Exh.10.1
----------------------------------
FIRST AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
THE MENDIK COMPANY, L.P.
----------------------------------
Dated as of , 1997
TABLE OF CONTENTS
ARTICLE I DEFINED TERMS . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II ORGANIZATIONAL MATTERS. . . . . . . . . . . . . . . . . . . . . 13
Section 2.1 Organization . . . . . . . . . . . . . . . . . . . . . . . 13
Section 2.2 Name . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 2.3 Registered Office and Agent; Principal Office . . . . . . 13
Section 2.4 Term . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE III PURPOSE . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 3.1 Purpose and Business . . . . . . . . . . . . . . . . . . . 13
Section 3.2 Powers . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 3.3 Partnership Only for Purposes Specified . . . . . . . . . 14
ARTICLE IV CAPITAL CONTRIBUTIONS AND ISSUANCES OF PARTNERSHIP INTERESTS. . 14
Section 4.1 Capital Contributions of the Partners . . . . . . . . . . 14
Section 4.2 Issuances of Partnership Interests . . . . . . . . . . . . 15
Section 4.3 No Preemptive Rights . . . . . . . . . . . . . . . . . . . 16
Section 4.4 Other Contribution Provisions . . . . . . . . . . . . . . 16
Section 4.5 No Interest on Capital . . . . . . . . . . . . . . . . . . 16
ARTICLE V DISTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 5.1 Requirement and Characterization of Distributions . . . . 17
Section 5.2 Amounts Withheld . . . . . . . . . . . . . . . . . . . . . 19
Section 5.3 Distributions Upon Liquidation . . . . . . . . . . . . . . 19
Section 5.4 Revisions to Reflect Issuance of Additional
Partnership Interests . . . . . . . . . . . . . . . . . . . . . . 20
ARTICLE VI ALLOCATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 6.1 Allocations For Capital Account Purposes . . . . . . . . . 20
Section 6.2 Revisions to Allocations to Reflect Issuance of
Additional Partnership Interests . . . . . . . . . . . . . . . . 21
ARTICLE VII MANAGEMENT AND OPERATIONS OF BUSINESS . . . . . . . . . . . . 21
Section 7.1 Management . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 7.2 Certificate of Limited Partnership . . . . . . . . . . . . 24
Section 7.3 Title to Partnership Assets . . . . . . . . . . . . . . . 25
Section 7.4 Reimbursement of the General Partner . . . . . . . . . . . 25
Section 7.5 Outside Activities of the General Partner . . . . . . . . 26
Section 7.6 Transactions with Affiliates . . . . . . . . . . . . . . . 28
Section 7.7 Indemnification . . . . . . . . . . . . . . . . . . . . . 28
Section 7.8 Liability of the General Partner . . . . . . . . . . . . . 30
Section 7.9 Other Matters Concerning the General Partner . . . . . . . 30
Section 7.10 Reliance by Third Parties . . . . . . . . . . . . . . . . 31
Section 7.11 Restrictions on General Partner's Authority . . . . . . . 31
Section 7.12 Loans by Third Parties . . . . . . . . . . . . . . . . . 38
ARTICLE VIII RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS . . . . . . . . . 38
Section 8.1 Limitation of Liability . . . . . . . . . . . . . . . . . 38
Section 8.2 Management of Business . . . . . . . . . . . . . . . . . . 38
Section 8.3 Outside Activities of Limited Partners . . . . . . . . . . 38
Section 8.4 Return of Capital . . . . . . . . . . . . . . . . . . . . 39
Section 8.5 Rights of Limited Partners Relating to the
Partnership . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 8.6 Redemption Right . . . . . . . . . . . . . . . . . . . . . 40
ARTICLE IX BOOKS, RECORDS, ACCOUNTING AND REPORTS . . . . . . . . . . . . 42
Section 9.1 Records and Accounting . . . . . . . . . . . . . . . . . . 42
Section 9.2 Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . 42
Section 9.3 Reports . . . . . . . . . . . . . . . . . . . . . . . . . 42
- i -
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 . . . . . . . . . . . . . . . . . . . 43
Section 10.4 Organizational Expenses . . . . . . . . . . . . . . . . . 44
Section 10.5 Withholding . . . . . . . . . . . . . . . . . . . . . . . 45
ARTICLE XI TRANSFERS AND WITHDRAWALS . . . . . . . . . . . . . . . . . . . 45
Section 11.1 Transfer . . . . . . . . . . . . . . . . . . . . . . . . 45
Section 11.2 Transfers of Partnership Interests of General
Partner . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Section 11.3 Limited Partners' Rights to Transfer . . . . . . . . . . 46
Section 11.4 Substituted Limited Partners . . . . . . . . . . . . . . 47
Section 11.5 Assignees . . . . . . . . . . . . . . . . . . . . . . . . 48
Section 11.6 General Provisions . . . . . . . . . . . . . . . . . . . 48
ARTICLE XII ADMISSION OF PARTNERS . . . . . . . . . . . . . . . . . . . . 50
Section 12.1 Admission of Successor General Partner . . . . . . . . . 50
Section 12.2 Admission of Additional Limited Partners . . . . . . . . 50
Section 12.3 Amendment of Agreement and Certificate of Limited
Partnership . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
ARTICLE XIII DISSOLUTION AND LIQUIDATION . . . . . . . . . . . . . . . . . 51
Section 13.1 Dissolution . . . . . . . . . . . . . . . . . . . . . . . 51
Section 13.2 Winding Up . . . . . . . . . . . . . . . . . . . . . . . 51
Section 13.3 Compliance with Timing Requirements of Regulations . . . 52
Section 13.4 Deemed Distribution and Recontribution . . . . . . . . . 53
Section 13.5 Rights of Limited Partners . . . . . . . . . . . . . . . 53
Section 13.6 Notice of Dissolution . . . . . . . . . . . . . . . . . . 53
Section 13.7 Cancellation of Certificate of Limited Partnership . . . 53
Section 13.8 Reasonable Time for Winding Up . . . . . . . . . . . . . 53
Section 13.9 Waiver of Partition . . . . . . . . . . . . . . . . . . . 54
Section 13.10 Liability of Liquidator . . . . . . . . . . . . . . . . 54
ARTICLE XIV AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS . . . . . . . . . 54
Section 14.1 Amendments . . . . . . . . . . . . . . . . . . . . . . . 54
Section 14.2 Meetings of the Partners . . . . . . . . . . . . . . . . 56
ARTICLE XV GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . 56
Section 15.1 Addresses and Notice . . . . . . . . . . . . . . . . . . 56
Section 15.2 Titles and Captions . . . . . . . . . . . . . . . . . . . 57
Section 15.3 Pronouns and Plurals . . . . . . . . . . . . . . . . . . 57
Section 15.4 Further Action . . . . . . . . . . . . . . . . . . . . . 57
Section 15.5 Binding Effect . . . . . . . . . . . . . . . . . . . . . 57
Section 15.6 Creditors . . . . . . . . . . . . . . . . . . . . . . . . 57
Section 15.7 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . 57
Section 15.8 Counterparts . . . . . . . . . . . . . . . . . . . . . . 57
Section 15.9 Applicable Law . . . . . . . . . . . . . . . . . . . . . 57
Section 15.10 Invalidity of Provisions . . . . . . . . . . . . . . . . 58
Section 15.11 Power of Attorney . . . . . . . . . . . . . . . . . . . 58
Section 15.12 Entire Agreement . . . . . . . . . . . . . . . . . . . . 59
Section 15.13 No Rights as Shareholders . . . . . . . . . . . . . . . 59
Section 15.14 Limitation to Preserve REIT Status . . . . . . . . . . . 59
- ii -
EXHIBIT A
---------
PARTNERS AND
PARTNERSHIP INTERESTS
EXHIBIT B
---------
CAPITAL ACCOUNT MAINTENANCE
EXHIBIT C
---------
SPECIAL ALLOCATION RULES
EXHIBIT D
---------
NOTICE OF REDEMPTION
EXHIBIT E
---------
VALUE OF CONTRIBUTED PROPERTY
- iii -
FIRST AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
THE MENDIK COMPANY, L.P.
THIS FIRST AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP, DATED AS
OF , 1997, is entered into by and among The Mendik Company,
Inc., a Maryland corporation, as the General Partner of and a Limited Partner in
the Partnership, and FW/Mendik REIT, L.L.C., a Delaware limited liability
company, as a Limited Partner, together with any other Persons who become
Partners in the Partnership as provided herein.
WHEREAS, the Partnership was formed on October 2, 1996, and, on October 2,
1996, the Partnership adopted an Agreement of Limited Partnership (the "Prior
Agreement");
NOW, THEREFORE, in consideration of the mutual covenants set forth
herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby amend
and restate the Prior Agreement in its entirety and agree to continue the
Partnership as a limited partnership under the Delaware Revised Uniform
Limited Partnership Act, as amended from time to time, as follows:
ARTICLE I
DEFINED TERMS
The following definitions shall be for all purposes, unless otherwise
clearly indicated to the contrary, applied to the terms used in this Agreement.
"Act" means the Delaware Revised Uniform Limited Partnership Act, as it may
be amended from time to time, and any successor to such statute.
"Additional Limited Partner" means a Person admitted to the Partnership as
a Limited Partner pursuant to Section 12.2 hereof and who is shown as such on
the books and records of the Partnership.
"Adjusted Capital Account" means the Capital Account maintained for each
Partner as of the end of each Partnership Year (i) increased by any amounts
which such Partner is obligated to restore pursuant to any provision of this
Agreement or is deemed to be obligated to restore pursuant to the penultimate
sentences of Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5) and
(ii) decreased by the items described in Regulations
Sections 1.704-1(b)(2)(ii)(d)(4), 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 Partnership Year.
"Adjusted Property" means any property the Carrying Value of which has been
adjusted pursuant to Exhibit B hereto.
"Adjustment Date" has the meaning set forth in Section 4.2.B hereof.
"Affiliate" means, with respect to any Person, (i) any Person directly or
indirectly controlling, controlled by or under common control with such Person,
(ii) any Person owning or
controlling ten percent (10%) or more of the outstanding voting interests of
such Person, (iii) any Person of which such Person owns or controls ten
percent (10%) or more of the voting interests or (iv) any officer, director,
general partner or trustee of such Person or any Person referred to in
clauses (i), (ii), and (iii) above. For purposes of this definition,
"control," when used with respect to any Person, means the power to direct
the management and policies of such Person, directly or indirectly, whether
through the ownership of voting securities, by contract or otherwise, and the
terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Agreed Value" means (i) in the case of any Contributed Property
contributed to the Partnership as part of or in connection with the
Consolidation, the amount set forth on Exhibit E attached hereto as the Agreed
Value of such Property; (ii) in the case of any other Contributed Property, the
704(c) 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; and
(iii) in the case of any property distributed to a Partner by the Partnership,
the Partnership's Carrying Value of such property at the time such property is
distributed, reduced by any indebtedness either assumed by such Partner upon
such distribution or to which such property is subject at the time of
distribution as determined under Section 752 of the Code and the regulations
thereunder.
"Agreement" means this 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 or other
organizational document governing the General Partner, as amended or restated
from time to time.
"Assignee" means a Person to whom one or more Partnership Units have been
transferred in a manner permitted under this Agreement, but who has not become a
Substituted Limited Partner, and who has the rights set forth in Section 11.5
hereof.
"Available Cash" means, with respect to any period for which such
calculation is being made:
(a) all cash revenues and funds received by the Partnership from whatever
source (excluding the proceeds of any Capital Contribution) plus the amount of
any reduction (including, without limitation, a reduction resulting because the
General Partner determines such amounts are no longer necessary) in reserves of
the Partnership, which reserves are referred to in clause (b)(iv) below;
(b) less the sum of the following (except to the extent made with the
proceeds of any Capital Contribution):
(i) all interest, principal and other debt payments made during
such period by the Partnership,
(ii) all cash expenditures (including capital expenditures) made
by the Partnership during such period,
(iii) investments in any entity (including loans made thereto) to
the extent that such investments are permitted under this Agreement and are
not otherwise described in clauses (b)(i) or (ii), and
(iv) the amount of any increase in reserves established during
such period which the General Partner determines is necessary or appropriate in
its sole and absolute discretion.
- 2 -
Notwithstanding the foregoing, Available Cash shall not include any cash
received or reductions in reserves, or take into account any disbursements
made or reserves established, after commencement of the dissolution and
liquidation of the Partnership.
"Book-Tax Disparities" means, with respect to any item of Contributed
Property or Adjusted Property, as of the date of any determination, the
difference between the Carrying Value of such Contributed Property or
Adjusted Property and the adjusted basis thereof for federal income tax
purposes as of such date. A Partner's share of the Partnership's Book-Tax
Disparities in all of its Contributed Property and Adjusted Property will be
reflected by the difference between such Partner's Capital Account balance as
maintained pursuant to Exhibit B hereto and the hypothetical balance of such
Partner's Capital Account computed as if it had been maintained, with respect
to each such Contributed Property or Adjusted Property, strictly in
accordance with federal income tax accounting principles.
"Business Day" means any day except a Saturday, Sunday or other day on
which commercial banks in New York, New York are authorized or required by
law to close.
"Capital Account" means the Capital Account maintained for a Partner
pursuant to Exhibit B hereto.
"Capital Contribution" means, with respect to any Partner, any cash, cash
equivalents or the Agreed Value of Contributed Property which such Partner
contributes or is deemed to contribute to the Partnership pursuant to
Section 4.1 or 4.2 hereof.
"Carrying Value" means (i) with respect to a Contributed Property or
Adjusted Property, the 704(c) Value of such property reduced (but not below
zero) by all Depreciation with respect to such Contributed Property or Adjusted
Property, as the case may be, charged to the Partners' Capital Accounts and
(ii) with respect to any other Partnership property, the adjusted basis of such
property for federal income tax purposes, all as of the time of determination.
The Carrying Value of any property shall be adjusted from time to time in
accordance with Exhibit B hereto, and to reflect changes, additions or other
adjustments to the Carrying Value for dispositions and acquisitions of
Partnership properties, as deemed appropriate by the General Partner.
"Cash Amount" means an amount of cash equal to the Value on the Valuation
Date of the Shares Amount.
"Certificate" means the Certificate of Limited Partnership relating to the
Partnership filed in the office of the Delaware Secretary of State, as amended
from time to time in accordance with the terms hereof and the Act.
"Charter Documents" has the meaning set forth in Section 7.11.D hereof.
"Class A" has the meaning set forth in Section 5.1.C hereof.
"Class A Share" has the meaning set forth in Section 5.1.C hereof.
"Class A Unit" means any Partnership Unit that is not specifically
designated by the General Partner as being of another specified class of
Partnership Units.
"Class B" has the meaning set forth in Section 5.1.C hereof.
"Class B Share" has the meaning set forth in Section 5.1.C hereof.
- 3 -
"Class B Unit" means a Partnership Unit that is specifically designated by
the General Partner as being a Class B Unit.
"Code" means the Internal Revenue Code of 1986, as amended and in effect
from time to time, as interpreted by the applicable regulations thereunder. Any
reference herein to a specific section or sections of the Code shall be deemed
to include a reference to any corresponding provision of future law.
"Consent" means the consent or approval of a proposed action by a Partner
given in accordance with Section 14.2 hereof.
"Consent of Certain Limited Partners" means Consent of the holders of 75%
in the aggregate of the Two Penn Plaza Units, the Eleven Penn Plaza Units,
and the ▇▇▇ ▇.▇. ▇▇▇▇▇ ▇▇▇▇▇, collectively considered as one group, provided
that (i) if there has been a prior transaction involving the Two Penn Plaza
Property, the Eleven Penn Plaza Property, or the 866 U.N. Plaza Property, as
the case may be, that has been approved by the holders of the Two Penn Plaza
Units, the Eleven Penn Plaza Units, or the ▇▇▇ ▇.▇. ▇▇▇▇▇ ▇▇▇▇▇, as the case
may be, pursuant to Section 7.11.C(1), 7.11.C(2) or 7.11.C(3), as applicable,
and (ii) no holder of the class of Partnership Units with respect to which
the prior transaction occurred (that is, the Two Penn Plaza Units the Eleven
Penn Plaza Units, or the ▇▇▇ ▇.▇. ▇▇▇▇▇ ▇▇▇▇▇, as the case may be) would
recognize gain for federal income tax purposes with respect to (but only with
respect to) such Partnership Units in excess of $1.00 as a result of the sale
or other disposition of all such Partnership Units for $1.00 (that is, no
Limited Partner has a "negative capital account" with respect to such
Partnership Units), then the "Certain Limited Partners" shall not be
considered to include the holders of Partnership Units of that class.
"Consent of the Outside Limited Partners" means the Consent of Limited
Partners (excluding for this purpose any Limited Partnership Interests held by
the General Partner, any Person of which the General Partner owns or controls
more than fifty percent (50%) of the voting interests and any Person owning or
controlling, directly or indirectly, more than fifty percent (50%) of the
outstanding voting interests of the General Partner) holding Percentage
Interests that are greater than fifty percent (50%) of the aggregate Percentage
Interest of all Limited Partners who are not excluded for the purposes hereof.
"Consolidation" means the transactions whereby the Partnership will acquire
interests in certain office properties located in midtown Manhattan and certain
property management businesses, which provide services to those properties and
to other properties in the New York metropolitan area, in exchange for
Partnership Units, all as described in a Consent Solicitation/Memorandum dated
November 11, 1996.
"Consolidation Transaction" has the meaning set forth in Section 7.11.C.(6)
hereof.
"Contributed Property" means each property or other asset contributed to
the Partnership, in such form as may be permitted by the Act, but excluding cash
contributed or deemed contributed to the Partnership. Once the Carrying Value
of a Contributed Property is adjusted pursuant to Exhibit B hereto, such
property shall no longer constitute a Contributed Property for purposes of
Exhibit B hereto, but shall be deemed an Adjusted Property for such purposes.
"Conversion Factor" means 1.0; provided that in the event that the General
Partner Entity (i) declares or pays a dividend on its outstanding Shares in
Shares or makes a distribution to all holders of its outstanding Shares in
Shares, (ii) subdivides its outstanding Shares or (iii) combines its outstanding
Shares into a smaller number of Shares, the Conversion Factor shall be adjusted
by multiplying the Conversion Factor by a fraction, the numerator of which shall
be the number of Shares issued and outstanding on the record date for such
dividend, distribution, subdivision or
- 4 -
combination (assuming for such purposes that such dividend, distribution,
subdivision or combination has occurred as of such time) and the denominator
of which shall be the actual number of Shares (determined without the above
assumption) issued and outstanding on the record date for such dividend,
distribution, subdivision or combination; and provided further that in the
event that an entity shall cease to be the General Partner Entity (the
"Predecessor Entity") and another entity shall become the General Partner
Entity (the "Successor Entity"), the Conversion Factor shall be adjusted by
multiplying the Conversion Factor by a fraction, the numerator of which is
the Value of one Share of the Predecessor Entity, determined as of the time
immediately prior to when the Successor Entity becomes the General Partner
Entity, and the denominator of which is the Value of one Share of the
Successor Entity, determined as of that same date. (For purposes of the
second proviso in the preceding sentence, in the event that any shareholders
of the Predecessor Entity will receive consideration in connection with the
transaction in which the Successor Entity becomes the General Partner Entity,
the numerator in the fraction described above for determining the adjustment
to the Conversion Factor (that is, the Value of one Share of the Predecessor
Entity) shall be the sum of the greatest amount of cash and the fair market
value of any securities and other consideration that the holder of one Share
in the Predecessor Entity could have received in such transaction (determined
without regard to any provisions governing fractional shares).) Any
adjustment to the Conversion Factor shall become effective immediately after
the effective date of such event retroactive to the record date, if any, for
the event giving rise thereto; it being intended that (x) adjustments to the
Conversion Factor are to be made in order to avoid unintended dilution or
anti-dilution as a result of transactions in which Shares are issued,
redeemed or exchanged without a corresponding issuance, redemption or
exchange of Partnership Units and (y) if a Specified Redemption Date shall
fall between the record date and the effective date of any event of the type
described above, that the Conversion Factor applicable to such redemption
shall be adjusted to take into account such event.
"Convertible Funding Debt" has the meaning set forth in Section 7.5.F
hereof.
"Debt" means, as to any Person, as of any date of determination, (i) all
indebtedness of such Person for borrowed money or for the deferred purchase
price of property or services, (ii) all amounts owed by such Person to banks
or other Persons in respect of reimbursement obligations under letters of
credit, surety bonds and other similar instruments guaranteeing payment or
other performance of obligations by such Person, (iii) all indebtedness for
borrowed money or for the deferred purchase price of property or services
secured by any lien on any property owned by such Person, to the extent
attributable to such Person's interest in such property, even though such
Person has not assumed or become liable for the payment thereof, and (iv)
obligations of such Person incurred in connection with entering into a lease
which, in accordance with generally accepted accounting principles, should be
capitalized.
"Deemed Partnership Interest Value" means, as of any date with respect to
any class of Partnership Interests, the Deemed Value of the Partnership
Interest of such class multiplied by the applicable Partner's Percentage
Interest of such class.
"Deemed Value of the Partnership Interest" means, as of any date with
respect to any class of Partnership Interests, (a) if the shares of common
stock (or other comparable equity interests) of the General Partner are
Publicly Traded (i) the total number of shares of capital stock (or other
comparable equity interest) of the General Partner corresponding to such
class of Partnership Interest (as provided for in Section 4.2.B hereof)
issued and outstanding as of the close of business on such date (excluding
any treasury shares) multiplied by the Value of a share of such capital stock
(or other comparable equity interest) on such date divided by (ii) the
Percentage Interest of the General Partner in such class of Partnership
Interests on such date, and (b) otherwise, the aggregate Value of such class
of Partnership Interests determined as set forth in the fourth and fifth
sentences of the definition of Value.
- 5 -
"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 Carrying Value as the
federal income tax depreciation, amortization, or other cost recovery deduction
for such year bears to such beginning adjusted tax basis; provided, however,
that if the federal income tax depreciation, amortization, or other cost
recovery deduction for such year is zero, Depreciation shall be determined with
reference to such beginning Carrying Value using any reasonable method selected
by the General Partner.
"Distribution Period" has the meaning set forth in Section 5.1.C hereof.
"866 U.N. Plaza Associates" means 866 United Nations Plaza Associates LLC,
a New York limited liability company.
"866 U.N. Plaza Property" has the meaning set forth in Section 7.11.C
hereof.
"866 U.N. Plaza Units" has the meaning set forth in Section 7.11.C hereof.
"Effective Date" means the date of the closing of the Consolidation.
"Eleven Penn Partnerships" means M/F Associates, a New York limited
partnership, M/F Eleven Associates, a New York limited partnership, M/S
Associates, a New York limited partnership, and M/S Eleven Associates, a New
York limited partnership.
"Eleven Penn Plaza Property" has the meaning set forth in Section 7.11.C
hereof.
"Eleven Penn Plaza Units" has the meaning set forth in Section 7.11.C
hereof.
"Equity Merger" has the meaning set forth in Section 7.11.D hereof.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exchanged Property" has the meaning set forth in Section 7.11.C hereof.
"Funding Debt" means the incurrence of any Debt by or on behalf of the
General Partner for the purpose of providing funds to the Partnership.
"General Partner" means The Mendik Company, Inc., a Maryland corporation,
or its successors as general partner of the Partnership.
