EXHIBIT 3.4
--------------------------
AGREEMENT OF LIMITED PARTNERSHIP
OF
CEDAR INCOME FUND PARTNERSHIP, L.P.
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TABLE OF CONTENTS
Page
ARTICLE 1
DEFINED TERMS
Section 1.1 Definitions............................................................................... 1
ARTICLE 2
ORGANIZATIONAL MATTERS
Section 2.1 Organization.............................................................................. 15
Section 2.2 Name...................................................................................... 15
Section 2.3 Registered Office and Agent; Principal Office............................................. 16
Section 2.4 Power of Attorney......................................................................... 16
Section 2.5 Term...................................................................................... 17
ARTICLE 3
PURPOSE
Section 3.1 Purpose and Business...................................................................... 17
Section 3.2 Powers.................................................................................... 18
ARTICLE 4
CAPITAL CONTRIBUTIONS
Section 4.1 Capital Contributions of the Partners..................................................... 18
Section 4.2 Additional Capital Contributions Generally................................................ 18
Section 4.3 Loans by Partners......................................................................... 18
Section 4.4 Loans by Third Parties.................................................................... 19
Section 4.5 Additional Funding, Additional Partnership Interests and Capital Contributions ........... 19
ARTICLE 5
DISTRIBUTIONS
Section 5.1 Requirement and Characterization of Distributions......................................... 21
Section 5.2 Distributions in Kind..................................................................... 21
Section 5.3 Amounts Withheld.......................................................................... 22
Section 5.4 Distributions Upon Liquidation............................................................ 22
ARTICLE 6
ALLOCATIONS
Section 6.1 Timing and Amount of Allocations of Net Income and Net Loss............................... 22
Section 6.2 General Allocations....................................................................... 22
Section 6.3 Additional Allocation Provisions.......................................................... 22
Section 6.4 Tax Allocations........................................................................... 25
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ARTICLE 7
MANAGEMENT AND OPERATIONS OF BUSINESS
Section 7.1 Management................................................................................ 25
Section 7.2 Certificate of Limited Partnership........................................................ 28
Section 7.3 Restrictions on General Partner's Authority............................................... 28
Section 7.4 Reimbursement of the General Partner...................................................... 31
Section 7.5 Outside Activities of the General Partner................................................. 31
Section 7.6 Contracts with Affiliates................................................................. 32
Section 7.7 Indemnification........................................................................... 32
Section 7.8 Liability of the General Partner.......................................................... 34
Section 7.9 Other Matters Concerning the General Partner.............................................. 34
Section 7.10 Title to Partnership Assets............................................................... 35
Section 7.11 Reliance by Third Parties................................................................. 35
ARTICLE 8
RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS
Section 8.1 Limitation of Liability................................................................... 36
Section 8.2 Management of Business.................................................................... 36
Section 8.3 Outside Activities of Limited Partners.................................................... 36
Section 8.4 Return of Capital......................................................................... 37
Section 8.5 Rights of Limited Partners Relating to the Partnership.................................... 37
Section 8.6 Redemption Right.......................................................................... 38
Section 8.7 Representations of Limited Partners....................................................... 39
ARTICLE 9
BOOKS, RECORDS, ACCOUNTING AND REPORTS
Section 9.1 Records and Accounting.................................................................... 41
Section 9.2 Fiscal Year............................................................................... 41
Section 9.3 Reports................................................................................... 41
ARTICLE 10
TAX MATTERS
Section 10.1 Preparation of Tax Returns................................................................ 42
Section 10.2 Tax Elections............................................................................. 42
Section 10.3 Tax Matters Partner....................................................................... 42
Section 10.4 Organizational Expenses................................................................... 44
Section 10.5 Withholding............................................................................... 44
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ARTICLE 11
TRANSFERS AND WITHDRAWALS
Section 11.1 Transfer.................................................................................. 45
Section 11.2 Transfer of General Partner's Partnership Interest........................................ 45
Section 11.3 Limited Partners' Rights to Transfer...................................................... 45
Section 11.4 Substituted Limited Partners.............................................................. 47
Section 11.5 Assignees................................................................................. 48
Section 11.6 General Provisions........................................................................ 48
ARTICLE 12
ADMISSION OF PARTNERS
Section 12.1 Admission of Successor General Partner.................................................... 49
Section 12.2 Admission of Additional Limited Partners.................................................. 49
Section 12.3 Amendment of Agreement and Certificate of Limited Partnership............................. 50
ARTICLE 13
DISSOLUTION AND LIQUIDATION
Section 13.1 Dissolution............................................................................... 50
Section 13.2 Winding Up................................................................................ 51
Section 13.3 Compliance with Timing Requirements of Regulations........................................ 52
Section 13.4 Deemed Distribution and Recontribution.................................................... 53
Section 13.5 Rights of Limited Partners................................................................ 53
Section 13.6 Notice of Dissolution..................................................................... 53
Section 13.7 Cancellation of Certificate of Limited Partnership........................................ 53
Section 13.8 Reasonable Time for Winding-Up............................................................ 54
Section 13.9 Waiver of Partition....................................................................... 54
ARTICLE 14
AMENDMENT OF PARTNERSHIP AGREEMENT; CONSENTS
Section 14.1 Amendments................................................................................ 54
Section 14.2 Action by the Partners.................................................................... 54
ARTICLE 15
GENERAL PROVISIONS
Section 15.1 Addresses and Notice...................................................................... 55
Section 15.2 Titles and Captions....................................................................... 55
Section 15.3 Pronouns and Plurals...................................................................... 55
Section 15.4 Further Action............................................................................ 56
Section 15.5 Binding Effect............................................................................ 56
Section 15.6 Creditors................................................................................. 56
Section 15.7 Waiver.................................................................................... 56
Section 15.8 Counterparts.............................................................................. 56
Section 15.9 Applicable Law............................................................................ 56
Section 15.10 Invalidity of Provisions.................................................................. 56
Section 15.11 Limitation to Preserve REIT Status........................................................ 57
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EXHIBITS
A Partners, Contributions and Partnership Units
B Notice of Redemption
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AGREEMENT OF LIMITED PARTNERSHIP
OF
CEDAR INCOME FUND PARTNERSHIP, L.P.
THIS AGREEMENT OF LIMITED PARTNERSHIP, dated as of June 25th, 1998,
is entered into by and among Cedar Income Fund, Ltd. (the "General Partner"), a
Maryland corporation, as the General Partner and the Persons whose names are set
forth on Exhibit A attached hereto, as the Limited Partners, together with any
other Persons who become Partners in the Partnership as provided herein.
ARTICLE 1
DEFINED TERMS
Section 1.1 Definitions.
The following definitions shall be for all purposes, unless
otherwise clearly indicated to the contrary, applied to the terms used in this
Agreement.
"Act" means the Delaware Revised Uniform Limited Partnership Act, as
it may be amended from time to time, and any successor to such statute.
"Additional Funds" shall have the meaning set forth in Section
4.5.A.
"Additional Limited Partner" means a Person admitted to the
Partnership as a Limited Partner pursuant to Section 12.2 hereof and who is
shown as such on the books and records of the Partnership.
"Adjusted Capital Account Deficit" means, with respect to any
Partner, the deficit balance, if any, in such Partner's Capital Account as of
the end of the relevant fiscal year, after giving effect to the following
adjustments:
(i) decrease such deficit by any amounts which such Partner is
obligated to restore pursuant to this Agreement or is
deemed to be obligated to restore pursuant to the
penultimate sentence of each of Treasury Regulation
Sections 1.704-2(i)(5) and 1.704-2(g); and
(ii) increase such deficit by the items described in Treasury
Regulation Section 1.704-1(b)(2)(ii)(d)(4), (5) and (6).
The foregoing definition of Adjusted Capital Account Deficit is intended to
comply with the provisions of Treasury Regulation Section 1.704-1(b)(2)(ii)(d)
and shall be interpreted consistently therewith.
"Adjustment Date" means, with respect to any Capital Contribution,
the close of business on the Business Day last preceding the date of the Capital
Contribution, provided, that if such Capital Contribution is being made by the
General Partner in respect of the proceeds from the issuance of REIT Shares (or
the issuance of the General Partner's securities exercisable for, convertible
into or exchangeable for REIT Shares), then the Adjustment Date shall be as of
the close of business on the Business Day last preceding the date of the
issuance of such securities.
"Affiliate" means, with respect to any Person, any Person directly
or indirectly controlling, controlled by or under common control with such
Person.
"Agreed Value" means (i) in the case of any Contributed Property set
forth in Exhibit A and as of the time of its contribution to the Partnership,
the value of such property as set forth in Exhibit A; (ii) in the case of any
Contributed Property not set forth in Exhibit A and as of the time of its
contribution to the Partnership, the fair market value of such property or other
consideration as determined by the General Partner, reduced by any liabilities
either assumed by the Partnership upon such contribution or to which such
property is subject when contributed; and (iii) in the case of any property
distributed to a Partner by the Partnership, the fair market value of such
property as determined by the General Partner at the time such property is
distributed, reduced by any indebtedness either assumed by such Partner upon
such distribution or to which such property is subject at the time of the
distribution as determined under Section 752 of the Code and the Regulations.
"Agreement" means this Agreement of Limited Partnership, as it may
be amended, supplemented or restated from time to time.
"Appraisal" means with respect to any assets, the opinion of an
independent third party experienced in the valuation of similar assets, selected
by the General Partner in good faith, such opinion may be in the form of an
opinion by such independent third party that the value for such property or
asset as set by the General Partner is fair, from a financial point of view, to
the Partnership.
"Articles of Incorporation" means the Articles of Incorporation of
the General Partner filed in the State of Maryland on June 12, 1998 as amended,
supplemented or restated from time to time.
"Assignee" means a Person to whom one or more Partnership Units have
been transferred in a manner permitted under this Agreement, but who has not
become a Substituted Limited Partner, and who has the rights set forth in
Section 11.5.
"Available Cash" means, with respect to any period for which such
calculation is being made, (i) the sum of:
a. the Partnership's Net Income or Net Loss (as the case may be) for
such period,
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b. Depreciation and all other noncash charges deducted in
determining Net Income or Net Loss for such period,
c. the amount of any reduction in reserves of the Partnership
referred to in clause (ii)(f) below (including, without limitation, reductions
resulting because the General Partner determines such amounts are no longer
necessary),
d. the excess of the net proceeds from the sale, exchange,
disposition, financing or refinancing of Partnership property for such period
over the gain (or loss, as the case may be) recognized from any such sale,
exchange, disposition, financing 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 Net Income or Net Loss for such period;
(ii) less the sum of:
a. all principal debt payments made during such period by the
Partnership,
b. capital expenditures made by the Partnership during such period,
c. repayments of investments in any entity (including repayments of
loans made thereto) to the extent that such repayments of investments are not
otherwise described in clauses (ii)(a) or (b),
d. all other expenditures and payments not deducted in determining
Net Income or Net Loss for such period,
e. any amount included in determining Net Income or Net Loss for
such period that was not received by the Partnership during such period, and
f. the amount of any increase in reserves established during such
period which the General Partner determines is necessary or appropriate in its
sole and absolute discretion.
Notwithstanding the foregoing, Available Cash shall not include the
amount of 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" means any event where the General Partner, or the
Partnership, as the case may be, makes an assignment for the benefit of
creditors, files a voluntary petition in bankruptcy, is adjudicated a bankrupt
or insolvent, files a petition or answer seeking for itself any reorganization,
arrangement, composition, readjustment, liquidation, dissolution or similar
relief under any statute, law or regulation, files an answer or other pleading
admitting or failing to contest the material allegations of a petition filed
against it in any proceeding of this nature, or seeks, consents to or acquiesces
in the appointment of a trustee, receiver or liquidator for all or any
substantial part of its properties.
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"Board of Directors" means the Board of Directors of the General
Partner.
"Business Day" means any day except a Saturday, Sunday or other day
on which commercial banks in New York, New York are authorized or required by
law to be closed.
"Capital Account" means, with respect to any Partner, the Capital
Account maintained for such Partner in accordance with the following provisions:
a. To each Partner's Capital Account there shall be added such
Partner's Capital Contributions, such Partner's share of Net Income and any
items in the nature of income or gain which are specially allocated pursuant to
Section 6.3 hereof, and the amount of any Partnership liabilities assumed by
such Partner or which are secured by any property distributed to such Partner.
b. From each Partner's Capital Account there shall be subtracted the
amount of cash and the Gross Asset Value of any property distributed to such
Partner pursuant to any provision of this Agreement, such Partner's distributive
share of Net Losses and any items in the nature of expenses or losses which are
specially allocated pursuant to Section 6.3 hereof, and the amount of any
liabilities of such Partner assumed by the Partnership or which are secured by
any property contributed by such Partner to the Partnership.
c. In the event any interest in the Partnership is transferred in
accordance with the terms of this Agreement, the transferee shall succeed to
the Capital Account of the transferor to the extent it relates to the
transferred interest.
d. In determining the amount of any liability for purposes of
subsections (a) and (b) hereof, there shall be taken into account Code Section
752(c) and any other applicable provisions of the Code and Regulations.
e. The foregoing provisions and the other provisions of this
Agreement relating to the maintenance of Capital Accounts are intended to comply
with Regulations Section 1.704-1(b) and Section 1.704-2, and shall be
interpreted and applied in a manner consistent with such Regulations. In the
event the General Partner shall determine that it is prudent to modify the
manner in which the Capital Accounts, or any debits or credits thereto
(including, without limitation, debits or credits relating to liabilities which
are secured by contributed or distributed property or which are assumed by the
Partnership, the General Partner, or the Limited Partners) are computed in order
to comply with such Regulations, the General Partner may make such modification,
provided that it is not likely to have a material effect on the amounts
distributable to any Person pursuant to Article 13 of this Agreement upon the
dissolution of the Partnership. The General Partner also shall (i) make any
adjustments that are necessary or appropriate to maintain equality between the
Capital Accounts of the Partners and the amount of Partnership capital reflected
on the Partnership's balance sheet, as computed for book purposes, in accordance
with Regulations Section 1.704-1(b)(2)(iv)(q), and (ii) make any appropriate
modifications in the event unanticipated events might otherwise cause this
Agreement not to comply with Regulations Section 1.704-1(b) or Section 1.704-2.
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"Capital Contribution" means, with respect to any Partner, the
amount of money and the initial Gross Asset Value of any property (other than
money) contributed to the Partnership by such Partner.
"Cash Amount" means an amount of cash per Partnership Unit equal to
the Value on the Valuation Date of the REIT Shares Amount.
"Certificate" means the Certificate of Limited Partnership relating
to the Partnership filed in the office of the Delaware Secretary of State, as
amended from time to time in accordance with the terms hereof and the Act.
"Code" means the Internal Revenue Code of 1986, as amended
from time to time or any successor statute thereto, as interpreted
by the
applicable regulations thereunder. Any reference herein to a specific section or
sections of the Code shall be deemed to include a reference to any corresponding
provision of future law.
"Consent" means the consent to, approval of, or vote on a proposed
action by a Partner given in accordance with Article 14 hereof.
"Consent of the Limited Partners" means the Consent of a Majority in
Interest of the Limited Partners, which Consent shall be obtained prior to the
taking of any action for which it is required by this Agreement and may be given
or withheld by a Majority in Interest of the Limited Partners, unless otherwise
expressly provided herein, in their sole and absolute discretion.
"Contributed Property" means each property or other asset, in
such form as may be permitted by the Act, but excluding cash, contributed or
deemed contributed to the Partnership (or deemed contributed to the Partnership
on termination and reconstitution thereof pursuant to Section 708 of the Code).
