SECOND AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
▇▇▇▇▇▇-▇▇▇▇▇ PROPERTIES LIMITED PARTNERSHIP
51
TABLE OF CONTENTS
Page
ARTICLE 1 DEFINED TERMS..............................................................................1
ARTICLE 2 ORGANIZATIONAL MATTERS.....................................................................12
Section 2.1 Organization and Continuation..................................................13
Section 2.2 Name...........................................................................13
Section 2.3 Registered Office and Agent; Principal Office..................................13
Section 2.4 Power of Attorney..............................................................13
Section 2.5 Term...........................................................................15
ARTICLE 3 PURPOSE....................................................................................15
Section 3.1 Purpose and Business...........................................................15
Section 3.2 Powers.........................................................................15
ARTICLE 4 CAPITAL CONTRIBUTIONS......................................................................16
Section 4.1 Capital Contributions of the Partners..........................................16
Section 4.2 Issuances of Additional Partnership Interests..................................16
Section 4.3 Contribution of Proceeds of Issuance of REIT Shares............................18
Section 4.4 No Preemptive Rights...........................................................18
ARTICLE 5 DISTRIBUTIONS..............................................................................19
Section 5.1 Requirement and Characterization of Distributions..............................19
Section 5.2 Amounts Withheld...............................................................19
Section 5.3 Distributions Upon Liquidation.................................................20
Section 5.4 Revisions to Reflect Issuance of Partnership Interests.........................20
ARTICLE 6 ALLOCATIONS................................................................................20
Section 6.1 Allocations For Capital Account Purposes.......................................20
Section 6.2 Other Allocation Rules.........................................................22
Section 6.3 Revisions to Allocations to Reflect Issuance of Partnership Interests..........22
ARTICLE 7 MANAGEMENT AND OPERATIONS OF BUSINESS......................................................22
Section 7.1 Management.....................................................................22
Section 7.2 Certificate of Limited Partnership.............................................26
Section 7.3 Restrictions on General Partner Authority......................................26
Section 7.4 Reimbursement of the General Partner...........................................27
Section 7.5 Outside Activities of the General Partner......................................28
Section 7.6 Contracts with Affiliates......................................................28
Section 7.7 Indemnification................................................................29
Section 7.8 Liability of the General Partner...............................................31
Section 7.9 Other Matters Concerning the General Partner...................................32
Section 7.10 Title to Partnership Assets....................................................33
Section 7.11 Reliance by Third Parties......................................................33
ARTICLE 8 RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS.................................................33
Section 8.1 Limitation of Liability........................................................33
Section 8.2 Management of Business.........................................................34
Section 8.3 Outside Activities of Limited Partners.........................................34
Section 8.4 Return of Capital..............................................................34
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Section 8.5 Rights of Limited Partners Relating to the Partnership.........................34
Section 8.6 Redemption Right...............................................................35
ARTICLE 9 BOOKS, RECORDS, ACCOUNTING AND REPORTS.....................................................37
Section 9.1 Records and Accounting.........................................................37
Section 9.2 Partnership Year...............................................................37
Section 9.3 Reports........................................................................37
ARTICLE 10 TAX MATTERS.............................................................................38
Section 10.1 Preparation of Tax Returns.....................................................38
Section 10.2 Tax Elections..................................................................38
Section 10.3 Tax Matters Partner............................................................38
Section 10.4 Organizational Expenses........................................................40
Section 10.5 Withholding....................................................................40
ARTICLE 11 TRANSFERS AND WITHDRAWALS...............................................................41
Section 11.1 Transfer.......................................................................41
Section 11.2 Transfer of General Partner's Partnership Interests............................41
Section 11.3 Limited Partners' Rights to Transfer...........................................41
Section 11.4 Substituted Limited Partners...................................................42
Section 11.5 Assignees......................................................................42
Section 11.6 General Provisions.............................................................43
ARTICLE 12 ADMISSION OF PARTNERS...................................................................44
Section 12.1 Admission of Successor General Partner.........................................44
Section 12.2 Admission of Additional Limited Partners.......................................44
Section 12.3 Amendment of Agreement and Certificate of Limited Partnership..................45
ARTICLE 13 DISSOLUTION, LIQUIDATION AND TERMINATION................................................45
Section 13.1 Dissolution....................................................................45
Section 13.2 Winding Up.....................................................................46
Section 13.3 Negative Capital Accounts......................................................47
Section 13.4 Deemed Distribution and Recontribution.........................................47
Section 13.5 Rights of Limited Partners.....................................................47
Section 13.6 Notice of Dissolution..........................................................48
Section 13.7 Termination of Partnership and Cancellation of
Certificate of Limited Partnership.............................................48
Section 13.8 Reasonable Time for Winding-Up.................................................48
Section 13.9 Waiver of Partition............................................................48
ARTICLE 14 AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS............................................48
Section 14.1 Amendments.....................................................................48
Section 14.2 Meetings of the Partners.......................................................50
ARTICLE 15 CONSOLIDATION, MERGER OR SALE OF ASSETS OF THE GENERAL PARTNER..........................51
Section 15.1 Trigger Events.................................................................51
Section 15.2 From and After the Occurrence of a Trigger Event...............................51
Section 15.3 Additional Issuer Covenants....................................................56
Section 15.4 Application to Later Transactions..............................................57
Section 15.5 Waivers and Amendments.........................................................57
53
ARTICLE 16 PARTNER RIGHTS PLAN.....................................................................57
Section 16.1 Purpose and Interpretation.....................................................57
Section 16.2 Issuance of Preferred Unit Purchase Right......................................57
Section 16.3 Exercise of Rights.............................................................58
Section 16.4 Final Expiration Date..........................................................58
Section 16.5 Adjustment of Purchase Price...................................................58
Section 16.6 Right to Purchase Common Units at a Discount...................................58
Section 16.7 Redemption.....................................................................58
Section 16.8 Exchange.......................................................................59
Section 16.9 Transfer.......................................................................59
Section 16.10 Nullification of Rights of Acquiring Person....................................59
Section 16.11 Amendments.....................................................................59
ARTICLE 17 GENERAL PROVISIONS......................................................................60
Section 17.1 Addresses and Notice...........................................................60
Section 17.2 Titles and Captions............................................................60
Section 17.3 Pronouns and Plurals...........................................................60
Section 17.4 Further Action.................................................................60
Section 17.5 Binding Effect.................................................................60
Section 17.6 Creditors......................................................................60
Section 17.7 Waiver.........................................................................61
Section 17.8 Counterparts...................................................................61
Section 17.9 Applicable Law.................................................................61
Section 17.10 Invalidity of Provisions.......................................................61
Section 17.11 Entire Agreement...............................................................61
Section 17.12 Withdrawal of Organizational Limited...........................................61
EXHIBIT A PARTNERS, CONTRIBUTIONS AND PARTNERSHIP INTERESTS..........................................1
EXHIBIT B CAPITAL ACCOUNT MAINTENANCE................................................................1
EXHIBIT C SPECIAL ALLOCATION RULES...................................................................1
EXHIBIT D VALUE OF CONTRIBUTED PROPERTY..............................................................1
EXHIBIT E NOTICE OF REDEMPTION.......................................................................1
EXHIBIT F INDEMNIFICATION UNDER SECTION 7.7(I).......................................................1
EXHIBIT G DESIGNATION OF THE VOTING POWERS, DESIGNATIONS, PREFERENCES AND RELATIVE, PARTICIPATING,
OPTIONAL OR OTHER SPECIAL RIGHTS AND QUALIFICATIONS, LIMITATIONS OR RESTRICTIONS OF THE
SERIES C PREFERRED PARTNERSHIP UNITS.......................................................1
EXHIBIT H FORM OF ELECTION TO PURCHASE...............................................................1
54
SECOND AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
▇▇▇▇▇▇-▇▇▇▇▇ PROPERTIES LIMITED PARTNERSHIP
THIS SECOND AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF
▇▇▇▇▇▇-▇▇▇▇▇ PROPERTIES LIMITED PARTNERSHIP (the "Agreement"), dated as of March
17, 1999, integrates into one document (i) the First Amended and Restated
Agreement of Limited Partnership, dated as of December 1, 1997, by and among
▇▇▇▇▇▇-▇▇▇▇▇ Properties, Inc., a Maryland corporation, as the General Partner,
and the Persons whose names were set forth on Exhibit A thereto, as the Limited
Partners, and (ii) the amendment made hereby. The amendment made hereby is made
pursuant to Section 14.1.B.
NOW THEREFORE, it is agreed:
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.
"Acquiring Person" has the meaning set forth in the Rights Agreement.
Although reference must be made to the Rights Agreement for the precise meaning
of "Acquiring Person" as it is used in this Agreement, the term generally means
a Person who owns 15% or more of the outstanding Common Shares of the General
Partner.
"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 12.2 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 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), (5), and (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 Year.
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"Adjusted Property" means any property the Carrying Value of which has
been adjusted 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), (iii) above.
"Agreed Value" means (i) in the case of any Contributed Property set
forth in Exhibit D and as of the time of its contribution to the Partnership,
the Agreed Value of such property as set forth in Exhibit D, which value shall
reflect any liabilities either assumed by the Partnership upon such contribution
or to which such property is subject when contributed, (ii) in the case of any
Contributed Property not set forth in Exhibit D 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.
"Articles of Incorporation" means the Amended and Restated Articles of
Incorporation of the General Partner filed in the State of Maryland on April 18,
1997 and amended or restated from time to time.
"Assignee" means a Person to whom one or more Partnership Units have
been transferred in a manner permitted under this Agreement, but who has not
become a Substituted Limited Partner, and who has the rights set forth in
Section 11.5.
"Available Cash" means, with respect to any period for which such
calculation is being made, (i) the sum of:
(a) the Partnership's Net Income or Net Loss (as the case may
be) for such period;
(b) Depreciation and all other noncash charges deducted in
determining Net Income or Net Loss for such period;
(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);
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(d) the excess of proceeds from the sale, exchange,
disposition, or refinancing of Partnership property for such period
over the gain, if any, 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 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;
(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; and
(h) the amount which is not available for distribution due to
regulatory, legal or other restrictions.
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
57
Partner's Capital Account computed as if it had been maintained strictly in
accordance with federal income tax accounting principles.
"Business Day" means any day except a Saturday, Sunday or other day on
which commercial banks in New York, New York 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 Sections
4.1, 4.2, or 4.3 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 per Partnership Unit equal to the
Value on the Valuation Date of the REIT Shares Amount.
"Certificate" means the Certificate of Limited Partnership relating to
the Partnership filed in the office of the Delaware Secretary of State, as
amended from time to time in accordance with the terms hereof and the Act.
"Code" means the Internal Revenue Code of 1986, as amended 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 Partnership Unit" means a Partnership Unit that is not a
Preferred Partnership Unit.
"Common Shares" means shares of common stock, $.01 par value per share,
of the General Partner.
"Consent" means the consent or approval of a proposed action by a
Partner given in accordance with Section 14.2 hereof.
"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 (including deemed contributions to the
Partnership on termination and reconstitution thereof pursuant to Section
58
708 of the Code). 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 (one REIT Share for one Partnership
Unit), provided that in the event that the General Partner (i) declares or pays
a dividend on its outstanding REIT Shares in REIT Shares or makes a distribution
to all holders of its outstanding REIT Shares in REIT Shares; (ii) subdivides
its outstanding REIT Shares; or (iii) combines its outstanding REIT Shares into
a smaller number of REIT Shares, the Conversion Factor shall be adjusted by
multiplying the Conversion Factor 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.
