Exhibit 99.5
AGREEMENT OF LIMITED PARTNERSHIP
OF
RD PROPERTIES, L.P. VIB
AGREEMENT OF LIMITED PARTNERSHIP dated as of May 6, 1998 by and
between RD New York VI, LLC, as general partner, and the entity listed on
Schedule A hereto, as limited partner.
WHEREAS, the Partnership was formed by the filing of a certificate of
limited partnership executed as of April 13, 1998.
WHEREAS, the General Partner, the Partnership, and the Limited Partner
desire to continue a limited partnership under the Delaware Revised Uniform
Limited Partnership Act for the limited purposes and subject to the terms and
conditions set forth in this Agreement.
NOW, THEREFORE, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. Definitions. As used herein, the following terms have the
following meanings:
"Act" means the Delaware Revised Uniform Limited Partnership Act, as
amended from time to time. Any and all references to specific provisions of the
Act shall be deemed to refer to any corresponding provisions of any succeeding
law.
"Affiliate", with respect to any Person, means (i) any Person directly
or indirectly controlling, controlled by, or under common control with, such
Person, (ii) any Person directly or indirectly owning or controlling 10% or more
of the outstanding voting securities of such Person, (iii) any officer, partner,
director or trustee of such Person, (iv) if such Person is an officer, partner,
director or trustee, any Person for which such Person acts in any such capacity,
and (v) as to any Person or any officer, partner, director or trustee mentioned
above who is an individual, the members of the immediate family of such
individual. For purposes of this definition, "control" means possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of a Person, whether through the ownership of voting
securities, by contract or otherwise.
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"Agreement" means this Agreement of Limited Partnership, as amended
from time to time.
"Business Day" means any day except a Saturday, Sunday or other day on
which commercial banks in New York, New York are authorized by law to be closed.
"Capital Account" has the meaning set forth in Section 6.3
"Capital Contribution" means, with respect to any Partner, the amount
specified as such Partner's Capital Contribution on Schedule B.
"Capital Contribution Percentage" means, with respect to any Partner,
the percentage specified as such Partner's Capital Contribution Percentage on
Schedule B.
"Closing Date" means the first date on which the Partnership acquires
Shares pursuant to the Contribution Agreement.
"Code" means the Internal Revenue Code of 1986, as amended from time
to time. Any and all references to specific provisions of the Code shall be
deemed to refer to any corresponding provisions of any succeeding law.
"Contribution Agreement" means the Contribution and Share Purchase
Agreement, dated as of April 15, 1998, among the Contributing Owners identified
therein, the Contributing Entities identified therein, RD Properties, L.P. VI,
RD Properties, L.P. VIA, RD Properties, L.P. VIB, ▇▇▇▇ Centers Trust and ▇▇▇▇
Centers Limited Partnership.
"Disposition" means the sale, exchange, transfer or other similar
disposition of all or any portion of the Investment; provided that "Disposition"
shall not include any tax-deferred exchange under the Code.
"Distributable Proceeds" means cash proceeds received by the
Partnership in excess of the aggregate amount of any then payable Partnership
Expenses.
"Effective Date" means the date of this Agreement.
"Event of Default" means the failure by the General Partner to perform
any of its material obligations under this Agreement, which failure shall not
have been cured by the General
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Partner within ten (10) Business Days after the receipt by the General Partner
of written notice of the occurrence of such failure by a Limited Partner,
provided that if such failure is capable of being cured but cannot be cured with
diligent efforts within such period of 10 Business Days and if the General
Partner has commenced to cure such failure within such period of 10 Business
Days, no Event of Default shall be deemed to have occurred unless either (a) the
General Partner ceases to proceed diligently to cure such failure or (b) such
failure is not cured within fifteen (15) days after the receipt by the General
Partner of such written notice of the occurrence of such failure by a Limited
Partner.
"Fair Market Value" means an amount equal to either (a) the average of
the closing prices for the common shares of beneficial interest of ▇▇▇▇ Centers
Trust, as officially reported on the principal national securities exchange on
which the common shares of beneficial interest of ▇▇▇▇ Centers Trust are then
listed or admitted for trading, during the twenty (20) consecutive days
immediately preceding the specified valuation date, or (b) if the common shares
of beneficial interest of ▇▇▇▇ Centers Trust are not then listed or admitted for
trading on any national securities exchange but are designated as a national
market system security by the National Association of Securities Dealers, Inc.
(the "NASD"), the average of the closing bid and asked prices for the common
shares of beneficial interest of ▇▇▇▇ Centers Trust as shown by the NASD
automated quotation system, during the twenty (20) days immediately preceding
the specified valuation date, or (c) if the common shares of beneficial interest
of ▇▇▇▇ Centers Trust are not then listed or admitted for trading on any
national exchange or quoted in the over-the-counter market, then the value as
determined by an independent appraiser mutually agreeable to the General Partner
and the Limited Partner. Except as specifically provided herein, if as of any
date of determination of Fair Market Value the number of outstanding common
shares of beneficial interest of ▇▇▇▇ Centers Trust is (a) less than 40 million
but equal to or greater than 30 million, the Fair Market Value shall mean the
average closing price as calculated above multiplied by 97.5%, (b) less than 30
million but equal to or greater than 20 million, the Fair Market Value shall
mean the average closing price as calculated above multiplied by 95%, or (c)
less than 20 million, the Fair Market Value shall mean the average closing price
as calculated above multiplied by 92.5%.
"Fiscal Period" means, with respect to any specified period, such
period treated as a single accounting period.
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"Fiscal Year" has the meaning set forth in Section 2.5.
"General Partner" means, at any time, any Person who, at such time,
serves as a general partner of the Partnership and is either RD New York VI,
LLC, or an Affiliate thereof admitted as a general partner pursuant to Section
10.1.
"Interest" means, with respect to any Partner, the interest of such
Partner in the Partnership at any particular time, including the rights and
obligations of such Partner as provided in this Agreement and the Act.
"Interest Percentage" means, with respect to any Partner, the
percentage specified as such Partner's Interest Percentage set forth on Schedule
C.
"Investment" means the acquisition, owning and holding by the
Partnership of a number of Shares equal to (i) (a) the excess of $17,001,000
plus any interest earned thereon prior to the Closing Date less (b) the
Partnership Expenses payable on or about the Closing Date divided by (ii) $7.50.
"Limited Partner" means, at any time, any Person who is at such time a
limited partner of the Partnership, and shall include any Person admitted to the
Partnership as a limited partner pursuant to Section 11.3. While this Agreement
may refer in the plural to Limited Partners, if any time there is only one
Limited Partner, such reference shall be deemed to refer in the singular to the
sole Limited Partner.
"▇▇▇▇ Centers Trust" means ▇▇▇▇ Centers Trust, a Maryland trust
(expected to be renamed Acadia Realty Trust upon consummation of the
transactions contemplated by the Contribution Agreement) and its successors.
"Net Income" or "Net Loss" means the net income or net loss of the
Partnership for any Fiscal Period, as determined for federal income tax
purposes, with the following adjustments:
(i) any income of the Partnership that is exempt from federal
income tax and not otherwise taken into account in computing Net Income or
Net Loss hereunder shall be added to such taxable income or loss; and
(ii) any expenditures of the Partnership described in Code
Section 705(a)(2)(B) or treated as Code Section 705(a)(2)(B) expenditures
pursuant to applicable Regulations under Code Section 704 and not otherwise
taken into account
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in computing Net Income or Net Loss hereunder shall be subtracted
from such taxable income or loss.
"Partners" means, at any time, the General Partner and all of the
Limited Partners at such time. "Partner" means, at any time, any one of the
Partners at such time.
"Partnership" means RD Properties, L.P. VIB, the partnership formed
and governed by the terms of this Agreement, as such partnership may from time
to time be constituted.
"Partnership Expenses" has the meaning set forth in Section 3.4(a).
"Person" means any individual, partnership, joint venture,
corporation, limited liability company, trust or other entity.
"Preferred Return" has the meaning set forth in Section 6.2.
"Regulations" means the applicable Treasury Regulations, including
Proposed and Temporary Treasury Regulations, under the Code. Any and all
references herein to specific provisions of the Regulations shall be deemed to
refer to any corresponding successor provision.
"Required Partners" means at any time such Limited Partners having at
least sixty-six and two-thirds percent (66-2/3%) of the aggregate Capital
Contributions of all Limited Partners. While this Agreement may refer in the
plural to Required Partners, if at any time there is only one Limited Partner,
such reference shall be deemed to refer in the singular to the sole Limited
Partner.
"Shares" means common shares of beneficial interest of ▇▇▇▇ Centers
Trust to be acquired by the Partnership pursuant to the Contribution Agreement
and all common shares of beneficial interest which may thereafter be issued in
exchange for or on account of such shares.
"Sister Partnerships" means the other partnerships sponsored by the
General Partner or its Affiliates for purposes of acquiring common shares of
beneficial interest of ▇▇▇▇ Centers Trust pursuant to the Contribution
Agreement, which partnerships are listed on Schedule D, as well as any other
similar partnership which acquires common shares of beneficial interest
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of ▇▇▇▇ Centers Trust on the Closing Date pursuant to the
Contribution Agreement.
"Transfer" means a sale, exchange, transfer, assignment, or other
disposition of all or any portion of an Interest, either directly or indirectly,
to another Person. When used as a verb, the term "Transfer" shall have a
correlative meaning.
"UBTI" means "unrelated business taxable income" as defined in Code
Sections 511 through 514 or, where the context so requires, gross income
required to be taken into account in determining unrelated business taxable
income pursuant to Code Section 513.
"Unreturned Capital" means, as of any date, a Partner's aggregate
Capital Contributions reduced by the amount of cash (or the Fair Market Value of
the Shares distributed to such Partner pursuant to Sections 6.1(a)(ii) or 9.4(a)
(to the extent the distribution under such provision corresponds with a
distribution pursuant to Section 6.1(a)(ii)).
Certain defined terms which are intended to be used only within the
confines of a single Section of this Agreement are not necessarily defined or
referenced in this Section 1.1.
SECTION 1.2. Interpretation. In this Agreement, unless otherwise
specified, (a) singular words include the plural and plural words include the
singular; (b) words which include a number of constituent parts, things or
elements shall be construed as referring separately to each constituent part,
thing or element thereof, as well as to all of such constituent parts, things or
elements as a whole; (c) words importing any gender include the other gender;
(d) references to any Person include such Person's successors and assigns and,
in the case of an individual, the word "successors" includes such Person's
heirs, devisees, legatees, executors, administrators and personal
representatives, provided that the foregoing shall not negate the effect of any
rights, restrictions or conditions in this Agreement associated with any
assignment or other Transfer of any Interest of any Partner; (e) references to
any statute or other law include all applicable rules, regulations and orders
adopted or made thereunder and all statutes or other laws amending,
consolidating or replacing the statute or law referred to; (f) references to any
agreement or other document, including this Agreement, include all subsequent
amendments thereto or hereto or other modifications thereof or hereof entered
into in accordance with the provisions thereof or hereof; (g) the words
"include"
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and "including", and words of similar import, shall be deemed to be followed by
the words "without limitation"; (h) the words "hereto", "herein", "hereof" and
"hereunder", and words of similar import, refer to this Agreement in its
entirety; (i) references to Articles, Sections, paragraphs, Schedules and
Exhibits are to the Articles, Sections, paragraphs, Schedules and Exhibits of
this Agreement; and (j) numberings and headings of Articles, Sections,
paragraphs, Schedules and Exhibits are inserted as a matter of convenience and
shall not affect the construction of this Agreement.
