EXHIBIT 10.1
AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
XXXXX REIT PROPERTIES, L.P.
TABLE OF CONTENTS
PAGE
ARTICLE I PARTNERSHIP..............................................................................................1
1.1 CREATION OF PARTNERSHIP: PARTNERSHIP INTERESTS...................................................1
1.2 NAME.............................................................................................2
1.3 APPROVAL OF ASSIGNMENT TO, AND ADMISSION OF, HREH................................................2
ARTICLE II DEFINITIONS.............................................................................................2
2.1 DEFINITIONS......................................................................................2
ARTICLE III CAPITALIZATION.........................................................................................12
3.1 INITIAL CAPITAL..................................................................................12
3.2 ISSUANCE AND REDEMPTION OF PARTNERSHIP INTERESTS.................................................12
3.3 ADDITIONAL FUNDS.................................................................................19
3.4 CAPITAL ACCOUNTS.................................................................................20
3.5 INTEREST ON AND RETURN OF CAPITAL................................................................21
3.6 NEGATIVE CAPITAL ACCOUNTS........................................................................21
3.7 LIMIT ON CONTRIBUTIONS AND OBLIGATIONS OF PARTNERS...............................................21
3.8 REDEMPTION AND REPURCHASE OF UNITS...............................................................21
3.9 REDEMPTION AND REPURCHASE OF INTERESTS OWNED BY HINES CONTROLLED
ENTITIES.........................................................................................22
ARTICLE IV OFFICE AND REGISTERED AGENT.............................................................................22
ARTICLE V PURPOSES AND POWERS OF PARTNERSHIP.......................................................................22
5.1 PURPOSES OF THE PARTNERSHIP......................................................................22
5.2 POWERS...........................................................................................22
5.3 REIT REQUIREMENTS................................................................................22
ARTICLE VI TERM....................................................................................................23
ARTICLE VII ALLOCATIONS............................................................................................23
7.1 PROFITS..........................................................................................23
7.2 LOSSES...........................................................................................24
7.3 SPECIAL ALLOCATIONS..............................................................................25
7.4 CURATIVE ALLOCATIONS.............................................................................26
7.5 TAX ALLOCATIONS: CODE SECTION 704(C).............................................................27
ARTICLE VIII CASH AVAILABLE FOR DISTRIBUTION.......................................................................28
8.1 DEFINITION OF AVAILABLE CASH.....................................................................28
8.2 TIMING AND PRIORITY OF DISTRIBUTIONS OF AVAILABLE CASH...........................................28
8.3 CONSENT TO ALLOCATIONS AND DISTRIBUTIONS.........................................................28
8.4 RIGHT TO LIMIT DISTRIBUTIONS.....................................................................28
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ARTICLE IX MANAGEMENT OF PARTNERSHIP...............................................................................28
9.1 GENERAL PARTNER..................................................................................28
9.2 LIMITATIONS ON POWER AND AUTHORITY OF PARTNERS...................................................30
9.3 LIMITED PARTNERS.................................................................................30
9.4 LIABILITY OF GENERAL PARTNER.....................................................................30
9.5 INDEMNITY........................................................................................30
9.6 OTHER ACTIVITIES OF PARTNERS AND AGREEMENTS WITH RELATED PARTIES.................................31
9.7 OTHER MATTERS CONCERNING THE GENERAL PARTNER.....................................................31
9.8 PARTNER EXCULPATION..............................................................................32
9.9 GENERAL PARTNER EXPENSES AND LIABILITIES.........................................................32
ARTICLE X BANKING..................................................................................................33
ARTICLE XI ACCOUNTING..............................................................................................33
11.1 FISCAL YEAR......................................................................................33
11.2 BOOKS OF ACCOUNT.................................................................................33
11.3 METHOD OF ACCOUNTING.............................................................................33
11.4 TAX MATTERS......................................................................................33
ARTICLE XII TRANSFERS OF PARTNERSHIP INTERESTS.....................................................................34
12.1 GENERAL PARTNER..................................................................................34
12.2 LIMITED PARTNER..................................................................................34
12.3 ADMISSION ADJUSTMENTS............................................................................36
12.4 TRANSFERS TO LENDERS.............................................................................36
ARTICLE XIII ADMISSION OF NEW PARTNERS.............................................................................37
ARTICLE XIV TERMINATION, LIQUIDATION AND DISSOLUTION OF PARTNERSHIP................................................37
14.1 TERMINATION EVENTS...............................................................................37
14.2 METHOD OF LIQUIDATION............................................................................37
14.3 DATE OF TERMINATION..............................................................................38
14.4 RECONSTITUTION UPON BANKRUPTCY...................................................................38
14.5 DEATH, LEGAL INCOMPETENCY, ETC. OF A LIMITED PARTNER.............................................39
ARTICLE XV POWER OF ATTORNEY.......................................................................................39
ARTICLE XVI AMENDMENT OF AGREEMENT.................................................................................40
ARTICLE XVII MISCELLANEOUS.........................................................................................40
17.1 NOTICES..........................................................................................40
17.2 MODIFICATIONS....................................................................................41
17.3 SUCCESSORS AND ASSIGNS...........................................................................41
17.4 DUPLICATE ORIGINALS..............................................................................41
17.5 CONSTRUCTION.....................................................................................41
17.6 GOVERNING LAW....................................................................................41
17.7 OTHER INSTRUMENTS................................................................................41
17.8 GENERAL PARTNER WITH INTEREST AS LIMITED PARTNER.................................................41
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17.9 LEGAL CONSTRUCTION...............................................................................41
17.10 GENDER...........................................................................................42
17.11 PRIOR AGREEMENTS SUPERSEDED......................................................................42
17.12 NO THIRD PARTY BENEFICIARY.......................................................................42
17.13 PURCHASE FOR INVESTMENT..........................................................................42
17.14 WAIVER...........................................................................................42
17.15 COUNTERPARTS.....................................................................................42
Schedule A - Partners, Capital Accounts and Partnership Interests
iii
AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
XXXXX REIT PROPERTIES, L.P.
THIS AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP (this
"Agreement") has been executed and delivered effective as of the ___ day of
_______________, 2004 (the "Effective Date"), by Xxxxx Real Estate Investment
Trust, Inc., a Maryland corporation (the "General Partner" or the "Company"),
and those persons and entities identified as "Limited Partners" in Schedule A
(the "Limited Partners"), (the General Partner and each Limited Partner being a
"Partner" and collectively, the "Partners").
RECITALS
WHEREAS, effective as of August 20, 2003, the General Partner and HALP
Associates Limited Partnership entered into that certain Agreement of Limited
Partnership (the "Original Agreement") of Xxxxx REIT Properties, L.P. in
accordance with the Delaware Revised Uniform Limited Partnership Act as amended
(the "Act").
WHEREAS, as of August 27, 2003, the Original Agreement was amended
pursuant to the First Amendment to Agreement of Limited Partnership for Xxxxx
REIT Properties, L.P. (the "First Amendment").
WHEREAS, the Partners deem it to be in their best interest to amend
and restate the Original Agreement, as amended by the First Amendment, in
accordance with the Act and this Agreement.
THEREFORE, in consideration of the mutual covenants contained in this
Agreement, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Partners agree as follows:
ARTICLE I
PARTNERSHIP
1.1 CREATION OF PARTNERSHIP: PARTNERSHIP INTERESTS. The General
Partner is the sole general partner and the Limited Partners are the sole
limited partners of the Partnership. All Partnership profits, losses, and
distributive shares of tax items accruing prior to the date of this Agreement
shall be allocated in accordance with, and the respective rights and
obligations of the Partners with respect to the period prior to the date of
this Agreement shall be governed by, the Agreement of Limited Partnership of
the Partnership that existed prior to this Agreement. No Partner has any
interest in any Partnership property solely as a result of being a Partner and
the interests of all Partners in the Partnership are, for all purposes,
personal property.
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1.2 NAME. The Partnership name shall be "Xxxxx REIT Properties, L.P.,"
but the General Partner may from time to time change the name of the
Partnership or may adopt such trade or fictitious names as it may determine.
1.3 APPROVAL OF ASSIGNMENT TO, AND ADMISSION OF, HREH. Effective as of
the date hereof, HALP has made an assignment of 21,739.13 OP Units
(representing all of the OP Units owned by HALP) to HREH. Such assignment is
hereby approved and HREH is hereby admitted as a limited partner of the
Partnership.
ARTICLE II
DEFINITIONS
2.1 DEFINITIONS. As used in this Agreement, the following terms shall
have the meanings set forth respectively after each:
"Act" shall mean the Delaware Revised Uniform Limited Partnership Act,
as amended from time to time, and any successor statute.
"Adjusted Capital Account" shall mean, at any time, the then balance
in the Capital Account of a Partner, after giving effect to the following
adjustments:
(i) add to such Capital Account any amounts that such Partner is
obligated to restore or is deemed obligated to restore under any
provision of this Agreement or as described in the penultimate
sentences of Regulations Section 1.704-2(g)(1) and Regulations Section
1.704-2(i)(5), or any successor provisions; and
(ii) subtract from such Capital Account the items described in
Regulations Sections 1.704-1(b)(2)(ii)(d)(4), (5) and (6).
"Adjusted Capital Account Deficit" shall mean, with respect to any
Partner, the deficit balance, if any, in that Partner's Adjusted Capital
Account.
"Affiliate" means (i) any Person directly or indirectly owning,
controlling, or holding, with power to vote ten percent or more of the
outstanding voting securities of such other Person, (ii) any Person ten percent
or more of whose outstanding voting securities are directly or indirectly
owned, controlled, or held, with the power to vote, by such other Persons,
(iii) any Person directly or indirectly controlling, controlled by, or under
common control with such other Person, (iv) any executive officer, director,
trustee or general partner of such other person, or (v) any legal entity for
which such Person acts as an executive officer, director, trustee or general
partner.
"Agreement" shall mean this Agreement of Limited Partnership, as it
may be amended from time to time.
"Articles of Incorporation" means the Articles of Incorporation of the
Company.
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"Available Cash" shall have the meaning provided in Section 8.1.
"Bankruptcy" of a Partner shall mean (a) the filing by a Partner of a
voluntary petition seeking liquidation, reorganization, arrangement or
readjustment, in any form, of its debts under Title 11 of the United States
Code (or corresponding provisions of future laws) or any other federal or state
insolvency law, or a Partner's filing an answer consenting to or acquiescing in
any such petition, (b) the making by a Partner of any assignment for the
benefit of its creditors or the admission by a Partner in writing of its
inability to pay its debts as they mature, or (c) the expiration of sixty (60)
days after the filing of any involuntary petition under Title 11 of the United
States Code (or corresponding provisions of future laws), seeking liquidation,
reorganization, arrangement or readjustment of its debts under any other
Federal or state insolvency law, provided that the same shall not have been
vacated, set aside or stayed within such 60-day period.
"Board of Directors" means the Board of Directors of the Company.
"Business Day" means any day other than Saturday or Sunday during
which national banks located in Houston, Texas are customarily open for
business.
"Capital Account" shall mean the capital account maintained by the
Partnership for each Partner as described in Section 3.4 below.
"Capital Contribution" shall mean, when used in respect of a Partner,
if applicable, the initial capital contribution of such Partner as set forth in
Section 3.1 below, and any other amounts of money and/or the Gross Asset Value
of other property contributed by such Partner to the capital of the Partnership
with respect to the Partner's interest in the Partnership, including the
Capital Contribution made by any predecessor holder of the Partnership Interest
of such Partner.
"Capital Transaction Gain or Loss" shall mean any Profits or Losses
described in paragraphs (iii), (iv) and (vi) of the definition of Profits and
Losses contained in this Article 2.
"Cash Amount" means an amount of cash equal to the value of the REIT
Shares Amount, which shall be based upon Net Asset Value on the date of receipt
by the General Partner of a Notice of Redemption.
"Code" shall mean the Internal Revenue Code of 1986, as the same may
be amended from time to time, and any successor statute.
"Common Share" means a share of common stock, $.001 par value per
share, of the Company.
"Company" means Xxxxx Real Estate Investment Trust, Inc., a Maryland
corporation and the General Partner of the Partnership.
"Contributing Partner" shall have the meaning provided in Section
3.2(B)(v).
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"Depreciation" shall mean for any fiscal year or portion thereof, an
amount equal to the depreciation, amortization or other cost recovery deduction
allowable with respect to an asset for such period for Federal income tax
purposes, except that if the Gross Asset Value of an asset differs from its
adjusted basis for Federal income tax purposes at the beginning of such period,
Depreciation shall be an amount that bears the same relationship to such
beginning Gross Asset Value as the depreciation, amortization or cost recovery
deduction in such period for Federal income tax purposes bears to the beginning
adjusted tax basis; provided, however, that if the adjusted basis for Federal
income tax purposes of an asset at the beginning of such period is zero,
Depreciation shall be determined with reference to such beginning Gross Asset
Value using any reasonable method selected by the General Partner.
"Effective Date" shall have the meaning provided in the introductory
paragraph of this Agreement.
"Exchange Date" shall have the meaning provided in Section 3.2(G).
"General Partner" means Xxxxx Real Estate Investment Trust, Inc., a
Maryland corporation, sometimes also referred to in this Agreement as the
"Company."