Notwithstanding the foregoing, no adjustment shall be made to the Conversion
Factor on account of the issuance of REIT Shares under the Shareholder Rights
Plan. 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, it being intended that (x) adjustments to the Conversion Factor
are to be made to avoid unintended dilution or anti-dilution as a result of
transactions in which REIT Shares are issued, redeemed or exchanged without a
corresponding issuance, redemption or exchange of Partnership Units and (y) if a
Specified Redemption Date shall fall between the record date and the effective
date of any event of the type described above, that the Conversion Factor
applicable to such redemption shall be adjusted to take into account such event.
"Deemed Value of the Partnership Interests" means, as of any date with
respect to any class of Partnership Interests, (i) the total number of shares of
capital stock of the General Partner corresponding to such class of Partnership
Interests issued and outstanding as of the close of business on such date
(excluding any treasury shares) multiplied by the Value of a share of such
capital stock on such date; (ii) divided by the Percentage Interest of the
General Partner in such class of Partnership Interests on such date. For
purposes of calculating Deemed Value of Partnership Interest with respect to any
class or series of Preferred Partnership Units, "Value" shall mean the stated
liquidation preference or value of the corresponding class or series of
Preferred Shares, unless otherwise provided in the Partnership Unit Designation
of such class or series of Preferred Partnership Units.
"Depreciation" means, for each Partnership Year an amount equal to the
federal income tax depreciation, amortization, or other cost recovery deduction
allowable with respect to an asset for such year, except that if the 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.
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"Dissolution Event" has the meaning set forth in Section 13.1.
"Distribution Date" has the meaning set forth in the Rights Agreement.
Although reference must be made to the Rights Agreement for the precise meaning
of "Distribution Date" as it is used in this Agreement, the term generally
refers to the earlier of (i) the tenth day after the General Partner or an
Acquiring Person publicly announces that an Acquiring Person has become such or
(ii) the tenth Business Day after the commencement of (or announcement of the
intention to commence) a tender or exchange offer that would result in any
Person becoming an Acquiring Person.
"General Partner" means ▇▇▇▇▇▇-▇▇▇▇▇ Properties, 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 that is a general partnership interest. 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 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
60
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 a director 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 any Person named as a Limited Partner in
Exhibit A attached hereto, as such Exhibit may be amended from time to time, or
any Substituted Limited Partner or Additional Limited Partner, in such Person's
capacity as a Limited Partner in the Partnership.
"Limited Partner Interest" means a Partnership Interest of a Limited
Partner in the Partnership representing a fractional part of the Partnership
Interests of all 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.
"Liquidator" has the meaning set forth in Section 13.2.
"Net Income" means, for any Partnership Year or any portion of a
Partnership Year, the excess, if any, of the Partnership's items of income and
gain for such Partnership Year over the Partnership's items of loss and
deduction for such Partnership Year. The items included in the calculation of
Net Income shall be determined in accordance with Exhibit B. Once an item of
income, gain, loss or deduction that has been included in the initial
computation of Net Income is subjected to the special allocation rules in
Exhibit C, Net Income or the resulting Net Loss, whichever the case may be,
shall be recomputed without regard to such item.
"Net Loss" means, for any Partnership Year, the excess, if any, of the
Partnership's items of loss and deduction for such Partnership Year over the
Partnership's items of income and gain for such Partnership Year. The items
included in the calculation of Net Loss shall be determined in accordance
Exhibit B. Once an item of income, gain, loss or deduction that has been
included in the initial computation of Net Loss is subjected to the special
allocation rules in Exhibit C, Net Loss or the resulting Net Income, whichever
the case may be, shall be recomputed without regard to such item.
"New Securities" has the meaning set forth in Section 4.2.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
61
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 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-l(a)(2).
"Notice of Election to Purchase" means the Notice of Election to
Purchase substantially in the form of Exhibit H to this Agreement.
"Notice of Redemption" means the Notice of Redemption substantially in
the form of Exhibit E to this Agreement.
"Original Agreement" means the Agreement of Limited Partnership of
▇▇▇▇▇▇-▇▇▇▇▇ Properties Limited Partnership, dated as of September 19, 1997,
between the General Partner and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇.
"Organizational Limited Partner" means ▇▇▇▇▇▇ ▇. ▇▇▇▇▇.
"Original Limited Partner" means a Limited Partner, other than the
General Partner, who was a Partner on December 1, 1997 and who owns one or more
Original Limited Partnership Units on the date action is called for under any of
the provisions hereof.
"Original Limited Partnership Unit" means a Partnership Unit held by an
Original Limited Partner on December 1, 1997 and held by such Original Limited
Partner on the date action is called for under any of the provisions hereof.
"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 Partner Nonrecourse Debt for a Partnership Year
shall be determined in accordance with the rules of Regulations Section
1.704-2(i)(2).
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"Partnership" means the limited partnership formed under the Act and
pursuant to this Agreement and any successor thereto.
"Partnership Interest" means a Limited Partner Interest or a General
Partner Interest 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
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 (i) 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 General Partner for a distribution to its shareholders of some or all of
its portion of such distribution or (ii) if applicable, for determining the
Partners entitled to vote on or consent to any proposed action for which the
consent or approval of the Partners is sought pursuant to Section 14.2 hereof.
"Partnership Unit" means a fractional, undivided share of the
Partnership Interests of all Partners issued pursuant to Sections 4.1, 4.2 and
4.3. The number of Partnership Units outstanding and 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.
Fractional Units may be held and counted by the General Partner as necessary to
meet the requirements of Section 4.1.
"Partnership Unit Designation" shall have the meaning set forth in
Section 4.2.
"Partnership Year" means the fiscal year of the Partnership, which
shall be the calendar year, or any portion of any calendar year for which the
Partnership is required to allocate Net Income, Net Loss, and any other items of
Partnership income, gain, loss, or deduction pursuant to Article 6.
"Percentage Interest" means, as to a Partner holding a class or series
of Partnership Interests, its interest in such class or series, determined by
dividing the Partnership Units of such class or series owned by such Partner by
the total number of Partnership Units of such class or series then outstanding
as specified in Exhibit A, as such exhibit may be amended from time to time,
multiplied by the aggregate Percentage Interest allocable to such class or
series of Partnership Interests. If the Partnership shall at any time have
outstanding more than one class or series of Partnership Interests,
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the Percentage Interest attributable to each class or series of Partnership
Interests shall be determined as set forth in Section 4.2.C.
"Person" means an individual or a corporation, partnership, limited
liability company, trust, unincorporated organization, association or other
entity.
"Preferred Partnership Unit" means any Partnership Unit issued from
time to time pursuant to Section 4.2 hereof that is designated by the General
Partner at the time of its issuance as a Preferred Partnership Unit.
"Preferred Shares" means a share of capital stock of the General
Partner now or hereafter authorized or reclassified that has rights different
from a Common Share.
"Recapture Income" means any gain recognized by the Partnership upon
the disposition of any property or asset of the Partnership, which gain is
characterized for federal income tax purposes as ordinary 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 hereof.
"Redemption Right" shall have the meaning set forth in Section 8.6
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" shall mean a share of capital stock of the General
Partner. REIT Shares may be issued in one or more classes or series in
accordance with the terms of the Articles of Incorporation of the General
Partner. If there is more than one class or series of REIT Shares, the term
"REIT Shares" shall, as the context requires, be deemed to refer to the class or
series of REIT Shares that correspond to the class or series of Partnership
Interests for which reference to REIT Shares is made. When used with reference
to Common Partnership Units, the term "REIT Shares" refers to Common Shares,
when used with reference to Series A Preferred Partnership Units, the term "REIT
Shares" refers to Series A Preferred Shares and when used with reference to any
other class or series of Preferred Partnership Units, the term "REIT Shares"
refers to the corresponding class or series of Preferred Shares.
"REIT Shares Amount" shall mean a number of REIT Shares equal to the
product of the number of Partnership Units offered for redemption by a Redeeming
Partner, multiplied by the Conversion Factor, provided that in the event the
General Partner 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
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"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.
"Replacement Share" has the meaning set forth in Section 15.2 of this
Agreement.
"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 other disposition of Contributed Property or
Adjusted Property, to the extent such item of gain or loss is not allocated
pursuant to Section 2.▇.▇(a) or 2.B.2(a) of Exhibit C to eliminate Book-Tax
Disparities.
"Right" has the meaning set forth at Section 16.2.
"Rights Agreement" means the Rights Agreement dated as of March 18,
1999 between the General Partner and First Union National Bank, as rights agent.
"Series A Preferred Partnership Unit" means a Preferred Partnership
Unit issued by the Partnership to the Partners pursuant to Article 16 of this
Agreement, having the voting powers, designations, preferences and relative,
participating, optional or other special rights and qualifications, limitations
or restrictions as are set forth in the Partnership Unit Designation Attached
hereto as Exhibit G . It is the intention of the General Partner, in
establishing the Series A Preferred Partnership Units, that each Series A
Preferred Partnership Unit shall be substantially the economic equivalent of a
Series A Preferred Share.
"Series A Preferred Shares" means the Series A Junior Participating
Preferred Shares, par value $.01 per share, issuable by the General Partner
pursuant to the Shareholder Rights Plan.
"704(c) Value" of any Contributed Property means the value of such
property as set forth in Exhibit D or if no value is set forth in Exhibit D, 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.
"Shareholder Rights Plan" means the General Partner's issuance of
preferred share purchase rights, with such terms as are set forth in the Rights
Agreement.
"Specified Redemption Date" means the tenth (10th) Business Day after
receipt by the General Partner of a Notice of Redemption.
"Subsidiary" means, with respect to any Person, any corporation,
partnership or other entity of which a majority of either (i) the voting power
of the voting equity securities or (ii) the outstanding equity interests is
owned, directly or indirectly, by such Person.
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"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 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 any share of capital stock of the
General Partner, 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, regular way, 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
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Section 2.1 Organization and Continuation
The Partnership is a limited partnership organized pursuant to the
provisions of the Act and upon the terms and conditions set forth in the
Original Agreement. The Partners hereby continue the Partnership and amend and
restate the Original Agreement in its entirety as of the date hereof. 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
The name of the Partnership shall be ▇▇▇▇▇▇-▇▇▇▇▇ Properties Limited
Partnership. The Partnership's business may be conducted under any other name or
names deemed advisable by the General Partner, including the name of the General
Partner or any Affiliate thereof. 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 name and address of the registered agent for service of process on
the Partnership in the State of North Carolina is D. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, 3850 ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ and the name and address of
the registered agent for service of process on the Partnership in the State of
Delaware is Corporation Trust Center, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ of
New Castle. The principal office of the Partnership shall be located at ▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, 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
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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 restatements
thereof) that the General Partner or the Liquidator
deems appropriate or necessary to form, qualify or
continue the existence or qualification of the
Partnership as a limited partnership (or a
partnership in which the limited partners have
limited liability) 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, Articles 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 a Partnership Interest;
and
(2) execute, swear to, seal, acknowledge and file all
ballots, consents, approvals, waivers, certificates
and other instruments appropriate or necessary, in
the sole and absolute discretion of the General
Partner 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
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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 September 18, 1997, the date
the Certificate was filed in the office of the Secretary of State of Delaware in
accordance with the Act, and shall continue until December 31, 2097, 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
General Partner at all times to be classified as a REIT, unless the General
Partner ceases to qualify as a REIT for reasons other than the conduct of the
business of the Partnership, (ii) to enter into any partnership, joint venture
or other similar arrangement to engage in any of the foregoing or to own
interests in any entity engaged in any of the foregoing, and (iii) to do
anything necessary or incidental to the foregoing. In connection with the
foregoing, and without limiting the General Partner's right, in its sole
discretion, to cease qualifying as a REIT, the Partners acknowledge the General
Partner's current status as a REIT inures to the benefit of all of the Partners
and not solely 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 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 General Partner to continue to qualify as a REIT, (ii) could
subject the General Partner 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 General Partner or its
securities, unless such action (or inaction) shall have been specifically
consented to by the General Partner in writing.
