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EXHIBIT 99.2
AGREEMENT OF LIMITED
PARTNERSHIP
OF
IRT PARTNERS L.P.
2
TABLE OF CONTENTS
Page
ARTICLE 1 - DEFINED TERMS................................................................................. 1
ARTICLE 2 - ORGANIZATIONAL MATTERS........................................................................ 13
Section 2.1 Organization and Continuation...................................................... 13
Section 2.2 Name............................................................................... 14
Section 2.3 Registered Office and Agent; Principal Office...................................... 14
Section 2.4 Power of Attorney.................................................................. 14
Section 2.5 Term............................................................................... 15
ARTICLE 3 - PURPOSE....................................................................................... 16
Section 3.1 Purpose and Business............................................................... 16
Section 3.2 Powers............................................................................. 16
ARTICLE 4 - CAPITAL CONTRIBUTIONS......................................................................... 16
Section 4.1 Capital Contributions of the Partners.............................................. 16
Section 4.2 Issuances of Additional Partnership Interests...................................... 17
Section 4.3 No Preemptive Rights............................................................... 17
Section 4.4 No Interest........................................................................ 18
Section 4.5 No Withdrawal...................................................................... 18
ARTICLE 5 - DISTRIBUTIONS................................................................................. 18
Section 5.1 Requirement and Characterization of Distributions.................................. 18
Section 5.2 Amounts Withheld................................................................... 19
Section 5.3 Distributions Upon Liquidation..................................................... 19
ARTICLE 6 - ALLOCATIONS................................................................................... 19
Section 6.1 Allocations For Capital Account Purposes........................................... 19
Section 6.2 Other Allocation Rules............................................................. 21
Section 6.3 Special Allocation Rules........................................................... 23
ARTICLE 7 - MANAGEMENT AND OPERATIONS OF BUSINESS......................................................... 25
Section 7.1 Management......................................................................... 25
Section 7.2 Certificate of Limited Partnership................................................. 30
Section 7.3 Reimbursement of the General Partner............................................... 30
Section 7.4 Contracts with Affiliates.......................................................... 31
Section 7.5 Indemnification.................................................................... 32
Section 7.6 Liability of the General Partner................................................... 34
Section 7.7 Other Matters Concerning the General Partner....................................... 34
Section 7.8 Title to Partnership Assets........................................................ 35
Section 7.9 Reliance by Third Parties.......................................................... 35
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ARTICLE 8 - RIGHTS AND OBLIGATIONS OF LIMITED PARTNER..................................................... 36
Section 8.1 Limitation of Liability............................................................ 36
Section 8.2 Management of Business............................................................. 36
Section 8.3 Outside Activities of Limited Partners............................................. 36
Section 8.4 Return of Capital.................................................................. 37
Section 8.5 Rights of Limited Partners Relating to the Partnership............................. 37
Section 8.6 Redemption Right................................................................... 38
ARTICLE 9 - BOOKS, RECORDS, ACCOUNTING AND REPORTS........................................................ 39
Section 9.1 Records and Accounting............................................................. 39
Section 9.2 Partnership Year................................................................... 40
Section 9.3 Reports............................................................................ 40
ARTICLE 10 - TAX MATTERS.................................................................................. 40
Section 10.1 Preparation of Tax Returns......................................................... 40
Section 10.2 Tax Elections...................................................................... 40
Section 10.3 Tax Matters Partner................................................................ 40
Section 10.4 Withholding........................................................................ 42
ARTICLE 11 - TRANSFERS AND WITHDRAWALS.................................................................... 42
Section 11.1 Transfer........................................................................... 42
Section 11.2 Transfer of General Partner's Partnership Interests................................ 43
Section 11.3 Limited Partners' Rights to Transfer............................................... 43
Section 11.4 Substituted Limited Partners....................................................... 44
Section 11.5 Assignees.......................................................................... 44
Section 11.6 General Provisions................................................................. 45
ARTICLE 12 - ADMISSION OF PARTNERS........................................................................ 45
Section 12.1 Admission of Successor General Partner............................................. 45
Section 12.2 Admission of Additional Limited Partners........................................... 46
Section 12.3 Amendment of Agreement and Certificate of Limited Partnership...................... 46
ARTICLE 13 - DISSOLUTION, LIQUIDATION AND TERMINATION..................................................... 47
Section 13.1 Dissolution........................................................................ 47
Section 13.2 Winding Up......................................................................... 47
Section 13.3 Negative Capital Accounts.......................................................... 49
Section 13.4 Deemed Distribution and Recontribution............................................. 50
Section 13.5 Rights of Limited Partners......................................................... 50
Section 13.6 Notice of Dissolution.............................................................. 50
Section 13.7 Termination of Partnership and Cancellation of Certificate of Limited
Partnership ................................................................................... 51
Section 13.8 Reasonable Time for Winding-Up..................................................... 51
Section 13.9 Waiver of Partition................................................................ 51
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ARTICLE 14 - AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS................................................. 51
Section 14.1 Amendments......................................................................... 51
Section 14.2 Meetings of the Partners........................................................... 53
ARTICLE 15 - GENERAL PROVISIONS........................................................................... 54
Section 15.1 Addresses and Notice............................................................... 54
Section 15.2 Titles and Captions................................................................ 54
Section 15.3 Pronouns and Plurals............................................................... 54
Section 15.4 Further Action..................................................................... 54
Section 15.5 Binding Effect..................................................................... 54
Section 15.6 Creditors.......................................................................... 54
Section 15.7 Waiver............................................................................. 54
Section 15.8 Counterparts....................................................................... 55
Section 15.9 Applicable Law..................................................................... 55
Section 15.10 Invalidity of Provisions........................................................... 55
Section 15.11 Entire Agreement................................................................... 55
ARTICLE 16 - CONSOLIDATION, MERGER OR SALE OF ASSETS OF THE GENERAL PARTNER............................... 55
Section 16.1 Triggering Events.................................................................. 55
Section 16.2 From and After the Occurrence of a Triggering Event................................ 56
Section 16.3 Application to Later Transactions.................................................. 56
Section 16.4 Waivers and Amendments............................................................. 57
EXHIBIT A - PARTNERS, CONTRIBUTIONS AND PARTNERSHIP INTERESTS......................................... 60
EXHIBIT B - VALUE OF CONTRIBUTED PROPERTY............................................................. 61
EXHIBIT E - NOTICE OF REDEMPTION...................................................................... 62
EXHIBIT F - ELECTING PARTNERS WITH DEFICIT CAPITAL ACCOUNT MAKE-UP REQUIREMENT........................ 64
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AGREEMENT OF
LIMITED PARTNERSHIP
OF
IRT PARTNERS L.P.
THIS AGREEMENT OF LIMITED PARTNERSHIP OF IRT PARTNERS L.P. (the
"Agreement"), dated as of July 14, 1998, is entered into by and among IRT
PROPERTY COMPANY, a Georgia corporation (the "General Partner"), IRT MANAGEMENT
COMPANY, a Georgia corporation (the "Initial Limited Partner"), and MIBEF
CORPORATE SERVICES, INC., as Trustee of (i) the Tamarac Trust ▇▇. ▇▇▇ (▇▇▇
"▇▇▇▇▇▇▇ ▇▇▇▇▇"), (▇▇) Riverside Trust No. 102 (the "Riverside Trust"), and
(iii) Charlotte Square Trust, Trust No. 103 (the "Charlotte Trust"), together
with any other Persons who become Partners in the Partnership as provided herein
(as such terms are defined hereinafter).
WHEREAS, the parties hereto have entered into the Contribution
Agreement (as hereinafter defined) pursuant to which, among other things, the
parties have agreed to establish the Partnership and to contribute assets to the
Partnership;
NOW THEREFORE, in consideration of the mutual covenants herein
contained, and other valuable consideration, the receipt of which is hereby
acknowledged, the parties hereto do hereby agree as follows:
ARTICLE 1
DEFINED TERMS
The following definitions shall be for all purposes, unless otherwise
clearly indicated to the contrary, applied to the terms used in this Agreement.
"Act" means the Georgia Revised Uniform Limited Partnership Act, as it
may be amended from time to time, and any successor to such statute.
"Additional Limited Partner" means a Person admitted to the Partnership
as a Limited Partner pursuant to Section 12.2 hereof and who is shown as such on
the books and records of the Partnership.
"Adjusted Capital Account" means the Capital Account maintained for
each Partner as of the end of each Partnership Year (i) increased by any amounts
which such Partner is obligated to restore pursuant to any provision of this
Agreement or is deemed to be obligated to restore pursuant to the penultimate
sentences of Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5) and (ii)
decreased by the items described in Regulations Sections
1.704-1(b)(2)(ii)(d)(4), (5), and (6). The foregoing definition of Adjusted
Capital Account is intended to comply with the
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provisions of Regulations Section 1.704-1(b)(2)(ii)(d) and shall be interpreted
consistently therewith.
"Adjusted Capital Account Deficit" means, with respect to any Partner,
the deficit balance, if any, in such Partner's Adjusted Capital Account as of
the end of the relevant Partnership Year.
"Adjusted Property" means any property the Carrying Value of which has
been adjusted pursuant to Exhibit B hereof.
"Affiliate" means, with respect to any Person, (i) any Person directly
or indirectly controlling, controlled by or under common control with such
Person, (ii) any Person owning or controlling ten percent (10%) or more of the
outstanding voting interests of such Person, (iii) any Person of which such
Person owns or controls ten percent (10%) or more of the voting interests, or
(iv) any officer, director, general partner or trustee of such Person or of any
Person referred to in clauses (i), (ii), (iii) above.
"Affiliate Limited Partner" means any Limited Partner including the
Initial Limited Partner that is an Affiliate of the General Partner or that is a
General Partner, provided however, for purposes of allocations and distributions
under Articles 5, 6 and 13 hereof, Units held by the General Partner or its
Affiliates as a result of conversions or redemptions of Partnership Units shall
be deemed not held by an Affiliated Limited Partner".
"Agreed Value" means (i) in the case of any Contributed Property set
forth in Exhibit B and as of the time of its contribution to the Partnership,
the Agreed Value of such property as set forth in Exhibit B, which value shall
reflect any liabilities either assumed by the Partnership upon such contribution
or to which such property is subject when contributed, (ii) in the case of any
Contributed Property not set forth in Exhibit B and as of the time of its
contribution to the Partnership, the 704(c) Value of such property, reduced by
any liabilities either assumed by the Partnership upon such contribution or to
which such property is subject when contributed, and (iii) in the case of any
property distributed to a Partner by the Partnership, the Partnership's Carrying
Value of such property at the time such property is distributed, reduced by any
indebtedness either assumed by such Partner upon such distribution or to which
such property is subject at the time of distribution as determined under Section
752 of the Code and the Regulations thereunder.
"Agreement" means this Agreement of Limited Partnership, as it may be
amended, supplemented or restated from time to time.
"Articles of Incorporation" means the Amended and Restated Articles of
Incorporation of the General Partner filed in the State of Georgia and amended
or restated from time to time.
"Assignee" means a Person to whom one or more Partnership Units have
been transferred in a manner permitted under this Agreement, but who has not
become a Substituted Limited Partner, and who has the rights set forth in
Section 11.5.
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"Available Cash" means with respect to any period for which such
calculation is being made:
(a) all cash revenues and funds received by the Partnership from
whatever source plus the amount of any reduction (including, without limitation,
a reduction resulting because the General Partner determines such amounts are no
longer necessary) in reserves of the Partnership, which reserves are established
in clause (b)(iv) below;
(b) less the sum of the following (except to the extent any such
payment is expressly subordinate to the distribution of some portion of
Available Cash):
(i) all interest, principal and other debt payments made
during such period by the Partnership,
(ii) all other cash expenditures (including capital
expenditures) made by the Partnership during such period,
(iii) investments in any entity (including loans made thereto)
to the extent that such investments are not otherwise described in
clauses (b)(i) or (ii), and
(iv) the amount of any increase in reserves established
during such period which the General Partner determines is necessary or
appropriate in its sole and absolute discretion.
Notwithstanding the foregoing, Available Cash shall not include any
cash received or reductions in reserves, or take into account any disbursements
made or reserves established, after commencement of the dissolution and
liquidation of the Partnership.
"Book-Tax Disparities" means, with respect to any item of Contributed
Property or Adjusted Property, as of the date of any determination, the
difference between the Carrying Value of such Contributed Property or Adjusted
Property and the adjusted basis thereof for federal income tax purposes as of
such date. A Partner's share of the Partnership's Book-Tax Disparities in all of
its Contributed Property and Adjusted Property will be reflected by the
difference between such Partner's Capital Account balance and the hypothetical
balance of such Partner's Capital Account computed as if it had been maintained
strictly in accordance with federal income tax accounting principles.
"Business Day" means any day except a Saturday, Sunday or other day on
which commercial banks in Atlanta, Georgia, Charlotte, North Carolina, Dallas,
Texas, and New York, New York are authorized or required by law to close.
"Capital Account" means the separate accounting entry maintained for a
Partner in accordance with the rules of Regulations Section 1.704-l(b)(2)(iv).
Such Capital Account shall be
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increased by (i) the amount of all Capital Contributions and any other deemed
contributions made by such Partner to the Partnership pursuant to this Agreement
and (ii) all items of Partnership income and gain (including income and gain
exempt from tax) computed in accordance with the definition of Net Income or Net
Loss and allocated to such Partner pursuant to Article 6 hereof, and decreased
by (x) the amount of cash or Agreed Value of all actual and deemed distributions
of cash or property made to such Partner pursuant to this Agreement and (y) all
items of Partnership deduction and loss computed in accordance with the
definition of Net Income or Net Loss and allocated to such Partner pursuant to
Article 6 hereof. A transferee (including an Assignee) of a Partnership Unit
shall succeed to a pro rata portion of the Capital Account of the transferor;
provided, however, that, if the transfer causes a termination of the Partnership
under Section 708(b)(1)(B) of the Code, the Partnership's properties shall be
deemed to have been transferred in accordance with Regulations Section 1.708-1
and appropriate adjustments resulting from such deemed transfers shall be made
hereunder. The 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, the General Partner, or any Limited Partners) are computed in order
to comply with such Regulations, the General Partner may make such modification
without regard to Article 14 of the Agreement, provided that it is not likely to
have a material effect on the amounts distributable to any Person pursuant to
Article 13 of the Agreement upon the dissolution of the Partnership. The General
Partner also shall (i) make any adjustments that are necessary or appropriate to
maintain equality between the Capital Accounts of the Partners and the amount of
Partnership capital reflected on the Partnership's balance sheet, as computed
for book purposes in accordance with Regulations Section 1.704-1(b)(2)(iv)(q),
and (ii) make any appropriate modifications in the event unanticipated events
might otherwise cause this Agreement not to comply with Regulations Section
1.704-1(b).
"Capital Contribution" means, with respect to any Partner, any cash,
cash equivalents or the Agreed Value of Contributed Property which such Partner
contributes or is deemed to contribute to the Partnership pursuant to Sections
4.1 or 4.2 hereof and which shall be treated as a contribution to the
Partnership pursuant to Section 721(a) of the Code.
"Carrying Value" means (i) with respect to a Contributed Property or
Adjusted Property, the 704(c) Value of such property, reduced (but not below
zero) by all Depreciation with respect to such Property charged to the Partners'
Capital Accounts following the contribution of or adjustment with respect to
such Property, and (ii) with respect to any other Partnership property, the
adjusted basis of such property for federal income tax purposes, all as of the
time of determination. The Carrying Value of any property shall be adjusted from
time to time in accordance with Section 6.3 hereof, and to reflect changes,
additions or other adjustments to the Carrying Value for dispositions and
acquisitions of Partnership properties, as deemed appropriate by the General
Partner.
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"Cash Amount" means an amount of cash per Partnership Unit equal to the
Value on the Valuation Date of the REIT Shares Amount plus the amount, if any,
per Unit, in the Redeeming Partner's Cumulative Unpaid Accrued Return Account
and Cumulative Unpaid Priority Distribution Account.
"Certificate" means the Certificate of Limited Partnership relating to
the Partnership filed in the office of the Georgia Secretary of State, as
amended from time to time in accordance with the terms hereof and the Act.
"Code" means the Internal Revenue Code of 1986, as amended and in
effect from time to time, as interpreted by the applicable regulations
thereunder. Any reference herein to a specific section or sections of the Code
shall be deemed to include a reference to any corresponding provision of future
law.
"Consent" means the consent or approval of a proposed action by a
Partner given in accordance with Article 14 hereof.
"Contributed Property" means each property or other asset, in such form
as may be permitted by the Act, but excluding cash, contributed or deemed
contributed to the Partnership. Once the Carrying Value of a Contributed
Property is adjusted pursuant to Section 6.3(g) hereof, such property shall no
longer constitute a Contributed Property for purposes of Section 6.3(g) hereof,
but shall be deemed an Adjusted Property for such purposes.
"Contribution Agreement" means that certain Contribution Agreement,
dated as of June 26, 1998, by and among the General Partner and MIBEF Corporate
Services, Inc., as Trustee of the Trusts.
"Conversion Factor" means 1.0, provided that in the event that the
General Partner (i) declares or pays a distribution on its outstanding REIT
Shares in REIT Shares or makes a distribution to all holders of its outstanding
REIT Shares in REIT Shares; (ii) subdivides its outstanding REIT Shares; or
(iii) combines its outstanding REIT Shares into a smaller number of REIT Shares,
the Conversion Factor shall be adjusted by multiplying the Conversion Factor by
a fraction, the numerator of which shall be the number of REIT Shares issued and
outstanding on the effective date for such distribution, subdivision or
combination assuming for such purpose that such distribution, subdivision or
combination has occurred as of such time, and the denominator of which shall be
the actual number of REIT Shares (determined without the above assumption)
issued and outstanding on the record date for such distribution, subdivision or
combination. Any adjustment to the Conversion Factor shall become effective
immediately after the effective date of such event retroactive to the record
date, if any, for such event.
