EXHIBIT 10.43
SECOND AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
CAPITAL AUTOMOTIVE L.P.
TABLE OF CONTENTS
ARTICLE I - DEFINED TERMS........................................................................................ 2
ARTICLE II - PARTNERSHIP FORMATION AND IDENTIFICATION............................................................ 9
2.01 Name, Office and Registered Agent.............................................................. 9
2.02 Partners....................................................................................... 9
2.03 Term and Dissolution........................................................................... 9
2.04 Filing of Certificate and Perfection of Limited Partnership.................................... 10
ARTICLE III - BUSINESS OF THE PARTNERSHIP........................................................................ 10
ARTICLE IV - CAPITAL CONTRIBUTIONS AND ACCOUNTS.................................................................. 10
4.01 Capital Contributions.......................................................................... 10
4.02 Additional Capital Contributions and Issuances of Additional Partnership Interests............. 11
4.03 Loans.......................................................................................... 13
4.04 Capital Accounts............................................................................... 14
4.05 Percentage Interests........................................................................... 14
4.06 No Interest on Contributions................................................................... 14
4.07 Return of Capital Contributions................................................................ 14
4.08 No Third Party Beneficiary..................................................................... 14
4.09 Rights, Options, Warrants and Other Derivative Securities...................................... 15
ARTICLE V - PROFITS AND LOSSES; DISTRIBUTIONS.................................................................... 16
5.01 Allocation of Profit and Loss.................................................................. 16
5.02 Distribution of Cash........................................................................... 17
5.03 REIT Distribution Requirements................................................................. 19
5.04 No Right to Distributions in Kind.............................................................. 19
5.05 Limitations on Return of Capital Contributions................................................. 19
5.06 Distributions upon Liquidation................................................................. 19
5.07 Substantial Economic Effect.................................................................... 20
ARTICLE VI - RIGHTS, OBLIGATIONS AND POWERS
OF THE GENERAL PARTNER......................................................................... 20
6.01 Management of the Partnership.................................................................. 20
6.02 Delegation of Authority........................................................................ 22
6.03 Indemnification and Exculpation of Indemnitees................................................. 22
6.04 Liability of the General Partner............................................................... 24
6.05 Expenditures by the Partnership................................................................ 25
6.06 Outside Activities............................................................................. 25
6.07 Employment or Retention of Affiliates.......................................................... 25
6.08 General Partner Participation.................................................................. 26
6.09 Title to Partnership Assets.................................................................... 26
i
6.10 Miscellaneous.................................................................................. 26
ARTICLE VII - CHANGES IN GENERAL PARTNER......................................................................... 27
7.01 Transfer of the General Partner's Partnership Interest......................................... 27
7.02 Admission of a Substitute or Successor General Partner......................................... 28
7.03 Effect of Bankruptcy, Withdrawal, Death or Dissolution of a General Partner.................... 29
7.04 Removal of a General Partner................................................................... 29
ARTICLE VIII - RIGHTS AND OBLIGATIONS OF THE LIMITED PARTNERS.................................................... 30
8.01 Management of the Partnership.................................................................. 30
8.02 Power of Attorney.............................................................................. 30
8.03 Limitation on Liability of Limited Partners.................................................... 31
8.04 [Reserved]..................................................................................... 31
8.05 Redemption Right............................................................................... 31
8.06 Registration................................................................................... 33
8.07 "Piggyback"Registration Rights................................................................. 35
ARTICLE IX - TRANSFERS OF LIMITED PARTNERSHIP INTERESTS.......................................................... 39
9.01 Purchase for Investment........................................................................ 39
9.02 Restrictions on Transfer of Limited Partnership Interests...................................... 40
9.03 Admission of Substitute Limited Partner........................................................ 42
9.04 Rights of Assignees of Partnership Interests................................................... 43
9.05 Effect of Bankruptcy, Death, Incompetence or Termination of a Limited Partner.................. 43
9.06 Joint Ownership of Interests................................................................... 43
ARTICLE X - BOOKS AND RECORDS; ACCOUNTING; TAX MATTERS........................................................... 44
10.01 Books and Records.............................................................................. 44
10.02 Custody of Partnership Funds; Bank Accounts.................................................... 44
10.03 Fiscal and Taxable Year........................................................................ 44
10.04 Annual Tax Information and Report.............................................................. 45
10.05 Tax Matters Partner; Tax Elections; Special Basis Adjustments.................................. 45
10.06 Reports to Limited Partners.................................................................... 45
ARTICLE XI - AMENDMENT OF AGREEMENT; SALE OF ALL OR SUBSTANTIALLY
ALL OF COMPANY'S ASSETS.......................................................................................... 46
11.01 Amendment of Agreement......................................................................... 46
11.02 Sale of All or Substantially All of the Assets of the Partnership; Change in Control........... 46
ARTICLE XII - GENERAL PROVISIONS................................................................................. 47
12.01 Notices........................................................................................ 47
12.02 Survival of Rights............................................................................. 47
12.03 Additional Documents........................................................................... 47
ii
12.04 Severability.................................................................................. 47
12.05 Entire Agreement.............................................................................. 47
12.06 Pronouns and Plurals.......................................................................... 47
12.07 Headings...................................................................................... 47
12.08 Counterparts.................................................................................. 47
12.09 Governing Law................................................................................. 48
12.10 Guaranty by Company........................................................................... 48
EXHIBIT A - SCHEDULE OF PARTNERS, NUMBER OF PARTNERSHIP UNITS AND THE AGREED VALUE OF NON-CASH CAPITAL
CONTRIBUTIONS................................................................................. A-1
EXHIBIT B - RESERVED...................................................................................... B-1
EXHIBIT C - NOTICE OF EXERCISE OF REDEMPTION RIGHT........................................................ C-1
iii
SECOND AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
CAPITAL AUTOMOTIVE L.P.
THIS SECOND AMENDED AND RESTATED LIMITED PARTNERSHIP AGREEMENT OF CAPITAL
AUTOMOTIVE L.P. (this "Agreement"), is made this 2nd day of February, 1999 by
and among CAPITAL AUTOMOTIVE REIT, a Maryland real estate investment trust (in
its capacity as General Partner, the "General Partner"), and each of the Limited
Partners signatory hereto.
THE PARTIES ENTER THIS AGREEMENT on the basis of the following facts,
understandings and intentions:
A. Capital Automotive L.P. (the "Partnership") was formed as a limited
partnership under the laws of the State of Delaware by a Certificate of Limited
Partnership filed with the Secretary of State of Delaware on November 14, 1997.
The Partnership is governed by a Limited Partnership Agreement dated November
21, 1997, as First Amended and Restated as of February 19, 1998, as Second
Amended and Restated as of the date hereof, and as further amended, restated and
supplemented, from time to time, maintained at the offices of the Partnership.
B. Capital Automotive L.P. is intended to result in an umbrella
partnership real estate investment trust in which Capital Automotive REIT shall
be the general partner.
C. In order to fund certain Administrative Expenses, as defined herein,
the Partnership assumed the obligation to repay certain obligations of the
General Partner, and has otherwise agreed to reimburse the General Partner for
any and all Administrative Expenses in connection with the formation of Capital
Automotive REIT and the Partnership.
D. The parties have reached certain understandings with respect to their
relative sharing of the benefits and burdens to be derived from the business
operations of the Partnership, and desire to enter into this Agreement in order
to (i) set forth herein such understandings and agreements; and (ii) set forth
their rights, obligations and understandings with respect to the Partnership and
its business.
NOW, THEREFORE, in consideration of the foregoing, and the covenants and
agreements between the parties hereto, and of other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
ARTICLE I
DEFINED TERMS
The following defined terms used in this Agreement shall have the meanings
specified below:
"Act" means the Delaware Revised Uniform Limited Partnership Act, as it may
be amended from time to time.
"Additional Limited Partner" means a Person admitted to this Partnership as
a Limited Partner pursuant to Section 4.02 hereof.
"Administrative Expenses" means: (i) all administrative and operating costs
and expenses and other expenses incurred by the Partnership; (ii) all
administrative and operating costs and expenses of the General Partner,
including any salaries or other payments to trustees, officers and/or employees
of the General Partner, and any accounting and legal expenses of the General
Partner, all of which costs and expenses, the Partners have agreed, are expenses
of the Partnership and not the General Partner; and (iii) to the extent not
included in clause (ii) above, other REIT Expenses. The amount of any
Administrative Expenses shall be reduced by all amounts (including non-income
amounts (by way of example, and not in limitation, refinancing proceeds))
received or recorded by, or on account of, the General Partner, arising out of
(a) any bank account, investment account, separate account or similar account of
the General Partner, (b) any investment other than the General Partner's direct
investment in the Partnership, and (c) any other assets held by the General
Partner other than Partnership Interests.
"Affiliate" means, (i) any Person that, directly or indirectly, controls or
is controlled by or is under common control with such Person, (ii) any other
Person that owns, beneficially, directly or indirectly, 5% or more of the
outstanding capital stock, shares or equity interests of such Person, or (iii)
any officer, director, employee, partner or trustee of such Person or any Person
controlling, controlled by or under common control with such Person (excluding
trustees and persons serving in similar capacities who are not otherwise an
Affiliate of such Person). For the purposes of this definition, "control"
(including the correlative meanings of the terms "controlled by" and "under
common control with"), as used with respect to any Person, shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, through the ownership
of voting securities, partnership interests or other equity interests.
"Agreed Value" means the fair market value of a Partner's non-cash Capital
Contribution as agreed to by the Partners. For purposes of this Agreement, the
Agreed Value of a Partner's non-cash Capital Contribution shall be equal to (A)
the number of Partnership Units received by such Partner (a) in exchange for
Property or an interest therein, (b) in exchange for interests in any
partnership, limited liability company or other entity, (c) in connection with
the merger of any partnership, limited liability company or other entity with
and into the Partnership or any Partnership-owned Entity, or (d) in exchange for
any other non-cash asset so contributed, multiplied by (B) the price per Share
established for those Partnership Units in the contribution
2
agreement between the General Partner and such Partners. The names and addresses
of the Partners, number of Partnership Units issued to each Partner, and the
Agreed Value of non-cash Capital Contributions is set forth on EXHIBIT A.
"Agreement" means this Agreement of Limited Partnership of the Partnership,
as amended, restated and supplemented, from time to time.
"Capital Account" has the meaning provided in Section 4.04 hereof.
"Capital Automotive L.P." means Capital Automotive L.P., a Delaware limited
partnership.
"Capital Automotive REIT" means Capital Automotive REIT, a Maryland real
estate investment trust.
"Capital Contribution" means the total amount of cash, cash equivalents and
Agreed Value of non-cash items, including Property, contributed or agreed to be
contributed, as the context requires, to the Partnership, by a Partner. Any
reference to the Capital Contribution of a Partner shall include the Capital
Contribution made by a predecessor holder of the Partnership Interest of such
Partner. The paid-in Capital Contribution shall mean the cash, cash equivalents
or the Agreed Value of any non-cash items, including Property, as the case may
be, actually contributed by a Partner and received by the Partnership or any
Partnership-owned Entity.
"Capital Transaction" means the refinancing, sale, exchange, condemnation,
recovery of a damage award or insurance proceeds (other than business or rental
interruption insurance proceeds not reinvested in the repair or reconstruction
of Properties), or other disposition of any Property (or the Partnership's
direct or indirect interest therein).
"Cash Amount" means an amount of cash per Partnership Unit equal to the
value of the REIT Shares Amount on the date of receipt by the General Partner of
a Notice of Redemption. The value of the REIT Shares Amount shall be based on
the average of the daily market price of REIT Shares for the twenty consecutive
trading days immediately preceding the five trading days prior to the date of
receipt by the General Partner of a Notice of Redemption. The market price for
each such trading day shall be: (i) if the REIT Shares are listed or admitted to
trading on any securities exchange or Nasdaq, the closing sale price, regular
way, on such day, or if no such sale takes place on such day, the average of the
closing bid and asked prices, regular way, on such day, (ii) if the REIT Shares
are not listed or admitted to trading on any securities exchange or Nasdaq, the
last reported sale price on such day or, if no sale takes place on such day, the
average of the closing bid and asked prices on such day, as reported by a
reliable quotation source designated by the General Partner, or (iii) if the
REIT Shares are not listed or admitted to trading on any securities exchange or
Nasdaq and no such last reported sale price or closing bid and asked prices are
available, the average of the reported high bid and low asked prices on such
day, as reported by a reliable quotation source designated by the General
Partner, or if there shall be no bid and asked prices on such day, the average
of the high bid and low asked prices, as so reported, on the most recent day
(not more than 10 days prior to the date in question) for which
3
prices have been so reported; PROVIDED THAT if there are no bid and asked prices
reported during the ten days prior to the date in question, the value of the
REIT Shares shall be determined by the General Partner acting in good faith on
the basis of such quotations, if available, or other information as it
considers, in its reasonable judgment, appropriate. In the event the REIT Shares
Amount includes "rights" that a holder of REIT Shares would be entitled to
receive, then the value of such rights shall be determined by the Company acting
in good faith on the basis of such quotations, if available, or other
information as it considers, in its reasonable judgment, appropriate.
"Certificate" means any instrument or document that is required under the
laws of the State of Delaware, or any other jurisdiction in which the
Partnership conducts business, to be signed and sworn to by the Partners of the
Partnership (either by themselves or pursuant to the power-of-attorney granted
to the General Partner in Section 8.02 hereof) and filed for recording in the
appropriate public offices within the State of Delaware or such other
jurisdiction to perfect or maintain the Partnership as a limited partnership, to
effect the admission, withdrawal, or substitution of any Partner of the
Partnership, or to protect the limited liability of the Limited Partners as
limited partners under the laws of the State of Delaware or such other
jurisdiction.
"Charter" means the Declaration of Trust of the Company filed with the
State Department of Assessments and Taxation of the State of Maryland, as
amended, restated or supplemented, from time to time.
"Code" means the Internal Revenue Code of 1986, as amended, and as
hereafter amended from time to time. Reference to any particular provision of
the Code shall mean that provision in the Code at the date hereof and any
succeeding provision of the Code.
"Commission" means the U.S. Securities and Exchange Commission.
"Company" means Capital Automotive REIT, a Maryland real estate investment
trust.
"Conversion Factor" means 1.0, PROVIDED THAT in the event that the Company
(i) declares or pays 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 issued and outstanding on
the record date for such dividend, distribution, subdivision or combination
(assuming for such purposes that such dividend, distribution, subdivision or
combination has occurred as of such time), and the denominator of which shall be
the actual number of REIT Shares (determined without the above assumption)
issued and outstanding on such date. Any adjustment to the Conversion Factor
shall become effective immediately after the effective date of such event
retroactive to the record date, if any, for such event; PROVIDED, HOWEVER, that
if the Company receives a Notice of Redemption after the record date, but prior
to the effective date of such dividend, distribution, subdivision or
combination, the Conversion Factor shall be
4
determined as if the Company had received the Notice of Redemption immediately
prior to the record date for such dividend, distribution, subdivision or
combination.
"Defaulting Limited Partner" has the meaning provided in Section 5.02(b)
hereof.
"Effective Date" means the date of closing of the Initial Offering.
"Equity Incentive Plan" means the Capital Automotive REIT 1998 Equity
Incentive Plan, as such plan may be restated, amended and supplemented from time
to time, or any equity incentive plan, including share option plan, restrictive
equity plan or share purchase plan, adopted in the future by the Company.