"Gross Asset Value" means, with respect to any Partnership asset, the
asset's adjusted basis for Federal income tax purposes, except as follows:
(i) The initial Gross Asset Value of any asset contributed by
a Partner to the Partnership shall be the gross fair market value of
such asset, as agreed to by the General Partner and the Contributing
Partner;
(ii) The Gross Asset Value of all Partnership assets shall be
adjusted to equal their respective gross fair market values, which
shall be determined in a manner consistent with the determination of
Net Asset Value, as of the following times: (a) 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) the
distribution by the Partnership to a Partner of more than a de minimis
amount of Partnership property as consideration for an interest in the
Partnership; (c) the liquidation of the Partnership within the meaning
of Regulations Section 1.704-1(b)(2)(ii)(g); and (d) upon the
occurrence of any other event for which an adjustment to Gross Asset
Value is permitted under the Regulations; provided, however, that
adjustments pursuant to clauses (a), (b) and (d) above shall be made
only if the General Partner reasonably determines that such
adjustments are necessary or appropriate to reflect the relative
economic interests of the Partners in the Partnership;
(iii) The Gross Asset Value of any Partnership asset
distributed to any Partner shall be adjusted to equal the gross fair
market value of such asset on the date of distribution, which shall be
determined in a manner consistent with the determination of Net Asset
Value; and
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(iv) The Gross Asset Value of Partnership assets shall be
increased (or decreased) to reflect any adjustments to the adjusted
basis of such assets pursuant to Code Section 734(b) or Code Section
743(b), but only to the extent that such adjustments are taken into
account in determining Capital Accounts pursuant to Regulations
Section 1.704-1(b)(2)(iv)(m) and paragraph (vi) of the definition of
Profits and Losses in this Article II below; provided, however, that
Gross Asset Value shall not be adjusted pursuant to this paragraph
(iv) to the extent the General Partner determines that an adjustment
pursuant to paragraph (ii) above is necessary or appropriate in
connection with a transaction that would otherwise result in an
adjustment pursuant to this paragraph (iv).
(v) If the Gross Asset Value of an asset has been determined
or adjusted pursuant to paragraphs (i), (ii) or (iv) above, such Gross
Asset Value shall thereafter be adjusted by the Depreciation taken
into account with respect to such asset for purposes of computing
Profits and Losses.
"HALP" shall mean HALP Associates Limited Partnership.
"Hines Controlled Entity" shall mean any partnership, limited
liability company, corporation, trust or other entity which is, directly or
indirectly, controlled by (a) Xxxxx Interests Limited Partnership, and/or (b)
Xxxxxxx X. Xxxxx and/or Xxxxxx X. Xxxxx or, in the event of the death or
disability of Xxxxxxx X. Xxxxx and/or Xxxxxx X. Xxxxx, the heirs, legal
representatives or estates of either or both of them.
"HREH" shall mean Hines Real Estate Holdings Limited Partnership.
"Issuance Date" means with respect to OP Units or the Participation
Interest owned by a Partner, the date upon which such OP Units or the
Participation Interest are issued to such Partner (and with respect to
Preference Units, shall have the meaning set forth in the applicable Preference
Unit Term Sheet).
"Limited Partner" shall mean any Person (i) whose name is set forth as
a Limited Partner on Schedule A attached hereto or who has become a Limited
Partner pursuant to the terms and conditions of this Agreement, and (ii) who
holds a partnership interest. "Limited Partners" means all such persons.
"Listing Date" shall mean the date on which the Common Shares are
first listed on a national securities exchange or included for quotation on a
national market system.
"Majority-in-Interest of the Limited Partners" shall mean, as of any
given time, Limited Partners who own more than fifty percent (50%) of the
Percentage Interests in the Partnership held by Limited Partners.
"Market Price" means, with respect to any Specified Redemption Date:
(a) the last reported sales price per share of the Common Shares at the close
of trading (whether or not the last reported sale occurred on such date) as
reported in the Wall Street Journal on the first Business Day of the calendar
quarter immediately preceding the date of receipt by the General
5
Partner of the Notice of Redemption, or (b) if the Common Shares are not traded
on a national exchange, the Net Asset Value per Common Share as of the date of
receipt by the General Partner of the Notice of Redemption.
"Net Asset Value" as of a particular date means the net fair market
value of the Partnership's equity as of such date, as approved by the Board of
Directors, which shall generally equal the net proceeds that would be available
for distribution by the Partnership if all properties owned directly or
indirectly (through one or more special purpose entities) by the Partnership
were sold at their fair market value in an all cash sale as of such date, and
all expected transaction costs (including all closing costs customarily borne
by a seller in the market where each Property is located and estimated legal
fees and expenses) were paid, and all liabilities were repaid, out of such
proceeds.
"Nonrecourse Deductions" has the meaning set forth in 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 a written notice delivered by a Redeeming
Partner to the Partnership (with a copy to the General Partner) under Section
3.2(C), pursuant to which the Redeeming Partner exercises the Redemption Right
with respect to all or a portion of its OP Units or Participation Interest in
accordance with the provisions of Section 3.2(C).
"OP Units" are units of Partnership Interest more particularly
described in Section 3.2.
"OP Unit Value" shall mean, as of any given time, the number of OP
Units into which a Preference Unit is convertible (whether or not the
conversion can then be effected), or the value of the Preference Unit expressed
in OP Units if the Preference Unit is not convertible into OP Units, as
provided for in the applicable Preference Unit Term Sheet.
"Other Securities" shall have the meaning set forth in Section
3.2(B)(iv).
"Participation Interest" shall have the meaning set forth in Section
3.2(A).
"Participation Interest Unit Equivalents" shall mean, as of any
Specified Redemption Date with respect to part or all of the Participation
Interest, the lesser of (i) the number of outstanding OP Units of the
Partnership, multiplied by a fraction whose numerator is the Percentage
Interest attributable to the Participation Interest as of such date and whose
denominator is 100% minus the Percentage Interest attributable to the
Participation Interest as of such date or (ii) the number of outstanding OP
Units of the Partnership, multiplied by a fraction (a) whose numerator is the
aggregate amount that would be distributed in respect of the Participation
Interest if an amount equal to Net Asset Value as of such date were distributed
among the Partners in accordance with Section 14.2(C) hereof and (b) whose
denominator equals (x) the aggregate amount that would be distributed to all
Partners if an amount equal to Net Asset Value as of such date were distributed
among the Partners in accordance with Section 14.2(C), minus (y) the amount
determined under clause (a).
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"Partner Nonrecourse Debt" has the meaning set forth in Regulations
Section 1.704-2(b)(4).
"Partner Nonrecourse Debt Minimum Gain" has the meaning set forth in
Regulations Section 1.704-2(i)(3).
"Partner Nonrecourse Deductions" has the meaning set forth in
Regulations Section 1.704-2(i)(2).
"Partners" shall mean, collectively, the General Partner and the
Limited Partners, or any additional or successor partners of the Partnership
admitted to the Partnership in accordance with the terms of this Agreement.
References to a Partner shall be to any one of the Partners.
"Partnership Interest" shall mean the ownership interest of a Partner
in the Partnership at any particular time, including the right of such Partner
to any and all benefits to which such Partner may be entitled as provided in
this Agreement, and to the extent not inconsistent with this Agreement, under
the Act, together with the obligations of such Partner to comply with all of
the terms and provisions of this Agreement and the Act.
"Partnership Minimum Gain" has the meaning set forth in Regulations
Sections 1.704-2(b)(2) and 1.704-2(d).
"Percentage Interest" shall mean a percentage that is determined for
each Partner in the following manner:
(i) End of Quarter Month Calculation of Percentage Interest
Attributable to Participation Interests. As of the end of each
calendar month, the holder of the Participation Interest shall have a
Percentage Interest in respect of its Participation Interest equal to
the sum of (a) the Percentage Interest of the holder of the
Participation Interest as of the end of the immediately preceding
month (which shall be 0% in the case of each calendar month beginning
prior to the Effective Date), adjusted as provided in clause (iii)
below for OP Units issued or redeemed during the calendar month just
ended, and further adjusted for any redemptions of such Participation
Interest during the calendar month just ended, plus (b) 0.0625% of the
net equity invested in those real estate investments reflected on the
balance sheet of the Partnership as of the end of such month, divided
by the Net Asset Value (as defined below) of the Partnership as of
the end of the current month, plus (c) 0.5% of the Gross Real Estate
Investments (as defined below) made by the Partnership during the
current month, divided by the Net Asset Value of the Partnership as
of the end of the current month.
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o "Gross Real Estate Investments" of the Partnership shall
generally mean the gross amount invested by the Partnership
in any real estate investments (either directly or indirectly
through one or more partnerships, limited liability
companies, or special purpose entities and including any real
estate investments contributed to the Partnership in exchange
for Units), including any debt attributable to such
investments; provided, however, that in the case of amounts
invested by the Partnership in any entity that is not
wholly-owned by the Partnership, "Gross Real Estate
Investments" shall mean the Partnership's allocable share of
the Gross Real Estate Investments of such entity.
o "Outstanding OP Unit Equivalents" as of the end of a
particular month shall mean a number equal to the number of
OP Units outstanding as of the end of such month, divided by
the difference between 100% and Percentage Interest
attributable to the Participation Interest as of the end of
such month.
(ii) When Change to Participation Interest Becomes Effective. The
Percentage Interest determined under clause (i) as of the end of a
particular month shall become effective as of the beginning of the
immediately following month.
(iii) Adjustment of Percentage Interests Attributable to
Participation Interest Following Issuance or Redemption of OP Units.
Immediately after the issuance or redemption by the Partnership of any
OP Units, the Percentage Interest attributable to the Participation
Interest shall be adjusted so that it equals (a) the Percentage
Interest attributable to the Participation Interest immediately prior
to the issuance or redemption of such OP Units, multiplied by (b) a
fraction whose numerator is (1) the number of OP Units outstanding
immediately prior to the issuance or redemption of such OP Units and
whose denominator equals (2) the number of OP Units outstanding
immediately after the issuance or redemption of such OP Units.
(iv) Calculation of Percentage Interests of Partners' Holding OP
Units. The Percentage Interest as of a particular time for each
Partner holding OP Units shall equal (a) 100% minus the Percentage
Interest attributable to the Participation Interest, multiplied by (b)
the sum of the OP Unit Value of any Preference Units held by that
Partner and the number of OP Units held by that Partner, divided by
(c) the sum of the OP Unit Value of all Preference Units issued and
outstanding at the time and the total number of OP Units issued and
outstanding at the time.
The respective Percentage Interests of the Partners as of the date of
this Agreement are set forth in Schedule A attached to this Agreement.
8
"Person" means an individual, corporation, partnership, estate, trust,
a portion of a trust set aside for or to be used exclusively for the purposes
described in Section 642(c) of the Code, association, private foundation within
the meaning of Section 509(a) of the Code, joint stock company or other entity
and also includes a group as that term is used for purposes of Section 13(d)(3)
of the Securities Exchange Act of 1934, as amended.
"Preference Units" are units of Partnership Interest more particularly
described in Section 3.2(A)(ii).
"Preference Unit Term Sheet" shall have the meaning provided in
Section 3.2(B)(1).
"Private Placement PTP Exemption" shall mean the exemption from
publicly traded partnership status provided in Regulations Section 1.7704-1(h)
(which generally applies if (i) all interests in a partnership are issued in a
transaction or series of transactions that are not required to be registered
under the Securities Act and (ii) the partnership does not have more than 100
partners at any time during taxable year of the partnership).
"Private Transfer" shall mean:
(i) transfers in which the basis of the Partnership Interest in
the hands of the transferee is determined, in whole or in part, by
reference to its basis in the hands of the transferor or is determined
under Code Section 732;
(ii) transfers at death, including transfers from an estate or
testamentary trust;
(iii) transfers between members of a family;
(iv) transfers involving the issuance of interests by (or on
behalf of) the Partnership in exchange for cash, property, or
services;
(v) transfers involving distributions from a qualified retirement
plan or an individual retirement account;
(vi) the transfer by a Partner and any related persons (within
the meaning of Code Section 267(b) or 707(b)(1)) in one or more
transactions during any 30 calendar day period of Partnership
Interests representing in the aggregate more than 2 percent of the
total interests in Partnership capital or profits;
(vii) transfers by one or more Partners of interests representing
in the aggregate 50 percent or more of the total interests in
Partnership capital and profits in one transaction or a series of
related transactions; and
(viii) transfers not recognized by the Partnership within the
meaning of Regulations Section 1.7704-1(d)(2) (i.e., transfers in
cases where the Partnership neither admits the transferee as a partner
nor recognizes any rights of the transferee as a partner).
9
"Profits" and "Losses" shall mean for each fiscal year or portion
thereof, an amount equal to the Partnership's items of taxable income or loss
for such year or period, determined by the General Partner in accordance with
Code Section 703(a) with the following adjustments:
(i) any income which is exempt from Federal income tax and not
otherwise taken into account in computing Profits or Losses shall be
added to taxable income or loss;
(ii) any expenditures of the Partnership described in Code
Section 705(a)(2)(B) or treated as Code Section 705(a)(2)(B)
expenditures under Regulations Section 1.704-1(b)(2)(iv)(i) and not
otherwise taken into account in computing Profits or Losses, will be
subtracted from taxable income or loss;
(iii) in the event that the Gross Asset Value of any Partnership
asset is adjusted pursuant to the definition of Gross Asset Value
contained in this Article 2, the amount of such adjustment shall be
taken into account as gain or loss from the disposition of such asset
for purposes of computing Profits and Losses;
(iv) gain or loss resulting from any disposition of Partnership
assets with respect to which gain or loss is recognized for Federal
income tax purposes shall be computed by reference to the Gross Asset
Value of the property disposed of, notwithstanding that the adjusted
tax basis of such property differs from its Gross Asset Value;
(v) in lieu of the depreciation, amortization and other cost
recovery deductions taken into account in computing such taxable
income or loss, there shall be taken into account Depreciation for
such fiscal year or other period;
(vi) to the extent an adjustment to the adjusted tax basis of any
Partnership asset pursuant to Code Section 734(b) or Code Section
743(b) is required pursuant to Regulations Section
1.704-1(b)(2)(iv)(m)(4) to be taken into account in determining
Capital Accounts as a result of a distribution other than in complete
liquidation of a Partner's Partnership Interest, is required pursuant
to the last sentence of Regulations Section 1.704-1(b)(2)(iv)(m)(2) to
be taken into account in determining Capital Accounts, the amount of
such adjustment shall be treated as an item of gain (if the adjustment
increases the basis of the asset) or loss (if the adjustment decreases
the basis of the asset) from the disposition of the asset and shall be
taken into account for purposes of computing Profits or Losses; and
(vii) any items specially allocated pursuant to Section 7.3 or
Section 7.4 shall not be considered in determining Profits or Losses.