"Cumulative Unpaid Accrued Return Account" means, with respect to any
Limited Partner other than an Affiliate Limited Partner, an amount, if any,
equal to (i) the interest that would accrue at the Prime Rate plus two percent
(2%) on such Partner's Cumulative Unpaid Priority Distribution Account
outstanding from time to time, less (ii) the cumulative amount of
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Available Cash distributed with respect to the Limited Partnership Units of such
Partner in reduction of such Cumulative Unpaid Accrued Return Account pursuant
to Section 5.1(a)(2). The Cumulative Unpaid Accrued Return Account shall also be
reduced to the extent the value of such account is paid through payment of the
REIT Shares Amount.
"Cumulative Unpaid Priority Distribution Account" means, with respect
to any Limited Partner other than an Affiliate Limited Partner, an amount, if
any, equal to (i) the aggregate of all Priority Distribution Amounts for Limited
Partnership Units held by such Limited Partner, less (ii) the cumulative amount
of Available Cash distributed with respect to such Limited Partnership Units of
such Limited Partner in reduction of such Cumulative Unpaid Priority
Distribution Account pursuant to Sections 5.1(a)(1) and 5.1(a)(3). The
Cumulative Unpaid Priority Distribution Account shall also be reduced to the
extent the value of such account is paid through payment of the REIT Shares
Amount.
"Depreciation" means, for each Partnership Year or other period an
amount equal to the federal income tax depreciation, amortization, or other cost
recovery deduction allowable with respect to an asset for such year, except that
if the Carrying Value of an asset differs from its adjusted basis for federal
income tax purposes at the beginning of such year or other period, Depreciation
shall be an amount which bears the same ratio to such beginning Carrying Value
as the federal income tax depreciation, amortization, or other cost recovery
deduction for such year bears to such beginning adjusted tax basis; provided,
however that if the federal income tax depreciation, amortization, or other cost
recovery deduction for such year is zero, Depreciation shall be determined with
reference to such beginning Carrying Value using any reasonable method selected
by the General Partner.
"Dissolution Event" has the meaning set forth in Section 13.1.
"General Partner" means IRT Property Company, in its capacity as the
general partner of the Partnership, or its permitted successors as general
partner of the Partnership, which permitted successors shall include any
Affiliate of IRT Property Company and any successor that becomes a general
partner of the Partnership pursuant to Section 11.2 hereof.
"General Partner Interest" means a Partnership Interest held by the
General Partner that is a general partnership interest. A General Partner
Interest may be expressed as a number of Partnership Units.
"IRS" means the Internal Revenue Service, which administers the
internal revenue laws of the United States.
"Immediate Family" means, with respect to any natural Person, such
natural Person's spouse and such natural Person's natural or adoptive parents,
descendants, nephews, nieces, brothers, and sisters.
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"Incapacity" or "Incapacitated" means, (i) as to any individual
Partner, death, total physical disability or entry by a court of competent
jurisdiction adjudicating him incompetent to manage his Person or his estate;
(ii) as to any corporation which is a Partner, the filing of a certificate of
dissolution, or its equivalent, for the corporation or the revocation of its
charter; (iii) as to any partnership which is a Partner, the dissolution and
commencement of winding up of the partnership; (iv) as to any estate which is a
Partner, the distribution by the fiduciary of the estate's entire interest in
the Partnership; (v) as to any trustee of a trust which is a Partner, the
termination of the trust (but not the substitution of a new trustee); or (vi) as
to any Partner, the bankruptcy of such Partner. For purposes of this definition,
bankruptcy of a Partner shall be deemed to have occurred when (A) the Partner
commences a voluntary proceeding seeking liquidation, reorganization or other
relief under any bankruptcy, insolvency or other similar law now or hereafter in
effect, (B) the Partner is adjudged as bankrupt or insolvent, or a final and
nonappealable order for relief under any bankruptcy, insolvency or similar law
now or hereafter in effect has been entered against the Partner, (C) the Partner
executes and delivers a general assignment for the benefit of the Partner's
creditors, (D) the Partner files an answer or other pleading admitting or
failing to contest the material allegations of a petition filed against the
Partner in any proceeding of the nature described in clause (B) above, (E) the
Partner seeks, consents to or acquiesces in the appointment of a trustee,
receiver or liquidator for the Partner or for all or any substantial part of the
Partner's properties, (F) any proceeding seeking liquidation, reorganization or
other relief of or against such Partner under any bankruptcy, insolvency or
other similar law now or hereafter in effect has not been dismissed within one
hundred twenty (120) days after the commencement thereof, (G) the appointment
without the Partner's consent or acquiescence of a trustee, receiver or
liquidator has not been vacated or stayed within ninety (90) days of such
appointment, or (H) an appointment referred to in clause (G) which has been
stayed is not vacated within ninety (90) days after the expiration of any such
stay.
"Indemnitee" means (i) any Person made a party to a proceeding by
reason of (A) his status as the General Partner, or a director or officer of the
Partnership or the General Partner, or (B) his or its liabilities, pursuant to a
loan guarantee or otherwise, for any indebtedness of the Partnership or any
Subsidiary of the Partnership (including, without limitation, any indebtedness
which the Partnership or any Subsidiary of the Partnership has assumed or taken
assets subject to), and (ii) such other Persons (including Affiliates of the
General Partner or the Partnership) as the General Partner may designate from
time to time (whether before or after the event giving rise to potential
liability), in its sole and absolute discretion.
"Initial Limited Partner" means IRT Management Company.
"Limited Partner" means the Initial Limited Partner and any Person
named as a Limited Partner in Exhibit A attached hereto, as such Exhibit may be
amended from time to time, or any Substituted Limited Partner or Additional
Limited Partner, in such Person's capacity as a Limited Partner in the
Partnership.
"Limited Partner Interest" means a Partnership Interest of a Limited
Partner in the Partnership representing a fractional part of the Partnership
Interests of all Partners and includes
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any and all benefits to which the holder of such a Partnership Interest may be
entitled as provided in this Agreement, together with all obligations of such
Person to comply with the terms and provisions of this Agreement. A Limited
Partner Interest may be expressed as a number of Partnership Units.
"Liquidator" has the meaning set forth in Section 13.2.
"Net Income" or "Net Loss" means, for any Partnership Year or any
portion of a Partnership Year, the excess, if any, or deficiency, if any, as the
case may be of the Partnership's items of income and gain for such Partnership
Year over the Partnership's items of loss and deduction for such Partnership
Year. For purposes of computing the amount of Net Income or Net Loss, unless
otherwise specified in this Agreement, the determination, recognition and
classification of any such item shall be the same as its determination,
recognition and classification for federal income tax purposes determined in
accordance with Section 703(a) of the Code (for this purpose all items of
income, gain, loss or deduction required to be stated separately pursuant to
Section 703(a)(1) of the Code shall be included in taxable income or loss), with
the following adjustments:
(1) Except as otherwise provided in Regulations Section
1.704-l(b)(2)(iv)(m), the computation of all items of
income, gain, loss and deduction shall be made
without regard to any election under Section 754 of
the Code which may be made by the Partnership,
provided that the amounts of any adjustments to the
adjusted bases of the assets of the Partnership made
pursuant to Section 734 of the Code as a result of
the distribution of property by the Partnership to a
Partner (to the extent that such adjustments have not
previously been reflected in the Partners' Capital
Accounts) shall be reflected in the Capital Accounts
of the Partners in the manner and subject to the
limitations prescribed in Regulations Section
1.704-1(b)(2)(iv)(m). Any income of the Partnership
that is exempt from federal income tax and not
otherwise taken into account in computing Net Income
or Net Loss pursuant to this definition shall be
added to such Net Income or Net Loss.
(2) The computation of all items of income, gain, loss
and deduction shall be made without regard to the
fact that items described in Sections 705(a)(1)(B)
and 705(a)(2)(B) of the Code are not includible in
gross income or are neither currently deductible nor
capitalized for federal income tax purposes.
(3) Any income, gain or loss attributable to the taxable
disposition of any Partnership property shall be
determined as if the adjusted basis of such property
as of such date of disposition were equal in amount
to the Partnership's Carrying Value with respect to
such property as of such date.
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(4) In lieu of the depreciation, amortization and other
cost recovery deductions taken into account in
computing such taxable income or loss, there shall be
taken into account Depreciation for such fiscal year.
(5) In the event the Carrying Value of any Partnership
Asset is adjusted pursuant to Section 1.D hereof, the
amount of any such adjustment shall be taken into
account as gain or loss from the disposition of such
asset.
(6) Any items specifically allocated under Section 6.1(c)
or Section 6.3 shall not be taken into account.
"Nonrecourse Built-in Gain" means, with respect to any Contributed
Properties or Adjusted Properties that are subject to a mortgage or negative
pledge securing a Nonrecourse Liability, the amount of any taxable gain that
would be allocated to the Partners pursuant to Section 6.3(b) if such properties
were disposed of in a taxable transaction in full satisfaction of such
liabilities and for no other consideration.
"Nonrecourse Deductions" has the meaning set forth in Regulations
Section 1.704-2(b)(1), and the amount of Nonrecourse Deductions for a
Partnership Year shall be determined in accordance with the rules of Regulations
Section 1.704-2(c).
"Nonrecourse Liability" has the meaning set forth in Regulations
Section 1.752-l(a)(2).
"Notice of Redemption" means the Notice of Redemption substantially in
the form of Exhibit E to this Agreement.
"Original Limited Partner" means a Limited Partner, other than the
General Partner and the Initial Limited Partner, who is a Partner on the date of
this Agreement and any transferee or assignee of the Units received by such a
Limited Partners on the date of this Agreement, and which has been admitted as
Limited Partner to the Partnership pursuant to, and consistent with Section
11.3.
"Partner" means a General Partner or a Limited Partner, and "Partners"
means the General Partner and the Limited Partners collectively.
"Partner Minimum Gain" means an amount, with respect to each Partner
Nonrecourse Debt, equal to the Partnership Minimum Gain that would result if
such Partner Nonrecourse Debt were treated as a Nonrecourse Liability,
determined in accordance with Regulations Section 1.704-2(i)(3).
"Partner Nonrecourse Debt" has the meaning set forth in Regulations
Section 1.704-2(b)(4).
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"Partner Nonrecourse Deductions" has the meaning set forth in
Regulations Section 1.704-2(i)(2), and the amount of Partner Nonrecourse
Deductions with respect to a Partner Nonrecourse Debt for a Partnership Year
shall be determined in accordance with the rules of Regulations Section
1.704-2(i)(2).
"Partnership" means the limited partnership formed under the Act and
pursuant to this Agreement and any successor thereto.
"Partnership Interest" means an ownership interest in the Partnership
representing a Capital Contribution by either a Limited Partner or the General
Partner and includes any and all benefits to which the holder of such a
Partnership Interest may be entitled as provided in this Agreement, together
with all obligations of such Person to comply with the terms and provisions of
this Agreement. A Partnership Interest may be expressed as a number of
Partnership Units.
"Partnership Minimum Gain" has the meaning set forth in Regulations
Section 1.704-2(b)(2), and the amount of Partnership Minimum Gain, as well as
any net increase or decrease in a Partnership Minimum Gain, for a Partnership
Year shall be determined in accordance with the rules of Regulations Section
1.704-2(d).
"Partnership Record Date" means the record date established by the
General Partner for a distribution to its holders of REIT Shares.
"Partnership Unit" means a fractional, undivided share of the
Partnership Interests of all Partners issued pursuant to Sections 4.1 and 4.2.
The number of Partnership Units outstanding and the Percentage Interest in the
Partnership represented by such Units are set forth in Exhibit A attached
hereto, as such Exhibit may be amended from time to time. The ownership of
Partnership Units shall be evidenced as the General Partner from time to time
determines. In no event shall the holding of a Partnership Unit constitute the
holder or assignee thereof as a shareholder or creditor of IRT Property Company,
and no such person shall have any rights or privileges as a shareholder or
creditor of IRT Property Company as a result of being the holder or assignee of
such Partnership Units.
"Partnership Year" means the fiscal year of the Partnership, which
shall be the calendar year.
"Percentage Interest" means, as to a Partner, its interest in the
Partnership as determined by dividing the Partnership Units owned by such
Partner by the total number of Partnership Units then outstanding and as
specified in Exhibit A attached hereto, as such Exhibit may be amended from time
to time.
"Person" means an individual or a corporation, partnership, limited
liability company, trust, unincorporated organization, association or other
entity.
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"Prime Rate" means, on any date, a fluctuating rate of interest per
annum equal to the rate of interest most recently established by NationsBank,
N.A. (or, at the General Partner's election, another major lender to the
Partnership, at the office with which the Partnership deals), as its prime rate
of interest for loans in United States dollars.
"Priority Distribution Amount" means with respect to any Limited
Partnership Unit (other than Units held by an Affiliate Limited Partner)
outstanding on a Partnership Record Date the product of (i) the cash
distribution per REIT Share (including any distribution designated by the
General Partner as capital gain pursuant to Section 857(b)(3)(C) of the Code or
a return of capital) declared by the General Partner on the Partnership Record
Date, and (ii) the Conversion Factor.
"Recapture Income" means any gain recognized by the Partnership
(computed without regard to any adjustment required by Section 734 or Section
743 of the Code) upon the disposition of any property or asset of the
Partnership, which gain is characterized for federal income tax purposes as
ordinary income because it represents the recapture of deductions previously
taken with respect to such property or asset.
"Recourse Liabilities" has the meaning set forth in Regulations Section
1.752-1(a)(1).
"Redeeming Partner" shall have the meaning set forth in Section 8.6
hereof.
"Redemption Right" shall have the meaning set forth in Section 8.6
hereof.
"Regulations" means the Income Tax Regulations, including the Temporary
Regulations, promulgated under the Code, as such regulations may be amended from
time to time (including corresponding provisions of succeeding regulations).
"REIT" means a real estate investment trust under Section 856 of the
Code.
"REIT Share" shall mean a share of the $1.00 par value common stock of
the General Partner.
"REIT Shares Amount" shall mean a number of REIT Shares equal to the
product of the number of Partnership Units offered for redemption by a Redeeming
Partner, multiplied by the Conversion Factor, provided that in the event the
General Partner issues to all holders of REIT Shares rights, options, warrants
or convertible or exchangeable securities entitling the shareholders to
subscribe for or purchase REIT Shares, or any other securities or property
(collectively, the "Rights"), then the REIT Shares Amount shall also include
such Rights that a holder of that number of REIT Shares would be entitled to
receive. In the event that the Redeeming Partner has a positive Cumulative
Unpaid Accrued Return Account or a positive Cumulative Unpaid Priority
Distribution Account, the REIT Shares Amount shall also include the number of
REIT Shares arrived at by dividing (x) the product of the positive amounts in
the Redeeming Partner's Cumulative Unpaid Accrued Return Account and Cumulative
Unpaid
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Priority Return Account and a fraction the numerator of which is the
number of Partnership Units Offered and the denominator of which is the total
Partnership Units owned by such Redeeming Partner, by (y) the Value on the
Valuation Date of a REIT share.
"Residual Gain" or "Residual Loss" means any item of gain or loss, as
the case may be, of the Partnership recognized for federal income tax purposes
resulting from a sale, exchange or other disposition of Contributed Property or
Adjusted Property, to the extent such item of gain or loss is not allocated
pursuant to Section 6.3(g)(2)(i)(A) or 6.3(g)(2)(ii)(A) to eliminate Book-Tax
Disparities.
"704(c) Value" of any Contributed Property means the value of such
property as set forth in Exhibit B or if no value is set forth in Exhibit B, the
fair market value of such property or other consideration at the time of
contribution as determined by the General Partner using such reasonable method
of valuation as it may adopt. Subject to Section 6.2(c) hereof, the General
Partner shall, in its sole and absolute discretion, use such method as it deems
reasonable and appropriate to allocate the aggregate of the 704(c) Values of
Contributed Properties in a single or integrated transaction among the separate
properties on a basis proportional to their respective fair market values.
"Securities Act" shall mean the Federal Securities Act of 1933, as
amended, and the rules and regulations of the Securities and Exchange Commission
thereunder.
"Specified Redemption Date" means the tenth (10th) Business Day after
receipt by the General Partner of a Notice of Redemption.
"Subsidiary" means, with respect to any Person, any corporation,
partnership, limited liability company, trust or other entity of which a
majority of either (i) the voting power of the voting equity securities or (ii)
the outstanding equity interests, is owned, directly or indirectly, by such
Person.
"Substituted Limited Partner" means a Person who is admitted as a
Limited Partner to the Partnership pursuant to Section 11.4.
"Terminating Capital Transaction" means any sale or other disposition
of all or substantially all of the assets of the Partnership or a related series
of transactions that, taken together, result in the sale or other disposition of
all or substantially all of the assets of the Partnership.
"Trusts" means (i) ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇. ▇▇▇, (▇▇) Riverside Trust,
Trust ▇▇. ▇▇▇, ▇▇▇ (▇▇▇) ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇. ▇▇▇.
"Unrealized Gain" attributable to any item of Partnership property
means, as of any date of determination, the excess, if any, of (i) the fair
market value of such property (as determined
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under Section 6.2(c) hereof) as of such date, over (ii) the Carrying Value of
such property (prior to any adjustment to be made pursuant to Section 6.2(c)
hereof) as of such date.
"Unrealized Loss" attributable to any item of Partnership property
means, as of any date of determination, the excess, if any, of (i) the Carrying
Value of such property (prior to any adjustment to be made pursuant to Section
6.2(c) hereof) as of such date, over (ii) the fair market value of such property
(as determined under Section 6.2(c) hereof) as of such date.
"Valuation Date" means the date of receipt by the General Partner of a
Notice of Redemption or, if such date is not a Business Day, the first Business
Day thereafter.
