-----------------------------------------
SECOND AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP
OF
CARRAMERICA REALTY, L.P.
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TABLE OF CONTENTS
ARTICLE I DEFINED TERMS....................................................1
ARTICLE II ORGANIZATIONAL MATTERS..........................................12
Section 2.1 Organization...........................................12
Section 2.2 Name...................................................13
Section 2.3 Registered Office and Agent; Principal Office..........13
Section 2.4 Term...................................................13
ARTICLE III PURPOSE........................................................13
Section 3.1 Purpose and Business...................................13
Section 3.2 Powers.................................................14
ARTICLE IV CAPITAL CONTRIBUTIONS; ISSUANCES OF PARTNERSHIP INTERESTS.......14
Section 4.1 Capital Contributions of the Partners..................14
Section 4.2 Issuances of Additional Partnership Interests..........15
Section 4.3 No Preemptive Rights...................................16
ARTICLE V DISTRIBUTIONS....................................................16
Section 5.1 Requirement and Characterization of Distributions......16
Section 5.2 Amounts Withheld.......................................17
Section 5.3 Distributions Upon Liquidation.........................17
ARTICLE VI ALLOCATIONS.....................................................17
Section 6.1 Allocations For Capital Account Purposes...............17
ARTICLE VII MANAGEMENT AND OPERATIONS OF BUSINESS..........................18
Section 7.1 Management.............................................18
Section 7.2 Certificate of Limited Partnership.....................22
Section 7.3 Title to Partnership Assets............................22
Section 7.4 Reimbursement of the General Partner...................23
Section 7.5 Outside Activities of the General Partner and its
Affiliates...........................................23
Section 7.6 Transactions with Affiliates...........................24
Section 7.7 Indemnification........................................25
Section 7.8 Liability of the General Partner.......................27
Section 7.9 Other Matters Concerning the General Partner...........28
Section 7.10 Reliance by Third Parties.............................29
ARTICLE VIII RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS....................29
Section 8.1 Limitation of Liability................................29
Section 8.2 Management of Business.................................30
Section 8.3 Outside Activities of Limited Partners.................30
Section 8.4 Return of Capital......................................30
Section 8.5 Rights of Limited Partners Relating to the Partnership.31
Section 8.6 Redemption Right.......................................32
ARTICLE IX BOOKS, RECORDS, ACCOUNTING AND REPORTS..........................34
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Section 9.1 Records and Accounting.................................34
Section 9.2 Fiscal Year............................................34
Section 9.3 Reports................................................34
ARTICLE X TAX MATTERS......................................................35
Section 10.1 Preparation of Tax Returns............................35
Section 10.2 Tax Elections.........................................35
Section 10.3 Tax Matters Partner...................................35
Section 10.4 Organizational Expenses...............................37
Section 10.5 Withholding...........................................37
ARTICLE XI TRANSFERS AND WITHDRAWALS.......................................38
Section 11.1 Transfer..............................................38
Section 11.2 General Partner's Rights to Transfer..................38
Section 11.3 Limited Partners' Rights to Transfer..................39
Section 11.4 Substituted Limited Partners..........................40
Section 11.5 Assignees.............................................41
Section 11.6 General Provisions....................................41
ARTICLE XII ADMISSION OF PARTNERS..........................................42
Section 12.1 Admission of Successor General Partner................42
Section 12.2 Admission of Additional Limited Partners..............42
Section 12.3 Amendment of Agreement and Certificate of
Limited Partnership.................................43
ARTICLE XIII DISSOLUTION AND LIQUIDATION...................................43
Section 13.1 Dissolution...........................................43
Section 13.2 Winding Up............................................44
Section 13.3 Compliance with Timing Requirements of Regulations....45
Section 13.4 Deemed Distribution and Recontribution................46
Section 13.5 Rights of Limited Partners............................46
Section 13.6 Notice of Dissolution.................................46
Section 13.7 Cancellation of Certificate of Limited Partnership....47
Section 13.8 Reasonable Time for Winding Up........................47
Section 13.9 Waiver of Partition...................................47
Section 13.10 Liability of Liquidator..............................47
ARTICLE XIV AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS...................48
Section 14.1 Amendments............................................48
Section 14.2 Meetings of the Partners..............................49
ARTICLE XV GENERAL PROVISIONS..............................................50
Section 15.1 Addresses and Notice..................................50
Section 15.2 Titles and Captions...................................50
Section 15.3 Pronouns and Plurals..................................51
Section 15.4 Further Action........................................51
Section 15.5 Binding Effect........................................51
Section 15.6 Creditors.............................................51
Section 15.7 Waiver................................................51
Section 15.8 Counterparts..........................................51
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Section 15.9 Applicable Law........................................52
Section 15.10 Invalidity of Provisions.............................52
Section 15.11 Power of Attorney....................................52
Section 15.12 Entire Agreement.....................................53
Section 15.13 No Rights as Stockholders............................54
Section 15.14 Rights and Duties of CarrAmerica and Affiliates
of the General Partner.............................54
EXHIBIT A
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PARTNERS AND PARTNERSHIP INTERESTS
EXHIBIT B
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CAPITAL ACCOUNT MAINTENANCE
EXHIBIT C
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SPECIAL ALLOCATION RULES
EXHIBIT D
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NOTICE OF REDEMPTION
EXHIBIT E
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CLASS C UNITS
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SECOND AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP
OF
CARRAMERICA REALTY, L.P.
THIS SECOND AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP, dated
as of May 9, 1997, is entered into by and among CarrAmerica Realty GP Holdings,
Inc., a Delaware corporation and wholly-owned subsidiary of Xxxx America Realty
Corporation, a Maryland corporation ("CarrAmerica"), as the General Partner, and
Xxxx America Realty LP Holdings, Inc., a Delaware corporation and wholly-owned
subsidiary of CarrAmerica, and the other Persons whose names are set forth on
Exhibit A as attached hereto who have been admitted as limited partners in
accordance with the provisions of the Agreement of Limited Partnership, dated as
of March 5, 1996, as amended prior to the date hereof, as the Limited Partners,
together with any other Persons who become Partners in the Partnership as
provided herein. CarrAmerica is a party to this Agreement solely for purpose of
Sections 7.4, 7.5, 7.7, 7.8, 8.6, 11.2, 15.13 and 15.14.
NOW, THEREFORE, in consideration of the mutual covenants set forth herein,
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto hereby agree to continue the
Partnership as a limited partnership under the Delaware Revised Uniform Limited
Partnership Act, as amended from time to time, as follows:
ARTICLE I
DEFINED TERMS
The following definitions shall be for all purposes, unless
otherwise clearly indicated to the contrary, applied to the terms used in this
Agreement.
"Act" means the Delaware Revised Uniform Limited Partnership Act, as
it may be amended from time to time, and any successor to such statute.
"Additional Limited Partner" means a Person admitted to the
Partnership as a Limited Partner pursuant to Section 4.2 hereof and who is shown
as such on the books and records of the Partnership.
"Adjusted Capital Account" means the Capital Account maintained for
each Partner as of the end of each Partnership Year (i) increased by any amounts
which such Partner is obligated to restore pursuant to any provision of this
Agreement or is deemed to be obligated to restore pursuant to the penultimate
sentences of Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5) and (ii)
decreased by the items described in Regulations Sections
1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5), and 1.704-1(b)(2)(ii)(d)(6).
The foregoing definition of
Adjusted Capital Account is intended to comply with the provisions of
Regulations Section 1.704-1(b)(2)(ii)(d) and shall be interpreted consistently
therewith.
"Adjusted Capital Account Deficit" means, with respect to any
Partner, the deficit balance, if any, in such Partner's Adjusted Capital Account
as of the end of the relevant Partnership Year
"Adjusted Property" means any property the Carrying Value of which
has been adjusted pursuant to Exhibit B hereof. Once an Adjusted Property is
deemed distributed by, and recontributed to, the Partnership for federal income
tax purposes upon a termination thereof pursuant to Section 708 of the Code,
such property shall thereafter constitute a Contributed Property until the
Carrying Value of such property is further adjusted pursuant to Exhibit B
hereof.
"Affiliate" means, with respect to any Person, (i) any Person
directly or indirectly controlling, controlled by or under common control with
such Person, (ii) any Person owning or controlling ten percent (10%) or more of
the outstanding voting interests of such Person, (iii) any Person of which such
Person owns or controls ten percent (10%) or more of the voting interests, or
(iv) any officer, director, general partner or trustee of such Person or any
Person referred to in clauses (i), (ii), and (iii) above. For purposes of this
definition, "control," when used with respect to any Person, means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise,
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Agreed Value" means (i) in the case of any Contributed Property as
of the time of its contribution to the Partnership, the 704(c) Value of such
property, reduced by any liabilities either assumed by the Partnership upon such
contribution or to which such property is subject when contributed, and (ii) in
the case of any property distributed to a Partner by the Partnership, the
Partnership's Carrying Value of such property at the time such property is
distributed, reduced by any indebtedness either assumed by such Partner upon
such distribution or to which such property is subject at the time of
distribution as determined under Section 752 of the Code and the regulations
thereunder.
"Agreement" means this Second Amended and Restated Agreement of
Limited Partnership, as it may be amended, supplemented or restated from time to
time.
"Articles of Incorporation" means the Articles of Incorporation of
CarrAmerica filed in the State of Maryland on July 9, 1992, as amended or
restated from time to time.
"Assignee" means a Person to whom one or more Partnership Units have
been transferred in a manner permitted under this Agreement, but who has
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not become a Substituted Limited Partner, and who has the rights set forth in
Section 11.5.
"Available Cash" means, with respect to any period for which such
calculation is being made:
(a) all cash revenues and funds received by the Partnership from
whatever source (excluding the proceeds of any Capital Contribution) plus the
amount of any reduction (including, without limitation, a reduction resulting
because the General Partner determines such amounts are no longer necessary) in
reserves of the Partnership, which reserves are referred to in clause (b)(iv)
below;
(b) less the sum of the following (except to the extent made
with the proceeds of any Capital Contribution):
(i) all interests, principal and other debt payments made
during such period by the Partnership,
(ii) all cash expenditures (including capital
expenditures) made by the Partnership during such period,
(iii) investments in any entity (including loans made thereto)
to the extent that such investments are permitted under this
Agreement and are not otherwise described in clauses (b)(i) or (ii),
and
(iv) the amount of any increase in reserves established during
such period which the General Partner determines is necessary or
appropriate in its sole and absolute discretion.
Notwithstanding the foregoing, Available Cash shall not include any
cash received or reductions in reserves, or take into account any disbursements
made or reserves established, after commencement of the dissolution and
liquidation of the Partnership.
"Book-Tax Disparities" means, with respect to any item of
Contributed Property or Adjusted Property, as of the date of any determination,
the difference between the Carrying Value of such Contributed Property or
Adjusted Property and the adjusted basis thereof for federal income tax purposes
as of such date. A Partner's share of the Partnership's Book-Tax Disparities in
all of its Contributed Property and Adjusted Property will be reflected by the
difference between such Partner's Capital Account balance as maintained pursuant
to Exhibit B and the hypothetical balance of such Partner's Capital Account
computed as if it had been maintained strictly in accordance with federal income
tax accounting principles.
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"Business Day" means any day except a Saturday, Sunday or other day
on which commercial banks in New York, New York are authorized or required by
law to close.
"Capital Account" means the Capital Account maintained for a Partner
pursuant to Exhibit B hereof.
"Capital Contribution" means, with respect to any Partner, any cash,
cash equivalents or the Agreed Value of Contributed Property which such Partner
contributes or is deemed to contribute to the Partnership pursuant to Section
4.1 or 4.2 hereof.
"CarrAmerica" means CarrAmerica Realty Corporation, a Maryland
corporation, or its successor.
"Carrying Value" means (i) with respect to a Contributed Property or
Adjusted Property, the 704(c) Value of such property reduced (but not below
zero) by all Depreciation with respect to such Contributed Property or Adjusted
Property, as the case may be, charged to the Partners' Capital Accounts and (ii)
with respect to any other Partnership property, the adjusted basis of such
property for federal income tax purposes, all as of the time of determination.
The Carrying Value of any property shall be adjusted from time to time in
accordance with Exhibit B hereof, and to reflect changes, additions or other
adjustments to the Carrying Value for dispositions and acquisitions of
Partnership properties, as deemed appropriate by the General Partner.
"Cash Amount" means an amount of cash per Partnership Unit equal to
the Value on the Valuation Date of the REIT Shares Amount.
"Certificate" means the Certificate of Limited Partnership relating
to the Partnership filed in the office of the Delaware Secretary of State, as
amended from time to time in accordance with the terms hereof and the Act.
"Class A Unit" means a Partnership Unit that is specifically
designated by the General Partner as being a Class A Unit.
"Class B Unit" means a Partnership Unit that is specifically
designated by the General Partner as being a Class B Unit.
"Class C Unit" means a Partnership Unit with such designations,
preferences, rights, powers and duties as are described in Exhibit E hereof and
that is specifically designated by the General Partner as being a Class C Unit.
"Code" means the Internal Revenue Code of 1986, as amended and in
effect from time to time, as interpreted by the applicable regulations
thereunder.
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Any reference herein to a specific section or sections of the Code shall be
deemed to include a reference to any corresponding provision of future law.
"Consent" means the consent or approval of a proposed action by a
Partner given in accordance with Section 14.2 hereof.
"Contributed Property" means each property or other asset
contributed to the Partnership, in such form as may be permitted by the Act, but
excluding cash contributed or deemed contributed to the Partnership (or deemed
contributed to the Partnership on termination and reconstitution thereof
pursuant to Section 708 of the Code). Once the Carrying Value of a Contributed
Property is adjusted pursuant to Exhibit B hereof, such property shall no longer
constitute a Contributed Property for purposes of Exhibit B hereof, but shall be
deemed an Adjusted Property for such purposes.
"Conversion Factor" means 1.0, provided that in the event that
CarrAmerica (i) declares or pays a dividend on its outstanding REIT Shares in
REIT Shares or makes a distribution to all holders of its outstanding REIT
Shares in REIT Shares, without receiving consideration for such additional REIT
Shares, (ii) subdivides its outstanding REIT Shares, without a corresponding
action taken with respect to the Partnership Units, or (iii) combines its
outstanding REIT Shares into a smaller number of REIT Shares, the Conversion
Factor shall be adjusted by multiplying the Conversion Factor by a fraction, the
numerator of which shall be the number of REIT Shares issued and outstanding on
the record date for such dividend, distribution, subdivision or combination
(assuming for such purposes that such dividend, distribution, subdivision or
combination has occurred as of such time), and the denominator of which shall be
the actual number of REIT Shares (determined without the above assumption)
issued and outstanding on the record date for such dividend, distribution,
subdivision or combination. Any adjustment to the Conversion Factor shall become
effective immediately after the effective date of such event retroactive to the
record date, if any, for such event; it being intended that (i) adjustments to
the Conversion Factor are to be made in order to avoid unintended dilution or
anti-dilution as a result of transactions of the type described above, and (ii)
if a Specified Redemption Date shall fall between the record date and the
effective date of any event of the type described above, that the Conversion
Factor applicable to such redemption shall be adjusted to take into account such
event.
"Depreciation" means, for each fiscal year, an amount equal to the
federal income tax depreciation, amortization, or other cost recovery deduction
allowable with respect to an asset for such year, except that if the Carrying
Value of an asset differs from its adjusted basis for federal income tax
purposes at the beginning of such year or other period, Depreciation shall be an
amount which bears the same ratio to such beginning Carrying Value as the
federal income tax depreciation, amortization, or other cost recovery deduction
for such year bears to
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such beginning adjusted tax basis; provided, however, that if the federal income
tax depreciation, amortization, or other cost recovery deduction for such year
is zero, Depreciation shall be determined with reference to such beginning
Carrying Value using any reasonable method selected by the General Partner.
"Distribution Period" means any calendar quarter or shorter period
with respect to which a distribution of Available Cash is to be made to the
Partners by the Partnership.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"General Partner" means GP Holdings or its successors as general
partner of the Partnership.
"General Partner Interest" or "General Partnership Interest"
means a Partnership Interest held by the General Partner that is a general
partner interest. A General Partner Interest or General Partnership Interest
may be expressed as a number of Partnership Units.
"GP Holdings" means CarrAmerica Realty GP Holdings, Inc., a Delaware
corporation, or its successor.
"IRS" means the Internal Revenue Service, which administers the
internal revenue laws of the United States.
"Immediate Family" means, with respect to any natural Person, such
natural Person's spouse, parents, descendants, nephews, nieces, brothers, and
sisters.
"Incapacity" or "Incapacitated" means, (i) as to any individual
Partner, death, total physical disability or entry by a court of competent
jurisdiction adjudicating such Partner incompetent to manage his or her Person
or estate, (ii) as to any corporation which is a Partner, the filing of a
certificate of dissolution, or its equivalent, for the corporation or the
revocation of its charter, (iii) as to any partnership which is a Partner, the
dissolution and commencement of winding up of the partnership, (iv) as to any
estate which is a Partner, the distribution by the fiduciary of the estate's
entire interest in the Partnership, (v) as to any trustee of a trust which is a
Partner, the termination of the trust (but not the substitution of a new
trustee), or (vi) as to any Partner, the bankruptcy of such Partner. For
purposes of this definition, bankruptcy of a Partner shall be deemed to have
occurred when (a) the Partner commences a voluntary proceeding seeking
liquidation, reorganization or other relief under any bankruptcy, insolvency or
other similar law now or hereafter in effect, (b) the Partner is adjudged as
bankrupt or insolvent, or a final and nonappealable order for relief under any
bankruptcy, insolvency or similar law now or hereafter in effect has been
entered against the
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Partner, (c) the Partner executes and delivers a general assignment for the
benefit of the Partner's creditors, (d) the Partner files an answer or other
pleading admitting or failing to contest the material allegations of a petition
filed against the Partner in any proceeding of the nature described in clause
(b) above, (e) the Partner seeks, consents to or acquiesces in the appointment
of a trustee, receiver or liquidator for the Partner or for all or any
substantial part of the Partner's properties, (f) any proceeding seeking
liquidation, reorganization or other relief under any bankruptcy, insolvency or
other similar law now or hereafter in effect has not been dismissed within one
hundred twenty (120) days after the commencement thereof, (g) the appointment
without the Partner's consent or acquiescence of a trustee, receiver of
liquidator has not been vacated or stayed within ninety (90) days of such
appointment, or (h) an appointment referred to in clause (g) is not vacated
within ninety (90) days after the expiration of any such stay.
