AGREEMENT
OF LIMITED PARTNERSHIP
OF
WESTERN/XXXXXX, X.X.
TABLE OF CONTENTS
ARTICLE I.
DEFINED TERMS. . . . . . . . . . . . . . 1
ARTICLE II.
PARTNERSHIP CONTINUATION AND IDENTIFICATION . . . . . . 9
2.02 Name, Office and Registered Agent. . . . . . . . . . . . . . . . . 9
2.03 Partners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.04 Term and Dissolution . . . . . . . . . . . . . . . . . . . . . . . 9
2.05 Filing of Certificate and Perfection of Limited Partnership. . . . 10
ARTICLE III.
BUSINESS OF THE PARTNERSHIP . . . . . . . . . . 11
3.01 Business Purpose . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.02 Representations and Warranties by the Parties. . . . . . . . . . . 11
ARTICLE IV.
CAPITAL CONTRIBUTIONS AND ACCOUNTS . . . . . . . . 13
4.01 Capital Contributions. . . . . . . . . . . . . . . . . . . . . . . 13
4.02 Additional Capital Contributions and Issuances of Additional
Partnership Interests. . . . . . . . . . . . . . . . . . . . . . . 13
4.03 General Partner Loans. . . . . . . . . . . . . . . . . . . . . . . 14
4.04 Capital Accounts . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.05 Percentage Interests . . . . . . . . . . . . . . . . . . . . . . . 15
4.06 No Interest on Contributions . . . . . . . . . . . . . . . . . . . 15
4.07 Return of Capital Contributions. . . . . . . . . . . . . . . . . . 15
4.08 No Third Party Beneficiary . . . . . . . . . . . . . . . . . . . . 15
ARTICLE V.
PROFITS AND LOSSES; DISTRIBUTIONS. . . . . . . . . 16
5.01 Allocation of Profit and Loss. . . . . . . . . . . . . . . . . . . 16
5.02 Distribution of Cash . . . . . . . . . . . . . . . . . . . . . . . 18
5.03 No Right to Distributions in Kind. . . . . . . . . . . . . . . . . 19
5.04 Limitations on Return of Capital Contributions . . . . . . . . . . 19
5.06 Distributions Upon Liquidation . . . . . . . . . . . . . . . . . . 19
5.07 Substantial Economic Effect. . . . . . . . . . . . . . . . . . . . 20
ARTICLE VI.
RIGHTS, OBLIGATIONS AND
POWERS OF THE GENERAL PARTNER. . . . . . . . . . 20
6.01 Management of the Partnership. . . . . . . . . . . . . . . . . . . 20
6.02 Adoption of Employee Benefit Plans . . . . . . . . . . . . . . . . 22
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6.03 Delegation of Authority. . . . . . . . . . . . . . . . . . . . . . 22
6.04 Indemnification and Exculpation of Indemnitees . . . . . . . . . . 23
6.05 Liability of the General Partner . . . . . . . . . . . . . . . . . 24
6.06 Expenditures by the Partnership. . . . . . . . . . . . . . . . . . 25
6.07 Outside Activities . . . . . . . . . . . . . . . . . . . . . . . . 26
6.08 Employment or Retention of Affiliates. . . . . . . . . . . . . . . 26
6.09 Title to Partnership Assets. . . . . . . . . . . . . . . . . . . . 27
ARTICLE VII.
CHANGES IN GENERAL PARTNER . . . . . . . . . . 27
7.01 Transfer of the General Partner's Partnership Interest . . . . . . 27
7.02 Admission of a Substitute or Additional General Partner. . . . . . 27
7.03 Effect of Bankruptcy, Withdrawal, Death or Dissolution of a
General Partner. . . . . . . . . . . . . . . . . . . . . . . . . . 28
7.04 Removal of a General Partner . . . . . . . . . . . . . . . . . . . 28
ARTICLE VIII.
RIGHTS AND OBLIGATIONS OF THE LIMITED PARTNERS . . . . . 30
8.01 Management of the Partnership. . . . . . . . . . . . . . . . . . . 30
8.02 Power of Attorney. . . . . . . . . . . . . . . . . . . . . . . . . 30
8.03 Limitation on Liability of Limited Partners. . . . . . . . . . . . 30
8.04 Conversion Right . . . . . . . . . . . . . . . . . . . . . . . . . 30
8.05 Registration . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
8.06 "Piggyback" Registration Rights. . . . . . . . . . . . . . . . . . 33
8.07 Sale of 704(c) Assets. . . . . . . . . . . . . . . . . . . . . . . 38
ARTICLE IX.
TRANSFERS OF LIMITED PARTNERSHIP INTERESTS . . . . . . 38
9.01 Purchase for Investment. . . . . . . . . . . . . . . . . . . . . . 38
9.02 Restrictions on Transfer of Limited Partnership Interests. . . . . 39
9.03 Admission of Substitute Limited Partner. . . . . . . . . . . . . . 40
9.04 Rights of Assignees of Partnership Interests . . . . . . . . . . . 41
9.05 Effect of Bankruptcy, Death, Incompetence or Termination of a
Limited Partner. . . . . . . . . . . . . . . . . . . . . . . . . . 41
9.06 Joint Ownership of Interests . . . . . . . . . . . . . . . . . . . 41
ARTICLE X.
BOOKS AND RECORDS; ACCOUNTING; TAX MATTERS . . . . . . 42
10.01 Books and Records . . . . . . . . . . . . . . . . . . . . . . 42
10.02 Custody of Partnership Funds; Bank Accounts . . . . . . . . . 42
10.03 Fiscal and Taxable Year . . . . . . . . . . . . . . . . . . . 43
10.04 Annual Tax Information and Report . . . . . . . . . . . . . . 43
10.05 Tax Matters Partner; Tax Elections; Special Basis
Adjustments. . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
10.06 Reports to Limited Partners . . . . . . . . . . . . . . . . . 43
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ARTICLE XI.
AMENDMENT OF AGREEMENT;
SALE OF ALL OR SUBSTANTIALLY ALL OF COMPANY'S ASSETS. . . . 44
11.01 Amendment of Agreement. . . . . . . . . . . . . . . . . . . . 44
11.02 Sale of All or Substantially all of the Assets of the
Partnership; Change in Control . . . . . . . . . . . . . . . . . . 45
ARTICLE XII.
GENERAL PROVISIONS . . . . . . . . . . . . 45
12.01 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
12.02 Survival of Rights. . . . . . . . . . . . . . . . . . . . . . 45
12.03 Additional Documents. . . . . . . . . . . . . . . . . . . . . 45
12.04 Severability. . . . . . . . . . . . . . . . . . . . . . . . . 45
12.05 Entire Agreement. . . . . . . . . . . . . . . . . . . . . . . 45
12.06 Pronouns and Plurals. . . . . . . . . . . . . . . . . . . . . 45
12.07 Headings. . . . . . . . . . . . . . . . . . . . . . . . . . . 45
12.08 Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . 45
12.09 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . 46
EXHIBITS
EXHIBIT A -- Schedule of Partners
EXHIBIT B -- Notice of Exercise of Conversion Right
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AGREEMENT
OF LIMITED PARTNERSHIP
OF
WESTERN/XXXXXX, X.X.
THIS AGREEMENT OF LIMITED PARTNERSHIP OF WESTERN/XXXXXX, X.X. (this
"Agreement"), dated as of October 30, 1998, is entered into by and between
WESTERN INVESTMENT REAL ESTATE TRUST, a California trust, as general partner (in
its capacity as General Partner (the "General Partner"), and each person who is
a signatory hereto, as limited partner (each, a "Limited Partner" and
collectively, the "Limited Partners").
