EXHIBIT 10.5
FORM OF SECOND AMENDED AND RESTATED AGREEMENT
OF
LIMITED PARTNERSHIP
OF
CAMDEN SUMMIT PARTNERSHIP, L.P.
______________, 2005
TABLE OF CONTENTS
Page
----
ARTICLE 1 DEFINED TERMS............................................................................ 1
ARTICLE 2 ORGANIZATIONAL MATTERS................................................................... 12
Section 2.1 Formation................................................................................ 12
Section 2.2 Name..................................................................................... 12
Section 2.3 Registered Office and Agent; Principal Office............................................ 13
Section 2.4 Power of Attorney........................................................................ 13
Section 2.5 Term..................................................................................... 14
ARTICLE 3 PURPOSE.................................................................................. 14
Section 3.1 Purpose and Business..................................................................... 14
Section 3.2 Powers................................................................................... 15
ARTICLE 4 CAPITAL CONTRIBUTIONS.................................................................... 15
Section 4.1 Capital Contributions of the Partners.................................................... 15
Section 4.2 Issuances of Additional Partnership Interests............................................ 16
Section 4.3 Preemptive Rights........................................................................ 17
ARTICLE 5 DISTRIBUTIONS............................................................................ 17
Section 5.1 Requirement and Characterization of Distributions........................................ 17
Section 5.2 Amounts Withheld......................................................................... 18
Section 5.3 Distributions Upon Liquidation........................................................... 18
ARTICLE 6 ALLOCATIONS.............................................................................. 18
Section 6.1 Allocations For Capital Account Purposes................................................. 18
Section 6.2 Substantial Economic Effect.............................................................. 21
ARTICLE 7 MANAGEMENT AND OPERATIONS OF BUSINESS.................................................... 21
Section 7.1 Management............................................................................... 21
Section 7.2 Certificate of Limited Partnership....................................................... 24
Section 7.3 Restrictions on General Partner Authority................................................ 25
Section 7.4 Reimbursement of the General Partner and the Company..................................... 26
Section 7.5 Outside Activities of the General Partner................................................ 26
Section 7.6 Contracts with Affiliates................................................................ 27
Section 7.7 Indemnification.......................................................................... 27
Section 7.8 Liability of the General Partner......................................................... 29
Section 7.9 Other Matters Concerning the General Partner............................................. 30
Section 7.10 Title to Partnership Assets.............................................................. 30
Section 7.11 Reliance by Third Parties................................................................ 31
ARTICLE 8 RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS............................................... 31
Section 8.1 Limitation of Liability.................................................................. 31
Section 8.2 Management of Business................................................................... 31
Section 8.3 Outside Activities of Limited Partners................................................... 31
Section 8.4 Return of Capital........................................................................ 32
Section 8.5 Rights of Limited Partners Relating to the Partnership................................... 32
Section 8.6 Redemption Right......................................................................... 33
-i-
TABLE OF CONTENTS
(continued)
ARTICLE 9 BOOKS, RECORDS, ACCOUNTING AND REPORTS................................................... 35
Section 9.1 Records and Accounting................................................................... 35
Section 9.2 Fiscal Year.............................................................................. 35
Section 9.3 Reports.................................................................................. 35
ARTICLE 10 TAX MATTERS.............................................................................. 36
Section 10.1 Preparation of Tax Returns............................................................... 36
Section 10.2 Tax Elections............................................................................ 36
Section 10.3 Tax Matters Partner...................................................................... 36
Section 10.4 Organizational Expenses.................................................................. 38
Section 10.5 Withholding.............................................................................. 38
ARTICLE 11 TRANSFERS AND WITHDRAWALS................................................................ 39
Section 11.1 Transfer................................................................................. 39
Section 11.2 Transfer of General Partner Interest and Limited Partner Interest........................ 39
Section 11.3 Limited Partners' Rights to Transfer..................................................... 40
Section 11.4 Substituted Limited Partners............................................................. 40
Section 11.5 Assignees................................................................................ 41
Section 11.6 General Provisions....................................................................... 41
ARTICLE 12 ADMISSION OF PARTNERS.................................................................... 42
Section 12.1 Admission of Successor General Partner................................................... 42
Section 12.2 Admission of Additional Limited Partners................................................. 42
Section 12.3 Amendment of Agreement and Certificate of Limited Partnership............................ 43
ARTICLE 13 DISSOLUTION, LIQUIDATION AND TERMINATION................................................. 43
Section 13.1 Dissolution.............................................................................. 43
Section 13.2 Winding Up............................................................................... 44
Section 13.3 Compliance with Timing Requirements of Regulations....................................... 45
Section 13.4 Deemed Distribution and Recontribution................................................... 46
Section 13.5 Rights of Limited Partners............................................................... 46
Section 13.6 Notice of Dissolution.................................................................... 46
Section 13.7 Termination of Partnership and Cancellation of Certificate of Limited Partnership........ 46
Section 13.8 Reasonable Time for Winding-Up........................................................... 47
Section 13.9 Waiver of Partition...................................................................... 47
ARTICLE 14 AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS............................................. 47
Section 14.1 Amendments............................................................................... 47
Section 14.2 Meetings of the Partners................................................................. 48
ARTICLE 15 GENERAL PROVISIONS....................................................................... 49
Section 15.1 Addresses and Notice..................................................................... 49
Section 15.2 Titles and Captions...................................................................... 49
Section 15.3 Pronouns and Plurals..................................................................... 50
Section 15.4 Further Action........................................................................... 50
Section 15.5 Binding Effect........................................................................... 50
Section 15.6 Creditors................................................................................ 50
Section 15.7 Waiver................................................................................... 50
-ii-
TABLE OF CONTENTS
(continued)
Section 15.8 Counterparts............................................................................. 50
Section 15.9 Applicable Law........................................................................... 50
Section 15.10 Invalidity of Provisions................................................................. 50
Section 15.11 Entire Agreement......................................................................... 51
Section 15.12 {Intentionally Omitted}.................................................................. 51
ARTICLE 16 CONSOLIDATION, MERGER OR SALE OF ASSETS OF THE COMPANY................................... 51
Section 16.1 Triggering Events........................................................................ 51
Section 16.2 From and After the Occurrence of a Triggering Event...................................... 52
Section 16.3 Additional Issuer Covenants.............................................................. 57
Section 16.4 Application to Later Transactions........................................................ 58
Section 16.5 Waivers and Amendments................................................................... 58
EXHIBITS
Exhibit A Partners Contributions and Partnership Interests
Exhibit B Capital Account Maintenance
Exhibit C Special Allocation Rules
Exhibit D Notice of Redemption
SCHEDULES
Schedule 1 Agreed Value of Contributed Properties
Schedule 2 704(c) Value of Contributed Properties
Schedule 3 Capital Contributions of Partners
-iii-
FORM OF SECOND AMENDED AND RESTATED AGREEMENT
OF
LIMITED PARTNERSHIP
OF
CAMDEN SUMMIT PARTNERSHIP, L.P.
THIS SECOND AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF
CAMDEN SUMMIT PARTNERSHIP, L.P. (this "Agreement"), dated as of ______________,
2005, is entered into by and among Camden Summit, Inc. (formerly Camden Sparks,
Inc.), a Delaware corporation (the "General Partner") and the Persons whose
names are set forth on Exhibit A as attached hereto (such Persons other than the
General Partner, Camden Property Trust and any Affiliates thereof are
collectively referred to herein as the "Summit Limited Partners").
WHEREAS, the Partnership was formed by (i) filing the Certificate and
(ii) certain of the Summit Limited Partners and Summit Properties Inc. (the
"Original General Partner") entering into an Agreement of Limited Partnership,
dated as of January 29, 1994 (the "Original Agreement");
WHEREAS, upon the Effective Date the Original General Partner has
merged with and into the General Partner (the "Merger"); and
WHEREAS, in accordance with Article 14 of the Original Agreement, the
General Partner and the Summit Limited Partners desire to amend and restate the
Agreement to make certain changes herein in connection with the Merger and
related transactions.
NOW THEREFORE, in accordance with the provisions of Section 2.4 of the Original
Agreement, the Original Agreement is hereby amended and restated in its entirety
as follows.
ARTICLE 1
DEFINED TERMS
The following definitions shall be for all purposes, unless otherwise
clearly indicated to the contrary, applied to the terms used in this Agreement.
"Act" means the Delaware Revised Uniform Limited Partnership Act, as it
may be amended from time to time, and any successor to such statute.
"Additional Limited Partner" means a Person admitted to the Partnership
as a Limited Partner pursuant to Section 4.2 hereof and who is shown as such on
the books and records of the Partnership.
"Adjusted Capital Account" means the Capital Account maintained for
each Partner as of the end of each Partnership taxable 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 Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5);
and (ii) decreased by the items described in Regulations 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
Regulations Section 1.704-1(b)(2)(ii)(d) and shall be interpreted consistently
therewith.
"Adjusted Capital Account Deficit" means, with respect to any Partner,
the deficit balance, if any, in such Partner's Adjusted Capital Account as of
the end of the relevant Partnership taxable year.
"Adjusted Property" means any property, the Carrying Value of which has
been adjusted pursuant to Exhibit B hereof. Upon the Effective Date, the
Carrying Value of all of the properties owned by the Partnership shall be
adjusted upward or downward to reflect any Unrealized Gain or Unrealized Loss
pursuant to Exhibit B hereof.
"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 Person of which such
Person owns or controls ten percent (10%) or more of the voting interests; or
(iv) any officer, director, general partner or trustee of such Person or of any
Person referred to in clauses (i), (ii), and (iii) above.
"Agreed Value" means (i) in the case of any Contributed Property
contributed to the Partnership prior to the Effective Date, the Agreed Value of
such property as set forth on Schedule 1 attached hereto; (ii) in the case of
any Contributed Property contributed to the Partnership upon or after the
Effective Date and as of the time of its contribution to the Partnership, the
704(c) Value of such property, reduced by any liabilities either assumed by the
Partnership upon such contribution or to which such property is subject when
contributed; and (iii) in the case of any property distributed to a Partner by
the Partnership, the Partnership's Carrying Value of such property at the time
such property is distributed, reduced by any indebtedness either assumed by such
Partner upon such distribution or to which such property is subject at the time
of distribution as determined under Section 752 of the Code and the Regulations
thereunder.
"Agreement" means this Second Amended and Restated Agreement of Limited
Partnership, as it may be amended, supplemented or restated from time to time.
"Assignee" means a Person to whom one or more Partnership Units have
been transferred in a manner permitted under this Agreement, but who has not
become a Substituted Limited Partner, and who has the rights set forth in
Section 11.5.
"Available Cash" means, with respect to any period for which such
calculation is being made, (i) the sum of:
(a) the Partnership's Net Income or Net Loss (as the case
maybe) for such period (without regard to adjustments resulting from allocations
described in Sections 1.A through 1.E of Exhibit C);
(b) Depreciation and all other non-cash charges deducted in
determining Net Income or Net Loss for such period;
-2-
(c) the amount of any reduction in the reserves of the
Partnership referred to in clause (ii)(f) below (including, without limitation,
reductions resulting because the General Partner determines such amounts are no
longer necessary);
(d) the excess of proceeds from the sale, exchange,
disposition, or refinancing of Partnership property for such period over the
gain recognized from such sale, exchange, disposition, or refinancing during
such period (excluding Terminating Capital Transactions); and
(e) all other cash received by the Partnership for such period
that was not included in determining Net Income or Net Loss for such period;
(ii) less the sum of:
(a) all principal debt payments made by the Partnership during
such period;
(b) capital expenditures made by the Partnership during such
period;
(c) investments made by the Partnership during such period in
any entity (including loans made thereto) to the extent that such investments
are not otherwise described in clause (ii)(a) or (ii)(b);
(d) all other expenditures and payments not deducted in
determining Net Income or Net Loss for such period;
(e) any amount included in determining Net Income or Net Loss
for such period that was not received by the Partnership during such period;
(f) the amount of any increase in reserves during such period
which the General Partner determines to be necessary or appropriate in its sole
and absolute discretion; and
(g) the amount of any working capital accounts and other cash
or similar balances which the General Partner determines to be necessary or
appropriate, in its sole and absolute discretion.
Notwithstanding the foregoing, Available Cash shall not include any cash
received or reductions in reserves, or take into account any disbursements made
or reserves established, after commencement of the dissolution and liquidation
of the Partnership.
"Book-Tax Disparities" means, with respect to any item of Contributed
Property or Adjusted Property, as of the date of any determination, the
difference between the Carrying Value of such Contributed Property or Adjusted
Property and the adjusted basis thereof for federal income tax purposes as of
such date. A Partner's share of the Partnership's Book-Tax Disparities in all of
its Contributed Property and Adjusted Property will be reflected by the
difference between such Partner's Capital Account balance as maintained pursuant
to Exhibit B and the hypothetical balance of such Partner's Capital Account
computed as if it had been maintained strictly in accordance with federal income
tax accounting principles.
-3-
"Business Day" means any day except a Saturday, Sunday or other day on
which commercial banks in Houston, Texas are authorized or required by law to
close.
"Capital Account" means the Capital Account maintained for a Partner
pursuant to Exhibit B hereof.
"Capital Contribution" means, with respect to any Partner, any cash,
cash equivalents or the Agreed Value of Contributed Property which such Partner
contributes or is deemed to contribute to the Partnership pursuant to Section
4.1 or 4.2 hereof.
"Carrying Value" means (i) with respect to a Contributed Property or
Adjusted Property, the 704(c) Value of such property, reduced (but not below
zero) by all Depreciation with respect to such Property charged to the Partners'
Capital Accounts following the contribution of or adjustment with respect to
such Property; and (ii) with respect to any other Partnership property, the
adjusted basis of such property for federal income tax purposes, all as of the
time of determination. The Carrying Value of any property shall be adjusted from
time to time in accordance with Exhibit B hereof, and to reflect changes,
additions or other adjustments to the Carrying Value for dispositions and
acquisitions of Partnership properties, as deemed appropriate by the General
Partner.
"Cash Amount" means an amount of cash with respect to the Common Units
offered for redemption by a Redeeming Partner equal to the Value on the
Valuation Date of the REIT Shares Amount.
"Certificate" means the Certificate of Limited Partnership relating to
the Partnership originally filed on January 29, 1994 in the office of the
Delaware Secretary of State, as amended as of the Effective Date in connection
with the Merger and as further amended from time to time in accordance with the
terms hereof and the Act.
"Certificate of Designations" means any Exhibit attached hereto or any
amendment to this Agreement that sets forth the designations, rights, powers,
duties and preferences of Partners holding any Partnership Interests issued
pursuant to Section 4.2, which amendment is in the form of a certificate signed
by the General Partner and appended to this agreement. A Certificate of
Designations is not the exclusive manner in which such an amendment may be
effected. The General Partner may adopt a Certificate of Designations without
the consent of the Limited Partners to the extent permitted pursuant to Section
14.1(b) hereof.
"Code" means the Internal Revenue Code of 1986, as amended and in
effect from time to time, as interpreted by the applicable regulations
thereunder. Any reference herein to a specific section or sections of the Code
shall be deemed to include a reference to any corresponding provision of future
law.
"Common Unit" means a Partnership Unit which is designated as a common
unit of limited partnership interest and which has the rights, preferences and
other privileges designated herein in respect of Common Unitholders. The
allocation of Common Units among the Partners shall be set forth on Exhibit A,
as may be amended from time to time.
"Common Unitholder" means a Partner that holds Common Units.
-4-
"Company" means Camden Property Trust, a Texas real estate investment
trust, and any successors thereto.
"Consent" means the consent or approval of a proposed action by a
Partner given in accordance with Section 14.2 hereof.
"Consideration" means (i) the Cash Amount or (ii) the REIT Shares
Amount, as determined by the Partnership or the Company, as applicable, in its
sole discretion, plus (x) cash in an amount equal to or (y) additional REIT
Shares with a Value equal to the aggregate Cumulative Unpaid Accrued Return
Amount and Cumulative Unpaid Priority Distribution Amount, if any, attributable
to the Common Units being redeemed or purchased.
"Contributed Property" means each property or other asset, in such form
as may be permitted by the Act (but excluding cash), contributed or deemed
contributed to the Partnership. Once the Carrying Value of a Contributed
Property is adjusted pursuant to Exhibit B hereof, such property shall no longer
constitute a Contributed Property for purposes of Exhibit B hereof, but shall be
deemed an Adjusted Property for such purposes.
"Conversion Factor" means 1.0, provided that in the event that the
Company (i) declares or pays a dividend on its outstanding REIT Shares in REIT
Shares or makes a distribution to all holders of its outstanding REIT Shares in
REIT Shares; (ii) subdivides its outstanding REIT Shares; or (iii) combines its
outstanding REIT Shares into a smaller number of REIT Shares, the Conversion
Factor shall be adjusted by multiplying the Conversion Factor by a fraction, the
numerator of which shall be the number of REIT Shares issued and outstanding on
the record date for such dividend, distribution, subdivision or combination
assuming for such purpose that such dividend, distribution, subdivision or
combination has occurred as of such time, and the denominator of which shall be
the actual number of REIT Shares (determined without the above assumption)
issued and outstanding on the record date for such dividend, distribution,
subdivision or combination. Any adjustment to the Conversion Factor shall become
effective immediately after the effective date of such event retroactive to the
record date, if any, for such event. The Conversion Factor shall be subject to
adjustment as provided in Section 16.2(b) hereof.
"Cumulative Unpaid Accrued Return Amount" means, with respect to any
holder of Common Units (other than the General Partner, the Company or any of
their respective Subsidiaries or Affiliates), an amount, if any, equal to (i)
the interest that would accrue at the Prime Rate plus five percent (5%) per
annum, compounded quarterly in arrears, on such Partner's Cumulative Unpaid
Priority Distribution Amount outstanding from time to time, less (ii) the
cumulative distributions received by such Partner pursuant to Clause (a) of
Section 5.1 hereof. The Cumulative Unpaid Return Amount of a Redeeming Partner
shall be reduced by the value of the aggregate Consideration paid by the
Partnership or the Company, as applicable, in respect of any Cumulative Unpaid
Accrued Return Amount attributable to any Common Units redeemed by the
Partnership or purchased by the Company pursuant to Section 8.6 hereof.
"Cumulative Unpaid Priority Distribution Amount" means, with respect to
any holder of Common Units (other than the General Partner, the Company or any
of their respective Subsidiaries or Affiliates), an amount, if any, equal to (i)
the aggregate of all Priority
-5-
Distribution Amounts with respect to the Common Units held by such Partner, less
(ii) the cumulative amount of distributions previously received by such Partner
pursuant to Clauses (b) and (c) of Section 5.1 hereof. For these purposes, an
unpaid Priority Distribution Amount will not be taken into account in
determining a holder of Common Units' Cumulative Unpaid Priority Distribution
Amount unless it remains unpaid as of the close of business on the third (3rd)
Business Day following the date on which the related dividend is paid by the
Company on REIT Shares. The Cumulative Unpaid Priority Distribution Amount of a
Redeeming Partner shall be reduced by the value of the aggregate Consideration
paid by the Partnership or the Company, as applicable, in respect of any
Cumulative Unpaid Priority Distribution Amount attributable to any Common Units
redeemed by the Partnership or purchased by the Company pursuant to Section 8.6
hereof.
"Declaration of Trust" means the Amended and Restated Declaration of
Trust of the Company, as amended.
"Depreciation" means, for each taxable year, an amount equal to the
federal income tax depreciation, amortization, or other cost recovery deduction
allowable with respect to an asset for such year, except that if the Carrying
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 Carrying Value as the
federal income tax depreciation, amortization, or other cost recovery deduction
for such year bears to such beginning adjusted tax basis; provided, however,
that if the federal income tax depreciation, amortization, or other cost
recovery deduction for such year is zero, Depreciation shall be determined with
reference to such beginning Carrying Value using any reasonable method selected
by the General Partner.
"Effective Date" means _________________, 2005 (i.e., the date of
closing of the Merger pursuant to the Merger Agreement).
"Exchange Ratio" shall have the meaning ascribed thereto in the Merger
Agreement.
