EXHIBIT 10.6
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FIRST AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP
OF
AGREE LIMITED PARTNERSHIP
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Dated as of April 22, 1994
Table of Contents
Page
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ARTICLE I - DEFINED TERMS 1
ARTICLE II - ORGANIZATIONAL MATTERS 14
Section 2.1. Continuation of Partnership 14
Section 2.2. Name 14
Section 2.3. Principal Office and Registered Agent 15
Section 2.4. Power of Attorney 15
Section 2.5 Term 16
ARTICLE III - PURPOSE 16
Section 3.1. Purpose and Business 16
Section 3.2. Powers 17
ARTICLE IV - CAPITAL CONTRIBUTIONS 17
Section 4.1. Capital Contribution of the Partners 17
Section 4.2. Issuance of Additional Partnership
Interests 19
Section 4.3. No Preemptive Rights 22
Section 4.4. Capital Accounts 22
Section 4.5 Return of Capital Account; Interest 25
ARTICLE V - DISTRIBUTIONS 26
Section 5.1. Initial Partnership Distributions 26
Section 5.2. Requirement and Characterization of
Distributions 26
Section 5.3 Amounts Withheld 26
Section 5.4. Distributions Upon Liquidation 26
ARTICLE VI - ALLOCATIONS 27
Section 6.1 Allocations For Capital Account Purposes 27
Section 6.2 Allocation of Nonrecourse Debt 27
Section 6.3 Reserved 27
Section 6.4 Special Allocation Rules 27
Section 6.5 Allocations for Tax Purposes 30
ARTICLE VII - MANAGEMENT AND OPERATIONS OF BUSINESS 31
Section 7.1 Management 31
Section 7.2 Certificate of Limited Partnership 32
Section 7.3 Restrictions on General Partner's
Authority 32
Section 7.4. Reimbursement of the General Partner 33
Section 7.5. Outside Activities of the General Partner 34
Section 7.6. Transactions with Affiliates 34
Section 7.7. Indemnification 35
Section 7.8. Liability of the General Partner 36
Section 7.9. Title to Partnership Assets 37
Section 7.10. Reliance by Third Parties 37
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ARTICLE VIII - RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS 38
Section 8.1. Limitation of Liability 38
Section 8.2. Outside Activities of Limited Partners 38
Section 8.3. Rights of Limited Partners Relating to
the Partnership 38
Section 8.4. Conversion Right 39
Section 8.5. General Partner Covenants Relating to the
Rights 41
Section 8.6. Other Matters Relating to the Conversion
Rights 41
ARTICLE IX - BOOKS, RECORDS, ACCOUNTING AND REPORTS 42
Section 9.1. Records and Accounting 42
Section 9.2. Fiscal Year 43
Section 9.3. Reports 43
ARTICLE X - TAX MATTERS 43
Section 10.1. Preparation of Tax Returns 43
Section 10.2. Tax Elections 43
Section 10.3. Tax Matters Partner 44
Section 10.4. Organizational Expenses 45
Section 10.5. Withholding 45
ARTICLE XI - TRANSFERS AND WITHDRAWALS 46
Section 11.1. Transfer 46
Section 11.2. Transfer of General Partner's
Partnership Interest 46
Section 11.3. Limited Partners' Rights to Transfer 48
Section 11.4. Substituted Limited Partners 52
Section 11.5. General Provisions 52
ARTICLE XII - DISSOLUTION AND LIQUIDATION 53
Section 12.1. Dissolution 53
Section 12.2. Winding Up 54
Section 12.3. Compliance with Timing Requirements of
Regulations 56
Section 12.4. Deemed Distribution and Recontribution 56
Section 12.5. Documentation of Liquidation 57
Section 12.6. Reasonable Time for Winding Up 57
Section 12.7. Indemnification of the Liquidator 57
Section 12.8. Waiver of Partition 57
ARTICLE XIII - AMENDMENT OF PARTNERSHIP AGREEMENT 58
Section 13.1. Amendments 58
ARTICLE XIV - ARBITRATION OF DISPUTES 59
Section 14.1. Arbitration 59
Section 14.2. Procedures 59
Section 14.3. Binding Character 60
Section 14.4 Exclusivity 60
Section 14.5. No Alteration of Agreement 61
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ARTICLE XV - CONDITIONS/CONCURRENT TRANSACTIONS 61
Section 15.1. General Partner Conditions 61
Section 15.2. Limited Partner Conditions 61
ARTICLE XVI - GENERAL PROVISIONS 62
Section 16.1. Addresses and Notice 62
Section 16.2. Titles and Captions 62
Section 16.3. Pronouns and Plurals 62
Section 16.4. Further Action 62
Section 16.5. Binding Effect 63
Section 16.6. No Third Party Beneficiaries 63
Section 16.7. Waiver 63
Section 16.8. No Agency 63
Section 16.9. Entire Understanding 63
Section 16.10. Counterparts 63
Section 16.11. Applicable Law 63
Section 16.12. Invalidity of Provisions 63
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FIRST AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP
OF
AGREE LIMITED PARTNERSHIP
THIS FIRST AMENDED AND RESTATED AGREEMENT OF LIMITED
PARTNERSHIP, dated as of April 22, 1994, is entered into by and among the
undersigned parties.
W I T N E S S E T H:
WHEREAS, Agree Realty Corporation, as general partner, and
▇▇▇▇▇▇▇ Agree, as limited partner, formed Agree Limited Partnership (the
"Partnership") as a Delaware limited partnership pursuant to that certain
Certificate of Limited Partnership dated April 4, 1994 and filed on April 4,
1994 among the partnership records of the Secretary of State of the State of
Delaware, and that certain Agreement of Limited Partnership dated as of April
4, 1994; and
WHEREAS, the original partners of the Partnership desire to
amend the aforesaid Agreement of Limited Partnership to (i) admit additional
limited partners to the Partnership, and (ii) amend and restate in its
entirety the agreement among the partners.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein contained and other good and valuable consideration, the
receipt, adequacy and sufficiency of which are hereby acknowledged, the
parties hereto, intending legally to be bound, hereby agree as follows:
ARTICLE I - DEFINED TERMS
Except as otherwise herein expressly provided, the following
terms and phrases shall have the meanings et forth below:
"Act" means the Delaware Revised Uniform Limited Partnership
Act, as it may be amended from time to time, and any successor to such
statute.
"Additional Limited Partner" has the meaning set forth
in Section 4.2 hereof.
"Additional REIT Securities" has the meaning set forth
in Section 4.2.C hereof.
"Adjusted Capital Account" means the Capital Account
maintained for each Partner as of the end of each fiscal year (i) increased
by any amounts which such Partner is obligated to restore pursuant to any
provision of this Agreement or is deemed
to be obligated to restore pursuant to the penultimate sentences of
Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5) and (ii) decreased by
the items described in Regulations Sections 1.704-1(b)(2)(ii)(d)(4),
1.704-1(b)(2)(ii)(d)(5), and 1.704-1(b)(2)(ii)(d)(6). The foregoing
definition of Adjusted Capital Account is intended to comply with the
provisions of Regulations Section 1.704-1(b)(2)(ii)(d) and shall be
interpreted consistently therewith.
"Adjusted Capital Account Deficit" means, with respect to any
Partner, the deficit balance, if any, in such Partner's Adjusted Capital
Account as of the end of the relevant fiscal year.
"Adjusted Property" means any property the Carrying Value of
which has been adjusted pursuant to Section 4.4.D hereof. Once an Adjusted
Property is deemed distributed by, and recontributed to, the Partnership for
federal income tax purposes upon a termination thereof pursuant to Section
708 of the Code, such property shall thereafter constitute a Contributed
Property until the Carrying Value of such property is further adjusted
pursuant to Section 4.4.D hereof.
"Affiliate" means, with respect to any Person, (i) any Person
directly or indirectly controlling, controlled by or under common control
with such Person, (ii) any Person owning or controlling fifty percent (50%)
or more of the outstanding voting interests of such Person, (iii) any Person
of which such Person owns or controls fifty percent (50%) or more of the
voting interests, (iv) any officer, director, general partner or trustee of
such Person or of any Person referred to in clauses (i), (ii), and (iii)
above, or (v) any member of the Immediate Family of such Person.
"Agreement" means this First Amended and Restated Agreement of
Limited Partnership, as it may be amended, supplemented or restated from time
to time.
"Articles of Incorporation" means the Articles of
Incorporation of the General Partner, as the same may be amended or restated
and in effect from time to time.
"Available Cash" means, with respect to any period for which
such calculation is being made, (i) the sum of:
(a) the Partnership's Net Income or Net Loss, as the
case may be, for such period (without regard to adjustments
resulting from allocations described in Section 6.4.A through
Section 6.4.E),
(b) Depreciation and all other noncash charges
deducted in determining Net Income or Net Loss for such
period,
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(c) the amount of any reduction in reserves of the
Partnership referred to in clause (ii)(f) below (including,
without limitation, reductions resulting because the General
Partner determines such amounts are no longer necessary),
(d) the excess of proceeds from the sale, exchange,
disposition or refinancing of Partnership property during such
period over the gain (or loss, as the case may be) recognized
from such sale, exchange, disposition or refinancing during
such period (excluding Terminating Capital Transactions),
except such proceeds as are distributed pursuant to Section
5.1, and
(e) all other cash received by the Partnership during
such period that was not included in determining Net Income or
Net Loss for such period;
(ii) less the sum of:
(a) all principal debt payments made during such
period by the Partnership,
(b) capital expenditures made by the Partnership
during such period,
(c) investments in any entity (including loans made
thereto) to the extent that such investments are not otherwise
described in clauses (ii)(a) or (b),
(d) all other expenditures and payments not
deducted in determining Net Income or Net Loss for such
period,
(e) any amount included in determining Net Income or
Net Loss of such period that was not received by the
Partnership during such period, and
(f) the amount of any increase in reserves established
during such period which the General Partner determines are
necessary or appropriate in its sole and absolute discretion.
Notwithstanding the foregoing, Available Cash shall not
include any cash received or reductions in reserves, or take into account any
disbursements made or reserves established, after commencement of the
dissolution and liquidation of the Partnership.
"Bankruptcy" of a Person shall be deemed to have occurred when
(a) the Person commences a voluntary proceeding seeking liquidation,
reorganization or other relief under any bankruptcy, insolvency or other
similar law now or hereafter in
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effect, (b) the Person is adjudged as bankrupt or insolvent, or a final and
nonappealable order for relief under any bankruptcy, insolvency or similar
law now or hereafter in effect has been entered against the Person, (c) the
Person executes and delivers a general assignment for the benefit of the
Person's creditors, (d) the Person files an answer or other pleading
admitting or failing to contest the material allegations of a petition filed
against the Person in any proceeding of the nature described in clause (b)
above, (e) the Person seeks, consents to or acquiesces in the appointment of
a trustee, receiver or liquidator for the Person or for all or any
substantial part of the Person's properties, (f) any proceeding seeking
liquidation, reorganization or other relief under any bankruptcy, insolvency
or other similar law now or hereafter in effect has not been dismissed within
one hundred twenty (120) days after the commencement thereof, (g) the
appointment without the Person's consent or acquiescence of a trustee,
receiver or liquidator has not been vacated or stayed within ninety (90) days
after such appointment, or (h) an appointment referred to in clause (g) is
not vacated within ninety (90) days after the expiration of any such stay.
"Beneficial Owner" means an owner of shares of stock of the
General Partner under Code Section 542(a)(2), either directly or
constructively through application of Code Section 544, as modified by Code
Section 856(h)(1)(B).
"Business Day" means any day except a Saturday, Sunday or
other day on which banking institutions in the State of New York are
authorized or obligated by law or executive order to close.
"Capital Account" means the Capital Account maintained for a
Partner pursuant to Section 4.4 hereof.
"Capital Contribution" means, with respect to any Partner, the
total amount of any cash, cash equivalents and the Net Asset Value of
Contributed Property which such Partner contributes or is deemed to
contribute to the Partnership pursuant to the terms of this Agreement,
including the Capital Contribution made by a predecessor holder of the
Interest of such Partner.
"Capital Stock" means REIT Shares and any other shares of
stock (including, without limitation, preferred stock) of the General
Partner.
"Carrying Value" means (i) with respect to a Contributed
Property, the Gross Asset Value of such property reduced (but not below zero)
by all Depreciation with respect to such property charged to the Partners'
Capital Accounts, (ii) with respect to an Adjusted Property, the Carrying
Value as last adjusted pursuant to Section 4.4 reduced (but not below zero)
by all Depreciation with respect to such property charged to the Partners'
Capital Accounts since the date of the last adjustment pursuant
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to Section 4.4, and (iii) with respect to any other Partnership property, the
adjusted basis of such property for federal income tax purposes, all as of
the time of determination. The Carrying Value of any property shall be
adjusted from time to time in accordance with Section 4.4 hereof and to
reflect changes, additions or other adjustments to the Carrying Value for
dispositions and acquisitions of Partnership properties, as deemed
appropriate by the General Partner.
"Certificate" means the Certificate of Limited Partnership of
the Partnership filed in the office of the Secretary of State of the State of
Delaware, as amended from time to time in accordance with the terms hereof
and the Act.
"Code" means the Internal Revenue Code of 1986, as amended and
in effect from time to time, as interpreted by the applicable regulations
thereunder. Any reference herein to a specific section or sections of the
Code shall be deemed to include a reference to any corresponding provision of
future law.
"Consent of the Limited Partners" means the written consent of
a majority-in-interest of the Limited Partners (i.e., Limited Partners
holding in the aggregate more than fifty percent (50%) of the total
Partnership Interests held by the Limited Partners), which consent shall be
obtained prior to the taking of any action for which it is required by this
Agreement and may be given or withheld by each Limited Partner in its sole
and absolute discretion.
"Contributed Property" means each property or other asset (but
excluding cash), in such form as may be permitted by the Act, contributed to
the Partnership or deemed contributed to the Partnership on termination and
reconstitution thereof pursuant to Section 708 of the Code. Once the Carrying
Value of a Contributed Property is adjusted pursuant to Section 4.4.D hereof,
such property shall no longer constitute a Contributed Property for purposes
of Section 4.4 hereof, but shall be deemed an Adjusted Property for such
purposes.
"Contribution Agreements" means the Contribution Agreements,
dated April 22, 1994, pursuant to which the Property Partnerships agreed to
contribute to the Partnership the Properties and other assets owned by such
Property Partnerships in consideration for the issuance of Partnership Units
to the partners of such Property Partnerships.
"Contribution Date" has the meaning set forth in
Section 4.2 hereof.
"Conversion Factor" means 1.0, provided that in the event that
the General Partner (i) 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
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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 that would be
issued and outstanding on the record date for such event if such dividend,
distribution, subdivision or combination had occurred as of such date, and
the denominator of which shall be the actual number of REIT Shares issued and
outstanding on the record date for such dividend, distribution, subdivision
or combination. Any adjustment of the Conversion Factor shall become
effective immediately after the effective date of such event retroactive to
the record date for such event; provided, however, that if a Specified
Conversion Date, Specified Exchange Date or Required Exchange Date, as the
case may be, occurs after the record date, but prior to the effective date,
of any such event, the Conversion Factor shall be determined as if the
Specified Conversion Date, Specified Exchange Date or Required Exchange Date,
as the case may be, had occurred immediately prior to the record date for
such event.
"Conversion Right" has the meaning set forth in Section
8.4 hereof.
"Converting Partner" has the meaning set forth in
Section 8.4 hereof.
"Deemed Partnership Interest Value" as of any date shall mean,
with respect to a Partner, the product of (i) the Deemed Value of the
Partnership as of such date, multiplied by (ii) such Partner's Partnership
Interest as of such date.
"Deemed Value of the Partnership" as of any date shall
mean the quotient of the following amounts:
(i) the product of (a) the Value of a REIT Share as of such
date, multiplied by (b) the total number of REIT Shares
issued and outstanding as of the close of business on
such date (excluding treasury shares), increased by any
liabilities and decreased by any assets of the General
Partner other than its interest in the Partnership,
divided by
(ii) the Partnership Interest of the General Partner as
of such date.
"Demand Notice" has the meaning set forth in Section
14.2 hereof.
"Depreciation" means, for each fiscal year, an amount equal to
the federal income tax depreciation, amortization or other cost recovery
deduction allowable with respect to an asset for such year, except that if
the Carrying Value of an asset differs from its adjusted basis for federal
income tax purposes at the beginning of such year or other period,
Depreciation shall be an amount which bears the same ratio to such beginning
Carry-
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ing Value as the federal income tax depreciation, amortization or other cost
recovery deduction for such year bears to such beginning adjusted tax basis;
provided, however, that if the federal income tax depreciation, amortization
or other cost recovery deduction for such year is zero, Depreciation shall be
determined with reference to such beginning Carrying Value using any
reasonable method selected by the General Partner.
"ERISA" means the Employee Retirement Income and Security Act
of 1974, as the same may be amended from time to time, or any successor
statute.
"Exchange Act" means the Securities Exchange Act of 1934, as
the same may be amended from time to time, or any successor statute.
"Exchange Right" means the Optional Exchange Right and the
Required Exchange Right set forth in Sections 11.3.C(1) and (2),
respectively.
"General Partner" means Agree Realty Corporation, a Maryland
corporation, its duly admitted successors and assigns and any other Person
who is a General Partner at the time of reference thereto.