"Conversion Factor" initially means 1.0, provided that
a. in the event that the General Partner
(i) declares or pays a dividend on its outstanding REIT
Shares in REIT Shares to all holders of its
outstanding REIT Shares or makes a distribution to
all holders of its outstanding REIT Shares in REIT
Shares,
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(ii) splits or subdivides its REIT Shares into a larger
number of REIT Shares, or
(iii) effects a reverse split or combines its
outstanding REIT Shares into a smaller number of REIT Shares, the Conversion
Factor shall be adjusted by multiplying the Conversion Factor previously in
effect by a fraction, the numerator of which shall be the number of REIT Shares
issued and outstanding on the record date for such dividend, distribution,
split, subdivision, reverse split or combination (assuming for such purposes
that such dividend, distribution, split, subdivision, reverse split or
combination has occurred as of such time), and the denominator of which shall be
the actual number of REIT Shares (determined without the above assumption)
issued and outstanding on the record date for such dividend, distribution,
split, subdivision, reverse split or combination;
b. in the event that the General Partner distributes any rights,
options or warrants to all holders of its REIT Shares to subscribe for or to
purchase or to otherwise acquire REIT Shares (or other securities or rights
convertible into, exchangeable for or exercisable for REIT Shares) at a price
per share less than the Value of a REIT Share on the record date for such
distribution (each a "Distributed Right"), then the Conversion Factor shall be
adjusted by multiplying the Conversion Factor previously in effect by a
fraction, the numerator of which shall be the number of REIT Shares issued and
outstanding on the record date plus the maximum number of REIT Shares
purchasable under such Distributed Rights, and the denominator of which shall be
the number of REIT Shares issued and outstanding on the record date plus a
fraction, the numerator of which is the maximum number of REIT Shares
purchasable under such Distributed Rights times the minimum purchase price per
REIT Share under such Distributed Rights, and the denominator of which is the
Value of a REIT Share as of the record date; provided, that if any such
Distributed Rights expire or become no longer exercisable, then the Conversion
Factor shall be adjusted, effective retroactive to the date of distribution of
the Distributed Rights, to reflect a reduced maximum number of REIT Shares or
any change in the minimum purchase price for the purposes of the above
fractions; and
c. in the event the General Partner shall, by dividend or otherwise,
distribute to all holders of its REIT Shares evidences of its indebtedness or
assets (including securities, but excluding any dividend or distribution
referred to in clause (a)(i) above), which evidences of indebtedness or assets
relate to assets not received by the General Partner pursuant to a pro rata
distribution by the Partnership, then the Conversion Factor shall be adjusted to
equal the amount determined by multiplying the Conversion Factor in effect
immediately prior to the close of business on the date fixed for determination
of stockholders entitled to receive such distribution by a fraction of which the
numerator shall be such Value of each REIT Share on the date fixed for such
determination, and the denominator shall be the Value of each REIT Share on the
date fixed for such determination less the then fair market value (as determined
by the Board of Directors, whose determination shall be conclusive) of the
portion of the evidences of indebtedness or assets so distributed applicable to
one REIT Share.
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Any adjustment to the Conversion Factor shall become effective immediately after
the effective date of such event retroactive to the record date, if any, for
such event; provided that any Limited Partner may waive, by written notice to
the General Partner, the effect of any adjustment to the Conversion Factor
applicable to the Units held by such Limited Partner, and thereafter, such
adjustment will not be effective as to such Units. For purposes of this
definition, the term "REIT Share" shall not include any Trust Shares (as defined
in the Articles of Incorporation of the General Partner).
"Debt" means, as to any Person, as of any date of determination, (i)
all indebtedness of such Person for borrowed money or for the deferred purchase
price of property or services; (ii) all amounts owed by such Person to banks or
other Persons in respect of reimbursement obligations under letters of credit,
surety bonds and other similar instruments guaranteeing payment or other
performance of obligations by such Persons; (iii) all indebtedness for borrowed
money or for the deferred purchase price of property or services secured by any
lien on any property owned by such Person, to the extent attributable to such
Person's interest in such property, even though such Person has not assumed or
become liable for the payment thereof; and (iv) lease obligations of such
Persons which, in accordance with generally accepted accounting principles,
should be capitalized.
"Depreciation" means, for each fiscal year or other period, an
amount equal to the depreciation, amortization or other cost recovery deduction
allowable with respect to an asset for such year or other period, except that if
the Gross Asset Value of an asset differs from its adjusted basis for federal
income tax purposes at the beginning of such year or other period, Depreciation
shall be an amount which bears the same ratio to such beginning Gross Asset
Value as the federal income tax depreciation, amortization or other cost
recovery deduction for such year or other period bears to such beginning
adjusted tax basis; provided, however, that if the federal income tax
depreciation, amortization or other cost recovery deduction for such year is
zero, depreciation shall be determined with reference to such beginning Gross
Asset Value using any reasonable method selected by the General Partner.
"Deemed Partnership Interest Value" means, as of any date, the
Deemed Value of the Partnership multiplied by the applicable Partner's
Percentage Interest.
"Deemed Value of the Partnership" means, as of any date, (a) the
total number of REIT Shares issued and outstanding as of the close of business
on such date (excluding any treasury shares) multiplied by the Value of a REIT
Share on such date, (i) minus the net fair market value of the General Partner
Properties determined by the Board of Directors of the General Partner in good
faith or (ii) if the face amount of the General Partner's liabilities (other
than those arising through the Partnership) exceeds the value of the General
Partner Properties, plus such excess and (b) divided by the Percentage Interest
of the General Partner on such date;
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"Effective Date" means the effective date of the merger of Cedar
Income Fund, Ltd., an Iowa corporation, into the General Partner, upon which
contributions set forth on Exhibit A that are to be effective on the Effective
Date shall become effective.
"Funding Debt" means the incurrence of any Debt by or on behalf of
the General Partner for the purpose of providing funds to the Partnership.
"General Partner" means the REIT or its successors as general
partner of the Partnership.
"General Partner Interest" means a Partnership Interest held by the
General Partner that is a general partnership interest. A General Partner
Interest may be expressed as a number of Partnership Units.
"General Partner Loan" is defined in Section 4.5.C.
"General Partner Properties" means any property or assets owned by
the General Partner directly, and which are not owned by the Partnership.
"Gross Asset Value" means, 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 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; provided
that, if the contributing Partner is the General Partner and contributes assets
in an amount valued at above cost, then the determination of the fair market
value of the contributed asset shall be determined by Appraisal.
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 using such reasonable method of valuation as it may adopt,
provided however, that for this purpose the net value of all of the Partnership
assets, in the aggregate, shall be equal to the Deemed Value of the Partnership,
regardless of the method of valuation adopted by the General Partner, as of the
following times:
(i) the acquisition of an additional interest in the Partnership
by a new or existing Partner in exchange for more than a de
minimis Capital Contribution if the General Partner reasonably
determines that such adjustment is necessary or appropriate to
reflect the relative economic interest of the Partners in the
Partnership;
(ii) the distribution by the Partnership to a Partner of more than
a de minimis amount of Partnership property as consideration
for an interest in the Partnership if the General Partner
reasonably determines that such adjustment is necessary or
appropriate to reflect the relative economic interests of the
Partners in the Partnership;
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(iii) the liquidation of the Partnership within the meaning of
Regulations Section 1.704-1(b)(2)(ii)(g) and 1.704-2; and
(iv) at such other times as the General Partner shall reasonably
determine necessary or advisable in order to comply with
Regulations Sections 1.704-1(b) and 1.704-2.
c. The Gross Asset Value of any Partnership asset distributed to a
Partner shall be the gross fair market value of such asset on the date of
distribution as determined by the distributee and the General Partner, or if the
distributee and the General Partner cannot agree on such a determination, by
Appraisal.
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 734(b) or Code Section 743(b), but only to the extent
that such adjustments are taken into account in determining Capital Accounts
pursuant to Regulations Section 1.704-1(b)(2)(iv)(m); provided, however, that
Gross Asset Values shall not be adjusted pursuant to this subparagraph (d) to
the extent that the General Partner reasonably determines that an adjustment
pursuant to subparagraph (b) is necessary or appropriate in connection with a
transaction that would otherwise result in an adjustment pursuant to this
subparagraph (d).
e. If the Gross Asset Value of a Partnership asset has been
determined or adjusted pursuant to subparagraph (a), (b) or (c), such Gross
Asset Value shall thereafter be adjusted by the Depreciation taken into account
with respect to such asset for purposes of computing Net Income and Net Losses.
"Holder" means either the Partner or Assignee owning a Unit.
"IRS" means the Internal Revenue Service, which administers the
internal revenue laws of the United States.
"Immediate Family" means, with respect to any natural Person, the
ancestors and descendants of such natural Person, the spouse of such natural
Person and the ancestors and descendants of such spouse, the estate or heirs
thereof, and any trust or estate, all of the beneficiaries of which consist of
the foregoing persons.
"Incapacity" or "Incapacitated" means, (i) as to any individual
Partner, death, physical disability which renders him unable to work on a
full-time basis or entry by a court of competent jurisdiction adjudicating him
incompetent to manage his Person or his estate; (ii) as to any corporation which
is a Partner, the filing of a certificate of dissolution, or its equivalent, for
the corporation or the revocation of its charter; (iii) as to any partnership
which is a Partner, the dissolution and commencement of winding
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up of the partnership; (iv) as to any estate which is a Partner, the
distribution by the fiduciary of the estate's entire interest in the
Partnership; (v) as to any trustee of a trust which is a Partner, the
termination of the trust (but not the substitution of a new trustee); or (vi) as
to any Partner, the bankruptcy of such Partner. For purposes of this definition,
bankruptcy of a Partner shall be deemed to have occurred when (a) the Partner
commences a voluntary proceeding seeking liquidation, reorganization or other
relief under any bankruptcy, insolvency or other similar law now or hereafter in
effect, (b) the Partner is adjudged as bankrupt or insolvent, or a final and
nonappealable order for relief under any bankruptcy, insolvency or similar law
now or hereafter in effect has been entered against the Partner, (c) the Partner
executes and delivers a general assignment for the benefit of the Partner's
creditors, (d) the Partner files an answer or other pleading admitting or
failing to contest the material allegations of a petition filed against the
Partner in any proceeding of the nature described in clause (b) above, (e) the
Partner seeks, consents to or acquiesces in the appointment of a trustee,
receiver or liquidator for the Partner or for all or any substantial part of the
Partner's properties, (f) any proceeding seeking liquidation, reorganization or
other relief under any bankruptcy, insolvency or other similar law now or
hereafter in effect has not been dismissed within 120 days after the
commencement thereof, (g) the appointment without the Partner's consent or
acquiescence of a trustee, receiver or liquidator has not been vacated or stayed
within 90 days of such appointment, or (h) an appointment referred to in clause
(g) is not vacated within 90 days after the expiration of any such stay.
"Indemnitee" means (i) any Person made a party to a proceeding by
reason of his status as (A) the General Partner or (B) a director or officer of
the Partnership or the General Partner, and (ii) such other Persons (including
Affiliates of the General Partner or the Partnership) as the General Partner may
designate from time to time, in its sole and absolute discretion.
"Limited Partner" means any Person named as a Limited Partner in
Exhibit A attached hereto, as such Exhibit may be amended from time to time, or
any Substituted Limited Partner or Additional Limited Partner, in such Person's
capacity as a Limited Partner in the Partnership.
"Limited Partnership Interest" means a Partnership Interest of a
Limited Partner in the Partnership representing a fractional part of the
Partnership Interest of all Limited Partners and includes any and all benefits
to which the holder of such a Partnership Interest may be entitled as provided
in this Agreement, together with all obligations of such person to comply with
the terms and provisions of this Agreement. A Limited Partnership Interest may
be expressed as a number of Partnership Units.
"Liquidator" has the meaning set forth in Section 13.2.A.
"Majority in Interest of the Limited Partners" means those Limited
Partners (other than any Limited Partner 50% or more of whose equity is owned,
directly or indirectly, by the General Partner) holding Percentage Interests
that are greater than fifty percent (50%) of the aggregate Percentage Interest
of all Limited Partners (other than any Limited Partner 50% or more whose equity
is owned, directly or indirectly, by the General Partner).
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"Net Income" or "Net Loss" means for each fiscal year of the
Partnership, an amount equal to the Partnership's taxable income or loss for
such fiscal year, determined in accordance with Code Section 703(a) (for this
purpose, all items of income, gain, loss, or deduction required to be stated
separately pursuant to Code Section 703(a)(1) shall be included in taxable
income or loss), with the following adjustments:
a. Any income of the Partnership that is exempt from federal income
tax and not otherwise taken into account in computing Net Income or Net Loss
pursuant to this definition of Net Income or Net Loss shall be added to such
taxable income or loss;
b. Any expenditures of the Partnership described in Code Section
705(a)(2)(B) or treated as Code Section 705(a)(2)(B) expenditures pursuant to
Regulations Section 1.704-1(b)(2)(iv)(i), and not otherwise taken into account
in computing Net Income or Net Loss pursuant to this definition of Net Income or
Net Loss shall be subtracted from such taxable income or loss;
c. In the event the Gross Asset Value of any Partnership asset is
adjusted pursuant to subparagraph (b) or subparagraph (c) of the definition of
Gross Asset Value, the amount of such adjustment shall be taken into account as
gain or loss from the disposition of such asset for purposes of computing Net
Income or Net Loss;
d. Gain or loss resulting from any disposition of property with
respect to which gain or loss is recognized for federal income tax purposes
shall be computed by reference to the Gross Asset Value of the property disposed
of, notwithstanding that the adjusted tax basis of such property differs from
its Gross Asset Value;
e. In lieu of the depreciation, amortization, and other cost
recovery deductions taken into account in computing such taxable income or loss,
there shall be taken into account Depreciation for such fiscal year;
f. To the extent an adjustment to the adjusted tax basis of any
Partnership asset pursuant to Code Section 734(b) or Code Section 743(b) is
required pursuant to Regulations Section 1.704-1(b)(2)(iv)(m)(4) to be taken
into account in determining Capital Accounts as a result of a distribution other
than in liquidation of a Partner's interest in the Partnership, the amount of
such adjustment shall be treated as an item of gain (if the adjustment increases
the basis of the asset) or loss (if the adjustment decreases the basis of the
asset) from the disposition of the asset and shall be taken into account for
purposes of computing Net Income or Net Loss; and
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g. Notwithstanding any other provision of this definition of Net
Income or Net Loss, any items which are specially allocated pursuant to Section
6.3 hereof shall not be taken into account in computing Net Income or Net Loss.
The amounts of the items of Partnership income, gain, loss, or deduction
available to be specially allocated pursuant to Section 6.3 hereof shall be
determined by applying rules analogous to those set forth in this definition of
Net Income or Net Loss.
"Nonrecourse Deductions" has the meaning set forth in Regulations
Section 1.704-2(b)(1), and the amount of Nonrecourse Deductions for a
Partnership Year shall be determined in accordance with the rules of Regulations
Section 1.704-2(c).
"Nonrecourse Liability" has the meaning set forth in Regulations
Section 1.752-1(a)(2).
"Notice of Redemption" means a Notice of Redemption substantially in
the form of Exhibit B to this Agreement.
"Partner" means a General Partner or a Limited Partner, and
"Partners" means the General Partner and the Limited Partners.
"Partner Minimum Gain" means an amount, with respect to each Partner
Nonrecourse Debt, equal to the Partnership Minimum Gain that would result if
such Partner Nonrecourse Debt were treated as a Nonrecourse Liability,
determined in accordance with Regulations Section 1.704-2(i)(3).
"Partner Nonrecourse Debt" has the meaning set forth in Regulations
Section 1.704-2(b)(4).
"Partner Nonrecourse Deductions" has the meaning set forth in
Regulations Section 1.704-2(i)(2), and the amount of Partner Nonrecourse
Deductions with respect to a Partner Nonrecourse Debt for a Partnership Year
shall be determined in accordance with the rules of Regulations Section
1.704-2(i)(2).
"Partnership" means the limited partnership formed under the Act and
pursuant to this Agreement, and any successor thereto.
"Partnership Interest" means an ownership interest in the
Partnership of either a Limited Partner or the General Partner and includes any
and all benefits to which the holder of such a Partnership Interest may be
entitled as provided in this Agreement, together with all obligations of such
Person to comply with the terms and provisions of this Agreement. A Partnership
Interest may be expressed as a number of Partnership Units.
"Partnership Minimum Gain" has the meaning set forth in Regulations
Section 1.704-2(b)(2), and the amount of Partnership Minimum Gain, as well as
any net increase or decrease in Partnership Minimum Gain, for a Partnership Year
shall be determined in accordance with the rules of Regulations Section
1.704-2(d).
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"Partnership Record Date" means the record date established by the
General Partner for the distribution of Available Cash pursuant to Section 5.1
hereof which record date shall be the same as the record date established by the
General Partner for a distribution to its stockholders of some or all of its
portion of such distribution.
"Partnership Unit" means a fractional, undivided share of the
Partnership Interest of all Partners issued pursuant to Sections 4.1 and 4.2. As
of the Effective Date of this Agreement, there shall be considered to be
2,245,411 Partnership Units outstanding, with all such Partnership Units
representing 100% of the Percentage Interests of the Partnership.
"Partnership Year" means the fiscal year of the Partnership, which
shall be the calendar year.
"Percentage Interest" means, as to a Partner, its interest in the
Partnership as determined by dividing the Partnership Units owned by such
Partner by the total number of Partnership Units then outstanding and as
specified in Exhibit A attached hereto, as such Exhibit may be amended from time
to time.
"Person" means an individual or a corporation, partnership, trust,
limited liability company, unincorporated organization, association or other
entity.
"Properties" means such interests in real property and personal
property including, without limitation, fee interest, interests in ground
leases, interests in joint ventures, interests in mortgages, and Debt
instruments as the Partnership may hold from time to time.
"Qualified Transferee" means an "Accredited Investor" as defined in
Rule 501 promulgated under the Securities Act.
"Redemption Right" has the meaning set forth in Section 8.6 hereof.
