EXHIBIT 10.1
AGREEMENT
OF LIMITED PARTNERSHIP
OF
A REIT, L.P.
TABLE OF CONTENTS
PAGE
----
ARTICLE I................................................................... 1
ARTICLE II.................................................................. 11
Section 2.01 Organization................................................. 11
Section 2.02 Name......................................................... 11
Section 2.03 Registered Office and Agent; Principal Office................ 11
Section 2.04 Partners..................................................... 11
Section 2.05 Term and Dissolution......................................... 11
Section 2.06 Filing of Certificate and Perfection of Limited Partnership.. 12
Section 2.07 Certificates Describing Partnership Units.................... 12
ARTICLE III................................................................. 13
Section 3.01 Purpose and Nature........................................... 13
Section 3.02 Powers....................................................... 13
ARTICLE IV.................................................................. 13
Section 4.01 Capital Contributions........................................ 13
Section 4.02 Additional Capital Contributions and Issuances of
Additional Partnership Interests.......................................... 13
Section 4.03 Additional Funding........................................... 15
Section 4.04 Capital Accounts............................................. 15
Section 4.05 Percentage Interests......................................... 16
Section 4.06 No Interest on Contributions................................. 16
Section 4.07 Return of Capital Contributions.............................. 16
Section 4.08 No Third-Party Beneficiary................................... 16
ARTICLE V................................................................... 17
Section 5.01 Allocations.................................................. 17
Section 5.02 Distributions................................................ 21
Section 5.03 REIT Distribution Requirements............................... 24
Section 5.04 No Right to Distributions in Kind............................ 24
Section 5.05 Limitations on Return of Capital Contributions............... 24
Section 5.06 Distributions Upon Liquidation............................... 24
Section 5.07 Substantial Economic Effect.................................. 25
ARTICLE VI.................................................................. 25
Section 6.01 Management of the Partnership................................ 25
Section 6.02 Delegation of Authority...................................... 27
Section 6.03 Indemnification and Exculpation of Indemnitees............... 28
Section 6.04 Liability of the General Partner............................. 29
Section 6.05 Reimbursement Obligations of Partnership..................... 30
Section 6.06 Outside Activities........................................... 30
Section 6.07 Employment or Retention of Affiliates........................ 30
Section 6.08 Title of Partnership Assets.................................. 31
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Section 6.09 Miscellaneous................................................ 31
ARTICLE VII................................................................. 32
Section 7.01 Transfer of the General Partner's Partnership Interest....... 32
Section 7.02 Admission of a Substitute or Additional General Partner...... 33
Section 7.03 Effect of Bankruptcy, Withdrawal, Death or Dissolution of a
General Partner........................................................... 34
Section 7.04 Removal of a General Partner................................. 34
Section 7.05 Option to Acquire Incentive Limited Partnership Interest..... 36
ARTICLE VIII................................................................ 36
Section 8.01 Management of the Partnership................................ 36
Section 8.02 Power of Attorney............................................ 36
Section 8.03 Limitation of Liability of Limited Partners.................. 36
Section 8.04 [Reserved]................................................... 36
Section 8.05 Redemption Right............................................. 36
Section 8.06 Registration................................................. 39
ARTICLE IX.................................................................. 40
Section 9.01 Purchase for Investment...................................... 40
Section 9.02 Restrictions on Transfer of Limited Partnership Interests.... 40
Section 9.03 Admission of Substitute Limited Partner...................... 41
Section 9.04 Rights of Assignees of Partnership Interests................. 43
Section 9.05 Effect of Bankruptcy, Death, Incompetence, or Termination
of a Limited Partner...................................................... 43
Section 9.06 Joint Ownership of Interests................................. 43
ARTICLE X................................................................... 43
Section 10.01 Books and Records........................................... 43
Section 10.02 Custody of Partnership Funds; Bank Accounts................. 44
Section 10.03 Fiscal and Taxable Year..................................... 44
Section 10.04 Annual Tax Information and Report........................... 44
Section 10.05 Tax Matters Partner; Tax Elections; Special Basis
Adjustments 44
Section 10.06 Reports to Limited Partners................................. 45
ARTICLE XI.................................................................. 45
Section 11.01 Amendment of this Agreement................................. 45
ARTICLE XII................................................................. 46
Section 12.01 Notices..................................................... 46
Section 12.02 Survival of Rights.......................................... 46
Section 12.03 Additional Documents........................................ 46
Section 12.04 Severability................................................ 46
Section 12.05 Entire Agreement............................................ 46
Section 12.06 Pronouns and Plurals........................................ 46
Section 12.07 Headings.................................................... 46
Section 12.08 Counterparts................................................ 47
Section 12.09 Governing Law............................................... 47
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EXHIBITS
EXHIBIT A - Partners, Capital Contributions and Percentage Interests
EXHIBIT B - Notice of Exercise of Redemption Right
EXHIBIT C - Certification of Non-Foreign Status
iii
AGREEMENT
OF LIMITED PARTNERSHIP
OF
A REIT, L.P.
This Agreement of Limited Partnership (the "Agreement") of A REIT, L.P.
(the "Partnership"), dated as of April 26, 2004, is entered into by and among A
REIT, Inc., a Maryland corporation (the "Company" or the "General Partner"),
Triple Net Properties L.L.C., a Virginia limited liability company (the "Special
Limited Partner"), Triple Net Properties, L.L.C., as the initial limited partner
(the "Initial Limited Partner") and the other Limited Partners (as defined
herein).
NOW, THEREFORE, in consideration of mutual covenants between the parties
hereto, and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
DEFINED TERMS
The following defined terms used in this Agreement shall have the meaning
specified below:
"ACT" means the Maryland Revised Uniform Limited Partnership Act, as it
may be amended from time to time.
"ADDITIONAL FUNDS" has the meaning set forth in Section 4.03 hereof.
"ADDITIONAL LIMITED PARTNER" means a Person admitted to this Partnership
as a Limited Partner pursuant to Section 4.02 hereof.
"ADDITIONAL SECURITIES" means any additional REIT Shares (other than REIT
Shares issued in connection with a redemption pursuant to Section 8.05 hereof)
or rights, options, warrants or convertible or exchangeable securities
containing the right to subscribe for or purchase REIT Shares, as set forth in
Section 4.02(a).
"ADJUSTED INVESTED CAPITAL" means Invested Capital, minus, upon the sale
of a Property, the lesser of (i) the Sale Proceeds from that Property that are
available for distribution or (ii) the sum of (A) the Allocable Invested Capital
for that Property and (B) any Cumulative Allocable Invested Capital Shortfall.
"ADMINISTRATIVE EXPENSES" means (i) all administrative and operating costs
and expenses incurred by the Partnership, (ii) those administrative costs and
expenses of the Company, including any salaries or other payments to directors,
officers or employees of the Company, and any accounting and legal expenses of
the Company, which expenses, the Partners have agreed, are expenses of the
Partnership and not the Company, and (iii) to the extent not included in clause
(ii) above, REIT Expenses; provided, however, that
Administrative Expenses shall not include any administrative costs and expenses
incurred by the Company that are attributable to Properties or Subsidiaries that
are owned by the Company directly, rather than through the Partnership.
"ADVISOR" means the Person, if any, appointed, employed or contracted with
by the Company pursuant to Section 8.1 of the Charter and responsible for
directing or performing the day-to-day business affairs of the Company,
including any Person to whom the Advisor subcontracts substantially all of such
functions.
"AFFILIATE" means, as to any individual, corporation, partnership, trust,
limited liability company or other legal entity, (i) any Person directly or
indirectly owning, controlling or holding, with the power to vote, ten percent
(10%) or more of the outstanding voting securities of such other Person; (ii)
any Person ten percent (10%) or more of whose outstanding voting securities are
directly or indirectly owned, controlled or held, with the power to vote, by
such other Person; (iii) any Person directly or indirectly controlling,
controlled by or under common control with such other Person; (iv) any executive
officer, director, trustee or general partner of such other Person; and (v) any
legal entity for which such Person acts as an executive officer, director,
manager, trustee or general partner.
"AGREED VALUE" means the fair market value of a Partner's non-cash Capital
Contribution as of the date of contribution as agreed to by the Partners. The
names and addresses of the Partners, number of Partnership Units issued to each
Partner and the Agreed Value of non-cash Capital Contributions as of the date of
contribution is set forth on Exhibit A.
"AGREEMENT" means this Agreement of Limited Partnership.
"ALLOCABLE INVESTED CAPITAL" means, for each Property, the product of (i)
the Invested Capital and (ii) a fraction equal to the Partnership's original
investment in that Property divided by the Partnership's total original
investment in all of its Properties.
"ALLOCABLE INVESTED CAPITAL SHORTFALL" means, for each Property that is
sold, the amount, if any, by which the Allocable Invested Capital exceeds the
Sale Proceeds available for distribution.
"CAPITAL ACCOUNT" has the meaning provided in Section 4.04 hereof.
"CAPITAL CONTRIBUTION" means the total amount of cash, cash equivalents
and the Agreed Value of any Property or other asset contributed or agreed to be
contributed, as the context requires, to the Partnership by each Partner
pursuant to the terms of the Agreement. Any reference to the Capital
Contribution of a Partner shall include the Capital Contribution made by a
predecessor holder of the Partnership Interest of such Partner.
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"CAPITAL TRANSACTION" means the refinancing, sale, exchange, condemnation,
recovery of a damage award or insurance proceeds (other than business or rental
interruption insurance proceeds not reinvested in the repair or reconstruction
of Properties) or other disposition of any Property (or the Partnership's
interest therein), except for any Terminating Capital Transaction.
"CASH AMOUNT" means an amount of cash per Partnership Unit equal to the
value of the REIT Shares Amount on the date of receipt by the General Partner of
a Notice of Redemption. The value of the REIT Shares Amount shall be based on
the average of the daily market price of REIT Shares for the ten (10)
consecutive Trading Days immediately preceding the date of such valuation. The
market price for each such Trading Day shall be: (i) if the REIT Shares are
listed or admitted to trading on any securities exchange, the sale price,
regular way, on such day, or if no such sale takes place on such day, the
average of a closing bid and asked prices, regular way, on such day, (ii) if the
REIT Shares are not listed or admitted to trading on any securities exchange,
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 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 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 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.
"CASH AVAILABLE FOR DISTRIBUTION" means, for a taxable year of the
Partnership, a positive amount, if any, equal to the cash revenues and receipts
of the Partnership (other than those arising from a Capital Transaction or a
Terminating Capital Transaction) available for distribution to the partners
after payment of the Partnership's expenses and other expenditures and the
creation of any reasonably required reserves, as determined by the General
Partner.
"CERTIFICATE" means any instrument or document that is required under the
laws of the State of Maryland, or any other jurisdiction in which the
Partnership conducts business, to be signed and sworn to by the Partners of the
Partnership (either by themselves or pursuant to the power-of-attorney granted
to the General Partner in Section 8.02 hereof) and filed for recording in the
appropriate public offices within the State of Maryland or such other
jurisdiction to perfect or maintain the Partnership as a limited partnership, to
effect the admission, withdrawal or substitution of any Partner of the
Partnership or to protect the limited liability of the Limited Partners as
limited partners under the laws of the State of Maryland or such other
jurisdiction.
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"CHARTER" means the charter of the Company.
"CODE" means the Internal Revenue Code of 1986, as amended, and as
hereafter amended from time to time. Reference to any particular provision of
the Code shall mean that provision in the Code at the date hereof and any
successor provision of the Code.
"COMMISSION" means the U.S. Securities and Exchange Commission.
"COMPANY" means A REIT, Inc., a Maryland corporation.
"CONVERSION FACTOR" means 1.0, provided that in the event that the Company
(i) declares or pays a dividend on its outstanding REIT Shares in REIT Shares or
makes a distribution to all holders of its outstanding REIT Shares in REIT
Shares, (ii) subdivides its outstanding REIT Shares or (iii) combines its
outstanding REIT Shares into a smaller number of REIT Shares, the Conversion
Factor shall be adjusted by multiplying the Conversion Factor by a fraction, the
numerator of which shall be the number of REIT Shares issued and outstanding on
the record date for such dividend, distribution, subdivision or combination
(assuming for such purposes that such dividend, distribution, subdivision or
combination has occurred as of such time), and the denominator of which shall be
the actual number of REIT Shares (determined without the above assumption)
issued and outstanding on such date and, provided further, that in the event
that an entity other than an Affiliate of the Company shall become General
Partner pursuant to any merger, consolidation or combination of the Company with
or into another entity (the "Successor Entity"), the Conversion Factor shall be
adjusted by multiplying the Conversion Factor by the number of shares of the
Successor Entity into which one REIT Share is converted pursuant to such merger,
consolidation or combination, determined as of the date of such merger,
consolidation 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; provided, however, that, if a
Redeeming Partner is to receive the Cash Amount and the record date for such
event falls during the valuation period for determining the Cash Amount, the
Conversion Factor shall be appropriately adjusted by the General Partner to
produce a fair and equitable calculation of the Cash Amount.
"CUMULATIVE ALLOCABLE INVESTED CAPITAL SHORTFALL" means the cumulative
Allocable Invested Capital Shortfall from prior sales of Properties that has not
previously been distributed to the General Partner and the Limited Partners.
"EVENT OF BANKRUPTCY" as to any Person means the filing of a petition for
relief as to such Person as debtor or bankrupt under the Bankruptcy Code of 1978
or similar provision of law of any jurisdiction (except if such petition is
contested by such Person and has been dismissed within 90 days); insolvency or
bankruptcy of such Person as finally determined by a court proceeding; filing by
such Person of a petition or application to accomplish the same or for the
appointment of a receiver or a trustee for such Person or a substantial part of
his assets; commencement of any proceedings relating to such Person as a debtor
under any other reorganization, arrangement, insolvency, adjustment of debt or
liquidation law of any jurisdiction, whether now in existence or hereinafter in
effect, either by such Person or by another, provided that if such proceeding is
commenced by another, such Person indicates his approval of such proceeding,
consents thereto or acquiesces
4
therein or such proceeding is contested by such Person and has not been finally
dismissed within 90 days.
"GENERAL PARTNER" means the Company, and any Person who becomes a
substitute or additional General Partner as provided herein, and any of their
successors as General Partner.
"GENERAL PARTNERSHIP INTEREST" means a Partnership Interest held by the
General Partner that is a general partnership interest.
"INCENTIVE LIMITED PARTNERSHIP INTEREST" means the ownership interest of
the Special Limited Partner in the Partnership at any particular time, including
the right of such Special Limited Partner to any and all benefits to which such
Special Limited Partner may be entitled as provided in this Agreement and in the
Act, together with the obligations of such Special Limited Partner to comply
with all the provisions of this Agreement and of such Act.
"INDEMNITEE" means (i) any Person made a party to a proceeding by reason
of its status as the General Partner or a director, officer or employee of the
Partnership, the Company or the General Partner and (ii) such other Persons
(including Affiliates of the Company, the General Partner or the Partnership) as
the General Partner may designate to from time to time, in its sole and absolute
discretion.
