PHILIPS PROPERTY HOLDINGS [ ], L.P.
LIMITED PARTNERSHIP AGREEMENT
PHILIPS PROPERTY HOLDINGS [ ], L.P.
LIMITED PARTNERSHIP AGREEMENT
TABLE OF CONTENTS
Article/Section Page
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I. Definitions
II. Organization, Offices, Purpose and Term
2.01 Formation
2.02 Name
2.03 Offices and Registered Agent
2.04 Purposes and Powers
2.05 Term
III. Partners and Capital
3.01 Partners
3.02 Capital Contributions of General Partner
3.03 Capital Contributions of Limited Partners
3.04 No Third Party Beneficiary
3.05 Capital Accounts
IV. Allocations of Profits and Losses
4.01 Allocation of Profits
4.02 Allocation of Losses
4.03 Allocation of Included and Excluded Items
4.04 Special Allocation Provisions
4.05 Curative Allocations
4.06 Allocations on Varying of Interests
4.07 Shares of Excess Nonrecourse Liabilities
in Determining Allocations of Profits
and Losses
V. Distributions and Withdrawals
5.01 Distributions
5.02 Application of Distributions
5.03 Withdrawals from Capital Accounts
VI. Management and Operations 6.01 Management of Partnership Affairs
6.02 Rights and Powers of the General Partner
6.03 Engagement of Affiliates
6.04 Restrictions on Partnership Operations
6.05 Reimbursement of Certain Expenses of the
General Partner
6.06 Operation in Accordance with REIT
requirements
6.07 Withdrawal or Resignation, Etc. of the
General Partner
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VII. Rights and Obligations of Limited Partners
7.01 Limited Liability
7.02 No Participation in Management
7.03 No Authority to Act
7.04 Right to Examine Books and Records
7.05 Right to Copy of Certificates
7.06 Limitation on Withdrawal, Etc.
7.07 Right to Return of Contributions
VIII. Transferability of Partners' Interests
8.01 Transfers of Partners' Interests
8.02 Requirements as to Costs and Acceptance
of Agreement
8.03 Admission of Substituted Limited Partners
8.04 Nonpermitted Attempted Transfers
IX. Dissolution and Termination
9.01 Events Causing Dissolution
9.02 Continuation By Action of the Partners
9.03 Liquidation
X. Books and Records; Accounting and Tax Matters
10.01 Books and Records
10.02 Tax Elections
10.03 Tax Matters Partner
XI. Amendments
11.01 General Amendment Requirements
11.02 Additional Restrictions
11.03 Corrective or Technical Amendments
XII. Miscellaneous
12.01 Exculpation and Indemnification
12.02 Power of Attorney
12.03 Notices
12.04 Section Headings
12.05 Severability
12.06 Governing Law
12.07 Counterparts
12.08 Partner in Interest
12.09 Words
12.10 Integrated Agreement
Exhibits
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A. Limited Partners [ss.3.01]
B. Description of the Property [ss.2.04]
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PHILIPS PROPERTY HOLDINGS [ ], L.P.
LIMITED PARTNERSHIP AGREEMENT
This Limited Partnership Agreement (the "Agreement"), made and entered into
as of ____, 199_ by and among PHILIPS SUB [ ], INC., a corporation organized
pursuant to the laws of the State of Delaware (the "General Partner") and
PHILIPS INTERNATIONAL REALTY, L.P., a limited partnership organized pursuant to
the laws of the State of Delaware (the "initial Limited Partner") and the
undersigned other parties hereto (together, the "Limited Partners").
The parties hereto agree as follows:
ARTICLE I
Definitions
1.01. Whenever used in this Agreement, the following terms shall have the
meanings set forth below:
(a) "Act" means the Delaware Revised Uniform Limited Partnership Act,
as from time to time amended.
(b) "Affiliate" means, with respect to any person (i) any member of
the immediate family (the spouse, parents, ancestors and descendants of the
person's parents (whether natural or adopted by the whole or half blood) or
the spouse's parents) of such or person if an individual; (ii) any trustee
or beneficiary of a person; (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 directly or
indirectly controlling, controlled by, or under common control with, such
person. For such purpose, "control" (and similar words) means possessing
the ability to influence the management or policies of a corporation,
partnership or other entity.
(c) "Capital Account" means the account of each Partner established
and maintained on the books of the Partnership as provided in Section 3.05.
(d) "Capital Contribution" in respect of any Partner means the amount
of cash or cash equivalents or other consideration contributed by such
Partner to the capital of the Partnership pursuant to Sections 3.02 or
3.03.
(e) "Certificate" means the certificate of limited partnership of the
Partnership as filed on ___, 199_ with the
Secretary of State of Delaware, as from time to time amended and filed
pursuant to the Act and the terms of this Agreement.
(f) "Code" means the Internal Revenue Code of 1986, as amended.
(g) "Company" means Philips International Realty Corp., a corporation
organized pursuant to the laws of the State of Maryland (and which is the
general partner of Philips International Realty, L.P.)
(h) "Exchange Agreement" means the Contribution and Exchange Agreement
dated as of August 11, 1997, by and among Philips International Realty,
L.P., the Partnership, the Existing Partnership, and other persons and
entities listed as partners on Exhibit A thereto.
(i) "Existing Partnership" means ____________________.