"Regulations" means the Income Tax Regulations promulgated under the
Code, as such regulations may be amended from time to time (including
corresponding provisions of succeeding regulations).
"Regulatory Allocations" has the meaning set forth in Section
6.3(A)(viii) of this Agreement.
"REIT" means a real estate investment trust under Section 856 of the
Code.
"REIT Requirements" has the meaning set forth in Section 5.1.
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"REIT Share" shall mean a share of common stock of the General
Partner, but shall not, for purposes of the definition of "Conversion Factor,"
include any Trust Shares (as defined in the Articles of Incorporation of the
General Partner).
"REIT Shares Amount" shall mean a number of REIT Shares equal to the
product of the number of Partnership Units offered for redemption by a Redeeming
Partner, multiplied by the Conversion Factor in effect on the Valuation Date.
"Securities Act" means the Securities Act of 1933, as amended, and
the rules and regulations of the Securities and Exchange Commission promulgated
thereunder.
"Specified Redemption Date" means the tenth (10th) Business Day
after receipt by the Partnership of a Notice of Redemption.
"Stock Option Plan" means any stock option plan of the General
Partner.
"Subsidiary" means, 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 interest is owned, directly or
indirectly, by such Person.
"Substituted Limited Partner" means a Person who is admitted as a
Limited Partner to the Partnership pursuant to Section 11.4
"Terminating Capital Transaction" means any sale or other
disposition of all or substantially all of the assets of the Partnership or a
related series of transactions that, taken together, result in the sale or other
disposition of all or substantially all of the assets of the Partnership.
"Valuation Date" means the date of receipt by the General Partner of
a Notice of Redemption or, if such date is not a Business Day, the immediately
preceding Business Day.
"Value" means, with respect to a REIT Share, the average of the
daily market price for the ten (10) consecutive trading days immediately
preceding the Valuation Date. The market price for each such trading day shall
be: (i) if the REIT Shares are listed or admitted to trading on any securities
exchange or the Nasdaq National Market System, the closing price, regular way,
on such day, or if no such sale takes place on such day, the average of the
closing bid and asked prices on such day, (ii) if the REIT Shares are not listed
or admitted to trading on any securities exchange or the Nasdaq National Market
System, the last reported sale price on such day or, if no sale takes place on
such day, the average of the closing bid and asked prices on such day, as
reported by a reliable quotation source designated by the General Partner, or
(iii) if the REIT Shares are not listed or admitted to trading on any securities
exchange or the Nasdaq National Market System and no such last reported sale
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price or closing bid and asked prices are available, the average of the reported
high bid and low asked prices on such day, as reported by a reliable quotation
source designated by the General Partner, or if there shall be no bid and asked
prices on such day, the average of the high bid and low asked prices, as so
reported, on the most recent day (not more than 10 days prior to the date in
question) for which prices have been so reported; provided that if there are no
bid and asked prices reported during the 10 days prior to the date in question,
the Value of the REIT Shares shall be determined by the General Partner acting
in good faith on the basis of such quotations and other information as it
considers, in its reasonable judgment, appropriate. In the event the REIT Shares
Amount includes rights that a holder of REIT Shares would be entitled to
receive, then the Value of such rights shall be determined by the General
Partner acting in good faith on the basis of such quotations and other
information as it considers, in its reasonable judgment, appropriate; and
provided further that in connection with determining the Deemed Value of the
Partnership for purposes of determining the number of additional Units issuable
upon a Capital Contribution funded by an underwritten public offering of REIT
Shares, then the Value of the REIT Shares shall be the public offering price per
share of the REIT Shares sold.
ARTICLE 2
ORGANIZATIONAL MATTERS
Section 2.1 Organization
The Partnership is a limited partnership pursuant to the provisions
of the Act and upon the terms and conditions set forth in this Agreement. Except
as expressly provided herein to the contrary, the rights and obligations of the
Partners and the administration and termination of the Partnership shall be
governed by the Act. The Partnership Interest of each Partner shall be personal
property for all purposes.
The Partnership has been formed with an initial contribution of
$1.00 by the General Partner for one Partnership Unit of general partnership
interest, and an initial contribution of $1.00 by Cedar Bay Company, for one
Partnership Unit of limited partnership interest. Upon the Effective Date, the
contributions specified on Exhibit A as being made on the Effective Date shall
be made and the Partnership Units specified therein shall be issued. Upon such
issuance, the initial Partnership Unit issued to the General Partner and the
initial Partnership Unit issued to Cedar Bay Company shall be redeemed for the
price of $1.00 each.
Section 2.2 Name
The name of the Partnership is Cedar Income Fund Partnership, L.P.
The Partnership's business may be conducted under any other name or names deemed
advisable by the General Partner, including the name of the General Partner or
any Affiliate thereof. The words "Limited Partnership," "L.P.," "Ltd." or
similar words or letters shall be included in the Partnership's name where
necessary for the purposes of complying with the laws of any jurisdiction that
so requires. The General Partner in its sole and absolute discretion may change
the name of the Partnership at any time and from time to time and shall notify
the Limited Partners of such change in the next regular communication to the
Limited Partners.
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Section 2.3 Registered Office and Agent; Principal Office
The address of the registered office of the Partnership in the State
of Delaware is located at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, and
the registered agent for service of process on the Partnership in the State of
Delaware at such registered office shall be as set forth in the Certificate, as
it may be amended from time to time. The principal office of the Partnership is
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ or such other place as
the General Partner may from time to time designate by notice to the Limited
Partners. The Partnership may maintain offices at such other place or places
within or outside the State of Delaware as the General Partner deems advisable.
Section 2.4 Power of Attorney
A. Each Limited Partner and each Assignee constitutes and appoints
the General Partner, any Liquidator, and authorized officers and
attorneys-in-fact of each, and each of those acting singly, in each case with
full power of substitution, as its true and lawful agent and attorney-in-fact,
with full power and authority in its name, place and stead to:
(1) Execute, swear to, acknowledge, deliver, file and record in
the appropriate public offices (a) all certificates, documents
and other instruments (including, without limitation, this
Agreement and the Certificate and all amendments or
restatements thereof) that the General Partner or the
Liquidator deems appropriate or necessary to form, qualify or
continue the existence or qualification of the Partnership as
a limited partnership (or a partnership in which the limited
partners have limited liability) in the State of Delaware and
in all other jurisdictions in which the Partnership may
conduct business or own property; (b) all instruments that the
General Partner deems appropriate or necessary to reflect any
amendment, change, modification or restatement of this
Agreement in accordance with its terms; (c) all conveyances
and other instruments or documents that the General Partner
deems appropriate or necessary to reflect the dissolution and
liquidation of the Partnership pursuant to the terms of this
Agreement, including, without limitation, a certificate of
cancellation; (d) all instruments relating to the admission,
withdrawal, removal or substitution of any Partner pursuant
to, or other events described in, Article 11, 12 or 13 hereof
or the Capital Contribution of any Partner; and (e) all
certificates, documents and other instruments relating to the
determination of the rights, preferences and privileges of
Partnership Interests; and
(2) execute, swear to, acknowledge and file all ballots, consents,
approvals, waivers, certificates and other instruments
appropriate or necessary, in the sole and absolute discretion
of the General Partner, to make, evidence, give, confirm or
ratify any vote, consent, approval, agreement or other action
which is made or given by the Partners hereunder or is
consistent with the terms of this Agreement or appropriate or
necessary, in the sole discretion of the General Partner, to
effectuate the terms or intent of this Agreement.
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Nothing contained herein shall be construed as authorizing the General Partner
to amend this Agreement except in accordance with Article 14 hereof or as may be
otherwise expressly provided for in this Agreement.
B. The foregoing power of attorney is hereby declared to be
irrevocable and a power coupled with an interest, in recognition of the fact
that each of the Partners will be relying upon the power of the General Partner
to act as contemplated by this Agreement in any filing or other action by it on
behalf of the Partnership, and it shall survive and not be affected by the
subsequent Incapacity of any Limited Partner or Assignee and the transfer of all
or any portion of such Limited Partner's or Assignee's Partnership Units and
shall extend to such Limited Partner's or Assignee's heirs, successors, assigns
and personal representatives. Each such Limited Partner or Assignee hereby
agrees to be bound by any representation made by the General Partner, acting in
good faith pursuant to such power of attorney, and each such Limited Partner or
Assignee hereby waives any and all defenses which may be available to contest,
engage or disaffirm the action of the General Partner, taken in good faith under
such power of attorney. Each Limited Partner or Assignee shall execute and
deliver to the General Partner or the Liquidator, within 15 days after receipt
of the General Partner's request therefor, such further designations, powers of
attorney and other instruments as the General Partner or the Liquidator, as the
case may be, deems necessary to effectuate this Agreement and the purposes of
the Partnership.
Section 2.5 Term
The term of the Partnership commenced on June 12, 1998 and shall
continue until December 31, 2098 unless it is dissolved sooner pursuant to the
provisions of Article 13 or as otherwise provided by law.
ARTICLE 3
PURPOSE
Section 3.1 Purpose and Business
The purpose and nature of the business to be conducted by the
Partnership is (i) to conduct any business that may be lawfully conducted by a
limited partnership organized pursuant to the Act, (ii) to enter into any
partnership, joint venture or other similar arrangement to engage in any of the
foregoing or the ownership of interest in any entity engaged in any of the
foregoing and (iii) to do anything necessary or incidental to the foregoing;
provided, however, that with respect to subparagraphs (i), (ii) and (iii) above
such business shall be limited to and conducted in such a manner as to permit
the General Partner at all times to be classified as a REIT for federal income
tax purposes, unless the General Partner has determined to cease to qualify as a
REIT, and, to the extent not inconsistent with the preceding clause, to permit
any other Partner which is a REIT to be so classified for federal income tax
purposes.
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Section 3.2 Powers
The Partnership is empowered to do any and all acts and things
necessary, appropriate, proper, advisable, incidental to or convenient for the
furtherance and accomplishment of the purposes and business described herein and
for the protection and benefit of the Partnership, provided that the Partnership
shall not take, or refrain from taking, any action which, in the judgment of the
General Partner, in its sole and absolute discretion, (i) could adversely affect
the ability of the General Partner to continue to qualify as a REIT, (ii) could
subject the General Partner to any additional taxes under Section 857 or Section
4981 of the Code, or (iii) could violate any law or regulation of any
governmental body or agency having jurisdiction over the General Partner or its
securities, unless any such action (or inaction) under (i), (ii) or (iii) first
shall have been specifically consented to by the General Partner in writing.
ARTICLE 4
CAPITAL CONTRIBUTIONS
Section 4.1 Capital Contributions of the Partners
At the time of the execution of this Agreement, the Partners shall
make Capital Contributions as set forth in Exhibit A to this Agreement. To the
extent the Partnership acquires after the date of this Agreement any property by
acquisition or by the merger of any other Person into the Partnership or
otherwise, Persons who receive Partnership Interests in connection with the
acquisition or 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 acquisition or merger agreement and
as set forth in Exhibit A as amended. The Partners shall own Partnership Units
in the amounts set forth in Exhibit A, which Exhibit A shall be amended from
time to time by the General Partner to the extent necessary to reflect
accurately exchanges, redemptions, Capital Contributions, the issuance of
additional Partnership Units, or similar events having an effect on a Partner's
Percentage Interest.
Section 4.2 Additional Capital Contributions Generally
Except as otherwise required by law or pursuant to this Article 4,
no Partner shall be required or permitted to make any additional Capital
Contributions to the Partnership.
Section 4.3 Loans by Partners
Except as otherwise provided in Section 4.5, no Partner shall be
required or permitted to make any loans to the Partnership.
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Section 4.4 Loans by Third Parties
The Partnership may incur Debt, or enter into other similar credit,
guarantee, financing or refinancing arrangements for any purpose (including,
without limitation, in connection with any further acquisition of Properties)
upon such terms as the General Partner determines appropriate; provided that
loans from the General Partner shall be subject to Section 4.5.C.
Section 4.5 Additional Funding, Additional Partnership Interests and
Capital Contributions
A. General. The General Partner may, at any time and from time to
time, determine that the Partnership requires additional funds
("Additional Funds") for the acquisition or development of
additional Properties or for such other purposes as the
General Partner may determine. Additional Funds may be raised
by the Partnership, at the election of the General Partner, in
any manner provided in, and in accordance with, the terms of
this Section 4.5. No Person shall have any preemptive rights
or rights to subscribe for or acquire any Partnership
Interest.
B. Additional General Partner Capital Contributions. The General
Partner may, or, to the extent the General Partner raises all
or any portion of the Additional Funds through the sale or
other issuance of REIT Shares or other equity interests in the
General Partner, the General Partner shall, contribute the
Additional Funds to the capital of the Partnership in exchange
for Partnership Units.
C. General Partner Loans. The General Partner may, or, to the
extent the General Partner enters into a Funding Debt, the
General Partner shall, lend the Additional Funds to the
Partnership (a "General Partner Loan"). If the General Partner
enters into such a Funding Debt, the General Partner Loan will
consist of the net proceeds to the General Partner from such
Funding Debt and will be on the same terms and conditions,
including interest rate, repayment schedule and costs and
expenses, as shall be applicable with respect to or incurred
in connection with such Funding Debt. Otherwise, all General
Partner Loans made pursuant to this Section 4.5 shall be on
terms and conditions no less favorable to the Partnership than
would be available to the Partnership from any third party.
D. Additional Limited Partners. The General Partner on behalf of
the Partnership may raise all or any portion of the Additional
Funds by accepting additional Capital Contributions, (i) in
the case of cash, from the General Partner or any Limited
Partner, or, (ii) in the case of property other than cash,
from any Partner and/or third parties, and either (a) in the
case of a Partner, issuing additional Units, or (b) in the
case of a third party, admitting such third party as an
Additional Limited Partner. The General Partner shall
determine the amount, terms and conditions of such additional
Capital Contributions.
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E. Additional Units. Upon the acceptance of a Capital Contribution, the
contributing Partner shall receive the following number of
additional whole Partnership Units (rounded down to the nearest
whole Partnership Unit):
U(1)= CC x TU
--
DV
where
U(1) = number of additional Partnership Units to be issued
CC = Agreed Value of the Capital Contribution
DV = Deemed Value of the Partnership as of the Adjustment Date for such
Capital Contribution
TU = total number of Partnership Units outstanding immediately prior to
the Capital Contribution
F. Additional Partnership Interests. The General Partner shall be
authorized to issue additional limited partnership interests
in the form of Partnership Units for any Partnership purpose
at any time or from time to time, to any Partner or other
Person (other than the General Partner, except in accordance
with the provisions contained below). The Partnership also may
from time to time issue to the General Partner additional
Partnership Units or other Partnership Interests in such
classes and having such designations, preferences and relative
rights (including preferences and rights senior to the
existing Limited Partnership Interests) as shall be determined
by the General Partner in accordance with the Act and
governing law. Any such issuance of Partnership Units or
Partnership Interests to the General Partner shall be
conditioned upon (i) the undertaking by the General Partner of
a related issuance of REIT Shares (with such shares having
designations, rights and preferences such that the economic
rights of the holders of such REIT Shares are substantially
similar to the rights of the additional Partnership Interests
issued to the General Partner) and the General Partner making
a Capital Contribution in an amount equal to the net proceeds
raised in the issuance of such REIT Shares or (ii) the
issuance by the General Partner of REIT Shares under any stock
option or bonus plan and the General Partner making a Capital
Contribution in an amount equal to the exercise price of the
option exercised by any employee pursuant to such stock option
or other bonus plan.
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G. Additional REIT Shares. The General Partner shall not issue
any (i) additional REIT Shares, (ii) rights, options or
warrants containing the right to subscribe for or purchase
REIT Shares or (iii) securities convertible or exchangeable
into REIT Shares (collectively, "Additional REIT Securities")
other than to all holders of REIT Shares, pro rata, unless (x)
the Partnership issues to the General Partner (i) Partnership
--- ---- Interests, (ii) rights, options or warrants
containing the right to subscribe for or purchase Partnership
Interests or (iii) securities convertible or exchangeable into
Partnership Interests such that the General Partner receives
an economic interest in the Partnership substantially similar
to the economic interest in the General Partner represented by
the Additional Securities and (y) the General Partner
contributes the net proceeds from the issuance of the
Additional REIT Securities and from the exercise of any rights
contained in any Additional REIT Securities to the
Partnership.
ARTICLE 5
DISTRIBUTIONS
Section 5.1 Requirement and Characterization of Distributions
The General Partner shall cause the Partnership to distribute quarterly
all or such portion as the General Partner may in its discretion determine, of
Available Cash generated by the Partnership during such quarter to the Holders
of Partnership Units on the Partnership Record Date with respect to such
quarter, pro rata in accordance with the respective number of Partnership Units
so held on such Partnership Record Date. The General Partner shall take such
reasonable efforts, as determined by it in its sole and absolute discretion and
consistent with its qualification as a REIT, to cause the Partnership to
distribute sufficient amounts to enable the General Partner to pay stockholder
dividends that will (a) satisfy the requirements for qualifying as a REIT under
the Code and Regulations ("REIT Requirements"), and (b) avoid any federal income
or excise tax liability of the General Partner.