"General Partner Entity" means the General Partner; provided, however,
that if (i) the shares of common stock (or other comparable equity interests)
of the General Partner are at any time not Publicly Traded and (ii) the
shares of common stock (or other comparable equity interests) of an entity
that owns, directly or indirectly, fifty percent (50%) or more of the shares
of common stock (or other comparable equity interests) of the General Partner
are Publicly Traded, the term "General Partner Entity" shall refer to such
entity whose shares of common stock (or other comparable equity securities)
are Publicly Traded. If both requirements set forth in clauses (i) and (ii)
above are not satisfied, then the term "General Partner Entity" shall mean
the General Partner.
"General Partner Payment" has the meaning set forth in Section 15.14
hereof.
- 6 -
"General Partnership Interest" means a Partnership Interest held by the
General Partner that is a general partnership interest. A General Partnership
Interest may be expressed as a number of Partnership Units.
"IRS" means the Internal Revenue Service, which administers the internal
revenue laws of the United States.
"Immediate Family" means, with respect to any natural Person, such natural
Person's spouse, parents, descendants, nephews, nieces, brothers, and sisters.
"Incapacity" or "Incapacitated" means, (i) as to any individual Partner,
death, total physical disability or entry by a court of competent
jurisdiction adjudicating such Partner incompetent to manage his or her
Person or estate, (ii) as to any corporation which is a Partner, the filing
of a certificate of dissolution, or its equivalent, for the corporation or
the revocation of its charter, (iii) as to any partnership which is a
Partner, the dissolution and commencement of winding up of the partnership,
(iv) as to any estate which is a Partner, the distribution by the fiduciary
of the estate's entire interest in the Partnership, (v) as to any trustee of
a trust which is a Partner, the termination of the trust (but not the
substitution of a new trustee) or (vi) as to any Partner, the bankruptcy of
such Partner. For purposes of this definition, bankruptcy of a Partner shall
be deemed to have occurred when (a) the Partner commences a voluntary
proceeding seeking liquidation, reorganization or other relief under any
bankruptcy, insolvency or other similar law now or hereafter in effect, (b)
the Partner is adjudged as bankrupt or insolvent, or a final and
nonappealable order for relief under any bankruptcy, insolvency or similar
law now or hereafter in effect has been entered against the Partner, (c) the
Partner executes and delivers a general assignment for the benefit of the
Partner's creditors, (d) the Partner files an answer or other pleading
admitting or failing to contest the material allegations of a petition filed
against the Partner in any proceeding of the nature described in clause (b)
above, (e) the Partner seeks, consents to or acquiesces in the appointment of
a trustee, receiver or liquidator for the Partner or for all or any
substantial part of the Partner's properties, (f) any proceeding seeking
liquidation, reorganization or other relief under any bankruptcy, insolvency
or other similar law now or hereafter in effect has not been dismissed within
one hundred twenty (120) days after the commencement thereof, (g) the
appointment without the Partner's consent or acquiescence of a trustee,
receiver of liquidator has not been vacated or stayed within ninety (90) days
of 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.
"Indemnitee" means (i) any Person made a party to a proceeding or
threatened with being made a party to a proceeding by reason of its status as
(A) the General Partner, (B) a Limited Partner or (C) a director or officer of
the Partnership or the General Partner and (ii) such other Persons (including
Affiliates of the General Partner, a Limited Partner or the Partnership) as the
General Partner may designate from time to time (whether before or after the
event giving rise to potential liability), in its sole and absolute discretion.
"Limited Partner" means any Person named as a Limited Partner in Exhibit A
attached hereto, as such Exhibit may be amended and restated 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 representing a fractional part of the Partnership
Interests of all Limited Partners and includes any and all benefits to which the
holder of such a Partnership Interest may be entitled as provided in this
Agreement, together with all obligations of such Person to comply with the terms
and provisions of this Agreement. A Limited Partnership Interest may be
expressed as a number of Partnership Units.
- 7 -
"Liquidating Event" has the meaning set forth in Section 13.1 hereof.
"Liquidating Transaction" has the meaning set forth in Section 7.11.C
hereof.
"Liquidator" has the meaning set forth in Section 13.2.A hereof.
"Mendik/FW LLC" means FW/Mendik REIT, L.L.C., a Delaware limited liability
company.
"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 Exhibit B hereto. If an item of income, gain, loss or deduction that
has been included in the initial computation of Net Income is subjected to
the special allocation rules in Exhibit C hereto, 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
Exhibit B. If an item of income, gain, loss or deduction that has been included
in the initial computation of Net Loss is subjected to the special allocation
rules in Exhibit C hereto, Net Loss or the resulting Net Income, whichever the
case may be, shall be recomputed without regard to such item.
"New Securities" means (i) any rights, options, warrants or convertible or
exchangeable securities having the right to subscribe for or purchase shares of
capital stock (or other comparable equity interest) of the General Partner,
excluding grants under any Stock Option Plan, or (ii) any Debt issued by the
General Partner that provides any of the rights described in clause (i).
"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 2.B of Exhibit C hereto
if such properties were disposed of in a taxable transaction in full
satisfaction of such liabilities and for no other consideration.
"Nonrecourse Deductions" has the meaning set forth in Regulations
Section 1.704-2(b)(1), and the amount of Nonrecourse Deductions for a
Partnership Year shall be determined in accordance with the rules of Regulations
Section 1.704-2(c).
"Nonrecourse Liability" has the meaning set forth in Regulations
Section 1.752-1(a)(2).
"Notice of Redemption" means a Notice of Redemption substantially in the
form of Exhibit D attached hereto.
"Partner" means the General Partner or a Limited Partner, and "Partners"
means the General Partner and the Limited Partners.
"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).
- 8 -
"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 limited partnership formed under the Act and
continued upon the terms and conditions set forth in this Agreement, and any
successor thereto.
"Partnership Interest" means a Limited Partnership Interest or the General
Partnership Interest and includes any and all benefits to which the holder of
such a Partnership Interest may be entitled as provided in this Agreement,
together with all obligations of such Person to comply with the terms and
provisions of this Agreement. A Partnership Interest may be expressed as a
number of Partnership Units.
"Partnership Minimum Gain" has the meaning set forth in Regulations
Section 1.704-2(b)(2), and the amount of Partnership Minimum Gain, as well as
any net increase or decrease in Partnership Minimum Gain, for a Partnership Year
shall be determined in accordance with the rules of Regulations
Section 1.704-2(d).
"Partnership Record Date" means the record date established by the
General Partner either (i) for the distribution of Available Cash pursuant to
Section 5.1 hereof, which record date shall be the same as the record date
established by the General Partner Entity for a distribution to its
shareholders of some or all of its portion of such distribution received by
the General Partner if the shares of common stock (or comparable equity
interests) of the General Partner Entity are Publicly Traded, or (ii) if
applicable, for determining the Partners entitled to vote on or consent to
any proposed action for which the consent or approval of the Partners is
sought pursuant to Section 14.2 hereof.
"Partnership Unit" means a fractional, undivided share of the Partnership
Interests of all Partners issued pursuant to Sections 4.1 and 4.2 hereof, and
includes Class A Units, Class B Units and any other classes or series of
Partnership Units established after the date hereof. The number of
Partnership Units outstanding and the Percentage Interests in the Partnership
represented by such Partnership Units are set forth in Exhibit A hereto, as
such Exhibit may be amended and restated from time to time. The ownership of
Partnership Units may be evidenced by a certificate in a form approved by the
General Partner.
"Partnership Year" means the fiscal year of the Partnership, which shall be
the calendar year.
"Percentage Interest" means, as to a Partner holding a class of Partnership
Interests, its interest in such class, determined by dividing the Partnership
Units of such class owned by such Partner by the total number of Partnership
Units of such class then outstanding as specified in Exhibit A attached hereto,
as such exhibit may be amended and restated from time to time, multiplied by the
aggregate Percentage Interest allocable to such class of Partnership Interests.
In the event that the Partnership shall at any time have outstanding more than
one class of Partnership Interests, the Percentage Interest attributable to each
class of Partnership Interests shall be determined as set forth in Section 4.2.B
hereof.
"Person" means a natural person, partnership (whether general or limited),
trust, estate, association, corporation, limited liability company,
unincorporated organization, custodian, nominee or any other individual or
entity in its own or any representative capacity.
- 9 -
"Predecessor Entity" has the meaning set forth in the definition of
"Conversion Factor" herein.
"Publicly Traded" means listed or admitted to trading on the New York Stock
Exchange, the American Stock Exchange or another national securities exchange or
designated for quotation on the NASDAQ National Market, or any successor to any
of the foregoing.
"Qualified REIT Subsidiary" means any Subsidiary of the General Partner
that is a "qualified REIT subsidiary" within the meaning Section 856(i) of the
Code.
"Recapture Income" means any gain recognized by the Partnership (computed
without regard to any adjustment required by 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.
"Redeeming Partner" has the meaning set forth in Section 8.6.A hereof.
"Redemption Amount" means either the Cash Amount or the Shares Amount, as
determined by the General Partner in its sole and absolute discretion; provided
that in the event that the Shares are not Publicly Traded at the time a
Redeeming Partner exercises its Redemption Right, the Redemption Amount shall be
paid only in the form of the Cash Amount unless the Redeeming Partner, in its
sole and absolute discretion, consents to payment of the Redemption Amount in
the form of the Shares Amount. A Redeeming Partner shall have no right, without
the General Partner's consent, in its sole and absolute discretion, to receive
the Redemption Amount in the form of the Shares Amount.
"Redemption Right" has the meaning set forth in Section 8.6.A hereof.
"Regulations" means the Income Tax Regulations promulgated under the Code,
as such regulations may be amended from time to time (including corresponding
provisions of succeeding regulations).
"REIT" means a real estate investment trust under Section 856 of the Code.
"REIT Requirements" has the meaning set forth in Section 5.1.A hereof.
"Replacement Property" has the meaning set forth in Section 7.11.C hereof.
"Residual Gain" or "Residual Loss" means any item of gain or loss, as the
case may be, of the Partnership recognized for federal income tax purposes
resulting from a sale, exchange or other disposition of Contributed Property or
Adjusted Property, to the extent such item of gain or loss is not allocated
pursuant to Section 2.B.1(a) or 2.B.2(a) of Exhibit C hereto to eliminate Book-
Tax Disparities.
"Safe Harbor" has the meaning set forth in Section 11.6.F hereof.
"Securities Act" means the Securities Act of 1933, as amended.
"704(c) Value" of any Contributed Property means the fair market value of
such property at the time of contribution as determined by the General Partner
using such reasonable method of valuation as it may adopt. Subject to Exhibit B
hereto, the General Partner shall, in its sole and absolute discretion, use such
method as it deems reasonable and appropriate to allocate the aggregate of the
704(c) Values of Contributed Properties in a single or integrated transaction
among each separate property on a basis proportional to their fair market
values. The 704(c) Values of the
- 10 -
Contributed Properties contributed to the Partnership as part of or in
connection with the Consolidation are set forth on Exhibit E attached hereto.
"Share" means a share of capital stock (or other comparable equity
interest) of the General Partner Entity. Shares may be issued in one or more
classes or series in accordance with the terms of the Articles of
Incorporation (or, if the General Partner is not the General Partner Entity,
the organizational documents of the General Partner Entity). In the event
that there is more than one class or series of Shares, the term "Shares"
shall, as the context requires, be deemed to refer to the class or series of
Shares that correspond to the class or series of Partnership Interests for
which the reference to Shares is made. When used with reference to Class A
Units, the term "Shares" refers to shares of common stock (or other
comparable equity interest) of the General Partner Entity.
"Shares Amount" means a number of Shares equal to the product of the number
of Partnership Units offered for redemption by a Redeeming Partner times the
Conversion Factor; provided that, in the event the General Partner Entity issues
to all holders of Shares rights, options, warrants or convertible or
exchangeable securities entitling such holders to subscribe for or purchase
Shares or any other securities or property (collectively, the "rights"), then
the Shares Amount shall also include such rights that a holder of that number of
Shares would be entitled to receive; and provided further that, the Shares
Amount shall be adjusted pursuant to Section 7.5 hereof in the event that the
General Partner acquires material assets other than on behalf of the
Partnership.
"Specified Redemption Date" means the tenth Business Day after receipt by
the General Partner of a Notice of Redemption; provided that, if the Shares
are not Publicly Traded, the Specified Redemption Date means the thirtieth
Business Day after receipt by the General Partner of a Notice of Redemption.
"Stock Option Plan" means any stock incentive plan of the General Partner,
the Partnership or any Affiliate of the Partnership or the General Partner.
"Subsidiary" means, with respect to any Person, any corporation, limited
liability company, partnership or joint venture, or other entity of which a
majority of (i) the voting power of the voting equity securities or (ii) the
outstanding equity interests is owned, directly or indirectly, by such Person.
"Substituted Limited Partner" means a Person who is admitted as a Limited
Partner to the Partnership pursuant to Section 11.4 hereof.
"Successor Entity" has the meaning set forth in the definition of
"Conversion Factor" herein.
"Successor Partnership" has the meaning set forth in Section 7.11.C hereof.
"Tenant" means any tenant from which the General Partner derives rent,
either directly or indirectly through partnerships, including the Partnership,
or through any Qualified REIT Subsidiary.
"Terminating Capital Transaction" means any sale or other disposition of
all or substantially all of the assets of the Partnership for cash 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 for
cash.
"Termination Transaction" has the meaning set forth in Section 11.2.B
hereof.
- 11 -
"Transferred Property" has the meaning set forth in Section 7.11.C. hereof.
"Two Penn Plaza Associates" means Two Penn Plaza Associates, L.P., a New
York limited partnership.
"Two Penn Plaza Property" has the meaning set forth in Section 7.11.C
hereof.
"Two Penn Plaza Units" has the meaning set forth in Section 7.11.C hereof.
"Unrealized Gain" attributable to any item of Partnership property means,
as of any date of determination, the excess, if any, of (i) the fair market
value of such property (as determined under Exhibit B hereto) as of such date,
over (ii) the Carrying Value of such property (prior to any adjustment to be
made pursuant to Exhibit B hereto) as of such date.
"Unrealized Loss" attributable to any item of Partnership property means,
as of any date of determination, the excess, if any, of (i) the Carrying Value
of such property (prior to any adjustment to be made pursuant to Exhibit B
hereto) as of such date, over (ii) the fair market value of such property (as
determined under Exhibit B hereto) as of such date.
"Valuation Date" means the date of receipt by the General Partner of a
Notice of Redemption or, if such date is not a Business Day, the first Business
Day thereafter.
"Value" means, with respect to any outstanding Shares of the General
Partner Entity that are Publicly Traded, the average of the daily market
price for the ten (10) consecutive trading days immediately preceding the
date with respect to which value must be determined or, if such date is not a
Business Day, the immediately preceding Business Day. The market price for
each such trading day shall be the closing price, regular way, on such day,
or if no such sale takes place on such day, the average of the closing bid
and asked prices on such day. In the event that the outstanding Shares of
the General Partner Entity are Publicly Traded and the Shares Amount includes
rights that a holder of Shares would be entitled to receive, then the Value
of such rights shall be determined by the General Partner acting in good
faith on the basis of such quotations and other information as it considers,
in its reasonable judgment, appropriate. In the event that the Shares of the
General Partner Entity are not Publicly Traded, the Value of the Shares
Amount per Partnership Unit offered for redemption (which will be the Cash
Amount per Partnership Unit offered for redemption payable pursuant to
Section 8.6A hereof) means the amount that a holder of one Partnership Unit
would receive if each of the assets of the Partnership were to be sold for
its fair market value on the Specified Redemption Date, the Partnership were
to pay all of its outstanding liabilities, and the remaining proceeds were to
be distributed to the Partners in accordance with the terms of this
Agreement. Such Value shall be determined by the General Partner, acting in
good faith and based upon a commercially reasonable estimate of the amount
that would be realized by the Partnership if each asset of the Partnership
(and each asset of each partnership. limited liability company, joint venture
or other entity in which the Partnership owns a direct or indirect interest)
were sold to an unrelated purchaser in an arms' length transaction where
neither the purchaser nor the seller were under economic compulsion to enter
into the transaction (without regard to any discount in value as a result of
the Partnership's minority interest in any property or any illiquidity of the
Partnership's interest in any property). In connection with determining the
Deemed Value of the Partnership Interest for purposes of determining the
number of additional Partnership Units issuable upon a Capital Contribution
funded by an underwritten public offering of shares of capital stock (or
other comparable equity interest) of the General Partner, the Value of such
shares shall be the public offering price per share of such class of the
capital stock (or other comparable equity interest) sold.
- 12 -
ARTICLE II
ORGANIZATIONAL MATTERS
Section 2.1 Organization
The Partnership is a limited partnership organized pursuant to the
provisions of the Act and upon the terms and conditions set forth in the Prior
Agreement. The Partners hereby continue the Partnership and amend and restate
the Prior Agreement in its entirety. 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 The Mendik Company, L.P. The
Partnership's business may be conducted under any other name or names deemed
advisable by the General Partner, including the name of the General Partner
or any Affiliate thereof. The words "Limited Partnership," "L.P.," "Ltd." or
similar words or letters shall be included in the Partnership's name where
necessary for the purposes of complying with the laws of any jurisdiction
that so requires. The General Partner in its sole and absolute discretion
may change the name of the Partnership at any time and from time to time and
shall notify the Limited Partners of such change in the next regular
communication to the Limited Partners.
Section 2.3 Registered Office and Agent; Principal Office
The address of the registered office of the Partnership in the State of
Delaware shall be located at Corporation Trust Center, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ of ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, and the registered agent for
service of process on the Partnership in the State of Delaware at such
registered office shall be Corporation Trust Company. The principal office of
the Partnership shall be ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, or such
other place as the General Partner may from time to time designate by notice to
the Limited Partners. The Partnership may maintain offices at such other place
or places within or outside the State of Delaware as the General Partner deems
advisable.
Section 2.4 Term
The term of the Partnership commenced on October 2, 1996, the date on which
the Certificate was filed in the office of the Secretary of State of the State
of Delaware in accordance with the Act, and shall continue until December 31,
2095, unless it is dissolved sooner pursuant to the provisions of Article XIII
hereof 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 conduct any business that may be lawfully conducted by a limited
partnership organized pursuant to the Act; provided, however, that such
business shall be limited to and conducted in such a manner as to permit the
General Partner Entity at all times to be classified as a REIT, unless the
General Partner Entity ceases to qualify, or is not qualified, as a REIT for
any reason or reasons not related
- 13 -
to the business conducted by the Partnership; (ii) to enter into any
partnership, joint venture, limited liability company or other similar
arrangement to engage in any of the foregoing or the ownership of interests
in any entity engaged, directly or indirectly, in any of the foregoing; and
(iii) to do anything necessary or incidental to the foregoing. In connection
with the foregoing, the Partners acknowledge that the status of the General
Partner Entity as a REIT inures to the benefit of all the Partners and not
solely the General Partner or its Affiliates.
Section 3.2 Powers
The Partnership is empowered to do any and all acts and things necessary,
appropriate, proper, advisable, incidental to or convenient for the
furtherance and accomplishment of the purposes and business described herein
and for the protection and benefit of the Partnership, 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 of trust, pledge or other lien, acquire, own,
manage, improve and develop real property, and lease, sell, transfer and
dispose of real property; provided, however, that the Partnership shall not
take, or refrain from taking, any action which, in the judgment of the
General Partner, in its sole and absolute discretion, (i) could adversely
affect the ability of the General Partner Entity to continue to qualify as a
REIT, (ii) could subject the General Partner Entity to any additional taxes
under Section 857 or Section 4981 of the Code or (iii) could violate any law
or regulation of any governmental body or agency having jurisdiction over the
General Partner Entity or its securities, unless such action (or inaction)
shall have been specifically consented to by the General Partner in writing.
Section 3.3 Partnership Only for Purposes Specified
The Partnership shall be a partnership only for the purposes specified in
Section 3.1 above, and this Agreement shall not be deemed to create a
partnership among the Partners with respect to any activities whatsoever other
than the activities within the purposes of the Partnership as specified in
Section 3.1 above.
ARTICLE IV
CAPITAL CONTRIBUTIONS AND ISSUANCES
OF PARTNERSHIP INTERESTS
Section 4.1 Capital Contributions of the Partners
A. Initial Capital Contributions and Recapitalization of the
Partnership on the Effective Date. The General Partner and Mendik/FW LLC
previously made Capital Contributions to the Partnership. On the Effective
Date, the General Partner and certain other Persons (including Mendik/FW LLC)
will make additional Capital Contributions to the Partnership in connection
with the Consolidation. On the Effective Date, the Partnership shall be
recapitalized, and the General Partner will complete Exhibit A hereto to
reflect the Capital Contributions made by each Partner, the Partnership Units
assigned to each Partner and the Percentage Interest in the Partnership
represented by such Partnership Units. The Capital Accounts of the Partners
and the Carrying Values of the Partnership's Assets shall be determined as of
the Effective Date pursuant to Section I.D of Exhibit B hereto to reflect the
Capital Contributions made prior to and on the Effective Date.
B. General Partnership Interest. A number of Partnership Units held by
the General Partner equal to one percent (1%) of all outstanding Partnership
Units shall be deemed to be the General Partner Partnership Units and shall
be the General Partnership Interest. All other
- 14 -
Partnership Units held by the General Partner shall be deemed to be Limited
Partnership Interests and shall be held by the General Partner in its
capacity as a Limited Partner in the Partnership.
C. Capital Contributions By Merger. To the extent the Partnership
acquires any property by the merger of any other Person into the Partnership,
Persons who receive Partnership Interests in exchange for their interests in
the Person merging into the Partnership shall become Partners and shall be
deemed to have made Capital Contributions as provided in the applicable
merger agreement and as set forth in Exhibit A hereto.
D. No Obligation to Make Additional Capital Contributions. Except as
provided in Sections 7.5 and 10.5 hereof, the Partners shall have no
obligation to make any additional Capital Contributions or provide any
additional funding to the Partnership (whether in the form of loans,
repayments of loans or otherwise). No Partner shall have any obligation to
restore any deficit that may exist in its Capital Account, either upon a
liquidation of the Partnership or otherwise.
Section 4.2 Issuances of Partnership Interests
A. General. The General Partner is hereby authorized to cause the
Partnership from time to time to issue to Partners (including the General
Partner and its Affiliates) or other Persons (including, without limitation,
in connection with the contribution of property to the Partnership)
Partnership Units or other Partnership Interests in one or more classes, or
in one or more series of any of such classes, with such designations,
preferences and relative, participating, optional or other special rights,
powers and duties, including rights, powers and duties senior to Limited
Partnership Interests, all as shall be determined, subject to applicable
Delaware law, by the General Partner in its sole and absolute discretion,
including, without limitation, (i) the allocations of items of Partnership
income, gain, loss, deduction and credit to each such class or series of
Partnership Interests, (ii) the right of each such class or series of
Partnership Interests to share in Partnership distributions and (iii) the
rights of each such class or series of Partnership Interests upon dissolution
and liquidation of the Partnership; provided that, no such Partnership Units
or other Partnership Interests shall be issued to the General Partner unless
either (a) the Partnership Interests are issued in connection with the grant,
award or issuance of Shares or other equity interests in the General Partner
having designations, preferences and other rights such that the economic
interests attributable to such Shares or other equity interests are
substantially similar to the designations, preferences and other rights
(except voting rights) of the additional Partnership Interests issued to the
General Partner in accordance with this Section 4.2.A or (b) the Partnership
Interests are issued to all Partners holding Partnership Interests in the
same class in proportion to their respective Percentage Interests in such
class. In the event that the Partnership issues Partnership Interests
pursuant to this Section 4.2.A, the General Partner shall make such revisions
to this Agreement (including but not limited to the revisions described in
Section 5.4, Section 6.2 and Section 8.6 hereof) as it deems necessary to
reflect the issuance of such additional Partnership Interests.