"General Partnership Interest" means the Partnership
Interest held by the General Partner.
"Gross Asset Value" of any Contributed Property contributed to
the Partnership in connection with the execution of this Agreement means the
fair market value of such Contributed Property as established pursuant to the
relevant Contribution Agreement. The Gross Asset Value of any other
Contributed Property means the fair market value of such Contributed Property
at the time of contribution as determined by the General Partner using such
reasonable method of valuation as it may, in its sole and absolute
discretion, adopt; provided, however, that the Gross Asset Value of any
property deemed contributed to the Partnership for federal income tax
purposes upon termination and reconstitution thereof pursuant to Section 708
of the Code shall be determined in accordance with Section 4.4 hereof. The
"Gross Asset Value" of any property distributed to a Partner means the fair
market value of such distributed property at the time of distribution as
determined by the General Partner using such reasonable method of valuation
as it may, in its sole and absolute discretion, adopt.
"Immediate Family" means, with respect to any natural Person,
such natural Person's spouse, ancestors, lineal descendants and brothers and
sisters (whether by the whole or half blood). This definition is intended to
conform to the definition of "family" contained in Code Section 544(a)(2). In
the event that the definition of family contained in Code Section 544(a)(2)
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is revised, the definition of "Immediate Family" shall be revised
accordingly.
"Incapacity" or "Incapacitated" means, (i) as to any
individual Partner, death, total physical disability or entry of an order by
a court of competent jurisdiction adjudicating him incompetent to manage his
Person or his estate; (ii) as to any corporation which is a Partner, the
filing a certificate of dissolution, or its equivalent, for the corporation
or the revocation of its charter; (iii) as to any partnership which is a
Partner, the dissolution and commencement of winding up of the partnership;
(iv) as to any estate which is a Partner, the distribution by the fiduciary
of the estate's entire interest in the Partnership; (v) as to any trustee of
a trust which is a Partner, the termination of the trust (but not the
substitution of a new trustee); or (vi) as to any Partner, the Bankruptcy of
such Partner.
"Indemnitee" means (i) any Person made a party to a proceeding
by reason of his status as (A) the General Partner, or (B) a director or
officer of the Partnership or the General Partner, (ii) such other Persons
(including Affiliates of the General Partner or the Partnership) as the
General Partner may designate from time to time, in its sole and absolute
discretion, and (iii) any Person who, at any time prior to the consummation
of the transactions contemplated by the Contribution Agreement, was a general
partner (or a director or officer of a general partner) of, or a director or
officer of, a Property Partnership.
"Independent Directors of the General Partner" means the
independent directors as defined in Article V, Section 3 of the Articles of
Incorporation.
"IRS" means the Internal Revenue Service.
"Lien" means any liens, security interests, mortgages, deeds
of trust, charges, claims, encumbrances, pledges, options, rights of first
offer or first refusal and any other rights or interests of any kind or
nature, actual or contingent, or other similar encumbrances of any nature
whatsoever.
"Limited Partner" means any Person named as a Limited Partner
in Exhibit A attached hereto, as such Exhibit may be amended from time to
time, or any Substituted Limited Partner or Additional Limited Partner, in
such Person's capacity as a Limited Partner in the Partnership.
"Limited Partnership Interest" means a Partnership Interest of
a Limited Partner in the Partnership 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.
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"Liquidator" has the meaning set forth in Section 12.2
hereof.
"Net Asset Value" means: (i) in the case of any Contributed
Property contributed, or deemed contributed, by a Partner to the Partnership,
the Gross Asset Value of such property as of the time of its contribution to
the Partnership, reduced by any liabilities either assumed by the Partnership
upon such contribution or to which such property is subject when contributed
(including, with respect to the Properties, any prepayment penalties or other
fees and expenses payable on or about the Contribution Date in connection
with the prepayment or modification of the liabilities to which such
Properties are subject), and (ii) in the case of any property distributed to
a Partner by the Partnership, the Gross Asset Value of such property at the
time of its distribution by the Partnership reduced by any liabilities either
assumed by the distributee Partner upon such distribution or to which such
property is subject when distributed.
"Net Income" means, for any taxable period, the excess, if
any, of the Partnership's items of income and gain for such taxable period
over the Partnership's items of loss and deduction for such taxable period.
The items included in the calculation of Net Income shall be determined in
accordance with Section 4.4 hereof. Once an item of income, gain, loss or
deduction that has been included in the initial computation of Net Income is
subjected to the special allocation rules in Sections 6.4 and 6.5, Net Income
or the resulting Net Loss, whichever the case may be, shall be recomputed
without regard to such item.
"Net Loss" means, for any taxable period, the excess, if any,
of the Partnership's items of loss and deduction for such taxable period over
the Partnership's items of income and gain for such taxable period. The items
included in the calculation of Net Loss shall be determined in accordance
with Section 4.4 hereof. Once an item of income, gain, loss or deduction that
has been included in the initial computation of Net Loss is subjected to the
special allocation rules in Sections 6.4 and 6.5, Net Loss or the resulting
Net Income whichever the case may be, shall be recomputed without regard to
such items.
"Nonrecourse Built-in Gain" means, with respect to any
Contributed Properties or Adjusted Properties that are subject to a mortgage
or negative pledge securing a Nonrecourse Liability, the amount of any
taxable gain that would be allocated to the Partners pursuant to Section
6.5.B if such properties were disposed of in a taxable transaction in full
satisfaction of such liabilities and for no other consideration.
"Nonrecourse Deductions" has the meaning set forth in
Regulations Section 1.704-2(b)(1), and the amount of Nonrecourse Deductions
for a fiscal year shall be determined in accordance with the rules of
Regulations Section 1.704-2(c).
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"Nonrecourse Liability" has the meaning set forth in
Regulations Section 1.752-1(a)(2).
"Notice of Conversion" means the Notice of Conversion
substantially in the form of Exhibit B to this Agreement.
"Notice of Exchange" means the Notice of Exchange
substantially in the form of Exhibit C to this Agreement.
"Offering" means the sale of REIT Shares pursuant to
the Registration Statement.
"Offering Date" means the date of closing of the Offering
without regard to any subsequent closing with respect to REIT Shares
constituting the Underwriters' overallotment option.
"Optional Exchange Right" has the meaning set forth in
Section 11.3.C(1) hereof.
"Original Limited Partner" means each of ▇▇▇▇▇▇▇ Agree,
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇.
"Partner" means a General Partner or a Limited Partner,
and "Partners" means the General Partner and the Limited Partners
as a collective group.
"Partner Minimum Gain" means an amount, with respect to each
Partner Nonrecourse Debt, equal to the Partnership Minimum Gain that would
result if such Partner Nonrecourse Debt were treated as a Nonrecourse
Liability, determined in accordance with Regulations Section 1.704-2(i)(3).
"Partner Nonrecourse Debt" has the meaning set forth in
Regulations Section 1.704-2(b)(4).
"Partner Nonrecourse Deductions" has the meaning set forth in
Regulations Section 1.704-2(i)(2), and the amount of Partner Nonrecourse
Deductions with respect to a Partner Nonrecourse Debt for a Partnership
year shall be determined in accordance with the rules of Regulations Section
1.704-2(i)(2).
"Partnership" means the Delaware limited partnership formed
under the Act and continued pursuant to this Agreement, as such partnership
may from time to time be constituted.
"Partnership Interest" means an ownership interest in the
Partnership representing a Capital Contribution by either a Limited Partner
or the General Partner and includes any and all benefits to which the holder
of such a Partnership Interest may be entitled as provided in this Agreement,
together with all obligations of such Person to comply with the terms and
provisions of this Agreement. The Partnership Interest of each Partner shall
be expressed as a percentage of the total Partnership Interests owned by all
of the Partners, as specified in
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Exhibit A attached hereto, as such Exhibit may be amended from time to time.
A Partnership Interest may be expressed as a number of Partnership Units.
"Partnership Minimum Gain" has the meaning set forth in
Regulations Section 1.704-2(b)(2), and the amount of Partnership Minimum
Gain, for a fiscal year shall be determined in accordance with the rules of
Regulations Section 1.704-2(d).
"Partnership Record Date" means the record date established by
the General Partner for the distribution of Available Cash pursuant to
Section 5.2 hereof, which record date shall be the same as the record date
established for a distribution to the holders of REIT Shares of some or all
of the General Partner's portion of such distribution.
"Partnership Unit" means a unit of Partnership Interest issued
to a Limited Partner pursuant to the terms of this Agreement, which unit may
be converted into REIT Shares through the exercise of the Rights set forth in
Sections 8.4 and 11.3.C. The number of Partnership Units of each Limited
Partner shall be as specified in Exhibit A attached hereto, as such Exhibit
may be amended from time to time. The Partnership Units shall be evidenced by
certificates as set forth in Section 4.1.E hereof.
"Person" means an individual or a corporation, partnership,
trust, unincorporated organization, association or other entity.
"Properties" means the community shopping centers previously
owned by the Property Partnerships and contributed to the Partnership
pursuant to the Contribution Agreement.
"Property Partnerships" means the partnerships which owned the
Properties prior to their contribution to the Partnership.
"Qualified Individual" has the meaning set forth in
Section 14.2 hereof.
"Recapture Income" means any gain recognized by the
Partnership (computed without regard to any adjustment required by Section
734 or Section 743 of the Code) upon the disposition of any property or asset
of the Partnership, which gain is characterized as ordinary income because it
represents the recapture of deductions previously taken with respect to such
property or asset.
"Registration Statement" means the Registration Statement on
Form S-11 (including the prospectus contained therein) filed by the General
Partner with the SEC, and any amendments thereto, pursuant to which the
General Partner proposes to offer and sell certain of the REIT Shares.
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"Regulations" means the income tax regulations promulgated
under the Code, as such regulations may be amended from time to time
(including corresponding provisions of succeeding regulations).
"REIT" means a real estate investment trust under Sections 856
through 860 of the Code.
"REIT Expenses" has the meaning set forth in Section
7.4.B hereof.
"REIT Share" means a share of common stock, par value $.01 per
share, of the General Partner.
"REIT Shares Conversion Amount" means a number of REIT Shares
equal to the product of (i) the number of Partnership Units offered for
conversion by a Converting Partner pursuant to Section 8.4, multiplied by
(ii) the Conversion Factor; provided that in the event the General Partner
issues to all holders of REIT Shares any Additional REIT Securities or any
other securities or property (collectively, the "rights"), then the REIT
Shares Conversion Amount shall also include such rights that a holder of that
number of REIT Shares would be entitled to receive.
"REIT Shares Exchange Amount" means a number of REIT Shares
equal to the product of (i) the number of Partnership Units to be exchanged
by a Limited Partner pursuant to Section 11.3.C(1) or (2), as the case may
be, multiplied by (ii) the Conversion Factor; provided that in the event the
General Partner issues to all holders of REIT Shares any Additional REIT
Securities or any other securities or property (collectively the "rights")
then the REIT Shares Exchange Amount shall also include such rights that a
holder of that number of REIT Shares would be entitled to receive.
"Requesting Party" has the meaning set forth in Section
14.2 hereof.
"Required Exchange Date" has the meaning set forth in
Section 11.3.C(2) hereof.
"Required Exchange Right" has the meaning set forth in
Section 11.3.C(2) hereof.
"Responding Party has the meaning set forth Section
14.2 hereof.
"Rights" means the Conversion Rights and the Exchange
Rights.
"SEC" means the United States Securities and Exchange
Commission.
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"Securities Act" means the Securities Act of 1933, as the same
may be amended from time to time, or any successor statute.
"Specified Conversion Date" means the tenth Business Day after
receipt by the General Partner of a Notice of Conversion, unless applicable
law requires a later date.
"Specified Exchange Date" means the tenth Business Day after
receipt by the General Partner of a Notice of Exchange, unless applicable law
requires a later date.
"Substituted Limited Partner" means a Person who is admitted
as a Limited Partner to the Partnership pursuant to Section 11.4.
"Terminating Capital Transaction" means any sale or other
disposition of all or substantially all of the assets of the Partnership or a
related series of transactions that, taken together, result in the sale or
other disposition of all or substantially all of the assets of the
Partnership.
"Trading Day" means a day on which the principal national
securities exchange on which the REIT Shares are listed or admitted to
trading is open for the transaction of business, or, if the REIT Shares are
not listed or admitted to trading, means a Business Day.
"Underwriters" means the various underwriters who purchase
REIT Shares in connection with the Offering.
"Unrealized Gain" attributable to any item of Partnership
property means, as of any date of determination, the excess, if any, of (i)
the fair market value of such property (as determined under Section 4.4
hereof) as of such date, over (ii) the Carrying Value of such property (prior
to any adjustment to be made pursuant to Section 4.4 hereof) as of such date.
"Unrealized Loss" attributable to any item of Partnership
property means, as of any date of determination, the excess, if any, of (i)
the Carrying Value of such property (prior to any adjustment to be made
pursuant to Section 4.4 hereof) as of such date, over (ii) the fair market
value of such property (as determined under Section 4.4 hereof) as of such
date.
"Value" means, with respect to a REIT Share as of any date,
the average of the "closing price" for the ten (10) consecutive Trading Days
immediately preceding such date. The "closing price" for each such Trading
Day means the last sale price, regular way on such day, or, if no such sale
takes place on that day, the average of the closing bid and asked prices,
regular way, in either case as reported on the principal consolidated
transaction reporting system with respect to securities listed or admitted to
trading on the New York Stock Exchange, or if the
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REIT Shares are not so listed or admitted to trading, as reported in the
principal consolidated transaction reporting system with respect to
securities listed on the principal national securities exchange (including
the National Market System of the National Association of Securities Dealers,
Inc. Automated Quotation System) on which the REIT Shares are listed or
admitted to trading or, if the REIT Shares are not so listed or admitted to
trading, the last quoted price or, if not quoted, the average of the high bid
and low asked prices in the over-the-counter market, as reported by the
National Association of Securities Dealers, Inc. Automated Quotation System
or, if such system is no longer in use, the principal automated quotation
system then in use or, if the REIT Shares are not so quoted by any such
system, the average of the closing bid and asked prices are furnished by a
professional market maker selected by the board of directors of the General
Partner making a market in the REIT Shares, or, if there is not such market
maker or such closing prices otherwise are not available, the fair market
value of the REIT Shares as of such day, as determined by the board of
directors of the General Partner in its sole discretion. In the event the
General Partner issues to all holders of REIT Shares rights, options,
warrants or convertible or exchangeable securities entitling the shareholders
to subscribe for or purchase REIT Shares or any other securities or property
(collectively, the "rights"), then the Value of a REIT Share shall include
the value of such rights, as determined by the board of directors of the
General Partner acting in good faith on the basis of such quotations and
other information as it considers, in its reasonable judgment, appropriate.
ARTICLE II - ORGANIZATIONAL MATTERS
Section 2.1. Continuation of Partnership
The Partners hereby continue the Partnership as a limited
partnership pursuant to the provisions of the Act and upon the terms and
conditions set forth in this Agreement. Except as expressly provided herein
to the contrary, the rights and obligations of the Partners and the
administration and termination of the Partnership shall be governed by the
Act. The Partnership Interest of each Partner shall be personal property for
all purposes.
Section 2.2. Name
The name of the Partnership is Agree Limited Partnership. The
General Partner in its sole and absolute discretion may change the name of
the Partnership at any time and from time to time and shall notify the
Limited Partners of such change in the regular communication to the Limited
Partners next succeeding the effectiveness of the change of name.
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Section 2.3. Principal Office and Registered Agent
The principal office of the Partnership is ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or such other place as the General
Partner may from time to time designate by notice to the Limited Partners.
The registered agent of the Partnership is The ▇▇▇▇▇▇▇▇-▇▇▇▇ Corporation
Systems, Inc., ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or
such other Person as the General Partner may from time to time designate. The
Partnership may maintain offices at such other place or places within or
outside the State of Delaware as the General Partner deems advisable.
Section 2.4. Power of Attorney
A. Each Limited Partner irrevocably constitutes and appoints
the General Partner, the Liquidator, and the authorized officers and
attorneys-in-fact of each, and each of those acting singly, in each case with
full power of substitution, as its true and lawful agent and
attorney-in-fact, with full power and authority in its name, place and stead
to:
(1) execute, swear to, acknowledge, deliver, file and
record in the appropriate public offices (a) all
certificates, documents and other instruments
(including, without limitation, the Certificate
and all amendments or restatements of this Agree-
ment or the Certificate) that the General Partner
or the Liquidator deems appropriate or necessary
to qualify or continue the existence or qualifica-
tion of the Partnership as a limited partnership
(or a partnership in which the limited partners
have a limited liability) in the State of Delaware
and in all other jurisdictions in which the Part-
nership may conduct business or own property; (b)
all instruments that the General Partner deems
appropriate or necessary to reflect any amendment,
change, modification or restatement of this Agree-
ment or the Certificate made in accordance with
the terms of this Agreement; (c) all conveyances
and other instruments or documents that the Gener-
al Partner or the Liquidator, as the case may be,
deems appropriate or necessary to reflect the
dissolution and liquidation of the Partnership
pursuant to the terms of this Agreement, includ-
ing, without limitation, a certificate of cancel-
lation; and (d) all instruments relating to the
Capital Contribution of any Partner or the admis-
sion, withdrawal, removal or substitution of any
Partner made pursuant to the terms of this Agree-
ment; and
(2) execute, swear to, acknowledge and file all bal-
lots, consents, approvals, waivers, certificates
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and other instruments appropriate or necessary, in the
sole and absolute discretion of the General Partner, to
make, evidence, give, confirm or ratify any vote,
consent, approval, agreement or other action which is
made or given by the Partners hereunder or is
consistent with the terms of this Agreement or
appropriate or necessary, in the sole and absolute
discretion of the General Partner, to effectuate the
terms or intent of this Agreement.
