============================================================================
EXHIBIT 10.64
AGREEMENT OF LIMITED PARTNERSHIP
OF
SIMON CAPITAL LIMITED PARTNERSHIP
TABLE OF CONTENTS
ARTICLE IDEFINITIONS: ETC.
1.1 Definitions. 1
ARTICLE IIORGANIZATION
2.1 Formation. 8
2.2 Name. 8
2.3 Purpose and Business of the Partnership. 8
2.4 Location of the Principal Place of Business. 12
2.5 Registered Agent and Registered Office. 12
ARTICLE IIITERM
3.1 Dissolution. 12
ARTICLE IVCONTRIBUTIONS TO CAPITAL
4.1 General Partner Capital Contributions. 12
4.2 Contributions of Partners. 12
4.3 Additional Funds. 13
4.4 No Third Party Beneficiary. 13
4.5 No Interest: No Return. 14
4.6 Capital Accounts. 14
ARTICLE VALLOCATIONS, DISTRIBUTIONS AND OTHERTAX AND ACCOUNTING MATTERS
5.1 Allocations. 16
5.2 Partnership Distributions. 22
5.3 Books of Account. 22
5.4 Reports. 22
5.5 Audits. 23
5.6 Tax Returns. 23
5.7 Tax Matters Partner. 23
ARTICLE VIRIGHTS AND DUTIES OF, AND RESTRICTIONS ON THE GENERAL PARTNER
6.1 Expenditures by Partners. 23
6.2 Powers and Duties of General Partner. 24
6.3 Major Decisions. 26
6.4 Proscriptions. 27
6.5 Additional Covenants. 27
6.6 Operation in Accordance with REIT Requirements. 30
6.7 Waiver and Indemnification. 30
6.8 Additional Partners. 31
6.9 Limitation of Liability of Directors, Shareholders, Employees
and Officers of the General Partner. 31
ARTICLE VIIDISSOLUTION, LIQUIDATION AND WINDING-UP
7.1 Accounting. 31
7.2 Distribution on Dissolution. 31
7.3 Sale of Partnership Assets. 32
7.4 Distributions in Kind. 32
7.5 Documentation of Liquidation. 33
7.6 Liability of the Liquidating Agent. 33
ARTICLE VIIITRANSFER OF PARTNERSHIP INTERESTS
8.1 Transfer of Partnership Interests. 33
ARTICLE IXRIGHTS AND OBLIGATIONS OF THE LIMITED PARTNER
9.1 No Participation in Management. 33
9.2 Bankruptcy Of the Limited Partner. 34
9.3 No Withdrawal. 34
9.4 Duties and Conflicts. 34
ARTICLE XGENERAL PROVISIONS
10.1 Notices. 34
10.2 Successors. 35
10.3 EFFECT AND INTERPRETATION. 35
10.4 Counterparts. 35
10.5 Partners Not Agents. 35
10.6 Entire Understanding: Etc. 35
10.7 Severability. 35
10.8 Pronouns and Headings. 35
10.9 Assurances. 35
10.10 Amendment. 36
AGREEMENT OF LIMITED PARTNERSHIP
OF
SIMON CAPITAL LIMITED PARTNERSHIP
This AGREEMENT OF LIMITED PARTNERSHIP OF SIMON CAPITAL LIMITED
PARTNERSHIP is made and entered into as of the ____ day of August, 1997,
by and among SDG Capital Associates Limited Partnership, a Delaware
limited partnership, as general partner (the "General Partner"), ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ Group, L.P., a Delaware limited partnership, as limited
partner and ▇▇▇▇▇▇▇▇▇ Capital Partnership, a Delaware general
partnership, as limited partner (▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Group, L.P. and
▇▇▇▇▇▇▇▇▇ Capital Partnership collectively referred to as the "Limited
Partners").
WITNESSETH:
WHEREAS, the parties hereto desire to form a limited partnership
under the provisions of the Delaware Uniform Limited Partnership Act for
the purposes and on the terms set forth below.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein contained and other good and valuable consideration,
the receipt, adequacy and sufficiency of which are hereby acknowledged,
the parties hereto, intending legally to be bound, hereby agree as
follows:
ARTICLE I
DEFINITIONS: ETC.
1.1 Definitions. Except as otherwise herein expressly provided,
the following terms and phrases shall have the meanings set forth below:
"Accountants" shall mean the firm or firms of independent
certified public accountants selected by the General Partner on behalf
of the Partnership to audit the books and records of the Partnership and
to prepare statements and reports in connection therewith.
"Act" shall mean the Revised Uniform Limited Partnership Act as
enacted in the State of Delaware, and as the same may hereafter be
amended from time to time.
01
"Administrative Expenses" shall mean (i) all administrative and
operating costs and expenses incurred by the Partnership, and (ii) those
administrative costs and expenses and accounting and legal expenses
undertaken by the General Partner on behalf or for the benefit of the
Partnership.
"Affiliate" shall mean, with respect to any Partner (or as to any
other Person the affiliates of whom are relevant for purposes of any of
the provisions of this Agreement), (i) any member of the Immediate
Family of such Partner; (ii) any partner, trustee, beneficiary, member
or shareholder of a Partner; (iii) any legal representative, successor
or assignee of any Person referred to in the preceding clauses (i) and
(ii); (iv) any trustee or trust for the benefit of any Person referred
to in the preceding clauses (i) through (iii); or (v) any Entity which
directly or indirectly through one or more intermediaries, controls, is
Controlled by, or is under common Control with, any Person referred to
in the preceding clauses (i) through (iv).
"Affiliate Financing" shall mean financing or refinancing obtained
from a Partner or an Affiliate of a Partner by the Partnership.
"Agreement" shall mean this Agreement of Limited Partnership, as
originally executed and as amended, modified, supplemented or restated
from time to time, as the context requires.
"Bankruptcy" shall mean, with respect to any Partner, (i) the
commencement by such Partner of any proceeding seeking relief under any
provision or chapter of the federal Bankruptcy Code or any other federal
or state law relating to insolvency, bankruptcy or reorganization, (ii)
an adjudication that such Partner is insolvent or bankrupt; (iii) the
entry of an order for relief under the federal Bankruptcy Code with
respect to such Partner, (iv) the filing of any such petition or the
commencement of any such case or proceeding against such Partner, unless
such petition and the case or proceeding initiated thereby are dismissed
within ninety (90) days from the date of such filing, (v) the filing of
an answer by such Partner admitting the allegations of any such
petition, (vi) the appointment of a trustee, receiver or custodian for
all or substantially all of the assets of such Partner unless such
appointment is vacated or dismissed within ninety (90) days from the
date of such appointment but not less than five (5) days before the
proposed sale of any assets of such Partner, (vii) the execution by such
Partner of a general assignment for the benefit of creditors, (viii) the
convening by such Partner of a meeting of its creditors, or any class
thereof, for purposes of effecting a moratorium upon or extension or
composition of its debts, (ix) the failure of such Partner to pay its
debts as they mature, (x) the levy, attachment, execution or other
seizure of substantially all of the assets of such Partner where such
seizure is not discharged within thirty (30) days thereafter, or (xi)
02
the admission by such Partner in writing of its inability to pay its
debts as they mature or that it is generally not paying its debts as
they become due.
"Capital Contribution" shall mean, with respect to any Partner,
the amount of money and the initial Gross Asset Value of any property
other than money contributed to the Partnership with respect to the
Partnership Interest held by such Partner (net of liabilities to which
such property is subject).
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Company" shall mean ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Group, Inc., a Maryland
corporation.
"Control" shall mean the ability, whether by the direct or
indirect ownership of shares or other equity interests, by contract or
otherwise, to elect a majority of the directors of a corporation, to
select the managing partner of a partnership, or otherwise to select, or
have the power to remove and then select, a majority of those persons
exercising governing authority over an Entity. In the case of a limited
partnership, the sole general partner, all of the general partners to
the extent each has equal management control and authority, or the
managing general partner or managing general partners thereof shall be
deemed to have control of such partnership and, in the case of a trust,
any trustee thereof or any Person having the right to select any such
trustee shall be deemed to have control of such trust.
"Depreciation" shall mean for each Partnership Fiscal Year or
other period an amount equal to the depreciation, amortization, or other
cost recovery deduction allowable under the Code with respect to an
asset for such year or other period, 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 or other period bears to
such beginning adjusted tax basis; provided, however, that if the
federal income tax depreciation, amortization or other cost recovery
deduction for such year is zero, Depreciation shall be determined with
reference to such beginning Gross Asset Value using any reasonable
method selected by the General Partner.
"Entity" shall mean any general partnership, limited partnership,
limited liability company, corporation, joint venture, trust, business
trust, cooperative or association.
