SIGNATURE COPY
PARTNERSHIP INTEREST
PURCHASE AND EXCHANGE AGREEMENT
This Partnership Interest Purchase and Exchange Agreement (the
"Agreement") is made and entered into as of September 10, 1998 by and among the
persons and entities listed on Exhibit A hereto (the "Contributors"), the
persons listed on Exhibit B hereto (the "Sellers" and, collectively with the
Contributors, the "Transferors"), United Dominion Realty Trust, Inc., a Virginia
corporation (the "Company") and United Dominion Realty, L.P., a Virginia limited
partnership (the "Company Operating Partnership").
RECITALS
WHEREAS, the Transferors are the legal and beneficial owners of all of
the limited partnership interests (the "AACLP Partnership Interests") in
American Apartment Communities II, L.P., a Delaware limited partnership
("AACLP"), which owns and operates, directly and indirectly the apartment
communities set forth on Schedule 5A hereto (the "AAC Properties");
WHEREAS, as an inducement to the Company to enter into an Agreement and
Plan of Merger (the "Merger Agreement") with American Apartment Communities II,
Inc., a Maryland corporation ("AAC"), whereby AAC will merge with and into the
Company (the "Merger") and thus benefit the Contributors, the Contributors have
agreed to contribute their respective AACLP Partnership Interests to the Company
Operating Partnership, and the Company Operating Partnership desires to acquire
the AACLP Partnership Interests from the Contributors, as provided herein;
WHEREAS, in connection with the Merger, the Sellers have agreed to sell
their respective AACLP Partnership Interests to the Company for cash, and the
Company desires to acquire the AACLP Partnership Interests from the Sellers, as
provided herein;
WHEREAS, together with AAC, the Transferors own all of the partnership
interests in AACLP;
WHEREAS, the parties intend to provide certain protections for the tax
position of the Contributors pursuant to Section 5(c) hereof, including American
Apartment Communities Operating Partnership, L.P., Schnitzer Investment Corp.
and AAC Management LLC (collectively, the "Tax Partners"); and
WHEREAS, Section 3.2 of the Merger Agreement provides certain
assurances given to induce the Transferors to enter in this Agreement.
NOW, THEREFORE, in consideration of the foregoing, the mutual
agreements contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged by the parties hereto,
the parties hereto do hereby agree as follows:
1. CONTRIBUTION AND SALE. (a) Pursuant to the terms hereof, the Contributors
hereby agree to contribute AACLP Partnership Interests to the Company
Operating Partnership free and clear of any and all restrictions on
transfer (other than restrictions under the Securities Act and state
securities laws), taxes, mortgages, liens, encumbrances, charges, pledges,
impositions, security interests, options, warrants, purchase rights, rights
of first refusal, contracts, commitments, equities, claims and demands
("Liens"), and the Company Operating Partnership hereby agrees to accept
such AACLP Partnership Interests from the Contributors, in exchange for an
aggregate amount of units of limited partnership interest in the Company
Operating Partnership (the "UDR Units") as set forth on Exhibit A (the
"Exchange Equity Consideration"). Any Contributor who receives UDR Units in
such exchange (a "UDR Unit Holder") shall, upon the issuance of such UDR
Units, be admitted as a limited partner of the Company Operating
Partnership and shall sign the Third Amended and Restated Agreement of
Limited Partnership of the Company Operating Partnership, in substantially
the form attached hereto as Exhibit D (the "Partnership Agreement").
(b) Pursuant to the terms hereof, the Sellers hereby agree to
sell AACLP Partnership Interests to the Company free and clear of any and
all Liens, and the Company hereby agrees to purchase such AACLP Partnership
Interests from the Sellers, for an aggregate amount of cash as set forth on
Exhibit B (the "Exchange Cash Consideration," and, together with the
Exchange Equity Consideration, the "Exchange Consideration"), subject to
adjustment as provided in Section 1(c) below.
(c) The Exchange Consideration shall be adjusted in accordance
with the provisions of Section 2.2 of the Merger Agreement. The allocation
of the Exchange Consideration among the Transferors shall be determined by
AACLP and AACLP shall provide such allocations to the Company on or before
the Closing Date.
2. BOARD SEAT. Until the earlier of such time as: (a) Xxxxx X. Xxxxxxxxx and
his affiliates (including American Apartment Communities Operating
Partnership, L.P. and AAC Management, L.L.C.) no longer own at least 50% of
the aggregate UDR Units issued to such persons pursuant to this Agreement
or (b) Xx. Xxxxxxxxx reaches age 70, Xx. Xxxxxxxxx shall be nominated for
election to the Board of Directors of the Company. For the purpose of the
preceding sentence, any common stock of UDR issued upon redemption of UDR
Units by Xx. Xxxxxxxxx or his affiliates (and held by such person on the
date of determination) shall be counted toward the number of UDR Units held
by such persons. For so long as Xx. Xxxxxxxxx continues to be nominated
pursuant to this Section 2, he shall be deemed for purposes of Section 5.8
of the Merger Agreement a nominee of the Holder referred to therein.
3. CONTRIBUTORS' AND SELLERS' REPRESENTATIONS AND WARRANTIES. Each Transferor,
severally and not jointly, hereby represents and warrants to the Company
and the Company Operating Partnership, as of the date hereof and as of the
Closing Date (as defined), with respect to the AACLP Partnership Interests
owned by such Transferor, respectively, as follows:
(a) With respect to each Transferor who is not an individual,
such Transferor (i) is a corporation/limited partnership/limited
liability company (as applicable) duly formed, validly existing and in
good standing under the laws of its state of organization, (ii) has all
requisite powers and all licenses, authorizations, consents and
approvals necessary to carry on its business as now conducted, to own,
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lease and operate its properties, to execute and deliver this Agreement
and any document or instrument required to be executed and delivered on
behalf of such Transferor hereunder, to perform its obligations under
this Agreement and any such other documents or instruments and to
consummate the transactions contemplated hereby, (iii) has duly
executed and delivered this Agreement and this Agreement constitutes a
valid and binding obligation of such Transferor, enforceable against
such Transferor in accordance with its terms and (iv) is the sole legal
and beneficial owner of its AACLP Partnership Interests, as applicable,
and has the full power and authority to contribute or sell such AACLP
Partnership Interests to the Company Operating Partnership or the
Company, as the case may be, pursuant to this Agreement.
(b) With respect to each Transferor who is an individual, such
person (i) has full legal right, power and authority to execute and
deliver this Agreement and any document or instrument required to be
executed and delivered on behalf of such Transferor hereunder, to
perform his or her obligations under this Agreement and any such other
documents or instruments and to consummate the transactions
contemplated hereby, (ii) has duly executed and delivered this
Agreement and this Agreement constitutes a valid and binding obligation
of such Transferor, enforceable against such Transferor in accordance
with its terms and (iii) is the sole legal and beneficial owner of his
AACLP Partnership Interests and has the full power and authority to
sell such AACLP Partnership Interests to the Company pursuant to this
Agreement.
(c) The AACLP Partnership Interests to be transferred pursuant
to this Agreement constitute any and all of such Transferor's interest
in AACLP, such Transferor owns such AACLP Partnership Interests free
and clear of any and all Liens, and the Transferors listed on Exhibits
A and B and AAC are the only equity owners of AACLP.
(d) There are no judgments of record or inchoate tax liens
against or relating to such Transferor or the AACLP Partnership
Interests; no acts of bankruptcy; nor any litigation or other
proceedings pending or threatened against or relating to such
Transferor or the AACLP Partnership Interests that would prevent the
consummation of the transactions contemplated by this Agreement.
(e) Such Transferor is not subject to any restriction,
agreement, law, judgment or decree that would prohibit or be violated
by the execution and delivery of this Agreement or by the consummation
of the transaction contemplated hereby.
(f) Such Transferor has obtained and has advised its partners
or members, as applicable, to obtain, from its and their own advisors
advice regarding the tax consequences of the transactions contemplated
by this Agreement and, in the case of Contributors, such Contributor
becoming a limited partner of the Company Operating Partnership, and
such Transferor has not relied on the Company, the Company Operating
Partnership or their advisors for such advice.
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(g) Neither such Transferor nor any of the partners or members
of such Transferor is a "foreign person" within the meaning of Section
1445(b)(2) of the Internal Revenue Code of 1986, as amended (the
"Code").
(h) No Transferor has retained any real estate broker,
business broker, finder or other person entitled to a commission or
other compensation in connection with this transaction, except as set
forth in the Merger Agreement.
4. THE COMPANY'S AND THE COMPANY OPERATING PARTNERSHIP'S REPRESENTATIONS AND
WARRANTIES. The Company and the Company Operating Partnership hereby
represent and warrant to the Contributors, as of the date hereof and as of
the Closing Date (as defined), that (a) each of the Company and the Company
Operating Partnership have the right and the power to execute and deliver
this Agreement and to perform their respective obligations hereunder, and
all necessary corporate and partnership action with respect thereto has
been duly and validly taken; each of the Company and the Company Operating
Partnership has duly executed and delivered this Agreement and this
Agreement constitutes a valid and binding obligation of each of the Company
and the Company Operating Partnership, enforceable against each such entity
in accordance with its terms; (b) subject to the terms of the Investment
Agreement in the form attached hereto as Exhibit C and the terms of the
Partnership Agreement, the UDR Units issued hereunder shall be redeemable
by the holders thereof for cash or, at the election of the Company,
exchangeable for Common Stock of the Company; and (c) neither the Company
nor the Company Operating Partnership has retained any real estate broker,
business broker, finder or other person entitled to a commission or other
compensation in connection with this transaction, except as set forth in
the Merger Agreement.
5. COVENANTS OF THE COMPANY AND THE COMPANY OPERATING PARTNERSHIP. The Company
and the Company Operating Partnership hereby covenant with the Contributors
that for so long as at least 10% of the UDR Units issued to the
Contributors pursuant to this Agreement are outstanding and held by any
Contributor or a transferee of such Contributor in a substituted basis
transaction for federal income tax purposes (a "Permitted Transferee"), and
notwithstanding anything to the contrary in the Partnership Agreement, as
presently in effect or as amended from time to time,
(a) Section 704(c) Allocations. The Company and the Company Operating
Partnership will elect to use the "traditional method" described in
Treasury regulations Section 1.704-3(b) of making allocations under
Section 704(c) of the Code, with respect to the AAC Properties
identified in Schedule 5A.
(b) AAC Property Sales. (i) During the period ending on the twelfth
anniversary of the Closing Date, none of the AAC Properties identified
on Schedule 5B (or any property acquired in a like-kind exchange under
Section 1031 or 1033 of the Code in replacement thereof) ("Schedule 5B
Properties") will be sold, transferred or otherwise disposed of other
than in a transaction described in Section 1031 or Section 1033 of the
Code, or other applicable non-recognition Code provision, in which no
gain or loss is recognized for federal income tax purposes (a
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"Non-Recognition Transaction") and (ii) none of the AAC Properties
identified in Schedule 5C (or any property acquired in a like-kind
exchange under Section 1031 or 1033 of the Code in replacement thereof)
("Schedule 5C Properties") will be sold, transferred or otherwise
disposed of other than in a Non-Recognition Transaction.
(c) AAC Property Refinancings.
(i) Except as otherwise provided in Sections 5(c)(ii) and
5(c)(iii), during the period ending on the twelfth anniversary
of the Closing Date with respect to the Schedule 5B Properties
(excluding Grandview Terrace, Sunset Village, Tivoli of
Columbus, and Mountain View), and indefinitely with respect to
the Schedule 5C Properties ("Refinancing Period") (A) the
existing mortgage indebtedness encumbering such AAC Properties
("Existing Indebtedness") or any replacement indebtedness
assumed or taken subject to in a Section 1031 Transaction
("Replacement Indebtedness") will not be prepaid, (B) any
Replacement Indebtedness will be nonrecourse and secured
solely by the replacement property and (C) the Existing
Indebtedness or Replacement Indebtedness will not be converted
from nonrecourse indebtedness to recourse indebtedness, except
that (I) regularly scheduled periodic principal payments on
Existing Indebtedness or Replacement Indebtedness may be made
and (II) Existing Indebtedness or Replacement Indebtedness may
be refinanced provided the refinancing indebtedness
("Refinancing Indebtedness") is (X) nonrecourse; (Y) does not
require principal repayments during such period which are
greater than the payments required on Existing Indebtedness
during such period; and (Z) is secured solely by the AAC
Property or Properties which secure the Existing Indebtedness
or the Replacement Indebtedness which is being refinanced. In
addition, any Refinancing Indebtedness may be refinanced
provided any indebtedness which refinances Refinancing
Indebtedness shall satisfy all the requirements of this
Section 5(c)(i). The determination of whether indebtedness is
recourse or nonrecourse shall be determined under Section 752
of the Code.
(ii) If, during the Refinancing Period, the Company decides to
refinance or prepay the Existing Indebtedness or the
Replacement Indebtedness in a manner that is not in compliance
with Section 5(c)(i), the Company will give written notice
("Refinancing Notice") to each Tax Partner at least 60 days
prior to such refinancing or prepayment. Such Refinancing
Notice must be given with respect to each proposed refinancing
or prepayment transaction on a property-by-property basis. The
Refinancing Notice will describe which Existing Indebtedness
or Replacement Indebtedness is scheduled to be refinanced or
prepaid, how much of such Existing Indebtedness or Replacement
Indebtedness is scheduled to be refinanced or prepaid, and
approximately when the refinancing or prepayment is scheduled
to occur. Upon receipt of the Refinancing Notice, each Tax
Partner shall have the option (A) to guarantee debt of the
Company Operating Partnership (or enter into a reimbursement
agreement with the Company with respect to debt of the Company
Operating Partnership) in an amount that prevents such Tax
Partner from recognizing income or gain for federal income tax
purposes as a result of such refinancing or prepayment and/or
(B) to exercise immediately its Redemption Rights for the Cash
Amount, instead of the REIT Shares Amount (as those terms are
defined in the Partnership Agreement), with respect to a
number of UDR Units necessary to pay the federal and state
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income tax liability associated with the income or gain that
is recognized as a result of such refinancing or prepayment.
If such Tax Partner elects to guarantee debt as described in
this Section 5(c)(ii), the Company, the Company Operating
Partnership and each such Tax Partner agree to negotiate in
good faith a guaranty agreement or reimbursement agreement
that is satisfactory to all parties, provided, however, that
the Company shall be required to ensure that (i) such guaranty
covers only the last dollars of liability with respect to such
debt ("bottom guarantee") and (ii) there is a sufficient level
of debt such that the bottom guarantee will put such Tax
Partner in the same position for federal income tax purposes
that it would have been in if the refinancing or prepayment
were not effected. If (A) the Company does not receive written
notice from a Tax Partner of its election to guarantee debt or
to exercise its Redemption Rights as described in this Section
5(c)(ii) within 30 days after such Tax Partner's receipt of
the Refinancing Notice or (B) a Tax Partner elects to exercise
its Redemption Rights as described in this Section 5(c)(ii),
the Company's and the Company Operating Partnership's
obligations under Section 5(c)(i) with respect to the Existing
Indebtedness or the Replacement Indebtedness that is scheduled
to be refinanced or prepayment shall terminate; provided,
however, that under no circumstances may a Tax Partner's
action or inaction with respect to a Refinancing Notice be
deemed to be a waiver of, or consent with respect to, any
future Refinancing Notice relating to any future proposed
refinancing or prepayment transaction. Furthermore, a new
Refinancing Notice must be given with respect to each proposed
refinancing or prepayment transaction on each property
notwithstanding the fact that a prior refinancing or
prepayment transaction had taken place with respect to any
indebtedness (or portion of any indebtedness) secured by that
property.
(iii) With respect to the Grandview Terrace, Sunset Village,
Tivoli of Columbus, and Mountain View AAC Properties, each Tax
Partner shall have the option on the Closing Date (A) to
guarantee debt of the Company Operating Partnership (or enter
into a reimbursement agreement with the Company with respect
to debt of the Company Operating Partnership) in an amount
that prevents any Tax Partner from recognizing income or gain
for federal income tax purposes as a result of the repayment
of the mortgage indebtedness encumbering such properties
and/or (B) to exercise immediately its Redemption Rights for
the Cash Amount, instead of the REIT Shares Amount (as those
terms are defined in the Partnership Agreement), with respect
to a number of UDR Units necessary to pay the federal and
state income tax liability associated with the income or gain
that is recognized as a result of such repayment. If a Tax
Partner elects to guarantee debt as described in this Section
5(c)(iii), the Company, the Company Operating Partnership and
such Tax Partner agree to negotiate in good faith a guaranty
agreement or reimbursement agreement that is satisfactory to
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all parties, provided, however, that the Company shall be
required to ensure that (i) such guaranty is a the bottom
guarantee and (ii) there is a sufficient level of debt such
that the bottom guarantee of which will put such Tax Partner
in the same position for federal income tax purposes that it
would have been in if the refinancing or prepayment were not
effected.
