EXHIBIT 10.16
AMENDED AND RESTATED LIMITED PARTNERSHIP AGREEMENT
OF
LEXFORD PROPERTIES, L.P.,
AN OHIO LIMITED PARTNERSHIP
TABLE OF CONTENTS
ARTICLE PAGE
I DEFINITIONS AND INTERPRETATION 2
1.1 Definitions 2
1.2 Interpretation 10
II ORGANIZATIONAL MATTERS 10
2.1 Continuation 10
2.2 Name 11
2.3 Principal Place of Business 11
2.4 Registered Office and Registered Agent 11
2.5 Term 11
2.6 Power of Attorney 11
III BUSINESS OF PARTNERSHIP 13
3.1 Purpose and Business 13
3.2 Powers 13
IV MANAGEMENT OF PARTNERSHIP; RIGHTS AND DUTIES OF GENERAL
PARTNER 14
4.1 Management 14
4.2 Liability for Certain Acts 14
4.3 General Partner and Limited Partners Have No
Exclusive Duty to Partnership 15
4.4 Indemnification 15
4.5 Other Matters Concerning the General Partner 17
4.6 Reliance by Third Parties 18
4.7 Affiliated Compensation 19
4.8 Title to Partnership Assets 19
V RIGHTS AND OBLIGATIONS OF PARTNERS 19
5.1 Admission of Partners 19
5.2 Limitation of Liability 19
5.3 List of Partners 19
5.4 Partnership Books 19
5.5 Representation by Partners 20
VI CAPITAL CONTRIBUTIONS TO THE PARTNERSHIP;
CAPITAL ACCOUNTS; DISTRIBUTIONS; ALLOCATIONS 22
6.1 Partners' Capital and Interests in the
Partnership 22
6.2 Capital Accounts 23
6.3 Timing and Amount of Allocations of Profits
and Losses 24
6.4 General Allocations of Profits and Losses 25
6.5 Additional Allocation Provisions 26
6.6 Tax Allocations 29
6.7 Distributions of Operating and Capital Cash Flow 29
6.8 Revisions to Reflect Issuance of Additional
Partnership Interests 30
VII BOOKS OF ACCOUNT, RECORDS AND REPORTS; TAX ITEMS 30
7.1 Records and Accounting 30
7.2 Fiscal Year 31
7.3 Reports 31
7.4 Tax Matters 31
VIII TRANSFERS AND WITHDRAWALS 34
8.1 Transfer 34
8.2 Transfer of Partnership Interests of the General
Partner and Holders of Common Partnership
Interests 34
8.3 Limited Partners' Rights to Transfer 35
8.4 Substituted Partner 36
8.5 Assignee 37
8.6 General Provisions 37
IX SUCCESSSOR GENERAL PARTNER AND ADMISSION OF ADDITIONAL
PARTNERS 40
9.1 Admission of Successor General Partner 40
9.2 Admission of Additional Partners 40
9.3 Amendment of Agreement and Certificate of
Formation 41
X DISSOLUTION AND TERMINATION 41
10.1 Dissolution 41
10.2 Effect of Filing of Dissolving Statement 42
10.3 Winding Up, Liquidation and Distribution of
Assets 42
10.4 Certificate of Dissolution 43
10.5 Effect of Dissolution 43
10.6 Return of Contribution Nonrecourse to Other
Partners 44
XI MISCELLANEOUS PROVISIONS 44
11.1 Notices 44
11.2 Books of Account and Records 44
11.3 Application of Ohio Law 44
11.4 Waiver of Action for Partition 44
11.5 Amendments 45
11.6 Execution of Additional Instruments 46
11.7 Headings 46
11.8 Waivers 46
11.9 Rights and Remedies Cumulative 46
11.10 Severability 46
11.11 Heirs, Successors and Assigns 46
11.12 Creditors 47
11.13 Counterparts 47
11.14 Integrated Agreement 47
AMENDED AND RESTATED LIMITED PARTNERSHIP AGREEMENT OF
LEXFORD PROPERTIES, L.P.
This AMENDED AND RESTATED LIMITED PARTNERSHIP AGREEMENT (the
"Agreement") is made and entered into as of the 1st day of October, 1999, by and
between ERP OPERATING LIMITED PARTNERSHIP, an Illinois limited partnership, as a
limited partner ("ERP"), and LEXFORD PARTNERS, L.L.C., an Ohio limited liability
company, as the general partner ("Lexford LLC" or the "General Partner").
R E C I T A L S:
WHEREAS, Lexford Properties, L.P. (the "Partnership") was formed as a
limited partnership under the laws of the State of Ohio by a Certificate of
Limited Partnership filed with the Ohio Secretary of State on March 30, 1998
(the "Certificate");
WHEREAS, prior to the date hereof, the Partnership was governed by that
certain Agreement of Limited Partnership of the Partnership, dated as of April
29, 1999, as amended (the "Original Partnership Agreement"), by and between
Lexford LLC, as general partner, and Lexford Residential Trust, a Maryland real
estate investment trust, as limited partner ("Lexford");
WHEREAS, pursuant to that certain Agreement and Plan of Merger, dated
June 30, 1999 (the "Merger Agreement), on October 1, 1999, prior to the
execution hereof, Lexford merged with and into Equity Residential Properties
Trust, a Maryland real estate investment trust ("EQR") (the "Merger");
WHEREAS, pursuant to the Merger, EQR succeeded to all of Lexford's
rights and obligations as a limited partner in the Partnership;
WHEREAS, pursuant to that certain Assignment agreement, dated October
1, 1999, by and between EQR and ERP, subsequent to the Merger and immediately
prior to the execution hereof, EQR assigned and ERP accepted all of EQR's rights
and obligations as a limited partner in the Partnership; and
WHEREAS, ERP and Lexford LLC now desire to amend and restate the
Original Partnership Agreement on the terms set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants set forth
herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
ARTICLE I
DEFINITIONS AND INTERPRETATION
1.1 DEFINITIONS . Unless otherwise expressly provided herein,
the following terms used in this Limited Liability Partnership
Agreement shall have the following meanings:
(a) "ACT" shall mean the provisions of Title XVII, Chapter
1782 of the Ohio Revised Code, as it may be amended from time to time.
(b) "ADDITIONAL PARTNER" shall mean any Person admitted to the
Partnership as a Partner pursuant to Section 9.2 hereof.
(c) "ADJUSTED CAPITAL ACCOUNT" means the Capital Account
maintained for each Partner as of the end of each Fiscal Year (i)
increased by any amounts which such Partner is obligated to restore
pursuant to any provision of this Agreement or is deemed to be
obligated to restore pursuant to the penultimate sentences of Treasury
Regulation Sections 1.704-2(g)(1) and 1.704-2(i)(5) and (ii) decreased
by the items described in Treasury Regulation Sections
1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5) and
1.704-1(b)(2)(ii)(d)(6). The foregoing definition of Adjusted Capital
Account is intended to comply with the provisions of Treasury
Regulation Section 1.704-1(b)(2)(ii)(d) and shall be interpreted
consistently therewith.
(d) "ADJUSTED CAPITAL ACCOUNT DEFICIT" shall mean with respect
to any Partner, the deficit balance, if any, in such Partner's Capital
Account as of the end of the relevant Fiscal Year, after giving effect
to the following adjustments:
(i) decrease such deficit by any amounts which such
Partner is obligated to restore pursuant to this Agreement or
is deemed to be obligated to restore pursuant to Treasury
Regulation Section 1.704-1(b)(2)(ii)(c) or the penultimate
sentence of each of Treasury Regulation Sections 1.704-2(i)(5)
and 1.704-2(g)(1); and
(ii) increase such deficit by the items described in
Treasury Regulation Section 1.704-1(b)(2)(ii)(d)(4), (5) and
(6).
The foregoing definition of Adjusted Capital Account Deficit is
intended to comply with the provisions of Treasury Regulation Section
1.704-1(b)(2)(ii)(d) and shall be interpreted consistently therewith.
(e) "AFFILIATE" means, with respect to any Person, (i) any
Person directly or indirectly controlling, controlled by, or under
common control with such Person, (ii) any Person owning or controlling
ten percent (10%) or more of the outstanding voting interests of such
Person, (iii) any officer, director, manager, partner, or general
partner of such Person, or (iv) any Person who is an officer, director,
manager, general partner, partner, trustee, or holder of ten percent
(10%) or more of the voting interests of any Person described in
clauses (i) through (iii) of this sentence. For purposes of this
definition, the term "controls", "is controlled by" or "is under common
control with" shall mean the possession, direct or indirect, of the
power to direct or cause the direction of the management and policies
of a person or entity, whether through the ownership of voting
securities, by contract or otherwise.
(f) "ASSIGNEE" shall mean a Person to whom one or more
Partnership Interests have been transferred in a manner permitted under
this Agreement, but who has not become a Substituted Partner, and who
has the rights set forth in Section 8.5.
(g) "BANKRUPTCY" shall mean the definition ascribed to such
term in the definition of the term "Incapacity".
(h) "CAPITAL ACCOUNT" as of any given date shall mean the
Capital Account maintained for each Partner pursuant to Section 6.2
hereafter.
(i) "CAPITAL CASH FLOW" shall mean, for purposes of this
Agreement and for a given period of time, the sum of the cash proceeds
plus the fair market value of any other consideration received by the
Partnership from a Major Capital Event, less the sum of (i) any portion
of such proceeds applied toward the repayment of any indebtedness being
refinanced or secured by or relating to the property being disposed of,
plus (ii) reasonable reserves required in the sole discretion of the
General Partner, plus (iii) any expenses incurred in connection with
such Major Capital Event.
(j) "CAPITAL CONTRIBUTION" shall mean the sum of any cash plus
the fair market value of any property, as determined by the General
Partner, contributed to the capital of the Partnership by a Partner.
(k) "CERTIFICATE" shall have the meaning as described in the
Recitals hereto.
(l) "CODE" shall mean the Internal Revenue Code of 1986, as
amended from time to time, or any corresponding provisions of
succeeding law.
(m) "COMMON PARTNERSHIP INTERESTS" shall mean any Partnership
Interest other than a Preference Interest.
(n) "DEPRECIATION" shall mean, for each Fiscal Year or other
period, an amount equal to the depreciation, amortization or other cost
recovery deduction allowable with respect to an asset for such year or
other period, except that if the Gross Asset Value of an asset differs
from its adjusted basis for federal income tax purposes at the
beginning of such year or other period, Depreciation shall be an amount
which bears the same ratio to such beginning Gross Asset Value as the
federal income tax depreciation, amortization or other cost recovery
deduction for such year or other period bears to such beginning
adjusted tax basis; provided, however, that if the federal income tax
depreciation, amortization or other cost recovery deduction for such
year is zero, Depreciation shall be determined with reference to such
beginning Gross Asset Value using any reasonable method selected by the
General Partner.
(o) "DISTRIBUTABLE FUNDS FROM PARTNERSHIP OPERATIONS" shall
mean the sum of Operating Cash Flow and Capital Cash Flow.
(p) "ENTITY" shall mean any general partnership, limited
partnership, limited liability company, corporation, joint venture,
trust, business trust, cooperative or association or any foreign trust
or foreign business organization.
(q) "EQR" shall mean Equity Residential Properties Trust, a
Maryland real estate investment trust.
(r) "ERISA" shall mean the Employee Retirement Income Security
Act of 1974, as amended.
(s) "ERP" shall mean ERP Operating Limited Partnership, an
Illinois limited partnership.
(t) "FISCAL YEAR" shall mean the Partnership's fiscal year,
which shall be the calendar year.
(u) "GENERAL PARTNER" shall mean ERP or such other Partner as
the Partners may designate in accordance with this Agreement.
(v) "GROSS ASSET VALUE" shall mean, 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.
(ii) Immediately prior to the times listed below, the
Gross Asset Values of all Partnership assets shall be adjusted
to equal their respective gross fair market values, as
determined by the General Partner using such reasonable method
of valuation as it may adopt:
(1) the acquisition of an additional
interest in the Partnership by a new or existing
Partner in exchange for more than a DE MINIMIS
Capital Contribution, if the General Partner
reasonably determines that such adjustment is
necessary or appropriate to reflect the relative
economic interests of the Partners in the
Partnership;
(2) 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 if the General Partner reasonably
determines that such adjustment is necessary or
appropriate to reflect the relative economic
interests of the Partners in the Partnership;
(3) the liquidation of the Partnership
within the meaning of Treasury Regulation Section
1.704-1(b)(2)(ii)(g); and
(4) at such other times as the General
Partner shall reasonably determine necessary or
advisable in order to comply with Treasury Regulation
Sections 1.704-1(b) and 1.704-2.
(iii) the Gross Asset Value of any Partnership asset
distributed to a Partner shall be the gross fair market value
of such asset on the date of distribution, as determined by
the General Partner.
(iv) The Gross Asset Value 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 Treasury Regulation Section
1.704-1(b)(2)(iv)(m); provided, however, that Gross Asset
Values shall not be adjusted pursuant to this subparagraph
(iv) to the extent that the General Partner reasonably
determines that an adjustment pursuant to subparagraph (ii) is
necessary or appropriate in connection with a transaction that
would otherwise result in an adjustment pursuant to this
subparagraph (iv).
(v) If the Gross Asset Value of a Partnership asset
has been determined or adjusted pursuant to subparagraph (i),
(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 Profits and
Losses.
