SECOND AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
PRICE DEVELOPMENT COMPANY, LIMITED PARTNERSHIP
Dated as of July 15, 1999
ARTICLE 1 DEFINED TERMS 1
ARTICLE 2 ORGANIZATIONAL MATTERS 15
Section 2.1 Organization and Continuation 15
Section 2.2. Name 15
Section 2.3. Registered Office and Agent, Principal Office 15
Section 2.4. Power of Attorney; Compliance with Act 16
Section 2.5. Term 18
ARTICLE 3 PURPOSE 18
Section 3.1. Purpose and Business 18
Section 3.2. Powers 18
ARTICLE 4 CAPITAL CONTRIBUTIONS 19
Section 4.1. Capital Contributions of the Partners 19
Section 4.2. Issuances of Additional OP Units and Preferred Units 19
Section 4.3. Contribution of Proceeds by General Partner 23
Section 4.4. No Interest; No Return 24
Section 4.5. No Third Party Beneficiaries 24
ARTICLE 5 DISTRIBUTIONS 24
Section 5.1. Requirement and Characterization of Distributions 24
Section 5.2. Distributions Upon Liquidation 25
ARTICLE 6 ALLOCATIONS 25
Section 6.1. Allocations of Profits and Losses 25
Section 6.2. Mandatory Allocations 28
Section 6.3. Other Allocation Rules 32
Section 6.4. Allocations for Tax Purposes 32
ARTICLE 7 MANAGEMENT AND OPERATIONS OF BUSINESS 33
Section 7.1. Management 33
Section 7.2. Certificate of Limited Partnership 38
Section 7.3. Restrictions on General Partner's Authority 38
Section 7.4. Reimbursement of the General Partner 38
Section 7.5. Outside Activities of the General Partner 40
Section 7.6. Contracts with Affiliates 41
Section 7.7. Indemnification 42
Section 7.8. Liability of the General Partner 45
Section 7.9. REIT Qualification of the General Partner 46
Section 7.10. Title to Partnership Assets 46
ARTICLE 8 RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS 47
Section 8.1. Limitation of Liability 47
Section 8.2. Management of Business 47
Section 8.3. Outside Activities of Limited Partners 47
Section 8.4. Return of Capital 48
Section 8.5. Rights of Limited Partners Relating to the Partnership 48
ARTICLE 9 BOOKS, RECORDS, ACCOUNTING AND REPORTS 50
Section 9.1. Records and Accounting 50
Section 9.2. Fiscal Year 50
Section 9.3. Reports 50
ARTICLE 10 TAX MATTERS 51
Section 10.1. Preparation of Tax Returns 51
Section 10.2. Tax Elections 51
Section 10.3. Tax Matters Partner 51
Section 10.4. Organizational Expenses 52
Section 10.5. Withholding; Combined Returns 52
ARTICLE 11 TRANSFERS AND WITHDRAWALS 54
Section 11.1. Transfer 54
Section 11.2. Transfer of General Partner's Partner Interest 54
Section 11.3. Limited Partners' Rights to Transfer 54
Section 11.4. Substituted Limited Partners 55
Section 11.5. Assignees 56
Section 11.6. General Provisions 57
ARTICLE 12 ADMISSION OF PARTNERS 58
Section 12.1. Admission of Successor General Partner 58
Section 12.2. Admission of Additional Limited Partners 58
Section 12.3. Amendment of Agreement and Certificate of Limited
Partnership 59
ARTICLE 13 DISSOLUTION, LIQUIDATION AND TERMINATION 59
Section 13.1. Dissolution 59
Section 13.2. Winding Up 61
Section 13.3. Negative Capital Accounts 63
Section 13.4. Accounting 64
Section 13.5. Deemed Distribution and Recontribution 65
Section 13.6. Rights of Partners 65
Section 13.7. Notice of Dissolution 65
Section 13.8. Termination of Partnership and Cancellation of
Certificate of Limited Partnership 66
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Section 13.9. Agreement to Remain in Effect 66
Section 13.10. Waiver of Partition 66
ARTICLE 14 AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS 66
Section 14.1. Amendments 66
Section 14.2. Meetings of the Partners 68
ARTICLE 15 GENERAL PROVISIONS 70
Section 15.1. Addresses and Notice 70
Section 15.2. Titles and Captions 70
Section 15.3. Pronouns and Plurals 70
Section 15.4. Further Action 70
Section 15.5. Binding Effect 70
Section 15.6. Waiver 70
Section 15.7. Counterparts 71
Section 15.8. Applicable Law 71
Section 15.9. Invalidity of Provisions 71
Section 15.10. Entire Agreement 71
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SECOND AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
PRICE DEVELOPMENT COMPANY, LIMITED PARTNERSHIP
THIS SECOND AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP,
entered into as of July 15, 1999, by and among JP Realty, Inc., a Maryland
corporation ("JP Realty"), as the general partner, and the Persons whose names
are set forth on EXHIBIT A as attached hereto, as the limited partners,
together with any other Persons who become Partners in the Partnership as
provided herein.
ARTICLE 1
DEFINED TERMS
Except as otherwise provided herein, the following terms and phrases
shall have the meanings set forth below.
"ACT" means the Maryland Revised Uniform Partnership Act, as it may
be amended from time to time, and any successor to such statute.
"ADDITIONAL LIMITED PARTNER" means a Person admitted to the
Partnership as a Limited Partner pursuant to Section 4.2 hereof and who is
shown as such on the books and records of the Partnership.
"ADJUSTED CAPITAL ACCOUNT" means the Capital Account maintained for
each Partner for each Partnership Year (i) increased by any amounts which such
Partner is obligated to restore pursuant to any provision of this Agreement or
otherwise or is deemed to be obligated to restore pursuant to Regulation 1.704-
1(b)(ii)(c) or the penultimate sentences of Regulations 1.704-2(g)(1)
and 1.704-2(i)(5) and (ii) decreased by the items described in Regulations
1.704-1(b)(2)(ii)(d)(4), (5), and (6). The foregoing definition of
Adjusted Capital Account is intended to comply with the provisions of
Regulations 1.704-1(b)(2)(ii)(d) and shall be interpreted
consistently therewith.
"AFFILIATE" means, with respect to any Person, (i) any Person
directly or indirectly controlling, controlled by or under common control with
such Person, (ii) any Person owning, except if such ownership arises out of
such Person's engagement as an underwriter in a securities offering, or
controlling ten percent (10%) or more of the outstanding voting interests of
such Person, (iii) any Person of which such Person owns, except if such
ownership arises out of such Person's engagement as an underwriter in a
securities offering, or controls ten percent (10%) or more of the voting
interests, or (iv) any officer, director, general partner or trustee of such
Person or of any Person referred to in clauses (i), (ii) and (iii) above.
"AGGREGATE RESTORATION AMOUNT" means with respect to the Obligated
Partners, as a group, the aggregate balances of the Restoration Amounts, if
any, of the Obligated Partners, as determined on the date in question.
"AGREEMENT" means this Second Amended and Restated Agreement of
Limited Partnership, as it may be amended, supplemented or restated from time
to time.
"ARTICLES OF INCORPORATION" means the Amended and Restated Articles
of Incorporation of the General Partner filed in the State of Maryland on
September 8, 1993, as amended or restated from time to time.
"ASSIGNEE" means a Person to whom one or more Partnership Units have
been transferred in a manner permitted under this Agreement, but who has not
become a Substituted Limited Partner, and who has the rights set forth in
Section 11.5.
"AVAILABLE CASH" means, with respect to any period for which such
calculation is being made, (a) all cash received by the Partnership from any
source (including borrowings by the Partnership, cash Capital Contributions and
proceeds of the sale, exchange or other disposition of all or portions of the
Partnership assets) and any cash released from working capital, capital
replacement, debt repayment or other reserves less (b) cash expended, reserved
or required for (i) debts and expenses, interest and principal payments on any
indebtedness, capital expenditures, taxes, fees, (ii) investments in the
acquisition, development, construction, expansion or redevelopment of real
estate or personal property
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appurtenant thereto, or entities which hold direct
or indirect interests in real estate or such personal property, or (iii) other
requirements of the Partnership, including any payments of any kind to holders
of Preferred Units, in each case as reasonably determined by the General
Partner. Notwithstanding the foregoing, Available Cash shall not include any
cash received or reductions in reserves, or take into account any disbursements
made or reserves established, after commencement of the dissolution and
liquidation of the Partnership.
"BANKRUPTCY" of a Person shall be deemed to have occurred when (a)
the Person commences a voluntary proceeding seeking liquidation, reorganization
or other relief under any bankruptcy, insolvency or other similar law now or
hereafter in effect, (b) the Person is adjudged as bankrupt or insolvent, or a
final and nonappealable order for relief under any bankruptcy, insolvency or
similar law now or hereafter in effect has been entered against the Person, (c)
the Person executes and delivers a general assignment for the benefit of the
Person's creditors, (d) the Person files an answer or other pleading admitting
or failing to contest the material allegations of a petition filed against the
Person in any proceeding of the nature described in clause (b) above, (e) the
Person seeks, consents to or acquiesces in the appointment of a trustee,
receiver or liquidator for the Person or for all or any substantial part of the
Person's properties, (f) any proceeding seeking liquidation, reorganization or
other relief of or against such Person under any bankruptcy, insolvency or
other similar law now or hereafter in effect has not been dismissed within one
hundred twenty (120) days after the commencement thereof, (g) the appointment
without the Person's consent or acquiescence of a trustee, receiver or
liquidator has not been vacated or stayed within ninety (90) days of such
appointment, or (h) an appointment referred to in clause (g) is not vacated
within ninety (90) days after the expiration of any such stay.
"CAPITAL ACCOUNT" means, as to any Partner, including a substituted
partner who shall, pursuant to the provisions hereof, acquire a Partnership
Interest, a book account maintained in accordance with the following
provisions:
(1) To each Partner's Capital Account there shall be credited the
amount of cash contributed by the Partner, the initial Gross Asset Value
of any other asset contributed by such Partner to the capital of the
Partnership (net of liabilities secured by such
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contributed property that
the Partnership assumes or takes subject to), such Partner's distributive
share of Profits, the amount of any Partnership liabilities assumed by the
Partner or secured by distributed assets that such Partner takes subject
to and any other items in the nature of income or gain that are allocated
to such Partner pursuant to Section 6.2 hereof; and
(2) To each Partner's Capital Account there shall be debited the
amount of cash distributed to the Partner, the Gross Asset Value of any
Partnership asset distributed to such Partner pursuant to any provision of
this Agreement, such Partner's distributive share of Losses and any other
items in the nature of expenses or losses that are allocated to such
Partner pursuant to Section 6.2 hereof.
In the event that a Partner's Partnership Interest or portion
thereof is transferred within the meaning of Regulations
1.704-1(b)(2)(iv)(f), the transferee shall succeed to the Capital
Account of the transferor to the extent that it relates to the Partnership
Interest or portion thereof so transferred.
In the event that the Gross Asset Values of Partnership assets are
adjusted, as contemplated in paragraph (b) or (c) of the definition of "Gross
Asset Value," the Capital Accounts of the Partners shall be adjusted to reflect
the aggregate net adjustments as if the Partnership sold all of its properties
for their fair market values and recognized gain or loss for federal income tax
purposes equal to the amount of such aggregate net adjustment.
The foregoing provisions and the other provisions of this Agreement
relating to the maintenance of Capital Accounts are intended to comply with
Regulations 1.704-1(b), and shall be interpreted and applied in a
manner consistent with such Regulations.
"CAPITAL CONTRIBUTIONS" means, with respect to any Partner, any
cash, cash equivalents or the initial Gross Asset Value of any property other
than money which such Partner contributes or is deemed to contribute to the
Partnership pursuant to Section 4.1 or 4.2 hereof.
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"CERTIFICATE" means the Certificate of Limited Partnership relating
to the Partnership filed in the office of the Maryland State \Department of
Assessments and Taxation, as amended from time to time in accordance with the
terms hereof and the Act.
"CODE" means the Internal Revenue Code of 1986, as amended (or any
corresponding provision of succeeding law). Reference to a section of the Code
shall be deemed to include a reference to any amendatory or successor provision
thereto.
"COMMON STOCK" means the Common Stock, par value $.0001 per share,
of the Company.
"CONSENT" means the consent or approval of a proposed action by
Limited Partners given in accordance with Sections 14.1 and 14.2 hereof and
consisting of the affirmative vote of Limited Partners holding no less than 51%
of the Limited Partner Interests (excluding Partnership Units that may be held
by the General Partner or any of its Subsidiaries as a Limited Partner).
"CONSENTING PARTNERS" has the same meaning set forth in Section
13.1.B.
"CONVERSION FACTOR" means 1.0; PROVIDED THAT in the event that the
General Partner (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 then
in effect by a fraction, the numerator of which shall be the number of REIT
Shares and shares of Excess Stock 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 and shares of Excess Stock (determined without the above
assumption) issued and outstanding on the record date for such dividend,
distribution, subdivision or combination. Any adjustment to the Conversion
Factor shall become effective immediately after the effective date of such
event retroactive to the record date, if any, for such event.
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"DEBT SERVICE" means, for any period, the sum of interest expense
and regularly scheduled principal amortization for the most recently available
trailing twelve-month period.
"DEPRECIATION" means, for each Partnership Year, an amount equal to
the federal income tax depreciation, amortization or other cost recovery
deduction allowable with respect to an asset for such year, except that if the
Gross Asset Value of an asset differs from its adjusted basis for federal
income tax purposes at the beginning of such year or other period, Depreciation
shall be an amount which bears the same ratio to such beginning Gross Asset
Value as the federal income tax depreciation, amortization or other cost
recovery deduction for such year bears to such beginning adjusted tax basis;
PROVIDED THAT if the federal income tax depreciation, amortization, or other
cost recovery deduction for such year is zero, Depreciation shall be determined
with reference to such beginning Gross Asset Value using any reasonable method
selected by the General Partner.
"EBITDA" means, for any period, the earnings of the Partnership for
such period before interest expense, taxes, depreciation and amortization,
determined in each case on a consolidated basis.
"EFFECTIVE DATE" means the date of this Agreement.
"EXCESS STOCK" has the meaning set forth in the Articles of
Incorporation.
"EXCHANGE AGREEMENT" means the Exchange Agreement, dated as of
January 21, 1994, among the General Partner and each of the Limited Partners,
relating to the rights of such Limited Partners to exchange Partnership Units
for REIT Shares.
"GAAP" means the generally accepted accounting principles in effect
in the United States.
"GENERAL PARTNER" means JP Realty, in its individual capacity and in
its capacity as general partner of the Partnership, or its successors as
general partner of the Partnership.
"GENERAL PARTNER INTEREST" means a Partnership Interest held by the
General Partner that is a general partnership interest. A General Partner
Interest shall be expressed as a number of Partnership Units, with such
Partnership Units being designated as either OP Units or Preferred Units.
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"GROSS ASSET VALUE" means, with respect to any asset of the
Partnership, such asset's adjusted basis for federal income tax purposes,
except as follows:
(a) the initial Gross Asset Value of any asset contributed by a
Partner to the Partnership shall be (i) in the case of any asset described
on attached EXHIBIT A, the gross fair market value as described thereto on
such EXHIBIT A, and (ii) in the case of any other asset hereafter
contributed by a Partner, the gross fair market value of such asset at the
time of contribution determined by the General Partner using such
reasonable method of valuation as it may adopt.
(b) the Gross Asset Values of all Partnership assets shall be
adjusted to equal their respective gross fair market values, as reasonably
determined by the General Partner, immediately prior to the following
events:
(i) a Capital Contribution (other than a de minimis Capital
Contribution) to the Partnership by a new or existing Partner as
consideration for a Partnership Interest;
(ii) the distribution by the Partnership to a Partner of more
than a de minimis amount of Partnership property as consideration
for the redemption of a Partnership Interest;
(iii) the liquidation of the Partnership within the meaning of
Regulations 1.704-1(b)(2)(ii)(g).
(c) the Gross Asset Values of Partnership assets distributed to any
Partner shall be the gross fair market values of such assets as reasonably
determined by the General Partner as of the date of distribution.
At all times, Gross Asset Values shall be adjusted by any
Depreciation taken into account with respect to the Partnership's assets for
purposes of computing Profits and Losses. Gross Asset Values shall be further
adjusted to reflect adjustments to Capital Accounts pursuant to Regulations
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(section) 1.704-1(b)(2)(iv)(m) to the extent not otherwise reflected in
adjustments to Gross Asset Values. Any adjustment to the Gross Asset Values of
Partnership property shall require an adjustment to the Partners' Capital
Accounts as described in the definition of "Capital Account."
"GUARANTEED AMOUNT" means, with respect to each Obligated Partner,
the amount, if any, of the Price Capital Corp. $95 million Collateralized Notes
due 2001 directly guaranteed by such Obligated Partner (or its partners in the
case of Fairfax Holding, LLC) pursuant to a Limited Guarantee Agreement, dated
January 21, 1994, by and among the Obligated Partner, Continental Bank, N.A.
and, if applicable, certain partners of the Obligated Partner.
"IMMEDIATE FAMILY" means, with respect to any natural Person, such
natural Person's spouse and such natural Person's natural or adoptive parents,
descendants, nephews, nieces, brothers, and sisters.
"INCAPACITY" or "INCAPACITATED" means, (i) as to any individual
Partner, death, total physical disability or entry by a court of competent
jurisdiction adjudicating him or her incompetent to manage his or her Person or
estate; (ii) as to any corporation which is a Partner, the filing of a
certificate or articles of dissolution, or its equivalent, for the corporation
or the revocation of its charter; (iii) as to any partnership which is a
Partner, the dissolution and commencement of winding up of the partnership;
(iv) as to any estate which is a Partner, the distribution by the fiduciary of
the estate's entire interest in the Partnership; (v) as to any trustee of a
trust which is a Partner, the termination of the trust (but not the
substitution of a new trustee); or (vi) as to any Partner, the Bankruptcy of
such Partner.
"INDEMNITEE" means (i) any Person made a party to a proceeding by
reason of his status as (A) a Partner, (B) a director or officer of a Partner,
or (C) an officer of the Partnership, and (ii) such other Persons (including
Affiliates of the General Partner or the Partnership) as the General Partner
may designate from time to time (whether before or after the event giving rise
to potential liability), in its sole and absolute discretion.
"IRS" means the Internal Revenue Service of the United States
Treasury Department.
"JP REALTY" means JP Realty, Inc., a Maryland corporation.
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"LIMITED PARTNER" means any Person named as a Limited Partner in
EXHIBIT A attached hereto, as such Exhibit may be amended from time to time, or
any Substituted Limited Partner or Additional Limited Partner, in such Person's
capacity as a limited partner in the Partnership.
"LIMITED PARTNER INTEREST" means a Partnership Interest of a Limited
Partner in the Partnership representing a fractional part of the Partnership
Interests of all Limited Partners (other than holders of Preferred Units) and
includes any and all benefits to which the holder of such a Partnership
Interest may be entitled as provided in this Agreement, together with all
obligations of such Person to comply with the terms and provisions of this
Agreement. A Limited Partner Interest shall be expressed as a number of
Partnership Units, with such Partnership Units being designated as either OP
Units or Preferred Units.
"LIQUIDATION PREFERENCE AMOUNT" means, with respect to a class or
series of Preferred Units, the amount that such class or series of Preferred
Units are entitled to upon a redemption of Preferred Units or liquidation of
the Partnership, each as further described in the applicable Partnership Unit
Designation.
"LIQUIDATOR" has the meaning set forth in Section 13.2.
"MARKET VALUE OF TOTAL EQUITY" means the total value of all
outstanding Partnership Units, with the value of each Partnership Unit equal to
the product arrived at by multiplying the current market value of a REIT Share
by the Conversion Factor.
"NONRECOURSE DEDUCTIONS" means the nonrecourse deductions as defined
in Regulations 1.704-2(b)(1). The amount of Nonrecourse Deductions
for a Partnership Year equals the net increase, if any, in the amount of
Partnership Minimum Gain during such Partnership Year reduced by any
distributions during such Partnership Year of proceeds of a Nonrecourse
Liability that are allocable to an increase in Partnership Minimum Gain,
determined according to the provisions of Regulations 1.704-2(c)
and 1.704-2(h).
"NONRECOURSE LIABILITY" means a liability as defined in Regulations
1.704-2(b)(3).
