EXHIBIT 10.50
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AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP OF
CNL APF PARTNERS, LP
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Dated as of August 31, 1999
TABLE OF CONTENTS
ARTICLE 1 DEFINED TERMS............................................................... 1
ARTICLE 2 ORGANIZATIONAL MATTERS...................................................... 12
Section 2.1 Continuation of Partnership....................................... 12
Section 2.2 Name.............................................................. 12
Section 2.3 Principal Office and Registered Agent............................. 12
Section 2.4 Power of Attorney................................................. 12
Section 2.5 Term.............................................................. 13
ARTICLE 3 PURPOSE..................................................................... 14
Section 3.1 Purpose and Business.............................................. 14
Section 3.2 Powers............................................................ 14
ARTICLE 4 CAPITAL CONTRIBUTIONS....................................................... 14
Section 4.1 Capital Contributions of the Partners............................. 14
Section 4.2 Issuances of Additional Partnership Interests..................... 15
Section 4.3 Stock Incentive Plans............................................. 16
Section 4.4 Other Equity Compensation Plans................................... 16
Section 4.5 Contribution of Proceeds of Issuance of REIT Shares............... 17
Section 4.6 No Preemptive Rights.............................................. 17
Section 4.7 Other Contribution Provisions..................................... 17
Section 4.8 No Interest on Capital............................................ 18
ARTICLE 5 DISTRIBUTIONS............................................................... 18
Section 5.1 Requirement and Characterization of Distributions................. 18
Section 5.2 Amounts Withheld.................................................. 18
Section 5.3 Distributions In Kind............................................. 18
Section 5.4 Revisions to Reflect Issuance of Partnership Interests............ 18
Section 5.5 Distributions Upon Liquidation.................................... 19
ARTICLE 6 ALLOCATIONS................................................................. 19
Section 6.1 Allocations for Capital Account Purposes.......................... 19
ARTICLE 7 MANAGEMENT AND OPERATIONS OF BUSINESS....................................... 20
Section 7.1 Management........................................................ 20
Section 7.2 Certificate of Limited Partnership................................ 23
Section 7.3 Restrictions on General Partner's Authority....................... 23
Section 7.4 Reimbursement of the APF Group.................................... 24
Section 7.5 Outside Activities of the APF Group............................... 25
Section 7.6 Contracts with Affiliates......................................... 26
Section 7.7 Indemnification................................................... 26
Section 7.8 Liability of the General Partner.................................. 28
Section 7.9 Other Matters Concerning the General Partner...................... 29
Section 7.10 Title to Partnership Assets....................................... 30
Section 7.11 Reliance by Third Parties......................................... 31
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ARTICLE 8 RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS.................................. 31
Section 8.1 Limitation of Liability........................................... 31
Section 8.2 Management of Business............................................ 31
Section 8.3 Outside Activities of Limited Partners............................ 32
Section 8.4 Return of Capital................................................. 32
Section 8.5 Rights of Limited Partners Relating to the Partnership............ 32
Section 8.6 Redemption Right.................................................. 33
Section 8.7 Covenants Relating to the Redemption Rights....................... 35
ARTICLE 9 BOOKS, RECORDS, ACCOUNTING AND REPORTS..................................... 35
Section 9.1 Records and Accounting........................................... 35
Section 9.2 Fiscal Year...................................................... 35
Section 9.3 Reports.......................................................... 36
ARTICLE 10 TAX MATTERS............................................................... 36
Section 10.1 Preparation of Tax Returns....................................... 36
Section 10.2 Tax Elections.................................................... 36
Section 10.3 Tax Matters Partner.............................................. 36
Section 10.4 Organizational Expenses.......................................... 38
Section 10.5 Withholding...................................................... 38
ARTICLE 11 TRANSFERS AND WITHDRAWALS................................................. 39
Section 11.1 Transfer......................................................... 39
Section 11.2 Transfer of General Partner's Partnership Interest............... 39
Section 11.3 Limited Partners' Rights to Transfer............................. 40
Section 11.4 Substituted Limited Partners..................................... 42
Section 11.5 Assignees........................................................ 42
Section 11.6 General Provisions............................................... 43
ARTICLE 12 ADMISSION OF PARTNERS..................................................... 44
Section 12.1 Admission of Successor General Partner........................... 44
Section 12.2 Admission of Additional Limited Partners......................... 44
Section 12.3 Amendment of Agreement and Certificate
of Limited Partnership.................................................... 45
ARTICLE 13 DISSOLUTION, LIQUIDATION AND TERMINATION.................................. 45
Section 13.1 Dissolution...................................................... 45
Section 13.2 Winding-Up....................................................... 46
Section 13.3 Compliance with Timing Requirements of Regulations............... 48
Section 13.4 Deemed Contribution and Distribution............................. 48
Section 13.5 Rights of Limited Partners....................................... 48
Section 13.6 Notice of Dissolution............................................ 48
Section 13.7 Termination of Partnership and Cancellation of
Certificate of Limited Partnership........................................ 48
Section 13.8 Reasonable Time for Winding-Up................................... 49
Section 13.9 Waiver of Partition.............................................. 49
Section 13.10 Liability of the Liquidator...................................... 49
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ARTICLE 14 AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS............................. 49
Section 14.1 Amendments...................................................... 49
Section 14.2 Meetings of the Partners........................................ 50
ARTICLE 15 PARTNER REPRESENTATIONS AND WARRANTIES................................... 51
Section 15.1 Representations and Warranties................................... 51
ARTICLE 16 GENERAL PROVISIONS........................................................ 52
Section 16.1 Addresses and Notice............................................. 52
Section 16.2 Titles and Captions.............................................. 52
Section 16.3 Pronouns and Plurals............................................. 53
Section 16.4 Further Action................................................... 53
Section 16.5 Binding Effect................................................... 53
Section 16.6 Creditors........................................................ 53
Section 16.7 Waiver........................................................... 53
Section 16.8 Counterparts..................................................... 53
Section 16.9 Applicable Law................................................... 53
Section 16.10 Invalidity of Provisions......................................... 53
Section 16.11 Entire Agreement................................................. 54
Section 16.12 Guaranty by APF.................................................. 54
Section 16.13 No Rights As Shareholders........................................ 54
Exhibit A - Partners, Percentage Interests and Partnership Units
Exhibit B - Capital Account Maintenance
Exhibit C - Special Allocation Rules
Exhibit D - Notice of Redemption
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AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP OF
CNL APF PARTNERS, LP
THIS AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP, dated as of
August 31, 1999, is entered into by and between CNL APF GP Corp., a Delaware
corporation, as the general partner and a limited partner of the Partnership
(the "General Partner") and CNL APF LP Corp., a Delaware corporation, as a
limited partner of the Partnership (the "Original Limited Partner"), together
with any other Persons who are admitted from time to time as Limited Partners as
provided herein.
WITNESSETH:
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WHEREAS, the General Partner caused the Partnership to file a Certificate
of Limited Partnership on May 19, 1998, thereby causing the Partnership to be
formed;
WHEREAS, the General Partner and the Limited Partner entered into that
certain Agreement of Limited Partnership dated as of May __, 1998 (the "Initial
Agreement"); and
WHEREAS, the General Partner and the Limited Partner desire to amend and
restate in its entirety the Initial Agreement.
NOW, THEREFORE, in consideration of the mutual covenants set forth herein,
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto hereby agree as follows:
ARTICLE 1
DEFINED TERMS
The following definitions shall be for all purposes, unless otherwise
clearly indicated to the contrary, applied to the terms used in this Agreement.
"Act" means the Delaware Revised Uniform Limited Partnership Act, as
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amended, or any successor statute.
"Additional Limited Partner" means a Person admitted to the Partnership as
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a Limited Partner pursuant to Section 4.2 hereof and who is shown as such on the
books and records of the Partnership.
"Adjusted Capital Account" means the Capital Account maintained for each
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Partner as of the end of each Partnership Year (i) increased by any amounts
which such Partner is obligated to restore pursuant to any provision of this
Agreement, or is treated as being obligated to restore pursuant to Regulations
Section 1.704-1(b)(2)(ii)(c), or is deemed to be obligated to restore pursuant
to the penultimate sentences of Regulations Sections 1.704-2(g)(1) and 1.704-
2(i)(5), and (ii) decreased by the items described in Regulations Sections
1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5), and 1.704-1(b)(2)(ii)(d)(6).
The foregoing definition of Adjusted Capital Ac-
count is intended to comply with the provisions of Regulations Section 1.704-
1(b)(2)(ii)(d) and shall be interpreted consistently therewith.
"Adjusted Capital Account Deficit" means, with respect to any Partner, the
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deficit balance, if any, in such Partner's Adjusted Capital Account as of the
end of the relevant Partnership Year.
"Adjusted Property" means any property the Carrying Value of which has been
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adjusted pursuant to Exhibit B hereof.
"Affiliate" means, with respect to any Person, (i) any Person directly or
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indirectly controlling, controlled by or under common control with such Person,
(ii) any Person owning or controlling ten percent (10%) or more of the
outstanding voting interests of such Person, (iii) any Person of which such
Person owns or controls ten percent (10%) or more of the voting interests, or
(iv) any officer, director, general partner or trustee of such Person or of any
Person referred to in clauses (i), (ii), and (iii) above. For the purposes of
this definition, "control," when used with respect to any Person, means the
power to direct the management and policies of such Person, directly or
indirectly, whether through the ownership of voting securities, by contract or
otherwise, and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
"Agreement" means this Amended and Restated Agreement of Limited
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Partnership, as it may be amended, supplemented or restated from time to time.
"APF" means CNL American Properties Fund, Inc., a Maryland corporation.
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"APF Group" means APF, the General Partner, the Original Limited Partner
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and any wholly owned subsidiaries of APF, the General Partner or the Original
Limited Partner.
"Articles of Incorporation" means the Amended and Restated Articles of
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Incorporation of APF, as they may be amended, supplemented or restated from time
to time.
"Assignee" means a Person to whom one or more Partnership Units have been
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transferred in a manner permitted under this Agreement, but who has not become a
Substituted Limited Partner, and who has the rights set forth in Section 11.5.
"Available Cash" means, with respect to any period for which such
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calculation is being made:
(a) all cash revenues and funds received by the Partnership from whatever
source (excluding the proceeds of any Capital Contribution) plus the
amount of any reduction (including, without limitation, a reduction
resulting because the General Partner determines such amounts are no
longer necessary) in reserves of the Partnership, which reserves are
referred to in clause (b)(iv) below;
(b) bless the sum of the following (except to the extent made with the
proceeds of any Capital Contribution);
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(i) all interest, principal and other debt payments made during such
period by the Partnership,
(ii) all cash expenditures (including capital expenditures) made by
the Partnership during such period,
(iii) investments in any entity (including loans made thereto) to the
extent that such investments are permitted under this Agreement
and are not otherwise described in clauses (b)(i) or (ii), and
(iv) the amount of any increase in reserves established during such
period which the General Partner determines is necessary or
appropriate in its sole and absolute discretion.
Notwithstanding the foregoing, Available Cash shall not include any cash
received or reductions in reserves, or take into account any disbursements made
or reserves established, after commencement of the dissolution and liquidation
of the Partnership.
"Book-Tax Disparities" means, with respect to any item of Contributed
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Property or Adjusted Property, as of the date of any determination, the
difference between the Carrying Value of such Contributed Property or Adjusted
Property and the adjusted basis thereof for federal income tax purposes as of
such date. A Partner's share of the Partnership's Book-Tax Disparities in all
of its Contributed Property and Adjusted Property will be reflected by the
difference between such Partner's Capital Account balance as maintained pursuant
to Exhibit B and the hypothetical balance of such Partner's Capital Account
computed as if it had been maintained strictly in accordance with federal income
tax accounting principles.
"Business Day" means any day except a Saturday, Sunday or other day on
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which banking institutions in the State of New York are authorized or required
by law or executive order to close.
"Capital Account" means the Capital Account maintained for a Partner
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pursuant to Exhibit B hereof.
"Capital Contribution" means, with respect to any Partner, any cash, cash
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equivalents or the Net Asset Value of Contributed Property which such Partner
contributes or is deemed to contribute to the Partnership pursuant to Section
4.1, 4.2, or 4.5 hereof.
"Carrying Value" means (i) with respect to a Contributed Property or
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Adjusted Property, the Gross Asset Value of such property, reduced (but not
below zero) by all Depreciation with respect to such Property charged to the
Partners' Capital Accounts following the contribution of or adjustment with
respect to such Property, and (ii) with respect to any other Partnership
property, the adjusted basis of such property for federal income tax purposes,
all as of the time of determination. The Carrying Value of any property shall
be adjusted from time to time in accordance with Exhibit B hereof, and to
reflect changes, additions or other adjustments to the Carrying Value for
improvements, dispositions and acquisitions of Partnership properties, as deemed
appropriate by the General Partner.
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"Cash Amount" means an amount of cash equal to the Value on the Valuation
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Date of the REIT Shares Amount. Notwithstanding the foregoing, if APF raises the
Cash Amount through an offering of securities, borrowings or otherwise, the Cash
Amount shall be reduced by an amount equal to the expenses incurred by APF in
connection with raising such funds (to the extent that such expenses are
allocable to funds used to pay the Cash Amount); provided, however, that the
total reduction of the Cash Amount for such expenses shall not exceed five
percent (5%) of the total Cash Amount as determined prior to reduction for such
expenses.
"Certificate" means the Certificate of Limited Partnership relating to the
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Partnership filed with the Secretary of State of Delaware, as amended from time
to time in accordance with the terms hereof and the Act.
"Code" means the Internal Revenue Code of 1986, as amended and in effect
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from time to time, as interpreted by the applicable regulations thereunder. Any
reference herein to a specific section or sections of the Code shall be deemed
to include a reference to any corresponding provision of future law.
"Contributed Property" means each property or other asset (but excluding
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cash), in such form as may be permitted by the Act, contributed to the
Partnership. Once the Carrying Value of a Contributed Property is adjusted
pursuant to Section 1.D of Exhibit B hereof, such property shall no longer
constitute a Contributed Property for purposes of Exhibit B hereof, but shall be
deemed an Adjusted Property for such purposes.
"Conversion Factor" means 1.0, provided that in the event that APF (i) pays
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a dividend on its outstanding REIT Shares in REIT Shares or makes a distribution
to all holders of its outstanding REIT Shares in REIT Shares; (ii) subdivides
its outstanding REIT Shares; or (iii) combines its outstanding REIT Shares into
a smaller number of REIT Shares, the Conversion Factor shall be adjusted by
multiplying the Conversion Factor by a fraction, the numerator of which shall be
the number of REIT Shares that would be issued and outstanding on the record
date for such event if such dividend, distribution, subdivision or combination
had occurred as of such date, and the denominator of which shall be the actual
number of REIT Shares issued and outstanding on the record date for such
dividend, distribution, subdivision or combination. Any adjustment of the
Conversion Factor shall become effective immediately after the effective date of
such event retroactive to the record date for such event; provided, however,
that if the General Partner receives a Notice of Redemption after the record
date, but prior to the effective date, of any such event, the Conversion Factor
shall be determined as if the General Partner had received the Notice of
Redemption immediately prior to the record date for such event.
"Depreciation" means, for each Partnership Year, an amount equal to the
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federal income tax depreciation, amortization, or other cost recovery deduction
allowable with respect to an asset for such year, except that if the Carrying
Value of an asset differs from its adjusted basis for federal income tax
purposes at the beginning of such year or other period, Depreciation shall be an
amount which bears the same ratio to such beginning Carrying Value as the
federal income tax depreciation, amortization, or other cost recovery deduction
for such year bears to such beginning adjusted tax basis; provided, however,
that if the federal income tax depreciation, amortization, or other cost
recovery deduction for such year is zero, Depreciation shall be determined
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with reference to such beginning Carrying Value using any reasonable method
selected by the General Partner.
"Effective Date" means the date of the acquisition by the APF Group of one
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or more of CNL Income Fund, Ltd., CNL Income Fund II, Ltd., CNL Income Fund III,
Ltd., CNL Income Fund IV, Ltd., CNL Income Fund V, Ltd., CNL Income Fund VI,
Ltd., CNL Income Fund VII, Ltd., CNL Income Fund VIII, Ltd., CNL Income Fund IX,
Ltd., CNL Income Fund X, Ltd., CNL Income Fund XI, Ltd., CNL Income Fund XII,
Ltd., CNL Income Fund XIII, Ltd., CNL Income Fund XIV, Ltd., CNL Income Fund XV,
Ltd., and/or CNL Income Fund XVI, Ltd.
"ERISA" means Employee Retirement Income Security Act of 1974, as amended.
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"ERISA Partner" means any Limited Partner that is either (i) an employee
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benefit plan subject to Title I of ERISA or Section 4975 of the Code, or (ii) a
nominee for a trust established pursuant to such employee benefit plan, or (iii)
an entity whose underlying assets include assets of such employee benefit plan
by reason of such plan's investment in such entity.
"ERISA Plan" means an "employee benefit plan" as that term is defined in 29
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U.S.C. (S) 1002(3), and which is not exempt from regulation under ERISA by
virtue of 29 U.S.C. (S) 1003(b).
"Exchange Act" means the Securities Exchange Act of 1934, as amended, or
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any successor statute.
"General Partner" means CNL APF GP Corp. or its successors as general
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partner of the Partnership.
"General Partner Interest" means the Partnership Interest held by the
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General Partner in its capacity as General Partner. A General Partner Interest
may be expressed as a number of Partnership Units. One percent (1%) of any
Partnership Units or Partnership Interests obtained by the General Partner in
connection with the issuance of additional Partnership Interests or Partnership
Units pursuant to Section 4.2, the exchange of Partnership Units pursuant to
Section 8.6 or otherwise, shall be owned by the General Partner as part of its
General Partner Interest, and the remaining Partnership Units or Partnership
Interests shall be owned by the General Partner as part of its Limited Partner
Interest.
"Gross Asset Value" of any Contributed Property means the fair market value
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of such property or other consideration at the time of contribution as
determined by the General Partner using such reasonable method of valuation as
it may adopt. The General Partner shall, in its sole and absolute discretion,
use such method as it deems reasonable and appropriate to allocate the aggregate
of the Gross Asset Values of Contributed Properties contributed in a single or
integrated transaction among the separate properties on a basis proportional to
their respective fair market values.
"Immediate Family" means, with respect to any natural Person, such natural
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Person's spouse, parents, descendants, nephews, nieces, brothers and sisters.
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"Incapacity" or "Incapacitated" means, (i) as to any individual Partner,
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death, total physical disability or entry of an order by a court of competent
jurisdiction adjudicating him incompetent to manage his Person or his estate;
(ii) as to any corporation which is a Partner, the filing of a certificate of
dissolution, or its equivalent, for the corporation or the revocation of its
charter; (iii) as to any partnership which is a Partner, the dissolution and
commencement of winding up of the partnership; (iv) as to any estate which is a
Partner, the distribution by the fiduciary of the estate's entire interest in
the Partnership; (v) as to any trustee of a trust which is a Partner, the
termination of the trust (but not the substitution of a new trustee); or (vi) as
to any Partner, the bankruptcy of such Partner. For purposes of this definition,
bankruptcy of a Partner shall be deemed to have occurred when (a) the Partner
commences a voluntary proceeding seeking liquidation, reorganization or other
relief under any bankruptcy, insolvency or other similar law now or hereafter in
effect, (b) the Partner is adjudged as bankrupt or insolvent, or a final and
nonappealable order for relief under any bankruptcy, insolvency or similar law
now or hereafter in effect has been entered against the Partner, (c) the Partner
executes and delivers a general assignment for the benefit of the Partner's
creditors, (d) the Partner files an answer or other pleading admitting or
failing to contest the material allegations of a petition filed against the
Partner in any proceeding of the nature described in clause (b) above, (e) the
Partner seeks, consents to or acquiesces in the appointment of a trustee,
receiver or liquidator for the Partner or for all or any substantial part of the
Partner's properties, (f) any proceeding seeking liquidation, reorganization or
other relief of or against such Partner under any bankruptcy, insolvency or
other similar law now or hereafter in effect has not been dismissed within one
hundred twenty (120) days after the commencement thereof, (g) the appointment
without the Partner's consent or acquiescence of a trustee, receiver or
liquidator has not been vacated or stayed within ninety (90) days of such
appointment, or (h) an appointment referred to in clause (g) which has been
stayed is not vacated within ninety (90) days after the expiration of any such
stay.
