SECOND AMENDED AND RESTATED
AGREEMENT OF
LIMITED PARTNERSHIP
OF
NEW ROC ASSOCIATES, L.P.
A NEW YORK LIMITED PARTNERSHIP
THE INTERESTS OF THE LIMITED PARTNERS, ISSUED UNDER THIS AGREEMENT, HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. NO RESALE OF AN OWNERSHIP
INTEREST BY A LIMITED PARTNER IS PERMITTED EXCEPT IN ACCORDANCE WITH THE
PROVISIONS OF THIS AGREEMENT, AND APPLICABLE FEDERAL AND STATE SECURITIES LAW.
TABLE OF CONTENTS
PAGE
ARTICLE I FORMATION, NAME AND ADDRESS.......................................2
1.1 Formation..................................................2
1.2 Name.......................................................2
1.3 Principal place of Business................................2
1.4 Registered Office and Registered Agent.....................2
1.5 Term.......................................................2
ARTICLE II PURPOSE OF THE PARTNERSHIP........................................2
2.1 Purpose....................................................2
2.2 Single Purpose Entity Provisions...........................2
ARTICLE III PARTNERS AND PARTNERSHIP INTEREST.................................3
3.1 General Partner............................................3
3.2 Limited Partner Interests..................................3
ARTICLE IV CAPITAL...........................................................3
4.1 General Partner............................................3
4.2 Limited Partners...........................................3
4.3 Capital Accounts...........................................3
4.4 Withdrawal of Capital......................................4
4.5 Additional Capital Contributions...........................4
ARTICLE V DISTRIBUTION TO PARTNERS PRIOR TO LIQUIDATION.....................4
5.1 Distribution of Net Cash Flow..............................4
5.2 Distribution of Sale and Refinancing and Capital
Transaction Proceeds.......................................5
ARTICLE VI INCOME AND LOSSES.................................................6
6.1 Allocation of Net Income...................................6
6.2 Allocation of Gain Attributable to Sale....................7
6.3 Allocation of Net Losses...................................7
6.4 Allocation of Losses Attributable to Capital
Transactions or Sale...................................... 8
6.5 Allocation of Gain from a Capital Transaction..............8
6.6 Special Allocations........................................9
6.7 Curative Allocatins.......................................10
6.8 [Reserved]................................................10
6.9 Other Allocation Rules....................................11
6.10 Tax Allocations: Code Section 704(c)......................11
6.11 Loan Assumption Costs.....................................12
ARTICLE VII AUTHORITY AND DUTIES OF THE GENERAL PARTNER .................... 12
7.1 Management Powers.........................................12
7.2 Action to Be Taken in Connection with Organization ...... 13
7.3 Devotion of Time..........................................13
7.4 Indemnifications..........................................13
7.5 Liability of the General Partner to Limited Partners......13
7.6 Representations, Warranties and Agreements of the
General Partner.......................................... 14
7.7 Loans By General Partner..................................15
ARTICLE VIII RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS ......................15
8.1 Management of Business....................................15
8.2 Limitation on Liability of Limited Partners.........15
8.3 Other Activities..........................................15
8.4 Power of Attorney to General Partner......................15
8.5 Certain Restricted Rights of Class A Limited Partners.....16
ARTICLE IX TRANSFERS OF LIMITED PARTNERSHIP INTERESTS...................16
9.1 Transfer of Limited Partners' Interest.................17
9.2 Death, Bankruptcy, or Incompetency of a Limited
Partner...................................................17
9.3 Substitute Limited Partner................................17
9.4 Amendment for Transfer....................................18
9.5 Exchange Rights...........................................18
9.6 Buy-Sell Agreement........................................20
9.7 Tag-Along Rights..........................................21
9.8 Right of First Refusal....................................21
9.9 Investment Representation and Warranties of the
Limited Partners..........................................22
ARTICLE X TRANSFERS OF GENERAL PARTNERSHIP INTEREST .......................23
10.1 Transfers of General Partnership Interest.................23
10.2 Death Liquidation, Dissolution, Withdrawal,
Adjudication of Incompetency, Bankruptcy or Removal
of a General Partner..................................... 24
10.3 Transferor of General Partnership Interests to
Bear Costs and Expenses...................................24
10.4 Removal of a General Partner..............................24
ARTICLE XI DISSOLUTION AND LIQUIDATION...................................25
11.1 Events Causing Dissolution...............................25
11.2 Winding Up and Dissolution..............................25
11.3 Distribution..............................................26
11.4 Limitation of Liability of Partners.......................27
ARTICLE XII BOOKS AND RECORDS ACCOUNTING, TAX ELECTIONS AND RELATED MATTERS..27
12.1 Books and Records.........................................27
12.2 Bank Accounts.............................................27
12.3 Accountants' Determination................................27
12.4 Reports to Limited Partners...............................27
12.5 Allocation Upon Transfer of Partnership Interest..........28
12.6 Basis Adjustment..........................................28
12.7 Tax Considerations........................................28
ARTICLE XIII MEETINGS, VOTING AND AMENDMENTS..................................28
13.1 Meetings..................................................29
13.2 Voting....................................................29
13.3 Amendments................................................29
ARTICLE XIV GENERAL PROVISIONS...............................................30
14.1 Notices...................................................30
14.2 Waiver of Partition.......................................30
14.3 Gender....................................................30
14.4 Severability..............................................30
14.5 Litigation................................................30
14.6 Right to Rely Upon the Authority of the General Partner...30
14.7 Right to Rely Upon Authority of Person Signing Agreement..31
14.8 Entire Agreement..........................................31
14.9 Interpretation............................................31
14.10 Binding Effect............................................31
14.11 Execution in Counterparts.................................31
14.12 Titles and Headings.......................................31
ARTICLE XV CERTAIN DEFINED TERMS............................................32
15.1 Defined Terms.............................................32
SCHEDULE A....................................................................40
SCHEDULE B....................................................................41
SCHEDULE C....................................................................42
SECOND AMENDED AND RESTATED AGREEMENT OF LIMITED
PARTNERSHIP OF NEW ROC ASSOCIATES, L.P.
SECOND AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP (hereinafter
sometimes referred to as the "Agreement"), dated as of the day of October ,
---
2003 (the "Effective Date"), by and among LC New Roc LP, a New York limited
liability company (referred to as the "Class B Limited Partner") and EPT New
Roc, LLC, a Delaware limited liability company (referred to as the "General
Partner" and/or the "Class A Limited Partner" and together with the Class B
Limited Partner referred to as "Limited Partners"). The General Partner and
Limited Partners shall be collectively referred to as Partners and individually
as a "Partner."
RECITALS
WHEREAS, on December 12, 1994, a Certificate of Limited Partnership was
filed with the Secretary of State of New York for New Roc Partners, L.P., which
Certificate of Limited Partnership was amended on March 11, 1996, to change the
name thereof to New Roc Associates, L.P. (the "Partnership"), and
WHEREAS, effective June 20, 1995, DKH New Roc, Inc., a New Jersey
corporation (the "Original General Partner"), DKH New Roc Associates, L.P., a
New Jersey limited Partnership ("DKH L.P."), and certain additional parties (the
"Original Class A Limited Partners") entered into an Amended and Restated
Agreement "of Limited Partnership (as amended, the "Original Agreement"); and
WHEREAS, as of , 200 , the Original Class A Limited
----------------- -
Partners transferred all of their Partnership interests to LRC Industries, Inc.,
a New York corporation ("LRCM); and
WHEREAS, as of April 10, 2002, the Original General Partner withdrew from
the Partnership and was replaced by LC New Roc, Inc., a New York corporation
("Second General Partner"); and
WHEREAS, on , 2003, DKH L.P. and LRCI transferred all of their
------------
interest in the Partnership to the Class B Limited Partner; and
WHEREAS, on August , 2003, the Partnership, the Second General Partner,
---
the Class B Limited Partner and the Class A Limited Partner entered into a
Partnership Interest Purchase Agreement (the "Purchase Agreement") whereby the
Class A Limited Partner would purchase the General Partner Interest from the
Second General Partner and the Class A Limited Partnership Interest from the
Class B Limited Partner.
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
and for other good and valuable consideration the receipt of which is hereby
acknowledged, the parties agree to amend and restate in its entirety the
Original Agreement as follows:
ARTICLE I
FORMATION, NAME AND ADDRESS
1.1 FORMATION. The parties hereto agree to form the Partnership under the
provisions of the New York Revised Limited Partnership Act (the "Partnership
Act") and this Agreement.
1.2 NAME. The name of the Partnership shall be "New Roc Associates, L.P."
1.3 PRINCIPAL PLACE OF BUSINESS. The principal place of business and the
principal office of the Partnership shall be located at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇. The General Partner may at any time change the location of
such principal office to another location within or without New York and shall
give notice of such change to the Limited Partners and shall file any
certificate necessary to effectuate such change. The Partnership may have such
other additional offices as hereafter determined by the General Partner.
1.4 REGISTERED OFFICE AND REGISTERED AGENT. The registered office of the
Partnership shall be . The registered agent
-------------------------------------
at such address shall be The General Partner may at any time change the location
of the registered office and/or the identity of the registered agent and shall
give notice of such change to the Limited Partners and shall file any
certificate necessary to effectuate such change.
1.5 TERM. The Partnership shall continue until December 31, 2040, unless
sooner dissolved in accordance with the provisions of this Agreement.
ARTICLE II
PURPOSE OF THE PARTNERSHIP
2.1 PURPOSE. The sole and exclusive purpose of the Partnership is to
operate a shopping center located in New Rochelle, New York, as more
particularly described on Schedule B attached hereto and incorporated herein,
(hereinafter sometimes referred to as the "Property"), and to conduct such other
activities related thereto as is desirable.
2.2 SINGLE PURPOSE ENTITY PROVISIONS. As a condition of GACC making the
loan contemplated by the GACC Loan Agreement to the Partnership, GACC has
required that the Partnership be a special purpose entity. In order to
accomplish and effect the foregoing, the General Partner and the Limited
Partners hereby agree to be bound by the terms and conditions set forth in
Schedule C annexed hereto and made a part hereof for the period during which the
loan by GACC pursuant to the GACC Loan Agreement remains outstanding and
thereafter for so long as any other lender to the Partnership may require. To
the extent any provision of Schedule C conflicts with the other provisions of
this Agreement, the provisions of Schedule C shall prevail.
ARTICLE III
PARTNERS AND PARTNERSHIP INTEREST
3.1 GENERAL PARTNER. In accordance with the terms of the Purchase
Agreement, all of the Second General Partner's right, title and interest in the
General Partner Interest shall be, and hereby is, transferred, assigned and sold
to the General Partner. As a result, upon execution of this Agreement, the
General Partner will own all of the General Partner Interest, having the Initial
Capital Account balance therefor set forth in Schedule A.
3.2 LIMITED PARTNER INTERESTS. The Partnership Interests held by the Class
B Limited Partner are hereby converted into a Class A Limited Partnership
Interest and a Class B Limited Partnership Interest, having the Initial Capital
Accounts set forth on Schedule A attached hereto and incorporated herein. In
accordance with the terms and conditions of the Purchase Agreement, all of the
Class B Limited Partner's right, title and interest in the Class A Limited
Partnership Interest shall be, and hereby is, transferred, assigned and sold to
the Class A Limited Partner as of the Effective Date. As a result, upon
execution of this Agreement, the Class A Limited Partner will own all of the
Class A Limited Partnership Interest, having the Initial Capital Account balance
therefor set forth in Schedule A, and the Class B Limited Partner will own all
of the Class B Limited Partnership Interest, having the Initial Capital Account
balance therefor set forth in Schedule A.
ARTICLE IV
CAPITAL
4.1 GENERAL PARTNER. The Original General Partner has made a Capital
Contribution to the Partnership in an amount equal to one (1%) percent of the
total Capital Contributions to the Partnership. Whenever the Capital
Contributions to the Partnership shall increase, the General Partner shall
increase its Capital Contribution to make its total Capital Contributions equal
to one (1%) percent of the total Capital Contributions to the Partnership.
4.2 LIMITED PARTNERS. The Limited Partner shall not make additional capital
contributions except as required under Section 4.5 or Section 8.2.
4.3 CAPITAL ACCOUNTS. An individual Capital Account shall be established
and maintained for each Partner in accordance with Regulations Section
1.704-1(b)(2)(iv). The original Capital Account established for a Substituted
Partner (as hereinafter defined) as adjusted pursuant to the terms hereof shall
be in the same amount as, and shall replace, the Capital Account of the Partner
w111ch such Substituted Partner succeeds (the "LN)R1G1R1A1 Partner"), arid, for
the purposes of this Agreement, such Substituted Partner shall be deemed to have
made the Capital Contribution, to the extent actually paid, of the Original
Partner. For purposes of this Section 4.3, the term "Substituted Partner" shall
mean a Person who shall become entitled to receive a share of the profits,
losses and distributions of the Partnership by reason of such Person succeeding
to an interest in the Partnership by assignment of all or any part of a
Partner's interest in the Partnership, whether or not such Person is admitted as
a Partner. To the extent a Substituted Partner receives less than 100% of the
interest of an Original Partner in the Partnership, the initial Capital Account
of such Substituted Partner and his Capital Contribution shall be in proportion
to the interest he receives. The Capital Account of the Original Partner and his
Capital Contribution shall continue, and not be replaced, in proportion to the
interest he retains.
4.4 WITHDRAWAL OF CAPITAL. A Partner shall not have the right to withdraw
from the Partnership all or any part of his Capital Contribution except as
specifically provided in this Agreement. No Partner shall have any right to
demand and receive property of the Partnership in return for his Capital
Contribution except as may be specifically provided in this Agreement.
4.5 Additional Capital Contributions.
(a) The General Partner is authorized from time to time to cause the
Partnership to raise additional capital from the Limited Partners or from
Persons who are not Partners on such terms and conditions as may be agreed
by the General Partner and the contributing Partner(s). Unless a Partner
agrees otherwise, it shall have no obligation to make additional capital
contributions to the Partnership.