(iv) Notwithstanding the foregoing, at any time in their sole
discretion, the partners or interest holders of any Tax
Partner may replace a reimbursement agreement with the Company
with a direct guaranty on substantially the same terms as such
reimbursement agreement.
(v) Notwithstanding anything to the contrary in this
Agreement, any Tax Partner may, in its sole discretion, at any
time or from time to time, and the Company shall provide such
Tax Partner with the opportunity to bottom guarantee debt of
the Company Operating Partnership (or enter into a
reimbursement agreement with the Company with respect to debt
of the Company Operating Partnership) in an amount that
prevents such Tax Partner from recognizing income or gain for
federal income tax purposes.
(vi) Notwithstanding anything to the contrary in this
Agreement, the aggregate amount of indebtedness that the
Company Operating Partnership shall be required to make
available for the Tax Partners to bottom guarantee shall not
exceed $200,000,000.
(d) Approval of Fundamental Transactions. Except pursuant to the prior
written consent of the holders of at least 66.66% of the
then-outstanding UDR Units issued to the Contributors pursuant to this
Agreement, neither the Company nor the Company Operating Partnership
may merge, consolidate or otherwise combine with or into any other
person, effect any reclassification, any recapitalization or change its
outstanding equity interests (other than a change in par value, or from
par value to no par value, or as a result of a subdivision or
combination of REIT Shares), or sell all or substantially all of its
assets (a "Fundamental Transaction") unless: (i) under the terms of the
Fundamental Transaction, the UDR Unit Holders will not recognize any
income or gain for Federal income tax purposes, either directly or
through allocation of such income or gain from the Company Operating
Partnership or any surviving entity; (ii) the UDR Unit Holders own a
percentage interest of the Company Operating Partnership or another
limited partnership or limited liability company that is the survivor
of the Fundamental Transaction with the Company Operating Partnership
(in each case, the "Surviving Partnership") based on the relative fair
market value of the net assets of the Company Operating Partnership and
the other net assets of the Surviving Partnership immediately prior to
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the consummation of such Fundamental Transaction; and (iii) the rights,
preferences and privileges of the UDR Unit Holders in the Surviving
Partnership (including with respect to registration rights) are at
least as favorable as those in effect immediately prior to the
consummation of such Fundamental Transaction and as those applicable to
any other limited partners or non-managing members of the Surviving
Partnership and at least include the right to redeem their interests in
the Surviving Partnership for the Maximum Transaction Consideration or
an amount of cash equal to at least the value of the Maximum
Transaction Consideration. "Maximum Transaction Consideration" shall
mean an amount of cash, securities, or other property (or a partnership
interest or other security readily convertible into such cash,
securities, or other property) no less than the product of the REIT
Shares Amount (as defined in the Partnership Agreement) and the
greatest amount of cash, securities or other property (expressed as an
amount per REIT Share (as defined in the Partnership Agreement)) paid
in the Fundamental Transaction to the holder of one REIT Share in
consideration for one REIT Share; provided, that if, in connection with
the Fundamental Transaction, a purchase, tender or exchange offer
("Offer") shall have been made to and accepted by the holders of more
than 50 percent of the outstanding REIT Shares, "Maximum Transaction
Consideration" shall mean no less than the greatest amount of cash,
securities or other property they would have received had they (Y)
exercised their Redemption Right and (Z) sold, tendered or exchanged
pursuant to the Offer the REIT Shares received upon exercise of the
Redemption Right immediately prior to the expiration of the Offer.
The covenants of the Company and the Company Operating Partnership in this
Section 5 shall survive consummation of the transactions contemplated by
this Agreement and the Merger Agreement, any future transaction to which
the Company or the Company Operating Partnership is a party, including
without limitation, any Fundamental Transaction and any future transaction
of the kind referred to in the definition of "Change of Control" in Article
I of the Investment Agreement, whether or not such transaction results in a
"Change of Control," as so defined.
6. INVESTMENT AGREEMENT. Concurrently with the execution and delivery of this
Agreement, each Contributor is executing and delivering to the Company
Operating Partnership an Investment Agreement in substantially the form
attached as Exhibit C.
7. CLOSING. The closing of the transaction contemplated hereby (the "Closing")
shall occur as soon as practicable after the Effective Time (as defined in
the Merger Agreement) on the date of the consummation of the Merger (the
"Closing Date"). At the Closing, each Transferor shall deliver to the
Company Operating Partnership, or the Company, as the case may be, a
duly-executed assignment, in form and substance satisfactory to the Company
Operating Partnership, to convey the AACLP Partnership Interests owned by
it to the Company Operating Partnership or the Company, as the case may be.
8. THE COMPANY'S AND COMPANY OPERATING PARTNERSHIP'S CONDITIONS TO CLOSING.
Notwithstanding any other provision hereof, the obligations of the Company
and the Company Operating Partnership to consummate the transactions
contemplated hereby shall be subject to the conditions, unless waived in
writing, as of the Closing, that i)" (i) each of the representations and
warranties of each of the Transferors contained herein shall remain true
and correct as of the date of this Agreement and the Closing Date, as
though made on and as of the Closing Date, ii)" (ii) each UDR Unit Holder
shall have executed an Investment Agreement substantially in the form
attached as Exhibit C hereto to the benefit of the Company Operating
Partnership and iii)" (iii) the Effective Time shall have occurred, (iv)
each Contributor shall have duly executed and delivered the
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Partnership Agreement substantially in the form attached hereto as Exhibit
D, (v) the Company and the Company Operating Partnership shall acquire all
of the AACLP Partnership Interests and (vi) each Transferor shall have
delivered to the Company and the Company Operating Partnership a duly
executed certificate setting forth such Transferor's address and federal
tax identification number and certifying that such Transferor is not a
"foreign person" within the meaning of Section 1445(b)(2) of the Code.
9. TRANSFERORS' CONDITIONS TO CLOSING. Notwithstanding any other provisions
hereof, the obligation of the Transferors to proceed to consummate the
transaction contemplated hereby shall be subject to the conditions, unless
waived in writing, as of the Closing, that oi)" (i) each of the
representations and warranties of the Company and the Company Operating
Partnership contained herein shall remain true and correct as of the date
of this Agreement and the Closing Date, as though made on and as of the
Closing Date, ii)" (ii) the Company Operating Partnership shall have
executed an Investment Agreement in the form attached as Exhibit C hereto
to the benefit of each UDR Unit Holder, iii)" (iii) each party to the
Partnership Agreement other than the Contributors shall have duly executed
and delivered the Partnership Agreement substantially in the form attached
hereto as Exhibit D and iv)" (iv) the Effective Time shall have occurred.
10. INDEMNIFICATION. The warranties and representations set forth in Sections 3
and 4 hereof shall survive the Closing. The Company and the Company
Operating Partnership, on one hand, and the Transferors, on the other,
hereby agree to indemnify, defend and hold each other harmless from and
against any and all loss, cost, damage, liability or expense (including,
without limitation, reasonable attorneys fees, court costs and reasonable
litigation expenses) that the other party may suffer, sustain or incur as a
result of, arising under or in connection with any breach of warranty or
agreement contained herein or any failure of performance hereunder. The
Transferors shall be severally and not jointly liable for any amounts owed
the Company or the Company Operating Partnership pursuant to this Section
10. Further, except in the event of a breach of a covenant set forth in
Section 5 hereof by the Company or the Company Operating Partnership, each
Transferor, severally and not jointly, shall indemnify, defend and save
harmless the Company and the Company Operating Partnership from and against
all claims, liabilities and expenses which may be asserted against either
or either may incur and which are based upon or arise out of the federal
income tax consequences to such Transferor of the contribution and/or sale
of the AACLP Partnership Interests for UDR Units and/or cash or any
subsequent transaction effected by the Transferors relating to such UDR
Units or cash. The Transferors have no responsibility to indemnify the
Company or the Company Partnership for the consequence to the Company or
the Company Partnership of the transactions contemplated hereby.
11. TERMINATION. This Agreement shall terminate and neither party shall have
any further liability hereunder at such time if the Merger Agreement shall
be terminated pursuant to Article VII thereof.
12. NOTICES. All notices, requests, claims, demands and other communications
under this Agreement shall be in writing and shall be deemed given if
delivered personally, sent by overnight courier (providing proof of
delivery) to the parties or sent by telecopy (providing confirmation of
transmission) at the following addresses or telecopy numbers (or at such
other address or telecopy number for a party as shall be specified by like
notice):
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a. if to the Company or the Company Operating Partnership, to:
00 Xxxxx Xxxxx Xxxxxx
Xxxxxxxx, XX 00000-0000
Attn: Xxxxx Xxxxxxx, Executive Vice President
Fax: (000) 000-0000
with copies to:
00 Xxxxx Xxxxx Xxxxxx
Xxxxxxxx, XX 00000-0000
Attn: Xxxxxxxx X. Surface, Senior Vice President
and General Counsel
Fax: (000) 000-0000
and
HUNTON & XXXXXXXX
000 Xxxx Xxxx Xxxxxx
Xxxxxxxx, XX 00000-0000
Attn: Xxxxx X. Xxxxxxxxxxxx, III
Fax: (000) 000-0000
b. if to the Transferors, to:
AMERICAN APARTMENT COMMUNITIES
OPERATING PARTNERSHIP, L.P.
000 Xxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
Attn: Xxxxx X. Xxxxxxxxx, Chief Executive Officer
Fax: (000) 000-0000
with copies to:
AMERICAN APARTMENT COMMUNITIES
OPERATING PARTNERSHIP, L.P.
00 Xxxx Xxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxxxxx, Esq., General Counsel
Fax: (000) 000-0000
and
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XXXXXX, XXXX & XXXXXXXX LLP
000 Xxxxx Xxxxx Xxxxxx
Xxx Xxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxx, Esq.
Fax: (000) 000-0000
and
SCHNITZER INVESTMENT CORP.
0000 Xx Xxxx
Xxxxxxxx, XX 00000-0000
Attn: Xxxxxxx X. Xxxxxx
Fax: (000) 000-0000
13. The rights and obligations of the parties hereto shall be binding upon and
shall inure to the benefit of such parties and their respective heirs,
executors, administrators, legal representatives, successors and assigns.
14. ENTIRE AGREEMENT. This Agreement, along with the Merger Agreement and the
Investment Agreement, contain the entire agreement between the parties
hereto with respect to the subject matter hereof, and all prior
negotiations, understandings and agreements are merged herein. This
Agreement may not be modified or rescinded except pursuant to a written
instrument signed by the party against whom enforcement is sought.
15. GOVERNING LAW. This Agreement and the rights and obligations of the parties
hereto shall be governed by and construed in accordance with the laws of
the Commonwealth of Virginia, without regard to its conflicts of laws
provisions.
16. COUNTERPARTS. This Agreement may be executed in one or more counterparts,
all of which shall be considered one and the same agreement and shall
become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties.
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IN WITNESS WHEREOF, the parties hereto have executed this Partnership
Interest Purchase and Exchange Agreement as of the day and year first above
written.
THE COMPANY OPERATING PARTNERSHIP:
UNITED DOMINION REALTY, L.P.
BY: United Dominion Realty Trust, Inc., its General
Partner
By:
Name:
Title:
THE COMPANY:
UNITED DOMINION REALTY TRUST, INC.:
By:
Name:
Title:
TRANSFERORS:
AMERICAN APARTMENT COMMUNITIES OPERATING PARTNERSHIP,
L.P., a Delaware limited partnership
BY: American Apartment Communities, Inc., its General
Partner
By:
Name:
Title:
AAC MANAGEMENT LLC, a Delaware limited liability company
By:
Name:
Title:
FOX POINT LTD., an
Ohio limited liability
company and successor
to Xxxxxxxxx II
Limited Partnership,
an Ohio limited
partnership
By:
Name:
Title:
SCHNITZER INVESTMENT CORP., an Oregon corporation
By:
Name:
Title:
XXXXX X. XXXXXXXXX, an individual
EXHIBIT D
THIRD AMENDED AND RESTATED AGREEMENT
OF LIMITED PARTNERSHIP
OF
UNITED DOMINION REALTY, L.P.
Dated as of September __, 1998
TABLE OF CONTENTS
ARTICLE I.
DEFINED TERMS
1.01 Defined Terms................................................................................. 1
ARTICLE II.
PARTNERSHIP CONTINUATION AND IDENTIFICATION
2.01 Continuation.................................................................................. 8
2.02 Name, Office and Registered Agent............................................................. 8
2.03 Partners...................................................................................... 8
2.04 Term and Dissolution.......................................................................... 8
2.05 Filing of Certificate and Perfection of Limited Partnership................................... 9
2.06 Certificates Describing Partnership Units..................................................... 9
ARTICLE III.
BUSINESS OF THE PARTNERSHIP
3.01 Business of the Partnership................................................................... 10
ARTICLE IV.
CAPITAL CONTRIBUTIONS AND ACCOUNTS
4.01 Capital Contributions......................................................................... 10
4.02 Additional Capital Contributions and Issuances of
Additional Partnership Interests............................................................. 11
4.03 Loans to the Partnership...................................................................... 12
4.04 Capital Accounts.............................................................................. 12
4.05 Percentage Interests.......................................................................... 13
4.06 No Interest on Contributions.................................................................. 13
4.07 Return of Capital Contributions............................................................... 13
4.08 No Third Party Beneficiary.................................................................... 13
ARTICLE V.
PROFITS AND LOSSES; DISTRIBUTIONS
5.01 Allocation of Profit and Loss................................................................. 14
5.02 Distribution of Cash.......................................................................... 15
5.03 REIT Distribution Requirements................................................................ 16
5.04 No Right to Distributions in Kind............................................................. 16
5.05 Limitations on Return of Capital Contributions................................................ 16
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5.06 Distributions Upon Liquidation................................................................ 17
5.07 Substantial Economic Effect................................................................... 17
ARTICLE VI.
RIGHTS, OBLIGATIONS AND
POWERS OF THE GENERAL PARTNER
6.01 Management of the Partnership................................................................. 18
6.02 Delegation of Authority....................................................................... 21
6.03 Indemnification and Exculpation of Indemnitees................................................ 21
6.04 Liability of the General Partner.............................................................. 22
6.05 Partnership Expenses.......................................................................... 23
6.06 Outside Activities............................................................................ 23
6.07 Employment or Retention of Affiliates......................................................... 24
6.08 Title to Partnership Assets................................................................... 24
ARTICLE VII.
CHANGES IN GENERAL PARTNER AND THE COMPANY
7.01 Transfer of a General Partner's Partnership Interest;
Transactions Involving the Company........................................................... 24
7.02 Admission of a Substitute or Additional General............................................... 26
7.03 Effect of Bankruptcy, Withdrawal, Death or Dissolution
of a General Partner......................................................................... 27
7.04 Removal of a General Partner.................................................................. 27
ARTICLE VIII.
RIGHTS AND OBLIGATIONS
OF THE LIMITED PARTNERS
8.01 Management of the Partnership................................................................. 29
8.02 Power of Attorney............................................................................. 29
8.03 Limitation on Liability of Limited Partners................................................... 29
8.04 Ownership by Limited Partner of Corporate General
Partner or Affiliate......................................................................... 29
8.05 Redemption Right.............................................................................. 29
8.06 NYSE Listing and Securities Act Registration of
REIT Shares.................................................................................. 33
ARTICLE IX.
TRANSFERS OF LIMITED PARTNERSHIP INTERESTS
9.01 Purchase for Investment....................................................................... 33
9.02 Restrictions on Transfer of Limited Partnership Interests..................................... 33
9.03 Admission of Substitute Limited Partner....................................................... 34
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9.04 Rights of Assignees of Partnership Interests.................................................. 35
9.05 Effect of Bankruptcy, Death, Incompetence or Termination
of a Limited Partner......................................................................... 36
9.06 Joint Ownership of Interests.................................................................. 36
ARTICLE X.
BOOKS AND RECORDS; ACCOUNTING; TAX MATTERS
10.01 Books and Records............................................................................. 37
10.02 Custody of Partnership Funds; Bank Accounts................................................... 37
10.03 Fiscal and Taxable Year....................................................................... 37
10.04 Annual Tax Information and Report............................................................. 37
10.05 Tax Matters Partner; Tax Elections; Special Basis Adjustments................................. 37
10.06 Reports to Limited Partners................................................................... 38
ARTICLE XI.
AMENDMENT OF AGREEMENT; MERGER; NOTICE
11.01 Amendment of Agreement; Merger................................................................ 39
11.02 Notice to Limited Partners.................................................................... 39
ARTICLE XII.
