FOURTH AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP OF
U.S. RESTAURANT PROPERTIES OPERATING L.P.
(FORMERLY BURGER KING OPERATING
LIMITED PARTNERSHIP)
Dated as of October 15, 1997
FOURTH AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP OF
U.S. RESTAURANT PROPERTIES OPERATING L.P.
(FORMERLY BURGER KING OPERATING LIMITED PARTNERSHIP)
This Fourth Amended and Restated Agreement of Limited Partnership (this
"Agreement") is entered into as of October 15, 1997, by and among USRP Managing,
Inc. ("Managing"), a Delaware corporation having its principal office at ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇ , ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ (the "Managing General
Partner") (or any other person or entity who shall in the future execute and
deliver this Agreement as a Substituted General Partner pursuant to the
provisions hereof), as the general partner (the "General Partner"), QSV
Properties, Inc., a Delaware corporation having its principal place of business
at ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ ("QSV"), and U.S.
Restaurant Properties Master L.P., a Delaware limited partnership having its
principal place of business at ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇ (the "MLP") and, together with QSV, the "Limited Partners") (the General
Partner and the Limited Partners sometimes hereinafter are referred to as a
"Partner," individually, and as the "Partners," collectively).
WHEREAS, QSV, MLP and Burger King Corporation, a Florida corporation
("BKC"), as the Special General Partner, heretofore have entered into an
Agreement of Limited Partnership dated as of December 10, 1985;
WHEREAS, QSV, the MLP and BKC amended and restated such Agreement of
Limited Partnership in its entirety as of January 6, 1986 and February 3, 1986,
and further amended such Agreement of Limited Partnership by Amendments No. 1
and 2 thereto through November 30, 1994;
WHEREAS, BKC withdrew as Special General Partner effective as of
November 30, 1994;
WHEREAS, QSV and the MLP amended and restated such Agreement of Limited
Partnership in its entirety as of March 17, 1995 (the "Second Amended and
Restated Agreement");
WHEREAS, QSV and the MLP amended and restated such Second Amended and
Restated Agreement in its entirety as of June 27, 1997 (the "Third Amended and
Restated Agreement");
WHEREAS, QSV withdrew as the Managing General Partner and USRP
Managing, Inc. was substituted as the Managing General Partner effective as of
October 15, 1997; and
WHEREAS, the Partners desire to further amend and restate such Third
Amended and Restated Agreement in its entirety, as hereinafter set forth;
NOW THEREFORE, for and in consideration of the foregoing, and of the
covenants and agreements hereinafter set forth, it is hereby agreed as follows:
ARTICLE I
CERTAIN DEFINITIONS
Unless the context otherwise specifies or requires, the terms defined
in this Article I shall, for the purposes of this Agreement, have the meanings
herein specified. Unless otherwise specified, all references herein to Articles
or Sections are to Articles or Sections of this Agreement.
Accounting Firm: The independent public accountants who are responsible
for assisting in maintaining the Partnership tax accounting and allocation
records and advising the Managing General Partner with respect thereto, as
selected and approved by the Managing General Partner from time to time, in its
sole and absolute discretion. The Accounting Firm and the Auditing Firm are not
required to be the same.
Additional Limited Partner: Any Person who is admitted to the
Partnership as a Limited Partner pursuant to Sections 5.2 and 12.2 and who is
shown as such on the book and records of the Partnership.
Additional Securities: The meaning ascribed to it in Section 5.2(a)
hereof.
Adjusted Basis: The basis for determining gain or loss for federal
income tax purposes from the sale or other disposition of property, as defined
in Section 1011 of the Code.
Adjusted Capital Account: The Capital Account maintained for each
Partner as of the end of each Fiscal Year (a) increased by any amounts that 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
Treasury Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5), (b) increased by
such Partner's allocable share (as determined under Section 752 of the Code) of
any nonrecourse indebtedness of the Partnership to the extent that such
indebtedness could not be repaid out of the Partnership's assets if all of the
Partnership's assets were sold at their respective Gross Asset Values as of the
end of the Fiscal Year and the proceeds from the sales were used to pay the
Partnership's liabilities, and (c) decreased by the items described in Treasury
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 Treasury Regulations Section
1.704-1(b)(2)(ii)(d) and shall be interpreted consistently therewith.
Adjusted Capital Account Deficit: With respect to any Partner, the
deficit balance, if any, in such Partner's Adjusted Capital Account as of the
end of the relevant Fiscal Year.
Affiliate: (a) Any Person (as hereinafter defined) directly or
indirectly owning, controlling, or holding power to vote ten percent (10%) or
more of the outstanding voting securities of the Person in question; (b) any
Person ten percent (10%) or more of whose outstanding voting securities are
directly or indirectly owned, controlled or held with power to vote by the
Person in question; (c) any Person directly or indirectly controlling,
controlled by, or under common control with the Person in question; (d) if the
Person in question is a corporation, any executive officer or director of the
Person in question or of any corporation directly or indirectly controlling the
Person in question; and (e) if the Person in question is a partnership, any
general partner owning or controlling ten percent (10%) or more of either the
capital or profits interests in such partnership.
As used in this definition of "Affiliate," the term "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract or otherwise.
Aggregate Common Units: A numeric value equal to the total outstanding
Class B Common Units as of the Effective Date. The amount of Aggregate Common
Units shall be appropriately reduced, from time to time, to reflect any
reduction in the amount of Class B Common Units that occurs as a result of (i)
any acquisition of a Class B Common Unit by the Company or its Affiliates or
(ii) any exchange of a Class B Common Unit pursuant to Section 5.5.
Agreement: This Fourth Amended and Restated Agreement of Limited
Partnership, as it may be further amended or supplemented from time to time.
Amended Agreement: The Amended and Restated Agreement of Limited
Partnership of Burger King Operating Limited Partnership, dated as of February
3, 1986, entered into by and among QSV, BKC and the MLP, as amended by Amendment
Nos. 1 and 2 thereto.
Ancillary Property: Personal property (other than personal property
included in the definitions of "Other Restaurant Properties," "Restricted
Restaurant Properties" and "Retail Properties") of whatever kind used in
connection with a Partnership Property, including, without limitation, supplies,
furnishings, equipment, trade dress and franchise, license and other rights.
Appraiser: Real Estate Research Corporation or its successor, or in the
event that Real Estate Research Corporation is not available for any reason to
provide an appraisal with respect to any matter hereunder, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and
Company or its successor, or in the event that both Real Estate Research
Corporation or its successor and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and Company or its successor
are not available for any reason to provide an appraisal with respect to any
matter hereunder, ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇, Incorporated or its successor, or in the
event that all of the foregoing companies are not available for any reason to
provide an appraisal with respect to any matters hereunder, such other
independent, nationally recognized real estate valuation firm selected by the
Managing General Partner in its reasonable discretion.
Assignee: 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 11.6.
Auditing Firm: The independent public accountants who are responsible
for auditing the financial statements of the Partnership as set forth in Section
10.4, as selected and approved by the Managing General Partner from time to
time, in its sole and absolute discretion. The Auditing Firm and the Accounting
Firm are not required to be the same.
Available Cash: With respect to any period for which such calculation
is being made,
(i) the sum of:
(a) the Partnership's Profit or Loss (as the case may
be) for such period,
(b) depreciation and all other noncash charges
deducted in determining Profit or Loss for such period,
(c) the amount of any reduction in the reserves of
the Partnership referred to in clause (ii)(f) below
(including, without limitation, reductions resulting because
the Managing General Partner determines such amounts are no
longer necessary),
(d) the excess of proceeds from the sale, exchange,
disposition, or refinancing of Partnership property for such
period over the gain (or loss, as the case may be)
recognized from such sale, exchange, disposition, or
refinancing during such period(excluding Terminating Capital
Transactions), and
(e) all other cash received by the Partnership for
such period that was not included in determining Profit or
Loss for such period;
(ii) less the sum of:
(a) all principal debt payments made during such
period by the Partnership,
(b) capital expenditures made by the Partnership
during such period,
(c) investments in any entity (including loans made
thereto) to the extent that such investments are not
otherwise described in clause (ii)(a) or (ii)(b),
(d) all other expenditures and payments not deducted
in determining Profit or Loss for such period,
(e) any amount included in determining Profit or Loss
for such period that was not received by the Partnership
during such period,
(f) the amount of any increase in reserves during
such period which the Managing General Partner determines to
be necessary or appropriate in its sole and absolute
discretion, and
(g) the amount of any working capital accounts and
other cash or similar balances which the Managing General
Partner determines to be necessary or appropriate in its sole
and absolute discretion.
Notwithstanding the foregoing, Available Cash shall not include any
cash received or reductions in reserves, or take into account any disbursements
made or reserves established, after commencement of the dissolution and
liquidation of the Partnership.
Bankruptcy: The meaning ascribed to it in Section 14.2 hereof.
BKC: Burger King Corporation and the successors and assigns of Burger
King Corporation.
BKC Franchise Agreement: A franchise agreement, whether now existing or
hereafter entered into, between a BKC Franchisee and BKC authorizing the BKC
Franchisee to operate a BK Restaurant, as the same may be amended, renewed, or
extended by BKC.
BKC Franchisees: Persons who operate BK Restaurants pursuant to BKC
Franchise Agreements.
BK Restaurants: Burger King "fast food" restaurants, whether operated
by BKC, an Affiliate of BKC or a BKC Franchisee. "BK Restaurant" means any one
of the BK Restaurants.
Business Day: Monday through Friday of each week, except that a legal
holiday recognized as such by the Government of the United States or the State
of Texas shall not be regarded as a Business Day.
Capital Account: The capital account established and maintained for
each Partner pursuant to Section 5.8.
Capital Contribution: Any property (including cash)contributed to the
Partnership by or on behalf of a Partner.
Carrying Value: (a) With respect to a property contributed to the
Partnership, the fair market value of such property at the time of contribution,
reduced (but not below zero) by all deductions for depreciation, amortization,
cost recovery and expense in lieu of depreciation debited to the Capital
Accounts of Partners and Assignees with respect to such property as of the time
of determination, and (b) with respect to any other property, the Adjusted Basis
of such property as of the time of determination. The Carrying Value of any
property shall be adjusted from time to time in accordance with Section 5.7, and
to reflect changes, additions or other adjustments to the Carrying Value for
dispositions, acquisitions or improvements of Partnership properties, as deemed
to be necessary or appropriate by the Managing General Partner.
Certificate: The Certificate of Limited Partnership, and any and all
amendments thereto, filed on behalf of the Partnership with the Recording Office
as required under the Delaware RULPA.
Class: A class of Partnership Interests distinguished by a specific
alphabetical or other designation.
Class A Common Limited Partner: The MLP or any other Person admitted
pursuant to this Agreement as a Class A Limited Partner either in connection
with the issuance of a newly-created Class A Common Unit or as a substitute with
respect to any transferred Class A Common Unit (or any portion thereof), each
for only so long as such Person remains as a Class A Limited Partner in
accordance with this Agreement and the Act.
Class A Common Unit: A Partnership Interest of a Class A Common Limited
Partner. The number of Class A Common Units owned by each Class A Common Limited
Partner shall be the number set forth opposite its name on Exhibit A.
Class B Common Distribution: With respect to each Partnership Record
Date, the product of (a) the Aggregate Common Units, (b) the Conversion Factor
and (c) the Company Common Dividend which has a record date which is the same as
the Partnership Record Date; provided, however, that with respect to the fiscal
quarter that includes the Effective Date, the numeric amount described in clause
(c) immediately above shall be multiplied by a fraction, the numerator of which
is the number of days from the day after the Effective Date to the end of such
fiscal quarter and the denominator of which is 90.
Class B Common Limited Partner: QSV or any other Person admitted
pursuant to this Agreement as a Class B Common Limited Partner either in
connection with the issuance of a newly-created Class B Common Unit or as a
substitute with respect to any transferred Class B Common Unit, each for only so
long as such Person remains as a Class B Common Limited Partner in accordance
with this Agreement and the Act.
Class B Common Unit: A Partnership Interest of a Class B Common Limited
Partner. The number of Class B Common Units owned by each Class B Common Limited
Partner shall be the number set forth opposite its name on Exhibit A. The number
of Common Units held by any particular Class B Common Limited Partner shall be
appropriately reduced, from time to time, to reflect any (i) acquisition of such
Partner's Class B Common Units by the Company, or any of its Affiliates or (ii)
any exchange of such Class B Common Units pursuant to Section 5.5 hereof;
provided, however, that if the Company or any of its Affiliates acquire a Class
B Common Unit, whether pursuant to Section 5.5 hereof, by purchase, or
otherwise, such Partnership Interest shall, upon and by virtue of such
acquisition and without any further action by the Partnership or any Partner,
automatically convert into a Class A Limited Partner Interest.
Class B Limited Partners: The Class B Common Limited Partners.
Code: The Internal Revenue Code of 1986, as amended to date and
hereafter amended. 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.
Commission: The Securities and Exchange Commission.
Common Stock: The common stock, par value $.001 per share, of the
Company.
Company: U.S. Restaurant Properties, Inc., a Maryland corporation.
Company Common Dividend: Any distribution of cash or property per share
declared payable on Common Stock.
Company Preferred Dividend: Any distribution of cash or property per
share declared payable on a series of Preferred Stock.
Contributed Property: Each Contributing Partner's interest in each
property (or interest therein), or other consideration, in such form as may be
permitted by the Delaware RULPA, but excluding cash and cash equivalents,
contributed directly or indirectly to the Partnership by such Contributing
Partner (or deemed contributed to the Partnership upon termination thereof
pursuant to Section 708 of the Code).
Contributing Partner: Each Partner contributing directly or indirectly
(or deemed to have contributed upon termination of the Partnership pursuant to
Section 708 of the Code) a Contributed Property to the Partnership in exchange
for a Partnership Interest.
Conversion Factor: 1.0, provided that in the event that the Company (a)
declares or pays a dividend on its outstanding shares of Common Stock in shares
of Common Stock or makes a distribution to all holders of its outstanding shares
of Common Stock; (b) subdivides its outstanding shares of Common Stock; or (c)
combines its outstanding shares of Common Stock into a smaller number of shares
of Common Stock, the Conversion Factor shall be adjusted by multiplying the
Conversion Factor by a fraction, the numerator of which shall be the number of
shares of Common Stock issued and outstanding on the record date for such
dividend, distribution, subdivision or combination, assuming for such purpose
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 of
Common Stock (determined without the above assumption) issued and outstanding on
the record date for such dividend, distribution, subdivision or combination. Any
adjustment to the Conversion Factor shall become effective immediately after the
effective date of such event retroactive to the record date, if any, for such
event.
Delaware RULPA: The Delaware Revised Uniform Limited Partnership Act (Del.
Code ▇▇▇. tit. 6 ss. 17-101 et seq.), as amended to date and as it may be
amended from time to time hereafter, and any successor to such Act.
Effective Date: The date as of which the Managing General Partner and the
Limited Partners execute this Agreement.
Exchange Act: Securities Exchange Act of 1934, as amended, and the
regulations of the Commission promulgated thereunder.
Fiscal Year: The Fiscal Year of the Partnership for financial
accounting purposes, and for federal, state, and local income tax purposes,
which shall be the calendar year unless changed by the Managing General Partner
in accordance with Section 10.3.
General Partner Interest: A Partnership Interest held by a General Partner,
in its capacity as general partner of the Partnership. A General Partner
Interest may be expressed as a number of Partnership Units.
General Partners: The Managing General Partner and any Substituted General
Partners. "General Partner" means one of the General Partners.
Gross Asset Value: With respect to any asset, the asset's adjusted basis
for federal income tax purposes, except as follows:
(a) The initial Gross Asset Value of any asset contributed (or deemed
to have been contributed) by a Partner to the Partnership shall be the gross
fair market value of such asset, as determined by the contributing Partner and
the General Partner.
(b) The Gross Asset Values of all Partnership assets shall be adjusted
to equal their respective gross fair market values, as determined by the General
Partner and subject to the approval of the Independent Directors, as of the
following times: (i) the acquisition of an additional Partnership Interest by
any new or existing Partner in exchange for more than a de minimis Capital
Contribution; (ii) the distribution by the Partnership to a Partner of more than
a de minimis amount of property as consideration for a Partnership Interest; and
(iii) the liquidation of the Partnership within the meaning of Section
1.704-1(b)(2)(ii)(g) of the Treasury Regulations.
(c) The Gross Asset Value of any Partnership asset distributed to any
Partner shall be adjusted to equal the gross fair market value of such asset on
the date of the distribution as determined by the General Partner and the
Partner receiving such distributed asset.
(d) The Gross Asset Values of Partnership assets shall be increased (or
decreased) to reflect any adjustments to the adjusted basis of such assets
pursuant to Code Section 732(d), Code Section 734(b) or Code Section 743(b), but
only to the extent that an adjustment pursuant to clause (c) immediately above
is not required in connection with the transaction.
Immediate Family: With respect to any natural Person, such natural
Person's spouse and such natural Person's natural or adoptive parents,
descendants (whether natural or adopted), nephews, nieces, brothers, sisters,
sons and daughters-in-law.
Incapacity or Incapacitated: (a) As to any individual Partner, death,
total physical disability or entry by a court of competent jurisdiction
adjudicating him or her incompetent to manage his or her Person or his or her
estate; (b) 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; (c) as to any partnership which is a Partner, the
dissolution and commencement of winding up of the partnership; (d) as to any
estate which is a Partner, the distribution by the fiduciary of the estate's
entire interest in the Partnership; (e) 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 (f) 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 (i) the Partner commences a voluntary proceeding seeking liquidation,
reorganization or other relief under any bankruptcy, insolvency or other similar
law nor or thereafter in effect, (ii) 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 thereafter in effect has been entered against
the Partner, (iii) the Partner executes and delivers a general assignment for
the benefit of the Partner's creditors, (iv) 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 (ii) above, (v) 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, (vi) any proceeding seeking
liquidation, reorganization or other relief of or against such Partner under any
bankruptcy, insolvency or other similar law now or hereafter in effect has not
been dismissed without one hundred twenty (120) days after the commencement
thereof, (vii) the appointment without the Partner's consent or acquiescence of
a trustee, receiver or liquidator has not been vacated or stayed within ninety
(90) days of such appointment, or (viii) an appointment referred to in clause
(g) which has been stayed is not vacated within ninety (90) days after the
expiration of any such stay.
Independent Consultant: Agribusiness Associates, Inc., or in the event
Agribusiness Associates, Inc., is unable or unwilling to advise the Managing
General Partner on a particular matter or informs the Managing General Partner
that it no longer is willing to serve as Independent Consultant, or in the event
Agribusiness Associates, Inc., is terminated as the Independent Consultant in
accordance with Section 8.10(b), any substitute consultant selected by the
Managing General Partner in accordance with Section 8.10(b).
Independent Directors: Directors of the Company who are not officers of
the Company, any Affiliate of an officer or employee of the Company or any
Affiliate of (a) any lessee of any properties of the Company or any Subsidiary
of the Company, (b) any Subsidiaries of the Company, or (c) any partnership that
is an affiliate of the Company.
Limited Partner Interest: A Partnership Interest of a Limited Partner
in the Partnership representing a fractional part of the Partnership Interests
of all 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 Persons to comply with the terms and provisions of
this Agreement. A Limited Partner Interest may be expressed as a number of
Partnership Units.
Limited Partners: QSV, the MLP and any Additional Limited Partners or
Substituted Limited Partners. "Limited Partner" means any one of the Limited
Partners.
Liquidating Trustee: The Managing General Partner, unless the
dissolution of the Partnership is caused by the withdrawal, bankruptcy, removal
or dissolution of the Managing General Partner, in which event the Liquidating
Trustee shall be the Person or Persons selected pursuant to Section 14.5.
Loss: The meaning ascribed to it in Section 6.4(f) hereof.
Majority Vote of the Limited Partners: The written consent of, or an
affirmative vote by, in accordance with the provisions of Section 15.2, Limited
Partners (including the Company) of record who are Limited Partners (and not
Assignees) with respect to more than fifty percent (50%) of the total number of
all outstanding Partnership Units held by all Limited Partners of record, as
Limited Partners (rather than as Assignees).
Managing: USRP Managing, Inc., a Delaware corporation.
Managing General Partner: Managing, or any successor appointed pursuant to
Section 11.2, 13.1 or 14.3, as the case may be.
MLP: U.S. Restaurant Properties Master L.P., a Delaware limited partnership
(formerly Burger King Investors Master L.P.).
Nasdaq: The National Association of Securities Dealers Automated Quotations
System.
National Securities Exchange: An exchange registered with the Commission
under Section 6(a) of the Exchange Act.
Nonrecourse Deductions: The meaning ascribed to it in Treasury Regulations
Section 1.704-2(b)(1).
Nonrecourse Liability: The meaning ascribed to it in Treasury Regulations
Section 1.752-1(a)(2).
Notice of Exchange: The Notice of Exchange substantially in the form of
Exhibit B to this Agreement.
Opinion of Independent Counsel: A written opinion of the law firm of
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ P.C. or other counsel designated by or acceptable to
the Managing General Partner, in its sole and absolute discretion.
Original Agreement: The Agreement of Limited Partnership of Burger King
Operating Limited Partnership, dated as of December 10, 1985, entered into by
and among QSV, BKC and the MLP.
Other Restaurant Properties: Those certain properties for which food
sales account for 10% or more of the gross revenues generated by the
improvements on such properties and (a) properties (regardless of use) acquired
adjacent to such properties or acquired in conjunction with the use or ownership
of such properties, (b) properties that were formerly such type of properties
which are not currently being used for any purpose, and (c) any unimproved land
which is adjacent to such a property or on which such a property is reasonably
expected to be constructed within one (1) year following the date of acquisition
of such land, in any case in which the Partnership, the Company or any Affiliate
or either of them has acquired or acquires an interest, whether consisting of
land to be held in fee simple or as a leasehold and any improvements thereon
(including all real property and certain personal property associated
therewith), together with (i) any other properties acquired pursuant to Section
7.2(v) with respect to such properties, (ii) any properties adjacent to such
properties, (iii) any buildings, improvements or other structures situated on
such properties, and (iv) any further right, title or interest acquired in such
properties. "Other Restaurant Property" means any one of the Other Restaurant
Properties.
Partner: A General Partner or Limited Partner. "Partners" means the General
Partners and the Limited Partners.
Partner Minimum Gain: An amount, with respect to each Partner
Nonrecourse Debt, equal to the Partnership Minimum Gain that would result if
such Partner Nonrecourse Debt were treated as a Nonrecourse Liability,
determined in accordance with Regulations Section 1.704-2(i)(3).
Partner Nonrecourse Debt: The meaning ascribed to it in Treasury
Regulations Section 1.704-2(b)(4).
Partner Nonrecourse Debt Minimum Gain: The meaning ascribed to it in
Treasury Regulations Section 1.704(2)(i). A Partner's share of Partner
Nonrecourse Debt Minimum Gain shall be determined in accordance with Treasury
Regulations Section 1.704(2)(i)(5).
Partner Nonrecourse Deductions: The meaning ascribed to it in Treasury
Regulations Section 1.704-2(i)(2).
Partnership: The limited partnership created by this Agreement and any
successor partnership thereto continuing the business of the Partnership which
is a reformation or reconstitution of the partnership governed by this
Agreement.
Partnership Assets: All assets and property, whether tangible or intangible
and whether real, personal or mixed, at any time owned by the Partnership.
Partnership Record Date: The record date established by the General
Partner for the distribution of Available Cash pursuant to Section 6.1 hereof,
which record date shall be the same as the record date established by the
Company for a distribution to its stockholders of some or all of its portion of
such distribution.
Partnership Interest: As to any Partner, all of the interests of that
Partner in the Partnership, including, without limitation, such Partner's (a)
right to a distributive share of the profits and losses of the Partnership, (b)
right to a distributive share of Partnership Assets, and (c) right, if a General
Partner, to participate in the management of the business and affairs of the
Partnership.
Partnership Minimum Gain: The meaning set forth in Treasury 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 Fiscal Year
shall be determined in accordance with the rules of Treasury Regulations Section
1.704-2(d).
Partnership Properties: The Other Restaurant Properties, the Restricted
Restaurant Properties and the Retail Properties. "Partnership Property" means
any one of the Partnership Properties.
Partnership Units: Fractional shares of the Partnership Interests of all
Partners issued pursuant to Sections 5.1, 5.2 and 5.4 hereof. "Partnership Unit"
means any one of the Partnership Units.
Percentage Interest: As to a Partner, its interest in the Partnership
as determined by dividing the Partnership Units owned by such Partner by the
total number of Partnership Units then outstanding and as specified in Exhibit A
attached hereto, as such Exhibit A may be amended from time to time.
Person: Any individual, corporation, association, partnership, joint
venture, trust, estate, or other entity or organization.
Preferred Distribution: With respect to each Partnership Record Date, the
product of: (a) the number of Preferred Units of any particular series and (b)
the Company Preferred Dividend then payable on the series of Preferred Stock as
to which such Preferred Units relate.
Preferred Partners: Any Person admitted to this Agreement as a Preferred
Partner in connection with the issuance of a newly-created Preferred Partnership
Unit.
Preferred Partnership Unit: Any Partnership Unit issued from time to
time pursuant to Section 5.2 hereof that is designated by the Managing General
Partner at the time of its issuance as a Preferred Partnership Unit. Each
Preferred Partnership Unit shall have such designations, preferences and
relative, participating, optional or other special rights, powers and duties,
including rights, powers and duties senior to Class A Limited Partner Interests
and Class B Common Units, all as shall be determined by the Managing General
Partner subject to the requirements of Section 5.2 hereof.
Preferred Stock: The preferred stock, par value $.001 per share, of the
Company.
Price Index: The Consumer Price Index for Urban Wage Earners and
Clerical Workers, all items, All Urban, Base 1967 = 100, issued by the Bureau of
Labor Statistics of the U.S. Department of Labor; provided, however, that if
such Consumer Price Index shall be discontinued with no successor or comparable
consumer price index, the Managing General Partner, in its sole and absolute
discretion, shall designate a substitute formula.
Profit: The meaning ascribed to it in Section 6.4(f) hereof.
Primary Lease: A lease, whether now existing or hereafter entered into,
pursuant to which the Partnership, as the lessee (either in its own name or as
an assignee of BKC pursuant to the Real Estate Purchase Agreement or otherwise),
holds the right to occupy and use a Partnership Property or any portion thereof.
QSV: QSV Properties Inc., a Delaware corporation.
Real Estate Purchase Agreement: The amended and restated Purchase and
Sale Agreement entered into concurrently with the execution of the Amended
Agreement by and between the Partnership, as purchaser, and BKC, as seller,
pursuant to which the Partnership purchased from BKC, and BKC sold to the
Partnership, certain of the Partnership Properties.
Recapture Income: Any gain recognized by the Partnership (but computed
without regard to any adjustment required by Section 734 or 743 of the Code)
upon the disposition of any property or asset of the Partnership that does not
constitute capital gain for federal income tax purposes because such gain
represents the recapture of deductions previously taken with respect to such
property or assets (determined without regard to Section 291(a)(1)) of the Code.
Recording Office: The Secretary of State of the State of Delaware.
REIT: A real estate investment trust under Section 856 of the Code.
REIT Partner: (a) A Partner that is, or has made an election to qualify
as, a real estate investment trust under the Code, including, without
limitation, the Company, (b) any "qualified Company subsidiary" (within the
meaning of Section 856(i)(2) of the Code) of any Partner that is, or has made an
election to qualify as, a real estate investment trust under the Code and (c)
any Partner that is a "qualified Company subsidiary" (within the meaning of
Section 856(i)(2) of the Code) of a real estate investment trust.
REIT Stock Amount: A number of shares of Common Stock equal to the
product of the number of Partnership Units offered for exchange by a Partner,
multiplied by the Conversion Factor, provided that in the event the Company
issues to all holders of Common Stock rights, options, warrants or convertible
or exchangeable securities entitling the stockholders to subscribe for or
purchase shares of Common Stock, or any other securities or property
(collectively, the "rights"), then the REIT Stock Amount shall also include such
rights that a holder of that number of shares of Common Stock would be entitled
to receive.
Restricted Restaurant Properties: Those certain restaurant properties,
consisting of the land in which the Partnership holds fee simple title or a
leasehold interest and the improvements thereon (including all real property and
certain personal property associated therewith), (a) held as of the Effective
Date or (b) if (and so long as) a BK Restaurant is located thereon, acquired
after the Effective Date, together with (i) any other properties acquired
pursuant to Section 7.2(v) with respect to such properties after the Effective
Date, (ii) any properties adjacent to such properties that are acquired by the
Partnership after the Effective Date, (iii) any buildings, improvements or other
structures situated on such properties after the Effective Date, and (iv) any
further right, title or interest acquired in such properties after the Effective
Date (including, without limitation, fee title acquired pursuant to Section
8.12). "Restricted Restaurant Property" means any one of the Restricted
Restaurant Properties.
Retail Properties: Those certain properties, other than Other
Restaurant Properties and Restricted Restaurant Properties, for which the sales
of goods or services to the public account for substantially all of the gross
revenues generated by the improvements on such properties and (a) properties
(regardless of use) acquired adjacent to such properties or acquired in
conjunction with the use or ownership of such properties, (b) properties that
were formerly such type of properties which are not currently being used for any
purpose, and (c) any unimproved land which is adjacent to such a property or on
which such a property is reasonably expected to be constructed within one (1)
year following the date of acquisition of such land, in any case in which the
Partnership, the Company or any Affiliate of either of them has acquired or
acquires an interest, whether consisting of land to be held in fee simple or as
a leasehold and any improvements thereon (including all real property and
certain personal property associated therewith), together with (i) any other
properties acquired pursuant to Section 7.2(v) with respect to such properties,
(ii) any properties adjacent to such properties, (iii) any buildings,
improvements or other structures situated on such properties, and (iv) any
further right, title or interest acquired in such properties. "Retail Property"
means any one of the Retail Properties.