"Indemnitee" means (i) any Person made a party to a proceeding by
reason of his status as (A) the General Partner or an Affiliate of the General
Partner (including, without limitation, CarrAmerica and LP Holdings), (B) a
Limited Partner or (C) a director or officer of the Partnership, the General
Partner or an Affiliate of 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 (whether before or after the event
giving rise to potential liability), in its sole and absolute discretion.
"Limited Partner" means LP Holdings and any other Person named as a
Limited Partner in Exhibit A attached hereto, as such Exhibit may be amended
from time to time, or any Substituted Limited Partner or Additional Limited
Partner, in such Person's capacity as a Limited Partner in the Partnership.
"Limited Partner Interest" or "Limited Partnership Interest" means a
Partnership Interest of a Limited Partner in the Partnership representing a
fractional part of the Partnership Interests of all Limited Partners and
includes any and all benefits to which the holder of such a Partnership Interest
may be entitled as provided in this Agreement, together with all obligations of
such Person to comply with the terms and provisions of this Agreement. A Limited
Partner Interest or Limited Partnership Interest may be expressed as a number of
Partnership Units.
"Liquidator" has the meaning set forth in Section 13.2.
"LP Holdings" means CarrAmerica Realty LP Holdings, Inc., a Delaware
corporation, or its successor.
"Net Income" means, for any taxable period, the excess, if any, of
the Partnership's items of income and gain for such taxable period over the
Partnership's items of loss and deduction for such taxable period. The items
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included in the calculation of Net Income shall be determined in accordance with
Exhibit B. Once an item of income, gain, loss or deduction that has been
included in the initial computation of Net Income is subjected to the special
allocation rules in Exhibit C, Net Income or the resulting Net Loss, whichever
the case may be, shall be recomputed without regard to such item.
"Net Loss" means, for any taxable period, the excess, if any, of the
Partnership's items of loss and deduction for such taxable period over the
Partnership's items of income and gain for such taxable period. The items
included in the calculation of Net Loss shall be determined in accordance with
Exhibit B. Once an item of income, gain, loss or deduction that has been
included in the initial computation of Net Loss is subjected to the special
allocation rules in Exhibit C, Net Loss or the resulting Net Income, whichever
the case may be, shall be recomputed without regard to such item.
"New Securities" has the meaning set forth in Section 7.5.B.
"Nonrecourse Built-in Gain" means, with respect to any Contributed
Properties or Adjusted Properties that are subject to a mortgage or negative
pledge securing a Nonrecourse Liability, the amount of any taxable gain that
would be allocated to the Partners pursuant to Section 2.B of Exhibit C if such
properties were disposed of in a taxable transaction in full satisfaction of
such liabilities and for no other consideration.
"Nonrecourse Deductions" has the meaning set forth in Regulations
Section 1.704-2(b)(1), and the amount of Nonrecourse Deductions for a
Partnership Year shall be determined in accordance with the rules of Regulations
Section 1.704-2(c).
"Nonrecourse Liability" has the meaning set forth in Regulations
Section 1.752-1(a)(2).
"Notice of Redemption" means the Notice of Redemption substantially
in the form of Exhibit D to this Agreement.
"Partner" means a General Partner or a Limited Partner, and
"Partners" means the General Partner and the Limited Partners.
"Partner Minimum Gain" means an amount, with respect to each Partner
Nonrecourse Debt, equal to the Partnership Minimum Gain that would result if
such Partner Nonrecourse Debt were treated as a Nonrecourse Liability,
determined in accordance with Regulations Section 1.704-2(i)(3).
"Partner Nonrecourse Debt" has the meaning set forth in
Regulations Section 1.704-2(b)(4).
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"Partner Nonrecourse Deductions" has the meaning set forth in
Regulations Section 1.704-2(i)(2), and the Amount of Partner Nonrecourse
Deductions with respect to a Partner Nonrecourse Debt for a Partnership Year
shall be determined in accordance with the rules of Regulations Section
1.704-2(i)(2).
"Partnership" means the limited partnership formed under the Act and
continued pursuant to this Agreement, and any successor thereto.
"Partnership Interest" means an ownership interest in the
Partnership representing a Capital Contribution by either a Limited Partner or
the General Partner and includes any and all benefits to which the holder of
such a Partnership Interest may be entitled as provided in this Agreement,
together with all obligations of such Person to comply with the terms and
provisions of this Agreement. A Partnership Interest may be expressed as a
number of Partnership Units.
"Partnership Minimum Gain" has the meaning set forth in Regulations
Section 1.704-2(b)(2), and the amount of Partnership Minimum Gain, as well as
any net increase or decrease in Partnership Minimum Gain, for a Partnership Year
shall be determined in accordance with the rules of Regulations Section
1.704-2(d).
"Partnership Record Date" means the record date established by the
General Partner for the distribution of Available Cash pursuant to Section 5.1
hereof, which record date shall be the same as the record date established by
the General Partner for a distribution to its shareholders of some or all of its
portion of such distribution.
"Partnership Unit" means a fractional, undivided share of the
Partnership Interests of all Partners issued pursuant to Sections 4.1 and 4.2,
and includes Class A Units, Class B Units and any other classes or series of
Partnership Units established after the date hereof. The number of Partnership
Units outstanding and the Percentage Interests in the Partnership represented by
such Partnership Units are set forth in Exhibit A hereto, as such Exhibit may be
amended from time to time. The ownership of Partnership Units may be evidenced
by a certificate in a form approved by the General Partner.
"Partnership Year" means the fiscal year of the Partnership, which
shall be the calendar year.
"Percentage Interest" means, as to a Partner, its interest in the
Partnership as determined by dividing the Partnership Units owned by such
Partner by the total number of Partnership Units then outstanding and as
specified in Exhibit A attached hereto, as such Exhibit may be amended from time
to time.
"Person" means a natural person, partnership (whether general or
limited), trust, estate, association, corporation, limited liability company,
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unincorporated organization, custodian, nominee or any other individual entity
in its own or any representative capacity.
"Recapture Income" means any gain recognized by the Partnership
(computed without regard to any adjustment required by Section 734 or 743 of the
Code) upon the disposition of any property or asset of the Partnership, which
gain is characterized as ordinary income because it represents the recapture of
deductions previously taken with respect to such property or asset.
"Redeeming Partner" has the meaning set forth in Section 8.6.
"Redemption Amount" means either the Cash Amount or the REIT Shares
Amount, as determined by the General Partner in its sole and absolute
discretion. A Redeeming Partner shall have no right, without the General
Partner's consent, to receive the Redemption Amount in the form of REIT Shares
Amount.
"Redemption Right" has the meaning set forth in Section 8.6.
"Regulations" means the Income Tax Regulations promulgated under the
Code, as such regulations may be amended from time to time (including
corresponding provisions of succeeding regulations).
"REIT" means a real estate investment trust under Section 856 of the
Code.
"REIT Share" shall mean a share of common stock of or comparable
equity interest in CarrAmerica.
"REIT Shares Amount" shall mean a number of REIT Shares equal to the
product of one times the Conversion Factor; provided that, in the event the
CarrAmerica issues to all holders of REIT Shares rights, options, warrants or
convertible or exchangeable securities entitling such holders to subscribe for
or purchase REIT Shares, or any other securities or property (collectively, the
"rights") then the REIT Shares Amount shall also include such rights that a
holder of that number of REIT Shares would be entitled to receive.
"Residual Gain" or "Residual Loss" means any item of gain or loss,
as the case may be, of the Partnership recognized for federal income tax
purposes resulting from a sale, exchange or other disposition of Contributed
Property or Adjusted Property, to the extent such item of gain or loss is not
allocated pursuant to Section 2.B.1(a) or 2.B.2(a) of Exhibit C to eliminate
Book-Tax Disparities.
"Securities Act" means the Securities Act of 1933, as amended.
"704(c) Value" of any Contributed Property means the fair market
value of such property at the time of contribution as determined by the General
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Partner using such reasonable method of valuation as it may adopt; provided,
however, that the 704(c) Value of any property deemed contributed to the
Partnership for federal income tax purposes upon termination and reconstitution
thereof pursuant to Section 708 of the Code shall be determined in accordance
with Exhibit B hereof. Subject to Exhibit B hereof, the General Partner shall,
in its sole and absolute discretion, use such method as it deems reasonable and
appropriate to allocate the aggregate of the 704(c) Value of Contributed
Properties in a single or integrated transaction among each separate property on
a basis proportional to its fair market values.
"Specified Redemption Date" means the tenth Business Day after
receipt by the General Partner of a Notice of Redemption; provided that, no
Specified Redemption Date with respect to a Partnership Unit shall occur before
one (1) year from the date such Partnership Unit was originally issued.
"Subsidiary" means, with respect to any Person, any corporation or
other entity of which a majority of (i) the voting power of the voting equity
securities or (ii) the outstanding equity interests is owned, directly or
indirectly, by such Person.
"Substituted Limited Partner" means a Person who is admitted as a
Limited Partner to the Partnership pursuant to Section 11.4.
"Terminating Capital Transaction" means any sale or other
disposition of all or substantially all of the assets of the Partnership for
cash or a related series of transactions that, taken together, result in the
sale or other disposition of all or substantially all of the assets of the
Partnership for cash.
"Termination Transaction" has the meaning set forth in Section
8.6.E.
"Unrealized Gain" attributable to any item of Partnership property
means, as of any date of determination, the excess, if any, of (i) the fair
market value of such property (as determined under Exhibit B hereof) as of such
date, over (ii) the Carrying Value of such property (prior to any adjustment to
be made pursuant to Exhibit B hereof) as of such date.
"Unrealized Loss" attributable to any item of Partnership property
means, as of any date of determination, the excess, if any, of (i) the Carrying
Value of such property (prior to any adjustment to be made pursuant to Exhibit B
hereof) as of such date, over (ii) the fair market value of such property (as
determined under Exhibit B hereof) as of such date.
"Valuation Date" means the date of receipt by the General Partner of
a Notice of Redemption or, if such date is not a Business Day, the first
Business Day thereafter.
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"Value" means, with respect to a REIT Share, the average of the
daily market price for the ten (10) consecutive trading days immediately
preceding the Valuation Date. The market price for each such trading day shall
be: (i) if the REIT Shares are listed or admitted to trading on any securities
exchange or the NASDAQ-National Market System, the closing price, regular way,
on such day, or if no such sale takes place on such day, the average of the
closing bid and asked prices on such day, (ii) if the REIT Shares are not listed
or admitted to trading on any securities exchange or the NASDAQ-National Market
System, the last reported sale price on such day or, if no sale takes place on
such day, the average of the closing bid and asked prices on such day, as
reported by a reliable quotation source designated by the General Partner, or
(iii) if the REIT Shares are not listed or admitted to trading on any securities
exchange or the NASDAQ-National Market System and no such last reported sale
price or closing bid and asked prices are available, the average of the reported
high bid and low asked prices on such day, as reported by a reliable quotation
source designated by the General Partner, or if there shall be no bid and asked
prices on such day, the average of the high bid and low asked prices, as so
reported, on the most recent day (not more than ten (10) days prior to the date
in question) for which prices have been so reported; provided that, if there are
no bid and asked prices reported during the ten (10) days prior to the date in
question, the Value of the REIT Shares shall be determined by the General
Partner acting in good faith on the basis of such quotations and other
information as it considers, in its reasonable judgment, appropriate. In the
event the REIT Shares Amount includes rights that a holder of REIT Shares would
be entitled to receive, then the Value of such rights shall be determined by the
General Partner acting in good faith on the basis of such quotations and other
information as it considers, in its reasonable judgment, appropriate.
ARTICLE II
ORGANIZATIONAL MATTERS
Section 2.1 Organization
The Partnership is a limited partnership organized pursuant to the
provisions of the Act and upon the terms and conditions set forth in the
Agreement of Limited Partnership, dated as of March 5, 1996, as amended prior to
the date hereof. The Partners hereby continue the Partnership and amend and
restate such Agreement of Limited Partnership, as amended prior to the date
hereof, in its entirety. Except as expressly provided herein to the contrary,
the rights and obligations of the Partners and the administration and
termination of the Partnership shall be governed by the Act. The Partnership
Interest of each Partner shall be personal property for all purposes.
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Section 2.2 Name
The name of the Partnership is CarrAmerica Realty, L.P. The
Partnership's business may be conducted under any other name or names deemed
advisable by the General Partner, including the name of the General Partner or
any Affiliate thereof. The words "Limited Partnership," "L.P.," "Ltd." or
similar words or letters shall be included in the Partnership's name where
necessary for the purposes of complying with the laws of any jurisdiction that
so requires. The General Partner in its sole and absolute discretion may change
the name of the Partnership at any time and from time to time and shall notify
the Limited Partners of such change in the next regular communication to the
Limited Partners.
Section 2.3 Registered Office and Agent; Principal Office
The address of the registered office of the Partnership in the State
of Delaware is located at 0000 Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx, and the
registered agent for service of process on the Partnership in the State of
Delaware at such registered office is Corporation Trust Company. The principal
office of the Partnership is 0000 Xxxxxxxxxxxx Xxxxxx, X.X., Xxxxxxxxxx, X.X.
00000, or such other place as the General Partner may from time to time
designate by notice to the Limited Partners. The Partnership may maintain
offices at such other place or places within or outside the State of Delaware as
the General Partner deems advisable.
Section 2.4 Term
The term of the Partnership commenced on March 5, 1996 and shall
continue until December 31, 2095, unless it is dissolved sooner pursuant to the
provisions of Article XIII or as otherwise provided by law.
ARTICLE III
PURPOSE
Section 3.1 Purpose and Business
The purpose and nature of the business to be conducted by the
Partnership is (i) to conduct any business that may be lawfully conducted by a
limited partnership organized pursuant to the Act, provided, however, that such
business shall be limited to and conducted in such a manner as to permit
CarrAmerica at all times to be classified as a REIT, unless CarrAmerica ceases
to qualify as a REIT for any reason or reasons not related to the business
conducted by the Partnership, (ii) to enter into any partnership, joint venture
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
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incidental to the foregoing. In connection with the foregoing and without
limiting CarrAmerica's right, in its sole discretion, to cease qualifying as a
REIT, the Partners acknowledge that CarrAmerica's status as a REIT inures to the
benefit of all the Partners and not solely the General Partner or its
Affiliates.
Section 3.2 Powers
The Partnership is empowered to do any and all acts and things
necessary, appropriate, proper, advisable, incidental to or convenient for the
furtherance and accomplishment of the purposes and business described herein and
for the protection and benefit of the Partnership, including, without
limitation, full power and authority, directly or through its ownership interest
in other entities, to enter into, perform and carry out contracts of any kind,
borrow money and issue evidences of indebtedness whether or not secured by
mortgages, deed of trust, pledge or other lien, acquire and develop real
property and lease, sell, transfer and dispose of real property; provided,
however, that the Partnership shall not take, or refrain from taking, any action
which, in the judgment of the General Partner, in its sole and absolute
discretion, (i) could adversely affect the ability of CarrAmerica to continue to
qualify as a REIT, (ii) could subject CarrAmerica to any additional taxes under
Section 857 or Section 4981 of the Code or (iii) could violate any law or
regulation of any governmental body or agency having jurisdiction over
CarrAmerica or the General Partner or the securities of either of them, unless
such action (or inaction) shall have been specifically consented to by the
General Partner in writing.
ARTICLE IV
CAPITAL CONTRIBUTIONS; ISSUANCES
OF PARTNERSHIP INTERESTS
Section 4.1 Capital Contributions of the Partners
At the time of the execution of this Agreement, the Partners have
made the Capital Contributions set forth in Exhibit A hereto. To the extent the
Partnership acquires any property by the merger of any other Person into the
Partnership, Persons who receive Partnership Interests in exchange for their
interests in the Person merging into the Partnership shall become Partners and
shall be deemed to have made Capital Contributions as provided in the applicable
merger agreement and as set forth in Exhibit A hereto. The Partners own
Partnership Units in the amounts set forth in Exhibit A and have a Percentage
Interest in the Partnership as set forth in Exhibit A, which Percentage Interest
shall be adjusted in Exhibit A from time to time by the General Partner to the
extent necessary to reflect accurately redemptions, Capital Contributions, the
issuance of additional Partnership Units, or similar events having an effect on
a Partner's Percentage Interest. The number of Partnership Units held by the
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General Partner shall be equal to at least one percent (1%) of all outstanding
Partnership Units, shall be deemed to be the General Partner Partnership Units
and shall be the General Partnership Interest. Except as provided in Section
10.5, the Partners shall have no obligation to make any additional Capital
Contributions or loans to the Partnership. No Partner shall have any obligation
to restore any deficit that may exist in its Capital Account, either upon a
liquidation of the Partnership or otherwise.
Section 4.2 Issuances of Additional Partnership Interests
A. General. The General Partner is hereby authorized to cause
the Partnership from time to time to issue to Partners or other Persons other
than the General Partner (including, without limitation, in connection with
the contribution of property to the Partnership) additional Partnership Units
or other Partnership Interests 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 subject to Delaware law, including, without limitation, (i) the
allocations of items of Partnership income, gain, loss, deduction and credit
to each such class or series of Partnership Interests, (ii) the right of each
such class or series of Partnership Interests to share in Partnership
distributions, and (iii) the rights of each such class or series of
Partnership Interests upon dissolution and liquidation of the Partnership.
B. Issuances of Additional Partnership Interests to the General
Partner. The General Partner may make Capital Contributions to the Partnership
at such times and in such amounts as the General Partner, in its sole and
absolute discretion, may determine advisable, but under no circumstances shall
the General Partner be obligated to make any such Capital Contribution. In
exchange for each such Capital Contribution, the Partnership shall issue to the
General Partner, at the election of the General Partner in its sole and absolute
discretion, (i) that number of Partnership Units equal to (a) the amount of the
Capital Contribution divided by (b) the Value of a REIT Share or (ii) or other
Partnership Interests, 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 good faith, subject to Delaware law, including,
without limitation, (x) the allocations of items of Partnership income, gain,
loss, deduction and credit to each such class or series of Partnership
Interests, (y) the right of each such class or series of Partnership Interests
to share in Partnership distributions, and (z) the rights of each such class or
series of Partnership Interests upon dissolution and liquidation of the
Partnership.