B. Percentage Interest Adjustments in the Case of Capital Contributions
for Partnership Units. Upon the acceptance of additional Capital
Contributions in exchange for Partnership Units, the Percentage Interest
related thereto shall be equal to a fraction, the numerator of which is equal
to the amount of cash, if any, plus the Agreed Value of Contributed Property,
if any, contributed with respect to such additional Partnership Units and the
denominator of which is equal to the sum of (i) the Deemed Value of the
Partnership Interests for all outstanding classes (computed as of the
Business Day immediately preceding the date on which the additional Capital
Contributions are made (an "Adjustment Date")) plus (ii) the aggregate amount
of additional Capital Contributions contributed to the Partnership on such
Adjustment Date in respect of such additional Partnership Units. The
Percentage Interest of each other Partner holding Partnership Interests not
making a full pro rata Capital Contribution shall be adjusted to a fraction the
- 15 -
numerator of which is equal to the sum of (i) the Deemed Partnership Interest
Value of such Limited Partner (computed as of the Business Day immediately
preceding the Adjustment Date) plus (ii) the amount of additional Capital
Contributions (such amount being equal to the amount of cash, if any, plus
the Agreed Value of Contributed Property, if any, so contributed), if any,
made by such Partner to the Partnership in respect of such Partnership
Interest as of such Adjustment Date and the denominator of which is equal to
the sum of (i) the Deemed Value of the Partnership Interests of all
outstanding classes (computed as of the Business Day immediately preceding
such Adjustment Date) plus (ii) the aggregate amount of the additional
Capital Contributions contributed to the Partnership on such Adjustment Date
in respect of such additional Partnership Interests. For purposes of
calculating a Partner's Percentage Interest pursuant to this Section 4.2.B,
cash Capital Contributions by the General Partner will be deemed to equal the
cash contributed by the General Partner plus (a) in the case of cash
contributions funded by an offering of any equity interests in or other
securities of the General Partner, the offering costs attributable to the
cash contributed to the Partnership, and (b) in the case of Partnership Units
issued pursuant to Section 7.5.E hereof, an amount equal to the difference
between the Value of the Shares sold pursuant to any Stock Option Plan and
the net proceeds of such sale.
C. Classes of Partnership Units. From and after the Effective Date,
subject to Section 4.2.A above, the Partnership shall have two classes of
Partnership Units entitled "Class A Units" and "Class B Units." Either Class
A Units or Class B Units, at the election of the General Partner, in its sole
and absolute discretion, may be issued to newly admitted Partners in exchange
for the contribution by such Partners of cash, real estate partnership
interests, stock, notes or other assets or consideration; provided, that all
Partnership Units issued to Partners in connection with the Consolidation
shall be Class A Units; and, provided further, that any Partnership Unit that
is not specifically designated by the General Partner as being of a
particular class shall be deemed to be a Class A Unit. Each Class B Unit
shall be converted automatically into a Class A Unit on the day immediately
following the Partnership Record Date for the Distribution Period (as defined
in Section 5.1.C hereof) in which such Class B Unit was issued, without the
requirement for any action by either the Partnership or the Partner holding
the Class B Unit.
Section 4.3 No Preemptive Rights
Except to the extent expressly granted by the Partnership pursuant to
another agreement, no Person shall have any preemptive, preferential or other
similar right with respect to (i) additional Capital Contributions or loans
to the Partnership or (ii) issuance or sale of any Partnership Units or other
Partnership Interests.
Section 4.4 Other Contribution Provisions
In the event that any Partner is admitted to the Partnership and is given
a Capital Account in exchange for services rendered to the Partnership, such
transaction shall be treated by the Partnership and the affected Partner as
if the Partnership had compensated such Partner in cash, and the Partner had
contributed such cash to the capital of the Partnership.
Section 4.5 No Interest on Capital
No Partner shall be entitled to interest on its Capital Contributions or
its Capital Account.
- 16 -
ARTICLE V
DISTRIBUTIONS
Section 5.1 Requirement and Characterization of Distributions
A. General. The General Partner shall distribute at least quarterly an
amount equal to one hundred percent (100%) of Available Cash generated by the
Partnership during such quarter or shorter period to the Partners who are
Partners on the Partnership Record Date with respect to such quarter or
shorter period as provided in Sections 5.1.B, 5.1.C and 5.1.D below.
Notwithstanding anything to the contrary contained herein, in no event may a
Partner receive a distribution of Available Cash with respect to a
Partnership Unit for a quarter or shorter period if such Partner is entitled
to receive a distribution with respect to a Share for which such Partnership
Unit has been redeemed or exchanged. Unless otherwise expressly provided for
herein or in an agreement at the time a new class of Partnership Interests is
created in accordance with Article IV hereof, no Partnership Interest shall
be entitled to a distribution in preference to any other Partnership
Interest. The General Partner shall make such reasonable efforts, as
determined by it in its sole and absolute discretion and consistent with the
qualification of the General Partner Entity as a REIT, to distribute
Available Cash (a) to Limited Partners so as to preclude any such
distribution or portion thereof from being treated as part of a sale of
property of the Partnership by a Limited Partner under Section 707 Code or
the Regulations thereunder; provided that, the General Partner and the
Partnership shall not have liability to a Limited Partner under any
circumstances as a result of any distribution to a Limited Partner being so
treated, and (b) to the General Partner in an amount sufficient to enable the
General Partner Entity to pay stockholder dividends that will (1) satisfy the
requirements for qualification as a REIT under the Code and the Regulations
(the "REIT Requirements") and (2) avoid any federal income or excise tax
liability for the General Partner Entity.
B. Method. (i) Each holder of Partnership Interests that are entitled
to any preference in distribution shall be entitled to a distribution in
accordance with the rights of any such class of Partnership Interests (and,
within such class, pro rata in proportion to the respective Percentage
Interests on such Partnership Record Date); and
(ii) To the extent there is Available Cash remaining after the payment of
any preference in distribution in accordance with the foregoing clause (i),
with respect to Partnership Interests that are not entitled to any preference
in distribution, pro rata to each such class in accordance with the terms of
such class (and, within each such class, pro rata in proportion to the
respective Percentage Interests on such Partnership Record Date).
C. Distributions When Class B Units Are Outstanding. If for any
quarter or shorter period with respect to which a distribution is to be made
(a "Distribution Period") Class B Units are outstanding on the Partnership
Record Date for such Distribution Period, the General Partner shall allocate
the Available Cash with respect to such Distribution Period available for
distribution with respect to the Class A Units and Class B Units collectively
between the Partners who are holders of Class A Units ("Class A") and the
Partners who are holders of Class B Units ("Class B") as follows:
- 17 -
(1) Class A shall receive that portion of the
Available Cash (the "Class A Share") determined by
multiplying the amount of Available Cash by the following
fraction:
A x Y
---------------------
(A x Y)+(B x X)
(2) Class B shall receive that portion of the
Available Cash (the "Class B Share") determined by
multiplying the amount of Available Cash by the following
fraction:
B x X
---------------------
(A x Y)+(B x X)
(3) For purposes of the foregoing formulas, (i) "A"
equals the number of Class A Units outstanding on the
Partnership Record Date for such Distribution Period;
(ii) "B" equals the number of Class B Units outstanding on
the Partnership Record Date for such Distribution Period;
(iii) "Y" equals the number of days in the Distribution
Period; and (iv) "X" equals the number of days in the
Distribution Period for which the Class B Units were issued
and outstanding.
The Class A Share shall be distributed among Partners holding Class A
Units on the Partnership Record Date for the Distribution Period in
accordance with the number of Class A Units held by each Partner on such
Partnership Record Date; provided that, in no event may a Partner receive a
distribution of Available Cash with respect to a Class A Unit if a Partner is
entitled to receive a distribution out of such Available Cash with respect to
a Share for which such Class A Unit has been redeemed or exchanged. The
Class B Share shall be distributed among the Partners holding Class B Units
on the Partnership Record Date for the Distribution Period in accordance with
the number of Class B Units held by each Partner on such Partnership Record
Date. In no event shall any Class B Units be entitled to receive any
distribution of Available Cash for any Distribution Period ending prior to
the date on which such Class B Units are issued.
D. Distributions When Class B Units Have Been Issued on Different
Dates. In the event that Class B Units which have been issued on different
dates are outstanding on the Partnership Record Date for any Distribution
Period, then the Class B Units issued on each particular date shall be
treated as a separate series of Partnership Units for purposes of making the
allocation of Available Cash for such Distribution Period among the holders
of Partnership Units (and the formula for making such allocation, and the
definitions of variables used therein, shall be modified accordingly). Thus,
for example, if two series of Class B Units are outstanding on the
Partnership Record Date for any Distribution Period, the allocation formula
for each series, "Series B(1)" and "Series B(2)" would be as follows:
- 18 -
(1) Series B(1) shall receive that portion of the
Available Cash determined by multiplying the amount of
Available Cash by the following fraction:
B(1) x X(1)
---------------------------------------
(A x Y)+(B(1) x X(1))+(B(2) x X(2))
(2) Series B(2) shall receive that portion of the
Available Cash determined by multiplying the amount of
Available Cash by the following fraction:
B(2) x X(2)
--------------------------------------
(A x Y)+(B(1) x X(1))+(B(2) x X(2))
(3) For purposes of the foregoing formulas the
definitions set forth in Section 5.1.C.3 above remain the
same except that (i) "B(1)" equals the number of Partnership
Units in Series B(1) outstanding on the Partnership Record
Date for such Distribution Period; (ii) "B(2)" equals the
number of Partnership Units in Series B(2) outstanding on the
Partnership Record Date for such Distribution Period;
(iii) "X(1)" equals the number of days in the Distribution
Period for which the Partnership Units in Series B(1) were
issued and outstanding; and (iv) "X(2)" equals the number of
days in the Distribution Period for which the Partnership
Units in Series B(2) were issued and outstanding.
E. Minimum Distributions if General Partner Not Publicly Traded. In
addition (and without regard to the amount of Available Cash), if the shares
of common stock (or other comparable equity interests) of the General Partner
are not Publicly Traded, the General Partner shall make cash distributions
with respect to the Class A Units at least annually for each taxable year of
the Partnership beginning prior to the fifteenth (15th) anniversary of the
Effective Date in an aggregate amount with respect to each such taxable year
at least equal to 95% of the Partnership's taxable income for such year
allocable to the Class A Units, with such distributions to be made not later
than 60 days after the end of such year. Notwithstanding Section
14.1.D.(iv), this Section 5.1.E may be amended with the Consent of Certain
Limited Partners.
Section 5.2 Amounts Withheld
All amounts withheld pursuant to the Code or any provisions of any state
or local tax law and Section 10.5 hereof with respect to any allocation,
payment or distribution to the General Partner, the Limited Partners or
Assignees shall be treated as amounts distributed to the General Partner,
Limited Partners or Assignees pursuant to Section 5.1 above for all purposes
under this Agreement.
Section 5.3 Distributions Upon Liquidation
Proceeds from a Terminating Capital Transaction shall be distributed to the
Partners in accordance with Section 13.2 hereof.
- 19 -
Section 5.4 Revisions to Reflect Issuance of Additional Partnership Interests
In the event that the Partnership issues additional Partnership Interests
to the General Partner or any Additional Limited Partner pursuant to Article
IV hereof, the General Partner shall make such revisions to this Article V as
it deems necessary to reflect the issuance of such additional Partnership
Interests.
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 Exhibit B hereto) 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 1 of Exhibit C hereto and Section 6.1.E below, 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 below exceed Net Income previously allocated to the
General Partner pursuant to this clause (i) of Section 6.1.A, (ii) second, to
the holders of any Partnership Interests that are entitled to any preference
in distribution in accordance with the rights of any such class of
Partnership Interests until each such Partnership Interest has been
allocated, on a cumulative basis pursuant to this clause (ii), Net Income
equal to the amount of distributions received which are attributable to the
preference of such class of Partnership Interests (and, within such class,
pro rata in proportion to the respective Percentage Interests as of the last
day of the period for which such allocation is being made) and (iii) third,
with respect to Partnership Interests that are not entitled to any preference
in the allocation of Net Income, pro rata to each such class in accordance
with the terms of such class (and, within such class, pro rata in proportion
to the respective Percentage Interests as of the last day of the period for
which such allocation is being made).
B. Net Losses. After giving effect to the special allocations set
forth in Section 1 of Exhibit C hereto and Section 6.1.E below, Net Losses
shall be allocated (i) first, to the holders of any Partnership Interests
that are entitled to any preference in distribution in accordance with the
rights of any such class of Partnership Interests to the extent that any
prior allocations of Net Income to such class of Partnership Interests
pursuant to Section 6.1.A(ii) above exceed, on a cumulative basis,
distributions with respect to such Partnership Interests pursuant to clause
(i) of Section 5.1.B hereof (and, within such class, pro rata in proportion
to the respective Percentage Interests as of the last day of the period for
which such allocation is being made) and (ii) second, with respect to classes
of Partnership Interests that are not entitled to any preference in
distribution, pro rata to each such class in accordance with the terms of
such class (and, within such class, pro rata in proportion to the respective
Percentage Interests as of the last day of the period for which such
allocation is being made); 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 (or increase any existing Adjusted Capital Account Deficit)
at the end of such taxable year (or portion thereof). All Net Losses in
excess of the limitations set forth in this Section 6.1.B shall be allocated
to the General Partner.
C. 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-
- 20 -
in Gain shall be allocated among the Partners in accordance with their
respective Percentage Interests.
D. Recapture Income. Any gain allocated to the Partners upon the sale
or other taxable disposition of any Partnership asset shall, to the extent
possible after taking into account other required allocations of gain
pursuant to Exhibit C hereto, be characterized as Recapture Income in the
same proportions and to the same extent as such Partners have been allocated
any deductions directly or indirectly giving rise to the treatment of such
gains as Recapture Income.
E. Cancellation of Indebtedness Income. Any cancellation of
indebtedness income required to be recognized by the Partnership with respect
to the Two Penn Plaza Property in connection with the acquisition of the Two
Penn Plaza Property by the Partnership and the restructuring of the
outstanding indebtedness with respect thereto shall be allocated solely to
holders of the Partnership Units issued with respect to Two Penn Plaza
Associates in the Consolidation. In the event that cancellation of
indebtedness income is recognized with respect to the property at ▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇ as a result of resolving the dispute with the lender under the loan
outstanding upon consummation of the Consolidation that is secured by a
mortgage on such property, holders of the Partnership Units issued with
respect to M 330 Associates, a New York limited partnership, shall be
specially allocated cancellation of indebtedness income in an amount equal to
their proportionate share of the dollar amount of the discount as a result of
the settlement resulting in the recognition of such cancellation of
indebtedness income.
Section 6.2 Revisions to Allocations to Reflect Issuance of Additional
Partnership Interests
In the event that the Partnership issues additional Partnership Interests
to the General Partner or any Additional Limited Partner pursuant to Article
IV hereof, the General Partner shall make such revisions to this Article VI
as it deems necessary to reflect the terms of the issuance of such additional
Partnership Interests, including making preferential allocations to classes
of Partnership Interests that are entitled thereto.
ARTICLE VII
MANAGEMENT AND OPERATIONS OF BUSINESS
Section 7.1 Management
▇. ▇▇▇▇▇▇ of General Partner. Except as otherwise expressly provided
in this Agreement, all management powers over the business and affairs of the
Partnership are and shall be exclusively vested in the General Partner, and
no Limited Partner shall have any right to participate in or exercise control
or management power over the business and affairs of the Partnership. The
General Partner may not be removed by the Limited Partners with or without
cause; provided, however, that if the Shares (or comparable equity
securities) of the General Partner Entity are not Publicly Traded, the
General Partner may be removed with cause with the Consent of the Outside
Limited Partners. 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 Sections 7.6 and 7.11 below, shall have full
power and authority to do all things deemed necessary or desirable by it to
conduct the business of the Partnership, to exercise all powers set forth in
Section 3.2 hereof and to effectuate the purposes set forth in Section 3.1
hereof, including, without limitation:
(1) the making of any expenditures, the lending or borrowing of money
(including, without limitation, making prepayments on loans and
borrowing money to permit the Partnership to make distributions to its
Partners in such
- 21 -
amounts as are required under Section 5.1.E hereof or will permit
the General Partner Entity (as long as the General Partner Entity
qualifies as a REIT) to avoid the payment of any federal income
tax (including, for this purpose, any excise tax pursuant to
Section 4981 of the Code) and to make distributions to its
shareholders sufficient to permit the General Partner Entity to
maintain REIT status), the assumption or guarantee of, or other
contracting for, indebtedness and other liabilities, the issuance of
evidences of indebtedness (including the securing of same by mortgage,
deed of trust or other lien or encumbrance on the Partnership's
assets) and the incurring of any obligations the General Partner deems
necessary for the conduct of the activities of the Partnership;
(2) the making of tax, regulatory and other filings, or rendering of
periodic or other reports to governmental or other agencies having
jurisdiction over the business or assets of the Partnership;
(3) the acquisition, disposition, mortgage, pledge, encumbrance,
hypothecation or exchange of any or all of the assets of the
Partnership (including the exercise or grant of any conversion,
option, privilege or subscription right or other right available in
connection with any assets at any time held by the Partnership) or the
merger or other combination of the Partnership with or into another
entity, on such terms as the General Partner deems proper;
(4) the use of the assets of the Partnership (including, without
limitation, cash on hand) for any purpose consistent with the terms of
this Agreement and on any terms it sees fit, including, without
limitation, the financing of the conduct of the operations of the
Partnership or any of the Partnership's Subsidiaries, the lending of
funds to other Persons (including, without limitation, the
Partnership's Subsidiaries) and the repayment of obligations of the
Partnership and its Subsidiaries and any other Person in which the
Partnership has an equity investment and the making of capital
contributions to its Subsidiaries;
(5) the management, operation, leasing, landscaping, repair, alteration,
demolition or improvement of any real property or improvements owned
by the Partnership or any Subsidiary of the Partnership or any Person
in which the Partnership has made a direct or indirect equity
investment;
(6) the negotiation, execution, and performance of any contracts,
conveyances or other instruments that the General Partner considers
useful or necessary to the conduct of the Partnership's operations or
the implementation of the General Partner's powers under this
Agreement, including contracting with contractors, developers,
consultants, accountants, legal counsel, other professional advisors
and other agents and the payment of their expenses and compensation
out of the Partnership's assets;
(7) the distribution of Partnership cash or other Partnership assets in
accordance with this Agreement;
(8) the holding, managing, investing and reinvesting of cash and other
assets of the Partnership;
(9) the collection and receipt of revenues and income of the Partnership;
- 22 -
(10) the selection and dismissal of employees of the Partnership
(including, without limitation, employees having titles such as
"president," "vice president," "secretary" and "treasurer") and
agents, outside attorneys, accountants, consultants and contractors of
the Partnership, and the determination of their compensation and other
terms of employment or hiring;
(11) the maintenance of such insurance for the benefit of the Partnership
and the Partners as it deems necessary or appropriate;
(12) the formation of, or acquisition of an interest in, and the
contribution of property to, any further limited or general
partnerships, joint ventures, limited liability companies or other
relationships that it deems desirable (including, without limitation,
the acquisition of interests in, and the contributions of property to
its Subsidiaries and any other Person in which it has an equity
investment from time to time);
(13) the control of any matters affecting the rights and obligations of the
Partnership, including the settlement, compromise, submission to
arbitration or any other form of dispute resolution or abandonment of
any claim, cause of action, liability, debt or damages due or owing to
or from the Partnership, the commencement or defense of suits, legal
proceedings, administrative proceedings, arbitrations or other forms
of dispute resolution, the representation of the Partnership in all
suits or legal proceedings, administrative proceedings, arbitrations
or other forms of dispute resolution, the incurring of legal expense
and the indemnification of any Person against liabilities and
contingencies to the extent permitted by law;
(14) the determination of the fair market value of any Partnership property
distributed in kind, using such reasonable method of valuation as the
General Partner may adopt;
(15) the exercise, directly or indirectly, through any attorney-in-fact
acting under a general or limited power of attorney, of any right,
including the right to vote, appurtenant to any assets or investment
held by the Partnership;
(16) the exercise of any of the powers of the General Partner enumerated in
this Agreement on behalf of or in connection with any Subsidiary of
the Partnership or any other Person in which the Partnership has a
direct or indirect interest, individually or jointly with any such
Subsidiary or other Person;
(17) the exercise of any of the powers of the General Partner enumerated in
this Agreement on behalf of any Person in which the Partnership does
not have any interest pursuant to contractual or other arrangements
with such Person;
(18) the making, executing and delivering of any and all deeds, leases,
notes, deeds to secure debt, mortgages, deeds of trust, security
agreements, conveyances, contracts, guarantees, warranties,
indemnities, waivers, releases or other legal instruments or
agreements in writing necessary or appropriate in the judgment of the
General Partner for the accomplishment of any of the powers of the
General Partner under this Agreement;
- 23 -
(19) the distribution of cash to acquire Partnership Units held by a
Limited Partner in connection with a Limited Partner's exercise of its
Redemption Right under Section 8.6 hereof; and
(20) the amendment and restatement of Exhibit A hereto to reflect
accurately at all times the Capital Contributions and Percentage
Interests of the Partners as the same are adjusted from time to time
to the extent necessary to reflect redemptions, Capital Contributions,
the issuance of Partnership Units, the admission of any Additional
Limited Partner or any Substituted Limited Partner or otherwise, which
amendment and restatement, notwithstanding anything in this Agreement
to the contrary, shall not be deemed an amendment of this Agreement,
as long as the matter or event being reflected in Exhibit A hereto
otherwise is authorized by this Agreement.
B. No Approval by Limited Partners. Except as provided in Section 7.11
below, each of the Limited Partners agrees that the General Partner is
authorized to execute, deliver and perform the above-mentioned agreements and
transactions on behalf of the Partnership without any further act, approval
or vote of the Partners, notwithstanding any other provision of this
Agreement, the Act or any applicable law, rule or regulation, to the full
extent permitted under the Act or other applicable law. The execution,
delivery or performance by the General Partner or the Partnership of any
agreement authorized or permitted under this Agreement shall not constitute a
breach by the General Partner of any duty that the General Partner may owe
the Partnership or the Limited Partners or any other Persons under this
Agreement or of any duty stated or implied by law or equity.
C. Insurance. At all times from and after the date hereof, the General
Partner may cause the Partnership to obtain and maintain (i) casualty, liability
and other insurance on the properties of the Partnership, (ii) liability
insurance for the Indemnitees hereunder and (iii) such other insurance as the
General Partner, in its sole and absolute discretion, determines to be
necessary.
D. Working Capital and Other Reserves. At all times from and after the
date hereof, the General Partner may cause the Partnership to establish and
maintain working capital reserves in such amounts as the General Partner, in its
sole and absolute discretion, deems appropriate and reasonable from time to
time, including upon liquidation of the Partnership pursuant to Section 13.2
hereof.