Second Amended and Restated Agreement: The Second Amended and Restated
Agreement of Limited Partnership of U.S. Restaurant Properties Operating L.P.,
dated as of March 17, 1995, by and between QSV Properties, Inc. and U.S.
Restaurant Properties Master L.P.
Section 754 Election: An election under Section 754 of the Code
relating to the adjustment of Adjusted Basis of Partnership Assets, as provided
in Sections 734 and 743 of the Code.
Securities Act: Securities Act of 1933, as amended, and the regulations of
the Commission promulgated thereunder.
Share Price: As of any date of determination: (a) if the shares of
Common Stock are listed or admitted to trading on one or more National
Securities Exchanges, the average of the last reported sale prices per share
regular way or, in case no such reported sale takes place on any such day, the
average of the last reported bid and asked prices per share regular way, in
either case on the principal National Securities Exchange on which the shares of
Common Stock are listed or admitted to trading, for the five (5) trading days
immediately preceding the date of determination; (b) if the shares of Common
Stock are not listed or admitted to trading on a National Securities Exchange
but are quoted by Nasdaq, the average of the last reported sales prices per
share regular way or, in case no reported sale takes place on any such day or
the last reported sales prices are not then quoted, the average of the closing
bid prices per share, for the five (5) trading days immediately preceding such
date of determination, as furnished by the National Quotation Bureau
Incorporated or such other nationally recognized quotation service as may be
selected by the Managing General Partner for such purpose, if such Bureau is not
at the time furnishing quotations; or (c) if the shares of Common Stock are not
listed or admitted to trading on a National Securities Exchange or quoted by
Nasdaq, an amount equal to the fair market value of a share as of such date of
determination, as determined by the Managing General Partner using any
reasonable method of valuation.
Special Allocations: The special allocations of items of income, gain,
deduction and loss pursuant to Section 6.5.
Subsidiary: With respect to any Person, any corporation or other entity
of which a majority of (i) the voting power of the voting equity securities or
(ii) the outstanding equity interests is owned, directly or indirectly, by such
Person.
Subsidiary Partnership: Any partnership of which the majority of the
limited or general partnership interests therein are owned, directly or
indirectly, by the Partnership.
Substituted General Partner: A Person who is admitted to the Partnership as
an additional or successor General Partner in accordance with Section 12.1.
Substituted Limited Partner: A Person who is admitted as a Limited Partner
to the Partnership pursuant to Section 11.5.
Successor Policy: The "successor policy" of BKC relating to the
extension and/or renewal of BKC Franchise Agreements with BKC Franchisees, which
policy, in connection with such extensions and/or renewals, makes provision for
replacing, reconstructing, expanding and/or otherwise improving BK Restaurants.
All references are to the "Successor Policy" as in effect on the date hereof, as
the same may be modified, amended, supplemented, superseded or replaced by BKC
from time to time in its sole and absolute discretion.
Terminating Capital Transaction: Any sale or other disposition of all
or substantially all of the assets of the Partnership or a related series of
transactions that, taken together, result in the sale or other disposition of
all or substantially all of the assets of the Partnership.
Termination Date: December 31, 2035.
Third Amended and Restated Agreement: The Third Amended and Restated
Agreement of Limited Partnership of U.S. Restaurant Properties Operating L.P.,
dated as of June 27, 1997, by and among QSV Properties, Inc., U.S. Restaurant
Properties Master L.P. and U.S. Restaurant Properties, Inc.
TPC: The Pillsbury Company, a Delaware corporation and the owner on the
date of the Amended Agreement of all of the issued and outstanding stock of BKC.
Treasury Regulations: The Income Tax Regulations promulgated under the
Code, as hereafter amended. Any reference herein to a specific section or
sections of specific Treasury Regulations shall be deemed to include a reference
to any corresponding provision of future Treasury Regulations.
Unit: A unit representing an equal undivided interest in an interest in the
MLP.
Unit Price: As of any date of determination: (a) if the Units are
listed or admitted to trading on one or more National Securities Exchanges, the
average of the last reported sale prices per Unit regular way or, in case no
such reported sale takes place on any such day, the average of the last reported
bid and asked prices per Unit regular way, in either case on the principal
National Securities Exchange on which the Units are listed or admitted to
trading, for the five (5) trading days immediately preceding the date of
determination; (b) if the Units are not listed or admitted to trading on a
National Securities Exchange but are quoted by Nasdaq, the average of the last
reported sales prices per Unit regular way or, in case no reported sale takes
place on any such day or the last reported sales prices are not then quoted, the
average of the closing bid prices per Unit, for the five (5) trading days
immediately preceding such date of determination, as furnished by the National
Quotation Bureau Incorporated or such other nationally recognized quotation
service as may be selected by the Managing General Partner for such purpose, if
such Bureau is not at the time furnishing quotations; or (c) if the Units are
not listed or admitted to trading on a National Securities Exchange or quoted by
Nasdaq, an amount equal to the fair market value of a Unit as of such date of
determination, as determined by the Managing General Partner using any
reasonable method of valuation.
Unpaid Common Distribution Account: An account to be maintained by the
Partnership for the Class B Common Limited Partners and to which will be
credited the amount of the Class B Common Distributions not paid on the date the
same is payable in accordance with Section 6.1(a)(ii) hereof.
Unrealized Gain: The excess, if any, of the fair market value of a
Partnership Asset as of the date of determination over the Carrying Value of the
Partnership Asset as of such date of determination.
Unrealized Loss: The excess, if any, of the Adjusted Basis of a
Partnership Asset as of the date of determination over the fair market value of
such Partnership Asset as of the date of determination.
Working Capital Reserve: The reserve for working capital established by the
Managing General Partner pursuant to Section 7.5.
ARTICLE II
FORMATION; NAME; PLACE OF BUSINESS
II.1. Formation of Partnership; Certificate of Limited Partnership.
The General Partner and the Limited Partners agreed to continue the
limited partnership formed as of December 10, 1985, pursuant to the provisions
of the Delaware RULPA and the terms and conditions of the Original Agreement,
the Amended Agreement, the Second Amended and Restated Agreement and the Third
Amended and Restated Agreement. Promptly after the execution of the Original
Agreement, QSV, in accordance with the Delaware RULPA, filed with the Recording
Office the Certificate of Limited Partnership. Subsequently, QSV, in accordance
with the Delaware RULPA, filed with the Recording Office an amendment to the
Certificate of Limited Partnership regarding the withdrawal of BKC as the
Special General Partner and the change in name of the Partnership. Subsequently,
the Managing General Partner, in accordance with the Delaware RULPA, filed with
the Recording Office an amendment to the Certificate of Limited Partnership
regarding the withdrawal of QSV as the Managing General Partner and the
substitution of Managing as the Managing General Partner. If the laws of any
jurisdiction in which the Partnership transacts business so require, the
Managing General Partner also shall file with the appropriate office in that
jurisdiction a copy of the Certificate of Limited Partnership and any other
documents necessary for the Partnership to qualify to transact business in such
jurisdiction and shall use its best efforts to file with the appropriate office
in that jurisdiction a copy of the Certificate of Limited Partnership and any
other documents necessary to establish and maintain the Limited Partner's
limited liability in such jurisdiction. The Partners further agree and obligate
themselves to execute, acknowledge and cause to be filed for record, in the
place or places and manner prescribed by law, any amendments to the Certificate
of Limited Partnership as may be required, either by the Delaware RULPA, by the
laws of a jurisdiction in which the Partnership transacts business, or by this
Agreement, to reflect changes in the information contained therein or otherwise
to comply with the requirements of law for the continuation, preservation and
operation of the Partnership as a limited partnership under the Delaware RULPA.
II.2. Name of Partnership.
The name under which the Partnership shall conduct its business is U.S.
Restaurant Properties Operating L.P. The business of the Partnership may be
conducted under any other name deemed necessary or desirable by the Managing
General Partner, in its sole and absolute discretion, except that such other
name may not include the surname of any Limited Partner unless such surname is
also the name or surname of the Managing General Partner. The words "Limited
Partnership" shall be included in the name of the Partnership where necessary
for complying with the laws of any jurisdiction that so requires. The Managing
General Partner (and, if necessary, all other General Partners) promptly shall
execute, file and record any assumed or fictitious name certificates required by
the laws of Delaware or any other state in which the Partnership transacts
business, and shall publish such certificates or other statements or
certificates as are required by the laws of Delaware or any other state in which
the Partnership transacts business.
II.3. Place of Business.
The principal place of business of the Partnership on the date hereof
is located at ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇. The
Managing General Partner may hereafter change the principal place of business of
the Partnership to such other place or places within the United States as the
Managing General Partner may determine from time to time, in its sole and
absolute discretion, provided that the Managing General Partner shall, if
necessary, amend the Certificate of Limited Partnership in accordance with
applicable requirements of the Delaware RULPA. The Managing General Partner may,
in its sole and absolute discretion, establish and maintain such other offices
and additional places of business of the Partnership, either within or without
the State of Delaware, as it deems appropriate.
II.4. Registered Office and Registered Agent.
The street address of the registered office of the Partnership shall be
at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, and the Partnership's
registered agent at such address shall be The Corporation Trust Company.
II.5. Power of Attorney.
Each Limited Partner (including any additional or Substituted Limited
Partner) and each Assignee who accepts Partnership Units is deemed to
irrevocably constitute, appoint and empower the Managing General Partner (and
any successor by merger, transfer, election or otherwise), and each of the
Managing General Partner's authorized officers and attorneys-in-fact, with full
power of substitution, as the true and lawful agent and attorney-in-fact of such
Limited Partner or Assignee, with full power and authority in such Limited
Partner's or Assignee's name, place and stead and for such Limited Partner's or
Assignee's use of benefit to make, execute, verify, consent to, swear to,
acknowledge, make oath as to, publish, deliver, file and/or record in the
appropriate public offices (a) all certificates and other instruments,
including, at the option of the Managing General Partner, this Agreement and the
Certificate of Limited Partnership and all amendments and restatements thereof,
that the Managing General Partner deems appropriate or necessary to qualify, or
continue the 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 all jurisdictions in which the Partnership may or may intend to
conduct business or own property; (b) all other certificates, instruments and
documents as may be required by, or may be appropriate under, the laws of any
state or other jurisdiction in which the Partnership may or may intend to
conduct business or own property; (c) all instruments that the Managing General
Partner deems appropriate or necessary to reflect any amendment, change or
modification of this Agreement in accordance with the terms hereof; (d) all
conveyances and other instruments or documents that the Managing General Partner
deems appropriate or necessary to effectuate or reflect the dissolution,
termination, and liquidation of the Partnership pursuant to the terms of this
Agreement; (e) any and all financing statements, continuation statements,
mortgages or other documents necessary to grant to or perfect for secured
creditors of the Partnership, including the General Partners and Affiliates, a
security interest, mortgage, pledge or lien on all or any of the Partnership
Assets; (f) all instrument or papers required to continue the business of the
Partnership pursuant to Article XIV; (g) all instruments (including this
Agreement and the Certificate of Limited Partnership and amendments and
restatements thereof) relating to the admission of any Partner pursuant to
Article XI; and (h) all other instruments as the attorneys-in-fact or any one of
them may deem necessary or advisable to carry out fully the provisions of this
Agreement in accordance with its terms. The execution and delivery by any of
said attorneys-in-fact of any such agreements, amendments, consents,
certificates or other instruments shall be conclusive evidence that such
execution and delivery was authorized hereby.
Nothing herein contained shall be construed as authorizing any Person
acting as attorney-in-fact pursuant to this Section 2.5 to take action as a
attorney-in-fact for any Limited Partner or Assignee to increase in any way the
liability of such Limited Partner or Assignee beyond the liability expressly set
forth in this Agreement, or to amend this Agreement except in accordance with
Article XV.
The appointment by each Limited Partner and Assignee of the Persons
designated in this Section 2.5 as attorneys-in-fact shall be deemed to be a
power of attorney coupled with an interest in recognition of the fact that each
of the Limited Partners and Assignees under this Agreement will be relying upon
the power of such Persons to act pursuant to this power of attorney for the
orderly administration of the affairs of the Partnership. The foregoing power of
attorney is hereby declared to be irrevocable, and it shall survive, and shall
not be affected by, the subsequent Incapacity or termination of any Limited
Partner or Assignee and it shall extend to such Limited Partner's or Assignee's
heirs, successors and assigns. Each Limited Partner and Assignee hereby agrees
to be bound by any representations made by any Person acting as attorney-in-fact
pursuant to this power of attorney in accordance with this Agreement. Each
Limited Partner and Assignee hereby waives any and all defenses that may be
available to contest, negate or disaffirm the action of any Person taken as
attorney-in-fact under this power of attorney in accordance with this Agreement.
Each Limited Partner and Assignee shall execute and deliver to the Managing
General Partner, within fifteen (15) days after receipt of the Managing General
Partner's request therefor, all such further designations, powers of attorney
and other instruments as the Managing General Partner deems necessary to
effectuate this Agreement and the purposes of the Partnership.
ARTICLE III
PURPOSES, NATURE OF BUSINESS,
AND POWERS OF PARTNERSHIP
III.1. Purposes and Business.
The purposes of the Partnership shall be (a) to invest in, acquire,
own, hold a leasehold interest in, manage, maintain, operate, lease, sublease,
improve, finance, reconstruct, sell, exchange, franchise and otherwise dispose
of Partnership Properties and Ancillary Property, whether itself, through other
Persons or otherwise; (b) to originate loans secured by liens on real estate;
and (c) to enter into any lawful transaction and engage in any lawful activities
in furtherance of the foregoing purposes; provided, however, that such business
arrangements and interests may be limited to and conducted in such a manner so
as to permit any REIT Partner at all times to be classified as a real estate
investment trust under the Code. In connection with the foregoing, and without
limiting the Company's right in its sole discretion to cease qualifying as a
REIT, the Partners acknowledge that the Company's current status as a REIT
inures to the benefit of all the Partners and not solely to the Company. The
Managing General Partner shall also be empowered to do any and all acts and
things necessary or prudent to ensure the Partnership will not be classified as
a "publicly traded partnership" for purposes of Section 7704 of the Code.
III.2. Powers.
The Partnership shall be 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, the following:
(a) To borrow money and issue evidences of indebtedness, and to secure
the same by mortgages, deeds of trust, security interests, pledges or other
liens on all or any part of the Partnership Assets;
(b) To secure and maintain insurance against liability or other loss
with respect to the activities and assets of the Partnership (including, without
limitation, insurance against liabilities under Section 7.11);
(c) To employ or retain such persons as may be necessary or appropriate
for the conduct of the Partnership's business, including permanent, temporary or
part-time employees and independent attorneys, accountants, consultants and
contractors;
(d) To acquire, own, hold a leasehold interest in, maintain, use,
lease, sublease, manage, operate, sell, exchange, transfer or otherwise deal in
assets and property as may be necessary or convenient for the purposes and
business of the Partnership;
(e) To incur expenses and to enter into, guarantee, perform and carry
out contracts or commitments of any kind, to assume obligations and to execute,
deliver, acknowledge and file documents in furtherance of the purposes and
business of the Partnership;
(f) To pay, collect, compromise, arbitrate, litigate or otherwise
adjust, contest or settle any and all claims or demands of or against the
Partnership;
(g) To invest in interest-bearing accounts and short-term investments,
including, without limitation, obligations of Federal, state and local
governments and their agencies, mutual funds (including money market funds),
commercial paper, time deposits and certificates of deposit of commercial banks,
savings banks or savings and loan associations;
(h) To originate loans secured by liens on real estate; and
(i) To engage in any kind of activity and to enter into and perform
obligations of any kind necessary to or in connection with, or incidental to,
the accomplishment of the purposes and business of the Partnership, so long as
said activities and obligations may be lawfully engaged in or performed by a
limited partnership under the Delaware RULPA.
ARTICLE IV
TERM OF PARTNERSHIP
IV.1. Term.
The Partnership commenced on the date upon which the Certificate was
duly filed with the Recording Office pursuant to Section 2.1 and shall continue
until the Termination Date unless dissolved and liquidated before the
Termination Date in accordance with the provisions of Article XIV.
ARTICLE V
CAPITAL
V.1. Capital Contributions of the Partners.
The Partners have made the Capital Contributions as set forth in
Exhibit C attached to this Agreement. Each Partner shall own Partnership Units
in the amount set forth for such Partner in Exhibit A, as the same may be
amended from time to time, and shall have a Percentage Interest in the
Partnership as set forth in Exhibit A, as the same may be amended from time to
time, which Percentage Interest shall be adjusted in Exhibit A from time to time
by the General Partner to the extent necessary to reflect accurately sales,
exchanges or other transfers, redemptions, Capital Contributions, the issuance
of additional Partnership Units, or similar events having an effect on a
Partner's Percentage Interest. Except as provided by law, Section 5.2, the
Partners shall have no obligation or right to make any additional Capital
Contributions or loans to the Partnership. 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, as amended to reflect such Capital Contributions.
The number of Partnership Units held by the General Partner, in its capacity as
general partner (equal to one percent (1%) of all outstanding Partnership Units
from time to time), shall be deemed to be the General Partner Interest.
V.2. Issuances of Additional Partnership Interests.
Except as provided in this Section 5.2 or in Section 5.3 hereof, the
Partners shall have no right or obligation to make any additional Capital
Contributions or loans to the Partnership. The Managing General Partner may
contribute additional capital to the Partnership, from time to time, and receive
additional Partnership Interests in respect thereof, in the manner contemplated
in this Section 5.2.
(a)(i) The Managing General Partner is hereby authorized to cause the
Partnership to issue such additional Partnership Interests in the form of
Partnership Units for any Partnership purpose at any time or from time to time,
to the Partners (including the Managing General Partner and any REIT Partner) or
to other Persons for such consideration and on such terms and conditions as
shall be established by the Managing General Partner in its sole and absolute
discretion, all without the approval of any Limited Partners. Any additional
Partnership Interests issued thereby may be issued in one or more classes, or
one or more series of any of such classes, with such designations, preferences
and relative, participating, optional or other special rights, powers and
duties, including rights, powers and duties senior to the Class A and Class
Limited Partner Interests, all as shall be determined by the Managing General
Partner in its sole and absolute discretion and without the approval of any
Limited Partner, subject to Delaware law, including, without limitation, (A) the
allocations of items of Partnership income, gain, loss, deduction and credit to
each such class or series of Partnership Interests; (B) the right of each such
class or series of Partnership Interests to share in Partnership distributions;
and (C) the rights of each such class or series of Partnership Interests upon
dissolution and liquidation of the Partnership, provided that a list of the
Preferred Partnership Units shall be set forth on Exhibit D hereto and that the
form of any Preferred Partnership Unit certificate issued by the Partnership
shall be attached as a schedule to Exhibit D on or prior to the date of issuance
of such Unit; provided, however, that no additional Partnership Interests shall
be issued to the Managing General Partner or any REIT Partner unless either:
(1)(x) the additional Partnership Interests are issued in
connection with an issuance of shares of Common Stock of or other interests in
the Company, which shares or interests have designations, preferences and other
rights, all such that the economic interests are substantially similar to the
designations, preferences and other rights of the additional Partnership
Interests issued to the Managing General Partner or any REIT Partner by the
Partnership in accordance with this Section 5.2 and (y) the Managing General
Partner or any REIT Partner shall make a Capital Contribution to the Partnership
in an amount equal to the proceeds raised in connection with the issuance of
such shares of stock of or other interests in the Company,
(2) the additional Partnership Interests are issued pursuant
to Section 11.2 hereof, or
(3) the additional Partnership Interests are issued to all
Partners in proportion to their respective Percentage Interests.
Without limiting the foregoing, the Managing General Partner is expressly
authorized to cause the Partnership to issue Partnership Units for less than
fair market value, so long as the General Partner concludes in good faith that
such issuance is in the best interests of the General Partner and the
Partnership.
(ii) The Company shall not issue any additional shares of Common Stock
or any shares of Preferred Stock (other than shares of Common Stock issued in
connection with an exchange pursuant to Section 5.5 hereof) or rights, options,
warrants or convertible or exchangeable securities containing the right to
subscribe for or purchase shares of Common Stock (collectively, "Additional
Securities") other than to all holders of shares of Common Stock, unless (A) the
Managing General Partner shall cause the Partnership to issue to the Managing
General Partner and any REIT Partner, as the Company may designate, 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 similar to those of the Additional
Securities, and (B) the Company contributes the proceeds from the issuance of
such Additional Securities, and from any exercise of rights contained in such
Additional Securities, through the Managing General Partner and any REIT Partner
to the Partnership; provided, however, that the Company is allowed to issue
Additional Securities in connection with an acquisition of a property to be held
directly by the Company, but if and only if, such direct acquisition and
issuance of Additional Securities have been approved and determined to be in the
best interests of the Company and the Partnership by a majority of the
Independent Directors. Without limiting the foregoing, the Company is expressly
authorized to issue Additional Securities for less than fair market value, and
to cause the Partnership to issue to the Managing General Partner corresponding
Partnership Interests, so long as (1) the Managing General Partner concludes in
good faith that such issuance is in the best interests of the Managing General
Partner and the Partnership, including, without limitation, the issuance of
shares of Common Stock and corresponding Partnership Units pursuant to an
employee stock purchase plan providing for employee purchases of shares of
Common Stock at a discount from fair market value or employee stock options that
have an exercise price that is less than the fair market value of the shares of
Common Stock, either at the time of issuance or at the time of exercise, and (2)
the Company contributes all of the proceeds of such issuance, through the
Managing General Partner and any REIT Partner, to the Partnership. For example,
in the event the Company issues shares of Common Stock for a cash purchase price
and contributes all of the proceeds of such issuance, through the Managing
General Partner and any REIT Partner, to the Partnership as required hereunder,
the Managing General Partner and any REIT Partner, as the Company may so
designate, shall be issued a number of additional Partnership Units equal to the
product of (x) the number of such shares of Common Stock issued by the Company,
the proceeds of which were so contributed, multiplied by (y) a fraction, the
numerator of which is 100%, and the denominator of which is the Conversion
Factor in effect on the date of such contribution.
(b) In connection with any and all issuances of shares of Common Stock,
the Company shall contribute all of the proceeds raised in connection with such
issuance to the Managing General Partner and any REIT Partner as the Company
determines, and in turn, the Managing General Partner and any REIT Partner shall
make Capital Contributions to the Partnership of such proceeds, provided that if
the proceeds actually received and contributed by the Company to the Managing
General Partner and any REIT Partner are less than the gross proceeds of such
issuance as a result of any underwriter's discount or other expenses paid or
incurred in connection with such issuance, then the Managing General Partner and
any REIT Partner shall be deemed to have made Capital Contributions to the
Partnership in the aggregate amount of the gross proceeds of such issuance and
the Partnership shall be deemed simultaneously to have paid such offering
expenses in connection with the required issuance of additional Partnership
Units to the Managing General Partner and any REIT Partner for such Capital
Contributions pursuant to Section 5.2(a) hereof.
(c) In the event the Managing General Partner or the Company acquires
Preferred Units from the Preferred Unitholders (in exchange for cash or shares
of Common Stock), the Partnership shall, as soon as practicable thereafter,
exchange each Preferred Unit held by the Managing General Partner or the Company
for such number of Partnership Units which are not designated as Preferred
Units, as determined by the Conversion Factor then in effect.
V.3. Additional Funding.
If the Managing General Partner determines that it is in the best
interests of the Partnership to provide for additional Partnership funds
("Additional Funds") for any Partnership purpose, the Managing General Partner
may (a) cause the Partnership to obtain such funds from outside borrowings, or
(b) elect to have the Managing General Partner or any REIT Partner provide such
Additional Funds to the Partnership through loans or otherwise.
V.4. Percentage Interests.
If the number of outstanding Partnership Units increases or decreases
during a taxable year, each Partner's Percentage Interest shall be adjusted to a
percentage equal to the number of Partnership Units held by such Partner divided
by the aggregate number of outstanding Partnership Units. If the Partners'
Percentage Interests are adjusted pursuant to this Section 5.4, the Profits and
Losses for the taxable year in which the adjustment occurs shall be allocated
between the part of the year ending on the day when the Partnership's property
is revalued by the Managing General Partner and the part of the year beginning
on the following day either (a) as if the taxable year had ended on the date of
the adjustment or (b) based on the number of days in each part. The Managing
General Partner, in its sole discretion, shall determine which method shall be
used to allocate Profits and Losses for the taxable year in which the adjustment
occurs. The allocation of Profits and Losses for the earlier part of the year
shall be based on the Percentage Interests before adjustment, and the allocation
of Profits and Losses for the later part shall be based on the adjusted
Percentage Interests.
V.5. Exchange of Units.
(a) Subject to Section 5.5(b), each Class B Limited Partner (other than
the Company) shall have the right (the "Common Exchange Right"), on or after the
first anniversary of the date on which he acquires Class B Units (or such later
or earlier date as shall be determined in the sole and absolute discretion of
the Managing General Partner at the time of the issuance of the Class B Common
Units), to require the Company to acquire all or a portion of the Class B Common
Units held by such Limited Partner in exchange for the REIT Stock Amount and
each Limited Partner (other than the Company) holding Preferred Units shall have
the right to exchange (the "Preferred Exchange Right" and, together with the
Common Exchange Right, the "Exchange Rights"), on or after the first anniversary
of the date on which he acquires the Preferred Units (or such later or earlier
date as shall be determined in the sole and absolute discretion of the Managing
General Partner at the time of issuance of the Preferred Units), to require the
Company to acquire all or a portion of the Preferred Units held by such Limited
Partner to the extent such exchange is permitted by the terms of and subject to
the other provisions of, the certificate evidencing such Preferred Units. The
Exchange Rights shall be exercised pursuant to a Notice of Exchange delivered to
the Company (with a copy to the Partnership) by the Limited Partner who is
exercising an Exchange Right (the "Exchanging Partner"). A Limited Partner may
not exercise an Exchange Right for fewer than one thousand (1,000) Partnership
Units or, if such Limited Partner holds fewer than one thousand (1,000)
Partnership Units, all of the Partnership Units held by such Partner. The
Exchanging Partner shall have no right, with respect to any Partnership Units so
exchanged, to receive any distributions paid with respect to the Partnership
Units on or after the date of the Notice of Exchange. The Assignee of any
Limited Partner may exercise the rights of such Limited Partner pursuant to this
Section 5.5(a), and such Limited Partner shall be deemed to have assigned such
rights to such Assignee and shall be bound by the exercise of such rights by
such Assignee. In connection with any exercise of such rights by an Assignee on
behalf of a Limited Partner, the REIT Stock Amount shall be paid by the Company
directly to such Assignee and not to such Limited Partner.
(b) Notwithstanding the provisions of Section 5.5(a), a Partner shall
not be entitled to exercise the Exchange Rights pursuant to Section 5.5(a) if
the delivery of shares of Common Stock or shares of Preferred Stock to such
Partner by the Company pursuant to Section 5.5(a) would be prohibited under the
Amended and Restated Articles of Incorporation of the Company.
V.6. Minimum Percentage Interest of General Partner.
The provisions of Sections 5.2 and 5.4 shall be applied so that in all
events the Percentage Interest of the General Partners shall be equal to at
least 1.00%. In the event the issuance of additional Partnership Interests
pursuant to Section 5.2 would (but for this Section 5.6) have the effect of
reducing the Percentage Interest of the General Partners to less than 1.00%, the
Company shall transfer Partnership Units to the General Partners (and, as of the
effective date of such issuance, the Company shall be deemed to hold Partnership
Units for the benefit of the General Partners) to the extent necessary to cause
the General Partners' Percentage Interest, after giving effect to such issuance,
to be equal to at least 1.00%. In the event any additional Capital Contributions
are to be made or deemed made to the Partnership by the General Partners and the
Company pursuant to Section 5.2 or 5.4, such additional Capital Contributions or
deemed Capital Contributions shall be allocated between the General Partners and
the Company in the amounts necessary to cause the General Partners' Percentage
Interest, after giving effect to such Capital Contributions, to be equal to at
least 1.00%.
V.7. No Preemptive Rights.
No Person shall have any preemptive, preferential or other similar
right with respect to (a) additional Capital Contributions or loans to the
Partnership; or (b) issuance or sale of any Partnership Units or other
Partnership Interests.
V.8. Capital Accounts.
A separate capital account (a "Capital Account") shall be established
and maintained for each Partner in accordance with Treasury Regulations Section
1.704-1(b)(2)(iv). If (i) a new or existing Partner acquires an additional
Partnership Interest in exchange for more than a de minimis Capital
Contribution, (ii) the Partnership distributes to a Partner more than a de
minimis amount of Partnership property as consideration for a Partnership
Interest, or (iii) the Partnership is liquidated within the meaning of Treasury
Regulation Section 1.704-1(b)(2)(ii)(g), the Managing General Partner shall
revalue the property of the Partnership to its fair market value (taking into
account Section 7701(g) of the Code) in accordance with Treasury Regulations
Section 1.704-1(b)(2)(iv)(f). When the Partnership's property is revalued by the
Managing General Partner, the Capital Accounts of the Partners shall be adjusted
in accordance with Treasury Regulations Sections 1.704-1(b)(2)(iv)(f) and (g),
which generally require such Capital Accounts to be adjusted to reflect the
manner in which the unrealized gain or loss inherent in such property (that has
not been reflected in the Capital Accounts previously) would be allocated among
the Partners pursuant to Section 6.4 if there were a taxable disposition of such
property for its fair market value (taking into account Section 7701(g) of the
Code) on the date of the revaluation.