THE PARTIES ENTER THIS AGREEMENT on the basis of the following facts,
understandings and intentions:
A. WESTERN/XXXXXX, X.X. (the "Partnership") was formed as a limited
partnership under the laws of the State of Delaware by a Certificate of Limited
Partnership filed with the Secretary of State of Delaware on October 13, 1998.
B. On the date hereof, pursuant to that certain Stock Purchase and
Contribution Agreement dated as of September 19, 1998 (the "Stock Purchase
Agreement") among the General Partner, the Partnership and each Partner, the
Partners are making certain capital contributions to the Partnership as
described in EXHIBIT A hereto (the "Initial Capital Contributions").
C. Upon completion of the Initial Capital Contributions and related
transactions under the Stock Purchase Agreement, the Partnership will be the
holder, directly or through one or more corporations, of certain notes and stock
of Xxxxxx'x Food Stores, Inc. an Oregon corporation ("Xxxxxx'x"), and will be
the sole owner of the Contributed Properties (as defined in the Stock Purchase
and Contribution Agreement).
D. Upon completion of the Initial Capital Contributions, the Limited
Partners will be admitted to the Partnership as Limited Partners with rights and
obligations as set forth herein.
NOW, THEREFORE, in consideration of the foregoing, and the covenants and
agreements between the parties hereto, and of other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
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ARTICLE I.
DEFINED TERMS
The following defined terms used in this Agreement shall have the meanings
specified below:
"ACT" means the Delaware Revised Uniform Limited Partnership Act, as it may
be amended from time to time.
"ADDITIONAL LIMITED PARTNER" means a Person admitted to this Partnership as
a Limited Partner pursuant to Section 4.02 hereof.
"ADMINISTRATIVE EXPENSES" means (i) all administrative and operating costs
and expenses incurred by the Partnership, and (ii) all administrative and
operating costs and expenses of the General Partner, including any salaries or
other payments to directors, officers and/or employees of the General Partner,
and any accounting and legal expenses of the General Partner, in each case to
the extent attributable to actions or activities undertaken by the General
Partner in respect of the Partnership or its assets.
"AFFILIATE" means, (i) any Person that, directly or indirectly, controls or
is controlled by or is under common control with such Person, (ii) any other
Person that owns, beneficially, directly or indirectly, 5% or more of the
outstanding capital stock, shares or equity interests of such Person, or (iii)
any officer, director, employee, partner or trustee of such Person or any Person
controlling, controlled by or under common control with such Person (excluding
trustees and persons serving in similar capacities who are not otherwise an
Affiliate of such Person). For the purposes of this definition, "control"
(including the correlative meanings of the terms "controlled by" and "under
common control with"), as used with respect to any Person, shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, through the ownership
of voting securities, partnership interests or other equity interests.
"AGREEMENT" means this Agreement of Limited Partnership of the Partnership.
"CAPITAL ACCOUNT" has the meaning provided in Section 4.04 hereof.
"CAPITAL CONTRIBUTION" means, with respect to any Partner, the amount of
money and the initial Gross Asset Value of any Contributed Property that such
Partner contributes to the Partnership pursuant to Section 4.02 or 4.03 hereof,
including the Initial Capital Contributions. Any reference to the Capital
Contribution of a Partner shall include the Capital Contribution made by a
predecessor holder of the Partnership Interest of such Partner.
"CAPITAL TRANSACTION" means the refinancing, sale, exchange, condemnation,
recovery of a damage award or insurance proceeds (other than business or rental
interruption insurance proceeds not reinvested in the repair or reconstruction
of Properties), or other disposition of any Property (or the Partnership's
interest therein).
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"CASH AMOUNT" means an amount of cash per Limited Partnership Unit equal to
the value of the Common Shares Amount on the date of receipt by the General
Partner of a Notice of Conversion of Common Shares. The value of the Common
Shares Amount shall be based on the average of the daily market price of Common
Shares for the ten consecutive trading days immediately preceding the date of
receipt by the General Partner of a Notice of Conversion of Common Shares. The
market price for each such trading day shall be: (i) if the Common Shares are
listed or admitted to trading on any securities exchange or the NYSE, the sale
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, regular way, on such day, (ii) if
the Common Shares are not listed or admitted to trading on any securities
exchange or the NYSE, 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 Common Shares are not listed or admitted to trading on
any securities exchange or the NYSE and no such last reported sale price or
closing bid and asked prices are available, the average of the reported high bid
and low asked prices on such day, as reported by a reliable quotation source
designated by the General Partner, or if there shall be no bid and asked prices
on such day, the average of the high bid and low asked prices, as so reported,
on the most recent day (not more than 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 ten days prior to the date in question, the value of
the Common 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 Common Shares Amount
includes rights that a holder of Common Shares would be entitled to receive,
then the value of such rights shall be determined by the Company acting in good
faith on the basis of such quotations and other information as it considers, in
its reasonable judgment, appropriate.
"CERTIFICATE" means any instrument or document that is required under the
laws of the State of Delaware, or any other jurisdiction in which the
Partnership conducts business, to be signed and sworn to by the Partners of the
Partnership (either by themselves or pursuant to the power-of-attorney granted
to the General Partner in Section 8.02 hereof) and filed for recording in the
appropriate public offices within the State of Delaware or such other
jurisdiction to perfect or maintain the Partnership as a limited partnership, to
effect the admission, withdrawal, or substitution of any Partner of the
Partnership, or to protect the limited liability of the Limited Partners as
limited partners under the laws of the State of Delaware or such other
jurisdiction.
"CODE" means the Internal Revenue Code of 1986, as amended, and as
hereafter amended from time to time. Reference to any particular provision of
the Code shall mean that provision in the Code at the date hereof and any
succeeding provision of the Code.
"COMMISSION" means the U.S. Securities and Exchange Commission.
"COMPANY" means Western Investment Real Estate Trust, a California Trust.
"COMMON SHARE" means a share of beneficial interest in the Company.
3
"COMMON SHARES AMOUNT" shall mean a number of Common Shares equal to the
number of Limited Partnership Units offered for conversion by a Converting
Partner, multiplied by the Conversion Factor; PROVIDED THAT in the event the
Company issues to all holders of Common Shares rights, options, warrants or
convertible or exchangeable securities entitling the shareholders to subscribe
for or purchase Common Shares, or any other securities or property
(collectively, the "rights"), then the Common Shares Amount shall also include
such rights that a holder of that number of Common Shares would be entitled to
receive.
"CONTRIBUTED PROPERTY" means each item of 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 a "new" partnership
pursuant to Code Section 708).
"CONVERSION AMOUNT" means either the Cash Amount, or the Common Shares
Amount, as determined pursuant to Section 8.04(b) hereof.
"CONVERSION FACTOR" means 1.0, PROVIDED THAT in the event that the Company
(i) declares or pays a dividend on its outstanding Common Shares in Common
Shares or makes a distribution to all holders of its outstanding Common Shares
in Common Shares, (ii) subdivides its outstanding Common Shares, or (iii)
combines its outstanding Common Shares into a smaller number of Common Shares,
the Conversion Factor shall be adjusted by multiplying the Conversion Factor by
a fraction, the numerator of which shall be the number of Common Shares issued
and outstanding on the record date for such dividend, distribution, subdivision
or combination (assuming for such purposes that such dividend, distribution,
subdivision or combination has occurred as of such time), and the denominator of
which shall be the actual number of Common Shares (determined without the above
assumption) issued and outstanding on such date. Any adjustment to the
Conversion Factor shall become effective immediately after the effective date of
such event retroactive to the record date, if any, for such event; PROVIDED,
HOWEVER, that if the Company receives a Notice of Conversion after the record
date, but prior to the effective date of such dividend, distribution,
subdivision or combination, the Conversion Factor shall be determined as if the
Company had received the Notice of Conversion immediately prior to the record
date for such dividend, distribution, subdivision or combination.