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ARTICLE 4
CAPITAL CONTRIBUTIONS
Section 4.1 Capital Contributions of the Partners
As of the date hereof, the Partners have made Capital Contributions as
set forth in Exhibit A to this Agreement. The Partners shall own Partnership
Units in the amounts set forth for each such Partner in Exhibit A and shall have
a Percentage Interest in the Partnership as set forth in Exhibit A, which
Percentage Interest shall be adjusted in Exhibit A from time to time by the
General Partner to the extent necessary to reflect accurately redemptions,
Capital Contributions, the issuance of additional Partnership Units, or similar
events having an effect on any Partner's Percentage Interest. The number of
Partnership Units held by the General Partner (equal to one percent (1%) of all
outstanding Partnership Units from time to time) shall be deemed to be the
General Partner Interest. Except as provided in Sections 4.2, 7.7(I) and 10.5,
the Partners shall have no obligation to make any additional Capital
Contributions or loans to the Partnership. The General Partner shall maintain
the information set forth in Exhibit A to the Agreement, as such information
shall change from time to time, in such form as the General Partner deems
appropriate for the conduct of the Partnership affairs, and Exhibit A shall be
deemed amended from time to time to reflect the information so maintained by the
General Partner, whether or not a formal amendment to the Agreement has been
executed amending such Exhibit A. Such information shall reflect (and Exhibit A
shall be deemed amended from time to time to reflect) the issuance of any
additional Partnership Units to the General Partner or any other Person, the
transfer of Partnership Units and the redemption of any Partnership Units, all
as contemplated in the Agreement.
Section 4.2 Issuances of Additional Partnership Interests
A. The General Partner is hereby authorized to cause the Partnership
from time to time to issue to the Partners (including the General Partner) or
other Persons additional Partnership Units or other Partnership Interests 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 and as shall be set forth in a
written document thereafter attached to and made an exhibit to this Agreement
(each, a "Partnership Unit Designation"), 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 General
Partner or an Affiliate of the General Partner unless either
(a)(1) the additional Partnership Interests are issued in
connection with an issuance of REIT Shares or other shares by the
General Partner, which shares have designations, preferences and other
rights such that the economic interests attributable to such shares are
70
substantially similar to the designations, preferences and other rights
of the additional Partnership Interests issued to the General Partner
in accordance with this Section 4.2.A, and (2) the General Partner
shall make a Capital Contribution to the Partnership in an amount equal
to the proceeds raised in connection with the issuance of such shares
of the General Partner; or
(b) the additional Partnership Units are issued to all
Partners in proportion to their respective Percentage Interests.
In addition, the General Partner may acquire Units from other Partners pursuant
to this Agreement. In the event that the Partnership issues Partnership
Interests pursuant to this Section 4.2.A, the General Partner shall make such
revisions to this Agreement (without any requirement of receiving approval of
the Limited Partners) including but not limited to the revisions described in
Section 5.4, Section 6.1 and Section 8.6, as it deems necessary to reflect the
issuance of such additional Partnership Interests and the special rights, powers
and duties associated therewith.
Without limiting the foregoing, the General Partner is expressly
authorized to cause the Partnership to issue Partnership Units for less than
fair market value, so long as the General Partner concludes in good faith that
such issuance is in the best interests of the General Partner and the
Partnership (for example, and not by way of limitation, the issuance of
Partnership Units pursuant to an employee purchase plan providing for employee
purchases of Partnership Units at a discount from fair market value or employee
options that have an exercise price that is less than the fair market value of
the Partnership Units, either at the time of issuance or at the time of
exercise).
B. The General Partner shall not issue any additional REIT Shares
(other than REIT Shares issued pursuant to Section 8.6), or rights, options,
warrants or convertible or exchangeable securities containing the right to
subscribe for or purchase REIT Shares (collectively "New Securities") other than
to all holders of REIT Shares unless (i) the General Partner shall cause the
Partnership to issue to the General Partner Partnership Interests or rights,
options, warrants or convertible or exchangeable securities of the Partnership
having designations, preferences and other rights, all such that the economic
interests are substantially similar to those of the New Securities, and (ii) the
General Partner contributes to the Partnership the proceeds from the issuance of
such New Securities and from the exercise of rights contained in such New
Securities or (y) such REIT Shares or New Securities are issued in exchange for
assets to be held directly by the General Partner within the limitations set
forth at Section 7.5 of this Agreement. Without limiting the foregoing, the
General Partner is expressly authorized to issue New Securities for less than
fair market value, and the General Partner is expressly authorized to cause the
Partnership to issue to the General Partner corresponding Partnership Interests,
so long as (x) the General Partner concludes in good faith that such issuance is
in the best interests of the General Partner and the Partnership (for example,
and not by way of limitation, the issuance of REIT Shares and corresponding
Units pursuant to an employee stock purchase plan providing for employee
purchases of REIT Shares at a discount from fair market value or employee stock
options that have an exercise price that is less than the fair market value of
the REIT Shares, either at the time of issuance or at the time of exercise), and
(y) the General Partner contributes all proceeds from such issuance and exercise
to the Partnership. This Section 4.2.B shall not prohibit the General Partner's
issuance of preferred share purchase rights under the Shareholder
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Rights Plan.
C. Upon the acceptance of Capital Contributions in exchange for
Partnership Units and if the Partnership shall have outstanding more than one
class of Partnership Interests, the Percentage Interest related thereto shall be
equal to a fraction, the numerator of which is equal to the amount of cash, if
any, plus the Agreed Value of Contributed Property, if any, contributed with
respect to such additional Partnership Units and the denominator of which is
equal to the sum of (i) the Deemed Value of the Partnership Interests for all
outstanding classes (computed as of the Business Day immediately preceding the
date on which the additional Capital Contributions are made (an "Adjustment
Date") plus (ii) the aggregate amount of additional Capital Contributions
contributed to the Partnership on such Adjustment Date in respect of such
additional Partnership Units. The Percentage Interest of each other Partner
holding Partnership Interests not making a full pro rata Capital Contribution
shall be adjusted to a fraction the numerator of which is equal to the sum of
(i) the Deemed Partnership Interest Value of such Limited Partner (computed as
of the Business Day immediately preceding the Adjustment Date) plus (ii) the
amount of additional Capital Contributions (such amount being equal to the
amount of cash, if any, plus the Agreed Value of Contributed Property, if any,
so contributed), if any, made by such Partner to the Partnership in respect of
such Partnership Interest as of such Adjustment Date and the denominator of
which is equal to the sum of (i) the Deemed Value of the Partnership Interests
of all outstanding classes (computed as of the Business Day immediately
preceding such Adjustment Date) plus (ii) the aggregate amount of the additional
Capital Contributions contributed to the Partnership of such Adjustment Date in
respect of such additional Partnership Interests.
Section 4.3 Contribution of Proceeds of Issuance of REIT Shares
In connection with any issuance of REIT Shares or New Securities
pursuant to Section 4.2, the General Partner shall contribute to the Partnership
any proceeds (or a portion thereof) raised in connection with such issuance;
provided that if the proceeds actually received by the General Partner are less
than the gross proceeds of such issuance as a result of any underwriter's
discount or other expenses paid or incurred in connection with such issuance,
then the General Partner shall be deemed to have made a Capital Contribution to
the Partnership in the amount equal to the sum of the net proceeds of such
issuance plus the amount of such underwriter's discount and other expenses paid
by the General Partner. In the case of employee acquisitions of New Securities
at a discount from fair market value or for no value in connection with a grant
of New Securities, the amount of such discount representing compensation to the
employee, as determined by the General Partner, shall be treated as an expense
of the issuance of such New Securities.
Section 4.4 No Preemptive Rights
No Person shall have any preemptive, preferential or other similar
right with respect to (i) additional Capital Contributions or loans to the
Partnership; or (ii) issuance or sale of any Partnership Units or other
Partnership Interests.
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ARTICLE 5
DISTRIBUTIONS
Section 5.1 Requirement and Characterization of Distributions
The General Partner shall distribute at least quarterly an amount equal
to 100% of Available Cash generated by the Partnership during such quarter or
shorter period to the Partners who are Partners on the Partnership Record Date
with respect to such quarter or shorter period in the following order of
priority:
(1) first, at the time and in the manner set forth in the
applicable Partnership Unit Designation, to each holder of Partnership
Interests of a class or series that is entitled to a preference in
distribution, in accordance with the rights of such class or series of
Partnership Interests (and, within such class or series, pro rata in
proportion to the respective Partnership Interests on such Partnership
Record Date); and
(2) second, to the extent there is Available Cash after
payment of any preference in distribution under the foregoing clause
(1), to the holders of Partnership Interests that are not entitled to
any preference in distribution, pro rata to each class or series in
accordance with the terms of such class or series (and within each
class or series pro rata in proportion to their respective Percentage
Interests on such Partnership Record Date).
Unless otherwise specifically agreed to by the General Partner,
distributions payable with respect to any Partnership Units that were not
outstanding during the entire annual or shorter period in respect of which
distribution is made shall be prorated based on the portion of the period that
such Units were outstanding. Notwithstanding anything to the contrary contained
herein, in no event shall a Partner receive a distribution of Available Cash
with respect to a Partnership Unit if such Partner is entitled to receive a
distribution out of such Available Cash with respect to a REIT Share for which
such Partnership Unit has been redeemed or exchanged. The General Partner shall
take such reasonable efforts, as determined by it in its sole and absolute
discretion and consistent with its qualification as a REIT, to distribute
Available Cash to the Limited Partners so as to preclude any such distribution
or portion thereof from being treated as part of a sale of property to the
Partnership by a Limited Partner under 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. Unless
otherwise expressly provided for herein or in an agreement at the time a new
class or series of Partnership Interests is created in accordance with Article
4, no Partnership Interest shall be entitled to a distribution in preference to
any other Partnership Interest.
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 General Partner, the Limited Partners or
Assignees shall be treated as amounts distributed to the General Partner,
Limited Partners, or Assignees pursuant to Section 5.1 for all purposes under
this Agreement.
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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 Revisions to Reflect Issuance of Partnership
Interests
If the Partnership issues Partnership Interests directly or indirectly
to the General Partner or any Additional Limited Partner pursuant to Article 4
hereof, the General Partner shall make such revisions to this Article 5 and
Exhibit A as it deems necessary to reflect the issuance of such additional
Partnership Interests without the requirements for any other consents or
approvals.
ARTICLE 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 Partnership Year as provided hereinbelow.
A. Net Income. After giving effect to the special allocations set forth
in Section 1 of Exhibit C, Net Income shall be allocated (i) first, to the
General Partner until the cumulative Net Income allocated pursuant to this
clause (i) of Section 6.1.A equals the aggregate Net Loss previously allocated
to the General Partner pursuant to clause (4) of Section 6.1.B; (ii) second, to
the holders of any class or series of Partnership Interests that are entitled to
a preference upon liquidation, in the order of the priorities of each such class
or series (and, within such class or series, in proportion to their share of the
Net Loss previously allocated pursuant to clause (3) of Section 6.1.B), until
the cumulative Net Income allocated to such holders pursuant to this clause (ii)
in Section 6.1.A equals the aggregate amount of previous Net Loss allocated
pursuant to clause (3) of Section 6.1.B; (iii) third, to the holders of any
class or series of Partnership Interests that are entitled to any preference in
periodic distributions of Available Cash under Section 5.1 in accordance with
the rights of any such class or series until each such Partnership Interest has
been allocated, on a cumulative basis pursuant to this clause (iii) of Section
6.1.A, Net Income equal to the amount of distributions received in respect of
such preference (and within such class or series, pro rata in proportion to the
respective Percentage Interests in such class or series as of the last day of
the period for which such allocation is being made); and (iv) thereafter, Net
Income shall be allocated to the classes and series of Partnership Interests
that are not entitled to any preference in periodic distributions of Available
Cash under Section 5.1, pro rata to each such class or series in accordance with
the terms of such class or series (and within each such class or series pro rata
in proportion to the respective Percentage Interests of each Partner in such
class or series as of the last day for which such allocation is being made).