"Recapitalization" shall have the meaning provided in Section 3.2(F).
"Record Date" shall have the meaning provided in Section 9.1.
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"Redeeming Partner" shall have the meaning provided in Section 3.2(C).
"Redemption Amount" means either the Cash Amount or the REIT Shares
Amount as determined pursuant to Section 3.2 hereof.
"Redemption Right" shall have the meaning provided in Section 3.2(C).
"Regulations" shall mean the Income Tax Regulations, including
Temporary Regulations, promulgated under the Code, as such regulations may be
amended from time to time (including corresponding provisions of succeeding
regulations).
"REIT" shall have the meaning provided in Section 5.3.
"REIT Requirements" shall have the meaning provided in Section 5.3.
"REIT Shares Amount" means a number of Common Shares equal to (i) in
the case of a Partner redeeming OP Units, the number of OP Units offered for
redemption by a Redeeming Partner, as adjusted pursuant to Sections 3.2(F) and
(G) and (ii) in the case of Partner redeeming part or all of the Participation
Interest, the number of Participation Interest Unit Equivalents, as adjusted
pursuant to Section 3.2(a).
"Rights" shall have the meaning provided in Section 3.2(G).
"Shareholder" means a holder of the Common Shares.
"Specified Redemption Date" means with respect to a Redeeming Partner,
the date that is ten Business Days after receipt by the General Partner of the
Notice of Redemption from such Partner.
"TMP" shall have the meaning provided in Section 11.4.
"Transfer" shall mean any sale, transfer, gift, exchange, assignment,
devise or other disposition, any pledge or collateral assignment, and any other
event that causes any Person to acquire beneficial ownership, or any agreement
to take any such actions or cause any such events, with respect to Units or
Partnership Interests, or the right to vote or receive distributions with
respect to Units or Partnership Interests, including (a) the granting or
exercise of any option (or any disposition of any option), (b) any disposition
of any securities or rights convertible into or exchangeable for Units or
Partnership Interests or any interest in Units or Partnership Interests or any
exercise of any such conversion or exchange right, and (c) Transfers of
interests in other entities that result in changes in beneficial ownership of
Units or Partnership Interests; in each case, whether voluntary or involuntary,
whether owned of record or beneficially owned, and whether by operation of law
or otherwise; provided, however, neither the conversion of a Preference Unit
into one or more OP Units nor the redemption of an OP Unit or Participation
Interest in accordance with Section 3.2 constitutes a Transfer. The terms
"Transferor," "Transferee," "Transferred" and "Transferring" have correlative
meanings.
"Units" has the meaning set forth in Section 3.2(A).
11
ARTICLE III
CAPITALIZATION
3.1 INITIAL CAPITAL. As of the effective date hereof, the Partners
have made or will make contributions of cash and/or property to the
Partnership, and the amount of such cash contributions and the Gross Asset
Value of such in-kind Capital Contributions are reflected in the Capital
Account balance of each such Partner as set forth opposite such Partner's name
on the attached Schedule A, as amended from time to time, under the heading
"Agreed Capital Account".
3.2 ISSUANCE AND REDEMPTION OF PARTNERSHIP INTERESTS.
A. The interest of a Partner in the Partnership that has been received
in exchange for Capital Contributions is referred to as being evidenced by one
or more "Units." Units may be either "OP Units" or "Preference Units":
(i) An "OP Unit" is a unit of Partnership Interest that has been
received in exchange for Capital Contributions and that, as more
particularly provided for below in Section 3.2(C), may be redeemed for
the Redemption Amount. The General Partner may create separate classes
or series of OP Units having privileges, variations, and designations
as may be determined by the General Partner in its sole and absolute
discretion.
(ii) A "Preference Unit" is a unit of Partnership Interest having
such rights, preferences and other privileges, variations and
designations as may be determined by the General Partner in its sole
and absolute discretion (but not in violation of the provisions of
Section 3.2(B) or the terms of any other Preference Unit(s) Term
Sheets). There may be more than one series or class of Preference
Units having differing terms and conditions, but all Preference Units
within a given series or class shall have the same rights, preferences
and other privileges, variations and designations. With respect to
each series or class of Preference Units, the General Partner may
also, in its discretion, determine and fix, among other terms and
conditions, any of the following: (a) the series to which such
Preference Units shall belong, (b) the distribution rate therefor, (c)
the price at and the terms and conditions on which such Preference
Units may be redeemed, (d) the amount payable in respect of such
Preference Units in the event of involuntary or voluntary liquidation,
(e) the terms and conditions on which such Preference Units may be
converted and the securities into which such Preference Units may be
converted (and/or the valuation of such Preference Units as measured
in OP Units), if such Preference Units are issued with the privilege
of conversion, and (f) the number of such Preference Units to be
issued as a part of such series. Once determined and fixed as herein
provided, however, the terms and conditions of a particular series or
class of Preference Units may not be changed without the written
consent of the holders of at least 67% of the Preference Units within
the
12
class or series (or such greater percentage as may be provided
for in any the applicable Preference Unit Term Sheet).
The aggregate total of all Units outstanding as of the date of this Agreement
is 21,958.69, all of which consist of OP Units. As of the date of this
Agreement, each Partner is deemed to hold Units as shown on Schedule A.
Effective as of the date hereof, the Partnership is issuing to HALP a
limited partnership interest denominated as a "Participation Interest." The
Participation Interest is in addition to, and distinct from, the Units
described above and any references to "Units" or OP Units shall not be deemed
to include the Participation Interest. It is intended that the Participation
Interest constitute a profits interest within the meaning of Section 2.02 of
IRS Revenue Procedure 93-27, 1993-2 C.B. 343.
B. From time to time hereafter, subject to and in accordance with
the provisions of this Section 3.2(B), the General Partner shall cause
the Partnership to issue additional Units as follows:
(i) OP Units to the Company upon the issuance by the Company
of additional Common Shares (other than in exchange for OP Units)
and the contribution of the net proceeds thereof as a Capital
Contribution to the Partnership as provided for in Section 3.3(B)
below, it being understood, however, that the Company may issue
Common Shares in connection with share option plans, dividend
reinvestment plans, restricted share plans or other benefit or
compensation plans without receiving any proceeds and that the
issuance of such Common Shares shall nonetheless entitle the
Company to receive additional OP Units pursuant to this clause
(i);
(ii) OP Units to Partners (including the General Partner) that
hold Preference Units that are convertible into OP Units, upon
the exercise of such conversion in accordance with the terms and
conditions of the Preference Unit Term Sheet applicable thereto;
(iii) OP Units to Partners holding OP Units (including the
General Partner) if and to the extent of each such Partner's
participation in any reinvestment program contemplated by Section
3.3(C) below;
(iv) Preference Units to the Company upon the issuance by the
Company of securities other than Common Shares whether debt or
equity securities ("Other Securities") and the contribution of
the net proceeds thereof as a Capital Contribution to the
Partnership as provided for in Section 3.3(B) below; and
(v) in all other cases, OP Units and/or Preference Units, as
determined by the General Partner, in its discretion, to existing
or newly-admitted Partners (including the General Partner), in
exchange for the contribution by a Partner (the "Contributing
Partner") of Capital Contributions to the Partnership.
13
Issuance of OP Units as aforesaid shall be in accordance with the
following:
(a) the number of OP Units issued to the Company under clause (i) of
this Section 3.2(B) shall be equal to the number of Common Shares issued;
(b) the number of OP Units issued to a Partner under clause (ii) of
this Section 3.2(B) shall be as provided for in the Preference Unit Term Sheet
pursuant to which the Preference Units being converted exist;
(c) the number of OP Units issued to a Limited Partner under clause
(iii) of this Section 3.2(B) shall be as provided for in the applicable
reinvestment program; and
(d) the number of OP Units issued to a Contributing Partner under
clause (v) of this Section 3.2(B) shall be equal to the quotient (rounded to
the nearest whole number) arrived at by dividing (x) the initial Gross Asset
Value of the property contributed as additional Capital Contributions (net of
any debt to which such property is subject or assumed by the Partnership in
connection with such contribution) by (y) the Net Asset Value attributable to
each OP Unit.
Issuance of Preference Units as aforesaid shall be in accordance with
the following:
(1) Preference Units issued pursuant to clause (v) of this Section
3.2(B) shall have the terms and conditions specified in an agreement (a
"Preference Unit Term Sheet") executed by and between the Partnership (at the
direction or in the discretion of the General Partner) and the Contributing
Partner. The number of Preference Units issued to a Contributing Partner under
clause (v) of this Section 3.2(B) shall be equal to the quotient (rounded to
the nearest whole number) arrived at by dividing (x) the net fair market value
of any property or assets contributed as additional capital contributions by
(y) price per Preference Unit provided for in the Preference Unit Term Sheet;
and
(2) Preference Units issued pursuant to clause (iv) of this Section
3.2(B) shall have economic terms substantially identical to those of the
applicable Other Securities.
Units may also be issued to some or all of the Partners holding Preference
Units if and to the extent of such Partner's participation in any reinvestment
program contemplated by Section 3.3(C). Upon the issuance of additional OP
Units and/or Preference Units in accordance with the provisions of this Section
3.2(B), each recipient of such Units shall either execute this Agreement or a
joinder to this Agreement (which joinder, as to Preference Units, may be a part
of any applicable Preference Unit Term Sheet) and, as applicable, the
Percentage Interest of all of the Partners shall thereupon be appropriately
adjusted by the General Partner.
C. Subject to the provisions of Sections 3.2(D) and (F), on or
after the later of (i) the date which is one year after the Issuance
Date or (ii) upon the completion of an initial public offering of the
Common Shares of the Company pursuant to a registration statement
filed with the Securities and Exchange Commission, each Limited
14
Partner shall have the right (the "Redemption Right") to require the
Partnership to redeem on a Specified Redemption Date all or a portion of the OP
Units or Participation Interest held by such Limited Partner at a redemption
price equal to and in the form of the Redemption Amount. The Redemption Right
shall be exercised pursuant to a Notice of Redemption delivered to the
Partnership (with a copy to the General Partner) by the Limited Partner who is
exercising the Redemption Right (the "Redeeming Partner"); provided, however,
that the Partnership shall not be obligated to satisfy such Redemption Right if
the Company elects to purchase the OP Units or Participation Interest subject
to the Notice of Redemption pursuant to Section 3.2(E). Notwithstanding the
foregoing provisions of this Section 3.2(C), the Company agrees to use its best
efforts to cause the closing of the acquisition of redeemed Partnership
Interests hereunder to occur as quickly as reasonably possible. The Redeeming
Partner shall have no right, with respect to any OP Units or Participation
Interest so redeemed, to receive any distribution paid with respect to such OP
Units or Participation Interest if the Record Date for such distribution is on
or after the Specified Redemption Date. If, and beginning with the first day of
the first taxable year in which, the Partnership no longer qualifies for the
Private Placement PTP Exemption, the Redemption Right shall comply with the
requirements of Regulations Section 1.7704-1(f) and shall be construed and
administered in accordance therewith.
D. In addition to other restrictions set forth on the Redemption
Rights in any other provision of this Agreement, the following
restrictions apply to Redemption Rights:
(i) Notwithstanding any other provision of this Article 3, but
subject to the last sentence of clause (iii) below, a Limited
Partner shall be entitled to exercise the Redemption Right only
if (x) the redemption or purchase of the Limited Partner's OP
Units or Participation Interest would constitute a Private
Transfer or (y) the Percentage Interest attributable to the OP
Units or Participation Interest to be purchased or redeemed, when
aggregated with other Transfers of Partnership Interests within
the same taxable year of the Partnership (but not including
Private Transfers), would constitute a Percentage Interest of ten
percent (10%) or less.
(ii) The General Partner may establish such policies and
procedures as it may deem necessary or desirable in its
discretion to administer the 10% Percentage Interest limit set
forth in subparagraph (i) above, including without limitation
imposing further limitations on the OP Units or Participation
Interest with respect to which the Redemption Right may be
exercised during any period of time shorter than a calendar year
and establishing procedures to allocate the ability to exercise
the Redemption Right among the Limited Partners.
(iii) The restrictions set forth in clauses (i) and (ii) above
shall continue in effect until such time as the Partnership is no
longer potentially subject to classification as a publicly traded
partnership, as defined in Code Section 7704, in the absence of
such restrictions, as determined by the General Partner in its
discretion. The restrictions set forth in clauses (i) and (ii)
above,
15
together with the restrictions on the Transfer of Partnership
Interests set forth in Section 12(B), are intended to limit
transfers of interests in the Partnership in such a manner as to
permit the Partnership to qualify for the safe harbors from
treatment as a publicly traded partnership set forth in
Regulations Sections 1.7704-1(d), (e), (f) and (j) and shall be
construed and administered in accordance therewith. The General
Partner may modify the restrictions set forth in clauses (i) and
(ii) above, and the provisions of Section 12(B), from time to
time in its discretion to ensure that the Partnership complies
and continues to comply with the Code and Regulations
requirements described above. Notwithstanding anything herein to
the contrary, the provisions of subparagraphs (i)-(iii) shall
only apply if, and beginning with the first day of the first
taxable year in which, the Partnership no longer qualifies for
the Private Placement PTP Exemption.