"Event of Bankruptcy" as to any Person means the filing of a petition for
relief as to such Person as debtor or bankrupt under the Bankruptcy Code of 1978
or similar provision of law of any jurisdiction (except if such petition is
contested by such Person and has been dismissed within 90 days); insolvency or
bankruptcy of such Person as finally determined by a court proceeding; filing by
such Person of a petition or application to accomplish the same or for the
appointment of a receiver or a trustee for such Person or a substantial part of
his assets; commencement of any proceedings relating to such Person as a debtor
under any other reorganization, arrangement, insolvency, adjustment of debt or
liquidation law of any jurisdiction, whether now in existence or hereinafter in
effect, either by such Person or by another, provided that if such proceeding is
commenced by another, such Person indicates his approval of such proceeding,
consents thereto or acquiesces therein, or such proceeding is contested by such
Person and has not been finally dismissed within 90 days.
"EXHIBIT A" means Exhibit A, as amended from time to time, to this
Agreement.
"Funding Loan" has the meaning provided in Section 4.03 hereof.
"GAAP" means generally accepted accounting principles, consistently
applied.
"General Partner" means the Company and any Person who becomes a substitute
or additional General Partner as provided herein, and any of their successors as
General Partner. The Company shall hold that amount of its Partnership Interest
which equals one percent (1%) of the total Partnership Interests in the
Partnership as General Partner.
"General Partner Investment Loan" means indebtedness incurred by the
General Partner (including, without limitation a loan from the Partnership, any
Partnership-owned Entity, Subsidiary or from any other Person) in connection
with its investment (either directly or through one or more Subsidiary
corporations or other entities) in a Subsidiary or a Partnership-owned Entity or
otherwise deemed necessary to finance or otherwise carry out the business
objectives of the Company and the Partnership.
"General Partnership Interest" means the one percent (1%) general
partnership interest held by the General Partner.
5
"Incentive Rights" has the meaning set forth in Section 4.02 hereof.
"Indemnitee" means (i) any Person made a party to a proceeding by reason of
his status as the General Partner or an affiliate of the General Partner or a
trustee or officer of the Partnership or the General Partner or an affiliate of
the General Partner or the Partnership and (ii) such other Persons, including
employees or agents of the Partnership or General Partner, as the General
Partner may designate in good faith from time to time, in its reasonable
discretion, giving consideration to the interest of the Partnership.
"Independent Trustees" shall mean those individuals, who are not, and
within the last two years have not been, (i) executive officers or employees of
the Company or the Partnership or any Subsidiary thereof or Partnership-owned
entity, (ii) a holder or a group of affiliated holders of securities of the
Company, who own or have the right to acquire 10% or more of the REIT Shares and
or preferred shares of beneficial interest of the Company on a fully diluted and
converted basis, or an officer, director, trustee, member, employee or Affiliate
thereof or a person who is a designee or nominee of any such holder to the Board
of Trustees of the Company, or (iii) a partner or an officer, director, trustee,
member, employee or Affiliate of a Partner.
"Initial Public Offering Price" shall mean the initial public offering
price per share of $15.00 as set forth in the Prospectus.
"Initial Offering" means the initial offer and sale by the Company and the
purchase by the Underwriters (as defined in the Prospectus) of the common shares
of beneficial interest of the Company for sale to the public that closed on
February 19, 1998.
"Limited Partner" means any Person named as a Limited Partner on EXHIBIT A,
and any Person who becomes a Substitute or Additional Limited Partner, in such
Person's capacity as a Limited Partner in the Partnership. EXHIBIT A shall be
amended from time to time to include such substitute and additional Limited
Partners therein.
"Limited Partnership Interest" means the ownership interest of a Limited
Partner in the Partnership at any particular time, including the right of such
Limited Partner to any and all benefits to which such Limited Partner may be
entitled as provided in this Agreement and in the Act, together with the
obligations of such Limited Partner to comply with all the provisions of this
Agreement and of such Act.
"Loss" has the meaning provided in Section 5.01(f) hereof.
"Minimum Limited Partnership Interest" means the lesser of (i) 1% or (ii)
if the total Capital Contributions to the Partnership exceed $50 million, 1%
divided by the ratio of the total Capital Contributions to the Partnership to
$50 million; provided, however, that the Minimum Limited Partnership Interest
shall not be less than 0.2% at any time.
"Nasdaq" means The Nasdaq Stock Market.
6
"New Securities" has the meaning set forth in Section 4.02(a)(ii) hereof.
"Notice of Redemption" means the Notice of Exercise of Redemption Right
substantially in the form attached as EXHIBIT C hereto.
"Original Limited Partner" means ▇▇▇▇▇ ▇. ▇▇▇▇▇.
"Partner" means any General Partner and/or Limited Partner.
"Partner Nonrecourse Debt Minimum Gain" has the meaning set forth in
Regulations Section 1.704-2(i). A Partner's share of Partner Nonrecourse Debt
Minimum Gain shall be determined in accordance with Regulations Section 1.704-
2(i)(5).
"Partnership-owned Entity" means any partnership, limited liability company
or other entity in which the Partnership has an ownership interest.
"Partnership Interest" means an ownership interest in the Partnership, of
any class or series as may be outstanding from time to time, 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.
"Partnership Minimum Gain" has the meaning set forth in Regulations Section
1.704-2(d). In accordance with Regulations Section 1.704-2(d), the amount of
Partnership Minimum Gain is determined by first computing, for each Partnership
nonrecourse liability, any gain the Partnership would realize if it disposed of
the property subject to that liability for no consideration other than full
satisfaction of the liability, and then aggregating the separately computed
gains. A Partner's share of Partnership Minimum Gain shall be determined in
accordance with Regulations Section 1.704-2(g)(1).
"Partnership Record Date" means the record date established by the General
Partner for the distribution of cash pursuant to Section 5.02 hereof, which
record date shall be the same as the record date established by the Company 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
Interests, of any class or series that may be outstanding from time to time, of
all Partners issued hereunder. The holdings of Partnership Units by the
Partners is as set forth on EXHIBIT A.
"Percentage Interest" means the percentage ownership interest in the
Partnership of each Partner, as determined by dividing the Partnership Units
owned by a Partner by the total number of Partnership Units then outstanding, as
it may be required to be adjusted for the powers, rights and preferences of any
class or series of Partnership Unit that may be outstanding from time to time.
7
"Person" means any individual, partnership, corporation, limited liability
company, joint venture, trust or other entity.
"Profit" has the meaning provided in Section 5.01(f) hereof.
"Property" means any real estate property and improvements, or other
investments, assets or properties, whether tangible or intangible, including
securities, in which the Partnership or any Partnership-owned Entity holds any
direct or indirect ownership interest.
"Prospectus" means the final prospectus delivered to purchasers of the
Company's common shares of beneficial interest in the Initial Offering dated
February 12, 1998.
"Redeeming Partner" has the meaning provided in Section 8.05(a) hereof.
"Redemption Amount" means either the Cash Amount or the REIT Shares Amount,
as determined pursuant to Section 8.05(b) hereof.
"Redemption Eligibility Date" means (i) the date set forth opposite the
name of the Limited Partner on EXHIBIT A hereto, or (ii) with respect to any
Unit sold or issued after December 1, 1998, the date that is the earlier to
occur of the last business day of January or July that is at least 12 months
following the date of sale of such Unit. EXHIBIT A shall be amended from time
to time to include new Partners and the applicable Redemption Eligibility Date
shall be included on such EXHIBIT A.
"Redemption Right" has the meaning provided in Section 8.05(a) hereof.
"Redemption Shares" has the meaning provided in Section 8.06(a) hereof.
"Regulations" means the Federal Income Tax Regulations issued under the
Code, as amended and as hereafter amended from time to time. Reference to any
particular provision of the Regulations shall mean that provision of the
Regulations on the date hereof and any succeeding provision of the Regulations.
"REIT" means a real estate investment trust under Sections 856 through 859
of the Code.
"REIT Expenses" means (i) costs and expenses relating to the formation and
continuity of existence of the Company, including taxes, fees and assessments
associated therewith, any and all costs, expenses or fees payable to any
trustee, officer or employee of the Company, (ii) costs and expenses relating to
the public offering and registration of securities by the Company and all
statements, reports, fees and expenses incidental thereto, including
underwriting discounts and selling commissions applicable to any such offering
of securities, (iii) costs and expenses associated with the preparation and
filing of any periodic reports by the Company under federal, state or local laws
or regulations, including filings with the Commission, (iv) costs and expenses
associated with compliance by the Company with laws, rules and regulations
promulgated by
8
any regulatory body, including the Commission, and (v) all other operating or
administrative costs of the Company incurred in the ordinary course of its
business on behalf of the Partnership.
"REIT Share" means one common share of beneficial interest of the Company.
"REIT Shares Amount" shall mean a number of REIT Shares equal to the number
of Partnership Units offered for redemption by a Redeeming Partner, multiplied
by the Conversion Factor; PROVIDED THAT in the event the Company 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 securities or property (collectively, the "rights"), then the REIT
Shares Amount shall also include such rights that a holder of that number of
REIT Shares would be entitled to receive.
"Rule 144" has the meaning set forth in Section 8.06(a) hereof.
"SEC" means the Commission or the U. S. Securities and Exchange Commission.
"Securities Act" has the meaning set forth in Section 8.05(b) hereof.
"Service" means the Internal Revenue Service.
"Specified Redemption Date" means 30 days after the receipt by the Company
of the Notice of Redemption.
"Subsidiary" means, with respect to any Person, any corporation 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.
"Substitute Limited Partner" means any Person admitted to the Partnership
as a Limited Partner pursuant to Section 9.03 hereof.
"Transaction" has the meaning set forth in Section 7.01(c) hereof.
"Transfer" has the meaning set forth in Section 9.02(a) hereof.
ARTICLE II
PARTNERSHIP FORMATION AND IDENTIFICATION
2.01 NAME, OFFICE AND REGISTERED AGENT. The name of the Partnership shall
be Capital Automotive L.P. The specified office and place of business of the
Partnership shall be ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
The General Partner may at any time change the location of such office, provided
the General Partner gives notice to the Partners of any such change. The name
and address of the Partnership's registered agent is Corporation Service
Company, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇. The sole duty
9
of the registered agent as such is to forward to the Partnership any notice that
is served on him as registered agent.
2.02 PARTNERS.
(a) As of the date hereof, the General Partner of the Partnership
shall be Capital Automotive REIT, a Maryland real estate investment trust. Its
principal place of business shall be the same as that of the Partnership.
(b) The Limited Partners shall be those Persons identified as Limited
Partners in EXHIBIT A hereto. The Limited Partners (other than the Original
Limited Partner) hereby are admitted as Limited Partners.
2.03 TERM AND DISSOLUTION.
(a) The term of the Partnership shall continue in full force and
effect until December 31, 2073 except that the Partnership shall be dissolved
upon the happening of any of the following events:
(i) The occurrence of an Event of Bankruptcy as to a General
Partner or the dissolution, death or withdrawal of a General Partner
unless the business of the Partnership is continued pursuant to
Section 7.03(b) hereof; PROVIDED THAT if a General Partner is on the
date of such occurrence a partnership, the dissolution of such
General Partner as a result of the dissolution, death, withdrawal,
removal or Event of Bankruptcy of a partner in such partnership shall
not be an event of dissolution of the Partnership if the business of
such General Partner is continued by the remaining partner or
partners, either alone or with additional partners, and such General
Partner and such partners comply with any other applicable
requirements of this Agreement;
(ii) The passage of 90 days after the sale or other disposition
of all or substantially all the assets of the Partnership; (PROVIDED
THAT if the Partnership receives an installment obligation as
consideration for such sale or other disposition, the Partnership
shall continue, unless sooner dissolved under the provisions of this
Agreement, until such time as such note or notes are paid in full);
(iii) The redemption of all Limited Partnership Interests (other
than any of such interests held by the Company); or
(iv) The election by the General Partner that the Partnership
should be dissolved.
10
(b) Upon dissolution of the Partnership (unless the business of the
Partnership is continued pursuant to Section 7.03(b) hereof), the General
Partner (or its trustee, receiver, successor or legal representative) shall
amend or cancel the Certificate and liquidate the Partnership's assets and apply
and distribute the proceeds thereof in accordance with Section 5.06 hereof.
Notwithstanding the foregoing, the liquidating General Partner may either (i)
defer liquidation of, or withhold from distribution, for a reasonable time, any
assets of the Partnership (including those necessary to satisfy the
Partnership's debts and obligations), or (ii) distribute the assets to the
Partners in kind.
2.04 FILING OF CERTIFICATE AND PERFECTION OF LIMITED PARTNERSHIP. The
General Partner shall execute, acknowledge, record and file at the expense of
the Partnership, the Certificate and any and all amendments thereto and all
requisite fictitious name statements and notices in such places and
jurisdictions as may be necessary to cause the Partnership to be treated as a
limited partnership under, and otherwise to comply with, the laws of each state
or other jurisdiction in which the Partnership conducts business or any Property
is located.
ARTICLE III
BUSINESS OF THE PARTNERSHIP
The purpose and nature of the business to be conducted by the Partnership
is (i) to conduct any business that may be lawfully conducted by a limited
partnership organized pursuant to the Act, provided, however, that such business
shall be limited to and conducted in such a manner as to permit the Company at
all times to qualify as a REIT, unless the Company otherwise ceases to qualify
as a REIT, (ii) to enter into any partnership, joint venture or other similar
arrangement to engage in any of the foregoing or the ownership of interests in
any entity engaged in any of the foregoing and (iii) to do anything necessary or
incidental to the foregoing. The General Partner shall also be empowered to do
any and all acts and things necessary or prudent to ensure that the Partnership
will not be classified as a "publicly traded partnership" for purposes of
Section 7704 of the Code.
ARTICLE IV
CAPITAL CONTRIBUTIONS AND ACCOUNTS
4.01 CAPITAL CONTRIBUTIONS. The Company, in its capacity as General
Partner and as a Limited Partner shall, subject to Section 4.02(b), contribute
to the capital of the Partnership cash in an amount set forth on EXHIBIT A,
which shall represent the gross proceeds of the Initial Offering. The Limited
Partners, other than the Company, shall contribute to the capital of the
Partnership certain real property interests in one or more of the Properties as
set forth opposite their names on EXHIBIT A. The Agreed Values of the Limited
Partners' ownership interests in the Properties that are contributed to the
Partnership are as set forth opposite their names on EXHIBIT A.
11
4.02 ADDITIONAL CAPITAL CONTRIBUTIONS AND ISSUANCES OF ADDITIONAL
PARTNERSHIP INTERESTS. Except as provided in Sections 4.02 or 4.03, the
Partners shall have no right or obligation to make any additional Capital
Contributions or loans to the Partnership. The General Partner may contribute
additional capital to the Partnership, from time to time, and receive additional
Partnership Interests in respect thereof, in the manner contemplated in this
Section 4.02.
(a) ISSUANCES OF ADDITIONAL PARTNERSHIP INTERESTS.
(i) GENERAL. The General Partner is hereby authorized to cause
the Partnership to issue such additional Partnership Interests in the form
of Partnership Units for any Partnership purpose at any time or from time
to time, to the Partners (including the Company) or to other Persons for
such consideration and on such terms and conditions as shall be established
by the General Partner in its sole and absolute discretion, all without the
approval of any Limited Partners. Any additional Partnership Interests
issued thereby may be issued in one or more classes, or one or more series
of any of such classes, with such designations, preferences and relative,
participating, optional or other special rights, powers and duties,
including rights, powers and duties senior to Limited Partnership Interests
represented by Partnership Units, all as shall be determined by the
General Partner in its sole and absolute discretion and without the
approval of any Limited Partner, subject to Delaware law, including,
without limitation, (i) the allocation of items of Partnership income,
gain, loss, deduction and credit to each such class or series of
Partnership Interests; (ii) the right of each such class or series of
Partnership Interests to share in Partnership distributions; and (iii) the
rights of each such class or series of Partnership Interests upon
dissolution and liquidation of the Partnership; PROVIDED, HOWEVER, that no
additional Partnership Interests shall be issued by the Partnership to the
Company unless either:
(1) the additional Partnership Interests are issued in
connection with an issuance of shares of or other interests in the Company,
which shares or interests have designations, preferences and other rights,
all such that the economic interests are substantially similar to the
designations, preferences and other rights of the additional Partnership
Interests issued to the Company by the Partnership in accordance with this
Section 4.02 and (B) except as provided in Section 4.02(a)(ii) hereof, the
Company shall make a Capital Contribution to the Partnership in an amount
equal to the proceeds raised in connection with the issuance of such shares
of or other interests in the Company, or
(2) the additional Partnership Interests are issued to all
Partners in proportion to their respective Percentage Interests.