Nothing contained herein shall be construed as authorizing the
General Partner to amend this Agreement except in accordance with Article
XIII hereof or as may be otherwise expressly provided for in this Agreement.
B. The foregoing power of attorney is hereby declared to be
irrevocable and a special power coupled with an interest, and it shall
survive and not be affected by the subsequent Incapacity of any Limited
Partner or the transfer of all or any portion of such Limited Partner's
Partnership Interest and shall extend to such Limited Partner's heirs,
successors, assigns and personal representatives. Each Limited Partner hereby
agrees to be bound by any representation made by the General Partner, acting
in good faith pursuant to such power of attorney; and each Limited Partner
hereby waives any and all defenses which may be available to contest, negate
or disaffirm the action of the General Partner, taken in good faith under
such power of attorney. Each Limited Partner shall execute and deliver to the
General Partner or the Liquidator, within fifteen (15) days after receipt of
the General Partner's or Liquidator's request therefor, such further
designation, powers of attorney and other instruments as the General Partner
or the Liquidator, as the case may be, deems necessary to effectuate this
Agreement and the purposes of the Partnership.
Section 2.5. Term
The term of the Partnership commenced on April 4, 1994, and shall
continue until December 31, 2094, unless it is dissolved sooner pursuant to
the provisions of Article XII or as otherwise provided by law.
ARTICLE III - PURPOSE
Section 3.1. Purpose and Business
The purpose and nature of the business to be conducted by the
Partnership is (i) to acquire, hold, own, develop, construct, improve,
maintain, operate, sell, lease, transfer, encumber, convey, exchange, and
otherwise dispose of or deal with real and personal property of all kinds;
(ii) to enter into any partnership, joint venture or other similar
arrangement to engage in any of the foregoing; to own interests in any entity
engaged in any of the foregoing; and to exercise all of the powers of an
owner
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in any such entity or interest; (iii) to conduct any business that may be
lawfully conducted by a limited partnership organized pursuant to the Act;
and (iv) to do anything necessary, appropriate, proper, advisable, desirable,
convenient or incidental to the foregoing; provided, however, that such
business shall be limited to and conducted in such a manner as to permit the
General Partner at all times to qualify as a REIT, unless the General Partner
voluntarily terminates its REIT status pursuant to its Articles of
Incorporation.
Section 3.2. Powers
Subject to all of the terms, covenants, conditions and limitations
contained in this Agreement and any other agreement entered into by the
Partnership, the Partnership shall have full power and authority to do any
and all acts and things necessary, appropriate, proper, advisable, desirable,
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, including, without limitation, full power and authority,
directly or through its ownership interest in other entities, to enter into,
perform and carry out contracts of any kind, borrow money and issue evidences
of indebtedness, whether or not secured by mortgage, deed or trust, pledge or
other lien, and acquire and develop real property; provided, however, that
the Partnership shall not take, or refrain from taking, any action which, in
the judgment of General Partner, in its sole and absolute discretion, (i)
could adversely affect the ability of the General Partner to achieve or
maintain qualification as a REIT, (ii) could subject the General Partner to
any additional taxes under Section 857 or Section 4981 of the Code, or (iii)
could violate any law or regulation of any governmental body or agency having
jurisdiction of the General Partner or its securities, unless such action (or
inaction) shall have been specifically consented to by the General Partner in
writing.
ARTICLE IV - CAPITAL CONTRIBUTIONS AND CAPITAL ACCOUNTS
Section 4.1. Capital Contribution of the Partners
A. Concurrently herewith, the General Partner shall
contribute to the capital of the Partnership in cash the dollar amount set
forth on Exhibit A in exchange for the Partnership Interest set forth on
Exhibit A.
B. Concurrently herewith, each Property Partnership shall
cause the Property owned by such Property Partnership, along with the other
assets owned by such Property Partnership, to be contributed to the
Partnership in accordance with the terms of the Contribution Agreements. Upon
the Partnership's acquisition of any Property, whether by reason of the
merger of any Property Partnership into the Partnership or the conveyance of
such Property by any Property Partnership to the Partnership, Persons
receiving Partnership Units in exchange for their inter-
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ests in the Property Partnership merging into the Partnership or the Property
Partnership conveying its Property to the Partnership shall become Limited
Partners in the Partnership and shall be deemed to have made a Capital
Contribution as determined by application of the provisions of the
Contribution Agreements in the amount set forth on Exhibit A opposite such
Persons' names and shall own the Partnership Units and Partnership Interests
set forth on Exhibit A opposite such Persons' names.
C. In the event that the Underwriters exercise their
overallotment option in connection with the Offering, the General Partner
shall contribute any additional funds received by it from the exercise of the
overallotment option to the Partnership in exchange for an additional
Partnership Interest. Upon such contribution, the Partnership Interests of
the Partners shall be adjusted as set forth in Section 4.2.A (with the Deemed
Value of the Partnership calculated for this purpose using the public
offering price as the Value of a REIT Share). The number of Partnership Units
owned by the Limited Partners shall not be decreased in connection with any
additional contribution of funds to the Partnership by the General Partner
pursuant to this Section 4.1.C.
D. The Partners shall own Partnership Units in the amounts
set forth on Exhibit A and shall have Partnership Interests in the
Partnership as set forth on Exhibit A, which Partnership Units and
Partnership Interests shall be adjusted on Exhibit A from time to time by the
General Partner to the extent necessary to reflect accurately redemptions,
exercises of Rights, Capital Contributions, transfers of Partnership
Interests, admissions of Additional Limited Partners or similar events. The
General Partner is authorized on behalf of each of the Partners to amend this
Agreement to reflect each such adjustment, and the General Partner shall
promptly deliver a copy of each such amendment to each Limited Partner. The
Limited Partners shall have no obligation to make any additional Capital
Contributions or loans to the Partnership.
E. The interest of each Limited Partner in Partnership
Units shall be evidenced by one or more certificates in such form as the
General Partner may from time to time prescribe. Upon surrender to the
General Partner of a certificate evidencing the ownership of Partnership
Units accompanied by proper evidence of authority to transfer, the General
Partner shall cancel the old certificate, issue a new certificate to the
Person entitled thereto and record the transaction upon its books. The
transfer of Partnership Units may be effectuated only in connection with a
transfer of a Limited Partnership Interest pursuant to the terms of Section
8.6 or Article 11 hereof. The General Partner may issue a new certificate or
certificates in place of any certificate or certificates previously issued,
which previously-issued certificate or certificates are alleged to have been
lost, stolen or destroyed, upon the making of an affidavit of that fact by
the owner claiming the certificate or certificates to be lost, stolen
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or destroyed. When issuing such new certificate or certificates, the General
Partner may, in its discretion and as a condition precedent to the issuance
thereof, require the owner of such lost, stolen or destroyed certificate or
certificates, or its legal representative, to give the Partnership a bond in
such a sum as the General Partner may reasonably direct as indemnity against
any claim that may be made against the Partnership with respect to the
certificate or certificates alleged to have been lost, stolen or destroyed.
Section 4.2. Issuance of Additional Partnership Interests
A. At any time after the date hereof, without the consent
of any Partner, the General Partner may, upon its determination that the
issuance of additional Partnership Interests is in the best interests of the
Partnership and upon no less than fifteen (15) days prior written notice to
the Limited Partners, cause the Partnership to issue Partnership Interests
to, and admit as a limited partner in the Partnership, any Person (an
"Additional Limited Partner") in exchange for the contribution by such Person
of cash and/or property in such amounts as is determined appropriate by the
General Partner to further the purposes of the Partnership under Section 3.1
hereof. In the event that an Additional Limited Partner is admitted to the
Partnership pursuant to this Section 4.2, the Partnership Interest issued to
such Additional Limited Partner shall be in an amount such that:
(1) the Partnership Interest of such Additional Limit-
ed Partner is equal to a fraction, the numerator
of which is equal to the total dollar amount of
the cash contributed and/or the Net Asset Value of
the property contributed by the Additional Limited
Partner as of the date of contribution to the
Partnership (the "Contribution Date") and the
denominator of which is equal to the sum of (i)
the Deemed Value of the Partnership (computed as
of the Business Day immediately preceding the
Contribution Date) and (ii) the total dollar
amount of the cash contributed and/or the Net
Asset Value of the property contributed by the
Additional Partner as of the Contribution Date;
and
(2) the Partnership Interests of each Partner other
than the Additional Limited Partner shall be re-
duced, as of the Contribution Date, such that the
Partnership Interest of each such Partner shall be
equal to a fraction, the numerator of which is
equal to the Deemed Partnership Interest Value of
such Partner (computed as of the Business Day
immediately preceding the Contribution Date) and
the denominator of which is equal to the sum of
(i) the Deemed Value of the Partnership (computed
as of the Business Day immediately preceding the
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Contribution Date) and (ii) the total dollar amount of
the cash contributed and/or Net Asset Value of the
property contributed by the Additional Limited Partner
as of the Contribution Date.
The General Partner shall be authorized on behalf of each of
the Partners to amend this Agreement to reflect the admission of any
Additional Limited Partner and any reduction of the Partnership Interests of
the other Partners in accordance with the provisions of this Section 4.2, and
the General Partner shall promptly deliver a copy of such amendment to each
Limited Partner.
The number of Partnership Units owned by the Limited Partners
shall not be decreased in connection with any admission of an Additional
Limited Partner pursuant to this Section 4.2. An Additional Limited Partner
that acquires a Partnership Interest pursuant to this Section 4.2 shall not
acquire any Partnership Units, and shall not acquire any interest in, and may
not exercise or otherwise participate in, any Rights pursuant to Sections 8.4
or 11.3.C. Notwithstanding anything to the contrary contained in the
immediately preceding sentence, the General Partner may (but is not required
to) grant to an Additional Limited Partner the right to dispose of its
Partnership Interest, and may create in the General Partner the right to
acquire such Partnership Interest, including, in either case, by exchange for
REIT Shares, upon such terms and conditions as are deemed appropriate by the
General Partner.
B. The Partnership shall from time to time issue to the
General Partner additional Partnership Interests or securities, rights,
options or warrants of the Partnership in such classes and having such
designations, preferences and other rights (including preferences and rights
senior to the existing Partnership Interests) as shall be determined by the
General Partner in accordance with the Act and this Agreement. Any such
issuance of Partnership Interests, securities, rights, options or warrants to
the General Partner shall be conditioned upon (i) the undertaking by the
General Partner of a related issuance of REIT Shares or other securities
having designations, rights and preferences such that the economic rights of
the holders of such REIT Shares or other securities are substantially similar
to the rights of the additional Partnership Interests, securities, rights,
options or warrants issued to the General Partner, and the General Partner
making a Capital Contribution in an amount equal to the net proceeds raised
in the issuance of such REIT Shares or other securities, (ii) the issuance by
the General Partner of REIT Shares pursuant to Section 8.4 or 11.3.C, or
(iii) the issuance by the General Partner of REIT Shares under any stock
option or bonus plan, and the General Partner making a Capital Contribution
in an amount equal to the exercise price of the option exercised by any
employee pursuant to such stock option or other bonus plan.
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C. The General Partner shall not issue (i) any additional
REIT Shares, or (ii) any preferred stock or rights, options or warrants
containing the right to subscribe for or purchase REIT Shares or securities
convertible or exchangeable into REIT Shares (collectively, "Additional REIT
Securities"), other than to all holders of REIT Shares, pro rata, unless (x)
the Partnership issues to the General Partner (i) Partnership Interests, or
(ii) securities, rights, options or warrants of the Partnership having
designations, preferences and other rights, including, if applicable, the
right to subscribe for or purchase Partnership Interests or securities
convertible or exchangeable into Partnership Interests, such that the General
Partner receives an economic interest in the Partnership substantially
similar to the economic interest in the General Partner represented by the
Additional REIT Securities, and (y) except with respect to an issuance of
REIT Shares pursuant to Section 8.4 or 11.3.C, the General Partner
contributes the net proceeds from the issuance of such additional REIT Shares
or Additional REIT Securities, as the case may be, and from the exercise of
any rights contained in any Additional REIT Securities to the Partnership.
D. If the General Partner establishes a stock option plan
and stock options granted in connection with such plan are exercised, or if
the General Partner issues Additional REIT Securities and any such Additional
REIT Securities are exercised, converted or exchanged for REIT Shares:
(1) the General Partner shall, as soon as practicable after
such exercise, conversion or exchange, contribute to
the capital of the Partnership an amount equal to the
price paid to the General Partner by the exercising
party; and
(2) the General Partner shall, as of the date on which
the acquisition of the REIT Shares is consummated
by such exercising party, be deemed to have con-
tributed to the Partnership an amount equal to the
Value (computed as of the Business Day immediately
preceding the date on which such acquisition of
REIT Shares is consummated by such exercising
party) of the REIT Shares delivered by the General
Partner to such exercising party.
E. Except as provided in Section 8.6 or 11.3.C., effective
upon the General Partner making, or being deemed to have made, a Capital
Contribution to the Partnership pursuant to clause B, C or D of this Section
4.2 other than with respect to the issuance by the General Partner of any
Additional REIT Securities, and effective upon the General Partner making, or
being deemed to have made, a Capital Contribution to the Partnership upon the
exercise, conversion or exchange of any Additional REIT Securities, the
General Partner shall receive an additional Partnership Interest such that:
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(1) the Partnership Interest of each Limited Partner
shall be equal to a fraction, the numerator of
which is equal to the Deemed Partnership Interest
Value of such Limited Partner (computed as of the
Business Day immediately preceding the date of
such contribution) and the denominator of which is
equal to the sum of (i) the Deemed Value of the
Partnership (computed as of the Business Day imme-
diately preceding the date of such contribution)
and (ii) the amount contributed, or deemed con-
tributed, by the General Partner on such date; and
(2) the Partnership Interest of the General Partner
shall be equal to a fraction, the numerator of
which is equal to the sum of (i) the Deemed Part-
nership Interest Value of the General Partner
(computed as of the Business Day immediately pre-
ceding the date of such contribution) and (ii) the
amount contributed, or deemed contributed, by the
General Partner on such date and the denominator
of which is equal to the sum of (x) the Deemed
Value of the Partnership (computed as of the Busi-
ness Day immediately preceding the date of such
contribution) and (y) the amount contributed, or
deemed contributed, by the General Partner.
The number of Partnership Units owned by the Limited Partners shall
not be decreased in connection with any additional contribution to the
Partnership by the General Partner pursuant to this Section 4.2.
Section 4.3. No Preemptive Rights
No Person shall have any preemptive, preferential or other similar
right with respect to the making of additional Capital Contributions or loans
to the Partnership.
Section 4.4. Capital Accounts.
A. The Partnership shall maintain for each Partner a
separate Capital Account in accordance with the rules of Regulations Section
1.704-1(b)(2)(iv). Such Capital Account shall be increased by (i) the amount
of all Capital Contributions made, or deemed to have been made, by such
Partner to the Partnership pursuant to this Agreement and (ii) all items of
Partnership income and gain (including income and gain exempt from tax)
computed in accordance with clause B hereof and allocated to such Partner
pursuant to Sections 6.1.A and 6.4 of this Agreement, and decreased by (x)
the amount of cash and the Net Asset Value of other property distributed to
such Partner pursuant to this Agreement (including, in the case of the
General Partner, payments of REIT Expenses by the Partnership) and (y) all
items of Partnership deduction and loss computed in accordance with clause
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B hereof and allocated to such Partner pursuant to Sections 6.1.B and 6.4 of
this Agreement.
B. For purposes of computing the amount of any item of
income, gain, deduction or loss to be reflected in the Partners' Capital
Accounts, unless otherwise specified in this Agreement, the determination,
recognition and classification of any such item shall be the same as its
determination, recognition and classification for federal income tax purposes
determined in accordance with Section 703(a) of the Code (for this purpose
all items of income, gain, loss or deduction required to be stated separately
pursuant to Section 703(a)(1) of the Code shall be included in taxable income
or loss), with the following adjustments:
(1) Except as otherwise provided in Regulations Section
1.704-1(b)(2)(iv)(m), the computation of all items of
income, gain, loss and deduction shall be made without
regard to any election under Section 754 of the Code
which may be made by the Partnership.
(2) The computation of all items of income, gain, loss and
deduction shall be made without regard to the fact that
items described in Sections 705(a)(1)(B) or
705(a)(2)(B) of the Code are not includable in gross
income or are neither currently deductible nor
capitalized for federal income tax purposes.
(3) Any income, gain or loss attributable to the taxable
disposition of any Partnership property shall be
determined as if the adjusted basis of such property as
of such date of disposition were equal in amount to the
Partnership's Carrying Value with respect to such
property as of such date.
(4) In lieu of the depreciation, amortization, and other
cost recovery deductions taken into account in
computing such taxable income or loss, there shall be
taken into account Depreciation for such fiscal year.