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C. Class C Units. Under the authority granted to it by Section 4.2.A
hereof, the General Partner has established an additional class of Partnership
Units entitled "Class C Units." Class C Units have the designations,
preferences, rights, powers and duties as set forth in Exhibit E hereto.
D. Minimum Percentage Interest of General Partner. The provisions of
this Section 4.2 shall be applied so that in all events the Percentage Interest
of the General Partner shall be equal to at least 1.00%. In the event the
issuance of additional Partnership Units or Partnership Interests pursuant to
Section 4.2.A would (but for this Section 4.2.D) have the effect of reducing the
Percentage Interest of the General Partner to less than 1.00%, LP Holdings shall
transfer Partnership Units to the General Partner (and, as of the effective date
of such issuance, LP Holdings shall be deemed to hold Partnership Units for the
benefit of the General Partner) to the extent necessary to cause the General
Partner's Percentage Interest, after giving effect to such issuance, to be equal
to at least 1.00%.
Section 4.3 No Preemptive Rights
No Person shall have any preemptive, preferential or other similar
right with respect to (i) additional Capital Contributions or loans to the
Partnership or (ii) issuance or sale of any Partnership Units or other
Partnership Interests.
ARTICLE V
DISTRIBUTIONS
Section 5.1 Requirement and Characterization of Distributions
The General Partner shall distribute at least quarterly an amount equal to one
hundred percent (100%) of Available Cash generated by the Partnership during
such quarter or shorter period to the Partners who are Partners on the
Partnership Record Date with respect to such quarter or shorter period as
follows: (i) to the extent that there is sufficient Available Cash, each holder
of Class A Units shall be entitled to a distribution per Class A Unit equal to
any accrued but unpaid distributions payable with respect to such Class A Unit,
if any, together with any accrued interest thereon, for all prior periods with
respect to which such Class A Unit was issued and outstanding (as described in
clause (ii) below); (ii) after the payment of any accrued but unpaid
distributions, if any, for all prior periods in accordance with the foregoing
clause (i), to the extent that there is sufficient Available Cash, each holder
of Class A Units shall be entitled to a distribution per Class A Unit
(multiplied by the Conversion Factor) in an amount equal to the dividend per
REIT Share paid by the General Partner for such quarter multiplied by a
fraction, the numerator of which is the number of days in the quarter or
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shorter period to which such distribution relates that the Class A Unit was
issued and outstanding, and the denominator of which is the total number of days
in the quarter or shorter period to which such distribution relates; provided,
that to the extent that there is not sufficient Available Cash to pay the
distributions per Class A Unit (multiplied by the Conversion Factor) in
accordance with this clause (ii), such deficit shall cumulate, and shall accrue
interest at a rate of eight percent (8%) per annum, and no distribution (other
than to a Redeeming Partner as provided in Section 8.6.C) shall be made for any
subsequent distribution period pursuant to clauses (ii) and (iii) hereof, unless
all such accrued but unpaid distributions (including any accrued interest
thereon) shall have been paid to the holders of the Class A Units pursuant to
clause (i) above for all prior periods; and (iii) to the extent there is excess
Available Cash after the application of clauses (i) and (ii), such excess shall
be distributed to each holder of Class B Units, on a pro rata basis.
Notwithstanding anything to the contrary contained herein, in no event may a
Partner receive a distribution of Available Cash with respect to a Partnership
Unit for a quarter or shorter period if such Partner is entitled to receive a
distribution with respect to a REIT Share for which such Unit has been redeemed
or exchanged.
Section 5.2 Amounts Withheld
All amounts withheld pursuant to the Code or any provisions of any
state or local tax law and Section 10.5 hereof with respect to any allocation,
payment or distribution to the General Partner, the Limited Partners or
Assignees shall be treated as amounts distributed to the General Partner,
Limited Partners, or Assignees pursuant to Section 5.1 for all purposes under
this Agreement.
Section 5.3 Distributions Upon Liquidation
Proceeds from a Terminating Capital Transaction shall be distributed
to the Partners in accordance with Section 13.2.
ARTICLE VI
ALLOCATIONS
Section 6.1 Allocations For Capital Account Purposes
For purposes of maintaining the Capital Accounts and in determining
the rights of the Partners among themselves, the Partnership's items of income,
gain, loss and deduction (computed in accordance with Exhibit B hereof) shall be
allocated among the Partners in each taxable year (or portion thereof) as
provided herein below.
A. Net Income. After giving effect to the special allocations set
forth in Section 1 of Exhibit C, Net Income shall be allocated (i) first, to the
General
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Partner to the extent that Net Losses previously allocated to the General
Partner pursuant to the last sentence of Section 6.1.B exceed Net Income
previously allocated to the General Partner pursuant to this clause (i) of
Section 6.1.A, (ii) second, to the Class A Units in accordance with their
respective Percentage Interests to each Partner until each Class A Unit has been
allocated, on a cumulative basis pursuant to this clause (ii), Net Income equal
to the sum of the distributions paid with respect to such Class A Unit pursuant
to clauses (i) and (ii) of Section 5.1, if any, and (iii) thereafter, to the
Class B Units.
B. Net Losses. After giving effect to the special allocations set
forth in Section 1 of Exhibit C, Net Losses shall be allocated (i) first, to the
Class B Units to the extent that any prior allocations of Net Income to the
Class B Units pursuant to Section 6.1(a)(iii) exceed, on a cumulative basis,
distributions with respect to the Class B Units pursuant to clause (iii) of
Section 5.1, (ii) second, to the Class A Units to the extent that any prior
allocations of Net Income pursuant to Section 6.1(a)(ii) exceed, on a cumulative
basis, the distributions paid with respect to such Class A Units pursuant to
clauses (i) and (ii) of Section 5.1 and (iii) third, to the Partners in
accordance with their respective Percentage Interests, provided that Net Losses
shall not be allocated to any Limited Partner pursuant to this Section 6.1.B to
the extent that such allocation would cause such Limited Partner to have an
Adjusted Capital Account Deficit at the end of such taxable year (or increase
any existing Adjusted Capital Account Deficit). All Net Losses in excess of the
limitations set forth in this Section 6.1.B shall be allocated to the General
Partner.
C. Allocation of Nonrecourse Debt. For purposes of
Regulations Section 1.752-3(a), the Partners agree that Nonrecourse
Liabilities of the Partnership in excess of the sum of (i) the amount of
Partnership Minimum Gain and (ii) the total amount of Nonrecourse Built-in
Gain shall be allocated among the Partners in accordance with their
respective Percentage Interests.
D. Recapture Income. Any gain allocated to the Partners upon the
sale or other taxable disposition of any Partnership asset shall to the extent
possible, after taking into account other required allocations of gain pursuant
to Exhibit C, be characterized as Recapture Income in the same proportions and
to the same extent as such Partners have been allocated any deductions directly
or indirectly giving rise to the treatment of such gains as Recapture Income.
ARTICLE VII
MANAGEMENT AND OPERATIONS OF BUSINESS
Section 7.1 Management
X. Xxxxxx of General Partner. Except as otherwise expressly provided
in this Agreement, all management powers over the business and affairs of
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the Partnership are and shall be exclusively vested in the General Partner, and
no Limited Partner shall have any right to participate in or exercise control or
management power over the business and affairs of the Partnership. The General
Partner may not be removed by the Limited Partners with or without cause. In
addition to the powers now or hereafter granted a general partner of a limited
partnership under applicable law or which are granted to the General Partner
under any other provision of this Agreement, the General Partner shall have full
power and authority to do all things deemed necessary or desirable by it to
conduct the business of the Partnership, to exercise all powers set forth in
Section 3.2 hereof and to effectuate the purposes set forth in Section 3.1
hereof, including, without limitation:
(1) the making of any expenditures, the lending or borrowing of
money (including, without limitation, making prepayments on
loans and borrowing money to permit the Partnership to make
distributions to its Partners in such amounts as will permit
CarrAmerica (so long as CarrAmerica qualifies as a REIT) to
avoid the payment of any federal income tax (including, for
this purpose, any excise tax pursuant to Section 4981 of the
Code) and to make distributions to its shareholders sufficient
to permit CarrAmerica to maintain REIT status), the assumption
or guarantee of, or other contracting for, indebtedness and
other liabilities, the issuance of evidences of indebtedness
(including the securing of same by deed to secure debt,
mortgage, deed of trust or other lien or encumbrance on the
Partnership's assets) and the incurring of any obligations it
deems necessary for the conduct of the activities of the
Partnership;
(2) the making of tax, regulatory and other filings, or rendering
of periodic or other reports to governmental or other agencies
having jurisdiction over the business or assets of the
Partnership;
(3) the acquisition, disposition, mortgage, pledge, encumbrance,
hypothecation or exchange of any or all of the assets of the
Partnership (including the exercise or grant of any
conversion, option, privilege or subscription right or other
right available in connection with any assets at any time held
by the Partnership) or the merger or other combination of the
Partnership with or into another entity on such terms as the
General Partner deems proper, which powers shall include,
without limitation, the power to pledge any or all of the
assets of the Partnership to secure a loan or other financing
for the benefit of the General Partner or Xxxx Realty (the
proceeds of which are not required to be contributed or loaned
to the Partnership);
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(4) the use of the assets of the Partnership (including, without
limitation, cash on hand) for any purpose consistent with the
terms of this Agreement and on any terms it sees fit,
including, without limitation, the financing of the conduct of
the operations of the General Partner, CarrAmerica, the
Partnership or any of the Partnership's Subsidiaries, the
lending of funds to other Persons (including, without
limitation, the Partnership's Subsidiaries and CarrAmerica's
Subsidiaries) and the repayment of obligations of the
Partnership and its Subsidiaries and any other Person in which
it has an equity investment and the making of capital
contributions to its Subsidiaries;
(5) the management, operation, leasing, landscaping, repair,
alteration, demolition or improvement of any real property or
improvement owned by the Partnership or any Subsidiary of the
Partnership;
(6) the negotiation, execution, and performance of any contracts,
conveyances or other instruments that the General Partner
considers useful or necessary to the conduct of the
Partnership's operations or the implementation of the General
Partner's powers under this Agreement;
(7) the distribution of Partnership cash or other Partnership
assets in accordance with this Agreement;
(8) the holding, managing, investing and reinvesting of cash
and other assets of the Partnership;
(9) the collection and receipt of revenues and income of the
Partnership;
(10) the selection and dismissal of employees of the Partnership or
the General Partner (including, without limitation, employees
having titles such as "president," vice president,"
"secretary" and "treasurer") and agents, outside attorneys,
accountants, consultants and contractors of the Partnership or
the General Partner, and the determination of their
compensation and other terms of employment or hiring;
(11) the maintenance of such insurance for the benefit of the
Partnership and the Partners as it deems necessary or
appropriate;
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(12) the formation of, or acquisition of an interest in, and the
contribution of property to, any further limited or general
partnerships, joint ventures or other relationships that it
deems desirable (including, without limitation, the
acquisition of interests in, and the contributions of property
to its Subsidiaries and any other Person in which it has an
equity investment from time to time);
(13) the control of any matters affecting the rights and
obligations of the Partnership, including the conduct of
litigation and the incurring of legal expense and the
settlement of claims and litigation, and the indemnification
of any Person against liabilities and contingencies to the
extent permitted by law;
(14) the undertaking of any action in connection with the
Partnership's direct or indirect investment in its
Subsidiaries or any other Person (including, without
limitation, the contribution or loan of funds by the
Partnership to such Persons); and
(15) the determination of the fair market value of any Partnership
property distributed in kind using such reasonable method of
valuation as it may adopt.
B. No Approval by Limited Partners. Each of the Limited Partners
agrees that the General Partner is authorized to execute, deliver and perform
the above-mentioned agreements and transactions on behalf of the Partnership
without any further act, approval or vote of the Partners, notwithstanding any
other provision of this Agreement, the Act or any applicable law, rule or
regulation to the fullest extent permitted under the Act or other applicable
law. The execution, delivery or performance by the General Partner or the
Partnership of any agreement authorized or permitted under this Agreement shall
not constitute a breach by the General Partner of any duty that the General
Partner may owe the Partnership or the Limited Partners or any other Persons
under this Agreement or of any duty stated or implied by law or equity.
C. Insurance. At all times from and after the date hereof,
the General Partner may cause the Partnership to obtain and maintain (i)
casualty, liability and other insurance on the properties of the Partnership
and (ii) liability insurance for the Indemnitees hereunder.
D. Working Capital Reserves. At all times from and after the date
hereof, the General Partner may cause the Partnership to establish and maintain
working capital reserves in such amounts as the General Partner, in its sole and
absolute discretion, deems appropriate and reasonable from time to time.
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E. No Obligations to Consider Tax Consequences of Limited Partners.
In exercising its authority under this Agreement, the General Partner may, but
shall be under no obligation to, take into account the tax consequences to any
Partner of any action taken by it. The General Partner and the Partnership shall
not have liability to a Limited Partner under any circumstances as a result of
an income tax liability incurred by such Limited Partner as a result of an
action (or inaction) by the General Partner pursuant to its authority under this
Agreement.
Section 7.2 Certificate of Limited Partnership
The Certificate has been previously filed with the Secretary of
State of Delaware. To the extent that such action is determined by the General
Partner to be reasonable and necessary or appropriate, the General Partner shall
file amendments to and restatements of the Certificate and do all the things to
maintain the Partnership as a limited partnership (or a partnership in which the
limited partners have limited liability) under the laws of the State of Delaware
and each other state, the District of Columbia or other jurisdiction in which
the Partnership may elect to do business or own property. Subject to the terms
of Section 8.5.A(4) hereof, the General Partner shall not be required, before or
after filing, to deliver or mail a copy of the Certificate or any amendment
thereto to any Limited Partner. The General Partner shall use all reasonable
efforts to cause to be filed such other certificates or documents as may be
reasonable and necessary or appropriate for the formation, continuation,
qualification and operation of a limited partnership (or a partnership in which
the limited partners have limited liability) in the State of Delaware and any
other state, the District of Columbia or other jurisdiction, in which the
Partnership may elect to do business or own property.
Section 7.3 Title to Partnership Assets
Title to Partnership assets, whether real, personal or mixed and
whether tangible or intangible, shall be deemed to be owned by the Partnership
as an entity, and no Partner, individually or collectively, shall have any
ownership interest in such Partnership assets or any portion thereof. Title to
any or all of the Partnership assets may be held in the name of the Partnership,
the General Partner or one or more nominees, as the General Partner may
determine, including Affiliates of the General Partner. The General Partner
hereby declares and warrants that any Partnership assets for which legal title
is held in the name of the General Partner or any nominee or Affiliate of the
General Partner shall be held by the General Partner for the use and benefit of
the Partnership in accordance with the provisions of this Agreement; provided,
however, that the General Partner shall use its best efforts to cause beneficial
and record title to such assets to be vested in the Partnership as soon as
reasonably practicable. All Partnership assets shall be
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recorded as the property of the Partnership in its books and records,
irrespective of the name in which legal title to such Partnership assets is
held.
Section 7.4 Reimbursement of the General Partner
A. No Compensation. Except as provided in this Section 7.4
and elsewhere in this Agreement (including the provisions of Articles V and
VI regarding distributions, payments, and allocations to which it may be
entitled), the General Partner shall not be compensated for its services as
general partner of the Partnership.
B. Responsibility for Partnership Expenses. The Partnership shall be
responsible for and shall pay all expenses relating to the Partnership's
organization, the ownership of its assets and its operations. The General
Partner shall be reimbursed on a monthly basis, or such other basis as the
General Partner may determine in its sole and absolute discretion, for all
expenses it incurs relating to the operation of, or for the benefit of, the
Partnership. The General Partner shall determine in good faith the amount of
expenses incurred by it related to the operation of, or for the benefit of, the
Partnership. In the event that certain expenses are incurred for the benefit of
the Partnership and other entities (including the General Partner), such
expenses will be allocated to the Partnership and such other entities in such a
manner as the General Partner in its sole and absolute discretion deems fair and
reasonable. Such reimbursements shall be in addition to any reimbursement to the
General Partner pursuant to Section 10.3(c) or as a result of indemnification
pursuant to Section 7.7 hereof. All payments and reimbursements hereunder shall
be characterized for federal income tax purposes as expenses of the Partnership
incurred on its behalf, and not as expenses of the General Partner.
C. Partnership Interest Issuance Expenses. The General
Partner also shall be reimbursed for all expenses it incurs relating to any
issuance of additional Partnership Interests pursuant to Section 4.2 hereof.
Section 7.5 Outside Activities of the General Partner and its
Affiliates
A. General. Nothing contained in this Agreement shall prevent or
prohibit the General Partner or any officer, director, employee, agent, trustee,
Affiliate or shareholder of the General Partner (including, without limitation,
CarrAmerica and LP Holdings) having business interests and engaging in business
activities in addition to those relating to the Partnership (including, without
limitation, owning and operating real estate and incurring indebtedness in its
own name, whether or not the proceeds of such indebtedness are used for the
benefit of
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the Partnership), including, without limitation, engaging in other business
interests and activities in direct or indirect competition with the Partnership.
Neither the Partnership nor any Partners shall have any right by virtue of this
Agreement or the partnership relationship established hereby in or to such other
ventures or activities or to the income or proceeds derived therefrom, and the
pursuit of such ventures, even if competitive with the business of the
Partnership (including, without limitation, causing tenants to transfer from one
of the Partnership's properties to other properties in which the General Partner
has an interest, directly or indirectly, without compensation to the
Partnership, or taking other actions for the benefit of the General Partner or
other entities affiliated with the General Partner that are detrimental to the
Partnership), shall not be deemed wrongful or improper. Neither the General
Partner nor any Affiliate of the General Partner (including, without limitation,
CarrAmerica and LP Holdings) shall be obligated to present any particular
opportunity to the Partnership even if such opportunity is of a character which,
if presented to the Partnership, could be taken by the Partnership, and,
regardless of whether or not such opportunity is competitive with the
Partnership, the General Partner or any Affiliate of the General Partner shall
have the right to take for its own account (individually or as a trustee,
partner or fiduciary), or to recommend to others, any such particular
opportunity. The General Partner and any Affiliates of the General Partner may
acquire Limited Partnership Interests and shall be entitled to exercise all
rights of a Limited Partner relating to such Limited Partnership Interests.
