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EXHIBIT 3.1.1
SECOND RESTATED AND AMENDED
AGREEMENT OF LIMITED PARTNERSHIP
OF
LIBERTY PROPERTY LIMITED PARTNERSHIP
DATED AS OF October 22, 1997
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LIMITED PARTNERSHIP AGREEMENT
OF
LIBERTY PROPERTY LIMITED PARTNERSHIP
TABLE OF CONTENTS
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ARTICLE I
Definitions.....................................................................................2
1.1 Definitions............................................................................2
ARTICLE II
Continuation of Partnership; Business of
Partnership..........................................................................14
2.1 Continuation..........................................................................14
2.2 Name..................................................................................15
2.3 Character of the Business.............................................................15
2.4 Location of Principal Place of Business...............................................15
ARTICLE III
Term...........................................................................................15
3.1 Commencement..........................................................................15
3.2 Dissolution...........................................................................15
ARTICLE IV
Capital Contributions..........................................................................16
4.1 Capital Contributions, Partnership Interests
and Percentage Interests of the Partners..............................................16
4.2 Issuance of Additional Partnership Interests
and REIT Shares.......................................................................17
4.3 No Third Party Beneficiaries..........................................................19
4.4 No Interest on or Return of Capital
Contribution..........................................................................19
4.5 Loans to Partnership..................................................................19
4.6 Stock Incentive Plan..................................................................19
ARTICLE V
Certain Concurrent Transactions................................................................20
[INTENTIONALLY OMITTED]........................................................................20
ARTICLE VI
Allocations, Distributions and Other Tax and
Accounting Matters.............................................................................20
6.1 Allocations...........................................................................20
6.2 Distributions.........................................................................20
6.3 Books of Account......................................................................20
6.4 Reports...............................................................................20
6.5 Tax Elections and Returns.............................................................21
6.6 Tax Matters Partner...................................................................21
6.7 Withholding Payments Required By Law..................................................22
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ARTICLE VII
Rights, Duties and Restrictions of the
General Partner................................................................................24
7.1 Powers and Duties of General Partner..................................................24
7.2 Specified Decisions...................................................................27
7.3 Reimbursement of the General Partner..................................................27
7.4 Outside Activities of the General Partner.............................................27
7.5 Contracts with Affiliates.............................................................28
7.6 Title to Partnership Assets...........................................................28
7.7 Reliance by Third Parties.............................................................28
7.8 Indemnification by Partnership........................................................29
7.9 Liability of the General Partner......................................................30
7.10 Other Matters Concerning the General Partner..........................................31
7.11 Operation in Accordance with REIT
Requirements..........................................................................32
ARTICLE VIII
Dissolution, Liquidation and Winding-Up........................................................32
8.1 Accounting............................................................................32
8.2 Distribution on Dissolution...........................................................32
8.3 Timing Requirements...................................................................33
8.4 Documentation of Liquidation..........................................................34
ARTICLE IX
Transfer of Partnership Interests..............................................................34
9.1 General Partner Transfer..............................................................34
9.2 Transfers by Limited Partners.........................................................34
9.3 Certain Restrictions on Transfer......................................................36
9.4 Effective Dates of Transfers..........................................................37
9.5 Transfer..............................................................................38
ARTICLE X
Rights and Obligations of the Limited Partners.................................................38
10.1 No Participation in Management........................................................38
10.2 Bankruptcy of a Limited Partner.......................................................38
10.3 No Withdrawal.........................................................................38
10.4 Conflicts.............................................................................39
10.5 Provision of Information..............................................................39
10.6 Limited Partner Representatives.......................................................40
10.7 Power of Attorney.....................................................................40
ARTICLE XI
Grant of Certain Rights to Limited Partners....................................................41
11.1 Grant of Rights.......................................................................41
ARTICLE XII
Representation and Warranty of ▇▇▇▇▇ Principals................................................42
12.1 Representation and Warranty of ▇▇▇▇▇
Principals............................................................................42
ARTICLE XIII
Indemnification and Security Interest..........................................................42
13.1 General Indemnification...............................................................42
13.2 Environmental Indemnities.............................................................43
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13.3 Indemnity Collateral..................................................................44
13.4 Security Interest for Indemnification
Obligations...........................................................................44
13.5 Procedure for Seeking Indemnification.................................................47
13.6 Indemnification as Exclusive Remedy...................................................47
13.7 Recovery from Title Insurance Policy..................................................47
13.8 Settlements; Prior Written Consent....................................................47
13.9 Limitation of Indemnity...............................................................47
ARTICLE XIV
Amendment of Partnership Agreement; Meetings ..................................................48
14.1 Amendments............................................................................48
14.2 Meetings of the Partners..............................................................49
ARTICLE XV
General Provisions.............................................................................50
15.1 No Liability of Trustees and Others...................................................50
15.2 Notices...............................................................................50
15.3 Controlling Law.......................................................................50
15.4 Execution in Counterparts.............................................................50
15.5 Provisions Separable..................................................................51
15.6 Entire Agreement......................................................................51
15.7 Paragraph Headings....................................................................51
15.8 Gender, Etc...........................................................................51
15.9 Number of Days........................................................................51
15.10 Partners Not Agents...................................................................51
15.11 Assurances............................................................................51
15.12 Waiver of Partition...................................................................52
Exhibits A through F
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THE LIMITED PARTNERSHIP INTERESTS REFERRED TO IN THIS AGREEMENT HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES
LAWS. REFERENCE IS MADE TO ARTICLE IX OF THIS AGREEMENT FOR PROVISIONS RELATING
TO VARIOUS RESTRICTIONS ON THE SALE OR OTHER TRANSFER OF THESE INTERESTS.
SECOND RESTATED AND AMENDED
AGREEMENT OF LIMITED PARTNERSHIP
OF
LIBERTY PROPERTY LIMITED PARTNERSHIP
THIS SECOND RESTATED AND AMENDED AGREEMENT OF LIMITED
PARTNERSHIP (the "Agreement") is made and entered into as of October 22, 1997 by
and among the General Partner and the Limited Partners (as those terms are
defined below).
W I T N E S S E T H:
WHEREAS, on March 28, 1994, ▇▇▇▇▇ General Corp., a
Pennsylvania corporation (the "Initial General Partner"), and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
III, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇ (the "Initial Limited Partners"), formed a
Pennsylvania limited partnership under the name "Liberty Property Limited
Partnership" (the "Partnership") with the Initial General Partner and the
Initial Limited Partners as the sole general partner and the sole limited
partners, respectively, of the Partnership;
WHEREAS, effective as of June 23, 1994: (i) certain persons
and entities were admitted to the Partnership as additional limited partners;
(ii) the Initial General Partner and the Initial Limited Partners withdrew from
the Partnership and their partnership interests in the Partnership were redeemed
for $100; and (iii) Liberty Property Trust, a Maryland real estate investment
trust, was admitted to the Partnership as the sole general partner thereof;
WHEREAS, various other persons and entities have been admitted
as limited partners of, or have ceased to be limited partners of, the
Partnership from June 23, 1994, through the date of this Agreement;
WHEREAS, that certain Agreement of Limited Partnership dated
as of June 23, 1994, was superseded on June 19, 1995 by that certain First
Restated and Amended Agreement of Limited Partnership, which was subsequently
amended by that certain Second Amendment to Agreement of Limited Partnership
dated as of December 22, 1995, by that certain Third Amendment to Agreement
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of Limited Partnership dated as of January 1, 1996, by that certain Fourth
Amendment to Agreement of Limited Partnership dated as of March 21, 1997, by
that certain Fifth Amendment to Agreement of Limited Partnership dated as of May
14, 1997, and by that certain Sixth Amendment to Agreement of Limited
Partnership dated as of August 11, 1997;
WHEREAS, the parties hereto are all of the Partners of
the Partnership as of the date of this Agreement;
WHEREAS, the parties desire to restate and amend said First
Restated and Amended Agreement of Limited Partnership, as so amended, in order
to incorporate the terms of the several amendments thereto and to clarify
certain other matters, such that the terms of this Agreement will supersede and
replace in their entireties the terms of said First Restated and Amended
Agreement of Limited Partnership and all amendments thereto; and
WHEREAS, the parties hereto desire to continue the Partnership
as a limited partnership under the Revised Uniform Limited Partnership Act of
the Commonwealth of Pennsylvania in accordance with the provisions of this
Agreement;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein contained and other good and valuable consideration, the
receipt, adequacy and sufficiency of which are hereby acknowledged, the parties
hereto, intending to be legally bound, hereby agree as follows, restating and
superseding hereby the terms of the First Restated and Amended Agreement of
Limited Partnership dated June 19, 1995, and all amendments thereto:
ARTICLE I
DEFINITIONS
1.1 DEFINITIONS. Except as otherwise herein expressly provided,
the following terms and phrases shall have the meanings as set forth below:
"Accountants" shall mean the firm or firms of
independent certified public accountants selected by the General Partner on
behalf of the Partnership and the Property Partnerships to audit the books and
records of the Partnership and the Property Partnerships and to prepare
statements and reports in connection therewith.
"Act" shall mean the Revised Uniform Limited
Partnership Act of the Commonwealth of Pennsylvania, as the same may hereafter
be amended from time to time.
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"Additional Partner" means a Person admitted to
the Partnership pursuant to the provisions hereof after the date
of this Agreement.
"Adjusted Capital Account Deficit" shall mean,
with respect to any Partner, the deficit balance, if any, in such Partner's
Capital Account as of the end of any relevant fiscal year and after giving
effect to the following adjustments:
(a) credit to such Capital Account any amounts which
such Partner is obligated or treated as obligated to
restore with respect to any deficit balance in such
Capital Account pursuant to Section 1.704-
1(b)(2)(ii)(c) of the Regulations, or is deemed to be
obligated to restore with respect to any deficit
balance pursuant to the penultimate sentences of
Sections 1.704-2(g)(1) and 1.704-2(i)(5) of the
Regulations; and
(b) debit to such Capital Account the items described
in Sections 1.704-1(b)(2)(ii)(d)(4), (5) and (6) of
the Regulations.
The foregoing definition of Adjusted Capital Account Deficit is intended to
comply with the requirements of the alternate test for economic effect contained
in Section 1.704-1(b)(2)(ii)(d) of the Regulations and shall be interpreted
consistently therewith.
"Administrative Expenses" shall mean (i) all
administrative and operating costs and expenses incurred by the Partnership,
(ii) all administrative, operating and other costs and expenses incurred by the
Property Partnerships, (iii) those administrative costs and expenses of the
General Partner, including salaries paid to officers of the General Partner, and
accounting and legal expenses undertaken by the General Partner on behalf or for
the benefit of the Partnership and (iv) to the extent not included in clause
(iii) above, REIT Expenses.
"Affiliate" shall mean, with respect to any
Partner (or as to any other person the affiliates of whom are relevant for
purposes of any of the provisions of this Agreement), (i) any member of the
Immediate Family of such Partner; (ii) any beneficiary of a Limited Partner
which is a trust; (iii) any trust for the benefit of any Person referred to in
the preceding clauses (i) and (ii); or (iv) any Entity which directly or
indirectly through one or more intermediaries, Controls, is Controlled by, or is
under common Control with, any Person referred to in the preceding clauses (i)
through (iii).
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"Agreement" shall mean this Limited Partnership
Agreement, as originally executed and as amended, modified, supplemented or
restated from time to time, as the context requires.
"Audited Financial Statements" shall mean
financial statements (balance sheet, statement of income, statement of partners'
equity and statement of cash flows) prepared in accordance with GAAP and
accompanied by an independent auditor's report containing an opinion thereon.
"Bankruptcy" shall mean, with respect to any
Partner, (i) the commencement by such Partner of any petition, case or
proceeding seeking relief under any provision or chapter of the federal
Bankruptcy Code or any other federal or state law relating to insolvency,
bankruptcy or reorganization, (ii) an adjudication that such Partner is
insolvent or bankrupt; (iii) the entry of an order for relief under the federal
Bankruptcy Code with respect to such Partner, (iv) the filing of any such
petition or the commencement of any such case or proceeding against such
Partner, unless such petition and the case or proceeding initiated thereby are
dismissed within ninety (90) days from the date of such filing or (v) the filing
of an answer by such Partner admitting the allegations of any such petition.
"Capital Account" shall mean, with respect to any
Partner, the separate "book" account which the Partnership shall establish and
maintain for such Partner in accordance with Section 704(b) of the Code and
Section 1.704-1(b)(2)(iv) of the Regulations and such other provisions of
Section 1.704-1(b) of the Regulations that must be complied with in order for
the Capital Accounts to be determined in accordance with the provisions of said
Regulations. In furtherance of the foregoing, the Capital Accounts shall be
maintained in compliance with Section 1.704-1(b)(2)(iv) of the Regulations; and
the provisions hereof shall be interpreted and applied in a manner consistent
therewith. In the event that a Partnership Interest is transferred in accordance
with the terms of this Agreement, the Capital Account, at the time of the
transfer, of the transferor attributable to the transferred interest shall carry
over to the transferee.
"Capital Contribution" shall mean, with respect to
any Partner, the amount of money and the initial Gross Asset Value of any
Contributed Property, net of liabilities assumed by the Partnership in
connection with such contribution or to which such property is subject when
contributed.
"Certificate" shall mean the Certificate of
Limited Partnership establishing the Partnership, as filed with the office of
the Pennsylvania Secretary of State, as it may be amended from time to time in
accordance with the terms of this Agreement and the Act.
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"Closing Price" on any date shall mean the last
sale price, regular way, or, in case no such sale takes place on such day, the
average of the closing bid and asked prices, regular way, in either case as
reported in the principal consolidated transaction reporting system with respect
to securities listed or admitted to trading on the New York Stock Exchange or,
if the Shares are not listed or admitted to trading on the New York Stock
Exchange, as reported in the principal consolidated transaction reporting system
with respect to securities listed on the principal national securities exchange
on which the Shares are listed or admitted to trading or, if the Shares are not
listed or admitted to trading on any national securities exchange, the last
quoted price, or if not so quoted, the average of the high bid and low asked
prices in the over-the-counter market, as reported by the National Association
of Securities Dealers, Inc. Automated Quotations System or, if such system is no
longer in use, the principal other automated quotations system that may then be
in use or, if the Shares are not quoted by any such organization, the average of
the closing bid and asked prices as furnished by a professional market maker
making a market in the Shares as such person is selected from time to time by
the Board of Trustees of the General Partner.
"Code" shall mean the Internal Revenue Code of
1986, as amended and in effect from time to time. Any reference herein to a
specific section of the Code shall be deemed to include a reference to any
corresponding provision of succeeding laws.
"Completion of the Offering" shall mean the
closing of the first sale of Shares in the Offering.
"Consent of the Limited Partners" shall mean the
written consent of a Majority-In-Interest of the Limited Partners, which Consent
shall be obtained prior to the taking of any action for which it is required by
this Agreement and may be given or withheld by a Majority-In-Interest of the
Limited Partners, unless otherwise expressly provided herein, in their sole and
absolute discretion.
"Contributed Partnership Interests" shall mean,
with respect to each Limited Partner, the partnership interests in the Existing
Property Partnership(s) contributed to the Partnership by such Limited Partner
(or deemed contributed to the Partnership including on the termination and
reconstitution thereof pursuant to Code Section 708), as set forth and so
identified in the books and records of the Partnership.
"Contributed Property" shall mean each property or
other asset, in such form as may be permitted by the Act (but excluding cash)
contributed to the Partnership, with respect to the Partnership Interest held by
each Partner (or deemed
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contributed to the Partnership including on the termination and reconstitution
thereof pursuant to Code Section 708).
"Contribution Agreement" shall mean the Amended
and Restated Contribution Agreement dated as of May 19, 1994 between the
Partnership and the several Contributors named therein.
"Control" shall mean the ability, whether by the
direct or indirect ownership of shares or other equity interests, by contract or
otherwise, to elect a majority of the directors of a corporation, to select the
managing partner of a partnership, or otherwise to select, or have the power to
remove and then select, a majority of those persons exercising governing
authority over an Entity. In the case of a limited partnership, the sole general
partner, all of the general partners to the extent each has equal management
control and authority, or the managing general partner or managing general
partners thereof shall be deemed to have control of such partnership and, in the
case of a trust, any trustee thereof or any Person having the right to select
any such trustee shall be deemed to have control of such trust.
"Current Per Share Market Price" on any date shall
mean the average of the Closing Price for the five consecutive Trading Days
ending on such date.
"Debentures" means the Exchangeable Subordinated
Debentures Due 2001 issued by the Partnership, as the same may be hereafter
amended, and all replacements thereof.
"Depreciation" shall mean, with respect to any
asset of the Partnership for any fiscal year or other period, the depreciation
or amortization, as the case may be, allowed or allowable for Federal income tax
purposes in respect of such asset for such fiscal year or other period;
provided, however, that if there is a difference between the Gross Asset Value
and the adjusted tax basis of such asset, Depreciation shall mean "book"
depreciation or amortization as determined under Section 1.704-1(b)(2)(iv)(g)(3)
of the Regulations.
"Entity" shall mean any general partnership,
limited partnership, corporation, joint venture, trust, business trust, real
estate investment trust or association.
"ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended from time to time (or any corresponding
provisions of succeeding laws).
"Existing Property Partnership Agreements" shall
mean the partnership agreements under which the Existing Property Partnerships
are constituted, as amended from time to time.
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"Existing Property Partnership Interests" shall
mean the interests of the Partnership as a partner in each of the
Existing Property Partnerships.
"Existing Property Partnerships" shall mean those
partnerships listed on Exhibit B hereto.
"GAAP" shall mean generally accepted accounting
principles in effect from time to time.
"General Partner" shall mean Liberty Property
Trust, a Maryland real estate investment trust, its duly admitted successors and
assigns and any other Person who is a general partner of the Partnership at the
time of reference thereto.
"Gross Asset Value" shall mean, with respect to
any asset of the Partnership, such asset's adjusted basis for Federal income tax
purposes, except as follows:
(a) the initial Gross Asset Value of any asset
contributed by a Partner to the Partnership shall be the gross
fair market value of such asset at the time of its
contribution as reasonably determined by the General Partner
and as so reflected in the books and records of the
Partnership;
(b) if the General Partner reasonably determines that
an adjustment is necessary or appropriate to reflect the
relative economic interests of the Partners, the Gross Asset
Values of all Partnership assets shall be adjusted to equal
their respective gross fair market values, as reasonably
determined by the General Partner, as of the following times:
(i) immediately prior to a Capital
Contribution (other than a de minimis Capital
Contribution) to the Partnership by a new or existing
Partner as consideration for a Partnership Interest;
(ii) immediately prior to the distribution
by the Partnership to a Partner of more than a de
minimis amount of Partnership property as
consideration for the redemption of a Partnership
Interest; and
(iii) immediately prior to the liquidation
of the Partnership within the meaning of Section
1.704-1(b)(2)(ii)(g) of the Regulations;
(c) the Gross Asset Values of Partnership assets
distributed to any Partner shall be the gross fair market
values of such assets as reasonably determined
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by the General Partner as of the date of distribution;
and
(d) the Gross Asset Values of Partnership assets
shall be increased (or decreased) to reflect any adjustments
to the adjusted basis of such assets pursuant to Sections
734(b) or 743(b) of the Code, but only to the extent that such
adjustments are taken into account in determining Capital
Accounts pursuant to Section 1.704-1(b)(2)(iv)(m) of the
Regulations; provided, however, that Gross Asset Values shall
not be adjusted pursuant to this paragraph to the extent that
the General Partner reasonably determines that an adjustment
pursuant to paragraph (b) above is necessary or appropriate in
connection with a transaction that would otherwise result in
an adjustment pursuant to this paragraph (d).
At all times, Gross Asset Values shall be adjusted by any Depreciation taken
into account with respect to the Partnership's assets for purposes of computing
Net Income and Net Loss. Any adjustment to the Gross Asset Values of Partnership
property shall require an adjustment to the Partners' Capital Accounts; as for
the manner in which such adjustments are allocated to the Capital Accounts, see
clause (c) of the definition of Net Income and Net Loss in the case of
adjustment by Depreciation, and clause (d) of said definition in all other
cases.
"Immediate Family" shall mean, with respect to any
Person, such Person's spouse, parents, parents-in-law, descendants, brothers,
sisters, first cousins, brothers-in-law and sisters-in-law.
"Indemnitee" shall mean (i) any Person made a
party to a proceeding by reason of his status as (A) the General Partner, (B) a
trustee, director, officer or Liquidating Trustee of the Partnership or the
General Partner or (C) a Limited Partner Representative, and (ii) such other
Persons (including Affiliates of the General Partner or the Partnership) as the
General Partner may designate from time to time, in its sole and absolute
discretion.