"Value" means, with respect to a REIT Share, the average of the daily
market price for the ten (10) consecutive trading days immediately preceding the
Valuation Date. The market price for each such trading day shall be: (i) the
closing prices ("regular way" pursuant to NYSE Rule 703.02 with respect to
shares trading "ex" distributions) on composite tape on the New York Stock
Exchange ("NYSE") or Nasdaq National Market, on such day, or if no such sale
takes place on such day, the average of the closing bid and asked prices on such
day; (ii) if the REIT Shares are not listed or admitted to trading on any
securities exchange or the Nasdaq National Market, the last reported sale price
on such day or, if no sale takes place on such day, the average of the closing
bid and asked prices on such day, as reported by a reliable quotation source
designated by the General Partner; or (iii) if the REIT Shares are not listed or
admitted to trading on any securities exchange or the Nasdaq National Market and
no such last reported sale price or closing bid and asked prices are available,
the average of the reported high bid and low asked prices on such day, as
reported by a reliable quotation source designated by the General Partner, or if
there shall be no bid and asked prices on such day, the average of the high bid
and low asked prices, as so reported, on the most recent day (not more than ten
(10) days prior to the date in question) for which prices have been so reported;
provided that if there are no bid and asked prices reported during the ten (10)
days prior to the date in question, the Value of the REIT Shares shall be
determined by the General Partner acting in good faith on the basis of such
quotations and other information as it considers, in its reasonable judgment,
appropriate. In the event the REIT Shares Amount includes rights that a holder
of REIT Shares would be entitled to receive, then the Value of such rights shall
be determined by the General Partner acting in good faith on the basis of such
quotations and other information as it considers, in its reasonable judgment,
appropriate.
ARTICLE 2
ORGANIZATIONAL MATTERS
Section 2.1 Organization and Continuation
The Partnership is a limited partnership organized pursuant to the
provisions of the Act. Except as expressly provided herein to the contrary, the
rights and obligations of the Partners and the administration and termination of
the Partnership shall be governed by the Act. The Partnership Interest of each
Partner shall be personal property for all purposes.
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Section 2.2 Name
The name of the Partnership shall be IRT Partners L.P. The
Partnership's business may be conducted under any other name or names deemed
advisable by the General Partner, including the name of the General Partner or
any Affiliate thereof. The words "Limited Partnership," "L.P.," "Ltd." or
similar words or letters shall be included in the Partnership's name where
necessary for the purposes of complying with the laws of any jurisdiction that
so requires. The General Partner in its sole and absolute discretion may change
the name of the Partnership at any time and from time to time and shall notify
the Limited Partners of such change in the next regular communication to the
Limited Partners.
Section 2.3 Registered Office and Agent; Principal Office
The address of the registered office of the Partnership in the State of
Georgia is ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ and the name of
the registered agent for service of process on the Partnership at such address
is CT Corporation System. The principal office of the Partnership shall be
located at ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, or
such other place as the General Partner may from time to time designate by
notice to the Limited Partners. The Partnership may maintain offices at such
other place or places within or outside the State of Georgia as the General
Partner deems advisable.
Section 2.4 Power of Attorney
(a) Each Limited Partner and each Assignee hereby constitutes and
appoints the General Partner, any Liquidator, and authorized officers and
attorneys-in-fact of each, and each of those acting singly, in each case with
full power of substitution, as its true and lawful agent and attorney-in-fact,
with full power and authority in its name, place and stead to:
(1) execute, swear to, acknowledge, deliver, file and
record in the appropriate public offices (i) all
certificates, documents and other instruments
(including, without limitation, this Agreement and
the Certificate and all amendments or restatements
thereof) that the General Partner or the Liquidator
deems appropriate or necessary to form, qualify or
continue the existence or qualification of the
Partnership as a limited partnership (or a
partnership in which the limited partners have
limited liability) in the State of Georgia and in all
other jurisdictions in which the Partnership may or
plans to conduct business or own property; (ii) all
instruments that the General Partner deems
appropriate or necessary to reflect any amendment,
change, modification or restatement of this Agreement
in accordance with its terms; (iii) all conveyances
and other instruments or documents that the General
Partner or the Liquidator deems appropriate or
necessary to reflect the dissolution
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and liquidation of the Partnership pursuant to the
terms of this Agreement, including, without
limitation, a certificate of cancellation; (iv) all
instruments relating to the admission, withdrawal,
removal or substitution of any Partner pursuant to,
or other events described in, Articles 11, 12 or 13
hereof or the Capital Contribution of any Partner;
and (v) all certificates, documents and other
instruments relating to the determination of the
rights, preferences and privileges of a Partnership
Interest; and
(2) execute, swear to, seal, acknowledge and file all
ballots, consents, approvals, waivers, certificates
and other instruments appropriate or necessary, in
the sole and absolute discretion of the General
Partner or any Liquidator, to make, evidence, give,
confirm or ratify any vote, consent, approval,
agreement or other action which is made or given by
the Partners hereunder or is consistent with the
terms of this Agreement or appropriate or necessary,
in the sole discretion of the General Partner or any
Liquidator, to effectuate the terms or intent of this
Agreement.
Nothing contained herein shall be construed as authorizing the General Partner
or any Liquidator to amend this Agreement except in accordance with Article 14
hereof or as may be otherwise expressly provided for in this Agreement.
(b) The foregoing power of attorney is hereby declared to be
irrevocable and a power coupled with an interest, in recognition of the fact
that each of the Partners will be relying upon the power of the General Partner
and any Liquidator to act as contemplated by this Agreement in any filing or
other action by it on behalf of the Partnership, and it shall survive and not be
affected by the subsequent Incapacity of any Limited Partner or Assignee and the
transfer of all or any portion of such Limited Partner's or Assignee's
Partnership Units and shall extend to such Limited Partner's or Assignee's
heirs, successors, assigns and personal representatives. Each such Limited
Partner or Assignee hereby agrees to be bound by any representation made by the
General Partner or any Liquidator, acting in good faith pursuant to such power
of attorney, and each such Limited Partner or Assignee hereby waives any and all
defenses which may be available to contest, negate or disaffirm the action of
the General Partner or any Liquidator, taken in good faith under such power of
attorney. Each Limited Partner or Assignee shall execute and deliver to the
General Partner or the Liquidator, within fifteen (15) days after receipt of the
General Partner's or Liquidator's request therefor, such further designation,
powers of attorney and other instruments as the General Partner or the
Liquidator, as the case may be, deems necessary to effectuate this Agreement and
the purposes of the Partnership.
Section 2.5 Term
The term of the Partnership commenced on July 14, 1998, the date the
Certificate was filed in the office of the Secretary of State of Georgia in
accordance with the Act, and shall
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continue until December 31, 2098, unless the Partnership is dissolved sooner
pursuant to the provisions of Article 13 or as otherwise provided by law.
ARTICLE 3
PURPOSE
Section 3.1 Purpose and Business
The purpose and nature of the business to be conducted by the
Partnership is (i) to conduct any business that may be lawfully conducted by a
limited partnership organized pursuant to the Act, provided, however, that such
business shall be limited to and conducted in such a manner as to permit the
General Partner at all times to be classified as a REIT, unless the General
Partner elects in its sole discretion not to qualify as a REIT, or otherwise
ceases to qualify as a REIT, (ii) to enter into any partnership, joint venture
or other similar arrangement to engage in any of the foregoing or to own
interests in any entity engaged in any of the foregoing, (iii) to borrow monies,
either unsecured or secured by one or more assets of the Partnership, and (iv)
to do anything necessary or incidental to the foregoing.
Section 3.2 Powers
The Partnership is empowered to do any and all acts and things
necessary, appropriate, proper, advisable, incidental to or convenient for the
furtherance and accomplishment of the purposes and business described herein and
for the protection and benefit of the Partnership, provided that the Partnership
shall not take, or refrain from taking, any action which, in the judgment of the
General Partner, in its sole and absolute discretion, (i) could adversely affect
the ability of the General Partner to continue to qualify as a REIT, (ii) could
subject the General Partner to any additional taxes under Section 857 or Section
4981 of the Code, or (iii) could violate any law or regulation of any
governmental body or agency having jurisdiction over the General Partner, the
Partnership or their respective securities, unless such action (or inaction)
shall have been specifically consented to by the General Partner in writing.
ARTICLE 4
CAPITAL CONTRIBUTIONS
Section 4.1 Capital Contributions of the Partners
At the time of the execution of this Agreement, the Partners shall make
Capital Contributions set forth in Exhibit A to this Agreement. The Partners
shall own Partnership Units in the amounts set forth for each such Partner in
Exhibit A and shall have a Percentage Interest in the Partnership as set forth
in Exhibit A, which Percentage Interest shall be adjusted in Exhibit A from time
to time by the General Partner to the extent necessary to reflect accurately
redemptions, conversions, Capital Contributions, the issuance of additional
Partnership Units, or similar events having an effect on any Partner's
Percentage Interest. Except as provided in Sections 4.2, 10.4, and 13.3(b), the
Partners shall have no obligation to make any additional Capital Contributions
or
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loans to the Partnership. The General Partner shall maintain the information
set forth in Exhibit A to the Agreement, as such information shall change from
time to time, in such form as the General Partner deems appropriate for the
conduct of the Partnership affairs, and Exhibit A shall be deemed amended from
time to time to reflect the information so maintained by the General Partner,
whether or not a formal amendment to the Agreement has been executed amending
such Exhibit A. Such information shall reflect (and Exhibit A shall be deemed
amended from time to time to reflect) the issuance of any additional Partnership
Units to the General Partner or any other Person, the transfer of Partnership
Units and the redemption of any Partnership Units, all as contemplated in the
Agreement.
Section 4.2 Issuances of Additional Partnership Interests
The General Partner is hereby authorized to cause the Partnership from
time to time to issue to the Partners (including the General Partner) or other
Persons additional Partnership Units or other Partnership Interests in one or
more classes, or one or more series of any of such classes, with such
designations, preferences and relative, participating, optional or other special
rights, powers and duties, including rights, powers and duties senior to Limited
Partner Interests, all as shall be determined by the General Partner in its sole
and absolute discretion subject to Georgia law, including, without limitation,
(i) the allocations of items of Partnership income, gain, loss, deduction and
credit to each such class or series of Partnership Interests; (ii) the right of
each such class or series of Partnership Interests to share in Partnership
distributions; and (iii) the rights of each such class or series of Partnership
Interests upon dissolution and liquidation of the Partnership; provided,
however, that no Partnership Interest may be issued to any person that has a
priority with respect to any of the foregoing items over the Original Limited
Partners at such time as the Original Limited Partners have priority as to
distributions under Articles 5, 6 and 13 hereof and no Affiliate of the General
Partner or the General Partner may be issued Units other than Units that are
subordinate to the Units of the Original Limited Partners at such time as the
Original Limited Partners have priority as to distributions under Articles 5, 6
and 13 hereof, except (i) as provided in Section 7.4(g) hereof or (ii) the
issuance of Units to the General Partner and its Affiliates in proportion to
their holdings of Units that have such priority as to distributions. Without
limiting the foregoing, the General Partner is expressly authorized to cause the
Partnership to issue Partnership Units for less than fair market value, so long
as the General Partner concludes in good faith that such issuance is in the best
interests of the General Partner and the Partnership (for example, and not by
way of limitation, the issuance of Partnership Units pursuant to an employee
purchase plan providing for employee purchases of Partnership Units at a
discount from fair market value or employee options that have an exercise price
that is less than the fair market value of the Partnership Units, either at the
time of issuance or at the time of exercise).
Section 4.3 No Preemptive Rights
No Person shall have any preemptive, preferential or other similar
right with respect to (i) additional Capital Contributions or loans to the
Partnership; or (ii) issuance or sale of any Partnership Units or other
Partnership Interests.
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Section 4.4 No Interest
No interest shall be paid by the Partnership on Capital Contributions
or on balances in Partners' Capital Accounts.
Section 4.5 No Withdrawal
No Partner shall be entitled to withdraw any part of his Capital
Contribution or his Capital Account or to receive any distribution from the
Partnership, except as provided in Articles 4, 5, 8 and 13 hereof.
ARTICLE 5
DISTRIBUTIONS
Section 5.1 Requirement and Characterization of Distributions
(a) The General Partner shall cause the Partnership to
distribute quarterly an amount equal to 100% of Available Cash generated by the
Partnership during such quarter to the Partners who are Partners on the
Partnership Record Date with respect to such quarter as follows:
(1) First, one hundred percent (100%) to the Limited
Partners other than any Affiliate Limited Partner, pro rata
based on the number of Partnership Units held by each such
Limited Partner on the applicable Partnership Record Date,
until each has received an amount equal to the Priority
Distribution Amount for the quarter for each such Unit;
(2) Next, if any Limited Partners have a positive
Cumulative Unpaid Accrued Return Account other than to any
Affiliate Limited Partner, one hundred percent (100%) to such
Limited Partners, pro rata based on the relative amounts of
their Cumulative Unpaid Accrued Return Accounts, until each
such Cumulative Unpaid Accrued Return Account reaches zero;
(3) Next, if any Limited Partners have a positive
Cumulative Unpaid Priority Distribution Account other than to
any Affiliate Limited Partner, one hundred percent (100%) to
such Limited Partners, pro rata based on the relative amounts
of their Cumulative Unpaid Priority Distribution Accounts,
until each such Cumulative Unpaid Priority Distribution
Account reaches zero; and
(4) Thereafter, to the General Partner and any
Affiliate Partner in proportion to the respective number of
Units held by each such Partner.
(b) The General Partner shall take such reasonable efforts, as
determined by it in its sole and absolute discretion and consistent with its
qualification as a REIT, to distribute
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Available Cash to the Limited Partners so as to preclude any such distribution
or portion thereof from being treated as part of a sale of property to the
Partnership by a Limited Partner under Section 707 of the Code or the
Regulations thereunder; provided that the General Partner and the Partnership
shall not have liability to a Limited Partner under any circumstances as a
result of any distribution to a Limited Partner being so treated.
Section 5.2 Amounts Withheld
All amounts withheld pursuant to the Code or any provisions of any
state or local tax law and Section 10.4 hereof with respect to any allocation,
payment or distribution to the General Partner, the Limited Partners or
Assignees shall be treated as amounts distributed to the General Partner,
Limited Partners, or Assignees pursuant to Section 5.1 for all purposes under
this Agreement.
Section 5.3 Distributions Upon Liquidation
Proceeds from a Terminating Capital Transaction and any other cash
received or reductions in reserves made after commencement of the liquidation of
the Partnership shall be distributed to the Partners in accordance with Section
13.2.
ARTICLE 6
ALLOCATIONS
Section 6.1 Allocations For Capital Account Purposes
For purposes of maintaining the Capital Accounts and in determining the
rights of the Partners among themselves, the Partnership's Net Income and Net
Loss shall be allocated among the Partners in each taxable year (or portion
thereof) as provided hereinbelow.
(a) Net Income. After giving effect to the special allocations set
forth in Section 6.3, Net Income shall be allocated as follows:
(1) First, to the Partners in proportion to and to the
extent of distributions with respect to such taxable
year, other than distributions of amounts for which
an allocation had previously been made under
paragraph (2) below;
(2) Second, to the Limited Partners in proportion to and
to the extent of the respective credit balances in
such Limited Partners' Cumulative Unpaid Accrued
Return Account and Cumulative Unpaid Priority
Distribution Account, less prior allocations with
respect thereto under this Section 6.1(a)(2) plus any
prior allocations under Section 6.1(b)(2); and
(3) Third, one hundred percent (100%) to the General
Partner and the Affiliate Limited Partners in an
amount equal to the excess, if any, of (i) the
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cumulative Net Losses allocated to such Partners
pursuant to Section 6.1(b)(5) and the last sentence
of Section 6.1(b) for all prior fiscal years, over
(ii) the cumulative Net Income allocated pursuant to
this Section 6.1(a)(1) for all prior fiscal years
(such allocation being made in proportion to such
Partners' respective excess amounts);
(4) Fourth, one hundred percent (100%) to the Limited
Partners (other than any Affiliate Limited Partner)
in an amount equal to the excess, if any, of (i) the
cumulative Net Losses allocated to such Limited
Partners pursuant to Section 6.1(b)(4) for all prior
fiscal years, over (ii) the cumulative Net Income
allocated pursuant to this Section 6.1(a)(2) for all
prior fiscal years, which amount shall be allocated
among the Partners in the same proportions and in the
reverse order as the Net Losses were allocated
pursuant to Section 6.1(b)(4);
(5) Fifth, one hundred percent (100%) to the Limited
Partners (other than any Affiliate Limited Partner)
in an amount equal to the excess, if any, of (i) the
cumulative Net Losses allocated to such Limited
Partners pursuant to Section 6.1(b)(3) for all prior
fiscal years, over (ii) the cumulative Net Income
allocated pursuant to this Section 6.1(a)(3) for all
prior fiscal years, which amount shall be allocated
among such Partners in the same proportions and in
the reverse order as the Net Losses were allocated
pursuant to Section 6.1(b)(3);
(6) Thereafter, to the General Partner and the Affiliate
Limited Partners in proportion to their respective
number of Units.
(b) Net Losses. After giving effect to the special
allocations set forth in Section 6.3, Net Losses shall be allocated as follows:
(1) First, one hundred percent (100%) to the General
Partner and the Affiliate Limited Partners in an
amount equal to the excess, if any, of (i) the
cumulative Net Income allocated pursuant to Section
6.1(a)(6) hereof for all prior fiscal years to such
Partner, over (ii) the cumulative Net Losses
allocated pursuant to this Section 6.1(b)(1) for all
prior fiscal years to such Partner (such allocation
being made in proportion to such Partner's respective
excess amounts);
(2) Second, to the Limited Partners until the cumulative
allocations of Net Losses under this Section
6.1(b)(2) equal the excess, if any, of the cumulative
allocations of Net Income under Section 6.1(a)(2) to
such Partners for all prior fiscal years over the
cumulative distributions to such Partners under
Section 5.1(a)(2) and (3) for the current and all
prior fiscal
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years (such allocation being made in proportion to
such Partners' respective excess amounts);
(3) Third, to the Limited Partners with positive Adjusted
Capital Account balances (determined, solely for
purposes of this Section 6.2(b)(3), without regard to
any obligation of a Partner to restore a negative
Capital Account under Section 13.3(b), in proportion
to such balances, until such balances are reduced to
zero;
(4) Fourth, to the Limited Partners in proportion to
their relative Percentage Interests; provided,
however, that to the extent that an allocation under
this Section 6.1(b)(4) would cause or increase an
Adjusted Capital Account Deficit for such Partner,
such Net Loss shall be allocated to those Limited
Partners (in proportion to their relative Percentage
Interests) for whom such allocation would not cause
or increase an Adjusted Capital Account Deficit; and
(5) Any remaining Net Loss shall be allocated to the
General Partner and any Affiliate Limited Partner in
proportion to their respective number of Units.