E. No Obligations to Consider Tax Consequences of Limited Partners. In
exercising its authority under this Agreement, the General Partner may, but
shall be under no obligation to, take into account the tax consequences to any
Partner (including the General Partner) of any action taken (or not taken) by
it. The General Partner and the Partnership shall not have liability to a
Limited Partner for monetary damages or otherwise for losses sustained,
liabilities incurred or benefits not derived by such Limited Partner in
connection with such decisions, provided that the General Partner has acted in
good faith and pursuant to its authority under this Agreement.
Section 7.2 Certificate of Limited Partnership
The General Partner has previously filed the Certificate with the Secretary
of State of Delaware. To the extent that such action is determined by the
General Partner to be reasonable and necessary or appropriate, the General
Partner shall file amendments to and restatements of the Certificate and do all
the things to maintain the Partnership as a limited partnership (or a
partnership in which the limited partners have limited liability) under the laws
of the State of Delaware and each other state, the District of Columbia or other
jurisdiction in which the
- 24 -
Partnership may elect to do business or own property. Subject to the terms of
Section 8.5.A(4) hereof, the General Partner shall not be required, before or
after filing, to deliver or mail a copy of the Certificate or any amendment
thereto to any Limited Partner. The General Partner shall use all reasonable
efforts to cause to be filed such other certificates or documents as may be
reasonable and necessary or appropriate for the formation, continuation,
qualification and operation of a limited partnership (or a partnership in
which the limited partners have limited liability) in the State of Delaware
and any other state, the District of Columbia or other jurisdiction in which
the Partnership may elect to do business or own property.
Section 7.3 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 Partners, individually or collectively, shall have any
ownership interest in such Partnership assets or any portion thereof. Title
to any or all of the Partnership assets may be held in the name of the
Partnership, the General Partner or one or more nominees, as the General
Partner may determine, including Affiliates of the General Partner. The
General Partner hereby declares and warrants that any Partnership assets for
which legal title is held in the name of the General Partner or any nominee
or Affiliate of the General Partner shall be held by the General Partner for
the use and benefit of the Partnership in accordance with the provisions of
this Agreement; provided, however, that the General Partner shall use its
best efforts to cause beneficial and record title to such assets to be vested
in the Partnership as soon as reasonably practicable. All Partnership assets
shall be recorded as the property of the Partnership in its books and
records, irrespective of the name in which legal title to such Partnership
assets is held.
Section 7.4 Reimbursement of the General Partner
A. No Compensation. Except as provided in this Section 7.4 and elsewhere
in this Agreement (including the provisions of Articles V and VI hereof
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. Responsibility for Partnership Expenses. The Partnership shall be
responsible for and shall pay all expenses relating to the Partnership's
organization, the ownership of its assets and its operations. The General
Partner shall be reimbursed on a monthly basis, or such other basis as the
General Partner may determine in its sole and absolute discretion, for all
expenses it incurs relating to the ownership and operation of, or for the
benefit of, the Partnership (including, without limitation, expenses related
to the management and administration of any Subsidiaries of the General
Partner or the Partnership or Affiliates of the Partnership such as auditing
expenses and filing fees); provided that, the amount of any such
reimbursement shall be reduced by (i) any interest earned by the General
Partner with respect to bank accounts or other instruments or accounts held
by it as permitted in Section 7.5.A below and (ii) any amount derived by the
General Partner from any investments permitted in Section 7.5.A below. The
General Partner shall determine in good faith the amount of expenses incurred
by it related to the ownership and operation of, or for the benefit of, the
Partnership. In the event that certain expenses are incurred for the benefit
of the Partnership and other entities (including the General Partner), such
expenses will be allocated to the Partnership and such other entities in such
a manner as the General Partner in its sole and absolute discretion deems
fair and reasonable. Such reimbursements shall be in addition to any
reimbursement to the General Partner pursuant to Section 10.3.C hereof and as
a result of indemnification pursuant to Section 7.7 below. All payments and
reimbursements hereunder shall be characterized for federal income tax
purposes as expenses of the Partnership incurred on its behalf, and not as
expenses of the General Partner.
- 25 -
C. Partnership Interest Issuance Expenses. The General Partner
shall also be reimbursed for all expenses it incurs relating to any issuance
of additional Partnership Interests, Shares, Debt of the Partnership or the
General Partner or rights, options, warrants or convertible or exchangeable
securities pursuant to Article IV hereof (including, without limitation, all
costs, expenses, damages and other payments resulting from or arising in
connection with litigation related to any of the foregoing), all of which
expenses are considered by the Partners to constitute expenses of, and for
the benefit of, the Partnership.
D. Purchases of Shares by the General Partner. In the event that
the General Partner exercises its rights under the Articles of Incorporation
to purchase shares or otherwise elects to purchase from its shareholders
Shares in connection with a stock repurchase or similar program or for the
purpose of delivering such Shares to satisfy an obligation under any dividend
reinvestment or stock purchase program adopted by the General Partner, any
employee stock purchase plan adopted by the General Partner or any similar
obligation or arrangement undertaken by the General Partner in the future,
the purchase price paid by the General Partner for such Shares and any other
expenses incurred by the General Partner in connection with such purchase
shall be considered expenses of the Partnership and shall be reimbursable to
the General Partner, subject to the conditions that: (i) if such Shares
subsequently are to be sold by the General Partner, the General Partner pays
to the Partnership any proceeds received by the General Partner for such
Shares (provided that a transfer of Shares for Partnership Units pursuant to
Section 8.6 hereof would not be considered a sale for such purposes); and
(ii) if such Shares are not retransferred by the General Partner within
thirty (30) days after the purchase thereof, the General Partner shall cause
the Partnership to cancel a number of Partnership Units of the appropriate
class (rounded to the nearest whole Partnership Unit) held by the General
Partner equal to the product attained by multiplying the number of such
Shares by a fraction, the numerator of which is one and the denominator of
which is the Conversion Factor.
E. Reimbursement not a Distribution. If and to the extent any
reimbursement made pursuant to this Section 7.4 is determined for federal
income tax purposes not to constitute a payment of expenses of the
Partnership, the amount so determined shall constitute a guaranteed payment
with respect to capital within the meaning of Section 707(c) of the Code,
shall be treated consistently therewith by the Partnership and all Partners
and shall not be treated as a distribution for purposes of computing the
Partners' Capital Accounts.
Section 7.5 Outside Activities of the General Partner
A. General. Without the Consent of the Outside Limited Partners,
the General Partner shall not, directly or indirectly, enter into or conduct
any business other than in connection with the ownership, acquisition and
disposition of Partnership Interests as a General Partner or Limited Partner
and the management of the business of the Partnership and such activities as
are incidental thereto. Without the Consent of the Outside Limited Partners,
the assets of the General Partner shall be limited to Partnership Interests
and permitted debt obligations of the Partnership (as contemplated by Section
7.5.F below), so that Shares and Partnership Units are completely fungible
except as otherwise specifically provided herein; provided, that the General
Partner shall be permitted to hold such bank accounts or similar instruments
or account in its own name as it deems necessary to carry out its
responsibilities and purposes as contemplated under this Agreement and its
organizational documents; and, provided further, that the General Partner
shall be permitted to acquire, directly or through a Qualified REIT
Subsidiary, up to a one percent (1%) interest in any partnership or limited
liability company at least ninety-nine percent (99%) of the equity of which
is owned by the Partnership. The General Partner and any of its Affiliates
may acquire Limited Partnership Interests and shall be entitled to exercise
all rights of a Limited Partner relating to such Limited Partnership
Interests. If, at any time, the General Partner acquires material assets
(other than on behalf of the Partnership), the definition of "Shares Amount"
shall be adjusted, as agreed to
- 26 -
by the General Partner and the Limited Partners (which agreement shall be
evidenced by Consent of the Outside Limited Partners), to reflect the
relative value of a share of capital stock (or other comparable equity
interest) of the General Partner relative to the Deemed Partnership Interest
Value of the related Partnership Unit.
B. Repurchase of Shares. In the event the General Partner
exercises its rights under the Articles of Incorporation to purchase Shares
or otherwise elects to purchase from its shareholders Shares in connection
with a stock repurchase or similar program or for the purpose of delivering
such shares to satisfy an obligation under any dividend reinvestment or stock
purchase program adopted by the General Partner, any employee stock purchase
plan adopted by the General Partner or any similar obligation or arrangement
undertaken by the General Partner in the future, then the General Partner
shall cause the Partnership to purchase from the General Partner that number
of Partnership Units of the appropriate class equal to the product obtained
by multiplying the number of Shares purchased by the General Partner times a
fraction, the numerator of which is one and the denominator of which is the
Conversion Factor, on the same terms and for the same aggregate price that
the General Partner purchased such Shares.
C. Forfeiture of Shares. In the event the Partnership or the
General Partner acquires Shares as a result of the forfeiture of such Shares
under a restricted or similar share plan, then the General Partner shall
cause the Partnership to cancel that number of Partnership Units of the
appropriate class equal to the number of Shares so acquired, and, if the
Partnership acquired such Shares, it shall transfer such Shares to the
General Partner for cancellation.
D. Issuances of Shares. After the Effective Date, the General Partner
shall not grant, award, or issue any additional Shares (other than Shares
issued pursuant to Section 8.6 hereof or pursuant to a dividend or
distribution (including any stock split) of Shares to all of its
shareholders), other equity securities of the General Partner, New Securities
or Convertible Funding Debt unless (i) the General Partner shall cause,
pursuant to Section 4.2.A hereof, the Partnership to issue to the General
Partner Partnership Interests or rights, options, warrants or convertible or
exchangeable securities of the Partnership having designations, preferences
and other rights, all such that the economic interests are substantially the
same as those of such additional Shares, other equity securities, New
Securities or Convertible Funding Debt, as the case may be, and (ii) the
General Partner transfers to the Partnership, as an additional Capital
Contribution, the proceeds from the grant, award, or issuance of such
additional Shares, other equity securities, New Securities or Convertible
Funding Debt, as the case may be, or from the exercise of rights contained in
such additional Shares, other equity securities, New Securities or
Convertible Funding Debt, as the case may be. Without limiting the
foregoing, the General Partner is expressly authorized to issue additional
Shares, other equity securities, New Securities or Convertible Funding Debt,
as the case may be, for less than fair market value, and the General Partner
is expressly authorized, pursuant to Section 4.2.A hereof, to cause the
Partnership to issue to the General Partner corresponding Partnership
Interests, as long as (a) the General Partner concludes in good faith that
such issuance is in the interests of the General Partner and the Partnership
(for example, and not by way of limitation, the issuance of Shares and
corresponding Partnership Units pursuant to a stock purchase plan providing
for purchases of Shares, either by employees or shareholders, at a discount
from fair market value or pursuant to employee stock options that have an
exercise price that is less than the fair market value of the Shares, either
at the time of issuance or at the time of exercise) and (b) the General
Partner transfers all proceeds from any such issuance or exercise to the
Partnership as an additional Capital Contribution.
E. Stock Option Plan. If at any time or from time to time, the General
Partner sells Shares pursuant to any Stock Option Plan, the General Partner
shall transfer the net proceeds of the sale of such Shares to the Partnership
as an additional Capital Contribution in exchange for an amount of additional
Partnership Units equal to the number of Shares so sold divided by the
Conversion Factor.
- 27 -
F. Funding Debt. The General Partner may incur a Funding Debt,
including, without limitation, a Funding Debt that is convertible into Shares
or otherwise constitutes a class of New Securities ("Convertible Funding
Debt"), subject to the condition that the General Partner lends to the
Partnership the net proceeds of such Funding Debt; provided, that Convertible
Funding Debt shall be issued pursuant to Section 7.5.D above; and, provided
further, that the General Partner shall not be obligated to lend the net
proceeds of any Funding Debt to the Partnership in a manner that would be
inconsistent with the General Partner's ability to remain qualified as a
REIT. If the General Partner enters into any Funding Debt, the loan to the
Partnership shall be on comparable terms and conditions, including interest
rate, repayment schedule and costs and expenses, as are applicable with
respect to or incurred in connection with such Funding Debt.
Section 7.6 Transactions with Affiliates
A. Transactions with Certain Affiliates. Except as expressly permitted
by this Agreement (other than Section 7.1.A hereof, which shall not be
considered authority for a transaction that otherwise would be prohibited by
this Section 7.6.A), the Partnership shall not, directly or indirectly, sell,
transfer or convey any property to, or purchase any property from, or borrow
funds from, or lend funds to, any Partner or any Affiliate of the Partnership
or the General Partner or the General Partner Entity that is not also a
Subsidiary of the Partnership, except pursuant to transactions that are on
terms that are fair and reasonable and no less favorable to the Partnership
than would be obtained from an unaffiliated third party.
B. Benefit Plans. The General Partner, in its sole and absolute
discretion and without the approval of the Limited Partners, may propose and
adopt on behalf of the Partnership employee benefit plans funded by the
Partnership for the benefit of employees of the General Partner, the
Partnership, Subsidiaries of the Partnership or any Affiliate of any of them
in respect of services performed, directly or indirectly, for the benefit of
the Partnership, the General Partner, or any of the Partnership's
Subsidiaries.
C. Conflict Avoidance. The General Partner is expressly
authorized to enter into, in the name and on behalf of the Partnership, a
right of first opportunity arrangement and other conflict avoidance
agreements with various Affiliates of the Partnership and General Partner on
such terms as the General Partner, in its sole and absolute discretion,
believes are advisable.
Section 7.7 Indemnification
A. General. The Partnership shall indemnify each Indemnitee from and
against any and all losses, claims, damages, liabilities, joint or several,
expenses (including, without limitation, attorneys fees and other legal fees
and expenses), judgments, fines, settlements and other amounts arising from
or in connection with any and all claims, demands, actions, suits or
proceedings, civil, criminal, administrative or investigative incurred by the
Indemnitee and relating to the Partnership or the General Partner or the
formation or operations of, or the ownership of property by, either of them
as set forth in this Agreement in which any such Indemnitee may be involved,
or is threatened to be involved, as a party or otherwise, unless it is
established by a final determination of a court of competent jurisdiction
that: (i) the act or omission of the Indemnitee was material to the matter
giving rise to the proceeding and either was committed in bad faith or was
the result of active and deliberate dishonesty, (ii) the Indemnitee actually
received an improper personal benefit in money, property or services or (iii)
in the case of any criminal proceeding, the Indemnitee had reasonable cause
to believe that the act or omission was unlawful. Without limitation, the
foregoing indemnity shall extend to any liability of any Indemnitee, pursuant
to a loan guarantee, contractual obligations for any indebtedness or other
obligations or otherwise, for any indebtedness of the Partnership or any
Subsidiary of the Partnership (including, without limitation, any
indebtedness which the Partnership or any Subsidiary of the Partnership has
assumed or taken
- 28 -
subject to), and the General Partner is hereby authorized and empowered, on
behalf of the Partnership, to enter into one or more indemnity agreements
consistent with the provisions of this Section 7.7 in favor of any Indemnitee
having or potentially having liability for any such indebtedness. The
termination of any proceeding by judgment, order or settlement does not
create a presumption that the Indemnitee did not meet the requisite standard
of conduct set forth in this Section 7.7.A. The termination of any
proceeding by conviction or upon a plea of nolo contendere or its equivalent,
or an entry of an order of probation prior to judgment, creates a rebuttable
presumption that the Indemnitee acted in a manner contrary to that specified
in this Section 7.7.A with respect to the subject matter of such proceeding.
Any indemnification pursuant to this Section 7.7 shall be made only out of
the assets of the Partnership, and any insurance proceeds from the liability
policy covering the General Partner and any Indemnitees, and neither the
General Partner nor any Limited Partner shall have any obligation to
contribute to the capital of the Partnership or otherwise provide funds to
enable the Partnership to fund its obligations under this Section 7.7.
B. Advancement of Expenses. Reasonable expenses expected to be
incurred by an Indemnitee shall be paid or reimbursed by the Partnership in
advance of the final disposition of any and all claims, demands, actions,
suits or proceedings, civil, criminal, administrative or investigative made
or threatened against an Indemnitee upon receipt by the Partnership of (i) a
written affirmation by the Indemnitee of the Indemnitee's good faith belief
that the standard of conduct necessary for indemnification by the Partnership
as authorized in this Section 7.7.A has been met and (ii) a written
undertaking by or on behalf of the Indemnitee to repay the amount if it shall
ultimately be determined that the standard of conduct has not been met.
C. No Limitation of Rights. The indemnification provided by this
Section 7.7 shall be in addition to any other rights to which an Indemnitee
or any other Person may be entitled under any agreement, pursuant to any vote
of the Partners, as a matter of law or otherwise, and shall continue as to an
Indemnitee who has ceased to serve in such capacity unless otherwise provided
in a written agreement pursuant to which such Indemnitee is indemnified.
D. Insurance. The Partnership may purchase and maintain insurance on
behalf of the Indemnitees and such other Persons as the General Partner shall
determine against any liability that may be asserted against or expenses that
may be incurred by such Person in connection with the Partnership's
activities, regardless of whether the Partnership would have the power to
indemnify such Person against such liability under the provisions of this
Agreement.
E. Benefit Plan Fiduciary. For purposes of this Section 7.7, (i) the
Partnership shall be deemed to have requested an Indemnitee to serve as
fiduciary of an employee benefit plan whenever the performance by it of its
duties to the Partnership also imposes duties on, or otherwise involves
services by, it to the plan or participants or beneficiaries of the plan,
(ii) excise taxes assessed on an Indemnitee with respect to an employee
benefit plan pursuant to applicable law shall constitute fines within the
meaning of this Section 7.7 and (iii) actions taken or omitted by the
Indemnitee with respect to an employee benefit plan in the performance of its
duties for a purpose reasonably believed by it to be in the interest of the
participants and beneficiaries of the plan shall be deemed to be for a
purpose which is not opposed to the best interests of the Partnership.
F. No Personal Liability for Limited Partners. In no event may an
Indemnitee subject any of the Partners to personal liability by reason of the
indemnification provisions set forth in this Agreement.
G. Interested Transactions. An Indemnitee shall not be denied
indemnification in whole or in part under this Section 7.7 because the
Indemnitee had an interest in the transaction with respect to which the
indemnification applies if the transaction was otherwise permitted by the
terms of this Agreement.
- 29 -
H. Benefit. The provisions of this Section 7.7 are for the benefit of
the Indemnitees, their heirs, successors, assigns and administrators and
shall not be deemed to create any rights for the benefit of any other
Persons. Any amendment, modification or repeal of this Section 7.7, or any
provision hereof, shall be prospective only and shall not in any way affect
the limitation on the Partnership's liability to any Indemnitee under this
Section 7.7 as in effect immediately prior to such amendment, modification or
repeal with respect to claims arising from or related to matters occurring,
in whole or in part, prior to such amendment, modification or repeal,
regardless of when such claims may arise or be asserted.
I. Indemnification Payments Not Distributions. If and to the extent
any payments to the General Partner pursuant to this Section 7.7 constitute
gross income to the General Partner (as opposed to the repayment of advances
made on behalf of the Partnership), such amounts shall constitute guaranteed
payments within the meaning of Section 707(c) of the Code, shall be treated
consistently therewith by the Partnership and all Partners, and shall not be
treated as distributions for purposes of computing the Partners' Capital
Accounts.
Section 7.8 Liability of the General Partner
A. General. Notwithstanding anything to the contrary set forth in this
Agreement, the General Partner and its directors and officers shall not be
liable for monetary damages to the Partnership, any Partners or any Assignees
for losses sustained, liabilities incurred or benefits not derived as a
result of errors in judgment or mistakes of fact or law or of any act or
omission if the General Partner acted in good faith.
B. No Obligation to Consider Separate Interests of Limited Partners or
Shareholders. The Limited Partners expressly acknowledge that the General
Partner is acting on behalf of the Partnership and the General Partner's
shareholders collectively, that the General Partner is under no obligation to
consider the separate interests of the Limited Partners (including, without
limitation, the tax consequences to Limited Partners or Assignees or to such
shareholders) in deciding whether to cause the Partnership to take (or
decline to take) any actions and that the General Partner shall not be liable
for monetary damages or otherwise for losses sustained, liabilities incurred
or benefits not derived by Limited Partners in connection with such
decisions, provided that the General Partner has acted in good faith.
C. Actions of Agents. Subject to its obligations and duties as General
Partner set forth in Section 7.1.A above, the General Partner may exercise
any of the powers granted to it by this Agreement and perform any of the
duties imposed upon it hereunder either directly or by or through its agents.
The General Partner shall not be responsible for any misconduct or
negligence on the part of any such agent appointed by the General Partner in
good faith.
D. Effect of Amendment. Any amendment, modification or repeal of this
Section 7.8 or any provision hereof shall be prospective only and shall not
in any way affect the limitations on the General Partner's liability to the
Partnership and the Limited Partners under this Section 7.8 as in effect
immediately prior to such amendment, modification or repeal with respect to
claims arising from or relating to matters occurring, in whole or in part,
prior to such amendment, modification or repeal, regardless of when such
claims may arise or be asserted.
Section 7.9 Other Matters Concerning the General Partner
A. Reliance on Documents. The General Partner may rely and shall be
protected in acting or refraining from acting upon any resolution,
certificate, statement, instrument, opinion, report, notice, request,
consent, order, bond, debenture or other paper or document believed by it in
good faith to be genuine and to have been signed or presented by the proper
party or parties.
- 30 -
B. Reliance on Advisors. The General Partner may consult with legal
counsel, accountants, appraisers, management consultants, investment bankers
and other consultants and advisors selected by it, and any act taken or
omitted to be taken in reliance upon the opinion of such Persons as to
matters which the General Partner reasonably believes to be within such
Person's professional or expert competence shall be conclusively presumed to
have been done or omitted in good faith and in accordance with such opinion.
C. Action Through Agents. The General Partner shall have the right, in
respect of any of its powers or obligations hereunder, to act through any of
its duly authorized officers and a duly appointed attorney or
attorneys-in-fact. Each such attorney shall, to the extent provided by the
General Partner in the power of attorney, have full power and authority to do
and perform all and every act and duty which is permitted or required to be
done by the General Partner hereunder.
D. Actions to Maintain REIT Status or Avoid Taxation of the General
Partner Entity. Notwithstanding any other provisions of this Agreement or
the Act, any action of the General Partner on behalf of the Partnership or
any decision of the General Partner to refrain from acting on behalf of the
Partnership undertaken in the good faith belief that such action or omission
is necessary or advisable in order (i) to protect the ability of the General
Partner Entity to continue to qualify as a REIT or (ii) to allow the General
Partner Entity to avoid incurring any liability for taxes under Section 857
or 4981 of the Code, is expressly authorized under this Agreement and is
deemed approved by all of the Limited Partners.
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, without consent or approval of any
other Partner or Person, to encumber, sell or otherwise use in any manner any
and all assets of the Partnership, to enter into any contracts on behalf of
the Partnership and to take any and all actions on behalf of the Partnership,
and such Person shall be entitled to deal with the General Partner as if the
General Partner were the Partnership's sole party in interest, both legally
and beneficially. Each Limited Partner hereby waives any and all defenses or
other remedies which may be available against such Person to contest, negate
or disaffirm any action of the General Partner in connection with any such
dealing. In no event shall any Person dealing with the General Partner or its
representatives be obligated to ascertain that the terms of this Agreement
have been complied with or to inquire into the necessity or expedience of any
act or action of the General Partner or its representatives. Each and every
certificate, document or other instrument executed on behalf of the
Partnership by the General Partner or its representatives shall be conclusive
evidence in favor of any and every Person relying thereon or claiming
thereunder that (i) at the time of the execution and delivery of such
certificate, document or instrument, this Agreement was in full force and
effect, (ii) the Person executing and delivering such certificate, document
or instrument was duly authorized and empowered to do so for and on behalf of
the Partnership, and (iii) such certificate, document or instrument was duly
executed and delivered in accordance with the terms and provisions of this
Agreement and is binding upon the Partnership.