03
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time (or any corresponding provisions of
succeeding laws).
"GAAP" shall mean generally accepted accounting principles
consistently applied.
"General Partner" shall mean SDG Capital Associates Limited
Partnership, a Delaware limited partnership.
"Gross Asset Value" shall have the meaning set forth in Section
4.6(b).
"Gross Income" shall mean the income of the Partnership determined
pursuant to Section 61 of the Code before deduction of items of expense
or deduction.
"Immediate Family" shall mean, with respect to any Person, such
Person's spouse, parents, parents-in-law, descendants by blood or
adoption, nephews, nieces, brothers, sisters, brothers-in-law, sisters-
in-law and children-in-law.
"Lender" shall mean The Chase Manhattan Bank or any successor or
assign hereof.
"Lien" shall mean any liens, security interests, mortgages, deeds
of trust, charges, claims, encumbrances, restrictions, pledges, options,
rights of first offer or first refusal and any other rights or interests
of others of any kind or nature, actual or contingent, or other similar
encumbrances of any nature whatsoever.
"Limited Partner(s)" shall mean ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Group, L.P., a
Delaware limited partnership and ▇▇▇▇▇▇▇▇▇ Capital Partnership, a
Delaware general partnership.
"Liquidating Agent" shall mean such individual or Entity as is
selected as the Liquidating Agent hereunder by the General Partner,
which individual or Entity may include the General Partner or an
Affiliate of the General Partner, provided such Liquidating Agent agrees
in writing to be bound by the terms of this Agreement. The Liquidating
Agent shall be empowered to give and receive notices, reports and
payments in connection with the dissolution, liquidation and/or winding-
up of the Partnership and shall hold and exercise such other rights and
powers as are necessary or required to permit all parties to deal with
the Liquidating Agent in connection with the dissolution, liquidation
and/or winding-up of the Partnership.
04
"Loan" shall have the meaning set forth in Section 2.3 hereof.
"Loan Documents" shall have the meaning set forth in Section 2.3
hereof.
"Losses" shall have the meaning set forth in Section 5.1 hereof.
"Major Decisions" shall have the meaning set forth in Section 6.3
hereof.
"Minimum Gain" shall have the meaning set forth in Section
5.1(d)(1) hereof.
"Minimum Gain Chargeback" shall have the meaning set forth in
Section 5.1(d)(1) hereof.
"Mortgage" shall mean those certain deeds of trust and/or
mortgages encumbering the Property to be executed and delivered by the
Partnership to the Lender.
"Net Financing Proceeds" shall mean the cash proceeds received by
the Partnership in connection with any borrowing by or on behalf of the
Partnership (whether or not secured), after deduction of all costs and
expenses incurred by the Partnership in connection with such borrowing,
and after deduction of that portion of such proceeds used to repay any
other indebtedness of the Partnership, or any interest or premium
thereon.
"Net Operating Cash Flow" shall mean, with respect to any fiscal
period of the Partnership, the aggregate amount of all cash received by
the Partnership from any source for such Fiscal Period (including Net
Sale Proceeds and Net Financing Proceeds and distributions from any
subsidiary of the Partnership, but excluding Capital Contributions) less
the aggregate amount of all expenses or other amounts paid with respect
to such period (including all payments of principal and interest on
account of our indebtedness of the Partnership), and such additional
cash reserves as of the last day of such period as the General Partner
deems necessary for any capital or operating expenditure permitted
hereunder.
"Net Sale Proceeds" shall mean the cash proceeds received by the
Partnership in connection with a sale of any asset by or on behalf of
the Partnership after deduction of any costs or expenses incurred by the
Partnership, or payable specifically out of the proceeds of such sale
(including, without limitation, any repayment of any indebtedness
required to be repaid as a result of such sale or which the General
Partner elects to repay out of the proceeds of such sale, together with
05
accrued interest and premium, if any, thereon and any sales commissions
or other costs and expenses due and payable to any Person in connection
with a sale).
"Nonrecourse Liabilities" shall have the meaning set forth in
Section 5.1(d)(1) hereof.
"Notes" shall mean those certain Commercial Mortgage Notes
executed by the Partnership and delivered to the Lender in accordance
with the Loan Documents.
"Partner Nonrecourse Debt" shall have the meaning set forth in
Section 5.1(d)(2) hereof.
"Partner Nonrecourse Debt Minimum Gain" shall have the meaning set
forth in Section 5.1(d)(2) hereof.
"Partner Nonrecourse Deduction" shall have the meaning set forth
in Section 5.1(d)(2) hereof.
"Partner(s)" shall mean the General Partner and the Limited
Partners, their duly admitted successors or assigns or any Person who is
a partner of the Partnership at the time of reference thereto.
"Partnership" shall mean the limited partnership hereby
constituted, as such limited partnership may from time to time be
constituted.
"Partnership Fiscal Year" shall mean the calendar year.
"Partnership Interest" shall mean with respect to a Partner, such
Partner's right to the allocations (and each item thereof), specified in
section 5.1 hereof and all distributions from the Partnership, and its
rights of management, consent, approval, or participation, if any, as
provided in this Agreement.
"Partnership Minimum Gain" shall have the meaning set forth in
Section 1.704-2(b)(2) of the Regulations.
"Percentage Interest" shall mean, with respect to any Partner, the
percentage ownership interest of such Partner in the Partnership. The
Percentage Interest of the General Partner shall at all times be 1%, and
the Percentage Interest of the Limited Partners shall at all times be
99%.
06
"Person" shall mean any individual or Entity.
"Pledge" shall mean a pledge or grant of a mortgage, security
interest, lien or other encumbrance in respect of a Partnership
Interest.
"Private Placement Agency Agreement" shall mean the Private
Placement Agency Agreement among the Partnership and Chase Securities,
Inc..
"Profits" shall have the meaning set forth in Section 5.1 hereof.
"Property" shall mean those properties (including peripheral land)
and interests set forth in Exhibit A hereto.
"REIT Requirements" shall have the meaning set forth in Section
5.2 hereof.
"Regulations" shall mean the final, temporary or proposed Income
Tax Regulations promulgated under the Code, as such regulations may be
amended from time to time (including corresponding provisions of
succeeding regulations).
"Required Funds" shall have the meaning set forth in Section 4.3
hereof.
"Special Director" shall have the meaning given to such term in
the Certificate of Incorporation of the General Partner.
"Substituted Limited Partner" shall have the meaning set forth in
Section 8.2 hereof.
"Third Party" or "Third Parties" shall mean a Person or Persons
who is or are neither a Partner or Partners nor an Affiliate or
Affiliates of a Partner or Partners.
"Third Party Financing" shall mean financing or refinancing
obtained from a Third Party by the Partnership.
"Transfer" shall mean any assignment, sale, transfer, conveyance
or other disposition or act of alienation, whether voluntary or
involuntary, or by operation of law.
07
ARTICLE II
ORGANIZATION
2.1 Formation. The parties hereto do hereby form and organize the
Partnership pursuant to the provisions of the Act, and all other
pertinent laws of the State of Delaware, for the purposes and upon the
terms and conditions hereinafter set forth. The Partners agree that the
rights and liabilities of the Partners shall be as provided in the Act
except as otherwise herein expressly provided. Promptly upon the
execution and delivery hereof, the General Partner shall cause a
Certificate of Limited Partnership and such other notice, instrument,
document, or certificate as may be required by applicable law, and which
may be necessary to enable the Partnership to conduct its business, and
to own its property, under the Partnership name, to be filed or recorded
in all appropriate public offices. Upon request of the General Partner,
the Limited Partners shall execute any assumed or fictitious name
certificate or certificates required by law to be filed in connection
with the formation of the Partnership. The General Partner shall
promptly cause the execution and delivery of such additional documents
and shall perform such additional acts consistent with the terms of this
Agreement as may be necessary to comply with the requirements of law for
the formation, qualification, and operation of a limited partnership
under the laws of the State of Delaware and for the qualification and
operation of a limited partnership in the States of Wisconsin, Ohio,
Florida, Kansas, Pennsylvania and Indiana.
2.2 Name. The business of the Partnership shall be conducted
under the name of Simon Capital Limited Partnership or such other name
as the General Partner may select, and all transactions of the
Partnership, to the extent permitted by applicable law, shall be carried
on and completed in such name. The Partnership shall at all times
conduct its own business in its own name.