Notwithstanding the foregoing, Net Losses shall not be allocated to any Limited
Partner pursuant to this Section 6.1(b) to the extent that such allocation would
cause such Limited Partner to have an Adjusted Capital Account Deficit at the
end of such taxable year (or increase any existing Adjusted Capital Account
Deficit). All Net Losses in excess of the limitations set forth in the preceding
sentence of this Section 6.1(b) shall be allocated to the General Partner.
(c) REIT Shares Amount Allocation. In the event that a Limited Partner
exercises his Redemption Right and receives payment of the REIT Shares Amount
with respect to some or all of his Units, such Limited Partner shall
notwithstanding the provisions of subsections 6.1(a) and 6.1(b) above be
allocated an amount of Net Income, or, if necessary, items of income or gain,
equal to the amount of any Cumulative Unpaid Accrued Return Account and any
Cumulative Unpaid Priority Return Account paid in connection with payment of
such amounts and for which such Limited Partner had not previously received an
allocation of Net Income not offset by an allocation of Net Loss.
Section 6.2 Other Allocation Rules
(a) Excess Nonrecourse Liabilities. For purposes of determining a
Partner's proportionate share of the "excess nonrecourse liabilities" of the
Partnership within the meaning of Regulations Section 1.752-3(a)(3), such
"excess nonrecourse liabilities" shall be allocated in accordance with such
Partner's share of Partnership profits; provided, however, that each such share
shall be determined by the General Partner in its reasonable discretion under
any method permitted under applicable Regulations.
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(b) Recapture Income. Any gain allocated to the Partners upon the sale
or other taxable disposition of any Partnership asset to the extent possible,
after taking into account other required allocations of gain pursuant to Section
6.3, shall be characterized as Recapture Income in the same proportions and to
the same extent as such Partners have been allocated any deductions directly or
indirectly giving rise to the treatment of such gains as Recapture Income.
(c) Carrying Value Adjustments.
(1) Consistent with the provisions of Regulations Section
1.704-l(b)(2)(iv)(f), and as provided in Section
6.2(c)(2) below, the Carrying Value of all
Partnership assets shall be adjusted upward or
downward to reflect any Unrealized Gain or Unrealized
Loss attributable to such Partnership property, as of
the times of the adjustments provided in Section
6.2(c)(2) below, as if such Unrealized Gain or
Unrealized Loss had been recognized on an actual sale
of each such property and allocated pursuant to
Section 6.1 of the Agreement.
(2) Such adjustments shall be made as of the following
times: (i) immediately prior to the acquisition of an
additional interest in the Partnership by any new or
existing Partner in exchange for more than a de
minimis Capital Contribution; (ii) immediately prior
to distribution by the Partnership to a Partner of
more than a de minimis amount of property as
consideration for an interest in the Partnership; and
(iii) immediately prior to the liquidation of the
Partnership within the meaning of Regulations Section
1.704-1(b)(2)(ii)(g), provided, however, that
adjustments pursuant to clauses (i) and (ii) above
shall be made only if the General Partner determines
that such adjustments are necessary or appropriate to
reflect the relative economic interests of the
Partners in the Partnership.
(3) In accordance with Regulations Section
1.704-l(b)(2)(iv)(e), the Carrying Value of
Partnership assets distributed in kind shall be
adjusted upward or downward to reflect any Unrealized
Gain or Unrealized Loss attributable to such
Partnership property, as of the time any such asset
is distributed.
(4) In determining Unrealized Gain or Unrealized Loss,
the aggregate cash amount and fair market value of
all Partnership assets (including cash or cash
equivalents) shall be determined by the General
Partner using such reasonable method of valuation as
it may adopt, or in the case of a liquidating
distribution pursuant to Article 13 of the Agreement,
shall be determined and allocated by the Liquidator
using such reasonable methods of valuation as it may
adopt. The General Partner, or the Liquidator, as the
case may be, shall allocate such aggregate value
among the assets of the Partnership (in such manner
as it determines in its sole and absolute discretion
to arrive at a fair market value for individual
properties).
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Section 6.3 Special Allocation Rules
Notwithstanding any other provision of the Agreement, the following
special allocations shall be made in the following order:
(a) Minimum Gain Chargeback. Notwithstanding the provisions of Section
6.1 of the Agreement or any other provisions of this Section 6.3, if there is a
net decrease in Partnership Minimum Gain during any Partnership Year, each
Partner shall be specially allocated items of Partnership income and gain for
such year (and, if necessary, subsequent years) in an amount equal to such
Partner's share of the net decrease in Partnership Minimum Gain, as determined
under Regulations Section 1.704-2(g). Allocations pursuant to the previous
sentence shall be made in proportion to the respective amounts required to be
allocated to each Partner pursuant thereto. The items to be so allocated shall
be determined in accordance with Regulations Section 1.704-2(f)(6). This Section
6.3(a) is intended to comply with the minimum gain chargeback requirements in
Regulations Section 1.704-2(f) and shall be interpreted consistently therewith.
Solely for purposes of this Section 6.3(a), each Partner's Adjusted Capital
Account Deficit shall be determined prior to any other allocations pursuant to
Section 6.1 with respect to such fiscal year and without regard to any decrease
in Partner Minimum Gain during such Partnership Year.
(b) Partner Minimum Gain Chargeback. Notwithstanding any provision of
Section 6.1 of this Agreement or any other provisions of this Section 6.3
(except paragraph (a) hereof), if there is a net decrease in Partner Minimum
Gain attributable to a Partner Nonrecourse Debt during any Partnership Year,
each Partner who has a share of the Partner Minimum Gain attributable to such
Partner Nonrecourse Debt, determined in accordance with Regulations Section
1.704-2(i)(5), shall be specially allocated items of Partnership income and gain
for such year (and, if necessary, subsequent years) in an amount equal to such
Partner's share of the net decrease in Partner Minimum Gain attributable to such
Partner Nonrecourse Debt, determined in accordance with Regulations Section
1.704-2(i)(5). Allocations pursuant to the previous sentence shall be made in
proportion to the respective amounts required to be allocated to each Partner
pursuant thereto. The items to be so allocated shall be determined in accordance
with Regulations Section 1.704-2(i)(4). This Section 6.3(b) is intended to
comply with the minimum gain chargeback requirement in such Section of the
Regulations and shall be interpreted consistently therewith. Solely for purposes
of this Section 6.3(b), each Partner's Adjusted Capital Account Deficit shall be
determined prior to any other allocations pursuant to Section 6.1 of the
Agreement with respect to such Partnership Year, other than allocations pursuant
to paragraph (a) hereof.
(c) Qualified Income Offset. In the event any Partner unexpectedly
receives any adjustments, allocations or distributions described in Regulations
Sections 1.704-1(b)(2)(ii)(d)(4), 1.704-l(b)(2)(ii)(d)(5) or
1.704-1(b)(2)(ii)(d)(6), and after giving effect to the allocations required
under Sections 6.3(a) and 6.3(b) hereof, such Partner has an Adjusted Capital
Account Deficit, items of Partnership income and gain (consisting of a pro rata
portion of each item of Partnership income, including gross income and gain for
the Partnership Year) shall be specifically allocated
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to such Partner in an amount and manner sufficient to eliminate, to the extent
required by the Regulations, its Adjusted Capital Account Deficit created by
such adjustments, allocations or distributions as quickly as possible.
(d) Nonrecourse Deductions. Nonrecourse Deductions for any Partnership
Year shall be allocated to the Partners in accordance with their respective
Percentage Interests. If the General Partner determines in its good faith
discretion that the Partnership's Nonrecourse Deductions must be allocated in a
different ratio to satisfy the safe harbor requirements of the Regulations
promulgated under Section 704(b) of the Code, the General Partner is authorized,
upon notice to the Limited Partners, to revise the prescribed ratio to the
numerically closest ratio for such Partnership Year which would satisfy such
requirements.
(e) Partner Nonrecourse Deductions. Any Partner Nonrecourse Deductions
for any Partnership Year shall be specially allocated to the Partner who bears
the economic risk of loss with respect to the Partner Nonrecourse Debt to which
such Partner Nonrecourse Deductions are attributable in accordance with
Regulations Section 1.704-2(i).
(f) Code Section 754 Adjustments. To the extent an adjustment to the
adjusted tax basis of any Partnership asset pursuant to Section 734(b) or 743(b)
of the Code is required, pursuant to Regulations Section 1.704-1(b)(2)(iv)(m),
to be taken into account in determining Capital Accounts, the amount of such
adjustment to the Capital Accounts shall be treated as an item of gain (if the
adjustment increases the basis of the asset) or loss (if the adjustment
decreases such basis), and such item of gain or loss shall be specially
allocated to the Partners in a manner consistent with the manner in which their
Capital Accounts are required to be adjusted pursuant to such Section of the
Regulations.
(g) Allocations for Tax Purposes
(1) Except as otherwise provided in this Section 6.3(g), for
federal income tax purposes, each item of income, gain, loss and deduction shall
be allocated among the Partners in the same manner as its correlative item of
"book" income, gain, loss or deduction is allocated.
(2) In an attempt to eliminate Book-Tax Disparities
attributable to a Contributed Property or Adjusted Property, items of income,
gain, loss, and deduction shall be allocated for federal income tax purposes
among the Partners as follows:
(i) (A) In the case of a Contributed Property, such
items attributable thereto shall be
allocated among the Partners consistent with
the principles of Section 704(c) of the Code
to take into account the variation between
the 704(c) Value of such property and its
adjusted basis at the time of contribution;
and
(B) any item of Residual Gain or Residual Loss
attributable to a Contributed Property shall
be allocated among the Partners in the
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same manner as its correlative item of
"book" gain or loss is allocated.
(ii) (A) In the case of an Adjusted Property, such
items shall
(1) first, be allocated among the
Partners in a manner consistent with
the principles of Section 704(c) of
the Code to take into account the
Unrealized Gain or Unrealized Loss
attributable to such property and
the allocations thereof, and
(2) second, in the event such property
was originally a Contributed
Property, be allocated among the
Partners in a manner consistent with
Section 6.3(g)(2)(i) above; and
(B) any item of Residual Gain or Residual Loss
attributable to an Adjusted Property shall
be allocated among the Partners in the same
manner its correlative item of "book" gain
or loss is allocated.
(iii) all other items of income, gain loss and deduction
shall be allocated among the Partners in the same
manner as their correlative item of "book" gain or
loss is allocated.
(iv) Any elections or other decisions relating to Code
Section 704(c) allocations shall be made by the
General Partner; provided, however, that the
"traditional method" of making Section 704(c)
allocations without curative allocations described in
Section 1.704-3(b) of the Regulations shall be used.
Allocations pursuant to Sections (i), (ii) and (iii)
hereof are solely for purposes of federal, state, and
local taxes and shall not affect, or in any way be
taken into account in computing, any Partner's
Capital Account or share of Net Income, Net Losses,
other items, or distributions pursuant to any
provision of this Agreement.
ARTICLE 7
MANAGEMENT AND OPERATIONS OF BUSINESS
Section 7.1 Management
(a) Except as otherwise expressly provided in this Agreement, all
management powers over the business and affairs of the Partnership are and shall
be exclusively vested in the General Partner, and no Limited Partner shall have
any right to participate in or exercise control or management power over the
business and affairs of the Partnership. The General Partner may not be removed
by the Limited Partners with or without cause. In addition to the powers now or
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hereafter granted to a general partner of a limited partnership under applicable
law or which are granted to the General Partner under any other provision of
this Agreement, the General Partner shall have full power and authority to do
all things deemed necessary or desirable by it to conduct the business of the
Partnership, to exercise all powers set forth in Section 3.2 hereof and to
effectuate the purposes set forth in Section 3.1 hereof, including, without
limitation:
(1) the making of any expenditures, the lending or
borrowing of money (including, without limitation,
making prepayments on loans and borrowing money to
permit the Partnership to make distributions to its
Partners in such amounts as will permit the General
Partner (so long as the General Partner qualifies as
a REIT) to avoid the payment of any federal income
tax (including, for this purpose, any excise tax
pursuant to Section 4981 of the Code) and to make
distributions to the General Partner such that the
General Partner can distribute to its shareholders
amounts sufficient to permit the General Partner to
maintain REIT status), the assumption or guarantee
of, or other contracting for, indebtedness and other
liabilities, the issuance of evidence of indebtedness
(including the securing of same by deed to secure
debt, mortgage, deed of trust or other lien or
encumbrance on the Partnership's assets) and the
incurring of any obligations it deems necessary for
the conduct of the activities of the Partnership;
(2) the making of tax, regulatory and other filings, or
rendering of periodic or other reports to
governmental or other agencies having jurisdiction
over the business or assets of the Partnership;
(3) the acquisition, disposition, mortgage, pledge,
encumbrance, hypothecation or exchange of any assets
of the Partnership (including the exercise or grant
of any conversion, option, privilege or subscription
right or other right available in connection with any
assets at any time held by the Partnership) or the
combination of the Partnership with or into another
entity (all of the foregoing without any prior
approval);
(4) the use of the assets of the Partnership (including,
without limitation, cash on hand) for any purpose
consistent with the terms of this Agreement and on
any terms it sees fit, including, without limitation,
the financing of the conduct of the operations of the
General Partner, the Partnership or any of the
Partnership's Subsidiaries, the lending of funds to
other Persons (including, without limitation, the
Subsidiaries of the Partnership and/or the General
Partner) and the repayment of obligations of the
Partnership and its Subsidiaries and any other Person
in which it has
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an equity investment, and the making of capital
contributions to its Subsidiaries;
(5) the management, operation, leasing, landscaping,
repair, expansion, alteration, renovation, demolition
or improvement of any real property or improvements
owned by the Partnership or any Subsidiary of the
Partnership;
(6) the negotiation, execution, and performance of any
contracts, conveyances or other instruments that the
General Partner considers useful or necessary to the
conduct of the Partnership's operations or the
implementation of the General Partner's powers under
this Agreement, including contracting with the
General Partner, any Subsidiary or Affiliate of the
General Partner, contractors, developers,
consultants, accountants, legal counsel, other
professional advisors and other agents and the
payment of their expenses and compensation out of the
Partnership's assets;
(7) the distribution of Partnership cash or other
Partnership assets in accordance with this Agreement;
(8) holding, managing, investing and reinvesting cash and
other assets of the Partnership;
(9) the collection and receipt of revenues and income of
the Partnership;
(10) the establishment of one or more divisions of the
Partnership, the selection and dismissal of employees
of the Partnership, any division of the Partnership,
or the General Partner (including, without
limitation, employees having titles such as
"president," "vice president," "secretary" and
"treasurer" of the Partnership, any division of the
Partnership, or the General Partner), and agents,
outside attorneys, accountants, consultants and
contractors of the General Partner or the Partnership
or any division of the Partnership, and the
determination of their compensation and other terms
of employment or hiring;
(11) the maintenance of such insurance for the benefit of
the Partnership and the Partners as it deems
necessary or appropriate;
(12) the formation of, or acquisition of an interest in,
and the contribution of property to, any further
limited or general partnerships, joint ventures,
Subsidiaries or other relationships that
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it deems desirable (including, without limitation,
the acquisition of interests in, and the
contributions of property to, its Subsidiaries and
any other Person in which it has an equity investment
from time to time);
(13) the control of any matters affecting the rights and
obligations of the Partnership, including the
settlement, compromise, submission to arbitration or
any other form of dispute resolution, or abandonment
of, any claim, cause of action, liability, debt or
damages, due or owing to or from the Partnership, the
commencement or defense of suits, legal proceedings,
administrative proceedings, arbitration or other
forms of dispute, resolution, and the representation
of the Partnership in all suits or legal proceedings,
administrative proceedings, arbitrations or other
forms of dispute resolution, the incurring of legal
expense, and the indemnification of any Person
against liabilities and contingencies to the extent
permitted by law;
(14) the undertaking of any action in connection with the
Partnership's direct or indirect investment in its
Subsidiaries or any other Person (including, without
limitation, the contribution or loan of funds by the
Partnership to such Persons);
(15) the determination of the fair market value of any
Partnership property distributed in kind using such
reasonable method of valuation as the General Partner
may adopt;
(16) the exercise, directly or indirectly, through any
attorney-in-fact acting under a general or limited
power of attorney, of any right, including the right
to vote, appurtenant to any asset or investment held
by the Partnership;
(17) the exercise of any of the powers of the General
Partner enumerated in this Agreement on behalf of or
in connection with any Subsidiary of the Partnership
or any other Person in which the Partnership has a
direct or indirect interest, or jointly with any such
Subsidiary or other Person;
(18) the exercise of any of the powers of the General
Partner enumerated in this Agreement on behalf of any
Person in which the Partnership does not have an
interest pursuant to contractual or other
arrangements with such Person; and
(19) the making, execution and delivery of any and all
deeds, leases, notes, deeds to secure debt,
mortgages, deeds of trust, security
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agreements, conveyances, contracts, guarantees,
warranties, indemnities, waivers, releases or legal
instruments or agreement in writing necessary or
appropriate in the judgment of the General Partner
for the accomplishment of any of the powers of the
General Partner enumerated in this Agreement.
(b) Each of the Limited Partners agrees that the General Partner is
authorized to execute, deliver and perform the above-mentioned agreements and
transactions on behalf of the Partnership without any further act, approval or
vote of the Partners, notwithstanding any other provision of this Agreement, the
Act or any applicable law, rule or regulation, to the fullest extent permitted
under the Act or other applicable law. The execution, delivery or performance by
the General Partner or the Partnership of any agreement authorized or permitted
under this Agreement shall not constitute a breach by the General Partner of any
duty that the General Partner may owe the Partnership or the Limited Partners or
any other Persons under this Agreement or of any duty stated or implied by law
or equity.