"Indemnitee" means (i) any Person made a party to a proceeding by reason of
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his status as (A) the General Partner, (B) a director or officer of the
Partnership or the General Partner, or (C) his or its liability, pursuant to a
loan guarantee or otherwise, for any indebtedness of the Partnership or any
Subsidiary of the Partnership (including, without limitation, any indebtedness
which the Partnership or any Subsidiary of the Partnership has assumed or taken
assets subject to), and (ii) such other Persons (including Affiliates of the
General Partner or the Partnership) as the General Partner may designate from
time to time (whether before or after the event giving rise to potential
liability), in its sole and absolute discretion.
"IRS" means the Internal Revenue Service, which administers the internal
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revenue laws of the United States.
"Lien" means any lien, security interest, mortgage, deed of trust, charge,
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claim, encumbrance, pledge, option, right of first offer or first refusal and
any other right or interest of any kind or nature, actual or contingent, or
other similar encumbrance of any nature whatsoever.
"Limited Partner" means any Person named as a Limited Partner in Exhibit A
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attached hereto, as such Exhibit may be amended from time to time, or any
Substituted Limited Partner or Additional Limited Partner, in such Person's
capacity as a Limited Partner in the Partnership.
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"Limited Partner Interest" means a Partnership Interest of a Limited
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Partner in the Partnership representing a fractional part of the Partnership
Interests of all Partners and includes any and all benefits to which the holder
of such a Partnership Interest may be entitled as provided in this Agreement,
together with all obligations of such Person to comply with the terms and
provisions of this Agreement. A Limited Partner Interest may be expressed as a
number of Partnership Units.
"Liquidating Event(s)" has the meaning set forth in Section 13.1 hereof.
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"Liquidator" has the meaning set forth in Section 13.2 hereof.
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"Net Asset Value" means (i) in the case of any Contributed Property as of
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the time of its contribution to the Partnership, the Gross Asset Value of such
property, reduced by any liabilities either assumed by the Partnership upon such
contribution or to which such property is subject when contributed, and (ii) in
the case of any property distributed to a Partner by the Partnership, the
Partnership's Carrying Value of such property at the time such property is
distributed, reduced by any indebtedness either assumed by such Partner upon
such distribution or to which such property is subject at the time of
distribution, as determined under Section 752 of the Code and the Regulations
thereunder.
"Net Income" means, for any taxable period, the excess, if any, of the
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Partnership's items of income and gain for such taxable period over the
Partnership's items of loss and deduction for such taxable period. The items
included in the calculation of Net Income shall be determined in accordance with
Section 1.B of Exhibit B. Once an item of income, gain, loss or deduction that
has been included in the initial computation of Net Income is subjected to the
special allocation rules in Exhibit C, Net Income or the resulting Net Loss,
whichever the case may be, shall be recomputed without regard to such item.
"Net Loss" means, for any taxable period, the excess, if any, of the
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Partnership's items of loss and deduction for such taxable period over the
Partnership's items of income and gain for such taxable period. The items
included in the calculation of Net Loss shall be determined in accordance with
Section 1.B of Exhibit B. Once an item of income, gain, loss or deduction that
has been included in the initial computation of Net Loss is subjected to the
special allocation rules in Exhibit C, Net Loss or the resulting Net Income,
whichever the case may be, shall be recomputed without regard to such item.
"New Securities" has the meaning set forth in Section 4.2.B hereof.
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"Nonrecourse Built-in Gain" means, with respect to any Contributed
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Properties or Adjusted Properties that are subject to a mortgage or negative
pledge securing a Nonrecourse Liability, the amount of any taxable gain that
would be allocated to the Partners pursuant to Section 2.B of Exhibit C if such
properties were disposed of in a taxable transaction in full satisfaction of
such liabilities and for no other consideration.
"Nonrecourse Deductions" has the meaning set forth in Regulations Section
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1.704-2(b)(1), and the amount of Nonrecourse Deductions for a Partnership Year
shall be determined in accordance with the rules of Regulations Section 1.704-
2(c).
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"Nonrecourse Liability" has the meaning set forth in Regulations Section
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1.752-1(a)(2).
"Notice of Redemption" means the Notice of Redemption substantially in the
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form of Exhibit D to this Agreement.
"Original Limited Partner" means a CNL APF LP Corp., a Delaware
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corporation.
"Partner" means a General Partner or a Limited Partner, and "Partners"
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means the General Partner and the Limited Partners.
"Partner Minimum Gain" means an amount, with respect to each Partner
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Nonrecourse Debt, equal to the Partnership Minimum Gain that would result if
such Partner Nonrecourse Debt were treated as a Nonrecourse Liability,
determined in accordance with Regulations Section 1.704-2(i)(3).
"Partner Nonrecourse Debt" has the meaning set forth in Regulations Section
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1.704-2(b)(4).
"Partner Nonrecourse Deductions" has the meaning set forth in Regulations
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Section 1.704-2(i)(2), and the amount of Partner Nonrecourse Deductions with
respect to a Partner Nonrecourse Debt for a Partnership Year shall be determined
in accordance with the rules of Regulations Section 1.704-2(i)(2).
"Partnership" means the limited partnership formed under the Act and
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pursuant to this Agreement and any successor thereto.
"Partnership Interest" means an ownership interest in the Partnership
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representing a Capital Contribution by either a Limited Partner or the General
Partner and includes any and all benefits to which the holder of such a
Partnership Interest may be entitled as provided in this Agreement, together
with all obligations of such Person to comply with the terms and provisions of
this Agreement. A Partnership Interest may be expressed as a number of
Partnership Units.
"Partnership Minimum Gain" has the meaning set forth in Regulations Section
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1.704-2(b)(2), and the amount of Partnership Minimum Gain, as well as any net
increase or decrease in Partnership Minimum Gain, for a Partnership Year shall
be determined in accordance with the rules of Regulations Section 1.704-2(d).
"Partnership-Owned Entity" means any partnership, limited liability company
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or other entity in which the Partnership has an ownership interest.
"Partnership Record Date" means the record date established by the General
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Partner for the distribution of Available Cash pursuant to Section 5.2 hereof,
which record date shall be the same as the record date established by the
General Partner for a distribution to its shareholders of some or all of its
portion of such distribution.
"Partnership Unit" means a fractional, undivided share of the Partnership
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Interests of all Partners issued pursuant to Section 4.1 or 4.2. As of the
Effective Date, there shall be considered
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to be 100 Partnership Units outstanding, with each Partnership Unit representing
a 1% Percentage Interest in the Partnership.
"Partnership Year" means the fiscal year of the Partnership, which shall be
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the calendar year.
"Percentage Interest" means, as to a Partner, its interest in the
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Partnership as determined by dividing the Partnership Units owned by such
Partner by the total number of Partnership Units then outstanding and as
specified in Exhibit A attached hereto, as such Exhibit may be amended from time
to time.
"Person" means an individual or a corporation, partnership, trust,
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unincorporated organization, association or other entity.
"Private Transfer" means a private transfer under Section 1.7704-1(e) of
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the Regulations.
"PTP" means a "publicly traded partnership," as that term is defined in
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Section 7704 of the Code.
"Qualified Transferee" means an "Accredited Investor" as defined in Rule
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501 of Regulation D promulgated under the Securities Act.
"Recapture Income" means any gain recognized by the Partnership (computed
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without regard to any adjustment required by Section 743 of the Code) upon the
disposition of any property or asset of the Partnership, which gain is
characterized as ordinary income because it represents the recapture of
deductions previously taken with respect to such property or asset.
"Redeeming Partner" has the meaning set forth in Section 8.6 hereof.
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"Redemption Amount" means either the Cash Amount or the REIT Shares Amount,
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as determined by the General Partner, in its sole and absolute discretion.
"Redemption Right" has the meaning set forth in Section 8.6 hereof.
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"Regulations" means the income tax regulations promulgated under the Code,
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as such regulations may be amended from time to time (including corresponding
provisions of succeeding regulations).
"Regulatory Allocations" has the meaning set forth in Section 1.G of
----------------------
Exhibit C.
"REIT" means a real estate investment trust under Sections 856 through 860
----
of the Code.
"REIT Share" means a share of common stock of APF.
----------
"REIT Shares Amount" means a whole number of REIT Shares equal to the
------------------
product of the number of Partnership Units offered for redemption by a Redeeming
Partner, multiplied by the Conversion Factor (rounded down to the nearest whole
number in the event such product is not a whole number); provided that in the
event APF at any time issues to all holders of REIT
-9-
Shares rights, options, warrants or convertible or exchangeable securities
entitling the shareholders to subscribe for or purchase REIT Shares, or any
other securities or property (collectively, the "rights"), which rights have not
expired pursuant to their terms, then the REIT Shares Amount thereafter shall
also include such rights that a holder of that number of REIT Shares would be
entitled to receive. A Redeeming Partner shall have no right, without the
General Partner's consent, in its sole and absolute discretion, to receive the
REIT Shares amount instead of the Cash Amount when the Redeeming Partner
exercises its Redemption Right.
"Residual Gain" or "Residual Loss" means any item of gain or loss, as the
------------- -------------
case may be, of the Partnership recognized for federal income tax purposes
resulting from a sale, exchange or other disposition of Contributed Property or
Adjusted Property, to the extent such item of gain or loss is not allocable
pursuant to Section 2.B.1(a) or 2.B.2(a) of Exhibit C to eliminate Book-Tax
Disparities.
"SEC" means the United States Securities and Exchange Commission.
---
"Securities Act" means the Securities Act of 1933, as amended, or any
--------------
successor statute.
"Share Option Plan" means any equity incentive plan of APF, the Partnership
-----------------
and/or any Affiliate of the Partnership.
"Specified Redemption Date" means the tenth (10th) Business Day after
-------------------------
receipt by the General Partner of a Notice of Redemption, or, in the event that
Section 11.7.A below is applicable, the seventieth (70th) day (or if such date
is not a Business Day, the first Business Day thereafter) after receipt by the
General Partner of a Notice of Redemption, unless applicable law requires a
later date. Notwithstanding the foregoing, if APF elects to pay all or any
portion of the consideration to a Redeeming Partner in cash, the Specified
Redemption Date may be extended for an additional period, not to exceed thirty
(30) Business Days, to the extent required for the APF Group to raise the funds
required to pay the cash consideration to the Redeeming Partner.
"Subsidiary" means, with respect to any Person, any corporation,
----------
partnership, or other entity of which a majority of (i) the voting power of the
voting equity securities or (ii) the outstanding equity interests is owned,
directly or indirectly, by such Person.
"Substituted Limited Partner" means (i) a Person who is admitted as a
---------------------------
Limited Partner to the Partnership pursuant to Section 11.4 and (ii) the General
Partner to the extent that it receives Partnership Units under Section 8.6.B.
"Terminating Capital Transaction" means any sale or other disposition of
-------------------------------
all or substantially all of the assets of the Partnership or a related series of
transactions that, taken together, result in the sale or other disposition of
all or substantially all of the assets of the Partnership.
"Trading Day" means a day on which the principal national securities
-----------
exchange on which the REIT Shares are listed or admitted to trading is open for
the transaction of business or, if the REIT Shares are not listed or admitted to
trading, means a Business Day.
"Transaction" has the meaning set forth in Section 11.2.B. hereof.
-----------
-10-
"Unrealized Gain" attributable to any item of Partnership property means,
---------------
as of any date of determination, the excess, if any, of (i) the fair market
value of such property (as determined under Exhibit B hereof) as of such date,
over (ii) the Carrying Value of such property (prior to any adjustment to be
made pursuant to Exhibit B hereof) as of such date.
"Unrealized Loss" attributable to any item of Partnership property means,
---------------
as of any date of determination, the excess, if any, of (i) the Carrying Value
of such property (prior to any adjustment to be made pursuant to Exhibit B
hereof) as of such date, over (ii) the fair market value of such property (as
determined under Exhibit B hereof) as of such date.
"Valuation Date" means the date of receipt by the Partnership of a Notice
--------------
of Redemption or, if such date is not a Business Day, the first Business Day
thereafter; provided that in the event Section 11.7.A is applicable, the
Valuation Date will be sixty (60) days (or if such date is not a Business Day,
the first Business Day thereafter) following the receipt by the Partnership of a
Notice of Redemption.
"Value" means, with respect to a REIT Share, the average of the closing
-----
price for the ten (10) consecutive Trading Days immediately preceding the
Valuation Date. The closing price for each such Trading Day means the last sale
price, regular way, on such day, or, if no such sale takes place on that day,
the average of the closing bid and asked prices on that day, regular way, in
either case as reported on the principal consolidated transaction reporting
system with respect to securities listed or admitted to trading on the New York
Stock Exchange, or if the REIT Shares are not so listed or admitted to trading,
as reported in the principal consolidated transaction reporting system with
respect to securities listed on the principal national securities exchange
(including the National Market System of the National Association of Securities
Dealers, Inc. Automated Quotation System) on which the REIT Shares are listed or
admitted to trading or, if the REIT Shares are not so listed or admitted to
trading, the last quoted price or, if not 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 Quotation System or, if such
system is no longer in use, the principal automated quotation system then in use
or, if the REIT Shares are not so quoted by any such system, the average of the
closing bid and asked prices as furnished by a professional market maker
selected by the board of directors of APF making a market in the REIT Shares,
or, if there is no such market maker or such closing prices otherwise are not
available, the fair market value of the REIT Shares as of such day, as
determined by the board of directors of APF in its sole discretion. In the
event APF issues to all holders of REIT Shares rights, options, warrants or
convertible or exchangeable securities entitling the shareholders to subscribe
for or purchase REIT Shares or any other property, then the Value of a REIT
Share shall include the value of such rights, as determined by the board of
directors of APF acting in good faith on the basis of such quotations and other
information as it considers, in its reasonable judgment, appropriate.
-11-
ARTICLE 2
ORGANIZATIONAL MATTERS
Section 2.1 Continuation of Partnership
---------------------------
The Partners hereby continue the Partnership as a limited partnership
pursuant to the provisions of the Act and upon the terms and conditions set
forth in this Agreement. Except as expressly provided herein to the contrary,
the rights and obligations of the Partners and the administration and
termination of the Partnership shall be governed by the Act. The Partnership
Interest of each Partner shall be personal property for all purposes.
Section 2.2 Name
----
The name of the Partnership is CNL APF Partners, L.P. The Partnership's
business may be conducted under any other name or names deemed advisable by the
General Partner, including the name of the General Partner or any Affiliate
thereof. The words "Limited Partnership," "L.P.," "Ltd." or similar words or
letters shall be included in the Partnership's name where necessary for the
purposes of complying with the laws of any jurisdiction that so requires. The
General Partner in its sole and absolute discretion may change the name of the
Partnership at any time and from time to time and shall notify the Limited
Partners of such change in the next regular communication to the Limited
Partners.
Section 2.3 Principal Office and Registered Agent
-------------------------------------
The address of the principal office of the Partnership shall be located at
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, or such other place as the
General Partner may from time to time designate by notice to the Limited
Partners. The registered agent for service of process on the Partnership in the
State of Delaware shall be The Corporation Trust Company, Corporation Trust
Center, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or such other agent as
the General Partner may from time to time designate. The Partnership may
maintain offices at such other place or places within or outside the State of
Delaware as the General Partner deems advisable.
Section 2.4 Power of Attorney
-----------------
A. Each Limited Partner hereby constitutes and appoints the General
Partner, any Liquidator, 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:
(1) execute, swear to, acknowledge, deliver, file and record in the
appropriate public offices (a) all certificates, documents and other
instruments (including, without limitation, this Agreement and the
Certificate and all amendments or restatements thereof) that the
General Partner or the Liquidator deems appropriate or necessary to
qualify or continue the existence or qualification of the Partnership
as a limited partnership in the State of Delaware and in all other
jurisdictions in which the Partnership may conduct business or own
property; (b) all instruments that the General Partner or the
Liquidator deems appropriate or necessary to reflect any amendment,
change, modification or restatement of this Agreement in accordance
-12-
with the terms; (c) all conveyances and other instruments or documents
that the General Partner deems appropriate or necessary to reflect the
dissolution and liquidation of the Partnership pursuant to the terms of
this Agreement, including, without limitation, a certificate of
cancellation; (d) all instruments relating to the admission,
withdrawal, removal or substitution of any Partner pursuant to, or
other events described in, Article 4, 8, 11, 12 or 13 hereof or the
Capital Contribution of any Partner; and (e) all certificates,
documents and other instruments relating to the determination of the
rights, preferences and privileges of Partnership Interests; and
(2) execute, swear to, seal, acknowledge and file all ballots, consents,
approvals, waivers, certificates and other instruments appropriate or
necessary, in the sole and absolute discretion of the General Partner
or any Liquidator, to make, evidence, give, confirm or ratify any vote,
consent, approval, agreement or other action which is made or given by
the Partners hereunder or is consistent with the terms of this
Agreement or appropriate or necessary, in the sole discretion of the
General Partner or any Liquidator, to effectuate the terms or intent of
this Agreement.
Nothing contained herein shall be construed as authorizing the General
Partner or any Liquidator to amend this Agreement except in accordance with
Article 14 hereof or as may be otherwise expressly provided for in this
Agreement.
B. The foregoing power of attorney is hereby declared to be 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 and any
Liquidator to act as contemplated by this Agreement in any filing or other
action by it on behalf of the Partnership, and it shall survive and not be
affected by the subsequent Incapacity of any Limited Partner and the transfer of
all or any portion of such Limited Partner's Partnership Units and shall extend
to such Limited Partner's heirs, successors, assigns and personal
representatives. Each such Limited Partner hereby agrees to be bound by any
representation made by the General Partner or any Liquidator, acting in good
faith pursuant to such power of attorney, and each such Limited Partner hereby
waives any and all defenses which may be available to contest, negate or
disaffirm the action of the General Partner or any Liquidator, taken in good
faith under such power of attorney. Each Limited Partner shall execute and
deliver to the General Partner or the Liquidator, within fifteen (15) days after
receipt of the General Partner's or Liquidator's request therefor, such further
designations, powers of attorney and other instruments as the General Partner or
the Liquidator, as the case may be, deems necessary to effectuate this Agreement
and the purposes of the Partnership.
Section 2.5 Term
----
The term of the Partnership commenced on May 19, 1998, the date the
Certificate was filed with the Secretary of State of Delaware in accordance with
the Act, and shall continue until December 31, 2099, unless the Partnership is
dissolved sooner pursuant to the provisions of Article 13 or as otherwise
provided by law.