B. Sale and Purchase of REIT Shares. CarrAmerica may issue
additional REIT Shares or rights, options, warrants or convertible or
exchangeable securities containing the right to subscribe for or purchase REIT
Shares ("New Securities"), or purchase or redeem REIT Shares, at such times and
in such amounts and for such consideration as CarrAmerica, in its sole and
absolute discretion, determines. Under no circumstances shall CarrAmerica be
obligated to contribute to the General Partner or the Partnership all or any
part of the proceeds from any issuance of such New Securities or from the
exercise of rights contained in such New Securities, and CarrAmerica may, in its
sole and absolute discretion, retain all such proceeds, to be used by
CarrAmerica as it determines, in its sole and absolute discretion, to be
advisable.
Section 7.6 Transactions with Affiliates
A. Permitted Transactions. Subject to Section 7.6.B below, the
Partnership may lend or contribute funds to, borrow funds from, and enter into
any other transactions with (including, without limitation, the purchase or sale
of any property or the transfer of a tenant from one of the Partnership's
properties to other properties in which the General Partner has an interest,
directly or indirectly, without compensation to the Partnership), the General
Partner, the Partnership's Subsidiaries or other Persons in which it has an
equity investment, or Affiliates of the Partnership, the General Partner or such
Subsidiaries or other Persons, on
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terms and conditions established in the sole and absolute discretion of the
General Partner. The foregoing authority shall not create any right or benefit
in favor of any Subsidiary or any other Person. The Partnership may transfer
assets to joint ventures, other partnerships, corporations or other business
entities in which it is or thereby becomes a participant upon such terms and
subject to such conditions consistent with this Agreement and applicable law.
B. Transactions with Certain Affiliates. Except as expressly
permitted by this Agreement, the Partnership shall not, directly or indirectly,
sell, transfer or convey any property to, or purchase any property from, or
borrow funds from, or lend funds to, any Affiliate of the Partnership or the
General Partner that is not a Subsidiary of the Partnership or the General
Partner, except pursuant to transactions that are on terms that are fair and
reasonable and no less favorable to the Partnership than would be obtained from
an unaffiliated third party.
C. Benefit Plans. The General Partner, in its sole and absolute
discretion and without the approval of the Limited Partners, may propose and
adopt on behalf of the Partnership employee benefit plans funded by the
Partnership for the benefit of employees of the General Partner, the
Partnership, Subsidiaries of the Partnership or any Affiliate of any of them in
respect of services performed, directly or indirectly, for the benefit of the
Partnership, the General Partner, or any of the Partnership's Subsidiaries.
D. Redemption of Partnership Units held by General Partner. The
Partnership is expressly permitted to purchase Partnership Units held by the
General Partner at any time and upon such terms as the General Partner, in its
sole and absolute discretion, shall determine, subject to Section 7.6.B;
provided , that any such purchase of Partnership Units from the General Partner
shall be deemed to have complied with Section 7.6.B if the purchase price per
Partnership Unit is equal to either (i) the Value of a REIT Share or (ii) the
price paid by the General Partner for such Partnership Unit, if such Partnership
Unit has been acquired from a third party.
Section 7.7 Indemnification
A. General. The Partnership shall indemnify an Indemnitee from and
against any and all losses, claims, damages, liabilities, joint or several,
expenses (including, without limitation, attorneys fees and other legal fees and
expenses), judgments, fines, settlements, and other amounts arising from 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 such 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
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either was committed in bad faith or was the result of active and deliberate
dishonesty, (ii) the Indemnitee actually received an improper personal benefit
in money, property or services, or (iii) in the case of any criminal proceeding,
the Indemnitee had reasonable cause to believe that the act or omission was
unlawful. Without limitation, the foregoing indemnity shall extend to any
liability of any Indemnitee, pursuant to a loan guarantee or otherwise, for any
indebtedness of the Partnership or any Subsidiary of the Partnership (including,
without limitation, any indebtedness which the Partnership or any Subsidiary of
the Partnership has assumed or taken subject to), and the General Partner is
hereby authorized and empowered, on behalf of the Partnership, to enter into one
or more indemnity agreements consistent with the provisions of this Section 7.7
in favor of any Indemnitee having or potentially having liability for any such
indebtedness. The termination of any proceeding by judgment, order or settlement
does not create a presumption that the Indemnitee did not meet the requisite
standard of conduct set forth in this Section 7.7.A. The termination of any
proceeding by conviction or upon a plea of nolo contendere or its equivalent, or
an entry of an order of probation prior to judgment, creates a rebuttable
presumption that the Indemnitee acted in a manner contrary to that specified in
this Section 7.7.A with respect to the subject matter of such proceeding. Any
indemnification pursuant to this Section 7.7 shall be made only out of the
assets of the Partnership, and neither the General Partner nor any Limited
Partner shall have any obligation to contribute to the capital of the
Partnership or otherwise provide funds to enable the Partnership to fund its
obligations under this Section 7.7.
B. Advancement of Expenses. Reasonable expenses incurred by an
Indemnitee who is a party to a proceeding may be paid or reimbursed by the
Partnership in advance of the final disposition of the proceeding upon receipt
by the Partnership of (i) a written affirmation by the Indemnitee of the
Indemnitee's good faith belief that the standard of conduct necessary for
indemnification by the Partnership as authorized in this Section 7.7.A has been
met, and (ii) a written undertaking by or on behalf of the Indemnitee to repay
the amount if it shall ultimately be determined that the standard of conduct has
not been met.
C. No Limitation of Rights. The indemnification provided by this
Section 7.7 shall be in addition to any other rights to which an Indemnitee or
any other Person may be entitled under any agreement, pursuant to any vote of
the Partners, as a matter of law or otherwise, and shall continue as to an
Indemnitee who has ceased to serve in such capacity unless otherwise provided in
a written agreement pursuant to which such Indemnitee is indemnified.
D. Insurance. The Partnership may purchase and maintain
insurance, on behalf of the Indemnitees and such other Persons as the General
Partner shall determine, against any liability that may be asserted against
or expenses that may be incurred by such Person in connection with the
Partnership's
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activities, regardless of whether the Partnership would have the power to
indemnify such Person against such liability under the provisions of this
Agreement.
E. Benefit Plan Fiduciary. For purposes of this Section 7.7, (i) the
Partnership shall be deemed to have requested an Indemnitee to serve as
fiduciary of an employee benefit plan whenever the performance by it of its
duties to the Partnership also imposes duties on, or otherwise involves services
by, it to the plan or participants or beneficiaries of the plan, (ii) excise
taxes assessed on an Indemnitee with respect to an employee benefit plan
pursuant to applicable law shall constitute fines within the meaning of this
Section 7.7 and (iii) actions taken or omitted by the Indemnitee with respect to
an employee benefit plan in the performance of its duties for a purpose
reasonably believed by it to be in the interest of the participants and
beneficiaries of the plan shall be deemed to be for a purpose which is not
opposed to the best interests of the Partnership.
F. No Personal Liability for Partners. In no event may an
Indemnitee subject any of the Partners to personal liability by reason of the
indemnification provisions set forth in this Agreement.
G. Interested Transactions. An Indemnitee shall not be denied
indemnification in whole or in part under this Section 7.7 because the
Indemnitee had an interest in the transaction with respect to which the
indemnification applies if the transaction was otherwise permitted by the
terms of this Agreement.
H. Benefit. The provisions of this Section 7.7 are for the
benefit of the Indemnitees, their heirs, successors, assigns and
administrators and shall not be deemed to create any rights for the benefit
of any other Persons.
Section 7.8 Liability of the General Partner
A. General. Notwithstanding anything to the contrary set
forth in this Agreement, the General Partner shall not be liable for monetary
damages to the Partnership, any Partners or any Assignees for losses
sustained or liabilities incurred as a result of errors in judgment or of any
act or omission if the General Partner acted in good faith.
B. No Obligation to Consider Separate Interests of Limited Partners.
The Limited Partners expressly acknowledge that the General Partner is acting on
behalf of the Partnership, other partnerships in which the General Partner
serves as general partner and the General Partner's shareholders collectively,
that the General Partner is under no obligation to consider the separate
interests of the Limited Partners (including, without limitation, the tax
consequences to Limited Partners or Assignees) in deciding whether to cause the
Partnership to take (or decline to take) any actions, and that the General
Partner
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shall not be liable for monetary damages for losses sustained, liabilities
incurred, or benefits not derived by Limited Partners in connection with such
decisions.
C. Actions of Agents. Subject to its obligations and duties as
General Partner set forth in Section 7.1.A hereof, the General Partner may
exercise any of the powers granted to it by this Agreement and perform any of
the duties imposed upon it hereunder either directly or by or through its
agents. The General Partner shall not be responsible for any misconduct or
negligence on the part of any such agent appointed by it in good faith.
D. Effect of Amendment. Any amendment, modification or repeal of
this Section 7.8 or any provision hereof shall be prospective only and shall not
in any way affect the limitations on the General Partner's liability to the
Partnership and the Limited Partners under this Section 7.8 as in effect
immediately prior to such amendment, modification or repeal with respect to
claims arising from or relating to matters occurring, in whole or in part, prior
to such amendment, modification or repeal, regardless of when such claims may
arise or be asserted.
Section 7.9 Other Matters Concerning the General Partner
A. Reliance on Documents. The General Partner may rely and shall be
protected in acting or refraining from acting upon any resolution, certificate,
statement, instrument, opinion, report, notice, request, consent, order, bond,
debenture, or other paper or document believed by it in good faith to be genuine
and to have been signed or presented by the proper party or parties.
B. Reliance on Advisors. The General Partner may consult with legal
counsel, accountants, appraisers, management consultants, investment bankers and
other consultants and advisers selected by it, and any act taken or omitted to
be taken in reliance upon the opinion of such Persons as to matters which the
General Partner reasonably believes to be within such Person's professional or
expert competence shall be conclusively presumed to have been done or omitted in
good faith and in accordance with such opinion.
C. Action Through Agents. The General Partner shall have the right,
in respect of any of its powers or obligations hereunder, to act through any of
its duly authorized officers and a duly appointed attorney or attorneys-in-fact.
Each such attorney shall, to the extent provided by the General Partner in the
power of attorney, have full power and authority to do and perform all and every
act and duty which is permitted or required to be done by the General Partner
hereunder.
D. Actions to Maintain REIT Status or Avoid Taxation of the General
Partner. Notwithstanding any other provisions of this Agreement or the Act, any
action of the General Partner on behalf of the Partnership or any decision
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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 CarrAmerica to continue to
qualify as a REIT or (ii) to allow CarrAmerica to avoid incurring any liability
for taxes under Section 857 or Section 4981 of the Code, is expressly authorized
under this Agreement and is deemed approved by all of the Limited Partners.
Section 7.10 Reliance by Third Parties
Notwithstanding anything to the contrary in this Agreement, any
Person dealing with the Partnership shall be entitled to assume that the General
Partner has full power and authority, without the consent or approval of any
other Partner or Person, to encumber, sell or otherwise use in any manner any
and all assets of the Partnership, to enter into any contracts on behalf of the
Partnership and to take any and all actions on behalf of the Partnership, and
such Person shall be entitled to deal with the General Partner as if the General
Partner were the Partnership's sole party in interest, both legally and
beneficially. Each Limited Partner hereby waives any and all defenses or other
remedies which may be available against such Person to contest, negate or
disaffirm any action of the General Partner in connection with any such dealing.
In no event shall any Person dealing with the General Partner or its
representatives be obligated to ascertain that the terms of this Agreement have
been complied with or to inquire into the necessity or expedience of any act or
action of the General Partner or its representatives. Each and every
certificate, document or other instrument executed on behalf of the Partnership
by the General Partner or its representatives shall be conclusive evidence in
favor of any and every Person relying thereon or claiming thereunder that (i) at
the time of the execution and delivery of such certificate, document or
instrument, this Agreement was in full force and effect, (ii) the Person
executing and delivering such certificate, document or instrument was duly
authorized and empowered to do so for and on behalf of the Partnership, and
(iii) such certificate, document or instrument was duly executed and delivered
in accordance with the terms and provisions of this Agreement and is binding
upon the Partnership.
ARTICLE VIII
RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS
Section 8.1 Limitation of Liability
The Limited Partners shall have no liability under this Agreement
except as expressly provided in this Agreement, including Section 10.5 hereof,
or under the Act.
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Section 8.2 Management of Business
No Limited Partner or Assignee (other than the General Partner, any
of its Affiliates or any officer, director, employee, partner, agent or trustee
of the General Partner, the Partnership or any of their Affiliates, in their
capacity as such) shall take part in the operation, management or control
(within the meaning of the Act) of the Partnership's business, transact any
business in the Partnership's name or have the power to sign documents for or
otherwise bind the Partnership. The transaction of any such business by the
General Partner, any of its Affiliates or any officer, director, employee,
partner, agent or trustee of the General Partner, the Partnership or any of
their Affiliates, in their capacity as such, shall not affect, impair or
eliminate the limitations on the liability of the Limited Partners or Assignees
under this Agreement.
Section 8.3 Outside Activities of Limited Partners
Any Limited Partner (including, without limitation, LP Holdings and
any other Affiliate of the General Partner which is a Limited Partner in the
Partnership) and any officer, director, employee, agent, trustee, Affiliate or
shareholder of any Limited Partner shall be entitled to and may have business
interests and engage in business activities in addition to those relating to the
Partnership, including business interests and activities in direct or indirect
competition with the Partnership. Neither the Partnership nor any Partners shall
have any rights by virtue of this Agreement in any business ventures of any
Limited Partner or Assignee. None of the Limited Partners nor any other Person
shall have any rights by virtue of this Agreement or the partnership
relationship established hereby in any business ventures of any other Person and
such Person shall have no obligation pursuant to this Agreement to offer any
interest in any such business ventures to the Partnership, any Limited Partner
or any such other Person, even if such opportunity is of a character which, if
presented to the Partnership, any Limited Partner or such other Person, could be
taken by such Person.
Section 8.4 Return of Capital
Except pursuant to the right of redemption set forth in Section 8.6,
no Limited Partner shall be entitled to the withdrawal or return of his Capital
Contribution, except to the extent of distributions made pursuant to this
Agreement or upon termination of the Partnership as provided herein. No Limited
Partner or Assignee shall have priority over any other Limited Partner or
Assignee either as to the return of Capital Contributions or, except to the
extent provided by Exhibit C hereof or as permitted by Section 4.2.B, or
otherwise expressly provided in this Agreement, as to profits, losses or
distributions.
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Section 8.5 Rights of Limited Partners Relating to the Partnership
A. General. In addition to other rights provided by this
Agreement or by the Act, and except as limited by Section 8.5.C hereof, each
Limited Partner shall have the right, for a purpose reasonably related to
such Limited Partner's interest as a limited partner in the Partnership, upon
written demand with a statement of the purpose of such demand and at such
Limited Partner's own expense:
(1) to obtain a copy of the most recent annual and quarterly
reports filed with the Securities and Exchange Commission by
the General Partner pursuant to the Exchange Act;
(2) to obtain a copy of the Partnership's federal, state and
local income tax returns for each Partnership Year;
(3) to obtain a current list of the name and last known
business, residence or mailing address of each Partner;
(4) to obtain a copy of this Agreement and the Certificate and all
amendments thereto, together with executed copies of all
powers of attorney pursuant to which this Agreement, the
Certificate and all amendments thereto have been executed; and
(5) to obtain true and full information regarding the amount of
cash and a description and statement of any other property or
services contributed by each Partner and which each Partner
has agreed to contribute in the future, and the date on which
each became a Partner.
B. Notice of Change in Conversion Factor. The Partnership
shall notify each Limited Partner in writing of any change made to the
Conversion Factor within ten (10) Business Days of the date such change
becomes effective.
C. Notice of Extraordinary Transaction of CarrAmerica. CarrAmerica
shall not make any extraordinary distributions of cash or property to its
shareholders or effect a merger or sale of all or substantially all of its
assets without notifying the Limited Partners of its intention to make such
distribution or effect such merger or sale at least twenty (20) Business Days
prior to the record date to determine shareholders eligible to receive such
distribution or to vote upon the approval of such merger or sale.
D. Confidentiality. Notwithstanding any other provision of
this Section 8.5, the General Partner may keep confidential from the Limited
Partners,
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for such period of time as the General Partner determines in its
sole and absolute discretion to be reasonable, any information that (i) the
General Partner believes to be in the nature of trade secrets or other
information the disclosure of which the General Partner in good faith
believes is not in the best interests of the Partnership or could damage the
Partnership or its business or (ii) the Partnership is required by law or by
agreements with unaffiliated third parties to keep confidential.
Section 8.6 Redemption Right
A. General. Subject to Section 8.6.C, on or after the date one (1)
year after each Partnership Unit is issued, the holder of such Partnership Unit
other than the General Partner, shall have the right (the "Redemption Right") to
require the Partnership to redeem on a Specified Redemption Date such
Partnership Unit at a redemption price equal to and in the form of the
Redemption Amount to be paid by the Partnership. The Redemption Right shall be
exercised pursuant to a Notice of Redemption delivered to the General Partner by
the Limited Partner who is exercising the redemption right (the "Redeeming
Partner"). A Limited Partner may not exercise the Redemption Right for less than
one thousand (1,000) Partnership Units or, if such Limited Partner holds less
than one thousand (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 distributions paid after the
Specified Redemption Date.
B. General Partner Assumption of Right. Notwithstanding the
provisions of Section 8.6.A, the General Partner may, in its sole and absolute
discretion, assume directly and satisfy a Redemption Right by paying to the
Redeeming Partner the Redemption Amount 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. In the event the General
Partner shall exercise its right to satisfy the Redemption Right in the manner
described in the preceding sentence, the Partnership shall have no obligation to
pay any amount to the Redeeming Partner with respect to such Redeeming Partner's
exercise of the Redemption Right, and each of the Redeeming Partner, the
Partnership, and the General Partner shall treat the transaction between the
General Partner and the Redeeming Partner as a sale of the Redeeming Partner's
Partnership Units to the General Partner for federal income tax purposes. Each
Redeeming Partner agrees to execute such documents as the General Partner may
reasonably require in connection with the issuance of REIT Shares upon exercise
of the Redemption Right. Nothing contained in this Section 8.6.B shall imply any
right of the General Partner to require any Limited Partner to exercise the
Redemption Right afforded to such Limited Partner pursuant to Section 8.6.A
hereof.