"Indemnity Collateral" shall have the meaning set
forth in Section 13.3.
"Independent Trustee(s)" shall mean those Trustees
of the General Partner who are not officers or employees of the
General Partner.
"Lien" shall mean any liens, security interests,
mortgages, deeds of trust, pledges, options, rights of first offer or first
refusal and any other similar encumbrances of any nature whatsoever.
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"Limited Partner Representatives" shall have the
meaning set forth in Section 10.6 hereof.
"Limited Partners" shall mean those Persons listed
under the heading "Limited Partners" on Exhibit A attached hereto in their
respective capacities as limited partners of the Partnership, their permitted
successors or assigns as limited partner hereof, or any Person who, at the time
of reference thereto, is a limited partner of the Partnership.
"Liquidating Trustee" shall mean such individual
or entity as is selected as the Liquidating Trustee hereunder by the General
Partner, which individual or Entity may include an Affiliate of the General
Partner, provided such Liquidating Trustee agrees in writing to be bound by the
terms of this Agreement. The Liquidating Trustee shall be empowered to give and
receive notices, reports and payments in connection with the dissolution,
liquidation and/or winding up of the Partnership and shall hold and exercise
such other rights and powers as are necessary or required to authorize all
parties to deal with the Liquidating Trustee in connection with the dissolution,
liquidation and/or winding-up of the Partnership and shall hold and exercise
such other rights and powers as are necessary or required to permit all parties
to deal with the Liquidating Trustee in connection with the dissolution,
liquidation and/or winding-up of the Partnership.
"Majority-In-Interest of the Limited Partners"
shall mean Limited Partner(s) who hold in the aggregate more than fifty percent
(50%) of the Percentage Interests then allocable to and held by the Limited
Partners, as a class.
"Minimum Gain Attributable to Partner Nonrecourse
Debt" shall mean "partner nonrecourse debt minimum gain" as determined in
accordance with Regulation Section 1.704-2(i)(2).
"Net Financing Proceeds" shall mean the cash
proceeds received by the Partnership in connection with any borrowing or
refinancing of borrowing (i) by or on behalf of the Partnership or (ii) by or on
behalf of any Property Partnership (whether or not secured), after deduction of
all costs and expenses incurred by the Partnership or the Property Partnership
in connection with such borrowing, and after deduction of that portion of such
proceeds used to repay any other indebtedness of the Partnership or Property
Partnerships, or any interest or premium thereon.
"Net Income or Net Loss" shall mean, for each
fiscal year or other applicable period, an amount equal to the Partnership's net
income or loss for such year or period as determined for federal income tax
purposes by the Accountants, determined in accordance with Section 703(a) of the
Code (for this purpose, all items of income, gain, loss or deduction
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required to be stated separately pursuant to Section 703(a) of the Code shall be
included in taxable income or loss), with the following adjustments: (a) by
including as an item of gross income any tax-exempt income received by the
Partnership; (b) by treating as a deductible expense any expenditure of the
Partnership described in Section 705(a)(2)(B) of the Code (including amounts
paid or incurred to organize the Partnership (unless an election is made
pursuant to Code Section 709(b)) or to promote the sale of interests in the
Partnership and by treating deductions for any losses incurred in connection
with the sale or exchange of Partnership property disallowed pursuant to Section
267(a)(1) or Section 707(b) of the Code as expenditures described in Section
705(a)(2)(B) of the Code); (c) in lieu of depreciation, depletion, amortization,
and other cost recovery deductions taken into account in computing total income
or loss, there shall be taken into account Depreciation; (d) gain or loss
resulting from any disposition of Partnership property with respect to which
gain or loss is recognized for federal income tax purposes shall be computed by
reference to the Gross Asset Value of such property rather than its adjusted tax
basis; and (e) in the event of an adjustment of the Gross Asset Value of any
Partnership asset which requires that the Capital Accounts of the Partnership be
adjusted pursuant to Regulation Section 1.704-1(b)(2)(iv)(e), (f) and (m), the
amount of such adjustment is to be taken into account as additional Net Income
or Net Loss pursuant to Exhibit C. Once an item of income, gain, loss or
deductions has been included in the initial computation of Net Income or Net
Loss or is subjected to the special allocation rules in Exhibit C, Net Income or
Net Loss shall be recomputed without regard to such item.
"Net Operating Cash Flow" shall mean, with respect
to any fiscal period of the Partnership, the excess, if any, of "Receipts" over
"Expenditures". For purposes hereof, the term "Receipts" means the sum of all
cash receipts of the Partnership from all sources for such period, including Net
Sale Proceeds and Net Financing Proceeds but excluding Capital Contributions,
and any amounts held as reserves as of the last day of such period which the
General Partner reasonably deems to be in excess of reserves as determined
below. The term "Expenditures" means the sum of (a) all cash expenses of the
Partnership for such period, (b) the amount of all payments of principal and
interest on account of any indebtedness of the Partnership including payments of
principal and interest on account of loans from the General Partner, or amounts
due on such indebtedness during such period, and (c) such cash reserves as of
the last day of such period as the General Partner deems necessary or
appropriate for any capital, operating or other expenditure, including, without
limitation, contingent liabilities.
"Net Sale Proceeds" shall mean the cash proceeds
received by the Partnership in connection with a sale of any asset (i) by or on
behalf of the Partnership or (ii) by or on
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behalf of a Property Partnership, after deduction of any costs or expenses
incurred by the Partnership or a Property Partnership, or payable specifically
out of the proceeds of such sale (including, without limitation, any repayment
of any indebtedness required to be repaid as a result of such sale or which the
General Partner elects to repay out of the proceeds of such sale, together with
accrued interest and premium, if any, thereon and any sales commissions or other
costs and expenses due and payable to any Person in connection with a sale,
including to a Partner or its Affiliates).
"Nonrecourse Deductions" shall have the meaning
set forth in Sections 1.704-2(b)(1) and (c) of the Regulations.
"Nonrecourse Liabilities" shall have the meaning
set forth in Section 1.704-2(b)(3) of the Regulations.
"Offering" shall have the meaning set forth in the
Registration Statement.
"Partner Nonrecourse Deductions" shall have the
meaning set forth in Section 1.704-2(i)(2) of the Regulations.
"Partner(s)" shall mean the General Partner and/or
the Limited Partners, their duly admitted successors or assigns or any Person
who is a partner of the Partnership at the time of reference thereto.
"Partnership" shall mean the limited partnership
hereby constituted, as such limited partnership may from time to
time be constituted.
"Partnership Interest" shall mean the ownership
interest of a Partner in the Partnership from time to time, including each
Partner's Percentage Interest and such Partner's Capital Account. Wherever in
this Agreement reference is made to a particular Partner's Partnership Interest
it shall be deemed to refer to such Partner's Percentage Interest and shall
include the proportionate amount of such Partner's other interests in the
Partnership which are attributable to or based upon the Partner's Partnership
Interest.
"Partnership Minimum Gain" shall have the meaning
set forth in Section 1.704-2(b)(2) of the Regulations.
"Partnership Record Date" means the record date
established by the General Partner for distribution of Net Operating Cash Flow
pursuant to Section 6.1 hereof, which record date shall be the same as the
record date established by the General Partner for distribution to its
shareholders of some or all of its portion of such distribution.
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"Percentage Interest" shall mean, with respect to
any Partner, the percentage ownership interest of such Partner in such items of
the Partnership as to which the term "Percentage Interests" is applied in this
Agreement. Such Percentage Interest shall be determined by dividing the
Partnership Interests owned by such Partner by the total number of Partnership
Interests then outstanding and as specified in Exhibit A hereto, as such Exhibit
may be amended from time to time.
"Person" shall mean any natural person or Entity.
"Property" or "Properties" shall mean any real
estate (and related assets) in which the Partnership or any Property
Partnership, directly or indirectly, owns or acquires ownership of a fee or
leasehold interest.
"Property Partnership Agreements" shall mean and
include the Existing Property Partnership Agreements and any partnership
agreement, certificate of incorporation, bylaws or similar agreement, document
or body of law (as any of the foregoing may be amended, modified or supplemented
from time to time) under which a Property Partnership is constituted or by which
it is governed.
"Property Partnership Interests" shall mean and
include Existing Property Partnership Interests and the interest of the
Partnership as a partner or other equity participant in any Property Partnership
acquired after the date hereof.
"Property Partnerships" shall mean and include the
Existing Property Partnerships and any partnership or other Entity in which the
Partnership is or becomes a partner or other equity participant and which is
formed for the purpose of acquiring, developing or owning a Property or a
proposed Property.
"Prospectus" shall mean any prospectus filed with
the Securities and Exchange Commission under Rule 424 of the Act, and any
amendment or supplement thereto, as part of the Registration Statement.
"Registration Statement" shall mean the
Registration Statement No. 33-77084 (including the prospectus contained therein)
heretofore filed by the General Partner with the SEC, and any amendments at any
time hereafter made thereto (other than post-effective amendments), pursuant to
which the General Partner proposes to offer and sell certain of its Shares.
"Regulations" shall mean the Income Tax
Regulations promulgated under the Code, as such regulations may be amended from
time to time (including corresponding provisions of succeeding regulations).
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"Regulatory Allocations" shall have the meaning
set forth in Exhibit C hereto.
"REIT" shall mean a real estate investment trust
as defined in Section 856 of the Code.
"REIT Expenses" shall mean (i) costs and expenses
relating to the formation and continuity of existence of the General Partner and
its subsidiaries (which subsidiaries shall, for purposes of this definition,
include the Property Partnerships and be included within the definition of
General Partner), including taxes, fees and assessments associated therewith,
any and all costs, expenses or fees payable to any director or trustee of the
General Partner or such subsidiaries, (ii) costs and expenses relating to any
offer or registration of securities by the General Partner and all statements,
reports, fees and expenses incidental thereto, including underwriting discounts
and selling commissions applicable to any such offer of securities, (iii) costs
and expenses associated with the preparation and filing of any periodic reports
by the General Partner under federal, state or local laws or regulations,
including filings with the SEC, (iv) costs and expenses associated with
compliance by the General Partner with laws, rules and regulations promulgated
by any regulatory body, including the SEC, and (v) all other operating or
administrative costs of the General Partner incurred in the ordinary course of
its business on behalf of the Partnership.
"REIT Requirements" shall have the meaning set
forth in Section 6.2 hereof.
"Rights" shall have the meaning set forth in
Section 11.1 hereof.
"▇▇▇▇▇ Principals" shall mean ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
III, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇.
"▇▇▇▇▇ Senior Executives" shall mean ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇ III, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇.
▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇ Price, ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇, III, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇.
▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇.
"SEC" shall mean the United States Securities and
Exchange Commission.
"Section 704(c) Tax Items" shall have the meaning
set forth in Exhibit C.
"Shares" shall mean the common shares of
beneficial interest of the General Partner.
"Special Indemnitors" shall mean ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
III, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇.
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"Special Indemnity Collateral" shall have the
meaning set forth in Section 13.3.
"Stock Incentive Plan" shall mean the General
Partner's 1994 Share Incentive Plan and any other stock option or stock
incentive plan hereafter adopted by the General Partner.
"Stock Option" shall mean an option to purchase
Shares granted under the Stock Incentive Plan.
"Stock Option Agreement" shall mean the form of
Stock Option Agreement to be used under the Stock Incentive Plan.
"Specified Decisions" shall have the meaning set
forth in Section 7.2 hereof.
"TLC Contribution Agreement" shall mean that
certain Contribution and Acquisition Agreement dated as of March 5, 1997, and
amended by that certain Amendment No. 1 to Contribution and Acquisition
Agreement dated as of April 17, 1997, by and among The Liberty Corporation,
certain of its affiliates named therein, the Partnership and the General
Partner.
"Tax Items" shall have the meaning set forth in
Exhibit C.
"Trading Day" shall mean a day on which the
principal national securities exchange on which the Common Stock is listed or
admitted to trading is open for the transaction of business or, if the Shares
are not listed or admitted to trading on any national securities exchange, shall
mean any day other than a Saturday, a Sunday or a day on which banking
institutions in the State of New York are authorized or obligated by law or
executive order to close.
"Underwriting Agreement" shall mean that certain
Underwriting Agreement for the offering and sale of 18,250,000 Shares among the
General Partner, the Partnership and the representatives of the several
underwriters named therein.
ARTICLE II
CONTINUATION OF PARTNERSHIP; BUSINESS OF PARTNERSHIP
2.1 Continuation. The parties hereto do hereby continue the
Partnership as a limited partnership pursuant to the provisions of the Act for
the purposes and upon the terms and conditions hereinafter set forth. The
Partners agree that the rights and liabilities of the Partners shall be as
provided in the Act, except as otherwise herein expressly provided.
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2.2 Name. The name of the Partnership shall be Liberty Property
Limited Partnership, or such other name as shall be chosen from time to time by
the General Partner in its sole discretion.
2.3 Character of the Business. The purpose of the Partnership
shall be to acquire, hold, own, develop, construct, improve, maintain, operate,
sell, lease, transfer, encumber, convey, exchange, and otherwise dispose of or
deal with the Properties and any other real and personal property of all kinds;
to exercise all of the powers of a partner in the Property Partnerships; to
acquire, own, deal with and dispose of Property Partnership Interests; to
undertake such other activities as may be necessary, desirable or appropriate to
the business of the Partnership; to engage in such other activities as shall be
necessary, desirable or appropriate to effectuate the foregoing purposes; and to
otherwise engage in any enterprise or business in which a limited partnership
may engage or conduct under the Act. The Partnership shall have all powers
necessary, desirable or appropriate to accomplish the purposes enumerated. In
connection with the foregoing, the Partnership shall have full power and
authority, directly or through its interest in Property Partnerships, to enter
into, perform, and carry out contracts of any kind, to borrow money and to issue
evidences of indebtedness, (including, without limitation, the Debentures)
whether or not secured by mortgages, security interests or other liens, and to
enter into any and all indentures and other agreements and documents relating to
such evidence of indebtedness, directly or indirectly, and to acquire and
construct additional Properties necessary or useful in connection with its
business.
2.4 Location of Principal Place of Business. The location of
the principal place of business of the Partnership shall be at ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇ Corporate Center, Malvern, PA 19335, or such
other location as shall be selected from time to time by the General Partner in
its sole discretion.
ARTICLE III
TERM
3.1 Commencement. The Partnership's term commenced upon the
filing of the Certificate with the Secretary of State of Pennsylvania on March
28, 1994.
3.2 Dissolution. The Partnership shall continue until dissolved
upon the occurrence of the earliest of the following events:
(a) the dissolution, termination, withdrawal,
retirement or Bankruptcy of the General Partner, subject to the Partnership
being continued as provided in Section 9.1 hereof;
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(b) the election to dissolve the Partnership made
in writing by the General Partner with the Consent of the Limited Partners;
(c) the sale or other disposition of all or
substantially all of the assets of the Partnership, unless the General Partner
elects to continue the Partnership business for the purpose of the receipt and
the collection of indebtedness or the collection of any other consideration to
be received in exchange for the assets of the Partnership (which activities
shall be deemed to be part of the winding up of the affairs of the Partnership);
(d) the entry of a decree of judicial dissolution
of the Partnership pursuant to the provisions of the Act, which decree is final
and not subject to appeal; or
(e) December 31, 2090.
ARTICLE IV
CAPITAL CONTRIBUTIONS
4.1 Capital Contributions, Partnership Interests and Percentage
Interests of the Partners. In various transactions from the organization of the
Partnership through the date of this Agreement, the Partners have made or caused
to be made their respective Capital Contributions to the Partnership as
reflected on the books of the Partnership. The Partners shall own Partnership
Interests in the amounts set forth in Exhibit A and shall have the Percentage
Interests in the Partnership as set forth in such Exhibit, which Percentage
Interests shall be adjusted in Exhibit A from time to time by the General
Partner to the extent necessary to properly reflect conversions of Partnership
Interests, Capital Contributions, the issuance of additional Partnership
Interests, or any other event having an effect on a Partner's Percentage
Interest. Any such changes to Exhibit "A" may be made by the General Partner
without the need for a formal amendment to this Agreement, and the Exhibit "A"
maintained from time to time on the books of the Partnership shall, absent
manifest error, be conclusive as to the Partnership Interests and Percentage
Interests of the Partners. A Partnership Interest refers to each separate unit
of ownership interest in the Partnership. The number of Partnership Interests
and Percentage Interests of each Partner are as specified on Exhibit A hereto as
such schedule may be amended from time to time to reflect transfers of
Partnership Interests, issuance of additional Partnership Interests and
conversions of Partnership Interests, but no such amendment can itself change
the number of Partnership Interests held by each Partner, as specified on such
Exhibit A. Except to the extent specifically set forth in this Agreement with
respect to the General Partner, the Partners shall have no obligation to make
any additional Capital Contributions or loans to the Partnership, even if the
failure to do so could result in the Bankruptcy or insolvency of the Partnership
or any other adverse consequence to the Partnership. At the time of the
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mandatory exchange of Property Partnership Interests for Partnership Interests
pursuant to Section 8.2(b) of the Existing Property Partnership Agreements, the
obligations of the respective transferors with respect to their loans referred
to in said Section 8.2(b) will be assumed by the Partnership, and the respective
transferors will be released by the holder of such loans from any further
personal liability under such loans.
4.2 Issuance of Additional Partnership Interests and
REIT Shares.
(a) The General Partner is hereby authorized to
cause the Partnership from time to time to issue to one or more of the Partners
(including the General Partner) or other Persons additional Partnership
Interests in one or more classes, or one or more series of any of such classes,
with such designations, preferences and participating, optional or other special
rights, powers and duties, including rights, powers and duties which may be
senior to interests in the Partnership theretofore issued, all as shall be
determined by the General Partner in its sole and absolute discretion and
without the approval of any of the Limited Partners, including, without
limitation, (i) the allocations of items of Partnership income, gain, loss,
deduction and credit to each such class or series of Partnership Interests: (ii)
the right of each such class or series of Partnership Interests to share in
Partnership distributions; and (iii) the rights of each such class or series of
Partnership Interests upon dissolution and liquidation of the Partnership,
provided that no such additional Partnership Interests shall be issued to the
General Partner unless either (i) the additional Partnership Interests are
issued in connection with an issuance of shares of the General Partner, which
shares have designations, preferences and other rights, all such that the
economic interests thereof are substantially similar to the designations,
preferences and other rights of the additional Partnership Interests issued to
the General Partner in accordance with this Section 4.2(a) and the General
Partner shall make a Capital Contribution to the Partnership in an amount equal
to the net proceeds, if any, received by the General Partner in connection with
the issuance of such shares of the General Partner, or (ii) the additional
Partnership Interests are issued to all Partners in proportion to their
respective Percentage Interests.
(b) After the initial public offering of Shares,
the General Partner shall not issue any additional Shares (other than Shares
issued pursuant to the provisions of Section 11.1 and Exhibit D hereto and
Shares issued whose proceeds are used to purchase Partnership Interests
transferred pursuant to Section 11.1 and Exhibit D hereto) or rights, options,
warrants or convertible or exchangeable securities containing the right to
subscribe for or purchase Shares (collectively, "New Securities") other than to
all holders of Shares unless (i) the General Partner shall cause the Partnership
to issue to the General Partner (or in the absence of such issuance, there shall
be
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deemed to have been issued to the General Partner) Partnership Interests or
rights, options, warrants or convertible or exchangeable securities of the
Partnership having designations, preferences and other rights, all such that the
economic interests are substantially similar to those of the New Securities, and
(ii) the General Partner contributes the net proceeds, if any, from the issuance
of such New Securities and from the exercise of rights contained in such New
Securities to the Partnership.
(c) In connection with the initial public
offering of Shares by the General Partner, and any other issuance of Shares
pursuant to this Section 4.2, the General Partner shall make a Capital
Contribution to the Partnership of the net proceeds received by it in connection
with such issuance, provided that if the proceeds actually received by the
General Partner are less than the gross proceeds of such issuance as a result of
any underwriter's discount, placement fees, commissions or other expenses paid
or incurred in connection with such issuance, then the General Partner shall be
deemed to have made a Capital Contribution to the Partnership in the amount of
the gross proceeds of such issuance and the Partnership shall be deemed
simultaneously to have reimbursed the General Partner pursuant to Section 7.3
for the amount of such underwriters' discount, placement fees, commissions or
other expenses.
(d) No Person shall have any preemptive,
preferential or other similar right with respect to (i) additional Capital
Contributions or loans to the Partnership; or (ii) issuance or sale of any
Partnership Interests.