"INDEPENDENT DIRECTOR" means a director who is not, and within the last
two (2) years has not been, directly or indirectly, associated with the Sponsor
or the Advisor by virtue of (i) ownership of an interest in the Sponsor, the
Advisor or their Affiliates, (ii) employment by the Sponsor, the Advisor or
their Affiliates, (iii) service as an officer or director of the Sponsor, the
Advisor or their Affiliates, (iv) performance of services, other than as a
director, for the Company, (v) service as a director or trustee of more than
three (3) real estate investment trusts organized by the Sponsor or advised by
the Advisor or (vi) maintenance of a material business or professional
relationship with the Sponsor, the Advisor or their Affiliates. An indirect
relationship shall include circumstances in which a director's spouse, parents,
children, siblings, mothers- or fathers-in-law, sons- or daughters-in-law or
brothers- or sisters-in-law is or has been associated with the Sponsor, the
Advisor, any of the Affiliates or the Company. A business or professional
relationship is considered material if the gross revenue derived by the director
from the Sponsor, the Advisor or their Affiliates exceeds five percent (5%) of
either the director's annual gross revenue derived from all sources during
either of the last two (2) years or the director's net worth, on a fair market
value basis. Notwithstanding the foregoing, serving as a director or owning an
interest in a REIT or other real estate program organized by the Sponsor or
advised or managed by the Advisor or its Affiliates shall not, by itself, cause
a director to be deemed associated with the Sponsor or the Advisor.
5
"INVESTED CAPITAL" means (i) the sum of (A) the number of REIT Shares
issued by the Company (including any REIT Shares actually issued through the
Company's distribution reinvestment program or the Company's incentive award)
and (B) the number of Partnership Units issued by the Partnership to Limited
Partners, multiplied by (ii) amount initially equal to $10.00, which amount
shall be adjusted appropriately to reflect (A) stock dividends, stock splits or
other changes in the capital structure of the Company or the Partnership and (B)
at the discretion of the General Partner, any changes in the average price per
share paid for REIT Shares and Partnership Units after the Offering.
"LIMITED PARTNER" means any Person (other than the Special Limited
Partner) named as a Limited Partner on Exhibit A attached hereto, as Exhibit A
may be amended from time to time, and any Person who becomes a Substitute or
Additional Limited Partner, in such Person's capacity as a Limited Partner in
the Partnership.
"LIMITED PARTNERSHIP INTEREST" means the ownership interest of a Limited
Partner in the Partnership at any particular time, including the right of such
Limited Partner to any and all benefits to which such Limited Partner may be
entitled as provided in this Agreement and in the Act, together with the
obligations of such Limited Partner to comply with all the provisions of this
Agreement and of such Act.
"LOSS" shall have the meaning set forth in Section 5.01(k) hereof.
"NOTICE OF REDEMPTION" means the Notice of Exercise of Redemption Right
substantially in the form attached as Exhibit B hereto.
"OFFER" has the meaning set forth in Section 7.01(c) hereof.
"OFFERING" means the initial offer and sale by the Company and the
participating broker-dealers pursuant to the Prospectus of REIT Shares for sale
to the public.
"OPERATING INCOME OR LOSS" means, for a taxable year of the Partnership,
the Profits and Losses of the Partnership (other than the Profits and Losses
arising from a Capital Transaction or a Terminating Capital Transaction), but
subject to the following adjustments:
(i) There shall be no reduction for depreciation or amortization
expenses; and
(ii) Operating Income or Loss shall not include any items of income,
loss, gain or expense that are specially allocated pursuant to Section 5.01(g),
(h) or (i).
"PARTNER" means any General Partner, Limited Partner or Special
Limited Partner.
"PARTNER NONRECOURSE DEBT MINIMUM GAIN" has the meaning set forth in
Regulations Section 1.704-2(i). A Partner's share of Partner Nonrecourse Debt
Minimum Gain shall be determined in accordance with Regulations Section
1.704-2(i)(5).
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"PARTNERSHIP INTEREST" means an ownership interest in the Partnership held
by the General Partner, the Special Limited Partner or any Limited 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.
"PARTNERSHIP MINIMUM GAIN" has the meaning set forth in Regulations
Section 1.704-2(d). In accordance with Regulations Section 1.704-2(d), the
amount of Partnership Minimum Gain is determined by first computing, for each
Partnership nonrecourse liability, any gain the Partnership would realize if it
disposed of the property subject to that liability for no consideration other
than full satisfaction of the liability, and then aggregating the separately
computed gains. A Partner's share of Partnership Minimum Gain shall be
determined in accordance with Regulations Section 1.704-2(g)(1).
"PARTNERSHIP RECORD DATE" means the record date established by the General
Partner for the distribution of cash pursuant to Section 5.02 hereof, which
record date shall be the same as the record date established by the Company for
a distribution to its stockholders of some or all of its portion of such
distribution.
"PARTNERSHIP UNIT" means a fractional, undivided share of the Partnership
Interests of all Partners (other than the Special Limited Partner) issued
hereunder. The allocation of Partnership Units among the Partners shall be as
set forth on Exhibit A, as may be amended from time to time.
"PERCENTAGE INTEREST" means the percentage ownership interest in the
Partnership of each Partner, as determined by dividing the Partnership Units
owned by a Partner by the total number of Partnership Units then outstanding.
The Percentage Interest of each Partner shall be as set forth on Exhibit A, as
may be amended from time to time.
"PERSON" means any individual, partnership, limited liability company,
corporation, joint venture, trust or other entity.
"PROFIT" shall have the meaning set forth in Section 5.01(k) hereof.
"PROPERTY" means any office or industrial property or other investment in
which the Partnership holds an ownership interest.
"PROSPECTUS" means the same as that term is defined in Section 2(10) of
the Securities Act of 1933, including a preliminary prospectus, an offering
circular as described in Rule 256 of the General Rules and Regulations under the
Securities Act of 1933 or, in the case of an intrastate offering, any document
by whatever name known, used for the purpose of offering and selling securities
to the public.
"REDEMPTION AMOUNT" means either the Cash Amount or the REIT Shares
Amount, as selected by the General Partner in its sole discretion pursuant to
Section 8.05(b) hereof.
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"REDEMPTION RIGHT" has the meaning provided in Section 8.05(a) hereof.
"REDEMPTION SHARES" has the meaning provided in Section 8.06(a) hereof.
"REDEEMING PARTNER" has the meaning provided in Section 8.05(a) hereof.
"REGULATIONS" means the Federal Income Tax Regulations issued under the
Code, as amended and as hereafter amended from time to time. Reference to any
particular provision of the regulations shall mean that provision of the
Regulations on the date hereof and any successor provision of the Regulations.
"REIT" means a real estate investment trust under Sections 856 through 860
of the Code.
"REIT EXPENSES" means (i) costs and expenses relating to the formation and
continuity of existence and operation of the Company and any Subsidiaries
thereof (which Subsidiaries shall, for purposes hereof, be included within the
definition of Company), including taxes, fees and assessments associated
therewith, any and all costs, expenses or fees payable to any director, officer
or employee of the Company, (ii) costs and expenses relating to any public
offering and registration of securities by the Company and all statements,
reports, fees and expenses incidental thereto, including, without limitation,
underwriting discounts and selling commissions applicable to any such offering
of securities and any costs and expenses associated with any claims made by any
holders of such securities or any underwriters or placement agents thereof,
(iii) costs and expenses associated with any repurchase of any securities by the
Company, (iv) costs and expenses associated with the preparation and filing of
any periodic or other reports and communications by the Company under federal,
state or local laws or regulations, including filings with the Commission, (v)
costs and expenses associated with compliance by the Company with laws, rules
and regulations promulgated by any regulatory body, including the Commission and
any securities exchange, (vi) costs and expenses associated with any 401(k)
plan, incentive plan, bonus plan or other plan providing for compensation for
the directors or employees of the Company or the Partnership, (vii) costs and
expenses incurred by the Company relating to any issuance or redemption of
Partnership Interests and (viii) all other operating or administrative costs of
the Company incurred in the ordinary course of its business on behalf of or in
connection with the Partnership.
"REIT SHARES" means the shares of common stock, $.01 par value per share,
of the Company (or Successor Entity, as the case may be).
"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 as adjusted to and including the
day immediately preceding the Specified Redemption Date; provided, that in the
event the Company issues to all holders of REIT Shares rights, options, warrants
or convertible or exchangeable securities entitling the stockholders to
subscribe for or purchase REIT Shares or any other securities or property
(collectively, the "rights") and the rights have not expired at the Specified
Redemption Date, then the REIT Shares Amount shall also include the rights
8
issuable to a holder of the REIT Shares Amount of REIT Shares on the record date
fixed for purposes of determining the holders of REIT Shares entitled to rights.
"RETURN" means an 8% per annum cumulative, non-compounded return on
Adjusted Invested Capital. If Adjusted Invested Capital is adjusted during a
period for which the Return is calculated, the Return will be computed based on
the weighted average Adjusted Invested Capital for the period. The Return shall
be prorated with respect to any Partner that is admitted as a Partner during a
period or that withdraws as a Partner during a period.
"SALE PROCEEDS" means the cash proceeds from a Capital Transaction after
payment of or adequate provision for, transaction expenses, debts of the
Partnership and any reasonably necessary reserves; provided, however, that Sale
Proceeds shall not include proceeds from any Terminating Capital Transaction.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SERVICE" means the Internal Revenue Service.
"SPECIAL LIMITED PARTNER" means Triple Net Properties, L.L.C., a
Virginia limited liability company, or any Person who becomes an Advisor
pursuant to the authority of the Company under Section 8.1 of the Charter.
"SPECIFIED REDEMPTION DATE" means the first business day that is at least
60 days after the receipt by the General Partner of the Notice of Redemption or
such earlier date as shall be designated in writing to the Redeeming Partner by
the General Partner.
"SPONSOR" means any Person directly or indirectly instrumental in
organizing, wholly or in part, the Company or any Person who will control,
manage or participate in the management of the Company and any Affiliate of such
Person. Not included is any Person whose only relationship with the Company is
that of an independent property manager of Company assets and whose only
compensation is as such. Sponsor does not include wholly independent third
parties such as attorneys, accountants and underwriters whose only compensation
is for professional services. A Person may also be deemed a Sponsor of the
Company by:
(i) taking the initiative, directly or indirectly, in founding or
organizing the business or enterprise of the Company, either alone or in
conjunction with one or more other Persons;
(ii) receiving a material participation in the Company in connection
with the founding or organizing of the business of the Company, in consideration
of services or property or both services and property;
(iii) having a substantial number of relationships and contacts with
the Company;
(iv) possessing significant rights to control the Company's
properties;
9
(v) receiving fees for providing services to the Company which are
paid on a basis that is not customary in the industry; or
(vi) providing goods or services to the Company on a basis which was
not negotiated at arms' length with the Company.
"SUBSIDIARY" means, with respect to any Person, any corporation,
partnership or other entity of which a majority of (i) the voting power of the
voting equity securities or (ii) the outstanding equity interests is owned,
directly or indirectly, by such Person.
"SUBSIDIARY PARTNERSHIP" means any partnership in which the General
Partner, a Subsidiary of the General Partner or the Partnership owns a
partnership interest.
"SUBSTITUTE LIMITED PARTNER" means any Person admitted to the Partnership
as a Limited Partner pursuant to Section 9.03 hereof.
"SUCCESSOR ENTITY" has the meaning provided in the definition of
"Conversion Factor" contained herein.
"SURVIVOR" has the meaning set forth in Section 7.01(d) hereof.
"TERMINATING CAPITAL TRANSACTION" means the sale, exchange or other
disposition of all or substantially all of the assets of the Partnership, after
which transaction the Partnership is dissolved and terminated.
"TRADING DAY" means a day on which the principal national securities
exchange on which a security is listed or admitted to trading is open for the
transaction of business or, if a security is not listed or admitted to trading
on any national securities exchange, shall mean any day other than a Saturday, a
Sunday or a day on which banking institutions in the State of New York are
authorized or obligated by law or executive order to close.
"TRANSACTION" has the meaning set forth in Section 7.01(c) hereof.
"TRANSFER" has the meaning set forth in Section 9.02(a) hereof.
"TRANSFER RESTRICTION DATE" means that date on which the Offering is
declared effective by the Commission or such later date as shall be established
by agreement between the Partnership and any Limited Partner.
"WITHHELD AMOUNT" means an amount required to be withheld by the
Partnership under the Code or any other federal, state or local law, including,
without limitation, pursuant to Sections 1441, 1442, 1445 and 1446 of the Code.
10
ARTICLE II
PARTNERSHIP CONTINUATION AND IDENTIFICATION
Section 2.01 Organization. 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.
Section 2.02 Name. The name of the Partnership shall be A REIT, 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 to time to time shall
notify the Limited Partners of such change in the next regular communication to
the Limited Partners.
Section 2.03 Registered Office and Agent; Principal Office. The name and
address of the Partnership's registered agent in the State of Maryland is
CSC-Lawyers Incorporating Service, ▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇. The principal office of the Partnership in the State of Maryland shall be
located at ▇▇▇▇▇ ▇▇▇, ▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ or such
other place as the General Partner may from time to time designate, in its sole
and absolute discretion, by notice to the Limited Partners. The Partnership may
maintain offices at such other place or places within or outside the State of
Maryland as the General Partner deems advisable.
Section 2.04 Partners.
(a) The General Partner of the Partnership is the Company. Its principal
place of business in the State of Maryland shall be the same as that of the
Partnership.
(b) The General Partner hereby consents to admit those persons identified
on Exhibit A as Limited Partners or Special Limited Partners as of the date
hereof. The Limited Partners shall be those Persons identified as Limited
Partners on Exhibit A hereto, as amended from time to time.
Section 2.05 Term and Dissolution.
(a) The term of the Partnership commenced on January 29, 2004, the date
the Certificate was filed in the State Department of Assessments and Taxation of
the State of Maryland in accordance with the Act and shall continue in full
force and effect in perpetuity, except that the Partnership shall be dissolved
upon the first to occur of any of the following events:
(i) The occurrence of an Event of Bankruptcy as to a General Partner
or the dissolution, death, removal or withdrawal of a General Partner
unless the business of the Partnership is continued pursuant to Section
7.03(b) hereof; provided
11
that if a General Partner is on the date of such occurrence a partnership,
the dissolution of such General Partner as a result of the dissolution,
death, withdrawal, removal or Event of Bankruptcy of a partner in such
partnership shall not be an event of dissolution of the Partnership if the
business of such General Partner is continued by the remaining partner or
partners, either alone or with additional partners and such General
Partner and such partners comply with any other applicable requirements of
this Agreement;
(ii) The passage of 90 days after the sale or other disposition of
all or substantially all of the assets of the Partnership (provided that
if the Partnership receives an installment obligation as consideration for
such sale or other disposition, the Partnership shall continue, unless
sooner dissolved under the provisions of this Agreement, until such time
as such note or notes are paid in full);
(iii) The election by the General Partner that the Partnership
should be dissolved; or
(iv) As otherwise provided in the Act.
(b) Upon dissolution of the Partnership (unless the business of the
Partnership is continued pursuant to Section 7.03(b) hereof), the General
Partner (or its trustee, receiver, successor or legal representative) shall
amend or cancel the Certificate and liquidate the Partnership's assets and apply
and distribute the proceeds thereof in accordance with Section 5.06 hereof.
Notwithstanding the foregoing, the liquidating General Partner may either (i)
defer liquidation of or withhold from distribution for a reasonable time, any
assets of the Partnership (including those necessary to satisfy the
Partnership's debts and obligations) or (ii) distribute the assets of the
Partnership to the Partners in kind.
Section 2.06 Filing of Certificate and Perfection of Limited Partnership.
