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EXHIBIT 10.1
FIRST AMENDED AND RESTATED AGREEMENT
OF LIMITED PARTNERSHIP
OF
PALACE OPERATING PARTNERSHIP, L.P.
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TABLE OF CONTENTS
Page
Article 1. Partnership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Continuation of Partnership; Partnership Interests . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Name . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.3 Number of Partners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Article 2. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Article 3. Capitalization And Withdrawal of Withdrawing Partner . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.1 Prior Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.2 Issuance and Redemption of Units . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.3 Additional Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.4 Capital Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
3.5 Interest on and Return of Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
3.6 Negative Capital Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
3.7 Limit on Contributions and Obligations of Partners . . . . . . . . . . . . . . . . . . . . . . . . . 17
3.8 Redemption and Repurchase of Units . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Article 4. Principal Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Article 5 Purpose and Powers of Partnership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.1 Purposes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.2. Powers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.3 REIT Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Article 6. Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Article 7. Allocations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
7.1 Profits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
7.2 Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
7.3 Special Allocations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
7.4 Curative Allocations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
7.5 Tax Allocations: Code Section 704(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Article 8. Cash Available for Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
8.1 Operating Cash Flow . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
8.2 Capital Cash Flow . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
8.3 Consent to Allocations and Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
8.4 Right to Limit Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
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Article 9. Management of Partnership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
9.1 General Partner . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
9.2 Limitations on Power and Authority of Partners . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
9.3 Limited Partners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
9.4 Liability of General Partner . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
9.5 Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
9.6 Other Activities of Partners and Agreements with Related Parties . . . . . . . . . . . . . . . . . . 26
9.7 Other Matters Concerning the General Partner . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
9.8 Partner Exculpation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
9.9 General Partner Expenses and Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Article 10. Banking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Article 11. Accounting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
11.1 Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
11.2 Books of Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
11.3 Method of Accounting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
11.4 Section 754 Election . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
11.5 Tax Matters Partner . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
11.6 Administrative Adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Article 12. Transfers of Partnership Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Article 13. Admission of New Partners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Article 14. Termination, Liquidation and Dissolution of Partnership . . . . . . . . . . . . . . . . . . . . . . 33
14.1 Termination Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
14.2 Method of Liquidation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
14.3 Date of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
14.4 Reconstitution Upon Bankruptcy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
14.5 Death, Legal Incompetency, Etc. of a Limited Partner . . . . . . . . . . . . . . . . . . . . . . . . 35
Article 15. Power of Attorney . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Article 16. Amendment of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Article 17. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
17.1 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
17.2 Modifications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
17.3 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
17.4 Duplicate Originals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
17.5 Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
17.6 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
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17.7 Other Instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
17.8 General Partner with Interest as Limited Partner . . . . . . . . . . . . . . . . . . . . . . . . . . 38
17.9 Legal Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
17.10 Gender . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
17.11 Prior Agreements Superseded . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
17.12 No Third Party Beneficiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
17.13 Purchase for Investment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
17.14 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
17.15 Time of Essence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Schedule A - Partners, Capital Accounts and Partnership Interests
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FIRST AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
PALACE OPERATING PARTNERSHIP, L.P.
THIS FIRST AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP (this
"Agreement") has been executed and delivered as of the 11th day of March, 1998,
by Palace REIT, a Texas real estate investment trust (the "General Partner" or
the "Company"), ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ (the "Withdrawing Partner") and those persons
and entities identified as "Limited Partners" in Schedule A (the "Limited
Partners"), (the General Partner and each Limited Partner being a "Partner" and
collectively, the "Partners").
RECITALS
A. The General Partner and the Withdrawing Partner are parties to
that certain Agreement of Limited Partnership of Palace Operating Partnership,
L.P. dated as of March 9, 1998 (the "Prior Partnership Agreement") and, in
accordance therewith, have been doing business as a Delaware limited
partnership (the "Partnership") under the name "Palace Operating Partnership,
L.P."
B. The Partners deem it to be in the best interest of the
Partnership to amend and restate the Prior Partnership Agreement and desire to
continue the Partnership in accordance with the Delaware Revised Uniform
Limited Partnership Act as amended (the "Act") and this Agreement.
THEREFORE, in consideration of the mutual covenants contained in this
Agreement, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Partners agree as follows:
Article 1. Partnership.
1.1 Continuation of Partnership; Partnership Interests.
The General Partner and the Limited Partners hereby continue the Partnership as
a Delaware limited partnership according to all of the terms and provisions of
this Agreement and otherwise in accordance with the Act. The General Partner
is the sole general partner and the Limited Partners are the sole limited
partners of the Partnership. All Partnership profits, losses, and distributive
shares of tax items accruing prior to the date of this Agreement shall be
allocated in accordance with, and the respective rights and obligations of the
Partners with respect to the period prior to the date of this Agreement shall
be governed by, the Prior Partnership Agreement. No Partner has any interest
in any Partnership property and the interest of all Partners in the Partnership
are, for all purposes, personal property.
1.2 Name. The Partnership name shall be "Palace
Operating Partnership, L.P.," but the General Partner may from time to time
change the name of the Partnership or may adopt such trade or fictitious names
as it may determine.
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1.3 Number of Partners. Unless the General Partner
determines that the Partnership will not be classified as a publicly traded
partnership for federal income tax purposes, the Partnership shall not at any
time have more than 100 partners (including as partners those persons
indirectly owning an interest in the Partnership through a partnership, limited
liability company, S corporation or grantor trust (such entity, a "flow through
entity"), but only if substantially all of the value of such person's interest
in the flow through entity is attributable to the flow through entity's
interest (direct or indirect) in the Partnership).
Article 2. Definitions.
2.1 As used in this Agreement, the following terms shall
have the meanings set forth respectively after each:
"Act" shall mean the Delaware Revised Uniform Limited Partnership Act,
as amended from time to time, and any successor statute.
"Adjusted Capital Account" shall mean, at any time, the then balance
in the Capital Account of a Partner as determined by the General Partner, after
giving effect to the following adjustments:
(i) add to such Capital Account any amounts that
such Partner is deemed obligated to restore as described in the
penultimate sentences of Regulations Section 1.704-2(g)(1) and
Regulations Section 1.704-2(i)(5), or any successor provisions; and
(ii) subtract from such Capital Account the items
described in Regulations Sections 1.704- 1(b)(2)(ii)(d)(4), (5) and
(6).
"Adjusted Capital Account Deficit" shall mean, with respect to any
Partner, the deficit balance, if any, in that Partner's Adjusted Capital
Account.
"Agreement" shall mean this First Amended and Restated Agreement of
Limited Partnership, as it may be amended from time to time.
"Bankruptcy" of a Partner shall mean (a) the filing by a Partner of a
voluntary petition seeking liquidation, reorganization, arrangement or
readjustment, in any form, of its debts under Title 11 of the United States
Code (or corresponding provisions of future laws) or any other federal or state
insolvency law, or a Partner's filing an answer consenting to or acquiescing in
any such petition, (b) the making by a Partner of any assignment for the
benefit of its creditors or the admission by a Partner in writing of its
inability to pay its debts as they mature, or (c) the expiration of sixty (60)
days after the filing of any involuntary petition seeking liquidation,
reorganization, arrangement or readjustment of its debts under Title 11 of the
United States Code (or corresponding provisions of future laws) or any other
Federal or state insolvency law, provided that the same shall not have been
vacated, set aside or stayed within such 60-day period.
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"Business Day" means any day other than Saturday or Sunday during
which national banks located in Dallas, Texas are customarily open for
business.
"Capital Account" shall mean the capital account maintained by the
Partnership for each Partner as described in Section 3.4 below. The Capital
Account balance of each Partner who is a Partner as of the effective date of
this Agreement shall be set forth opposite such Partner's name on Schedule A
hereto.
"Capital Cash Flow" shall have the meaning provided in Section 8.2
below.
"Capital Cash Flow Preference Units" shall have the meaning set forth
in Section 8.2.
"Capital Contribution" shall mean, when used in respect of a Partner,
if applicable, the initial capital contribution of such Partner as set forth in
Section 3.1 below, and any other amounts of money or the fair market value of
other property contributed by such Partner to the capital of the Partnership
with respect to the Partner's interest in the Partnership, including the
Capital Contribution made by any predecessor holder of the Partnership Interest
of such Partner.
"Cash Amount" means an amount of cash equal to the value of the REIT
Shares Amount on the date of receipt by the General partner of a Notice of
Redemption. The value of the REIT Shares Amount, as determined hereunder shall
be based upon the Market Price.
"Code" shall mean the Internal Revenue Code of 1986, as the same may
be amended from time to time, and any successor statute.
"Common Share" means a common share of beneficial interest in the
Company.
"Company" means Palace REIT, a Texas real estate investment trust and
the General Partner of the Partnership.
"Contributing Partner" shall have the meaning provided in clause (v)
of Section 3.2(B) below.
"Declaration of Trust" shall mean the Declaration of Trust of the
Company, as amended from time to time.
"Depreciation" shall mean for any fiscal year or portion thereof, an
amount equal to the depreciation, amortization or other cost recovery deduction
allowable with respect to an asset for such period for Federal income tax
purposes, except that if the Gross Asset Value of an asset differs from its
adjusted basis for Federal income tax purposes at the beginning of such period,
Depreciation shall be an amount that bears the same relationship to such
beginning Gross Asset Value as the depreciation, amortization or cost recovery
deduction in such period for Federal income tax purposes bears to the beginning
adjusted tax basis; provided, however, that if the adjusted basis for Federal
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income tax purposes of an asset at the beginning of such period is zero,
Depreciation shall be determined with reference to such beginning Gross Asset
Value using any reasonable method selected by the General Partner.
"Determination Date" shall have the meaning set forth in Section
3.2(B) or, as applicable, Section 3.2(C).
"Exchange Date" shall have the meaning provided in Section 3.2(F).
"General Partner" means Palace REIT, a Texas real estate investment
trust sometimes also referred to in this Agreement as the "Company."
"FPAA" shall have the meaning provided in Section 11.6.
"Gross Asset Value" means, with respect to any Partnership asset, the
asset's adjusted basis for Federal income tax purposes, except as follows:
(i) The initial Gross Asset Value of any asset
contributed by a Partner to the Partnership shall be the gross fair
market value of such asset, as determined by the General Partner;
(ii) The Gross Asset Value of all Partnership assets shall
be adjusted to equal their respective gross fair market values, as
determined by the General Partner, as of the following times: (a) the
acquisition of an additional interest in the Partnership by any new or
existing Partner in exchange for more than a de minimis Capital
Contribution; (b) the distribution by the Partnership to a Partner of
more than a de minimis amount of Partnership property as consideration
for an interest in the Partnership; and (c) the liquidation of the
Partnership within the meaning of Regulations Section
1.704-1(b)(2)(ii)(g); provided, however, that adjustments pursuant to
clauses (a) and (b) above shall be made only if the General Partner
reasonably determines that such adjustments are necessary or
appropriate to reflect the relative economic interests of the Partners
in the Partnership;
(iii) The Gross Asset Value of any Partnership asset
distributed to any Partner shall be adjusted to equal the gross fair
market value of such asset on the date of distribution as determined
by the General Partner; and
(iv) The Gross Asset Value of Partnership assets shall be
increased (or decreased) to reflect any adjustments to the adjusted
basis of such assets pursuant to Code Section 734(b) or Code Section
743(b), but only to the extent that such adjustments are taken into
account in determining Capital Accounts pursuant to Regulations
Section 1.704-1(b)(2)(iv)(m) and paragraph (vi) of the definition of
Profits and Losses and Section 7.3(G) below; provided, however, that
Gross Asset Value shall not be adjusted pursuant to this paragraph
(iv) to the extent the General Partner determines that an adjustment
pursuant to
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paragraph (ii) above is necessary or appropriate in connection with a
transaction that would otherwise result in an adjustment pursuant to
this paragraph (iv).
If the Gross Asset Value of an asset has been determined or adjusted pursuant
to paragraphs (i), (ii) or (iv) above, such Gross Asset Value shall thereafter
be adjusted by the Depreciation taken into account with respect to such asset
for purposes of computing Profits and Losses.