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"OBLIGATED PARTNER(S)" means that or those Limited Partner(s) listed
as Obligated Partner(s) on EXHIBIT B attached hereto and made a part hereof, as
such exhibit may be amended from time to time by the General Partner. Any
successor, assignee or transferee of the entire Partnership Interest of an
Obligated Partner shall be considered an Obligated Partner; provided, however,
that if an Obligated Partner, which is not an individual (an "Entity Obligated
Partner"), makes a liquidating distribution to an interest holder who is being
allocated a portion of such Entity Obligated Partner's Restoration Amount, the
General Partner shall amend EXHIBIT B to add such distributee as an additional
Obligated Partner with a Restoration Amount equal to such distributee's
allocable share of such Entity Obligated Partner's Restoration Amount and the
Restoration Amount of the Entity Obligated Partner shall be reduced
accordingly.
"OP UNIT" has the meaning set forth in Section 4.2.A.
"PARTNER" means a General Partner or a Limited Partner, and
"PARTNERS" means the General Partner and the Limited Partners.
"PARTNER MINIMUM GAIN" means an amount, with respect to each Partner
Nonrecourse Debt, equal to the Partnership Minimum Gain that would result if
such Partner Nonrecourse Debt were treated as a Nonrecourse Liability,
determined in accordance with Regulations 1.704-2(i)(3).
"PARTNER NONRECOURSE DEBT" means a liability as defined in
Regulations 1.704-2(b)(4).
"PARTNER NONRECOURSE DEDUCTIONS" means the partner nonrecourse
deductions as defined in Regulations 1.704-2(i)(2). The amount of
Partner Nonrecourse Deductions with respect to a Partner Nonrecourse Debt for a
Partnership Year equals the net increase, if any, in the amount of Partner
Minimum Gain during such Partnership Year attributable to such Partner
Nonrecourse Debt, reduced by any distributions during that Partnership Year to
the Partner that bears the economic risk of loss for such Partner Nonrecourse
Debt to the extent that such distributions are from the proceeds of such
Partner Nonrecourse Debt and are allocable to an increase in Partner Minimum
Gain attributable to such Partner Nonrecourse Debt, determined according to the
provisions of Regulations 1.704-2(h) and 1.704-2(i).
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"PARTNERSHIP" means Price Development Company, Limited Partnership,
a Maryland limited partnership.
"PARTNERSHIP INTEREST" means an ownership interest in the
Partnership representing a Capital Contribution by either a Limited Partner or
the General Partner and includes any and all benefits to which the holder of
such a Partnership Interest may be entitled as provided in this Agreement,
together with all obligations of such Person to comply with the terms and
provisions of this Agreement. A Partnership Interest may be expressed as a
number of Partnership Units.
"PARTNERSHIP MINIMUM GAIN" means the aggregate gain, if any, that
would be realized by the Partnership for purposes of computing Profits and
Losses with respect to each Partnership asset if each Partnership asset subject
to a Nonrecourse Liability were disposed of for the amount outstanding on the
Nonrecourse Liability by the Partnership in a taxable transaction. Partnership
Minimum Gain with respect to each Partnership asset shall be further determined
in accordance with Regulations 1.704-2(d) and any subsequent rule or
regulation governing the determination of minimum gain. A Partner's share of
Partnership Minimum Gain at the end of any Partnership Year shall equal the
aggregate Nonrecourse Deductions allocated to such Partner (or his predecessors
in interest) up to that time, less such Partner's (and predecessors') aggregate
share of decreases in Partnership Minimum Gain determined in accordance with
Regulations 1.704-2(g).
"PARTNERSHIP RECORD DATE" means the record date established by the
General Partner for the distribution of Available Cash pursuant to Section 5.1
hereof, and the General Partner will establish the same date as the record date
for a distribution to its stockholders of some or all of its portion of such
distribution.
"PARTNERSHIP UNIT" has the meaning set forth in Section 4.2.
"PARTNERSHIP UNIT DESIGNATION" has the meaning set forth in
Section 4.2.
"PARTNERSHIP YEAR" means the fiscal year of the Partnership, which
shall be the calendar year.
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"PERCENTAGE INTEREST" means, as to a Partner, its interest in the
Partnership as determined by dividing the Partnership Units owned by such
Partner (other than Preferred Units) by the total number of Partnership Units
then outstanding (other than Preferred Units) and as specified in EXHIBIT A
attached hereto, as such Exhibit may be amended from time to time in accordance
with the terms of this Agreement.
"PERSON" means an individual or a corporation, partnership, trust,
unincorporated organization, association, limited liability company or other
entity.
"PREFERRED UNIT" has the meaning set forth in Section 4.2.A.
"PRIOR AGREEMENTS" means the Amended and Restated Agreement of
Limited Partnership of Price Development Company, Limited Partnership, dated as
of January 21, 1994, between the General Partner and the Limited Partners named
therein, as thereafter amended, and the First Amended and Restated Agreement of
Limited Partnership of Price Development Company, Limited Partnership, dated as
of April 22, 1999, between the General Partner and the Limited Partners named
therein, which Prior Agreements are amended and restated in their entirety by
this Agreement as of the Effective Date.
"PROFITS" and "LOSSES" mean, respectively, for each Partnership Year
or other period, the Partnership's taxable income or loss for such Partnership
Year or other period, determined in accordance with Code 703(a) (for
this purpose, all items of income, gain, loss, or deduction required to be
stated separately pursuant to Code 703(a)(1) shall be included in
taxable income or loss), adjusted as follows:
(1) any income of the Partnership that is exempt from federal income
tax and not otherwise taken into account in computing Profits or Losses
shall be added to such taxable income or loss;
(2) in lieu of the depreciation, amortization and other cost recovery
deductions taken into account in computing such taxable income or loss,
there shall be taken into account Depreciation for such Partnership Year
or other period;
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(3) any items that are specially allocated pursuant to Section 6.2
hereof shall not be taken into account in computing Profits or Losses;
(4) any expenditures of the Partnership described in Code
705(a)(2)(B) (or treated as such under Regulations
1.704-1(b)(2)(iv)(i)) and not otherwise taken into account in
computing Profits or Losses shall be deducted from such taxable income or
loss;
(5) in the event the Gross Asset Value of any Partnership asset is
adjusted in accordance with paragraph (b) or (c) of the definition of
Gross Asset Value, the amount of such adjustment shall be taken into
account as gain or loss from the disposition of such Partnership asset for
purposes of computing Profits or Losses;
(6) gain or loss resulting from any disposition of any Partnership
asset with respect to which gain or loss is recognized for federal income
tax purposes shall be computed by reference to the Gross Asset Value of
the property disposed of, notwithstanding the fact that the adjusted tax
basis of such Partnership asset differs from its Gross Asset Value; and
(7) An allocation of Partnership Profits or Losses to a Partner shall
be treated as an allocation to such Partner of the same share of each item
of income, gain, loss and deduction that has been taken into account in
computing such Profits or Losses.
"RECOURSE LIABILITY" means the amount of indebtedness owed by the
Partnership other than Nonrecourse Liabilities and Partner Nonrecourse Debt.
"REGISTRATION RIGHTS AGREEMENT" means the Registration Rights
Agreement, dated as of January 21, 1994, among the General Partner and each of
the Limited Partners, relating to the registration of REIT Shares issued upon
exchange of Partnership Units under the Exchange Agreement.
"REGULATIONS" means the Income Tax Regulations of the Internal
Revenue Service ("IRS") as such regulations may be amended from time to time
(including Temporary Regulations). A reference to any Regulation shall be
deemed to include any amendatory or successor provision thereto.
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"REIT" means a real estate investment trust as defined in Code
856.
"REIT SHARE" shall mean a share of capital stock of the General
Partner, including a share of Excess Stock of the General Partner exchanged for
a share of such capital stock, as provided in Article Ninth of the Articles of
Incorporation or any amendatory or successor provision thereto.
"RESTORATION AMOUNT" means with respect to any Obligated Partner,
the amount set forth opposite the name of such Obligated Partner on EXHIBIT B
attached hereto and made a part hereof, as such exhibit may be adjusted from
time to time by the General Partner. If an Entity Obligated Partner makes a
liquidating distribution to an interest holder who is being allocated a portion
of such Entity Obligated Partner's Restoration Amount, the General Partner
shall amend EXHIBIT B to add such distributee as an additional Obligated
Partner, and the Restoration Amount of such additional Obligated Partner shall
equal such distributee's allocable share of the Entity Obligated Partner's
Restoration Amount, and the Restoration Amount of the Entity Obligated Partner
shall be reduced accordingly.
"SUBSIDIARY" means, with respect to any Person, any corporation,
partnership or other entity of which a majority of (i) the voting power of the
voting equity securities or (ii) the outstanding equity interests is owned,
directly or indirectly, by such Person.
"SUBSTITUTED LIMITED PARTNER" means a Person who is admitted as a
Limited Partner to the Partnership pursuant to Section 11.4.
"TAX RATE" for any period means the highest marginal federal income
tax rate for individuals in effect during that period under the Code plus an
additional five percent (5%) of such rate.
"TERMINATING CAPITAL TRANSACTION" means any sale or other
disposition of all or substantially all of the assets of the Partnership or a
related series of transactions that, taken together, result in the sale or
other disposition of all or substantially all of the assets of the Partnership.
"TOTAL LIABILITIES" means, as of the date of determination, all
liabilities of the Partnership, determined on a consolidated basis in
conformity with GAAP.
14
ARTICLE 2
ORGANIZATIONAL MATTERS
Section 2.1. ORGANIZATION AND CONTINUATION
The Partnership is continued as a limited partnership organized
pursuant to the provisions of the Act and upon the terms and conditions set
forth in the Prior Agreements. The Partners hereby amend and restate the First
Amended and Restated Agreement of Limited Partnership of Price Development
Company, Limited Partnership, dated as of April 22, 1999, in its entirety as of
the Effective Date. Except as expressly provided herein to the contrary, the
rights and obligations of the Partners and the administration and termination
of the Partnership shall continue to be governed by the Act. The Partnership
Interest of each Partner shall be personal property for all purposes.
Section 2.2. NAME
The name of the Partnership is Price Development Company, Limited
Partnership. The Partnership's business may be conducted under any other name
or names deemed advisable by the General Partner, including the name of the
General Partner or any Affiliate thereof; provided, however, that the General
Partner may not choose the name (or any derivative thereof) of any Limited
Partner without the prior written consent of that Limited Partner. The words
"Limited Partnership," "L.P.," "Ltd." or similar words or letters shall be
included in the Partnership's name where necessary for the purposes of
complying with the laws of any jurisdiction that so requires. Subject to the
condition set forth in the second sentence of this Section 2.2, the General
Partner in its sole and absolute discretion may change the name of the
Partnership at any time and from time to time and shall notify the Limited
Partners of such change in the next regular communication to the Limited
Partners.
Section 2.3. REGISTERED OFFICE AND AGENT, PRINCIPAL OFFICE
The address of the principal office of the Partnership in the State
of Maryland is located at ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-
3010, and the "resident" agent in Maryland for service of process on the
Partnership in the State of Maryland at such registered office is P&M Agent
Corp. and such principal office and resident agent may be changed as the
General Partner may from time
15
to time designate by notice to the Limited
Partners. The principal executive office of the Partnership is located at ▇▇
▇▇▇▇▇▇▇ ▇▇▇▇-▇▇▇, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, and may be changed to such other
place as the General Partner may from time to time designate by notice to the
Limited Partners. The Partnership may maintain offices at such other place or
places within or outside the State of Maryland as the General Partner deems
advisable.
Section 2.4. POWER OF ATTORNEY; COMPLIANCE WITH ACT
A. Each Limited Partner and each Assignee hereby constitutes and
appoints the General Partner, any Liquidator, and authorized officers and
attorneys-in-fact of each, and each of those acting singly, in each case with
full power of substitution, as its true and lawful agent and attorney-in-fact,
with full power and authority in its name, place and stead to:
(1) execute, swear to, seal, acknowledge, deliver, file and record
in the appropriate public offices (a) all certificates, documents and other
instruments (including, without limitation, this Agreement and the Certificate
and all amendments or restatements thereof) that the General Partner or the
Liquidator deems appropriate or necessary to form, qualify or continue the
existence or qualification of the Partnership as a limited partnership (or a
partnership in which the limited partners have limited liability to the extent
provided by applicable law) in the State of Maryland and in all other
jurisdictions in which the Partnership may or plans to conduct business or own
property; (b) all instruments that the General Partner deems appropriate or
necessary to reflect any amendment, change, modification or restatement of this
Agreement in accordance with its terms; (c) all conveyances and other
instruments or documents that the General Partner deems appropriate or
necessary to reflect the dissolution and liquidation of the Partnership
pursuant to the terms of this Agreement, including, without limitation, a
certificate of cancellation; (d) all instruments relating to the admission,
withdrawal, removal or substitution of any Partner pursuant to, or other events
described in, Article 11, 12 or 13 hereof or the Capital Contribution of any
Partner; (e) any agreements, waivers or other instruments required by any state
or local tax authority to enable the Partnership to file combined, consolidated
or similar state or local
16
income tax returns and/or to pay a combined state and
local tax on behalf of the Partnership or all of the Partners; and (f) the
Exchange Agreement and the Registration Rights Agreement; and
(2) execute, swear to, seal, acknowledge and file all ballots,
consents, approvals, waivers, certificates and other instruments appropriate or
necessary, in the sole and absolute discretion of the General Partner, to make,
evidence, give, confirm or ratify any vote, consent, approval, agreement or
other action which is made or given by the Partners hereunder or is consistent
with the terms of this Agreement or appropriate or necessary, in the sole and
absolute discretion of the General Partner, to effectuate the terms or intent
of this Agreement.
Nothing contained herein shall be construed as authorizing the
General Partner to amend this Agreement except in accordance with Article 14
hereof or as may be otherwise expressly provided for in this Agreement in
Articles 11.4.C and 12.3.
B. The foregoing power of attorney is irrevocable and coupled with
an interest, in recognition of the fact that each of the Partners will be
relying upon the power of the General Partner to act as contemplated by this
Agreement in any filing or other action by it on behalf of the Partnership, and
it shall survive and not be affected by the subsequent Incapacity of any
Limited Partner or Assignee and the transfer of all or any portion of such
Limited Partner's or Assignee's Partnership Units and shall extend to such
Limited Partner's or Assignee's heirs, successors, assigns and personal
representatives. Each such Limited Partner or Assignee hereby agrees to be
bound by any representation made by the General Partner, acting in good faith
pursuant to such power of attorney; and each such Limited Partner or Assignee
hereby waives any and all defenses which may be available to contest, negate or
disaffirm the action of the General Partner, taken in good faith under such
power of attorney. Each Limited Partner or Assignee shall execute and deliver
to the General Partner or the Liquidator, within fifteen (15) days after
receipt of the General Partner's or Liquidator's request therefor, such further
designation, powers of attorney and other instruments as the General Partner or
the Liquidator, as the case may be, deems necessary to effectuate this power of
attorney.
17
Section 2.5. TERM
The term of the Partnership commenced on September 13, 1993, the
date the Certificate was filed in the office of the Maryland State Department
of Assessments and Taxation in accordance with the Act and shall continue until
December 31, 2093, unless the Partnership is dissolved and terminated sooner
pursuant to the provisions of Article 13 or as otherwise provided by law.
ARTICLE 3
PURPOSE
Section 3.1. PURPOSE AND BUSINESS
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 THAT such business
shall be limited to and conducted in such a manner as to permit the General
Partner at all times to be classified as a REIT, unless the General Partner
ceases to qualify as a REIT for reasons other than the conduct of the business
of the Partnership, (ii) to enter into any partnership, joint venture or other
similar arrangement to engage in any of the foregoing or to own interests in
any entity engaged in any of the foregoing and (iii) to do anything necessary
or incidental to the foregoing. In connection with the foregoing, the Partners
acknowledge that the General Partner's current status as a REIT inures to the
benefit of all the Partners and not solely the General Partner.
Section 3.2. POWERS
The Partnership shall be empowered to do any and all acts and things
necessary, appropriate, proper, advisable, incidental to or convenient for the
furtherance and accomplishment of the purposes and business described herein
and for the protection and benefit of the Partnership, PROVIDED THAT the
Partnership shall not take, or refrain from taking, any action which, in the
reasonable judgment of the General Partner (i) could adversely affect the
ability of the General Partner to continue to qualify as a REIT, (ii) could
subject the General Partner to any additional taxes under Code 857 or
4981, or (iii) could violate any law or regulation of any governmental body or
agency having jurisdiction over the
18
General Partner or its securities, unless
such action (or inaction) shall have been specifically consented to by the
General Partner in writing.
ARTICLE 4
CAPITAL CONTRIBUTIONS
Section 4.1. CAPITAL CONTRIBUTIONS OF THE PARTNERS
In consideration of its Capital Contribution, each Partner shall
receive Partnership Units. Each Partner shall own Partnership Units, which
shall be designated under this Agreement as either "OP Units" or "Preferred
Units," in the amount set forth for such Partner in EXHIBIT A. The Partners
shall have a Percentage Interest in the OP Units as set forth for such Partner
in EXHIBIT A, which Percentage Interest shall be adjusted in EXHIBIT A from
time to time by the General Partner to the extent necessary in accordance with
the terms of this Agreement to reflect accurately exchanges of Partnership
Units for REIT Shares in accordance with the Exchange Agreement, Capital
Contributions, the issuance of additional Partnership Units (pursuant to any
merger or otherwise), a change in the number of issued and outstanding REIT
Shares pursuant to Section 7.4.D of this Agreement, or an adjustment of the
nature contemplated by Section 7.5.B hereof. Except as provided in Sections
4.2, 10.5 and 13.3 the Partners shall have no obligation to make any additional
Capital Contributions or loans to the Partnership.
Section 4.2. ISSUANCES OF ADDITIONAL OP UNITS AND PREFERRED UNITS
A. The General Partner is hereby authorized to cause the Partnership
from time to time to issue to the Partners (including the General Partner) or
other Persons additional Partnership Units or other Partnership Interests
(except that no General Partnership Interests will be issued to any Person
other than the General Partner) on the terms set forth below. The Partnership
Interest of a Partner in the Partnership is sometimes referred to as being
evidenced by one or more "Partnership Units." Partnership Units may be either
"OP Units" or "Preferred Units":
(i) An "OP Unit" is a common unit of Partnership Interest in
the Partnership and shall represent a fractional undivided share of
the Partnership Interests of all Partners
19
(other than holders of
Preferred Units) issued pursuant to Sections 4.1 and 4.2. Each
additional OP Unit issued by the Partnership shall be on
substantially the same terms with regard to allocations of income,
gain, loss, deduction and credit, the right to receive distributions
and to vote or consent on matters presented to Partners as all other
outstanding OP Units.
(ii) A "Preferred Unit" is a unit of Partnership Interest
having such rights, preferences, exchange rights, voting powers and
restrictions, limitations as to distributions, qualifications and
terms and conditions as may be determined by the General Partner in
its sole and absolute discretion (but not in violation of the
provisions of Section 4.2(B) or the terms of any other Preferred
Unit(s)). There may be more than one series or classes of Preferred
Units having differing terms and conditions, but all Preferred Units
within a given series or class shall have the same rights,
preferences, exchange rights, voting powers and restrictions,
limitations as to distributions, qualifications and terms and
conditions, provided that a written designation of preferences
setting forth the above shall be set forth as a schedule to any
amendment to or restatement of this Agreement (each, a "Partnership
Unit Designation"). Subject to the terms of any other Preferred
Units, with respect to each series or class of Preferred Units, the
General Partner may, in its discretion, determine and fix, among
other terms and conditions, any of the following: (a) the series to
which such Preferred Units shall belong, (b) the distribution rate
thereon (or the method of determining such distribution rate),
(c) the price at and the terms and conditions on which such
Preferred Units may be redeemed, (d) the amount payable in respect
of such Preferred Units in the event of involuntary or voluntary
liquidation of the Partnership, and (e) the terms and conditions on
which such Preferred Units may be converted or exchanged for other
securities of the Partnership or the General Partner.
20
(iii) No additional OP Unit or Preferred Unit issued by the
Partnership shall have an adverse impact on the existing Limited
Partners' right to exercise the exchange rights set forth in the
Exchange Agreement and the registration rights set forth in the
Registration Rights Agreement.