Without limiting the foregoing, the General Partner is expressly
authorized to cause the Partnership to issue Partnership Units for
less than fair market value,
12
under the Equity Incentive Plan, pursuant to the dealer warrants
described in the Prospectus, or otherwise, so long as the General
Partner concludes in good faith that such issuance is in the best
interests of the General Partner, the Company and the Partnership.
(ii) UPON OFFER AND SALE OF NEW SECURITIES. After the Initial
Offering, the Company shall not offer and sell any additional REIT Shares
(other than REIT Shares offered and sold in connection with a redemption
pursuant to Section 8.05 hereof) 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 (A) the General Partner shall cause the
Partnership to issue Partnership Interests to the Company or rights,
options, warrants or convertible or exchangeable securities of the
Partnership having designations, preferences and other rights, all such
that the economic interests are substantially similar to those of the New
Securities, and (B) the Company contributes the proceeds from the offering
and sale of such New Securities (including property) and from the exercise
of rights contained in such New Securities to the Partnership, or,
alternatively, (C) the New Securities are issued to all shareholders of the
Company in proportion to their respective ownership interest in the
Company; PROVIDED, HOWEVER, that the Company is allowed to issue New
Securities in connection with an acquisition of property to be held
directly by the Company, but if and only if, such direct acquisition and
issuance of New Securities have been approved and determined to be in the
best interests of the Company and the Partnership by a majority of the
Independent Trustees. Without limiting the foregoing, the Company is
expressly authorized to issue New Securities for less than fair market
value, and 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 best interests of the
General Partner 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) the Company contributes all proceeds from such issuance
to the Partnership. By way of example, in the event the Company issues
REIT Shares for a cash purchase price and contributes all of the proceeds
of such issuance, if any, and the exercise price thereof, to the
Partnership as required hereunder, the Company shall be issued a number of
additional Partnership Units equal to the product of (A) the number of such
REIT Shares issued by the Company the proceeds of which were so
contributed, multiplied by (B) a fraction, the numerator of which is one
hundred percent (100%), and the denominator of which is the Conversion
Factor in effect on the date of such contribution.
13
(b) CERTAIN DEEMED CONTRIBUTIONS OF PROCEEDS OF OFFERS AND SALES OF
REIT SHARES. In connection with any and all offers and sales of REIT Shares,
the Company shall contribute all of the proceeds raised in connection with such
offers and sales as Capital Contributions to the Partnership, PROVIDED THAT if
the proceeds actually received by and contributed by the Company are less than
the gross proceeds of such offers and sales as a result of any underwriter's
discount, commissions, offering or other expenses paid or incurred in connection
with such offering and sale, then the Company shall be deemed to have made a
Capital Contribution to the Partnership in the amount of the gross proceeds of
such offering and sale and the Partnership shall be deemed simultaneously to
have paid such offering expenses or other Administrative Expenses as an expense
of the Partnership in connection with the required issuance of additional
Partnership Units to the Company for such Capital Contribution pursuant to
Section 4.02(a) hereof. Any such offering expenses or other Administrative
Expenses in connection with the offering, as well as other items of income,
gain, deduction or loss may be specially allocated among the Partners so that
each Partner's capital account shall bear the same relationship to the aggregate
of the Partners' capital accounts as such Partner's Percentage Interest bears to
the aggregate of the Partners' Percentage Interests.
(c) MINIMUM LIMITED PARTNERSHIP INTEREST. In the event that either a
redemption pursuant to Section 8.05 hereof or an additional Capital Contribution
by the Company would result in all Limited Partners (other than the Company in
its capacity as a Limited Partner), in the aggregate, owning less than the
Minimum Limited Partnership Interest, the General Partner and the Limited
Partners shall form another partnership and contribute sufficient Limited
Partnership Interests together with such other Limited Partners so that the
Limited Partners (other than the Company in its capacity as a Limited Partner)
own at least the Minimum Limited Partnership Interest.
(d) WARRANTS. No warrant issued by the Company or the Partnership
may be exercised for Partnership Units if, in the opinion of legal counsel for
the Partnership, the issuance of such Partnership Units would result in the
Partnership's being treated as an association taxable as a corporation (other
than a qualified REIT subsidiary within the meaning of Section 856(i) of the
Code).
4.03 LOANS. The General Partner may from time to time borrow funds from a
third party and advance such funds to the Partnership or any Partnership-owned
Entity as a loan or capital contribution ("Funding Loan"), including, without
limitation, a Funding Loan that is convertible into REIT Shares or otherwise
constitutes a class of New Securities ("Convertible Funding Loans"), PROVIDED
THAT any such funds must first be obtained by the General Partner from a third
party lender, and then all of such funds must be loaned by the General Partner
to the Partnership or Partnership-owned Entity on the same terms and conditions,
including principal amount, interest rate, repayment schedule and costs and
expenses, as shall be applicable with respect to or incurred in connection with
such loan with such third party lender. Notwithstanding anything herein to the
contrary, the General Partner shall not be obligated to lend the net proceeds of
any Funding Loan or Convertible Funding Loan to the Partnership in a manner that
would be inconsistent with the General Partner's ability to remain qualified as
a REIT. In addition, the General Partner may from time to time enter into
General Partner Investment Loans. Except for Funding Loans or General Partner
14
Investment Loans, the General Partner shall not incur any indebtedness for
borrowed funds; provided, however, that any loan proceeds received by the
General Partner may be distributed to the Company and, in turn, to the Company's
shareholders or other equity holders if such loan and distribution have been
approved and determined to be necessary by a majority of the Independent
Trustees to enable the Company to maintain its status as a REIT under Sections
856-859 of the Code.
4.04 CAPITAL ACCOUNTS. A separate capital account (a "Capital Account")
shall be established and maintained for each Partner in accordance with
Regulations Section 1.704-1(b)(2)(iv). If (i) a new or existing Partner acquires
an additional Partnership Interest in exchange for more than a de minimis
Capital Contribution, (ii) the Partnership distributes to a Partner more than a
de minimis amount of Partnership property as consideration for a Partnership
Interest, or (iii) the Partnership is liquidated within the meaning of
Regulation Section 1.704-l(b)(2)(ii)(g), the General Partner shall revalue the
property of the Partnership to its fair market value (as determined by the
General Partner and taking into account Section 7701(g) of the Code) in
accordance with Regulations Section 1.704-l(b)(2)(iv)(f). When the Partnership's
property is revalued by the General Partner, the Capital Accounts of the
Partners shall be adjusted in accordance with Regulations Sections 1.704-
1(b)(2)(iv)(f) and (g), which generally require such Capital Accounts to be
adjusted to reflect the manner in which the unrealized gain or loss inherent in
such property (that has not been reflected in the Capital Accounts previously)
would be allocated among the Partners pursuant to Section 5.01 if there were a
taxable disposition of such property for its fair market value (as determined by
the General Partner and taking into account Section 7701(g) of the Code) on the
date of the revaluation.
4.05 PERCENTAGE INTERESTS. If the number of outstanding Partnership Units
increases or decreases during a taxable year, a Partner's Partnership Interest
shall be adjusted to reflect its new Percentage Interest, as necessary, to give
effect to such increase or decrease. If the Partners' Partnership Interests are
adjusted to reflect new Percentage Interests pursuant to this Section 4.05, the
Profits and Losses for the taxable year in which the adjustment occurs shall be
allocated between the part of the year ending on the day of the adjustment and
the part of the year beginning on the following day either (i) as if the taxable
year had ended on the date of the adjustment or (ii) based on the number of days
in each part. The General Partner, in its sole discretion, shall determine which
method shall be used to allocate Profits and Losses for the taxable year in
which the adjustment occurs. The allocation of Profits and Losses for the
earlier part of the year shall be based on the Percentage Interests before
adjustment, and the allocation of Profits and Losses for the later part shall be
based on the adjusted Percentage Interests.
4.06 NO INTEREST ON CONTRIBUTIONS. No Partner shall be entitled to
interest on its Capital Contribution.
4.07 RETURN OF CAPITAL CONTRIBUTIONS. No Partner shall be entitled to
withdraw any part of its Capital Contribution or its Capital Account or to
receive any distribution from the Partnership, except as specifically provided
in this Agreement. Except as otherwise provided herein, there shall be no
obligation to return to any Partner or withdrawn Partner any part of such
Partner's Capital Contribution for so long as the Partnership continues in
existence.
15
4.08 NO THIRD PARTY BENEFICIARY. No creditor or other third party having
dealings with the Partnership and/or any Partnership-owned Entity, as the case
may be, shall have the right to enforce the right or obligation of any Partner
to make Capital Contributions or loans or to pursue any other right or remedy
hereunder or at law or in equity, it being understood and agreed that the
provisions of this Agreement shall be solely for the benefit of, and may be
enforced solely by, the parties hereto and their respective successors and
assigns. None of the rights or obligations of the Partners herein set forth to
make Capital Contributions or loans to the Partnership or any Partnership-owned
Entity, as the case may be, shall be deemed an asset of the Partnership and/or
Partnership-owned entity, as the case may be, for any purpose by any creditor or
other third party, nor may such rights or obligations be sold, transferred or
assigned by the Partnership or any Partnership-owned Entity, as the case may be,
or pledged or encumbered by the Partnership or any Partnership-owned Entity, as
the case may be, to secure any debt or other obligation of the Partnership
and/or Partnership-owned Entity, as the case may be, or of any of the Partners.
In addition, it is the intent of the parties hereto that no distribution to any
Partner shall be deemed a return of capital, money or other property in
violation of the Act.
4.09 RIGHTS, OPTIONS, WARRANTS AND OTHER DERIVATIVE SECURITIES
(a) If grants of REIT Shares are made in connection with an Equity
Incentive Plan:
(i) The Company shall contribute, as soon as practicable after
such grant to the Partnership (to be thereafter taken into account for the
purposes of calculating any cash distributable to the Partners), an amount
equal to the price, if any, paid to the Company by the party receiving such
REIT Shares;
(ii) The Partnership shall issue to the Company an aggregate
number of additional Partnership Units equal to the product of (1) the
number of such REIT Shares issued by the Company, multiplied by (2) a
fraction, the numerator of which is 100%, and the denominator of which is
the Conversion Factor in effect on the date of such contribution; and
(iii) The Company's Percentage Interest and the Percentage
Interests of the other Limited Partners shall be adjusted as set forth in
Section 4.02.
(b) If rights, options or warrants granted, offered or sold by the
Company are exercised:
(i) The Company shall contribute, as soon as practicable after
such exercise, to the Partnership (to be thereafter taken into account for
purposes of calculating any cash distributable to the Partners), an amount
equal to the exercise price, if any, paid to the Company by the exercising
party in connection with the exercise of such right, option or warrant;
16
(ii) The Partnership shall issue to the Company as a
reimbursement of a Partnership expense pursuant to Section 6.05 an
aggregate number of additional Partnership Units equal to the product of
(1) the number of REIT Shares issued by the Company in satisfaction of such
exercised option or warrant, multiplied by (2) a fraction, the numerator of
which is 100%, and the denominator of which is the Conversion Factor in
effect on the date of such contribution; and
(iii) The Company's Percentage Interest and the Percentage
Interests of the other Limited Partners shall be adjusted as set forth in
Section 4.02.
(c) If the Company grants any share appreciation rights, performance
share awards or other similar rights ("Incentive Rights"), then simultaneously,
the Partnership shall grant the Company corresponding and economically
equivalent rights with respect to Partnership Units. Consequently, upon the
cash payment by the Company pursuant to such Incentive Rights, the Partnership
shall make an equal cash payment to the Company as a reimbursement of a
Partnership expense pursuant to Section 6.05 hereof.
ARTICLE V
PROFITS AND LOSSES; DISTRIBUTIONS
5.01 ALLOCATION OF PROFIT AND LOSS.
(a) GENERAL. Except as otherwise provided in this Section 5.01 and
Section 4.02(b), Profit and Loss of the Partnership for each fiscal year of the
Partnership shall be allocated among the Partners in accordance with their
respective Percentage Interests.
(b) MINIMUM GAIN CHARGEBACK. Notwithstanding any provision to the
contrary, (i) any expense of the Partnership that is a "nonrecourse deduction"
within the meaning of Regulations Section 1.704-2(b)(1) shall be allocated in
accordance with the Partners' respective Percentage Interests, (ii) any expense
of the Partnership that is a "partner nonrecourse deduction" within the meaning
of Regulations Section 1.704-2(i)(2) shall be allocated in accordance with
Regulations Section 1.704-2(i)(1), (iii) if there is a net decrease in
Partnership Minimum Gain within the meaning of Regulations Section 1.704-2(f)(1)
for any Partnership taxable year, items of gain and income shall be allocated
among the Partners in accordance with Regulations Section 1.704-2(f) and the
ordering rules contained in Regulations Section 1.704-2(j), and (iv) if there is
a net decrease in Partner Nonrecourse Debt Minimum Gain within the meaning of
Regulations Section 1.704-2(i)(4) for any Partnership taxable year, items of
gain and income shall be allocated among the Partners in accordance with
Regulations Section 1.704-2(i)(4) and the ordering rules contained in
Regulations Section 1.704-2(j). A Partner's "interest in partnership profits"
for purposes of determining its share of the nonrecourse liabilities of the
Partnership within the meaning of Regulations Section 1.752-3(a)(3) shall be
such Partner's Percentage Interest.
17
(c) QUALIFIED INCOME OFFSET. If a Limited Partner receives in any
taxable year an adjustment, allocation, or distribution described in
subparagraphs (4), (5), or (6) of Regulations Section 1.704-l(b)(2)(ii)(d) that
causes or increases a negative balance in such Partner's Capital Account that
exceeds the sum of such Partner's shares of Partnership Minimum Gain and Partner
Nonrecourse Debt Minimum Gain, as determined in accordance with Regulations
Sections 1.704-2(g) and 1.704-2(i), such Partner shall be allocated specially
for such taxable year (and, if necessary, later taxable years) items of income
and gain in an amount and manner sufficient to eliminate such negative Capital
Account balance as quickly as possible as provided in Regulations Section 1.704-
l(b)(2)(ii)(d). After the occurrence of an allocation of income or gain to a
Limited Partner in accordance with this Section 5.01(c), to the extent permitted
by Regulations Section 1.704-l(b), items of expense or loss shall be allocated
to such Partner in an amount necessary to offset the income or gain previously
allocated to such Partner under this Section 5.01(c).
(d) CAPITAL ACCOUNT DEFICITS. Loss shall not be allocated to a
Limited Partner to the extent that such allocation would cause a deficit in such
Partner's Capital Account (after reduction to reflect the items described in
Regulations Section 1.704-1(b)(2)(ii)(d)(4), (5) and (6)) to exceed the sum of
such Partner's shares of Partnership Minimum Gain and Partner Nonrecourse Debt
Minimum Gain. Any Loss in excess of that limitation shall be allocated to the
General Partner. After the occurrence of an allocation of Loss to the General
Partner in accordance with this Section 5.01(d), to the extent permitted by
Regulations Section 1.704-l(b), Profit shall be allocated to such Partner in an
amount necessary to offset the Loss previously allocated to such Partner under
this Section 5.01(d).