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B. Net Loss. After giving effect to the special allocations set forth
in Section 1 of Exhibit C, Net Loss shall be allocated to the Partners in the
following order:
(1) First, to the Partners, in proportion to
their share of the Net Income previously allocated
pursuant to clause (iv) of Section 6.1.A until the
cumulative Net Loss allocated to them pursuant to
this clause (1) equals the aggregate amount of such
previous Net Income allocations;
(2) Second, with respect to classes or
series of Partnership Interests that are not entitled
to any preferences upon liquidation, pro rata to each
such class or series in accordance with the terms of
such class or series (and within such class or
series, pro rata in proportion to their respective
Percentage Interests as of the last day of the period
for which such allocation is being made); provided,
that Net Loss shall not be allocated to any Partner
pursuant to this clause (2) of Section 6.1.B to the
extent that such allocation would cause such Partner
to have an Adjusted Capital Account Deficit (or to
increase an existing Adjusted Capital Account
Deficit) at the end of such period;
(3) Third, to the holders of any class or
series of Partnership Interests that are entitled to
a preference upon liquidation, in reverse order of
the priorities of each such class or series (and
within such class or series, pro rata in proportion
to their respective Percentage Interests as of the
last day of the period for which such allocation is
being made); provided that Net Loss shall not be
allocated to any Partner pursuant to this clause (3)
of Section 6.1.B to the extent that such allocation
would cause such Partner to have an Adjusted Capital
Account Deficit (or to increase an existing Capital
Account Deficit) at the end of such period;
(4) Fourth, 100% to the General Partner.
C. Terminating Capital Transactions. Upon the occurrence of a
Terminating Capital Transaction or otherwise upon the commencement of a
liquidation of the Partnership, after giving effect to the special allocations
set forth in Section 1 of Exhibit C, Net Income or Net Loss shall be allocated
among the Partners in accordance with Section 6.1.A or 6.1.B, as the case may
be; provided, however, that holders of any class or series of Partnership
Interests that are entitled to a preference upon liquidation shall be specially
allocated Net Income or Net Loss (or, if necessary, items of income, gain, loss
or deduction) until their Adjusted Capital Accounts equal the amounts of their
liquidation preference, in accordance with the terms of such class or series, to
be distributed under clause (4) of Section 13.2.A. (before giving effect to such
distribution).
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Section 6.2 Other Allocation Rules
A. Excess Nonrecourse Liabilities. Solely for purposes of determining a
Partner's proportionate share of the "excess nonrecourse liabilities" of the
Partnership within the meaning of Regulations Section 1.752-3(a)(3), such
"excess nonrecourse liabilities" first shall be allocated to those Partners who
have, and in an amount equal to, such Partners' built-in gain under Regulations
Section 1.704-3(a)(3)(ii) less any Nonrecourse Built-in Gain, and then shall be
allocated among the Partners in accordance with their respective Percentage
Interests.
B. Recapture Income. Recapture Income shall be allocated in accordance
with Regulations Sections 1.1245-1(e) or 1.1250-1(f) as applicable.
Section 6.3 Revisions to Allocations to Reflect Issuance of
Partnership Interests.
If the Partnership issues Partnership Interests directly or indirectly
to the General Partner or any Additional Limited Partner pursuant to Article IV
hereof, the General Partner shall make such revisions to this Article VI and
Exhibit A as it deems necessary to reflect the terms of the issuance of such
Partnership Interests, including making preferential allocations to classes of
Partnership Interests that are entitled thereto. Such revisions shall not
require the consent or approval of any other Partner.
ARTICLE 7
MANAGEMENT AND OPERATION 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 to a general partner of a limited partnership under applicable
law or which are granted to the General Partner under any other provision of
this Agreement, the General Partner, subject to Section 7.3 hereof, shall have
full power and authority to do all things 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 General
Partner (so long as the General Partner qualifies as
a REIT) to avoid the payment
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of any federal income tax (including, for this
purpose, any excise tax pursuant to Section 4981 of
the Code) and to make distributions to the General
Partner such that the General Partner can distribute
to its shareholders amounts sufficient to permit the
General Partner to maintain REIT status), the
assumption or guarantee of, or other contracting for,
indebtedness and other liabilities, the issuance of
evidence of indebtedness (including the securing of
same by deed to secure debt, mortgage, deed of trust
or other lien or encumbrance on the Partnership's
assets) and the 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
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
General Partner, the Partnership or any of the
Partnership's Subsidiaries, the lending of funds to
other Persons (including, without limitation, the
Subsidiaries of the Partnership and/or the General
Partner) 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 owned by the
Partnership or any Subsidiary of the Partnership;
(6) the negotiation, execution, and performance of any
contracts, conveyances or other instruments that the
General Partner considers useful or necessary to the
conduct of the Partnership's operations or the
implementation of the General Partner's powers under
this Agreement, including contracting with
contractors, developers, consultants, accountants,
legal counsel, other professional advisors
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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, any division of the Partnership,
or the General Partner (including, without
limitation, employees having titles such as
"president," "vice president," "secretary" and
"treasurer" of the Partnership, any division of the
Partnership, or the General Partner), and agents,
outside attorneys, accountants, consultants and
contractors of the General Partner or the Partnership
or any division of the Partnership, and the
determination of their compensation and other terms
of employment or hiring;
(11) the maintenance of such insurance for the benefit of
the Partnership and the Partners as it deems
necessary or appropriate;
(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;
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(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; and
(19) the making, execution and delivery of any and all
deeds, leases, notes, deeds to secure debt,
mortgages, deeds of trust, security agreements,
conveyances, contracts, guarantees, warranties,
indemnities, waivers, releases or legal instruments
or agreement 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.
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. 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.
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C. At all times from and after the date hereof, the General Partner may
cause the Partnership to obtain and maintain (i) casualty, liability and other
insurance on the properties of the Partnership and (ii) liability insurance for
the Indemnitees hereunder.
D. At all times from and after the date hereof, the General Partner may
cause the Partnership to establish and maintain 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.
E. In exercising its authority under this Agreement and except as
provided at Section 5.1, 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. 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 pursuant to its authority under this Agreement.
Section 7.2 Certificate of Limited Partnership
The General Partner has previously filed the Certificate with the
Secretary of State of Delaware as required by the Act. 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 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 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
The General Partner may not sell, exchange, transfer or otherwise
dispose of all or substantially all of the Partnership's assets in a single
transaction or a series of related transactions (including by way of merger,
consolidation or other combination with any other Person) without the Consent of
Partners holding 50% or more of the Common Partnership Units and compliance with
the other provisions hereof.
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Section 7.4 Reimbursement of the General Partner
A. Except as provided in this Section 7.4 and elsewhere in this
Agreement (including the provisions of Articles 5 and 6 regarding distributions,
payments, and allocations to which it may be entitled), the General Partner
shall not be compensated for its services as general partner of the Partnership.
B. The General Partner shall be reimbursed on a monthly basis, or such
other basis as the General Partner may determine in its sole and absolute
discretion, for all expenses that it incurs 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 with respect to bank accounts or other instruments or accounts held by
it on behalf of the Partnership as permitted in Section 7.5.A. The Limited
Partners acknowledge that, for purposes of this Section 7.4.B, all expenses of
the General Partner are deemed incurred for the benefit of the Partnership. Such
reimbursements shall be in addition to any reimbursement to the General Partner
as a result of indemnification pursuant to Section 7.7 hereof.
C. As set forth in Section 4.3, the General Partner shall be treated as
having made a Capital Contribution in the amount of all expenses that it incurs
relating to the organization and/or reorganization of the Partnership and the
General Partner, and any other issuance of additional Partnership Interests or
REIT Shares pursuant to Section 4.2 hereof.
D. In the event that the General Partner elects to purchase from the
shareholders of the General Partner REIT Shares for the purpose of delivering
such REIT Shares to satisfy an obligation under any dividend reinvestment
program adopted by the General Partner, any employee stock purchase plan adopted
by the General Partner, or any similar obligation or arrangement undertaken by
the General Partner in the future, the purchase price paid by the General
Partner for such REIT Shares and any other expenses incurred by the General
Partner in connection with such purchase shall be considered expenses of the
Partnership and shall be reimbursed to the General Partner, subject to the
condition that: (i) if such REIT Shares subsequently are to be sold by the
General Partner, the General Partner shall pay to the Partnership any proceeds
received by the General Partner for such REIT Shares (provided that a transfer
of REIT Shares for Units pursuant to Section 8.6 would not be considered a sale
for such purposes); and (ii) if such REIT Shares are not retransferred by the
General Partner within 30 days after the purchase thereof, the General Partner
shall cause the Partnership to cancel a number of Partnership Units held by the
General Partner equal to the quotient obtained by dividing the number of such
REIT Shares by the Conversion Factor.
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Section 7.5 Outside Activities of the General Partner
A. The General Partner shall not directly or indirectly enter into or
conduct any business other than in connection with the ownership, acquisition
and disposition of Partnership Interests as a General Partner or Limited Partner
and the management of the business of the Partnership, and such activities as
are incidental thereto. The General Partner shall not hold any assets other than
Partnership Interests as a General Partner or Limited Partner, and other than
such bank accounts or similar instruments or accounts as it deems necessary to
carry out its responsibilities contemplated under this Agreement and its
organizational documents; provided, however, that if the General Partner
believes that it is in the best interest of the Partnership, the General Partner
may hold, other than through the Partnership, up to 1% of the economic interests
in another issuer. 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.
B. Except as provided in Section 7.4.D, in the event the General
Partner exercises its rights under Article VI of its Articles of Incorporation
to purchase REIT Shares, then the General Partner shall cause the Partnership to
purchase from it that number of Common Partnership Units equal to the quotient
obtained by dividing the number of REIT Shares to be purchased by the General
Partner by the Conversion Factor on the same terms and for the same aggregate
price that the General Partner purchased such REIT Shares.
Section 7.6 Contracts with Affiliates
A. The Partnership may lend or contribute funds or other assets to its
Subsidiaries or other Persons in which it has an equity investment and such
Persons may borrow funds from the Partnership, on 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. Except as provided in Section 7.5.A, the Partnership may transfer
assets to joint ventures, other partnerships, corporations or other business
entities in which it is or thereby becomes a participant upon 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 and no less favorable to the Partnership
than would be obtained from an unaffiliated third party.
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
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respect of services performed, directly or indirectly, for the benefit of the
Partnership, the General Partner, or any of the Partnership's Subsidiaries.