(e) The General Partner is hereby authorized on
behalf of each of the Partners to amend this Agreement to reflect the admission
of any Additional Partner or any increase in the Percentage Interests of any
Partner and the corresponding reduction of the Percentage Interests of the other
Partners in accordance with the provisions of this Section 4.2, and the General
Partner shall promptly send a copy of such amendment to each Limited Partner.
(f) Pursuant to subsections 4.2(a) and (b)
hereof, on August 11, 1997 the General Partner contributed to the Partnership
approximately $120,813,500, representing the net proceeds from the issuance of
New Securities consisting of 5,000,000 shares of 8.80% Series A Cumulative
Redeemable Preferred Shares of Beneficial Interest, Liquidation Preference
$25.00 per share. Effective upon the Partnership's receipt of such net proceeds
the Partnership is deemed to have issued to the General Partner 5,000,000 units
of 8.80% Series A Cumulative Redeemable Preferred Partnership Interests, the
designations, preferences and participating, optional or other special rights,
powers and duties of which are set forth on Exhibit F hereto.
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4.3 No Third Party Beneficiaries. No creditor or other third
party shall have the right to enforce any right or obligation of any Partner to
make Capital Contributions or loans or to pursue any other right or remedy
hereunder or at law or in equity, it being understood and agreed that the
provisions of this Agreement shall be solely for the benefit of, and may be
enforced solely by, the parties hereto and their respective successors and
assigns. None of the rights or obligations of the Partners herein set forth to
make Capital Contributions or loans to the Partnership shall be deemed an asset
of the Partnership for any purpose by any creditor or other third party, nor may
such rights or obligations be sold, transferred or assigned by the Partnership
or pledged or encumbered by the Partnership to secure any debt or other
obligation of the Partnership or of any of the Partners.
4.4 No Interest on or Return of Capital Contribution. No
Partner shall be entitled to interest on its Capital Contribution or, except as
otherwise specifically provided herein, have any right to demand or receive the
return of its Capital Contribution.
4.5 Loans to Partnership. At the option of the General Partner,
any Partner (including, without limitation, the General Partner) may make loans
to the Partnership on terms deemed by the General Partner to be commercially
reasonable.
4.6 Stock Incentive Plan. If at any time or from time to time
Stock Options granted in connection with the General Partner's Stock Incentive
Plan are exercised or restricted Shares are issued in accordance with the terms
of the Stock Incentive Plan:
(a) the General Partner shall, as soon as
practicable after such exercise, contribute to the capital of the Partnership an
amount equal to the exercise price paid to the General Partner by such
exercising party in connection with the exercise of the Stock Option; and
(b) with respect to the issuance of Stock
Options, the General Partner shall be deemed to have contributed to the
Partnership as a Capital Contribution pursuant to Section 4.6(a) hereof an
amount equal to the excess of the Current Per Share Market Price (as of the
Trading Date immediately preceding the date on which the purchase of the Shares
by such exercising party is consummated) over the amount contributed in respect
of the exercise of such Options pursuant to Section 4.6(a) multiplied by the
number of Shares delivered by the General Partner to such exercising party, and
with respect to the issuance of restricted Shares such Current Per Share Market
Price multiplied by the number of restricted Shares so issued.
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ARTICLE V
CERTAIN CONCURRENT TRANSACTIONS
[INTENTIONALLY OMITTED]
ARTICLE VI
ALLOCATIONS, DISTRIBUTIONS AND OTHER TAX AND ACCOUNTING MATTERS
6.1 Allocations. The Net Income, Net Loss and/or other
Partnership items shall be allocated pursuant to the provisions of Exhibit C
hereto.
6.2 Distributions. Except as provided in Section 8.2, the
General Partner shall cause the Partnership to distribute all or any portion of
Net Operating Cash Flow to the Partners from time to time as determined by the
General Partner, but in any event not less frequently than quarterly in such
amounts as the General Partner shall determine; provided, however, (a) that all
such distributions shall be made pro rata in accordance with the Partners' then
Percentage Interests; (b) that distributions to be received by newly admitted
Limited Partners in their capacity as partners of the Partnership shall be
pro-rated to reflect the portion of the fiscal quarter of the Partnership for
which the newly admitted Limited Partners held their Partnership Interests and
shall not be pro rata in accordance with their then Percentage Interests; and
(c) that notwithstanding the foregoing, the General Partner shall use its best
efforts to cause the Partnership to distribute sufficient amounts to enable the
General Partner to pay shareholder dividends that will (i) satisfy the
requirements for qualifying as a REIT under the Code and Regulations ("REIT
Requirements"), and (ii) avoid any federal income or excise tax liability of the
General Partner.
6.3 Books of Account. At all times during the continuance of
the Partnership, the General Partner shall maintain or cause to be maintained
full, true, complete and correct books of account. In addition, the Partnership
shall keep all records required to be kept pursuant to the Act.
6.4 Reports. The General Partner shall cause to be sent to the
Limited Partners promptly after receipt of the same from the Accountants and in
no event later than 105 days after the close of each fiscal year of the
Partnership, copies of Audited Financial Statements for the Partnership, or of
the General Partner if such statements are prepared solely on a consolidated
basis with the General Partner, for the immediately preceding fiscal year of the
Partnership. The Partnership shall also cause to be prepared such reports and/or
information as are
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necessary for the General Partner to determine its qualification as a REIT and
its compliance with REIT Requirements.
6.5 Tax Elections and Returns. All elections required or
permitted to be made by the Partnership under any applicable tax law shall be
made by the General Partner in its sole discretion. The General Partner shall
cause the Accountants to prepare and submit to the Limited Partner
Representatives on or before March 31st of each year for review all federal and
state income tax returns of the Partnership and cause the Accountants for the
Property Partnerships to submit to the Limited Partner Representatives on or
before March 31st of each year for review all federal and state income tax
returns of the Property Partnerships. If the Limited Partner Representatives
determine that any modifications to the tax returns of the Partnership or any
Property Partnership should be considered, the Limited Partner Representatives
shall, within ten (10) days following receipt of such tax returns from the
Accountants or the General Partner, indicate to the Accountants or to the
General Partner to advise the Property Partnership's accountants of the
suggested revisions to the tax returns, which returns shall be resubmitted to
the Limited Partner Representatives for their review (but not approval). The
Limited Partner Representatives shall complete their review of the resubmitted
returns within ten (10) days after receipt thereof from the Accountants or the
General Partner. The General Partner shall consult in good faith with the
Limited Partner Representatives regarding any proposed modifications to the tax
returns of the Partnership and/or the Property Partnerships. A statement of the
allocation of Net Income or Loss of the Partnership shown on the annual income
tax returns prepared by the Accountants and a statement of the allocation of Net
Income or Net Loss shown on the income tax return of the Property Partnerships
shall be transmitted and delivered to the Limited Partner Representatives within
ten (10) days of the receipt thereof by the Partnership. The General Partner
shall be responsible for preparing and filing all federal and state tax returns
for the Partnership and furnishing copies thereof to the Partners, together with
required Partnership schedules showing allocations of tax items and copies of
the tax returns of all Property Partnerships, all within the period of time
prescribed by law.
6.6 Tax Matters Partner. The General Partner is hereby
designated as the Tax Matters Partner within the meaning of Section 6231 (a)(7)
of the Code for the Partnership; provided, however, that (i) in exercising its
authority as Tax Matters Partner it shall be limited by the provisions of this
Agreement affecting tax aspects of the Partnership; (ii) the General Partner
shall consult in good faith with the Limited Partner Representatives regarding
the filing of a Code Section 6227(b) administrative adjustment request with
respect to the Partnership or a Property Partnership before filing such request,
it being understood, however, that the provisions hereof shall not be
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construed to limit the ability of any Partner, including the General Partner, to
file an administrative adjustment request on its behalf pursuant to Section
6227(a) of the Code; (iii) the General Partner shall consult in good faith with
the Limited Partner Representatives regarding the filing of a petition for
judicial review of an administrative adjustment request under Section 6228 of
the Code, or a petition for judicial review of a final partnership
administrative judgment under Section 6226 of the Code relating to the
Partnership before filing such petition; (iv) the General Partner shall give
prompt notice to the Limited Partner Representatives of the receipt of any
written notice that the Internal Revenue Service or any state or local taxing
authority intends to examine or audit Partnership income tax returns for any
year, receipt of written notice of the beginning of an administrative proceeding
at the Partnership level relating to the Partnership under Section 6223 of the
Code, receipt of written notice of the final Partnership administrative
adjustment relating to the Partnership pursuant to Section 6223 of the Code, and
receipt of any request from the Internal Revenue Service for waiver of any
applicable statute of limitations with respect to the filing of any tax return
by the Partnership and (v) the General Partner shall promptly notify the Limited
Partner Representatives if the General Partner does not intend to file for
judicial review with respect to the Partnership. The General Partner, in acting
on behalf of the Partnership as tax matters partner of a Property Partnership,
shall afford the Limited Partner Representatives the same rights with respect to
Property Partnership tax matters as are afforded to the Limited Partner
Representatives under this Section 6.6.
6.7 Withholding Payments Required By Law.
(a) Unless treated as a Tax Payment Loan (as
hereinafter defined), any amount paid by the Partnership for or with respect to
any Partner on account of any withholding tax or other tax payable with respect
to the income, profits or distributions of the Partnership pursuant to the Code,
the Treasury Regulations, or any state or local statute, regulation or ordinance
requiring such payment (a "Withholding Tax Act") shall be treated as a
distribution to such Partner for all purposes of this Agreement, consistent with
the character or source of the income, profits or cash which gave rise to the
payment or withholding obligation. To the extent that the amount required to be
remitted by the Partnership under the Withholding Tax Act exceeds the amount
then otherwise distributable to such Partner, the excess shall constitute a loan
from the Partnership to such Partner (a "Tax Payment Loan") which shall be
payable upon demand and shall bear interest, from the date that the Partnership
makes the payment to the relevant taxing authority, at the rate announced from
time to time by Citibank, N.A. (or any successor thereto) as its "prime rate",
plus 5 percentage points, compounded monthly (but in no event higher than the
highest interest rate permitted by applicable law). So long as any Tax
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Payment Loan to any Partner or the interest thereon remains unpaid, the
Partnership shall make future distributions due to such Partner under this
Agreement by applying the amount of any such distributions first to the payment
of any unpaid interest on such Tax Payment Loan and then to the repayment of the
principal thereof, and no such future distributions shall be paid to such
Partner until all of such principal and interest has been paid in full.
(b) The General Partner shall have the authority
to take all actions necessary to enable the Partnership to comply with the
provisions of any Withholding Tax Act applicable to the Partnership and to carry
out the provisions of this Section. Nothing in this Section shall create any
obligation on the General Partner to advance funds to the Partnership or to
borrow funds from third parties in order to make any payments on account of any
liability of the Partnership under a Withholding Tax Act.
(c) In the event that a Tax Payment Loan is not
paid by a Limited Partner within 30 days after written demand therefor is made
by the General Partner, the General Partner, as such Limited Partner's
attorney-in-fact, may execute any and all such documents and take any and all
such other action as the Limited Partner could take, in the Limited Partner's
name, place and stead, to exercise Rights under Article XI hereof and to deliver
on behalf of such Limited Partner a Sale Component Exercise Notice (as that term
is defined in Exhibit D hereto) with respect to such Limited Partner's
Partnership Interests or any portion thereof and (all documents relating
thereto, including, without limitation, a ▇▇▇▇ of sale for such Partnership
Interests), whose proceeds will be sufficient, in the General Partner's
judgment, to pay such Loan, all accrued interest thereon and all costs incurred
by the Partnership in connection with attempting to collect such Loan, and to
apply the proceeds received upon the closing of the exercise of such Rights to
repay such Loan, accrued interest and costs, with any balance of such proceeds
being for the account of such Limited Partner. Each Limited Partner hereby
irrevocably constitutes and appoints the General Partner with full power of
substitution, to take any and all such action on behalf of the Limited Partner
as is set forth in this Section 6.7(c). Such appointment shall survive the death
or incompetency of each Limited Partner to the fullest extent permitted by law.
(d) Any Partner who is not a nonresident alien or
a foreign entity, such as a corporation, partnership, trust or estate (as those
terms are defined in the Code and the Treasury Regulations) shall deliver to the
General Partner a Certification of Non-Foreign Status in the form attached
hereto as Schedule 3 (the "Non-Foreign Certificate") for withholding purposes
under Sections 1445 and 1446 of the Code. In the event that a Partner (i) is a
nonresident alien or foreign entity, such as a corporation, partnership, trust
or estate (as those terms are
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defined in the Code and the Treasury Regulations), or (ii) does not furnish a
Non-Foreign Certificate to the General Partner, the withholding provisions in
this Section 6.7 shall apply for purposes of Sections 1445 and 1446 of the Code.
ARTICLE VII
RIGHTS, DUTIES AND RESTRICTIONS OF THE GENERAL PARTNER
7.1 Powers and Duties of General Partner.
(a) The General Partner shall be responsible for
the management of the Partnership's business and affairs. Except as otherwise
herein expressly provided, and subject to the limitations contained in Section
7.2 hereof with respect to Specified Decisions, the General Partner shall have,
and is hereby granted, full and complete power, authority and discretion to take
such action for and on behalf of the Partnership and in its name as the General
Partner shall, in its sole and absolute discretion, deem necessary or
appropriate to carry out the Partnership's business and the purposes for which
the Partnership was organized. Except as otherwise expressly provided herein,
and subject to Section 7.2 hereof, the General Partner shall, on behalf of, and
at the expense of, the Partnership, have without limitation the right, power and
authority:
(1) to manage, control, invest, reinvest, acquire
by purchase, lease or otherwise, sell, contract to purchase or sell, grant,
obtain, or exercise options to purchase, options to sell or conversion rights,
assign, transfer, convey, deliver, endorse, exchange, pledge, mortgage, abandon,
improve, repair, maintain, insure, lease for any term and otherwise deal with
any and all property of whatsoever kind and nature, and wheresoever situated, in
furtherance of the purposes of the Partnership;
(2) to acquire, directly or indirectly,
interests in real estate of any kind and of any type, and any and all kinds of
interests therein, and to determine the manner in which title thereto is to be
held; to manage, insure against loss, protect and subdivide any of the real
estate, interests therein or parts thereof; to improve, develop or redevelop any
such real estate; to participate in the ownership and development of any
property; to dedicate for public use, to vacate any subdivisions or parts
thereof, to resubdivide, to contract to sell, to grant options to purchase or
lease, to sell on any terms; to convey, to mortgage, pledge or otherwise
encumber said property, or any part thereof; to lease said property or any part
thereof from time to time, upon any terms and for any period of time, and to
renew or extend leases, to amend, change or modify the terms and provisions of
any leases and to grant options to lease and options to renew leases and options
to purchase; to partition or to exchange said real property, or any part
thereof,
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for other real or personal property; to grant easements or charges of any kind;
to release, convey or assign any right, title or interest in or about or
easement appurtenant to said property or any part thereof; to construct and
reconstruct, remodel, alter, repair, add to or take from buildings on said
premises; to insure any Person having an interest in or responsibility for the
care, management or repair of such property; to direct the trustee of any land
trust to mortgage, lease, convey or contract to convey the real estate held in
such land trust or to execute and deliver deeds, mortgages, notes, and any and
all documents pertaining to the property subject to such land trust or in any
matter regarding such trust; to execute assignments of all or any part of the
beneficial interest in such land trust;
(3) to employ, engage or contract with or dismiss
from employment or engagement Persons to the extent deemed necessary by the
General Partner for the operation and management of the Partnership business,
including but not limited to, contractors, subcontractors, engineers,
architects, surveyors, mechanics, consultants, accountants, attorneys, insurance
brokers, real estate brokers and others;
(4) to enter into contracts on behalf of the
Partnership and to cause all Administrative Expenses to be paid;
(5) to borrow and lend money and make and obtain
loans and advances to or from any Person for Partnership purposes (including,
without limitation the making of loans to partners of any of the Property
Partnerships); to contract liabilities and obligations of every kind and nature
with or without security; and to repay, discharge, settle, adjust, compromise,
or liquidate any such loan, advance, obligation or liability;
(6) to grant security interests, mortgage,
assign, pledge, hypothecate, deposit, deliver, enter into sale and leaseback
arrangements or otherwise give as security or for sale or other disposition any
and all Partnership property, tangible or intangible, including, but not limited
to, personal property and real estate and interests; to sign, execute and
deliver any and all assignments, deeds, bills of sale and instruments in
writing; to enter into, make, execute, deliver and receive agreements,
undertakings and instruments of every kind and nature; and generally to do any
and all other acts and things incidental to any of the foregoing;
(7) to, acquire and enter into any contract of
insurance (including, without limitation, general partner liability and
partnership reimbursement insurance policies) which the General Partner may deem
necessary or appropriate;
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(8) to conduct any and all banking transactions
on behalf of the Partnership; to draw, sign, execute, accept, endorse,
guarantee, deliver, receive and pay any checks, drafts, bills of exchange,
acceptances, notes, obligations, undertakings and other instruments for or
relating to the payment of money in, into, or from any account in the
Partnership's name; to make deposits and withdraw the same and to negotiate or
discount commercial paper and acceptances;
(9) to demand, ▇▇▇ for, receive, and otherwise
take steps to collect all debts, rents, proceeds, interests, dividends, goods,
income from property, damages and all other property, to which the Partnership
may be entitled or which are or may become due the Partnership from any Person;
to commence, prosecute or enforce, or to defend, answer or oppose, contest and
abandon all legal proceedings in which the Partnership is or may hereafter be
interested; and to settle, compromise or submit to arbitration any claims,
disputes and matters which may arise between the Partnership and any other
Person and to grant an extension of time for the payment or satisfaction thereof
on any terms, with or without security;
(10) to acquire interests in and contribute
property to any limited or general partnerships, joint ventures, subsidiaries or
other entities as the General Partner deems desirable.
(11) to maintain the Partnership's books and
records; and
(12) to prepare and deliver, or cause to be
prepared and delivered by the Accountants, all financial and other reports with
respect to the operations of the Partnership, and preparation and filing of all
tax returns and reports.
Except as otherwise provided herein, to the extent the duties of the General
Partner require expenditures of funds to be paid to third parties, the General
Partner shall not have any obligations hereunder except to the extent that
Partnership funds are reasonably available to it for the performance of such
duties, and nothing herein contained shall be deemed to require the General
Partner, in its capacity as such, to expend its individual funds for payment to
third parties or to undertake any specific liability or ligation on behalf of
the Partnership.
(b) Notwithstanding the provisions of Section
7.1(a), the Partnership shall not take, or refrain from taking, any action
which, in the judgment of the General Partner, in its sole and absolute
discretion, (i) could adversely affect the ability of the General Partner to
continue to qualify as a REIT, (ii) could subject the General Partner to any
additional taxes under Section 857 or Section 4981 of the Code or other
potentially adverse consequences under the Code, or (iii) could
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violate any law or regulation of any governmental body or agency having
jurisdiction over the General Partner or its securities, unless such action (or
inaction) shall have been specifically consented to by the General Partner in
writing.
7.2 Specified Decisions. At any time that the Limited Partners
(other than the General Partner in its capacity as a Limited Partner) own in the
aggregate more than 10% of the issued and outstanding Partnership Interests, the
General Partner shall not, without the prior Consent of the Limited Partners,
authorize or cause the Partnership to amend or terminate this Agreement (other
than amendments which do not adversely affect any Limited Partner), make a
general assignment for the benefit of creditors, institute any proceeding for
bankruptcy or be dissolved or liquidated (collectively, the "Specified
Decisions") or, subject to Section 7.6 below, take title to any property other
than in the name of the Partnership or a subsidiary thereof.
7.3 Reimbursement of the General Partner.
(a) Except as provided in this Section 7.3 and
elsewhere in this Agreement (including the provisions of Article 6 regarding
distributions, payments and allocations to which it may be entitled), the
General Partner shall not be compensated for its services as general partner of
the Partnership.
(b) The General Partner shall be reimbursed on a
monthly basis, or such other basis as the General Partner may determine in its
sole and absolute discretion, for all expenses it incurs relating to the
ownership of interests in the Partnership and operation of, or for the benefit
of, the Partnership, including, without limitation, the Administrative Expenses.
The Limited Partners acknowledge that the General Partner's sole business is the
ownership of interests in and operation of the Partnership and that all of the
General Partner's expenses are incurred for the benefit of the Partnership. Such
reimbursements shall be in addition to any reimbursement to the General Partner
as a result of indemnification pursuant to Section 7.8 hereof.
(c) The General Partner shall also be reimbursed
for all expenses it incurs relating to the organization of the Partnership and
the General Partner, the initial public offering of REIT shares by the General
Partner, and any other issuance of additional Partnership Interests or REIT
shares pursuant to Section 4.2 hereof.