V.9. Percentage Interests.
If the number of outstanding Partnership Units increases or decreases
during a taxable year, each Partner's Percentage Interest shall be adjusted to a
percentage equal to the number of Partnership Units held by such Partner divided
by the aggregate number of outstanding Partnership Units. If the Partners'
Percentage Interests are adjusted pursuant to this Section 5.9, the Profits and
Losses for the taxable year in which the adjustment occurs shall be allocated
between the part of the year ending on the day when the Partnership's property
is revalued by the Managing General Partner and the part of the year beginning
on the following day either (i) as if the taxable year had ended on the date of
the adjustment or (ii) based on the number of days in each part. The Managing
General Partner, in its sole discretion, shall determine which method shall be
used to allocate Profits and Losses for the taxable year in which the adjustment
occurs. The allocation of Profits and Losses for the earlier part of the year
shall be based on the Percentage Interests before adjustment, and the allocation
of Profits and Losses for the later part shall be based on the adjusted
Percentage Interests.
V.10. Negative Capital Accounts.
(a) Except to the extent provided in Section 5.10(b), and except to the
extent that the Partners are required to make Capital Contributions under
Section 5.1, no Partner shall be required to pay to the Partnership or any other
Partner any deficit balance which may exist from time to time in such Partner's
or Assignee's Capital Account.
(b) Notwithstanding the foregoing, if any General Partner has a deficit
balance in its Capital Account following the liquidation of its Partnership
Interest, as determined after taking into account all Capital Account
adjustments for the Partnership Fiscal Year during which such liquidation
occurs, it is unconditionally obligated to restore the amount of such deficit or
negative balance to the Partnership by the end of such Fiscal Year (or, if
later, within 90 days after the date of such liquidation), which such amount
shall, upon liquidation of the Partnership, be paid to creditors of the
Partnership or distributed to other Partners in accordance with their positive
Capital Account balances.
V.11. No Interest on Amounts in Capital Account.
No Partner or Assignee shall be entitled to receive any interest on its
outstanding Capital Account balance.
V.12. Advances to Partnership.
If any Partner or Assignee shall advance funds to the Partnership in
excess of the amounts required hereunder to be contributed by it to the capital
of the Partnership, the making of such advances shall not result in any increase
in the amount of the Capital Account of such Partner or Assignee or entitle such
Partner or Assignee to any increase in its Percentage Interest (as defined in
Article VI). The amounts of any such advances shall be a debt of the Partnership
to such Partner or Assignee and shall be payable or collectible only out of the
Partnership Assets in accordance with the terms and conditions upon which such
advances are made.
V.13. Liability of Limited Partner.
Except as provided in the Delaware RULPA and Section 6.2 and Section
7.11(e), (a) the Limited Partners or Assignees shall not be personally liable
for any debts, liabilities, contracts or obligations of the Partnership; (b) the
Limited Partners shall be liable only to make payments of such Limited Partners'
Capital Contributions pursuant to Section 5.1; and (c) after the Limited
Partners' Capital Contributions shall be fully paid, the Limited Partners shall
not be required to make any further Capital Contributions or to lend any funds
to the Partnership.
V.14. Return of Capital.
Except upon the dissolution of the Partnership or as otherwise
specifically provided in this Agreement, no Partner or Assignee shall have the
right to demand or to receive the return of all or any part of the Capital
Account or Capital Contributions of such Partner or Assignee.
V.15. No Third Party Beneficiary.
No creditor or other third party having dealings with the Partnership
shall have the right to enforce the right or obligation of any Partner to make
Capital Contributions or loans or to pursue any other right or remedy hereunder
or at law or in equity, it being understood and agreed that the provisions of
this Agreement shall be solely for the benefit of, and may be enforced solely
by, the parties hereto and their respective successors and assigns. None of the
rights or obligations of the Partners herein set forth to make Capital
Contributions or loans to the Partnership shall be deemed an asset of the
Partnership for any purpose by any creditor or other third party, nor may such
rights or obligations be sold, transferred or assigned by the Partnership or
pledged or encumbered by the Partnership to secure any debt or other obligation
of the Partnership or of any of the Partners. In addition, it is the intent of
the parties hereto that no distribution to any Limited Partners shall be deemed
a return of money or other property in violation of the Act. However, if any
court of competent jurisdiction holds that, notwithstanding the provisions of
this Agreement, any Limited Partner is obligated to return such money or
property, such obligation shall be the obligation of such Limited Partner and
not of a General Partner. Without limiting the generality of the foregoing, a
deficit Capital Account of a Partner shall not be deemed to be a liability of
such Partner nor an asset or property of the Partnership.
V.16. Employee Benefit Plans.
(a) If grants of shares of Common Stock are made in connection with any
of the Company's employee benefit plans:
(i) The Company, through the Managing General Partner and any
REIT Partner, shall contribute, as soon as practicable after such grant, to the
Partnership (to be thereafter taken into account for the purpose of calculating
any cash distributable to the Partners), an amount equal to the price, if any,
paid to the Company by the party receiving such shares of Common Stock;
(ii) The Partnership shall issue to the Managing General
Partner and any REIT Partner an aggregate number of additional Partnership Units
equal to the product of (A) the number of such shares of Common Stock issued by
the Company, multiplied by (B) a fraction, the numerator of which is 100%, and
the denominator of which is the Conversion Factor in effect on the date of such
contribution; and
(iii) The Managing General Partner's and any REIT Partners's
Percentage Interest and the Percentage Interests of the other Limited Partners
shall be adjusted as set forth in Section 5.2.
(b) If stock options granted in connection with a Company employee
benefit plan are exercised:
(i) The Company, through the Managing General Partner and any
REIT Partner, shall contribute, as soon as practicable after such exercise, to
the Partnership (to be thereafter taken into account for purposes of calculating
any cash distributable to the Partners), an amount equal to the exercise price,
if any, paid to the Company by the exercising party in connection with the
exercise of the option or warrant;
(ii) The Partnership shall issue to the Managing General
Partner and any REIT Partner an aggregate number of additional Partnership Units
equal to the product of (A) the number of shares of Common Stock issued by the
Company in satisfaction of such exercised option or warrant, multiplied by (B) a
fraction, the numerator of which is 100%, and the denominator of which is the
Conversion Factor in effect on the date of such contribution; and
(iii) The Managing General Partner's and any REIT Partner's
Percentage Interest and the Percentage Interests of the other Limited Partners
shall be adjusted as set forth in Section 5.2.
(c) If the Company grants any director, officer or employee share
appreciation rights, performance share awards or other similar rights
("Incentive Rights"), then simultaneously the Partnership shall grant the
Managing General Partner and any REIT Partner corresponding and economically
equivalent rights. Consequently, upon the cash payment by the Company to its
directors, officers or employees pursuant to such Incentive Rights, the
Partnership shall make an equal cash payment to the Managing General Partner and
any REIT Partner.
ARTICLE VI
DISTRIBUTIONS; ALLOCATIONS
VI.1. Requirement and Characterization of Distributions.
(a) The Managing General Partner shall cause the Partnership to
distribute quarterly an amount equal to 100% of Available Cash generated by the
Partnership during such quarter to the Partners who are Partners on the
Partnership Record Date with respect to such quarter in the following order of
priority:
(i) First, to the holders of the Preferred Partnership Units
in such amount as is required for the Partnership to pay all
distributions with respect to such Preferred Partnership Units due or
payable in accordance with the instruments designating such Preferred
Partnership Units through the last day of such quarter; such
distributions shall be made to such Partners in such order of priority
and with such preferences as have been established with respect to such
Preferred Partnership Units as of the last day of such calendar
quarter; and then
(ii) Second, to the Class B Common Limited Partners who are,
and to any former Class B Common Limited Partners who were, Partners on
the Partnership Record Date with respect to such fiscal quarter in
accordance with their respective Percentage Interests on such
Partnership Record Date until the Class B Common Limited Partners have
received an amount pursuant to this clause equal to the sum of (A) the
Class B Common Distribution in respect of such fiscal quarter and (B)
the balance in the Unpaid Common Distribution Account; provided,
however, that the allocation between the Class B Common Limited
Partners of amounts relating to the Unpaid Common Distribution Account
shall take into account the effect of any distribution pursuant to
Section 6.1(b) hereof; and
(iii) Thereafter, 1% to the General Partner and 99% to the
Class A Limited Partners in accordance with their respective Percentage
Interests.
(b) Following the receipt of a written notice of an intention to
exchange Class B Common Units pursuant to the terms of Section 5.5 hereof, the
Managing General Partner shall cause the Partnership to distribute, immediately
prior to the consummation of such exchange, to any Limited Partner whose
Partnership Interest is being exchanged an amount of Available Cash at such time
equal to the balance, if any, of the Unpaid Common Distribution Account
corresponding to the Class B Common Units.
(c) The Managing General Partner shall have the power to determine any
alternative minimum tax, adjustments and tax preference items in such manner and
in such amounts as the Managing General Partner may determine in the Managing
General Partner's discretion.
(d) In no event may a Partner receive a distribution of Available Cash
with respect to a Partnership Unit if such Partner is entitled to receive a
distribution out of such Available Cash with respect to a share of Common Stock
for which such Partnership Unit has been redeemed or exchanged. The Managing
General Partner shall take such reasonable efforts, as determined by it in its
sole and absolute discretion and consistent with the Company's qualification as
a REIT, to distribute Available Cash to the Limited Partners so as to preclude
any such distribution or portion thereof from being treated as part of a sale of
property to the Partnership by a Limited Partner under Section 707 of the Code
or the Regulations thereunder; provided that the Company, the Managing 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.
(e) Notwithstanding anything to the contrary contained herein, in no
event shall any Partner receive a distribution of Available Cash with respect to
any Class B Common Unit with respect to any quarter until such time as the
Partnership has distributed to the holders of the Preferred Partnership Units an
amount sufficient to pay all distributions payable with respect to such
Preferred Partnership Units through the last day of such quarter, in accordance
with the instruments designating such Preferred Partnership Units.
VI.2. Withholding.
(a) All amounts withheld pursuant to the Code or any provisions of any
state or local tax law and Section 6.2(b) 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 6.1 for all purposes under
this Agreement.
(b) 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 Managing General Partner
determines that the Partnership is required to withhold or pay with respect to
any amount distributable or allocable to such Limited Partner pursuant to this
Agreement, including, without limitation, any taxes required to be withheld or
paid by the Partnership pursuant to Sections 1441, 1442, 1445, or 1446 of the
Code. Any amount paid on behalf of or with respect to a Limited Partner shall
constitute a loan by the Partnership to such Limited Partner, which loan shall
be repaid by such Limited Partner within fifteen (15) days after notice from the
Managing 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 Managing 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
6.2(b). In the event that a Limited Partner fails to pay any amounts owed to the
Partnership pursuant to this Section 6.2(b) when due, the Managing 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. Without limitation, in such event, the Managing
General Partner shall have the right to receive distributions that would
otherwise be distributable to such defaulting Limited Partner until such time as
such loan, together with all interest thereon, has been paid in full; and any
such distributions so received by the Managing General Partner shall be treated
as having been distributed to the defaulting Limited Partner and immediately
paid by the defaulting Limited Partner to the Managing General Partner in
repayment of such loan. Any amounts payable by a Limited Partner hereunder shall
bear interest at the lesser of (A) the base rate on corporate loans at large
United States money center commercial banks, as published from time to time in
The Wall Street Journal, plus four (4) percentage points or (B) the maximum
lawful rate of interest on such obligation, such interest to accrue from the
date such amount is due (i.e., fifteen (15) days after demand) until such amount
is paid in full. Each Limited Partner shall take such actions as the Partnership
or the Managing General Partner shall request in order to perfect or enforce the
security interest created hereunder.
VI.3. Distributions Upon Liquidation.
(a) Upon liquidation of the Partnership, after payment of, or adequate
provision for, debts and obligations of the Partnership, including any Partner
loans, any remaining assets of the Partnership shall be distributed to all
Partners with positive Capital Accounts in accordance with their respective
positive Capital Account balances. For purposes of the preceding sentence, the
Capital Account of each Partner shall be determined after all adjustments made
in accordance with Sections 6.1 and 6.4 resulting from Partnership operations
and from all sales and dispositions of all or any part of the Partnership's
assets. Any distributions pursuant to this Section 6.3 shall be made by the end
of the Partnership's taxable year in which the liquidation occurs (or, if later,
within 90 days after the date of the liquidation). To the extent deemed
advisable by the General Partner, appropriate arrangements (including the use of
a liquidating trust) may be made to assure that adequate funds are available to
pay any contingent debts or obligations.
(b) If the Managing General Partner has a negative balance in its
Capital Account following a liquidation of the Partnership, as determined after
taking into account all Capital Account adjustments in accordance with Sections
6.1 and 6.4 resulting from Partnership operations and from all sales and
dispositions of all or any part of the Partnership's assets, the Managing
General Partner shall contribute to the Partnership an amount of cash equal to
the negative balance in its Capital Account and such cash shall be paid or
distributed by the Partnership to creditors, if any, and then to the Limited
Partners in accordance with Section 6.3(a). Such contribution by the Managing
General Partner shall be made by the end of the Partnership's taxable year in
which the liquidation occurs (or, if later, within 90 days after the date of the
liquidation).
VI.4. Allocations of Profit and Losses.
After giving effect to the special allocations set forth in Sections
6.5 and 6.6 hereof, Profits and Losses for a Fiscal Year or other period shall
be allocated for both tax and Capital Account purposes, in the following manner:
(a) Profits shall be allocated in the following order and
priority:
(i) first, to Preferred Partners in proportion to
their respective Percentage Interests until the amount of
Profits allocated to the Preferred Partners pursuant to this
clause (i) for the current Fiscal Year equals the excess of
(A) the cumulative amount of the Preferred Distribution for
each quarter of the current Fiscal Year and all prior Fiscal
Years over (B) the cumulative amount of Profits allocated to
the Preferred Partners pursuant to this clause (i) for all
prior Fiscal Years;
(ii) second, to the General Partner, in proportion to
and to the extent of an amount equal to the excess, if any, of
(A) the cumulative Losses allocated to such General Partner
pursuant to the last sentence of Section 6.7 hereof for all
prior Fiscal Years, over (B) the cumulative Profits allocated
to such General Partner pursuant to this Section 6.4(a)(ii)
for all prior Fiscal Years;
(iii) third, to the Partners (other than the Class B
Limited Partners and the Preferred Partners), in proportion to
and to the extent of an amount equal to the excess, if any, of
(A) the cumulative Losses allocated to such Partners pursuant
to Section 6.4(b)(iv) hereof for all prior Fiscal Years, over
(B) the cumulative Profits allocated to such Partners pursuant
to this Section 6.4(a)(iii) for all prior Fiscal Years;
(iv) fourth, to the Preferred Partners, in proportion
to and to the extent of an amount equal to the excess, if any,
of (A) the cumulative Losses allocated to each such Partner
pursuant to Section 6.4(b)(iii) hereof for all prior Fiscal
Years, over (B) the cumulative Profits allocated to such
Partner pursuant to this Section 6.4(a)(iv) for all prior
Fiscal Years;
(v) fifth, to the Class B Limited Partners, in
proportion to and to the extent of an amount equal to the
excess, if any, of (A) the cumulative Losses allocated to such
Partner pursuant to Section 6.4(b)(ii) hereof for all prior
Fiscal Years, over (B) the cumulative Profits allocated to
such Partner pursuant to this Section 6.4(a)(v) for all prior
Fiscal Years;
(vi) sixth, to the General Partner, the Class A
Common Limited Partner and the Class B Limited Partners in
proportion to and to the extent of (A) the cumulative amount
of the Available Cash distributed to such Partners pursuant to
Sections 6.1(a)(ii) and (iii) for each quarter of the current
Fiscal Year and all prior Fiscal Years over (B) the cumulative
amount of Profits allocated to such Partners pursuant to this
clause (vi) for all prior Fiscal Years; and
(vii) thereafter, to the General Partner, the Class A
Common Limited Partner and the Class B Limited Partners in
accordance with their respective Percentage Interests.
(b) Losses shall be allocated in the following order and
priority:
(i) first, to the General Partner and the Class A
Common Limited Partners in proportion to and until the amount
of Losses allocated pursuant to this clause (i) for the
current Fiscal Year equals the excess, if any, of (A) the sum
of (1) their respective Capital Account balances on the
Effective Date, (2) the Capital Contributions made by such
Partners subsequent to the Effective Date, and (3) the
cumulative amount of Profits allocated to such Partners
pursuant to Section 6.4(a)(vii) hereof over (B) the sum of (1)
cumulative amount of Losses allocated to such Partners
pursuant to this clause (i) for all prior Fiscal Years and (2)
the cumulative amount of distributions made to them pursuant
to Section 6.1 hereof;
(ii) second, to the Class B Limited Partners, in
proportion to their respective Percentage Interests until the
amount of Losses allocated pursuant to this clause (ii) for
the current Fiscal Year equals the excess, if any, of (A) the
sum of (1) the aggregate amount of the portion of their
Capital Account balances on the Effective Date attributable to
Class B Common Units, (2) the aggregate Capital Contributions
made by such Partners subsequent to the Effective Date in
respect of their Class B Common Units, and (3) the cumulative
amount of Profits allocated to them pursuant to Section
6.4(a)(ii) hereof over (B) the sum of (1) cumulative amount of
Losses allocated to such Partners pursuant to this clause (ii)
for all prior Fiscal Years and (2) the cumulative amount of
distributions made to them pursuant to Section 6.1 hereof;
(iii) third, to the Preferred Partners, in proportion
to their respective Percentage Interests until the amount of
Losses allocated pursuant to this clause (iii) for the current
Fiscal Year equals the excess, if any, of (A) the sum of (1)
the aggregate amount of the portion of their Capital Account
balances on the Effective Date attributable to Class B
Preferred Units, (2) the aggregate Capital Contributions made
by such Partners subsequent to the Effective Date in respect
of their respective Preferred Partnership Units, and (3) the
cumulative amount of Profits allocated to them pursuant to
Section 6.4(a)(i) hereof over (B) the sum of (1) cumulative
amount of Losses allocated to such Partners pursuant to this
clause (iii) for all prior Fiscal Years and (2) the cumulative
amount of distributions made to them pursuant to Section 6.1
hereof; and
(iv) thereafter, 1% to the General Partner and 99% to
the Limited Partners (other than the Class B Limited Partners
and the Preferred Partners) in accordance with their
Percentage Interests.
VI.5. Special Allocations.
The following special allocations shall be made in the following order:
(a) Notwithstanding any other provision of this Agreement to
the contrary, if in any Fiscal Year there is a net decrease in Partnership
Minimum Gain, then each Partner shall first be allocated items of Partnership
income for such Fiscal Year (and, if necessary, subsequent Fiscal Years) in an
amount equal to the portion of such Partners' share of the net decrease in
Partnership Minimum Gain, determined in accordance with the provisions of
Treasury Regulations Section 1.704-2(g). As provided in Treasury Regulations
Section 1.704-2(j), income of the Partnership allocated for any Fiscal Year
under this Section 6.5(a) shall consist first of items of book gain recognized
from the disposition of Partnership property subject to Nonrecourse Liabilities
to the extent of the decrease in Partnership Minimum Gain that is attributable
to such disposition, with any remaining allocated income deemed to be made up of
a pro rata portion of the Partnership's other items of gross income for such
taxable year.
(b) Notwithstanding any other provision of this Agreement to
the contrary, except as specified in Section 6.5(a), if in any Fiscal Year there
is a net decrease in Partner Minimum Gain, then each Partner shall first be
allocated items of Partnership income for such Fiscal Year (and, if necessary,
subsequent Fiscal Years) in an amount equal to the portion of such Partners'
share of the net decrease in such Partner Minimum Gain, determined in accordance
with the provisions of Treasury Regulations Section 1.704-2(i). As provided in
Treasury Regulations Section 1.704-2(j), income of the Partnership allocated for
any Fiscal Year under this Section 6.5(b) shall consist first of items of book
gain recognized from the disposition of Partnership property subject to Partner
Nonrecourse Debt to the extent of the decrease in Partner Minimum Gain that is
attributable to such disposition, with any remaining allocated income deemed to
be made up of a pro rata portion of the Partnership's other items of gross
income for such taxable year.
(c) In the event any Partner unexpectedly receives any
adjustments, allocations, or distributions described in Sections
1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5) or 1.704-1(b)(2)(ii)(d)(6) of
the Treasury Regulations, items of Partnership income and gain shall be
specially allocated to such Partner in an amount and manner sufficient to
eliminate, to the extent required by the Treasury Regulations, the Adjusted
Capital Account Deficit, if any, of such Partner as quickly as possible,
provided that an allocation pursuant to this Section 6.5(c) shall be made only
if and to the extent that such Partner would have an Adjusted Capital Account
Deficit after all other allocations provided for in this Article VI have been
tentatively made as if this Section 6.5(c) were not in the Agreement.
(d) In the event a Limited Partner (who is not also a General
Partner) has a deficit Capital Account at the end of any Fiscal Year that is in
excess of the sum of (i) the amount the Limited Partner is obligated to restore
pursuant to any provision of this Agreement, and (ii) the amount the Limited
Partner is deemed to be obligated to restore pursuant to Section
1.704-1(b)(2)(ii)(c) of the Treasury Regulations, the Limited Partner shall be
specially allocated items of Partnership income and gain in the amount of such
excess as quickly as possible, provided that an allocation pursuant to this
Section 6.5(d) shall be made only if and to the extent that the Limited Partner
would have a deficit Capital Account in excess of such sum after all other
allocations provided for in this Article VI have been made as if Section 6.5(c)
hereof and this Section 6.5(d) were not in the Agreement.
(e) To the extent an adjustment to the adjusted tax basis of
any Partnership asset is required pursuant to Code Section 732(d), Code Section
734(b) or Code Section 743(b), the Capital Accounts of the Partners shall be
adjusted pursuant to Section 1.704-1(b)(2)(iv)(m) of the Treasury Regulations.
VI.6. Curative Allocations.
The allocations set forth in Sections 6.5 and 6.7 hereof (the
"Regulatory Allocations") are intended to comply with certain requirements of
the Treasury Regulations. It is the intent of the Partners that, to the extent
possible, all Regulatory Allocations shall be offset either with other
Regulatory Allocations or with special allocations of other items of Partnership
income, gain, loss or deduction pursuant to this Section 6.6. Therefore,
notwithstanding any other provision of this Article VI (other than the
Regulatory Allocations), the General Partner shall make such offsetting special
allocations of Partnership income, gain, loss or deduction in whatever manner it
determines appropriate so that, after such offsetting allocations are made, each
Partner's Capital Account balance is, to the extent possible, equal to the
Capital Account balance such Partner would have had if the Regulatory
Allocations were not part of the Agreement and all Partnership items were
allocated pursuant to Section 6.4.
VI.7. Loss Limitation.
The Losses allocated to a Limited Partner pursuant to Section 6.4(b)
hereof shall not exceed the maximum amount of Losses that can be so allocated
without causing a Limited Partner to have an Adjusted Capital Account Deficit at
the end of any Fiscal Year. All Losses in excess of the limitations set forth in
this Section 6.7 shall be allocated to the General Partner.
VI.8. Tax Allocations; Code Section 704(c).
In accordance with Code Section 704(c) and the Treasury Regulations
promulgated thereunder, income, gain, loss, and deduction with respect to any
property contributed to the capital of the Partnership shall, solely for tax
purposes, be allocated among the Partners so as to take account of any variation
between the adjusted basis of such property to the Partnership for federal
income tax purposes and its initial Gross Asset Value. In the event the Gross
Asset Value of any Partnership asset is adjusted pursuant to clause (v) of the
definition of Gross Asset Value, subsequent allocations of income, gain, loss,
and deduction with respect to such asset shall take account of any variation
between the adjusted basis of such asset for federal income tax purposes and its
Gross Asset Value in the same manner as under Code Section 704(c) and the
Treasury Regulations promulgated thereunder. Any elections or other decisions
related to allocations pursuant to this Section 6.8 will be made in any manner
that the General Partner determines in its sole discretion (including any manner
that may benefit the General Partner and its Affiliates).
VI.9. Company Distribution Requirements.
The Managing General Partner shall use its reasonable efforts to cause
the Partnership to distribute amounts sufficient to enable the Company to pay
shareholder dividends that will allow the Company to (a) meet its distribution
requirement for qualification as a real estate investment trust as set forth in
Section 857(a)(1) of the Code and (b) avoid any federal income or excise tax
liability imposed by the Code.
VI.10. No Right to Distributions in Kind.
The Managing General Partner may distribute property, other than cash
to the Partners in any manner determined by the General Partner. No Partner
shall be entitled to demand property other than cash in connection with any
distributions by the Partnership.
VI.11. Limitations on Return of Capital Contributions.
Notwithstanding any of the provisions of this Article VI, no Partner
shall have the right to receive and the Managing General Partner shall not have
the right to make, a distribution that includes a return of all or part of a
Partner's Capital Contributions, unless after giving effect to the return of a
Capital Contribution, the sum of all Partnership liabilities, other than the
liabilities to a Partner for the return of his Capital Contribution, does not
exceed the fair market value of the Partnership's assets.
ARTICLE VII
MANAGEMENT
VII.1. Management and Control of Partnership.
Except as otherwise expressly provided or limited by the provisions of
this Agreement (including, without limitation, the provisions of Article VIII),
the Managing General Partner shall have full, exclusive and complete discretion
to manage and control the business and affairs of the Partnership, to make all
decisions affecting the business and affairs of the Partnership and to take all
such actions as it deems necessary or appropriate to accomplish the purposes of
the Partnership as set forth herein. The Managing General Partner shall use
reasonable efforts to carry out the purposes of the Partnership and shall devote
to the management of the business and affairs of the Partnership such time as
the Managing General Partner, in its reasonable discretion, shall deem to be
reasonably required for the operation thereof. The Limited Partners shall have
no authority, right or power to bind the Partnership, or to manage or control,
or to participate in the management or control of, the business and affairs of
the Partnership in any manner whatsoever.
VII.2. Powers of Managing General Partner.
Subject to the limitation of Section 7.3, which vests certain approval
rights in the Limited Partners, and to the limitations and restrictions set
forth in Article VIII, the Managing General Partner (acting on behalf of the
Partnership) shall have the right, power and authority, in the management of the
business and affairs of the Partnership, to do or cause to be done any and all
acts, at the expense of the Partnership, deemed by the Managing General Partner
to be necessary or appropriate to effectuate the business, purposes and
objectives of the Partnership. The power and authority of the Managing General
Partner pursuant to this Agreement shall be liberally construed to encompass all
acts and activities in which a partnership may engage under the Delaware RULPA.