Section 5.2 Distributions in Kind
No right is given to any Partner to demand and receive property or cash.
The General Partner may determine, in its sole and absolute discretion, to make
a distribution in kind to the Partners of Partnership assets and such assets
shall be distributed in such a fashion as to ensure that the fair market value
is distributed and allocated in accordance with Articles 5, 6 and 13.
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Section 5.3 Amounts Withheld
All amounts withheld pursuant to the Code or any provisions of any state
or local tax and Section 10.5 hereof with respect to any allocation, payment or
distribution to the General Partner, the Limited Partners or Assignees shall be
treated as amounts distributed to the General Partner, Limited Partners or
Assignees, as the case may be, pursuant to Section 5.1 for all purposes under
this Agreement.
Section 5.4 Distributions Upon Liquidation
Notwithstanding the foregoing, proceeds from a Terminating Capital
Transaction shall be distributed to the Partners in accordance with Section
13.2.
ARTICLE 6
ALLOCATIONS
Section 6.1 Timing and Amount of Allocations of Net Income and Net Loss
Net Income and Net Loss of the Partnership shall be determined and
allocated with respect to each fiscal year of the Partnership as of the end of
each such year. Subject to the other provisions of this Article 6, an allocation
to a Partner of a share of Net Income or Net Loss shall be treated as an
allocation of the same share of each item of income, gain, loss or deduction
that is taken into account in computing Net Income or Net Loss.
Section 6.2 General Allocations
Except as otherwise provided in this Article 6, Net Income and Net Loss
shall be allocated to each of the Partners in accordance with their respective
Percentage Interests during the year.
Section 6.3 Additional Allocation Provisions Notwithstanding the foregoing
provisions of this Article 6:
A. Regulatory Allocations.
(i) Minimum Gain Chargeback. Except as otherwise provided in Regulations
Section 1.704-2(f), notwithstanding the provisions of Section 6.2 of this
Agreement, or any other provision of this Article 6, if there is a net decrease
in Partnership Minimum Gain during any fiscal year, each Partner shall be
specially allocated items of Partnership income and gain for such year (and, if
necessary, subsequent years) in an amount equal to such Partner's share of the
net decrease in Partnership Minimum Gain, as determined under Regulations
Section 1.704-2(g). Allocations pursuant to the previous sentence shall be made
in proportion to the respective amounts required to be allocated to each Partner
pursuant thereto. The items to be allocated shall be determined in accordance
with Regulations Sections 1.704-2(f)(6) and 1.704-2(j)(2). This Section
6.3(A)(i) is intended to qualify as a "minimum gain chargeback" within the
meaning of Regulations Section 1.704-2(f) which shall be controlling in the
event of a conflict between such Regulation and this Section 6.3(A)(i).
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(ii) Partner Minimum Gain Chargeback. Except as otherwise provided in
Regulations Section 1.704-2(i)(4), and notwithstanding the provisions of Section
6.2 of this Agreement, or any other provision of this Article 6 (except Section
6.3(A)(i)), if there is a net decrease in Partner Minimum Gain attributable to a
Partner Nonrecourse Debt during any fiscal year, each Partner who has a share of
the Partner Minimum Gain attributable to such Partner Nonrecourse Debt,
determined in accordance with Regulations Section 1.704-2(i)(5), shall be
specifically allocated items of Partnership income and gains for such year (and,
if necessary, subsequent years) in an amount equal to such Partner's share of
the net decrease in Partner Minimum Gain attributable to such Partner
Nonrecourse Debt, determined in accordance with Regulations Section
1.704-2(i)(4). Allocations pursuant to the previous sentence shall be made in
proportion to the respective amounts required to be allocated to each Partner
pursuant thereto. The items to be so allocated shall be determined in accordance
with Regulations Sections 1.704-2(i)(4) and 1.704-2(j)(2). This Section
6.3(A)(ii) is intended to qualify as a "chargeback of partner nonrecourse debt
minimum gain" within the meaning of Regulations Section 1.704-2(i) which shall
be controlling in the event of a conflict between such Regulation and this
Section 6.3(A)(ii).
(iii) Nonrecourse Deductions and Partner Nonrecourse Deductions. Any
Nonrecourse Deductions for any fiscal year shall be specially allocated to the
Partners in accordance with their Percentage Interests. Any Partner Nonrecourse
Deductions for any fiscal year shall be specially allocated to the Partner(s)
who bears the economic risk of loss with respect to the Partner Nonrecourse Debt
to which such Partner Nonrecourse Deductions are attributable, in accordance
with Regulations Section 1.704-2(i).
(iv) Qualified Income Offset. If any Partner unexpectedly receives an
adjustment, allocation or distribution described in Regulations Section
1.704-1(h)(2)(ii)(d)(4), (5) or (6), items of Partnership income and gain shall
be allocated, in accordance with Regulations Section 1.704-1(b)(2)(ii)(d), to
the Partner in an amount and manner sufficient to eliminate to the extent
required by such Regulations, the Adjusted Capital Account Deficit of the
Partner as quickly as possible provided that an allocation pursuant to this
Section 6.3(A)(iv) shall be made if and only to the extent that such Partner
would have an Adjusted Capital Account Deficit after all other allocations
provided in this Article 6 have been tentatively made as if this Section
6.3(A)(iv) were not in this Agreement. It is intended that this Section
6.3(A)(iv) qualify and be construed as a "qualified income offset" within the
meaning of Regulations Section 1.704.1(b)(2)(ii)(d), which shall be controlling
in the event of a conflict between such Regulations and this Section 6.3(A)(iv).
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(v) Gross Income Allocation. In the event any Partner has a deficit
Capital Account at the end of any fiscal year which is in excess of the sum of
(1) the amount (if any) such Partner is obligated to restore to the Partnership,
and (2) the amount such Partner is deemed to be obligated to restore pursuant to
the penultimate sentences of Regulations Sections 1.704.2(g)(1) and
1.704-2(i)(5), each such 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 6.3(A)(v) shall be made if
and only to the extent that such Partner would have a deficit Capital Account in
excess of such sum after all other allocations provided in this Article 6 have
been tentatively made as if this Section 6.3(A)(v) and Section 6.3(A)(iv) were
not in this Agreement.
(vi) Limitation on Allocation of Net Loss. To the extent any allocation of
Net Loss would cause or increase an Adjusted Capital Account Deficit as to any
Partner, such allocation of Net Loss shall be reallocated among the other
Partners in accordance with their respective Partnership Interests, subject to
the limitations of this Section 6.3(A)(vi).
(vii) Section 745 Adjustment. To the extent an adjustment to the adjusted
tax basis of any Partnership asset pursuant to Code Section 734(b) or Code
Section 743(b) is required, pursuant to Regulations Section
1.704.1(b)(2)(iv)(m)(2) or Regulations Section 1.704-1(b)(2)(iv)(m)(4), to be
taken into account in determining Capital Accounts as the result of a
distribution to a Partner in complete liquidation of his interest in the
Partnership, the amount of such adjustment to the Capital Accounts shall be
treated as an item of gain (if the adjustment increases the basis of the asset)
or loss (if the adjustment decreases such basis) and such gain or loss shall be
specially allocated to the Partners in accordance with their interests in the
Partnership in the event that Regulations Section 1.704-1(b(2)(iv)(m)(2)
applies, or to the Partners to whom such distribution was made in the event that
Regulations Section 1.704-1(b)(2)(iv)(m)(4) applies.
(viii) Curative Allocation. The allocations set forth in Sections
6.3(A)(i), (ii), (iii), (iv), (v), (vi), and (vii) (the "Regulatory
Allocations") are intended to comply with certain regulatory requirements,
including the requirements of Regulations Sections 1.704-1(b) and 1.704-2.
Notwithstanding the provisions of Section 6.2, the Regulatory Allocations shall
be taken into account in allocating other items of income, gain, loss and
deduction among the Partners so that, to the extent possible, the net amount of
such allocations of other items and the Regulatory Allocations to each Partner
shall be equal to the net amount that would have been allocated to each such
Partner if the Regulatory Allocations had not occurred.
B. For purposes of determining a Partner's proportional share of the
"excess nonrecourse liabilities" of the Partnership within the meaning of
Regulations Section 1.752-3(a)(3), each Partner's interest in Partnership
profits shall be such Partner's Percentage Interest.
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Section 6.4 Tax Allocations
A. In General. Except as otherwise provided in this Section 6.4, for
income tax purposes each item of income, gain, loss and deduction (collectively,
"Tax Items") shall be allocated among the Partners in the same manner as its
correlative item of "book" income, gain, loss or deduction is allocated pursuant
to Sections 6.2 and 6.3.
B. Allocations Respecting Section 704(c) Revaluations. Notwithstanding
Section 6.4(A), Tax Items with respect to Partnership property that is
contributed to the Partnership by a Partner shall be shared among the Partners
for income tax purposes pursuant to Regulations promulgated under Section 704(c)
of the Code, so as to take into account the variation, if any, between the basis
of the property to the Partnership and its initial Gross Asset Value. With
respect to Partnership property that is initially contributed to the Partnership
upon its formation, such variation between basis and initial Gross Asset Value
shall be taken into account under the "traditional method" as described in
Proposed Treasury Regulation Section 1.704-3(b) and Treasury Regulation Section
1.704-1(c)(2). With respect to properties subsequently contributed to the
Partnership the Partnership shall account for such variation under any method
approved under Section 704(c) of the Code and the applicable regulations as
chosen by the General Partner. In the event the Gross Asset Value of any
Partnership asset is adjusted pursuant to subparagraph (b) of the definition of
Gross Asset Value (provided in Article 1 of this Agreement), subsequent
allocations of Tax Items with respect to such asset shall take account of the
variation, if any, between the adjusted basis of such asset and its Gross Asset
Value in the same manner as under Section 704(c) of the Code and the applicable
regulations.
ARTICLE 7
MANAGEMENT AND OPERATIONS OF BUSINESS
Section 7.1 Management
A. Except as otherwise expressly provided in this Agreement, all
management powers over the business and affairs of the Partnership are
exclusively vested in the General Partner and no Limited Partner shall have any
right to participate in or exercise control or management power over the
business and affairs of the Partnership. The General Partner may not be removed
by the Limited Partners with or without cause, except with the consent of the
General Partner. In addition to the powers now or hereafter granted a general
partner of a limited partnership under applicable law or which are granted to
the General Partner under any other provision of this Agreement, the General
Partner, subject to the other provisions hereof including Section 7.3, shall
have full power and authority to do all things deemed necessary or desirable by
it to conduct the business of the Partnership, to exercise all powers set forth
in Section 3.2 hereof and to effectuate the purposes set forth in Section 3.1
hereof, including, without limitation:
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(1) the making of any expenditures, the lending or borrowing of money
(including, without limitation, making prepayments on loans and
borrowing money to permit the Partnership to make distributions to
its Partners in such amounts as will permit the General Partner (as
long as the General Partner has determined to qualify as a REIT) to
avoid the payment of any federal income tax (including, for this
purpose, any excise tax pursuant to Section 4981 of the Code) and to
make distributions to its stockholders sufficient to permit the
General Partner to maintain REIT status), the assumption or
guarantee of or other contracting for, indebtedness and other
liabilities, the issuance of evidences of indebtedness (including
the securing of same by mortgage, deed of trust or other lien or
encumbrance on the Partnership's assets) and the incurring of any
obligations it deems necessary for the conduct of the activities of
the Partnership;
(2) the making of tax, regulatory and other filings, or rendering of
periodic or other reports to governmental or other agencies having
jurisdiction over the business or assets of the Partnership;
(3) the acquisition, disposition, mortgage, pledge, encumbrance,
hypothecation or exchange of any assets of the Partnership or the
merger or other combination of the Partnership with or into another
entity. In the event of any such sale, exchange, disposition or
other transfer of any property of the Partnership, the Partnership
shall no later than 15 days after the end of the calendar quarter in
which such sale, exchange, disposition or other transfer becomes a
taxable event to Partners, to the extent of the net cash Proceeds of
such sale, exchange, disposition or other transfer, effect a
distribution of cash in an amount which shall be such that the pro
rata share thereof received by each Partner shall equal or exceed
the total liability of such Partner for federal, state and local
income and franchise taxes resulting from such sale, exchange,
disposition or other transfer and from such distribution;
(4) the mortgage, pledge, encumbrance or hypothecation of any assets of
the Partnership, and the use of the assets of the Partnership
(including, without limitation, cash on hand) for any purpose
consistent with the terms of this Agreement and on any terms it sees
fit, including without limitation, the financing of the conduct or
the operations of the General Partner and of the Partnership, the
lending of funds to other Persons and the repayment of obligations
of the Partnership and any other Person in which it has an equity
investment;
(5) the negotiation, execution, and performance of any contracts,
leases, conveyances or other instruments that the General Partner
considers useful or necessary to the conduct of the Partnership's
operations or the implementation of the General Partner's powers
under this Agreement;
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(6) the distribution of Partnership cash or other Partnership assets in
accordance with this Agreement;
(7) the appointment of a manager or advisor to manage the business of
the Partnership and the entering into of a management agreement in
connection therewith and the selection and dismissal of employees of
the Partnership or of the General Partner (including, without
limitation, employees having titles such as "president," "vice
president," "secretary" and "treasurer") and agents, outside
attorneys, accountants, consultants and contractors of the General
Partner or of the Partnership and the determination of their
compensation, management fees and other terms of engagement,
employment or hiring;
(8) the maintenance of such insurance for the benefit of the Partnership
and the Partners as it deems necessary or appropriate;
(9) the formation of, or acquisition of an interest in, and the
contribution of property to, any further limited or general
partnerships, joint ventures or other relationships that it deems
desirable (including, without limitation, the acquisition of
interests in, and the contributions of property to any Subsidiary
and any other Person in which it has an equity investment from time
to time); provided that as long as the General Partner has
determined to continue to qualify as a REIT, the General Partner may
not engage in any such formation, acquisition or contribution that
would cause it to fail to qualify as a REIT;
(10) the control of all matters affecting the rights and obligations of
the Partnership, including the conduct of litigation and the
incurring of legal expense and the settlement of claims and
litigation, and the indemnification of any Person against
liabilities and contingencies to the extent permitted by law;
(11) the undertaking of any action in connection with the Partnership's
direct or indirect investment in any Person (including, without
limitation, the contribution or loan of funds by the Partnership to
such Persons); and
(12) subject to the other provisions in this Agreement, the determination
of the fair market value of any Partnership property distributed in
kind using such reasonable method of valuation as it may adopt,
provided that such methods are otherwise consistent with the
requirements of this Agreement.
B. Each of the Limited Partners agrees that the General Partner is
authorized to execute, deliver and perform the above-mentioned agreements and
transactions on behalf of the Partnership without any further act, approval or
vote of the Partners, notwithstanding any other provisions of
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this Agreement (except as provided in Section 7.3), the Act or any applicable
law, rule or regulation. None of the execution, delivery and performance by the
General Partner or the Partnership of any agreement authorized or permitted
under this Agreement shall constitute a breach by the General Partner of any
duty that the General Partner may owe the Partnership or the Limited Partners or
any other Persons under this Agreement or of any duty stated or implied by law
or equity.
C. At all times from and after the date hereof, the General Partner may
cause the Partnership to obtain and maintain (i) casualty, liability and other
insurance on the properties of the Partnership and (ii) liability insurance for
the Indemnitees hereunder.
D. At all times from and after the date hereof, the General Partner may
cause the Partnership to establish and maintain working capital reserves in such
amounts as the General Partner, in its sole and absolute discretion, deems
appropriate and reasonable from time to time.
E. In exercising its authority under this Agreement, the General Partner
may, but shall be under no obligation to, take into account the tax consequences
to any Partner (including the General Partner) of any action taken by it. The
General Partner and the Partnership shall not have liability to a Partner under
any circumstances as a result of an income tax liability incurred by such
Limited Partner as a result of an action (or inaction) by the General Partner
pursuant to its authority under this Agreement.
Section 7.2 Certificate of Limited Partnership
To the extent that such action is determined by the General Partner to be
reasonable and necessary or appropriate, the General Partner shall file
amendments to and restatements of the Certificate and do all the things to
maintain the Partnership as a limited partnership (or a partnership in which the
limited partners have limited liability) under the laws of the State of Delaware
and each other state, the District of Columbia or other jurisdiction, in which
the Partnership, or any of its subsidiaries, may elect to do business or own
property. Subject to the terms of Section 8.5.A(4) hereof, the General Partner
shall not be required, before or after filing, to deliver or mail a copy of the
Certificate or any amendment thereto to any Limited Partner. The General Partner
shall use all reasonable efforts to cause to be filed such other certificates or
documents as may be reasonable and necessary or appropriate for the formation,
continuation, qualification and operation of a limited partnership (or a
partnership in which the limited partners have limited liability) in the State
of Delaware, any other state, or the District of Columbia or other jurisdiction,
in which the Partnership, or any of its Subsidiaries, may elect to do business
or own property.