(5) In the event the Carrying Value of any Partnership
Assets are adjusted pursuant to clause D hereof,
Capital Accounts shall be adjusted to reflect the
aggregate net adjustments as if the Partnership
sold all of its properties for their fair market
values and recognized gain or loss for Federal
income tax purposes equal to the amounts of such
aggregate net adjustment.
(6) Any items specially allocated under Section 6.5 hereof
shall not be taken into account.
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C. Generally, a transferee of a Partnership Interest shall
succeed to a pro rata portion of the Capital Account of the transferor;
provided, however, that, if the transfer causes a termination of the
Partnership under Section 708(b)(1)(B) of the Code, the Partnership's
properties shall be deemed to have been distributed in liquidation of the
Partnership to the Partners (including the transferee of a Partnership
Interest) and recontributed by such Partners in reconstitution of the
Partnership. In such event, the Carrying Values of the Partnership properties
shall be adjusted immediately prior to such deemed distribution pursuant to
clause D(2) hereof. The Capital Accounts of such reconstituted Partnership
shall be maintained in accordance with the principles of this Section 4.4.
D. (1) Consistent with the provisions of Regulations
Section 1.704-(b)(2)(iv)(f), and as provided in
clause D(2), the Carrying Values of all Partner-
ship assets shall be adjusted upward or downward
to reflect any Unrealized Gain or Unrealized Loss
attributable to such Partnership property, as of
the times of the adjustments provided in clause
D(2) hereof, as if such Unrealized Gain or Unreal-
ized Loss had been recognized on an actual sale of
each such property and allocated pursuant to Sec-
tion 6.1 of this Agreement.
(2) Such adjustments shall be made as of the following
times: (a) immediately prior to the acquisition
of an additional interest in the Partnership by
any new or existing Partner in exchange for more
than a de minimis Capital Contribution; (b) imme-
diately prior to the distribution by the Partner-
ship to a Partner of more than a de minimis amount
of property as consideration for an interest in
the Partnership; and (c) immediately prior to the
liquidation of the Partnership within the meaning
of Regulations Section 1.704-1(b)(2)(ii)(g).
(3) In accordance with Regulations Section 1.704-
1(b)(2)(iv)(e) the Carrying Value of Partnership
assets distributed in kind shall be adjusted up-
▇▇▇▇ and downward to reflect any Unrealized Gain
or Unrealized Loss attributable to such Partner-
ship property, as of the time any such asset is
distributed.
(4) In determining such Unrealized Gain or Unrealized
Loss the aggregate cash amount and fair market
value of all Partnership assets (including cash or
cash equivalents) shall be determined by the Gen-
eral Partner using such reasonable method of valu-
ation as it may adopt, or in the case of a liqui-
dating distribution pursuant to Article XIII of
this Agreement, be determined and allocated by the
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Liquidator using such reasonable methods of valuation
as it may adopt. The General Partner, or the
Liquidator, as the case may be, shall allocate such
aggregate value among the assets of the Partnership (in
such manner as it determines in its sole and absolute
discretion to arrive at a fair market value for
individual properties).
E. The provisions of this Agreement relating to the
maintenance of Capital Accounts are intended to comply with Regulations
Section 1.704-1(b) and shall be interpreted and applied in a manner
consistent with such Regulations. In the event the General Partner shall
determine that it is prudent to modify the manner in which the Capital
Accounts, or any debits or credits thereto (including, without limitation,
debits or credits relating to liabilities which are assumed by the
Partnership, the General Partner, or the Limited Partners) are computed in
order to comply with such Regulations, the General Partner may make such
modification, provided that it is not likely to have a material effect on the
amounts distributable to any Person pursuant to Article XIII of this
Agreement upon the dissolution of the Partnership. The General Partner also
shall (i) make any adjustments that are necessary or appropriate to maintain
equality between the Capital Accounts of the Partners and the amount of
Partnership Capital reflected on the Partnership's balance sheet, as computed
for book purposes, in accordance with Regulations Section 1.704-1(b)(iv)(q),
and (ii) make any appropriate modifications in the event unanticipated events
might otherwise cause this Agreement not to comply with Regulations Section
1.704-1(b).
Section 4.5. Return of Capital Account; Interest.
Except as otherwise specifically provided in this Agreement, (i) no
Partner shall have any right to withdraw or reduce its Capital Contributions
or Capital Account or to demand and receive property other than cash from the
Partnership in return for its Capital Contributions or Capital Account; (ii)
no Partner shall have any priority over any other Partner as to the return of
its Capital Contributions or Capital Account; (iii) any return of Capital
Contributions or Capital Accounts to the Partners shall be solely from the
assets of the Partnership, and no Partner shall be personally liable for any
such return; and (iv) no interest shall be paid by the Partnership on Capital
Contributions or on balances in Partners' Capital Accounts.
ARTICLE V - DISTRIBUTIONS
Section 5.1. Initial Partnership Distributions
As soon as practicable after the execution of this Agreement, the
Partnership shall return to the General Partner and ▇▇▇▇▇▇▇ Agree the initial
capital contributions of Ten Dollars ($10) and Nine Hundred Ninety Dollars
($990), respectively, previously made by such Partners to the Partnership.
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Section 5.2. Requirement and Characterization of Distributions
The General Partner shall cause the Partnership to distribute
quarterly all, or such portion deemed appropriate by the General Partner, of
Available Cash generated by the Partnership during such quarter to the
Partners who are Partners on the Partnership Record Date with respect to such
quarter in accordance with their respective Partnership Interests on such
Partnership Record Date. The General Partner shall take such reasonable
efforts, as determined by it in its sole and absolute discretion and
consistent with its qualification as a REIT, to distribute Available Cash to
the Limited Partners so as to preclude any such distribution or portion
thereof from being treated as part of a sale of property to the Partnership
by a Limited Partner under Section 707 of the Code or the Regulations
thereunder. Notwithstanding the foregoing, the General Partner shall use its
best efforts to cause the Partnership to distribute sufficient amounts to
enable the General Partner to pay shareholder dividends that will (i) allow
the General Partner to achieve and maintain qualification as a REIT, and (ii)
avoid the imposition of any additional taxes under Section 857 or Section
4981 of the Code.
Section 5.3. Amounts Withheld
All amounts withheld pursuant to the Code or any provisions of any
state or local tax law and Section 10.5 hereof with respect to any
allocation, payment or distribution to a Partner shall be treated as amounts
distributed to such Partner pursuant to Section 5.2 for all purposes of this
Agreement.
Section 5.4. Distributions Upon Liquidation
Proceeds from a Terminating Capital Transaction shall be distributed
to the Partners in accordance with Section 12.2.
ARTICLE VI - ALLOCATIONS
Section 6.1 Allocations For Capital Account Purposes
For purposes of maintaining the Capital Accounts and in determining
the rights of the Partners among themselves, the Partnership's items of
income, gain, loss and deduction (computed in accordance with Section 4.4
hereof) shall be allocated among the Partners in each taxable year (or
portion thereof) as provided herein below.
A. Net Income. After giving effect to the special
allocations set forth in Section 6.4 hereof, Net Income shall be
allocated (i) first, to the General Partner to the extent that
Net Losses previously allocated to the General Partner pursuant
to the last sentence of Section 6.1.B exceed Net Income previous-
ly allocated to the General Partner pursuant to this clause (i)
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of Section 6.1.A, and (ii) thereafter, Net Income shall be allocated to the
Partners in accordance with their respective Partnership Interests.
B. Net Losses. After giving effect to the special
allocations set forth in Section 6.4 hereof, Net Losses shall be allocated to
the Partners in accordance with their respective Partnership Interests,
provided that Net Losses shall not be allocated to any Limited Partner
pursuant to this Section 6.1.B to the extent that such allocation would cause
such Limited Partner to have an Adjusted Capital Account Deficit at the end
of such taxable year (or increase any existing Adjusted Capital Account
Deficit). All Net Losses in excess of the limitations set forth in this
Section 6.1.B shall be allocated to the General Partner.
Section 6.2 Allocation of Nonrecourse Debt
For purposes of Regulations Section 1.752-3(a), the Partners agree
that Nonrecourse Liabilities of the Partnership in excess of the sum of (i)
the amount of Partnership Minimum Gain and (ii) the total amount of
Nonrecourse Built-in Gain shall be allocated among the Partners in accordance
with their respective Partnership Interests.
Section 6.3 Reserved.
Section 6.4 Special Allocation Rules.
Notwithstanding any other provision of this Agreement, the following
special allocations shall be made:
A. Minimum Gain Chargeback. Notwithstanding any other
provision of this Agreement (including Section 6.1 above), if there is a net
decrease in Partnership Minimum Gain during any fiscal year (except to the
extent attributable to certain conversions and refinancings of Partnership
indebtedness, certain capital contributions or certain revaluations of the
Partnership property as further described in Regulations Sections 1.704-
2(d)(4), 1.704-2(f)(2) or 1.704-2(f)(3)), each Partner shall be specifically
allocated items of Partnership income and gain for such year (and, if
necessary, subsequent years) in an amount equal to such Partner's share of
the net decrease in Partnership Minimum Gain, as determined under Regulations
Section 1.704-2(g). Allocations pursuant to the previous sentence shall be
made in proportion to the respective amounts required to be allocated to each
Partner pursuant thereto. The items to be so allocated shall be determined in
accordance with Regulations Section 1.704-2(f)(6) and 1.704-2(j)(2). This
Section 6.4.A is intended to comply with the minimum gain chargeback
requirements in Regulations Section 1.704-2(f).
B. Partner Minimum Gain Chargeback. Notwithstanding
any other provision of this Agreement (including Section 6.1
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above but excluding Section 6.4.A, which shall be applied before this Section
6.4.B), if there is a net decrease in Partner Minimum Gain attributable to a
Partner Nonrecourse Debt during any fiscal year (except to the extent
attributable to certain conversions and refinancings of Partnership
indebtedness, certain capital contributions or certain revaluations of the
Partnership property as further described in Regulations Sections 1.704-
2(i)(3) and 1.704-2(i)(4)), each Partner who has a share of the Partner
Minimum Gain attributable to such Partner Nonrecourse Debt, determined in
accordance with Regulations Section 1.704-2(i)(5), shall be specifically
allocated items of Partnership income and gain for such year (and, if
necessary, subsequent years) in an amount equal to such Partner's share of
the net decrease in Partner Minimum Gain attributable to such Partner
Nonrecourse Debt, determined in accordance with Regulations Section
1.704-2(i)(5). Allocations pursuant to the previous sentence shall be made in
proportion to the respective amounts required to be allocated to each Partner
pursuant thereto. The items to be so allocated shall be determined in
accordance with Regulations Sections 1.704-2(i)(4) and 1.704-2(j)(2). This
Section 6.4.B is intended to comply with the minimum gain chargeback
requirement in such Section of the Regulations and shall be interpreted
consistently therewith.
C. Qualified Income Offset. In the event any Partner
unexpectedly receives any adjustments, allocations or distributions
described in Regulations Sections 1.704-1(b)(2)(ii)(d)(4),
1.704-1(b)(2)(ii)(d)(5), or 1.704-1(b)(2)(ii)(d)(6), and after giving effect
to the allocations required under Sections 6.4.A and 6.4.B hereof, such
Partner has an Adjusted Capital Account Deficit, items of Partnership income
and gain shall be specifi- cally allocated to such Partner in an amount and
manner suffi- cient to eliminate, to the extent required by the Regulations,
its Adjusted Capital Account Deficit created by such adjustments, allocations
or distributions as quickly as
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possible. This Section 6.4.C is intended to constitute a "qualified income
offset" under Regulation Section 1.704-1(b)(2)(ii)(d) and shall be
interpreted consistently therewith.
D. Nonrecourse Deductions. Nonrecourse Deductions for any
taxable period shall be allocated to the Partners in accordance with their
respective Partnership Interests. If the General Partner determines, in its
good faith discretion, that the Partnership's Nonrecourse Deductions must be
allocated in a different ratio to satisfy the safe harbor requirements of the
Regulations promulgated under Section 704(b) of the Code, the General Partner
is authorized, upon notice to the Limited Partners, to revise the prescribed
ratio to the numerically closest ratio which does satisfy such requirements.
E. Partner Nonrecourse Deductions. Any Partner
Nonrecourse Deductions for any fiscal year shall be specifically allocated to
the Partner(s) who bear(s) the economic risk of loss with respect to the
Partner Nonrecourse Debt to which such Partner Nonrecourse Deductions are
attributable in accordance with Regulations Section 1.704-2(b)(4) and
1.704-2(i).
F. Code Section 754 Adjustments. To the extent an
adjustment to the adjusted tax basis of any Partnership asset pursuant to
Section 734(b) or 743(b) of the Code is required, pursuant to Regulations
Section 1.704-1(b)(2)(iv)(m), to be taken into account in determining Capital
Accounts, the amount of such adjustment to the Capital Accounts shall be
treated as an item of gain (if the adjustment increases the basis of asset)
or loss (if the adjustment decreases such basis), and such item of gain or
loss shall be specially allocated to the Partners in a manner consistent with
the manner in which their Capital Accounts are required to be adjusted
pursuant to such Section of the Regulations.
G. Sections 1245/1250 Recapture. If any portion of gain
from the sale of property is treated as Recapture Income, then (A) such
Recapture Income shall be allocated among the Partners in the same proportion
that the depreciation and amortization deductions giving rise to the
Recapture Income were allocated, and (B) other tax items of gain of the same
character that would have been recognized, but for the application of Code
Sections 1245 and/or 1250, shall be allocated away from those Partners who
are allocated Recapture Income pursuant to clause (A) so that, to the extent
possible, the other Partners are allocated the same amount, and type, of gain
that would have been allocated to them had Code Sections 1245 and/or 1250 not
applied. For purposes hereof, in order to determine the proportionate
allocations of depreciation and amortization deductions for each fiscal year
or other applicable period, such deductions shall be deemed allocated on the
same basis as Net Income and Net Loss for such respective period.
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H. Distributions of Proceeds of Nonrecourse Liabilities.
To the extent permitted by Regulations Sections 1.704-2(h)(3) and
1.704-2(i)(6), the General Partner shall treat a distribution made from the
proceeds of a nonrecourse liability as not allocable to an increase in
Partnership (or Partner) Minimum Gain to the extent the distribution does not
cause or increase a deficit balance in any Partner's Capital Account that
exceeds the amount such Partner is obligated to restore (within the meaning
of Regulations Section 1.704-1(b)(2)(ii)(c)) as of the end of the
Partnership's taxable year in which the distribution occurs.
I. REIT Expenses. The General Partner shall be
allocated an amount of gross income equal to the REIT Expenses.
Section 6.5 Allocations for Tax Purposes
A. Except as otherwise provided in this Section 6.5, for
federal income tax purposes, each item of income, gain, loss and deduction
shall be allocated among the Partners in the same manner as its correlative
item of "book" income, gain, loss or deduction is allocated pursuant to
Sections 6.1 and 6.4 of this Agreement.
B. Notwithstanding any other provision in this Agreement,
items of income, gain, loss, and deduction attributable to a Contributed
Property or an Adjusted Property, shall, in accordance with Sections 704(b)
and 704(c), be allocated solely for federal income tax purposes (and not for
"book" purposes) among the Partners as follows:
(1) In the case of a Contributed Property, such items
attributable thereto shall be allocated among the
Partners in a manner prescribed by Section 704(c)
of the Code and the Regulations thereunder so as
to take into account the variation between the
Gross Asset Value of such property and its adjust-
ed basis at the time of contribution;
(2) In the case of an Adjusted Property, such items
shall be allocated among the Partners in a manner
prescribed by Sections 704(b) and 704(c) of the
Code and the Regulations thereunder so as to take
into account any variation between the adjusted
basis of such asset for federal income tax purpos-
es and the Carrying Value of such asset as of the
time of the last adjustment under Section
4.4.B.(5) hereof;
(3) In furtherance of the foregoing, the Partnership shall
employ the method prescribed in Regulation Section
1.704-3(b) (the "traditional method") or the equivalent
successor provision(s) of proposed, temporary or final
Regulations; and
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(4) Any deductions attributable to prepayment penal-
ties or other fees and expenses taken into account
in determining the Net Asset Value of any Contrib-
uted Property shall be allocated to the Partners
who (directly or indirectly) contributed the Con-
tributed Property in accordance with the manner in
which they bear the economic cost of the amounts
giving rise to such deductions.
C. Except as provided in Regulations Section
1.704-1(b)(2)(iv)(m), the adjustment to the adjusted tax basis of any
Partnership asset pursuant to Section 734(b) or 743(b) of the Code shall
affect the amount of income, gain, deduction or loss of the Partnership only
for federal (and, if applicable, state or local) income tax purposes, and,
with respect to an adjustment under section 743(b), shall be allocated
entirely to the transferee of the Partnership units so transferred.
D. If any Partner sells or otherwise disposes of any
property, directly or indirectly, to the Partnership, and, as a result
thereof, gain on a subsequent disposition of such property by the Partnership
is reduced pursuant to Section 267(d) of the Code, then, to the extent
permitted by applicable law, gain for federal income tax purposes
attributable to such subsequent disposition shall first be allocated among
the Partners other than the original selling Partner in an amount equal to
such Partner's allocations of "book" gain on the property pursuant to
Sections 6.1 and 6.4 hereof and only the remaining gain, if any, for federal
income tax purposes shall be allocated to the selling Partner.