B. From time to time, the General Partner, subject to the provisions
of this Section 4.2.B and the terms of any other Preferred Units, may, without
the consent of any other Partner, cause the Partnership to issue:
(i) OP Units to the General Partner upon the issuance by the
General Partner of additional shares of Common Stock, other than in
connection with the exchange of OP Units, provided that any net
proceeds received by the General Partner as a result of the issuance
of such additional shares of Common Stock are contributed to the
Partnership as additional Capital Contributions, in accordance with
Section 4.1 (it being understood that the General Partner may issue
shares of Common Stock in connection with stock option plans,
restricted stock plans or other employee benefit plans without
receiving any proceeds and that the issuance of such shares shall
nonetheless entitle the General Partner to additional OP Units).
The number of OP Units issued to the General Partner under this
Section 4.2.B(i) shall be equal to the quotient arrived at by
dividing the number of shares of Common Stock issued by the
Conversion Factor.
(ii) Preferred Units to the General Partner upon the issuance
by the General Partner of shares of its preferred stock ("Preferred
Stock") not in connection with an exchange of Preferred Units for
Preferred Stock as may be specified in the Partnership Unit
Designation attached as a schedule to the amendment to this
Agreement designating such Preferred Units, provided that any net
proceeds received by the General Partner as a result of the issuance
of such additional shares of Preferred Stock are contributed to the
Partnership as additional Capital Contributions, in accordance with
Section 4.1. The
21
number of Preferred Units issued to the General
Partner under this Section 4.2.B(ii) shall be equal to the number of
shares of Preferred Stock issued and shall have the rights,
preferences and restrictions, limitations as to distributions,
qualifications and terms and conditions substantially consistent
with the Preferred Stock that is issued.
(iii) OP Units and/or Preferred Units, as determined by the
General Partner, in its discretion, may be issued in exchange for
the contribution by any Person (the "Contributing Partner") of
additional Capital Contributions to the Partnership. The number of
OP Units and/or Preferred Units issued to a Contributing Partner
under this Section 4.2.B(iii) shall be equal to the quotient
(rounded to the nearest whole number) arrived at by dividing (x) the
initial Gross Asset Value of the property contributed as additional
Capital Contributions (net of any debt to which such property is
subject or assumed by the Partnership in connection with such
contribution) by (y) such price as may be determined by the General
Partner in connection with such contributions; provided, that, such
price is not below the fair market value of such unit as determined
in good faith by the General Partner.
(iv) Notwithstanding the foregoing, no additional OP Units
and/or Preferred Units shall be issued to the General Partner or any
of its Subsidiaries unless such issuance complies with (a) Sections
4.2.B(i) or 4.2.B(ii), as the case may be, or (b) the additional OP
Units and/or Preferred Units are issued to all Partners in
proportion to their respective Percentage Interests.
(v) The terms, conditions, rights, preferences and privileges
of each class or series of Preferred Units shall be specified in a
Partnership Unit Designation attached as a schedule to a further
amendment to this Agreement which may be adopted by the General
Partner without the consent of any Limited Partner (except to the
extent required by any outstanding class or series of Preferred
Units).
22
Upon the issuance of OP Units or Preferred Units, as the case may
be, or upon the exchange of OP Units for Common Stock or Preferred Units for
Preferred Stock, EXHIBIT A shall be accordingly adjusted by the General
Partner.
C. The right of Limited Partners holding Preferred Units to exchange
such Preferred Units for any other class or series of Partnership Units or
class or series of Preferred Stock of the General Partner shall be set forth in
the amendment to this Agreement designating such class or series of Preferred
Units.
D. Notwithstanding the foregoing, no OP Unit and/or Preferred Unit
may be issued at a price below the fair market value of such unit as determined
in good faith by the General Partner as of the date of issuance of such OP Unit
or Preferred Unit, as the case may be, or, in the case of a security which is
exchangeable for or convertible into such OP Unit or Preferred Unit, as of the
date of grant of such security.
E. The General Partner shall not issue any rights, options, warrants
or convertible or exchangeable securities containing the right to subscribe for
or purchase shares of Common Stock or Preferred Stock (collectively, "New
Securities") unless (i) the General Partner shall cause the Partnership to
issue to the General Partner Partnership Interests having substantially the
same rights, options, warrants or convertible or exchangeable securities to
purchase OP Units and/or Preferred Units, and the economic interests of the
additional Partnership Interests are substantially similar to the economic
interests of such New Securities and (ii) the General Partner contributes the
proceeds from the exercise of rights contained in such New Securities to the
Partnership.
Section 4.3. CONTRIBUTION OF PROCEEDS BY GENERAL PARTNER
In connection with any issuance of shares of Common Stock and/or
Preferred Stock pursuant to Section 4.2, the General Partner shall make a
Capital Contribution to the Partnership of the proceeds raised in connection
with such issuance; provided, that, if the proceeds actually received by the
General Partner are less than the gross proceeds of such issuance as a result
of any underwriter's discount
23
or other expenses paid or incurred in connection
with such issuance, then the General Partner shall be deemed to have made a
Capital Contribution to the Partnership in the amount of the gross proceeds of
such issuance and the Partnership shall be deemed simultaneously to have
reimbursed the General Partner pursuant to Section 7.4.C for the amount of such
underwriter's discount or other expenses.
Section 4.4. NO INTEREST; NO RETURN
Except as expressly provided for in this Agreement or in a
Partnership Unit Designation attached as a schedule to an amendment to this
Agreement specifying the terms, conditions, rights, preferences and privileges
of any class or series of Preferred Units, no Partner shall have the right to
demand or to receive the return of all or any part of its Capital Contributions
to the Partnership. No Partner shall have the right to demand or receive
property other than cash in return for the contributions of such Partner to the
Partnership.
Section 4.5. NO THIRD PARTY BENEFICIARIES
This Agreement is solely for the benefit of and may be enforced
solely by the Partners hereunder, and no rights or obligations to or with
respect to any person not a Partner, whether or not such person is claiming
through a Partner, shall be deemed to exist or to arise under or as a result of
this Agreement.
ARTICLE 5
DISTRIBUTIONS
Section 5.1. REQUIREMENT AND CHARACTERIZATION OF DISTRIBUTIONS
The General Partner shall distribute quarterly an amount equal to
100% of Available Cash generated by the Partnership during such quarter to the
Partners who are Partners on the Partnership Record Date with respect to such
quarter in accordance with their respective Percentage Interests on such
Partnership Record Date. Notwithstanding the foregoing, (i) distributions to
Partners made in respect of the quarterly periods of a Partnership Year shall
be made in accordance with their respective Percentage Interests as of the
Partnership Record Date with respect to any such quarter and shall, in the
aggregate, not be less than an amount determined by multiplying the Tax Rate by
the taxable income and gain
24
allocated to the Limited Partners under this
Agreement during such Partnership Year and (ii) the General Partner may retain
Available Cash in an amount equal to the excess of the net proceeds from the
sale or other disposition of real property investments held directly or
indirectly by or for the Partnership included in Available Cash over the amount
of capital gain dividends declared by the General Partner attributable to such
sale divided by the Percentage Interest of the General Partner as of the end of
the quarter during which such sale or other disposition occurs. In no event
may a Partner receive a distribution of Available Cash with respect to a
Partnership Unit to the extent such Partner is entitled to receive a
distribution out of such Available Cash with respect to a REIT Share for which
such Partnership Unit has been exchanged. The General Partner shall take such
reasonable efforts, as determined by it in its sole and absolute discretion and
consistent with its qualification as a REIT, to distribute Available Cash to
the Limited Partners so as to preclude any such distribution or portion thereof
from being treated as part of a sale of property to the Partnership by a
Limited Partner under Code 707 or the Regulations thereunder;
PROVIDED THAT the General Partner and the Partnership shall not have liability
to a Limited Partner as a result of any distribution to a Limited Partner being
so treated.
Section 5.2. DISTRIBUTIONS UPON LIQUIDATION
Proceeds from a Terminating Capital Transaction, and any other cash
received or reductions in reserves made after commencement of the liquidation
of the Partnership, shall be distributed to the Partners in accordance with
Section 13.2.
ARTICLE 6
ALLOCATIONS
Section 6.1. ALLOCATIONS OF PROFITS AND LOSSES
A. ALLOCATION OF PROFITS. After giving effect to the mandatory
allocations set forth in Section 6.2, Profits for any Partnership Year or other
applicable period shall be allocated to the Partners in the following order of
priority:
25
(i) First, to the General Partner to the extent that the
cumulative Losses allocated to the General Partner pursuant to
Section 6.1.B(v) exceed the cumulative Profits allocated to the
General Partner pursuant to this Section 6.1.A(i);
(ii) Second, to each Partner to the extent of and in proportion
to the amount by which the cumulative Losses allocated to such
Partner pursuant to Section 6.1.B(iv) exceed the cumulative Profits
allocated to such Partner pursuant to this Section 6.1.A(ii);
(iii) Third, to the General Partner to the extent that the
cumulative Losses allocated to the General Partner pursuant to
Section 6.1.B(iii), exceed the cumulative Profits allocated to the
General Partner pursuant to this Section 6.1.A(iii);
(iv) Fourth, to each holder of Preferred Units to the extent of
and in proportion to the amount by which the cumulative Losses
allocated to each such holder pursuant to Section 6.1.B(ii) exceed
the cumulative Profits allocated to such holder pursuant to this
Section 6.1.A(iv);
(v) Fifth, to each Partner to the extent of and in proportion
to the amount by which the cumulative Losses allocated to such
Partner pursuant to Section 6.1.B(i), exceed the cumulative Profits
allocated to such Partner pursuant to this Section 6.1.A(v); and
(vi) Thereafter, to the Partners in accordance with their
respective Percentage Interests.
B. ALLOCATION OF LOSSES. After giving effect to the mandatory
allocations set forth in Section 6.2, Losses for any Partnership Year or other
applicable period shall be allocated to the Partners in the following order of
priority:
(i) First, to the Partners, in proportion to their respective
Percentage Interests; provided that Losses allocated pursuant to
this Section 6.1.B(i) shall not exceed
26
the maximum amount of Losses
that can be allocated without causing any Partner to have a negative
Adjusted Capital Account balance (excluding for this purpose any
increase to such Adjusted Capital Account for a Partner's actual
obligation to fund a deficit Capital Account balance, including the
obligation of an Obligated Partner to fund a deficit Capital Account
balance pursuant to Section 13.3 hereof);
(ii) Second, to the holders of Preferred Units; provided that
Losses allocated pursuant to this Section 6.1.B(ii) shall not exceed
the maximum amount of Losses that can be allocated without causing
any holder of Preferred Units to have a negative Adjusted Capital
Account (excluding for this purpose any increase to such Adjusted
Capital Account for a Partner's actual obligation to fund a deficit
Capital Account balance, including the obligation of an Obligated
Partner to fund a deficit Capital Account balance pursuant to
Section 13.3 hereof);
(iii) Third, to the General Partner, until the General
Partner's Adjusted Capital Account Deficit (excluding for this
purpose any increase to such Adjusted Capital Account for the
obligation of the General Partner to actually fund a deficit Capital
Account balance) equals the excess of (i) the amount of Recourse
Liabilities over (ii) the Aggregate Restoration Amount;
(iv) Fourth, to the Obligated Partners, in proportion to their
respective Restoration Amounts, until such time as the Obligated
Partners have been allocated an aggregate amount of Losses pursuant
to this Section 6.1.B(iv) in excess of the aggregate amount of
Profits allocated to such Partners pursuant to Section 6.1.A(ii)
equal to the Aggregate Restoration Amount; and
(v) Thereafter, to the General Partner.
27
This Section 6.1 shall control notwithstanding any reallocation or
adjustment of taxable income, loss or other items by the IRS or any other
taxing authority; provided, however, that neither the Partnership nor the
General Partner (nor any of their respective affiliates) is required to
indemnify any Obligated Partner (or its affiliates) for the loss of any tax
benefit resulting from any reallocation or adjustment of taxable income, loss
or other items by the IRS or other taxing authority. The provisions of this
Section 6.1 shall not be amended in a manner which adversely affects an
Obligated Partner (without the consent of such Obligated Partner), provided
that the General Partner may amend EXHIBIT B to add additional Obligated
Partners.
Section 6.2. MANDATORY ALLOCATIONS
A. [INTENTIONALLY OMITTED].
B. MINIMUM GAIN CHARGEBACK. Notwithstanding any other provision of
this Article 6, if there is a net decrease in Partnership Minimum Gain during
any Partnership Year, then, subject to the exceptions set forth in Regulations
1.704-2(f)(2), (3), (4) and (5), each Partner shall be specially
allocated items of Partnership income and gain for such year (and, if
necessary, subsequent years) in an amount equal to such Partner's share of the
net decrease in Partnership Minimum Gain, as determined under Regulations
1.704-2(g). Allocations pursuant to the previous sentence shall be
made in proportion to the respective amounts required to be allocated to each
Partner pursuant thereto. The items to be so allocated shall be determined in
such section of the Regulations in accordance with Regulations
1.704-2(f). This Section 6.2.B is intended to comply with the
minimum gain chargeback requirements in Regulations 1.704-2(f) and
shall be interpreted consistently therewith.
C. PARTNER MINIMUM GAIN CHARGEBACK. Notwithstanding any other
provision of this Article 6 except Section 6.2.B, if there is a net decrease in
Partner Minimum Gain attributable to a Partner Nonrecourse Debt during any
Partnership Year, then, subject to the exceptions set forth in Regulations
1.704-2(i)(4), each Partner who has a share of the Partner Minimum
Gain attributable to such Partner Nonrecourse Debt, determined in accordance
with Regulations 1.704-2(i)(5), shall be specially
28
allocated items of
Partnership income and gain for such year (and, if necessary, subsequent years)
in an amount equal to such Partner's share of the net decrease in Partner
Minimum Gain attributable to such Partner Nonrecourse Debt, determined in
accordance with Regulations 1.704-2(i)(4). Allocations pursuant to
the previous sentence shall be made in proportion to the respective amounts
required to be allocated to each Partner pursuant thereto. The items to be so
allocated shall be determined in accordance with Regulations
1.704-2(i)(4). This Section 6.2.C is intended to comply with the
minimum gain chargeback requirement in such Section of the Regulations and
shall be interpreted consistently therewith.
D. QUALIFIED INCOME OFFSET. Notwithstanding any other provision of
this Article 6, except Sections 6.2.B and 6.2.C, in the event any Partner
receives any adjustments, allocations or distributions described in Regulations
1.704-1(b)(2)(ii)(d)(4), (5), or (6), that cause or increase an
Adjusted Capital Account deficit of such Partner, items of Partnership income
and gain shall be specially allocated to such Partner in an amount and manner
sufficient to eliminate, to the extent required by the Regulations, the
Adjusted Capital Account deficit of such Partner as quickly as possible.
E. NONRECOURSE DEDUCTIONS. Nonrecourse Deductions for any
Partnership Year shall be allocated to the Partners in accordance with their
respective Percentage Interests.
F. PARTNER NONRECOURSE DEDUCTIONS. Any Partner Nonrecourse
Deductions for any Partnership Year shall be specially allocated to the Partner
who bears the economic risk of loss with respect to the Partner Nonrecourse
Debt to which such Partner Nonrecourse Deductions are attributable in
accordance with Regulations 1.704-2(i)(1).
G. CODE SECTION 754 ADJUSTMENTS. To the extent an adjustment to the
adjusted tax basis of any Partnership asset pursuant to Code 734(b)
or 743(b) is required, pursuant to Regulations 1.704-1(b)(2)(iv)(m),
to be taken into account in determining Capital Accounts, the amount of such
adjustment to the Capital Accounts shall be treated as an item of gain (if the
adjustment increases the basis of the asset) or loss (if the adjustment
decreases such basis), and such item of gain or loss shall be
29
specially allocated to the Partners in a manner consistent with the manner in
which their Capital Accounts are required to be adjusted pursuant to such
Section of the Regulations.
Each Partner hereby agrees to provide the Partnership with all
information necessary to give effect to an election made under Code
754 if the General Partner determines to make such an election. With
respect to such election:
(1) Any change in the amount of the depreciation deducted by the
Partnership and any change in the gain or loss of the Partnership, for federal
income tax purposes, resulting from an adjustment pursuant to Code
743(b) shall be allocated entirely to the transferee of the
Partnership Interest or portion thereof so transferred. Neither the capital
contribution obligations of, nor the Partnership Interest of, nor the amount of
any cash distributions to, the Partners shall be affected as a result of such
election, and except as provided in Regulations 1.704-1(b)(2)(iv)(m),
the making of such election shall have no effect except for federal and (if
applicable) state and local income tax purposes.
(2) Solely for federal and (if applicable) state and local income
tax purposes and not for the purpose of maintaining the Partners' Capital
Accounts (except as provided in Regulations 1.704-1(b)(2)(iv)(m)),
the Partnership shall keep a written record for those assets, the bases of
which is adjusted as a result of such election, and the amount at which such
assets are carried on such record shall be debited (in the case of an increase
in basis) or credited (in the case of a decrease in basis) by the amount of
such basis adjustment. Any change in the amount of the depreciation deducted
by the Partnership and any change in the gain or loss of the Partnership, for
federal and (if applicable) state and local income tax purposes, attributable
to the basis adjustment made as a result of such election shall be debited or
credited, as the case may be, on such record.
H. PREFERENTIAL INCOME ALLOCATIONS. After giving effect to the
mandatory allocations set forth above, gross income of the Partnership shall be
allocated to the holders of Preferred Units (and within each such class or
series of Preferred Units, pro rata in accordance with the number of Preferred
Units of such class or series held by each such holder) until the cumulative
amount allocated to each such
30
holder pursuant to this Section 6.2.H equals the
cumulative amount for the current and all prior years of the sum of (A) the
distributions made to each such holder pursuant to the distribution section of
the applicable Partnership Unit Designation and (B) the portions of the
distributions made to each such holder pursuant to a redemption of a Preferred
Unit under the terms of an applicable Partnership Unit Designation (if any)
that exceed the Liquidation Preference Amount (other than any accrued but
unpaid distribution thereon) per Preferred Unit established for such Preferred
Units in the applicable Partnership Unit Designation. Such allocations shall
be made in proportion to the relative excess amounts determined for each such
holder. Solely for purposes of making the required allocation under this
Section 6.2.H in the year in which the Partnership is liquidated, the amount of
any accrued but unpaid distributions in arrears in respect of the Preferred
Units (determined in accordance with the relevant provisions in the applicable
Partnership Unit Designation) shall be treated as having been distributed to
the holders of Preferred Units immediately prior to such liquidation or
redemption pursuant to the distribution section of the applicable Partnership
Unit Designation.
I. CURATIVE ALLOCATIONS. The allocations set forth in Sections
6.2.B, C and D above (the "Regulatory Allocations") are intended to comply with
certain requirements of Regulations 1.704-1(b). The Regulatory
Allocations shall be taken into account for the purpose of equitably adjusting
subsequent allocations of Profits and Losses, and items of income, gain, loss,
and deduction among the Partners so that, to the extent possible, the net
amount of such allocations of Profits and Losses and other items to each
Partner shall be equal to the net amount that would have been allocated to each
such Partner if the Regulatory Allocations had not occurred.
J. ALLOCATION ADJUSTMENTS TO GENERAL PARTNER. To the extent the
General Partner realizes cumulative income or gain with respect to an interest
in a Subsidiary of the Partnership in excess of any losses or deductions to the
General Partner with respect to such interest in such Subsidiary (excluding its
interest in the Partnership itself), its share of Profits shall be reduced (or
Losses shall be
31
increased) and reallocated to the Limited Partners in an amount
equal to the cumulative net income or gain of the General Partner from such
Subsidiary.
Section 6.3. OTHER ALLOCATION RULES
A. Pursuant to Regulations 1.752-3(a), for the purpose of
determining each Partner's share of excess Nonrecourse Liabilities of the
Partnership, and solely for such purpose, each Partner's interest in
partnership profits shall equal such Partner's Percentage Interest.
B. The allocation of Profits and Losses for any Partnership Year
during which a person acquires a Partnership Interest (other than upon
formation of the Partnership), or during which there is a change in the
Partners' Percentage Interests, shall take into account the Partners' varying
interests for such Partnership Year pursuant to any method permissible under
Code 706 that is selected by the General Partner. The method
selected by the General Partner shall apply notwithstanding any agreement
between the assignor and assignee of such Partnership Interest although the
General Partner may recognize any such agreement.