Section 7.3 Restrictions on General Partner's Authority
A. The General Partner may not take any action in contravention of this
Agreement, including, without limitation:
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(1) take any action that would make it impossible to carry
on the ordinary business of the Partnership, except as
otherwise provided in this Agreement;
(2) possess Partnership property, or assign any rights in
specific Partnership property, for other than a
Partnership purpose except as otherwise provided in this
Agreement;
(3) admit a Person as a Partner, except as otherwise
provided in this Agreement;
(4) perform any act that would subject a Limited Partner to
liability as a general partner in any jurisdiction or
any other liability except as provided herein or under
the Act; or
(5) enter into any contract, mortgage, loan or other
agreement that prohibits or restricts, or has the effect
of prohibiting the ability of a Limited Partner to
exercise its rights to an Exchange in full, except with
the written consent of such Limited Partner.
B. The General Partner shall not, without the prior written Consent
of the Limited Partners, undertake, on behalf of the Partnership, any of the
following actions or enter into any transaction which would have the effect of
such transactions:
(1) Except as provided in Section 7.3.C amend, modify or
terminate this Agreement other than to reflect the
admission, substitution, termination or withdrawal of
Partners pursuant to Article 12 hereof;
(2) Make a general assignment for the benefit of creditors
or appoint or acquiesce in the appointment of a
custodian, receiver or trustee for all or any part of
the assets of the Partnership;
(3) Institute any proceeding for Bankruptcy on behalf of the
Partnership;
(4) Approve or acquiesce in the transfer of the Partnership
Interest of the General Partner to any Person other than
the Partnership; or
(5) Admit into the Partnership any Additional or Substitute
General Partners.
C. Notwithstanding Section 7.3.B, the General Partner shall have the
power, without the Consent of the Limited Partners, to amend this Agreement as
may be required to facilitate or implement any of the following purposes:
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(1) to add to the obligations of the General Partner or
surrender any right or power granted to the General
Partner or any Affiliate of the General Partner for the
benefit of the Limited Partners;
(2) to reflect the admission, substitution, termination, or
withdrawal of Partners in accordance with this
Agreement;
(3) to reflect a change that is of an inconsequential nature
and does not adversely affect the Limited Partners in
any material respect, or to cure any ambiguity, correct
or supplement any provision in this Agreement not
inconsistent with law or with other provisions, or make
other changes with respect to matters arising under this
Agreement that will not be inconsistent with law or with
the provisions of this Agreement;
(4) to satisfy any requirements, conditions, or guidelines
contained in any order, directive, opinion, ruling or
regulation of a federal or state agency or contained in
federal or state law;
(5) to amend the provisions of this Agreement to protect the
qualification of the General Partner as a REIT because
of a change in applicable law (or an authoritative
interpretation thereof) or a ruling of the Internal
Revenue Service, unless the General Partner has
determined to cease qualifying as a REIT; and
(6) to modify, as set forth in the definition of "Capital
Account," the manner in which Capital Accounts are
computed.
The General Partner will provide notice to the Limited Partners when any action
under this Section 7.3.C is taken.
D. Notwithstanding Sections 7.3.B and 7.3.C hereof, this Agreement
shall not be amended, and no action may be taken by the General Partner, without
the Consent of each Partner adversely affected if such amendment or action would
(i) convert a Limited Partner's interest in the Partnership into a general
partner's interest (except as the result of the General Partner acquiring such
interest), (ii) modify the limited liability of a Limited Partner, (iii) alter
rights of the Partner to receive distributions pursuant to Article 5 or Section
7.1.A(3), or the allocations specified in Article 6 (except as permitted
pursuant to Section 4.5 and Section 7.3.C(3) hereof); (iv) alter or modify the
rights to an Exchange or REIT Shares Amount as set forth in Section 8.6, and
related definitions thereof or (v) amend this Section 7.3.D. Further, no
amendment may alter the restrictions on the General Partner's authority set
forth elsewhere in this Section 7.3 without the Consent specified in such
Section.
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E. The General Partner shall not take, on behalf of the Partnership,
without the prior written Consent of the Limited Partners, as long as the
Limited Partners have at least 10% of the aggregate Percentage Interests of the
Partnership, any of the following actions:
(1) Dissolve the Partnership;
(2) Agree to or consummate any merger, consolidation,
reorganization or other business combination to which
the Partnership or the General Partner is a party; or
(3) Sell, dispose, convey or otherwise transfer all or
substantially all of the assets of the Partnership or
the General Partner in one or a series of transactions.
Section 7.4 Reimbursement of the General Partner
A. Except as provided in this Section 7.4 and elsewhere in this
Agreement (including the provisions of Articles 5 and 6 regarding distributions,
payments and allocations to which it may be entitled), the General Partner shall
not be compensated for its services as general partner of the Partnership.
B. Subject to Section 15.11, the General Partner shall be reimbursed
on a monthly basis, or such other basis as the General Partner may determine in
its sole and absolute discretion, for all expenses it incurs relating to the
ownership of interests in and operation of, or for the benefit of, the
Partnership. The Limited Partners acknowledge that the General Partner's sole
business is the ownership of interests in and operation of the Partnership and
that such expenses are incurred for the benefit of the Partnership; provided,
that, the General Partner shall not be reimbursed for expenses it incurs
relating to the organization of the Partnership and the General Partner and any
public offering of REIT Shares by the General Partner, but shall be reimbursed
for expenses it incurs with respect to any other issuance of additional
Partnership Interests pursuant to the provisions hereof. Such reimbursements
shall be in addition to any reimbursement to the General Partner as a result of
indemnification pursuant to Section 7.7 hereof.
Section 7.5 Outside Activities of the General Partner
A. The General Partner shall not directly or indirectly enter into
or conduct any business, other than in connection with the ownership,
acquisition and disposition of Partnership Interests as a General Partner and
the management of the business of the Partnership, its operation as a public
reporting company with a class (or classes) of securities registered under the
Securities Exchange Act of 1934, as amended, its operation as a REIT and such
activities as are incidental to same. Without the Consent of the Limited
Partners, the General Partner shall not, directly or indirectly, participate in
or otherwise acquire any interest in any real or personal property, except its
General Partner Interest, and other than such short-term liquid investments,
bank accounts or similar instruments as it deems necessary to carry out its
responsibilities contemplated under this Agreement and its Articles of
Incorporation. Any Limited Partner Interests acquired by the General Partner,
whether pursuant to exercise by a Limited Partner of its right to an Exchange or
otherwise, shall be automatically converted into a General Partner Interest
comprised of an identical number of Partnership Units.
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B. In the event the General Partner exercises its rights under
Article IV of the Articles of Incorporation to purchase REIT Shares, then the
General Partner shall cause the Partnership to purchase from it a number of
Partnership Units as determined based on the application of the Conversion
Factor on the same terms that the General Partner purchased such REIT Shares.
Section 7.6 Contracts with Affiliates
A. The Partnership may lend or contribute to Persons in which it has
an equity investment, and such Persons may borrow funds from the Partnership on
terms and conditions established in the sole and absolute discretion of the
General Partner. The foregoing authority shall not create any right or benefit
in favor of any Person.
B. Except as provided in Section 7.5.A, the Partnership may transfer
assets to joint ventures, other partnerships, corporations or other business
entities in which it is or thereby becomes a participant upon such terms and
subject to such conditions consistent with this Agreement and applicable law.
C. The General Partner, in its sole and absolute discretion and
without the approval of the Limited Partners, may propose and adopt on behalf of
the Partnership employee benefit plans funded by the Partnership for the benefit
of employees of the General Partner, the Partnership, Subsidiaries of the
Partnership or any Affiliate of any of them in respect of services performed,
directly or indirectly, for the benefit of the Partnership, the General Partner,
or any of the Partnership's Subsidiaries.
D. The General Partner is expressly authorized to enter into, in the
name and on behalf of the Partnership, a right of first opportunity arrangement
and other conflict avoidance agreements with various Affiliates of the
Partnership and the General Partner, on such terms as the General Partner, in
its sole and absolute discretion, believes are advisable.
Section 7.7 Indemnification
A. The Partnership shall indemnify an Indemnitee from and against
any and all losses, claims, damages, liabilities, joint or several, expenses
(including legal fees and expenses), judgments, fines, settlements, and other
amounts arising from any and all claims, demands, actions, suits or proceedings,
civil, criminal, administrative or investigative, that relate to the operations
of the Partnership as set forth in this Agreement in which any Indemnitee may be
involved, or is threatened to be involved, as a party or
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otherwise, unless it is established that: (i) the act or omission of the
Indemnitee was material to the matter giving rise to the proceeding and either
was committed in bad faith or was the result of active and deliberate
dishonesty; (ii) the Indemnitee actually received an improper personal benefit
in money, property or services; or (iii) in the case of any criminal proceeding,
the Indemnitee had reasonable cause to believe that the act or omission was
unlawful. The termination of any proceeding by judgment, order or settlement
does not create a presumption that the Indemnitee did not meet the requisite
standard of conduct set forth in this Section 7.7.A. The termination of any
proceeding by conviction or upon a plea of nolo contendere or its equivalent, or
any entry of an order of probation prior to judgment, creates a rebuttable
presumption that the Indemnitee acted in a manner contrary to that specified in
this Section 7.7.A. Any indemnification pursuant to this Section 7.7 shall be
made only out of the assets of the Partnership.
B. Reasonable expenses incurred by an Indemnitee who is a party to a
proceeding may be paid or reimbursed by the Partnership in advance of the final
disposition of the proceeding upon receipt by the Partnership of (i) a written
affirmation by the Indemnitee of the Indemnitee's good faith belief that the
standard of conduct necessary for indemnification by the Partnership as
authorized in this Section 7.7.A has been met, and (ii) a written undertaking by
or on behalf of the Indemnitee to repay the amount if it shall ultimately be
determined that the standard of conduct has not been met.
C. The indemnification provided by this Section 7.7 shall be in
addition to any other rights to which an Indemnitee or any other Person may be
entitled under any agreement, pursuant to any vote of the Partners, as a matter
of law or otherwise and shall continue as to an Indemnitee who has ceased to
serve in such capacity.
D. The Partnership may purchase and maintain insurance, on behalf of
the Indemnitees and such other Persons as the General Partner shall determine,
against any liability that may be asserted against or expenses that may be
incurred by such Person in connection with the Partnership's activities,
regardless of whether the Partnership would have the power to indemnify such
Person against such liability under the provisions of this Agreement.
E. For purposes of this Section 7.7, the Partnership shall be deemed
to have requested an Indemnitee to serve as fiduciary of an employee benefit
plan whenever the performance by it of its duties to the Partnership also
imposes duties on or otherwise involves services by it to the plan or
participants or beneficiaries of the plan; excise taxes assessed on an
Indemnitee with respect to an employee benefit plan pursuant to applicable law
shall constitute fines within the meaning of Section 7.7; and actions taken or
omitted by the Indemnitee with respect to an employee benefit plan in the
performance of its duties for a purpose reasonably believed by it to be in the
interest of the participants and beneficiaries of the plan shall be deemed to be
for a purpose that is not opposed to the best interests of the Partnership.
F. In no event may an Indemnitee subject the Limited Partners to
personal liability by reason of the indemnification provisions set forth in this
Agreement.
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G. An Indemnitee shall not be denied indemnification in whole or in
part under this Section 7.7 because the Indemnitee had an interest in the
transaction with respect to which the indemnification applies if the transaction
was otherwise permitted by the terms of this Agreement.
H. The provisions of this Section 7.7 are for the benefit of the
Indemnitees, their heirs, successors, assigns and administrators and shall not
be deemed to create any rights for the benefit of any other Persons.
Section 7.8 Liability of the General Partner
A. Notwithstanding anything to the contrary set forth in this
Agreement, the General Partner shall not be liable or accountable in damages or
otherwise to the Partnership, any Partners or any Assignees for losses
sustained, liabilities incurred or benefits not derived as a result of errors in
judgment or mistakes of fact or law or any act or omission if the General
Partner acted in good faith.
B. The Limited Partners expressly acknowledge that the General
Partner is acting for the benefit of the Partnership, the Limited Partners and
the General Partner's stockholders collectively, that the General Partner is
under no obligation to give priority to the separate interests of the Limited
Partners or the General Partner's stockholders (including, without limitation,
the tax consequences to Limited Partners or Assignees or to stockholders) in
deciding whether to cause the Partnership to take (or decline to take) any
actions.
C. Subject to its obligations and duties as General Partner set
forth in Section 7.1.A hereof, the General Partner may exercise any of the
powers granted to it by this Agreement and perform any of the duties imposed
upon it hereunder either directly or by or through its agents. The General
Partner shall not be responsible for any misconduct or negligence on the part of
any such agent appointed by it in good faith.
D. Any amendment, modification or repeal of this Section 7.8 or any
provision hereof shall be prospective only and shall not in any way affect the
limitations on the General Partner's liability to the Partnership and to the
Limited Partners under this Section 7.8 as in effect immediately prior to such
amendment, modification or repeal with respect to claims arising from or
relating to matters occurring, in whole or in part, prior to such amendment,
modification or repeal, regardless of when such claims may arise or be asserted.
Section 7.9 Other Matters Concerning the General Partner
A. The General Partner may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement, instrument,
opinion, report, notice, request, consent, order, bond, debenture, or other
paper or document believed by it to be genuine and to have been signed or
presented by the proper party or parties.
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B. The General Partner may consult with legal counsel, accountants,
appraisers, management consultants, investment bankers and other consultants and
advisers selected by it, and any act taken or omitted to be taken in reliance
upon the opinion of such Persons as to matters which such General Partner
reasonably believes to be within such Person's professional or expert competence
shall be conclusively presumed to have been done or omitted in good faith and in
accordance with such opinion.
C. The General Partner shall have the right, in respect of any of
its powers or obligations hereunder, to act through any of its duly authorized
officers and a duly appointed attorney or attorneys-in-fact. Each such attorney
shall, to the extent provided by the General Partner in the power of attorney,
have full power and authority to do and perform all and every act and duty which
is permitted or required to be done by the General Partner hereunder.
D. Notwithstanding any other provisions of this Agreement or the
Act, any action of the General Partner on behalf of the Partnership or any
decision of the General Partner to refrain from acting on behalf of the
Partnership, undertaken in the good faith belief that such action or omission is
necessary or advisable in order (i) to protect the ability of the General
Partner to continue to qualify as a REIT or (ii) to avoid the General Partner
incurring any taxes under Section 857 or Section 4981 of the Code, is expressly
authorized under this Agreement and is deemed approved by all of the Limited
Partners.
Section 7.10 Title to Partnership Assets
Title to Partnership assets, whether real, personal or mixed and
whether tangible or intangible, shall be deemed to be owned by the Partnership
as an entity, and no Partners, by virtue of their status as such, individually
or collectively, shall have any ownership interest in any of such Partnership
assets or any portion thereof. Title to any or all of the Partnership assets may
be held in the name of the Partnership, the General Partner or one or more
nominees, as the General Partner may determine, including Affiliates of the
General Partner. The General Partner hereby declares and warrants that any
Partnership assets for which legal title is held in the name of the General
Partner or any nominee or Affiliate of the General Partner shall be held by the
General Partner for the use and benefit of the Partnership in accordance with
the provisions of this Agreement; provided, however, that the General Partner
shall use its best efforts to cause beneficial and record title to such assets
to be vested in the Partnership as soon as reasonably practicable. All
Partnership assets shall be recorded as the property of the Partnership in its
books and records, irrespective of the name in which legal title to such
Partnership assets is held.
Section 7.11 Reliance by Third Parties
Notwithstanding anything to the contrary in this Agreement, any
Person dealing with the Partnership shall be entitled to assume that the General
Partner has full power and authority to encumber, sell or otherwise use in any
manner any and all assets of the Partnership and to enter into any contracts on
behalf of the Partnership, and such Person shall be entitled to deal with the
General Partner as if it were the Partnership's sole party in interest, both
legally and beneficially. Each Limited Partner hereby waives any and all
defenses or other remedies which may be available against such Person to
contest, negate or disaffirm any action of the General Partner in connection
with any such dealing. In no event shall any Person dealing with the General
Partner or its representatives be obligated to ascertain that the terms of this
Agreement have been complied with or to inquire into the necessity or expedience
of any act or action of the General Partner or its representatives. Each and
every certificate, document or other instrument executed on behalf of the
Partnership by the General Partner or its representatives shall be
conclusive evidence in favor of any and every Person relying thereon or claiming
thereunder that (i) at the time of the execution and delivery of such
certificate, document or instrument, this Agreement was in full force and
effect, (ii) the Person executing and delivering such certificate, document or
instrument was duly authorized and empowered to do so for and on behalf of the
Partnership and (iii) such certificate, document or instrument was duly executed
and delivered in accordance with the terms and provisions of this Agreement and
is binding upon the Partnership.