"General Partner" means the Camden Summit, Inc., in its capacity as the
general partner of the Partnership, or its successors as general partner of the
Partnership.
"General Partner Interest" means a Partnership Interest held by the
General Partner, in its capacity as general partner. A General Partner Interest
may be expressed as a number of Partnership Units.
"IRS" means the Internal Revenue Service, which administers the
internal revenue laws of the United States.
"Immediate Family" means, with respect to any natural Person, such
natural Person's spouse and such natural Person's natural or adoptive parents,
descendants, nephews, nieces, brothers, and sisters.
"Incapacity" or "Incapacitated" means, (i) as to any individual
Partner, death, total physical disability or entry by a court of competent
jurisdiction adjudicating him incompetent to manage his Person or his estate;
(ii) as to any corporation which is a Partner, the filing of a
-6-
certificate of dissolution, or its equivalent, for the corporation or the
revocation of its charter; (iii) as to any partnership which is a Partner, the
dissolution and commencement of winding up of the partnership; (iv) as to any
estate which is a Partner, the distribution by the fiduciary of the estate's
entire interest in the Partnership; (v) as to any trustee of a trust which is a
Partner, the termination of the trust (but not the substitution of a new
trustee); or (vi) as to any Partner, the bankruptcy of such Partner. 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 of or against
such Partner 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 or liquidator has not been
vacated or stayed within ninety (90) days of such appointment; or (h) an
appointment referred to in clause (g) which has been stayed is not vacated
within ninety (90) days after the expiration of any such stay.
"Indemnitee" means (i) any Person made a party to a proceeding by
reason of (A) his status as the General Partner, or as a director, trustee,
trust manager or officer of the Partnership or the General Partner, or (B) his
or its liabilities, pursuant to a loan guarantee 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 assets subject to); and (ii) such other
Persons (including Affiliates of the General Partner or the Partnership) as the
General Partner may designate from time to time (whether before or after the
event giving rise to potential liability), in its sole and absolute discretion.
"Limited Partner" means the General Partner, the Company and any other
Person named as a Limited Partner in Exhibit A attached hereto, as such Exhibit
may be amended from time to time, or any Substituted Limited Partner or
Additional Limited Partner, in such Person's capacity as a Limited Partner of
the Partnership.
"Limited Partner Interest" means a Partnership Interest of a Limited
Partner in the Partnership representing a fractional part of the Partnership
Interests of all Partners and includes any and all benefits to which the holder
of such a Partnership Interest may be entitled, as provided in this Agreement,
together with all obligations of such Person to comply with the terms and
provisions of this Agreement. A Limited Partner Interest may be expressed as a
number of Partnership Units.
"Liquidating Event" has the meaning set forth in Section 13.1.
-7-
"Liquidator" has the meaning set forth in Section 13.2.
"Merger" has the meaning set forth in the recitals to this Agreement.
"Merger Agreement" means that certain Agreement and Plan of Merger
Agreement dated as of October 4, 2004 among the General Partner and the Original
General Partner.
"Net Income" means, for any taxable period, the excess, if any, of the
Partnership's items of income and gain for such taxable period over the
Partnership's items of loss and deduction for such taxable period. The items
included in the calculation of Net Income shall be determined in accordance with
federal income tax accounting principles, subject to the specific adjustments
provided for in Exhibit B.
"Net Loss" means, for any taxable period, the excess, if any, of the
Partnership's items of loss and deduction for such taxable period over the
Partnership's items of income and gain for such taxable period. The items
included in the calculation of Net Loss shall be determined in accordance with
federal income tax accounting principles, subject to the specific adjustments
provided for in Exhibit B.
"Nonrecourse Built-in Gain" means, with respect to any Contributed
Properties or Adjusted Properties that are subject to a mortgage or negative
pledge securing a Nonrecourse Liability, the amount of any taxable gain that
would be allocated to the Partners pursuant to Section 2.B of Exhibit C if such
properties were disposed of in a taxable transaction in full satisfaction of
such liabilities and for no other consideration.
"Nonrecourse Deductions" has the meaning set forth in Regulations
Section 1.704-2(b)(1), and the amount of Nonrecourse Deductions for a
Partnership taxable year shall be determined in accordance with the rules of
Regulations Section 1.704-2(c).
"Nonrecourse Liability" has the meaning set forth in Regulations
Section 1.752-1(a)(2).
"Notice of Redemption" means the Notice of Redemption substantially in
the form of Exhibit D to this Agreement.
"Partner" means a General Partner or a Limited Partner, and "Partners"
means the General Partner and the Limited Partners collectively.
"Partner Minimum Gain" means an amount, with respect to each Partner
Nonrecourse Debt, equal to the Partnership Minimum Gain that would result if
such Partner Nonrecourse Debt were treated as a Nonrecourse Liability,
determined in accordance with Regulations Section 1.704-2(i)(3).
"Partner Nonrecourse Debt" has the meaning set forth in Regulations
Section 1.704-2(b)(4).
"Partner Nonrecourse Deductions" has the meaning set forth in
Regulations Section 1.704-2(i)(2), and the amount of Partner Nonrecourse
Deductions with respect to a
-8-
Partner Nonrecourse Debt for a Partnership taxable year shall be determined in
accordance with the rules of Regulations Section 1.704-2(i)(2).
"Partnership" means the limited partnership formed under the Act and
pursuant to this Agreement, as it may be amended and restated, and any successor
thereto.
"Partnership Interest" means an ownership interest in the Partnership
representing a Capital Contribution by either a Limited Partner or the General
Partner and includes any and all benefits to which the holder of such a
Partnership Interest may be entitled as provided in this Agreement, together
with all obligations of such Person to comply with the terms and provisions of
this Agreement. A Partnership Interest may be expressed as a number of
Partnership Units.
"Partnership Minimum Gain" has the meaning set forth in Regulations
Section 1.704-2(b)(2), and the amount of Partnership Minimum Gain, as well as
any net increase or decrease in a Partnership Minimum Gain, for a Partnership
taxable year shall be determined in accordance with the rules of Regulations
Section 1.704-2(d).
"Partnership Record Date" means the record date established by the
General Partner for the distribution of Available Cash pursuant to Section 5.1
hereof, which record date shall be the same as the record date established by
the Company for the corresponding dividend distribution to its shareholders, or,
if no such record date is established by the Company, the payment date of such
distribution.
"Partnership Unit" or "Unit" means a fractional, undivided share of the
Partnership Interests of all Partners issued pursuant to Sections 4.1 and 4.2
(and includes any series or class of Preferred Units). The number of Partnership
Units outstanding and (in the case of Common Units) the Percentage Interest in
the Partnership represented by such Units are set forth in Exhibit A attached
hereto, as such Exhibit may be amended from time to time. The ownership of
Partnership Units shall be evidenced by such form of certificate for units as
the General Partner adopts from time to time unless the General Partner
determines that the Partnership Units shall be uncertificated securities.
"Partnership Year" means the fiscal year of the Partnership, which
shall be the calendar year.
"Percentage Interest" means, as to a Partner, its percentage interest
as a Common Unitholder determined by dividing the Common Units owned by such
Partner by the total number of Common Units then outstanding and as specified in
Exhibit A attached hereto, as such Exhibit may be amended from time to time.
"Person" means an individual or a corporation, partnership, trust,
unincorporated organization, association or other entity.
"Pre-Liquidation Period" has the meaning set forth in Section 13.6
hereof.
"Preferred Unit" means a limited partnership interest (of any series),
other than a Common Unit, represented by a fractional, undivided share of the
Partnership Interests of all Partners issued hereunder and which is designated
as a "Preferred Unit" (or as a particular class
-9-
or series of Preferred Units) herein and which has the rights, preferences and
other privileges designated herein (including by way of a Certificate of
Designations) in respect of a Preferred Unitholder. The allocation of Preferred
Units among the Partners shall be set forth on Exhibit A, as may be amended from
time to time.
"Preferred Unitholder" means a Partner that holds Preferred Units (of
any class or series).
"Prime Rate" means, on any date, a fluctuating rate of interest per
annum equal to the rate of interest most recently established by JPMorgan Chase
(or, at the General Partner's election, another major lender to the Company or
the Partnership, at the office with which the Company or the Partnership deals)
as its prime rate of interest for loans in United States dollars.
"Priority Distribution Amount" means with respect to the Common Units
held by a Partner (other than the General Partner, the Company, or any of their
respective Subsidiaries or Affiliates) on a Partnership Record Date for
distribution of Available Cash, a cash amount equal in value to the aggregate
cash dividends, cash distributions or other cash amounts that would have been
payable to such holder of Common Units in the event that such Partner owned REIT
Shares equal in number to the REIT Shares Amount attributable to all of such
Partner's Common Units as of such Partnership Record Date.
"Recapture Income" means any gain recognized by the Partnership upon
the disposition of any property or asset of the Partnership, which gain is
characterized as non-capital gain income because it represents the recapture of
deductions previously taken with respect to such property or asset.
"Redeeming Partner" has the meaning set forth in Section 8.6(a) hereof.
"Redemption Right" has the meaning set forth in Section 8.6(a) hereof.
"Regulations" means the Income Tax Regulations promulgated under the
Code, as such regulations may be amended from time to time (including
corresponding provisions of succeeding regulations).
"REIT" means a real estate investment trust under Section 856 of the
Code.
"REIT Share" means a common share of beneficial interest of the
Company, par value $0.01 per share.
"REIT Shares Amount" means a number of REIT Shares equal to the product
of the number of Common Units offered for redemption by a Redeeming Partner,
multiplied by the Conversion Factor, provided that in the event the Company
issues to all holders of REIT Shares rights, options, warrants or convertible or
exchangeable securities entitling the shareholders to subscribe for or purchase
REIT Shares, or any other securities or property (collectively, the "rights"),
then the REIT Shares Amount shall also include such rights that a holder of that
number of REIT Shares would be entitled to receive.
"Residual Gain" or "Residual Loss" means any item of gain or loss, as
the case may be, of the Partnership recognized for federal income tax purposes
resulting from a sale, exchange or
-10-
other disposition of Contributed Property or Adjusted Property, to the extent
such item of gain or loss is not allocated pursuant to Section 2.B.1(a) or
2.B.2(a) of Exhibit C to eliminate Book-Tax Disparities.
"704(c) Value" of any Contributed Property means with respect to any
Contributed Property contributed to the Partnership prior to the Effective Date
the value of such property as set forth in Schedule 2 attached hereto and with
respect to all other Contributed Properties, the fair market value of such
property or other consideration at the time of contribution, as determined by
the General Partner using such reasonable method of valuation as it may adopt.
Subject to Exhibit B hereof, the General Partner shall, in its sole and absolute
discretion, use such method as it deems reasonable and appropriate to allocate
the aggregate of the 704(c) Values of Contributed Properties in a single or
integrated transaction among the separate properties on a basis proportional to
their respective fair market values.
"Specified Redemption Date" means the tenth (10th) Business Day after
receipt by the Company of a Notice of Redemption; provided that if the Company
combines its outstanding REIT Shares, no Specified Redemption Date shall occur
after the record date of such combination of REIT Shares and prior to the
effective date of such combination.
"Subordinated Amounts" means any and all payments of the Partnership
that are attributable to (i) any payment of principal or interest with respect
to any indebtedness owing by the Partnership to the General Partner, the Company
or any of their respective Subsidiaries or Affiliates; (ii) any payments by the
Partnership to the General Partner, the Company or any of their respective
Subsidiaries or Affiliates with respect to any reimbursement of expenses
incurred by the General Partner, the Company or any of their respective
Subsidiaries or Affiliates; (iii) any compensation paid by the Partnership to
the General Partner or its Affiliates for services rendered and (iv) any other
amounts owed to or being paid to the Company or any of its respective
Subsidiaries or Affiliates.
"Subsidiary" means, with respect to any Person, any corporation,
partnership or other entity of which a majority of (i) the voting power of the
voting equity securities; or (ii) the outstanding equity interests, is owned,
directly or indirectly, by such Person.
"Substituted Limited Partner" means a Person who is admitted as a
Limited Partner to the Partnership pursuant to Section 11.4.
"Terminating Capital Transaction" means any sale or other disposition
of all or substantially all of the assets of the Partnership or a related series
of transactions that, taken together, result in the sale or other disposition of
all or substantially all of the assets of the Partnership.
"Unrealized Gain" attributable to any item of Partnership property
means, as of any date of determination, the excess, if any, of (i) the fair
market value of such property (as determined under Exhibit B hereof) as of such
date; over (ii) the Carrying Value of such property (prior to any adjustment to
be made pursuant to Exhibit B hereof) as of such date.
"Unrealized Loss" attributable to any item of Partnership property
means, as of any date of determination, the excess, if any, of (i) the Carrying
Value of such property (prior to any
-11-
adjustment to be made pursuant to Exhibit B hereof) as of such date; over (ii)
the fair market value of such property (as determined under Exhibit B hereof) as
of such date.
"Valuation Date" means the date of receipt by the General Partner of a
Notice of Redemption or, if such date is not a Business Day, the first Business
Day thereafter.
"Value" means, with respect to a REIT Share, the average of the daily
market price for the ten (10) consecutive trading days immediately preceding the
Valuation Date. The market price for each such trading day shall be: (i) if the
REIT Shares are listed or admitted to trading on any securities exchange or the
NASDAQ-National Market System, the closing price on such day, or if no such sale
takes place on such day, the average of the closing bid and asked prices on such
day; (ii) if the REIT Shares are not listed or admitted to trading on any
securities exchange or the NASDAQ-National Market System, the last reported sale
price on such day or, if no sale takes place on such day, the average of the
closing bid and asked prices on such day, as reported by a reliable quotation
source designated by the General Partner; or (iii) if the REIT Shares are not
listed or admitted to trading on any securities exchange or the NASDAQ-National
Market System and no such last reported sale price or closing bid and asked
prices are available, the average of the reported high bid and low asked prices
on such day, as reported by a reliable quotation source designated by the
General Partner, or if there shall be no bid and asked prices on such day, the
average of the high bid and low asked prices, as so reported, on the most recent
day (not more than ten (10) days prior to the date in question) for which prices
have been so reported; provided that if there are no bid and asked prices
reported during the ten (10) days prior to the date in question, the Value of
the REIT Shares shall be determined by the General Partner acting in good faith
on the basis of such quotations and other information as it considers, in its
reasonable judgment, appropriate. In the event the REIT Shares Amount includes
rights that a holder of REIT Shares would be entitled to receive, then the Value
of such rights shall be determined by the General Partner acting in good faith
on the basis of such quotations and other information as it considers, in its
reasonable judgment, appropriate.
ARTICLE 2
ORGANIZATIONAL MATTERS
Section 2.1 Formation
Effective as of January 29, 1994, the Partnership was formed as a
limited partnership under and pursuant to the Act. Except as expressly provided
herein to the contrary, the rights and obligations of the Partners and the
administration and termination of the Partnership shall be governed by the Act.
The Partnership Interest of each Partner shall be personal property for all
purposes.
Section 2.2 Name
Prior to the Effective Date, the name of the Partnership was "Summit
Properties Partnership, L.P." From and after the Effective Date, the name of the
Partnership shall be Camden Summit Partnership, L.P. and, immediately following
the Merger, an Amendment to the Partnership's Certificate of Limited Partnership
was filed to reflect the change in the name and the change in the General
Partner. The Partnership's business may be conducted under any other
-12-
name or names deemed advisable by the General Partner, including the name of the
General Partner or any Affiliate thereof. The words "Limited Partnership,"
"L.P.," "Ltd." or similar words or letters shall be included in the
Partnership's name where necessary for the purposes of complying with the laws
of any jurisdiction that so requires. The General Partner in its sole and
absolute discretion may change the name of the Partnership at any time and from
time to time and shall notify the Limited Partners of such change in the next
regular communication to the Limited Partners.
Section 2.3 Registered Office and Agent; Principal Office
The address of the registered office of the Partnership in the State of
Delaware and the name and address of the registered agent for service of process
on the Partnership in the State of Delaware is The Corporation Trust Company,
Corporation Trust Center, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇. The
principal office of the Partnership shall be ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, or such other place as the General Partner may from time
to time designate by notice to the Limited Partners. The Partnership may
maintain offices at such other place or places within or outside the State of
Delaware as the General Partner deems advisable.
Section 2.4 Power of Attorney
(a) Each Limited Partner and each Assignee hereby constitutes
and appoints the General Partner, any Liquidator, and authorized
officers and attorneys-in-fact of each, and each of those acting
singly, in each case with full power of substitution, as its true and
lawful agent and attorney-in-fact, with full power and authority in its
name, place and stead to:
(1) execute, swear to, 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 restatement thereof) that the General Partner or
the Liquidator deems appropriate or necessary to form, qualify
or continue the existence or qualification of the Partnership
as a limited partnership (or a partnership in which the
Limited Partners have limited liability) in the State of
Delaware and in all other jurisdictions in which the
Partnership may or plans to conduct business or own property;
(b) all instruments that the General Partner deems appropriate
or necessary to reflect any amendment, change, modification or
restatement of this Agreement in accordance with its terms;
(c) all conveyances and other instruments or documents that
the General Partner or the Liquidator deems appropriate or
necessary to reflect the dissolution and liquidation of the
Partnership pursuant to the terms of this Agreement,
including, without limitation, a certificate of cancellation;
(d) all instruments relating to the admission, withdrawal,
removal or substitution of any Partner pursuant to, or other
events described in, Article 11, 12 or 13 hereof or the
Capital Contribution of any Partner; and (e) all certificates,
documents and other instruments relating to the determination
of the rights, preferences and privileges of Partnership
Interest; and
-13-
(2) execute, swear to, seal, acknowledge and file all
ballots, consents, approvals, waivers, certificates and other
instruments appropriate or necessary, in the sole and absolute
discretion of the General Partner or any Liquidator, 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 Liquidator, to effectuate the
terms or intent of this Agreement.
Nothing contained herein shall be construed as authorizing the General
Partner or any Liquidator to amend this Agreement except in accordance with
Article 14 hereof or as may be otherwise expressly provided for in this
Agreement.
(b) 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 and any Liquidator to act as contemplated by this
agreement in any filing or other action by it on behalf of the
Partnership, and it shall survive and not be affected by the subsequent
Incapacity of any Limited Partner or Assignee and the transfer of all
or any portion of such Limited Partner's or Assignee's Partnership
Units and shall extend to such Limited Partner's or Assignee's heirs,
successors, assigns and personal representatives. Each such Limited
Partner or Assignee hereby agrees to be bound by any representation
made by the General Partner or any Liquidator, acting in good faith
pursuant to such power of attorney, and each such Limited Partner or
Assignee hereby waives any and all defenses which may be available to
contest, negate or disaffirm the action of the General Partner or any
Liquidator, taken in good faith under such power of attorney. Each
Limited Partner or Assignee shall execute and deliver to the General
Partner or the Liquidator, within fifteen (15) days after receipt of
the General Partner's or Liquidator's request therefor, such further
designation, powers of attorney and other instruments as the General
Partner or the Liquidator, as the case may be, deems necessary to
effectuate this Agreement and the purposes of the Partnership.
Section 2.5 Term
The term of the Partnership commenced on January 29, 1994 and shall
continue until December 31, 2093, unless, the Partnership is dissolved sooner
pursuant to the provisions of Article 13 or as otherwise provided by law.
ARTICLE 3
PURPOSE
Section 3.1 Purpose and Business
The purpose and nature of the business to be conducted by the
Partnership is (i) to conduct any business that may be lawfully conducted by a
limited partnership organized pursuant to the Act; provided, however, that such
business shall be limited to and conducted in such a manner as to permit the
Company at all times to be classified as a REIT, unless the
-14-
Company ceases to qualify as a REIT for reasons other than the conduct of the
business of the Partnership; (ii) to enter into any partnership, joint venture
or other similar arrangement to engage in any of the foregoing or to own
interests in any entity engaged in any of the foregoing; and (iii) to do
anything necessary or incidental to the foregoing. In connection with the
foregoing, and without limiting the Company's right, in its sole discretion, to
cease qualifying as a REIT, the Partners acknowledge the Company's current
status as a REIT inures to the benefit of all of the Partners and not solely the
Company or the General Partner.