2.3 Purpose and Business of the Partnership.
(a) Subject to the limitations set forth herein, the purpose
for which the Partnership is formed is to engage solely in the
following activities:
(1) To execute and deliver any and all instruments,
agreements, certificates, documents, notices, papers or other
writings as may be necessary or advisable in connection with
the acquisition by the Partnership of the Property;
08
(2) to execute and deliver (i) the loan agreement
with the Lender pursuant to which the Partnership will borrow
$225,000,000; (ii) the Note evidencing borrowings pursuant to
the loan agreement; (iii) mortgages or deeds of trust
encumbering each Property, to secure all obligations of the
Partnership under the Loan Agreement and the Note; and (iv)
any and all assignments, financing statements, security
agreements, certificates, documents, notices, papers or other
writings in connection therewith (collectively, the "Loan
Documents");
(3) to execute and deliver a placement,
underwriting or similar agreement with any underwriter that
may be retained in connection with the securitization of the
Note, and any instruments, agreements, certificates,
documents, notices, papers or other writings as may be
necessary or advisable in connection with any securitization;
(4) to engage in any activities necessary to hold,
receive, exchange, otherwise dispose of and otherwise deal in
and exercise all rights, powers, privileges, and all other
incidents of ownership or possession with respect to all the
Property and any property or interests which may be acquired
by the Partnership as a result of any sale or other
disposition of any Property;
(5) to engage in any activities necessary to
authorize, execute and deliver any other instrument,
agreement, certificate, notice or document in connection with
the activities described above, including the filing of any
instrument, agreements, certificates, notices, applications
and other documents necessary or advisable to comply with any
applicable laws, statutes, rules and regulations or necessary
or advisable to perfect or protect the above-referenced
security interests;
(6) to take any and all other actions necessary
under and pursuant to this Agreement; and
(7) to engage in such lawful activities and to
exercise such powers permitted to partnerships under the laws
of the State of Delaware that are necessarily incident to or
connected with the foregoing or necessary or convenient to
accomplish the foregoing and which are consistent with the
limitations set forth in this Section 2.3(a) and the other
Sections hereof.
09
(b) Notwithstanding anything contained herein to the
contrary, so long as the Note is outstanding, Section 2.3(a) shall
not be amended without the consent of the Lender, any successor
thereto or any assignee of the Note.
(c) The Partnership shall not commingle its funds with those
of any Affiliate or any other entity. Funds and other assets of
the Partnership shall be separately identified and segregated. All
of the Partnership's assets shall at all times be held by or on
behalf of the Partnership, and, if held on behalf of the
Partnership by another entity, shall at all times be kept
identifiable (in accordance with customary usages) as assets owned
by the Partnership. The Partnership shall maintain its own
separate bank accounts, payroll and books of account.
(d) The Partnership shall pay from its own assets all
obligations of any kind incurred by the Partnership (other than
organizational expenses).
(e) The Partnership shall take all appropriate action
necessary to ensure its existence as a partnership in good standing
under the laws of the State of Delaware.
(f) All financial statements, accounting records and other
partnership documents of the Partnership shall be maintained at an
office separate from those of any Affiliate or any other entity.
(g) The annual financial statements of the Partnership shall
disclose, in accordance with and to the extent required under GAAP,
any transactions between the Partnership and any Affiliate.
(h) All business transactions entered into by the Partnership
with any Affiliate shall be on terms and conditions that are no
less favorable to the Partnership than the terms and conditions
that would be expected to have been obtained, at the time of such
transaction and under similar circumstances, from unaffiliated
persons. In addition, all such transactions shall be approved by
the General Partner. The Partnership shall not guarantee any
liabilities or obligations of any Affiliate or any other Person,
nor shall it assume any indebtedness or other liabilities or
obligations of any Affiliate or any other Person.
10
(i) The Partnership shall at all times hold itself out to the
public (including any Affiliate's creditors) as a separate and
distinct entity operating under the Partnership's own name, and the
Partnership shall act solely in its own name and through its own
authorized officers and agents.
(j) The Partnership shall pay out of its own funds salaries,
if any, of its officers and employees, and shall reimburse any
Affiliate for any service provided to the Partnership by such
Affiliate (including those to be provided pursuant to any lease,
administrative or management services agreement or other contract
between the Partnership and any Affiliate) in accordance with the
terms of any such lease, agreement or other contract.
(k) Notwithstanding any other provision of this Agreement or
any provision of law that otherwise so empowers the Partnership,
for so long as the Note under the loan agreement is outstanding,
the Partnership shall not, without the approval of the General
Partner and the holder of such Notes, do any of the following:
(1) engage in any business or activity other than
as set forth in Section 2.3(a) or as may be necessary or
convenient to comply with the provisions of Section 2.3(c)
through and including Section 2.3(j); or
(2) institute any proceeding to be adjudicated as
bankrupt or insolvent, or consent to the institution of
bankruptcy or insolvency proceedings against it, or file a
petition or answer or consent seeking reorganization or relief
under any applicable federal, or state law relating to
bankruptcy, or consent to the filing of any such petition or
to the appointment of a receiver, rehabilitator, conservator,
liquidator, assignee, 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 its
affairs, or make any assignment for the benefit of creditors,
or admit in writing its inability to pay its debts generally
as they become due, or take any action in furtherance of the
foregoing; or
(3) consolidate, merge, dissolve or liquidate, in
whole or in part; or
(4) incur, assume or guarantee any debt except as
provided in the loan agreement.
11
2.4 Location of the Principal Place of Business. The location of
the principal place of business of the Partnership shall be at ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, or such other location
as shall be selected from time to time by the General Partner in its
sole discretion.
2.5 Registered Agent and Registered Office. The Registered Agent
of the Partnership shall be The Corporation Trust Company, or such other
Person as the General Partner may select in its sole discretion. The
Registered Office of the Partnership shall be c/o The Corporation Trust
Company, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ or such other
location as the General Partner may select in its sole and absolute
discretion.
ARTICLE III
TERM
3.1 Dissolution. The Partnership shall be dissolved upon the
occurrence of the earlier of (i) December 31, 2069, and (ii) the
earliest of the following events:
(a) The withdrawal, dissolution, termination or bankruptcy of
the General Partner, it being agreed that so long as the Notes are
outstanding, the General Partner shall not withdraw or resign from
the Partnership and in the event that the General Partner shall
become disassociated from the Partnership, shall withdraw from the
Partnership or shall liquidate, become insolvent or file a petition
for bankruptcy, the Partnership shall appoint a new special purpose
general partner and deliver an acceptable non-consolidation opinion
to the holder of the Note and to any applicable rating agency
concerning the Partnership and the replacement general partner;
(b) The sale or other disposition of all or substantially all
the assets of the Partnership; or
(c) dissolution required by operation of law.
ARTICLE IV
CONTRIBUTIONS TO CAPITAL
4.1 General Partner Capital Contributions. Simultaneously with
the execution and delivery hereof, the General Partner shall contribute
or cause to be made Capital Contributions of assets described on
Schedule 1, and (after giving effect to such contributions) the General
Partner shall have made or caused to be made Capital Contributions to
12
the Partnership of money and/or assets in the amount or of the nature
set forth on Schedule 2.
4.2 Contributions of Partners. On the date hereof, the Limited
Partners shall make or cause to be made Capital Contributions of assets
described on Schedule 1, and (after giving effect to such contributions)
the Limited Partners shall have made or caused to be made Capital
Contributions to the Partnership of money and/or assets in the amount or
of the nature set forth on Schedule 2. By execution and delivery of
this Agreement, the Limited Partners hereby acknowledge and agree that
the relative values of their capital interests in the Partnership are as
reflected by the Capital Accounts and Percentage Interests (which shall,
initially, be as set forth on Schedule 2). Except as otherwise
expressly provided herein or required by applicable law, the Limited
Partners shall not be required to contribute any additional capital to
the Partnership. All surtax, documentary stamp tax or other transfer
tax that may be imposed as a result of the foregoing Capital
Contributions shall be paid by the General Partner.
4.3 Additional Funds. The Partnership may obtain funds ("Required
Funds") which it considers necessary to meet the needs and obligations
and requirements of the Partnership, or to maintain adequate working
capital or to repay Partnership indebtedness, and to carry out the
Partnership's purposes, from the proceeds of Third Party Financing or
Affiliate Financing, provided that at the time of such financing, none
of the Notes remain outstanding. In no event may the Partnership obtain
any Third Party Financing that is recourse to any Partner or any
Affiliate, partner, shareholder, beneficiary, principal, officer, or
director of any Partner without the consent of the affected Partner and
any other Person or Persons to whom such recourse may be had. This
Section 4.3 shall not be deemed to limit the right of the Partnership at
any time to incur certain types of indebtedness to the extent expressly
permitted under the Mortgage.