"CONVERSION RIGHT" has the meaning provided in Section 8.04(a) hereof.
"CONVERSION SHARES" has the meaning provided in Section 8.05(a) hereof.
"CONVERTING PARTNER" has the meaning provided in Section 8.04(a) hereof.
"CURRENT DISTRIBUTION AMOUNT" for any fiscal quarter or other distribution
period with respect to a Limited Partnership Unit shall mean the amount of per
share cash (or other consideration) distributed to holders of Common Shares of
the Company in such period, multiplied by the Conversion Factor; PROVIDED,
HOWEVER, that with respect to any normal distribution to holders of Common
Shares of the Company payable in the fourth quarter of 1998, the Current
Distribution Amount shall equal zero.
4
"DEBT" means, as to any Person, as of any date of determination, (i) all
indebtedness of such Person for borrowed money or for the deferred purchase
price of property or services; (ii) all amounts owed by such Person to banks or
other Persons in respect of reimbursement obligations under letters of credit,
surety bonds and other similar instruments guaranteeing payment or other
performance of obligations by such Person; (iii) all indebtedness for borrowed
money or for the deferred purchase price of property or services secured by any
lien on any property owned by such Person, to the extent attributable to such
Person's interest in such property, even though such Person has not assumed or
become liable for the payment thereof; and (iv) lease obligations of such Person
that, in accordance with generally accepted accounting principles, should be
capitalized.
"DEFAULTING LIMITED PARTNER" has the meaning provided in Section 5.02(b)
hereof.
"EFFECTIVE DATE" means the date hereof.
"EVENT OF BANKRUPTCY" as to any Person means the filing of a petition for
relief as to such Person as debtor or bankrupt under the Bankruptcy Code of 1978
or similar provision of law of any jurisdiction (except if such petition is
contested by such Person and has been dismissed within 90 days); insolvency or
bankruptcy of such Person as finally determined by a court proceeding; filing by
such Person of a petition or application to accomplish the same or for the
appointment of a receiver or a trustee for such Person or a substantial part of
his assets; commencement of any proceedings relating to such Person as a debtor
under any other reorganization, arrangement, insolvency, adjustment of debt or
liquidation law of any jurisdiction, whether now in existence or hereinafter in
effect, either by such Person or by another, provided that if such proceeding is
commenced by another, such Person indicates his approval of such proceeding,
consents thereto or acquiesces therein, or such proceeding is contested by such
Person and has not been finally dismissed within 90 days.
"FUNDING LOAN" has the meaning provided in Section 4.03 hereof.
"GAAP" means generally accepted accounting principles, consistently
applied.
"GENERAL PARTNER" means the Company, any successor-in-interest to the
Company as permitted under the terms hereof, and any Person who becomes a
substitute or additional General Partner as provided herein, and any of their
successors as General Partner.
"GENERAL PARTNERSHIP INTEREST" means the Partnership Interest held by the
General Partner.
"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 General
5
Partner and agreed to by the contributing Partner. The gross fair market value
of the assets constitution the Initial Capital Contributions shall be as set
forth on Exhibit A hereto.
(b) The Gross Asset Values of all Partnership assets immediately
prior to the occurrence of any event described in clause (i), clause (ii), cause
(iii), clause (iv) or clause (v) hereof shall be adjusted to equal their
respective gross fair market value, as determined by the General Partner using
such reasonable method of valuation as it may adopt, as of the following times:
(i) the acquisition of an additional interest in the Partnership
(other than in connection with the execution of this Agreement but
including, without limitation, acquisitions pursuant to Section 4.02
hereof or contributions by the General Partner pursuant to such
Section) 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 interests 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 Partnership reasonably
determines that such adjustment is necessary or appropriate to reflect
the relative economic interests of the Partners in the Partnership;
(iii) the liquidation of the Partnership within the meaning
of Regulations Section 1.704-1(b)(2)(ii)(g);
(iv) upon the admission of a successor General Partner pursuant
to Section 7.02 hereof; and
(v) 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 provided
that, if the distributee is the General Partner or if the distributee and the
General Partner cannot agree on such a determination, such gross fair market
value shall be determined 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 subsection (d) to the
extent that the General Partner reasonably determines that an adjustment
6
pursuant to subsection (b) above is necessary or appropriate in connection with
a transaction that would otherwise result in an adjustment pursuant to this
subsection (d).
(e) If the Gross Asset Value of a Partnership asset has been
determined or adjusted pursuant to subsection (a), subsection (b) or subsection
(d) above, such Gross Asset Value shall thereafter be adjusted by the
Depreciation taken into account with respect to such asset for purposes of
computing Profits and Losses.
"HOLDER" means either (a) a Partner or (b) any permitted assignee thereof,
owning a Partnership Unit, that is treated as a member of the Partnership for
federal income tax purposes.
"INDEMNITEE" means (i) any Person made a party to a proceeding by reason of
his status as the General Partner, a Limited Partner or an affiliate of either
of the foregoing, or a director or officer of the Partnership, a Limited Partner
or the General Partner or an affiliate of any of the foregoing and (ii) such
other Persons as the General Partner may designate in good faith from time to
time, in its reasonable discretion, giving consideration to the interest of the
Partnership.
"INITIAL CAPITAL CONTRIBUTIONS" has the meaning provided in the recitals
hereto.
"LIMITED PARTNER" means any Person named as a Limited Partner on EXHIBIT A
attached hereto, and any Person who becomes a Substitute Limited Partner, in
such Person's capacity as a Limited Partner in the Partnership.
"LIMITED PARTNERSHIP INTEREST" means the ownership interest of a Limited
Partner in the Partnership at any particular time, including the right of such
Limited Partner to any and all benefits to which such Limited Partner may be
entitled as provided in this Agreement and in the Act, together with the
obligations of such Limited Partner to comply with all the provisions of this
Agreement and of such Act. A Limited Partnership Interest may be expressed as a
number of Limited Partnership Units.
"LIMITED PARTNERSHIP UNIT" means an interest in the Partnership
representing a portions of the Limited Partnership Interests issued pursuant to
Sections 4.01 or 4.02 hereof. The initial allocation of Limited Partnership
Units among the Partners is as set forth on Exhibit A, as may be amended for
time to time.
"LOSS" has the meaning provided in Section 5.01(h) hereof.
"NOTICE OF CONVERSION" means the Notice of Exercise of Conversion Right
substantially in the form attached as EXHIBIT B hereto.
"NYSE" means the New York Stock Exchange.
"PARTNER" means any General Partner or Limited Partner.
7
"PARTNER NONRECOURSE DEBT MINIMUM GAIN" has the meaning set forth in
Regulations Section 1.704-2(i). A Partner's share of Partner Nonrecourse Debt
Minimum Gain shall be determined in accordance with Regulations Section
1.704-2(i)(5).
"PARTNERSHIP INTEREST" means an ownership interest in the Partnership by
either a Limited Partner or the General Partner and includes any and all
benefits to which the holder of such a Partnership Interest may be entitled as
provided in this Agreement, together with all obligations of such Person to
comply with the terms and provisions of this Agreement.
"PARTNERSHIP MINIMUM GAIN" has the meaning set forth in Regulations Section
1.704-2(d). In accordance with Regulations Section 1.704-2(d), the amount of
Partnership Minimum Gain is determined by first computing, for each Partnership
nonrecourse liability, any gain the Partnership would realize if it disposed of
the property subject to that liability for no consideration other than full
satisfaction of the liability, and then aggregating the separately computed
gains. A Partner's share of Partnership Minimum Gain shall be determined in
accordance with Regulations Section 1.704-2(g)(1).