-13-
ARTICLE 3
PURPOSE
Section 3.1 Purpose and Business
--------------------
The purpose and nature of the business to be conducted by the Partnership
is to (i) conduct any business that may be lawfully conducted by a limited
partnership organized pursuant to the Act, including, without limitation, to
acquire, hold, own, develop, construct, improve, maintain, operate, sell, lease,
transfer, encumber, convey, exchange, and otherwise dispose of or deal with real
and personal property of all kinds; (ii) enter into any partnership, joint
venture or other similar arrangement to engage in any of the foregoing or own
interests in any entity engaged in any of the foregoing, and to exercise all of
the powers of an owner in any such entity; and (iii) do anything necessary,
appropriate, proper, advisable, desirable, convenient or incidental to the
foregoing; provided, however, that such business shall be limited to and
conducted in such a manner as to permit APF at all times to qualify as a REIT,
unless APF voluntarily terminates its REIT status pursuant to its Articles of
Incorporation. In connection with the foregoing, and without limiting the right
of APF in its sole discretion to cease qualifying as a REIT, the Partners
acknowledge that the current status of APF as a REIT inures to the benefit of
all the Partners and not solely APF.
Section 3.2 Powers
------
Subject to all of the terms, covenants, conditions and limitations
contained in this Agreement and any other agreement entered into by the
Partnership, the Partnership shall have full power and authority to do any and
all acts and things necessary, appropriate, proper, advisable, desirable,
incidental to or convenient for the furtherance and accomplishment of the
purposes and business described herein and for the protection and benefit of the
Partnership, including, without limitation, full power and authority, directly
or through its ownership interest in other entities, to enter into, perform and
carry out contracts of any kind, borrow money and issue evidences of
indebtedness, whether or not secured by mortgage, deed of trust, pledge or other
lien, acquire and develop real property, and lease, sell, transfer or otherwise
dispose of real property; provided, however, that the Partnership shall not
take, or refrain from taking, any action which, in the judgment of General
Partner, in its sole and absolute discretion, (i) could adversely affect the
ability of APF to achieve or maintain qualification as a REIT, (ii) could
subject APF to any additional taxes under Section 857 or Section 4981 of the
Code, or (iii) could violate any law or regulation of any governmental body or
agency having jurisdiction over APF or its securities, unless such action (or
inaction) shall have been specifically consented to by the General Partner in
writing.
ARTICLE 4
CAPITAL CONTRIBUTIONS
Section 4.1 Capital Contributions of the Partners
-------------------------------------
A. The Partners have made Capital Contributions to the Partnership as set
forth in the books of the Partnership. To the extent the Partnership acquires
any property by the merger of any other Person into the Partnership, Persons who
receive Partnership Interests in exchange for
-14-
their interests in the Person merging into the Partnership shall become Partners
and shall be deemed to have made Capital Contributions as provided in the
applicable merger agreement. The Partners shall own Partnership Units in the
amounts set forth for each Partner in Exhibit A and shall have a Percentage
Interest in the Partnership as set forth in Exhibit A, which Percentage Interest
shall be adjusted in Exhibit A from time to time by the General Partner to the
extent necessary to reflect accurately redemptions, Capital Contributions, the
issuance of additional Partnership Units (pursuant to any merger or otherwise),
or similar events having an effect on a Partner's Percentage Interest. Except as
provided in Sections 4.2 and 10.5, the Partners shall have no obligation to make
any additional Capital Contributions or loans to the Partnership.
B. The ownership of Partnership Units may be evidenced by such form of
certificate as the General Partner may from time to time prescribe. Upon
surrender to the General Partner of a certificate evidencing the ownership of
Partnership Units, accompanied by proper evidence of authority to transfer, the
General Partner shall cancel the old certificate, issue a new certificate to the
Person entitled thereto and record the transaction upon its books. The General
Partner may issue a new certificate or certificates in place of any certificate
or certificates previously issued, which previously-issued certificate or
certificates are alleged to have been lost, stolen or destroyed, upon the making
of an affidavit of that fact by the owner claiming the certificate or
certificates to be lost, stolen or destroyed. When issuing such new certificate
or certificates, the General Partner may, in its discretion and as a condition
precedent to the issuance thereof, require the owner of such lost, stolen or
destroyed certificate or certificates, or its legal representative, to give the
Partnership a bond in such sum as the General Partner may direct as indemnity
against any claim that may be made against the Partnership with respect to the
certificate or certificates alleged to have been lost, stolen or destroyed.
Section 4.2 Issuances of Additional Partnership Interests
---------------------------------------------
A. The General Partner is hereby authorized to cause the Partnership from
time to time to issue to Partners (including the General Partner) or other
persons (including, without limitation, in connection with the contribution of
property to the Partnership) additional Partnership Units or other Partnership
Interests in one or more classes, or one or more series of any of such classes,
with such designations, preferences and relative, participating, optional or
other special rights, powers and duties, including rights, powers and duties
senior to Limited Partner Interests, all as shall be determined by the General
Partner in its sole and absolute discretion subject to Delaware law, including,
without limitation, (i) the allocations of items of Partnership income, gain,
loss, deduction and credit to each such class or series of Partnership
Interests; (ii) the right of each such class or series of Partnership Interests
to share in Partnership distributions; and (iii) the rights of each such class
or series of Partnership Interests upon dissolution and liquidation of the
Partnership; provided that no such additional Partnership Units or other
Partnership Interests shall be issued to the General Partner unless either (a)
the additional Partnership Interests are issued pursuant to Section 4.2.B, 4.3
or 4.5, (b)(1) the additional Partnership Interests are issued in connection
with the grant, award, or issuance of shares of APF other than pursuant to
Section 4.2.B, 4.3 or 4.5, which shares have designations, preferences and other
rights such that the economic interests attributable to such shares 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 (2) APF (through the General Partner) shall make a
Capital Contribution to the Partnership in an amount equal to the proceeds, if
any, raised in con-
-15-
nection with the issuance of such shares of APF, or (c) the additional
Partnership Interests are issued to all Partners in proportion to their
respective Percentage Interests.
B. After the Effective Date, APF shall not grant, award, or issue any
additional REIT Shares (other than REIT Shares issued pursuant to Section 8.6),
or rights, options, warrants or convertible or exchangeable securities
containing the right to subscribe for or purchase REIT Shares (collectively "New
Securities"), other than to all holders of REIT Shares unless (i) the General
Partner shall cause the Partnership to issue 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 the same as those of the New
Securities, and (ii) APF (through the General Partner) contributes the net
proceeds from the grant, award or issuance of such New Securities and from the
exercise of rights contained in such New Securities to the Partnership. Without
limiting the foregoing, APF is expressly authorized to issue New Securities for
less than fair market value, and the General Partner is expressly authorized to
cause the Partnership to issue to the General Partner corresponding Partnership
Interests, so long as (x) the General Partner concludes in good faith that such
issuance is in the interests of APF and the Partnership (for example, and not by
way of limitation, the issuance of REIT Shares and corresponding Partnership
Units pursuant to an employee stock purchase plan providing for employee
purchases of REIT Shares at a discount from fair market value or employee stock
options that have an exercise price that is less than the fair market value of
the REIT Shares, either at the time of issuance or at the time of exercise), and
(y) APF (through the General Partner) contributes all proceeds from such
issuance and exercise to the Partnership.
Section 4.3 Stock Incentive Plans.
---------------------
A. Grants of REIT Shares. If grants of REIT Shares are made in
---------------------
connection with a Share Option Plan,
APF (through the General Partner) shall, as soon as practicable after such
grant, transfer the net proceeds of the sale of such REIT Shares to the
Partnership as an additional Capital Contribution in exchange for an amount
of additional Partnership Units equal to the number of REIT Shares so sold
divided by the Conversion Factor.
B. Exercise of Stock Options. If stock options granted in connection
-------------------------
with a Share Option Plan are exercised,:
APF (through the General Partner) shall, as soon as practicable after such
exercise, transfer an amount equal to the exercise price paid by the
exercising party to the Partnership as an additional Capital Contribution
in exchange for an amount of additional Partnership Units equal to the
number of REIT Shares so sold divided by the Conversion Factor.
Section 4.4 Other Equity Compensation Plans.
-------------------------------
A. The Partnership may adopt a compensation plan for its employees,
agents or consultants pursuant to which the Partnership may grant Limited
Partner Interests (including Partnership Units, which Partnership Units shall
enable the Limited Partner to participate in the Redemption Rights), or options
to acquire Limited Partner Interests (including Partnership ▇▇▇▇▇,
-▇▇-
which Partnership Units shall enable the Limited Partner to participate in the
Redemption Rights), to one or more of its employees, agents or consultants upon
such terms and conditions as may be deemed necessary or appropriate by the
General Partner.
B. Upon any admission of an employee, agent or consultant of the
Partnership as an additional Limited Partner (an "Employee Limited Partner")
pursuant to Section 4.4.A above, the Partnership Interest of the other Partners
shall be diluted, on a pro rata basis, in proportion to their respective
Partnership Interests, to reflect the admission of the Employee Limited Partner.
The number of Partnership Units owned by the existing Partners and Assignees
shall not be decreased in connection with any admission of an Employee Limited
Partner.
C. In addition to the compensation plans described in Sections 4.3 and
4.4.A hereof, the General Partner, in its sole and absolute discretion and
without the approval of the Limited Partners, may propose and adopt on behalf of
the Partnership employee benefit plans or other incentive compensation plans
(including, without limitation, plans granting REIT Shares or options to
purchase REIT Shares, plans granting Partnership Interests (including
Partnership Units) or options to purchase Partnership Interests (including
Partnership Units), "phantom" equity plans or other plans in which compensation
is tied to revenue or income amounts, or based on increases in the market value
of equity ownership interests) for the benefit of employees, agents or
consultants of any member of the APF Group, the Partnership, or any Affiliate of
the foregoing in respect of services performed, directly or indirectly, for the
benefit of the APF Group or the Partnership.
Section 4.5 Contribution of Proceeds of Issuance of REIT Shares
---------------------------------------------------
In connection with the initial public offering of REIT Shares by APF, and
any other offering of REIT Shares by APF, APF (through the General Partner)
shall make a Capital Contribution to the Partnership of the proceeds raised in
connection with such grant, award, or issuance in exchange for an amount of
additional Partnership Units equal to the number of REIT Shares so granted,
awarded or issued divided by the Conversion Factor; provided that if the
proceeds actually received by APF are less than the gross proceeds of such
grant, award, or issuance as a result of any underwriter's discount, commission,
or fee or other expenses paid or incurred in connection with such grant, award,
or 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
APF pursuant to Section 7.4.C for the amount of such underwriter's discount or
other expenses.
Section 4.6 No Preemptive Rights
--------------------
No Person shall have any preemptive, preferential or other similar right
with respect to (i) additional Capital Contributions or loans to the
Partnership; or (ii) issuance or sale of any Partnership Units or other
Partnership Interests.
Section 4.7 Other Contribution Provisions
-----------------------------
If any Partner is admitted to the Partnership and is given a Capital
Account in exchange for services rendered to the Partnership, such transaction
shall be treated by the Partnership and
-17-
the affected Partner as if the Partnership had compensated such Partner in cash,
and the Partner had contributed such cash to the capital of the Partnership.
Section 4.8 No Interest on Capital
----------------------
No Partner shall be entitled to interest on its Capital Contribution or its
Capital Account.
ARTICLE 5
DISTRIBUTIONS
Section 5.1 Requirement and Characterization of Distributions
-------------------------------------------------
The General Partner shall cause the Partnership to distribute at least
quarterly an amount equal to one hundred percent (100%) of Available Cash
generated by the Partnership during such quarter or shorter period to the
Partners who are Partners on the Partnership Record Date with respect to such
quarter or shorter period in accordance with their respective Partnership Units
on such Partnership Record Date; provided that in no event may a Partner receive
a distribution of Available Cash with respect to a Partnership Unit if such
Partner is entitled to receive a distribution out of such Available Cash with
respect to a REIT Share for which such Partnership Unit has been redeemed. The
General Partner shall take such reasonable efforts, as determined by it in its
sole and absolute discretion and consistent with APF's qualification as a REIT,
to distribute Available Cash to the Limited Partners so as to preclude any such
distribution or portion thereof from being treated as part of a sale of property
to the Partnership by a Limited Partner under Section 707 of the Code or the
Regulations thereunder; provided that the General Partner and the Partnership
shall not have liability to a Limited Partner under any circumstances as a
result of any distribution to a Limited Partner being so treated.
Section 5.2 Amounts Withheld
----------------
All amounts withheld pursuant to the Code or any provisions of any state or
local tax law and Section 10.5 hereof with respect to any allocation, payment or
distribution to the General Partner or the Limited Partners shall be treated as
amounts distributed to the General Partner or Limited Partners pursuant to
Section 5.1 for all purposes under this Agreement.
Section 5.3 Distributions In Kind
---------------------
The General Partner has the authority to make in-kind distributions of
assets to the Partners. Any such distributions in kind shall be distributed
among the Partners in the same manner as set forth in Section 5.1 with respect
to Available Cash (provided that distributions in kind made after commencement
of the liquidation of the Partnership shall be distributed to the Partners in
accordance with Section 13.2). The General Partner shall determine the fair
market value of any assets distributed in kind using such reasonable method of
valuation as it may adopt.
Section 5.4 Revisions to Reflect Issuance of Partnership Interests
------------------------------------------------------
If the Partnership issues Partnership Interests to the General Partner or
any Additional Limited Partner pursuant to Article IV hereof, the General
Partner shall make such revisions to
-18-
this Article V and Exhibit A as it deems necessary to reflect the issuance of
such additional Partnership Interests without the requirement of any other
consents or approvals.
Section 5.5 Distributions Upon Liquidation
------------------------------
Proceeds from a Terminating Capital Transaction and any other cash received
or reductions in reserves made after commencement of the liquidation of the
Partnership, shall be distributed to the Partners in accordance with Section
13.2.
ARTICLE 6
ALLOCATIONS
Section 6.1 Allocations for Capital Account Purposes
----------------------------------------
For purposes of maintaining the Capital Accounts and in determining the
rights of the Partners among themselves, the Partnership's items of income,
gain, loss and deduction (computed in accordance with Exhibit B hereof) shall be
allocated among the Partners in each taxable year (or portion thereof) as
provided herein below.
A. Net Income. After giving effect to the special allocations set forth in
Section 1 of Exhibit C, Net Income shall be allocated (i) first, to the General
Partner to the extent that Net Loss previously allocated to the General Partner
pursuant to the last sentence of Section 6.1.B exceeds Net Income previously
allocated to the General Partner pursuant to this clause (i) of Section 6.1.A,
and (ii) thereafter, Net Income shall be allocated to the Partners in accordance
with their respective Percentage Interests.
B. Net Loss. After giving effect to the special allocations set forth in
Section 1 of Exhibit C, Net Loss shall be allocated to the Partners in
accordance with their respective Percentage Interests; provided that Net Loss
shall not be allocated to any Limited Partner pursuant to this Section 6.1.B to
the extent that such allocation would cause such Limited Partner to have an
Adjusted Capital Account Deficit at the end of such taxable year (or increase
any existing Adjusted Capital Account Deficit). All Net Loss in excess of the
limitations set forth in this Section 6.1.B shall be allocated to the General
Partner.
C. Allocation of Nonrecourse Debt. For purposes of Regulations Section
1.752-3(a), the Partners agree that Nonrecourse Liabilities of the Partnership
in excess of the sum of (i) the amount of Partnership Minimum Gain and (ii) the
total amount of Nonrecourse Built-In Gain shall be allocated among the Partners
in accordance with their respective Percentage Interests.
D. Recapture Income. If any portion of gain from the sale of property is
treated as Recapture Income, then such Recapture Income shall be allocated among
the Partners in accordance with Regulations Sections 1.1245-1(e) and 1.1250-
1(f).
E. Allocations to Reflect Issuance of Additional Partnership Interests. In
the event that the Partnership issues additional Partnership Interests to the
General Partner or any Additional Limited Partner under Section 4.2 hereof, the
General Partner shall make such revisions to Sections 6.1.A and B above as it
determines are necessary to reflect the issuance of such additional Partnership
Interests.
-19-
ARTICLE 7
MANAGEMENT AND OPERATIONS OF BUSINESS
Section 7.1 Management
----------
A. Except as otherwise expressly provided in this Agreement, all
management powers over the business and affairs of the Partnership are and shall
be exclusively vested in the General Partner, and no Limited Partner shall have
any right to participate in or exercise control or management power over the
business and affairs of the Partnership. The General Partner may not be removed
by the Limited Partners with or without cause. In addition to the powers now or
hereafter granted a general partner of a limited partnership under applicable
law or which are granted to the General Partner under any other provision of
this Agreement, the General Partner, subject to Section 7.3 hereof, shall have
full power and authority to do all things deemed necessary or desirable by it to
conduct the business of the Partnership, to exercise all powers set forth in
Section 3.2 hereof and to effectuate the purposes set forth in Section 3.1
hereof, including, without limitation:
(1) the making of any expenditures, the lending or borrowing of money
(including, without limitation, making prepayments on loans and
borrowing money to permit the Partnership to make distributions to its
Partners in such amounts as will permit APF (so long as APF elects to
qualify as a REIT) to avoid the payment of any federal income tax
(including, for this purpose, any excise tax pursuant to Section 4981
of the Code) and to make distributions to its shareholders sufficient
to permit APF to maintain REIT status), the assumption or guarantee of,
or other contracting for, indebtedness and other liabilities, the
issuance of evidences of indebtedness (including the securing of same
by deed to secure debt, mortgage, deed of trust or other lien or
encumbrance on the Partnership's assets) and the incurring of any
obligations it deems necessary for the conduct of the activities of the
Partnership;
(2) the making of tax, regulatory and other filings, or rendering of
periodic or other reports to governmental or other agencies having
jurisdiction over the business or assets of the Partnership;
(3) the acquisition, disposition, mortgage, pledge, encumbrance,
hypothecation or exchange of any assets of the Partnership (including
the exercise or grant of any conversion, option, privilege, or
subscription right or other right available in connection with any
assets at any time held by the Partnership) or the merger or other
combination of the Partnership with or into another entity (all of the
foregoing subject to any prior approval only to the extent required by
Section 7.3 hereof);
(4) the use of the assets of the Partnership (including, without
limitation, cash on hand) for any purpose consistent with the terms of
this Agreement and on any terms it sees fit, including, without
limitation, the financing of the conduct of the operations of the
General Partner, the Partnership or any of the Partnership's
Subsidiaries, the lending of funds to other Persons (including, without
limitation, the Partnership's Subsidiaries), incurring debt on behalf
of or guaranteeing the debt of
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another Person, and the repayment of obligations of the Partnership
and its Subsidiaries and any other Person in which it has an equity
investment and the making of capital contributions to its
Subsidiaries;
(5) the management, operation, leasing, landscaping, repair, alteration,
demolition or improvement of any real property or improvements owned
by the Partnership or any Subsidiary of the Partnership;
(6) the negotiation, execution, and performance of any contracts,
conveyances or other instruments that the General Partner considers
useful or necessary to the conduct of the Partnership's operations or
the implementation of the General Partner's powers under this
Agreement, including contracting with contractors, developers,
consultants, accountants, legal counsel, other professional advisors
and other agents and the payment of their expenses and compensation
out of the Partnership's assets;
(7) the mortgage, pledge, encumbrance or hypothecation of any assets of
the Partnership, and the use of the assets of the Partnership
(including, without limitation, cash on hand) for any purpose
consistent with the terms of this Agreement and on any terms it sees
fit, including, without limitation, the financing of the conduct or
the operations of the General Partners or the Partnership, the
lending of funds to other Persons (including, without limitation, any
Subsidiaries of the Partnership) and the repayment of obligations of
the Partnership, any of its Subsidiaries and any other Person in
which it has an equity investment;
(8) the distribution of Partnership cash or other Partnership assets in
accordance with this Agreement;
(9) the holding, management, investment and reinvestment of cash and
other assets of the Partnership;
(10) the collection and receipt of revenues and income of the
Partnership;
(11) the establishment of one or more divisions of the Partnership, the
selection and dismissal of employees of the Partnership, any division
of the Partnership, or the General Partner (including, without
limitation, employees having titles such as "president," "vice
president," "secretary" and "treasurer" of the Partnership, any
division of the Partnership, or the General Partner), and of agents,
outside attorneys, accountants, consultants and contractors of the
General Partner, the Partnership or any division of the Partnership,
and the determination of their compensation and other terms of
employment or hiring;
(12) the maintenance of such insurance for the benefit of the Partnership
and the Partners as it deems necessary or appropriate;
(13) the formation of, or acquisition of a debt or equity ownership
interest in, and the contribution of property to, any further limited
or general partnerships, joint ventures, corporations, trusts or
other entities that it deems desirable (including, with-
-21-
out limitation, the acquisition of interests in, and the
contributions of property to, its Subsidiaries and any other Person
in which it has an investment from time to time);
(14) the control of any matters affecting the rights and obligations of
the Partnership, including the settlement, compromise, submission to
arbitration or any other form of dispute resolution, or abandonment
of any claim, cause of action, liability, debt or damages due or
owing to or from the Partnership, the commencement or defense of
suits, legal proceedings, administrative proceedings, arbitrations or
other forms of dispute resolution, and the representation of the
Partnership in all suits or legal proceedings, administrative
proceedings, arbitrations or other forms of dispute resolution, the
incurring of legal expense, and the indemnification of any Person
against liabilities and contingencies to the extent permitted by law;
(15) the undertaking of any action in connection with the Partnership's
direct or indirect investment in its Subsidiaries or any other Person
(including, without limitation, the contribution or loan of funds by
the Partnership to such Persons);
(16) the determination of the fair market value of any Partnership
property distributed in kind using such reasonable method of
valuation as it may adopt;
(17) the exercise, directly or indirectly through any attorney-in-fact
acting under a general or limited power of attorney, of any right,
including the right to vote, appurtenant to any asset or investment
held by the Partnership;
(18) the exercise of any of the powers of the General Partner enumerated
in this Agreement on behalf of or in connection with any Subsidiary
of the Partnership or any other Person in which the Partnership has a
direct or indirect interest, or jointly with any such Subsidiary or
other Person;
(19) the exercise of any of the powers of the General Partner enumerated
in this Agreement on behalf of any Person in which the Partnership
does not have an interest pursuant to contractual or other
arrangements with such Person;
(20) the distribution of cash to acquire Partnership Units held by a
Limited Partner in connection with a Limited Partner's exercise of
its Redemption Right under Section 8.6; and
(21) the making, execution and delivery of any and all deeds, leases,
notes, deeds to secure debt, mortgages, deeds of trust, security
agreements, conveyances, contracts, guarantees, warranties,
indemnities, waivers, releases or legal instruments or agreements in
writing necessary or appropriate in the judgment of the General
Partner for the accomplishment of any of the powers of the General
Partner enumerated in this Agreement.