"IRS" shall have the meaning set forth in Section 11.6.
"Issuance Date" means with respect to OP Units owned by a Partner, the
date upon which such OP Units are issued to such Partner (and with respect to
Preference Units, shall have the meaning set forth in the applicable Preference
Unit Term Sheet).
"Limited Partner" shall mean any Person (i) whose name is set forth as
a Limited Partner on Schedule A attached hereto or who has become a Limited
Partner pursuant to the terms and conditions of this Agreement, and (ii) who
holds a partnership interest. "Limited Partners" means all such persons.
"Majority-in-Interest of the Limited Partners" shall mean, as of any
given time, Limited Partners who own more than fifty percent (50%) of the
Percentage Interests in the Partnership held by Limited Partners.
"Market Price" means (a) the average, for the most recent ten (10)
consecutive trading days for the Common Shares preceding the date of receipt by
the General Partner of the Notice of Redemption, of the last reported sales
price per share of the Common Shares at the close of trading on each such date
as reported in the Wall Street Journal, or (b) in the event that the Common
Shares have not traded for at least ten (10) consecutive trading days, then the
average as aforesaid over the most recent number of dates that Common Shares
have traded.
"Nonrecourse Deductions" has the meaning set forth in Regulations
Section 1.704-2(c).
"Nonrecourse Liability" has the meaning set forth in Regulations
Section 1.752-1(a)(2).
"Notice of Redemption" means a written notice delivered by a Redeeming
Partner to the Partnership (with a copy to the General Partner) under Section
3.2(C), pursuant to which the Redeeming Partner exercises the Redemption Right
with respect to all or a portion of its OP Units in accordance with the
provisions of Section 3.2(C).
"Operating Cash Flow" shall have the meaning provided in Section 8.1.
"OP Units" are units of Partnership Interest more particularly
described in Section 3.2.
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"OP Unit Value" shall mean, as of any given time, the number of OP
Units into which a Preference Unit is convertible (whether or not the
conversion can then be effected), or the value of the Preference Unit expressed
in OP Units if the Preference Unit is not convertible into OP Units, as
provided for in the applicable Preference Unit Term Sheet or Other Securities
Term Sheet.
"Other Securities" shall have the meaning set forth in clause (iv) of
Section 3.2(B).
"Other Securities Term Sheet" shall have the meaning provided in
clause (f) of Section 3.2(B).
"Partner Nonrecourse Debt" has the meaning set forth in Regulations
Section 1.704-2(b)(4).
"Partner Nonrecourse Debt Minimum Gain" has the meaning set forth in
Regulations Section 1.704-2(i).
"Partner Nonrecourse Deductions" has the meaning set forth in
Regulations Section 1.704-2(i).
"Partners" shall mean, collectively, the General Partner and the
Limited Partners, or any additional or successor partners of the Partnership
admitted to the Partnership in accordance with the terms of this Agreement.
References to a Partner shall be to any one of the Partners.
"Partnership Interest" shall mean the ownership interest of a Partner
in the Partnership at any particular time, including the right of such Partner
to any and all benefits to which such Partner may be entitled as provided in
this Agreement, and to the extent not inconsistent with this Agreement, under
the Act, together with the obligations of such Partner to comply with all of
the terms and provisions of this Agreement and the Act.
"Partnership Minimum Gain" has the meaning set forth in Regulations
Sections 1.704-2(b)(2) and 1.704-2(d).
"Percentage Interest" shall mean, as to each Partner, the quotient
(expressed as a percentage) arrived at by dividing (i) the sum of (A) the OP
Unit Value of any Preference Units held by that Partner and (B) the number of
OP Units held by that Partner, by (ii) the sum of (A) the OP Unit Value of all
Preference Units issued and outstanding at the time and (B) the total number of
OP Units issued and outstanding at the time. The respective Percentage
Interests of the Partners as of the date of this Agreement are set forth in
Schedule A attached to this Agreement.
"Person" means any individual, partnership, corporation, trust,
limited liability company or other entity.
"Preference Units" are units of Partnership Interest more particularly
described in Section 3.2(A).
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"Preference Unit Term Sheet" shall have the meaning provided in clause
(e) of Section 3.2(B).
"Prior Partnership Agreement" has the meaning set forth in Recital A.
"Profits" and "Losses" shall mean for each fiscal year or portion
thereof, an amount equal to the Partnership's items of taxable income or loss
for such year or period, determined by the General Partner in accordance with
Section 703(a) of the Code with the following adjustments:
(i) any income which is exempt from Federal income tax
and not otherwise taken into account in computing Profits or Losses
shall be added to taxable income or loss;
(ii) any expenditures of the Partnership described in Code
Section 705(a)(2)(B) or treated as Section 705(a)(2)(B) expenditures
under Regulations Section 1.704-1(b)(2)(iv)(i) and not otherwise taken
into account in computing Profits or Losses, will be subtracted from
taxable income or loss;
(iii) in the event that the Gross Asset Value of any
Partnership asset is adjusted pursuant to the definition of Gross
Asset Value contained in this Section 2, the amount of such adjustment
shall be taken into account as gain or loss from the disposition of
such asset for purposes of computing Profits and Losses;
(iv) gain or loss resulting from any disposition of
Partnership assets with respect to which gain or loss is recognized
for Federal income tax purposes shall be computed by reference to the
Gross Asset Value of the property disposed of, notwithstanding that
the adjusted tax basis of such property differs from its Gross Asset
Value;
(v) in lieu of the depreciation, amortization and other
cost recovery deductions taken into account in computing such taxable
income or loss, there shall be taken into account Depreciation for
such fiscal year or other period;
(vi) to the extent an adjustment to the adjusted tax basis
of any Partnership asset pursuant to Code Section 734(b) or Code
Section 743(b) is required pursuant to Regulations Section
1.704-1(b)(2)(iv)(m)(4) to be taken into account in determining
Capital Accounts as a result of a distribution other than in complete
liquidation of a Partner's Partnership Interest, the amount of such
adjustment shall be treated as an item of gain (if the adjustment
increases the basis of the asset) or loss (if the adjustment decreases
the basis of the asset) from the disposition of the asset and shall be
taken into account for purposes of computing Profits or Losses; and
(vii) any items specially allocated pursuant to Section 7.3
or Section 7.4 shall not be considered in determining Profits or
Losses.
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"Recapitalization" shall have the meaning provided in Section 3.2(E).
"Record Date" shall have the meaning provided in Section 9.1.
"Redeeming Partner" shall have the meaning provided in Section 3.2(C).
"Redemption Amount" means either the Cash Amount or the REIT Shares
Amount as determined pursuant to Section 3.2 hereof.
"Redemption Right" shall have the meaning provided in Section 3.2(C).
"Regulations" shall mean the Income Tax Regulations, including
Temporary Regulations, promulgated under the Code, as such regulations may be
amended from time to time (including corresponding provisions of succeeding
regulations).
"REIT" shall have the meaning provided in Section 5.3.
"REIT Requirements" shall have the meaning provided in Section 5.3.
"REIT Shares Amount" means a number of Common Shares equal to the
number of OP Units offered for redemption by a Redeeming Partner, as adjusted
pursuant to Sections 3.2(E) and (F).
"Residual Operating Cash Flow Preference Units" shall have the meaning
provided in Section 8.1.
"Rights" shall have the meaning provided in Section 3.2(F).
"Specified Redemption Date" means with respect to a Redeeming Partner,
the date that is ten Business Days after receipt by the General Partner of the
Notice of Redemption from such Partner.
"TMP" shall have the meaning provided in Section 11.5.
"Transfer" shall have the meaning provided in Section 12(B).
"Transferee" shall have the meaning provided in Section 12(B).
"Units" has the meaning set forth in Section 3.2(A).
Article 3. Capitalization And Withdrawal of Withdrawing Partner.
3.1 Prior Capital. The initial capital contributions to
the Partnership were made by the General Partner and the Withdrawing Partner
and consisted of $990.00 and $10.00,
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respectively. As of the effective date of this Agreement the Withdrawing
Partner has withdrawn from the Partnership and no longer has any interest in
the Partnership. As of the effective date hereof, the Limited Partners have
made contributions of cash and/or property to the Partnership, and the amount
of such cash contributions and the Gross Asset Value of such in-kind Capital
Contributions are reflected in the Capital Account balance of each such Partner
as set forth opposite such Partner's name on the attached Schedule A.
3.2 Issuance and Redemption of Units.
A. The interest of a Partner in the Partnership is
referred to as being evidenced by one or more "Units." Units may be
either "OP Units" or "Preference Units":
(i) An "OP Unit" is a unit of Partnership
Interest that, as more particularly provided for below in
Section 3.2(C), may be redeemed for the Redemption Amount.
(ii) A "Preference Unit" is a unit of Partnership
Interest having such rights, preferences and other privileges,
variations and designations as may be determined by the
General Partner in its sole and absolute discretion (but not
in violation of the provisions of Section 3.2(B) or the terms
of any other Preference Unit(s) Term Sheets). There may be
more than one series or class of Preference Units having
differing terms and conditions, but all Preference Units
within a given series or class shall have the same rights,
preferences and other privileges, variations and designations.
With respect to each series or class of Preference Units, the
General Partner may also, in its discretion, determine and
fix, among other terms and conditions, any of the following:
(a) the series to which such Preference Units shall belong,
(b) the distribution rate therefor, (c) the price at and the
terms and conditions on which such Preference Units may be
redeemed, (d) the amount payable in respect of such Preference
Units in the event of involuntary or voluntary liquidation,
(e) the terms and conditions on which such Preference Units
may be converted and the securities into which such Preference
Units may be converted (and/or the valuation of such
Preference Units as measured in OP Units), if such Preference
Units are issued with the privilege of conversion, and (f) the
number of such Preference Units to be issued as a part of such
series. Once determined and fixed as herein provided,
however, the terms and conditions of a particular series or
class of Preference Units may not be changed without the
written consent of the holders of at least 67%of the
Preference Units within the class or series (or such greater
percentage as may be provided for in the applicable Preference
Unit Term Sheet or Other Securities Term Sheet, as the case
may be).
The aggregate total of all Units outstanding as of the date of this Agreement
is 415,312 (assuming full conversion of all outstanding Preference Units into
OP Units). As of the date of this Agreement, each Partner is deemed to hold
Units as shown on Schedule A.
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B. From time to time hereafter, subject to and in
accordance with the provisions of this Section 3.2(B), the General
Partner shall cause the Partnership to issue additional Units as
follows:
(i) OP Units to the Company upon the issuance by
the Company of additional Common Shares (other than in
exchange for OP Units) and the contribution of the net
proceeds thereof as a Capital Contribution to the Partnership
as provided for in Section 3.3(B) below it being understood,
however, that the Company may issue Common Shares in
connection with share option plans, dividend reinvestment
plans, restricted share plans or other benefit or compensation
plans (for example, shares issued in lieu of fees or
compensation) without receiving any proceeds and that the
issuance of such Common Shares shall nonetheless entitle the
Company to receive additional OP Units pursuant to this clause
(i);
(ii) OP Units to Partners (including itself) that
hold Preference Units that are convertible into OP Units, upon
the exercise of such conversion in accordance with the terms
and conditions of the Preference Unit Term Sheet or Other
Securities Term Sheet applicable thereto;
(iii) OP Units to Partners holding OP Units
(including itself) if and to the extent of each such Partner's
participation in any reinvestment program contemplated by
Section 3.3(C) below;
(iv) Preference Units to the Company upon the
issuance by the Company of securities other than Common Shares
whether debt or equity securities ("Other Securities") and the
contribution of the net proceeds thereof as a Capital
Contribution to the Partnership as provided for in Section
3.3(B) below; and
(v) in all other cases, OP Units and/or
Preference Units, as determined by the General Partner, in its
discretion, to existing or newly-admitted Partners (including
itself), in exchange for the contribution by a Partner (the
"Contributing Partner") of Capital Contributions to the
Partnership.