C. To the extent permitted by Regulations 1.704-2(h)(3)
and 1.704-2(i)(6), the General Partner shall endeavor to treat distributions as
having been made from the proceeds of Nonrecourse Liabilities or Partner
Nonrecourse Debt only to the extent that such distributions would cause or
increase a deficit balance in any Partner's Capital Account that exceeds the
amount such Partner is otherwise obligated to restore (within the meaning of
Regulations 1.704-1(b)(ii)(c)) as of the end of the Partnership's
taxable year in which the distribution occurs.
Section 6.4. ALLOCATIONS FOR TAX PURPOSES
A. Except as otherwise provided in this Section 6.4, for federal
income tax purposes, each item of income, gain, loss and deduction shall be
allocated among the Partners in the same manner as its correlative item of
"book" income, gain, loss or deduction is allocated pursuant to Sections 6.1,
6.2 and 6.3 above.
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B. In accordance with Code 704(b) and 704(c) and the
Regulations thereunder, income, gain, loss, and deduction with respect to any
property contributed to the capital of the Partnership shall, solely for
federal income tax purposes, be allocated among the Partners so as to take into
account any variation between the adjusted basis of such property to the
Partnership for federal income tax purposes and the initial Gross Asset Value
of such property. If the Gross Asset Value of any Partnership property is
adjusted as described in the definition of Gross Asset Value, subsequent
allocations of income, gain, loss, and deduction with respect to such asset
shall take account of any variation between the adjusted basis of such asset
for federal income tax purposes and the Gross Asset Value of such asset in the
manner prescribed under Code 704(b) and 704(c) and the Regulations
thereunder. In furtherance of the foregoing, the Partnership shall employ the
method prescribed in Proposed Regulations 1.704-3(b) (the
"traditional method") or the equivalent successor provision(s) of proposed,
temporary or final Regulations.
ARTICLE 7
MANAGEMENT AND OPERATIONS OF BUSINESS
Section 7.1. Management
A. Except as otherwise expressly provided in this Agreement, all
management powers over the business and affairs of the Partnership are and
shall be exclusively vested in the General Partner, and no Limited Partner
shall have any right to participate in or exercise control or management power
over the business and affairs of the Partnership. The General Partner may not
be removed by the Limited Partners with or without cause. In addition to the
powers now or hereafter granted a general partner of a limited partnership
under applicable law or which are granted to the General Partner under any
other provision of this Agreement, the General Partner, subject to Section 7.3
hereof, shall have full power and authority to do all things reasonably deemed
necessary or desirable by it to conduct the business of the Partnership, to
exercise all powers set forth in Section 3.2 hereof and to effectuate the
purposes set forth in Section 3.1 hereof, including, without limitation:
33
(1) the making of any expenditures, the lending or borrowing of
money (including, without limitation, making prepayments on loans and borrowing
money to permit the Partnership to make distributions to its Partners in such
amounts as will permit the General Partner (so long as the General Partner
qualifies as a REIT) to avoid the payment of any federal income tax (including,
for this purpose, any excise tax pursuant to Code 4981) and to make
distributions to its stockholders sufficient to permit the General Partner to
maintain REIT status), the assumption or guarantee of, or other contracting
for, indebtedness and other liabilities, the issuance of evidences of
indebtedness (including the securing of same by deed to secure debt, mortgage,
deed of trust or other lien or encumbrance on the Partnership's assets) and the
incurrence of any obligations it reasonably deems necessary for the conduct of
the activities of the Partnership;
(2) the making of tax, regulatory and other filings, or rendering
of periodic or other reports to governmental or other agencies having
jurisdiction over the business or assets of the Partnership;
(3) the acquisition, disposition, mortgage, pledge, encumbrance,
hypothecation or exchange of assets of the Partnership (including the exercise
or grant of any conversion, option, privilege, or subscription right or any
other right available in connection with any assets at any time held by the
Partnership);
(4) the use of the assets of the Partnership (including, without
limitation, cash on hand) for any purpose consistent with the terms of this
Agreement and on any terms it reasonably determines to be in the best interests
of the Partnership, including, without limitation, the financing of the conduct
of the operations of the General Partner, the Partnership or any of the
Partnership's Subsidiaries, the lending of funds to other Persons (including,
without limitation, the Partnership's Subsidiaries) and the repayment of
obligations of the Partnership and its Subsidiaries and any other Person in
which it has an equity investment and the making of capital contributions to
its Subsidiaries;
34
(5) the management, operation, leasing, landscaping, repair,
alteration, demolition or improvement of any real property or improvements
owned by the Partnership or any Subsidiary of the Partnership;
(6) the negotiation, execution, and performance of any contracts,
conveyances or other instruments that the General Partner considers useful or
necessary to the conduct of the Partnership's operations or the implementation
of the General Partner's powers under this Agreement, including contracting
with contractors, developers, consultants, accountants, legal counsel, other
professional advisors and other agents and the payment of their expenses and
compensation out of the Partnership's assets;
(7) the distribution of Partnership cash or other Partnership
assets in accordance with this Agreement;
(8) holding, managing, investing and reinvesting cash and other
assets of the Partnership;
(9) the collection and receipt of revenues and income of the
Partnership;
(10) the establishment of one or more divisions of the
Partnership, the selection and dismissal of employees of the Partnership or any
division of the Partnership (including, without limitation, employees having
titles such as "president," "vice president," "secretary" and "treasurer" of
the Partnership or any division of the Partnership), and agents, outside
attorneys, accountants, consultants and contractors of the Partnership or any
division of the Partnership and the determination of their compensation and
other terms of employment or hiring;
(11) the maintenance of such insurance for the benefit of the
Partnership and the Partners as it deems necessary or appropriate and in the
best interests of the Partnership and its Partners as a whole;
(12) the formation of, or acquisition of an interest in, and the
contribution of property to, any further limited or general partnerships, joint
ventures, trusts, corporations or other relationships that it deems desirable
(including, without limitation, the acquisition of interests in, and the
contributions
35
of property to, its Subsidiaries and any other Person in which it
has an equity investment from time to time);
(13) the control of any matters affecting the rights and
obligations of the Partnership, including the settlement, compromise,
submission to arbitration or any other form of dispute resolution, or
abandonment of, any claim, cause of action, liability, debt or damages, due or
owing to or from the Partnership, the commencement or defense of suits, legal
proceeding, administrative proceedings, arbitrations or other forms of dispute
resolution, and the representation of the Partnership in all suits or legal
proceedings, administrative proceedings, arbitrations or other forms of dispute
resolution, the incurring of legal expense, and the indemnification of any
Person against liabilities and contingencies to the extent permitted under this
Agreement;
(14) the undertaking of any action in connection with the
Partnership's direct or indirect investment in its Subsidiaries or any other
Person (including, without limitation, the contribution or loan of funds by the
Partnership to such Persons);
(15) the determination of the fair market value of any Partnership
property distributed in kind using such reasonable method of valuation as it
may adopt;
(16) the exercise, directly or indirectly, through any attorney-
in-fact acting under a general or limited power of attorney, of any right,
including the right to vote, appurtenant to any asset or investment held by the
Partnership;
(17) the exercise of any of the powers of the General Partner
enumerated in this Agreement on behalf of or in connection with any Subsidiary
of the Partnership or any other Person in which the Partnership has a direct or
indirect interest, or jointly with any such Subsidiary or other Person;
(18) the exercise of any of the powers of the General Partner
enumerated in this Agreement on behalf of any Person in which the Partnership
does not have an interest pursuant to contractual or other arrangements with
such Person;
36
(19) the payment or retirement of debt obligations by the General
Partner or the Partnership or by the General Partner on behalf of or in
connection with any Subsidiary of the Partnership;
(20) the making, execution and delivery of any and all deeds,
leases, notes, deeds to secure debt, mortgages, deeds of trust, security
agreements, conveyances, contracts, guarantees, warranties, indemnities,
waivers, releases or legal instruments or agreements in writing necessary or
appropriate in the judgment of the General Partner for the accomplishment of
any of the powers of the General Partner enumerated in this Agreement;
(21) the issuance of additional Partnership Units whether OP Units
or Preferred Units or other Partnership Interests in accordance with Section
4.2; and
(22) the taking of all actions to effect the transactions
contemplated to be taken by the Partnership by Registration Statement No. 33-
68844, and as may be necessary or convenient in connection therewith.
B. Each of the Limited Partners agrees that the General Partner is
authorized to execute, deliver and perform the above-mentioned agreements and
transactions on behalf of the Partnership without any further act, approval or
vote of the Partners, (except as provided in Section 7.3), to the fullest
extent permitted under the Act or other applicable law.
C. At all times from and after the date hereof, the General Partner
may cause the Partnership to obtain and maintain (i) casualty, liability and
other insurance on the properties of the Partnership and (ii) liability
insurance for the Indemnitees hereunder.
D. At all times from and after the date hereof, the General Partner
may cause the Partnership to establish and maintain any and all reserves,
working capital accounts and other cash or similar balances in such amounts as
the General Partner in its reasonable business judgment deems appropriate and
reasonable from time to time and in the best interests of the Partnership.
37
E. In exercising its authority under this Agreement, the General
Partner may, but (except as otherwise provided herein) shall not be obligated
to, take into account the tax consequences to any Partner of any action taken
by it.
Section 7.2. CERTIFICATE OF LIMITED PARTNERSHIP
The General Partner shall file amendments to the Certificate and do
all the things to maintain the Partnership as a limited partnership (or a
partnership in which the limited partners have limited liability) under the
laws of the State of Maryland and each other state or the District of Columbia,
in which the Partnership may elect to do business or own property. The General
Partner shall be required, before or after filing, to deliver or mail a copy of
the Certificate or any amendment thereto to the Limited Partners. The General
Partner shall cause to be filed such other certificates or documents as may be
reasonable and necessary or appropriate for the formation, continuation,
qualification and operation of a limited partnership (or a partnership in which
the limited partners have limited liability to the extent provided by
applicable law) in the State of Maryland and any other state, or the District
of Columbia, in which the Partnership may elect to do business or own property.
Section 7.3. RESTRICTIONS ON GENERAL PARTNER'S AUTHORITY
The General Partner may not, without the written consent of all of
the Limited Partners, take any action in contravention of an express
prohibition or limitation contained in this Agreement.
Section 7.4. REIMBURSEMENT OF THE GENERAL PARTNER
A. Except as provided in this Section 7.4 and elsewhere in this
Agreement (including the provisions of Articles 5 and 6 regarding
distributions, payments, and allocations to which it may be entitled), the
General Partner shall not be compensated for its services as general partner of
the Partnership.
B. The General Partner shall be reimbursed on a monthly basis, or
such other basis as the General Partner may determine in its sole and absolute
discretion, for all expenses it incurs relating to the ownership and operation
of, or for the benefit of, the Partnership; provided that the amount of such
38
reimbursement shall be reduced by any interest earned by the General Partner
with respect to bank accounts or other instruments or accounts held by it on
behalf of the Partnership as permitted in Section 7.5.A.; provided further,
that if the General Partner receives distributions as a partner or equity owner
(direct or indirect) of a Subsidiary or from any Subsidiary of the Partnership
other than as a distribution from the Partnership, the amount of such
reimbursements shall be reduced by such amounts. The General Partner
represents and warrants to the Partnership and the Limited Partners that the
General Partner's sole business is the ownership of interests in and operation
of the Partnership and as such all of the General Partner's expenses will be
incurred for the benefit of the Partnership. Such reimbursements shall be in
addition to any reimbursement to the General Partner as a result of
indemnification pursuant to Section 7.7 hereof.
C. The General Partner shall also be reimbursed for all expenses it
incurs relating to the organization and/or reorganization of the Partnership
and the General Partner, the initial public offering of REIT Shares by the
General Partner, and any other issuance of additional Partnership Interests or
REIT Shares pursuant to Section 4.2 hereof. Any such reimbursement shall be
treated for purposes of maintaining Capital Accounts and allocating Profits and
Losses as a distribution to the General Partner and any distribution or loss
attributable to such expenditures shall be claimed solely by the General
Partner.
D. This section sets forth the actions required of the General
Partner and the Partnership in the event the General Partner acquires REIT
Shares in the several circumstances set forth below:
(1) In the event that the General Partner shall elect to purchase
from stockholders REIT Shares and utilizing funds provided by the Partnership
for such purpose rather than funds distributed with respect to the General
Partner's Partnership Interest, a redemption of Partnership Interests of the
General Partner (with such redemption first to be applied to the extent, if
any, that Limited Partner Units are held by the General Partner or are obtained
by the General Partner by means of an exchange therefor of REIT Shares under
the Exchange Agreement) shall occur as contemplated in Section 7.5.B of
39
this Agreement reflecting a redemption in the Partnership Interest of the
General Partner attributable thereto. It is contemplated that the General
Partner may so utilize Partnership funds to purchase from stockholders REIT
Shares(a)for the purpose of any stock repurchase program or any similar
obligation or arrangement undertaken by the General Partner,(b) for the
purpose of satisfying an obligation under the Exchange Agreement (to the
extent authorized but unissued shares of Common Stock are not so used), or (c)
for any other proper purposes of the General Partner.
(2) In the event that the General Partner shall elect to purchase
from stockholders REIT Shares pursuant to any employee stock purchase plan (or
any similar obligation or arrangement undertaken by the General Partner for its
employees or for the employees of the Partnership or any Subsidiary) and
utilizing funds provided by the Partnership for such purpose rather than funds
distributed with respect to the General Partner's Partnership Interest, the
purchase price paid by the General Partner for such REIT Shares and any other
expenses incurred by the General Partner in connection with such purchase shall
be considered expenses of the General Partner and shall be reimbursed to the
General Partner by the Partnership, subject to the conditions that, if such
reacquired REIT Shares are subsequently sold by the General Partner, the
General Partner shall return such reimbursement to the extent of any proceeds
and dividends received by the General Partner for such REIT Shares.
Section 7.5. OUTSIDE ACTIVITIES OF THE GENERAL PARTNER
A. The General Partner shall not directly or indirectly enter into
or conduct any business, other than in connection with the ownership,
acquisition and disposition of Partnership Interests as a General Partner or
Limited Partner and the management of the business of the Partnership, the
ownership, acquisition and disposition of direct or indirect economic or voting
interests (representing not more than a one percent (1.0%) interest) in
entities in which the remaining economic or voting interests are held directly
or indirectly by the Partnership, and such activities as are incidental
thereto. The General Partner shall not own or enter into any agreement to
acquire any assets other than (i) Partnership Interests as a General Partner or
Limited Partner, (ii) the direct or indirect economic or voting interests
referred to above and (iii) such bank accounts or similar instruments or
accounts as it deems necessary
40
to carry out its responsibilities contemplated
under this Agreement and the Articles of Incorporation. The General Partner
and any Affiliates of the General Partner may acquire Limited Partner Interests
and shall be entitled to exercise all rights of a Limited Partner relating to
such Limited Partner Interests, except as such rights are otherwise expressly
limited herein.
B. In the event the General Partner exercises its rights under
Article Ninth of the Articles of Incorporation, or any amendatory or successor
provision thereto or under Section 7.4.D(1) hereof to acquire or redeem REIT
shares, then the General Partner shall cause the Partnership to redeem from the
General Partner, or any of its Subsidiaries, Partnership Units equal to that
number of Partnership Units (such redemption to be of Limited Partner interests
first) equal to the product obtained by multiplying the number of REIT Shares
to be redeemed by the General Partner times the Conversion Factor on the same
terms and for the same aggregate price that the General Partner redeemed such
REIT Shares.
Section 7.6. CONTRACTS WITH AFFILIATES
A. The Partnership may lend or contribute funds or other assets to
its Subsidiaries or other Persons in which it has an equity investment, and
such Persons may borrow funds from the Partnership, on fair and reasonable
terms and conditions established in the sole and absolute discretion of the
General Partner in its reasonable business judgment to be in the best interests
of the Partnership. The foregoing authority shall not create any right or
benefit in favor of any Subsidiary or any other Person.
B. Except as provided in Section 7.5.A, the Partnership may transfer
assets to joint ventures, other partnerships, corporations or other business
entities in which it is or thereby becomes a participant upon fair and
reasonable terms and subject to such conditions consistent with this Agreement
and applicable law as the General Partner, in its sole and absolute discretion,
believes are advisable in its reasonable business judgment and the best
interests of the Partnership.
C. Except as expressly permitted by this Agreement, neither the
General Partner nor any of its Affiliates shall sell, transfer or convey any
property to, or purchase any property from, the
41
Partnership, directly or
indirectly, except pursuant to transactions that are no less favorable to the
Partnership than if the transactions were with an unaffiliated third party.
D. The General Partner, (through a majority of its independent
directors) in its sole and absolute discretion determined in its reasonable
business judgment to be in the best interests of the Partnership and without
the approval of the Limited Partners, may propose and adopt employee benefit
plans, stock option plans and similar plans funded by the Partnership for the
benefit of employees of the General Partner, the Partnership, or Subsidiaries
of the Partnership in respect of services performed, directly or indirectly,
for the benefit of the Partnership, the General Partner, or any of the
Partnership's Subsidiaries.
E. The General Partner is expressly authorized to enter into, in the
name and on behalf of the Partnership, conflict of interest avoidance
agreements with various Affiliates of the Partnership and the General Partner,
on such terms as the General Partner, in its sole and absolute discretion,
believes, in the exercise of its reasonable business judgment, are advisable
and in the best interests of the Partnership.
Section 7.7. INDEMNIFICATION
A. The Partnership shall indemnify each Indemnitee from and against
any and all losses, claims, damages, liabilities, joint or several, expenses
(including, without limitation, reasonable attorney's fees and other 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 such Indemnitee may be
involved, or is threatened to be involved, as a party or otherwise; provided
that the Partnership shall not indemnify an Indemnitee for any such losses,
claims, damages, liabilities, expenses, judgments, fines, settlements or other
amounts arising out of or resulting from (i) the gross negligence, fraud, or
intentional misconduct by such Indemnitee, or a violation of law by such
Indemnitee when the Indemnitee has reasonable cause to believe such action was
unlawful, (ii) the violation or breach by such Indemnitee of the provisions of
this Agreement or (iii) any transaction from which such Indemnitee received a
personal
42
benefit in violation or breach of any provision of this Agreement.
Without limitation, the foregoing indemnity shall extend to any liability of
any Indemnitee, pursuant to a loan guaranty or otherwise, for any indebtedness
of the Partnership or any Subsidiary of the Partnership (including, without
limitation, any indebtedness which the Partnership or any Subsidiary of the
Partnership has assumed or taken subject to), and the General Partner is hereby
authorized and empowered, on behalf of the Partnership, to enter into one or
more indemnity agreements consistent with the provisions of this Section 7.7 in
favor of any Indemnitee having or potentially having liability for any such
indebtedness; provided, however, that the foregoing indemnity will not apply if
the Indemnitee has waived its rights to any subrogation on this indemnity. The
termination of any proceeding by judgment, order or settlement does not create
a presumption that the Indemnitee did not meet the requisite standard of
conduct set forth in this Section 7.7.A. The termination of any proceeding by
conviction of an Indemnitee or upon a plea of nolo contendere or its equivalent
by an Indemnitee, or an entry of an order of probation against an Indemnitee
prior to judgment, creates a rebuttable presumption that such Indemnitee acted
in a manner contrary to that specified in this Section 7.7.A with respect to
the subject matter of such proceeding. Any indemnification pursuant to this
Section 7.7 shall be made only out of the assets of the Partnership, and
neither the General Partner nor any Limited Partners shall have any obligation
to contribute to the capital of the Partnership or otherwise provide funds to
enable the Partnership to fund its obligations under this Section 7.7.
B. Reasonable expenses incurred by an Indemnitee who is a party to a
proceeding may be paid or reimbursed by the Partnership in advance of the final
disposition of the proceeding upon receipt by the Partnership of (i) a written
affirmation by the Indemnitee of the Indemnitee's good faith belief that the
standard of conduct necessary for indemnification by the Partnership as
authorized in Section 7.7.A has been met, and (ii) a written undertaking by or
on behalf of the Indemnitee to repay the amount if it shall ultimately be
determined that the standard of conduct has not been met.
43
C. The indemnification provided by this Section 7.7 shall be in
addition to any other rights to which an Indemnitee may be entitled under any
agreement, pursuant to any vote of the Partners, as a matter of law or
otherwise, and shall continue as to an Indemnitee who has ceased to serve in
such capacity unless otherwise provided in a written agreement with such
Indemnitee or in the writing pursuant to which such Indemnitee is indemnified.