(e) ALLOCATIONS BETWEEN TRANSFEROR AND TRANSFEREE. If a Partner
transfers any part or all of its Partnership Interest, and the transferee is
admitted as a substitute Partner as provided herein, the distributive shares of
the various items of Profit and Loss allocable among the Partners during such
fiscal year of the Partnership shall be allocated between the transferor and the
substitute Partner either (i) as if the Partnership's fiscal year had ended on
the date of the transfer, or (ii) based on the number of days of such fiscal
year that each was a Partner without regard to the results of Partnership
activities in the respective portions of such fiscal year in which the
transferor and the transferee were Partners. The General Partner, in its sole
discretion, shall determine which method shall be used to allocate the
distributive shares of the various items of Profit and Loss between the
transferor and the substitute Partner.
(f) DEFINITION OF PROFIT AND LOSS. "Profit" and "Loss" and any items
of income, gain, expense, or loss referred to in this Agreement shall be
determined in accordance with federal income tax accounting principles, as
modified by Regulations Section 1.704-l(b)(2)(iv), except that Profit and Loss
shall not include items of income, gain and expense that are specially allocated
pursuant to Section 5.01(b), 5.01(c), or 5.01(d). All allocations of income,
Profit, gain, Loss, and expense (and all items contained therein) for federal
income tax purposes shall be identical to all allocations of such items set
forth in this Section 5.01, except as otherwise required by Section 704(c) of
the Code and Regulations Section 1.704-l(b)(4). The General Partner shall have
the authority to elect the method to be used by the Partnership for
18
allocating items of income, gain, and expense as required by Section 704(c) of
the Code and such election shall be binding on all Partners.
5.02 DISTRIBUTION OF CASH.
(a) The General Partner shall distribute cash on a quarterly (or, at
the election of the General Partner, more frequent) basis, in an amount
determined by the General Partner in its sole discretion, to the Partners who
are Partners on the Partnership Record Date with respect to such quarter (or
other distribution period) in accordance with their respective Percentage
Interests on the Partnership Record Date; PROVIDED, HOWEVER, that if a new or
existing Partner acquires an additional Partnership Interest in exchange for a
Capital Contribution on any date other than a Partnership Record Date, the cash
distribution attributable to such additional Partnership Interest relating to
the Partnership Record Date next following the issuance of such additional
Partnership Interest shall be reduced in the proportion to (i) the number of
days that such additional Partnership Interest is held by such Partner bears to
(ii) the number of days between such Partnership Record Date and the immediately
preceding Partnership Record Date.
(b) Notwithstanding any other provision of this Agreement, the
General Partner is authorized to take any action that it determines to be
necessary or appropriate to cause the Partnership to comply with any withholding
requirements established under the Code or any other federal, state or local law
including, without limitation, pursuant to Sections 1441, 1442, 1445 and 1446 of
the Code. To the extent that the Partnership is required to withhold and pay
over to any taxing authority any amount resulting from the allocation or
distribution of income to the Partner or assignee (including by reason of
Section 1446 of the Code), either (i) if the actual amount to be distributed to
the Partner or assignee equals or exceeds the amount required to be withheld by
the Partnership, the amount withheld shall be treated as a distribution of cash
in the amount of such withholding to such Partner or assignee, or (ii) if the
actual amount to be distributed to the Partner or assignee is less than the
amount required to be withheld by the Partnership, the amount required to be
withheld shall be treated as a loan (a "Partnership Loan") from the Partnership
to the Partner on the day the Partnership pays over such amount to the
applicable taxing authority. A Partnership Loan shall be repaid through
withholding by the Partnership with respect to subsequent distributions to the
applicable Partner or assignee. In the event that a Limited Partner or assignee
(collectively, a "Defaulting Limited Partner") fails to pay any amount owed to
the Partnership with respect to the Partnership Loan within 15 days after demand
for payment thereof is made by the Partnership on the Defaulting Limited
Partner, the General Partner, in its sole discretion, may elect to make the
payment to the Partnership on behalf of such Defaulting Limited Partner. In such
event, on the date of payment, the General Partner shall be deemed to have
extended a loan (a "General Partner Loan") to the Defaulting Limited Partner in
the amount of the payment made by the General Partner and shall succeed to all
rights and remedies of the Partnership against the Defaulting Limited Partner as
to that amount. Without limitation, the General Partner shall have the right to
receive any distributions that otherwise would be made by the Partnership to the
Defaulting Limited Partner until such time as the General Partner Loan has been
paid in full, and any such distributions so received by the General Partner
shall be treated as having been received by the Defaulting Limited Partner and
immediately paid to the General Partner.
19
Any amounts treated as a Partnership Loan or a General Partner Loan
pursuant to this Section 5.02(b) shall bear interest at the lesser of (i) the
base rate on corporate loans at large United States money center commercial
banks, as published from time to time in THE WALL STREET JOURNAL, or (ii) the
maximum lawful rate of interest on such obligation, such interest to accrue from
the date the Partnership or the General Partner, as applicable, is deemed to
extend the loan until such loan is repaid in full.
(c) In no event may a Partner receive a distribution of cash with
respect to a Partnership Unit if such Partner is entitled to receive a dividend
with respect to a REIT Share for which all or part of such Partnership Unit has
been or will be exchanged pursuant to Section 8.05(a).
5.03 REIT DISTRIBUTION REQUIREMENTS. The General Partner shall use its
reasonable efforts to cause the Partnership to distribute amounts sufficient to
enable the Company (i) to meet its distribution requirement for qualification as
a REIT as set forth in Section 857(a)(1) of the Code and (ii) to avoid any
federal income or excise tax liability imposed by the Code.
5.04 NO RIGHT TO DISTRIBUTIONS IN KIND. No Partner shall be entitled to
demand property other than cash in connection with any distributions by the
Partnership.
5.05 LIMITATIONS ON RETURN OF CAPITAL CONTRIBUTIONS. Notwithstanding any of
the provisions of this Article V, no Partner shall have the right to receive and
the General Partner shall not have the right to make, a distribution which
includes a return of all or part of a Partner's Capital Contributions, unless
after giving effect to the return of a Capital Contribution, the sum of all
liabilities of the Partnership, other than the liabilities to a Partner for the
return of his Capital Contribution, does not exceed the fair market value of the
Partnership's assets.
5.06 DISTRIBUTIONS UPON LIQUIDATION.
(a) Upon liquidation of the Partnership, after payment of, or
adequate provision for, debts and obligations of the Partnership, including any
Partner loans, any remaining assets of the Partnership shall be distributed to
all Partners with positive Capital Accounts in accordance with their respective
positive Capital Account balances. For purposes of the preceding sentence, the
Capital Account of each Partner shall be determined after all adjustments made
in accordance with Sections 5.01 and 5.02 resulting from Partnership operations
and from all sales and dispositions of all or any part of the Partnership's
assets. Any distributions pursuant to this Section 5.06 should be made by the
end of the Partnership's taxable year in which the liquidation occurs (or, if
later, within 90 days after the date of the liquidation). To the extent deemed
advisable by the General Partner, appropriate arrangements (including the use of
a liquidating trust) may be made to assure that adequate funds are available to
pay any contingent debts or obligations.
20
(b) If the General Partner has a negative balance in its Capital
Account following a liquidation of the Partnership, as determined after taking
into account all Capital Account adjustments in accordance with Sections 5.01
and 5.02 resulting from Partnership operations and from all sales and
dispositions of all or any part of the Partnership's assets, the General Partner
shall contribute to the Partnership an amount of cash equal to the negative
balance in its Capital Account and such cash shall be paid or distributed by the
Partnership to creditors, if any, and then to the Limited Partners in accordance
with Section 5.06(a). Such contribution by the General Partner shall be made by
the end of the Partnership's taxable year in which the liquidation occurs (or,
if later, within 90 days after the date of the liquidation).
5.07 SUBSTANTIAL ECONOMIC EFFECT. It is the intent of the Partners that
the allocations of Profit and Loss under this Agreement have substantial
economic effect (or be consistent with the Partners' interests in the
Partnership in the case of the allocation of losses attributable to nonrecourse
debt) within the meaning of Section 704(b) of the Code as interpreted by the
Regulations promulgated pursuant thereto. Article V and other relevant
provisions of this Agreement shall be interpreted in a manner consistent with
such intent.
ARTICLE VI
RIGHTS, OBLIGATIONS AND POWERS OF THE GENERAL PARTNER
6.01 MANAGEMENT OF THE PARTNERSHIP.
(a) Except as otherwise expressly provided in this Agreement, the
General Partner shall have full, complete and exclusive discretion to manage and
control the business of the Partnership for the purposes herein stated, and
shall make all decisions affecting the business and assets of the Partnership.
Subject to the restrictions specifically contained in this Agreement, the powers
of the General Partner shall include, without limitation, the authority to take
the following actions, directly or indirectly, on behalf of the Partnership or
for the benefit of the Partnership through any Partnership-owned Entity or
otherwise:
(i) to acquire, purchase, own, lease and dispose of any real
property and any other property or assets that the General Partner
determines are necessary or appropriate or in the best interests of the
business of the Partnership;
(ii) subject to the terms of any applicable lease, to construct
buildings and make other improvements on any Properties;
(iii) to borrow money, issue evidences of indebtedness in
connection therewith, refinance, guarantee, increase the amount of, modify,
amend or change the terms of, or extend the time for the payment of, any
indebtedness or obligation, and secure such indebtedness by mortgage, deed
of trust, pledge or other lien on any Property;
(iv) to pay, either directly or by reimbursement, for all
operating costs and general administrative expenses consistent with this
Agreement;
21
(v) to lease all or any portion of any Property, whether or
not the terms of such leases extend beyond the termination date of the
Partnership or any Partnership-owned Entity, as the case may be, and
whether or not any portion of the Property so leased is to be occupied by
the lessee, or, in turn, subleased in whole or in part to others, for such
consideration and on such terms as the General Partner may determine;
(vi) to prosecute, defend, arbitrate, settle or compromise any
and all claims or Liabilities in favor of or against the Partnership or any
Partnership-owned Entity, as the case may be, on such terms and in such
manner as the General Partner may reasonably determine, and similarly to
prosecute, defend, arbitrate, settle or compromise any litigation with
respect to the Partners, the Partnership, any Partnership-owned Entity or
any Property; PROVIDED, HOWEVER, that the General Partner may not, without
the consent of all of the Partners, confess a judgment against the
Partnership;
(vii) to file applications, communicate, and otherwise deal with
any and all governmental agencies;
(viii) to make or revoke any election permitted or required by
any taxing authority;
(ix) to maintain such insurance coverage for public liability,
fire and casualty, and any and all other insurance in such amounts and such
types, as it shall determine from time to time;
(x) to determine whether or not to apply any insurance
proceeds for any Property to the restoration of such Property or to
distribute the same;
(xi) to retain legal counsel, accountants, consultants, real
estate brokers, and such other persons, as the General Partner may deem
necessary or appropriate and to pay therefor such reasonable remuneration
as the General Partner may deem reasonable and proper;
(xii) to retain other services of any kind or nature and to pay
therefor such remuneration as the General Partner may deem reasonable and
proper;
(xiii) to negotiate and conclude agreements with respect to any
of the rights, powers and authority conferred upon the General Partner;
(xiv) to maintain accurate accounting records and to file
promptly all federal, state and local income tax returns;
22
(xv) to distribute cash or other assets in accordance with
this Agreement;
(xvi) to form or acquire an interest in, and contribute
Property to, any limited or general partnerships, joint ventures, limited
liability companies or other entities or enter into any other relationships
that it deems desirable (including, without limitation, the acquisition of
interests in, and the contributions of Property to, its Partnership-owned
Entities or any other Person in which it has an ownership interest from
time to time);
(xvii) to establish Partnership reserves for working capital,
capital expenditures, contingent liabilities, or any other valid
Partnership purpose; and
(xviii) to take such other action, execute, acknowledge, swear
to or deliver such other documents and instruments, and perform any and all
other acts the General Partner deems necessary or appropriate for the
formation, continuation and conduct of the business and affairs of the
Partnership (including, without limitation, all actions consistent with
allowing the Company at all times to qualify as a REIT unless the Company
voluntarily terminates its REIT status) and to possess and enjoy all of the
rights and powers of a general partner as provided by the Act.
(b) Except as otherwise provided herein, to the extent the duties of
the General Partner require expenditures of funds to be paid to third parties,
Partnership-owned Entities or other Persons, the General Partner shall not have
any obligations hereunder except to the extent that Partnership funds are
reasonably available to it for the performance of such duties, and nothing
herein contained shall be deemed to require the General Partner, in its capacity
as such, to expend its individual funds for such purpose or to undertake any
individual liability or obligation on behalf of the Partnership.
Notwithstanding anything herein to the contrary, the General Partner may, in its
sole discretion, expend its funds on behalf of the Partnership or any
Partnership-owned Entity; in which case, any funds so expended and which are not
reimbursed within sixty (60) days of such expenditure pursuant to Section 6.05
shall be deemed to be a loan by the General Partner to the Partnership or such
Partnership-owned Entity, which loan shall be on commercially reasonable terms
and shall bear interest at commercially reasonable rates consistent with terms
that could be negotiated with unaffiliated third-parties.
6.02 DELEGATION OF AUTHORITY. The General Partner may delegate any or all
of its powers, rights and obligations hereunder, and may appoint, employ,
contract or otherwise deal with any Person for the transaction of business on
behalf of, or for the benefit of, the Partnership, which Person may, under
supervision of the General Partner, perform any acts or services as the General
Partner may approve.
23
6.03 INDEMNIFICATION AND EXCULPATION OF INDEMNITEES.
(a) The Partnership shall indemnify an Indemnitee from and against
any and all losses, claims, damages, liabilities (joint or several), expenses
(including reasonable legal fees and expenses), judgments, fines, settlements,
and other amounts arising from any and all claims, demands, actions, suits or
proceedings, civil, criminal, administrative or investigative, that relate to
the operations of the Partnership as set forth in this Agreement in which any
Indemnitee may be involved, or is threatened to be involved, as a party or
otherwise, unless it is established that: (i) the act or omission of the
Indemnitee was material to the matter giving rise to the proceeding and either
was committed in bad faith or was the result of active and deliberate
dishonesty; (ii) the Indemnitee actually received an improper personal benefit
in money, property or services; or (iii) in the case of any criminal proceeding,
the Indemnitee had reasonable cause to believe that the act or omission was
unlawful. The termination of any proceeding by judgment, order or settlement
does not create a presumption that the Indemnitee did not meet the requisite
standard of conduct set forth in this Section 6.03(a). The termination of any
proceeding by conviction or upon a plea of nolo contendere or its equivalent, or
an entry of an order of probation prior to judgment, creates a rebuttable
presumption that the Indemnitee acted in a manner contrary to the standard of
conduct necessary for indemnification as specified in this Section 6.03(a). Any
indemnification pursuant to this Section 6.03 shall be made only out of the
assets of the Partnership.
(b) The Partnership may reimburse an Indemnitee for reasonable
expenses incurred by an Indemnitee who is a party to a proceeding in advance of
the final disposition of the proceeding upon receipt by the Partnership of (i) a
written affirmation by the Indemnitee of the Indemnitee's good faith belief that
the standard of conduct necessary for indemnification by the Partnership as
authorized in this Section 6.03 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 6.03 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.