B. Each of the Limited Partners agrees that the General Partner is
authorized to execute, deliver and perform the above-mentioned agreements and
transactions on behalf of the Partnership without any further act, approval or
vote of the Partners, notwithstanding any other
-22-
provision of this Agreement (except as provided in Section 7.3), the Act or any
applicable law, rule or regulation, to the fullest extent permitted under the
Act or other applicable law. The execution, delivery or performance by the
General Partner or the Partnership of any agreement authorized or permitted
under this Agreement shall not constitute a breach by the General Partner of any
duty that the General Partner may owe the Partnership or the Limited Partners or
any other Persons under this Agreement or of any duty stated or implied by law
or equity.
C. At all times from and after the date hereof, the General Partner, at
the expense of the Partnership, may or may not cause the Partnership to obtain
and maintain (i) casualty, liability and other insurance on the properties of
the Partnership and (ii) liability insurance for the Indemnitees hereunder.
D. At all times from and after the date hereof, the General Partner may
cause the Partnership to establish and maintain at any and all times working
capital accounts and other cash or similar balances in such amounts as the
General Partner, in its sole and absolute discretion, deems appropriate and
reasonable from time to time.
E. In exercising its authority under this Agreement, the General Partner
may, but shall be under no obligation to, take into account the tax consequences
to any Partner of any action taken by it. The General Partner and the
Partnership shall not have liability to a Limited Partner under any
circumstances as a result of an income tax liability incurred by such Limited
Partner as a result of an action (or inaction) by the General Partner pursuant
to its authority under this Agreement.
Section 7.2 Certificate of Limited Partnership
----------------------------------
The General Partner has previously filed the Certificate with the Secretary
of State of Delaware as required by the Act. The General Partner shall use all
reasonable efforts to cause to be filed such other certificates or documents as
may be reasonable and necessary or appropriate for the formation, continuation,
qualification and operation of a limited partnership (or a partnership in which
the limited partners have limited liability) in the State of Delaware and each
other jurisdiction in which the Partnership may elect to do business or own
property. To the extent that such action is determined by the General Partner to
be reasonable and necessary or appropriate, the General Partner shall file
amendments to and restatements of the Certificate and do all the things to
maintain the Partnership as a limited partnership (or a partnership in which the
limited partners have limited liability) under the laws of the State of Delaware
and each other jurisdiction in which the Partnership may elect to do business or
own property. Subject to the terms of Section 8.5.A(2) hereof, the General
Partner shall not be required before or after filing, to deliver or mail a copy
of the Certificate or any amendment thereto to any Limited Partner.
Section 7.3 Restrictions on General Partner's Authority
-------------------------------------------
A. The General Partner may not take any action in contravention of an
express prohibition or limitation of this Agreement without the written consent
of all of the Partners (or such lower percentage of the Partners as may be
specifically provided for under a provision of this Agreement or the Act).
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B. Except as provided in Article 13 hereof, the General Partner may not
sell, exchange, transfer or otherwise dispose of all or substantially all of the
Partnership's assets in a single transaction or a series of related transactions
(including by way of merger, consolidation or other combination with any other
Person) without the consent of a majority of the Percentage Interests of the
Limited Partners (including the Original Limited Partner and the General Partner
in its capacity as a Limited Partner).
Section 7.4 Reimbursement of the APF Group
------------------------------
A. Except as provided in this Section 7.4 and elsewhere in this Agreement
(including the provisions of Articles 5 and 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 Partnership shall be responsible for and shall pay all expenses
relating to the Partnership's organization, the ownership of its assets and its
operations. The APF Group shall be reimbursed on a monthly basis, or such other
basis as the General Partner may determine in its sole and absolute discretion,
for all expenses it incurs relating to the ownership and operation of, or for
the benefit of, the Partnership (including, without limitation, expenses related
to the operations of the General Partner and to the management and
administration of any Subsidiaries of the General Partner or the Partnership or
Affiliates of the Partnership, such as auditing expenses and filing fees);
provided that, the amount of any such reimbursement shall be reduced by (i) any
income received by the APF Group with respect to bank accounts or other
instruments or accounts held by it as permitted in Section 7.5.A; and (ii) any
amount derived by the APF Group from any investments in Partnership-Owned
Entities permitted in Section 7.5.A. The Limited Partners acknowledge that the
APF Group's sole business is the ownership of interests in and operation of the
Partnership, and that all of the APF Group's operating expenses (including,
without limitation, costs and expenses relating to the formation and continuity
of existence of the APF Group, costs and expenses relating to the initial public
offering of REIT Shares by APF and any other issuance or registration by APF of
additional REIT Shares or rights, options, warrants, or convertible or
exchangeable securities pursuant to Section 4.2 hereof, costs and expenses
associated with compliance with the periodic reporting requirements and all
other rules and regulations of the SEC or any other federal, state or local
regulatory body, salaries payable to officers and employees of the APF Group,
fees and expenses payable to directors of the APF Group, and all other operating
or administrative costs of the APF Group) are incurred for the benefit of the
Partnership and shall be reimbursed by the Partnership as provided above in this
Section 7.4.B. Such reimbursements shall be in addition to any reimbursement to
the General Partner pursuant to Section 10.3.C and as a result of
indemnification pursuant to Section 7.7. All payments and reimbursements
hereunder shall be characterized for federal income tax purposes as expenses of
the Partnership incurred on its behalf, and not as expenses of the APF Group.
C. The APF Group shall also be reimbursed for all expenses it incurs
relating to any issuance of Partnership Interests, REIT Shares, debt of the
Partnership or APF or rights, options, warrants or convertible or exchangeable
securities pursuant to Article IV (including, without limitation, all costs,
expenses, damages and other payments resulting from or arising in connection
with litigation related to any of the foregoing), all of which expenses are
considered by the Partners to constitute expenses of, and for the benefit of,
the Partnership.
-24-
D. If APF exercises its rights under the Articles of Incorporation to
purchase REIT Shares or otherwise elects to purchase from its shareholders REIT
Shares in connection with a share repurchase or similar program or for the
purpose of delivering such REIT Shares to satisfy an obligation under any
dividend reinvestment or equity purchase program adopted by APF, any employee
equity purchase plan adopted by APF or any similar obligation or arrangement
undertaken by APF in the future, the purchase price paid by APF for those REIT
Shares and any other expenses incurred by APF in connection with such purchase
shall be considered expenses of the Partnership and shall be reimbursable to
APF, subject to the conditions that: (i) if those REIT Shares subsequently are
to be sold by APF, APF (through the General Partner) shall pay to the
Partnership any proceeds received by APF for those REIT Shares (provided that a
transfer of REIT Shares for Partnership Units pursuant to Section 8.6 would not
be considered a sale for such purposes); and (ii) if such REIT Shares are not
retransferred by APF within thirty (30) days after the purchase thereof, the
General Partner shall cause the Partnership to cancel a number of Partnership
Units (rounded to the nearest whole Partnership Unit) held by the General
Partner equal to the product attained by multiplying the number of those REIT
Shares by a fraction, the numerator of which is one (1) and the denominator of
which is the Conversion Factor.
E. If and to the extent any reimbursement made pursuant to this Section
7.4 is determined for federal income tax purposes not to constitute a payment of
expenses of the Partnership, the amount so determined shall constitute a
guaranteed payment with respect to capital within the meaning of Section 707(c)
of the Code, shall be treated consistently therewith by the Partnership and all
Partners and shall not be treated as a distribution for purposes of computing
the Partners' Capital Accounts.
Section 7.5 Outside Activities of the APF Group
-----------------------------------
A. Without the consent of a majority of the Percentage Interests of the
Limited Partners (including the Original Limited Partner and the General Partner
in its capacity as a Limited Partner), the APF Group shall not directly or
indirectly enter into or conduct any business, other than in connection with the
ownership, acquisition and disposition of Partnership Interests and the
management of the business of the Partnership, and such activities as are
incidental thereto. The General Partner shall not incur any debts other than (i)
debt of the Partnership for which it may be liable in its capacity as General
Partner of the Partnership, (ii) indebtedness for borrowed money the proceeds
from which borrowing are loaned to the Partnership on the same terms and
conditions as the borrowing by the General Partner and (iii) borrowings to
invest in Partnership-Owned Entities. The assets of the APF Group shall be
limited to the Partnership Interests so that the REIT Shares and Partnership
Units are substantially fungible. Notwithstanding the foregoing, the APF Group
may (i) own such bank accounts or similar instruments as it deems necessary to
carry out its responsibilities contemplated under this Agreement and the
Articles of Incorporation, (ii) acquire (either directly or through one or more
subsidiary corporations or other entities) ownership interests in Partnership-
Owned Entities, to the extent the General Partner determines that such ownership
is necessary or appropriate to further the business objectives of the
Partnership, and (iii) incur indebtedness (including without limitation a loan
from the Partnership or from any other Person) in connection with its investment
(either directly or through one or more subsidiary corporations or other
entities) in a Partnership-Owned Entity.
-25-
B. If the Partnership or APF acquires REIT Shares as a result of the
forfeiture of such REIT Shares under a restricted or similar share plan, then
the General Partner shall cause the Partnership to cancel that number of
Partnership Units equal to the number of REIT Shares so acquired, and, if the
Partnership acquires such REIT Shares, it shall transfer such REIT Shares to APF
for cancellation.
Section 7.6 Contracts with Affiliates
-------------------------
A. The Partnership may lend or contribute funds or other assets to its
Subsidiaries or other Persons in which it has an equity or debt 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
Subsidiary or any other Person.
B. The Partnership may transfer assets to joint ventures, other
partnerships, corporations or other business entities in which it is or thereby
becomes a participant upon such terms and subject to such conditions consistent
with this Agreement and applicable law as the General Partner, in its sole and
absolute discretion, believes are advisable.
C. Except as expressly permitted by this Agreement, neither the General
Partner nor any of its Affiliates shall sell, transfer or convey any property
to, or purchase any property from, the Partnership, directly or indirectly,
except pursuant to transactions that are determined by the General Partner in
good faith to be fair and reasonable and no less favorable to the Partnership
than would be obtained from an unaffiliated third party.
D. The General Partner, in its sole and absolute discretion and without
the approval of the Limited Partners, may propose and adopt on behalf of the
Partnership employee benefit plans, stock option plans, and similar plans funded
by the Partnership for the benefit of employees of the General Partner, the
Partnership, Subsidiaries of the Partnership or any Affiliate of any of them in
respect of services performed, directly or indirectly, for the benefit of the
Partnership, the General Partner, or any of the Partnership's Subsidiaries.
E. The General Partner is expressly authorized to enter into, in the name
and on behalf of the Partnership, a right of first opportunity arrangement,
noncompetition agreement or other conflict avoidance agreements with various
Affiliates of the Partnership and the General Partner, on such terms as the
General Partner, in its sole and absolute discretion, believes are advisable.
Section 7.7 Indemnification
---------------
A. The Partnership shall indemnify each Indemnitee from and against any
and all losses, claims, damages, liabilities, joint or several, expenses
(including, without limitation, attorneys fees and other legal fees and
expenses), judgments, fines, settlements, and other amounts arising from or in
connection with any and all claims, demands, actions, suits or proceedings,
civil, criminal, administrative or investigative, incurred by the Indemnitee and
relating to the Partnership or the General Partner or the operation of, or the
ownership of property by either of them as set forth in this Agreement in which
such Indemnitee may be involved, or is threatened to be involved, as a party or
otherwise, unless it is established by a final determination of a court
-26-
of competent jurisdiction 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. Without
limitation, the foregoing indemnity shall extend to any liability of any
Indemnitee, pursuant to a loan guaranty contractual obligation for any
indebtedness or other obligation or otherwise, for any indebtedness of the
Partnership or any Subsidiary of the Partnership (including, without limitation,
any indebtedness which the Partnership or any Subsidiary of the Partnership has
assumed or taken subject to), and the General Partner is hereby authorized and
empowered, on behalf of the Partnership, to enter into one or more indemnity
agreements consistent with the provisions of this Section 7.7 in favor of any
Indemnitee having or potentially having liability for any such indebtedness. 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 7.7.A. The termination of any proceeding by conviction
of an Indemnitee or upon a plea of nolo contendre or its equivalent by an
Indemnitee, or an entry of an order of probation against an Indemnitee prior to
judgment, creates a rebuttable presumption that such Indemnitee acted in a
manner contrary to that specified in this Section 7.7.A with respect to the
subject matter of such proceeding. Any indemnification pursuant to this Section
7.7 shall be made only out of the assets of the Partnership, and neither the
General Partner nor any Limited Partner shall have any obligation to contribute
to the capital of the Partnership or otherwise provide funds to enable the
Partnership to fund its obligations under this Section 7.7.
B. Reasonable expenses expected to be 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 any and all claims, demands, actions, suits or
proceedings, civil, criminal, administrative or investigative made or threatened
against an Indemnitee upon receipt by the Partnership of (i) a written
affirmation by the Indemnitee of the Indemnitee's good faith belief that the
standard of conduct necessary for indemnification by the Partnership as
authorized in Section 7.7.A has been met, and (ii) a written undertaking by or
on behalf of the Indemnitee to repay the amount if it shall ultimately be
determined that the standard of conduct has not been met.
C. The indemnification provided by this Section 7.7 shall be in addition
to any other rights to which an Indemnitee or any other Person may be entitled
under any agreement, pursuant to any vote of the Partners, as a matter of law or
otherwise, and shall continue as to an Indemnitee who has ceased to serve in
such capacity unless otherwise provided in a written agreement pursuant to which
such Indemnitee is indemnified.
D. The Partnership may, but shall not be obligated to, 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 Person in connection with the
Partnership's activities, regardless of whether the Partnership would have the
power to indemnify such Person against such liability under the provisions of
this Agreement.
E. The losses, claims, damages, liabilities, joint or several, expenses,
judgments, fines, settlements, and other amounts referred to in Section 7.7.A
shall include losses, claims,
-27-
damages, liabilities, joint or several, expenses, judgments, fines, settlements,
and other amounts arising under applicable law with respect to an employee
benefit 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 Section 7.7.
F. In no event may an Indemnitee subject any of the Partners to personal
liability by reason of the indemnification provisions set forth in this
Agreement.
G. An Indemnitee shall not be denied indemnification in whole or in part
under this Section 7.7 because the Indemnitee had an interest in the transaction
with respect to which the indemnification applies to the provisions set forth in
this Agreement.
H. The provisions of this Section 7.7 are for the benefit of the
Indemnitees, their heirs, successors, assigns and administrators and shall not
be deemed to create any rights for the benefit of any other Persons. Any
amendment, modification or repeal of this Section 7.7 or any provision hereof
shall be prospective only and shall not in any way affect the limitations on the
Partnership's liability to any Indemnitee under this Section 7.7 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.
Section 7.8 Liability of the General Partner
--------------------------------
A. Notwithstanding anything to the contrary set forth in this Agreement,
the General Partner shall not be liable for monetary damages to the Partnership
or any Partners 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.
B. The Limited Partners expressly acknowledge that the General Partner is
acting on behalf of the Partnership and the shareholders of APF 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) in deciding whether to cause the Partnership
to take (or decline to take) any actions, and that the General Partner shall not
be liable to the Partnership or to any Partner 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 has acted in
good faith.
C. Subject to its obligations and duties as General Partner set forth in
Section 7.1.A hereof, the General Partner may exercise any of the powers granted
to it by this Agreement and perform any of the duties imposed upon its 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. Any amendment, modification or repeal of this Section 7.8 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 7.8 as in effect immediately prior to such
amendment, modification or repeal with respect to claims arising from
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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.
Section 7.9 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, notice, request, consent, order, bond, debenture, or other
paper or document believed by it in good faith to be genuine and to have been
signed or presented by the proper party or parties.
B. The General Partner may consult with legal counsel, accountants,
appraisers, management consultants, investment bankers, architects, engineers,
environmental consultants and other consultants and advisers selected by it, and
any act taken or omitted to be taken in reliance upon the opinion of such
Persons as to matters which the General Partner reasonably believes to be within
such Person's professional or expert competence shall be conclusively presumed
to have been done or omitted in good faith and in accordance with such opinion.
C. The General Partner shall have the right, in respect of any of its
powers or obligations hereunder, to act through any of its duly authorized
officers and a duly appointed attorney or attorneys-in-fact. Each such attorney
shall, to the extent provided by the General Partner in the power of attorney,
have full power and authority to do and perform all and every act and duty which
is permitted or required to be done by the General Partner hereunder.