ARTICLE VII - MANAGEMENT AND OPERATIONS OF BUSINESS
Section 7.1 Management
A. Except as otherwise expressly provided in this
Agreement, all management powers over the business and affairs of the
Partnership are exclusively vested in the General Partner, and no Limited
Partner shall have any right to participate in or exercise control or
management power over the business and affairs of the Partnership. The
General Partner may not be removed by the Limited Partners with or without
cause. In addition to the powers now or hereafter granted a general partner
of a limited partnership under applicable law or which are granted to the
General Partner under any other provision of this Agreement, the General
Partner, subject to Section 7.3 hereof, shall have full power and authority
to do all things and perform all acts specified in this Agreement or
otherwise deemed necessary or desirable by it to conduct the business of the
Partnership, to exercise all Partnership powers set forth in Section 3.2
hereof and to effectuate the Partnership purposes set forth in Section 3.1
hereof.
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B. No Limited Partner (other than any officer, director,
employee, partner, agent or trustee of the General Partner, the Partnership
or any of their Affiliates, in his, her or its capacity as such) shall take
part in the operation, management or control (within the meaning of the Act)
of the Partnership's business, transact any business in the Partnership's
name or have the power to sign documents for or otherwise bind the
Partnership. The transaction of any such business by the General Partner, any
of its Affiliates or any officer, director, employee, partner, agent or
trustee of the General Partner, the Partnership or any of their Affiliates,
in their capacity as such, shall not affect, impair or eliminate the
limitations on the liability of the Limited Partners under this Agreement.
C. The Limited Partners acknowledge that the taking
of certain actions hereunder by the General Partner will require the approval
of a majority of the Independent Directors of the General Partner.
Section 7.2 Certificate of Limited Partnership
To the extent that such action is determined by the General Partner
to be necessary or appropriate, the General Partner shall file amendments to
and restatements of the Certificate and do all things necessary or
appropriate to maintain the Partnership as a limited partnership under the
laws of the State of Delaware and each other jurisdiction in which the
Partnership may elect to do business or own property. Subject to the terms of
Section 8.3.A(3) hereof, the General Partner shall not be required, before or
after filing, to deliver or mail a copy of the Certificate or any amendment
thereto to any Limited Partner. The General Partner shall use all reasonable
efforts to cause to be filed such other certificates or documents as may be
reasonable and necessary or appropriate for the continuation, qualification
and operation of a limited partnership in the State of Delaware and any other
jurisdiction in which the Partnership may elect to do business or own
property.
Section 7.3 Restrictions on General Partner's Authority
A. The General Partner may not, without the written
Consent of the Limited Partners, take any of the following actions:
(1) amend, modify or terminate this Agreement other than in
accordance with Article 4, 12, 13 or 14 hereof;
(2) admit a Person as a Partner, except as otherwise
provided in this Agreement;
(3) make a general assignment for the benefit of cred-
itors or appoint or acquiesce in the appointment
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of a custodian, receiver or trustee for all or any
part of the assets of the Partnership;
(4) institute any proceeding for Bankruptcy on behalf
of the Partnership;
(5) sell, exchange, transfer or otherwise dispose of all or
substantially all of the Partnership's assets in a
single transaction or a series of related transactions
(including by way of merger, consolidation or other
combination with any other Person); or
(6) dissolve the Partnership.
Notwithstanding the foregoing, the Consent of the Limited Partners
shall not be required for any action listed above in this Section 7.3.A if,
at the time that the General Partner desires to take such action, the Limited
Partners own, in the aggregate, less than a ten percent (10%) Partnership
Interest.
B. The General Partner shall not have the authority to:
(1) take any action in contravention of this Agreement or
which would make it impossible to carry on the ordinary
business of the Partnership;
(2) possess Partnership property, or assign any rights
in specific Partnership property, for other than a
Partnership purpose;
(3) do any act in contravention of applicable law; or
(4) perform any act that would subject a Limited Partner to
liability as a general partner in any jurisdiction or
any other liability except as provided herein or under
the Act.
Section 7.4. Reimbursement of the General Partner
A. Except as provided in this Section 7.4 and elsewhere in
this Agreement (including the provisions of Articles V and VI regarding
distributions, payments and allocations to which it may be entitled), the
General Partner shall not be compensated for its services as general partner
of the Partnership.
B. The General Partner shall be reimbursed for all of the
General Partner's operating expenses, including, without limitation, costs
and expenses relating to the formation and continuity of existence of the
Partnership and the General Partner, the Offering and the issuance of any
additional Partnership Interests or REIT Shares, costs and expenses
associated with compliance with the periodic reporting requirements and all
other
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rules and regulations of the SEC or any other federal, state or local
regulatory body, salaries payable to officers and employees of the General
Partner, fees and expenses payable to directors of the General Partner, and
all other operating or administrative costs of the General Partner. To the
extent any reimbursements to the General Partner do not constitute payment of
expenses of the Partnership, such amounts shall constitute "REIT Expenses".
Section 7.5. Outside Activities of the General Partner
A. The General Partner shall not directly or indirectly own
any assets or enter into or conduct any business, other than in connection
with the ownership, acquisition and disposition of Partnership Interests as a
General Partner and the management of the business of the Partnership, and
such activities as are incidental thereto; provided, however, that the
General Partner may own such bank accounts or similar instruments as it deems
necessary to carry out its responsibilities contemplated under this Agreement
and its responsibilities to the holders of REIT Shares.
B. In the event the General Partner purchases or otherwise
acquires REIT Shares, then the General Partner shall cause the Partnership to
purchase from it a portion of its Partnership Interest on the same terms that
the General Partner purchased or acquired such REIT Shares.
Section 7.6. Transactions with Affiliates
A. The Partnership may contribute assets and loan funds 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, in its sole and absolute
discretion, believes are desirable, consistent with this Agreement and
applicable law.
B. After the Offering is completed, except as expressly
permitted by this Agreement, no Partner or Affiliate of a Partner shall sell,
transfer or convey any property to, purchase any property from, lend funds to
or borrow funds from, provide services to, or enter into any other
transaction with, the Partnership, directly or indirectly, except pursuant to
transactions that are on terms that are no less favorable to the Partnership
than could be obtained from an unaffiliated third party. Any such transaction
with an Original Limited Partner or with an Affiliate of any such Original
Limited Partner is subject to review and approval by a majority of the
Independent Directors of the General Partner.
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Section 7.7. Indemnification
A. The Partnership shall indemnify each Indemnitee who is
made a party to, or otherwise is involved or is threatened to be involved in,
a proceeding that relates to the operations of the Partnership pursuant to
the terms of this Agreement or to the operations of a Property Partnership
prior to the consummation of the transactions contemplated by the
Contribution Agreements, and shall hold each such Indemnitee harmless against
all judgments, penalties, fines, settlements and expenses (including, without
limitation, attorneys' fees, ERISA excise taxes or penalties) reasonably
incurred by such Indemnitee in connection therewith, to the fullest extent
permitted under the Act, 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 (or omitted) in bad faith or was the
result of active or 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 for
indemnification set forth in this Section 7.7.A. The termination of any
proceeding by conviction or upon a plea of nolo contendere or its equivalent,
or the entry of an order of probation prior to judgment, creates a rebuttable
presumption that the Indemnitee failed to meet the standard of conduct for
indemnification set forth in this Section 7.7.A.
B. The right to indemnification conferred in this Section
7.7 shall be a contract right and shall include the right of each Indemnitee
to be paid by the Partnership the expenses incurred in defending any such
proceeding in advance of its final disposition; provided, however, that the
payment of such expenses in advance of the final disposition of a proceeding
shall be made only upon delivery to the Partnership of (i) a written
affirmation of the Indemnitee of his or her good faith belief that the
standard of conduct necessary for indemnification by the Partnership pursuant
to this Section 7.7 has been met, and (ii) a written undertaking by the
Indemnitee to repay all amounts so advanced if it shall ultimately be
determined that the standard of conduct has not been met.
C. The indemnification provided pursuant to this Section
7.7 shall continue as to a Person who has ceased to have the status of an
Indemnitee pursuant to clause (i) or clause (iii) of the definition of
"Indemnitee" set forth in Article I hereof and shall inure to the benefit of
the heirs, successors, assigns, executors and administrators of any such
Person, and to a Person whose status as an Indemnitee was originally
established pursuant to clause (ii) of such definition and was later
terminated for any reason; provided, however, that except as provided in
Section 7.7.D with respect to proceedings seeking to enforce
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rights to indemnification, the Partnership shall indemnify any such Person
seeking indemnification in connection with a proceeding initiated by such
Person only if such proceeding was authorized by the General Partner.
D. If a claim under Sections 7.7.A, 7.7.B or 7.7.C is not
paid in full by the Partnership within thirty (30) calendar days after a
written claim has been received by the Partnership, the Indemnitee making
such claim may at any time thereafter (but prior to payment of the claim)
bring suit against the Partnership to recover the unpaid amount of the claim
and, if successful, in whole or in part, such Indemnitee shall be entitled to
be paid also the expense of prosecuting such claim.
E. Following any "change in control" of the General Partner
of the type required to be reported under Item 1 of Form 8-K promulgated
under the Exchange Act, any determination as to entitlement to
indemnification shall be made by independent legal counsel selected by the
Indemnitee, which independent legal counsel shall be retained by the General
Partner on behalf of the Partnership and at the expense of the Partnership.
F. The right to indemnification and the payment of expenses
incurred in defending a proceeding in advance of its final disposition
conferred in this Section 7.7 shall not be exclusive of any other right which
any Person may have or hereafter acquire under any statute or agreement, or
pursuant to any vote of the Partners, or otherwise.
G. The Partnership may purchase and maintain insurance, at
its expense, on its own behalf and on behalf of any Indemnitee and of such
other Persons as the General Partner shall determine, against any liability
(including expenses) that may be asserted against and incurred by such Person
in connection with the Partnership's activities pursuant to this Agreement,
whether or not the Partnership would have the power to indemnify such Person
against such liability under the terms of this Agreement.
H. Any indemnification pursuant to this Section 7.7 shall
be made only out of assets of the Partnership. In no event may an Indemnitee
subject any Limited Partner to personal liability by reason of the
indemnification provisions set forth in this Agreement.
I. The provisions of this Section 7.7 are for the
benefit of the Indemnities, their heirs, successors, assigns,
executors and administrators, and shall not be deemed to create
any rights for the benefit of any other Person.
Section 7.8. Liability of the General Partner
A. Notwithstanding anything to the contrary set forth
in this Agreement, the General Partner shall not be liable for monetary
damages to the Partnership or any Partners for losses
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sustained or liabilities incurred as a result of errors in judgment or of any
act or omission if the General Partner acted in good faith and in a manner
reasonably believed to be (i) within the scope of the authority granted by
this Agreement and (ii) in the best interests of the Partnership.
B. Subject to its obligations and duties as General Partner
set forth in Section 7.1.A hereof, the General Partner may exercise any of
the powers granted to it by this Agreement and perform any of the duties
imposed upon it hereunder either directly or by or through its agents. The
General Partner shall not be responsible for any misconduct or negligence on
the part of any such agent appointed by it in good faith.
Section 7.9. Title to Partnership Assets
Title to Partnership assets, whether real, personal or mixed and
whether tangible or intangible, shall be deemed to be owned by the
Partnership as an entity, and no Partner, individually or collectively, shall
have any ownership interest in such Partnership assets or any portion
thereof. Title to any or all of the Partnership assets may be held in the
name of the Partnership, the General Partner or one or more nominees, as the
General Partner may determine, including Affiliates of the General Partner.
Section 7.10. Reliance by Third Parties
Notwithstanding anything to the contrary in this Agreement, any
Person dealing with the Partnership shall be entitled to assume that the
General Partner has full power and authority to encumber, sell or otherwise
use in any manner any and all assets of the Partnership and to enter into any
contracts on behalf of the Partnership, and such Person shall be entitled to
deal with the General Partner as if it were the Partnership's sole party in
interest, both legally and beneficially. In no event shall any Person dealing
with the General Partner or its representatives be obligated to ascertain
that the terms of this Agreement have been complied with. Each and every
certificate, document or other instrument executed on behalf of the
Partnership by the General Partner or its representatives shall be conclusive
evidence in favor of any and every Person relying thereon or claiming there-
under that (i) at the time of the execution and delivery of such certificate,
document or instrument, this Agreement was in full force and effect, (ii) the
Person executing and delivering such certificate, document or instrument was
duly authorized and empowered to do so for and on behalf of the Partnership,
and (iii) such certificate, document or instrument was duly executed and
delivered in accordance with the terms and provisions of this Agreement and
is binding upon the Partnership.
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ARTICLE VIII - RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS
Section 8.1. Limitation of Liability
The Limited Partners shall have no liability under this Agreement
except as expressly provided in this Agreement, including Section 10.5
hereof, or under the Act.
Section 8.2. Outside Activities of Limited Partners
Subject to any agreements entered into by a Limited Partner or its
Affiliates with the Partnership, any Limited Partner and any officer,
director, employee, agent, trustee, Affiliate or shareholder of any Limited
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 in direct competition with the
Partnership. Neither the Partnership nor any of the Partners shall have any
rights by virtue of this Agreement or the Partnership relationship
established hereby in any business ventures of any Limited Partner, and no
Limited Partner shall have any obligation pursuant to this Agreement to offer
any interest in any such business ventures to the Partnership or any other
Limited Partner, even if such opportunity is of a character which, if
presented to the Partnership or any other Limited Partner, could be taken by
such Person.
Section 8.3. Rights of Limited Partners Relating to the
Partnership
A. In addition to other rights provided by this Agreement
or by the Act, and except as limited by clause C hereof, each Limited Partner
shall have the right, for a purpose reasonably related to such Limited
Partner's interest as a limited partner in the Partnership, upon written
demand with a statement of the purpose of such demand and at such Limited
Partner's own expense:
(1) to obtain a copy of the Partnership's federal,
state and local income tax returns for each fiscal
year;
(2) to obtain a current list of the name and last
known business, residence or mailing address of
each Partner; provided, however, that the General
Partner may require, as a condition of providing
such list to a Limited Partner, that the Limited
Partner confirm in writing to the General Partner
that the names of the Partners and other informa-
tion provided by the list will be held in strict-
est confidence and no distribution of the list
will be made;
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(3) to obtain a copy of this Agreement and the Certif-
icate, and all amendments to the Agreement and the
Certificate; and
(4) to obtain true and full information regarding the
amount of cash and a description and statement of any
other property or services contributed by each Partner
and which each Partner has agreed to contribute in the
future, and the date on which each became a Partner.
B. The Partnership shall notify each Limited Partner in
writing of any change made to the Conversion Factor within ten (10) Business
Days after the date such change becomes effective.
C. Notwithstanding any other provision of this Section 8.3,
the General Partner may keep confidential from the Limited Partners, for such
period of time as the General Partner determines in its sole and absolute
discretion to be reasonable, any information that (i) the General Partner
believes to be in the nature of trade secrets or other information the
disclosure of which the General Partner in good faith believes is not in the
best interests of the Partnership, or (ii) the Partnership is required by law
or by agreements with unaffiliated third parties to keep confidential.
Section 8.4. Conversion Right
A. Subject to the limitations of clause B below, each
Limited Partner who is an Original Limited Partner or an Affiliate of an
Original Limited Partner (other than by virtue of clause (iv) of the
definition of Affiliate) shall have the right (the "Conversion Right") to
require the General Partner to convert on any Specified Conversion Date all
or any portion of the Partnership Units held by such Limited Partner into
REIT Shares or, at the option of the General Partner, to purchase (or to
cause the Partnership to repurchase) all or any portion of the Partnership
Units held by such Limited Partner for cash. The Conversion Right shall be
exercised pursuant to a Notice of Conversion delivered to the General Partner
by the Limited Partner who is exercising the conversion right (the
"Converting Partner"), accompanied by the certificate or certificates
evidencing the Partnership Units to be converted. The General Partner shall
inform the Converting Partner of its election with respect to the manner in
which the exercise of the Conversion Right will be satisfied as provided in
clause C below. The number of REIT Shares to be issued to a Limited Partner
upon exercise of the Conversion Right shall be equal to the REIT Shares
Conversion Amount. The amount of cash to be paid to a Limited Partner, at the
option of the General Partner, upon exercise of the Conversion Right shall be
equal to the Value of the REIT Shares Conversion Amount as of the Business
Day on which the Conversion Right is duly exercised.
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B. Notwithstanding anything to the contrary contained in
clause A above, no REIT Shares shall be issued to a Limited Partner pursuant
to clause A above to the extent that the issuance of such REIT Shares would
either:
(1) cause the aggregate value of the Capital Stock owned by
the following Persons (either as direct owners or
Beneficial Owners):
(i) the Original Limited Partners and their
Affiliates (excluding any Affiliate who is such
by virtue of clause (iv) of the definition of
Affiliate), and
(ii) any Person who has obtained REIT Shares di-
rectly from an Original Limited Partner or an
Affiliate of an Original Limited Partner
(excluding any Affiliate who is such by vir-
tue of clause (iv) of the definition of Af-
filiate) or pursuant to Section 11.3.C here-
of, or any transferee of such Person (but
only to the extent that the value of the
Capital Stock owned by such Person or trans-
feree (as a direct owner or a Beneficial
Owner) exceeds five percent (5%) of the ag-
gregate value of the total Capital Stock
issued and outstanding)
to exceed twenty-four and 9/10 percent (24.9%) of the
aggregate value of the total Capital Stock issued and
outstanding as of the Specified Conversion Date; or
(2) cause the General Partner to be considered to be
closely held within the meaning of Section 856(a)(6) of
the Code as of the Specified Conversion Date.