The General Partner shall execute, acknowledge, record and file at the expense
of the Partnership, the Certificate and any and all amendments thereto and all
requisite fictitious name statements and notices in such places and
jurisdictions as may be necessary to cause the Partnership to be treated as a
limited partnership under and otherwise to comply with, the laws of each state
or other jurisdiction in which the Partnership conducts business.
Section 2.07 Certificates Describing Partnership Units. At the request of
a Limited Partner, the General Partner, at its option, may issue a certificate
summarizing the terms of such Limited Partner's interest in the Partnership,
including the number of Partnership Units owned and the Percentage Interest
represented by such Partnership Units as of the date of such certificate. Any
such certificate (i) shall be in form and substance as approved by the General
Partner, (ii) shall not be negotiable and (iii) shall bear a legend to the
following effect:
This certificate is not negotiable. The Partnership Units
represented by this certificate are governed by and transferable
only in accordance with the provisions of the Agreement of Limited
Partnership of A REIT, L.P., as amended from time to time.
12
ARTICLE III
BUSINESS OF THE PARTNERSHIP
Section 3.01 Purpose and Nature. 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
manner as to permit the Company at all times to qualify as a REIT, unless the
Company 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 the ownership of interests in any entity engaged in any of the
foregoing and (iii) to do anything necessary or incidental to the foregoing. In
connection with the foregoing and without limiting the Company's right in its
sole discretion to cease qualifying as a REIT, the Partners acknowledge that the
Company's current status as a REIT inures to the benefit of all the Partners and
not solely to the Company. The General Partner shall also be empowered to do any
and all acts and things necessary or prudent to ensure that the Partnership will
not be classified a "publicly traded partnership" that is treated as a
corporation under Section 7704 of the Code.
Section 3.02 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 actions which,
in the judgment of the General Partner, in its sole and absolute discretion,
could: (i) adversely affect the ability of the Company to initially qualify, or
continue to qualify, as a REIT; (ii) subject the Company to any taxes under
Section 857 or Section 4981 of the Code (other than any tax imposed under Code
Section 857 on capital gains that the Company elects to retain); or (iii)
violate any law or regulation of any governmental body or agency having
jurisdiction over the Company or its securities, unless such action (or
inaction) shall have been specifically consented to in writing by the Company.
ARTICLE IV
CAPITAL CONTRIBUTIONS AND ACCOUNTS
Section 4.01 Capital Contributions. The General Partner, the Special
Limited Partner and the Limited Partners have made capital contributions to the
Partnership in exchange for the Partnership Interests set forth opposite their
names on Exhibit A, as amended from time to time.
Section 4.02 Additional Capital Contributions and Issuances of Additional
Partnership Interests. Except as provided in this Section 4.02 or in Section
4.03, the Partners shall have no right or obligation to make any additional
Capital Contributions or loans to the Partnership. The General Partner may
contribute additional capital to the Partnership, from time to time and receive
additional Partnership Interests in respect thereof, in the manner contemplated
in this Section 4.02.
(a) Issuances of Additional Partnership Interests.
13
(i) General. The General Partner is hereby authorized to cause the
Partnership to issue such additional Partnership Interests in the form of
Partnership Units for any Partnership purpose at any time or from time to
time, to the Partners (including the General Partner and the Special
Limited Partner) or to other Persons for such consideration and on such
terms and conditions as shall be established by the General Partner in its
sole and absolute discretion, all without the approval of the Special
Limited Partner or any Limited Partners. Any additional Partnership
Interests issued thereby may be issued 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 Partnership
Interests, all as shall be determined by the General Partner in its sole
and absolute discretion and without the approval of the Special Limited
Partner or any Limited Partner, subject to Maryland 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
additional Partnership Interests shall be issued to the Company or any
wholly owned Subsidiary of the Company unless either:
(1)(A) the additional Partnership Interests are issued in
connection with an issuance of REIT Shares of or other interests in
the Company, which shares or interests have designations,
preferences and other rights, all such that the economic interests
are substantially similar to the designations, preferences and other
rights of the additional Partnership Interests issued to the Company
by the Partnership in accordance with this Section 4.02 and (B) the
Company shall make a Capital Contribution (directly or through the
General Partner) to the Partnership in an amount equal to the
proceeds raised in connection with the issuance of such REIT Shares
of or other interests in the Company, or
(2) the additional Partnership Interests are issued to all
Partners in proportion to their respective Percentage Interests.
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.
(b) Upon Issuance of Additional Securities. After the Offering, the
Company shall not issue any additional REIT Shares (other than REIT Shares
issued in connection with a redemption pursuant to Section 8.05 hereof) or
rights, options, warrants or convertible or exchangeable securities containing
the right to subscribe for or purchase REIT Shares (collectively, "Additional
Securities") other than to all holders of REIT Shares, unless (A) the General
Partner shall cause the Partnership to issue to the Company Partnership
Interests or rights, options, warrants or convertible or exchangeable securities
14
of the Partnership having designations, preferences and other rights, all such
that the economic interests are substantially similar to those of the Additional
Securities and (B) the Company contributes (directly or through the General
Partner) the proceeds from the issuance of such Additional Securities and from
any exercise of rights contained in such Additional Securities to the
Partnership; provided, however, that the Company is allowed to issue Additional
Securities without complying with the provisions of (A) and (B) above if such
issuance of Additional Securities has been approved and determined to be in the
best interests of the Company and the Partnership by a majority of the
Independent Directors. Without limiting the foregoing, the Company is expressly
authorized to issue Additional Securities for less than fair market value and
the General Partner is expressly authorized to cause the Partnership to issue to
the Company corresponding Partnership Interests, so long as (x) the General
Partner concludes in good faith that such issuance is in the best interests of
the Partnership and (y) the Company contributes (directly or through the General
Partner) all proceeds from such issuance to the Partnership. In the event the
Company issues REIT Shares for a cash purchase price and contributes (directly
or through the General Partner) all of the proceeds of such issuance to the
Partnership, the General Partner shall be issued a number of additional
Partnership Units equal to the product of (A) the number of such REIT Shares
issued by the Company, the proceeds of which were so contributed, multiplied by
(B) a fraction, the numerator of which is 100%, and the denominator of which is
the Conversion Factor in effect on the date of such contribution.
(c) Certain Deemed Contributions of Proceeds of Offering of REIT Shares.
In connection with any and all offerings of REIT Shares, the Company shall make
(directly or through the General Partner) Capital Contributions to the
Partnership of the net proceeds therefrom, provided that if the proceeds
actually received and contributed are less than the gross proceeds of such
offering as a result of any underwriter's discount or other expenses paid or
incurred in connection with such issuance, then the Company shall make (directly
or through a General Partner) a Capital Contribution of such net proceeds to the
Partnership but the General Partner shall receive additional Partnership Units
with a value equal to the aggregate amount of the gross proceeds of such
issuance pursuant to Section 4.02(a) hereof. Upon any such Capital Contribution
by the Company or the General Partner, its Capital Account shall be increased by
the actual amount of its Capital Contribution pursuant to Section 4.01 hereof.
Section 4.03 Additional Funding. If the General Partner determines that it
is in the best interests of the Partnership to provide for additional
Partnership funds ("Additional Funds") for any Partnership purpose, the General
Partner may (i) cause the Partnership to obtain such funds from outside
borrowings, or (ii) elect to have the General Partner provide such Additional
Funds to the Partnership through loans or otherwise.
Section 4.04 Capital Accounts. A separate capital account (a "Capital
Account") shall be established and maintained for each Partner in accordance
with Regulations Section 1.704-1(b)(2)(iv). If (i) a new or existing Partner
acquires an additional Partnership Interest in exchange for more than a de
minimis Capital Contribution, (ii) the Partnership distributes to a Partner more
than a de minimis amount of Partnership property as consideration for a
Partnership Interest, or (iii) the Partnership is liquidated within the meaning
of Regulation Section 1.704-1(b)(2)(ii)(g), the General Partner shall revalue
the property of the Partnership to its fair market value (as determined by the
General Partner, in its sole discretion, and taking into account Section 7701(g)
of the
15
Code) in accordance with Regulations Section 1.704-1(b)(2)(iv)(f). When the
Partnership's property is revalued by the General Partner, the Capital Accounts
of the Partners shall be adjusted in accordance with Regulations Sections
1.704-1(b)(2)(iv)(f) and (g), which generally require such Capital Accounts to
be adjusted to reflect the manner in which the unrealized gain or loss inherent
in such property (that has not been reflected in the Capital Account previously)
would be allocated among the Partners pursuant to Section 5.01 if there were a
taxable disposition of such property for its fair market value (as determined by
the General Partner, in its sole discretion, and taking into account Section
7701(g) of the Code) on the date of the revaluation.
Section 4.05 Percentage Interests. If the number of outstanding
Partnership Units increases or decreases during a taxable year, each Partner's
Percentage Interest shall be adjusted by the General Partner effective as of the
effective date of each such increase or decrease to a percentage equal to the
number of Partnership Units held by such Partner divided by the aggregate number
of Partnership Units outstanding after giving effect to such increase or
decrease. If the Partners' Percentage Interests are adjusted pursuant to this
Section 4.05, Operating Income for the taxable year in which the adjustment
occurs shall be allocated between the part of the year ending on the day
preceding the effective date of such adjustment and the part of the year
beginning on the effective date of such adjustment either (i) as if the taxable
year had ended on the date of the adjustment or (ii) based on the number of days
in each part. The General Partner, in its sole discretion, shall determine which
method shall be used to allocate Operating Income for the taxable year in which
the adjustment occurs. The allocation of Operating Income for the earlier part
of the year shall be based on the Percentage Interests before adjustment, and
the allocation of Operating Income for the later part shall be based on the
adjusted Percentage Interests.
Section 4.06 No Interest on Contributions. No Partner shall be entitled to
interest on its Capital Contribution.
Section 4.07 Return of Capital Contributions. No Partner shall be entitled
to withdraw any part of its Capital Contribution or its Capital Account or to
receive any distribution from the Partnership, except as specifically provided
in this Agreement. Except as otherwise provided herein, there shall be no
obligation to return to any Partner or withdrawn Partner any part of such
Partner's Capital Contribution for so long as the Partnership continues in
existence.
Section 4.08 No Third-Party Beneficiary. No creditor or other third party
having dealings with the Partnership shall have the right to enforce the right
or obligation of any Partner to make Capital Contributions or loans or to pursue
any other right or remedy hereunder or at law or in equity, it being understood
and agreed that the provisions of this Agreement shall be solely for the benefit
of, and may be enforced solely by, the parties hereto and their respective
successors and assigns. None of the rights or obligations of the Partners herein
set forth to make Capital Contributions or loans to the Partnership shall be
deemed an asset of the Partnership for any purpose by any creditor or other
third party, nor may such rights or obligations be sold, transferred, or
assigned by the Partnership or pledged or encumbered by the Partnership to
secure any debt or other obligation of the Partnership or of any of the
Partners. In addition, it is the intent of the parties hereto that no
distribution to any Limited Partner shall be deemed a return of money or other
property
16
in violation of the Act. However, if any court of competent jurisdiction holds
that, not withstanding the provisions of this Agreement, any Limited Partner is
obligated to return such money or property, such obligation shall be the
obligation of such Limited Partner and not of the General Partner. Without
limiting the generality of the foregoing, a deficit Capital Account of a Partner
shall not be deemed to be a liability of such Partner nor an asset or property
of the Partnership.
ARTICLE V
ALLOCATIONS; DISTRIBUTIONS
Section 5.01 Allocations.
(a) Operating Income. Operating Income of the Partnership for each taxable
year of the Partnership shall be allocated among the Partners as follows:
(i) First, 100% to the General Partner and the Limited Partners in
accordance with their respective Percentage Interests until the cumulative
amount of Operating Income and gain allocated pursuant to this Section
5.01(a)(i) and Section 5.01(c)(i)(A) for the current and all prior years
equals the cumulative amount of Operating Losses and losses allocated
pursuant to Section 5.01(b)(iii) and Section 5.01(c)(ii)(B) for the
current and all prior years;
(ii) Second, 90% to the General Partner and the Limited Partners in
accordance with their respective Percentage Interests and 10% to the
Special Limited Partner until the cumulative amount of Operating Income
and gain allocated pursuant to this Section 5.01(a)(ii) and Section
5.01(c)(i)(B) for the current and all prior years equals the cumulative
amount of Operating Losses and losses allocated pursuant to Section
5.01(b)(ii) and Section 5.01(c)(ii)(A) for the current and all prior
years;
(iii) Third, 100% to the General Partner and the Limited Partners in
accordance with their respective Percentage Interests until the cumulative
amount of Operating Income and gain allocated to the General Partner and
each of the Limited Partners under this Section 5.01(a)(iii) and Section
5.01(c)(i)(C)(4) for the current and all prior years and under Section
5.01(a)(v) for all prior years (less the cumulative amount of Operating
Losses allocated under Section 5.01(b)(i) for the current and all prior
years) equals the cumulative amount distributed to the General Partner and
each of the Limited Partners pursuant to Section 5.02(a) and Section
5.02(b)(i)(C) for the current and all prior years;
(iv) Fourth, 90% to the General Partner and the Limited Partners in
accordance with their respective Percentage Interests and 10% to the
Special Limited Partner until the cumulative amount of Operating Income
and gain allocated to the Special Limited Partner under this Section
5.01(a)(iv) and Section 5.01(c)(i)(D) for the current and all prior years
equals the cumulative amount distributed to the Special Limited Partner
pursuant to Section 5.02(b)(ii) for the current and all prior years; and
17
(v) Thereafter, 100% to the General Partner and the Limited
Partners in accordance with their respective Percentage Interests.
(b) Operating Losses. Operating Losses of the Partnership for each
taxable year of the Partnership shall be allocated among the Partners as
follows:
(i) First, 100% to the General Partner and the Limited Partners in
accordance with their respective Percentage Interests until the
cumulative amount of Operating Losses allocated pursuant to this Section
5.01(b)(i) for the current and all prior years equals the cumulative
amount of Operating Income allocated pursuant to Section 5.01(a)(v) for
the current and all prior years;
(ii) Second, 90% to the General Partner and the Limited Partners
in accordance with their respective Percentage Interests and 10% to the
Special Limited Partner until the cumulative amount of Operating Losses
and losses allocated pursuant to this Section 5.01(b)(ii) and Section
5.01(c)(ii)(A) for the current and all prior years (less the cumulative
amount of Operating Income and gain allocated pursuant to Section
5.01(a)(ii) and Section 5.01(c)(i)(B) for the current and all prior
years) equals the cumulative amount of Operating Income and gain
allocated pursuant to Section 5.01(a)(iv) and Section 5.01(c)(i)(D) for
the current and all prior years; and
(iii) Thereafter, 100% to the General Partner and the Limited
Partners in accordance with their respective Percentage Interests.