(j) "General Partner" means Philips Sub [ ], Inc., a corporation
organized pursuant to the laws of the State of Delaware, and any other
person admitted as general partner of the Partnership, except that such
term shall not include any person after it has resigned, or otherwise
ceased to be, a general partner of the Partnership.
(k) "Limited Partner" means any limited partner admitted to the
Partnership pursuant to Section 3.01.
(l) "Losses" of the Partnership for any period means the net losses of
the Partnership for such period determined in accordance with the
accounting method followed by the Partnership for United States federal
income tax purposes.
(m) "Partner" means either (including, in the plural, both) a General
Partner or a Limited Partner in the Partnership.
(n) "Partnership" means the partnership formed pursuant to this
Agreement and the Act.
(o) "Partnership Interest" means the interest of a Partner in the
Profits and capital of the Partnership, including its Capital Account
balance.
(p) "Partnership Percentage" in respect of any Partner means that
fraction, expressed as a percentage, having as its numerator the Capital
Contribution of such Partner and having its denominator the aggregate
Capital Contributions of all Partners.
(q) "Profits" of the Partnership for any period means the net income
of the Partnership for such period determined in accordance with the
accounting method followed by the Partnership for United States federal
income tax purposes.
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(r) "Regulations" means the Treasury Regulations issued under the
Code, as amended.
(s) "REIT" means a real estate investment trust under Section 856 of
the Code.
ARTICLE II
Organization, Offices, Purpose and Term
2.01. Formation. The Partners hereby form the Partnership as a limited
partnership (the "Partnership") pursuant to the Act.
2.02. Name. The name of the Partnership shall be "Philips Property Holdings
[ ], L.P." The operations of the Partnership, however, may be conducted under
any other name deemed necessary or desirable by the Partners or as may be
necessary to comply with the requirements of any jurisdiction in which the
Partnership may conduct operations.
2.03. Offices and Registered Agent. The principal office of the Partnership
shall be at c/o the General Partner at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇, or such other place as the General Partner may designate by notice to the
Limited Partners. The initial registered office of the Partnership shall be at
c/o United Corporate Services, Inc., ▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
In addition, the Partnership may maintain such other offices as the General
Partner may deem advisable at any other place or places. The registered agent of
the Partnership for service of process shall be United Corporate Services, Inc.
The General Partner may from time to time designate another registered agent or
another location for the registered office of the Partnership upon notice to the
Limited Partners.
2.04. Purposes and Powers.
(a) Subject to Section 6.04, the nature and purposes of the business
to be conducted by the Partnership are to engage solely in the following:
(i) directly or indirectly to acquire, own, finance, construct, improve,
and operate the office property located at [insert address], as more
particularly described in Exhibit B); provided, however, that such business
shall be limited to and conducted in such a manner as to permit the Company
at all times to be classified as a REIT for federal income tax purposes,
unless the Company has determined to cease to qualify as a REIT, (ii) to
enter into any partnership, joint venture or other similar arrangements to
engage in any of the foregoing or the ownership of interests in any entity
engaged in any of the foregoing, and (iii) to do anything necessary or
incidental to the foregoing. In connection with the foregoing, and without
limiting the Company's right in its sole discretion
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to cease qualifying as a REIT, the Partners acknowledge that the Company's
status as a REIT inures to the benefit of all of the Partners and not
solely the Company.
(b) The Partnership is empowered to do any and all acts and things
necessary, appropriate, proper, advisable, incidental to or convenient for
the furtherance and accomplishment of the purposes and business described
herein and for the protection and benefit of the Partnership; provided,
that the Partnership shall not take, or shall refrain from taking, any
action which, (i) could adversely affect the ability of the Company to
continue to qualify as a REIT, or (ii) could subject the Company to any
additional taxes under Section 857 or Section 4981 of the Code or any
successor or newly enacted provisions of the Code imposing other additional
taxes or penalties on the Company.
2.05. Term. The Partnership commenced on the filing of a certificate of
limited partnership on ___, 199_. The Partnership shall continue until December
31, 209_, or until dissolved pursuant to Article IX, and for so long thereafter
as is reasonably necessary for the winding up and liquidation of Partnership
operations.
ARTICLE III
Partners and Capital
3.01. Partners.
(a) Philips Sub [ ], Inc. shall be the General Partner.
(b) Philips International Realty, L.P. shall be the initial Limited
Partner. Other Limited Partners shall be as admitted from time to time and
set forth in Exhibit A (as revised from time to time by the General
Partner). A person shall be deemed admitted as a Limited Partner when the
General Partner has accepted such person as a Limited Partner of the
Partnership, and the books and records reflect such person as admitted to
the Partnership as a Limited Partner.
(c) After the formation of the Partnership, new (as distinguished from
substituted) Limited Partners shall be admitted in the sole discretion of
the General Partner.
3.02. Capital Contributions of General Partner.
(a) The General Partner shall upon formation of the Partnership make
an initial Capital Contribution of $1,000 in cash or cash equivalents.
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(b) The General Partner, as Capital Contributions are received from
Limited Partners, shall make additional Capital Contributions consistent
with the maintenance at all times of aggregate General Partner Capital
Contributions at least equal to the lesser of (i) 1.01 percent of the
aggregate Capital Contributions of all Limited Partners or (ii) that amount
which will cause the General Partner's Capital Account balance to equal one
(1) percent of the aggregate Capital Account balances of all Partners if
positive (and otherwise, zero). The General Partner may also make
additional Capital Contributions from time to time as may be deemed
necessary for Partnership operations after taking into account other funds
available to the Partnership.
