent provided in Section 3.10, the Persons entitled
to be indemnified thereunder).
Section 9.19. Special Power of Attorney.
(a) By executing this Agreement, in person or by attorney-in-fact, each
Limited Partner (and each Substituted Partner by acceptance of Units)
constitutes and appoints the General Partner as the attorney-in-fact for such
Limited Partner, with power and authority to act in its name and on its behalf
to approve, execute, acknowledge and swear to the execution, acknowledgment and
filing of the following documents:
(i) Any amendments to this Agreement which are permitted under
Section 9.05(a) or for which the required consent has been
given under Section 9.05(b), 9.05(d) or Section 9.05(c), any
separate certificates of limited partnership, as well as any
amendments to the foregoing which, under the laws of the State
of Indiana or the laws of any other state, are required to be
made or filed or which are required to be made or filed by any
governmental agency;
(ii) Any certificates of limited partnership, as well as any
amendments to the foregoing which, under the laws of the State
of Indiana or the laws of any other state, are required to be
filed or which the General Partner deems it advisable to file;
(iii) Any other instrument or document which may be required to be
filed by the Partnership under the laws of any state or by any
governmental agency; and
(iv) Any instrument or document which may be required to effect the
continuation of the Partnership, the admission of an
Additional Limited Partner or Substituted
44
Partner, or the dissolution and termination of the Partnership
(provided such continuation, admission or dissolution and
termination are in accordance with the terms of this
Agreement), or to reflect any reductions in amount of
contributions of Partners.
(b) The special power of attorney granted by each Limited Partner:
(i) Is a special power of attorney coupled with an interest, is
irrevocable, shall survive the death of the granting Limited
Partner (if an individual), and is limited to those matters
herein set forth;
(ii) May be exercised by the General Partner acting alone for each
Limited Partner by a facsimile signature of the General
Partner or by listing all of the Limited Partners executing
any instrument with a single signature of the General Partner
acting as an attorney-in-fact for all of them; and
(iii) Shall survive an Assignment by a Limited Partner of all or any
portion of its Units except that, where the Assignee of the
Units owned by a Limited Partner has been approved by the
General Partner for admission to the Partnership as a
Substituted Partner, the special power of attorney shall
survive such Assignment for the sole purpose of enabling the
General Partner to execute, acknowledge and file any
instrument or document necessary to effect such substitution.
45
IN WITNESS WHEREOF, the parties hereto have executed this Agreement of
Limited Partnership this ___ day of _________, 1999.
GENERAL PARTNER:
DUKE GP, INC.
By:
--------------------------------------------
LIMITED PARTNERS:
DUKE GP, INC., as attorney-in-fact
for the Persons listed in EXHIBIT A hereto
By:
--------------------------------------------
WITHDRAWING GENERAL PARTNER:
DUKE REALTY INVESTMENTS, INC.
------------------------------------------------
46