Section 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; 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 the Company to continue to qualify as a REIT;
(ii) could subject the Company to any additional taxes under Section 857 or
Section 4981 of the Code; or (iii) could violate any law or regulation of any
governmental body or agency having jurisdiction over the Company or its
securities, unless such action (or inaction) shall have been specifically
consented to by the General Partner in writing.
ARTICLE 4
CAPITAL CONTRIBUTIONS
Section 4.1 Capital Contributions of the Partners
Prior to the Effective Date, the Partners have made Capital
Contributions to the Partnership as reflected on Schedule 3 attached hereto. On
the Effective Date, (i) the Original General Partner merged with and into the
General Partner, with the General Partner succeeding by operation of law to the
Partnership Interests held by the Original General Partner, and (ii) upon the
effectiveness of such merger, this Agreement became effective and replaced the
Original Agreement in its entirety. In connection with the amendments effected
by this Agreement, among other things, the number of Common Units held by each
Partner were adjusted by multiplying the number of Common Units held by such
Partner immediately prior to the effective time of the Merger by the final
Exchange Ratio at the effective time of the Merger, after taking into account
any adjustments thereto, and the provisions of the Agreement were amended, among
other things, to reflect that the REIT Shares Amount payable to a Redeeming
Partner in connection with an exercise of the Redemption Right pursuant to
Section 8.6 hereof shall be comprised of REIT Shares (as opposed to common stock
of the Original General Partner). As of the Effective Date (after taking into
account the Merger and any Capital Contributions or redemptions relating thereto
as well as the adjustment of Common Units as described above), (i) the number
and class of Partnership Units held by each Partner, (ii) the Capital Account
balance of each Partner and (iii) the Percentage Interest of each Partner are as
set forth on Exhibit A attached hereto, which Percentage Interest shall be
adjusted in Exhibit A from time to time by the General Partner to the extent
necessary to reflect accurately redemptions, additional Capital Contributions,
the issuance of additional Partnership Units (pursuant to any merger or
otherwise), or similar events having an effect on any Partner's
-15-
Percentage Interest. To the extent the Partnership acquires any property by the
merger of any other Person into the Partnership, Persons who receive Partnership
Interests in exchange for their interests in the Person merging into the
Partnership shall become Partners and shall be deemed to have made Capital
Contributions as provided in the applicable merger agreement and as set forth in
Exhibit A, as amended to reflect such deemed Capital Contributions. The number
of Common Units held by the General Partner, in its capacity as general partner,
(equal to one percent (1%) of all outstanding Common Units from time to time)
shall be deemed to be the General Partner Interest. All other Common Units held
by the General Partner shall be held in its capacity as a Limited Partner.
Except as provided in Sections 4.2 and 10.5, the Partners shall have no
obligation to make any additional Capital Contributions or loans to the
Partnership.
Section 4.2 Issuances of Additional Partnership Interests
The General Partner is hereby authorized to cause the Partnership from
time to time to issue to the Partners (including the General Partner) or other
Persons additional Partnership Units or other Partnership Interests in one or
more classes, or one or more series of any of such classes, with such
designations, preferences and relative, participating, optional or other special
rights, powers and duties, including rights, powers and duties senior to Limited
Partner Interests, all as shall be determined by the General Partner in its sole
and absolute discretion subject to Delaware law, including, without limitation,
(i) the allocations of items of Partnership income, gain, loss, deduction and
credit to each such class or series of Partnership Interests; (ii) the right of
each such class or series of Partnership Interests to share in Partnership
distributions; and (iii) the rights of each such class or series of Partnership
Interests upon dissolution and liquidation of the Partnership; provided that no
such additional Partnership Units or other Partnership Interests shall be issued
to the Company, the General Partner or any of their respective Subsidiaries or
Affiliates, unless either (x) the Company, the General Partner or their
Subsidiary or Affiliate, as applicable, shall make a Capital Contribution to the
Partnership in an amount equal to the fair market value of such Partnership
Units or other Partnership Interests (as determined in good faith by the General
Partner, provided, however, that for purposes hereof the fair market value of a
Common Unit of the same class of Common Units held by the Summit Limited
Partners shall be equal to (A) the Value of that number of REIT Shares (or
fraction thereof) comprising the REIT Shares Amount attributable to a single
Common Unit of such class as of the date of issuance of such Common Unit or (B)
with respect to issuances on the Effective Date, the Cash Consideration (as
defined in the Merger Agreement), or (y) the additional Partnership Units or
other Partnership Interests are issued to all Partners in proportion to their
respective Percentage Interests; and provided further that no such additional
Partnership Units or other Partnership Interests shall be issued to the Company,
the General Partner or one of their respective Subsidiaries or Affiliates, with
rights to distributions during the operation or upon liquidation of the
Partnership that are senior to the distributions of the Summit Limited Partners
during the operation or upon the liquidation of the Partnership or with rights
to Net Losses that would result in a change in the priority of allocation of Net
Losses pursuant to Section 6.1(b) hereof in a manner that has an adverse effect
upon any of the Summit Limited Partners.
-16-
Section 4.3 Preemptive Rights
No Person shall have any preemptive, preferential or other similar
purchase right with respect to (i) additional Capital Contributions or loans to
the Partnership; or (ii) the issuance or sale of any Partnership Units or other
Partnership Interests.
ARTICLE 5
DISTRIBUTIONS
Section 5.1 Requirement and Characterization of Distributions
Subject to Sections 5.3 and 5.4 hereof and subject to the rights and
preferences of any outstanding class or series of Preferred Units as set forth
in the Certificates of Designations therefor attached hereto or executed by the
General Partner, or as otherwise provided herein with respect to Partnership
Interests other than Common Units, the General Partner shall distribute at least
quarterly an amount equal to one hundred percent (100%) of Available Cash
generated by the Partnership during such quarter or shorter period as follows:
(a) first, to the Common Unitholders (other than the General
Partner, the Company or any of their respective Subsidiaries or
Affiliates) who are Partners on the Partnership Record Date with
respect to such distribution, pro rata among them in proportion to the
Cumulative Unpaid Accrued Return Amount, if any, of each such Common
Unitholder until the Cumulative Unpaid Accrued Return Amount of each
Common Unitholder is reduced to zero;
(b) second, to the Common Unitholders (other than the General
Partner, the Company or any of their respective Subsidiaries or
Affiliates) who are Partners on the Partnership Record Date with
respect to such distribution pro rata among them in proportion to the
Cumulative Unpaid Priority Distribution Amount, if any, of each such
Common Unitholder until the Cumulative Unpaid Priority Distribution
Amount of each such Common Unitholder is reduced to zero;
(c) third, to the Common Unitholders (other than the General
Partner, the Company or any of their respective Subsidiaries or
Affiliates) who are Partners on the Partnership Record Date with
respect to such distribution, pro rata among them in proportion to the
Priority Distribution Amount, if any, of each such Common Unitholder,
until each such Common Unitholder has received an amount equal to the
Priority Distribution Amount with respect to such distribution;
(d) thereafter, one hundred percent (100%) to the General
Partner, the Company and their respective Subsidiaries and Affiliates
(and any permitted transferee under Section 11.2 hereof) pro rata in
proportion to the Common Units held by the General Partner, the Company
and their respective Subsidiaries and Affiliates (and any permitted
transferee under Section 11.2 hereof).
Notwithstanding the foregoing, in no event may a Partner
receive a distribution of Available Cash with respect to a Common Unit
if such Partner is entitled to receive a distribution with respect to a
REIT Share for which such Common Unit has been
-17-
redeemed or exchanged. No Partner shall receive any distributions in
respect of, and no Cumulative Unpaid Accrued Return Amount shall accrue
with respect to, any failure of such Partner to timely receive any
Priority Distribution Amount due to the Partner's failure to provide
the General Partner with accurate information regarding its address for
payment of distributions hereunder. The General Partner shall take such
reasonable efforts, as determined by it in its sole and absolute
discretion and consistent with the Company's qualification as a REIT,
to distribute Available Cash to the Limited Partners so as to preclude
any such distribution or portion thereof from being treated as part of
a sale of property to the Partnership by a Limited Partner under
Section 707 of the Code or the Regulations thereunder; provided that
the General Partner and the Partnership shall not have liability to a
Limited Partner under any circumstances as a result of any distribution
to a Limited Partner being so treated.
Section 5.2 Amounts Withheld
All amounts withheld pursuant to the Code or any provisions of any
state or local tax law and Section 10.5 hereof with respect to any allocation,
payment or distribution to the Partners or Assignees shall be treated as amounts
distributed to the Partners or Assignees pursuant to Section 5.1 for all
purposes under this Agreement.
Section 5.3 Distributions Upon Liquidation
Proceeds from a Terminating Capital Transaction and any other cash
received or reductions in reserves made after commencement of the liquidation of
the Partnership shall be distributed to the Partners in accordance with Section
13.2
Section 5.4 Subordinated Amounts. Notwithstanding any other provision
of this Agreement to the contrary, the Partnership shall not pay any
Subordinated Amounts unless and until the Cumulative Accrued Unpaid Return
Amounts and Cumulative Unpaid Priority Distribution Amounts of all of the
holders of Common Units (other than the Company, the General Partner and their
respective Subsidiaries and Affiliates) have been reduced to zero.
ARTICLE 6
ALLOCATIONS
Section 6.1 Allocations For Capital Account Purposes
For purposes of maintaining the Capital Accounts and in determining the
rights of the Partners among themselves, the Partnership's items of income,
gain, loss and deduction (computed in accordance with Exhibit B hereof) shall be
allocated among the Partners in each taxable year (or portion thereof) as
provided herein below.
(a) Net Income. Net Income shall be allocated:
(i) first, to the General Partner to the extent that
Net Losses previously allocated to the General Partner
pursuant to Section 6.1(b)(iv) below for all prior taxable
years exceed Net Income previously allocated to the General
Partner pursuant to this Section 6.1(a)(i) for all prior
taxable years;
-18-
(ii) second, to Partners holding Preferred Units to
the extent that Net Losses previously allocated to such
Partners pursuant to Section 6.1(b)(iii) below for all prior
taxable years exceed Net Income previously allocated to such
Partners pursuant to this Section 6.1(a)(ii) for all prior
taxable years;
(iii) third, to Partners holding Common Units to the
extent that Net Losses previously allocated to such Partners
pursuant to Section 6.1(b)(ii) below for all prior taxable
years exceed Net Income previously allocated to such Partners
pursuant to this Section 6.1(a)(iii) for all prior taxable
years;
(iv) fourth, to Partners holding Preferred Units in
accordance with the rights of any such class of Partnership
Interests until each such Preferred Unit has been allocated
Net Income equal to the excess of (x) the cumulative amount of
preferred distributions such Partners are entitled to receive
to the last day of the current taxable year or to the date of
redemption to the extent such Partnership Interests are
redeemed during such taxable year over (y) the cumulative Net
Income allocated to such Partners, pursuant to this Section
6.1(a)(iv) for all prior taxable years (and, within each such
class, pro rata in proportion to the respective share of such
Units each Partner holds as of the last day of the period for
which such allocation is being made);
(v) fifth, to Partners holding Common Units pro rata
in proportion to and up to the amount of any distributions
received by each such Partner pursuant to Section 5.1 hereof
for the current taxable year or other taxable period (provided
that for purposes of this Section 6.1(a)(v) the General
Partner may include in the calculation of distributions
received by a Partner during any taxable year or other taxable
period of the Partnership any distributions received by the
Partner on or before the thirtieth (30th) day following the
end of the particular taxable year or other period of the
Partnership, provided further that, if the General Partner
elects to include the distribution in any such calculation,
any such distribution shall be disregarded for purposes of
determining allocations of income in the year in which it is
actually made); and
(vi) sixth, the remaining Net Income of the
Partnership shall be allocated one hundred percent (100%) to
the General Partner, the Company and their respective
Subsidiaries and Affiliates (and any permitted transferee
under Section 11.2 hereof) pro rata in proportion to the
Common Units held by the General Partner, the Company and
their respective Subsidiaries and Affiliates (and any
permitted transferee under Section 11.2 hereof).
(b) Net Losses. After giving effect to the special allocations
set forth in Section 1 of Exhibit C attached hereto, Net Losses shall
be allocated:
(i) first, to the General Partner and the Company to
the extent Net Income previously allocated to the General
Partner and the Company pursuant to Section 6.1(a)(vi) above
for all prior tax years exceeds Net Losses allocated to the
-19-
General Partner and the Company under this Section 6.1(b)(i)
for all prior taxable years;
(ii) second, with respect to Common Units, pro rata
in proportion to each Partner's respective Adjusted Capital
Account as of the last day of the period for which such
allocation is being made 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 pursuant to Regulations Section
1.704-1(b)(2)(ii)(c)(2)) of each Partner with respect to such
Common Units is reduced to zero;
(iii) third, to the Partners holding Preferred Units
in accordance with the rights of such class of Preferred Units
(and, if there is more than one class of such Preferred Units,
then in the reverse order of their preferences in
distributions), until the Adjusted Capital Account (modified
in the same manner as in the parenthetical in the immediately
preceding clause (i)) of each such Partner with respect to
such Preferred Units is reduced to zero; and
(iv) fourth, to the General Partner.
(c) For purposes of Regulations Section 1.752-3(a), the
Partners agree, that except as otherwise expressly agreed to in a
separate written agreement between the General Partner and one or more
Limited Partners, that Nonrecourse Liabilities of the Partnership in
excess of the sum of (i) the amount of Partnership Minimum Gain; and
(ii) the total amount of Nonrecourse Built-in Gain shall be allocated
among the Partners in accordance with their respective Percentage
Interests.
(d) Any gain allocated to the Partners upon the sale or other
taxable disposition of any Partnership asset shall, to the extent
possible, after taking into account other required allocations of gain
pursuant to Exhibit C, be characterized as Recapture Income in the same
proportions and to the same extent as such Partners have been allocated
any deductions directly or indirectly giving rise to the treatment of
such gains as Recapture Income.
(e) Notwithstanding anything to the contrary in this Article
6, following the occurrence of a Liquidating Event (and, if applicable,
the failure of the Partners to elect to continue the Partnership),
items of income, gain, loss and deduction for the current fiscal year
(and if necessary, the prior fiscal year if such event occurs before
the due date, without regard for any extension of time, for filing the
federal income tax return for the Partnership for such prior year)
shall be specially allocated to the Summit Limited Partners who are
then Partners and/or other Partners to the extent necessary to cause
the Capital Account of each such Summit Limited Partner to equal an
amount that, if distributed in cash (taking into account all prior
distributions to such Summit Limited Partner for all periods since the
Effective Date in respect to the Units held by them at the time of the
Liquidating Event), would result in such Summit Limited Partner
receiving aggregate distributions in respect of the Units held by them
at the time of the Liquidating Event or revaluation equal to the Value
of the REIT Shares Amount attributable to those
-20-
Units as of the Effective Date (as determined immediately following
consummation of the Merger and the conversion of the outstanding Common
Units as described in Section 4.1 hereof) plus an return thereon that
results in the Summit Limited Partner having received an internal rate
of return equal to 8% per annum. In the event of any revaluation of
Partnership property pursuant to Treasury Regulations Section
1.704-1(b)(2)(iv)(f), items of book income, gain, loss and deduction
shall be allocated to the Summit Limited Partners who are then Partners
and/or other Partners in a manner consistent with this Section 6.1(e).
Section 6.2 Substantial Economic Effect
It is the intent of the Partners that the allocations of Net Income and
Net Losses under this Agreement have substantial economic effect (or be
consistent with the Partners' interests in the Partnership in the case of the
allocation of losses attributable to nonrecourse debt) within the meaning of
Section 704(b) of the Code as interpreted by the Regulations promulgated
pursuant thereto. Article VI and other relevant provisions of this Agreement
shall be interpreted in a manner consistent with such intent.
ARTICLE 7
MANAGEMENT AND OPERATIONS OF BUSINESS
Section 7.1 Management
(a) Except as otherwise expressly provided in this Agreement,
all management powers over the business and affairs of the Partnership
are and shall be exclusively vested in the General Partner, and no
Limited Partner shall have any right to participate in or exercise
control or management power over the business and affairs of the
Partnership. The General Partner may not be removed by the Limited
Partners with or without cause. In addition to the powers now or
hereafter granted a general partner of a limited partnership under
applicable law or which are granted to the General Partner under any
other provision of this Agreement, the General Partner, subject to
Section 7.3 hereof and shall have full power and authority to do all
things deemed necessary or desirable by it to conduct the business of
the Partnership, to exercise all powers set forth in Section 3.2 hereof
and to effectuate the purposes set forth in Section 3.1 hereof,
including, without limitation:
(1) the making of any expenditures, the lending or
borrowing of money (including, without limitation, making
prepayments on loans and borrowing money to permit the
Partnership to make distributions to its Partners in such
amounts as will permit the Company (so long as the Company
qualifies as a REIT) to avoid the payment of any federal
income tax (including, for this purpose, any excise tax
pursuant to Section 4981 of the Code) and to make
distributions to its shareholders in amounts sufficient to
permit the Company to maintain REIT status), the assumption or
guarantee of, or other contracting for, indebtedness and other
liabilities, the issuance of evidence of indebtedness
(including the securing of the same by deed, mortgage, deed of
trust or other lien
-21-
or encumbrance on the Partnership's assets) and the incurring
of any obligations it deems necessary for the conduct of the
activities of the Partnership;
(2) the making of tax, regulatory and other filings,
or rendering of periodic or other reports to governmental or
other agencies having jurisdiction over the business or assets
of the Partnership;
(3) the acquisition, disposition, mortgage, pledge,
encumbrance, hypothecation or exchange of any assets of the
Partnership (including the exercise or grant of any
conversion, option, privilege, or subscription right or other
right available in connection with any assets at any time held
by the Partnership) or the merger or other combination of the
Partnership with or into another entity (all of the foregoing
subject to any prior approval only to the extent required by
Section 7.3 hereof);
(4) the use of the assets of the Partnership
(including, without limitation, cash on hand) for any purpose
consistent with the terms of this Agreement and on any terms
it sees fit, including, without limitation, the financing of
the conduct of the operations of the Company, the Partnership
or any of the Partnership's Subsidiaries, the lending of funds
to other Persons (including, without limitation, the Company
or the Subsidiaries of the Partnership and/or the Company) and
the repayment of obligations of the Partnership and its
Subsidiaries and any other Person in which it has an equity
investment, and the making of capital contributions to its
Subsidiaries;
(5) the management, operation, leasing, landscaping,
repair, alteration, demolition or improvement of any real
property or improvements owed by the Partnership or any
Subsidiary of the Partnership;
(6) the negotiation, execution, and performance of
any contracts, conveyances or other instruments that the
General Partner considers useful or necessary to the conduct
of the Partnership's operations or the implementation of the
General Partner's powers under this Agreement, including
contracting with contractors, developers, consultants,
accountants, legal counsel, other professional advisors and
other agents and the payment of their expenses and
compensation out of the Partnership's assets;
(7) the distribution of Partnership cash or other
Partnership assets in accordance with this Agreement;
(8) holding, managing, investing and reinvesting cash
and other assets of the Partnership;
(9) the collection and receipt of revenues and income
of the Partnership;
(10) the establishment of one or more divisions of
the Partnership, the selection and dismissal of employees of
the Partnership (including, without
-22-
limitation, employees having titles such as "president," "vice
president," "secretary" and "treasurer" of the Partnership),
and agents, outside attorneys, accountants, consultants and
contractors of the Partnership, and the determination of their
compensation and other terms of employment or hiring;
(11) the maintenance of such insurance for the
benefit of the Partnership and the Partners as it deems
necessary or appropriate;
(12) the formation of, or acquisition of an interest
in, and the contribution of property to, any further limited
or general partnerships, joint ventures or other relationships
that it deems desirable (including, without limitation, the
acquisition of interests in, and the contributions of property
to, its Subsidiaries and any other Person in which it has an
equity investment from time to time);
(13) the control of any matters affecting the rights
and obligations of the Partnership, including the settlement,
compromise, submission to arbitration or any other form of
dispute resolution, or abandonment of, any claim, cause of
action, liability, debt or damages, due or owing to or from
the Partnership, the commencement or defense of suits, legal
proceedings, administrative proceedings, arbitration or other
forms of dispute resolution, and the representation of the
Partnership in all suits or legal proceedings, administrative
proceedings, arbitrations or other forms of dispute
resolution, the incurring of legal expense, and the
indemnification of any Person against liabilities and
contingencies to the extent permitted by law;
(14) the undertaking of any action in connection with
the Partnership's direct or indirect investment in its
Subsidiaries or any other Person (including, without
limitation, the contribution or loan of funds by the
Partnership to such Persons);
(15) the determination of the fair market value of
any Partnership property distributed in kind using such
reasonable method of valuation as the General Partner may
adopt;
(16) the exercise, directly or indirectly, through
any attorney-in-fact acting under a general or limited power
of attorney, of any right, including the right to vote,
appurtenant to any asset or investment held by the
Partnership;
(17) the exercise of any of the powers of the General
Partner enumerated in this Agreement on behalf of or in
connection with any Subsidiary of the Partnership or any other
Person in which the Partnership has a direct or indirect
interest, or jointly with any such Subsidiary or other Person;
(18) the exercise of any of the powers of the General
Partner enumerated in this Agreement on behalf of any Person
in which the Partnership does not have an interest pursuant to
contractual or other arrangements with such Person;
-23-
(19) the making, execution and delivery of any and
all deeds, leases, notes, mortgages, deeds of trust, security
agreements, conveyances, contracts, guarantees, warranties,
indemnities, waivers, releases or legal instruments or
agreements in writing necessary or appropriate, in the
judgment of the General Partner, for the accomplishment of any
of the powers of the General Partner enumerated in this
Agreement; and
(20) the issuance of additional Partnership Units, as
appropriate, in connection with Capital Contributions by
Additional Limited Partners and additional Capital
Contributions by Partners pursuant to Article 4 hereof.