SECTION 1.3. Consent and Approvals. In this Agreement, the words
"consent" and "approval" shall mean the prior written consent or approval of the
Partner or Partners having the right to consent or approve, which consent or
approval shall not be unreasonably withheld or delayed unless otherwise provided
in this Agreement, provided that no Partner shall be liable or responsible for
damages to any other Partner or the Partnership for its failure to respond to
any request for, or for its withholding or delay in giving, its consent or
approval.
ARTICLE II
GENERAL PROVISIONS
SECTION 2.1. Partnership Name. The name of the Partnership is RD
Properties, L.P. VIB.
SECTION 2.2. Principal Office; Delaware Office; Agent for Service of
Process. The principal executive office and business address of the Partnership
and the General Partner shall be c/o Acadia Management Company LLC, ▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ or such other place as the General
Partner shall determine in its discretion. The address of the registered office
of the Partnership in the State of Delaware is ▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇
▇-▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ 19901, or such other address as may be
designated from time to time by the General Partner. The Partnership's initial
agent for service of process shall be The ▇▇▇▇▇▇▇▇-▇▇▇▇ Corporation System,
Inc., ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇. The General Partner
shall give notice to the Limited Partners of any change in the principal
executive office or the business address of the Partnership or the General
Partner, the Delaware office, or in the name or address of the Partnership's
agent for service of process.
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SECTION 2.3. Purposes of the Partnership. The sole purposes of the
Partnership are to acquire, own, hold, sell, transfer, distribute, dispose of
and exercise control over the Investment in accordance with the terms hereof.
SECTION 2.4. Liability of Limited Partners Generally. Except as
otherwise provided in this Agreement or the Act, no Limited Partner shall be
obligated to make any contribution of capital or any payment to the Partnership
or have any liability for the debts and obligations of the Partnership.
SECTION 2.5. Fiscal Year. The fiscal year of the Partnership (the
"Fiscal Year") for financial statement and federal income tax purposes shall be
the calendar year.
ARTICLE III
MANAGEMENT AND OPERATIONS OF THE PARTNERSHIP
SECTION 3.1. Management Generally. The management and control of the
Partnership shall be vested exclusively in the General Partner. Except as
otherwise set forth herein, the Limited Partners shall have no part in the
management or control of the Partnership and shall have no authority or right to
act on behalf of the Partnership in connection with any matter.
SECTION 3.2. Authority of the General Partner. The General Partner
shall have all rights and powers that may be possessed by a general partner
under the Act on behalf and in the name of the Partnership to carry out any and
all of the objects and purposes of the Partnership and to perform all acts which
it may deem necessary or desirable in connection with the purposes for which the
Partnership was formed, including the power to acquire, own, hold, sell,
transfer, distribute, and vote or grant proxies to vote with respect to the
Investment.
SECTION 3.3. Major Decisions Requiring Consent of the Limited
Partners.
(a) Notwithstanding the provisions of Section 3.2, but subject to the
terms of this Agreement, the following powers of the Partnership shall be
exercised by the General Partner only with the consent of the Required Partners:
(i) (A) commencing on behalf of the Partnership a voluntary case
or other proceeding seeking liquidation, reorganization or other relief
with respect to the
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Partnership or its debts under any bankruptcy, insolvency,
reorganization or other similar law now or hereafter in effect; (B) seeking
the appointment of a trustee, receiver, liquidator, custodian or other
similar official in respect of any or all of the Investment; (C) consenting
to any such relief or to the appointment of or taking possession by any
such official in an involuntary case or other proceeding commenced against
the Partnership; or (D) making a general assignment for the benefit of
creditors;
(ii) permitting the Partnership to operate in such manner as to
be classified as an "investment company" for purposes of the Investment
Company Act of 1940;
(iii) doing any act in contravention of this Agreement or outside
the stated purposes of this Partnership or which would make it impossible
to carry on the business of the Partnership;
(iv) confessing a judgement against the Partnership in connection
with any threatened or pending legal action;
(v) causing the Partnership to incur any indebtedness;
(vi) paying or agreeing to pay any fee to any Partner or any
person known by the General Partner to be an Affiliate of any Partner,
except to the extent expressly provided or permitted to be paid in this
Agreement to such Partner or Affiliate; and
(vii) causing the acquisition, financing, refinancing or
disposition of any investment other than the acquisition of Shares.
SECTION 3.4. Expenses.
(a) The Partnership shall be responsible for and shall pay all
Partnership Expenses except to the extent that there are insufficient funds of
the Partnership to pay such Partnership Expenses or the General Partner shall
determine that it is not in the best interest of the Partnership to pay such
Partnership Expenses. The Partnership Expenses required to be paid by the
Partnership shall be paid only out of funds of the Partnership determined by the
General Partner to be available for such purpose. As used herein, the term
"Partnership Expenses" means all expenses or obligations of the Partnership or
otherwise
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incurred by the General Partner or any Affiliate of the General Partner or the
Limited Partner which are reasonable and enumerated in the items below:
(i) the Partnership's pro rata share of all
expenses including offering expenses related to the formation of the
Partnership, which in no event shall exceed, in the aggregate the
lesser of (a) $17,700 and (b) $125,000 times the percentage obtained by
dividing the aggregate purchase price for the Shares paid by the
Partnership by the sum of the aggregate purchase price paid for the
Shares by the Partnership and the aggregate purchase price paid by the
Sister Partnerships for common shares of beneficial interest of ▇▇▇▇
Centers Trust;
(ii) the Partnership's pro rata share of the actual
out-of-pocket expenses and overhead costs related to the operation of
the acquisition department of the General Partner and its Affiliates
from January 1, 1998 until the Closing Date (but in no event later than
December 31, 1998) incurred in connection with the acquisition of the
Shares, which in no event shall exceed $1,250,000 times the number of
days which have elapsed between January 1, 1998 and the Closing Date,
divided by 365, times the percentage obtained by dividing the aggregate
purchase price for the Shares paid by the Partnership by the sum of the
aggregate purchase price paid for the Shares by the Partnership and the
aggregate purchase price paid for common shares of beneficial interest
of ▇▇▇▇ Centers Trust by the Sister Partnerships;
(iii) the Partnership's pro rata share of the fees of
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & Associates, in connection with the delivery of a
fairness opinion (which total fees shall not exceed $100,000 plus
reimbursable expenses), times the percentage obtained by dividing the
aggregate purchase price for the Shares paid by the Partnership by the
sum of the aggregate purchase price paid for the Shares by the
Partnership and the aggregate purchase price paid for common shares of
beneficial interest of ▇▇▇▇ Centers Trust by the Sister Partnerships;
(iv) all costs and expenses incurred by the
Partnership in holding and disposing of the Investment;
(v) all expenses, if any, incurred by the
Partnership in connection with the registration,
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qualification or exemption of the Partnership under any
applicable federal, state, local or foreign law;
(vi) all expenses incurred by the Partnership in
connection with any litigation involving the Partnership (including the
cost of any investigation and preparation) and the amount of any
judgment or settlement paid in connection therewith (provided that
expenses reimbursed to the General Partner in connection with any
litigation brought by or on behalf of any Limited Partner against the
General Partner shall not constitute Partnership Expenses and the
General Partner shall be obligated to repay any reimbursement for such
expenses pursuant to this Section 3.4(a) if such litigation is resolved
against the General Partner), but nothing herein shall preclude the
exercise of any right of the General Partner to seek reimbursement of
any such expenses directly from such Limited Partner, and further
provided that expenses incurred or being incurred by the General
Partner or any of its Affiliates in connection with any litigation and
the amount of any judgment or settlement paid or payable in connection
therewith, as to which neither the General Partner nor any of its
Affiliates is entitled to indemnification pursuant to the provisions of
Section 8.1 hereof or otherwise shall not constitute Partnership
Expenses for which either the General Partner or any of its Affiliates
shall be entitled to be paid or reimbursed pursuant hereto and the
General Partner and any of its Affiliates shall be required to repay
any such expenses or amount earlier paid by the Partnership as
Partnership Expenses, immediately, upon a determination that it or they
are not entitled to indemnification hereunder;
(vii) except as limited by clause (vi) above, all
expenses for indemnity or contribution payable by the Partnership to
any Person, whether payable under Article VIII or otherwise;
(viii) all expenses incurred in connection with the
preparation of amendments to this Agreement;
(ix) all expenses incurred by the Partnership in
connection with the dissolution and liquidation of the
Partnership;
(x) all accounting and legal fees and expenses
incurred by the Partnership to independent accountants and counsel; and
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(xi) all legal fees and disbursements of counsel for
the Limited Partner incurred in connection with the negotiation,
preparation, execution and delivery of this Agreement and the
transactions contemplated hereby.
(b) Except as otherwise expressly provided in this Agreement,
Partnership Expenses shall not include the general overhead of the General
Partner or its Affiliates.
(c) If the transactions contemplated by the Contribution
Agreement are not consummated, the Limited Partner shall not be (i) liable or
responsible for any Partnership Expenses (unless the Limited Partner failed to
make its Capital Contribution as required hereunder) and (ii) entitled to any
portion of the "break-up" fee to be paid by ▇▇▇▇ Centers Trust upon termination
of the Contribution Agreement pursuant to Section 13(a)(iv), (v) or (vii)
thereof.
SECTION 3.5. Books and Records; Accounting Method;
Valuation.
(a) The General Partner shall keep or cause to be kept at the
address of the General Partner (or at such other place as the General Partner
shall advise the other Partners in writing) full and accurate books and records
of the Partnership. Such books and records shall be available, upon reasonable
advance notice to the General Partner, for inspection and copying at reasonable
times during business hours by each Limited Partner or its duly authorized agent
or representative.
(b) The Partnership's books of account shall be kept on the
same basis followed by the Partnership for federal income tax purposes, except
as otherwise provided herein and except to the extent the Limited Partner
requires different reporting, in which case the Limited Partner shall pay the
incremental cost of such reporting unless one or more Sister Partnerships also
use such reporting method.
SECTION 3.6. Tax Elections. The Partnership shall file its tax
returns as a partnership for federal, state and local income and other tax
purposes. No settlement of any tax issue involving the Partnership shall be made
by the General Partner without the approval of the Required Partners. The
General Partner, at the request of the Required Partners, shall make an election
to adjust the basis of the property of the Partnership under Code Section 754.
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SECTION 3.7. Tax Matters Partner.
(a) The General Partner is hereby designated as the "tax
matters partner" of the Partnership as defined in Section 6231 of the Code, and
any successor provisions (the "Tax Matters Partner").
(b) The Tax Matters Partner shall give prompt notice to the
Limited Partners of (i) the receipt by the Tax Matters Partner of written notice
that a federal, state or local taxing authority intends to examine the
Partnership's income tax returns for any year; (ii) receipt by the Tax Matters
Partner of written notice of a final Partnership administrative adjustment under
Code Section 6223; and (iii) receipt of any request by the Tax Matters Partner
from the Internal Revenue Service for waiver of any applicable statute of
limitations with respect to any tax return of the Partnership. In performing its
role as tax matters partner, the Required Partners shall have veto and approval
rights with respect to all decisions.
SECTION 3.8. Reliance by Third Parties. Persons
dealing with the Partnership are entitled to rely conclusively
upon the power and authority of the General Partner herein set
forth.
SECTION 3.9. Meetings of Partners.