"PARTNERSHIP RECORD DATE" means the record date established by the General
Partner for the distribution of cash pursuant to Section 5.02 hereof, which
record date shall be the same as the record date established by the Company for
a distribution to its shareholders of some or all of its portion of such
distribution.
"PERCENTAGE INTEREST" means, as to each Limited Partner, its interest in
the Limited Partnership Units as determined by dividing the Limited Partnership
Units owned by such Limited Partner by the total number of Limited Partnership
Units then outstanding. The initial Percentage Interest of each Limited Partner
is as set forth opposite its respective name on EXHIBIT A, as may be amended
from time to time.
"PERSON" means any individual, partnership, corporation, joint venture,
trust or other entity.
"PRIOR DISTRIBUTION DEFICIENCY" on any date shall mean the excess, if any,
of the aggregate Current Distribution Amounts for all prior periods (beginning
with the date the Initial Capital Contributions are made) over the aggregate
amount theretofore distributed to the Limited Partners under Section 5.02(a)(i)
hereof.
"PROFIT" has the meaning provided in Section 5.01(h) hereof.
"PROPERTY" means any investment in which the Partnership holds an ownership
interest.
"REGULATIONS" means the Federal Income Tax Regulations issued under the
Code, as amended and as hereafter amended from time to time. Reference to any
particular provision of the Regulations shall mean that provision of the
Regulations on the date hereof and any succeeding provision of the Regulations.
8
"REIT" means a real estate investment trust under Sections 856 through 860
of the Code.
"RULE 144" has the meaning set forth in Section 8.05(a) hereof.
"SEC" means the United States Securities and Exchange Commission.
"SECURITIES ACT" has the meaning set forth in Section 8.04(a) hereof.
"SERVICE" means the Internal Revenue Service.
"SPECIFIED CONVERSION DATE" means 30 days after the receipt by the Company
of the Notice of Conversion.
"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 interests is owned, directly or
indirectly, by such Person.
"SUBSTITUTE LIMITED PARTNER" means any Person admitted to the Partnership
as a Limited Partner pursuant to Section 9.03 hereof.
"TAXABLE DISTRIBUTION AMOUNT" means, with respect to each Limited
Partnership Unit, and for each taxable year (or portion thereof during which
such Limited Partnership Unit is outstanding), an amount equal to the lesser of
(i) the total distributions made with respect to such Limited Partnership Unit
for such taxable year (or portion), or (ii) the amount necessary for total
Profit allocated with respect to such Limited Partnership Unit for such taxable
year (or portion) and all prior taxable years (or portions) to equal the product
of (y) the portion of the distributions made with respect to a share of Common
Stock of the Company for such taxable years (or portions) taxed, or expected to
be taxed, as dividend income to the holder thereof, multiplied by (z) the
Conversion Ratio as in effect for each such taxable year or portion. It is
understood that in applying the preceding sentence, the General Partner shall
estimate in good faith the portion of the current year's distributions expected
to be taxed as a dividend.
"TRANSFER" has the meaning set forth in Section 9.02(a) hereof.
ARTICLE II.
PARTNERSHIP CONTINUATION AND IDENTIFICATION
2.01 CONTINUATION. The Partners hereby agree to continue the
Partnership pursuant to the Act and upon the terms and conditions set forth in
this Agreement.
2.02 NAME, OFFICE AND REGISTERED AGENT. The name of the Partnership
shall be WESTERN/XXXXXX, X.X. The specified office and place of business of the
Partnership shall be 0000 Xxxxxx Xxxxxx, Xxxxx 000, Xxxxxxxxxx, Xxxxxxxxxx
00000. The General Partner may at any time change the location of such office,
provided the General Partner gives notice to the
9
Partners of any such change. The name and address of the Partnership's
registered agent is __________________________. The sole duty of the registered
agent as such is to forward to the Partnership any notice that is served on him
as registered agent.
2.03 PARTNERS.
(a) As of the date hereof, the General Partner of the Partnership is
Western Investment Real Estate Trust, a California Trust. Its principal place
of business shall be the same as that of the Partnership.
(b) The Limited Partners shall be those Persons identified as Limited
Partners in EXHIBIT A hereto, as amended from time to time.
2.04 TERM AND DISSOLUTION.
(a) The term of the Partnership shall continue in full force and
effect until June 23, 2048 except that the Partnership shall be dissolved upon
the happening of any of the following events:
(i) The occurrence of an Event of Bankruptcy as to a General
Partner or the dissolution, death or withdrawal of a General Partner
unless the business of the Partnership is continued pursuant to
Section 7.03(b) hereof; provided that if a General Partner is on the
date of such occurrence a partnership, the dissolution of such General
Partner as a result of the dissolution, death, withdrawal, removal or
Event of Bankruptcy of a partner in such partnership shall not be an
event of dissolution of the Partnership if the business of such
General Partner is continued by the remaining partner or partners,
either alone or with additional partners, and such General Partner and
such partners comply with any other applicable requirements of this
Agreement;
(ii) The passage of 90 days after the sale or other
disposition of all or substantially all the assets of the Partnership;
provided that if the Partnership receives an installment obligation as
consideration for such sale or other disposition, the Partnership
shall continue, unless sooner dissolved under the provisions of this
Agreement, until such time as such note or notes are paid in full;
(iii) The conversion of all Limited Partnership Interests; or
(iv) The election by the General Partner that the Partnership
should be dissolved.
(b) Upon dissolution of the Partnership (unless the business of the
Partnership is continued pursuant to Section 7.03(b) hereof), the General
Partner (or its trustee, receiver, successor or legal representative) shall
amend or cancel the Certificate and liquidate the
10
Partnership's assets and apply and distribute the proceeds thereof in accordance
with Section 5.05 hereof. Notwithstanding the foregoing, the liquidating General
Partner may either (i) defer liquidation of, or withhold from distribution, for
a reasonable time, any assets of the Partnership (including those necessary to
satisfy the Partnership's debts and obligations), or (ii) distribute the assets
to the Partners in kind.
2.05 FILING OF CERTIFICATE AND PERFECTION OF LIMITED PARTNERSHIP. The
General Partner shall execute, acknowledge, record and file at the expense of
the Partnership, the Certificate and any and all amendments thereto and all
requisite fictitious name statements and notices in such places and
jurisdictions as may be necessary to cause the Partnership to be treated as a
limited partnership under, and otherwise to comply with, the laws of each state
or other jurisdiction in which the Partnership conducts business.
ARTICLE III.
BUSINESS OF THE PARTNERSHIP
3.01 BUSINESS PURPOSE. The purpose and nature of the business to be
conducted by the Partnership is to conduct any business that may be lawfully
conducted by a limited partnership organized pursuant to the Act; PROVIDED,
HOWEVER, that such business shall be limited to and conducted in such a manner
as to permit the General Partner at all times to qualify as a REIT, unless the
Company otherwise ceases to qualify as a REIT. The General Partner shall also
be empowered to do any and all acts and things necessary or prudent to ensure
that the Partnership will not be classified as a "publicly traded partnership"
for purposes of Section 7704 of the Code.