(w) "INCAPACITY" or "INCAPACITATED" means, (i) as to any
individual Partner, death, total physical disability or entry by a
court of competent jurisdiction adjudicating such Partner incompetent
to manage his or her Person or estate, (ii) as to any corporation which
is a Partner, the filing of a certificate of dissolution, or its
equivalent, for the corporation or the revocation of its charter, (iii)
as to any partnership or limited liability company which is a Partner,
the dissolution and commencement of winding up of the partnership or
limited liability company, (iv) as to any estate which is a Partner,
the distribution by the fiduciary of the estate's entire interest in
the Partnership, (v) as to any trustee of a trust which is a Partner,
the termination of the trust (but not the substitution of a new
trustee) or (vi) as to any Partner, the Bankruptcy of such Partner. For
purposes of this definition, Bankruptcy of a Partner shall be deemed to
have occurred when (a) the Partner commences a voluntary proceeding
seeking liquidation, reorganization or other relief under any
bankruptcy, insolvency or other similar law now or hereafter in effect,
(b) the Partner is adjudged as bankrupt or insolvent, or a final and
nonappealable order for relief under any bankruptcy, insolvency or
similar law now or hereafter in effect has been entered against the
Partner, (c) the Partner executes and delivers a general assignment for
the benefit of the Partner's creditors, (d) the Partner files an answer
or other pleading admitting or failing to contest the material
allegations of a petition filed against the Partner in any proceeding
of the nature described in clause (b) above, (e) the Partner seeks,
consents to or acquiesces in the appointment of a trustee, receiver or
liquidator for the Partner or for all or any substantial part of the
Partner's properties, (f) any proceeding seeking liquidation,
reorganization or other relief under any bankruptcy, insolvency or
other similar law now or hereafter in effect has not been dismissed
within one hundred twenty (120) days after the commencement thereof,
(g) the appointment without the Partner's consent or acquiescence of a
trustee, receiver of liquidator has not been vacated or stayed within
ninety (90) days of such appointment or (h) an appointment referred to
in clause (g) is not vacated within ninety (90) days after the
expiration of any such stay.
(x) "INDEMNITEE" (i) shall mean any Person subject to a claim
or demand made or threatened to be made a party to, or involved or
threatened to be involved in, an action, suit or proceeding by reason
of his or her status as (a) the General Partner or (b) a director,
officer, employee or agent of the Partnership or the General Partner,
and (ii) such other Persons (including Affiliates of the General
Partner or the Partnership) as the General Partner may designate from
time to time, in its sole and absolute discretion.
(y) "LIMITED PARTNER" shall mean and include any Partner that
is not a General Partner.
(z) "LOSSES" shall have the meaning given it in Section 6.3(c)
hereafter.
(aa) "MAJOR CAPITAL EVENT" The placement of new or additional
financing upon all or any portion of the Partnership's assets or any
interest therein; the refinancing of any existing or new financing upon
all or any portion of the Partnership's assets or any interest therein;
or the sale, exchange, condemnation, casualty loss or other disposition
(whether voluntary or involuntary) of substantially all of the
Partnership's assets (including any disposition in consideration for
securities in any real estate investment trust or other entity).
(bb) "MAJORITY-IN-INTEREST" shall mean Partner(s) who,
individually or collectively, own greater than fifty percent (50%) of
the Percentage Interests.
(cc) "NONRECOURSE DEDUCTIONS" shall have the meaning set forth
in Treasury Regulation Section 1.704-2(b)(1), and the amount of
Nonrecourse Deductions for a Fiscal Year of the Partnership shall be
determined in accordance with the rules of Treasury Regulation Section
1.704-2(c).
(dd) "NONRECOURSE LIABILITY" shall have the meaning set forth
in Treasury Regulation Section 1.752-1(a)(2).
(ee) "OFFICIAL RECORDS" shall mean the Partnership's official
records which are to be maintained by the General Partner of the
Partnership at the Partnership's principal place of business.
(ff) "OPERATING CASH FLOW" shall mean, for purposes of this
Agreement and for a given period of time, all cash received by the
Partnership from any source (but excluding Capital Cash Flow), less the
sum of the following (to the extent not paid from Capital Cash Flow):
cash expended for all debts and expenses of the Partnership; principal
and interest payments on any indebtedness of the Partnership; capital
expenditures; and reasonable reserves required in the sole
determination of the General Partner.
(gg) "OTHER SECURITIES TERM SHEET" shall have the meaning
given it in Section 6.1(c) hereof.
(hh) "PARTNER" shall mean each of the Persons or Entities who
from time to time are admitted and continue as General Partners or
Limited Partners of the Partnership pursuant to the terms hereof.
(ii) "PARTNER MINIMUM GAIN" means an amount, with respect to
each Partner Nonrecourse Debt, equal to the Partnership Minimum Gain
that would result if such Partner Nonrecourse Debt were treated as a
Nonrecourse Liability, determined in accordance with Treasury
Regulation Section 1.704-2(i)(3).
(jj) "PARTNER NONRECOURSE DEBT" shall mean "partner
nonrecourse debt" as defined in Treasury Regulation Section
1.704-2(b)(4).
(kk) "PARTNER NONRECOURSE DEDUCTIONS" shall mean "partner
nonrecourse deductions" as defined in Treasury Regulation Section
1.704-2(i)(2) and the amount of Partner Nonrecourse Deductions with
respect to a Partner Nonrecourse Debt for a Fiscal Year of the
Partnership shall be determined in accordance with the rules of
Treasury Regulation Section 1.704-2(i)(2).
(ll) "PARTNERSHIP" shall mean Lexford Properties, L.P., an
Ohio limited partnership.
(mm) "PARTNERSHIP INTEREST" shall mean a Partner's entire
interest in the Partnership, including such Partner's Percentage
Interest and such other rights and privileges that the Partner may
enjoy by being a Partner.
(nn) "PARTNERSHIP MINIMUM GAIN" shall mean "partnership
minimum gain" as defined in Treasury Regulation Section 1.704-2(b)(2),
and the amount of Partnership Minimum Gain, as well as any net increase
or decrease in Partnership Minimum Gain, for a Fiscal Year of the
Partnership shall be determined in accordance with the rules of
Treasury Regulation Section 1.704-2(d).
(oo) "PERCENTAGE INTEREST" shall mean, for any Partner, the
percentage as set forth on Exhibit A hereto. Exhibit A shall be amended
from time to time to reflect any adjustments made to a Partner's
Percentage Interest.
(pp) "PERSON" shall mean any individual or entity, and the
heirs, executors, administrators, legal representatives, successors,
and assigns of such "Person" where the context so permits.
(qq) "PREFERENCE INTEREST" shall mean any class or series of
Partnership Interest designated as a Preference Interest pursuant to an
Other Securities Term Sheet adopted in accordance with Section 6.1(c)
hereof.
(rr) "PROFITS" shall have the meaning given it in Section
6.3(c) hereof.
(ss) "PROFITS" or "LOSSES" means for each Fiscal Year, an
amount equal to the Partnership's taxable income or loss for such
Fiscal Year, determined in 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:
(i) Any income of the Partnership that is exempt from
federal income tax and not otherwise taken into account in
computing Profits or Losses pursuant to this definition of
Profits or 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 Treasury Regulation
Section 1.704-1(b)(2)(iv)(i), and not otherwise taken into
account in computing Profits or Losses pursuant to this
definition of Profits or 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 subparagraph (ii) or
(iii) of the definition of Gross Asset Value, the amount of
such adjustment shall be taken into account as gain or loss
from the disposition of such asset for purposes of computing
Profits or 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 Fiscal Year;
(vi) 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 Treasury
Regulation Section 1.704-1(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 the basis of the asset) from the disposition of the
asset and shall be taken into account for purposes of
computing Profits or Losses; and
(vii) Notwithstanding any other provision of this
definition of Profits or Losses, any items of gross income or
deduction which are specially allocated pursuant to any Other
Securities Term Sheet and any items which are specially
allocated pursuant to Section 6.5 shall not be taken into
account in computing Profits or Losses. The amounts of items
of Partnership income, gain, loss, or deduction available to
be specially allocated pursuant to Section 6.5 shall be
determined by applying rules analogous to those set forth in
this definition of Profits or Losses.
(tt) "QUALIFIED TRANSFEREE" shall mean an "Accredited
Investor" as defined in Rule 501 promulgated under the Securities Act.
(uu) "REAL ESTATE INVESTMENT TRUST" shall mean a real estate
investment trust, as defined in Section 856 of the Code.
(vv) "REFERENCE RATE" shall mean the rate as announced, from
time to time, by Chemical Bank, a New York State banking corporation,
as its "base rate" or "reference rate".
(ww) "REGULATORY ALLOCATIONS" shall have the meaning set forth
in Section 6.5(a)(viii).
(xx) "REIT CHARTER" shall mean the Amended and Restated
Declaration of Trust of EQR.
(yy) "SECURITIES ACT" shall mean the Securities Act of 1933,
as amended and the rules and regulations of the Securities and Exchange
Commission promulgated thereunder.
(zz) "SUBSIDIARY" shall mean with respect to any Person, any
corporation, limited liability company, trust, partnership or joint
venture, or other entity of which a majority of (i) the voting power of
the voting equity securities or (ii) the outstanding equity interests
is owned, directly or indirectly, by such Person.
(aaa) "SUBSTITUTED PARTNER" shall mean a Person admitted as a
Limited Partner under Section 8.4.
(bbb) "TAX ITEMS" shall have the meaning set forth in Section
6.6(a).
(ccc) "TREASURY REGULATIONS" shall include proposed, temporary
and final regulations promulgated under the Code in effect as of the
date of filing the Certificate and the corresponding sections of any
regulations subsequently issued that amend or supersede such
regulations.
(ddd) "UNITS" shall mean units of Common Partnership Interest
or Preference Interests, as the case may be.
1.2 INTERPRETATION . The definitions in Section 1.1 shall
apply equally to both the singular and plural forms of the terms
defined. Whenever the context may require, any pronoun used in this
Agreement shall include the corresponding masculine, feminine and
neuter forms. As
used in this Agreement, the words "include," "includes" and "including"
shall be deemed to be followed by the phrase "without limitation." As
used in this Agreement, the terms "herein," "hereof" and "hereunder"
shall refer to this Agreement in its entirety. Any references in this
Agreement to "Sections" or "Articles" shall, unless otherwise
specified, refer to Sections or Articles, respectively, in this
Agreement.
ARTICLE II
ORGANIZATIONAL MATTERS
2.1 CONTINUATION . The Partners hereby agree to continue the
Partnership pursuant to the provisions of the Act and upon the terms
and conditions set forth in this Agreement.
2.2 NAME . The name of the Partnership is Lexford Properties,
L.P., provided that the General Partner may elect to transact business
in other names in those jurisdictions where they deem it necessary for
purposes of complying with the requirements of local law.
2.3 PRINCIPAL PLACE OF BUSINESS . The principal place of
business of the Partnership shall be Two ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇. The Partnership may relocate its principal
place of business to any other place or places as the General Partner
may from time to time deem advisable. Additional offices may be
maintained and acts done at any other place appropriate for
accomplishing the purposes of the Partnership, all as determined by the
General Partner.
2.4 REGISTERED OFFICE AND REGISTERED AGENT . The Partnership's
initial registered office shall be at the office of its registered
agent at ▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, and the
name of its initial registered agent at such address shall be Lexis
Document Services, Inc. The registered office and registered agent may
be changed from time to time by filing the address of the new
registered office and/or the name of the new registered agent with the
Ohio Secretary of State pursuant to the Act.
2.5 TERM . The term of the Partnership shall commence as of
the date hereof and shall be until October 1, 2049, unless sooner
terminated in accordance with either the provisions of this Agreement
or the Act.
2.6 POWER OF ATTORNEY .
(a) GENERAL. Each Partner and each Assignee who accepts a
Partnership Interest (or any rights, benefits or privileges associated
therewith) is deemed to irrevocably constitute and appoint the General
Partner, any liquidating trustee and authorized officers and
attorneys-in-fact of each, and each of those acting singly, in each
case with full power of substitution, as its true and lawful agent and
attorney-in-fact, with full power and authority in its name, place and
stead to:
(i) execute, swear to, acknowledge, deliver, file and
record in the appropriate public offices (a) all certificates,
documents and other instruments (including, without
limitation, this Agreement and the Certificate and all
amendments or restatements thereof) that the General Partner
or any liquidating trustee deems appropriate or necessary to
form, qualify or continue the existence or qualification of
the Partnership as a limited partnership in the State of Ohio
and in all other jurisdictions in which the Partnership may
conduct business or own property, (b) all instruments that the
General Partner or any liquidating trustee deem appropriate or
necessary to reflect any amendment, change, modification or
restatement of this Agreement in accordance with its terms,
(c) all conveyances and other instruments or documents that
the General Partner or any liquidating trustee or deems
appropriate or necessary to reflect the dissolution and
liquidation of the Partnership pursuant to the terms of this
Agreement, including, without limitation, a certificate of
cancellation, (d) all instruments relating to the admission,
withdrawal, removal or substitution of any Partner pursuant
to, or other events described in, Article VIII or IX hereof or
the Capital Contribution of any Partner and (e) all
certificates, documents and other instruments relating to the
determination of the rights, preferences and privileges of
Partnership Interests; and
(ii) execute, swear to, acknowledge and file all
ballots, consents, approvals, waivers, certificates and other
instruments appropriate or necessary, in the sole and absolute
discretion of the General Partner or any liquidating trustee,
to make, evidence, give, confirm or ratify any vote, consent,
approval, agreement or other action which is made or given by
the Partners hereunder or is consistent with the terms of this
Agreement or appropriate or necessary, in the sole discretion
of the General Partner or any liquidating trustee, to
effectuate the terms or intent of this Agreement.
Nothing contained in this Section 2.6 shall be construed as authorizing
the General Partner or any liquidating trustee to amend this Agreement except in
accordance with Section 11.5 hereof or as may be otherwise expressly provided
for in this Agreement.
(b) IRREVOCABLE NATURE. The foregoing power of attorney is
hereby declared to be irrevocable and a power coupled with an interest,
in recognition of the fact that each of the Partners will be relying
upon the power of the General Partner or any liquidating trustee to act
as contemplated by this Agreement in any filing or other action by it
on behalf of the Partnership, and it shall survive and not be affected
by the subsequent Incapacity of any Partner or Assignee and the
transfer of all or any portion of such Partner's or Assignee's
Partnership Interests and shall extend to such Partner's or Assignee's
heirs, successors, assigns and personal representatives. Each such
Partner or Assignee hereby agrees to be bound by any representation
made by the General Partner or any liquidating trustee, acting in good
faith pursuant to such power of attorney; and each such Partner or
Assignee hereby waives any and all defenses which may be available to
contest, negate or disaffirm the action of the General Partner or any
liquidating trustee, taken in good faith under such power of attorney.