Section 7.11 Restrictions on General Partner's Authority
A. Consent Required. The General Partner may not take any action
in contravention of an express prohibition or limitation of this Agreement
without the written Consent of (i) all Partners adversely affected or (ii)
such lower percentage of the Limited Partnership Interests as may be
specifically provided for under a provision of this Agreement or the Act.
B. Sale of All Assets of the Partnership. Except as provided in
Article XIII hereof and subject to Section 7.11.C and Section 7.11.D below,
the General Partner may not, directly
- 31 -
or indirectly, cause the Partnership to 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
(including a triangular merger), consolidation or other combination with any
other Persons) (i) if such merger, sale or other transaction is in connection
with a Termination Transaction permitted under Section 11.2.B hereof, without
the Consent of the Partners holding a majority or more of the then
outstanding Partnership Units (including any Partnership Units held by the
General Partner), or (ii) otherwise, without the Consent of the Outside
Limited Partners.
C. Required Consent of Certain Partners. (i) The General Partner may
not, directly or indirectly, cause the Partnership to take any action
prohibited by this Section 7.11.C without the requisite approval as provided
in this Section 7.11.C.
(1) For a period of fifteen (15) years following the Effective
Date, the General Partner may not, directly or indirectly, cause
the Partnership to sell, exchange or otherwise dispose of the
property located at Two Penn Plaza, New York, New York or any
indirect interest therein (collectively, the "Two Penn Plaza
Property") (other than an involuntary sale pursuant to foreclosure
of the mortgage secured by the Two Penn Plaza Property or
otherwise, including pursuant to a deed in lieu of foreclosure
(provided that the General Partner may not execute any deed in lieu
of foreclosure unless the maturity of the indebtedness secured by
the Two Penn Plaza Property has been accelerated) or a proceeding
in connection with a bankruptcy) without the consent of the
Partners at the time of the proposed sale, exchange or other
disposition (other than the General Partner or the General Partner
Entity or any Subsidiary of either the General Partner or the
General Partner Entity) who hold seventy-five percent (75%) of the
Partnership Units which were issued with respect to Two Penn Plaza
Associates in the Consolidation and which remain outstanding
(whether held by the original recipient of such Partnership Units
or by a successor or transferee of the original recipient, but not
including the General Partner or the General Partner Entity or any
Subsidiary of either the General Partner or the General Partner
Entity) (referred to as "Two Penn Plaza Units"). In addition,
during such fifteen-year period, the General Partner may not,
directly or indirectly, cause the Partnership to repay, earlier
than one year prior to its stated maturity, any indebtedness
secured by the Two Penn Plaza Property without the consent of
Partners holding seventy-five percent (75%) of the Two Penn Plaza
Units, unless such repayment (a) is made in connection with the
refinancing (on a basis such that the new debt would be considered
a Nonrecourse Liability, or, as contemplated by clause (2) below, a
Partner Nonrecourse Debt) of such indebtedness for an amount not
less than the principal amount of such indebtedness on the date of
such refinancing, with such refinancing indebtedness (1) providing
for the least amount of principal amortization as is available on
commercially reasonable terms and (2) permitting (but not
requiring) a guarantee of such indebtedness by the holders of the
Two Penn Plaza Units who elect to join in such guarantee in a form
and on terms consistent with the guarantees by the holders of the
Two Penn Plaza Units in effect immediately prior to such
refinancing, provided that the opportunity to provide such
guarantee may be obtained on commercially reasonable terms, or (b)
is made in connection with an involuntary sale pursuant to
foreclosure of the mortgage secured by the Two Penn Plaza Property
or otherwise, including pursuant to a deed in lieu of foreclosure
(provided that the General Partner may not execute any deed in lieu
of foreclosure unless the maturity of the indebtedness secured by
the Two Penn Plaza Property has been accelerated) or a proceeding
in connection with
- 32 -
a bankruptcy. During such fifteen-year period, the General Partner
shall use commercially reasonable efforts during the one-year
period prior to the stated maturity of such indebtedness to
cause the Operating Partnership to refinance (on a basis
such that the new debt would be considered a Nonrecourse
Liability, or, as contemplated by clause (2) below, a Partner
Nonrecourse Debt) the indebtedness for an amount not less than the
principal amount of such indebtedness on the date of such
refinancing, provided such refinancing can be obtained on
commercially reasonable terms, with such refinancing indebtedness
(1) providing for the least amount of principal amortization as is
available on commercially reasonable terms and (2) permitting (but
not requiring) a guarantee of such indebtedness by the holders of
the Two Penn Plaza Units who elect to join in such guarantee in a
form and on terms consistent with the guarantees by the holders of
the Two Penn Plaza Units in effect immediately prior to such
refinancing, provided that the opportunity to provide such guarantee
may be obtained on commercially reasonable terms. Finally, during
such fifteen-year period, the General Partner shall not, without the
consent of Partners holding seventy-five percent (75%) of the Two
Penn Plaza Units, incur indebtedness secured by the Two Penn Plaza
Property if, at the time such indebtedness is incurred, the
aggregate amount of the indebtedness secured by the Two Penn Plaza
Property would exceed the greater of (i) seventy-five percent (75%)
of the fair market value of the Two Penn Plaza Property (or the
interest therein) securing such indebtedness or (ii) the then
outstanding indebtedness being refinanced plus all costs (including
prepayment fees, "breakage" payments and similar costs) incurred in
connection with such refinancing.
(2) For a period of fifteen (15) years following the Effective
Date, the General Partner may not, directly or indirectly, cause
the Partnership to sell, exchange or otherwise dispose of the
property located at Eleven Penn Plaza, New York, New York or any
indirect interest therein (collectively, the "Eleven Penn Plaza
Property") (other than an involuntary sale pursuant to foreclosure
of the mortgage secured by the Eleven Penn Plaza Property or
otherwise, including pursuant to a deed in lieu of foreclosure
(provided that the General Partner may not execute any deed in lieu
of foreclosure unless the maturity of the indebtedness secured by
the Eleven Penn Plaza Property has been accelerated) or a
proceeding in connection with a bankruptcy) without the consent of
the Partners at the time of the proposed sale, exchange or other
disposition (other than the General Partner or the General Partner
Entity or any Subsidiary of either the General Partner or the
General Partner Entity) who hold seventy-five percent (75%) of the
Partnership Units which were issued with respect to the Eleven Penn
Partnerships in the Consolidation and which remain outstanding
(whether held by the original recipient of such Partnership Units
or by a successor or transferee of the original recipient, but not
including the General Partner or the General Partner Entity or any
Subsidiary of either the General Partner or the General Partner
Entity) (referred to as "Eleven Penn Plaza Units"). In addition,
during such fifteen-year period, the General Partner may not,
directly or indirectly, cause the Partnership to repay, earlier
than one year prior to its stated maturity, any indebtedness
secured by the Eleven Penn Plaza Property without the consent of
Partners who hold seventy-five percent (75%) of the Eleven Penn
Plaza Units, unless such repayment (a) is made in connection with
the refinancing (on a basis such that the new debt would be
considered a Nonrecourse Liability, or, as contemplated by clause
(2) below, a Partner Nonrecourse Debt) of such indebtedness for an
amount not less than
- 33 -
the principal amount of such indebtedness on the date of such
refinancing, with such refinancing indebtedness (1) providing
for the least amount of principal amortization as is available
on commercially reasonable terms and (2) permitting (but not
requiring) a guarantee of such indebtedness by the holders of
the Eleven Penn Plaza Units who elect to join in such guarantee in
a form and on terms consistent with the guarantees by the holders
of the Eleven Penn Plaza Units in effect immediately prior to such
refinancing, provided that the opportunity to provide such
guarantee may be obtained on commercially reasonable terms, or (b)
is made in connection with an involuntary sale pursuant to
foreclosure of the mortgage secured by the Eleven Penn Plaza
Property or otherwise, including pursuant to a deed in lieu of
foreclosure (provided that the General Partner may not execute any
deed in lieu of foreclosure unless the maturity of the indebtedness
secured by the Eleven Penn Plaza Property has been accelerated) or
a proceeding in connection with a bankruptcy. During such
fifteen-year period, the General Partner shall use commercially
reasonable efforts during the one-year period prior to the stated
maturity of such indebtedness to cause the Operating Partnership to
refinance (on a basis such that the new debt would be considered a
Nonrecourse Liability, or, as contemplated by clause (2) below, a
Partner Nonrecourse Debt) the indebtedness for an amount not less
than the principal amount of such indebtedness on the date of such
refinancing, provided such refinancing can be obtained on
commercially reasonable terms, with such refinancing indebtedness
(1) providing for the least amount of principal amortization as is
available on commercially reasonable terms and (2) permitting (but
not requiring) a guarantee of such indebtedness by the holders of
the Eleven Penn Plaza Units who elect to join in such guarantee in
a form and on terms consistent with the guarantees by the holders
of the Eleven Penn Plaza Units in effect immediately prior to such
refinancing, provided that the opportunity to provide such
guarantee may be obtained on commercially reasonable terms.
Finally, during such fifteen-year period, the General Partner shall
not, without the consent of Partners holding seventy-five percent
(75%) of the Eleven Penn Plaza Units, incur indebtedness secured by
the Eleven Penn Plaza Property if, at the time such indebtedness is
incurred, the aggregate amount of the indebtedness secured by the
Eleven Penn Plaza Property would exceed the greater of (i)
seventy-five percent (75%) of the fair market value of the Eleven
Penn Plaza Property (or the interest therein) securing such
indebtedness or (ii) the then outstanding indebtedness being
refinanced plus all costs (including prepayment fees, "breakage"
payments and similar costs) incurred in connection with such
refinancing.
(3) For a period of fifteen (15) years following the Effective
Date, the General Partner may not, directly or indirectly, cause
the Partnership to sell, exchange, or otherwise dispose of the
property located at ▇▇▇ ▇.▇. ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ or any
indirect interest therein (collectively, the "866 U.N. Plaza
Property") (other than an involuntary sale pursuant to foreclosure
of the mortgage secured by the 866 U.N. Plaza Property or
otherwise, including pursuant to a deed in lieu of foreclosure
(provided that the General Partner may not execute any deed in lieu
of foreclosure unless the maturity of the indebtedness secured by
the 866 U.N. Plaza Property has been accelerated) or a proceeding
in connection with a bankruptcy) without the consent of the
Partners at the time of the proposed sale, exchange or other
disposition (other than the General Partner or the General Partner
Entity or any Subsidiary of either the General Partner or the
General Partner Entity)
- 34 -
who hold seventy-five percent (75%) of the Partnership Units which
were issued with respect to 866 U.N. Plaza Associates in the
Consolidation and which remain outstanding (whether held by the
original recipient of such Partnership Units or by a successor or
transferee of the original recipient, but not including the General
Partner or the General Partner Entity or any Subsidiary of either
the General Partner or the General Partner Entity) (referred to as
"866 U.N. Plaza Units"). In addition, during such fifteen-year
period, the General Partner may not, directly or indirectly, cause
the Partnership to repay, earlier than one year prior to its stated
maturity, any indebtedness secured by the 866 U.N. Plaza Property
without the consent of Partners holding seventy-five percent (75%)
of the ▇▇▇ ▇.▇. ▇▇▇▇▇ ▇▇▇▇▇, unless such repayment (a) is made in
connection with the refinancing (on a basis such that the new debt
would be considered a , or, as contemplated by clause (2) below, a
Partner Nonrecourse Debt) of such indebtedness for an amount not
less than the principal amount of such indebtedness on the date of
such refinancing, with such refinancing indebtedness (1) providing
for the least amount of principal amortization as is available on
commercially reasonable terms and (2) permitting (but not
requiring) a guarantee of such indebtedness by the holders of the
866 U.N. Plaza Units who elect to join in such guarantee in a form
and on terms consistent with the guarantees by the holders of the
866 U.N. Plaza Units in effect immediately prior to such
refinancing, provided that the opportunity to provide such
guarantee may be obtained on commercially reasonable terms, or (b)
is made in connection with an involuntary sale pursuant to
foreclosure of the mortgage secured by the 866 U.N. Plaza Property
or otherwise, including pursuant to a deed in lieu of foreclosure
(provided that the General Partner may not execute any deed in lieu
of foreclosure unless the maturity of the indebtedness secured by
the 866 U.N. Plaza Property has been accelerated) or a proceeding
in connection with a bankruptcy. During such fifteen-year period,
the General Partner shall use commercially reasonable efforts
during the one-year period prior to the stated maturity of such
indebtedness to cause the Operating Partnership to refinance (on a
basis such that the new debt would be considered a Nonrecourse
Liability, or, as contemplated by clause (2) below, a Partner
Nonrecourse Debt) the indebtedness for an amount not less than the
principal amount of such indebtedness on the date of such
refinancing, provided such refinancing can be obtained on
commercially reasonable terms, with such refinancing indebtedness
(2) providing for the least amount of principal amortization as is
available on commercially reasonable terms and (2) permitting (but
not requiring) a guarantee of such indebtedness by the holders of
the 866 U.N. Plaza Units who elect to join in such guarantee in a
form and on terms consistent with the guarantees by the holders of
the 866 U.N. Plaza Units in effect immediately prior to such
refinancing, provided that the opportunity to provide such
guarantee may be obtained on commercially reasonable terms.
Finally, during such fifteen-year period, the General Partner shall
not, without the consent of Partners holding seventy-five percent
(75%) of the ▇▇▇ ▇.▇. ▇▇▇▇▇ ▇▇▇▇▇, incur indebtedness secured by
the 866 U.N. Plaza Property if, at the time such indebtedness is
incurred, the aggregate amount of the indebtedness secured by the
866 U.N. Plaza Property would exceed the greater of (i)
seventy-five percent (75%) of the fair market value of the 866 U.N.
Plaza Property (or the interest therein) securing such indebtedness
or (ii) the then outstanding indebtedness being refinanced plus all
costs (including prepayment fees, "breakage" payments and similar
costs) incurred in connection with such refinancing.
- 35 -
(4) Subparagraphs (1), (2), and (3) shall not apply to any transaction
that involves the Two Penn Plaza Property, the Eleven Penn Plaza
Property or the 866 U.N. Plaza Property, as the case may be (which
Property is referred to as the "Exchanged Property"), if such
transaction qualifies as a like-kind exchange under Section 1031 of
the Code in which no gain is recognized by the Partnership as long
as the following conditions are satisfied: (x) such exchange is
not with a "related party" within the meaning of Section 1031(f)(3)
of the Code; (y) the property received in exchange for the
Exchanged Property (referred to as the "Replacement Property") is
secured by nonrecourse indebtedness in an amount not less than the
outstanding principal amount of the nonrecourse indebtedness
secured by the Exchanged Property at the time of the exchange, nor
greater than the amount that would be permitted under Sections
7.11.C(1), (2), or (3), as the case may be, with a maturity not
earlier than, and a principal amortization rate not more rapid
than, the maturity and principal amortization rate of such
indebtedness secured by the Exchanged Property, which indebtedness
permits (but does not require) a guarantee of such indebtedness by
the holders of the Two Penn Plaza Units, the Eleven Penn Plaza
Units or the ▇▇▇ ▇.▇. ▇▇▇▇▇ ▇▇▇▇▇, as the case may be, who elect to
join in such guarantee in a form and on terms consistent with the
guarantees by the holders of the Two Penn Plaza Units, the Eleven
Penn Plaza Units or the ▇▇▇ ▇.▇. ▇▇▇▇▇ ▇▇▇▇▇, as the case may be,
in effect immediately prior to the time of the exchange, and (z)
the Replacement Property is thereafter treated for all purposes of
the restrictions in this Section 7.11.C as the Exchanged Property
and the indebtedness secured by such Replacement Property is
subject to the same restrictions and agreements as apply with
respect to the indebtedness secured by the Exchanged Property.
(5) Subparagraphs (1), (2), and (3) shall not apply to any
transaction that involves the Two Penn Plaza Property, the Eleven
Penn Plaza Property or the 866 U.N. Plaza Property, as the case may
be (which Property is referred to as the "Transferred Property"),
if (x) such transaction does not result in, and is not otherwise in
connection with, a dissolution of the Partnership, (y) such
transaction qualifies as a contribution to a partnership under
Section 721 of the Code in which no gain is recognized with respect
to the Two Penn Plaza Property, the Eleven Penn Plaza Property or
the 866 U.N. Plaza Property by the Partnership or the holders of
the Two Penn Plaza Units, the Eleven Penn Plaza Units, or the ▇▇▇
▇.▇. ▇▇▇▇▇ ▇▇▇▇▇, as the case may be (other than gain, if any,
resulting solely because the share, if any, of indebtedness
allocable to a Partnership Unit under Treas. Reg. Section
1.752-3(a)(3) (or any successor thereto) is reduced or eliminated),
and (z) the entity to which such Transferred Property is
transferred agrees, for the benefit of the holders of the Two Penn
Plaza Units, the Eleven Penn Plaza Units or the ▇▇▇ ▇.▇. ▇▇▇▇▇
▇▇▇▇▇, as the case may be, that all of the restrictions of this
Section 7.11.C shall apply to the Transferred Property and the
indebtedness outstanding with respect thereto in the same manner
and to the extent set forth in this Section 7.11.C and such
agreement is reflected in the partnership agreement (or other
comparable governing instrument) of the entity to which the
Transferred Property is transferred.
(6) Subparagraphs (1), (2), and (3) shall not apply to any
transaction that involves either a merger or consolidation of the
Partnership with or into another entity that qualifies as a
"partnership" for federal income tax purposes (the "Successor
Partnership") or a transfer of all or substantially all
- 36 -
of the assets of the Partnership to a Successor Partnership and
dissolution of the Partnership in connection therewith (in either
case, a "Consolidation Transaction") so long as (x) no gain is
recognized with respect to the Two Penn Plaza Property, the Eleven
Penn Plaza Property or the 866 U.N. Plaza Property by the
Partnership or the holders of the Two Penn Plaza Units, the Eleven
Penn Plaza Units or the ▇▇▇ ▇.▇. ▇▇▇▇▇ ▇▇▇▇▇, as the case may be,
in connection with such Consolidation Transaction (other than gain,
if any, resulting solely because the share, if any, of indebtedness
allocable to a Partnership Unit under Treas. Reg. Section
1.752-3(a)(3) (or any successor thereto) is reduced or eliminated)
and (y) the Successor Partnership agrees in writing, for the
benefit of the holders of the Two Penn Plaza Units, the Eleven Penn
Plaza Units or the ▇▇▇ ▇.▇. ▇▇▇▇▇ ▇▇▇▇▇, as the case may be, that
all of the restrictions of this Section 7.11.C shall apply to the
Two Penn Plaza Property, the Eleven Penn Plaza Property and the 866
U.N. Plaza Property and the indebtedness outstanding with respect
thereto in the same manner and to the extent set forth in this
Section 7.11.C.
(7) Subparagraphs (1), (2) and (3) shall not apply to any sale
or other disposition transaction not otherwise described in
Subparagraphs (4), (5) or (6) (including a merger or consolidation)
involving the Two Penn Plaza Property, the Eleven Penn Plaza
Property and/or the 866 U.N. Plaza Property that is undertaken in
connection with and as an integral part of a sale or other
disposition of all or substantially all of the assets of the
Partnership (referred to as a "Liquidating Transaction") so long as
the Liquidating Transaction is undertaken with the Consent of
Certain Limited Partners.
(ii) Nothing herein shall be deemed to require that the Partnership or
the General Partner take any action to avoid or prevent an involuntary
disposition of any property, whether pursuant to foreclosure of a mortgage
secured by such property or otherwise, including pursuant to a deed in lieu
of foreclosure or a proceeding in connection with a bankruptcy.
(iii) Nothing herein shall prevent the sale, exchange, transfer or
other disposition of any property pursuant to the dissolution and liquidation
of the Partnership in accordance with Article XIII hereof (other than Section
13.1(v), which shall be subject to this Section 7.11.C).
D. Merger or Consolidation in Which the Partnership is Not the
Surviving Entity. In the event that the Partnership is to merge or
consolidate with or into any other entity in a transaction in which holders
of Partnership Units will receive consideration other than cash or equity
securities that are Publicly Traded (an "Equity Merger") and such Equity
Merger would be prohibited by Section 7.11.C but for the application of
Section 7.11.C(6), then (in addition to any Consent requirements under
Section 7.11.B and Section 7.11.C) the Equity Merger shall require the
Consent of Certain Limited Partners unless:
(i) the partnership agreement, limited liability agreement or other
operative governing documents (the "Charter Documents") of the entity
that is the surviving entity in such Equity Merger contain provisions
that are comparable in all material respects to, or the entity that is
the surviving entity in such Equity Merger otherwise agree in writing,
for the benefit of the holders of the Two Penn Plaza Units, the Eleven
Penn Plaza Units, and the ▇▇▇ ▇.▇. ▇▇▇▇▇ ▇▇▇▇▇, to restrictions that are
comparable in all material respects to the provisions of Section 4.2.A,
Article V and Article VI (except for differences that would be permitted
pursuant to Sections 4.2, 5.1.E, 5.4, 6.2 and 14.1.B(3) if such changes
were to be made to this Agreement), Section 7.1.A (second sentence only),
Section 7.6.A, Section 7.11.A, Section 7.11.B, this Section 7.11.D,
Section 8.6 (and all defined terms set forth in Article I that relate
- 37 -
to the Redemption Right), Section 11.2, Section 13.1, Section 13.2.A(3)
(except as permitted pursuant to Sections 4.2, 5.4, 6.2 and 14.1.B(3)),
Section 14.1.C, Section 14.1.D, and Section 14.2, all as in effect
immediately prior to the Equity Merger; and
(ii) the Equity Merger would not either cause a holder of a Partnership
Unit to be a general partner or to have liability equivalent to that of a
general partner in a partnership or otherwise modify the limited
liability of a Limited Partner under this Agreement.
Section 7.12 Loans by Third Parties
The Partnership may incur Debt, or enter into similar credit, guarantee,
financing or refinancing arrangements for any purpose (including, without
limitation, in connection with any acquisition of property) with any Person
that is not the General Partner upon such terms as the General Partner
determines appropriate; provided that, the Partnership shall not incur any
Debt that is recourse to the General Partner, except to the extent otherwise
agreed to by the General Partner in its sole discretion.
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 Management of Business
No Limited Partner or Assignee (other than the General Partner, any of
its Affiliates or any officer, director, employee, partner, agent or trustee
of the General Partner, the Partnership or any of their Affiliates, in their
capacity as such) shall take part in the operation, management or control
(within the meaning of the Act) of the Partnership's business, transact any
business in the Partnership's name or have the power to sign documents for or
otherwise bind the Partnership. The transaction of any such business by the
General Partner, any of its Affiliates or any officer, director, employee,
partner, agent or trustee of the General Partner, the Partnership or any of
their Affiliates, in their capacity as such, shall not affect, impair or
eliminate the limitations on the liability of the Limited Partners or
Assignees under this Agreement.