3.02 REPRESENTATIONS AND WARRANTIES BY THE PARTIES.
(a) Each Partner (including, without limitation, each Additional
Limited Partner or Substituted Limited Partner as a condition to becoming an
Additional Limited Partner or a Substituted Limited Partner) that is an
individual represents and warrants to each other Partner(s) that (i) the
consummation of the transactions contemplated by this Agreement to be performed
by such Partner will not result in a breach or violation of, or a default under,
any material agreement by which such Partner or any of such Partner's property
is bound, or any statute, regulation, order or other law to which such Partner
is subject, (ii) subject to the last sentence of this Section 3.2(a), such
Partner is neither a "foreign person" within the meaning of Code Section 1445(f)
nor a "foreign partner" within the meaning of Code Section 1446(e), (iii) this
Agreement is binding upon, and enforceable against, such Partner in accordance
with its terms. Notwithstanding anything contained herein to the contrary, in
the event that the representation contained in clause (ii) foregoing would be
inaccurate if given by a Partner, such Partner (w) shall not be required to make
and shall not be deemed to have made such representation, (x) shall deliver to
the General Partner in connection with or prior to its execution of this
Agreement written notice that it may not truthfully make such representation,
(y) hereby agrees that it is subject to, and hereby authorizes the General
Partner to withhold, all withholdings to which such a "foreign person" or
"foreign partner", as applicable, is subject
11
under the Code and (z) hereby agrees to cooperate fully with the General Partner
with respect to such withholdings, including by effecting the timely completion
and delivery to the General Partner of all internal revenue forms required in
connection therewith.
(b) Each Partner (including, without limitation, each Additional
Limited Partner or Substituted Limited Partner as a condition to becoming an
Additional Limited Partner or a Substituted Limited Partner) that is not an
individual represents and warrants to each other Partner(s) that (i) all
transactions contemplated by this Agreement to be performed by it have been duly
authorized by all necessary action, including, without limitation, that of its
general partner(s), committee(s), trustee(s), beneficiaries, directors and/or
shareholder(s), as the case may be, as required, (ii) the consummation of such
transactions shall not result in a breach or violation of, or a default under,
its partnership or operating agreement, trust agreement, articles, charter or
by-laws, as the case may be, any material agreement by which such Partner or any
of such Partner's properties or any of its partners, members, beneficiaries,
trustees or shareholders, as the case may be, is or are bound, or any statute,
regulation, order or other law to which such Partner or any of its partners,
members, trustees, beneficiaries or shareholders, as the case may be, is or are
subject, (iii) subject to the last sentence of this Section 3.02(b), such
Partner is neither a "foreign person" within the meaning of the Code Section
1445(f) nor a "foreign partner" within the meaning of Code Section 1446(e), and
(iv) this Agreement is binding upon, and enforceable against, such Partner in
accordance with its terms. Notwithstanding anything contained herein to the
contrary, in the event that the representation contained in clause (iii)
foregoing would be inaccurate if given by a Partner, such Partner (w) shall not
be required to make and shall not be deemed to have made such representation,
(x) shall deliver to the General Partner in connection with or prior to its
execution of this Agreement written notice that it may not truthfully make such
representation, (y) hereby agrees that it is subject to, and hereby authorizes
the General Partner to withhold, all withholdings to which such a "foreign
person" or "foreign partner", as applicable, is subject under the Code and (z)
hereby agrees to cooperate fully with the General Partner with respect to such
withholdings, including by effecting the timely completion and delivery to the
General Partner of all internal revenue forms required in connection therewith.
(c) Each Partner (including, without limitation, each Substituted
Limited Partner as a condition to becoming a Substituted Limited Partner)
represents, warrants and agrees that it has acquired and continues to hold its
interest in the Partnership for its own account for investment purposes only and
not for the purpose of, or with a view toward, the resale or distribution of all
or any part thereof, and not with a view toward selling or otherwise
distributing such interest or any part thereof at any particular time or under
any predetermined circumstances. Each Partner further represents and warrants
that it is a sophisticated investor, able and accustomed to handling
sophisticated financial matters for itself, particularly real estate
investments, and that is has a sufficiently high net worth that it does not
anticipate a need for the funds that it has invested in the Partnership in what
it understands to be a highly speculative and liquid investment.
(d) The representations and warranties contained in Sections 3.02(a),
3.02(b), and 3.02(c) hereof shall survive the execution and delivery of this
Agreement by each Partner
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(and, in the case of an Additional Limited Partner or a Substituted Limited
Partner, the admission of such Additional Limited Partner or Substituted Limited
Partner as a Limited Partner in the Partnership) and the dissolution,
liquidation and termination of the Partnership.
(e) Each Partner (including, without limitation, each Substituted
Limited Partner as a condition to becoming a Substituted Limited Partner) hereby
acknowledges that no representations as to potential profit, cash flows, funds
from operations or yield, if any, in respect of the Partnership or General
Partner have been made by any Partner or any employee or representative or
Affiliate of any Partner, and that projections and any other information,
including, without limitation, financial and descriptive information and
documentation, that may have been in any manner submitted to such Partner shall
not constitute any representation or warranty of any kind or nature, express or
implied.
ARTICLE IV.
CAPITAL CONTRIBUTIONS AND ACCOUNTS
4.01 CAPITAL CONTRIBUTIONS. The Partners shall make the Initial Capital
Contributions to the Partnership, whereupon the General Partner shall own the
sole General Partnership Interest in the Partnership with the rights and
obligations set forth herein, and each Limited Partner shall own Limited
Partnership Units in the amount set forth for such Partner on EXHIBIT A (as the
same may be amended from time to time by the General Partner to the extent
necessary to reflect accurately sales, exchanges or other transfers,
redemptions, Capital Contributions, the issuance of additional Partnership
Units, or similar events having an effect on a Partner's ownership of
Partnership Units), with the rights and obligations set forth herein. The
Initial Capital contributions shall be valued for Capital account purposes in
the manner set forth on EXHIBIT A. Any transfer tax owed as a result of the
Initial Capital Contributions shall be the responsibility of, and shall be paid
by, the Partnership.
4.02 ADDITIONAL CAPITAL CONTRIBUTIONS AND ISSUANCES OF ADDITIONAL
PARTNERSHIP INTERESTS. Except as provided in this Section 4.02 or in Section
4.03, the Partners shall have no right or obligation to make any additional
Capital Contributions, loans or preferred equity investments to the Partnership.
(a) ADDITIONAL GENERAL PARTNER CONTRIBUTIONS. Except as provided in
Article VII hereof, the Company shall at all times be the sole General Partner
of the Partnership. The General Partner may, but shall not be obligated to,
contribute additional capital to the Partnership, from time to time, as
determined by the General Partner in its sole discretion.
(b) ADDITIONAL LIMITED PARTNERSHIP INTERESTS. The General Partner
may not admit additional Limited Partners or issue additional Limited
Partnership Interests without the consent of a majority-in-interest of the
Limited Partners, such consent not to be unreasonably withheld. Upon the
issuance of any additional Limited Partnership Interest, the General Partner
shall amend Article V, Exhibit A and such other provisions hereof as may be
necessary or appropriate to reflect such issuance.
13
4.03 GENERAL PARTNER LOANS. The General Partner may, but shall not be
obligated to, from time to time advance funds to the Partnership for any proper
Partnership purpose as a loan ("Funding Loan") or a preferred equity investment
("Preferred Investment"), on such terms and conditions as it shall determine in
its good faith discretion.
4.04 CAPITAL ACCOUNTS. A separate capital account (a "Capital Account")
shall be established and maintained for each Partner in accordance with
Regulations Section 1.704-1(b)(2)(iv). If (i) a new or existing Partner acquires
an additional Partnership Interest in exchange for more than a DE MINIMIS
Capital Contribution, (ii) the Partnership distributes to a Partner more than a
DE MINIMIS amount of Partnership property as consideration for a Partnership
Interest, or (iii) the Partnership is liquidated within the meaning of
Regulation Section 1.704-l(b)(2)(ii)(g), the General Partner shall revalue the
property of the Partnership to its fair market value (as determined by the
General Partner and taking into account Section 7701(g) of the Code) in
accordance with Regulations Section 1.704-l(b)(2)(iv)(f). When the Partnership's
property is revalued by the General Partner, the Capital Accounts of the
Partners shall be adjusted in accordance with Regulations Sections
1.704-1(b)(2)(iv)(f) and (g), which generally require such Capital Accounts to
be adjusted to reflect the manner in which the unrealized gain or loss inherent
in such property (that has not been reflected in the Capital Accounts
previously) would be allocated among the Partners pursuant to Section 5.01 if
there were a taxable disposition of such property for its fair market value (as
determined by the General Partner and taking into account Section 7701(g) of the
Code) on the date of the revaluation.