(d) The Partnership may purchase and maintain insurance, on behalf of
the Indemnitees and such other Persons as the General Partner shall determine,
against any liability that may be asserted against or expenses that may be
incurred by such 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) For purposes of this Section 6.03, the Partnership shall be
deemed to have requested an Indemnitee to serve as fiduciary of an employee
benefit plan whenever the performance by it of its duties to the Partnership
also imposes duties on, or otherwise involves services by, it to the plan or
participants or beneficiaries of the plan; excise taxes assessed on an
Indemnitee with respect to an employee benefit plan pursuant to applicable law
shall constitute
24
fines within the meaning of this Section 6.03; and actions taken or omitted by
the Indemnitee with respect to an employee benefit plan in the performance of
its duties for a purpose reasonably believed by it to be in the interest of the
participants and beneficiaries of the plan shall be deemed to be for a purpose
which is not opposed to the best interests of the Partnership.
(f) In no event may an Indemnitee subject the Limited 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 6.03 because the Indemnitee had an interest in the
transaction with respect to which the indemnification applies if the transaction
was otherwise permitted by the terms of this Agreement.
(h) The provisions of this Section 6.03 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.
6.04 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. Additionally, the General Partner shall not be in breach
of any duty that the General Partner may owe to the Limited Partners or the
Partnership or any other Persons under this Agreement or of any duty stated or
implied by law or equity, provided the General Partner, acting in good faith,
abides by the terms of this Agreement.
(b) The Limited Partners expressly acknowledge that the General
Partner is acting on behalf of the Partnership and the Company's shareholders
collectively, that the General Partner is under no obligation to consider the
separate interests of the Limited Partners (including, without limitation, the
tax consequences to the Limited Partners) in deciding whether to cause the
Partnership to take (or decline to take) any actions. In the event of a
conflict between the interests of the shareholders of the Company on one hand
and the Limited Partners on the other, the General Partner shall endeavor in
good faith to resolve the conflict in a manner not adverse to either the
shareholders of the Company or the Limited Partners; provided the General
Partner shall not be liable for monetary damages for losses sustained,
liabilities incurred, or benefits not derived by Limited Partners in connection
with such decisions, provided that the General Partner has acted in good faith.
(c) Subject to its obligations and duties as General Partner set
forth in Section 6.01 hereof, the General Partner may exercise any of the powers
granted to it under this Agreement and perform any of the duties imposed upon it
hereunder either directly or by or through its agents. The General Partner shall
not be responsible for any misconduct or negligence on the part of any such
agent appointed by it in good faith.
25
(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 the Company to
continue to qualify as a REIT or (ii) to prevent the Company from incurring any
taxes under Section 857, Section 4981, or any other provision of the Code, is
expressly authorized under this Agreement and is deemed approved by all of the
Limited Partners.
(e) Any amendment, modification or repeal of this Section 6.04 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 6.04 as in effect immediately prior to such
amendment, modification or repeal with respect to matters occurring, in whole or
in part, prior to such amendment, modification or repeal, regardless of when
claims relating to such matters may arise or be asserted.
6.05 EXPENDITURES BY THE PARTNERSHIP. The General Partner is hereby
authorized to pay compensation for accounting, administrative, legal, technical,
management and other services rendered to the Partnership. All of the aforesaid
expenditures (including Administrative Expenses) shall be obligations of the
Partnership, and the General Partner shall be entitled to reimbursement by the
Partnership for any expenditure incurred by it on behalf or for the benefit of
the Partnership. The Partnership shall also assume, and pay when due, all
Administrative Expenses to the extent not included in the expenses described
above. This provision shall be given effect as of the date of formation of the
Partnership.
6.06 OUTSIDE ACTIVITIES. Subject to Section 6.08 hereof, the Charter and
any agreements entered into by the General Partner or its Affiliates with the
Partnership or any Partnership-owned Entity, as the case may be, any officer,
director, employee, agent, trustee, Affiliate or shareholder of the General
Partner shall be entitled to and may have business interests and engage in
business activities in addition to those relating to the Partnership and any
Partnership-owned Entity, as the case may be, including business interests and
activities substantially similar or identical to those of the Partnership or any
Partnership-owned Entity. None of the Partnership, any Partnership-owned Entity
or any of the Limited Partners shall have any rights by virtue of this Agreement
in any such business ventures, interests or activities. 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 such business
ventures, interests or activities, and the General Partner shall have no
obligation pursuant to this Agreement to offer any interest in any such business
ventures, interests and activities to the Partnership, any Partnership-owned
Entity or any Limited Partner, even if such opportunity is of a character which,
if presented to the Partnership, any Partnership-owned Entity or any Limited
Partner, could be taken by such Person.
26
6.07 EMPLOYMENT OR RETENTION OF AFFILIATES.
(a) Any Affiliate of the General Partner may be employed or retained
by the Partnership and any Partnership-owned Entity and may otherwise deal with
the Partnership and any Partnership-owned Entity (whether as a buyer, lessor,
lessee, manager, furnisher of goods or services, broker, agent, lender or
otherwise) and may receive from the Partnership and any Partnership-owned Entity
any compensation, price, or other payment therefor which the General Partner
determines to be fair and reasonable.
(b) The Partnership may lend or contribute to any Partnership-owned
Entity or other Persons in which it has an equity investment, and such Persons
may borrow funds from the Partnership or the General Partner, 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 Partnership-owned Entity or any other Person.
(c) The Partnership may transfer assets to joint ventures,
Partnership-owned Entities, other partnerships, corporations, limited liability
companies or other business entities in which it is or becomes a participant
upon such terms and subject to such conditions as the General Partner deems are
consistent with this Agreement and applicable law.
(d) Except as expressly permitted by this Agreement, neither the
General Partner nor any of its Affiliates, other than the Partnership or the
Partnership-owned Entities, shall sell, transfer or convey any property or
assets to, or purchase any Property from, the Partnership or any Partnership-
owned Entity, directly or indirectly, except pursuant to transactions that are
on terms that are fair and reasonable to the Partnership.
6.08 GENERAL PARTNER PARTICIPATION. Except as set forth below, the
General Partner agrees that all business activities of the General Partner,
including activities pertaining to the acquisition, development and/or ownership
of Property, shall be conducted, directly or indirectly, through or for the
benefit of the Partnership or one or more Partnership-owned Entities.
Notwithstanding the foregoing, the General Partner may (i) own such bank
accounts or similar instruments as it deems necessary to carry out its purpose
under this Agreement and under its Charter, (ii) capitalize Subsidiaries of the
General Partner provided that such Subsidiaries have been organized and carry
out their businesses, directly or indirectly, to further the purpose of the
Partnership or any Partnership-owned Entity, (iii) acquire, directly or through
one or more Subsidiaries, ownership interests in any Partnership-owned Entity,
and (iv) enter into or assume General Partner Investment Loans. The General
Partner also agrees that all loans from the General Partner to the Partnership
shall constitute Funding Loans, subject to the exceptions set forth in Section
4.03 hereof.
6.09 TITLE TO PARTNERSHIP ASSETS. Title to Partnership Property, 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 Property or
any portion thereof. Title to any or all of the Partnership Property may be
held in the name of the Partnership, the General Partner or one or more
27
nominees, as the General Partner may determine, including Subsidiaries or other
Affiliates of the General Partner. The General Partner hereby declares and
warrants that any Partnership Property for which legal title is held in the name
of the General Partner or any nominee, including any Subsidiary or Affiliate of
the General Partner shall be held by the General Partner for the use and benefit
of the Partnership in accordance with the provisions of this Agreement;
PROVIDED, HOWEVER, that, if and when it shall become necessary or advisable and
in the best interests of the Partnership, in the reasonable judgment of the
General Partner, 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. Such Partnership Property 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. Notwithstanding
anything herein to the contrary, nothing herein shall be construed to limit the
rights, powers or privileges of the Partnership to organize, acquire or hold
ownership interests in, or otherwise hold Property indirectly through, one or
more Partnership-owned Entities in the sole discretion of the General Partner.
6.10 MISCELLANEOUS. In the event the Company redeems any REIT Shares,
then the General Partner shall cause the Partnership to purchase from the
Company a number of Partnership Units as determined based on the application of
the Conversion Factor on the same terms that the Company redeemed such REIT
Shares. Moreover, if the Company makes a cash tender offer or other offer to
acquire REIT Shares, then the General Partner shall cause the Partnership to
make a corresponding offer to the Company to acquire an equal number of
Partnership Units held by the Company. In the event any REIT Shares are redeemed
by the Company pursuant to such offer, the Partnership shall redeem an
equivalent number of the Company's Partnership Units for an equivalent purchase
price based on the application of the Conversion Factor.
ARTICLE VII
CHANGES IN GENERAL PARTNER
7.01 TRANSFER OF THE GENERAL PARTNER'S PARTNERSHIP INTEREST.
(a) The General Partner may not transfer or assign any of its
General Partnership Interest or withdraw as General Partner except as provided
in Section 7.01(c) or in connection with a transaction described in Section
7.01(d).
(b) The Company agrees that it will at all times own, through its
General Partnership Interest and Limited Partnership Interest, in the aggregate
at least a 20% Percentage Interest in the Partnership.
(c) Except as otherwise provided in Section 6.07(c) or Section
7.01(d) hereof, the Company shall not engage in any merger, consolidation or
other combination with or into another Person or sale of all or substantially
all of its assets, or any reclassification, or any 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 of REIT Shares) (a
"Transaction"), unless (i) the Transaction also includes a merger of the
Partnership or sale of
28
substantially all of the assets of the Partnership as a result of which all
Limited Partners will receive for each Partnership Unit an amount of cash,
securities, or other property equal to the product of the Conversion Factor and
the greatest amount of cash, securities or other property paid in the
Transaction to a holder of one REIT Share in consideration of one REIT Share,
PROVIDED THAT if, in connection with the Transaction, a purchase, tender or
exchange offer ("Offer") shall have been made to and accepted by the holders of
more than 50% of the outstanding REIT Shares, each holder of Partnership Units
shall be given the option to exchange its Partnership Units for the greatest
amount of cash, securities, or other property which a Limited Partner would have
received had it (A) exercised its Redemption Right and received REIT Shares and
(B) sold, tendered or exchanged pursuant to the Offer the REIT Shares received
upon exercise of the Redemption Right immediately prior to the expiration of the
Offer; and (ii) no more than 75% of the equity securities of the acquiring
Person in such Transaction shall be owned, after consummation of such
Transaction, by the General Partner or Persons who were Affiliates of the
Partnership or the General Partner immediately prior to the date on which the
Transaction is consummated.
(d) Notwithstanding Section 7.01(c), the Company may merge into or
consolidate with another entity if immediately after such merger or
consolidation (i) substantially all of the assets of the successor or surviving
entity (the "Surviving Entity"), other than Partnership Units held by the
General Partner, are contributed to the Partnership as a Capital Contribution in
exchange for Partnership Units with a fair market value equal to the value of
the assets so contributed as determined by the Surviving Entity in good faith
and (ii) the Surviving Entity expressly agrees to assume, or acknowledge and
ratify, all obligations of the General Partner under the Partnership Agreement.
Upon such contribution and assumption, the Surviving Entity shall have the right
and duty to amend this Agreement as set forth in this Section 7.01(d). The
Surviving Entity shall in good faith arrive at a new method for the calculation
of the Cash Amount and Conversion Factor for a Partnership Unit after any such
merger or consolidation so as to approximate the existing method for such
calculation as closely as reasonably possible. Such calculation shall take into
account, among other things, the kind and amount of securities, cash and other
property that was receivable upon such merger or consolidation by a holder of
REIT Shares and/or options, warrants or other rights relating thereto, and to
which a holder of Partnership Units could have acquired had such Partnership
Units been redeemed immediately prior to such merger or consolidation. Such
amendment to this Agreement shall provide for adjustment to such method of
calculation which shall be as nearly equivalent as may be practicable to the
adjustments provided for with respect to the Conversion Factor. The above
provisions of this Section 7.01(d) shall similarly apply to successive mergers
or consolidations permitted hereunder.
7.02 ADMISSION OF A SUBSTITUTE OR SUCCESSOR GENERAL PARTNER. A Person shall
be admitted as a substitute or successor General Partner of the Partnership only
if the following terms and conditions are satisfied:
29
(a) a majority in interest of the Limited Partners (other than the
Company in its capacity as a Limited Partner) shall have consented in writing to
the admission of the substitute or successor General Partner;
(b) the Person to be admitted as a substitute or additional General
Partner shall have accepted and agreed to be bound by all the terms and
provisions of this Agreement by executing a counterpart thereof and such other
documents or instruments as may be required or appropriate in order to effect
the admission of such Person as a General Partner, and a certificate evidencing
the admission of such Person as a General Partner shall have been filed for
recordation and all other actions required by Section 2.05 hereof in connection
with such admission shall have been performed;
(c) if the Person to be admitted as a substitute or additional
General Partner is a corporation, partnership or limited liability company it
shall have provided the Partnership with evidence satisfactory to counsel for
the Partnership of such Person's authority to become a General Partner and to be
bound by the terms and provisions of this Agreement; and
(d) counsel for the Partnership shall have rendered an opinion
(relying on such opinions from other counsel and the state or any other
jurisdiction as may be necessary) that the admission of the person to be
admitted as a substitute or additional General Partner is in conformity with the
Act, that none of the actions taken in connection with the admission of such
Person as a substitute or additional General Partner will cause (i) the
Partnership to be classified other than as a partnership for federal income tax
purposes, or (ii) the loss of any Limited Partner's limited liability.
7.03 EFFECT OF BANKRUPTCY, WITHDRAWAL, DEATH OR DISSOLUTION OF A GENERAL
PARTNER.
(a) Upon the occurrence of an Event of Bankruptcy as to a General
Partner (and its removal pursuant to Section 7.04(a) hereof) or the withdrawal,
death or dissolution of a General Partner (except that, if a General Partner is
on the date of such occurrence a partnership, the withdrawal, death,
dissolution, Event of Bankruptcy as to, or removal of a partner in, such
partnership shall be deemed not to be a dissolution of such General Partner if
the business of such General Partner is continued by the remaining partner or
partners), the Partnership shall be dissolved and terminated unless the
Partnership is continued pursuant to Section 7.03(b) hereof.
(b) Following the occurrence of an Event of Bankruptcy as to a
General Partner (and its removal pursuant to Section 7.04(a) hereof) or the
death, withdrawal, removal or dissolution of a General Partner (except that, if
a General Partner is on the date of such occurrence a partnership, the
withdrawal, death, dissolution, Event of Bankruptcy as to, or removal of a
partner in, such partnership shall be deemed not to be a dissolution of such
General Partner if the business of such General Partner is continued by the
remaining partner or partners), the Limited Partners, within 90 days after such
occurrence, may elect to reconstitute the Partnership and continue the business
of the Partnership for the balance of the term specified in Section 2.04 hereof
by selecting, subject to Section 7.02 hereof and any other provisions of this
30
Agreement, a substitute General Partner by unanimous consent of the Limited
Partners. If the Limited Partners elect to reconstitute the Partnership and
admit a substitute General Partner, the relationship with the Partners and of
any Person who has acquired an interest of a Partner in the Partnership shall be
governed by this Agreement.
7.04 REMOVAL OF A GENERAL PARTNER.
(a) Upon the occurrence of an Event of Bankruptcy as to, or the
dissolution of, a General Partner, such General Partner shall be deemed to be
removed automatically; PROVIDED, HOWEVER, that if a General Partner is on the
date of such occurrence a partnership, the withdrawal, death, dissolution, Event
of Bankruptcy as to or removal of a partner in such partnership shall be deemed
not to be a dissolution of the General Partner if the business of such General
Partner is continued by the remaining partner or partners.
(b) If a General Partner has been removed pursuant to this Section
7.04 and the Partnership is continued pursuant to Section 7.03 hereof, such
General Partner shall promptly transfer and assign its General Partnership
Interest in the Partnership to the substitute General Partner approved by a
majority in interest of the Limited Partners (excluding the Company in its
capacity as a Limited Partner) in accordance with Section 7.03(b) hereof and
otherwise admitted to the Partnership in accordance with Section 7.02 hereof.