E. The General Partner is expressly authorized to enter into, in the
name and on behalf of the Partnership, 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. Except as provided at Section 7.7(I), hereof, 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, 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, unless it is established
that: (i) the act or omission of the Indemnitee was material to the matter
giving rise to the proceeding and either was committed in bad faith or was the
result of active and deliberate dishonesty; (ii) the Indemnitee actually
received an improper personal benefit in money, property or services; or (iii)
in the case of any criminal proceeding, the Indemnitee had reasonable cause to
believe that the act or omission was unlawful. Without limitation, the foregoing
indemnity shall extend to any liability of any Indemnitee, pursuant to a loan
guaranty or otherwise for any indebtedness of the Partnership or any Subsidiary
of the Partnership (including without limitation, any indebtedness which the
Partnership or any Subsidiary of the Partnership has assumed or taken subject
to), and the General Partner is hereby authorized and empowered, on behalf of
the Partnership, to enter into one or more indemnity agreements consistent with
the provisions of this Section 7.7 in favor of any Indemnitee having or
potentially having liability for any such indebtedness. The termination of any
proceeding by judgment, order or settlement does not create a presumption that
the Indemnitee did not meet the requisite standard of conduct set forth in this
Section 7.7.A with respect to the subject matter of such proceeding. The
termination of any proceeding by conviction of an Indemnitee or upon a plea of
nolo contendere or its equivalent by an Indemnitee, or an entry of an order of
probation against an Indemnitee prior to judgment, creates a rebuttable
presumption that such Indemnitee acted in a manner contrary to that specified in
this Section 7.7.A. 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 may be paid or reimbursed by the Partnership in advance of the final
disposition of the proceeding upon receipt by the Partnership of (i) a written
affirmation by the Indemnitee of the Indemnitee's good faith belief that the
standard of conduct necessary for indemnification by the Partnership as
authorized in Section 7.7.A. has been met, and (ii) a written undertaking by or
on behalf of the Indemnitee to repay the amount if it shall ultimately be
determined that the standard of conduct has not been met.
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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 Indemnitee is 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. Any liabilities which an Indemnitee incurs as a result of acting on
behalf of the Partnership or the General Partner (whether as a fiduciary or
otherwise) in connection with the operation, administration or maintenance of an
employee benefit plan or any related trust or funding mechanism (whether such
liabilities are in the form of excise taxes assessed by the Internal Revenue
Service, penalties assessed by the Department of Labor, restitutions to such a
plan or trust or other funding mechanism or to a participant or beneficiary of
such plan, trust of other funding mechanism, or otherwise) shall be treated as
liabilities or judgments or fines under this Section 7.7 unless such liabilities
arise as a result of (i) such Indemnitee's intentional misconduct or knowing
violations of the law, or (ii) any transaction in which such Indemnitee received
a personal benefit in violation or breach of any provision of this Agreement or
applicable law.
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
Indemnitees, their heirs, successors, assigns and administrators and shall not
be deemed to create any rights for the benefit of any other Persons. Any
amendment, modification or repeal of this Section 7.7 or any provision hereof
shall be prospective only and shall not in any way affect the limitations on the
Partnership's liability to any Indemnitee under this Section 7.7 as in effect
immediately prior to such amendment, modification, or 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.
I. The Partners hereby acknowledge that, in conjunction with the
financing and the refinancing of the property owned by the Partnership, the
General Partner may agree to guarantee part or all of such debt. The Partners
understand that, pursuant to Regulations Section 1.752-(2)(b)(3)(i), such
guaranty obligation would, absent the indemnification provided hereinafter,
serve to increase the General Partner's share of such debt pursuant to
Regulations Section 1.752-2(a). Inasmuch as, notwithstanding such guaranty
obligation, each of the Limited Partners desires to
84
increase his share of such debt and the General Partner desires to decrease its
share of such debt (for purposes of Regulations Section 1.752-2(a)), each of the
Limited Partners, to the extent provided in Exhibit F, attached hereto, hereby
agrees to indemnify the General Partner in the event and to the extent that the
General Partner both is required to make a payment to the lender under any such
guaranty obligation and is unable to sell any or all of the assets of the
Partnership for money or moneys worth to make the General Partner whole on
account of such payment. This indemnification is effective only at the time, in
the event and to the extent that upon a dissolution and liquidation of the
Partnership, the General Partner is a creditor of the Partnership due to its
guaranty of Partnership debt and the proceeds of sale in such dissolution and
liquidation are insufficient to reimburse the General Partner for any amounts
paid on such guaranty obligation as contemplated in this Section 7.7(I). As
provided in Exhibit F, this indemnification is limited on a per Unit basis to
Units owned by an indemnifying Limited Partner at the time an indemnification is
due to the General Partner as provided by this Section 7.7(I), such that each
Limited Partner's obligation is reduced upon a redemption of Units as provided
in Section 8.6 or upon any other transfer or disposition of Units. In addition,
any and all indemnification as provided by this Section 7.7(I) shall terminate
in full as to each and every Limited Partner in the event that both (i) the
General Partner receives from tax counsel an opinion that the Original Limited
Partners will be allocated an amount of excess nonrecourse liabilities under the
provisions of Section 6.2(A) hereof and Regulations Section 1.752-3(a)(3) equal
to or greater than the amount of the indemnification requirement indicated on
Exhibit F, and (ii) upon a vote of the Original Limited Partners, Units
representing more than 50% of the Original Limited Partnership Units are voted
in favor of terminating the indemnification required by this Section 7.7(I).
Section 7.8 Liability of the General Partner
A. Notwithstanding anything to the contrary set forth in this
Agreement, the General Partner shall not be liable for monetary damages to the
Partnership, any Partners or any Assignees for 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 and with due care and loyalty.
B. The Limited Partners expressly acknowledge that the General Partner
is acting on behalf of the Partnership and the General Partner's shareholders
collectively, that the General Partner is under no obligation, except as
provided at Section 5.1, to consider the separate interests of the Limited
Partners (including, without limitation, the tax consequences to Limited
Partners or Assignees) in deciding whether to cause the Partnership to take (or
decline to take) any actions, and that 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.
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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 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.
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 a duly appointed attorney or attorneys-in-fact. Each such attorney
shall, to the extent provided by the General Partner in the power of attorney,
have full power and authority to do and perform all and every act and duty which
is permitted or required to be done by the General Partner hereunder.
D. Notwithstanding any other provisions of this Agreement or the Act,
any action of the General Partner on behalf of the Partnership or any decision
of the General Partner to refrain from acting on behalf of the Partnership,
undertaken in the good faith belief that such action or omission is necessary or
advisable in order (i) to protect the ability of the General Partner to continue
to qualify as a REIT or (ii) to avoid the General Partner incurring any taxes
under Section 857 or Section 4981 of the Code, is expressly authorized under
this Agreement and is deemed approved by all of the Limited Partners.
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Section 7.10 Title to Partnership Assets
Title to Partnership assets, whether real, personal or mixed and
whether tangible or intangible, shall be deemed to be owned by the Partnership
as an entity, and no Partner, individually or collectively, shall have any
ownership interest in such Partnership assets or any portion thereof. Title to
any or all of the Partnership assets may be held in the name of the Partnership,
the General Partner or one or more nominees, as the General Partner may
determine, including Affiliates of the General Partner. The General Partner
hereby declares and warrants that any Partnership assets for which legal title
is held in the name of the General Partner or any nominee or Affiliate of the
General Partner shall be held by the General Partner or such nominee or
Affiliate for the use and benefit of the Partnership in accordance with the
provisions of this Agreement; provided, 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.
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 Sections 7.7(I) and
10.5 hereof, or under the Act.
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Section 8.2 Management of Business
No Limited Partner or Assignee (other than the General Partner, any of
its Affiliates or any officer, director, employee, partner, 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, 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 a Subsidiary, any Limited Partner (other than the
General Partner) and any officer, director, 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 (other
than the General Partner) 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 (other than the General Partner to the
extent expressly provided herein) and such Person shall have no obligation
pursuant to this Agreement to offer any interest in any such business ventures
to the Partnership, any Limited Partner or any such other Person, even if such
opportunity is of a character which, if presented to the Partnership, any
Limited Partner or such other Person, could be taken by such Person.
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 permitted by Section 4.2.B, or
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 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
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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 General Partner 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
(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 and applicable 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 and 8.6.C, each Limited Partner, other
than the General Partner, shall have the right (the "Redemption Right") to
require the Partnership to redeem on a Specified Redemption Date all or a
portion of the Partnership Units held by such Limited Partner at a redemption
price equal to and in the form of the Cash Amount 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 General Partner) 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 General Partner elects to purchase the Partnership Units
subject to the
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Notice of Redemption pursuant to Section 8.6.B. A Limited Partner may not
exercise the Redemption Right for less than one thousand (1,000) Partnership
Units or, if such Limited Partner holds less than one thousand (1,000)
Partnership Units, all of the Partnership Units held by such Partner. The
Redeeming Partner shall have no right, with respect to any Partnership Units so
redeemed, to receive any Partnership 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 such Assignee on behalf of such Limited Partner, the Cash Amount
shall be paid by the Partnership directly to such Assignee and not to such
Limited Partner.
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
Partnership Units described in the Notice of Redemption to the General Partner
and the General Partner may, in its sole and absolute discretion, elect to
purchase directly and acquire such Partnership Units by paying to the Redeeming
Partner either the Cash Amount or the REIT Shares Amount, as elected by the
General Partner (in its sole and absolute discretion), on the Specified
Redemption Date, whereupon the General Partner shall acquire the Partnership
Units offered for redemption by the Redeeming Partner and shall be treated for
all purposes of this Agreement as the owner of such Partnership Units. If the
General Partner shall elect to exercise its right to purchase Partnership Units
under this Section 8.6.B with respect to a Notice of Redemption, it shall so
notify the Redeeming Partner within five (5) Business Days after the receipt by
the General Partner of such Notice of Redemption. Unless the General Partner (in
its sole and absolute discretion) shall exercise its right to purchase
Partnership Units from the Redeeming Partner pursuant to its right to purchase
Partnership Units under this Section 8.6.B, the General Partner 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 General
Partner shall exercise its right to purchase Partnership 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 General Partner shall treat the transaction between the
General Partner and the Redeeming Partner for federal income tax purposes as a
sale of the Redeeming Partner's Partnership Units to the General Partner. Each
Redeeming Partner agrees to execute such documents as the General Partner 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 General Partner pursuant to Section 8.6.B
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(regardless of whether or not the General Partner would in fact exercise its
rights under Section 8.6.B) would be prohibited under the Articles of
Incorporation.
D. Preferred Partnership Units shall be redeemed, if at all, only in
accordance with such redemption rights or options as are set forth with respect
to such Preferred Partnership Units (or class or series thereof) in the
instruments designating such Preferred Partnership Units (or class or series
thereof).
E. In the event that the Partnership issues additional Partnership
Interests pursuant to Section 4.2.A, the General Partner shall make such
revisions to this Section 8.6 as it determines are necessary to reflect the
issuance of such additional Partnership Interests.
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 Sections 8.5.A and 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 Partnership Year
The fiscal year of the Partnership shall be the calendar year.
Section 9.3 Reports
A. As soon as practicable, but in no event later than one hundred five
(105) days after the close of each Partnership Year, the General Partner shall
cause to be mailed to each Limited Partner, as of the close of the Partnership
Year, an annual report containing financial statements of the Partnership, or of
the General Partner if such statements are prepared solely on a consolidated
basis with the General Partner, for such Partnership Year, presented in
accordance with generally
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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 General Partner, if
such statements are prepared solely on a consolidated basis with the General
Partner, and such other information as may be required by applicable law or
regulation, or as the General Partner determines to be appropriate.
ARTICLE 10
TAX MATTERS
Section 10.1 Preparation of Tax Returns
The General Partner shall use its reasonable best efforts to arrange
for the preparation and timely filing of all returns of Partnership income,
gains, deductions, losses and other items required of the Partnership for
federal and state income tax purposes and shall use all reasonable efforts to
furnish, within ninety (90) days of the close of each taxable year, the tax
information reasonably required by Limited Partners for federal and state income
tax reporting purposes.
Section 10.2 Tax Elections
Except as otherwise provided herein, the General Partner shall, in its
sole and absolute discretion, determine whether to make any available election
pursuant to the Code. The General Partner shall have the right to seek to revoke
any such election (including, without limitation, the election under Section 754
of the Code) upon the General Partner's determination in its sole and absolute
discretion that such revocation is in the best interests of the Partners.