(c) From and after the date hereof, the General Partner may cause the
Partnership to obtain and maintain (i) casualty, liability and other insurance
on the properties of the Partnership and (ii) liability insurance for the
Indemnities hereunder.
(d) From and after the date hereof, the General Partner may cause the
Partnership to establish and maintain at any and all times working capital
accounts and other cash or similar balances in such amounts as the General
Partner, in its sole and absolute discretion, deems appropriate and reasonable
from time to time.
(e) In exercising its authority under this Agreement and except as
provided at Section 5.1, the General Partner may, but shall be under no
obligation to, take into account the tax consequences to any Partner of any
action taken by it. The General Partner and the Partnership shall not have
liability to a Limited Partner under any circumstances as a result of an income
tax liability incurred by such Limited Partner as a result of an action (or
inaction) by the General Partner pursuant to its authority under this Agreement.
Notwithstanding the foregoing, the General Partner is authorized to enter into
agreements and understandings with Limited Partners regarding property
contributed to the Partnership and conditions under which such property may be
sold, transferred or refinanced.
(f) Notwithstanding anything contained in this Agreement to the
contrary, the General Partner, acting as fiduciary, shall use its reasonable
best efforts and act in good faith to operate the Partnership's assets and
manage the Partnership's business, including its indebtedness, so as to produce
sufficient Available Cash to fund to the Limited Partners the Priority
Distribution Amount on a current basis and any balance in the Cumulative Unpaid
Accrued Return Accounts and Cumulative Unpaid Priority Distribution Accounts of
the Limited Partners.
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Section 7.2 Certificate of Limited Partnership
The General Partner has previously filed the Certificate with the
Secretary of State of Georgia as required by the Act. The General Partner shall
use all reasonable efforts to cause to be filed such other certificates or
documents as may be reasonable and necessary or appropriate for the formation,
continuation, qualification and operation of a limited partnership (or a
partnership in which the limited partners have limited liability) in the State
of Georgia and any other state, or the District of Columbia, in which the
Partnership may elect to do business or own property. To the extent that such
action is determined by the General Partner to be reasonable and necessary or
appropriate, the General Partner shall file amendments to and restatements of
the Certificate and do all the things to maintain the Partnership as a limited
partnership (or a partnership in which the limited partners have limited
liability) under the laws of the State of Georgia and each other state or the
District of Columbia in which the Partnership may elect to do business or own
property. Subject to the terms of Section 8.5(a)(4) hereof, the General Partner
shall not be required, before or after filing, to deliver or mail a copy of the
Certificate or any amendment thereto to any Limited Partner.
Section 7.3 Reimbursement of the General Partner
(a) The General Partner shall be entitled to reasonable compensation,
for services provided to the Partnership; provided, however, that compensation
shall be deferred hereunder so long as any Limited Partner has a positive
Cumulative Unpaid Priority Distribution Account.
(b) The General Partner shall be reimbursed on a monthly basis, or such
other basis as the General Partner may determine in its sole and absolute
discretion, for all expenses that it incurs relating to the ownership and
operation of, or for the benefit of, the Partnership. Such reimbursements shall
be in addition to any reimbursement to the General Partner as a result of
indemnification pursuant to Section 7.5 hereof.
(c) The General Partner shall be treated as having made a Capital
Contribution in the amount of all expenses that it incurs relating to the
organization and/or reorganization of the Partnership and the General Partner,
and any other issuance of additional Partnership Interests or REIT Shares
pursuant to Section 4.2 hereof.
(d) In the event that the General Partner shall have transferred
substantially all of its assets to the Partnership, and the General Partner
elects to purchase from the shareholders of the General Partner REIT Shares for
the purpose of delivering such REIT Shares to satisfy an obligation under any
distribution or dividend reinvestment program or similar program adopted by the
General Partner, any employee stock purchase plan adopted by the General
Partner, or any similar obligation or arrangement undertaken by the General
Partner in the future, if the General Partner so elects, the purchase price paid
by the General Partner for such REIT Shares and any other expenses incurred by
the General Partner in connection with such purchase shall be considered
expenses of the Partnership and shall be reimbursed to the General Partner,
subject to the condition that: (i) if such REIT Shares subsequently are to be
sold by the General Partner, the
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General Partner shall pay to the Partnership any proceeds received by the
General Partner for such REIT Shares (provided that a transfer of REIT Shares
for Units pursuant to Section 8.6 would not be considered a sale for such
purposes); and (ii) if such REIT Shares are not retransferred by the General
Partner within 30 days after the purchase thereof, the General Partner shall
cause the Partnership to cancel a number of Partnership Units held by the
General Partner equal to the product obtained by multiplying the Conversion
Factor by the number of such REIT Shares.
Section 7.4 Contracts with Affiliates
(a) The Partnership may lend or contribute funds or other assets to its
Subsidiaries or other Persons in which it has an equity investment and such
Persons may borrow funds from the Partnership, on terms and conditions
established in the sole and absolute discretion of the General Partner. The
foregoing authority shall not create any right or benefit in favor of any
Subsidiary or any other Person.
(b) The Partnership may transfer assets to joint ventures, other
partnerships, corporations or other business entities in which it is or thereby
becomes a participant upon such terms and subject to such conditions consistent
with this Agreement and applicable law as the General Partner, in its sole and
absolute discretion, believes are advisable.
(c) Neither the General Partner nor any of its Affiliates shall sell,
transfer or convey any property to, or purchase any property from, the
Partnership, directly or indirectly, obtain from or furnish goods or services to
the Partnership, directly or indirectly, or engage in any transactions with the
Partnership, directly or indirectly, except pursuant to transactions that are
determined by the General Partner in good faith to be fair and reasonable and no
less favorable to the Partnership than would be obtained from an unaffiliated
third party.
(d) The General Partner, in its sole and absolute discretion and
without the approval of the Limited Partners, may propose and adopt on behalf of
the Partnership employee benefit plans, stock option plans, and similar plans
funded by the Partnership for the benefit of employees of the General Partner,
the Partnership, Subsidiaries of the Partnership or any Affiliate of any of them
in respect of services performed, directly or indirectly, for the benefit of the
Partnership, the General Partner, or any of the Partnership's Subsidiaries.
(e) The General Partner is expressly authorized to enter into, in the
name and on behalf of the Partnership, a right of first opportunity arrangement
and other conflict avoidance agreements with various Affiliates of the
Partnership and the General Partner, on such terms as the General Partner, in
its sole and absolute discretion, shall determine.
(f) The General Partner is expressly authorized to enter into, in the
name and on behalf of the Partnership, such guarantees of debt or of other
obligations of the General Partner, and/or of any Subsidiary or Affiliate of the
General Partner, as the General Partner, in its sole and absolute discretion,
shall determine.
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(g) Notwithstanding any other provision of this Agreement, in the event
the General Partner transfers all or substantially all of its assets to the
Partnership and as a result all or substantially all of the General Partner's
assets are owned through the Partnership, then (i) the Units of the General
Partner and its Affiliates will assume an equal priority with Units held by the
Original Limited Partners and for all purposes of this Agreement its Units shall
be treated on a pari passu basis with Units held by the Original Limited
Partners and the allocation and distribution provisions of this Agreement shall
be amended appropriately pursuant to the provisions of Section 14.1(b)(5), and
(ii) the General Partner will be authorized to issue interests to itself
superior to those held by any other Limited Partner to the extent the General
Partner at substantially the same time issues similar interests in its own
securities or obligations and provides the proceeds of such issuance to the
Partnership in exchange for such superior interests in the Partnership, provided
that such superior Partnership interests provide only for payments in respect of
such General Partner's securities or obligations in accordance with their terms.
Section 7.5 Indemnification
(a) The Partnership shall indemnify each Indemnitee from and against
any and all losses, claims, damages, liabilities, joint or several, expenses
(including, without limitation, attorneys' fees and other legal fees and
expenses), judgments, fines, settlements, and other amounts arising from any and
all claims, demands, actions, suits or proceedings, civil, criminal,
administrative or investigative, that relate to the operations of the
Partnership, the General Partner as set forth in this Agreement in which such
Indemnitee may be involved, or is threatened to be involved, as a party or
otherwise, unless it is conclusively established by a final unappealable order
of a court of competent jurisdiction that: (i) the act or omission of the
Indemnitee was material to the matter giving rise to the proceeding and either
was committed in bad faith or was the result of active and deliberate
dishonesty; (ii) the Indemnitee actually received an improper personal benefit
in money, property or services; or (iii) in the case of any criminal proceeding,
the Indemnitee had reasonable cause to believe that the act or omission was
unlawful. Without limitation, the foregoing indemnity shall extend to any
liability of any Indemnitee, pursuant to a loan guaranty or otherwise for any
indebtedness of the Partnership or any Subsidiary of the Partnership (including
without limitation, any indebtedness which the Partnership or any Subsidiary of
the Partnership has assumed or taken subject to), and the General Partner is
hereby authorized and empowered, on behalf of the Partnership, to enter into one
or more indemnity agreements consistent with the provisions of this Section 7.5
in favor of any Indemnitee having or potentially having liability for any such
indebtedness. The termination of any proceeding by judgment, order or settlement
does not create a presumption that the Indemnitee did not meet the requisite
standard of conduct set forth in this Section 7.5(a) with respect to the subject
matter of such proceeding. The termination of any proceeding by conviction of an
Indemnitee or upon a plea of nolo contendere or its equivalent by an Indemnitee,
or an entry of an order of probation against an Indemnitee prior to judgment,
creates a rebuttable presumption that such Indemnitee acted in a manner contrary
to that specified in this Section 7.5(a). Any indemnification pursuant to this
Section 7.5 shall be made only out of the assets of the Partnership, and neither
the General Partner nor any Limited Partner shall have any obligation to
contribute to the capital of the Partnership or otherwise provide funds, to
enable the Partnership to fund its obligations under this Section 7.5.
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(b) Reasonable expenses incurred by an Indemnitee who is a party to a
proceeding may be paid or reimbursed by the Partnership in advance of the final
disposition of the proceeding upon receipt by the Partnership of (i) a written
affirmation by the Indemnitee of the Indemnitee's good faith belief that the
standard of conduct necessary for indemnification by the Partnership as
authorized in Section 7.5(a) has been met, and (ii) a written undertaking by or
on behalf of the Indemnitee to repay the amount if it shall ultimately be
determined that the standard of conduct has not been met.
(c) The indemnification provided by this Section 7.5 shall be in
addition to any other rights to which an Indemnitee or any other Person may be
entitled under any agreement, pursuant to any vote of the Partners, as a matter
of law or otherwise, and shall continue as to an Indemnitee who has ceased to
serve in such capacity unless otherwise provided in a written agreement pursuant
to which such Indemnitee is indemnified.
(d) The Partnership may, but shall not be obligated to, purchase and
maintain insurance, on behalf of the Indemnities and such other Persons as the
General Partner shall determine, against any liability that may be asserted
against or expenses that may be incurred by such Person in connection with the
Partnership's activities, regardless of whether the Partnership would have the
power to indemnify such Person against such liability under the provisions of
this Agreement.
(e) Any liabilities which an Indemnitee incurs as a result of acting on
behalf of the Partnership or the General Partner (whether as a fiduciary or
otherwise) in connection with the operation, administration or maintenance of an
employee benefit plan or any related trust or funding mechanism (whether such
liabilities are in the form of excise taxes assessed by the Internal Revenue
Service, penalties assessed by the Department of Labor, restitutions to such a
plan or trust or other funding mechanism or to a participant or beneficiary of
such plan, trust or other funding mechanism, or otherwise) shall be treated as
liabilities or judgments or fines under this Section 7.5 unless such liabilities
arise as a result of (i) such Indemnitee's intentional misconduct or knowing
violations of the law, or (ii) any transaction in which such Indemnitee received
a personal benefit in violation or breach of any provision of this Agreement or
applicable law.
(f) In no event may an Indemnitee subject any of the Partners to
personal liability by reason of the indemnification provisions set forth in this
Agreement.
(g) An Indemnitee shall not be denied indemnification in whole or in
part under this Section 7.5 because the Indemnitee had an interest in the
transaction with respect to which the indemnification applies if the transaction
was otherwise permitted by the terms of this Agreement.
(h) The provisions of this Section 7.5 are for the benefit of the
Indemnities, their heirs, successors, assigns and administrators and shall not
be deemed to create any rights for the benefit of any other Persons. Any
amendment, modification or repeal of this Section 7.5 or any provision hereof
shall be prospective only and shall not in any way affect the limitations on the
Partnership's
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liability to any Indemnitee under this Section 7.5 as in effect
immediately prior to such amendment, modification, or repeal with respect to
claims arising from or relating to matters occurring, in whole or in part, prior
to such amendment, modification or repeal, regardless of when such claims may
arise or be asserted.
Section 7.6 Liability of the General Partner
(a) Notwithstanding anything to the contrary set forth in this
Agreement, the General Partner shall not be liable for monetary damages to the
Partnership, any Partners or any Assignees for losses sustained or liabilities
incurred as a result of errors in judgment or of any act or omission if the
General Partner acted in good faith and with due care and loyalty.
(b) The Limited Partners expressly acknowledge that the General Partner
is acting on behalf of the Partnership and the General Partner's shareholders
collectively, that the General Partner is under no obligation, except as
provided at Section 5.1 and 7.1(f), to consider the separate interests of the
Limited Partners (including, without limitation, the tax consequences to Limited
Partners or Assignees) in deciding whether to cause the Partnership to take (or
decline to take) any actions, and that the General Partner shall not be liable
for monetary damages for losses sustained, liabilities incurred, or benefits not
derived by Limited Partners in connection with such decisions, provided that the
General Partner has acted in good faith.
(c) Subject to its obligations and duties as General Partner set forth
in Section 7.1(a) hereof, the General Partner may exercise any of the powers
granted to it by this Agreement and perform any of the duties imposed upon it
hereunder either directly or by or through its agents. The General Partner shall
not be responsible for any misconduct or negligence on the part of any such
agent appointed by the General Partner in good faith.
(d) Any amendment, modification or repeal of this Section 7.6 or any
provision hereof shall be prospective only and shall not in any way affect the
limitations on the General Partner's liability to the Partnership and the
Limited Partners under this Section 7.6 as in effect immediately prior to such
amendment, modification or repeal with respect to claims arising from or
relating to matters occurring, in whole or in part, prior to such amendment,
modification or repeal, regardless of when such claims may arise or be asserted.
Section 7.7 Other Matters Concerning the General Partner
(a) The General Partner may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement, instrument,
opinion, report, notice, request, consent, order, bond, debenture, or other
paper or document believed by it in good faith to be genuine and to have been
signed or presented by the proper party or parties.
(b) The General Partner may consult with legal counsel, accountants,
appraisers, management consultants, investment bankers, architects, engineers,
environmental consultants and other consultants and advisers selected by it, and
any act taken or omitted to be taken in reliance
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upon the opinion of such Persons as to matters which such General Partner
reasonably believes to be within such Person's professional or expert competence
shall be conclusively presumed to have been done or omitted in good faith and in
accordance with such opinion.
(c) The General Partner shall have the right, in respect of any of its
powers or obligations hereunder, to act through any of its duly authorized
officers and a duly appointed attorney or attorneys-in-fact. Each such attorney
shall, to the extent provided by the General Partner in the power of attorney,
have full power and authority to do and perform all and every act and duty which
is permitted or required to be done by the General Partner hereunder.
(d) Notwithstanding any other provisions of this Agreement or the Act,
any action of the General Partner on behalf of the Partnership or any decision
of the General Partner to refrain from acting on behalf of the Partnership,
undertaken in the good faith belief that such action or omission is necessary or
advisable in order (i) to protect the ability of the General Partner to continue
to qualify as a REIT or (ii) to avoid the General Partner incurring any taxes
under Section 857 or Section 4981 of the Code, is expressly authorized under
this Agreement and is deemed approved by all of the Limited Partners.
Section 7.8 Title to Partnership Assets
Title to Partnership assets, whether real, personal or mixed and
whether tangible or intangible, shall be deemed to be owned by the Partnership
as an entity, and no Partner, individually or collectively, shall have any
ownership interest in such Partnership assets or any portion thereof. Title to
any or all of the Partnership assets may be held in the name of the Partnership,
the General Partner or one or more nominees, as the General Partner may
determine, including Affiliates of the General Partner. The General Partner
hereby declares and warrants that any Partnership assets for which legal title
is held in the name of the General Partner or any nominee or Affiliate of the
General Partner shall be held by the General Partner or such nominee or
Affiliate for the use and benefit of the Partnership in accordance with the
provisions of this Agreement; provided, however, that the General Partner shall
use its best efforts to cause beneficial and record title to such assets to be
vested in the Partnership as soon as reasonably practicable. All Partnership
assets shall be recorded as the property of the Partnership in its books and
records, irrespective of the name in which legal title to such Partnership
assets is held.
Section 7.9 Reliance by Third Parties
Notwithstanding anything to the contrary in this Agreement, any Person
dealing with the Partnership shall be entitled to assume that the General
Partner has full power and authority, without consent or approval of any other
Partner or Person, to encumber, sell or otherwise use in any manner any and all
assets of the Partnership and to enter into any contracts on behalf of the
Partnership, and take any and all actions on behalf of the Partnership and such
Person shall be entitled to deal with the General Partner as if the General
Partner were the Partnership's sole party in interest, both legally and
beneficially. Each Limited Partner hereby waives any and all defenses or other
remedies which may be available against such Person to contest, negate or
disaffirm any
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action of the General Partner in connection with any such dealing. In no event
shall any Person dealing with the General Partner or its representatives be
obligated to ascertain that the terms of this Agreement have been complied with
or to inquire into the necessity or expedience of any act or action of the
General Partner or its representatives. Each and every certificate, document or
other instrument executed on behalf of the Partnership by the General Partner or
its representatives shall be conclusive evidence in favor of any and every
Person relying thereon or claiming thereunder that (i) at the time of the
execution and delivery of such certificate, document or instrument, this
Agreement was in full force and effect, (ii) the Person executing and delivering
such certificate, document or instrument was duly authorized and empowered to do
so for and on behalf of the Partnership and (iii) such certificate, document or
instrument was duly executed and delivered in accordance with the terms and
provisions of this Agreement and is binding upon the Partnership.