Section 8.3 Outside Activities of Limited Partners
Subject to Section 7.5 hereof, and subject to any agreements entered into
pursuant to Section 7.6.C hereof and to any other agreements entered into by
a Limited Partner or its Affiliates with the Partnership or a Subsidiary, any
Limited Partner (other than the General Partner) and any officer, director,
employee, agent, trustee, Affiliate or shareholder of any Limited Partner
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 or indirect competition with the
Partnership. Neither the Partnership nor any Partners shall have any rights
by virtue of this Agreement in any business ventures of any Limited Partner
or Assignee. None of the Limited Partners (other than the General Partner)
nor any other Person shall have any rights by virtue of this Agreement or the
partnership relationship established hereby in any business ventures of any
other Person (other than the General Partner to the extent expressly provided
herein), and such Person shall have no obligation pursuant to this Agreement
to offer any interest in any such
- 38 -
business ventures to the Partnership, any Limited Partner or any such other
Person, even if such opportunity is of a character which, if presented to the
Partnership, any Limited Partner or such other Person, could be taken by such
Person.
Section 8.4 Return of Capital
Except pursuant to the right of redemption set forth in Section 8.6
below, no Limited Partner shall be entitled to the withdrawal or return of
its Capital Contribution, except to the extent of distributions made pursuant
to this Agreement or upon termination of the Partnership as provided herein.
No Limited Partner or Assignee shall have priority over any other Limited
Partner or Assignee either as to the return of Capital Contributions (except
as permitted by Section 4.2.A hereof) or, except to the extent provided by
Exhibit C hereto or as permitted by Sections 4.2.A, 5.1.B(i), 6.1.A(ii) and
6.1.B(i) hereof or otherwise expressly provided in this Agreement, as to
profits, losses, distributions or credits.
Section 8.5 Rights of Limited Partners Relating to the Partnership
A. General. In addition to other rights provided by this Agreement or
by the Act, and except as limited by Section 8.5.D below, 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 most recent annual and quarterly
reports filed with the Securities and Exchange Commission by the
General Partner Entity pursuant to the Exchange Act;
(2) to obtain a copy of the Partnership's federal, state and
local income tax returns for each Partnership Year;
(3) to obtain a current list of the name and last known
business, residence or mailing address of each Partner;
(4) to obtain a copy of this Agreement and the Certificate and
all amendments thereto, together with executed copies of all powers
of attorney pursuant to which this Agreement, the Certificate and
all amendments thereto have been executed; and
(5) to obtain true and full information regarding the amount
of cash and a description and statement of any other property or
services contributed by each Partner and which each Partner has
agreed to contribute in the future, and the date on which each
became a Partner.
B. Notice of Conversion Factor. The Partnership shall notify each
Limited Partner upon request of the then current Conversion Factor and any
changes that have been made thereto.
C. Notice of Extraordinary Transaction of the General Partner Entity.
The General Partner Entity shall not make any extraordinary distributions of
cash or property to its shareholders or effect a merger (including, without
limitation, a triangular merger), a sale of all or substantially all of its
assets or any other similar extraordinary transaction without notifying the
Limited Partners of its intention to make such distribution or effect such
merger, sale or other extraordinary transaction at least twenty (20) Business
Days prior to the record date to determine
- 39 -
shareholders eligible to receive such distribution or to vote upon the
approval of such merger, sale or other extraordinary transaction (or, if no
such record date is applicable, at least twenty (20) business days before
consummation of such merger, sale or other extraordinary transaction). This
provision for such notice shall not be deemed (i) to permit any transaction
that otherwise is prohibited by this Agreement or requires a Consent of the
Partners or (ii) to require a Consent of the Limited Partners to a
transaction that does not otherwise require Consent under this Agreement.
Each Limited Partner agrees, as a condition to the receipt of the notice
pursuant hereto, to keep confidential the information set forth therein until
such time as the General Partner Entity has made public disclosure thereof
and to use such information during such period of confidentiality solely for
purposes of determining whether or not to exercise the Redemption Right;
provided, however, that a Limited Partner may disclose such information to
its attorney, accountant and/or financial advisor for purposes of obtaining
advice with respect to such exercise so long as such attorney, accountant
and/or financial advisor agrees to receive and hold such information subject
to this confidentiality requirement.
D. Confidentiality. Notwithstanding any other provision of this
Section 8.5, the General Partner may keep confidential from the Limited
Partners, for such period of time as the General Partner determines in its
sole and absolute discretion to be reasonable, any information that (i) the
General Partner reasonably believes to be in the nature of trade secrets or
other information the disclosure of which the General Partner in good faith
believes is not in the best interests of the Partnership or could damage the
Partnership or its business or (ii) the Partnership is required by law or by
agreements with unaffiliated third parties to keep confidential.
Section 8.6 Redemption Right
A. General. (i) Subject to Section 8.6.C below, on or after the date
two (2) years after the issuance of a Partnership Unit to a Limited Partner
pursuant to Article IV hereof (which two-year period shall commence upon the
issuance of such Partnership Unit regardless of whether such Partnership Unit
is designated upon issuance as a Class A Unit, a Class B Unit or otherwise
and shall include the period of time from the date such Partnership Unit is
issued to such Limited Partner as other than a Class A Unit until the date
such Partnership Unit is converted automatically to a Class A Unit pursuant
to Section 4.2.C hereof), or on or after such date prior to the expiration of
such two-year period as the General Partner, in its sole and absolute
discretion, designates with respect to any or all Class A Units then
outstanding, the holder of a Partnership Unit (if other than the General
Partner or the General Partner Entity or any Subsidiary of either the General
Partner or the General Partner Entity) shall have the right (the "Redemption
Right") to require the Partnership to redeem such Partnership Unit on a
Specified Redemption Date and at a redemption price equal to and in the form
of the Cash Amount to be paid by the Partnership. Any such Redemption Right
shall be exercised pursuant to a Notice of Redemption delivered to the
Partnership (with a copy to the General Partner) by the Limited Partner who
is exercising the Redemption Right (the "Redeeming Partner"). A Limited
Partner may not exercise the Redemption Right for less than one thousand
(1,000) Partnership Units or, if such Redeeming Partner holds less than one
thousand (1,000) Partnership Units, for less than all of the Partnership
Units held by such Redeeming Partner.
(ii) The Redeeming Partner shall have no right with respect to any
Partnership Units so redeemed to receive any distributions paid after the
Specified Redemption Date.
(iii) The Assignee of any Limited Partner may exercise the rights of
such Limited Partner pursuant to this Section 8.6, and such Limited Partner
shall be deemed to have assigned such rights to such Assignee and shall be
bound by the exercise of such rights by such Limited Partner's Assignee. In
connection with any exercise of the such rights by such Assignee on behalf of
- 40 -
such Limited Partner, the Cash Amount shall be paid by the Partnership
directly to such Assignee and not to such Limited Partner.
(iv) In the event that the General Partner provides notice to the Limited
Partners, pursuant to Section 8.5.C hereof, the Redemption Right shall be
exercisable, without regard to whether the Partnership Units have been
outstanding for any specified period, during the period commencing on the
date on which the General Partner provides such notice and ending on the
record date to determine shareholders eligible to receive such distribution
or to vote upon the approval of such merger, sale or other extraordinary
transaction (or, if no such record date is applicable, at least twenty (20)
business days before the consummation of such merger, sale or other
extraordinary transaction). In the event that this subparagraph (iv)
applies, the Specified Redemption Date is the date on which the Partnership
and the General Partner receive notice of exercise of the Redemption Right,
rather than ten (10) Business Days after receipt of the notice of redemption.
B. General Partner Assumption of Right. (i) If a Limited Partner has
delivered a Notice of Redemption, the General Partner may, in its sole and
absolute discretion (subject to any limitations on ownership and transfer of
Shares set forth in the Articles of Incorporation), elect to assume directly
and satisfy a Redemption Right by paying to the Redeeming Partner either the
Cash Amount or the Shares Amount, as the General Partner determines in its
sole and absolute discretion (provided that payment of the Redemption Amount
in the form of Shares shall be in Shares registered under Section 12 of the
Exchange Act and listed for trading on the exchange or national market on
which the Shares are Publicly Traded, and provided further that, in the event
that the Shares are not Publicly Traded at the time a Redeeming Partner
exercises its Redemption Right, the Redemption Amount shall be paid only in
the form of the Cash Amount unless the Redeeming Partner, in its sole and
absolute discretion, consents to payment of the Redemption Amount in the form
of the Shares Amount), on the Specified Redemption Date, whereupon the
General Partner shall acquire the Partnership Units offered for redemption by
the Redeeming Partner and shall be treated for all purposes of this Agreement
as the owner of such Partnership Units. Unless the General Partner, in its
sole and absolute discretion, shall exercise its right to assume directly and
satisfy the Redemption Right, the General Partner shall not have any
obligation to the Redeeming Partner or to the Partnership with respect to the
Redeeming Partner's exercise of the Redemption Right. In the event the
General Partner shall exercise its right to satisfy the Redemption Right in
the manner described in the first sentence of this Section 8.6.B and shall
fully perform its obligations in connection therewith, the Partnership shall
have no right or obligation to pay any amount to the Redeeming Partner with
respect to such Redeeming Partner's exercise of the Redemption Right, and
each of the Redeeming Partner, the Partnership and the General Partner shall,
for federal income tax purposes, treat the transaction between the General
Partner and the Redeeming Partner as a sale of the Redeeming Partner's
Partnership Units to the General Partner. Nothing contained in this Section
8.6.B shall imply any right of the General Partner to require any Limited
Partner to exercise the Redemption Right afforded to such Limited Partner
pursuant to Section 8.6.A above.
(ii) In the event that the General Partner determines to pay the
Redeeming Partner the Redemption Amount in the form of Shares, the total
number of Shares to be paid to the Redeeming Partner in exchange for the
Redeeming Partner's Partnership Units shall be the applicable Shares Amount.
In the event this amount is not a whole number of Shares, the Redeeming
Partner shall be paid (i) that number of Shares which equals the nearest
whole number less than such amount plus (ii) an amount of cash which the
General Partner determines, in its reasonable discretion, to represent the
fair value of the remaining fractional Share which would otherwise be payable
to the Redeeming Partner.
(iii) Each Redeeming Partner agrees to execute such documents as the
General Partner may reasonably require in connection with the issuance of
Shares upon exercise of the Redemption Right.
- 41 -
C. Exceptions to Exercise of Redemption Right. Notwithstanding the
provisions of Sections 8.6.A and 8.6.B above, a Partner shall not be entitled
to exercise the Redemption Right pursuant to Section 8.6.A above if (but only
as long as) the delivery of Shares to such Partner on the Specified
Redemption Date (i) would be prohibited under the Articles of Incorporation
or (ii) as long as the Shares are Publicly Traded, would be prohibited under
applicable federal or state securities laws or regulations (in each case
regardless of whether the General Partner would in fact assume and satisfy
the Redemption Right).
D. No Liens on Partnership Units Delivered for Redemption. Each
Limited Partner covenants and agrees with the General Partner that all
Partnership Units delivered for redemption shall be delivered to the
Partnership or the General Partner, as the case may be, free and clear of all
liens, and, notwithstanding anything contained herein to the contrary,
neither the General Partner nor the Partnership shall be under any obligation
to acquire Partnership Units which are or may be subject to any liens. Each
Limited Partner further agrees that, in the event any state or local property
transfer tax is payable as a result of the transfer of its Partnership Units
to the Partnership or the General Partner, such Limited Partner shall assume
and pay such transfer tax.
E. Additional Partnership Interests. In the event that the Partnership
issues Partnership Interests to any Additional Limited Partner pursuant to
Article IV hereof, the General Partner shall make such amendments to this
Section 8.6 as it determines are necessary to reflect the issuance of such
Partnership Interests (including setting forth any restrictions on the
exercise of the Redemption Right with respect to such Partnership Interests).
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, including, without limitation, all books and records
necessary to provide to the Limited Partners any information, lists and
copies of documents required to be provided pursuant to Section 9.3 below.
Any records maintained by or on behalf of the Partnership in the regular
course of its business may be kept on, or be in the form of, punch cards,
magnetic tape, photographs, micrographics or any other information storage
device, provided that the records so maintained are convertible into clearly
legible written form within a reasonable period of time. The books of the
Partnership shall be maintained, for financial and tax reporting purposes, on
an accrual basis in accordance with generally accepted accounting principles.
Section 9.2 Fiscal Year
The fiscal year of the Partnership shall be the calendar year.
Section 9.3 Reports
A. Annual Reports. As soon as practicable, but in no event later than
the date on which the General Partner Entity mails its annual report to its
stockholders, the General Partner shall cause to be mailed to each Limited
Partner an annual report, as of the close of the most recently ended
Partnership Year, containing financial statements of the Partnership, or of
the General Partner Entity if such statements are prepared solely on a
consolidated basis with the Partnership, for such Partnership Year, presented
in accordance with generally accepted accounting
- 42 -
principles, such statements to be audited by a nationally recognized firm of
independent public accountants selected by the General Partner Entity.
B. Quarterly Reports. If and to the extent that the General Partner
Entity mails quarterly reports to its stockholders, as soon as practicable,
but in no event later than the date on which such reports are mailed, the
General Partner shall cause to be mailed to each Limited Partner a report
containing unaudited financial statements, as of the last day of such
calendar quarter, of the Partnership, or of the General Partner Entity if
such statements are prepared solely on a consolidated basis with the
Partnership, and such other information as may be required by applicable law
or regulation, or as the General Partner determines to be appropriate.
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 and state income tax purposes
and shall use all reasonable efforts to furnish, within ninety (90) days of
the close of each taxable year, the tax information reasonably required by
Limited Partners for federal and state income tax reporting purposes.
Section 10.2 Tax Elections
Except as otherwise provided herein, the General Partner shall, in its
sole and absolute discretion, determine whether to make any available
election pursuant to the Code; 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) upon the General Partner's
determination in its sole and absolute discretion that such revocation is in
the best interests of the Partners.
Section 10.3 Tax Matters Partner
A. General. The General Partner shall be the "tax matters partner" of
the Partnership for federal income tax purposes. Pursuant to Section
6223(c)(3) of the Code, upon receipt of notice from the IRS of the beginning
of an administrative proceeding with respect to the Partnership, the tax
matters partner shall furnish the IRS with the name, address, tax payer
identification number and profit interest of each of the Limited Partners and
any Assignees; provided, however, that such information is provided to the
Partnership by the Limited Partners.
▇. ▇▇▇▇▇▇. The tax matters partner is authorized, but not required:
(1) to enter into any settlement with the IRS with
respect to any administrative or judicial proceedings for the
adjustment of Partnership items required to be taken into
account by a Partner for income tax purposes (such
administrative proceedings being referred to as a "tax audit"
and such judicial proceedings being referred to as "judicial
review"), and in the settlement agreement the tax matters
partner may expressly state that such agreement shall bind all
Partners, except that such settlement agreement shall not bind
any Partner (i) who (within the time prescribed pursuant to
the Code and
- 43 -
Regulations) files a statement with the IRS providing that the
tax matters partner shall not have the authority to enter into
a settlement agreement on behalf of such Partner or (ii) who
is a "notice partner" (as defined in Section 6231(a)(8) of the
Code) or a member of a "notice group" (as defined in Section
6223(b)(2) of the Code);
(2) in the event that a notice of a final administrative
adjustment at the Partnership level of any item required to be
taken into account by a Partner for tax purposes (a "final
adjustment") is mailed to the tax matters partner, to seek
judicial review of such final adjustment, including the filing
of a petition for readjustment with the Tax Court or the filing
of a complaint for refund with the United States Claims Court
or the District Court of the United States for the district in
which the Partnership's principal place of business is located;
(3) to intervene in any action brought by any other Partner for
judicial review of a final adjustment;
(4) to file a request for an administrative adjustment with the IRS
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;
(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 hereof shall be fully applicable to the tax
matters partner in its capacity as such.
C. Reimbursement. The tax matters partner shall receive no
compensation for its services. All third party costs and expenses incurred
by the tax matters partner in performing its duties as such (including legal
and accounting fees and expenses) shall be borne by the Partnership. Nothing
herein shall be construed to restrict the Partnership from engaging an
accounting firm or a law firm to assist the tax matters partner in
discharging its duties hereunder, as long as the compensation paid by the
Partnership for such services is reasonable.
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.
- 44 -
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 Section 1441, 1442, 1445, or 1446 of
the Code. Any amount paid on behalf of or with respect to a Limited Partner
shall constitute a recourse 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 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 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 four
(4) 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 request in order to perfect or
enforce the security interest created hereunder.
ARTICLE XI
TRANSFERS AND WITHDRAWALS
Section 11.1 Transfer
A. Definition. The term "transfer," when used in this Article XI with
respect to a Partnership Interest or a Partnership Unit, shall be deemed to
refer to a transaction by which the General Partner purports to assign all or
any part of its General Partnership Interest to another Person or by which a
Limited Partner purports to assign all or any part of 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 redemption or repurchase of Partnership Units by the Partnership
from a Partner (including the General Partner) or acquisition of Partnership
Units from a Limited Partner by the General Partner pursuant to Section 8.6
hereof or otherwise. No part of the interest of a Limited Partner shall be
subject to the claims of any creditor, any spouse for alimony or support, or
to legal process, and may not be voluntarily or involuntarily alienated or
encumbered except as may be specifically provided for in this Agreement.
B. General. 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.
- 45 -
Section 11.2 Transfers of Partnership Interests of General Partner
A. Except for transfers of Partnership Units to the Partnership as
provided in Section 7.5 or Section 8.6 hereof, the General Partner may not
transfer any of its Partnership Interest (including both its General
Partnership Interest and its Limited Partnership Interest) except in
connection with a transaction described in Section 11.2.B below or as
otherwise expressly permitted under this Agreement), nor shall the General
Partner withdraw as General Partner except in connection with a transaction
described in Section 11.2.B below.
B. The General Partner shall not engage in any merger (including a
triangular merger), consolidation or other combination with or into another
person, sale of all or substantially all of its assets or any
reclassification, recapitalization or change of outstanding Shares (other
than a change in par value, or from par value to no par value, or as a result
of a subdivision or combination as described in the definition of "Conversion
Factor") ("Termination Transaction"), unless the Termination Transaction has
been approved by the Consent of the Partners holding a majority or more of
the then outstanding Partnership Units (including any Partnership Units held
by the General Partner) and in connection with which all Limited Partners
either will receive, or will have the right to elect to receive, for each
Partnership Unit an amount of cash, securities, or other property equal to
the product of the Conversion Factor and the greatest amount of cash,
securities or other property paid to a holder of Shares, if any,
corresponding to such Partnership Unit was issued pursuant to Section 4.2.A
hereof in consideration of one such Share at any time during the period from
and after the date on which the Termination Transaction is consummated;
provided that, if, in connection with the Termination Transaction, a
purchase, tender or exchange offer shall have been made to and accepted by
the holders of more than fifty percent (50%) of the outstanding Shares, each
holder of Partnership Units shall receive, or shall have the right to elect
to receive, the greatest amount of cash, securities, or other property which
such holder would have received had it exercised the Redemption Right and
received Shares in exchange for its Partnership Units immediately prior to
the expiration of such purchase, tender or exchange offer and had thereupon
accepted such purchase, tender or exchange offer.
Section 11.3 Limited Partners' Rights to Transfer
A. General. Subject to the provisions of Sections 11.3.C, 11.3.D,
11.3.E, 11.4 and 11.6 below, prior to the second anniversary of the Effective
Date, a Limited Partner may not transfer any of such Limited Partner's rights
as a Limited Partner without the consent of the General Partner, which
consent the General Partner may withhold in its sole discretion if it
determines that such a transfer would cause any or all of the Limited
Partners other than the Limited Partner seeking to transfer its rights as a
Limited Partner to be subject to tax liability as a result of such transfer.
Any purported transfer attempted in violation of the foregoing sentence shall
be deemed void ab initio and shall have no force or effect. Subject to the
provisions of Sections 11.3.C, 11.3.D, 11.3.E, 11.4 and 11.6 below, on or
after the second anniversary of the Effective Date, a Limited Partner (other
than the General Partner) may transfer, with or without the consent of the
General Partner, all or any portion of its Partnership Interest, or any of
such Limited Partner's rights as a Limited Partner, provided that prior
written notice of such proposed transfer is delivered to the General Partner.
B. Incapacitated Limited Partners. If a Limited Partner is subject to
Incapacity, the executor, administrator, trustee, committee, guardian,
conservator or receiver of such Limited Partner's estate shall have all the
rights of a Limited Partner, but not more rights than those enjoyed by other
Limited Partners for the purpose of settling or managing the estate and such
power as the Incapacitated Limited Partner possessed to transfer all or any
part of its interest in the Partnership. The Incapacity of a Limited
Partner, in and of itself, shall not dissolve or terminate the Partnership.
- 46 -
C. No Transfers Violating Securities Laws. The General Partner may
prohibit any transfer of Partnership Units by a Limited Partner 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 Unit.
D. No Transfers Affecting Tax Status of Partnership. No transfer of
Partnership Units by a Limited Partner (including a redemption or exchange
pursuant to Section 8.6 hereof) may be made to any Person if (i) in the
opinion of legal counsel for the Partnership, it would result in the
Partnership being treated as an association taxable as a corporation for
federal income tax purposes or would result in a termination of the
Partnership for federal income tax purposes (except as a result of the
redemption or exchange for Shares of all Partnership Units held by all
Limited Partners other than the General Partner or the General Partner Entity
or any Subsidiary of either the General Partner or the General Partner Entity
or pursuant to a transaction expressly permitted under Section 7.11.B or
Section 11.2 hereof), (ii) in the opinion of legal counsel for the
Partnership, it would adversely affect the ability of the General Partner
Entity to continue to qualify as a REIT or would subject the General Partner
Entity 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.
E. No Transfers to Holders of Nonrecourse Liabilities. No pledge or
transfer of any Partnership Units may be made to a lender to the Partnership
or any Person who is related (within the meaning of Section 1.752-4(b) of the
Regulations) to any lender to the Partnership whose loan constitutes a
Nonrecourse Liability without the consent of the General Partner, in its sole
and absolute discretion; provided that, as a condition to such consent the
lender will be required to enter into an arrangement with the Partnership and
the General Partner to exchange or redeem for the Redemption Amount any
Partnership Units in which a security interest is held simultaneously with
the time at which such lender would be deemed to be a partner in the
Partnership for purposes of allocating liabilities to such lender under
Section 752 of the Code.
Section 11.4 Substituted Limited Partners
A. Consent of General Partner. No Limited Partner shall have the right
to substitute a transferee as a Limited Partner in its place without the
consent of the General Partner to the admission of a transferee of the
interest of a Limited Partner pursuant to this Section 11.4 as a Substituted
Limited Partner, which consent may be given or withheld by the General
Partner in its sole and absolute discretion. The General Partner's failure
or refusal to permit a transferee of any such interests to become a
Substituted Limited Partner shall not give rise to any cause of action
against the Partnership or any Partner.
B. Rights of Substituted Limited Partner. A transferee who has been
admitted as a Substituted Limited Partner in accordance with this Article XI
shall have all the rights and powers and be subject to all the restrictions
and liabilities of a Limited Partner under this Agreement. The admission of
any transferee as a Substituted Limited Partner shall be conditioned upon the
transferee executing and delivering to the Partnership an acceptance of all
the terms and conditions of this Agreement (including, without limitation,
the provisions of Section 15.11 hereof and such other documents or
instruments as may be required to effect the admission).
C. Amendment and Restatement of Exhibit A. Upon the admission of a
Substituted Limited Partner, the General Partner shall amend and restate
Exhibit A hereto to reflect the name, address, Capital Account, number of
Partnership Units, and Percentage Interest of
- 47 -
such Substituted Limited Partner and to eliminate or adjust, if necessary,
the name, address, Capital Account and Percentage Interest of the predecessor
of such Substituted Limited Partner.