C. Within twenty (20) Business Days after the Business Day
on which the Conversion Right is duly exercised, the General Partner shall
inform the Converting Partner, in writing, (i) whether it elects to purchase
(or to cause the Partnership to repurchase) all or any portion of the
Partnership Units to which the Notice of Conversion relates for cash, and
(ii) whether the Converting Partner is not entitled to exercise the
Conversion Right with respect to a specified number of Partnership Units by
virtue of clause B above and, if so, stating either that the General Partner
will purchase (or will cause the Partnership to repurchase) such number of
Partnership Units or that the Board of Directors of the General Partner,
acting by a majority of its Independent Directors, has made the good faith
determination that both the General Partner and the Partnership lack
available funds, consistent with Section 5.2 hereof, to make such pur-
chase/repurchase. The General Partner may elect the option set
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forth in the foregoing clause (i) only to the extent it and/or the
Partnership have available funds to make such purchase/repurchase. If the
General Partner informs the Converting Partner pursuant to the foregoing
clause (ii) that both it and the Partnership lack available funds to make
such purchase/repurchase in full, it shall also inform the Converting
Partner of the portion, if any, of the Partnership Units which it and/or the
Partnership have available funds to purchase/repurchase. In the event the
General Partner informs a Converting Partner that such Converting Partner is
not entitled to convert any portion of the Partnership Units held by such
Converting Partner into REIT Shares pursuant to clause B above, and in the
further event that the General Partner informs such Converting Partner that
it lacks available funds to purchase (or that the Partnership lacks available
funds to repurchase) any portion of such Partnership Units which the
Converting Partner is not entitled to convert into REIT Shares, such
Converting Partner shall be deemed to have withdrawn his Notice of Conversion
with respect to that portion of his Partnership Units as to which he is not
entitled to exercise the Conversion Right by virtue of clause B above and
which the General Partner and the Partnership lack adequate funds to
purchase/repurchase.
Section 8.5. General Partner Covenants Relating to the Rights
A. The General Partner shall at all times reserve for
issuance such number of REIT Shares as may be necessary to enable the General
Partner to issue such REIT Shares in full payment of the Rights with respect
to all Partnership Units which are from time to time outstanding.
B. As long as the General Partner shall be obligated to
file periodic reports under the Exchange Act, the General Partner shall
timely file such reports in such manner as shall enable any recipient of REIT
Shares issued pursuant to Section 8.4 or 11.3.C in reliance upon an exemption
from registration under the Securities Act to be eligible to utilize Rule 144
promulgated by the SEC pursuant to the Securities Act, or any successor rule
or regulation thereunder, for the resale hereof.
Section 8.6. Other Matters Relating to the Conversion Rights
A. Any Partnership Units transferred to the General
Partner or the Partnership in connection with the exercise of the Conversion
Rights shall be canceled.
B. Upon any transfer of Partnership Units to the
General Partner or the Partnership by a Limited Partner pursuant to Section
8.4 above, the Partnership Interest of such Converting Partner shall be
decreased, and the Partnership Interest of the
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General Partner shall be correspondingly increased, as provided in this
Section 8.6.B. The Partnership Interest of such Converting Partner subsequent
to the conversion event shall be equal to the product of the following: (i)
the Partnership Interest of such Limited Partner immediately prior to the
conversion event, multiplied by (ii) a fraction, the numerator of which is
the total Partnership Units owned by such Limited Partner immediately after
the conversion event, and the denominator of which is the total number of
Partnership Units owned by such Limited Partner immediately prior to the
conversion event. The Partnership Interest of the General Partner subsequent
to the conversion event shall be equal to the sum of the following: (i) the
Partnership Interest of the General Partner immediately prior to the
conversion event, plus (ii) the amount by which the Partnership Interest of
the Converting Partner was decreased pursuant to the immediately preceding
sentence. Notwithstanding the foregoing, if a Limited Partner owns
Partnership Units and also owns Partnership Interests issued pursuant to
Section 4.2 above (which Partnership Interests did not receive any
Partnership Units), the portion of the Partnership Interest of such Limited
Partner that represents Partnership Interests issued pursuant to Section 4.2
shall not be subject to reduction pursuant to the provisions of this Section
8.6.B. The General Partner shall be deemed to have contributed to the
Partnership an amount equal to the Value (computed as of the Business Day on
which the Notice of Conversion is delivered to the General Partner) of the
REIT Shares delivered, or the cash paid, by the General Partner to the
Converting Partner.
C. The General Partner shall use its best efforts to cause
any delivery of REIT Shares to a Converting Partner pursuant to Section 8.4
to be made on the twentieth (20th) Business Day after the Business Day on
which the Conversion Right is duly exercised. Any payment of cash to a
Converting Partner pursuant to Section 8.4 shall be made on the twentieth
(20th) Business Day after the Business Day on which the Conversion Right is
duly exercised.
D. Any state or local transfer tax that may be
payable as the result of a conversion of Partnership Units pursuant to
Section 8.4 shall be payable by the Converting Partner.
ARTICLE IX - BOOKS, RECORDS, ACCOUNTING AND REPORTS
Section 9.1. Records and Accounting
The General Partner shall keep or cause to be kept at the principal
office of the Partnership appropriate books and records with respect to the
Partnership's business. Any records maintained by or on behalf of the
Partnership in the regular course of its business may be kept on, or be in
the form of, punch cards, magnetic tape, photographs, micrographics or any
other information storage device, provided that the records so main-
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tained are convertible into clearly legible written form within a reasonable
period of time. The books of the Partnership shall be maintained, for
financial and tax reporting purposes, on an accrual basis in accordance with
generally accepted accounting principles.
Section 9.2. Fiscal Year
The fiscal year of the Partnership shall be the calendar year.
Section 9.3. Reports
As soon as practicable after the close of each fiscal year, the
General Partner shall cause to be mailed to each Limited Partner (i) 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, and (ii) IRS Form 1065 and
Schedule K-1, or similar forms as may be required by the IRS, with respect to
such fiscal year. The statements required pursuant to clause (i) shall be
audited by a nationally recognized firm of independent public accountants
selected by the General Partner.
ARTICLE X - TAX MATTERS
Section 10.1. Preparation of Tax Returns
The General Partner shall arrange for the preparation and timely
filing of all returns of Partnership income, gains, deductions, losses and
other items required of the Partnership for federal, state and local income
tax purposes, and the delivery to the Limited Partners of all tax information
reasonably required by the Limited Partners for federal, state and local
income tax reporting purposes.
Section 10.2. Tax Elections
Except as otherwise provided herein, the General Partner shall, in
its sole and absolute discretion, determine whether to make any available
election or choose any available reporting method pursuant to the Code or
state or local tax law; provided, however, that the General Partner shall
make the election under Section 754 of the Code in accordance with applicable
regulations thereunder. The General Partner shall have the right to seek to
revoke any such election (including, without limitation, the election under
Section 754 of the Code) or change any reporting method upon the General
Partner's determination, in its sole and absolute discretion, that such
revocation is in the best interests of all of the Partners. Each Partner
hereby agrees to provide the Partnership with all information necessary to
evaluate or give effect to such election.
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Section 10.3. Tax Matters Partner
A. The General Partner shall be the "tax matters partner"
of the Partnership for federal income tax matters pursuant to Section
6223(c)(3) of the Code. As such, the General Partner is authorized to
represent the Partnership in connection with all examinations of the affairs
of the Partnership by any federal, state or local tax authorities.
B. The tax matters partner is authorized, but not
required:
(1) to enter into any settlement with the IRS with
respect to any administrative or judicial proceed-
ings for the adjustment of Partnership items re-
quired to be taken into account by a Partner for
income tax purposes (such administrative proceed-
ings being referred to as a "tax audit" and such
judicial proceedings being referred to as "▇▇▇▇-
cial review"), and in the settlement agreement the
tax matters partner may expressly state that such
agreement shall bind all Partners, except that
such settlement agreement shall not bind any Part-
ner (i) who (within the time prescribed pursuant
to the Code and Regulations) files a statement
with the IRS providing that the tax matters part-
ner shall not have the authority to enter into a
settlement agreement on behalf of such Partner or
(ii) who is a "notice partner" (as defined in
Section 6231 of the Code) or a member of a "notice
group" (as defined in Section 6223(b)(2) of the
Code);
(2) in the event that a notice of a final administra-
tive adjustment at the Partnership level of any
item required to be taken into account by a Part-
ner for tax purposes ( a "final adjustment") is
mailed to the tax matters partner, to seek ▇▇▇▇-
cial review of such final adjustment, including
the filing of a petition for readjustment with the
Tax Court or the United States Claims Court, or
the filing of a complaint for refund with the
District Court of the United States for the dis-
trict in which the Partnership's principal place
of business is located;
(3) to intervene in any action brought by any other
Partner for judicial review of a final adjustment;
(4) to file a request for an administrative adjustment with
the IRS at any time and, if any part of such request is
not allowed by the IRS, to file an appropriate pleading
(petition or complaint) for judicial review with
respect to such request;
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(5) to enter into an agreement with the IRS to extend the
period for assessing any tax which is attributable to
any item required to be taken into account by a Partner
for tax purposes, or an item affected by such item; and
(6) to take any other action on behalf of the Partners of
the Partnership in connection with any tax audit or
judicial review proceeding to the extent permitted by
applicable law or regulations.
The taking of any action and the incurring of any expense by
the tax matters partner in connection with any such proceeding, except to the
extent required by law, is a matter in the sole and absolute discretion of
the tax matters partner and the provisions relating to indemnification of the
General Partner set forth in Section 7.7 of this Agreement shall be fully
applicable to the tax matters partner in its capacity as such.
C. The tax matters partner shall receive no compensation
for its services. All third party costs and expenses incurred by the tax
matters partner in performing its duties as such (including legal and
accounting fees) shall be borne by the Partnership. Nothing herein shall be
construed to restrict the Partnership from engaging an accounting firm to
assist the tax matters partner in discharging its duties hereunder.
Section 10.4. Organizational Expenses
The Partnership shall elect to deduct expenses, if any, incurred by
it in organizing the Partnership ratably over a sixty (60)-month period as
provided in Section 709 of the Code.
Section 10.5. Withholding
Each Limited Partner hereby authorizes the Partnership to withhold
from or pay on behalf of or with respect to such Limited Partner any amount
of federal, state, local or foreign taxes that the General Partner determines
that the Partnership is required to withhold or pay with respect to any
amount distributable or allocable to such Limited Partner pursuant to this
Agreement, including, without limitation, any taxes required to be withheld
or paid by the Partnership pursuant to Sections 1441, 1442, 1445, or 1446 of
the Code. Any amount paid on behalf of or with respect to a Limited Partner
shall constitute a loan by the Partnership to such Limited Partner, which
loan shall be repaid by such Limited Partner within fifteen (15) days after
notice from the General Partner that such payment must be made unless (i) the
Partnership withholds such payment from a distribution which would otherwise
be made to the Limited Partner, or (ii) the General Partner determines, in
its sole and absolute discretion, that such payment may be satisfied out of
the available funds of the Partnership which would, but for such payment, be
distributed to the Limited Partner. Any amounts withheld pursuant to the
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foregoing clauses (i) or (ii) shall be treated as having been distributed to
such Limited Partner. Each Limited Partner hereby unconditionally and
irrevocably grants to the Partnership a security interest in such Limited
Partner's Partnership Interest to secure such Limited Partner's obligation to
pay to the Partnership any amounts required to be paid pursuant to this
Section 10.5. In the event that a Limited Partner fails to pay any amounts
owed to the Partnership pursuant to this Section 10.5 when due, the General
Partner may, in its sole and absolute discretion, elect to make the payment
to the Partnership on behalf of such defaulting Limited Partner, and in such
event shall be deemed to have loaned such amount to such defaulting Limited
Partner and, until repayment of such loan, shall succeed to all rights and
remedies of the Partnership as against such defaulting Limited Partner
(including, without limitation, the right to receive distributions). Any
amounts payable by a Limited Partner hereunder shall bear interest at the
base rate on corporate loans at large United States money center commercial
banks, as published from time to time in the Wall Street Journal, plus two
(2) percentage points (but not higher than the maximum lawful rate) from the
date such amount is due (i.e., fifteen (15) days after demand) until such
amount is paid in full. Each Limited Partner shall take such actions as the
Partnership or the General Partner shall reasonably request in order to
perfect or enforce the security interest created hereunder.
ARTICLE XI - TRANSFERS AND WITHDRAWALS
Section 11.1. Transfer
A. The term "transfer," when used in this Article XI with
respect to a Partnership Interest, shall be deemed to refer to a transaction
by which the General Partner purports to assign its General Partnership
Interest to another Person or by which a Limited Partner purports to assign
its Limited Partnership Interest to another Person, and includes a sale,
assignment, gift, pledge, encumbrance, hypothecation, mortgage, exchange or
any other disposition by law or otherwise. The term "transfer" when used in
this Article XI does not include any conversion of Partnership Units by a
Limited Partner pursuant to Section 8.4.
B. No Partnership Interest shall be transferred, in whole
or in part, except in accordance with the terms and conditions set forth in
this Article XI. Any transfer or purported transfer of a Partnership Interest
not made in accordance with this Article XI shall be null and void.
Section 11.2. Transfer of General Partner's Partnership Interest
A. The General Partner shall not withdraw from the
Partnership or transfer all or any portion of its interest in the Partnership
without the Consent of the Limited Partners. Upon any transfer of a
Partnership Interest in accordance with the
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provisions of this Section 11.2.A, the transferee General Partner shall
become a substituted General Partner, effective simultaneously with such
transfer, vested with the powers and rights of the transferor General
Partner, and shall be liable for all obligations and responsible for all
duties of the General Partner, once such transferee has executed such
instrument as may be necessary to effectuate such admission and to confirm
the agreement of such transferee to be bound by all the terms and provisions
of this Agreement with respect to the Partnership Interest so acquired. It is
a condition to any transfer otherwise permitted hereunder that the transferee
assumes by operation of law or express agreement all of the obligations of
the transferor General Partner under this Agreement with respect to such
transferred Partnership Interest and no such transfer (other than pursuant to
a statutory merger or consolidation wherein all obligations and liabilities
of the transferor General Partner are assumed by a successor by operation of
law) shall relieve the transferor General Partner of its obligations under
this Agreement without the Consent of the Limited Partners.
B. The General Partner may transfer General Partner-
ship Interests held by it to the Partnership in accordance with Section 7.5.B
hereof.
C. The General Partner shall not engage in any merger,
consolidation or other combination with or into another Person or any sale of
all or substantially all of its assets, or any reclassification,
recapitalization or change of outstanding REIT Shares (other than a
reincorporation, a change in par value or from par value to no par value, or
as a result of a subdivision or combination as described in the definition of
"Conversion Factor") ("Transaction"), unless either:
(1) the Transaction also includes a merger of the
Partnership or sale of substantially all of the
assets of the Partnership, as a result of which
all Limited Partners will receive for each Part-
nership Unit an amount of cash, securities or
other property equal to the product of the Conver-
sion Factor and the greatest amount of cash, secu-
rities or other property paid to a holder of one
REIT Share in consideration of one REIT Share at
any time during the period from and after the date
on which the Transaction is consummated, provided
that if, in connection with the Transaction, a
purchase, tender or exchange offer shall have been
made to and accepted by the holders of more than
fifty (50%) percent of the outstanding REIT
Shares, the holders of Partnership Units shall
receive the greatest amount of cash, securities or
other property which a Limited Partner would have
received had it exercised the Conversion Right or
the Exchange Right, as the case may be, and re-
ceived REIT Shares in exchange for all of its
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Partnership Units immediately prior to the expira-
tion of such purchase, tender or exchange offer;
or
(2) the Transaction provides that the Partnership
shall continue as a separate entity and grants to
the Limited Partners conversion and exchange
rights with respect to the ownership interests in
the new entity that are substantially equivalent
to the Rights provided for in Sections 8.4 and
11.3.C.
The Limited Partners shall make the election as to whether option (1) or (2)
above shall apply with respect to a Transaction. Such election shall be made
by Limited Partners owning a majority-in-interest of the total Partnership
Interests owned by the Limited Partners.