ARTICLE 8
RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS
Section 8.1 Limitation of Liability
The Limited Partners shall have no liability under this Agreement
except as expressly provided in this Agreement, including Sections 10.4 and
13.2(b) hereof, or under the Act.
Section 8.2 Management of Business
No Limited Partner or Assignee (other than the General Partner, any of
its Affiliates or any officer, director, employee, partner, agent or trustee of
the General Partner, the Partnership or any of their Affiliates, in their
capacity as such) shall take part in the operation, management or control
(within the meaning of the Act) of the Partnership's business, transact any
business in the Partnership's name or have the power to sign documents for or
otherwise bind the Partnership. The transaction of any such business by the
General Partner, any of its Affiliates or any officer, director, employee,
partner, agent or trustee of the General Partner, the Partnership or any of
their Affiliates, in their capacity as such, shall not affect, impair or
eliminate the limitations on the liability of the Limited Partners or Assignees
under this Agreement.
Section 8.3 Outside Activities of Limited Partners
Subject to any agreements entered into pursuant to Section 7.4(e)
hereof and any other agreements entered into by a Limited Partner or its
Affiliates with the Partnership or a Subsidiary, any Limited Partner (other than
the General Partner) and any officer, director, employee, agent, trustee,
Affiliate or shareholder of any Limited Partner (other than the General Partner)
shall be entitled to and may have business interests and engage in business
activities in addition to those relating to the Partnership, including business
interests and activities that are in direct competition with the Partnership or
that are enhanced by the activities of the Partnership. Neither the Partnership
nor any Partners shall have any rights by virtue of this Agreement in any
business ventures of any Limited Partner or Assignee. None of the Limited
Partners (other than the
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General Partner) nor any other Person shall have any rights by virtue of this
Agreement or the Partnership relationship established hereby in any business
ventures of any other Person (other than the General Partner to the extent
expressly provided herein) and such Person shall have no obligation pursuant to
this Agreement to offer any interest in any such business ventures to the
Partnership, any Limited Partner or any such other Person, even if such
opportunity is of a character which, if presented to the Partnership, any
Limited Partner or such other Person, could be taken by such Person.
Section 8.4 Return of Capital
Except pursuant to the right of redemption set forth in Section 8.6, no
Limited Partner shall be entitled to the withdrawal or return of its Capital
Contribution, except to the extent of distributions made pursuant to this
Agreement or upon termination of the Partnership as provided herein. Except to
the extent otherwise expressly provided in this Agreement, no Limited Partner or
Assignee shall have priority over any other Limited Partner or Assignee either
as to the return of Capital Contributions or as to profits, losses or
distributions.
Section 8.5 Rights of Limited Partners Relating to the
Partnership
(a) In addition to other rights provided by this Agreement or by the
Act, and except as limited by Section 8.5(c) hereof, each Limited Partner shall
have the right, for a purpose reasonably related to such Limited Partner's
interest as a limited partner in the Partnership, upon written demand with a
statement of the purpose of such demand and at such Limited Partner's own
expense (including such copying and administrative charges as the General
Partner may establish from time to time):
(1) to obtain a copy of the most recent annual and
quarterly reports filed with the Securities and
Exchange Commission by the General Partner pursuant
to the Securities Exchange Act of 1934;
(2) to obtain a copy of the Partnership's federal, state
and local income tax returns for each Partnership
Year;
(3) to obtain a current list of the name and last known
business, residence or mailing address of each
Partner;
(4) to obtain a copy of this Agreement and the
Certificate and all amendments thereto, together with
executed copies of all powers of attorney pursuant to
which this Agreement, the Certificate and all
amendments thereto have been executed; and
(5) to obtain true and full information regarding the
amount of cash and a description and statement of any
other property or services contributed by
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each Partner and which each Partner has agreed to
contribute in the future, and the date on which each
became a Partner.
(b) The Partnership shall notify each Limited Partner upon request of
the then current and applicable Conversion Factor.
(c) Notwithstanding any other provision of this Section 8.5, the
General Partner may keep confidential from the Limited Partners, for such period
of time as the General Partner determines in its sole and absolute discretion to
be reasonable, any information that: (i) the General Partner reasonably believes
to be in the nature of trade secrets or other information the disclosure of
which the General Partner in good faith believes is not in the best interests of
the Partnership or could damage the Partnership or its business; (ii) the
Partnership is required by law or by agreements with an unaffiliated third party
to keep confidential; or (iii) has not been publicly disclosed by the General
Partner.
Section 8.6 Redemption Right
(a) Subject to Sections 8.6(b) and 8.6(c), each Limited Partner, other
than any Affiliate 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 Partnership Units held by such Limited Partner at a
redemption price equal to and in the form of the Cash Amount to be paid by the
Partnership. The Redemption Right shall be exercised pursuant to a Notice of
Redemption delivered to the Partnership (with a copy to the General Partner) by
the Limited Partner who is exercising the redemption right (the "Redeeming
Partner"); provided, however, that the Partnership shall not be obligated to
satisfy such Redemption Right if the General Partner purchases the Partnership
Units subject to the Notice of Redemption pursuant to Section 8.6(b). A Limited
Partner may not exercise the Redemption Right for less than one thousand (1,000)
Partnership Units or, if such Limited Partner holds less than one thousand
(1,000) Partnership Units, all of the Partnership Units held by such Partner.
The Redeeming Partner shall have no right, with respect to any Partnership Units
so redeemed, to receive any Partnership distributions paid on or after the
Specified Redemption Date, except in the event that the Specified Redemption
Date occurs after a Partnership Record Date and prior to the payment of the
distribution of Available Cash relating to such Partnership Record Date. The
Assignee of any Limited Partner may exercise the rights of such Limited Partner
pursuant to this Section 8.6, and such Limited Partner shall be deemed to have
assigned such rights to such Assignee and shall be bound by the exercise of such
rights by such Assignee. In connection with any exercise of such rights by such
Assignee on behalf of such Limited Partner, the Cash Amount shall be paid by the
Partnership directly to such Assignee and not to such Limited Partner.
(b) Notwithstanding the provisions of Section 8.6(a), a Limited Partner
that exercises the Redemption Right shall be deemed to have offered to sell the
Partnership Units described in the Notice of Redemption to the General Partner
and the General Partner may, in its sole and absolute discretion, elect to
purchase directly and acquire such Partnership Units by paying to the Redeeming
Partner either the Cash Amount or the REIT Shares Amount, as elected by the
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General Partner (in its sole and absolute discretion), on the Specified
Redemption Date, whereupon the General Partner shall acquire the Partnership
Units offered for redemption by the Redeeming Partner and shall be treated for
all purposes of this Agreement as the owner of such Partnership Units. If the
General Partner shall elect to exercise its right to purchase Partnership Units
under this Section 8.6(b) with respect to a Notice of Redemption, it shall so
notify the Redeeming Partner within five (5) Business Days after the receipt by
the General Partner of such Notice of Redemption. Unless the General Partner (in
its sole and absolute discretion) shall exercise its right to purchase
Partnership Units from the Redeeming Partner pursuant to its right to purchase
Partnership Units under this Section 8.6(b), the General Partner shall not have
any obligation to the Redeeming Partner or the Partnership with respect to the
Redeeming Partner's exercise of the Redemption Right except as expressly
provided to the contrary herein. In the event the General Partner shall exercise
its right to purchase Partnership Units with respect to the exercise of a
Redemption Right in the manner described in the first sentence of this Section
8.6(b), the Partnership shall have no obligation to pay any amount to the
Redeeming Partner with respect to such Redeeming Partner's exercise of such
Redemption Right, and each of the Redeeming Partner, the Partnership, and the
General Partner shall treat the transaction between the General Partner and the
Redeeming Partner for federal income tax purposes as a sale of the Redeeming
Partner's Partnership Units to the General Partner. Each Redeeming Partner
agrees to execute such documents as the General Partner may reasonably require
in connection with the issuance of REIT Shares upon exercise of the Redemption
Right.
(c) The Partnership shall not redeem for cash any Partnership Interest
held by the General Partner or any of its Affiliates.
ARTICLE 9
BOOKS, RECORDS, ACCOUNTING AND REPORTS
Section 9.1 Records and Accounting
The General Partner shall keep or cause to be kept at the principal
office of the Partnership those records and documents required to be maintained
by the Act and other books and records deemed by the General Partner to be
appropriate with respect to the Partnership's business, including, without
limitation, all books and records necessary to provide to the Limited Partners
any information, lists and copies of documents required to be provided pursuant
to Sections 8.5(a) and 9.3 hereof. Any records maintained by or on behalf of the
Partnership in the regular course of its business may be kept on, or be in the
form of, punch cards, magnetic tape, photographs, micrographics or any other
information storage device, provided that the records so maintained are
convertible into clearly legible written form within a reasonable period of
time. The books of the Partnership shall be maintained, for financial and tax
reporting purposes, on an accrual basis and in accordance with generally
accepted accounting principles, or such other basis as the General Partner
determines to be necessary or appropriate.
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Section 9.2 Partnership Year
The fiscal year of the Partnership shall be the calendar year.
Section 9.3 Reports
As soon as practicable, the General Partner shall cause to be mailed to
each Limited Partner, as of the last day of the calendar quarter, a report
containing unaudited financial statements of the Partnership or of the General
Partner, if such statements are prepared solely on a consolidated basis with the
General Partner, and such other information as may be required by applicable law
or regulation, or as the General Partner determines to be appropriate. Limited
Partners shall receive all annual and quarterly reports, proxy statements and
other shareholder communications transmitted from time to time by the General
Partner to holders of REIT Shares.
ARTICLE 10
TAX MATTERS
Section 10.1 Preparation of Tax Returns
The General Partner shall arrange for the preparation and
timely filing of all returns of Partnership income, gains, deductions, losses
and other items required of the Partnership for federal and state income tax
purposes and shall use all reasonable efforts to furnish the tax information
reasonably required by Limited Partners for federal and state income tax
reporting purposes.
Section 10.2 Tax Elections
Except as otherwise provided herein, the General Partner shall, in its
sole and absolute discretion, determine whether to make any available election
pursuant to the Code. The General Partner shall have the right to seek to revoke
any such election (including, without limitation, the election under Section 754
of the Code) upon the General Partner's determination in its sole and absolute
discretion that such revocation is in the best interests of the Partners.
Section 10.3 Tax Matters Partner
(a) The General Partner shall be the "tax matters partner" of the
Partnership for federal income tax purposes. Pursuant to Section 6230(e) of the
Code, upon receipt of notice from the IRS of the beginning of an administrative
proceeding with respect to the Partnership, the tax matters partner shall
furnish the IRS with the name, address, taxpayer identification number, and
profit interest of each of the Limited Partners and the Assignees; provided,
however, that such information is provided to the Partnership by the Limited
Partners and the Assignees.
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(b) The tax matters partner is authorized, but not required:
(1) to enter into any settlement with the IRS with
respect to any administrative or judicial proceedings
for the adjustment of Partnership items required to
be taken into account by a Partner for income tax
purposes (such administrative proceedings being
referred to as a "tax audit" and such judicial
proceedings being referred to as "judicial review"),
and in the settlement agreement the tax matters
partner may expressly state that such agreement shall
bind all Partners, except that such settlement
agreement shall not bind any Partner (i) who (within
the time prescribed pursuant to the Code and
Regulations) files a statement with the IRS providing
that the tax matters partner shall not have the
authority to enter into a settlement agreement on
behalf of such Partner or (ii) who is a "notice
partner" (as defined in Section 6231(a)(8) of the
Code) or a member of a "notice group" (as defined in
Section 6223(b)(2) of the Code);
(2) in the event that a notice of a final administrative
adjustment at the Partnership level of any item
required to be taken into account by a Partner for
tax purposes (a "final adjustment") is mailed to the
tax matters partner, to seek judicial review of such
final adjustment, including the filing of a petition
for readjustment with the Tax Court or the filing of
a complaint for refund with the United States Claims
Court or the District Court of the United States for
the district in which the Partnership's principal
place of business is located;
(3) to intervene in any action brought by any other
Partner for judicial review of a final adjustment;
(4) to file a request for an administrative adjustment
with the IRS and, if any part of such request is not
allowed by the IRS, to file an appropriate pleading
(petition or complaint) for judicial review with
respect to such request;
(5) to enter into an agreement with the IRS to extend the
period for assessing any tax which is attributable to
any item required to be taken into account by a
Partner for tax purposes, or any item affected by
such item; and
(6) to take any other action on behalf of the Partners or
the Partnership in connection with any tax audit or
judicial review proceeding to the extent permitted by
applicable law or regulations.
The taking of any action and the incurring of any expense by the tax
matters partner in connection with any such proceeding, except to the extent
required by law, is a matter in the sole and absolute discretion of the tax
matters partner and the provisions relating to indemnification of
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the General Partner set forth in Section 7.5 of this Agreement shall be fully
applicable to the tax matters partner in its capacity as such.
(c) The tax matters partner shall receive no compensation for its
services as such. All third party costs and expenses incurred by the tax matters
partner in performing its duties as such (including legal and accounting fees
and expenses) shall be borne by the Partnership. Nothing herein shall be
construed to restrict the Partnership from engaging an accounting firm to assist
the tax matters partner in discharging its duties hereunder, so long as the
compensation paid by the Partnership for such services is reasonable.
Section 10.4 Withholding
Each Limited Partner hereby authorizes the Partnership to withhold from
or pay on behalf of or with respect to such Limited Partner any amount of
federal, state, local, or foreign taxes that the General Partner determines that
the Partnership is required to withhold or pay with respect to any amount
distributable or allocable to such Limited Partner pursuant to this Agreement,
including, without limitation, any taxes required to be withheld or paid by the
Partnership pursuant to Sections 1441, 1442, 1445, or 1446 of the Code. Any such
amount paid on behalf of or with respect to a Limited Partner shall constitute a
loan by the Partnership to such Limited Partner, which loan shall be repaid by
such Limited Partner within fifteen (15) days after notice from the General
Partner that such repayment must be made. Any amounts payable by a Limited
Partner hereunder shall bear interest at the lesser of (A) the base rate on
corporate loans at large United States money center commercial banks, as
published from time to time in The Wall Street Journal, plus four (4) percentage
points, or (B) the maximum lawful rate of interest on such obligation, such
interest to accrue from the date such amount is due (i.e., fifteen (15) days
after demand) until such amount is paid in full.
ARTICLE 11
TRANSFERS AND WITHDRAWALS
Section 11.1 Transfer
(a) The term "transfer", when used in this Article 11 with respect to a
Partnership Unit, shall be deemed to refer to a transaction by which the General
Partner purports to assign all or any part of its General Partner Interest to
another Person or by which a Limited Partner purports to assign all or any part
of its Limited Partner Interest to another Person, and includes a sale,
assignment, gift, pledge, encumbrance, hypothecation, mortgage, exchange or any
other disposition by law or otherwise. The term "transfer" when used in this
Article 11 does not include any redemption of Partnership Interests by the
Partnership from a Limited Partner or any acquisition of Partnership Units from
a Limited Partner by the General Partner or from the General Partner pursuant to
Section 8.6.
(b) No Partnership Interest shall be transferred, in whole or in part,
except in accordance with the terms and conditions set forth in this Article 11
and Article 17 hereof. Any
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transfer or purported transfer of a Partnership Interest not made in accordance
with this Article 11 and Article 17 shall be null and void.
Section 11.2 Transfer of General Partner's Partnership Interests
(a) The General Partner may not transfer any of its General Partner
Interest or withdraw as General Partner except as provided in Section 11.2(b) or
Article 16.
(b) The General Partner may transfer any of its General Partner
Interest to any Subsidiary or other Affiliate of the General Partner, or to any
other Person or Persons if the General Partner consolidates or merges into such
Person or Persons or if the General Partner sells or otherwise transfers (or one
or more of its Subsidiaries sells or otherwise transfers) to such Person or
Persons, in one or more transactions, substantially all of the assets or earning
power of the General Partner or the Partnership, provided, however, nothing
contained herein shall restrict the General Partner's right to pledge,
hypothecate, encumber or ▇▇▇▇▇ ▇▇▇▇ fide security interests in the General
Partner's interests in this Partnership.
Section 11.3 Limited Partners' Rights to Transfer
(a) Subject to the provisions of any subscription agreement and
contribution agreement or similar agreement related to a Limited Partner's
acquisition of Partnership Units, and Sections 11.3(c), 11.3(d), 11.3(e), 11.4
and 11.5 hereof, a Limited Partner may transfer, with or without the consent of
the General Partner, all or any portion of its Partnership Interest, or any of
such Limited Partner's economic rights as a Limited Partner.
(b) If a Limited Partner is subject to Incapacity, the executor,
administrator, trustee, committee, guardian, conservator or receiver of such
Limited Partner's estate shall have all the rights of a Limited Partner, but not
more rights than those enjoyed by other Limited Partners, for the purpose of
selling or managing the estate and such power as the Incapacitated Limited
Partner possessed to transfer all or any part of his or its interest in the
Partnership. The Incapacity of a Limited Partner, in and of itself, shall not
dissolve or terminate the Partnership.
(c) The General Partner may prohibit any transfer by a Limited Partner
of its Partnership Units if, in the opinion of legal counsel to the Partnership,
such transfer would (i) not be exempt from registration under the Securities Act
of 1933; (ii) otherwise violate any federal or state securities laws or
regulations applicable to the Partnership or the Partnership Unit; or (iii)
cause the Partnership to register the Partnership Units under Section 12(g) of
the Securities Exchange Act of 1934, as amended or any successor provision, and
the General Partner may condition any such transfer upon its receipt of a
no-action letter from the Securities and Exchange Commission or an opinion of
counsel in each case in form and substance reasonably satisfactory to the
General Partner.