(a) Partnership meetings shall be held at the Partnership's
principal executive office (unless another address is duly noticed by the
General Partner to all of the Partners), and shall be held (i) when called by
the General Partner or, (ii) as respects any matter on which the Limited
Partners may vote or are required to be consulted or to consent, when called by
any Limited Partners representing more than ten percent (10%) of the aggregate
Interest Percentages held by all of the Limited Partners. Notice of a meeting
shall be given in accordance with the provisions of Section 12.15, unless such
notice is waived by all of the Partners. Partners may participate in a meeting
of the Partnership through the use of conference telephones or similar
communication equipment, so long as all Partners participating in the meeting
can hear one another.
(b) Any action which may be taken at any meeting of the
Partners may be taken without a meeting if a consent in writing, setting forth
the action so taken, shall be signed by Partners having not less than the
minimum number of votes that would be necessary to authorize or take that action
at a meeting at which all Partners entitled to vote thereon were present and
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voted. Any written solicitation for the consent of any Limited Partner to the
taking of any action shall be simultaneously forwarded by the General Partners
to all of the other Limited Partners. Any action taken without a meeting as
provided in this Section 3.9(b) shall be effective as of the date for
effectiveness set forth in the written document evidencing such consent, or, if
no such date is set forth, then on the date upon which the last required
signature of a Partner thereon is obtained. The record date for determining
Partners entitled to give written consent to Partnership action without a
meeting shall be the day on which the first written consent is given. Similarly,
any action which may be taken only after obtaining the consent of the Required
Partners may be taken without a meeting if a consent in writing, setting forth
the action to be so taken, shall be signed by Partners having not less than the
minimum number of votes that would be necessary to authorize or take that action
at a meeting at which all Partners entitled to vote thereon were present and
voted.
ARTICLE IV
INVESTMENTS AND INVESTMENT OPPORTUNITIES
SECTION 4.1. Investments Generally.
The assets of the Partnership shall consist solely of the
Shares, and any cash from time to time distributed to the Partnership with
respect thereto which may be invested pending distribution to the Partners as
set forth hereunder.
SECTION 4.2. Partner Investments. Nothing in any other
provision of this Agreement shall limit the right of the Partners or any of
their Affiliates, and each of them shall be permitted without first having
consulted with any other Partner to engage in or conduct any other business.
SECTION 4.3. Additional Rights of Limited Partner with
Respect to the Investment.
(a) Right of First Preference for Preferred Stock.
(i) If, following the Closing Date, ▇▇▇▇ Centers Trust engages
in an offering of preferred stock convertible into common shares of beneficial
interest of ▇▇▇▇ Centers Trust (the "Offered Stock"), it has agreed, pursuant to
the Contribution Agreement, to use its commercially reasonable efforts to
provide the Limited Partner and the limited partners of the Sister Partnerships
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(collectively, with the Limited Partner, the "Sister LPs" and individually, a
"Sister LP") with a right of first preference to purchase shares of Offered
Stock in the first offering or offerings with respect to an aggregate of $75
million (the "Offering") of such Offered Stock which occurs subsequent to the
Closing Date, on terms and conditions which will be identical to the offer and
sale of such Offered Stock to investors other than the Sister LPs.
Notwithstanding the foregoing, up to $10 million of the Offering may be reserved
for Persons other than the Sister LPs. If the Offering is increased to up to $90
million, the excess of the amount of the Offering over $75 million may also be
reserved for Persons other than the Sister LPs, and if the Offering is increased
to above $90 million, the right of first preference to purchase shares of
Offered Stock in favor of the Sister LPs shall equal the sum of (I) $65 million
and (II) the lesser of (A) $10 million and (B) the excess of (i) the amount of
the Offering over (ii) $90 million.
(ii) The Partners hereby acknowledge that the terms of the
Offered Stock will be subject to the discretion of ▇▇▇▇ Centers Trust.
Notwithstanding the foregoing, the General Partner, as authorized in the
Contribution Agreement, hereby grants to the Limited Partner, and agrees to use
its best efforts to cause ▇▇▇▇ Centers Trust to offer to the Limited Partner,
the right to acquire at least its pro rata share of the Offered Stock. The
General Partner hereby agrees that the Sister LPs shall have the right to
acquire the Offered Stock, if any, in accordance with the following procedures:
1. If the Limited Partner and the other Sister LPs elect to
acquire all or any portion of the Offered Stock, then the
Limited Partner may acquire up to its pro rata share of the
Offered Stock. Such pro rata share shall be determined by
multiplying the number of shares of Offered Stock times a
fraction, the numerator of which is the number of Shares
acquired by the Partnership and the denominator of which is
the aggregate number of Shares and common shares of beneficial
interest of ▇▇▇▇ Centers Trust acquired by the Partnership and
the Sister Partnerships.
2. If any Sister LP elects not to purchase all or any portion
of its pro rata share of the Offered Stock, the General
Partner will use its best efforts to cause ▇▇▇▇ Centers Trust
to offer to the Limited Partner and the other Sister LPs the
right to purchase some or all of the remaining Offered Stock.
The Limited Partner and those other Sister LPs desiring to
purchase additional
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shares of Offered Stock may purchase up to their pro rata
share as determined above of the remaining Offered Stock until
such remaining Offered Stock is either purchased or the
Limited Partner and the other Sister LPs no longer desire to
purchase any additional Offered Stock.
(b) Registration Rights. Reference is made to the form of
Registration Rights and Lock-Up Agreement attached as Exhibit E to the
Contribution Agreement (the "Registration Rights Agreement"). To the extent the
final Registration Rights Agreement entered into on the Closing Date does not
provide that the rights of the Partnership thereunder are automatically
assignable to transferees of the Shares, the General Partner, on behalf of the
Partnership, hereby agrees to assign such rights to the Limited Partners upon
any distribution of the Shares from the Partnership and the General Partner will
cause the Partnership to execute and deliver any and all documents necessary to
effect such assignment.
(c) Tag-Along Rights. (i) If the General Partner or any
Affiliate of the General Partner (collectively with the General Partner, a "GP
Affiliate") desires to sell or otherwise dispose of (other than a pledge in
connection with a borrowing) any common shares of beneficial interest of ▇▇▇▇
Centers Trust, options to purchase common shares of beneficial interest of ▇▇▇▇
Centers Trust (not including the exercise of employee stock options granted to
such GP Affiliate who is an officer of ▇▇▇▇ Centers Trust), operating
partnership units of ▇▇▇▇ Centers Limited Partnership or other securities
convertible into or exchangeable for common shares of beneficial interest of
▇▇▇▇ Centers Trust (collectively, "MCT Securities") held by it to any other
Person other than a GP Affiliate (a "Third Party Sale"), the GP Affiliate shall,
at least thirty (30) Business Days prior to the proposed closing date of such
Third Party Sale, give written notice to the Limited Partner describing such
Third Party Sale in reasonable detail including the price offered and all
material terms and conditions of the Third Party Sale.
(ii) The Limited Partner shall have the right and the option,
by written notice given to the selling GP Affiliate within fifteen (15) Business
Days prior to the closing of such Third Party Sale, to sell in such Third Party
Sale the same percentage of the total number of Shares held by the Partnership
(or direct the Partnership to sell such number of Shares) as the number of MCT
Securities to be sold by the selling GP Affiliate or Affiliates represents to
all MCT Securities held by such GP Affiliate or Affiliates.
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(iii) In the event a Third Party Sale is proposed, the right
granted under this Section 4.3(c) shall be exercisable by the Partnership at the
written request of the Limited Partner.
(d) Pre-emptive Rights. In the event that any GP Affiliate
receives pre-emptive rights to acquire MCT Securities (the "Pre-emptive
Rights"), such GP Affiliate shall grant to the Limited Partner and/or use its
best efforts to cause ▇▇▇▇ Centers Trust (or other giver of Pre-emptive Rights)
to grant to the Limited Partner and the other Sister LPs Pre-emptive Rights to
acquire, on terms no less favorable than those offered to the GP Affiliates, the
same aggregate number of MCT Securities as are subject to the Pre-emptive Rights
offered to such GP Affiliates. Of such Pre-emptive Rights to be given to the
Sister LPs, the Limited Partner shall be entitled to acquire its pro rata share
of such MCT Securities. Such pro rata share shall be determined in the same
manner as is set forth in Section 4.3(a)(ii).
(e) Pass-through of Right to Purchase. In the event that ▇▇▇▇
Centers Trust commences a rights offering for any securities or other similar
offering of rights or securities to its shareholders, the Limited Partner may
exercise the rights granted to shareholders of ▇▇▇▇ Centers Trust, as if it were
a shareholder with respect to the Shares not otherwise previously distributed to
it pursuant to this Agreement; provided the cost of exercising such rights shall
be paid directly by the Limited Partner.
(f) Voting Proxy. Notwithstanding anything else contained in
this Agreement, the General Partner hereby constitutes and appoints the Limited
Partner its true and lawful attorney, agent and proxy to exercise all voting
rights of shareholders of ▇▇▇▇ Centers Trust with respect to the number of
Shares owned by the Partnership which would otherwise be distributable to the
Limited Partner if the Partnership were liquidated.
(g) Any purchase of securities pursuant to Sections 4.3(a),
(d) and (e) hereof (i) which are required to be purchased in the name of the
Partnership, shall be purchased by the Partnership (upon a contribution of cash
by the Limited Partner therefor) and shall immediately be distributed by the
Partnership to the Limited Partner (ii) shall not be deemed property of the
Partnership and (iii) shall not be subject to the provisions of this Agreement,
including without limitation, the provisions relating to the Preferred Return,
Carried Interest or distributions.
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(h) The provisions of Sections 4.3(c) through (f) hereof shall
terminate upon the earlier to occur of (i) the termination or dissolution of the
Partnership and (ii) thirty (30) months after the Closing Date (collectively,
the "Expiration Date"). The provisions of Section 4.3(a) shall survive the
termination or dissolution of the Partnership only if an offering of Offered
Securities has not occurred prior to the Expiration Date and the General Partner
will do whatever is necessary to confirm the continuation of such rights to the
Limited Partner. The provisions of Section 4.3(b) shall survive the termination
or dissolution of the Partnership.
ARTICLE V
CAPITAL CONTRIBUTIONS
SECTION 5.1. Capital Contributions.
(a) Each Partner hereby agrees to make Capital Contributions
to the Partnership in the amount set forth on Schedule B on or before five
business days prior to the Closing Date. The General Partner shall send a
written notice to each Limited Partner at least five business days before the
date on which the Capital Contribution is to be made. All Capital Contributions
shall be paid to the Partnership in immediately available funds in United States
dollars by 2:00 p.m. (New York time) on the date specified by the General
Partner. The General Partner may pursue any remedies available to the
Partnership, in law or at equity, against any Partner who fails to make a
Capital Contribution as required pursuant to this Agreement, including the
commencement of an action seeking specific performance and/or damages, and after
the closing of the transactions contemplated by the Contribution Agreement, if
the Limited Partner has failed to make all or a portion of its Capital
Contribution, the General Partner's rights hereunder to pursue such remedies may
be exercised by ▇▇▇▇ Centers Trust directly. Notwithstanding the foregoing, the
Partners shall not be obligated to make Capital Contributions as described
herein if (i) there is an amendment to the Contribution Agreement that could
reasonably be expected to be materially adverse to the Investment, the Limited
Partner or the Partnership, (ii) the General Partner (or an Affiliate of the
General Partner) waives a condition to closing under the Contribution Agreement
which could reasonably be expected to be materially adverse to the Investment,
the Limited Partner or the Partnership, or (iii) there is any increase over $25
million in the aggregate amount of Offered Stock offered to, or reserved for,
any Person other than the Limited Partner and the Sister
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LPs. For purposes hereof, any change to (i) the purchase price per Share, (ii)
the aggregate amount to be invested by the Partnership and all of the Sister
Partnerships in excess of $120 million, (iii) the aggregate number of and
percentage of the outstanding common shares of beneficial interest of ▇▇▇▇
Centers Trust represented by the Shares to be purchased, as compared with such
number and percentage assuming a purchase by the Partnership and the Sister
Partnerships of 16 million common shares of beneficial interest of ▇▇▇▇ Centers
Trust at $7.50 per share, or (iv) the right of first preference to purchase
Offered Stock, shall be deemed to be materially adverse to the Investment, the
Limited Partner and the Partnership.