Section 11.5 Assignees
If the General Partner, in its sole and absolute discretion, does not
consent to the admission of any permitted transferee under Section 11.3 above
as a Substituted Limited Partner, as described in Section 11.4 above, such
transferee shall be considered an Assignee for purposes of this Agreement.
An Assignee shall be entitled to all the rights of an assignee of a limited
partnership interest under the Act, including the right to receive
distributions from the Partnership and the share of Net Income, Net Losses,
gain, loss and Recapture Income attributable to the Partnership Units
assigned to such transferee, and shall have the rights granted to the Limited
Partners under Section 8.6 hereof, but shall not be deemed to be a holder of
Partnership Units for any other purpose under this Agreement, and shall not
be entitled to vote such Partnership Units in any matter presented to the
Limited Partners for a vote (such Partnership Units being deemed to have been
voted on such matter in the same proportion as all other Partnership Units
held by Limited Partners are voted). In the event any such transferee
desires to make a further assignment of any such Partnership Units, such
transferee shall be subject to all the provisions of this Article XI to the
same extent and in the same manner as any Limited Partner desiring to make an
assignment of Partnership Units.
Section 11.6 General Provisions
A. Withdrawal of Limited Partner. No Limited Partner may withdraw from
the Partnership other than as a result of a permitted transfer of all of such
Limited Partner's Partnership Units in accordance with this Article XI or
pursuant to redemption of all of its Partnership Units under Section 8.6
hereof.
B. Termination of Status as Limited Partner. Any Limited Partner who
shall transfer all of its Partnership Units in a transfer permitted pursuant
to this Article XI or pursuant to redemption of all of its Partnership Units
under Section 8.6 hereof shall cease to be a Limited Partner.
C. Timing of Transfers. Transfers pursuant to this Article XI may only
be made on the first day of a fiscal quarter of the Partnership, unless the
General Partner otherwise agrees.
D. Allocations. If any Partnership Interest is transferred during any
quarterly segment of the Partnership's fiscal year in compliance with the
provisions of this Article XI or redeemed or transferred pursuant to Section
8.6 hereof, 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 (unless the General Partner, in its sole and absolute discretion,
elects to adopt a daily, weekly, or a monthly proration period, in which
event Net Income, Net Losses, each item thereof and all other items
attributable to such interest for such fiscal year shall be prorated based
upon the applicable method selected by the General Partner). Solely for
purposes of making such allocations, each of such items for the calendar
month in which the transfer or redemption 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 attributable to any Partnership Unit with
respect to which the Partnership Record Date is before the date of such
transfer, assignment or redemption shall be made to the transferor Partner or
the Redeeming Partner, as the case may be, and, in the case of a transfer or
assignment other than a redemption, all distributions of Available Cash
thereafter attributable to such Partnership Unit shall be made to the
transferee Partner.
- 48 -
E. Additional Restrictions. In addition to any other restrictions on
transfer herein contained, including without limitation the provisions of
this Article XI, in no event may any transfer or assignment of a Partnership
Interest by any Partner (including pursuant to Section 8.6 hereof) be made
without the express consent of the General Partner, in its sole and absolute
discretion, (i) to any person or entity who lacks the legal right, power or
capacity to own a Partnership Interest; (ii) in violation of applicable law;
(iii) of any component portion of a Partnership Interest, such as the Capital
Account, or rights to distributions, separate and apart from all other
components of a Partnership Interest; (iv) if in the opinion of legal counsel
to the Partnership such transfer would cause a termination of the Partnership
for federal or state income tax purposes (except as a result of the
redemption or exchange for Shares of all Partnership Units held by all
Limited Partners or pursuant to a transaction expressly permitted under
Section 7.11.B or Section 11.2 hereof); (v) if in the opinion of counsel to
the Partnership, such transfer would cause the Partnership to cease to be
classified as a partnership for federal income tax purposes (except as a
result of the redemption or exchange for Shares of all Partnership Units held
by all Limited Partners or pursuant to a transaction expressly permitted
under Section 7.11.B or Section 11.2 hereof); (vi) if such transfer would
cause the Partnership to become, with respect to any employee benefit plan
subject to Title I of ERISA, a "party-in-interest" (as defined in Section
3(14) of ERISA) or a "disqualified person" (as defined in Section 4975(c) of
the Code); (vii) if such transfer would, in the opinion of counsel to 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 2510.1-101; (viii) if such transfer requires the
registration of such Partnership Interest pursuant to any applicable federal
or state securities laws; (ix) if such transfer is effectuated through an
"established securities market" or a "secondary market" (or the substantial
equivalent thereof) within the meaning of Section 7704 of the Code or such
transfer causes the Partnership to become a "publicly traded partnership," as
such term is defined in Section 469(k)(2) or Section 7704(b) of the Code; (x)
if such transfer subjects the Partnership to regulation under the Investment
Company Act of 1940, the Investment Advisors Act of 1940 or the Employee
Retirement Income Security Act of 1974, each as amended; (xi) if the
transferee or assignee of such Partnership Interest is unable to make the
representations set forth in Section 15.15 hereof or such transfer could
otherwise adversely affect the ability of the General Partner Entity to
remain qualified as a REIT; or (xii) if in the opinion of legal counsel for
the Partnership, such transfer would adversely affect the ability of the
General Partner Entity to continue to qualify as a REIT or subject the
General Partner Entity to any additional taxes under Section 857 or Section
4981 of the Code.
F. Avoidance of "Publicly Traded Partnership" Status. The General
Partner shall monitor the transfers of interests in the Partnership to
determine (i) if such interests are being traded on an "established
securities market" or a "secondary market (or the substantial equivalent
thereof)" within the meaning of Section 7704 of the Code and (ii) whether
additional transfers of interests would result in the Partnership being
unable to qualify for at least one of the "safe harbors" set forth in
Regulations Section 1.7704-1 (or such other guidance subsequently published
by the IRS setting forth safe harbors under which interests will not be
treated as "readily tradable on a secondary market (or the substantial
equivalent thereof)" within the meaning of Section 7704 of the Code) (the
"Safe Harbors"). The General Partner shall take all steps reasonably
necessary or appropriate to prevent any trading of interests or any
recognition by the Partnership of transfers made on such markets and, except
as otherwise provided herein, to insure that at least one of the Safe Harbors
is met.
- 49 -
ARTICLE XII
ADMISSION OF PARTNERS
Section 12.1 Admission of Successor General Partner
A successor to all of the General Partner's General Partnership Interest
pursuant to Section 11.2 hereof who is proposed to be admitted as a successor
General Partner shall be admitted to the Partnership as the General Partner,
effective upon such transfer. Any such transferee shall carry on the
business of the Partnership without dissolution. In each case, the admission
shall be subject to the successor General Partner's executing and delivering
to the Partnership an acceptance of all of the terms and conditions of this
Agreement and such other documents or instruments as may be required to
effect the admission.
Section 12.2 Admission of Additional Limited Partners
A. General. No Person shall be admitted as an Additional Limited
Partner without the consent of the General Partner, which consent shall be
given or withheld in the General Partner's sole and absolute discretion. A
Person who makes a Capital Contribution to the Partnership in accordance with
this Agreement, including, without limitation, pursuant to Section 4.1.C
hereof, or who exercises an option to receive Partnership Units shall be
admitted to the Partnership as an Additional Limited Partner only with the
consent of the General Partner and only upon furnishing to the General
Partner (i) evidence of acceptance in form satisfactory to the General
Partner of all of the terms and conditions of this Agreement, including,
without limitation, the power of attorney granted in Section 15.11 hereof and
(ii) such other documents or instruments as may be required in the discretion
of the General Partner in order to effect such Person's admission as an
Additional Limited Partner. The admission of any Person as an Additional
Limited Partner shall become effective on the date upon which the name of
such Person is recorded on the books and records of the Partnership,
following the consent of the General Partner to such admission.
B. Allocations to Additional Limited Partners. If any Additional
Limited Partner is admitted to the Partnership on any day other than the
first day of a Partnership Year, then Net Income, Net Losses, each item
thereof and all other items allocable among Partners and Assignees for such
Partnership Year shall be allocated among such Additional Limited Partner and
all other Partners and Assignees by taking into account their varying
interests during the Partnership Year in accordance with Section 706(d) of
the Code, using the interim closing of the books method (unless the General
Partner, in its sole and absolute discretion, elects to adopt a daily, weekly
or monthly proration method, in which event Net Income, Net Losses, and each
item thereof would be prorated based upon the applicable period selected by
the General Partner). Solely for purposes of making such allocations, each
of such items for the calendar month in which an admission of any Additional
Limited Partner occurs shall be allocated among all the Partners and
Assignees including such Additional Limited Partner. All distributions of
Available Cash with respect to which the Partnership Record Date is before
the date of such admission shall be made solely to Partners and Assignees
other than the Additional Limited Partner, and all distributions of Available
Cash thereafter shall be made to all the Partners and Assignees including
such Additional Limited Partner.
Section 12.3 Amendment of Agreement and Certificate of Limited Partnership
For the admission to the Partnership of any Partner, the General Partner
shall take all steps necessary and appropriate under the Act to amend the
records of the Partnership (including an amendment and restatement of Exhibit
A hereto) and, if necessary, to prepare as soon as practical an amendment of
this Agreement and, if required by law, shall prepare and file an amendment to
- 50 -
the Certificate and may for this purpose exercise the power of attorney
granted pursuant to Section 15.11 hereof.
ARTICLE XIII
DISSOLUTION AND LIQUIDATION
Section 13.1 Dissolution
The Partnership shall not be dissolved by the admission of Substituted
Limited Partners or Additional Limited Partners or by the admission of a
successor General Partner in accordance with the terms of this Agreement.
Upon the withdrawal of the General Partner, any successor General Partner
shall continue the business of the Partnership. The Partnership shall
dissolve, and its affairs shall be wound up, upon the first to occur of any
of the following ("Liquidating Events") :
(i) the expiration of its term as provided in Section 2.4
hereof;
(ii) an event of withdrawal of the General Partner, as defined
in the Act (other than an event of bankruptcy), unless, within ninety (90)
days after the withdrawal a "majority in interest" (as defined below) of the
remaining Partners Consent in writing to continue the business of the
Partnership and to the appointment, effective as of the date of withdrawal,
of a substitute General Partner;
(iii) an election to dissolve the Partnership made by the
General Partner, in its sole and absolute discretion, after December 31, 2046;
(iv) entry of a decree of judicial dissolution of the
Partnership pursuant to the provisions of the Act;
(v) the sale of all or substantially all of the assets and
properties of the Partnership for cash or for marketable securities (subject
to Section 7.11.C); or
(vi) a final and nonappealable judgment is entered by a court
of competent jurisdiction ruling that the General Partner is bankrupt or
insolvent, or a final and nonappealable order for relief is entered by a
court with appropriate jurisdiction against the General Partner, in each case
under any federal or state bankruptcy or insolvency laws as now or hereafter
in effect, unless prior to or within ninety days after of the entry of such
order or judgment a "majority in interest" (as defined below) of the
remaining Partners Consent in writing to continue the business of the
Partnership and to the appointment, effective as of a date prior to the date
of such order or judgment, of a substitute General Partner.
As used herein, a "majority in interest" shall refer to Partners
(excluding the General Partner) who hold more than fifty percent (50%) of the
outstanding Percentage Interests not held by the General Partner.
Section 13.2 Winding Up
A. General. Upon the occurrence of a Liquidating Event, the
Partnership shall continue solely for the purposes of winding up its affairs
in an orderly manner, liquidating its assets, and satisfying the claims of
its creditors and Partners. No Partner shall take any action that is
inconsistent with, or not necessary to or appropriate for, the winding up of
the Partnership's business and affairs. The General Partner (or, in the
event there is no remaining General Partner, any Person elected by a majority
in interest of the Limited Partners (the "Liquidator")) shall be
- 51 -
responsible for overseeing the winding up and dissolution of the Partnership
and shall take full account of the Partnership's liabilities and property and
the Partnership property shall be liquidated as promptly as is consistent
with obtaining the fair value thereof, and the proceeds therefrom (which may,
to the extent determined by the General Partner, include equity or other
securities of the General Partner or any other entity) shall be applied and
distributed in the following order:
(1) First, to the payment and discharge of all of the
Partnership's debts and liabilities to creditors other than the
Partners;
(2) Second, to the payment and discharge of all of the
Partnership's debts and liabilities to the Partners; and
(3) The balance, if any, to the Partners in accordance with
their Capital Accounts, 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 XIII.
B. Deferred Liquidation. Notwithstanding the provisions of Section
13.2.A above 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) or distribute to the Partners, in
lieu of cash, as tenants in common and in accordance with the provisions of
Section 13.2.A above, 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.
Section 13.3 Compliance with Timing Requirements of Regulations
Subject to Section 13.4 below, 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 XIII 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 General Partner, a pro rata portion of the distributions
that would otherwise be made to the General Partner and Limited Partners
pursuant to this Article XIII 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 (in which case 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 General Partner, in the same proportions as
the amount
- 52 -
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 13.4 Deemed Distribution and Recontribution
Notwithstanding any other provision of this Article XIII, in the event
the Partnership is deemed liquidated within the meaning of Regulations
Section 1.704-1(b)(2)(ii)(g) 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, for federal income tax purposes and for purposes of
maintaining Capital Accounts pursuant to Exhibit B hereto, the Partnership
shall be deemed to have distributed its assets in kind to the General Partner
and Limited Partners, who shall be deemed to have assumed and taken such
assets 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 recontributed the Partnership assets
in kind to the Partnership, which shall be deemed to have assumed and taken
such assets subject to all such liabilities.
Section 13.5 Rights of Limited Partners
Except as otherwise provided in this Agreement, each Limited Partner
shall look solely to the assets of the Partnership for the return of its
Capital Contributions and shall have no right or power to demand or receive
property other than cash from the Partnership. Except as otherwise expressly
provided in this Agreement, no Limited Partner shall have priority over any
other Limited Partner as to the return of its Capital Contributions,
distributions, or allocations.
Section 13.6 Notice of Dissolution
In the event a Liquidating Event occurs or an event occurs that would,
but for provisions of an election or objection by one or more Partners
pursuant to Section 13.1 above, result in a dissolution of the Partnership,
the General Partner shall, within thirty (30) days thereafter, provide
written notice thereof to each of the Partners and to all other parties with
whom the Partnership regularly conducts business (as determined in the
discretion of the General Partner) and shall publish notice thereof in a
newspaper of general circulation in each place in which the Partnership
regularly conducts business (as determined in the discretion of the General
Partner).
Section 13.7 Cancellation of Certificate of Limited Partnership
Upon the completion of the liquidation of the Partnership cash and
property as provided in Section 13.2 above, 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.
Section 13.8 Reasonable Time for Winding Up
A reasonable time shall be allowed for the orderly winding up of the
business and affairs of the Partnership and the liquidation of its assets
pursuant to Section 13.2 above, in order to
- 53 -
minimize any losses otherwise attendant upon such winding-up, and the
provisions of this Agreement shall remain in effect among the Partners during
the period of liquidation.
Section 13.9 Waiver of Partition
Each Partner hereby waives any right to partition of the Partnership
property.
Section 13.10 Liability of Liquidator
The Liquidator shall be indemnified and held harmless by the Partnership
in the same manner and to the same degree as an Indemnitee may be indemnified
pursuant to Section 7.11 hereof.
ARTICLE XIV
AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS
Section 14.1 Amendments
A. General. Amendments to this Agreement may be proposed by the
General Partner or by any Limited Partners holding twenty-five percent (25%)
or more of the Partnership Interests. Following such proposal (except an
amendment pursuant to Section 14.1.B below), the General Partner shall submit
any proposed amendment to the Limited Partners. The General Partner shall
seek the written vote of the Partners on the proposed amendment or shall call
a meeting to vote thereon and to transact any other business that it may deem
appropriate. For purposes of obtaining a written vote, the General Partner
may require a response within a reasonable specified time, but not less than
fifteen (15) days, and failure to respond in such time period shall
constitute a vote which is consistent with the General Partner's
recommendation with respect to the proposal. Except as provided in Section
14.1.B, 14.1.C or 14.1.D below, a proposed amendment shall be adopted and be
effective as an amendment hereto if it is approved by the General Partner and
it receives the Consent of Partners holding a majority of the Percentage
Interests of the Limited Partners (including Limited Partnership Interests
held by the General Partner).
B. Amendments Not Requiring Limited Partner Approval. Notwithstanding
Section 14.1.A or Section 14.1.C hereof, the General Partner shall have the
power, without the Consent of the Limited Partners, to amend this Agreement
as may be required to facilitate or implement any of the following purposes:
(1) to add to the obligations of the General Partner or
surrender any right or power granted to the General Partner or any
Affiliate of the General Partner for the benefit of the Limited
Partners;
(2) to reflect the admission, substitution, termination or
withdrawal of any Partner in accordance with this Agreement;
(3) to set forth the designations, rights, powers, duties, and
preferences of the holders of any additional Partnership Interests
issued pursuant to Article IV hereof;
- 54 -
(4) to reflect a change that does not adversely affect any of the Limited
Partners in any material respect, or to cure any ambiguity, correct or
supplement any provision in this Agreement not inconsistent with law
or with other provisions, or make other changes with respect to
matters arising under this Agreement that will not be inconsistent
with law or with the provisions of this Agreement or as may be
expressly provided by any other provisions of this Agreement; and
(5) to satisfy any requirements, conditions, or guidelines contained in
any order, directive, opinion, ruling or regulation of a federal,
state or local agency or contained in federal, state or local law.
The General Partner shall notify the Limited Partners when any action under this
Section 14.1.B is taken in the next regular communication to the Limited
Partners.
C. Amendments Requiring Limited Partner Approval (Excluding General
Partner). Notwithstanding Section 14.1.A above, without the Consent of the
Outside Limited Partners, the General Partner shall not amend Section 4.2.A,
Section 5.1.E, Section 7.1.A (second sentence only), Section 7.5, Section 7.6,
Section 7.8, Section 7.11.B, Section 11.2, Section 13.1, this Section 14.1.C or
Section 14.2.
D. Other Amendments Requiring Certain Limited Partner Approval.
Notwithstanding anything in this Section 14.1 to the contrary, this Agreement
shall not be amended with respect to any Partner adversely affected without the
Consent of such 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) amend
Section 7.11.A, (iv) amend Article V, Article VI, or Section 13.2.A(3) (except
as permitted pursuant to Sections 4.2, 5.1.E, 5.4, 6.2 and 14.1(B)(3)), (v)
amend Section 8.6 or any defined terms set forth in Article I that relate to the
Redemption Right (except as permitted in Section 8.6.E), or (vi) amend this
Section 14.1.D. In addition, any amendment to Section 7.11.C of this Agreement
shall require the following consent:
(i) In the event that the amendment to Section 7.11.C affects the Two Penn
Plaza Property or the rights of holders of Two Penn Plaza Units, such
amendment shall require the Consent of Partners (other than the General
Partner or the General Partner Entity or any Subsidiary of either the
General Partner or the General Partner Entity) who hold seventy-five
percent (75%) of the Two Penn Plaza Units;
(ii) In the event that the amendment to Section 7.11.C affects the Eleven
Penn Plaza Property or the rights of holders of Eleven Penn Plaza Units,
such amendment shall require the Consent of Partners (other than the
General Partner or the General Partner Entity or any Subsidiary of either
the General Partner or the General Partner Entity) who hold seventy-five
percent (75%) of the Eleven Penn Plaza Units; and
(iii) In the event that the amendment to Section 7.11.C affects the 866
U.N. Plaza Property or the rights of holders of ▇▇▇ ▇.▇. ▇▇▇▇▇ ▇▇▇▇▇, such
amendment shall require the Consent of Partners (other than the General
Partner or the General Partner Entity or any Subsidiary of either the
General Partner or the General Partner Entity) who hold seventy-five
percent (75%) of the ▇▇▇ ▇.▇. ▇▇▇▇▇ ▇▇▇▇▇.
▇. Amendment and Restatement of Exhibit A Not An Amendment.
Notwithstanding anything in this Article XIV or elsewhere in this Agreement to
the contrary, any amendment and restatement of Exhibit A hereto by the General
Partner to reflect events or changes
- 55 -
otherwise authorized or permitted by this Agreement, whether pursuant to Section
7.1.A(20) hereof or otherwise, shall not be deemed an amendment of this
Agreement and may be done at any time and from time to time, as necessary by the
General Partner without the Consent of the Limited Partners.
Section 14.2 Meetings of the Partners
A. General. Meetings of the Partners may be called by the General
Partner and shall be called upon the receipt by the General Partner of a written
request by Limited Partners holding twenty-five percent (25%) or more of the
Partnership Interests. The call shall state the nature of the business to be
transacted. Notice of any such meeting shall be given to all Partners not less
than seven (7) days nor more than thirty (30) days prior to the date of such
meeting. Partners may vote in person or by proxy at such meeting. Whenever the
vote or Consent of Partners is permitted or required under this Agreement, such
vote or Consent may be given at a meeting of Partners or may be given in
accordance with the procedure prescribed in Section 14.1.A above. Except as
otherwise expressly provided in this Agreement, the Consent of holders of a
majority of the Percentage Interests held by Limited Partners (including Limited
Partnership Interests held by the General Partner) shall control.
B. Actions Without a Meeting. Any action required or permitted to be
taken at a meeting of the Partners may be taken without a meeting if a written
consent setting forth the action so taken is signed by a majority of the
Percentage Interests of the Partners (or such other percentage as is expressly
required by this Agreement). Such consent may be in one instrument or in
several instruments, and shall have the same force and effect as a vote of a
majority of the Percentage Interests of the Partners (or such other percentage
as is expressly required by this Agreement). Such consent shall be filed with
the General Partner. An action so taken shall be deemed to have been taken at a
meeting held on the effective date so certified.
C. Proxy. Each Limited Partner may authorize any Person or Persons to
act for him by proxy on all matters in which a Limited Partner is entitled to
participate, including waiving notice of any meeting, or voting or participating
at a meeting. Every proxy must be signed by the Limited Partner or its
attorney-in-fact. No proxy shall be valid after the expiration of eleven (11)
months from the date thereof unless otherwise provided in the proxy. Every
proxy shall be revocable at the pleasure of the Limited Partner executing it,
such revocation to be effective upon the Partnership's receipt of notice thereof
in writing.
D. Conduct of Meeting. Each meeting of Partners shall be conducted by
the General Partner or such other Person as the General Partner may appoint
pursuant to such rules for the conduct of the meeting as the General Partner or
such other Person deems appropriate.
ARTICLE XV
GENERAL PROVISIONS
Section 15.1 Addresses and Notice
Any notice, demand, request or report required or permitted to be given or
made to a Partner or Assignee under this Agreement shall be in writing and shall
be deemed given or made when delivered in person or when sent by first class
United States mail or by other means of written communication to the Partner or
Assignee at the address set forth in Exhibit A hereto or such other address as
the Partners shall notify the General Partner in writing.
- 56 -
Section 15.2 Titles and Captions
All article or section titles or captions in this Agreement are for
convenience only. They shall not be deemed part of this Agreement and in no way
define, limit, extend or describe the scope or intent of any provisions hereof.
Except as specifically provided otherwise, references to "Articles" and
"Sections" are to Articles and Sections of this Agreement.