3.03. Capital Contributions of Limited Partners.
(a) The initial Limited Partner shall, upon formation of the
Partnership make an initial Capital Contribution of $1,000 in cash or cash
equivalents.
(b) The Limited Partners shall upon the Closing of the Exchange
Agreement (as therein defined) make Capital Contributions of their
interests in the Existing Partnership in exchange for Partnership Interests
as provided in the Exchange Agreement. The Limited Partners, upon request
of the General Partner, may from time to time (but shall not be obligated
to), make additional Capital Contributions as may be deemed necessary by
the General Partner for Partnership operations after taking into account
other funds available to the Partnership.
3.04. No Third Party Beneficiary. No creditor or other third party having
dealings with the Partnership shall have the right to enforce the right or
obligation of any Partner to make Capital Contributions or loans or to pursue
any other right or remedy hereunder or at law or in equity, it being understood
and agreed among the parties hereto that the provisions of this Agreement shall
be solely for the benefit of, and may be enforced solely by, the parties hereto
and their respective successors and assigns. None of the rights or obligations
of the Partners herein set forth to make Capital Contributions or loans to the
Partnership shall be deemed an asset of the Partnership for any purpose by any
creditor or other third party, nor may such rights or obligations be sold,
transferred or assigned by the Partnership or pledged or encumbered by the
Partnership to secure any debt or other obligation of the Partnership or of any
of the Partners.
3.05. Capital Accounts. A Capital Account shall be established and
maintained by the Partnership for each Partner, generally as set forth below and
specifically in accordance with Section 704 of the Code and Section
1.704-1(b)(2)(iv) of the Regulations.
(a) Each Partner's Capital Account shall be increased
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by (A) the amount of money contributed by it to the Partnership, including
Partnership liabilities assumed by such Partner, and (B) allocations to it
pursuant to Article IV of Partnership income and gain (or items thereof).
The Partnership shall also make appropriate adjustments with respect to (1)
any property contributed to the Partnership ("Contributed Property"), and
(2) any property revalued on the books of the Partnership and the Partners'
Capital Accounts ("Revalued Property"), in each instance as required or
permitted by the Regulations.
(b) Each Partner's Capital Account shall be decreased by (A) the
amount of money distributed to it by the Partnership, including liabilities
of such Partner assumed by the Partnership, and (B) allocations to it
pursuant to Article IV of Partnership loss and deduction (or items
thereof), including also allocations of Partnership expenditures which are
neither deductible nor properly capitalized. The Partnership shall also
make appropriate adjustments with respect to (1) any Contributed Property
or Revalued Property which may be distributed, and (2) any losses or other
adjustments appropriately attributable to Contributed Property or Revalued
Property, in each instance as required or permitted by the Regulations.
(c) Upon the transfer of all, or a part of, a Partner's interest in
the Partnership, the Capital Account of the transferor that is attributable
to the transferred interest will carry over to the transferee Partner,
giving effect to any and all charges, credits or adjustments to the Capital
Accounts of the Partners provided for in Section 1.704-1(b)(2)(iv) of the
Regulations, including any such charges, credits or adjustments resulting
from any elections under Section 754 of the Code or from a termination of
the Partnership under Section 708(b)(1)(B) of the Code.
ARTICLE IV
Allocations of Profits and Losses
4.01. Allocation of Profits. The Profits of the Partnership for any period
shall be credited to the respective Capital Accounts of the Partners as follows:
(a) First, Partnership Profits shall be allocated to each Partner in
the proportions and amounts necessary to restore Partnership Losses
previously allocated to Partners (and not previously restored by
allocations pursuant to this subsection), proceeding by reference to prior
periods in the reverse order in which the prior Partnership Losses were
allocated;
(b) Next, if there shall remain any amount of Profits to be allocated,
Partnership Profits shall be allocated to the Partners in accordance with
their respective Partnership
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Percentages.
4.02. Allocation of Losses. The Losses of the Partnership for any period
shall be debited to the respective Capital Accounts of the Partners in
accordance with their respective Partnership Percentages.
4.03. Allocation of Included and Excluded Items.
(a) Items of Partnership income, expenses, etc., offset against one
another in computing Profits or Losses for any taxable year of the
Partnership, shall be allocated in the same proportions as Profits or
Losses for such taxable year are allocated.
(b) Items not otherwise taken into account in computing Profits or
Losses shall be added thereto or subtracted therefrom as follows: (i)
income exempt from federal income taxation shall be added, and (ii)
nondeductible expenditures described in Section 705(a)(2)(B) of the Code or
treated as so described under Section 1.704-1(b)(2)(iv)(i) of the
Regulations shall be subtracted.
4.04. Special Allocation Provisions.
(a) Minimum Gain Chargeback. If there is a net decrease in the
Partnership Minimum Gain during a Partnership taxable year, each Partner
will be allocated, before any other allocation of Partnership items for
such taxable year is made under Section 704(b) of the Code, items of gain
from the disposition of any property subject to partner nonrecourse debt
and thereafter other items of income and gain for such year (and, if
necessary, subsequent years) equal to the amount of such decrease, to the
extent of such Partner's share of such net decrease (computed for this
purpose in the manner provided under Section 1.704-2(f) of the Regulations,
after giving appropriate effect to the exceptions and waivers therein
provided or authorized, including but not limited to the exceptions for
certain conversions, refinancings and capital contributions) of such
Partner at the end of such year. This provision relating to Minimum Gain
Chargebacks is intended to comply with Sections 1.704-1(b)(4)(iv) and
1.704-2 of the Regulations and shall be interpreted and applied in a manner
consistent with such Regulations.