D. The Partnership may, but shall not be obligated to, purchase and
maintain insurance on behalf of any of the Indemnitees 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. Any liabilities which an Indemnitee incurs as a result of acting
on behalf of the Partnership or the General Partner (whether as a fiduciary or
otherwise) in connection with the operation, administration or maintenance of
an employee benefit plan or any related trust or funding mechanism (whether
such liabilities are in the form of excise taxes, penalties, restitutions or
other funding mechanism or to a participant or beneficiary of such plan, trust
or other funding mechanism, or otherwise) shall be treated as liabilities or
judgments or fines under this Section 7.7.
F. An Indemnitee shall not be denied indemnification in whole or in
part under this Section 7.7 solely 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.
G. The provisions of this Section 7.7 are for the benefit of the
Indemnitees, their heirs, successors, assigns and administrators and shall not
be deemed to create any rights for the benefit of any other Persons. Any
amendment, modification or repeal of this Section 7.7 or any provision hereof
shall be prospective only and shall not in any way affect the limitations on
the Partnership's liability to any Indemnitee under this Section 7.7 as in
effect immediately prior to such amendment, modification or
44
repeal with respect
to claims arising from or relating to matters occurring, in whole or in part,
prior to such amendment, modification or repeal, regardless of when such claims
may arise or be asserted.
Section 7.8. LIABILITY OF THE GENERAL PARTNER
A. Notwithstanding anything to the contrary set forth in this
Agreement, the General Partner shall not be liable for monetary damages to the
Partnership, any Partners or any Assignees for any losses, claims, damages,
liabilities, expenses, judgments, fines, settlements or other amounts incurred
due to acts or omissions of the General Partner, except if such losses, claims,
damages, liabilities, expenses, judgments, fines, settlements or other amounts
arose out of or resulted from (i) the gross negligence, fraud, intentional
misconduct or a knowing violation of law by the General Partner when it had
reasonable cause to believe such action giving rise to the violation was
unlawful (ii) the violation or breach by the General Partner of the provisions
of this Agreement or (iii) any transaction in which the General Partner
received a personal benefit in violation or breach of any provision of this
Agreement.
B. Subject to its obligations and duties as General Partner set
forth in Sections 7.1.A and 7.3 hereof, the General Partner may exercise any of
the powers granted to it by 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 willful misconduct or gross
negligence on the part of any such agent appointed by it in good faith and
without gross negligence.
C. Any amendment, modification or repeal of this Section 7.8 or any
provision hereof shall be prospective only and shall not in any way affect the
limitations on the General Partner's liability to the Partnership and the
Limited Partners under this Section 7.8 as in effect immediately prior to such
amendment, modification or repeal with respect to claims arising from or
relating to matters occurring, in whole or in part, prior to such amendment,
modification or repeal, regardless of when such claims may arise or be
asserted.
45
Section 7.9.
REIT QUALIFICATION OF THE GENERAL PARTNER
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 General Partner to
continue to qualify as a REIT or (ii) to avoid the General Partner incurring
any taxes under Code 857 or 4981, is expressly authorized under this
Agreement and is deemed approved by all of the Limited Partners. Nothing,
however, in this Agreement shall be deemed to give rise to any liability on the
part of the Limited Partners for the General Partner's failure to qualify or
continue to qualify as a REIT or failure to avoid incurring any taxes under the
foregoing Sections of the Code, or to give rise to any liability of the General
Partner for such failure so to qualify.
Section 7.10. TITLE TO PARTNERSHIP ASSETS
Title to Partnership assets, whether real, personal or mixed and
whether tangible or intangible, shall be deemed to be owned by the Partnership
as an entity, and no Partner, individually or collectively, shall have any
ownership interest in such Partnership assets or any portion thereof. Title to
any or all of the Partnership assets may be held in the name of the
Partnership, the General Partner or one or more nominees, as the General
Partner may determine, including Affiliates of the General Partner. The
General Partner hereby declares and warrants that any Partnership assets for
which legal title is held in the name of the General Partner or any nominee or
Affiliate of the General Partner shall be held by the General Partner, or such
nominee or Affiliate for the use and benefit of the Partnership in accordance
with the provisions of this Agreement; PROVIDED THAT the General Partner shall
use its best efforts to cause beneficial and record title to such assets to be
vested in the Partnership as soon as reasonably practicable. All Partnership
assets shall be recorded as the property of the Partnership in its books and
records, irrespective of the name in which legal title to such Partnership
assets is held.
46
ARTICLE 8
RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS
Section 8.1. LIMITATION OF LIABILITY
The Limited Partners shall have no liability under this Agreement,
except as expressly provided in this Agreement including Section 10.5 hereof,
or under the Act.
Section 8.2. MANAGEMENT OF BUSINESS
No Partner or Assignee (other than the General Partner, any of its
Subsidiaries or any officer, director, employee, partner, agent or trustee of
the General Partner, the Partnership or any of their Subsidiaries, in their
capacity as such) shall take part in the operation, management or control of
the Partnership's business, transact any business in the Partnership's name or
have the power to sign documents for or otherwise bind the Partnership.
Notwithstanding anything herein seemingly to the contrary, the transaction of
any such business by the General Partner, any of its Subsidiaries or any
officer, director, employee, partner, agent or trustee of the General Partner,
the Partnership or any of their Subsidiaries, in their capacity as such, shall
not affect, impair or eliminate the limitations on the liability of the Limited
Partners or Assignees under this Agreement.
Section 8.3. OUTSIDE ACTIVITIES OF LIMITED PARTNERS
Subject to any agreements entered into pursuant to Section 7.6.E
hereof and any other agreements entered into by a Limited Partner or its
Affiliates with the Partnership or a Subsidiary, any Limited Partner (other
than the General Partner) and any officer, director, employee, agent, trustee,
Affiliate or stockholder of any Limited Partner (other than 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, including
business interests and activities that are in direct competition with the
Partnership or that are enhanced by the activities of the Partnership. Neither
the Partnership nor any Partners shall have any rights by virtue of this
Agreement in any business ventures of any Limited Partner (other than the
General Partner) or Assignee. None of the Limited Partners nor any other
Person shall have any rights by virtue of this Agreement or the partnership
relationship established hereby in any business
47
ventures of any other Person
(other than the General Partner to the extent expressly provided herein) and
such Person shall have no obligation pursuant to this Agreement to offer any
interest in any such business ventures to the Partnership, any Limited Partner
or any such other Person, even if such opportunity is of a character which, if
presented to the Partnership, any Limited Partner or such other Person, could
be taken by such Person. In addition, the Partners recognize that certain of
the Limited Partners and their Affiliates are and may in the future be tenants
of the Partnership or other Persons or own anchor or other stores in the
Partnership's properties or other properties and in connection therewith may
have interests that conflict with those of the Partnership. In deciding
whether to take any actions in such capacity, such Limited Partners and their
Affiliates shall be under no obligation to consider the separate interests of
the Partnership and shall have no fiduciary obligations to the Partnership and
shall not be liable for monetary damages for losses sustained, liabilities
incurred or benefits not derived by the other Partners in connection with such
actions.
Section 8.4. RETURN OF CAPITAL
No Partner shall be entitled to the withdrawal or return of his
Capital Contribution, except to the extent of distributions made pursuant to
this Agreement or upon termination of the Partnership as provided herein or as
a result of a redemption of a Partnership Interest pursuant to Section 7.5.
Section 8.5. RIGHTS OF LIMITED PARTNERS RELATING TO THE PARTNERSHIP
A. In addition to other rights provided by this Agreement or by the
Act, each Limited Partner shall be furnished:
(1) a copy of the most recent annual and quarterly reports filed with
the Securities and Exchange Commission by the General Partner pursuant to
the Securities Exchange Act of 1934 and all proxy materials and current
reports on Form 8-K filed by the General Partner with the Securities and
Exchange Commission;
48
(2) a copy of the Partnership's federal, state and local income tax
returns for each Partnership Year;
(3) a current list of the name and last known business, residence or
mailing address of each Partner; and
(4) a copy of this Agreement and the Certificate and all amendments
thereto, together with executed copies of all powers of attorney pursuant
to which this Agreement, the Certificate and all amendments thereto have
been executed.
B. The Partnership shall notify any Limited Partner, on request, of
the then current Conversion Factor or any change made to the Conversion Factor.
C. Notwithstanding any other provision of this Section 8.5, the
General Partner may keep confidential from the Limited Partners, for such
period of time as the General Partner determines in its sole and absolute
discretion to be reasonable, any information that (i) the General Partner
reasonably believes to be in the nature of trade secrets the disclosure of
which the General Partner in good faith believes is not in the best interests
of the Partnership or could damage the Partnership or its business or (ii) the
Partnership is required by law or by agreements with an unaffiliated third
party to keep confidential.
D. The General Partner shall provide advance written notice to the
Limited Partners of any proposed sale or refinancing by the Partnership or any
of its Subsidiaries, and will consult during normal business hours with any
Limited Partner who requests in writing the right to consult with the General
Partner with respect thereto. The General Partner also shall provide the
Limited Partners with quarterly tax projections for the Partnership. Subject
in all respects to Section 7.3 hereof, in no event, however, will the General
Partner be obligated to agree to any modifications to a proposed sale or
refinancing which are suggested by a Limited Partner, nor will any Limited
Partner have a veto or other right over any such proposed sale or refinancing.
49
ARTICLE 9
BOOKS, RECORDS, ACCOUNTING AND REPORTS
Section 9.1. RECORDS AND ACCOUNTING
The General Partner shall keep or cause to be kept at the principal
executive office of the Partnership those records and documents required to be
maintained by the Act and other books and records deemed by the General Partner
to be appropriate with respect to the Partnership's business, including,
without limitation, all books and records necessary to provide to the Limited
Partners any information, lists and copies of documents required to be provided
pursuant to Section 9.3 hereof. The books of the Partnership shall be
maintained, for financial and tax reporting purposes, on an accrual basis in
accordance with GAAP, or on such other basis as the General Partner determines
to be necessary or appropriate.
Section 9.2. FISCAL YEAR
The fiscal year of the Partnership shall be the calendar year.
Section 9.3. REPORTS
A. As soon as practicable, but in no event later than one hundred
five (105) days after the close of each Partnership Year, the General Partner
shall cause to be mailed to each Limited Partner as of the close of the
Partnership Year, an annual report containing financial statements of the
Partnership, or of the General Partner if such statements are prepared solely
on a consolidated basis with the General Partner, for such Partnership Year,
presented in accordance with GAAP, such statements to be audited by a
nationally recognized firm of independent public accountants selected by the
General Partner.
B. As soon as practicable, but in no event later than one hundred
five (105) days after the close of each calendar quarter (except the last
calendar quarter of each year), the General Partner shall cause to be mailed to
each Limited Partner as of the last day of the calendar quarter, a report
containing unaudited financial statements of the Partnership, or of the General
Partner, if such statements are
50
prepared solely on a consolidated basis with
the General Partner, and such other information as may be required by
applicable law or regulation, or as the General Partner determines to be
appropriate.
ARTICLE 10
TAX MATTERS
Section 10.1. PREPARATION OF TAX RETURNS
The General Partner shall arrange for the preparation and timely
filing of all returns of Partnership income, gains, deductions, losses and
other items required of the Partnership for federal and state income tax
purposes and shall use all reasonable efforts to furnish, within ninety (90)
days of the close of each taxable year, the tax information reasonably required
by Limited Partners for federal and state income tax reporting purposes.
Section 10.2. TAX ELECTIONS
Except as otherwise provided herein, the General Partner shall, in
its sole and absolute discretion, determine whether to make any available
election pursuant to the Code; PROVIDED THAT the General Partner shall make the
election under Code 754 in accordance with applicable Regulations
thereunder. The General Partner shall have the right to seek to revoke any
such elections (including, without limitation, the election under Code
754) upon the General Partner's determination in its sole and
absolute discretion that such revocation is in the best interests of the
Partners.
Section 10.3. TAX MATTERS PARTNER
A. The General Partner shall be the "tax matters partner" of the
Partnership for federal income tax purposes within the meaning of Code
6231(a)(7). Pursuant to Code 6223(c)(3), upon receipt of
notice from the IRS of the beginning of an administrative proceeding with
respect to the Partnership, the tax matters partner shall furnish the IRS with
the name, address and profit interest of each of the Limited Partners and the
Assignees to the extent that such information is provided to the Partnership by
the Limited Partners and the Assignees. The General Partner is authorized to
take any action in connection with any tax audit or continuing judicial action
as it determines in good faith is in the
51
best interests of the Partners;
provided, however, that the Tax Matters Partner shall not be entitled to bind
JCP Realty, Inc. or its Affiliates in their capacity as a Limited Partner
("JCP") by any Settlement Agreement (within the meaning of Section 6224 of the
Code) and shall notify JCP in a manner and at such time as is sufficient to
allow JCP to exercise its rights pursuant to Section 6224(a)(3) of the Code.
The taking of any action and the incurring of any expense by the tax
matters partner in connection with any such proceeding, except to the extent
required by law, is a matter in the sole and absolute discretion of the tax
matters partner and the provisions relating to indemnification of the General
Partner set forth in Section 7.7 of this Agreement shall be fully applicable to
the tax matters partner in its capacity as such.
B. The tax matters partner shall receive no compensation for its
services. All third party costs and expenses incurred by the tax matters
partner in performing its duties as such (including legal and accounting fees
and expenses) shall be borne by the Partnership. Nothing herein shall be
construed to restrict the Partnership from engaging an independent accounting
firm or the accountants for the Partnership to assist the tax matters partner
in discharging its duties hereunder, so long as the compensation paid by the
Partnership for such services is reasonable.
Section 10.4. ORGANIZATIONAL EXPENSES
The Partnership shall elect to deduct expenses, if any, incurred by
it in organizing the Partnership ratably over a sixty (60) month period as
provided in Code 709.
Section 10.5. WITHHOLDING; COMBINED RETURNS
A. Each Partner hereby authorizes the Partnership to withhold from
or pay on behalf of or with respect to such Partner and Assignee any amount of
federal, state, local, or foreign taxes that the General Partner reasonably
determines that the Partnership is required to withhold or pay with respect to
any amount distributable or allocable to such Partner or Assignee pursuant to
this Agreement, including, without limitation, any taxes required to be
withheld or paid by the Partnership pursuant to Code 1441, 1442,
1445, or 1446. Any amount paid on behalf of or with respect to a Partner or
Assignee shall
52
constitute a loan by the Partnership to such Partner or
Assignee, which loan shall be repaid through withholding of subsequent
distributions to such Partner or Assignee. In the event that a Limited Partner
fails to pay any amounts owed to the Partnership pursuant to this Section 10.5
when due, the General Partner may, in its sole and absolute discretion, elect
to make the payment to the Partnership on behalf of such defaulting Limited
Partner, and in such event shall be deemed to have loaned such amount to such
defaulting Limited Partner and shall succeed to all rights and remedies of the
Partnership as against such defaulting Limited Partner. Without limitation, in
such event the General Partner shall have the right to receive distributions
that would otherwise be distributable to such defaulting Limited Partner until
such time as such loan, together with all interest thereon, has been paid in
full; and any such distributions so received by the General Partner shall be
treated as having been distributed to the defaulting Limited Partner and
immediately paid by the defaulting Limited Partner to the General Partner in
repayment of such loan. Any amounts payable by a Limited Partner hereunder
shall bear interest at the lesser of (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 such amount is due
(i.e., fifteen (15) days after demand) until such amount is paid in full.
B. The General Partner is authorized, if it determines in good faith
that such action is in the interests to both it and the Limited Partners, to
negotiate with state and local tax authorities and/or file state and local
combined or consolidated income tax returns on behalf of the Partnership and
for all of the Partners and Assignees in respect of income of the Partnership.
To the extent any payment or accrual of state or local income taxes result in a
federal, state or local tax credit to one or more Partners, such credit shall
be allocated between the Partners in proportion to their respective average
daily Percentage Interests for the Partnership Year for which such tax is paid
or accrued and the amount allocated to each Partner shall be treated as a
distribution to such Partner and shall reduce the amount of available cash
otherwise distributable to such Partners under Article 5.
53
ARTICLE 11
TRANSFERS AND WITHDRAWALS
Section 11.1. TRANSFER
A. The term "transfer," when used in this Article 11 with respect to
a Partnership Unit, shall be deemed to refer to a transaction by which the
General Partner purports to assign all or any part of its General Partner
Interest to another Person or by which a Limited Partner purports to assign all
or any part of its Limited Partner Interest to another Person, and includes a
sale, assignment, gift, pledge, encumbrance, hypothecation, mortgage, exchange
or any other disposition by law or otherwise. The term "transfer" when used in
this Article 11 does not include any redemption of Partnership Units by the
Partnership from a Limited Partner or acquisition of Partnership Units from a
Limited Partner by the General Partner pursuant to the Exchange Agreement or a
distribution of Partnership Units by Boise Mall Development Company, Ltd. to
its partners.
B. No Partnership Interest shall be transferred, in whole or in
part, except in accordance with the terms and conditions set forth in this
Article 11. Any transfer or purported transfer of a Partnership Interest not
made in accordance with this Article 11 shall be null and void.
Section 11.2. TRANSFER OF GENERAL PARTNER'S PARTNER INTEREST
A. The General Partner may not transfer any of its General Partner
Interest or Limited Partner Interests or withdraw as General Partner, except as
provided in Section 11.2.B.
B. The General Partner may cause to be redeemed Partnership
Interests in accordance with Section 7.5.B hereof and may transfer its Limited
Partnership Interests but not its General Partner Interests to any wholly owned
subsidiary, but may not transfer any beneficial or record ownership interest in
such subsidiary to any other Person.
Section 11.3. LIMITED PARTNERS' RIGHTS TO TRANSFER
A. Subject to the provisions of Section 11.3.E, no Limited Partner
shall have the right to transfer all or any portion of his Partnership
Interest, or any of such Limited Partner's rights as a Limited
54
Partner, without
the prior written consent of the General Partner, which consent may be given or
withheld by the General Partner in its sole and absolute discretion. Any
purported transfer of a Partnership Interest by a Limited Partner in violation
of this Section 11.3.A shall be void ab initio and shall not be given effect
for any purpose by the Partnership.
B. If a Limited Partner is subject to Incapacity, the executor,
administrator, trustee, committee, guardian, conservator or receiver of such
Limited Partner's estate shall have all the rights of a Limited Partner, but
not more rights than those enjoyed by other Limited Partners, for the purpose
of settling or managing the estate and such power as the Incapacitated Limited
Partner possessed to transfer all or any part of his or its interest in the
Partnership. The Incapacity of a Limited Partner, in and of itself, shall not
dissolve or terminate the Partnership.
C. No transfer by a Limited Partner of his Partnership Units may be
made to any Person if (i) in the opinion of legal counsel for the Partnership,
it would result in the Partnership being treated as an association taxable as a
corporation, or (ii) such transfer is effectuated through an "established
securities market" or a "secondary market (or the substantial equivalent
thereof)" within the meaning of Code 7704(b).
D. Notwithstanding the provisions of Section 11.3.A (but subject to
the provisions of Section 11.3.C), a Limited Partner may, with or without the
consent of the General Partner, transfer all or a portion of his Partnership
Units to a lender as security for a loan made to or guaranteed by the Limited
Partner, provided that in connection with any such transfer the lender does not
acquire greater rights with respect to the Partnership Units than those held by
the transferring Limited Partner.
Section 11.4. SUBSTITUTED LIMITED PARTNERS
A. No Limited Partner shall have the right to substitute a
transferee as a Limited Partner in his place. The General Partner shall,
however, have the right to consent to the admission of a transferee of the
interest of a Limited Partner pursuant to this Section 11.4 as a Substituted
Limited Partner, which consent may be withheld by the General Partner in its
discretion. If such consent is
55
granted by the General Partner, the transferee
shall be admitted to the Partnership as a Substituted Limited Partner upon
furnishing to the General Partner (i) evidence of acceptance in form
satisfactory to the General Partner of all of the terms and conditions of this
Agreement, including, without limitation, the power of attorney granted in
Sections 2.4 and 13.1 hereof, the Exchange Agreement and the Registration
Rights Agreement and (ii) such other documents or instruments as may be
reasonably required by the General Partner in order to effect such Person's
admission as a Substituted Limited Partner. The General Partner's failure or
refusal to permit a transferee of any such interests to become a Substituted
Limited Partner shall not give rise to any cause of action for damages against
the Partnership or any Partner.