Issuance of OP Units as aforesaid shall be in accordance with the following:
(a) the number of OP Units issued to the Company under
clause (i) of this Section 3.2(B) shall be equal to the number of
Common Shares issued;
(b) the number of OP Units issued to a Partner under
clause (ii) of this Section 3.2(B) shall be as provided for in the
Preference Unit Term Sheet or the Other Securities Term Sheet pursuant
to which the Preference Units being converted exist;
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(c) the number of OP Units issued to a Limited Partner
under clause (iii) of this Section 3.2(B) shall be as provided for in
the applicable reinvestment program; and
(d) the number of OP Units issued to a Contributing
Partner under clause (v) of this Section 3.2(B) shall be equal to the
quotient (rounded to the nearest whole number) arrived at by dividing
(x) the initial Gross Asset Value of the property contributed as
additional Capital Contributions (net of any debt to which such
property is subject or assumed by the Partnership in connection with
such contribution) by (y) the Market Price (as hereinafter defined).
For purposes of this Section 3.2(B) only, the "Determination Date" shall mean
the trading date, preceding the issuance of the OP Units, selected by the
General Partner, in its discretion, based on the particular facts and
circumstances surrounding the proposed issuance of the OP Units in question.
Issuance of Preference Units as aforesaid shall be in accordance with the
following:
(e) Preference Units issued pursuant to clause (v) of
this Section 3.2(B) shall have the terms and conditions specified in
an agreement (a "Preference Unit Term Sheet") executed by and between
the Partnership (at the direction or in the discretion of the General
Partner) and the Contributing Partner. The number of Preference Units
issued to a Contributing Partner under clause (v) of this Section
3.2(B) shall be equal to the quotient (rounded to the nearest whole
number) arrived at by dividing (x) the Initial Gross Asset Value of
the property contributed as additional capital contributions (net of
any debt to which such property is subject or assumed by the
Partnership in connection with such contribution) by (y) an amount
provided for in the Preference Unit Term Sheet; and
(f) Preference Units issued pursuant to clause (iv) of
this Section 3.2(B) shall have economic terms substantially identical
to those of the applicable Other Securities and such other terms and
conditions, all of which are specified in an agreement (an "Other
Securities Term Sheet") executed between the Partnership and the
Company and such Other Securities Term Sheet shall thereupon be a part
of this Agreement.
Units may also be issued to some or all of the Partners holding Preference
Units if and to the extent of such Partner's participation in any reinvestment
program contemplated by Section 3.3(C). Upon the issuance of additional OP
Units and/or Preference Units in accordance with the provisions of this Section
3.2(B), each recipient of such Units shall either execute this Agreement or a
joinder to this Agreement (which joinder, as to Preference Units, may be a part
of any applicable Preference Unit Term Sheet or Other Securities Term Sheet)
and, as applicable, the Percentage Interest of all of the Partners shall
thereupon be appropriately adjusted by the General Partner; provided however,
in no event shall any additional Preference Units or OP Units be issued
(pursuant to this Section 3.2(B) or otherwise) to the extent that the effect of
such issuance would be to reduce the General Partner's Percentage Interest
(including any interest held by the General Partner or the Company as a Limited
Partner) to fifty percent (50%) or less, unless the General Partner shall in
its sole discretion determine that such issuance of Preference Units or OP
Units is appropriate.
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C. Subject to the provisions of Section 3.2(E), on or
after the date which is one (1) year after the Issuance Date, each
Limited 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 OP Units held by such Limited Partner at a redemption
price equal to and in the form of the Redemption Amount. 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 Company and/or the
General Partner elects to purchase the OP Units subject to the Notice
of Redemption pursuant to Section 3.2(D); and provided, further, that
no Limited Partner may deliver to the General Partner more than four
(4) Notices of Redemption during each calendar year. In addition to
the restrictions on redemption set forth in Section 3.2(E), a Limited
Partner may not exercise the Redemption Right for less than one
thousand (1,000) OP Units or, if such Limited Partner holds less than
one thousand (1,000) OP Units, all of the OP Units held by such
Partner. Notwithstanding the foregoing provisions of this Section
3.2(C), the Company and the General Partner agree to use their best
efforts to cause the closing of the acquisition of redeemed OP Units
hereunder to occur as quickly as reasonably possible. The Redeeming
Partner shall have no right, with respect to any OP Units so redeemed,
to receive any distribution paid with respect to OP Units if the Record
Date for such distribution is on or after the Specified Redemption
Date.
D. Notwithstanding the provisions of Section 3.2(C), a
Limited Partner that exercises the Redemption Right shall be deemed to
have offered to sell the OP Units described in the Notice of
Redemption to the General Partner and the Company, and either of the
General Partner or the Company (or both or any designee thereof) may,
in their sole and absolute discretion, elect to purchase directly and
acquire such OP Units by paying to the Redeeming Partner either the
Cash Amount, or, the REIT Shares Amount, as elected by the General
Partner or the Company or any designee thereof (each in its sole and
absolute discretion), on the Specified Redemption Date, whereupon the
General Partner and/or the Company or any designee thereof shall
acquire the OP Units offered for redemption by the Redeeming Partner
and shall be treated for all purposes of this Agreement as the owner
of such OP Units. If the General Partner and/or the Company or any
designee thereof shall elect to exercise their right to purchase OP
Units under this Section 3.2(D) with respect to a Notice of
Redemption, they shall so notify the Redeeming Partner within five
Business Days after the receipt by the General Partner of such Notice
of Redemption. Unless the General Partner and/or the Company or any
designee thereof (each in its sole and absolute discretion) shall
exercise its right to purchase OP Units from the Redeeming Partner
pursuant to this Section 3.2(D), neither the General Partner nor the
Company or any designee thereof shall have any obligation to the
Redeeming Partner or the Partnership with respect to such Redeeming
Partner's exercise of such Redemption Right. In the event that the
General Partner or the Company or any designee thereof shall exercise
its right to purchase OP Units with respect to the exercise of a
Redemption Right in the manner described in the first sentence of this
Section 3.2(D), the Partnership shall have no obligation to pay any
amount to the Redeeming
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Partner with respect to such Redeeming Partner's exercise of such
Redemption, and each of the Redeeming Partner, the Partnership, and
the General Partner or the Company or any designee thereof, as the
case may be, shall treat the transaction between the General Partner
or the Company or any designee thereof, as the case may be, and the
Redeeming Partner for federal income tax purposes as a sale of the
Redeeming Partner's OP Units to the General Partner or the Company or
any designee thereof. Each Redeeming Partner agrees to execute such
documents as the General Partner may reasonably require in connection
with the issuance of Common Shares upon exercise of the Redemption
Right.
E. The Company shall at all times reserve and keep
available out of its authorized but unissued Common Shares, solely for
the purpose of effecting the exchange of OP Units for Common Shares,
such number of Common Shares as shall from time to time be sufficient
to effect the redemption of all outstanding OP Units not owned by the
Company, and any Preference Units not owned by the Company that are
convertible into OP Units (whether or not the conversion can then be
effected). No Limited Partner shall, by virtue of being the holder of
one or more OP Units and/or Preference Units be deemed to be a
shareholder of or have any other interest in the Company. In the
event of any change in the outstanding Common Shares of the Company or
its successor by reason of any share dividend, split,
recapitalization, merger, consolidation, combination, exchange of
shares or other similar corporate change other than the issuance of
Rights, as further described in Section 3.2(F) (a "Recapitalization"),
the number of OP Units held by each Partner shall be adjusted upward
or downward to equal such number of Common Shares of the Company (or
as applicable, the Common Shares or equivalent class of securities of
the successor thereto) as would have been held by the Partner
immediately following the Recapitalization if such Partner had held a
number of Common Shares equal to such number of OP Units immediately
prior to such Recapitalization. In the event the Company or the
General Partner or any designee thereof acquires OP Units pursuant to
such Section 3.2(D), the General Partner shall record the transfer on
the books of the Partnership so that the Company or the General
Partner or any designee thereof, as applicable, is thereupon the owner
and holder of such OP Units. Notwithstanding the foregoing provisions
of this Section 3.2, a Limited Partner shall not have the right to
exercise a Redemption Right if, upon payment of the REIT Shares Amount
to such Limited Partner, (i) the Company would, as a result thereof,
no longer qualify (or it would be reasonably possible in the judgement
of the General Partner that the Company no longer would qualify) as a
real estate investment trust under the Code; or (ii) the payment of
such REIT Shares Amount to the Limited Partner would constitute or be
reasonably possible in the judgment of the General Partner to
constitute a violation of applicable federal or state securities laws
or would violate any applicable provisions of the organizational
documents of the Company (including without limitation any
restrictions on ownership of securities of the Company set forth in
the Declaration of Trust or Bylaws of the Company). In either such
event, to the extent the consequences described in (i) or (ii) could
be eliminated by reasonable action of the General Partner or the
Company without any material detriment to the General Partner or the
Company and at the expense of such Limited Partner(s) requesting such
exchange, the Company or the General Partner shall take all such
reasonable action to effect the exchange of OP Units for Common Shares
by such Limited Partner(s) as herein provided.
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F. In the event that a Redeeming Partner exercises the
Redemption Right, and the Company or the General Partner or any
designee thereof elects to make the payment of the REIT Shares Amount
to the Redeeming Partner referenced in accordance with the first
sentence of Section 3.2(D), and in the event that the Company issues
to all of its holders of Common Shares as of a certain record date
rights, options, warrants or convertible or exchangeable securities
entitling such shareholders to subscribe for or purchase Common Shares
or any other securities or property (collectively, "Rights"), with the
record date for such Rights issuance falling within the period
starting on the date that the Company receives the Redemption Notice
from the Redeeming Partner and ending on the day immediately preceding
the date upon which the Company, the General Partner or their designee
delivers the Common Shares to the Redeeming Partner in exchange for
such Redeeming Partner's OP Units (the date upon which such exchange
occurs being referred to herein as the "Exchange Date"), which Rights
will not be distributed before the Exchange Date, then the amount
payable by the Company, the General Partner or their designee to the
Redeeming Partner in exchange for its OP Units under this Section 3.2
shall also include such Rights that the Redeeming Partner would have
received if it had been the owner of the Common Shares to be delivered
by the Company to the Redeeming Partner prior to the record date for
the issuance of the Rights (as the same may be expressed for any
purpose hereunder in a number of OP Units or Common Shares as
determined by the General Partner).
3.3 Additional Funds.
A. No Partner shall be assessed or, except as otherwise
provided in this Agreement, required to contribute additional funds or
other property to the Partnership. Any additional funds or other
property required by the Partnership, as determined by the General
Partner in its sole discretion, may, at the option of the General
Partner and without an obligation to do so (except as provided for in
Section 3.3(B) below), be contributed by the General Partner or any
other Partner (provided such other Partner is willing to do so and the
General Partner consents thereto, each in its sole and absolute
discretion) as additional Capital Contributions. If and as the
General Partner or any other Partner makes additional Capital
Contributions to the Partnership, each such Partner shall receive
additional OP Units and/or Preference Units as provided for in Section
3.2(B) above. The General Partner shall also have the right (but not
the obligation) to raise any additional funds required for the
Partnership in accordance with the provisions of Section 9.7(E) below
and/or by causing the Partnership to borrow the necessary funds from
third parties on such terms and conditions as the General Partner
shall deem appropriate in its sole discretion. If the General Partner
elects to cause the Partnership to borrow the additional funds, or if
the Partnership issues a guaranty, indemnity or similar undertaking in
connection with the indebtedness of the Company as aforesaid, in any
such case one or more of the Partnership's assets may be encumbered to
secure the loan or undertaking. Except as provided for in Section
3.3(C) below, no Limited Partner shall have the right to make
additional Capital Contributions to the Partnership without the prior
written consent of the General Partner.