GENERAL PROVISIONS
12.01 Notices....................................................................................... 39
12.02 Survival of Rights............................................................................ 40
12.03 Additional Documents.......................................................................... 40
12.04 Severability.................................................................................. 40
12.05 Entire Agreement.............................................................................. 40
12.06 Rules of Construction......................................................................... 40
12.07 Headings...................................................................................... 40
12.08 Counterparts.................................................................................. 40
12.09 Governing Law................................................................................. 40
EXHIBITS
EXHIBIT A - Partners, Capital Contributions and Percentage Interests
EXHIBIT B - Notice of Exercise of Redemption Right
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THIRD AMENDED AND RESTATED AGREEMENT
OF LIMITED PARTNERSHIP
OF
UNITED DOMINION REALTY, L.P.
Dated as of September __, 1998
RECITALS
United Dominion Realty, L.P. (the "Partnership") was formed as a
limited partnership under the laws of the Commonwealth of Virginia by a
Certificate of Limited Partnership filed with the Clerk of the State Corporation
Commission of Virginia on October 23, 1995 and commenced operations on November
4, 1995. The Second Amended and Restated Agreement of Limited Partnership of the
Partnership was entered into as of August 30, 1997 (the "Second Restatement").
This Third Amended and Restated Agreement of Limited Partnership is entered into
this __th day of September, 1998 by and among United Dominion Realty Trust, Inc.
(the "Company") as the general partner (in such capacity, the "General Partner")
and the Limited Partners set forth on Exhibit A hereto, for the purpose of
amending and restating the Second Restatement.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing, of mutual covenants
between the parties hereto, and of other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree to amend the Second Restatement to read in its entirety as follows:
ARTICLE I.
DEFINED TERMS
I.01 Defined Terms. The following defined terms used in this Agreement
shall have the meanings specified below:
"Act" means the Virginia Revised Uniform Limited Partnership Act, as it
may be amended from time to time.
"Additional Funds" is defined in Section 4.03.
"Additional Limited Partner" means a Person admitted to this
Partnership as a Limited Partner pursuant to Section 4.02.
"Affiliate" means, (i) any Person that, directly or indirectly,
controls or is controlled by or is under common control with such Person, (ii)
any other Person that owns, beneficially, directly or indirectly, 10% or more of
the outstanding capital stock, shares or equity interests of such Person, or
(iii) any officer, director, employee, partner or trustee of such Person or any
Person controlling, controlled by or under common control with such Person
(excluding trustees and persons serving in similar capacities who are not
otherwise an Affiliate of such Person). For the purposes of this definition,
"control" (including the correlative meanings of the terms "controlled by" and
"under common control with"), as used with respect to any Person, shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, through the ownership
of voting securities or partnership interests or otherwise.
"Agreed Value" means the fair market value of a Partner's non-cash
Capital Contribution as of the date of contribution as agreed to by the such
Partner and the General Partner. The name and address of each Partner, number of
Partnership Units issued to such Partner, and the Agreed Value of such Partner's
non-cash Capital Contributions as of the date of contribution thereof is set
forth on Exhibit A.
"Agreement" means this Third Amended and Restated Agreement of Limited
Partnership, as amended from time to time.
"Available Cash" means, for any period, the excess, if any, of (i) the
cash receipts of the Partnership (other than from the sale, exchange or other
disposition of the assets of the Partnership), including amounts withdrawn from
reserves, over (ii) the disbursements of cash by the Partnership (other than
distributions to Partners and amounts paid with the receipts from the sale,
exchange or other disposition of the assets of the Partnership), including
amounts deposited in reserves. Available Cash for any period shall be determined
by the General Partner in its reasonable discretion.
"Capital Account" is defined in Section 4.04.
"Capital Contribution" means the total amount of capital contributed to
the Partnership by each Partner. Any reference to the Capital Contribution of a
Partner shall include the Capital Contribution made by a predecessor holder of
the Partnership Interest of such Partner. The paid-in Capital Contribution shall
mean the cash amount or the Agreed Value of other assets actually contributed by
each Partner to the capital of the Partnership.
"Capital Transaction" means the refinancing, sale, exchange,
condemnation, recovery of a damage award or insurance proceeds (other than
business or rental interruption insurance proceeds not reinvested in the repair
or reconstruction of Properties), or other disposition of any Property (or the
Partnership's interest therein).
"Cash Amount" means an amount of cash per Partnership Unit equal to the
Value of the REIT Shares Amount on the date of receipt by the General Partner of
a Notice of Redemption.
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"Certificate" means any instrument or document that is required under
the laws of the Commonwealth of Virginia, or any other jurisdiction in which the
Partnership conducts business, to be signed and sworn to by the Partners of the
Partnership (either by themselves or pursuant to the power-of-attorney granted
to the General Partner in Section 8.02) and filed for recording in the
appropriate public offices within the Commonwealth of Virginia or such other
jurisdiction to perfect or maintain the Partnership as a limited partnership, to
effect the admission, withdrawal, or substitution of any Partner of the
Partnership, or to protect the limited liability of the Limited Partners as
limited partners under the laws of the Commonwealth of Virginia or such other
jurisdiction.
"Charter" means the Articles of Incorporation of the Company, as
amended from time to time.
"Code" means the Internal Revenue Code of 1986, as amended, and as
hereafter amended from time to time. Reference to any particular provision of
the Code shall mean that provision in the Code at the date hereof and any
successor provision of the Code.
"Commission" means the Securities and Exchange Commission.
"Company" means United Dominion Realty Trust, Inc., a Virginia
corporation.
"Conversion Factor" means 1.0, as adjusted pursuant to Section 8.05(f).
"Dividend Equivalent" as to any Partner means the amount of
distributions such Partner would have received for the quarter (or other
distribution period) from REIT Shares if such Partner owned the number of REIT
Shares equal to the product to such Partner's Partnership Units and the
Conversion Factor for the Partnership Record Date pertaining to such quarter (or
other distribution period).
"Event of Bankruptcy" as to any Person means the filing of a petition
for relief as to such Person as debtor or bankrupt under the Bankruptcy Code of
1978 or similar provision of law of any jurisdiction (except if such petition is
contested by such Person and has been dismissed within 90 days); insolvency or
bankruptcy of such Person as finally determined by a court proceeding; filing by
such Person of a petition or application to accomplish the same or for the
appointment of a receiver or a trustee for such Person or a substantial part of
his assets; commencement of any proceedings relating to such Person as a debtor
under any other reorganization, arrangement, insolvency, adjustment of debt or
liquidation law of any jurisdiction, whether now in existence or hereinafter in
effect, either by such Person or by another, provided that if such proceeding is
commenced by another, such Person indicates his approval of such proceeding,
consents thereto or acquiesces therein, or such proceeding is contested by such
Person and has not been finally dismissed within 90 days.
"General Partner" means the Company and any Person who becomes a
substitute or additional General Partner as provided herein, and any of their
successors as General Partner. At any time at which the Partnership has two or
more General Partners, all such General Partners shall designate one of such
General Partners as managing General Partner and may from time to time designate
a successor managing General Partner and, unless the context otherwise requires,
references to the General Partner shall mean the General Partner at the time so
designated as managing General Partner.
"General Partnership Interest" means a Partnership Interest held by the
General Partner that is a general partnership interest.
"Indemnitee" means (i) any Person made a party to a proceeding by
reason of such Person's status as the General Partner or a director, officer or
employee of the Partnership or the General Partner, and (ii) such other Persons
(including Affiliates of the General Partner or the Partnership) as the General
Partner may designate from time to time, in its sole and absolute discretion.
"Investment Agreement" means the contribution, investment, subscription
or other agreement or agreements pursuant to which a Limited Partner contributes
property or cash to the Partnership in exchange for a Partnership Interest.
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"Limited Partner" means any Person named as a Limited Partner on
Exhibit A attached hereto, and any Person who becomes a Substitute or Additional
Limited Partner, in such Person's capacity as a Limited Partner in the
Partnership.
"Limited Partnership Interest" means the ownership interest of a
Limited Partner in the Partnership at any particular time, including the right
of such Limited Partner to any and all benefits to which such Limited Partner
may be entitled as provided in this Agreement and in the Act, together with the
obligations of such Limited Partner to comply with all the provisions of this
Agreement and of such Act.
"Loss" is defined in Section 5.01(f).
"Minimum Limited Partnership Interest" means the lesser of (i) 1% or
(ii) if the total Capital Contributions to the Partnership exceeds $50 million,
1% divided by the ratio of the total Capital Contributions to the Partnership to
$50 million; provided, however, that the Minimum Limited Partnership Interest
shall not be less than 0.2% at any time.
"Notice of Redemption" means the Notice of Exercise of Redemption Right
substantially in the form attached as Exhibit B hereto.
"NYSE" means the New York Stock Exchange and includes any other
national securities exchange on which the REIT Shares are listed at the
determination date.
"Offer" is defined in Section 7.01(c).
"Original Limited Partner" means UDRT of North Carolina, L.L.C., a
North Carolina limited liability company.
"Outside Partner" means any Partner other than a UDR Partner.
"Partner" means any General Partner or Limited Partner.
"Partner Nonrecourse Debt Minimum Gain" has the meaning set forth in
Regulations Section 1.704-2(i). A Partner's share of Partner Nonrecourse Debt
Minimum Gain shall be determined in accordance with Regulations Section
1.704-2(i)(5).
"Partnership Interest" means an ownership interest in the Partnership
held by either a Limited Partner or the General Partner and includes any and all
benefits to which the holder of such a Partnership Interest may be entitled as
provided in this Agreement, together with all obligations of such Person to
comply with the terms and provisions of this Agreement.
"Partnership Minimum Gain" has the meaning set forth in Regulations
Section 1.704-2(d). In accordance with Regulations Section 1.704-2(d), the
amount of Partnership Minimum Gain is determined by first computing, for each
Partnership nonrecourse liability, any gain the Partnership would realize if it
disposed of the property subject to that liability for no consideration other
than full satisfaction of the liability, and then aggregating the separately
computed gains. A Partner's share of Partnership Minimum Gain shall be
determined in accordance with Regulations Section 1.704-2(g)(1).
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"Partnership Record Date" means the record date established by the
General Partner for the distribution of cash pursuant to Section 5.02, which
record date shall be the same as the record date established by the General
Partner for a distribution to the holders of the REIT Shares.
"Partnership Unit" means a fractional, undivided share of the
Partnership Interests of all Partners issued hereunder. The allocation of
Partnership Units among the Partners shall be as set forth on Exhibit A, as may
be amended from time to time.
"Percentage Interest" means at any time the percentage ownership
interest in the Partnership of each Partner, as determined by dividing the
Partnership Units owned by such Partner by the total number of Partnership Units
outstanding at such time. The Percentage Interest of each Partner shall be as
set forth on Exhibit A, as may be amended from time to time.
"Percentage Interest Adjustment Date" means the effective date of an
adjustment of the Partners' Percentage Interests pursuant to Section 4.05.
"Person" means any individual, partnership, corporation, joint venture,
trust or other entity.
"Profit" is defined in Section 5.01(f).
"Property" means any apartment property or other investment in which
the Partnership holds an ownership interest.
"Redeeming Partner" is defined in Section 8.05(a).
"Redemption Amount" means either the Cash Amount or the REIT Shares
Amount, as selected by the General Partner in its sole and absolute discretion
pursuant to Section 8.05(b).
"Redemption Right" is defined in Section 8.05(a).
"Regulations" means the Federal Income Tax Regulations issued under the
Code, as amended and as hereafter amended from time to time. Reference to any
particular provision of the Regulations shall mean that provision of the
Regulations on the date hereof and any successor provision of the Regulations.
"REIT" means a real estate investment trust under Sections 856 through
860 of the Code.
"REIT Expenses" means (i) costs and expenses relating to the continuity
of existence of the Company and its Subsidiaries (all such entities shall, for
purposes of this section, be included within the definition of Company),
including, without limitation, taxes, fees and assessments associated therewith
and any costs, expenses or fees payable to any director, officer or employee of
the Company (including, without limitation, any costs of indemnification), (ii)
costs and expenses relating to any offer or registration of REIT Shares or other
securities by the Company and all statements, reports, fees and expenses
incidental thereto, including, without limitation, underwriting discounts and
selling commissions applicable to any such offer of securities and any costs and
expenses associated with any claims made by any holders of such securities or
any underwriters or placement agents thereof, (iii) costs and expenses incurred
in connection with the repurchase of any securities by the Company, (iv) costs
and expenses associated with the preparation and filing of any periodic or other
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reports and communications by the Company under federal, state or local laws or
regulations, including filings with the Commission, (v) costs and expenses
associated with compliance by the Company with laws, rules and regulations
promulgated by any regulatory body, including the Commission and any securities
exchange, (vi) costs and expenses associated with any 401(k) plan, incentive
plan, bonus plan or other plan providing for compensation for the employees of
the Company, (vii) costs and expenses incurred by the Company relating to any
issuance or redemption of Partnership Interests, and (viii) all other operating
or administrative costs incurred by the Company in connection with the ordinary
course of the Company's or the Partnership's business (including the business of
any Subsidiary thereof).
"REIT Share" means a share of common stock of the Company, $1 par value
per share, or a share of the common stock of any Successor Entity.
"REIT Shares Amount" shall mean a whole number of REIT Shares equal to
the product of the number of Partnership Units offered for redemption by a
Redeeming Partner, multiplied by the Conversion Factor as adjusted to and
including the Specified Redemption Date plus cash in lieu of any fractional REIT
Shares based on the Value of a REIT Share as of the date of receipt by the
General Partner of a Notice of Redemption; provided that in the event the
Company issues to all holders of REIT Shares rights, options, warrants or
convertible or exchangeable securities entitling the shareholders to subscribe
for or purchase REIT Shares, or any other securities or property (collectively,
the "rights"), and the rights have not expired at the Specified Redemption Date,
then the REIT Shares Amount shall also include the rights issuable to a holder
of the REIT Shares Amount of REIT Shares on the record date fixed for purposes
of determining the holders of REIT Shares entitled to rights.
"Securities Act" means the Securities Act of 1933, as amended.
"Service" means the Internal Revenue Service.
"Specified Redemption Date" means (i) with respect to Partnership Units
to be redeemed for a Cash Amount, the first Business Day of the month that is at
least 20 business days after the receipt by the General Partner of the Notice of
Redemption, as the same may be extended pursuant to Section 8.05(d) and (ii)
with respect to Partnership Units to be redeemed for a REIT Shares Amount, the
fifth Business Day following the date of the General Partner's notice of its
election to purchase such Partnership Units pursuant to Section 8.05(b).
"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 (including general partners' interests) or (ii) the outstanding
equity interests is owned, directly or indirectly, by such Person.
"Subsidiary Partnership" means any partnership of which the majority of
the limited or general partnership interests therein are owned, directly or
indirectly, by the Partnership.
"Substitute Limited Partner" means any Person admitted to the
Partnership as a Limited Partner pursuant to Section 9.03.
"Transaction" is defined in Section 7.01(c).
"Transfer" is defined in Section 9.02(a).
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"UDR Partner" means the Company and any Partner that is an Affiliate of
the Company.
"Value" means, with respect to any security, the average of the daily
market price of such security for the twenty (20) consecutive trading days
immediately preceding the date of such valuation. The market price for each such
trading day shall be: (i) if such security is listed or admitted to trading on
any securities exchange or The Nasdaq National Market, the closing price,
regular way, on such day or, if no sale takes place on such day, the average of
the closing bid and asked prices on such day, (ii) if such security is not
listed or admitted to trading on any securities exchange or The Nasdaq National
Market, the last reported sale price on such day or, if no sale takes place on
such day, the average of the closing bid and asked prices on such day, as
reported by a recognized quotation source designated by the Company, or (iii) if
such security is not listed or admitted to trading on any securities exchange or
The Nasdaq National Market and no such last reported sale price or closing bid
and asked prices are available, the average of the reported high bid and low
asked prices on such day, as reported by a recognized quotation source
designated by the General Partner, or if there shall be no bid and asked prices
on such day, the average of the high bid and low asked prices, as so reported,
on the most recent day (not more than twenty (20) days prior to the date in
question) for which prices have been so reported; provided, that if there are no
bid and asked prices reported during the twenty (20) days prior to the date in
question, the value of such security shall be determined by the General Partner
acting in good faith on the basis of such quotations and other information as it
considers, in its reasonable judgment, appropriate. In the event that any
security includes any additional rights the value of which is not included
within such price, then the value of such rights shall be determined by the
General Partner acting in good faith on the basis of such quotations and other
information as it considers, in its reasonable judgment, appropriate, and
included in determining the "Value" of such security.
ARTICLE II.
PARTNERSHIP CONTINUATION AND IDENTIFICATION
II.01 Continuation. The Partners hereby agree to continue the
Partnership pursuant to the Act and upon the terms and conditions set forth in
this Agreement.