(d) No transfer by a Limited Partner of its Partnership Units may be
made to any Person if (i) in the opinion of legal counsel for the Partnership,
it would result in the Partnership
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being treated as an association taxable as a corporation, or (ii) such transfer
is effectuated through an "established securities market" or a "secondary
market" (or the substantial equivalent thereof) within the meaning of Section
7704 of the Code.
(e) No transfer of any Partnership Units may be made to a lender to the
Partnership or any Person who is related (within the meaning of Regulations
Section 1.752-4(b)) to any lender to the Partnership whose loan constitutes a
Nonrecourse Liability, without the consent of the General Partner, in its sole
and absolute discretion, provided that as a condition to such consent the lender
will be required to enter into an arrangement with the Partnership and the
General Partner to exchange or redeem for the Cash Amount any Partnership Units
in which a security interest is held simultaneously with the time at which such
lender would be deemed to be a partner in the Partnership for purposes of
allocating liabilities to such lender under Section 752 of the Code.
Section 11.4 Substituted Limited Partners
(a) No Limited Partner shall have the right to substitute a transferee
as a Limited Partner in his place. The General Partner shall, however, have the
right to consent to the admission of a transferee of the interest of a Limited
Partner pursuant to this Section 11.4 as a Substituted Limited Partner, which
consent may be given or withheld by the General Partner in its sole and absolute
discretion. The General Partner's failure or refusal to permit a transferee of
any such interests to become a Substituted Limited Partner shall not give rise
to any cause of action against the Partnership or any Partner.
(b) A transferee who has been admitted as a Substituted Limited Partner
in accordance with this Article 11 shall have all the rights and powers and be
subject to all the restrictions and liabilities of a Limited Partner under this
Agreement.
(c) Upon the admission of a Substituted Limited Partner, the General
Partner shall amend Exhibit A to reflect the name, address, number of
Partnership Units, and Percentage Interest of such Substituted Limited Partner
and to eliminate or adjust, if necessary, the name, address and interest of the
predecessor of such Substituted Limited Partner.
Section 11.5 Assignees
If the General Partner, in its sole and absolute discretion, does not
consent to the admission of any permitted transferee under Section 11.3 as a
Substituted Limited Partner, as described in Section 11.4, such transferee shall
be considered an Assignee for purposes of this Agreement. An Assignee shall be
deemed to have had assigned to it, and shall be entitled to receive
distributions from the Partnership and the share of Net Income, Net Losses,
Recapture Income, and any other items, gain, loss deduction and credit of the
Partnership attributable to the Partnership Units assigned to such transferee,
but shall not be deemed to be a holder of Partnership Units for any other
purpose under this Agreement except as provided in Section 8.6, and shall not be
entitled to vote such Partnership Units in any matter presented to the Limited
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Partners for a vote (such Partnership Units being deemed to have been voted on
such matter in the same proportion as all other Partnership Units held by
Limited Partners are voted). In the event any such transferee desires to make a
further assignment of any such Partnership Units, such transferee shall be
subject to all the provisions of this Article 11 to the same extent and in the
same manner as any Limited Partner desiring to make an assignment of Partnership
Units.
Section 11.6 General Provisions
(a) No Limited Partner may withdraw from the Partnership other than as
a result of a permitted transfer of all of such Limited Partner's Partnership
Units in accordance with this Article 11 or pursuant to redemption of all of its
Partnership Units under Section 8.6.
(b) Any Limited Partner who shall transfer all of its Partnership Units
in a transfer permitted pursuant to this Article 11 shall cease to be a Limited
Partner upon the admission of all Assignees of such Partnership Units as
Substituted Limited Partners. Similarly, any Limited Partner who shall transfer
all of its Partnership Units pursuant to a redemption of all of its Partnership
Units under Section 8.6 shall cease to be a Limited Partner.
(c) Transfers pursuant to this Article 11 may only be made on the first
day of a fiscal quarter of the Partnership, unless the General Partner otherwise
agrees.
(d) If any Partnership Interest is transferred or assigned during any
quarterly segment of the Partnership Year in compliance with the provisions of
this Article 11 or redeemed or transferred pursuant to Section 8.6, on any day
other than the first day of a Partnership Year, then Net Income, Net Losses,
each item thereof and all other items attributable to such interest for such
Partnership Year shall be divided and allocated between the transferor Partner
and the transferee Partner by taking into account their varying interests during
the Partnership Year in accordance with Section 706(d) of the Code, using any
method permitted under the applicable Regulations and selected by the General
Partner in its sole and absolute discretion. All distributions of Available Cash
attributable to such Partnership Unit with respect to which the Partnership
Record Date is before the date of such transfer, assignment, or redemption shall
be made to the transferor Partner or the Redeeming Partner, as the case may be,
and in the case of a transfer or assignment other than a redemption, all
distributions of Available Cash thereafter attributable to such Partnership Unit
shall be made to the transferee Partner.
ARTICLE 12
ADMISSION OF PARTNERS
Section 12.1 Admission of Successor General Partner
A permitted successor to all of the General Partner Interest who is
proposed to be admitted as a successor General Partner shall be admitted to the
Partnership as the General Partner, effective upon such transfer. Any such
transferee shall carry on the business of the Partnership without dissolution.
In each case, the admission shall be subject to the successor General Partner
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executing and delivering to the Partnership an acceptance of all of the terms
and conditions of this Agreement and such other documents or instruments as may
be required to effect the admission. In the case of such admission on any day
other than the first day of a Partnership Year, all items attributable to the
General Partner Interest for such Partnership year shall be allocated between
the transferring General Partner and such successor as provided in Section
11.6(d) hereof.
Section 12.2 Admission of Additional Limited Partners
(a) After the admission to the Partnership of the Initial Limited
Partner on the date hereof, a Person who makes a Capital Contribution to the
Partnership in accordance with this Agreement shall be admitted to the
Partnership as an Additional Limited Partner only upon furnishing to the General
Partner (i) evidence of acceptance in form satisfactory to the General Partner
of all of the terms and conditions of this Agreement, including, without
limitation, the power of attorney granted in Section 2.4 hereof and (ii) such
other documents or instruments as may be required in the discretion of the
General Partner in order to effect such Person's admission as an Additional
Limited Partner.
(b) Notwithstanding anything to the contrary in this Section 12.2, no
Person shall be admitted as an Additional Limited Partner without the consent of
the General Partner, which consent may be given or withheld in the General
Partner's sole and absolute discretion. The admission of any Person as an
Additional Limited Partner shall become effective on the date upon which the
name of such Person is recorded on the books and records of the Partnership,
following the consent of the General Partner to such admission.
(c) If any Additional Limited Partner is admitted to the Partnership on
any day other than the first day of a Partnership Year, then Net Income, Net
Losses, each item thereof and all other items allocable among Partners and
Assignees for such Partnership Year shall be allocated among such Additional
Limited Partner and all other Partners and Assignees by taking into account
their varying interests during the Partnership Year in accordance with Section
706(d) of the Code, using any method permitted under the applicable Regulations
and selected by the General Partner in its sole and absolute discretion. All
distributions of Available Cash with respect to which the Partnership Record
Date is before the date of such admission shall be made solely to Partners and
Assignees other than the Additional Limited Partner and all distributions of
Available Cash thereafter shall be made to all of the Partners and Assignees
including such Additional Limited Partner.
Section 12.3 Amendment of Agreement and Certificate of Limited
Partnership
For the admission to the Partnership of any Partner, the General
Partner shall, subject to the requirements of Section 4.2, take all steps
necessary and appropriate under the Act to amend the records of the Partnership
and, if necessary, to prepare as soon as practical an amendment of this
Agreement (including an amendment of Exhibit A) and, if required by law, shall
prepare and file an amendment to the Certificate and may for this purpose
exercise the power of attorney granted pursuant to Section 2.4 hereof.
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ARTICLE 13
DISSOLUTION, LIQUIDATION AND TERMINATION
Section 13.1 Dissolution
The Partnership shall not be dissolved by the admission of Substituted
Limited Partners or Additional Limited Partners or by the admission of a
successor General Partner in accordance with the terms of this Agreement. Upon
the withdrawal of the General Partner, any successor General Partner shall
continue the business of the Partnership. The Partnership shall dissolve, and
its affairs shall be wound up, upon the first to occur of any of the following
("Dissolution Events"):
(a) the expiration of its term as provided in Section 2.5 hereof.
(b) an event of withdrawal of the General Partner, as defined in the
Act (other than an event of bankruptcy), unless within ninety (90) days after
such event of withdrawal a majority in interest of the remaining Partners agree
in writing to continue the business of the Partnership and to the appointment,
effective as of the date of withdrawal, of a successor General Partner;
(c) an election to dissolve the Partnership made by the General
Partner, in its sole and absolute discretion;
(d) entry of a decree of judicial dissolution of the Partnership
pursuant to the provisions of the Act;
(e) the sale of all or substantially all of the assets and properties
of the Partnership; or
(f) a final and non-appealable judgment is entered by a court of
competent jurisdiction ruling that the General Partner is bankrupt or insolvent,
or a final and non-appealable order for relief is entered by a court with
appropriate jurisdiction against the General Partner, in each case under any
federal or state bankruptcy or insolvency laws as now or hereafter in effect,
unless prior to the entry of such order or judgment all of the remaining
Partners agree in writing to continue the business of the Partnership and to the
appointment, effective as of a date prior to the date of such order or judgment,
of a substitute General Partner.
Section 13.2 Winding Up
(a) The General Partner shall provide written notice to the Limited
Partners of the occurrence of a Dissolution Event, giving them at least 20 days
in which to exercise the Redemption Right prior to the distribution of any
proceeds from the liquidation of the Partnership pursuant to this Section
13.2(a), unless such occurs by virtue of events described in paragraphs (a), (b)
(if involuntary), (d) or (f) of Section 13.1, in which case the General Partner
shall provide written notice to the Limited Partners promptly after the
occurrence of such event.
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Upon the occurrence of a Dissolution Event or a Terminating Capital Transaction,
the Partnership shall continue solely for the purposes of winding up its affairs
in an orderly manner, liquidating its assets, and satisfying the claims of its
creditors and Partners. No Partner shall take any action that is inconsistent
with, or not necessary to or appropriate for, the winding up of the
Partnership's business and affairs. The General Partner, or, in the event there
is no remaining General Partner, any Person elected by a majority in interest of
the Limited Partners (the General Partner or such other Person being referred to
herein as the "Liquidator"), shall be responsible for overseeing the winding up
and dissolution of the Partnership and shall take full account of the
Partnership's liabilities and property and the Partnership property shall be
liquidated as promptly as is consistent with obtaining the fair value thereof,
and the proceeds therefrom (which may, to the extent determined by the General
Partner, include shares of stock in the General Partner) shall be applied and
distributed in the following order:
(1) First, to the payment and discharge of all of the
Partnership's debts and liabilities to creditors
other than the Partners;
(2) Second, to the payment and discharge of all of the
Partnership's debts and liabilities to the Partners,
pro rata in accordance with amounts owed to each such
Partner;
(3) Third, one hundred percent (100%) to the Limited
Partners, other than any Affiliate Limited Partner,
pro rata based on the number of Limited Partner Units
held by such Partners, until each such Partner has
received an amount equal to the amount, if any, in
such Partner's Cumulative Unpaid Accrued Return
Account and Cumulative Unpaid Priority Distribution
Account plus the aggregate Priority Distribution
Amounts for each Partnership Record Date (if any)
occurring subsequent to the Dissolution Event;
(4) The balance, if any, after giving effect to all
contributions, distributions, and allocations for all
periods, to those Partners with positive Capital
Account balances, to the extent of such positive
Capital Account balances.
The General Partner shall not receive any additional compensation for any
services performed pursuant to this Article 13.
(b) Notwithstanding the provisions of Section 13.2(a) hereof which
require liquidation of the assets of the Partnership, but subject to the order
of priorities set forth therein, if prior to or upon dissolution of the
Partnership, the Liquidator determines that an immediate sale of part or all of
the Partnership's assets would be impractical, would cause undue loss to the
Partners, or would be inconsistent with the terms of any binding agreement into
which the Partnership entered prior to the Dissolution Event or Terminating
Capital Transaction, the Liquidator may, in its sole and absolute discretion,
defer for a reasonable time the liquidation of any assets except those necessary
to satisfy liabilities of the Partnership (including those to Partners as
creditors) and/or distribute to the Partners, in lieu of cash, in accordance
with the provisions of Section 13.2(a)
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hereof, interests in such Partnership assets as the Liquidator deems not
suitable for liquidation. Any such distributions in kind shall be made only if,
in the good faith judgment of the Liquidator, such distributions in kind are in
the best interest of the Partners, and shall be subject to such conditions
relating to the disposition and management of such properties as the Liquidator
deems reasonable and equitable and to any agreements governing the operation or
disposition of such properties at such time. The Liquidator shall determine the
fair market value of any property distributed in kind using such reasonable
method of valuation as it may adopt.
(c) In the discretion of the Liquidator, a pro rata portion of the
distributions that would otherwise be made to the General Partner and Limited
Partners pursuant to this Article 13 may be:
(1) distributed to a trust established for the benefit of
the General Partner and Limited Partners for the
purposes of liquidating Partnership assets,
collecting amounts owed to the Partnership, and
paying any contingent or unforeseen liabilities or
obligations of the Partnership or the General Partner
arising out of or in connection with the Partnership.
The assets of any such trust shall be distributed to
the General Partner and Limited Partners from time to
time, in the reasonable discretion of the Liquidator,
in the same proportions as the amount distributed to
such trust by the Partnership would otherwise have
been distributed to the General Partner and Limited
Partners pursuant to this Agreement; or
(2) withheld or escrowed to provide a reasonable reserve
for Partnership liabilities (contingent or otherwise)
and to reflect the unrealized portion of any
installment obligations owed to the Partnership,
provided that such withheld or escrowed amounts shall
be distributed to the General Partner and Limited
Partners in the manner and order of priority set
forth in Section 13.2.A as soon as practicable.
Section 13.3 Negative Capital Accounts
(a) Except as provided in Section 13.3(b), no Partner, General or
Limited, shall be liable to the Partnership or to any other Partner for any
negative balance outstanding in each such Partner's Capital Account, whether
such negative Capital Account results from the allocation of Net Losses or other
items of deduction and loss to such Partner or from distributions to such
Partner.
(b) If any Limited Partner who elects to be added to Exhibit F (an
"Electing Partner"), on the date of the "liquidation" of his respective interest
in the Partnership (within the meaning of Regulations Section
1.704-1(b)(2)(ii)(g)), has a negative balance in his Capital Account, then such
Electing Partner shall contribute in cash to the capital of the Partnership the
lesser of (i) the maximum amount (if any such maximum amount is stated) listed
beside such Electing Partner's name on Exhibit F or (ii) the amount required to
increase his Capital Account as of such date to
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zero. Any such contribution required of a Partner hereunder shall be made on or
before the later of (i) the end of the Partnership fiscal year in which the
interest of such Partner is liquidated or (ii) the ninetieth (90th) day
following the date of such liquidation. Notwithstanding any provision hereof to
the contrary, all amounts so contributed by a Partner to the capital of the
Partnership shall, upon the liquidation of the Partnership under this Article
13, be first paid to any then creditors of the Partnership, including Partners
that are Partnership creditors (in the order provided in Section 13.2), and any
remaining amount shall be distributed to the other Partners then having positive
balances in their respective Capital Accounts in proportion to such positive
balances. After the death of an Electing Partner, the executor of the estate of
such an Electing Partner may elect to reduce (or eliminate) the deficit Capital
Account restoration obligation of such an Electing Partner pursuant to this
Section 13.3(b). Such election may be made by such executor by delivering to the
General Partner within two hundred seventy (270) days of the death of such an
Electing Partner a written notice setting forth the maximum deficit balance in
his Capital Account that such executor agrees to restore under this Section
13.3(b), if any. If such executor does not make such a timely election (whether
or not the balance in his Capital Account is negative at such time), then such
Electing Partner's estate (and the beneficiaries thereof who receive
distribution of Partnership Units therefrom) shall be deemed to have a deficit
Capital Account restoration obligation as set forth pursuant to the terms of
this Section 13.3(b).
Section 13.4 Deemed Distribution and Recontribution
Notwithstanding any other provision of this Article 13, in the event
the Partnership is considered liquidated within the meaning of Regulations
Section 1.704-l(b)(2)(ii)(g), but no Dissolution Event has occurred, the
Partnership's property shall not be liquidated, the Partnership's liabilities
shall not be paid or discharged, and the Partnership's affairs shall not be
wound up.
Section 13.5 Rights of Limited Partners
Except as otherwise provided in this Agreement, each Limited Partner
shall look solely to the assets of the Partnership for the return of its Capital
Contributions and shall have no right or power to demand or receive property
other than cash from the Partnership, and shall have no rights as a shareholder
or as a creditor of the General Partner by virtue of being a Limited Partner.
Except as otherwise provided in this Agreement, no Limited Partner shall have
priority over any other Partner as to the return of its Capital Contributions,
distribution or allocations.
Section 13.6 Notice of Dissolution
In the event a Dissolution Event occurs or an event occurs that would,
but for the provisions of an election or objection by one or more Partners
pursuant to Section 13.1, result in a dissolution of the Partnership, the
General Partner shall provide within thirty (30) days thereafter written notice
thereof to each of the Partners.
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Section 13.7 Termination of Partnership and Cancellation of
Certificate of Limited Partnership
Upon the completion of the liquidation of the Partnership cash and
property as provided in Section 13.2 hereof, the Partnership shall be
terminated, a certificate of cancellation shall be filed, and all qualifications
of the Partnership as a foreign limited partnership in jurisdictions other than
the State of Georgia shall be canceled and such other actions as may be
necessary to terminate the Partnership shall be taken.