The power and authority of the Managing General Partner shall include, without
limitation, the power and authority on behalf of the Partnership:
(a) To acquire, own, lease, sublease, manage, hold, deal in, control or
dispose of any interests or rights in personal property or real property,
including interests in any Partnership Property, whether realty or personalty,
including, without limitation, the powers to sell, exchange, lease, sublease,
mortgage, pledge, convey in trust, enter into joint ventures or partnerships
respecting or otherwise hypothecate or dispose of all or any portion of any
Partnership Property or any other Partnership Asset or any interest therein;
provided, however, that the use of any Restricted Restaurant Property and any
sale or other disposition of any Restricted Restaurant Property shall be subject
to the restrictions and limitations set forth in Sections 8.3 and 8.4;
(b) Subject to the restrictions and limitations set forth in Section
8.3 but without limiting the generality of Section 7.2(a), to negotiate, enter
into, renegotiate, extend, renew, terminate, modify, amend, waive, execute,
acknowledge or take any other action on behalf of the Partnership with respect
to any Primary Lease (including, without limitation, to exercise any right of
the Partnership under any Primary Lease to acquire title to a Partnership
Property pursuant to a right of first refusal) or any lease or sublease of a
Partnership Property whether to a BKC Franchisee or otherwise, or any provision
thereof;
(c) Subject to the restrictions and limitations set forth in Sections
8.3 and 8.4, to create, by grant or otherwise, easements, servitudes,
rights-of-way, and other rights in and to any Partnership Property;
(d) To alter, improve, expand, repair, raze, replace or reconstruct a
Partnership Property; provided, however, that any improvement, expansion,
replacement, or reconstruction of a Partnership Property pursuant to the
Successor Policy (as further described in Section 8.6) shall be subject to the
terms and conditions of Section 8.6;
(e) Subject to the restrictions and limitations set forth in Sections
8.3 and 8.4, to let or lease, or sublet or sublease, any Partnership Property
for any period, and for any purpose;
(f) To apply proceeds of any sale, exchange, mortgage, pledge or other
disposition of any Partnership Property or any other Partnership Asset to
payment of liabilities of the Partnership and to pay, collect, compromise,
arbitrate or otherwise adjust any and all other claims or demands of or against
the Partnership or to hold such proceeds against the payment of contingent
liabilities, known or unknown;
(g) To maintain or cause to be maintained records of all rights and
interests acquired or disposed of by the Partnership, all correspondence
relating to the business of the Partnership, and the original records (or copies
on such media as the Managing General Partner may deem appropriate) of all
statements, bills and other instruments furnished the Partnership in connection
with its business;
(h) To maintain records and accounts of all operations and
expenditures, make all filings and reports required under applicable rules and
regulations of any governmental department, bureau or agency, any securities
exchange and any automated quotation system of a registered securities
association, and furnish the Partners with all necessary United States federal,
state or local income tax reporting information or such information with respect
to any other jurisdiction;
(i) To purchase and maintain (either directly or through participation
under insurance contracts purchased and maintained by any Affiliate), in its
sole and absolute discretion and at the expense of the Partnership, liability,
indemnity and any other insurance (including, without limitation, errors and
omissions insurance and insurance to cover the obligations of the Partnership
under Section 7.10), sufficient to protect the Partnership, the General
Partners, their officers, directors, employers, agents and Affiliates or any
other Person from those liabilities and hazards which may be insured against in
the conduct of the business and in the management of the business and affairs of
the Partnership;
(j) To make, execute, assign, acknowledge and file on behalf of the
Partnership any and all documents or instruments of any kind which the Managing
General Partner may deem necessary or appropriate in carrying out the purposes
and business of the Partnership, including, without limitation, powers of
attorney, agreements of indemnification, sales contracts, deeds, options, loan
obligations, mortgages, deeds of trust, notes, documents or instruments of any
kind or character, and amendments thereto. Any person, firm or corporation
dealing with the Managing General Partner shall not be required to determine or
inquire into the authority or power of the Managing General Partner to bind the
Partnership or to execute, acknowledge or deliver any and all documents in
connection therewith;
(k) To borrow money or to obtain credit in such amounts, on such terms
and conditions and at such rates of interest and upon such other terms and
conditions as the Managing General Partner deems appropriate, from banks, other
lending institutions or any other Person, including the Partners, for any
purpose of the Partnership, including, without limitation, any loan incurred for
the purpose of making one or more distributions to any or all Partners,
including any distributions which are, in whole or in part, a return of Capital
Contributions; and subject to the restrictions and limitations set forth in
Section 8.4, in connection with such loans to mortgage, pledge, assign or
otherwise encumber or alienate any or all of the Partnership Properties or other
Partnership Assets, including any income therefrom, to secure or provide for the
repayment thereof. As between any lender and the Partnership, it shall be
conclusively presumed that the proceeds of such loans are to be and will be used
for the purposes authorized herein and that the Managing General Partner has the
full power and authority to borrow such money and to obtain such credit;
(l) To originate loans or otherwise provide financing, whether through
guarantees, letters of credit or otherwise, secured by liens on real estate to
borrowers who meet the Partnership's underwriting criteria, which shall be
established by the Managing General Partner;
(m) To assume obligations, enter into contracts, including contracts of
guaranty or suretyship, incur liabilities, lend money and otherwise use the
credit of the Partnership, and, subject to the restrictions and limitations set
forth in Sections 8.3 and 8.4, to secure any of the obligations, contracts or
liabilities of the Partnership by mortgage, pledge or other encumbrance of all
or any part of the property, franchises and income of the Partnership;
(n) To invest funds of the Partnership in interest-bearing accounts and
short-term investments, including, without limitation, obligations of the
federal, state and local governments and their agencies, mutual funds (including
money market funds), time deposits, commercial paper and certificates of deposit
of commercial banks, savings banks or savings and loan associations; provided
that the Managing General Partner shall not invest Partnership funds in such a
manner that the Partnership will be considered to be holding itself out as being
engaged primarily in the business of investing, reinvesting or trading in
securities or otherwise will be deemed to be an investment company under the
Investment Company Act of 1940, as amended;
(o) To make any election on behalf of the Partnership as is or may be
permitted under the Code or under the taxing statute or rule of any state,
local, foreign or other jurisdiction, and to supervise the preparation and
filing of all tax and information returns which the Partnership may be required
to file;
(p) To maintain the buildings, appurtenances and grounds of the
Partnership Properties in accordance with acceptable standards, including within
such maintenance, without limitation thereof, interior and exterior cleaning,
painting and decorating, plumbing, carpentry and such other normal maintenance
and repair work as may be appropriate;
(q) To collect all rents and other charges from lessees of the
Partnership Properties due the Partnership. The Managing General Partner shall
have full power and authority to request, demand, collect, receive and receipt
for all such rents and other charges, to institute legal proceedings in the name
of the Partnership for the collection thereof and for the dispossession of any
Person from a Partnership Property, to settle or compromise all such legal
proceedings and any other disputes with respect to such rents and other charges
and to incur such expenses in connection therewith as the Managing General
Partner shall determine to be necessary or appropriate, which expenses may
include the costs of counsel for any such matter;
(r) To cause to be disbursed (i) the aggregate amount required to be
paid pursuant to any indebtedness of the Partnership, including therein amounts
due under any mortgages or deeds of trust for interest, amortization of
principal and for allocation to reserve or escrow funds; (ii) the amount of rent
payable by the terms of any Primary Lease; (iii) the amount of all real estate
taxes and other impositions levied by appropriate authorities (including,
without limitation, amounts required to be paid by any BKC Franchisee pursuant
to any lease with respect to a Restricted Restaurant Property); and (iv) amounts
otherwise due and payable as expenses of the Partnership incurred in furtherance
of the purposes of this Agreement (including, without limitation, amounts
payable to the General Partners);
(s) To employ and engage suitable agents, employees, advisers,
consultants and counsel (including any custodian, investment adviser,
accountant, attorney, corporate fiduciary, bank or other reputable financial
institution, or any other agents, employees or Persons who may serve in such
capacity for the Managing General Partner or any Affiliate of the Managing
General Partner) to carry out any activities which the Managing General Partner
is authorized or required to carry out or conduct under this Agreement,
including, without limitation, a Person who may be engaged to undertake some or
all of the general management, property management, financial accounting and
record keeping or other duties of the Managing General Partner, to indemnify
such Persons against liabilities incurred by them in acting in such capacities
on behalf of the Partnership and to rely on the advice given by such Persons, it
being agreed and understood that the Managing General Partner shall not be
responsible for any acts or omissions of any such Persons and shall assume no
obligations in connection therewith other than the obligation to use due care in
the selection thereof;
(t) To enter into an agreement or agreements with real estate brokers
or agents, investment banking firms, appraisers or others providing for the
engagement of such Persons on an exclusive or non-exclusive basis to advise or
represent the Partnership in the valuation, sale, transfer, assignment, lease,
sublease, mortgaging or other encumbering of, or other dealings in, the
Partnership Properties, it being understood that the Managing General Partner
shall not be responsible for any acts or omissions of any such Person and shall
assume no obligations in connection therewith other than the obligation to use
due care in the selection thereof; provided, however, that no commission in
connection with any sale or other disposition of a Partnership Property shall
exceed six percent (6%) of the gross proceeds from such sale or disposition, and
that no commission in connection with any such sale or other disposition shall
be payable to a General Partner or any of its Affiliates;
(u) To consult with the Independent Consultant pursuant to the
provisions of Section 8.10 with respect to any matter related to the business
and affairs of the Partnership;
(v) To take such actions and make such decisions as may be necessary or
appropriate, in the reasonable judgment of the Managing General Partner, to
resolve or avoid any actual or potential conflict of interest between the
Partnership and any General Partners or any Affiliates thereof, including,
without limitation, subject to Section 8.8, to cause the Partnership to accept
from BKC or a third party, in exchange or substitution for one or more
Restricted Restaurant Properties, one or more other properties on which a BK
Restaurant leased to a BKC Franchisee is located; provided, however, that, so
long as Section 1031 of the Code or any similar provision shall remain in
effect, any such substitution or exchange must qualify as an exchange of
property of a like-kind in which no gain or loss is recognized to the
Partnership except to the extent of any cash received in connection therewith;
(w) To hold Partnership Properties or other Partnership Assets in the
name of one or more nominees, with or without disclosure of the fiduciary
relationship;
(x) To pay, extend, renew, modify, adjust, submit to arbitration,
prosecute, defend or compromise, upon such terms as it may determine and upon
such evidence as it may deem sufficient, any obligation, suit, liability, cause
of action or claim, including taxes, either in favor of or against the
Partnership;
(y) To qualify the Partnership to do business in any state, territory,
dependency or foreign country;
(z) To purchase any Partnership Property subject to a Primary Lease
whether pursuant to a first right of refusal under such Primary Lease or
otherwise;
(aa) To enter into a property management agreement with BKC pursuant to
which BKC agrees on behalf of the Managing General Partner, at no additional
expense to the Partnership, to exercise certain day-to-day management
responsibilities with respect to the Partnership Properties and to perform
related administrative services upon the terms and conditions set forth therein,
to extend, renew, terminate, modify, amend or waive such agreement or any
provision thereof and to take such action pursuant to or in connection with such
agreement as the Managing General Partner shall determine appropriate; provided,
however, that the Managing General Partner shall have no obligation to enter
into any such agreement;
(bb) To distribute money or Partnership Assets to Partners and
Assignees in accordance with Article VI, regardless of the source of such money
or Partnership Assets, including, without limitation, money borrowed by the
Partnership or by the Managing General Partner on behalf of the Partnership;
(cc) To acquire fee simple title or a leasehold interest in any
Partnership Property and Ancillary Property related thereto and to provide for
the purchase price for such property from funds otherwise constituting Cash Flow
or the Net Proceeds of a Capital Transaction, whether at the time of acquisition
or thereafter to pay principal, interest or other amounts payable in respect of
any financing related to such acquisition;
(dd) To lease, sell or otherwise transfer Ancillary Property to any
tenant of a Partnership Property, to provide financing, whether through loans,
guarantees or otherwise, for any tenant of a Partnership Property and to provide
the funds for such transactions from funds otherwise constituting Cash Flow or
the Net Proceeds of a Capital Transaction, whether at the time of such
transaction or thereafter to pay principal, interest or other amounts payable in
respect of any financing undertaken for such purpose;
(ee) To mortgage, lien or otherwise encumber or restrict any Restricted
Restaurant Property and use the proceeds thereof in respect of Other Restaurant
Properties, Retail Properties or for any other Partnership purpose; and to
mortgage, lien or otherwise encumber or restrict any Other Restaurant Property
or Retail Property and use the proceeds thereof in respect of Restricted
Restaurant Properties or for any other Partnership purpose;
(ff) To operate or franchise any Partnership Property, whether directly
or through any Affiliates or other Persons;
(gg) To reinvest or otherwise use funds otherwise constituting Cash
Flow or the Net Proceeds of a Capital Transaction in or for Partnership
Properties, Ancillary Property or other Partnership Assets or for any other
Partnership purpose;
(hh) To form or acquire an interest in, and to contribute any property
to, any further limited or general partnerships, limited liability companies,
joint ventures or other relationships that it deems desirable (including,
without limitation, the acquisition of interests in, and the contributions of
property to, any subsidiary and other Person in which it has an equity
investment from time to time); provided, however, that, as long as any Partner
has determined to continue to qualify as a real estate investment trust under
the Code, the General Partners may not engage in any such formation, acquisition
or contribution that would cause such Partner to fail to qualify as a real
estate investment trust under the Code or fail to qualify as a "qualified
Company subsidiary" within the meaning of Section 856(i)(2) of the Code;
(ii) To possess and exercise any additional rights and powers of a
general partner under the partnership laws of Delaware (including, without
limitation, the Delaware RULPA) and any other applicable laws, to the extent not
inconsistent with this Agreement; and
(jj) In general, to exercise in full all of the powers of the
Partnership as set forth in Section 3.2 and to do any and all acts and conduct
all proceedings and execute all rights and privileges, contracts and agreements
of any kind whatsoever, although not specifically mentioned in this Agreement,
that the Managing General Partner in its sole and absolute discretion may deem
necessary or appropriate to the conduct of the business and affairs of the
Partnership or to carry out the purposes of the Partnership. The expression of
any power or authority of the Managing General Partner in this Agreement shall
not in any way limit or exclude any other power or authority which is not
specifically or expressly set forth in this Agreement.
VII.3. Restrictions on Authority of Managing General Partner.
(a) Anything in this Agreement to the contrary notwithstanding, the
Managing General Partner shall have no authority to:
(i) pay for any services performed by a General Partner or an
Affiliate of a General Partner, except as otherwise expressly permitted
in this Agreement; or
(ii) take any action on any matter with respect to which the
prior approval of the Limited Partners is specifically required under
this Agreement without having received such prior approval.
(b) Notwithstanding any other provision of this Agreement, the Managing
General Partner shall not, unless approved by a Majority Vote of the Limited
Partners:
(i) except upon dissolution and liquidation of the Partnership
pursuant to Article XIV, cause the Partnership to sell, exchange,
assign, lease, sublease or otherwise dispose of all or substantially
all of the Partnership Assets (including by way of merger,
consolidation or other combination with any other Person) other than in
ordinary course of business of the Partnership; provided, however, that
this provision shall not be interpreted to preclude or limit the
mortgage, pledge, hypothecation or grant of a security interest in all
or substantially all of the Partnership Assets, and shall not apply to
any forced sale of any or all of the Partnership Assets pursuant to the
foreclosure of, or other realization upon, any such encumbrance; or
(ii) cause the Partnership to merge or consolidate with any
other partnership or other entity (other than a Limited Partner).
VII.4. Title to Partnership Assets.
Title to Partnership Assets, whether real, personal or mixed, or
tangible or intangible, shall be deemed to be owned by the Partnership as an
entity, and no Partner, individually or collectively, shall have any ownership
interest in such Partnership Assets or any portion thereof. Title to any or all
of the Partnership Assets may be held in the name of the Partnership, of the
Managing General Partner or of one or more nominees, as the Managing General
Partner may determine. The Managing General Partner hereby declares and warrants
that any Partnership Assets for which legal title is held in the name of the
Managing General Partner shall be held in trust by the Managing General Partner
for the use and benefit of the Partnership in accordance with the terms or
provisions of this Agreement. All Partnership Assets shall be recorded as the
property of the Partnership on its books and records, irrespective of the name
in which legal title to such Partnership Assets is held.
VII.5. Working Capital Reserve.
The Managing General Partner shall have the right to cause the
Partnership to set up a Working Capital Reserve and to set aside therein such
funds as the Managing General Partner, in its sole and absolute discretion,
shall determine to be reasonable in connection with the operation of the
business of the Partnership. Any funds set aside for such Working Capital
Reserve may be invested by the Managing General Partner with a view to the
appropriate degree of safety of and return on such invested funds, and such
funds shall not be available for current distribution under Section 6.5;
provided, however, that some or all of such funds may subsequently be made
available for distribution pursuant to Section 6.5 should the Managing General
Partner, in its sole and absolute discretion, so elect. The Working Capital
Reserve established and maintained pursuant to this Section 7.5 shall be in
addition to any reserves established and maintained by the Managing General
Partner to implement the Successor Policy pursuant to Section 8.6.
VII.6. Other Business Activities of Partners.
Subject to Section 7.8 hereof and any agreements entered into by the
Managing General Partner or its Affiliates with the Partnership or a Subsidiary
Partnership, any officer, director, employee, agent, trustee, Affiliate or
stockholder of the Managing General Partner shall be entitled to and may have
business interests and engage in business activities in addition to those
relating to the Partnership, including business interests and activities
substantially similar or identical to those of the Partnership. Neither the
Partnership nor any of the Limited Partners shall have any rights by virtue of
this Agreement in any such business ventures, interest or activities. None of
the Limited Partners nor any other Person shall have any rights by virtue of
this Agreement or the partnership relationship established hereby in any such
business ventures, interests or activities, and the Managing General Partner
shall have no obligation pursuant to this Agreement to offer any interest in any
such business ventures, interests and activities to the Partnership or any
Limited Partner, even if such opportunity is of a character which, if presented
to the Partnership or any Limited Partner, could be taken by such Person.
VII.7. Transactions with Managing General Partner or Affiliates.
In addition to transactions specifically contemplated by the terms and
provisions of this Agreement, including, without limitation, Articles VIII and
IX, the Partnership is expressly permitted to enter into other transactions
(including, without limitation, the acquisition of goods or services) with any
Affiliates of the Managing General Partner, provided that the price and other
terms of such other transactions are fair to the Partnership and that the price
and other terms of such transactions are not less favorable to the Partnership
than those generally prevailing with respect to comparable transactions between
unrelated parties.
VII.8. General Partner Participation.
The Managing General Partner agrees that all business activities of the
Managing General Partner, including activities pertaining to the acquisition,
development or ownership of restaurant properties or other property, shall be
conducted through the Partnership or one or more Subsidiary Partnerships;
provided, however, that the Company is allowed to make a direct acquisition, but
if and only if, such acquisition is made in connection with the issuance of
Additional Securities, which direct acquisition and issuance have been approved
and determined to be in the best interests of the Company and the Partnership by
a majority of the Independent Directors.
VII.9. Net Worth Representation; Independent Judgment.
In addition to their other duties and obligations, the General Partners
further agree as follows:
(a) The General Partners shall use their best efforts to maintain a
combined net worth equal to the total amount, if any, that could reasonably be
expected to be required in order for the Partnership to be treated as a
partnership for federal income tax purposes; and
(b) In acting on behalf of the Partnership, the Managing General
Partner will not act under the direction of or as an agent of or "dummy" for the
Limited Partners.
VII.10. Liability of General Partners to Partnership and the Limited Partners.
The General Partners, their Affiliates and all officers, directors,
employees and agents of the General Partners and their Affiliates shall not be
liable to the Partnership or to the Limited Partners for any losses sustained or
liabilities incurred as a result of any act or omission of the General Partners
or their Affiliates if (a) the General Partner or Affiliate acted (or failed to
act) in good faith and in a manner it believed to be in, or not opposed to, the
interests of the Partnership, and (b) the conduct of the General Partner or
Affiliate did not constitute actual fraud, gross negligence or willful or wanton
misconduct.
VII.11. Indemnification of General Partners and Affiliates.
(a) The Partnership shall indemnify and hold harmless the General
Partners, their Affiliates and all officers, directors, employees and agents of
the General Partners and their Affiliates (individually, an "Indemnitee") from
and against any and all losses, claims, demands, costs, damages, liabilities,
joint and several, expenses of any nature (including attorneys' fees and
disbursements), judgments, fines, settlements and other amounts arising from any
and all claims, demands, actions, suits or proceedings, civil, criminal,
administrative or investigative, in which the Indemnitee may be involved, or
threatened to be involved, as a party or otherwise, arising out of or incidental
to the Initial Public Offering, the Second Public Offering or the Third Public
Offering or the business of the Partnership or the Limited Partners, including,
without limitation, liabilities under the federal and state securities laws,
regardless of whether the Indemnitee continues to be a General Partner, an
Affiliate or an officer, director, employee or agent of a General Partner or of
an Affiliate at the time any such liability or expense is paid or incurred, if
(i) the Indemnitee acted in good faith and in a manner it believed to be in, or
not opposed to, the interests of the Partnership, and, with respect to any
criminal proceeding, had no reasonable cause to believe its conduct was
unlawful, and (ii) the Indemnitee's conduct did not constitute actual fraud,
gross negligence or willful or wanton misconduct. The termination of any action,
suit or proceeding by judgment, order, settlement, conviction or upon a plea of
nolo contendere, or its equivalent, shall not, in and of itself, create a
presumption or otherwise constitute evidence that the Indemnitee acted in a
manner contrary to that specified in (i) or (ii) above.
(b) Expenses incurred by an Indemnitee in defending any claim, demand,
action, suit or proceeding subject to this Section 7.11 shall, from time to
time, be advanced by the Partnership prior to the final disposition of such
claim, demand, action, suit or proceeding upon receipt by the Partnership of an
undertaking by or on behalf of the Indemnitee to repay such amount unless it
shall be determined that such Person is entitled to be indemnified as authorized
in this Section 7.11.
(c) The indemnification provided by this Section 7.11 shall be in
addition to any other rights to which those indemnified may be entitled under
any agreement, with the approval of the Limited Partners, as a matter of law or
equity or otherwise, both as to an action in the Indemnitee's capacity as a
General Partner, an Affiliate or as an officer, director, employee or agent of a
General Partner or an Affiliate, and as to an action in another capacity, and
shall continue as to an Indemnitee who has ceased to serve in such capacity and
shall inure to the benefit of the heirs, successors, assigns and administrators
of the Indemnitee.
(d) The Partnership may purchase and maintain insurance (either
directly or through participation under insurance contracts purchased and
maintained by any Affiliate) on behalf of the General Partners and such other
Persons as the Managing General Partner shall determine against any liability
that may be asserted against or expense that may be incurred by such Person in
connection with the Initial Public Offering, the Second Public Offering or the
Third Public Offering and the activities of the Partnership or the Limited
Partners, regardless of whether the Partnership or the Limited Partners would
have the power to indemnify such Person against such liability under the
provisions of this Agreement.
(e) Except as set forth in the next sentence below, any indemnification
hereunder shall be satisfied solely out of the assets of the Partnership and the
Limited Partners. The limited partners or stockholders of the Limited Partners
shall not be subject to personal liability by reason of these indemnification
provisions; provided, however, that to the extent that a limited partner of the
Limited Partners shall recover from any Indemnitee any amount that is subject to
indemnification hereunder, the limited partner or stockholders of the Limited
Partners shall have personal liability to the Partnership, the Limited Partners
and the Indemnitee under this Section 7.11 for and to the extent of such amount.
(f) An Indemnitee shall not be denied indemnification in whole or in
part under this Section 7.11 by reason of the fact that 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.
(g) The provisions of this Section 7.11 are for the benefit of the
Indemnitees and shall not be deemed to create any rights for the benefit of any
other Persons.
VII.12. No Management by Limited Partners.
The Limited Partners shall not take part in the day-to-day management,
operation or control of the business and affairs of the Partnership. The Limited
Partners shall not have any right, power or authority to transact any business
in the name of the Partnership or to act for or on behalf of or to bind the
Partnership. The Limited Partners shall have no rights other than those
specifically provided herein or granted by law where consistent with a valid
provision hereof. In the event any laws, rules or regulations applicable to the
Partnership, or to the sale or issuance of securities by a Limited Partner,
require the Limited Partners to have certain rights, options, privileges or
consents not granted by the terms of this Agreement, then the Limited Partner
shall have and enjoy such rights, options, privileges and consents so long as
(but only so long as) the existence thereof does not result in a loss of the
limitation on liability enjoyed by the Limited Partners under the Delaware RULPA
or the applicable laws of any other jurisdiction.
VII.13. Other Matters Concerning General Partners.
(a) The General Partners 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 them to be genuine and to have been signed or presented
by the proper party or parties.
(b) The General Partners may consult with legal counsel, accountants,
appraisers, management consultants, investment bankers and other consultants and
advisers selected by them and any opinion of any such Person as to matters that
the General Partners reasonably believe to be within its professional or expert
competence (including, without limitation, any opinion of legal counsel to the
effect that the Partnership would "more likely than not" prevail with respect to
any matter) shall be full and complete authorization and protection in respect
of any action taken or suffered or omitted by a General Partner hereunder in
good faith and in accordance with such opinion.
(c) The General Partners shall have the right, in respect of any of
their powers or obligations hereunder, to act through a duly appointed attorney
or attorneys-in-fact. Each such attorney or attorney-in-fact 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. Each such appointment
shall be evidenced by a duly executed power of attorney giving and granting to
each such attorney or attorney-in-fact full power and authority to do and
perform all and every act and thing requisite and necessary to be done by the
General Partner in connection with the Partnership.
(d) Notwithstanding any other provision of this Agreement or the
Delaware RULPA, any action of the General Partners on behalf of the Partnership
or any decision of the General Partners 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 any REIT Partner
to continue to qualify as a real estate investment trust under the Code, (ii) to
avoid any REIT Partner incurring any taxes under the Section 857 or 4981 of the
Code or (iii) for any REIT Partner to continue to qualify as a "qualified
Company subsidiary" (within the meaning of Section 856(i)(2)) of the Code), is
expressly authorized under this Agreement and is deemed approved by all of the
Limited Partners.
VII.14. Other Limitations.
The following additional limitations shall apply to the operation and
management of the Partnership:
(a) No General Partner shall receive for its account any kickbacks or
rebates with respect to expenditures made by or on behalf of the Partnership,
nor shall any General Partner enter into any reciprocal arrangement that has the
effect of circumventing this Section 7.15(a) or Section 9.1;
(b) The Partnership shall not grant any General Partner an exclusive
right, as agent, to sell any Partnership Property or other Partnership Asset;
and
(c) No commission or other fee shall be payable to a General Partner,
directly or indirectly, in connection with the distribution or reinvestment of
any Net Proceeds of a Capital Transaction, except as provided in Section 9.3.
VII.15. Miscellaneous.
In the event the Company redeems any shares of Common Stock or
securities convertible into or redeemable or exchangeable for shares of Common
Stock, then the Managing General Partner shall cause the Partnership to purchase
from the Managing General Partner and any REIT Partner a number of Partnership
Units as determined based on the application of the Conversion Factor on the
same terms that the Company redeemed such securities. Moreover, if the Company
makes a cash tender offer or other offer to acquire shares of Common Stock or
securities convertible into or redeemable or exchangeable for shares of Common
Stock, then the Managing General Partner shall cause the Partnership to make a
corresponding offer to the Managing General Partner and any REIT Partner to
acquire an equal number of Partnership Units held by the Managing General
Partner and any REIT Partner. In the event any shares of Common Stock or
securities convertible into or redeemable or exchangeable for shares of Common
Stock are redeemed by the Company pursuant to such offer, the Partnership shall
redeem an equivalent number of the Managing General Partner's and any REIT
Partner's Partnership Units for an equivalent purchase price based on the
application of the Conversion Factor.
ARTICLE VIII
ACQUISITION, OPERATION, AND DISPOSITION
OF RESTRICTED RESTAURANT PROPERTIES
VIII.1. General.
(a) The Partners hereby expressly agree that, in addition to any other
provisions of this Agreement, the acquisition, ownership, operation and
disposition of the Partnership Properties by the Partnership shall be in
accordance with, and shall be subject to, the provisions, restrictions and
limitations set forth in this Article VIII; provided that, except for Section
8.13, this Article VIII shall not apply to any of the Other Restaurant
Properties or the Retail Properties. The Partners further expressly agree that
any action taken by a General Partner or Affiliate thereof in accordance with,
or pursuant to, the provisions of this Article VIII conclusively shall be deemed
to be fair to and in the best interests of the Partnership, the Limited Partners
and the General Partners, and the fact that an action of a General Partner or an
Affiliate is undertaken in accordance with, or pursuant to, this Article VIII
shall be a complete and absolute defense to any claim or action asserting the
invalidity of such action or any claim or action for damages or other relief
based upon an assertion that such action resulted in a breach by a General
Partner or an Affiliate of this Agreement or any duty, fiduciary or otherwise,
owed by the General Partners and their affiliates to the Partnership or the
Limited Partners.
(b) The Partners expressly acknowledge and agree that the provisions,
restrictions and limitations set forth in this Article VIII are reasonable in
all respects, are pursuant to and consistent with the purposes of the
Partnership, are necessary to induce BKC to enter into the Real Estate Purchase
Agreement and to otherwise deal with Restricted Restaurant Properties, and are
necessary to protect the business and interests of BKC and the Partnership. In
the event that the Partnership shall breach or violate or fail to perform any of
its obligations set forth in this Article VIII, then, at the option of BKC, BKC
shall be entitled to proceed to enforce the obligations of the Partnership
hereunder by any action at law, suit in equity, or other appropriate proceeding,
whether for damages, for special performance of an obligation contained herein
or for an injunction or other equitable remedy against any violation of the
provisions hereof. The Partnership hereby agrees to indemnify and hold harmless
BKC from and against any assessment, payment, damage, expense, loss, cost,
liability or deficiency (including, without limitation, interest, penalties and
reasonable attorneys' fees and disbursements) incurred by BKC in enforcing or
sustaining the provisions hereof or resulting from or in connection with any
such breach, violation, or failure.
VIII.2. Contribution to Partnership; Acquisition of Restricted Restaurant
Properties.
The Managing General Partner has previously caused the Partnership to
acquire certain Restricted Restaurant Properties from BKC in accordance with and
subject to the terms and conditions set forth in the Real Estate Purchase
Agreement, including the exhibits thereto, and caused the Partnership to pay to
BKC the purchase price for such Restricted Restaurant Properties specified in
the Real Estate Purchase Agreement.
VIII.3. Use and Other Restrictions.
(a) Except as otherwise expressly provided in this Section 8.3, the
Partnership shall not, without the prior written consent of BKC, in its sole and
absolute discretion, use any Restricted Restaurant Property or permit any
Restricted Restaurant Property to be used for any purpose other than the
operation thereon of a BK Restaurant and other uses related thereto.
(b) (i) In furtherance of the provisions of Section 8.3(a), in the
event that BKC renews or extends a BKC Franchise Agreement with respect
to a Restricted Restaurant Property at any time at or prior to the
expiration of such BKC Franchise Agreement, then, regardless of the
duration of such renewal or extension the Partnership promptly shall,
without additional charge, renew or extend the lease of the Restricted
Restaurant Property to such BKC Franchisee for a period coterminous
with the period of such renewal or extension and for and upon
substantially the same rental and other terms and conditions as and
upon which BKC is then renewing or extending leases with BKC
Franchisees for properties owned or leased (as the case may be) by BKC,
or in the event BKC at such time is no longer renewing or extending
leases with BKC Franchisees for properties owned or leased (as the case
may be) by BKC, then upon substantially the same rental and other terms
and conditions as and upon which BKC most recently was renewing or
extending such leases with BKC Franchisees (except that, for purposes
of determining the guaranteed minimum rental thereunder, the lessor's
"investment" in Restricted Restaurant Properties held as of the
Effective Date shall be deemed to be equal to the sum of the investment
of BKC with respect to such Restricted Restaurant Property prior to the
date of its acquisition by the Partnership plus any investment by the
Partnership with respect to such Restricted Restaurant Property after
such date (and in no event shall such "investment" include the purchase
price paid by the Partnership to BKC for such Restricted Restaurant
Property pursuant to the Real Estate Purchase Agreement)); provided
that the rental for such lease may be greater than the rental upon
which BKC is then (or, if applicable, was) so renewing or extending
such leases. Notwithstanding anything to the contrary contained herein,
any extension or renewal of a lease of a Restricted Restaurant Property
pursuant to the Successor Policy shall be in accordance with the
Successor Policy as then in effect and Section 8.6 (including, without
limitation, the provisions of Section 8.6(b) relating to determination
of the annual minimum rental under a lease extended or renewed in
accordance with the Successor Policy). Without limiting the foregoing,
the Managing General Partner, in its sole and absolute discretion, at
the request of BKC or a BKC Franchisee, shall be permitted to consent
to a renewal or extension of a lease of a Restricted Restaurant
Property for a rental less favorable to the Partnership than the rental
upon which BKC is then renewing or extending leases with BKC
Franchisees for properties owned or leased (as the case may be) by BKC
(or, if applicable, the rental upon which BKC most recently was
renewing or extending such leases with BKC Franchisees) if BKC agrees
to treat the excess of the rental at which BKC is then renewing or
extending such leases (or, if applicable, the rental at which BKC most
recently was renewing or extending such leases) over the rental payable
to the Partnership in connection with such renewal or extension as
"rent relief" subject to the provisions of Section 8.5.