Each Partner or Assignee shall execute and deliver to the General
Partner or the liquidating trustee, within fifteen (15) days after
receipt of the General Partner's or liquidating trustee's request
therefor, such further designation, powers of attorney and other
instruments as the General Partner or the liquidating trustee, as the
case may be, deems necessary to effectuate this Agreement and the
purposes of the Partnership.
ARTICLE III
BUSINESS OF PARTNERSHIP
3.1 PURPOSE AND BUSINESS . The purpose and nature of the
business to be conducted by the Partnership is (i) to conduct any
business that may be lawfully conducted by a limited partnership
organized pursuant to the Act; provided, however, that such business
shall be limited to and conducted in a manner as to permit EQR at all
times to be classified as a REIT, unless EQR ceases to qualify or is
not qualified as a REIT for any reason or reasons not related to the
business conducted by the Partnership, (ii) to enter into any
corporation, partnership, joint venture, trust, limited liability
company or other similar arrangement to engage in any of the foregoing
or the ownership of interests in any entity engaged, directly or
indirectly, in any of the foregoing and (iii) to do anything necessary
or incidental to the foregoing. In connection with the foregoing, the
Partners acknowledge that the status of EQR as a REIT inures to the
benefit of all the Partners and not solely to EQR or its Affiliates.
3.2 POWERS . The Partnership is empowered to do any and all
acts and things necessary, appropriate, proper, advisable, incidental
to or convenient for the furtherance and accomplishment of the purposes
and business described herein and for the protection and benefit of the
Partnership, including, without limitation, full power and authority,
directly or through its ownership interest in other entities, to enter
into, perform and carry out contracts of any kind, borrow money and
issue evidences of indebtedness, whether or not secured by mortgage,
deed of trust, pledge or other lien, acquire, own, manage, improve and
develop real property, and lease, sell, transfer and dispose of real
property; provided, however, that the Partnership shall not take, or
refrain from taking, any action which, in the judgment of the General
Partner, in its sole and absolute discretion, (i) could adversely
affect the ability of EQR to continue to qualify as a REIT, (ii) could
subject EQR to any additional taxes under Section 857 or Section 4981
of the Code, (iii) could cause the Partnership to be classified as a
publicly traded partnership under Section 7704 of the Code, or (iv)
could violate any law or regulation of any governmental body or agency
having jurisdiction over any General Partner or its securities, unless
such action (or inaction) shall have been specifically consented to by
the General Partner in writing.
ARTICLE IV
MANAGEMENT OF PARTNERSHIP;
RIGHTS AND DUTIES OF GENERAL PARTNER
4.1 MANAGEMENT .
(a) All management powers over the business and affairs of the
Partnership are and shall be vested exclusively in the General Partner,
and no other Partner or Person shall have any right or authority to act
for or by the Partnership except as permitted in this Agreement or as
required by law. No Partner is an agent of the Partnership solely by
virtue of being a Partner, and no Partner has authority to act for the
Partnership solely by virtue of being a Partner.
(b) Except as provided herein, each of the Partners agrees
that the General Partner is authorized to execute, deliver and perform
the above-mentioned agreements and transactions on behalf of the
Partnership without any further act, approval or vote of the Partners,
notwithstanding any other provision of this Agreement, the Act or any
applicable law, rule or regulation, to the full extent permitted under
the Act or other applicable law. The execution, delivery or performance
by the General Partner or the Partnership of any agreement authorized
or permitted under this Agreement shall not constitute a breach by the
General Partner of any duty that the General Partner may owe the
Partnership or the Partners or any other Persons under this Agreement
or of any duty stated or implied by law or equity.
(c) The General Partner shall not take any action (or fail to
take any action) if the consequence of such action (or inaction) would
be (i) to cause EQR to fail to qualify as a real estate investment
trust ("REIT") for federal or applicable state income tax purposes or
(ii) to cause ERP to fail to qualify as a partnership for federal or
applicable state income tax purposes, or (iii) to cause the
Partnership, ERP, or EQR to be classified as a publicly traded
partnership under Section 7704 of the Code or an "investment company"
as defined in, or otherwise be subject to regulation under, the
Investment Company Act of 1940, as amended.
4.2 LIABILITY FOR CERTAIN ACTS . The General Partner shall
perform its duties as General Partner in good faith, in a manner it or
its representatives reasonably believes to be in the best interests of
the Partnership, and with such care as an ordinarily prudent person in
a like position would use under similar circumstances. A General
Partner who so performs the duties as General Partner shall not have
any liability by reason of being or having been a General Partner of
the Partnership. The General Partner does not in any way guarantee the
return of the Partners' Capital Contributions or a profit for the
Partners from the operations of the Partnership. Notwithstanding any
other provision of this Agreement, the General Partner shall not be
liable to the Partnership or to any Partner for any loss or damage
sustained by the Partnership or any Partner, unless the loss or damage
shall have been the result of fraud, deceit, gross negligence, willful
misconduct, or a wrongful taking by the General Partner.
4.3 GENERAL PARTNER AND LIMITED PARTNERS HAVE NO EXCLUSIVE
DUTY TO PARTNERSHIP . The General Partner shall not be required to
manage the Partnership as its sole and exclusive function, and it (and
any Partner) may have other business interests and may engage in other
activities in addition to those relating to the Partnership. Neither
the Partnership nor any Partner shall have any right, by virtue of this
Agreement, to share or participate in such other investments or
activities of the General Partner and/or any other Partner or to the
income or proceeds derived therefrom, notwithstanding that such
investments or activities may be
competitive with the business of the Partnership. Neither the General
Partner nor any other Partner shall incur any liability to the
Partnership or to any of the Partners as a result of engaging in any
other business or venture. The General Partner may, in its sole
discretion, on behalf of the Partnership, purchase, sell or lease real
or personal property from or to any Partner (including the General
Partner) or pay fees or compensation to any Partner (including the
General Partner) for any efforts or commitments in connection with the
business of the Partnership or otherwise deal with any Partner
(including the General Partner) or any firm in which any Partner
(including the General Partner) is directly or indirectly interested,
and neither the Partnership nor any of its Partners shall have any
rights in or to any income or profits received by such Partner or
General Partner in a transaction with the Partnership.
4.4 INDEMNIFICATION .
(a) GENERAL. The Partnership shall indemnify each Indemnitee
to the fullest extent provided by the Act from and against any and all
losses, claims, damages, liabilities, joint or several, expenses
(including, without limitation, reasonable attorneys fees and other
legal fees and expenses), judgments, fines, settlements and other
amounts arising from or in connection with any and all claims, demands,
actions, suits or proceedings, civil, criminal, administrative or
investigative, incurred by the Indemnitee and relating to the
Partnership or the General Partner or the operation of, or the
ownership of property by, any of them as set forth in this Agreement in
which any such Indemnitee may be involved, or is threatened to be
involved, as a party or otherwise, unless it is established by a final
determination of a court of competent jurisdiction that: (i) the act or
omission of the Indemnitee was material to the matter giving rise to
the proceeding and either was committed in bad faith or was the result
of active and deliberate dishonesty, (ii) the Indemnitee actually
received an improper personal benefit in money, property or services or
(iii) in the case of any criminal proceeding, the Indemnitee had
reasonable cause to believe that the act or omission was unlawful.
Without limitation, the foregoing indemnity shall extend to any
liability of any Indemnitee, pursuant to a loan guarantee, contractual
obligation for any indebtedness or other obligation or otherwise, for
any indebtedness of the Partnership or any Subsidiary of the
Partnership (including, without limitation, any indebtedness which the
Partnership or any Subsidiary of the Partnership has assumed or taken
subject to), and the General Partner is hereby authorized and
empowered, on behalf of the Partnership, to enter into one or more
indemnity agreements consistent with the provisions of this Section 4.4
in favor of any Indemnitee having or potentially having liability for
any such indebtedness. The termination of any proceeding by judgment,
order or settlement does not create a presumption that the Indemnitee
did not meet the requisite standard of conduct set forth in this
Section 4.4. The termination of any proceeding by conviction or upon a
plea of nolo contendere or its equivalent, or an entry of an order of
probation prior to judgment, creates a rebuttable presumption that the
Indemnitee acted in a manner contrary to that specified in this Section
4.4. With respect to the subject matter of such proceeding. Any
indemnification pursuant to this Section 4.4 shall be made only out of
the assets of the Partnership, and any insurance proceeds from the
liability policy covering the General Partner and any Indemnitee, and
neither a General Partner nor any Limited Partner shall have any
obligation to contribute to the capital of the Partnership or otherwise
provide funds to enable the Partnership to fund its obligations under
this Section 4.4.
(b) ADVANCEMENT OF EXPENSES. Reasonable expenses expected to
be incurred by an Indemnitee shall be paid or reimbursed by the
Partnership in advance of the final disposition of any and all claims,
demands, actions, suits or proceedings, civil, criminal, administrative
or investigative made or threatened against an Indemnitee upon receipt
by the Partnership of (i) a written affirmation by the Indemnitee of
the Indemnitee's good faith belief that the standard of conduct
necessary for indemnification by the Partnership as authorized in this
Section 4.4 has
been met and (ii) a written undertaking by or on behalf of the
Indemnitee to repay the amount if it shall ultimately be determined
that the standard of conduct has not been met.
(c) NO LIMITATION OF RIGHTS. The indemnification provided by
this Section 4.4 shall be in addition to any other rights to which an
Indemnitee or any other Person may be entitled under any agreement,
pursuant to any vote of the Partners, as a matter of law or otherwise,
and shall continue as to an Indemnitee who has ceased to serve in such
capacity unless otherwise provided in a written agreement pursuant to
which such Indemnitee is indemnified.
(d) INSURANCE. The Partnership may purchase and maintain
insurance on behalf of the Indemnitees and such other Persons as the
General Partner shall determine against any liability that may be
asserted against or expenses that may be incurred by such Person in
connection with the Partnership's activities, regardless of whether the
Partnership would have the power to indemnify such Person against such
liability under the provisions of this Agreement.
(e) BENEFIT PLAN FIDUCIARY. For purposes of this Section 4.4,
(i) excise taxes assessed on an Indemnitee, or for which the Indemnitee
is otherwise found liable, with respect to an ERISA Plan pursuant to
applicable law shall constitute fines within the meaning of this
Section 4.4 and (iii) actions taken or omitted by the Indemnitee with
respect to an ERISA Plan in the performance of its duties for a purpose
reasonably believed by it to be in the interest of the participants and
beneficiaries of such ERISA Plan shall be deemed to be for a purpose
which is not opposed to the best interests of the Partnership.
(f) NO PERSONAL LIABILITY FOR PARTNERS. In no event may an
Indemnitee subject any of the Partners to personal liability by reason
of the indemnification provisions set forth in this Agreement.
(g) INTERESTED TRANSACTIONS. An Indemnitee shall not be denied
indemnification in whole or in part under this Section 4.4 because the
Indemnitee had an interest in the transaction with respect to which the
indemnification applies if the transaction was otherwise permitted by
the terms of this Agreement.
(h) BENEFIT. The provisions of this Section 4.4 are for the
benefit of the Indemnitees, their employees, officers, directors,
trustees, heirs, successors, assigns and administrators and shall not
be deemed to create any rights for the benefit of any other Persons.
Any amendment, modification or repeal of this Section 4.4, or any
provision hereof, shall be prospective only and shall not in any way
affect the limitation on the Partnership's liability to any Indemnitee
under this Section 4.4 as in effect immediately prior to such
amendment, modification or repeal with respect to claims arising from
or related to matters occurring, in whole or in part, prior to such
amendment, modification or repeal, regardless of when such claims may
arise or be asserted.
(i) INDEMNIFICATION PAYMENTS NOT DISTRIBUTIONS. If and to the
extent any payments to the General Partner pursuant to this Section 4.4
constitute gross income to the General Partner (as opposed to the
repayment of advances made on behalf of the Partnership), such amounts
shall constitute guaranteed payments within the meaning of Section
707(c) of the Code, shall be treated consistently therewith by the
Partnership and all Partners, and shall not be treated as distributions
for purposes of computing the Partners' Capital Accounts.
(j) EXCEPTION TO INDEMNIFICATION. Notwithstanding anything to
the contrary in this Agreement, a General Partner shall not be entitled
to indemnification hereunder for any loss,
claim, damage, liability or expense for which such General Partner is
obligated to indemnify the Partnership under any other agreement
between such General Partner and the Partnership.
4.5 OTHER MATTERS CONCERNING THE GENERAL PARTNER .
(a) RELIANCE ON DOCUMENTS. The General Partner may rely and
shall be protected in acting or refraining from acting upon any
resolution, certificate, statement, instrument, opinion, report,
notice, request, consent, order, bond, debenture or other paper or
document believed by it in good faith to be genuine and to have been
signed or presented by the proper party or parties.
(b) RELIANCE ON ADVISORS. The General Partner may consult with
legal counsel, accountants, appraisers, management consultants,
investment bankers and other consultants and advisers selected by them,
and any act taken or omitted to be taken in reliance upon the opinion
of such Persons as to matters which the General Partner reasonably
believes to be within such Person's professional or expert competence
shall be conclusively presumed to have been done or omitted in good
faith and in accordance with such opinion.
(c) ACTION THROUGH AGENTS. The General Partner shall have the
right, in respect of any of its powers or obligations hereunder, to act
through any of its duly authorized officers and a duly appointed
attorney or attorneys-in-fact. Each such attorney shall, to the extent
provided by the General Partner in the power of attorney, have full
power and authority to do and perform all and every act and duty which
is permitted or required to be done by the General Partner hereunder.
(d) ACTIONS TO MAINTAIN REIT STATUS. Notwithstanding any other
provisions of this Agreement or the Act, any action of the General
Partner on behalf of the Partnership or any decision of a General
Partner to refrain from acting on behalf of the Partnership undertaken
in the good faith belief that such action or omission is necessary or
advisable in order (i) to protect the ability of EQR to continue to
qualify as a REIT or (ii) to allow EQR to avoid incurring any liability
for taxes under Section 857 or 4981 of the Code, is expressly
authorized under this Agreement and is deemed approved by all of the
Partners.