4.05 PERCENTAGE INTERESTS. If the number of outstanding Limited Partnership
Units increases or decreases during a taxable year, each Limited Partner's
Percentage Interest shall be adjusted to a percentage equal to the number of
Limited Partnership Units held by such Limited Partner divided by the aggregate
number of Limited Partnership Units outstanding after giving effect to such
increase or decrease. If the Limited Partners' Percentage Interests are adjusted
pursuant to this Section 4.05, the Profits and Losses for the taxable year in
which the adjustment occurs shall be allocated between the part of the year
ending on the day of the adjustment and the part of the year beginning on the
following day either (i) as if the taxable year had ended on the date of the
adjustment or (ii) based on the number of days in each part. The General
Partner, in its sole discretion, shall determine which method shall be used to
allocate Profits and Losses for the taxable year in which the adjustment occurs.
The allocation of Profits and Losses for the earlier part of the year shall be
based on the Percentage Interests before adjustment, and the allocation of
Profits and Losses for the later part shall be based on the adjusted Percentage
Interests.
4.06 NO INTEREST ON CONTRIBUTIONS. No Partner shall be entitled to
interest on its Capital Contribution.
4.07 RETURN OF CAPITAL CONTRIBUTIONS. Except as specifically provided in
this Agreement, no Partner shall be entitled to withdraw any part of its Capital
Contribution or its Capital Account or to receive any distribution from the
Partnership. Except as otherwise
14
provided herein, there shall be no obligation to return to any Partner or
withdrawn Partner any part of such Partner's Capital Contribution for so long as
the Partnership continues in existence.
4.08 NO THIRD PARTY BENEFICIARY. No creditor or other third party having
dealings with the Partnership shall have the right to enforce the right or
obligation of any Partner to make Capital Contributions or loans or to pursue
any other right or remedy hereunder or at law or in equity, it being understood
and agreed that the provisions of this Agreement shall be solely for the benefit
of, and may be enforced solely by, the parties hereto and their respective
successors and assigns. None of the rights or obligations of the Partners herein
set forth to make Capital Contributions or loans to the Partnership shall be
deemed an asset of the Partnership for any purpose by any creditor or other
third party, nor may such rights or obligations be sold, transferred or assigned
by the Partnership or pledged or encumbered by the Partnership to secure any
debt or other obligation of the Partnership or of any of the Partners. In
addition, it is the intent of the parties hereto that no distribution to any
Limited Partner shall be deemed a return of money or other property in violation
of the Act.
ARTICLE V.
PROFITS AND LOSSES; DISTRIBUTIONS
5.01 ALLOCATION OF PROFIT AND LOSS.
(a) GENERAL. Except as otherwise provided in this Section 5.01 or in
Section 5.06, Profit of the Partnership for each fiscal year of the Partnership
shall be allocated (i) first, to the Capital Accounts of the Limited Partners in
proportion to their Percentage Interests, until all Profits allocated under this
clause (i) with respect to each Limited Partnership Unit shall equal the lesser
of (A) the aggregate Taxable Distribution Amount with respect to such Limited
Partnership Unit for all periods up through the date of such allocation, or (B)
all amounts theretofore distributed with respect to such Limited Partnership
Unit under Section 5.02(a)(i) hereof; and (ii) thereafter, to the General
Partner.
(b) Except as otherwise provided in this Section 5.01 or in Section
5.06, Loss of the Partnership shall be charged to the Capital Account of the
General Partner.
(c) NONRECOURSE DEDUCTIONS; MINIMUM GAIN CHARGEBACK. Notwithstanding
any provision to the contrary, (i) any expense of the Partnership that is a
"nonrecourse deduction" within the meaning of Regulations Section 1.704-2(b)(1)
shall be allocated to the Capital Account of the General Partner, (ii) any
expense of the Partnership that is a "partner nonrecourse deduction" within the
meaning of Regulations Section 1.704-2(i)(2) shall be allocated to the Capital
Accounts of the Partner in accordance with Regulations Section 1.704-2(i)(1),
(iii) if there is a net decrease in Partnership Minimum Gain within the meaning
of Regulations Section 1.704-2(f)(1) for any Partnership taxable year, items of
gain and income shall be allocated among the Partners in accordance with
Regulations Section 1.704-2(f) and the ordering rules contained in Regulations
Section 1.704-2(j), and (iv) if there is a net decrease in Partner Nonrecourse
Debt Minimum Gain within the meaning of Regulations Section
15
1.704-2(i)(4) for any Partnership taxable year, items of gain and income shall
be allocated among the Partners in accordance with Regulations Section
1.704-2(i)(4) and the ordering rules contained in Regulations Section
1.704-2(j). For purposes of determining its share of the nonrecourse
liabilities of the Partnership within the meaning of Regulations Section
1.752-3(a)(3), the General Partner's interest in partnership profits shall be
considered to be 100 percent.
(d) QUALIFIED INCOME OFFSET. If a Limited Partner receives in any
taxable year an adjustment, allocation, or distribution described in
subparagraphs (4), (5), or (6) of Regulations Section 1.704-l(b)(2)(ii)(d) that
causes or increases a negative balance in such Partner's Capital Account that
exceeds the sum of such Partner's shares of Partnership Minimum Gain and Partner
Nonrecourse Debt Minimum Gain, as determined in accordance with Regulations
Sections 1.704-2(g) and 1.704-2(i), such Partner shall be allocated specially
for such taxable year (and, if necessary, later taxable years) items of income
and gain in an amount and manner sufficient to eliminate such negative Capital
Account balance as quickly as possible as provided in Regulations Section
1.704-l(b)(2)(ii)(d). After the occurrence of an allocation of income or gain to
a Limited Partner in accordance with this Section 5.01(d), to the extent
permitted by Regulations Section 1.704-l(b), items of expense or loss shall be
allocated to such Partner in an amount necessary to offset the income or gain
previously allocated to such Partner under this Section 5.01(d).
(e) CAPITAL ACCOUNT DEFICITS. Loss shall not be allocated to a
Limited Partner to the extent that such allocation would cause a deficit in such
Partner's Capital Account (after reduction to reflect the items described in
Regulations Section 1.704-1(b)(2)(ii)(d)(4), (5) and (6)) to exceed the sum of
such Partner's shares of Partnership Minimum Gain and Partner Nonrecourse Debt
Minimum Gain. Any Loss in excess of that limitation shall be allocated to the
General Partner. After the occurrence of an allocation of Loss to the General
Partner in accordance with this Section 5.01(e), to the extent permitted by
Regulations Section 1.704-l(b), Profit shall be allocated to such Partner in an
amount necessary to offset the Loss previously allocated to such Partner under
this Section 5.01(e).
(f) CURATIVE ALLOCATIONS. The allocations set forth in Section
5.01(b), (c), (d), and (e) hereof (the "Regulatory Allocations") are intended to
comply with certain regulatory requirements, including the requirements of
Regulations Section 1.704-1(b) and 1.704-2. 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 without violating
the requirements giving rise to the Regulatory Allocations, the net amount of
such allocations of other items and the Regulatory Allocations to each Holder of
a Partnership Common Unit shall be equal to the net amount that would have been
allocated to each such Holder if the Regulatory Allocations had not been
applied.