(iv) A Limited Partner shall not be entitled to exercise
either a Redemption Right or any right to convert a Preference
Unit into an OP Unit if such exercise would (a) result in the
total Common Shares and any other ownership or beneficial
interests in the Company being owned by fewer than one hundred
persons within the meaning of Code Section 856(a)(5); (b) result
in such Limited Partner or any other person owning, directly or
constructively under Code Section 856(d)(5), in excess of 9.9% of
the total Common Shares (and any other ownership or beneficial
interests) in the Company; (c) cause more than 50% of the value
of the Company's Common Shares (and any other ownership or
beneficial interests) to be held by five or fewer individuals and
certain organizations under Code Section 856(h) and 542(a)(2);
(d) cause the Company to own, directly or constructively, 10% or
more of the ownership interests of any person that is a tenant
with respect to any real property owned or constructively owned
by the Company (so as to prevent the application of Code Section
856(d)(2)); or (e) cause the acquisition of Common Shares (and
any other ownership or beneficial interests) in the Company by
such Limited Partner to be "integrated" with any other
distribution of interests in the Company for purposes of
complying with the registration provisions of the Securities Act
of 1933. The General Partner may modify the restrictions set
forth in this Section 3.2(D)(iv) from time to time in its
discretion to ensure that the Partnership complies and continues
to comply with Code Section 856. The General Partner may, in its
sole discretion, waive the restrictions on redemption set forth
in this Section 3.2(D)(iv); provided, however, that in the event
a restriction is waived, the redeeming partner shall be paid the
Cash Amount.
(v) A Limited Partner shall not be entitled to exercise a
Redemption Right if it prejudices or affects the continuity of
the Partnership for purposes of Code Section 708. Prior to any
such redemption described in the preceding sentence, the General
Partner may require an opinion of counsel satisfactory to the
General Partner to the effect that such redemption will not cause
adverse tax consequences to the nonredeeming Partners, and such
Limited Partner exercising the Redemption Right shall be
responsible for paying said counsel's fee for his opinion.
16
Provided, however, that the General Partner may exempt a
Limited Partner from the foregoing restrictions to the same
extent, and under the same circumstances, that the General
Partner may waive similar restrictions pursuant to its Articles
of Incorporation.
E. Notwithstanding the provisions of Section 3.2(C), a Limited
Partner that exercises the Redemption Right shall be deemed to have
offered to sell the OP Units or Participation Interest described in
the Notice of Redemption to the Company, and the Company (or any
designee thereof) may, in its sole and absolute discretion, elect to
purchase directly and acquire such OP Units or Participation Interest
by paying to the Redeeming Partner either the Cash Amount or the REIT
Shares Amount, as elected by the Company or any designee thereof (each
in its sole and absolute discretion), on the Specified Redemption
Date, whereupon the Company or any designee thereof shall acquire the
OP Units or Participation Interest offered for redemption by the
Redeeming Partner and shall be treated for all purposes of this
Agreement as the owner of such OP Units or Participation Interest. If
the Company or any designee thereof shall elect to exercise its right
to purchase OP Units or a Participation Interest under this Section
3.2(E) with respect to a Notice of Redemption, it shall so notify the
Redeeming Partner within five Business Days after the receipt by the
General Partner of such Notice of Redemption. Unless the Company or
any designee thereof (each in its sole and absolute discretion) shall
exercise its right to purchase OP Units or a Participation Interest
from the Redeeming Partner pursuant to this Section 3.2(E), neither
the Company nor any designee thereof shall have any obligation to the
Redeeming Partner or the Partnership with respect to such Redeeming
Partner's exercise of such Redemption Right. In the event that the
Company or any designee thereof shall exercise its right to purchase
OP Units or a Participation Interest with respect to the exercise of a
Redemption Right in the manner described in the first sentence of this
Section 3.2(E), the Partnership shall have no obligation to pay any
amount to the Redeeming Partner with respect to such Redeeming
Partner's exercise of such Redemption Right, and each of the Redeeming
Partner, the Partnership, and the Company or any designee thereof, as
the case may be, shall treat the transaction between the Company or
any designee thereof, as the case may be, and the Redeeming Partner
for federal income tax purposes as a sale of the Redeeming Partner's
OP Units or Participation Interest to the Company or any designee
thereof. Each Redeeming Partner agrees to execute such documents as
the General Partner may reasonably require in connection with the
issuance of Common Shares upon exercise of the Redemption Right. Any
OP Units or Participation Interest acquired by the General Partner
pursuant to such Redemption Right shall, upon and after such
acquisition, be treated as a general partner interest.
F. The Company shall at all times reserve and keep available out
of its authorized but unissued Common Shares, solely for the purpose
of effecting the exchange of OP Units and the Participation Interest
for Common Shares, such number of Common Shares as shall from time to
time be sufficient to effect the redemption of the Participation
Interest and all outstanding OP Units not owned by the Company, and
any Preference Units not owned by the Company that are convertible
into OP Units (whether or not the conversion can then be effected). No
Limited Partner shall, by virtue of being the holder of the
Participation Interest or one or more OP Units and/or Preference Units
be deemed to be a shareholder of or have any other interest in the
Company. In the event
17
of any change in the outstanding Common Shares of the Company or
its successor by reason of any share dividend, split,
recapitalization, merger, consolidation, combination, exchange of
shares or other similar corporate change other than the issuance of
Rights, as further described in Section 3.2(G) (a "Recapitalization"),
the number of OP Units held by each Partner shall be adjusted upward
or downward to equal such number of Common Shares of the Company (or
as applicable, the Common Shares or equivalent class of securities of
the successor thereto) as would have been held by the Partner
immediately following the Recapitalization if such Partner had held a
number of Common Shares equal to such number of OP Units immediately
prior to such Recapitalization. In the event the Company or any
designee thereof acquires OP Units or a Participation Interest
pursuant to such Section 3.2(E), the General Partner shall record the
transfer on the books of the Partnership so that the Company or any
designee thereof, as applicable, is thereupon the owner and holder of
such OP Units or Participation Interest. As is more particularly
described in Section 3.2(D)(iv), notwithstanding any other provisions
of this Section 3.2, a Limited Partner shall not have the right to
exercise a Redemption Right if, upon payment of the REIT Shares Amount
to such Limited Partner, (i) the Company would, as a result thereof,
no longer qualify (or it would be reasonably possible in the judgement
of the General Partner that the Company no longer would qualify) as a
real estate investment trust under the Code; or (ii) the payment of
such REIT Shares Amount to the Limited Partner would constitute or be
reasonably possible in the judgment of the General Partner to
constitute a violation of applicable federal or state securities laws
or would violate any applicable provisions of the organizational
documents of the Company (including without limitation any
restrictions on ownership of securities of the Company set forth in
the Articles of Incorporation or Bylaws of the Company). In either
such event, to the extent the consequences described in (i) or (ii)
could be eliminated by reasonable action of the General Partner or the
Company without any material detriment to the General Partner or the
Company and at the expense of such Limited Partner(s) requesting such
exchange, the Company or the General Partner shall take all such
reasonable action to effect the exchange of OP Units or a
Participation Interest for Common Shares by such Limited Partner(s) as
herein provided.
G. In the event that a Redeeming Partner exercises the Redemption
Right, and the Company or any designee thereof elects to make the
payment of the REIT Shares Amount to the Redeeming Partner referenced
in accordance with the first sentence of Section 3.2(E), and in the
event that the Company issues to all of its holders of Common Shares
as of a certain record date rights, options, warrants or convertible
or exchangeable securities entitling such shareholders to subscribe
for or purchase Common Shares or any other securities or property
(collectively, "Rights"), with the record date for such Rights
issuance falling within the period starting on the date that the
Company receives the Redemption Notice from the Redeeming Partner and
ending on the day immediately preceding the date upon which the
Company or its designee delivers the Common Shares to the Redeeming
Partner in exchange for such Redeeming Partner's OP Units (the date
upon which such exchange occurs being referred to herein as the
"Exchange Date"), which Rights will not be distributed before the
Exchange Date, then the amount payable by the Company or its designee
to the Redeeming Partner in exchange for its OP Units or Participation
Interest under this Section 3.2 shall also include such Rights that
the Redeeming Partner would have received if it had been the
18
owner of the Common Shares to be delivered by the Company to the
Redeeming Partner prior to the record date for the issuance of the
Rights (as the same may be expressed for any purpose hereunder in a
number of OP Units or Common Shares as determined by the General
Partner).
3.3 ADDITIONAL FUNDS.
A. No Partner shall be assessed or, except as otherwise provided
in this Agreement, be required to contribute additional funds or other
property to the Partnership. Any additional funds or other property
required by the Partnership, as determined by the General Partner in
its sole discretion, may, at the option of the General Partner and
without an obligation to do so (except as provided for in Section
3.3(B) below), be contributed by the General Partner or any other
Partner (provided such other Partner is willing to do so and the
General Partner consents thereto, each in its sole and absolute
discretion) as additional Capital Contributions. If and as the General
Partner or any other Partner makes additional Capital Contributions to
the Partnership, each such Partner shall receive additional OP Units
and/or Preference Units as provided for in Section 3.2(B) above. The
General Partner shall also have the right (but not the obligation) to
raise any additional funds required for the Partnership in accordance
with the provisions of Section 9.7(E) below and/or by causing the
Partnership to borrow the necessary funds from third parties on such
terms and conditions as the General Partner shall deem appropriate in
its sole discretion. If the General Partner elects to cause the
Partnership to borrow the additional funds, or if the Partnership
issues a guaranty, indemnity or similar undertaking in connection with
the indebtedness of the Company as aforesaid, in any such case one or
more of the Partnership's assets may be encumbered to secure the loan
or undertaking. Except as provided for in Section 3.3(C) below, no
Limited Partner shall have the right to make additional Capital
Contributions to the Partnership without the prior written consent of
the General Partner.
B. Except for (i) the capitalization of any wholly-owned entity
of the General Partner which is the general partner of a partnership
having the Partnership as a limited partner, (ii) the net proceeds
generated by the issuance of Other Securities that evidence debt (and
are not equity securities) that are loaned by the Company to the
Partnership, and (iii) where the Company determines that the net
proceeds generated by the issuance of Common Shares or Other
Securities (whether for debt or equity) are to be retained by the
Company for a valid business reason consistent with the purposes of
the Partnership and such retention does not materially adversely
affect the Limited Partners, the net proceeds of any and all funds
raised by or through the Company through the issuance of Common Shares
or Other Securities shall be contributed to the Partnership as
additional Capital Contributions, and in such event the Company shall
be issued additional Units pursuant to Section 3.2(B) above.
C. If the General Partner creates and administers a reinvestment
program in substantial conformance with a dividend reinvestment
program which may be available from time to time to holders of the
Common Shares, each Limited Partner holding OP Units shall have the
right to reinvest any or all cash distributions payable to it from
time to time pursuant to this Agreement (subject to the restrictions
described in
19
Article 12), by having some or all (as the Limited Partner
elects) of such distributions contributed to the Partnership as
additional Capital Contributions, and in such event the Partnership
shall issue to each such Limited Partner additional OP Units pursuant
to Section 3.2(B)(iii) above, or the General Partner, in its sole
discretion, may elect to cause distributions with respect to which a
Limited Partner has elected reinvestment to be contributed to the
Company in exchange for the issuance of Common Shares. At the option
of the General Partner, such a program may also be made available with
respect to Preference Units.
3.4 CAPITAL ACCOUNTS. A separate capital account ("Capital Account")
shall be maintained for each Partner.
A. To each Partner's Capital Account there shall be added the
amount of cash and the Gross Asset Value of any property contributed
by such Partner to the Partnership pursuant to any provision of this
Agreement, such Partner's distributive share of Profits and any items
in the nature of income or gain which are specially allocated pursuant
to Section 7.3, Section 7.4 or Section 14.2(C) hereof, and the amount
of any Partnership liabilities assumed by such Partner or which are
secured by any Partnership property distributed to such Partner.
B. From each Partner's Capital Account there shall be subtracted
the amount of cash and the Gross Asset Value of any Partnership
property distributed to such Partner pursuant to any provision of this
Agreement, such Partner's distributive share of losses and any items
in the nature of expenses or losses which are specially allocated
pursuant to Section 7.3, Section 7.4 or Section 14.2(C) hereof, and
the amount of any liabilities of such Partner assumed by the
Partnership or which are secured by any property contributed by such
Partner to the Partnership.
C. In the event all or a portion of a Partnership Interest is
transferred in accordance with the terms of this Agreement (including
a transfer of OP Units or a Participation Interest in exchange for
Common Shares, pursuant to Section 3.2(E)), the transferee shall
succeed to the Capital Account of the transferor to the extent it
relates to the transferred Partnership Interest.
D. In determining the amount of any liability for purposes of
Sections 3.4(A) and 3.4(B) above, there shall be taken into account
Code Section 752(c) and any other applicable provisions of the Code
and Regulations.
E. This Section 3.4 and the other provisions of this Agreement
relating to the maintenance of Capital Accounts are intended to comply
with Regulations Section 1.704-1(b), and shall be interpreted and
applied in a manner consistent with such Regulations. In the event the
General Partner shall determine that it is prudent to modify the
manner in which the Capital Accounts, or any debits or credits thereto
(including, without limitation, debits or credits relating to
liabilities which are secured by contributed or distributed property
or which are assumed by the Partnership, or the Partners) are computed
in order to comply with such Regulations, the General Partner may make
such modification, provided that it is not likely to have a material
effect on the amounts
20
distributed to any Partner pursuant to Section 14.2 upon the
liquidation 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
1.704-1(b)(2)(iv)(g), and (ii) make any appropriate modifications in
the event unanticipated events might otherwise cause this Agreement
not to comply with Regulations Section 1.704-1(b).
3.5 INTEREST ON AND RETURN OF CAPITAL.
A. No Partner shall be entitled to any interest on its Capital
Account or on its Capital Contributions to the Partnership.