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C. Payment of Accrued and Unpaid Distributions. On any Specified
Redemption Date occurring on or prior to the tenth anniversary of the date on
which the Redeeming Partner was admitted to the Partnership, the Partnership
shall pay to the Redeeming Partner the amount of all accrued and unpaid
distributions, if any, pursuant to Section 5.1. On any Specified Redemption Date
occurring after the tenth anniversary of the date on which the Redeeming Partner
was admitted to the Partnership, the Partnership shall pay to the Redeeming
Partner the amount of all accrued and unpaid distributions, if any, pursuant to
Section 5.1; provided, however, that no such payment of cumulated and unpaid
distributions shall be required if the Redemption Amount is at least 110% of the
sum of (i) the quotient obtained by dividing the Redeeming Partner's Capital
Contribution as set forth on Exhibit A by the number of the Partnership Units
(multiplied by the Conversion Factor) held by such Partner and (ii) all accrued
and unpaid distributions with respect to a Partnership Unit.
D. Exceptions to Exercise of Redemption Right. Notwithstanding the
provisions of Sections 8.6.A and 8.6.B, a Partner shall not be entitled to
exercise the Redemption Right pursuant to Section 8.6.A if the delivery of REIT
Shares to such Partner on the Specified Redemption Date (i) would be prohibited
under the Articles of Incorporation or (ii) would be prohibited under applicable
federal or state securities laws or regulations.
E. Redemption Amount Adjustment in Terminating Transaction.
Notwithstanding any other provision of this Agreement, in the event that
CarrAmerica Realty Corporation shall cease to exist for any reason (including,
without limitation, the merger of CarrAmerica Realty Corporation into another
entity or a sale of all or substantially all of the assets of CarrAmerica Realty
Corporation and distribution of the proceeds therefrom in liquidation) (referred
to as a "Termination Transaction"), the Redemption Amount thereafter shall be
equal to (i) the consideration received for one REIT Share in connection with
the Termination Transaction multiplied by (ii) the Conversion Factor at the time
of the Termination Transaction, which Redemption Amount the General Partner
shall pay upon an exercise of the Redemption Right, at its sole option, either
in the form of the consideration received by the CarrAmerica Realty Corporation
stockholders in connection with the Termination Transaction or in cash in an
amount equal to the value of such consideration at the time the Redemption Right
is exercised, as determined by the General Partner in good faith.
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ARTICLE IX
BOOKS, RECORDS, ACCOUNTING AND REPORTS
Section 9.1 Records and Accounting
The General Partner shall keep or cause to be kept at the principal
office of the Partnership appropriate books and records with respect to the
Partnership's business, including, without limitation, all books and records
necessary to provide to the Limited Partners any information, lists and copies
of documents required to be provided pursuant to Section 9.3 hereof. Any records
maintained by or on behalf of the Partnership in the regular course of its
business may be kept on, or be in the form of, punch cards, magnetic tape,
photographs, micrographics or any other information storage device, provided
that the records so maintained are convertible into clearly legible written form
within a reasonable period of time. The books of the Partnership shall be
maintained, for financial and tax reporting purposes, on an accrual basis in
accordance with generally accepted accounting principles.
Section 9.2 Fiscal Year
The fiscal year of the Partnership shall be the calendar year.
Section 9.3 Reports
A. Annual Reports. As soon as practicable, but in no event later
than the date on which CarrAmerica mails its annual report to its stockholders,
the General Partner shall cause to be mailed to each Limited Partner an annual
report, as of the close of the most recently ended Partnership Year, containing
financial statements of the Partnership, or of CarrAmerica if such statements
are prepared solely on a consolidated basis with CarrAmerica, for such
Partnership Year, presented in accordance with generally accepted accounting
principles, such statements to be audited by a nationally recognized firm of
independent public accountants selected by the General Partner.
B. Quarterly Reports. If and to the extent that CarrAmerica mails
quarterly reports to its stockholders, as soon as practicable, but in no event
later than the date on which such reports are mailed, the General Partner shall
cause to be mailed to each Limited Partner a report containing unaudited
financial statements, as of the last day of such calendar quarter, of the
Partnership, or of CarrAmerica if such statements are prepared solely on a
consolidated basis with CarrAmerica, and such other information as may be
required by applicable law or regulation, or as the General Partner determines
to be appropriate.
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ARTICLE X
TAX MATTERS
Section 10.1 Preparation of Tax Returns
The General Partner shall arrange for the preparation and timely
filing of all returns of Partnership income, gains, deductions, losses and other
items required of the Partnership for federal and state income tax purposes and
shall use all reasonable efforts to furnish, within ninety (90) days of the
close of each taxable year, the tax information reasonably required by Limited
Partners for federal and state income tax reporting purposes.
Section 10.2 Tax Elections
Except as otherwise provided herein, the General Partner shall, in
its sole and absolute discretion, determine whether to make any available
election pursuant to the Code; provided, however, that the General Partner shall
make the election under Section 754 of the Code in accordance with applicable
regulations thereunder. The General Partner shall have the right to seek to
revoke any such election (including, without limitation, the election under
Section 754 of the Code) upon the General Partner's determination in its sole
and absolute discretion that such revocation is in the best interests of the
Partners.
Section 10.3 Tax Matters Partner
A. General. The General Partner shall be the "tax matters partner"
of the Partnership for federal income tax purposes. Pursuant to Section
6223(c)(3) of the Code, upon receipt of notice from the IRS of the beginning of
an administrative proceeding with respect to the Partnership, the tax matters
partner shall furnish the IRS with the name, address and profit interest of each
of the Limited Partners and any Assignees; provided, however, that such
information is provided to the Partnership by the Limited Partners.
X. Xxxxxx. The tax matters partner is authorized, but not
required:
(1) to enter into any settlement with the IRS with respect
to any administrative or judicial proceedings for the
adjustment of Partnership items required to be taken
into account by a Partner for income tax purposes (such
administrative proceedings being referred to as a "tax
audit" and such judicial proceedings being referred to
as "judicial review"), and in the settlement agreement
the tax matters partner may expressly state that such
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agreement shall bind all Partners, except that such
settlement agreement shall not bind any Partner (i) who
(within the time prescribed pursuant to the Code and
Regulations) files a statement with the IRS providing
that the tax matters partner shall not have the
authority to enter into a settlement agreement on behalf
of such Partner or (ii) who is a "notice partner" (as
defined in Section 6231(a)(8) of the Code) or a member
of a "notice group" (as defined in Section 6223(b)(2) of
the Code);
(2) in the event that a notice of a final administrative
adjustment at the Partnership level of any item required
to be taken into account by a Partner for tax purposes
(a "final adjustment") is mailed to the tax matters
partner, to seek judicial review of such final
adjustment, including the filing of a petition for
readjustment with the Tax Court or the filing of a
complaint for refund with the United States Claims Court
or the District Court of the United States for the
district in which the Partnership's principal place of
business is located;
(3) to intervene in any action brought by any other
Partner for judicial review of a final adjustment;
(4) to file a request for an administrative adjustment with
the IRS at any time and, if any part of such request is
not allowed by the IRS, to file an appropriate pleading
(petition or complaint) for judicial review with respect
to such request;
(5) to enter into an agreement with the IRS to extend the
period for assessing any tax which is attributable to
any item required to be taken into account by a Partner
for tax purposes, or an item affected by such item; and
(6) to take any other action on behalf of the Partners of
the Partnership in connection with any tax audit or
judicial review proceeding to the extent permitted by
applicable law or regulations.
The taking of any action and the incurring of any expense by the tax
matters partner in connection with any such proceeding, except to the extent
required by law, is a matter in the sole and absolute discretion of the tax
matters partner and the provisions relating to indemnification of the General
Partner
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set forth in Section 7.7 of this Agreement shall be fully applicable to the tax
matters partner in its capacity as such.
C. Reimbursement. The tax matters partner shall receive no
compensation for its services. All third party costs and expenses incurred by
the tax matters partner in performing his duties as such (including legal and
accounting fees and expenses) shall be borne by the Partnership. Nothing herein
shall be construed to restrict the Partnership from engaging an accounting firm
to assist the tax matters partner in discharging his duties hereunder, so long
as the compensation paid by the Partnership for such services is reasonable.
Section 10.4 Organizational Expenses
The Partnership shall elect to deduct expenses, if any, incurred by
it in organizing the Partnership ratably over a sixty (60) month period as
provided in Section 709 of the Code.
Section 10.5 Withholding
Each Limited Partner hereby authorizes the Partnership to withhold
from or pay on behalf of or with respect to such Limited Partner any amount of
federal, state, local, or foreign taxes that the General Partner determines that
the Partnership is required to withhold or pay with respect to any amount
distributable or allocable to such Limited Partner pursuant to this Agreement,
including, without limitation, any taxes required to be withheld or paid by the
Partnership pursuant to Section 1441, 1442, 1445, or 1446 of the Code. Any
amount paid on behalf of or with respect to a Limited Partner shall constitute a
loan by the Partnership to such Limited Partner, which loan shall be repaid by
such Limited Partner within fifteen (15) days after notice from the General
Partner that such payment must be made unless (i) the Partnership withholds such
payment from a distribution which would otherwise be made to the Limited Partner
or (ii) the General Partner determines, in its sole and absolute discretion,
that such payment may be satisfied out of the available funds of the Partnership
which would, but for such payment, be distributed to the Limited Partner. Any
amounts withheld pursuant to the foregoing clauses (i) or (ii) shall be treated
as having been distributed to such Limited Partner. Each Limited Partner hereby
unconditionally and irrevocably grants to the Partnership a security interest in
such Limited Partner's Partnership Interest to secure such Limited Partner's
obligation to pay to the Partnership any amounts required to be paid pursuant to
this Section 10.5. In the event that a Limited Partner fails to pay any amounts
owed to the Partnership pursuant to this Section 10.5 when due, the General
Partner may, in its sole and absolute discretion, elect to make the payment to
the Partnership on behalf of such defaulting Limited Partner, and in such event
shall be deemed to have loaned such amount to such defaulting Limited Partner
and shall succeed to all rights and remedies of the
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Partnership as against such defaulting Limited Partner (including, without
limitation, the right to receive distributions). Any amounts payable by a
Limited Partner hereunder shall bear interest at the base rate on corporate
loans at large United States money center commercial banks, as published from
time to time in the Wall Street Journal, plus four (4) percentage points (but
not higher than the maximum lawful rate) from the date such amount is due (i.e.,
fifteen (15) days after demand) until such amount is paid in full. Each Limited
Partner shall take such actions as the Partnership or the General Partner shall
request in order to perfect or enforce the security interest created hereunder.
ARTICLE XI
TRANSFERS AND WITHDRAWALS
Section 11.1 Transfer
A. Definition. The term "transfer," when used in this Article XI
with respect to a Partnership Interest or a Partnership Unit, shall be deemed to
refer to a transaction by which the General Partner purports to assign all or
any part of its General Partnership Interest to another Person or by which a
Limited Partner purports to assign all or any part of its Limited Partnership
Interest to another Person, and includes a sale, assignment, gift, pledge,
encumbrance, hypothecation, mortgage, exchange or any other disposition by law
or otherwise. The term "transfer" when used in this Article XI does not include
any redemption or repurchase of Partnership Units by the Partnership from a
Partner (including the General Partner pursuant to Section 7.6.D) or acquisition
of Partnership Units from a Limited Partner by the General Partner pursuant to
Section 8.6 or otherwise.
B. General. No Partnership Interest shall be transferred, in
whole or in part, except in accordance with the terms and conditions set
forth in this Article XI. Any transfer or purported transfer of a
Partnership Interest not made in accordance with this Article XI shall be
null and void.
Section 11.2 General Partner's Rights to Transfer
A. Limited Partnership Interests. The General Partner may transfer
all or any portion of its Limited Partnership Interests, or any of the rights
associated with such Limited Partnership Interests, to any party without the
consent of the Partnership or any Partner (regardless of whether such transfer
triggers a termination of the Partnership for tax purposes under Section 708 of
the Code).
B. General Partner Interest. The General Partner shall not be
permitted to transfer its General Partner Interest except (i) to an Affiliate of
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the General Partner, (ii) in connection with a sale of all or substantially all
of the General Partner's assets, or (iii) in connection with a merger,
consolidation or other business combination involving the General partner;
provided, that the foregoing transfers shall be permitted if the Person
succeeding as General Partner pursuant to clause (i), (ii) or (iii) above
assumes all of the obligations of the General Partner under the Partnership
Agreement.
Section 11.3 Limited Partners' Rights to Transfer
A. General. Subject to the provisions of Sections 11.3.C, 11.3.D,
11.3.E and 11.4, a Limited Partner (other than LP Holdings) may transfer, with
or without the consent of the General Partner, all or any portion of his
Partnership Interest, or any of such Limited Partner's rights as a Limited
Partner, to an Immediate Family Member or an Affiliate of such Limited Partner,
provided that prior written notice of such proposed transfer is delivered to the
General Partner. No other transfers of a Limited Partnership Interest may be
effected without the consent of the General Partner, which consent may be given
or denied by the General Partner in its sole and absolute discretion.
B. Incapacitated Limited Partners. If a Limited Partner is subject
to Incapacity, the executor, administrator, trustee, committee, guardian,
conservator or receiver of such Limited Partner's estate shall have all the
rights of a Limited Partner, but not more rights than those enjoyed by other
Limited Partners for the purpose of settling or managing the estate and such
power as the Incapacitated Limited Partner possessed to transfer all or any part
of his or its interest in the Partnership. The Incapacity of a Limited Partner,
in and of itself, shall not dissolve or terminate the Partnership.
C. No Transfers Violating Securities Laws. The General Partner may
prohibit any transfer of Partnership Units by a Limited Partner if, in the
opinion of legal counsel to the Partnership, such transfer would require filing
of a registration statement under the Securities Act or would otherwise violate
any federal, state or foreign securities laws or regulations applicable to the
Partnership or the Partnership Unit.
D. No Transfers Affecting Tax Status of Partnership. No transfer of
Partnership Units by a Limited Partner may be made to any Person if (i) in the
opinion of legal counsel for the Partnership, it would result in the Partnership
being treated as an association taxable as a corporation for federal income tax
purposes, (ii) in the opinion of legal counsel for the Partnership, it would
adversely affect the ability of CarrAmerica to continue to qualify as a REIT or
would subject CarrAmerica to any additional taxes under Section 857 or Section
4981 of the Code, or (iii) such transfer is attempted to be effectuated through
an "established
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securities market" or a "secondary market (or the substantial equivalent
thereof)" within the meaning of Section 7704 of the Code.
E. No Transfers to Holders of Nonrecourse Liabilities. No pledge,
assignment or other transfer of any Partnership Units may be made to a lender to
the Partnership or any Person who is related (within the meaning of Section
1.752-4(b) of the Regulations) to any lender to the Partnership whose loan
constitutes a Nonrecourse Liability without the consent of the General Partner,
in its sole and absolute discretion; provided that, as a condition to such
consent the lender will be required to enter into an arrangement with the
Partnership and the General Partner to exchange or redeem for the Redemption
Amount any Partnership Units in which a security interest is held simultaneously
with the time at which such lender would be deemed to be a partner in the
Partnership for purposes of allocating liabilities to such lender under Section
752 of the Code.
Section 11.4 Substituted Limited Partners
A. Consent of General Partner. No Limited Partner shall have the
right to substitute a transferee as a Limited Partner in his place. The General
Partner shall, however, have the right to consent to the admission of a
transferee of the interest of a Limited Partner pursuant to this Section 11.4 as
a Substituted Limited Partner, which consent may be given or withheld by the
General Partner in its sole and absolute discretion. The General Partner's
failure or refusal to permit a transferee of any such interests to become a
Substituted Limited Partner shall not give rise to any cause of action against
the Partnership or any Partner.
B. Rights of Substituted Limited Partner. A transferee who has been
admitted as a Substituted Limited Partner in accordance with this Article XI
shall have all the rights and powers and be subject to all the restrictions and
liabilities of a Limited Partner under this Agreement. The admission of any
transferee as a Substituted Limited Partner shall be conditioned upon the
transferee executing and delivering to the Partnership an acceptance of all the
terms and conditions of this Agreement (including, without limitation, the
provisions of Section 15.11 and such other documents or instruments as may be
required to effect the admission).
C. Amendment of Exhibit A. Upon the admission of a Substituted
Limited Partner, the General Partner shall amend Exhibit A to reflect the name,
address, number of Partnership Units, and Percentage Interest of such
Substituted Limited Partner and to eliminate or adjust, if necessary, the name,
address and interest of the predecessor of such Substituted Limited Partner.
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Section 11.5 Assignees
If the General Partner, in its sole and absolute discretion, does
not consent to the admission of any permitted transferee under Section 11.3 as a
Substituted Limited Partner, as described in Section 11.4, such transferee shall
be considered an Assignee for purposes of this Agreement. An Assignee shall be
entitled to all the rights of an assignee of a limited partnership interest
under the Act, including the right to receive distributions from the Partnership
and the share of Net Income, Net Losses, gain, loss and Recapture Income
attributable to the Partnership Units assigned to such transferee, but shall not
be deemed to be a holder of Partnership Units for any other purpose under this
Agreement, and shall not be entitled to vote such Partnership Units in any
matter presented to the Limited Partners for a vote (such Partnership Units
being deemed to have been voted on such matter in the same proportion as all
other Partnership Units held by Limited Partners are voted). In the event any
such transferee desires to make a further assignment of any such Partnership
Units, such transferee shall be subject to all the provisions of this Article XI
to the same extent and in the same manner as any Limited Partner desiring to
make an assignment of Partnership Units.
Section 11.6 General Provisions
A. Withdrawal of Limited Partner. No Limited Partner may withdraw
from the Partnership other than as a result of a permitted transfer of all of
such Limited Partner's Partnership Units in accordance with this Article XI or
pursuant to redemption of all of its Partnership Units under Section 8.6.
B. Termination of Status as Limited Partner. Any Limited Partner who
shall transfer all of its Partnership Units in a transfer permitted pursuant to
this Article XI or pursuant to redemption of all of its Partnership Units under
Section 8.6 shall cease to be a Limited Partner.