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ARTICLE 8
RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS
Section 8.1 Limitation of Liability
The Limited Partners shall have no liability under this Agreement
except as expressly provided in this Agreement or under the Act.
Section 8.2 Management of Business
No Limited Partner or Assignee (other than the General Partner, any
of its Affiliates or any officer, director, employee, partner, agent or trustee
of the General Partner, the Partnership or any of their Affiliates, in their
capacity as such) shall take part in the operations, management or control
(within the meaning of the Act) of the Partnership's business, transact any
business in the Partnership's name or have the power to sign documents for or
otherwise bind the Partnership. The transaction of any such business by the
General Partner, any of its Affiliates or any officer, director, employee,
partner, agent or trustee of the General Partner, the Partnership or any of
their Affiliates, in their capacity as such, shall not affect, impair or
eliminate the limitations on the liability of the Limited Partners or Assignees
under this Agreement.
Section 8.3 Outside Activities of Limited Partners
Subject to any agreements entered into by a Limited Partner or its
Affiliates with the General Partner, Partnership or a Subsidiary, any Limited
Partner and any officer, director, partner, employee, agent, trustee, Affiliate
or shareholder of any Limited Partner shall be entitled to and may have business
interests and engage in business activities in addition to those relating to the
Partnership, including business interests and activities in direct competition
with the Partnership. Neither the Partnership nor any Partners shall have any
rights by virtue of this Agreement in any business ventures of any Limited
Partner or Assignee. Subject to such agreements, 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 business ventures of any
other Person, other than the General Partner, and such Person shall have no
obligation pursuant to this Agreement to offer any interest in any such business
ventures to the Partnership, any Limited Partner or any such other Person, even
if such opportunity is of a character that, if presented to the Partnership, any
Limited Partner or such other Person, could be taken by such Person.
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Section 8.4 Return of Capital
Except pursuant to the rights of Redemption set forth in Section
8.6, no Limited Partner shall be entitled to the withdrawal or return of his
Capital Contribution, except to the extent of distributions made pursuant to
this Agreement or upon termination of the Partnership as provided herein. No
Limited Partner or Assignee shall have priority over any other Limited Partner
or Assignee either as to the return of Capital Contributions, or otherwise
expressly provided in this Agreement, as to profits, losses, distributions or
credits.
Section 8.5 Rights of Limited Partners Relating to the Partnership
A. In addition to other rights provided by this Agreement or by the
Act, and except as limited by Section 8.5.C hereof, each Limited Partner shall
have the right, for a purpose reasonably related to such Limited Partner's
interest as a limited partner in the Partnership, upon written demand with a
statement of the purpose of such demand and at the Partnership's expense:
(1) to obtain a copy of the most recent annual and quarterly
reports filed with the Securities and Exchange
Commission by the General Partner pursuant to the
Securities Exchange Act of 1934, as amended, and each
communication sent to the stockholders of the General
Partner;
(2) to obtain a copy of the Partnership's federal, state and
local income tax returns for each Partnership Year;
(3) to obtain a current list of the name and last known
business, residence or mailing address of each Partner;
and
(4) to obtain a copy of this Agreement and the Certificate
and all amendments thereto, together with executed
copies of all powers of attorney pursuant to which this
Agreement, the Certificate and all amendments thereto
have been executed.
B. The Partnership shall notify each Limited Partner, upon request,
of the then current Conversion Factor and the REIT Shares Amount per Partnership
Unit and, with reasonable detail, how the same were determined.
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C. Notwithstanding any other provision of this Section 8.5, the
General Partner may keep confidential from the Limited Partners, for such period
of time as the General Partner determines in its sole and absolute discretion to
be reasonable, any information that (i) the General Partner believes to be in
the nature of trade secrets or other information the disclosure of which the
General Partner in good faith believes is not in the best interests of the
Partnership or (ii) the Partnership or the General Partner is required by law or
by agreements with unaffiliated third parties to keep confidential.
Section 8.6 Redemption Right
A. Subject to Sections 8.6.B and 8.6.C hereof, each Limited Partner
(other than the General Partner) shall have the right (the "Redemption Right")
to require the Partnership to redeem on a Specified Redemption Date all or a
portion of the Partnership Units held by such Limited Partner at a redemption
price per Unit equal to and in the form of the Cash Amount to be paid by the
Partnership. The Redemption Right shall be exercised pursuant to a Notice of
Redemption delivered to the Partnership (with a copy to the General Partner) by
the Limited Partner who is exercising the Redemption Right (the "Redeeming
Partner"); provided, however, that the Partnership shall not be obligated to
satisfy such Redemption Right if the General Partner elects to purchase the
Partnership Units subject to the Notice of Redemption pursuant to Section 8.6.B.
A Limited Partner may not exercise the Redemption Right for less than one
thousand (1,000) Partnership Units, or, if such Limited Partner holds less than
one thousand (1,000) Partnership Units, all of the Partnership Units held by
such Partner. The Redeeming Partner shall have no right, with respect to any
Partnership Units so redeemed, to receive any distributions paid on or after the
Specified Redemption Date. The Assignee of any Limited Partner may exercise the
rights of such Limited Partner pursuant to this Section 8.6, and such Limited
Partner shall be deemed to have assigned such rights to such Assignee and shall
be bound by the exercise of such rights by such Assignee. In connection with any
exercise of such rights by an Assignee on behalf of a Limited Partner, the Cash
Amount shall be paid by the Partnership directly to such Assignee and not to
such Limited Partner.
B. Notwithstanding the provisions of Section 8.6.A, a Limited
Partner that exercises the Redemption Right shall be deemed to have offered to
sell the Partnership Units described in the Notice of Redemption to the General
Partner, and the General Partner will, at the direction of the Partnership as
determined in the Partnership's sole and absolute discretion and only if so
directed, elect to purchase directly and acquire such Partnership Units by
paying to the Redeeming Partner either the Cash Amount or the REIT Shares
Amount, as elected by the General Partner (in its sole and absolute discretion),
on the Specified Redemption Date, whereupon the General Partner shall acquire
the Partnership Units offered for redemption by the Redeeming Partner and shall
be treated for all purposes of this Agreement as the owner of such Partnership
Units. If the General Partner shall elect to exercise its rights to purchase
Partnership Units under this Section 8.6.B with respect to a Notice of
Redemption, it shall so notify the Redeeming Partner within five (5) Business
days after the receipt by it of such Notice of Redemption. Unless the General
Partner shall exercise its right to purchase Partnership Units from the
Redeeming Partner pursuant to this Section 8.6.B, the General Partner shall not
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have any obligation to the Redeeming Partner or the Partnership with respect to
the Redeeming Partner's exercise of the Redemption Right. In the event the
General Partner shall exercise its right to purchase Partnership Units with
respect to the exercise of a Redemption Right in the manner described in the
first sentence of this Section 8.6.B, the Partnership shall have no obligation
to pay any amount to the Redeeming Partner with respect to such Redeeming
Partner's exercise of such Redemption Right, and each of the Redeeming Partner,
the Partnership, and the General Partner shall treat the transaction between the
General Partner and the Redeeming Partner, for federal income tax purposes, as a
sale of the Redeeming Partner's Partnership Units to the General Partner. Each
Redeeming Partner agrees to execute such documents as the General Partner may
reasonably require in connection with the issuance of REIT Shares upon exercise
of the Redemption Right.
C. Notwithstanding the provisions of Section 8.6.A and Section
8.6.B, a Partner shall not be entitled to exercise the Redemption Right pursuant
to Section 8.6.A if the delivery of REIT Shares to such Partner on the Specified
Redemption Date by the General Partner pursuant to Section 8.6.B (regardless of
whether or not the General Partner would in fact exercise its rights under
Section 8.6.B) would be prohibited under the Articles of Incorporation of the
General Partner.
D. With respect to any Redemption Right pursuant to this Section
8.6:
(1) All Partnership Units acquired by the General Partner
pursuant thereto shall automatically, and without
further action required, be converted into and deemed to
be General Partner interests comprised of the same
number of Partnership Units.
(2) The consummation of such Redemption shall be subject to
the requisite filings, if any, and the expiration or
termination of the applicable waiting period, if any,
under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act
of 1976, as amended.
(3) Each Redeeming Partner shall continue to own all
Partnership Units subject to any Notice of Redemption
and be treated as a Limited Partner with respect to such
Partnership Units for all purposes of this Agreement,
until such Partnership Units are transferred to the
General Partner.
Section 8.7 Representations of Limited Partners
Each Limited Partner by execution of this Agreement represents and
warrants to every other Partner and to the Partnership as follows:
(i) it is acquiring the Partnership Units to be received by it for
its own account and not with the view to the sale or
distribution of the same or any part thereof in violation of
the Securities Act;
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(ii) it understands that the Partnership Units (or REIT Shares
issued upon exchange of the Partnership Units) to be issued to
it will not be registered under the Securities Act, or the
securities laws of any state ("Blue Sky Laws") by reason of a
specific exemption or exemptions from registration under the
Securities Act and applicable Blue Sky Laws and that the
REIT's and Partnership's reliance on such exemptions is
predicated in part on the accuracy and completeness of the
representations and warranties of it;
(iii) it understands that, for the reasons set forth in paragraph
(ii) above the Partnership Units (or REIT Shares issued upon
exchange of the Partnership Units) may not be offered, sold,
transferred, pledged, or otherwise disposed of by it except
(A) pursuant to an effective registration statement under the
Securities Act and any applicable Blue Sky Laws, (B) pursuant
to a no-action letter issued by the Securities and Exchange
Commission to the effect that a proposed transfer of the
Partnership Units (or REIT Shares issued upon exchange of the
Partnership Units) may be made without registration under the
Securities Act, together with either registration or an
exemption under applicable Blue Sky Laws, or (C) upon the REIT
and the Partnership receiving an opinion of counsel
knowledgeable in securities law matters and reasonably
acceptable to the REIT and the Partnership to the effect that
the proposed transfer is exempt from the registration
requirements of the Securities Act and any applicable Blue Sky
Laws, and that, accordingly, it must bear the economic risk of
an investment in the Partnership Units (and the REIT Shares
issued upon exchange of the Partnership Units) for an
indefinite period of time;
(iv) it is a Qualified Transferee;
(v) it understands that an investment in the Partnership and the
REIT involves substantial risks; it has had the opportunity to
review all documents and information which it has requested
concerning its investment in the Partnership and the REIT and
to ask questions of the management of the Partnership and the
REIT, which questions were answered to its satisfaction; and
(vi) it understands that any certificates representing the
Partnership Units (and any REIT Shares issued upon exchange of
the Partnership Units) will bear a legend substantially to the
effect of the following:
"The securities represented by this certificate have
not been registered under the Securities Act of 1933,
as amended (the "Act"), or the securities laws of any
state. The securities may not be offered, sold,
transferred, pledged or otherwise disposed of without
an effective registration statement under the Act and
under any applicable state securities laws, receipt
of a no-action letter issued by the Securities and
Exchange Commission (together with either
registration or an exemption under applicable state
securities laws) or an opinion of counsel acceptable
to the Partnership and the REIT that the proposed
transaction will be exempt from registration under
the Act and applicable state securities laws."
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and that the Partnership and the REIT reserve the right to
place a stop order against the transfer of any certificates
representing the Partnership Units (and any REIT Shares issued
upon exchange of the Partnership Units), and to refuse to
effect any transfers thereof, in the absence of satisfying the
conditions contained in the foregoing legend.
ARTICLE 9
BOOKS, RECORDS, ACCOUNTING AND REPORTS
Section 9.1 Records and Accounting
The General Partner shall keep or cause to be kept at the
principal office of the Partnership appropriate books and records with respect
to the Partnership's business, including without limitation, all books and
records necessary to provide to the Limited Partners any information, lists and
copies of documents required to be provided pursuant to Section 9.3 hereof. Any
records maintained by or on behalf of the Partnership in the regular course of
its business may be kept on, or be in the form of, punch cards, magnetic tape,
photographs, micrographics or any other information storage device, provided
that the records so maintained are convertible into clearly legible written form
within a reasonable period of time. The books of the Partnership shall be
maintained, for financial and tax reporting purposes, on an accrual basis in
accordance with generally accepted accounting principles.
Section 9.2 Fiscal Year
The fiscal year of the Partnership shall be the calendar year.
Section 9.3 Reports
A. As soon as practicable, but in no event later than 105 days
after the close of each Partnership Year, or such earlier date as they are filed
with Securities and Exchange Commission, the General Partner shall cause to be
mailed to each Limited Partner as of the close of the Partnership Year, an
annual report containing financial statements of the Partnership, or of the
General Partner if such statements are prepared solely on a consolidated basis
with the General Partner, for such Partnership Year, presented in accordance
with generally accepted accounting principles, such statements to be audited by
a nationally recognized firm of independent public accountants selected by the
General Partner.
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B. As soon as practicable, but in no event later than 105 days
after the close of each calendar quarter (except the last calendar quarter of
each year) the General Partner shall cause to be mailed to each Limited Partner
as of the last day of the calendar quarter, a report containing unaudited
financial statements of the Partnership, or of the General Partner, if such
statements are prepared solely on a consolidated basis with applicable law or
regulation, or as the General Partner determines to be appropriate.
ARTICLE 10
TAX MATTERS
Section 10.1 Preparation of Tax Returns
The General Partner shall arrange for the preparation and
timely filing of all returns of Partnership income, gains, deductions, losses
and other items required of the Partnership for federal and state income tax
purposes and shall use all reasonable efforts to furnish, within 90 days of the
close of each taxable year, the tax information reasonably required by Limited
Partners for federal and state income tax reporting purposes.
Section 10.2 Tax Elections
Except as otherwise provided herein, the General Partner
shall, in its sole and absolute discretion, determine whether to make any
available election pursuant to the Code, including the election under Section
754 of the Code. The General Partner shall have the right to seek to revoke any
such election (including without limitation, any election under Section 754 of
the Code) upon the General Partner's determination in its sole and absolute
discretion that such revocation is in the best interests of the Partners.
Section 10.3 Tax Matters Partner
A. The General Partner shall be the "tax matters partner" of
the Partnership for federal income tax purposes. Pursuant to Section 6223(c)(3)
of the Code, upon receipt of notice from the IRS of the beginning of an
administrative proceeding with respect to the Partnership, the tax matters
partner shall furnish the IRS with the name, address and profit interest of each
of the Limited Partners; provided, however, that such information is provided to
the Partnership by the Limited Partners.
B. The tax matters partner is authorized, but not required:
(1) to enter into any settlement with the IRS with
respect to any administrative or judicial proceedings
for the adjustment of Partnership items required to
be taken into account by a Partner for income tax
purposes (such administrative proceedings being
referred to as a "tax audit" and such judicial
proceedings being referred to as "judicial review"),
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and in the settlement agreement the tax matters
partner may expressly state that such agreement shall
bind all Partners, except that such settlement
agreement shall not bind any Partner (i) who (within
the time prescribed pursuant to the Code and
Regulations) files a statement with the IRS providing
that the tax matters partner shall not have the
authority to enter into a settlement agreement on
behalf of such Partner or (ii) who is a "notice
partner" (as defined in Section 6231 of the Code) or
a member of a "notice group" (as defined in Section
6223(b)(2) of the Code);
(2) in the event that a notice of a final administrative
adjustment at the Partnership level of any item
required to be taken into account by a Partner for
tax purposes (a "final adjustment") is mailed to the
tax matters partner, to seek judicial review of such
final adjustment, including the filing of a petition
for readjustment with the Tax Court or the United
States Claims Court, or the filing of a complaint for
refund with the District Court of the United States
for the district in which the Partnership's principal
place of business is located;
(3) to intervene in any action brought by any other
Partner for judicial review of a final adjustment;
(4) to file a request for an administrative adjustment
with the IRS at any time and, if any part of such
request is not allowed by the IRS, to file an
appropriate pleading (petition or complaint) for
judicial review with respect to such request;
(5) to enter into an agreement with the IRS to extend the
period for assessing any tax which is attributable to
any item required to be taken into account by a
Partner for tax purposes, or an item affected by such
item; and
(6) to take any other action on behalf of the Partners of
the Partnership in connection with any tax audit or
judicial review proceeding to the extent permitted by
applicable law or regulations.
The taking of any action and the incurring of any expense by
the tax matters partner in connection with any such proceeding, except to the
extent required by law, is a matter in the sole and absolute discretion of the
tax matters partner and the provisions relating to indemnification of the
General Partner set forth in Section 7.7 of this Agreement shall be fully
applicable to the tax matters partner in its capacity as such.