II.02 Name, Office and Registered Agent. The name of the Partnership
shall be United Dominion Realty, L.P. The specified office and place of business
of the Partnership shall be 00 Xxxxx 0xx Xxxxxx, Xxxxxxxx, Xxxxxxxx 00000-0000.
The General Partner may at any time change the location of such office, provided
the General Partner gives notice to the Partners of any such change. The name
and address of the Partnership's registered agent is Xxxxxxxx X. Surface, United
Dominion Realty Trust, Inc., 00 Xxxxx Xxxxx Xxxxxx, Xxxxxxxx Xxxxxxxx
00000-0000. The sole duty of the registered agent as such is to forward to the
Partnership any notice that is served on her as registered agent.
II.03 Partners.
(a) The General Partner of the Partnership is the Company. Its
principal place of business shall be the same as that of the Partnership.
(b) The Limited Partners shall be those Persons identified as
Limited Partners on Exhibit A hereto, as amended from time to time.
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II.04 Term and Dissolution.
(a) The term of the Partnership shall continue in full force
and effect until December 31, 2051, except that the General Partner, in its sole
and absolute discretion, may extend the term of the Partnership and the
Partnership shall be dissolved upon the first to occur of any of the following
events:
(i) The occurrence of an Event of Bankruptcy as to a
General Partner or the dissolution, death or withdrawal of a
General Partner unless the Partnership is continued pursuant
to Section 2.04(c); provided, that if a General Partner is on
the date of such occurrence a partnership, the dissolution of
such General Partner as a result of the dissolution, death,
withdrawal, removal or Event of Bankruptcy of a partner in
such partnership shall not be an event of dissolution of the
Partnership if the business of such General Partner is
continued by the remaining partner or partners, either alone
or with additional partners, and such General Partner and such
partners comply with any other applicable requirements of this
Agreement;
(ii) The passage of 90 days after the sale or other
disposition of all or substantially all of the assets of the
Partnership (provided that if the Partnership receives one or
more obligations as consideration for such sale or other
disposition, the Partnership shall continue, unless sooner
dissolved under the provisions of this Agreement, until such
time as all of such obligations are paid or satisfied in
full);
(iii) The redemption of all Limited Partnership
Interests (other than any of such interests held by the
Company or any Subsidiary thereof); or
(iv) The election by the General Partner that the
Partnership should be dissolved.
(b) Upon dissolution of the Partnership (unless the
Partnership is continued pursuant to Section 2.04(c)), the General Partner (or
its trustee, receiver, successor or legal representative) shall amend or cancel
the Certificate and liquidate the Partnership's assets and apply and distribute
the proceeds thereof in accordance with Section 5.06. Notwithstanding the
foregoing, the liquidating General Partner may either (i) defer liquidation of,
or withhold from distribution for a reasonable time, any assets of the
Partnership (including those necessary to satisfy the Partnership's debts and
obligations), or (ii) distribute the assets to the Partners in kind.
(c) Notwithstanding Section 2.04(a)(i), upon the occurrence of
an Event of Bankruptcy as to a General Partner or the dissolution, death or
withdrawal of a General Partner, the Limited Partners, within 90 days after such
occurrence, may elect to continue the Partnership for the balance of the term
specified in Section 2.04(a) by selecting, subject to Section 7.02 and any other
provisions of this Agreement, a substitute General Partner by consent of a
majority in interest of the Limited Partners. If the Limited Partners elect to
continue the Partnership and admit a substitute General Partner, the
relationship with the Partners and of any Person who has acquired an interest of
a Partner in the Partnership shall be governed by this Agreement.
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II.05 Filing of Certificate and Perfection of Limited Partnership. The
General Partner shall execute, acknowledge, record and file at the expense of
the Partnership, the Certificate and any and all amendments thereto and all
requisite fictitious name statements and notices in such places and
jurisdictions as may be necessary to cause the Partnership to be treated as a
limited partnership under, and otherwise to comply with, the laws of each state
or other jurisdiction in which the Partnership conducts business.
II.06 Certificates Describing Partnership Units. At the request of a
Limited Partner, the General Partner, at its option, may issue a certificate
summarizing the terms of such Limited Partner's interest in the Partnership,
including the number of Partnership Units owned and the Percentage Interest
represented by such Partnership Units as of the date of such certificate. Any
such certificate (i) shall be in form and substance as approved by the General
Partner, (ii) shall not be negotiable and (iii) shall bear the following legend:
This certificate is not negotiable. The Partnership Units
represented by this certificate are governed by and
transferable only in accordance with the provisions of the
Agreement of Limited Partnership of United Dominion Realty,
L.P., as amended from time to time.
ARTICLE III.
BUSINESS OF THE PARTNERSHIP
III.01 Business of the Partnership. The purpose and nature of the
business to be conducted by the Partnership is (i) to conduct any business that
may be lawfully conducted by a limited partnership organized pursuant to the
Act, provided, however, that such business shall be limited to and conducted in
such a manner as to permit the Company at all times to qualify as a REIT, unless
the Company otherwise ceases to qualify as a REIT, (ii) to enter into any
partnership, joint venture or other similar arrangement to engage in any of the
foregoing or the ownership of interests in any entity engaged in any of the
foregoing and (iii) to do anything necessary or incidental to the foregoing. In
connection with the foregoing, and without limiting the Company's right in its
sole and absolute discretion to cease qualifying as a REIT, the Partners
acknowledge that the Company's current status as a REIT and the avoidance of
income and excise taxes on the Company inures to the benefit of all the Partners
and not solely to the Company. Notwithstanding the foregoing, the Limited
Partners acknowledge that the Company may terminate its status as a REIT under
the Code at any time to the full extent permitted by the Charter. Subject to
Article XI hereof, the General Partner shall also be empowered (but shall not be
required) to do any and all acts and things necessary or prudent to ensure that
the Partnership will not be classified as a "publicly traded partnership" for
purposes of Section 7704 of the Code.
ARTICLE IV.
CAPITAL CONTRIBUTIONS AND ACCOUNTS
IV.01 Capital Contributions. The General Partner and the Limited
Partners have contributed to the capital of the Partnership cash or property in
an amount or having an Agreed Value set forth opposite their names on Exhibit A,
as amended from time to time.
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IV.02 Additional Capital Contributions and Issuances of Additional
Partnership Interests. Except as provided in this Section 4.02 or in Section
4.03, the Partners shall have no right or obligation to make any additional
Capital Contributions or loans to the Partnership. The Partners, with the
consent of the General Partner, which consent may be withheld in its sole and
absolute discretion, may contribute additional capital to the Partnership, from
time to time, and receive additional Partnership Interests in respect thereof,
in the manner contemplated in this Section 4.02.
(a) Issuances of Additional Partnership Interests. The General
Partner is hereby authorized to cause the Partnership to issue such additional
Partnership Interests in the form of Partnership Units for any Partnership
purpose at any time or from time to time, to the Partners (including the General
Partner) or to other Persons for such consideration and on such terms and
conditions as shall be established by the General Partner in its sole and
absolute discretion, all without the approval of any Limited Partners. Any
additional Partnership Interests issued thereby may be issued in one or more
classes, or one or more series of any of such classes, with such designations,
preferences and relative, participating, optional or other special rights,
powers and duties, including rights, powers and duties senior to Limited
Partnership Interests, all as shall be determined by the General Partner in its
sole and absolute discretion and without the approval of any Limited Partner,
subject to Virginia law, including, without limitation, (i) the allocations of
items of Partnership income, gain, loss, deduction and credit to each such class
or series of Partnership Interests; (ii) the right of each such class or series
of Partnership Interests to share in Partnership distributions; and (iii) the
rights of each such class or series of Partnership Interests upon dissolution
and liquidation of the Partnership. Without limiting the foregoing, the General
Partner is expressly authorized to cause the Partnership to issue Partnership
Units for less than fair market value, so long as the General Partner concludes
in good faith that such issuance is in the best interests of the Company and the
Partnership. Upon each issuance of Partnership Units hereunder, the General
Partner shall amend Exhibit A attached hereto to reflect such issuance.
(b) Certain Deemed Contributions of Proceeds of Issuance of
Company Securities. If (i) the Company issues securities and contributes some or
all the proceeds raised in connection with such issuance to the Partnership and
(ii) the proceeds actually received and contributed by the Company to the
Partnership are less than the Partnership's share (as determined by the General
Partner, in its sole and absolute discretion) of the gross proceeds of such
issuance as a result of any underwriter's discount or other expenses paid or
incurred in connection with such issuance, then the Company shall be deemed to
have made Capital Contributions to the Partnership in the aggregate amount of
the Partnership's share of the gross proceeds of such issuance that are
contributed to the Partnership and the Partnership shall be deemed
simultaneously to have paid such offering expenses in connection with the
issuance of additional Partnership Units to the Company for such Capital
Contributions pursuant to Section 4.02(a). In any case in which the Company
contributes less than all of the proceeds of such issuance to the Partnership,
it shall be deemed to have contributed the gross proceeds of issuance of the
number of units of the issued security (or the number of dollars of principal in
the case of debt securities) equal to the quotient of the division of the amount
of proceeds contributed by the net proceeds per unit (or per dollar), and the
Partnership shall be deemed to have paid offering expenses equal to the product
of such number of units (or dollars) times the per unit (or per dollar) offering
expenses.
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(c) Minimum Limited Partnership Interest. In the event that
either a redemption pursuant to Section 8.05 or additional Capital Contributions
by the General Partner and the Original Limited Partner would result in the
Limited Partners (other than the Original Limited Partner), in the aggregate,
owning less than the Minimum Limited Partnership Interest, the General Partner
and the Limited Partners (other than the Original Limited Partner) shall form
another partnership and contribute sufficient Limited Partnership Interests
together with such other Limited Partners so that the Limited Partners (other
than the Original Limited Partner), in the aggregate, own at least the Minimum
Limited Partnership Interest.
IV.03 Loans to the Partnership. If the General Partner determines that
it is in the best interests of the Company and the Partnership to provide for
additional Partnership funds ("Additional Funds") for any Partnership purpose,
the General Partner may (i) cause the Partnership to obtain such funds from
outside borrowings or (ii) elect to have the Company or a Subsidiary or
Subsidiaries of the Company loan such Additional Funds to the Partnership. The
loans to the Partnership shall be in exchange for such consideration and on such
terms and conditions as shall be established by the General Partner in its sole
and absolute discretion, all without the approval of any Limited Partners.
Without limiting the foregoing, the General Partner is expressly authorized to
cause the Partnership to issue debt securities for less than fair market value,
so long as the General Partner concludes in good faith that such issuance is in
the best interests of the Company and the Partnership.
IV.04 Capital Accounts. A separate capital account (a "Capital
Account") shall be established and maintained for each Partner in accordance
with Regulations Section 1.704-1(b)(2)(iv). If (i) a new or existing Partner
acquires an additional Partnership Interest in exchange for more than a de
minimis Capital Contribution, (ii) the Partnership distributes to a Partner more
than a de minimis amount of Partnership property as consideration for a
Partnership Interest, or (iii) the Partnership is liquidated within the meaning
of Regulation Section 1.704-1(b)(2)(ii)(g), the General Partner shall revalue
the property of the Partnership to its fair market value (as determined by the
General Partner, in its sole and absolute discretion, and taking into account
Section 7701(g) of the Code) in accordance with Regulations Section
1.704-1(b)(2)(iv)(f). When the Partnership's property is revalued by the General
Partner, the Capital Accounts of the Partners shall be adjusted in accordance
with Regulations Sections 1.704-1(b)(2)(iv)(f) and (g), which generally require
such Capital Accounts to be adjusted to reflect the manner in which the
unrealized gain or loss inherent in such property (that has not been reflected
in the Capital Accounts previously) would be allocated among the Partners
pursuant to Section 5.01 if there were a taxable disposition of such property
for its fair market value (as determined by the General Partner, in its sole and
absolute discretion, and taking into account Section 7701(g) of the Code) on the
date of the revaluation.
IV.05 Percentage Interests. If the number of outstanding Partnership
Units increases or decreases during a taxable year, each Partner's Percentage
Interest shall be adjusted by the General Partner effective as of the effective
date of each such increase or decrease to a percentage equal to the number of
Partnership Units held by such Partner divided by the aggregate number of
Partnership Units outstanding after giving effect to such increase or decrease.
If the Partners' Percentage Interests are adjusted pursuant to this Section
4.05, the Profits and Losses for the taxable year in which the adjustment occurs
shall be allocated between the several parts of the year (a) beginning on the
first day of the year and ending on the next following Percentage Interest
Adjustment Date, (b) beginning on the day following a Percentage Interest
Adjustment Date and ending on the next following Percentage Interest Adjustment
Date, and/or (c) beginning on the first day following the last Percentage
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Interest Adjustment Date occurring during the year and ending on the last day of
the year, as may be appropriate, either (i) as if the taxable year had ended on
the last day of each part or (ii) based on the number of days in each part. The
General Partner, in its sole and absolute discretion, shall determine which
method shall be used to allocate Profits and Losses for the taxable year in
which the adjustment occurs. The allocation among the Partners of Profits and
Losses allocated to any part of the year shall be based on the Percentage
Interests determined as of the first day of such part.
IV.06 No Interest on Contributions. No Partner shall be entitled to
interest on its Capital Contribution.
IV.07 Return of Capital Contributions. No Partner shall be entitled to
withdraw any part of its Capital Contribution or its Capital Account or to
receive any distribution from the Partnership, except as specifically provided
in this Agreement. Except as otherwise provided herein, there shall be no
obligation to return to any Partner or withdrawn Partner any part of such
Partner's Capital Contribution for so long as the Partnership continues in
existence.
IV.08 No Third Party Beneficiary. No creditor or other third party
having dealings with the Partnership shall have the right to enforce the right
or obligation of any Partner to make Capital Contributions or loans or to pursue
any other right or remedy hereunder or at law or in equity, it being understood
and agreed that the provisions of this Agreement shall be solely for the benefit
of, and may be enforced solely by, the parties hereto and their respective
successors and assigns. None of the rights or obligations of the Partners herein
set forth to make Capital Contributions or loans to the Partnership shall be
deemed an asset of the Partnership for any purpose by any creditor or other
third party, nor may such rights or obligations be sold, transferred or assigned
by the Partnership or pledged or encumbered by the Partnership to secure any
debt or other obligation of the Partnership or of any of the Partners. In
addition, it is the intent of the parties hereto that no distribution to any
Limited Partner shall be deemed a return of money or other property in violation
of the Act. However, if any court of competent jurisdiction holds that,
notwithstanding the provisions of this Agreement, any Limited Partner is
obligated to return such money or property, such obligation shall be the
obligation of such Limited Partner and not of the General Partner. Without
limiting the generality of the foregoing, a deficit Capital Account of a Partner
shall not be deemed to be a liability of such Partner nor an asset or property
of the Partnership.
ARTICLE V.
PROFITS AND LOSSES; DISTRIBUTIONS
V.01 Allocation of Profit and Loss.
(a) General.
(i) Profit of the Partnership for each fiscal year of
the Partnership shall be allocated in the following order of
priority:
(A) First, to the Partners in proportion to
and up to the amount of cash distributed to each such
Partner pursuant to Section 5.02 for the fiscal year;
and
(B) Thereafter, to the Partners in
accordance with their respective Percentage
Interests.
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(ii) Loss of the Partnership for each fiscal year of
the Partnership shall be allocated to the Partners in
accordance with their respective Percentage Interests.
(iii) Depreciation and amortization expenses of the
Partnership shall be allocated among the Partners in
accordance with their respective Percentage Interests.
(b) Minimum Gain Chargeback. Notwithstanding any provision to
the contrary, (i) any expense of the Partnership that is a "nonrecourse
deduction" within the meaning of Regulations Section 1.704-2(b)(1) shall be
allocated in accordance with the Partners' respective Percentage Interests, (ii)
any expense of the Partnership that is a "partner nonrecourse deduction" within
the meaning of Regulations Section 1.704-2(i)(2) shall be allocated in
accordance with Regulations Section 1.704-2(i)(1), (iii) if there is a net
decrease in Partnership Minimum Gain within the meaning of Regulations Section
1.704-2(f)(1) for any Partnership taxable year, items of gain and income shall
be allocated among the Partners in accordance with Regulations Section
1.704-2(f) and the ordering rules contained in Regulations Section 1.704-2(j),
and (iv) if there is a net decrease in Partner Nonrecourse Debt Minimum Gain
within the meaning of Regulations Section 1.704-2(i)(4) for any Partnership
taxable year, items of gain and income shall be allocated among the Partners in
accordance with Regulations Section 1.704-2(i)(4) and the ordering rules
contained in Regulations Section 1.704-2(j). A Partner's "interest in
partnership profits" for purposes of determining its share of the nonrecourse
liabilities of the Partnership within the meaning of Regulations Section
1.752-3(a)(3) shall be such Partner's Percentage Interest.