4.4 No Third Party Beneficiary. No creditor or other third party
having dealings with the Partnership shall have the right to enforce the
right or obligation of any Partner to make Capital Contributions or to
pursue any other right or remedy hereunder or at law or in equity, it
being understood and agreed that the provisions of this Agreement shall
be solely for the benefit of, and may be enforced solely by, the parties
hereto and their respective successors and assigns. None of the rights
or obligations of the Partners herein set forth to make Capital
Contributions to the Partnership shall be deemed an asset of the
Partnership for any purpose by any creditor or other third party, nor
may such rights or obligations be sold, transferred or assigned by the
13
Partnership or pledged or encumbered by the Partnership to secure any
debt or other obligation of the Partnership or of any of the Partners.
Notwithstanding the foregoing provisions of this Section 4.4,
restrictions set forth in this Agreement which are required by the terms
of the Loan Documents shall inure to the benefit of, and be enforceable
by, the holder of the Loan Documents and its successors and assigns.
4.5 No Interest: No Return. No Partner shall be entitled to
interest on its Capital Contribution or on such Partner's Capital
Account. Except as provided herein or by law, no Partner shall have any
right to withdraw any part of its Capital Account or to demand or
receive the return of its Capital Contribution from the Partnership.
4.6 Capital Accounts.
(a) The Partnership shall establish and maintain a separate
capital account ("Capital Account") for each Partner, including a
substitute partner who shall pursuant to the provisions hereof
acquire a Partnership Interest, which Capital Account shall be:
(1) credited with the amount of cash contributed by
such Partner to the capital of the Partnership; the initial
Gross Asset Value (net of liabilities secured by such
contributed property that the Partnership assumes or takes
subject to) of any other property contributed by such Partner
to the capital of the Partnership; such Partner's distributive
share of Profits; and any other items in the nature of income
or gain that are allocated to such Partner pursuant to Section
5.1 hereof, but excluding tax items described in Regulations
Section 1.704-1(b)(4)(i); and
(2) debited with the amount of cash distributed to
such Partner pursuant to the provisions of this Agreement; the
Gross Asset Value (net of liabilities secured by such
distributed property that such Partner assumes or takes
subject to) of any Partnership property 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 5.1 hereof, but excluding tax
items described in Regulations Section 1.704-1(b)(4)(i).
14
In the event that a Partner's Partnership Interest or portion
thereof is transferred within the meaning of Regulations Section 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 described below in Section 4.6(b) hereof, the Capital
Accounts of the Partners shall be adjusted to reflect the aggregate net
adjustments as if the Partnership sold all of its property 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 Section 1.704-1(b) of the Regulations, and shall be interpreted and
applied as provided in the Regulations.
(b) The term "Gross Asset Value" or "Gross Asset Values"
means, with respect to any asset of the Partnership, such asset's
adjusted basis for federal income tax purposes, except as follows:
(1) the initial Gross Asset Value of any asset
contributed by a Partner to the Partnership shall be the gross
fair market value of such asset as reasonably determined by
the General Partner;
(2) 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, within the meaning of
Section 1.704-1(b)(2)(iv)(f)(5)(i) of the Regulations) to
the Partnership by a new or existing Limited Partner as
consideration for a Partnership Interest;
(ii) the distribution by the Partnership
to a Partner of more than a de minimis amount (within the
meaning of Section 1.704-1(b)(2)(iv)(f)(5)(ii) of the
Regulations) of Partnership property as consideration for
the redemption of a Partnership Interest; and
15
(iii) the liquidation of the Partnership
within the meaning of Section 1.704-1(b)(2)(ii)(g) of the
Regulations.
(3) 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. Any adjustment to the Gross Asset
Values of Partnership property shall require an adjustment to the
Partners' Capital Accounts as described in Section 4.6(a) above.
ARTICLE V
ALLOCATIONS, DISTRIBUTIONS AND OTHER
TAX AND ACCOUNTING MATTERS
5.1 Allocations.
(a) For the purpose of this Agreement, the terms "Profits"
and "Losses" mean, respectively, for each Partnership Fiscal Year
or other period, the Partnership's taxable income or loss for such
Partnership Fiscal Year or other period, determined in accordance
with Section 703(a) of the Code (for this purpose, all items of
income, gain, loss, or deduction required to be stated separately
pursuant to Section 703(a)(1) of the Code shall be included in
taxable income or loss), 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 pursuant to this Section 5.1(a)
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 Fiscal Year or other period;
(3) any items that are specially allocated pursuant
to Section 5.1(d) hereof shall not be taken into account in
computing Profits or Losses; and
16
(4) any expenditures of the Partnership described
in Section 705(a)(2)(B) of the Code (or treated as such under
Regulation Section 704-1(b)(2)(iv)(i)) and not otherwise taken
into account in computing Profits or Losses pursuant to this
Section 5.1(a) shall be deducted from such taxable income or
loss.
(b) Except as otherwise provided in section 5.1(d) hereof,
the Profits and Losses of the Partnership (and each item thereof)
for each Partnership Fiscal Year shall be allocated among the
Partners in accordance with their respective Percentage Interests.
(c) For the purpose of Section 5.1(b) hereof, gain or loss
resulting from any disposition of Partnership property shall be
computed by reference to the Gross Asset Value of the property
disposed of, notwithstanding that the adjusted tax basis of such
property for federal income tax purposes differs from its Gross
Asset Value.
(d) Notwithstanding the foregoing provisions of this Section
5.1, the following provisions shall apply:
(1) A Partner shall not receive an allocation of
any Partnership deduction that would result in total loss
allocations attributable to "Nonrecourse Liabilities" (as
defined in Regulations Section 1.704-2(b)(3)) in excess of
such Partner's share of Minimum Gain (as determined under
Regulations Section 1.704-2(g)). The term "Minimum Gain" means
an amount determined in accordance with Regulations Section
1.704-2(d) by computing, with respect to each Nonrecourse
Liability of the Partnership, the amount of gain, if any, that
the Partnership would realize if it disposed of the property
subject to such liability for no consideration other than full
satisfaction thereof, and by then aggregating the amounts so
computed. If the Partnership makes a distribution allocable
to the proceeds of a Nonrecourse Liability, in accordance with
Regulation Section 1.704-2(h) the distribution will be treated
as allocable to an increase in Partnership Minimum Gain to the
extent the increase results from encumbering Partnership
property with aggregate Nonrecourse Liabilities that exceeds
the property's adjusted tax basis. If there is a net decrease
in Partnership Minimum Gain for a Partnership Fiscal Year, in
accordance with Regulations Section 1.704-2(f) and the
exceptions contained therein, the Partners shall be allocated
17
items of Partnership income and gain for such Partnership
Fiscal Year (and, if necessary, for subsequent Partnership
Fiscal Years) equal to the Partners' respective shares of the
net decrease in Minimum Gain within the meaning of Regulations
Section 1.704-2(g)(2) (the "Minimum Gain Chargeback"). The
items to be allocated pursuant to this Section 5.1(d)(1) shall
be determined in accordance with Regulations Section 1.704-
2(f) and (j).
(2) Any item of "Partner Nonrecourse Deduction" (as
defined in Regulations Section 1.7042(i)) with respect to a
"Partner Nonrecourse Debt" (as defined in Regulations Section
1.704-2(b)(4)) shall be allocated to the Partner or Partners
who bear the economic risk of loss for such Partner
Nonrecourse Debt in accordance with Regulations Section 1.704-
2(i)(1). If the Partnership makes a distribution allocable to
the proceeds of a Partner Nonrecourse Debt, in accordance with
Regulation Section 1.704-2(i)(6) the distribution will be
treated as allocable to an increase in Partner Minimum Gain to
the extent the increase results from encumbering Partnership
Property with aggregate Partner Nonrecourse Debt that exceeds
the property's adjusted tax basis. Subject to Section
5.1(d)(1) hereof, but notwithstanding any other provision of
this Agreement, in the event that there is a net decrease in
minimum Gain attributable to a Partner Nonrecourse Debt (such
Minimum Gain being hereinafter referred to as "Partner
Nonrecourse Debt Minimum Gain") for a Partnership Fiscal Year,
then after taking into account allocations pursuant to Section
5.1(d)(1) hereof, but before any other allocations are made
for such taxable year, and subject to the exceptions set forth
in Regulations Section 1.7042(i)(4), each Partner with a share
of Partner Nonrecourse Debt Minimum Gain at the beginning of
such Partnership Fiscal Year shall be allocated items of
income and gain for such Partnership Fiscal Year (and, if
necessary, for subsequent Partnership Fiscal Years) equal to
such Partner's share of the net decrease in Partner
Nonrecourse Debt Minimum Gain as determined in a manner
consistent with the provisions of Regulations Section 1.704-
2(g)(2). The items to be allocated pursuant to this Section
5.1(d)(2) shall be determined in accordance with Regulations
Section 1.704-2(i)(4) and (j).