7.4 Outside Activities of the General Partner.
(a) The General Partner shall not directly or
indirectly enter into or conduct any business, other than in connection with the
ownership, acquisition and disposition of Partnership Interests as a General
Partner or Limited Partner and
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the management and operation of the business of the Partnership, and such
activities as are incidental thereto.
(b) The General Partner agrees that all
borrowings for the purpose of making distributions to its shareholders will be
incurred by the Partnership or one or more of the Property Partnerships and the
proceeds of such indebtedness will be included as Net Financing Proceeds
hereunder.
7.5 Contracts with Affiliates. The Partnership may lend or
contribute to its subsidiaries or other Persons in which it has an equity
investment, and such Persons may borrow funds from the Partnership, on terms and
conditions established in the sole and absolute discretion of the General
Partner. The foregoing authority shall not create any right or benefit in favor
of any Person. The Partnership may also engage in other transactions and enter
into contracts with Affiliates which are on terms fair and reasonable to the
Partnership and no less favorable to the Partnership than would be obtained from
unaffiliated third parties.
7.6 Title to Partnership Assets. Title to Partnership assets,
whether real, personal or mixed and whether tangible or intangible, shall be
deemed to be owned by the Partnership as an entity, and no Partner, individually
or collectively, shall have any ownership interest in such Partnership assets or
any portion thereof. Title to any or all of the Partnership assets may be held
in the name of the Partnership, the General Partner or one or more nominees, as
the General Partner may determine, including Affiliates of the General Partner.
The General Partner hereby acknowledges and confirms that any partnership assets
for which legal title is held in the name of the General Partner or any nominee
or Affiliate of the General Partner shall be held by the General Partner for the
use and benefit of the Partnership in accordance with the provisions of this
Agreement; provided, however, that the General Partner shall use its best
efforts to cause beneficial and record title to such assets to be vested in the
Partnership as soon as reasonably practicable. All Partnership assets shall be
recorded as the property of the Partnership in its books and records,
irrespective of the name in which legal title to such Partnership assets is
held.
7.7 Reliance by Third Parties. Notwithstanding anything to the
contrary in this Agreement, any Person dealing with the Partnership shall be
entitled to assume that the General Partner has full power and authority to
encumber, sell or otherwise use in any manner any and all assets of the
Partnership and to enter into any contracts on behalf of the Partnership, and
such Person shall be entitled to deal with the General Partner as if it were the
Partnership's sole party in interest, both legally and beneficially. Each
Limited Partner hereby waives any and all defenses or other remedies which may
be available against such
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Person to contest, negate or disaffirm any action of the General Partner in
connection with any such dealing. In no event shall any Person dealing with the
General Partner or its representatives be obligated to ascertain that the terms
of this Agreement have been complied with or to inquire into the necessity or
expedience of any act or action of the General Partner or its representatives.
Each and every certificate, document or other instrument executed on behalf of
the Partnership by the General Partner shall be conclusive evidence in favor of
any and every Person relying thereon or claiming thereunder that (i) at the time
of the execution and delivery of such certificate, document or instrument, this
Agreement was in full force and effect, (ii) the Person executing and delivering
such certificate, document or instrument was duly authorized and empowered to do
so for and on behalf of the Partnership and (iii) such certificate, document or
instrument was duly executed and delivered in accordance with the terms and
provisions of this Agreement and is binding upon the Partnership.
7.8 Indemnification by Partnership.
(a) The Partnership shall indemnify an Indemnitee
from and against any and all losses, claims, damages, liabilities, joint or
several, expenses (including legal fees and expenses), judgments, fines,
settlements, and other amounts arising from any and all claims, demands,
actions, suits or proceedings, civil, criminal, administrative or investigative,
that relate to the operations of the Partnership as set forth in this Agreement
in which any Indemnitee may be involved, or is threatened to be involved, as a
party or otherwise, unless it is established that: (i) the act or omission of
the Indemnitee was material to the matter giving rise to the proceeding and
either was committed in bad faith or was the result of active and deliberate
dishonesty; (ii) the Indemnitee actually received an improper personal benefit
in money, property or services; or (iii) in the case of any criminal proceeding,
the Indemnitee had reasonable cause to believe that the act or omission was
unlawful. The termination of any proceeding by judgment, order or settlement
does not create a presumption that the Indemnitee did not meet the requisite
standard of conduct set forth in this Section 7.8(a). Any indemnification
pursuant to this Section 7.8 shall be made only out of the assets of the
Partnership and no Partner shall have any personal liability therefor.
(b) Reasonable expenses incurred by an Indemnitee
who is a party to a proceeding may be paid or reimbursed by the Partnership in
advance of the final disposition of the proceeding upon receipt by the
Partnership of (i) a written affirmation by the Indemnitee of the Indemnitee's
good faith belief that the standard of conduct necessary for indemnification by
the Partnership, as authorized in this Section 7.8, has been met, and (ii) a
written undertaking by or on behalf of the Indemnitee to
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repay the amount paid or reimbursed if it shall ultimately be determined that
such standard of conduct has not been met.
(c) The indemnification provided by this Section
7.8 shall be in addition to any other rights to which an Indemnitee or any other
Person may be entitled under any agreement, as a matter of law or otherwise, and
shall continue as to an Indemnitee who has ceased to serve in such capacity.
(d) The Partnership may purchase and maintain
insurance, on behalf of the Indemnitees and such other Persons as the General
Partner shall determine, against any liability that may be asserted against or
expenses that may be incurred by such Persons in connection with the
Partnership's activities, regardless of whether the Partnership would have the
power to indemnify any such Person against such liability under the provisions
of this Agreement.
(e) For purposes of this Section 7.8, the
Partnership shall be deemed to have requested an Indemnitee to serve as
fiduciary of an employee benefit plan whenever the performance by it of its
duties to the Partnership also imposes duties on, or otherwise involves services
by, it to the plan or participants or beneficiaries of the plan; excise taxes
assessed on an Indemnitee with respect to an employee benefit plan pursuant to
applicable law shall constitute fines within the meaning of this Section 7.8;
and actions taken or omitted by the Indemnitee with respect to an employee
benefit plan in the performance of its duties for a purpose reasonably believed
by it to be in the interest of the participants and beneficiaries of the plan
shall be deemed to be for a purpose which is not opposed to the best interests
of the Partnership.
(f) An Indemnitee shall not be denied
indemnification in whole or in part under this Section 7.8 solely because the
Indemnitee had an interest in the transaction with respect to which the
indemnification applies.
(g) The provisions of this Section 7.8 are for
the benefit of the Indemnitees, their heirs, successors, assigns personal
representatives and administrators, and shall not be deemed to create any rights
for the benefit of any other Persons.
7.9 Liability of the General Partner
(a) Notwithstanding anything to the contrary set
forth in this Agreement, the General Partner shall not be liable for monetary or
other damages to the Partnership, any of the Partners or any assignee of any
interest of any Partner for losses sustained or liabilities incurred as a result
of errors in judgment or of any act or omission if the General Partner acted in
good faith and was not guilty of any active and deliberate dishonesty with
respect thereto.
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(b) The Limited Partners expressly acknowledge
that the General Partner is acting on behalf of the Partnership and the General
Partner's shareholders collectively, that the General Partner is under no
obligation to consider the separate interests of the Limited Partners
(including, without limitation, the tax consequences to Limited Partners or any
assignees thereof) in deciding whether to cause the Partnership to take (or
decline to take) any actions, and that the General Partner shall not be liable
for monetary damages for losses sustained, liabilities incurred, or benefits not
derived by Limited Partners in connection with such decisions, provided that the
General Partner acted in good faith with respect thereto.
(c) Subject to its obligations and duties as
General Partner set forth in Section 7.1 hereof, the General Partner may
exercise any of the powers granted to it by this Agreement and performing of the
duties imposed upon it hereunder either directly or by or through its agents.
The General Partner shall not be responsible for any misconduct or negligence on
the part of any such agent appointed by it in good faith.
(d) The General Partner shall not be deemed to
have any limitations or obligations, or be subject to any restrictions, of a
partner of a general partnership, if it otherwise would not have such
limitations or obligations or be subject to such restrictions under the terms of
the Act, any other applicable law and this Agreement.
(e) Any amendment, modification or repeal of this
Section 7.9 or any provision hereof shall be prospective only and shall not in
any way affect the limitations on the General Partner's liability to the
Partnership and the Limited Partners under this Section 7.9 as in effect
immediately prior to such amendment, modification or repeal with respect to
claims arising from or relating to matters occurring, in whole or in part, prior
to such amendment, modification or repeal, regardless of when such claims may
arise or be asserted.
7.10 Other Matters Concerning the General Partner
(a) The General Partner may rely and shall be
protected in acting or refraining from acting upon any resolution, certificate,
statement, instrument, opinion, report, or other document believed by it to be
genuine and to have been signed or presented by the proper party or parties.
(b) The General Partner may consult with legal
counsel, accountants, appraisers, management consultants, investment bankers and
other consultants and advisers selected by it, and any act taken or omitted to
be taken in reliance upon the opinion of such Persons as to matters which such
General Partner reasonably believes to be within such Person's professional or
expert competence shall be conclusively presumed to have been
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done or omitted in good faith and in accordance with such opinion.
(c) The General Partner shall have the right, in
respect of any of its powers or obligations hereunder, to act through any of its
duly authorized officers and any attorney or attorneys-in-fact duly appointed by
the General Partner. Each such attorney shall, to the extent provided by the
General Partner in the power of attorney, have full power and authority to do
and perform all and every act and duty which is permitted or required to be done
by the General Partner hereunder.
(d) Notwithstanding any other provisions of this
Agreement or the Act, any action of the General Partner on behalf of the
Partnership or any decision of the General Partner to refrain from acting on
behalf of the Partnership, undertaken in the good faith belief that such action
or omission is necessary or advisable in order (i) to protect or further the
ability of the General Partner to continue to qualify as a REIT or (ii) to avoid
the General Partner incurring any taxes under Section 857 or Section 4981 of the
Code, is expressly authorized under this Agreement and is deemed approved by all
of the Limited Partners.
7.11 Operation in Accordance with REIT Requirements. The
Partners acknowledge and agree that the Partnership shall be operated in a
manner that will enable the General Partner to (a) satisfy the REIT Requirements
and (b) avoid the imposition of any federal income or excise tax liability. The
Partnership shall avoid taking any action, or permitting any Property
Partnership to take any action, which would result in the General Partner
ceasing to satisfy the REIT Requirements or would result in the imposition of
any federal income or excise tax liability on the General Partner. The
determination as to whether the Partnership has operated in the manner
prescribed in this Section 7.11 shall be made without regard to any action or
inaction of the General Partner with respect to distributions and the timing
thereof.
ARTICLE VIII
DISSOLUTION, LIQUIDATION AND WINDING-UP
8.1 Accounting. In the event of the dissolution, liquidation
and winding-up of the Partnership, a proper accounting shall be made of the
Capital Account of each Partner and of the Net Income or Net Loss of the
Partnership from the date of the last previous accounting to the date of
dissolution.
8.2 Distribution on Dissolution. In the event of the
dissolution and liquidation of the Partnership for any reason, the assets of the
Partnership shall be liquidated and the net proceeds therefrom shall be
distributed in the following rank and order:
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(a) Payment of creditors of the Partnership in
the order of priority as provided by law;
(b) Establishment of reserves as provided by the
General Partner to provide for contingent and other Partnership
liabilities, if any; and
(c) To the Partners in accordance with the
positive balances in their Capital Accounts after giving effect to all
contributions, distributions and allocations for all periods, other than
distributions under this Section 8.2(c).
Whenever the Liquidating Trustee reasonably determines that any reserves
established pursuant to paragraph (b) above are in excess of the reasonable
requirements of the Partnership, the amount determined to be excess shall be
distributed to the Partners in accordance with the provisions of this Section
8.2.
8.3 Timing Requirements.
(a) In the event that the Partnership is
"liquidated" within the meaning of Section 1.704-1(b)(2)(ii) (g) of the
Regulations, any and all distributions to the Partners pursuant to Section
8.2(c) hereof shall be made no later than the later to occur of (i) the last day
of the taxable year of the Partnership in which such liquidation occurs or (ii)
ninety (90) days after the date of such liquidation.
(b) Notwithstanding the provisions of Section 8.2
hereof which require liquidation of the assets of the Partnership, but subject
to the order of priorities set forth therein, if prior to or upon dissolution of
the Partnership the Liquidating Trustee determines that an immediate sale of
part or all of the Partnership's assets would be impractical or would cause
undue loss to the Partners, the Liquidating Trustee may, in its sole and
absolute discretion, defer for a reasonable time the liquidation of any assets
except those necessary to satisfy liabilities of the Partnership (including to
those Partners which are creditors of the Partnership) and/or distribute to the
Partners, in lieu of cash, as tenants in common and in accordance with the
provisions of Section 8.2 hereof, undivided interests in such Partnership assets
as the Liquidating Trustee deems not suitable for liquidation. Any such
distributions in kind shall be made only if, in the good faith judgment of the
Liquidating Trustee, such distributions in kind are in the best interest of the
Partners, and shall be subject to such conditions relating to the disposition
and management of such properties as the Liquidating Trustee deems reasonable
and equitable and to any agreements governing the operation of such properties
at such time. The Liquidating Trustee shall determine the fair market value of
any property distributed in kind using such reasonable method of valuation as it
may adopt.
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8.4 Documentation of Liquidation. Upon the completion of the
dissolution and liquidation of the Partnership, the Partnership shall terminate
and the Liquidating Trustee shall have the authority to execute and record any
and all documents or instruments required to effect the dissolution, liquidation
and termination of the Partnership.
ARTICLE IX
TRANSFER OF PARTNERSHIP INTERESTS
9.1 General Partner Transfer. The General Partner shall not
withdraw from the Partnership and shall not sell, assign, pledge, encumber or
otherwise dispose of all or any portion of its interest in the Partnership
without the Consent of the Limited Partners at any time that the Limited
Partners (other than the General Partner in its capacity as a Limited Partner)
own in the aggregate more than 10% of the issued and outstanding Partnership
Interests. Upon any transfer of a Partnership Interest in accordance with the
provisions of this Section 9.1, the transferee General Partner shall become
vested with the powers and rights of the transferor General Partner, and shall
be liable for all obligations and responsible for all duties of the General
Partner, once such transferee has executed such instruments as may be necessary
to effectuate such admission and to confirm the agreement of such transferee to
be bound by all the terms and provisions of this Agreement with respect to the
Partnership Interest so acquired. It is a condition to any transfer otherwise
permitted hereunder that the transferee assumes by operation of law or express
agreement all of the obligations of the transferor General Partner under this
Agreement with respect to such transferred Partnership Interest and no such
transfer (other than pursuant to a statutory merger or consolidation wherein all
obligations and liabilities of the transferor General Partner are assumed by a
successor corporation by operation of law) shall relieve the transferor General
Partner of its obligations under this Agreement without the Consent of the
Limited Partners, in their reasonable discretion. In the event the General
Partner withdraws or retires from the Partnership, in violation of this
Agreement or otherwise, or dissolves, terminates or upon the Bankruptcy of the
General Partner, the Partners holding a majority of the Percentage Interests
then held by all Partners may, within 120 days after such withdrawal,
dissolution, retirement, termination or Bankruptcy (the "Designated Events"),
elect to continue the Partnership business by selecting a substitute general
partner, which substitute general partner accepts such selection and agrees to
serve as general partner.
9.2 Transfers by Limited Partners.
(a) Subject to the provisions of Sections 9.2(b)
and 9.2(d), no Limited Partner shall have the right to transfer
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all or any portion of its Partnership Interest prior to June 23, 1995.
Thereafter, no such transfer may be made of any of such Limited Partner's rights
as a Limited Partner without the prior written consent of the General Partner,
which consent may be given or withheld by the General Partner in its sole and
absolute discretion. Notwithstanding the foregoing, no ▇▇▇▇▇ Senior Executive
may transfer any Partnership Interest, or any rights as a Limited Partner, or
any Shares prior to June 23, 1997 other than the following: (i) after June 23,
1995 such person may transfer up to 20% of the aggregate Partnership Interests
and Shares issued to such person on or after June 23, 1994, and (ii) after June
23, 1996 such person may transfer up to 50% of the aggregate Partnership
Interests and Shares issued to such person on or after June 23, 1994. In
addition to the restrictions on transfer set forth in this Section 9.2, any
transfer of Partnership Interests or Shares by a Special Indemnitor shall be
subject to the provisions of Section 13.3(a) hereof. Any purported transfer of a
Partnership Interest or Share by a Limited Partner in violation of this Section
9.2(a) shall be void ab initio and shall not be given effect for any purpose by
the Partnership.
(b) Notwithstanding the provisions of Section
9.2(a) (but subject to the provisions of Section 9.3) a Limited Partner, whether
or not a ▇▇▇▇▇ Senior Executive or a Special Indemnitor may transfer, with or
without the consent of the General Partner all or a portion of its Partnership
Interests to (i) a member of such transferor's Immediate Family, or a trust for
the benefit of a member of such transferor's Immediate Family and (ii) if such
Limited Partner is a trust, to one or more beneficiaries thereof; provided, that
any Partnership Interest permitted to be transferred pursuant to this Section
9.2(b) shall remain subject to all provisions of this Agreement, including,
without limitation, Section 9.2 and Article XIII hereof.
(c) No Limited Partner shall have the right to
substitute a transferee as a Limited Partner in his place. The General Partner
shall, however, have the right to consent to the admission of a transferee of
the interest of a Limited Partner pursuant to this Section 9.2 as a substituted
limited partner (as such term is used in the Act), which consent may be given or
withheld by the General Partner in its sole and absolute discretion. The General
Partner's failure or refusal to permit a transferee of any such interests to
become a substituted limited partner shall not give rise to any cause of action
against the Partnership or any Partner. A transferee who has been admitted as a
substituted limited partner in accordance with this Article IX shall have all
the rights and powers and be subject to all the restrictions and liabilities of
a Limited Partner under this Agreement.
(d) If the General Partner, in its sole and
absolute discretion, does not consent to the admission of any
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permitted transferee under Sections 9.2(a) or 9.2(b), as a substituted limited
partner under Section 9.2(c), such transferee shall be considered an assignee
for purposes of this Agreement. An assignee shall be deemed to have had assigned
to it, and shall be entitled to receive, distributions from the Partnership and
the share of Net Income, Net Losses, and any other items of income, gain, loss,
deduction and credit of the Partnership attributable to the Partnership
Interests assigned to such transferee and shall have all of the Rights referred
to in Section 11.1 of this Agreement attributable to such Partnership Interests,
but shall not be deemed to be a holder of Partnership Interests for any other
purpose under this Agreement, and shall not be entitled to vote such Partnership
Interests in any matter presented to the Limited Partners for a vote (such
Partnership Interests being deemed to have been voted on such matter in the same
proportion as all other Partnership Interests held by Limited Partners are
voted). In the event any such transferee desires to make a further assignment of
any such Partnership Interests, such transferee shall be subject to all the
provisions of this Article IX to the same extent and in the same manner as any
Limited Partner desiring to make an assignment of Partnership Interests.
(e) The Limited Partners acknowledge that the
Partnership Interests have not been registered under any federal or state
securities laws and, as a result thereof, they may not be sold or otherwise
transferred, except in compliance with such laws. Notwithstanding anything to
the contrary contained in this Agreement, no Partnership Interest may be sold or
otherwise transferred unless such transfer is exempt from registration under any
applicable securities laws or such transfer is registered under such laws, it
being acknowledged that the Partnership has no obligation to take any action
which would cause any such Interests to be registered.
9.3 Certain Restrictions on Transfer. In addition to any other
restrictions on transfer herein contained, in no event may any transfer of a
Partnership Interest by any Partner be made (i) to any person or entity who
lacks the legal right, power or capacity to own a Partnership Interest; (ii) in
the event such transfer would cause the General Partner to cease to comply with
the REIT Requirements, (iii) if such transfer would cause a termination of the
Partnership for federal income tax purposes, (iv) if such transfer would, in the
opinion of counsel to the Partnership, cause the Partnership to cease to be
classified as a Partnership for Federal income tax purposes, (v) if such
transfer is effectuated through an "established securities market" or a
"secondary market (or the substantial equivalent thereof)" within the meaning of
Section 7704(b) of the Code, (vi) if such transfer would cause the Partnership
to become, with respect to any employee benefit plan subject to Title l of
ERISA, a "party-in-interest" (as defined in Section 3(14) of ERISA) or a
"disqualified person" (as defined in section 4975(c) of the
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Code), (vii) if such transfer would, in the opinion of counsel to the
Partnership, cause any portion of the assets of the Partnership to constitute
assets of any employee benefit plan pursuant to Department of Labor Regulations
Section 2510.2-101 or (viii) to a lender to the Partnership or any Person who is
related (within the meaning of Section 1.752-4(b) of the Regulations) to any
lender to the Partnership whose loan constitutes a Nonrecourse Liability, unless
in the opinion of counsel to the Partnership, such transfer and ownership of the
Partnership Interest by the lender (or related person) will not have adverse
federal income tax consequence to the Partners. In addition, the following
Persons admitted to the Partnership as Limited Partners pursuant to that certain
Fourth Amendment to Agreement of Limited Partnership dated as of March 21, 1997,
shall in no event be entitled to transfer all or any portion of their
Partnership Interests to the General Partner: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇,
NWBC Associates, Inc., 330 Associates, Inc., and APEX Asset Management
Corporation.