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 administrative proceedings being
referred to as a "tax audit" and such judicial
proceedings
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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 into account by a
Partner for tax purposes, or any 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.
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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 such
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 repayment must be made, unless (i) the Partnership withholds
such repayment 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 repayment may be satisfied out of the available funds of
the Partnership which would, but for such repayment, 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. Without limitation, in such event the General
Partner (i) 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 and
(ii) shall succeed to all rights and remedies of the Partnership as against such
defaulting Limited Partner. 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.
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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 General Partner 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's Partnership Interests
A. The General Partner may not transfer any of its General Partner
Interest or Limited Partner Interests or withdraw as General Partner except as
provided in Section 11.2.B or Article 15.
B. The General Partner may transfer Limited Partner Interests held by
it either to the Partnership in accordance with Section 7.5.B hereof or to a
purported holder of REIT Shares in accordance with the provisions of Article VI
of the Articles of Incorporation.
C. If the General Partner is the surviving entity of a merger, it shall
contribute substantially all of the assets acquired in the merger to the
Partnership as a Capital Contribution in exchange for Partnership Units with a
fair market value, as reasonably determined by the General Partner, equal to the
704(c) Value of the assets so contributed; provided that this requirement shall
not be applicable if such merger is a Trigger Event as defined in Section 15.
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
and 11.5, 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 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.
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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 (i) require filing of a registration statement under the
Securities Act of 1933; (ii) otherwise violate any federal or state securities
laws or regulations applicable to the Partnership or the Partnership Unit; or
(iii) cause the Partnership to register the Partnership Units under Section
12(g) of the Securities Exchange Act of 1934, as amended, or any successor
provision.
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 Regulations
Section 1.752-4(b)) 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
in which a security interest is held simultaneously with the time at which such
lender would be deemed to be a partner in the Partnership for purposes of
allocating liabilities to such lender under Section 752 of the Code.
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.
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
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If the General Partner, in its sole and absolute discretion, does not
consent to the admission of any permitted transferee under Section 11.3 as a
Substituted Limited Partner, as described in Section 11.4, such transferee shall
be considered an Assignee for purposes of this Agreement. An Assignee shall be
deemed to have had assigned to it, and shall be entitled to receive
distributions from the Partnership and the share of 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 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
Substituted 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. Transfers pursuant to this Article 11 may only be made on the first
day of a fiscal quarter of the Partnership, unless the General Partner otherwise
agrees.
D. If any Partnership Interest is transferred or assigned during any
quarterly segment of the Partnership 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 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. Solely for purposes of making such
allocations, each of such items for the calendar month in which the transfer or
assignment occurs shall be allocated to the transferee Partner, and none of such
items for the calendar month in which a redemption occurs shall be allocated to
the Redeeming Partner. 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.
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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 admission to the Partnership of the Original Limited
Partners on December 1, 1997, 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 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 items for the calendar month
in which an admission of any Additional Limited Partner occurs shall be
allocated among all the Partners and Assigns including such Additional Limited
Partner. 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.
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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, upon the first to occur of any of the following
("Dissolution Events"):
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 through December 31, 2043,
an election to dissolve the Partnership made by the General Partner, unless (i)
at the time of such election, Original Limited Partners hold at least 10% of the
Limited Partnership Units, including such Units held by the General Partner, and
(ii) Original Limited Partners owning a majority of the Original Limited
Partnership Units object in writing to such dissolution within thirty (30) days
of receiving written notice of such election from the General Partner;
D. on or after January 1, 2044 an election to dissolve the Partnership
made by the General Partner, in its sole and absolute discretion;
E. entry of a decree of judicial dissolution of the Partnership
pursuant to the provisions of the Act;
F. the sale of all or substantially all of the assets and properties of
the Partnership; or
G. 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
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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 Dissolution Event or a Terminating Capital
Transaction, 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 stock in the General Partner) 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 payment and discharge of all of the
Partnership's debts and liabilities to the General
Partner;
(3) Third, to the payment and discharge of all of the
Partnership's debts and liabilities to the other
Partners; and
(4) The balance, if any, after giving effect to all
contributions, distributions, and allocations for all
periods, to those Partners with positive Capital
Account balances, to the extent of such positive
Capital Account balances.
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 those to 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
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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 Negative Capital Accounts
No Partner, General or Limited, shall be liable to the Partnership or
to any other Partner for any negative balance outstanding in each such Partner's
Capital Account, whether such negative Capital Account results from the
allocation of Net Losses or other items of deduction and loss to such Partner or
from distributions to such Partner.
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-l(b)(2)(ii)(g), but no Dissolution 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.
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
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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,
distribution or allocations.
Section 13.6 Notice of Dissolution
In the event a Dissolution 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 provide within thirty (30) days thereafter written notice
thereof to each of the Partners.
Section 13.7 Termination of Partnership and Cancellation of
Certificate of Limited Partnership
Upon the completion of the liquidation of the Partnership cash and
property as provided in Section 13.2 hereof, the Partnership shall be
terminated, a certificate of cancellation shall be filed, and all qualifications
of the Partnership as a foreign limited partnership in 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.
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
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A. Amendments to this Agreement may be proposed by the General Partner
or by any Limited Partners holding ten percent (10%) 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, 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 Interests held by the General Partner).
B. Notwithstanding Section 14.1.A, the General Partner shall have the
power, without the consent of the Limited Partners, to amend this Agreement as
may be required to facilitate or implement any of the following purposes:
(1) to add to the obligations of the General Partner or
surrender any right or power granted to the General
Partner or any Affiliate of the General Partner for
the benefit of the Limited Partners;
(2) to reflect the admission, substitution, termination,
or withdrawal of Partners in accordance with this
Agreement;
(3) to set forth the designations, rights, powers,
duties, and preferences of the holders of any
additional Partnership Interests issued pursuant to
Section 4.2.A hereof;
(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
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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) 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 Article 15 or Sections 4.2.A, 7.5, 7.6, 11.2, 14.1.A or
14.2 without the Consent of 75% of the Percentage Interests of the Limited
Partners excluding Limited Partners Interests held by the General Partner.
Section 14.2 Meetings of the Partners
A. Meetings of the Partners may be called by the General Partner and
shall be called upon the receipt by the General Partner of a written request by
Limited Partners holding twenty percent (20) or more of the Percentage
Interests. The call shall state the nature of the business to be transacted and
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 14.1A 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
Partnership Interests held by the General Partner) 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 75% 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 75% 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.
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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 General Partner and may
be held at the same time, and as part of, meetings of the shareholders of the
General Partner.
ARTICLE 15
CONSOLIDATION, MERGER OR SALE OF ASSETS OF THE GENERAL PARTNER
Section 15.1 Trigger Events
For the purposes of this Article 15, each of the following events shall
be deemed to be a "Trigger Event": (w) if the General Partner consolidates with,
or merges into, any other Person, and the General Partner is not the continuing
or surviving corporation of such consolidation or merger, (x) if any Person
consolidates with, or merges into, the General Partner, and the General Partner
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 or exchanged for stock or other securities of any
other Person or cash or any other property, or (y) if the General Partner 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, 50% or more of
the assets or earning power of the General Partner or the Partnership.
Section 15.2 From and After the Occurrence of a Trigger Event
Effective on the date of each Trigger Event, the Redemption Right shall
be adjusted as provided in this Section 15.2.
A. From and after the occurrence of a Trigger Event (each such
occurrence, a "Trigger Occurrence") and until the occurrence, if any, of a
subsequent Trigger Event (in which case a further adjustment shall be made
pursuant to this Section 15.2), 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 Trigger Event, all of the
REIT Shares are converted solely into Registered Common Stock (as hereinafter
defined), such Registered Common Stock and (ii) in all other cases, the common
stock, or, if such Person shall have no common stock, the equity securities or
other equity interest having power to control or direct the management (the
"Common Stock") of (a) in the event of a Trigger Event described in clause (w)
or (x) of the first sentence of Section 15.1, (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 Trigger Event described
in clause (y) of the first sentence of Section 15.1, the Person that is the
party receiving the largest portion of the assets or earning power transferred
pursuant to such transaction or transactions, or, if the Person receiving the
largest portion of the assets or earning power cannot be determined, whichever
Person
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has the highest Market Capitalization; provided, however, that in any such case,
(1) if the Common Stock of such Person is not at such time and has not been
continuously over the preceding 12-month period registered ("Registered Common
Stock") under Section 12 of the Securities and Exchange Act of 1934, as amended
(the "Exchange Act"), or such Person is neither a corporation nor a real estate
investment trust, and such Person is a direct or indirect Subsidiary of another
Person that has Registered Common Stock outstanding, "Replacement Shares" shall
mean shares of the Common Stock of such other Person; (2) if the Common Stock of
such Person is not Registered Common Stock or such Person is neither a
corporation nor a 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 Stock outstanding, "Replacement
Shares" shall mean shares of the Common Stock of the parent entity having the
highest Market Capitalization; (3) if the Common Stock of such Person is not
Registered Common Stock or such Person is neither a corporation nor a 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 Stock
outstanding, "Replacement Shares" shall mean shares of the Common Stock of
whichever of such other Persons is the issuer having the highest Market
Capitalization; and (4) if the Common Stock of such Person is not Registered
Common Stock or such Person is neither a corporation nor a 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 Stock
outstanding, "Replacement Shares" shall mean shares of the Common Stock of
whichever ultimate parent entity is the corporation or real estate investment
trust having the highest aggregate shareholders' equity or, if no such ultimate
parent entity is a corporation or a real estate investment trust, shall be
deemed to refer to shares of the Common Stock 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 shares of Common Stock
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).
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 Stock, by the number of shares of Registered Common
Stock 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 15.2.
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 Trigger 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
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such tender offer; provided, however, further, if prior to the expiration of
such requisite 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 Partnership Units held by the
Limited Partners (excluding the Partnership Units held by the General Partner
and its Affiliates). 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 15.2.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 Partnership Units held by the Limited Partners (excluding the Partnership
Units held by the General Partner and its Affiliates) and the General Partner,
which determination shall be binding on all of the Limited Partners. If the
holders of a majority of the Partnership Units held by the Limited Partners
(excluding the Partnership Units held by the General Partner and its Affiliates)
and the 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 Partnership Units held by
the Limited Partners (excluding the Partnership Units held by the General
Partner and its Affiliates) 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
Partnership Units held by the Limited Partners
(excluding the Partnership Units held by the General
Partner and its Affiliates) or 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 on a single arbitrator to determine the fair
value of the shares (the "Arbitrator"). If the
holders of a majority of the Partnership Units held
by the Limited Partners (excluding the Partnership
Units held by the General Partner and its Affiliates)
and the
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General Partner have not agreed on the Arbitrator
within ten (10) days after the giving of the
Arbitration Notice, then either, 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 North (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 Delaware, 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 or the General Partner 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 Partnership Units held by the Limited
Partners (excluding the Partnership Units
held by the General Partner and its
Affiliates) 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,
108
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 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
Charlotte metropolitan area of North
Carolina 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.
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(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.