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 the ability of APF to continue to qualify as a
REIT or (ii) to allow APF to avoid incurring liability for 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.
E. If and so long as the Partnership Interests of "benefit plan investors"
are "significant" (as such term or terms succeeding thereto with the same
objective are used in 29 C.F.R. Section 2510.3-101(f) (such regulation or
successor regulation being known as the "Plan Assets Regulation")), or if
necessary so that the underlying assets of the General Partner will not be "plan
assets" (as such term is defined in the Plan Assets Regulation) of any ERISA
Partner, then the General Partner shall conduct the affairs of the Partnership
in such manner so that the Partnership shall qualify as a "real estate operating
company" ("REOC"), as that term is used in the Plan Assets Regulation, and so
that the assets of the Partnership will not be plan assets of any ERISA Partner.
(1) If the General Partner, pursuant to this Section 7.9.E, intends to
conduct the affairs of the Partnership as a REOC, the General Partner
shall deliver to each ERISA Partner an opinion of counsel reasonably
acceptable to each ERISA Partner and upon which such ERISA Partner may
rely with respect to the Partnership's REOC status as of the "initial
valuation date" and, if requested in writing by an ERISA Partner, as
of each "annual valuation period" (as those terms, or
-29-
terms succeeding thereto with the same objective, are defined in the
Plan Assets Regulation). Such opinion of counsel shall state (A) as to
the opinion respecting the "initial valuation date," that the
Partnership shall qualify as a REOC for the period beginning on such
"initial valuation date" and ending on the last day of the first
"annual valuation period," and (b) as to each annual opinion
respecting each "annual valuation period," that the Partnership shall
qualify as a REOC for the 12-month period following the last day of
such "annual valuation period." Such opinion of counsel may rely upon,
among other things, a certificate of the General Partner as to the
exercise of management rights with respect to one or more investments
(other than short-term investments pending long-term commitment or
distribution to investors) during the appropriate period, and as to a
description of such investments, and also shall state whether the
Partnership has included in a certification to the opinion a statement
to the effect that on such "initial valuation date" or during such
"annual valuation period" at least fifty percent (50%) of Partnership
assets (other than short-term investments pending long-term commitment
or distribution to investors), valued at cost, were invested in real
estate investments as described in the Plan Assets Regulation.
(2) If the opinion described in this subsection is not provided in the
affirmative, or if any ERISA Partner shall obtain and deliver to the
General Partner an opinion of counsel to such ERISA Partner (which
opinion shall be reasonably satisfactory to the General Partner) that
there is a reasonable probability that the Partnership was not or will
not be a REOC for a period in which either (i) participation by
benefit plan investors in the Partnership is significant, or (ii) REOC
status is necessary so that the underlying assets of the General
Partner will not be plan assets and the General Partner does not
obtain an opinion to the contrary reasonably acceptable to each such
ERISA Partner within fifteen (15) days of its receipt of the opinion
delivered by the ERISA Partner (it being understood that the existence
or reaffirmation of the opinion delivered by the ERISA Partner to the
General Partner shall not constitute the sole basis of any ERISA
Partner's determination that the opinion delivered within fifteen (15)
days by the General Partner is not reasonably satisfactory), then the
General Partner is hereby authorized and empowered to take such
actions as it deems necessary and appropriate to mitigate, prevent, or
cure such adverse consequences as might result to an ERISA Partner
from the underlying assets of the Partnership being assets of an ERISA
Partner or the underlying assets of the General Partner being assets
of any ERISA Partner.
Section 7.10 Title to Partnership Assets
---------------------------
Title to Partnership assets, whether real, personal or mixed and whether
tangible or intangible, shall be deemed to be owned by the Partnership as an
entity, and no Partner, individually or collectively, shall have any ownership
interest in such Partnership assets or any portion thereof. Title to any or all
of the Partnership assets may be held in the name of the Partnership, the
General Partner or one or more nominees, as the General Partner may determine,
including Affiliates of the General Partner. The General Partner hereby
declares and warrants that any Partnership assets for which legal title is held
in the name of the General Partner or any nominee or Affiliate of the General
Partner shall be held by the General Partner for the use and benefit of
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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.
Section 7.11 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, without consent or approval of any other
Partner or Person, 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 take any and all actions on behalf of the Partnership and such
Person shall be entitled to deal with the General Partner as if the General
Partner 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 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 or its representatives 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.
ARTICLE 8
RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS
Section 8.1 Limitation of Liability
-----------------------
The Limited Partners (other than the General Partner in its capacity as
such) shall have no liability under this Agreement except as expressly provided
in this Agreement, including Section 10.5 hereof, or under the Act.
Section 8.2 Management of Business
----------------------
No Limited Partner (other than the General Partner or any officer,
director, employee, partner, agent or trustee of the General Partner, the
Partnership or any of their Affiliates, in their capacity as such) shall take
part in the operation, management or control (within the meaning of the Act) 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. The
transaction of any such business by the General Partner, any of its Affiliates
or any officer, director, employee, partner, agent or trustee of the General
Partner, the Partnership or any of their Affiliates, in their capacity
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as such, shall not affect, impair or eliminate the limitations on the liability
of the Limited Partners (other than the General Partner in its capacity as such)
under this Agreement.
Section 8.3 Outside Activities of Limited Partners
--------------------------------------
Subject to Section 7.5 hereof, and subject to any agreements entered into
pursuant to Section 7.6.E hereof and any other agreements entered into by a
Limited Partner or its Affiliates with the Partnership or a Subsidiary, any
Limited Partner and any officer, director, employee, agent, trustee, Affiliate
or shareholder of any Limited Partner shall be entitled to and may have business
interests and engage in business activities in addition to those relating to the
Partnership, including business interests and activities that are in direct
competition with the Partnership or that are enhanced by the activities of the
Partnership. Neither the Partnership nor any Partners shall have any rights by
virtue of this Agreement in any business ventures of any Limited Partner. None
of the Limited Partners nor any other Person shall have any rights by virtue of
this Agreement or the Partnership relationship established hereby in any
business ventures of any other Person other than the APF Group, and such Person
shall have no obligation pursuant to this Agreement to offer any interest in any
such business ventures to the Partnership, any Limited Partner or any such other
Person, even if such opportunity is of a character which, if presented to the
Partnership, any Limited Partner or such other Person, could be taken by such
Person.
Section 8.4 Return of Capital
-----------------
Except pursuant to the Redemption Right set forth in Section 8.6, no
Limited Partner shall be entitled to the withdrawal or return of its Capital
Contribution or Capital Account, except to the extent of distributions made
pursuant to this Agreement or upon termination of the Partnership as provided
herein. Except to the extent provided by Exhibit C hereof or as permitted by
Section 4.2, or otherwise expressly provided in this Agreement, no Limited
Partner shall have priority over any other Limited Partner either as to the
return of Capital Contributions or as to profits, losses or distributions.
Section 8.5 Rights of Limited Partners Relating to the Partnership
------------------------------------------------------
A. In addition to other rights provided by this Agreement or by the Act,
and except as limited by Section 8.5.C hereof, each Limited Partner shall have
the right, for a purpose reasonably related to such Limited Partner's interest
as a limited partner in the Partnership, upon written demand with a statement of
the purpose of such demand and at such Limited Partner's own expense (including
such copying and administrative charges as the General Partner may establish
from time to time):
(1) to obtain a copy of this Agreement and the Certificate and all
amendments thereto, together with executed copies of all powers of
attorney pursuant to which this Agreement, the Certificate and all
amendments thereto have been executed;
(2) to obtain true and full information regarding the amount of cash and a
description and statement of any other property or services
contributed by each Partner and which each Partner has agreed to
contribute in the future, and the date on which each became a Partner;
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(3) to inspect and copy, promptly after becoming available, a copy of the
Partnership's federal, state and local income tax returns for each
Partnership Year; and
(4) to inspect and copy a current list of the name and last known
business, residence or mailing address of each Partner.
B. The Partnership shall notify each Limited Partner, upon request, of
the then current Conversion Factor and any change therein.
C. Notwithstanding any other provision of this Section 8.5, 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.
Section 8.6 Redemption Right
----------------
A. Subject to the limitations set forth herein and in Section 8.6.B,
Section 8.6.C and Section 11.7 below, on or after the Effective Date, each
Limited Partner shall have the right (the "Redemption Right") to require the
Partnership to redeem on a Specified Redemption Date all or a portion of the
Partnership Units owned by such Limited Partner (a "Redeeming Partner") at a
redemption price equal to and in the form of the Cash Amount to be paid by the
Partnership. The Redemption Right shall be exercised pursuant to a Notice of
Redemption delivered to the Partnership (with a copy to APF) by the Redeeming
Partner, accompanied by any certificate or certificates evidencing the
Partnership Units to be exchanged; provided, however, that the Partnership shall
not be obligated to satisfy such Redemption Right if APF elects to purchase the
Partnership Units subject to the Notice of Redemption pursuant to Section 8.6.B
below. In addition to the restrictions on redemption set forth in Section 11.7
below, a Limited Partner may not exercise the Redemption Right for less than one
thousand (1,000) Partnership Units or, if such Limited Partner holds less than
one thousand (1,000) Partnership Units, all of the Partnership Units held by
such Limited Partner. No Redeeming Partner shall have any right with respect to
any Partnership Units so exchanged to receive any distributions paid after the
Specified Redemption Date.
B. Notwithstanding the provisions of Section 8.6.A above, a Limited
Partner that exercises the Redemption Right shall be deemed to have offered to
sell the Partnership Units described in the Notice of Redemption to APF, and APF
may, in its sole and absolute discretion, elect to purchase directly and acquire
such Partnership Units by paying to the Redeeming Partner either (i) an amount
of cash equal to the Cash Amount, (ii) a number of REIT Shares equal to the REIT
Shares Amount, or (iii) any combination of (i) or (ii) above, with the decision
as to the type of consideration to be given to the Redeeming Partner to be made
by APF, in its sole and absolute discretion, whereupon APF shall acquire the
Partnership Units offered for redemption by the Redeeming Partner and shall
transfer the Partnership Units to the General Partner which shall be treated for
all purposes of this Agreement as the owner of (and a Substituted Limited
Partner with respect to) such Partnership Units. If APF shall elect to exercise
its right to pur-
-33-
chase Partnership Units under this Section 8.6.B with respect to a Notice of
Redemption, it shall so notify the Redeeming Partner within five (5) Business
Days after the receipt by APF of such Notice of Redemption. If APF elects to pay
all or any portion of the consideration to a Redeeming Partner in cash, APF
agrees to use its best efforts to raise any required funds as quickly as
possible after receipt by APF of the Notice of Redemption. Unless APF (in its
sole and absolute discretion) shall exercise its right to purchase Partnership
Units from the Redeeming Partner pursuant to this Section 8.6.B, APF shall not
have any obligation to the Redeeming Partner or the Partnership with respect to
the Redeeming Partner's exercise of the Redemption Right. In the event APF shall
exercise its right to purchase Partnership Units with respect to the exercise of
a Redemption Right in the manner described in this Section 8.6.B, the
Partnership shall have no obligation to pay any amount to the Redeeming Partner
with respect to such Redeeming Partner's exercise of such Redemption Right, and
each of the Redeeming Partner, the Partnership, and APF, as the case may be,
shall treat the transaction between APF and the Redeeming Partner for federal
income tax purposes as a sale of the Redeeming Partner's Partnership Units to
APF. Each Redeeming Partner agrees to execute such documents as the General
Partner and APF may reasonably require in connection with the issuance of REIT
Shares upon exercise of the Redemption Right.
C. Notwithstanding anything to the contrary contained in Sections 8.6.A
and 8.6.B above, to the extent that the delivery of REIT Shares to a Redeeming
Partner pursuant to Section 8.6.B above would cause the Redeeming Partner to
violate the applicable "Ownership Limit" or the "Existing Holder Limit" set
forth in the Articles of Incorporation, would otherwise violate the "Ownership
and Transfer Limitations" set forth in Section 5.5(ii) of the Articles of
Incorporation, or would create a condition in which some or all such REIT Shares
would be "Excess Shares" under the Articles of Incorporation, APF shall be
entitled to exercise its rights under Section 8.6.B above, provided that in such
event APF may not deliver REIT Shares to such Redeeming Partner but may, in its
sole and absolute discretion, elect to either (1) pay the consideration to the
Redeeming Partner in the form of the Cash Amount, or (2) refuse, in whole or in
part, to accept the Notice of Redemption. In addition, notwithstanding the
provisions of Sections 8.6.A and 8.6.B, a Partner shall not be entitled to
exercise the Redemption Right if (but only as long as) the delivery of REIT
Shares to such Partner on the Specified Redemption Date would be prohibited
under applicable federal or state securities laws or regulations.
D. Each Limited Partner covenants and agrees with APF that all
Partnership Units delivered for exchange shall be delivered to APF free and
clear of all Liens and, notwithstanding anything herein contained to the
contrary, APF shall not be under any obligation to acquire Partnership Units
which are or may be subject to any Liens. 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 Partnership Units to the Partnership or the
General Partner, such Limited Partner shall assume and pay such transfer tax.
E. The Assignee of any Limited Partner may exercise the rights of such
Limited Partner pursuant to this Section 8.6, and such Limited Partner shall be
deemed to have assigned such rights to such Assignee and shall be bound by the
exercise of such rights by such Limited Partner's Assignee. In connection with
any exercise of such rights by such Assignee on behalf of such Limited Partner,
the Redemption Amount shall be paid by the Partnership directly to such Assignee
and not to such Limited Partner.
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F. If the Partnership issues Partnership Interests to any Additional
Limited Partner pursuant to Article IV, the General Partner shall make such
revisions to this Section 8.6 as it determines are necessary to reflect the
issuance of such Partnership Interests, including setting forth any restrictions
on the exercise of the Redemption Right with respect to such Partnership
Interests. Such restrictions may include, but are not limited to, setting a
date before which an Additional Partner is not permitted to exercise its
Redemption Right.
Section 8.7 Covenants Relating to the Redemption Rights
-------------------------------------------
A. APF shall at all times reserve for issuance such number of REIT Shares
as may be necessary to enable it to issue such REIT Shares in full satisfaction
of the Redemption Rights with respect to all Partnership Units of the Limited
Partners which are from time to time outstanding.
B. As long as APF shall be obligated to file periodic reports under the
Exchange Act, APF shall use its best efforts to file such reports in such manner
as shall enable any recipient of REIT Shares issued pursuant to Section 8.6 in
reliance upon an exemption from registration under the Securities Act to
continue to be eligible to utilize Rule 144 as promulgated by the SEC pursuant
to the Securities Act, or any successor rule or regulation or statute
thereunder, for the resale thereof.
ARTICLE 9
BOOKS, RECORDS, ACCOUNTING AND REPORTS
Section 9.1 Records and Accounting
----------------------
The General Partner shall keep or cause to be kept at the principal office
of the Partnership those records and documents required to be maintained by the
Act and other books and records deemed by the General Partner to be appropriate
with respect to the Partnership's business, including, without limitation, all
books and records necessary to provide to the Limited Partners any information,
lists and copies of documents required to be provided pursuant to Section 8.5
hereof. Any records maintained by or on behalf of the Partnership in the
regular course of its business may be kept on, or be in the form of, magnetic
tape, photographs, micro graphics or any other information storage device,
provided that the records so maintained are convertible into clearly legible
written form within a reasonable period of time. The books of the Partnership
shall be maintained, for financial and tax purposes, on an accrual basis in
accordance with generally accepted accounting principles, or other such basis as
the General Partner determines to be necessary or appropriate.
Section 9.2 Fiscal Year
-----------
The fiscal year of the Partnership shall be the calendar year.
-35-
Section 9.3 Reports
-------
A. As soon as practicable, but in no event later than one hundred twenty
(120) days after the close of each Partnership Year, the General Partner shall
cause to be mailed to each Limited Partner an annual report containing financial
statements of the Partnership for such Partnership Year, or of the APF Group if
such statements are prepared solely on a consolidated basis with the APF Group,
presented in accordance with generally accepted accounting principles, such
statements to be audited by a nationally recognized firm of independent public
accountants selected by the General Partner.
B. As soon as practicable, but in no event later than seventy-five (75)
days after the close of each calendar quarter (except the last calendar quarter
of each year), the General Partner shall cause to be mailed to each Limited
Partner a report containing unaudited financial statements of the Partnership as
of the last day of the calendar quarter, or of the APF Group if such statements
are prepared solely on a consolidated basis with the APF Group, and such other
information as may be required by applicable law or regulation, or as the
General Partner determines to be appropriate.
ARTICLE 10
TAX MATTERS
Section 10.1 Preparation of Tax Returns
--------------------------
The General Partner shall arrange for the preparation and timely filing of
all returns of Partnership income, gains, deductions, losses and other items
required of the Partnership for federal and state income tax purposes and shall
use all reasonable efforts to furnish, within ninety (90) days of the close of
each taxable year, the tax information required by Limited Partners for federal
and state income tax reporting purposes.
Section 10.2 Tax Elections
-------------
Except as otherwise provided herein, the General Partner shall, in its sole
and absolute discretion, determine whether to make any available election
pursuant to the Code; provided, however, that the General Partner shall make the
election under Section 754 of the Code in accordance with applicable regulations
thereunder. The General Partner shall have the right to seek to revoke any such
election (including, without limitation, the election under Section 754 of the
Code) upon the General Partner's determination in its sole and absolute
discretion that such revocation is in the best interests of the Partners.
Section 10.3 Tax Matters Partner
-------------------
A. The General Partner shall be the tax matters partner of the
Partnership for federal income tax purposes. Pursuant to Section 6223(c)(3) of
the Code, upon receipt of notice from the IRS of the beginning of an
administrative proceeding with respect to the Partnership, the tax matters
partner shall furnish the IRS with the name, address, taxpayer identification
number, and profit interest of each of the Limited Partners; provided, however,
that such information is provided to the Partnership by the Limited Partners.
-36-
B. The tax matters partner is authorized, but not required:
(1) to enter into any settlement with the IRS with respect to any
administrative or judicial proceedings for the adjustment of
Partnership items required to be taken into account by a Partner for
income tax purposes (such administrative proceedings being referred to
as a tax audit and such judicial proceedings being referred to as
judicial review), and in the settlement agreement the tax matters
partner may expressly state that such agreement shall bind all
Partners, except that such settlement agreement shall not bind any
Partner (i) who (within the time prescribed pursuant to the Code and
Regulations) files a statement with the IRS providing that the tax
matters partner shall not have the authority to enter into a
settlement agreement on behalf of such Partner or (ii) who is a notice
partner (as defined in Section 6231(a)(8) of the Code) or a member of
a notice group (as defined in Section 6223(b)(2) of the Code);
(2) in the event that a notice of a final administrative adjustment at the
Partnership level of any item required to be taken into account by a
Partner for tax purposes (a final adjustment) is mailed to the tax
matters partner, to seek judicial review of such final adjustment,
including the filing of a petition for readjustment with the Tax Court
or the filing of a complaint for refund with the United States Claims
Court or the District Court of the United States for the district in
which the Partnership's principal place of business is located;
(3) to intervene in any action brought by any other Partner for judicial
review of a final adjustment;
(4) to file a request for an administrative adjustment with the IRS and,
if any part of such request is not allowed by the IRS, to file an
appropriate pleading (petition or complaint) for judicial review with
respect to such request;
(5) to enter into an agreement with the IRS to extend the period for
assessing any tax which is attributable to any item required to be
taken account by a Partner for tax purposes, or an item affected by
such item; and
(6) to take any other action on behalf of the Partners of the Partnership
in connection with any tax audit or judicial review proceeding to the
extent permitted by applicable law or regulations.