At the time of assignment, the removed General Partner shall be entitled to
receive from the substitute General Partner the fair market value of the General
Partnership Interest of such removed General Partner as reduced by any damages
caused to the Partnership Interest of such removed General Partner. Such fair
market value shall be determined by an appraiser mutually agreed upon by the
General Partner and a majority in interest of the Limited Partners (excluding
the Company in its capacity as a Limited Partner) within 10 days following the
removal of the General Partner. In the event that the parties are unable to
agree upon an appraiser, the removed General Partner and a majority in interest
of the Limited Partners (excluding the Company in its capacity as a Limited
Partner) each shall select an appraiser. Each such appraiser shall complete an
appraisal of the fair market value of the removed General Partner's General
Partnership Interest within 30 days of the General Partner's removal, and the
fair market value of the removed General Partner's General Partnership Interest
shall be the average of the two appraisals; PROVIDED, HOWEVER, that if the
higher appraisal exceeds the lower appraisal by more than 20% of the amount of
the lower appraisal, the two appraisers, no later than 40 days after the removal
of the General Partner, shall select a third appraiser who shall complete an
appraisal of the fair market value of the removed General Partner's General
Partnership Interest no later than 60 days after the removal of the General
Partner. In such case, the fair market value of the removed General Partner's
General Partnership Interest shall be the average of the two appraisals closest
in value.
(c) The General Partnership Interest of a removed General Partner,
during the time after default until transfer under Section 7.04(b), shall be
converted to that of a special Limited Partner; PROVIDED, HOWEVER, such removed
General Partner shall not have any rights to participate in the management and
affairs of the Partnership, and shall not be entitled to any portion of the
income, expense, profit, gain or loss allocations or cash distributions
allocable or payable, as the case may be, to the Limited Partners. Instead,
such removed General Partner
31
shall receive and be entitled only to retain distributions or allocations of
such items that it would have been entitled to receive in its capacity as
General Partner, until the transfer is effective pursuant to Section 7.04(b).
(d) All Partners shall have given and hereby do give such consents,
shall take such actions and shall execute such documents as shall be legally
necessary and sufficient to effect all the foregoing provisions of this Section.
ARTICLE VII
RIGHTS AND OBLIGATIONS OF THE LIMITED PARTNERS
8.01 MANAGEMENT OF THE PARTNERSHIP. The Limited Partners shall not
participate in the management or control of Partnership business nor shall they
transact any business for the Partnership, nor shall they have the power to sign
for or bind the Partnership, such powers being vested solely and exclusively in
the General Partner.
8.02 POWER OF ATTORNEY. Each Limited Partner hereby irrevocably appoints
the General Partner his true and lawful attorney-in-fact, who may act for each
Limited Partner and in his name, place and ▇▇▇▇▇, and for his use and benefit,
to sign, acknowledge, swear to, deliver, file and record, at the appropriate
public offices, any and all documents, certificates, and instruments as may be
deemed necessary or desirable by the General Partner to carry out fully the
provisions of this Agreement and the Act in accordance with their terms, which
power of attorney is coupled with an interest and shall survive the death,
dissolution or legal incapacity of the Limited Partner, or the transfer by the
Limited Partner of any part or all of his Partnership Interest.
8.03 LIMITATION ON LIABILITY OF LIMITED PARTNERS. No Limited Partner shall
be liable for any debts, liabilities, contracts or obligations of the
Partnership. A Limited Partner shall be liable to the Partnership only to make
payments of his Capital Contribution, if any, as and when due hereunder. After
his Capital Contribution is fully paid, no Limited Partner shall, except as
otherwise required by the Act, be required to make any further Capital
Contributions or other payments or lend any funds to the Partnership.
8.04 [RESERVED.]
8.05 REDEMPTION RIGHT.
(a) Subject to Sections 8.05(b)-(f), on or after the Redemption
Eligibility Date, each Limited Partner (other than the Company in its capacity
as a 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 held by such Limited 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 the General Partner) by the Limited Partner
who is exercising the Redemption Right (the "Redeeming Partner"); provided,
however, that the Partnership shall not
32
be obligated to satisfy such Redemption Right if the Company elects to purchase
the Partnership Units subject to the Notice of Redemption pursuant to Section
8.05(b); and provided, further, that no Limited Partner may deliver to the
General Partner more than four (4) Notices of Redemption during each calendar
year. In addition to the restrictions on redemption set forth in Section
8.05(f), 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 Partner. Notwithstanding the foregoing provisions of this Section
8.05(a), the Company agrees to use its best efforts to cause the closing of the
acquisition of redeemed Partnership Units hereunder to occur as quickly as
reasonably possible. The Redeeming Partner shall have no right, with respect to
any Partnership Units so redeemed, to receive any distribution paid with respect
to Partnership Units if the record date for such distribution is on or after the
Specified Redemption Date.
(b) Notwithstanding the provisions of Section 8.05(a), 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 the Company,
and the Company may, in its sole and absolute discretion, elect to purchase
directly and acquire such Partnership Units by paying to the Redeeming Partner
either the Cash Amount, or, the REIT Shares Amount, as elected by the Company
(in its sole and absolute discretion), on the Specified Redemption Date,
whereupon the Company shall acquire the Partnership Units offered for redemption
by the Redeeming Partner and shall be treated for all purposes of this Agreement
as the owner of such Partnership Units. If the Company shall elect to exercise
its right to purchase Partnership Units under this Section 8.05(b) with respect
to a Notice of Redemption, it shall so notify the Redeeming Partner within five
Business Days after the receipt by the General Partner of such Notice of
Redemption. Unless the Company (in its sole and absolute discretion) shall
exercise its right to purchase Partnership Units from the Redeeming Partner
pursuant to this Section 8.05(b), the Company 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 the Company shall exercise its
right to purchase Partnership Units with respect to the exercise of a Redemption
Right in the manner described in the first sentence of this Section 8.05(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 the Company, as the case may
be, shall treat the transaction between the Company and the Redeeming Partner
for federal income tax purposes as a sale of the Redeeming Partner's Partnership
Units to the Company. Each Redeeming Partner agrees to execute such documents
as the Company and the General Partner may reasonably require in connection with
the issuance of REIT Shares upon exercise of the Redemption Right.
(c) Notwithstanding the provisions of Section 8.05(a) and 8.05(b),
the Company shall not exercise its rights under Section 8.05(b) to deliver the
REIT Shares Amount, if the delivery of REIT Shares to a Redeeming Partner on the
Specified Redemption Date by the Company pursuant to Section 8.05(b) would (i)
result in such Partner or any other person owning, directly or indirectly, REIT
Shares in excess of the Ownership Limit (as defined in the Charter) and
calculated in accordance therewith, except as provided in the Charter, (ii)
result in REIT Shares being owned by fewer than 100 persons (determined without
reference to any rules
33
of attribution), (iii) result in the Company being "closely held" within the
meaning of Section 856(h) of the Code, (iv) cause the Company to own, directly
or constructively, 10% or more of the ownership interests in a tenant of the
Company's, the Partnership's, or a Partnership-owned Entity's , real property,
within the meaning of Section 856(d)(2)(B) of the Code, (v) cause the
acquisition of REIT Shares by such Partner to be "integrated" with any other
distribution of REIT Shares for purposes of complying with the registration
provisions of the Securities Act, or (vi) otherwise violate the Charter or any
law.
(d) Any Cash Amount to be paid to a Redeeming Partner pursuant to
this Section 8.05 shall be paid within 30 days after the initial date of receipt
by the Partnership (with a copy to the General Partner) of the Notice of
Redemption relating to the Partnership Units to be redeemed. Notwithstanding the
foregoing, the Partnership and the General Partner agree to use their best
efforts to cause the closing of the acquisition of redeemed Partnership Units
hereunder to occur as quickly as reasonably possible.
(e) In the event that the General Partner permits the pledge of a
Limited Partner's Partnership Units to a lender, the General Partner may agree,
in its sole discretion, to allow such lender, upon a default by the applicable
Limited Partner under a loan made by such lender, to redeem such Partnership
Units (prior to or after the expiration of the one-year period described in
Section 8.05(a)); provided, that any such redemption shall be effected by the
Partnership in the form of the Cash Amount.
(f) Notwithstanding any other provision of this Agreement, the
General Partner shall place appropriate restrictions on the ability of the
Limited Partners to exercise their Redemption Rights as and if deemed necessary
to ensure that the Partnership does not constitute a "publicly traded
partnership" under Section 7704 of the Code.
8.06 REGISTRATION.
(a) SHELF REGISTRATION. Subject to the provisions of applicable
securities laws and the interpretations of the Commission, prior to or on the
first date upon which the Partnership Units owned by any Limited Partner may be
redeemed, at the request of a Limited Partner or, at the option of the Company
prior to such request, the Company agrees to file with the Commission, a shelf
registration statement on Form S-3 under Rule 415 of the Securities Act, or any
similar rule that may be adopted by the Commission (the "Shelf Registration"),
with respect to all of the REIT Shares issued to such Limited Partners pursuant
to Section 8.05(b) hereof (the "Redemption Shares"). The Company will use its
best efforts to have the Shelf Registration declared effective under the
Securities Act and to keep the Shelf Registration continuously effective until a
date agreed upon by the Company and such Limited Partners or until such time as
all of the securities registered pursuant to such Shelf Registration (i) have
been disposed of pursuant to such Shelf Registration, (ii) have otherwise been
distributed pursuant to Rule 144 promulgated under the Securities Act ("Rule
144"), or (iii) have been otherwise transferred in a transaction resulting in
the transferee receiving REIT Shares not deemed to be "restricted securities"
under Rule 144. The Company further agrees to supplement or make amendments to
the Shelf Registration, if required by the rules, regulations or
34
instructions applicable to the registration form utilized by the Company or by
the Securities Act or rules and regulations thereunder for the Shelf
Registration. No provision of this Agreement shall require the Company to file a
registration statement on any form other than Form S-3. The Company, in the
exercise of its reasonable judgment, shall have the right to delay the filing of
the Shelf Registration for up to 120 days.
(b) REGISTRATION AND QUALIFICATION PROCEDURES. The Company, upon the
written request of a Limited Partner, is required by the provisions of Section
8.06(a) hereof to use its best efforts to have the Shelf Registration declared
effective under the Securities Act. Accordingly, the Company will:
(i) prepare and file with the Commission a registration
statement, including amendments thereof and supplements relating thereto,
with respect to the Redemption Shares;
(ii) use its best efforts to cause the Shelf Registration to be
declared effective by the Commission;
(iii) keep the Shelf Registration effective and the related
prospectus current as described in Section 8.05(a) hereof; provided,
however, that the Company shall have no obligation to file any amendment or
supplement at its own expense or the Partnership's expense more than 90
days after the effective date of the Shelf Registration;
(iv) furnish to each holder of Redemption Shares such numbers
of copies of prospectuses, and supplements or amendments thereto, and such
other documents as such holder reasonably requests;
(v) register or qualify the Redemption Shares covered by the
registration statement under the securities or blue sky laws of such
jurisdictions within the United States as any holder of Redemption Shares
shall reasonably request, and do such other reasonable acts and things as
may be required of it to enable such holders to consummate the sale or
other disposition in such jurisdictions of the Redemption Shares; provided,
however, that the Company shall not be required to (i) qualify as a foreign
corporation or consent to a general and unlimited service or process in any
jurisdictions in which it would not otherwise be required to be qualified
or so consent or (ii) qualify as a dealer in securities; and
(vi) keep the holders of Redemption Shares advised as to the
initiation and progress of the registration.
35
(c) ALLOCATION OF EXPENSES. The Partnership shall pay all expenses in
connection with the Shelf Registration, including without limitation (i) all
expenses incident to filing with the National Association of Securities Dealers,
Inc., (ii) registration fees, (iii) printing expenses, (iv) accounting and legal
fees and expenses, except to the extent holders of Redemption Shares elect to
engage accountants or attorneys in addition to the accountants and attorneys
engaged by the Partnership or the Company, (v) accounting expenses incident to
or required by any such registration or qualification and (vi) expenses of
complying with the securities or blue sky laws of any jurisdictions in
connection with such registration or qualification; provided, however, the
Partnership shall not be liable for (A) any discounts or commissions to any
broker attributable to the sale of Redemption Shares, or (B) any fees or
expenses incurred by holders of Redemption Shares in connection with such
registration which, according to the written instructions of any regulatory
authority, the Partnership is not permitted to pay.
(d) SALE OF REDEMPTION SHARES. The Company may require in its sole
discretion that the Redemption Shares be sold in block trades through
underwriters or broker-dealers or that the sale of the Redemption Shares be
underwritten by investment banking firms selected by the Company.
(e) LISTING ON SECURITIES EXCHANGE. If the Company shall list or
maintain the listing of any REIT Shares on any securities exchange or national
market system, it will at its expense and as necessary to permit the
registration and sale of the Redemption Shares hereunder, list thereon, maintain
and, when necessary, increase such listing to include such Redemption Shares.
8.07 "PIGGYBACK" REGISTRATION RIGHTS.
(a) NOTICE OF REGISTRATION. If, at any time commencing upon the date
upon which all or any portion of the Partnership Units may be redeemed for the
Redemption Shares (but not if such Partnership Units shall have been redeemed
for cash in accordance with the provisions hereof), the Company files a
registration statement under the Securities Act with respect to a firm
commitment underwritten public offering of any securities of the Company, the
Company shall give thirty (30) days prior written notice thereof to each Limited
Partner and shall, upon the written request of any or all of the Limited
Partners, upon exercise of the Redemption Right and upon election by the Company
to deliver the REIT Share Amount include in the underwritten public offering the
number of Redemption Shares that each such Limited Partner may request (except
as set forth in Section 8.07(b) below). The Company will keep such registration
statement effective and current under the Securities Act permitting the sale of
Redemption Shares covered thereby for the same period that the registration
statement is maintained effective for the other persons (including the Company)
selling thereunder. In any underwritten offering, however, the Redemption
Shares to be included will be sold at the same time and at the same price as the
Company's securities. In the event that the Company fails to receive a written
request from a Limited Partner within thirty (30) days of its written notice,
then the Company shall have no obligation to include any of the Redemption
Shares in the offering. In connection with any registration statement or
subsequent amendment or similar document
36
filed pursuant to this Section 8.07, the Company shall take all reasonable steps
to make the securities covered thereby eligible for public offering and sale
under the securities or blue sky laws of the applicable jurisdictions by the
effective date of such registration statement; provided that in no event shall
the Company be obligated to qualify to do business in any jurisdiction where it
is not so qualified at the time of filing such documents or to take any action
which would subject it to unlimited service of process in any jurisdiction where
it is not so subject at such time. The Company shall keep such filing current
for the length of time it must keep any registration statement, post-effective
amendment, prospectus or offering circular effective pursuant hereto.
(b) UNDERWRITING. In the event of an offering by the Company in which
one or more Limited Partners wishes to include Redemption Shares under this
Section 8.07, and it is determined in good faith by the managing underwriter of
such offering, giving effect to the number of REIT Shares to be offered by the
Company, that the total number of Redemption Shares that would consequently be
offered is in excess of the number of Redemption Shares that can be sold at the
proposed price, then the number of Redemption Shares of the Limited Partners to
be offered will be reduced ratably, based upon the number of Redemption Shares
each Limited Partner has requested to include in such registration; provided,
however, that notwithstanding anything in this Section 8.07(b) to the contrary,
the Limited Partners shall have the right to contribute, on a pro-rata basis as
described above, an aggregate of Redemption Shares equaling at least fifteen
percent (15%) of the total value of such offering.