(b) If an additional capital contribution shall be made pursuant to
Section 4.5(a), the Capital Accounts shall be adjusted accordingly to
reflect the impact of such additional capital contributions in accordance
with the terms and conditions established by the General Partner and the
contributing Partner(s). contribution.
(c) No Partner shall have any obligation to make any additional
capital
ARTICLE V
DISTRIBUTION TO PARTNERS PRIOR TO LIQUIDATION
5.1 DISTRIBUTION OF NET CASH FLOW. The Net Cash Flow of the Partnership
shall be distributed to the Partners at such time or times as the General
Partner may determine; provided, however, that distributions of Net Cash Flow,
to the extent available, shall be made at least quarterly. Such Net Cash Flow
during each calendar year of the Partnership shall be distributed as follows:
(a) First, distributions shall be made to the Class A Limited Partner,
until such Partner has received distributions pursuant to this Section 5.1
(a) in an amount equal to (i) its Undistributed Class A Preferred Return
less (ii) an amount (the "Class A CAPEX Deduction") equal_ to the Residual
Percentage Interest of the Class A Limited Partner times the amount of
Capital Expenditures made by the Partnership during the period for which
the distribution is being made;
(b) Second, distributions shall be made to the Class B Limited
Partner, until such Partner has received distributions pursuant to this
Section 5.1 (b) in an amount equal to (i) its Undistributed Class B
Preferred Return, less (ii) an amount (the "Class B CAPEX Deduction") equal
to the Residual Percentage Interest of the Class B Limited Partner times
the amount of Capital Expenditures made by the Partnership during the
period for which the distribution is being made; and
(c) Third, distributions shall be made to the Limited Partners, pari
passu, in the following proportions:
(i) the percentage equal to the Class A Limited Partner's
Residual Percentage Interest to such Partner until such Partner has
received distributions pursuant to this Section 5.1(c) in an amount
equal to its Undistributed Class A CAPEX Deductions, provided, that at
such time as the Class B Limited Partner has no Undistributed Class B
CAPEX Deductions, the Class A Limited Partner shall receive 100% of
the distributions pursuant to this Section 5.1(c) until such time as
the Undistributed Class A CAPEX Deductions have been reduced to zero;
and
(ii) the percentage equal to the Class B Limited Partner's
Residual Percentage Interest to such Partner until such Partner has
received distributions pursuant to this Section 5.1(c) in an amount
equal to its Undistributed Class B CAPEX Deductions, provided, that at
such time as the Class A Limited Partner has no Undistributed Class A
CAPEX Deductions, the Class B Limited Partner shall receive 100% of
the distributions pursuant to this Section 5.1(c) until such time as
the Undistributed Class B CAPEX Deductions have been reduced to zero;
and
(d) Fourth, any additional distributions shall be made to the Partners
in the following proportions: (i) prior to the Refinancing Date, 1 % to the
General Partner, 49% to the Class A Limited Partner and 50% to the Class B
Limited Partner; (ii) after the Refinancing Date, and until the total
amount of debt service payments (including, principal and interest) and all
Current Year Distributions (defined below) of Net Cash Flow made after the
Effective Date and during the fiscal year which includes the period for
which the distribution is made equals $8,900,000, (the "Trigger Level"), 1%
to the General Partner, 84% to the Class A Limited Partner and 15% to the
Class B Limited Partner; and (iii) after the Refinancing Date, and after
the Trigger Level has been reached for the applicable fiscal year, all
further distributions of Net Cash Flow for such fiscal year shall be made
1% to the General Partner, 59% to the Class A Limited Partner and 40% to
the Class B Limited Partner. "Current Year Distributions" shall mean
distributions of Net Cash Flow pursuant to Sections 5.1(a), (b) and (c),
but only to the extent that they apply to Class A Preferred Return and
Class B Preferred Return amounts accrued for the applicable fiscal year and
the recovery of Class A CAPEX Deduction and Class B CAPEX Deduction amounts
deducted in the applicable fiscal year.
5.2 DISTRIBUTION OF SALE AND REFINANCINIZ AND CAPITAL TRANSACTION PROCEEDS.
Notwithstanding Section 5.1, Sale Proceeds and Refinancing and Capital
Transaction Proceeds shall be distributed to the Partners as promptly after the
occurrence of the event giving rise thereto as the General Partner deems
reasonably prudent. The distribution of Sale Proceeds and Refinancing and
Capital Transaction Proceeds shall be as follows:
(a) First, retire all debt of the Partnership (including any partner
loans) and set up any reserve which the General Partner deems necessary to
provide for any contingent or unforeseen liabilities or obligations
unforeseen of the Partnership; provided, however, that at the expiration of
such period of time as the General Partner may deem advisable the balance
of such reserve shall be distributed in the manner otherwise set forth
herein in Section 5.2;
(b) Second, distributions shall be made to the Class A Limited
Partner, until such Partner has received distributions pursuant to this
Section 5.2(b) in an amount equal to its Undistributed Class A Preferred
Return;
(c) Third, distributions shall be made to the Class B Limited Partner,
until such Partner has received distributions pursuant to this Section
5.2(c) in an amount equal to its Undistributed Class B Preferred Return;
(d) Fourth, distributions shall be made to the Class A Limited
Partner, until such Partner has received distributions pursuant to this
Section 5.2(d) in an amount equal to such Partner's Invested Class A
Capital;
(e) Fifth, distributions shall be made to the Class B Limited Partner,
until such Partner has received distributions pursuant to this Section
5.2(e) in an amount equal to such Partner's Invested Class B Capital;
(f) Sixth, the balance shall be distributed to the Partners in the
following proportions: 1.0% to the General Partner, 70.4% to the Class A
Limited Partner and 28.6% to the Class B Limited Partner.
ARTICLE VI
INCOME AND LOSSES
6.1 ALLOCATION OF NET INCOME. After giving effect to the special
allocations set forth in Sections 6.6 and 6.7, the Net Income (other than items
of income or gain attributable to Capital Transactions or a Sale) of the
Partnership shall be allocated as follows:
(a) First, to the Class A Limited Partner, as necessary, to cause the
Capital Account balance of the Class A Limited Partner to equal the
Undistributed Class A Preferred Return (the "First Class A Preference
Amount");
(b) Second, to the Class B Limited Partner, as necessary, to cause the
Capital Account balance of the Class B Limited Partner to equal the
Undistributed Class B Preferred Return (the "First Class B Preference
Amount");
(c) Third, after giving effect to the allocations made pursuant to
Section 6.1(a), to the Class A Limited Partner, as necessary, to cause the
Capital Account balance of the Class A Limited Partner to equal the sum of
(i) the First Class A Preference Amount plus (ii) the Invested Class A
Capital (such sum being referred to as the "Total Class A Preference
Amount");
(d) Fourth, after giving effect to the allocations made pursuant to
Section 6.1(b), to the Class B Limited Partner, as necessary, to cause the
Capital Account balance of the Class B Limited Partner to at least equal
the sum of (i) the First Class B Preference Amount plus (ii) the Invested
Class B Capital (such sum being referred to as the "Total Class B
Preference Amount"); 1280186v9 6
(e) Fifth, after giving effect to the allocations made pursuant to
Sections 6.1(a)-(d), among the Partners as necessary to cause the portion
of each Partner's Capital Account balance exceeding such Partner's Total
Preference Amount to be in proportion to the Partners' then respective
Operating Percentage Interests; and
(f) Sixth, any balance among the Partners in proportion to their then
respective Operating Percentage Interests.
6.2 ALLOCATION OF GAIN ATTRIBUTABLE TO SALE. After giving effect to the
special allocations set forth in Sections 6.6 and 6.7, items of income or gain
attributable to a Sale shall be allocated among the Partners as follows:
(a) First, to the Members in proportion to, and to the extent of, any
deficit balances in their respective Capital Accounts until all such
Capital Accounts have been restored to zero;
(b) Second, after giving effect to the allocations made pursuant to
Section 6.2(a), to the Class A Limited Partner, as necessary, to cause the
Capital Account balance of the Class A Limited Partner to equal the First
Class A Preference Amount;
(c) Third, after giving effect to the allocations made pursuant to
Section 6.2(a), to the Class B Limited Partner, as necessary, to cause the
Capital Account balance of the Class B Limited Partner to equal the First
Class B Preference Amount;
(d) Fourth, after giving effect to the allocations made pursuant to
Sections 6.2(a) and 6.2(b), to the Class A Limited Partner, as necessary,
to cause the Capital Account balance of the Class A Limited Partner to
equal the Total Class A Preference Amount;
(e) Fifth, after giving effect to the allocations made pursuant to
Sections 6.2(a) and 6.2(c), to the Class B Limited Partner, as necessary,
to cause the Capital Account balance of the Class B Limited Partner to
equal the Total Class B Preference Amount;
(f) Sixth, after giving effect to the allocations made pursuant to
Sections 6.2(a)-(e), among the Partners as necessary to cause the portion
of each Partner's Capital Account balance exceeding such Partner's Total
Preference Amount to be in proportion to the Partners' then respective
Residual Percentage Interests; and
(g) Seventh, any balance among the Partners in proportion to their
respective Residual Percentage Interests.
6.3 ALLOCATION OF NET LOSSES. After giving effect to the special
allocations set forth in Sections 6.6 and 6.7, the Net losses (other than Losses
attributable to Capital Transactions or a Sale) of the Partnership shall be
allocated as follows:
(a) First, to the Class B Limited Partner, as necessary, to cause such
Partner's Capital Account balance, to equal the First Class B Preference
Amount; 1280186v9 7
(b) Second, to the Class A Limited Partner, as necessary, to cause
such Partner's Capital Account balance, to equal the First Class A
Preference Amount;
(c) Third, as necessary, to cause the Class B Limited Partner's
Capital Account balance to equal zero;
(d) Fourth, as necessary, to cause the Class A Limited Partner's
Capital Account balance to equal zero; and Percentage Interest.
(e) Fifth, to the Partners in proportion to their respective Residual
6.4 ALLOCATION OF LOSSES ATTRIBUTABLE TO CAPITAL TRANSACTIONS OR SALE.
After giving effect to the special allocations set forth in Sections 6.6 and
6.7, losses attributable to Capital Transactions or a Sale shall be allocated as
follows:
(a) First, to the Class B Limited Partner, as necessary, to cause such
Partner's Capital Account balance, to equal the First Class B Preference
Amount;
(b) Second, to the Class A Limited Partner, as necessary, to cause
such Partner's Capital Account balance, to equal the First Class A
Preference Amount;
(c) Third, as necessary, to cause the Class B Limited Partner's
Capital Account balance to equal zero;
(d) Fourth, as necessary, to cause the Class A Limited Partner's
Capital Account balance to equal zero; and Percentage Interests.
(e) Fifth, to the Partners in proportion to their respective Residual
6.5 ALLOCATION OF GAIN FROM A CAPITAL TRANSACTION. After giving effect to
the special allocations set forth in Sections 6.6 and 6.7, items of income or
gain from a Capital Transaction shall be allocated as follows:
(a) First, to the Members in proportion to, and to the extent of, any
deficit balances in their respective Capital Accounts until all such
Capital Accounts have been restored to zero;
(b) Second, after giving effect to the allocations made pursuant to
Section 6.5(a), to the Class A Limited Partner, as necessary, to cause the
Capital Account balance of the Class A Limited Partner to equal the First
Class A Preference Amount;
(c) Third, after giving effect to the allocations made pursuant to
Section 6.5(a), to the Class B Limited Partner, as necessary, to cause the
Capital Account balance of the Class B Limited Partner to equal the First
Class B Preference Amount;
(d) Fourth, after giving effect to the allocations made pursuant to
Sections 6.5(a) and 6.5(b), to the Class A Limited Partner, as necessary,
to cause the Capital Account balance of the Class A Limited Partner to
equal the Total Class A Preference Amount;
(e) Fifth, after giving effect to the allocations made pursuant to
Sections 6.5(a) and 6.5(c), to the Class B Limited Partner, as necessary,
to cause the Capital Account balance of the Class B Limited Partner to
equal the Total Class B Preference Amount;
(f) Sixth, after giving effect to the allocations made pursuant to
Sections 6.5(a)-(e), among the Partners as necessary to cause the portion
of each Partner's Capital Account balance exceeding such Partner's Total
Preference Amount to be in proportion to the Partners' then respective
Residual Percentage Interests; and
(g) Seventh, any balance among the Partners in proportion to their
then respective Residual Percentage Interests.
6.6 SPECIAL ALLOCATIONS. The following special allocations shall be made in
the following order:
(a) Minimum Gain Chargeback. Except as otherwise provided in Section
1.704-2(f) of the Regulations, notwithstanding any other provision of this
Article VI, if there is a net decrease in Partnership Minimum Gain during
any year, 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, determined in accordance with Regulations Section 1.704-2(g).
Allocations pursuant to the previous sentence shall be made in proportion
to the respective amounts required to be allocated to each Partner pursuant
thereto. The items to be so allocated shall be determined in accordance
with Sections 1.704-2(f)(6) and 1.704-2(j)(2) of the Regulations. This
Section 6.6(a) is intended to comply with the minimum gain chargeback
requirement in Section 1.7042(f) of the Regulations and shall be
interpreted consistently therewith.
(b) Partner Minimum Gain Chargeback. Except as otherwise provided in
Section 1.704-2(i)(4) of the Regulations, notwithstanding any other
provision of this Article VI, if there is a net decrease in Partner
Nonrecourse Debt Minimum Gain attributable to a Partner Nonrecourse Debt
during any year, each Partner who has a share of the Partner Nonrecourse
Debt Minimum Gain attributable to such Partner Nonrecourse Debt, determined
in accordance with Section 1.704-2(i)(5) of the Regulations, shall be
specially allocated items of Partnership income and gain 1Vr such year
(and, if lecessary, subsequent years) in an amount equal to such Partner's
share of the net decrease in Partner Nonrecourse Debt, determined in
accordance with Regulations Section 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 Sections 1.704-2(i)(4)
and 1.704-20)(2) of the Regulations. This Section 6.6(b) is intended to
comply with the minimum gain chargeback requirement in Section
1.704-2(i)(4) of the Regulations and shall be interpreted consistently
therewith.