(c) Gains and Losses from Capital Transactions. (i) Gains from Capital
Transactions shall be allocated among the Partners as follows:
(A) First, 100% to the General Partner and the Limited
Partners in accordance with their respective Percentage Interests
until the cumulative amount of Operating Income and gain allocated
pursuant to Section 5.01(a)(i) and this Section 5.01(c)(i)(A) for
the current and all prior years equals the cumulative amount of
Operating Losses and losses allocated pursuant to Section
5.01(b)(iii) and Section 5.01(c)(ii)(B) for the current and all
prior years;
(B) Second, 90% to the General Partner and the Limited
Partners in accordance with their respective Percentage Interests
and 10% to the Special Limited Partner until the cumulative amount
of Operating Income and gain allocated pursuant to Section
5.01(a)(ii) and this Section 5.01(c)(i)(B) for the current and all
prior years equals the cumulative amount of Operating Losses and
losses allocated pursuant to Section 5.01(b)(ii) and Section
5.01(c)(ii)(A) for the current and all prior years;
(C) Third, 100% to the General Partner and the Limited
Partners in accordance with their respective Percentage Interests
until the General Partner and the Limited Partners have been
allocated an aggregate amount equal to the sum of (1) any
depreciation or amortization recapture associated with the
Partnership's investment in the Property, (2) the amount by which
18
the Allocable Invested Capital exceeds the Partnership's
investment in the Property, (3) any amounts distributed to the
General Partner and the Limited Partners pursuant to Section
5.02(b)(i)(B) (except to the extent that the related Cumulative
Allocable Invested Capital Shortfall was attributable to a loss
previously allocated pursuant to Section 5.01(c)(ii)(B) that has
been previously recaptured pursuant to Section 5.01(a)(i) or
Section 5.01(c)(i)(A)) and (4) any amounts distributed to the
General Partner and the Limited Partners pursuant to Section
5.02(b)(i)(C); and
(D) Thereafter, 90% to the General Partner and the Limited
Partners in accordance with their respective Percentage Interests,
and 10% to the Special Limited Partner.
(ii) Losses from Capital Transactions shall be allocated among the
Partners follows:
(A) First, 90% to the General Partner and the Limited
Partners in accordance with their respective Percentage Interests
and 10% to the Special Limited Partner until the cumulative amount
of Operating Losses and losses allocated pursuant to Section
5.01(b)(ii) and this Section 5.01(c)(ii)(A) for the current and
all prior years (less the cumulative amount of Operating Income
and gain allocated pursuant to Section 5.01(a)(ii) and Section
5.01(c)(i)(B) for the current and all prior years) equals the
cumulative amount of Operating Income and gain allocated pursuant
to Section 5.01(a)(iv) and Section 5.01(c)(i)(D) for the current
and all prior years; and
(B) Thereafter, 100% to the General Partner and the Limited
Partners in accordance with their respective Percentage Interests.
(d) Gains and Losses from Terminating Capital Transactions. (i) Gains
from a Terminating Capital Transaction shall be allocated among the Partners as
follows:
(A) First, 100% to the General Partner and the Limited
Partners in accordance with their respective Percentage Interests
until the aggregate Capital Account balance of the General Partner
and the Limited Partners equals the sum of (1) the Adjusted
Invested Capital (after reduction by any amounts previously
distributed pursuant to Section 5.02(b)(i)(A) and (B)) and (2) the
cumulative Return for the current year and all prior years that
has not previously been distributed pursuant to Section
5.02(b)(i)(C); and
(B) Thereafter, 90% to the General Partner and the Limited
Partners in accordance with their respective Percentage Interests,
and 10% to the Special Limited Partner.
(ii) Losses from a Terminating Capital Transaction shall be
allocated among the Partners as follows:
19
(A) First, 90% to the General Partner and the Limited
Partners in accordance with their respective Percentage Interests
and 10% to the Special Limited Partner until the cumulative amount
of Operating Losses and losses allocated pursuant to Section
5.01(b)(ii), Section 5.01(c)(ii)(A) and this Section
5.01(d)(ii)(A) for the current and all prior years (less the
cumulative amount of Operating Income and gain allocated pursuant
to Section 5.01(a)(ii) and Section 5.01(c)(i)(B) for the current
and all prior years) equals the cumulative amount of Operating
Income and gain allocated pursuant to Section 5.01(a)(ii), Section
5.01(a)(iv) and Section 5.01(c)(i)(D) for the current and all
prior years; and
(B) Thereafter, 100% to the General Partner and the Limited
Partners in accordance with their respective Percentage Interests.
(e) Clawback. Notwithstanding Sections 5.01(a), (b), (c) and (d) hereof,
to the extent that the Special Limited Partner is required to repay
distributions to the Partnership pursuant to Section 5.02(c) hereof, the
allocations under Sections 5.01(a), (b), (c) and (d) hereof shall be adjusted to
reflect such repayment.
(f) Depreciation and Amortization Deductions. Depreciation and
amortization deductions for each taxable year of the Partnership shall be
allocated to the General Partner and the Limited Partners in accordance with
their respective Percentage Interests.
(g) Minimum Gain Chargeback. Notwithstanding any provision to the
contrary, (i) any expense of the Partnership that is a "nonrecourse deduction"
within the meaning of Regulations Section 1.704-2(b)(1) shall be allocated in
accordance with the Partners' respective Percentage Interests, (ii) any expense
of the Partnership that is a "partner nonrecourse deduction" within the meaning
of Regulations Section 1.704-2(i)(2) shall be allocated to the Partner that
bears the "economic risk of loss" of such deduction in accordance with
Regulations Section 1.704-2(i)(1), (iii) if there is a net decrease in
Partnership Minimum Gain within the meaning of Regulations Section 1.704-2(f)(1)
for any Partnership taxable year, then subject to the exceptions set forth in
Regulations Section 1.704-2(f)(2), (3), (4) and (5), items of gain and income
shall be allocated among the Partners in accordance with Regulations Section
1.704-2(f) and the ordering rules contained in Regulations Section 1.704-2(j)
and (iv) if there is a net decrease in Partner Nonrecourse Debt Minimum Gain
within the meaning of Regulations Section 1.704-2(i)(4) for any Partnership
taxable year, then, subject to the exceptions set forth in Regulations Section
1.704(2)(g), items of gain and income shall be allocated among the Partners in
accordance with Regulations Section 1.704-2(i)(4) and the ordering rules
contained in Regulations Section 1.704-2(j). A Partner's "interest in
partnership profits" for purposes of determining its share of the nonrecourse
liabilities of the Partnership within the meaning of Regulations Section
1.752-3(a)(3) shall be such Partner's Percentage Interest.
(h) Qualified Income Offset. If a Partner receives in any taxable year an
adjustment, allocation, or distribution described in subparagraph (4), (5), or
(6) of Regulations Section 1.704-1(b)(2)(ii)(d) that causes or increases a
deficit balance in such Partner's Capital Account that exceeds the sum of such
Partner's shares of Partnership Minimum Gain and Partner Nonrecourse Debt
Minimum Gain, as determined in accordance with Regulations Sections 1.704-2(g)
and 1.704-2(i), such Partner shall be
20
allocated specially for such taxable year (and, if necessary, later taxable
years) items of income and gain in an amount and manner sufficient to eliminate
such deficit Capital Account balance as quickly as possible as provided in
Regulations Section 1.704-1(b)(2)(ii)(d). After the occurrence of an allocation
of income or gain to a Partner in accordance with this Section 5.01(h), to the
extent permitted by Regulations Section 1.704-1(b), items of expense or loss
shall be allocated to such Partner in an amount necessary to offset the income
or gain previously allocated to such Partner under this Section 5.01(h).
(i) Capital Account Deficits. Loss shall not be allocated to a Partner to
the extent that such allocation would cause a deficit in such Partner's Capital
Account (after reduction to reflect the items described in Regulations Section
1.704-1(b)(2)(ii)(d)(4), (5) and (6)) to exceed the sum of such Partner's shares
of Partnership Minimum Gain and Partner Nonrecourse Debt Minimum Gain. Any loss
in excess of that limitation shall be allocated to other Partners who have
positive Capital Account balances in accordance with their respective Percentage
Interests. After the occurrence of an allocation of loss to a Partner in
accordance with this Section 5.01(i), to the extent permitted by Regulations
Section 1.704-1(b), profit, income, or gain shall be allocated to such Partner
in an amount necessary to offset a loss previously allocated to such Partner
under this Section 5.01(i).
(j) Allocations Between Transferor and Transferee. If a Partner transfers
any part or all of its Partnership Interest, the distributive shares of the
various items of income, gain, loss and expense allocable among the Partners
during such fiscal year of the Partnership shall be allocated between the
transferor and the transferee Partner either (i) as if the Partnership's fiscal
year had ended on the date of the transfer, or (ii) based on the number of days
of such fiscal year that each was a Partner without regard to the results of
Partnership activities in the respective portions of such fiscal year in which
the transferor and the transferee were Partners. The General Partner, in its
sole discretion, shall determine which method shall be used to allocate the
distributive shares of the various items of income, gain, loss and expense
between the transferor and the transferee Partner.
(k) Definition of Profit and Loss. "Profit" and "Loss" and any items of
income, gain, expense, or loss referred to in this Agreement shall be determined
in accordance with federal income tax accounting principles, as modified by
Regulations Section 1.704-1(b)(2)(iv). All allocations of income, Profit, gain,
Loss and expense (and all items contained therein) for federal income tax
purposes shall be identical to all allocations of such items set forth in this
Section 5.01, except as otherwise required by Section 704(c) of the Code and
Regulations Section 1.704-1(b)(4). The General Partner shall have the authority
to elect the method to be used by the Partnership for allocating items of
income, gain, expense and loss as required by Section 704(c) of the Code and
such election shall be binding on all Partners.
Section 5.02 Distributions.
(a) Cash Available for Distribution. The Partnership shall distribute
Cash Available for Distribution on a quarterly (or, at the election of the
General Partner, more frequent) basis, in an amount determined by the General
Partner in its sole discretion, to
21
the Partners who are Partners on the Partnership Record Date with respect to
such quarter (or other distribution period) 100% to the General Partner and the
Limited Partners in accordance with their respective Percentage Interests.
Notwithstanding the foregoing, however, if a new or existing Partner acquires an
additional Partnership Interest in exchange for a Capital Contribution on any
date other than a Partnership Record Date, the cash distribution attributable to
such additional Partnership Interest relating to the Partnership Record Date
next following the issuance of such additional Partnership Interest shall be
reduced in the proportion to (i) the number of days that such additional
Partnership Interest is held by such Partner bears to (ii) the number of days
between such Partnership Record Date and the immediately preceding Partnership
Record Date.
(b) Sale Proceeds. The Partnership shall distribute Sale Proceeds on a
quarterly (or, at the election of the General Partner, more frequent) basis, in
an amount determined by the General Partner in its sole discretion, to the
Partners who are Partners on the Partnership Record Date with respect to such
quarter (or other distribution period) as follows:
(i) First, 100% to the General Partner and the Limited Partners in
accordance with their respective Percentage Interests until the General
Partner and the Limited Partners have received an amount equal to the sum
of (A) the Allocable Invested Capital with respect to the Properties sold
during such quarter (or other distribution period), (B) any Cumulative
Allocable Invested Capital Shortfall that has not been distributed
pursuant to Section 5.02(a) hereof and (C) any cumulative shortfall in
the General Partner's and the Limited Partners' receipt of the Return
pursuant to Section 5.02(a) hereof and this Section 5.02(b)(i)(c); and
(ii) Thereafter, 90% to the General Partner and the Limited
Partners in accordance with their respective Percentage Interests, and
10% to the Special Limited Partner.
(c) Clawback. Notwithstanding Section 5.02 (b) hereof, if there is a
shortfall in the distribution of the Return to the General Partner and the
Limited Partners at the end of any calendar year and the Special Limited Partner
previously has received distributions pursuant to Section 5.02(b)(ii) (other
than distributions that have previously been repaid pursuant to this Section
5.02(c)), the Special Limited Partner will be required to repay to the
Partnership whatever portion of those prior distributions is
22
necessary to cause the Return to be met. The Partnership will distribute any
repaid amounts to the General Partner and the Limited Partners in accordance
with their respective Percentage Interests. For purposes of this Section
5.02(c), in determining whether there is a shortfall in the Return, only amounts
distributed pursuant to Section 5.02(b)(ii) or Section 5.02(c) generally will be
taken into account. However, to the extent that the Special Limited Partner has
returned a distribution under this Section 5.02(c), the returned distribution
plus the original accompanying 90% distribution to the General Partner and the
Limited Partners will be treated as having been distributed 100% to the General
Partner and the Limited Partners pursuant to Section 5.02(b)(ii) or Section
5.02(c). In no event will the cumulative amount repaid by the Special Limited
Partner to the Partnership pursuant to this Section 5.02(c) exceed the
cumulative amount of distributions that the Special Limited Partner previously
has received pursuant to Section 5.02(b)(ii).
(d) Withholding. Notwithstanding any other provision of this Agreement,
the General Partner is authorized to take any action that it determines to be
necessary or appropriate to cause the Partnership to comply with any withholding
requirements established under the Code or any other federal, state, or local
law, including, without limitation, pursuant to Sections 1441, 1442, 1445 and
1446 of the Code. To the extent that the Partnership is required to withhold and
pay over to any taxing authority any amount resulting from the allocation or
distribution of income to the Partner or assignee (including by reason of
Section 1446 of the Code), either (i) if the actual amount to be distributed to
the Partner (the "Distributable Amount") equals or exceeds the amount required
to be withheld by the Partnership (the "Withheld Amount"), the entire
Distributable Amount shall be treated as a distribution of cash to such Partner,
or (ii) if the Amount is less than the Withheld Amount, the excess of the
Withheld Amount over the Distributable Amount shall be treated as a loan (a
"Partnership Loan") from the Partnership to the Partner on the day the
Partnership pays over such amount to a taxing authority. A Partnership Loan
shall be repaid through withholding by the Partnership with respect to
subsequent distributions to the applicable Partner or assignee. In the event
that a Limited Partner (a "Defaulting Limited Partner") fails to pay any amount
owed to the Partnership with respect to the Partnership Loan within 15 days
after demand for payment thereof is made by the Partnership on the Limited
Partner, the General Partner, in its sole discretion, may elect to make the
payment to the Partnership on behalf of such Defaulting Limited Partner. In such
event, on the date of payment, the General Partner shall be deemed to have
extended a loan (a "General Partner Loan") to the Defaulting Limited Partner in
the amount of the payment made by the General Partner and shall succeed to all
rights and remedies of the Partnership against the Defaulting Limited Partner as
to that amount. Without limitation, the General Partner shall have the right to
receive any distributions that otherwise would have been made by the Partnership
to the Defaulting Limited Partner until such time the General Partner Loan has
been paid in full and any such distributions so received the General Partner
shall be treated as having been received by the Defaulting Limited Partner and
immediately paid to the General Partner.
Any amounts treated as a Partnership Loan or a General Partner
Loan pursuant to this Section 5.02(d) shall bear interest at the lesser of (i)
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, or (ii) the
maximum lawful rate of interest on such
23
obligation, such interest to accrue from the date the Partnership or the General
Partner, as applicable, is deemed to extend the loan until such loan is repaid
in full.
(e) Redeemed Partnership Units. In no event may a Partner receive a
distribution of cash with respect to a Partnership Unit if such Partner is
entitled to receive an equivalent cash dividend as the holder of record of a
REIT Share for which all or part of such Partnership Unit has been or will be
redeemed.
Section 5.03 REIT Distribution Requirements. The General Partner shall
use its reasonable efforts to cause the Partnership to distribute amounts
sufficient to enable the Company to pay stockholder dividends that will allow a
Company to (i) meet its distribution requirement for qualification as a REIT as
set forth in Section 857 of the Code and (ii) avoid any federal income or excise
tax liability imposed by the Code (other than federal income tax liability
associated with capital gains that the Company elects to retain).
Section 5.04 No Right to Distributions in Kind. No Partner shall be
entitled to demand property other than cash in connection with any distributions
by the Partnership.