(b) Each of the Limited Partners agrees that the General
Partner is authorized to execute, deliver and perform the
above-mentioned agreements and transactions on behalf of the
Partnership without any further act, approval or vote of the Partners,
notwithstanding any other provision of this Agreement (except as
provided in Section 7.3), the Act or any applicable law, rule or
regulation, to the fullest extent permitted under the Act or other
applicable law, rule or regulation. 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 Limited Partners or any other Persons under
this Agreement or of any duty stated or implied by law or equity.
(c) The General Partner may cause the Partnership to establish
and maintain at any and all times working capital accounts and other
cash or similar balances in such amounts as the General Partner, in its
sole and absolute discretion, deems appropriate and reasonable from
time to time.
(d) Except as otherwise expressly agreed to in a separate
written agreement between the General Partner and one or more Limited
Partners, in exercising its authority under this Agreement, the General
Partner may, but shall be under no obligation to, take into account the
tax consequences to any Partner of any action taken by it. Except as
otherwise expressly agreed to in a separate written agreement between
the General Partner and one or more Limited Partners, the General
Partner and the Partnership shall not have liability to a Limited
Partner under any circumstances as a result of an income tax liability
incurred by such Limited Partner as a result of an action (or inaction)
by the General Partner taken pursuant to its authority under this
Agreement and in accordance with the terms of Section 7.3.
Section 7.2 Certificate of Limited Partnership
Effective as of January 29, 1994, the Certificate was filed with the
Secretary of State of Delaware as required by the Act. As of the Effective Date,
the Certificate shall be amended to reflect the Merger and the change in the
Partnership's name. The General Partner shall use all reasonable efforts to
cause to be filed such other certificates or documents as may be reasonable and
necessary or appropriate for the formation, continuation, qualification and
operation of a limited partnership (or a partnership in which the limited
partners have limited liability) in the State of Delaware and any other state,
or the District of Columbia, in which the Partnership may
-24-
elect to do business or own property. To the extent that such action is
determined by the General Partner to be reasonable and necessary or appropriate,
the General Partner shall file amendments to and restatements of the Certificate
and do all of the things to maintain the Partnership as a limited partnership
(or a partnership in which the limited partners have limited liability) under
the laws of the State of Delaware and each other state, or the District of
Columbia, in which the Partnership may elect to do business or own property.
Subject to the terms of Section 8.5(a)(4) hereof, the General Partner shall not
be required, before or after filing, to deliver or mail a copy of the
Certificate or any amendment thereto to any Limited Partner.
Section 7.3 Restrictions on General Partner Authority
(a) The General Partner may not take any action in
contravention of an express prohibition or limitation of this Agreement
without the written Consent of Limited Partners holding a majority of
the Percentage Interests of the Limited Partners (including Limited
Partner Percentage Interests held by the General Partner), or such
other percentage of the Limited Partners as may be specifically
provided for under a provision of this Agreement.
(b) Except as provided in Article 13 hereof, the General
Partner may not cause the Partnership to liquidate, without the Consent
of Limited Partners holding majority of the Percentage Interests of the
Limited Partners (other than Limited Partner Interests held by the
General Partner, the Company or any Subsidiary or Affiliate of the
Company).
(c) Except as provided in Article 14 hereof, the General
Partner will not make any amendments to this Agreement without the
Consent of Limited Partners holding a majority of the Percentage
Interests of the Limited Partners (other than Limited Partner Interests
held by the General Partner, the Company or any Subsidiary or Affiliate
of the Company).
(d) The General Partner shall not transfer or assign its
General Partner Interest to any Person other than the Company or a
direct or indirect wholly owned Subsidiary of the Company without the
Consent of Limited Partners holding a majority of the Percentage
Interests of the Limited Partners (other than Limited Partner Interests
held by the General Partner, the Company or any Subsidiary or Affiliate
of the Company).
(e) The General Partner shall not cause the Partnership to
merge or consolidate with or into any other Person without the Consent
of Limited Partners holding a majority of the Percentage Interests of
the Limited Partners (other than Limited Partner Interests held by the
General Partner, the Company or any Subsidiary or Affiliate of the
Company), except in a transaction in which the Summit Limited Partners
are granted economic rights that are identical to their economic rights
under this Agreement (provided, however, for purposes of this Section
7.3(e), any changes in the form of such rights of the Summit Limited
Partners required to reflect a change in the issuer of the REIT Shares
or a change in the capital structure of the Company or the Partnership,
e.g., adjustment to the Conversion Factor, change of the securities
which the Common Units may receive upon exercise of their Redemption
Right, a change of Common Units into
-25-
common units in the new limited partnership, shall not result in the
economic rights granted to the Original Limited Partners not being
identical to their economic rights hereunder). Notwithstanding the
foregoing, in the event that the General Partner proposes to merge or
consolidate the Partnership with or into any other Person in connection
with a transaction that constitutes a Triggering Event pursuant to
Section 16.1 hereof, the General Partner and the Partnership shall
comply with the applicable provisions of Article 16 hereof with respect
to such Triggering Event.
(f) The General Partner shall not cause the Partnership to
commence a voluntary proceeding seeking liquidation, reorganization or
other relief under any bankruptcy, insolvency or other similar law or
to consent to the filing of any involuntary proceeding seeking
liquidation, reorganization or other relief under any bankruptcy,
insolvency or other similar law, without the Consent of Limited
Partners holding a majority of the Percentage Interests of the Limited
Partners (other than Limited Partner Interests held by the General
Partner, the Company or any Subsidiary or Affiliate of the Company).
Section 7.4 Reimbursement of the General Partner and the Company
(a) Except as provided in this Section 7.4 and elsewhere in
this Agreement (including the provisions of Articles 5 and 6 regarding
distributions, payments, and allocations to which it may be entitled),
the General Partner shall not be compensated for its services as
general partner of the Partnership.
(b) The General Partner and the Company, shall be reimbursed
on a monthly basis, or such other basis as they may determine in their
reasonable discretion, for all reasonable expenses that they incur
relating to the ownership and operation of, or for the benefit of, the
Partnership; provided that the amount of any such reimbursement shall
be reduced by any interest earned by the General Partner or the Company
with respect to bank accounts or other instruments or accounts held by
them on behalf of the Partnership. Such reimbursement shall be in
addition to any reimbursement made as a result of indemnification
pursuant to Section 7.7 hereof.
(c) The General Partner and its Affiliates may receive
reasonable compensation for services rendered to or for the benefit of
the Partnership.
Section 7.5 Outside Activities of the General Partner
The General Partner shall not directly or indirectly enter into or
conduct any business other than in connection with the ownership, acquisition
and disposition of Partnership Interests and the management of the business of
the Partnership, and such activities as are incidental thereto. The General
Partner and any Affiliates of the General Partner may acquire Limited Partner
Interests and shall be entitled to exercise all rights of a Limited Partner
relating to such Limited Partner Interests.
-26-
Section 7.6 Contracts with Affiliates
(a) The Partnership may lend or contribute funds or other
assets to its Affiliates or Subsidiaries or other Persons in which it
has an equity investment and such Persons may borrow funds from the
Partnership, on terms and conditions established in the sole and
absolute discretion of the General Partner. The foregoing authority
shall not create any right or benefit in favor of any Subsidiary or any
other Person.
(b) The Partnership may transfer assets to joint ventures,
other partnerships, corporations or other business entities in which it
is or thereby becomes a participant upon such terms and subject to such
conditions consistent with this Agreement and applicable law as the
General Partner, in its sole and absolute discretion, believes are
advisable.
(c) Except as expressly permitted by this Agreement, neither
the General Partner nor any of its Affiliates shall sell, transfer or
convey any property to, or purchase any property from, the Partnership,
directly or indirectly, except pursuant to transactions that are
determined by the General Partner in good faith to be fair and
reasonable.
(d) The General Partner, in its sole and absolute discretion
and without the approval of the Limited Partners, may propose and
adopt, on behalf of the Partnership, employee benefit plans, stock
option plans, and similar plans funded by the Partnership for the
benefit of employees of the General Partner, the Partnership,
Subsidiaries of the Partnership or any Affiliate of any of them in
respect of services performed, directly or indirectly, for the benefit
of the Partnership, the General Partner, or any Subsidiaries of the
Partnership.
(e) The General Partner is expressly authorized to enter into,
in the name and on behalf of the Partnership, a right of first
opportunity arrangement and other conflict avoidance agreements with
various Affiliates of the Partnership and the General Partner, on such
terms as the General Partner, in its sole and absolute discretion,
believes are advisable.
Section 7.7 Indemnification
(a) To the fullest extent permitted by Delaware law, the
Partnership shall indemnify each Indemnitee from and against any and
all losses, claims, damages, liabilities, joint or several, expenses
(including, without limitation, attorneys fees and other legal fees and
expenses), judgments, fines, settlements, and other amounts arising
from any and all claims, demands, actions, suits or proceedings, civil,
criminal, administrative or investigative, that relate to the
operations of the Partnership or the General Partner as set forth in
this Agreement, in which such Indemnitee may be involved, or is
threatened to be involved, as a party or otherwise. Without limitation,
the foregoing indemnity shall extend to any liability of any
Indemnitee, pursuant to a loan guaranty or otherwise for any
indebtedness of the Partnership or any Subsidiary of the Partnership
(including without limitation, any indebtedness which the Partnership
or any Subsidiary of the Partnership has assumed or taken subject to),
and the General Partner is
-27-
hereby authorized and empowered, on behalf of the Partnership, to enter
into one or more indemnity agreements consistent with the provisions of
this Section 7.7 in favor of any Indemnitee having or potentially
having liability for any such indebtedness. Any indemnification
pursuant to this Section 7.7 shall be made only out of the assets of
the Partnership, and neither the General Partner nor any Limited
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 7.7.
(b) Reasonable expenses incurred by an Indemnitee who is a
party to a proceeding shall be paid or reimbursed by the Partnership in
advance of the final disposition of the proceeding.
(c) The indemnification provided by this Section 7.7 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 Indemnitees are
indemnified.
(d) The Partnership may, but shall not be obligated to,
purchase and maintain insurance, on behalf of the Indemnitees and such
other Persons as the General Partner shall determine, against any
liability that may be asserted against or expenses that may be incurred
by such Person in connection with the Partnership's activities,
regardless of whether the Partnership would have the power to indemnify
such Person against such liability under the provisions of this
Agreement.
(e) For purposes of this Section 7.7, the Partnership shall be
deemed to have requested an Indemnitee to serve as fiduciary of an
employee benefit plan whenever the performance by it of its duties to
the Partnership also imposes duties on, or otherwise involves services
by, it to the plan or participants or beneficiaries of the plan; excise
taxes assessed on an Indemnitee with respect to an employee benefit
plan pursuant to applicable law shall constitute fines within the
meaning of Section 7.7; and actions taken or omitted by the Indemnitee
with respect to an employee benefit plan in the performance of its
duties for a purpose reasonably believed by it to be in the interest of
the participants and beneficiaries of the plan shall be deemed to be
for a purpose which is not opposed to the best interests of the
Partnership.
(f) In no event may an Indemnitee subject any of the Partners
to personal liability by reason of the indemnification provisions set
forth in this Agreement.
(g) An Indemnitee shall not be denied indemnification in whole
or in part under this Section 7.7 because the Indemnitee had an
interest in the transaction with respect to which the indemnification
applies if the transaction was otherwise permitted by the terms of this
Agreement.
(h) The provisions of this Section 7.7 are for the benefit of
the Indemnities, their heirs, successors, assigns and administrators
and shall not be deemed to create any rights for the benefit of any
other Persons. Any amendment, modification or repeal of this
-28-
Section 7.7 or any provision hereof shall be prospective only and shall
not in any way affect the Partnership's liability to any Indemnitee
under this Section 7.7, as in effect immediately prior to such
amendment, modification, or repeal with respect to claims arising from
or relating to matters occurring, in whole or in part, prior to such
amendment, modification or repeal, regardless of when such claims may
arise or be asserted.
Section 7.8 Liability of the General Partner
(a) Notwithstanding anything to the contrary set forth in this
Agreement, the General Partner and its officers, directors and/or trust
managers shall not be liable for monetary damages to the Partnership,
any Partners or any Assignees for losses sustained or liabilities
incurred as a result of errors in judgment or of any act or omission if
the General Partner acted in good faith.
(b) The Limited Partners and the Company expressly acknowledge
that the General Partner is acting on behalf of both the Limited
Partners and the shareholders of the Company collectively; that, except
as provided to the contrary in written agreements between the Limited
Partners and the General Partner and/or the Partnership (including
without limitation that certain Tax, Asset and Income Support Agreement
as of the date hereof), the General Partner is under no obligation to
consider separately the interests of the Limited Partners (except as
otherwise provided herein) in deciding whether to cause the Partnership
to take (or decline to take) any actions, and that, except as provided
to the contrary in written agreements between the Limited Partners and
the General Partner and/or the Partnership (including without
limitation that certain Tax, Asset and Income Support Agreement as of
the date hereof), the General Partner shall not be liable for monetary
damages for losses sustained, liabilities incurred, or benefits not
derived by Limited Partners in connection with such decisions, provided
that the General Partner has acted in good faith.
(c) Subject to its obligations and duties as General Partner
set forth in Section 7.1(a) hereof, the General Partner may exercise
any of the powers granted to it by this Agreement and perform any of
the duties imposed upon it hereunder either directly or by or through
its agents. The General Partner shall not be responsible for any
misconduct or negligence on the part of any such agent appointed by the
General Partner in good faith.
(d) Any amendment, modification or repeal of this Section 7.8
or any provision hereof shall be prospective only and shall not in any
way affect the limitations on the General Partner's and its officers'
and directors' liability to the Partnership and the Limited Partners
under this Section 7.8 as in effect immediately prior to such
amendment, modification or repeal with respect to claims arising from
or relating to matters occurring, in whole or in part, prior to such
amendment, modification or repeal, regardless of when such claims may
arise or be asserted.
-29-
Section 7.9 Other Matters Concerning the General Partner
(a) 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) The General Partner may consult with legal counsel,
accountants, appraisers, management consultants, investment bankers,
architects, engineers, environmental consultants and other consultants
and advisers selected by it, and any act taken or omitted to be taken
in reliance upon the opinion of such Persons as to matters which such
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) 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 duly appointed 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) Notwithstanding any other provisions of this Agreement or
the Act, any action of the General Partner on behalf of the Partnership
or any decision of the General Partner to refrain from acting on behalf
of the Partnership, undertaken in the good faith belief that such
action or omission is necessary or advisable in order (i) to protect
the ability of the Company to continue to qualify as a REIT; or (ii) to
avoid the Company incurring any taxes under Section 857 or Section 4981
of the Code, is expressly authorized under this Agreement and is deemed
approved by all of the Limited Partners.
Section 7.10 Title to Partnership Assets
Title to Partnership assets, whether real, personal or mixed and
whether tangible or intangible, shall be deemed to be owned by the Partnership
as an entity, and no Partner, individually or collectively, shall have any
ownership interest in such Partnership assets or any portion thereof. Title to
any or all of the Partnership assets may be held in the name of the Partnership,
the General Partner or one or more nominees, as the General Partner may
determine, including Affiliates of the General Partner. The General Partner
hereby declares and warrants that any Partnership assets for which legal title
is held in the name of the General Partner or any nominee or Affiliate of the
General Partner shall be held by the General Partner for the use and benefit of
the Partnership in accordance with the provisions of this Agreement; provided,
however, that the General Partner shall use its best efforts to cause beneficial
and record title to such assets to be vested in the Partnership as soon as
reasonably practicable. All Partnership assets shall be recorded as the property
of the Partnership in its books and records, irrespective of the name in which
legal title to such Partnership assets is held.
-30-
Section 7.11 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 and to enter into any contracts on behalf of the
Partnership, and 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 Limited 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.
ARTICLE 8
RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS
Section 8.1 Limitation of Liability
The Limited Partners shall have no liability under this Agreement
except as expressly provided in this Agreement, including Section 10.5 hereof,
or under the Act.
Section 8.2 Management of Business
No Limited Partner or Assignee (other than the General Partner, any of
its Affiliates or any officer, director, trust manager, employee, agent or
trustee of the General Partner, the Partnership or any of their Affiliates, in
their capacity as such) shall take part in the operation, management or control
(within the meaning of the Act) of the Partnership's business, transact any
business in the Partnership's name or have the power to sign documents for or
otherwise bind the Partnership. The transaction of any such business by the
General Partner, any of its Affiliates or any officer, director, trust manager,
employee, partner, agent or trustee of the General Partner, the Partnership or
any of their Affiliates, in their capacity as such, shall not affect, impair or
eliminate the limitations on the liability of the Limited Partners or Assignees
under this Agreement.
Section 8.3 Outside Activities of Limited Partners
Subject to any agreements entered into pursuant to Section 7.6(e)
hereof and any other agreements entered into by a Limited Partner or its
Affiliates with the Partnership or any of its
-31-
Subsidiaries, any Limited Partner (other than the General Partner) and any
officer, director, trust manager, employee, agent, trustee, Affiliate or
shareholder of any Limited Partner (other than the General Partner) shall be
entitled to and may have business interests and engage in business activities in
addition to those relating to the Partnership, including business interests and
activities that are in direct competition with the Partnership or that are
enhanced by the activities of the Partnership. Neither the Partnership nor any
Partners shall have any rights by virtue of this Agreement in any business
ventures of any Limited Partner or Assignee. None of the Limited Partners nor
any other Person shall have any rights by virtue of this Agreement or the
Partnership relationship established hereby in any business ventures of any
other Person and such Person shall have no obligation pursuant to this Agreement
to offer any interest in any such business ventures to the Partnership, any
Limited Partner or any such other Person, even if such opportunity is of a
character which, if presented to the Partnership, any Limited Partner or such
other Person, could be taken by such Person.
Section 8.4 Return of Capital
Except pursuant to the right of redemption set forth in Section 8.6, no
Limited Partner shall be entitled to the withdrawal or return of its Capital
Contribution, except to the extent of distributions made pursuant to this
Agreement or upon termination of the Partnership as provided herein. Except to
the extent provided by Exhibit C hereof or as otherwise expressly provided in
this Agreement, no Limited Partner or Assignee shall have priority over any
other Limited Partner or Assignee, either as to the return of Capital
Contributions or as to profits, losses or distributions.