(ii) In the event that (A) either (1) a BKC Franchise
Agreement authorizing the operation of a BK Restaurant on a Restricted
Restaurant Property is terminated automatically, is terminated by BKC
or is terminated by the mutual agreement of the parties thereto prior
to the expiration of the stated term thereof, or (2) a BKC Franchise
Agreement expires according to the terms thereof and is not renewed or
extended by BKC at or prior to the expiration of such BKC Franchise
Agreement, and (B) during the six (6) month period commencing on the
date of such termination or expiration either (1) BKC and a Person that
meets BKC's then existing franchisee financial capability requirements
enter into a BKC Franchise Agreement authorizing such Person to operate
a BK Restaurant on the Restaurant Property, and BKC notifies the
Partnership thereof, or (2) BKC notifies the Partnership that BKC
desires to operate a BK Restaurant on the Restaurant Property, then the
Partnership promptly shall terminate any lease of the Restaurant
Property with the terminated BKC Franchisee (if such lease then has not
terminated or expired) and enter into a new lease of the Restaurant
Property with the new BKC Franchisee or with BKC, as the case may be.
The rental, duration and other terms and conditions of any such new
lease shall be substantially the same as the rental, duration and other
terms and conditions as and upon which BKC is then entering into new
leases with BKC Franchisees for properties owned or leased (as the case
may be) by BKC, or in the event BKC at such time is no longer entering
into new leases with BKC Franchisees for properties owned or leased, as
the case may be, by BKC, then substantially the same rental duration
and other terms and conditions as and upon which BKC most recently was
entering such leases with BKC Franchisees (except that, for purposes of
determining the guaranteed annual minimum rental thereunder, the
lessor's "investment" in Restricted Restaurant Properties held as of
the Effective Date shall be deemed to be equal to the sum of the
investment of BKC with respect to such Restaurant Property prior to the
date of its acquisition by the Partnership plus any investment of the
Partnership with respect to such Restaurant Property after such date
(and in no event shall such "investment" include the purchase price
paid by the Partnership to BKC for such Restricted Restaurant Property
pursuant to the Real Estate Purchase Agreement)). Without limiting the
foregoing, the Managing General Partner, in its sole and absolute
discretion, at the request of BKC or a BKC Franchisee, shall be
permitted to enter into a new lease of a Restricted Restaurant Property
for a rental less favorable to the Partnership than the rental upon
which BKC is then entering into leases with BKC Franchisees for
properties owned or leased (as the case may be) by BKC (or, if
applicable, the rental upon which BKC most recently was entering into
such leases with BKC Franchisees) if BKC agrees to treat the excess of
the rental at which BKC is then entering into such leases (or, if
applicable, the rental at which BKC most recently was entering into
such leases) over the rental payable to the Partnership in connection
with such new lease as "rent relief" subject to the provisions of
Section 8.5. During the period (the "Determination Period") that BKC is
considering whether to enter into a new BKC Franchise Agreement with
respect to the Restricted Restaurant Property or operate itself a BK
Restaurant on the Restricted Restaurant Property (but in no event after
the expiration of the six (6) month period described in clause (B)
above), BKC shall pay to the Partnership an amount equal to the excess
of the guaranteed amount rental payable to the Partnership under the
terminated BKC Franchisee's lease for the Determination Period
(computed without regard to any termination or expiration of such
lease) over the amount of rent, if any, actually collected by the
Partnership thereunder for the Determination Period. The Partnership
shall, at the expense of BKC, take all such actions as BKC reasonably
may request to enforce the provisions of the terminated BKC
Franchisee's lease applicable during the Determination Period. If BKC
does not, prior to the end of the Determination Period, enter into a
new BKC Franchise Agreement with respect to the Restricted Restaurant
Property or elect to operate itself a BK Restaurant on the Restricted
Restaurant Property, then subject to Section 8.9 hereof, the
Partnership shall be free to take such actions with respect to the
terminated BKC Franchisee's lease as the Partnership may deem
appropriate. Notwithstanding anything to the contrary contained herein,
BKC shall have the right at any time, upon written notice to the
Partnership, to terminate the Determination Period with respect to any
Restricted Restaurant Property, in which event all rights and
obligations of BKC in connection with such terminated Determination
Period shall terminate, effective as of the date on which the
Partnership receives such notice and as of the payment by BKC of all
amounts payable hereunder with respect to the Determination Period.
(iii) In the event that BKC approves the assignment by a BKC
Franchisee of a BKC Franchise Agreement with respect to a Restricted
Restaurant Property to another person or entity that meets BKC's then
existing franchisee financial capability requirements or to BKC, then,
subject to the assumption by such new BKC Franchisee or BKC, as the
case may be, of all of the former BKC Franchisee's obligations and
liabilities thereafter accruing under the former BKC Franchisee's lease
of the Restricted Restaurant Property, the Partnership promptly shall,
without additional charge, approve and permit the assignment of such
lease with respect to such Restricted Restaurant Property to the new
BKC Franchisee or to BKC, as the case may be. Upon such assignment and
assumption, the former BKC Franchisee, at the request of BKC, shall be
released from all obligations and liabilities thereafter accruing under
such lease; provided, however, that a release in connection with an
assignment or assumption shall be required pursuant hereto only if BKC,
as a matter of policy, is then granting such releases in connection
with the assignment or assumption of leases with BKC Franchisees for
properties owned or leased, as the case may be, by BKC. In addition to
the foregoing, in the event that BKC consents to the assignment by a
BKC Franchisee of a Franchise Agreement with respect to a Restricted
Restaurant Property to a corporation in which such BKC Franchisee has a
financial interest, then, upon the request of such BKC Franchisee, the
Partnership shall approve the assignment of the BKC Franchisee's lease
of such Restricted Restaurant Property to such corporation upon the
condition that such BKC Franchisee shall remain fully responsible for
all liabilities and obligations accruing under such lease subsequent to
such assignment.
(iv) The Partnership shall give BKC prompt written notice of
the occurrence of any default by a BKC Franchisee under any lease of a
Restricted Restaurant Property. BKC shall have the right (but not the
obligation), within the longer of thirty (30) days after the receipt by
BKC of such written notice of such default or any applicable grace
period provided to the lessee under such lease, to cure any default by
the lessee under such lease, and the Partnership shall not terminate
such lease unless such default is not cured within such applicable
period. The Partnership also shall give BKC prompt written notice of
the occurrence of any event which results automatically in the
termination of any such lease. BKC shall have the right (but not the
obligation), within thirty (30) days after receipt of such notice, to
assume all obligations and liabilities of the lessee under such lease
accruing from the date of such automatic termination. If BKC exercises
such right, then, as between BKC and the Partnership, such termination
shall be of no force or effect and shall be deemed not to have
occurred.
(v) In furtherance of the provisions of Section 8.3(a), in the
event the Partnership acquires any Restricted Restaurant Property after
the Effective Date, the rental, duration and other terms and conditions
in the lease for the BKC Franchisee for such property shall be
substantially the same as the rental, duration and other terms and
conditions as and upon which BKC is then entering into new leases with
BKC Franchisees for properties owned or leased, as the case may be, by
BKC, or in the event BKC at such time is no longer entering into new
leases with BKC Franchisees for properties owned or leased, as the case
may be, by BKC, then upon substantially the same rental, duration and
other terms and conditions as upon which BKC most recently was entering
into such leases with BKC Franchisees. Notwithstanding the foregoing,
the rental for such leases may be greater than that which BKC is then
setting (or, if appropriate, was setting) for BKC Franchisees.
(c) Notwithstanding anything to the contrary contained in any lease of
a Restricted Restaurant Property to which a BKC Franchisee is a party, (i) BKC
shall have the right at any time, without obtaining the consent of the
Partnership, to assume the obligations and liabilities of the lessee thereafter
accruing under such lease, and thereupon, at the request of BKC, such lessee
shall be released from all obligations and liabilities thereafter accruing
thereunder; provided, however, that a release in connection with such an
assumption shall be required pursuant to this Section 8.3 only if BKC, as a
matter of policy, is then granting such releases in connection with the
assumption by BKC of leases with BKC Franchisees for properties owned or leased,
as the case may be, by BKC; and (ii) at any time after any such assumption by
BKC, BKC shall have the right, without obtaining the consent of the Partnership,
to assign such lease to a Person that meets BKC's then existing franchisee
financial capability requirements, and upon such assignment and the assumption
by such Person of all obligations and liabilities of BKC thereafter accruing
under such lease, BKC shall be released from all obligations and liabilities
thereafter accruing thereunder.
(d) (i) In the event that BKC notifies the Partnership that BKC has
extended or renewed a BKC Franchise Agreement with respect to a Restricted
Restaurant Property that is subject to a Primary Lease for a term coterminous
with one or more permitted renewal terms available under such Primary Lease, or
(ii) in the event that BKC notifies the Partnership that either (A) BKC has
entered into a new BKC Franchise Agreement with a Person that meets BKC's then
existing financial capabilities requirements authorizing such Person to operate
a BK Restaurant on a Restricted Restaurant Property that is subject to Primary
Lease for a term coterminous with one or more permitted renewal terms available
under such Primary Lease, or (B) BKC has decided to operate a BK Restaurant on a
Restricted Restaurant Property that is subject to a Primary Lease for a term
coterminous with one or more permitted renewal terms available under such
Primary Lease, then in any such event, in addition to any other requirements of
this Section 8.3, the Partnership promptly shall renew the applicable Primary
Lease for a term no shorter than the term of the extended, renewed or new BKC
Franchise Agreement, as the case may be, or in the case of BKC's election to
operate a BK Restaurant at such Restricted Restaurant Property, for a term no
shorter than the term of BKC's lease with the Partnership with respect to such
Restricted Restaurant Property.
(e) Unless otherwise expressly waived by BKC in writing, the
restrictions and other provisions of this Section 8.3 shall remain in effect and
shall be enforceable with respect to each Restricted Restaurant Property by BKC
during the period commencing on the date of the Amended Agreement and ending on
the earliest of (i) a transfer by the Partnership of all of its right, title and
interest in and to all of such Restricted Restaurant Property pursuant to
Section 8.4(f) following the failure of BKC to elect to acquire all of the
Restricted Restaurant Property pursuant to an offer thereof to BKC under Section
8.4(d) or the failure of BKC to close the acquisition thereof on the date
required by Section 8.4(e); (ii) a BKC Franchise Agreement is terminated by BKC
or by the mutual agreement of the parties thereto prior to the expiration of the
stated term thereof and BKC does not, prior to the end of the Determination
Period, enter into a new BKC Franchise Agreement with respect to the Restricted
Restaurant Property or elect to operate itself a BK Restaurant on the Restricted
Restaurant Property; or (iii) a BKC Franchise Agreement with respect to a
Restricted Restaurant Property expires according to the terms thereof and BKC
does not either (A) renew or extend the same at or prior to the expiration
thereof or (B) prior to the end of the Determination Period, enter into a new
BKC Franchise Agreement with respect to the Restricted Restaurant Property or
elect to operate itself a BK Restaurant on the Restricted Restaurant Property;
provided, however, if the duration of such period would render the restrictions
or other provisions of this Section 8.3 invalid or unenforceable under any law
of the jurisdiction in which a Restricted Restaurant Property is located
limiting the period during which such restrictions or other provisions may
endure, then such period shall continue with respect to such Restricted
Restaurant Property only for such term as may be prescribed by the laws of such
jurisdiction. It is the express intent of BKC, the Partnership, and the Partners
that such restrictions and other provisions shall be valid and enforceable to
the fullest extent permitted by the laws of such jurisdiction.
(f) Notwithstanding anything to the contrary in this Section 8.3 or
elsewhere in this Agreement, nothing contained herein or elsewhere shall affect
the right of BKC, in its sole and absolute discretion, to terminate a BKC
Franchise Agreement, to renew or extend or fail to renew or extend a BKC
Franchise Agreement, to approve or disapprove any assignment of a BKC Franchise
Agreement, to elect to enter into a new BKC Franchise Agreement with respect to
a Restricted Restaurant Property or to operate itself a BK Restaurant on the
Restricted Restaurant Property, to amend or modify a BKC Franchise Agreement or
to take or fail to take any other action in connection with a BKC Franchise
Agreement.
(g) Notwithstanding any other provision of this Agreement, the Partners
hereby expressly agree that the Managing General Partner shall have no duty,
under any circumstances whatsoever, to seek to sell, or to consider any offer to
purchase, any Restricted Restaurant Property so long as such Restricted
Restaurant Property is subject to the restrictions and other provisions of this
Section 8.3, and the fact that a Restricted Restaurant Property is subject to
the restrictions and provisions of this Section 8.3 shall be a complete and
absolute defense to any claim or action for damages or other relief based upon a
claim or action for damages or other relief based upon a failure of the Managing
General Partner to solicit or consider offers to purchase such Restricted
Restaurant Property, irrespective of the terms of any such offer that may be
received by the Managing General Partner.
VIII.4. Restrictions on Transfer of Restricted Restaurant Properties.
(a) For purposes of this Section 8.4, the term "transfer," with respect
to a Restricted Restaurant Property, shall include a sale, lease, sublease,
gift, mortgage, deed of trust, exchange, assignment or other disposition,
including a disposition under judicial order, legal process, execution,
attachment or enforcement or foreclosure of an encumbrance, but shall not
include the following: (i) a mortgage, deed of trust, grant of security interest
or other encumbrance effected in a bona fide transaction with an unrelated and
unaffiliated secured party, or with BKC, the Managing General Partner or any
Affiliate thereof, to secure indebtedness of the Partnership for money borrowed
from such secured party, which mortgage, deed of trust, grant of security
interest or other encumbrance is made pursuant to a written security agreement,
mortgage, deed of trust or other agreement that assures that, before any
foreclosure may be had thereon or other transfer may occur thereunder or in
connection therewith, the secured party shall first notify BKC in writing of its
intent to foreclose or effect another transfer and shall first offer the
Restricted Restaurant Property to BKC at the price and on the other terms and
conditions specified in a written offer from a prospective purchaser (which may
be the secured party) in connection with such foreclosure or other transfer;
(ii) a lease or sublease to BKC or a BKC Franchisee in order to permit the
operation of a BK Restaurant on a Restricted Restaurant Property; (iii) a grant
of easement, right-of-way or other right with respect to a Restricted Restaurant
Property to any public utility or other governmental authority in connection
with the provision of utility or other public service (but such grant shall
comply with the provisions of Section 8.4(b)); or (iv) a transfer to a
governmental authority pursuant to or in connection with a condemnation or other
exercise of the power of eminent domain.
(b) The Partnership shall not, without the prior written consent of
BKC, in BKC's sole and absolute discretion: (i) at any time that a Restricted
Restaurant Property is being leased to BKC or a BKC Franchisee in order to
permit BKC or such BKC Franchisee to operate a BK Restaurant on the Restricted
Restaurant Property or during any applicable Determination Period, lease or
sublease all or any part of a Restricted Restaurant Property to any other
Person, whether or not such other lease would be subject or subordinate to the
lease to BKC or the BKC Franchisee; or (ii) grant or convey any easement,
right-of-way or other right with respect to such Restricted Restaurant Property
if the grant or use thereof would have a material adverse effect upon the
operation of a BK Restaurant on the Restricted Restaurant Property.
(c) Except as provided in Section 8.4(b), the Partnership shall not
transfer (as defined in Section 8.4(a)) any right, title or interest in or to
any Restricted Restaurant Property, or any part thereof, to any person or entity
without first offering it to BKC in accordance with the provisions of this
Section 8.4(c). Subject to the provisions of Section 8.4(b), if the Partnership
receives a bona fide written offer from an independent third party to acquire in
a transfer all or any part of any Restricted Restaurant Property that the
Partnership intends to accept, subject to this Section 8.4(c), then the
Partnership shall offer such Restricted Restaurant Property to BKC at the price
and on the terms and conditions (including timing and manner of payment)
contained in such bona fide written offer. The offer of such Restricted
Restaurant Property to BKC (the "Offer") shall be made in writing and shall be
accompanied by a true and correct copy of the bona fide written offer. The
Partnership promptly shall provide or cause to be provided to BKC such
information relating to the Offer or the third-party offeror as BKC reasonably
may request.
(d) In order to accept the Offer, BKC shall, within thirty (30) days
after receipt of the Offer (or, if later, within five (5) business days after
receipt of all additional information reasonably requested by BKC pursuant to
Section 8.4(c) (such 30-day period and any extension under this Section 8.4(d)
to be referred to as the "Election Period")), notify the Partnership in writing
of its election to acquire such Restricted Restaurant Property; provided,
however, that BKC shall not be required to acquire such Restricted Restaurant
Property upon the terms and conditions of any third-party offer the
consideration for which is not practicably obtainable by BKC (such as, by way of
example and not of limitation, specific land, stock in a closely held
corporation or stock in a publicly held corporation that cannot be acquired by
BKC without an increase in the trading price thereof or without registration or
filing under any federal or state securities law), but BKC shall have the right
to acquire such Restricted Restaurant Property upon terms and conditions
(including consideration) reasonably equivalent to those contained in such
offer; and provided further, that the failure of BKC to acquire such Restricted
Restaurant Property upon any such reasonably equivalent terms or conditions
shall not permit the Partnership to transfer such Restricted Restaurant Property
pursuit to Section 8.4(f). Failure of BKC to provide such written notice within
the Election Period shall constitute a refusal by BKC to purchase such
Restricted Restaurant Property pursuant to the Offer.
(e) The closing date of any acquisition of such Restricted Restaurant
Property by BKC hereunder shall be on the date fixed in the third-party offer
unless such closing date would occur prior to the expiration of twenty (20)
business days after the last day of the Election Period, in which event the
closing date shall occur on such twentieth (20th) business day or on such other
date to which BKC and the Partnership may agree.
(f) If BKC shall fail to elect to acquire such Restricted Restaurant
Property pursuant to Section 8.4(d), or shall fail to close the acquisition on
the date required by Section 8.4(e), then the Partnership shall be free, for a
period of sixty (60) days after either such failure, to transfer such Restricted
Restaurant Property to the bona fide third-party offeror for a price and on
other terms and conditions contained in such third-party offer. If such
Restricted Restaurant Property is not so transferred by the Partnership within
such sixty (60) day period, all rights of the Partnership to transfer such
Restricted Restaurant Property free of the foregoing restrictions shall
terminate and such Restricted Restaurant Property again shall be subject to the
provisions of this Section 8.4.
(g) Unless otherwise expressly waived by BKC in writing, the provisions
of this Section 8.4 shall remain in effect and the rights granted hereunder
shall be exercisable and enforceable by BKC with respect to each Restricted
Restaurant Property during the period commencing on the date of the Amended
Agreement and ending on the earlier of (i) the date that the Partnership first
ceases to hold any right, title or interest (including an interest as a
creditor) in or to such Restricted Restaurant Property or (ii) the date that the
use restrictions set forth in Section 8.3 terminate or would have terminated but
for an early termination pursuant to the provisions contained in Section 8.3(e);
provided, however, that if the duration of such period would render the
provisions of this Section 8.4 or the rights of BKC hereunder invalid or
unenforceable under the rule against perpetuities as applied in the jurisdiction
in which a Restricted Restaurant Property is located, then such period shall
continue with respect to such Restricted Restaurant Property only until the
expiration of the longest of the following periods which shall be valid under
the rule against perpetuities as applied in such jurisdiction: (i) the period
ending twenty-one (21) years after the death of the survivor of the legitimate
natural or adopted children and grandchildren of U.S. Presidents Kennedy,
Johnson, Nixon, Ford, ▇▇▇▇▇▇ and ▇▇▇▇▇▇ alive on the date of the Amended
Agreement; (ii) twenty-one (21) years after the date of the Amended Agreement;
or (iii) such other term as may be statutorily prescribed in such jurisdiction.
It is the express intent of BKC, the Partnership and the Partners that the
provisions hereof and rights of BKC hereunder shall be exercisable and
enforceable by BKC to the fullest extent permitted by the laws of such
jurisdiction.
VIII.5. Rent Relief.
(a) The Managing General Partner, in its sole and absolute discretion,
at the request of BKC or a BKC Franchisee, shall be permitted to cause the
Partnership to grant "rent relief" (as defined in Section 8.5(b)) to a BKC
Franchisee with respect to any Restricted Restaurant Property upon the condition
that BKC agree to make a quarterly payment to the Partnership for each fiscal
quarter (with such payment to be due and payable thirty (30) days after the end
of each such fiscal quarter) during which such "rent relief" is in effect,
irrespective of whether or not the Partnership subsequently sells or otherwise
disposes of such Restricted Restaurant Property while such "rent relief" is in
effect in an amount equal to the product of (i) the total dollar amount of the
rent reduction with respect to such Restricted Restaurant Property effective for
such fiscal quarter pursuit to such "rent relief" multiplied by (ii) a fraction,
(A) the numerator of which is the dollar amount of the franchise royalty fee
payable to BKC with respect to such Restricted Restaurant Property for such
fiscal quarter (exclusive of any amount required under the applicable BKC
Franchise Agreement to be expended by BKC for advertising and any other income
to BKC) (the "Franchise Royalty Fee") and (B) the denominator of which is the
sum of the Franchise Royalty Fee and the dollar amount of rent payable with
respect to such Restricted Restaurant Property for such fiscal quarter
(determined without regard to any "rent relief" applicable with respect to such
Restricted Restaurant Property) (the "Rental Amount"). By way of illustration,
if the applicable Franchise Royalty Fee for a Restricted Restaurant Property for
a particular fiscal quarter were $35,000 and the applicable Rental Amount for
such Restricted Restaurant Property for such fiscal quarter were $100,000, and
if the Partnership, at the request of BKC or at the request of a BKC Franchisee
and with the consent of BKC, were to grant "rent relief" with respect to such
Restricted Restaurant Property for such fiscal quarter in the amount of $20,000,
then BKC would be obligated to pay to the Partnership $5,185 (the product of
$35,000/$135,000 multiplied by $20,000) within thirty (30) days after the end of
such fiscal quarter. The obligation of BKC to make payments to the Partnership
in connection with "rent relief" granted hereunder shall continue until the
"rent relief" terminates (or, if sooner, the lease with respect to which the
"rent relief" is granted terminates or expires), notwithstanding any intervening
sale or other disposition by the Partnership of the Restricted Restaurant
Property with respect to which such "rent relief" is granted.
(b) As used here the term "rent relief" shall mean (i) any permanent
reduction in rent payable with respect to a Restricted Restaurant Property, (ii)
any temporary reduction in rent payable with respect to a Restricted Restaurant
Property (A) if such temporary reduction is for a period in excess of either
ninety (90) consecutive days or ninety (90) days, whether or not consecutive, in
any Fiscal Year, or (B) if such temporary reduction is granted while a BK
Restaurant is being replaced, reconstructed, expanded, or otherwise improved
under the Successor Policy to take into account the fact that such BK Restaurant
is not operating or is operating on a limited basis during such period, or (C)
if such temporary reduction is for a period of ninety (90) consecutive days or
less and the Managing General Partner specifically designates such reduction as
"rent relief" subject to this Section 8.5; provided, however, that in no event
shall the term "rent relief" include any reduction in rent payable with respect
to a Restricted Restaurant Property granted in connection with the Successor
Policy if such reduction in rent payable is subject to Section 8.6(b).
Notwithstanding anything to the contrary herein, the Managing General Partner
shall not be considered to have caused the Partnership to grant "rent relief"
hereunder, and no payment from BKC to the Partnership shall be due hereunder, as
the result of or in connection with any failure of a BKC Franchisee, without the
express written consent of the Managing General Partner, to make any payment of
rent due the Partnership with respect to a Restricted Restaurant Property (1) if
such failure does not continue for a period in excess of ninety (90) consecutive
days, or (2) if either the lease with such BKC Franchisee shall have
automatically terminated or the Managing General Partner shall have caused the
Partnership to seek to terminate the Partnership's lease with such BKC
Franchisee with respect to such Restricted Restaurant Property and in either
event, the Managing General Partner shall have caused the Partnership to
initiate and pursue such action (including litigation, if appropriate) against
such defaulting BKC Franchisee as the Managing General Partner, in its sole and
absolute discretion, shall determine to be appropriate under the circumstances
in order to obtain payment of rents (including lost rent) due the Partnership
under its lease with the defaulting BKC Franchisee. In the event that BKC makes
any payment to the Partnership pursuant to this Section 8.5 in connection with
"rent relief" deemed granted hereunder and the Partnership subsequently shall
collect such "rent relief" from the BKC Franchisee, then the Partnership shall
refund to BKC the amount paid by BKC in connection with such "rent relief."
VIII.6. Successor Policy.
BKC maintains the Successor Policy relating to the extension and/or
renewal of BKC Franchise Agreements with BKC Franchisees. In connection with
such extensions and/or renewals, the Successor Policy, in order to help ensure
that the BK Restaurant system remains competitive, makes provision for the
replacement, reconstruction, expansion and/or other improvement (collectively,
"rebuilding") of existing BK Restaurants owned or leased by BKC and leased or
subleased to BKC Franchisees if such BK Restaurants meet certain criteria
established by BKC. Under the Successor Policy as currently in effect, BKC must
determine whether or not a BK Restaurant should be rebuilt. If BKC determines
that a BK Restaurant should be rebuilt under the Successor Policy and BKC elects
to pay the cost of rebuilding, then the terms of the lease with respect to such
BK Restaurant is extended and the BKC Franchisee's guaranteed "minimum rental"
payable under such lease is adjusted. In the event BKC does not elect to pay the
cost of rebuilding a BK Restaurant designated by BKC to be rebuilt under the
Successor Policy, then, with the consent of BKC, the BKC Franchisee can elect to
pay such cost, in which event the percentage rent payable with respect to such
BK Restaurant is reduced from 8.5 percent (8.5%) to 5.5 percent (5.5%) of annual
gross sales at such BK Restaurant, the term of the lease with respect to such BK
Restaurant is extended and the guaranteed minimum rent payable under such lease
is adjusted. The Managing General Partner shall cause the Partnership to
implement, with respect to the Restricted Restaurant Properties, those aspects
of the Successor Policy related to the rebuilding of BK Restaurants, as such
policy is currently in effect and as such policy may be modified, amended,
supplemented, superseded or replaced by BKC from time to time in its sole and
absolute discretion, in order to cause those Restricted Restaurant Properties
designated by BKC, in its sole and absolute discretion, to be rebuilt under such
Successor Policy to be rebuilt, subject to satisfaction by BKC of the following
conditions:
(a) In the event that the BKC Franchisee for a Restricted Restaurant
Property that is designated by BKC to be rebuilt under the Successor Policy does
not pay the cost of such rebuilding, then the Managing General Partner shall
cause the Partnership to rebuild such Restricted Restaurant Property upon the
condition that BKC pay to the Partnership, at the time such rebuilding is
commenced, an amount equal to the product of (i) the total dollar amount of
funds to be expended by the Partnership for purposes of rebuilding such
Restricted Restaurant Property multiplied by (ii) a fraction, (A) the numerator
of which is the weighted annual average of the percentage rates applicable for
determining the franchise royalty fees payable to BKC with respect to such
Restricted Restaurant Property over the remaining term of the lease under the
BKC Franchise Agreement in effect with respect to such Restricted Restaurant
Property (exclusive of any amounts required under the applicable BKC Franchise
Agreement to be expended by BKC for advertising and other income to BKC) (the
"Average Franchise Royalty Rate") and (B) the denominator of which is the sum of
the Average Franchise Royalty Rate and the weighted annual average of the
percentage rates applicable for determining the percentage rent payable to the
Partnership with respect to such Restricted Restaurant Property on the basis of
sales over the remaining term of the lease with the BKC Franchisee in effect
with respect to such Restricted Restaurant Property (the "Average Percentage
Rent Rate"). By way of illustration, if the applicable Average Percentage Rent
Rate for a particular Restricted Restaurant Property were 8.5 percent (8.5%) and
the applicable Average Franchise Royalty Rate for such Restricted Restaurant
Property were 3.5 percent (3.5%), and if the total cost to rebuild such
Restricted Restaurant Property pursuant to the "Successor Policy" were $500,000,
then BKC would be obligated to pay to the Partnership, at the time the
rebuilding of such Restricted Restaurant Property commenced, $145,833 (the
product of 3.5/12 multiplied by $500,000). The Managing General Partner shall
cause the Partnership to pay the Partnership's share of the cost of rebuilding a
Restricted Restaurant Property to rebuilt under the Successor Policy, in its
sole and absolute discretion, (1) from current operating cash flow of the
Partnership or otherwise to the extent available or (2) with funds borrowed from
a lender (including, subject to Section 7.13, BKC or any Affiliate of BKC) on
such terms and conditions as the Managing General Partner shall, in its sole and
absolute discretion, determine advisable, with the payments of principal and
interest required with respect to any such loan to be paid from operating cash
flow to the extent available; and
(b) In the event that the BKC Franchisee for a Restricted Restaurant
Property that is designated by BKC to be rebuilt under the Successor Policy pays
the cost of such rebuilding and thus would be entitled to a reduction in rent
payable with respect to such Restricted Restaurant Property, then BKC would make
a quarterly payment to the Partnership for each fiscal quarter during the period
during which such rent reduction is in effect, irrespective of whether or not
the Partnership subsequently sells or otherwise disposes of such Restricted
Restaurant Property while such rent reduction is in effect (with such payment to
be due and payable thirty (30) days after the end of each such fiscal quarter)
in an amount equal to the product of (i) the total dollar amount of the rent
reduction effective with respect to such fiscal quarter pursuant to the
"Successor Policy" multiplied by (ii) a fraction, (A) the numerator of which is
the percentage rate for determining the franchise royalty fee payable to BKC
with respect to such Restricted Restaurant Property for such fiscal quarter
(exclusive of any amount required under the applicable BKC Franchise Agreement
to be expended by BKC for advertising and other income to BKC) (the "Franchise
Royalty Rate"), and (B) the denominator of which is the sum of the Franchise
Royalty Rate and the percentage rate for determining the rent payable to the
Partnership with respect to such Restricted Restaurant Property on the basis of
sales for such fiscal quarter (the "Percentage Rent Rate"). By way of
illustration, if the applicable Percentage Rent Rate for a Restricted Restaurant
Property for a particular fiscal quarter were 8.5 percent (8.5%) and the
applicable Franchise Royalty Rate for such Restricted Restaurant Property for
such fiscal quarter were 3.5 percent (3.5%), and if the BKC Franchisee for such
Restricted Restaurant Property were to be entitled under the Successor Policy to
a reduction in the applicable Percentage Rent Rate to 5.5 percent (5.5%) if such
BKC Franchisee were to rebuild such Restricted Restaurant Property pursuant to
the Successor Policy, then, assuming that such BKC Franchisee's rent payable
following such rent reduction exceeds the minimum base rent payable to the
Partnership with respect to such fiscal quarter, BKC would be obligated to pay
to the Partnership an amount equal to the product of (i) 3.5/12 multiplied by
(ii) the product of (A) 3 percent (3%) multiplied by (B) the gross sales at such
Restricted Restaurant Property for such fiscal quarter. The obligation of BKC to
make payments to the Partnership under this Section 8.6(b) in connection with a
rent reduction granted hereunder shall continue until the lease under which such
rent reduction is granted terminates or expires, notwithstanding any intervening
sale or other disposition by the Partnership of the Restricted Restaurant
Property with respect to which such rent reduction is granted.