4.6 RELIANCE BY THIRD PARTIES . Notwithstanding anything to
the contrary in this Agreement, any Person dealing with the Partnership
shall be entitled to assume that the General Partner has full power and
authority, without consent or approval of any other Partner or Person,
to encumber, sell or otherwise use in any manner any and all assets of
the Partnership, to enter into any contracts on behalf of the
Partnership and to take any and all actions on behalf of the
Partnership, and such Person shall be entitled to deal with the General
Partner as if the General Partner were the Partnership's sole party in
interest, both legally and beneficially. Each Partner hereby waives any
and all defenses or other remedies which may be available against such
Person to contest, negate or disaffirm any action of the General
Partner in connection with any such dealing. In no event shall any
Person dealing with the General Partner or its representatives be
obligated to ascertain that the terms of this Agreement have been
complied with or to inquire into the necessity or expedience of any act
or action of the General Partner or its representatives. Each and every
certificate, document or other instrument executed on behalf of the
Partnership by the General Partner or its representatives shall be
conclusive evidence in favor of any and every Person relying thereon or
claiming thereunder that (i) at the time of the execution and delivery
of such certificate, document or instrument, this Agreement was in full
force and effect, (ii) the Person executing and delivering such
certificate, document or instrument was duly authorized and empowered
to do so for and on behalf of the Partnership, and (iii) such
certificate, document or
instrument was duly executed and delivered in accordance with the terms
and provisions of this Agreement and is binding upon the Partnership.
4.7 AFFILIATED COMPENSATION . The General Partner may retain
such Persons or Entities as it shall determine (including any Person or
Entity in which the General Partner shall have an interest or of which
it is an Affiliate) to provide services to or on behalf of the
Partnership for such reasonable compensation as the General Partner
deems to be appropriate.
4.8 TITLE TO PARTNERSHIP ASSETS . Title to Partnership assets,
whether real, personal or mixed and whether tangible or intangible,
shall be deemed to be owned by the Partnership as an entity, and no
Partners, individually or collectively, shall have any ownership
interest in such Partnership assets or any portion thereof. Title to
any or all of the Partnership assets, including any bank accounts, may
be held in the name of the Partnership, the General Partner or one or
more nominees, as the General Partner may determine, including
Affiliates of the General Partner. The General Partner hereby declares
and warrants that any Partnership assets for which legal title is held
in the name of any General Partner or any nominee or Affiliate of the
General Partner shall be held by that General Partner for the use and
benefit of the Partnership in accordance with the provisions of this
Agreement. All Partnership assets shall be recorded as the property of
the Partnership in its books and records, irrespective of the name in
which legal title to such Partnership assets is held.
ARTICLE V
RIGHTS AND OBLIGATIONS OF PARTNERS
5.1 ADMISSION OF PARTNERS . Each of the Partners listed on
Exhibit A is hereby admitted and shall be recognized as a Partner of
the Partnership. No other Person shall be admitted or recognized as a
Partner of the Partnership, unless such Person is admitted in
accordance with this Agreement. The Partnership shall not at any time
have more than one hundred (100) Partners. For purposes of the
preceding sentence, a Partner shall include any Person indirectly
owning an interest in the Partnership through a partnership, limited
liability company, S corporation or grantor trust (such entity, a "flow
through entity"), but only if (i) substantially all of the value of
such Person's interest in the flow through entity is attributable to
the flow through entity's interest (direct or indirect) in the
Partnership, in each case within the meaning of Treasury Regulation
Section 1.7704-1(h) and (ii) a principal purpose of the use of the flow
through entity is to permit the Partnership to satisfy the 100 partner
limitation in Treasury Regulation Section 1.7704-1(h)(1)(ii).
5.2 LIMITATION OF LIABILITY . Each Partner's liability shall
be limited as set forth in this Agreement, the Act and other applicable
law.
5.3 LIST OF PARTNERS . Upon written request of any Partner,
the General Partner shall provide a list showing the names, addresses
and Percentage Interests of all Partners.
5.4 PARTNERSHIP BOOKS . The General Partner of the Partnership
shall maintain and preserve, during the term of the Partnership, and
for a time period thereafter consistent with reasonable record
retention policies, all accounts, books, Official Records and other
relevant Partnership documents. Upon reasonable request, each Partner
shall have the right, during ordinary business hours, to inspect and
copy such Partnership documents at the requesting Partner's expense.
5.5 REPRESENTATION BY PARTNERS . Each Partner represents and
warrants to the other Partners and to the Partnership as follows:
(a) All transactions contemplated by this Agreement to be
performed by such Partner have been duly authorized by all necessary
action and do not require the consent or approval of any third party,
and such Partner has all necessary power with respect thereto.
(b) The consummation of the transactions contemplated by this
Agreement will not (and with the giving of notice or lapse of time or
both would not) result in a breach or violation of, or a default or
loss of contractual benefits under, any trust agreement or other
agreement by which such Partner or any of such Partner's properties is
bound, or any statute, regulation, order or other law to which such
Partner or any of such Partner's properties is subject, or give rise to
a lien or other encumbrance upon any of such Partner's properties or
assets.
(c) This Agreement is a valid and binding agreement on the
part of such Partner, enforceable in accordance with its terms.
(d) Such Partner's interest in the Partnership will be
acquired solely by and for the account of such Partner and is not being
purchased for subdivision, fractionalization, resale or distribution;
such Partner has no contract, undertaking, agreement or arrangement
with any person to sell or transfer to such person or anyone else such
Partner's interests in the Partnership (or any part thereof); and such
Partner has no present plans or intentions to enter into any such
contract, undertaking or arrangement.
(e) Such Partner's interests in the Partnership have not and
will not be registered under the federal Securities Act of 1933, as
amended, or the securities laws of any state, and cannot be sold or
transferred without compliance with the registration provisions of said
Act or state laws or compliance with exemptions, if any, available
thereunder. Such Partner understands that neither the Partnership nor
any Partner have any obligation or intention to register the interests
in the Partnership under any federal or state securities act or law, or
to file the reports to make public the information required by Rule 144
under the Securities Act of 1933, as amended.
(f) Such Partner: (i) has such knowledge and experience in
financial and business matters in general, and in investments of the
type made by the Partnership in particular, that such Partner is
capable of evaluating the merits and risks of an investment in the
Partnership; (ii) has a financial condition that is such that such
Partner has no need for liquidity with respect to such Partner's
investment in the Partnership to satisfy any existing or contemplated
undertaking or indebtedness; (iii) is able to bear the economic risk of
such Partner's investment in the Partnership for an indefinite period
of time, including the risk of losing all of such investment, and loss
of such investment would not materially adversely affect such Partner;
(iv) has either secured independent tax advice with respect to the
investment in the Partnership, upon which such Partner is solely
relying, or such Partner is sufficiently familiar with the income
taxation of entities similar to the Partnership that such Partner has
deemed such independent advice unnecessary; and (v) has sufficient
liquidity and net worth to satisfy, when required, its financial
commitments to the Partnership.
(g) Such Partner acknowledges that all documents pertaining to
the transaction have been made available to it and such Partner has
been allowed an opportunity to ask questions and receive answers
thereto and to verify and clarify any information contained in the
documents.
(h) Such Partner has relied solely upon the documents
submitted to such Partner and independent investigations made by such
Partner in making the decision to become a Partner, and acknowledges
that no representations or agreements other than those set forth in
this Agreement have been made in respect thereto.
(i) Such Partner expressly acknowledges that: (i) such
Partner's interests in the Partnership are speculative investments that
involve a high degree of risk of loss of the entire investment of such
Partner in the Partnership; (ii) no federal or state agency has
reviewed or passed upon the adequacy or accuracy of the information set
forth in the documents submitted to such Partner or made any finding or
determination as to the fairness for investment, or any recommendation
or endorsement of an investment in the Partnership; (iii) there are
restrictions on the transferability of the interests in the
Partnership; there will be no public market for the interests in the
Partnership; and, accordingly, it may not be possible for such Partner
to liquidate such Partner's investment in the Partnership; and (iv) any
anticipated federal or state income tax benefits applicable to such
Partner's interests in the Partnership may be lost through changes in,
or adverse interpretations of, existing laws and regulations.
(j) Such Partner has not offered or sold to any Person
interests in such Partner that could or would have the effect of
subjecting the Partnership to the registration requirements of the
federal Securities Act of 1933, as amended, or any applicable state
securities law, or exposing the Partnership, the other Partners or any
Affiliates of the other Partners to any disclosure obligations or
liabilities under any applicable federal or state securities law.
(k) Such Partner is an "accredited investor", within the
meaning of Rule 501 promulgated under the Securities Act of 1933. A
Partner who receives the return in whole or in part of its contribution
is liable to the Partnership only to the extent, if any, provided by
the Act.
ARTICLE VI
CAPITAL CONTRIBUTIONS TO THE PARTNERSHIP; CAPITAL ACCOUNTS;
DISTRIBUTIONS; ALLOCATIONS
6.1 PARTNERS' CAPITAL AND INTERESTS IN THE PARTNERSHIP .
(a) INITIAL CAPITAL CONTRIBUTIONS. The Partners shall own
Partnership Interests of the class and in the amounts set forth in
Exhibit A and shall have a Percentage Interest in the Partnership as
set forth in Exhibit A, which Percentage Interest shall be adjusted in
Exhibit A from time to time by the General Partner to the extent
necessary to accurately reflect exchanges, redemptions, Capital
Contributions, the issuance of additional Partnership Interests or
similar events having an effect on a Partner's Percentage Interest.
Except as required by law or as otherwise provided in subsection (b)
hereof and Section 7.4(e), no Partner shall be required or permitted to
make any additional Capital Contributions or loans to the Partnership.
(b) GENERAL. The General Partner may, at any time and from
time to time, determine that the Partnership requires additional funds
("Additional Funds") for the acquisition of additional properties or
for such other Partnership purposes as the General Partner may
determine. Additional Funds may be raised by the Partnership, at the
election of the General Partner, in any manner provided in, and in
accordance with, the terms of this subsection (b). No Person shall have
any preemptive, preferential or similar right or rights to subscribe
for or acquire any Partnership Interest.
(c) ISSUANCE OF ADDITIONAL PARTNERSHIP INTERESTS. The General
Partner may raise all or any portion of the Additional Funds by
accepting additional Capital Contributions of cash. The General Partner
may also accept additional Capital Contributions of real property or
other non-cash assets. In connection with any such additional Capital
Contributions (of cash or property), the General Partner is hereby
authorized to cause the Partnership from time to time to issue to
Partners (including the General Partner) or other Persons (including,
without limitation, in connection with the contribution of property to
the Partnership) additional Common Partnership Interests, or Preference
Interests, all as shall be determined by the General Partner in its
sole and absolute discretion subject to Ohio law, and as set forth by
an other securities term sheet to this Agreement (an "Other Securities
Term Sheet"), including without limitation: (i) the allocations of
items of Profit, Loss, income, gain, loss, deduction and credit to such
class or series of Preference Interests; (ii) the right of each such
class or series of Preference Interests to share in distribution of
Distributable Funds from Partnership Operations; (iii) the rights of
each such class or series of Preference Interests upon dissolution and
liquidation of the Partnership; and (iv) the right to vote. In the
event that the Partnership issues additional Preference Interests
pursuant to this subsection (c), the General Partner shall make such
revisions to this Agreement (including but not limited to an Other
Securities Term Sheet and the revisions described in Sections 9.3 and
6.8) as it determines are necessary to reflect the issuance of such
additional Preference Interests.
(d) PERCENTAGE INTEREST ADJUSTMENTS IN THE CASE OF CAPITAL
CONTRIBUTIONS FOR PARTNERSHIP INTERESTS. Upon the acceptance of
additional Capital Contributions in exchange for Partnership Interests,
the Percentage Interest related thereto, and the Percentage Interest of
each other Partner shall be equal to the amounts agreed to by the
Partnership and the contributors.
(e) NO PREEMPTIVE RIGHTS. Except to the extent expressly
granted by the Partnership, pursuant to another agreement, no Person
shall have any preemptive, preferential or other similar right with
respect to (i) making additional Capital Contributions to the
Partnership or (ii) issuance or sale of any Partnership Interests.
(f) LIMITED LIABILITY. Anything in this Agreement to the
contrary notwithstanding, the personal liability of any Partner arising
out of or in any manner relating to the Partnership shall be limited to
and shall not exceed that Partner's Capital Contribution made and
required to be made hereunder. No Partner shall have any personal
liability for liabilities or obligations of the Partnership, except to
the extent of its Capital Contributions as aforesaid, and, except as
aforesaid, no Partner shall be required to make any further or
additional contributions to the capital of the Partnership or to lend
or advance funds to the Partnership for any purpose.
(g) NO BENEFIT TO CREDITORS. The obligation, if any, of a
Partner to contribute to the capital of the Partnership is solely and
exclusively for the benefit of the Partnership and the Partners, and is
not intended to confer rights on any third party. Without limiting the
generality of the foregoing, no creditor of the Partnership shall be
deemed a third party beneficiary of any obligation of any Partner to
contribute capital or make advances to the Partnership.
6.2 CAPITAL ACCOUNTS .
(a) A separate Capital Account shall be maintained for each
Partner. Each Partner's Capital Account shall be (a) CREDITED WITH (i)
the amount of money contributed by such Partner, (ii) the Gross Asset
Value of property contributed by such Partner (net of liabilities
encumbering such contributed property that the Partnership is
considered to assume or take subject to under
Section 752 of the Code), and (iii) allocations to such Partner of
Partnership income and gain (or items thereof) (including income and
gain exempt from tax and income and gain described in Treasury
Regulation Section 1.704-1(b)(2)(iv)(g), but excluding income and gain
described in Treasury Regulation Section 1.704-1(b)(4)(i)); and (b)
DEBITED WITH (i) the amount of money distributed to such Partner, (ii)
the Gross Asset Value of property distributed to such Partner (net of
liabilities encumbering such distributed property that such Partner is
considered to assume or take subject to under Section 752 of the Code),
(iii) allocations to such Partner of expenditures described in Section
705(a)(2)(B) of the Code (including expenditures deemed to be Section
705(a)(2)(B) expenditures under Treasury Regulation Section
1.704-1(b)(2)(iv)(i)), and (iv) allocations to such Partner of
Partnership loss and deduction (or item thereof) (including loss and
deduction described in Treasury Regulation Section
1.704-1(b)(2)(iv)(g), but excluding: (A) items described in (b)(iii)
above, and (B) loss or deduction described in Treasury Regulations
Sections 1.704-1(b)(4)(i) or (iii)).