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B. Except for (i) the capitalization of any wholly-owned
entity of the General Partner which is the general partner of a
partnership having the Partnership as a limited partner, (ii) the net
proceeds generated by the issuance of Other Securities that evidence
debt (and are not equity securities) that are loaned by the Company to
the Partnership, and (iii) where the Company determines that the net
proceeds generated by the issuance of Common Shares or Other
Securities (whether for debt or equity) are retained by the Company
for a valid business reason consistent with the purposes of the
Partnership and such retention does not materially adversely affect
the Limited Partners, the net proceeds of any and all funds raised by
or through the Company through the issuance of Common Shares or Other
Securities shall be contributed to the Partnership as additional
Capital Contributions, and in such event the Company shall be issued
additional Units pursuant to Section 3.2(B) above.
C. If the General Partner creates and administers a
reinvestment program in substantial conformance with a dividend
reinvestment program which may be available from time to time to
holders of the Common Shares, each Limited Partner holding OP Units
shall have the right to reinvest any or all cash distributions payable
to it from time to time pursuant to this Agreement by having some or
all (as the Limited Partner elects) of such distributions contributed
to the Partnership as additional Capital Contributions, and in such
event the Partnership shall issue to each such Limited Partner
additional OP Units pursuant to clause (iii) of Section 3.2(B) above,
or the General Partner, in its sole discretion, may elect to cause
distributions with respect to which a Limited Partner has elected
reinvestment to be contributed to the Company in exchange for the
issuance of Common Shares. At the option of the General Partner, such
a program may also be made available with respect to Preference Units.
3.4 Capital Accounts. A separate capital account
("Capital Account") shall be maintained for each Partner.
A. To each Partner's Capital Account there shall be
added such Partner's Capital Contributions, such Partner's
distributive share of Profits and any items in the nature of income or
gain which are specially allocated pursuant to Section 7.3, Section
7.4 or Section 14.2(C) hereof, and the amount of any Partnership
liabilities assumed by such Partner or which are secured by any
Partnership property distributed to such Partner.
B. From each Partner's Capital Account there shall be
subtracted the amount of cash and the Gross Asset Value of any
Partnership property distributed to such Partner pursuant to any
provision of this Agreement, such Partner's distributive share of
losses and any items in the nature of expenses or losses which are
specially allocated pursuant to Section 7.3, Section 7.4 or Section
14.2(C) hereof, and the amount of any liabilities of such Partner
assumed by the Partnership or which are secured by any property
contributed by such Partner to the partnership.
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C. In the event all or a portion of a Partnership
Interest is transferred in accordance with the terms of this Agreement
(including a transfer of OP Units in exchange for Common Shares,
pursuant to Section 3.2(D)), the transferee shall succeed to the
Capital Account of the transferor to the extent it relates to the
transferred Partnership Interest.
D. In determining the amount of any liability for
purposes of Sections 3.4(A) and 3.4(B) above, there shall be taken
into account Code Section 752(c) and any other applicable provisions
of the Code and Regulations.
E. This Section 3.4 and the other provisions of 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, or the
Partners) are computed in order to comply with such Regulations, the
General Partner may make such modification, provided that it is not
likely to have a material effect on the amounts distributed to any
Partner pursuant to Section 14.2 upon the liquidation 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)(g),
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).
3.5 Interest on and Return of Capital.
A. No Partner shall be entitled to any interest on its
Capital Account or on its Capital Contributions to the Partnership.
B. Except as expressly provided for in this Agreement,
no Partner shall have the right to demand or to receive the return of
all or any part of his Capital Contributions to the Partnership and
there shall be no priority of one Partner over the other as to the
return of capital contributions or withdrawals or distributions of
profits and losses. No Partner shall have the right to demand or
receive property other than cash in return for the contributions of
such Partner to the Partnership.
3.6 Negative Capital Accounts. Subject to the provisions
of any guarantee or other written agreement between a Partner and the
Partnership, no Partner shall be required to pay to the Partnership any deficit
or negative balance which may exist in its Capital Account.
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3.7 Limit on Contributions and Obligations of Partners.
Except as provided in Sections 3.1, 3.2 and 3.3 (or the provisions of any
guarantee or other written agreement between a Partner and the Partnership) no
Partner shall be required to make any additional advances or contributions to
or on behalf of the Partnership or to endorse any obligations of the
Partnership.
3.8 Redemption and Repurchase of Units. Notwithstanding
any other provision of this Agreement which may be contrary to this Section
3.8, in the event of the proposed repurchase or redemption for cash by the
Company of (i) Common Shares or (ii) Other Securities with respect to which the
Company had previously been issued Preference Units pursuant to Section
3.2(B)(iv) of this Agreement, then, in such event, the Partnership shall
provide cash to the Company concurrently with such repurchase or redemption or
for such purpose equal to the proposed repurchase or redemption price, and one
OP Unit owned by the General Partner (or, in the case of redemption or
repurchase by the Company of Other Securities contemplated by clause (ii)
above, one Preference Unit owned by the General Partner which had been issued
with respect to such Other Securities) shall be canceled with respect to each
Common Share (or share of Other Securities) so repurchased or redeemed.
Article 4. Principal Office. The principal office of the
Partnership shall be located at ▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇▇▇, or at such other place as the General Partner may designate after
giving written notice of such designation to the other Partners.
Article 5. Purpose and Powers of Partnership.
5.1 Purposes. The purposes of the Partnership shall be
to acquire, purchase, own, operate, manage, develop, redevelop, invest in,
finance, refinance, sell, lease and otherwise deal with commercial properties
and assets related thereto, and interests therein, whether directly or
indirectly, alone or in association with others. The purposes of the
Partnership include, but are not limited to:
(A) acquiring, developing, operating, leasing and
managing commercial properties and conducting any other lawful
business relating thereto;
(B) financing, mortgaging, exchanging, selling,
encumbering or otherwise disposing of all or any part of a
commercial property or any interest therein;
(C) constructing, reconstructing, altering,
modifying and subtracting from or adding to a commercial
property or any part thereof;
(D) organizing and holding interests in
corporations, partnerships, limited liability companies and
other entities owning or otherwise having an interest in,
whether directly or indirectly, one or more commercial
properties; and
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(E) in general, the making of any investments or
expenditures, the borrowing and lending of money and the
taking of any and all actions which are incidental or related
to any of the purposes recited above.
It is agreed that each of the foregoing is an ordinary part of the
Partnership's business and affairs. Property may be acquired subject
to, or by assuming, the liens, encumbrances, and other title
exceptions which affect such Property. The Partnership may also be a
partner (general or limited) in partnerships (general or limited), a
venturer in joint ventures, a shareholder in corporations, a member in
limited liability companies or an investor in any other type of
business entity created to accomplish all or any of the foregoing.
5.2. Powers. The Partnership purposes may be accomplished
by taking any action which is not prohibited under the Act and which is related
to the acquisition, ownership, development, improvement, operation, management,
financing, leasing, exchanging, selling or otherwise encumbering or disposing
of all or any portion of the assets of the Partnership, or any interest
therein.
5.3 REIT Requirements. Each Limited Partner understands
and acknowledges that the General Partner has elected to be treated as a real
estate investment trust ("REIT") under Code Section 856. Each Limited Partner
further understands and acknowledges that in order to maintain its status as a
REIT, the General Partner must comply with numerous and complex rules and
regulations set forth in the Code and the Regulations, many of which are
applied on a quarterly and/or annual basis (the "REIT Requirements"), and that
the management and operation of the Partnership will have a material effect on
the ability of the General Partner to continue to maintain its status as a
REIT. Accordingly, notwithstanding any other provision of this Agreement or
any non-mandatory provision of the Act, the Partnership shall not take any
action which (or fail to take any action, the omission of which) (i) could
adversely affect the ability of the General Partner to qualify or continue to
qualify as a REIT, (ii) could subject the General Partner to any additional
taxes under Code Section 857 or Code Section 4981 or other potentially adverse
consequences under the Code, or (iii) otherwise could cause the General Partner
to violate the REIT Requirements. In addition, notwithstanding any other
provision of this Agreement or any non-mandatory provision of 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 General Partner's business judgement 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.
Article 6. Term. The term of the Partnership shall continue
until the Partnership is terminated upon the occurrence of an event described
in Section 14.1 below.
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Article 7. Allocations.
7.1 Profits.
A. After giving effect to the allocations set forth in
Sections 7.3, 7.4 and 14.2(C), Profits for any fiscal year shall be
allocated (i) first to the General Partner until the cumulative
Profits allocated to the General Partner under this Section 7.1(A)(i)
equal the cumulative Losses allocated to the General Partner under
Section 7.2(B), and (ii) second among the Partners in proportion to
their respective Percentage Interests.
B. In the event that the Partnership issues additional
Units to the General Partner or any Limited Partner pursuant to
Section 3.2 hereof, the General Partner shall make such revisions to
this Section 7.1 as it determines are necessary to reflect the terms
of the issuance of such additional Units, including, but not limited
to, making special allocations of Profits and Losses and other
Partnership items to certain classes of Units.
7.2 Losses.
A. After giving effect to the special allocations set
forth in Sections 7.3, 7.4, and 14.2(C), Losses for any fiscal year
shall be allocated among the Partners in proportion to their
respective Percentage Interests.
B. The Losses allocated pursuant to Section 7.2(A) above
shall not exceed the maximum amount of Losses that can be so allocated
without causing any Limited Partner to have an Adjusted Capital
Account Deficit at the end of any fiscal year. All Losses in excess
of the limitations set forth in this Section 7.2(B) shall be allocated
to the General Partner.
C. In the event that the Partnership issues additional
Units to the General Partner or any Limited Partner pursuant to
Section 3.2 hereof, the General Partner shall make such revisions to
this Section 7.2 as it determines are necessary to reflect the terms
of the issuance of such additional Units, including, but not limited
to, making special allocations of Profits and Losses and other
Partnership items to certain classes of Units.
7.3 Special Allocations. The following special
allocations shall be made in the following order:
A. Minimum Gain Chargeback. Except as otherwise
provided in Regulations Section 1.704-2(f), notwithstanding any other
provision of this Article 7, if there is a net decrease in Partnership
Minimum Gain during any fiscal year, each Partner shall be specially
allocated items of Partnership income and gain for such fiscal year
(and, if necessary, subsequent fiscal years) in an amount equal to
such Partner's share of the net decrease in Partnership Minimum Gain,
determined in accordance with Regulations Section 1.704-2(g). The
items to be so allocated shall be determined in accordance with
Regulations Sections 1.704-2(f)(6) and 1.704-2(j)(2). This Section
7.3(A) is intended to comply with the
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minimum gain chargeback requirement in Section 1.704-2(f) of the
Regulations and shall be interpreted consistently therewith.
B. Partner Minimum Gain Chargeback. Except as otherwise
provided in Regulations Section 1.704-2(i)(4), notwithstanding any
other provision of this Article 7, if there is a net decrease in
Partner Nonrecourse Debt Minimum Gain attributable to a Partner
Nonrecourse Debt during any Partnership fiscal year, each Partner who
has a share of the Partner Nonrecourse Debt 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 fiscal year (and, if
necessary, subsequent fiscal years) in an amount equal to such
Partner's share of the net decrease in Partner Nonrecourse Debt
Minimum Gain attributable to such Partner Nonrecourse Debt, determined
in accordance with Regulations Section 1.704-2(i)(4). The items to be
so allocated shall be determined in accordance with Regulations
Sections 1.704-2(i)(4) and 1.704-2(i)(2). This Section 7.3(B) is
intended to comply with the minimum gain chargeback requirement in
Regulations Section 1.704-2(i)(4) and shall be interpreted
consistently therewith.
C. Qualified Income Offset. In the event any Partner
unexpectedly receives any adjustments, allocations, or distributions
described in Regulations Section 1.704-1(b)(2)(ii)(d)(4), Section
1.704-1(b)(2)(ii)(d)(5), or Section 1.704-1(b)(2)(ii)(d)(6), items of
Partnership income and gain shall be specially allocated to each such
Partner in an amount and manner sufficient to eliminate, to the extent
required by the Regulations, the Adjusted Capital Account Deficit of
such Partner as quickly as possible, provided that an allocation
pursuant to this Section 7.3(C) shall be made only if and to the
extent that such Partner would have an Adjusted Capital Account
Deficit after all other allocations provided for in this Article 7
have been tentatively made, as if this Section 7.3(C) were not in this
Agreement.