(c) Qualified Income Offset. If a Limited Partner receives in
any taxable year an adjustment, allocation, or distribution described in
subparagraphs (4), (5), or (6) of Regulations Section 1.704-1(b)(2)(ii)(d) that
causes or increases a negative balance in such Partner's Capital Account that
exceeds the sum of such Partner's shares of Partnership Minimum Gain and Partner
Nonrecourse Debt Minimum Gain, as determined in accordance with Regulations
Sections 1.704-2(g) and 1.704-2(i), such Partner shall be allocated specially
for such taxable year (and, if necessary, later taxable years) items of income
and gain in an amount and manner sufficient to eliminate such negative Capital
Account balance as quickly as possible as provided in Regulations Section
1.704-1(b)(2)(ii)(d). After the occurrence of an allocation of income or gain to
a Limited Partner in accordance with this Section 5.01(c), to the extent
permitted by Regulations Section 1.704-1(b) and Section 5.01(d), items of
expense or loss shall be allocated to such Partner in an amount necessary to
offset the income or gain previously allocated to such Partner under this
Section 5.01(c).
(d) Capital Account Deficits. Loss shall not be allocated to a
Limited Partner to the extent that such allocation would cause a deficit in such
Partner's Capital Account (after reduction to reflect the items described in
Regulations Section 1.704-1(b)(2)(ii)(d)(4), (5) and (6)) to exceed the sum of
such Partner's shares of Partnership Minimum Gain and Partner Nonrecourse Debt
Minimum Gain. Any Loss in excess of that limitation shall be allocated to the
General Partner. After the occurrence of an allocation of Loss to the General
Partner in accordance with this Section 5.01(d), to the extent permitted by
Regulations Section 1.704-1(b), Profit shall be allocated to such Partner in an
amount necessary to offset the Loss previously allocated to such Partner under
this Section 5.01(d).
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(e) Allocations Between Transferor and Transferee. If a
Partner transfers any part or all of its Partnership Interest, the distributive
shares of the various items of Profit and Loss allocable among the Partners
during such fiscal year of the Partnership shall be allocated between the
transferor and the transferee Partner either (i) as if the Partnership's fiscal
year had ended on the date of the transfer, or (ii) based on the number of days
of such fiscal year that each was a Partner without regard to the results of
Partnership activities in the respective portions of such fiscal year in which
the transferor and the transferee were Partners. The General Partner, in its
sole and absolute discretion, shall determine which method shall be used to
allocate the distributive shares of the various items of Profit and Loss between
the transferor and the transferee Partner.
(f) Definition of Profit and Loss. "Profit" and "Loss" and any
items of income, gain, expense, or loss referred to in this Agreement shall be
determined in accordance with federal income tax accounting principles, as
modified by Regulations Section 1.704-1(b)(2)(iv), except that Profit and Loss
shall not include items of income, gain and expense that are specially allocated
pursuant to Section 5.01(a)(iii), 5.01(b), 5.01(c), or 5.01(d). All allocations
of income, Profit, gain, Loss, and expense (and all items contained therein) for
federal income tax purposes shall be identical to all allocations of such items
set forth in this Section 5.01, except as otherwise required by Section 704(c)
of the Code and Regulations Section 1.704-1(b)(4). The General Partner shall
have the authority to elect the method to be used by the Partnership for
allocating items of income, gain, and expense as required by Section 704(c) of
the Code (including a method that may result in a Partner receiving a
disproportionately larger share of the Partnership's tax depreciation
deductions) and such election shall be binding on all Partners.
V.02 Distribution of Cash.
(a) The General Partner shall distribute Available Cash on a
quarterly (or, at the election of the General Partner, more frequent) basis to
the Partners who are Partners on the Partnership Record Date with respect to
such quarter (or other distribution period) in the following order of priority:
(i) First, to the Outside Partners, in proportion to
their respective Percentage Interests on the Partnership
Record Date, until each Outside Partner has received an amount
equal to its Dividend Equivalent for such quarter (or other
distribution period);
(ii) Second, to the UDR Partners, in proportion to
their respective Percentage Interests on the Partnership
Record Date, until each UDR Partner has received an amount
equal to the excess, if any, of (A) the amount that such UDR
Partner would have received pursuant to Section 5.02(a)(iii)
in the absence of Section 5.02(a)(i) and this Section
5.02(a)(ii) from the date of this Agreement to the end of the
period to which the distribution relates, over (B) the sum of
all prior distributions to such UDR Partner pursuant to this
Section 5.02(a)(ii) and Section 5.02(a)(iii); and
(iii) Thereafter, to the Partners in accordance with
their respective Percentage Interests on the Partnership
Record Date.
If a new or existing Partner acquires an additional Partnership Interest in
exchange for a Capital Contribution on any date other than a Partnership Record
Date, the cash distribution attributable to such additional Partnership Interest
for the Partnership Record Date following the issuance of such additional
Partnership Interest shall be reduced in the proportion that the number of days
that such additional Partnership Interest is held by such Partner bears to the
number of days between such Partnership Record Date and the immediately
preceding Partnership Record Date.
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(b) Notwithstanding any other provision of this Agreement, the
General Partner is authorized to take any action that it determines to be
necessary or appropriate to cause the Partnership to comply with any withholding
requirements established under the Code or any other federal, state or local law
including, without limitation, pursuant to Sections 1441, 1442, 1445, and 1446
of the Code. If the Partnership is required to withhold and pay over to any
taxing authority any amount resulting from the allocation or distribution of
income to a Partner or its assignee (including by reason of Section 1446 of the
Code) and if the amount to be distributed to the Partner (the "Distributable
Amount") equals or exceeds the amount required to be withheld by the Partnership
(the "Withheld Amount"), the Withheld Amount shall be treated as a distribution
of cash to such Partner. If, however, the Distributable Amount is less than the
Withheld Amount, no amount shall be distributed to the Partner, the
Distributable Amount shall be treated as a distribution of cash to such Partner,
and the excess of the Withheld Amount over the Distributable Amount shall be
treated as a loan (a "Partnership Loan") from the Partnership to the Partner on
the day the Partnership pays over such excess to a taxing authority. A
Partnership Loan may be repaid, at the election of the General Partner in its
sole and absolute discretion, either (i) through withholding by the Partnership
with respect to subsequent distributions to the applicable Partner or assignee,
or (ii) at any time more than twelve (12) months after a Partnership Loan
arises, by cancellation of Partnership Units with a value equal to the unpaid
balance of the Partnership Loan (including accrued interest). Any amounts
treated as a Partnership Loan pursuant to this Section 5.02(b) shall bear
interest at the lesser of (i) the base rate on corporate loans at large United
States money center commercial banks, as published from time to time in The Wall
Street Journal (or an equivalent successor publication), or (ii) the maximum
lawful rate of interest on such obligation, such interest to accrue from the
date the Partnership is deemed to extend the loan until such loan is repaid in
full.
(c) In no event may a Partner receive a distribution of cash
with respect to a Partnership Unit if such Partner is entitled to receive a cash
dividend as the holder of record of a REIT Share for which all or part of such
Partnership Unit has been or will be exchanged.
V.03 REIT Distribution Requirements. Notwithstanding anything to the
contrary in this Agreement, the General Partner, if it is not able to borrow
money from the Partnership, may cause the Partnership to distribute amounts
sufficient to enable the Company to pay shareholder dividends that will allow
the Company to (i) meet its distribution requirement for qualification as a REIT
as set forth in Section 857(a)(1) of the Code and (ii) avoid any federal income
or excise tax liability imposed by the Code.
V.04 No Right to Distributions in Kind. No Partner shall be entitled to
demand property other than cash in connection with any distributions by the
Partnership.
V.05 Limitations on Return of Capital Contributions. Notwithstanding
any of the provisions of this Article V, no Partner shall have the right to
receive and the General Partner shall not have the right to make, a distribution
that includes a return of all or part of a Partner's Capital Contributions,
unless after giving effect to the return of a Capital Contribution, the sum of
all Partnership liabilities, other than the liabilities to a Partner for the
return of his Capital Contribution, does not exceed the fair market value of the
Partnership's assets.
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V.06 Distributions Upon Liquidation.
(a) Upon liquidation of the Partnership, after payment of, or
adequate provision for, debts and obligations of the Partnership, including any
Partner loans, any remaining assets of the Partnership shall be distributed to
all Partners with positive Capital Accounts in accordance with their respective
positive Capital Account balances. For purposes of the preceding sentence, the
Capital Account of each Partner shall be determined after all adjustments made
in accordance with Sections 5.01 and 5.02 resulting from Partnership operations
and from all sales and dispositions of all or any part of the Partnership's
assets. Any distributions pursuant to this Section 5.06 shall be made by the end
of the Partnership's taxable year in which the liquidation occurs (or, if later,
within 90 days after the date of the liquidation). To the extent deemed
advisable by the General Partner, appropriate arrangements (including the use of
a liquidating trust) may be made to assure that adequate funds are available to
pay any contingent debts or obligations.
(b) If the General Partner has a negative balance in its
Capital Account following a liquidation of the Partnership, as determined after
taking into account all Capital Account adjustments in accordance with Sections
5.01 and 5.02 resulting from Partnership operations and from all sales and
dispositions of all or any part of the Partnership's assets, the General Partner
shall contribute to the Partnership an amount of cash equal to the negative
balance in its Capital Account and such cash shall be paid or distributed by the
Partnership to creditors, if any, and then to the Limited Partners in accordance
with Section 5.06(a). Such contribution by the General Partner shall be made by
the end of the Partnership's taxable year in which the liquidation occurs (or,
if later, within 90 days after the date of the liquidation).
V.07 Substantial Economic Effect. It is the intent of the Partners that
the allocations of Profit and Loss under the Agreement have substantial economic
effect (or be consistent with the Partners' interests in the Partnership in the
case of the allocation of losses attributable to nonrecourse debt) within the
meaning of Section 704(b) of the Code as interpreted by the Regulations
promulgated pursuant thereto. Article V and other relevant provisions of this
Agreement shall be interpreted in a manner consistent with such intent.
ARTICLE VI.
RIGHTS, OBLIGATIONS AND
POWERS OF THE GENERAL PARTNER
VI.01 Management of the Partnership.
(a) Except as otherwise expressly provided in this Agreement,
the General Partner shall have full, complete and exclusive discretion to manage
and control the business of the Partnership for the purposes herein stated, and
shall make all decisions affecting the business and assets of the Partnership.
Subject to the restrictions specifically contained in this Agreement, the powers
of the General Partner shall include, without limitation, the authority to take
the following actions on behalf of the Partnership:
(i) to acquire, purchase, own, operate, lease and
dispose of any real property and any other property or assets,
including, without limitation, equity interests in other
REITs, mortgage loans and participations therein, that the
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General Partner determines are necessary or appropriate or in
the best interests of the business of the Company and the
Partnership;
(ii) to construct buildings and make other
improvements on the properties owned or leased by the
Partnership;
(iii) to authorize, issue, sell, redeem or otherwise
purchase any Partnership Interests or any securities
(including secured and unsecured debt obligations of the
Partnership, debt obligations of the Partnership convertible
into any class or series of Partnership Interests, or options,
rights, warrants or appreciation rights relating to any
Partnership Interests) of the Partnership;
(iv) to borrow or lend money for the Partnership,
issue or receive evidences of indebtedness in connection
therewith, refinance, increase the amount of, modify, amend or
change the terms of, or extend the time for the payment of,
any such indebtedness, and secure such indebtedness by
mortgage, deed of trust, pledge or other lien on the
Partnership's assets;
(v) to guarantee or become a comaker of indebtedness
of the Company or any Subsidiary thereof, refinance, increase
the amount of, modify, amend or change the terms of, or extend
the time for the payment of, any such guarantee or
indebtedness, and secure such guarantee or indebtedness by
mortgage, deed of trust, pledge or other lien on the
Partnership's assets;
(vi) to use assets of the Partnership (including,
without limitation, cash on hand) for any purpose consistent
with this Agreement, including, without limitation, payment,
either directly or by reimbursement, of all operating costs
and general administrative expenses of the Company, the
Partnership, or any Subsidiary of either to third parties or
to the Company as set forth in this Agreement;
(vii) to lease all or any portion of any of the
Partnership's assets, whether or not the terms of such leases
extend beyond the termination date of the Partnership and
whether or not any portion of the Partnership's assets so
leased are to be occupied by the lessee, or, in turn,
subleased in whole or in part to others, for such
consideration and on such terms as the General Partner may
determine;
(viii) to prosecute, defend, arbitrate, or compromise
any and all claims or liabilities in favor of or against the
Partnership, on such terms and in such manner as the General
Partner may reasonably determine, and similarly to prosecute,
settle or defend litigation with respect to the Partners, the
Partnership, or the Partnership's assets; provided, however,
that the General Partner may not, without the consent of the
Limited Partners (other than the Original Limited Partner)
holding more than 50% of the Percentage Interests of the
Limited Partners (other than the Original Limited Partner),
confess a judgment against the Partnership;
(ix) to file applications, communicate, and otherwise
deal with any and all governmental agencies having
jurisdiction over, or in any way affecting, the Partnership's
assets or any other aspect of the Partnership business;
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(x) to make or revoke any election permitted or
required of the Partnership by any taxing authority;
(xi) to maintain such insurance coverage for public
liability, fire and casualty, and any and all other insurance
for the protection of the Partnership, for the conservation of
Partnership assets, or for any other purpose convenient or
beneficial to the Partnership, in such amounts and such types,
as it shall determine from time to time;
(xii) to determine whether or not to apply any
insurance proceeds for any property to the restoration of such
property or to distribute the same;
(xiii) to establish one or more divisions of the
Partnership, to hire and dismiss employees of the Partnership
or any division of the Partnership, and to engage legal
counsel, accountants, consultants, real estate brokers, and
other professionals, as the General Partner may deem necessary
or appropriate in connection with the Partnership business, on
such terms (including provisions for compensation and
eligibility to participate in employee benefit plans, stock
option plans and similar plans funded by the Partnership) as
the General Partner may deem reasonable and proper;
(xiv) to retain other services of any kind or nature
in connection with the Partnership business, and to pay
therefor such remuneration as the General Partner may deem
reasonable and proper;
(xv) to negotiate and conclude agreements on behalf
of the Partnership with respect to any of the rights, powers
and authority conferred upon the General Partner;
(xvi) to maintain accurate accounting records and to
file promptly all federal, state and local income tax returns
on behalf of the Partnership;
(xvii) to distribute Partnership cash or other
Partnership assets in accordance with this Agreement;
(xviii) to form or acquire an interest in, and
contribute property to, any further limited or general
partnerships, joint ventures or other relationships that it
deems desirable (including, without limitation, the
acquisition of interests in, and the contributions of property
to, its Subsidiaries and any other Person in which it has an
equity interest from time to time);
(xix) to establish Partnership reserves for working
capital, capital expenditures, contingent liabilities, or any
other valid Partnership purpose;
(xx) subject to Article XI, to merge, consolidate or
combine the Partnership with or into another Person;
(xxi) subject to Article XI, to do any and all acts
and things necessary or prudent to ensure that the Partnership
will not be classified as a "publicly traded partnership" for
purposes of Section 7704 of the Code; and
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(xxii) to take such other action, execute,
acknowledge, swear to or deliver such other documents and
instruments, and perform any and all other acts that the
General Partner deems necessary or appropriate for the
formation, continuation and conduct of the business and
affairs of the Partnership (including, without limitation, all
actions consistent with allowing the General Partner at all
times to qualify as a REIT unless the General Partner
voluntarily terminates its REIT status) and to possess and
enjoy all of the rights and powers of a general partner as
provided by the Act.
(b) Except as otherwise provided herein, to the extent the
duties of the General Partner require expenditures of funds to be paid to third
parties, the General Partner shall not have any obligations hereunder except to
the extent that Partnership funds are reasonably available to it for the
performance of such duties, and nothing herein contained shall be deemed to
authorize or require the General Partner, in its capacity as such, to expend its
individual funds for payment to third parties or to undertake any individual
liability or obligation on behalf of the Partnership.
VI.02 Delegation of Authority. The General Partner may delegate any or
all of its powers, rights and obligations hereunder, and may appoint, employ,
contract or otherwise deal with any Person for the transaction of the business
of the Partnership, which Person may, under supervision of the General Partner,
perform any acts or services for the Partnership as the General Partner may
approve.
VI.03 Indemnification and Exculpation of Indemnitees.