In the event the guaranteed minimum rent payable pursuant to any lease
with respect to a Restricted Restaurant Property is adjusted in connection with
the rebuilding of a BK Restaurant pursuant to the Successor Policy, then
notwithstanding any other provision of the Agreement or of the Successor Policy,
the "fair market value of the original property" for purposes of determining the
amount of such adjustment shall be equal to the replacement cost of such
property, as determined by the Appraiser. Notwithstanding anything to the
contrary herein, BKC, in its sole and absolute discretion, may elect not to
designate a particular Restricted Restaurant Property to be rebuilt under the
Successor Policy, in which event the BKC Franchisee for such Restricted
Restaurant Property shall be solely responsible for the cost of rebuilding and
shall not be entitled to any reduction in rent payable with respect to such
Restricted Restaurant Property. BKC in no event shall be entitled to any fee or
other payment from the Partnership in connection with the rebuilding of a
Restricted Restaurant Property under the Successor Policy.
In addition to the foregoing, BKC, separate and apart from
implementation of the Successor Policy, from time to time may request that the
Partnership acquire property adjacent to a Restricted Restaurant Property for
purposes of permitting expansion of the BK Restaurant or related facilities
(such as parking) located on such Restricted Restaurant Property. The Managing
General Partner shall cause the Partnership to acquire any such adjacent
property upon the request of BKC upon the condition that BKC pay to the
Partnership, at the time such acquisition occurs an amount determined in
accordance with the formula set forth in Section 8.6(a).
VIII.7. Competitive Facilities.
Without in any way limiting the generality of Section 7.6, the Limited
Partner recognizes that BKC, TPC and Affiliates thereof are in the business of
establishing, own, leasing, operating, managing and franchising restaurants,
including, without limitation, BK Restaurants, and that in connection with such
businesses, BKC, TPC and/or Affiliates thereof may from time to time establish,
own, lease, operate, manage and/or franchise new restaurants, including, without
limitation, BK Restaurants. Both such existing restaurants and any such new
restaurants may be competitive with one or more of the Partnership Properties
and may adversely affect the revenues of the Partnership with respect to one or
more of the Partnership Properties. The Limited Partners expressly consent to
all actions of BKC, TPC and any Affiliate of either in connection both with
existing restaurants and with any new restaurants and agrees that neither BKC,
TPC and the Managing General Partner, nor any Affiliate of any of them shall
incur any liability to the Partnership or the Limited Partners as the result of
or in connection with any such action.
VIII.8. Acquisition of Restricted Restaurant Properties by General Partners or
Affiliates.
Notwithstanding any other provision of this Agreement, including,
without limitation, Sections 7.2(v) and 8.4(d), (e) and (f), no Person that is a
General Partner or an Affiliate of a General Partner shall acquire any
Restricted Restaurant Property from the Partnership, whether by purchase,
exchange, or substitution, unless (a) the consideration received by the
Partnership for such Restricted Restaurant Property is at least equal to the
"fair market value" (as hereinafter defined) of such Restricted Restaurant
Property, as determined by the Appraiser and (b) such acquisition would not
result in the Company failing to qualify as a "real estate investment trust"
under Section 856 of the Code; provided, however, that this Section 8.8 shall
have no application to any acquisition of a Restricted Restaurant Property by
BKC pursuant to Section 8.4 if, at the time of such acquisition, neither BKC nor
any Affiliate of BKC is a General Partner. Any acquisition of a Restricted
Restaurant Property, whether by purchase, exchange or substitution, by a Person
who is a General Partner or an Affiliate of a General Partner for consideration
that is at least equal to the "fair market value" (as hereinafter defined) of
such Restricted Restaurant Property, as determined by the Appraiser,
conclusively shall be deemed to be fair and in the best interests of the
Partnership. As used herein, the term "fair market value" shall mean the value
that would be obtained in an arm's-length transaction between an informed and
willing purchaser under no compulsion to buy and an informed and willing seller
under no compulsion to sell, as determined by the Appraiser, using such method
or methods of valuation as the Appraiser determines most accurately reflect the
value of the particular Restricted Restaurant Property in question under the
circumstances, provided that for a period of five (5) years from March 17, 1995,
the Appraiser shall use the "capitalization of income" method (applying such
capitalization rate and other assumptions and adjustments as the Appraiser
determines appropriate under the circumstances) unless the Appraiser determines
that the use of such method would result in an understatement of the value of
the Restricted Restaurant Property with respect to which such appraisal is being
performed. For purposes of this Section 8.8, in the event that any consideration
to be received by the Partnership in exchange or substitution for any Restricted
Restaurant Property is in any form other than money, then the "fair market
value" of such consideration, as determined by the Appraiser (or if such other
consideration is in the form of property other than real estate, by an appraiser
experienced in valuing such other property designated by the Appraiser), shall
be required to be at least equal to the "fair market value" of the Restricted
Restaurant Property or Properties to be transferred.
VIII.9. Termination of Lease for Restricted Restaurant Property Following
Termination of BKC Franchise Agreement
(a) In the event that (i) either (A) a BKC Franchise Agreement
authorizing the operation of a BK Restaurant is terminated by BKC or by the
mutual agreement of the parties thereto prior to the expiration of the stated
term thereof, or (B) a BKC Franchise Agreement expires according to the terms
thereof and is not renewed by BKC at or prior to the expiration of such BKC
Franchise Agreement, and (ii) BKC does not, prior to the end of the
Determination Period (as defined in Section 8.3), enter into a new BKC Franchise
Agreement with respect to the Restricted Restaurant Property or elect to operate
a BK Restaurant on the Restricted Restaurant Property, as provided for in
Section 8.3(b)(ii), then the Managing General Partner, in its sole and absolute
discretion, shall be permitted to cause the Partnership to terminate any lease
with a BKC Franchisee with respect to such Restricted Restaurant Property if a
default has occurred under such lease and either (1) the Managing General
Partner shall have caused the Partnership to initiate and pursue such action
(including, if appropriate, litigation) against such defaulting lessee as the
Managing General Partner, in its sole and absolute discretion, shall determine
to be reasonable under the circumstances in order to obtain payment of amounts
(including lost rent) due the Partnership under such lease, or (2) the Managing
General Partner or the defaulting lessee shall have located a new lessee for the
Restricted Restaurant Property for a term at least as long as the remaining
unexpired term under the lease to be terminated and for a rent not lower than
the minimum base rent payable under such lease (or if the rent is lower than the
minimum base rent payable under the lease to be terminated, the defaulting
lessee shall have agreed to be contractually obligated to continue to pay to the
Partnership an amount equal to the difference between the rent payable under the
new lease and the minimum base rent payable under the lease to be terminated and
shall have provided adequate security, as determined by the Managing General
Partner to be reasonable under the circumstances, for such obligation).
(b) In addition to any termination in accordance with Section 8.9(a)
and any termination in accordance with Section 8.3(b)(ii), the Managing General
Partner, in its sole and absolute discretion, shall be permitted, without
limitation, to cause the Partnership to terminate a lease with a BKC Franchisee
with respect to a Restricted Restaurant Property if the BKC Franchise Agreement
with respect to such Restricted Restaurant Property is terminated in connection
with or as a result of a condemnation involving all or substantially all of a
Restricted Restaurant Property or a casualty materially adversely affecting the
use of such Restricted Restaurant Property for the purpose of operating a BK
Restaurant for a period in excess of six (6) months.
(c) The provisions of this Section 8.9 shall not limit or affect in any
way the termination of a lease with respect to a Restricted Restaurant Property
with a Person that is not and was not a BKC Franchisee. The provisions of this
Section 8.9 are for the benefit of the Partnership, the Limited Partners, and
the limited partners and stockholders of the Limited Partners and their
assignees, and shall not be deemed to create any rights for the benefit of any
other Persons, including, without limitation, any lessees under leases with the
Partnership.
VIII.10. Independent Consultant.
(a) The Managing General Partner, in its sole and absolute discretion,
shall be entitled but not required, to consult with the Independent Consultant
with respect to any action or proposed action affecting or relating to the
Partnership or the Limited Partners or their business. In the event that the
Managing General Partner shall elect to consult with the Independent Consultant
with respect to any such action or proposed action, then the Independent
Consultant shall advise the Managing General Partner whether such action or
proposed action is contrary to the interests of the Partnership or the Limited
Partner, as the case may be, taking into account, with respect to the Restricted
Restaurant Properties, that the original purpose of the Partnership and the MLP
was to acquire and hold real estate that is leased to BKC Franchisees for the
purpose of operating BK Restaurants and to derive revenues therefrom. The
Limited Partners expressly agree that any actions taken by the Managing General
Partner in accordance with the advice of the Independent Consultant conclusively
shall be deemed to be fair to and in the best interests of the Partnership, the
Limited Partners and the limited partners and stockholders of the Limited
Partners and their assignees, and the fact that an action of the Managing
General Partner is undertaken in accordance with the advice of the Independent
Consultant shall be a complete and absolute defense to any claim or action
asserting the invalidity of such action or any claim or action for damages or
other relief based upon an assertion that such action resulted in a breach by
the Managing General Partner or any of its Affiliates of this Agreement or any
duty, fiduciary or otherwise, owed by the Managing General Partner or any
Affiliate to the Partnership, the Limited Partners or the limited partners or
stockholders of the Limited Partners or their assignees. The Limited Partners
further acknowledge that the purpose of this Section 8.10 is to provide an
arrangement to facilitate outside consultation by the Managing General Partner
with respect to potential problems arising in connection with the management of
the Partnership and the Limited Partners and expressly agree that, in order to
induce the Managing General Partner to consent to this Section 8.10 and to
undertake such consultation from time to time as it determines appropriate,
neither the failure of the Managing General Partner to consult with the
Independent Consultant on any particular action or proposed action, nor the
failure of the Managing General Partner to act in accordance with the advice of
the Independent Consultant on any action or proposed action with respect to
which the Managing General Partner shall elect to consult with the Independent
Consultant, shall create any inference or presumption or otherwise constitute
evidence with respect to the fairness of such action or proposed action to the
Partnership, the Limited Partners or the limited partners or stockholders of the
Limited Partners or their assignees, as the case may be.
(b) In the event that the Independent Consultant designated in this
Agreement at any time is unable or unwilling to advise the Managing General
Partner on a particular matter or should inform the Managing General Partner
that it no longer is willing to serve as Independent Consultant, then the
Managing General Partner shall designate a substitute Independent Consultant, as
provided for below. The Managing General Partner shall have the right at any
time, in its sole and absolute discretion, to terminate the Independent
Consultant and to designate a substitute Independent Consultant, as provided for
below; provided, however, that the Managing General Partner shall have no
obligation to the Partnership or the Limited Partners, as the case may be, to
terminate the Independent Consultant under any circumstances, and provided
further that any termination of the Independent Consultant pursuant to this
Section 8.10(b) conclusively shall be deemed to be fair to and in the best
interests of the Partnership and the Limited Partners. Any substitute
Independent Consultant designated by the Managing General Partner pursuant to
this Section 8.10(b) shall have experience in advising or consulting about the
"fast food" business and shall be "financially independent" (as hereinafter
defined) of the Managing General Partner. A Person shall be deemed "financially
independent" of the Managing General Partner for purposes of this Section 8.10
if such Person is not, and during the preceding four (4) years has not been, a
BKC Franchisee or Affiliate of the Managing General Partner, of BKC, of TPC or
of a BKC Franchisee; and (ii) such Person has not derived more than fifteen
percent (15%) of such Person's average annual gross revenues over the preceding
four (4) years from the Managing General Partner, BKC, TPC, any BKC Franchisee
and any Affiliate of any of the foregoing.
(c) The Managing General Partner, in its sole and absolute discretion,
either (i) may cause the Partnership to indemnify and hold harmless the
Independent Consultant upon such terms and conditions as the Managing General
Partner shall determine appropriate or (ii) may indemnify and hold harmless the
Independent Consultant upon such terms and conditions as the Managing General
Partner shall determine appropriate, in which event the Partnership shall
indemnify the Managing General Partner for any amounts required to be paid under
such indemnification; provided, however, that in either case, the terms and
conditions of such indemnification shall be no more favorable to the Independent
Consultant than the terms and conditions pursuant to which the General Partners,
their Affiliates and officers, directors, employees and agents of the General
Partners and their Affiliates are indemnified and held harmless pursuant to
Section 7.11.
VIII.11. Consent to Use of Name and Trademarks.
BKC consents to the Partnership's use of the words "Burger King" in the
name of the Partnership and to the Partnership's use of the registered
trademarks and service marks Burger King(R), Whopper(R), Whopper Junior(R) and
the Burger King bun halves logo in any registration statement filed by any
Partner or any Affiliate thereof, all sales materials and other documents
prepared for use in connection with any public offering by any Limited Partners,
any reports to or written communications with the Limited Partners and any
reports filed by the Partnership with any federal, state or local regulatory
agency terminated upon the withdrawal of BKC as the special general partner.
VIII.12. Acquisition of Fee Title to Properties Subject to Primary Leases.
The Managing General Partner shall have the right, in its sole and
absolute discretion, to cause the Partnership to acquire fee title to any
Restricted Restaurant Property that is subject to a Primary Lease, either
pursuant to a right of first refusal on behalf of the Partnership set forth in
such Primary Lease or otherwise. BKC shall have no obligation to the Partnership
in connection with any such acquisition.
VIII.13. Location of Other Restaurant Properties.
The Partnership shall not acquire any Other Restaurant Properties
within a two-mile radius of any Restricted Restaurant Property held as of March
17, 1995.
ARTICLE IX
COMPENSATION OF GENERAL PARTNERS;
PAYMENT OF PARTNERSHIP EXPENSES
IX.1. Compensation to General Partners.
Except as expressly provided in Section 9.2 or 9.3, no General Partner
shall receive any compensation from the Partnership for services rendered in its
capacity as a general partner of the Partnership. Notwithstanding anything
herein to the contrary, at such time as QSV ceases to be the Managing General
Partner or the managing general partner of the MLP, whether as a result of the
transfer of QSV's Partnership Interest pursuant to Section 11.2 (or Section 12.2
of the Investors Partnership Agreement) or the withdrawal or removal of QSV
pursuant to Section 13.1 (or Section 14.1 or 14.2 of the Investors Partnership
Agreement) (other than removal for "cause," as defined in the Investors
Partnership Agreement), then QSV shall have the option, in its sole discretion,
to convert its Partnership Interest and its partnership interest in the MLP and
to either assign to the MLP or convert its rights (the "Rights") under the
provisions of Section 9.2 (and Section 9.2 of the Investors Partnership
Agreement) (collectively, the "Conversion") for the Acquisition Price (as
defined below), effective as of the date of such transfer, withdrawal or
removal, and upon such Conversion the successor Managing General Partner shall
cause the Partnership to issue to QSV Partnership Units in the amounts provided
for below.
In exchange for the Conversion of the Rights, as provided for above,
and the conversion of the QSV's Partnership Interest, in the event QSV elects to
effect the Conversion, QSV will receive the "Acquisition Price," consisting of
(a) the Initial Unit Consideration and (b) the Contingent Unit Consideration.
The Initial Unit Consideration consists of 850,000 Partnership Units (which
number or classification shall be adjusted to give effect to any
reclassification or change of the shares of Common Stock or Units, including,
without limitation, a split, or any merger or consolidation of the Company or
the MLP, except the merger of the MLP with the Company or a subsidiary thereof,
or sale of assets to another entity, occurring after March 31, 1997), with the
number of Partnership Units issuable hereunder being reduced (on a one-for-one
basis) by the number of Units or shares of Common Stock otherwise received by
QSV in connection with the Conversion. The portion of the Initial Unit
Consideration consisting of Partnership Units shall be issued by the Partnership
as soon as practicable following the date of the Conversion, but in no event
later than 30 days thereafter.
The Contingent Share Consideration consists of up to a maximum number
of 550,000 Partnership Units (which number or classification shall be adjusted
to give effect to any reclassification or change of the Common Stock or Units,
including, without limitation, a split, or any merger or consolidation of the
Company or the MLP, except the merger of the MLP with the Company or any
subsidiary thereof, or sale of assets to another entity, occurring after March
31, 1997). The type and number of securities issuable as the Contingent Share
Consideration (subject to the next sentence) shall be at the sole discretion of
QSV. The exact number of Partnership Units to be issued (which number shall be
reduced on a one-for-one basis by the number of Units otherwise received by QSV
as part of the Contingent Share Consideration) will be determined by dividing
the (i) amount by which the MGP Net Income (as defined below) for the 2000
Fiscal Year exceeds $3,612,500 by (ii) $4.25, and rounding the resulting number
up to the nearest whole number. "MGP Net Income" means the dollar amount of fees
and distributions which would have been payable to QSV, as Managing General
Partner, by the Partnership for the 2000 Fiscal Year, pursuant to the provisions
of Section 9.2, had QSV operated the Partnership as the "Managing General
Partner" on a continuous basis from the date of the Conversion through December
31, 2000 plus the amounts that would have been payable to QSV pursuant to its
aggregate 1.98% general partnership interests in the Partnership and the MLP,
less $775,000.
For example, if the MGP Net Income for the 2000 Fiscal Year would have
been $5,100,000 ($5,875,000 revenues less $775,000) then the Contingent Unit
Consideration would be an additional 350,000 Partnership Units.
The Contingent Unit Consideration, if any, shall be issued by the
Partnership as soon as practicable following the end of the 2000 Fiscal Year,
but in no event later than March 31, 2001.
IX.2. Operational Expenses.
In addition to any reimbursement pursuant to the indemnification set
forth in Section 7.11, the Partnership, pursuant to this Section 9.2, shall:
(a) With respect to (i) the Partnership Properties held as of March 17,
1995 and (ii) the Partnership Properties and Ancillary Property related thereto
acquired thereafter with respect to the Partnership Properties referred to in
clause (i) above whether pursuant to Section 8.12 or otherwise, the Partnership
shall cause to be paid to the Managing General Partner with respect to each
Fiscal Year an aggregate amount equal to Four Hundred Thousand Dollars
($400,000) adjusted annually as set forth in Section 9.2(c) hereof, which amount
shall be in lieu of any reimbursement for expenses related to the management of
the business affairs of the Partnership and the Limited Partner (other than
expenses described in Section 9.2(c) hereof) that are incurred by the Managing
General Partner or its Affiliates with respect to such Partnership Properties,
which amount shall be payable in equal quarterly installments within sixty (60)
days after the end of each fiscal quarter.
(b) With respect to any Partnership Property and Ancillary Property
related thereto acquired after March 17, 1995 (other than those referred to in
Section 9.2(a) hereof) and mortgage loans, if any, originated by the Partnership
or the MLP, (i) the Partnership shall pay to the Managing General Partner (A) an
acquisition fee equal to 1% of the purchase price paid by the Partnership or the
Limited Partner for such Partnership Property and Ancillary Property related
thereto, payable on the date of acquisition or origination, as applicable, and
(B) with respect to each Fiscal Year, an amount, adjusted annually as set forth
in Section 9.2(c), accruing while such property is held at the rate of 1% per
annum (applied using the simple interest method on the basis of a 365/366-day
year and the actual number of days elapsed) on the purchase price paid by the
Partnership or any of the Limited Partners for such Partnership Property and
Ancillary Property related thereto, and (ii) if the Rate of Return attributable
to all Partnership Properties and Ancillary Property related thereto acquired
after March 17, 1995 (other than those referred to in Section 9.2(a)) in respect
of any Fiscal Year shall exceed 12% per annum, the Partnership shall pay to the
Managing General Partner an amount equal to 25% of the amount of cash received
by the Partnership representing such excess, which amounts shall be in lieu of
any reimbursement of expenses related to the management of the business affairs
of the Partnership and the Limited Partners (other than expenses described in
Section 9.2(c)) that are incurred by the Managing General Partner or its
Affiliates with respect to such Partnership Properties and (except as provided
in clause (i)(A) of this Section 9.2(b)) shall be payable in quarterly
installments within sixty (60) days after the end of each fiscal quarter (which
may be estimated in the case of the first three fiscal quarters). For purposes
of the calculations provided for in this Section 9.2 in the event of a mortgage
loan origination, the term "Partnership Properties" shall be deemed to include
any originated mortgage loans and the "purchase price" of such mortgage loans
will be the principal balances thereof at the beginning of any Fiscal Year.
(c) The Partnership shall either pay, or reimburse the Managing General
Partner on a monthly basis for the payment of, all amounts payable to any Person
for providing goods or performing services (including, without limitation,
legal, accounting, auditing, recordkeeping, reporting, depositary, transfer
agent, printing, appraisal, servicing and consulting services) for or on behalf
of the Partnership or the Limited Partners; provided, however, that the
Partnership shall not pay, or reimburse the Managing General Partner for, the
payment of any amount to an Affiliate or an officer, director or employee of an
Affiliate for legal, accounting, managerial or consulting services; and provided
further, that the Partnership shall pay, or shall reimburse the Managing General
Partner for, a payment to an Affiliate or an officer, director or employee of an
Affiliate for goods or other services only if the price and the terms upon which
such goods or services are provided to the Partnership or the Limited Partners
are fair to the Partnership or the Limited Partners, as the case may be, and are
not less favorable to the Partnership or the Limited Partners, as the case may
be, than would be incurred if the Partnership or the Limited Partners were to
obtain such goods or services from an unrelated third party or were to engage
employees to provide such goods or services directly.
For 1987 and for each Fiscal Year thereafter, the amount payable
pursuant to Section 9.2(a) shall be increased by an amount equal to the product
of Four Hundred Thousand Dollars ($400,000) multiplied by the percentage
increase in the Price Index from January 1, 1986, through the last day of the
immediately preceding Fiscal Year. For each year after the year in which a
Partnership Property is acquired, the amount otherwise payable pursuant to
Section 9.2 (b)(i)(B) (the "Section 9.2(b)(i)(B) Amount") shall be increased by
an amount equal to the product of the Section 9.2(b)(i)(B) Amount multiplied by
the percentage increase in the Price Index from the first day of the immediately
preceding Fiscal Year or, in the case of the first year after the year in which
the Partnership Property is acquired, the first day of the month in which the
acquisition occurred through the last day of the Fiscal Year immediately
preceding such year or, if earlier, the last day of the month in which such
Partnership Property was disposed of. The percentage increase in the Price Index
through the last day of a particular period shall be determined by calculating
the increase, if any, in the Price Index for the last time period during such
period (the "Price Index Determination Period") with respect to which the Price
Index is published (currently a monthly period) over the Price Index for the
time period immediately preceding the first day of the Price Index Determination
Period, and expressing the amount of such increase as a percentage of the Price
Index for said time period immediately preceding the first day of the Price
Index Determination Period.
"Rate of Return" in respect of any period shall mean and refer to the
quotient obtained by dividing (1) the aggregate revenues (calculated in
accordance with generally accepted accounting principles and before amortization
of unearned income on direct financing leases) received by the Partnership or
the Limited Partners from the Partnership Properties and Ancillary Property
referred to in Section 9.2(b) for such period, whether through operations, sale
or other disposition, less (without duplication) (i) the aggregate fees payable
pursuant to Section 9.2(b)(i)(B) for such period in respect of such properties,
(ii) the aggregate expenses of the Partnership (other than interest expense,
depreciation, amortization and other non-cash expenses and charges and expenses
described in Sections 9.2(b) and (c)) directly attributable to such property and
interest expense on any debt or distributions with respect to any interests (the
"Preferred Interests") of the Partnership issued to the Company in exchange for
the proceeds from the issuance by the Company of equity securities ranking
senior to the Common Stock with respect to the payment of dividends by the
Company allocated thereto for such period, (iii) the general and administrative
expenses of the Partnership (other than non-cash expenses and charges and
expenses described in Sections 9.2(a) and (b)) for such period allocated to such
properties (based on the ratio of Average Partnership Equity in such properties
to the aggregate Average Partnership Equity in all Partnership Properties), and
(iv) the principal amount of debt and dollar amount of Preferred Interests
allocated to any such properties repaid during such period and, if applicable,
the cash costs and expenses of any kind or nature incurred in respect of the
sale or other disposition thereof, by (2) the Average Partnership Equity in such
properties during such period. "Average Partnership Equity" shall mean and refer
to (A) the average of the sums of the aggregate purchase prices therefor, the
aggregate fees paid pursuant to Section 9.2(b)(i)(A) in respect thereof and all
other cash costs and expenses of any kind or nature incurred in connection with
the acquisitions thereof ("Property Costs") as of the last day of each calendar
month occurring during the period of determination, less (B) the average
outstanding principal amount of debt of the Partnership and the aggregate dollar
value of the Preferred Interests outstanding as of the last day of each calendar
month during such period and allocated to such properties. The Rate of Return
for any outstanding mortgage loans will be evaluated separately with the
mortgage loans constituting a separate pool of "properties" for such
calculation. The general and administrative expenses allocable to such mortgage
loans shall be equal to the total amount of such expenses for any Fiscal Year
multiplied by a fraction, the numerator of which shall be the aggregate
principal amount of all mortgage loans outstanding at the beginning of such
Fiscal Year and the denominator of which shall be the total of all Property
Costs and such aggregate principal amount.
For the purposes of the foregoing, debt of the Partnership and the
Preferred Interests shall be allocated among the Partnership Properties as
follows: (1) non-recourse debt shall be allocated to the property secured
thereby and, if such debt is secured by more than one property, such debt shall
be allocated among the properties secured thereby based on the relative Property
Costs thereof; and (2) recourse debt and the Preferred Interests shall be
allocated to all of the Partnership Properties based on the relative Property
Costs thereof (reduced for this purpose by the amounts of non-recourse debt
allocated thereto in accordance with clause (1) above).
IX.3. Reimbursement of the General Partners.
In the event that the provisions of Section 9.2 are terminated in
accordance with the terms of Section 9.1, the following compensation provisions
shall apply, to be effective upon the date of such termination.
(a) The General Partners shall not be compensated for their services as
general partner of the Partnership except as provided in elsewhere in this
Agreement (including the provisions of Article VI regarding distributions,
payments and allocations to which it may be entitled in its capacity as the
General Partner).
(b) Subject to Sections 9.2(c) and 16.9, the Partnership shall be
liable for, and shall reimburse the General Partners on a monthly basis, or such
other basis as the General Partners may determine in their sole and absolute
discretion, for all sums expended in connection with the Partnership's business
or for the benefit of the Partnership, including, without limitation, (i)
expenses relating to the ownership of interests in, and management and operation
of, or for the benefit of, the Partnership, (ii) compensation of officers and
employees, including, without limitation, payments under future employee benefit
plans of any General Partner, (iii) director fees and expenses, and (iv) all
costs and expenses of any General Partner being a public company, including
costs of filings with the Commission, reports and other distributions to its
stockholders.