B. Except as expressly provided for in this Agreement, no Partner
shall have the right to demand or to receive the return of all or any
part of its Capital Contributions to the Partnership and there shall
be no priority of one Partner over another Partner as to the return of
capital contributions or withdrawals or distributions of profits and
losses. No Partner shall have the right to demand or receive property
other than cash in return for the contributions of such Partner to the
Partnership.
3.6 NEGATIVE CAPITAL ACCOUNTS. Upon the liquidation of the Partnership
or the liquidation of the Participation Interest, the holder of the
Participation Interest shall be required to pay to the Partnership any deficit
or negative balance which may exist in its Capital Account at such time
(determined after taking into account the allocations described in Article 7 or
Section 14.2(C) for the year in which such liquidation or redemption occurs).
Subject to the provisions of any guarantee or other written agreement between a
Partner and the Partnership, or except as provided in the preceding sentence,
no Partner shall otherwise be required to pay to the Partnership any deficit or
negative balance which may exist in its Capital Account.
3.7 LIMIT ON CONTRIBUTIONS AND OBLIGATIONS OF PARTNERS. Except as
provided in Sections 3.1, 3.2 and 3.3 (or the provisions of any guarantee or
other written agreement between a Partner and the Partnership), no Partner
shall be required to make any additional advances or contributions to or on
behalf of the Partnership or guarantee any obligations of the Partnership.
3.8 REDEMPTION AND REPURCHASE OF UNITS. Notwithstanding any other
provision of this Agreement which may be contrary to this Section 3.8, in the
event of the proposed repurchase or redemption for cash by the Company of (i)
Common Shares or (ii) Other Securities with respect to which the Partnership
had previously issued Preference Units pursuant to Section 3.2(B)(iv) of this
Agreement, then, in such event, the Partnership shall provide cash to the
Company concurrently with such repurchase or redemption or for such purpose
equal to the proposed repurchase or redemption price, and one OP Unit owned by
the General Partner (or, in the case of redemption or repurchase by the Company
of Other Securities contemplated by clause (ii) above, one Preference Unit
owned by the General Partner which had been issued with respect to such Other
Securities) shall be canceled with respect to each Common Share (or share of
Other Securities) so repurchased or redeemed.
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3.9 REDEMPTION AND REPURCHASE OF INTERESTS OWNED BY XXXXX CONTROLLED
ENTITIES. Notwithstanding any other provision of this Agreement which may be
contrary to this Section 3.9, if at any time the General Partner is not
sponsored by a Xxxxx Controlled Entity, HALP, HREH, and each other Xxxxx
Controlled Entity may redeem all or a portion of the Participation Interest
and/or Units it owns at any time, or from time to time. The redemption price of
the portion of the Participation Interest and/or Units being redeemed will be
equal to the Cash Amount attributable to such Participation Interest or Units,
as the case may be. The holder may elect, at its option, to receive cash or
Common Shares (or a combination of same) in connection with such redemption.
ARTICLE IV
OFFICE AND REGISTERED AGENT
The address of the registered office of the Partnership in the State
of Delaware is located at 0000 Xxxxxx Xxxxxx, Xxxx xx Xxxxxxxxxx, Xxxxxx of Xxx
Xxxxxx, Xxxxx xx Xxxxxxxx 00000, and the registered agent for service of
process on the Partnership in the State of Delaware at such registered office
is the Corporation Trust Company. The principal office of the Partnership is
located at 0000 Xxxx Xxx Xxxxxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxx 00000-0000 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 may deem advisable.
ARTICLE V
PURPOSES AND POWERS OF PARTNERSHIP
5.1 PURPOSES OF THE PARTNERSHIP. The objects and purposes of the
Partnership are to engage in any lawful business activities in which a
partnership formed under the Act may engage or participate, with its primary
objects and purposes being, either as a partner in a partnership or joint
venture or otherwise, to purchase, own, maintain, mortgage, encumber,
construct, develop, equip, manage, lease, finance, operate, dispose of or
otherwise deal with real property, interests in real property or mortgages
secured by real property.
5.2 POWERS. The Partnership purposes may be accomplished by taking any
action which is not prohibited under the Act.
5.3 REIT REQUIREMENTS. Each Limited Partner understands and
acknowledges that the General Partner intends to elect to be treated as a real
estate investment trust ("REIT") under Code Section 856. Each Limited Partner
further understands and acknowledges that in order to maintain its status as a
REIT, the General Partner must comply with numerous and complex rules and
regulations set forth in the Code and the Regulations, many of which are
applied on a quarterly and/or annual basis (the "REIT Requirements"), and that
the management and operation of the Partnership will have a material effect on
the ability of the General Partner to continue to maintain its status as a
REIT. Accordingly, notwithstanding any other provision of this Agreement or any
non-mandatory provision of the Act, the Partnership shall not take any action
which (or fail to take any action, the omission of which) (i) could adversely
affect the ability of the General Partner to qualify or continue to qualify as
a
22
REIT, (ii) could subject the General Partner to any additional taxes under Code
Section 857 or Code Section 4981 or other potentially adverse consequences
under the Code, or (iii) otherwise could cause the General Partner to violate
the REIT Requirements, specifically including, but not limited to, restrictions
on Redemption Rights in Section 3.2(D)(iv). In addition, notwithstanding any
other provision of this Agreement or any non-mandatory provision of the Act,
any action of the General Partner on behalf of the Partnership or any decision
of the General Partner to refrain from acting on behalf of the Partnership,
undertaken in the General Partner's business judgement that such action or
omission is necessary or advisable in order (i) to protect the ability of the
General Partner to continue to qualify as a REIT or (ii) to avoid the General
Partner incurring any taxes under Code Section 857 or Code Section 4981, is
expressly authorized under this Agreement and is approved by all of the Limited
Partners.
ARTICLE VI
TERM
The term of the Partnership shall continue until the Partnership is
terminated upon the occurrence of an event described in Section 14.1 below.
ARTICLE VII
ALLOCATIONS
7.1 PROFITS. A. After giving effect to the special allocations set
forth in Sections 7.3, 7.4, and 14.2(C), Profits for any fiscal year other than
Capital Transactions Gains shall be allocated as follows:
(i) first, gross profits shall be allocated to the holder of
the Participation Interest, until the cumulative amount of
Profits allocated to such holder pursuant to this Section 7.1(A)
with respect to its Participation Interest equals the cumulative
amount of distributions, other than distributions of proceeds
from transactions resulting in Capital Transaction Gains or
Losses, made to such holder pursuant to Section 8.2 hereof with
respect to its Participation Interest; and
(ii) thereafter, remaining Profits shall be allocated among
the Partners in proportion to the number of OP Units held by each
such Partner.
B. After giving effect to the allocations set forth in Sections
7.3, 7.4 and 14.2(C), Capital Transaction Gains shall be computed
separately with respect to each property and shall be allocated among
the Partners as follows:
(i) first, among the Partners in proportion to, and to the
extent of, any deficit balance in each such Partner's Capital
Account;
(ii) second, to the holder of the Participation Interest in
the minimum amount needed so as to cause its Capital Account
balance to equal the product of the Percentage Interest
attributable to the Participation Interest and the aggregate
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Capital Account balances of all the Partners (after giving
effect to the allocation in this clause (ii)); and
(iii) thereafter, among the Partners in proportion to their
respective Percentage Interests.
C. In the event that the Partnership issues additional Units to
the General Partner or any Limited Partner pursuant to Section 3.2
hereof, the General Partner shall make such revisions to this Section
7.1 as it determines are necessary to reflect the terms of the
issuance of such additional Units, including such revisions as are
needed to ensure that such allocations (i) will comply with the terms
of Regulations Sections 1.704-1 and -2 and Code Section 514(c)(9)(E),
(ii) will properly reflect the varying interests of the Partners in
the Partnership, and (iii) will cause the Capital Accounts of the
Partners held by them to be in the ratios in which the Partners are
entitled to receive distributions with respect to their Partnership
Interests pursuant to Article 8 hereof.
7.2 LOSSES.
A. After giving effect to the special allocations set forth in
Sections 7.3, 7.4, and 14.2(C), all Losses (including Capital
Transaction Losses, which shall be computed and allocated separately
with respect to each property) shall be allocated among the Partners
as follows:
(i) first, among the Partners in proportion to the number of
OP Units held by each such Partner, until the aggregate Capital
Account balances of the Partners holding OP Units is reduced to
an amount equal to the product of (a) 100% minus the Percentage
Interest attributable to the Participation Interest and (b) the
aggregate Capital Account balances of all the Partners (after
giving effect to the allocation in this clause (i));
(ii) second, among the Partners in proportion to their
respective positive Capital Account balances; and
(iii) thereafter, among the Partners in proportion to the
number of OP Units held by each such Partner.
B. The Losses allocated pursuant to Section 7.2(A) above shall
not exceed the maximum amount of Losses that can be so allocated
without causing any Limited Partner to have an Adjusted Capital
Account Deficit at the end of any fiscal year. All Losses in excess of
the limitations set forth in this Section 7.2(B) shall be allocated
among the other Partners in proportion to the number of OP Units held
by each such other Partner.
C. In the event that the Partnership issues additional Units to
the General Partner or any Limited Partner pursuant to Section 3.2
hereof, the General Partner shall make such revisions to this Section
7.2 as it determines are necessary to reflect the terms of the
issuance of such additional Units, including such revisions as are
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needed to ensure that such allocations (i) will comply with the
terms of Regulations Sections 1.704-1 and -2 and Code Section
514(c)(9)(E), (ii) will properly reflect the varying interests of the
Partners in the Partnership, and (iii) will cause the Capital Accounts
of the Partners to be in the ratios in which the Partners are entitled
to receive distributions with respect to their Partnership Interests
pursuant to Article 8 hereof.
7.3 SPECIAL ALLOCATIONS. The following special allocations shall be
made in the following order:
A. Except as otherwise provided in Regulations Section
1.704-2(f), and notwithstanding any other provision of this Article 7,
if there is a net decrease in Partnership Minimum Gain during any
fiscal year, each Partner shall be specially allocated items of
Partnership income and gain for such fiscal year (and, if necessary,
subsequent fiscal years) in an amount equal to such Partner's share of
the net decrease in Partnership Minimum Gain, determined in accordance
with Regulations Section 1.704-2(g). The items to be so allocated
shall be determined in accordance with Regulations Sections
1.704-2(f)(6) and 1.704-2(j)(2). This Section 7.3(A) is intended to
comply with the minimum gain chargeback requirement in Regulations
Section 1.704-2(f) and shall be interpreted consistently therewith.
B. Except as otherwise provided in Regulations Section
1.704-2(i)(4), and notwithstanding any other provision of this Article
7, if there is a net decrease in Partner Nonrecourse Debt Minimum Gain
attributable to a Partner Nonrecourse Debt during any Partnership
fiscal year, each Partner who has a share of the Partner Nonrecourse
Debt 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
fiscal year (and, if necessary, subsequent fiscal years) in an amount
equal to such Partner's share of the net decrease in Partner
Nonrecourse Debt Minimum Gain attributable to such Partner Nonrecourse
Debt, determined in accordance with Regulations Section 1.704-2(i)(4).
The items to be so allocated shall be determined in accordance with
Regulations Sections 1.704-2(i)(4) and 1.704-2(i)(2). This Section
7.3(B) is intended to comply with the minimum gain chargeback
requirement in Regulations Section 1.704-2(i)(4) and shall be
interpreted consistently therewith.
C. In the event any Partner unexpectedly receives any
adjustments, allocations, or distributions described in Regulations
Sections 1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5), or
1.704-1(b)(2)(ii)(d)(6), items of Partnership income and gain shall be
specially allocated to each such Partner in an amount and manner
sufficient to eliminate, to the extent required by the Regulations,
the Adjusted Capital Account Deficit of such Partner as quickly as
possible, provided that an allocation pursuant to this Section 7.3(C)
shall be made only if and to the extent that such Partner would have
an Adjusted Capital Account Deficit after all other allocations
provided for in this Article 7 have been tentatively made, as if this
Section 7.3(C) were not in this Agreement.
D. In the event any Partner has a deficit Capital Account at the
end of any Partnership fiscal year which is in excess of the sum of
(i) the amount such Partner is
25
obligated to restore pursuant to any provision of this Agreement,
and (ii) the amount such Partner 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), each such Partner shall be specially
allocated items of Partnership income and gain in the amount of such
excess as quickly as possible, provided that an allocation pursuant to
this Section 7.3(D) shall be made only if and to the extent that such
Partner would have a deficit Capital Account after all other
allocations provided for in this Article 7 have been made as if
Section 7.3(C) hereof and this Section 7.3(D) were not in the
Agreement.
E. If and to the extent Partners holding Preference Units receive
preferred distributions from the Partnership (other than distributions
pursuant to Section 14.2(C) in final liquidation of the Partnership),
each such Partner shall be allocated Partnership gross income in an
amount equal to the amount of preferred distributions received with
respect to such Preference Units, prior to any allocations of Profit
and Loss pursuant to Sections 7.1 and 7.2 above. For purposes of this
Section 7.3(E), any payment with respect to a Preference Unit that,
under the applicable Preference Unit Term Sheet, constitutes a payment
in redemption of such Preference Unit (and a return of the Partner's
Capital Contribution with respect to such Preference Unit) shall not
result in a special allocation of gross income to the Partner
receiving such payments under this Section 7.3(E), except to the
extent such payment is specifically attributable to accrued and unpaid
preferred distributions with respect to such Preference Unit provided
for in such Preference Unit Term Sheet.
F. Nonrecourse Deductions for any fiscal year shall be allocated
among the Partners in accordance with their respective Percentage
Interests.
G. Any Partner Nonrecourse Deductions for any fiscal year shall
be specially allocated to the Partner who bears the economic risk of
loss with respect to the Partner Nonrecourse Debt to which such
Partner Nonrecourse Deductions are attributable, in accordance with
Regulations Section 1.704-2(i)(1).