(a) The Partnership shall indemnify an Indemnitee from and
against any and all losses, claims, damages, liabilities, joint or several,
expenses (including reasonable legal fees and expenses), judgments, fines,
settlements, and other amounts arising from any and all claims, demands,
actions, suits or proceedings, civil, criminal, administrative or investigative,
that relate to the operations of the Partnership as set forth in this Agreement
in which any Indemnitee may be involved, or is threatened to be involved, as a
party or otherwise, unless it is established that: (i) the act or omission of
the Indemnitee was material to the matter giving rise to the proceeding and
either was committed in bad faith or was the result of active and deliberate
dishonesty; (ii) the Indemnitee actually received an improper personal benefit
in money, property or services; or (iii) in the case of any criminal proceeding,
the Indemnitee had reasonable cause to believe that the act or omission was
unlawful. The termination of any proceeding by judgment, order or settlement
does not create a presumption that the Indemnitee did not meet the requisite
standard of conduct set forth in this Section 6.03(a). The termination of any
proceeding by conviction or upon a plea of nolo contendere or its equivalent, or
an entry of an order of probation prior to judgment, creates a rebuttable
presumption that the Indemnitee acted in a manner contrary to that specified in
this Section 6.03(a). Any indemnification pursuant to this Section 6.03 shall be
made only out of the assets of the Partnership.
(b) The Partnership may reimburse an Indemnitee for reasonable
expenses incurred by an Indemnitee who is a party to a proceeding in advance of
the final disposition of the proceeding upon receipt by the Partnership of (i) a
written affirmation by the Indemnitee of the Indemnitee's good faith belief that
the standard of conduct necessary for indemnification by the Partnership as
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authorized in this Section 6.03 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 6.03 shall be
in addition to any other rights to which an Indemnitee or any other Person may
be entitled under any agreement, pursuant to any vote of the Partners, as a
matter of law or otherwise, and shall continue as to an Indemnitee who has
ceased to serve in such capacity.
(d) The Partnership may purchase and maintain insurance, on
behalf of the Indemnitees and such other Persons as the General Partner shall
determine, against any liability that may be asserted against or expenses that
may be incurred by such Person in connection with the Partnership's activities,
regardless of whether the Partnership would have the power to indemnify such
Person against such liability under the provisions of this Agreement.
(e) For purposes of this Section 6.03, the Partnership shall
be deemed to have requested an Indemnitee to serve as fiduciary of an employee
benefit plan whenever the performance by it of its duties to the Partnership
also imposes duties on, or otherwise involves services by, it to the plan or
participants or beneficiaries of the plan; excise taxes assessed on an
Indemnitee with respect to an employee benefit plan pursuant to applicable law
shall constitute fines within the meaning of this Section 6.03; and actions
taken or omitted by an Indemnitee with respect to an employee benefit plan in
the performance of its duties for a purpose reasonably believed by it to be in
the interest of the participants and beneficiaries of the plan shall be deemed
to be for a purpose which is not opposed to the best interests of the
Partnership.
(f) In no event may an Indemnitee subject the Limited Partners
to personal liability by reason of the indemnification provisions set forth in
this Agreement.
(g) An Indemnitee shall not be denied indemnification in whole
or in part under this Section 6.03 because the Indemnitee had an interest in the
transaction with respect to which the indemnification applies if the transaction
was otherwise permitted by the terms of this Agreement.
(h) The provisions of this Section 6.03 are for the benefit of
the Indemnitees, their heirs, successors, assigns and administrators and shall
not be deemed to create any rights for the benefit of any other Persons.
VI.04 Liability of the General Partner.
(a) Notwithstanding anything to the contrary set forth in this
Agreement, the General Partner shall not be liable for monetary damages to the
Partnership or any Partners for losses sustained or liabilities incurred as a
result of errors in judgment or of any act or omission if the General Partner
acted in good faith. The General Partner shall not be in breach of any duty that
the General Partner may owe to the Limited Partners or the Partnership or any
other Persons under this Agreement or of any duty stated or implied by law or
equity provided the General Partner, acting in good faith, abides by the terms
of this Agreement.
(b) The Limited Partners expressly acknowledge that the
General Partner is acting on behalf of the Partnership, the Company and the
Company's shareholders collectively, that the General Partner is under no
obligation to consider the separate interests of the Limited Partners
(including, without limitation, the tax consequences to Limited Partners or the
tax consequences of some, but not all, of the Limited Partners) in deciding
whether to cause the Partnership to take (or decline to take) any actions. In
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any case in which the General Partner determines in good faith that the
interests of the Limited Partners and the General Partner's shareholders may
conflict, the Limited Partners further acknowledge and agree that the General
Partner shall be deemed to have discharged its fiduciary duties to the Limited
Partners by discharging such duties to the General Partner's shareholders. The
General Partner shall not be liable for monetary damages for losses sustained,
liabilities incurred, or benefits not derived by Limited Partners in connection
with any such decisions, provided that the General Partner has acted in good
faith.
(c) Subject to its obligations and duties as General Partner
set forth in Section 6.01, the General Partner may exercise any of the powers
granted to it under this Agreement and perform any of the duties imposed upon it
hereunder either directly or by or through its agents. The General Partner shall
not be responsible for any misconduct or negligence on the part of any such
agent appointed by it in good faith.
(d) Notwithstanding any other provisions of this Agreement or
the Act, any action of the General Partner on behalf of the Partnership or any
decision of the General Partner to refrain from acting on behalf of the
Partnership, undertaken in the good faith belief that such action or omission is
necessary or advisable in order (i) to protect the ability of the Company to
continue to qualify as a REIT or (ii) to prevent the Company from incurring any
taxes under Section 857, Section 4981, or any other provision of the Code, is
expressly authorized under this Agreement and is deemed approved by all of the
Limited Partners.
(e) Any amendment, modification or repeal of this Section 6.04
or any provision hereof shall be prospective only and shall not in any way
affect the limitations on the General Partner's liability to the Partnership and
the Limited Partners under this Section 6.04 as in effect immediately prior to
such amendment, modification or repeal with respect to matters occurring, in
whole or in part, prior to such amendment, modification or repeal, regardless of
when claims relating to such matters may arise or be asserted.
VI.05 Partnership Expenses. In addition to the expenses that are
directly attributable to the Partnership, the Partnership shall pay the REIT
Expenses that are allocable to the Partnership. The General Partner, in its sole
and absolute discretion, shall determine what portion of the REIT Expenses are
allocable to the Partnership. If any REIT Expenses determined by the General
Partner to be allocable to the Partnership are paid by the General Partner, the
General Partner shall be reimbursed by the Partnership therefor.
VI.06 Outside Activities. The Partners and any officer, director,
employee, agent, trustee, Affiliate, Subsidiary, or shareholder of any Partner
shall be entitled to and may have business interests and engage in business
activities in addition to those relating to the Partnership, including business
interests and activities substantially similar or identical to those of the
Partnership. Neither the Partnership nor any of the Partners nor any other
Person shall have any rights by virtue of this Agreement or the partnership
relationship established hereby in any such business ventures, interests or
activities, and the Partners shall have no obligation pursuant to this Agreement
to offer any interest in any such business ventures, interests and activities to
the Partnership or any Partner, even if such opportunity is of a character
which, if presented to the Partnership or any Partner, could be taken by such
Person.
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VI.07 Employment or Retention of Affiliates.
(a) Any Affiliate of the General Partner may be employed or
retained by the Partnership and may otherwise deal with the Partnership (whether
as a buyer, lessor, lessee, manager, furnisher of goods or services, broker,
agent, lender or otherwise) and may receive from the Partnership any
compensation, price, or other payment therefor which the General Partner
determines to be fair and reasonable.
(b) The Partnership may lend or contribute to its Subsidiaries
or other Persons in which it has an equity investment, and such Persons may
borrow funds from the Partnership, on terms and conditions established in the
sole and absolute discretion of the General Partner. The foregoing authority
shall not create any right or benefit in favor of any Subsidiary or any other
Person.
(c) The Partnership may transfer assets to joint ventures,
other partnerships, corporations or other business entities in which it is or
thereby becomes a participant upon such terms and subject to such conditions as
the General Partner deems are consistent with this Agreement and applicable law.
VI.08 Title to Partnership Assets. Title to Partnership assets, whether
real, personal or mixed and whether tangible or intangible, shall be deemed to
be owned by the Partnership as an entity, and no Partner, individually or
collectively, shall have any ownership interest in such Partnership assets or
any portion thereof. Title to any or all of the Partnership assets may be held
in the name of the Partnership, the General Partner or one or more nominees, as
the General Partner may determine, including Affiliates of the General Partner.
ARTICLE VII.
CHANGES IN GENERAL PARTNER AND THE COMPANY
VII.01 Transfer of a General Partner's Partnership Interest;
Transactions Involving the Company.
(a) Except as provided in Section 7.01(c), 7.01(d) or 7.03(a),
a General Partner shall not transfer all or any portion of its General
Partnership Interest or withdraw as General Partner.
(b) Except as provided in Section 7.01(c) or 7.01(d), the
General Partner (or all General Partners if at any time there are two or more
General Partners) and the Original Limited Partner will at all times own in the
aggregate at least a 1% Percentage Interest.
(c) Except as otherwise provided in Section 7.01(d), the
Company shall not merge, consolidate or otherwise combine with or into another
Person or sell all or substantially all of its assets (other than in connection
with a change in the Company's state of incorporation or organizational form) (a
"Transaction"), unless one of the following conditions is met:
(i) the consent of Limited Partners (other than the
Company or any Subsidiary of the Company) holding more than
50% of the Percentage Interests of the Limited Partners (other
than those held by the Company or any Subsidiary of the
Company) is obtained;
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(ii) the Transaction also includes a merger,
consolidation or combination of the Partnership or sale of
substantially all of the assets of the Partnership or other
transaction as a result of which all Limited Partners (other
than the Company or any Subsidiary) will receive for each
Partnership Unit an amount of cash, securities, or other
property (or a partnership interest or other security readily
convertible into such cash, securities, or other property) no
less than the product of the Conversion Factor and the
greatest amount of cash, securities or other property
(expressed as an amount per REIT Share) paid in the
Transaction in consideration for REIT Shares, provided, that
if, in connection with the Transaction, a purchase, tender or
exchange offer ("Offer") shall have been made to and accepted
by the holders of more than 50 percent of the outstanding REIT
Shares, all Limited Partners (other than the Company or any
Subsidiary) will receive no less than the amount of cash and
the fair market value of securities or other consideration
that they would have received had they (A) exercised their
Redemption Right and (B) sold, tendered or exchanged pursuant
to the Offer the REIT Shares received upon exercise of the
Redemption Right immediately prior to the expiration of the
Offer;
(iii) the Company is the surviving entity in the
Transaction and either (A) the holders of REIT Shares do not
receive cash, securities, or other property in the Transaction
or (B) all Limited Partners (other than the Company or any
Subsidiary) receive an amount of cash, securities, or other
property (expressed as an amount per Partnership Unit) that is
no less than the product of the Conversion Factor and the
greatest amount of cash, securities, or other property
(expressed as an amount per REIT Share) received in the
Transaction by any holder of REIT Shares; or
(iv) the Company merges, consolidates, or combines
with or into another entity and, immediately after such
merger, (A) substantially all of the assets of the surviving
entity, other than Partnership Units and the ownership
interests in any wholly-owned Subsidiaries held by the
Company, are contributed to the Partnership as a Capital
Contribution in exchange for Partnership Units with a fair
market value equal to the value of the assets so contributed
as determined pursuant to Section 704(c) of the Code, (B) any
successor or surviving corporation expressly agrees to assume
all obligations of the Company hereunder, and (C) the
Conversion Factor is adjusted appropriately to reflect the
ratio at which REIT Shares are converted into shares of the
surviving entity.
The General Partner shall give the Limited Partners notice of any Transaction at
least 20 business days prior to the effective date of such Transaction,
provided, however, that the General Partner need not give any such notice prior
to the date on which the holders of REIT Shares are first notified of such
Transaction by the Company.
(d) Notwithstanding Sections 7.01(a), 7.01(b) and 7.01(c),
(i) a General Partner may transfer all or any portion
of its General Partnership Interest to (A) a wholly-owned
Subsidiary of such General Partner or (B) the owner of all of
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the ownership interests of such General Partner, and following
a transfer of all of its General Partnership Interest, may
withdraw as General Partner; and
(ii) the Company may engage in a Transaction not
required by law or by the rules of any national securities
exchange on which the REIT Shares are listed to be submitted
to the vote of the holders of the REIT Shares and the General
Partner shall not be required to give notice to the Limited
Partners of any such Transaction as provided by Section
7.01(c).
VII.02 Admission of a Substitute or Additional General Partner. A
Person shall be admitted as a substitute or additional General Partner of the
Partnership only if the following terms and conditions are satisfied:
(a) the Person to be admitted as a substitute or additional
General Partner shall have accepted and agreed to be bound by all the terms and
provisions of this Agreement by executing a counterpart thereof and such other
documents or instruments as may be required or appropriate in order to effect
the admission of such Person as a General Partner, and a certificate evidencing
the admission of such Person as a General Partner shall have been filed for
recordation and all other actions required by Section 2.05 in connection with
such admission shall have been performed;
(b) if the Person to be admitted as a substitute or additional
General Partner is a corporation or a partnership it shall have provided the
Partnership with evidence satisfactory to counsel for the Partnership of such
Person's authority to become a General Partner and to be bound by the terms and
provisions of this Agreement; and
(c) counsel for the Partnership shall have rendered an opinion
(relying on such opinions from other counsel and the state or any other
jurisdiction as may be necessary) that the admission of the person to be
admitted as a substitute or additional General Partner is in conformity with the
Act, that none of the actions taken in connection with the admission of such
Person as a substitute or additional General Partner will cause (i) the
Partnership to be classified other than as a partnership for federal income tax
purposes, or (ii) the loss of any Limited Partner's limited liability.
VII.03 Effect of Bankruptcy, Withdrawal, Death or Dissolution of a
General Partner.
(a) Upon the occurrence of an Event of Bankruptcy as to a
General Partner (and its removal pursuant to Section 7.04(a) hereof) or the
withdrawal, removal or dissolution of a General Partner (except that, if a
General Partner is on the date of such occurrence a partnership, the withdrawal,
death, dissolution, Event of Bankruptcy as to or removal of a partner in such
partnership shall be deemed not to be a dissolution of such General Partner if
the business of such General Partner is continued by the remaining partner or
partners), the Partnership shall be dissolved and terminated unless the
Partnership is continued pursuant to Section 7.03(b) hereof. The merger of the
General Partner with or into any entity that is admitted as a substitute or
successor General Partner pursuant to Section 7.02 hereof shall not be deemed to
be the withdrawal, dissolution or removal of the General Partner.
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(b) Following the occurrence of an Event of Bankruptcy as to a
General Partner (and its removal pursuant to Section 7.04(a) hereof) or the
withdrawal, removal or dissolution of a General Partner (except that, if a
General Partner is on the date of such occurrence a partnership, the withdrawal,
death, dissolution, Event of Bankruptcy as to or removal of a partner in such
partnership shall be deemed not to be a dissolution of such General Partner if
the business of such General Partner is continued by the remaining partner or
partners), the Limited Partners, within 90 days after such occurrence, may elect
to continue the business of the Partnership for the balance of the term
specified in Section 2.04 hereof by selecting, subject to Section 7.02 hereof
and any other provisions of this Agreement, a substitute General Partner by
consent of the Limited Partners holding more than 50% of the Percentage
Interests of the Limited Partners. If the Limited Partners elect to continue the
business of the Partnership and admit a substitute General Partner, the
relationship with the Partners and of any Person who has acquired an interest of
a Partner in the Partnership shall be governed by this Agreement.
VII.04 Removal of a General Partner.
(a) Upon the occurrence of an Event of Bankruptcy as to, or
the dissolution of, a General Partner, such General Partner shall be deemed to
be removed automatically; provided, however, that if a General Partner is on the
date of such occurrence a partnership, the withdrawal, death, dissolution, Event
of Bankruptcy as to or removal of a partner in such partnership shall be deemed
not to be a dissolution of the General Partner if the business of such General
Partner is continued by the remaining partner or partners. The Limited Partners
may not remove the General Partner, with or without cause.