(b) Notwithstanding anything to the contrary in this Agreement, if at
the end of any taxable year, the sum of the Partners' deficit Capital
Account balances exceeds the Partnership Minimum Gain, the Partners with
deficits in their Capital Accounts shall, to the extent possible, and as
rapidly as possible, be allocated Profits, if any, pro rata, in an amount
which will eliminate such excess.
(c) Qualified Income Offset. Notwithstanding anything
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contained in this Agreement to the contrary, if any Partner receives an
adjustment, allocation or distribution described in Sections
1.704-1(b)(2)(ii)(d)(4), (5) or (6) of the Regulations which unexpectedly
causes or increases a deficit in such Partner's Capital Account, such
Partner will be allocated items of income and gain in an amount and manner
sufficient to eliminate such deficit balance as quickly as possible. This
provision relating to Qualified Income offsets is intended to comply with
Section 1.704-1(b)(2)(ii)(d) of the Regulations and shall be interpreted
and applied in a manner consistent with such Regulations.
(d) For purposes of this section, the term "Partnership Minimum Gain"
means the aggregate gains (of whatever character) of the Partnership,
computed with respect to each nonrecourse debt of the Partnership, that
would be realized by the Partnership upon disposition in taxable
transactions of the Partnership properties subject to such debts in full
satisfaction thereof.
(e) For purposes of this section, the term "nonrecourse debt" means a
Partnership liability secured by Partnership property and with respect to
which none of the Partners has any personal liability as determined under
Section 1.752-1(a)(2) of the Regulations.
(f) (i) In accordance with Section 704(c) of the Code and the
Regulations thereunder, income, gain, loss, and deduction with respect to
any property contributed to the capital of the Partnership shall, solely
for tax purposes, be allocated among the Partners so as to take account of
any variation between the adjusted basis of such property to the
Partnership for federal income tax purposes and its fair market value at
the time of contribution.
(ii) In the event any Partnership property has been revalued on the
books of the Partnership and the Capital Accounts of the Partners under
Section 1.704-1(b)(2)(iv)(f) of the Regulations, subsequent allocations of
income, gain, loss, and deduction with respect to such asset shall take
account of any variation between the adjusted basis of such asset for
federal income tax purposes and its fair market value in the same manner as
under Section 704(c) of the Code and the Regulations thereunder.
(iii) Any elections or other decisions relating to allocations under
this Section 4.04 shall be made by the General Partner in any manner that
reasonably reflects the purposes and intentions of this Agreement.
Specifically, with respect to property contributed to the Partnership
pursuant to the Exchange Agreement, variations between basis and value of
Contributed Property shall be taken into account under the "traditional
method" as described in Section 1.704-3(b) of the Regulations, unless
otherwise determined by the General Partner and the
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contributing Partner.
4.05. Curative Allocations. If any allocation of gain, income, loss,
expense or any other item is made pursuant to Sections 4.04(a), 4.04(b) or
4.04(c) of this Agreement (the "Regulatory Allocations") with respect to one or
more Partners (the "Deficit Partners"), then the balance of such items for the
current and all subsequent fiscal years shall be allocated among the Partners
other than the Deficit Partners as if such items were allocated among all the
Partners (including the Deficit Partners) without regard to the Regulatory
Allocations and this section, until the amount of such items that would have
been allocated to the Deficit Partners but for the Regulatory Allocations equal
the amount allocated to the Deficit Partners pursuant to the Regulatory
Allocations.
4.06. Allocations on Varying of Interests.
(a) Unless otherwise required by the Code or the Regulations or as
agreed to by the General Partner, in its sole and absolute discretion,
Profits or Losses allocable to Partners in respect of varying interests in
the Partnership during any year shall be allocated in the manner described
in Section 4.06 (b) below.
(b) The allocation of Profits or Losses other than Profits or Losses
arising from a liquidation of the Partnership during any year of the
Partnership shall be based upon the length of time during such year, as
measured by the effective date of any assignment or other varying of
interests that the affected Partnership Interests were owned by each
Partner and shall not be based upon the date or dates during such fiscal
year in which income was earned or losses were sustained by the
Partnership; provided, however, that the allocation of Profits or Losses
resulting from a liquidation of the Partnership shall be based upon the
date or dates such income was earned or losses were sustained.
4.07. Shares of Excess Nonrecourse Liabilities in Determining Allocations
of Profits and Losses. For the purposes of determining the Partners' shares of
the excess nonrecourse liabilities of the Partnership (within the meaning of
Section 1.752-3(a)(3) of the Regulations), the interest of each Partner in
Partnership profits shall be the share of each Partner in Partnership Profits
provided in Section 4.01(b).
ARTICLE V
Distributions and Withdrawals
5.01. Distributions. The Partnership shall make distributions from time to
time to the Partners of such available funds as the Partnership reasonably
determines will not be
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necessary for the proper and beneficial conduct of Partnership operations.
Notwithstanding the foregoing, the General Partner shall take such reasonable
efforts, as determined by it in its sole and absolute discretion and consistent
with the Company's qualification as a REIT, to cause the Partnership to
distribute sufficient amounts to enable the Company to pay stockholder dividends
that will (i) satisfy the REIT requirements and (ii) avoid any federal income or
excise tax liability of the Company.