(b) The Capital Accounts of the Partners may, in the sole
discretion of the General Partner, be adjusted to reflect a revaluation
of Partnership property (including intangible assets such as goodwill)
on the books of the Partnership if such adjustments are made
principally for a substantial non-tax business purpose (i) in
connection with a contribution of money or other property (other than a
DE MINIMIS amount) to the Partnership by a new or existing Partner as
consideration for an interest in the Partnership, or (ii) in connection
with the liquidation of the Partnership or a distribution of money or
other property (other than a DE MINIMIS amount) by the Partnership to a
retiring or continuing Partner as consideration for an interest in the
Partnership. Such Capital Account adjustments, if made under these
circumstances, shall (i) be based on the fair market value of
Partnership property (taking Section 7701(g) of the Code into account)
on the date of adjustment, (ii) reflect the manner in which the
unrealized income, gain, loss or deduction inherent in such property
(that has not been reflected in the Capital Accounts previously) would
be allocated among the Partners if there were a taxable disposition of
such property for such fair market value on that date and (iii) be made
in accordance with Treasury Regulation Section 1.704-1(b)(2)(iv)(g) for
allocations to the Partners of depreciation, depletion, amortization,
and gain or loss, as computed for book purposes, with respect to such
property.
(c) No Partner shall be entitled to a return of its Capital
Contributions except by way of the distribution to it of assets upon
the dissolution of the Partnership pursuant to the provisions of this
Agreement. No interest shall be allocated to any Partner on the amount
of its Capital Account.
(d) Except as provided in this Agreement or any Other
Securities Term Sheet, there shall be no priority of one or more of the
Partners over other Partners as to a return of Capital Contributions,
withdrawals or distributions of Distributable Funds from Partnership
Operations.
(e) A negative Capital Account of any Partner shall not be
considered an asset of the Partnership at any time, and no Partner
having a negative Capital Account shall be obliged to restore its
negative Capital Account.
6.3 TIMING AND AMOUNT OF ALLOCATIONS OF PROFITS AND LOSSES .
Profits and Losses of the Partnership shall be determined and allocated
with respect to each Fiscal Year of the Partnership as of the end of
each such year. Subject to the other provisions of this Article 6, an
allocation to a Partner of a share of Profits or Losses shall be
treated as an allocation of the same share of each item of income,
gain, loss or deduction that is taken into account in computing Profits
or Losses.
6.4 GENERAL ALLOCATIONS OF PROFITS AND LOSSES .
(a) IN GENERAL. Except as otherwise provided in this Article
6, Profits and Losses allocable with respect to a class of Partnership
Interests, shall be allocated to each of the Partners holding such
class of Partnership Interests in accordance with their respective
Percentage Interest of such class.
(b) (i) PROFITS. Except as provided in Section 6.5, Profits
for any Fiscal Year shall be allocated in the following manner and
order of priority:
(1) First, 100% to the holders of Common
Partnership Interests in an amount equal to the
excess, if any, of the cumulative Losses allocated to
the holders of Common Partnership Interests pursuant
to Section 6.4(b)(ii)(3) for all prior Fiscal Years
minus the cumulative Profits allocated to such
holders pursuant to this Section 6.4(b)(i)(1) for all
prior Fiscal Years;
(2) Second, 100% to the holders of
Preference Partnership Interests in an amount equal
to the excess, if any, of the cumulative Losses
allocated to such holders pursuant to Section
6.4(b)(ii)(2) for all prior Fiscal Years minus the
cumulative Profits allocated to such holders pursuant
to this Section 6.4(b)(i)(2) for all prior Fiscal
Years;
(3) Third, 100% to the holders of Common
Partnership Interests in an amount equal to the
excess, if any, of the cumulative Losses allocated to
each such holder pursuant to Section 6.4(b)(ii)(1)
for all prior Fiscal Years minus the cumulative
Profits allocated to each holder pursuant to this
Section 6.2(b)(i)(3) for all prior Fiscal Years; and
(4) 100% to the holders of Common
Partnership Interests in accordance with their
respective Percentage Interests in the Common
Partnership Interests.
To the extent the allocations of Profits set forth above in any
paragraph of this Section 6.4(b)(i) are not sufficient to entirely
satisfy the allocation set forth in such paragraph, such allocation
shall be made in proration to the total amount that would have been
allocated pursuant to such paragraph without regard to such shortfall.
(ii) LOSSES. Except as provided in Section 6.5,
Losses for any Fiscal Year shall be allocated in the following
manner and order of priority:
(1) First, 100% to the holders of Common
Partnership Interests in accordance with their
respective Percentage Interests, until the Adjusted
Capital Account (ignoring for this purpose any
amounts a Partner is obligated to contribute to the
capital of the Partnership or is deemed obligated to
contribute to the capital of the Partnership pursuant
to Treasury Regulation Section
1.704-1(b)(2)(ii)(c)(2) and ignoring the Partner's
Preference Interest) of each such Partner is zero;
(2) Second, 100% to the holders of
Preference Interests, pro rata, in proportion to
their Adjusted Capital Account balances, until the
Adjusted Capital
Account of each such Partner is zero; provided,
however that if there are multiple classes of
Preference Interests with different liquidation
preferences, then Losses allocated pursuant to this
Section 6.4(b)(ii)(2) shall be allocated among the
classes of such holders of Preference Interests in
reverse order to the order of liquidation preference
of such class (and within such class, pro rata, in
proportion to the Adjusted Capital Account balances
of such Partners). For purposes of this Section
6.4(b)(ii)(2), the Adjusted Capital Account shall be
determined by ignoring any amounts a holder is
obligated to contribute to the capital of the
Partnership or is deemed obligated to contribute
pursuant to Treasury Regulation Section
1.704-1(b)(2)(ii)(c)(2)); and
(3) 100% to the holders of Common
Partnership Interests in accordance with their
respective Percentage Interests.
(c) ALLOCATIONS TO REFLECT ISSUANCE OF ADDITIONAL PARTNERSHIP
INTERESTS. In the event that the Partnership issues additional
Partnership Interests to the General Partner, another existing Partner
or any Additional Partner, the General Partner shall make such
revisions to this Section 6.4 or to other provisions of this Agreement
as it determines are necessary to reflect the terms of the issuance of
such additional Partnership Interests, including making preferential
allocations to certain classes of Partnership Interests, subject to the
terms of any Other Securities Term Sheet.
6.5 ADDITIONAL ALLOCATION PROVISIONS . Notwithstanding the
foregoing provisions of this Article 6:
(a) REGULATORY ALLOCATIONS.
(i) MINIMUM GAIN CHARGEBACK. Except as otherwise
provided in Treasury Regulation Section 1.704-2(f),
notwithstanding the provisions of Section 6.4, or any other
provision of this Article 6, if there is a net decrease in
Partnership Minimum Gain during any Fiscal 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, as determined under Treasury
Regulation 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 allocated shall be
determined in accordance with Treasury Regulation Section
1.704-2(f)(6) and 1.704-2(j)(2). This Section 6.5(a)(i) is
intended to qualify as a "minimum gain chargeback" within the
meaning of Treasury Regulation Section 1.704-2(f) which shall
be controlling in the event of a conflict between such
Treasury Regulation and this Section 6.5(a)(i).
(ii) PARTNER MINIMUM GAIN CHARGEBACK. Except as
otherwise provided in Treasury Regulation Section
1.704-2(i)(4), and notwithstanding the provisions of Section
6.4, or any other provisions of this Article 6 (except Section
6.5(a)(i)), if there is a net decrease in Partner Minimum Gain
attributable to a Partner Nonrecourse Debt during any Fiscal
Year, each Partner who has a share of the Partner Minimum Gain
attributable to such Partner Nonrecourse Debt, determined in
accordance with Treasury Regulation 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
Treasury Regulation Section 1.704-2(i)(4) and 1.704-2(j)(2).
This Section 6.3A(ii) is intended to qualify as a "chargeback
of partner nonrecourse debt minimum gain" within the meaning
of Treasury Regulation Section 1.704-2(i) which shall be
controlling in the event of a conflict between such Treasury
Regulation and this Section 6.5(a)(ii).
(iii) NONRECOURSE DEDUCTIONS AND PARTNER NONRECOURSE
DEDUCTIONS. Any Nonrecourse Deductions for any Fiscal Year
shall be specially allocated to the Partners in accordance
with their respective Percentage Interest in Common
Partnership Interests. Any Partner Nonrecourse Deductions for
any Fiscal Year shall be specially allocated to the Partner(s)
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 Treasury
Regulation Section 1.704-2(b)(4) and 1.704-2(i).
(iv) QUALIFIED INCOME OFFSET. If any Partner
unexpectedly receives an adjustment, allocation or
distribution described in Treasury Regulation Section
1.704-1(b)(2)(ii)(d)(4), (5) or (6), items of Partnership
income and gain shall be allocated, in accordance with
Treasury Regulation Section 1.704-1(b)(2)(ii)(d), to the
Partner in an amount and manner sufficient to eliminate, to
the extent required by such Treasury Regulations, the Adjusted
Capital Account Deficit of the Partner as quickly as possible
provided that an allocation pursuant to this Section
6.5(a)(iv) shall be made if and only to the extent that such
Partner would have an Adjusted Capital Account Deficit after
all other allocations provided in this Article 6 have been
tentatively made as if this Section 6.5(a)(iv) were not in the
Agreement. It is intended that this Section 6.5(a)(iv) qualify
and be construed as a "qualified income offset" within the
meaning of Treasury Regulation Section 1.704-1(b)(2)(ii)(d),
which shall be controlling in the event of a conflict between
such Treasury Regulation and this Section 6.5(a)(iv).
(v) GROSS INCOME ALLOCATION. In the event any Partner
has a deficit Capital Account at the end of any Fiscal Year
which is in excess of the sum of (a) the amount (if any) such
Partner is obligated to restore to the Partnership and (b) the
amount such Partner is deemed to be obligated to restore
pursuant to Treasury Regulation Section 1.704-1(b)(ii)(c) or
the penultimate sentences of Treasury Regulation Section
1.704-2(g)(1) and 1.704-2(i)(5), each such Partner shall be
specially allocated items of Partnership income and gain in
the amount of such excess as quickly as possible; provided,
that an allocation pursuant to this Section 6.5(a)(v) shall be
made if and only to the extent that such Partner would have a
deficit Capital Account in excess of such sum after all other
allocations provided in this Article 6 have been tentatively
made as if this Section 6.5(a)(v) and Section 6.5(a)(iv) were
not in the Agreement.
(vi) LIMITATION ON ALLOCATION OF LOSSES. To the
extent any allocation of Losses would cause or increase an
Adjusted Capital Account Deficit as to any Partner, such
allocation of Losses shall be reallocated among the other
Partners in accordance with their respective Percentage
Interests in Common Partnership Interests, subject to the
limitations of this Section 6.5(a)(vi).
(vii) SECTION 754 ADJUSTMENT. 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 Treasury Regulation Sections
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 his interest in the Partnership, the amount of such
adjustment to the Capital Accounts shall be treated as an item
of gain (if the adjustment increases the basis of the asset)
or loss (if the adjustment decreases such basis) and such gain
or loss shall be specially allocated to the Partners in
accordance with their interests in the Partnership in the
event that Treasury Regulation Section 1.704-1(b)(2)(iv)(m)(2)
applies, or to the Partners to whom such distribution was made
in the event that Treasury Regulation Section
1.704-1(b)(2)(iv)(m)(4) applies.
(viii) CURATIVE ALLOCATION. The allocations set forth
in Sections 6.5(a)(i), (ii), (iii), (iv), (v), (vi) and (vii)
(the "Regulatory Allocations") are intended to comply with
certain regulatory requirements, including the requirements of
Treasury Regulation Sections 1.704-1(b) and 1.704-2.
Notwithstanding the provisions of Sections 6.3 and 6.4, the
Regulatory Allocations shall be taken into account in
allocating other items of income, gain, loss and deduction
among the Partners so that, to the extent possible, the net
amount of such allocations of other items and the Regulatory
Allocations to each Partner shall be equal to the net amount
that would have been allocated to each such Partner if the
Regulatory Allocations had not occurred.
(b) ALLOCATION OF NONRECOURSE LIABILITIES. For purposes of
determining a Partner's proportional share of the "excess nonrecourse
liabilities" of the Partnership within the meaning of Treasury
Regulation Section 1.752-3(a)(3), each Partner's interest in
Partnership profits shall be such Partner's Percentage Interest.
6.6 TAX ALLOCATIONS .
(a) IN GENERAL. Except as otherwise provided in this Section
6.6 for income tax purposes each item of income, gain, loss and
deduction (collectively, "Tax Items") shall be allocated among the
Partners in the same manner as its correlative item of "book" income,
gain, loss or deduction is allocated pursuant to Sections 6.4 and 6.5.
(b) ALLOCATIONS RESPECTING SECTION 704(C) REVALUATIONS.
Notwithstanding Section 6.6(a), Tax Items with respect to Partnership
property that is contributed to the Partnership by a Partner shall be
shared among the Partners for income tax purposes pursuant to Treasury
Regulations promulgated under Code Section 704(c), so as to take into
account the variation, if any, between the basis of the property to the
Partnership and its initial Gross Asset Value. The Partnership shall
account for such variation under any method approved under Code Section
704(c) and the applicable regulations as selected by the General
Partner. In the event the Gross Asset Value of any Partnership asset is
adjusted pursuant to subparagraph (ii) of the definition of Gross Asset
Value (provided in Article 1), subsequent allocations of Tax Items with
respect to such asset shall take account of the variation, if any,
between the adjusted basis of such asset and its Gross Asset Value in
the same manner as under Code Section 704(c) and the applicable
regulations consistent with the requirements of Treasury Regulation
Section 1.704-1(b)(iv)(g) using any method approved under Code Section
704(c) and the applicable regulations as selected by the General
Partner.