(c) OBLIGATION OF LIMITED PARTNERS UPON REGISTRATION. To include
Redemption Shares in any registration, each Limited Partner shall:
(i) Cooperate with the Company in preparing each such
registration and execute all such agreements as any underwriter may deem
reasonably necessary in favor of such underwriter;
(ii) Promptly supply the Company with all information,
documents, representations and agreements as such underwriter may deem
reasonably necessary in connection with such registration; and
(iii) Agree in writing not to sell or transfer any share of the
Redemption Shares not included in such underwritten offering for a period
of seven (7) days prior to and thirty (30) days after the effective date of
such registration without the underwriters' consent, but no Limited Partner
shall be required to make such agreement unless the other Limited Partners
included in any offering covered by such registration shall similarly
agree.
(d) COMPANY'S OBLIGATIONS UPON REGISTRATION. If and whenever the
Company is obligated by the provisions of this Section 8.07 to effect the
registration of any offering of REIT Shares under the Securities Act, as
expeditiously as possible the Company will, or will use its best efforts to, as
the case may be:
(i) Prepare and file with the SEC a registration statement
with respect to such REIT Shares and, use its best efforts to cause such
registration statement to become effective;
(ii) Prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration
statement effective until the earlier of the sale of all securities covered
thereby or the date on which such REIT Shares may be sold into the market
without restriction under Rule 144;
(iii) Furnish to each Limited Partner so many copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Securities Act, and such other documents, as such
Limited Partner may reasonably request; and
(iv) Register or qualify the Redemption Shares covered by such
registration statement under such other securities or blue sky laws of such
jurisdictions as such Limited Partner shall reasonably request, and do any
and all other acts and things that may be reasonably necessary or advisable
to enable the Limited Partners to consummate the disposition in such
jurisdictions of such securities.
(e) EXPENSES. In connection with any filing or other registration
hereunder the Partnership shall bear all the expenses and professional fees
which arise in connection with such filings or registration (except for the
Limited Partner's pro rata share of any underwriters' discount) and all expenses
incurred in making such filings and keeping them effective and correct as
provided hereunder and shall also provide each Limited Partner with a reasonable
number of printed copies of the prospectus, offering circulars and/or
supplemental prospectuses or amended prospectuses in final and preliminary form;
PROVIDED, HOWEVER, each Limited Partner will pay its own direct out-of-pocket
costs incurred with the registration of REIT Shares, including but not limited
to Limited Partner's attorney and accountants fees, travel expenses and any
consulting fees.
(f) INDEMNIFICATION BY THE COMPANY. The Company will indemnify each
Limited Partner, each of its officers and trustees, and each person controlling
the Limited Partner, with respect to which registration, qualification or
compliance has been effected pursuant to this Section 8.07, against all claims,
losses, damages, costs, expenses and liabilities whatsoever (or actions in
respect thereof) arising out of or based on (i) any untrue statement, (or
alleged untrue statement) of a material fact contained in any registration
statement, prospectus, offering circular or other similar document (including
any related registration statement, notification or the like) incident to any
such registration, qualification or compliance, or based on any omission (or
alleged omission) to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading in the light of the
circumstances under which they were made or (ii) any violation by the Company of
the Securities Act or any state securities law or of any rule or regulation
promulgated under the Securities Act or any state
38
securities law applicable to the Company and relating to action or inaction
required of the Company in connection with any such registration, qualification
or compliance, and will reimburse the Limited Partner, each of its officers and
trustees, and each person controlling the Limited Partner, for any legal and any
other expenses reasonably incurred in connection with investigating or defending
any such claim, loss, damage, liability or action, provided, however, that (x)
the Company will not be liable in any such case to the extent that any such
claim, loss, damage, liability, or action arises out of or is based on any
untrue statement (or alleged untrue statement) or omission (or alleged omission)
based upon written information furnished to the Company by an instrument duly
executed by the Limited Partner and stated to be specifically for use therein or
furnished by the Limited Partner to the Company in response to a request by the
Company stating specifically that such information will be used by the Company
therein, and (y) such indemnity agreement shall not inure to the benefit of the
Limited Partner, insofar as it relates to any such untrue statement (or alleged
untrue statement) or omission (or alleged omission) made in the preliminary
prospectus or prospectus but eliminated or remedied in the amended prospectus on
file with the Commission at the time the registration statement becomes
effective or in the amended prospectus filed with the Commission pursuant to
Rule 424(b) under the Securities Act or in any subsequent amended prospectus
filed with the Commission prior to the written confirmation of the sale of the
Registrable Securities at issue (collectively, the "Final Prospectus"), if a
copy of the Final Prospectus was not furnished to the person or entity asserting
the loss, liability, claim or damage at or prior to the time such action is
required by the Securities Act.
(g) INDEMNIFICATION BY THE LIMITED PARTNERS. The Limited Partners
will, if Redemption Shares held by or issuable to such Limited Partners are
included in the REIT Shares to which such registration, qualification or
compliance is being effected, indemnify the Company, each of its trustees and
officers, each underwriter, if any, of the REIT Shares covered by such
registration statement, and each person who controls the Company within the
meaning of the Securities Act against all claims, losses, damages, costs,
expenses and liabilities whatsoever (or actions in respect thereof) arising out
of or based on any untrue statement (or alleged untrue statement) of a material
fact contained in any such registration statement, prospectus, offering circular
or other similar document (including any related registration statement,
notification or the like) incident to any such registration, qualification or
compliance, or based on any omission (or alleged omission) to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances under which they were made,
and will reimburse the Company, such trustees, officers, persons or underwriters
for any legal or any other expenses reasonably incurred in connection with
investigating or defending any such claim, loss, damage, costs, expense,
liability or action, in each case to the extent, but only to the extent, that
such untrue statement (or alleged untrue statement) or omission (or alleged
omission) is made in such registration statement, prospectus, offering circular
or other document in reliance upon and in conformity with written information
furnished to the Company by an instrument duly executed by the Limited Partners
and stated to be specifically for use therein or furnished by any Limited
Partner to the Company in response to a request by the Company stating
specifically that such information will be used by the Company therein,
provided, however, that the foregoing indemnity agreement is subject to the
condition that, such indemnity agreement shall not inure to
39
the benefit of the Company or any underwriter insofar as it relates to any such
untrue statements (or alleged untrue statements) or omission (or alleged
omission) made in the preliminary prospectus or prospectus but eliminated or
remedied in the Final Prospectus, if a copy of the Final Prospectus was not
furnished to the person or entity asserting the loss, liability, claim or damage
at or prior to the time such action is required by the Securities Act.
(h) INDEMNIFICATION PROCEDURES. Each party entitled to
indemnification under this Section 8.07 (the "Indemnified Party") shall give
notice to the party required to provide indemnification (the "Indemnifying
Party") promptly after such Indemnified Party has actual knowledge of any claim
as to which indemnity may be sought, and shall permit the Indemnifying Party to
assume the defense of any such claim or any litigation resulting therefrom,
provided that counsel for the Indemnifying Party, who shall conduct the defense
of such claim or litigation, shall be approved by the Indemnified Party (whose
approval shall not unreasonably be withheld). The failure of any Indemnified
Party to give notice as provided herein shall relieve the Indemnifying Party of
its obligations under this Agreement only to the extent that such failure to
give notice shall materially prejudice the Indemnifying Party in the defense of
any such claim or any such litigation. No Indemnifying Party, in the defense of
any such claim or litigation, shall, except with the consent of each Indemnified
Party, consent to entry of any judgment or enter into any settlement that
attributes any liability to the Indemnified Party, unless the settlement
includes as an unconditional term thereof the giving by the claimant or
plaintiff to such Indemnified Party of a release from all liability in respect
to such claim or litigation. If any such Indemnified Party shall have been
advised by counsel chosen by it that there may be one or more legal defenses
available to such Indemnified Party that are different from or additional to
those available to the Indemnifying Party, the Indemnifying Party shall not have
the right to assume the defense of such action on behalf of such Indemnified
Party and will reimburse such Indemnified Party and any person controlling such
Indemnified Party for the reasonable fees and expenses of any counsel retained
by the Indemnified Party, it being understood that the Indemnifying Party shall
not, in connection with any one action or separate but similar or related
actions in the same jurisdiction arising out of the same general allegations or
circumstances, be liable for the reasonable fees and expenses of more than one
separate firm of attorneys for each Indemnified Party or controlling person (and
all other Indemnified Parties and controlling persons which may be represented
without conflict by one counsel), which firm shall be designated in writing by
the Indemnified Party (or Indemnified Parties, if more than one Indemnified
Party is to be represented by such counsel) to the Indemnifying Party. The
Indemnifying Party shall not be subject to any liability for any settlement made
without its consent, which shall not be unreasonably withheld.
If the indemnification provided for in this Section 8.07 from the
Indemnifying Party is unavailable to an Indemnified Party hereunder in respect
of any losses, claims, damages, labilities or expenses referred to therein, then
the Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall
contribute to the amount paid or payable by such Indemnified Party as a result
of such losses, claims, damages, labilities or expenses in such proportion as is
appropriate to reflect the relative fault of the Indemnifying Party and
Indemnified Parties in connection with the actions which resulted in such
losses, claims, damages, liabilities or expenses, as well as any other relevant
equitable considerations. The relative fault of such
40
Indemnifying Party and Indemnified Parties shall be determined by reference to,
among other things, whether any action in question, including any untrue or
alleged untrue statement of a material fact or omission or alleged omission to
state a material fact, has been made by, or relates to information supplied by,
such Indemnifying Party or Indemnified Parties, and the parties, relative
intent, knowledge, access to information and opportunity to correct or prevent
such action. The amount paid or payable by a party as a result of the losses
claims, damages, liabilities and expenses referred to above shall be deemed to
include any legal or other fees or expenses reasonably incurred by such party in
connection with any investigation or proceeding.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 8.07 were determined by pro rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to in the immediately preceding paragraph.
No person guilty of fraudulent misrepresentation (within the meaning of section
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
ARTICLE IX
TRANSFERS OF LIMITED PARTNERSHIP INTERESTS
9.01 PURCHASE FOR INVESTMENT.
(a) Each Limited Partner hereby represents and warrants to the
Company and to the Partnership that the acquisition of his Partnership Interest
is made as a principal for his account for investment purposes only and not with
a view to the resale or distribution of such Partnership Interest.
(b) Each Limited Partner agrees that he will not sell, assign or
otherwise transfer his Partnership Interest or any fraction thereof, whether
voluntarily or by operation of law or at judicial sale or otherwise, to any
Person who does not make the representations and warranties to the Company set
forth in Section 9.01(a) above and similarly agree not to sell, assign or
transfer such Partnership Interest or fraction thereof to any Person who does
not similarly represent, warrant and agree.
9.02 RESTRICTIONS ON TRANSFER OF LIMITED PARTNERSHIP INTERESTS.
(a) Except as otherwise provided in Section 9.02(d) hereof and except
for the pledge rights contained in Section 9.02(f) hereof, no Limited Partner
(other than the General Partner) may offer, sell, assign, hypothecate, pledge or
otherwise transfer his Limited Partnership Interest, in whole or in part,
whether voluntarily or by operation of law or at judicial sale or otherwise
(collectively, a "Transfer") without the written consent of the General Partner,
which consent may be withheld in the reasonable discretion of the General
Partner. The General Partner may require, as a condition of any Transfer, that
the transferor assume all costs incurred by the Partnership in connection
therewith.
41
(b) No Limited Partner may effect a Transfer of his Limited
Partnership Interest, in whole or in part, if, in the opinion of legal counsel
reasonably acceptable to the Partnership, such proposed Transfer would require
the registration of the Limited Partnership Interest under the Securities Act or
would otherwise violate any applicable federal or state securities or "Blue Sky"
law (including investment suitability standards).
(c) No transfer by a Limited Partner of his Partnership Units, in
whole or in part, may be made to any Person if (i) in the opinion of legal
counsel for the Partnership, the transfer would result in the Partnership's
being treated as an association taxable as a corporation (other than a qualified
REIT subsidiary within the meaning of Section 856(i) 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.
(d) Section 9.02(a) shall not apply to the following transactions,
except that the General Partner may require that the transferor assume all costs
incurred by the Partnership in connection therewith:
(i) any Transfer by a Limited Partner pursuant to the exercise
of his Redemption Right under Section 8.05 hereof;
(ii) any Transfer by a Limited Partner that is a corporation or
other business entity to any of its Affiliates or subsidiaries or to any
successor in interest of such Limited Partner; or
(iii) any donative Transfer (including for such purposes
transfers at death) by an individual Limited Partner to his immediate
family members or any trust in which the individual or his immediate family
members own, collectively, 100% of the beneficial interests. For purposes
of this Section 9.02(d)(iii), the term "immediate family member" shall be
deemed to include only an individual Limited Partner's spouse, children,
grandchildren, nieces and nephews,
provided that such Limited Partner shall give 30 days notice of any transfer
-------------
under this Section 9.02(d) to the General Partner so that a determination can be
made whether the transfer otherwise is prohibited under Sections 9.02(b) or
9.02(c).
(e) Any Transfer in contravention of any of the provisions of this
Article IX shall be void and ineffectual and shall not be binding upon, or
recognized by, the Partnership.
(f) Notwithstanding Section 9.02(a), the Limited Partner may pledge
any or all of its Partnership Units as collateral in any borrowing from an
institutional lender upon receiving the consent of the General Partner to such
pledge. The Limited Partner must seek such consent in writing and provide to
the General Partner complete copies of the commitment letter, all loan
documentation and any other materials deemed necessary in the General Partner's
discretion. Upon granting its consent, the General Partner will agree to issue
a letter to such lender agreeing to exchange or redeem such Limited Partner's
Partnership Units for the Cash
42
Amount upon a default by the applicable Limited Partner under such loan if (i)
the lender and the applicable Limited Partner each request that such letter be
issued; (ii) such loan transaction is deemed by the General Partner to be arm's-
length and not designed to circumvent the Agreement or restrictions contained
herein; and (iii) the applicable Limited Partner acknowledges that any such
exchange or redemption could potentially cause a taxable event to such Limited
Partner. In no event will the Company or the Partnership guarantee or be liable
to the lender or others for any such permissible loans wherein the Limited
Partner's Partnership Units are used as collateral.
(g) No transfer of any Partnership Units may be made to a lender to
the Partnership or to any Person who is related (within the meaning of
Regulations Section 1.752-4(b)) to any lender to the Partnership whose loan
constitutes a non-recourse liability (within the meaning of Regulations Section
1.752-1(a)(2)), without the consent of the General Partner, which may be
withheld in its sole and absolute discretion; PROVIDED, HOWEVER, that as a
condition to such consent the lender will be required to enter into an
arrangement with the Partnership and the General Partner to exchange or redeem
for the Cash Amount any Partnership Units in which a security interest is held
simultaneously with the time at which such lender would be deemed to be a
partner in the Partnership for purposes of allocating liabilities to such lender
under Section 752 of the Code.
(h) No Limited Partner may effect a Transfer of any warrant held by
such Limited Partner, in whole or in part, if, in the opinion of legal counsel
for the Partnership, such proposed Transfer would result in the Partnership's
being treated as an association taxable as a corporation (other than a qualified
REIT subsidiary within the meaning of Section 856(i) of the Code), determined as
if such warrant had been exercised. Such Limited Partner shall give 30 days
notice of any transfer under this Section 9.02(h) to the General Partner so that
a determination can be made whether the transfer otherwise is prohibited under
Sections 9.02(b) or 9.02(c).