▇. ▇▇▇▇▇ Income Allocation. In the event any Partner
has a deficit Capital Account at the end of any Partnership fiscal
year which is in excess of the sum of (i) the amount such Partner is
obligated to restore pursuant to any provision of this Agreement, and
(ii) the amount such Partner 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), each such Partner shall be specially
allocated items of Partnership income and gain in the amount of such
excess as quickly as possible, provided that an allocation pursuant to
this Section 7.3(D) shall be made only if and to the extent that such
Partner would have a deficit Capital Account after all other
allocations provided for in this Article 7 have been made as if
Section 7.3(C) hereof and this Section 7.3(D) were not in the
Agreement.
E. Preferential Gross Income Allocations. If and to the
extent Partners receive distributions from the Partnership (other than
distributions pursuant to Section 14.2(C) in final liquidation of the
Partnership), each such Partner shall be allocated an equal amount of
Partnership gross income prior to any allocations of Profit and Loss
pursuant to Sections 7.1
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and 7.2 above. For purposes of this Section 7.3(E), any payment with
respect to a Preference Unit that, under the applicable Preference
Unit Term Sheet or Other Securities Term Sheet, as the case may be,
constitutes a payment in redemption of such Preference Unit (and a
return of the Partner's Capital Contribution with respect to such
Preference Unit) shall not result in a special allocation of gross
income to the Partner receiving such payments under this Section
7.3(E), except to the extent such payment is specifically attributable
to accrued and unpaid preferred distributions with respect to such
Preference Unit provided for in such Preference Unit Term Sheet or
Other Securities Term Sheet.
F. Nonrecourse Deductions. Nonrecourse Deductions for
any fiscal year shall be allocated among the Partners in accordance
with their respective Percentage Interests.
G. Partner Nonrecourse Deductions. Any Partner
Nonrecourse Deductions for any fiscal year shall be specially
allocated to the Partner who bears the economic risk of loss with
respect to the Partner Nonrecourse Debt to which such Partner
Nonrecourse Deductions are attributable, in accordance with
Regulations Section 1.704-2(i)(1).
H. Section 754 Adjustments. To the extent an adjustment
to the adjusted tax basis of any Partnership asset pursuant to Code
Section 734(b) or Code Section 743(b) is required, pursuant to
Regulations Section 1.704-1(b)(2)(iv)(m)(2) or Regulations Section
1.704-1(b)(2)(iv)(m)(4), to be taken into account in determining
Capital Accounts as the result of a distribution to a Partner in
complete liquidation of his interest in the Partnership, the amount of
such adjustment to Capital Accounts shall be treated as an item of
gain (if the adjustment increases the basis of the asset) or loss (if
the adjustment decreases such basis) and such gain or loss shall be
specifically allocated to the Partners in accordance with their
respective Percentage Interests in the event that Regulations Section
1.704-1(b)(2)(iv)(m)(2) applies, or the Partner to whom such
distribution was made in the event that Regulations Section
1.704-1(b)(2)(iv)(m)(4) applies.
7.4 Curative Allocations. The allocations set forth in
Sections 7.2(B), 7.3(A), 7.3(B), 7.3(C), 7.3(D), 7.3(F), 7.3(G), and 7.3(H)
above (the "Regulatory Allocations") are intended to comply with certain
requirements of the Regulations under Sections 704(b) and 514(c)(9)(E) of the
Code. It is the intent of the Partners that, to the extent possible, all
Regulatory Allocations shall be offset either with other Regulatory Allocations
or with special allocations of other items of Partnership income, gain, loss,
or deduction pursuant to this Section 7.4. Therefore, notwithstanding any
other provision of this Article 7 (other than the Regulatory Allocations), the
General Partner shall make such offsetting special allocations of Partnership
income, gain, loss, or deduction in whatever manner it determines appropriate
so that, after such offsetting allocations are made, each Partner's Capital
Account balance is, to the extent possible, equal to the Capital Account
balance such Partner would have had if the Regulatory Allocations were not part
of the Agreement and all Partnership items were allocated pursuant to Section
7.1(A)(ii) and 7.2(A) (subject, however, to Section 7.3(E) above). In
exercising its discretion under this Section 7.4, the General Partner shall
take into account future Regulatory Allocations under Section 7.3(A) and 7.3(B)
that, although not
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yet made, are likely to offset other Regulatory Allocations previously made
under Sections 7.3(F) and 7.3(G).
7.5 Tax Allocations: Code Section 704(c).
A. Income, gain, loss, and deduction with respect to any
property contributed to the capital of the Partnership shall, solely
for tax purposes, be allocated among the Partners so as to take
account of any variation between the adjusted basis of such property
to the Partnership for Federal income tax purposes and its initial
Gross Asset Value in accordance with any permissible method or methods
under Code Section 704(c) and the Regulations thereunder.
B. In the event the Gross Asset Value of any Partnership
asset is adjusted pursuant to the definition of "Gross Asset Value"
contained in Article 2 above, subsequent allocations of income, gain,
loss and deduction with respect to such asset shall take account of
any variation between the adjusted basis of such asset for Federal
income tax purposes and its Gross Asset Value in the same manner or
manners permitted under Code Section 704(c) and the Regulations
thereunder.
C. Any elections or other decisions relating to such
allocations shall be made by the General Partner using any permissible
manner under the Code or the Regulations that the General Partner may
elect in its sole discretion. Allocations pursuant to this section
7.5 are solely for purposes of Federal, state, and local taxes and
shall not affect, or in any way be taken into account in computing,
any Partner's Capital Account or share of Profits, Losses, other
items, or distributions pursuant to any provision in this Agreement.
Article 8. Cash Available for Distribution.
8.1 Operating Cash Flow. As used in this Agreement,
"Operating Cash Flow" shall mean and be defined as all cash receipts of the
Partnership from whatever source (but excluding Capital Cash Flow and excluding
the proceeds of any Capital Contributions to the Partnership) during the period
in question in excess of all items of Partnership expense (other than non-cash
expenses such as depreciation) and other cash needs of the Partnership,
including, without limitation, amounts paid by the Partnership as principal on
debts and advances, during such period, capital expenditures and any reserves
(as determined by the General Partner) established or increased during such
period. In the discretion of the General Partner, reserves may include cash
held for future acquisitions. Operating Cash Flow shall be distributed to or
for the benefit of the Partners of record as of the applicable Record Date not
less frequently than annually, and shall be distributed, first to those
Partners holding Preference Units to the extent of the respective priorities
(if any) established by the applicable Preference Unit Term Sheets and Other
Securities Term Sheets; and then the balance pro rata among the Partners
holding OP Units and the Partners holding Preference Units which, based on the
provision of the applicable Preference Unit Term Sheets and Other Securities
Term Sheets, entitle such Partners to participate in such distributions on a
pari passu basis with the
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holders of OP Units (the "Residual Operating Cash Flow Preference Units"), to
each Partner based on the quotient (expressed as a percentage) arrived at by
dividing (i) the sum of the OP Unit Value of any Residual Operating Cash Flow
Preference Units held by that Partner and the number of OP Units held by that
Partner by (ii) the sum of the OP Unit Value of all Residual Operating Cash
Flow Preference Units issued and outstanding at the time and the total number
of OP Units issued and outstanding at the time. Notwithstanding the foregoing,
the General Partner reserves the right to pro-rate distributions of Operating
Cash Flow to incoming Limited Partners who were admitted during the applicable
period (but excluding any incoming Partners who received Units from an existing
Limited Partner) and who held Units as of the applicable Record Date but held
such Units for less than the entire period with respect to which the Operating
Cash Flow distribution is to be paid, based on the number of days such Units
were outstanding during the applicable period, or any other method of
pro-ration deemed equitable by the General Partner and, in such event, the
amount of the distribution payable to all other Partners shall be adjusted
accordingly.
8.2 Capital Cash Flow. As used in this Agreement,
"Capital Cash Flow" shall mean and be defined as collectively (a) gross
proceeds realized in connection with the sale of any assets of the Partnership,
(b) gross financing or refinancing proceeds, (c) gross condemnation proceeds
(excluding condemnation proceeds applied to restoration of remaining property)
and (d) gross insurance proceeds (excluding rental insurance proceeds or
insurance proceeds applied to restoration of property), less (a) closing costs,
(b) the cost to discharge any Partnership financing encumbering or otherwise
associated with the asset(s) in question, (c) the establishment of reserves (as
determined by the General Partner, and which may include cash held for future
acquisitions), and (d) other expenses of the Partnership then due and owing.
Subject to Section 14.2 below, if applicable, Capital Cash Flow shall be
distributed to or for the benefit of the Partners of record as of the
applicable Record Date not less frequently than annually and shall be
distributed: first to the Partners holding Preference Units to the extent of
the respective priorities (if any) established by the applicable Preference
Unit Term Sheets and Other Securities Term Sheets; and then the balance pro
rata among those Partners holding OP Units and those Partners holding
Preference Units which, based on the provisions of the applicable Preference
Unit Term Sheets and Other Securities Term Sheets, entitle such Partners to
participate in such distributions on a pari passu basis with the holders of OP
Units (the "Capital Cash Flow Preference Units"), to each Partner based on the
quotient (expressed as a percentage) arrived at by dividing (i) the sum of the
OP Unit Value of any Capital Cash Flow Preference Units held by that Partner
and the number of OP Units held by that Partner by (ii) the sum of the OP Unit
Value of all Capital Cash Flow Preference Units issued and outstanding at the
time and the total number of OP Units issued and outstanding at the time.
Notwithstanding the foregoing, the General Partner reserves the right to
pro-rate distributions of Capital Cash Flow to incoming Limited Partners who
were admitted during the applicable period (but excluding any incoming Partners
who received Units from an existing Limited Partner) and who held Units as of
the applicable Record Date but held such Units for less than the entire period
with respect to which the Capital Cash Flow distribution is to be paid, based
on the number of days such Units were outstanding during the applicable period,
or any other method of pro-ration deemed equitable by the General Partner and,
in such event, the amount of the distribution payable to all other Partners
shall be adjusted accordingly.
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8.3 Consent to Allocations and Distributions. Each of
the Partners hereby consents to the allocations and distributions provided for
in this Agreement.
8.4 Right to Limit Distributions. The right of any
Partner to receive distributions of any nature pursuant to the terms of this
Agreement shall be subject to the terms of any agreement between such Partner
and the Partnership limiting, restricting or providing rights of set-off with
respect to such distributions.
Article 9. Management of Partnership.