(c) Qualified Income Offset. In the event any Partner unexpectedly
receives any adjustments, allocations, or distributions described in
Sections 1.7041(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5), or
1.704-1(b)(2)(ii)(d)(6) of the Regulations, 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 the Partner as quickly as possible,
provided that an allocation pursuant to this Section 6.6(c) shall be made
only if and to the extent that the Partner would have an Adjusted Capital
Account Deficit after all other allocations provided for in this Article VI
have been tentatively made as if this Section 6.6(c) were not in the
Agreement.
(d) [Reserved]
(e) Nonrecourse Deductions. Nonrecourse Deductions for any year shall
be specially allocated to the Partners in proportion to their respective
Residual Percentage Interests.
(f) Partner Nonrecourse Deductions. Any Partner Nonrecourse Deductions
for any 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 Section 1.704-2(i)(1).
(g) Section 754 Adjustments. To the extent an adjustment to the
adjusted tax basis of any Partnership asset, pursuant to Code Section
734(b) or Code Section 743(b) is required, pursuant to Regulations Section
1.704-1(b)(2)(iv)(m)(2) or 1.704 1(b)(2)(iv)(m)(4), to be taken into
account in determining Capital Accounts as the result of a distribution to
a Partner in complete liquidation of such Partner's interest in the
Partnership, the amount of such adjustment to 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 gain or
loss shall be specially allocated to the Partners in accordance with their
interests in the Partnership in the event Regulations Section
1.704-1(b)(2)(iv)(m)(2) applies, or to the Partner to whom such
distribution was made in the event Regulations Section
1.704-1(b)(2)(iv)(m)(4) applies.
6.7 CURATIVE ALLOCATIONS. The allocations set forth in Sections 6.6(a),
6.6(b), 6.6(c), 6.6(e), 6.6(f), and 6.6(g) (the "Regulatory Allocations") are
intended to comply with certain requirements of the Regulations. It is the
intent of the Partners that, to the extent possible, all Regulatory Allocations
shall be offset either with other Regulatory Allocations or with special
allocations of other items of Partnership income, gain, loss or deduction
pursuant to this Section 6.7. Therefore, notwithstanding any other provision of
this Article VI (other than the Regulatory Allocations), the General Partner
shall make such offsetting special allocations of Partnership income, gain, loss
or deduction in whatever manner it determines appropriate so that, after such
offsetting allocations are made, each Partner's Capital Account balance is, to
the extent possible, equal to the Capital Account balance such Partner would
have had if the Regulatory Allocations were not part of the Agreement and all
Partnership items were allocated pursuant to Sections 6.1-6.5.
6.8 [Reserved]
6.9 OTHER ALLOCATION RULES.
(a) The Partners are aware of the income tax consequences of the
allocations made by this Article VI and hereby agree to be bound by the
provisions of this Article VI in reporting their shares of Partnership
income and loss for income tax purposes.
(b) Solely for purposes of determining a Partner's proportionate share
of the "excess nonrecourse liabilities" of the Partnership within the
meaning of Regulations Section 1.752-3(a)(3), the Partners' interests in
Partnership profits are in proportion to their Residual Percentage
Interests.
(c) To the extent permitted by Section 1.704-2(h)(3) of the
Regulations, the General Partner shall endeavor to treat distributions of
Net Cash Flow as having been made from the proceeds of a Nonrecourse
Liability or a Partner Nonrecourse Debt only to the extent that such
distributions would cause or increase an Adjusted Capital Account Deficit
for any Partner.
6.10 TAX ALLOCATIONS: Code Section 704(c). In accordance with Code Section
704(c) and the Regulations thereunder, income, gain, loss, and deduction with
respect to any property contributed to the capital of the Partnership (and any
other property owned by the Partnership that has a tax basis different from its
Gross Asset Value) shall, solely for 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 federal income tax purposes and its Gross
Asset Value (computed in accordance with the definition of Gross Asset Value)
using the remedial method specified in Regulations Section 1.704-3(d)(1).
In the event the Gross Asset Value of any Partnership asset is adjusted
pursuant to subparagraph (ii) of 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 its Gross Asset Value in the same manner as
under Code Section 704(c) and the Regulations thereunder (using the remedial
method specified in Regulation Section 1.704-3(d)(1)).
Any elections or other decisions relating to such allocations shall be made
by the General Partner in any manner that reasonably reflects the purpose and
intention of this Agreement. Allocations pursuant to this Section 6.10 are
solely for purposes of federal, state, and local taxes and shall not affect, or
in any way be taken into account in computing, any Partner's Capital Account or
share of Net Income, Net Losses, or other Items or distributions pursuant to any
provision of this Agreement.
The Partners acknowledge and agree that in connection with the admission of
EPT New Roc, LLC ("EPTNR"), as a General Partner and Limited Partner, the
provisions of this Section 6.10 shall be applied as follows:
(a) In connection with EPTNR's acquisition of its interest as a
Limited Partner, the Partnership shall make an election under Code Section
754 to increase the basis of Partnership property (in accordance with Code
Section 743(b)).
(b) In connection with EPTNR's acquisition of its interest as a
General Partner, the Partnership shall increase the capital accounts of the
Partners to reflect a revaluation of Partnership property (in accordance
with Regulations Section 1.704-1(b)(2)(iv)(f)).
(c) In connection with the revaluation of the Partnership's property
(as set forth above), each of the Partners will be treated as having
contributed to the Partnership such Partner's interest in each asset of the
Partnership. For EPTNR, Section 704(c) will not apply to such deemed
contribution because the tax basis of each asset deemed to have been
contributed by EPTNR will be equal to the book value of such asset. Section
704(c) will apply, however, to the assets deemed to have been contributed
by [▇▇▇▇▇▇▇▇ Newco LLC ("▇▇▇▇▇▇▇▇")] because the tax basis of each asset
deemed to have been contributed by ▇▇▇▇▇▇▇▇ will be less than the book
value of such asset.
(d) As a result of the application of Section 704(c) (as set forth
above), all tax items will be allocated to the Partners in accordance with
the remedial method specified in Regulations Section 1.704-3(d)(1). Under
this method, "tax will follow book" for EPTNR, and any disparity between
tax and book items will be reflected entirely in the allocation of tax
items to ▇▇▇▇▇▇▇▇.
6.11 LOAN ASSUMPTION COSTS. Notwithstanding any other provision of this
Agreement to the contrary, any item of expense or deduction (including both book
and tax items) related to the Prepayment Costs shall be specially allocated to
the Class B Limited Partner and shall not be taken into account as an item of
expense or deduction allocated under Sections 6.1 to 6.7, above. Further, for
purposes of any reference to a Partner's ;Capital Account in Article V, Article
VI and Article XI, such items of expense or deduction (and any increase in the
Class B Limited Partner's Capital Account occurring as a result of the payment
of the Prepayment Costs) shall be disregarded.
ARTICLE VII
AUTHORITY AND DUTIES OF THE GENERAL PARTNER
7.1 MANAGEMENT POWERS.
(a) The General Partner shall have the exclusive right and power to
manage and operate the Partnership and to do all things necessary to carry
on the purpose, business and objectives of the Partnership referred to in
Article II of this Agreement.
(b) -Evcepas otherwise modif ed by this Agreement iii addition t----l
any other powers conferred on general partners by the Partnership Act, the
General Partner shall have the following rights and powers in regard to the
management and control of the business and affairs of the Partnership:
(1) To take all action on behalf of the Partnership necessary to
accomplish the purpose of this Partnership;
(ii) To employ from time to time such Persons, including, without
limitation, accountants and attorneys, on such terms and for such
compensation as the General Partner shall reasonably determine
desirable;
(iii) To deposit or invest the funds of the Partnership in such
bank accounts or brokerage cash accounts as is deemed from time to
time not to be distributed to the Partners or needed for current
operations;
(iv) To prosecute, defend, settle or compromise any actions or
claims at the Partnership's expense as may be deemed necessary or
proper to enforce or protect the interests of the Partnership and to
satisfy any judgment or settlement;
(v) To establish reasonable reserve funds from any and all cash
funds of the Partnership to comply with the Partnership's current and
future loan covenants, to provide adequate working capital for the
operation of the Property and the business of the Partnership and to
address liabilities of the Partnership, contingent or otherwise;
(vi) To pay any and all organizational expenses or any other
expenses including all legal fees incurred for the benefit of the
Partnership; and (vii) To enter into, acknowledge and deliver, perform
and carry out contracts and agreements of every kind necessary or
incidental to the accomplishments of the foregoing.
7.2 ACTION TO BE TAKEN IN CONNECTION WITH ORGANIZATION. The General Partner
is specifically authorized to, and shall make all filings on behalf of the
Partners and the Partnership as specified in and pursuant to the power of
attorney provided by Section 8.4.
7.3 DEVOTION OF TIME. The General Partner (and its directors and officers)
shall devote such time to the Partnership business as is deemed necessary;
provided, however, that they shall not be required to devote their full, or,
even substantial, time to the Partnership's business. The General Partner (and
its directors and officers) may engage in other businesses of every nature and
description, independently and with others and the Partners shall not by reason
of this Agreement have any rights in any of said ventures or the income or
profits derived therefrom.
7.4 INDEMNIFICATIONS. The Partnership shall indemnify and hold harmless the
General Partner, the directors and officers of the General Partner and EPT and
each Partnership employee or agent against any and all claims, actions, demands,
losses, costs, expenses (including attorneys' fees), damages, and threat of
loss, as a result of any claim or legal proceeding relating to the performance
or non-performance of any act concerning the activities of the Partnership, or
in Furtherance of the Partnership's irltereCt.C; provided, however, the party
against whom the claim is made or legal proceeding is directed must not have
been guilty of fraud, gross negligence or willful misconduct; provided, further,
that such indemnity shall be satisfied only out of and to the extent of
Partnership assets, and no Limited Partner shall have any personal liability on
account thereof.
7.5 LIABILITY OF THE GENERAL PARTNER TO LIMITED PARTNERS.
(a) Except for the affirmative representations, warranties or
agreements of a General Partner and except in case of fraud, willful
misconduct or gross negligence, the doing of any act or the failure to do
any act by a General Partner (including any acts or failures to act in the
capacity as the tax matters partner), the effect of which may cause or
result in loss or damage to the Partnership or the Partners, if one in good
faith to promote the best interests of the Partnership, shall not subject
such General Partner to any liability to the Partners or the Partnership.
(b) The General Partner shall not be liable to the other Partners
except for acts of willful misconduct, FRAUD, BREACH OF FIDUCIARY duty,
breach of agreement or gross negligence.
7.6 REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE GENERAL PARTNER. The
General Partner represents and warrants to, and confirms and agrees with, the
other Partners hereto as follows:
(a) that it has full right, power and authority to execute and deliver
this Agreement and to perform each of its obligations hereunder;
(b) that it has duly executed and delivered this Agreement, and that
all action necessary to constitute this Agreement as its valid and binding
obligation has been taken, and this Agreement is duly binding in accordance
with its terms; it is not subject to any restriction or agreement which
prohibits or would be violated by the execution and delivery hereof or the
consummation of the transactions contemplated herein or pursuant to which
the consent of any third person, firm or corporation is required in order
to give effect to the transactions contemplated herein;
(c) that it will use its best efforts to cause the Partnership to
continue to meet the appropriate requirements so that the Partnership will
be classified as a limited partnership for federal income tax purposes
including without limitation the maintenance of sufficient net worth by the
General Partner in accordance with the Code, and will take all such other
action as will enable it to remain as a General Partner in the Partnership
and perform its obligations hereunder, provided that the General Partner
will not be responsible for adverse tax effects resulting from reliance
upon written opinions of counsel or accountants;
(d) that it will not allow a sale or exchange of more than 50% of
ownership in Partnership profits, losses, capital and other items during
any 12 month period;
(e) that it will, on behalf of the Partnership, make timely elections
to obtain, tax benefits granted by the Code. No election shall be made by
the Partnership, the General Partner or arty partici_r~ant to be excluded
Erom the application of the provisions of Subchapter K of the Code;
(f) that it will make the elections under Section 754 of the Code to
adjust basis of Partnership property in case of transfer of Partnership
Interests provided the terms and conditions set forth elsewhere in this
Agreement relating to such elections are satisfied;
(g) that it will use its best efforts to file proper documentation in
the State of New York and, when required, in other states in which the
Partnership transacts business or owns property in order to limit the
liability of Limited Partners and to enable the Partnership to conduct its
business;
(h) that it will cause the Partnership to appropriately pay all of its
debts and obligations from Partnership funds to the extent available;
(i) that it will not create any additional interests in the
Partnership for a General Partner or Limited Partner except as specifically
set forth herein; and.
(j) that no representation or warranty contained herein or in any
exhibit, written statement, certificate or document furnished or to be
furnished by the Partnership or it pursuant to this Agreement or in
connection with the transactions contemplated hereby will contain any
material untrue statement of a material fact or omits or will omit to state
a material fact necessary to make the statements contained herein or
therein not misleading.
7.7 LOANS BY GENERAL PARTNER. The General Partner shall have the right but
not the obligation to loan or advance to the Partnership such funds as are
necessary to achieve the Partnership's purposes. All such loans or advances
shall bear interest at the prime rate of interest charged by Chase Manhattan
Bank, plus two (2%) percent. Such loans shall be repaid out of Net Cash Flow
and/or Net Proceeds of Capital Transactions and/or Net Refinancing Proceeds
and/or Sale Proceeds as the General Partner shall determine prior to any
distributions to the Partners.