6.7 DISTRIBUTIONS OF OPERATING AND CAPITAL CASH FLOW .
(a) Distributions of Operating Cash Flow shall be made at
least annually at such time or times as the General Partner shall
determine. The Operating Cash Flow of the Partnership shall be
distributed as follows:
(i) first, to the extent applicable, to the Partners
holding Preference Partnership Interests to the extent of the
respective priorities (if any) established by the applicable
Other Securities Term Sheet; and
(ii) thereafter, to the Partners in accordance with
their respective Percentage Interests.
(b) Distributions of Capital Cash Flow shall be made at such
time as the General Partner shall determine. Except as otherwise
provided in Section 10.3 hereafter with respect to liquidation of the
Partnership, the Capital Cash Flow of the Partnership shall be
distributed as follows:
(i) first, to pay such debts of the Partnership as
the General Partner shall determine;
(ii) second, to the extent applicable, to the
Partners holding Preference Partnership Interests to the
extent of the respective priorities (if any) established by
the applicable Other Securities Term Sheet; and
(iii) thereafter, to the Partners in accordance with
their respective Percentage Interests.
6.8 REVISIONS TO REFLECT ISSUANCE OF ADDITIONAL PARTNERSHIP
INTERESTS . If the Partnership issues Partnership Interests to the
General Partner or any Additional Partner pursuant to this Article VI
hereof, the General Partner shall make the revisions to this Article VI
and Exhibit A as it deems necessary to reflect the issuance of such
additional Partnership Interests without the requirements for any other
consents or approvals.
ARTICLE VII
BOOKS OF ACCOUNT, RECORDS AND REPORTS; TAX ITEMS
7.1 RECORDS AND ACCOUNTING . The General Partner shall keep or
cause to be kept at the principal office of the Partnership appropriate
books and records with respect to the Partnership's business,
including, without limitation, all books and records necessary to
provide to the Partners any information, lists and copies of documents
required to be provided pursuant to Section 7.3. Any records maintained
by or on behalf of the Partnership in the regular course of its
business may be kept on, or be in the form of, punch cards, magnetic
tape, photographs, micrographics or any other information storage
device, provided that the records so maintained are convertible into
clearly legible written form within a reasonable period of time. The
books of the Partnership shall be maintained, for financial and tax
reporting purposes, on an accrual basis in accordance with generally
accepted accounting principles.
7.2 FISCAL YEAR . The fiscal year of the Partnership shall be
the calendar year.
7.3 REPORTS .
(a) ANNUAL REPORTS. As soon as practicable, but in no event
later than the date on which EQR mails its annual report to its
shareholders, the General Partner shall cause to be mailed to each
Partner an annual report, as of the close of the most recently ended
Fiscal Year, containing financial statements of the Partnership, or of
EQR if such statements are prepared solely on a consolidated basis with
the Partnership, for such Fiscal Year, presented in accordance with
generally accepted accounting principles, such statements to be audited
by a nationally recognized firm of independent public accountants
selected by EQR
(b) QUARTERLY REPORTS. If and to the extent that the EQR mails
quarterly reports to its shareholders, as soon as practicable, but in
no event later than the date on such reports are mailed, EQR shall
cause to be mailed to each Partner a report containing unaudited
financial statements, as of the last day of such calendar quarter, of
the Partnership, or of EQR if such statements are prepared solely on a
consolidated basis with the Partnership, and such other information as
may be required by applicable law or regulation, or as the General
Partner determines to be appropriate.
7.4 TAX MATTERS .
(a) PREPARATION OF TAX RETURNS. The General Partner shall
arrange for the preparation and timely filing of all returns of
Partnership income, gains, deductions, losses and other items required
of the Partnership for federal and state income tax purposes and shall
use all reasonable efforts to furnish, within ninety (90) days of the
close of each taxable year, the tax information reasonably required by
Partners for federal and state income tax reporting purposes.
(b) TAX ELECTIONS. Except as otherwise provided herein, the
General Partner shall, in its sole and absolute discretion, determine
whether to make any available election pursuant to the Code, including,
without limitation, the election under Section 754 of the Code in
accordance with applicable regulations thereunder. The General Partner
shall have the right to seek to revoke any such election (including,
without limitation, the election under Section 754 of the Code) upon
the General Partner's determination in its sole and absolute discretion
that such revocation is in the best interests of the Partners.
(c) TAX MATTERS PARTNER.
(i) GENERAL. The General Partner shall be the "tax
matters partner" of the Partnership for federal income tax
purposes. Pursuant to Section 6223(c)(3) of the Code, upon
receipt of notice from the IRS of the beginning of an
administrative proceeding with respect to the Partnership, the
tax matters partner shall furnish the IRS with the name,
address, taxpayer identification number and profit interest of
each of the Partners and any Assignees; provided, however,
that such information is provided to the Partnership by the
Partners.
(ii) POWERS. The tax matters partner is authorized,
but not required:
(1) to enter into any settlement with the
IRS with respect to any administrative or judicial
proceedings for the adjustment of Partnership items
required to be taken into account by a Partner for
income tax purposes (such administrative proceedings
being referred to as a "tax audit" and such judicial
proceedings being referred to as "judicial review"),
and in the settlement agreement the tax matters
partner may expressly state that such agreement shall
bind all Partners, except that such settlement
agreement shall not bind any Partner (i) who (within
the time prescribed pursuant to the Code and Treasury
Regulations) files a statement with the IRS providing
that the tax matters partner shall not have the
authority to enter into a settlement agreement on
behalf of such Partner or (ii) who is a "notice
partner" (as defined in Section 6231(a)(8) of the
Code) or a Partner of a "notice group" (as defined in
Section 6223(b)(2) of the Code);
(2) if a notice of a final administrative
adjustment at the Partnership level of any item
required to be taken into account by a Partner for
tax purposes (a "final adjustment") is mailed to the
tax matters partner, to seek judicial review of such
final adjustment, including the filing of a petition
for readjustment with the Tax Court or the filing of
a complaint for refund with the United States Claims
Court or the District Court of the United States for
the district in which the Partnership's principal
place of business is located;
(3) to intervene in any action brought by
any other Partner for judicial review of a final
adjustment;
(4) to file a request for an administrative
adjustment with the IRS at any time and, if any part
of such request is not allowed by the IRS, to file an
appropriate pleading (petition or complaint) for
judicial review with respect to such request;
(5) to enter into an agreement with the IRS
to extend the period for assessing any tax which is
attributable to any item required to be taken into
account by a Partner for tax purposes, or an item
affected by such item; and
(6) to take any other action on behalf of
the Partners of the Partnership in connection with
any tax audit or judicial review proceeding to the
extent permitted by applicable law or regulations.
The taking of any action and the incurring of any expense by the tax
matters partner in connection with any such proceeding, except to the
extent required by law, is a matter in the sole and absolute discretion
of the tax matters partner and the provisions relating to
indemnification of the General Partner set forth in Section 4.4 shall
be fully applicable to the tax matters partner in its capacity as such.
(iii) REIMBURSEMENT. The tax matters partner shall
receive no compensation for its services. All third party
costs and expenses incurred by the tax matters partner in
performing its duties as such (including legal and accounting
fees and expenses) shall be borne by the Partnership. Nothing
herein shall be construed to restrict the Partnership from
engaging an accounting firm and/or law firm to assist the tax
matters partner in discharging its duties hereunder, so long
as the compensation paid by the Partnership for such services
is reasonable.
(d) ORGANIZATIONAL EXPENSES. The Partnership shall deduct
expenses, if any, incurred by it in organizing the Partnership as
provided in Section 709 of the Code.
(e) WITHHOLDING. Each Partner hereby authorizes the
Partnership to withhold from or pay on behalf of or with respect to
such Partner any amount of federal, state, local, or foreign taxes that
the General Partner determines that the Partnership is required to
withhold or pay with respect to any amount distributable or allocable
to such Partner pursuant to this Agreement, including, without
limitation, any taxes required to be withheld or paid by the
Partnership pursuant to Section 1441, 1442, 1445, or 1446 of the Code.
Any amount paid on behalf of or with respect to a Partner shall
constitute a loan by the Partnership to such Partner, which loan shall
be repaid by such Partner within fifteen (15) days after notice from
the General Partner that such payment must be made unless (i) the
Partnership withholds such payment from a distribution which would
otherwise be made to the Partner or (ii) the General Partner
determines, in its sole and absolute discretion, that such payment may
be satisfied out of the available funds of the Partnership which would,
but for such payment, be distributed to the Partner. Any amounts
withheld pursuant to the foregoing clauses (i) or (ii) shall be treated
as having been distributed to such Partner. Each Partner hereby
unconditionally and irrevocably grants to the Partnership a security
interest in such Partner's Partnership Interest to secure such
Partner's obligation to pay to the Partnership any amounts required to
be paid pursuant to this Section 7.4(e). If a Partner fails to pay any
amounts owed to the Partnership pursuant to this Section 7.4(e) when
due, the General Partner may, in its sole and absolute discretion,
elect to make the payment to the Partnership on behalf of such
defaulting Partner, and in such event shall be deemed to have loaned
such amount to such defaulting Partner and shall succeed to all rights
and remedies of the Partnership as against such defaulting Partner
(including, without limitation, the right to receive distributions).
Any amounts payable by a Partner hereunder shall bear interest at the
base rate on corporate loans at large United States money center
commercial banks, as published from time to time in the Wall Street
Journal, plus four (4) percentage points (but not higher than the
maximum lawful rate under the laws of the State of Ohio) from the date
such amount is due (I.E., fifteen (15) days after demand) until such
amount is paid in full. Each Partner shall take such actions as the
Partnership or the General Partner shall request to perfect or enforce
the security interest created hereunder.
ARTICLE VIII
TRANSFERS AND WITHDRAWALS
8.1 TRANSFER .
(a) The term "transfer," when used in this Article VIII with
respect to a Partnership Interest, shall be deemed to refer to a
transaction by which a Partner purports to assign its Partnership
Interest to another Person, and includes a sale, assignment, gift
(outright or in trust), pledge, encumbrance, hypothecation, mortgage,
exchange or any other disposition by law or otherwise. No part of the
Partnership Interest of a Partner shall be subject to the claims of any
creditor, any spouse for alimony or support, or to legal process, and
may not be voluntarily or involuntarily alienated or encumbered, except
as may be specifically provided for in this Agreement.
(b) No Partnership Interest shall be transferred, in whole or
in part, except in accordance with the terms and conditions set forth
in this Article VIII. Any transfer or purported transfer of a
Partnership Interest of a Limited Partner not made in accordance with
this Article VIII shall be null and void AB INITIO unless otherwise
consented by the General Partner in its sole and absolute discretion.
8.2 TRANSFER OF PARTNERSHIP INTERESTS OF THE GENERAL PARTNER
AND HOLDERS OF COMMON PARTNERSHIP INTERESTS .
(a) Except as provided below, the General Partner shall not
withdraw from the Partnership and shall not transfer all or any portion
of its interest in the Partnership (whether by sale, statutory merger,
consolidation, liquidation or otherwise) other than to one or more
Persons wholly-owned, directly or indirectly, by ERP and/or EQR. Any
prohibited transfer of the General Partner's Partnership Interest shall
be void AB INITIO. Notwithstanding the foregoing, the General Partner
shall be entitled to transfer its interest in the Partnership if such
transfer would not violate the terms of an Other Securities Term Sheet.
(b) Except as otherwise provided in this Article VIII, a
Limited Partner shall not withdraw from or transfer all or any portion
of its Partnership Interest in the Partnership (whether by sale,
statutory merger, consolidations, liquidation or otherwise) without the
prior written consent of the General Partner (which consent may be
given or withheld in the General Partner's sole and absolute
discretion). Any attempted transfer of a Partnership Interest of a
Limited Partner contrary to this Section 8.2(b) shall be void AB
INITIO. To the extent the prior sentence does not have the effect of
preventing any such proposed transfer, the transfer shall vest in the
General Partner the authority to dissolve the Partnership, in its
discretion.
8.3 LIMITED PARTNERS' RIGHTS TO TRANSFER .
(a) Any Limited Partner may, at any time without the consent
of the General Partner, subject to the provisions of Section 8.6, (a)
pledge (a "Pledge") all or any portion of its Partnership Interest to a
lending institution, which is not an Affiliate of such Limited Partner,
as collateral or security for a bona fide loss or other extension of
credit, or (b) transfer such pledged Partnership Interest to such
lending institution in connection with the exercise of remedies under
such loan or extension of credit. In addition, each Limited Partner or
Assignee (resulting from a transfer made pursuant to the preceding
sentence) shall have the right to transfer all or any portion of its
Partnership Interest, subject to the provisions of Section 8.6 PROVIDED
that any transfer of a Partnership Interest shall be made only to
Qualified Transferees. It is a condition to any transfer otherwise
permitted hereunder that the transferee assumes by operation of law or
express agreement all of the obligations of the transferor Limited
Partner under this Agreement with respect to such transferred
Partnership Interest and no such transfer (other than pursuant to a
statutory merger or consolidation wherein all obligations and
liabilities of the transferor Limited Partner are assumed by a
successor corporation by operation of law) shall relieve the transferor
Partner of its obligations under this Agreement without the approval of
the General Partner, in its reasonable discretion. Notwithstanding the
foregoing, any transferee of any transferred Partnership Interest shall
be subject to any and all ownership limitations contained in the REIT
Charter, which may limit or restrict such transferee's ability to
exercise any of its redemption rights or exchange rights set forth in
any applicable Other Securities Term Sheet. Any transferee, whether or
not admitted as a Substituted Partner, shall take their Partnership
Interest subject to the obligations of the transferor hereunder. Unless
admitted as a Substituted Partner, no transferee, whether by a
voluntary transfer, by operation of law or otherwise, shall have any
rights hereunder, other than the rights of an Assignee as provided in
Section 8.5.
(b) If a Limited Partner is subject to Incapacity, the
executor, administrator, trustee, committee, guardian, conservator or
receiver of such Limited Partner's estate shall have all the rights of
a Limited Partner, but not more rights than those enjoyed by other
Limited Partners, for
the purpose of setting or managing the estate, and such power as the
Incapacitated Limited Partner possessed to transfer all or any part of
his or its interest in the Partnership. The Incapacity of a Limited
Partner, in and of itself, shall not dissolve or terminate the
Partnership.