H. To the extent an adjustment to the adjusted tax basis of any
Partnership asset pursuant to Code Section 734(b) is required,
pursuant to Regulations Section 1.704-1(b)(2)(iv)(m)(4), to be taken
into account in determining Capital Accounts as the result of a
distribution to a Partner in complete liquidation of its interest in
the Partnership, the amount of such adjustment to Capital Accounts
shall be treated as an item of gain (if the adjustment increases the
basis of the asset) or loss (if the adjustment decreases such basis)
and such gain or loss shall be specifically allocated to the Partner
to whom such distribution was made.
7.4 CURATIVE ALLOCATIONS. The allocations set forth in Sections 7.2(C), 7.3(A),
7.3(B), 7.3(C), 7.3(D), 7.3(F), 7.3(G), and 7.3(H) above (the "Regulatory
Allocations") are intended to comply with certain requirements of the
Regulations under Code Section 704(b). It is the intent of the Partners that,
to the extent possible, all Regulatory Allocations shall be offset either with
other Regulatory Allocations or with special allocations of other items of
Partnership income, gain, loss, or deduction pursuant to this Section 7.4.
Therefore, notwithstanding any other provision of this Article 7 (other than
the Regulatory Allocations), the
26
General Partner shall make such offsetting special allocations of Partnership
income, gain, loss, or deduction in whatever manner it determines appropriate
so that, after such offsetting allocations are made, each Partner's Capital
Account balance is, to the extent possible, equal to the Capital Account
balance such Partner would have had if the Regulatory Allocations were not part
of the Agreement and all Partnership items were allocated pursuant to Section
7.1(A)(ii) and 7.2(A) (subject, however, to Section 7.3(E) above). In
exercising its discretion under this Section 7.4, the General Partner shall
take into account future Regulatory Allocations under Section 7.3(A) and 7.3(B)
that, although not yet made, are likely to offset other Regulatory Allocations
previously made under Sections 7.3(F) and 7.3(G).
7.5 TAX ALLOCATIONS: CODE SECTION 704(C).
A. Income, gain, loss, and deduction with respect to any property
contributed to the capital of the Partnership shall, solely for tax
purposes, be allocated among the Partners so as to take account of any
variation between the adjusted basis of such property to the
Partnership for Federal income tax purposes and its initial Gross
Asset Value in accordance with any permissible method or methods under
Code Section 704(c) and the Regulations thereunder, as determined in
the sole discretion of the General Partner.
B. In the event the Gross Asset Value of any Partnership asset is
adjusted pursuant to the definition of "Gross Asset Value" contained
in Article 2 above, subsequent allocations of income, gain, loss and
deduction with respect to such asset shall take account of any
variation between the adjusted basis of such asset for Federal income
tax purposes and its Gross Asset Value in the same manner or manners
permitted under Code Section 704(c) and the Regulations thereunder.
C. The portion of any gain recognized by the Partnership on the
disposition of property which is classified as ordinary income under
Sections 751, 1245 or 1250 of the Code, or which is classified as
"unrecaptured section 1250 gain" under Section 1(h)(7) of the Code,
shall be allocated among the Partners in the ratio in which the
deductions giving rise to such ordinary income or unrecaptured section
1250 gain were allocated; provided, however, that the amount of
ordinary income or unrecaptured section 1250 gain so allocated shall
not exceed the gain from such sale or disposition that is so allocable
to the Partner.
D. Any elections or other decisions relating to the allocations
provided under this Section 7.5 shall be made by the General Partner
using any permissible manner under the Code or the Regulations that
the General Partner may elect in its sole discretion. Allocations
pursuant to this Section 7.5 are solely for purposes of Federal,
state, and local taxes and shall not affect, or in any way be taken
into account in computing, any Partner's Capital Account or share of
Profits, Losses, other items, or distributions pursuant to any
provision in this Agreement.
27
ARTICLE VIII
CASH AVAILABLE FOR DISTRIBUTION
8.1 DEFINITION OF AVAILABLE CASH. As used in this Agreement,
"Available Cash" shall mean and be defined as all cash receipts of the
Partnership from whatever source during the period in question in excess of all
items of Partnership expense (other than non-cash expenses such as
depreciation) and other cash needs of the Partnership, including, without
limitation, investments by the Partnership, amounts paid by the Partnership as
principal on debts and advances during such period, capital expenditures,
payments to any dealer manager, advisor or property manager under any dealer
manager, advisory and/or property management agreement, other fees and expense
reimbursements, funds used for redemptions, and any reserves (as determined by
the General Partner) established or increased during such period. In the
discretion of the General Partner, but subject to Section 5.3, reserves may
include cash held for future acquisitions.
8.2 TIMING AND PRIORITY OF DISTRIBUTIONS OF AVAILABLE CASH. Available
Cash shall be distributed to or for the benefit of the Partners of record as of
the applicable Record Date not less frequently than monthly. All such
distributions shall, subject to the rights of any holder of Preference Units,
be distributed among the Partners holding OP Units and Participation Interests
in proportion to their respective Percentage Interests as of the applicable
Record Date.
8.3 CONSENT TO ALLOCATIONS AND DISTRIBUTIONS. Each of the Partners
hereby consents to the allocations and distributions provided for in this
Agreement. 8.4 RIGHT TO LIMIT DISTRIBUTIONS. The right of any Partner to
receive distributions of any nature pursuant to the terms of this Agreement
shall be subject to the terms of any agreement between such Partner and the
Partnership limiting, restricting or providing rights of set-off with respect
to such distributions.
ARTICLE IX
MANAGEMENT OF PARTNERSHIP
9.1 GENERAL PARTNER. The General Partner shall be the sole manager of
the Partnership business, and shall have the right and power to make all
decisions and take any and every action with respect to the property, the
business and affairs of the Partnership and shall have all the rights, power
and authority generally conferred by law, or necessary, advisable or consistent
with accomplishing the purposes of the Partnership. All such decisions or
actions made or taken by the General Partner hereunder shall be binding upon
all of the Partners and the Partnership. The powers of the General Partner to
manage the Partnership business shall include, without limitation, the power
and authority to, directly or indirectly:
(i) operate any business normal or customary for the owner of
or investor in commercial property of the type held by the
Partnership;
(ii) perform any and all acts necessary or appropriate to the
operation of the Partnership's assets, including, but not limited
to, preparing,
28
negotiating, executing and delivering leases and rental
agreements with regard to real and personal property owned by the
Partnership, preparing applications for rezoning, preparing
objections to rezoning of other property and establishing bank
accounts in the name of the Partnership;
(iii) improve, renovate and/or perform construction activities
with regard to the properties owned by the Partnership and to
retain such contractors, subcontractors and other persons or
entities as may be required in connection with such activities;
(iv) procure and maintain such insurance as may be available
in such amounts and covering such risks as are deemed appropriate
by the General Partner;
(v) take and hold all real, personal and mixed property of the
Partnership in the name of the Partnership or in the name of a
nominee;
(vi) negotiate, execute and deliver agreements on behalf of
and in the name of the Partnership;
(vii) borrow money (whether on a secured or unsecured basis),
finance and refinance the assets of the Partnership or any part
thereof or interest therein, and in connection therewith, issue
notes, bonds, securities and other undertakings and evidences of
indebtedness and documents related thereto (including, without
limitation, guaranties, indemnities and similar undertakings to
support loans obtained or debt securities issued by the Company);
(viii) coordinate all accounting and clerical functions of the
Partnership and employ such accountants, lawyers, property
managers, leasing agents and other management or service
personnel as may from time to time be required to carry on the
business of the Partnership;
(ix) acquire any assets, and encumber, sell, assign, transfer,
ground lease or otherwise dispose of any or all of the assets of
the Partnership, or any part thereof or interest therein
including, without limitation, by way of any Unit dividend,
split, recapitalization, merger, consolidation, combination,
exchange of Units or other similar Partnership organizational
change;
(x) organize one or more partnerships, corporations, limited
liability companies or other business entities which are
controlled, directly or indirectly, by the Partnership and make
any capital contributions (in cash or in kind) required pursuant
to the organizational documents or subscription agreements
relating to any such partnerships, corporations, limited
liability companies or other business entities; and
(xi) establish the date (the "Record Date") for the purpose of
making any proper determination in connection with, but not
limited to, the following matters: (a) which Partners are
entitled to receive distributions, (b)
29
consent to any matter for which the consent of Partners is
permitted or required under any provision hereof, or (c)
otherwise when Partners are allocated rights hereunder.
9.2 LIMITATIONS ON POWER AND AUTHORITY OF PARTNERS. Notwithstanding
the powers of the General Partner set forth in Section 9.1 above, the General
Partner shall not have the right or power to do any of the following unless any
such action is approved by a Majority-in-Interest of the Limited Partners:
A. do any act in contravention of this Agreement, or any
amendment hereto; or
B. do any act which would make it impossible to carry on the
ordinary business of the Partnership, except to the extent that such
act is specifically permitted by the terms hereof (it being understood
and agreed that a sale of any or all of the assets of the Partnership,
for example, would be an ordinary part of the Partnership's business
and affairs and is specifically permitted hereby).
9.3 LIMITED PARTNERS. The Limited Partners shall have no right or
authority to act for or to bind the Partnership and no Limited Partner (other
than the General Partner if the General Partner is also a Limited Partner)
shall participate in the conduct or control of the Partnership's affairs or
business.
9.4 LIABILITY OF GENERAL PARTNER. The General Partner shall not be
liable or accountable, in damages or otherwise, to the Partnership or to any
other Partner for any error of judgment or for any mistakes of fact or law or
for anything which it may do or refrain from doing hereafter in connection with
the business and affairs of the Partnership except (i) in the case of fraud,
willful misconduct (such as an intentional breach of fiduciary duty or an
intentional breach of this Agreement) or gross negligence, and (ii) for other
breaches of this Agreement, but the liability of the General Partner under this
clause (ii) shall be limited to its interest in the Partnership as more
particularly provided for in Section 9.8. The General Partner shall not have
any personal liability for the return of any Limited Partner's Capital
Contributions.
9.5 INDEMNITY. The Partnership shall indemnify and shall hold the
General Partner (and the officers and directors thereof) harmless from any
liability, loss, cost or damage, including without limitation reasonable legal
fees and court costs, incurred by it by reason of anything it may do or refrain
from doing hereafter for and on behalf of the Partnership or in connection with
its business or affairs; provided, however, that the Partnership shall not be
required to indemnify (i) the General Partner for any liability, loss, cost or
damage which it might incur as a result of its fraud, willful misconduct or
gross negligence in the performance of its duties hereunder, (ii) any officer
or director (other than "Independent Directors", as such term is defined in the
Articles of Incorporation) of the General Partner for any liability, loss, cost
or damage which it might incur as a result of misconduct or negligence of such
person, and (iii) any Independent Directors of the General Partner for any
liability, loss, cost or damage which it might incur as a result of willful
misconduct or gross negligence of such person. In addition, the General Partner
shall be entitled to reimbursement from the Partnership for any amounts paid by
it in satisfaction of indemnification obligations owed by the General Partner
to present or former
30
officers or directors of the General Partner or its predecessors, as provided
for in or pursuant to the Articles of Incorporation and Bylaws of the General
Partner. The right of indemnification set forth in this Section 9.5 shall be in
addition to any rights to which the person or entity seeking indemnification
may otherwise be entitled and shall inure to the benefit of the successors and
assigns of any such person or entity. No Partner shall be personally liable
with respect to any claim for indemnification pursuant to this Section 9.5, but
such claim shall be satisfied solely out of assets of the Partnership.
9.6 OTHER ACTIVITIES OF PARTNERS AND AGREEMENTS WITH RELATED PARTIES.
Except as may otherwise be agreed to in writing, each Limited Partner, and its
affiliates, shall be free to engage in, to conduct or to participate in any
business or activity whatsoever, including, without limitation, the
acquisition, development, management and exploitation of real and personal
property (other than property of the Partnership), without any accountability,
liability or obligation whatsoever to the Partnership or to any other Partner,
even if such business or activity competes with or is enhanced by the business
of the Partnership. The General Partner, in the exercise of its power and
authority under this Agreement, may contract and otherwise deal with or
otherwise obligate the Partnership to entities in which the General Partner or
any one or more of the officers, directors or shareholders of the General
Partner may have an ownership or other financial interest, whether direct or
indirect.
9.7 OTHER MATTERS CONCERNING THE GENERAL PARTNER.
A. The General Partner shall be protected in relying, acting or
refraining from acting on any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, bond,
debenture, or other paper or document believed by it to be genuine and
to have been executed or presented by the proper party or parties.
B. The General Partner may exercise any of the powers granted or
perform any of the duties imposed by this Agreement either directly or
through agents. The General Partner may consult with legal counsel,
accountants, appraisers, management consultants, investment bankers
and other consultants selected by it, each of whom may serve as
consultants for the Partnership. An opinion by any consultant on a
matter which the General Partner believes to be within its
professional or expert competence shall be full and complete
protection as to any action taken or omitted by the General Partner
based on the opinion and actions taken or omitted in accordance
therewith. The General Partner shall not be responsible for the
misconduct, negligence, acts or omissions of any consultant or
contractor of the Partnership or of the General Partner, and shall
assume no obligation other than to use due care in the selection of
all consultants and contractors.
C. No mortgagee, grantee, creditor or any other person dealing
with the Partnership shall be required to investigate the authority of
the General Partner or secure the approval of or confirmation by any
Limited Partner of any act of the General Partner in connection with
the conduct of any ordinary or extraordinary Partnership business.
31
D. The General Partner may retain such persons or entities as it
shall determine (including the General Partner or any entity in which
the General Partner shall have an interest or with which it is
affiliated) to provide services to or on behalf of the Partnership.