ARTICLE VIII
RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS
8.1 MANAGEMENT OF BUSINESS. Except as specifically provided in this
Agreement, the Limited Partners shall take no part in the management or control
of the business of the Partnership nor transact any business in the name of the
Partnership. Such Partners shall have no power to sign for or bind the
Partnership to any agreement or document. The Limited Partners shall not have
any liability with respect to the Partnership or the Partners except as stated
in Section 8.2 and Article IV.
8.2 LIMITATION ON LIABILITY OF LIMITED PARTNERS. The liability of each
Limited Partner shall be limited to his required additional Capital
Contribution, if any, pursuant to the terms of this Agreement. No such Partner
shall have any additional personal liability to contribute money to, or in
respect of, the liabilities or obligations of the Partnership, nor shall any
Limited Partner be personally liable for any obligations of the Partnership
except as may be required under law.
8.3 OTHER ACTIVITIES. The Limited Partners may engage in n _r pnssess
interests in other business ventures of every kind and description for their own
accounts, including, but not by way of limitation, the ownership or management
of office building projects, theater and entertainment complexes, shopping
center projects or apartment projects, developments or undertakings, and in so
doing they shall incur no liability to the Partnership or to any other Partner
as a result of engaging in any other business venture. Neither the Partnership
nor any of the Partners shall have any rights by virtue of this Agreement in and
to such independent business ventures or to the income or profits derived
therefrom.
8.4 POWER OF ATTORNEV TO GENERAL PARTNER.
(a) Each Limited Partner (including a Substitute Limited Partner)
hereby appoints and empowers the General Partner and any successor General
Partner as his true and lawful attorney-in-fact in such Limited Partner's
name, place, stead and behalf to sign, certify under oath, acknowledge,
record and file: (i) a Certificate of Limited Partnership and each and
every amendment or cancellation to the Certificate of Limited Partnership
which may be necessary, desirable or appropriate, (ii) whatever further
instruments may be necessary or appropriate to affect the substitution of a
Partner, and (iii) all other instruments required to carry out the
intention and purposes of this Agreement. The foregoing appointment by all
Limited Partners of the General Partner and any successor General Partner
as attorneys-in-fact or attorney-in-fact shall be deemed to be a power
coupled with an interest, shall be irrevocable and shall survive the
assignment by any Limited Partner of the whole or any part of his
Partnership Interest hereunder.
(b) Each Limited Partner authorizes such attorney-in-fact to take any
further action which such attorney-in-fact shall consider necessary or
advisable to be done in and about the foregoing, including the power of
consent to items (i), (ii) and (iii) above, as fully as such Limited
Partner might or could do if personally present, and hereby ratifying and
confirming all that such attorney-in-fact shall lawfully do or cause to be
done by virtue hereof. Each of the Limited Partners waives any and all
defenses which may be available to such Limited Partners to contest, negate
or disaffirm the actions of any General Partner under the power of attorney
herein granted.
(c) The foregoing power of attorney may be exercised by such
attorney-in-fact with or without listing all of the names of the Limited
Partners executing any agreement, certificate, instruction or documents
with the single signature of such attorney-in-fact acting as
attorney-in-fact for all of them.
8.5 CERTAIN RESTRICTED RIGHTS OF CLASS A LIMITED PARTNERS.
(a) Upon the withdrawal, dissolution, death, removal, adjudication of
incompetency or Bankruptcy of the last remaining General Partner, the Class
A Limited Partner shall have the right, but not the obligation, exercisable
within 30 days from notice of such withdrawal, dissolution, death,
adjudication of incompetency or Bankruptcy to designate a new General
Partner (the "Substituted General Partner") and to elect to continue the
Partnership's business, in a reconstituted form as herein provided, and
each Limited Partner hereby agrees to such continuation in the event such
election is made.
(b) Upon written request to the General Partner by the Class A Limited
Partner or the Class B Limited Partner, the General Partner shall call a
meeting or a vote, without a meeting, of the Limited Partners, as
requested.
(c) Any Limited Partner may request from the Partnership at any time a
list of the names, addresses and Limited Partnership Interest of all
Limited Partners.
ARTICLE IX
TRANSFERS OF LIMITED PARTNERSHIP INTERESTS
9.1 TRANSFER OF LIMITED PARTNERS' INTEREST. A Limited Partner may assign
the whole or any part of its economic interest in the Partnership to a legally
capable Person who is, or is lawfully empowered to become, a Limited Partner in
the Partnership in respect of such interest or such part thereof, only if prior
thereto:
(a) The General Partner is satisfied that the assignment will not
impair the ability of the Partnership to be taxed as a partnership;
(b) If requested by the General Partner, such Person furnishes an
opinion of counsel, satisfactory in form and substance to the Partnership's
counsel, to the effect that such assignment will not violate the Federal or
any State securities laws;
(c) Such Person represents that he is acquiring the interest for his
own account for investment and not with a view to the distribution thereof,
(d) Such Person agrees to comply with the terms of this Agreement and
to execute any and all documents that the General Partner may deem
necessary in connection with the assignment and substitution;
(e) If requested by the General Partner, each Person furnishes an
opinion of counsel satisfactory in form and substance to the Partnership's
counsel, that such assignment taken, together with other prior transfers
shall not result in a termination of the Partnership for Federal income tax
purposes; and
(f) The General Partner consents thereto, which consent can be
withheld unreasonably and arbitrarily except for a transfer to a Family
Member.
9.2 DEATH, BANKRUPTCY, OR INCOMPETENCE OF A LIMITED PARTNER. Upon the
death, Bankruptcy or adjudication of legal incompetency of a Limited Partner
(and, in the case of a Limited Partner that is a corporation, association,
partnership, joint venture or trust, the dissolution of such Limited Partner)
the Partnership shall not be dissolved and the personal representative, guardian
or other successor-in-interest of such Limited Partner shall have all of the
rights of such Limited Partner for the sole purpose of settling the estate or
business of such Limited Partner and shall be liable for all his liabilities and
obligations to the Partnership as a Limited Partner. In addition, such personal
representative, guardian or other successor-ininterest of such Limited Partner
shall have the right without satisfying Section 9.1 (f) to assign all of the
decedent's right and interest in his Limited Partnership Interest, but the
assignee shall not become a Substitute Limited Partner unless the conditions
provided in Section 9.3 are satisfied.
9.3 SUBSTITUTE LIMITED PARTNER. No assignee or transferee of a Limited
Partner shall become a Substitute Limited Partner unless, in addition to the
requirements specified in Section 9.1, all of the following conditions are
satisfied:
(a) the assigning or transferring Limited Partner so provides in the
instrument of assignment;
(b) the assignee or transferee executes such documents as the General
Partner may reasonably require so that he will be bound by all the
provisions of the Agreement, as it may then be amended, any Certificate of
Limited Partnership, as it may then be amended, and any other agreement
which the General Partner may reasonably require the Substitute Limited
Partner to be bound by;
(c) the assignee or transferee agrees to bear all costs and expenses,
including legal fees of the Partnership incurred in effecting such
substitution;
(d) the assignee or transferee shall have delivered to the Partnership
a letter containing the representations and agreements set forth in Section
9.9; and
(e) The General Partner shall consent thereto, which consent may be
withheld unreasonably and arbitrarily except for transfer to a Family
Member.
9.4 AMENDMENT FOR TRANSFER. Each Limited Partner hereby consents to the
execution and recordation on his behalf by the General Partner of any amendment
hereto and any amendment to the Certificate of Limited Partnership required for
the purpose of admitting as a Limited Partner the transferee of any Partnership
Interest in the Partnership as provided in this Article IX, and the execution
and recordation on his behalf of any other instruments required in connection
therewith, and the General Partners are hereby granted the right to admit such
transferee upon all of the terms set forth above. Each Limited Partner agrees to
execute at the request of the General Partners all documents necessary or
desirable to effect the transfer of any Partnership Interest in the Partnership
pursuant to this Article IX.
9.5 EXCHANGE RIGHTS.
(a) EXERCISE OF EXCHANGE RIGHTS. EPT does hereby grant to the Class B
Limited Partner and the Class B Limited Partner does hereby accept the
right, but not the obligation (hereinafter such right sometimes referred to
as the "Rights"), to convert all, and not less than all, of the Class B
Limited Partnership Interest into Shares or cash, as selected by EPT, at
any time or from time to time, on the terms and subject to the conditions
and restrictions contained in this Section 9.5. The Rights granted
hereunder may be exercised by the Class B Limited Partner, on the terms and
subject to the conditions and restrictions contained in this Article IX,
upon delivery to EPT of a notice of the Class B Limited Partner's (the
"Converting Partner") intention to exercise (an "Exercise Notice") the
Rights to convert the Class B Limited Partner's Interest (the "Offered
Interest"). Once delivered, the Exercise Notice shall be irrevocable,
except that the Class B Partner shall have the right to withdraw the
Exercise Notice within 10 days after EPT's notice that the Purchase Price
will be paid in cash, subject to payment. A Limited Interest in accordance
with the terms hereof, provided, that EPT may nullify any Exercise Notice
during a period not exceeding 180 days (the "Blackout Period") if EPT shall
deliver to the Converting Partner written notice (the "Nullification
Notice") that EPT has determined in good faith that any such conversion and
the sale of the Shares issued upon conversion would adversely affect an
offering or contemplated offering of any securities of EPT or any other
contemplated material corporate event or that there exists material
nonpublic information regarding EPT, provided, that EPT shall not commence
a Blackout Period more than one (1) time in any twelvemonth period.
Promptly after EPT determines in good faith that any conversion pursuant to
this Section 9.5 and the sale of the Shares issued upon conversion would
not adversely affect an offering or contemplated offering of any securities
of EPT or any other contemplated material corporate event or that the
material nonpublic information regarding EPT that caused the Blackout
Period no longer exists or is no longer nonpublic information, EPT shall
deliver to the Converting Partner whose Election Notice was nullified
pursuant to the preceding sentence written notice that the Blackout Period
has ceased (the "Nullification Rescission Notice"). For purposes of
determining the duration of each Blackout Period, each Blackout Period
shall be deemed to (A) commence on the first date on which EPT delivers the
first Nullification Notice with respect to the Blackout Period (the
"Initial Nullification Date"), and (B) terminate on the earlier of (I) the
first date on which EPT delivers a Nullification Rescission Notice with
respect to the applicable Nullification Notice (the "Nullification
Rescission Date"), or (II) the close of business on the 180th day following
the commencement of the Blackout Period. Upon expiration of the Blackout
Period, each Exercise Notice that was subject to the Blackout Period shall
be terminated and of no effect, and the Converting Partner shall be
required to deliver an additional Exercise Notice if such Converting
Partner wishes to exercise its Rights after the Blackout Period. If the
Converting Partner was not precluded from exercising its Rights under
Section 9.5(f) on the date the Exercise Notice was delivered, and such
Exercise Notice was nullified due to a Blackout Period, if the Converting
Partner delivers another Exercise Notice within ten (10) days after its
receipt of the Nullification Rescission Notice, the Converting Partner
shall have the right to exercise its Rights hereunder notwithstanding
Section 9.5(f).
In the event EPT elects to cause the Offered Interest to be converted
into cash, EPT shall effect such conversion by causing either the
Partnership to redeem the Offered Interest for cash or the Class A Limited
Partner to purchase the Offered Interest for cash.
The Converting Partner agrees that any information it receives
regarding the reason for the Blackout Period or the existence of a Blackout
Period is confidential information and may not be disclosed to any party
during the Blackout Period without the express written consent of EPT.
(b) LIMITATION ON EXERCISE OF RIGHTS. If an Exercise Notice is
delivered to EPT but, as a result of the limitation or restriction in the
charter of EPT, the Rights cannot be exercised in full for Shares, the
Exercise Notice, if the Purchase Price is to be payable in Shares, shall be
deemed to be modified such that the Rights shall be exercised for cash.
(c) COMPUTATION OF NUMBER OF SHARES ISSUED OR PURCHASE PRICE. If EPT
exchanges the Class B Limited Partnership Interest into Shares, the number
of Shares issued to the exchanging Converting Partner is equal to (i) the
Exchange Capital (defined below) attributable to the Class B Limited
Partnership interest converted divided by (ii) the greater of EPT Trading
Price or the EPT Net Book Value Per Share (the "Exchanged Shares"). If the
Partnership or the Class A Limited Partner shall pay cash for the Offered
Interests, the amount of cash paid shall equal the product of the Exchanged
Shares (as determined in accordance with the preceding sentence) times the
EPT Price (the "Purchase Price"). "Exchange Capital" shall mean the Initial
Capital Account, plus any additional capital contributions, less any
distributions made pursuant to Section 5.2(e), attributable to the Class B
Limited Partnership Interest to be converted, as adjusted pursuant to
Section 9.5(f).
(d) CLOSING. The closing of the acquisition or redemption of Offered
Interest shall, unless otherwise mutually agreed, be held at the principal
offices of EPT, on the date agreed to by EPT and the Converting Partner,
which date (the "Settlement Date") shall in no event be on a date which is
later than the later of (i) ten (10) days after the date of the Exercise
Notice and (ii) five (5) days after the expiration or termination of the
waiting period applicable to the Converting Partner, if any, under the
▇▇▇▇- ▇▇▇▇▇-▇▇▇▇▇▇ Act (the "HSR Act"). EPT agrees to use its best efforts
to obtain an early termination of the waiting period applicable to any such
acquisition, if any, under the HSR Act. Until the Settlement Date, the
Converting Partner shall continue to own its Offered Interest, and will
continue to be treated as the holder of such Offered Interest for all
purposes of this Agreement, including, without limitation, for purposes of
voting, consent, allocations and distributions. Offered Interests will be
transferred to EPT, the Class A Limited Partner or the Partnership, as
applicable, only upon receipt by the tendering Converting Partner of Shares
or cash in payment in full therefor.