(3) Pursuant to Regulations Section 1.752-3(a)(3),
for the purpose of determining each Partner's share of excess
nonrecourse liabilities of the Partnership, and solely for
18
such purpose, each Partner's interest in Partnership profits
is hereby specified to be such Partner's Percentage Interest.
(4) No Limited Partners shall be allocated any item
of deduction or loss of the Partnership if such allocation
would cause such Limited Partner's Capital Account to become
negative by more than the sum of (i) any amount such Limited
Partner is obligated to restore upon liquidation of the
Partnership, plus (ii) such Limited Partner's share of the
Partnership's Minimum Gain and Partner Nonrecourse Debt
Minimum Gain. An item of deduction or loss that cannot be
allocated to a Limited Partner pursuant to this Section
5.1(d)(4) shall be allocated to the General Partner. For this
purpose, in determining the Capital Account balance of such
Limited Partner, the items described in Regulations Section
1.704-1(b)(2)(ii)(d)(4), (5), and (6) shall be taken into
account. In the event that (A) any Limited Partner
unexpectedly receives any adjustment, allocation, or
distribution described in Regulations Sections 1.704-
1(b)(2)(ii)(d)(4), (5), or (6), and (B) such adjustment,
allocation, or distribution causes or increases a deficit
balance (net of amounts which such Limited Partner is
obligated to restore or deemed obligated to restore under
Regulations Section 1.7042(g)(1) and 1.704-2(i)(5) and
determined after taking into account any adjustments,
allocations, or distributions described in Regulations
Sections 1.704-1(b)(2)(ii)(d)(4), (5), or (6) that, as of the
end of the Partnership Fiscal Year, reasonably are expected to
be made to such Limited Partner) in such Limited Partner's
Capital Account as of the end of the Partnership Fiscal Year
to which such adjustment, allocation, or distribution relates,
then items of Gross Income (consisting of a pro rata portion
of each item of Gross Income) for such Partnership Fiscal Year
and each subsequent Partnership Fiscal Year shall be allocated
to such Limited Partner until such deficit balance or increase
in such deficit balance, as the case may be, has been
eliminated. In the event that this Section 5.1(d)(4) and
Section 5.1(d)(1) and/or (2) hereof apply, Section 5.1(d)(1)
and/or (2) hereof shall be applied prior to this Section
5.1(d)(4).
(e) In accordance with Sections 704(b) and 704(c) of the Code
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 account of any variation
between the adjusted basis of such property to the Partnership for
19
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 Sections 704(b) and 704(c) of the Code and the
Regulations thereunder. In furtherance of the foregoing, the
Partnership shall employ the method prescribed in Regulation
Section 1.704-3(b) (the "traditional method") or the equivalent
successor provisions) of proposed, temporary or final Regulations.
(f) Notwithstanding anything to the contrary contained in
this Section 5.1, the allocation of Profits and Losses for any
Partnership Fiscal 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 Fiscal Year pursuant to any method permissible
under Section 706 of the Code that is selected by the General
Partner (notwithstanding any agreement between the assignor and
assignee of such Partnership Interest although the General Partner
may recognize any such agreement), which method may take into
account the date on which the Transfer or an agreement to Transfer
becomes irrevocable pursuant to its terms, as determined by the
General Partner.
(g) In the event of a sale or exchange of a Partner's
Partnership Interest or portion thereof or upon the death of a
Partner, if the Partnership has not theretofore elected, pursuant
to Section 754 of the Code, to adjust the basis of Partnership
property, the General Partner shall cause the Partnership to elect,
if the Person acquiring such Partnership Interest or portion
thereof so requests, pursuant to Section 754 of the Code, to adjust
the basis of Partnership property. In addition, in the event of a
distribution referred to in Section 734(b) of the Code, if the
Partnership has not theretofore elected, the General Partner may,
in the exercise of its reasonable discretion, cause the Partnership
to elect, pursuant to Section 754 of the Code, to adjust the basis
of Partnership property. Except as provided in Regulations Section
1.704-1(b)(2)(iv)(m), such adjustment shall not be reflected in the
Partners' Capital Accounts and shall be effective solely for
federal and (if applicable) state and local income tax purposes.
Each Partner hereby agrees to provide the Partnership with all
information necessary to give effect to such election. With
respect to such election:
20
(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 Section 743(b) of the Code
shall be allocated entirely to the transferee of the
Partnership Interest or portion thereof so transferred. No
capital contribution obligation shall be imposed on any
Partner and neither the Partnership Interest of, nor the
amount of any cash distributions to, any Partner shall be
affected as a result of such election, and except as provided
in Regulations Section 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 Section 1.704-1(b)(2)(iv)(m)), the Partnership
shall keep a written record for those assets, the bases of
which are 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) The Profits, Losses, gains, deductions, and credits of
the Partnership (and all items thereof) for each Partnership Fiscal
Year shall be determined in accordance with the accounting method
followed by the Partnership for federal income tax purposes.
Except as provided in Sections 5.1(e) and 5.1(g) hereof,, for
federal income tax purposes, each item of income, gain, loss, or
deduction shall be allocated among the Partners in the same manner
as its correlative item of "book" income, gain, loss, or deduction
has been allocated pursuant to this Section 5.1.
(i) To the extent permitted by Regulations Sections 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
21
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 Section 1.704-1(b)(2)(ii)(c)) As of the end of the
Partnership's taxable year in which the distribution occurs.
(j) If any Partner sells or otherwise disposes of any
property, directly or indirectly, to the Partnership, and as a
result thereof, gain on a subsequent disposition of such property
by the Partnership is reduced pursuant to Section 267(d) of the
Code, then, to the extent permitted by applicable laws, gain for
federal income tax purposes attributable to such subsequent
disposition shall first be allocated among the Partners other than
the selling Partner in an amount equal to such Partners'
allocations of "book" gain on the property pursuant to this Section
5.1, and any remaining gain for federal income tax purposes shall
be allocated to the selling Partner.
5.2 Partnership Distributions. The General Partner shall cause
the Partnership to distribute all or a portion of Net Operating Cash
Flow to the Partners from time to time as determined by the General
Partner, but in any event not less frequently than quarterly in such
amounts as the General Partner shall determine; provided, however, that
all such distributions shall be made pro rata in accordance with the
Partners' then Percentage Interests; and provided further, that
notwithstanding the foregoing, the General Partner shall use its best
efforts (not requiring any material expenditure of funds or the
incurrence of any material liability on the part of the General Partner)
to cause the Partnership to distribute sufficient amounts to enable the
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Group, L.P. to distribute sufficient amounts to the
Company to pay shareholder dividends that will (a) satisfy the
requirements for qualifying as a REIT under the Code and Regulations
(the "REIT Requirements"), and (b) avoid any federal income or excise
tax liability of the general partner. All amounts withheld pursuant to
the Code or a provision of any state or local tax law with respect to
any allocation, payment or distribution to any Partner shall be treated
as amounts distributed to such Partner.
5.3 Books of Account. At all times during the continuance of the
Partnership, the General Partner shall maintain or cause to be
maintained full, true, complete and correct books of account in-
accordance with generally accepted accounting principles wherein shall
be entered particulars of all monies, goods or effects belonging to or
owing to or by the Partnership, or paid, received, sold or purchased in
the course of the Partnership's business, and all of such other
transactions, matters and things relating to the business of the
22
Partnership as are usually entered in books of account kept by persons
engaged in a business of a like kind and character. In addition, the
Partnership shall keep all records required to be kept pursuant to the
Act. The books and records of account shall be kept separately from the
books and records of account of any other Person, at the principal
office of the Partnership, and each Partner and its representatives
shall at all reasonable times have access to such books and records and
the right to inspect and copy the same.
5.4 Reports. Within one hundred twenty (120) days after the end
of each Partnership Fiscal Year, the Partnership shall cause to be
prepared and transmitted to each Partner, an annual report of the
Partnership relating to the previous Partnership Fiscal Year containing
a statement of financial condition as of the year then ended, and
statements of operations, cash flow and Partnership equity for the year
then ended, which annual statements shall be prepared in accordance with
GAAP and shall be audited by the Accountants. The Partnership shall
also cause to be prepared and transmitted to each Partner within forty-
five (45) days after the end of each of the first three (3) quarters of
each Partnership Fiscal Year, a quarterly unaudited report of the
Partnership's financial condition and statements of operations cash flow
and Partnership equity relating to the fiscal quarter then just ended,
prepared in accordance with GAAP.
5.5 Audits. Not less frequently than annually, the books and
records of the partnership shall be audited by the Accountants.