Section 8.5 Rights of Limited Partners Relating to the Partnership
(a) In addition to the other rights provided by this Agreement
or by the Act, and except as limited by Section 8.5(c) hereof, each
Limited Partner shall have the right, for a purpose reasonably related
to such Limited Partner's interest as a limited partner in the
Partnership, upon written demand with a statement of the purpose of
such demand and at such Limited Partner's own expense (including such
copying and administrative charges as the General Partner may establish
from time to time):
(1) to obtain a copy of the most recent annual and
quarterly reports filed with the Securities and Exchange
Commission by the Company pursuant to the Securities Exchange
Act of 1934;
(2) to obtain a copy of the Partnership's federal,
state and local income tax returns for each Partnership Year;
(3) to obtain a current list of the name and last
known business, residence or mailing address of each Partner;
(4) to obtain a copy of this Agreement and the
Certificate and all amendments thereto, together with executed
copies of all powers of attorney pursuant to which this
Agreement, the Certificate and all amendments thereto have
been executed; and
-32-
(5) to obtain true and full information regarding the
amount of cash and a description and statement of any other
property or services contributed by each Partner and which
each Partner has agreed to contribute in the future, and the
date on which each became a Partner.
(b) The Partnership shall notify each Limited Partner, upon
request, of the then current Conversion Factor.
(c) Notwithstanding any other provision of this Section 8.5,
the General Partner may keep confidential from the Limited Partners,
for such period of time as the General Partner determines in its sole
and absolute discretion to be reasonable, any information that (i) the
General Partner reasonably believes to be in the nature of trade
secrets or other information, the disclosure of which the General
Partner in good faith believes is not in the best interests of the
Partnership or could damage the Partnership or its business; or (ii)
the Partnership is required by law or by agreements with an
unaffiliated third party to keep confidential.
Section 8.6 Redemption Right
(a) Subject to Sections 8.6(b), 8.6(c), 8.6(d) and 8.6(e)
hereof, at all times prior to the expiration of the Pre-Liquidation
Period, each Limited Partner (other than the General Partner, the
Company or any Subsidiary of the Company) shall have the right (the
"Redemption Right") to require the Partnership to redeem on a Specified
Redemption Date all or a portion of the Common Units held by such
Limited Partner at a redemption price equal to and in the form of the
Consideration to be paid by the Partnership. The Redemption Right shall
be exercised pursuant to a Notice of Redemption delivered to the
Partnership (with a copy to the Company) by the Limited Partner who is
exercising the redemption right (the "Redeeming Partner"); provided,
however, that the Partnership shall not be obligated to satisfy such
Redemption Right if the Company elects to purchase the Common Units
subject to the Notice of Redemption pursuant to Section 8.6(b). A
Limited Partner may not exercise the Redemption Right for less than two
thousand (2,000) Common Units or, if such Limited Partner holds less
than two thousand (2,000) Common Units, all of the Common Units held by
such Partner. The Redeeming Partner shall have no right, with respect
to any Common Units so redeemed, to receive any distributions paid on
or after the Specified Redemption Date. The Assignee of any Limited
Partner may exercise the rights of such Limited Partner pursuant to
this Section 8.6, and such Limited Partner shall be deemed to have
assigned such rights to such Assignee and shall be bound by the
exercise of such rights by such Assignee. In connection with any
exercise of such rights by an Assignee on behalf of a Limited Partner,
the Consideration shall be paid by the Partnership directly to such
Assignee and not to such Limited Partner and neither the Partnership
nor the General Partner shall have any liability to such Limited
Partner for making the foregoing payment to such Assignee.
(b) Notwithstanding the provisions of Section 8.6(a), a
Limited Partner that exercises the Redemption Right shall be deemed to
have offered to sell the Common Units described in the Notice of
Redemption to the Company, and the Company may, in its sole and
absolute discretion, elect to purchase directly and acquire such Common
-33-
Units by paying to the Redeeming Partner the Consideration on the
Specified Redemption Date, whereupon the Company shall acquire the
Common Units offered for redemption by the Redeeming Partner and shall
be treated for all purposes of this Agreement as the owner of such
Common Units. If the Company shall elect to exercise its right to
purchase Common Units under this Section 8.6(b) with respect to a
Notice of Redemption, it shall so notify the Redeeming Partner within
five Business Days after the receipt by it of such Notice of
Redemption. Unless the Company (in its sole and absolute discretion)
shall exercise its right to purchase Common Units from the Redeeming
Partner pursuant to this Section 8.6(b), following delivery by the
Partnership of the Consideration to the Redeeming Partner the Company
shall not have any obligation to the Redeeming Partner or the
Partnership with respect to the Redeeming Partner's exercise of the
Redemption Right. In the event the Company shall exercise its right to
purchase Common Units with respect to the exercise of a Redemption
Right in the manner described in the first sentence of this Section
8.6(b), the Partnership shall have no obligation to pay any amount to
the Redeeming Partner with respect to such Redeeming Partner's exercise
of such Redemption Right, and each of the Redeeming Partner, the
Partnership, and the Company shall treat the transaction between the
Company and the Redeeming Partner, for federal income tax purposes, as
a sale of the Redeeming Partner's Common Units to the Company. In such
event, the Company shall become the holder of the Common Units and
shall have all of the rights as a Limited Partner hereunder with
respect to such Common Units (including being considered for all
purposes hereunder as the owner of the Percentage Interests
attributable to such Common Units); provided, however, that
notwithstanding the foregoing the Company shall not be entitled to
receive any Priority Distribution Amounts, Cumulative Unpaid Accrued
Return Amount or Cumulative Unpaid Priority Distribution Amounts with
respect to such Common Units. Each Redeeming Partner agrees to execute
such documents as the Company may reasonably require in connection with
the issuance of REIT Shares upon exercise of the Redemption Right.
(c) Notwithstanding the provisions of Section 8.6(a) and
Section 8.6(b), a Partner shall not be entitled to exercise the
Redemption Right pursuant to Section 8.6(a) if the delivery of REIT
Shares to such Partner on the Specified Redemption Date by the Company
pursuant to Section 8.6(b) (regardless of whether or not the Company
would in fact exercise its rights under Section 8.6(b)) would be
prohibited under the Declaration of the Trust of the Company.
(d) In the event that the Company (under Section 8.6(b)
above), elects to pay the applicable REIT Shares Amount to the
Redeeming Partner or Assignee hereunder and such REIT Shares Amount is
not a whole number of REIT Shares, the Redeeming Partner or Assignee
shall be paid (i) that number of REIT Shares which equals the nearest
whole number less than such amount, plus (ii) an amount of cash in lieu
of the fractional REIT Share that would otherwise be payable to the
Redeeming Partner or the Assignee equal to the product of the
percentage of a REIT Share represented by a such fractional REIT Share
and the Value on the Valuation Date of a REIT Share.
(e) Each Redeeming Partner covenants and agrees with the
Partnership and the Company that all Common Units delivered in
connection with the exercise of the
-34-
Redemption Right shall be delivered to the Partnership or the Company,
respectively, free and clear of all liens, encumbrances, liabilities,
claims or charges of any kind, and notwithstanding anything contained
herein to the contrary, neither the Partnership nor the Company shall
be under any obligation to acquire any Redeeming Partner's Common
Units, (1) to the extent that any such Common Units are subject to any
liens, encumbrances, liabilities, claims or charges of any kind that
shall not be released prior to the delivery of such Common Units to the
Partnership or the Company or (2) in the event that any such Redeeming
Partner shall fail to give adequate assurances that such Common Units
will be delivered to the Partnership or the Company free and clear of
any such liens, encumbrances, liabilities, claims or charges or any
kind or shall fail to agree to fully indemnify the Partnership and the
Company from any such liens, encumbrances, liabilities, claims or
charges of any kind.
(f) In connection with the exercise of the Redemption Right by
a Redeeming Partner the Partnership or, as applicable the Company,
shall deliver the REIT Shares Amount or the Cash Amount but not a
combination of the REIT Shares Amount and the Cash Amount with respect
to the Common Units redeemed or purchased hereunder. Notwithstanding
the foregoing, the Partnership or the Company may elect to pay the
Consideration to a Redeeming Partner in the form of the REIT Shares
Amount and pay to such Redeeming Partner cash in lieu of any fractional
REIT Share in accordance with Section 8.6(d) hereof.
ARTICLE 9
BOOKS, RECORDS, ACCOUNTING AND REPORTS
Section 9.1 Records and Accounting
The General Partner shall keep or cause to be kept at the principal
office of the Partnership those records and documents required to be maintained
by the Act and other books and records deemed by the General Partner to be
appropriate with respect to the Partnership's business, including, without
limitation, all books and records necessary to provide to the Limited Partners
any information, lists and copies of documents required to be provided pursuant
to Section 9.3 hereof. 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,
or such other basis as the General Partner determines to be necessary or
appropriate.
Section 9.2 Fiscal Year
The fiscal year of the Partnership shall be the calendar year.
Section 9.3 Reports
(a) As soon as practicable, but in no event later than one
hundred five (105) days after the close of each Partnership Year, the
General Partner shall cause to be mailed
-35-
to each Limited Partner as of the close of the Partnership Year, an
annual report containing financial statements of the Partnership, or of
the Company if such statements are prepared solely on a consolidated
basis with the Company, for such Partnership 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 the General Partner.
(b) As soon as practicable, but in no event later than one
hundred five (105) days after the close of each calendar quarter
(except the last calendar quarter of each year), the General Partner
shall cause to be mailed to each Limited Partner as of the last day of
the calendar quarter, a report containing unaudited financial
statements of the Partnership, or of the Company, if such statements
are prepared solely on a consolidated basis with the Company, and such
other information as may be required by applicable law or regulation,
or as the General Partner determines to be appropriate.
ARTICLE 10
TAX MATTERS
Section 10.1 Preparation of Tax Returns
The General Partner shall arrange for the preparation and timely filing
of all returns of Partnership income, gains, deductions, losses and other items
required of the Partnership for federal and state income tax purposes and shall
use all reasonable efforts to furnish, within ninety (90) days of the close of
each taxable year, the tax information reasonably requested by Limited Partners
for federal and state income tax reporting purposes.
Section 10.2 Tax Elections
Except as otherwise provided herein or as otherwise agreed to in a
written agreement between the General Partner and one or more Limited Partners,
the General Partner shall, in its sole and absolute discretion, determine
whether to make or revoke any available election pursuant to the Code
(including, without limitation the election under Section 754 of the Code).
Section 10.3 Tax Matters Partner
(a) The General Partner shall be the "tax matters partner" of
the Partnership for federal income tax purposes. Pursuant to Section
6230(e) 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 Limited Partners and the Assignees; provided, however, that
such information is provided to the Partnership by the Limited Partners
and the Assignees.
(b) 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
-36-
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 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 member of a "notice
group" (as defined in Section 6223(b)(2) of the Code);
(2) in the event that 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 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 account of 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 or 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 7.7 of this Agreement shall be fully applicable to
the tax matters partner in its capacity as such.
(c) 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 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.
-37-
Section 10.4 Organizational Expenses
The Partnership shall elect to deduct expenses, if any, incurred by it
in organizing the Partnership ratably over a sixty (60) month period as provided
in Section 709 of the Code.
Section 10.5 Withholding
Each Limited Partner hereby authorizes the Partnership to withhold
from, or pay on behalf of or with respect to, such Limited 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 Limited Partner pursuant to this Agreement,
including, without limitation, any taxes required to be withheld or paid by the
Partnership pursuant to Sections 1441, 1442, 1445, or 1446 of the Code. Any
amount paid on behalf of or with respect to a Limited Partner shall constitute a
loan by the Partnership to such Limited Partner, which loan shall be repaid by
such Limited 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 Limited
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 Limited
Partner. Any amounts withheld pursuant to the foregoing clauses (i) or (ii)
shall be treated as having been distributed to such Limited Partner. Each
Limited Partner hereby unconditionally and irrevocably grants to the Partnership
a security interest in such Limited Partner's Partnership Interest to secure
such Limited Partner's obligation to pay to the Partnership any amounts required
to be paid pursuant to this Section 10.5. In the event that a Limited Partner
fails to pay any amounts owed to the Partnership pursuant to this Section 10.5
when due, the General Partner may, in its sole and absolute discretion, elect to
make the payment to the Partnership on behalf of such defaulting Limited
Partner, and in such event shall be deemed to have loaned such amount to such
defaulting Limited Partner and shall succeed to all rights and remedies of the
Partnership as against such defaulting Limited Partner. Without limitation, in
such event the General Partner shall have the right to receive distributions
that would otherwise be distributable to such defaulting Limited Partner until
such time as such loan, together with all interest thereon, has been paid in
full, and any such distributions so received by the General Partner shall be
treated as having been distributed to the defaulting Limited Partner and
immediately paid by the defaulting Limited Partner to the General Partner in
repayment of such loan. Any amounts payable by a Limited Partner hereunder shall
bear interest at the lesser of (A) 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, or (B) the maximum
lawful rate of interest on such obligation, such interest to accrue from the
date such amount is due (i.e., fifteen (15) days after demand) until such amount
is paid in full. Each Limited Partner shall take such actions as the Partnership
or the General Partner shall request in order to perfect or enforce the security
interest created hereunder.
-38-
ARTICLE 11
TRANSFERS AND WITHDRAWALS
Section 11.1 Transfer
(a) The term "transfer," when used in this Article 11 with
respect to a Partnership Unit, shall be deemed to refer to a
transaction by which the General Partner purports to assign all or any
part of its General Partner Interest to another Person or by which a
Limited Partner purports to assign all or any part of its Limited
Partner Interest to another Person, and includes a sale, assignment,
gift, pledge, encumbrance, hypothecation, mortgage, exchange or any
other disposition by law or otherwise. The term "transfer" when used in
this Article 11 does not include any redemption of Partnership
Interests by the Partnership from a Limited Partner or any acquisition
of Partnership Units from a Limited Partner by the Company pursuant to
Section 8.6.
(b) No Partnership Interest shall be transferred, in whole or
in part, except in accordance with the terms and conditions set forth
in this Article 11. Any transfer or purported transfer of a Partnership
Interest not made in accordance with this Article 11 shall be null and
void.
Section 11.2 Transfer of General Partner Interest and Limited Partner
Interest
The General Partner may not (x) transfer any of its General Partner
Interest or withdraw as General Partner, or (y) if such transfer would result in
the General Partner and its direct or indirect wholly-owned Subsidiaries owning
less than 50% of the outstanding Common Units transfer any of its Limited
Partner Interest, unless Limited Partners holding a majority of the Percentage
Interests of the Limited Partners (other than Limited Partner Interests held by
the General Partner, the Company or any Subsidiary or Affiliate of the Company)
consent to such transfer or withdrawal or such transfer is to the Company or a
direct or indirect wholly-owned Subsidiary of the Company. In the event that the
General Partner transfers any of its Limited Partner Interest, the transferee
(and any and all subsequent transferees) shall be entitled to the same rights to
distributions (of operating cash flow as well as liquidation proceeds), with
regard to such Limited Partner Interest as the General Partner hereunder. In
addition, the Company may not own, directly or indirectly, less than 100% of the
capital stock or, directly or indirectly, control less than all voting
securities of the General Partner unless Limited Partners holding a majority of
the Percentage Interests (other than Limited Partner Interests held by the
General Partner, the Company or any Subsidiary or Affiliate of the Company)
consent to the related transfer of such interests. For purposes of this Section
11.2 only, the term "transfer" shall include, in addition to the actions
described in Section 11.1(a), the issuance of voting stock of the General
Partner to a Person other than the Company or a direct or indirect wholly-owned
Subsidiary of the Company or any other transaction (except any transaction
effected in compliance with Section 7.3 or Article 16 hereof or any other
transaction expressly permitted by this Agreement) which has the substantive
effect of reducing the Company's (together with its Subsidiaries) economic
interest or control of the General Partner below 100%.
-39-
Section 11.3 Limited Partners' Rights to Transfer
(a) Subject to the provisions of Sections 11.3(c), 11.3(d),
11.3(e), 11.4, a Limited Partner may transfer, with or without the
consent of the General Partner, all or any portion of its Partnership
Interest, or any of such Limited Partner's economic rights as a Limited
Partner.
(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 of the rights
of a Limited Partner, but not more rights than those enjoyed by other
Limited Partners, for the purpose of settling or managing the estate
and such power as the Incapacitated Limited Partner possessed to
transfer all or any part of his or its interest in the Partnership. The
Incapacity of a Limited Partner, in and of itself, shall not dissolve
or terminate the Partnership.
(c) The General Partner may prohibit any transfer by a Limited
Partner of its Partnership Units if, in the opinion of legal counsel to
the Partnership, such transfer would require filing of a registration
statement under the Securities Act of 1933 or would otherwise violate
any federal or state securities laws or regulations applicable to the
Partnership or the Partnership Units.
(d) No transfer by a Limited Partner of its Partnership Units
may be made to any Person if (i) in the opinion of legal counsel for
the Partnership, it would result in the Partnership being treated as an
association taxable as a corporation, or (ii) such transfer is
effectuated through an "established securities market" or a "secondary
market (or the substantial equivalent thereof)" within the meaning of
Section 7704 of the Code.
(e) No transfer of any Partnership Units may be made to a
lender to the Partnership or any Person who is related (within the
meaning of Section 1.752-4(b) of the Regulations) to any lender to the
Partnership whose loan 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 exchange or redeem for the Cash Amount any
Partnership Units to be transferred to the lender 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.
Section 11.4 Substituted Limited Partners
(a) No Limited Partner shall have the right to substitute a
transferee as a Limited Partner in his place. The General Partner
shall, however, have the right to consent to the admission of a
transferee of the interest of a Limited Partner pursuant to this
Section 11.4 as a Substituted Limited Partner, which consent may be
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 interests to become a Substituted Limited
Partner shall not give rise to any cause of action against the
Partnership or any Partner.
-40-
(b) A transferee who has been admitted as a Substituted
Limited Partner in accordance with this Article 11 shall have all the
rights and powers and be subject to all the restrictions and
liabilities of a Limited Partner under this Agreement.
(c) Upon the admission of a Substituted Limited Partner, the
General Partner shall amend Exhibit A to reflect the name, address,
number of Partnership Units, and Percentage Interest of such
Substituted Limited Partner and to eliminate or adjust, if necessary,
the name, address and interest of the predecessor of such Substituted
Limited Partner.
Section 11.5 Assignees
If the General Partner, in its sole and absolute discretion, does not
consent to the admission of any permitted transferee as a Substituted Limited
Partner, as described in Section 11.4, such transferee shall be considered an
Assignee for purposes of this Agreement. An Assignee shall be deemed to have had
assigned to it, and shall be entitled to receive distributions from the
Partnership and the share of Net Income, Net Losses, Recapture Income, and any
other items, gain, loss deduction and credit of the Partnership attributable to
the Partnership Units assigned to such transferee, but shall not be deemed to be
a holder of Partnership Units for any other purpose under this Agreement, and
shall not be entitled to vote such Partnership Units in any matter presented to
the Limited Partners for a vote (such Partnership Units being deemed to have
been voted on such matter in the same proportion as all other Partnership Units
held by Limited Partners are voted). In the event any such transferee desires to
make a further assignment of any such Partnership Units, such transferee shall
be subject to all of the provisions of this Article 11 to the same extent and in
the same manner as any Limited Partner desiring to make an assignment of
Partnership Units.
Section 11.6 General Provisions
(a) No Limited Partner may withdraw from the Partnership other
than as a result of a permitted transfer of all of such Limited
Partner's Partnership Units in accordance with this Article 11 or
pursuant to redemption of all of its Partnership Units under Section
8.6.