(e) CLOSING DELIVERIES. At the closing of the purchase and sale or
redemption of Offered Interest, payment of the purchase price shall be
accompanied by proper instruments of transfer and assignment and by the
delivery of (i) representations and warranties of (A) the Converting
Partner with respect to its due authority to sell all of the right, title
and interest in and to such Offered Interest to EPT, the Class A Limited
Partner or the Partnership, as applicable, and with respect to the
ownership by of the Converting Partner of such Partnership Interest, free
and clear of all liens, and (B) EPT with respect to its due authority to
acquire such Interest for Shares or to cause the Class A Limited Partner or
the Partnership to redeem such Interest for cash and, in the case of
payment by Shares, (ii)(A) an opinion of counsel for EPT, reasonably
satisfactory to the Converting Partner, to the effect that such Shares have
been duly authorized, are validly issued, fully-paid and non-assessable,
and (B) a stock certificate or certificates evidencing the Shares to be
issued and registered in the name of the Converting Partner or its
designee.
(f) LIMITATIONS ON EXERCISE OF RIGHTS. Notwithstanding anything in
this Section 9.5 to the contrary (except the last sentence of the first
paragraph of Section 9.5(a)), (a) the Rights may not be exercised prior to
the third anniversary of the Effective Date, (b) the Rights may not be
exercised if there remains any amount due under the Minority Interest Loan
or unless such amount due is paid in full on the Settlement Date, and (c)
the Class B Limited Partner shall not have the right to exercise its Rights
under this Section 9.5 unless the Project NOI exceeds $8,900,000.00. If
Project NOI equals $8,900,000.00, for purposes of calculating the Exchange
Shares or Purchase Price, Exchange Capital of the Class B Limited Partner
shall be multiplied by a factor of 75%, which factor will proportionately
increase to 100% if Project NOI equals $10,000,000.00 or more. For example,
if (i) the Class B Limited Partner's Exchange Capital prior to adjustment
under this Section 9.5(f) was $10,000,000.00, and (ii) Project NOI for the
twelve completed months prior to the date of the Exercise Notice equals
$9,450,000.00, the Class B Limited Partner's Exchange Capital would be
multiplied by a factor of 87.5%, resulting in adjusted Exchange Capital of
$8,750,000.00.
9.6 BUY-SELL AGREEMENT. After the fifth anniversary of the Effective Date,
either the Class A Limited Partner or the Class B Limited Partner may give
notice to the other that it wishes to have the Partnership sell its assets and
liquidate. The Limited Partner exercising this option (the "Exercising Partner")
shall then be entitled to make an offer to purchase the assets of the
Partnership (the "Purchase Offer"). The other party (the "Receiving Partner")
may elect to accept the Purchase Offer or submit a higher offer for the purchase
of the assets of the Partnership, which the Exercising Partner shall either
accept or require that the Partnership sell its assets at the best available
price within 120 days, but shall not be entitled to require the Partnership to
sell at any price offered by any third party without giving the Receiving
Partner the right to purchase at that price. Notwithstanding the foregoing,
neither the Class A Limited Partner nor the Class B Limited Partner may give
notice of its wish to sell Partnership assets unless such Limited Partner
continues to own, at the time of such notice, at least 10% of the Limited
Partnership Interest issued to such Limited Partner on the Effective Date.
9.7 TAG-ALONG RIGHTS.
(a) If at any time a Limited Partner (the "Transferring Partner")
proposes the sale or other transfer of all or part of the Transferring
Partner's Limited Partner Interest to a Third Party (a "Covered
Transaction"), the other Limited Partner (the "Other Partner") shall have
the right (the "Tag-Along Right"), but not the obligation, to cause the
Transferring Partner to require the Offeror to purchase, on the same terms
offered to the Transferring Partner, from the Other Partner, at least all
of the Other Partner's Limited Partner Interest. For purposes of this
Section 9.7, a "Third Party" shall mean (i) a party that is not a Family
Member of the Transferring Partner, and (ii) (A) if the Transferring
Partner is the Class B Limited Partner, a party that is not controlled by
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, or (B) if the Transferring Partner is the Class A
Limited Partner, a party that is not controlled by EPT.
(b) Within five (5) business days after the decision to accept a
proposed Covered Transaction, the Transferring Partner will provide the
Other Partner and the Partnership with written notice (the "Tag-Along
Notice") of its intent to participate in a Covered Transaction and setting
forth all of the material terms and conditions of the Covered Transaction.
(c) If the Other Partner desires to exercise its Tag-Along Right, it
shall provide written notice (the "Tag-Along Exercise Notice") to the
Transferring Partner and the Partnership within thirty (30) days after the
date of the Tag-Along Notice informing them of its election to exercise its
Tag-Along Right. The Tag-Along Exercise Notice shall set forth the
percentage of the Limited Partner Interest owned by the Other Partner that
such Other Partner is willing to sell to the Third Party in connection with
the Covered Transaction (the "Tag-Along Percentage").
(d) In the event that the Third Party does not purchase the Limited
Partner Interests of the Transferring Partner, then the proposed transfer
of Limited Partner Interests by the Other Partner to the Third Party shall
not be allowed pursuant to this Agreement.
9.8 RIGHT OF FIRST REFUSAL.
(a) Subject to the terms and conditions set forth in this Section 9.8,
for so long as Class B Limited Partner continues to own at least 10% of the
Limited Partnership Interest issued to such Limited Partner on the
Effective Date (the "Right to Purchase Period"), the Partnership hereby
grants to the Class B Limited Partner a right of first refusal ("First
Refusal Right") relating to the purchase and sale of all or substantially
all of the assets of the Partnership. If, at any time during the Right to
Purchase Period, the Partnership desires to sell all or substantially all
of its assets (the "Subject Assets") to a third party (the "Proposed
Third-Party") pursuant to a bona fide offer consisting of cash and/or other
consideration having an aggregate value of less than $105,000,000 (a "Bona
Fide Offer"), the Partnership shall first deliver to the Class B Limited
Partner a written offer (the "Third Party Proposal"), which Third Party
Proposal shall describe the terms and conditions of the Bona Fide Offer,
including price, timing and other essential terms. The Third Party Proposal
shall disclose the identity of the Proposed Third-Party, together with any
proposed form agreement and any other material facts relating to the
proposed transaction.
(b) If the Class B Limited Partner elects to match the Bona Fide Offer
on the terms set forth in the Third Party Proposal, the Class B Limited
Partner shall deliver in writing its election to Partnership within fifteen
(15) days following the date the Class B Limited Partner received the Third
Party Proposal (the "Acceptance Date"). If the Class B Limited Partner does
not elect to match the terms of the Third Party Proposal, Partnership may,
within a period of one (1) year after the date of the delivery of the Third
Party Proposal, pursue the proposed transaction with the Proposed
Third-Party, upon the terms and conditions substantially consistent to
those included in the Third Party Proposal. The Class B Limited Partner
shall be notified in writing of any material change in the terms or
conditions of the Third Party Proposal, which notification shall be deemed
a new and separate Third Party Proposal which may be accepted by the Class
B Limited Partner pursuant to this Section 9.8(b).
(c) During the period following the date the Third Party Proposal was
received by the Class B Limited Partner and continuing until the Acceptance
Date, the Partnership shall provide the Class B Limited Partner access to
the Subject Assets, the Partnership's books and records related thereto and
its officers and employees with knowledge thereof during reasonable hours
for purposes of conducting a due diligence investigation regarding the
Subject Assets and the Bona Fide Offer.
(d) The closing of any sale of Subject Assets pursuant to this Section
9.8 to the Class B Limited Partner shall be determined by the Partnership
and the Class B Limited Partner (which, unless otherwise agreed, shall be
on the first business day following the sixtieth (60th) day after the
Acceptance Date).
9.9 INVESTMENT REPRESENTATION AND WARRANTIES OF THE LIMITED PARTNERS. Each
Limited Partner, by signing this Agreement, hereby represents and warrants to
the General Partner, the other Limited Partners and to the Partnership as
follows:
(a) That it has full right, power and authority to execute and deliver
this Agreement and to perform each obligation hereunder. This Agreement has
been duly executed and delivered by it or on its behalf and constitutes its
valid and binding obligation in accordance with its terms. It is not
subject to any restriction or agreement which prohibits, or would be
violated by, the execution and delivery hereof or the consummation of the
transactions contemplated herein or pursuant to which the consent of any
third person, firm or corporation is required in order to give effect to
the transactions contemplated herein.
(b) That its purchase is made as a principal for its sole account for
investment purposes only and not with a view toward the distribution of all
or any portion thereof and that under no circumstances will it sell,
transfer or assign all or any portion of its Limited Partnership Interest
except in compliance with the provisions of this Agreement, the Securities
Act of 1933, as amended (the "Securities Act") and applicable rules and
regulations promulgated thereunder, and state or local laws related thereto
and applicable rules and regulations promulgated thereunder.
(c) That it is relying on his own business and investment expertise as
well as his own representative and professional tax, legal and other
business advisors in making its decision to enter into and execute this
Agreement and make its investment in the Partnership.
(d) That it is aware of the restrictions on transfer of its interest
hereunder and under Federal and State securities laws and that the same
will at no time be freely transferable or assignable.
(e) That it has no reason to anticipate any change in circumstances,
financial or otherwise, which should cause it to sell or distribute, or
necessitate or require a sale or distribution of its Limited Partnership
Interest.
(f) That it is an accredited investor for Federal and State securities
law purposes.
(g) That it is familiar with the nature of, and risks attending,
investments in real estate and unregistered Securities.
ARTICLE X
TRANSFERS OF GENERAL PARTNERSHIP INTEREST
10.1 TRANSFERS OF GENERAL PARTNERSHIP INTEREST.
(a) The General Partner may not withdraw from the Partnership, nor
transfer, sell or assign any or all of its interest as a General Partner in
the Partnership, except that it may withdraw, transfer, sell or assign its
interest if, and only if, the Class A Limited Partner and the Class B
Limited Partner shall consent, in writing, thereto. In addition, the
following criteria, if applicable, must be satisfied:
(i) The transferee shall have accepted and agreed to be bound by
all the terms and provisions of this Agreement, by executing a
counterpart thereof, and such other documents or instruments as may be
required or appropriate in order to effect the admission of such
Person as a General Partner and a certificate evidencing the admission
of such Person as a General Partner shall have been filed for
recordation and all other actions required by the Agreement in
connection with such admission shall have been performed.
(ii) The substitute or additional General Partner shall have
provided the Partnership with evidence satisfactory to counsel for the
Partnership of its authority to become a General Partner and to be
bound by the terms and provision of the Partnership Agreement.
(iii) Counsel for the Partnership has rendered an opinion that
the withdrawal of the General Partner is in conformity with the
Partnership Act and any other applicable law of any state and that
none of the actions taken in connection with the admission of the
Substitute or additional General Partner will cause the termination or
dissolution of the Partnership for Federal income tax purposes; and
(iv) The counsel for the Partnership shall have delivered to the
Partnership an opinion that the Partnership will continue to be
classified as a partnership for Federal income tax purposes.
10.2 DEATH LIQUIDATION, DISSOLUTION, WITHDRAWAL, ADJUDICATION OF
INCOMPETENCY, BANKRUPTCY OR REMOVAL OF A GENERAL PARTNER.
(a) The Partnership shall terminate upon the death, liquidation,
dissolution, withdrawal, adjudication of incompetency, removal or
Bankruptcy of the last remaining General Partner, unless a Substituted
General Partner is appointed and accepts such position as provided for in
Section 8.5 of this Agreement.
(b) In the event that the Partnership is not terminated due to the
death, liquidation, dissolution, withdrawal, adjudication of incompetency,
removal or bankruptcy of a General Partner, such General Partner shall
thereafter be deemed to be a Limited Partner and such Partner (or his
trustee in bankruptcy, executors or administrators, successors, or assigns
or other personal or legal representative) shall thereafter be deemed to be
a Limited Partner provided, however, that all provisions with respect to
the distributive share of such Partner shall be interpreted as if such
interest had not been so converted. However, in the event that any such
withdrawal, liquidation or dissolution shall be in violation of this
Agreement, then such General Partner shall relinquish its interest in the
Partnership as damages, provided that any other remedy of the Partnership
and the other Partners against such General Partner shall survive. The
entire interest of such General Partner shall be reallocated to any
remaining or successor General Partner, if any, and the Limited Partners
(pro rata to their Partnership Interests) or as may otherwise be agreed
upon.
10.3 TRANSFEROR OF GENERAL PARTNERSHIP INTERESTS TO BEAR COSTS AND
EXPENSES. All costs and expenses incurred by the Partnership in connection with
any disposition of a Partnership p interest of a General Partner or any part
thereof pursuant to this Article and/or another Person becoming a Partner in the
Partnership in respect of such interest or each such part thereof, including any
filing, recording and publishing costs and the fees and disbursements of
counsel, shall be paid by the Partner disposing of such interest or such part
thereof.
10.4 REMOVAL OF A GENERAL PARTNER.
(a) A General Partner may be removed for Cause by the unanimous
approval of the Class A Limited Partner and the Class B Limited Partner
which approval shall not be unreasonably withheld. The removal of any
General Partner hereunder shall be effected by obtaining a court
determination that Cause exists and then by the sending of written notice
thereof to such General Partner. The effective date of such removal shall
be the date of the filing of appropriate amendments to the Certificate of
Limited Partnership and all other filings required to be made on behalf of
the Partnership with respect to the removal of such General Partner. The
removed General Partner hereby appoints any remaining or successor General
Partner as his attorney in fact to execute, acknowledge, and deliver any
document including the amendments to the Certificate of Limited Partnership
and Agreement of Limited Partnership to effectuate such removal. After the
General Partner's removal for Cause, such General Partner's interest in the
Partnership shall be deemed assigned to any successor General Partner, if
any, and the Limited Partners (pro rata to their Partnership Interests) or
as may otherwise be agreed upon. Such removed General Partner shall remain
liable for the acts resulting in his removal as well as all obligations or
liabilities not discharged or otherwise satisfied prior to the date he
ceased to be the General Partner.