9.4 Effective Dates of Transfers.
(a) Transfers pursuant to this Article IX may
only be made as of the first day of a fiscal quarter of the Partnership, unless
the General Partner otherwise agrees. The General Partner hereby agrees that,
with respect to Persons admitted to the Partnership as Limited Partners under
the TLC Contribution Agreement, transfers pursuant to the conversion rights of
such Persons as set forth in Section 11.1 of this Agreement or pursuant to that
certain Contributors Rights Agreement dated as of May 14, 1997, shall not be
limited to the first day of a fiscal quarter.
(b) If any Partnership Interest is transferred or
assigned in compliance with the provisions of this Article IX, or converted or
sold for Shares or cash pursuant to Section 11.1 on any day other than the first
day of a calendar year, then Net Income, Net Loss, each item thereof and all
other items attributable to such Partnership Interest for such year shall be
allocated to the transferor Partner, or the converted or selling Partner, as the
case may be, and the transferee Partner, by taking into account their varying
interests during such year in accordance with Section 706(d) of the Code, using
the interim closing of the books method. Solely for purposes of making such
allocations, each of such items for the calendar month in which a transfer or
assignment occurs shall be allocated to the transferee Partner. All
distributions of Net Operating Cash Flow attributable to such Partnership
Interest with respect to which the Partnership Record Date is before the date of
such transfer, assignment, conversion or sale shall be made to the transferring,
assigning, converting or selling Partner, and all distributions of Net Operating
Cash Flow thereafter attributable to such Partnership Interest shall be made to
the transferee Partner. Furthermore, the interim closing of the books method
shall be
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used to take into account the acquisition by the General Partner on the date
hereof of its Partnership Interest and the allocation to the General Partner of
the Net Income, Net Loss and each item thereof and all items attributable to
such Partnership Interest accruing on and after this date.
9.5 Transfer.
(a) The term "transfer", when used in this
Article IX with respect to a Partnership Interest, shall be deemed to refer to a
transaction by which a Partner purports to assign its Partnership Interest or
any portion thereof to another Person, and includes a sale, assignment, gift,
pledge, encumbrance, hypothecation, mortgage, exchange or any other disposition
by law or otherwise; provided however, that the term "transfer", when used in
this Article IX does not (except when such term is used in Section 9.4) include
any conversion of Partnership Interests of a Limited Partner or acquisition of
Partnership Interests from a Limited Partner by the General Partner or the
Partnership pursuant to Section 11.1.
(b) No Partnership Interest shall be transferred,
in whole or in part, except in accordance with the terms and conditions set
forth in this Article IX. Any transfer or purported transfer of a Partnership
Interest not made in accordance with this Article IX shall be null and void.
ARTICLE X
RIGHTS AND OBLIGATIONS OF THE LIMITED PARTNERS
10.1 No Participation in Management. No Limited Partner, in its
capacity as such, shall take part in the management of the Partnership's
business, transact any business in the Partnership's name or have the power to
sign documents for or otherwise bind the Partnership. Any rights expressly
granted to the Limited Partners in this Agreement shall not be deemed to be
rights relating to the management of the Partnership's business.
10.2 Bankruptcy of a Limited Partner. The Bankruptcy of any
Limited Partner shall not cause a dissolution of the Partnership, but the rights
of such Limited Partner to share in the Net Profits or Net Losses of the
Partnership and to receive distributions of Partnership funds shall, on the
happening of such event, devolve on its successors or assigns, subject to the
terms and conditions of this Agreement, and the Partnership shall continue as a
limited partnership. However, in no event shall such assignee(s) become a
substituted Limited Partner except in accordance with Article IX hereof.
10.3 No Withdrawal. No Limited Partner may withdraw
its Capital Contribution from the Partnership without the prior
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written consent of the General Partner, other than as expressly provided in this
Agreement.
10.4 Conflicts. The Partners recognize that the Limited Partners
and their Affiliates have or may have other business interests, activities and
investments, some of which may be in conflict or competition with the business
of the Partnership, and that, with respect to the ▇▇▇▇▇ Principals, subject to
the provisions of those certain employment agreements between the respective
▇▇▇▇▇ Principals and the General Partner dated June 23, 1994, such Persons are
entitled to carry on such other business interests, activities and investments.
The Limited Partners and their Affiliates may engage in or possess an interest
in any other business or venture of any kind, independently or with others, on
their own behalf or on behalf of other entities with which they are affiliated
or associated, and such persons may engage in any activities, whether or not
competitive with the Partnership, without any obligation to offer any interest
in such activities to the Partnership or to any Partner. Except, with respect to
the activities of the ▇▇▇▇▇ Principals, as set forth in the employment
agreements between the respective ▇▇▇▇▇ Principals and the General Partner dated
June 23, 1994 neither the Partnership nor any Partner shall have any right, by
virtue of this Agreement, in or to such activities, or the income or profits
derived therefrom, and the pursuit of such activities, even if competitive with
the business of the Partnership, shall not be deemed wrongful or improper.
Notwithstanding the foregoing, the provisions of this Section 10.4 shall not
negate or impair any other written agreement between one or more of the Limited
Partners and the General Partner or the Partnership or any duties which a
Limited Partner may have in such Limited Partner's capacity as an officer or
trustee of the General Partner.
10.5 Provision of Information.
(a) With respect to any information required to
be provided to the Limited Partners pursuant to Section 17-305 (or any successor
thereto) of the Act: (i) the cost of preparing or providing any such information
(including, without limitation, fees paid to any person or entity in connection
therewith) shall be paid by the requesting Partner and in no event shall such
information be required to be given to the requesting Partner until such payment
has been made to the Partnership; (ii) in no event shall any financial
statements of the Partnership be required to be provided except for such
statements as have already been prepared or are otherwise required to be
provided to the Limited Partners under this Agreement and in no event shall any
statements which have been prepared be required to be audited, reviewed or
otherwise examined by a certified public accountant, if the statements are not
otherwise required to be so audited, reviewed or examined pursuant to the
provisions of this Agreement; and (iii) in no event shall such information be
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required to be furnished until 45 days after such request and unless the
information is already in the possession of the Partnership.
(b) The Partnership shall notify any Limited
Partner, on request, of the then current Conversion Factor (as that term is used
in Exhibit "D") or any change made to the Conversion Factor.
(c) Notwithstanding any other provision of this
Section 10.5, the General Partner may keep confidential from the Limited
Partners, for such period of time as the General Partner determines in its sole
and absolute discretion to be reasonable, any information that (i) the General
Partner reasonably believes to be in the nature of trade secrets or other
information the disclosure of which the General Partner in good faith believes
is not in the best interests of the Partnership or could damage the Partnership
or its business or (ii) the Partnership is required by law or by agreements with
an unaffiliated third party to keep confidential.
10.6 Limited Partner Representatives. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ III and
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ are hereby appointed as the Limited Partner Representatives. A
Majority-In-Interest of the Limited Partners shall have the right, at any time,
within their sole discretion, to replace any of the Limited Partner
Representatives, to appoint a temporary substitute to act for any Limited
Partner Representative unable to act, or to vest in only one of the Limited
Partner Representatives the sole power to exercise rights of the Limited Partner
Representatives hereunder. The Limited Partner Representatives shall be
appointed by the Limited Partners in writing, a copy of which shall be delivered
to the General Partner. Any appointments of Limited Partner Representatives made
hereunder shall remain effective until rescinded in a writing delivered to the
General Partner and the General Partner shall have the right and authority to
rely (and shall be fully protected in so doing) on the actions taken and
directions given by such Limited Partner Representatives without any further
evidence of their authority or further action by the Limited Partners.
10.7 Power of Attorney.
(a) Each Limited Partner constitutes and appoints
the General Partner, any Liquidating Trustee, and authorized officers and
attorneys-in-fact of each, and each of those acting singly, in each case with
full power of substitution, as its true and lawful agent and attorney-in-fact,
with full power and authority in its name, place and stead to: execute, swear
to, acknowledge, deliver, file and record in the appropriate public offices (i)
all certificates, documents and other instruments (including, without
limitation, this Agreement and the Certificate and all amendments or
restatements thereof) that the
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General Partner or the Liquidating Trustee deems appropriate or necessary to
form, qualify or continue the existence or qualification of the Partnership as a
limited partnership (or a partnership in which the limited partners have limited
liability) in the Commonwealth of Pennsylvania and in all other jurisdictions in
which the Partnership may conduct business or own property; (ii) all instruments
that the General Partner deems appropriate or necessary to reflect any
amendment, change, modification or restatement of this Agreement in accordance
with its terms; (iii) all conveyances and other instruments or documents that
the General Partner deems appropriate or necessary to reflect the dissolution
and liquidation of the Partnership pursuant to the terms of this Agreement,
including, without limitation, a certificate of cancellation; and (iv) all
instruments relating to the admission, withdrawal, removal or substitution of
any Partner pursuant to the provisions of this Agreement, or the Capital
Contribution of any Partner.
(b) The foregoing power of attorney is
irrevocable and a power coupled with an interest, in recognition of the fact
that each of the Partners will be relying upon the power of the General Partner
to act as contemplated by this Agreement in any filing or other action by it on
behalf of the Partnership, and it shall survive the death of incompetency of a
Limited Partner to the effect and extent permitted by law and the transfer of
all or any portion of such Limited Partner's Partnership Interests and shall
extend to such Limited Partner's heirs, successors, assigns and personal
representatives.
(c) Nothing contained in this Section 10.7 shall
be construed as authorizing the General Partner to amend this Agreement except
in accordance with Article XIV hereof.
ARTICLE XI
GRANT OF CERTAIN RIGHTS TO LIMITED PARTNERS
11.1 Grant of Rights. The General Partner does hereby grant to
the Limited Partners, and the Limited Partners do hereby accept the right, but
not the obligation (hereinafter such right sometimes referred to as the
"Rights"), to convert all or a portion of their Partnership Interests into
Shares, and/or to sell at any time on or after June 23, 1995, the remainder (or
any part thereof) of their Partnership Interests to the General Partner (or its
designee), at any time or from time to time after June 23, 1995 on the terms and
subject to the conditions and restrictions contained in Exhibit D hereto;
provided, however, (a) that ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ III, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ may convert, prior to June 23, 1994, such portion of
their respective Partnership Interests such that they may collectively receive
an aggregate of 155,548 Shares; and (b) that the Partnership Interests issued to
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇, NWBC Associates, Inc., 330 Associates, Inc.,
and
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APEX Asset Management Corporation shall not be exchangeable or convertible into
Shares until after March 21, 1998. The Rights granted hereunder may be exercised
by any one or more of the Limited Partners, on the terms and subject to the
conditions and restrictions contained in Exhibit D hereto.
ARTICLE XII
REPRESENTATION AND WARRANTY OF ▇▇▇▇▇ PRINCIPALS
12.1 Representation and Warranty of ▇▇▇▇▇ Principals. Each of
the ▇▇▇▇▇ Principals represents and warrants to the General Partner that, as of
the date the Registration Statement was declared effective by the Securities and
Exchange Commission and as of the date hereof, the Registration Statement did
not and does not contain an untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to make the
statements therein not misleading; the Prospectus, on the date of filing thereof
with the Securities and Exchange Commission and on the date hereof did not and
does not contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading; provided that the foregoing representation shall not be applicable
to statements in or omissions from the Registration Statement and the Prospectus
in reliance upon, and in conformity with, written information furnished to the
General Partner or the Partnership by any underwriter named in the Underwriting
Agreement, specifically for use in the preparation of the Registration Statement
or Prospectus.
ARTICLE XIII
INDEMNIFICATION AND SECURITY INTEREST
13.1 General Indemnification. Subject to the terms of Section
13.9 below, the Limited Partners agree to indemnify and hold harmless the
General Partner, the Partnership, each subsidiary of the General Partner or the
Partnership, and any of their officers, directors, trustees, employees, agents
or other affiliates (each, an "Indemnified Party" and collectively, the
"Indemnified Parties") from and against all demands, claims, actions or causes
of action, assessments, losses, fines, penalties, damages, liabilities, costs
and expenses (including, without limitation, reasonable attorneys' fees and
expenses of counsel chosen by the Indemnified Parties and costs of litigation
and reasonable fees and expenses of accountants chosen by the Indemnified
Parties) and charges sustained or incurred by any of the Indemnified Parties as
a result of or arising out of (a) any inaccuracy in or breach of representation
or warranty of any of the Limited Partners in this Agreement, any contribution
agreement to which such Limited Partner is a party, any
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assignment or other agreement to which such Limited Partner is a party
transferring assets or property (or interests therein), or in any other
agreement to which such Limited Partner is a party with respect to the
conveyance, assignment, contribution or other transfer of the Properties (or
interests therein), assets, agreements, rights or other interests conveyed,
assigned, contributed or otherwise transferred to the Partnership or any
subsidiary of the Partnership; or (b) any inaccuracy in or breach of a
representation or warranty, or failure to perform any obligations of, of the
General Partner or the Partnership in the Underwriting Agreement; provided that,
no claim for indemnity may be maintained hereunder unless an Indemnified Party
shall have delivered a written notice identifying such claims to the Limited
Partners on or before the first anniversary of the date hereof.
13.2 Environmental Indemnities. In addition to their indemnity
obligations as Limited Partners pursuant to Section 13.1 above, and subject to
the limitations set forth in 13.4(b) below, with respect to (A) the Property
located at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ("1180
Church"), and (B) the 32 Properties identified on Exhibit E hereto located in
the Great Valley Corporate Center in Malvern, Pennsylvania (the "Malvern
Properties"), ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
(the "Special Indemnitors") agree to indemnify and hold harmless the Indemnified
Parties from and against all demands, claims, actions or causes of action,
assessments, losses, fines, penalties, damages, liabilities, costs and expenses
(including without limitation, reasonable attorneys' fees and expenses of
counsel chosen by the Indemnified Parties and costs of litigation and reasonable
fees and expenses of accountants chosen by the Indemnified Parties) and charges
sustained or incurred by the Partnership or the General partner or any of their
subsidiaries as a result of or arising out of any matter, condition or act at
1180 Church or at the Malvern Properties involving any Environmental Laws,
Environmental Claim, or Hazardous Materials (each as defined in the Contribution
Agreement) which matter, condition or act existed on or arose prior to the date
of the Agreement (whether or not disclosed in the environmental reports set
forth as exhibits to the Contribution Agreement or as described in the
Prospectus or otherwise known by any of the Special Indemnitors); provided, that
no claim for indemnity may be maintained pursuant to this Section 13.2 (X) with
respect to 1180 Church, unless such Indemnified Party shall have delivered a
written notice identifying such claim to the Special Indemnitors on or before
the tenth anniversary of the date hereof or (Y) with respect to the Malvern
Properties, unless such Indemnified Party shall have delivered a written notice
identifying such claim to the Special Indemnitors on or before the fifth
anniversary of the date hereof.
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13.3 Indemnity Collateral.
(a) Recourse for the indemnity obligation of the
Limited Partners set forth in Section 13.1 above shall be limited to the
Indemnity Collateral (as hereinafter defined). Indemnity Collateral shall mean
with respect to any Limited Partner, (i) the Partnership Interests and Shares
acquired by the Limited Partner in connection with the formation of the General
Partner as a REIT and the Offering; (ii) any Shares received by the Limited
Partners as a result of the exchange of Partnership Interests for Shares; and
(iii) distributions, share splits or other securities received with respect to
the Shares or Partnership Interests described in clauses (i) and (ii) above.
(b) Recourse for the indemnity obligation of the
Special Indemnitors set forth in Section 13.2 above shall after June 23, 1995 be
limited to the Special Indemnity Collateral (as hereinafter defined), (A) with
respect to 1180 Church, through the tenth anniversary of the date hereof and (B)
with respect to the Malvern Properties, through the fifth anniversary of the
date hereof. Special Indemnity Collateral shall mean (X) with respect to 1180
Church, Indemnity Collateral of the Special Indemnitors in an aggregate amount
equal to ten percent (10%) of the total Indemnity Collateral of all the Limited
Partners and (Y) with respect to the Malvern Properties, Indemnity Collateral of
the Special Indemnitors in an amount having a value of $6,000,000 (based on an
initial public offering price of $20.00 per share issued by the REIT pursuant to
the Registration Statement) calculated solely as of the date hereof. The
obligations of the Special Indemnitors with respect to 1180 Church are
independent of their obligations with respect to the Malvern Properties and vice
versa. No reduction in the amount of the Special Indemnity Collateral to satisfy
the obligations of the Special Indemnitors with respect to 1180 Church will
reduce the Special Indemnity Collateral available to satisfy the obligations of
the Special Indemnitors with respect to the Malvern Properties and no reduction
in the amount of the Special Indemnity Collateral to satisfy the obligations of
the Special Indemnitors with respect to the Malvern Properties will reduce the
Special Indemnity Collateral available to satisfy the obligations of the Special
Indemnitors with respect to 1180 Church.
13.4 Security Interest for Indemnification Obligations.
(a) With respect to the indemnity obligations of
the Limited Partners set forth under Section 13.1 hereof, and of the Special
Indemnitors set forth under Section 13.2 hereof, the Limited Partners and the
Special Indemnitors hereby grant, subject to the provisions of Section 13.4(d),
hereof to the General Partner a lien upon and a continuing security interest in,
the Indemnity Collateral, and in the case of the Special Indemnitors, the
Special Indemnity Collateral, which shall be security for the indemnity
obligations of the Limited Partners
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and the Special Indemnitors, respectively, under this Article XIII. With the
exception of transfers to a transferor's Immediate Family pursuant to Section
9.2(b) which are made expressly subject to the liens and security interests
created hereby, no transfer may be made by the Limited Partners or the Special
Indemnitors of their Partnership Interests or Shares that are subject to the
liens and security interests created hereby until and unless such liens and
security interests are released in accordance with the provisions of Section
13.4(e) hereby; provided, however, that (i) after June 23, 1995, Partnership
Interests and Shares owned by the Limited Partners, which Partnership Interests
and Shares are subject to the lien and security interest granted under this
Section 13.4(a), other than Partnership Interests and Shares that constitute the
Special Indemnity Collateral, may be transferred in accordance with this
Agreement free and clear of such lien and security interest except in the event
that a claim for indemnity has been made in accordance with this Article XIII
and has not been resolved and (ii) Partnership Interests and Shares constituting
the Special Indemnity Collateral may be transferred in accordance with this
Agreement free and clear of such lien and security interest with respect to 1180
Church after June 23, 2004, and with respect to Malvern Properties after June
23, 1999, except in the event that a claim for indemnity under Section 13.2
hereof has been made in accordance with this Article XIII and has not been
resolved.
(b) The Limited Partners and the Special
Indemnitors shall have, on or before the date hereof, (i) delivered to the
General Partner certificates representing all of the Shares in such manner and
accompanied by such instruments, including stock transfer powers duly endorsed
in blank, as shall be necessary to grant the General Partner a fully perfected
first priority security interest in such Shares and in any Shares that may,
after June 23, 1994, be issued to the Limited Partners or the Special
Indemnitors by share dividend, split or similar distribution and (ii) prepared
and filed UCC financing statements and such other documents and have taken other
action necessary to grant the General Partner a fully perfected first priority
security interest in all of their respective Partnership Interests. In the event
the Limited Partners or the Special Indemnitors are determined to have an
indemnification obligation pursuant to Section 13.4(d) hereof, then each
Indemnified Party shall have all of the rights now or hereafter existing under
applicable law, and all rights as a secured creditor under the Uniform
Commercial Code in all relevant jurisdictions, with respect to the Indemnity
Collateral or the Special Indemnity Collateral, as the case may be, and they
agree to take all such actions as may be reasonably requested of them by an
Indemnified Party to ensure that the Indemnified Parties can realize on such
security interest.