The taking of any action and the incurring of any expense by the tax
matters partner in connection with any such proceeding, except to the extent by
law, is a matter in the sole and absolute discretion of the tax matters partner
and the provisions relating to indemnification of the General Partner set forth
in Section 7.7 of this Agreement shall be fully applicable to the tax matters
partner in its capacity as such.
C. The tax matters partner shall receive no compensation for its
services. All third party costs and expenses incurred by the tax matters
partner in performing its duties as such (including legal and accounting fees
and expenses) shall be borne by the Partnership. Nothing herein shall be
construed to restrict the Partnership from engaging an accounting firm to assist
-37-
the tax matters partner in discharging its duties hereunder, so long as the
compensation paid by the Partnership for such services is reasonable.
Section 10.4 Organizational Expenses
-----------------------
The Partnership shall elect to deduct expenses, if any, incurred by it in
organizing the Partnership ratably over a sixty (60) month period as provided in
Section 709 of the Code.
Section 10.5 Withholding
-----------
Each Limited Partner hereby authorizes the Partnership to withhold from or
pay on behalf of or with respect to such Limited Partner any amount of federal,
state, local or foreign taxes that the General Partner determines that the
Partnership is required to withhold or pay with respect to any amount
distributable or allocable to such Limited Partner pursuant to this Agreement,
including, without limitation, any taxes required to be withheld or paid by the
Partnership pursuant to Sections 1441, 1442, 1445 or 1446 of the Code. Any
amount paid on behalf of or with respect to a Limited Partner shall constitute a
loan by the Partnership to such Limited Partner, which loan shall be repaid by
such Limited Partner within fifteen (15) days after notice from the General
Partner that such payment must be made unless (i) the Partnership withholds such
payment from a distribution which would otherwise be made to the Limited Partner
or (ii) the General Partner determines, in its sole and absolute discretion,
that such payment may be satisfied out of the available funds of the Partnership
which would, but for such payment, be distributed to the Limited Partner. Any
amounts withheld pursuant to the foregoing clauses (i) or (ii) shall be treated
as having been distributed to such Limited Partner. Each Limited Partner hereby
unconditionally and irrevocably grants to the Partnership a security interest in
such Limited Partner's Partnership Interest to secure such Limited Partner's
obligation to pay to the Partnership any amounts required to be paid pursuant to
this Section 10.5. In the event that a Limited Partner fails to pay any amounts
owed to the Partnership pursuant to this Section 10.5 when due, the General
Partner may, in its sole and absolute discretion, elect to make the payment to
the Partnership on behalf of such defaulting Limited Partner, and in such event
shall be deemed to have loaned such amount to such defaulting Limited Partner
and shall succeed to all rights and remedies of the Partnership as against such
defaulting Limited Partner. Without limitation, in such event the General
Partner shall have the right to receive distributions that would otherwise be
distributable to such defaulting Limited Partner until such time as such loan,
together with all interest thereon, has been paid in full, and any such
distributions that would otherwise be distributable to such defaulting Limited
Partner until such time as such loan, together with all interest thereon, has
been paid in full, and any such distributions so received by the General Partner
shall be treated as having been distributed to the defaulting Limited Partner
and immediately paid by the defaulting Limited Partner to the General Partner in
repayment of such loan. Any amounts payable by a Limited Partner hereunder shall
bear interest at the lesser of (A) the base rate on corporate loans at large
United States money center commercial banks, as published from time to time in
the Wall Street Journal, plus four (4) percentage points, or (B) the maximum
lawful rate of interest on such obligation, such interest to accrue from the
date such amount is due (i.e., fifteen (15) days after demand) until such amount
is paid in full. Each Limited Partner shall take such actions as the Partnership
or the General Partner shall request in order to perfect or enforce the security
interest created hereunder.
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ARTICLE 11
TRANSFERS AND WITHDRAWALS
Section 11.1 Transfer
--------
A. The term "transfer," when used in this Article 11 with respect to a
Partnership Interest, shall be deemed to refer to a transaction by which the
General Partner purports to assign all or any part of its General Partner
Interest to another Person or by which a Limited Partner (including the General
Partner in its capacity as a Limited Partner) purports to assign all or any part
of its Limited Partner Interest to another Person, and includes a sale,
assignment, gift, pledge, encumbrance, hypothecation, mortgage, exchange or any
other disposition by law or otherwise. The term "transfer" when used in this
Article 11 does not include any redemption or repurchase of Partnership Units by
the Partnership from a Partner or acquisition of Partnership Units from a
Limited Partner by the General Partner pursuant to Section 8.6 or otherwise. No
part of the interest of a Limited Partner shall be subject to the claims of any
creditor, any spouse for alimony or support, or to legal process, and may not be
voluntarily or involuntarily alienated or encumbered except as may be
specifically provided for in this Agreement.
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 11.
Any transfer or purported transfer of a Partnership Interest not made in
accordance with this Article 11 shall be null and void.
Section 11.2 Transfer of Partnership Interests of General Partner and
--------------------------------------------------------
Original Limited Partner
------------------------
A. The General Partner may not transfer any of its Partnership Interest
or withdraw as General Partner except in accordance with a transaction described
in Section 11.2.B, 11.2.C or 11.2.D.
B. Except as provided in Sections 11.2.C and 11.2.D, after the Effective
Date, APF shall not engage in any merger (including a triangular merger),
consolidation or other combination with or into another person, sale of all or
substantially all of its assets or any reclassification, recapitalization or
change of outstanding REIT Shares (other than a change in par value, or from par
value to no par value, or as a result of a subdivision or combination as
described in the definition of "Conversion Factor") ("Transaction"), unless the
Transaction either: (1) has been approved by the consent of the Partners
holding at least a majority of the then outstanding Partnership Units (including
any Partnership Units held by the General Partner and the Original Limited
Partner) and in connection with which all Limited Partners either will receive,
or will have the right to elect to receive (either directly or through the
receipt of partnership interests or similar securities that are redeemable or
convertible into such amount of cash, securities or other property (or the cash
equivalent thereof)), for each Partnership Unit an amount of cash, securities,
or other property equal to the product of the Conversion Factor multiplied by
the greatest amount of cash, securities or other property (or the cash
equivalent thereof) paid to a holder of REIT Shares corresponding to such
Partnership Unit in consideration of one (1) such REIT Share at any time during
the period from and after the date on which the Transaction is consummated;
provided that, if, in connection with the Transaction, a purchase, tender or
exchange offer shall have been made to and accepted by the holders of more than
fifty percent (50%) of the outstanding REIT
-39-
Shares, each holder of Partnership Units shall receive (either directly or
through the receipt of partnership interests or similar securities that are
redeemable or convertible into such amount of cash, securities or other property
(or the cash equivalent thereof)) the greatest amount of cash, securities, or
other property (or the cash equivalent thereof) which such holder would have
received had it exercised the Redemption Right and received REIT Shares in
exchange for its Partnership Units immediately prior to the expiration of such
purchase, tender or exchange offer and had thereupon accepted such purchase,
tender or exchange offer; or (2) provides that the Partnership shall continue as
a separate entity and grants to the Limited Partners redemption rights with
respect to the ownership interests in the new entity that are substantially
equivalent to the Redemption Rights provided for in Section 8.6.
C. Notwithstanding Section 11.2.B, APF may merge with another entity if
immediately after such merger substantially all of the assets of the surviving
entity, other than Partnership Units held by APF, are contributed to the
Partnership as a Capital Contribution in exchange for Partnership Units with a
fair market value, as reasonably determined by the General Partner, equal to the
Net Asset Value of the assets so contributed.
D. APF shall not transfer (other than to a member of the APF Group) all
or any portion of its ownership interest in the General Partner or the Original
Limited Partner; provided, however, that APF may liquidate the General Partner
or the Original Limited Partner.
Section 11.3 Transfer of Partnership Interests of Limited Partners
-----------------------------------------------------
(Other Than Limited Partnership Interests of the General Partner and the
------------------------------------------------------------------------
Original Limited Partner)
-------------------------
A. Subject in all events to the provisions of Sections 11.3.C, 11.3.D,
11.3.E, 11.3.F, and 11.7, a Limited Partner (other than the Original Limited
Partner and the General Partner in its capacity as a Limited Partner, which
shall be governed by Section 11.2) may transfer all or any portion of its
Partnership Interest as follows:
(1) Any Limited Partner may, at any time, without the consent of the
General Partner, (i) transfer all or any portion of its Partnership
Interest to (i) any General Partner, (ii) an Affiliate, another
Limited Partner or an Immediate Family member (or a trust for the
benefit of one or more Immediate Family members), subject to the
provisions of Section 11.6, and (iii) a trust for the benefit of a
charitable beneficiary or a charitable foundation, subject to the
provisions of Section 11.6.
(2) Any Limited Partner may transfer all or any portion of its Partnership
Interest other than in accordance with (1) above provided that such
Limited Partner shall give prior written notice of the proposed
transfer to the General Partner, which notice shall state (i) the
identity of the proposed transferee, and (ii) the amount and type of
consideration proposed to be received for the transferred Partnership
Interest. The General Partner shall have ten (10) days upon which to
give the transferring Partner notice of its election to acquire the
Partnership Interest on the proposed terms. If it so elects, it shall
purchase the Partnership Interest on such terms within ten (10) days
after giving notice of such election. If it does not so elect, the
transferring Partner may transfer such Partnership Interest to a third
party (provided that such third
-40-
party is a Qualified Transferee), on economic terms no more favorable
to the transferee than the proposed terms.
It is a condition to any transfer otherwise permitted hereunder, that the
transferee assumes by operation of law or express agreement all of the
obligations of the transferor Limited Partner under this Agreement with respect
to such transferred Partnership Interest and no such transfer (other than
pursuant to a statutory merger or consolidation wherein all obligations and
liabilities of the transferor Partner are assumed by a successor corporation by
operation of law) shall relieve the transferor Partner of its obligations under
this Agreement without the approval of the General Partner, in its reasonable
discretion. Notwithstanding the foregoing, any transferee of any transferred
Partnership Interest shall be subject to any and all ownership limitations
contained in the Articles of Incorporation. Any transferee, whether or not
admitted as a Substituted Limited Partner, shall take subject to the obligations
of the transferor hereunder. Unless admitted as a Substitute Limited Partner, no
transferee, whether by a voluntary transfer, by operation of law or otherwise,
shall have rights hereunder, other than the rights of an Assignee as provided in
Section 11.5.
B. If a Limited Partner is subject to Incapacity, the executor,
administrator, trustee, committee, guardian, conservator or receiver of such
Limited Partner's estate shall have all the rights of a Limited Partner, but not
more than those enjoyed by other Limited Partners, for the purpose of settling
or managing the estate and such power as the Incapacitated Limited Partner
possessed to transfer all or any part of its interest in the Partnership. The
Incapacity of a Limited Partner, in and of itself, shall not dissolve or
terminate the Partnership.
C. The General Partner may, in its sole discretion, prohibit a transfer
of Partnership Units by a Limited Partner unless it receives (i) a written
opinion of legal counsel to such Limited Partner (which opinion and counsel
shall be reasonably satisfactory to the Partnership) that such transfer would
not require filing of a registration statement under the Securities Act or would
not otherwise violate any federal, state or foreign securities laws or
regulations applicable to the Partnership or the Partnership Unit, or (ii) at
the option of the Partnership, an opinion of legal counsel to the Partnership.
D. The General Partner may, in its sole discretion, prohibit a transfer
of a Partnership Interest by a Limited Partner if in the opinion of legal
counsel for the Partnership, it would result in the Partnership being treated as
an association taxable as a corporation for federal income tax purposes, or
would result in a termination of the Partnership for federal income tax
purposes. In addition, no transfer by a Limited Partner of its Partnership
Units may be made to any Person if (i) in the opinion of legal counsel for the
Partnership, it would adversely affect the ability of APF to continue to qualify
as a REIT or subject APF to any additional taxes under Section 857 or Section
4981 of the Code, or (ii) such transfer is effectuated through an established
securities market or a secondary market (or the substantial equivalent thereof)
within the meaning of Section 7704 of the Code.
E. No transfer by a Limited Partner of its Partnership Interest may be
made (i) to any Person who lacks the legal right, power or capacity to own a
Partnership Interest, (ii) in violation of any provision of any mortgage or
trust deed (or the note or bond secured thereby) constituting a Lien against an
asset of the Partnership, (iii) in violation of applicable law, or (iv) if such
trans-
-41-
fer 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. The General
Partner may require a Limited Partner to obtain advance approval of a transfer
of its Partnership Interest if the General Partner reasonably determines that
this is necessary to avoid such adverse consequences.
F. No transfer of any Partnership Units may be made 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 without the consent of the General Partner, which
consent may be granted or withheld by the General Partner in its sole and
absolute discretion.
Section 11.4 Substituted Limited Partners
----------------------------
A. No Limited Partner shall have the right to substitute a transferee as
a Limited Partner in its place without the consent of the General Partner, 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.
B. A transferee who has been admitted as a Substituted Limited Partner in
accordance with this Article 11 shall have all the rights and powers and be
subject to all the restrictions and liabilities of a Limited Partner under this
Agreement. The admission of any transferee as a Substituted Limited Partner
shall be subject to the transferee executing and delivering to the Partnership
an acceptance of all of the terms and conditions of this Agreement (including,
without limitation, the provisions of Section 2.4) and such other documents or
instruments as may be required to effect the admission.
C. Upon the admission of a Substituted Limited Partner, the General
Partner shall amend Exhibit A to reflect the name, address, number of
Partnership Units, and Percentage Interest of such Substituted Limited Partner
and to eliminate or adjust, if necessary, the name, address and interest of the
predecessor of such Substituted Limited Partner.
Section 11.5 Assignees
---------
If the General Partner, in its sole and absolute discretion, does not
consent to the admission of any permitted transferee under Section 11.3 as a
Substituted Limited Partner, as described in Section 11.4, 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 Loss,
Recapture Income, and any other items of gain, loss, deduction and credit of the
Partnership attributable to the Partnership Units assigned to such transferee
(and shall be subject to the provisions of Section 10.5 hereof relating to any
such allocations of tax items) and shall be entitled to exercise the Redemption
Rights with respect to such Partnership Units in accordance with the terms and
conditions of Section 8.6, but shall not be deemed to be a holder of Partnership
Units for any other purpose under this Agreement, and shall not be entitled to
vote such Partnership Units in any matter presented to the Partners for a vote
(such Partnership Units being deemed to have been voted on
-42-
such matter in the same proportion as all other Partnership Units held by the
Partners are voted). In the event any such transferee desires to make a further
assignment of any such Partnership Units, such transferee shall be subject to
all the provisions of this Article 11 to the same extent and in the same manner
as any Limited Partner desiring to make an assignment of Partnership Units.
Section 11.6 General Provisions
------------------
A. No Limited Partner may withdraw from the Partnership other than as a
result of a permitted transfer of all of such Limited Partner's Partnership
Interest in accordance with this Article 11 or pursuant to an exchange of all of
its Partnership Units under Section 8.6.
B. Any Limited Partner who shall transfer all of its Partnership Units in
a permitted transfer pursuant to this Article 11 shall cease to be a Limited
Partner upon the admission of all assignees of such Partnership Units as
Substituted Limited Partners. Similarly, any Limited Partner who shall transfer
all of his Partnership Units pursuant to an exchange of all of its Partnership
Units under Section 8.6 shall cease to be a Limited Partner.
C. Transfers pursuant to this Article 11 may only be made on the first
day of a fiscal quarter of the Partnership, unless the General Partner otherwise
agrees.
D. If any Partnership Interest is transferred in compliance with the
provisions of this Article 11 or exchanged pursuant to Section 8.6, on any day
other than the first day of a Partnership Year, then Net Income, Net Loss, each
item thereof and all other items attributable to such interest for such
Partnership Year shall be divided and allocated between the transferor Partner
and the transferee Partner by taking into account their varying interests during
the fiscal year in accordance with Section 706(d) of the Code, using the interim
closing of the books method (unless the General Partner, in its sole and
absolute discretion, elects to adopt a daily, weekly or monthly proration
method, in which event Net Income, Net Loss and each item thereof for such
Partnership Year shall be prorated based upon the applicable period selected by
the General Partner). Solely for purposes of making such allocations, each of
such items for the calendar month in which a transfer occurs shall be allocated
to the transferee Partner, and none of such items for the calendar month in
which an exchange occurs shall be allocated to the transferor. All
distributions of Available Cash attributable to such Partnership Unit with
respect to which the Partnership Record Date is before the date of such transfer
or exchange shall be made to the transferor Partner or the Redeeming Partner, as
the case may be, and all distributions of Available Cash thereafter attributable
to such Partnership Unit shall be made to the transferee Partner or the General
Partner, as the case may be.
Section 11.7 Restrictions to Prevent Treatment as a PTP
------------------------------------------
A. If at any time during the Partnership Year the number of Partners (as
determined by the General Partner in its sole discretion in accordance with
Regulations Section 1.7704-1(h)(3)) has exceeded one hundred (100) (or if the
General Partner reasonably anticipates that the number of Partners will exceed
one hundred (100) during the Partnership Year), and if a Partner wishes to
exercise its Redemption Right, the Redeeming Partner must provide to the General
Partner written notice of its intent to exercise the Redemption Right at least
sixty (60) days prior
-43-
to exercising such rights. Subject to Section 11.7.B below, the Valuation Date
shall be sixty (60) days following the receipt of such written notice by the
General Partner (or, if such date is not a Business Day, the Valuation Date
shall be the first Business Day thereafter). The Specified Redemption Date shall
occur ten (10) days after the Valuation Date (or, if such date is not a Business
Day, the Specified Redemption Date shall be the first Business Day thereafter).
This restriction is intended to comply with the redemption and repurchase
agreement safe harbor as set forth in Regulations Section 1.7704-1(f) and shall
be interpreted consistently therewith.
B. If at any time during the Partnership Year the number of Partners (as
determined by the General Partner in its sole discretion in accordance with
Regulations Section 1.7704-1(h)(3)) has exceeded one hundred (100) (or if the
General Partner reasonably anticipates that the number of Partners will exceed
one hundred (100) during the Partnership Year), and if the sum of the interests
in capital and profits transferred during the Partnership Year (other than
Private Transfers) is equal to or exceeds ten percent (10%) of the total
interests in capital or profits (excluding the interests held by the APF Group)
in the Partnership, no Partner may exercise its Redemption Right. This
restriction is intended to comply with the redemption and repurchase agreement
safe harbor as set forth in Regulations Section 1.7704-1(f) and shall be
interpreted consistently therewith.
C. Notwithstanding anything in Sections 11.7.A and 11.7.B to the
contrary, the General Partner may, in its sole and absolute discretion, permit
Private Transfers at any time.
D. Notwithstanding anything in this Agreement to the contrary, the
General Partner may, in its sole and absolute discretion and regardless of the
number of Partners in the Partnership, take any action (including imposing any
restriction on transfers and redemptions) which the General Partner reasonably
believes is necessary to prevent the Partnership from being treated as a PTP.
ARTICLE 12
ADMISSION OF PARTNERS
Section 12.1 Admission of Successor General Partner
--------------------------------------
A successor to all of the General Partner Interest pursuant to Section 11.2
hereof who is proposed to be admitted as a successor General Partner shall be
admitted to the Partnership as the General Partner, effective upon such
transfer. Any such transferee shall carry on the business of the Partnership
without dissolution. In each case, the admission shall be subject to the
successor General Partner executing and delivering to the Partnership an
acceptance of all of the terms and conditions of this Agreement and such other
documents or instruments as may be required to effect the admission. In the case
of such admission on any day other than the first day of a Partnership Year, all
items attributable to the General Partner Interest for such Partnership Year
shall be allocated between the transferring General Partner and such successor
as provided in Section 11.6.D hereof.