(g) ALLOCATIONS BETWEEN TRANSFEROR AND TRANSFEREE. If a Partner
transfers any part or all of its Partnership Interest, and the transferee is
admitted as a substitute Partner as provided herein, the distributive shares of
the various items of Profit and Loss allocable among the Partners during such
fiscal year of the Partnership shall be allocated between the transferor
16
and the substitute Partner either (i) as if the Partnership's fiscal year had
ended on the date of the transfer, or (ii) based on the number of days of such
fiscal year that each was a Partner without regard to the results of Partnership
activities in the respective portions of such fiscal year in which the
transferor and the transferee were Partners. The General Partner, in its sole
discretion, shall determine which method shall be used to allocate the
distributive shares of the various items of Profit and Loss between the
transferor and the substitute Partner.
(h) DEFINITION OF PROFIT AND LOSS. "Profit" and "Loss" and any items
of income, gain, expense, or loss referred to in this Agreement shall be
determined in accordance with federal income tax accounting principles, as
modified by Regulations Section 1.704-l(b)(2)(iv), except that Profit and Loss
shall not include items of income, gain and expense that are specially allocated
pursuant to Section 5.01(b), 5.01(c), 5.01(d), or 5.01(e). All allocations of
income, Profit, gain, Loss, and expense (and all items contained therein) for
federal income tax purposes shall be identical to all allocations of such items
set forth in this Section 5.01, except as otherwise required by Section 704(c)
of the Code and Regulations Section 1.704-l(b)(4). The General Partner shall
have the authority to elect the method to be used by the Partnership for
allocating items of income, gain, and expense as required by Section 704(c) of
the Code and such election shall be binding on all Partners.
5.02 DISTRIBUTION OF CASH.
(a) On each date that a distribution of cash or other property is
made by the General Partner to its shareholders, the General Partner shall cause
the Partnership to distribute such cash as the General Partner, in its sole
discretion, considers available for distribution on such date, to the Holders of
Partnership Interests on the Partnership Record Date with respect to such
distribution period. Such cash distributions shall be made (i) first, to the
Limited Partners, with respect to each Limited Partnership Unit, in an amount
equal to the sum of the Current Distribution Amount and the Prior Distribution
Deficiency, if any, for such Limited Partnership Unit, and (ii) thereafter, to
the General Partner.
(b) Notwithstanding any other provision of this Agreement, the
General Partner is authorized to take any action that it determines to be
necessary or appropriate to cause the Partnership to comply with any withholding
requirements established under the Code or any other federal, state or local law
including, without limitation, pursuant to Sections 1441, 1442, 1445 and 1446 of
the Code. To the extent that the Partnership is required to withhold and pay
over to any taxing authority any amount resulting from the allocation or
distribution of income to a Partner or assignee (including by reason of Section
1446 of the Code), either (i) if the actual amount to be distributed to the
Partner or assignee equals or exceeds the amount required to be withheld by the
Partnership, the amount withheld shall be treated as a distribution of cash in
the amount of such withholding to such Partner or assignee, or (ii) if the
actual amount to be distributed to the Partner or assignee is less than the
amount required to be withheld by the Partnership, the amount required to be
withheld shall be treated as a loan (a "Partnership Loan") from the Partnership
to the Partner on the day the Partnership pays over such amount to the
applicable taxing authority. A Partnership Loan shall be repaid through
withholding by the Partnership with respect to subsequent distributions to the
applicable Partner or assignee. In the
17
event that a Limited Partner or assignee (either, a "Defaulting Limited
Partner") fails to pay any amount owed to the Partnership with respect to a
Partnership Loan within 15 days after demand for payment thereof is made by the
Partnership on the Defaulting Limited Partner, the General Partner, in its sole
discretion, may elect to make the payment to the Partnership on behalf of such
Defaulting Limited Partner. In such event, on the date of payment, the General
Partner shall be deemed to have extended a loan (a "General Partner Loan") to
the Defaulting Limited Partner in the amount of the payment made by the General
Partner and shall succeed to all rights and remedies of the Partnership against
the Defaulting Limited Partner as to that amount. Without limitation, the
General Partner shall have the right to receive any distributions that otherwise
would be made by the Partnership to the Defaulting Limited Partner until such
time as the General Partner Loan has been paid in full, and any such
distributions so received by the General Partner shall be treated as having been
received by the Defaulting Limited Partner and immediately paid to the General
Partner.
Any amounts treated as a Partnership Loan or a General Partner Loan
pursuant to this Section 5.02(b) shall bear interest at the lesser of (i) the
base rate on corporate loans at large United States money center commercial
banks, as published from time to time in THE WALL STREET JOURNAL, or (ii) the
maximum lawful rate of interest on such obligation, such interest to accrue from
the date the Partnership or the General Partner, as applicable, is deemed to
extend the loan until such loan is repaid in full.
(c) In no event may a Partner receive a distribution of cash with
respect to a Limited Partnership Unit if such Partner is entitled to receive a
dividend with respect to a Common Share for which all or part of such Limited
Partnership Unit has been or will be exchanged.
5.03 NO RIGHT TO DISTRIBUTIONS IN KIND; GENERAL PARTNER'S RIGHT OF
SUBSTITUTION.
(a) Except as provided in paragraph (b) hereof, no Partner shall be
entitled to demand property other than cash in connection with any distributions
by the Partnership.
(b) The General Partner shall be permitted, without obtaining the
consent of any other Partner, to cause any item of real property now owned or
hereafter acquired by the Partnership (including, without limitation, those
items of real property included in the Initial Capital Contributions) to be
distributed in-kind to the General Partner; PROVIDED, HOWEVER, that no such
distribution shall be permitted unless, concurrently with such distribution, the
General Partner shall contribute to the Partnership one or more properties which
the General Partner reasonably expects will generate cash available for
distribution in an amount at least equal to the amount of cash expected to be
generated by the Property or Properties distributed for the remainder of the
period described in Section 8.07 hereof.
5.04 LIMITATIONS ON RETURN OF CAPITAL CONTRIBUTIONS. Notwithstanding any
of the provisions of this Article 5, no Partner shall have the right to receive,
and the General Partner shall not have the right to make, a distribution which
includes a return of all or part of a Partner's Capital Contributions, unless
after giving effect to the return of a Capital Contribution,
18
the sum of all liabilities of the Partnership, other than the liabilities to a
Partner for the return of his Capital Contribution, does not exceed the fair
market value of the Partnership's assets.
5.05 REIT DISTRIBUTION REQUIREMENTS. The General Partner shall use its
reasonable efforts to cause the Partnership to distribute amounts sufficient to
enable the General Partner (i) to meet its distribution requirement for
qualification as a REIT as set forth in Section 857(a)(i) of the Code and (ii)
to avoid any federal income or excise tax liability imposed by the Code.
5.06 DISTRIBUTIONS UPON LIQUIDATION.
(a) Upon liquidation of the Partnership, after payment of, or
adequate provision for, debts and obligations of the Partnership, including any
Partner loans, any remaining assets of the Partnership shall be distributed to
all Partners with positive Capital Accounts in accordance with their respective
positive Capital Account balances. For purposes of the preceding sentence, the
Capital Account of each Partner shall be determined after all adjustments made
in accordance with Sections 5.01 and 5.02 resulting from Partnership operations.