(b) If a General Partner has been removed pursuant to this
Section 7.04 and the Partnership is continued pursuant to Section 7.03 hereof,
such General Partner shall promptly transfer and assign its General Partnership
Interest in the Partnership (i) to the substitute General Partner approved by
the Limited Partners in accordance with Section 7.03(b) hereof and otherwise
admitted to the Partnership in accordance with Section 7.02 hereof. At the time
of assignment, the removed General Partner shall be entitled to receive from the
substitute General Partner the fair market value of the General Partnership
Interest of such removed General Partner as reduced by any damages caused to the
Partnership by such General Partner. Such fair market value shall be determined
by an appraiser mutually agreed upon by the General Partner and a majority in
interest of the Limited Partners within 10 days following the removal of the
General Partner. In the event that the parties are unable to agree upon an
appraiser, the General Partner and a majority in interest of the Limited
Partners each shall select an appraiser, each of which appraisers shall complete
an appraisal of the fair market value of the General Partner's General
Partnership Interest within 30 days of the General Partner's removal, and the
fair market value of the General Partner's General Partnership Interest shall be
the average of the two appraisals; provided, however, that if the higher
appraisal exceeds the lower appraisal by more than 20% of the amount of the
lower appraisal, the two appraisers, no later than 40 days after the removal of
the General Partner, shall select a third appraiser who shall complete an
appraisal of the fair market value of the General Partner's General Partnership
Interest no later than 60 days after the removal of the General Partner. In such
case, the fair market value of the General Partner's General Partnership
Interest shall be the average of the two appraisals closest in value.
(c) The General Partnership Interest of a removed General
Partner, during the time after default until transfer under Section 7.04(b),
shall be converted to that of a special Limited Partner; provided, however, such
removed General Partner shall not have any rights to participate in the
management and affairs of the Partnership, and shall not be entitled to any
portion of the income, expenses, Profit, gain or Loss, distributions or
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allocations, as the case may be, payable or allocable to the Limited Partners as
such. Instead, such removed General Partner shall receive and be entitled to
retain only distributions or allocations of such items which it would have been
entitled to receive in its capacity as General Partner, until the transfer is
effective pursuant to Section 7.04(b).
(d) All Partners shall have given and hereby do give such
consents, shall take such actions and shall execute such documents as shall be
legally necessary and sufficient to effect all the foregoing provisions of this
Section 7.04.
ARTICLE VIII.
RIGHTS AND OBLIGATIONS
OF THE LIMITED PARTNERS
VIII.01 Management of the Partnership. The Limited Partners shall not
participate in the management or control of Partnership business nor shall they
transact any business for the Partnership, nor shall they have the power to sign
for or bind the Partnership, such powers being vested solely and exclusively in
the General Partner.
VIII.02 Power of Attorney. Each Limited Partner hereby irrevocably
appoints the General Partner its true and lawful attorney-in-fact, who may act
for each Limited Partner and in its name, place and stead, and for its use and
benefit, to sign, acknowledge, swear to, deliver, file and record, at the
appropriate public offices, any and all documents, certificates, and instruments
as may be deemed necessary or desirable by the General Partner to carry out
fully the provisions of this Agreement and the Act in accordance with their
terms, which power of attorney is coupled with an interest and shall survive the
death, dissolution or legal incapacity of the Limited Partner, or the transfer
by the Limited Partner of any part or all of its Partnership Interest.
VIII.03 Limitation on Liability of Limited Partners. No Limited Partner
shall be liable for any debts, liabilities, contracts or obligations of the
Partnership. A Limited Partner shall be liable to the Partnership only to make
payments of its Capital Contribution, if any, as and when due hereunder. After
its Capital Contribution is fully paid, no Limited Partner shall, except as
otherwise required by the Act, be required to make any further Capital
Contributions or other payments or lend any funds to the Partnership.
VIII.04 Ownership by Limited Partner of Corporate General Partner or
Affiliate. No Limited Partner shall at any time, either directly or indirectly,
own any stock or other interest in the General Partner or in any Affiliate
thereof, if such ownership by itself or in conjunction with other stock or other
interests owned by other Limited Partners would, in the opinion of counsel for
the Partnership, jeopardize the classification of the Partnership as a
partnership for federal income tax purposes. The General Partner shall be
entitled to make such reasonable inquiry of the Limited Partners as is required
to establish compliance by the Limited Partners with the provisions of this
Section.
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VIII.05 Redemption Right.
(a) Subject to Sections 8.05(b), 8.05(c), 8.05(d), and
8.05(e), and the provisions of any agreement between the Partnership and any
Limited Partner with respect to Partnership Units held by such Limited Partners,
each Limited Partner, other than the Original Limited Partner, shall have the
right (the "Redemption Right") to require the Partnership to redeem on a
Specified Redemption Date all or a portion of the Partnership Units held by such
Limited Partner at a redemption price equal to and in the form of the Cash
Amount to be paid by the Partnership, provided, that such Partnership Units
shall have been outstanding for at least one year. The Redemption Right shall be
exercised pursuant to a Notice of Redemption delivered to the Partnership (with
a copy to the General Partner) by the Limited Partner who is exercising the
Redemption Right (the "Redeeming Partner"); provided, however, that the
Partnership shall not be obligated to satisfy such Redemption Right if the
General Partner elects to purchase the Partnership Units subject to the Notice
of Redemption pursuant to Section 8.05(b); and provided, further, that no
Limited Partner may deliver more than two Notices of Redemption during each
calendar year. A Limited Partner may not exercise the Redemption Right for less
than 1,000 Partnership Units or, if such Limited Partner holds less than 1,000
Partnership Units, all of the Partnership Units held by such Partner. The
Redeeming Partner shall have no right, with respect to any Partnership Units so
redeemed, to receive any distribution paid with respect to Partnership Units if
the record date for such distribution is on or after the Specified Redemption
Date.
(b) Notwithstanding the provisions of Section 8.05(a), a
Limited Partner that exercises the Redemption Right shall be deemed to have
offered to sell the Partnership Units described in the Notice of Redemption to
the General Partner, and the General Partner may, in its sole and absolute
discretion but subject to the last sentence of this subsection (b), elect to
purchase directly and acquire such Partnership Units by paying to the Redeeming
Partner either the Cash Amount or the REIT Shares Amount, as elected by the
General Partner (in its sole and absolute discretion), on the Specified
Redemption Date, whereupon the General Partner shall acquire the Partnership
Units offered for redemption by the Redeeming Partner and shall be treated for
all purposes of this Agreement as the owner of such Partnership Units. If the
General Partner shall elect to exercise its right to purchase Partnership Units
under this Section 8.05(b) with respect to a Notice of Redemption, it shall so
notify the Redeeming Partner within five Business Days after the receipt by the
General Partner of such Notice of Redemption. Such notice shall indicate whether
the General Partner will pay the Cash Amount or the REIT Shares Amount. Unless
the General Partner (in its sole and absolute discretion) shall exercise its
right to purchase Partnership Units from the Redeeming Partner pursuant to this
Section 8.05(b), the General Partner 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 the General Partner shall
exercise its right to purchase Partnership Units with respect to the exercise of
a Redemption Right in the manner described in the first sentence of this Section
8.05(b), the Partnership shall have no obligation to pay any amount to the
Redeeming Partner with respect to such Redeeming Partner's exercise of such
Redemption Right, and each of the Redeeming Partner, the Partnership, and the
General Partner shall treat the transaction between the General Partner and the
Redeeming Partner for federal income tax purposes as a sale of the Redeeming
Partner's Partnership Units to the General Partner. Each Redeeming Partner
agrees to execute such documents as the Partnership may reasonably require in
connection with the issuance of REIT Shares upon exercise of the Redemption
Right. If Section 5.05 hereof shall prevent the Partnership from satisfying, in
whole or in part, any exercise of the Redemption Right by a Redeeming Partner,
then the Company (whether or not it is then the General Partner) shall be deemed
to have elected pursuant to this Section 8.05(b) to purchase, and hereby agrees
to purchase, directly from such Redeeming Partner, such number of Partnership
Units as the Partnership is unable to redeem due to the operation of Section
5.05.
(c) Notwithstanding the provisions of Section 8.05(a) and
8.05(b), a Limited Partner shall not be entitled to exercise the Redemption
Right if the delivery of REIT Shares to such Partner on the Specified Redemption
Date by the Company pursuant to Section 8.05(b) (regardless of whether or not
the Company would in fact exercise its rights under Section 8.05(b)) would (i)
result in REIT Shares being owned by fewer than 100 persons (determined without
reference to any rules of attribution), (ii) result in the Company being
"closely held" within the meaning of Section 856(h) of the Code, (iii) cause the
Company to own, directly or constructively, 10% or more of the ownership
interests in a tenant of the Company's, the Partnership's or a Subsidiary's real
property, within the meaning of Section 856(d)(2)(B) of the Code, (iv) in the
good faith opinion of the Board of Directors of the Company, otherwise
disqualify the Company as a REIT, or (v) in the opinion of counsel for the
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Company, constitute or result in a violation of Section 5 of the Securities Act
of 1933, as amended (the "Securities Act"), or cause the acquisition of REIT
Shares by such Partner to be "integrated" with any other distribution of REIT
Shares for purposes of complying with the registration provisions of the
Securities Act. The Company, in its sole and absolute discretion, may waive the
restriction on redemption set forth in this Section 8.05(c); provided, however,
that in the event such restriction is waived, the Redeeming Partner shall be
paid the Cash Amount.
(d) Any Cash Amount to be paid to a Redeeming Partner pursuant
to this Section 8.05 shall be paid within 20 Business Days after the initial
date of receipt by the General Partner of the Notice of Redemption relating to
the Partnership Units to be redeemed; provided, however, that such 20-Business
Day period may be extended for up to an additional 180-day period to the extent
required for the Company to issue and sell securities the proceeds of which will
be contributed to the Partnership to provide cash for payment of the Cash
Amount. Notwithstanding the foregoing, the General Partner agrees to use its
best efforts to cause the closing of the acquisition of redeemed Partnership
Units hereunder to occur as quickly as reasonably possible.
(e) Notwithstanding any other provision of this Agreement, the
General Partner may place appropriate restrictions on the ability of the Limited
Partners to exercise their Redemption Rights as and if deemed necessary to
ensure that the Partnership does not constitute a "publicly traded partnership"
under section 7704 of the Code. If and when the General Partner determines that
imposing such restrictions is necessary, the General Partner shall give prompt
written notice thereof (a "Restriction Notice") to each of the Limited Partners,
which notice shall be accompanied by a copy of an opinion of counsel to the
Partnership which states that, in the opinion of such counsel, such restrictions
are necessary in order to avoid the Partnership being treated as a "publicly
traded partnership" under Section 7704 of the Code.
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(f) The Conversion Factor shall be adjusted from time to time
as follows:
(i) In the event that the Company (A) declares or
pays a dividend on its outstanding REIT Shares in REIT Shares
or makes a distribution to all holders of its outstanding REIT
Shares in REIT Shares, (B) subdivides its outstanding REIT
Shares, or (C) combines its outstanding REIT Shares into a
smaller number of REIT Shares, the Conversion Factor shall be
adjusted by multiplying the Conversion Factor by a fraction,
the numerator of which shall be the number of REIT Shares
issued and outstanding on the record date for such dividend,
distribution, subdivision or combination (assuming for such
purposes that such dividend, distribution, subdivision or
combination has occurred as of such time), and the denominator
of which shall be the actual number of REIT Shares (determined
without the above assumption) issued and outstanding on such
date.
(ii) In the event that the Company declares or pays a
dividend or other distribution on its outstanding REIT Shares
(other than (a) ordinary cash dividends or (b) dividends
payable in REIT Shares that give rise to an adjustment in the
Conversion Factor under subsection (i) hereof) and the Value
of the REIT Shares on the 20th trading day following the
record date ("Record Date") for such dividend or distribution
(the "Post-Distribution Value") is less than the Value of the
REIT Shares on the Business Day immediately preceding such
Record Date (the "Pre-Distribution Value"), then the
Conversion Factor in effect after the Record Date shall be
adjusted by multiplying the Conversion Factor in effect prior
to the Record Date by a fraction, the numerator of which is
the Pre-Distribution Value and the denominator of which is the
Post-Distribution Value, provided, however, that no adjustment
shall be made if (a) with respect to any cash dividend or
distribution with respect to REIT shares, the Partnership
distributes with respect to each Partnership Unit an amount
equal to the amount of such dividend or distribution
multiplied by the Conversion Factor or (b) with respect to any
dividend or distribution of securities or property other than
cash, the Partnership distributes with respect to each
Partnership Unit an amount of securities or other property
equal to the amount distributed with respect to each REIT
share multiplied by the Conversion Ratio or a partnership
interest or other security readily convertible into such
securities or other property.
(iii) Any adjustment to the Conversion Factor shall
become effective immediately after the effective date of any
of the events described in subsections (i) and (ii),
retroactive to the record date, if any, for such event,
provided, however, that if the Partnership receives a Notice
of Redemption after the record date, but prior to the payment
date or effective date, of any dividend, distribution,
subdivision or combination referred to in subsection (i) or
(ii), the Conversion Factor shall be determined as if the
Company had received the Notice of Exchange immediately prior
to the record date for such dividend, distribution,
subdivision or combination.
VIII.06 NYSE Listing and Securities Act Registration of REIT Shares. In
the event that the General Partner elects to acquire a Redeeming Partner's
Partnership Units by paying to such Partner the REIT Shares Amount, the REIT
Shares issued to the Redeeming Partner if and to the extent provided in such
Redeeming Partner's Registration Rights Agreement (a) registered under the
Securities Act and/or entitled to rights to Securities Act registration and (b)
listed on the NYSE.
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ARTICLE IX.
TRANSFERS OF LIMITED PARTNERSHIP INTERESTS
IX.01 Purchase for Investment.
(a) Each Limited Partner hereby represents and warrants to the
General Partner and to the Partnership that the acquisition of his Partnership
Interest is made as a principal for his account for investment purposes only and
not with a view to the resale or distribution of such Partnership Interest.
(b) Each Limited Partner agrees that he will not sell, assign
or otherwise transfer his Partnership Interest or any fraction thereof, whether
voluntarily or by operation of law or at judicial sale or otherwise, to any
Person who does not make the representations and warranties to the General
Partner set forth in Section 9.01(a) above and similarly agree not to sell,
assign or transfer such Partnership Interest or fraction thereof to any Person
who does not similarly represent, warrant and agree.
IX.02 Restrictions on Transfer of Limited Partnership Interests.
(a) Except as otherwise provided in this Article IX, no
Limited Partner may offer, sell, assign, hypothecate, pledge or otherwise
transfer his Limited Partnership Interest, in whole or in part, whether
voluntarily or by operation of law or at judicial sale or otherwise
(collectively, a "Transfer") without the written consent of the General Partner,
which consent may be withheld in the sole and absolute discretion of the General
Partner. The General Partner may require, as a condition of any Transfer, that
the transferor assume all costs incurred by the Partnership in connection
therewith.
(b) No Limited Partner may effect a Transfer of its Limited
Partnership Interest, in whole or in part, if, in the opinion of legal counsel
for the Partnership, such proposed Transfer would require the registration of
the Limited Partnership Interest under the Securities Act or would otherwise
violate any applicable federal or state securities or blue sky law (including
investment suitability standards).
(c) No Transfer by a Limited Partner of its Partnership Units,
in whole or in part, may be made to any Person if (i) in the opinion of counsel
for the Partnership, the Transfer would result in the Partnership's being
treated as an association taxable as a corporation (other than a qualified REIT
subsidiary within the meaning of Section 856(i) of the Code), (ii) in the
opinion of counsel for the Partnership, the Transfer would adversely affect the
ability of the Company to continue to qualify as a REIT or subject the Company
to any additional taxes under Section 857 or Section 4981 of the Code, or (iii)
such Transfer is effectuated through an "established securities market" or a
"secondary market (or the substantial equivalent thereof)" within the meaning of
Section 7704 of the Code.
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(d) No transfer of any Partnership Units may be made to a
lender to the Partnership or any Person who is related (within the meaning of
Regulations Section 1.752-4(b)) to any lender to the Partnership whose loan
constitutes a nonrecourse liability (within the meaning of Regulations Section
1.752-1(a)(2)), without the consent of the General Partner, which may be
withheld in its sole and absolute discretion, provided that as a condition to
such consent the lender will be required to enter into an arrangement with the
Partnership and the General Partner to exchange or redeem for the Cash Amount
any Partnership Units in which a security interest is held simultaneously with
the time at which such lender would be deemed to be a partner in the Partnership
for purposes of allocating liabilities to such lender under Section 752 of the
Code.
(e) Section 9.02(a) shall not apply to any Transfer by a
Limited Partner pursuant to the exercise of its Redemption Right under Section
8.05 hereof.
(f) Any Transfer in contravention of any of the provisions of
this Article IX shall be void and ineffectual and shall not be binding upon, or
recognized by, the Partnership.
IX.03 Admission of Substitute Limited Partner.
(a) Subject to the other provisions of this Article IX, an
assignee of the Limited Partnership Interest of a Limited Partner (which shall
be understood to include any purchaser, transferee, donee, or other recipient of
any disposition of such Limited Partnership Interest) shall be deemed admitted
as a Limited Partner of the Partnership only upon the satisfactory completion of
the following:
(i) The assignee shall have accepted and agreed to
be bound by the terms and provisions of this Agreement by
executing a counterpart or an amendment thereof, including a
revised Exhibit A, and such other documents or instruments as
the General Partner may require in order to effect the
admission of such Person as a Limited Partner.