Section 12.2 Admission of Additional Limited Partners
----------------------------------------
A. After the admission to the Partnership of the Original Limited Partner
and the General Partner (in its capacity as a Limited Partner), a Person who
makes a Capital Contribution
-44-
to the Partnership in accordance with this Agreement or who exercises an option
to receive Partnership Units shall be admitted to the Partnership as an
Additional Limited Partner only upon furnishing to the General Partner (i)
evidence of acceptance in form satisfactory to the General Partner of all of the
terms and conditions of this Agreement, including, without limitation, the power
of attorney granted in Section 2.4 hereof and (ii) such other documents or
instruments as may be required in the discretion of the General Partner in order
to effect such Person's admission as an Additional Limited Partner.
B. Notwithstanding anything to the contrary in this Section 12.2, no
Person shall be admitted as an Additional Limited Partner without the consent of
the General Partner, which consent may be given or withheld in the General
Partner's sole and absolute discretion. The admission of any Person as an
Additional Limited Partner shall become effective on the date upon which the
name of such Person is recorded on the books and records of the Partnership,
following the consent of the General Partner to such admission.
C. If any Additional Limited Partner is admitted to the Partnership on
any day other than the first day of a Partnership Year, then Net Income, Net
Loss, each item thereof and all other items allocable among Partners for such
Partnership Year shall be allocated among such Additional Limited Partner and
all other Partners by taking into account their varying interests during the
Partnership Year in accordance with Section 706(d) of the Code, using the
interim closing of the books method (unless the General Partner, in its sole and
absolute discretion, elects to adopt a daily, weekly or monthly proration
method, in which event Net Income, Net Loss and each item thereof for such
Partnership Year shall be prorated based on the applicable period selected by
the General Partner). Solely for purposes of making such allocations, each of
such items for the calendar month in which an admission of any Additional
Limited Partner occurs shall be allocated among all the Partners including such
Additional Limited Partner. All distributions of Available Cash with respect to
which the Partnership Record Date is before the date of such admission shall be
made solely to Partners other than the Additional Limited Partner, and all
distributions of Available Cash thereafter shall be made to all the Partners
including such Additional Limited Partner.
Section 12.3 Amendment of Agreement and Certificate of Limited
-------------------------------------------------
Partnership
-----------
For the admission to the Partnership of any Partner, the General Partner
shall take all steps necessary and appropriate under the Act to amend the
records of the Partnership and, if necessary, to prepare as soon as practicable
an amendment of this Agreement (including an amendment of Exhibit A) and, if
required by law, shall prepare and file an amendment to the Certificate and may
for this purpose exercise the power of attorney granted pursuant to Section 2.4
hereof.
ARTICLE 13
DISSOLUTION, LIQUIDATION AND TERMINATION
Section 13.1 Dissolution
-----------
Except as set forth in this Article 13, no Partner shall have the right to
dissolve the Partnership. The Partnership shall not be dissolved by the
admission of Substituted Limited Partners
-45-
or Additional Limited Partners or by the admission of a successor General
Partner in accordance with the terms of this Agreement. Upon the withdrawal of
the General Partner, any successor General Partner shall continue the business
of the Partnership. The Partnership shall dissolve, and its affairs shall be
wound up, upon the first to occur of any of the following ("Liquidating
Events"):
A. the expiration of its term as provided in Section 2.5 hereof;
B. an event of withdrawal of the General Partner, as defined in the Act
(other than an event of bankruptcy), unless, within ninety (90) days after such
event of withdrawal a majority of the Percentage Interests of the Limited
Partners (including the Original Limited Partner and the General Partner in its
capacity as a Limited Partner) agree in writing to continue the business of the
Partnership and to the appointment, effective as of the date of withdrawal, of a
successor General Partner;
C. an election to dissolve the Partnership made by the General Partner,
in its sole and absolute discretion after December 31, 2049;
D. entry of a decree of judicial dissolution of the Partnership pursuant
to the provisions of the Act;
E. the sale of all or substantially all of the assets and properties of
the Partnership; or
F. a final and non-appealable judgment is entered by a court of competent
jurisdiction ruling that the General Partner is bankruptcy or insolvent, or a
final and non-appealable order for relief is entered by a court with appropriate
jurisdiction against the General Partner, in each case under any federal or
state bankruptcy or insolvency laws as now or hereafter in effect, unless prior
to the entry of such order or judgment, a majority of the Percentage Interests
of the Limited Partners (including the Original Limited Partner and the General
Partner in its capacity as a Limited Partner) of the remaining Partners agree
in writing to continue the business of the Partnership and to the appointment,
effective as of the date prior to the date of such order or judgment, of a
substituted General Partner.
Section 13.2 Winding-Up
----------
A. Upon the occurrence of a Liquidating Event, the Partnership shall
continue solely for the purposes of winding up its affairs in an orderly manner,
liquidating its assets, and satisfying the claims of its creditors and Partners.
No Partner shall take any action that is inconsistent with, or not necessary to
or appropriate for, the winding up of the Partnership's business and affairs.
The General Partner, or, in the event there is no remaining General Partner, any
Person elected by a majority in interest of the Limited Partners (the General
Partner or such other Person being referred to herein as the "Liquidator") shall
be responsible for overseeing the winding up and dissolution of the Partnership
and shall take full account of the Partnership's liabilities and property and
the Partnership property shall be liquidated as promptly as is consistent with
obtaining the fair value thereof, and the proceeds therefrom (which may, to the
extent determined by the General Partner, include shares of stock in APF) shall
be applied and distributed in the following order:
-46-
(1) First, to the payment and discharge of all of the Partnership's debts
and liabilities to creditors other than the Partners;
(2) Second, to the payment and discharge of all of the Partnership's debts
and liabilities to the Partners; and
(3) The balance, if any, to the General Partner and Limited Partners in
accordance with their Capital Accounts, after giving effect to all
contributions, distributions, and allocations for all periods.
The General Partner shall not receive any additional compensation for any
services performed pursuant to this Article 13.
B. Notwithstanding the provisions of Section 13.2.A 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 Liquidator 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 Liquidator 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 as creditors) and/or
distribute to the Partners, in lieu of cash, as tenants in common and in
accordance with the provisions of Section 13.2.A hereof, undivided interests in
such Partnership assets as the Liquidator deems not suitable for liquidation.
Any such distributions in kind shall be made only if, in the good faith judgment
of the Liquidator, 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 Liquidator deems reasonable and
equitable and to any agreements governing the operation of such properties at
such time. The Liquidator shall determine the fair market value of any property
distributed in kind using such reasonable method of valuation as it may adopt.
C. In the discretion of the Liquidator, a pro rata portion of the
distributions that would otherwise be made to the General Partner and Limited
Partners pursuant to this Article 13 may be:
(1) distributed to a trust established for the benefit of the General
Partner and Limited Partners for the purpose of liquidating
Partnership assets, collecting amounts owed to the Partnership, and
paying any contingent or unforeseen liabilities or obligations of the
Partnership or of the General Partner arising out of or in connection
with the Partnership. The assets of any such trust shall be
distributed to the General Partner and Limited Partners from time to
time, in the reasonable discretion of Liquidator, in the same
proportions as the amount distributed to such trust by the Partnership
would otherwise have been distributed to the General Partner and
Limited Partners pursuant to this Agreement; or
(2) withheld or escrowed to provide a reasonable reserve for Partnership
liabilities (contingent or otherwise) and to reflect the unrealized
portion of any installment obligations owed to the Partnership,
provided that such withheld or escrowed
-47-
amounts shall be distributed to the General Partner and Limited
Partners in the manner and order of priority set forth in Section
13.2.A as soon as practicable.
Section 13.3 Compliance with Timing Requirements of Regulations
--------------------------------------------------
In the event the Partnership is liquidated within the meaning of
Regulations Section 1.704-1(b)(2)(ii)(g), distributions shall be made pursuant
to this Article 13 to the General Partner and Limited Partners who have positive
Capital Accounts in compliance with Regulations Section 1.704-1(b)(2)(ii)(b)(2).
If any Partner has a deficit balance in its Capital Account (after giving effect
to all contributions, distributions and allocations for all taxable years,
including the year during which such liquidation occurs), such Partner shall
have no obligation to make any contribution to the capital of the Partnership
with respect to such deficit, and such deficit shall not be considered a debt
owed to the Partnership or to any other Person for any purpose whatsoever.
Section 13.4 Deemed Contribution and Distribution
------------------------------------
Notwithstanding any other provision of this Article 13, in the event the
Partnership is considered liquidated within the meaning of Regulations Section
1.704-1(b)(2)(ii)(g) but no Liquidating Event has occurred, the Partnership's
property shall not be liquidated, the Partnership's liabilities shall not be
paid or discharged, and the Partnership's affairs shall not be wound up.
Instead, for federal income tax purposes and purposes of maintaining Capital
Accounts pursuant to Exhibit B hereto, the Partnership shall be deemed to have
contributed all of its assets and liabilities to a new partnership in exchange
for an interest in the new partnership. Immediately thereafter, the Partnership
shall be deemed to have liquidated by distributing interests in the new
partnership to the Partners (including the transferee of a Partnership
Interest).
Section 13.5 Rights of Limited Partners
--------------------------
Except as otherwise provided in this Agreement, each Limited Partner shall
look solely to the assets of the Partnership for the return of its Capital
Contributions and shall have no right or power to demand or receive property
other than cash from the Partnership. Except as otherwise provided in this
Agreement, no Limited Partner shall have priority over any other Partner as to
the return of its Capital Contributions, distributions, or allocations.
Section 13.6 Notice of Dissolution
---------------------
In the event a Liquidating Event occurs or an event occurs that would,
absent an election or objection by one or more Partners pursuant to Section
13.1, result in a dissolution of the Partnership, the General Partner shall,
within sixty (60) days thereafter, provide written notice thereof to each of the
Partners.
Section 13.7 Termination of Partnership and Cancellation of Certificate
----------------------------------------------------------
of Limited Partnership
----------------------
Upon the completion of the liquidation of the Partnership cash and property
as provided in Section 13.2 hereof, the Partnership shall be terminated, a
certificate of cancellation shall be filed, and all qualifications of the
Partnership as a foreign limited partnership in jurisdictions
-48-
other than the State of Delaware shall be canceled and such other actions as may
be necessary to terminate the Partnership shall be taken.
Section 13.8 Reasonable Time for Winding-Up
------------------------------
A reasonable time shall be allowed for the orderly winding-up of the
business and affairs of the Partnership and the liquidation of its assets
pursuant to Section 13.2 hereof, in order to minimize any losses otherwise
attendant upon such winding-up, and the provisions of this Agreement shall
remain in effect among the Partners during the period of liquidation.
Section 13.9 Waiver of Partition
-------------------
Each Partner hereby waives any right to partition of the Partnership
property.
Section 13.10 Liability of the Liquidator
---------------------------
The Liquidator shall be indemnified and held harmless by the Partnership
from and against any and all claims, demands, liabilities, costs, damages and
causes of action of any nature whatsoever arising out of or incidental to the
Liquidator's taking of any action authorized under or within the scope of this
Agreement; provided, however, that the Liquidator shall not be entitled to
indemnification, and shall not be held harmless, where the claim, demand,
liability, cost, damage or cause of action at issue arises out of:
(1) a matter entirely unrelated to the Liquidator's action or conduct
pursuant to the provisions of this Agreement; or
(2) the proven willful misconduct or gross negligence of the Liquidator.
ARTICLE 14
AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS
Section 14.1 Amendments
----------
A. Amendments to this Agreement may be proposed by the General Partner or
by any Limited Partners holding twenty-five percent (25%) or more of the
Percentage Interests. Following such proposal, the General Partner shall submit
any proposed amendment to the Limited Partners. The General Partner shall seek
the written vote of the Partners on the proposed amendment or shall call a
meeting to vote thereon and to transact any other business that it may deem
appropriate. For purposes of obtaining a written vote, the General Partner may
require a response within a reasonable specified time, but not less than fifteen
(15) days, and failure to respond in such time period shall constitute a vote
which is consistent with the General Partner's recommendation with respect to
the proposal. Except as provided in Section 14.1.B, 14.1.C or 14.1.D, a proposed
amendment shall be adopted and be effective as an amendment thereto if it is
approved by the General Partner and it receives the consent of holders of a
majority of the outstanding Partnership Units (including Partnership Units held
by the General Partner and the Original Limited Partner). Any action requiring
the consent of the holders of a majority of the outstanding Partnership Units
shall be deemed to be approved if approved by the requisite holders even though
notice has not been given to all holders.
-49-
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 designations, rights, powers, duties, and preferences
of the holders of any additional Partnership Interests issued pursuant
to Section 4.2.A hereof;
(4) to reflect a change that does not adversely affect any of 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, or make other changes with respect to
matters arising under this Agreement that will not be inconsistent
with law or with the provisions of this Agreement; and
(5) to satisfy any requirements, conditions, or guidelines contained in
any order, directive, opinion, ruling or regulation of a federal or
state agency or contained in federal or state law.
The General Partner shall provide notice to the Limited Partners when any action
under this Section 14.1.B is taken.
C. Notwithstanding Sections 14.1.A and 14.1.B 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 interest, (ii) modify the limited liability of a Limited
Partner in a manner adverse to such Limited Partner, (iii) alter rights of the
Partner to receive distributions pursuant to Article 5, or the allocations
specified in Article 6 (except as permitted pursuant to Section 4.2 and Section
14.1.B(3) or (4) and paragraph 1.E of Exhibit B hereof) in a manner adverse to
such Partner, (iv) cause the termination of the Partnership prior to the time
set forth in Sections 2.5 or 13.1, 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 7.3 without the consent specified in that section.
D. Notwithstanding Section 14.1.A or Section 14.1.B hereof, the General
Partner shall not amend Sections 4.2.A, 7.6, 11.2 or 14.2 without the consent of
a majority of the Percentage Interests of the Limited Partners (including the
Original Limited Partner and the General Partner in its capacity as a Limited
Partner).
Section 14.2 Meetings of the Partners
------------------------
A. Meetings of the Partners may be called by the General Partner and
shall be called upon the receipt by the General Partner of a written request by
Limited Partners holding twenty-five percent (25%) or more of the Percentage
Interests. The call shall state the nature of the
-50-
business to be transacted. Notice of any such meeting shall be given to all
Partners not less than seven (7) days nor more than thirty (30) 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 the Partners is permitted or required
under this Agreement, such vote or consent may be given at a meeting of the
Partners or may be given in accordance with the procedure prescribed in Section
14.1.A hereof. Except as otherwise expressly provided in this Agreement, the
consent of holders of a majority of the outstanding Partnership Units (including
Partnership Units held by the General Partner and the Original Limited Partner)
shall control.
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 by the holders of a majority of the outstanding
Partnership Units (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 the holders of a majority
of the outstanding Partnership Units (or such other percentage as is expressly
required by this Agreement). Such consent shall be filed with the General
Partner. An action so taken shall be deemed to have been taken at a meeting
held on the effective date so certified.
C. Each Limited Partner may authorize any Person or Persons to act for it
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 its attorney-in-
fact. No proxy shall be valid after the expiration of eleven (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, such revocation
to be effective upon the Partnership's receipt of or written notice such
revocation from the Limited Partner executing such proxy.
D. Each meeting of Partners shall be conducted by the General Partner or
such other Person as the General Partner may appoint pursuant to such rules for
the conduct of the meeting as the General Partner or such other Person deems
appropriate in its sole discretion. Without limitation, meetings of Partners
may be conducted in the same manner as meetings of the shareholders of APF and
may be held at the same time as, and as part of, meetings of the shareholders of
APF.
ARTICLE 15
PARTNER REPRESENTATIONS AND WARRANTIES
Section 15.1 Representations and Warranties.
------------------------------
A. Each Partner represents and warrants severally and not jointly, and
solely on behalf of itself, to the Partnership and the other Partners as
follows:
(1) Organization. If such Partner is not a natural person, such
------------
Partner is duly formed and validly existing and is qualified to do
business and in good standing in the jurisdictions in which it does
business.
(2) Due Authorization; Binding Agreement. This Agreement has been duly
------------------------------------
executed and delivered by such Partner, or an authorized
representative of such Partner, and
-51-
constitutes a legal, valid and binding obligation of such Partner,
enforceable against such Partner in accordance with the terms hereof.
(3) Consents and Approvals. No consent, waiver, approval or authorization
----------------------
of, or filing, registration or qualification with, or notice to, any
governmental unit or any other person is required to be made, obtained
or given by such Partner in connection with the execution, delivery
and performance of this Agreement other than consents, waivers,
approvals or authorizations which have been obtained prior to the date
hereof.
(4) No Conflict with Other Documents or Violation of Law. The execution
----------------------------------------------------
of this Agreement by such Partner and such Partner's performance of
the transactions contemplated herein will not violate any document,
instrument, agreement, stipulation, judgment, order, or any applicable
federal, state or local law, ordinance or regulation to which such
Partner is a party or by which such Partner is bound.
B. Each Limited Partner represents and warrants that its Limited Partner
Interest is being acquired for its own account and not with a view to the
distribution or other sale thereof, except in a transaction which is exempt from
registration under the Securities Act or registered thereunder. Any
distribution or other sale of the Limited Partner Interest of such Limited
Partner shall be subject to the provisions of Section 11.3 hereof. Such Limited
Partner further represents and warrants to the Partnership and the other
Partners that such Limited Partner is an "Accredited Investor" as defined
pursuant to Rule 501 of Regulation D of the Securities Act.
ARTICLE 16
GENERAL PROVISIONS
Section 16.1 Addresses and Notice
--------------------
All notices, requests, demands and other communications hereunder to a
Partner shall be in writing and shall be deemed to have been duly given if
delivered by hand or if sent by certified mail, return receipt requested,
properly addressed and postage prepaid, or transmitted by commercial overnight
courier to the Partner at the address set forth in Exhibit A or at such other
address as the Partner shall notify the General Partner in writing. Such
communications shall be deemed sufficiently given, served, sent or received for
all purposes at such time as delivered to the addressee (with the return receipt
or delivery receipt being deemed conclusive evidence of such delivery) or at
such time as delivery is refused by the addressee upon presentation.
Section 16.2 Titles and Captions
-------------------
All article or section titles or captions in this Agreement are for
convenience only. They shall not be deemed part of this Agreement and in no way
define, limit, extend or describe the scope or intent of any provisions hereof.
Except as specifically provided otherwise, (i) references to Articles and
Sections are to Articles and Sections of this Agreement, and (ii) references to
Exhibits are to the Exhibits attached to this Agreement. Each Exhibit attached
hereto and referred to herein is hereby incorporated by reference.
-52-
Section 16.3 Pronouns and Plurals
--------------------
Whenever the context may require, any pronoun used in this Agreement shall
include the corresponding masculine, feminine or neuter forms, and the singular
form of nouns, pronouns and verbs shall include the plural and vice versa.
Section 16.4 Further Action
--------------
The parties shall execute and deliver all documents, provide all
information and take or refrain from taking action as may be necessary or
appropriate to achieve the purposes of this Agreement.
Section 16.5 Binding Effect
--------------
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their heirs, executors, administrators, successors, legal
representatives and permitted assigns.