(b) Any Limited Partner who shall transfer all of its
Partnership Units in a transfer permitted pursuant to this Article 11
shall cease to be a Limited Partner upon the admission of all Assignees
of such Partnership Units as Substitute Limited Partners. Similarly,
any Limited Partner who shall transfer all of its Partnership Units
pursuant to a redemption of all of its Partnership Units under Section
8.6 shall cease to be a Limited Partner.
(c) Except as otherwise authorized by the General Partner,
transfers pursuant to this Article 11 may only be made on the first day
of a fiscal quarter of the Partnership.
(d) If any Partnership Interest is transferred or assigned
during any quarterly segment of the Partnership's fiscal year in
compliance with the provisions of this Article 11 or redeemed or
transferred pursuant to Section 8.6 on any day other than the first day
of a Partnership Year, then Net Income, Net Losses, each item thereof
and all other items
-41-
attributable to such interest for such Partnership Year shall be
divided and allocated between the transferor Partner and the transferee
Partner by taking into account their varying interests during the
Partnership Year in accordance with Section 706(d) of the Code, using
the interim closing of the books method. All distributions of Available
Cash attributable to such Partnership Unit with respect to which the
Partnership Record Date is before the date of such transfer,
assignment, or redemption shall be made to the transferor Partner or
the Redeeming Partner, as the case may be, and in the case of a
transfer or assignment other than a redemption, all distributions of
Available Cash thereafter attributable to such Partnership Unit shall
be made to the transferee Partner.
ARTICLE 12
ADMISSION OF PARTNERS
Section 12.1 Admission of Successor General Partner
A successor to all of the General Partner Interest pursuant to Section
11.2 hereof 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 Partnership Year, all
items attributable to the General Partner Interest for such Partnership Year
shall be allocated between the transferring General Partner and such successor
as provided in Section 11.6(d) hereof.
Section 12.2 Admission of Additional Limited Partners
(a) After the date hereof, a Person who makes a Capital
Contribution to the Partnership in accordance with this Agreement shall
be admitted to the Partnership as an Additional Limited Partner only
upon furnishing to the General Partner (i) evidence of acceptance in
form satisfactory to the General Partner of all of the terms and
conditions of this Agreement, including, without limitation, the power
of attorney granted in Section 2.4 hereof 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
Limited Partner.
(b) Notwithstanding anything to the contrary in this Section
12.2, no Person shall be admitted as an Additional Limited Partner
without the consent of the General Partner, which consent may be given
or withheld in the General Partner's sole and absolute discretion. The
admission of any Person as an Additional Limited Partner shall become
effective on the date upon which the name of such Person is recorded on
the books and records of the Partnership, following the consent of the
General Partner to such admission.
(c) If any Additional Limited Partner is admitted to the
Partnership on any day other than the first day of a Partnership Year,
then Net Income, Net Losses, each item
-42-
thereof and all other items allocable among Partners and Assignees for
such Partnership Year shall be allocated among such Additional Limited
Partner and all other Partners and Assignees by taking into account
their varying interests during the Partnership 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
item for the calendar month in which an admission of any Additional
Limited Partner occurs shall be allocated among all of the Partners and
Assignees, including such Additional Limited Partner, assuming the
admission occurred as of the last day of the month. All distributions
of Available Cash with respect to which the Partnership Record Date is
before the date of such admission shall be made solely to Partners and
Assignees, other than the Additional Limited Partner, and all
distributions of Available Cash thereafter shall be made to all of the
Partners and Assignees, including such Additional Limited Partner.
Section 12.3 Amendment of Agreement and Certificate of Limited
Partnership
For the admission to the Partnership of any Partner, the General
Partner shall take all steps necessary and appropriate under the Act to amend
the 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 2.4 hereof.
ARTICLE 13
DISSOLUTION, LIQUIDATION AND TERMINATION
Section 13.1 Dissolution
The Partnership shall not be dissolved by the admission of Substituted
Limited Partners or Additional Limited Partners or by the admission of a
successor General Partner in accordance with the terms of this Agreement. Upon
the withdrawal of the General Partner, any successor General Partner shall
continue the business of the Partnership. The Partnership shall dissolve, and
its affairs shall be wound up, only upon the first to occur of any of the
following (each a "Liquidating Event"):
(a) the expiration of its term as provided in Section 2.5
hereof;
(b) an event of withdrawal of the General Partner, as defined
in the Act (other than an event of bankruptcy), unless, within ninety
(90) days after such event of withdrawal a majority in interest of the
remaining Partners agree in writing to continue the business of the
Partnership and to the appointment, effective as of the date of
withdrawal, of a successor General Partner;
(c) from and after the date of this Agreement an election to
dissolve the Partnership made by the General Partner with the Consent
of Partners holding a majority of the Percentage Interests of the
Limited Partners (other than Limited Partner Interests held by the
General Partner, the Company or any Subsidiary or Affiliate of the
Company).
-43-
(d) entry of a decree of judicial dissolution of the
Partnership pursuant to the provisions of the Act;
(e) the sale of all or substantially all of the assets and
properties of the Partnership; or
(f) a final and non-appealable judgment is entered by a court
of competent jurisdiction ruling that the General Partner is bankrupt
or insolvent, or a final and non-appealable order for relief is entered
by a court with appropriate jurisdiction against the General Partner,
in each case under any federal or state bankruptcy or insolvency laws
as now or hereafter in effect, unless prior to the entry of such order
or judgment all of the remaining Partners agree 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.
Section 13.2 Winding Up
(a) Upon the occurrence of a Liquidating Event, the
Partnership shall continue solely for the purposes of winding up its
affairs in an orderly manner, liquidating its assets, and satisfying
the claims of its creditors and Partners. No Partner shall take any
action that is inconsistent with, or not necessary to or appropriate
for, the winding up of the Partnership's business and affairs. The
General Partner, or, in the event there is no remaining General
Partner, any Person elected by a majority in interest of the Limited
Partners (the General Partner or such other Person being referred to
herein as the "Liquidator"), shall be responsible for overseeing the
winding up and dissolution of the Partnership and shall take full
account of the Partnership's liabilities and property and the
Partnership property shall be liquidated as promptly as is consistent
with obtaining the fair value thereof, and the proceeds therefrom
(which may, to the extent determined by the General Partner, include
shares of common stock in the Company) shall be applied and distributed
in the following order:
(1) First, to the payment and discharge of all of the
Partnership's debts and liabilities to creditors other than
the Partners;
(2) Second, to the Summit Limited Partners in
proportion to and up to the amount of their respective Capital
Accounts, after giving effect to any allocation pursuant to
Section 6.1(e) hereof.
(3) Third, to the payment and discharge of all of the
Partnership's debts and liabilities to the General Partner;
(4) Fourth, to the payment and discharge of all of
the Partnership's debts and liabilities to the other Partners;
and
(5) The balance, if any, to the General Partner and
Limited Partners (other than the Summit Limited Partners) in
accordance with their Capital Accounts, after giving effect to
all contributions, distributions, and allocations for all
periods.
-44-
The General Partner shall not receive any additional compensation for
any services performed pursuant to this Article 13.
(b) Notwithstanding the provisions of Section 13.2(a) hereof
which require liquidation of the assets of the Partnership, but subject
to the order of priorities set forth therein, if prior to or upon
dissolution of the Partnership the Liquidator determines that an
immediate sale of part or all of the Partnership's assets would be
impractical or would cause undue loss to the Partners, the Liquidator
may, in its sole and absolute discretion, defer for a reasonable time
the liquidation of any assets except those necessary to satisfy
liabilities of the Partnership (including to those Partners as
creditors) and/or distribute to the Partners, in lieu of cash, as
tenants in common and in accordance with the provisions of Section
13.2(a) hereof, undivided interests in such Partnership assets as the
Liquidator deems not suitable for liquidation. Any such distributions
in kind shall be made only if, in the good faith judgment of the
Liquidator, such distributions in kind are in the best interest of the
Partners, and shall be subject to such conditions relating to the
disposition and management of such properties as the Liquidator deems
reasonable and equitable and to any agreements governing the operation
of such properties at such time. The Liquidator shall determine the
fair market value of any property distributed in kind using such
reasonable method of valuation as it may adopt.
(c) In the discretion of the Liquidator, a pro rata portion of
the distributions that would otherwise be made to the General Partner
and Limited Partners pursuant to this Article 13 may be:
(1) distributed to a trust established for the
benefit of the General Partner and Limited Partners for the
purposes of liquidating Partnership assets, collecting amounts
owed to the Partnership, and paying any contingent or
unforeseen liabilities or obligations of the Partnership or
the General Partner arising out of or in connection with the
Partnership. The assets of any such trust shall be distributed
to the General Partner and Limited Partners from time to time,
in the reasonable discretion of the Liquidator, in the same
proportions as the amount distributed to such trust by the
Partnership would otherwise have been distributed to the
General Partner and Limited Partners pursuant to this
Agreement; or
(2) withheld or escrowed to provide a reasonable
reserve for Partnership liabilities (contingent or otherwise)
and to reflect the unrealized portion of any installment
obligations owed to the Partnership, provided that such
withheld or escrowed amounts shall be distributed to the
General Partner and Limited Partners in the manner and order
of priority set forth in Section 13.2(a) as soon as
practicable.
Section 13.3 Compliance with Timing Requirements of Regulations
In the event the Partnership is "liquidated" within the meaning of
Regulations Section 1.704-1(b)(2)(ii)(g), distributions shall be made pursuant
to this Article 13 to the General Partner and Limited Partners who have positive
Capital Accounts in compliance with Regulations
-45-
Section 1.704-1(b)(2)(ii)(b)(2). If any Partner has a deficit balance in his
Capital Account (after giving effect to all contributions, distributions and
allocations for all taxable years, including the year during which such
liquidation occurs), such Partner shall have no obligation to make any
contribution to the capital of the Partnership with respect to such deficit, and
such deficit shall not be considered a debt owed to the Partnership or to any
other Person for any purpose whatsoever.
Section 13.4 Deemed Distribution and Recontribution
Notwithstanding any other provision of this Article 13, in the event
the Partnership is considered "liquidated" within the meaning of Regulations
Section 1.704-1(b)(2)(ii)(g), but no Liquidating Event has occurred, the
Partnership's property shall not be liquidated, the Partnership's liabilities
shall not be paid or discharged, and the Partnership's affairs shall not be
wound up. Instead, for federal income tax purposes and for purposes of
maintaining Capital Accounts pursuant to Exhibit B hereto, the Partnership shall
be deemed to have contributed its assets in kind to a new partnership in return
for interests in such partnership that correspond to the outstanding interests
in the Partnership and then, distributed the interests in such new partnership
to the General Partner and Limited Partners in accordance with their respective
interests in the Partnership in liquidation of the Partnership.
Section 13.5 Rights of Limited Partners
Except as otherwise provided in this Agreement, each Limited Partner
shall look solely to the assets of the Partnership for the return of its Capital
Contributions and shall have no right or power to demand or receive property
other than cash from the Partnership. Except as otherwise provided in this
Agreement, no Limited Partner shall have priority over any other Partner as to
the return of its Capital Contributions, distributions, or allocations.
Section 13.6 Notice of Dissolution
In the event a Liquidating Event occurs or an event occurs that would,
but for the provisions of an election or objection by one or more Partners
pursuant to Section 13.1, result in a dissolution of the Partnership, the
General Partner shall, within thirty (30) days thereafter, provide written
notice thereof to each of the Partners (a "Liquidation Notice"). The General
Partner shall not make any liquidating distributions to the Partners prior to
the expiration of thirty (30) days following delivery by the General Partner of
a Liquidation Notice to the Partners (such thirty (30) day period is referred to
herein as the "Pre-Liquidation Period"). During the Pre-Liquidation Period, each
Partner may exercise the Redemption Right.
Section 13.7 Termination of Partnership and Cancellation of Certificate
of Limited Partnership
Upon the completion of the liquidation of the Partnership's assets, as
provided in Section 13.2 hereof, the Partnership shall be terminated, a
certificate of cancellation shall be filed, and all qualifications of the
Partnership as a foreign limited partnership in jurisdictions other than the
State of Delaware shall be canceled and such other actions as may be necessary
to terminate the Partnership shall be taken.
-46-
Section 13.8 Reasonable Time for Winding-Up
A reasonable time shall be allowed for the orderly winding-up of the
business and affairs of the Partnership and the liquidation of its assets
pursuant to Section 13.2 hereof, in order to minimize any losses otherwise
attendant upon such winding-up, and the provisions of this Agreement shall
remain in effect between the Partners during the period of liquidation.
Section 13.9 Waiver of Partition
Each Partner hereby waives any right to partition of the Partnership
property.
ARTICLE 14
AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS
Section 14.1 Amendments
(a) Amendments to this Agreement may be proposed by the
General Partner or by any Limited Partners (other than the General
Partner) holding twenty percent (20%) or more of the Partnership
Interests. Following such proposal, the General Partner shall submit
any proposed amendment to the Limited Partners. The General Partner
shall seek the written vote of the Partners on the proposed amendment
or shall call a meeting to vote thereon and to transact any other
business that it may deem appropriate. For purposes of obtaining a
written vote, the General Partner may require a response within a
reasonable specified time, but not less than fifteen (15) days, and
failure to respond in such time period shall constitute a vote which is
consistent with the General Partner's recommendation with respect to
the proposal. Except as provided in Section 7.3(a), 7.3(b), 13.1(c),
14.1(b), 14.1(c) or 14.1(d), a proposed amendment shall be adopted and
be effective as an amendment hereto if it is approved by the General
Partner and it receives the Consent of Partners holding a majority of
the Percentage Interests of the Limited Partners (including Limited
Partner Percentage Interests held by the General Partner, the Company
or their respective Subsidiaries or Affiliates).
(b) Notwithstanding Section 14.1(a), the General Partner shall
have the power, without the consent of the Limited Partners, to amend
this Agreement as may be required to facilitate or implement any of the
following purposes:
(1) to add to the obligations of the General Partner
or surrender any right or power granted to the General Partner
or any Affiliate of the General Partner for the benefit of the
Limited Partners;
(2) to reflect the admission, substitution,
termination, or withdrawal of Partners in accordance with this
Agreement;
(3) to set forth the designations, rights, powers,
duties, and preferences of the holders of any additional
Partnership Interests issued pursuant to Section 4.2 hereof;
-47-
(4) to reflect a change that is of an inconsequential
nature and does not adversely affect the Limited 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, 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
(5) to satisfy any requirements, conditions, or
guidelines contained in any order, directive, opinion, ruling
or regulation of a federal or state agency or contained in
federal or state law.
The General Partner shall provide notice to the Limited Partners when
any action under this Section 14.1(b) is taken.
(c) Notwithstanding Section 14.1(a) and 14.1(b) hereof, this
Agreement shall not be amended without the Consent of each Partner
adversely affected if such amendment would (i) convert a Limited
Partner's interest in the Partnership into a General Partner Interest;
(ii) modify the limited liability of a Limited Partner in a manner
adverse to such Limited Partner; (iii) alter rights of the Partner to
receive distributions pursuant to Article 5 or Article 13, or the
allocations specified in Article 6 (except as permitted pursuant to
Section 4.2 and Section 14.1(b)(3) hereof); (iv) except as permitted by
Article XVI hereof, alter or modify the Redemption Right and REIT
Shares Amount as set forth in Section 8.6 and the related definitions,
in a manner adverse to such Partner; (v) cause the termination of the
Partnership prior to the time set forth in Sections 2.5 or 13.1; or
(vi) amend this Section 14.1(c). Further, no amendment may alter the
restrictions on the General Partner's authority set forth in Section
7.3. without the Consent specified in that section.
(d) Notwithstanding Section 14.1(a) or Section 14.1(b) hereof,
the General Partner shall not amend Sections 4.2, 7.5, 7.6, 11.2 or
14.2 without the Consent of Limited Partners holding a majority of the
Percentage Interests of the Limited Partners, excluding Limited Partner
Interests held by the General Partner, the Company or any Subsidiary of
the Company.
Section 14.2 Meetings of the Partners
(a) Meetings of the Partners may be called by the General
Partner and shall be called upon the receipt by the General Partner of
a written request by Limited Partners (other than the Company) holding
twenty percent (20%) or more of the Partnership Interests. The request
shall state the nature of the business to be transacted. Notice of any
such meeting shall be given to all Partners not less than seven (7)
days nor more than thirty (30) days prior to the date of such meeting.
Partners may vote in person or by proxy at such meeting. Whenever the
vote or Consent of the Partners is permitted or required under this
Agreement, such vote or Consent may be given at a meeting of the
Partners or may be given in accordance with the procedure prescribed in
Section 14.1(a) hereof. Except as otherwise expressly provided in this
Agreement, the Consent of holders of a majority of the Percentage
Interests held by Limited Partners (including Limited
-48-
Partnership Interests held by the General Partner, the Company and
their respective Subsidiaries and Affiliates) shall control.
(b) Any action required or permitted to be taken at a meeting
of the Partners may be taken without a meeting if a written consent
setting forth the action so taken is signed by a majority of the
Percentage Interests of the Partners (or such other percentage as is
expressly required by this Agreement). Such consent may be in one
instrument or in several instruments, and shall have the same force and
effect as a vote of a majority of the Percentage Interests of the
Partners (or such other percentage as is expressly required by this
Agreement). Such consent shall be filed with the General Partner. An
action so taken shall be deemed to have been taken at a meeting held on
the effective date so certified.
(c) Each Limited Partner may authorize any Person or Persons
to act for him by proxy on all matters in which a Limited Partner is
entitled to participate, including waiving notice of any meeting, or
voting or participating at a meeting. Every proxy must be signed by the
Limited Partner or his attorney-in-fact. No proxy shall be valid after
the expiration of eleven (11) months from the date thereof unless
otherwise provided in the proxy. Every proxy shall be revocable at the
pleasure of the Limited Partner executing it, such revocation to be
effective upon the Partnership's receipt of written notice of such
revocation from the Limited Partner executing such proxy.
(d) Each meeting of the Partners shall be conducted by the
General Partner or such other Person as the General Partner may appoint
pursuant to such rules for the conduct of the meeting as the General
Partner or such other Person deems appropriate. Without limitation,
meetings of Partners may be conducted in the same manner as meetings of
the shareholders of the Company and may be held at the same time, and
as part of, meetings of the shareholders of the Company.
ARTICLE 15
GENERAL PROVISIONS
Section 15.1 Addresses and Notice
Any notice, demand, request or report required or permitted to be given
or made to a Partner or Assignee under this Agreement shall be in writing and
shall be deemed given or made when delivered in person or when sent by first
class United States mail or by other means of written communication to the
Partner or Assignee at the address set forth in Exhibit A or such other address
of which the Partner shall notify the General Partner in writing.
Section 15.2 Titles and Captions
All article or section titles or captions in this Agreement are for
convenience only. They shall not be deemed part of this Agreement and in no way
define, limit, extend or describe the scope or intent of any provisions hereof.
Except as specifically provided otherwise, references to "Articles" and
"Sections" are to Articles and Sections of this Agreement.
-49-
Section 15.3 Pronouns and Plurals
Whenever the context may require, any pronoun used in this Agreement
shall include the corresponding masculine, feminine or neuter forms, and the
singular form of nouns, pronouns and verbs shall include the plural and vice
versa.
Section 15.4 Further Action
The parties shall execute and deliver all documents, provide all
information and take or refrain from taking action as may be necessary or
appropriate to achieve the purposes of this Agreement.
Section 15.5 Binding Effect
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their heirs, executors, administrators, successors, legal
representatives and permitted assigns.
Section 15.6 Creditors
Other than as expressly set forth herein with respect to the
Indemnities, none of the provisions of this Agreement shall be for the benefit
of, or shall be enforceable by, any creditor of the Partnership.
Section 15.7 Waiver
No failure by any party to insist upon the strict performance of any
covenant, duty, agreement or condition of this Agreement or to exercise any
right or remedy consequent upon a breach thereof shall constitute waiver of any
such breach or any other covenant, duty, agreement or condition.
Section 15.8 Counterparts
This Agreement may be executed in counterparts, all of which together
shall constitute one agreement binding on all of the parties hereto,
notwithstanding that all such parties are not signatories to the original or the
same counterpart. Each party shall become bound by this Agreement immediately
upon affixing its signature hereto.