5.02. Application of Distributions. In making distributions pursuant to
Section 5.01, the Partnership shall apply available Partnership funds, after
payment or other adequate provision for all current liabilities of the
Partnership (including indebtedness against Partnership property and for
reasonable operating reserves), to distributions among all Partners in
accordance with their respective Partnership Percentages.
5.03. Withdrawals from Capital Accounts. Partners may not withdraw any
amount from their Partnership Capital Accounts except to the extent that
distributions authorized in this Agreement may for any purpose be deemed to
constitute withdrawals.
ARTICLE VI
Management and Operations
6.01. Management of Partnership Affairs. The management and control of the
Partnership and its operations and affairs shall rest exclusively with the
General Partner. The General Partner (subject to the limitations set forth in
this Agreement) shall have all the rights and powers which may be possessed by a
general partner under the Act, and such rights and powers as are otherwise
conferred by law or are necessary, advisable or convenient to the discharge of
its duties under this Agreement and the Act and to the management of the
operations and affairs of the Partnership. Persons dealing with the Partnership
shall be entitled to rely conclusively on the power and authority of the General
Partner as set forth in this Agreement.
6.02. Rights and Powers of the General Partner. Without limiting the
generality of the powers and rights of the General Partner set out in Section
6.01, but subject to the limitations set forth in Sections 2.04 and 6.04, it is
agreed that the General Partner shall have the following rights and powers which
it may exercise at the cost, expense and risk of the Partnership:
(a) the employment of the capital and Profits of the Partnership in
the exercise of any rights or powers possessed by the Partnership (or any
nominee of the Partnership) or General Partner hereunder, including
particularly in carrying out the purposes of the Partnership set out in
Section 2.04(a);
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(b) the making of all decisions relating to the acquisition, sale,
exchange, transfer, conveyance, assignment, encumbrance or other
disposition for cash, other property, or on terms, of all or any part of,
or interest in, real property, and the approval, rejection, execution and
modification of leases and subleases of, and options, concessions, licenses
and other agreements with respect to real property or any interest therein;
(c) the borrowing of money and the obtaining of loans, secured and
unsecured, for the Partnership and in connection therewith the issuance of
notes, and other debt instruments, and the securing of the same by
mortgaging, assigning for security purposes, pledging or hypothecating all
or part of any real property and other assets of the Partnership, and the
prepayment, in whole or in part, refinancing, recasting, modification,
consolidation or extension of any such mortgage, assignment, pledge or
other security instrument and, in connection therewith, the execution and
delivery, for and on behalf of the Partnership, of any extensions, renewals
or modifications thereof any new mortgages, assignments, pledges or other
security instruments in lieu thereof; and
(d) the placement of record title to real property, or any interest
therein, in the names of nominees, the direction of the actions of any such
nominee, the change or discontinuance of the use of any nominee, provided
that one hundred (100%) percent of the beneficial ownership of any such
nominee is vested in the Partnership, its General Partner or initial
Limited Partner or an Affiliate thereof; and
(e) the engagement, on behalf of the Partnership, of such professional
persons, firms or corporations as the General Partner in its reasonable
judgment shall deem advisable for the conduct and operation of the business
of the Partnership, including, without limitation, brokers, mortgage
bankers, lawyers, accountants, architects, engineers, consultants,
contractors and purveyors of other such services for the Partnership on
such terms and for such compensation or costs as the General Partner, in
its reasonable judgment, shall determine. 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.
6.03. Engagement of Affiliates. The General Partner may, on behalf and at
the expense of the Partnership, engage the General Partner or a firm in which
the General Partner, a Limited Partner, or a Partner, officer, director,
stockholder or
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Affiliate of any of them, has an interest, to render services to
the Partnership and/or the assets of the Partnership, provided that the fees or
other compensation payable for such services are specifically authorized by the
terms of this Agreement or are comparable to those prevailing in arm's-length
transactions for similar services and are approved by the Company's Board of
Directors.
6.04. Restrictions on Partnership Operations. Notwithstanding anything to
the contrary in this Agreement:
(a) The Partnership shall not commingle its funds with those of any
Affiliate or any other entity. Funds and other assets of the Partnership
shall be separately identified and segregated. All of the Partnership's
assets shall at all times be held by or on behalf of the Partnership, and,
if held on behalf of the Partnership by another entity, shall at all times
be kept identifiable (in accordance with customary usage) as assets owned
by the Partnership. The Partnership shall maintain its own separate bank
accounts, payroll and books of account.
(b) The Partnership shall pay from its own assets all obligations of
any kind incurred by the Partnership (other than organizational expenses).
(c) The Partnership shall take all appropriate action necessary to
ensure its existence as a limited partnership in good standing under the
laws of the State of Delaware.
(d) All financial statements, accounting records and other partnership
documents of the Partnership shall be maintained at an office separate from
those of any Affiliate or any other entity.
(e) The annual financial statements of the Partnership shall disclose,
in accordance with and to the extent required under generally accepted
accounting principles, any transactions between the Partnership and any
Affiliate.
(f) The Partnership shall at all times hold itself out to the public
(including any Affiliate's creditors) as a separate and distinct entity
operating under the Partnership's own name, and the Partnership shall act
solely in its own name and through its own authorized officers and agents.