(b) For purposes of this Paragraph, "Cause" shall mean fraud or
willful gross misconduct or a willful breach of a material obligation,
representation or warranty of the General Partner under the Partnership
Agreement unless cured within thirty (30) days of notice thereof.
ARTICLE XI
DISSOLUTION AND LIQUIDATION
11.1 EVENTS CAUSING DISSOLUTION. The Partnership shall be dissolved and its
affairs wound up upon the first to occur of the following:
(a) the expiration of the term provided for in Section 1.5 hereof,
(b) the death, withdrawal, liquidation, dissolution, bankruptcy,
adjudication of incompetency or removal of the last remaining General
Partner unless the Partnership's business is continued as provided in
Section 8.5 hereof,
(c) The General Partner and the Class A Limited Partner shall
determine that the Partnership should be dissolved;
(d) the sale or other disposition by the Partnership of all or
substantially all of its assets, unless the Partnership as part of the
consideration for any such sale or other disposition acquired a mortgage,
deed of trust, mortgage deed or lease on all or substantially all of the
Partnership assets, in which case the Partnership shall be dissolved
following the sate by it or satisfaction of its entire interest in such
mortgage, deed of trust, mortgage deed or lease; or
(e) any other event causing the dissolution of the Partnership under
the laws of New York unless provided otherwise herein.
11.2 WINDING UP AND DISSOLUTION.
(a) Upon the dissolution of the Partnership pursuant to Section 11.1,
the winding up of the Partnership business and the distribution of
Partnership assets shall be carried out with due diligence and in a timely
manner and consistent with the provisions of this Section and applicable
requirements of law.
(b) The remaining General Partner or if there is no General Partner
such responsible person as may be appointed shall be responsible for taking
all actions relating to the winding up and distribution of assets of the
Partnership. Such responsible Person or party as may be appointed, shall be
referred to hereinafter in this Section as the "Liquidator.," The
Liquidator shall file all certificates or notices of the dissolution of the
Partnership as required by law. Upon the complete liquidation and
distribution of the Partnership property and assets, the Partners shall
cease to be Partners of the Partnership, and the Liquidator shall execute,
acknowledge and cause to be filed all certificates and notices required by
law to terminate the Partnership.
(c) The Liquidator shall proceed without any unnecessary delay to sell
and otherwise liquidate the Partnership assets; provided, however, that if
the Liquidator shall determine that an immediate sale of part or all of the
Partnership assets would cause undue loss to the Partners, the Liquidator
may, in order to avoid such loss, defer the liquidation of the Partnership
assets for a reasonable time, except for such liquidations as may be
necessary to satisfy the debts and liabilities of the Partnership to
persons and parties other than the Partners. The Liquidator shall sell or
otherwise liquidate the Partnership assets at such prices and on such terms
as the Liquidator, in the exercise of its best judgment under the
circumstances then presented, deems in the best interest of the Partners.
The proceeds from the sale and liquidation of the Partnership assets shall
be distributed as provided in Section 11.3.
(d) Promptly following the complete liquidation and distribution of
the Partnership property and assets, the Partnership accountants shall
prepare, and the Liquidator shall furnish to each Partner, a statement
showing the manner in which the Partnership property and assets were
liquidated and distributed.
11.3 DISTRIBUTION.
(a) The net proceeds resulting from the liquidation of the assets of
the Partnership shall be distributed in the same manner set forth in
Section 5.2(a), and then to all Partners in proportion to their positive
Capital Account balances; provided however, if the Capital Account balances
of the Partners determined on a tentative basis (after giving effect to all
contributions, distributions and allocations for all periods), differ from
the amounts that would be distributed to them pursuant to the provisions of
Section 5.2 hereof, then notwithstanding anything to the contrary herein
(except the Regulatory Allocations and other allocations described in
Section 6.7), items of income, gain, loss and deduction shall be specially
allocated among the Partners by the General Partner for the fiscal year in
which the dissolution of the Partnership occurs (and, if necessary, prior
fiscal years) in order to conform the Capital Account balances of the
Partners to the amounts that would be distributed to them pursuant to the
provisions of Section 5.2.
(b) Notwithstanding the foregoing, if any Partner shall be indebted to
the Partnership, then, until payment of such indebtedness by said Partner,
the liquidator(s) shall retain such Partner's distributive share of the
Partnership properties and assets and, after applying the cost of operation
of such properties and assets during the period of such liquidation against
the income therefrom, the balance of such income shall be applied in
liquidation of such indebtedness. However, if at the expiration of two (2)
months after notice of such outstanding indebtedness has been given to such
Partner, such amount has not been paid or otherwise liquidated in full, the
Liquidator may sell the assets allocable to such Partner at public or
private sale at the best price immediately obtainable, such best price to
be determined in the sole judgment of the Liquidator. As much of the
proceeds of such sale as shall be necessary to liquidate such indebtedness
shall then be so applied, and the balance of such proceeds, if any, shall
be distributed to such Partner. Any gain or loss realized for federal
income tax purposes upon the disposition of such assets shall, to the
extent permitted by law, be allocated to such Partner, and to the extent
not so permitted, to the Partners in accordance with Article VI hereof.
11.4 LIMITATION OF LIABILITY OF PARTNERS. Upon the dissolution of the
Partnership and the distribution of the net proceeds pursuant to Section 11.3,
each Limited Partner shall look solely to the property and assets of the
Partnership for the return of his capital and if the Partnership property and
assets remaining after the payment or discharge, of the debts and liabilities of
the Partnership are insufficient to return the full amount of the capital of
each Limited Partner, such Limited Partner shall have no recourse or claim
against the General Partner or against any other Limited Partner.
ARTICLE XII
BOOKS AND RECORDS ACCOUNTING, TAX ELECTIONS AND RELATED MATTERS
12.1 BOOKS AND RECORDS. At all times during the continuance of the
Partnership, the General Partner shall keep or cause to be kept full and true
books of account, in which shall be entered fully and accurately all
transactions of the Partnership. All of the said books of account, together with
this Agreement and any certificate of the Partnership, as amended, shall be
maintained at an office of the Partnership and shall be open to the inspection
of all Partners or their duly designated representatives upon reasonable prior
written notice and during normal business hours. There shall be no requirement
to send a copy of the Certificate of Limited Partnership or any amendment
thereto to the Limited Partners.
12.2 BANK ACCOUNTS. All funds of the Partnership shall be deposited in its
name in such bank or brokerage cash account or accounts as shall be designated
by the General Partner. Withdrawals shall be made only in the regular course of
business by check signed by at least two of the officers of the General Partner
or such other person designated by the General Partner.
12.3 ACCOUNTANTS' DETERMINATION. All determinations of accounting matters
hereunder, including but not limited to, determinations of Net Cash Flow, Sale
Proceeds, Capital Transactions Proceeds, and Refinancing Proceeds shall be made
by the General Partner upon the advice of the then regularly retained
accountants of the Partnership. The accountants for the Partnership shall be
selected by the General Partner.
12.4 REPORTS TO LIMITED PARTNERS.
(a) The General Partner, at the Partnership's expense, shall cause the
Partnership's independent certified public accountants to prepare financial
statements of the Partnership and such other information as may be
necessary for each Partner to prepare his own tax return. The General
Partner shall use its best efforts to deliver such information to all who
were Partners at any time during the year.
(b) The General Partner at the Partnership's expense, shall for each
fiscal year cause to be prepared and filed on behalf of the Partnership a
Partnership tax return for Federal income tax purposes within the time
prescribed by law (including extensions) for such filing. The General
Partner shall also cause to be prepared and filed, on behalf of the
Partnership, such state and/or city income tax returns as may be required
by law.
12.5 ALLOCATION UPON TRANSFER OF PARTNERSHIP INTEREST. In the event of a
transfer of a Partnership Interest at any time other than at the end of an
accounting period of the Partnership, the various items of Partnership income,
gain, loss, deduction, credit, allowance or tax preference as computed for
Federal and state income tax purposes shall be allocated to the transferee as of
the first day of the month during which such transfer shall take place or in
such other manner as agreeable to the parties and allowable under the Code;
provided, however, that all such items which arise from a Capital Transaction or
Sale shall be allocated to the person who was the owner of such Partnership
Interest at the time such Capital Transaction or Sale was consummated. It is
understood and agreed that in the event of such a transfer, the Partnership
shall not be required to prepare financial statements other than as of the end
of a Partnership accounting period.
12.6 BASIS ADJUSTMENT. In the event of a transfer of an interest in and to
the Partnership, its capital, income and losses, or the distribution of any
Partnership assets to a Partner, the General Partner, upon the request of the
transferee or distributee, as the case may be, shall elect on behalf of the
Partnership under Section 754 of the Code to cause the basis of the
Partnership's property to be adjusted, for federal income tax purposes, in the
manner provided in Sections 734 or 743 of the Code, as the case may be. At the
General Partner's option the Partnership also may elect to adjust the basis of
its property pursuant to corresponding provisions of state and local tax laws.
Notwithstanding the foregoing, the General Partner shall have no obligation to
make an election under Section 754 upon the death of a Partner until and unless
the representative of such Partner shall present an appraisal prepared by an
appraiser satisfactory to the General Partner. The cost of such appraisal shall
be borne by the representative of the Limited Partner.
12.7 TAX CONSIDERATIONS. Except as otherwise specifically provided in this
Agreement, all tax elections, determinations and allocations to be made
hereunder or under the Code or any applicable state or local tax laws shall be
made by the General Partner, after consultation with the Partnership's
accountants and legal counsel, and all such elections, determinations and
allocations made by the General Partner shall be final and binding upon all
Partners and their representatives. The tax matters partner shall be the General
Partner.
ARTICLE XIII
MEETINGS, VOTING AND AMENDMENTS
13.1 MEETINGS. A meeting of the Partners of the Partnership may be called
by the General Partner at any time. The General Partner may also call for a
vote, without a meeting of the Limited Partners, on matters on which the Limited
Partners are entitled to vote. Written notice stating the place and time of the
meeting, or of the date on which the votes shall be counted, and the purpose of
the meeting or the matter to be voted upon, shall be sent by the General Partner
to each Partner at least ten (10) days before the meeting or date on which the
votes are to be counted. The General Partner shall call for a meeting or a vote
without a meeting upon the written request of the Class A Limited Partner or the
Class B Limited Partner.
13.2 VOTING.
(a) A Limited Partner who is entitled to vote shall be entitled to
vote (i) at a meeting, in person, by written proxy or by a signed writing
directing the manner in which, he desires that his vote be cast, which
writing must be received by a General Partner prior to such meeting, or
(ii) without a meeting, by a signed writing directing the manner in which
he desires that his vote be cast, which writing must be received by a
General Partner prior to the date upon which the votes of Limited Partners
are to be counted.
(b) Only the votes of Limited Partners of record on the date notice of
vote was sent whether at a meeting or otherwise shall be counted. The laws
of the State of New York pertaining to the validity and use of corporate
proxies, to the extent they are applicable, shall govern the validity and
use of proxies given by the Limited Partners, except that any submission by
the General Partners for the vote of the Limited Partners by proxy may
provide that if a proxy is not returned to the General Partners by the date
of the meeting or the date on which the votes are to be counted, it will be
deemed to be a proxy from the Limited Partner concerned to the General
Partners, to vote his Partnership Interest for or against all matters
properly brought forward for a vote in the discretion of the General
Partners. Proxies and written votes of the Limited Partners shall be mailed
to the Partnership in the manner of giving notices pursuant to Section 14.1
of Article XIV.
13.3 AMENDMENTS.
(a) Amendments to this Agreement may be proposed by the General
Partner. A proposed amendment shall be adopted and effective if approved by
the unanimous vote, to be obtained in the manner provided above, of the
Class A Limited Partner and the Class B Limited Partner; provided, however,
that no amendment shall become effective (i) which is in contravention of
the Partnership Act, (ii) which in the opinion of the Partnership's legal
counsel would cause the Partnership to be treated for Federal incoine tax
purposes as an "association taxable as a corporation", (iii) which in the
opinion of the Partnership's legal counsel would cause a Limited Partner to
become liable as a general partner or (iv) which increases the liability or
agreed upon Capital Contribution, reduces the income or loss ratio or share
of distribution of any Limited Partner or changes or modifies any warranty
or representation of any Limited Partner without his prior written consent
thereto unless such amendment is specifically authorized by this Agreement.
(b) Notwithstanding any other provision of this Agreement to the
contrary, the General Partner shall have the power to amend this Agreement,
without the consent of any Limited Partner (i) to add to the
representations, duties or obligations of the General Partner for the
benefit of the Limited Partners, (ii) to make any technical tax amendments
to this Agreement, which, in the opinion of the Partnership's independent
certified public accountants and legal counsel, to not have a substantive
effect on the operations of the Partnership and the rights and obligations
of the Partners pursuant to this Agreement, and (iii) to amend any
documents to reflect the admission, or withdrawal of a Limited Partner or
General Partner in accordance with this Agreement.
ARTICLE XIV
GENERAL PROVISIONS
14.1 NOTICES. Any and all notices or other communications required or
permitted by the terms of this Agreement to be sent to the General Partners
shall be sent to their addresses as reflected in the records, of the
Partnership. Any and all such notices or other communication to any Limited
Partner shall be sent to the address of such Limited Partner appearing in the
records of the Partnership. All such notices and other communications shall be
sent by registered or certified mail, return receipt requested. Any Limited
Partner may change his address by giving notice to the General Partners of his
new address. A General Partner may change its address by giving notice to all
other Partners. A properly sent notice shall be deemed received on the third
business day after the date of the postmark or such marking.