(c) In the event an Indemnified Party asserts,
within the time period set forth in Section 13.1 hereof or
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Section 13.2 hereof, that the Limited Partners or the Special Indemnitors have
an indemnification obligation to an Indemnified Party under this Article XIII,
and the Limited Partners or the Special Indemnitors are determined to have an
indemnification obligation pursuant to Section 13.4(d) hereof, then, (x) the
General Partner shall, to the full extent permitted by law, be deemed, without
payment of further consideration or the taking of further action by the General
Partner, the Limited Partners or the Special Indemnitors to have acquired from
any or all of the Limited Partners or the Special Indemnitors such Indemnity
Collateral or Special Indemnity Collateral as shall be equal in value (based, in
the case of Partnership Interests, on the number of Shares for which such
Partnership Interests could be exchanged, computed as of the date the Indemnity
Collateral or the Special Indemnity Collateral is acquired by the General
partner pursuant to this Section 13.3(c), and in the case of the Shares, on the
Closing Price of the Shares computed as of the date of such acquisition) to the
amount recoverable from or payable by or indemnified by the Limited Partners or
the Special Indemnitors under this Article XIII, and (y) the Indemnified Parties
shall have all of the rights now or hereafter existing under applicable law and
all rights as a secured creditor under the Uniform Commercial Code in all
relevant jurisdictions, with respect to the Indemnity Collateral and the Special
Indemnity Collateral, and the Limited Partners and the Special Indemnitors agree
to take all such actions as may be reasonably requested of them by the General
Partner to ensure that the Indemnified Parties can realize on such security
interest.
(d) The liens and the security interests in the
Indemnity Collateral and the Special Indemnity Collateral granted hereunder
shall not be released (i) with respect to the Partnership Interests and Shares
of the Limited Partners until all of the indemnification obligations of the
Limited Partners hereunder have expired or been satisfied in accordance with
their terms and (ii) with respect to the Partnership Interests and Shares
constituting Special Indemnity Collateral of the Special Indemnitors, until all
of the indemnification obligations of the Special Indemnitors hereunder have
expired or been satisfied in accordance with their terms. Upon satisfaction of
the conditions to the release of the liens and security interests in the
Indemnity collateral and the Special Indemnity Collateral set forth in (i) or
(ii) above, the General Partner shall prepare and file all documents and shall
take all other action necessary on its part to release such security interest in
the Indemnity Collateral or the Special Indemnity Collateral, as applicable.
(e) Notwithstanding anything contained in this
Article XIII to the contrary, except with respect to the Limited Partners'
representations and warranties under Paragraph 10(e) of the Contribution
Agreement, none of the Limited Partners or the Special Indemnitors shall be
liable with respect for any claim or series of related claims under this Article
XIII unless, and only
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to the extent that, the total amount recoverable under this Article XIII with
respect to such claim(s) exceeds $1,000,000.
13.5 Procedure for Seeking Indemnification. If a claim for
indemnification is or may be asserted under this Article XIII, the person or
entity against whom or which such claim is or may be asserted shall have the
right, at its own expense, to participate in the defense of any claim, action or
proceeding ("Claim") asserted which resulted in the claim for indemnification,
and if such right is exercised, the parties shall cooperate in the defense of
such action or proceeding. If a claim is asserted which is subject to possible
indemnification under this Article XIII, the person against whom such claim is
asserted shall give prompt notice thereof to such Indemnitor; provided, however,
that the failure to so provide prompt notice shall not relieve the Indemnitor
from the indemnification obligations hereunder, unless and to the extent such
failure prejudices Indemnitor's defense with regard to such claim.
13.6 Indemnification as Exclusive Remedy. Indemnification of the
Indemnified Parties pursuant to this Article XIII shall be the exclusive remedy
of the Indemnified Parties for any breach of any representation, obligation,
warranty or covenant of the Limited Partners or the Special Indemnitors, named
in this Agreement or the Closing Agreement (as that term is defined in the
Contribution Agreement) and the liability of such parties shall be limited as
provided in this Article XIII.
13.7 Recovery from Title Insurance Policy. Each Limited Partner
is relieved of liability hereunder if and to the extent the Indemnified Parties
recover for any loss or damage under any applicable title insurance policy. Each
Limited Partner shall use best efforts to collect for any such loss or damage
under any title insurance policy covering such loss or damage.
13.8 Settlements; Prior Written Consent. Notwithstanding
anything to the contrary contained in this Article XIII, no Limited Partner or
Special Indemnitor shall be liable with respect to any settlement which is made
of any claim or any amounts payable under any such settlement without the prior
written consent of such Limited Partner or Special Indemnitor who or which may
be liable with respect to such settlement under this Article XIII.
13.9 Limitation of Indemnity.
(a) With respect to the Limited Partners who were
admitted to the Partnership pursuant to the First Amendment to Agreement of
Limited Partnership dated as of March 1, 1995, the term "Limited Partners" shall
be deemed, solely for the purposes of this Article XIII, to refer to those
Persons who were admitted
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as Limited Partners to the Partnership concurrently with the consummation of the
transactions contemplated by that certain Contribution Agreement dated as of
March 1, 1995.
(b) The term "Limited Partner" as used in this
Article XIII shall not include those Persons admitted to the Partnership as
Limited Partners pursuant to the TLC Contribution Agreement.
(c) The indemnification set forth in clause (b)
of Section 13.1 above shall not be binding upon any Limited Partner first
admitted to the Partnership on or after October 1, 1997.
ARTICLE XIV
AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS
14.1 Amendments.
(a) This Agreement may not be amended unless such
amendment is approved by the General Partner and by a Majority- in-Interest of
the Limited Partners, except as provided below in this Section 14.1.
(b) Notwithstanding Section 14.1(a), the General
Partner shall have the power, without the consent of the Limited Partners, to
amend this Agreement as may be required to facilitate or implement any of the
following purposes:
(1) to add to the obligations of the General
Partner or surrender any right or power granted to the General Partner or any
Affiliate of the General Partner for the benefit of the Limited Partners;
(2) to reflect the admission, substitution,
termination, or withdrawal of Partners in accordance with this Agreement;
(3) to set forth the rights, powers, duties,
and preferences of the holders of any additional Partnership Interests issued
pursuant to Section 4.2 hereof;
(4) to reflect a change that does not
adversely affect the Limited Partners in any material respect, or to cure any
ambiguity, correct or supplement any provision in this Agreement not
inconsistent with law or with other provisions; and
(5) to satisfy any requirements, conditions,
or guidelines contained in any order, directive, opinion, ruling
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53
or regulation of a federal or state agency or contained in federal or state law.
The General Partner will provide notice to the Limited Partners promptly after
any action under this Section 14.1(b)(5) is taken.
(c) Notwithstanding Section 14.1(a) hereof, this
Agreement shall not be amended without the consent of each Partner adversely
affected if such amendment would (i) convert a Limited Partner's interest in the
Partnership into a general partner's interest, (ii) modify the limited liability
of a Limited Partner, (iii) alter rights of the Partners to receive allocations
and distributions pursuant to Articles VI or VIII hereof (except as permitted
pursuant to Section 4.2 and Section 14.1(b)(3) hereof), (iv) alter or modify the
Rights set forth in Article XI hereof or Exhibit D hereto or (v) amend this
Section 14.1(c). Further, no amendment may alter the restrictions on the General
Partner's authority set forth in Section 7.2 without the Consent specified in
that Section.
(d) Notwithstanding Section 14.1(a) hereof, the
General Partner shall not, during such time as the Limited Partners (other than
the General Partner, in its capacity as a Limited Partner) own more than 10% of
issued and the outstanding Partnership Interests, amend or terminate this
Agreement (other than amendments which do not adversely affect any Limited
Partner) without the Consent of the Limited Partners.
14.2 Meetings of the Partners.
(a) Meetings of Partners may be called by the
General Partner (but shall not be required to be called). The call shall state
the nature of the business to be transacted. Notice of any such meeting shall be
given to all Partners not less than seven days prior to the date of such
meeting. Partners may vote in person or by proxy at such meeting. Whenever the
vote or Consent of Partners is permitted or required under this Agreement, such
vote or Consent may be given at a meeting of Partners.
(b) Any action required or permitted to be taken
at a meeting of the Partners may be taken without a meeting if a written consent
setting forth the action so taken is signed (in counterpart or otherwise) by
Partners holding a majority of the Percentage Interests of the Partners (or such
other percentage as is expressly required by this Agreement). Such consent may
be in one instrument or in several instruments, and shall have the same force
and effect as a vote of a majority of the Percentage Interests of the Partners
(or such other percentage as is expressly required by this Agreement). Such
consent shall be filed with the General Partner.
-49-
54
(c) Each Limited Partner may authorize any Person
or Persons to act for him by proxy on all matters in which a Limited Partner is
entitled to participate, including waiving notice of any meeting, or voting or
participating at a meeting. Every proxy must be signed by the Limited Partner or
his attorney-in-fact. No proxy shall be valid after the expiration of 11 months
from the date thereof unless otherwise provided in the proxy. Every proxy shall
be revocable at the pleasure of the Limited Partner executing it.
ARTICLE XV
GENERAL PROVISIONS
15.1 No Liability of Trustees and Others. Notwithstanding
anything to the contrary contained herein, no recourse shall be had by the
Partnership or any Partner against any trustee, shareholder, officer, employee,
agent or attorney of the General Partner for any act or omission of the General
Partner or any obligation or liability of the General Partner under this
Agreement, and none of the foregoing shall have any personal liability for or
with respect to any of the foregoing. In addition, if this Agreement is executed
by the trustee of any trust, it is being executed as trustee solely, and not in
any individual capacity and nothing herein shall create any liability on such
trustee or any personal property of such trustee.
15.2 Notices. All notices, offers or other communications
required or permitted to be given pursuant to this Agreement shall be in writing
and may be personally served, telecopied or sent by United States mail and shall
be deemed to have been given when delivered in person, upon receipt of telecopy,
one Business Day after deposit in the overnight mail or other next day delivery
service or three business days after deposit in United States mail, registered
or certified, postage prepaid, and properly addressed, by or to the appropriate
party. For purposes of this Section 15.2, the addresses of the parties hereto
shall be as set forth in the Partnership's records. The address of any party
hereto may be changed by a notice in writing given in accordance with the
provisions hereof.
15.3 Controlling Law. This Agreement and all questions relating
to its validity, interpretation, performance and enforcement (including, without
limitation, provisions concerning limitations of actions), shall be governed by
and construed in accordance with the laws of the Commonwealth of Pennsylvania,
notwithstanding any conflict-of-laws doctrines of such state or other
jurisdiction to the contrary.
15.4 Execution in Counterparts. This Agreement may be executed
in any number of counterparts, each of which shall be deemed to be an original
as against any party whose signature appears thereon, and all of which shall
together constitute one
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55
and the same instrument. This Agreement shall become binding when one or more
counterparts hereof, individually or taken together, shall bear the signatures
of all of the parties reflected hereon as the signatories.
15.5 Provisions Separable. The provisions of this Agreement are
independent of and separable from each other, and no provision shall be affected
or rendered invalid or unenforceable by virtue of the fact that for any reason
any other or others of them may be invalid or unenforceable in whole or in part.
15.6 Entire Agreement. This Agreement contains the entire
understanding among the parties hereto with respect to the subject matter
hereof, and supersedes all prior and contemporaneous agreements and
understandings, inducements or conditions, express or implied, oral or written,
except as herein contained. The express terms hereof control and supersede any
course of performance and/or usage of the trade inconsistent with any of the
terms hereof. This Agreement may not be modified or amended other than by an
agreement in writing.
15.7 Paragraph Headings. The paragraph headings in this
Agreement are for convenience only; they form no part of this Agreement and
shall not affect its interpretation.
15.8 Gender, Etc. Words used herein, regardless of the number
and gender specifically used, shall be deemed and construed to include any other
number, singular or plural, and any other gender, masculine, feminine or neuter,
as the context indicates is appropriate.
15.9 Number of Days. In computing the number of days for
purposes of this Agreement, all days shall be counted, including Saturdays,
Sundays and holidays; provided, however, that if the final day of any time
period falls on a Saturday, Sunday or holiday on which federal banks are or may
elect to be closed, then the final day shall be deemed to be the next day which
is not a Saturday, Sunday or such holiday.
15.10 Partners Not Agents. Nothing contained herein shall be
construed to constitute any Partner the agent of another Partner, except as
specifically provided herein, or in any manner to limit the Limited Partners in
the carrying on of their own respective businesses or activities.
15.11 Assurances. Each of the Partners shall hereafter execute
and deliver such further instruments and do such further acts and things as may
be required or useful to carry out the intent and purpose of this Agreement and
as are not inconsistent with the terms hereof.
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56
15.12 Waiver of Partition. Each Partner hereby waives any right
such Partner may have to partition its interest in the Partnership or any
property of the Partnership.
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57
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement or caused this Agreement to be executed on their behalf as of the date
first above written.
LIBERTY PROPERTY TRUST,
General Partner, on its own behalf
and as attorney-in-fact for the
Limited Partners pursuant to the
power of attorney granted to
the General Partner in Section 10.7 of
the First Restated and Amended
Partnership Agreement
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ III
-------------------------------
Title: Chief Executive Officer
-----------------------------
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58
LIST OF EXHIBITS TO LIMITED PARTNERSHIP
AGREEMENT OF LIBERTY PROPERTY LIMITED PARTNERSHIP
Exhibits
--------
A - Omitted
B - Existing Property Partnerships
C - Allocations
D - Matters relating to Conversion Rights
E - The Malvern Properties
F - Rights of 8.80% Series A Cumulative Redeemable
Preferred Partnership Interests
Schedules
---------
Schedule 1 - Conversion Component Exercise Notice
Schedule 2 - Sale Component Exercise Notice
Schedule 3 - Non-Foreign Affidavit
-54-
59
EXHIBIT "A"
[Omitted]
A-1
60
EXHIBIT B
Existing Property Partnerships
239 ▇▇▇▇▇ & Associates
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇ Limited
Partnership
308P ▇▇▇▇▇ & Associates
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Limited Partnership
322 ▇▇▇▇▇ & Associates
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Limited Partnership
370 ▇▇▇▇▇ & Associates
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Limited Partnership
372 ▇▇▇▇▇ & Associates
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Limited Partnership
373 ▇▇▇▇▇ & Associates
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇ Limited
Partnership a/k/a ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Limited Partnership
412 ▇▇▇▇▇ & Associates
Great Valley Retail
Limited Partnership
469 ▇▇▇▇▇ & Associates
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Limited Partnership
B-1
61
EXHIBIT B
(Continued)
Existing Property Partnerships
487 ▇▇▇▇▇ & Associates
▇▇▇ ▇▇▇▇ ▇▇▇▇ Limited
Partnership
506 ▇▇▇▇▇ & Associates
▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Limited Partnership
507 ▇▇▇▇▇ & Associates
▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Limited Partnership
508 ▇▇▇▇▇ & Associates
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Limited Partnership
509 ▇▇▇▇▇ & Associates
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇ Limited
Partnership
510 ▇▇▇▇▇ & Associates
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇ Limited
Partnership
511P ▇▇▇▇▇ & Associates
▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇
Limited Partnership
512P ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ Limited
Partnership
513P ▇▇▇/▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ Limited
Partnership
B-2
62
EXHIBIT B
(Continued)
Existing Property Partnerships
527 ▇▇▇▇▇ & Associates
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
Limited Partnership
563 ▇▇▇▇▇ & Associates
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇ Limited
Partnership a/k/a
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇ Limited
Partnership
564 ▇▇▇▇▇ & Associates
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇ Limited
Partnership
582 ▇▇▇▇▇ & Associates
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
Limited Partnership
596 ▇▇▇▇▇ & Associates
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Limited Partnership
607 ▇▇▇▇▇ & Associates
Great Valley Associates
Limited Partnership a/k/a
Great Valley Associates
625 ▇▇▇▇▇ & Associates
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Limited Partnership
626 ▇▇▇▇▇ & Associates
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
Limited Partnership
B-3
63
EXHIBIT B
(Continued)
Existing Property Partnerships
662 ▇▇▇▇▇ & Associates
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Limited Partnership
663 ▇▇▇▇▇ & Associates
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Limited Partnership
664 ▇▇▇▇▇ & Associates
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Limited Partnership
674 ▇▇▇▇▇ & Associates
▇▇▇-▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ Limited Partnership
750 ▇▇▇▇▇ & Associates
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
Limited Partnership
753 ▇▇▇▇▇ & Associates
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Limited Partnership
805 Morehall Associates
Limited Partnership
812 Morehall Associates
Limited Partnership
813 ▇▇▇▇▇ & Associates
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Limited Partnership
B-4
64
EXHIBIT B
(Continued)
Existing Property Partnerships
815 Morehall Associates
Limited Partnership
817 ▇▇▇▇▇ & Associates
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Limited Partnership
818 ▇▇▇▇▇ & Associates
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Limited Partnership
821 ▇▇▇▇▇ & Associates
▇▇▇ ▇▇▇▇ ▇▇▇▇
Limited Partnership
825 ▇▇▇▇▇ & Associates
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Limited Partnership
861 ▇▇▇▇▇ & Associates
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
Limited Partnership
872 ▇▇▇▇▇ & Associates
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Limited Partnership
884 ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
Associates Limited
Partnership
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ Associates
Limited Partnership
B-5
65
EXHIBIT B
(Continued)
Existing Property Partnerships
901 ▇▇▇▇▇ & Associates
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
911 ▇▇▇▇▇ & Associates
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
913 ▇▇▇▇▇ & Associates
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Limited Partnership
919 ▇▇▇▇▇ & Associates
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Limited Parkway
921 RHW Lehigh Valley
922 ▇▇▇▇▇ & Associates
Plymouth Meeting
Limited Partnership
934 ▇▇▇▇▇ & Associates
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
945 ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Associates Limited
Partnership
946 ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Associates Limited
Partnership
959 ▇▇▇▇▇ & Associates
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
B-6
66
EXHIBIT B
(Continued)
Existing Property Partnerships
963 ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Associates Limited
Partnership
976 ▇▇▇▇▇ & Associates
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Limited Partnership
980 ▇▇▇▇▇ & Associates
XXVII Great Valley Parkway
Limited Partnership
983 ▇▇▇▇▇ & Associates
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Limited Partnership
988 ▇▇▇▇▇ & Associates
▇▇▇ ▇▇▇▇ ▇▇▇▇ Limited
Partnership
B-7
67
EXHIBIT C
Allocations
1. Allocation of Net Income, Net Loss and Net Gains from Sales.
(a) Net Income. Except as otherwise provided herein, Net
Income for any fiscal year or other applicable period shall be allocated in the
following order and priority:
(1) First, (x) to the General Partner to the
extent of, and in proportion to, the excess of the cumulative Losses allocated
to the General Partner pursuant to subparagraph (b)(2) for all prior periods
over the cumulative amount of Net Income allocated to the General Partner
pursuant to this subparagraph (a)(1)(x) for all prior periods; (y) to the
Partners, until the cumulative Net Income allocated pursuant to this
subparagraph (a)(1) (y) for the current and all prior periods equals the
cumulative Net Loss allocated pursuant to subparagraph (b)(2) hereof for all
prior periods, among the Partners in the reverse order that such Net Loss was
allocated to the Permitted Partners pursuant to subparagraph (b)(3) hereof (and,
in the event of a shift of a Partner's interest in the Partnership, to the
Partners in a manner that most equitably reflects the successors in interest to
the Permitted Partners).
(2) Thereafter, the balance of the Net Income, if
any, shall be allocated to the Partners in accordance with their respective
Percentage Interests.
(b) Net Loss. Except as otherwise provided herein, Net Loss of
the Partnership for each fiscal year or other applicable period shall be
allocated as follows:
(1) To the Partners in accordance with their
respective Percentage Interests, until each such Partner has a zero balance in
its Capital Account; for this purpose alone, the amount of the General Partner's
Capital Account balance shall be computed without regard to any Net Income, Net
Loss or distributions arising out of or attributable to the Series A Preferred
Interests other than distributions in redemption of the Series A Preferred
Interests pursuant to Section 5 of Exhibit F, then
(2) To the General Partner, to the extent of its
remaining positive balance in its Capital Account.
(3) Notwithstanding subparagraph (b)(1) hereof,
to the extent any Net Loss allocated to a Partner under subparagraph (b)(1)
hereof or this subparagraph (b)(3) would cause such Partner (hereinafter, a
"Restricted Partner") to have an Adjusted Capital Account Deficit as of the end
of the fiscal
C-1
68
year to which such Net Loss relates, such Net Loss shall not be allocated to
such Restricted Partner and instead shall be allocated to the other Partner(s)
(hereinafter, the "Permitted Partners") pro rata in accordance with their
relative Percentage Interests.