C. Timing of Transfers. Transfers pursuant to this Article XI
may only be made on the first day of a fiscal quarter of the Partnership,
unless the General Partner otherwise agrees.
D. Allocations. If any Partnership Interest is transferred during
any quarterly segment of the Partnership's fiscal year in compliance with the
provisions of this Article XI or redeemed or transferred pursuant to Section
8.6, Net Income, Net Losses, each item thereof and all other items attributable
to such interest for such fiscal year shall be divided and allocated between the
transferor Partner and the transferee Partner by taking into account their
varying interests during the fiscal year in accordance with Section 706(d) of
the Code, using the interim closing of the books method. Solely for purposes of
making such allocations, each of such items for the calendar month in which the
transfer or redemption
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occurs shall be allocated to the Person who is a Partner as of midnight on the
last day of said month. All distributions of Available Cash attributable to any
Partnership Unit with respect to which the Partnership Record Date is before the
date of such transfer, assignment or redemption shall be made to the transferor
Partner or the Redeeming Partner, as the case may be, and, in the case of a
transfer or assignment other than a redemption, all distributions of Available
Cash thereafter attributable to such Partnership Unit shall be made to the
transferee Partner.
ARTICLE XII
ADMISSION OF PARTNERS
Section 12.1 Admission of Successor General Partner
A successor to all of the General Partner's General Partner Interest
pursuant to Section 11.2 hereof who is proposed to be admitted as a successor
General Partner shall be admitted to the Partnership as the General Partner,
effective upon such transfer. Any such transferee shall carry on the business of
the Partnership without dissolution. In each case, the admission shall be
subject to the successor General Partner executing and delivering to the
Partnership an acceptance of all of the terms and conditions of this Agreement
and such other documents or instruments as may be required to effect the
admission.
Section 12.2 Admission of Additional Limited Partners
A. General. No Person shall be admitted as an Additional Limited
Partner without the consent of the General Partner, which consent may be given
or withheld in the General Partner's sole and absolute discretion. A Person who
makes a Capital Contribution to the Partnership in accordance with this
Agreement or who exercises an option to receive Partnership Units shall be
admitted to the Partnership as an Additional Limited Partner only with the
consent of the General Partner and only upon furnishing to the General Partner
(i) evidence of acceptance in form satisfactory to the General Partner of all of
the terms and conditions of this Agreement, including, without limitation, the
power of attorney granted in Section 15.11 hereof and (ii) such other documents
or instruments as may be required in the discretion of the General Partner in
order to effect such Person's admission as an Additional Limited Partner. The
admission of any Person as an Additional Limited Partner shall become effective
on the date upon which the name of such Person is recorded on the books and
records of the Partnership, following the consent of the General Partner to such
admission.
B. Allocations to Additional Parties. If any Additional Limited
Partner is admitted to the Partnership on any day other than the first day of a
Partnership Year, then Net Income, Net Losses, each item thereof and all other
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items allocable among Partners and Assignees for such Partnership Year shall be
allocated among such Additional Limited Partner and all other Partners and
Assignees by taking into account their varying interests during the Partnership
Year in accordance with Section 706(d) of the Code, using the interim closing of
the books method. Solely for purposes of making such allocations, each of such
items for the calendar month in which an admission of any Additional Limited
Partner occurs shall be allocated among all the Partners and Assignees including
such Additional Limited Partner. All distributions of Available Cash with
respect to which the Partnership Record Date is before the date of such
admission shall be made solely to Partners and Assignees other than the
Additional Limited Partner, and all distributions of Available Cash thereafter
shall be made to all the Partners and Assignees including such Additional
Limited Partner.
Section 12.3 Amendment of Agreement and Certificate of
Limited Partnership
For the admission to the Partnership of any Partner, the General
Partner shall take all steps necessary and appropriate under the Act to amend
the records of the Partnership and, if necessary, to prepare as soon as
practical an amendment of this Agreement (including an amendment of Exhibit A)
and, if required by law, shall prepare and file an amendment to the Certificate
and may for this purpose exercise the power of attorney granted pursuant to
Section 15.11 hereof.
ARTICLE XIII
DISSOLUTION AND LIQUIDATION
Section 13.1 Dissolution
The Partnership shall not be dissolved by the admission of
Substituted Limited Partners or Additional Limited Partners or by the admission
of a successor General Partner in accordance with the terms of this Agreement.
Upon the withdrawal of the General Partner, any successor General Partner shall
continue the business of the Partnership. The Partnership shall dissolve, and
its affairs shall be wound up, upon the first to occur of any of the following
("Liquidating Events") :
(i) the expiration of its term as provided in Section 2.4
hereof;
(ii) an event of withdrawal of the General Partner, as defined in
the Act (other than an event of bankruptcy), unless, within ninety (90) days
after the withdrawal all the remaining Partners agree in writing to continue the
business of the Partnership and to the appointment, effective as of the date of
withdrawal, of a substitute General Partner;
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(iii) an election to dissolve the Partnership made by the General
Partner, in its sole and absolute discretion;
(iv) entry of a decree of judicial dissolution of the
Partnership pursuant to the provisions of the Act;
(v) the sale of all or substantially all of the assets and
properties of the Partnership in exchange for cash; or
(vi) a final and non-appealable judgment is entered by a court of
competent jurisdiction ruling that the General Partner is bankrupt or insolvent,
or a final and non-appealable order for relief is entered by a court with
appropriate jurisdiction against the General Partner, in each case under any
federal or state bankruptcy or insolvency laws as now or hereafter in effect,
unless prior to the entry of such order or judgment all of the remaining
Partners agree in writing to continue the business of the Partnership and to the
appointment, effective as of a date prior to the date of such order or judgment,
of a substitute General Partner.
Section 13.2 Winding Up
A. General. Upon the occurrence of a Liquidating Event, the
Partnership shall continue solely for the purposes of winding up its affairs in
an orderly manner, liquidating its assets, and satisfying the claims of its
creditors and Partners. No Partner shall take any action that is inconsistent
with, or not necessary to or appropriate for, the winding up of the
Partnership's business and affairs. The General Partner (or, in the event there
is no remaining General Partner, any Person elected by a majority in interest of
the Limited Partners (the "Liquidator")) shall be responsible for overseeing the
winding up and dissolution of the Partnership and shall take full account of the
Partnership's liabilities and property and the Partnership property shall be
liquidated as promptly as is consistent with obtaining the fair value thereof,
and the proceeds therefrom (which may, to the extent determined by the General
Partner, include equity or other securities of the General Partner, CarrAmerica
or any other entity) shall be applied and distributed in the following order:
(1) First, to the payment and discharge of all of the
Partnership's debts and liabilities to creditors other than
the Partners;
(2) Second, to the payment and discharge of all of the
Partnership's debts and liabilities to the General Partner;
(3) Third, to the payment and discharge of all of the
Partnership's debts and liabilities to the Partners; and
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(4) The balance, if any, to the Partners in accordance with their
Capital Accounts, after giving effect to all contributions,
distributions, and allocations for all periods.
The General Partner shall not receive any additional compensation for any
services performed pursuant to this Article XIII.
B. Deferred Liquidation. Notwithstanding the provisions of Section
13.2.A hereof which require liquidation of the assets of the Partnership, but
subject to the order of priorities set forth therein, if prior to or upon
dissolution of the Partnership the Liquidator determines that an immediate sale
of part or all of the Partnership's assets would be impractical or would cause
undue loss to the Partners, the Liquidator may, in its sole and absolute
discretion, defer for a reasonable time the liquidation of any assets except
those necessary to satisfy liabilities of the Partnership (including to those
Partners as creditors) and/or distribute to the Partners, in lieu of cash, as
tenants in common and in accordance with the provisions of Section 13.2.A
hereof, undivided interests in such Partnership assets as the Liquidator deems
not suitable for liquidation. Any such distributions in kind shall be made only
if, in the good faith judgment of the Liquidator, such distributions in kind are
in the best interest of the Partners, and shall be subject to such conditions
relating to the disposition and management of such properties as the Liquidator
deems reasonable and equitable and to any agreements governing the operation of
such properties at such time. The Liquidator shall determine the fair market
value of any property distributed in kind using such reasonable method of
valuation as it may adopt.
Section 13.3 Compliance with Timing Requirements of Regulations
In the event the Partnership is "liquidated" within the meaning of
Regulations Section 1.704-1(b)(2)(ii)(g), distributions shall be made pursuant
to this Article XIII to the General Partner and Limited Partners who have
positive Capital Accounts in compliance with Regulations Section
1.704-1(b)(2)(ii)(b)(2). If any Partner has a deficit balance in his Capital
Account (after giving effect to all contributions, distributions and allocations
for all taxable years, including the year during which such liquidation occurs),
such Partner shall have no obligation to make any contribution to the capital of
the Partnership with respect to such deficit, and such deficit shall not be
considered a debt owed to the Partnership or to any other Person for any purpose
whatsoever. In the discretion of the General Partner, a pro rata portion of the
distributions that would otherwise be made to the General Partner and Limited
Partners pursuant to this Article XIII may be: (A) distributed to a trust
established for the benefit of the General Partner and Limited Partners for the
purposes of liquidating Partnership assets, collecting amounts owed to the
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Partnership, and paying any contingent or unforeseen liabilities or obligations
of the Partnership or of the General Partner arising out of or in connection
with the Partnership (in which case the assets of any such trust shall be
distributed to the General Partner and Limited Partners from time to time, in
the reasonable discretion of the General Partner, in the same proportions as the
amount distributed to such trust by the Partnership would otherwise have been
distributed to the General Partner and Limited Partners pursuant to this
Agreement); or (B) withheld to provide a reasonable reserve for Partnership
liabilities (contingent or otherwise) and to reflect the unrealized portion of
any installment obligations owed to the Partnership, provided that such withheld
amounts shall be distributed to the General Partner and Limited Partners as soon
as practicable.
Section 13.4 Deemed Distribution and Recontribution
Notwithstanding any other provision of this Article XIII, in the
event the Partnership is deemed liquidated within the meaning of Regulations
Section 1.704-1(b)(2)(ii)(g) but no Liquidating Event has occurred, the
Partnership's property shall not be liquidated, the Partnership's liabilities
shall not be paid or discharged, and the Partnership's affairs shall not be
wound up. Instead, for federal income tax purposes and for purposes of
maintaining Capital Accounts pursuant to Exhibit B hereof, the Partnership shall
be deemed to have distributed the Property in kind to the General Partner and
Limited Partners, who shall be deemed to have assumed and taken such property
subject to all Partnership liabilities, all in accordance with their respective
Capital Accounts. Immediately thereafter, the General Partner and Limited
Partners shall be deemed to have recontributed the Partnership property in kind
to the Partnership, which shall be deemed to have assumed and taken such
property subject to all such liabilities.
Section 13.5 Rights of Limited Partners
Except as otherwise provided in this Agreement, each Limited Partner
shall look solely to the assets of the Partnership for the return of its Capital
Contributions and shall have no right or power to demand or receive property
other than cash from the Partnership. No Limited Partner shall have priority
over any other Limited Partner as to the return of its Capital Contributions,
distributions, or allocations.
Section 13.6 Notice of Dissolution
In the event a Liquidating Event occurs or an event occurs that
would, but for provisions of Section 13.1, result in a dissolution of the
Partnership, the General Partner shall, within thirty (30) days thereafter,
provide written notice thereof to each of the Partners and to all other parties
with whom the Partnership regularly conducts business (as determined in the
discretion of the General Partner) and shall publish notice thereof in a
newspaper of general circulation in each place in which the Partnership
regularly conducts business (as determined in the discretion of the General
Partner).
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Section 13.7 Cancellation of Certificate of Limited Partnership
Upon the completion of the liquidation of the Partnership cash and
property as provided in Section 13.2 hereof, the Partnership shall be terminated
and the Certificate and all qualifications of the Partnership as a foreign
limited partnership in jurisdictions other than the State of Delaware shall be
canceled and such other actions as may be necessary to terminate the Partnership
shall be taken.
Section 13.8 Reasonable Time for Winding Up
A reasonable time shall be allowed for the orderly winding up of the
business and affairs of the Partnership and the liquidation of its assets
pursuant to Section 13.2 hereof, in order to minimize any losses otherwise
attendant upon such winding-up, and the provisions of this Agreement shall
remain in effect among the Partners during the period of liquidation.
Section 13.9 Waiver of Partition
Each Partner hereby waives any right to partition of the Partnership
property.
Section 13.10 Liability of Liquidator
The Liquidator shall be indemnified and held harmless by the
Partnership from and against any and all claims, demands, liabilities, costs,
damages and causes of action of any nature whatsoever arising out of or
incidental to the Liquidator's taking of any action authorized under or within
the scope of this Agreement; provided, however, that the Liquidator shall not be
entitled to indemnification, and shall not be held harmless, where the claim,
demand, liability, cost, damage or cause of action at issue arises out of (i) a
matter entirely unrelated to the Liquidator's action or conduct pursuant to the
provisions of this Agreement, or, (ii) the proven willful misconduct or gross
negligence of the Liquidator.
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ARTICLE XIV
AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS
Section 14.1 Amendments
A. General. Amendments to this Agreement may be proposed by the
General Partner or by any Limited Partners holding twenty-five percent (25%) or
more of the Partnership Interests. Following such proposal (except an amendment
pursuant to Section 14.1.B below), the General Partner shall submit any proposed
amendment to the Limited Partners. The General Partner shall seek the written
vote of the Partners on the proposed amendment or shall call a meeting to vote
thereon and to transact any other business that it may deem appropriate. For
purposes of obtaining a written vote, the General Partner may require a response
within a reasonable specified time, but not less than fifteen (15) days, and
failure to respond in such time period shall constitute a vote which is
consistent with the General Partner's recommendation with respect to the
proposal. Except as provided in Section 14.1.B, 14.1.C or 14.1.D, a proposed
amendment shall be adopted and be effective as an amendment hereto if it is
approved by the General Partner and it receives the Consent of Partners holding
a majority of the Percentage Interests of the Limited Partners (including
Limited Partnership Interests held by the General Partner).
B. Amendments Not Requiring Limited Partner Approval.
Notwithstanding Section 14.1.A, the General Partner shall have the power,
without the consent of the Limited Partners, to amend this Agreement as may
be required to facilitate or implement any of the following purposes:
(1) to add to the obligations of the General Partner or surrender
any right or power granted to the General Partner or any
Affiliate of the General Partner for the benefit of the
Limited Partners;
(2) to reflect the admission, substitution, termination, or
withdrawal of Partners in accordance with this Agreement
(which may be effected through the replacement of Exhibit A
hereto with an amended Exhibit A);
(3) to set forth the designations, rights, powers, duties, and
preferences of the holders of any additional Partnership
Interests issued pursuant to Section 4.2.A or Section 4.2.B
hereof;
(4) to modify the term of the Partnership as set forth in
Section 2.5;
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(5) to reflect a change that does not adversely affect the Limited
Partners in any material respect, or to cure any ambiguity,
correct or supplement any provision in this Agreement not
inconsistent with law or with other provisions, or make other
changes with respect to matters arising under this Agreement
that will not be inconsistent with law or with the provisions
of this Agreement; and
(6) to satisfy any requirements, conditions, or guidelines
contained in any order, directive, opinion, ruling or
regulation of a federal or state agency or contained in
federal or state law.
The General Partner shall provide notice to the Limited Partners when any action
under this Section 14.1.B has been taken.
C. Amendments Requiring Limited Partner Approval (Excluding General
Partner). Notwithstanding Section 14.1.A hereof, the General Partner shall not
amend Section 4.2.B, Article V, Article VI, Section 7.6, Section 7.8, Section
8.6 or Section 11.2 without the Consent of a majority of the Percentage
Interests of the Limited Partners, excluding Limited Partnership
Interests held by LP Holdings.
D. Amendments Requiring Unanimous Limited Partner Approval.
Notwithstanding anything in this Section 14.1 to the contrary, this Agreement
shall not be amended without the Consent of each Partner adversely affected if
such amendment would (i) convert a Limited Partner's interest in the Partnership
into a general partner's interest, (ii) modify the limited liability of a
Limited Partner, or (iii) amend this Section 14.1.D.
Section 14.2 Meetings of the Partners
A. General. Meetings of the Partners may be called by the General
Partner and shall be called upon the receipt by the General Partner of a written
request by Limited Partners holding twenty-five percent (25%) or more of the
Partnership Interests. The call shall state the nature of the business to be
transacted. Notice of any such meeting shall be given to all Partners not less
than seven (7) days nor more than thirty (30) days prior to the date of such
meeting. Partners may vote in person or by proxy at such meeting. Whenever the
vote or Consent of Partners is permitted or required under this Agreement, such
vote or Consent may be given at a meeting of Partners or may be given in
accordance with the procedure prescribed in Section 14.1.A hereof. Except as
otherwise expressly provided in this Agreement, the Consent of holders of a
majority of the Percentage Interests held by Limited Partners (including LP
Holdings and any other Affiliate of the General Partner) shall control.
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B. Actions Without a Meeting. Any action required or permitted to be
taken at a meeting of the Partners may be taken without a meeting if a written
consent setting forth the action so taken is signed by a majority of the
Percentage Interests of the Partners (or such other percentage as is expressly
required by this Agreement). Such consent may be in one instrument or in several
instruments, and shall have the same force and effect as a vote of a majority of
the Percentage Interests of the Partners (or such other percentage as is
expressly required by this Agreement). Such consent shall be filed with the
General Partner. An action so taken shall be deemed to have been taken at a
meeting held on the effective date so certified.
C. Proxy. Each Limited Partner may authorize any Person or Persons
to act for him by proxy on all matters in which a Limited Partner is entitled to
participate, including waiving notice of any meeting, or voting or participating
at a meeting. Every proxy must be signed by the Limited Partner or his
attorney-in-fact. No proxy shall be valid after the expiration of eleven (11)
months from the date thereof unless otherwise provided in the proxy. Every proxy
shall be revocable at the pleasure of the Limited Partner executing it.
D. Conduct of Meeting. Each meeting of Partners shall be
conducted by the General Partner or such other Person as the General Partner
may appoint pursuant to such rules for the conduct of the meeting as the
General Partner or such other Person deems appropriate.