5.6 Tax Returns.
(a) Consistent with all other provisions of this Agreement,
the General Partner shall determine the methods to be used in the
preparation of federal, state, and local income and other tax
returns for the Partnership in connection with all items of income
and expense, including, but not limited to, valuation of assets,
the methods of depreciation and cost recovery, elections, credits,
and tax accounting methods and procedures.
(b) The Partnership shall timely cause to be prepared and
transmitted to the Partners federal and appropriate state and local
Partnership Income Tax Schedules "K-1, or any substitute therefor,
with respect to such Partnership Fiscal Year on appropriate forms.
23
5.7 Tax Matters Partner. The General Partner is hereby designated
as the Tax Matters Partner within the meaning of Section 6231(a)(7) of
the Code for the Partnership.
ARTICLE VI
RIGHTS AND DUTIES OF, AND RESTRICTIONS ON THE GENERAL PARTNER
6.1 Expenditures by Partners. The General Partner is hereby
authorized to pay compensation for accounting, administrative, legal,
technical, management and other services rendered to the Partnership.
All of the aforesaid expenditures shall be made on behalf of the
Partnership and the General Partner shall be entitled to reimbursement
by the Partnership for any expenditures incurred by it on behalf of the
Partnership which shall have been made other than out of the funds of
the Partnership. The Partnership shall also assume, and pay when due,
all Administrative Expenses.
6.2 Powers and Duties of General Partner. The General Partner
shall be responsible for the management of the Partnership's business
and affairs. Except as otherwise herein expressly provided, and subject
to the limitations contained in Section 6.3 hereof with respect to Major
Decisions, the General Partner shall have, and is hereby granted, full
and complete power, authority and discretion to take such action for and
on behalf of the Partnership and in its name as the General Partner
shall, in its sole and absolute discretion, deem necessary or
appropriate to carry out the purposes for which the Partnership was
organized. Except as otherwise expressly provided herein, and subject
to Sections 2.3 and 6.3 hereof, the General Partner shall have the
right, power and authority:
(a) To manage, insure against loss and protect the Property
or any portion thereof; to improve, develop or redevelop the
Property; to participate in the ownership, redevelopment and
expansion of the Property; to mortgage, pledge or otherwise
encumber the Property, or any portion thereof, but only in
accordance with Section 2.3 hereof; to lease the Property or any
portion thereof from time to time, upon any terms and for any
period of time, and to renew or extend leases, to amend, change or
modify the terms and provisions of any leases and to grant options
to lease and options to renew leases, all in accordance with the
Mortgage; to grant easements of any kind; to release, convey or
assign any right, title or interest in or about or easement
appurtenant to the Property or any portion thereof; to construct
and reconstruct, remodel, alter, repair, add to or take from
buildings on the Property; to insure any Person having an interest
in or responsibility for the care, management or repair of said
Property;
24
(b) To employ, engage or contract with or dismiss from
employment or engagement Persons to the extent deemed necessary by
the General Partner for the operation and management of the
Partnership business, including but not limited to, employees,
contractors, subcontractors, engineers, architects, surveyors,
mechanics, consultants, accountants, attorneys, insurance brokers,
real estate brokers, placement agents, financial advisors and
others, the general partner agreeing to employ at all times a
sufficient number of employees in light of its contemplated
business operations;
(c) To enter into contracts on behalf of the Partnership in
accordance with Section 2.3 hereof;
(d) To sign, execute and deliver any and all assignments,
deeds and other contracts and instruments in writing; to authorize,
give, make, procure, accept and receive moneys, payments, property,
notices, demands, vouchers, receipts, releases, compromises and
adjustments; to waive notices, demands, protests and authorize and
execute waivers of every kind and nature; to enter into, make,
execute, deliver and receive written agreements, undertakings and
instruments of every kind and nature; to give oral instructions and
make oral agreements; and generally to do any and all other acts
and things incidental to any of the foregoing or with reference to
any dealings or transactions which any attorney may deem necessary,
proper or advisable;
(e) To acquire and enter into any contract of insurance which
the General Partner deems necessary or appropriate for the
protection of the Partnership or any Affiliate thereof, for the
conservation of the Partnership's assets or for any purpose
convenient or beneficial to the Partnership or any Affiliate
thereof;
(f) To conduct any and all banking transactions on behalf of
the Partnership; to adjust and settle checking, savings, and other
accounts with such institutions as the General Partner shall deem
appropriate; to draw, sign, execute, accept, endorse, guarantee,
deliver, receive and pay any checks, drafts, bills of exchange,
acceptances, notes, obligations, undertakings and other instruments
for or relating to the payment of money in, into or from any
account in the Partnership's name; to execute, procure, consent to
and authorize extensions and renewals of the same; to make deposits
and withdraw the same and to negotiate or discount commercial
paper, acceptances, negotiable instruments, bills of exchange and
dollar drafts; provided, however, that in no event in connection
with any of the foregoing shall the accounts or funds of the
25
Partnership be commingled with the accounts or funds of any other
Person and the Partnership shall at all times pay its own
liabilities from Partnership funds;
(g) To demand, ▇▇▇ for, receive, and otherwise take steps to
collect or recover all debts, rents, proceeds, interests,
dividends, goods, chattels, income from property, damages and all
other property to which the Partnership may be entitled or which
are or may become due the Partnership from any Person; to commence,
prosecute or enforcer or to defend, answer or oppose, contest and
abandon all legal proceedings in which the Partnership is or may
hereafter be interested; and to settle, compromise or submit to
arbitration any accounts, debts, claims, disputes and matters which
may arise between the Partnership and any other Person and to grant
an extension of time for the payment or satisfaction thereof on any
terms with or without security;
(h) To make arrangements for financing, including the taking
of all action deemed necessary or appropriate by the General
Partner to cause any approved loans to be closed;
(i) To take all reasonable measures necessary to insure
compliance by the Partnership with applicable arrangements and
contractual obligations entered into by the Partnership from time
to time in accordance with the provisions of this Agreement,
including periodic reports required to be submitted to lenders,
using all due diligence to insure that the Partnership is in
compliance with its contractual obligations;
(j) To maintain the Partnership's books and records; and
(k) To prepare and deliver, or cause to be prepared and
delivered by the Accountants, all financial and other reports with
respect to the operations of the Partnership, and preparation and
filing of all federal and state tax returns and reports.
Except as otherwise provided herein, to the extent the duties of
the General Partner require expenditures of funds to be paid to third
parties, the General Partner shall not have any obligations hereunder
except to the extent that Partnership funds are reasonably available to
it for the performance of such duties, and nothing herein contained
shall be deemed to authorize or require the General Partner, in its
capacity as such, to expend its individual funds for payment to third
parties or to undertake any individual liability or obligation on behalf
26
of the Partnership. Nothing contained in this Section 6.2 shall
authorize the General Partner to take any action which would be in
violation of Section 2.3.
6.3 Major Decisions. The General Partner shall not, without the
prior consent of the Limited Partners and any additional partners that
may from time to time be admitted to the Partnership in accordance with
Section 6.7 hereof and, so long as any of the Notes remains outstanding,
the unanimous affirmative vote of the Board of Directors of the general
partner of the General Partner (and with regard to only (c) and (d)
below the consent of the holder of such Notes), undertake any of the
following actions on behalf of the Partnership (the "Major Decisions"):
(a) Institute any proceeding for or take any action resulting
in Bankruptcy on behalf of the Partnership;
(b) Take title to any personal or real property other than in
the name of the Partnership;
(c) Act or cause the taking or refraining of any action with
respect to the dissolution, liquidation or winding up of the
Partnership or an election to continue the Partnership or to
continue the business of the Partnership; or
(d) Merge or consolidate with or into any Person or sell,
exchange, transfer or otherwise dispose of all or substantially all
of the Partnership's assets.
6.4 Proscriptions. The General Partner shall not have the
authority:
(a) to do any act in contravention of this Agreement or the
Loan Documents or which would make it impossible to carry on the
ordinary business of the Partnership, provided that a sale of the
Property shall not be deemed to be such an act;
(b) to possess any Partnership property or assign rights in
specific Partnership property for other than Partnership purposes;
or
(c) to do any act in contravention of applicable law.
27
Nothing herein contained shall impose any obligation on any Person or
firm doing business with the Partnership to inquire as to whether or not
the General Partner has properly exercised its authority in executing
any contract, lease, mortgage, deed or any other instrument or document
on behalf of the Partnership, and any such third Person shall be fully
protected in relying upon such authority.