(5) The Partnership shall pay all fees and expenses
relating to the arbitration (including, without
limitation, the fees and expenses of one counsel
(including local counsel, if required) chosen by the
holders of a majority of the Partnership Units held
by the Limited Partners (excluding the Partnership
Units held by the General Partner and its Affiliates)
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
"General Partner" 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 General Partner's
obligations under this Agreement pursuant to an instrument in form and substance
satisfactory to the holders of a majority of the Partnership Units held by the
Limited Partners (excluding the Partnership Units held by the General Partner
and its Affiliates). 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 15.3 Additional Issuer Covenants
The General Partner shall (i) not enter in an agreement with any Person
which would result in a Trigger Event unless such agreement provides for each of
the following and (ii) from and after any Trigger Occurrence, comply with each
of the following:
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A. If, on the day immediately prior to a Trigger Occurrence, the Issuer
is qualified as a REIT, then, substantially contemporaneously with such Trigger
Occurrence, the General Partner, the Issuer and its Affiliates shall enter into
such mergers, combinations, conveyances or other transactions as shall be
required to cause substantially all of the assets of the General Partner and the
Issuer and its Affiliates to be owned, leased or held directly or indirectly by
a single operating partnership in which the Limited Partners shall hold
partnership units having the rights specified by this Agreement. The agreement
governing the resulting operating partnership shall be in a form substantially
no less favorable to each of the Limited Partners than is this Agreement.
B. 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
Partnership Unit, the same amount of cash or property the holder of a
Partnership Unit would have received had such holder exercised its Redemption
Right and received Replacement Shares prior to such dividend or distribution.
Section 15.4 Application to Later Transactions
This Article 15 shall apply to the initial Trigger Event and shall
continue to apply to each subsequent Trigger Event.
Section 15.5 Waivers and Amendments
This Article 15 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;
provided that the General Partner may amend this Article 15, without the consent
of the Limited Partners for the purposes set forth at Section 14.1.B(4) prior to
a Trigger Occurrence.
ARTICLE 16
PARTNER RIGHTS PLAN
Section 16.1 Purpose and Interpretation.
This Article 16 sets forth the Partner Rights Plan of the Partnership.
The purpose of the Partner Rights Plan is to ensure that holders of Common
Partnership Units enjoy the same rights as holders of Common Shares under the
Shareholder Rights Plan; accordingly, reference should be made to the Rights
Agreement for purposes of interpretation of the provisions of this Article 16.
Section 16.2 Issuance of Preferred Unit Purchase Right.
In connection with the adoption of the Shareholder Rights Plan, as of
March 29, 1999, each holder of a Common Partnership Unit shall be issued one
right to purchase one one-hundredth of a Series A Preferred Partnership Unit (a
"Right") for each outstanding Common Partnership Unit. Until the Distribution
Date or earlier redemption or expiration of the Rights, each subsequently issued
Common Partnership Unit will also include one Right.
111
Section 16.3 Exercise of Rights.
Each Right entitles the holder to purchase from the Partnership one
one-hundredth of a Series A Preferred Partnership Unit at a price of $36 per
Unit, subject to adjustment (the "Purchase Price"). The Rights are not
exercisable until the Distribution Date. Any holder of a Right may exercise a
Right by delivery of a Notice of Election to Purchase to the General Partner and
payment of the Purchase Price for each one-hundredth of a Series A Preferred
Partnership Unit as to which the Rights are exercised, at or prior to the
earliest of (i) the close of business on March 29, 2009 (the "Final Expiration
Date"), (ii) the time at which the Rights are redeemed as provided in Section
16.7 hereof or (iii) the time at which the Rights are exchanged as provided in
Section 16.8 hereof.
Section 16.4 Final Expiration Date.
The Rights will expire on March 29, 2009, unless such Final Expiration
Date is extended by the General Partner or they are earlier redeemed or
exchanged by the Partnership.
Section 16.5 Adjustment of Purchase Price.
The Purchase Price, the number of Series A Preferred Partnership Units
issuable upon exercise of a Right and the number of Rights outstanding are
subject to adjustment by the General Partner from time to time to prevent
dilution to the same extent and in the same manner as the purchase price, the
number of Series A Preferred Shares issuable upon exercise of a preferred share
purchase right and the number of preferred share purchase rights outstanding
under the Rights Agreement.
Section 16.6 Right to Purchase Common Units at a Discount.
In the event any person or group of affiliated persons becomes an
Acquiring Person, proper provision will be made so that each holder of a Right
will thereafter have the right to receive, upon the exercise thereof at the
then-current exercise price of the Right, that number of Common Units redeemable
for REIT Shares that have a market value of two times the exercise price of the
Right. In the event the General Partner is acquired in a merger or other
business combination transaction or 50% or more of its consolidated assets or
earning power are sold after a person or group has become an Acquiring Person,
proper provision will be made so that each holder of a Right will thereafter
have the right to receive, upon the exercise thereof at the then-current
exercise price of the Right, that number of Replacement Shares that at the time
of such transaction will have a market value of two times the exercise price of
the Right. The General Partner shall not enter into a transaction of the nature
described in the preceding sentence unless prior thereto the General Partner and
the issuer of the Replacement Shares have entered into an agreement providing
that such issuer take all steps necessary to assure that the requirements of the
preceding sentence are satisfied.
Section 16.7 Redemption.
112
At any time prior to the acquisition by a person or group of affiliated
or associated persons of beneficial ownership of 15% or more of the outstanding
Common Shares, the General Partner may cause the Operating Partnership to redeem
the Rights in whole, but not in part, at a price of $.01 per Right (the
"Redemption Price"). The redemption of the Rights may be made effective at such
time, on such basis and with such conditions as the General Partner in its sole
discretion may establish. Immediately upon action of the General Partner
ordering the redemption of the Rights, the right to exercise the Rights will
terminate and the only right of the holders of Rights will be to receive the
Redemption Price.
Section 16.8 Exchange.
At any time after any person or group becomes an Acquiring Person and
prior to the acquisition by such person or group of 50% or more of the
outstanding Common Shares, the General Partner may cause the Partnership to
exchange the Rights (other than Rights owned by such person or group which will
have become void pursuant to Section 16.10) in whole or in part, at an exchange
ratio of one Common Unit per Right, subject to adjustment. Immediately upon any
action of the General Partner ordering the exchange of any Rights, the right to
exercise such Rights will terminate and the only right thereafter of the holders
of such Rights will be to receive that number of Common Units equal to the
number of such Rights multiplied by the above-mentioned exchange ratio.
Section 16.9 Transfer.
The Rights will be transferred with and only with the Common
Partnership Units.
Section 16.10 Nullification of Rights of Acquiring Person.
Notwithstanding anything herein to the contrary, if any Partner (other
than the General Partner) is also an Acquiring Person, such Partner's rights
shall become void.
Section 16.11 Amendments.
The terms of the Rights may be amended by the General Partner without
the consent of the holders of the Rights to the same extent that the Board of
Directors of the General Partner may amend the terms of the rights under the
Shareholder Rights Plan without the consent of the holders of such rights. From
and after such time as any person or group of affiliates or associated persons
becomes an Acquiring Person, no such amendment may adversely affect the interest
of the holders of the Rights (other than those held by an Acquiring Person).
113
ARTICLE 17
GENERAL PROVISIONS
Section 17.1 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 17.2 Titles and Captions
All article or section titles or captions in this Agreement are for
convenience only. They shall not be deemed part of this Agreement and in no way
define, limit, extend or describe the scope or intent of any provisions hereof.
Except as specifically provided otherwise, references to "Articles" and
"Sections" are to Articles and Sections of this Agreement.
Section 17.3 Pronouns and Plurals
Whenever the context may require, any pronoun used in this Agreement
shall include the plural and vice versa.
Section 17.4 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 purpose of this Agreement.
Section 17.5 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 17.6 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 creditors of the Partnership.
114
Section 17.7 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 17.8 Counterparts
This Agreement may be executed in counterparts, all of which together
shall constitute one agreement binding on all the parties hereto,
notwithstanding that all such parties are not signatories to the original or the
same counterpart. Each party shall become bound by this Agreement immediately
upon affixing its signature hereto.
Section 17.9 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 17.10 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.
Section 17.11 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 agreement among them with respect
thereto.
Section 17.12 Withdrawal of Organizational Limited Partner
Following the admission of the Limited Partners, the Organizational
Limited Partner shall withdraw from the Partnership and shall be entitled to
receive forthwith the return of his capital contribution, without interest or
deduction.
115
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.
GENERAL PARTNER:
▇▇▇▇▇▇-▇▇▇▇▇ PROPERTIES, INC.
By: _____________________________
Title: _____________________________
[CORPORATE SEAL]
LIMITED PARTNERS:
116
EXHIBIT A
PARTNERS, CONTRIBUTIONS AND PARTNERSHIP INTERESTS
(Information intentionally omitted.)
117
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-l(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-l(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)(4).
(2) The computation of all items of income, gain, and
deduction shall be made without regard to the fact
that items described in Section 705(a)(2)(B) of the
Code are not includible in 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.
118
(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.
D. (1) Consistent with the provisions of Regulations
Section 1.704-l(b)(2)(iv)(f), and as provided in
Section ▇.▇(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 ▇.▇(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 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.
(3) In accordance with Regulations Section
1.704-l(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.
(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
119
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. In the event the
General Partner shall determine that it is prudent to modify 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 in order to comply with
such Regulations, 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).
2. No Interest
No interest shall be paid by the Partnership on Capital Contributions
or on balances in Partners' Capital Accounts.
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.
120
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 Year, each
Partner shall be specially allocated items of Partnership income and gain for
such Partnership Year (and, if necessary, subsequent Partnership 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 during such Partnership 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 l.A hereof), if there is a net decrease in Partner Minimum Gain
attributable to a Partner Nonrecourse Debt during any Partnership Year, each
Partner who has a share of the Partner Minimum Gain attributable to such Partner
Nonrecourse Debt, determined in accordance with Regulations Section
1.704-2(i)(5), shall be specially allocated items of Partnership income and gain
for such Partnership Year (and, if necessary, subsequent Partnership 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 this Section l.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 Year,
other than allocations pursuant to Section l.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-l(b)(2)(ii)(d)(5) or
1.704-1(b)(2)(ii)(d)(6), and after giving effect to the allocations required
under Sections l.A and l.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 Year) shall be specifically allocated to such
121
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
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 Year which would satisfy such
requirements.
E. Partner Nonrecourse Deductions. Any Partner Nonrecourse Deductions
for any Partnership Year shall be specially allocated to the Partner who bears
the economic risk of loss with respect to the Partner Nonrecourse Debt to which
such Partner Nonrecourse Deductions are attributable in accordance with
Regulations 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.
2. Allocations for Tax Purposes
A. Except as otherwise provided in this Section 2, 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.
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
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
122
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 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 the Exhibit C.
C. The Partnership shall use the "Traditional Method" of making Section
704(c) allocations as provided by Regulations Section 1.704-3(b) to eliminate
the disparities between the Carrying Value of property and its adjusted basis.
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EXHIBIT D
VALUE OF CONTRIBUTED PROPERTY
Underlying Property 704(c) Value Agreed Value
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EXHIBIT E
NOTICE OF REDEMPTION
The undersigned Limited Partner hereby irrevocably (i) redeems Limited
Partnership Units in ▇▇▇▇▇▇-▇▇▇▇▇ Properties Limited Partnership in accordance
with the terms of the Amended and Restated Agreement of Limited Partnership of
▇▇▇▇▇▇-▇▇▇▇▇ Properties Limited Partnership and the Redemption Right referred to
therein, (ii) surrenders such Limited Partnership Units and all right, title and
interest therein, and (iii) directs that the Cash Amount of REIT Shares Amount
(as determined by the General Partner) 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 Limited Partnership 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 Limited Partnership Units as provided
herein, and (c) has obtained the consent or approval of all person 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)
If REIT Shares are to be issued, issue to:
Name:_____________________________________
Please insert social security or identifying number:____________
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EXHIBIT F
INDEMNIFICATION UNDER SECTION 7.7(I)
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Maximum
Limited Partner Indemnification Indemnification
Per Unit Obligation
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EXHIBIT G
DESIGNATION OF THE VOTING POWERS, DESIGNATIONS,
PREFERENCES AND RELATIVE, PARTICIPATING, OPTIONAL
OR OTHER SPECIAL RIGHTS AND QUALIFICATIONS, LIMITATIONS OR
RESTRICTIONS OF THE SERIES A PREFERRED PARTNERSHIP UNITS
The following are the terms of the Series A Preferred Partnership Units
established pursuant to this Partnership Unit Designation:
(a) Number. The maximum number of authorized Series A Preferred
Partnership Units shall be 1,000,000. Such number may be increased or decreased
by the General Partner; provided, that no decrease shall reduce the number of
Series A Preferred Partnership Units to a number less than the number of Series
A Preferred Partnership Units then outstanding plus the number reserved for
issuance upon the exercise of outstanding options, rights or warrants or upon
the conversion of any outstanding securities issued by the Partnership
convertible into Series A Preferred Partnership Units.