ARTICLE XV
GENERAL PROVISIONS
Section 15.1 Addresses and Notice
Any notice, demand, request or report required or permitted to be
given or made to a Partner or Assignee under this Agreement shall be in writing
and shall be deemed given or made when delivered in person or when sent by first
class United States mail or by other means of written communication to the
Partner or Assignee at the address set forth in Exhibit A or such other address
as the Partners shall notify the General Partner in writing.
Section 15.2 Titles and Captions
All article or section titles or captions in this Agreement are for
convenience only. They shall not be deemed part of this Agreement and in no way
define, limit, extend or describe the scope or intent of any provisions hereof.
Except as specifically provided otherwise, references to "Articles" and
"Sections" are to Articles and Sections of this Agreement.
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Section 15.3 Pronouns and Plurals
Whenever the context may require, any pronoun used in this Agreement
shall include the corresponding masculine, feminine or neuter forms, and the
singular form of nouns, pronouns and verbs shall include the plural and vice
versa.
Section 15.4 Further Action
The parties shall execute and deliver all documents, provide all
information and take or refrain from taking action as may be necessary or
appropriate to achieve the purposes of this Agreement.
Section 15.5 Binding Effect
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their heirs, executors, administrators, successors, legal
representatives and permitted assigns.
Section 15.6 Creditors
None of the provisions of this Agreement shall be for the benefit
of, or shall be enforceable by, any creditor of the Partnership.
Section 15.7 Waiver
No failure by any party to insist upon the strict performance of any
covenant, duty, agreement or condition of this Agreement or to exercise any
right or remedy consequent upon a breach thereof shall constitute waiver of any
such breach or any other covenant, duty, agreement or condition.
Section 15.8 Counterparts
This Agreement may be executed in counterparts, all of which
together shall constitute one agreement binding on all the parties hereto,
notwithstanding that all such parties are not signatories to the original or the
same counterpart. Each party shall become bound by this Agreement immediately
upon affixing its signature hereto.
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Section 15.9 Applicable Law
This Agreement shall be construed and enforced in accordance with
and governed by the laws of the State of Delaware, without regard to the
principles of conflicts of law.
Section 15.10 Invalidity of Provisions
If any provision of this Agreement is or becomes invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein shall not be affected thereby.
Section 15.11 Power of Attorney
A. General. Each Limited Partner and each Assignee who
accepts Units (or any rights, benefits or privileges associated therewith) is
deemed irrevocably to constitute and appoint the General Partner, any
Liquidator, and authorized officers and attorneys-in-fact of each, and each
of those acting singly, in each case with full power of substitution, as its
true and lawful agent and attorney-in-fact, with full power and authority in
its name, place and stead to:
(1) execute, swear to, acknowledge, deliver, file and record in
the appropriate public offices (a) all certificates, documents
and other instruments (including, without limitation, this
Agreement and the Certificate and all amendments or
restatements thereof) that the General Partner or any
Liquidator deems appropriate or necessary to form, qualify or
continue the existence or qualification of the Partnership as
a limited partnership (or a partnership in which the limited
partners have limited liability) in the State of Delaware and
in all other jurisdictions in which the Partnership may
conduct business or own property, (b) all instruments that the
General Partner or any Liquidator deems appropriate or
necessary to reflect any amendment, change, modification or
restatement of this Agreement in accordance with its terms,
(c) all conveyances and other instruments or documents that
the General Partner or any Liquidator deems appropriate or
necessary to reflect the dissolution and liquidation of the
Partnership pursuant to the terms of this Agreement,
including, without limitation, a certificate of cancellation,
(d) all instruments relating to the admission, withdrawal,
removal or substitution of any Partner pursuant to, or other
events described in, Article XI, XII or XIII hereof or the
Capital Contribution of any Partner, and (e) all certificates,
documents and other instruments relating to the
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determination of the rights, preferences and privileges of
Partnership Interests; and
(2) execute, swear to, acknowledge and file all ballots, consents,
approvals, waivers, certificates and other instruments
appropriate or necessary, in the sole and absolute discretion
of the General Partner or any Liquidator, to make, evidence,
give, confirm or ratify any vote, consent, approval, agreement
or other action which is made or given by the Partners
hereunder or is consistent with the terms of this Agreement or
appropriate or necessary, in the sole discretion of the
General Partner or any Liquidator, to effectuate the terms or
intent of this Agreement.
Nothing contained herein shall be construed as authorizing the
General Partner or any Liquidator to amend this Agreement except in accordance
with Article XIV hereof or as may be otherwise expressly provided for in this
Agreement.
B. Irrevocable Nature. The foregoing power of attorney is hereby
declared to be irrevocable and a power coupled with an interest, in recognition
of the fact that each of the Partners will be relying upon the power of the
General Partner or any Liquidator to act as contemplated by this Agreement in
any filing or other action by it on behalf of the Partnership, and it shall
survive and not be affected by the subsequent Incapacity of any Limited Partner
or Assignee and the transfer of all or any portion of such Limited Partner's or
Assignee's Partnership Units and shall extend to such Limited Partner's or
Assignee's heirs, successors, assigns and personal representatives. Each such
Limited Partner or Assignee hereby agrees to be bound by any representation made
by the General Partner or any Liquidator, acting in good faith pursuant to such
power of attorney; and each such Limited Partner or Assignee hereby waives any
and all defenses which may be available to contest, negate or disaffirm the
action of the General Partner or any Liquidator, taken in good faith under such
power of attorney. Each Limited Partner or Assignee shall execute and deliver to
the General Partner or the Liquidator, within fifteen (15) days after receipt of
the General Partner's or Liquidator's request therefor, such further
designation, powers of attorney and other instruments as the General Partner or
the Liquidator, as the case may be, deems necessary to effectuate this Agreement
and the purposes of the Partnership.
Section 15.12 Entire Agreement
This Agreement contains the entire understanding and agreement among
the Partners with respect to the subject matter hereof and supersedes any prior
written oral understandings or agreements among them with respect thereto.
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Section 15.13 No Rights as Stockholders
Nothing contained in this Agreement shall be construed as conferring
upon the holders of the Partnership Units any rights whatsoever as stockholders
of the General Partner or CarrAmerica, including, without limitation, any right
to receive dividends or other distributions made to shareholders of the General
Partner or CarrAmerica or to vote or to consent or receive notice as
shareholders in respect to any meeting of shareholders for the election of
directors of the General Partner or CarrAmerica or any other matter.
Section 15.14 Rights and Duties of CarrAmerica and Affiliates
of the General Partner
A. Dividends on REIT Shares. Notwithstanding anything contained in
this Agreement to the contrary, any reference herein to dividends paid or
payable by CarrAmerica on REIT Shares shall be deemed to be a reference to such
dividends as have been paid or are payable by CarrAmerica.
B. Liability of CarrAmerica. Notwithstanding anything to the
contrary set forth in this Agreement, CarrAmerica shall not be liable for
monetary damages to the Partnership, any Partners or any Assignees for losses
sustained or liabilities incurred as a result of errors in judgment or of any
act or omission of the General Partner.
C. No Redemptions by LP Holdings. Notwithstanding anything to
the contrary set forth in this Agreement, LP Holdings shall not be entitled
to exercise the Redemption Right with respect to any Limited Partnership
Units held by it.
D. Assumption of Redemption Right by CarrAmerica. Notwithstanding
anything to the contrary set forth in this Agreement, any assumption of a
Redemption Right by the General Partner pursuant to Section 8.6.B hereof shall
be deemed to be an assumption of such Redemption Right by CarrAmerica, and all
rights and duties of the General Partner with respect to such Redemption Right
shall be deemed and treated as the rights and duties of CarrAmerica. In the
event that CarrAmerica determines to pay the Redeeming Partner the Redemption
Amount in the form of REIT Shares, the total number of REIT Shares to be paid to
the Redeeming Partner in exchange for that Redeeming Partner's Partnership Units
shall be the applicable REIT Shares Amount multiplied by the number of
Partnership Units being redeemed. In the event this product is not a whole
number, the Redeeming Partnership shall be paid (x) that number of REIT Shares
which equals the nearest whole number less than such product plus (y) an amount
of cash which CarrAmerica determines, in its sole and absolute discretion, to
represent the fair value of the remaining fractional REIT Share which would
otherwise be payable to the Redeeming Partner.
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E. Transfer Rights. Notwithstanding anything to the contrary set
forth in this Agreement, an Affiliate of the General Partner (including, without
limitation, LP Holdings and CarrAmerica) may transfer all or any portion of its
Limited Partnership Interests, or any of the rights associated with such Limited
Partnership Interests, to any party without the consent of the Partnership or
any Partner (regardless of whether such transfer triggers a termination of the
Partnership for tax purposes under Section 708 of the Code).
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the date first written above.
GENERAL PARTNER:
CARRAMERICA REALTY GP
HOLDINGS, INC.
By: /s/ Xxxxx X. Xxxxxx
---------------------------
Name: Xxxxx X.Xxxxxx
---------------------------
Title: Chief Financial Officer
---------------------------
LIMITED PARTNERS:
By: CarrAmerica Realty GP
Holdings, Inc., as Attorney-in-
Fact for the Limited Partners
By: /s/ Xxxxx X. Xxxxxx
---------------------------
Name: Xxxxx X. Xxxxxx
---------------------------
Title: Chief Financial Officer
---------------------------
CARRAMERICA REALTY CORPORATION, solely
for purposes of Sections 7.4, 7.5, 7.7,
7.8, 8.6, 11.2, 15.13 and 15.14 of this
Agreement
By: /s/ Xxxxx X. Xxxxxx
---------------------------
Name: Xxxxx X. Xxxxxx
---------------------------
Title: Chief Financial Officer
---------------------------
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Effective as of May 9, 1997
EXHIBIT A
PARTNERS AND PARTNERSHIP INTERESTS
Class A Class B Class C Agreed
Partnership Partnership Partnership Initial Percentage
Name and Address of Partner Units Units Units Capital Interest
--------------------------- ----- ----- ----- ------- --------
GENERAL PARTNER:
CarrAmerica Realty GP 89,723 $ 2,264,695 1.00%
Holdings, Inc. Class B (1.20% of
0000 Xxxxxxxxxxxx Xxxxxx, X.X. Units Class B
Washington D.C. 20006 Units)
LIMITED PARTNERS:
CarrAmerica Realty LP 7,392,797 $186,348,830 82.40%
Holdings, Inc. Class B (98.80% of
0000 Xxxxxxxxxxxx Xxxxxx, X.X. Units Class B
Washington D.C. 20006 Units)
Xxxxxxx X. Xxxxx 190,796 243,795 $10,484,508 4.84%
1402 Xxxxxxxxx Class A Class C (20.08% of
Xxxxxx, Xxxxx 00000 Units Units Class A
Units,
45.18% of
Class C
Units)
Xxxxx X. Xxxxxxxx 164,588 243,795 $9,852,240 4.55%
c/x Xxxxxxxxxxx Real Class A Class C (17.32% of
Estate Company Units Units Class A
Congress at 0xx Xxxxxx Xxxxx,
Xxxxxx, Xxxxx 00000 45.18% of
Class C
Units)
Xxxxxxx X. Xxxxxxxx, Xx. 52,003 $1,254,572 0.58%
c/x Xxxxxxxxxxx Real Class C (9.64% of
Estate Company Units Class C
Congress at 0xx Xxxxxx Xxxxx)
Xxxxxx, Xxxxx 00000
Plaza Developers Holdings LLC 11,452 $280,000 0.13%
c/o Xxxx Xxxxxx Company Class A (1.21% of
0000 Xxxxxxxx Xxxxx Xxxxxx Units Class A
Xxxxxxxxx, Xxxxxxxx 00000 Units)
Class A Class B Class C Agreed
Partnership Partnership Partnership Initial Percentage
Name and Address of Partner Units Units Units Capital Interest
--------------------------- ----- ----- ----- ------- --------
Bristol Plaza 3,781 $100,000 0.04%
0000 Xxxxxxx Xxxxxx Class A (0.40% of
Suite 260 Units Class A
Xxxxx Xxxx, Xxxxxxxxxx Xxxxx)
00000
Bannockburn General 144,094 $4,553,364 1.61%
Partnership Class A (15.17% of
0000 Xxx Xxxxx Xxxxxx Units Class A
Xxxxxxxx, Xxxxxxxxxx 00000 Units)
Xxxxx Xxx Xxxxxxxx 100,016 $2,945,465 1.11%
0000 Xxxx Xxxxxx Xxxxx Class A (10.53% of
Xxxxx, Xxxx 00000 Units Class A
Units)
Xxxxx X. Xxxxxxx 100,016 $2,945,465 1.11%
000 Xxxx Xxxxxxxx Xxx Class A (10.53% of
Xxxxxx, Xxxx 00000 Units Class A
Units)
Xxxxxx X. Xxxxxxxx 9,162 $269,838 0.10%
000 Xxxxxxx Xxxxx Class A (0.96% of
Xxxxxx, Xxxx 00000 Units Class A
Units)
F. Xxx Xxxxxx 9,162 $269,838 0.10%
0000 Xxxxxxxxxx Xxxx Xxxxxx Class A (0.96% of
Xxxx Xxxx Xxxx, Xxxx 00000 Units Class A
Units)
Xxxxx XxXxx Xxxxxxxx 84,789 $2,497,036 0.95%
0000 Xxxxx Xxxx Xxxxxx Class A (8.93% of
Xxxx Xxxx Xxxx, Xxxx 00000 Units Class A
Units)
MSI, Inc. 132,255 $3,894,898 1.47%
Arrow Press Square Class A (13.92% of
165 South West Temple Units Class A
Xxxxx 000 Xxxxx)
Xxxx Xxxx Xxxx, Xxxx 00000
------- --------- ------- ------------ -------
TOTAL: 950,111 7,482,520 539,593 $227,960,749 100.00%
===============================================================
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EXHIBIT B
CAPITAL ACCOUNT MAINTENANCE
1. Capital Accounts of the Partners
A. The Partnership shall maintain for each Partner a separate
Capital Account in accordance with the rules of Regulations Section
l.704-l(b)(2)(iv). Such Capital Account shall be increased by (i) the amount of
all Capital Contributions and any other deemed contributions made by such
Partner to the Partnership pursuant to this Agreement and (ii) all items of
Partnership income and gain (including income and gain exempt from tax) computed
in accordance with Section 1.B hereof and allocated to such Partner pursuant to
Section 6.1.A of the Agreement and Exhibit C hereof, and decreased by (x) the
amount of cash or Agreed Value of all actual and deemed distributions of cash or
property made to such Partner pursuant to this Agreement and (y) all items of
Partnership deduction and loss computed in accordance with Section 1.B hereof
and allocated to such Partner pursuant to Section 6.1.B of the Agreement and
Exhibit C hereof.
B. For purposes of computing the amount of any item of income, gain,
deduction or loss to be reflected in the Partners' Capital Accounts, unless
otherwise specified in this Agreement, the determination, recognition and
classification of any such item shall be the same as its determination,
recognition and classification for federal income tax purposes determined in
accordance with Section 703(a) of the Code (for this purpose all items of
income, gain, loss or deduction required to be stated separately pursuant to
Section 703(a) (1) of the Code shall be included in taxable income or loss),
with the following adjustments:
(1) Except as otherwise provided in Regulations Section
1.704-1(b)(2)(iv)(m), the computation of all items of income,
gain, loss and deduction shall be made without regard to any
election under Section 754 of the Code which may be made by
the Partnership, provided that the amounts of any adjustments
to the adjusted bases of the assets of the Partnership made
pursuant to Section 734 of the Code as a result of the
distribution of property by the Partnership to a Partner (to
the extent that such adjustments have not previously been
reflected in the Partners' Capital Accounts) shall be
reflected in the Capital Accounts of the Partners in the
manner and subject to the limitations prescribed in
Regulations Section l.704-1(b)(2)(iv) (m)(4).
(2) The computation of all items of income, gain, and deduction
shall be made without regard to the fact that items described
in Sections 705(a)(l)(B) or 705(a)(2)(B) of the Code are not
includable gross income or are neither currently deductible
nor capitalized for federal income tax purposes.
(3) Any income, gain or loss attributable to the taxable
disposition of any Partnership property shall be determined as
if the adjusted basis of such property as of such date of
disposition were equal in amount to the Partnership's Carrying
Value with respect to such property as of such date.
(4) In lieu of the depreciation, amortization, and other cost
recovery deductions taken into account in computing such
taxable income or loss, there shall be taken into account
Depreciation for such fiscal year.
(5) In the event the Carrying Value of any Partnership Asset is
adjusted pursuant to Section 1.D hereof, the amount of any
such adjustment shall be taken into account as gain or loss
from the disposition of such asset.
(6) Any items specially allocated under Section 2 of Exhibit C
hereof shall not be taken into account.
C. Generally, a transferee (including any Assignee) of a Partnership
Unit shall succeed to a pro rata portion of the Capital Account of the
transferor; provided, however, that, if the transfer causes a termination of the
Partnership under Section 708(b)(l)(B) of the Code, the Partnership's properties
shall be deemed, solely for federal income tax purposes, to have been
distributed in liquidation of the Partnership to the holders of the Partnership
units (including transferee) and recontributed by such Persons in reconstitution
of the Partnership. In such event, the Carrying Values of the Partnership
properties shall be adjusted immediately prior to such deemed distribution
pursuant to Section 1.D(2) hereof. The Capital Accounts of such reconstituted
Partnership shall be maintained in accordance with the principles of this
Exhibit B.
D. (1) Consistent with the provisions of Regulations Section
1.704-1(b)(2)(iv)(f), and as provided in Section 1.D(2), the
Carrying Values of all Partnership assets shall be adjusted
upward or downward to reflect any Unrealized Gain or
Unrealized Loss attributable to such Partnership property, as
of the times of the adjustments provided in Section 1.D(2)
hereof, as if such Unrealized Gain or Unrealized Loss had been
recognized on an actual sale of each such property and
allocated pursuant to Section 6.1 of the Agreement.
(2) Such adjustments shall be made as of the following times: (a)
immediately prior to the acquisition of an additional interest
in the Partnership by any new or existing Partner in exchange
for more than a de minimis Capital Contribution; (b)
immediately prior to the distribution by the Partnership to a
Partner of more than a de minimis amount of property as
consideration for an interest in the Partnership; and (c)
immediately prior to the liquidation of the Partnership within
the meaning of Regulations Section 1.704-l(b)(2)(ii)(g),
provided however that adjustments pursuant to clauses (a) and
(b) above shall be made only if the General Partner determines
that such adjustments are necessary or appropriate to reflect
the relative economic interests of the Partners in the
Partnership.