9.1 General Partner. The General Partner shall be the
sole manager of the Partnership business, and shall have the right and power to
make all decisions and take any and every action with respect to the property,
the business and affairs of the Partnership and shall have all the rights,
power and authority generally conferred by law, or necessary, advisable or
consistent with accomplishing the purposes of the Partnership. All such
decisions or actions made or taken by the General Partner hereunder shall be
binding upon all of the Partners and the Partnership. The powers of the
General Partner to manage the Partnership business shall include, without
limitation, the power and authority to, directly or indirectly:
(i) operate any business normal or customary for the
owner of or investor in commercial property of the
type held by the Partnership;
(ii) perform any and all acts necessary or appropriate to
the operation of the Partnership's assets, including,
but not limited to, preparing, negotiating, executing
and delivering leases and rental agreements with
regard to real and personal property owned by the
Partnership, preparing applications for rezoning,
preparing objections to rezoning of other property
and establishing bank accounts in the name of the
Partnership;
(iii) improve, renovate and/or perform construction
activities with regard to the properties owned by the
Partnership and to retain such contractors,
subcontractors and other persons or entities as may
be required in connection with such activities;
(iv) procure and maintain such insurance as may be
available in such amounts and covering such risks as
are deemed appropriate by the General Partner;
(v) take and hold all real, personal and mixed property
of the Partnership in the name of the Partnership or
in the name of a nominee;
(vi) negotiate, execute and deliver agreements on behalf
of and in the name of the Partnership;
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(vii) borrow money (whether on a secured or unsecured
basis), finance and refinance the assets of the
Partnership or any part thereof or interest therein,
and in connection therewith, issue notes, bonds,
securities and other undertakings and evidences of
indebtedness and documents related thereto
(including, without limitation, guaranties,
indemnities and similar undertakings to support loans
obtained or debt securities issued by the Company);
(viii) coordinate all accounting and clerical functions of
the Partnership and employ such accountants, lawyers,
property managers, leasing agents and other
management or service personnel as may from time to
time be required to carry on the business of the
Partnership;
(ix) acquire any assets, and encumber, sell, assign,
transfer, ground lease or otherwise dispose of any or
all of the assets of the Partnership, or any part
thereof or interest therein including, without
limitation, by way of any Unit dividend, split,
recapitalization, merger, consolidation, combination,
exchange of Units or other similar Partnership
organizational change;
(x) organize one or more partnerships, corporations,
limited liability companies or other business
entities which are controlled, directly or
indirectly, by the Partnership and make any capital
contributions (in cash or in kind) required pursuant
to the organizational documents or subscription
agreements relating to any such partnerships,
corporations, limited liability companies or other
business entities; and
(xi) establish the date (the "Record Date") for the
purpose of making any proper determination in
connection with, but not limited to, the following
matters: (a) which Partners are entitled to receive
distributions, (b) consent to any matter for which
the consent of Partners is permitted or required
under any provision hereof, or (c) otherwise when
Partners are allocated rights hereunder.
9.2 Limitations on Power and Authority of Partners.
Notwithstanding the powers of the General Partner set forth in Section 9.1
above, the General Partner shall not have the right or power to do any of the
following unless any such action is approved by a Majority-in-Interest of the
Limited Partners:
(a) do any act in contravention of this Agreement, or any
amendment hereto;
(b) do any act which would make it impossible to carry on
the ordinary business of the Partnership, except to the extent that
such act is specifically permitted by the terms hereof (it being
understood and agreed that a sale of any or all of the assets of the
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Partnership, for example, would be an ordinary part of the
Partnership's business and affairs and is specifically permitted
hereby); or
(c) confess a judgment against the Partnership.
9.3 Limited Partners. The Limited Partners shall have no
right or authority to act for or to bind the Partnership and no Limited Partner
shall participate in the conduct or control of the Partnership's affairs or
business.
9.4 Liability of General Partner. The General Partner
shall not be liable or accountable, in damages or otherwise, to the Partnership
or to any other Partner for any error of judgment or for any mistakes of fact
or law or for anything which it may do or refrain from doing hereafter in
connection with the business and affairs of the Partnership except (i) in the
case of fraud, willful misconduct (such as an intentional breach of fiduciary
duty or an intentional breach of this Agreement) or gross negligence, and (ii)
for other breaches of this Agreement, but the liability of the General Partner
under this clause (ii) shall be limited to its interest in the Partnership as
more particularly provided for in Section 9.8. The General Partner shall not
have any personal liability for the return of any Limited Partner's Capital
Contributions.
9.5 Indemnity. The Partnership shall indemnify and shall
hold the General Partner (and the trustees, managers, officers and directors
thereof) harmless from any liability, loss, cost or damage, including without
limitation reasonable legal fees and court costs, incurred by it by reason of
anything it may do or refrain from doing hereafter for and on behalf of the
Partnership or in connection with its business or affairs; provided, however,
that the Partnership shall not be required to indemnify the General Partner (or
any officer, trustee, manager or director thereof) for any liability, loss,
cost or damage which it might incur as a result of its fraud, willful
misconduct or gross negligence in the performance of its duties hereunder. In
addition, the General Partner shall be entitled to reimbursement from the
Partnership for any amounts paid by it in satisfaction of indemnification
obligations owed by the General Partner to present or former officers,
trustees, managers or directors of the General Partner or its predecessors, as
provided for in or pursuant to the Declaration of Trust and Bylaws of the
General Partner. The right of indemnification set forth in this Section 9.5
shall be in addition to any rights to which the person or entity seeking
indemnification may otherwise be entitled and shall inure to the benefit of the
successors and assigns of any such person or entity. No Partner shall be
personally liable with respect to any claim for indemnification pursuant to
this Section 9.5, but such claim shall be satisfied solely out of assets of the
Partnership.
9.6 Other Activities of Partners and Agreements with
Related Parties. The General Partner shall devote its full-time efforts in
furtherance of the Partnership business, it being expressly understood that,
except for (i) the Company's ownership of any wholly-owned subsidiary or other
entity of the Company which is a partner of a partnership having the
Partnership as a partner, (ii) the issuance of debt or equity securities or
other borrowing where the net proceeds thereof are loaned or contributed to the
Partnership, and (iii) activities incidental to the Company's status and
existence as a real estate investment trust, the General Partner shall conduct
all of its activities
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exclusively through the Partnership and shall not conduct or engage in any way
in any other material business activities. Except as may otherwise be agreed
to in writing, each Limited Partner, and its affiliates, shall be free to
engage in, to conduct or to participate in any business or activity whatsoever,
including, without limitation, the acquisition, development, management and
exploitation of real and personal property (other than property of the
Partnership), without any accountability, liability or obligation whatsoever to
the Partnership or to any other Partner, even if such business or activity
competes with or is enhanced by the business of the Partnership. The General
Partner, in the exercise of its power and authority under this Agreement, may
contract and otherwise deal with or otherwise obligate the Partnership to
entities in which the General Partner or any one or more of the managers,
trustees, officers, directors or shareholders of the General Partner may have
an ownership or other financial interest, whether direct or indirect.
9.7 Other Matters Concerning the General Partner.
A. The General Partner shall be protected in relying,
acting or refraining from acting on any resolution, certificate,
statement, instrument, opinion, report, notice, request, consent,
order, bond, debenture, or other paper or document believed by it to
be genuine and to have been executed or presented by the proper party
or parties.
B. The General Partner may exercise any of the powers
granted or perform any of the duties imposed by this Agreement either
directly or through agents. The General Partner may consult with
counsel, accountants, appraisers, management consultants, investment
bankers and other consultants selected by it, each of whom may serve
as consultants for the Partnership. An opinion by any consultant on a
matter which the General Partner believes to be within its
professional or expert competence shall be full and complete
protection as to any action taken or omitted by the General Partner
based on the opinion and actions taken or omitted in accordance
therewith. The General Partner shall not be responsible for the
misconduct, negligence, acts or omissions of any consultant or
contractor of the Partnership or of the General Partner, and shall
assume no obligation other than to use due care in the selection of
all consultants and contractors.
C. No mortgagee, grantee, creditor or any other person
dealing with the Partnership shall be required to investigate the
authority of the General Partner or secure the approval of or
confirmation by any Limited Partner of any act of the General Partner
in connection with the conduct of any ordinary or extraordinary
Partnership business.
D. The General Partner may retain such persons or
entities as it shall determine (including the General Partner or any
entity in which the General Partner shall have an interest or with
which it is affiliated) to provide services to or on behalf of the
Partnership. The General Partner shall be entitled to reimbursement
from the Partnership for its out-of-pocket expenses (including,
without limitation, amounts paid or payable to the General Partner or
any entity in which the General Partner shall have an interest or with
which it is affiliated) incurred in connection with Partnership
business. Such expenses shall be deemed to include without limitation
those expenses required in connection with the administration of the
Partnership such as the maintenance of Partnership books and records,
management
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of the Partnership property and assets and preparation of information
respecting the Partnership needed by the Partners in the preparation
of their individual tax returns.
E. The General Partner may loan to the Partnership the
net proceeds of loans obtained or debt securities issued by the
Company so long as the terms of such loan to the Partnership are
substantially equivalent to the corresponding loan obtained or debt
securities issued by the Company.
9.8 Partner Exculpation. Except for fraud, willful
misconduct and gross negligence, no Partner shall have any personal liability
whatsoever, whether to the Partnership or to any other Partner, for the debts
or liabilities of the Partnership or its obligations hereunder, and the full
recourse of any Partner shall be limited to the interest of that Partner in the
Partnership. To the fullest extent permitted by law, no trustee, manager,
officer, director or shareholder of the General Partner shall be liable to the
Partnership for money damages except for (i) active and deliberate dishonesty
established by a final judgment or (ii) actual receipt of an improper benefit
or profit in money, property or services. Without limitation of the foregoing,
and except for fraud, willful misconduct and gross negligence, no property or
assets of any Partner, other than its interest in the Partnership, shall be
subject to levy, execution or other enforcement procedures for the satisfaction
of any judgment (or other judicial process) in favor of any other Partners and
arising out of, or in connection with, this Agreement. This Agreement is
executed by the trustees, managers, trust managers, members, officers or
partners of each Partner solely as trustees, managers, members, officers or
partners of the same and not in their own individual capacities. No advisor,
trustee, manager, trust manager, member, director, officer, partner, employee,
beneficiary, shareholder, participant or agent of any Partner (or of any
partner of a Partner) shall be personally liable in any matter or to any extent
under or in connection with this Agreement, and the Partnership, each Partner
and their respective successors and assigns shall look solely to the interest
of the other Partner in the Partnership for the payment of any claim or for any
performance hereunder.
9.9 General Partner Expenses and Liabilities. All costs
and expenses incurred by the Company in connection with its activities as the
General Partner hereunder, all costs and expenses incurred by the Company in
connection with its continued existence, qualification as a real estate
investment trust under the Code and otherwise, and all other liabilities
incurred or suffered by the General Partner in connection with the pursuit of
its business and affairs as contemplated hereunder and in connection herewith,
shall be paid (or reimbursed to the Company, if paid by the Company) by the
Partnership unless and to the extent that any such costs were paid by the
Company in connection with the issuance of additional shares of beneficial
interest of the Company as contemplated by Section 3.3(B) above.
Article 10. Banking. The funds of the Partnership shall be kept
in accounts designated by the General Partner and all withdrawals therefrom
shall be made on such signature or signatures as shall be designated by the
General Partner.
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Article 11. Accounting.
11.1 Fiscal Year. The fiscal year and taxable year of the
Partnership (the "fiscal year") shall end on the last day of December of each
year, unless another fiscal year end is selected by the General Partner.
11.2 Books of Account. The Partnership books of account
shall be maintained at the principal office designated in Article 4 or at such
other locations and by such person or persons as may be designated by the
General Partner. The Partnership shall pay the expense of maintaining its
books of account. Each Partner shall have, during reasonable business hours
and upon reasonable prior notice, access to the books of the Partnership and in
addition, at its expense, shall have the right to copy such books. The General
Partner, at the expense of the Partnership, shall cause to be prepared and
distributed to the Partners annual financial data sufficient to reflect the
status and operations of the Partnership and its assets and to enable each
Partner to file its federal income tax return.
11.3 Method of Accounting. The Partnership books of
account shall be maintained and kept, and its income, gains, losses and
deductions shall be accounted for, in accordance with generally accepted
accounting principles, consistently applied, or such other method of accounting
as may be adopted hereafter by the General Partner. All elections and options
available to the Partnership for Federal or state income tax purposes shall be
taken or rejected by the Partnership in the sole discretion of the General
Partner.
11.4 Section 754 Election. In case of a distribution of
property made in the manner provided in Section 734 of the Code (or any similar
provision enacted in lieu thereof), or in the case of a transfer of any
interest in the Partnership permitted by this Agreement made in the manner
provided in Section 743 of the Code (or any similar provision enacted in lieu
thereof), the General Partner, on behalf of the Partnership, will file an
election under Section 754 of the Code (or any similar provision enacted in
lieu thereof) in accordance with the procedures set forth in the applicable
Regulations.