14.2 WAIVER OF PARTITION. Each party does hereby waive the right to
partition or the right to take any other action which might otherwise be
available to such party for the purpose of severing his relationship with the
Partnership or such party's interest in the property held by the Partnership
from the interests of the other parties until the end of the term of the
Partnership.
14.3 GENDER. Wherever used herein, the masculine, feminine and neuter
pronouns shall be fully interchangeable, and the singular shall include the
plural where the context so requires.
14.4 SEVERABILITY. Every provision of this Agreement is intended to be
severable. If any term or provision hereof is illegal, invalid or in conflict
with any existing or future law or the purpose of this Agreement, for any reason
whatsoever, such term or provision shall be ineffectual and void, and the
validity of the remainder of this Agreement shall not be affected thereby.
14.5 LITIGATION. The General Partner sh ail prosecute and defend such
actions at law or in equity as may be necessary to enforce or protect the
interests of the Partnership. The Partnership and the General Partner shall
respond to any final decree, judgment or decision of any court, board or
authority having jurisdiction in the matter. The General Partners shall satisfy
any such judgment, decree or decision first out of any insurance proceeds
available therefore, next out of the assets of the Partnership, and finally out
of the assets of the General Partner.
14.6 RIGHT TO RELY UPON THE AUTHORITY OF THE GENERAL PARTNER. No person
dealing with the General Partner shall be required to determine its authority to
make any commitment or undertaking on behalf of the Partnership, nor to
determine any fact or circumstance bearing upon the existence of its authority.
In addition, no purchaser of any asset owned by the Partnership shall be
required to determine the sole and exclusive authority of the General Partner to
sign and deliver on behalf of the Partnership any such instrument of transfer,
or to see the application or distribution of revenues or proceeds paid or
credited in connection therewith, unless such purchasers shall have received
written notice from the Partnership regarding the same.
14.7 RIGHT TO RELY UPON AUTHORITY OF PERSON SIGNING AGREEMENT. In the event
that a Limited Partner is a trust (with or without disclosed beneficiaries),
partnership, limited partnership, joint venture, corporation, or any other
entity other than a natural person, the Partnership and the General Partner
shall (a) not be required to determine the authority of the person signing the
Agreement or any amendment hereto, to make any commitment or undertaking on
behalf of such entity, nor to determine any fact or circumstance on behalf of
such entity, nor to determine any fact or circumstance bearing upon the
existence of his authority, (b) not be required to see to the application or
distribution of revenues or proceeds paid or credited to the person signing the
Agreement or any amendment hereto on behalf of such entity; (c) be entitled to
rely on the authority of the person signing the Agreement or any amendment
hereto with respect to the voting of the interest of such entity and with
respect to the giving of consent on behalf of such entity in connection with any
matter for which consent is permissible or required hereunder; and (d) be
entitled to rely upon the authority of any general partner, manager, joint
venturer, co-trustee or successor trustee, or president or vice president (as
the case may be) of any such entity the same as though such person were the
person originally signing the Agreement or any amendment hereto on behalf of
such entity.
14.8 ENTIRE AGREEMENT. This Agreement contains the entire understanding
among the parties and supersedes all prior agreements and understandings
relating to the Partnership. There are no representations, agreements or
understandings, oral or written, relating to the subject matter hereof which are
not fully expressed herein.
14.9 INTERPRETATION. This Agreement and the rights and liabilities of the
parties hereunder shall be construed under the laws of the State of New York,
including the Partnership Act, as amended from time-to-time. To the extent the
provisions herein shall be contrary or otherwise modify or alter the provisions
of the Partnership Act, this Agreement shall supersede the Partnership Act.
14.10 BINDING EFFECT. This Agreement shall extend to and be binding upon
the parties hereto and their respective heirs, executors, administrators,
personal representatives and, to the extent that any assignment shall have been
made pursuant to the terms hereof, their assigns.
14.11 EXECUTION IN COUNTERPARTS. This Agreement may be executed in
counterparts each of which shall be deemed an original but which shall
constitute one agreement binding on all of the parties.
14.12 TITLES AND HEADINGS. Article and Section headings and titles and any
table of contents in this Agreement are for convenience of reference only, and
shall not control or alter the meaning of this Agreement as set forth in the
text.
ARTICLE XV
CERTAIN DEFINED TERMS
15.1 DEFINED TERMS. As used herein, the following terms shall have the
following meanings:
(a) "Adjusted Capital Account Deficit" means, with respect to any
Partner, the deficit balance, if any, in such Partner's Capital Account as
of the end of the relevant year, after giving effect to the following
adjustments:
(i) Credit to such Capital Account any amounts which such Partner
is deemed to be obligated to restore pursuant to the penultimate
sentences in Sections 1.704-2(g)(1) and 1.704-2(i)(5) of the
Regulations; and
(ii) Debit to such Capital Account the items described in
Sections 1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5) and
1.704-1(b)(2)(ii)(d)(6) of the Regulations.
The foregoing definition of Adjusted Capital Account Deficit is
intended to comply with the provisions of Section 1.704-1(b)(2)(ii)(d) of
the Regulations and shall be interpreted consistently therewith.
(b) "Bankruptcy" shall mean, as to a specified Person, its filing a
petition in bankruptcy, a filing of such a petition against it which is not
dismissed within 120 days, its making of a general assignment for the
benefit of creditors, its consenting to an appointment of a receiver for a
substantial part of its property, a court appointment of such a receiver
which is. not vacated, or stayed within 120 days or the sequestration by a
court of competent jurisdiction of substantially all of its assets.
(c) "Capital Account" shall mean the capital account maintained for
each partner in accordance with Treasury Regulation 1.704-1(b).
(d) "Capital Contribution" shall mean the total capital contributed to
the Partnership by a Partner, as and when contributed.
(e) "Capital Expenditures" shall mean the amount for replacements and
capital repairs to the Property (including repairs to, and replacements of,
structural components, roofs, building systems, parking garages and parking
lots, in each case to the extent expenditures are approved within the
budget or consented to by the Partnership and in respect thereof are
capitalized in accordance with GAAP, plus any net increase in cash reserves
from the beginning of the applicable period, and minus any net decrease in
cash reserves from the beginning of the applicable period.
(e) "Capital Transaction" shall mean a sale, exchange or other
disposition of less than substantially all of the Property, the sale of
easement rights or similar interests in the Property and any other
transactions (such as fire or casualty damage) which are attributable to
the capital of the Partnership but after which the Partnership continues to
conduct its activities on a substantial basis.
(f) "Capital Transactions Proceeds" shall mean the proceeds received
by the Partnership attributable to a Capital Transaction.
(g) "Class A Preferred Return" shall mean a cumulative (noncompounded)
return equal to ten and 142/1000 percent (10.142%) per annum, based on the
Invested Class A Capital of the Class A Limited Partner, commencing on the
Effective Date.
(h) "Class B Preferred Return" shall mean a cumulative (noncompounded)
return equal to eight percent (8%) per annum, based on the Invested Class B
Capital of the Class B Limited Partner, commencing on the Effective Date.
(i) "Code" shall mean the United States Internal Revenue Code of 1986,
as amended, and the Regulations promulgated thereunder and any
corresponding provisions of subsequent law.
(j) "Depreciation" means, for each year, an amount equal to the
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, 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, however, that if the
adjusted basis for federal income tax purposes of an asset at the beginning
of 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.
(k) "EPT" shall mean Entertainment Properties Trust, a Maryland real
estate investment trust.
(1) "EPT Net Book Value Per Share" shall mean the [net book value per
Share], as disclosed on EPT's Form 10-Q or Form 10-K most recently filed
prior to the date of determination thereof with the Securities and Exchange
Commission.
(m) "EPT Trading Price" shall mean the average closing price of the
Shares for the thirty trading days immediately prior to the Exercise
Notice; provided, however, if and to the extent the Exercise Notice is
given with respect to Subject Shares within six (6) months after the
expiration of the applicable Blackout Period, then "EPT Trading Price"
shall mean the average closing price of the Shares for the thirty trading
days immediately prior to the nullified Exercise Notice. "Subject Shares"
shall mean Shares issuable pursuant to Section 9.5 of this Agreement for
which an Exercise Notice had been previously nullified pursuant to Section
9.5 due to a Blackout Period.
(n) "Excess Capital Amount" means (a) for the Class A Limited Partner,
the amount by which such Partner's Capital Account exceeds the Total Class
A Preference Amount, (b) for the Class B Limited Partner, the amount by
which such Partner's Capital Account exceeds the Total Class B Preference
Amount, and (c) for the General Partner, the positive balance in such
Partner's Capital Account.
(o) "Family Members" shall mean spouse, parents, children,
grandchildren and siblings.
(p) "First Class A Preference Amount" is defined in Section 6.1(a).
(q) "First Class B Preference Amount" is defined in Section 6.1(b).
(r) "GACC" means German American Capital Corporation, and its
successors or assigns. "
(s) GACC Loan Agreement" means that certain Loan and Security
Agreement, dated as of April 12, 2002, between the Partnership and GACC, as
lender.
(t) "Gross Asset Value" means with respect to any asset, the asset's
adjusted basis for federal income tax purposes, except as follows:
(i) 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 determined by the General Partner, provided that the
initial Gross Asset Values of the assets owned by the Partnership
immediately after the Effective Date shall be as set forth on Schedule
A.
(ii) The Gross Asset Values of all Partnership assets shall be
adjusted to equal their respective gross fair market values (taking
Code Section 7701(g) into account), as determined by the General
Partner as of the following times: (A) the acquisition of an
additional interest in the Partnership by any new or existing Partner
in exchange for more than a de minimis Capital Contribution; (B) the
distribution by the Partnership to a Partner of more than a de minimis
amount of Partnership property as consideration for an interest in the
Partnership; and (C) the liquidation of the Partnership within the
meaning of Regulations Section 1.704-1(b)(2)(ii)(g), PROVIDED that an
adjustment described in clauses (A) and (B) of this paragraph shall be
made only if the General Partner reasonably determines that such
adjustment is necessary to reflect the relative economic interests of
the Partners in the Partnership; and
(iii) The Gross Asset Value of any item of Partnership assets
distributed to any Partner shall be adjusted to equal the gross fair
market value (taking Code Section 7701(g) into account) of such asset
on the date of distribution as determined by the General Partner; and
(iv) The Gross Asset Values of Partnership assets shall be
increased (or decreased) to reflect any adjustments to the adjusted
basis of such assets pursuant to Code Section 734(b) or Code Section
743(b), but only to the extent that such adjustments are taken into
account in determining Capital Accounts pursuant to Regulations
Section 1.704-1(b)(2)(iv)(m) and subparagraph (vi) of the definition
of "Net Income" and "Net Losses" or Section 6.6(g) hereof, provided,
however, that Gross Asset Values shall not be adjusted pursuant to
this subparagraph (iv) to the extent that an adjustment pursuant to
subparagraph (ii) is required in connection with a transaction that
would otherwise result in an adjustment pursuant to this subparagraph
(iv).
If the Gross Asset Value of an asset has been determined or
adjusted pursuant to subparagraph (ii) or (iv), such Gross Asset Value
shall thereafter be adjusted by the Depreciation taken into account
with respect to such asset, for purposes of computing Net Income and
Net Losses.
(u) "Initial Capital Account" shall mean, for each Partnership
Interest, the amount set forth therefore in Schedule A, which shall be the
Capital Account for such Partnership Interest as of the Effective Date.
(v) "Invested Class A Capital" shall mean with respect to the Class A
Limited Partner, the Initial Capital Account of such Partner, reduced by
any distributions previously made to such Partner pursuant to Section
5.2(d). If at any time during the term of the Partnership, the "Invested
Class A Capital" of the Partner shall have been reduced to zero, "Invested
Class A Capital" thereafter shall be calculated with respect to such
Partner only by considering such Partner's subsequent Capital Contributions
and subsequent distributions pursuant to Section 5.2(d).
(w) "Invested Class B Capital" shall mean with respect to the Class B
Limited Partner, the Initial Capital Account of such Partner, reduced by
any distributions previously made to such Partner pursuant to Section
5.2(e). If at any time during the term of the Partnership, the "Invested
Class B Capital" of the Partner shall have been reduced to zero, "Invested
Class B Capital" thereafter shall be calculated with respect to such
Partner only by considering such Partner's subsequent Capital Contributions
and subsequent distributions pursuant to Section 5.2(e).
(x) "Minority Interest Loan" shall mean any loan made by EPT to the
Class B Limited Partner pursuant to the Loan Agreement, by and between EPT
and the Class B Limited Partner, dated as of the Effective Date.
(y) "Net Cash Flow" shall mean the available cash of the Partnership
(including proceeds of Class A Loans and Class B Loans) after debt service
plus the net reduction in the amount of any reserves or escrows minus (i)
the amount of cash set aside for reserves; and (ii) any other cash
expenditures or escrows which were not funded by borrowings or capital
contributions. Net Cash Flow shall not include Sales Proceeds, Capital
Transaction Proceeds or Refinancing Proceeds.