(3) In accordance with Regulations Section 1.704- l(b)(2)(iv)(e),
the Carrying Value of Partnership assets distributed in kind
shall be adjusted upward or downward to reflect any Unrealized
Gain or Unrealized Loss attributable to such Partnership
property, as of the time any such asset is distributed.
(4) In determining Unrealized Gain or Unrealized Loss for purposes
of this Exhibit B, the aggregate cash amount and fair market
value of all Partnership assets (including cash or cash
equivalents) shall be determined by the General Partner using
such reasonable method of valuation as it may adopt, or in the
case of a liquidating distribution pursuant to Article XIII of
the Agreement, shall be determined and allocated by the
Liquidator using such reasonable methods of valuation as it
may adopt. The General Partner, or the Liquidator, as the case
may be, shall allocate such aggregate fair market value among
the assets of the Partnership in such manner as it determines
in its sole and absolute discretion to arrive at a fair market
value for individual properties.
E. The provisions of the Agreement (including this Exhibit B and the
other Exhibits to the Agreement) relating to the maintenance of Capital Accounts
are intended to comply with Regulations Section 1.704-1(b), and shall be
interpreted and applied in a manner consistent with such Regulations. In the
event the General Partner shall determine that it is prudent to modify
-2-
the manner in which the Capital Accounts, or any debits or credits thereto
(including, without limitation, debits or credits relating to liabilities which
are secured by contributed or distributed property or which are assumed by the
Partnership, the General Partner, or the Limited Partners) are computed in order
to comply with such Regulations, the General Partner may make such modification
without regard to Article XIV of the Agreement, provided that it is not likely
to have a material effect on the amounts distributable to any Person pursuant to
Article XIII of the Agreement upon the dissolution of the Partnership. The
General Partner also shall (i) make any adjustments that are necessary or
appropriate to maintain equality between the Capital Accounts of the Partners
and the amount of Partnership capital reflected on the Partnership's balance
sheet, as computed for book purposes, in accordance with Regulations Section
l.704-l(b)(2)(iv)(q), and (ii) make any appropriate modifications in the event
unanticipated events might otherwise cause this Agreement not to comply with
Regulations Section l.704-1(b).
2. No Interest
No interest shall be paid by the Partnership on Capital
Contributions or on balances in Partners' Capital Accounts.
3. No Withdrawal
No Partner shall be entitled to withdraw any part of its Capital
Contribution or Capital Account or to receive any distribution from the
Partnership, except as provided in Articles IV, V, VII and XIII of the
Agreement.
-3-
EXHIBIT C
SPECIAL ALLOCATION RULES
1. Special Allocation Rules.
Notwithstanding any other provision of the Agreement or this Exhibit
C, the following special allocations shall be made in the following order:
A. Minimum Gain Chargeback. Notwithstanding the provisions of
Section 6.1 of the Agreement or any other provisions of this Exhibit C, if there
is a net decrease in Partnership Minimum Gain during any Partnership Year, each
Partner shall be specially allocated items of Partnership income and gain for
such year (and, if necessary, subsequent years) in an amount equal to such
Partner's share of the net decrease in Partnership Minimum Gain, as determined
under Regulations Section 1.704-2(g). Allocations pursuant to the previous
sentence shall be made in proportion to the respective amounts required to be
allocated to each Partner pursuant thereto. The items to be so allocated shall
be determined in accordance with Regulations Section 1.704-2(f) (6). This
Section 1.A is intended to comply with the minimum gain chargeback requirements
in Regulations Section 1.704-2(f) and for purposes of this Section 1.A only,
each Partner's Adjusted Capital Account Deficit shall be determined prior to any
other allocations pursuant to Section 6.1 of this Agreement with respect to such
Partnership Year and without regard to any decrease in Partner Minimum Gain
during such Partnership Year.
B. Partner Minimum Gain Chargeback. Notwithstanding any other
provision of Section 6.1 of this Agreement or any other provisions of this
Exhibit C (except Section 1.A hereof), if there is a net decrease in Partner
Minimum Gain attributable to a Partner Nonrecourse Debt during any Partnership
Year, each Partner who has a share of the Partner Minimum Gain attributable to
such Partner Nonrecourse Debt, determined in accordance with Regulations Section
1.704-2(i) (5), shall be specially allocated items of Partnership income and
gain for such year (and, if necessary, subsequent years) in an amount equal to
such Partner's share of the net decrease in Partner Minimum Gain attributable to
such Partner Nonrecourse Debt, determined in accordance with Regulations Section
1.704-2(i) (5). Allocations pursuant to the previous sentence shall be made in
proportion to the respective amounts required to be allocated to each General
Partner and Limited Partner pursuant thereto. The items to be so allocated shall
be determined in accordance with Regulations Section 1.704-2(i) (4). This
Section 1.B is intended to comply with the minimum gain chargeback requirement
in such Section of the Regulations and shall be interpreted consistently
therewith. Solely for purposes of this Section 1.B, each Partner's Adjusted
Capital Account Deficit shall be determined prior to any other allocations
pursuant to Section 6.1 of the Agreement or this Exhibit with respect to such
Partnership Year, other than allocations pursuant to Section 1.A hereof.
C. Qualified Income Offset. In the event any Partner unexpectedly
receives any adjustments, allocations or distributions described in Regulations
Sections 1.704-l(b)(2)(ii)(d)(4), l.704-1(b)(2)(ii)(d)(5), or 1.704-
l(b)(2)(ii)(d)(6), and after giving effect to the allocations required under
Sections 1.A and 1.B hereof, such Partner has an Adjusted Capital Account
Deficit, items of Partnership income and gain (consisting of a pro rata portion
of each item of Partnership income, including gross income and gain for the
Partnership Year) and shall be specifically allocated to such Partner in an
amount and manner sufficient to eliminate, to the extent required by the
Regulations, its Adjusted Capital Account Deficit created by such adjustments,
allocations or distributions as quickly as possible. This Section 1.C is
intended to constitute a "qualified income offset" under Regulations Section
1.704-1(b)(2)(ii)(d) and shall be interpreted consistently therewith.
D Nonrecourse Deductions. Nonrecourse Deductions for any Partnership
Year shall be allocated to the Partners in accordance with their respective
Percentage Interests. If the
General Partner determines in its good faith discretion that the Partnership's
Nonrecourse Deductions must be allocated in a different ratio to satisfy the
safe harbor requirements of the Regulations promulgated under Section 704(b) of
the Code, the General Partner is authorized, upon notice to the Limited
Partners, to revise the prescribed ratio for such Partnership Year to the
numerically closest ratio which would satisfy such requirements.
E. Partner Nonrecourse Deductions. Any Partner Nonrecourse
Deductions for any Partnership Year shall be specially allocated to the Partner
who bears the economic risk of loss with respect to the Partner Nonrecourse Debt
to which such Partner Nonrecourse Deductions are attributable in accordance with
Regulations Sections 1.704-2(b)(4) and 1.704-2(i).
F. Code Section 754 Adjustments. To the extent an adjustment to the
adjusted tax basis of any Partnership asset pursuant to Section 734(b) or 743(b)
of the Code is required, pursuant to Regulations Section 1.704-l(b)(2)(iv)(m),
to be taken into account in determining Capital Accounts, the amount of such
adjustment to the Capital Accounts shall be treated as an item of gain (if the
adjustment increases the basis of the asset) or loss (if the adjustment
decreases such basis), and such item of gain or loss shall be specially
allocated to the Partners in a manner consistent with the manner in which their
Capital Accounts are required to be adjusted pursuant to such Section of the
Regulations.
2. Allocations for Tax Purposes
A. Except as otherwise provided in this Section 2, for federal
income tax purposes, each item of income, gain, loss and deduction shall be
allocated among the Partners in the same manner as its correlative item of
"book" income, gain, loss or deduction is allocated pursuant to Section 6.1 of
the Agreement and Section 1 of this Exhibit C.
B. In an attempt to eliminate Book-Tax Disparities attributable to a
Contributed Property or Adjusted Property, items of income, gain, loss, and
deduction shall be allocated for federal income tax purposes among the Partners
as follows:
(1) (a) In the case of a Contributed Property, such items
attributable thereto shall be allocated among the
Partners consistent with the principles of Section
704(c) of the Code to take into account the variation
between the 704(c) Value of such property and its
adjusted basis at the time of contribution (taking into
account Section 2.C of this Exhibit C); and
(b) any item of Residual Gain or Residual Loss attributable
to a Contributed Property shall be allocated among the
Partners in the same manner as its correlative item of
"book" gain or loss is allocated pursuant to Section 6.1
of the Agreement and Section 1 of this Exhibit C.
(2) (a) In the case of an Adjusted Property, such items shall
(i) first, be allocated among the Partners in a manner
consistent with the principles of Section 704(c) of the
Code to take into account the Unrealized Gain or
Unrealized Loss attributable to such property and the
allocations thereof pursuant to Exhibit B, and
(ii) second, in the event such property was originally a
Contributed Property, be allocated among the Partners in
a manner consistent with Section 2.B(1) of this Exhibit
C; and
-2-
(b) any item of Residual Gain or Residual Loss attributable
to an Adjusted Property shall be allocated among the
Partners in the same manner its correlative item of
"book" gain or loss is allocated pursuant to Section 6.1
of the Agreement and Section 1 of this Exhibit C.
(3) all other items of income, gain, loss and deduction shall be
allocated among the Partners the same manner as their
correlative item of "book" gain or loss is allocated pursuant
to Section 6.1 of the Agreement and Section 1 of this Exhibit
C.
C. To the extent Regulations promulgated pursuant to Section 704(c)
of the Code permit a Partnership to utilize alternative methods to eliminate the
disparities between the Carrying Value of property and its adjusted basis, the
General Partner shall, subject to the following, have the authority to elect the
method to be used by the Partnership and such election shall be binding on all
Partners. With respect to the Contributed Property transferred to the
Partnership pursuant to certain Contribution Agreements dated May 24, 1996 by
and between the Partnership and certain contributors, the Partnership shall
elect to use the "traditional method" set forth in Treasury Regulation
ss.1.704-3(b).
-3-
EXHIBIT D
NOTICE OF REDEMPTION
The undersigned hereby irrevocably (i) redeems _________ Partnership
Units in CarrAmerica Realty, L.P. in accordance with the terms of the Agreement
of Limited Partnership of CarrAmerica Realty, L.P., as amended, and the
Redemption Right referred to therein, (ii) surrenders such Partnership Units and
all right, title and interest therein and (iii) directs that the Cash Amount or
REIT Shares Amount (as determined by CarrAmerica) deliverable upon exercise of
the Redemption Right be delivered to the address specified below, and if REIT
Shares are to be delivered, such REIT Shares be registered or placed in the
name(s) and at the address(es) specified below. The undersigned hereby
represents, warrants, and certifies, that the undersigned (a) has marketable,
and unencumbered title to such Partnership Units, free and clear of the rights
of or interests of any other person or entity, (b) has the full right, power and
authority to redeem and surrender such Partnership Units as provided herein and
(c) has obtained the consent or approval of all persons or entities, if any,
having the right to consult or approve such redemption and surrender.
Dated:______________________ Name of Limited Partner:______________________
__________________________________
(Signature of Limited Partner)
__________________________________
(Street Address)
__________________________________
(City) (State) (Zip Code)
Signature Guaranteed by:
__________________________________
If REIT Shares are to be issued, issue to:
Name:
Please insert social security or identifying number:
EXHIBIT E
CLASS C UNITS
Notwithstanding any other provision of the Agreement, including the
provisions of Exhibits A through D thereof, Class C Units shall have the
following designations, preferences, rights, powers and duties:
(1) General. Except as otherwise provided below, each Class C Unit
shall have the same designations, preferences, rights, powers and duties as each
Class A Unit.
(2) Distributions. No distributions of Available Cash as described
in Section 5.1 of the Agreement shall be made with respect to a Class C Unit
while such Class C Unit is outstanding.
(3) Redemption Right. A holder of Class C Units shall not have the
Redemption Right under Section 8.6 of the Agreement with respect to such Class C
Units. The Redemption Right for a holder of Class A Units received with respect
to such holder's Class C Units pursuant to clause (4) below shall be the same as
set forth in Section 8.6 of the Agreement, except that such Redemption Right
shall be exercisable immediately upon issuance of such Class A Units (or on such
other terms as may be set forth in the contribution agreement pursuant to which
such Class C Units are issued).
(4) Conversion to Class A Units.
(a) Beginning on the third anniversary of the date of issuance
of a Class C Unit and on each anniversary thereafter, up to and including the
seventh anniversary of such issuance, each holder of a Class C Unit shall
receive a number of Class A Units, with respect to each Class C Unit owned as of
such date, equal to (A) the greater of (y) one (1) or (z) $24.125 divided by the
average of the daily market price for the ten (10) consecutive trading days
immediately preceding such anniversary date of a REIT Share (determining the
"market price" consistent with the method set forth in the definition of "Value"
in the Agreement), multiplied by (B) .20. On each date of issuance of Class A
Units pursuant to this subparagraph (a), one-fifth of the Class C Units held by
each holder thereof immediately prior to such date shall be canceled and
retired.
(b) If, prior to the fifth anniversary of the date hereof, the
Partnership consummates the sale of any of the Contributed Properties (other
than The Xxxxxxxxxxx Complex) in a transaction that triggers gain for a
Contributor under Section 704(c) of the Code, then, upon the closing of any such
sale, each holder of a Class C Unit shall receive a number of Class A Units,
with respect to each Class C Unit, equal to (A) the greater of (y) one (1) or
(z) $24.125 divided by the average of
the daily market price for the ten (10) consecutive trading days immediately
preceding such closing date (determining the "market price" consistent with the
method set forth in the definition of "Value" in the Agreement), multiplied by
(B) a fraction, the numerator of which is the "Contribution Value" for the
Contributed Property so sold, as set forth in Schedule 1 of the Contribution
Agreement, and the denominator of which is the total "Contribution Value," as
set forth in Schedule 1 to the Contribution Agreement. On each date of issuance
of Class A Units pursuant to this subparagraph (b), a number of Class C Units
held by each holder thereof immediately prior to such date equal to (i) the
number of Class C Units held by such holder immediately prior to such date,
multiplied by (ii) the fraction set forth in clause (B) above, shall be canceled
and retired.
(c) Notwithstanding the provisions of subparagraph (a) or (b)
above, each holder of a Class C Unit shall receive a number of Class A Units,
with respect to each Class C Unit, equal to the greater of (y) one (1) or (z)
$24.125 divided by the average of the daily market price for the ten (10)
consecutive trading days immediately preceding the date of the occurrence of any
of the events described below (determining the "market price" consistent with
the method set forth in the definition of "Value" in the Agreement), immediately
upon the occurrence of any of the following events: (i) the Partnership enters
into a binding agreement that would result in a Terminating Capital Transaction;
(ii) a Liquidating Event occurs (as defined in Section 13.1 of the Partnership
Agreement); (iii) the General Partner enters into a binding agreement to
transfer its General Partner Interest, except for a transfer (y) to an Affiliate
of the General Partner (in which event the term REIT Share shall continue to
mean a share of common stock of CarrAmerica) or (z) in connection with a merger,
consolidation or other business combination involving the General Partner and in
which individuals who immediately prior to such merger, consolidation or other
business combination constituted the board of directors of the General Partner
constitute a majority of the board of directors of the successor General
Partner; or (iv) during any consecutive two-year period commencing on or after
the date hereof, individuals who at the beginning of such period constituted the
board of directors of the General Partner (together with any new directors whose
election by the board of directors or whose nomination for election by
stockholders of the General Partner was approved by a vote of at least a
majority of the members of the board of directors then in office who either were
members of the board of directors at the beginning of such period or whose
election or nomination for election was previously so approved) cease for any
reason to constitute a majority of the members of the board of directors then in
office. Upon the occurrence of any of the events described in this subparagraph
(c), each Class C Unit shall be canceled and retired. The General Partner shall
provide each holder of Class C Units with prompt notice of any of the events
described in this subparagraph (c), so as to enable such holder to avail itself
of the Redemption Right with respect to the Class A Units into which such Class
C Units are converted pursuant to this subparagraph (c).
(5) Capital Accounts. A Capital Account shall be maintained with
respect to each Class C Unit. The Capital Account for each Class C Unit
initially shall be $24.125, which Capital Account shall be reduced by 20% each
year beginning on the third anniversary of the date of issuance of such Class C
Unit, until the seventh anniversary of the date of such issuance, at which time
the Capital Account for such Class C Unit shall equal to zero (unless a Class A
Unit shall have been issued pursuant to clause (4)(c) above, at which time the
Capital Account for such Class C Unit shall equal zero). The Capital Account for
each Class A Unit issued with respect to a Class C Unit pursuant to clause (4)
above initially shall be $24.125.
(6) Allocations. No allocations of Partnership items of income,
gain, loss and deduction will be made for tax purposes with respect to the Class
C Units, except as may be required by Section 704(c) of the Code and the
corresponding provisions of the Agreement. For purposes of the Section 704(c)
allocations attributable to property transferred in exchange for the Class C
Units, the Partnership shall use a modified "traditional method" whereby special
curative allocations of gain on the disposition of the property are made to a
Partner holding the Class C Units.
(7) Certain Definitions. Capitalized terms used in this Exhibit E
shall have the meanings given them in the Agreement unless otherwise defined
herein.
(a) "Contributed Properties" means those certain office
properties known as Great Hills Plaza, Park North, Balcones Center, First State
Bank (Lone Star Tower), The Setting, The Xxxxxxxxxxx Complex, Riata and Xxxxxx
Xxxxx which were received by the Partnership from the Contributors pursuant to
the Contribution Agreement.
(b) "Contribution Agreement" means that certain Contribution
Agreement dated as of June 26, 1996 by and between the Partnership and various
parties thereto.
(c) "Contributors" means those certain partnerships and
corporations which received Class A Units and Class C Units of Limited
Partnership Interest in the Partnership in exchange for the Contributed
Properties and certain other assets pursuant to the Contribution Agreement.