Section 13.8 Reasonable Time for Winding-Up
A reasonable time shall be allowed for the orderly winding-up of the
business and affairs of the Partnership and the liquidation of its assets
pursuant to Section 13.2 hereof, in order to minimize any losses otherwise
attendant upon such winding-up, and the provisions of this Agreement shall
remain in effect between the Partners during the period of liquidation.
Section 13.9 Waiver of Partition
Each Partner hereby waives any right to partition of the Partnership
property.
ARTICLE 14
AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS
Section 14.1 Amendments
(a) Amendments to this Agreement may be proposed by the General Partner
or by any Limited Partners holding twenty-five percent (25%) or more of the
Partnership Interests. Following such proposal, the General Partner shall submit
any proposed amendment to the Limited Partners. The General Partner shall seek
the written vote of the Partners on the proposed amendment or shall call a
meeting to vote thereon and to transact any other business that it may deem
appropriate. For purposes of obtaining a written vote, the General Partner may
require a response within a reasonable specified time, but not less than fifteen
(15) Business Days, and failure to respond in such time period shall constitute
a vote which is consistent with the General Partner's recommendation with
respect to the proposal. Except as provided in Section 14.1(b), 14.1(c) or
14.1(d), a proposed amendment shall be adopted and be effective as an amendment
hereto if it (i) is approved by the General Partner and it receives the Consent
of Partners holding a majority of the Percentage Interests of the Limited
Partners (including Limited Partner Interests held by the General Partner,
except as provided in Section 14.1(d)), and except as provided in Section
14.1(b) or 14.1(c).
(b) Notwithstanding Section 14.1(a), the General Partner shall have the
power, without the consent of the Limited Partners, to amend this Agreement as
may be required to facilitate or implement any of the following purposes:
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(1) to add to the obligations of the General Partner or
surrender any right or power granted to the General
Partner or any Affiliate of the General Partner for
the benefit of the Limited Partners;
(2) to reflect the admission, substitution, termination,
or withdrawal of Partners in accordance with this
Agreement;
(3) to set forth the designations, rights, powers,
duties, and preferences of the holders of any
additional Partnership Interests issued pursuant to
Section 4.2 hereof;
(4) to reflect a change that is of an inconsequential
nature and does not adversely affect the Limited
Partners in any material respect, or to cure any
ambiguity, correct or supplement any provision in
this Agreement not inconsistent with law or with the
other provisions of this Agreement, or make other
changes with respect to matters arising under this
Agreement that will not be inconsistent with law or
with the provisions of this Agreement;
(5) to reflect the contribution to the Partnership of
substantially all assets of the General Partner
(which amendments in such case may include, without
limitation, the elimination of all provisions of this
Agreement providing for distribution and allocations
priorities with respect to the Limited Partners); and
(6) to satisfy any requirements, conditions, or
guidelines contained in any order, directive,
opinion, ruling or regulation of a federal or state
agency or contained in federal or state law.
The General Partner shall provide notice to the Limited Partners when any action
under this Section 14.1(b) is taken.
(c) Notwithstanding Section 14.1(a) and 14.1(b) hereof, this Agreement
shall not be amended without the Consent of each Partner adversely affected if
such amendment would (i) convert a Limited Partner's interest in the Partnership
into a General Partner Interest, (ii) modify the limited liability of a Limited
Partner, (iii) alter rights of the Partner to receive distributions pursuant to
Article 5 or Article 13, or the allocations specified in Article 6 (except as
permitted pursuant to Section 4.2 and Section 14.1(b)(3) hereof), (iv) alter or
modify the Redemption Right and REIT Shares Amount as set forth in Section 8.6,
and the related definitions, (v) cause the termination of the Partnership prior
to the time set forth in Sections 2.5 or 13.1, or (vi) amend this Sections 4.2,
7.4(f) or 14.1(c).
(d) Notwithstanding Section 14.1(a) or Section 14.1(b) hereof, the
General Partner shall not amend Article 16 or Sections 7.3, 7.4, 7.5, 11.3,
13.2(a) (to the extent that any
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Partnership Units are outstanding that entitle the Partners (other than the
General Partner and its Affiliates) holding such Partnership Units to priority
distributions under Section 13.2(a)(3)), 14.1(a) or 14.2 without the Consent of
a majority of the Percentage Interests of the Limited Partners other than an
Affiliate Limited Partner.
Section 14.2 Meetings of the Partners
(a) Meetings of the Partners may be called by the General Partner and
shall be called upon the receipt by the General Partner of a written request by
Limited Partners holding twenty percent (20%) or more of the Percentage
Interests. The call shall state the nature of the business to be transacted and
notice of any such meeting shall be given to all Partners not less than seven
(7) days nor more than thirty (30) days prior to the date of such meeting.
Partners may vote in person or by proxy at such meeting. Whenever the vote or
Consent of the Partners is permitted or required under this Agreement, such vote
or Consent may be given at a meeting of the Partners or may be given in
accordance with the procedure prescribed in Section 14.1(a) hereof. Except as
otherwise expressly provided in this Agreement, the Consent of holders of a
majority of the Percentage Interests held by Limited Partners (including Limited
Partnership Interests held by the General Partner) shall control.
(b) Any action required or permitted to be taken at a meeting of the
Partners may be taken without a meeting if a written consent setting forth the
action so taken is signed by a majority of the Percentage Interests of the
Partners (or such other percentage as is expressly required by this Agreement).
Such consent may be in one instrument or in several instruments and shall have
the same force and effect as a vote of a majority of the Percentage Interests of
the Partners (or such other percentage as is expressly required by this
Agreement). Such consent shall be filed with the General Partner. An action so
taken shall be deemed to have been taken at a meeting held on the effective date
so certified.
(c) Each Limited Partner may authorize any Person or Persons to act for
him by proxy on all matters in which a Limited Partner is entitled to
participate, including waiving notice of any meeting, or voting or participating
at a meeting. Every proxy must be signed by the Limited Partner or his
attorney-in-fact. No proxy shall be valid after the expiration of eleven (11)
months from the date thereof unless otherwise provided in the proxy. Every proxy
shall be revocable at the pleasure of the Limited Partner executing it, such
revocation to be effective upon the Partnership's receipt of written notice of
such revocation from the Limited Partner executing such proxy.
(d) Each meeting of the Partners shall be conducted by the General
Partner or such other Person as the General Partner may appoint pursuant to such
rules for the conduct of the meeting as the General Partner or such other Person
deems appropriate. Without limitation, meetings of Partners may be conducted in
the same manner as meetings of the shareholders of the General Partner and may
be held at the same time, and as part of, meetings of the shareholders of the
General Partner.
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ARTICLE 15
GENERAL PROVISIONS
Section 15.1 Addresses and Notice
Any notice, demand, request or report required or permitted to be given
or made to a Partner or Assignee under this Agreement shall be in writing and
shall be deemed given or made when delivered to the Partner or Assignee at the
address set forth in Exhibit A or such other address of which the Partner shall
notify the General Partner in writing (or if delivery is refused, when delivery
is attempted but refused.)
Section 15.2 Titles and Captions
All article or section titles or captions in this Agreement are for
convenience only. They shall not be deemed part of this Agreement and in no way
define, limit, extend or describe the scope or intent of any provisions hereof.
Except as specifically provided otherwise, references to "Articles" and
"Sections" are to Articles and Sections of this Agreement.
Section 15.3 Pronouns and Plurals
Whenever the context may require, any pronoun used in this Agreement
shall include the plural and vice versa.
Section 15.4 Further Action
The parties shall execute and deliver all documents, provide all
information and take or refrain from taking action as may be necessary or
appropriate to achieve the purpose of this Agreement.
Section 15.5 Binding Effect
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their heirs, executors, administrators, successors, legal
representatives and permitted assigns.
Section 15.6 Creditors
Other than as expressly set forth herein with respect to the
Indemnities, none of the provisions of this Agreement shall be for the benefit
of, or shall be enforceable by, any creditors of the Partnership.
Section 15.7 Waiver
No failure by any party to insist upon the strict performance of any
covenant, duty, agreement or condition of this Agreement or to exercise any
right or remedy consequent upon a
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breach thereof shall constitute waiver of any such breach or any other covenant,
duty, agreement or condition.
Section 15.8 Counterparts
This Agreement may be executed in counterparts, all of which together
shall constitute one agreement binding on all the parties hereto,
notwithstanding that all such parties are not signatories to the original or the
same counterpart. Each party shall become bound by this Agreement immediately
upon affixing its signature hereto.
Section 15.9 Applicable Law
This Agreement shall be construed and enforced in accordance with and
governed by the laws of the State of Georgia, without regard to the principles
of conflicts of law.
Section 15.10 Invalidity of Provisions
If any provision of this Agreement is or becomes invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein shall not be affected thereby.
Section 15.11 Entire Agreement
This Agreement contains the entire understanding and agreement among
the Partners with respect to the subject matter hereof and supersedes any other
prior written or oral understandings or agreement among them with respect
thereto.
ARTICLE 16
CONSOLIDATION, MERGER OR SALE OF
ASSETS OF THE GENERAL PARTNER
Section 16.1 Triggering Events
For the purposes of this Article 16, the effective date and time of any
of the following events shall be deemed to be a "Triggering Event": (w) if the
General Partner consolidates with, or merges into, any other Person, and the
General Partner is not the continuing or surviving corporation of such
consolidation or merger, (x) if any Person consolidates with, or merges into,
the General Partner, and the General Partner is the continuing or surviving
corporation of such consolidation or merger and, in connection with such
consolidation or merger, all or part of the outstanding REIT Shares are
converted into or exchanged for stock or other securities of any other Person or
cash or any other property, or (y) if the General Partner sells or otherwise
transfers (or one or more of its Subsidiaries sells or otherwise transfers) to
any Person or Persons, in one or more transactions, substantially all of the
assets or earning power of the General Partner or the Partnership.
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Section 16.2 From and After the Occurrence of a Triggering Event
Effective on the date of each Triggering Event, the Redemption Right
shall be adjusted as provided in this Section 16.2.
(a) From and after a Triggering Event and until the occurrence, if any,
of a subsequent Triggering Event (in which case a further adjustment shall be
made pursuant to this Section 16.2), each and every reference contained in this
Agreement to a "REIT Share" or "REIT Shares" shall be deemed to be a reference
to a share or shares, respectively (each, a "Replacement Share"; collectively,
"Replacement Shares"), of the common stock, or, if such Person shall have no
common stock, the equity securities or other equity interest having power to
control or direct the management (the "Common Stock") of: (a) in the case of a
Triggering Event described in clause (w) or (x) of the first sentence of Section
16.1, (1) the Person that is the issuer of any securities into which the REIT
Shares are converted in such merger or consolidation, and (2) if no securities
are so issued, the Person that is the other party to such merger or
consolidation; or (b) in the event of a Triggering Event described in clause (y)
of the first sentence of Section 16.1, the Person that is the party receiving
the largest portion of the assets or earning power transferred pursuant to such
transaction or transactions. Any issuer of "Replacement Shares" shall be
referred to as an "Issuer."
(b) From and after a Triggering Event, the "Conversion Factor" shall be
adjusted in a manner to have the same effect as though the Units had been
exchanged for REIT Shares immediately prior to consummation of the Triggering
Event and the holder had received the same consideration in the Triggering Event
as was received by holders of REIT Shares.
(c) In the event that on the date of a Triggering Event, the shares of
a Person are not publicly held or not so listed or traded or if, for the ten
days prior to such date, no market maker is making a market in the shares of a
Person, the Average Trading Price of the shares of such Person shall be the fair
value of the shares as determined in good faith by the General Partner, which
determination shall be binding on all of the Limited Partners.
(d) From and after a Triggering Event, each and every reference to the
"General Partner" in Section 8.6 shall be deemed to be a reference to the Issuer
of the Replacement Shares. From and after a Triggering Event, the "Average
Trading Price" of a REIT Share or a Replacement Share, as applicable shall be
substituted for the "Value" of the same for the purposes of determining the Cash
Amount.
Section 16.3 Application to Later Transactions
This Article 16 shall apply to the initial Triggering Event and shall
continue to apply to each subsequent Triggering Event.
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Section 16.4 Waivers and Amendments
This Article 16 shall only be amended as provided in Section 14.1(d) of
this Agreement and shall be deemed included in such section for all purposes;
provided that the General Partner may amend this Article 16, without the consent
of the Limited Partners for the purposes set forth at Section 14.1(b)(4) prior
to a Triggering Event.
ARTICLE 17
INVESTMENT REPRESENTATION
17.1 Investment. The Limited Partners represent to the Partnership and
to the General Partner that they are acquiring their respective Units for their
own accounts for investment purposes only, and without a view to any
distribution of their Units.
17.2 Restrictive Legend. If at any time the Units are evidenced by
certificates or other documents, each such certificate or other document will
contain a legend stating that (i) such Units (1) have not been registered under
the Securities Act of 1933 or the securities or blue sky laws of any state or
other jurisdiction, (2) have been issued pursuant to one or more claims of
exemption from the registration provisions of the Securities Act and any state
or other jurisdiction's securities laws which may be applicable, and (3) may not
be sold, transferred or assigned without compliance with the registration
provisions of the Securities Act or in compliance with one or more available
exemptions therefrom, and (ii) the sale, transfer or assignment of such Units is
further subject to restrictions contained in this Agreement and a subscription
agreement, contribution agreement or other agreement with the Partnership or its
General Partner pursuant to which Limited Partner subscribed for his or her
Units, and such Units may not be sold, transferred or assigned unless and to the
extent permitted by, and in accordance with, the provisions of this Agreement
and such subscription, contribution and other agreements with the Partnership or
the General Partner.
-57-
62
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.
GENERAL PARTNER:
IRT PROPERTY COMPANY
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇
Title: Vice President & Treasurer
LIMITED PARTNER:
IRT MANAGEMENT COMPANY
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Executive Vice President
-58-
63
LIMITED PARTNERS:
TAMARAC TRUST, TRUST NO. 101, BY
MIBEF CORPORATE SERVICES, INC., AS
TRUSTEE
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------
Title: Agent
-----------------------------------
RIVERSIDE TRUST, TRUST NO. 102,
BY MIBEF CORPORATE SERVICES, INC., AS
TRUSTEE
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------
Title: Agent
-----------------------------------
CHARLOTTE SQUARE TRUST,
TRUST NO. 103, BY MIBEF CORPORATE
SERVICES, INC., AS TRUSTEE
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------
Title: Agent
-----------------------------------
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64
FIRST AMENDMENT
TO THE
AGREEMENT OF
LIMITED PARTNERSHIP
OF
IRT PARTNERS L.P.
THIS FIRST AMENDMENT TO THE AGREEMENT OF LIMITED PARTNERSHIP OF IRT
PARTNERS L.P. (the "Amendment"), dated as of August 12, 1998, is entered into by
and among IRT PROPERTY COMPANY, a Georgia corporation (the "General Partner"),
IRT MANAGEMENT COMPANY, a Georgia corporation (the "Initial Limited Partner"),
and MIBEF CORPORATE SERVICES, INC., as Trustee of (i) the Tamarac Trust ▇▇. ▇▇▇
(▇▇▇ "▇▇▇▇▇▇▇ ▇▇▇▇▇"), (▇▇) Riverside Trust No. 102 (the "Riverside Trust"), and
(iii) Charlotte Square Trust, Trust No. 103 (the "Charlotte Trust"), together
with any other Persons who become Partners in the Partnership as provided herein
(as such terms are defined hereinafter).
WHEREAS, the parties hereto entered into that certain Agreement of
Limited Partnership of IRT Partners L.P. (the "Agreement"), dated as of July 14,
1998; and
WHEREAS, the parties hereto wish to clarify the Agreement in certain
respects;
NOW THEREFORE, in consideration of the mutual covenants herein
contained, and other valuable consideration, the receipt of which is hereby
acknowledged, the parties hereto do hereby agree as follows:
1. Definitions. The terms, phrases or other references set forth in the
Agreement shall have the same meaning when used herein, unless otherwise
indicated, and they are hereby incorporated herein and made a part hereof.
2. Amendment of Article 1. The definition of "Priority Distribution
Amount" in Article 1 of the Agreement is hereby amended to read in its entirety
as follows:
"'Priority Distribution Amount' means with respect to any Limited
Partnership Unit (other than Units held by an Affiliate Limited Partner)
outstanding on a Partnership Record Date the product of: (i) the cash
distribution per REIT Share (including any distribution designated by
the General Partner as capital gain pursuant to Section 857(b)(3)(C) of
the Code or a return of capital) declared by the General Partner on the
Partnership Record Date; (ii) the Conversion Factor; and (iii) a
fraction, the denominator of which is the actual number of days in the
quarter or other period subsequent to the date the last cash dividend or
distribution was paid with respect to the REIT Shares through the
payment date for the cash dividend or distribution for the REIT Shares
to which such Partnership
65
Record Date relates, and the numerator of which is the actual number of
days in such quarter or such other period that such Limited Partnership
Unit was outstanding."
3. Effect of Amendment. Except as expressly provided in this Amendment,
the provisions of the Agreement shall remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto have entered into this Amendment
as of the date first above written.
GENERAL PARTNER:
IRT PROPERTY COMPANY
By:
---------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇
Title: Vice President & Treasurer
LIMITED PARTNER:
IRT MANAGEMENT COMPANY
By:
---------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Executive Vice President
and Chief Financial Officer
-2-
66
LIMITED PARTNERS:
TAMARAC TRUST, TRUST NO.
101, BY MIBEF CORPORATE
SERVICES, INC., AS TRUSTEE
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------
Title: Agent
---------------------------------
RIVERSIDE TRUST, TRUST NO.
102, BY MIBEF CORPORATE
SERVICES, INC., AS TRUSTEE
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------
Title: Agent
---------------------------------
CHARLOTTE SQUARE TRUST,
TRUST NO. 103, BY MIBEF
CORPORATE SERVICES, INC., AS
TRUSTEE
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------
Title: Agent
---------------------------------
-3-