11.5 Tax Matters Partner. The General Partner is hereby
designated the Tax Matters Partner (hereinafter referred to as the "TMP") of
the Partnership and shall have all rights and obligations of the TMP under the
Code. The Partnership shall reimburse the TMP for any and all out-of-pocket
costs and expenses (including attorneys' and accountants' fees) incurred or
sustained by it in its capacity as TMP. The Partnership shall indemnify,
defend and hold the TMP harmless from and against any loss, liability, damage,
cost or expense (including attorneys' and accountants' fees) sustained or
incurred as a result of any act or decision concerning the Partnership tax
matters and within the scope of its responsibility as TMP.
11.6 Administrative Adjustments. If the TMP receives
notice of a Final Partnership Administrative Adjustment (the "FPAA") or if a
request for an administrative adjustment made by the TMP is not allowed by the
United States Internal Revenue Service (the "IRS") and the IRS does not notify
the TMP of the beginning of an administrative proceeding with respect to the
Partnership's taxable year to which such request relates (or if the IRS so
notifies the TMP but fails
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to mail a timely notice of an FPAA), the TMP may, but shall not be obligated
to, petition a court for readjustment of partnership items. In the case of
notice of an FPAA, if the TMP determines that the United States District Court
or Claims Court is the most appropriate forum for such a petition, the TMP
shall notify each person who was a Partner at any time during the Partnership's
taxable year to which the IRS notice relates of the approximate amount by which
its tax liability would be increased (based on such assumptions as the TMP may
make) if the treatment of partnership items on his return was made consistent
with the treatment of partnership items on the Partnership's return, as
adjusted by the FPAA. Unless each such person deposits with the TMP, for
deposit with IRS, the approximate amount of his increased tax liability,
together with a written agreement to make additional deposits if required to
satisfy the jurisdictional requirements of the court, within thirty days after
the TMP's notice to such person, the TMP shall not file a petition in such
court. Instead, the TMP may, but shall not be obligated to, file a petition in
the United States Tax Court.
Article 12. Transfers of Partnership Interests.
A. General Partner. The General Partner may not transfer
its interest in the Partnership without the consent of a
Majority-in-Interest of the Limited Partners unless (1) the transfer
of such interest is to an affiliate of the General Partner, or (2) the
transfer of such interest is pursuant to or in connection with a
Recapitalization and either (a) the Recapitalization has been approved
by the consent of a Majority-in-Interest of the Limited Partners, or
(b) an appropriate adjustment to the number of OP Units held by each
Partner has been made in accordance with Section 3.2(E).
B. Limited Partner.
(i) No Limited Partner or substituted Limited
Partner shall, without the prior written consent of the
General Partner (which consent may be given or withheld in the
sole discretion of the General Partner), sell, assign,
distribute or otherwise transfer (a "Transfer") all or any
part of his interest in the Partnership, except (w) by
operation of law, testamentary disposition, gift (outright or
in trust) or by sale, in each case to or for the benefit of
his parent(s), spouse or descendants, (x) pledges or other
collateral transfers effected by a Limited Partner to secure
the repayment of a loan or other obligation; provided however,
that each such pledgee shall agree in writing, concurrent with
such pledge or other collateral transfer, to (i) subordinate
its rights with respect to the pledged interest to any and all
rights granted by the pledging Limited Partner to the
Partnership, whether or not such rights constitute perfected
security interests in favor of the Partnership, including,
without limitation, any rights to withhold, restrict or offset
distributions in respect of such pledged interest under the
terms of any agreement between the Partnership and the
pledging Limited Partner, and (ii) to defer the exercise of
its rights as a secured creditor to realize upon the
collateral in the case of an event of default until the
expiration of one-year from the Issuance Date with regard to
the OP Units which constitute such collateral, (y) the
exchange of OP Units for Common Shares of the Company,
pursuant to Section
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3.2(C) above, and (z) the distribution of OP Units or
Preference Units by a Limited Partner to any of its direct or
indirect constituent partners or owners. Notwithstanding the
foregoing, each such transfer shall be subject to compliance
with restrictions on transferability contained in the
Declaration of Trust and Bylaws of the Company and/or any
applicable agreement executed by the transferor as well as
compliance with applicable Federal and state securities laws,
and no transfer by a Limited Partner of OP Units or Preference
Units may be made if such transfer would result in the
Partnership being treated as an association taxable as a
corporation or if such transfer is effectuated through an
"established securities market" or a "secondary market (or the
substantial equivalent thereof)" within the meaning of Section
7704 of the Code; the General Partner reserves the right to
require an opinion of counsel regarding such matters in form
and substance reasonably acceptable to the General Partner as a
condition to any such Transfer. Neither the conversion of a
Preference Unit into one or more OP Units nor the redemption of
an OP Unit in accordance with Section 3.2 constitutes a
Transfer. A Limited Partner shall notify the General Partner
of any Transfer of beneficial interest or other interest which
occurs without a transfer of record ownership, as well as any
pledge or other collateral transfer. No part of the interest
of a Limited Partner shall be subject to the claims of any
creditor, any spouse for alimony or support, or to legal
process, and may not be voluntarily or involuntarily alienated
or encumbered except as may be specifically provided for in
this Agreement. A Limited Partner shall not be permitted to
retire or withdraw from the Partnership except as expressly
permitted by this Agreement.
(ii) An assignee, legatee, distributee or other
transferee (whether by conveyance, operation of law or
otherwise)(including any pledgee upon realization of its
rights as a secured creditor) (a "Transferee") of all or any
portion of a Limited Partner's interest in the Partnership
shall be entitled to receive Profits, Losses and distributions
hereunder attributable to such interest acquired by reason of
such Transfer, from and after the effective date of the
Transfer of such interest; provided, however, anything in this
Agreement to the contrary notwithstanding, (a) except as
provided in Section 12(B)(i) no Transfer by a Limited Partner
shall be effective until such Transfer has been consented to
by the General Partner; (b) without the prior written consent
of the General Partner, no Transferee shall be considered a
substituted Limited Partner except as provided in Section
12(B)(i)(w) and (z) and, in any event, until such Transferee
shall have agreed to be bound by the terms of this Agreement
and shall have executed a counterpart hereof; (c) the
Partnership and the General Partner shall be entitled to treat
the transferor of such interest as the absolute owner thereof
in all respects, and shall incur no liability for the
allocation of Profits and Losses or distributions which are
made to such transferor until such time as the written
instrument of Transfer has been received by the General
Partner and the "effective date" of the Transfer has passed,
and (d) the General Partner shall have the right to require
any such transferor to exchange the OP Units to which such
interest
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36
relates for Common Shares or cash, pursuant to Section 3.2(C)
above. The "effective date" of any transfer shall be the last
day of the month set forth on the written instrument of
Transfer or such other date consented to in writing by the
General Partner as the "effective date."
(iii) Notwithstanding anything to the contrary
contained in this Section 12(B), (a) in the event that a
Limited Partner pursuant to the dissolution and liquidation of
such Limited Partner distributes all or any portion of its
interest in the Partnership, the partners, shareholders or
members (as the case may be) in such Limited Partner receiving
such interest shall become substituted Limited Partners, and
shall (upon agreeing to be bound by the terms of this
Agreement and executing a counterpart hereof and/or any
Preference Unit Term Sheet or Other Securities Term Sheet)
succeed to the rights, interests and obligations of such
Limited Partner in the Partnership, in proportion to their
respective interests in such Limited Partner, and (b) no
Transfer shall be effective to the extent that such Transfer
would, in the opinion of the General Partner (y) by treating
the interest in the Partnership so transferred as if it had
been exchanged for Common Shares in accordance with Section
3.2(C) above, violate the limitations on ownership of Common
Shares contained in the Declaration of Trust and/or Bylaws of
the Company, or (z) violate any State or Federal securities
laws.
C. Admission Adjustments. The General Partner shall,
when necessary, cause this Agreement to be amended from time to time
(and shall cause Schedule A to be revised), to reflect the admission
or withdrawal of Partners, and the issuance, conversion and redemption
of any Preference Units and/or OP Units (including the corresponding
adjustment to Percentage Interests).
D. General Partner's Percentage Interest.
Notwithstanding any other provision of this Agreement to the contrary,
no sale, exchange, assignment, or other transfer or issuance of a
Partnership Interest by or to any Partner shall be effective, if the
effect of such transaction would be to cause the General Partner's
Percentage Interest (including any interest held by the General
Partner or the Company as a Limited Partner) to decrease to a level of
fifty percent (50%) or less, unless the General Partner shall in its
sole discretion provide its prior written consent to any such sale,
exchange, assignment or other transfer or issuance.
E. Transfers to Lenders. Notwithstanding any other
provision of this Agreement to the contrary, no transfer of any Units
may be made to a lender to the Partnership or any person who is
related (within the meaning of Section 1.752-4(b) of the Regulations)
to any lender to the Partnership whose loan constitutes a Nonrecourse
Liability, without the consent of the General Partner, which consent
may be given or withheld by the General Partner in its sole and
absolute discretion, provided that as a condition to such consent
being granted 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 or the REIT Shares Amount any Units
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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.
Article 13. Admission of New Partners. The General Partner shall
admit to the Partnership as limited partners those persons and entities who
are not already Partners and who receive OP Units and/or Preference Units in
accordance with the provisions of this Agreement.
Article 14. Termination, Liquidation and Dissolution of
Partnership.
14.1 Termination Events. The Partnership shall be
dissolved and its affairs wound up in the manner hereinafter provided upon the
earliest to occur of the following events:
A. December 31, 2097; or
B. the sale of all or substantially all of the assets of
the Partnership;
C. the agreement of those Partners holding at least
sixty-seven percent (67%) of the Percentage Interests of all of the
Partners, determining that the Partnership should be dissolved; or
D. subject to Section 14.4 below, the entry of a final
judgment, order or decree of a court of competent jurisdiction
adjudicating as bankrupt either the Partnership or the General
Partner, and the expiration without appeal of the period, if any,
allowed by applicable law to appeal therefrom.
14.2 Method of Liquidation. Upon the happening of any of
the events specified in Section 14.1 above, the General Partner (or if there be
no General Partner, a liquidating trustee selected by a Majority-in-Interest of
the Limited Partners) shall immediately commence to wind up the Partnership's
affairs and shall liquidate the assets of the Partnership as promptly as
possible, unless the General Partner, or the liquidating trustee, shall
determine that an immediate sale of Partnership assets would cause undue loss
to the Partnership, in which event the liquidation may be deferred for a
reasonable time. The Partners shall continue to share Operating Cash Flow,
Capital Cash Flow, Profits and Losses during the period of liquidation in the
same proportions as before dissolution (subject to Section 14.2(C) below). The
proceeds from liquidation of the Partnership, including repayment of any debts
of Partners to the Partnership, shall be applied in the following order:
A. Debts of the Partnership, including repayments of
principal and interest on loans and advances made by the General
Partner pursuant to Sections 3.3 and/or 9.7 above; then
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38
B. to the establishment of any reserves deemed necessary
or appropriate by the General Partner, or by the person(s) winding up
the affairs of the Partnership in the event there is no remaining
General Partner of the Partnership, for any contingent or unforeseen
liabilities or obligations of the Partnership. Such reserves
established hereunder shall be held for the purpose of paying any such
contingent or unforeseen liabilities or obligations and, at the
expiration of such period as the General Partner, or such person(s)
deems advisable, the balance of such reserves shall be distributed in
the manner provided hereinafter in this Section 14.2 as though such
reserves had been distributed contemporaneously with the other funds
distributed hereunder; and then
C. To the Partners in accordance with their respective
Capital Account balances, after giving effect to all contributions,
distributions and allocations for all periods. In connection
therewith, income, gain and loss of the Partnership (and to the extent
necessary to achieve the purposes hereof, items of gross income and
deduction) with respect to the sale or other disposition of all or
substantially all of the Partnership's assets and/or the Partnership's
operations in connection therewith (whether or not attributable to the
taxable year in which the distribution pursuant to this Section
14.2(C) is to be made or a preceding taxable year) shall be allocated
among the Partners so that each Partner's Capital Account shall equal,
after taking into account the prior balance (positive or negative) in
such Partner's Capital Account and the effect of such allocation, the
amount that such Partner would be entitled to receive if the
Partnership were to make a distribution to the Partners pursuant to
the provisions of Section 8.2 hereof in an amount equal to the
remaining liquidation proceeds to be distributed under this Section
14.2(C).