(g) The Partnership shall pay out of its own funds salaries, if any,
of its officers and employees, and shall reimburse any Affiliate for any
service provided to the Partnership by such Affiliate (including those to
be provided pursuant to any lease, administrative or management services
agreement or other contract between the Partnership and any Affiliate) in
accordance with the terms of any such lease, agreement or other contract.
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6.05. Reimbursement of Certain Expenses of the General Partner.
(a) Except as provided in this Section 6.05 and elsewhere in this
Agreement (including in Articles IV and V) the General Partner shall not be
compensated for its services as general partner of the Partnership.
(b) 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, any expenses incurred by the General Partner in connection with
the management by the General Partner of any real property directly or
indirectly owned by the Partnership.
6.06. Operation in Accordance with REIT Requirements. The Partners
acknowledge and agree that the Partnership shall be operated in a manner that
will enable the Company to (i) satisfy the REIT requirements and (ii) avoid the
imposition of any federal income or excise tax liability. The Partnership shall
avoid taking any action which would result in the Company ceasing to satisfy
REIT requirements or which would result in the imposition of any federal income
or excise tax liability on the Company.
6.07. Withdrawal or Resignation, Etc. of General Partner.
(a) The General Partner shall not, without the prior written consent
or unanimous vote of all other Partners, voluntarily withdraw or resign as
a general partner of the Partnership or otherwise act with similar effect.
(b) If the General Partner withdraws, resigns or otherwise ceases to
be a General Partner pursuant to Section 9.01(a), its liability as a
general partner shall cease as provided in the Act, and the Partnership
shall promptly file an amendment to the Certificate and shall otherwise
take all steps reasonably necessary under the Act to cause such a cessation
of liability.
ARTICLE VII
Rights and Obligations of Limited Partners
7.01. Limited Liability. No Limited Partner shall be required to make
capital contributions to the Partnership in addition to those required under
Section 3.03. No Limited Partner shall be personally liable for any of the debts
of the Partnership or any of the losses thereof. However, the amount committed
by it to the capital of the Partnership and its
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interest in Partnership assets shall be subject to liability therefor.
7.02. No Participation in Management. A Limited Partner shall have no right
to control, and shall take no part in the management or control of, the
Partnership's activities or business, but may exercise the rights and powers of
a Limited Partner under this Agreement.
7.03. No Authority to Act. A Limited Partner shall have no power to
represent, act for, sign for or bind the General Partner or the Partnership. The
Limited Partners hereby consent to the exercise by the General Partner of the
powers conferred on it by the Act and this Agreement.
7.04. Right to Examine Books and Records. A Limited Partner shall have the
right to examine the books and records of the Partnership (including without
limitation the names and addresses of all Partners) as provided in Section
10.01, including the right to have such examination conducted without expense to
the Partnership by any reasonable number of persons designated by such Limited
Partner.
7.05. Right to Copy of Certificates. Upon specific written request of any
Limited Partner, the General Partner shall deliver or mail to such Limited
Partner a copy of the Certificate or any certificate of amendment or other
certificate required to be filed with the Secretary of State of the State of
Delaware or with any other state or province. The General Partner shall have no
obligation to deliver or mail any such certificate to a Limited Partner in the
absence of such specific written request.
7.06. Limitation on Withdrawal, Etc. A Limited Partner shall have no right
to withdraw from the Partnership or to institute an action for dissolution of
the Partnership, except in accordance with the provisions of the Act or except
as provided in this Agreement.
7.07. Right to Return of Contributions. No Limited Partner shall be
entitled to the return of any portion of its Capital Contributions except as
provided in Section 5.03 or to the extent, if any, that distributions made, or
deemed to be made, pursuant to this Agreement may be considered as such by law,
or by unanimous agreement of the Partners, or upon dissolution of the
Partnership.
ARTICLE VIII
Transferability of Partners' Interests
8.01. Transfers of Partners' Interest. No Partner's Partnership Interest
(including either any portion or the
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entirety thereof) shall be sold, transferred, assigned, pledged, hypothecated or
otherwise disposed of or encumbered, other than to another Partner.
8.02. Requirements as to Costs and Acceptance of Agreement. The General
Partner, as a condition to any sale, transfer or assignment of a Partnership
Interest, may require that any purchaser, transferee or assignee pay to the
Partnership such amount as is determined by the General Partner to be sufficient
to pay all costs, including a share of allocated overhead costs, and legal fees
and expenses, to be incurred in implementing any proposed transfer. Further,
Partnership Interests may only be sold, transferred or assigned if the proposed
purchaser, transferee or assignee agrees in written form satisfactory to the
General Partner to be bound by this Agreement as then in effect and gives notice
to the General Partner of the consummation of such sale, transfer or assignment.
The effective date of such sale, transfer or assignment shall be the date
determined by the General Partner, which shall in no event be later than the
last day of the calendar month in which the General Partner receives notice
thereof.
8.03. Admission of Substituted Limited Partners. Notwithstanding anything
in this Article to the contrary, any purchaser, transferee or assignee of a
Partnership Interest shall become a substituted Limited Partner only with the
consent of the General Partner, which consent may be granted or refused within
the General Partner's discretion, and only upon compliance with all applicable
provisions of law. No sale, transfer or assignment shall release the selling,
transferring or assigning Limited Partner from any of its obligations under this
Agreement unless its purchaser, transferee or assignee becomes a substituted
Limited Partner.