(c) The General Partner may prohibit any transfer otherwise
permitted under this Section 8.3 by a Limited Partner of his or her
Partnership Interest if, in the opinion of legal counsel to the
Partnership, such transfer would require the filing of a registration
statement under the Securities Act by the Partnership or would
otherwise violate any federal or state securities laws or regulations
applicable to the Partnership or the Partnership Interest.
(d) No transfer by a Limited Partner of his or her Partnership
Interest (including any redemption or exchange rights set forth in an
applicable Other Securities Term Sheet or any other acquisition of
Common Partnership Interest or Preference Interest by the General
Partner or the Partnership) may be made to any Person if (i) in the
opinion of legal counsel for the Partnership, it could result in the
Partnership being treated as an association taxable as a corporation or
(ii) absent the consent of the General Partner, which may be given or
withheld in its sole and absolute discretion, such transfer could be
treated as effectuated through an "established securities market" or a
"secondary market (or the substantial equivalent thereof)" within the
meaning on Section 7704 of the Code.
(e) No transfer of any Partnership Interest may be made to a
lender to the Partnership or any Person who is related (within the
meaning of Treasury Regulation Section 1.752-4(b)) to any lender to the
Partnership whose loss constitutes a Nonrecourse Liability, without the
consent of the General Partner, in its sole and absolute discretion;
PROVIDED, that as a condition to such consent, the lender will be
required to enter into an arrangement with the Partnership and the
General Partner to redeem or exchange the Partnership Interest pursuant
to the applicable Other Securities Term Sheet for any consideration in
which a security interest is held simultaneously with the time at which
such lender would be deemed to be a Partner in the Partnership for
purposes of allocating liabilities to such lender under Section 752 of
the Code.
(f) No Limited Partner may withdraw from the Partnership
except as a result of transfer, redemption or exchange of all of its
Partnership Interest pursuant hereto or pursuant to the applicable
Other Securities Term Sheet, as the case may be.
8.4 SUBSTITUTED PARTNER .
(a) Any Limited Partner shall have the right to substitute a
transferee permitted by this Agreement as a Partner in his or her
place. The General Partner shall have the right to consent to the
admission of a permitted transferee of the interest of any other
Partner, as a Substituted Partner pursuant to this Section 8.4, which
consent may be given or withheld by the General Partner in its sole and
absolute discretion. The General Partner's failure or refusal to permit
a transferee of any such Partnership Interests to become a Substituted
Partner shall not give rise to any cause of action against the
Partnership or any Partner.
(b) A transferee who has been admitted as a Substituted
Partner in accordance with this Article VIII shall have all the rights
and powers and be subject to all the restrictions and liabilities of a
Partner under this Agreement. The admission of any transferee as a
Substituted Partner shall be subject to the transferee executing and
delivering to the Partnership an acceptance of all of the terms and
conditions of this Agreement (including, without limitation, such other
documents or instruments as may be required to effect the admission,
each in form and substance
satisfactory to the General Partner) and the acknowledgment by such
transferee that each of the representations and warranties set forth in
Section 5.5 are true and correct with respect to such transferee as of
the date of the transfer of the Partnership Interest to such transferee
and will continue to be true to the extent required by such
representations and warranties.
(c) Upon the admission of a Substituted Partner, the General
Partner shall amend Exhibit A to reflect the name, address and
Percentage Interest of such Substituted Partner and to eliminate or
adjust, if necessary, the name, address and interest of the predecessor
of such Substituted Partner.
8.5 ASSIGNEE . If the General Partner, with respect to a
transferee requiring the General Partner's consent, does not consent,
in its sole and absolute discretion, to the admission of any permitted
transferee under Section 8.3 as a Substituted Partner, as described in
Section 8.4, such transferee shall be considered an Assignee for
purposes of this Agreement. An Assignee shall be entitled to all the
rights of an assignee of a partnership interest under the Act,
including the right to reserve distributions from the Partnership and
the share of Profits, Losses, gain and loss attributable to the
Partnership Interest assigned to such transferee, the rights to
transfer the Partnership Interest provided in this Article VIII, the
right of exchange of such Partnership Interest for consideration as set
forth in any applicable Other Securities Term Sheet, but shall not be
deemed to be a Partner for any other purpose under this Agreement, and
shall not be entitled to effect a consent with respect to such
Partnership Interest on any matter presented to the Partners for
approval (such consent remaining with the transferor Partner). In the
event any such transferee desires to make a further assignment of any
such Partnership Interest, such transferee shall be subject to all the
provisions of this Article VIII to the same extent and in the same
manner as any Partner desiring to make an assignment of Partnership
Interest. Notwithstanding anything contained in this Agreement to the
contrary, as a condition to becoming an Assignee, any prospective
Assignee must first execute and deliver to the Partnership an
acknowledgment that each of the representation and warranties set forth
in Section 5.5 hereof are true and correct with respect to such
prospective Assignee as of the date of the prospective assignment of
the Partnership Interest to such prospective Assignee and will continue
to be true to the extent required by such representations or
warranties.
8.6 GENERAL PROVISIONS .
(a) No Partner may withdraw from the Partnership other than as
a result of (i) a transfer of all of such Partner's Partnership
Interest as permitted in accordance with this Article VIII and the
transferee(s) of such Partnership Interest being admitted to the
Partnership as a Substituted Partner, (ii) pursuant to the redemption
or exchange of all of such Partner's Partnership Interest pursuant to
the applicable Other Securities Term Sheet.
(b) Any Partner who shall transfer all of such Partner's
Partnership Interest in a transfer permitted pursuant to this Article
VIII where such transferee was admitted as a Substituted Partner or
pursuant to the exercise of its rights of redemption or exchange of all
of such Partner's Partnership Interest pursuant to the applicable Other
Securities Term Sheet shall cease to be a Partner.
(c) Transfers pursuant to this Article VIII may only be made
effective on the last day of the month set forth on the written
instrument of transfer, unless the General Partner otherwise agrees.
(d) If any Partnership Interest is transferred, assigned or
redeemed during any quarterly segment of the Partnership's Fiscal Year
in compliance with the provisions of this Article VIII or transferred
or redeemed pursuant to the applicable Other Securities Term Sheet, on
any day other than the first day of a Fiscal Year, then Profits,
Losses, each item thereof and all other items attributable to such
Partnership Interest for such Fiscal Year shall be divided and
allocated between the transferor Partner and the transferee Partner by
taking into account their varying increases during the fiscal year in
accordance with Section 706(d) of the Code, using the interim closing
of the books method. Except as otherwise required by Section 706(d) of
the Code or as otherwise specified in this Agreement or as otherwise
determined by the General Partner (to the extent consistent with
Section 706(d) of the Code, solely for purposes of making such
allocations, each of such items for the calendar month in which the
transfer, assignment or redemption occurs shall be allocated among all
the Partners and Assignees in a manner determined by the General
Partner in its sole discretion.
(e) In addition to any other restrictions on transfer herein
contained, including without limitation the provisions of this Article
VIII, in no event may any transfer or assignment of a Partnership
Interest by any Partner (including by way of a Partnership Interest
redemption or exchange pursuant to an applicable Other Securities Term
Sheet, or any other acquisition of Common Partnership Interests or
Partnership Interests by the Partnership, or the General Partner) be
made (i) to any person or entity who lacks the legal right, power or
capacity to own a Partnership Interest; (ii) in violation of applicable
law; (iii) except with the consent of the General Partner, which may be
given or withheld in its sole and absolute discretion, of any component
portion of a Partnership Interest, such as the Capital Account, or
rights to distributions, separate and apart from all other components
of a Partnership Interest; (iv) except with the consent of the General
Partner, which may be given or withheld in its sole and absolute
discretion, if in the opinion of legal counsel to the Partnership such
transfer would cause a termination of the Partnership for federal or
state income tax purposes (except as a result of the redemption or
exchange of Partnership Interests, respectively, of all Partnership
Interests held by all Limited Partners); (v) if such transfer would
cause the Partnership to be classified as a "publicly traded
partnership" within the meaning of Section 7704 of the Code, or as an
association taxable as a corporation for federal or state income tax
purposes; (vi) if such transfer would cause the Partnership to become,
with respect to any employee benefit plan subject to Title 1 of ERISA,
a "party-in-interest" (as defined in Section 3(14) of ERISA) or a
"disqualified person" (as defined in Section 4975(c) of the Code);
(vii) if such transfer would, in the opinion of counsel to the
Partnership, cause any portion of the assets of the Partnership to
constitute assets of any employee benefit plan pursuant to Department
of Labor Regulations Section 2510.2101; (viii) if such transfer
requires the registration of such Partnership Interest or requires the
registration of the exchange of such Partnership Interests for any
capital stock pursuant to any applicable federal or state securities
laws; (ix) if such transfer is effectuated through an "established
securities market" or a "secondary market" (or the substantial
equivalent thereof) within the meaning of Section 7704 of the Code or
such transfer causes the Partnership to become a "publicly traded
partnership," as such term is defined in Sections 469(k)(2) or 7704 of
the Code; (x) if such transfer subjects the Partnership to be regulated
under the Investment Company Act of 1940, the Investment Advisors Act
of 1946 or the Employee Retirement Income Security Act of 1974, each as
amended; (xi) if the transferee or assignee of such Partnership
Interest is unable to make the representations set forth in Section 5.5
or such transfer could otherwise adversely affect the ability of EQR in
its capacity as the sole General Partner of ERP, to remain qualified as
a REIT; or (xii) if, except with the consent of the General Partner,
which may be given or withheld in its sole and absolute discretion,
such transfer would subject EQR to any additional taxes under Section
857 or Section 4981 of the Code.
(f) The General Partner shall monitor the transfers of
interests in the Partnership (including any acquisition of Partnership
Interests by the Partnership, or the General Partner) to determine (i)
if such interests are being traded on an "established securities
market" or a "secondary market (or the substantial equivalent thereof)"
within the meaning of Section 7704 of the Code and (ii) whether such
transfers of interests would result in the Partnership being unable to
qualify for at least one of the "safe harbors" set forth in Treasury
Regulation Section 1.7704-1 (or such other applicable guidance
subsequently published by the IRS setting forth safe harbors under
which interests will not be treated as "readily tradable on a secondary
market (or the substantial equivalent thereof)" within the meaning of
Section 7704 of the Code) (the "Safe Harbor"). The General Partner
shall have authority (but shall not be required to) to take any steps
it determines are necessary or appropriate in its sole and absolute
discretion to prevent any trading of interests which could cause the
Partnership to become a "publicly traded partnership," or any
recognition by the Partnership of such transfers, or to insure that at
least one of the Safe Harbors is met.
ARTICLE IX
SUCCESSSOR GENERAL PARTNER AND
ADMISSION OF ADDITIONAL PARTNERS
9.1 ADMISSION OF SUCCESSOR GENERAL PARTNER . A successor to
all of the General Partner's Partnership Interest pursuant to Section
9.2 who is proposed to be admitted as a successor General Partner shall
be admitted to the Partnership as the General Partner, effective upon
such transfer. Any such transferee shall carry on the business of the
Partnership without dissolution. In each case, the admission shall be
subject to the successor General Partner executing and delivering to
the Partnership an acceptance of all of the terms and conditions of
this Agreement and such other documents or instruments as may be
required to effect the admission. In the case of such admission on any
day other than the first day of a Fiscal Year, all items attributable
to the General Partner's Partnership Interest for such Fiscal Year
shall be allocated between the transferring General Partner and such
successor as provided in Article VIII.
9.2 ADMISSION OF ADDITIONAL PARTNERS .
(a) A Person who makes a Capital Contribution to the
Partnership in accordance with this Agreement shall be admitted to the
Partnership as an Additional Partner only upon furnishing to the
General Partner (i) evidence of acceptance in form satisfactory to the
General Partner of all of the terms and conditions of this Agreement,
including, without limitation, the power of attorney granted in Section
2.6 and (ii) such other documents or instruments as may be required in
the discretion of the General Partner in order to effect such Person's
admission as an Additional Partner.
(b) Notwithstanding anything to the contrary in this Section
9.2, no Person shall be admitted as an Additional Partner without the
consent of the General Partner, which consent may be given or withheld
in the General Partner's sole and absolute discretion. The admission of
any Person as an Additional Partner shall become effective on the date
upon which the name of such Person is recorded on the books and records
of the Partnership, following the receipt of the Capital Contribution
in respect of such Partner, the documents set forth in this Section
9.2(a) and the consent of the General Partner to such admission. If any
Additional Partner is admitted to the Partnership on any day other than
the first day of a Fiscal Year, then Profits, Losses, each item thereof
and all other items allocable among Partners and Assignees for such
Fiscal Year shall be
allocated among such Partner and all other Partners and Assignees by
taking into account their varying interests during the Fiscal Year in
accordance with Section 706(d) of the Code, using the interim closing
of the books method. Solely for purposes of making such allocations,
each of such items for the calendar month in which an admission of an
Additional Partner occurs shall be allocated among all the Partners and
Assignees, including such Additional Partner, in a manner determined by
the General Partner in its sole discretion.
9.3 AMENDMENT OF AGREEMENT AND CERTIFICATE OF FORMATION . For
the admission to the Partnership of any Partner, the General Partner
shall take all steps necessary and appropriate under the Act to amend
the records of the Partnership and, if necessary, to prepare as soon as
practical an amendment of this Agreement (including an amendment of
Exhibit A) and, if required by law, shall prepare and file an amendment
to the Certificate and may for this purpose exercise the power of
attorney granted pursuant to Section 2.6.