C. The tax matters partner shall receive no compensation for
its services. All third party costs and expenses incurred by the tax matters
partner in performing his duties as such (including legal and accounting fees)
shall be borne by the Partnership. Nothing herein shall be construed to restrict
the Partnership from engaging legal counsel or an accounting firm to assist the
tax matters partner in discharging his duties hereunder, as long as the
compensation paid by the Partnership for such services is reasonable.
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Section 10.4 Organizational Expenses
The Partnership shall elect to deduct expenses, if any,
incurred by it in organizing the Partnership ratably over a 60-month period as
provided in Section 709 of the Code.
Section 10.5 Withholding
Each Limited Partner hereby authorizes the Partnership to
withhold from or pay on behalf of or with respect to such Limited Partner any
amount of federal, state, local or foreign taxes that the General Partner
determines that the Partnership is required to withhold or pay with respect to
any amount distributable or allocable to such Limited Partner pursuant to this
Agreement, including, without limitation, any taxes required to be withheld or
paid by the Partnership pursuant to Sections 1441, 1442, 1445 or 1446 of the
Code. Any amount paid on behalf of or with respect to a Limited Partner shall
constitute a loan by the Partnership to such Limited Partner, which loan shall
be repaid by such Limited Partner within 15 days after notice from the General
Partner that such payment must be made unless (i) the Partnership withholds such
payment from a distribution which would otherwise be made to the Limited Partner
or (ii) the General Partner determines, in its sole and absolute discretion,
that such payment may be satisfied out of the available funds of the Partnership
which would, but for such payment, be distributed to the Limited Partner. Any
amounts withheld pursuant to the foregoing clauses (i) or (ii) shall be treated
as having been distributed to such Limited Partner. Each Limited Partner hereby
unconditionally and irrevocably grants to the Partnership a security interest in
such Limited Partner's Partnership Interest to secure such Limited Partner's
obligation to pay to the Partnership any amounts required to be paid pursuant to
this Section 10.5. In the event that a Limited Partner fails to pay any amounts
owed to the Partnership pursuant to this Section 10.5 when due, the General
Partner may, in its sole and absolute discretion, elect to make the payment to
the Partnership on behalf of such defaulting Limited Partner, and in such event
shall be deemed to have loaned such amount to such defaulting Limited Partner
and shall succeed to all rights and remedies of the Partnership as against such
defaulting Limited Partner (including, without limitation, the right to receive
distributions). Any amounts payable by a Limited Partner hereunder shall bear
interest at the base rate on corporate loans at large United States money center
commercial banks, as published from time to time in the Wall Street Journal,
plus four percentage points (but not higher than the maximum lawful rate) from
the date such amount is due (i.e., 15 days after demand) until such amount is
paid in full. Each Limited Partner shall take such actions as the Partnership or
the General Partner shall request in order to perfect or enforce the security
interest created hereunder.
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ARTICLE 11
TRANSFERS AND WITHDRAWALS
Section 11.1 Transfer
A. The term "transfer," when used in this Article 11 with
respect to a Partnership Unit, shall be deemed to refer to a transaction by
which the General Partner purports to assign its General Partner Interest to
another Person or by which a Limited Partner purports to assign its Limited
Partnership Interest to another Person, and includes a sale, assignment, gift
(outright or in trust), pledge, encumbrance, hypothecation, mortgage, exchange
or any other disposition by law or otherwise. The term "transfer" when used in
this Article 11 does not include a redemption pursuant to Section 8.6 No part of
the interest of a Limited Partner shall be subject to the claims of any
creditor, any spouse for alimony or support, or to legal process, and may not be
voluntarily or involuntarily alienated or encumbered except as may be
specifically provided for in this Agreement.
B. No Partnership Interest shall be transferred, in whole or
in part, except in accordance with the terms and conditions set forth in this
Article 11. Any transfer or purported transfer of a Partnership Interest not
made in accordance with this Article 11 shall be null and void.
Section 11.2 Transfer of General Partner's Partnership
Interest
The General Partner shall not withdraw from the Partnership
and shall not transfer all or any portion of its interest in the Partnership
(whether by sale, statutory merger or consolidation, liquidation or otherwise)
without the consent of all of the Limited Partners, which may be withheld by
each Limited Partner in its sole and absolute discretion, and only upon the
admission of a successor General Partner pursuant to Section 12.1. Upon any
transfer of a Partnership Interest in accordance with the provisions of this
Section 11.2, the transferee shall become a Substitute General Partner for all
purposes herein, and shall be vested with the powers and rights of the
transferor General Partner, and shall be liable for all obligations and
responsible for all duties of the General Partner, once such transferee has
executed such instruments as may be necessary to effectuate such admission and
to confirm the agreement of such transferee to be bound by all the terms and
provisions of this Agreement with respect to the Partnership Interest so
acquired. It is a condition to any transfer otherwise permitted hereunder that
the transferee assumes, by operation of law or express agreement, all of the
obligations of the transferor General Partner under this Agreement with respect
to such transferred Partnership Interest, and no such transfer (other than
pursuant to a statutory merger or consolidation wherein all obligations and
liabilities of the transferor General Partner are assumed by a successor
corporation by operation of law) shall relieve the transferor General Partner of
its obligations under this Agreement without the Consent of the Limited
Partners, in their reasonable discretion. In the event the General Partner
withdraws from the Partnership, in violation of this Agreement or otherwise, or
otherwise dissolves or terminates, or upon the bankruptcy of the General
Partner, a majority in interest of all the remaining Partners may elect to
continue the Partnership business by selecting a Substitute General Partner in
accordance with the Act.
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Section 11.3 Limited Partners' Rights to Transfer
A. Prior to the first anniversary of the Effective Date, no
Limited Partner shall transfer all or any portion of its Partnership Interest to
any transferee without the consent of the General Partner, which consent may be
withheld in its sole and absolute discretion; provided, however, that any
Limited Partner may, at any time, without the consent of the General Partner,
(i) transfer all or any portion of its Partnership Interest to the General
Partner, subject to the provisions of Section 11.6, (ii) transfer its
Partnership Interest pursuant to its right of redemption as provided in Section
8.6 hereof, (iii) transfer all or any portion of its Partnership Interest to its
Immediate Family, to a corporation controlled by such Limited Partner or, if the
Limited Partner is an entity, to its beneficial owners (or members of the
Immediate Family of such beneficial owners) or (iv) pledge (a "Pledge") all or
any portion of its Partnership Interest to a lending institution, which is not
an Affiliate of such Limited Partner, as collateral or security for a bona fide
loan or other extension of credit, and transfer such pledged Partnership
Interest to such lending institution in connection with the exercise of remedies
under such loan or extension or credit. After such first anniversary, each
Limited Partner or Assignee, pursuant to the proviso of the preceding sentence,
shall have the right to transfer all or any portion of its Partnership Interest,
or subject to the provisions of Section 11.6 and the satisfaction of each of the
following conditions, transfer all or any portion of its Partnership Interests
to any other Person:
(a) General Partner Right of First Refusal. The
transferring Partner shall give written notice of the
proposed transfer to the General Partner, which
notice shall state (i) the identity of the proposed
transferee, and (ii) the amount and type of
consideration proposed to be received for the
Partnership Units to be transferred. The General
Partner shall have twenty (20) days upon which to
give the transferring Partner notice of its election
to acquire the Partnership Units on the proposed
terms. If it so elects, it shall purchase the
Partnership Units on such terms within twenty (20)
days after giving notice of such election. If it does
not so elect, the transferring Partner may transfer
such Partnership Units to a third party, on economic
terms no more favorable to the transferee than the
proposed terms, subject to the other conditions of
this Section 11.3.
(b) Qualified Transferee. Any transfer of a Partnership
Interest shall be made only to Qualified Transferees.
It is a condition to any transfer otherwise permitted
hereunder that the transferee assumes by operation of law or express agreement
all of the obligations of the transferor Limited Partner under this Agreement
with respect to such transferred Partnership Interest and no such transfer
(other than pursuant to a statutory merger or consolidation wherein all
obligations and liabilities of the transferor partner are assumed by a successor
entity by operation of law) shall relieve the transferor Partner of its
obligations under this Agreement without the approval of the General Partner, in
its reasonable discretion. Notwithstanding the foregoing, any transferee of any
transferred Partnership Interest shall be subject to any and all ownership
limitations contained in the Articles of Incorporation. Any transferee, whether
or not admitted as a Substituted Limited Partner, shall take subject to the
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obligations of the transferor hereunder and by accepting such transfer makes the
representations and warranties contained in Section 8.7 hereof. Unless admitted
as a Substitute Limited Partner, no transferee, whether by a voluntary transfer,
by operation of law or otherwise, shall have rights hereunder, other than the
rights of an Assignee as provided in Section 11.5.
B. If a Limited Partner is subject to Incapacity, the
executor, administrator, trustee, committee, guardian, conservator, or receiver
of such Limited Partner's estate shall have all the rights of a Limited Partner,
but not more rights than those enjoyed by other Limited Partners, for the
purpose of settling or managing the estate, and such power as the Incapacitated
Limited Partner possessed to transfer all or any part of his or its interest in
the Partnership. The Incapacity of a Limited Partner, in and of itself, shall
not dissolve or terminate the Partnership.
C. The General Partner may prohibit any transfer otherwise
permitted under Section 11.3 by a Limited Partner of his Partnership Units if,
in the opinion of legal counsel to the Partnership, such transfer would require
the filing of a registration statement under the Securities Act by the
Partnership or would otherwise violate any federal or state securities laws or
regulations applicable to the Partnership or the Partnership Unit.
D. No transfer by a Limited Partner of his Partnership Units
(including any Exchange) may be made to any person if (i) in the opinion of
legal counsel for the Partnership, it would result in the Partnership being
treated as an association taxable as a corporation, or (ii) such transfer is
effectuated through an "established securities market" or a "secondary market
(or the substantial equivalent thereof)" within the meaning of Section 7704 of
the Code.
Section 11.4 Substituted Limited Partners
A. No Limited Partner shall have the right to substitute a
transferee as a Limited Partner in his place (including any transferee permitted
by Section 11.3). The General Partner shall, however, have the right to consent
to the admission of a transferee of the interest of a Limited Partner pursuant
to this Section 11.4 as a Substituted Limited Partner, which consent may be
given or withheld by the General Partner in its sole and absolute discretion.
The General Partner's failure or refusal to permit a transferee of any such
interests to become a Substituted Limited Partner shall not give rise to any
cause of action against the Partnership or any Partner.
B. A transferee who has been admitted as a Substituted Limited
Partner in accordance with this Article 11 shall have all the rights and powers
and be subject to all the restrictions and liabilities of a Limited Partner
under this Agreement. Upon such admission, the transferee makes the
representations and warranties contained in Section 8.7 hereof.
C. Upon the admission of a Substituted Limited Partner, the
General Partner shall amend Exhibit A to reflect the name, address, number of
Partnership Units, and Percentage Interest of such Substituted Limited Partner
and to eliminate or adjust, if necessary, the name, address and interest of the
predecessor of such Substituted Limited Partner.
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Section 11.5 Assignees
If the General Partner, in its sole and absolute discretion,
does not consent to the admission of any permitted transferee under Section 11.3
as a Substituted Limited Partner, as described in Section 11.4, such transferee
shall be considered an Assignee for purposes of this Agreement. An Assignee
shall be entitled to all the rights of an assignee of a limited partnership
interest under the Act, including the right to receive distributions from the
Partnership and the share of Net Income, Net Losses, gain and loss attributable
to the Partnership Units assigned to such transferee, the rights to transfer the
Partnership Units provided in this Article 11, and the right of redemption
provided in Section 8.6, 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
effect a Consent with respect to such Partnership Units on any matter presented
to the Limited Partners for approval (such Consent remaining with the transferor
Limited Partner). In the event any such transferee desires to make a further
assignment of any such Partnership Units, such transferee shall be subject to
all the provisions of this Article 11 to the same extent and in the same manner
as any Limited Partner desiring to make an assignment of Partnership Units.
Section 11.6 General Provisions
A. No Limited Partner may withdraw from the Partnership other
than as a result of a permitted transfer of all of such Limited Partner's
Partnership Units in accordance with this Article 11 or pursuant to the exercise
of its Redemption Right with respect to all of its Partnership Units under
Section 8.6.
B. Any Limited Partner who shall transfer all of his
Partnership Units in a transfer permitted pursuant to this Article 11, where
such transferee was admitted as a Limited Partner, or pursuant to the exercise
of its Redemption Right with respect to all of its Partnership Units under
Section 8.6, shall cease to be a Limited Partner.
C. Transfers pursuant to this Article 11 may only be made
on the first day of a fiscal quarter of the Partnership, unless the General
Partner otherwise agrees.
D. If any Partnership Interest is transferred during any
quarterly segment of the Partnership's fiscal year in compliance with the
provisions of this Article 11 or transferred pursuant to Section 8.6, 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 or any other permissible
method selected by the General Partner in the exercise of its reasonable
discretion. Solely for purposes of making such allocations, each of such items
for the calendar month in which the transfer or redemption occurs shall be
allocated to the Person who is a Partner as of midnight on the last day of said
month. All distributions of Available Cash with respect to which the Partnership
Record Date is before the date of such transfer or redemption shall be made to
the transferor Partner, and all distributions of Available Cash thereafter shall
be made to the transferee Partner.
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E. In addition to any other restrictions on transfer herein
contained, in no event may any transfer or assignment of a Partnership Interest
by any Partner (including by way of an Exchange) be made (i) to any person or
entity who lacks the legal right, power or capacity to own a Partnership
Interest; (ii) in violation of applicable law; (iii) of any component portion of
a Partnership Interest, such as the Capital Account, or rights to distributions,
separate and apart from all other components of a Partnership Interest; (iv) in
the event such transfer would cause the General Partner to cease to comply with
the REIT Requirements, if the General Partner at such time has determined to
continue to meet the REIT Requirements; (v) if such transfer would cause a
termination of the Partnership for federal or state income tax purposes (except
as a result of the Exchange of all Partnership Units held by all Limited
Partners); (vi) if such transfer would, in the opinion of counsel to the
Partnership, cause the Partnership to cease to be classified as a partnership
for federal income tax purposes (except as a result of the Exchange of all
Partnership Units held by all Limited Partners); (vii) if such transfer would
cause the Partnership to become, with respect to any employee benefit plan
subject to Title I of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), a "party-in-interest" (as defined in Section 23(14) of ERISA)
or a "disqualified person" (as defined in Section 4975(c) of the Code); (viii)
if such transfer would, in the opinion of counsel to the Partnership, cause any
portion of the assets of the Partnership to constitute assets of any employee
benefit plan pursuant to Department of Labor Regulations Section 2510.2-101;
(ix) if such transfer requires the registration of such Partnership Interest
pursuant to any applicable federal or state securities laws; (x) if such
transfer causes the Partnership to become a "Publicly Traded Partnership," as
such term is defined in Sections 469(k)(2) or 7704(b) of the Code; or (xi) if
such transfer subjects the Partnership to be regulated under the Investment
Company Act of 1940 or the Investment Advisors Act of 1940, each as amended, or
ERISA.
ARTICLE 12
ADMISSION OF PARTNERS
Section 12.1 Admission of Successor General Partner
A successor to all of the General Partner's General Partner
Interest pursuant to Section 11.2 hereof who is proposed to be admitted as a
successor General Partner shall be admitted to the Partnership as the General
Partner, effective upon such transfer. Any such transferee shall carry on the
business of the Partnership without dissolution. In each case, the admission
shall be subject to the successor General Partner executing and delivering to
the Partnership an acceptance of all of the terms and conditions of this
Agreement and such other documents or instruments as may be required to effect
the admission.
Section 12.2 Admission of Additional Limited Partners
A. After the admission to the Partnership of the initial
Limited Partners on the date hereof, a Person who makes a Capital Contribution
to the Partnership in accordance with this Agreement shall be admitted to the
Partnership as an Additional Limited Partner only upon furnishing to the General
Partner (i) evidence of acceptance in form satisfactory to the General Partner
of all of the terms and conditions of this Agreement, including, without
limitation, the power of attorney granted in Section 2.4 hereof and (ii) such
other documents or instruments as may be required in the discretion of the
General Partner in order to effect such Person's admission as an Additional
Limited Partner.
B. Notwithstanding anything to the contrary in this Section
12.2, no Person shall be admitted as an Additional Limited Partner without the
consent of the General Partner, which consent may be given or withheld in the
General Partner's sole and absolute discretion. The admission of any Person as
an Additional Limited Partner shall become effective on the date upon which the
name of such Person is recorded on the books and records of the Partnership,
following the receipt of the Capital Contribution in respect of such Limited
Partner and the consent of the General Partner to such admission.