9.03 ADMISSION OF SUBSTITUTE LIMITED PARTNER.
(a) Subject to the other provisions of this Article IX, an assignee
of the Limited Partnership Interest of a Limited Partner (which shall be
understood to include any purchaser, transferee, donee, or other recipient of
any disposition of such Limited Partnership Interest) shall be deemed admitted
as a Limited Partner of the Partnership only upon the satisfactory completion of
the following:
(i) The assignee shall have accepted and agreed to be bound by
the terms and provisions of this Agreement by executing a counterpart or an
amendment thereof, including a revised EXHIBIT A, and such other documents
or instruments as the General Partner may require in order to effect the
admission of such Person as a Limited Partner.
(ii) To the extent required, an amended Certificate evidencing
the admission of such Person as a Limited Partner shall have been signed,
acknowledged and filed for record in accordance with the Act.
(iii) The assignee shall have delivered a letter containing the
representation set forth in Section 9.01(a) hereof and the agreement set
forth in Section 9.01(b) hereof.
(iv) If the assignee is a corporation, partnership or trust,
the assignee shall have provided the General Partner with evidence
satisfactory to counsel for the Partnership of the assignee's authority to
become a Limited Partner under the terms and provisions of this Agreement.
(v) The assignee shall have executed a power of attorney
containing the terms and provisions set forth in Section 8.02 hereof.
(vi) The assignee shall have paid all reasonable legal fees of
the Partnership and the General Partner and filing and publication costs in
connection with his substitution as a Limited Partner.
(vii) The assignee has obtained the prior written consent of the
General Partner to its admission as a Substitute Limited Partner, which
consent may be given or denied in the exercise of General Partner's sole
and absolute discretion.
(viii) In the case of an assignee of the Limited Partnership
Interest of the General Partner except in the case of a transaction
described in Section 7.01(c) or (d) (in which case no consent is
necessary), the assignee has obtained the prior written consent of a
majority-in-interest of the Limited Partners (other than the General
Partner) to its admission as a Substitute Limited Partner, which consent
may be given or denied in the exercise of such Limited Partners' sole and
absolute discretion.
(b) For the purpose of allocating profits and losses and distributing
cash received by the Partnership, a Substitute Limited Partner shall be treated
as having become, and appearing in the records of the Partnership as, a Partner
upon the filing of the Certificate described in Section 9.03(a)(ii) hereof or,
if no such filing is required, the later of the date specified in the transfer
documents or the date on which the General Partner has received all necessary
instruments of transfer and substitution.
(c) The General Partner shall cooperate with the Person seeking to
become a Substitute Limited Partner by preparing the documentation required by
this Section and making all official filings and publications. The Partnership
shall take all such action as promptly as practicable after the satisfaction of
the conditions in this Article IX to the admission of such Person as a Limited
Partner of the Partnership.
41
9.04 RIGHTS OF ASSIGNEES OF PARTNERSHIP INTERESTS.
(a) Subject to the provisions of Sections 9.01 and 9.02 hereof,
except as required by operation of law, the Partnership shall not be obligated
for any purposes whatsoever to recognize the assignment by any Limited Partner
of his Partnership Interest until the Partnership has received notice thereof.
(b) Any Person who is the assignee of all or any portion of a Limited
Partner's Limited Partnership Interest, but does not become a Substitute Limited
Partner and desires to make a further assignment of such Limited Partnership
Interest, shall be subject to all the provisions of this Article IX to the same
extent and in the same manner as any Limited Partner desiring to make an
assignment of his Limited Partnership Interest.
9.05 EFFECT OF BANKRUPTCY, DEATH, INCOMPETENCE OR TERMINATION OF A LIMITED
PARTNER. The occurrence of an Event of Bankruptcy as to a Limited Partner, the
death of a Limited Partner or a final adjudication that a Limited Partner is
incompetent (which term shall include, but not be limited to, insanity) shall
not cause the termination or dissolution of the Partnership, and the business of
the Partnership shall continue if an order for relief in a bankruptcy proceeding
is entered against a Limited Partner. The trustee or receiver of his estate or,
if he dies, his executor, administrator or trustee or, if he is finally
adjudicated incompetent, his committee, guardian or conservator shall have the
rights of such Limited Partner for the purpose of settling or managing his
estate property and such power as the bankrupt, deceased or incompetent Limited
Partner possessed to assign all or any part of his Partnership Interest and to
join with the assignee in satisfying conditions precedent to the admission of
the assignee as a Substitute Limited Partner.
9.06 JOINT OWNERSHIP OF INTERESTS. A Partnership Interest may be acquired
by two individuals as joint tenants with right of survivorship, provided that
such individuals either are married or are related and share the same home as
tenants in common. The written consent or vote of both owners of any such
jointly held Partnership Interest shall be required to constitute the action of
the owners of such Partnership Interest; provided, however, that the written
consent of only one joint owner will be required if the Partnership has been
provided with evidence satisfactory to the counsel for the Partnership that the
actions of a single joint owner can bind both owners under the applicable laws
of the state of residence of such joint owners. Upon the death of one owner of a
Partnership Interest held in a joint tenancy with a right of survivorship, the
Partnership Interest shall become owned solely by the survivor as a Limited
Partner and not as an assignee. The Partnership need not recognize the death of
one of the owners of a jointly-held Partnership Interest until it shall have
received notice of such death. Upon notice to the General Partner from either
owner, the General Partner shall cause the Partnership Interest to be divided
into two equal Partnership Interests, which shall thereafter be owned separately
by each of the former owners.
45
ARTICLE X
BOOKS AND RECORDS; ACCOUNTING; TAX MATTERS
10.01 BOOKS AND RECORDS. At all times during the continuance of the
Partnership, the General Partner shall keep or cause to be kept at the
Partnership's specified office true and complete books of account in accordance
with generally accepted accounting principles, including: (a) a current list of
the full name and last known business address of each Partner, (b) a copy of the
Certificate of Limited Partnership and all certificates of amendment thereto,
(c) copies of the Partnership's federal, state and local income tax returns and
reports, (d) copies of the Agreement and any financial statements of the
Partnership for the three most recent years and (e) all documents and
information required under the Act. Any Partner or his duly authorized
representative, upon paying the costs of collection, duplication and mailing,
shall be entitled to inspect or copy such records during ordinary business
hours.
10.02 CUSTODY OF PARTNERSHIP FUNDS; BANK ACCOUNTS.
(a) All funds of the Partnership not otherwise invested shall be
deposited in one or more accounts maintained in such banking or brokerage
institutions as the General Partner shall determine, and withdrawals shall be
made only on such signature or signatures as the General Partner may, from time
to time, determine.
(b) All deposits and other funds not needed in the operation of the
business of the Partnership may be invested by the General Partner in investment
grade instruments (or investment companies whose portfolio consists primarily
thereof), government obligations, certificates of deposit, bankers' acceptances
and municipal notes and bonds and other similar investments. The funds of the
Partnership shall not be commingled with the funds of any other Person except
for such commingling as may necessarily result from an investment in those
investment companies permitted by this Section 10.02(b).
10.03 FISCAL AND TAXABLE YEAR. The fiscal and taxable year of the
Partnership shall be the calendar year.
10.04 ANNUAL TAX INFORMATION AND REPORT. Within 90 days after the end of
each fiscal year of the Partnership, the General Partner shall furnish to each
person who was a Limited Partner at any time during such year the tax
information necessary to file such Limited Partner's individual tax returns as
shall be reasonably required by law.
10.05 TAX MATTERS PARTNER; TAX ELECTIONS; SPECIAL BASIS ADJUSTMENTS.
(a) The General Partner shall be the Tax Matters Partner of the
Partnership within the meaning of Section 6231(a)(7) of the Code. As Tax Matters
Partner, the General Partner shall have the right and obligation to take all
actions authorized and required, respectively, by the Code for the Tax Matters
Partner. The General Partner shall have the right to retain professional
assistance in respect of any audit of the Partnership by the Service and all
out-
46
of-pocket expenses and fees incurred by the General Partner on behalf of the
Partnership as Tax Matters Partner shall constitute Partnership expenses. In the
event the General Partner receives notice of a final Partnership adjustment
under Section 6223(a)(2) of the Code, the General Partner shall either (i) file
a court petition for judicial review of such final adjustment within the period
provided under Section 6226(a) of the Code, a copy of which petition shall be
mailed to all Limited Partners on the date such petition is filed, or (ii) mail
a written notice to all Limited Partners, within such period, that describes the
General Partner's reasons for determining not to file such a petition.
(b) All elections required or permitted to be made by the
Partnership under the Code or under any applicable state law shall be made by
the General Partner in its sole discretion.
(c) In the event of a transfer of all or any part of the
Partnership Interest of any Partner, the Partnership, at the option of the
General Partner, may elect pursuant to Section 754 of the Code to adjust the
basis of the Properties. Notwithstanding anything contained in Article V of this
Agreement, any adjustments made pursuant to Section 754 shall affect only the
successor in interest to the transferring Partner and in no event shall be taken
into account in establishing, maintaining or computing Capital Accounts for the
other Partners for any purpose under this Agreement. Each Partner will furnish
the Partnership with all information necessary to give effect to such election.
10.06 REPORTS TO LIMITED PARTNERS.
(a) As soon as practicable after the close of each fiscal quarter,
but in no event later than 45 days (other than the last quarter of the fiscal
year), the General Partner shall cause to be mailed to each Limited Partner a
quarterly report containing financial statements of the Partnership, or of the
Company if such statements are prepared solely on a consolidated basis with the
Company, for such fiscal quarter, presented in accordance with generally
accepted accounting principles. As soon as practicable after the close of each
fiscal year, the General Partner shall cause to be mailed to each Limited
Partner an annual report containing financial statements of the Partnership, or
of the Company if such statements are prepared solely on a consolidated basis
with the Company for such fiscal year, prepared in accordance with generally
accepted accounting principles. The annual financial statements shall be audited
by accountants selected by the General Partner.
(b) Any Partner shall further have the right to a private audit of
the books and records of the Partnership, provided such audit is made for
Partnership purposes, at the expense of the Partner desiring it and is made
during normal business hours.
47
ARTICLE XI
AMENDMENT OF AGREEMENT;
SALE OF ALL OR SUBSTANTIALLY ALL OF COMPANY'S ASSETS
11.01 AMENDMENT OF AGREEMENT. The General Partner, without the consent of
the Limited Partners, may amend this Agreement in any respect; provided,
however, that the following amendments shall require the consent of Limited
Partners (other than the Company in its capacity as a Limited Partner) holding
at least two-thirds (2/3rds) of the Percentage Interests of the Limited Partners
(other than the Company in its capacity as a Limited Partner):
(a) any amendment affecting the operation of the Conversion Factor
or Redemption Right (except as provided in Section 8.05(d) hereof) in a manner
adverse to the Limited Partners;
(b) any amendment that would adversely affect the rights of the
Limited Partners to receive the distributions payable to them hereunder other
than with respect to the issuance of additional Partnership Units pursuant to
Section 4.02 of this Agreement;
(c) any amendment that would alter the Partnership's allocations of
Profit and Loss to the Limited Partners in a manner adverse to Limited Partners,
other than with respect to the issuance of additional Partnership Units pursuant
to Section 4.02 of this Agreement;
(d) any amendment that would impose on the Limited Partners any
obligation to make additional Capital Contributions to the Partnership;
(e) any amendment to Section 8.07 above in a manner adverse to any
Limited Partner; and
(f) any amendment to this Article XI.
11.02 SALE OF ALL OR SUBSTANTIALLY ALL OF THE ASSETS OF THE PARTNERSHIP;
CHANGE IN CONTROL. The General Partner, without the consent of the Limited
Partners (including the Company in its capacity as a Limited Partner) holding at
least two-thirds (2/3rds) of the Percentage Interests of the Limited Partners
(including the Company in its capacity as a Limited Partner), may not sell,
transfer, or convey all or substantially all of the assets of the Partnership,
including, without limitation, a sale, assignment or transfer to another public
or private company, or approve a merger or consolidation of the Partnership.
ARTICLE XII
GENERAL PROVISIONS
12.01 NOTICES. All communications required or permitted under this
Agreement shall be in writing and shall be deemed to have been given when
delivered personally or upon deposit in the United States mail, registered,
postage prepaid return receipt requested, to the Partners at the addresses set
forth in EXHIBIT A hereto; PROVIDED, HOWEVER, that any Partner may
48
specify a different address by notifying the General Partner in writing of such
different address. Notices to the Partnership shall be delivered at or mailed to
its specified office.
12.02 SURVIVAL OF RIGHTS. Subject to the provisions hereof limiting
transfers, this Agreement shall be binding upon and inure to the benefit of the
Partners and the Partnership and their respective legal representatives,
successors, transferees and assigns.
12.03 ADDITIONAL DOCUMENTS. Each Partner agrees to perform all further
acts and execute, swear to, acknowledge and deliver all further documents which
may be reasonable, necessary, appropriate or desirable to carry out the
provisions of this Agreement or the Act.
12.04 SEVERABILITY. If any provision of this Agreement shall be declared
illegal, invalid, or unenforceable in any jurisdiction, then such provision
shall be deemed to be severable from this Agreement (to the extent permitted by
law) and in any event such illegality, invalidity or unenforceability shall not
affect the remainder hereof.
12.05 ENTIRE AGREEMENT. This Agreement and Exhibits hereto constitute the
entire Agreement of the Partners and supersede all prior written agreements and
prior and contemporaneous oral agreements, understandings and negotiations with
respect to the subject matter hereof.
12.06 PRONOUNS AND PLURALS. When the context in which words are used in
the Agreement indicates that such is the intent, words in the singular number
shall include the plural and the masculine gender shall include the neuter or
female gender as the context may require.
12.07 HEADINGS. The Article headings or sections in this Agreement are for
convenience only and shall not be used in construing the scope of this Agreement
or any particular Article.
12.08 COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original copy and all of
which together shall constitute one and the same instrument binding on all
parties hereto, notwithstanding that all parties shall not have signed the same
counterpart.
12.09 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware.
12.10 GUARANTY BY COMPANY. The Company unconditionally and irrevocably
guarantees to the Limited Partners the performance by the Company of its
respective obligations as the General Partner and a Limited 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.
(Remainder of Page Intentionally Left Blank)
50
IN WITNESS WHEREOF, the parties hereto have hereunder affixed their
signatures to this Agreement of Limited Partnership.
GENERAL PARTNER
CAPITAL AUTOMOTIVE REIT, a
Maryland real estate investment trust
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Its: President and Chief Executive Officer
LIMITED PARTNERS
CAPITAL AUTOMOTIVE REIT, a
Maryland real estate investment trust
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Its: President and Chief Executive Officer
[Signature Blocks of Other Limited Partners]
SIGNATURE PAGE TO AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
CAPITAL AUTOMOTIVE L.P.
50
SCHEDULE A
SCHEDULE OF PARTNERS,
NUMBER OF PARTNERSHIP UNITS AND
CAPITAL CONTRIBUTIONS
[Exhibit Information Not Filed Herewith]
A-1
EXHIBIT B
[RESERVED]
B-2
EXHIBIT C
---------
NOTICE OF EXERCISE OF REDEMPTION RIGHT
In accordance with Section 8.05 of the Agreement of Limited Partnership (the
"Agreement") of Capital Automotive L.P., the undersigned hereby irrevocably (i)
presents for redemption ________ units of limited partnership interest ("Units")
in Capital Automotive L.P. (the "Partnership") in accordance with the terms of
the Agreement and the "Redemption Right" referred to in Section 8.05 thereof,
(ii) surrenders such Units and all right, title and interest therein, (iii)
surrenders herewith any certificate or other writing evidencing the Units (and
requests that any 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 the General Partner), as
defined in the Agreement, deliverable upon exercise of the Redemption Rights 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)
______________________________
(Mailing Address)
______________________________
(City) (State) (Zip Code)
Signature Guaranteed by:
______________________________
If REIT Shares are to be issued, issue to:
______________________________
______________________________
______________________________
Please insert social security or identifying number:
______________________________
C-1