Section 15.3 Pronouns and Plurals
Whenever the context may require, any pronoun used in this Agreement shall
include the corresponding masculine, feminine or neuter forms, and the singular
form of nouns, pronouns and verbs shall include the plural and vice versa.
Section 15.4 Further Action
The parties shall execute and deliver all documents, provide all
information and take or refrain from taking action as may be necessary or
appropriate to achieve the purposes of this Agreement.
Section 15.5 Binding Effect
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their heirs, executors, administrators, successors, legal
representatives and permitted assigns.
Section 15.6 Creditors
Other than as expressly set forth herein with regard to any Indemnitee,
none of the provisions of this Agreement shall be for the benefit of, or shall
be enforceable by, any creditor of the Partnership.
Section 15.7 Waiver
No failure by any party to insist upon the strict performance of any
covenant, duty, agreement or condition of this Agreement or to exercise any
right or remedy consequent upon a breach thereof shall constitute waiver of any
such breach or any other covenant, duty, agreement or condition.
Section 15.8 Counterparts
This Agreement may be executed in counterparts, all of which together shall
constitute one agreement binding on all the parties hereto, notwithstanding that
all such parties are not signatories to the original or the same counterpart.
Each party shall become bound by this Agreement immediately upon affixing its
signature hereto.
Section 15.9 Applicable Law
This Agreement shall be construed and enforced in accordance with and
governed by the laws of the State of Delaware, without regard to the principles
of conflicts of law.
- 57 -
Section 15.10 Invalidity of Provisions
If any provision of this Agreement is or becomes invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein shall not be affected thereby.
Section 15.11 Power of Attorney
A. General. Each Limited Partner and each Assignee who accepts
Partnership Units (or any rights, benefits or privileges associated therewith)
is deemed to irrevocably constitute and appoint the General Partner, any
Liquidator and authorized officers and attorneys-in-fact of each, and each of
those acting singly, in each case with full power of substitution, as its true
and lawful agent and attorney-in-fact, with full power and authority in its
name, place and stead to:
(1) execute, swear to, acknowledge, deliver, file and record in the
appropriate public offices (a) all certificates, documents and other
instruments (including, without limitation, this Agreement and the
Certificate and all amendments or restatements thereof) that the
General Partner or any Liquidator deems appropriate or necessary to
form, qualify or continue the existence or qualification of the
Partnership as a limited partnership (or a partnership in which the
limited partners have limited liability) in the State of Delaware and
in all other jurisdictions in which the Partnership may conduct
business or own property, (b) all instruments that the General Partner
or any Liquidator deems appropriate or necessary to reflect any
amendment, change, modification or restatement of this Agreement in
accordance with its terms, (c) all conveyances and other instruments
or documents that the General Partner or any Liquidator deems
appropriate or necessary to reflect the dissolution and liquidation of
the Partnership pursuant to the terms of this Agreement, including,
without limitation, a certificate of cancellation, (d) all instruments
relating to the admission, withdrawal, removal or substitution of any
Partner pursuant to, or other events described in, Article XI, XII or
XIII hereof or the Capital Contribution of any Partner and (e) all
certificates, documents and other instruments relating to the
determination of the rights, preferences and privileges of Partnership
Interests; and
(2) execute, swear to, acknowledge and file all ballots, consents,
approvals, waivers, certificates and other instruments appropriate or
necessary, in the sole and absolute discretion of the General Partner
or any Liquidator, to make, evidence, give, confirm or ratify any
vote, consent, approval, agreement or other action which is made or
given by the Partners hereunder or is consistent with the terms of
this Agreement or appropriate or necessary, in the sole discretion of
the General Partner or any Liquidator, to effectuate the terms or
intent of this Agreement.
Nothing contained in this Section 15.11 shall be construed as authorizing
the General Partner or any Liquidator to amend this Agreement except in
accordance with Article XIV hereof or as may be otherwise expressly provided for
in this Agreement.
B. Irrevocable Nature. The foregoing power of attorney is hereby
declared to be irrevocable and a power coupled with an interest, in recognition
of the fact that each of the Partners will be relying upon the power of the
General Partner or any Liquidator to act as contemplated by this Agreement in
any filing or other action by it on behalf of the Partnership, and it shall
survive
- 58 -
and not be affected by the subsequent Incapacity of any Limited Partner or
Assignee and the transfer of all or any portion of such Limited Partner's or
Assignee's Partnership Units and shall extend to such Limited Partner's or
Assignee's heirs, successors, assigns and personal representatives. Each such
Limited Partner or Assignee hereby agrees to be bound by any representation made
by the General Partner or any Liquidator, acting in good faith pursuant to such
power of attorney; and each such Limited Partner or Assignee hereby waives any
and all defenses which may be available to contest, negate or disaffirm the
action of the General Partner or any Liquidator, taken in good faith under such
power of attorney. Each Limited Partner or Assignee shall execute and deliver
to the General Partner or the Liquidator, within fifteen (15) days after receipt
of the General Partner's or Liquidator's request therefor, such further
designation, powers of attorney and other instruments as the General Partner or
the Liquidator, as the case may be, deems necessary to effectuate this Agreement
and the purposes of the Partnership.
Section 15.12 Entire Agreement
This Agreement contains the entire understanding and agreement among the
Partners with respect to the subject matter hereof and supersedes any prior
written oral understandings or agreements among them with respect thereto.
Section 15.13 No Rights as Shareholders
Nothing contained in this Agreement shall be construed as conferring upon
the holders of the Partnership Units any rights whatsoever as shareholders of
the General Partner Entity, including, without limitation, any right to receive
dividends or other distributions made to shareholders of the General Partner
Entity or to vote or to consent or receive notice as shareholders in respect to
any meeting of shareholders for the election of directors of the General Partner
Entity or any other matter.
Section 15.14 Limitation to Preserve REIT Status
To the extent that any amount paid or credited to the General Partner or
its officers, directors, employees or agents pursuant to Section 7.4 or
Section 7.7 hereof would constitute gross income to the General Partner Entity
for purposes of Section 856(c)(2) or 856(c)(3) of the Code (a "General Partner
Payment") then, notwithstanding any other provision of this Agreement, the
amount of such General Partner Payments for any fiscal year shall not exceed the
lesser of:
(i) an amount equal to the excess, if any, of (a) 4.20% of the General
Partner Entity's total gross income (but not including the amount of any General
Partner Payments) for the fiscal year which is described in subsections (A)
though (H) of Section 856(c)(2) of the Code over (b) the amount of gross income
(within the meaning of Section 856(c)(2) of the Code) derived by the General
Partner Entity from sources other than those described in subsections (A)
through (H) of Section 856(c)(2) of the Code (but not including the amount of
any General Partner Payments); or
(ii) an amount equal to the excess, if any of (a) 25% of the General
Partner Entity's total gross income (but not including the amount of any General
Partner Payments) for the fiscal year which is described in subsections (A)
through (I) of Section 856(c)(3) of the Code over (b) the amount of gross income
(within the meaning of Section 856(c)(3) of the Code) derived by the General
Partner Entity from sources other than those described in subsections (A)
through (I) of Section 856(c)(3) of the Code (but not including the amount of
any General Partner Payments);
provided, however, that General Partner Payments in excess of the amounts set
forth in subparagraphs (i) and (ii) above may be made if the General Partner
Entity, as a condition
- 59 -
precedent, obtains an opinion of tax counsel that the receipt of such excess
amounts would not adversely affect the General Partner Entity's ability to
qualify as a REIT. To the extent General Partner Payments may not be made in a
year due to the foregoing limitations, such General Partner Payments shall
carry over and be treated as arising in the following year, provided, however,
that such amounts shall not carry over for more than five years, and if not
paid within such five year period, shall expire; provided further, that (i) as
General Partner Payments are made, such payments shall be applied first to carry
over amounts outstanding, if any, and (ii) with respect to carry over amounts
for more than one Partnership Year, such payments shall be applied to the
earliest Partnership Year first.
- 60 -
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first written above.
GENERAL PARTNER:
THE MENDIK COMPANY, INC.
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
LIMITED PARTNERS:
THE MENDIK COMPANY, INC.
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
FW/MENDIK REIT, L.L.C.
By: FWM, L.P., member
By: FWM Genpar, Inc., general partner
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
By: Mendik Holdings LLC, member
By: Mendik Holdings, Inc., managing
member
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
[ADD OTHER LIMITED PARTNERS]
- 61 -
EXHIBIT A
PARTNERS AND PARTNERSHIP INTERESTS
Class A Class B Agreed Initial
Partnership Partnership Capital Percentage
Name and Address of Partner Units Units Account Interest
--------------------------- ----------- ----------- ------------- ----------
GENERAL PARTNER:
The Mendik Company, Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
LIMITED PARTNERS:
The Mendik Company, Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
FW/Mendik REIT, L.L.C.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
[List Other Partners]
TOTAL 100.00%
----------- ----------- ------------- ----------
EXHIBIT B
CAPITAL ACCOUNT MAINTENANCE
1. Capital Accounts of the Partners
A. The Partnership shall maintain for each Partner a separate Capital
Account in accordance with the rules of Regulations Section l.704-l(b)(2)(iv).
Such Capital Account shall be increased by (i) the amount of all Capital
Contributions and any other deemed contributions made by such Partner to the
Partnership pursuant to this Agreement and (ii) all items of Partnership income
and gain (including income and gain exempt from tax) computed in accordance with
Section 1.B hereof and allocated to such Partner pursuant to Section 6.1 of the
Agreement and Exhibit C hereof, and decreased by (x) the amount of cash or
Agreed Value of all actual and deemed distributions of cash or property made to
such Partner pursuant to this Agreement and (y) all items of Partnership
deduction and loss computed in accordance with Section 1.B hereof and allocated
to such Partner pursuant to Section 6.1 of the Agreement and Exhibit C hereof.
B. For purposes of computing the amount of any item of income, gain,
deduction or loss to be reflected in the Partners' Capital Accounts, unless
otherwise specified in this Agreement, the determination, recognition and
classification of any such item shall be the same as its determination,
recognition and classification for federal income tax purposes determined in
accordance with Section 703(a) of the Code (for this purpose all items of
income, gain, loss or deduction required to be stated separately pursuant to
Section 703(a)(1) of the Code shall be included in taxable income or loss), with
the following adjustments:
(1) Except as otherwise provided in Regulations Section
1.704-1(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, provided
that the amounts of any adjustments to the adjusted bases of the assets
of the Partnership made pursuant to Section 734 of the Code as a result
of the distribution of property by the Partnership to a Partner (to the
extent that such adjustments have not previously been reflected in the
Partners' Capital Accounts) shall be reflected in the Capital Accounts
of the Partners in the manner and subject to the limitations prescribed
in Regulations Section l.704-1(b)(2)(iv) (m)(4).
(2) The computation of all items of income, gain, and deduction shall be
made without regard to the fact that items described in Sections
705(a)(l)(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 Asset is adjusted
pursuant to Section 1.D hereof, the amount of any such adjustment
shall be taken into account as gain or loss from the disposition of
such asset.
(6) Any items specially allocated under Section 2 of Exhibit C hereof
shall not be taken into account.
C. Generally, a transferee (including any Assignee) of a Partnership Unit
shall succeed to a pro rata portion of the Capital Account of the transferor.
The Capital Accounts of such reconstituted Partnership shall be maintained in
accordance with the principles of this Exhibit B.
D. (1) Consistent with the provisions of Regulations
Section 1.704-1(b)(2)(iv)(f), and as provided in
Section 1.D(2), the Carrying Values of all Partnership assets
shall be adjusted upward or downward to reflect any Unrealized Gain
or Unrealized Loss attributable to such Partnership property, as of
the times of the adjustments provided in Section 1.D(2) hereof, as if
such Unrealized Gain or Unrealized Loss had been recognized on an
actual sale of each such property and allocated pursuant to
Section 6.1 of the Agreement.
(2) Such adjustments shall be made as of the following times: (a)
immediately prior to the acquisition of an additional interest in the
Partnership by any new or existing Partner in exchange for more than a
de minimis Capital Contribution; (b) immediately prior to the
distribution by the Partnership to a Partner of more than a de minimis
amount of property as consideration for an interest in the
Partnership; and (c) immediately prior to the liquidation of the
Partnership within the meaning of Regulations Section 1.704-
l(b)(2)(ii)(g), provided however that adjustments pursuant to clauses
(a) and (b) above shall be made only if the General Partner determines
that such adjustments are necessary or appropriate to reflect the
relative economic interests of the Partners in the Partnership.
(3) In accordance with Regulations Section 1.704-l(b)(2)(iv)(e), the
Carrying Value of Partnership assets distributed in kind shall be
adjusted upward or downward to reflect any Unrealized Gain or
Unrealized Loss attributable to such Partnership property, as of the
time any such asset is distributed.
(4) In determining Unrealized Gain or Unrealized Loss for purposes of this
Exhibit B, the aggregate cash amount and fair market value of all
Partnership assets (including cash or cash equivalents) shall be
determined by the General Partner using such reasonable method of
valuation as it may adopt, or in the case of a liquidating
distribution pursuant to Article XIII of the Agreement, shall be
determined and allocated by the Liquidator using such reasonable
methods of valuation as it may adopt. The General Partner, or the
Liquidator, as the case may be, shall allocate such aggregate fair
market 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 the Agreement (including this Exhibit B and the
other Exhibits to the Agreement) relating to the maintenance of Capital Accounts
are intended to comply with Regulations Section 1.704-1(b), and shall be
interpreted and applied in a manner consistent with such Regulations. In the
event the General Partner shall determine that it is prudent to modify the
manner in which the Capital Accounts, or any debits or credits thereto
(including, without limitation, debits or credits relating to liabilities which
are secured by contributed or distributed property or which are assumed by the
Partnership, the General Partner, or the Limited Partners) are computed in order
to comply with such Regulations, the General Partner may make such modification
without regard to Article XIV of the Agreement, provided that it is not likely
to have a material effect on the amounts distributable to any Person pursuant to
Article XIII of the Agreement
B-2
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 l.704-l(b)(2)(iv)(q), and
(ii) make any appropriate modifications in the event unanticipated events
might otherwise cause this Agreement not to comply with Regulations Section
l.704-1(b).
2. No Interest
No interest shall be paid by the Partnership on Capital Contributions or on
balances in Partners' Capital Accounts.
3. No Withdrawal
No Partner shall be entitled to withdraw any part of its Capital
Contribution or Capital Account or to receive any distribution from the
Partnership, except as provided in Articles IV, V, VII and XIII of the
Agreement.
B-3
EXHIBIT C
SPECIAL ALLOCATION RULES
1. Special Allocation Rules.
Notwithstanding any other provision of the Agreement or this Exhibit C, the
following special allocations shall be made in the following order:
A. Minimum Gain Chargeback. Notwithstanding the provisions of
Section 6.1 of the Agreement or any other provisions of this Exhibit C, if there
is a net decrease in Partnership Minimum Gain during any Partnership Year, each
Partner shall be specially allocated items of Partnership income and gain for
such year (and, if necessary, subsequent years) in an amount equal to such
Partner's share of the net decrease in Partnership Minimum Gain, as determined
under Regulations Section 1.704-2(g). Allocations pursuant to the previous
sentence shall be made in proportion to the respective amounts required to be
allocated to each Partner pursuant thereto. The items to be so allocated shall
be determined in accordance with Regulations Section 1.704-2(f)(6). This
Section 1.A is intended to comply with the minimum gain chargeback requirements
in Regulations Section 1.704-2(f) and for purposes of this Section 1.A only,
each Partner's Adjusted Capital Account Deficit shall be determined prior to any
other allocations pursuant to Section 6.1 of this Agreement with respect to such
Partnership Year and without regard to any decrease in Partner Minimum Gain
during such Partnership Year.
B. Partner Minimum Gain Chargeback. Notwithstanding any other
provision of Section 6.1 of this Agreement or any other provisions of this
Exhibit C (except Section 1.A hereof), if there is a net decrease in Partner
Minimum Gain attributable to a Partner Nonrecourse Debt during any
Partnership Year, each Partner who has a share of the Partner Minimum Gain
attributable to such Partner Nonrecourse Debt, determined in accordance with
Regulations Section 1.704-2(i) (5), shall be specially allocated items of
Partnership income and gain for such year (and, if necessary, subsequent
years) in an amount equal to such Partner's share of the net decrease in
Partner Minimum Gain attributable to such Partner Nonrecourse Debt,
determined in accordance with Regulations Section 1.704-2(i) (5).
Allocations pursuant to the previous sentence shall be made in proportion to
the respective amounts required to be allocated to each General Partner and
Limited Partner pursuant thereto. The items to be so allocated shall be
determined in accordance with Regulations Section 1.704-2(i) (4). This
Section 1.B is intended to comply with the minimum gain chargeback
requirement in such Section of the Regulations and shall be interpreted
consistently therewith. Solely for purposes of this Section 1.B, each
Partner's Adjusted Capital Account Deficit shall be determined prior to any
other allocations pursuant to Section 6.1 of the Agreement or this Exhibit
with respect to such Partnership Year, other than allocations pursuant to
Section 1.A hereof.
C. Qualified Income Offset. In the event any Partner unexpectedly
receives any adjustments, allocations or distributions described in Regulations
Sections 1.704-l(b)(2)(ii)(d)(4), l.704-1(b)(2)(ii)(d)(5), or
1.704-l(b)(2)(ii)(d)(6), and after giving effect to the allocations required
under Sections 1.A and 1.B hereof with respect to such Partnership Year, such
Partner has an Adjusted Capital Account Deficit, items of Partnership income
and gain (consisting of a pro rata portion of each item of Partnership income,
including gross income and gain for the Partnership Year) shall be specially
allocated to such Partner in an amount and manner sufficient to eliminate,
to the extent required by the Regulations, its Adjusted Capital Account
Deficit created by such adjustments, allocations or distributions as quickly
as possible. This Section 1.C is intended to constitute a "qualified income
offset" under Regulations Section 1.704-1(b)(2)(ii)(d) and shall be
interpreted consistently therewith.
▇. ▇▇▇▇▇ Income Allocation. In the event that any Partner has an
Adjusted Capital Account Deficit at the end of any Partnership Year (after
taking into account allocations to
be made under the preceding paragraphs hereof with respect to such Partnership
Year), each such Partner shall be specially allocated items of Partnership
income and gain (consisting of a pro rata portion of each item of Partnership
income, including gross income and gain for the Partnership Year) in an amount
and manner sufficient to eliminate, to the extent required by the Regulations,
its Adjusted Capital Account Deficit.
E. Nonrecourse Deductions. Nonrecourse Deductions for any Partnership
Year shall be allocated to the Partners in accordance with their respective
Percentage Interests. If the General Partner determines in its good faith
discretion that the Partnership's Nonrecourse Deductions must be allocated in a
different ratio to satisfy the safe harbor requirements of the Regulations
promulgated under Section 704(b) of the Code, the General Partner is authorized,
upon notice to the Limited Partners, to revise the prescribed ratio for such
Partnership Year to the numerically closest ratio which would satisfy such
requirements.
F. Partner Nonrecourse Deductions. Any Partner Nonrecourse Deductions
for any Partnership Year shall be specially allocated to the Partner who bears
the economic risk of loss with respect to the Partner Nonrecourse Debt to which
such Partner Nonrecourse Deductions are attributable in accordance with
Regulations Sections 1.704-2(b)(4) and 1.704-2(i).
G. 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-l(b)(2)(iv)(m),
to be taken into account in determining Capital Accounts, the amount of such
adjustment to the Capital Accounts shall be treated as an item of gain (if the
adjustment increases the basis of the asset) or loss (if the adjustment
decreases such basis), and such item of gain or loss shall be specially
allocated to the Partners in a manner consistent with the manner in which their
Capital Accounts are required to be adjusted pursuant to such Section of the
Regulations.
2. Allocations for Tax Purposes
A. Except as otherwise provided in this Section 2, for federal income tax
purposes, each item of income, gain, loss and deduction shall be allocated among
the Partners in the same manner as its correlative item of "book" income, gain,
loss or deduction is allocated pursuant to Section 6.1 of the Agreement and
Section 1 of this Exhibit C.
B. In an attempt to eliminate Book-Tax Disparities attributable to a
Contributed Property or Adjusted Property, items of income, gain, loss, and
deduction shall be allocated for federal income tax purposes among the Partners
as follows:
(1) (a) In the case of a Contributed Property, such items attributable
thereto shall be allocated among the Partners consistent with the
principles of Section 704(c) of the Code to take into account the
variation between the 704(c) Value of such property and its
adjusted basis at the time of contribution (taking into account
Section 2.C of this Exhibit C); and
(b) any item of Residual Gain or Residual Loss attributable to a
Contributed Property shall be allocated among the Partners in the
same manner as its correlative item of "book" gain or loss is
allocated pursuant to Section 6.1 of the Agreement and Section 1
of this Exhibit C.
C-2
(2) (a) In the case of an Adjusted Property, such items shall
(i) first, be allocated among the Partners in a manner consistent
with the principles of Section 704(c) of the Code to take into
account the Unrealized Gain or Unrealized Loss attributable to
such property and the allocations thereof pursuant to Exhibit B;
(ii) second, in the event such property was originally a
Contributed Property, be allocated among the Partners in a manner
consistent with Section 2.B(1) of this Exhibit C; and
(b) any item of Residual Gain or Residual Loss attributable to an
Adjusted Property shall be allocated among the Partners in the
same manner its correlative item of "book" gain or loss is
allocated pursuant to Section 6.1 of the Agreement and Section 1
of this Exhibit C.
C. To the extent Regulations promulgated pursuant to Section 704(c) of
the Code permit a Partnership to utilize alternative methods to eliminate
the disparities between the Carrying Value of property and its adjusted basis,
the General Partner shall, subject to the following, have the authority to
elect the method to be used by the Partnership and such election shall be
binding on all Partners. With respect to the Contributed Properties
transferred to the Partnership in connection with the Consolidation, the
Partnership shall elect to use the "traditional method" set forth in Treasury
Regulation Section 1.704-3(b).
C-3
EXHIBIT D
NOTICE OF REDEMPTION
The undersigned hereby irrevocably (i) redeems Partnership
Units in The Mendik Company, L.P. in accordance with the terms of the First
Amended and Restated Agreement of Limited Partnership of The Mendik Company,
L.P., as amended, and the Redemption Right referred to therein, (ii)
surrenders such Partnership Units and all right, title and interest therein
and (iii) directs that the Cash Amount or Shares Amount (as determined by the
General Partner) deliverable upon exercise of the Redemption Right be
delivered to the address specified below, and if Shares are to be delivered,
such Shares be registered or placed in the name(s) and at the address(es)
specified below. The undersigned hereby represents, warrants, and certifies
that the undersigned (a) has marketable and unencumbered title to such
Partnership Units, free and clear of the rights of or interests of any other
person or entity, (b) has the full right, power and authority to redeem and
surrender such Partnership Units as provided herein and (c) has obtained the
consent or approval of all persons or entities, if any, having the right to
consult or approve such redemption and surrender.
Dated: Name of Limited Partner:
------------------ --------------------------
-----------------------------------
(Signature of Limited Partner)
-----------------------------------
(Street Address)
-----------------------------------
(City) (State) (Zip Code)
Signature Guaranteed by:
--------------------------
If Shares are to be issued, issue to:
Name:
Please insert social security or identifying number:
EXHIBIT E
VALUE OF CONTRIBUTED PROPERTY
Underlying Property 704(c) Value Agreed Value
------------------- ------------ ------------