8.04. Nonpermitted Attempted Transfers. Any purported sale, transfer,
assignment, pledge, hypothecation or other disposition of a whole or any part of
a Partnership Interest which is not made in compliance with this Article shall
be null and void ab initio.
ARTICLE IX
Dissolution and Termination
9.01. Events Causing Dissolution. This Partnership shall be dissolved by
the occurrence of any of the following events:
(a) The bankruptcy or any other event of withdrawal of a general
partner within the meaning of the Act (including any retirement or transfer
described in Article VIII, in violation of the requirements of said
Article), or any other event which under the Act causes a dissolution of a
partnership; provided, however, that an event of withdrawal of a general
partner shall not be a
15
dissolution event if there is a continuing general partner;
(b) Expiration of the term of the Partnership as set forth in Section
2.05;
(c) The completion of the sale or other disposition of all or
substantially all of the Partnership assets;
(d) The affirmative vote of all of the Partners adopting an amendment
to this Agreement providing for the dissolution of the Partnership.
9.02. Continuation by Action of the Partners. Notwithstanding Section
9.01(a), if any event of withdrawal of a general partner under the Act would
otherwise cause dissolution of the Partnership, such dissolution shall not occur
if all remaining Partners (or such lesser percentage of such Partners as may be
permitted by the Act, but in no event less than a majority in interest of the
Limited Partners) within ninety (90) days of the occurrence of such event, agree
in writing to the continuation of the Partnership and to the appointment of one
or more additional general partners as necessary or desired. If the Partnership
is so continued, the withdrawing or expelled General Partner may withdraw
capital contributions and other amounts to which it is properly entitled on such
terms as may be set in the reasonable discretion of the successor General
Partner.
9.03. Liquidation. Upon a dissolution of the Partnership, the General
Partner, or if there is no remaining General Partner, then an agent (the
"Liquidating Agent"), designated for such purpose by the Limited Partners
holding a majority in interest of the Limited Partners' interests hereunder,
shall wind up the operations of the Partnership as promptly as shall be
practicable. Thereafter, all the assets of the Partnership, or the proceeds
therefrom if it shall have been decided as part winding up of operations to
liquidate the same, to the extent sufficient therefor, shall be paid or applied
and distributed in the following order:
(a) To the payment and discharge (or the making of adequate provision
for) all of the Partnership's debts and liabilities to persons other than
Partners;
(b) To the payment and discharge of all of the Partnership's debts and
liabilities to Partners (other than in respect of their Partnership
Interests); and
(c) Finally, the balance of such assets or proceeds shall be
distributed on an asset by asset basis among the Partners in accordance
with the balances in their respective Capital Accounts (any distributions
in kind to be based upon their values as reasonably determined during the
winding up of Partnership operations). If the General Partner, at the time
of distributions pursuant to this paragraph, shall have a deficit
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Capital Account, it shall contribute to the Partnership an amount sufficient to
eliminate such deficit.
Distributions upon liquidation of the Partnership (or any Partner's
interest in the Partnership) and related adjustments shall be made by the end of
the taxable year of the liquidation (or, if later, within 90 days after the date
of such liquidation) or as otherwise permitted by the Regulations.
ARTICLE X
Books and Records; Accounting and Tax Matters
10.01. Books and Records. The books and records of the Partnership shall be
kept in accordance with tax accounting principles, reflecting all Partnership
transactions, and shall be appropriate for the Partnership's operations. Each
Partner shall have reasonable access to the Partnership's books and records at
the location or locations where such books and records are maintained.
10.02. Tax Elections. The Partnership shall make such tax elections as it
may deem appropriate, including, but not limited to, an election under Section
754 of the Code, in accordance with applicable procedures.
10.03. Tax Matters Partner. The General Partner is designated as the "Tax
Matters Partner" as that term is used in Section 6231(a)(7)(A) of the Code.
ARTICLE XI
Amendments
11.01. General Amendment Requirements. Except as otherwise set forth in
this Article, this Agreement may be amended in whole or in part upon the
unanimous vote or written consent of all Partners. A change in Exhibit A, made
by the General Partner in accordance with the provisions of this Agreement,
shall not be deemed an amendment.
11.02. Additional Restrictions. Notwithstanding anything to the contrary,
and in addition to the foregoing, no amendment to Section 8.01 or any portion of
this Section 11.02 relating to Section 8.01 shall become effective unless also
approved by the Company's Board of Directors.
11.03. Corrective or Technical Amendments. Notwithstanding Section 11.01,
and subject to the limitation set forth in Section 11.02, the General Partner is
authorized to amend this Agreement in any way deemed necessary or desirable by
it (a) for the purposes of curing any formal defect, omission, or
17
inconsistency therein, or (b) to satisfy mandatory governmental requirements.
Notice of each such amendment shall be given to all other Partners no later than
sixty (60) days after the execution or the effective date thereof, whichever
shall be the later.
ARTICLE XII
Miscellaneous
12.01. Exculpation and Indemnification.
(a) Exculpation. The doing of any act or the failure to do any act by
the General Partner, its directors, officers, employees and agents, or the
Liquidating Agent, the effect of which may cause or result in loss or
damage to the Partnership, if done pursuant to advice of legal counsel
employed by or on behalf of the General Partner on behalf of the
Partnership, or if done to promote the best interests of the Partnership,
shall not subject any such person to any liability to the Partnership or
the Partners; provided, that the foregoing shall not relieve any person of
liability hereunder if it shall have been determined by a court of
competent jurisdiction that such person acted so as to be liable for actual
fraud, willful misfeasance, gross negligence or reckless disregard of the
duties involved in the conduct of its or his office, which liability shall
survive such person's ceasing to hold its or his office and any dissolution
of the Partnership.