B. A transferee who has been admitted as a Substituted Limited
Partner in accordance with this Article 11 shall have all the rights and powers
and be subject to all the restrictions and liabilities of a Limited Partner
under this Agreement.
C. Upon the admission of a Substituted Limited Partner, the General
Partner shall amend EXHIBIT A to reflect the name, address, number of
Partnership Units, and Percentage Interest of such Substituted Limited Partner
and to eliminate or adjust, if necessary, the name, address and interest of the
predecessor of such Substituted Limited Partner.
Section 11.5. ASSIGNEES
If the General Partner does not consent to the admission of any
permitted transferee under Section 11.3 as a Substituted Limited Partner, as
described in Section 11.4, such transferee shall be considered an Assignee for
purposes of this Agreement. An Assignee shall be deemed to have had assigned
to it, and shall be entitled to receive, distributions from the Partnership and
the share of Profits, Losses, and any other items of income, gain, loss,
deduction and credit of the Partnership attributable to the Partnership Units
assigned to such transferee, but shall not be deemed to be a holder of
Partnership Units for any other purpose under this Agreement, and shall not be
entitled to vote such Partnership Units in any matter presented to the Limited
Partners for a vote, such Partnership Units continuing to be voted by the
Partner appearing in the records of the Partnership as owning the same. In the
event any such
56
transferee desires to make a further assignment of any such
Partnership Units, such transferee shall be subject to all the provisions of
this Article 11 to the same extent and in the same manner as any Limited
Partner desiring to make an assignment of Partnership Units.
Section 11.6. GENERAL PROVISIONS
A. No Limited Partner may withdraw from the Partnership other than
as a result of a permitted transfer of all of such Limited Partner's
Partnership Units in accordance with this Article 11.
B. Any Limited Partner who shall transfer all of his Partnership
Units in a transfer permitted pursuant to this Article 11 shall cease to be a
Limited Partner upon the admission of all Assignees of such Partnership Units
as Substituted Limited Partners.
C. Transfers pursuant to this Article 11 may only be made as of the
first day of a month, unless the General Partner otherwise agrees.
D. Transfers pursuant to the Exchange Agreement may be made at any
time as specified in the Exchange Agreement.
E. If any Partnership Unit is transferred or assigned in compliance
with the provisions of this Article 11 on any day other than the first day of a
Partnership Year, then Profits, Losses, each item thereof and all other items
attributable to such Partnership Unit for such Partnership Year shall be
allocated to the transferor and the transferee by taking into account their
varying interests during the Partnership Year in accordance with Section 6.3.B.
F. All distributions pursuant to Section 5.1 attributable to a
transferred Partnership Interest (i) with respect to which the Partnership
Record Date is before the effective date of a transfer or assignment (other
than a pledge, encumbrance, hypothecation or mortgage) of the Partnership
Interest will be made to the transferor Partner, (ii) with respect to the first
Partnership Record Date after the effective date of such transfer or assignment
(other than a pledge, encumbrance, hypothecation or mortgage) shall be paid to
the transferor Partner and the transferee or assignee, ratably in accordance
with
57
their respective periods of ownership of the Partnership Interest
transferred during the period with respect to which such distribution is made,
and (iii) all distributions made in respect of a Record Date after the Record
Dates described in (i) and (ii) attributable to the Partnership Interest will
be made to the transferee or assignee (other than in connection with a pledge,
encumbrance, hypothecation or mortgage).
ARTICLE 12
ADMISSION OF PARTNERS
Section 12.1. ADMISSION OF SUCCESSOR GENERAL PARTNER
A successor to all of the General Partner Interest by a Person
designated by the Partners under Section 13.1.B shall be admitted to the
Partnership as the General Partner, effective, as the case may be, upon
completion of the Transaction or the date the notice specified in Section
13.1.B is given as therein provided. Any such transferee shall carry on the
business of the Partnership without dissolution. In each case, the admission
shall be subject to the successor General Partner executing and delivering to
the Partnership an acceptance of all of the terms and conditions of this
Agreement and such other documents or instruments as may be required to effect
the admission. In the case of such admission on any day other than the first
day of a Partnership Year, all items attributable to the General Partner
Interest for such Partnership Year shall be allocated between the transferring
Partner(s) and such successor as provided in Section 6.3.B.
Section 12.2. ADMISSION OF ADDITIONAL LIMITED PARTNERS
A. After the admission to the Partnership of the initial Limited
Partners on the date hereof, a Person who makes a Capital Contribution to the
Partnership in accordance with Section 4.2 of this Agreement or who exercises
an option to receive Partnership Units shall be admitted to the Partnership as
an Additional Limited Partner only upon furnishing to the General Partner (i)
evidence of acceptance in form satisfactory to the General Partner of all of
the terms and conditions of this Agreement, including, without limitation, the
power of attorney granted in Section 2.4 and 13.1 hereof
58
and (ii) such other
documents or instruments as may be required in the sole and absolute discretion
of the General Partner in order to effect such Person's admission as an
Additional Limited Partner.
B. Notwithstanding anything to the contrary in this Section 12.2, no
Person shall be admitted as an Additional Limited Partner without the consent
of the General Partner, which consent may be given or withheld in the General
Partner's sole and absolute discretion. The admission of any Person as an
Additional Limited Partner shall become effective on the date upon which the
name of such Person is recorded in the books and records of the Partnership,
following the consent of the General Partner to such admission.
C. If any Additional Limited Partner is admitted to the Partnership
on any day other than the first day of a Partnership Year, then Profits,
Losses, each item thereof and all other items allocable among Partners and
Assignees for such Partnership Year shall be allocated among such Additional
Limited Partner and all other Partners and Assignees in accordance with Section
6.3.B.
Section 12.3. AMENDMENT OF AGREEMENT AND CERTIFICATE OF LIMITED
PARTNERSHIP
For the admission to the Partnership of any Partner, the General
Partner shall take all steps necessary and appropriate under the Act to amend
the books and records of the Partnership and, if necessary, to prepare as soon
as practical an amendment of this Agreement (including an amendment of EXHIBIT
A) and, if required by law, shall prepare and file an amendment to the
Certificate and may for the purposes of amending the Certificate exercise the
power of attorney granted pursuant to Section 2.4 hereof.
ARTICLE 13
DISSOLUTION, LIQUIDATION AND TERMINATION
Section 13.1. DISSOLUTION
The Partnership shall not be dissolved by the admission of
Substituted Limited Partners or Additional Limited Partners or by the admission
of a successor General Partner in accordance with the terms of this Agreement.
Upon the withdrawal of the General Partner, any successor General Partner
59
shall continue the business of the Partnership. The Partnership shall dissolve,
and its affairs shall be wound up, upon the first to occur of any of the
following ("Liquidating Events"):
A. the expiration of its term as provided in Section 2.5 hereof;
B. an event of withdrawal of the last remaining General Partner, as
defined in the Act, unless within ninety (90) days following such event of
withdrawal, the remaining Partners representing a majority of the Partnership
Units (other than those held by the General Partner) held by such remaining
Partners (the "Consenting Partners") (i) agree in writing to continue the
Partnership and designate a successor General Partner whose Partnership
Interest in the Partnership shall be derived, on an equitable basis, from the
Partnership Interests of all remaining Partners on terms to be determined by
the Consenting Partners and (ii) provide written notice of such agreement and
designation to all other Partners;
C. from and after the date of this Agreement through December 31,
2043, an election to dissolve the Partnership made by the General Partner,
unless any Limited Partner holding at least five percent (5%) of the
Partnership Units objects in writing to such dissolution within thirty (30)
days of receiving written notice of such election from the General Partner;
D. on or after January 1, 2044, an election to dissolve the
Partnership made by the General Partner with the Consent of the Limited
Partners;
E. entry of a decree of judicial dissolution of the Partnership
pursuant to the provision of the Act; or
F. the sale of all or substantially all of the assets and properties
of the Partnership.
For purposes of Section 13.1.B, all Limited Partners agree that the
agreement by the Consenting Partners to continue the Partnership and designate
a successor General Partner shall constitute the agreement of all remaining
Partners "to continue the business of the limited partnership" and "to the
appointment . . . of [an] additional general partner" within the meaning of
10-801(3) of the Act, to the
60
same effect as if all remaining Partners
affirmatively consented in writing to such continuation and designation. In
this regard, each Limited Partner hereby constitutes and appoints such
designated successor General Partner, and its authorized officers and
attorneys-in-fact, and each of those acting singly, in each case with full
power of substitution, as its true and lawful agent and attorney-in-fact, with
full power and authority in its name, place and stead to execute, swear to,
seal, acknowledge, deliver, file and record in the appropriate public offices
all certificates, documents and other instruments that such successor deems
appropriate or necessary to evidence the affirmative consent in writing to such
continuation and designation.
The foregoing power of attorney is irrevocable and coupled with an
interest, in recognition of the fact that each of the Partners will be relying
upon the power of the successor General Partner to act as contemplated above,
and it shall survive and not be affected by the subsequent Incapacity of any
Limited Partner and the transfer of all or any portion of such Limited
Partner's Partnership Units and shall extend to such Limited Partner's heirs,
successors, assigns and personal representatives.
Section 13.2. WINDING UP
A. Upon the occurrence of a Liquidating Event, the Partnership shall
continue solely for the purposes of winding up its affairs in an orderly
manner, liquidating its assets, and satisfying the claims of its creditors and
Partners. No Partner shall take any action that is inconsistent with, or not
necessary to or appropriate for, the winding up of the Partnership's business
and affairs. The General Partner or a Person designated by the General Partner
or, in the event there is no remaining General Partner, any Person elected by
holders of a majority of the outstanding Partnership Units held by Limited
Partners (excluding Units that may be held by the General Partner or any of its
Subsidiaries as a Limited Partner) (the General Partner or such other Person
being referred to herein as the "Liquidator") shall be responsible for
overseeing the winding up and dissolution of the Partnership and shall take
full account of the Partnership's liabilities and property and the Partnership
property shall be liquidated as promptly as is consistent with obtaining the
fair value thereof, and the proceeds therefrom shall be applied and distributed
in the following order:
61
(1) First, to the payment and discharge of all of the
Partnership's debts and liabilities to creditors other than the Partners;
(2) Second, to the payment and discharge of, and in proportion to,
all of the Partnership's debts and liabilities to the Partners; and
(3) The balance, if any, to the Partners in proportion to their
positive Capital Account balances, after giving effect to all contributions,
distributions, and allocations of Profits and Losses and other items for all
periods.
The General Partner shall not receive any additional compensation
for any services performed pursuant to this Article 13.
B. Notwithstanding the provisions of Section 13.2.A hereof which
require liquidation of the assets of the Partnership, but subject to the order
of priorities set forth therein, if prior to or upon dissolution of the
Partnership the Liquidator determines that an immediate sale of part or all of
the Partnership's assets would be impractical or would cause undue loss to the
Partners, the Liquidator may, in its sole and absolute discretion, defer for a
reasonable time the liquidation of any assets except those necessary to satisfy
liabilities of the Partnership (including to those Partners as creditors)
and/or, with the consent of each Partner, distribute to the Partners, in lieu
of cash, as tenants in common and in accordance with the provisions of Section
13.2.A hereof, undivided interests in such Partnership assets as the Liquidator
deems not suitable for liquidation. Any such distributions in kind shall be
made only if, in the good faith judgment of the Liquidator, such distributions
in kind are in the best interest of the Partners, and shall be subject to such
conditions relating to the disposition and management of such properties as the
Liquidator deems reasonable and equitable and to any agreements governing the
operation of such properties at such time. The Liquidator shall determine the
fair market value of any property distributed in kind using such reasonable
method of valuation as it may adopt.
62
Section 13.3. NEGATIVE CAPITAL ACCOUNTS
A. Except as provided in the next sentence and Section 13.3.B, no
Partner shall be liable to the Partnership or to any other Partner for any
deficit or negative balance which may exist in such Partner's Capital Account.
Upon liquidation of an Obligated Partner's interest in the Partnership pursuant
to a liquidation of the Partnership or by means of a distribution to the
Obligated Partner by the Partnership, if any such Obligated Partner has a
deficit balance in its Capital Account (after giving effect to all
contributions, distributions, allocations and adjustments to Capital Accounts
for all periods), each such Obligated Partner shall contribute to the capital
of the Partnership an amount equal to its respective deficit balance; such
obligation to be satisfied by the end of the Partnership Year of liquidation
(or, if later, within ninety (90) days following the liquidation and
dissolution of the Partnership). Such contributions shall be used to make
payments to creditors of the Partnership and such Obligated Partners (i) shall
not be subrogated to the rights of any such creditor against the General
Partner, the Partnership, another Partner or any Person related thereto, and
(ii) hereby waive any right to reimbursement, contribution or similar right to
which such Obligated Partners might otherwise be entitled as a result of the
performance of its obligations under this Agreement.
B. Notwithstanding any other provision of this Agreement, an
Obligated Partner shall cease to be an Obligated Partner upon an exchange of
all of such Obligated Partner's remaining Partnership Units for REIT Shares
(pursuant to the Exchange Agreement) six months after the date of such exchange
unless at the time of, or during the six-month period following, such exchange,
there has been:
(i) An entry of a decree or order for relief in respect of the
Partnership by a court having jurisdiction over a substantial part
of the Partnership's assets, or the appointment of a receiver,
liquidator, assignee, custodian, trustee, sequestrator (or other
similar official) of the Partnership or of any substantial part of
its property, or ordering the winding up or liquidation of the
Partnership's affairs, in an involuntary case under the
63
federal bankruptcy laws, as now or hereafter constituted, or any
other applicable federal or state bankruptcy, insolvency or other
similar law; or
(ii) The commencement against the Partnership of an involuntary
case under the federal bankruptcy laws, as now or hereafter
constituted, or any other applicable federal or state bankruptcy,
insolvency or other similar law; or
(iii) The commencement by the Partnership of a voluntary case
under the federal bankruptcy laws, as now or hereafter constituted,
or any other applicable federal or state bankruptcy, insolvency or
other similar law, or the consent by it to the entry of an order for
relief in an involuntary case under any such law or the consent by
it to the appointment of or taking possession by a receiver,
liquidator, assignee, custodian, trustee, sequestrator (or other
similar official) of the Partnership or of any substantial part of
its property, or the making by it of a general assignment for the
benefit of creditors, or the failure of the Partnership generally to
pay its debts as such debts become due or the taking of any action
in furtherance of any of the foregoing; or
(iv) A failure by the Partnership to maintain a ratio of Total
Liabilities to Market Value of Total Equity of less than 400%; or
(v) A failure by the Partnership to maintain a ratio of EBITDA
to Debt Service of greater than 110%.
Following the passage of the six-month period described in this
Section 13.3.B, an Obligated Partner shall cease to be an Obligated Partner at
the first time, if any, that all of the conditions set forth in (i) through (v)
above are no longer in existence.
Section 13.4. ACCOUNTING
In the event of the dissolution, liquidation and winding up of the
Partnership, a proper accounting (which shall be certified) shall be made of
the Capital Account of each Partner and of the
64
Profits or Losses of the Partnership from the date of the last previous
accounting to the date of dissolution. Financial statements presenting
such accounting shall include a report of a certified public accountant
selected by the Liquidator.
Section 13.5. DEEMED DISTRIBUTION AND RECONTRIBUTION
Notwithstanding any other provision of this Article 13, in the event
the Partnership is liquidated within the meaning of Regulations
1.704-1(b)(2)(ii)(g) but no Liquidating Event has occurred, the
Partnership's property shall not be liquidated, the Partnership's liabilities
shall not be paid or discharged, and the Partnership's affairs shall not be
wound up. Instead, for federal income tax purposes and for purposes of
maintaining Capital Accounts, the Partnership shall be deemed to have
distributed the property in kind to the General Partner and Limited Partners,
who shall be deemed to have assumed and taken such property subject to all
Partnership liabilities, all in accordance with their respective Capital
Accounts. Immediately thereafter, the General Partner and Limited Partners
shall be deemed to have recontributed the Partnership property in kind to the
Partnership, which shall be deemed to have assumed and taken such property
subject to all such liabilities.
Section 13.6. RIGHTS OF PARTNERS
Except as otherwise provided in this Agreement, each Partner shall
look solely to the assets of the Partnership for the return of his Capital
Contributions and shall have no right or power to demand or receive property
other than cash from the Partnership. Except as otherwise provided in this
Agreement, no Partner shall have priority over any other Partner as to the
return of his Capital Contributions, distributions, or allocations.
Section 13.7. NOTICE OF DISSOLUTION
In the event a Liquidating Event occurs or an event occurs that
would, but for an election or objection by one or more Partners pursuant to
Section 13.1, result in a dissolution of the Partnership, the General Partner
shall, within 15 days thereafter, provide written notice thereof to each of the
Partners.
65
Section 13.8. Termination of Partnership and Cancellation
OF CERTIFICATE OF LIMITED PARTNERSHIP
Upon the completion of the liquidation of the Partnership and the
distribution of all cash and property as provided in Section 13.2 hereof, the
Partnership shall be terminated, a certificate of cancellation shall be filed,
and all qualifications of the Partnership as a foreign limited partnership in
any jurisdiction other than the State of Maryland shall be cancelled and such
other actions as may be necessary to terminate the Partnership shall be taken.
Section 13.9. AGREEMENT TO REMAIN IN EFFECT
The provisions of this Agreement shall remain in effect between the
Partners during the period of liquidation.
Section 13.10. WAIVER OF PARTITION
Each Partner hereby waives any right to partition of the Partnership
property.
ARTICLE 14
AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS
Section 14.1. AMENDMENTS
A. Amendments to this Agreement may be proposed by the General
Partner or by Limited Partners holding at least twenty-five percent (25%) or
more of the Partnership Units held by Limited Partners (excluding Partnership
Units that may be held by the General Partner or any of its Subsidiaries as a
Limited Partner). Following such proposal, the General Partner shall submit any
proposed amendment to all of the Limited Partners. The General Partner shall
seek the written vote of the Partners on the proposed amendment or shall call a
meeting to vote thereon and to transact any other business that it may deem
appropriate. For purposes of obtaining a written vote, the General Partner may
require a response within a reasonable specified time, but not less than five
(5) Business Days, and failure to respond in such time period shall constitute
a vote which is consistent with the General Partner's recommendation with
respect to the proposal. Except as provided in Section 14.1.B, 14.1.C and
14.1.D, a proposed amendment shall be adopted and be effective as an amendment
hereto if it is approved by the
66
General Partner and it receives the Consent of
Partners holding a majority of the Partnership Units held by Limited Partners
(excluding Partnership Units that may be held by the General Partner or any of
its Subsidiaries as a Limited Partner).
B. Notwithstanding Section 14.1.A, the General Partner shall have
the power, without the consent of the Limited Partners, to amend this Agreement
as may be required to facilitate or implement any of the following purposes:
(1) to add to the obligations of the General Partner or surrender any
right or power granted to the General Partner or any Affiliate of the
General Partner for the benefit of the Limited Partners;
(2) to reflect the admission, substitution, termination, or
withdrawal of Partners in accordance with this Agreement;
(3) to reflect a change that is of an inconsequential nature and does
not adversely affect the Limited Partners, or to cure any ambiguity,
correct or supplement any provision in this Agreement not inconsistent
with law or with other provisions, or make other changes with respect to
matters arising under this Agreement that will not be inconsistent with
law or with the provisions of this Agreement; and
(4) to satisfy any requirements, conditions, or guidelines contained
in any order, directive, opinion, ruling, or regulation of a federal or
state agency or contained in federal or state law.
The General Partner shall provide 10 Business Days' prior written notice to the
Limited Partners of any action to be taken under this Section 14.1.B.
C. Notwithstanding Sections 14.1.A, 14.1.B and 14.1.D hereof, this
Agreement shall not be amended without the consent of each Partner adversely
affected if such amendment would (i) convert a Limited Partner's interest in
the Partnership into a general partner interest, (ii) modify the limited
liability
67
of a Limited Partner in a manner adverse to such Limited Partner,
(iii) amend any of Articles 5 and 6, and Sections 7.3, 11.3, 11.4, 13.1 and
13.2 or (iv) amend this Section 14.1.C. Further, no amendment may alter the
restrictions on the General Partner's authority set forth in Section 7.3
without the consent specified in that section.