(z) "Net Income" and "Net Losses" mean, for each year, an amount equal
to the Partnership's taxable income or loss for such year, determined
accordance with Code Section 703(a) (for this purpose, all items of income,
gain, loss, or deduction required to be stated separately pursuant to Code
Section 703(a)(1) shall be included in taxable income or loss), with the
following adjustments (without duplication):
(i) Any income of the Partnership that is exempt from federal
income tax and not otherwise taken into account in computing Net
Income or Net Losses pursuant to this definition of "Net Income" and
"Net Losses" shall be added to such taxable income or loss;
(ii) Any expenditures of the Partnership described in Code
Section 705(a)(2)(B) or treated as Code Section 705(a)(2)(B)
expenditures pursuant to Regulations Section 1.704-1(b)(2)(iv)(i), and
not otherwise taken into account in computing Net Income or Net Losses
pursuant to this definition of "Net Income" and "Net Losses" shall be
subtracted from such taxable income or loss:
(iii) In the event the Gross Asset Value of any Partnership asset
is adjusted pursuant to subparagraphs (ii) or (iii) of the definition
of Gross Asset Value, the amount of such adjustment shall be treated
as an item of gain (if the adjustment increases the Gross Asset Value
of the asset) or an item of loss (if the adjustment decreases the
Gross Asset Value of the asset) from the disposition of such asset and
shall be taken into account for purposes of computing Net Income or
Net Losses;
(iv) Gain or loss resulting from any disposition of property with
respect to which gain or loss is recognized for federal income tax
purposes shall be computed by reference to the Gross Asset Value of
the property disposed of, notwithstanding that the adjusted tax basis
of such property differs from its Gross Asset Value;
(v) 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 year, computed in accordance with the definition of Depreciation;
(vi) To the extent an adjustment to the adjusted tax basis of any
Partnership asset pursuant to Code Section 734(b) is required,
pursuant to Regulations Section 1.704-(b)(2)(iv)(m)(4), to be taken
into account in determining Capital Accounts as a result of a
distribution other than in liquidation of a Partner's interest in the
Partnership, the amount of such adjustment 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) from the disposition of such
asset and shall be taken into account for purposes of computing Net
Income or Net Losses; and
(vii) Notwithstanding any other provision of this definition, any
items which are specially allocated pursuant to Section 6.6 or Section
6.7 hereof shall not be taken into account in computing Net Income or
Net Losses.
The amounts of the items of Partnership income, gain, loss or
deduction available to be specially allocated piirs,,a,,t to Sections
6.6 and 6.7 hereof shall be determined by applying rules analogous to
those set forth in subparagraphs (i) through (vi) above.
(aa) "Nonrecourse Deductions" has the meaning set forth in Section
1.704-2(b)(1) of the Regulations.
(bb) "Nonrecourse Liability" has the meaning set forth in Section
1.704-2(b)(3) of the Regulations.
(cc) "Operating Percentage Interests" shall mean:
(i) prior to the Refinancing Date, 1% for the General Partner,
49% for the Class A Limited Parffi~er and 50% for the Class B Limited
Partner;
(ii) after the Refinancing Date, and until the Trigger Level has
been reached for the Partnership's fiscal year which includes the
period for which the distribution is made, 1% for the General Partner,
84% for the Class A Limited Partner and 15% for the Class B Limited
Partner; and (iii) after the Refinancing Date, and after the Trigger
Level has been reached for the applicable fiscal year, 1 % for the
General Partner, 59% for the Class A Limited Partner and 40% for the
Class B Limited Partner.
(dd) "Partner Nonrecourse Debt" has the same meaning as the term
"partner nonrecourse debt" in Section 1.704-2(b)(4) of the Regulations.
(ee) "Partner Nonrecourse Debt 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 Section 1.704-2(i)(3)
of the Regulations.
(ff) "Partner Nonrecourse Deductions" has the same meaning as the term
"partner nonrecourse deductions" in Sections 1.704-2(i)(1) and
1.704-2(i)(2) of the Regulations.
(gg) "Partnership Minimum Gain" has the meaning given the term
"partnership minimum gain" in Sections 1.704-2(b)(2) and 1.704-2(d) of the
Regulations.
(hh) "Person" shall mean any individual, general partnership, limited
partnership, corporation, joint ventures, trust, business trust,
cooperative or association and the heirs, executors, administrators,
successors and assigns thereof, where the context so admits.
(ii) "Project NOI" shall mean the net operating income of the
Partnership for the last twelve full calendar months prior to the date of
determination, determined in accordance with generally accepted accounting
principles.
(jj) "Refinancing" shall mean a refinancing, recasting, modification,
alteration or any other event relating to the Property resulting in a
principal balance owed by the Partnership in excess of $66,000,000.00.
(kk) "Refinancing Date" shall mean the first date in which all of the
existing debt owed to GACC pursuant to the GACC Loan Agreement is converted
to a fixed rate loan.
(11) "Refinancing Proceeds" shall mean the proceeds received by the
Partnership attributable to a Refinancing.
(mm) "Regulations" means the income tax regulations, including
temporary regulations, promulgated under the Code, as such regulations are
amended from time to time.
(nn) "Regulatory Allocations" has the meaning set forth in Section 6.7
hereof.
(oo) "Residual Percentage Interest" shall mean 1.0% for the General
Partner, 70.4% for the Class A Limited Partner and 28.6% for the Class B
Limited Partner.
(pp) "Sale" shall mean a sale of all or substantially all of the
Property.
(qq) "Sale Proceeds" shall mean the proceeds received by the
Partnership attributable to a Sale.
(rr) "Shares" shall mean shares of Common Stock of EPT.
(ss) "Total Class A Preference Amount" is defined in Section 6.1(c).
(tt) "Total Class B Preference Amount" is defined in Section 6.1(d).
(uu) "Trigger Date" is defined in Section 6.1(e).
(vv) "Undistributed Class A CAPEX Deduction" means an amount equal to
the aggregate of all Class .A CAPEX Deductions actually resulting in a
reduction of undistributed Class A Preferred Return pursuant to Section
5.1(a), less all prior distributions made to the Class A Partner pursuant
to Section 5.1(c)(i).
(ww) "Undistributed Class B CAPEX Deduction" means an amount equal to
the aggregate of all Class B CAPEX Deductions actually resulting in a
reduction of Undistributed Class A Preferred Return pursuant to Section
5.1(b), less all prior distributions made to the Class B Partner pursuant
to Section 5.1(c)(ii).
(xx) "Undistributed Class A Preferred Return" means an amount equal to
the Class A Preferred Return accrued for all periods to the date the
Undistributed Class A Preferred Return is being determined, less all Class
A CAPEX Deductions and all prior distributions made to the Class A Limited
Partner pursuant to Sections 5.1(a) and 5.2(b), provided that the deduction
for distributions made under Sections 5.1(a) and 5.2(b) shall not result in
the Undistributed Class A Preferred Return for any quarter during such
period being less than zero.
(yy) "Undistributed Class B Preferred Return" means an amount equal to
the Class B Preferred Return accrued for all periods to the date the
Undistributed Class B Preferred Return is being determined, less all Class
B CAPEX Deductions and all prior distributions made to the Class B Limited
Partner pursuant to Sections 5.1(b) and 5.2(c), provided that the deduction
for distributions made under Sections 5.1(b) and 5.2(c) shall not result in
the Undistributed Class B Preferred Return for any quarter during such
period being less than zero.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
GENERAL PARTNER AND CLASS A LIMITED
PARTNER
EPT NEW ROC, LLC
By:
--------------------------------
Name:
Title:
CLASS B LIMITED PARTNER
LC NEW ROC LP, LLC
By:
--------------------------------
Name:
Title:
The Obligations under Section 9.5
Agreed and Accepted by:
ENTERTAINMENT PROPERTIES TRUST
By:
-------------------------------
Name:
Title:
The Provisions of Section 3.1 are
Agreed and Accepted by:
LC NEW ROC, INC.
By:
--------------------------------
Name:
Title:
SCHEDULE A
LIST OF PARTNERS
GENERAL INITIAL CAPITAL
PARTNER ACCOUNT
EPT New Roc, Inc. $350,000
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇
CLASS A
LIMITED PARTNER
EPT New Roc, Inc. $24,650,000
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇
CLASS B
LIMITED PARTNER
LC New Roc LP, LLC $10,000,000
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
TOTAL $35,000,000
SCHEDULE B
DESCRIPTION OF THE PROPERTY
[To be completed]
SCHEDULE C
SINGLE PURPOSE ENTITY PROVISIONS
A. PURPOSE.
Notwithstanding any provision hereof or of any other document governing the
formation, management or operation of the Partnership to the contrary, the
following shall govern: The nature of the business and of the purposes to be
conducted and promoted by the Partnership, is to engage solely in the following
activities:
1. To acquire the Property.
2. To own, hold, sell, assign, transfer, operate, lease, mortgage, pledge
and otherwise deal with the Property.
3. To exercise all powers enumerated in the Uniform Limited Partnership
Act of New York necessary or convenient to the conduct, promotion or
attainment of the business or purposes otherwise set forth herein.
B. CERTAIN PROHIBITED ACTIVITIES.
Notwithstanding any provision hereof or of any other document governing the
formation, management or operation of the Partnership to the contrary, the
following shall govern: The Partnership shall only incur indebtedness in an
amount necessary to acquire, operate and maintain the Property. For so long as
any mortgage lien exists on the Property, the Partnership shall not incur,
assume or guaranty any other indebtedness, except for the currently existing
second mortgage to Empire State Development Corporation securing a loan in the
amount of $4,000,000 or the GACC Loan (the "Permitted Debt"). The Partnership
shall not consolidate or merge with or into any other entity or convey or
transfer its properties and assets substantially as an entirety to any entity
unless (i) the entity (if other than the Partnership) formed or surviving such
consolidation or merger or that acquired by conveyance or transfer the
properties and assets of the partnership substantially as an entirety (a) shall
be organized and existing under the laws of the United States of America or any
State or the District of Columbia, (b) shall include in its organizational
documents the same limitations set forth in this Article B and in Article D, and
(c) shall expressly assume the due and punctual performance of the Partnership's
obligations; and (ii) immediately after giving effect to such transaction, no
default or event of default under any agreement to which it is a party shall
have been committed by this partnership and be continuing. For so long as a
mortgage lien exists on the Property, the Partnership will not voluntarily
commence a case with respect to itself, as debtor, under the Federal Bankruptcy
Code or any similar federal or state statute without the unanimous consent of
all of the partners of the Partnership. For so long as a mortgage lien exists on
the Property, (i) no amendment to this Partnership Agreement maybe made and (ii)
the Partnership shall not dissolve, liquidate or terminate without first
obtaining approval of the mortgagee holding a first mortgage lien on the
Property.
C. INDEMNIFICATION.
Notwithstanding any provision hereof or of any other document governing the
formation, management or operation of the Partnership to the contrary, the
following shall govern: Any indemnification shall be fully subordinated to any
obligations respecting the Property and shall not constitute a claim against the
Partnership in the event that cash flow is insufficient to pay such obligations.
D. SEPARATENESS COVENANTS.
Notwithstanding any provision hereof or of any other document governing the
formation, management or operation of the Partnership to the contrary, the
following shall govern: For so long as any mortgage lien exists on the Property,
in order to preserve and ensure its separate and distinct identity, in addition
to the other provisions set forth in this Partnership Agreement, the Partnership
shall conduct its affairs in accordance with the following provisions:
l. It shall establish and maintain an office through which its business
shall be conducted separate and apart from that of any of its affiliate and
shall allocate fairly and reasonably any overhead for shared office space.
2. It shall maintain separate partnership records and books of account
from those of any affiliate.
3. It shall not commingle assets with those of any affiliate.
4. It shall conduct its own business in its own name.
5. It shall observe all partnership formalities.
6. It shall maintain financial statements separate from any affiliate.
7. It shall pay any liabilities out of its own funds, including salaries
of any employee, not funds of any affiliate.
8. It shall maintain an arm's length relationship with any affiliate.
9. It shall maintain adequate capital in light of its contemplated
business operations.
10. It shall not guarantee or become obligated for the debts of any other
entity, including any affiliate, or hold out its credit as being available
to satisfy the obligations of others.
11. It shall not acquire obligations or securities of its partners,
members or shareholders.
12. It shall use stationery, invoices and checks separate from any
affiliate.
13. It shall not pledge its assets for the benefit of any other entity,
including any affiliate or make any loans or advances to any other person.
14. It shall hold itself out as any entity separate from any affiliate.
15. It shall correct any known misunderstanding regarding its separate
identity.
16. At all times have all of its general partners be special purpose
corporate entities with at lease two (2) Independent Directors.
For purposes of this Article D, the following terms shall have the
following meaning:
"affiliate" means any person controlling or controlled by or under
common control with the Partnership including, without limitation (i) any
person who has a familial relationship, by blood, marriage or otherwise
with any partner or employee of the Partnership, or any affiliate thereof
and (ii) any person which receives compensation for administrative, legal
or accounting services from this partnership, or any affiliate. For
purposes of this definition, "control", when used with respect to any
specified person, means the power to direct the management and policies of
such person, directly or indirectly, whether through the ownership of
voting securities, by contract or otherwise; and the terms "controlling",
and "controlled" have meanings correlative to the foregoing.
"Independent Director" shall man an individual who shall not have been
at the time of such individual's appointment, and may not have been at any
time (i) a partner, member, shareholder of, or an officer or employee of,
the Partnership or any of its respective partners, members, shareholders,
subsidiaries or affiliates, (ii) a customer of, or supplier to, the
Partnership or managing member of the Partnership or any of their
respective partners, members, shareholders, subsidiaries or affiliates,
(iii) a person controlling any such partner, member, shareholder, supplier
or customer, or (iv) a member of the immediate family of any such
shareholder, officer, employee, supplier or customer of any other director
of the Partnership or of the managing member of the Partnership. As used
herein, the term "control" means the possession, directly or indirectly, of
the power to direct or cause the direction of the management and policies
of a person or entity, whether through ownership of voting securities, by
contract or otherwise.
"person" means any individual, corporation, partnership, limited
liability company, joint venture, association, joint stock company, trust
(including any beneficiary thereof), unincorporated organization, or
government or any agency or political subdivision thereof.
E. DISSOLUTION.
Notwithstanding any provision or of any other document governing the
formation, management or operation of the Partnership hereof to the contrary,
the following shall govern: The Partnership shall not terminate solely as a
consequence of the bankruptcy of one or more of the general partners of the
Partnership so long as there remains a solvent general partner of the
Partnership.
Notwithstanding any provision or of any other document governing the
formation, management or operation of the Partnership hereof to the contrary,
the following shall govern:
Subject to applicable law, dissolution of the Partnership shall not occur so
long as the Partnership remains mortgagor of the Property.