(b) If the closing under the Contribution Agreement does not
occur for any reason by the earlier of December 31, 1998 and the termination of
the Contribution Agreement, the General Partner shall promptly, and in no event
later than two (2) Business Days after the earlier of such date and the
termination of the Contribution Agreement, pay to the Limited Partner an amount
equal to the Limited Partner's Capital Contribution plus all interest earned
thereon in immediately available funds to an account designated by the Limited
Partner, and the Limited Partner shall be released from and have no further
obligations hereunder.
SECTION 5.2. Temporary Investment of Funds. The General
Partner shall invest all cash held by the Partnership in money market
instruments which instruments shall be (i) debt instruments issued or guaranteed
by the United States or its agencies or instrumentalities maturing within six
months or less from the date of acquisition, (ii) commercial paper rated P-1 or
A-1 on the date of acquisition and maturing within six months or less from the
date of acquisition, (iii) overnight time deposits or other interest-bearing
deposits (whether or not insured) in national or state banks (a) having capital
and surplus of at least $1,000,000,000 and having a long-term senior debt rating
by Standard & Poor's Corporation of "A" or better (or an equivalent rating
issued by ▇▇▇▇▇'▇ Investors Service, Inc.) or (b) otherwise approved by the
Required Partners, (iv) money market mutual funds with assets of at least
$750,000,000 and investments comprised of debt with a credit rating of A1 or P1
or a substantially similar rating and (v) similar quality short-term
investments. Notwithstanding the foregoing, it is not expected that the
Partnership will retain any material cash balances. Any interest earned on
investments pursuant to this Section 5.2 shall be payable to the Partners pro
rata in accordance with their Interest Percentage in the event the Closing does
not occur or in the event the Closing does occur, shall be added to the Capital
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Contributions made hereunder, pro rata in accordance with the Partners' Interest
Percentage and shall be applied first to pay Partnership Expenses and second to
purchase Shares.
ARTICLE VI
DISTRIBUTIONS, CAPITAL ACCOUNTS AND ALLOCATIONS
SECTION 6.1. Distributions.
(a) Prior to the dissolution of the Partnership, the General
Partner shall cause the Partnership, to the extent of Distributable Proceeds, to
make distributions in cash, as soon as practicable (and in all events within two
(2) Business Days) after receipt of such proceeds, to the Partners as follows:
(i) first, to the Limited Partners in payment of
the preferred return described in Section 6.2 pro rata in accordance
with their Interest Percentages;
(ii) second, to the Partners, pro rata in accordance
with their respective amounts of Unreturned Capital until each such
Partner has received distributions pursuant to this Section 6.1(a)(ii)
in an aggregate amount equal to its Capital Contribution as of the date
of such distribution; and
(iii) third, (A) 80% to the Limited Partners, pro
rata in accordance with their respective Interest Percentages, and (B)
20% to the General Partner.
(b) The General Partner shall determine and distribute
Distributable Proceeds promptly (and in all events within two (2) Business Days)
after the Partnership receives cash proceeds.
(c) Notwithstanding anything in this Agreement to the
contrary, the Partnership shall make no distributions except to the extent
permitted under the Act.
(d) Intentionally Deleted.
(e) (i) Each Limited Partner shall have the right to cause the
Partnership to distribute to it a number of Shares as determined in
accordance with the following formula, at or about the times indicated
below:
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(A) At any time commencing after the eighteenth
(18th) month after the Closing Date, the product of (i)
one-third of the number of Shares held by the Partnership
and (ii) the Limited Partner's Interest
Percentage;
(B) At any time commencing after the twenty-fourth
(24th) month after the Closing Date, the greater of the
product of (i) (a) one-half of the number of Shares then
held by the Partnership and (b) the Limited Partner's
Interest Percentage and (ii)(a) two-thirds of the number
of Shares originally acquired by the Partnership less any
Shares distributed to the Limited Partner pursuant to
Section 6.1(e)(i)(A) and (b) the Limited Partner's
Interest Percentage;
(C) At any time commencing after the thirtieth
(30th) month after the Closing Date, the product of (i)
the number of Shares then held by the Partnership and
(ii) the Limited Partner's Interest
Percentage.
(ii) If any of the following shall occur: (a) both ▇▇▇▇
▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ are not executive officers of ▇▇▇▇
Centers Trust and spending a substantial portion of their time on the
management of ▇▇▇▇ Centers Trust, (b) a tender offer is initiated for
the shares of ▇▇▇▇ Centers Trust, (c) the closing price per share of
▇▇▇▇ Centers Trust common stock as officially reported on the principal
national securities exchange on which the shares are then listed or
admitted for trading is less than $7.50 per share for more than twenty
consecutive Business Days at any time after the last day of the
eighteenth full month after the Closing Date or the common shares of
beneficial interest of ▇▇▇▇ Centers Trust have been suspended from
trading or have been delisted, (d) either ▇▇▇▇ ▇▇▇▇▇▇▇ or ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ are the subject of a governmental investigation required to
be disclosed pursuant to Items 401(f)(2) through (6) of Regulation S-K
promulgated under the Securities Act of 1933, as amended (or any
successor regulation), (e) the bankruptcy, insolvency, or a similar
proceeding is instituted by or against the General Partner or ▇▇▇▇
Centers Trust, (f) the General Partner shall have breached its
obligations under this Agreement which breach has not been cured, or an
uncured Event of Default shall have occurred, (g) the funds from
operations (as described on Schedule E) per common share of beneficial
interest of
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▇▇▇▇ Centers Trust for the twelve-month period ending on March 31, 2000
as reported in the audited financial statements of ▇▇▇▇ Centers Trust
is less than $0.72, (h) the General Partner is removed pursuant to
Section 10.2, (i) either ▇▇▇▇ ▇▇▇▇▇▇▇ or ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ is no longer
a member of the board of trustees of ▇▇▇▇ Centers Trust, or (j) either
▇▇▇▇ ▇▇▇▇▇▇▇ or ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ has, as a result of a voluntary
decision, ceased to be an executive officer of ▇▇▇▇ Centers Trust who
spends a substantial portion of his time on the management of ▇▇▇▇
Centers Trust,
then each Limited Partner will have the right to cause the Partnership
to distribute to it, upon request, the number of Shares equal to (a)
the product of (A) the number of Shares then held by the Partnership
and (B) such Partner's Interest Percentage.
(iii) At the time a distribution is made pursuant to
Section 6.1(e)(i) or (ii) above, Section 6.7 shall apply and the
Interest Percentage of the Partners shall be recalculated to reflect
said distribution.
(iv) The General Partner's interest set forth in
Section 6.1(a)(iii) (the "Carried Interest") will remain in effect with
respect to distributed Shares until sixty months after the Closing Date
(which period shall end at such earlier time as may be designated by a
Limited Partner, but in no event earlier than thirty-six months after
the Closing Date) unless Shares distributed are actually sold
(including as Shares actually sold, any such Shares distributed to the
partners or members of the Limited Partners) by the Limited Partners
prior to such date. For any distributed shares sold prior to such date,
the Carried Interest will be calculated at the time of sale with
respect to the Shares sold based upon the sales price received by the
Limited Partner for such Shares, net of any broker fees and commissions
and other expenses and costs of sale, and paid from the Limited Partner
to the General Partner either in cash or shares, at the option of the
Limited Partner, in the manner set forth below. Upon sixty months after
the Closing Date (or such earlier date as may be determined by a
Limited Partner in accordance with this paragraph) the Carried Interest
shall be calculated based on the Fair Market Value (except that if the
Shares are treated as having been sold because the second parenthetical
in the first sentence of this paragraph applies, the last sentence of
the definition of Fair Market Value shall not be applied) and paid in
full, in cash or in shares (at the option of the Limited Partner),
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for all remaining Shares held by the Partnership, the Limited Partners
and the General Partner. If Shares are distributed pursuant to this
Section 6.1(e), for purposes of calculating the Carried Interest, (i)
dividends received on the Shares after the Shares have been distributed
shall be taken into account and (ii) the value of the Shares at the
time the Carried Interest is determined (rather than at the time the
Shares were distributed) shall be applied. At the time the Limited
Partner determines to sell Shares, the Limited Partner will consider,
but is not obligated to comply with, a request from the General Partner
to pay the Carried Interest to the General Partner in Shares in lieu of
cash.
(v) In order to avoid any duplication of fees, at
the time either (i) the Partnership sells any of its Shares or (ii)
following a distribution, a Limited Partner sells any of its Shares (in
either case, a "Triggering Event"), the Carried Interest will be
reduced to reflect (A) the aggregate "value" on the date of the
Triggering Event of the options for common shares of beneficial
interest of ▇▇▇▇ Centers Trust held by and/or previously exercised by
▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇ ▇▇▇▇▇▇▇▇▇ and (B) any extraordinary compensation
that has been paid by ▇▇▇▇ Centers Trust to ▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇
▇▇▇▇▇▇▇▇▇ (i.e., bonus compensation in excess of amounts customarily
paid to executive officers of public real estate investment trusts, as
reasonably determined by the Limited Partner) and the net present
value, calculated using a discount rate equal to Treasury Securities of
similar maturity, of amounts payable by ▇▇▇▇ Centers Trust to ▇▇▇▇
▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ as a result of a change in control (as
defined in any agreement between ▇▇▇▇ Centers Trust and either ▇▇▇▇
▇▇▇▇▇▇▇ or ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇) of ▇▇▇▇ Centers Trust (the "Excess
Compensation"). The Carried Interest for the Partnership will be
reduced by an amount equal to (a) the "value" of all vested options for
common shares of beneficial interest of ▇▇▇▇ Centers Trust held by
and/or previously exercised by ▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇ ▇▇▇▇▇▇▇▇▇ and the
Excess Compensation multiplied by (b) a fraction, the numerator of
which is the number of Shares sold by the Partnership or the Limited
Partner and the denominator of which is all of the issued and
outstanding common shares of beneficial interest of ▇▇▇▇ Centers Trust
and operating units of ▇▇▇▇ Centers Limited Partnership, on a fully
diluted basis. For purposes of this calculation, the "value" of the
options shall be determined using the Black-Scholes method.