ARTICLE X
DISSOLUTION AND TERMINATION
10.1 DISSOLUTION .
(a) The Partnership shall not be dissolved by the admission of
Substituted Partners or Additional Partners or by the admission of a
successor General Partner in accordance with the terms of this
Agreement. Upon the withdrawal of a General Partner, the remaining
General Partners and any successor General Partner shall continue the
business of the Partnership. The Partnership shall dissolve, and its
affairs shall be wound up, upon the first to occur of any of the
following ("Liquidating Events"):
(i) the expiration of its term as provided in
Section 2.5 hereof;
(ii) an event of withdrawal of a General Partner, as
defined in the Act (other than an event of bankruptcy), unless
(1) there is at least one other General Partner, in which case
the remaining General Partners shall continue the business of
the Partnership, or (2) within ninety (90) days after the
withdrawal a "majority in interest" (as defined below) of the
remaining Partners consent in writing to continue the business
of the Partnership and to the appointment, effective as of the
date of withdrawal, of a substitute General Partner;
(iii) an election to dissolve the Partnership made by
the General Partner, in its sole and absolute discretion;
(iv) entry of a decree of judicial dissolution of the
Partnership pursuant to the provisions of the Act;
(v) the sale of all or substantially all of the
assets and properties of the Partnership for cash or for
marketable securities; or
(vi) a final and non-appealable judgment is entered
by a court of competent jurisdiction ruling that the remaining
General Partner(s) is bankrupt or insolvent, or a final and
non-appealable order for relief is entered by a court with
appropriate jurisdiction against the remaining General
Partner(s), in each case under any federal or
state bankruptcy or insolvency laws as now or hereafter in
effect, unless prior to or at the time of the entry of such
order or judgment a "majority in interest" (as defined below)
of the remaining Partners consent in writing to continue the
business of the Partnership and to the appointment, effective
as of a date prior to the date of such order or judgment, of a
substitute General Partner.
As used herein, a "majority in interest" shall refer to Partners
(excluding the General Partners) who hold more than fifty percent (50%) of the
outstanding Percentage Interests not held by the General Partners.
10.2 EFFECT OF FILING OF DISSOLVING STATEMENT . Upon the
filing by the Ohio Secretary of State of a statement of intent to
dissolve, the Partnership shall cease to carry on its business, except
insofar as may be necessary for the winding up of its business, but its
separate existence shall continue until a certificate of dissolution
has been issued by the Ohio Secretary of State or until a decree
dissolving the Partnership has been entered by a court of competent
jurisdiction.
10.3 WINDING UP, LIQUIDATION AND DISTRIBUTION OF ASSETS .
(a) Upon dissolution, an accounting shall be made by the
Partnership's accountants of the accounts of the Partnership and of the
Partnership's assets, liabilities and operations from the date of the
last previous accounting until the date of dissolution. The General
Partner shall immediately proceed to wind up the affairs of the
Partnership.
(b) If the Partnership is dissolved and its affairs are to be
wound up, the General Partner (or if there be none, a liquidating
trustee selected by a Majority-in-Interest of the Partners) shall wind
up the affairs and liquidate the assets of the Partnership, and the
proceeds from the liquidation of the Partnership assets shall be
applied and distributed in the following order of priority:
(i) To the creditors of the Partnership (other than
Partners and creditors whose obligations will be assumed or
otherwise transferred on the sale or distribution of
Partnership assets) and to the payment of liquidation
expenses; when there is a contingent debt, obligation or
liability of the Partnership, a reserve (in such amount as the
General Partner or, if no General Partner, the liquidating
trustee, in its sole discretion, shall determine) shall be set
up to meet such contingency, and if and when such contingency
shall cease to exist, the moneys, if any, then contained in
the reserve shall be distributed as provided in this Section
10.3;
(ii) Then to the payment of any funds advanced to the
Partnership by any Partner or Partners and any other bona fide
loans made by any Partner or Partners to the Partnership and
evidenced by a note or notes duly executed by the Partnership;
and
(iii) Then to the Partners in accordance with their
respective Capital Account balances after giving effect to all
contributions, distributions and allocations for all periods.
In connection therewith, income, gain and loss of the
Partnership (and to the extent necessary to achieve the
purposes hereof, items of gross income and deduction) with
respect to the sale or other disposition of all or
substantially all of the Partnership's assets and/or the
Partnership's operations in connection therewith (whether or
not attributable to the taxable year in which the distribution
pursuant to this Section
10.3(b)(iii) is to be made or a preceding taxable year) shall
be allocated among the Partners so that each Partner's Capital
Account shall equal, after taking into account the prior
balance (positive or negative) in such Partner's Capital
Account and the effect of such allocation, the amount that
such Partner would be entitled to receive if the Partnership
were to make a distribution to the Partners pursuant to the
provisions of Section 6.7(b) hereof in an amount equal to the
remaining liquidation proceeds to be distributed under this
Section 10.3(b)(iii).
(c) Notwithstanding anything to the contrary in this
Agreement, upon a liquidation within the meaning of Section
1.704-1(b)(2)(ii)(g) of the Treasury Regulations, if any Partner has a
deficit Capital Account (after giving effect to all contributions,
distributions, allocations and other Capital Accounts adjustments for
all taxable years, including the year during which such liquidation
occurs), such Partner shall have no obligation to make any Capital
Contribution, and the negative balance of such Partner's Capital
Contribution, and the negative balance of such Partner's Capital
Account shall not be considered a debt owed by such Partner to the
Partnership or to any other Person for any purpose whatsoever.
(d) Upon completion of the winding up, liquidation and
distribution of the assets, the Partnership shall be deemed terminated.
(e) The General Partner shall comply with any applicable
requirements of applicable law pertaining to the winding up of the
affairs of the Partnership and the final distribution of its assets.
10.4 CERTIFICATE OF DISSOLUTION . When all debts, liabilities
and obligations have been paid and discharged or adequate provisions
have been made therefor and all of the remaining property and assets
have been distributed to the Partners, certificates of dissolution
shall be executed in duplicate and verified by the person signing the
articles, which articles shall set forth the information required by
the Act. Duplicate originals of such articles of dissolution shall be
delivered to the Ohio Secretary of State.
10.5 EFFECT OF DISSOLUTION . Upon the issuance of the
certificate of dissolution, the existence of the Partnership shall
cease, except for the purpose of suits, other proceedings and
appropriate action as provided in the Act. The General Partner shall
have authority to distribute any Partnership property discovered after
dissolution, convey real estate and take such other action as may be
necessary on behalf of and in the name of the Partnership.
10.6 RETURN OF CONTRIBUTION NONRECOURSE TO OTHER PARTNERS .
Except as provided by law or as expressly provided in this Agreement,
upon dissolution, each Partner shall look solely to the assets of the
Partnership for the return of its Capital Contribution. If the
Partnership property remaining after the payment or discharge of the
debts and liabilities of the Partnership is insufficient to return the
cash contribution of one or more Partners, such Partner or Partners
shall have no recourse against any other Partner.
ARTICLE XI
MISCELLANEOUS PROVISIONS
11.1 NOTICES . Any notice, request, demand, consent, approval
and other communications under this Agreement shall be in writing, and
shall be deemed duly given or made at the time and on the date when
personally delivered as shown on a receipt therefor (which shall
include delivery by a nationally recognized overnight delivery
service), or when sent by facsimile, or three (3) business days after
being mailed by prepaid registered or certified mail, return receipt
requested, to the address for each party set forth at the conclusion of
this Agreement. Any Partner, by written notice to the other in the
manner herein provided, may designate an address different from that
set forth at the conclusion of this Agreement.
11.2 BOOKS OF ACCOUNT AND RECORDS . Proper and complete
records and books of account shall be kept or shall be caused to be
kept by the General Partner or such representatives as it may appoint
in which shall be entered fully and accurately all transactions and
other matters relating to the Partnership's business in such detail and
completeness as is customary and usual for businesses of the type
engaged in by the Partnership. The books and records shall at all times
be maintained at the principal executive office of the Partnership and
shall be open to the reasonable inspection and examination of the
Partners or their duly authorized representatives, at the sole cost and
expense of such Partner during reasonable business hours.
11.3 APPLICATION OF OHIO LAW . This Agreement, and the
application of interpretation hereof, shall be governed exclusively by
its terms and by the laws of the State of Ohio, and specifically the
Act.
11.4 WAIVER OF ACTION FOR PARTITION . Each Partner irrevocably
waives during the term of the Partnership any right that it may have to
maintain any action for partition with respect to the property of the
Partnership.
11.5 AMENDMENTS .
(a) GENERAL. Amendments to this Agreement may be proposed by
the General Partner or by any Partner holding twenty-five percent (25%)
or more of any class or series of Partnership Interests. Following such
proposal (except an amendment pursuant to Section 11.5(b)), the General
Partner shall submit any proposed amendment to the Partners. The
General Partner shall seek the written vote of the Partners on the
proposed amendment or shall call a meeting to vote thereon and to
transact any other business that the General Partner may deem
appropriate. For purposes of obtaining a written vote, the General
Partner may require a response within a reasonable specified time, but
not less than fifteen (15) days after notice is given, and failure to
respond in such time period shall constitute a vote which is consistent
with the General Partner's recommendation with respect to the proposal.
Except as provided in Section 11.5(b) or 11.5.(d), a proposed amendment
shall be adopted and be effective as an amendment hereto if (i) it is
approved by the General Partner and (ii) it receives the consent of
Partners holding a majority of the Common Partnership Interests and a
Majority of each class of Preference Interests (including Partnership
Interests held by the General Partner).
(b) AMENDMENTS NOT REQUIRING APPROVAL OF PARTNERS OTHER THAN
THE GENERAL PARTNER. Notwithstanding Section 11.5(a) or 11.5.(b), the
General Partner shall have the power, without the consent of the
Partners, to amend this Agreement as may be required to facilitate or
implement any of the following purposes:
(i) to add to the obligations of the General Partner
or surrender any right or power granted to the General Partner
or any Affiliate of the General Partner for the benefit of the
Partners;
(ii) to reflect the admission, substitution,
termination, or withdrawal of Partners in accordance with this
Agreement (which may be effected through the replacement of
Exhibit A with an amended Exhibit A);
(iii) to set forth the designations, rights, powers,
duties, and preferences of the holders of any additional
Partnership Interests issued pursuant to Article VI;
(iv) to reflect a change that does not adversely
affect the Partners in any material respect, or to cure any
ambiguity, correct or supplement any provision in this
Agreement not inconsistent with law or with other provisions
of this Agreement, or make other changes with respect to
matters arising under this Agreement that will not be
inconsistent with law or with the provisions of this
Agreement; and
(v) to satisfy any requirements, conditions, or
guidelines contained in any order, directive, opinion, ruling
or regulation of a federal, state or local agency or contained
in federal, state or local law.
The General Partner shall notify the Limited Partners when any action
under this Section 11.5(b) is taken in the next regular communication to the
Partners.
(c) OTHER AMENDMENTS REQUIRING CERTAIN PARTNER'S APPROVAL.
Notwithstanding anything in this Section 11.5 to the contrary, this
Agreement shall not be amended with respect to any Partner adversely
affected without the consent of such Partner adversely affected if such
amendment would (i) modify the limited liability of a Limited Partner,
(ii) amend Article VI (except as permitted pursuant to Sections
11.5(b)(iii) and 6.8, (iii) amend the redemption or exchange rights
under an Other Securities Term Sheet, or (iv) amend this Section
11.5(c). This Section 11.5(c) does not require unanimous consent of all
classes of Partners adversely affected unless the amendment is to be
effective against all Partners of such classes adversely affected.
11.6 EXECUTION OF ADDITIONAL INSTRUMENTS . Each Partner hereby
agrees to execute such other and further statements of interest and
holdings, designations, powers of attorney and other instruments
necessary to comply with any laws, rules or regulations.
11.7 HEADINGS . The headings in this Agreement are inserted
for convenience only and are in no way intended to describe, interpret,
define, or limit the scope, extent or intent of this Agreement or any
provision hereof.
11.8 WAIVERS . The failure of any party to seek redress for
violation of or to insist upon the strict performance of any covenant
or condition of this Agreement shall not prevent a subsequent act,
which would have originally constituted a violation, from having the
effect of an original violation.
11.9 RIGHTS AND REMEDIES CUMULATIVE . The rights and remedies
provided by this Agreement are cumulative and the use of any one right
or remedy by any party shall not preclude or waive the right to use any
or all other remedies. Said rights and remedies are given in addition
to any other rights the parties may have by law, statute, ordinance or
otherwise.
11.10 SEVERABILITY . If any provision of this Agreement or the
application thereof to any Person or circumstance shall be invalid,
illegal or unenforceable to any extent, the remainder of this Agreement
and the application thereof shall not be affected and shall be
enforceable to the fullest extent permitted by law.
11.11 HEIRS, SUCCESSORS AND ASSIGNS . Each and all of the
covenants, terms, provisions and agreements herein contained shall be
binding upon and inure to the benefit of the parties hereto and, to the
extent permitted by this Agreement, their respective heirs, legal
representatives, successors and assigns.
11.12 CREDITORS . None of the provisions of this Agreement
shall be for the benefit of or enforceable by any creditors of the
Partnership or of any Partner.
11.13 COUNTERPARTS . This Agreement may be executed in
counterparts, each of which shall be deemed an original but all of
which shall constitute one and the same instrument.
11.14 INTEGRATED AGREEMENT . This Agreement is intended to be
the sole "partnership agreement" (within the meaning of Section 1782.01
of the Act) of the Partnership. No document, instrument or writing
(other than an amendment to this Agreement that complies with Section
11.5 of this Agreement) is intended to be or shall be accorded the
status of a "partnership agreement" within the meaning of the Act.
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CERTIFICATE
The undersigned hereby agree, acknowledge and certify that the
foregoing Agreement constitutes the Amended and Restated Limited Partnership
Agreement of Lexford Properties, L.P. adopted by the Partners of the Partnership
in order to be effective as of October 1, 1999.
ERP OPERATING LIMITED PARTNERSHIP,
an Illinois limited partnership
By: Equity Residential Properties Trust,
a Maryland real estate investment trust,
its general partner
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇, Esq.
Its: Vice-President
Notice for Address Purposes: c/o Equity Residential Properties Trust
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
LEXFORD PARTNERS, L.L.C.,
an Ohio limited liability company
By: ERP Operating Limited Partnership,
an Illinois limited partnership
By: Equity Residential Properties Trust,
a Maryland real estate investment trust,
its general partner
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇, Esq.
Its: Vice-President
Notice for Address Purposes: c/o Equity Residential Properties Trust
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▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
EXHIBIT A
PARTNERS AND PERCENTAGE INTERESTS
PARTNER PERCENTAGE INTEREST
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ERP OPERATING LIMITED PARTNERSHIP, AN
ILLINOIS LIMITED PARTNERSHIP 99.0%
LEXFORD PARTNERS, L.L.C., AN OHIO LIMITED
LIABILITY COMPANY 1.0%