(c) Notwithstanding anything herein to the contrary, it is
intended that the distribution to the Partners upon the dissolution of the
Partnership pursuant to the Section 8.2 recognize the priority accorded to the
Series A Preferred Interests, and the General Partner shall vary the allocations
hereunder, if necessary, to accomplish that result.
2. Special Allocations.
Notwithstanding any provisions of paragraph 1 of this Exhibit
C, the following special allocations shall be made in the following order:
(a) Minimum Gain Chargeback (Nonrecourse Liabilities). If
there is a net decrease in Partnership Minimum Gain for any Partnership fiscal
year (except as a result of conversion or refinancing of Partnership
indebtedness, certain capital contributions or revaluation of the Partnership
property as further outlined in Regulation Sections 1.704-2(d)(4), (f)(2) or
(f)(3)), each Partner shall be specially allocated items of Partnership income
and gain for such year (and, if necessary, subsequent years) in an amount equal
to that Partner's share of the net decrease in Partnership Minimum Gain. The
items to be so allocated shall be determined in accordance with Regulation
Section 1.704-2(f). This paragraph (a) is intended to comply with the minimum
gain chargeback requirement in said section of the Regulations and shall be
interpreted consistently therewith. Allocations pursuant to this paragraph (a)
shall be made in proportion to the respective amounts required to be allocated
to each Partner pursuant hereto.
(b) Minimum Gain Attributable to Partner Nonrecourse
Debt. If there is a net decrease in Minimum Gain
Attributable to Partner Nonrecourse Debt during any fiscal year (other than due
to the conversion, refinancing or other change in the debt instrument causing it
to become partially or wholly nonrecourse, certain capital contributions, or
certain revaluations of Partnership property (as further outlined in Regulation
Section 1.704-2(i)(4)), each Partner shall be specially allocated items of
Partnership income and gain for such year (and, if necessary, subsequent years)
in an amount equal to the Partner's share of the net decrease in the Minimum
Gain Attributable to Partner Nonrecourse Debt. The items to be so allocated
shall be determined in accordance with Regulation Section 1.704-2(i)(4) and
(j)(2). This paragraph (b) is intended to comply with the minimum gain
chargeback requirement with respect to Partner Nonrecourse Debt contained in
said section of
C-2
69
the Regulations and shall be interpreted consistently therewith. Allocations
pursuant to this paragraph (b) shall be made in proportion to the respective
amounts required to be allocated to each Partner pursuant hereto.
(c) Qualified Income Offset. In the event a Partner
unexpectedly receives any adjustments, allocations or distributions described in
Regulation Section 1.704- 1(b)(2)(ii)(d)(4), (5), or (6), and such Limited
Partnership has an Adjusted Capital Account Deficit, items of Partnership income
and gain shall be specially allocated to such Partner in an amount and manner
sufficient to eliminate the Adjusted Capital Account Deficit as quickly as
possible. This paragraph (c) is intended to constitute a "qualified income
offset" under Regulation Section 1.704-1(b)(2)(ii)(d) and shall be interpreted
consistently therewith.
(d) Nonrecourse Deductions. Nonrecourse Deductions for any
fiscal year or other applicable period shall be allocated to the Partners in
accordance with their respective Percentage Interests.
(e) Partner Nonrecourse Deductions. Partner Nonrecourse
Deductions for any fiscal year or other applicable period shall be specially
allocated to the Partner that bears the economic risk of loss for the debt
(i.e., the Partner Nonrecourse Debt) in respect of which such Partner
Nonrecourse Deductions are attributable (as determined under Regulation Section
1.704- 2(b)(4) and (i)(1)).
(f) Curative Allocations. The Regulatory Allocations shall be
taken into account in allocating other items of income, gain, loss, and
deduction among the Partners so that, to the extent possible, the cumulative net
amount of allocations of Partnership items under paragraphs 1 and 2 of this
Exhibit C shall be equal to the net amount that would have been allocated to
each Partner if the Regulatory Allocations had not occurred. This subparagraph
(f) is intended to minimize to the extent possible and to the extent necessary
any economic distortions which may result from application of the Regulatory
Allocations and shall be interpreted in a manner consistent therewith. For
purposes hereof, "Regulatory Allocations" shall mean the allocations provided
under this paragraph 2 (other than this subparagraph.)
(g) To the extent that the Partnership is deemed, for book
purposes, to have recognized income under Code Section 108 attributable to the
repayment of certain mortgage indebtedness from the proceeds of the Offerings,
as described in the Registration Statement, any such income shall be allocated
to the Limited Partners in proportion to their relative Percentage Interests.
C-3
70
(h) For each Fiscal Year or portion thereof, Net Income of the
Partnership (and gross income to the extent required to carry out the purposes
of this provision) shall be allocated to the General Partner to the extent of
the excess of the cumulative distributions made to the General Partner pursuant
to Section 3 of Exhibit "F" with respect to the current and all prior periods
over the cumulative amount of Net Income (or gross income, as the case may be)
allocated to the General Partner pursuant to this subparagraph (h) with respect
to all prior periods.
3. Tax Allocations.
(a) Generally. Subject to paragraphs (b) and (c) hereof, items
of income, gain, loss, deduction and credit to be allocated for income tax
purposes (collectively, "Tax Items") shall be allocated among the Partners on
the same basis as their respective book items.
(b) Sections 1245/1250 Recapture. If any portion of gain from
the sale of property is treated as gain which is ordinary income by virtue of
the application of Code Sections 1245 or 1250 ("Affected Gain"), then (A) such
Affected Gain shall be allocated among the Partners in the same proportion that
the depreciation and amortization deductions giving rise to the Affected Gain
were allocated and (B) other Tax Items of gain of the same character that would
have been recognized, but for the application of Code Sections 1245 and/or 1250,
shall be allocated away from those Partners who are allocated Affected Gain
pursuant to Clause (A) so that, to the extent possible, the other Partners are
allocated the same amount, and type, of capital gain that would have been
allocated to them had Code Sections 1245 and/or 1250 not applied. For purposes
of the prior sentence, each Partner shall be treated as having been allocated
depreciation and amortization in the same proportion as such Partner (before, on
or after the date of the Partnership Agreement to which this Exhibit C is
attached), has been allocated any deductions, directly or indirectly, giving
rise to the Affected Gain.
(c) Allocations Respecting Section 704(c) and Revaluations.
Notwithstanding paragraph (b) hereof, Tax Items with respect to Partnership
property that is subject to Code Section 704(c) and/or Regulation Section
1.704-1(b)(2)(iv)(f) (collectively "Section 704(c) Tax Items") shall be
allocated in accordance with said Code section and/or Regulation Section
1.704-3, as the case may be. The allocation of Section 704(c) Tax Items shall be
subject to the ceiling rule stated in Regulation Section 1.704-3(b). Debt
cancellation income realized upon the repayment of mortgage indebtedness from
the proceeds of the Offerings, as described in the Registration Statement, shall
be accounted for as an item of built-in gain property.
C-4
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(d) Excess Nonrecourse Liabilities. The "excess nonrecourse
liabilities" of the Partnership (within the meaning of Regulation Section
1.752-3(a)(3)) shall be allocated among the Partners in accordance with the
Partners' share of the profits of the Partnership, determined by taking into
account all of the facts and circumstances relating to the economic arrangement
of the Partners.
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EXHIBIT D
Rights Terms
The Rights granted by the General Partner to the Limited
Partners pursuant to Section 11.1 of the Amended and Restated Limited
Partnership Agreement to which this Exhibit is attached (the "Agreement") shall
be subject to the following terms and conditions:
1. Definitions. The following terms shall, for
purposes of this Exhibit and the Agreement, have the meanings set
forth below:
"Beneficially Own" shall mean the ownership of
Shares by a Person who would be treated as an owner of such Shares under Section
542(a)(2) of the Code, either directly or constructively through the application
of Section 544 of the Code, as modified by Section 856(h)(1)(B) of the Code.
"Conversion Factor" means 1.0, provided that in
the event that the General Partner (i) declares or pays a dividend on its
outstanding Shares in Shares or makes a distribution to all holders of its
outstanding Shares in Shares or effects a stock split, (ii) subdivides its
outstanding Shares, or (iii) combines its outstanding Shares into a smaller
number of Shares, the Conversion Factor shall be adjusted by multiplying the
Conversion Factor by a fraction, the numerator of which shall be the number of
Shares issued and outstanding on the record date for such dividend distribution,
subdivision or contribution (assuming for such purposes that such dividend,
distribution, subdivision or combination has occurred as of such time), and the
denominator of which shall be the actual number of Shares (determined without
the above assumption) issued and outstanding on the record date for such
dividend, distribution, subdivision or combination. Any adjustment to the
Conversion Factor shall become effective immediately after the effective date of
such event retroactive to the record date, if any, for such event.
"Conversion Component Exercise Notice" shall have
the meaning set forth in Paragraph 2(a) hereof.
"Conversion Rights" shall have the meaning set
forth in Paragraph 2(a) hereof.
"Election Notice" shall mean the written notice to
be given by the General Partner to an Exercising Partner in response to the
receipt by the General Partner of an Exercise Notice from such Exercising
Partner.
"Exchange Act" shall mean the Securities Exchange
Act of 1934, as amended, or any successor statute.
D-1
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"Exercise Notice" shall mean and include a
Conversion Component Exercise Notice and/or a Sale Component
Exercise Notice.
"Exercising Partners" shall have the meaning set
forth in Paragraph 2 hereof.
"Offered Interests" shall mean the Partnership
Interests of the Exercising Partners identified in a Conversion Component
Exercise Notice or a Sale Component Exercise Notice which, pursuant to the
exercise of Conversion Rights or Sale Rights, can be acquired under the terms
hereof.
"Partnership Interests" shall mean the limited
partnership interests of an Exercising Partner in Liberty Property Limited
Partnership, a Delaware limited partnership, or any successor thereto.
"Purchase Price" shall mean the number of Shares
or the amount of cash payable for Partnership Interests pursuant to the
provisions of Paragraph 5 hereof.
"REIT Shares Amount" shall mean a number of Shares
equal to the product of the number of Partnership Interests offered for
conversion by an Exercising Partner, multiplied by the Conversion Factor;
provided that in the event the General Partner issues to all holders of Shares
rights, options, warrants or convertible or exchangeable securities entitling
its shareholders to subscribe for or purchase Shares, or any other securities or
property (collectively, the "rights") then the REIT Shares Amount shall also
include such rights that a holder of that number of REIT Shares would be
entitled to receive.
"Sale Component Exercise Notice" shall have the
meaning set forth in Paragraph 2(b) hereof.
"Sale Rights" shall have the meaning set forth in
Paragraph 2(b) hereof.
"Securities Act" shall mean the Securities Act of
1933, as amended, or any successor statute.
"Share" shall mean a common share of beneficial
interest of the General Partner.
"Valuation Date" means the date which is fifteen
days prior to the scheduled date of closing of a sale made pursuant to the
exercise of Conversion Rights or Sale Rights.
"Value" means, with respect to a Share, the average
of the daily market price for the ten (10) consecutive trading days immediately
preceding the Valuation Date. The market price for each such trading day shall
be: (i) if the Shares are listed or admitted to trading on any securities
D-2
74
exchange or the NASDAQ National Market System, the closing price, regular way,
on such day, or if no such sale takes place on such day, the average of the
closing bid and asked prices on such day, (ii) if the Shares are not listed or
admitted to trading on any securities exchange or the NASDAQ National Market
System, the last reported sale price on such day or, if no sale takes place on
such day, the average of the closing bid and asked prices on such day, as
reported by a reliable quotation source designated by the General Partner, or
(iii) if the Shares are not listed or admitted to trading on any securities
exchange or the NASDAQ National Market System and no such last reported sale
price or closing bid and asked prices are available, the average of the reported
high bid and low asked prices on such day, as reported by a reliable quotation
source designated by the General Partner, or if there shall be no bid and asked
prices on such day, the average of the high bid and low asked prices, as so
reported, on the most recent day (not more than 10 days prior to the date in
question) for which prices have been so reported; provided that if there are no
bid and asked prices reported during the 10 days prior to the date in question,
the Value of the Shares shall be determined by the General Partner acting in
good faith on the basis of such quotations and other information as it
considers, in its reasonable judgment, appropriate. In the event the REIT Shares
Amount includes rights that a holder of Shares would be entitled to receive,
then the Value of such rights shall be determined by the General Partner acting
in good faith on the basis of such quotations and other information as it
considers, in its reasonable judgment, appropriate.
2. Delivery of Exercise Notices.
(a) Any one or more Limited Partners ("Exercising
Partners") may, subject to the limitations set forth herein:
(i)deliver to the General Partner written
notice in the form attached hereto as Schedule 1 (the "Conversion Component
Exercise Notice") pursuant to which such Exercising Partners elect to exercise
their rights to convert (the "Conversion Rights") all or any portion of their
Partnership Interests into Shares, subject to the limitations contained in
Paragraphs 3 and 4 below; and/or
(ii) deliver to the General Partner written
notice in the form attached hereto as Schedule 2 (the "Sale Component Exercise
Notice") pursuant to which such Exercising Partners elect to exercise their
rights to sell (the "Sale Rights") all or any portion of their Partnership
Interests to the General Partner (or the General Partner's designee), subject to
the limitations contained in Paragraphs 3 and 5 below.
(b) If the Exercising Partner is not a nonresident
alien or a foreign entity, such as a corporation, partnership, trust or estate
(as those terms are defined in the Code and Regulations), such Exercising
Partner shall deliver to
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75
the General Partner a Certification of Non-Foreign Status in the form attached
hereto as Schedule 3 (the "Non-Foreign Certificate") for withholding purposes
under Section 1445 of the Code. In the event that an Exercising Partner (i) is a
nonresident alien or foreign entity, such as a corporation, partnership, trust
or estate (as those terms are defined in the Code and Regulations), or (ii) does
not furnish a Conversion Certificate to the General Partner, the withholding
provision in paragraph 10 shall apply.
3. Limitation on Delivery of Exercise Notices. No Exercise
Notice may be delivered with respect to the lesser of (i) all Partnership
Interests owned by the Limited Partner exercising such Notice or (ii) 1,000
Partnership Interests.
4. Limitation on Exercise of Conversion Rights and Sale Rights.
(a) If a Conversion Component Exercise Notice is
delivered to the General Partner but (i) as a result of restrictions contained
in the Declaration of Trust of the General Partner as of the date of the
Agreement, the Conversion Rights cannot be exercised in full, or (ii) the
issuance of Shares pursuant to a full exercise of the Conversion Rights would
singly or when aggregated with any prior or concurrent issuances (A) cause the
General Partner to cease to comply with the REIT Requirements or (B) cause any
Person or the Initial Limited Partners and Persons who would be treated as
Beneficially Owning Shares in the Company owned by one or more of the Initial
Limited Partners seeking to exercise the Rights to Beneficially Own more than
29.9% of the issued and outstanding Shares, then the Conversion Component
Exercise Notice shall be deemed to be modified such that the Conversion Rights
shall be exercised only to the extent permitted as set forth above in this
paragraph; with the remainder of such Rights being deemed to be Sale Rights and
the corresponding portion of the Conversion Component Exercise Notice being
deemed to be a Sale Component Exercise Notice.
(b) The exercise of Sale Rights by ▇▇▇▇▇ Senior
Executives is subject to the restrictions imposed pursuant to the third sentence
of Section 9.2(a) of the Agreement.
5. Computation of Purchase Price; Form of Payment.
With respect to the exercise of Conversion Rights,
the Purchase Price payable for the Offered Interests shall be payable by the
transfer to the Exercising Partner by the General Partner or the Partnership of
the number of Shares equal to the number of Offered Interests multiplied by the
Conversion Factor. With respect to the exercise of Sale Rights, the Purchase
Price shall, in the sole and absolute discretion of the General Partner, be paid
in the form of (a) cash or check, or by wire transfer of immediately available
funds to the Exercising
D-4
76
Partner's designated account, in which case the purchase price shall be the
Value of the REIT Shares Amount which would have been issuable upon exercise of
the Conversion Rights, or (b) by the transfer to the Exercising Partner by the
General Partner of a number of Shares equal to the number of Offered Interests
multiplied by the Conversion Factor.
6. Closing; Delivery of Election Notice. The closing of the
acquisition of Offered Interests shall, unless otherwise mutually agreed, be
held at the principal offices of the General Partner or, at the option of the
General Partner, may be effectuated by mail, as of the following times:
(a) With respect to the exercise of Conversion
Rights, at 2:00 p.m. on that date which is seventy days after the receipt by the
General Partner of the applicable Exercise Notice (or if such day is not a
Business Day, the first Business Day thereafter); and
(b) With respect to the exercise of Sale Rights,
the General Partner shall, within thirty (30) days after receipt by the General
Partner of any Sale Component Exercise Notice delivered in accordance with the
requirements of Paragraph 3 hereof, deliver to the Exercising Partner an
Election Notice, which Election Notice shall specify the form of the Purchase
Price (which shall be in accordance with Paragraph 5 hereof) to be paid to such
Exercising Partner, and the closing thereof shall be held at 2:00 p.m. on that
date which is seventy (70) days after the receipt by the General Partner of the
applicable Exercise Notice (or if such day is not a Business Day, the first
Business Day thereafter).
7. Closing Deliveries. At the closing of the purchase and sale
of Offered Interests, payment of the Purchase Price shall be accompanied by
proper instruments of transfer and assignment relating to the Offered Interests
and, with respect to any Shares which are issued in payment of the Purchase
Price or any portion thereof, by the delivery of a share certificate or
certificates evidencing the Shares to be issued and registered in the name of
the Exercising Partner or its designee. Immediately after the closing, the
Offered Interests shall continue to be outstanding and shall be owned by the
General Partner.
8. Covenants of the General Partner. The General
Partner covenants and agrees as follows:
(a) At all times during the pendency of the
Rights, the General Partner shall reserve for issuance such number of Shares as
may be necessary to enable the General Partner to issue such Shares in full
payment of the Purchase Price in regard to all Partnership Interests which are
from time to time outstanding.
D-5
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(b) As long as the General Partner shall be
obligated to file periodic reports under the Exchange Act, the General Partner
will timely file such reports in such manner as shall enable any recipient of
Shares issued to Limited Partners hereunder in reliance upon an exemption from
registration under the Securities Act to continue to be eligible to utilize Rule
144 promulgated by the SEC pursuant to the Securities Act, or any successor rule
or regulation or statute thereunder, for the resale thereof.
(c) During the pendency of the Rights, the
Limited Partners shall receive all financial statements and communications
transmitted from time to time by the General Partner to its shareholders
generally.
(d) Notwithstanding the General Partner's
determination as to the form in which the Purchase Price shall be payable, the
General Partner shall be required to pay the Purchase Price by cash or check or
wire transfer of immediately available funds to the extent that payment by
issuance of Shares would disqualify the General Partner from being treated as a
REIT under the Code.
9. Limited Partners' Covenants. Each Limited Partner covenants
and agrees with the General Partner that all Offered Interests tendered to the
General Partner in accordance with the exercise of Rights herein provided shall
be delivered to the General Partner free and clear of all Liens (except any
which may have been given to the General Partner or the Partnership) and should
any such Liens exist or arise with respect to such Offered Interests, the
General Partner shall be under no obligation to acquire the same unless, in
connection with such acquisition, the General Partner has elected to pay such
portion of the Purchase Price in the form of cash consideration in circumstances
where such consideration will be sufficient to cause such existing Lien to be
discharged in full upon application of all or a part of such consideration and
the General Partner is expressly authorized to apply such portion of the
Purchase Price as may be necessary to discharge such Lien in full. Each Limited
Partner further agrees that, in the event any state or local property transfer
tax is payable as a result of the transfer of its Offered Interests to the
General Partner (or its designee), such Limited Partner shall assume and timely
pay such transfer tax. Each Limited Partner hereby indemnifies and agrees to
save the General Partner harmless of, from and against any damages, costs and
expenses arising from a breach of the Limited Partner's covenants contained in
this paragraph, which indemnity shall survive the closing of any exercise of
Rights hereunder.
10. Withholding. If this Paragraph applies pursuant to
Paragraph 2(b) hereof, the General Partner shall have the authority to take all
actions necessary in order to comply with its withholding obligations pursuant
to Section 1445 of the Code. Such authority shall include the sale by the
General Partner to
D-6
78
one or more third parties of all or a portion of the Shares otherwise payable to
the Exercising Partner pursuant to Paragraph 5 hereof and the use of such sale
proceeds to satisfy any withholding obligations arising from such Exercising
Partner's exercise of the Rights. The Shares sold pursuant to this Section shall
be treated as issued to the Exercising Partner in accordance with Paragraph 5
hereof.