14.3 Date of Termination. The Partnership shall be
terminated when all notes received in connection with such disposition have
been paid and all of the cash or property available for application and
distribution under Section 14.2 above (including reserves) shall have been
applied and distributed in accordance therewith.
14.4 Reconstitution Upon Bankruptcy.
A. Notwithstanding any dissolution of the Partnership
under clause (d) of Section 14.1 above, if the Partnership is
reconstituted as set forth in this Section 14.4, then the business of
the Partnership shall be continued with the Partnership's property and
the Partnership's assets shall not be liquidated.
B. If the Partnership is dissolved by reason of the
bankruptcy of the General Partner, a successor general partner may be
admitted within 90 days after the dissolution, effective as of the
date of dissolution, as the General Partner hereunder, with the
written consent of a Majority-in-Interest of the Limited Partners.
Upon the admission of such successor general partner, without any
further consent or approval of any other Partner, the Partnership
shall be reconstituted as a successor limited partnership.
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39
C. If the Partnership is dissolved by reason of the
bankruptcy of the Partnership in a proceeding for the reorganization
(and not the liquidation) of the Partnership, then, with the consent
of the Company and a Majority-in-Interest of the Limited Partners, the
Partnership may be reconstituted within 90 days after dissolution,
effective as of the date of dissolution, whereupon the Partnership
shall be reconstituted as a successor limited partnership.
D. The successor limited partnership reconstituted in
accordance with the foregoing provisions of this Section 14.4 shall
continue the business of the Partnership with the Partnership's
property. The Percentage Interests of the Partners in the successor
limited partnership shall be in proportion to their respective
Percentage Interests in the dissolved Partnership. Such successor
limited partnership shall be governed by the terms and provisions of
this Agreement and references in this Agreement to the Partnership or
to the Partners or their rights and obligations shall be understood to
comprehend such successor limited partnership and the Partners thereof
and their rights and obligations.
14.5 Death, Legal Incompetency, Etc. of a Limited Partner.
The death, legal incompetency, insolvency, dissolution or bankruptcy of a
Limited Partner shall not dissolve or terminate the Partnership. Upon the
death or incapacity of an individual Limited Partner, such individual Limited
Partner's interest in the Partnership shall be transferred either by will, the
laws of intestacy or otherwise to the legal representative or successor of such
individual Limited Partner.
Article 15. Power of Attorney. Each Limited Partner hereby
irrevocably constitutes and appoints the General Partner, with full power of
substitution, its true and lawful attorney, for him and in his name, place and
▇▇▇▇▇ and for his use and benefit, to sign, swear to, acknowledge, file and
record:
(i) this Agreement, and subject to Article 16 below,
amendments to this Agreement;
(ii) any certificates, instruments and documents
(including assumed and fictitious name certificates)
as may be required by, or may be appropriate under,
the laws of the State of Delaware, the State of
Texas, the State of Nevada or any other State or
jurisdiction in which the Partnership is doing or
intends to do business, in order to discharge the
purposes of the Partnership or otherwise in
connection with the use of the name or names used by
the Partnership;
(iii) any other instrument which may be required to be
filed or recorded by the Partnership on behalf of the
Partners under the laws of any State or by any
governmental agency in order for the Partnership to
conduct its business;
(iv) any documents which may be required to effect the
continuation of the Partnership, the admission of a
substitute or additional Partner, the
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40
dissolution and termination of the Partnership or the
amendment and restatement of Schedule A, provided such
continuation, admission, dissolution and termination
or amendment and restatement of Schedule A, is not in
violation of any provision of this Agreement; and
(v) any documents which may be required or desirable to
have the General Partner appointed, and act as, the
"Tax Matters Partner" as described in the Code.
The foregoing grant of authority is a special power of attorney coupled with an
interest, is irrevocable and shall survive the death or incapacity of any
individual Limited Partner, and shall survive the delivery of any assignment by
a Limited Partner of the whole or any portion of his interest in the
Partnership.
Article 16. Amendment of Agreement.
A. Each Limited Partner, by his execution of or joinder
in this Agreement, hereby irrevocably appoints the General Partner
with power of substitution, as his true and lawful attorney coupled
with an interest, in his name, place and ▇▇▇▇▇ to amend this Agreement
in any respect other than:
(i) to enlarge the obligation of any Partner to
make contributions to the capital of the Partnership; or
(ii) except as otherwise provided for in this
Agreement or as required by law, to modify the allocation of
Profits or Losses or distributions among the Partners as
provided for in Articles 7 and 8 above, respectively; or
(iii) to amend Article 1 or Section 3.2, 9.2, or
12; or
(iv) to amend this Section 16.
B. With respect to amendments regarding Sections
16(A)(ii) or 16(A)(iii), this Agreement may be amended with the
written consent of the Company and those Limited Partners holding not
less than 67% of the aggregate of Percentage Interests held by all
Limited Partners.
Notwithstanding the foregoing, the terms and conditions of a
particular series of Preference Units may not be changed without the written
consent of the holders of at least 67% of the Preference Units within the class
or series (or such greater percentage as may be provided for in the applicable
Preference Unit Term Sheet or Other Securities Term Sheet, as the case may be).
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C. With respect to amendments regarding Section
16(A)(i), this Agreement may be amended only with the written consent
of the General Partner and any Partner adversely affected by such
amendment. With respect to amendments regarding Section 16(A)(iv)
this Agreement may be amended only with the written consent of all
Partners.
In the event this Agreement shall be amended pursuant to this Article
16, the General Partner shall cause this Agreement to be amended to reflect the
amendment.
Article 17. Miscellaneous.
17.1 Notices. Any notice, election or other communication
provided for or required by this Agreement shall be in writing and shall be
deemed to have been given when delivered by hand or by telecopy or other
facsimile transmission, the first business day after sent by overnight courier
(such as Federal Express), or on the second business day after deposit in the
United States Mail, certified or registered, return receipt requested, postage
prepaid, properly addressed to the Partner to whom such notice is intended to
be given at the address for the Partner set forth on Schedule A of this
Agreement, or at such other address as such person may have previously
furnished in writing to the Partnership and each Partner with copies to:
Palace REIT
▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
17.2 Modifications. Except as otherwise provided in this
Agreement, no change or modification of this Agreement, nor any waiver of any
term or condition in the future, shall be valid or binding upon a Partner
unless such change or modification shall be in writing and signed by such
Partner.
17.3 Successors and Assigns. Any person acquiring or
claiming an interest in the Partnership, in any manner whatsoever, shall be
subject to and bound by all of the terms, conditions and obligations of this
Agreement to which his predecessor-in-interest was subject or bound, without
regard to whether such a person has executed a counterpart hereof or any other
document contemplated hereby. No person, including the legal representative,
heir or legatee of a deceased Partner, shall have any rights or obligations
greater than those set forth in this Agreement, and no person shall acquire an
interest in the Partnership or become a Partner thereof except as expressly
permitted by and pursuant to the terms of this Agreement. Subject to the
foregoing, and the provisions of Article 12 above, this Agreement shall be
binding upon and inure to the benefit of the Partners and their respective
successors, assigns, heirs, legal representatives, executors and
administrators.
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17.4 Duplicate Originals. For the convenience of the
Partners, any number of counterparts hereof may be executed, and each such
counterpart shall be deemed to be an original instrument, and all of which
taken together shall constitute one agreement.
17.5 Construction. The titles of the Articles, Sections
and subsections herein have been inserted as a matter of convenience of
reference only and shall not control or affect the meaning or construction of
any terms or provisions herein.
17.6 Governing Law. This Agreement shall be governed by
the laws of the State of Delaware. Except to the extent the Act is
inconsistent with the provisions of this Agreement, the provisions of such Act
shall apply to the Partnership.
17.7 Other Instruments. The parties hereto covenant and
agree that they will execute such other and further instruments and documents
as, in opinion of the General Partner, are or may become necessary or desirable
to effectuate and carry out the Partnership as provided for by this Agreement.
17.8 General Partner with Interest as Limited Partner. If
the General Partner ever has an interest as a Limited Partner in the
Partnership, the General Partner shall, with respect to such interest, enjoy
all of the rights and be subject to all of the obligations and duties of a
Limited Partner.
17.9 Legal Construction. In case any one or more of the
provisions contained in this Agreement shall for any reason be held to be
invalid, illegal or unenforceable in any respect, such invalidity, illegality
or unenforceability shall not affect any other provision hereof and this
Agreement shall be construed as if such invalid, illegal or unenforceable
provision had never been contained herein.
17.10 Gender. Whenever the context shall so require, all
words herein in any gender shall be deemed to include the masculine, feminine
or neuter gender, all singular words shall include the plural, and all plural
words shall include the singular.
17.11 Prior Agreements Superseded. This Agreement
supersedes any prior understandings or written or oral agreements amongst the
Partners, or any of them, respecting the within subject matter and contains the
entire understanding amongst the Partners with respect thereto.
17.12 No Third Party Beneficiary. The terms and provisions
of this Agreement are for the exclusive use and benefit of General Partner and
the Limited Partners and shall not inure to the benefit of any other person or
entity.
17.13 Purchase for Investment. Each Partner represents,
warrants and agrees that it has acquired and continues to hold its interest in
the Partnership for its own account for investment only and not for the purpose
of, or with a view toward, the resale or distribution of all or any part
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thereof, nor with a view toward selling or otherwise distributing such interest
or any part thereof at any particular time or under any predetermined
circumstances. Each Partner further represents and warrants that it is a
sophisticated investor, able and accustomed to handling sophisticated financial
matters for itself, particularly real estate investments, and that it has a
sufficiently high net worth that it does not anticipate a need for the funds it
has invested in the Partnership in what it understands to be a highly
speculative and illiquid investment.
17.14 Waiver. No consent or waiver, express or implied, by
any Partner to or of any breach or default by any other Partner in the
performance by such other Partner of its obligations hereunder shall be deemed
or construed to be a consent to or waiver of any other breach or default in the
performance by such other Partner of the same or any other obligations of such
Partner hereunder. Failure on the part of any Partner to complain of any act
or failure to act on the part of any other Partner or to declare any other
Partner in default, irrespective of how long such failure continues, shall not
constitute a waiver by such Partner of its rights hereunder.
17.15 Time of Essence. Time is hereby expressly made of
the essence with respect to the performance by the parties of their respective
obligations under this Agreement.
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IN WITNESS WHEREOF, this Agreement has been executed and sworn to as
of the day and year first above written by the General Partner and the
undersigned Limited Partners.
GENERAL PARTNER:
PALACE REIT, a Texas real estate investment trust
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------------
Title: Chief Executive Officer
-----------------------------------------
LIMITED PARTNERS:
PALACE REIT, a Texas real estate investment trust
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------------
Title: Chief Executive Officer
-----------------------------------------
BAYVIEW INVESTMENTS, INC., a Nevada
corporation
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
--------------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-----------------------------------------
Title: President
-----------------------------------------
IMPERIAL WAREHOUSE, INC., a Nevada
corporation
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
--------------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-----------------------------------------
Title: President
-----------------------------------------
POLARIS WAREHOUSE, INC., a Nevada
corporation
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
--------------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-----------------------------------------
Title: President
-----------------------------------------
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AGREED AND CONSENTED: WITHDRAWING PARTNER:
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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SCHEDULE A
Partners, Capital Accounts and Partnership Interests
Agreed
Preference Capital Percentage
Name and Address of Partners OP Units Units Account Interest
---------------------------- -------- ----- ------- --------
General Partner:
Palace REIT
▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇ 0 0 990.00
Limited Partners:
Palace REIT
▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇ 0
Bayview Investments, Inc.
▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇ 184,906 0
Imperial Warehouse, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇ 92,107 0
Polaris Warehouse, Inc.
▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇ 138,299 0
The remainder of Schedule A to be completed upon conclusion of the initial
public offering of Palace REIT.
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