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SECTION 6.2. Preferred Return. No later and no less frequently
than the thirtieth (30th) day following the close of each fiscal quarter, the
General Partner shall determine, based on a statement of operations and cash
flow for the Partnership, which need not be audited, and distribute to the
Limited Partners to the extent of Distributable Proceeds, pro rata in accordance
with their respective amounts of Unreturned Capital, an amount, in the
aggregate, equal to eight percent (8%) per annum of the average monthly balance
of such Partners' aggregate Unreturned Capital (the "Preferred Return")since the
last distribution of Distributable Proceeds. To the extent the Partnership is
unable to make a Preferred Return payment pursuant to this Section 6.2 in any
quarter, the unpaid amount of the Preferred Return will be compounded
semiannually at a rate of 8% per annum and paid in future quarters. No amounts
shall be distributed to Partners pursuant to Section 6.1 (other than Section
6.1(a)(i))or Section 9.4 if any Preferred Return amount required to be paid
under this Section 6.2 is accrued but unpaid. Amounts paid pursuant to this
Section 6.2 are intended to constitute payments of a preferred return for
capital within the meaning of Treasury Regulations ss. 1.514(c)-2(d)(2) and not
guaranteed payments within the meaning of Section 707(c) of the Code.
SECTION 6.3. Capital Accounts. (a) There shall be
established for each Partner on the books and records of the
Partnership an account (a "Capital Account"), which shall
initially be zero and which shall be adjusted as follows:
(i) The amount of cash contributed to the
Partnership by each Partner shall be credited to the Capital Account of
such Partner.
(ii) The amount of cash (or the fair market value of
other property as determined by the General Partner pursuant to this
Article VI, net of any liabilities assumed or taken subject to by the
Partners) distributed by the Partnership to each Partner shall be
debited against the Capital Account of such Partner.
(iii) The Net Income and Net Loss of the Partnership
(and the items entering into the determination thereof) allocated to
each Partner pursuant to this Article VI shall be credited to and
debited against, respectively, the Capital Account of such Partner.
(b) If all or any portion of an Interest is
transferred in accordance with this Agreement, the transferee
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shall succeed to the Capital Account of the transferor to the extent it relates
to the transferred Interest or portion thereof.
(c) The provisions of this Agreement relating to
the maintenance of Capital Accounts are intended to comply with applicable
Regulations under Code Section 704 and to provide for allocations which have
"substantial economic effect" within the meaning of those Regulations and shall
be interpreted and applied in a manner consistent with this intention.
SECTION 6.4. Allocations of Net Income and Net Loss.
(a) Net Income. Except as otherwise provided in this Article
VI, Net Income for each Fiscal Year shall be allocated in the following order:
(i) first, if any Net Loss has been previously
allocated to the Partners, reversing the prior allocations of Net Loss
on a most recent in time basis until the cumulative amount allocated
pursuant to this Section 6.4(a)(i) equals the cumulative amount of Net
Loss previously so allocated; and
(ii) second, to the Partners in an amount equal to
the distributions made to each Partner (or which would be made to each
Partner, if the Partnership distributed cash in an amount equal to such
Net Income) pursuant to Section 6.1(a).
(b) Net Loss. Except as otherwise provided in this Article VI,
Net Loss for each Fiscal Year shall be allocated to the General Partner and the
Limited Partners in proportion to their Interest Percentages.
(c) Miscellaneous. Any Net Income or Net Loss allocated to the
Limited Partners shall be allocated among the Limited Partners pro rata in
accordance with their Interest Percentages.
SECTION 6.5. Other Allocations.
(a) Other Allocation Rules.
(i) To the extent required by Code Section 704 and
the Regulations thereunder, income, gain, loss, deduction and credit
with respect to any property shall, solely for tax purposes (and not
for purposes of maintaining the Capital Accounts hereunder), be
allocated among the
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Partners so as to take account of any variation between the adjusted
basis of such property for federal income tax purposes and its 704(c)
Value. Any elections or other decisions relating to such allocation
shall be made by the General Partner with the consent of the Required
Partners.
"704(c) Value" means, with respect to any Partnership asset,
the adjusted basis for federal income tax purposes of such asset, adjusted as of
the following times to equal its gross fair market value (as determined by the
General Partner in its discretion): (a) the acquisition of an additional
Interest by any new or existing Partner in exchange for more than a de minimis
(as that term is used in Regulation Section 1.704-1(b)(2)(iv)(f)) Capital
Contribution; (b) the distribution by the Partnership to a Partner of more than
a de minimis amount of Partnership property or money if the General Partner
determines in its discretion that such adjustment is necessary or appropriate to
reflect the economic interests of the Partners in the Partnership; and (c) the
liquidation of the Partnership for federal income tax purposes within the
meaning of Regulation Section 1.704(b)(2)(ii).
SECTION 6.6. Tax Allocations. All items of income, gain, loss,
deduction or credit of the Partnership shall be allocated among the Partners for
federal income tax purposes in a manner consistent with the allocation of the
corresponding items to the Partners under the other provisions of this Article
VI.
SECTION 6.7. Distributions in Kind. The General Partner may
distribute any property constituting all or any portion of an Investment in
kind. Any property so distributed shall be deemed for purposes of determining
Net Income or Net Loss under this Article VI to have been sold by the
Partnership for an amount equal to its Fair Market Value (calculated in United
States dollars). Except as provided in Section 6.1(e), in any distribution of
property in kind, the General Partner shall not, without the consent of all the
Limited Partners, discriminate among Partners and shall endeavor to (i)
distribute to each applicable Partner a proportional interest in any particular
property in accordance with this Article VI and (ii) if cash and property in
kind are to be distributed simultaneously in respect of any Investment,
distribute cash and property in kind in the same proportion to each applicable
Partner.
Notwithstanding the foregoing, if any Limited Partner notifies
the General Partner that such Limited Partner is prohibited by applicable law or
regulation from holding directly the property to be distributed in kind, the
General Partner
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shall, in lieu of making such distribution in kind to such Limited Partner and
to the extent permitted by applicable law, use commercially reasonable efforts
to sell such property on such Limited Partner's behalf, on terms acceptable to
such Limited Partner and, upon such sale, the General Partner shall promptly
distribute to such Limited Partner the net proceeds of such sale.
SECTION 6.8. Setoff and Withholding of Certain Amounts.
Notwithstanding anything else contained in this Agreement, the General Partner
may in its discretion set off against, or withhold from, any distribution to any
Partner pursuant to this Agreement, the following amounts:
(a) any amounts due from such Partner to the Partnership
or the General Partner pursuant to this Agreement to the extent not
otherwise paid,
(b) any amounts required to pay or reimburse (x) the
Partnership for the payment of any withholding or other taxes properly
attributable to such Partner or (y) the General Partner for any
advances made by the General Partner for such purpose.
Any amounts so set off or withheld pursuant to this Section
6.8 shall be applied by the General Partner to discharge the obligation in
respect of which such amounts were withheld. All amounts set off or withheld
either pursuant to this Section 6.8 or pursuant to the Code or any provision of
any state or local tax law attributable to any Partner shall be treated as
amounts distributed to such Partner for all purposes under this Agreement.
SECTION 6.9. Withdrawal and Return of Capital. Except as
specifically provided in this Agreement, a Partner shall not have any right to
demand the return of any Capital Contribution or to withdraw any portion of
Partnership capital. If the Distributable Proceeds remaining upon dissolution of
the Partnership after the payment or discharge of Partnership Expenses are
insufficient to return any Partner's Unreturned Capital, the Partner shall have
no recourse against any of the Partners or against the Partnership.
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ARTICLE VII
REPORTS TO LIMITED PARTNERS
SECTION 7.1. Reports.
(a) The books of account and records of the Partnership shall
be audited as of the end of each Fiscal Year by the Partnership's independent
public accountants. All reports provided to the Limited Partners pursuant to
this Section 7.1 shall be prepared on an accrual basis. The Partnership's
independent public accountants shall be a nationally recognized independent
certified public accounting firm selected by the General Partner. Until such
time as the Limited Partner becomes a shareholder of ▇▇▇▇ Centers Trust, the
Partnership shall deliver to the Limited Partner a copy of any reports and other
correspondence sent by ▇▇▇▇ Centers Trust to the Partnership, as a shareholder
of ▇▇▇▇ Centers Trust promptly after receipt thereof.
(b) Within 15 days after the end of each fiscal quarter, the
General Partner shall prepare and mail to each Person who was a Partner during
such quarter an unaudited report setting forth as of the end of such fiscal
quarter:
(i) unless such quarter is the last fiscal
quarter, a balance sheet of the Partnership;
(ii) unless such quarter is the last fiscal quarter,
an income and expense statement of the Partnership reflecting the cash
flow of the Partnership for such fiscal quarter (including an estimate
of the amount of UBTI that is expected to be incurred for such quarter
and the related Fiscal Year); and
(iii) a status report of the Partnership's
Investments and activities during such fiscal quarter.
(c) Within 45 days after the end of each Fiscal Year, the
General Partner shall prepare (or cause to be prepared) and mail to each
Partner, an audited report setting forth as of the end of such Fiscal Year:
(i) a balance sheet of the Partnership,
(ii) an income and expense statement of the
Partnership reflecting the cash flow of the Partnership for such Fiscal
Year, and
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(iii) a statement of each Partner's Capital Account.
(d) Each Limited Partner other than an Affiliate of the
General Partner agrees that it will not, and it will cause its employees,
representatives and advisors not to, disclose the information in any reports
issued pursuant to this Section 7.1 to any Person without the prior written
consent of the General Partner; provided that any Limited Partner may make such
disclosures as it reasonably believes may be required by law, regulation or rule
of any governmental authority or in conjunction with any litigation proceeding.
(e) After the end of each Fiscal Year, the General Partner
shall cause the Partnership's independent certified public accountants to
prepare and transmit, as promptly as possible, and in any event within 45 days
of the close of the Fiscal Year, a federal income tax form K-1 for each Partner,
a copy of the Partnership's return filed for federal income tax purposes and a
report setting forth in sufficient detail such transactions effected by the
Partnership during such Fiscal Year as shall enable each Partner to prepare its
federal income tax return, if any. The General Partner shall mail such materials
to (i) each Partner and (ii) each former Partner (or its successors, assigns,
heirs or personal representatives) who may require such information in preparing
its federal income tax return.
ARTICLE VIII
EXCULPATION AND INDEMNIFICATION
SECTION 8.1. Exculpation and Indemnification.
(a) Notwithstanding anything to the contrary in this
Agreement, the General Partner, its members and Affiliates and its and their
directors, officers, shareholders, partners, trustees and employees
(individually, a "Released Party" and collectively, the "Released Parties")
shall not be liable to the Partnership or to the Limited Partners for any
losses, claims, damages or liabilities arising from any act or omission
performed or omitted by a Released Party arising out of or in connection with
this Agreement or the Partnership's business or affairs, except for (i) any such
loss, claim, damage or liability attributable to the negligence or willful
misconduct of a Released Party or a material breach of this Agreement which a
Released Party fails to cure, or fails to cause the General Partner to cure,
within ten (10) Business Days following receipt
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by the General Partner of notice of such breach from the Required Partners (a
"Breach"), provided that if such breach is capable of being cured but cannot be
cured with diligent efforts within such period of 10 Business Days and if such
Released Party or the General Partner, as the case may be, has commenced to cure
such breach within such period of 10 Business Days, no Breach of this Agreement
shall be deemed to have occurred unless either (a) such Released Party or the
General Partner, as the case may be, ceases to proceed diligently to cure such
breach or (b) such breach is not cured within fifteen (15) days after the
receipt by the General Partner of such notice of the breach, or (ii) any such
loss, claim, damage or liability attributable to or arising out of or as a
result of any Released Party's position as an officer or director or controlling
stockholder (except in the case of any such loss, claim, damage or liability
attributable to such person's position as a controlling stockholder arising in
connection with the initial funding of the Partnership Investment pursuant to
the Contribution Agreement) of ▇▇▇▇ Centers Trust or with respect to actions
taken or omitted to be taken by them in such capacity. The General Partner
shall, to the fullest extent permitted by applicable law, indemnify, defend and
hold harmless the Partnership and the Limited Partners against any losses,
claims, damages or liabilities to which the Partnership or such Limited Partners
may become subject in connection with (i) any Breach or (ii) actions or
omissions of any Released Party after the Closing Date relating to his positions
as an executive officer or director or controlling stockholder (except in the
case of any such loss, claim, damage or liability attributable to such person's
position as a controlling stockholder arising in connection with the initial
funding of the Partnership Investment pursuant to the Contribution Agreement) of
▇▇▇▇ Centers Trust or actions taken or omitted to be taken by him in such
capacity.