Section 11.3. Limited Partners' Rights to Transfer
A. No Limited Partner shall transfer all or any portion of
its Partnership Interest without the consent of the General Partner, which
consent may be withheld in its sole and absolute discretion; provided,
however, that, notwithstanding the foregoing, each Limited Partner which is
an Original Limited Partner or an Affiliate of an Original Limited Partner
(excluding any Affiliate who is such by virtue of clause (iv) of the
definition of Affiliate) may, subject to the provisions of this Section 11.3,
at any time, without the consent of the General Partner, (i) exercise its
Conversion Rights, if any, in accordance with the terms of Section 8.4; (ii)
transfer all or a portion of its Partnership Interest to an Original Limited
Partner or an Affiliate of an Original Limited Partner (excluding any
Affiliate who is such by virtue of clause (iv) of the definition of
Affiliate); or (iii) pledge or otherwise encumber all or any portion of its
Partnership Interest to any Person in a bona fide transaction and grant the
secured party the right to acquire such Partnership Interest upon default. In
addition, notwithstanding the foregoing, any Person who is not an Original
Limited Partner or an Affiliate of an Original Limited Partner (excluding any
Affiliate who is such by virtue of clause (iv) of the definition of
Affiliate) and acquires a Limited Partnership Interest pursuant to clause
(iii) of the preceding sentence may, without the consent of the General
Partner, (x) exercise its Exchange Rights in accordance with the terms of
Section 11.3.C, and (y) subject to the provisions of Section 11.3.C hereof,
transfer all or a portion of such Limited Partnership Interest to an Original
Limited Partner or an Affiliate of an Original Limited Partner (excluding any
Affiliate who is such by virtue of clause (iv) of the definition of
Affiliate). Subject to the provisions of Section 11.3.C hereof, upon any
transfer of a Limited Partnership Interest in accordance with the provisions
of this Section 11.3.A, the transferee shall be admitted as a Substituted
Limited Partner as provided in Section 11.4 hereof.
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B. If a Person who is an Original Limited Partner or an
Affiliate of an Original Limited Partner (excluding any Affiliate who is such
by virtue of clause (iv) of the definition of Affiliate) becomes the owner of
a Limited Partnership Interest in accordance with the provisions of clause
(ii) or (iii) of the first sentence of Section 11.3.A or clause (y) of the
second sentence of Section 11.3.A, such Person shall also become the owner of
the Partnership Units allocable to such Partnership Interest and shall be
entitled to exercise the Conversion Rights with respect to such Partnership
Units in accordance with the terms and conditions set forth in Section 8.4
above.
C. If a Person who is not an Original Limited Partner or an
Affiliate of an Original Limited Partner (excluding any Affiliate who is such
by virtue of clause (iv) of the definition of Affiliate) becomes the owner of
a Limited Partnership Interest in accordance with the provisions of clause
(iii) of the first sentence of Section 11.3.A hereof, such Person shall also
become the owner of the Partnership Units allocable to such Partnership
Interest; provided, however, that, in lieu of Conversion Rights, such
Partnership Units shall have the following rights and shall be subject to the
following restrictions:
(1) For a period of one (1) year after the date on
which such Person acquires the Partnership Units,
such Person shall have the right (the "Optional
Exchange Right") to require the General Partner to
exchange for REIT Shares on any Specified Exchange
Date all or any portion of the Partnership Units
held by such Limited Partner or, at the option of
the General Partner, to purchase (or to cause the
Partnership to repurchase) for cash on any Speci-
fied Exchange Date all or any portion of the Part-
nership Units held by such Limited Partner. The
Optional Exchange Right shall be exercised pursu-
ant to a Notice of Exchange delivered to the Gen-
eral Partner by the Limited Partner who is exer-
cising the exchange right, accompanied by the
certificate or certificates evidencing the Part-
nership Units to be exchanged. The General Part-
ner shall notify such Limited Partner of its elec-
tion with respect to the manner in which the exer-
cise of the Exchange Right will be satisfied with-
in twenty (20) Business Days after the Business
Day on which the Exchange Right is duly exercised.
The number of REIT Shares to be issued to the
Limited Partner upon exercise of the Optional
Exchange Right shall be equal to the REIT Shares
Exchange Amount. The amount of cash to be paid to
a Limited Partner, at the option of the General
Partner, upon exercise of the Optional Exchange
Right shall be equal to the Value of the REIT
Shares Exchange Amount as of the Business Day on
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which the Optional Exchange Right is duly exer-
cised.
(2) Any of the Partnership Units so acquired by such
Person that have not been exchanged for REIT
Shares or cash pursuant to the provisions of Sec-
tion 11.3.C(1) above on or prior to the date which
is one (1) year after the date of such acquisition
(the "Required Exchange Date") shall be exchanged
(the "Required Exchange Right") for a number of
REIT Shares equal to the REIT Shares Exchange
Amount as of the Required Exchange Date or, at the
option of the General Partner, an amount of cash
equal to the Value of the REIT Shares Exchange
Amount as of the Required Exchange Date.
(3) Any state or local transfer tax that may be payable as
the result of an exchange of Partnership Units pursuant
to this Section 11.3.C shall be payable by the
exchanging Limited Partner.
(4) Upon any transfer of Partnership Units to the
General Partner or the Partnership by a Limited
Partner pursuant to this Section 11.3.C, the Part-
nership Interest of such Limited Partner shall be
decreased, and the Partnership Interest of the
General Partner shall be correspondingly in-
creased, as provided in this Section 11.3.C(4).
The Partnership Interest of such Limited Partner
subsequent to the exchange event shall be equal to
the product of the following: (i) the Partnership
Interest of such Limited Partner immediately prior
to the exchange event, multiplied by (ii) a frac-
tion, the numerator of which is the total Partner-
ship Units owned by such Limited Partner immedi-
ately after the exchange event, and the denomina-
tor of which is the total number of Partnership
Units owned by such Limited Partner immediately
prior to the exchange event. The Partnership
Interest of the General Partner subsequent to the
exchange event shall be equal to the sum of the
following: (i) the Partnership Interest of the
General Partner immediately prior to the exchange
event, plus (ii) the amount by which the Partner-
ship Interest of the exchanging Limited Partner
was decreased pursuant to the immediately preced-
ing sentence. Notwithstanding the foregoing, if a
Limited Partner owns Partnership Units and also
owns Partnership Interests issued pursuant to
Section 4.2 above (which Partnership Interests did
not receive any Partnership Units), the portion of
the Partnership Interest of such Limited Partner
that represents the Partnership Interests issued
pursuant to Section 4.2 shall not be subject to
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reduction pursuant to the provisions of this Section
11.3.C(4). The General Partner shall be deemed to have
contributed to the Partnership an amount equal to the
Value (computed as of the Business Day which is or
proximately follows the first to occur of (x) the day
on which the notice of Exchange is delivered to the
General Partner or (y) the Required Exchange Date) of
the REIT Shares delivered, or the cash paid, by the
General Partner to the exchanging Limited Partner.
(5) Any Partnership Units transferred to the General
Partner or the Partnership pursuant to the provisions
of this Section 11.3.C shall be canceled.
(6) Notwithstanding anything to the contrary contained
in this Section 11.3.C, if all or any portion of
the Partnership Interest owned by a Person who is
not an Original Limited Partner or an Affiliate of
an Original Limited Partner (excluding any Affili-
ate who is such by virtue of clause (iv) of the
definition of Affiliate) is transferred to an
Original Limited Partner or an Affiliate of an
Original Limited Partner (excluding any Affiliate
who is such by virtue of clause (iv) of the defi-
nition of Affiliate) prior to the Required Ex-
change Date, the Partnership Units allocable to
such Partnership Interest (or portion thereof)
shall not be subject to the required exchange of
Partnership Units for REIT Shares set forth in
Section 11.3.C(2) above.
D. If a Limited Partner is Incapacitated, the executor,
administrator, trustee, committee, guardian, conservator or receiver of such
Limited Partner's estate shall have all the rights of a Limited Partner, for
the purpose of settling or managing the estate and such power as the
Incapacitated Limited Partner possessed to transfer all or any part of his,
her or its interest in the Partnership. The Incapacity of a Limited Partner,
in and of itself, shall not dissolve or terminate the Partnership.
E. The General Partner may prohibit any transfer by a
Limited Partner otherwise permitted under this Section 11.3 if, in the
opinion of legal counsel to the Partnership, such transfer would require
filing of a registration statement under the Securities Act or would
otherwise violate any federal or state securities laws or regulations
applicable to the Partnership or the Partnership Interest.
F. No transfer by a Limited Partner of its Partner-
ship Interest may be made to any Person if (i) in the opinion of
legal counsel for the Partnership, it would result in the Part-
nership being treated as an association taxable as a corporation
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for federal income tax purposes, (ii) in the opinion of legal counsel for the
Partnership, it would adversely affect the ability of the General Partner to
continue to qualify as a REIT or subject the General Partner to any
additional 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 the meaning
of Section 7704 of the Code.
G. No transfer by a Limited Partner of its Partnership
Interest may be made (i) to any Person who lacks the legal right, power or
capacity to own a Partnership Interest, (ii) in violation of any provision of
any mortgage or trust deed (or the note or bond secured thereby) constituting
a Lien against an asset of the Partnership, or other instrument, document or
agreement to which the Partnership is a party or otherwise bound, (iii) in
violation of applicable law, or (iv) if such transfer would, in the opinion
of legal counsel for the Partnership, cause any portion of the assets of the
Partnership to constitute assets of any employee benefit plan pursuant to
Department of Labor regulations section 2510.2-101.
Section 11.4. Substituted Limited Partners
A. Unless otherwise agreed by the transferor and
transferee, a transferee of a Limited Partnership Interest shall be admitted
as a Substituted Limited Partner in accordance with this Article XI and shall
have all the rights and powers and be subject to all the restrictions and
liabilities of a Limited Partner under this Agreement. It shall be a
condition precedent to the admission of any Person as a Substituted Limited
Partner that such Person execute and deliver to the Partnership (i) evidence
of acceptance, in form reasonably satisfactory to the General Partner, of all
of the terms and conditions of this Agreement, including, without limitation,
the power of attorney granted in Section 2.4 hereof, and (ii) such other
documents or instruments as may be reasonably required in the discretion of
the General Partner in order to effect such Person's admission as a
Substituted Limited Partner.
B. Upon the admission of a Substituted Limited Partner, the
General Partner shall amend Exhibit A to reflect the name, address, number of
Partnership Units, if any, and Partnership Interest of such Substituted
Limited Partner and to eliminate or adjust, if necessary, the name, address
and interest of the predecessor of such Substituted Limited Partner. The
admission of any Person as a Substituted Limited Partner shall become
effective on the date upon which the name of such Person is recorded on the
books and records of the Partnership.
Section 11.5. General Provisions
A. No Limited Partner may withdraw from the Partner-
ship other than as a result of a permitted transfer or exchange
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of all of such Limited Partner's Partnership Interest in accordance with this
Article XI or pursuant to a conversion of all of its Partnership Interest
under Section 8.4.
B. Any Limited Partner who shall transfer all of its
Partnership Interest in a permitted transfer or exchange pursuant to this
Article XI or pursuant to a conversion of all of its Partnership Interest
under Section 8.4 shall cease to be a Limited Partner.
C. If any Partnership Interest is transferred or exchanged
in compliance with the provisions of this Article XI, or converted pursuant
to Section 8.4, during any quarterly segment of the Partnership's fiscal
year, Net Income, Net Losses, each item thereof and all other items
attributable to such interest for such fiscal year shall be divided and
allocated between the transferor Partner and the transferee Partner by taking
into account their varying interests during the fiscal year in accordance
with Section 706(d) of the Code, using the interim closing of the books
method. Solely for purposes of making such allocations, each of such items
for the calendar month in which the transfer or conversion occurs shall be
allocated to the Person who is a Partner as of midnight on the last day of
said month. All distributions of Available Cash with respect to which the
Partnership Record Date is before the date of such transfer or conversion
shall be made to the transferor Partner, and all distributions of Available
Cash thereafter shall be made to the transferee Partner.
ARTICLE XII - DISSOLUTION AND LIQUIDATION
Section 12.1. Dissolution
The Partnership shall not be dissolved by the admission of
Substituted Limited Partners or Additional Limited Partners or by the
admission of a substituted General Partner in accordance with the terms of
this Agreement. Upon the withdrawal of the General Partner, any substituted
General Partner shall continue the business of the Partnership. The
Partnership shall dissolve, and its affairs shall be wound up, upon the first
to occur of any of the following (each, a "Liquidating Event"):
A. the expiration of its term as provided in Section
2.5 hereof;
B. an event of withdrawal of the General Partner, as
defined in the Act (including an event of Bankruptcy), unless within ninety
(90) days after the withdrawal remaining Partners owning a
majority-in-interest of the total Partnership Interests of the remaining
Partners agree in writing to continue the business of the Partnership and to
the appointment, effective immediately prior to the date of withdrawal, of a
substitute General Partner;
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C. an election to dissolve the Partnership made in writing
by the General Partner with the Consent of the Limited Partners; provided,
however, that the General Partner may elect to dissolve the Partnership
without the Consent of the Limited Partners at any time that the Limited
Partners own, in the aggregate, less than a ten percent (10%) Partnership
Interest;
D. entry of a decree of judicial dissolution of the
Partnership pursuant to the provisions of the Act; or
E. the sale of all or substantially all of the assets of
the Partnership, unless the General Partner, with the Consent of the Limited
Partners, elects to continue the Partnership business for the purpose of the
receipt and the collection of indebtedness or the collection of other
consideration to be received in exchange for the assets of the Partnership
(which activities shall be deemed to be part of the winding up of the
Partnership); provided that the General Partner may elect to continue the
Partnership in accordance with the provisions of this Section 12.1.E without
the Consent of the Limited Partners if at the time of such sale the Limited
Partners own, in the aggregate, less than a ten percent (10%) Partnership
Interest.
Section 12.2. Winding Up
A. Upon the occurrence of a Liquidating Event, the
Partnership shall continue solely for the purpose of winding up its affairs
in an orderly manner, liquidating its assets (subject to the provisions of
Section 12.2.B below), and satisfying the claims of its creditors and
Partners. No Partner shall take any action that is inconsistent with, or not
necessary to or appropriate for, the winding up of the Partnership's business
and affairs. The General Partner (or, in the event there is no remaining
General Partner, any Person elected by Limited Partners owning a
majority-in-interest of the total Partnership Interests of the Limited
Partners (the General Partner or such other Person overseeing the winding up
of the Partnership, the "Liquidator")) shall be responsible for overseeing
the winding up of the Partnership. The assets of the Partnership shall be
liquidated as promptly as is consistent with obtaining the fair market value
thereof, and the proceeds therefrom (which may include shares of stock in the
General Partner) shall be applied and distributed in the following order:
(1) First, to the payment and discharge of all of the
Partnership's debts and liabilities to creditors
other than the Partners;
(2) Second, to the payment and discharge of all of the
Partnership's debts and liabilities to the Part-
ners; and
(3) The balance, if any, to the General Partner and
Limited Partners in accordance with their positive
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Capital Account balances, after giving effect to all
contributions, distributions and allocations for all
periods.
The General Partner shall not receive any additional compensation for any
services performed pursuant to this Article XII.
B. Notwithstanding the provisions of Section 12.2.A hereof
which require liquidation of the assets of the Partnership, but subject to
the order of priorities set forth therein, if prior to or upon dissolution of
the Partnership, the Liquidator determines that an immediate sale of part or
all of the Partnership's assets would be impractical or would cause undue
loss to the Partners, the Liquidator may, in its sole and absolute
discretion, defer for a reasonable time the liquidation of any assets except
those necessary to satisfy liabilities of the Partnership (including to those
Partners as creditors) and/or distribute to the Partners, in lieu of cash, as
tenants in common and in accordance with the provisions of Section 12.2.A
hereof, undivided interests in such Partnership assets as the Liquidator
deems not suitable for liquidation. Any such distributions in kind shall be
made only if, in the good faith judgment of the Liquidator, such
distributions in kind are in the best interest of the Partners, and shall be
subject to such conditions relating to the disposition and management of such
properties as the Liquidator deems reasonable and equitable and to any
agreements governing the operation of such properties at such time. The
Liquidator shall determine the fair market value of any property distributed
in kind using such reasonable method of valuation as it may adopt.
C. As part of the liquidation and winding up of the
Partnership, a proper accounting shall be made of the Capital Account of each
Partner, including an analysis of changes to the Capital Account from the
date of the last previous accounting. Financial statements presenting such
accounting shall include a report of an independent certified public
accountant selected by the Liquidator.
D. As part of the liquidation and winding up of the
Partnership, the Liquidator may sell Partnership assets (or assets owned by
any partnership in which the Partnership is a partner) solely on an
"arm's-length" basis, at the best price and on the best terms and conditions
as the Liquidator in good faith believes are reasonably available at the
time.
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Section 12.3. Compliance with Timing Requirements of Regulations
In the event the Partnership is "liquidated" within the meaning of
Regulations Section 1.704-1(b)(2)(ii)(g), distributions shall be made
pursuant to this Article XII to the General Partner and Limited Partners who
have positive Capital Accounts in compliance with Regulations Section
1.704-1(b)(2)(ii)(b)(2). If any Partner has a deficit balance in its Capital
Account (after giving effect to all contributions, distributions and
allocations for all taxable years, including the year during which such
liquidation occurs), such Partner shall have no obligation to make any
contribution to the capital of the Partnership with respect to such deficit,
and such deficit shall not be considered a debt owed to the Partnership or to
any other Person for any purpose whatsoever. In the discretion of the
Liquidator, a pro rata portion of the distributions that would otherwise be
made to the General Partner and Limited Partners pursuant to this Article XII
may be:
A. distributed to a trust established for the benefit of
the General Partner and Limited Partners for the purposes of liquidating
Partnership assets, collecting amounts owed to the Partnership and paying any
contingent or unforeseen liabilities or obligations of the Partnership or of
the General Partner arising out of or in connection with the Partnership. The
assets of any such trust shall be distributed to the General Partner and
Limited Partners from time to time, in the reasonable discretion of the
Liquidator, in the same proportions as the amount distributed to such trust
by the Partnership would otherwise have been distributed to the General
Partner and Limited Partners pursuant to this Agreement; or
B. withheld to provide a reasonable reserve for Partnership
liabilities (contingent or otherwise) and to reflect the unrealized portion
of any installment obligations owed to the Partnership, provided that such
withheld amounts shall be distributed to the General Partner and Limited
Partners as soon as practicable.