Section 15.9 Applicable Law
This Agreement shall be construed and enforced in accordance with and
governed by the laws of the State of Delaware, without regard to the principles
of conflicts of law.
Section 15.10 Invalidity of Provisions
If any provision of this Agreement is or becomes invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein shall not be affected thereby.
-50-
Section 15.11 Entire Agreement
This Agreement contains the entire understanding and agreement among
the Partners with respect to the subject matter hereof and supersedes any other
prior written or oral understandings or agreements among them with respect
thereto; provided that the General Partner and the Partnership may enter into
separate written agreements with certain of the Limited Partners relating to
their rights and obligations under this Agreement and such separate agreements
shall not be superseded by this Agreement but shall supplement and be considered
part of this Agreement.
Section 15.12 {INTENTIONALLY OMITTED}
{INTENTIONALLY OMITTED}
ARTICLE 16
CONSOLIDATION, MERGER OR SALE OF ASSETS OF THE COMPANY
Section 16.1 Triggering Events
For the purposes of this Article 16, each of the following events shall
be deemed to be a "Triggering Event": (v) if the Company consolidates with, or
merges into, any other Person, and the Company is not the continuing or
surviving corporation of such consolidation or merger, (w) the Company engages
in a transaction that constitutes a "going private" transaction within the
meaning of Rule 13e-3 under the Exchange Act, (x) if any Person consolidates
with, or merges into, the Company, and the Company is the continuing or
surviving corporation of such consolidation or merger and, in connection with
such consolidation or merger, all or part of the outstanding REIT Shares are
converted into stock or other securities of any other Person or cash or any
other property, (y) if any Person becomes the Beneficial Owner (as hereinafter
defined) of 33.3% or more of the then outstanding REIT Shares or (z) if the
Company sells or otherwise transfers (or one or more of its Subsidiaries sells
or otherwise transfers) to any Person or Persons, in one or more transactions,
assets aggregating more than 50% of the value of the assets (based on either the
fair market value of the assets or cash flow generated by the assets) of the
Company and its Subsidiaries, as a whole. "Beneficial Owner" means any Person
who, together with such Person's affiliates (as defined in Rule 12b-2 of the
Securities Exchange Act of 1934, as amended (including any rules and regulations
thereunder, (the "Exchange Act")) and associates (as defined in Rule 12b-2 of
the Exchange Act), (i) would be considered a "beneficial owner" under Rule 13d-3
of the Exchange Act, other than (A) as a result of a revocable proxy given in
response to a proxy or consent solicitation made pursuant to, and in accordance
with, the Exchange Act or (B) as would not be reportable by such Person on
Schedule 13D under the Exchange Act, or (ii) has entered into any agreement,
arrangement or understanding (whether or not in writing) for the purpose of
acquiring (whether such right is exercisable immediately or only after the
passage of time or upon the satisfaction of conditions) owning, voting (except
pursuant to a revocable proxy or consent solicitation made pursuant to, and in
accordance with, the Exchange Act) or disposing of REIT Shares, including upon
the exercise of conversion rights, exchange rights, rights, warrants or options
or otherwise.
-51-
Section 16.2 From and After the Occurrence of a Triggering Event
Effective on the date of each Triggering Event, the Redemption Right
shall be adjusted as provided in this Section 16.2.
(a) From and after the occurrence of a Triggering Event (each
such occurrence, a "Trigger Occurrence") and until the occurrence, if
any, of a subsequent Triggering Event (in which case a further
adjustment shall be made pursuant to this Section 16.2), each and every
reference contained in this Agreement to a "REIT Share" or "REIT
Shares" shall be deemed to be a reference to a share or shares,
respectively (each, a "Replacement Share"; collectively, "Replacement
Shares"), of: (i) if, as a result of any Triggering Event, all of the
REIT Shares are converted solely into Registered Common Shares (as
hereinafter defined), such Registered Common Shares and (ii) in all
other cases, the common shares, or, if such Person shall have no common
shares, the equity securities or other equity interests having power to
control or direct the management (the "Common Shares") of (a) in the
event of a Triggering Event described in clause (w) or (x) of the first
sentence of Section 16.1, (1) the Person that is the issuer of any
securities into which the REIT Shares are converted in such merger or
consolidation, or, if there is more than one such issuer, the issuer
who has the highest Market Capitalization (as hereinafter defined) and
(2) if no securities are so issued, the Person that is the other party
to such merger or consolidation, or if there is more than one such
Person, the Person who has the highest Market Capitalization or (b) in
the event of a Triggering Event described in clause (y) or (z) of the
first sentence of Section 16.1, the Person that is the party becoming
the Beneficial Owner of the largest percentage of the outstanding REIT
Shares or receiving the largest portion of the value of assets (with
such value determined based on either the fair market value of the
assets or the cash flow generated by the assets) transferred pursuant
to such transaction or transactions, or, if each Person that is a party
to such transaction or transactions or if the Person becoming the
Beneficial Owner of the largest portion of the REIT Shares or receiving
the largest portion of the assets cannot be determined, whichever
Person has the highest Market Capitalization; provided, however, that
in any such case, (1) if the Common Shares of such Person are not at
such time and have not been continuously over the preceding
twelve-month period registered ("Registered Common Shares") under
Section 12 of the Exchange Act, or such Person is not a corporation or
a state-chartered real estate investment trust, and such Person is a
direct or indirect Subsidiary of another Person that has Registered
Common Shares outstanding, "Replacement Shares" shall mean the Common
Shares of such other Person; (2) if the Common Shares of such Person
are not Registered Common Shares or such Person is not a corporation or
a state-chartered real estate investment trust, and such Person is a
direct or indirect Subsidiary of another Person but is not a direct or
indirect Subsidiary of another Person which has Registered Common
Shares outstanding, "Replacement Shares" shall mean Common Shares of
the ultimate parent entity of such first-mentioned Person; (3) if the
Common Shares of such Person are not Registered Common Shares or such
Person is not a corporation or a state-chartered real estate investment
trust, and such Person is directly or indirectly controlled by more
than one Person, and one of such other Persons has Registered Common
Shares outstanding, "Replacement Shares" shall mean Common Shares of
whichever of such other Persons is the issuer having the highest Market
Capitalization; and (4) if the
-52-
Common Shares of such Person are not Registered Common Shares or such
Person is not a corporation, or a state-chartered real estate
investment trust, and such Person is directly or indirectly controlled
by more than one Person, and none of such other Persons have Registered
Common Shares outstanding, "Replacement Shares" shall mean Common
Shares of whichever ultimate parent entity is the corporation, or a
state-chartered real estate investment trust having the highest
aggregate shareholders' equity or, if no such ultimate parent entity is
a corporation or a state-chartered real estate investment trust, shall
be deemed to refer to Common Shares of whichever ultimate parent entity
is the entity having the greatest net assets. Any issuer of
"Replacement Shares" shall be referred to as an "Issuer". "Market
Capitalization" means the dollar figure equal to the product of the
number of Common Shares issued and outstanding on the date of the
Trigger Occurrence in question, on a fully diluted basis, not held by
affiliates (as defined under the Exchange Act) multiplied by the
Average Trading Price (as hereinafter defined). The holders of a
majority of the Common Units held by the Limited Partners (excluding
the Common Units held by the General Partner, the Company or any
Subsidiary of the Company) may, within 90 days after the occurrence of
a Triggering Event described in clause (y) of the first sentence of
Section 16.1 involving a purchase of less than all of the then
outstanding REIT Shares, waive, in writing, the adjustment to the
Redemption Right provided for in this Section 16.2; provided, that (i)
the Redemption Right shall remain in full force and effect as provided
in Section 8.6, (ii) such election shall be binding on all of the
Limited Partners and (iii) if the adjustment to the Redemption Right
has previously been waived pursuant to this sentence, a new Triggering
Event shall be deemed to occur each time a Person who is the Beneficial
Owner of at least 33.3% of the outstanding REIT Shares becomes the
Beneficial Owner of an additional 2% or more of the outstanding REIT
Shares.
(b) From and after a Trigger Occurrence, the "Conversion
Factor" shall be adjusted by multiplying the "Conversion Factor"
existing on the day immediately prior to such Trigger Occurrence as
follows: (i) if the REIT Shares, as a result of the Trigger Occurrence,
have been converted solely into the right to receive Registered Common
Shares, by the number of Registered Common Shares which the holder of a
single REIT Share was entitled to receive as a result of the Trigger
Occurrence or (ii) in all other cases, by a fraction, the numerator of
which shall be the Average Trading Price of a REIT Share as of such
Trigger Occurrence and the denominator of which shall be the Average
Trading Price of a Replacement Share as of such Trigger Occurrence.
Following a Trigger Occurrence, the Conversion Factor shall be further
adjusted as set forth in the definition of "Conversion Factor"
contained in Article 1 of this Agreement and as provided in this
Section 16.2.
(c) For the purpose of any computation hereunder, the "Average
Trading Price" per share of Common Stock on any date shall be deemed to
be the average of the daily closing prices per share of such shares for
the ten consecutive trading days immediately prior to the third trading
day prior to such date; provided, however, in the event the Triggering
Event occurs as part of a series of related transactions which also
includes a tender offer, the ten trading day period shall be the ten
consecutive trading day period immediately prior to the day REIT Shares
are accepted for payment pursuant to such tender offer; provided,
however, further, if prior to the expiration of such requisite
-53-
ten trading day period the issuer announces either (A) a dividend or
distribution on such shares payable in such shares or securities
convertible into such shares or (B) any subdivision, combination or
reclassification of such shares, then, following the ex-dividend date
for such dividend or the record date for such subdivision, as the case
may be, the "Average Trading Price" shall be properly adjusted to take
into account such event. The closing price for each day shall be, if
the shares are listed and admitted to trading on a national securities
exchange, as reported in the principal consolidated transaction
reporting system with respect to securities listed on the principal
national securities exchange on which such shares are listed or
admitted to trading or, if such shares are not listed or admitted to
trading on any national securities exchange, the last quoted price or,
if not so quoted, the high bid price in the over-the-counter market, as
reported by the NASDAQ National Market System or such other system then
in use, or, if on any such date such shares are not quoted by any such
organization, the average of the closing bid and asked prices as
furnished by a professional market maker making a market in such shares
selected by the holders of a majority of the Common Units held by the
Limited Partners (excluding the Common Units held by the General
Partner). If such shares are not publicly held or not so listed or
traded or if, for the ten days prior to such date, no market maker is
making a market in such shares, the Average Trading Price of such
shares on such date shall be deemed to be the fair value of such shares
as determined as set forth in Section 16.2(d). The term "trading day"
shall mean, if such shares are listed or admitted to trading on any
national securities exchange, a day on which the principal national
securities exchange on which such shares are listed or admitted to
trading is open for the transaction of business or, if such shares are
not so listed or admitted, a Business Day.
(d) In the event that on the date of a Trigger Occurrence, the
shares of a Person are not publicly held or not so listed or traded or
if, for the ten days prior to such date, no market maker is making a
market in the shares of a Person, the Average Trading Price of the
shares of such Person shall be the fair value of the shares as
determined in good faith by the holders of a majority of the Common
Units held by the Limited Partners (excluding the Common Units held by
the General Partner, the Company or any Subsidiary of the Company) and
by the General Partner, which determination shall be binding on all of
the Limited Partners. If the holders of a majority of the Common Units
held by the Limited Partners (excluding the Common Units held by the
General Partner, the Company or any Subsidiary of the Company) and
General Partner have not agreed on the fair value of the shares and
executed and delivered between them an agreement setting forth the same
within twenty (20) days after the Trigger Occurrence in question, then
either the General Partner or the holders of a majority of the Common
Units held by the Limited Partners (excluding the Common Units held by
the General Partner, the Company or any Subsidiary of the Company) may
notify the other that they or it desire to invoke the following
arbitration procedure:
(1) Notice of the holders of a majority of the Common
Units held by the Limited Partners (excluding the Common Units
held by the General Partner, the Company or any Subsidiary of
the Company) or by the General Partner of such parties'
intention to seek arbitration shall be delivered to the other
parties within ten (10) days, after which all parties shall,
in good faith, attempt to agree
-54-
on a single arbitrator to determine the fair value of the
shares (the "Arbitrator"). If the holders of a majority of the
Common Units held by the Limited Partners (excluding the
Common Units held by the General Partner, the Company or any
Subsidiary of the Company) and the General Partner have not
agreed on the Arbitrator within ten (10) days after the giving
of the Arbitration Notice, then either party, on behalf of
both, may apply to the local office of the American
Arbitration Association or any organization which is the
successor thereof (the "AAA") for appointment of the
Arbitrator, or, if the AAA shall not then exist or shall fail,
refuse or be unable to act such that the Arbitrator is not
appointed by the AAA within ten (10) days after application
therefor, then either party may apply to any court of
competent jurisdiction in the State of Texas (the "Court") for
the appointment of the Arbitrator and the other party shall
not raise any question as to the Court's full power and
jurisdiction to entertain the application and make the
appointment. The date on which the Arbitrator is appointed, by
the agreement of the parties, by appointment by the AAA or by
appointment by the Court, is referred to herein as the
"Appointment Date". If any Arbitrator appointed hereunder
shall be unwilling or unable, for any reason, to serve, or
continue to serve, a replacement arbitrator shall be appointed
in the same manner as the original Arbitrator.
(2) The arbitration shall be conducted in accordance
with the then prevailing commercial arbitration rules of the
AAA, modified as follows:
(i) To the extent that any statute imposes
requirements different than those of the AAA in order for the
decision of the Arbitrator to be enforceable in the courts of
the State of Texas, such requirements shall be complied with
in the arbitration.
(ii) The Arbitrator shall be disinterested and
impartial, shall not be affiliated with the Limited Partners,
the General Partner or their Affiliates and shall have at
least ten (10) years experience in the market in which the
applicable Person transacts the majority of its business.
(iii) Before hearing any testimony or receiving any
evidence, the Arbitrator shall be sworn to hear and decide the
controversy faithfully and fairly by an officer authorized to
administer an oath and a written copy thereof shall be
delivered to each of the Limited Partners and the General
Partner.
(iv) Within twenty (20) days after the Appointment
Date, the holders of a majority of the Common Units held by
the Limited Partners (excluding the Common Units held by the
General Partner, the Company or any Subsidiary of the Company)
and the General Partner shall deliver to the Arbitrator two
(2) copies of their respective written determinations of the
fair value of the shares (each, a "Determination") together
with such affidavits, appraisals, reports and other written
evidence relating thereto as the submitting party deems
appropriate. After the submission of any Determination, the
submitting party may not make any additions to or deletions
from, or otherwise change, such Determination or the
-55-
affidavits, appraisals, reports and other written evidence
delivered therewith. If either party fails to so deliver its
Determination within such time period, time being of the
essence with respect thereto, such party shall be deemed to
have irrevocably waived its right to deliver a Determination
and the Arbitrator, without holding a hearing, shall accept
the Determination of the submitting party as the fair value of
the shares. If each party submits a Determination with respect
to the fair value of the shares within the twenty (20) day
period described above, the Arbitrator shall, promptly after
its receipt of the second Determination, deliver a copy of
each party's Determination to the other party.
(v) Not less than ten (10) days nor more than twenty
(20) days after the earlier to occur of (x) the expiration of
the twenty (20) day period provided for in clause (iv) of this
subparagraph or (y) the Arbitrator's receipt of both of the
Determinations from the parties (such earlier date is referred
to herein as the "Submission Date") and upon not less than
five (5) days notice to the parties, the Arbitrator shall hold
one or more hearings with respect to the determination of the
fair value of the shares. The hearings shall be held in the
Houston metropolitan area of Texas at such location and time
as shall be specified by the Arbitrator. Each of the parties
shall be entitled to present all relevant evidence and to
cross-examine witnesses at the hearings. The Arbitrator shall
have the authority to adjourn any hearing to such later date
as the Arbitrator shall specify, provided that in all events
all hearings with respect to the determination of the fair
value of the shares shall be concluded not later than thirty
(30) days after the Submission Date.
(vi) The Arbitrator shall be instructed, and shall be
empowered only, to select as the fair value of the shares that
one of the Determinations which the Arbitrator believes is the
more accurate determination of the Average Trading Price of
the shares. Without limiting the generality of the foregoing,
in rendering his or her decision, the Arbitrator shall not add
to, subtract from or otherwise modify the provisions of this
Agreement or either of the Determinations.
(vii) The Arbitrator shall render his or her
determination as to the selection of a Determination in a
signed and acknowledged written instrument, original
counterparts of which shall be sent simultaneously to Limited
Partners and the General Partner, within ten (10) days after
the conclusion of the hearing(s) required by clause (v) of
this Section.
(3) This provision shall constitute a written
agreement to submit any dispute regarding the determination of
the Average Trading Price of the shares of a Person to
arbitration.
(4) The arbitration decision, determined as provided
in this Article, shall be conclusive and binding on the
parties, shall constitute an "award" by the Arbitrator within
the meaning of the AAA rules and applicable law, and judgment
may be entered thereon in any court of competent jurisdiction.
-56-
(5) The holders of a majority of the Common Units
(other than the General Partner, the Company or any Subsidiary
of the Company) shall pay all fees and expenses relating to
the arbitration (including, without limitation, the reasonable
fees and expenses of one counsel chosen by the holders of a
majority of the Common Units held by the Limited Partners
(excluding the Common Units held by the General Partner, the
Company or any Subsidiary of the Company) and of experts and
witnesses retained or called by the Limited Partners). The
Limited Partners' counsel chosen as set forth in the preceding
sentence shall represent the interests of all of the Limited
Partners and the choice of counsel shall be binding on all of
the Limited Partners.
(e) From and after a Trigger Occurrence, each and every
reference to the "Company" in Section 8.6 shall be deemed to be a
reference to the Issuer of the Replacement Shares. From and after a
Trigger Occurrence, the Issuer shall assume or unconditionally guaranty
the performance of the Partnership's obligation to pay the
Consideration to a Redeeming Partner under Section 8.6 of this
Agreement pursuant to an instrument in form and substance reasonably
satisfactory to the holders of a majority of the Common Units held by
the Limited Partners (excluding the Common Units held by the General
Partner, the Company or any Subsidiary of the Company). From and after
a Trigger Occurrence, the "Average Trading Price" of a REIT Share or a
Replacement Share, as applicable shall be substituted for the "Value"
of the same for the purposes of determining the Cash Amount.
Section 16.3 Additional Issuer Covenants
(a) From and after a Trigger Occurrence, in the event a
dividend or distribution consisting of cash or property (other than
Replacement Shares) or both is paid by the Issuer in respect of the
Replacement Shares, the General Partner shall cause the Partnership to
distribute, in respect of each Common Unit, the same amount of cash or
property the holder of a Common Unit would have received had such
holder exercised its Redemption Right and received Replacement Shares
prior to such dividend or distribution.
(b) In the event that the Company proposes to engage in a
transaction that constitutes a Triggering Event, the prior Consent of
Partners holding a majority of the Percentage Interests of the Limited
Partners (other than the General Partner, the Company or any Subsidiary
of the Company) shall be required unless the Issuer of Replacement
Shares agrees to provide the Summit Limited Partners with economic
rights that are identical to the economic rights of such Summit Limited
Partners hereunder (provided, however, that for purposes of this
Section 16.3(b) any changes to the rights of the Summit Limited
Partners required to reflect a change in the issuer of the REIT Shares
or a change in the capital structure of the Company, e.g., adjustment
to the Conversion Factor, change of the securities which the Common
Units may receive upon exercise of the Redemption Right, and any other
changes effected expressly in accordance with Section 16.2 hereof shall
not result in the economic rights of the Summit Limited Partners not
being identical to their economic rights hereunder); provided further
that, notwithstanding the foregoing, if the Replacement Shares are not
listed on a national
-57-
securities exchange or on the Nasdaq National Market, the economic
rights of the Summit Limited Partners shall be deemed not to be
identical following the Triggering Event.
Section 16.4 Application to Later Transactions
This Article 16 shall apply to the initial Triggering Event and shall
continue to apply to each subsequent Triggering Event.