6.5 Additional Covenants.
(a) Notwithstanding any provision to the contrary set forth
herein, the General Partner covenants that, so long as any of the
Notes remain outstanding, it shall not cause or permit the
Partnership to:
(1) engage, directly or indirectly, in any business
activity, other than activities authorized hereunder or under
the Loan Documents, and any and all lawful activities
incidental to or necessary, suitable or convenient to
accomplish the foregoing to the extent that same are not
contrary to Section 2.3 hereof or are otherwise prohibited by
the Loan Documents;
(2) commingle its property with the property of any
of its partners or Affiliates or any other Person;
(3) transfer or lease the Property or any portion
thereof or interest therein, except as permitted under the
Mortgage;
(4) engage in a nonexempt prohibited transaction
described in Section 406 of ERISA or Section 4975 of the Code;
(5) acquire obligations or securities of its
Partners;
(6) except as expressly permitted under the Loan
Documents, engage in any dissolution, liquidation, winding-up,
consolidation, merger, sale of all or substantially all of its
assets or transfer of its ownership interests;
(7) except for the Loan, be the obligor or
guarantor of or otherwise incur or be responsible for any
indebtedness;
28
(8) pledge its assets for the benefit of any other
entity, make loans or advances to any other entity, guarantee
or become obligated for the debts of another entity or hold
its credit out as being available to satisfy the obligations
of others;
(9) partition the Property;
(10) amend this Agreement in any manner: (A) such
that the Partnership would not, as a result of such amendment,
be a special purpose entity, (B) that would have a material
adverse effect on the mortgagee under the Mortgage or (C) to
modify the limitations on the business of the Partnership, the
restrictions on amendment, modification or termination hereof,
the restrictions on the Partnership's ability to institute a
Bankruptcy, or any other covenant to make same inconsistent
with this Section 6.5(a) (the above referenced limitations,
restrictions and covenants shall include, without limitation,
those set forth in Sections 2.3, 3.1, 4.3, 6.3, 6.4, 6.5, 6.7,
8.1 and 10.10 hereof), unless, in the case of any modification
described in this clause (C), the Partnership shall obtain
written consent of the holders of the Notes and written
confirmation from any applicable rating agency that such
modification will not result in the downgrade, qualification
or withdrawal of the rating then assigned to the Notes;
(11) take title to any real or personal property
other than in the name of the Partnership;
(12) buy or hold evidence of indebtedness issued by any
other person or entity (other than cash and investment grade
securities); or
(13) identify itself as a division of any other person or
entity.
(b) The General Partner covenants that, so long as any of the
Notes remain outstanding, it shall cause the Partnership to:
(1) do or cause to be done all things necessary to
preserve and keep in full force and effect the existence of
the Partnership and maintain adequate capitalization (taking
into account, among other things, the market value of its
assets) for its business purposes;
29
(2) maintain books and records, bank accounts,
checks, invoices and financial statements separate from those
of its Affiliates and observe other partnership formalities
and maintain a principal executive and administrative office
through which its business is conducted separate from that of
any of its Affiliates; provided, however, that the Partnership
and/or any of its Affiliates may have offices in the same
location provided there is a fair and appropriate allocation
of overhead costs, including, without limitation, the salaries
of any shared employees, if any, among the Partnership and/or
any such Affiliate and/or any such Affiliate bears its fair
share of such costs;
(3) pay all of its obligations and liabilities and
the salaries of its employees, if any, out of its own funds;
(4) maintain a sufficient number of employees in
light of its contemplated business operations;
(5) at all times conduct its own business in its
own name, hold itself out to the public as a legal entity
separate and distinct from any of its Affiliates (including
using separate stationery and including, with respect to its
leasing activities, entering into any contracts and preparing
its financial statements), to correct any known
misunderstanding regarding its separate identity and cause it
and such Affiliates to conduct business with it on an arm's
length and commercially reasonable basis;
(6) at all times be a "Single Purpose Entity" (as
that term is defined in the Mortgage); and
(7) prepare and file its own tax returns or, if
part of a consolidated group, join in the consolidated tax
return of such group as a separate member thereof, each in
accordance with the terms of Section 5.6 hereof.
6.6 Operation in Accordance with REIT Requirements. The Partners
acknowledge and agree that the Partnership shall be operated in a manner
that will enable the Company, general partner of ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Group,
L.P., to (a) satisfy the REIT Requirements and (b) avoid the imposition
of any federal income or excise tax liability. The Partnership shall
avoid taking any action which would result in the Company ceasing to
30
satisfy the requirements for qualifying as a real estate investment
trust under the Code and the Regulations or would result in the
imposition of any federal income or excise tax liability of the Company.
6.7 Waiver and Indemnification. Neither the General Partner nor
any of its Affiliates, directors, trust managers, officers, employees,
shareholders, nor any Person acting on its behalf, pursuant hereto,
shall be liable, responsible or accountable in damages or otherwise to
the Partnership or to any Partner for any acts or omissions performed or
omitted to be performed by them within the scope of the authority
conferred upon the General Partner by this Agreement and the Act,
provided that the General Partner's or such other Person's conduct or
omission to act was taken in good faith and in the belief that such
conduct or omission was in the best interests of the Partnership and,
provided further, that the General Partner or such other Person shall
not be guilty of fraud, willful misconduct or gross negligence. The
Partnership shall, and hereby does, indemnify and hold harmless the
General Partner and its Affiliates, their respective directors,
officers, shareholders, employees and any other individual acting on
their behalf to the extent such Persons would be indemnified by the
Company pursuant to Article Eighth of the Articles of Incorporation of
the Company if such persons were directors, officers, agents or
employees of the Company; provided, however, that no Partner shall have
any personal liability with respect to the foregoing indemnification,
any such indemnification to be satisfied solely out of the assets of the
Partnership.
6.8 Additional Partners. Additional Partners may be admitted to
the Partnership only with the consent of the General Partner and the
Limited Partners, subject to the terms and conditions of the Mortgage.
6.9 Limitation of Liability of Directors, Shareholders, Employees
and Officers of the General Partner. Any obligation or liability
whatsoever of the General Partner which may arise at any time under this
Agreement or any other instrument, transaction, or undertaking
contemplated hereby shall be satisfied, if at all, out of the assets of
the General Partner or the Partnership only. No such obligation or
liability shall be personally binding upon, nor shall resort for the
enforcement thereof be had to, any of the General Partner's Directors,
shareholders, officers, employees, or agents, regardless of whether such
obligation or liability is in the nature of contract, tort or otherwise.
ARTICLE VII
DISSOLUTION, LIQUIDATION AND WINDING-UP
31
7.1 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 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 the Accountants.
7.2 Distribution on Dissolution. In the event of the dissolution
and liquidation of the Partnership for any reason, the assets of the
Partnership shall be liquidated for distribution in the following rank
and order:
(a) Payment of creditors of the Partnership (other than
Partners) in the order of priority as provided by law;
(b) Establishment of reserves as determined by the General
Partner to provide for contingent liabilities, if any;
(c) Payment of debts of the Partnership to Partners, if any,
in the order of priority provided by law;
(d) To the Partners in accordance with the positive balances
in their Capital Accounts after giving effect to all contributions,
distributions and allocations for all periods, including the period
in which such distribution occurs (other than those distributions
made pursuant to this Section 7.2(d) and Section 7.4 hereof).
If upon dissolution and termination of the Partnership the Capital
Account of the Limited Partners are less than zero, then the Limited
Partners shall have no obligation to restore the negative balance in its
Capital Account. Whenever the Liquidating Agent reasonably determines
that any reserves established pursuant to paragraph (b) above are in
excess of the reasonable requirements of the Partnership, the amount
determined to be excess shall be distributed to the Partners in
accordance with the above provisions.
7.3 Sale of Partnership Assets. In the event of the liquidation
of the Partnership in accordance with the terms of this Agreement, the
Liquidating Agent may sell Partnership property; provided, however, that
all sales, leases, encumbrances or transfers of Partnership assets shall
be made by the Liquidating Agent solely on an "arm's length" basis, at
the best price and oh the best terms and conditions as the Liquidating
Agent in good faith believes are reasonably available at the time and
32
under the circumstances and on a non-recourse basis to the Limited
Partners. The liquidation of the Partnership shall not be deemed
finally terminated until the Partnership shall have received cash
payments in full with respect to obligations such as notes, purchase
money mortgages installment sale contracts or other similar receivables
received by the Partnership in connection with the sale of Partnership
assets-and all obligations of the Partnership have been satisfied or
assumed by the General Partner. The Liquidating Agent shall continue to
act to enforce all of the rights of the Partnership pursuant to any such
obligations until paid in full.