Section 12.4. Deemed Distribution and Recontribution
Notwithstanding any other provisions of this Article XII, in the
event the Partnership is liquidated within the meaning of Regulations Section
1.704-1(b)(2)(ii)(q) but no Liquidating Event has occurred, the Partnership's
property shall not be liquidated, the Partnership's liabilities shall not be
paid or discharged, and the Partnership's affairs shall not be wound up.
Instead, the Partnership shall be deemed to have distributed the Partnership
property in kind to the General Partner and Limited Partners, who shall be
deemed to have assumed and taken such property subject to all Partnership
liabilities, all in accordance with their respective Capital Accounts.
Immediately thereafter, the General Partner and Limited Partners shall be
deemed to have
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recontributed the Partnership property in kind to the Partnership, which
shall be deemed to have assumed and taken such property subject to all such
liabilities.
Section 12.5. Documentation of Liquidation
Upon the completion of the liquidation of the Partnership as provided
in Section 12.2 hereof, the Partnership shall be terminated and the
Certificate and all qualifications of the Partnership as a foreign limited
partnership in jurisdictions other than the State of Delaware shall be
canceled, and such other actions as may be necessary to terminate the
Partnership shall be taken. The Liquidator shall have the authority to
execute and record any and all documents or instruments required to effect
the dissolution, liquidation and termination of the Partnership.
Section 12.6. Reasonable Time for Winding Up
A reasonable time shall be allowed for the orderly winding up of the
business and affairs of the Partnership and the liquidation of its assets
pursuant to Section 12.2 hereof, in order to minimize any losses otherwise
attendant upon such winding-up, and the provisions of this Agreement shall
remain in effect during the period of liquidation.
Section 12.7. Indemnification of the Liquidator
The Liquidator shall be indemnified and held harmless by the
Partnership from and against any and all claims, demands, liabilities, costs,
damages and causes of action of any nature whatsoever arising out of or
incidental to the Liquidator's taking of any action authorized under or
within the scope of this Agreement; provided, however, that the Liquidator
shall not be entitled to indemnification, and shall not be held harmless,
where the claim, demand, liability, cost, damage or cause of action at issue
arises out of:
(1) a matter entirely unrelated to the Liquidator's
action or conduct pursuant to the provisions of
this Agreement; or
(2) the proven willful misconduct or gross negligence
of the Liquidator.
Section 12.8. Waiver of Partition
Each Partner hereby waives may right to partition of the Partnership
property.
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ARTICLE XIII - AMENDMENT OF PARTNERSHIP AGREEMENT
Section 13.1. Amendments
A. Amendments to this Agreement may be proposed by the
General Partner or by any Limited Partners holding twenty-five percent (25%)
or more of the Partnership Interests. Except as provided in Section 13.1.B or
13.1.C, a proposed amendment shall be adopted and be effective as an
amendment hereto if it is approved by the General Partner and it receives the
Consent of the Limited Partners (provided that, the Consent of the Limited
Partners shall not be required for any amendment if the Limited Partners own,
in the aggregate, less than a ten percent (10%) Partnership Interest).
B. Notwithstanding Section 13.1.A, the General Partner
shall have the power, without the Consent of the Limited Partners, to amend
this Agreement as may be required to facilitate or implement any of the
following purposes:
(1) to add to the obligations of the General Partner or
surrender any right or power granted to the General
Partner or any Affiliate of the General Partner for the
benefit of the Limited Partners;
(2) to reflect the admission, substitution, termina-
tion or withdrawal of Partners in accordance with
this Agreement;
(3) to amend Schedule A to this Agreement in accordance
with Section 4.2, 8.4 or 11.3.C of this Agreement; and
(4) to reflect a change that is of an inconsequential
nature and does not adversely affect the Limited
Partners in any material respect, or to cure any
ambiguity, correct or supplement any provision in
this Agreement not inconsistent with law or with
other provisions, or make other changes with re-
spect to matters arising under this Agreement that
will not be inconsistent with law or with the
provisions of this Agreement.
The General Partner will provide notice to the Limited Partners when any
action under this Section 13.1.B is taken.
C. Notwithstanding anything to the contrary contained in
Section 13.1.A hereof, this Agreement shall not be amended without the prior
written consent of each Partner adversely affected if such amendment would
(i) convert a Limited Partner's interest in the Partnership into a general
partner's interest, (ii) modify the limited liability of a Limited Partner,
(iii) alter rights of the Partner to receive distributions pursuant to
Article V, or the allocations specified in Article VI
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(except as permitted pursuant to Section 4.2 and Section 13.1.B(3) hereof),
(iv) alter or modify the Rights set forth in Sections 8.4 and 11.3.C, (v)
cause the termination of the Partnership prior to the time set forth in
Section 2.5 or 12.1, or (vi) amend this Section 13.1.C. Further, no amendment
may alter the restrictions on the General Partner's authority set forth in
Section 7.3 without the consent of all Limited Partners.
ARTICLE XIV - ARBITRATION OF DISPUTES
Section 14.1. Arbitration
Notwithstanding anything to the contrary contained in this Agreement,
all claims, disputes and controversies between the parties hereto (including,
without limitation, any claims, disputes and controversies between the
Partnership and any one or more of the Partners and any claims, disputes and
controversies between any one or more Partners) arising out of or in
connection with this Agreement or the Partnership created hereby, relating to
the validity, construction, performance, breach, enforcement or termination
thereof, or otherwise, shall be resolved by binding arbitration in the State
of Michigan, in accordance with this Article XIV and, to the extent not
inconsistent herewith, the Expedited Procedures and Commercial Arbitration
Rules of the American Arbitration Association.
Section 14.2. Procedures
Any arbitration called for by this Article XIV shall be conducted in
accordance with the following procedures:
(1) The Partnership or any Partner (the "Requesting
Party") may demand arbitration pursuant to Section
14.1 hereof at any time by giving written notice
of such demand (the "Demand Notice") to all other
Partners against whom a claim is made or with
respect to which a dispute has arisen and (if the
Requesting Party is not the Partnership) to the
Partnership (all such other Partners and, if ap-
plicable, the Partnership, collectively, the "Re-
sponding Party"), which Demand Notice shall de-
scribe in reasonable detail the nature of the
claim, dispute or controversy.
(2) Within fifteen (15) days after the giving of a
Demand Notice, the Requesting Party, on the one
hand, and the Responding Party, on the other hand,
shall select and designate in writing to the other
party one reputable, disinterested individual
deemed competent to arbitrate the claim, dispute
or controversy and who is willing to act as an
arbitrator of the claim, dispute or controversy (a
"Qualified Individual"). Within fifteen (15) days
after the foregoing selections have been made, the
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arbitrators so selected shall jointly select a third
Qualified Individual. In the event that the two
arbitrators initially selected are unable to agree on a
third arbitrator within the second fifteen (15) day
period referred to above, then, on the application of
either party, the American Arbitration Association
shall promptly select and appoint a Qualified
Individual to act as the third arbitrator. The three
arbitrators selected pursuant to this Section 14.2(2)
shall constitute the arbitration panel for the
arbitration in question
(3) The presentations of the parties in the arbitra-
tion proceeding shall be commenced and completed
within sixty (60) days after the selection of the
arbitration panel pursuant to Section 14.2(2)
above, and the arbitration panel shall render its
decision in writing within thirty (30) days after
the completion of such presentations. Any deci-
sion concurred in by any two (2) of the arbitra-
tors shall constitute the decision of the arbitra-
tion panel; unanimity shall not be required.
(4) The arbitration panel shall have the discretion to
include in its decision a direction that all or part of
the attorneys' fees and costs of any party or parties
and/or the costs of such arbitration be paid by any one
or more of the parties.
(5) Notwithstanding anything to the contrary contained
above in this Section 14.2, if either party fails
to select a Qualified Individual to act as an
arbitrator for such party with the fifteen (15)
day time period set forth in the first sentence of
Section 14.2(2), the Qualified Individual selected
by the other party shall serve as sole arbitrator
under this Section 14.2 in lieu of the arbitration
panel. Such sole arbitrator shall have all of the
rights and duties of the arbitration panel set
forth above in this Section 14.2.
Section 14.3. Binding Character
Any decision rendered pursuant to this Article XIV shall be final and
binding on the parties hereto, and judgment thereon may be entered by any
state or federal court of competent jurisdiction.
Section 14.4. Exclusivity
Arbitration shall be the exclusive method available for resolution of
claims, disputes and controversies described in Section 14.1 hereof, and the
Partnership and its Partners stipulate that the provisions hereof shall be a
complete defense to
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any suit, action or proceeding in any court or before any administrative or
arbitration tribunal with respect to any such claim, controversy or dispute.
The provisions of this Article XIV shall survive the dissolution of the
Partnership.
Section 14.5. No Alteration of Agreement
Nothing contained herein shall be deemed to give the arbitrators any
authority, power or right to alter, change, amend, modify, add to or subtract
from any of the provisions of this Agreement.
ARTICLE XV - CONDITIONS/CONCURRENT TRANSACTIONS
Section 15.1. General Partner Conditions
The obligation of the General Partner to consummate the transactions
contemplated herein is subject to fulfillment of all of the following
conditions on or prior to the date hereof:
(1) The transactions contemplated by the Contribution
Agreement shall have been consummated in accordance
with the terms and conditions of the Contribution
Agreement;
(2) All consents, waivers, approvals and authorizations
required for the consummation of the transactions
contemplated hereby shall have been obtained; and
(3) The Registration Statement shall have become effective
under the provisions of the Securities Act, and no
order or other administrative proceeding shall have
been entered or instituted with respect thereto, and be
pending, as of the date hereof.
Section 15.2. Limited Partner Conditions
The obligation of the Limited Partners to consummate the transactions
contemplated herein is subject to fulfillment of all of the following
conditions on or prior to the date hereof:
(1) The General Partner shall have contributed to the
Partnership the amount of its Capital Contribution set
forth in Exhibit A;
(2) The transactions contemplated by the Contribution
Agreement shall have been consummated in accordance
with the terms and conditions of the Contribution
Agreement;
(3) All consents, waivers, approvals and authoriza-
tions required for the consummation of the trans-
-61-
actions contemplated hereby shall have been ob-
tained; and
(4) The Registration Statement shall have become effective
under the provisions of the Securities Act, and no stop
order or other administrative proceeding shall have
been entered or instituted with respect thereto, and be
pending, as of the date hereof.
ARTICLE XVI - GENERAL PROVISIONS
Section 16.1. Addresses and Notice
All notices, requests, demands and other communications hereunder to
a Partner shall be in writing and shall be deemed to have been duly given and
received (i) on the day delivered by hand, or (ii) on the third Business Day
after sent by certified mail, return receipt requested, properly addressed
and postage prepaid, or (iii) on the first Business Day after transmitted by
commercial overnight courier to the Partner at the address set forth in
Exhibit A or at such other address as the Partner shall notify the General
Partner in writing.
Section 16.2. Titles and Captions
All article or section titles or captions in this Agreement are for
convenience only and in no way define, limit, extend or describe the scope or
intent of any provisions hereof. Each Exhibit attached hereto and referred to
herein is hereby incorporated by reference.
Section 16.3. Pronouns and Plurals
Whenever the context may require, any pronoun used in this Agreement
shall include the corresponding masculine, feminine or neuter forms, and the
singular form of nouns, pronouns and verbs shall include the plural and vice
versa. Any reference in this Agreement to "including" shall be deemed to mean
"including without limitation."
Section 16.4. Further Action
The Partners shall execute and deliver all such further documents,
provide all information and take or refrain from taking such further action
as may be necessary or appropriate to carry out the transactions contemplated
by this Agreement.
Section 16.5. Binding Effect
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their heirs, executors, administrators, successors, legal
representatives and permitted assigns.
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Section 16.6. No Third Party Beneficiaries
None of the provisions of this Agreement shall be for the benefit of,
or shall be enforceable by, any creditor of the Partnership or any other
Person to whom any debts, liabilities or obligations may be owed by (or who
otherwise has any claim against) the Partnership or any of the Partners.
Section 16.7. Waiver
No failure by any party to insist upon the strict performance of any
covenant, duty, agreement or condition of this Agreement or to exercise any
right or remedy consequent upon a breach thereof shall constitute waiver of
any such breach or any other covenant, duty, agreement or condition.
Section 16.8. No Agency
Except as specifically provided herein, nothing contained herein
shall be construed to constitute any Partner the agent of another Partner or
in any manner to limit the Partners in carrying on their own respective
businesses and activities.
Section 16.9. Entire Understanding
This Agreement constitutes the entire agreement and understanding
among the Partners and supersedes any prior understanding and/or written or
oral agreements among them respecting the subject matter herein.
Section 16.10. Counterparts
This Agreement may be executed in counterparts, all of which together
shall constitute one agreement binding on all the parties hereto,
notwithstanding that all such parties are not signatories to the original or
the same counterpart.
Section 16.11. Applicable Law
This Agreement shall be construed in accordance with and governed by
the laws of the State of Delaware, without regard to the principles of
conflict of laws.
Section 16.12. Invalidity of Provisions
If any provision of this Agreement is or becomes invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of
the remaining provisions contained herein shall not be affected thereby.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the date first written above.
GENERAL PARTNER:
AGREE REALTY CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇
------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇
Title: Secretary
LIMITED PARTNERS:
/s/ ▇▇▇▇▇▇▇ Agree
-----------------------------------
▇▇▇▇▇▇▇ Agree
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-----------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇ ▇▇▇▇▇▇
-----------------------------------
▇▇▇▇ ▇▇▇▇▇▇
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EXHIBIT A
EXHIBIT A
---------
Name and Address Partnership Partnership
of Partner Contribution Interest Units
---------------- ------------ ----------- -----------
General Partner:
----------------
Agree Realty Corporation $45.1 million 80.53% 2,638,185
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇-
▇▇▇ ▇▇▇▇▇
Limited Partners:
-----------------
▇▇▇▇▇▇▇ Agree
---------------- interest in certain 10.09% 329,825
---------------- real property
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
---------------- interest in certain 7.30% 240,000
---------------- real property
▇▇▇▇ ▇▇▇▇▇▇
---------------- interest in certain 2.08% 68,134
---------------- real property
A-1
EXHIBIT B
NOTICE OF CONVERSION
The undersigned hereby irrevocably (i) converts ____________________
_____________ Partnership Units in Agree Realty Limited Partnership in
accordance with the terms of the First Amended and Restated Agreement of
Limited Partnership Agreement of Agree Realty Limited Partnership and the
Conversion Right referred to in Section 8.4 therein, (ii) surrenders such
Partnership Units and all right, title and interest therein, and (iii)
directs that the REIT Shares deliverable upon exercise of the Conversion
Right be delivered to the address specified below, and registered or placed
in the name(s) and at the address(es) specified below.
The undersigned hereby represents and warrants that (i) it has full
power and authority to transfer all of its right, title and interest in such
Partnership Units, (ii) such Partnership Units are free and clear of all
Liens, and (iii) it will pay any state or local transfer tax that may be
payable as a result of the conversion of such Partnership Units and the
issuance of such REIT Shares.
Dated: _________________
Name of Limited Partner: _______________________________
Signature of Limited Partner: _______________________________
By:____________________________
Title:_________________________
Address: _______________________________
(▇▇▇▇▇▇ ▇▇▇▇▇▇▇)
_______________________________
(City) (State) (Zip Code)
Signature [Attested]
[Witnessed] by:
_______________________________
Issue REIT Shares to:
Please insert social security or identifying number;
Name:
Address:
Deliver the REIT Shares to the following address:
- 2 -
EXHIBIT C
NOTICE OF EXCHANGE
The undersigned hereby irrevocably (i) exchanges ___________________
_______________ Partnership Units in Agree Realty Limited Partnership in
accordance with the terms of the First Amended and Restated Agreement of
Limited Partnership Agreement of Agree Reality Limited Partnership and the
Optional Exchange Right referred to in Section 11.3.C therein, (ii)
surrenders such Partnership Units and all right, title and interest therein,
and (iii) directs that the REIT Shares deliverable upon exercise of the
Optional Exchange Right be delivered to the address specified below, and
registered or placed in the name(s) and at the address(e) specified below.
The undersigned hereby represents and warrants that (i) it has full
power and authority to transfer all of its right, title and interest in such
Partnership Units, (ii) such Partnership Units are free and clear of all
Liens, and (iii) it will pay any state or local transfer tax that may be
payable as a result of the exchange of such Partnership Units and the
issuance of such REIT Shares.
Dated: ___________________
Name of Limited Partner: _____________________________
Signature of Limited Partners: _____________________________
By:__________________________
Title:_______________________
_____________________________
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_____________________________
(City) (State) (Zip Code)
Signature [Attested]
[Witnessed] by:
_____________________________