The General Partner shall be entitled to reimbursement from the
Partnership for its out-of-pocket expenses (including, without
limitation, amounts paid or payable to the General Partner or any
entity in which the General Partner shall have an interest or with
which it is affiliated) incurred in connection with Partnership
business. Such expenses shall be deemed to include without limitation
those expenses required in connection with the administration of the
Partnership such as the maintenance of Partnership books and records,
management of the Partnership property and assets and preparation of
information respecting the Partnership needed by the Partners in the
preparation of their individual tax returns.
E. The General Partner may loan to the Partnership the net
proceeds of loans obtained or debt securities issued by the Company so
long as the terms of such loan to the Partnership are substantially
equivalent to the corresponding loan obtained or debt securities
issued by the Company.
9.8 PARTNER EXCULPATION. Except for fraud, willful misconduct and
gross negligence, no Partner shall have any personal liability whatsoever,
whether to the Partnership or to any other Partner, for the debts or
liabilities of the Partnership or its obligations hereunder, and the full
recourse of any Partner shall be limited to the interest of that Partner in the
Partnership. To the fullest extent permitted by law, no officer, director or
shareholder of the General Partner shall be liable to the Partnership for money
damages except for (i) active and deliberate dishonesty established by a final
judgment, order or decree of a court of competent jurisdiction or (ii) actual
receipt of an improper benefit or profit in money, property or services.
Without limitation of the foregoing, and except for fraud, willful misconduct
and gross negligence, no property or assets of any Partner, other than its
interest in the Partnership, shall be subject to levy, execution or other
enforcement procedures for the satisfaction of any judgment (or other judicial
process) in favor of any other Partners and arising out of, or in connection
with, this Agreement. No advisor, trustee, manager, trust manager, member,
director, officer, partner, employee, beneficiary, shareholder, participant or
agent of any Partner (or of any partner of a Partner) shall be personally
liable in any matter or to any extent under or in connection with this
Agreement, and the Partnership, each Partner and their respective successors
and assigns shall look solely to the interest of the other Partner in the
Partnership for the payment of any claim or for any performance hereunder.
9.9 GENERAL PARTNER EXPENSES AND LIABILITIES. The Partnership will pay
or reimburse the General Partner for all ongoing accounting and administrative
expenses of the General Partner so that, absent extraordinary circumstances,
the General Partner will not bear any expenses beyond those borne by the
Partnership. The Partnership shall pay all out-of-pocket costs and expenses
(including legal, accounting, tax, consulting and other professional fees and
expenses and travel and entertainment expenses) incurred by the Partnership,
the General Partner, and the General Partner and its Affiliates in connection
with the structuring and organization of the Partnership and the General
Partner and the offering and sale of Units and Common Shares and Other
Securities.
32
ARTICLE X
BANKING
The funds of the Partnership shall be kept in accounts designated by
the General Partner and all withdrawals therefrom shall be made on such
signature or signatures as shall be designated by the General Partner.
ARTICLE
XI ACCOUNTING
11.1 FISCAL YEAR. The fiscal year and taxable year of the Partnership
(the "fiscal year") shall end on the last day of December of each year, unless
another fiscal year end is selected by the General Partner.
11.2 BOOKS OF ACCOUNT. The Partnership books of account shall be
maintained at the principal office designated in Article 4 or at such other
locations and by such person or persons as may be designated by the General
Partner. The Partnership shall pay the expense of maintaining its books of
account. Each Partner shall have, during reasonable business hours and upon
reasonable prior notice, access to the books of the Partnership and in
addition, at its expense, shall have the right to copy such books. The General
Partner, at the expense of the Partnership, shall cause to be prepared and
distributed to the Partners annual financial data sufficient to reflect the
status and operations of the Partnership and its assets and to enable each
Partner to file its federal income tax return.
11.3 METHOD OF ACCOUNTING. The Partnership books of account shall be
maintained and kept, and its income, gains, losses and deductions shall be
accounted for, in accordance with generally accepted accounting principles
consistently applied, or such other method of accounting as may be adopted
hereafter by the General Partner.
11.4 TAX MATTERS.
A. The General Partner is hereby designated the Tax Matters
Partner (hereinafter referred to as the "TMP") of the Partnership and
shall have all rights and obligations of the TMP under the Code. The
Partnership shall reimburse the TMP for any and all out-of-pocket
costs and expenses (including attorneys' and accountants' fees)
incurred or sustained by it in its capacity as TMP. The Partnership
shall indemnify, defend and hold the TMP harmless from and against any
loss, liability, damage, cost or expense (including attorneys' and
accountants' fees) sustained or incurred as a result of any act or
decision concerning the Partnership tax matters and within the scope
of its responsibility as TMP. If the Partnership is the subject of an
income tax audit by any federal, state, local or foreign authority,
then to the extent the Partnership is treated as an entity for
purposes of the audit, including administrative settlement and
judicial review, the TMP shall be authorized to act for, and its
decision shall be final and binding upon, the Partnership and each
Partner.
B. The General Partner shall take such steps as are necessary to
ensure that the Partnership is taxed as a partnership under the Code.
Subject to the preceding
33
sentence, the General Partner shall have the exclusive right to
make any determination whether the Partnership shall make available
elections (including any election pursuant to Code Section 754 to
adjust the tax basis of Partnership assets) for federal, state, or
local tax purposes, and the General Partner shall be absolved from all
liability and other consequences from its making or failing to make
any such election. All decisions and other matters concerning the
computation and allocation or tax items and attributes which are not
otherwise specifically provided for by the terms of this Agreement
shall be determined by the General Partner, and the General Partner
shall be absolved from all liability and other consequences from any
such decisions which are made in good faith.
C. The General Partner shall take all such actions as are
reasonably necessary for the Partnership to comply with any
withholding or comparable requirements under federal, state, local and
foreign law and shall remit any amounts withheld to, and file required
forms with, the applicable taxing jurisdictions. All amounts withheld
from distributions shall be treated as having been distributed to the
Partner with respect to whom the withholding was made. Any amounts
that are required to be withheld by the Partnership with respect to a
Partner which are in excess or in advance of distributions to such
Partnership shall be paid over by such Partner to the Partnership.
Each Partner agrees to furnish the Partnership with such
representations and forms as the General Partner shall reasonably
request to assist in complying with the Partnership's withholding
obligations. A Partner subject to withholding shall pay to or
reimburse the Partnership for taxes, related interest and penalties,
and all other costs and expenses incurred by the Partnership in
connection with such withholding obligation, except for interest,
penalties or costs (but not taxes) that are incurred as a result of
the gross negligence or willful misconduct of the Partnership or the
General Partner
ARTICLE XII
TRANSFERS OF PARTNERSHIP INTERESTS
12.1 GENERAL PARTNER. The General Partner may not Transfer its interest in the
Partnership without the consent of a Majority-in-Interest of the Limited
Partners unless (i) the Transfer of such interest is to a Xxxxx Controlled
Entity or to an entity that is, directly or indirectly, wholly-owned by the
Company and/or a Xxxxx Controlled Entity, or (ii) the Transfer of such interest
is pursuant to or in connection with a Recapitalization and either (a) the
Recapitalization has been approved by the consent of a Majority-in-Interest of
the Limited Partners, or (b) an appropriate adjustment to the number of OP
Units held by each Partner has been made in accordance with Section 3.2(F).
12.2 LIMITED PARTNER.
A. No Limited Partner or substituted Limited Partner may Transfer
all or any part of its interest in the Partnership, unless each of the
following conditions are met:
(i) The Limited Partner obtains the prior written
consent of the General Partner (which consent may be given or
withheld in the sole discretion of the General Partner),
except for (x) the exchange of OP Units or a Participation
34
Interest for Common Shares, pursuant to Section 3.2(C) above
or (y) the Transfer of Units or Participation Interests by
any Xxxxx Controlled Entity to any other Xxxxx Controlled
Entity.
(ii) Either (x) the Partnership qualifies for the
Private Placement PTP Exemption for the entire taxable year
of such Transfer and for all prior taxable years, (y) the
Transfer is a Private Transfer, or (z) the Partnership is no
longer potentially subject to classification as a publicly
traded partnership, as defined in Section 7704 of the Code,
as determined by the General Partner in its sole discretion.
(iii) Such Transfer is not limited or prohibited by,
and complies with, any restrictions on transferability
contained in the Articles of Incorporation and Bylaws of the
Company and/or any applicable agreement executed by the
transferor.
(iv) Such Transfer would not violate the securities
laws of any jurisdiction applicable to the Partnership or the
Partnership Interest to be assigned or transferred;
(v) Such Transfer would not cause the Partnership
to lose its status as a partnership for U.S. federal income
tax purposes or cause the Partnership to become subject to
the Investment Company Act;
(vi) Such Transfer would not cause (A) all or any
portion of the assets of the Partnership (1) to constitute
"plan assets" (under ERISA, the Code or the applicable
provisions of any similar law) of any existing or
contemplated investor, or (2) to be subject to the provisions
of ERISA, the Code or any applicable similar law, or (B) the
General Partner to become a fiduciary with respect to any
existing or contemplated investor, pursuant to ERISA or the
applicable provisions of any similar law, or otherwise.
(vii) Such Transfer would not cause a termination of
the Partnership under Code Section 708.
(viii) The Transferor delivers opinions of counsel
regarding the foregoing matters in form and substance
reasonably acceptable to the General Partner as a condition
to any such Transfer.
(ix) The Transfer would not, in the opinion of the
General Partner, (y) by treating the interest in the
Partnership so transferred as if it had been exchanged for
Common Shares in accordance with Section 3.2(C) above,
violate the limitations on ownership of Common Shares
contained in the Articles of Incorporation and/or Bylaws of
the Company, or (z) violate any State or Federal securities
laws.
(x) The Transferee shall have agreed to be bound by
the terms of this
35
Agreement and shall have executed a counterpart hereof or
joinder hereto.
B. A Limited Partner shall notify the General Partner of any
Transfer of beneficial interest or other interest which occurs without
a transfer of record ownership, as well as any pledge or other
collateral transfer.
C. No part of the interest of a Limited Partner shall be subject
to the claims of any creditor, any spouse for alimony or support, or
to legal process, and may not be voluntarily or involuntarily
alienated or encumbered except as may be specifically provided for in
this Agreement. A Limited Partner shall not be permitted to retire or
withdraw from the Partnership except as expressly permitted by this
Agreement.
D. Any Transferee of all or any portion of a Limited Partner's
interest in the Partnership in accordance and compliance with the
provisions of this Section 12.2 shall be entitled to receive Profits,
Losses and distributions hereunder attributable to such interest
acquired by reason of such Transfer, from and after the effective date
of the Transfer of such interest; provided, however, anything in this
Agreement to the contrary notwithstanding, (i) without the prior
written consent of the General Partner, no Transferee shall be
considered a substituted Limited Partner; (ii) the Partnership and the
General Partner shall be entitled to treat the Transferor of such
interest as the absolute owner thereof in all respects, and shall
incur no liability for the allocation of Profits and Losses or
distributions which are made to such Transferor until such time as the
written instrument of Transfer has been received by the General
Partner and the "effective date" of the Transfer has passed, and (c)
the General Partner shall have the right to require any such
Transferor to exchange such Partnership Interest for Common Shares or
cash, pursuant to Section 3.2(C) above. The "effective date" of any
Transfer shall be the last day of the month set forth on the written
instrument of Transfer or such other date consented to in writing by
the General Partner as the "effective date."
12.3 ADMISSION ADJUSTMENTS. The General Partner shall, when necessary,
cause this Agreement to be amended from time to time (and shall cause Schedule
A to be revised), to reflect the admission or withdrawal of Partners, and the
issuance, conversion and redemption of any Preference Units and/or OP Units
(including the corresponding adjustment to Percentage Interests).
12.4 TRANSFERS TO LENDERS. Notwithstanding any other provision of this
Agreement to the contrary, no transfer of any Units or Participation Interest
may be made to a lender to the Partnership or any person who is related (within
the meaning of Regulations Section 1.752-4(b)) to any lender to the Partnership
whose loan constitutes a Nonrecourse Liability, without the consent of the
General Partner, which consent may be given or withheld by the General Partner
in its sole and absolute discretion, provided that as a condition to such
consent being granted the lender will be required to enter into an arrangement
with the Partnership and the General Partner to exchange or redeem for the Cash
Amount or the REIT Shares Amount any Units or Participation Interest 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 Code Section 752.
36
ARTICLE XIII
ADMISSION OF NEW PARTNERS
The General Partner shall admit to the Partnership as limited
partners those persons and entities who are not already Partners and who
receive a Participation Interest, OP Units and/or Preference Units in
accordance with the provisions of this Agreement.
ARTICLE XIV
TERMINATION, LIQUIDATION AND DISSOLUTION OF PARTNERSHIP
14.1 TERMINATION EVENTS. The Partnership shall be dissolved and its
affairs wound up in the manner hereinafter provided upon the earliest to occur
of the following events:
A. the sale of all or substantially all of the assets of the
Partnership; or
B. subject to Section 14.4 below, the entry of a final judgment,
order or decree of a court of competent jurisdiction adjudicating as
bankrupt either the Partnership or the General Partner, and the
expiration without appeal of the period, if any, allowed by applicable
law to appeal therefrom.
14.2 METHOD OF LIQUIDATION. Upon the happening of any of the events
specified in Section 14.1 above, the General Partner (or if there be no General
Partner, a liquidating trustee selected by a Majority-in-Interest of the
Limited Partners) shall immediately commence to wind up the Partnership's
affairs and shall liquidate the assets of the Partnership as promptly as
possible, unless the General Partner, or the liquidating trustee, shall
determine that an immediate sale of Partnership assets would cause undue loss
to the Partnership, in which event the liquidation may be deferred for a
reasonable time. The Partners shall continue to share distributions, Profits
and Losses during the period of liquidation in the same proportions as before
dissolution (subject to Section 14.2(C) below). The proceeds from liquidation
of the Partnership, including repayment of any debts of Partners to the
Partnership, shall be applied in the following order:
A. Debts of the Partnership, including repayments of principal
and interest on loans and advances made by the General Partner
pursuant to Sections 3.3 and/or 9.7 above; then
B. To the establishment of any reserves deemed necessary or
appropriate by the General Partner, or by the person(s) winding up the
affairs of the Partnership in the event there is no remaining General
Partner of the Partnership, for any contingent or unforeseen
liabilities or obligations of the Partnership. Such reserves
established hereunder shall be held for the purpose of paying any such
contingent or unforeseen liabilities or obligations and, at the
expiration of such period as the General Partner, or such person(s)
deems advisable, the balance of such reserves shall be distributed in
the manner provided hereinafter in this Section 14.2 as though such
reserves had been distributed contemporaneously with the other funds
distributed hereunder; and then
37
C. To the Partners in accordance with their respective positive
Capital Account balances, after giving effect to all contributions,
distributions and allocations for all periods. In connection
therewith, income, gain and loss of the Partnership (and to the extent
necessary to achieve the purposes hereof, items of gross income and
deduction) with respect to the sale or other disposition of all or
substantially all of the Partnership's assets and/or the Partnership's
operations in connection therewith (whether or not attributable to the
taxable year in which the distribution pursuant to this Section
14.2(C) is to be made or a preceding taxable year) shall be allocated
among the Partners so that each Partner's Capital Account shall equal,
after taking into account the prior balance (positive or negative) in
such Partner's Capital Account and the effect of such allocation, the
amount that such Partner would be entitled to receive if the
Partnership were to make a distribution to the Partners pursuant to
the provisions of Section 8.2 hereof in an amount equal to the
remaining liquidation proceeds to be distributed under this Section
14.2(C).
14.3 DATE OF TERMINATION. The Partnership shall be terminated when all
notes received in connection with any liquidating sales or other dispositions
have been paid or distributed and all of the cash or property available for
application and distribution under Section 14.2 above (including reserves)
shall have been applied and distributed in accordance therewith.
14.4 RECONSTITUTION UPON BANKRUPTCY.
A. Notwithstanding any dissolution of the Partnership under
Section 14.1(D) above, if the Partnership is reconstituted as set
forth in this Section 14.4, then the business of the Partnership shall
be continued with the Partnership's property and the Partnership's
assets shall not be liquidated.
B. If the Partnership is dissolved by reason of the bankruptcy of
the General Partner, a successor general partner may, in the
discretion of the General Partner hereunder with the written consent
of a Majority-in-Interest of the Limited Partners, be admitted within
90 days after the dissolution, effective as of the date of
dissolution. Upon the admission of such successor general partner,
without any further consent or approval of any other Partner, the
Partnership shall be reconstituted as a successor limited partnership.
C. If the Partnership is dissolved by reason of the bankruptcy of
the Partnership in a proceeding for the reorganization (and not the
liquidation) of the Partnership, then, with the consent of the Company
and a Majority-in-Interest of the Limited Partners, the Partnership
may be reconstituted within 90 days after dissolution, effective as of
the date of dissolution, whereupon the Partnership shall be
reconstituted as a successor limited partnership.
A. The successor limited partnership reconstituted in accordance with
the foregoing provisions of this Section 14.4 shall continue the business of
the Partnership with the Partnership's property. The Percentage Interests of
the Partners in the successor limited partnership shall be in proportion to
their respective Percentage Interests in the dissolved Partnership. Such
successor limited partnership shall be governed by the terms
38
and provisions of this Agreement and references in this Agreement to the
Partnership or to the Partners or their rights and obligations shall be
understood to comprehend such successor limited partnership and the Partners
thereof and their rights and obligations.
14.5 DEATH, LEGAL INCOMPETENCY, ETC. OF A LIMITED PARTNER. The death,
legal incompetency, insolvency, dissolution or bankruptcy of a Limited Partner
shall not dissolve or terminate the Partnership. Upon the death or incapacity
of an individual Limited Partner, such individual Limited Partner's interest in
the Partnership shall be transferred either by will, the laws of intestacy or
otherwise to the legal representative or successor of such individual Limited
Partner.
ARTICLE XV
POWER OF ATTORNEY
Each Limited Partner hereby irrevocably constitutes and appoints the
General Partner, with full power of substitution, its true and lawful attorney,
for it and in its name, place and stead and for its use and benefit, to sign,
swear to, acknowledge, file and record:
A. this Agreement, and subject to Article 16 below, amendments to
this Agreement;
B. any certificates, instruments and documents (including assumed
and fictitious name certificates) as may be required by, or may be
appropriate under, the laws of the State of Delaware, the State of
Texas or any other State or jurisdiction in which the Partnership is
doing or intends to do business, in order to discharge the purposes of
the Partnership or otherwise in connection with the use of the name or
names used by the Partnership;
C. any other instrument which may be required to be filed or
recorded by the Partnership on behalf of the Partners under the laws
of any State or by any governmental agency in order for the
Partnership to conduct its business;
D. any documents which may be required to effect the continuation
of the Partnership, the admission of a substitute or additional
Partner, the dissolution and termination of the Partnership or the
amendment and restatement of Schedule A, provided such continuation,
admission, dissolution and termination or amendment and restatement of
Schedule A, is not in violation of any provision of this Agreement;
and
E. any documents which may be required or desirable to have the
General Partner appointed, and act as, the TMP.
The foregoing grant of authority is a special power of attorney coupled with an
interest, is irrevocable and shall survive the death or incapacity of any
individual Limited Partner, and shall survive the delivery of any assignment by
a Limited Partner of the whole or any portion of his interest in the
Partnership.
39
ARTICLE XVI
AMENDMENT OF AGREEMENT
A. Each Limited Partner, by his execution of or joinder in this
Agreement, hereby irrevocably appoints the General Partner with power
of substitution, as his true and lawful attorney coupled with an
interest, in his name, place and xxxxx to amend this Agreement in any
respect other than:
(i) to enlarge the obligation of any Partner to make
contributions to the capital of the Partnership; or
(ii) except as otherwise provided for in this Agreement or as
required by law, to modify the allocation of Profits or Losses or
distributions among the Partners as provided for in Articles 7
and 8 above, respectively; or
(iii) to amend Articles 1 or 12 or Section 9.2; or
(iv) to amend this Article 16.
B. With respect to amendments regarding Sections 16(A)(ii) or
16(A)(iii), this Agreement may be amended with the written consent of
the General Partner and those Limited Partners holding not less than
67% of the aggregate of Percentage Interests held by all Limited
Partners. Notwithstanding the foregoing, the terms and conditions of a
particular series of Preference Units may not be changed without the
written consent of the holders of at least 67% of the Preference Units
within the class or series (or such greater percentage as may be
provided for in the applicable Preference Unit Term Sheet).
C. With respect to amendments regarding Section 16(A)(i), this
Agreement may be amended only with the written consent of the General
Partner and any Partner adversely affected by such amendment. With
respect to amendments regarding Section 16(A)(iv) this Agreement may
be amended only with the written consent of all Partners.
In the event this Agreement shall be amended pursuant to this Article
16, the General Partner shall cause this Agreement to be amended to reflect the
amendment.
ARTICLE XVII
MISCELLANEOUS
17.1 NOTICES. Any notice, election or other communication provided for
or required by this Agreement shall be in writing and shall be deemed to have
been given when delivered by hand or by telecopy or other facsimile
transmission, the first business day after sent by overnight courier (such as
Federal Express), or on the second business day after deposit in the United
States Mail, certified or registered, return receipt requested, postage
prepaid, properly addressed to the Partner to whom such notice is intended to
be given at the address for the Partner set forth on Schedule A of this
Agreement, or at such other address as such person may
40
have previously furnished in writing to the Partnership and each Partner with
copies to the General Partner at 0000 Xxxx Xxx Xxxxxxxxx, Xxxxx 0000, Xxxxxxx,
Xxxxx 00000-0000.
17.2 MODIFICATIONS. Except as otherwise provided in this Agreement, no
change or modification of this Agreement, nor any waiver of any term or
condition in the future, shall be valid or binding upon a Partner unless such
change or modification shall be in writing and signed by such Partner.
17.3 SUCCESSORS AND ASSIGNS. Any person acquiring or claiming an
interest in the Partnership, in any manner whatsoever, shall be subject to and
bound by all of the terms, conditions and obligations of this Agreement to
which his predecessor-in-interest was subject or bound, without regard to
whether such a person has executed a counterpart hereof or any other document
contemplated hereby. No person, including the legal representative, heir or
legatee of a deceased Partner, shall have any rights or obligations greater
than those set forth in this Agreement, and no person shall acquire an interest
in the Partnership or become a Partner thereof except as expressly permitted by
and pursuant to the terms of this Agreement. Subject to the foregoing, and the
provisions of Article 12 above, this Agreement shall be binding upon and inure
to the benefit of the Partners and their respective successors, assigns, heirs,
legal representatives, executors and administrators.
17.4 DUPLICATE ORIGINALS. For the convenience of the Partners, any
number of counterparts hereof may be executed, and each such counterpart shall
be deemed to be an original instrument, and all of which taken together shall
constitute one agreement.
17.5 CONSTRUCTION. The titles of the Articles, Sections and
subsections herein have been inserted as a matter of convenience of reference
only and shall not control or affect the meaning or construction of any terms
or provisions herein.
17.6 GOVERNING LAW. This Agreement shall be governed by the laws of
the State of Delaware. Except to the extent the Act is inconsistent with the
provisions of this Agreement, the provisions of such Act shall apply to the
Partnership.
17.7 OTHER INSTRUMENTS. The parties hereto covenant and
agree that they will execute such other and further instruments and documents
as, in opinion of the General Partner, are or may become necessary or desirable
to effectuate and carry out the Partnership as provided for by this Agreement.
17.8 GENERAL PARTNER WITH INTEREST AS LIMITED PARTNER. If the General
Partner ever has an interest as a Limited Partner in the Partnership, the
General Partner shall, with respect to such interest, enjoy all of the rights
and be subject to all of the obligations and duties of a Limited Partner.
17.9 LEGAL CONSTRUCTION. In case any one or more of the provisions
contained in this Agreement shall for any reason be held to be invalid, illegal
or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provision hereof and this Agreement
shall be construed as if such invalid, illegal or unenforceable provision had
never been contained herein
41
17.10 GENDER. Whenever the context shall so require, all words herein
in any gender shall be deemed to include the masculine, feminine or neuter
gender, all singular words shall include the plural, and all plural words shall
include the singular.
17.11 PRIOR AGREEMENTS SUPERSEDED. This Agreement supersedes any prior
understandings or written or oral agreements among the Partners, or any of
them, respecting the within subject matter and contains the entire
understanding amongst the Partners with respect thereto.
17.12 NO THIRD PARTY BENEFICIARY. The terms and provisions of this
Agreement are for the exclusive use and benefit of General Partner and the
Limited Partners and shall not inure to the benefit of any other person or
entity.
17.13 PURCHASE FOR INVESTMENT. Each Partner represents, warrants and
agrees that it has acquired and will hold its interest in the Partnership for
its own account for investment only and not for the purpose of, or with a view
toward, the resale or distribution of all or any part thereof, nor with a view
toward selling or otherwise distributing such interest or any part thereof at
any particular time or under any predetermined circumstances. Each Partner
further represents and warrants that it is a sophisticated investor, able and
accustomed to handling sophisticated financial matters for itself, particularly
real estate investments, and that it has a sufficiently high net worth that it
does not anticipate a need for the funds it has invested in the Partnership in
what it understands to be a highly speculative and illiquid investment.
17.14 ACCESS TO RECORDS. Any Shareholder and any designated
representative thereof shall be permitted reasonable access to all the records
of the Partnership at and during reasonable times, and may inspect and copy any
of them for a reasonable charge.
17.15 WAIVER. No consent or waiver, express or implied, by any Partner
to or of any breach or default by any other Partner in the performance by such
other Partner of its obligations hereunder shall be deemed or construed to be a
consent to or waiver of any other breach or default in the performance by such
other Partner of the same or any other obligations of such Partner hereunder.
Failure on the part of any Partner to complain of any act or failure to act on
the part of any other Partner or to declare any other Partner in default,
irrespective of how long such failure continues, shall not constitute a waiver
by such Partner of its rights hereunder.
17.16 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, which when taken together, shall constitute but one original.
42
IN WITNESS WHEREOF, this Agreement has been executed and sworn to as
of the day and year first above written by the General Partner and the
undersigned Limited Partners.
GENERAL PARTNER:
XXXXX REAL ESTATE INVESTMENT TRUST, INC.,
a Maryland corporation
By:
------------------------------------
Name:
-----------------------------
Title:
-----------------------------
LIMITED PARTNERS:
XXXXX REAL ESTATE HOLDINGS LIMITED
PARTNERSHIP
By: JCH Investments, Inc.,
its General Partner
By:
------------------------------------
Name:
-----------------------------
Title:
-----------------------------
HALP ASSOCIATES LIMITED PARTNERSHIP
By: Xxxxx Interests Limited Partnership,
its General Partner
By: Xxxxx Holdings, Inc.,
its General Partner
By:
------------------------------------
Name:
-----------------------------
Title:
-----------------------------
43
SCHEDULE A
Partners, Capital Accounts and Partnership Interests
AGREED
PREFERENCE CAPITAL PERCENTAGE
NAME AND ADDRESS OF PARTNERS OP UNITS UNITS ACCOUNT INTEREST
---------------------------- -------- ----- ------- --------
General Partner:
Xxxxx Real Estate Investment Trust, Inc. 219.56 $ 2,020 1%
Limited Partners:
Xxxxx Real Estate Holdings Limited 21,739.13 $200,000 99%
Partnership
HALP Associates Limited Partnership Participation $ 0 0%
Interest
44