D. Notwithstanding Sections 14.1.A, 14.1.B and 14.1.C hereof, the
General Partner shall have the power, without the consent of the Limited
Partners (whether or not Obligated Partners), to amend EXHIBIT B hereto for the
purpose of adding, substituting or removing an Obligated Partner or adjusting
the Restoration Amount with respect to any Obligated Partner; provided,
however, EXHIBIT B shall not be amended without the prior written consent of
the Obligated Partner(s) being adversely affected thereby. Notwithstanding the
foregoing sentence, in connection with any liquidating distribution made by an
Entity Obligated Partner to an interest holder who is being allocated a portion
of such Entity Obligated Partner's Restoration Amount, the General Partner
shall also have the power, without the consent of the Limited Partners (whether
or not Obligated Partners), to amend EXHIBIT B hereto for the purpose of (i)
adding such distributee as an additional Obligated Partner with a Restoration
Amount equal to such distributee's allocable share of such Entity Obligated
Partner's Restoration Amount and (ii) making a corresponding reduction in the
Restoration Amount of such Entity Obligated Partner.
Section 14.2. MEETINGS OF THE PARTNERS
A. Meetings of the Partners may be called by the General Partner and
shall be called upon the receipt by the General Partner of a written request by
Limited Partners holding at least five percent (5%) or more of the Partnership
Units held by Limited Partners (excluding Partnership Units that may be held by
the General Partner or any of its Subsidiaries as a Limited Partner). The call
shall state the nature of the business to be transacted. Notice of any such
meeting shall be given to all Partners not less than seven (7) days nor more
than thirty (30) days prior to the date of such meeting. Partners may vote in
person or by proxy at such meeting. Whenever the vote or consent of Partners
is permitted or required
68
under this Agreement, such vote or consent may be
given at a meeting of Partners or may be given in accordance with the procedure
prescribed in Section 14.1 hereof.
B. Any action required or permitted to be taken at a meeting of the
Partners may be taken without a meeting if a written consent is executed on or
before the effective date thereof that sets forth the action to be taken and is
signed by the requisite Partners. Such consent may be in one instrument or in
several instruments, and shall have the same force and effect as a vote of
Partners at a meeting. Such consent shall be filed with the General Partner
and a copy provided to each Limited Partner promptly thereafter. An action so
taken shall be deemed to have been taken at a meeting held on the effective
date so certified.
C. Each Limited Partner may authorize any Person or Persons to act
for him by proxy on all matters in which a Limited Partner is entitled to
participate, including waiving notice of any meeting, or voting or
participating at a meeting. Every proxy must be signed by the Limited Partner
or his attorney-in-fact. No proxy shall be valid after the expiration of one
year from the date thereof unless otherwise provided in the proxy. Unless
otherwise indicated in the proxy, every proxy shall be revocable at the
pleasure of the Limited Partner executing it, such revocation to be effective
upon the Partnership's receipt of written notice of such revocation from the
Limited Partner executing such proxy.
D. Each meeting of Partners shall be conducted by the General
Partner or such other Person as the General Partner may appoint pursuant to
such rules for the conduct of the meeting as the General Partner or such other
Person deems appropriate. Without limitation, meetings of Partners may be
conducted in the same manner as meetings of the stockholders of the General
Partner and may be held at the same time, as a part of, meeting of the
stockholders of the General Partner.
69
ARTICLE 15
GENERAL PROVISIONS
Section 15.1. ADDRESSES AND NOTICE
Any notice, demand, request or report required or permitted to be
given or made to a Partner or Assignee under this Agreement shall be in writing
and shall be deemed given or made when delivered in person or three (3)
Business Days after being deposited in the United States mail, registered or
certified, postage prepaid, and properly addressed to the Partner or Assignee
at the address set forth in EXHIBIT A or such other address of which the
Partner or Assignee shall notify the General Partner in writing.
Section 15.2. TITLES AND CAPTIONS
All article or section titles or captions in this Agreement are for
convenience only. They shall not be deemed part of this Agreement and in no
way define, limit, extend or describe the scope or intent of any provisions
hereof. Except as specifically provided otherwise, references to "Articles"
and "Sections" are to Articles and Sections of this Agreement.
Section 15.3. PRONOUNS AND PLURALS
Whenever the context may require, any pronoun used in this Agreement
shall include the corresponding masculine, feminine or neuter forms, and the
singular form of nouns, pronouns and verbs shall include the plural and vice
versa.
Section 15.4. FURTHER ACTION
The parties shall execute and deliver all documents and take or
refrain from taking action as may be reasonable and necessary or appropriate to
achieve the purposes of the Agreement.
Section 15.5. BINDING EFFECT
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their heirs, executors, administrators, successors, legal
representatives and permitted assigns.
Section 15.6. WAIVER
70
No failure by any party to insist upon the strict performance of any
covenant, duty, agreement or condition of this Agreement or to exercise any
right or remedy consequent upon a breach thereof shall constitute waiver of any
such breach or any other covenant, duty, agreement or condition.
Section 15.7. COUNTERPARTS
This Agreement may be executed in counterparts, all of which
together shall constitute one agreement binding on all the parties hereto,
notwithstanding that all such parties are not signatories to the original or
the same counterpart. Each party shall become bound by this Agreement
immediately upon affixing its signature hereto.
Section 15.8. APPLICABLE LAW
This Agreement shall be construed and enforced in accordance with
and governed by the laws of the State of Maryland, without regard to the
principles of conflicts of law.
Section 15.9. INVALIDITY OF PROVISIONS
If any provision of this Agreement is or becomes invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein shall not be affected thereby.
Section 15.10. ENTIRE AGREEMENT
This Agreement and all documents and agreements referred to herein
and therein contain the entire understanding and agreement among the Partners
with respect to the subject matter hereof and supersedes the Prior Agreements
and any other prior written or oral understandings or agreements among them
with respect thereto.
71
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
under seal as of the date first written above.
GENERAL PARTNER:
JP Realty, Inc.
By: /s/ G. ▇▇▇ ▇▇▇▇▇▇▇
-------------------
G. ▇▇▇ ▇▇▇▇▇▇▇
President
LIMITED PARTNERS:
The Persons whose names are set forth on
EXHIBIT A as Limited Partners as attached
hereto.
By: JP Realty, Inc., as Attorney-in-Fact
By: /s/ G. ▇▇▇ ▇▇▇▇▇▇▇
---------------------
G. ▇▇▇ ▇▇▇▇▇▇▇
President
72
EXHIBIT A
PARTNERS AND PARTNERSHIP INTERESTS
Name of Partner Partnership Percentage
Units Interest
------------------- ---------------------
GENERAL PARTNER
JP Realty, Inc.
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇-▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ 17,640,747 82.74871%
LIMITED PARTNERS
Boise Mall Investment Company, Ltd. 824,411 3.86712%
▇▇▇▇▇, ▇▇▇▇ 125 0.00059%
▇▇▇▇▇, ▇▇▇▇▇ 320 0.00150%
Cache Valley Mall Partnership, Ltd. 328,813 1.54239%
▇▇▇▇▇▇▇▇, ▇▇▇▇▇ 100 0.00047%
▇▇▇▇▇▇▇, ▇▇▇ 100 0.00047%
▇▇▇▇▇▇▇, ▇▇▇▇▇ 35,460 0.16633%
▇▇▇▇▇▇▇, ▇▇▇▇ 765 0.00359%
▇▇▇▇▇▇▇, ▇▇▇▇▇ 1,531 0.00718%
▇▇▇▇▇▇, ▇▇▇▇ 24 0.00011%
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ 125 0.00059%
East Ridge Partnership 100 0.00047%
▇▇▇▇▇▇, ▇▇▇▇ 320 0.00150%
Fairfax Holding, LLC 786,226 3.68801%
▇▇▇▇▇, ▇▇▇▇ 5,486 0.02573%
▇▇▇▇▇▇▇, G. Rex 3,680 0.01726%
▇▇▇▇, ▇▇▇▇▇▇▇ 6,817 0.03198%
▇▇▇▇▇▇▇▇, ▇▇▇▇▇ 100 0.00047%
Hall Investment Company 10,204 0.04786%
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ 5,102 0.02393%
JCP Realty, Inc. 350,460 1.64393%
KFC Advertising 5,487 0.02574%
▇▇▇▇▇▇, ▇▇▇▇ 125 0.00059%
▇▇▇▇▇▇, ▇▇▇▇ 25 0.00012%
King American Hospital, Ltd. 63,424 0.29751%
King Provo, Ltd. 64,872 0.30430%
▇▇▇▇, ▇▇▇▇▇▇ ▇. 6,244 0.02929%
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇. 214 0.00100%
▇▇▇▇▇▇, ▇▇▇ 100 0.00047%
North Plains Development Company, Ltd. 19,033 0.08928%
North Plains Land Company, Ltd. 1,758 0.00825%
▇▇▇▇▇, ▇▇▇▇ 1,894 0.00888%
▇▇▇▇▇, ▇▇▇▇▇ 125 0.00059%
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. 692 0.00325%
Pine Ridge Development Company, Ltd. 77,641 0.36420%
Pine Ridge Land Company, Ltd. 5,176 0.02428%
▇▇▇▇▇, ▇▇▇▇ 200 0.00094%
▇▇▇▇▇, ▇▇▇▇▇▇ 350 0.00164%
EX. A-1
Price 800 Company, Ltd. 156,615 0.73465%
Price Commerce, Ltd. 63,423 0.29750%
Price East Bay, Ltd. 37,157 0.17430%
Price ▇▇▇▇▇▇ ▇▇▇▇▇▇ Company, Ltd. 17,497 0.08207%
Price Fremont Company, Ltd. 166,315 0.78015%
Price Glendale Company, Ltd. 3,935 0.01846%
Price Orem Investment Company, Ltd. 66,747 0.31309%
Price Plaza 800 Company, Ltd. 12,199 0.05722%
Price Riverside Company, Ltd. 10,983 0.05152%
Price Rock Springs Company, Ltd. 11,100 0.05207%
Price Taywin Company, Ltd. 106,381 0.49901%
▇▇▇▇▇, ▇▇▇▇▇▇ 100 0.00047%
Red Cliff Mall Investment Company 167,379 0.78514%
RMC Mall Corp. 41,518 0.19475%
Roebbelen Engineering 72,000 0.33774%
▇▇▇▇▇▇▇, ▇▇▇ 23,371 0.10963%
Taycor Ltd. 35,462 0.16634%
Tech Park II Company, Ltd. 4,929 0.02312%
▇▇▇▇▇▇▇, ▇▇▇▇ 150 0.00070%
▇▇▇▇, ▇▇▇▇ 160 0.00075%
▇▇▇▇▇▇▇, ▇▇▇▇▇ 35,460 0.16633%
▇▇▇▇▇▇▇, ▇▇▇▇ 5,102 0.02393%
▇▇▇▇▇▇▇, ▇▇▇ 5,306 0.02489%
▇▇▇▇▇▇▇, ▇▇▇▇ 10,000 0.04691%
YSP 16,787 0.07874%
------------------- ---------------------
21,318,452 100.00000%
=================== =====================
EX. A-2
A-2
EXHIBIT B
OBLIGATED PARTNER Restoration Amount
----------------------------- ----------------------
EX. B-1
Ex. B-1
SCHEDULE A
TERMS OF 8-3/4% SERIES A CUMULATIVE REDEEMABLE
PREFERRED UNITS
SECTION 1. DEFINITIONS. Capitalized terms that are used herein
shall have the same meanings as set forth in the attached First Amended and
Restated Agreement of Limited Partnership of Price Development Company,
Limited Partnership (the "PARTNERSHIP AGREEMENT") or as otherwise set forth
below:
(a) "AFFILIATE" means, as to any Person, any entity which, directly or
indirectly through one or more intermediaries, controls, is controlled
by or is under common control with such Person.
(b) "CHARTER" means the Articles of Amendment and Restatement of the
Company, dated as of November 19, 1993, as originally filed as an
Articles of Incorporation with the Maryland State Department of
Assessments and Taxation (the "DEPARTMENT") on September 8, 1993, as
amended by a Certificate of Correction on October 22, 1993, as
thereafter amended on October 27, 1993 and by those certain Articles
Supplementary filed with the Department on April 23, 1999, and as
further amended and restated from time to time.
(c) "LIQUIDATION PREFERENCE" means, with respect to the Series A Preferred
Units, the sum, payable in U.S. dollars, of (i) $25.00 per Series A
Preferred Unit, plus (ii) the amount of any accumulated and unpaid
Priority Return (as hereinafter defined) with respect to such unit,
whether or not declared, to the date of payment.
(d) "PARITY PREFERRED UNITS" means any class or series of Partnership
Interests of the Partnership now or hereafter authorized, issued or
outstanding and expressly designated by the Partnership to rank on a
parity with the Series A Preferred Units (as hereinafter defined) with
respect to distributions and rights upon voluntary or involuntary
liquidation, winding-up or dissolution of the Partnership.
(e) "PRIORITY RETURN" means an amount, payable in U.S. dollars, equal to 8-
3/4% per annum of the Liquidation Preference per Series A Preferred
Unit, commencing on the date of issuance of such Series A Preferred
Unit, determined on the basis of a 360-day year of twelve 30-day months
(or actual days for any month which is shorter than a full monthly
period), cumulative to the extent not distributed on any Series A
Preferred Unit Distribution Payment Date.
(f) "PTP" means a "publicly traded partnership" within the meaning of
Section 7704 of the Code.
(g) "SUBSIDIARY" means, with respect to any Person, any corporation,
partnership, limited liability company, joint venture or other entity of
which a majority of (i) voting power of the voting securities or (ii)
the outstanding equity interests, is owned, directly or indirectly, by
such person.
SECTION 2. DESIGNATION AND NUMBER. Pursuant to Section 4.2 of
the Partnership Agreement, a series of Partnership Units in the Partnership
designated as the "8-3/4% Series A Cumulative Redeemable Preferred Units"
(the "SERIES A PREFERRED UNITS") is hereby established. The number of
Series A Preferred Units shall be 510,000.
SECTION 3. DISTRIBUTIONS. (a) PAYMENT OF DISTRIBUTIONS.
Subject to the rights of holders of Parity Preferred Units as to the
payment of distributions, pursuant to other Partnership Unit Designations
executed under Section 4.2 of the Partnership Agreement, holders of Series
A Preferred Units shall be entitled to receive the Priority Return when, as
and if declared by the Partnership acting
SCH. A-1
through the General Partner. Such distributions shall be cumulative, shall
accrue from the original date of issuance of the Series A Preferred Units and
will be payable(i) quarterly (such quarterly periods for purposes of payment
and accrual will be the quarterly periods ending on the dates specified in
this sentence and not calendar year quarters) in arrears, on March 31, June 30,
September 30, and December 31 of each year commencing on June 30, 1999 and,
(ii)in the event of a redemption of Series A Preferred Units on the redemption
date (each a "SERIES A PREFERRED UNIT DISTRIBUTION PAYMENT DATE"). If any
Series A Preferred Unit Distribution Payment Date is not a Business Day (as
hereinafter defined), then payment of the distribution to be made on such
date will be made on the Business Day immediately preceding such date with
the same force and effect as if made on such date. Distributions on the
Series A Preferred Units will be made to the holders of record of the
Series A Preferred Units on the relevant record dates to be fixed by the
Partnership acting through the General Partner, which record dates shall in
no event exceed 15 Business Days prior to the relevant Series A Preferred
Unit Distribution Payment Date (the "SERIES A PREFERRED UNIT PARTNERSHIP
RECORD DATE").
The term "BUSINESS DAY" means each day, other than a Saturday or a Sunday,
which is not a day on which banking institutions in New York, New York are
authorized or required by law, regulation or executive order to close.
(b) PROHIBITION ON DISTRIBUTION. No distributions on Series A Preferred
Units shall be authorized by the General Partner or paid or set apart
for payment by the Partnership at any such time as the terms and
provisions of any agreement of the Partnership or the General Partner,
including any agreement relating to indebtedness, prohibits such
authorization, payment or setting apart for payment or provides that
such authorization, payment or setting apart for payment would
constitute a breach thereof or a default thereunder, or to the extent
that such authorization or payment shall be restricted or prohibited by
law.
(c) DISTRIBUTIONS CUMULATIVE. Distributions on the Series A Preferred
Units will accrue whether or not the terms and provisions of any
agreement of the Partnership, including any agreement relating to its
indebtedness at any time prohibit the current payment of distributions,
whether or not the Partnership has earnings, whether or not there are
funds legally available for the payment of such distributions and
whether or not such distributions are authorized. Accrued but unpaid
distributions on the Series A Preferred Units will accumulate as of the
Series A Preferred Unit Distribution Payment Date on which they first
become payable. Distributions on account of arrears for any past
distribution periods may be declared and paid at any time, without
reference to a regular Series A Preferred Unit Distribution Payment Date
to holders of record of the Series A Preferred Units on the record date
fixed by the Partnership acting through the General Partner which date
shall not be more than 15 Business Days prior to the payment date.
Accumulated and unpaid distributions will not bear interest.
(d) PRIORITY AS TO DISTRIBUTIONS. (i) So long as any Series A Preferred
Units are outstanding, no distribution of cash or other property shall
be authorized, declared, paid or set apart for payment on or with
respect to any class or series of Partnership Interest ranking junior as
to the payment of distributions or rights upon a voluntary or
involuntary liquidation, dissolution or winding-up of the Partnership to
the Series A Preferred Units (collectively, "JUNIOR UNITS"), nor shall
any cash or other property be set aside for or applied to the purchase,
redemption or other acquisition for consideration of any Series A
Preferred Units, any Parity Preferred Units or any Junior Units, unless,
in each case, all distributions accumulated on all Series A Preferred
Units and all classes and series of outstanding Parity Preferred Units
have been paid in full. The foregoing sentence shall not prohibit (x)
distributions payable solely in Junior Units, (y) the conversion of
Junior Units or Parity Preferred Units into Partnership Interests
corresponding to any Series A Preferred Units, or (z) the redemption of
Partnership Interests corresponding to any Series A Preferred Stock,
Parity Preferred Stock or Junior Stock to be purchased by the General
Partner pursuant to Article NINTH of the Charter)to
SCH. A-2
preserve the General Partner's status as a real estate investment trust,
provided that such redemption shall be upon the same terms as the
corresponding purchase pursuant to Article NINTH of the Charter.
(ii) So long as distributions have not been paid in full (or a sum
sufficient for such full payment is not irrevocably deposited in trust
for payment) upon the Series A Preferred Units, all distributions
authorized and declared on the Series A Preferred Units and all classes
or series of outstanding Parity Preferred Units shall be authorized and
declared so that the amount of distributions authorized and declared per
Series A Preferred Unit and such other classes or series of Parity
Preferred Units shall in all cases bear to each other the same ratio
that accrued distributions per Series A Preferred Unit and such other
classes or series of Parity Preferred Units (which shall not include any
accumulation in respect of unpaid distributions for prior distribution
periods if such class or series of Parity Preferred Units do not have
cumulative distribution rights) bear to each other.
(e) NO FURTHER RIGHTS. Holders of Series A Preferred Units shall not be
entitled to any distributions, whether payable in cash, other property
or otherwise, in excess of the full cumulative distributions described
herein.
SECTION 4. LIQUIDATION PROCEEDS. (a) Subject to the rights of
holders of Parity Preferred Units with respect to rights upon any voluntary
or involuntary liquidation, dissolution or winding-up of the Partnership,
each holder of Series A Preferred Units shall be entitled to receive out of
the assets of the Partnership legally available for distribution or the
proceeds thereof, after payment or provision for debts and other
liabilities of the Partnership, but before any payment or distributions of
the assets shall be made to holders of Junior Units, an amount equal to
such holder's Liquidation Preference; provided, however, that in no event
shall such amount exceed such holder's Capital Account balance on the date
of distribution. If, upon such voluntary or involuntary liquidation,
dissolution or winding-up, there are insufficient assets to permit full
payment of liquidating distributions to the holders of Series A Preferred
Units and any Parity Preferred Units as to rights upon liquidation,
dissolution or winding-up of the Partnership, all payments of liquidating
distributions on the Series A Preferred Units and such Parity Preferred
Units shall be made so that the payments on the Series A Preferred Units
and such Parity Preferred Unit shall in all cases bear to each other the
same ratio that the respective rights of the Series A Preferred Units and
such other Parity Preferred Units (which shall not include any accumulation
in respect of unpaid distributions for prior distribution periods if such
Parity Preferred Units do not have cumulative distribution rights) upon
liquidation, dissolution or winding-up of the Partnership bear to each
other.