Section 5.05 Limitations on Return of Capital Contributions.
Notwithstanding any of the provisions of this Article V, no Partner shall have
the right to receive and the General Partner shall not have the right to make, a
distribution that includes a return of all or part of a Partner's Capital
Contributions, unless after giving effect to the return of a Capital
Contribution, the sum of all Partnership liabilities, other than the liabilities
to a Partner for the return of his Capital Contribution, does not exceed the
fair market value of the Partnership's assets.
Section 5.06 Distributions Upon Liquidation.
(a) Upon liquidation of the Partnership, after payment of, or adequate
provision for, debts and obligations of the Partnership, including any Partner
loans, any remaining assets of the Partnership shall be distributed to all
Partners with positive Capital Accounts in accordance with their respective
positive Capital Account balances. For purposes of this Section 5.06(a), the
Capital Account of each Partner shall be determined after all adjustments made
in accordance with Sections 5.01 and 5.02 resulting from Partnership operations
and from all sales and dispositions of all or any part of the Partnership's
assets. To the extent deemed advisable by the General Partner, appropriate
arrangements (including the use of a liquidating trust) may be made to assure
that adequate funds are available to pay any contingent debts or obligations.
(b) If less than all of the Adjusted Invested Capital has been returned
to the General Partner and the Limited Partners or there is a shortfall in the
distribution of the Return to the General Partner and the Limited Partners when
the Partnership's last Property has been sold and the Special Limited Partner
previously has received distributions pursuant to Section 5.02(b)(ii) (other
than distributions that have previously been repaid pursuant to Section
5.02(c)), the Special Limited Partner will be required to repay to the
Partnership whatever portion of those prior distributions is necessary to cause
a full return of Adjusted Invested Capital and a full distribution of the Return
to the General Partner and the Limited Partners. The Partnership will distribute
any repaid amounts to the General Partner and the Limited Partners in accordance
with
24
their respective Percentage Interests. For purposes of this Section 5.06(b), in
determining whether Adjusted Invested Capital has been returned and a full
distribution of the Return has been made to the General Partner and the Limited
Partners, generally only amounts distributed pursuant to Section 5.02(b)(i) and
Section 5.06(a) will be taken into account. However, to the extent that the
Special Limited Partner returns a distribution under Section 5.02(c) or this
Section 5.06(b), the returned distribution plus the original accompanying 90%
distributions to the General Partner and the Limited Partners will be treated as
having been distributed 100% to the General Partner and the Limited Partners in
accordance with their respective Percentage Interests pursuant to Section
5.02(b)(i). In no event will the cumulative amount repaid by the Special Limited
Partner to the Partnership pursuant to Section 5.02(c) and this Section 5.06(b)
exceed a cumulative amount of distributions that the Special Limited Partner
previously has received pursuant to Section 5.02(b)(ii).
Section 5.07 Substantial Economic Effect. It is the intent of the
Partners that the allocations of Operating Income, Operating Loss, income, gain,
loss and expense under the Agreement have substantial economic effect (or be
consistent with the Partners' interests in the Partnership in the case of the
allocation of losses or expenses attributable to nonrecourse debt) within the
meaning of Section 704(b) of the Code interpreted by the Regulations promulgated
pursuant thereto. Article V and other relevant provisions of this Agreement
shall be interpreted in a manner consistent with such intent. Furthermore, the
General Partner shall have the right, without the consent of the Limited
Partners or the Special Limited Partner, to modify the provisions of Section
5.01 to the extent necessary to comply with Section 704(b) of the Code or
otherwise to achieve the intended distribution of Cash Available for
Distribution, Sale Proceeds, or liquidation proceeds among the Partners.
ARTICLE VI
RIGHTS, OBLIGATIONS AND POWERS OF THE GENERAL PARTNER
Section 6.01 Management of the Partnership.
(a) Except as otherwise expressly provided in this Agreement, the General
Partner shall have full, complete and exclusive discretion to manage and control
the business of the Partnership for the purposes herein stated and shall make
all decisions affecting the business and assets of the Partnership. Subject to
the restrictions specifically contained in this Agreement, the powers of the
General Partner shall include, without limitation, the authority to take the
following actions on behalf of the Partnership:
(i) to acquire, purchase, own, operate, lease and dispose of any
real property and any other property or assets including, but not limited
to, notes and mortgages, that the General Partner determines are
necessary or appropriate or in the best interests of the business of the
Partnership;
(ii) to construct buildings and make other improvements on the
properties owned or leased by the Partnership;
(iii) to authorize, issue, sell, redeem or otherwise purchase any
Partnership Interests or any securities (including secured and unsecured
debt obligations of the Partnership, debt obligations of the Partnership
convertible into
25
any class or series of Partnership Interests, or options, rights,
warrants or appreciation rights relating to any Partnership Interests) of
the Partnership;
(iv) to borrow or lend money for the Partnership, issue or receive
evidences of indebtedness in connection therewith, refinance, increase
the amount of, modify, amend or change the terms of, or extend the time
for the payment of, any such indebtedness and secure such indebtedness by
mortgage, deed of trust, pledge or other lien on the Partnership's
assets;
(v) to guarantee or become a co-maker of indebtedness of the
Company, the General Partner or any Subsidiary thereof, refinance,
increase the amount of, modify, amend or change the terms of, or extend
the time for the payment of, any such guarantee or indebtedness and
secure such guarantee or indebtedness by mortgage, deed of trust, pledge
or other lien on the Partnership's assets;
(vi) to use assets of the Partnership (including, without
limitation, cash on hand) for any purpose consistent with this Agreement,
including, without limitation, payment, either directly or by
reimbursement, of all operating costs and general administrative expenses
of the General Partner, the Partnership or any Subsidiary of either, to
third parties or to the General Partner as set forth in this Agreement;
(vii) to lease all or any portion of any of the Partnership's
assets, whether or not the terms of such leases extend beyond the
termination date of the Partnership and whether or not any portion of the
Partnership's assets so leased are to be occupied by the lessee or, in
turn, subleased in whole or in part to others, for such consideration and
on such terms as the General Partner may determine;
(viii) to prosecute, defend, arbitrate or compromise any and all
claims or liabilities in favor of or against the Partnership, on such
terms and in such manner as the General Partner may reasonably determine
and similarly to prosecute, settle or defend litigation with respect to
the Partners, the Partnership or the Partnership's assets;
(ix) to file applications, communicate and otherwise deal with any
and all governmental agencies having jurisdiction over, or in any way
affecting, the Partnership's assets or any other aspect of the
Partnership business;
(x) to make or revoke any election permitted or required of the
Partnership by any taxing authority;
(xi) to maintain such insurance coverage for public liability,
fire and casualty and any and all other insurance for the protection of
the Partnership, for the conservation of Partnership assets, or for any
other purpose convenient or beneficial to the Partnership, in such
amounts and such types, as it shall determine from time to time;
(xii) to determine whether or not to apply any insurance proceeds
for any property to the restoration of such property or to distribute the
same;
26
(xiii) to establish one or more divisions of the Partnership, to
hire and dismiss employees of the Partnership or any division of the
Partnership and to retain legal counsel, accountants, consultants, real
estate brokers and such other persons, as the General Partner may deem
necessary or appropriate in connection with Partnership business and to
pay therefor such reasonable remuneration as the General Partner may deem
reasonable and proper;
(xiv) to retain other services of any kind or nature in connection
with the Partnership business and to pay therefor such remuneration as
the General Partner may deem reasonable and proper;
(xv) to negotiate and conclude agreements on behalf of the
Partnership with respect to any of the rights, powers and authority
conferred upon the General Partner;
(xvi) to maintain accurate accounting records and to file promptly
all federal, state and local income tax returns on behalf of the
Partnership;
(xvii) to distribute Partnership cash or other Partnership assets
in accordance with this Agreement;
(xviii) to form or acquire an interest in, and contribute property
to, any further limited or general partnerships, joint ventures or other
relationships that it deems desirable (including, without limitation, the
acquisition of interests in, and the contributions of property to, its
Subsidiaries and any other Person in which it has an equity interest from
time to time);
(xix) to establish Partnership reserves for working capital,
capital expenditures, contingent liabilities or any other valid
Partnership purpose; and
(xx) to take such other action, execute, acknowledge, swear to or
deliver such other documents and instruments and perform any and all
other acts that the General Partner deems necessary or appropriate for
the formation, continuation and conduct of the business and affairs of
the Partnership (including, without limitation, all actions consistent
with allowing the Company at all times to qualify as a REIT unless the
Company voluntarily terminates its REIT status) and to possess and enjoy
all of the rights and powers of a general partner as provided by the Act.
(b) Except as otherwise provided herein, to the extent the duties of the
General Partner require expenditures of funds to be paid to third parties, the
General Partner shall not have any obligations hereunder except to the extent
that Partnership funds are reasonably available to it for the performance of
such duties and nothing herein contained shall be deemed to authorize or require
the General Partner, in its capacity as such, to expend its individual funds for
payment to third parties or to undertake any individual liability or obligation
on behalf of the Partnership.
Section 6.02 Delegation of Authority. The General Partner may delegate
any or all of its powers, rights and obligations hereunder and may appoint,
employ, contract or otherwise deal with any Person for the transaction of the
business of the Partnership,
27
which Person may, under supervision of the General Partner, perform any acts or
services for the Partnership as the General Partner may approve.
Section 6.03. Indemnification and Exculpation of Indemnitees.
(a) The Partnership shall indemnify an Indemnitee from and against any
and all losses, claims, damages, liabilities, joint or several, expenses
(including reasonable 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 as set forth in this Agreement in which any
Indemnitee may be involved, or is threatened to be involved, as a party or
otherwise, unless it is established that: (i) the act or omission of the
Indemnitee was material to the matter giving rise to the proceeding and either
was committed in bad faith or was the result of active and deliberate
dishonesty; (ii) the Indemnitee actually received an improper personal benefit
in money, property or services; or (iii) in the case of any criminal proceeding,
the Indemnitee had reasonable cause to believe that the act or omission was
unlawful. 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 6.03(a). The termination of any
proceeding by conviction or upon a plea of nolo contendere or its equivalent, or
an entry of an order of probation prior to judgment, creates a rebuttable
presumption that the Indemnitee acted in a manner contrary to that specified in
this Section 6.03(a). Any indemnification pursuant to this Section 6.03 shall be
made only out of the assets of the Partnership.
(b) The Partnership shall reimburse an Indemnitee for reasonable expenses
incurred by an Indemnitee who is a party to a proceeding 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 this Section 6.03 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 6.03 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.
(d) The Partnership may purchase and maintain insurance, on behalf of the
Indemnitees and such other Persons as the General Partner shall determine,
against any liability that may be asserted against or expenses that may be
incurred by such Person in connection with the Partnership's activities,
regardless of whether the Partnership would have the power to indemnify such
Person against such liability under the provisions of this Agreement.
(e) For purposes of this Section 6.03, the Partnership shall be deemed to
have requested an Indemnitee to serve as fiduciary of an employee benefit plan
whenever the performance by it of its duties to the Partnership also imposes
duties on, or otherwise involves service by, it to the plan or participants or
beneficiaries of the plan; excise taxes assessed on an Indemnitee with respect
to an employee benefit plan pursuant to applicable
28
law shall constitute fines within the meaning of this Section 6.03; and actions
taken or omitted by the Indemnitee with respect to an employee benefit plan in
the performance of its duties for a purpose reasonably believed by it to be in
the interest of the participants and beneficiaries of the plan shall be deemed
to be for a purpose which is not opposed to the best interests of the
Partnership.
(f) In no event may an Indemnitee subject the Limited 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 6.03 because the Indemnitee had an interest in the
transaction with respect to which indemnification applies if the transaction was
otherwise permitted by the terms of this Agreement.
(h) The provisions of this Section 6.03 are for the benefit of the
Indemnitees, their heirs, successors, assigns and administrators and shall not
be deemed to create any rights for the benefit of any other Persons.
Section 6.04 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
or any Partners 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. The General Partner shall not be in breach of any duty that the
General Partner may owe to the Limited Partners or the Partnership or any other
Persons under this Agreement or of any duty stated or implied by law or equity
provided the General Partner, acting in good faith, abides by the terms of this
Agreement.
(b) The Limited Partners expressly acknowledge that the General Partner
is acting on behalf of the Partnership, the Company and the Company's
stockholders collectively, that the General Partner is under no obligation to
consider the separate interests of the Limited Partners (including, without
limitation, the tax consequences to Limited Partners or the tax consequences of
some, but not all, of the Limited Partners) in deciding whether to cause the
Partnership to take (or decline to take) any actions. In the event of a conflict
between the interests of the stockholders of the Company on one hand and the
Limited Partners on the other, the General Partner shall endeavor in good faith
to resolve the conflict in a manner not adverse to either the Company's
stockholders or the Limited Partners; provided, however, that for so long as the
Company owns a controlling interest in the Partnership, any such conflict that
cannot resolved in a manner not adverse to either the Company's stockholders or
the Limited Partners shall be resolved in favor of the stockholders. The General
Partner shall not be liable for monetary damages for losses sustained,
liabilities incurred or benefits of 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 6.01 hereof, a General Partner may exercise any of the powers granted to
it under this Agreement and perform any of the duties imposed upon it hereunder
either directly or
29
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 it in good
faith.
(d) Notwithstanding any other provisions of this Agreement or the Act,
any action of the General Partner on behalf of the Partnership or any decision
of the General Partner to refrain from acting on behalf of the Partnership,
undertaken in the good faith belief that such action or omission is necessary or
advisable in order (i) to protect the ability of the Company to continue to
qualify as a REIT or (ii) to prevent the Company from incurring any taxes under
Section 857, Section 4981, or any other provision of the Code, is expressly
authorized under this Agreement and is deemed approved by all of the Limited
Partners.
(e) Any amendment, modification or repeal of this Section 6.04 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 6.04 as in effect immediately prior to such
amendment, modification or repeal with respect to matters occurring, in whole or
in part, prior to such amendment, modification or repeal, regardless of when
claims relating to such matters may arise or be asserted.
Section 6.05 Reimbursement Obligations of Partnership. The General
Partner is hereby authorized to pay compensation for accounting, administrative,
legal, technical, management and other services rendered to the Partnership. All
of the aforesaid expenditures (including Administrative Expenses and REIT
Expenses) shall be obligations of the Partnership and the General Partner shall
be entitled to reimbursement by the Partnership for any expenditure (including
Administrative Expenses and REIT Expenses) incurred by it on behalf of the
Partnership which shall be made other than out of the funds of the Partnership.
Section 6.06 Outside Activities. Subject to Section 6.08 hereof, the
Charter and any agreements entered into by the Company, the General Partner or
its Affiliates with the Partnership or a Subsidiary, any officer, director,
employee, agent, trustee, Affiliate or stockholder of the Company or the General
Partner, 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 substantially similar
or identical to those of the Partnership. Neither the Partnership nor any of the
Limited Partners shall have any rights by virtue of this Agreement in any such
business ventures, interest or activities. None of the Limited Partners nor any
other Person shall have any rights by virtue of this Agreement or the
partnership relationship established hereby in any such business ventures,
interests or activities and the General Partner shall have no obligation
pursuant to this Agreement to offer any interest in any such business ventures,
interests and activities to the Partnership or any Limited Partner, even if such
opportunity is of a character which, if presented to the Partnership or any
Limited Partner, could be taken by such Person.
Section 6.07 Employment or Retention of Affiliates.