(b) Indemnification. The Partnership shall indemnify any Partner who
was or is a party or is threatened to be made a party to any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative, by reason of the fact that it is or was a
Partner against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually or reasonably incurred by it in
connection with such action, suit or proceeding if it acted in good faith
and in a manner it reasonably believed to be or not opposed to the best
interests of the Partnership.
12.02. Power of Attorney.
(a) Each Limited Partner does hereby make, constitute and appoint the
General Partner and any successor thereto, each with full power of
substitutions, as its true and lawful attorney with respect to affairs of
the Partnership, for it and in its name, place and stead and for its own
use and benefit to:
(i) Execute, swear to, acknowledge, deliver, file and record on
its behalf in the appropriate public offices and publish (1) the
Certificate; (2) all instruments which the General Partner deems
appropriate to reflect any amendment, change (including but not
limited to a change of membership) or
18
modification of the Partnership in accordance with the terms of this
Agreement; (3) certificates of fictitious or assumed name; (4) all
certificates and other instruments and all amendments thereto which
the General Partner deems appropriate or necessary to qualify, or to
continue the qualification of, the Partnership as a limited
partnership wherein a limited partner has limited liability in any
jurisdiction in which the Partnership may conduct business; (5) all
conveyances and other instruments or documents which the General
Partner deems appropriate or necessary to reflect the dissolution and
termination of the Partnership pursuant to the terms of this
Agreement; and (6) consents to the withdrawal or reduction of a
Limited Partner's invested capital.
(ii) Take any actions, comparable to those set forth in Section
12.02(a)(i), with respect to any partnership or comparable
organization in which the Partnership owns an interest.
(b) The power of attorney granted under Section 12.02(a) by the
Limited Partners to the General Partner is a special power of attorney
coupled with an interest and is irrevocable. It may be exercised by said
General Partner for the Limited Partners by a facsimile signature of one of
the officers of the General Partner or by listing all of the Limited
Partners executing any instrument over the signature of one of the General
Partner's officers acting as Attorney in Fact for all of them. It will
survive the delivery of any assignment by a Limited Partner of the whole or
any portion of its Partnership Interest, except that in cases in which the
assignee thereof has been approved by the General Partner for admission to
the Partnership as a substituted Limited Partner, the power of attorney
shall survive the delivery of such assignment for the sole purpose of
enabling the General Partner to execute, acknowledge and file instruments
necessary to effect such substitution.
12.03. Notices. Any notice, payment, demand, or other communication
required to be given by any provision of this Agreement shall be made in writing
and shall be deemed to have been delivered and given for all purposes (i) if
delivered personally to the party to whom the same is directed, or (ii) whether
or not the same is actually received, if sent by facsimile, telex or by
registered or certified mail, return receipt requested, postage and charges
prepaid addressed to the last address of the relevant party provided upon
execution of this Agreement or by notice hereunder; and shall be deemed to be
given as the date delivered if delivered personally, or the first business day
following the date of transmission by facsimile or telex, or five (5) days after
the date on which the same was deposited in the mail, addressed and sent as
aforesaid.
12.04. Section Headings. Section and other headings contained in this
Agreement are for reference purposes only and are in no way intended to
describe, interpret, define or limit
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the scope, extent or intent of the Agreement or any provisions thereof.
12.05. Severability. Each provision of this Agreement is intended to be
severable. If any term or provision hereof is illegal or invalid for any reason
whatsoever, such illegality or invalidity shall not affect the validity of the
remainder of the Agreement.
12.06. Governing Law. The law of the State of Delaware shall govern the
validity of this Agreement, the construction of its terms and the interpretation
of the rights and duties of the parties hereto.
12.07. Counterparts. The Agreement may be executed in any number of
counterparts with separate signature pages, with the same effect as if all
parties hereto had signed the same document. All counterparts shall be construed
together and shall constitute one Agreement.
12.08. Parties in Interest. Subject to the provisions contained in Article
VIII hereof, each and every covenant, term, provision and agreement herein
contained shall be binding upon and inure to the benefit of the successors and
assigns of the respective parties hereto.
12.09. Words. Whenever the singular number is used herein, and required by
the context, the same shall include the plural, and vice versa. The masculine
gender, when used herein shall include the feminine and neuter genders, and vice
versa, and the word "person" shall include any corporation, firm, partnership or
other form of association.
12.10. Integrated Agreement. This Agreement constitutes the entire
understanding and agreement among the parties hereto with respect to the subject
matter hereof, and there are no agreements, understandings, restrictions,
representations or warranties among the parties other than those set forth
herein or herein provided for.
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IN WITNESS WHEREOF, this Agreement has been executed as of the date first
above written.
GENERAL PARTNER:
PHILIPS SUB [ ], INC.
By:
-----------------------------------
LIMITED PARTNER:
--------------------------------------
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EXHIBIT A
LIMITED PARTNERS
----------------
Capital
Name and Address Contribution
---------------- ------------
EXHIBIT B
DESCRIPTION OF THE PROPERTY
---------------------------