(b) NOTICE. Written notice of any such voluntary or involuntary
liquidation, dissolution or winding-up of the Partnership, stating the
payment date or dates when, and the place or places where, the amounts
distributable in such circumstances shall be payable, shall be given by
(i) fax and (ii) by first class mail, postage pre-paid, not less than 30
and not more than 60 days prior to the payment date stated therein, to
each record holder of the Series A Preferred Units at the respective
addresses of such holders as the same shall appear on the transfer
records of the Partnership.
(c) NO FURTHER RIGHTS. After payment of the full amount of the Liquidation
Preference to which they are entitled, the holders of Series A Preferred
Units will have no right or claim to any of the remaining assets of the
Partnership.
(d) CONSOLIDATION, MERGER OR CERTAIN OTHER TRANSACTIONS. The voluntary
sale, conveyance, lease, exchange or transfer (for cash, shares of
stock, securities or other consideration) of all or substantially all of
the property or assets of the General Partner to, or the consolidation
or merger or other business combination of the Partnership with or into,
any corporation, trust or other entity (or of any
SCH. A-3
corporation, trust or
other entity with or into the Partnership) shall not be deemed to
constitute a liquidation, dissolution or winding-up of the Partnership.
SECTION 5. OPTIONAL REDEMPTION. (a) RIGHT OF OPTIONAL
REDEMPTION. The Series A Preferred Units may not be redeemed prior to
April 23, 2004. On or after such date, the Partnership shall have the
right to redeem the Series A Preferred Units, in whole (but, not in part),
at any time, upon not less than 30 nor more than 60 days' written notice,
at a redemption price, payable in cash, equal to the Liquidation Preference
(the "SERIES A REDEMPTION PRICE").
(b) LIMITATION ON REDEMPTION. (i) The Series A Redemption Price (other
than the portion thereof consisting of accumulated but unpaid
distributions) will be payable solely out of the sale proceeds of
capital stock of the General Partner, which will be contributed by the
General Partner to the Partnership as additional capital contribution,
or out of the sale of limited partnership interests in the Partnership
and from no other source. For purposes of the preceding sentence,
"capital stock" means any equity securities (including Common Stock and
Preferred Stock (as such terms are defined in the Charter of the General
Partner), shares, participation or other ownership interest (however
designated) and any rights (other than debt securities convertible into
or exchangeable for equity securities) or options to purchase any of the
foregoing.
(ii) The Partnership may not redeem fewer than all of the outstanding
Series A Preferred Units unless all accumulated and unpaid distributions
have been paid on all Series A Preferred Units for all quarterly
distribution periods terminating on or prior to the date of redemption.
(c) PROCEDURES FOR REDEMPTION. (i) Notice of redemption will be (A)
faxed, and (B) mailed by the Partnership, by certified mail, postage
prepaid, not less than 30 nor more than 60 days prior to the redemption
date, addressed to the respective holders of record of the Series A
Preferred Units at their respective addresses as they appear on the
records of the Partnership. No failure to give or defect in such notice
shall affect the validity of the proceedings for the redemption of any
Series A Preferred Units except as to the holder to whom such notice was
defective or not given. In addition to any information required by law,
each such notice shall state: (1) the redemption date, (2) the Series A
Redemption Price, (3) the aggregate number of Series A Preferred Units
to be redeemed, (4) the place or places where such Series A Preferred
Units are to be surrendered for payment of the Series A Redemption
Price, (5) that distributions on the Series A Preferred Units to be
redeemed will cease to accumulate on such redemption date and (6) that
payment of the Series A Redemption Price will be made upon presentation
and surrender of such Series A Preferred Units.
(ii) If the Partnership gives a notice of redemption in respect of Series A
Preferred Units (which notice will be irrevocable) then, by 12:00 noon,
New York City time, on the redemption date, the Partnership will deposit
irrevocably in trust for the benefit of the Series A Preferred Units
being redeemed funds sufficient to pay the applicable Series A
Redemption Price and will give irrevocable instructions and authority to
pay such Series A Redemption Price to the holders of the Series A
Preferred Units upon surrender of the Series A Preferred Units by such
holders at the place designated in the notice of redemption. On and
after the date of redemption, distributions will cease to accumulate on
the Series A Preferred Units called for redemption, unless the
Partnership defaults in the payment thereof. If any date fixed for
redemption of Series A Preferred Units is not a Business Day, then
payment of the Series A Redemption Price payable on such date will be
made on the next succeeding day that is a Business Day (and without any
interest or other payment in respect of any such delay) except that, if
such Business Day falls in the next calendar year, such payment will be
made on the immediately preceding Business Day, in each case with the
same force and effect as if made on such date fixed for redemption. If
payment of the Series A Redemption Price is improperly withheld or
refused and not paid by the Partnership, distributions on such Series A
Preferred Units
SCH. A-4
will continue to accumulate from the original redemption
date to the date of payment, in which case the actual payment date will
be considered the date fixed for redemption for purposes of calculating
the applicable Series A Redemption Price.
SECTION 6. VOTING RIGHTS. (a) GENERAL. Holders of the Series
A Preferred Units will not have any voting rights or right to consent to
any matter requiring the consent or approval of the Limited Partners,
except as set forth in Section 14.2 of the Partnership Agreement and in
this SECTION 6.
(b) CERTAIN VOTING RIGHTS. So long as any Series A Preferred Units remain
outstanding, the Partnership shall not, without the affirmative vote of
the holders of at least two-thirds of the Series A Preferred Units
outstanding at the time: (i) authorize or create, or increase the
authorized or issued amount of, any class or series of Partnership
Interests ranking prior to the Series A Preferred Units with respect to
payment of distributions or rights upon liquidation, dissolution or
winding-up or reclassify any Partnership Interests into any such
Partnership Interest, or create, authorize or issue any obligations or
security convertible into or evidencing the right to purchase any such
Partnership Interests; (ii) authorize or create, or increase the
authorized or issued amount of any Parity Preferred Units or reclassify
any Partnership Interest into any such Partnership Interest or create,
authorize or issue any obligations or security convertible into or
evidencing the right to purchase any such Partnership Interests but only
to the extent such Parity Preferred Units are issued to an Affiliate of
the Partnership, other than the General Partner to the extent the
issuance of such interests was to allow the General Partner to issue
corresponding preferred stock to persons who are not Affiliates of the
Partnership; or (iii) either (A) exchange shares with, consolidate with,
merge into or with, or convey, transfer or lease its assets
substantially as an entirety to, any corporation or other entity or (B)
amend, alter or repeal the provisions of the Partnership Agreement,
whether by merger, consolidation or otherwise, that would adversely
affect the powers, special rights, preferences, privileges or voting
power of the Series A Preferred Units or the holders thereof; PROVIDED,
HOWEVER, that with respect to the occurrence of a share exchange,
merger, consolidation or a sale or lease of all of the Partnership's
assets as an entirety, so long as (1) the Partnership is the surviving
entity and the Series A Preferred Units remain outstanding with the
terms thereof unchanged, or (2) the resulting, surviving or transferee
entity is a partnership, limited liability company or other pass-through
entity organized under the laws of any state and substitutes the Series
A Preferred Units for other interests in such entity having
substantially the same terms and rights are the Series A Preferred
Units, including with respect to distributions, voting rights and rights
upon liquidation, dissolution or winding-up, then the occurrence of any
such event shall not be deemed to adversely affect such rights,
privileges or voting powers of the holders of the Series A Preferred
Units; and PROVIDED FURTHER that any increase in the amount of
Partnership Interests or the creation or issuance of any other class or
series of Partnership Interests, in each case ranking (y) junior to the
Series A Preferred Units with respect to payment of distributions or the
distribution of assets upon liquidation, dissolution or winding-up, or
(z) on a parity to the Series A Preferred Units with respect to payment
of distributions or the distribution of assets upon liquidation,
dissolution or winding-up, to the extent such Partnership Interest are
not issued to an affiliate of the Partnership, other than the General
Partner to the extent the issuance of such interests was to allow the
General Partner to issue corresponding preferred stock to persons who
are not Affiliates of the Partnership, such issuance shall not be deemed
to materially and adversely affect such rights, preferences privileges
or voting powers. In the event of any conflict between the provisions
of Section 14.2 of the Partnership Agreement and the provisions of this
SECTION 6, the provisions of this SECTION 6 shall control.
SECTION 7. TRANSFER RESTRICTIONS. The Series A Preferred Units
shall be subject to all of the provisions of Article 11 of the Partnership
Agreement. Article 11 is hereby amended by adding a new Section 11.7 to
the end of Article 11 as follows:
SCH. A-5
"11.7 Notwithstanding anything to the contrary contained in Article 11
hereof, (i) a transfer of all or any portion of the Series A Preferred
Units shall not require the consent of the General Partner; (ii) the
transferee of such transfer shall be admitted to the Partnership as a
Limited Partner on the closing date of such transfer; (iii) the Partnership
and the General Partner shall treat such transferee as the absolute owner
of the interest transferred in all respects; and (iv) the General Partner
shall not have the right to require any transferor or transferee of such
Series A Preferred Units to have such Series A Preferred Units redeemed;
provided, that the foregoing shall not apply to (x) a transfer in violation
of Section 11.3C. hereof, (y) a transfer that would create a risk that the
Partnership would fail to qualify for the private placement or lack of
actual trading safe harbor of Notice 88-75 or Treasury Regulation
1.7704-1 and (z) a transfer to any Person that is a competitor (as
reasonably determined by the General Partner) of the General Partner.
SECTION 8. EXCHANGE RIGHTS. (a) RIGHT TO EXCHANGE. (i)
Subject to all cases to the ownership limitations set forth in the Charter,
Series A Preferred Units will be exchangeable in whole (but not in part) at
any time on or after the tenth (10{th}) anniversary of the date of
issuance, at the option of the holders thereof, for authorized but
previously unissued shares of 8-3/4% Series A Cumulative Redeemable
Preferred Stock of the General Partner (the "SERIES A PREFERRED STOCK") at
an exchange rate of one share of Series A Preferred Stock for one Series A
Preferred Unit, subject to adjustment as described below (the "SERIES A
EXCHANGE PRICE"), provided that the Series A Preferred Units will become
exchangeable at any time, in whole (but not in part), at the option of the
holders of Series A Preferred Units for Series A Preferred Stock if (x) at
any time full distributions shall not have been timely made on any Series A
Preferred Unit with respect to six prior quarterly distribution periods,
whether or not consecutive; provided, however, that a distribution in
respect of Series A Preferred Units shall be considered timely made if made
within two Business Days after the applicable Series A Preferred Units
Distribution Payment Date if at the time of such late payment there shall
not be any prior quarterly distribution periods in respect of which full
distributions were not timely made, (y) upon receipt by a holder or holders
of Series A Preferred Units of (1) notice from the General Partner that the
General Partner or a Subsidiary of the General Partner has taken the
position that the Partnership is, or upon the occurrence of a defined event
in the immediate future will be, a PTP and (2) an opinion rendered by an
outside nationally recognized independent counsel familiar with such
matters addressed to a holder or holders of Series A Preferred Units, that
the Partnership is or likely is, or upon the occurrence of a defined event
in the immediate future will be or likely will be, a PTP, or (z) the
holders of the Series A Preferred Units determine and the General Partner
confirms that such holders hold or will hold 20% or more of the profits and
capital interests of the Partnership and (ii) if such notice and opinion
than 20% of the profits and capital interests of the Partnership; PROVIDED,
that (i) in the case of clause (z), the Series A Preferred Units will be
exchangeable only to the extent necessary to reduce the holdings of the
holders of the Series A Preferred Units to less than 20% of the profits and
capital interests of the Partnership and (ii) if such notice and opinion
described in clauses (1) and (2) refers to a defined event, the Series A
Preferred Units will become exchangeable only after the defined event
occurs; PROVIDED FURTHER, that in the event any such exchange would result
from application of clause (y)(2) above, no exchange will be available to
the holders of Series A Preferred Units if, within 15 Business Days of the
date of delivery of the opinion referred to in clause (y)(2) above, the
General Partner delivers to such holders an opinion rendered by an outside
nationally recognized independent counsel familiar with such matters
addressed to the General Partner, that upon the occurrence of such defined
event the Partnership will not or likely will not become a PTP. In
addition to and not in limitation of the foregoing, but subject to the
ownership limitations in the Charter, the Series A Preferred Units may be
exchanged for Series A Preferred Stock, in whole (but not in party), at the
option of any holder prior to the tenth (10th) anniversary of the
issuance date and after the third anniversary thereof if such holder of
Series A Preferred Units shall deliver to the General Partner either (i) a
private letter ruling addressed to such holder of Series A Preferred Units
or (ii) an opinion of independent counsel reasonably acceptable to the
General Partner based on the enactment of temporary or final Treasury
Regulations or the publication of a Revenue Ruling, in either case to the
effect that an
SCH. A-6
exchange of the Series A Preferred Units at such earlier
time would not cause the Series A Preferred Units to be considered "stock
and securities" within the meaning of Section 351(e) of the Code for
purposes of determining whether the holder of such Series A Preferred Units
is an "investment company" under Section 721(b) of the Code if an exchange
is permitted at such earlier date.
(ii) Notwithstanding anything to the contrary set forth in SECTION 8(A)(I),
if an Exchange Notice (as hereinafter defined) has been delivered to the
General Partner, then the General Partner may, at its option, elect to
redeem or cause the Partnership to redeem all (but not a portion) of the
outstanding Series A Preferred Units for cash in an amount equal to the
Liquidation Preference per Series A Preferred Unit. The General Partner
may exercise its option to redeem the Series A Preferred Units for cash
pursuant to this SECTION 8(A)(II) by giving each holder of record of
Series A Preferred Units notice of its election to redeem for cash,
within 15 Business Days after receipt of the Exchange Notice, by (m)
fax, and (n) registered mail, postage paid, at the address of each
holder as it may appear on the records of the Partnership stating (A)
the redemption date, which shall be no later than 60 days following the
receipt of the Exchange Notice, (B) the redemption price, (C) the place
or places where the Series A Preferred Units are to be surrendered for
payment of the redemption price, (D) that distributions on the Series A
Preferred Units will cease to accrue on such redemption date, (E) that
payment of the redemption price will be made upon presentation and
surrender of the Series A Preferred Units and (F) the aggregate number
of Series A Preferred Units to be redeemed.
(iii) If an exchange of all or a portion of Series A Preferred Units
pursuant to SECTION 8(A)(I) would violate the provisions on ownership
limitation of the General Partner set forth in Article NINTH of the
Charter of the General Partner with respect to the Series A Preferred
Stock, the General Partner shall give written notice thereof to each
holder of record of Series A Preferred Units, within 15 Business Days
following receipt of the Exchange Notice, by (m) fax, and (n) registered
mail, postage prepaid, at the address of each such holder set forth in
the records of the Partnership. In such event, each holder of Series A
Preferred Units shall be entitled to exchange, pursuant to the
provisions on the ownership limitation of the General Partner set forth
in such Article NINTH of the Charter of the General Partner and any
Series A Preferred Units not so exchanged (the "EXCESS UNITS") shall be
redeemed by the Partnership for cash in an amount equal to the
Liquidation Preference. The written notice of the General Partner shall
state (A) the number of Excess Units held by such holder, (B) the
redemption price of the Excess Units, (C) the date on which such Excess
Units shall be redeemed, which date shall be no later than 60 days
following the receipt of the Exchange Notice, (D) the place or places
where such Excess Units are to be surrendered for payment of the
Redemption Price, (E) that distributions on the Excess Units will cease
to accrue on such redemption date, and (F) that payment of the
redemption price will be made upon presentation and surrender of such
Excess Units. In the event an exchange would result in Excess Units, as
a condition to such exchange, each holder of such units agrees to
provide representations and covenants reasonably requested by the
General Partner relating to (1) the widely held nature of the interests
in such holder, sufficient to assure the General Partner that the
holder's ownership of stock of the General Partner (without regard to
the limits described above) will not cause any individual to own in
excess of 5.0% of the stock of the General Partner; and (2) to the
extent such holder can so represent and covenant without obtaining
information from its owners, the holder's ownership of Units of the
Partnership and its affiliates.
(iv) The redemption of Series A Preferred Units described in SECTION
8(A)(II) and (III) shall be subject to the provisions of SECTION 5;
provided, however, that the term "redemption price" in such Section
shall be read to mean the Liquidation Preference pre Series A Preferred
Unit being redeemed.
(b) PROCEDURE FOR EXCHANGE. (i) Any exchange shall be exercised pursuant
to a notice of exchange (the "EXCHANGE NOTICE") delivered to the General
Partner by the holder who is exercising such exchange right, by (a) fax
and (b) by certified mail postage prepaid. The exchange of Series A
Preferred Units,
SCH. A-7
or a specified portion thereof, may be effected after
the fifth Business Day following receipt by the General Partner of the
Exchange Notice by delivering certificates, if any, representing such
Series A Preferred Units to be exchanged together with, if applicable,
written notice of exchange and proper assignment of such Series A
Preferred Units to the office of the General Partner maintained for such
purpose. Currently, such office is located at ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇-▇▇▇, ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇. Each exchange will be deemed to have been
effected immediately prior to the close of business on the date on which
such Series A Preferred Units to be exchange (together with all required
documentation) shall have been surrendered and notice shall have been
received by the General Partner as aforesaid and the Exchange Price
shall have been paid. Any Series A Preferred Stock issued pursuant to
this SECTION 8 shall be delivered as shares which are duly authorized,
validly issued, fully paid and nonassessable, free of pledge, lien,
encumbrance or restriction other than those provided in the Charter, the
ByLaws of the General Partner, the Securities Act of 1933, as amended,
and relevant state securities or blue sky laws.
(ii) In the event of an exchange of Series A Preferred Units for shares of
Series A Preferred Stock, an amount equal to the accrued and unpaid
Priority Return, whether or not declared, to the date of exchange on any
Series A Preferred Units tendered for exchange shall (a) accrue on the
shares of the Series A Preferred Stock for which such Series A Preferred
Units are exchanged, and (b) continue to accrue on such Series A
Preferred Units, which shall remain outstanding following such exchange,
with the General Partner as the holder of such Series A Preferred Units.
Notwithstanding anything to the contrary set forth herein, in no event
shall a holder of a Series A Preferred Unit that was validly exchanged
into Series A Preferred Stock pursuant to this section (other than the
General Partner now holding such Series A Preferred Unit), receive a
distribution from the Partnership. if such holder, after the exchange,
is entitled to receive a distribution from the General Partner with
respect to the share of Series A Preferred Stock for which such Series A
Preferred Unit was exchanged or redeemed.
(iii) Fractional shares of Series A Preferred Stock are not to be issued
upon exchange but, in lieu thereof, the General Partner will pay a cash
adjustment based upon the fair market value of the Series A Preferred
Stock on the date prior to the exchange date as determined in good faith
by the Board of Directors of the General Partner.
(c) ADJUSTMENT OF EXCHANGE PRICE. (i) The Exchange Price is subject to
adjustment upon certain events, including subdivisions, combinations and
reclassification of the Series A Preferred Stock.
(ii) In case the General Partner shall be a party to any transaction
(including, without limitation, a merger, consolidation, statutory share
exchange, tender offer for all or substantially all of the General
Partner's capital stock or sale of all or substantially all of the
General Partner's assets), in each case as a result of which the Series
A Preferred Stock will be converted into the right to receive shares of
capital stock, other securities or other property (including cash or any
combination thereof), each Series A Preferred Unit will thereafter be
exchangeable into the kind of and amount of shares of capital stock and
other securities and property receivable (including cash or any
combination thereof) upon the consummation of such transaction by a
holder of that number of shares of Series A Preferred Stock or fraction
thereof into which one Series A Preferred Unit was exchangeable
immediately prior to such transaction. The General Partner may not
become a party to any such transaction unless the terms thereof are
consistent with the foregoing.
SECTION 9. NO CONVERSION RIGHTS. Except as set forth in SECTION
8, the holders of the Series A Preferred Units shall not have any rights to
convert such units into shares of any other class or series of stock or
into any other securities of, or interest in, the Partnership.
SCH. A-8
SECTION 10. NO SINKING FUND. No sinking fund shall be
established for the retirement or redemption of Series A Preferred Units.
SECTION 11. EXHIBIT A TO PARTNERSHIP AGREEMENT. In order to
duly reflect the issuance of the Series A Preferred Units provided for
herein, the Partnership Agreement is hereby further amended pursuant to
Section 14.1.B. thereof by deleting Exhibit A thereto and replacing Exhibit
A attached hereto therefor.
SCH. A-9