(a) Any Affiliate of the Company or the General Partner may be employed
or retained by the Partnership and may otherwise deal with the Partnership
(whether as a buyer, lessor, lessee, manager, furnisher of goods or services,
broker, agent, lender or
30
otherwise) and may receive from the Partnership any compensation, price or other
payment therefor, which the General Partner determines to be fair and
reasonable.
(b) The Partnership may lend or contribute 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.
(c) 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 as the
General Partner deems are consistent with this Agreement and applicable law.
(d) Except as expressly permitted by this Agreement, neither the General
Partner nor any of its Affiliates shall sell, transfer or convey any property
to, or purchase any property from, the Partnership, directly or indirectly,
except pursuant to transactions that are on terms that are fair and reasonable
to the Partnership.
Section 6.08 Title of 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 Person, 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 a General Partner or any nominee or
Affiliate of the General Partner shall be held by the General Partner for the
use and benefit of the Partnership in accordance with the provisions of this
Agreement; provided, however, that the General Partner shall use its best
efforts to cause beneficial and record title to such assets to be vested in the
Partnership as soon as reasonably practicable. All Partnership assets shall be
recorded as the property of the Partnership in its books and records
irrespective of the name in which legal title to such Partnership assets is
held.
Section 6.09 Miscellaneous. In the event the Company redeems any REIT
Shares, then the General Partner shall cause the Partnership to purchase from
the General Partner a number of Partnership Units as determined based on the
application of the Conversion Factor on the same terms that the Company redeemed
such REIT Shares. Moreover, if the Company makes a cash tender offer or other
offer to acquire REIT Shares, then the General Partner shall cause the
Partnership to make a corresponding offer to the General Partner to acquire an
equal number of Partnership Units held by the General Partner. In the event any
REIT Shares are acquired by the Company pursuant to such offer, the Partnership
shall redeem an equivalent number of the General Partner's Partnership Units for
an equivalent purchase price based on the application of the Conversion Factor.
31
ARTICLE VII
CHANGES IN GENERAL PARTNER
Section 7.01 Transfer of the General Partner's Partnership Interest.
(a) The General Partner shall not transfer all or any portion of its
General Partnership Interest or withdraw as General Partner except as provided
in Section 7.01(c) or in connection with a transaction described in Section
7.01(d) or (e).
(b) The General Partner agrees that its Percentage Interest will at all
times be in the aggregate at least 1%.
(c) Except as otherwise provided herein in Section 7.01(d) or (e) hereof,
the Company shall not engage in any merger, consolidation or other combination
with or into another Person or sale of all or substantially all of its assets,
or any reclassification, or any recapitalization or change of outstanding REIT
Shares (other than a change in par value, or from par value to no par value, or
as a result of a subdivision or combination of REIT Shares), in each case which
results in a change of control of the Company (a "Transaction"), unless:
(i) as a result of such Transaction all Limited Partners will
receive for each Partnership Unit an amount of cash, securities or other
property equal to the product of the Conversion Factor and the greatest
amount of cash, securities or other property paid in the Transaction to a
holder of one REIT Share in consideration of one REIT Share, provided
that if, in connection with the Transaction, a purchase, tender or
exchange offer ("Offer") shall have been made to, and accepted by, the
holders of more than 50% of the outstanding REIT Shares, each holder of
Partnership Units shall be given the option to exchange its Partnership
Units for the greatest amount of cash, securities or other property which
a Limited Partner would have received had it (A) exercised its Redemption
Right and (B) sold, tendered or exchanged pursuant to the Offer the REIT
Shares received upon exercise of the Redemption Right immediately prior
to the expiration of the Offer; or
(ii) the Company is the surviving entity in the Transaction and
either the holders of REIT Shares do not receive cash, securities or
other property in the Transaction or (B) all Limited Partners (other than
the General Partner or an Affiliate of the General Partner) receive an
amount of cash, securities or other property (expressed as an amount per
REIT Share) that is no less than the product of Conversion Factor and the
greatest amount of cash, securities or other property (expressed as an
amount per REIT Share) received in the Transaction by any holder of REIT
Shares.
(d) Notwithstanding Section 7.01(c), the Company may merge with or into
or consolidate with another entity if immediately after such merger or
consolidation (i) substantially all of the assets of the successor or surviving
entity, including any wholly owned Subsidiary of such entity (collectively, the
"Survivor"), other than Partnership Units or the stock of any wholly owned
Subsidiary, are contributed, directly or indirectly, to the Partnership as a
Capital Contribution in exchange for Partnership Units with a fair market value
equal to the value of the assets so contributed as determined by the Survivor in
good
32
faith and (ii) the Survivor expressly agrees to assume all obligations of the
Company, as appropriate, hereunder. Upon such contribution and assumption, the
Survivor shall have the right and duty to amend this Agreement as set forth in
this Section 7.01(d). The Survivor shall in good faith arrive at a new method
for the calculation of the Cash Amount, the REIT Shares Amount and Conversion
Factor for a Partnership Unit after any such merger or consolidation so as to
approximate the existing method for such calculation as closely as reasonably
possible. Such calculation shall take into account, among other things, the kind
and amount of securities, cash and other property that was receivable upon such
merger or consolidation by a holder of REIT Shares or options, warrants or other
rights relating thereto and to which a holder of Partnership Units could have
acquired had such Partnership Units been redeemed immediately prior to such
merger or consolidation. Such amendment to this Agreement shall provide for
adjustment to such method of calculation, which shall be as nearly equivalent as
may be practicable to the adjustments provided for with respect to the
Conversion Factor. The Survivor also shall in good faith modify the definition
of REIT Shares and make such amendments to Section 8.05 hereof so as to
approximate the existing rights and obligations set forth in Section 8.05 as
closely as reasonably possible. The above provisions of this Section 7.01(d)
shall similarly apply to successive mergers or consolidations permitted
hereunder.
(e) Notwithstanding Section 7.01(c),
(i) a General Partner (including the Company) may transfer all or
any portion of its General Partnership Interest to (A) a wholly owned
Subsidiary of such General Partner or (B) the owner of all of the
ownership interests of such General Partner and following a transfer of
all of its General Partnership Interest, withdraw as General Partner; and
(ii) the Company may engage in any transaction not required by law
or by the rules of any national securities exchange on which the REIT
Shares are listed to be submitted to the vote of the holders of the REIT
Shares.
Section 7.02 Admission of a Substitute or Additional General Partner. A
Person shall be admitted as a substitute or additional General Partner of the
Partnership only if the following terms and conditions are satisfied:
(a) Except where the admission of a substitute or additional General
Partner is expressly authorized in Section 7.01, a majority in interest of the
Limited Partners (other than the General Partner) must consent in writing to the
admission of the substitute or additional General Partner, which consent may be
withheld in the sole discretion of such Limited Partners;
(b) The Person to be admitted as a substitute or additional General
Partner shall have accepted and agreed to be bound by all the terms and
provisions of this Agreement by executing a counterpart thereof and such other
documents or instruments as may be required or appropriate in order to effect
the admission of such Person as a General Partner and a certificate evidencing
the admission of such Person as a General Partner shall have been filed for
recordation and all other actions required by Section 2.05 hereof in connection
with such admission shall have been performed;
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(c) If the Person to be admitted as a substitute or additional General
Partner is a corporation or a partnership, it shall have provided the
Partnership with evidence satisfactory to counsel for the Partnership of such
Person's authority to become a General Partner and to be bound by the terms and
provisions of this Agreement; and
(d) Counsel for the Partnership shall have rendered an opinion (relying
on such opinion from other counsel and the state or any other jurisdiction as
may be necessary) that the admission of the Person to be admitted as a
substitute or additional General Partner is in conformity with the Act, that
none of the actions taken in connection with the admission of such Person as a
substitute or additional General Partner will cause (i) the Partnership to be
classified other than as a partnership for federal income tax purposes or (ii)
the loss of any Limited Partner's limited liability.
Section 7.03 Effect of Bankruptcy, Withdrawal, Death or Dissolution of a
General Partner.
(a) Upon the occurrence of an Event of Bankruptcy as to a General Partner
(and its removal pursuant to Section 7.04(a) hereof) or the death, withdrawal,
removal or dissolution of a General Partner (except that, if a General Partner
is on the date of such occurrence a partnership, the withdrawal, death,
dissolution or Event of Bankruptcy as to, or removal of a partner in, such
partnership shall be deemed not to be a dissolution of such General Partner if
the business of such General Partner is continued by the remaining partner or
partners), the Partnership shall be dissolved and terminated unless the
Partnership is continued pursuant to Section 7.03(b) hereof.
(b) Following the occurrence of an Event of Bankruptcy as to a General
Partner (and its removal pursuant to Section 7.04(a) hereof) or the death,
withdrawal, removal or dissolution of a General Partner (except that, if a
General Partner is on the date of such occurrence a partnership, the withdrawal,
death, dissolution or Event of Bankruptcy to, or removal of a partner in, such
partnership shall be deemed not to be a dissolution of such General Partner if
the business of such General Partner is continued by the remaining partner or
partners), the Limited Partners, within 90 days after such occurrence, may elect
to reconstitute the Partnership and continue the business of the Partnership for
the balance of the term specified in Section 2.04 hereof by selecting, subject
to Section 7.02 hereof and any other provisions of this Agreement, a substitute
General Partner by unanimous consent of the Limited Partners. If the Limited
Partners elect to reconstitute the Partnership and admit a substitute General
Partner, the relationship with the Partners and of any Person who has acquired
an interest of a Partner in the Partnership shall be governed by this Agreement.
Section 7.04 Removal of a General Partner.
(a) Upon the occurrence of an Event of Bankruptcy as to, or the
dissolution of, a General Partner, such General Partner shall be deemed to be
removed automatically; provided, however, that if a General Partner is on the
date of such occurrence a partnership, the withdrawal, death, dissolution or
Event of Bankruptcy as to, or removal of a partner in, such partnership shall be
deemed not to be a dissolution of the General Partner if the business of such
General Partner is continued by the remaining partner or
34
partners. The Limited Partners may not otherwise remove the General Partner,
with or without cause.
(b) If a General Partner has been removed pursuant to this Section 7.04
and the Partnership is continued pursuant to Section 7.03(b) hereof, such
General Partner shall promptly transfer and assign its General Partnership
Interest in the Partnership to the substitute General Partner approved by a
majority in interest of the Limited Partners in accordance with Section 7.03(b)
hereof and otherwise admitted to the Partnership in accordance with Section 7.02
hereof. At the time of assignment, the removed General Partner shall be entitled
to receive from the substitute General Partner the fair market value of the
General Partnership Interest of such removed General Partner as reduced by any
damages caused to the Partnership by such General Partner. Such fair market
value shall be determined by an appraiser mutually agreed upon by the General
Partner and a majority in interest of the Limited Partners within ten (10) days
following the removal of the General Partner. In a event that the parties are
unable to agree upon an appraiser, the removed General Partner and a majority in
interest of the Limited Partners each shall select an appraiser. Each such
appraiser shall complete an appraisal of the fair market value of the removed
General Partner's General Partnership Interest within thirty (30) days of the
General Partner's removal and the fair market value of the removed General
Partner's General Partnership Interest shall be the average of the two
appraisals; provided, however, that if the higher appraisal exceeds the lower
appraisal by more than 20% of the amount of the lower appraisal, the two
appraisers, no later than forty (40) days after the removal of the General
Partner, shall select a third appraiser who shall complete an appraisal of the
fair market value of the removed General Partner's General Partnership Interest
no later than sixty (60) days after the removal of the General Partner. In such
case, the fair market value of the removed General Partner's General Partnership
Interest shall be the average of the two appraisals closest in value.
(c) The General Partnership Interest of a removed General Partner, during
the time after default until transfer under Section 7.04(b), shall be converted
to that of a special Limited Partner; provided, however, such removed General
Partner shall not have any rights to participate in the management and affairs
of the Partnership and shall not be entitled to any portion of the income,
expense, profit, gain or loss allocations or cash distributions allocable or
payable, as the case may be, to the Limited Partners. Instead, such removed
General Partner shall receive and be entitled only to retain distributions or
allocations of such items that it would have been entitled to receive in its
capacity as General Partner, until a transfer is effective pursuant to Section
7.04(b).
(d) All Partners shall have given and hereby do give such consents, shall
take such actions and shall execute such documents as shall be legally necessary
and sufficient to effect all the foregoing provisions of this Section.
35
Section 7.05 Option to Acquire Incentive Limited Partnership Interest. The
General Partner shall have the option to acquire the Incentive Limited
Partnership Interest upon the listing of the REIT Shares on a stock exchange.
The purchase price for the Incentive Limited Partnership Interest shall be
payable in REIT Shares or Limited Partnership Interests, at the election of the
Special Limited Partner, except that the Special Limited Partner shall not be
permitted to elect to receive REIT Shares to the extent that doing so would
cause the Company to fail to qualify as a REIT. The purchase price for the
Incentive Limited Partnership Interest shall equal the amount of the
distribution that the Special Limited Partner would receive pursuant to Section
5.02(a)(ii) and Section 5.02(b)(ii) hereof if the Partnership were immediately
to sell all of its Properties for their market value.
ARTICLE VIII
RIGHTS AND OBLIGATIONS OF THE LIMITED PARTNERS
Section 8.01 Management of the Partnership. The Limited Partners shall not
participate in the management or control of Partnership business nor shall they
transact any business for the Partnership, nor shall they have the power to sign
for or bind the Partnership, such powers being vested solely and exclusively in
the General Partner.
Section 8.02 Power of Attorney. Each Limited Partner hereby irrevocably
appoints the General Partner its true and lawful attorney-in-fact, who may act
for each Limited Partner and in its name, place and stead and for its use and
benefit, to sign, acknowledge, swear to, deliver, file and record at the
appropriate public offices, any and all documents, certificates and instruments
as may be deemed necessary or desirable by the General Partner to carry out
fully the provisions of this Agreement and the Act in accordance with their
terms, which power of attorney is coupled with an interest and shall survive the
death, dissolution or legal incapacity of the Limited Partner, or the transfer
by the Limited Partner of any part or all of its Partnership Interest.
Section 8.03 Limitation of Liability of Limited Partners. No Limited
Partner shall be liable for any debts, liabilities, contracts or obligations of
the Partnership. A Limited Partner shall be liable to the Partnership only to
make payments of its Capital Contribution, if any, as and when due hereunder.
After its Capital Contribution is fully paid, no Limited Partner shall, except
as otherwise required by the Act, be required to make any further Capital
Contributions or other payments or lend any funds to the Partnership.
Section 8.04 [Reserved].
Section 8.05 Redemption Right.
(a) Subject to the provisions of this Section 8.05 and the terms of any
agreements between the Partnership and one or more Limited Partners, each
Limited Partner (other than the Special Limited Partner, the General Partner or
any wholly owned Subsidiaries of the General Partner or the Partnership Units
purchased by the Initial Limited Partner) shall have the right (the "Redemption
Right") to require the Partnership to redeem on the 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
36
pursuant to a Notice of Redemption delivered to the Partnership (with a copy to
the General Partner) by the Limited Partner who is exercising the Redemption
Right (the "Redeeming Partner"); provided, however, that the Partnership shall
not be obligated to satisfy such Redemption Right if the General Partner elects
to purchase the Partnership Units subject to the Notice of Redemption pursuant
to Section 8.05(b); and provided, further, that no Limited Partner may deliver
more than two Notices of Redemption during each calendar year. A Limited Partner
may not exercise the Redemption Right for less than 1,000 Partnership Units or,
if such Limited Partner holds less than 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
distribution paid with respect to Partnership Units if the Partnership Record
Date for such distribution is on or after the Specified Redemption Date.