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Section 12.3 Amendment of Agreement and Certificate of
Limited Partnership
For the admission to the Partnership of any Partner, the
General Partner shall take all steps necessary and appropriate under the Act to
amend the records of the Partnership and, if necessary, to prepare as soon as
practical an amendment of this Agreement (including an amendment of Exhibit A)
and, if required by law, shall prepare and file an amendment to the Certificate
and may for this purpose exercise the power of attorney granted pursuant to
Section 2.4 hereof.
ARTICLE 13
DISSOLUTION AND LIQUIDATION
Section 13.1 Dissolution
The Partnership shall not be dissolved by the admission of
Substituted Limited Partners or Additional Limited Partners or by the admission
of a successor General Partner in accordance with the terms of this Agreement.
Upon the withdrawal of the General Partner, any successor General Partner shall
continue the business of the Partnership. The Partnership shall dissolve, and
its affairs shall be wound up, upon the first to occur of any of the following
("Liquidating Events"):
A. the expiration of its term as provided in Section 2.5
hereof;
B. an event of withdrawal of the General Partner, as defined
in the Act, unless, within 90 days after the withdrawal, at least a majority in
interest of all the remaining Partners agree in writing, in their sole and
absolute discretion, to continue the business of the Partnership and to the
appointment, effective as of the date of withdrawal, of a substitute General
Partner;
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C. an election to dissolve the Partnership made by the
General Partner, approved by the Consent of the Limited Partners;
D. entry of a decree of judicial dissolution of the
Partnership pursuant to the provisions of the Act;
E. the sale of all or substantially all of the assets and
properties of the Partnership;
F. a Bankruptcy of the General Partner, unless a majority
in interest of all of the remaining Partners agree in writing to continue the
business of the Partnership and to the appointment, effective as of a date
prior to the date of such Bankruptcy, of a substitute General Partner; or
G. the Exchange by all Partners (other than the General
Partner) of all Units into REIT Shares.
Section 13.2 Winding Up
A. Upon the occurrence of a Liquidating Event, the Partnership
shall continue solely for the purposes of winding up its affairs in an orderly
manner, liquidating its assets, and satisfying the claims of its creditors and
Partners. No Partner shall take any action that is inconsistent with, or not
necessary to or appropriate for, the winding up of the Partnership's business
and affairs. The General Partner (or, in the event there is no remaining General
Partner, any Person elected by a Majority in Interest of the Limited Partners
(the "Liquidator")) shall be responsible for overseeing the winding up and
dissolution of the Partnership and shall take full account of the Partnership's
liabilities and property and the Partnership property shall be liquidated as
promptly as is consistent with obtaining the fair value thereof, and the
proceeds therefrom (which may, to the extent determined by the General Partner,
include shares of stock in the General Partner) shall be applied and distributed
in the following order:
(1) First, to the payment and discharge of all of the
Partnership's debts and liabilities to creditors
other than the Partners;
(2) Second, to the payment and discharge of all of the
Partnership's debts and liabilities to the General
Partner;
(3) Third, to the payment and discharge of all of the
Partnership's debts and liabilities to the Limited
Partners; and
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(4) The balance, if any, to the General Partner and
Limited Partners in accordance with their positive
Capital Account balances, determined after taking
into account all Capital Account adjustments for the
Partnership taxable year during which the liquidation
occurs (other than those made as a result of the
liquidating distribution set forth in this Section
13.2.A(4)).
The General Partner shall not receive any additional compensation for any
services performed pursuant to this Article 13 other than reimbursement of its
expenses as provided in Section 7.4.
B. Notwithstanding the provisions of Section 13.2.A hereof
which require liquidation of the assets of the Partnership, but subject to the
order of priorities set forth therein, if prior to or upon dissolution of the
Partnership the Liquidator determines that an immediate sale of part or all of
the Partnership's assets would be impractical or would cause undue loss to the
Partners, the Liquidator may, in its sole and absolute discretion, defer for a
reasonable time the liquidation of any assets except those necessary to satisfy
liabilities of the Partnership (including to those Partners as creditors) and/or
distribute to the Partners, in lieu of cash, as tenants in common and in
accordance with the provisions of Section 13.2.A hereof, undivided interests in
such Partnership assets as the Liquidator deems not suitable for liquidation.
Any such distributions in kind shall be made only if, in the good faith judgment
of the Liquidator, such distributions in kind are in the best interests of the
Partners, and shall be subject to such conditions relating to the disposition
and management of such properties as the Liquidator deems reasonable and
equitable and to any agreements governing the operation of such properties at
such time. The Liquidator shall determine the fair market value of any property
distributed in kind using such reasonable method of valuation as it may adopt.
Section 13.3 Compliance with Timing Requirements of
Regulations
In the event the Partnership is "liquidated" within the
meaning of Regulations Section 1.704-1(b)(2)(ii)(g), distributions shall be made
pursuant to this Article 13 to the General Partner and Limited Partners who have
positive Capital Accounts in compliance with Regulations Section
1.704-1(b)(2)(ii)(h)(2). If any Partner has a deficit balance in his Capital
Account (after giving effect to all contributions, distributions and allocations
for the taxable years, including the year during which such liquidation occurs),
such Partner shall have no obligation to make any contribution to the capital of
the Partnership with respect to such deficit, and such deficit shall not be
considered a debt owed to the Partnership or to any other Person for any purpose
whatsoever. In the discretion of the General Partner, a pro rata portion of the
distributions that would otherwise be made to the General Partner and Limited
Partners pursuant to this Article 13 may be:
A. distributed to a trust established for the benefit of the
General Partner and Limited Partners for the purposes of liquidating Partnership
assets, collecting amounts owed to the Partnership, and paying any contingent or
unforeseen liabilities or obligations of the Partnership or of the General
Partner arising out of or in connection with the Partnership. The assets of any
such trust shall be distributed to the General Partner and Limited Partners from
time to time, in the reasonable discretion of the General Partner, in the same
proportions and amounts as would otherwise have been distributed to the General
Partner and Limited Partners pursuant to this Agreement; or
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B. withheld to provide a reasonable reserve for Partnership
liabilities (contingent or otherwise) and to reflect the unrealized portion of
any installment obligations owed to the Partnership, provided that such withheld
amounts shall be distributed to the General Partner and Limited Partners as soon
as practicable.
Section 13.4 Deemed Distribution and Recontribution
Notwithstanding any other provision of this Article 13, in
the event the Partnership is liquidated within the meaning of Regulations
Section 1.704-1(b)(2)(ii)(g) but no Liquidating Event has occurred, the
Partnership's property shall not be liquidated, the Partnership's liabilities
shall not be paid or discharged, and the Partnership's affairs shall not be
wound up. Instead, the Partnership shall be deemed to have distributed the
property in kind to the General Partner and Limited Partners, who shall be
deemed to have assumed and taken such property subject to all Partnership
liabilities, all in accordance with their respective Capital Accounts.
Immediately thereafter, the General Partner and Limited Partners shall be deemed
to have recontributed the Partnership property in kind to the Partnership, which
shall be deemed to have assumed and taken such property subject to all such
liabilities.
Section 13.5 Rights of Limited Partners
Except as otherwise provided in this Agreement, each
Limited Partner shall look solely to the assets of the Partnership for the
return of his Capital Contribution and shall have no right or power to demand or
receive property from the General Partner. No Limited Partner shall have
priority over any other Limited Partner as to the return of his Capital
Contributions, distributions or allocations.
Section 13.6 Notice of Dissolution
In the event a Liquidating Event occurs or an event occurs
that would, but for provisions of Section 13.1 result in a dissolution of the
Partnership, the General Partner shall, within 30 days thereafter, provide
written notice thereof to each of the Partners and to all other parties with
whom the Partnership regularly conducts business (as determined in the
discretion of the General Partner) and shall publish notice thereof in a
newspaper of general circulation in each place in which the Partnership
regularly conduct business (as determined in the discretion of the General
Partner).
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Section 13.7 Cancellation of Certificate of Limited
Partnership
Upon the completion of the liquidation of the Partnership cash
and property as provided in Section 13.2 hereof, the Partnership shall be
terminated and the Certificate and all qualifications of the Partnership as a
foreign limited partnership in jurisdictions other than the State of Delaware
shall be canceled and such other actions as may be necessary to terminate the
Partnership shall be taken.
Section 13.8 Reasonable Time for Winding-Up
A reasonable time shall be allowed for the orderly
winding-up of the business and affairs of the Partnership and the liquidation of
its assets pursuant to Section 13.2 hereof, in order to minimize any losses
otherwise attendant upon such winding-up, and the provisions of this Agreement
shall remain in effect between the Partners during the period of liquidation.
Section 13.9 Waiver of Partition
Each Partner hereby waives any right to partition of the
Partnership property.
ARTICLE 14
AMENDMENT OF PARTNERSHIP AGREEMENT; CONSENTS
Section 14.1 Amendments
A. The actions requiring Consent of Limited Partners pursuant
to this Agreement, including Section 7.3, or otherwise pursuant to applicable
law, are subject to the procedures in this Article 14.
B. Amendments to this Agreement may be proposed by the General
Partner or by any Limited Partner. Following such proposal, the General Partner
shall submit any proposed amendment to the Limited Partners. The General Partner
shall seek the written consent of the Partners on the proposed amendment or
shall call a meeting to vote thereon and to transact any other business that it
may deem appropriate. For purposes of obtaining a written consent, the General
Partner may require a response within a reasonable specified time, but not less
than 15 days, and failure to respond in such time period shall constitute a
consent which is consistent with the General Partner's recommendation (if so
recommended) with respect to the proposal; provided, that, an action shall
become effective at such time as requisite consents are received even if prior
to such specified time.
Section 14.2 Action by the Partners
A. Meetings of the Partners may be called by the General
Partner and shall be called upon the receipt by the General Partner of a written
request by Limited Partners holding 25 percent or more of the Partnership
Interests held by Limited Partners. The call shall state the nature of the
business to be transacted. Notice of any such meeting shall be given to all
Partners not less than ten days nor more than 30 days prior to the date of such
meeting. Partners may vote in person or by proxy at such meeting. Whenever the
vote or Consent of Partners is permitted or required under this Agreement, such
vote or Consent may be given at a meeting of Partners or may be given in
accordance with the procedure prescribed in Section 14.1 hereof.
-54-
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 the percentage as is expressly required
by this Agreement for the action in question. Such consent may be in one
instrument or in several instruments, and shall have the same force and effect
as a vote of the Percentage Interests of the Partners (expressly required by
this Agreement). Such consent shall be filed with the General Partner. An action
so taken shall be deemed to have been taken at a meeting held on the effective
date so certified.
C. Each Limited Partner may authorize any Person or Persons to
act for him by proxy on all matters in which a Limited Partner is entitled to
participate, including waiving notice of any meeting, or voting or participating
at a meeting. Every proxy must be signed by the Limited Partner or his
attorney-in-fact. No proxy shall be valid after the expiration of 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.
D. Each meeting of Partners shall be conducted by the General
Partner or such other Person as the General Partner may appoint pursuant to such
rules for the conduct of the meeting as the General Partner or such other Person
deems appropriate.
ARTICLE 15
GENERAL PROVISIONS
Section 15.1 Addresses and Notice
Any notice, demand, request or report required or permitted to
be given or made to a Partner or Assignee under this Agreement shall be in
writing and shall be deemed given or made when delivered in person or when sent
by first class United States mail or by other means of written communication to
the Partner or Assignee at the address set forth in Exhibit A or such other
address as the Partners shall notify the General Partner in writing.
Section 15.2 Titles and Captions
All article or section titles or captions in this Agreement
are for convenience only. They shall not be deemed part of this Agreement and in
no way define, limit, extend or describe the scope or intent of any provisions
hereof. Except as specifically provided otherwise, references to "Articles" and
"Sections" are to Articles and Sections of this Agreement.
-55-
Section 15.3 Pronouns and Plurals
Whenever the context may require, any pronoun used in this
Agreement shall include the corresponding masculine, feminine or neuter forms,
and the singular form of nouns, pronouns and verbs shall include the plural and
vice versa.
Section 15.4 Further Action
The parties shall execute and deliver all documents, provide
all information and take or refrain from taking action as may be necessary or
appropriate to achieve the purposes of this Agreement.
Section 15.5 Binding Effect
This Agreement shall be binding upon and inure to the benefit
of the parties hereto and their heirs, executors, administrators, successors,
legal representatives and permitted assigns.
Section 15.6 Creditors
None of the provisions of this Agreement shall be for the
benefit of, or shall be enforceable by, any creditor of the Partnership.
Section 15.7 Waiver
No failure by any party to insist upon the strict performance
of any covenant, duty, agreement or condition of this Agreement or to exercise
any right or remedy consequent upon any breach thereof shall constitute waiver
of any such breach or any other covenant, duty, agreement or condition.
Section 15.8 Counterparts
This Agreement may be executed in counterparts, all of which
together shall constitute one agreement binding on all the parties hereto,
notwithstanding that all such parties are not signatories to the original or the
same counterpart. Each party shall become bound by this Agreement immediately
upon affixing its signature hereto.
Section 15.9 Applicable Law
This Agreement shall be construed in accordance with and
governed by the laws of the State of Delaware, without regard to the principles
of conflicts of law.
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Section 15.10 Invalidity of Provisions
If any provision of this Agreement is or becomes invalid,
illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein shall not be
affected thereby.
Section 15.11 Limitation to Preserve REIT Status
To the extent that any amount paid or credited to the
General Partner or its officers, directors, employees or agents, whether as a
reimbursement, fee, expense or indemnity (a "GP Payment"), would constitute
gross income to the General Partner for purposes of Sections 856(c)(2) or
856(c)(3) of the Code (but is not described in subsections (A) through (H) of
Section 856(c)(2) or subsections (A) through (I) of Section 856(c)(3)) then,
notwithstanding any other provision of this Agreement, the amount of such GP
Payments for any fiscal year shall not exceed the lesser of:
(i) an amount equal to the excess, if any, of (a) 5.00% of the
General Partner's total gross income for the fiscal year which
is described in subsections (A) through (H) of Section
856(c)(2) of the Code over (b) the amount of gross income
(within the meaning of Section 856(c)(2) of the Code) derived
by the General Partner from sources other than those described
in subsections (A) through (H) of Section 856(c)(2) of the
Code (but not including the amount of any GP Payments); or
(ii) an amount equal to the excess, if any, of (a) 25% of the
General Partner's total gross income for the fiscal year which
is described in subsections (A) through (I) of Section
856(c)(3) of the Code over (b) the amount of gross income
(within the meaning of Section 856(c)(3) of the Code) derived
by the General Partner from sources other than those described
in subsections (A) through (I) of Section 856(c)(3) of the
Code (not including the amount of any GP Payments).
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IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first written above.
CEDAR INCOME FUND, LTD.
By: /s/ ▇▇▇ ▇. ▇▇▇▇▇▇
--------------------
Name: ▇▇▇ ▇. ▇▇▇▇▇▇
Title: President
LIMITED PARTNERS:
CEDAR BAY COMPANY
By: THE POINT ASSOCIATES, L.P.,
Partner
By: SELBRIDGE CORP., General Partner
By: /s/ ▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇ ▇. ▇▇▇▇▇▇
Title:
By: TRIANGLE CENTER ASSOCIATES, L.P.,
Partner
By: BUTTZVILLE CORP., General Partner
By: /s/ ▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇ ▇. ▇▇▇▇▇▇
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EXHIBIT A
PARTNERS, CONTRIBUTIONS AND PARTNERSHIP UNITS
I. Initial Contributions (cancelled 6/26/98)
Name and Address of the Capital Partnership of
Partner Contribution Units
---------------- -------------- -----------
General Partner
Cedar Income Fund, Ltd. $1.00 1
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Limited Partner
Cedar Bay Company $1.00 1
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
II. Contributions To Be Made On Effective Date
Name and Address of Partner Partnership Units
--------------------------- -----------------
General Partner
Cedar Income Fund, Ltd. 542,111
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Cedar Bay Company 1,703,300
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
A-1
EXHIBIT B
NOTICE OF REDEMPTION
The undersigned hereby irrevocably (i) elects to have redeemed
__________ Limited Partnership Units in Cedar Income Fund Partnership, L.P. in
accordance with the terms of the Limited Partnership Agreement of Cedar Income
Fund Partnership, L.P. and the Redemption Rights referred to therein, (ii)
surrenders such Limited Partnership Units and all right, title and interest
therein, and (iii) directs that the cash and any REIT Shares deliverable upon
redemption be delivered to the address specified below, and such REIT Shares be
registered or placed in the name(s) and at the address(es) specified below.
Dated: _______________________
Name of Limited Partner
__________________________________
(Signature of Limited Partner)
__________________________________
(Street Address)
__________________________________
(City) (State) (Zip Code)
Issue REIT Shares to:
Please insert social security or identifying number:
Name:
B-1