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SCHEDULE 1
LIBERTY PROPERTY LIMITED PARTNERSHIP
CONVERSION COMPONENT EXERCISE NOTICE
All capitalized terms herein shall have the meanings set forth
in Exhibit D to the Agreement of Limited Partnership of Liberty Property Limited
Partnership dated as of June 23, 1994 (the "Rights Terms"), the terms and
provisions of which are hereby incorporated by reference.
Pursuant to the Rights Terms, the undersigned Exercising
Partner hereby irrevocably elects to exercise Conversion Rights with respect to
______ Offered Interests. The undersigned acknowledges that the Purchase Price
payable for the Offered Interests shall be the issuance to the Exercising
Partner by the Trust of ______ Shares.
Unless otherwise indicated in the attached Designee
Registration Form, Shares issued pursuant to the exercise of Conversion Rights
herein shall be registered solely in the name of the Exercising Partner.
Attached hereto is the Certification of Non-Foreign Status of
the Exercising Partner.
Dated:____________, 1995 EXERCISING PARTNER
Individual
-------------------------------
-------------------------------
Print Name
-------------------------------
Address
-------------------------------
Corporation, Partnership
or Other Entity
Corporation -------------------------------
Attest: By:
-------------------------- ----------------------------
Title:
-------------------------------
Social Security No./
Tax Identification No.
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SCHEDULE 2
LIBERTY PROPERTY LIMITED PARTNERSHIP
SALE COMPONENT EXERCISE NOTICE
All capitalized terms herein shall have the meanings set forth
in Exhibit D to the Agreement of Limited Partnership of Liberty Property Limited
Partnership dated as of June 23, 1994 (the "Rights Terms"), the terms and
provisions of which are hereby incorporated by reference.
Pursuant to the Rights Terms, the undersigned Exercising
Partner hereby irrevocably elects to exercise Sale Rights with respect to ______
Offered Interests. The undersigned acknowledges that the Purchase Price payable
for the Offered Interests shall be, at the Trust's election, either: (a) cash,
check or wire transfer of the Value of ______ Shares (determined in accordance
with the Rights Terms), or (b) the issuance to the Exercising Partner by the
Trust ______ of Shares.
Unless otherwise indicated in the attached Designee
Registration Form, Shares, if any, issued pursuant to the exercise of Sale
Rights herein shall be registered solely in the name of the Exercising Partner.
Attached hereto is the Certification of Non-Foreign Status of
the Exercising Partner.
Dated:____________, 1995 EXERCISING PARTNER
Individual
-------------------------------
-------------------------------
Print Name
-------------------------------
Address
-------------------------------
Corporation, Partnership
or Other Entity
Corporation -------------------------------
Attest: By:
-------------------------- ----------------------------
Title:
-------------------------------
Social Security No./
Tax Identification No.
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SCHEDULE 3
AFFIDAVIT REGARDING FOREIGN INVESTMENT
IN REAL PROPERTY TAX ACT
Section 1445 of the Internal Revenue Code provides that a
transferee of a U.S. real property interest must withhold tax if the transferor
is a foreign person. To inform the transferee that withholding of tax is not
required upon the disposition of a U.S. real property interest by
_______________________________ ("Transferor"), the undersigned hereby affirms
the following on behalf of Transferor:
1. Transferor is not a foreign person, foreign corporation,
foreign partnership, foreign trust, or foreign estate (as those terms are
defined in the Internal Revenue Code and Income Tax Regulations);
2. Transferor's U.S. employer identification number is
______________;
3. Transferor's office address is:
-------------------------------
-------------------------------
-------------------------------
-------------------------------
Transferor understands that this affidavit may be disclosed to
the Internal Revenue Service by the transferee and that any false statement
contained in this affidavit could be furnished by fine, imprisonment or both.
Transferor understands that the transferee is relying on this
affidavit in determining whether withholding of tax is required.
Under penalties of perjury, the undersigned declares that they
have examined this affidavit and, to the best of the undersigned's knowledge and
belief it is true, correct and complete, and that the undersigned has authority
to execute this document on behalf of Transferor.
Dated: __________________ ______________________________
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EXHIBIT E
Malvern Properties
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
487 ▇▇▇ ▇▇▇▇ ▇▇▇▇
511P ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
513P 300-400 ▇▇▇▇▇▇▇ Field
607 ▇▇-▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
662 ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
663 ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
664 ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
753 ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
805 ▇▇▇-▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
812 ▇▇▇-▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
813 ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
814 ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
817 ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
818 ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
821 ▇▇▇ ▇▇▇▇ ▇▇▇▇
825 ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
861 ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
901 ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇ ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Parkway
913 ▇▇-▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇ ▇▇-▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Parkway
925 ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
934 ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
959 ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
976 ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
980 ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
983 ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
988 ▇▇▇ ▇▇▇▇ ▇▇▇▇
▇-▇
▇▇
▇▇▇▇▇▇▇ ▇
▇▇▇▇▇▇▇ PROPERTY LIMITED PARTNERSHIP
STATEMENT ESTABLISHING AND FIXING THE RIGHTS AND
PREFERENCES OF THE 8.80% SERIES A CUMULATIVE
REDEEMABLE PREFERRED PARTNERSHIP INTERESTS
The "8.80% Series A Cumulative Redeemable Preferred
Partnership Interests" possess the following designations, preferences, rights,
restrictions, limitations as to distributions, qualifications and terms and
conditions of redemption as set forth below:
(1) Designation and Number. A series of preferred partnership
interests in the Partnership (the "Preferred Interests") designated the "8.80%
Series A Cumulative Redeemable Preferred Partnership Interests" (the "Series A
Preferred Interests"), is hereby established. The maximum number of partnership
interests of the Series A Preferred Interests shall be 5,750,000. The Series A
Preferred Interests shall not be certificated and may not, under any
circumstances, be transferrable by the General Partner to any other person or
entity.
(2) Rank. The Series A Preferred Interests will, with respect
to distribution rights and rights upon liquidation, dissolution or winding up of
the Partnership, rank (a) senior to the partnership interests of the General
Partner and of the Limited Partners, and to all equity securities ranking junior
to such Series A Preferred Interests; (b) on a parity with all equity securities
issued by the Partnership the terms of which specifically provide that such
equity securities rank on a parity with the Series A Preferred Interests; and
(c) junior to all equity securities issued in accordance with Section 6(b) below
by the Partnership the terms of which specifically provide that such equity
securities rank senior to the Series A Preferred Interests. The term "equity
securities" shall not include convertible debt securities.
(3) Distributions.
(a) The General Partner, as holder of the Series A
Preferred Interests, shall be entitled to receive, when and as authorized by the
General Partner in its capacity as general partner, out of funds legally
available for the payment of distributions, cumulative preferential cash
distributions at the rate of 8.80% per annum of the $25.00 liquidation
preference (equivalent to a fixed annual amount of $2.20 per interest). Such
distributions shall be cumulative from the first date on which any Series A
Preferred Interest is issued and shall be payable
F-1
84
quarterly in arrears on or before the 30th day of January, April, June and
October of each year or, if any such date is not a business day (as defined
herein), the next succeeding business day (each, a "Distribution Payment Date").
The first distribution, which will be payable on October 30, 1997, will be for
less than a full quarter. Such distribution and any distribution payable on the
Series A Preferred Interests for any partial distribution period will be
computed on the basis of a 360-day year consisting of twelve 30-day months.
(b) No distributions on Series A Preferred Interests
shall be authorized by the General Partner or paid or set apart for payment by
the Partnership at such time as the terms and provisions of any agreement of the
Partnership, including any agreement relating to its indebtedness, prohibits
such authorization, payment or setting apart for payment or provides that such
authorization, payment or setting apart for payment would constitute a breach
thereof or a default thereunder, or if such authorization or payment shall be
restricted or prohibited by law.
(c) Notwithstanding the foregoing, distributions on
the Series A Preferred Interests will accrue whether or not the terms and
provisions set forth in Section 3(b) hereof at any time prohibit the current
payment of distributions, whether or not the Partnership has earnings, whether
or not there are funds legally available for the payment of such distributions
and whether or not such distributions are authorized. Accrued but unpaid
distributions on the Series A Preferred Interests will accumulate as of the
Distribution Payment Date on which they first become payable.
(d) Except as provided in Section 3(e) below, no
distributions will be authorized or paid or set apart for payment with respect
to the General Partner interest, the Limited Partner interests or on any other
equity interest of the Partnership or any other series of Preferred Interests
ranking, as to distributions, on a parity with or junior to the Series A
Preferred Interests for any period unless full cumulative distributions for all
past distribution periods and the then current distribution period have been or
contemporaneously are (i) authorized and paid or (ii) authorized and a sum
sufficient for the payment thereof is set apart for such payment on the Series A
Preferred Interests.
(e) When distributions are not paid in full (or a
sum sufficient for such full payment is not so set apart) upon the Series A
Preferred Interests and the interests of any other series of Preferred Interests
ranking on a parity as to distributions with the Series A Preferred Interests,
all distributions authorized upon the Series A Preferred Interests and any other
series of Preferred Interests ranking on a parity as to distributions with the
Series A Preferred Interests shall be authorized pro rata so that the amount of
distributions authorized per Series A Preferred Interest and such other series
of Preferred Interests shall in all cases
F-2
85
bear to each other the same ratio that accrued distributions on the Series A
Preferred Interests and such other series of Preferred Interests (which shall
not include any accrual in respect of unpaid distributions on such other series
of Preferred Interests for prior distribution periods if such other series of
Preferred Interests does not have a cumulative distribution) bear to each other.
No interest, or sum of money in lieu of interest, shall be payable in respect of
any distribution payment or payments on Series A Preferred Interests which may
be in arrears.
(f) Except as provided in the immediately preceding
paragraph, unless full cumulative distributions on the Series A Preferred
Interests have been or contemporaneously are authorized and paid or authorized
and a sum sufficient for the payment thereof is set apart for payment for all
past distribution periods and the then current distribution period, no
distributions shall be authorized or paid or set aside for payment nor shall any
other distribution be authorized or made with respect to the General Partner
interest, the Limited Partner interests or to any other equity interest of the
Partnership ranking junior to or on a parity with the Series A Preferred
Interests as to distributions or upon liquidation, nor shall the General Partner
interest, any Limited Partner interest, or any other equity interest of the
Partnership ranking junior to or on a parity with the Series A Preferred
Interests as to distributions or upon liquidation be redeemed, purchased or
otherwise acquired for any consideration (or any moneys be paid to or made
available for a sinking fund for the redemption of any such interests) by the
Partnership (except by conversion into or exchange for other equity interests of
the Partnership ranking junior to the Series A Preferred Interests as to
distributions and upon liquidation). The foreclosure by the Partnership on the
Limited Partner interests constituting the Indemnity Collateral and/or the
Special Indemnity Collateral (as defined in Section 13.3 of the Partnership
Agreement) shall not be deemed to be a redemption, purchase or acquisition for
consideration for purposes of this Section 3(f).
(g) The General Partner, as holder of the Series A
Preferred Interests, shall not be entitled to any distribution, whether payable
in cash, property or equity interests in excess of full cumulative distributions
on the Series A Preferred Interests as described above. Any distribution made on
the Series A Preferred Interests shall first be credited against the earliest
accrued but unpaid distribution due with respect to such interests which remains
payable.
(4) Liquidation Preference.
(a) Upon any voluntary or involuntary liquidation,
dissolution or winding up of the affairs of the Partnership, the General
Partner, as holder of the Series A Preferred Interests then outstanding, is
entitled to be paid out of the assets of the Partnership legally available for
distribution to its equity
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interest holders a liquidation preference of $25.00 per Series A Preferred
Interest, plus an amount equal to any accrued and unpaid distributions to the
date of payment, before any distribution of assets is made with respect to the
General Partner interest, the Limited Partner interest or to the holders of any
other class or series of equity interests of the Partnership that ranks junior
to the Series A Preferred Interests as to liquidation rights.
(b) In the event that, upon any such voluntary or
involuntary liquidation, dissolution or winding up, the available assets of the
Partnership are insufficient to pay the amount of the liquidating distributions
on all outstanding Series A Preferred Interests and the corresponding amounts
payable on all other classes or series of equity interests of the Partnership
ranking on a parity with the Series A Preferred Interests in the distribution of
assets, then the General Partner, as holder of the Series A Preferred Interests
and all other such classes or series of equity interests shall share ratably in
any such distribution of assets in proportion to the full liquidating
distributions to which they would otherwise be respectively entitled.
(c) Written notice of any such liquidation,
dissolution or winding up of the Partnership, stating the payment date or dates
when, and the place or places where, the amounts distributable in such
circumstances shall be payable, shall be given by first class mail, postage
pre-paid, not less than three nor more than 60 days prior to the payment date
stated therein, to the General Partner, as holder of the Series A Preferred
Interests.
(d) After payment to the General Partner of the full
amount of the liquidating distributions to which it is entitled as holder of
Series A Preferred Interests, the General Partner will have no right or claim to
any of the remaining assets of the Partnership with respect to the Series A
Preferred Interests.
(e) The consolidation or merger of the Partnership
with or into any other partnership, corporation, trust or entity or of any other
partnership, corporation, trust or other entity with or into the Partnership or
the sale, lease or conveyance of all or substantially all of, the property or
business of the Partnership, shall not be deemed to constitute a liquidation,
dissolution or winding up of the Partnership.
(5) Redemption.
(a) Right of Optional Redemption. The Series A
Preferred Interests are not redeemable prior to July 30, 2002. On and after July
30, 2002, the Partnership, at its option and upon not less than three nor more
than 60 days' written notice, may, with Proceeds designated for such purpose as
set forth in Section 5(b) below, redeem the Series A Preferred Interests, in
whole or in part, at any time or from time to time, for cash at a redemption
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price of $25.00 per interest, plus all accrued and unpaid distributions thereon
to the date fixed for redemption, without interest.
(b) Limitations on Redemption.
(i) Proceeds from the sale of shares of
beneficial interest of the General Partner which are contributed to the
Partnership ("Proceeds") may be used by the Partnership only in the manner
specified by the General Partner. If the General Partner specifies that some or
all of such Proceeds are to be used to redeem Series A Preferred Interests in
order to provide the General Partner with funds to redeem some or all of the
8.80% Series A Cumulative Redeemable Preferred Shares of Beneficial Interest
(the "Series A Preferred") of the General Partner, then the Partnership shall
distribute such specified amount of Proceeds to the General Partner in
redemption of Series A Preferred Interests in order to enable the General
Partner to redeem a like amount of its Series A Preferred with such Proceeds.
The redemption price of the Series A Preferred Interests (other than the portion
thereof consisting of accrued and unpaid distributions) is payable only from
Proceeds designated for such purpose by the General Partner. For purposes of the
first sentence of this Section 5(b)(i), "shares of beneficial interest of the
General Partner" means any equity securities (including Common Shares and
Preferred Shares), shares, interest, participation or other ownership interests
(however designated) of the General Partner and any rights (other than debt
securities convertible into or exchangeable for equity securities) or options
issued by the General Partner to purchase any of the foregoing.
(ii) Unless full cumulative distributions on
all Series A Preferred Interests shall have been or contemporaneously are
authorized and paid or authorized and a sum sufficient for the payment thereof
is set apart for payment for all past distribution periods and the then current
distribution period, no Series A Preferred Interests shall be redeemed unless
all outstanding Series A Preferred Interests are simultaneously redeemed, and
the Partnership shall not purchase or otherwise acquire directly or indirectly
any Series A Preferred Interests.
(c) Rights to Distributions on Interests Called for
Redemption. Immediately prior to any redemption of Series A Preferred Interests,
the Partnership shall pay, in cash, any accumulated and unpaid distributions
through the redemption date.
(d) Procedures for Redemption.
(i) Notice of redemption will be given in
writing to the General Partner, as holder of the Series A Preferred Interests,
not less than three nor more than 60 days prior to the redemption date. No
failure to give such notice or any defect
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thereto or in the mailing thereof shall affect the validity of the proceedings
for the redemption of any Series A Preferred Interests.
(ii) In addition to any information required
by law, such notice shall state: (A) the redemption date; (B) the redemption
price; (C) the number of Series A Preferred Interests to be redeemed; (D) the
place or places where the Series A Preferred Interests are to be surrendered for
payment of the redemption price; and (E) that distributions on the interests to
be redeemed will cease to accrue on such redemption date. If less than all of
the Series A Preferred Interests are to be redeemed, the notice mailed to the
General Partner shall also specify the number of Series A Preferred Interests to
be redeemed.
(iii) If notice of redemption of any Series
A Preferred Interests has been given and if the funds necessary for such
redemption have been set aside by the Partnership in trust for the benefit of
the General Partner, as holder of the Series A Preferred Interests so called for
redemption, then from and after the redemption date distributions will cease to
accrue on such Series A Preferred Interests, such Series A Preferred Interests
shall no longer be deemed outstanding and all rights of the General Partner, as
holder of such interests will terminate, except the right to receive the
redemption price. The General Partner, as holder of the Series A Preferred
Interests to be redeemed, shall surrender such Series A Preferred Interests at
the place designated in such notice and, upon surrender in accordance with said
notice of the Series A Preferred Interests so redeemed (pursuant to an
instrument of surrender in a form determined by the Partnership), such Series A
Preferred Interests shall be redeemed by the Partnership at the redemption price
plus any accrued and unpaid distributions payable upon such redemption. In case
less than all the Series A Preferred Interests are redeemed, an instrument (in a
form determined by the Partnership) setting forth the number of unredeemed
interests owned by the General Partner shall be executed by the Partnership and
the General Partner, as such holder, in duplicate, with a copy retained by each
party thereto.
(6) No Participation in Management.
(a) The General Partner, in its capacity as holder
of Series A Preferred Interests, shall not take part in the management of the
Partnership's business, transact any business in the Partnership's name or have
the power to sign documents for or otherwise bind the Partnership. Any rights
expressly granted in this Agreement to the General Partner, in its capacity as
holder of the Series A Preferred Interests, shall not be deemed to be rights
relating to the management of the Partnership's business. The Series A Preferred
Interests are not general partnership interests in the Partnership.
(b) So long as any Series A Preferred Interests
remain outstanding, the Partnership shall not, without the approval
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of the General Partner in its capacity as holder of the Series A Preferred
Interests, (i) authorize or create, or increase the authorized or issued amount
of, any class or series of partnership interests ranking prior to the Series A
Preferred Interests with respect to payment of distributions or the distribution
of assets upon liquidation, dissolution or winding up or reclassify any
authorized partnership interests of the Partnership into any such partnership
interests, or create, authorize or issue any obligation or security convertible
into or evidencing the right to purchase any such partnership interests, (ii)
amend, alter or repeal the provisions of this Agreement, whether by merger,
consolidation or otherwise, so as to materially and adversely affect any right,
preference or privilege of the Series A Preferred Interests or the General
Partner as holder thereof or (iii) enter into a consolidation or merger in which
another entity is the surviving entity, unless the General Partner, as holder of
the Series A Preferred Interests, receives a preference security the rights,
preferences and privileges of which do not differ from those of the Series A
Preferred Interests in any manner which is material and adverse to the General
Partner as holder of the Series A Preferred Interests; provided, however, that
with respect to the occurrence of any event set forth in (ii) or (iii) above, so
long as the Series A Preferred Interests remain outstanding with the terms
thereof materially unchanged, or the terms of the securities issued in exchange
for the Series A Preferred Interests in the consolidation or merger are not
materially different from those of the Series A Preferred Interests, the
occurrence of any such event shall not be deemed to materially and adversely
affect such rights, preferences or privileges of the General Partner as holder
of the Series A Preferred Interests and provided further that any increase in
the amount of the authorized Preferred Interests or the creation or issuance of
any other series of Preferred Interests, or any increase in the amount of
authorized interests of such series, in each case ranking on a parity with or
junior to the Series A Preferred Interests with respect to payment of
distributions or the distribution of assets upon liquidation, dissolution or
winding up, shall not be deemed to materially and adversely affect such rights,
preferences or privileges.
(7) Conversion. The Series A Preferred Interests are not
convertible into or exchangeable for any other property or securities of the
Partnership.
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STATE OF-------------------------------:
: ss.
COUNTY OF------------------------------:
On the _____ day of ___________, 199_, before me, the
subscriber, a Notary Public in and for the State and County aforesaid,
personally appeared ________________, who acknowledged himself/herself to be
________________, and that he/she executed the foregoing Instrument for the
purposes therein contained.
WITNESS my hand and seal the day and year aforesaid.
-------------------------------
Notary Public
[NOTARIAL SEAL] My Commission Expires:
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