(b) The Partnership shall, to the fullest extent permitted by
applicable law, indemnify, defend and hold harmless each Released Party against
any losses, claims, damages or liabilities to which such Released Party may
become subject in connection with any matter arising out of or in connection
with this Agreement or the Partnership's business or affairs, except for any
such loss, claim, damage or liability attributable to the gross negligence,
willful misconduct or Breach of a Released Party or as a result of any Released
Party's position as an officer or director or controlling stockholder of ▇▇▇▇
Centers Trust or with respect to actions taken by or omitted to be taken by any
Released Party in such capacity. If any Released Party becomes involved in any
capacity in any action, proceeding or investigation in connection with any
matter arising out of or in connection with this Agreement or the Partnership's
business or
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affairs, the Partnership shall reimburse such Released Party for its legal and
other expenses (including the cost of any investigation and preparation) as they
are incurred in connection therewith, provided that such Released Party shall
promptly repay to the Partnership the amount of any such reimbursed expenses
paid to it if it shall ultimately be determined that such Released Party was not
entitled to be indemnified by the Partnership in connection with such action,
proceeding or investigation. Any such obligation of the Partnership shall be
limited to the assets of the Partnership and there shall be no personal
liability of any of the Limited Partners for any such obligation of the
Partnership.
(c) Each Partner covenants for itself and its successors,
assigns, heirs and personal representatives that such Person will, at any time
prior to or after dissolution of the Partnership, on demand, whether before or
after such Person's withdrawal from the Partnership, pay to the Partnership or
the General Partner any amount which the Partnership or the General Partner, as
the case may be, pays in respect of taxes (including withholding taxes) imposed
upon income of or distributions to such Partner.
ARTICLE IX
DURATION AND DISSOLUTION OF THE PARTNERSHIP
SECTION 9.1. Duration. The term of the Partnership
shall commence on the Effective Date and, subject to Section 9.2,
the term of the Partnership shall continue until December 31,
2005.
SECTION 9.2. Dissolution. Subject to the Act, the
Partnership shall be dissolved and its affairs shall be wound up
upon the earliest to occur of:
(a) the expiration of the term of the Partnership
provided in Section 9.1;
(b) the written consent of the Partners to dissolve
the Partnership;
(c) a decision made by the General Partner to dissolve the
Partnership because it has reasonably determined that changes in any applicable
law or regulation would have a material adverse effect on the continuation of
the Partnership and has delivered
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to the Required Partners an opinion of counsel reasonably acceptable (as to the
opinion itself and the counsel rendering such opinion) to the Required Partners
to that effect;
(d) the withdrawal, removal or other cessation of the General
Partner as a general partner of the Partnership (within the meaning of the Act)
or the termination of the active engagement of either ▇▇▇▇ ▇▇▇▇▇▇▇ or ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇ from the Partnership; and
(e) any of the events set forth in Section 6.1(e)(ii) shall
have occurred or for any other reason the Partnership no longer holds any
Shares.
SECTION 9.3. Winding Up of Partnership. Upon dissolution, the
Partnership's business shall be wound up in an orderly manner. The General
Partner shall be the liquidator to wind up the affairs of the Partnership
pursuant to this Agreement. If no general partner remains, the Limited Partners
may approve one or more liquidators to act as the liquidator in carrying out
such liquidation. Subject to the Act (and with respect to any distribution of
assets, Section 6.7), the liquidator shall dispose of or distribute all
Partnership assets to the Partners within one year following dissolution, except
that such one-year period may be extended with the approval of the Limited
Partners.
SECTION 9.4. Distribution Upon Dissolution of the
Partnership.
(a) Upon dissolution of the Partnership, the liquidator shall
make a distribution in kind to the Partners. In performing its duties, the
liquidator is authorized to sell, distribute, exchange or otherwise dispose of
the assets of the Partnership in any manner that the liquidator shall determine
to be in the best interest of the Partners. Subject to the Act, after all
liabilities contingent or otherwise of the Partnership (including any
liabilities to Partners and any obligations to Partners under Section 3.4) have
been satisfied or duly provided for (as determined by the liquidator in its
discretion), the remaining assets of the Partnership shall be distributed to the
partners in proportion to their positive Capital Accounts (after giving effect
to adjustments attributable to all Partnership transactions prior to any such
distribution including the sale of any property deemed to occur under Section
6.7).
(b) The full rights, powers and authority of the liquidator
shall continue so long as appropriate and necessary to
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complete the process of winding up the business and affairs of
the Partnership.
(c) In the discretion of the liquidator a portion of the
distributions that would otherwise be made to the Partners pursuant to this
Section 9.4 may be:
(i) distributed to a trust established for the
benefit of the Partners for the purposes of liquidating Partnership
assets, collecting amounts owed to the Partnership, and paying any
liabilities or obligations of the Partnership or of the General Partner
arising to of or in connection with the Partnership. (Subject to
Section 6.7, the assets of any such trust shall be distributed to the
Partners from time to time, in the discretion of the liquidator, in the
same proportions as the amount distributed to such trust by the
Partnership would otherwise have been distributed to the Partners
pursuant to this Agreement); or
(ii) withheld to provide a reserve for Partnership
liabilities (contingent or otherwise), provided that such withheld
amounts shall be distributed to the Partners as soon as the liquidator
determines, in its discretion, that such amounts are no longer
necessary to be retained.
(d) Except as otherwise provided in this Agreement, (i) each
Partner shall look solely to the assets of the Partnership for the return of its
Capital Contributions and shall have no right or power to demand or receive
property other than cash from the Partnership and (ii) no Limited Partner shall
have priority over any other Limited Partner as to the return of its Capital
Contributions. Subject only to any applicable provisions of the Act, in
conjunction with the dissolution of the Partnership, no Partner shall have any
obligation to contribute to or reimburse the Partnership for any deficit in such
Partner's Capital Account.
ARTICLE X
TRANSFERABILITY OF GENERAL PARTNER'S INTEREST
SECTION 10.1. Transferability of General Partner's
Interest.
(a) Except as otherwise provided herein, the General Partner
may not Transfer all or any portion of its Interest to any Person without the
prior approval of the Required Partners.
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(b) In connection with any Transfer permitted hereunder, the
General Partner may admit a transferee as a general partner of the Partnership
without further action by any partner or any other Person, and such transferee
shall be deemed admitted to the Partnership as a general partner of the
Partnership immediately prior to the Transfer and shall continue the business of
the Partnership without dissolution.
(c) Notwithstanding, the foregoing, the General Partner agrees
that no Transfer contemplated by this Section 10.1 shall be effected if such
Transfer would jeopardize the status of the Partnership as a partnership for
federal income tax purposes.
(d) In connection with any Transfer permitted hereunder, all
expenses, including attorneys' fees and expenses, incurred by the Partnership in
connection with such Transfer shall be fully borne by the General Partner or the
General Partner's transferee. In addition, the General Partner or the General
Partner's transferee shall indemnify the Partnership in a manner reasonably
satisfactory to the Limited Partners against any losses, claims, damages,
liabilities or expenses to which the Partnership may become subject arising out
of or based upon any false representation or warranty made by, or breach or
failure to comply with any covenant or agreement of, the General Partner or the
General Partner's transferee in connection with such Transfer.
SECTION 10.2. Removal of the General Partner.
(a) In the event of fraud, gross negligence, willful
misconduct, or an Event of Default by the General Partner, the General Partner
may be removed by written notice (a "Removal Notice") from Limited Partners
(other than any Limited Partner that is an Affiliate of the General Partner)
representing 66.67% of the aggregate Capital Contributions of all Limited
Partners (other than any Limited Partner that is an Affiliate of the General
Partner).
(b) Upon the removal of the General Partner pursuant to
Section 10.2(a), (i) the Partnership shall immediately and automatically be
terminated, and (ii) the Carried Interest shall not be payable.
(c) The removal of the General Partner pursuant to Section
10.2(a) is not the exclusive remedy of the Partnership or the Limited Partners
for any fraud, gross negligence, willful misconduct, or an Event of Default by
the General Partner.
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SECTION 10.3. Withdrawal of the General Partner. Except as
otherwise provided in this Article X, the General Partner may not withdraw from
the Partnership prior to its dissolution.
ARTICLE XI
TRANSFERABILITY OF A LIMITED PARTNER'S INTEREST
SECTION 11.1. Restrictions on Transfer. Prior to 18 months
from the Closing Date, no Transfer of all or any portion of a Limited Partner's
Interest (including some or all of its rights or obligations hereunder) may be
made (other than to an Affiliate of the Limited Partner) without the prior
written consent of the General Partner in its absolute discretion. After 18
months from the Closing Date, a Limited Partner may transfer all or a portion of
its Interest upon the prior written consent of the General Partner. If the
General Partner does not consent to such Transfer (unless the General Partner
withholds its consent because of evidence that the proposed transferee has a
reputation of committing acts of moral turpitude), the General Partner shall
terminate the Partnership and distribute the Shares to the Partners, and within
six months of such distribution the Limited Partner shall pay the Carried
Interest with respect to the Shares distributed. Subject to the Act, no Transfer
shall relieve the transferor of any of its obligations under this Agreement
without the written consent of the General Partner.
SECTION 11.2. Expenses of Transfer; Indemnification. All
expenses, including attorneys' fees and expenses, incurred by the General
Partner or the Partnership in connection with any Transfer shall be fully borne
by the transferring Limited Partner or such Limited Partner's transferee. In
addition, the transferring Limited Partner or such transferee shall indemnify
the Partnership and the General Partner in a manner reasonably satisfactory to
the General Partner against any losses, claims, damages, liabilities or expenses
to which the Partnership or the General Partner may become subject arising out
of or based upon any false representation or warranty made by, or breach or
failure to comply with any covenant or agreement of, such transferring Limited
Partner or such transferee in connection with such Transfer.
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SECTION 11.3. Recognition of Transfer.
(a) The Partnership shall not recognize for any purpose any
purported Transfer of all or any portion of a Limited Partner's Interest
(including some or all of its rights or obligations hereunder) and no transferee
of all or any portion of such Interest shall be admitted as a Limited Partner
hereunder unless:
(1) the provisions of Sections 11.1, 11.2 and 11.3(b) shall
have been complied with;
(2) the General Partner shall have been furnished with the
documents effecting such Transfer, in form and substance satisfactory
to the General Partner, executed and acknowledged by both transferor
and the transferee;
(3) such Transfer shall have been made in accordance with all
applicable laws and regulations and all necessary governmental consents
shall have been obtained and requirements satisfied, including the
Transfer having been made pursuant to an exemption from the Securities
Act of 1933 and in compliance with the provisions of New York Corporate
Securities Law or any other applicable state real estate or securities
laws or regulations, and such Transfer shall not jeopardize the
availability of the Partnership's exemption from registration in
connection with the original offering and sale of Interests referred to
in Section 12.4(a);
(4) such Transfer will not cause a termination of the
Partnership for federal income tax purposes;
(5) the books and records of the Partnership shall have been
changed (which change shall be made as promptly as practicable) to
reflect the admission of such Limited Partner;
(6) all necessary instruments reflecting such admission shall
have been filed in each jurisdiction in which such filing is necessary
in order to qualify the Partnership to conduct business or to preserve
the limited liability of the Limited Partners; and
(7) the General Partner shall have received such advice and
opinions from counsel to the transferor and counsel to the Partnership
as the General Partner shall deem
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appropriate to determine that the Transfer complies with the
requirements of clauses (3) and (4) above.