(c) To the extent practicable, Partnership expenses shall be billed
directly to and paid by the Partnership, subject to Section 16.9, reimbursements
to the General Partner of any of their Affiliates by the Partnership pursuant to
this Section 9.3 shall be treated as "guaranteed payments" within the meaning of
Section 707(c) of the Code.
ARTICLE X
BANK ACCOUNTS; BOOKS AND RECORDS;
FISCAL YEAR; STATEMENTS; TAX MATTERS
X.1. Bank Accounts.
All funds of the Partnership shall be deposited in its name in such
checking and savings accounts, time deposits, certificates of deposit or other
accounts at such banks or other financial institutions as shall be designated by
the Managing General Partner from time to time, and the Managing General Partner
shall arrange for the appropriate conduct of any such account or accounts. The
Managing General Partner shall have fiduciary responsibility for the safekeeping
and use of the funds of the Partnership, whether or not in possession and
control of the Managing General Partner, and the Managing General Partner shall
not employ or permit any other Person to employ such funds except in accordance
with the terms of this Agreement. The Managing General Partner shall not permit
funds of the Partnership to be commingled with funds of the Managing General
Partner, any Affiliate or any other Person; provided, however, that nothing
herein shall preclude any investment of funds of the Partnership in a mutual
fund or similar entity for which a separate account is maintained on behalf of
each participant.
X.2. Books and Records.
(a) The Managing General Partner shall keep, or cause to be kept,
accurate, full, and complete books and accounts with respect to the Partnership,
showing assets, liabilities, income, operations, transactions and the financial
condition of the Partnership. Such books and accounts shall be prepared and
maintained on the accrual basis of accounting in accordance with generally
accepted accounting principles. The Managing General Partner shall maintain and
preserve all Partnership books and records for such period as the Managing
General Partner, in its reasonable discretion, shall determine necessary or
appropriate, subject to any requirements of state or federal law; provided,
however, that all appraisal reports obtained by the Partnership, whether in
connection with the acquisition of the Partnership Properties or otherwise,
shall be retained by the Partnership for at least five (5) years from the date
thereof.
(b) The Limited Partners shall have the right, at reasonable times and
at the Limited Partners' own expense, but only upon twenty (20) days prior
written notice to the Managing General Partner in accordance with Section 16.2,
and only for a valid business purpose related to the conduct of the
Partnership's business, (i) to have true and full information regarding the
status of the business and financial condition of the Partnership; (ii) to
inspect and copy the books of the Partnership and other reasonably available
records and information concerning the operation of the Partnership, including
copies of any appraisal reports described in Section 10.2(a) and copies of the
federal, state and local income tax returns of the Partnership; (iii) to have a
current list of the name and last known business, residence or mailing address
of each Partner; (iv) to have true and full information regarding the amount of
cash and a description and statement of the Carrying Value of any property or
services contributed by any Partner to the Partnership and the date upon which
each Partner became a Partner; and (v) to have a copy of this Agreement, the
Certificate of Limited Partnership and all amendments or certificates of
amendment, as the case may be, thereto, together with copies of any powers of
attorney pursuant to which any such amendment or certificate of amendment has
been executed.
(c) Anything in this Section 10.2 to the contrary notwithstanding, the
Managing General Partner, in its sole and absolute discretion, may refuse the
Limited Partners access to any information, records, documents or data it
determines to be confidential, including, without limitation, any records
relating to the sales or revenues or projected sales or revenues of one or more
specific BK Restaurants, information related to the financial condition or
circumstances of any BKC Franchisee or BKC's relationship with any BKC
Franchisee and any other information provided to the Partnership by BKC and
specifically designated by BKC, in its reasonable discretion, to be confidential
and/or proprietary.
X.3. Fiscal Year.
The Fiscal Year of the Partnership for financial and federal, state and
local income tax purposes initially shall be the calendar year. The Managing
General Partner shall have authority to change the beginning and ending dates of
the Fiscal Year if the Managing General Partner, in its sole and absolute
discretion, subject to approval by the Internal Revenue Service, shall determine
such change to be necessary or appropriate to the business of the Partnership,
and shall give written notice of any such change to the Limited Partners within
thirty (30) days after the occurrence thereof.
X.4. Financial Statement and Information.
(a) All financial statements shall be accurate and complete in all
material respects, shall present fairly the financial position and operating
results of the Partnership and shall be prepared on the accrual basis as
provided in Section 10.2 for each Fiscal Year of the Partnership during the term
of this Agreement.
(b) No later than forty-five (45) days after the end of each fiscal
quarter of each Fiscal Year (except the last fiscal quarter of each Fiscal
Year), commencing with the fiscal quarter ending June 30, 1986, the Managing
General Partner shall prepare and deliver to the Limited Partners an unaudited
statement of income for the Partnership for such fiscal quarter, an unaudited
statement of changes in cash flows for the period between the end of the most
recent Fiscal Year and the end of such fiscal quarter and an unaudited balance
sheet of the Partnership dated as of the end of such fiscal quarter, in each
case prepared in accordance with generally accepted accounting principles,
together with a statement setting forth any transactions between the Partnership
and any of the General Partners or any Affiliate thereof, the amount of any
fees, commissions, compensation and other remuneration paid or accrued to any of
the General Partners or any Affiliate thereof and a description of any services
rendered to the Partnership therefor, any other information required by Form
10-Q under the Exchange Act and such other information (financial or otherwise)
as the Managing General Partner, in its discretion, shall deem necessary or
appropriate.
(c) No later than ninety (90) days after the end of each Fiscal Year
during the term of this Agreement, the Managing General Partner shall prepare
and deliver to the Limited Partners: (i) a balance sheet, together with
statements of income, Partners' equity and changes in cash flows for the
Partnership during such Fiscal Year, which financial statements shall be audited
by the Auditing Firm (such financial statements to contain a report of the
Auditing Firm which shall include: (A) a statement that an audit of such
financial statements has been made in accordance with generally accepted
auditing standards and that such financial statements are in conformity with
generally accepted accounting principles; (B) a statement of the opinion of the
Auditing Firm with respect to the financial statements and the accounting
principles and practices reflected therein and in regard to the consistency of
the application of such accounting principles; and (C) an identification of any
matters reflected in such financial statements to which the Auditing Firm takes
exception); (ii) a report summarizing any transactions between the Partnership
and any of the General Partners or any Affiliate thereof, the amount of any
fees, commissions, compensation and other remuneration (including, without
limitation, reimbursements of expenses pursuant to Section 9.3) paid or accrued
by the Partnership for such Fiscal Year to the General Partners and any
Affiliates thereof, and the services rendered to the Partnership in connection
therewith; (iii) a report of the activities of the Partnership during the Fiscal
Year; and (iv) a statement (which statement need not be audited) showing any
Cash Flow and any Net Proceeds of a Capital Transaction distributed or to be
distributed to the Partners in respect of such Fiscal Year.
(d) The Managing General Partner shall provide to the Limited Partners
such other reports and information concerning the business and affairs of the
Partnership (i) as the Managing General Partner, in its sole and absolute
discretion, may deem necessary or appropriate, or (ii) to the extent not
provided for in Section 10.4(b) or (c) as may deem necessary or appropriate by
the Delaware RULPA or by any other law or any regulation of any regulatory body
applicable to the Partnership.
(e) The Managing General Partner shall provide any of the reports or
other information referred to in this Section 10.4 to such federal, state or
local governments, governmental agencies or other regulatory entities as the
Managing General Partner, in its sole and absolute discretion, may deem
necessary or appropriate.
X.5. Accounting Decisions.
All decisions as to accounting matters, except as specifically provided
to the contrary herein, shall be made by the Managing General Partner.
X.6. Where Maintained.
The books, accounts and records of the Partnership at all times shall
be maintained at the Partnership's principal office or, at the option of the
Managing General Partner, at the principal place of business of the Managing
General Partner.
X.7. Preparation of Tax Returns.
The Managing General Partner, at the expense of the Partnership, shall
arrange for the preparation and timely filing of all returns of the Partnership
showing all income, gains, deductions and losses necessary for federal and state
income tax and shall furnish to the Limited Partners within seventy-five (75)
days of the close of the Fiscal Year the tax information reasonably required for
federal and state income tax reporting purposes. The classification, realization
and recognition of income, gains, losses and deductions, and other items of the
Partnership shall be on the accrual method of accounting for federal income tax
purposes.
X.8. Tax Elections.
Except as otherwise specifically provided herein, the Managing General
Partner shall, in its sole and absolute discretion, determine whether to make
any available election (including, without limitation, the elections provided
for in Sections 48(q)(4), 168 and 754 of the Code) on behalf of the Partnership.
The Managing General Partner shall have the right to seek to revoke any such
election upon the Managing General Partner's determination that such revocation
is in the interests of limited partners and stockholders of the Limited
Partners; provided that the Managing General Partner shall not seek to revoke
any such election unless the Managing General Partner has received an Opinion of
Independent Counsel to the effect that such revocation would not cause (a) the
loss of limited liability of the Limited Partners under this Agreement or of the
limited partners of the MLP under the Investors Partnership Agreement, or (b)
the Partnership or the MLP to be treated as an association taxable as a
corporation for federal income tax purposes.
X.9. Tax Controversies.
Subject to the provisions hereof, the Managing General Partner is
designated as the "tax matters partner" (as defined in the Code) of the
Partnership and is authorized to and required to represent the Partnership (at
the expense of the Partnership) in connection with all examinations of the
affairs of the Partnership by any federal, state or local tax authorities,
including any resulting administrative and judicial proceedings, and to expend
funds of the Partnership for professional services and costs associated
therewith. Each Partner agrees to cooperate with the Managing General Partner
and to do or refrain from doing any or all things reasonably required by the
Managing General Partner in connection with the conduct of all such proceeding.
X.10. Organizational Expenses.
The Partnership shall elect to deduct expenses considered incurred in
organizing the Partnership ratably over a sixty-month period as provided in
Section 709 of the Code.
X.11. Taxation as a Partnership.
No election shall be made by the Partnership, the General Partners or
the Limited Partners to be excluded from the application of any of the
provisions of Subchapter K, Chapter I of Subtitle A of the Code or from an
similar provisions of any state tax law.
X.12. Qualification as a Company.
In the event that the Managing General Partner at any time shall
determine that either the Partnership or the MLP does not qualify, or no longer
will qualify, as a partnership for federal income tax purpose, then the Managing
General Partner shall have the right, but not the obligation, to take any such
action as it, in its sole and absolute discretion, determines to be in the
interests of the MLP in connection therewith or as a result thereof, including,
without limitation to cause the Partnership and the MLP to be reorganized so as
to qualify as a "real estate investment trust" within the meaning of Section 856
of the Code.
ARTICLE XI
TRANSFER OF INTERESTS
XI.1. Transfer.
(a) The term "transfer," when used in this Article XI with respect to a
Partnership Interest, shall include any sale, assignment, gift, pledge,
hypothecation, mortgage, exchange or other disposition.
(b) No Partnership Interest shall be transferred in whole or in part
except in accordance with the terms and conditions set forth in this Article XI.
Any transfer or purported transfer of any Partnership Interest not made in
accordance with this Article XI shall be null and void.
XI.2. Transfers of Interests of General Partners.
(a) The Managing General Partner shall not transfer all or any portion
of its General Partnership Interest or withdraw as General Partner except as
provided in Section 11.2(b) or in connection with a transaction described in
Section 11.2(c).
(b) Except as otherwise provided in Section 11.2(c) hereof, the Company
shall not engage in any merger, consolidation or other combination with or into
another Person or sale of all or substantially all of its assets, or any
reclassification, or any recapitalization or change of outstanding shares of
Common Stock (other than a change in par value, or from par value to no par
value, or as a result of a subdivision or combination of shares of Common Stock)
(a "Transaction"), unless (i) the Transaction also includes a merger of the
Partnership or sale of substantially all of the assets of the Partnership as a
result of which all Limited Partners will receive for each Partnership Unit an
amount of cash, securities or other property equal to the product of the
Conversion Factor and the greater amount of cash, securities or other property
paid in the Transaction to a holder of one share of Common Stock in
consideration of one share of Common Stock, provided that if, in connection with
the Transaction, a purchase, tender or exchange offer ("Offer") shall have been
made to and accepted by the holders of more than 50% of the outstanding shares
of Common Stock, each holder of Partnership Units shall be given the option to
exchange its Partnership Units for the greater amount of cash, securities or
other property which a Limited Partner would have received had it (A) exercised
its Exchange Right and (B) sold, tendered or exchanged pursuant to the Offer the
shares of Common Stock received upon exercise of the Exchange Right immediately
prior to the expiration of the Offer; and (ii) no more than 75% of the equity
securities of the acquiring Person in such Transaction shall be owned, after
consummation of such Transaction, by the General Partner or Persons who were
Affiliates of the Partnership or the General Partner immediately prior to the
date on which the Transaction is consummated.
(c) Notwithstanding Section 11.2(b), the Company or the Managing
General Partner may merge with or into a consolidate with another entity if
immediately after such merger or consolidation (i) substantially all of the
assets of the successor or surviving entity (the "Surviving General Partner"),
other than Partnership Units held by the Managing General Partner, are
contributed, directly or indirectly, to the Partnership as a Capital
Contribution in exchange for Partnership Units with a fair market value equal to
the value of the assets so contributed as determined by the Surviving General
Partner in good faith and (ii) the Surviving General Partner expressly agrees to
assume all obligations of the General Partner or the Company, as appropriate,
hereunder. Upon such contribution and assumption, the Surviving General Partner
shall have the right and duty to amend this Agreement as set forth in this
Section 11.2(c). The Surviving General Partner shall in good faith arrive at a
new method for the calculation of the REIT Stock Amount and Conversion Factor
for a Partnership Unit after such merger or consolidation so as to approximate
the existing method for such calculation as closely as reasonably possible. Such
calculation shall take into account, among other things, the kind and amount of
securities, cash and other property that was receivable upon such merger or
consolidation by a holder of shares of Common Stock or options, warrants or
other rights relating thereto, and to which a holder of Partnership Units could
have acquired had such Partnership Units been exchanged immediately prior to
such merger or consolidation. Such amendment to this Agreement shall provide for
adjustment to such method of calculation, which shall be as nearly equivalent as
may be practicable to the adjustments provided for with respect to the
Conversion Factor. The Surviving General Partner also shall in good faith modify
the definition of Common Stock and make such amendments to Section 5.5 hereof so
as to approximate the existing rights and obligations set forth in Section 5.5
as closely as reasonably possible. The above provisions of this Section 11.2(c)
shall similarly apply to successive mergers or consolidations permitted
hereunder.
XI.3. Purchase For Investment.
(a) Each Limited Partner hereby represents and warrants to the Managing
General Partner, to the Company and to the Partnership that the acquisition of
his Partnership Interests is made as a principal for his account for investment
purposes only and not with a view to the resale or distribution of such
Partnership Interest.
(b) Each Limited Partner agrees that he will not sell, assign or
otherwise transfer his Partnership Interest or any fraction thereof, whether
voluntarily or by operation of law or at judicial sale or otherwise, to any
Person who does not make the representations and warranties to the General
Partner set forth in Section 11.3(a) above and similarly agrees not to sell,
assign or transfer such Partnership Interest or fraction thereof to any Person
who does not similarly represent, warrant and agree.
XI.4. Restrictions on Transfer of Limited Partnership Interests.
(a) The Company or any other REIT Partner may not transfer any Limited
Partner Interest held by it, except (i) to the Partnership in accordance with
Section 7.15 hereof, (ii) to the Company or to any direct or indirect
wholly-owned Subsidiary of the Company, or (iii) in connection with a
Transaction described in Section 11.2(b) hereof.
(b) Subject to the provisions of Sections 11.4(c), (d) and (e), a
Limited Partner (other than the Company or any other REIT Partner) may offer,
sell, assign, hypothecate, pledge or otherwise transfer all or any portion of
his Limited Partner Interest or any of such Limited Partner's economic rights as
a Limited Partner, whether voluntarily or by operation of law or at judicial
sale or otherwise (collectively, a "Transfer") with or without the consent of
the General Partner. Any assignee or transferee of a Limited Partnership
Interest pursuant to this Section 11.4(b) may only become a substitute Limited
Partner pursuant to Section 11.5 hereof. The Managing General Partner may
require as a condition of any Transfer, that the transferor assume all costs
incurred by the Partnership in connection therewith.
(c) No Limited Partner (other than the Company or any other REIT
Partner) may effect a Transfer of its Limited Partner Interest, in whole or in
part, if, in the opinion of legal counsel for the Partnership, such proposed
Transfer would require the registration of the Limited Partnership Interest
under the Securities Act of 1933, as amended, or would otherwise violate any
applicable federal or state securities or blue sky law (including investment
suitability standards).
(d) No transfer by a Limited Partner of its Partnership Units, in whole
or in part, may be made to any Person if (i) in the opinion of legal counsel for
the Partnership, the transfer would result in the Partnership being traded as an
association taxable as a corporation (other than a qualified REIT subsidiary
within the meaning of Section 856(i) of the Code), (ii) in the opinion of legal
counsel for the Partnership, it would adversely affect the ability of the
Company to continue to qualify as a REIT or subject the Company to any
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 transfer of any Partnership Units may be made to a lender to the
Partnership or any Person who is related (within the meaning of Treasury
Regulations Section 1.752-4(b)) to any lender to the Partnership whose loan
constitutes a nonrecourse liability (within the meaning of Treasury Regulations
Section 1.752-1(a)(2)), without the consent of the Managing General Partner,
which may be withheld 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 Managing General Partner to exchange
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.
(f) Any Transfer in contravention of any of the provisions of this
Article XI shall be void and ineffectual and shall not be binding upon, or
recognized by, the Partnership.
XI.5. Admission of Substitute Limited Partner.
(a) Subject to the other provisions of this Article XI, an assignee of
the Limited Partner Interest of a Limited Partner (which shall be understood to
include any purchaser, transferee, donee or other recipient of any disposition
of such Limited Partner Interest) shall be deemed admitted as a Limited Partner
of the Partnership only upon the satisfactory completion of the following:
(i) The assignee shall have accepted and agreed to be bound by
the terms and provisions of this Agreement by executing a counterpart or an
amendment thereof; and such other documents or instruments as the Managing
General Partner may require in order to effect the admission of such Person as a
Limited Partner.
(ii) To the extent required, an amended Certificate evidencing
the admission of such Person as a Limited Partner shall have been signed,
acknowledged and filed for record in accordance with the Delaware RULPA.
(iii) The assignee shall have delivered a letter containing
the representation set forth in Section 11.3(a) hereof and the agreement set
forth in Section 11.3(b) hereof.
(iv) If the assignee is a corporation, partnership or trust,
the assignee shall have provided the Managing General Partner with evidence
satisfactory to counsel for the Partnership of the assignee's authority to
become a Limited Partner under the terms and provisions of this Agreement.
(v) The assignee shall have executed a power of attorney
containing the terms and provisions reasonably satisfactory to the Managing
General Partner.
(vi) The assignee shall have paid all reasonable legal fees of
the Partnership and the Managing General Partner and filing and publication
costs in connection with its substitution as a Limited Partner.
(vii) The assignee has obtained the prior written consent of
the Managing General Partner to its admission as a Substitute Limited Partner,
which consent may be given or denied in the exercise of the General Partner's
sole and absolute discretion.
(b) For the purpose of allocating Profits and Losses and distributing
cash received by the Partnership, a Substitute Limited Partner shall be treated
as having become, and appearing in the records of the Partnership as, a Partner
upon the filing of the Certificate described in Section 11.5(a)(ii) hereof or,
if no such filing is required, the later of the date specified in the transfer
documents or the date on which the Managing General Partner has received all
necessary instruments of transfer and substitution.
(c) The Managing General Partner shall cooperate with the Person
seeking to become a Substitute Limited Partner by preparing the documentation
required by this Section and making all official filings and publications. The
Partnership shall take all such action as promptly as practicable after the
satisfaction of the conditions in this Article XI to the admission of such
Person as a Limited Partner of the Partnership.
XI.6. Assignees.
If the General Partners in their sole and absolute discretion, do not
consent to the admission of any permitted transferee under Section 11.4 as a
Substituted Limited partner, as described in Section 11.5, such transferee shall
be considered an Assignee for purposes of this Agreement. An Assignee shall be
deemed to have had assigned to it, and shall be entitled to receive
distributions from the Partnership and the share of net income, net losses and
any other items of gain, loss, deduction and credit of the Partnership
attributable to the Partnership Units assigned to such transferee, and shall
have the rights granted to the Limited Partners under Section 5.5, 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.
XI.7. General Provisions.
(a) No Limited Partner may withdraw from the Partnership other than as
a result of a permitted transfer of all of such Limited Partner's Partnership
Units in accordance with this Article XI or pursuant to the exchange of all of
its Partnership Units under Section 5.5.
(b) Any Limited Partner who shall transfer all of his Partnership Units
in a transfer permitted pursuant to this Article XI shall cease to be a Limited
Partner upon the admission of all Assignees of such Partnership Units as
Substitute Limited Partners. Similarly, any Limited Partner who shall transfer
all of his Partnership Units pursuant to an exchange of all of his Partnership
Units under Section 5.5 shall cease to be a Limited Partner.
(c) Transfers pursuant to this Article XI may only be made on the first
day of a fiscal quarter of the Partnership, unless the General Partners
otherwise agree.
(d) If any Partnership Interest is transferred or assigned in
compliance with the provisions of this Article XI or exchanged pursuant to
Section 5.5, on any day other than the first day of a Fiscal Year, then 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 Managing
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 for such Fiscal Year shall be prorated based upon the
applicable period selected by the Managing General Partner). Solely for purposes
of making such allocations, each of such items for the calendar month in which
the transfer or assignment occurs shall be allocated to the transferee Partner,
and none of such items for the calendar month in which a redemption occurs shall
be allocated to the Exchanging Partner. All distributions of Cash Flow
attributable to such Partnership Unit with respect to which the payment date (in
accordance with Section 6.5(b)) is before the date of such transfer, assignment
or redemption shall be made to the transferor Partner or the Exchanging Partner,
as the case may be, and, in the case of a transfer or assignment other than a
redemption, all distributions of Cash Flow thereafter attributable to such
Partnership Unit shall be made to the transferee Partner.
ARTICLE XII
ADMISSION OF PARTNERS
XII.1. Admission of Substitute Successor General Partners.
Except as otherwise provided in Section 11.2(c) hereof, a Person shall
be admitted as a substitute or successor General Partner of the Partnership only
if the following terms and conditions are satisfied:
(a) a Majority Vote of the Limited Partners (other than the MLP or the
Company) shall have been received approving the admission of the substitute or
successor General Partner, which consent may be withheld in the sole discretion
of such Limited Partners;
(b) the Person to be admitted as a substitute or additional General
Partners shall have accepted and agreed to be bound by all the terms and
provisions of this Agreement by executing a counterpart thereof and such other
documents or instruments as may be required or appropriate in order to effect
the admission of such Person as a General Partner, and a Certificate evidencing
the admission of such Person as a General Partner shall have been filed for
recordation;
(c) if the Person to be admitted as a substitute or additional General
Partner is a corporation or a partnership it shall have provided the Partnership
with evidence satisfactory to counsel for the Partnership of such Person's
authority to become a General Partner and to be bound by the terms and
provisions of this Agreement; and
(d) counsel for the Partnership shall have rendered an opinion (relying
on such opinions from other counsel and the state or any other jurisdiction as
may be necessary) that the admission of the person to be admitted as a
substitute or additional General Partner is in conformity with the Act, that
none of the actions taken in connection with the admission of such Person as a
substitute or additional General Partner will cause (i) the Partnership to be
classified other than as a partnership for federal income tax purposes, or (ii)
the loss of any Limited Partner's limited liability.
XII.2. Admission of Additional Limited Partners.
(a) A Person who made or makes a Capital Contribution to the
Partnership in accordance with this Agreement or who exercises an option to
receive Partnership Units shall be admitted to the Partnership as an Additional
Limited Partner only upon furnishing to the Managing 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, a power
of authority reasonably satisfactory to the Managing General Partner, and (ii)
such other documents or instruments as may be required in the discretion of the
Managing General Partner in order to effect such Person's admission as an
Additional Limited Partner.
(b) Notwithstanding anything to the contrary in this Section 12.2, no
Person shall be admitted as an Additional Limited Partner without the consent of
the Managing General Partner, which consent may be given or withheld in the
Managing General Partner's sole and absolute discretion. The admission of any
Person as an Additional Limited Partner shall become effective on the date upon
which the name of such Person is recorded on the books and records of the
Partnership, following the consent of the General Partner to such admission.
(c) If any Additional Limited Partner is admitted to the Partnership on
any day other than the first day of the Partnership's Fiscal Year, then such
Person shall be treated as an Assignee, subject to the provisions of Section
11.6 hereof.
ARTICLE XIII
WITHDRAWAL OR REMOVAL OF GENERAL PARTNERS
XIII.1. Withdrawal or Removal of General Partners.
(a) A General Partner may not be removed by the Limited Partners with
or without cause.
(b) Upon the occurrence of the Bankruptcy as to, or the dissolution of,
a General Partner, such General Partner shall be deemed to be removed
automatically; provided, however, that if a General Partner is on the date of
such occurrence a partnership, the withdrawal, death, dissolution, Bankruptcy as
to, or removal of, a partner in such partnership shall be deemed not to be a
dissolution of a General Partner if the business of such General Partner is
continued by the remaining partner or partners.
(c) If a General Partner has been removed pursuant to this Section 13.1
and the Partnership is continued pursuant to Section 14.3 hereof, such General
Partner shall promptly transfer and assign its General Partner Interest in the
Partnership to the substitute General Partner approved by a Majority Vote of the
Limited Partners and otherwise admitted to the Partnership in accordance with
Section 12.1 hereof. At the time of assignment, the removed General Partner
shall be entitled to receive from the substitute General Partner the fair market
value of the General Partner Interest of such removed General Partner as reduced
by any damages caused to the Partnership by such General Partner. Such fair
market value shall be determined by an appraiser mutually agreed upon by the
General Partner and a Majority Vote of the Limited Partners (excluding the MLP
and the Company) within 10 days following the removal of the General Partner. In
the event that the parties are unable to agree upon an appraiser, the removed
General Partner and a Majority Vote of the Limited Partners (excluding the MLP
and the Company) each shall select an appraiser. Each such appraiser shall
complete an appraisal of the fair market value of the removed General Partner's
General Partner Interest within 30 days of the General Partner's removal, and
the fair market value of the removed General Partner's General Partner Interest
shall be the average of the two appraisals; provided, however, that if the
higher appraisal exceeds the lower appraisal by more than 20% of the amount of
the lower appraisal, the two appraisers, no later than 40 days after the removal
of the General Partner, shall select a third appraiser who shall complete an
appraisal of the fair market value of the removed General Partner's General
Partner Interest no later than 60 days after the removal of the General Partner.
In such case, the fair market value of the removed General Partner's General
Partner Interest shall be the average of the two appraisals closest in value.
(d) The General Partner Interest of a removed General Partner, during
the time after default until transfer under Section 13.1(c), shall be converted
to that of a special Limited Partner; provided, however, such removed General
Partner shall not have any rights to participate in the management and affairs
of the Partnership, and shall not be entitled to any portion of the income,
expense, profit, gain or loss allocations or cash distributions allocable or
payable, as the case may be, to the Limited Partners. Instead, such removed
General Partner shall receive and be entitled only to retain distributions or
allocations of such items that it would have been entitled to receive in its
capacity as General Partner, until the transfer is effective pursuant to Section
13.1(c).
(e) All Partners shall have given and hereby do give such consents,
shall take such actions and shall execute such documents as shall be legally
necessary and sufficient to effect all the foregoing provisions of this Section.
XIII.2. Amendment of Agreement and Certificate of Limited Partnership.
This Agreement and the Certificate shall be amended to reflect the
withdrawal, removal or succession of a General Partner.
ARTICLE XIV
DISSOLUTION AND LIQUIDATION
XIV.1. No Dissolution.
The Partnership shall not be dissolved by the admission of additional
Limited Partners or Substituted Limited Partners or by the admission of
additional General Partners or Substituted General Partners in accordance with
the terms of this Agreement.
XIV.2. Events Causing Dissolution.
The Partnership shall be dissolved and its affairs wound up upon the
occurrence of any of the following events:
(a) the expiration of the term of the Partnership, as provided in
Section 4.1;
(b) the withdrawal of the Managing General Partner or the occurrence of
any other event that results in the Managing General Partner ceasing to be the
Managing General Partner (other than by reason of a transfer pursuant to Section
11.2 or a withdrawal occurring upon or after, or a removal effective upon or
after, selection of a successor pursuant to Section 13.1);
(c) the "Bankruptcy" (as hereinafter defined) of the Managing General
Partner;
(d) a written determination by the Managing General Partner that
projected future revenues of the Partnership will be insufficient to enable
payment of projected Partnership costs and expenses or, if sufficient, will be
such that continued operation of the Partnership is not in the best interests of
the Partners;
(e) an election by the Limited Partners to terminate, dissolve or
liquidate the Partnership;
(f) any attempted transfer, sale, assignment, gift, pledge,
hypothecation, mortgage, exchange or other disposition by the Limited Partners
of their Partnership Interests; or
(g) the occurrence of any other event that, under the Delaware RULPA,
would cause the dissolution of the Partnership or that would make it unlawful
for the business of the Partnership to be continued.