Section 16.5 Waivers and Amendments
(a) The provisions of this Article 16 may be waived only upon
the written consent of the holders of a majority of the Common Units
held by the Summit Limited Partners (excluding the Common Units held by
the General Partner, the Company and any Subsidiary of the Company).
(b) This Article 16 shall only be amended as provided in
Section 14.1(d) of this Agreement and shall be deemed included in such
section for all purposes.
-58-
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.
GENERAL PARTNER:
CAMDEN SUMMIT, INC.,
a Delaware corporation
By: __________________________________
Name: ________________________________
Title: _______________________________
LIMITED PARTNERS:
By: CAMDEN SUMMIT, INC.,
a Delaware corporation
as Attorney-in-Fact for the Limited Partners
By: ____________________________________________
Name: __________________________________________
Title: _________________________________________
The undersigned has executed this Agreement for the purposes of Sections 7.8(b),
8.6 and 11.2 only.
CAMDEN PROPERTY TRUST,
a Texas real estate investment trust
By: ____________________________________________
Name: __________________________________________
Title: _________________________________________
LIMITED PARTNER SIGNATURE PAGE
The undersigned, desiring to become one of the within named Limited
Partners of Camden Summit Partnership, L.P., hereby becomes a party to the
Second Amended and Restated Agreement of Limited Partnership of Camden Summit
Partnership, L.P. by and among Camden Summit, Inc. and such Limited Partners,
dated as of ________ , 2005. The undersigned agrees that this signature page may
be attached to any counterpart of said Agreement of Limited Partnership.
Signature line for Limited Partner
______________________________________
Address of Limited Partner
______________________________________
EXHIBIT A
PARTNERS, OUTSTANDING PARTNERSHIP UNITS AND
PERCENTAGE INTERESTS
(AS OF ________________, 2005)
Exhibit A
EXHIBIT B
CAPITAL ACCOUNT MAINTENANCE
1. Capital Accounts of the Partners
A. The Partnership shall maintain for each Partner a separate Capital
Account in accordance with the rules of Regulations Section 1.704-1(b)(2)(iv).
Such Capital Account shall be increased by (i) the amount of all Capital
Contributions and any other deemed contributions made by such Partner to the
Partnership pursuant to this Agreement; and (ii) all items of Partnership income
and gain (including income and gain exempt from tax) computed in accordance with
Section 1.B hereof and allocated to such Partner pursuant to Section 6.1(a) of
the Agreement and Exhibit C hereof, and decreased by (x) the amount of cash or
Agreed Value of all actual and deemed distributions of cash or property made to
such Partner pursuant to this Agreement; and (y) all items of Partnership
deduction and loss computed in accordance with Section 1.B hereof and allocated
to such Partner pursuant to Section 6.1(b) of the Agreement and Exhibit C
hereof.
B. For purposes of computing the amount of any item of income, gain,
deduction or loss to be reflected in the Partners' Capital Accounts, unless
otherwise specified in this Agreement, the determination, recognition and
classification of any such item shall be the same as its determination,
recognition and classification for federal income tax purposes determined in
accordance with Section 703(a) of the Code (for this purpose all items of
income, gain, loss or deduction required to be stated separately pursuant to
Section 703(a)(1) of the Code shall be included in taxable income or loss), with
the following adjustments:
(1) Except as otherwise provided in Regulations Section
1.704-1(b)(2)(iv)(m), the computation of all items of income, gain,
loss and deduction shall be made without regard to any election under
Section 754 of the Code which may be made by the Partnership, provided
that the amounts of any adjustments to the adjusted bases of the assets
of the Partnership made pursuant to Section 734 of the Code as a result
of the distribution of property by the Partnership to a Partner (to the
extent that such adjustments have not previously been reflected in the
Partners' Capital Accounts) shall be reflected in the Capital Accounts
of the Partners in the manner and subject to the limitations prescribed
in Regulations Section 1.704-1(b)(2)(iv)(m)(5).
(2) The computation of all items of income, gain, and
deduction shall be made without regard to the fact that items described
in Sections 705(a)(1)(B) or 705(a)(2)(B) of the Code are not includable
gross income or are neither currently deductible nor capitalized for
federal income tax purposes.
(3) Any income, gain or loss attributable to the taxable
disposition of any Partnership property shall be determined as if the
adjusted basis of such property as of such date of disposition were
equal in amount to the Partnership's Carrying Value with respect to
such property as of such date.
B-1
(4) 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.
(5) In the event the Carrying Value of any Partnership Asset
is adjusted pursuant to Section 1.D hereof, the amount of any such
adjustment shall be taken into account as gain or loss from the
disposition of such asset.
(6) Any items specifically allocated under Section 2 of
Exhibit C hereof shall not be taken into account.
C. Generally, a transferee (including an Assignee) of a Partnership
Unit shall succeed to a pro rata portion of the Capital Account of the
transferor; provided, however, that, if the transfer causes a termination of the
Partnership under Section 708(b)(1)(B) of the Code, the Partnership shall be
deemed to have contributed its assets in kind to a new partnership in return for
interests in such partnership that correspond to the outstanding interests in
the Partnership, and then, distributed the interests in such new partnership to
the General Partner and the Limited Partners in accordance with their respective
interests in the Partnership in liquidation of the Partnership. In such event,
the Carrying values of the Partnership properties shall be adjusted upon such
deemed contribution to the new partnership pursuant to Section 1.D(2) hereof.
The Capital Accounts of such reconstituted Partnership shall be maintained in
accordance with the principles of this Exhibit B.
D. (1) Consistent with the provisions of Regulations Section
1.704-1(b)(2)(iv)(f), and as provided in Section 1.D(2), the Carrying Value of
all Partnership assets shall be adjusted upward or downward to reflect any
Unrealized Gain or Unrealized Loss attributable to such Partnership property, as
of the times of the adjustments provided in Section 1.D(2) hereof, as if such
Unrealized Gain or Unrealized Loss had been recognized on an actual sale of each
such property and allocated pursuant to Section 6.1 of the Agreement.
(2) Such adjustments shall be made as of the following times:
(a) immediately prior to the acquisition of an additional interest in
the Partnership by any new or existing Partner in exchange for more
than a de minimis Capital Contribution; (b) immediately prior to the
distribution by the Partnership to a Partner of more than a de minimis
amount of property as consideration for an interest in the Partnership;
and (c) immediately prior to the liquidation of the Partnership within
the meaning of Regulations Section 1.704-1(b)(2)(ii)(g) provided,
however, that adjustments pursuant to clauses (a) and (b) above shall
be made only if the General Partner determines that such adjustments
are necessary or appropriate to reflect the relative economic interests
of the Partners in the Partnership, including any significant special
allocations that would be made pursuant to Section 6.1(e).
(3) In accordance with Regulations Section
1.704-1(b)(2)(iv)(e), the Carrying Value of Partnership assets
distributed in kind shall be adjusted upward or downward to reflect any
Unrealized Gain or Unrealized Loss attributable to such Partnership
property, as of the time any such asset is distributed.
B-2
(4) In determining Unrealized Gain or Unrealized Loss for
purposes of this Exhibit B, the aggregate cash amount and fair market
value of all Partnership assets (including cash or cash equivalents)
shall be determined by the General Partner using such reasonable method
of valuation as it may adopt, or in the case of a liquidating
distribution pursuant to Article 13 of the Agreement, shall be
determined and allocated by the Liquidator using such reasonable
methods of valuation as it may adopt. The General Partner, or the
Liquidator, as the case may be, shall allocate such aggregate value
among the assets of the Partnership (in such manner as it determines in
its sole and absolute discretion to arrive at a fair market value for
individual properties).
E. The provisions of this Agreement (including this Exhibit B and other
Exhibits to this Agreement) relating to the maintenance of Capital Accounts are
intended to comply with Regulations Section 1.704-1(b), and shall be interpreted
and applied in a manner consistent with such Regulations. Except as otherwise
set forth in a written agreement between the General Partner and/or the
Partnership and one or more Limited Partners (including without limitation the
certain Tax, Asset and Income Support Agreement as of the date hereof), in the
event the General Partner shall determine that it is prudent to modify (i) the
manner in which the Capital Accounts, or any debits or credits thereto
(including, without limitation, debits or credits relating to liabilities which
are secured by contributed or distributed property or which are assumed by the
Partnership, the General Partner, or the Limited Partners) are computed; or (ii)
the manner in which items are allocated among the Partners for federal income
tax purposes in order to comply with such Regulations or to comply with Section
704(c) of the Code, the General Partner may make such modification without
regard to Article 14 of the Agreement, provided that it is not likely to have a
material effect on the amounts distributable to any Person pursuant to Article
13 of the Agreement upon the dissolution of the Partnership. The General Partner
also shall (i) make any adjustments that are necessary or appropriate to
maintain equality between the Capital Accounts of the Partners and the amount of
Partnership capital reflected on the Partnership's balance sheet, as computed
for book purposes, in accordance with Regulations Section 1.704-1(b)(2)(iv)(q);
and (ii) make any appropriate modifications in the event unanticipated events
might otherwise cause this Agreement not to comply with Regulations Section
1.704-1(b). In addition, except as otherwise set forth in a written agreement
between the General Partner and/or the Partnership and one or more Limited
Partners (including without limitation that certain Tax, Asset and Income
Support Agreement as of the date hereof), the General Partner may adopt and
employ such methods and procedures for (i) the maintenance of book and tax
capital accounts; (ii) the determination and allocation of adjustments under
Sections 704(c), 734 and 743 of the Code; (iii) the determination of Net Income,
Net Loss, taxable loss and items thereof under this Agreement and pursuant to
the Code; (iv) the adoption of reasonable conventions and methods for the
valuation of assets and the determination of tax basis; (v) the allocation of
asset value and tax basis; and (vi) conventions for the determination of cost
recovery, depreciation and amortization deductions, as it determines in its sole
discretion are necessary or appropriate to execute the provisions of this
Agreement, to comply with federal and state tax laws, and are in the best
interest of the Partners.
2. No Interest
No interest shall be paid by the Partnership on Capital Contributions
or on balances in Partners' Capital Accounts.
B-3
3. No Withdrawal
No Partner shall be entitled to withdraw any part of his Capital
Contribution or his Capital Account or to receive any distribution from the
Partnership, except as provided in Articles 4, 5, 7 and 13 of the Agreement.
B-4
EXHIBIT C
SPECIAL ALLOCATION RULES
1. Special Allocation Rules.
Notwithstanding any other provision of the Agreement or this Exhibit C,
the following special allocations shall be made in the following order:
A. Minimum Gain Chargeback. Notwithstanding the provisions of Section
6.1 of the Agreement or any other provisions of this Exhibit C, if there is a
net decrease in Partnership Minimum Gain during any Partnership taxable 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 Regulations Section 1.704-2(g). Allocations pursuant to the previous
sentence shall be made in proportion to the respective amounts required to be
allocated to each Partner pursuant thereto. The items to be so allocated shall
be determined in accordance with Regulations Section 1.704-2(f)(6). This Section
1.A is intended to comply with the minimum gain chargeback requirements in
Regulations Section 1.704-2(f) and shall be interpreted consistently therewith.
Solely for purposes of this Section 1.A, each Partner's Adjusted Capital Account
Deficit shall be determined prior to any other allocations pursuant to Section
6.1 of Partner Minimum Gain during such Partnership taxable year.
B. Partner Minimum Gain Chargeback. Notwithstanding any other provision
of Section 6.1 of this Agreement or any other provisions of this Exhibit C
(except Section 1.A hereof), if there is a net decrease in Partner Minimum Gain
attributable to a Partner Nonrecourse Debt during any Partnership taxable year,
each Partner who has a share of the Partner Minimum Gain attributable to such
Partner Nonrecourse Debt, determined in accordance with Regulations Section
1.702-2(i)(5), 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 Partner Minimum Gain attributable to such
Partner Nonrecourse Debt, determined in accordance with Regulations Section
1.704-2(i)(5). Allocations pursuant to the previous sentence shall be made in
proportion to the respective amounts required to be allocated to each Partner
pursuant thereto. The items to be so allocated shall be determined in accordance
with Regulations Section 1.704-2(i)(4). This Section 1.B is intended to comply
with the minimum gain chargeback requirement in such Section of the Regulations
and shall be interpreted consistently therewith. Solely for purposes of the
Section 1.B, each Partner's Adjusted Capital Account Deficit shall be determined
prior to any other allocations pursuant to Section 6.1 of the Agreement or this
Exhibit with respect to such Partnership taxable year, other than allocations
pursuant to Section 1.A hereof.
C. Qualified Income Offset. In the event any Partner unexpectedly
receives any adjustments, allocations or distributions described in Regulations
Sections 1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5), or
1.704-1(b)(2)(ii)(d)(6), and after giving effect to the allocations required
under Sections 1.A and 1.B hereof such Partner has an Adjusted Capital Account
Deficit, items of Partnership income and gain (consisting of a pro rata portion
of each item of Partnership income, including gross income and gain for the
Partnership taxable year)
C-1
shall be specifically allocated to such Partner in an amount and manner
sufficient to eliminate, to the extent required by the Regulations, its Adjusted
Capital Account Deficit created by such adjustments, allocations or
distributions as quickly as possible.
D. Nonrecourse Deductions. Nonrecourse Deductions for any Partnership
taxable year shall be allocated to the Partners in accordance with their
respective Percentage Interests. If the General Partner determines in its good
faith discretion that the Partnership's Nonrecourse Deductions must be allocated
in a different ratio to satisfy the safe harbor requirements of the Regulations
promulgated under Section 704(b) of the Code, the General Partner is authorized,
upon notice to the Limited Partners, to revise the prescribed ratio to the
numerically closest ratio for such Partnership taxable year which would satisfy
such requirements.
E. Partner Nonrecourse Deductions. Any Partner Nonrecourse Deductions
for any Partnership taxable year shall be specially allocated to the Partner who
bears the economic risk of loss with respect to the Partner Nonrecourse Debt to
which such Partner Nonrecourse Deductions are attributable in accordance with
Regulations Section 1.704-2(i).
F. Code Section 754 Adjustments. To the extent an adjustment to the
adjusted tax basis of any Partnership asset pursuant to Section 734(b) or 743(b)
of the Code is required, pursuant to Regulations Section 1.704-1(b)(2)(iv)(m),
to be taken into account in determining Capital Accounts, the amount of such
adjustment to the Capital Accounts shall be treated as an item of gain (if the
adjustment increases the basis of the asset) or loss (if the adjustment
decreases such basis, and such item of gain or loss shall be specially allocated
to the Partners in a manner consistent with the manner in which their Capital
Accounts are required to be adjusted pursuant to such Section of the
Regulations.
G. Curative Allocations. The allocations set forth in Section 1.A
through 1.F of this Exhibit C (the "Regulatory Allocations") are intended to
comply with certain requirements of the Regulations under Section 704(b) of the
Code. The Regulatory Allocations may not be consistent with the manner in which
the Partners intend to divide Partnership distributions. Accordingly, the
General Partner is hereby authorized to divide other allocations of income,
gain, deduction and loss among the Partners so as to prevent the Regulatory
Allocations from distorting the manner in which Partnership distributions will
be divided among the Partners. In general, the Partners anticipate that this
will be accomplished by specially allocating other items of income, gain, loss
and deduction among the Partners so that the net amount of the Regulatory
Allocations and such special allocations to each person is zero. However, the
General Partner will have discretion to accomplish this result in any reasonable
manner; provided, however, that no allocation pursuant to this Section 1.G shall
cause the Partnership to fail to comply with the requirements of Regulations
Sections 1.704-1(b)(2)(ii)(d), 1.704-2(e) or 1.704-2(i).
2. Allocations for Tax Purposes
A. Except as otherwise provided in the Code and Regulations, for
federal income tax purposes, each item of income, gain, loss and deduction shall
be allocated among the Partners in the same manner as its correlative item of
"book" income, gain, loss or deduction is allocated pursuant to Section 6.1 of
the Agreement and Section 1 of this Exhibit C.
C-2
B. In an attempt to eliminate Book-Tax Disparities attributable to a
Contributed Property or Adjusted Property, items of income, gain, loss, and
deduction shall be allocated for federal income tax purposes among the Partners
as follows:
(1) (a) In the case of a Contributed Property, such items
attributable thereto shall be allocated among the Partners, consistent
with the principles of Section 704(c) of the Code and the Regulations
thereunder, to take into account the variation between the 704(c) Value
of such property and its adjusted basis at the time of contribution;
and
(b) any item of Residual Gain or Residual Loss attributable to
a Contributed Property shall be allocated among the Partners in the
same manner as its correlative item of "book" gain or loss is allocated
pursuant to Section 6.1 of the Agreement and Section 1 of this Exhibit
C.
(2) (a) In the case of an Adjusted Property, such items shall
(1) first, be allocated among the Partners in a manner
consistent with the principles of Section 704(c) of the Code and the
Regulations thereunder to take into account the Unrealized Gain or
Unrealized Loss attributable to such property and the allocations
thereof pursuant to Exhibit B; and
(2) second, in the event such property was originally a
Contributed Property, be allocated among the Partners in a manner
consistent with Section 2.B(1) of this Exhibit C; and
(b) any item of Residual Gain or Residual Loss attributable to
an Adjusted Property shall be allocated among the Partners in the same
manner its correlative item of "book" gain or loss is allocated
pursuant to Section 6.1 of the Agreement and Section 1 of this Exhibit
C.
(3) all other items of income, gain, loss and deduction shall
be allocated among the Partners the same manner as their correlative
item of "book" gain or loss is allocated pursuant to Section 6.1 of the
Agreement and Section 1 of this Exhibit C.
C. Subject to the further provisions of this Section 2.C, to the extent
that the Treasury Regulations promulgated pursuant to Section 704(c) of the Code
permit the Partnership to utilize alternative methods to eliminate the
disparities between the Carrying Value of property and its adjusted basis, the
General Partner shall have the authority to elect the method to be used by the
Partnership and such election shall be binding on all Partners.
3. No Withdrawal
No Partner shall be entitled to withdraw any part of his Capital
Contribution or his Capital Account or to receive any distribution from the
Partnership, except as provided in Articles 4, 5, 8 and 13 of the Agreement.
C-3
4. Agreements
To the extent permitted by law, the General Partner and one or more
Limited Partners may enter into separate written agreements modifying the
provisions of this Exhibit C.
C-4
EXHIBIT D
NOTICE OF REDEMPTION
The undersigned Limited Partner hereby irrevocably (i) redeems
__________ Common Units in Camden Summit Partnership, L.P. in accordance with
the terms of the Second Amended and Restated Agreement of Limited Partnership of
Camden Summit Partnership, L.P. and the Redemption Right referred to therein;
(ii) surrenders such Common Units and all right, title and interest therein; and
(iii) directs that the Cash Amount or REIT Shares Amount (as determined by the
Partnership or the Company) deliverable upon exercise of the Redemption Right be
delivered to the address specified below, and if REIT Shares are to be
delivered, such REIT Shares be registered or placed in the name(s) and at the
address(es) specified below. The undersigned hereby, represents, warrants, and
certifies that the undersigned (a) has marketable and unencumbered title to such
Common Units, free and clear of the rights or interests of any other person or
entity; (b) has the full right, power, and authority to redeem and surrender
such Common Units as provided herein; and (c) has obtained the consent or
approval of all persons or entities, if any, having the right to consent or
approve such redemption and surrender.
Dated:
______________________________________
Name of Limited Partner:
______________________________________
Please Print
______________________________________
______________________________________
(Signature of Limited Partner)
______________________________________
(Street Address)
______________________________________
(City) (State) (Zip Code)
D-1
Signature Guaranteed by:
______________________________________
If REIT Shares are to be issued,
issue to:
______________________________________
Name:
______________________________________
Please insert social security or
identifying number:
D-2
SCHEDULE 1
AGREED VALUE OF CONTRIBUTED PROPERTIES
1
SCHEDULE 2
704(c) VALUE OF CONTRIBUTED PROPERTIES
1
SCHEDULE 3
CAPITAL CONTRIBUTIONS OF PARTNERS
1