(b) Each transferee, as a condition to its admission as a
Limited Partner, shall execute and acknowledge such instruments, in form and
substance satisfactory to the General Partner, as the General Partner deems
necessary or desirable to effectuate such admission and to confirm the agreement
of such Limited Partner to be bound by all the terms and provisions of this
Agreement with respect to any rights and/or obligations represented by the
Interest acquired by such Limited Partner. The admission of any such Limited
Partner shall not require the approval of any Limited Partner.
SECTION 11.4. Transfers During a Fiscal Year. If any Transfer
of a Partner's Interest shall occur at any time other than the end of a Fiscal
Year, the distributive shares of the various items of Partnership income, gain,
loss and expense as computed for tax purposes and the distributions of the
Partnership shall be allocated between the transferor and the transferee
consistent with applicable requirements under Code Section 706; provided that no
such allocation shall be effective unless the transferor and the transferee
shall have agreed to reimburse the General Partner for any incremental
accounting fees and other expenses incurred by the General Partner in making
such allocation. Neither the General Partner nor the Partnership shall incur any
liability for making allocations and distributions in accordance with the
provisions of this Section 11.4.
SECTION 11.5. Withdrawal of a Limited Partner. Except as
otherwise provided in this Article XI, a Limited Partner may not withdraw from
the Partnership prior to its dissolution.
ARTICLE XII
MISCELLANEOUS
SECTION 12.1. Amendment to the Agreement.
Except as otherwise provided in this Section 12.1, this
Agreement may be amended by the General Partner with the approval of Limited
Partners representing a majority of the aggregate Capital Contributions of all
Limited Partners; provided that no amendment of this Agreement shall:
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(1) without the approval of all the Limited Partners,
amend this Section 12.1,
(2) without the approval of the affected Limited Partner, (w)
increase the liability of a Partner beyond the liability of such
Partner expressly set forth in this Agreement or otherwise modify or
affect the limited liability of such Partner, (x) decrease the Interest
of any Partner (other than as provided in this Agreement), (y) change
the Capital Contributions of any Partner (other than as provided in
this Agreement) or (z) change the method of distribution or allocations
made under Article VI to any Partner (other than as provided in this
Agreement), or
(3) without the approval of Partners having Capital
Contributions representing the percentage of Capital Contributions
specified in any provision of this Agreement required for any action or
approval of the Partners, amend such provision.
SECTION 12.2. Approvals. To the extent permitted by applicable
law, each Limited Partner agrees that the written approval of the Required
Partners shall bind the Partnership and each Limited Partner and shall have the
same legal effect as the written approval of each Partner, for purposes of
granting the approval of the Limited Partners with respect to any proposed
action of the Partnership, the General Partner or any of its Affiliates that
specifically requires such approval.
SECTION 12.3. Consultation with the Limited Partners.
(a) The General Partner shall consult on a quarterly basis
with the Limited Partners (other than Limited Partners who are Affiliates of the
General Partner) on any material Partnership matters.
(b) Notwithstanding anything else contained in this Section
12.3, the Limited Partners shall not possess or exercise any power that, if
possessed or exercised by a General Partner, would constitute participation in
the control of the business of the Partnership.
SECTION 12.4. Investment Representation. Each Limited
Partner, by executing this Agreement, represents and warrants
that the following statements are true:
(a) it understands and accepts that the offering and sale of
Interests is intended to be exempt from Registration
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under the Securities Act of 1933, as amended (the "Securities Act"), by virtue
of Section 4(2) of the Securities Act and that the Partnership will make a
notation in its records as to the nontransferability of the Interests without
the prior consent of the General Partner and place a legend on any certificates
evidencing the Interests to the effect that the Interests may not be transferred
in violation of the Securities Act;
(b) it understands and accepts that the offering and sale of
Interests is intended to be exempt from registration under the securities laws
of the state or states in which the offer and sale are deemed to be made, by
virtue of a transactional exemption set forth therein;
(c) it has such knowledge and experience in business, tax and
financial matters so as to enable it to utilize the information made available
to it in connection with the offering of the Interests in order to evaluate the
merits and risks of an investment in the Interests and to make an informed
investment decision with respect thereto;
(d) it is an "accredited investor" within the meaning of Rule
501 under the Securities Act;
(e) it is making its investment in the Partnership for its own
account and not for the account of others and is not investing with the present
intention of selling, distributing, transferring or reallocating all or any
portion of its investment and, while the disposition of its investments is
always subject to its own control, presently intends to hold the same until the
Partnership is terminated;
(f) it understands that transferability of its Interest is
restricted and the Limited Partner cannot expect to have any liquidity with
respect to its investment;
(g) unless the General Partner has previously determined that
the admission of the Limited Partner will not cause assets of the Partnership to
be "plan assets" within the meaning of Department of Labor Regulation
ss.2510.3-101, it is not an employee benefit plan subject to Title I of the
Employee Retirement Income Security Act of 1974;
(h) it understands that no federal or state agency has
recommended or endorsed the purchase of the Interests or passed on the adequacy
or accuracy of the information set forth in this Agreement;
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(i) it has had the opportunity, at a reasonable time prior to
its purchase of the Interests, to ask questions and receive answers concerning
the terms and conditions of an investment in the Partnership and to obtain any
additional information, financial or otherwise, which it deems appropriate in
order to evaluate an investment in the Partnership; and
(j) it is treated as a single investor for purposes of the
Investment Company Act of 1940.
SECTION 12.5. Representations.
(a) The General Partner represents and warrants to the Limited
Partners, and covenants and agrees, that:
(i) the General Partner is a limited
liability company, duly formed, validly existing and in good standing
under the laws of the State of Delaware and is duly qualified and in
good standing in each jurisdiction in which the character and location
of its properties or the nature of its business activities makes such
qualification necessary, and has all requisite power and authority to
execute, deliver and perform this Agreement;
(ii) the execution, delivery and performance
by the General Partner of this Agreement is within its power, has been
authorized by all necessary action and does not contravene any
provision of its organizational documents;
(iii) this Agreement is a valid and binding
obligation of the General Partner;
(iv) the execution, delivery and performance
of this Agreement by the General Partner does not conflict with or
result in a breach of any of the provisions of, or constitute a default
under, any bond, note or other form of indebtedness, indenture,
mortgage, deed of trust, loan agreement or similar instrument, any
lease or other agreement or contract to which it is a party or by which
any of its property may be bound or any applicable law or order, rule
or regulation or any court or governmental agency that has jurisdiction
over it or any of its property;
(v) there are no actions, suits or
proceedings pending or, to the knowledge of the General Partner,
threatened against or affecting the General Partner or, to the
knowledge of the General Partner or its members,
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which would bring into question the validity of the transactions
contemplated by this Agreement or might result in a material adverse
change in the business, assets or condition of the General Partner;
(vi) during the term of the Partnership, the
General Partner will not subject any of its Interests in the
Partnership (or its respective right in the future to receive income or
profits from the Partnership) to the claims of any creditors;
(vii) during the term of the Partnership,
the General Partner shall defend at its sole cost and expense any claim
made against its Interest in the Partnership (or its respective right
in the future to receive income or profits from the Partnership)
resulting from the respective indebtedness or the claims of any
creditors of the General Partner;
(viii) during the term of the Partnership,
the General Partner shall promptly notify the Limited Partners as to
(A) any claim asserted or threatened against the General Partner's
Interest in the Partnership (including its right in the future to
receive income and profits from the Partnership), or against any assets
of the Partnership or against any of the respective members of the
General Partner and (B) any other obligation entered into by the
General Partner or any of the respective members of the General
Partner, where such claim or obligation in the judgment of the General
Partner might reasonably have a material adverse effect on the
Partnership or the Interest of the Limited Partners in the Partnership;
(ix) there are no terms governing the
investment of the Sister Partnerships (whether in a partnership
agreement, a side letter or otherwise) that are more favorable to any
limited partner of any Sister Partnership than the terms of this
Agreement, and in the event that any term governing the investment of
the Sister Partnerships is subsequently granted (whether in a
partnership agreement, a side letter or otherwise) that is more
favorable to any limited partner of any Sister Partnership than the
Limited Partner, the General Partner shall promptly grant to the
Limited Partner such more favorable term; and
(x) the General Partner is not aware of any
material inaccuracy in the written material concerning ▇▇▇▇
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Centers Trust and the properties controlled by Affiliates of the
General Partner prepared by the General Partner or its Affiliates and
delivered to the Limited Partners prior to the date hereof.
(b) Each of the Limited Partners represents and warrants
individually and respectively to the General Partner that:
(i) it is duly formed and validly existing
under the laws of the jurisdiction of its formation or is an individual
and has all requisite power and authority to execute, deliver and
perform this Agreement;
(ii) the execution, delivery and performance
of this Agreement by it are within its power, and for Limited Partners
that are not individuals, have been authorized by all necessary action
and do not contravene any provision of its articles of formation or
governance;
(iii) this Agreement is a valid and binding
obligation of such Limited Partner; and
(iv) the execution, delivery and performance
of this Agreement by it does not conflict with or result in a breach of
any of the provisions of, or constitute a default under, any bond, note
or other form of indebtedness, indenture, mortgage, deed of trust, loan
agreement or similar instrument, any lease or other agreement or
contract to which it is a party or by which any of its property may be
bound or any applicable law or order, rule or regulation or any court
or governmental agency that has jurisdiction over it or any of its
property.
SECTION 12.6. Involvement of ▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇ in the Partnership. ▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇ ▇▇▇▇▇▇▇▇▇, by their
respective signatures attached hereto, each respectively acknowledges and agrees
as follows: (a) that they are the sole members of the General Partner; (b) that,
absent his death or disability, each shall at all times during the term of the
Partnership actively participate in such capacity on behalf of the General
Partner in the management of the Partnership; and (c) that, without the consent
of the Required Partners and absent death or disability of either of them, the
ownership of interests in the General Partner shall not be voluntarily
transferred, pledged or otherwise conveyed other than among such individuals or
to or for the benefit of their respective families. Absent death, disability or
the consent of the Required Partners, ▇▇▇▇
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▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ each agree that they shall commit sufficient
attention, time and effort to the management and operation of the General
Partner and through such entity to the management and operation of the
Partnership and its Investments as is then reasonably appropriate or required in
light of the then activities of the Partnership. ▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ will not exercise the options described in Section 6.1(e)(v) prior to
36 months after the Closing Date.
SECTION 12.7. Successors; Counterparts. This Agreement (i)
shall be binding as to the executors, administrators, estates, heirs and legal
successors of the Partners and (ii) may be executed in several counterparts with
the same effect as if the parties executing the several counterparts had all
executed one counterpart.