For purposes of this Agreement, the term "Bankruptcy" shall mean, and
the Managing General Partner shall be deemed "Bankrupt" upon, (i) the entry of a
decree or order for relief of the Managing General Partner by a court of
competent jurisdiction in any involuntary case involving the Managing General
Partner under any bankruptcy, insolvency or other similar law now or hereafter
in effect; (ii) the appointment of a receiver, liquidator, assignee, custodian,
trustee, sequestrator or other similar agent for the Managing General Partner or
for any substantial part of the Managing General Partner's assets or property;
(iii) the ordering of the winding up or liquidation of the Managing General
Partner's affairs; (iv) the filing with respect to the Managing General Partner
of a petition in any such involuntary bankruptcy case, which petition remains
undismissed for a period of ninety (90) days or which is dismissed or suspended
pursuant to Section 305 of the Federal Bankruptcy Code (or any corresponding
provision of any future United States bankruptcy law); (v) the commencement by
the Managing General Partner of a voluntary case under any bankruptcy,
insolvency or other similar law now or hereafter in effect; (vi) the consent by
the Managing General Partner to the entry of an order for relief in a
involuntary case under any such law or to the appointment of or taking
possession by a receiver, liquidator, assignee, trustee, custodian, sequestrator
or other similar agent for the Managing General Partner or for any substantial
part of the Managing General Partner's assets or property; (vii) the making by
the Managing General Partner of any general assignment for the benefit of
creditors; or (viii) the failure by the Managing General Partner generally to
pay its debts as such debts become due.
XIV.3. Right to Continue Business of Partnership.
Upon an event described in Section 14.2(b), 14.2(c) or 14.2(g) (but not
an event described in Section 14.2(g) that makes it unlawful for the business of
the Partnership to be continued), the Partnership thereafter shall be dissolved
and liquidated unless, within ninety (90) days after the event described in any
of such Sections, an election to reconstitute and continue the business of the
Partnership shall be made by a Majority Vote of the Limited Partners. If such an
election to continue the Partnership is made, then:
(a) a Majority Vote of the Limited Partners shall select a successor
Managing General Partner;
(b) the Partnership shall continue until another event causing
dissolution in accordance with this Article XIV shall occur; and
(c) all necessary steps shall be taken to amend this Agreement and the
Certificate of Limited Partnership to reflect the reconstitution and
continuation of the business of the Partnership.
XIV.4. DissolutionXIV.4. Dissolution.
Except as otherwise provided in Section 14.3, upon the dissolution of
the Partnership, the Certificate of Limited Partnership shall be canceled in
accordance with the provisions of the Delaware RULPA, and the Managing General
Partner promptly shall notify the Partners of such dissolution.
XIV.5. 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 6.3 in order to minimize any losses otherwise attendant upon
such a winding up.
XIV.6. Termination of Partnership.
Except as otherwise provided in this Agreement, the Partnership shall
terminate when all of the assets of the Partnership shall have been converted
into cash, the net proceeds therefrom, as well as any other liquid assets of the
Partnership, after payment of or due provision for all debts, liabilities and
obligations of the Partnership, shall have been distributed to the Partners as
provided for in Sections 6.3 and 6.7 and the Certificate of Limited Partnership
shall have been canceled in the manner required by the Delaware RULPA.
ARTICLE XV
AMENDMENTS
XV.1. Amendments to be Adopted Solely by the Managing General Partner.
The Managing General Partner, without the consent or approval at the
time of the Limited Partners, may amend any provision of this Agreement, and
execute, swear to, acknowledge, deliver, file and record all documents required
or desirable in connection therewith, to reflect:
(a) a change in the name of the Partnership or the location of the
principal place of business of the Partnership;
(b) the admission, substitution, termination or withdrawal of Partners
in accordance with this Agreement, including amending Exhibit A hereto.
(c) additions to the obligations of the General Partners or surrender
any right or power granted to the General Partners or any Affiliate of the
General Partners for the benefit of the Limited Partners;
(d) the designations, rights, powers, duties and preferences of the
holders of any additional Partnership Interests issued pursuant to Section
5.2(a) hereof;
(e) a change that is necessary to qualify the Partnership as a limited
partnership or a partnership in which the Limited Partners have limited
liability under the laws of any state or that is necessary or advisable in the
opinion of the Managing General Partner to ensure that the Partnership will not
be treated as an association taxable as a corporation for federal income tax
purposes;
(f) a change that is (i) of an inconsequential nature and does not
adversely affect the Limited Partners in any material respect; (ii) necessary or
desirable to cure any ambiguity, to correct or supplement any provision herein
that would be inconsistent with any other provision herein or to make any other
provision with respect to matters or questions arising under this Agreement that
will not be inconsistent with the provision of this Agreement; (iii) necessary
or desirable to satisfy any requirements, conditions or guidelines contained in
any opinion, directive, order, ruling or regulation of any federal or state
agency or contained in any federal or state statute; (iv) necessary or desirable
to facilitate the trading of the Units, as contemplated in the Investor
Partnership Agreement, or the shares of Common Stock, or comply with any rule,
regulation guideline or requirement of any securities exchange on which the
Units or the shares of Common Stock are or will be listed for trading,
compliance with any of which the Managing General Partner deems to be in the
interests of the Partnership and the Limited Partners; (v) necessary to conform
this Agreement to any amendments made in the Investors Partnership Agreement in
accordance with the terms thereof; or (vi) required or contemplated by this
Agreement;
(g) a change in any provision of this Agreement which requires any
action to be taken by or on behalf of the Managing General Partner or the
pursuant to the requirements of applicable Delaware law if the provisions of
applicable Delaware law are amended, modified or revoked so that the taking of
such action is no longer required;
(h) to reflect such changes as are reasonably necessary for any Partner
to maintain its status as a "qualified Company subsidiary" within the meaning of
Section 856(i)(2) of the Code; or
(i) any other amendments similar to the foregoing.
The authority set forth in this Section 15.1 shall specifically include
the authority to make such amendments to this Agreement and to the Certificate
of Limited Partnership as the Managing General Partner deems necessary or
desirable in the event the Delaware RULPA is amended to eliminate or change any
provision now in effect. Without limiting the foregoing, the Limited Partners
shall, upon the request of the Managing General Partner, execute, swear to or
acknowledge any document determined by the Managing General Partner to be
required or desirable in connection with the foregoing. The Managing General
Partner shall provide notice to the Limited Partners when any action under this
Section 15.1 is taken.
XV.2. Amendment Procedures.
Except as specifically provided in Sections 15.1 and 15.3, all
amendments to this Agreement shall be made solely in accordance with the
following procedures:
(a) Any amendments of this Agreement must be proposed either:
(i) by the Managing General Partner, by submitting the text of
the proposed amendment to all Limited Partners in writing; or
(ii) by Limited Partners owning (as Limited Partners and not
as Assignees) at least twenty-five percent (25%) of the total
Partnership Units owned by Limited Partners (as Limited Partners and
not as Assignees), by submitting their proposed amendment in writing to
the Managing General Partner. The Managing General Partners shall,
within sixty (60) days after the receipt of any such proposed
amendment, or as soon thereafter as is reasonably practicable, submit
the text of the proposed amendment to all Limited Partners. The
Managing General Partner may include in such submission its
recommendation as to the proposed amendment.
(b) If an amendment is proposed pursuant to this Section 15.2, the
Managing General Partner shall seek the written consent of the Limited Partners
to such amendment or shall call a meeting of the Limited Partners to consider
and vote on the proposed amendment, unless, in the opinion of Independent
Counsel, such proposed amendment would be illegal under Delaware law if adopted,
in which case the Managing General Partner shall not be required to take any
further action with respect thereto. For purposes of obtaining a written vote,
the Managing General Partner may require a response within a reasonable period
of time, but not less than fifteen (15) days, and failure to respond in such
time shall constitute a vote which is consistent with the Managing General
Partner's recommendation with respect to the proposal. A proposed amendment
shall be effective only if approved by the General Partners in writing and by a
Majority Vote of the Limited Partners, unless a greater percentage vote of the
Limited Partners is required by law or any other provision of this Agreement.
The Managing General Partner shall keep all Partners advised of the status of
any proposed amendment and shall notify all Partners upon final adoption or
rejection of any proposed amendment.
(c) The holders of record of Preferred Units shall not be entitled to
vote on any matter on which Limited Partners are entitled to vote, or on any
other matters, provided that the holders of Preferred Units shall have the right
to vote as a separate class of Partnership Units on the following, each of which
shall require the consent of holders of record of Preferred Units representing
more than 50% of Preferred Units:
(i) Any amendment that would adversely affect the rights of
the Preferred Unitholders to receive the distributions payable to them
hereunder;
(ii) Any amendment that would alter the Partnership's
allocations of Profits and Losses to the Preferred Unitholders; or
(iii) Any amendment that would impose on the Preferred
Unitholders any obligation to make additional Capital Contributions to the
Partnership.
XV.3. Amendment Restrictions.
Notwithstanding Sections 15.1 and 15.2, this Agreement shall not be
amended without the consent of each Partner adversely affected if such amendment
would (a) convert a Limited Partner Interest into a General Partner Interest;
(b) modify the limited liability of a Limited Partner in a manner adverse to
such Limited Partner; (c) alter rights of the Partner to receive distributions
pursuant to Article VI or Article XIV (except as permitted pursuant to Section
5.5 or 15.1(e)); (d) alter or modify the Exchange Right and REIT Stock Amount as
set forth in 5.4, and the related definitions, in a manner adverse to such
Partner; (e) cause the termination of the Partnership prior to the time set
forth in Article IV or Section 14.2; or (f) amend this Section 15.3. Further, no
amendment may alter the restrictions on the General Partner's authority set
forth in Section 7.3(b) without the consent specified in that section.
Notwithstanding any other provision hereof, the General Partner shall not amend
Section 5.2(a), 7.6, 7.7 or 15.4 unless approved by the Majority Vote of the
Limited Partners, excluding Partnership Units held by the Company.
XV.4. Meetings of the Partners.
(a) Meetings of the Partners may be called by the General Partners and
shall be called upon the receipt by the General Partners of a written request by
Limited Partners (other than the Company) holding twenty percent (20%) or more
of the Partnership Units. The request shall state the nature of the business to
be transacted. Notice of any such meeting shall be given to all Partners not
less than ten (10) days nor more than sixty (60) days prior to the date of such
meeting. Partners may vote in person or by proxy at such meeting. Whenever the
vote or consent of the Partners is permitted or required under this Agreement,
such vote or consent may be given at a meeting of the Partners or may be given
in accordance with the procedure prescribed in Section 15.2(b). Except as
otherwise expressly provided int his Agreement, the Majority Vote of the Limited
Partners (including Partnership Units held by the Company) shall control.
(b) Any action required or permitted to be taken at a meeting of the
Partners may be taken without a meeting if a written consent setting forth the
action so taken is signed by a majority of the Percentage Interests of the
Partners (or such other percentage as is expressly required by this Agreement).
Such consent may be in one instrument or in several instruments, and shall have
the same force and effect as a vote of a majority of the Percentage Interests of
the Partners (or such other percentage as is expressly required by this
Agreement). Such consent shall be filed with the General Partner. An action so
taken shall be deemed to have been taken at a meeting held on the effective date
so certified.
(c) Each Limited Partner may authorize any Person or Persons to act for
it 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 written notice of
such revocation from the Limited Partner executing such proxy.
(d) Each meeting of the Partners shall be conducted by the General
Partner or such other Person as the Managing General Partner may appoint
pursuant to such rules for the conduct of the meeting as the Managing General
Partner or such other Person deems appropriate. Without limitation, meetings of
Partners may be conducted in the same manner as meetings of the stockholders of
the Company and may be held at the same time, and as part of, meetings of the
stockholders of Company.
ARTICLE XVI
MISCELLANEOUS PROVISIONS
XVI.1. Additional Actions and Documents.
Each of the Partners hereby agrees to take or cause to be taken such
further actions, to execute, acknowledge, deliver and file or cause to be
executed, acknowledged, delivered and filed such further documents and
instruments, and to use best efforts to obtain such consents as may be necessary
or as may be reasonably requested in order to fully effectuate the purposes,
terms and conditions of this Agreement, whether before, at or after the closing
of the transactions contemplated by this Agreement.
XVI.2. Notices.
All notices, demands, requests or other communications which may be or
are required to be given, served or sent by a Partner or the Partnership
pursuant to this Agreement shall be in writing, and shall be personally
delivered, mailed by first-class mail, postage prepaid, or transmitted by
facsimile, telegram or telex, addressed as follows:
(a) If to the Managing General Partner:
USRP Managing, Inc.
Attn: Chairman or President
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
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Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
(b) If to QSV:
QSV Properties, Inc.
Attn: Chairman or President
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Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
(c) If to the Company:
U.S. Restaurant Properties, Inc.
Attn: Chief Executive Officer
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▇▇▇▇▇ ▇▇▇
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Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
(d) If to the Partnership:
U.S. Restaurant Properties Operating L.P.
Attn: Managing General Partner
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▇▇▇▇▇ ▇▇▇
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Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Each Partner and the Partnership may designate by notice in writing a
new address to which any notice, demand, request or communication may thereafter
be so given, served or sent. Each notice, demand, request or communication which
shall be delivered, mailed or transmitted in the manner described above shall be
deemed to have been duly given when delivered in person, sent by first class
mail or transmitted by facsimile, telegram or telex.
XVI.3. Severability.
The invalidity of any one or more provisions hereof or of any other
agreement or instrument given pursuant to or in connection with this Agreement
shall not affect the remaining portions of this Agreement or any such other
agreement or instrument or any part thereof, all of which are inserted
conditionally on their being held valid in law; and in the event that one or
more of the provisions contained herein or therein should be invalid, or should
operate to render this Agreement or any such other agreement or instrument
invalid, this Agreement and such other agreements and instruments shall be
construed as if such invalid provisions had not been inserted.
XVI.4. Survival.
It is the express intention and agreement of the Partners that all
covenants, agreements, statements, representations, warranties and indemnities
made in this Agreement shall survive the execution and delivery of this
Agreement.
XVI.5. Waivers.
Neither the waiver by a Partner of a breach of or a default under any
of the provisions of this Agreement, nor the failure of a Partner, on one or
more occasions, to enforce any of the provisions of this Agreement or to
exercise any right, remedy or privilege hereunder shall thereafter be construed
as a waiver of any subsequent breach or default of a similar nature, or as a
waiver of any such provisions, rights, remedies or privileges hereunder.
XVI.6. Exercise of Rights.
No failure or delay on the part of a Partner or the Partnership in
exercising any right, power or privilege hereunder and no course of dealing
between the Partners or between a Partner and the Partnership shall operate as a
waiver thereof; nor shall any single or partial exercise of any right, power or
privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
expressly provided are cumulative and not exclusive of any other rights or
remedies which a Partner or the Partnership would otherwise have at law or in
equity or otherwise.
XVI.7. Binding Effect.
Subject to any provisions hereof restricting assignment, this Agreement
shall be binding upon and shall inure to the benefit of the Partners (and BKC
and its successors and assigns for purposes of Article VIII and Section 15.3)
and their respective heirs, devisees, executors, administrators, legal
representatives, successors and assigns.
XVI.8. Limitation on Benefits of this Agreement.
It is the explicit intention of the Partners that, with the exception
of the rights of BKC, its successors and assigns, in connection with Article
VIII and Section 15.3, no person or entity other than the Partners and the
Partnership is or shall be entitled to bring any action to enforce any provision
of this Agreement against any Partner or the Partnership, and that, except as
set forth in Section 8.1(b), the covenants, undertakings and agreements set
forth in this Agreement shall be solely for the benefit of, and shall be
enforceable only by, the Partners (or their respective successors and assigns as
permitted hereunder) and the Partnership.
XVI.9. Limitation to Preserve Company Status.
Notwithstanding anything else in this Agreement, to the extent that the
amount paid, credited, distributed or reimbursed by the Partnership to any REIT
Partner or its officers, directors, employees or agents, whether as a
reimbursement, fee, expense or indemnity (a "REIT Payment"), would constitute
gross income to the REIT Partner for purposes of Section 856(c)(2) or 856(c)(3)
of the Code, then, notwithstanding any other provision of this Agreement, the
amount of such REIT Payments, as selected by the General Partners in their
discretion from among items of potential distribution, reimbursement, fees,
expenses and indemnities, shall be reduced for any Fiscal Year of the
Partnership so that the REIT Payments, as so reduced, for or with respect to
such REIT Partner shall not exceed the lesser of:
(a) an amount equal to the excess, if any, of (i) four and
nine-tenths percent (4.9%) of the REIT Partner's total gross income
(but excluding the amount of any REIT Payments) for the Fiscal Year of
the Partnership that is described in Section 856(c)(2) of the Code (or
any substitute or successor provision thereto) over (ii) the amount of
gross income (within the meaning of Section 856(c)(2) of the Code (or
any substitute or successor provision thereto)) derived by the REIT
Partner from sources other than those described in Section 856(c)(2) of
the Code (or any substitute or successor provision thereto) (but not
including the amount of any REIT Payments); or
(b) an amount equal to the excess, if any, of (i) twenty-four
percent (24%) of the REIT Partner's total gross income (but excluding
the amount of any REIT Payments) for the Fiscal Year of the Partnership
that is described in Section 856(c)(3) of the Code (or any substitute
or successor provision thereto) over (ii) the amount of gross income
(within the meaning of Section 856(c)(3) of the Code (or any substitute
or successor provision thereto)) derived by the REIT Partner from
sources other than those described in Section 856(c)(3) of the Code (or
any substitute or successor provision thereto) (but not including the
amount of any REIT Payments);
provided, however, that REIT Payments in excess of the amounts set forth in
clauses (a) and (b) above may be made if the General Partners, as a condition
precedent, obtain an opinion of tax counsel that the receipt of such excess
amounts shall not adversely affect the REIT Partner's ability to qualify as a
real estate investment trust under the Code. To the extent that REIT Payments
may not be made in a Fiscal Year of the Partnership as a consequence of the
limitations set forth in this Section 16.9, such REIT Payments shall carry over
and shall be treated as arising in the following Fiscal Year of the Partnership.
The purpose of the limitations contained in this Section 16.9 is to prevent any
REIT Partner from failing to qualify as a real estate investment trust under the
Code by reason of such REIT Partner's share of items, including distributions,
reimbursements, fees, expenses or indemnities, receivable directly or indirectly
from the Partnership, and this Section 16.9 shall be interpreted and applied to
effectuate such purpose.
XVI.10. Force Majeure.
If the Managing General Partner is rendered unable, wholly or in part,
by "force majeure" (as herein defined) to carry out any of its obligations under
this Agreement, other than the obligation hereunder to make money payments, the
obligations of the Managing General Partner, insofar as they are affected by
such force majeure, shall be suspended during, but no longer than, the
continuance of such force majeure. The term "force majeure" as used herein shall
mean an act of God, strike, lockout or other industrial disturbance, act of
public enemy, war, blockade, public riot, lightning, fire, storm, flood,
explosion, governmental restraint, unavailability of equipment and any other
cause, whether of the kind specifically enumerated above or otherwise, which is
not reasonably within the control of the Managing General Partner.
XVI.11. Entire Agreement.
This Agreement contains the entire agreement among the Partners with
respect to the transactions contemplated herein, and supersedes all prior oral
or written agreements, commitments or understandings with respect to the matters
provided for herein.
XVI.12. Pronouns.
All pronouns and any variations thereof shall be deemed to refer to the
masculine, feminine, neuter, singular or plural, as the identity of the person
or entity may require.
XVI.13. Headings.
Article, Section and subsection headings contained in this Agreement
are inserted for convenience of reference only, shall not be deemed to be a part
of this Agreement for any purpose and shall not in any way define or affect the
meaning, construction or scope of any of the provisions hereof.
XVI.14. Governing Law.
This Agreement, the rights and obligations of the parties hereto and
any claims or disputes relating thereto, shall be governed by and construed in
accordance with the laws of Delaware (but not including the choice of law rules
thereof).
XVI.15. Execution in Counterparts.
To facilitate execution, this Agreement may be executed in as many
counterparts as may be required; and it shall not be necessary that the
signatures of, or on behalf of, each party, or that the signatures of all
persons required to bind any party, appear on each counterpart; but it shall be
sufficient that the signature of, or on behalf of, each party, or that the
signatures of the persons required to bind any party, appear on one or more of
the counterparts. All counterparts shall collectively constitute a single
agreement. It shall not be necessary in making proof of this Agreement to
produce or account for more than a number of counterparts containing the
respective signatures of, or on behalf of, all of the parties hereto.
ARTICLE XVII
EXECUTION
IN WITNESS WHEREOF, the undersigned have duly executed this Agreement,
or have caused this Agreement to be duly executed on their behalf, as of the day
and year first hereinabove set forth.
MANAGING GENERAL PARTNER:
ATTEST: USRP MANAGING, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------- -----------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Secretary Title: President and Chief
Executive Officer
LIMITED PARTNERS:
QSV PROPERTIES, INC.
ATTEST:
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------- ------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Secretary Title: President and Chief
Executive Officer
ATTEST:
U.S. RESTAURANT PROPERTIES
MASTER L.P.
By: USRP MANAGING, INC.,
its Managing General Partner
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------- -----------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Secretary Title: President and Chief
Executive Officer
DB973090149
030598 v12
111:17207-2
EXHIBIT A
PARTNERSHIP INTERESTS
Name and Address Partnership Percentage
of Partner Units Interest
------------------ ------------- ------------
1. U.S. Restaurant Properties, Inc. 12,531,533 90.69%
Master L.P. Class A Units
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▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
2. QSV Properties, Inc. 1,148,418 8.31%
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ Class B ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
3. USRP Managing, Inc. General Partner 1%
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
A-1
EXHIBIT B
NOTICE OF EXCHANGE
The undersigned Limited Partner hereby irrevocably (i) exchanges
____________ Partnership Units in U.S. Restaurant Properties Operating L.P. in
accordance with the terms of the Third Amended and Restated Agreement of Limited
Partnership of U.S. Restaurant Properties Operating L.P. and the Exchange Right
referred to therein; (ii) surrenders such Partnership Units and all right, title
and interest therein; and (iii) directs that the REIT Stock Amount deliverable
upon exercise of the Exchange Right be delivered to the address specified below,
and that the shares of Common Stock be registered or placed in the name(s)
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 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 person or entities, if any, having the right to consent or
approve such redemption and surrender.
Dated: _____________________
Name of Limited Partner: ____________________________
Please Print
__________________________________________________
(Signature of Limited Partner)
__________________________________________________
(Street Address)
__________________________________________________
(City) (State) (Zip Code)
Signature Guaranteed by:
_________________________________________________
Issue shares of Common Stock to:
Name:_______________________________
Please insert social security of identifying number:______________________
B-1
EXHIBIT C
CAPITAL CONTRIBUTIONS
Cash Agreed Value of Total
Partners Contributions Contributed Properties Contribution
-------- ------------- ---------------------- ------------
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TABLE OF CONTENTS
Page
ARTICLE I CERTAIN DEFINITIONS.............................................2
ARTICLE II FORMATION; NAME; PLACE OF BUSINESS.............................17
2.1. Formation of Partnership; Certificate of Limited Partnership...17
2.2. Name of Partnership............................................18
2.3. Place of Business..............................................18
2.4. Registered Office and Registered Agent.........................18
2.5. Power of Attorney..............................................18
ARTICLE III PURPOSES, NATURE OF BUSINESS,
AND POWERS OF PARTNERSHIP......................................20
3.1. Purposes and Business..........................................20
3.2. Powers.........................................................20
ARTICLE IV TERM OF PARTNERSHIP............................................21
4.1. Term...........................................................21
ARTICLE V CAPITAL........................................................22
5.1. Capital Contributions of the Partners..........................22
5.2. Issuances of Additional Partnership Interests..................22
5.3. Additional Funding.............................................24
5.4. Percentage Interests...........................................25
5.5. Exchange of Units..............................................25
5.6. Minimum Percentage Interest of General Partner.................26
5.7. No Preemptive Rights...........................................26
5.8. Capital Accounts...............................................26
5.9. Percentage Interests...........................................27
5.10. Negative Capital Accounts......................................27
5.11. No Interest on Amounts in Capital Account......................27
5.12. Advances to Partnership........................................28
5.13. Liability of Limited Partner...................................28
5.14. Return of Capital..............................................28
5.15. No Third Party Beneficiary.....................................28
5.16. Employee Benefit Plans.........................................29
ARTICLE VI DISTRIBUTIONS; ALLOCATIONS.....................................30
6.1. Requirement and Characterization of Distributions..............30
6.2. Withholding....................................................31
6.3. Distributions Upon Liquidation.................................32
6.4. Allocations of Profit and Losses...............................33
6.5. Special Allocations............................................35
6.6. Curative Allocations...........................................36
6.7. Loss Limitation................................................36
6.8. Tax Allocations; Code Section 704(c)...........................37
6.9. Company Distribution Requirements..............................37
6.10. No Right to Distributions in Kind..............................37
6.11. Limitations on Return of Capital Contributions.................37
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TABLE OF CONTENTS
(Continued)
ARTICLE VII MANAGEMENT.....................................................38
7.1. Management and Control of Partnership..........................38
7.2. Powers of Managing General Partner.............................38
7.3. Restrictions on Authority of Managing General Partner..........44
7.4. Title to Partnership Assets....................................45
7.5. Working Capital Reserve........................................45
7.6. Other Business Activities of Partners..........................45
7.7. Transactions with Managing General Partner or Affiliates.......46
7.8. General Partner Participation..................................46
7.10. Liability of General Partners to Partnership and the Limited
Partners...................................................... 46
7.11. Indemnification of General Partners and Affiliates.............47
7.12. No Management by Limited Partners..............................48
7.13. Other Matters Concerning General Partners......................48
7.14. Other Limitations..............................................49
7.15. Miscellaneous..................................................50
ARTICLE VIII ACQUISITION, OPERATION, AND DISPOSITION
OF RESTRICTED RESTAURANT PROPERTIES............................50
8.1. General........................................................50
8.2. Contribution to Partnership; Acquisition of Restricted
Restaurant Properties..........................................51
8.3. Use and Other Restrictions.....................................51
8.4. Restrictions on Transfer of Restricted Restaurant Properties...56
8.5. Rent Relief....................................................59
8.6. Successor Policy...............................................60
8.7. Competitive Facilities.........................................63
8.8. Acquisition of Restricted Restaurant Properties by General
Partners or Affiliates........................................ 63
8.9. Termination of Lease for Restricted Restaurant Property
Following Termination of BKC Franchise Agreement.............. 64
8.10. Independent Consultant.........................................65
8.11. Consent to Use of Name and Trademarks..........................66
8.12. Acquisition of Fee Title to Properties Subject to Primary
Leases........................................................ 67
8.13. Location of Other Restaurant Properties........................67
ARTICLE IX COMPENSATION OF GENERAL PARTNERS;
PAYMENT OF PARTNERSHIP EXPENSES................................67
9.1. Compensation to General Partners...............................67
9.2. Operational Expenses..........................................68
9.3. Reimbursement of the General Partners.........................71
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TABLE OF CONTENTS
(Continued)
ARTICLE X BANK ACCOUNTS; BOOKS AND RECORDS;
FISCAL YEAR; STATEMENTS; TAX MATTERS..........................72
10.1. Bank Accounts.................................................72
10.2. Books and Records.............................................72
10.3. Fiscal Year...................................................73
10.4. Financial Statement and Information...........................73
10.5. Accounting Decisions..........................................74
10.6. Where Maintained..............................................75
10.7. Preparation of Tax Returns....................................75
10.8. Tax Elections.................................................75
10.9. Tax Controversies.............................................75
10.10. Organizational Expenses.......................................76
10.11. Taxation as a Partnership.....................................76
10.12. Qualification as a Company....................................76
ARTICLE XI TRANSFER OF INTERESTS.........................................76
11.1. Transfer......................................................76
11.2. Transfers of Interests of General Partners....................76
11.3. Purchase For Investment.......................................78
11.4. Restrictions on Transfer of Limited Partnership Interests.....78
11.5. Admission of Substitute Limited Partner.......................79
11.6. Assignees.....................................................80
11.7. General Provisions............................................81
ARTICLE XII ADMISSION OF PARTNERS.........................................81
12.1. Admission of Substitute Successor General Partners............81
12.2. Admission of Additional Limited Partners......................82
ARTICLE XIII WITHDRAWAL OR REMOVAL OF GENERAL PARTNERS.....................83
13.1. Withdrawal or Removal of General Partners.....................83
13.2. Amendment of Agreement and Certificate of Limited Partnership.84
ARTICLE XIV DISSOLUTION AND LIQUIDATION...................................84
14.1. No Dissolution................................................84
14.2. Events Causing Dissolution....................................84
14.3. Right to Continue Business of Partnership.....................85
14.4. Dissolution...................................................86
14.5. Reasonable Time for Winding Up................................86
14.6. Termination of Partnership....................................86
ARTICLE XV AMENDMENTS....................................................86
15.1. Amendments to be Adopted Solely by the Managing General
Partner.......................................................86
15.2. Amendment Procedures..........................................88
15.3. Amendment Restrictions........................................89
15.4. Meetings of the Partners......................................89
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TABLE OF CONTENTS
(Continued)
ARTICLE XVI MISCELLANEOUS PROVISIONS......................................90
16.1. Additional Actions and Documents..............................90
16.2. Notices.......................................................90
16.3. Severability..................................................92
16.4. Survival......................................................92
16.5. Waivers.......................................................92
16.6. Exercise of Rights............................................92
16.7. Binding Effect................................................92
16.8. Limitation on Benefits of this Agreement......................93
16.9. Limitation to Preserve Company Status.........................93
16.10. Force Majeure.................................................94
16.11. Entire Agreement..............................................94
16.12. Pronouns......................................................94
16.13. Headings......................................................94
16.14. Governing Law.................................................95
16.15. Execution in Counterparts.....................................95
ARTICLE XVII EXECUTION.....................................................96
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