(b) Notwithstanding the provisions of Section 8.05(a), a Limited Partner
that exercises the Redemption Right shall be deemed to have offered to sell the
Partnership Units described in the Notice of Redemption to the General Partner
and the General Partner may, in its sole and absolute discretion, elect to
purchase directly and acquire such Partnership Units by paying to the Redeeming
Partner either the Cash Amount or the REIT Shares Amount, as elected by the
General Partner (in its sole and absolute discretion), on the Specified
Redemption Date, whereupon the General Partner shall acquire the Partnership
Units offered for redemption by the redeeming Partner and shall be treated for
all purposes of this Agreement as the owner of such Partnership Units. If the
General Partner shall elect to exercise its right to purchase Partnership Units
under this Section 8.05(b) with respect to a Notice of Redemption, it shall so
notify the Redeeming Partner within ten (10) 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 this Section 8.05(b),
the General Partner shall have no obligation to the Redeeming Partner or the
Partnership with respect to the Redeeming Partner's exercise of the Redemption
Right. In the event the General Partner shall exercise its right to purchase
Partnership Units with respect to the exercise of a Redemption Right in the
manner described in the first sentence of this Section 8.05(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, as the case may be,
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. If the Redeeming Partner receives REIT Shares, the Redeeming Partner
shall have the right to receive any dividend or other distribution paid with
respect to REIT Shares if the record date for such dividend or distribution is
on or after the Specified Redemption Date.
(c) Notwithstanding the provisions of Section 8.05(a) and 8.05(b), a
Limited Partner shall not be entitled to exercise the Redemption Right if the
delivery of REIT Shares to such Partner on the Specified Redemption Date by the
General Partner pursuant to Section 8.05(b) (regardless of whether the General
Partner would in fact exercise its rights under Section 8.05(b)) would (i)
result in such Partner or any other person owning, directly or indirectly, REIT
Shares in excess of the Aggregate Stock Ownership Limit or
37
Common Stock Ownership Limit (each as defined in the Charter) and calculated in
accordance therewith, except as provided in the Charter, (ii) result in REIT
Shares being owned by fewer than 100 persons (determined without reference to an
rules of attribution), (iii) result in the General Partner being "closely held"
within the meaning of Section 856(h) of the Code, (iv) otherwise jeopardize the
General Partner's status as a REIT or (iv) cause the acquisition of REIT Shares
by such Partner to be "integrated" with any other distribution of REIT Shares
for purposes of complying with the registration provisions of the Securities
Act. The General Partner, in its sole discretion, may waive the restriction on
redemption set forth in this Section 8.05(c); provided, however, that in the
event such restriction is waived, the Redeeming Partner shall be paid the Cash
Amount.
(d) Any Cash Amount to be paid to a Redeeming Partner pursuant to this
Section 8.05 shall be paid on the Specified Redemption Date; provided, however,
the General Partner may elect to cause the Specified Redemption Date to be
delayed for up to an additional 180 days to the extent required for the General
Partner to cause additional REIT Shares to be issued to provide financing to be
used to make such payment of the Cash Amount. Notwithstanding the foregoing, the
General Partner agrees to use its best efforts to cause the closing of the
acquisition of redeemed Partnership Units hereunder to occur as quickly as
reasonably possible.
(e) Notwithstanding any other provision of this Agreement, the General
Partner is authorized to take any action that it determines to be necessary or
appropriate to cause the Partnership to comply with any withholding requirements
established under the Code or any other federal, state or local law that apply
upon a Redeeming Partner's exercise of the Redemption Right. If a Redeeming
Partner believes that it is exempt from such withholding upon a exercise of the
Redemption Right, such Partner must furnish the General Partner with a FIRPTA
Certificate in the form attached hereto as Exhibit C. If the Partnership or the
General Partner is required to withhold and pay over to any taxing authority any
amount upon a Redeeming Partner's exercise of the Redemption Right and if the
Redemption Amount equals or exceeds the Withheld Amount, the Withheld Amount
shall be treated as an amount received by such Partner in redemption of its
Partnership Units. If, however, the Redemption Amount is less than the Withheld
Amount, the Redeeming Partner shall not receive any portion of the Redemption
Amount, the Redemption Amount shall be treated as an amount received by such
Partner in redemption of its Partnership Units and the Partner shall contribute
the excess of the Withheld Amount over the Redemption Amount to the Partnership
before the Partnership is required to pay over such excess to a taxing
authority.
(f) Notwithstanding any other provision of this Agreement, the General
Partner shall place appropriate restrictions on the ability of the Limited
Partners to exercise their Redemption Rights as and if deemed necessary to
ensure that the Partnership does not constitute a "publicly traded partnership"
that is taxed as a corporation under Section 7704 of the Code. If and when the
General Partner determines that imposing such restrictions is necessary, the
General Partner shall give prompt written notice thereof (a "Restriction
Notice") to each of the Limited Partners, which notice shall be accompanied by a
copy of an opinion of counsel to the Partnership which states that, in the
opinion of such counsel, restrictions are necessary in order to avoid the
Partnership being treated as a "publicly traded partnership" that is taxed as a
corporation under Section 7704 of the Code.
38
Section 8.06 Registration. Subject to the terms of any agreement between
the General Partner and one or more Limited Partners with respect to Partnership
Units held by them:
(a) Shelf Registration of the Common Stock. Within two weeks prior or
subsequent to the first date upon which the Partnership Units owned by any
Limited Partner may be redeemed (or such later date as may be permitted under
applicable provisions of the Securities Act), the General Partner agrees to file
with the Commission a shelf registration statement on Form S-3 (if the General
Partner is eligible to use such form) under Rule 415 of the Securities Act (a
"Registration Statement") or any similar rule that may be adopted by the
Commission, with respect to all of the REIT Shares that may be issued upon
redemption of such Partnership Units pursuant to Section 8.05 hereof
("Redemption Shares"). The General Partner will use its best efforts to have the
Registration Statement declared effective under the Securities Act. The General
Partner need not file a separate Registration Statement, but may file one
Registration Statement covering Redemption Shares issuable to more than one
Limited Partner. The General Partner further agrees to supplement or make
amendments to each Registration Statement, if required by the rules, regulations
or instructions applicable to the registration form utilized by the General
Partner or by the Securities Act or rules and regulations thereunder for such
Registration Statement.
(b) If a Registration Statement under subsection (a) above is not
available under the securities laws or the rules of the Commission, or if
required to permit the resale of Redemption Shares by "Affiliates" (as defined
in the Securities Act), upon the written request of any Limited Partner holding
at least 20,000 Partnership Units, the General Partner agrees to file with the
Commission a Registration Statement covering the resale of Redemption Shares by
Affiliates or others whose Redemption Shares are not covered by a Registration
Statement filed pursuant to subsection (a) above, provided that the General
Partner is furnished all information with respect to holders of Redemption
Shares required to complete such Registration Statement and have it declared
effective by the Commission. The General Partner will use its best efforts to
have the Registration Statement declared effective under the Securities Act. The
General Partner need not file a separate Registration Statement, but may file
one Registration Statement covering Redemption Shares issuable to more than one
Limited Partner. The General Partner further agrees to supplement or make
amendments to each Registration Statement, if required by the rules, regulations
or instructions applicable to the registration form utilized by the General
Partner or by the Securities Act or rules and regulations thereunder for such
Registration Statement.
(c) Listing on Securities Exchange. If the General Partner shall list or
maintain the listing of REIT Shares on any securities exchange or national
market system, it will at its expense and as necessary to permit the
registration and sale of the Redemption Shares hereunder, list thereon, maintain
and, when necessary, increase such listing to include such Redemption Shares.
39
(d) Registration Not Required. Notwithstanding the foregoing, the
General Partner shall not be required to file or maintain the effectiveness of a
registration statement relating to Redemption Shares after the first date upon
which, in the opinion of counsel to the General Partner, all of the Redemption
Shares covered thereby could be sold by the holders thereof in any period of
three months pursuant to Rule 144 under the Securities Act, or any successor
rule thereto.
ARTICLE IX
TRANSFERS OF LIMITED PARTNERSHIP INTERESTS
Section 9.01 Purchase for Investment.
(a) Each Limited Partner hereby represents and warrants to the General
Partner and to the Partnership that the acquisition of his Partnership Interests
is made as a principal for his account for investment purposes only and not with
a view to the resale or distribution of such Partnership Interest.
(b) Each Limited Partner agrees that he will not sell, assign or
otherwise transfer his Partnership Interest or any fraction thereof, whether
voluntarily or by operation of law, or at judicial sale or otherwise, to any
Person who does not make the representations and warranties to the General
Partner set forth in Section 9.01(a) above and similarly agree not to sell,
assign or transfer such Partnership Interest or fraction thereof to any Person
who does not similarly represent, warrant and agree.
Section 9.02 Restrictions on Transfer of Limited Partnership Interests.
(a) Subject to the provisions of this Article IX, no Limited Partner may
offer, sell, assign, hypothecate, pledge or otherwise transfer all or any
portion of his Limited Partnership Interest, or any of such Limited Partner's
economic rights as a Limited Partner, whether voluntarily or by operation of law
or at judicial sale or otherwise (collectively, a "Transfer") without the
consent of the General Partner, which consent may be granted or withheld in its
sole an absolute discretion. Any such purported transfer undertaken without such
consent shall considered to be null and void ab initio and shall not be given
effect. Each Limited Partner acknowledges that the General Partner has agreed
not to grant any such consent prior to the Transfer Restriction Date. The
General Partner may require, as a condition of any Transfer to which it
consents, that the transferor assume all costs incurred by the Partnership in
connection therewith.
(b) No Limited Partner may withdraw from the Partnership other than as a
result of a permitted Transfer (i.e., a Transfer consented to as contemplated by
clause (a) above or clause (c) below or a Transfer pursuant to Section 9.05
below) of all of his Partnership Units pursuant to this Article IX or pursuant
to a redemption of all of his Partnership Units pursuant to Section 8.05. Upon
the permitted Transfer or redemption of all of a Limited Partner's Partnership
Units, such Limited Partner shall cease to be a Limited Partner.
(c) Subject to the provisions of this Article IX, a Limited Partner may
Transfer, with the consent of the General Partner, all or a portion of his
Partnership Units to (i) a
40
parent or parent's spouse, natural or adopted descendant or descendants, spouse
of such descendant, or brother or sister, or a trust created by such Limited
Partner for the benefit of such Limited Partner and/or any such person(s), of
which trust such Limited Partner or any such person(s) is a trustee, (ii) a
corporation controlled by a Person or Persons named in clause (i) above, or
(iii) if the Limited Partner is an entity, its beneficial owners or one or more
of its Affiliates.
(d) No Limited Partner may effect a Transfer of its Limited Partnership
Interest, in whole or in part, if, in the opinion of legal counsel for the
Partnership, such proposed Transfer would require the registration of the
Limited Partnership Interest under the Securities Act, or would otherwise
violate any applicable federal or state securities or blue sky law (including
investment suitability standards).
(e) No Transfer by a Limited Partner of its Partnership Units, in whole
or in part, may be made to any Person if (i) in the opinion of legal counsel for
the Partnership, the transfer would result in the Partnership being treated as
an association taxable as corporation (other than a qualified REIT subsidiary
within the meaning of Section 856(i) of the Code), (ii) in the opinion of legal
counsel for the Partnership, it would adversely affect the ability of the
Company to continue to qualify as a REIT or subject the Company to any taxes
under Section 857 or Section 4981 of the Code, or (iii) such transfer is
effectuated through an "established securities market" or a "secondary market
(or the substantial equivalent thereof)" within a meaning of Section 7704 of the
Code.
(f) 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 the Partnership whose loan constitutes a
nonrecourse liability (within the meaning of Regulations Section 1.752-1(a)(2)),
without the consent of the General Partner, which may be withheld in its sole
and absolute discretion; provided, however, that as a condition to such consent,
the lender may 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 which a security interest is held simultaneously with the time at which
such lender would deemed to be a partner in the Partnership for purposes of
allocating liabilities to such lender under Section 752 of the Code.
(g) Any Transfer in contravention of any of the provisions of this
Article IX shall be void and ineffectual and shall not be binding upon, or
recognized by, the Partnership.
(h) Prior to the consummation of any Transfer under this Article IX, the
transferor and/or a transferee shall deliver to the General Partner such
opinions, certificates and other documents as the General Partner shall request
in connection with such Transfer.
Section 9.03 Admission of Substitute Limited Partner.
(a) Subject to the other provisions of this Article IX, an assignee of
the Limited Partnership Interest of a Limited Partner (which shall be understood
to include any purchaser, transferee, donee or other recipient of any
disposition of such Limited Partnership Interest) shall be deemed admitted as a
Limited Partner of the Partnership
41
only with the consent of the General Partner and upon the satisfactory
completion of the following:
(i) The assignee shall have accepted and agreed to be bound by the
terms and provisions of this Agreement by executing a counterpart or an
amendment thereof, including a revised Exhibit A and such other documents
or instruments as the General Partner may require in order to effect the
admission of such Person as a Limited Partner.
(ii) To the extent required, an amended Certificate evidencing the
admission of such Person as a Limited Partner shall have been signed,
acknowledged and filed for record in accordance with the Act.
(iii) The assignee shall have delivered a letter containing the
representation set forth in Section 9.01(a) hereof and the agreement set
forth in Section 9.01(b) hereof.
(iv) If the assignee is a corporation, partnership, limited
liability company or trust, the assignee shall have provided the General
Partner with evidence satisfactory to counsel for the Partnership of the
assignee's authority to become a Limited Partner under the terms and
provisions of this Agreement.
(v) The assignee shall have executed a power of attorney
containing the terms and provisions set forth in Section 8.02 hereof.
(vi) The assignee shall have paid all reasonable legal fees of the
Partnership and the General Partner and filing and publication costs in
connection with its substitution as a Limited Partner.
(vii) The assignee has obtained the prior written consent of the
General Partner to its admission as a Substitute Limited Partner, which
consent may be given or denied in the exercise of the General Partner's
sole and absolute discretion.
(b) For the purpose of allocating Operating Income and distributing cash
received by the Partnership, a Substitute Limited Partner shall be treated as
having become and appearing in the records of the Partnership as, a Partner upon
the filing of the Certificate described in Section 9.03(a)(ii) hereof or, if no
such filing is required, the later of the date specified in the transfer
documents or the date on which the General Partner has received all necessary
instruments of transfer and substitution.
(c) The General Partner shall cooperate with the Person seeking to
become a Substitute Limited Partner by preparing the documentation required by
this Section and making all official filings and publications. The Partnership
shall take all such action as promptly as practicable after the satisfaction of
the conditions in this Article IX to the admission of such Person as a Limited
Partner of the Partnership.
42
Section 9.04 Rights of Assignees of Partnership Interests.
(a) Subject to the provisions of Sections 9.01 and 9.02 hereof, except
as required by operation of law, the Partnership shall not be obligated for any
purposes whatsoever to recognize the assignment by any Limited Partner of its
Partnership Interest until the Partnership has received notice thereof.