Section 16.6 Creditors
---------
Other than as expressly set forth herein with respect to the Indemnitees,
none of the provisions of this Agreement shall be for the benefit of, or shall
be enforceable by, any creditor of the Partnership.
Section 16.7 Waiver
------
No failure by any party to insist upon the strict performances of any
covenant, duty, agreement or condition of this Agreement or to exercise any
right or remedy consequent upon a breach thereof shall constitute waiver of any
such breach or any other covenant, duty, agreement or condition.
Section 16.8 Counterparts
------------
This Agreement may be executed in counterparts, all of which together shall
constitute one agreement binding on all the parties hereto, notwithstanding that
all such parties are not signatories to the original or the same counterpart.
Each party shall become bound by this Agreement immediately upon affixing its
signature hereto.
Section 16.9 Applicable Law
--------------
This Agreement shall be construed and enforced in accordance with and
governed by the laws of the State of Delaware, without regard to the principles
of conflicts of law.
Section 16.10 Invalidity of Provisions
------------------------
If any provision of this Agreement is or becomes invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein shall not be affected thereby.
-53-
Section 16.11 Entire Agreement
----------------
This Agreement contains the entire understanding and agreement among the
Partners with respect to the subject matter hereof and any other prior written
or oral understandings or agreements among them with respect thereto.
Section 16.12 Guaranty by APF
---------------
APF unconditionally and irrevocably guarantees to the Limited Partners the
performance by the General Partner of the obligations of the General Partner
under this Agreement. This guaranty is exclusively for the benefit of the
Limited Partners and shall not extend to the benefit of any creditor of the
Partnership.
Section 16.13 No Rights As Shareholders
-------------------------
Nothing contained in this Agreement shall be construed as conferring upon
the holders of the Partnership Units any rights whatsoever as shareholders of
APF, including, without limitation, any right to receive dividends or other
distributions made to shareholders of APF or to vote or to consent or receive
notice as shareholders in respect to any meeting of shareholders for the
election of board members of APF or any other matter.
-54-
IN WITNESS WHEREOF, the parties hereto have executed this Agreement under
seal as of the date first written above.
GENERAL PARTNER:
CNL APF GP Corp.
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
--------------------------------------
By: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Its: President
LIMITED PARTNERS:
CNL APF GP Corp.
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
--------------------------------------
By: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Its: President
CNL APF LP Corp.
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
--------------------------------------
By: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Its: President
-55-
The undersigned, on its own behalf and in its capacity as the sole shareholder
of the General Partner and the Original Limited Partner hereby (1) agrees to all
of the restrictions imposed on it, the General Partner and the Original Limited
Partner in the Agreement (including, without limitation, the restrictions under
Article IV and Sections 7.4.D, 7.5 and 11.2 of the Agreement), and (2) accepts
all of the obligations imposed on it, the General Partner and the Original
Limited Partner in the Agreement (including, without limitation, its obligations
pursuant to Sections 8.6 and 8.7 and the guaranty obligation contained in
Section 16.12 of the Agreement).
CNL AMERICAN PROPERTIES FUND, INC.
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
-------------------------------------
By: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Its: President
-56-
EXHIBIT A
PARTNERS, PERCENTAGE INTERESTS AND
PARTNERSHIP UNITS
Name and Percentage Partnership
Address of Partner Interest Units
------------------ --------- -----------
General Partner:
----------------
CNL APF GP Corp. 1% 1
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Limited Partners:
-----------------
CNL APF GP Corp. 19% 19
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
CNL APF LP Corp. 80% 80
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
A-1
EXHIBIT B
CAPITAL ACCOUNT MAINTENANCE
1. Capital Accounts of the Partners
--------------------------------
A. The Partnership shall maintain for each Partner a separate Capital
Account in accordance with the rules of Regulations Section 1.704-1(b)(2)(iv).
Such Capital Account shall be increased by (i) the amount of all Capital
Contributions and any other deemed contributions made by such Partner to the
Partnership pursuant to this Agreement and (ii) all items of Partnership income
and gain (including income and gain exempt from tax) computed in accordance with
Section 1.B hereof and allocated to such Partner pursuant to Section 6.1.A of
the Agreement and Exhibit C hereof, and decreased by (x) the amount of cash or
---------
Net Asset Value of all actual and deemed distributions of cash or property made
to such Partner pursuant to this Agreement and (y) all items of Partnership
deduction and loss computed in accordance with Section 1.B hereof and allocated
to such Partner pursuant to Section 6.1.B of the Agreement and Exhibit C hereof.
---------
B. For purposes of computing the amount of any item of income, gain,
deduction or loss to be reflected in the Partners' Capital Accounts, unless
otherwise specified in this Agreement, the determination, recognition and
classification of any such item shall be the same as its determination,
recognition and classification for federal income tax purposes determined in
accordance with Section 703(a) of the Code (for this purpose all items of
income, gain, loss or deduction required to be stated separately pursuant to
Section 703(a)(1) of the Code shall be included in taxable income or loss), with
the following adjustments:
(1) Except as otherwise provided in Regulations Section 1.704-
1(b)(2)(iv)(m), the computation of all items of income, gain, loss and
deduction shall be made without regard to any election under Section
754 of the Code which may be made by the Partnership, provided that
the amounts of any adjustments to the adjusted bases of the assets of
the Partnership made pursuant to Section 734 of the Code as a result
of the distribution of property by the Partnership to a Partner (to
the extent that such adjustments have not previously been reflected in
the Partners' Capital Accounts) shall be reflected in the Capital
Accounts of the Partners in the manner and subject to the limitations
prescribed in Regulations Section 1.704-1(b)(2)(iv)(m).
(2) The computation of all items of income, gain, loss and deduction shall
be made without regard to the fact that items described in Sections
705(a)(1)(B) or 705(a)(2)(B) of the Code are not includable in gross
income or are neither currently deductible nor capitalized for federal
income tax purposes.
(3) Any income, gain or loss attributable to the taxable disposition of
any Partnership property shall be determined as if the adjusted basis
of such property as of such date of disposition were equal in amount
to the Partnership's Carrying Value with respect to such property as
of such date.
B-1
(4) In lieu of the depreciation, amortization and other cost recovery
deductions taken into account in computing such taxable income or
loss, there shall be taken into account Depreciation for such fiscal
year.
(5) In the event the Carrying Value of any Partnership Asset is adjusted
pursuant to Section 1.D hereof, the amount of any such adjustment
shall be taken into account as gain or loss from the disposition of
such asset.
(6) Any items specially allocated under Section 2 of Exhibit C hereof
shall not be taken into account.
C. A transferee (including an Assignee) of a Partnership Unit shall
succeed to a pro rata portion of the Capital Account of the transferor.
D. (1) Consistent with the provisions of Regulations Section 1.704-
1(b)(2)(iv)(f), and as provided in Section 1.D(2), the Carrying Values
of all Partnership assets shall be adjusted upward or downward to
reflect any Unrealized Gain or Unrealized Loss attributable to such
Partnership property, as of the times of the adjustments provided in
Section 1.D(2) hereof, as if such Unrealized Gain or Unrealized Loss
had been recognized on an actual sale of each such property and
allocated pursuant to Section 6.1 of the Agreement.
(2) Such adjustments shall be made as of the following times: (a)
immediately prior to the acquisition of an additional interest in the
Partnership by any new or existing Partner in exchange for more than a
de minimis Capital Contribution; (b) immediately prior to the
distribution by the Partnership to a Partner of more than a de minimis
amount of property as consideration for an interest in the
Partnership; and (c) immediately prior to the liquidation of the
Partnership within the meaning of Regulations Section 1.704-
1(b)(2)(ii)(g); provided, however, that adjustments pursuant to
clauses (a) and (b) above shall be made only if the General Partner
determines that such adjustments are necessary or appropriate to
reflect the relative economic interests of the Partners in the
Partnership.
(3) In accordance with Regulations Section 1.704-1(b)(2)(iv)(e), the
Carrying Value of Partnership assets distributed in kind shall be
adjusted upward or downward to reflect any Unrealized Gain or
Unrealized Loss attributable to such Partnership property, as of the
time any such asset is distributed, as if such Unrealized Gain or
Unrealized Loss had been recognized on an actual sale of such
Partnership property and allocated pursuant to Section 6.1 of the
Agreement.
(4) In determining Unrealized Gain or Unrealized Loss for purposes of
this Exhibit B, the aggregate cash amount and fair market value of all
Partnership assets (including cash or cash equivalents) shall be
determined by the General Partner using such reasonable method of
valuation as it may adopt, or in the case of a liquidating
distribution pursuant to Article 13 of the Agreement, shall be
determined and allocated by the Liquidator using such reasonable
methods of valuation as it may adopt. The General Partner, or the
Liquidator, as the case may be, shall
B-2
allocate such aggregate fair market value among the assets of the
Partnership (in such manner as it determines in its sole and absolute
discretion to arrive at a fair market value for individual
properties).
E. The provisions of this Agreement (including this Exhibit B and the
other Exhibits to this Agreement) relating to the maintenance of Capital
Accounts are intended to comply with Regulations Section 1.704-1(b), and shall
be interpreted and applied in a manner consistent with such Regulations. In the
event the General Partner shall determine that it is prudent to modify the
manner in which the Capital Accounts, or any debits or credits thereto
(including, without limitation, debits or credits relating to liabilities which
are secured by contributed or distributed property or which are assumed by the
Partnership, the General Partner, or the Limited Partners) are computed in order
to comply with such Regulations, the General Partner may make such modification
without regard to Article 14 of the Agreement, provided that it is not likely to
have a material effect on the amounts distributable to any Person pursuant to
Article 13 of the Agreement upon the dissolution of the Partnership. The
General Partner also shall (i) make any adjustments that are necessary or
appropriate to maintain equality between the Capital Accounts of the Partners
and the amount of Partnership capital reflected on the Partnership's balance
sheet, as computed for book purposes, in accordance with Regulations Section
1.704-1(b)(2)(iv)(q), and (ii) make any appropriate modifications in the event
unanticipated events might otherwise cause this Agreement not to comply with
Regulations Section 1.704-1(b).
B-3
EXHIBIT C
SPECIAL ALLOCATION RULES
1. Special Allocation Rules
------------------------
Notwithstanding any other provision of the Agreement or this Exhibit C, the
following special allocations shall be made in the following order:
A. Minimum Gain Chargeback. Notwithstanding the provisions of Section
-----------------------
6.1 of the Agreement or any other provisions of this Exhibit C, if there is a
net decrease in the Partnership Minimum Gain during any Partnership Year (except
as a result of certain conversions and refinancings of Partnership indebtedness,
certain Capital Contributions, or certain revaluations of the Partnership
property as further described in Regulations Sections 1.704-2(d)(4), 1.704-
2(f)(2) or 1.704-2(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 such Partner's share of the net decrease in Partnership
Minimum Gain, as determined under Regulations Section 1.704-2(g). Allocations
pursuant to the previous sentence shall be made in proportion to the respective
amounts required to be allocated to each Partner pursuant thereto. The items to
be so allocated shall be determined in accordance with Regulations Sections
1.704-2(f)(6) and 1.704-2(j)(2). This Section 1.A is intended to comply with
the minimum gain chargeback requirements in Regulations Section 1.704-2(f) and
for purposes of this Section 1.A only, each Partner's Adjusted Capital Account
Deficit shall be determined prior to any other allocations pursuant to Section
6.1 of this Agreement with respect to such Partnership Year and without regard
to any decrease in Partner Minimum Gain during such Partnership Year.
B. Partner Minimum Gain Chargeback. Notwithstanding any other provision
-------------------------------
of Section 6.1 of the Agreement or any other provisions of this Exhibit C
(except Section 1.A hereof), if there is a net decrease in Partner Minimum Gain
attributable to a Partner Nonrecourse Debt during any Partnership Year (except
as a result of certain conversions and refinancings of Partnership indebtedness,
certain Capital Contributions, or certain revaluations of the Partnership
property as further described in Regulations Sections 1.704-2(i)(3) and 1.704-
2(i)(4)), each Partner who has a share of the Partner Minimum Gain attributable
to such Partner Nonrecourse Debt, determined in accordance with Regulations
Section 1.704-2(i)(5), shall be specially allocated items of Partnership income
and gain for such year (and, if necessary, subsequent years) in an amount equal
to such Partner's share of the net decrease in Partner Minimum Gain attributable
to such Partner Nonrecourse Debt, determined in accordance with Regulations
Section 1.704-2(i)(5). Allocations pursuant to the previous sentence shall be
made in proportion to the respective amounts required to be allocated to each
General Partner and Limited Partner pursuant thereto. The items to be so
allocated shall be determined in accordance with Regulations Sections 1.704-
2(i)(4) and 1.704-2(j)(2). This Section 1.B is intended to comply with the
minimum gain chargeback requirement in such Sections of the Regulations and
shall be interpreted consistently therewith. Solely for purposes of this
Section 1.B, each Partner's Adjusted Capital Account Deficit shall be determined
prior to any other allocations pursuant to Section 6.1 of the Agreement or this
Exhibit with respect to such Partnership Year, other than allocations pursuant
to Section 1.A hereof.
C-1
C. Qualified Income Offset. In the event any Partner unexpectedly
-----------------------
receives any adjustments, allocations or distributions described in Regulations
Sections 1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5) or 1.704-
1(b)(2)(ii)(d)(6), and after giving effect to the allocations required under
Sections 1.A and 1.B hereof, such Partner has an Adjusted Capital Account
Deficit, items of Partnership income and gain (consisting of a pro rata portion
of each item of Partnership income, including gross income and gain for the
Partnership Year) shall be specifically allocated to such Partner in an amount
and manner sufficient to eliminate, to the extent required by the Regulations,
its Adjusted Capital Account Deficit created by such adjustments, allocations or
distributions as quickly as possible. This Section 1.C is intended to
constitute a qualified income offset under Regulations Section 1.704-
1(b)(2)(ii)(d) and shall be interpreted consistently therewith.
D. Nonrecourse Deductions. Nonrecourse Deductions for any Partnership
----------------------
Year shall be allocated to the Partners in accordance with their respective
Percentage Interests. If the General Partner determines in its good faith
discretion that the Partnership's Nonrecourse Deductions must be allocated in a
different ratio to satisfy the safe harbor requirements of the Regulations
promulgated under Section 704(b) of the Code, the General Partner is authorized,
upon notice to the Limited Partners, to revise the prescribed ratio for such
Partnership Year to the numerically closest ratio which would satisfy such
requirements.
E. Partner Nonrecourse Deductions. Any Partner Nonrecourse Deductions
------------------------------
for any Partnership Year shall be specially allocated to the Partner who bears
the economic risk of loss with respect to the Partner Nonrecourse Debt to which
such Partner Nonrecourse Deductions are attributable in accordance with
Regulations Sections 1.704-2(b)(4) and 1.704-2(i).
F. Code Section 754 Adjustments. To the extent an adjustment to the
----------------------------
adjusted tax basis of any Partnership asset pursuant to Section 734(b) or 743(b)
of the Code is required, pursuant to Regulations Section 1.704-1(b)(2)(iv)(m),
to be taken into account in determining Capital Accounts, the amount of such
adjustment to the Capital Accounts shall be treated as an item of gain (if the
adjustment increases the basis of the asset) or loss (if the adjustment
decreases such basis), and such item of gain or loss shall be specially
allocated to the Partners in a manner consistent with the manner in which their
Capital Accounts are required to be adjusted pursuant to such Section of the
Regulations.
G. Curative Allocations. The allocations set forth in Section 1.C of
--------------------
this Exhibit C (the "Regulatory Allocations") are intended to comply with
certain requirements of the Regulations promulgated under Section 704 of the
Code. The Regulatory Allocations shall be taken into account in allocating Net
Income, Net Loss and other items of income, gain, loss and deduction to each
Partner so that, to the extent possible, and to the extent permitted by the
Regulations, the cumulative allocations of Net Income, Net Loss and other items
and the Regulatory Allocations to each Partner shall be equal to the net amount
that would have been allocated to each Partner if the Regulatory Allocations had
not been made.
2. Allocations for Tax Purposes
----------------------------
A. Except as otherwise provided in this Section 2, for federal income tax
purposes, each item of income, gain, loss and deduction shall be allocated among
the Partners in the same
C-2
manner as its correlative item of book income, gain, loss or deduction is
allocated pursuant to Section 6.1 of the Agreement and Section 1 of this Exhibit
C.
B. In an attempt to eliminate Book-Tax Disparities attributable to a
Contributed Property or Adjusted Property, items of income, gain, loss, and
deduction shall be allocated for federal income tax purposes among the Partners
as follows:
(1) (a) In the case of a Contributed Property, such items
attributable thereto shall be allocated among the Partners
consistent with the principles of Section 704(c) of the Code to
take into account the variation between the Gross Asset Value of
such property and its adjusted basis at the time of contribution;
and
(b) any item of Residual Gain or Residual Loss attributable to a
Contributed Property shall be allocated among the Partners in the
same manner as its correlative item of book gain or loss is
allocated pursuant to Section 6.1 of the Agreement and Section 1
of this Exhibit C.
(2) (a) In the case of an Adjusted Property, such items shall:
(1) first, be allocated among the Partners in a manner
consistent with the principles of Section 704(c) of the Code
to take into account the Unrealized Gain or Unrealized Loss
attributable to such property and the allocations thereof
pursuant to Exhibit B, and
(2) second, in the event such property was originally a
Contributed Property, be allocated among the Partners in a
manner consistent with Section 2.B(1) of this Exhibit C; and
(b) any item of Residual Gain or Residual Loss attributable to
an Adjusted Property shall be allocated among the Partners in the
same manner its correlative item of book gain or loss is
allocated pursuant to Section 6.1 of the Agreement and Section 1
of this Exhibit C.
(3) all other items of income, gain, loss and deduction shall be
allocated among the Partners in the same manner as their
correlative item of book gain or loss is allocated pursuant to
Section 6.1 of the Agreement and Section 1 of this Exhibit C.
C. For purposes of Sections 2.B(1) (a) and 2.B(2) (a) of this Exhibit C,
the General Partner shall have the authority, in its sole and absolute
discretion, to elect the method to be used under Regulations Section 1.704-3 to
take into account the variation between the fair market value and the adjusted
tax basis of a Contributed Property or Adjusted Property.
C-3
EXHIBIT D
NOTICE OF REDEMPTION
The undersigned hereby irrevocably (i) presents for redemption ______ units
of limited partnership interest ("Partnership Units") in CNL APF Partners, LP
(the "Partnership") in accordance with the terms of the Amended and Restated
Agreement of Limited Partnership of CNL APF Partners, LP and the "Redemption
Right" referred to in Section 8.6 thereof, (ii) surrenders such Partnership
Units and all right, title and interest therein, and (iii) surrenders herewith
any certificate or other writing evidencing the Partnership Units (and requests
that any Partnership Units so evidenced that are not redeemed be evidenced by
the issuance of a new certificate or writing) and (iv) directs that the "Cash
Amount" or "REIT Shares Amount" (as determined by APF), as defined in the
Agreement, deliverable upon exercise of the Redemption Right be delivered to the
address specified below, and if REIT Shares are to be delivered, such REIT
Shares be registered or placed in the name(s) and at the address(es) specified
below.
Dated: _____________________
Name of Limited Partner:
_______________________________________
(Signature of Limited Partner)
_______________________________________
(Street Address)
_______________________________________
(City) (State) (Zip Code)
Signature [attested] [witnessed] by:
_______________________________________
If REIT Shares are to be issued, issue to:
Name:
Address:
Please insert social security or identifying number:
D-1