7.4 Distributions in Kind. In the event that it becomes necessary
to make a distribution of Partnership property in kind, the General
Partner may, with the consent of the Limited Partners, transfer and
convey such property to the distributees as tenants in common, subject
to any liabilities attached thereto, so as to vest in them undivided
interests in the whole of such property in proportion to their
respective rights to share in the proceeds of the sale of such property
(other than as a creditor) in accordance with the provisions of Section
7.2 hereof. Immediately prior to the distribution of Partnership
property in kind to a Partner, the Capital Account of each Partner shall
be increased or decreased, as the case may be, to reflect the manner in
which the unrealized income, gain, loss and deduction inherent in such
property (to the extent not previously reflected in the Capital
Accounts) would be allocated among the Partners if there were a taxable
disposition of such property for its fair market value as of the date of
the distribution.
7.5 Documentation of Liquidation. Upon the completion of the
dissolution and liquidation of the Partnership, the Partnership shall
terminate and the Liquidating Agent shall have the authority to execute
and record any and all documents or instruments required to effect the
dissolution, liquidation and termination of the Partnership.
7.6 Liability of the Liquidating Agent. The Liquidating Agent
shall be indemnified and held harmless by the Partnership from and
against any and all claims, demands, liabilities, costs, damages and
causes of action of any nature whatsoever arising out of or incidental
to the Liquidating Agent's taking of any action authorized under or
within the scope of this Agreement; provided, however, that no Partner
shall have any personal liability with respect to the foregoing
indemnification, any such indemnification to be satisfied solely out of
the assets of the Partnership; and provided, further, that the
Liquidating Agent shall not be entitled to indemnification, and shall
not be held harmless, where the claim, demand, liability, cost, damage
or cause of action at issue arose out of:
33
(a) a matter entirely unrelated to the Liquidating Agent's
action or conduct pursuant to the provisions of this Agreement; or
(b) the proven misconduct or negligence of the Liquidating
Agent.
ARTICLE VIII
TRANSFER OF PARTNERSHIP INTERESTS
8.1 Transfer of Partnership Interests. As long as the Notes are
outstanding, neither the General Partner nor the Limited Partners shall
withdraw from the Partnership or Transfer, encumber or otherwise dispose
of any interest in the Partnership such that the transferee owns more
than a 49% interest in the Partnership or the transferee is an affiliate
or family member of a transferor which owned more than a 49% interest in
the Partnership prior to such transfer, and any action taken in
contravention of the foregoing shall be null and void.
ARTICLE IX
RIGHTS AND OBLIGATIONS OF THE LIMITED PARTNERS
9.1 No Participation in Management. Except as expressly permitted
hereunder, the Limited Partners shall not take part in the management of
the Partnership's business, transact any business in the Partnership's
name or have the power to sign documents for or otherwise bind the
Partnership.
9.2 Bankruptcy Of the Limited Partners. The Bankruptcy of the
Limited Partners shall not cause a dissolution of the Partnership, but
the rights of the Limited Partners to share in the Profits or Losses of
the Partnership and to receive distributions of Partnership funds shall,
on the happening of such event, devolve on its successors or assigns,
subject to the terms and conditions of this Agreement, and the
Partnership shall continue as a limited partnership. However, in no
event shall such assignee(s) become a Substituted Limited Partner.
9.3 No Withdrawal. The Limited Partners may not withdraw from the
Partnership without the prior written consent of the General Partner,
other than as expressly provided in this Agreement.
9.4 Duties and Conflicts. The General Partner recognizes that the
Limited Partners and its Affiliates has or may have other business
interests, activities and investments, some of which may be in conflict
34
or competition with the business of the Partnership, and that such
persons are entitled to carry on such other business interests,
activities and investments. The Limited Partners and its Affiliates may
engage in or possess an interest in any other business or venture of any
kind, independently or with others, on their own behalf or on behalf of
other entities with which they are affiliated or associated, and such
persons may engage in any activities, whether or not competitive with
the Partnership, without any obligation to offer any interest in such
activities to the Partnership or to any Partner. Neither the
Partnership nor any Partner shall have any right, by virtue of this
Agreement, in or to such activities, or the income or profits derived
therefrom, and the pursuit of such activities, even if competitive with
the business of the Partnership, shall not be deemed wrongful or
improper.
ARTICLE X
GENERAL PROVISIONS
10.1 Notices. All notices, offers or other communications required
or permitted to be given pursuant to this Agreement shall be in writing
and may be personally served or sent by United States mail and shall be
deemed to have been given when delivered in person, upon receipt of
telecopy or three business days after deposit in United States mail,
registered or certified, postage prepaid, and properly addressed, by or
to the appropriate party. For purposes of this Section 10.1, the
addresses of the parties hereto are all at c/o ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Group,
▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇. The address of
any party hereto may be changed by a notice in writing given in
accordance with the provisions hereof.
10.2 Successors. This Agreement and all the terms and provisions
hereof shall be binding upon and shall inure to the benefit of all
Partners, and their legal representatives, heirs, successors and
permitted assigns, except as expressly herein otherwise provided.
10.3 EFFECT AND INTERPRETATION. THIS AGREEMENT SHALL BE GOVERNED
BY AND CONSTRUED IN CONFORMITY WITH THE LAWS OF THE STATE OF DELAWARE.
10.4 Counterparts. This Agreement may be executed in counterparts,
each of which shall be an original, but all of which shall constitute
one and the same instrument.
35
10.5 Partners Not Agents. Nothing contained herein shall be
construed to constitute any Partner the agent of another Partner, except
as specifically provided herein, or in any manner to limit the Partners
in the carrying on of their own respective businesses or activities.
10.6 Entire Understanding: Etc. This Agreement and the other
agreements referenced herein or therein constitutes the entire agreement
and understanding among the Partners and supersedes any prior
understandings and/or written or oral agreements among them respecting
the subject matter within.
10.7 Severability. If any provision of this Agreement, or the
application of such provision to any Person or circumstance, shall be
held invalid by a court of competent jurisdiction, the remainder of this
Agreement, or the application of such provision to Persons or
circumstances other than those to which it is held invalid by such
court, shall not be affected thereby.
10.8 Pronouns and Headings. As used herein, all pronouns shall
include the masculine, feminine and neuter, and all defined terms shall
include the singular and plural thereof wherever the context and facts
require such construction. The headings, titles and subtitles herein
are inserted for convenience of reference only and are to be ignored in
any construction of the provisions hereof. Any references in this
Agreement to "including" shall be deemed to mean "including without
limitation."
10.9 Assurances. Each of the Partners shall hereafter execute and
deliver such further instruments and do such further acts and things as
may be required or useful to carry out the intent and purpose of this
Agreement and as are not inconsistent with the terms hereof.
10.10 Amendment. Subject to Section 6.5(a)(10) hereof, this
Agreement may be amended, modified or terminated, but only in writing by
the General Partner, the Limited Partners and all other parties admitted
to the Partnership in accordance with Section 6.7 hereof.
[End of Page 36]
36
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
or caused this Agreement to be executed as of the date and year first
above written.
GENERAL PARTNER: SDG CAPITAL LIMITED PARTNERSHIP,
a Delaware limited partnership
By: \s\▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, Chief Executive Officer
LIMITED PARTNER: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ GROUP, L.P., a
Delaware limited partnership
By: SD PROPERTY GROUP, INC., an Ohio
corporation, managing general partner
By: \s\▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇
Chief Executive Officer
▇▇▇▇▇▇▇▇▇ CAPITAL PARTNERSHIP, a
Delaware general partnership
By: ▇▇▇▇▇▇▇▇▇ PROPERTIES, INC., an Ohio
corporation
By: \s\▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇
Chief Executive Officer
37
SCHEDULE 1
CAPITAL CONTRIBUTIONS
GENERAL PARTNER GROSS ASSET VALUE
(SDG Capital Associates Limited Partnership)
Cash $1,636,000
West Ridge Mall (2.5% undivided interest) $1,702,400
TOTAL $3,338,400
LIMITED PARTNER
(▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Group, L.P.)
West Ridge Mall (97.5% undivided interest) $66,861,600
LIMITED PARTNER
(▇▇▇▇▇▇▇▇▇ Capital Partnership)
Bay Park Square $36,300,000
▇▇▇▇▇▇▇▇ Plaza $26,640,000
Cheltenham Square $50,000,000
DeSoto Square $56,800,000
Upper Valley Mall $44,800,000
Washington Square $49,100,000
$263,640,000
TOTAL CAPITAL $333,840,000
38
SCHEDULE 2
CAPITAL ACCOUNT PERCENTAGES
GENERAL PARTNER Percent Interest
SDG Capital Associates Limited Partnership 1%
LIMITED PARTNERS
▇▇▇▇▇▇▇▇▇ Capital Partnership 78.5%
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Group, L.P. 20.5%
TOTAL 100.0%
39