(b) Any Person who is the assignee of all or any portion of a Limited
Partner's Limited Partnership Interest, but does not become a Substitute Limited
Partner and desires to make a further assignment of such Limited Partnership
Interest, shall be subject to all the provisions of this Article IX to the same
extent and in the same manner as any Limited Partner desiring to make an
assignment of its Limited Partnership Interest.
Section 9.05 Effect of Bankruptcy, Death, Incompetence or Termination of a
Limited Partner. The occurrence of an Event of Bankruptcy as to a Limited
Partner, the death of a Limited Partner or a final adjudication that a Limited
Partner is incompetent (which term shall include, but not be limited to,
insanity) shall not cause the termination or dissolution of the Partnership and
the business of the Partnership shall continue if an order for relief in a
bankruptcy proceeding is entered against a Limited Partner, the trustee or
receiver of his estate or, if he dies, his executor, administrator or trustee,
or, if he is finally adjudicated incompetent, his committee, guardian or
conservator, shall have the rights of such Limited Partner for the purpose of
settling or managing his estate property and such power as the bankrupt,
deceased or incompetent Limited Partner possessed to assign all or any part of
his Partnership Interest and to join with the assignee in satisfying conditions
precedent to the admission of the assignee as a Substitute Limited Partner.
Section 9.06 Joint Ownership of Interests. A Partnership Interest may be
acquired by two individuals as joint tenants with the right of survivorship,
provided that such individuals either are married or are related and share the
same home as tenants in common. The written consent or vote of both owners of
any such jointly held Partnership Interest shall be required to constitute the
action of the owners of such Partnership Interest; provided, however, that the
written consent of only one joint owner will be required if the Partnership has
been provided with evidence satisfactory to the counsel for the Partnership that
the actions of a single joint owner can bind both owners under the applicable
laws of the state of residence of such joint owners. Upon the death of one owner
of a Partnership Interest held in a joint tenancy with a right of survivorship,
the Partnership Interest shall become owned solely by the survivor as a Limited
Partner and not as an assignee. The Partnership need not recognize the death of
one of the owners of a jointly held Partnership Interest until it shall have
received notice of such death. Upon notice to the General Partner from either
owner, the General Partner shall cause the Partnership Interest to be divided
into two equal Partnership Interests, which shall thereafter be owned separately
by each of the former owners.
ARTICLE X
BOOKS AND RECORDS; ACCOUNTING; TAX MATTERS
Section 10.01 Books and Records. At all times during the continuance of
the Partnership, the Partners shall keep or cause to be kept at the
Partnership's specified office
43
true and complete books of account in accordance with generally accepted
accounting principles, including: (a) a current list of the full name and last
known business address of each Partner, (b) a copy of the Certificate of Limited
Partnership and all certificates of amendment thereto, (c) copies of the
Partnership's federal, state and local income tax returns and reports, (d)
copies of the Agreement and any financial statements of the Partnership for the
three most recent years and (e) all documents and information required under the
Act. Any Partner or its duly authorized representative, upon paying the costs of
collection, duplication and mailing, shall be entitled to inspect or copy such
records during ordinary business hours.
Section 10.02 Custody of Partnership Funds; Bank Accounts.
(a) All funds of the Partnership not otherwise invested shall be
deposited in one or more accounts maintained in such banking or brokerage
institutions as the General Partner shall determine and withdrawals shall be
made only on such signature or signatures as the General Partner may, from time
to time, determine.
(b) All deposits and other funds not needed in the operation of the
business of the Partnership may be invested by the General Partner in investment
grade instruments (or investment companies whose portfolio consists primarily
thereof), government obligations, certificates of deposit, bankers' acceptances
and municipal notes and bonds. The funds of the Partnership shall not be
commingled with the funds of any other Person except for such commingling as may
necessarily result from an investment in those investment companies permitted by
this Section 10.02(b).
Section 10.03 Fiscal and Taxable Year. The fiscal and taxable year of the
Partnership shall be the calendar year.
Section 10.04 Annual Tax Information and Report. Within 75 days after the
end of each fiscal year of the Partnership, the General Partner shall furnish to
each person who was a Limited Partner at any time during such year a properly
completed Schedule K-1.
Section 10.05 Tax Matters Partner; Tax Elections; Special Basis
Adjustments.
(a) The General Partner shall be the Tax Matters Partner of the
Partnership within the meaning of Section 6231(a)(7) of the Code. As Tax Matters
Partner, the General Partner shall have the right and obligation to take all
actions authorized and required, respectively, by the Code for the Tax Matters
Partner. The General Partner shall have the right to retain professional
assistance in respect of any audit of the Partnership by the Service and all
out-of-pocket expenses and fees incurred by the General Partner on behalf of the
Partnership as Tax Matters Partner shall constitute Partnership expenses. In the
event the General Partner receives notice of a final Partnership adjustment
under Section 6223(a)(2) of the Code, the General Partner shall either (i) file
a court petition for judicial review of such final adjustment within the period
provided under Section 6226(a) of the Code, a copy of which petition shall be
mailed to all Limited Partners on the date such petition is filed, or (ii) mail
a written notice to all Limited Partners, within such period, that describes the
General Partner's reasons for determining not to file such a petition.
44
(b) All elections required or permitted to be made by the Partnership
under the Code or any applicable state or local tax law shall be made by the
General Partner in its sole discretion.
(c) In the event of a transfer of all or any part of the Partnership
Interest of any Partner, the Partnership, at the option of the General Partner,
may elect pursuant to Section 754 of the Code to adjust the basis of the
Properties. Notwithstanding anything contained in Article V of this Agreement,
any adjustments made pursuant to Section 754 shall affect only the successor in
interest to the transferring Partner and in no event shall be taken into account
in establishing, maintaining, or computing Capital Accounts for the other
Partners for any purpose under this Agreement. Each Partner will furnish the
Partnership with all information necessary to give effect to such election.
Section 10.06 Reports to Limited Partners.
(a) As soon as practicable after the close of each fiscal quarter (other
than the last quarter of the fiscal year), the General Partner shall cause to be
mailed to each Limited Partner a quarterly report containing financial
statements of the Partnership, or of the General Partner if such statements are
prepared solely on a consolidated basis with the General Partner, for such
fiscal quarter, presented in accordance with generally accepted accounting
principles. As soon as practicable after the close of each fiscal year, the
General Partner shall cause to be mailed to each Limited Partner an annual
report containing financial statements of the Partnership, or of the General
Partner if such statements are prepared solely on a consolidated basis with the
General Partner, for such fiscal year, presented in accordance with generally
accepted accounting principles. The annual financial statements shall be audited
by accountants selected by the General Partner.
(b) Any Partner shall further have the right to a private audit of the
books and records of the Partnership, provided such audit is made for
Partnership purposes, at the expense of the Partner desiring it and is made
during normal business hours.
ARTICLE XI
AMENDMENT OF THIS AGREEMENT
Section 11.01 Amendment of this Agreement The General Partner's consent
shall be required for any amendment to this Agreement. The General Partner,
without the consent of the Limited Partners, may amend this Agreement in any
respect; provided, however, that the following amendments shall require the
consent of Limited Partners holding more than 50% of the Percentage Interests of
the Limited Partners:
(a) any amendment affecting the operation of the Conversion Factor or
the Redemption Right (except as provided in Section 7.01 or 8.05 hereof) in a
manner adverse to the Limited Partners;
(b) any amendment that would adversely affect the rights of the Limited
Partners to receive the distributions payable to them hereunder, other than
pursuant to the issuance of additional Partnership Units pursuant to Section
4.02 hereof;
45
(c) any amendment that would alter the Partnership's allocations of
income, gain, loss and expense to the Limited Partners, other than pursuant to
the issuance of additional Partnership Units pursuant to Section 4.02 hereof or
an amendment effected pursuant to Section 5.07 hereof; or
(d) any amendment that would impose on the Limited Partners any
obligation to make additional Capital Contributions to the Partnership.
ARTICLE XII
GENERAL PROVISIONS
Section 12.01 Notices. All communications required or permitted under this
Agreement shall be in writing and shall be deemed to have been given when
delivered personally or upon deposit in the United States mail, registered,
postage prepaid and return receipt requested, to the Partners at the addresses
set forth in Exhibit A attached hereto; provided, however, that any Partner may
specify a different address by notifying the General Partner in writing of such
different address. Notices to the Partnership shall be delivered at, or mailed
to, its specified office.
Section 12.02 Survival of Rights. Subject to the provisions hereof
limiting transfers, this Agreement shall be binding upon, and inure to the
benefit of, the Partners and the Partnership and their respective legal
representatives, successors, transferees and assigns.
Section 12.03 Additional Documents. Each Partner agrees to perform all
further acts and execute, swear to, acknowledge and deliver all further
documents which may be reasonable, necessary, appropriate, or desirable to carry
out the provisions of this Agreement or the Act.
Section 12.04 Severability. If any provision of this Agreement shall be
declared illegal, invalid, or unenforceable in any jurisdiction, then such
provision shall be deemed to be severable from this Agreement (to the extent
permitted by law) and in any event such illegality, invalidity or
unenforceability shall no affect the remainder hereof.
Section 12.05 Entire Agreement. This Agreement and exhibits attached
hereto constitute the entire agreement of the Partners and supersede all prior
written agreements and prior and contemporaneous oral agreements, understandings
and negotiations with respect to the subject matter hereof.
Section 12.06 Pronouns and Plurals. When the context in which words are
used in the Agreement indicates that such is the intent, words in the singular
number shall include the plural and the masculine gender shall include the
neuter or female gender as the context may require.
Section 12.07 Headings. The Article headings or sections in this Agreement
are for convenience only and shall not be used in construing the scope of this
Agreement or any particular Article.
46
Section 12.08 Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original copy and all of
which together shall constitute one and the same instrument binding on all
parties hereto, notwithstanding that all parties shall not have signed the same
counterpart.
Section 12.09 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Maryland.
[BALANCE OF PAGE INTENTIONALLY LEFT BLANK]
47
IN WITNESS WHEREOF, the parties hereto have hereunder affixed their
signatures to this Agreement of Limited Partnership, all as of April 26, 2004.
GENERAL PARTNER:
A REIT, INC., a Maryland corporation
By:
---------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, President
SPECIAL LIMITED PARTNER:
TRIPLE NET PROPERTIES L.L.C., a Virginia limited
liability company
By:
---------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, President
INITIAL LIMITED PARTNER:
TRIPLE NET PROPERTIES L.L.C., a Virginia limited
liability company
By:
---------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, President
48
EXHIBIT A
Agreed Value
Cash of Capital Partnership Percentage
Partner Contribution Contribution Units Interest
GENERAL PARTNER:
A REIT, Inc. $ 1,000 $ 1,000 100 0.50%
LIMITED PARTNER:
Triple Net Properties, $200,000 $200,000 20,000 99.5%
L.L.C.
SPECIAL LIMITED PARTNER:
Triple Net Properties, L.L.C. 0 0 0 0%*
* The Special Limited Partner will be entitled to the distributions provided for
in Article V of this Agreement.
A-1
EXHIBIT B
NOTICE OF EXERCISE OF REDEMPTION RIGHT
In accordance with Section 8.05 of the Agreement of Limited Partnership
(the "Agreement") of A REIT, L.P., a Maryland limited partnership, the
undersigned hereby irrevocably (i) presents for redemption Partnership Units in
A REIT, L.P. in accordance with the terms of the Agreement and the Redemption
Right referred to in Section 8.05 thereof, (ii) surrenders such Partnership
Units and all right, title and interest therein and (iii) directs that the Cash
Amount or REIT Shares Amount as defined in the Agreement) as determined by the
General Partner deliverable upon exercise of the Redemption Right be delivered
to the address specified below and if REIT Shares (as defined in the Agreement)
are to be delivered, such REIT Shares be registered or placed in the name(s) and
at the address(es) specified below.
Dated: _______________, ________
Name of Limited Partner:
____________________________________________
(Signature of Limited Partner)
____________________________________________
(Mailing Address)
____________________________________________
(City) (State) (Zip Code)
Signature Guaranteed by:
____________________________________________
If REIT Shares are to be issued, issue to:
Please insert social security or identifying number:
Name:
B-1
EXHIBIT C
For Redeeming Partners that are entities:
CERTIFICATION OF NON-FOREIGN STATUS
Under Section 1445(e) of the Internal Revenue Code of 1986, as amended
(the "Code"), in the event of a disposition by a non-U. S. person of a
partnership interest in a partnership in which (i) 50% or more of the value of
the gross assets consists of United States real property interests ("USRPIs"),
as defined in section 897(c) of the Code and (ii) 90% or more of the value of
the gross assets consists of USRPIs, cash and cash equivalents, the transferee
will be required to withhold 10% of the amount realized by the non-U. S. person
upon the disposition. To inform A REIT, Inc., a Maryland corporation (the
"General Partner"), and A REIT, L.P., a Maryland limited partnership (the
"Partnership"), that no withholding is required with respect to the redemption
by ________________________ ("Limited Partner") of its units of limited
partnership interest in the Partnership, the undersigned hereby certifies the
following on behalf of Limited Partner:
1. Limited Partner is not a foreign corporation, foreign partnership, foreign
trust, or foreign estate as those terms are defined in the Code and the
Treasury regulations thereunder.
2. The U. S. employer identification number of Limited Partner is __________.
3. The principal business address of Limited Partner is _____________________
__________________________________________, and Limited Partner's place of
incorporation is ______________________________________________________.
4. Limited Partner agrees to inform the General Partner if it becomes a
foreign person at any time during the three-year period immediately
following the date of this notice.
5. Limited Partner understands that this certification may be disclosed to
the Internal Revenue Service by the General Partner and that any false
statement contained herein could be punished by fine, imprisonment, or
both.
LIMITED PARTNER
By:_________________________________________
Name:_______________________________________
Its:________________________________________
Under penalties of perjury, I declare that I have examined this certification
and, to the best of my knowledge and belief, it is true, correct and complete
and I further declare that I have authority to sign this document on behalf of
Limited Partner.
Date: ____________________ [NAME]
___________________________________________
Title
C-1
For Redeeming Partners that are individuals:
CERTIFICATION OF NON-FOREIGN STATUS
Under section 1445(e) of the Internal Revenue Code of 1986, as amended
(the "Code"), in the event of a disposition by a non-U. S. person of a
partnership interest in a partnership in which (i) 50% or more of the value of
the gross assets consists of United States real property interests ("USRPIs"),
as defined in section 897(c) of the Code and (ii) 90% or more of the value of
the gross assets consists of USRPIs, cash and cash equivalents, the transferee
will be required to withhold 10% of the amount realized by the non-U. S. person
upon the disposition. To inform A REIT, Inc., a Maryland corporation (the
"General Partner"), and A REIT, L.P., a Maryland limited partnership (the
"Partnership"), that no withholding is required with respect to my redemption of
my units of limited partnership interest in the Partnership, I,
_________________, hereby certify the following:
1. I am not a nonresident alien for purposes of U. S. income taxation.
2. My U. S. taxpayer identification number (social security number) is
_____________________________.
3. My home address is:______________________________________________________.
4. I agree to inform the General Partner promptly if I become a
nonresident alien at any time during the three-year period immediately
following the date of this notice.
5. I understand that this certification may be disclosed to the Internal
Revenue Service by the General Partner and that any false statement
contained herein could be punished by fine, imprisonment, or both.
__________________________________________
Name:
Under penalties of perjury, I declare that I have examined this certification
and, to the best of my knowledge and belief, it is true, correct and complete.
Date: ______________________
__________________________________________
Name:
C-1