SECTION 12.8. Governing Law; Severability. This Agreement
shall be governed by and construed in accordance with the laws of the State of
Delaware without giving effect to the principles of conflict of laws thereof. In
particular, it shall be construed to the maximum extent possible to comply with
all of the terms and conditions of the Act. If, nevertheless, it shall be
determined by a court of competent jurisdiction that any provision or wording of
this Agreement shall be invalid or unenforceable under said Act or other
applicable law, such invalidity or unenforceability shall not invalidate the
entire Agreement. In that case, this Agreement shall be construed so as to limit
any term or provision so as to make it enforceable or valid within the
requirements of applicable law, and, in the event such term or provision cannot
be so limited, this Agreement shall be construed to omit such invalid or
unenforceable provisions. If it shall be determined by a court of competent
jurisdiction that any provision relating to the distributions and allocations of
the Partnership or to any fee payable by the Partnership is invalid or
unenforceable, this Agreement shall be construed or interpreted so as (i) to
make it enforceable or valid and (ii) to make the distributions, allocations and
fees as closely equivalent to those set forth in this Agreement as is
permissible under applicable law.
SECTION 12.9. Filings. Following the execution and delivery of
this Agreement, the General Partner shall promptly prepare any documents
required to be filed and recorded under the Act, and the General Partner shall
promptly cause each such document to be filed and recorded in accordance with
the Act and, to the extent required by local law, to be filed and recorded or
notice thereof to be published in the appropriate place in each state in which
the Partnership may hereafter establish a place of
704007.15
business. The General Partner shall also promptly cause to be filed, recorded
and published such statements of fictitious business name and other notices,
certificates, statements or other instruments required by any provision of any
applicable law of the United States or any state or other jurisdiction which
governs the conduct of its business from time to time.
SECTION 12.10. Power of Attorney. Each Limited Partner does
hereby constitute and appoint the General Partner as its true and lawful
representative and attorney-in-fact, in its name, place and stead to make,
execute, sign, deliver and file (i) a Certificate of Limited Partnership of the
Partnership, any amendment thereof required because of an amendment to this
Agreement or in order to effectuate any change in the membership of the
Partnership, (ii) any amendments to this Agreement pursuant to Section 12.1, and
(iii) all such other instruments, documents and certificates which may from time
to time be required by the laws of the United States of America, the State of
Delaware or any other state, or any political subdivision or agency thereof, to
effectuate, implement and continue the valid and subsisting existence of the
Partnership or to dissolve the Partnership.
The power of attorney granted hereby is coupled with an
interest and shall (a) survive and not be affected by the subsequent death,
incapacity, disability, dissolution, termination or bankruptcy of the Limited
Partner granting the same or the transfer of all or any portion of such Limited
Partner's Interest and (b) extend to such Limited Partner's successors, assigns
and legal representatives.
SECTION 12.11. Waiver of Action for Partition. Each of the
Partners irrevocably waives any right that it may have to maintain any action or
other legal proceeding for partition with respect to any of the Partnership's
assets.
SECTION 12.12. Headings. Section and other headings contained
in this Agreement are for reference purposes only and are not intended to
describe, interpret, define or limit the scope or intent of this Agreement or
any provision hereof.
SECTION 12.13. Additional Documents. Each Partner, upon the
request of the General Partner, agrees to perform all further acts and execute,
acknowledge and deliver any documents that may be reasonably necessary to carry
out the provisions of this Agreement.
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SECTION 12.14. Goodwill. No value shall be placed on
the name or goodwill of the Partnership.
SECTION 12.15. Notices. All notices, requests and other
communications to any party hereunder shall be in writing (including telecopier
or similar writing) and shall be given to such party (and any other person
designated by such party) at its address or telecopier number set forth on
Schedule A hereto or such other address or telecopier number as such party may
hereafter specify for the purpose by notice to the General Partner (if such
party is a Limited Partner) or to all the Limited Partners (if such party is the
General Partner). Each such notice, request or other communication shall be
effective (i) if given by telecopier, when transmitted to the number specified
pursuant to this Section 12.15 and the appropriate answerback or confirmation is
received, (ii) if given by mail, 72 hours after such communication is deposited
in the mails with first class postage prepaid, addressed as aforesaid or (iii)
if given by any other means, when delivered at the address specified pursuant to
this Section 12.15.
SECTION 12.16. Enforcement Costs. In the event any Partner
defaults in the performance of its obligations under this Agreement, the
Partnership or any non-defaulting Partner enforcing its rights under this
Agreement or compelling such defaulting Partner to perform its obligations
hereunder shall be entitled to collect from the defaulting Partner all
reasonable costs and expenses (including, without limitation, reasonable
attorneys' fees and costs) expended or incurred in connection with enforcing its
rights under this Agreement.
SECTION 12.17. No Third Party Rights. The obligations or
rights of the Partnership or any Partners to make or require any Capital
Contribution under this Agreement shall not grant any rights to or confer any
benefits upon any Person who is not a Partner other than ▇▇▇▇ Centers Trust
pursuant to Section 5.1. The provisions of this Agreement are intended only for
the regulation of relations among Partners, putative Partners and the
Partnership. This Agreement is not intended for the benefit of non-Partner
creditors and does not grant any rights to non-Partner creditors other than
▇▇▇▇ Centers Trust pursuant to Section 5.1.
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IN WITNESS WHEREOF, the undersigned have hereto set their
hands as of the day and year first above written.
GENERAL PARTNER:
RD New York VI, LLC, a
Delaware limited liability company
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇
-------------------------------
By: ▇▇▇▇ ▇▇▇▇▇▇▇
LIMITED PARTNER:
Five Arrows Realty Securities LLC,
a Delaware limited liability Company
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
By:_________________________
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Agreement With Respect to
Section 12.6:
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇
-------------------------
▇▇▇▇ ▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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SCHEDULE A
Partners
General Partner
RD New York VI, LLC
c/o Acadia Management
▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn:
Fax:
Limited Partner
Five Arrows Realty Securities LLC
c/o Rothschild Realty Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
704007.15
A-1
SCHEDULE B
Capital
Name and Capital Contribution
Address Number of Units Contribution Percentage
------------ -----------
RD New York .001 $1,000 .00006%
VI, LLC
Five Arrows 17 $17,000,000 99.99994%
Realty
Securities
LLC
704007.15
▇-▇
▇▇▇▇▇▇▇▇ ▇
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇
▇▇ ▇▇▇ ▇▇▇▇ VI, LLC .00006%
Five Arrows Realty Securities LLC 99.99994%
704007.15
C-1
SCHEDULE D
Sister Partnerships
RD Properties, L.P. VI
RD Properties, L.P. VIA
704007.15
D-1
SCHEDULE E
FUNDS FROM OPERATIONS METHODOLOGY
704007.15
E-1
AGREEMENT OF
LIMITED PARTNERSHIP
OF
RD PROPERTIES, L.P. VIB
By and Between
RD New York VI, LLC
a Delaware limited liability company,
as the General Partner,
and
certain other individuals and entities
as Limited Partners
dated as of
May 6, 1998
704007.15
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS.....................................................1
SECTION 1.1. Definitions.......................................1
SECTION 1.2. Interpretation....................................6
SECTION 1.3. Consent and Approvals.............................7
ARTICLE II
GENERAL PROVISIONS..............................................7
SECTION 2.1. Partnership Name..................................7
SECTION 2.2. Principal Office; Delaware Office; Agent for
Service of Process.....................................7
SECTION 2.3. Purposes of the Partnership.......................8
SECTION 2.4. Liability of Limited Partners Generally...........8
SECTION 2.5. Fiscal Year.......................................8
ARTICLE III
MANAGEMENT AND OPERATIONS OF THE PARTNERSHIP....................8
SECTION 3.1. Management Generally..............................8
SECTION 3.2. Authority of the General Partner..................8
SECTION 3.3. Major Decisions Requiring Consent of the
Limited Partners.......................................8
SECTION 3.4. Expenses..........................................9
SECTION 3.5. Books and Records; Accounting Method;
Valuation.............................................12
SECTION 3.6. Tax Elections....................................12
SECTION 3.7. Tax Matters Partner..............................13
SECTION 3.8. Reliance by Third Parties........................13
SECTION 3.9. Meetings of Partners.............................13
ARTICLE IV
INVESTMENTS AND INVESTMENT OPPORTUNITIES.......................14
SECTION 4.1. Investments Generally............................14
SECTION 4.2. Partner Investments..............................14
SECTION 4.3. Additional Rights of Limited Partner with
Respect to the Investment.............................14
ARTICLE V
CAPITAL CONTRIBUTIONS..........................................18
SECTION 5.1. Capital Contributions............................18
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Page
SECTION 5.2. Temporary Investment of Funds....................19
ARTICLE VI
DISTRIBUTIONS, CAPITAL ACCOUNTS AND ALLOCATIONS................20
SECTION 6.1. Distributions....................................20
SECTION 6.2. Preferred Return.................................24
SECTION 6.3. Capital Accounts.................................24
SECTION 6.4. Allocations of Net Income and Net Loss. ........25
SECTION 6.5. Other Allocations................................25
SECTION 6.6. Tax Allocations..................................26
SECTION 6.7. Distributions in Kind............................26
SECTION 6.8. Setoff and Withholding of Certain Amounts........27
SECTION 6.9. Withdrawal and Return of Capital.................27
ARTICLE VII
REPORTS TO LIMITED PARTNERS....................................28
SECTION 7.1. Reports..........................................28
ARTICLE VIII
EXCULPATION AND INDEMNIFICATION................................29
SECTION 8.1. Exculpation and Indemnification..................29
ARTICLE IX
DURATION AND DISSOLUTION OF THE PARTNERSHIP....................31
SECTION 9.1. Duration.........................................31
SECTION 9.2. Dissolution......................................31
SECTION 9.3. Winding Up of Partnership........................32
SECTION 9.4. Distribution Upon Dissolution of the
Partnership...........................................32
ARTICLE X
TRANSFERABILITY OF GENERAL PARTNER'S INTEREST..................33
SECTION 10.1. Transferability of General Partner's
Interest..............................................33
SECTION 10.2. Removal of the General Partner..................34
SECTION 10.3. Withdrawal of the General Partner...............35
ARTICLE XI
TRANSFERABILITY OF A LIMITED PARTNER'S INTEREST................35
SECTION 11.1. Restrictions on Transfer........................35
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Page
SECTION 11.2. Expenses of Transfer; Indemnification...........35
SECTION 11.3. Recognition of Transfer.........................36
SECTION 11.4. Transfers During a Fiscal Year..................37
SECTION 11.5. Withdrawal of a Limited Partner.................37
ARTICLE XII
MISCELLANEOUS..................................................37
SECTION 12.1. Amendment to the Agreement......................37
SECTION 12.2. Approvals.......................................38
SECTION 12.3. Consultation with the Limited Partners..........38
SECTION 12.4. Investment Representation.......................38
SECTION 12.5. Representations.................................40
SECTION 12.6. Involvement of ▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇ in the Partnership..........................42
SECTION 12.7. Successors; Counterparts........................43
SECTION 12.8. Governing Law; Severability.....................43
SECTION 12.9. Filings.........................................43
SECTION 12.10. Power of Attorney...............................44
SECTION 12.11. Waiver of Action for Partition..................44
SECTION 12.12. Headings........................................44
SECTION 12.13. Additional Documents............................44
SECTION 12.14. Goodwill........................................45
SECTION 12.15. Notices.........................................45
SECTION 12.16. Enforcement Costs...............................45
SECTION 12.17. No Third Party Rights...........................45
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