(b) Distributions.
(1) Subject to the rights of the holders of any series of Preferred
Partnership Units ranking prior and superior to the Series A Preferred
Partnership Units with respect to distributions, the holders of Series A
Preferred Partnership Units, in preference to the holders of Common Partnership
Units, and to any other junior Preferred Partnership Units, shall be entitled to
receive, when, as and if authorized by the General Partner out of funds legally
available for the purpose, quarterly distributions payable in cash on the first
day of March, June, September and December in each year (each such date being
referred to herein as a "Quarterly Distribution Payment Date"), commencing on
the first Quarterly Distribution Payment Date after the first issuance of a
Series A Preferred Partnership Unit, in an amount per Series A Preferred
Partnership Unit (rounded to the nearest cent) equal to the greater of (a) $1 or
(b) subject to the provision for adjustment hereinafter set forth, 100 times the
aggregate per Common Partnership Unit amount of all cash distributions, and 100
times the aggregate per Common Partnership Unit amount (payable in kind) of all
non-cash distributions, other than a distribution payable in Common Partnership
Units or a subdivision of the outstanding Common Partnership Units (by
reclassification or otherwise), authorized on the Common Partnership Units since
the immediately preceding Quarterly Distribution Payment Date or, with respect
to the first Quarterly Distribution Payment Date, since the first issuance of
any Series A Preferred Partnership Units. In the event the General Partner or
the Partnership shall at any time authorize, declare or pay any distribution on
the Common Partnership Units payable in Common Partnership Units, or effect a
subdivision or combination or consolidation of the outstanding Common
Partnership Units (by reclassification or otherwise than by payment of a
distribution in Common Partnership Units) into a greater or lesser number of
Common Partnership Units, then in each such case the amount to which holders of
Series A Preferred Partnership Units were entitled immediately prior to such
event under clause (b) of the preceding sentence shall be adjusted by
multiplying such amount by a fraction, the numerator of which is the number of
Common Partnership Units outstanding immediately after such
127
event and the denominator of which is the number of Common Partnership Units
that were outstanding immediately prior to such event.
(2) The Partnership shall declare a distribution on the Series A
Preferred Partnership Units as provided in paragraph (1) of this Section (b)
immediately after it declares a distribution on the Common Partnership Units
(other than a distribution payable in Common Partnership Units); provided that,
in the event no distribution shall have been declared on the Common Partnership
Units during the period between any Quarterly Distribution Payment Date and the
next subsequent Quarterly Distribution Payment Date, a distribution of $1 per
Series A Preferred Partnership Unit shall nevertheless be payable on such
subsequent Quarterly Distribution Payment Date.
(3) Distributions shall begin to accrue and be cumulative on
outstanding Series A Preferred Partnership Units from the Quarterly Distribution
Payment Date next preceding the date of issue of such Partnership Units, unless
the date of issue of such Partnership Units is prior to the record date for the
first Quarterly Distribution Payment Date, in which case distributions on such
Partnership Units shall begin to accrue from the date of issue of such
Partnership Units, or unless the date of issue is a Quarterly Distribution
Payment Date or is a date after the record date for the determination of holders
of Series A Preferred Partnership Units entitled to receive a quarterly
distribution and before such Quarterly Distribution Payment Date, in either of
which events such distributions shall begin to accrue and be cumulative from
such Quarterly Distribution Payment Date. Accrued but unpaid distributions shall
not bear interest. Distributions paid on the Series A Preferred Partnership
Units in an amount less than the total amount of such distributions at the time
accrued and payable on such Partnership Units shall be allocated pro rata among
all Series A Preferred Partnership Units at the time outstanding. The General
Partner may fix a record date for the determination of holders of Series A
Preferred Partnership Units entitled to receive payment of a distribution
declared thereon, which record date shall be not more than 60 days prior to the
date fixed for the payment thereof.
(c) Voting Rights. The holders of Series A Preferred Partnership Units
shall have the following voting rights:
(1) Except as otherwise provided herein, in any other Partnership Unit
Designation creating a series of Preferred Partnership Units, or by law, the
holders of Series A Preferred Partnership Units and the holders of Common
Partnership Units and any other Partnership Units of the Partnership having
general voting rights shall vote together as one class on all matters submitted
to a vote of Partners of the Partnership.
(2) Except as set forth herein, holders of Series A Preferred
Partnership Units shall have no special voting rights and their consent shall
not be required (except to the extent they are entitled to vote with holders of
Common Partnership Units as set forth herein) for taking any action.
(d) Certain Restrictions.
128
(1) Whenever quarterly distributions payable on the Series A Preferred
Partnership Units as provided in Section (b) are in arrears, thereafter and
until all accrued and unpaid distributions, whether or not authorized or
declared, on Series A Preferred Partnership Units outstanding shall have been
paid in full, the General Partner and the Partnership shall not:
(i) authorize, declare or pay distributions, on any
Partnership Unit ranking junior (either as to distributions or upon
liquidation, dissolution or winding up) to the Series A Preferred
Partnership Units;
(ii) authorize, declare or pay distributions on any
Partnership Unit ranking on a parity (either as to distributions or
upon liquidation, dissolution or winding up) with the Series A
Preferred Partnership Units, except distributions paid ratably on the
Series A Preferred Partnership Units and all such parity Partnership
Units on which distributions are payable or in arrears in proportion to
the total amounts to which the holders of all such Partnership Units
are then entitled;
(iii) redeem or purchase or otherwise acquire for
consideration Partnership Units ranking junior (either as to
distributions or upon liquidation, dissolution or winding up) to the
Series A Preferred Partnership Units, provided that the Partnership may
at any time redeem, purchase or otherwise acquire any such junior
Partnership Units in exchange for Partnership Units ranking junior
(either as to distributions or upon dissolution, liquidation or winding
up) to the Series A Preferred Partnership Units; or
(iv) redeem or purchase or otherwise acquire for consideration
any Series A Preferred Partnership Units, or any Partnership Units
ranking on a parity with the Series A Preferred Partnership Units,
except in accordance with a purchase offer made in writing or by
publication (as determined by the General Partner) to all holders of
such Partnership Units upon such terms as the General Partner, after
consideration of the respective annual distribution rates and other
relative rights and preferences of the respective series and classes,
shall determine in good faith will result in fair and equitable
treatment among the respective series or classes.
(2) The Partnership shall not permit any subsidiary of the Partnership
to purchase or otherwise acquire for consideration any Partnership Units of the
Partnership unless the Partnership could, under paragraph (1) of this Section
(d), purchase or otherwise acquire such Partnership Units at such time and in
such manner.
(e) Liquidation, Dissolution or Winding Up. Upon any liquidation,
dissolution or winding up of the Partnership, no distribution shall be made (1)
to the holders of Partnership Units ranking junior (either as to distributions
or upon liquidation, dissolution or winding up) to the Series A Preferred
Partnership Units unless, prior thereto, the holders of Series A Preferred
Partnership Units shall have received $100 per Series A Preferred Partnership
Unit, plus an amount equal to accrued and unpaid distributions thereon, whether
or not authorized or declared, to the date of such payment, provided that the
holders of Series A Preferred Partnership Units shall be entitled to receive an
129
aggregate amount per Series A Preferred Partnership Unit, subject to the
provision for adjustment hereinafter set forth, equal to 100 times the aggregate
amount to be distributed per Common Partnership Unit, or (2) to the holders of
Partnership Units ranking on a parity (either as to distributions or upon
liquidation, dissolution or winding up) with the Series A Preferred Partnership
Units, except distributions made ratably on the Series A Preferred Partnership
Units and all such parity Partnership Units in proportion to the total amounts
to which the holders of all such Partnership Units are entitled upon such
liquidation, dissolution or winding up. In the event the General Partner or the
Partnership shall at any time authorize, declare or pay any distribution on the
Common Partnership Units payable in Common Partnership Units, or effect a
subdivision or combination or consolidation of the outstanding Common
Partnership Units (by reclassification or otherwise than by payment of a
distribution in Common Partnership Units) into a greater or lesser number of
Common Partnership Units, then in each such case the aggregate amount to which
holders of Series A Preferred Partnership Units were entitled immediately prior
to such event under the proviso in clause (1) of the preceding sentence shall be
adjusted by multiplying such amount by a fraction the numerator of which is the
number of Common Partnership Units outstanding immediately after such event and
the denominator of which is the number of Common Partnership Units that were
outstanding immediately prior to such event.
(f) Consolidation, Merger, etc. In case the Partnership shall enter
into any consolidation, merger, combination or other transaction in which the
Common Partnership Units are exchanged for or changed into other securities,
cash and/or any other property, then in any such case each Series A Preferred
Partnership Unit shall at the same time be similarly exchanged or changed into
an amount per Series A Preferred Partnership Unit, subject to the provision for
adjustment hereinafter set forth, equal to 100 times the aggregate amount of
stock, securities, cash and/or any other property (payable in kind), as the case
may be, into which or for which each Common Partnership Unit is changed or
exchanged. In the event the General Partner or the Partnership shall at any time
authorize, declare or pay any distribution on the Common Partnership Units
payable in Common Partnership Units, or effect a subdivision or combination or
consolidation of the outstanding Common Partnership Units (by reclassification
or otherwise than by payment of a distribution in Common Partnership Units) into
a greater or lesser number of Common Partnership Units, then in each such case
the amount set forth in the preceding sentence with respect to the exchange or
change of Series A Preferred Partnership Units shall be adjusted by multiplying
such amount by a fraction, the numerator of which is the number of Common
Partnership Units outstanding immediately after such event and the denominator
of which is the number of Common Partnership Units that were outstanding
immediately prior to such event.
(g) No Redemption. The Series A Preferred Partnership Units shall not
be redeemable.
(h) Rank. The Series A Preferred Partnership Units shall rank, with
respect to the payment of quarterly distributions and to participation in
distributions of payments in the case of any liquidation, dissolution or winding
up of the Partnership, junior to all other series of Preferred Partnership
Units.
(i) Amendment. The Agreement shall not be amended in any manner that
would materially alter or change the preferences, voting powers or other rights
or restrictions of the Series
130
A Preferred Partnership Units, as set forth herein, so as to affect them
adversely without the affirmative vote of the holders of at least two-thirds of
the outstanding Series A Preferred Partnership Units, voting together as a
single class.
131
EXHIBIT H
NOTICE OF ELECTION TO PURCHASE
(To be executed if Partner desires to exercise a Right)
To ▇▇▇▇▇▇-▇▇▇▇▇ PROPERTIES, INC.:
The undersigned Partner hereby irrevocably elects to exercise
______ Rights to purchase Common Partnership Units or Series A Preferred
Partnership Units, as applicable, issuable upon the exercise of the Rights and
requests that such Partnership Units be issued in the name of the undersigned
Partner.
Please insert social security
or other identifying taxpayer number:________________________
______________________________________________________________________________
(Please print name and address)
Date: ________________________
__________________________________
Signature
Signature Guaranteed:_____________________________
132