(ii) To the extent required, an amended Certificate
evidencing the admission of such Person as a Limited Partner
shall have been signed, acknowledged and filed for record in
accordance with the Act.
(iii) The assignee shall have delivered a letter
containing the representation set forth in Section 9.01(a) and
the agreement set forth in Section 9.01(b).
(iv) If the assignee is a corporation, partnership
or trust, the assignee shall have provided the General Partner
with evidence satisfactory to counsel for the Partnership of
the assignee's authority to become a Limited Partner under the
terms and provisions of this Agreement.
(v) The assignee shall have executed a power of
attorney containing the terms and provisions set forth in
Section 8.02.
(vi) The assignee shall have paid all reasonable
legal fees of the Partnership and the General Partner and
filing and publication costs in connection with its
substitution as a Limited Partner.
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(vii) The assignee has obtained the prior written
consent of the General Partner to its admission as a
Substitute Limited Partner, which consent may be given or
denied in the exercise of the General Partner's sole and
absolute discretion.
(b) For the purpose of allocating Profits and Losses and
distributing cash received by the Partnership, a Substitute Limited Partner
shall be treated as having become, and appearing in the records of the
Partnership as, a Partner upon the filing of the Certificate described in
Section 9.03(a)(ii) or, if no such filing is required, the later of the date
specified in the transfer documents or the date on which the General Partner has
received all necessary instruments of transfer and substitution.
(c) The General Partner shall cooperate with the Person
seeking to become a Substitute Limited Partner by preparing the documentation
required by this Section and making all official filings and publications. The
Partnership shall take all such action as promptly as practicable after the
satisfaction of the conditions in this Article IX to the admission of such
Person as a Limited Partner of the Partnership.
IX.04 Rights of Assignees of Partnership Interests.
(a) Subject to the provisions of Sections 9.01 and 9.02,
except as required by operation of law, the Partnership shall not be obligated
for any purposes whatsoever to recognize the assignment by any Limited Partner
of its Partnership Interest until the Partnership has received notice thereof.
(b) Any Person who is the assignee of all or any portion of a
Limited Partner's Limited Partnership Interest, but does not become a Substitute
Limited Partner and desires to make a further assignment of such Limited
Partnership Interest, shall be subject to all the provisions of this Article IX
to the same extent and in the same manner as any Limited Partner desiring to
make an assignment of its Limited Partnership Interest.
(c) The General Partner shall have the right, in its sole and
absolute discretion, to redeem the Limited Partnership Interest assigned by any
Limited Partner (an "Assigning Limited Partner") to any person who does not,
within 20 business days following the date of such assignment, become a
Substitute Limited Partner (an "Assignee"). In such case, the Assigning Limited
Partner and the Assignee shall be deemed to have tendered irrevocably to the
General Partner a Notice of Redemption with respect to all of the Limited
Partnership Interest assigned.
IX.05 Effect of Bankruptcy, Death, Incompetence or Termination of a
Limited Partner. The occurrence of an Event of Bankruptcy as to a Limited
Partner, the death of a Limited Partner or a final adjudication that a Limited
Partner is incompetent (which term shall include, but not be limited to,
insanity) shall not cause the termination or dissolution of the Partnership, and
the business of the Partnership shall continue if an order for relief in a
bankruptcy proceeding is entered against a Limited Partner, the trustee or
receiver of his estate or, if he dies, his executor, administrator or trustee,
or, if he is finally adjudicated incompetent, his committee, guardian or
conservator, shall have the rights of such Limited Partner for the purpose of
settling or managing his estate property and such power as the bankrupt,
deceased or incompetent Limited Partner possessed to assign all or any part of
his Partnership Interest and to join with the assignee in satisfying conditions
precedent to the admission of the assignee as a Substitute Limited Partner.
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IX.06 Joint Ownership of Interests. A Partnership Interest may be
acquired by two individuals as joint tenants with right of survivorship,
provided that such individuals either are married or are related and share the
same home as tenants in common. The written consent or vote of both owners of
any such jointly held Partnership Interest shall be required to constitute the
action of the owners of such Partnership Interest; provided, however, that the
written consent of only one joint owner will be required if the Partnership has
been provided with evidence satisfactory to the counsel for the Partnership that
the actions of a single joint owner can bind both owners under the applicable
laws of the state of residence of such joint owners. Upon the death of one owner
of a Partnership Interest held in a joint tenancy with a right of survivorship,
the Partnership Interest shall become owned solely by the survivor as a Limited
Partner and not as an assignee. The Partnership need not recognize the death of
one of the owners of a jointly-held Partnership Interest until it shall have
received notice of such death. Upon notice to the General Partner from either
owner, the General Partner shall cause the Partnership Interest to be divided
into two equal Partnership Interests, which shall thereafter be owned separately
by each of the former owners.
ARTICLE X.
BOOKS AND RECORDS; ACCOUNTING; TAX MATTERS
X.01 Books and Records. At all times during the continuance of the
Partnership, the General Partner shall keep or cause to be kept at the
Partnership's specified office true and complete books of account in accordance
with generally accepted accounting principles, including: (a) a current list of
the full name and last known business address of each Partner, (b) a copy of the
Certificate of Limited Partnership and all certificates of amendment thereto,
(c) copies of the Partnership's federal, state and local income tax returns and
reports, (d) copies of the Agreement and any financial statements of the
Partnership for the three most recent years and (e) all documents and
information required under the Act. Any Partner or its duly authorized
representative, upon paying the costs of collection, duplication and mailing,
shall be entitled to inspect or copy such records during ordinary business
hours.
X.02 Custody of Partnership Funds; Bank Accounts.
(a) All funds of the Partnership not otherwise invested shall
be deposited in one or more accounts maintained in such banking or brokerage
institutions as the General Partner shall determine, and withdrawals shall be
made only on such signature or signatures as the General Partner may, from time
to time, determine.
(b) All deposits and other funds not needed in the operation
of the business of the Partnership may be invested by the General Partner in
investment grade instruments (or investment companies whose portfolio consists
primarily thereof), government obligations, certificates of deposit, bankers'
acceptances and municipal notes and bonds. The funds of the Partnership shall
not be commingled with the funds of any other Person except for such commingling
as may necessarily result from an investment in those investment companies
permitted by this Section 10.02(b).
X.03 Fiscal and Taxable Year. The fiscal and taxable year of the
Partnership shall be the calendar year.
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X.04 Annual Tax Information and Report. Within 75 days after the end of
each fiscal year of the Partnership, the General Partner shall furnish to each
person who was a Limited Partner at any time during such year the tax
information necessary to file such Limited Partner's individual tax returns as
shall be reasonably required by law.
X.05 Tax Matters Partner; Tax Elections; Special Basis Adjustments.
(a) The General Partner shall be the Tax Matters Partner of
the Partnership within the meaning of Section 6231(a)(7) of the Code. As Tax
Matters Partner, the General Partner shall have the right and obligation to take
all actions authorized and required, respectively, by the Code for the Tax
Matters Partner. The General Partner shall have the right to retain professional
assistance in respect of any audit of the Partnership by the Service and all
out-of-pocket expenses and fees incurred by the General Partner on behalf of the
Partnership as Tax Matters Partner shall constitute Partnership expenses. In the
event the General Partner receives notice of a final Partnership adjustment
under Section 6223(a)(2) of the Code, the General Partner shall either (i) file
a court petition for judicial review of such final adjustment within the period
provided under Section 6226(a) of the Code, a copy of which petition shall be
mailed to all Limited Partners on the date such petition is filed, or (ii) mail
a written notice to all Limited Partners, within such period, that describes the
General Partner's reasons for determining not to file such a petition.
(b) All elections required or permitted to be made by the
Partnership under the Code or any applicable state or local tax law shall be
made by the General Partner in its sole and absolute discretion.
(c) In the event of a transfer of all or any part of the
Partnership Interest of any Partner, the Partnership, at the option of the
General Partner, may elect pursuant to Section 754 of the Code to adjust the
basis of the Properties. Notwithstanding anything contained in Article V of this
Agreement, any adjustments made pursuant to Section 754 shall affect only the
successor in interest to the transferring Partner and in no event shall be taken
into account in establishing, maintaining or computing Capital Accounts for the
other Partners for any purpose under this Agreement. Each Partner will furnish
the Partnership with all information necessary to give effect to such election.
X.06 Reports to Limited Partners.
(a) As soon as practicable after the close of each fiscal
quarter (other than the last quarter of the fiscal year), the General Partner
shall cause to be mailed to each Limited Partner a quarterly report containing
financial statements of the Partnership, or of the Company if such statements
are prepared solely on a consolidated basis with the Company, for such fiscal
quarter, presented in accordance with generally accepted accounting principles.
As soon as practicable after the close of each fiscal year, the General Partner
shall cause to be mailed to each Limited Partner an annual report containing
financial statements of the Partnership, or of the Company if such statements
are prepared solely on a consolidated basis with the Company, for such fiscal
year, presented in accordance with generally accepted accounting principles. The
annual financial statements shall be audited by accountants selected by the
General Partner.
(b) Any Partner shall further have the right to a private
audit of the books and records of the Partnership, provided such audit is made
for Partnership purposes, at the expense of the Partner desiring it and is made
during normal business hours.
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ARTICLE XI.
AMENDMENT OF AGREEMENT; MERGER; NOTICE
XI.01 Amendment of Agreement; Merger. The General Partner's consent
shall be required for any amendment to the Agreement or any merger,
consolidation or combination of the Partnership. The General Partner, without
the consent of the Limited Partners, may amend this Agreement in any respect or
cause the Partnership to merge, consolidate or combine with or into any other
partnership, limited partnership, limited liability company or corporation as
contemplated in Section 7.01(c) or (d) hereof; provided, however, that the
following amendments and any other such merger, consolidation or combination of
the Partnership (a "Merger") shall require the consent of Limited Partners
(other than the Company or any Subsidiary of the Company) holding more than 50%
of the Percentage Interests of the Limited Partners (other than the Company or
any Subsidiary of the Company):
(a) any amendment affecting the operation of the Conversion
Factor or the Redemption Right (except as provided in Sections 7.01(c) or
8.05(e)) in a manner adverse to the Limited Partners;
(b) any amendment that would adversely affect the rights of
the Limited Partners to receive the distributions payable to them hereunder,
other than with respect to the issuance of additional Partnership Units pursuant
to Section 4.02;
(c) any amendment that would alter the Partnership's
allocations of Profit and Loss to the Limited Partners, other than with respect
to the issuance of additional Partnership Units pursuant to Section 4.02; or
(d) any amendment to this Article XI.
The consent of each Limited Partner shall be required for any
amendment that would impose on the Limited Partners any obligation to make
additional Capital Contributions to the Partnership.
XI.02 Notice to Limited Partners. The General Partner shall notify the
Limited Partners of the substance of any amendment or Merger requiring the
consent of the Limited Partners pursuant to Section 11.01 at least 20 business
days prior to the effective date of such amendment or Merger.
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ARTICLE XII.
GENERAL PROVISIONS
XII.01 Notices. All communications required or permitted under this
Agreement shall be in writing and shall be deemed to have been given when
delivered personally or upon deposit in the United States mail, registered,
postage prepaid return receipt requested, to the Partners at the addresses set
forth in Exhibit A attached hereto; provided, however, that any Partner may
specify a different address by notifying the General Partner in writing of such
different address. Notices to the Partnership shall be delivered at or mailed to
its specified office.
XII.02 Survival of Rights. Subject to the provisions hereof limiting
transfers, this Agreement shall be binding upon and inure to the benefit of the
Partners and the Partnership and their respective legal representatives,
successors, transferees and assigns.
XII.03 Additional Documents. Each Partner agrees to perform all further
acts and execute, swear to, acknowledge and deliver all further documents which
may be reasonable, necessary, appropriate or desirable to carry out the
provisions of this Agreement or the Act.
XII.04 Severability. If any provision of this Agreement shall be
declared illegal, invalid, or unenforceable in any jurisdiction, then such
provision shall be deemed to be severable from this Agreement (to the extent
permitted by law) and in any event such illegality, invalidity or
unenforceability shall not affect the remainder hereof.
XII.05 Entire Agreement. This Agreement and exhibits attached hereto
constitute the entire Agreement of the Partners and supersede all prior written
agreements and prior and contemporaneous oral agreements, understandings and
negotiations with respect to the subject matter hereof.
XII.06 Rules of Construction. When the context in which words are used
in the Agreement indicates that such is the intent, words in the singular number
shall include the plural and the masculine gender shall include the neuter or
female gender as the context may require. Unless the context otherwise
indicates, references to particular Articles and Sections are references to
Articles and Sections of this Agreement.
XII.07 Headings. The Article headings or sections in this Agreement are
for convenience only and shall not be used in construing the scope of this
Agreement or any particular Article.
XII.08 Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original copy and all of
which together shall constitute one and the same instrument binding on all
parties hereto, notwithstanding that all parties shall not have signed the same
counterpart.
XII.09 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the Commonwealth of Virginia.
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IN WITNESS WHEREOF, the parties hereto have hereunder affixed their
signatures to this Third Amended and Restated Agreement of Limited Partnership,
all as of the ____ day of September, 1998.
The Partnership and American Apartment Communities Operating
Partnership, L.P., AAC Management LLC and Schnitzer Investment Corp. (the "AAC
Limited Partners") agree that notwithstanding the proviso to the first sentence
of Section 8.05(a) hereof (i) the AAC Limited Partners shall be entitled to
exercise their Redemption Rights as provided in Section 5(c)(ii) and (iii) of
the Partnership Interest Purchase and Exchange Agreement, dated as of September
10, 1998, among the AAC Limited Partners, the Partnership and the General
Partner, among others, and (ii) the Redemption Rights of the AAC Limited
Partners shall be modified as set forth in Section 3.1(b) of the Investment
Agreement, dated as of September 10, 1998, among the General Partner, the
Partnership and the AAC Limited Partners, among others. The Partnership, the
General Partner and the AAC Limited Partners agree that the foregoing
modifications shall be deemed to be an amendment to this Agreement binding upon
each of them.
GENERAL PARTNER:
UNITED DOMINION REALTY TRUST, INC.
By:
Name:
Title:
LIMITED PARTNERS:
AMERICAN APARTMENT COMMUNITIES
OPERATING PARTNERSHIP, L.P.,
a Delaware limited partnership
By:
Its: General Partner
By:
Name:
Title:
[signatures continued on following page]
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AAC MANAGEMENT LLC, a Delaware
limited liability company
By:
Name:
Title:
SCHNITZER INVESTMENT CORP.,
an Oregon corporation
By:
Name:
Title:
By:
_____________, attorney-in-
fact for the other Limited
Partners listed on Exhibit A
to the Agreement
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EXHIBIT A
Agreed Value of
Partner Cash Non-Cash Partnership Percentage
and Address Contribution Contribution Units Interest
----------- ------------ --------------- ----- --------
General Partner:
%
%
United Dominion Realty Trust, Inc.
00 Xxxxx Xxxxx Xxxxxx, Xxxxx 000
Xxxxxxxx, Xxxxxxxx 00000
Limited Partners:
UDRT of North Carolina, L.L.C.
c/o United Dominion Realty Trust, Inc.
00 Xxxxx Xxxxx Xxxxxx, Xxxxx 000
Xxxxxxxx, Xxxxxxxx 00000
[UPDATE TO COME
FROM UDRT]
EXHIBIT B
NOTICE OF EXERCISE OF REDEMPTION RIGHT
In accordance with Section 8.05 of the Third Amended and Restated
Agreement of Limited Partnership (the "Agreement") of United Dominion Realty,
L.P., the undersigned hereby irrevocably (i) presents for redemption ________
Partnership Units in United Dominion Realty, L.P. in accordance with the terms
of the Agreement and the Redemption Right referred to in Section 8.05 thereof,
(ii) surrenders such Partnership Units and all right, title and interest
therein, and (iii) directs that the Cash Amount or REIT Shares Amount (as
defined in the Agreement) as determined by the General Partner deliverable upon
exercise of the Redemption Right be delivered to the address specified below,
and if REIT Shares (as defined in the Agreement) are to be delivered, such REIT
Shares be registered or placed in the name(s) and at the address(es) specified
below.
Dated:________ __, _____
Name of Limited Partner:
------------------------------
(Signature of Limited Partner)
------------------------------
(Mailing Address)
------------------------------
(City) (State) (Zip Code)
Signature Guaranteed by:
------------------------------
If REIT Shares are to be issued, issue to:
Please insert social security or identifying number:
Name:
