Exhibit 10.6
THIS AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP is made and
entered into as of _____________, 199__ by and among American Real Estate
Investment Corporation, a Maryland corporation ("the Company") as general
partner, and the Persons whose names are set forth on Exhibit A as attached
hereto, as the limited partners, together with any other Persons who become
Partners in the Partnership as provided herein.
ARTICLE I
DEFINED TERMS
Except as otherwise herein expressly provided, the following terms
and phrases shall have the meanings set forth below:
"Accountants" shall mean the firm or firms of independent
certified public accountants selected by the General Partner on behalf of the
Partnership to audit the books and records of the Partnership and to prepare
statements and reports in connection therewith.
"Act" shall mean the Revised Uniform Limited Partnership Act as
enacted in the State of Delaware, and as the same may hereafter be amended from
time to time.
"Additional Partnership Interests" shall have the meaning set
forth in Section 4.2(a) hereof.
"Additional Limited Partner" shall have the meaning set forth in
Section 4.2(b) hereof.
"Adjusted Capital Account Deficit" shall mean, with respect to any
Partner, the deficit balance, if any, in such Partner's Capital Account as of
the end of the relevant Partnership Fiscal Year, after giving effect to the
following adjustments:
(i) Credit to such Capital Account any amounts which
such Partner is obligated to restore pursuant to this Agreement or is deemed to
be obligated to restore to the Partnership pursuant to the second to last
sentences of Regulations xx.xx. 1.704-2(g)(1) and 1.704-2(i)(5).
(ii) Debit to such Capital Account the items described
in Regulations xx.xx. 1.704-1(b)(2)(ii)(d)(4), (5) and (6).
The foregoing definition of Adjusted Capital Account Deficit is intended to
comply with Regulation ss. 1.704-1(b)(2)(ii)(d) and shall be interpreted
consistently therewith.
"Adjusted Current Per Share Market Price" shall mean the Current
Per Share Market Price multiplied by the Conversion Factor.
"Adjustment Date" shall have the meaning set forth in Section
4.2(b) hereof.
"Affiliate" shall mean, with respect to any Partner (or as to any
other person the
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affiliates of whom are relevant for purposes of any of the provisions of this
Agreement), (i) any member of the Immediate Family of such Partner; (ii) any
trustee or beneficiary of a Partner; (iii) any legal representative, successor,
or assignee of any Person referred to in the preceding clauses (i) and (ii);
(iv) any trustee or trust for the benefit of any Person referred to in the
preceding clauses (i) through (iii); or (v) any Entity which directly or
indirectly through one or more intermediaries, Controls, is Controlled by, or is
under common Control with, any Person referred to in the preceding clauses (i)
through (iv).
"Affiliate Financing" shall mean financing or refinancing obtained
from a Partner or an Affiliate of a Partner by the Partnership.
"Agreement" shall mean this Agreement of Limited Partnership, as
originally executed and as amended, modified, supplemented or restated from time
to time, as the context requires.
"Assignee" shall mean a Person to whom one or more Partnership
Units have been transferred in a manner permitted under this Agreement, but who
has not become a Substituted Limited Partner, and who has the rights set forth
in Section 9.5.
"Bankruptcy" shall mean, with respect to any Partner, (i) the
commencement by such Partner of any proceeding seeking relief under any
provision or chapter of the federal Bankruptcy Code or any other federal or
state law relating to insolvency, bankruptcy or reorganization; (ii) an
adjudication that such Partner is insolvent or bankrupt; (iii) the entry of an
order for relief under the federal Bankruptcy Code with respect to such Partner;
(iv) the filing of any such petition or the commencement of any such case or
proceeding against such Partner, unless such petition and the case or proceeding
initiated thereby are dismissed within one hundred twenty (120) days from the
date of such filing; (v) the filing of an answer by such Partner admitting the
allegations of any such petition; (vi) the appointment of a trustee, receiver or
custodian for all or substantially all of the assets of such Partner unless such
appointment is vacated or dismissed within ninety (90) days from the date of
such appointment but not less than five (5) days before the proposed sale of any
assets of such Partner; (vii) the insolvency of such Partner or the execution by
such Partner of a general assignment for the benefit of creditors; (viii) the
failure of such Partner to pay its debts as they mature; (ix) the levy,
attachment, execution or other seizure of substantially all of the assets of
such Partner where such seizure is not discharged within thirty (30) days
thereafter, or (x) the admission by such Partner in writing of its inability to
pay its debts as they mature or that it is generally not paying its debts as
they become due.
"Capital Account" shall mean a book account established and
maintained for each Partner in accordance with the following provisions:
(i) To each Partner's Capital Account there shall be
credited such Partner's Capital Contributions, such Partner's
distributive share of Profits and any items in the nature of income or
gain which are allocated to such Partner pursuant to Section 5.2, and the
amount of any Partnership liabilities that are assumed by such Partner or
that are secured by any Partnership property distributed to such Partner.
(ii) To each Partner's Capital Account there shall be
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debited the amount of cash and the Gross Asset Value of any Partnership
asset distributed to such Partner pursuant to any provision of this
Agreement (except for distributions made in repayment of loans made by
such Partner to the Partnership), such Partner's distributive share of
Losses and any items in the nature of expenses or losses which are
allocated to such Partner pursuant to Section 5.2, and the amount of any
liabilities of such Partner that are assumed by the Partnership or which
are secured by any property contributed to the Partnership by such
Partner (except to the extent already reflected in the amount of the
Partner's Capital Contributions).
In the event that the Gross Asset Value of Partnership assets are
adjusted pursuant to paragraph (ii), (iii) or (iv) of the definition of Gross
Asset Value, the Capital Accounts of the Partners shall be adjusted to reflect
the aggregate net adjustments as if the Partnership sold all of its assets for
their fair market values, and recognized gain or loss for federal income tax
purposes equal to the aggregate amount of such net adjustment.
The foregoing provisions and the other provisions of this
Agreement relating to the maintenance of Capital Accounts are intended to comply
with Code ss. 704(b) and the Regulations thereunder, and shall be interpreted
and applied in a manner consistent with such Regulations. In the event the
General Partner determines that it is prudent to modify the manner in which the
Capital Accounts, or any debits or credits thereto, 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
distributable to any Partner pursuant to Section 8.2 upon the liquidation of the
Partnership. Any questions with respect to a Partner's Capital Account shall be
resolved by the General Partner in its reasonable discretion, applying
principles consistent with this Agreement.
Any transferee of a Partnership Interest or a portion thereof
shall succeed to the Capital Account relating to the Partnership Interest
transferred or the corresponding portion thereof.
"Capital Contributions" shall mean, with respect to any Partner,
the amount of cash and the initial Gross Asset Value of any other property
contributed to the capital of the Partnership by or on behalf of such Partner
reduced by the amount of any liability assumed by the Partnership relating to
such property and any liability to which such property is subject.
"Certificate" shall mean the Certificate of Limited Partnership
establishing the Partnership, as filed with the office of the Delaware Secretary
of State, as it may be amended from time to time in accordance with the terms of
this Agreement and the Act.
"Charter" shall mean the Company's Articles of Incorporation, as
amended from time to time.
"Closing Date" shall mean [ ], 1997.
"Closing Price" on any date shall mean (A) the last reported sale
price of the Shares on the principal stock exchange on which the Shares are
listed, or (B) if the Shares are not listed on a stock exchange, the last
reported sale price of the Shares on the principal automated securities price
quotation system on which sale prices of the Shares are reported, or
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(C) if the Shares are not listed on a stock exchange and sale prices of the
Shares are not reported on an automated quotation system, the mean of the high
bid and low asked price quotations for the Shares as reported by National
Quotation Bureau Incorporated if at least two securities dealers have inserted
both bid and asked quotations for the Shares on at least five of the ten
preceding Trading Days. If the Shares are not traded or quoted as described in
any of clause (A), (B) or (C), the Closing Price of the Shares on a day will be
the fair market value of the Shares on that day as determined by a member firm
of the New York Stock Exchange, Inc. selected by the Board of Directors of the
General Partner. In the event that the Shares received upon exercise of the
Conversion Rights include rights that a holder of Shares would be entitled to
receive, then the value of such rights shall be determined by the General
Partner acting in good faith on the basis of such quotations and other
information as it considers, in its reasonable judgment, appropriate.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Consent of the Limited Partners" shall mean the written consent
of a Majority-In-Interest of the Limited Partners, which consent shall be
obtained prior to the taking of any action for which it is required by this
Agreement and may be given or withheld by a Majority-In-Interest of the Limited
Partners, unless otherwise expressly provided herein, in their sole and absolute
discretion.
"Consenting Partners" shall have the meaning set forth in Section
8.1(a) hereof.
"Contributed Funds" shall have the meaning set forth in Section
4.2(b) hereof.
"Contributed Limited Partner Assets" shall mean properties or
interests in entities owning such properties, interests in certain property
management and related assets, or cash, contributed by the Limited Partners.
"Contribution Date" shall have the meaning set forth in Section
4.2(b) hereof.
"Control" shall mean the ability, whether by the direct or
indirect ownership of shares or other equity interests, by contract or
otherwise, to elect a majority of the directors of a corporation, to select the
managing partner of a partnership, or otherwise to select, or have the power to
remove and then select, a majority of those persons exercising governing
authority over an Entity. In the case of a limited partnership, the sole general
partner, all of the general partners to the extent each has equal management
control and authority, or the managing general partner or managing general
partners thereof shall be deemed to have control of such partnership and, in the
case of a trust, any trustee thereof or any Person having the right to select
any such trustee shall be deemed to have control of such trust.
"Conversion Factor" means 1.0; provided that, in the event that
the General Partner (i) declares or pays a dividend on its outstanding Shares in
Shares or makes a distribution to all holders of its outstanding Shares in
Shares; (ii) subdivides its outstanding Shares, or (iii) combines its
outstanding Shares into a smaller number of Shares, the Conversion Factor shall
be adjusted by multiplying the Conversion Factor then in effect by a fraction,
the numerator of which shall be the number of Shares issued and outstanding on
the record date for such dividend, distribution, subdivision or combination
(assuming for such purposes that such
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dividend, distribution, subdivision or combination has occurred as of such
time), and the denominator of which shall be the actual number of Shares
(determined without the above assumption) issued and outstanding on the record
date for such dividend, distribution, subdivision or combination. Any adjustment
to the Conversion Factor shall become effective immediately after the effective
date of such event retroactive to the record date, if any, for such event;
provided, however, that if the General Partner receives an Exercise Notice after
the record date, but prior to the effective date of such dividend, distribution,
subdivision or combination, the Conversion Factor shall be determined as if the
General Partner has received the Exercise Notice immediately prior to the record
date for such dividend, distribution, subdivision or combination.
"Conversion Right" shall have the meaning set forth in Section
12.1 hereof.
"Current Per Share Market Price" on any date shall mean the
average of the Closing Price for the ten (10) consecutive Trading Days ending on
such date.
"Depreciation" shall mean for each Partnership Fiscal Year or
other period, an amount equal to the depreciation, amortization, or other cost
recovery deduction allowable under the Code with respect to an asset for such
year or other period, 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
year or other period, Depreciation shall be an amount which bears the same ratio
to such beginning Gross Asset Value as the federal income tax depreciation,
amortization, or other cost recovery deduction for such year or other period
bears to such beginning adjusted tax basis; provided, however, that if the
federal income tax depreciation, amortization, or other cost recovery deduction
for such year is zero, Depreciation shall be determined with reference to such
beginning Gross Asset Value using any reasonable method selected by the General
Partner.
"Designated Properties" shall mean those properties known as 0000
Xxxxxx Xxxx, 0 Xxxxxxxx Xxxx and Urban Farms Shopping Center.
"Entity" shall mean any general partnership, limited partnership,
limited liability company, corporation, joint venture, trust, business trust,
cooperative or association.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time (or any corresponding provisions of
succeeding laws).
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Exercise Notice" shall have the meaning set forth in Section 12.2
hereof.
"Exercising Partners" shall have the meaning set forth in Section
12.2 hereof.
"GAAP" shall mean generally accepted accounting principles
consistently applied.
"General Partner" shall mean American Real Estate Investment
Corporation, a Maryland corporation, its duly admitted successors and assigns
and any other Person who is a
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general partner of the Partnership at the time of reference thereto.
"General Partner Capital Contribution" shall have the meaning set
forth in Section 4.1 hereof.
"General Partner Interest" shall mean a Partnership Interest held
by the General Partner. A General Partner Interest shall be expressed as a
number of Partnership Units.
"Gross Asset Value" shall mean, with respect to any 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 (a) in the case of
any asset described on attached Exhibit A, the gross fair market value
ascribed thereto on such Exhibit A and (b) in the case of any other asset
hereafter contributed by a Partner, the gross fair market value of such
asset at the time of contribution, as reasonably determined by the
General Partner;
(ii) The Gross Asset Values of all Partnership assets
shall be adjusted to equal their respective gross fair market values, as
reasonably determined by the General Partner, 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 property as consideration for an
interest in the Partnership; and (c) the liquidation of the Partnership
within the meaning of Regulations ss. 1.704-1(b)(2)(ii)(g);
(iii) The Gross Asset Value of any Partnership Asset
distributed to any Partner shall be the gross fair market value of such
asset on the date of distribution; and
(iv) The Gross Asset Values of Partnership Assets shall
be increased (or decreased) to reflect any adjustments to the adjusted
basis of such assets pursuant to Code ss. 734(b) or Code ss. 743(b), but
only to the extent that such adjustments are taken into account in
determining Capital Accounts pursuant to Regulations ss.
1.704-1(b)(2)(iv)(m).
If the Gross Asset Value of an asset has been determined or adjusted pursuant to
this provision, 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. Any adjustment to the Gross Asset Values of
Partnership Assets shall require an adjustment to the Partner's Capital Account
as provided in the definition of Capital Account.
"Xxxx-Xxxxx Act" shall mean the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended.
"Immediate Family" shall mean, with respect to any Person, such
Person's spouse, parents, parents-in-law, descendants by blood or adoption,
nephews, nieces, brothers, sisters, brothers-in-law, sisters-in-law and
children-in-law.
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"Incapacity" or "Incapacitated" shall mean, (i) as to any
individual Partner, death, total physical disability or entry by a court of
competent jurisdiction adjudicating him or her incompetent to manage his or her
Person or estate; (ii) as to any corporation which is a Partner, the filing of a
certificate or articles of dissolution, or its equivalent, for the corporation
or the revocation of its charter; (iii) as to any partnership which is a
Partner, the dissolution and commencement of winding up of the partnership; (iv)
as to any estate which is a Partner, the distribution by the fiduciary of the
estate's entire interest in the Partnership; (v) as to any trustee of a trust
which is a Partner, the termination of the trust (but not the substitution of a
new trustee); or (vi) as to any Partner, the Bankruptcy of such Partner.
"Incentive Option" shall mean an option to purchase Shares granted
under the Stock Incentive Plan.
"Incentive Option Agreement" shall mean the form or forms of
Incentive Option Agreement to be used under the Stock Incentive Plan.
"Indemnitee" shall mean (i) any Person made a party to a
proceeding by reason of his status as (a) a General Partner, (b) a director or
officer of a General Partner, or (c) an officer of the Partnership, and (ii)
such other Persons (including Affiliates of the General Partner or the
Partnership) as the General Partner may designate from time to time (whether
before or after the event giving rise to potential liability), in its sole
discretion.
"Lien" shall mean any liens, security interests, mortgages, deeds
of trust, charges, claims, encumbrances, restrictions, pledges, options, rights
of first offer or first refusal and any other rights or interests of others of
any kind or nature, actual or contingent, or other similar encumbrances of any
nature whatsoever.
"Limited Partner" shall mean any Person listed under the heading
"Limited Partners" on the signature page hereto who have executed (in person or
pursuant to power of attorney) this Agreement in their respective capacities as
limited partners of the Partnership, their permitted successors or assigns as a
limited partner hereof, or any Person who, at the time of reference thereto, is
a limited partner of the Partnership.
"Limited Partner Interest" shall mean a Partnership Interest of a
Limited Partner in the Partnership representing a fractional part of the
Partnership Interests of all Limited Partners and includes any and all benefits
to which the holder of such a Partnership Interest may be entitled as provided
in this Agreement, together with all obligations of such Person to comply with
the terms and provisions of this Agreement. A Limited Partner Interest shall be
expressed as a number of Partnership Units designated as OP Units.
"Liquidating Trustee" shall mean such individual or Entity as is
selected as the Liquidating Trustee hereunder by the General Partner, which
individual or Entity may include the General Partner or an Affiliate of the
General Partner, provided such Liquidating Trustee agrees in writing to be bound
by the terms of this Agreement. The Liquidating Trustee shall be empowered to
give and receive notices, reports and payments in connection with the
dissolution, liquidation and/or winding-up of the Partnership and shall hold and
exercise such other rights and powers as are necessary or required to permit all
parties to deal with the Liquidating Trustee
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in connection with the dissolution, liquidation and/or winding-up of the
Partnership.
"Major Decisions" shall have the meaning set forth in Section 7.2
hereof.
"Majority-In-Interest of the Limited Partners" shall mean Limited
Partner(s) who hold in the aggregate more than fifty percent (50%) of the
Percentage Interests then allocable to and held by the Limited Partners, as a
class.
"NASD" means the National Association of Securities Dealers, Inc.
"Net Financing Proceeds" shall mean the cash proceeds received by
the Partnership in connection with any borrowing by or on behalf of the
Partnership (whether or not secured), after deduction of all costs and expenses
incurred by the Partnership in connection with such borrowing, and after
deduction of that portion of such proceeds used to repay any other indebtedness
of the Partnership, or any interest or premium thereon.
"Net Operating Cash Flow" shall mean, with respect to any fiscal
period of the Partnership, the excess, if any, of "Receipts" over
"Expenditures". For purposes hereof, the term "Receipts" means the sum of all
cash receipts of the Partnership from all sources for such period, including Net
Sale Proceeds and Net Financing Proceeds but excluding Capital Contributions,
and any amounts held as reserves as of the last day of such period which the
General Partner reasonably deems to be in excess of necessary reserves as
determined below. The term "Expenditures" means the sum of (i) all cash expenses
of the Partnership for such period; (ii) the amount of all payments of principal
and interest on account of any indebtedness of the Partnership, or amounts due
on such indebtedness during such period; and (iii) such additional cash reserves
as of the last day of such period as the General Partner deems necessary for any
capital or operating expenditure permitted hereunder.
"Net Sale Proceeds" shall mean the cash proceeds received by the
Partnership in connection with a sale of any asset by or on behalf of the
Partnership after deduction of any costs or expenses incurred by the
Partnership, or payable specifically out of the proceeds of such sale
(including, without limitation, any repayment of any indebtedness required to be
repaid as a result of such sale or which the General Partner elects to repay out
of the proceeds of such sale, together with accrued interest and premium, if
any, thereon and any sales commissions or other costs and expenses due and
payable to any Person in connection with a sale).
"Nonrecourse Deductions" shall have the meaning set forth in
Regulations ss. 1.704-2(b)(1). The amount of Nonrecourse Deductions for a
Partnership Fiscal Year equals the net increase, if any, in the amount of
Partnership Minimum Gain during such Partnership Fiscal Year reduced by any
distributions during such Partnership Fiscal Year of proceeds of a Nonrecourse
Liability that are allocable to an increase in Partnership Minimum Gain,
determined according to the provisions of Regulations xx.xx. 1.704-2(c) and
1.704-2(h).
"Nonrecourse Liability" shall have the meaning set forth in
Regulations ss. 1.704-2(b)(3).
"OP Units" shall have the meaning set forth in Section 4.1.
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"Offered Units" shall have the meaning set forth in Section 12.2.
"Original Properties" means the Americana Lakewood apartments, the
Emerald Pointe apartments, the Sedona apartments and the Quadrangles Village
apartments (or any property the federal income tax basis of which is determined
in whole or in part by reference to the basis of the foregoing).
"Ownership Limit" shall have the meaning set forth in Section 12.4
hereof.
"Partners" shall mean the General Partner and the Limited
Partners, their duly admitted successors or assigns or any Person who is a
partner of the Partnership at the time of reference thereto.
"Partner Minimum Gain" shall mean an amount, with respect to each
Partner Nonrecourse Debt, equal to the Partnership Minimum Gain that would
result if such Partner Nonrecourse Debt were treated as a Nonrecourse Liability,
determined in accordance with Regulations ss. 1.704-2(i)(3).
"Partner Nonrecourse Debt" shall have the meaning set forth in
Regulations ss. 1.704-2(b)(4).
"Partner Nonrecourse Deductions" shall have the meaning set forth
in Regulations ss. 1.704-2(i)(2). The amount of Partner Nonrecourse Deductions
with respect to a Partner Nonrecourse Debt for a Partnership Fiscal Year equals
the net increase, if any, in the amount of Partner Minimum Gain during such
Partnership Fiscal Year attributable to such Partner Nonrecourse Debt, reduced
by any distributions during that Partnership Fiscal Year to the Partner that
bears the economic risk of loss for such Partner Nonrecourse Debt to the extent
that such distributions are from the proceeds of such Partner Nonrecourse Debt
and are allocable to an increase in Partner Minimum Gain attributable to such
Partner Nonrecourse Debt, determined according to the provisions of Regulations
xx.xx. 1.704-2(h) and 1.704-2(i).
"Partnership" shall mean the limited partnership hereby
constituted, as such limited partnership may from time to time be constituted.
"Partnership Fiscal Year" shall mean the calendar year.
"Partnership Interest" shall mean with respect to a Partner, such
Partner's right to the allocations (and each item thereof), specified in Section
5.1 hereof and all distributions from the Partnership, and its rights of
management, consent, approval, or participation, if any, as provided in this
Agreement.
"Partnership Minimum Gain" shall have the meaning set forth in
Regulations ss. 1.704-2(d).
"Partnership Unit" shall mean a fractional, undivided share of the
Partnership Interests of all Partners. As of the date of this Agreement, there
shall be considered to be a total of [ ] Partnership Units outstanding
consisting of [ ] Partnership Units held by the General
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Partner and [ ] OP Units.
"Percentage Interest" shall mean, with respect to any Partner, the
percentage ownership interest of such Partner in the Partnership, which shall be
calculated by dividing such Partner's total number of Partnership Units by the
total number of Partnership Units owned by all Partners. The initial Percentage
Interest of each Partner is as set forth opposite its respective name on
attached Exhibit A.
"Person" shall mean any individual or Entity.
"Pledge shall mean a pledge or grant of a mortgage, security
interest, lien or other encumbrance in respect of a Partnership Interest.
"Prior Agreement" shall mean the Agreement of Limited Partnership
of the Partnership, dated as of November 10, [1993], between the Company, as the
sole general partner, and the limited partners listed on the signature page
thereto, which Prior Agreement is amended and restated in its entirety by this
Agreement as of the Closing Date.
"Profits" and "Losses" shall mean, for each Partnership Fiscal
Year or other period, an amount equal to the Partnership's taxable income or
loss for such Partnership Fiscal Year or period, determined in accordance with
Code ss. 703(a) (for this purpose, all items of income, gain, loss, or deduction
required to be stated separately pursuant to Code ss. 703(a)(1) shall be
included in taxable income or loss), with the following adjustments:
(i) Any income of the Partnership that is exempt
from federal income tax or excluded from federal gross income and not
otherwise taken into account in computing Profits or Losses pursuant to
this Section shall be added to such taxable income or loss;
(ii) Any expenditures of the Partnership described
in Code ss. 705(a)(2)(B) or treated as Code ss. 705(a)(2)(B) expenditures
pursuant to Regulations ss. 1.704-1(b)(2)(iv)(i), and not otherwise taken
into account in computing Profits or Losses pursuant to this Section,
shall be subtracted from such taxable income or loss;
(iii) In the event the Gross Asset Value of any
Partnership Asset is adjusted pursuant to any provision of this Agreement
in accordance with the definition of Gross Asset Value, 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 or Losses;
(iv) Gain or loss resulting from any disposition
of any Partnership Asset 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 Asset differs from its Gross Asset Value;
(v) In lieu of the depreciation, amortization, and
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other cost recovery deductions taken into account in computing such
taxable income or loss, there shall be taken into account Depreciation
for such Partnership Fiscal Year or other period, computed in accordance
with the definition of Depreciation; and
(vi) Notwithstanding any other provision of this
Section, any items which are allocated pursuant to Section 5.2 shall not
be taken into account in computing Profits or Losses.
"Property" shall mean any real estate in which the Partnership,
directly or indirectly, acquires ownership of a fee or leasehold interest.
"Prospectus" means a prospectus included in the Shelf Registration
Statement, including any preliminary prospectus, and any such prospectus as
amended or supplemented by any prospectus supplement with respect to the terms
of the offering of any portion of the Registrable Securities covered by the
Shelf Registration Statement, and by all other amendments and supplements to
such prospectus, including post-effective amendments, and in each case including
all material incorporated by reference therein.
"Purchase Price" shall have the meaning set forth in Section 12.2.
"Registrable Securities" means Shares issued or issuable to
Limited Partners upon exchange of their OP Units, excluding (i) Shares for which
the Shelf Registration Statement shall have become effective under the
Securities Act and which have been disposed of under the Shelf Registration
Statement, and (ii) Shares sold or otherwise distributed pursuant to Rule 144
under the Securities Act.
"Registration Expenses" means any and all expenses incident to
performance of or compliance with Article XV of this Agreement, including,
without limitation: (i) all SEC, stock exchange or NASD registration and filing
fees, (ii) all fees and expenses incurred in connection with compliance with
state securities or blue sky laws (including reasonable fees and disbursements
of counsel in connection with blue sky qualification of any of the Registrable
Securities and the preparation of a Blue Sky Memorandum, if necessary) and
compliance with the rules of the NASD, (iii) all expenses of any Persons in
preparing or assisting in preparing, word processing, printing and distributing
the Shelf Registration Statement, any Prospectus, certificates and other
documents relating to the performance of and compliance with Article XV of this
Agreement, (iv) all fees and expenses incurred in connection with the listing,
if any, of any of the Registrable Securities on any securities exchange or
exchanges pursuant to Section 3(k) hereof, and (v) the fees and disbursements of
counsel for the Company and of the independent public accountants of the
Company, including the expenses of any special audits or "cold comfort" letters,
if any, required by or incident to such performance and compliance. Registration
Expenses shall specifically exclude underwriting discounts and commissions,
brokerage or dealer fees, the fees and disbursements of counsel, accountants or
other representatives of a selling Limited Partner, and transfer taxes, if any,
relating to the sale or disposition of Registrable Securities by a selling
Limited Partner, all of which shall be borne by such Limited Partner in all
cases.
"Registration Rights Agreement" shall mean the Registration
Agreement dated November 10, 1993 by and between the Company and the
Partnership, relating to the
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registration of Shares issued upon exercise of the Conversion Rights granted
herein.
"Regulations" shall mean the Income Tax Regulations promulgated
under the Code as such regulations may be amended from time to time (including
Temporary Regulations).
"REIT" shall mean a real estate investment trust as defined in
Section 856 of the Code.
"Required Funds" shall have the meaning set forth in Section 4.2
hereof.
"Rights" shall have the meaning set forth in Section 12.1 hereof.
"Sale Period" shall mean the 45-day period immediately following
the filing with the SEC by the Company of an annual report of the Company on
Form 10-K or a quarterly report of the Company on Form 10-Q or such other period
as the Company may determine.
"SEC" shall mean the United States Securities and Exchange
Commission.
"Section 0000 Xxxxxxxx" means, with respect to any property, the
exchange of such property for property of like kind in a transaction qualifying
under Section 1031 of the Code in which not more than 10% of the built-in gain
associated with such property is required to be recognized by the partners of
the Operating Partnership for federal income tax purposes.
"Securities Act" shall mean the Securities Act of 1933, as
amended.
"Shares" shall mean the shares of Common Stock, par value $.001
per share, of the Company.
"Share Value" as of any date shall mean the total number of Shares
issued and outstanding at the close of business on such date (and excluding any
treasury shares) multiplied by the Current Per Share Market Price on such date.
"Shelf Registration Statement" shall mean a "shelf" registration
statement of the Company and any other entity required to be a registrant with
respect to such shelf registration statement pursuant to the requirements of the
Securities Act which covers all of the Registrable Securities on an appropriate
form under Rule 415 under the Securities Act, or any similar rule that may be
adopted by the SEC, and all amendments and supplements to such registration
statement, including post-effective amendments, in each case including the
Prospectus contained therein, all exhibits thereto and all materials
incorporated by reference therein.
"Special Consenting Partners" means, initially, the [XxXxxxx
Xxxxxx Bay, L.P.], until the [XxXxxxx Xxxxxx Bay, L.P.] notifies the Partnership
of its successors to the rights of the Special Consenting Partners under this
Agreement.
"Stock Incentive Plan" shall mean the General Partner's 1993
Omnibus Incentive Plan, and any other stock incentive plan adopted in the future
by the General Partner.
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"Substituted Limited Partner" shall have the meaning set forth in
Section 9.4 hereof.
"Third Party" or "Third Parties" shall mean a Person or Persons
who is or are neither a Partner or Partners nor an Affiliate or Affiliates of a
Partner or Partners.
"Third Party Financing" shall mean financing or refinancing
obtained from a Third Party by the Partnership.
"Trading Day" shall mean (x) if the Shares are listed on at least
one stock exchange, a day on which there is trading on the principal stock
exchange on which the Shares are listed, (y) if the Shares are not listed on a
stock exchange, but sale prices of the Shares are reported on an automated
quotation system, a day on which trading is reported on the principal automated
quotation system on which sales of the Shares are reported, or (z) if the Shares
are not listed on a stock exchange and sale prices of the Shares are not
reported on an automated quotation system, a day on which quotations are
reported by National Quotation Bureau Incorporated.
"Transfer" shall mean any assignment, sale, transfer, conveyance,
Pledge, grant of an option or proxy, or other disposition or act of alienation,
whether voluntary or involuntary, or by operation of law.
ARTICLE II
ORGANIZATIONAL MATTERS
II.1 Organization and Continuation. The Partnership is continued
as a limited partnership organized pursuant to the provisions of the Act and
upon the terms and conditions set forth in the Prior Agreement. The Partners
hereby amend and restate the Prior Agreement in its entirety as of the Closing
Date. Except as expressly provided herein to the contrary, the rights and
obligations of the Partners and the administration and termination of the
Partnership shall continue to be governed by the Act. The Partnership Interest
of each Partner shall be personal property for all purposes.
II.2 Name. The name of the Partnership is American Real Estate
Investment, L.P. The Partnership's business may be conducted under any other
name or names deemed advisable by the General Partner, including the name of the
General Partner or any Affiliate thereof. The words "Limited Partnership,"
"L.P.," "Ltd." or similar words or letters shall be included in the
Partnership's name where necessary for the purposes of complying with the laws
of any jurisdiction that so requires. Subject to the condition set forth in the
second sentence of this Section 2.2, the General Partner in its sole discretion
may change the name of the Partnership at any time and from time to time and
shall notify the Limited Partners of such change in the next regular
communication by the Partnership to the Limited Partners.
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II.3 Registered Office and Agent, Principal Office. The name and
address of the Partnership's registered agent is Corporation Service Company,
0000 Xxxxxx Xxxx, Xxxxxxxxxx, Xxxxxxxx 00000. Such registered agent may be
changed as the General Partner may from time to time designate by notice to the
Limited Partners. The principal executive office of the Partnership is located
at [_____________________________________________], and may be changed to such
other place as the General Partner may from time to time designate. The
Partnership may maintain offices at such other place or places within or outside
the State of Delaware as the General Partner deems advisable.
II.4 Power of Attorney; Compliance with Act.
(a) The Limited Partners hereby irrevocably constitute
and appoint the General Partner, with full power of substitution and
resubstitution, as the Limited Partners' true and lawful attorney-in-fact with
full power and authority to act in the Limited Partners' name, place and stead
to:
(1) make, execute, swear to, seal, acknowledge,
deliver, file and record in the appropriate public offices (a) all
certificates, documents and other instruments (including, without
limitation, this Agreement and the Certificate and all amendments or
restatements thereof) that the General Partner or the Liquidating Trustee
deems appropriate or necessary to form, qualify or continue the existence
or qualification of the Partnership as a limited partnership (or a
partnership in which the limited partners have limited liability to the
extent provided by applicable law) in the State of Delaware and in all
other jurisdictions in which the Partnership may or plans to conduct
business or own property; (b) all instruments that the General Partner
deems appropriate or necessary to reflect any amendment or restatement of
this Agreement in accordance with its terms; (c) all conveyances and
other instruments or documents that the General Partner deems appropriate
or necessary to reflect the dissolution and liquidation of the
Partnership pursuant to the terms of this Agreement, including, without
limitation, a certificate of cancellation; (d) all instruments relating
to the admission, withdrawal, removal or substitution of any Partner
pursuant to, or other events described in, Articles VIII or IX, or the
Capital Contribution of any Partner; (e) any agreements, waivers or other
instruments required by any state or local tax authority to enable the
Partnership to file combined, consolidated or similar state or local
income tax returns and/or to pay state and local taxes on behalf of the
Partnership or all of the Partners; (f) all documents and other
instruments relating to the determination of the rights, preferences and
privileges of Partnership Interests; and (g) the Registration Rights
Agreement and all amendments to such agreement approved in accordance
with its respective terms; and
(2) execute, swear to, seal, acknowledge and file all
ballots, consents, approvals, waivers, certificates and other instruments
appropriate or necessary, in the sole discretion of the General Partner,
to make, evidence, give, confirm or ratify any vote, consent, approval,
agreement or other action which is made or given by the Partners
hereunder or is consistent with the terms of this Agreement or
appropriate or necessary, in the sole discretion of the General Partner,
to effectuate the terms or intent of this Agreement.
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(b) The foregoing power of attorney is irrevocable and
coupled with an interest, in recognition of the fact that each of the Partners
will be relying upon the power of the General Partner to act as contemplated by
this Agreement in any filing or other action by it on behalf of the Partnership,
and it shall survive and not be affected by the subsequent Incapacity of any
Limited Partner or Assignee and the transfer of all or any portion of such
Limited Partner's or Assignee's Partnership Interest and shall extend to such
Limited Partner's or Assignee's heirs, successors, assigns and personal
representatives. Each such Limited Partner or Assignee hereby agrees to be bound
by any representation made by the General Partner, acting in good faith pursuant
to such power of attorney; and each such Limited Partner or Assignee hereby
waives any and all defenses which may be available to contest, negate or
disaffirm the action of the General Partner, taken in good faith under such
power of attorney. Each Limited Partner or Assignee shall execute and deliver to
the General Partner or the Liquidating Trustee, within fifteen (15) days after
receipt of the General Partner's or Liquidating Trustee's request therefor, such
further designation, powers of attorney and other instruments as the General
Partner or the Liquidating Trustee, as the case may be, deems necessary to
effectuate this power of attorney.
II.5 Term. The term of the Partnership commenced on the date the
Certificate was filed in the office of the Delaware Secretary of State in
accordance with the Act and shall continue until dissolved and terminated
pursuant to the provisions of Article VIII or as otherwise provided by law.
II.6 Filing of Certificate and Perfection of Limited Partnership.
The General Partner shall execute, acknowledge, record and file at the expense
of the Partnership, the Certificate and any and all amendments thereto and all
requisite fictitious name statements and notices in such places and
jurisdictions as may be necessary to cause the Partnership to be treated as a
limited partnership under, and otherwise to comply with, the laws of each state
or other jurisdiction in which the Partnership conducts business.
II.7 Certificates Describing Partnership Units. At the request of
a Limited Partner, the General Partner, at its option, may issue a certificate
summarizing the terms of such Limited Partner's interest in the Partnership,
including the number of Partnership Units owned and the Percentage Interest
represented by such Partnership Units as of the date of such certificate. Any
such certificate (i) shall be in form and substance as approved by the General
Partner; (ii) shall not be negotiable and (iii) shall bear a legend to the
following effect:
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This certificate is not negotiable. The Partnership Units
represented by this certificate are governed by and transferable
only in accordance with the provisions of the Amended and Restated
Agreement of Limited Partnership of American Real Estate
Investment, L.P., as amended and restated.
ARTICLE III
PURPOSE
III.1 Purpose and Business. The purpose and nature of the business
to be conducted by the Partnership is as follows: (i) to conduct any business
that may be lawfully conducted by a limited partnership organized pursuant to
the Act, including, without limitation, investing in (either directly or through
the acquisition of interest in partnerships or other entities), purchasing
(either directly or through the acquisition of interest in partnerships or other
entities), developing, owning, managing, leasing and disposing of real estate
and any improvements thereon, entering into any partnership, joint venture, or
similar arrangement to engage in any of the foregoing, or to own interests in
any entity engaged in any of the foregoing, as well as any other activity as the
General Partner may from time to time approve, and to do anything necessary or
appropriate to accomplish the foregoing; provided that, such business shall be
limited to and conducted in such a manner as to permit the General Partner at
all times to be classified as a REIT, unless the General Partner ceases to
qualify as a REIT for reasons other than the conduct of the business of the
Partnership; (ii) to enter into any partnership, joint venture or other similar
arrangement to engage in any of the foregoing or to own interests in any entity
engaged in any of the foregoing; and (iii) to do anything necessary or
incidental to the foregoing. In connection with the foregoing, the Partners
acknowledge that the General Partner's status as a REIT inures to the benefit of
all the Partners and not solely the General Partner.
III.2 Powers. The Partnership shall be empowered to do any and all
acts and things necessary, appropriate, proper, advisable, incidental to or
convenient for the furtherance and accomplishment of the purposes and business
described herein and for the protection and benefit of the Partnership; provided
that, the Partnership shall not take, or refrain from taking, any action which,
in the judgment of the General Partner, in its sole discretion, (i) could
adversely affect the ability of the General Partner to continue to qualify as a
REIT, unless the General Partner determines to terminate its qualification as a
REIT; (ii) could subject the General Partner to any additional taxes under Code
ss. 857 or 4981, or (iii) could violate any law or regulation of any
governmental body or agency having jurisdiction over the General Partner or its
securities, unless such action (or inaction) shall have been specifically
consented to by the General Partner in writing.
ARTICLE IV
CAPITAL CONTRIBUTIONS
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IV.1 Capital Contributions of the Partners. The General Partner
has contributed to the capital of the Partnership the amount set forth on
Exhibit A (the "General Partner Capital Contribution"). Each Limited Partner has
contributed or shall contribute, or cause to be contributed as its initial
Capital Contribution to the capital of the Partnership, the Contributed Limited
Partner Assets, with the values as set forth opposite their names on attached
Exhibit A. The agreed-to gross fair market value of each of the Contributed
Limited Partner Assets, which shall be their initial Gross Asset Value, is as
set forth opposite the contributing Limited Partner's name on attached Exhibit
A. Each Partner shall own Partnership Units, which if such Partner is a Limited
Partner shall be designated under this Agreement as "OP Units," in the amount
set forth for such Partner in Exhibit A and shall have a Percentage Interest in
the Partnership as set forth for such Partner in Exhibit A, which Percentage
Interest shall be adjusted in Exhibit A from time to time by the General Partner
to the extent necessary in accordance with the terms of this Agreement to
reflect (a) exchanges of Partnership Units for Shares in accordance with Article
XII; (b) transfers of Partnership Units that result in the admission of a
Substituted Limited Partner; (c) withdrawals of Partners; (d) Capital
Contributions or (e) issuances of additional Partnership Units (pursuant to any
merger or otherwise). Except as otherwise provided herein, the Partners shall
have no obligation to make any additional Capital Contributions or loans to the
Partnership.
IV.2 Issuances of Additional Partnership Interests; Additional
Partners.
(a) The General Partner is hereby authorized to cause
the Partnership to issue such additional Partnership Interests ("Additional
Partnership Interests") in the form of Partnership Units for any Partnership
purpose at any time or from time to time, to the Partners (including the General
Partner) or to other Persons for such consideration and on such terms and
conditions as shall be established by the General Partner in its sole and
absolute discretion, all without the approval of any Limited Partners. Any
Additional Partnership Interests issued thereby may be issued in one or more
classes, or one or more series of any of such classes, with such designations,
preferences and relative, participating, optional or other special rights,
powers and duties, including rights, powers and duties senior to Limited
Partnership Interests, all as shall be determined by the General Partner in its
sole and absolute discretion and without the approval of any Limited Partner,
subject to Delaware law, including, without limitation, (i) the allocations of
items of Partnership income, gain, loss, deduction and credit to each such class
or series of Partnership Interests; (ii) the right of each such class or series
of Partnership Interests to share in Partnership distributions; and (iii) the
rights of each such class or series of Partnership Interests upon dissolution
and liquidation of the Partnership; provided, however, that no additional
Partnership Units or other Partnership Interests shall be issued to the General
Partner unless either:
(1) (A) the Additional Partnership Interests are
issued in connection with an issuance of shares of capital stock of or
other interests in the General Partner, which shares or interests have
designations, preferences and other rights, all such that the economic
interests are substantially similar to the designations, preferences and
other rights of the Additional Partnership Interests issued to the
General Partner by the Partnership and (B) the General Partner shall make
a Capital Contribution to the Partnership in an amount equal to the
proceeds raised in connection with the issuance of such shares of capital
stock of or other interests in the General Partner, or
17
(2) the Additional Partnership Interests are issued
to all Partners in proportion to their respective Percentage Interests,
or
(3) the General Partner makes an additional Capital
Contribution to the Partnership, other than as specified in (1) above.
If as a result of (3) above the number of Partnership Units held by the General
Partner would not equal the number of Shares then outstanding, the number of
Partnership Units outstanding shall be adjusted so that the General Partner will
own its Percentage Interest of the total Partnership Units outstanding by owning
a number of Partnership Units equal to the number of Shares then outstanding,
and the number of Partnership Units owned by each Limited Partner will
accordingly be adjusted to equal its current Percentage Interest.
Without limiting the foregoing, the General Partner is expressly
authorized to cause the Partnership to issue Partnership Units for less than
fair market value, so long as the General Partner concludes in good faith that
such issuance is in the best interests of the General Partner and the
Partnership.
(b) The General Partner may cause the Partnership to issue
additional Partnership Units to and admit as an additional Limited Partner
("Additional Limited Partner"), any Person in exchange for the Capital
Contribution by such Person of cash and/or property. In the event that the
Partnership issues Additional Partnership Units pursuant to this Section 4.2,
the number of Partnership Units issued shall be determined by dividing the U.S.
dollar amount of cash plus the agreed value of the property contributed as of
the date of contribution to the Partnership (the "Contribution Date") by the
Adjusted Current Per Share Market Price, computed as of the Trading Day
immediately preceding the Contribution Date.
(c) Notwithstanding anything contained herein to the
contrary, an Additional Limited Partner that acquires an Additional Partnership
Interest pursuant to this Section 4.2 shall not acquire any interest in, and may
not exercise or otherwise participate in, any Conversion Rights pursuant to
Article XII, without the Agreement of the General Partner.
IV.3 Issuance of Shares.
(a) Upon Issuance of Additional Securities. The Company
shall not issue any additional Shares (other than Shares issued in connection
with an exchange pursuant to Article XII hereof) or rights, options, warrants or
convertible or exchangeable securities containing the right to subscribe for or
purchase Shares (collectively, "Additional Securities") other than to all
holders of Shares, unless (A) the Company shall cause the Partnership to issue
to the Company, Partnership Interests or rights, options, warrants or
convertible or exchangeable securities of the Partnership having designations,
preferences and other rights, all such that the economic interests are
substantially similar to those of the Additional Securities, and (B) the Company
contributes the proceeds from the issuance of such Additional Securities and
from any exercise of rights contained in such Additional Securities, directly
and through the Company, to the Partnership; provided, however, that the Company
is allowed to issue Additional Securities in connection with an acquisition of a
property to be held directly by the Company, but if and only if, such direct
acquisition and issuance of Additional Securities have been approved and
18
determined to be in the best interests of the Company and the Partnership by a
majority of the Directors (as defined in the Charter). Without limiting the
foregoing, the Company is expressly authorized to issue Additional Securities
for less than fair market value, and to cause the Partnership to issue to the
Company corresponding Partnership Interests, so long as (x) the Company
concludes in good faith that such issuance is in the best interests of the
Company and the Partnership, including without limitation, the issuance of
Shares and corresponding Partnership Units pursuant to an employee share
purchase plan providing for employee purchases of Shares at a discount from fair
market value or employee stock options that have an exercise price that is less
than the fair market value of the Shares, either at the time of issuance or at
the time of exercise, and (y) the Company contributes all proceeds from such
issuance to the Partnership. For example, in the event the Company issues Shares
for a cash purchase price and contributes all of the proceeds of such issuance
to the Partnership as required hereunder, the Company shall be issued a number
of additional Partnership Units equal to the product of (A) the number of such
Shares issued by the Company, the proceeds of which were so contributed,
multiplied by (B) a fraction, the numerator of which is 100%, and the
denominator of which is the Conversion Factor in effect on the date of such
contribution.
(b) Certain Deemed Contributions of Proceeds of Issuance of
Shares. In connection with any and all issuance of Shares, the Company shall
make Capital Contributions to the Partnership of the proceeds therefrom,
provided that if the proceeds actually received and contributed by the Company
are less than the gross proceeds of such issuance as a result of any
underwriter's discount or other expenses paid or incurred in connection with
such issuance, then the Company shall be deemed to have made Capital
Contributions to the Partnership in the aggregate amount of the gross proceeds
of such issuance and the Partnership shall be deemed simultaneously to have paid
such offering expenses in accordance with Section 7.7 hereof and in connection
with the required issuance of additional Partnership Units to the Company for
such Capital Contributions pursuant to Section 4.3(a) hereof.
IV.4 Stock Incentive Plan. If at any time or from time to time
Incentive Options granted in connection with the Company's Stock Incentive Plan
are exercised in accordance with the terms of the Incentive Option Agreement,
the Company shall, as soon as practicable after such exercise, contribute to the
capital of the Partnership an amount equal to the exercise price paid to the
Company by such exercising party in connection with the exercise of the
Incentive Option.
IV.5 No Third Party Beneficiary. No creditor or other third party
having dealings with the Partnership shall have the right to enforce the right
or obligation of any Partner to make Capital Contributions or to pursue any
other right or remedy hereunder or at law or in equity, it being understood and
agreed that the provisions of this Agreement shall be solely for the benefit of,
and may be enforced solely by, the parties hereto and their respective
successors and assigns. None of the rights or obligations of the Partners herein
set forth to make Capital Contributions to the Partnership shall be deemed an
asset of the Partnership for any purpose by any creditor or other third party,
nor may such rights or obligations be sold, transferred or assigned by the
Partnership or pledged or encumbered by the Partnership to secure any debt or
other obligation of the Partnership or of any of the Partners. Notwithstanding
the foregoing, the stockholders of the Company shall not be considered creditors
or third parties for the purposes of this Agreement but shall be considered
third party beneficiaries with the right to enforce this Agreement.
19
IV.6 No Interest; No Return. No Partner shall be entitled to
interest on its Capital Contribution or on such Partner's Capital Account.
Except as provided herein or by law, no Partner shall have any right to withdraw
any part of its Capital Account or to demand or receive the return of its
Capital Contribution from the Partnership.
IV.7 No Preemptive Rights. No Person shall have any preemptive,
preferential or other similar right with respect to (i) additional Capital
Contributions or loans to the Partnership; or (ii) issuance or sale of any
Partnership Interests.
IV.8 Percentage Interests. If the number of outstanding
Partnership Units increases or decreases during the taxable year, each Partner's
Percentage Interest shall be adjusted by the General Partner effective as of the
effective date of each such increase or decrease to a percentage equal to the
number of Partnership Units held by such Partner divided by the aggregate number
of Partnership Units outstanding after giving effect to such increase or
decrease. If the Partners' Percentage Interests are adjusted pursuant to this
Section 4.8, the Profits and Losses for the taxable year in which the adjustment
occurs shall be allocated between the part of the year ending on the day when
the Partnership's property is revalued by the General Partner and the part of
the year beginning on the following day either (i) as if the taxable year had
ended on the date of the adjustment or (ii) based on the number of days in each
part. The General Partner, in its sole discretion, shall determine which method
shall be used to allocate Profits and Losses for the taxable year in which the
adjustment occurs. The allocation of Profits and Losses for the earlier part of
the year shall be based on the Percentage Interests before adjustment, and the
allocation of Profits and Losses for the later part shall be based on the
adjusted Percentage Interests.
ARTICLE V
ALLOCATIONS, DISTRIBUTIONS AND OTHER TAX AND
ACCOUNTING MATTERS
V.1 Profits and Losses.
After giving effect to the mandatory Partnership
allocations set forth in Section 5.2, Profits and Losses for any Fiscal Year or
other applicable period shall be allocated to the Partners pro rata in
accordance with their Percentage Interests.
V.2 Mandatory Allocations
(a) (1) Minimum Gain Chargeback. Notwithstanding any other
provision of this Article 5, if there is a net decrease in Partnership
Minimum Gain during any Partnership Fiscal Year or other applicable
period, then, subject to the exceptions set forth in Regulations ss.
1.704-2(f)(2), (3), (4) and (5), each Partner shall be specially
allocated items of Partnership income and gain for such Partnership
Fiscal Year (and, if necessary, subsequent Partnership Fiscal Years) in
an amount equal to such
20
Partner's share of the net decrease in Partnership Minimum Gain, as
determined in accordance with Regulations ss. 1.704-2(g). Allocations
pursuant to the previous sentence shall be determined in accordance with
Regulations ss. 1.704-2(f). This Section 5.2(a)(1) is intended to comply
with the minimum gain chargeback requirement in Regulations ss.
1.704-2(f) shall be interpreted consistently therewith.
(2) Partner Minimum Gain Chargeback. Notwithstanding
any other provision of this Article 5 except Section 5.2(a)(1), if there
is a net decrease in Partner Minimum Gain attributable to a Partner
Nonrecourse Debt during any Partnership Fiscal Year or other applicable
period, then, subject to the exceptions set forth in Regulations ss.
1.704-2(i)(4), each Partner who has a share of the Partner Minimum Gain
attributable to such Partner Nonrecourse Debt, determined in accordance
with Regulations ss. 1.704-2(i)(5) shall be specially allocated items of
Partnership income and gain for such Partnership Fiscal Year (and, if
necessary, subsequent Partnership Fiscal Years) in an amount equal to
such Partner's share of the net decrease in Partner Minimum Gain
attributable to such Partner Nonrecourse Debt, determined in accordance
with Regulations ss. 1.704-2(i)(4). Allocations pursuant to the previous
sentence shall be made in proportion to the respective amounts required
to be allocated to each Partner pursuant thereto. The items to be so
allocated shall be determined in accordance with Regulations ss.
1.704-2(i)(4). This Section 5.2(a)(2) is intended to comply with the
minimum gain chargeback requirement in Regulations ss. 1.704-2(i)(4) and
shall be interpreted consistently therewith.
(b) Qualified Income Offset. Notwithstanding any provision
of this Article 5, except Section 5.2(a), in the event any Partner receives any
adjustments, allocations, or distributions described in Regulations xx.xx.
1.704-1(b)(2)(ii)(d)(4), (5) or (6), that cause or increase an Adjusted Capital
Account Deficit of such Partner, items of Partnership income and gain shall be
specially allocated to such Partner in an amount and manner sufficient to
eliminate, to the extent required by the Regulations, the Adjusted Capital
Account Deficit of such Partner as quickly as possible. This Section 5.2(b) is
intended to comply with the qualified income offset provision of Regulations ss.
1.704-1(b)(2)(ii)(d) and shall be interpreted consistently therewith.
(c) No Excess Deficit. To the extent that any Partner has
or would have, as a result of an allocation of Loss (or item thereof), an
Adjusted Capital Account Deficit, such amount of Loss (or item thereof) shall be
allocated to the other Partners in accordance with Section 5.1, but in a manner
which will not produce an Adjusted Capital Account Deficit as to such Partner.
To the extent such allocation would result in all Partners having Adjusted
Capital Account Deficits, such Loss shall be allocated to the General Partner.
Any allocations of Loss pursuant to this Section 5.2(c) shall be reversed with a
corresponding amount of Profits in subsequent years.
(d) Nonrecourse Deductions. Nonrecourse Deductions for any
Partnership Fiscal Year or other applicable period shall be allocated to the
Partners pro rata in accordance with their Percentage Interests.
(e) Partner Nonrecourse Deductions. Any Partner Nonrecourse
Deductions for any Partnership Fiscal Year or other applicable period shall be
specially allocated to the Partner who bears the economic risk of loss with
respect to the Partner Nonrecourse Debt to which such Partner Nonrecourse
Deductions are attributable in accordance with Regulations
21
ss. 1.704-2(i)(1).
(f) Code ss. 754 Adjustments. To the extent an adjustment
to the adjusted tax basis of any Partnership asset pursuant to Code ss. 734(b)
or Code ss. 743(b) is required, pursuant to Regulations xx.xx.
1.704-1(b)(2)(iv)(m), to be taken into account in determining Capital Accounts,
the amount of such adjustment to the Capital Accounts shall be treated as an
item of gain (if the adjustment increases the basis of the asset) or loss (if
the adjustment decreases such basis) and such gain or loss shall be specially
allocated to the Partners in a manner consistent with the manner in which their
Capital Accounts are required to be adjusted pursuant to such Section of the
Regulations.
Each Partner hereby agrees to provide the Partnership with all
information necessary to give effect to an election made under Code ss. 754 if
the General Partner determines to make such an election. With respect to such
election:
(1) Any change in the amount of the depreciation
deducted by the partnership and any change in the gain or loss of the
Partnership, for federal income tax purposes, resulting from an
adjustment pursuant to Section 743(b) or the Code shall be allocated
entirely to the transferee of the Partnership Interest or portion thereof
so transferred. Neither the capital contribution obligations of, nor the
Partnership Interest of, nor the amount of any cash distributions to, the
Partners shall be affected as a result of such election, and except as
provided in Regulations ss. 1.704-1(b)(2)(iv)(m), the making of such
election shall have no effect except for federal and (if applicable)
state and local income tax purposes.
(2) Solely for federal and (if applicable) state and
local income tax purposes and not for the purpose of maintaining the
Partners' Capital Accounts (except as provided in Regulations Section
1.704-1(b)(2)(iv)(m)), the Partnership shall keep a written record for
those assets, the bases of which is adjusted as a result of such
election, and the amount at which such assets are carried on such record
shall be debited (in the case of an increase in basis) or credited (in
the case of a decrease in basis) by the amount of such basis adjustment.
Any change in the amount of the depreciation deducted by the Partnership
and any change in the gain or loss of the Partnership, for federal and
(if applicable) state and local income tax purposes, attributable to the
basis adjustment made as a result of such election shall be debited or
credited, as the case may be, on such record.
(g) Curative Allocations. Any mandatory allocations of
items of income, gain, loss or deduction pursuant to Sections 5.2(a), (b), (c)
and (e) above shall be taken into account for the purpose of equitably adjusting
subsequent allocations of income, gain, loss or deduction so that the net
allocations, in the aggregate, allocated to each Partner pursuant to this
Article 5, and the Capital Accounts of each Partner, shall as quickly as
possible and to the extent possible, be the same as if no mandatory allocations
had been made.
V.3 Other Allocation Rules
(a) Pursuant to Regulations ss. 1.752-3(a), for the purpose
of determining each Partner's share of excess Nonrecourse Liabilities of the
Partnership, and solely for such purpose, each Partner's interest in partnership
profits shall equal such Partner's
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Percentage Interest.
(b) The allocation of Profits and Losses for any
Partnership Year during which a person acquires a Partnership Interest (other
than upon formation of the Partnership), or during which there is a change in
the Partners' Percentage Interests, shall take into account the Partners'
varying interests for such Partnership Year pursuant to any method permissible
under Code ss. 706 that is selected by the General Partner. The method selected
by the General Partner shall not apply notwithstanding any agreement between the
assignor and assignee of such Partnership Interest although the General Partner
may recognize any such agreement.
(c) To the extent permitted by Regulations ss.
1.704-2(h)(3) and 1.704-2(i)(6), the General Partner shall endeavor to treat
distributions as having been made from the proceeds of Nonrecourse Liabilities
or Partner Nonrecourse Debt only to the extent that such distributions would
cause or increase a deficit balance in any Partner's Capital Account that
exceeds the amount such Partner is otherwise obligated to restore (within the
meaning of Regulations ss. 1.704-1(b)(ii)(c)) as of the end of the Partnership's
taxable year in which the distribution occurs.
V.4 Allocations for Tax Purposes
(a) Except as otherwise provided in this Section 5.4, for
federal income tax purposes, each item of income, gain, loss and deduction shall
be allocated among the Partners in the same manner as its correlative item of
"book" income, gain, loss or deduction is allocated pursuant to Sections 5.1,
5.2 and 5.3 above.
(b) In accordance with Codess. 704(b) and 704(c) and the
Regulations thereunder, income, gain, loss and deduction with respect to any
property contributed to the capital of the Partnership shall, solely for federal
income tax purposes, be allocated among the Partners so as to take into account
any variation between the adjusted basis of such property to the Partnership for
federal income tax purposes and the initial Gross Asset Value of such property.
If the Gross Asset Value of any Partnership property is adjusted as described in
the definition of Gross Asset Value, 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 the Gross Asset Value of such asset in the manner prescribed under
Code ss. 704(b) and 704(c) and the Regulations thereunder. In accordance with
the foregoing, the Partnership shall elect to use the "traditional method" set
forth in Regulation ss.1.704-3(b) with respect to the properties contributed by
or on behalf of the Special Consenting Partners.
V.5 Revisions to Allocations to Reflect Issuance of Additional
Partnership Interests.
In the event that the Partnership issues Additional Partnership
Interests to the General Partner or any Additional Limited Partner pursuant to
Article IV hereof, the General Partner shall make such revisions to this Article
V as it deems necessary to reflect the terms of the issuance of such Partnership
Interests, including any preferential allocations to classes of Partnership
Interests that are entitled thereto.
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V.6 Distributions. Except with respect to a liquidation of the
Partnership pursuant to Article VIII hereof:
(a) The General Partner shall cause the Partnership to
distribute all or a portion of Net Operating Cash Flow to the Partners from time
to time as determined by the General Partner, but in any event not less
frequently than quarterly in such amounts as the General Partner shall
determine;
(b) For each Partnership Fiscal Year, all distributions
made pursuant to this Section 5.6 shall be made to the Partners in proportion to
their respective Percentage Interests; provided that the General Partner shall
use its best efforts to cause the Partnership to make distributions such that
the cumulative distributions per OP Unit shall equal the cumulative
distributions per Share; provided further that in no event may a Partner receive
a distribution of Net Operating Cash Flow with respect to a Partnership Unit if
such Partner is entitled to receive a distribution out of such Net Operating
Cash Flow with respect to a Share for which such Partnership Unit has been
exchanged and such distribution shall be made to the Company; and
(c) Notwithstanding the provisions of Section 5.6 (a) and
(b), the General Partner shall use its best efforts to cause the Partnership to
distribute sufficient amounts to enable the General Partner to pay shareholder
dividends that will (1) satisfy the requirements for qualification as a REIT
under the Code and the Regulations (the "REIT Requirements") and (2) avoid any
federal income or excise tax liability of the General Partner.
ARTICLE VI
TAX MATTERS
VI.1 Preparation of Tax Returns
The General Partner shall arrange for the preparation and timely
filing of all returns of Partnership income, gains, deductions, losses and other
items required of the Partnership for federal and state income tax purposes and
shall use all reasonable efforts to furnish, within ninety (90) days of the
close of each taxable year, the tax information reasonably required by Limited
Partners for federal and state income tax reporting purposes.
VI.2 Tax Elections
Except as otherwise provided herein, the General Partner shall, in
its sole and absolute discretion, determine whether to make any available
election pursuant to the Code; provided that the General Partner shall make the
election under Code ss. 754 in accordance with applicable Regulations
thereunder. The General Partner shall have the right to seek to revoke any such
elections (including, without limitation, the election under Code ss. 754) upon
the General Partner's determination in its sole and absolute discretion that
such revocation is in the best interests of the Partners.
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VI.3 Tax Matters Partner
(a) The General Partner shall be the "tax matters partner"
of the Partnership for federal income tax purposes within the meaning of Code
ss. 6231(a)(7). Pursuant to Code ss. 6223(c)(3), upon receipt of notice from the
IRS of the beginning of an administrative proceeding with respect to the
Partnership, the tax matters partner shall furnish the IRS with the name,
address and profit interest of each of the Limited Partners and the Assignees to
the extent that such information is provided to the Partnership by the Limited
Partners and the Assignees. The General Partner is authorized to take any action
in connection with any tax audit or continuing judicial action as it determines
in good faith is in the best interests of the Partners.
The taking of any action and the incurring of any expense
by the tax matters partner in connection with any such proceeding, except to the
extent required by law, is a matter in the sole and absolute discretion of the
tax matters partner and the provisions relating to indemnification of the
General Partner set forth in Section 7.5 of this Agreement shall be fully
applicable to the tax matters partner in its capacity as such.
(b) The tax matters partner shall receive no compensation
for its services. All third party costs and expenses incurred by the tax matters
partner in performing its duties as such (including legal and accounting fees
and expenses) shall be borne by the Partnership. Nothing herein shall be
construed to restrict the Partnership from engaging an independent accounting
firm or the accountants for the Partnership to assist the tax matters partner in
discharging its duties hereunder, so long as the compensation paid by the
Partnership for such services is reasonable.
VI.4 Organizational Expenses
The Partnership shall elect to deduct expenses, if any, incurred
by it in organizing the Partnership ratably over a sixty (60) month period as
provided in Code ss. 709.
VI.5 Withholding; Combined Returns
(a) Each Partner hereby authorizes the Partnership to
withhold from or pay on behalf of or with respect to such Partner and Assignee
any amount of federal, state, local, or foreign taxes that the General Partner
reasonably determines that the Partnership is required to withhold or pay with
respect to any amount distributable or allocable to such Partner or Assignee
pursuant to this Agreement, including, without limitation, any taxes required to
be withheld or paid by the Partnership pursuant to Code ss. 1441, 1442, 1445, or
1446. Any amount paid on behalf of or with respect to a Partner or Assignee
shall constitute a loan by the Partnership to such Partner or Assignee, which
loan shall be repaid through withholding of subsequent distributions to such
Partner or Assignee. In the event that a Limited Partner fails to pay any
amounts owed to the Partnership pursuant to this Section 6.5 when due, the
General Partner may, in its sole and absolute discretion, elect to make the
payment to the Partnership on behalf of such defaulting Limited Partner, and in
such event shall be deemed to have loaned such amount to such defaulting Limited
Partner and shall succeed to all rights and remedies of the Partnership as
against such defaulting Limited Partner. Without limitation, in such event the
General Partner shall have the right to receive distributions that would
otherwise be distributable to such defaulting Limited Partner until such time as
such loan, together with all interest thereon,
25
has been paid in full; and any such distributions so received by the General
Partner shall be treated as having been distributed to the defaulting Limited
Partner and immediately paid by the defaulting Limited Partner to the General
Partner in repayment of such loan. Any amounts payable by a Limited Partner
hereunder shall bear interest at the lesser of (i) the base rate on corporate
loans at large United States money center commercial banks, as published from
time to time in The Wall Street Journal or (ii) the maximum lawful rate of
interest on such obligation, such interest to accrue from the date such amount
is due (which shall be fifteen (15) days after demand) until such amount is paid
in full.
(b) The General Partner is authorized, if it determines in
good faith that such action is in the interests to both it and the Limited
Partners, to negotiate with state and local tax authorities and/or file state
and local combined or consolidated income tax returns on behalf of the
Partnership and for all of the Partners and Assignees in respect of income of
the Partnership. To the extent any payment or accrual of state or local income
taxes result in a federal, state or local tax credit to one or more Partners,
such credit shall be allocated between the Partners in proportion to their
respective average daily Percentage Interests for the Partnership Fiscal Year
for which such tax is paid or accrued and the amount allocated to each Partner
shall be treated as a distribution to such Partner and shall reduce the amount
of available cash otherwise distributable to such Partners under Article 5.
ARTICLE VII
RIGHTS, DUTIES AND RESTRICTIONS OF THE GENERAL PARTNER
VII.1 Management. The General Partner shall be responsible for the
management of the Partnership's business and affairs. Except as otherwise herein
expressly provided, and subject to the limitations contained in Section 7.2
hereof with respect to Major Decisions, the General Partner shall have, and is
hereby granted, full and complete power to the fullest extent permissible under
the Act, authority and discretion to take such action for and on behalf of the
Partnership and in its name as the General Partner shall, in its sole and
absolute discretion, deem necessary or appropriate to carry out the purposes for
which the Partnership was organized. Except as otherwise expressly provided
herein, and subject to Section 7.2 hereof, the General Partner shall have the
right, power and authority:
(a) To manage, control, invest, lend, reinvest, acquire by
purchase, lease or otherwise, sell, contract to purchase or sell, grant, obtain,
or exercise options to purchase, options to sell or conversion rights, assign,
transfer, convey, deliver, endorse, exchange, pledge, mortgage, abandon,
improve, repair, maintain, insure, lease for any term and otherwise deal with
any and all property of whatsoever kind and nature, and wheresoever situated, in
furtherance of the purposes of the Partnership;
(b) To acquire, directly or indirectly, interests in real
or personal property of any kind and of any type, and any and all kinds of
interests therein, and to determine the manner in which title thereto is to be
held; to manage, insure against loss, protect and subdivide any of the real or
personal property, interests therein or parts thereof; to improve, develop or
redevelop any such real or personal property; to participate in the ownership
and development of any property; to dedicate for public use, to vacate any
subdivisions or parts
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thereof, to resubdivide, to contract to sell, to grant options to purchase or
lease, to sell on any terms; to convey, to mortgage, pledge or otherwise
encumber said property, or any part thereof; to lease said property or any part
thereof from time to time, upon any terms and for any period of time, and to
renew or extend leases, to amend, change or modify the terms and provisions of
any leases and to grant options to lease and options to renew leases and options
to purchase; to partition or to exchange said real property, or any part
thereof, for other real or personal property; to grant easements or charges of
any kind; to release, convey or assign any right, title or interest in or about
or easement appurtenant to said property or any part thereof; to construct and
reconstruct, remodel, alter, repair, add to or take from buildings on said
property; to insure any Person having an interest in or responsibility for the
care, management or repair of such property; to direct the trustee of any land
trust to mortgage, lease, convey or contract to convey the real estate held in
such land trust or to execute and deliver deeds, mortgages, notes, and any and
all documents pertaining to the property subject to such land trust or in any
matter regarding such trust; to execute assignments of all or any part of the
beneficial interest in such land trust;
(c) To employ, engage or contract with or dismiss from
employment or engagement Persons to the extent deemed necessary by the General
Partner for the operation and management of the Partnership business, including
but not limited to, contractors, subcontractors, engineers, architects,
surveyors, mechanics, consultants, accountants, attorneys, insurance brokers,
real estate brokers and others;
(d) To enter into contracts on behalf of the Partnership;
(e) To borrow or lend money, procure loans and advances
from any Person for Partnership purposes, and to apply for and secure, from any
Person, credit or accommodations; to contract liabilities and obligations,
direct or contingent and of every kind and nature with or without security; and
to repay, discharge, settle, adjust, compromise, or liquidate any such loan,
advance, credit, obligation or liability;
(f) To Pledge, hypothecate, mortgage, assign, deposit,
deliver, enter into sale and leaseback arrangements or otherwise give as
security or as additional or substitute security, or for sale or other
disposition any and all Partnership property, tangible or intangible, including,
but not limited to, real estate and beneficial interests in land trusts, and to
make substitutions thereof, and to receive any proceeds thereof upon the release
or surrender thereof; to sign, execute and deliver any and all assignments,
deeds and other contracts and instruments in writing; to authorize, give, make,
procure, accept and receive moneys, payments, property, notices, demands,
vouchers, receipts, releases, compromises and adjustments; to waive notices,
demands, protests and authorize and execute waivers of every kind and nature; to
enter into, make, execute, deliver and receive written agreements, undertakings
and instruments of every kind and nature; to give oral instructions and make
oral agreements; and generally to do any and all other acts and things
incidental to any of the foregoing or with reference to any dealings or
transactions which any attorney may deem necessary, proper or advisable;
(g) To acquire and enter into any contract of insurance
which the General Partner deems necessary or appropriate for the protection of
the Partnership, for the conservation of the Partnership's assets or for any
purpose convenient or beneficial to the Partnership;
(h) To conduct any and all banking transactions on behalf
of the
27
Partnership; to adjust and settle checking, savings, and other accounts with
such institutions as the General Partner shall deem appropriate; to draw, sign,
execute, accept, endorse, guarantee, deliver, receive and pay any checks,
drafts, bills of exchange, acceptances, notes, obligations, undertakings and
other instruments for or relating to the payment of money in, into, or from any
account in the Partnership's name; to execute, procure, consent to and authorize
extensions and renewals of the same; to make deposits and withdraw the same and
to negotiate or discount commercial paper, acceptances, negotiable instruments,
bills of exchange and dollar drafts;
(i) To demand, xxx for, receive, and otherwise take steps
to collect or recover all debts, rents, proceeds, interests, dividends, goods,
chattels, income from property, damages and all other property, to which the
Partnership may be entitled or which are or may become due the Partnership from
any Person; to commence, prosecute or enforce, or to defend, answer or oppose,
contest and abandon all legal proceedings in which the Partnership is or may
hereafter be interested; and to settle, compromise or submit to arbitration any
accounts, debts, claims, disputes and matters which may arise between the
Partnership and any other Person and to grant an extension of time for the
payment or satisfaction thereof on any terms, with or without security;
(j) To make arrangements for financing, including the
taking of all action deemed necessary or appropriate by the General Partner to
cause any approved loans to be closed;
(k) To take all reasonable measures necessary to insure
compliance by the Partnership with applicable arrangements, and other
contractual obligations and arrangements entered into by the Partnership from
time to time in accordance with the provisions of this Agreement, including
periodic reports as required to lenders and using all due diligence to insure
that the Partnership is in compliance with its contractual obligations;
(l) To maintain the Partnership's books and records; and
(m) To prepare and deliver, or cause to be prepared and
delivered by the Accountants, all financial and other reports with respect to
the operations of the Partnership, and preparation and filing of all federal and
state tax returns and reports.
Except as otherwise provided herein, to the extent the
duties of the General Partner require expenditures of funds to be paid to third
parties, the General Partner shall not have any obligations hereunder except to
the extent that Partnership funds are reasonably available to it for the
performance of such duties, and nothing herein contained shall be deemed to
authorize or require the General Partner, in its capacity as such, to expend its
individual funds for payment to third parties or to undertake any individual
liability or obligation on behalf of the Partnership.
VII.2 Major Decisions. The General Partner shall not, without the
prior Consent of the Limited Partners, on behalf of the Partnership, undertake
any of the following actions (the "Major Decisions"):
(a) Amend, modify or terminate this Agreement other than to
reflect the admission of Additional Limited Partners pursuant to Section 4.2
hereof or as otherwise described in Article XIV.
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(b) Make a general assignment for the benefit of creditors
or appoint or acquiesce in the appointment of a custodian, receiver or trustee
for all or any part of the assets of the Partnership.
(c) Take title to any personal or real property, other than
in the name of the Partnership or pursuant to Section 7.10 hereof.
(d) Institute any proceeding for Bankruptcy on behalf of
the Partnership.
(e) Act or cause the taking of any action with respect to
the following matters:
(1) the dissolution and winding up of the Partnership
or an election to continue the Partnership or to continue the business of
the Partnership;
(2) a change in the nature of the business of the
Partnership.
VII.3 Proscriptions. The General Partner shall not have the
authority to:
(a) Do any act in contravention of this Agreement or which
would make it impossible to carry on the ordinary business of the Partnership;
(b) Possess any Partnership property or assign rights in
specific Partnership property for other than Partnership purposes; or
(c) Do any act in contravention of applicable law.
Nothing herein contained shall impose any obligation on any Person or firm doing
business with the Partnership to inquire as to whether or not the General
Partner has properly exercised its authority in executing any contract, lease,
mortgage, deed or any other instrument or document on behalf of the Partnership,
and any such Third Person shall be fully protected in relying upon such
authority.
VII.4 Outside Activities of General Partner. Without Consent of
the Limited Partners, the General Partner shall not, directly or indirectly,
enter into or conduct any business other than in connection with the ownership,
acquisition and disposition of Partnership Interests as a General Partner or
Limited Partner and the management of the business of the Partnership and such
activities as are incidental thereto. Without the Consent of the Limited
Partners, the assets of the General Partner shall be limited to Partnership
Interests and permitted debt obligations of the Partnership, so that Shares and
Partnership Units are completely fungible except as otherwise specifically
provided herein; provided, that the General Partner shall be permitted to (i)
hold such bank accounts or similar instruments or accounts in its own name as it
deems necessary to carry out its responsibilities and purposes as contemplated
under this Agreement and its organizational documents; (ii) acquire, directly or
through any subsidiary of the General Partner that is a qualified REIT
subsidiary within the meaning of ss. 856(i) of the
29
Code, up to a one percent (1%) interest in any partnership or limited liability
company at least ninety-nine percent (99%) of the equity of which is owned by
the Partnership; and (iii) own all of the equity interest in [FLIP BRE], [the
property known as 00-00 Xxxxxx Xxxx and any other property acquired]. The
General Partner and any of its Affiliates may acquire Limited Partner Interests
and shall be entitled to exercise all rights of a Limited Partner relating to
such Limited Partner Interests.
VII.5 Indemnification.
(a) The Partnership shall indemnify each Indemnitee from
and against any and all losses, claims, damages, liabilities, joint or several,
expenses (including, without limitation, reasonable attorney's fees and other
legal fees and expenses), judgments, fines, settlements, and other amounts
arising from any and all claims, demands, actions, suits or proceedings, civil,
criminal, administrative or investigative, that relate to the operations of the
Partnership or the activities of such Indemnitee acting on behalf of the
Partnership, an Affiliate of the Partnership or an entity in which the
Partnership holds an interest as set forth in this Agreement in which such
Indemnitee may be involved, or is threatened to be involved, as a party or
otherwise; provided that, the Partnership shall not indemnify an Indemnitee for
any such losses, claims, damages, liabilities, expenses, judgments, fines,
settlements or other amounts arising out of or resulting from (i) fraud,
intentional misconduct by such Indemnitee, or a violation of law by such
Indemnitee when the Indemnitee has reasonable cause to believe such action was
unlawful; (ii) the violation or breach by such Indemnitee of the provisions of
this Agreement or (iii) any transaction from which such Indemnitee received a
personal benefit in violation or breach of any provision of this Agreement. The
termination of any proceeding by judgment, order or settlement does not create a
presumption that the Indemnitee did not meet the requisite standard of conduct
set forth in this Section 7.5(a). The termination of any proceeding by
conviction of an Indemnitee or upon a plea of nolo contendere or its equivalent
by an Indemnitee, or an entry of an order of probation against an Indemnitee
prior to judgment, creates a rebuttable presumption that such Indemnitee acted
in a manner contrary to that specified in this Section 7.5(a) with respect to
the subject matter of such proceeding. Any indemnification pursuant to this
Section 7.5 shall be made only out of the assets of the Partnership, and neither
the General Partner nor any Limited Partners shall have any obligation to
contribute to the capital of the Partnership or otherwise provide funds to
enable the Partnership to fund its obligations under this Section 7.5.
(b) Reasonable expenses incurred by an Indemnitee who is a
party to a proceeding may be paid or reimbursed by the Partnership in advance of
the final disposition of the proceeding upon receipt by the Partnership of (i) a
written affirmation by the Indemnitee of the Indemnitee's good faith belief that
the standard of conduct necessary for indemnification by the Partnership as
authorized in Section 7.5(a) has been met; and (ii) a written undertaking by or
on behalf of the Indemnitee to repay the amount if it shall ultimately be
determined that the standard of conduct has not been met.
(c) The indemnification provided by this Section 7.5 shall
be in addition to any other rights to which an Indemnitee may be entitled under
any agreement, pursuant to any vote of the Partners, as a matter of law or
otherwise, and shall continue as to an Indemnitee who has ceased to serve in
such capacity unless otherwise provided in a written agreement with such
Indemnitee or in the writing pursuant to which such Indemnitee is
30
indemnified.
(d) The Partnership may, but shall not be obligated to,
purchase and maintain insurance on behalf of any of the Indemnities and such
other Persons as the General Partner shall determine, against any liability that
may be asserted against or expenses that may be incurred by such Person in
connection with the Partnership's activities, regardless of whether the
Partnership would have the power to indemnify such Person against such liability
under the provisions of this Agreement.
(e) Any liabilities which an Indemnitee incurs as a result
of acting on behalf of the Partnership or the General Partner (whether as a
fiduciary or otherwise) in connection with the operation, administration or
maintenance of an employee benefit plan or any related trust or funding
mechanism (whether such liabilities are in the form of excise taxes, penalties,
restitutions or other funding mechanism or to a participant or beneficiary of
such plan, trust or other funding mechanism, or otherwise) shall be treated as
liabilities or judgments or fines under this Section 7.5.
(f) The provisions of this Section 7.5 are for the benefit
of the Indemnities, their heirs, successors, assigns and administrators and
shall not be deemed to create any rights for the benefit of any other Persons.
Any amendment, modification or repeal of this Section 7.5 or any provision
hereof shall be prospective only and shall not in any way affect the limitations
on the Partnership's liability to any Indemnitee under this Section 7.5 as in
effect immediately prior to such amendment, modification or repeal with respect
to claims arising from or relating to matters occurring, in whole or in part,
prior to such amendment, modification or repeal, regardless of when such claims
may arise or be asserted.
VII.6 Liability of the General Partner.
(a) Notwithstanding anything to the contrary set forth in
this Agreement, the General Partner shall not be liable for monetary damages to
the Partnership, any Partners or any Assignees for any losses, claims, damages,
liabilities, expenses, judgments, fines, settlements or other amounts incurred
due to acts or omissions of the General Partner, except if such losses, claims,
damages, liabilities, expenses, judgments, fines, settlements or other amounts
arose out of or resulted from (i) fraud, intentional misconduct or a knowing
violation of law by the General Partner when it had reasonable cause to believe
such action giving rise to the violation was unlawful; (ii) the violation or
breach by the General Partner of the provisions of this Agreement or (iii) any
transaction in which the General Partner received a personal benefit in
violation or breach of any provision of this Agreement.
(b) Subject to its obligations and duties as General
Partner set forth in Section 7.1 hereof, the General Partner may exercise any of
the powers granted to it by this Agreement and perform any of the duties imposed
upon it hereunder either directly or by or through its agents. The General
Partner shall not be responsible for any acts or omissions on the part of any
agent appointed by it in good faith.
(c) Any amendment, modification or repeal of this Section
7.6 or any provision hereof shall be prospective only and shall not in any way
affect the limitations on the General Partner's liability to the Partnership and
the Limited Partners under this Section 7.6 as in effect immediately prior to
such amendment, modification or repeal with respect to claims
31
arising from or relating to matters occurring, in whole or in part, prior to
such amendment, modification or repeal, regardless of when such claims may arise
or be asserted.
(d) The Limited Partners expressly acknowledge that the
General Partner is acting on behalf of the Partnership and the General Partner's
stockholders collectively, that the General Partner is under no obligation to
consider the separate interest of the Limited Partners (including, without
limitation, the tax consequences to Limited Partnerships or Assignees) in
deciding whether to cause the Partnerships to take (or decline to take) any
actions, and that the General Partner shall not be liable for monetary damages
to the Partnership or any Partner for Losses sustained, liabilities incurred, or
benefits not derived by Limited Partners in connection with such decisions, so
long as the General Partner has acted in good faith.
VII.7 Reimbursement of the General Partner.
(a) No Compensation. Except as provided in this Section 7.7
and elsewhere in this Agreement, the General Partner shall not be compensated
for its services as general partner to the Partnership.
(b) Responsibility for Partnership Expenses. The
Partnership shall be responsible for and shall pay all expenses relating to the
Partnership's organization, the ownership of its assets and its operations. The
General Partner shall be reimbursed on a monthly basis, or such other basis as
the General Partner may determine in its sole and absolute discretion, for all
expenses it incurs relating to the ownership and operation of, or for the
benefit of, the Partnership (including, without limitation, expenses related to
the management and administration of any subsidiaries of the General Partner or
the Partnership or Affiliates of the Partnership such as auditing expenses and
filing fees); provided that, the amount of any such reimbursement shall be
reduced by (i) any interest earned by the General Partner with respect to bank
accounts or other instruments or accounts held by it as permitted elsewhere in
this Agreement and (ii) any amount derived by the General Partner from any
investments as permitted elsewhere in this Agreement (including, without
limitation, amounts derived from its ownership of those subsidiaries described
in Section 7.4) and; provided further, that the General Partner shall not be
reimbursed for (i) income tax liabilities or (ii) filing or similar fees in
connection with maintaining the General Partner's continued corporate existence
that are incurred by the General Partner. The General Partner shall determine in
good faith the amount of expenses incurred by it related to the ownership and
operation of, or for the benefit of, the Partnership. In the event that certain
expenses are incurred for the benefit of the Partnership and other entities
(including the General Partner), such expenses will be allocated to the
Partnership and such other entities in such a manner as the General Partner in
its sole and absolute discretion deems fair and reasonable. Such reimbursements
shall be in addition to any reimbursement to the General Partner as a result of
indemnification pursuant to Section 7.5. All payments and reimbursements
hereunder shall be characterized for federal income tax purposes as expenses of
the Partnership incurred on its behalf, and not as expenses of the General
Partner.
(c) Partnership Interest Issuance Expenses. The General
Partner shall also be reimbursed for all expenses it incurs relating to any
issuance of Additional Partnership Interests, Shares, debt of the Partnership or
the General Partner or rights, options, warrants or convertible or exchangeable
securities pursuant to this Agreement (including, without limitation, all costs,
expenses, damages and other payments resulting from or arising in
32
connection with litigation related to any of the foregoing), all of which
expenses are considered by the Partners to constitute expenses of, and for the
benefit of, the Partnership.
(d) Purchases of Shares by the General Partner. In the
event that the General Partner exercises its obligation under Article XII hereof
to purchase Shares or otherwise elects to purchase from its shareholders Shares
in connection with a stock repurchase or similar program or for the purpose of
delivering such Shares to satisfy an obligation under any dividend reinvestment
or stock purchase program adopted by the General Partner, any employee stock
purchase plan adopted by the General Partner or any similar obligation or
arrangement undertaken by the General Partner in the future, the purchase price
paid by the General Partner for such Shares and any other expenses incurred by
the General Partner in connection with such purchase shall be considered
expenses of the Partnership and shall be reimbursable to the General Partner,
subject to the conditions that: (i) if such Shares subsequently are to be sold
by the General Partner, the General Partner pays to the Partnership any proceeds
received by the General Partner for such Shares (provided that a transfer of
Shares for Partnership Units pursuant to Section [12] hereof would not be
considered a sale for such purposes); and (ii) if such Shares are not
retransferred by the General Partner within thirty (30) days after the purchase
thereof, the General Partner shall cause the Partnership to cancel a number of
Partnership Units of the appropriate class (rounded to the nearest whole
Partnership Unit) held by the General Partner equal to the product attained by
multiplying the number of such Shares by a fraction, the numerator of which is
one and the denominator of which is the Conversion Factor.
(e) Reimbursement not a Distribution. If and to the extent
any reimbursement made pursuant to this Section 7.7 is determined for federal
income tax purposes not to constitute a payment of expenses of the Partnership,
the amount so determined shall constitute a guaranteed payment with respect to
capital within the meaning of Section 707(c) of the Code, shall be treated
consistently therewith by the Partnership and all Partners and shall not be
treated as a distribution for purposes of computing the Partners' Capital
Accounts.
VII.8 REIT Qualification of the General Partner. Notwithstanding
any other provisions of this Agreement or the Act, any action of the General
Partner on behalf of the Partnership or any decision of the General Partner to
refrain from acting on behalf of the Partnership, undertaken in the good faith
belief that such action or omission is necessary or advisable in order (i) to
protect the ability of the General Partner to continue to qualify as a REIT or
(ii) to avoid the General Partner incurring any taxes under Code ss. 857 or
4981, is expressly authorized under this Agreement and is deemed approved by all
of the Limited Partners. Nothing, however, in this Agreement shall be deemed to
give rise to any liability on the part of the Limited Partners for the General
Partner's failure to qualify or continue to qualify as a REIT or failure to
avoid incurring any taxes under the foregoing Sections of the Code, or to give
rise to any liability of the General Partner for such failure so to qualify.
VII.9 Employment or Retention of Affiliates.
(a) Any Affiliate of the General Partner may be employed or
retained by the Partnership and may otherwise deal with the Partnership (whether
as a buyer, lessor, lessee, manager, furnisher of goods or services, broker,
agent, lender or otherwise) and may receive from the Partnership any
compensation, price, or other payment therefor which the
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General Partner determines to be fair and reasonable.
(b) The Partnership may lend or contribute to its
subsidiaries or other Persons in which it has an equity investment, and such
Persons may borrow funds from he Partnership, on terms and conditions
established in the sole and absolute discretion of the General Partner. The
foregoing authority shall not create any right or benefit in favor of any
subsidiary or any other Person.
(c) The Partnership may transfer assets to joint ventures,
other partnerships, corporations or other business entities in which it is or
thereby becomes a participant upon such terms and subject to such conditions as
the General Partner deems are consistent with this Agreement and applicable law.
(d) Except as expressly permitted by this Agreement,
neither the General Partner nor any of its Affiliates shall sell, transfer or
convey any property to, or purchase any property from, the Partnership, directly
or indirectly, except pursuant to transactions that are on terms that are fair
and reasonable to the Partnership.
VII.10 Title to Partnership Assets. Title to Partnership assets,
whether real, personal or mixed and whether tangible or intangible, shall be
deemed to be owned by the Partnership as an entity, and no Partner, individually
or collectively, shall have any ownership interest in such Partnership assets or
any portion thereof. Title to any or all of the Partnership assets may be held
in the name of the Partnership, the General Partner or one or more nominees, as
the General Partner may determine, including Affiliates of the General Partner.
The General Partner hereby declares and warrants that any Partnership assets for
which legal title is held in the name of the General Partner or any nominee or
Affiliate of the General Partner shall be held by the General Partner, or such
nominee or Affiliate for the use and benefit of the Partnership in accordance
with the provisions of this Agreement; provided that, the General Partner shall
use its best efforts to cause beneficial and record title to such assets to be
vested in the Partnership as soon as reasonably practicable. All Partnership
assets shall be recorded as the property of the Partnership in its books and
records, irrespective of the name in which legal title to such Partnership
assets is held
VII.11 Other Matters Concerning the General Partner.
(a) The General Partner shall be protected in acting or
refraining from acting upon any resolution, certificate, statement, instrument,
opinion, report, notice, request, consent, order, bond, debenture, or other
paper or document believed by it in good faith to be genuine and to have been
signed or presented by the proper party or parties.
(b) The General Partner may consult with legal counsel,
accountants, appraisers, management consultants, investment bankers, architects,
engineers, environmental consultants and other consultants and advisers selected
by it and any act taken or omitted to be taken in reliance upon the opinion of
such Persons as to matters which such General Partner reasonably believes to be
with such Person's professional or expert competence shall be conclusively
presumed to have been done or omitted in good faith and in accordance with such
opinion.
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(c) The General Partner shall have the right, in respect of
any of its powers or obligations hereunder, to act through any of its duly
authorized officers and a duly appointed attorney or attorney-in-fact. Each such
attorney shall, to the extent provided by the General Partner in the power of
attorney, have full power and authority to do and perform all and every act and
duty which is permitted or required to be done by the General Partner hereunder.
VII.12 Original Properties. The General Partner shall use all
commercially reasonable efforts in disposing of any of the Original Properties
to structure such transaction as one or more Section 1031 Exchanges.
ARTICLE VIII
DISSOLUTION, LIQUIDATION AND WINDING-UP
VIII.1 Dissolution. The Partnership shall not be dissolved by the
admission of Substituted Limited Partners or Additional Limited Partners or by
the admission of a successor General Partner in accordance with the terms of
this Agreement. Upon the withdrawal of the General Partner, any successor
General Partner shall continue the business of the Partnership. The Partnership
shall dissolve, and its affairs shall be wound up, upon the first to occur of
any of the following ("Liquidating Events"):
(a) an event of withdrawal of the last remaining General
Partner, as defined in the Act, unless within ninety (90) days following such
event of withdrawal, the remaining Partners representing a majority of the
Partnership Units held by such remaining Partners (the "Consenting Partners")
(i) agree in writing to continue the Partnership and designate a successor
General Partner whose Partnership Interest in the Partnership shall be derived,
on an equitable basis, from the Partnership Interests of all remaining Partners
on terms to be determined by the Consenting Partners and (ii) provide written
notice of such agreement and designation to all other Partners;
(b) entry of a decree of judicial dissolution of the
Partnership pursuant to the provisions of the Act;
(c) the sale or other disposition of all or substantially
all of the assets and properties of the Partnership;
(d) the exchange of all Limited Partnership Interests; or
(e) the election by the General Partner that the
Partnership should be dissolved.
VIII.2 Distribution on Dissolution. Upon the occurrence of a
Liquidating Event, the Partnership shall continue solely for the purposes of
winding up its affairs in an orderly manner, liquidating its assets, and
satisfying the claims of its creditors and Partners. No Partner shall take any
action that is inconsistent with, or not necessary to or appropriate for, the
winding up of the Partnership's business and affairs. The Liquidating Trustee
shall be
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responsible for overseeing the winding up and dissolution of the Partnership and
shall take full account of the Partnership's liabilities and property and the
Partnership property shall be liquidated as promptly as is consistent with
obtaining the fair value thereof, and the proceeds therefrom shall be applied
and distributed in the following order:
(a) Payment of creditors of the Partnership (other than
Partners) in the order of priority as provided by law;
(b) Establishment of reserves as provided by the General
Partner to provide for contingent liabilities, if any;
(c) Payment of debts of the Partnership to Partners, if
any, in the order of priority provided by law;
(d) To the Partners in accordance with the positive
balances in their Capital Accounts (after giving effect to all contributions,
distributions and allocations for all periods pursuant to this Section 8.2(d)
hereof).
Whenever the Liquidating Trustee reasonably determines that any reserves
established pursuant to paragraph (b) above are in excess of the reasonable
requirements of the Partnership, the amount determined to be excess shall be
distributed to the Partners in accordance with the above provisions.
VIII.3 Sale of Partnership Assets. In the event of the liquidation
of the Partnership in accordance with the terms of this Agreement, the
Liquidating Trustee may sell Partnership property; provided, however, all sales,
leases, encumbrances or transfers of Partnership assets shall be made by the
Liquidating Trustee solely on an "arm's-length" basis, at the best price and on
the best terms and conditions as the Liquidating Trustee in good faith believes
are reasonably available at the time and under the circumstances and on a
non-recourse basis to the Limited Partners. The liquidation of the Partnership
shall not be deemed finally terminated until the Partnership shall have received
cash payments in full with respect to obligations such as notes, purchase money
mortgages, installment sale contracts or other similar receivables received by
the Partnership in connection with the sale of Partnership assets and all
obligations of the Partnership have been satisfied or assumed by the General
Partner. The Liquidating Trustee shall continue to act to enforce all of the
rights of the Partnership pursuant to any such obligations until paid in full.
VIII.4 Distributions in Kind. In the event that it becomes
necessary to make a distribution of Partnership property in kind, the General
Partner may, with the Consent of the Limited Partners, transfer and convey such
property to the distributees as tenants in common, subject to any liabilities
attached thereto, so as to vest in them undivided interests in the whole of such
property in proportion to their respective rights to share in the proceeds of
the sale of such property (other than as a creditor) in accordance with the
provisions of Section 8.2 hereof.
VIII.5 Documentation of Liquidation. Upon the completion of the
dissolution and liquidation of the Partnership, the Partnership shall terminate
and the Liquidating Trustee shall have the authority to execute and record any
and all documents or instruments required to effect the dissolution, liquidation
and termination of the Partnership.
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VIII.6 Liability of the Liquidating Trustee. The Liquidating
Trustee shall be indemnified and held harmless by the Partnership from and
against any and all claims, demands, liabilities, costs, damages and causes of
action of any nature whatsoever arising out of or incidental to the Liquidating
Trustee' s taking of any action authorized under or within the scope of this
Agreement; provided, however, that the Liquidating Trustee shall not be entitled
to indemnification, and shall not be held harmless, where the claim, demand,
liability, cost, damage or cause of action at issue arose out of:
(a) A matter entirely unrelated to the Liquidating
Trustee's action or conduct pursuant to the provisions of this Agreement; or
(b) The proven misconduct or negligence of the Liquidating
Trustee.
VIII.7 Accounting. In the event of the dissolution, liquidating
and winding-up of the Partnership, a proper accounting (which shall be
certified) shall be made of the Capital Account of each Partner and of the
Profits or Losses of the Partnership from the date of the last previous
accounting to the date of dissolution. Financial statements presenting such
accounting shall include a report of a certified public accountant selected by
the Liquidating Trustee.
VIII.8 Negative Capital Accounts. No Partner shall be liable to
the Partnership or to any other Partner for any deficit or negative balance
which may exist in such Partner's Capital Account, whether such negative Capital
Account results from the allocation of Losses or other items of deduction and
loss to such Partner or from distribution to such Partner.
VIII.9 Rights of Partners. Except as otherwise provided in this
Agreement, each Partner shall look solely to the assets of the Partnership for
the return of such Partner's Capital Contributions and shall have no right or
power to demand or receive property other than cash from the Partnership. Except
as otherwise provided in this Agreement, no Partner shall have priority over any
other Partner as to the return of his Capital Contributions, distributions, or
allocations.
VIII.10 Notice of Dissolution. In the event a Liquidating Event
occurs or an event occurs that would result in a dissolution of the Partnership,
the General Partner shall, within 30 days thereafter, provide written notice
thereof to each of the Partners.
VIII.11 Termination of Partnership and Cancellation of Certificate
of Limited Partnership. Upon the completion of the liquidation of the
Partnership and the distribution of all cash and property as provided in Section
8.2 hereof, the Partnership shall be terminated, a certificate of cancellation
shall be filed, and all qualifications of the Partnership as a foreign limited
partnership in any jurisdiction other than the State of Delaware shall be
cancelled and such other actions as may be necessary to terminate the
Partnership shall be taken.
VIII.12 Waiver of Partition. Each Partner hereby waives any right
to partition of the Partnership property.
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ARTICLE IX
TRANSFER OF PARTNERSHIP INTERESTS
IX.1 General.
(a) The term "transfer," when used in this Article IX with
respect to a Partnership Unit, shall be deemed to refer to a transaction by
which the General Partner purports to assign all or any part of its General
Partner Interest to another Person or by which a Limited Partner purports to
assign all or any part of its Limited Partner Interest to another Person, and
includes a sale, assignment, gift, pledge, encumbrance, hypothecation, mortgage,
exchange or any other disposition by law or otherwise. The term "transfer" when
used in this Article IX does not include any redemption of Partnership Units by
the Partnership from a Limited Partner or acquisition of Partnership Units from
a Limited Partner by the General Partner pursuant to the Conversion Rights.
(b) No Partnership Interest shall be transferred, in whole
or in part, except in accordance with the terms and conditions set forth in this
Article IX. Any transfer or purported transfer of a Partnership Interest not
made in accordance with this Article IX shall be null and void.
IX.2 General Partner Transfer.
(a) The General Partner shall not withdraw from the
Partnership and shall not sell, assign, pledge, encumber or otherwise dispose of
all or any portion of its interest in the Partnership without the Consent of the
Limited Partners, which shall not be unreasonably withheld.
(b) Except for the merger with Fairlawn Industrial Park,
Inc. effected on the Closing Date, the General Partner shall not engage in any
merger, consolidation or other combination with or into another Person, or sale
of all or substantially all of its assets, or any reclassification, or
recapitalization or change of outstanding Shares (other than a reincorporation,
a change in par value, or from par value to no par value, or as a result of a
subdivision or combination as described in the definition of "Conversion
Factor," which require no Consent of the Limited Partners under this Agreement)
("Transaction"), unless the Transaction either:
(i) includes a merger of the Partnership or sale of
substantially all of the assets of the Partnership, as a result of which
all Limited Partners will receive for each Partnership Unit an amount of
cash, securities, or other property equal to the product of the
Conversion Factor and the greatest amount of cash, securities or other
property paid to a holder of one Share in consideration of one Share at
any time during the period from and after the date on which the
Transaction is consummated, provided that if, in connection with the
Transaction, a purchase, tender or exchange offer shall have been made to
and accepted by the holders of more than fifty percent (50%) of the
outstanding Shares, the holders of Partnership Units shall receive the
greatest amount of
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cash, securities, or other property which a Limited Partner would have
received had it exercised the Conversion Right and received Shares in
exchange for all of its Partnership Units immediately prior to the
expiration of such purchase, tender or exchange offer; or
(ii) provides that the Partnership shall continue as a
separate entity and grants to the Limited Partners exchange rights with
respect to the ownership interests in the new entity that are
substantially equivalent to the Conversion Rights provided for in Section
12.1.
(c) Upon any transfer of a Partnership Interest in
accordance with the provisions of this Section 9.2, the successor General
Partner shall become vested with the powers and rights of the transferor General
Partner, and shall be liable for all obligations and responsible for all duties
of the General Partner, once such successor has executed such instruments as may
be necessary to effectuate such admission and to confirm the agreement of such
successor to be bound by all the terms and provisions of this Agreement with
respect to the Partnership Interest so acquired. It is a condition to any
transfer otherwise permitted hereunder that the successor assumes by operation
of law or express agreement all of the obligations of the transferor General
Partner under this Agreement with respect to such transferred Partnership
Interest.
(d) In the event the General Partner withdraws from the
Partnership, in violation of this Agreement or otherwise, or dissolves,
terminates or upon the Bankruptcy of the General Partner, a Majority-In-Interest
of the Limited Partners may elect to continue the Partnership business by
selecting a successor general partner.
IX.3 Transfers by Limited Partners.
(a) No Limited Partner shall sell, assign, pledge,
encumber, or otherwise dispose of all or any portion of its Partnership Interest
to any transferee without the consent of the General Partner, which consent
shall not be unreasonably withheld; provided, however, that each Limited Partner
may at any time, without the consent of the General Partner, transfer all or a
portion of its Partnership Interest to an Affiliate of such Limited Partner,
subject to the provisions of this Section 9.3 and Section 9.6 hereof.
(b) Nothing herein shall preclude a Limited Partner from
transferring its Limited Partnership Interest upon exercise of its Conversion
Rights under Article XII hereof.
(c) It is a condition to any transfer otherwise permitted
hereunder that the transferee assumes by operation of law or express agreement
all of the obligations of the transferor Limited Partner under this Agreement
with respect to such transferred Partnership Interest and no such transfer
(other than pursuant to a statutory merger or consolidation wherein all
obligations and liabilities of the transferor Partner are assumed by a successor
corporation by operation of law) shall relieve the transferor Partner of its
obligations under this Agreement without the approval of the General Partner, in
its reasonable discretion. Any transferee, whether or not admitted as a
Substituted Limited Partner, shall take subject to the obligations of the
transferor hereunder.
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(d) If a Limited Partner is subject to Incapacity, the
executor, administrator, trustee, committee, guardian, conservator or receiver
of such Limited Partner's estate shall have all the rights of a Limited Partner,
but not more rights than those enjoyed by other Limited Partners, for the
purpose of settling or managing the estate and such power as the Incapacitated
Limited Partner possessed to transfer all or any part of his or its interest in
the Partnership. The Incapacity of a Limited Partner, in and of itself, shall
not dissolve or terminate the Partnership.
IX.4 Substituted Limited Partners.
(a) A Limited Partner shall have the right to substitute a
transferee as a Limited Partner in his place without the consent of the General
Partner in cases of transfer of all or a portion of its Partnership Interest to
an Affiliate of such Limited Partner, subject to the provisions of Section 9.6.
In all other situations, the General Partner shall have the right to consent to
the admission of a transferee of the interest of a Limited Partner as a
Substituted Limited Partner, which consent shall not be unreasonably withheld,
subject to the provisions of Section 9.6.
(b) A transferee who has been admitted as a Substituted
Limited Partner shall have all the rights and powers, including rights with
respect to the Conversion Rights, of the transferor Limited Partner, and be
subject to all the restrictions and liabilities of a Limited Partner under this
Agreement; provided, however, that notwithstanding the foregoing, any transferee
shall be subject to any and all ownership limitations contained in the Charter.
(c) Unless admitted as a Substituted Limited Partner, no
transferee of a Partnership Interest pursuant to this Section 9.4, whether by a
voluntary transfer, by operation of law or otherwise, shall have rights
hereunder, other than to receive such portion of the distributions made by the
Partnership as are allocable to the Percentage Interest transferred.
IX.5 Assignees. If the General Partner does not consent to the
admission of any permitted transferee as a Substituted Limited Partner, such
transferee shall be considered an Assignee for purposes of this Agreement. An
Assignee shall be deemed to have had assigned to it, and shall be entitled to
receive, distributions from the Partnership and the share of Profits, Losses,
and any other items of income, gain, loss, deduction and credit of the
Partnership attributable to the Partnership Units assigned to such transferee,
but shall not be deemed to be a holder of Partnership Units for any other
purpose under this Agreement, and shall not be entitled to vote such Partnership
Units in any matter presented to the Limited Partners for a vote, such
Partnership Units continuing to be voted by the Partner appearing in the records
of the Partnership as owning the same. In the event any such transferee desires
to make a further assignment of any such Partnership Units, such transferee
shall be subject to all the provisions of this Article IX to the same extent and
in the same manner as any Limited Partner desiring to make an assignment of
Partnership Units.
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IX.6 Restrictions on Transfer. In addition to any other
restrictions on transfer herein contained, in no event may any transfer or
assignment of a Partnership Interest by any Partner be made (i) to any person or
entity who lacks the legal right, power or capacity to own a Partnership
Interest; (ii) in violation of any provision of any mortgage or trust deed (or
the note or bond secured thereby) constituting a Lien against a Property or any
part thereof, or other instrument, document or agreement to which the
Partnership or any Property is a party or otherwise bound; (iii) in violation of
applicable law; (iv) of any component portion of a Partnership Interest, such as
the Capital Account, or rights to distributions, separate and apart from all
other components of a Partnership Interest; (v) in the event such transfer would
immediately or with the passage of time cause the Company to fail to comply with
the REIT Requirements, such determination to be made assuming that the Company
does comply with the REIT Requirements immediately prior to the proposed
transfer; (vi) if such transfer would cause a termination of the Partnership for
federal income tax purposes; (vii) if such transfer would, in the opinion of
counsel to the Partnership, cause the Partnership to cease to be classified as a
partnership, or to be classified as a "publicly traded partnership," for federal
income tax purposes; (viii) if such transfer would cause the Partnership to
become, with respect to any employee benefit plan subject to Title I of ERISA, a
"party-in-interest" (as defined in Section 3(14) of ERISA) or a "disqualified
person" (as defined in Section 4975(e) of the Code); (ix) if such transfer
would, in the opinion of counsel to the Partnership, cause any portion of the
underlying assets of the Partnership to constitute assets of any employee
benefit plan pursuant to Department of Labor Regulations Section 2510.3-101 or
(x) if such transfer would, in the opinion of counsel to the Partnership,
violate the Securities Act or applicable state blue sky laws.
ARTICLE X
ADMISSION OF PARTNERS
X.1 Admission of Successor General Partner. A successor to all of
the General Partner Interest pursuant to Section 9.2 hereof shall be admitted to
the Partnership as the General Partner, effective as of the date of such
transfer. The successor General Partner shall carry on the business of the
Partnership without dissolution. In each case, the admission shall be subject to
the successor General Partner executing and delivering to the Partnership an
acceptance of all of the terms and conditions of this Agreement and such other
documents or instruments as may be required to effect the admission. In the case
of such admission on any day other than the first day of a Partnership Year, all
items attributable to the General Partner Interest for such Partnership Year
shall be allocated between the transferring Partner(s) and such successor as
provided in Section 5.1(g).
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X.2 Admission of Substituted or Additional Limited Partners.
(a) An Additional Limited Partner shall be admitted only
upon furnishing to the General Partner (i) a written agreement of acceptance in
form satisfactory to the General Partner accepting all of the terms and
conditions of this Agreement, including, without limitation, the power of
attorney granted in Section 2.4 hereof and the Registration Rights Agreement;
and (ii) such other documents or instruments as may be required in the sole
discretion of the General Partner in order to effect such Person's admission as
a Substituted or Additional Limited Partner.
(b) The admission of any Person as a Substituted or
Additional Limited Partner shall become effective on the date upon which the
name of such Person is recorded in the books and records of the Partnership,
following the consent of the General Partner to such admission.
(c) If any Substituted or Additional Limited Partner is
admitted to the Partnership on any day other than the first day of a Partnership
Year, then Profits, Losses, each item thereof and all other items allocable
among Partners and Assignees for such Partnership Year shall be allocated among
such Additional Limited Partner and all other Partners and Assignees in
accordance with Section 5.1.
X.3 Amendment of Agreement and Certificate of Limited Partnership.
The General Partner shall take all steps necessary and appropriate under the Act
to amend the books and records of the Partnership and to prepare as soon as
practical an amendment of this Agreement (including an amendment of Exhibit A)
to reflect the admission to the Partnership of any Partner and any corresponding
changes in the Percentage Interests of the Partners, and, if required by law,
shall prepare and file an amendment to the Certificate and may for the purposes
of amending the Certificate exercise the power of attorney granted pursuant to
Section 2.4 hereof. The General Partner shall promptly deliver a copy of any
amendments to this Agreement or the Certificate to each Limited Partner.
ARTICLE XI
RIGHTS AND OBLIGATIONS OF THE LIMITED PARTNERS
XI.1 No Participation in Management. Except as expressly permitted
hereunder, the Limited Partners shall not take part in the management of the
Partnership's business, transact any business in the Partnership's name or have
the power to sign documents for or otherwise bind the Partnership.
XI.2 Bankruptcy of a Limited Partner. The Bankruptcy of any
Limited Partner shall not cause a dissolution of the Partnership, but the rights
of such Limited Partner to share in the Profits or Losses of the Partnership and
to receive distributions of Partnership funds shall, on the happening of such
event, devolve on its successors or assigns, subject to the terms and conditions
of this Agreement, and the Partnership shall continue as a limited partnership.
However, in no event shall such assignee(s) become a Substituted Limited
Partner.
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XI.3 No Withdrawal. No Limited Partner may withdraw from the
Partnership without the prior written consent of the General Partner, other than
as expressly provided in this Agreement.
XI.4 Duties and Conflicts. The General Partner recognizes that the
Limited Partners and their Affiliates have or may have other business interests,
activities and investments, some of which may be in conflict or competition with
the business of the Partnership, and that, such persons are entitled to carry on
such other business interests, activities and investments. The Limited Partners
and their Affiliates may engage in or possess an interest in any other business
or venture of any kind, independently or with others, on their own behalf or on
behalf of other entities with which they are affiliated or associated, and such
persons may engage in any activities, whether or not competitive with the
Partnership, without any obligation to offer any interest in such activities to
the Partnership or to any Partner. Neither the Partnership nor any Partner shall
have any right, by virtue of this Agreement, in or to such activities, or the
income or profits derived therefrom, and the pursuit of such activities, even if
competitive with the business of the Partnership, shall not be deemed wrongful
or improper.
XI.5 Consent of Certain Limited Partners. At any time during the 7
year period following the Closing Date, the Partnership may not sell or
otherwise dispose of a Designated Property or a Successor Designated Property
(as hereinafter defined) in a transaction that causes gain recognition under
Sections 704(c) or 752 (or any other section) of the Code for the Special
Consenting Partners without the consent of the Special Consenting Partners. For
purposes of this Section 11.5, the term "Successor Designated Property" means a
property acquired by the Partnership upon the disposition of a Designated
Property in a Section 1031 like kind exchange or any other exchange transaction
that does not result in gain recognition. The provisions of this Section 11.5
shall not be applicable with respect to any Special Consenting Partner if at any
time such Special Consenting Partner beneficially owns fewer than 30% of the
number of Partnership Units beneficially owned by such Special Consenting
Partner on the Closing Date.
ARTICLE XII
CONVERSION RIGHT
XII.1 Grant of Rights. The General Partner does hereby grant to
each of the Limited Partners and the Limited Partners do hereby accept the
right, but not the obligation (hereinafter such right sometimes referred to as
the "Rights" or "Conversion Rights"), to convert all or any portion of their
Partnership Interests into Shares or cash, as selected by the General Partner,
at any time or from time to time, on the terms and subject to the conditions and
restrictions contained in this Article XII. In the event the General Partner
elects to cause the Offered Units to be converted into Shares, upon the closing
of the acquisition of the Offered Units, the General Partner shall become the
owner of such Offered Units and be a Substituted Limited Partner pursuant to
Section 9.4 hereof. In the event the General Partner elects to cause the Offered
Units to be converted into cash, upon the closing of the acquisition of the
Offered Units, the General Partner shall effect such conversion by causing the
Partnership to redeem the Offered Units for cash.
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XII.2 Delivery of Exercise Notices. The Conversion Rights granted
hereunder may be exercised by any one or more of the Limited Partners
("Exercising Partners"), on the terms and subject to the conditions and
restrictions contained in this Article XII, upon delivery to the General Partner
of a Exercise Notice (the "Exercise Notice") in the form of Exhibit B, which
notice shall specify the number of OP Units to be sold by such Limited Partner
(the "Offered Units"). Once delivered, the Exercise Notice shall be irrevocable,
subject to payment by the General Partner or the Partnership of the purchase
price in Shares or cash (the "Purchase Price") in respect of such Partnership
Interests in accordance with the terms hereof.
XII.3 Limitation on Delivery of Exercise Notices. The ability of
Limited Partners to exercise Conversion Rights shall be restricted so that only
one (1) Exercise Notice may be delivered to the General Partner during each
calendar quarter period; provided, however, such Exercise Notice may be
delivered by or on behalf of one or more Exercising Parties.
XII.4 Limitation on Exercise of Conversion Rights. Conversion
Rights may be exercised at any time and from time to time, subject to the
limitation contained in Section 12.3 above and as provided herein. To the extent
that the delivery of Shares to an Exercising Partner would violate the ownership
limitations set forth in the Charter (the "Ownership Limit"), including without
limitation the restrictions set forth in Section 6.2.1 of the Charter, the
General Partner shall not deliver Shares to such Exercising Partner but may, in
its sole and absolute discretion, elect to either (i) pay the Purchase Price to
the Exercising Partner in cash, or (ii) refuse, in whole or in part, to accept
the Exercise Notice. A Limited Partner may not exercise the Conversion Right for
less than 1,000 Partnership Units, or, if such Limited Partner holds less than
1,000 Partnership Units, all of the Partnership Units held by such Partner.
XII.5 Purchase Price Upon Conversion. If the General Partner
elects to pay the Purchase Price in Shares, then the General Partner shall
acquire the Offered Units in exchange for that number of Shares equal to the
number of Offered Units multiplied by the Conversion Factor. If the General
Partner elects to cause the Purchase Price to be paid in cash, then the
Partnership shall acquire the Offered Units in exchange for that amount of cash
equal to such number of Offered Units multiplied by the Adjusted Current Per
Share Market Price as of the date of the Exercise Notice.
XII.6 Closing; Delivery of Election Notice. The closing of the
acquisition of Offered Units shall, unless otherwise mutually agreed, be held at
the principal offices of the General Partner, on the date agreed to by the
General Partner and the Exercising Partners, which date shall be as soon as
practicable but in no event be later than the date which is the later of (i)
twenty (20) days after the date of the Exercise Notice and (ii) the expiration
or termination of the waiting period applicable to each Exercising Partner, if
any, under the Xxxx-Xxxxx Act. Notwithstanding the foregoing, in the event that
the General Partner elects to cause the Purchase Price to be paid in cash
because payment in Shares would violate the Ownership Limit, then the General
Partner shall have up to one hundred eighty (180) days after the date of the
Exercise Notice to close the acquisition of the Offered Units; provided that
after twenty (20) days, interest shall be paid on the Purchase Price at the
prime rate as reported in the Wall Street Journal.
XII.7 Closing Deliveries. At the closing of the acquisition of
Offered Xxxxx,
00
payment of the Purchase Price shall be accompanied by proper instruments of
transfer and assignment to transfer and vest ownership of the Offered Units in
the General Partner or the Partnership, as the case may be, and by the delivery
of (i) representations and warranties of (A) the Exercising Partner with respect
to its due authority to sell all of the right, title and interest in and to such
Offered Units to the General Partner or the Partnership, as the case may be, and
with respect to the status of the Offered Unit being sold, free and clear of all
Liens, and (B) the General Partner with respect to its due authority to acquire
such Offered Units for Shares or to cause the Partnership to redeem such Offered
Units for cash; and (ii) to the extent that any Shares are issued in payment of
the Purchase Price or any portion thereof, (A) an opinion of counsel for the
General Partner, reasonably satisfactory to the Exercising Partners, to the
effect that such Shares have been duly authorized, are validly issued, fully
paid and non-assessable, and (B) a stock certificate or certificates evidencing
the Shares to be issued and registered in the name of the Exercising Partner or
its designee.
XII.8 Covenants of the General Partner. To facilitate the General
Partner's ability to fully perform its obligations hereunder, the General
Partner covenants and agrees as follows:
(a) At all times during the pendency of the Conversion
Rights, the General Partner shall reserve for issuance such number of Shares as
may be necessary to enable the General Partner to issue such Shares in full
payment of the Purchase Price in regard to all Limited Partners' Partnership
Interests which are from time to time outstanding.
(b) As long as the General Partner shall be obligated to
file periodic reports under the Exchange Act, the General Partner will timely
file such reports in such manner as shall enable any recipient of Shares issued
to Limited Partners hereunder in reliance upon an exemption from registration
under the Securities Act to continue to be eligible to utilize Rule 144
promulgated by the SEC pursuant to the Securities Act, or any successor rule or
regulation or statute thereunder, for the resale thereof.
(c) During the pendency of the Conversion Rights, the
Limited Partners shall receive in a timely manner all reports filed by the
General Partner with the SEC and all other communications transmitted from time
to time by the General Partner to the owners of its Shares.
(d) The General Partner shall, within five days after
request by a Limited Partner, notify such Limited Partner of the then current
Conversion Factor.
XII.9 Limited Partners' Covenant. Each Limited Partner covenants
and agrees with the General Partner that all Offered Units tendered to the
General Partner or the Partnership, as the case may be, in accordance with the
exercise of Rights herein provided shall be delivered free and clear of all
Liens and should any Liens exist or arise with respect to such Offered Units,
the General Partner or the Partnership, as the case may be, shall be under no
obligation to acquire or redeem the same. Each Limited Partner further agrees
that, in the event any state or local property transfer tax is payable as a
result of the transfer of its Offered Units to the General Partner, the
Partnership or their respective designees, such Limited Partner shall assume and
pay such transfer tax.
45
ARTICLE XIII
BOOKS, RECORDS, ACCOUNTING AND REPORTS
XIII.1 Records and Accounting.
(a) The General Partner, at the cost and expense of the
Partnership, shall keep or cause to be kept at the principal executive office of
the Partnership those records and documents required to be maintained by the Act
and other books and records deemed by the General Partner to be appropriate with
respect to the Partnership's business, including, without limitation, all books
and records necessary to provide to the Limited Partners any information, lists
and copies of documents required to be provided pursuant to Section 13.2 hereof.
The books of the Partnership shall be maintained, for financial and tax
reporting purposes, on an accrual basis in accordance with GAAP, or on such
other basis as the General Partner determines to be necessary or appropriate.
(b) All books and records of the Partnership shall be open
to inspection by any Limited Partner or duly authorized representative of such
Limited Partner on reasonable notice at any reasonable time during business
hours, for any purpose reasonably related to the Limited Partner's interest as a
Limited Partner, and such Limited Partner or its representative at its expense
shall have the further right to make copies or excerpts therefrom.
XIII.2 Reports.
(a) As soon as practicable after the close of each
Partnership Year, the General Partner shall cause to be mailed to each Limited
Partner as of the close of the Partnership Year, an annual report containing
financial statements of the Partnership, or of the General Partner if such
statements are prepared solely on a consolidated basis with the General Partner,
for such Partnership Year, presented in accordance with GAAP, such statements to
be audited by a nationally recognized firm of independent public accountants
selected by the General Partner.
(b) As soon as practicable after the close of each calendar
quarter (except the last calendar quarter of each year), the General Partner
shall cause to be mailed to each Limited Partner as of the last day of the
calendar quarter, a report containing unaudited financial statements of the
Partnership, or of the General Partner, if such statements are prepared solely
on a consolidated basis with the General Partner, and such other information as
may be required by applicable law or regulation, or as the General Partner
determines to be appropriate.
XIII.3 Bank Accounts. All funds of the Partnership shall be
deposited in its name in an account or accounts maintained with such bank(s) as
is (are) determined by the General Partner. The funds of the Partnership may be
commingled with the funds of the General Partner or any of its Subsidiaries.
Checks shall be drawn upon the Partnership account or accounts only for the
purposes of the Partnership and shall be signed by the General Partner or such
Person or Persons as are authorized by the General Partner.
46
ARTICLE XIV
AMENDMENT OF PARTNERSHIP AGREEMENT
XIV.1 General. This Agreement may not be amended without the
approval of the General Partner and by the Consent of the Limited Partners,
except as provided below in this Article XIV.
XIV.2 Amendment Without Consent. Notwithstanding Section 14.1, the
General Partner shall have the power, without the Consent of the Limited
Partners, to amend this Agreement as may be required to facilitate or implement
any of the following purposes:
(a) to add to the obligations of the General Partner or
surrender any right or power granted to the General Partner or any Affiliate of
the General Partner for the benefit of the Limited Partners;
(b) to reflect the admission, substitution, termination, or
withdrawal of Partners in accordance with this Agreement;
(c) to set forth the rights, powers, duties, and
preferences of the holders of any Additional Partnership Interests issued
pursuant to Section 4.2 hereof;
(d) to reflect a change that does not adversely affect the
Limited Partners in any material respect, or to cure any ambiguity, correct or
supplement any provision in this Agreement not inconsistent with law or with
other provisions; and
(e) to satisfy any requirements, conditions, or guidelines
contained in any order, directive, opinion, ruling or regulation of a federal or
state agency or contained in federal or state law. The General Partner will
provide notice to the Limited Partners promptly after any action under this
Section 14.2(e) is taken.
XIV.3 Special Consent Rights. Notwithstanding Section 14.1 hereof,
this Agreement shall not be amended without the consent of each Partner
adversely affected if such amendment would (i) convert a Limited Partner's
interest in the Partnership into a general partner's interest; (ii) modify the
limited liability of a Limited Partner; (iii) alter rights of the Partners to
receive allocations and distributions pursuant to Articles V or VIII hereof
(except as permitted pursuant to Section 4.2 and Section 14.2(c) hereof); (iv)
alter or modify the Rights set forth in Article XII hereof, (v) alter or modify
the rights set forth in Article XV hereof; (vi) cause a termination of the
Partnership prior to the time set forth in Section 8.1; (vii) alter or modify
Section 11.5; or (viii) amend this Section 14.3.
47
ARTICLE XV
REGISTRATION RIGHTS
XV.1 Shelf Registration Under the Securities Act. (a) Filing of
Shelf Registration Statement. Within 24 months following the Closing Date, the
Company shall cause to be filed a Shelf Registration Statement providing for the
sale by the Limited Partners of all of the Registrable Securities in accordance
with the terms hereof and will use its reasonable best efforts to cause such
Shelf Registration Statement to be declared effective by the SEC as soon as
reasonably practicable. The Company agrees to use its reasonable best efforts to
keep the Shelf Registration Statement continuously effective under the
Securities Act until such time as the aggregate number of OP Units and
Registrable Securities outstanding is less than 10% of the aggregate number of
OP Units outstanding on the Closing Date and, subject to Section 15.2(b) and
Section 15.2(i), further agrees to supplement or amend the Shelf Registration
Statement, if and as required by the rules, regulations or instructions
applicable to the registration form used by the Company for such Shelf
Registration Statement or by the Securities Act or by any other rules and
regulations thereunder for Shelf Registration. Each Limited Partner who sells
Shares as part of the Shelf Registration shall be deemed to have agreed to all
of the terms and conditions of this Article XV and to have agreed to perform any
and all obligations of a Limited Partner hereunder.
(b) Expenses. The Company shall pay all Registration
Expenses in connection with the registration pursuant to Section 15.1(a). Each
Limited Partner shall pay all underwriting discounts and commissions, brokerage
or dealer fees, the fees and disbursements of counsel, accountants or other
representatives of such Limited Partner and transfer taxes, if any, relating to
the sale or disposition of such Limited Partner's Registrable Securities
pursuant to the Shelf Registration Statement or Rule 144 under the Securities
Act.
(c) Inclusion in Shelf Registration Statement. Not later
than 30 days prior to filing the Shelf Registration Statement with the SEC, the
Company shall notify each Limited Partner of its intention to make such filing
and request advice from each Limited Partner as to whether such Limited Partner
desires to have Registrable Securities held by it or which it is entitled to
receive not later than the last day of the first Sale Period occurring in whole
or in part after the date of such notice included in the Shelf Registration
Statement at such time. Any Limited Partner who does not provide the information
reasonably requested by the Company in connection with the Shelf Registration
Statement as promptly as practicable after receipt of such notice, but in no
event later than 20 days thereafter, shall not be entitled to have its
Registrable Securities included in the Shelf Registration Statement at the time
it becomes effective, but shall have the right thereafter to deliver to the
Company a Registration Notice as contemplated by Section 15.2(b).
XV.2 Registration Procedures. In connection with the obligations
of the Company with respect to the Shelf Registration Statement pursuant to
Section 15.1 hereof, the Company shall:
(a) prepare and file with the SEC, within the time period
set forth in Section 15.1(a) hereof, a Shelf Registration Statement, which Shelf
Registration Statement (i)
48
shall be available for the sale of the Registrable Securities in accordance with
the intended method or methods of distribution by the selling Limited Partners
thereof and (ii) shall comply as to form in all material respects with the
requirements of the applicable form and include all financial statements
required by the SEC to be filed therewith;
(b) subject to the last three sentences of this Section
15.2(b) and to Section 15.2(i) hereof, (i) prepare and file with the SEC such
amendments and post-effective amendments to the Shelf Registration Statement as
may be necessary to keep the Shelf Registration Statement effective for the
applicable period; (ii) cause each Prospectus to be supplemented by any required
prospectus supplement, and as so supplemented to be filed pursuant to Rule 424
or any similar rule that may be adopted under the Securities Act; (iii) respond
promptly to any comments received from the SEC with respect to the Shelf
Registration Statement, or any amendment, post-effective amendment or supplement
relating thereto; and (iv) comply with the provisions of the Securities Act with
respect to the disposition of all securities covered by the Shelf Registration
Statement during the applicable period in accordance with the intended method or
methods of distribution by the selling Limited Partners thereof. Notwithstanding
anything to the contrary contained herein, the Company shall not be required to
take any of the actions described in clauses (i), (ii) or (iii) above with
respect to each particular Limited Partner holding Registrable Securities unless
and until the Company has received either a written notice (a "Registration
Notice") from a Limited Partner that such Limited Partner intends to make offers
or sales under the Shelf Registration Statement as specified in such
Registration Notice or a written response from such Limited Partner of the type
contemplated by Section 15.1(c); provided, however, that the Company shall have
7 business days to prepare and file any such amendment or supplement after
receipt of a Registration Notice. Offers or sales under the Shelf Registration
Statement may be made only during a Sale Period. Such Limited Partner also shall
notify the Company in writing upon completion of such offer or sale or at such
time as such Limited Partner no longer intends to make offers or sales under the
Shelf Registration Statement;
(c) furnish to each Limited Partner holding Registrable
Securities that has delivered a Registration Notice to the Company, without
charge, as many copies of each applicable Prospectus, including each preliminary
Prospectus and any amendment or supplement thereto, and such other documents as
such Limited Partner may reasonably request, in order to facilitate the public
sale or other disposition of the Registrable Securities; the Company consents to
the use of such Prospectus, including each preliminary Prospectus, by each such
Limited Partner in connection with the offering and sale of the Registrable
Securities covered by such Prospectus or the preliminary Prospectus;
(d) use its reasonable best efforts to register or qualify
the Registrable Securities by the time the Shelf Registration Statement is
declared effective by the SEC under all applicable state securities or "blue
sky" laws of such jurisdictions as any Limited Partner holding Registrable
Securities covered by the Shelf Registration Statement shall reasonably request
in writing, keep each such registration or qualification effective during the
period the Shelf Registration Statement is required to be kept effective or
during the period offers or sales are being made by a Limited Partner that has
delivered a Registration Notice to the Company, whichever is shorter, and do any
and all other acts and things which may be reasonably necessary or advisable to
enable such Limited Partner to consummate the disposition in each such
jurisdiction of such Registrable Securities owned by such Limited Partner;
provided, however, that the Company shall not be required (i) to qualify
generally to do business in any
49
jurisdiction or to register as a broker or dealer in such jurisdiction where it
would not be required so to qualify or register but for this Section 15.2(d),
(ii) to subject itself to taxation in any such jurisdiction or (iii) to submit
to the general service of process in any such jurisdiction;
(e) notify each Limited Partner when the Shelf Registration
Statement has become effective and notify each Limited Partner holding
Registrable Securities that has delivered a Registration Notice to the Company
promptly and, if requested by such Limited Partner, confirm such advice in
writing (i) when any post-effective amendments and supplements to the Shelf
Registration Statement become effective, (ii) of the issuance by the SEC or any
state securities authority of any stop order suspending the effectiveness of the
Shelf Registration Statement or the initiation of any proceedings for that
purpose, (iii) if the Company receives any notification with respect to the
suspension of the qualification of the Registrable Securities for sale in any
jurisdiction or the initiation of any proceeding for such purpose and (iv) of
the happening of any event during the period the Shelf Registration Statement is
effective as a result of which the Shelf Registration Statement or a related
Prospectus contains any untrue statement of a material fact or omits to state
any material fact required to be stated therein or necessary to make the
statements therein (in the case of the Prospectus, in light of the circumstances
under which they were made) not misleading;
(f) make every reasonable effort to obtain the withdrawal
of any order suspending the effectiveness of the Shelf Registration Statement at
the earliest possible moment;
(g) furnish to each Limited Partner holding Registrable
Securities that has delivered a Registration Notice to the Company, without
charge, at least one conformed copy of the Shelf Registration Statement and any
post-effective amendment thereto (without documents incorporated therein by
reference or exhibits thereto, unless requested);
(h) cooperate with the selling Limited Partners holding
Registrable Securities to facilitate the timely preparation and delivery of
certificates representing Registrable Securities to be sold and not bearing any
Securities Act legend; and enable certificates for such Registrable Securities
to be issued for such numbers of shares and registered in such names as the
selling Limited Partners may reasonably request at least two business days prior
to any sale of Registrable Securities;
(i) subject to the last three sentences of Section 15.2(b)
hereof, upon the occurrence of any event contemplated by Section 15.2(e)(iv)
hereof, use its reasonable best efforts promptly to prepare and file a
supplement or prepare, file and obtain effectiveness of a post-effective
amendment to the Shelf Registration Statement or a related Prospectus or any
document incorporated therein by reference or file any other required document
so that, as thereafter delivered to the purchasers of the Registrable
Securities, such Prospectus will not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein, in the light of the circumstances under which
they were made, not misleading;
(j) a reasonable time prior to the filing of any
Prospectus, any amendment to the Shelf Registration Statement or amendment or
supplement to a Prospectus, provide copies of such document (not including any
documents incorporated by reference therein unless requested) to the Limited
Partners holding Registrable Securities that have provided a Registration Notice
to the Company;
50
(k) use its reasonable best efforts to cause all
Registrable Securities to be listed on any securities exchange on which similar
securities issued by the Company are then listed;
(l) otherwise use its reasonable efforts to comply with all
applicable rules and regulations of the SEC and make available to its security
holders, as soon as reasonably practicable, an earnings statement covering at
least 12 months which shall satisfy the provisions of Section 11(a) of the
Securities Act and Rule 158 thereunder; and
(m) use its reasonable best efforts to cause the
Registrable Securities covered by the Shelf Registration Statement to be
registered with or approved by such other governmental agencies or authorities
as may be necessary by virtue of the business and operations of the Company to
enable Limited Partners that have delivered Registration Notices to the Company
to consummate the disposition of such Registrable Securities.
The Company may require each Limited Partner holding
Registrable Securities to furnish to the Company in writing such information
regarding the proposed distribution by such Limited Partner as the Company may
from time to time reasonably request in writing.
In connection with and as a condition to the Company's
obligations with respect to the Shelf Registration Statement pursuant to Section
15.1 hereof and this Section 15.2, each Limited Partner agrees that (i) it will
not offer or sell its Registrable Securities under the Shelf Registration
Statement until (A) it has either (1) provided a Registration Notice pursuant to
Section 15.2(b) hereof or (2) had Registrable Securities included in the Shelf
Registration Statement at the time it became effective pursuant to Section
15.1(c) hereof and (B) it has received copies of the supplemented or amended
Prospectus contemplated by Section 15.2(b) hereof and receives notice that any
post-effective amendment has become effective; (ii) upon receipt of any notice
from the Company of the happening of any event of the kind described in Section
15.2(b)(iv) hereof, such Limited Partner will forthwith discontinue disposition
of Registrable Securities pursuant to the Shelf Registration Statement until
such Limited Partner receives copies of the supplemented or amended Prospectus
contemplated by Section 15.2(i) hereof and receives notice that any
post-effective amendment has become effective, and, if so directed by the
Company, such Limited Partner will deliver to the Company (at the expense of the
Company) all copies in its possession, other than permanent file copies then in
such Limited Partner's possession, of the Prospectus covering such Registrable
Securities current at the time of receipt of such notice; and (iii) all offers
and sales under the Shelf Registration Statement shall be completed within
forty-five (45) days after the first date on which offers or sales can be made
pursuant to clause (i) above, and upon expiration of such forty-five (45) day
period the Limited Partner will not offer or sell its Registrable Securities
under the Shelf Registration Statement until it has again complied with the
provisions of clause (i)(B) above, except that if the applicable Registration
Notice was delivered to the Company at a time which was not part of a Sale
Period, such forty-five (45) day period shall be the next succeeding Sale
Period.
XV.3 Restrictions on Public Sale by Holders of Registrable
Securities. Each Limited Partner agrees with the Company that:
51
(a) If the Board of Directors of the Company determines in
its good faith judgment that the filing of the Shelf Registration Statement
under Section 15.1 hereof or the use of any Prospectus would materially impede,
delay or interfere with any pending material financing, acquisition or corporate
reorganization or other material corporate development involving the Company or
any of its subsidiaries, or require the disclosure of important information
which the Company has a bona fide business purpose for preserving as
confidential or the disclosure of which would impede the Company's ability to
consummate a significant transaction, upon written notice of such determination
by the Company, the rights of the Limited Partners to offer, sell or distribute
any Registrable Securities pursuant to the Shelf Registration Statement or to
require the Company to take action with respect to the registration or sale of
any Registrable Securities pursuant to the Shelf Registration Statement
(including any action contemplated by Section 15.2 hereof) will be suspended
until the date upon which the Company notifies the Limited Partners in writing
that suspension of such rights for the grounds set forth in this Section 15.3(a)
is no longer necessary, but no such period shall extend for longer than 90 days.
(b) In the case of the registration of any underwritten
equity offering proposed by the Company (other than any registration by the
Company on Form S-8, or a successor or substantially similar form, of (i) an
employee stock option, stock purchase or compensation plan or of securities
issued or issuable pursuant to any such plan or (ii) a dividend reinvestment
plan), each Limited Partner agrees, if requested in writing by the managing
underwriter or underwriters administering such offering, not to effect any
offer, sale or distribution of Registrable Securities (or any option or right to
acquire Registrable Securities) during the period commencing on the 7th day
prior to the expected effective date (which date shall be stated in such notice)
of the registration statement covering such underwritten primary equity offering
and ending on the date specified by such managing underwriter in such written
request to such Limited Partner, which date shall not be later than 90 days
after such expected date of effectiveness.
(c) In the event that any Limited Partner uses a Prospectus
in connection with the offering and sale of Registrable Securities covered by
such Prospectus, such Limited Partner will use only the latest version of such
Prospectus provided to it by the Company.
XV.4 Indemnification; Contribution. (a) Indemnification by the
Company. The Company agrees to indemnify and hold harmless each Limited Partner
and its officers and directors and each person, if any, who controls any Limited
Partner within the meaning of Section 15 of the Securities Act as follows:
(i) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, arising out of any untrue statement or
alleged untrue statement of a material fact contained in the Shelf
Registration Statement (or any amendment thereto) or any Prospectus,
including all documents incorporated therein by reference, or the
omission or alleged omission therefrom of a material fact necessary in
order to make the statements therein, in light of the circumstances under
which they were made, not misleading;
(ii) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, to the extent of the aggregate amount
paid in settlement of any
52
litigation, or investigation or proceeding by any governmental agency or
body, commenced or threatened, or of any claim whatsoever based upon any
such untrue statement or omission, or any such alleged untrue statement
or omission, if such settlement is effected with the written consent of
the Company; and
(iii) against any and all expense whatsoever, as incurred
(including reasonable fees and disbursements of counsel), reasonably
incurred in investigating, preparing or defending against any litigation,
or investigation or proceeding by any governmental agency or body,
commenced or threatened, in each case whether or not a party, or any
claim whatsoever based upon any such untrue statement or omission, or any
such alleged untrue statement or omission, to the extent that any such
expense is not paid under clause (i) or (ii) above;
provided, however, that the indemnity provided pursuant to this Section
15.4(a) does not apply to any Limited Partner with respect to any loss,
liability, claim, damage or expense to the extent arising out of any
untrue statement or omission or alleged untrue statement or omission made
in reliance upon and in conformity with written information furnished to
the Company by such Limited Partner expressly for use in the Shelf
Registration Statement (or any amendment thereto) or any Prospectus.
(b) Indemnification by Limited Partners. Each Limited
Partner severally agrees to indemnify and hold harmless the Company and the
other selling Limited Partners, and each of their respective directors and
officers (including each director and officer of the Company who signed the
Shelf Registration Statement), and each person, if any, who controls the Company
or any other selling Limited Partner within the meaning of Section 15 of the
Securities Act, to the same extent as the indemnity contained in Section 15.4(a)
hereof (except that any settlement described in Section 15.4(a)(2) shall be
effected with the written consent of such Limited Partner), but only insofar as
such loss, liability, claim, damage or expense arises out of or is based upon
any untrue statement or omission, or alleged untrue statement or omission, made
in the Shelf Registration Statement (or any amendment thereto) or any Prospectus
in reliance upon and in conformity with written information furnished to the
Company by such selling Limited Partner expressly for use in the Shelf
Registration Statement (or any amendment thereto) or such Prospectus. In no
event shall the liability of any Limited Partner under this Section 15.4(b) be
greater in amount than the dollar amount of the proceeds received by such
Limited Partner upon the sale of the Registrable Securities giving rise to such
indemnification obligation.
(c) Each indemnified party shall give reasonably prompt
notice to each indemnifying party of any action or proceeding commenced against
it in respect of which indemnity may be sought hereunder, but failure so to
notify an indemnifying party (i) shall not relieve it from any liability which
it may have under the indemnity agreement provided in Section 15.4(a) or (b)
unless and to the extent it did not otherwise learn of such action and the lack
of notice by the indemnified party results in the forfeiture by the indemnifying
party of substantial rights and defenses and (ii) shall not, in any event,
relieve the indemnifying party from any obligations to any indemnified party
other than the indemnification obligation provided under Section 15.4(a) or (b).
If the indemnifying party so elects within a reasonable time after receipt of
such notice, the indemnifying company may assume the defense of such action or
proceeding at such indemnifying party's own expense with counsel chosen by the
indemnifying
53
party; provided, however, that, if such indemnified party or parties reasonably
determine that a conflict of interest exists where it is advisable for such
indemnified party or parties to be represented by separate counsel or that, upon
advice of counsel, there may be legal defenses available to them which are
different from or in addition to those available to the indemnifying party, then
the indemnifying party shall not be entitled to assume such defense and the
indemnified party or parties in the aggregate shall be entitled to one separate
counsel at the indemnifying party's expense. If an indemnifying party is not so
entitled to assume the defense of such action or does not assume such defense,
after having received the notice referred to in the first sentence of this
Section 15.4(c), the indemnifying party or parties will pay the reasonable fees
and expenses of counsel for the indemnified party or parties. In such event
however, no indemnifying party will be liable for any settlement effected
without the written consent of such indemnifying party. If an indemnifying party
is entitled to assume, and assumes, the defense of such action or proceeding in
accordance with this paragraph, such indemnifying party shall not be liable for
any fees and expenses of counsel for the indemnified parties incurred thereafter
in connection with such action or proceeding.
(d) In order to provide for just and equitable contribution
in circumstances in which the indemnity agreement provided for in this Section
15.4 is for any reason held to be unenforceable although applicable in
accordance with its terms, the Company and the selling Limited Partners shall
contribute to the aggregate losses, liabilities, claims, damages and expenses of
the nature contemplated by such indemnity agreement incurred by the Company and
the selling Limited Partners, in such proportion as is appropriate to reflect
the relative fault of and benefits to the Company on the one hand and the
selling Limited Partners on the other (in such proportions that the selling
Limited Partners are severally, not jointly, responsible for the balance), in
connection with the statements or omissions which resulted in such losses,
liabilities, claims, damages or expenses, as well as any other relevant
equitable considerations. The relative benefits to the indemnifying party and
indemnified parties shall be determined by reference to, among other things, the
total proceeds received by the indemnifying party and indemnified parties in
connection with the offering to which such losses, liabilities, claims, damages,
or expenses relate. The relative fault of the indemnifying party and indemnified
parties shall be determined by reference to, among other things, whether the
action in question, including any untrue or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact, has been
made by, or relates to information supplied by, such indemnifying party or the
indemnified parties, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such action.
The Company and the Limited Partners agree that it would
not be just or equitable if contribution pursuant to this Section 15.4(d) were
determined by pro rata allocation or by any other method of allocation which
does not take account of the equitable considerations referred to in the
immediately preceding paragraph. Notwithstanding the provisions of this Section
15.4(d), no selling Limited Partner shall be required to contribute any amount
in excess of the amount by which the total price at which the Registrable
Securities of such selling Limited Partner were sold to the public, exceeds the
amount of any damages which such selling Limited Partner is otherwise required
to pay by reason of such untrue statement or omission.
Notwithstanding the foregoing, no Person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any Person who was not
guilty of such fraudulent misrepresentation. For
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purposes of this Section 15.4(d), each Person, if any, who controls a Limited
Partner within the meaning of Section 15 of the Securities Act and directors and
officers of a Limited Partner shall have the same rights to contribution as such
Limited Partner, and each director of the Company, each officer of the Company
who signed the Shelf Registration Statement and each Person, if any, who
controls the Company within the meaning of Section 15 of the Securities Act
shall have the same rights to contribution as the Company.
XV.5 Rule 144 Sales. (a) The Company covenants that it will file
the reports required to be filed by the Company under the Securities Act and the
Exchange Act, so as to enable any Limited Partner to sell Registrable Securities
pursuant to Rule 144 under the Securities Act.
(b) In connection with any sale, transfer or other
disposition by any Limited Partner of any Registrable Securities pursuant to
Rule 144 under the Securities Act, the Company shall cooperate with such Limited
Partner to facilitate the timely preparation and delivery of certificates
representing Registrable Securities to be sold and not bearing any Securities
Act legend, and enable certificates for such Registrable Securities to be for
such number of shares and registered in such names as the selling Limited
Partners may reasonably request at least two business days prior to any sale of
Registrable Securities.
ARTICLE XVI
GENERAL PROVISIONS
XVI.1 Notice. Any notice, demand, request or report required or
permitted to be given or made to a Partner or Assignee under this Agreement
shall be in writing and shall be deemed given or made when delivered in person,
received by facsimile or overnight courier, or upon deposit in the United States
mail, registered or certified, postage prepaid, and properly addressed to the
Partner or Assignee at the address set forth in Exhibit A, or such other address
of which the Partner or Assignee shall notify the General Partner in writing.
XVI.2 Binding Effect. This Agreement and all the terms and
provisions hereof shall be binding upon and shall inure to the benefit of all
Partners, and their legal representatives, heirs, successors and permitted
assigns, except as expressly herein otherwise provided.
XVI.3 Liability of Limited Partners. The liability of the Limited
Partners for their obligations, covenants, representations and warranties under
this Agreement shall be several and not joint.
XVI.4 Effect and Interpretation. This Agreement shall be governed
by and construed in conformity with the laws of the State of Delaware.
XVI.5 Counterparts. This Agreement may be executed in
counterparts, each of which shall be an original, but all of which shall
constitute one and the same instrument.
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XVI.6 Partners Not Agents. Nothing contained herein shall be
construed to constitute any Partner the agent of another Partner, except as
specifically provided herein, or in any manner to limit the Partners in the
carrying on of their own respective businesses or activities.
XVI.7 Titles and Captions. All article or section titles or
captions in this Agreement are for convenience only. They shall not be deemed
part of this Agreement and in no way define, limit, extend or describe the scope
or intent of any provisions hereof. Except as specifically provided otherwise,
references to "Articles" and "Sections" are to Articles and Sections of this
Agreement.
XVI.8 Pronouns and Plurals. Whenever the context may require, any
pronoun used in this Agreement shall include the corresponding masculine,
feminine or neuter forms, and the singular form of nouns, pronouns and verbs
shall include the plural and vice versa.
XVI.9 Severability. If any provision of this Agreement, or the
application of such provision to any person or circumstance, shall be held
invalid by a court of competent jurisdiction, the remainder of this Agreement,
or the application of such provision to persons or circumstances other than
those to which it is held invalid by such court, shall not be affected thereby.
XVI.10 Entire Agreement. This Agreement and all documents and
agreements referred to herein and therein contain the entire understanding and
agreement among the Partners with respect to the subject matter hereof and
supersede the Prior Agreement and any other prior written or oral understandings
or agreements among them with respect thereto.
XVI.11 Assurances. Each of the Partners shall hereafter execute
and deliver such further instruments and do such further acts and things as may
be required or useful to carry out the intent and purpose of this Agreement and
as are not inconsistent with the terms hereof.
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IN WITNESS WHEREOF, the parties hereto have executed this
Agreement or caused this Agreement to be executed as of the date and year first
above written.
GENERAL PARTNER:
American Real Estate Investment Corporation
By:
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[Xxxx Xxxxxx, President]
LIMITED PARTNERS:
Executed by [Xxxx Xxxxxx, Treasurer]
of American Real Estate Investment
Corporation, a Delaware corporation,
pursuant to Power of Attorney granted
by the below named persons
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EXHIBIT A
Gross Asset Value of
Contributed Limited
Name and Address Partner Assets (Net Opening Partnership Percentage
of Partner Cash Contribution of Secured Liabilities) Capital Account Units/OP Units Interest
-------------------- ----------------- ----------------------- --------------- -------------- ------------
General Partner
American Real Estate [(1)]
Investment Corporation
Limited Partners[(2)]
[(1) It is understood that the initial number of Units to be held by the
General Partner will equal the number of Shares issued and outstanding.]
[(2) It is understood that the immediately after the closing effected on the
Closing Date, Limited Partners who were Limited Partners prior to such
closing will hold in the aggregate 789,421 OP Units.]
EXHIBIT B
Form of Exercise Notice
Pursuant to Article XII of the Agreement of Limited Partnership of
American Real Estate Investment, L.P., a Delaware limited partnership (the
"Partnership"), the undersigned hereby irrevocably elects to exercise the right
to sell to American Real Estate Investment Corporation, a Maryland corporation
and the general partner of the Partnership, _________ OP Units of the
Partnership (the "Offered Units") and requests that certificates for the
Purchase Price be issued in the name of _________________ (social security
number ___________).
All terms used herein not otherwise defined shall be defined as
set forth in the aforesaid Agreement of Limited Partnership.
Dated:________________ ___________________________________
(Signature)
Signature Guaranteed:
________________________________