Gain or loss resulting from any disposition of Partnership assets in connection
with such liquidation (including, without limitation, attributable to any
in-kind distributions undertaken in connection therewith) shall be credited or
charged to the Capital Accounts of the Partners so as to result, as nearly as
possible, in liquidating distributions with respect to each Limited Partnership
Unit equal to the sum of (i) the Cash Amount as of the date of liquidation, plus
(ii) any Prior Distribution Deficiency as of such date. Any distributions
pursuant to this Section 5.06 should be made by the end of the Partnership's
taxable year in which the liquidation occurs (or, if later, within 90 days after
the date of the liquidation). To the extent deemed advisable by the General
Partner, appropriate arrangements (including the use of a liquidating trust) may
be made to assure that adequate funds are available to pay any contingent debts
or obligations.
(b) If the General Partner has a negative balance in its Capital
Account following a liquidation of the Partnership, as determined after taking
into account all Capital Account adjustments in accordance with this Article 5
resulting from Partnership operations and from all sales and dispositions of all
or any part of the Partnership's assets, the General Partner shall contribute to
the Partnership an amount of cash equal to the negative balance in its Capital
Account and such cash shall be paid or distributed by the Partnership to
creditors, if any, and then to the Limited Partners in accordance with Section
5.06(a). Such contribution by the General Partner shall be made by the end of
the Partnership's taxable year in which the liquidation occurs (or, if later,
within 90 days after the date of the liquidation).
5.07 SUBSTANTIAL ECONOMIC EFFECT. It is the intent of the Partners that
the allocations of Profit and Loss under the Agreement have substantial economic
effect (or be consistent with the Partners' interests in the Partnership in the
case of the allocation of losses attributable to nonrecourse debt) within the
meaning of Section 704(b) of the Code as interpreted by the Regulations
promulgated pursuant thereto. Article 5 and other relevant provisions of this
Agreement shall be interpreted in a manner consistent with such intent.
19
ARTICLE VI.
RIGHTS, OBLIGATIONS AND
POWERS OF THE GENERAL PARTNER
6.01 MANAGEMENT OF THE PARTNERSHIP.
(a) Except as otherwise expressly provided in this Agreement, the
General Partner shall have full, complete and exclusive discretion to manage and
control the business of the Partnership for the purposes herein stated, and
shall make all decisions affecting the business and assets of the Partnership.
Subject to the restrictions specifically contained in this Agreement, the powers
of the General Partner shall include, without limitation, the authority to take
the following actions on behalf of the Partnership:
(i) to acquire, purchase, own, lease and dispose of any real
property and any other property or assets that the General Partner
determines are necessary or appropriate or in the best interests of
the business of the Partnership;
(ii) subject to the terms of any applicable lease, to
construct buildings and make other improvements on the properties
owned or leased by the Partnership;
(iii) to borrow money for the Partnership, issue evidences of
indebtedness in connection therewith, refinance, guarantee, increase
the amount of, modify, amend or change the terms of, or extend the
time for the payment of, any indebtedness or obligation to the
Partnership, and secure such indebtedness by mortgage, deed of trust,
pledge or other lien on the Partnership's assets;
(iv) to pay, either directly or by reimbursement, for all
operating costs and general administrative expenses of the Company,
the General Partner, or the Partnership, to third parties or to the
General Partner as set forth in this Agreement;
(v) to lease all or any portion of any of the Partnership's
assets, whether or not the terms of such leases extend beyond the
termination date of the Partnership and whether or not any portion of
the Partnership's assets so leased are to be occupied by the lessee,
or, in turn, subleased in whole or in part to others, for such
consideration and on such terms as the General Partner may determine;
(vi) to prosecute, defend, arbitrate, or compromise any and
all claims or Liabilities in favor of or against the Partnership, on
such terms and in such manner as the General Partner may reasonably
determine, and similarly to prosecute, settle or defend litigation
with respect to the Partners, the Partnership, or the Partnership's
assets; PROVIDED, HOWEVER, that the General Partner may not,
20
without the consent of all of the Partners, confess a judgment against
the Partnership;
(vii) to file applications, communicate, and otherwise deal
with any and all governmental agencies having jurisdiction over, or in
any way affecting, the Partnership's assets or any other aspect of the
Partnership business;
(viii) to make or revoke any election permitted or required of
the Partnership by any taxing authority;
(ix) to maintain such insurance coverage for public liability,
fire and casualty, and any and all other insurance for the protection
of the Partnership, for the conservation of Partnership assets, or for
any other purpose convenient or beneficial to the Partnership, in such
amounts and such types, as it shall determine from time to time;
(x) to determine whether or not to apply any insurance
proceeds for any property to the restoration of such property or to
distribute the same;
(xi) to retain legal counsel, accountants, consultants, real
estate brokers, and such other persons, as the General Partner may
deem necessary or appropriate in connection with the Partnership
business and to pay therefor such reasonable remuneration as the
General Partner may deem reasonable and proper;
(xii) to retain other services of any kind or nature in
connection with the Partnership business, and to pay therefor such
remuneration as the General Partner may deem reasonable and proper;
(xiii) to negotiate and conclude agreements on behalf of the
Partnership with respect to any of the rights, powers and authority
conferred upon the General Partner;
(xiv) to maintain accurate accounting records and to file
promptly all federal, state and local income tax returns on behalf of
the Partnership;
(xv) to distribute Partnership cash or other Partnership
assets in accordance with this Agreement;
(xvi) to form or acquire an interest in, and contribute
property to, any further limited or general partnerships, joint
ventures or other relationships that it deems desirable (including,
without limitation, the acquisition of interests in, and the
contributions of property to, its Subsidiaries and any other Person in
which it has an equity interest from time to time);
21
(xvii) to establish Partnership reserves for working capital,
capital expenditures, contingent liabilities, or any other valid
Partnership purpose; and
(xviii) to take such other action, execute, acknowledge, swear
to or deliver such other documents and instruments, and perform any
and all other acts the General Partner deems necessary or appropriate
for the formation, continuation and conduct of the business and
affairs of the Partnership (including, without limitation, all actions
consistent with allowing the Company at all times to qualify as a REIT
unless the Company voluntarily terminates its REIT status) and to
possess and enjoy all of the rights and powers of a general partner as
provided by the Act.
(b) Except as otherwise provided herein, to the extent the duties of
the General Partner require expenditures of funds to be paid to third parties,
the General Partner shall not have any obligations hereunder except to the
extent that Partnership funds are reasonably available to it for the performance
of such duties, and nothing herein contained shall be deemed to authorize or
require the General Partner, in its capacity as such, to expend its individual
funds for payment to third parties or to undertake any individual liability or
obligation on behalf of the Partnership.
6.02 ADOPTION OF EMPLOYEE BENEFIT PLANS. The General Partner, in its sole
and absolute discretion and without 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 or any of the Partnership's Subsidiaries.
6.03 DELEGATION OF AUTHORITY. The General Partner may delegate any or all
of its powers, rights and obligations hereunder, and may appoint, employ,
contract or otherwise deal with any Person for the transaction of the business
of the Partnership, which Person may, under supervision of the General Partner,
perform any acts or services for the Partnership as the General Partner may
approve.
6.04 INDEMNIFICATION AND EXCULPATION OF INDEMNITEES.
(a) To the fullest extent permitted by applicable law, the
Partnership shall indemnify each Indemnitee from and against any and all losses,
claims, damages, liabilities (joint or several), expenses (including, without
limitation, attorney's fees and other 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 such Indemnitee may be involved, or is threatened to be involved, as a
party or otherwise; provided, however, that the Partnership shall not indemnify
an Indemnitee: (i) for willful misconduct or a knowing violation of the law or
(ii) for any transaction for which such Indemnitee received an improper personal
benefit in violation or breach of any provision of this Agreement. Without
limitation,
22
the foregoing indemnity shall extend to any liability of any Indemnitee,
pursuant to a loan guarantee or otherwise, for any indebtedness of the
Partnership or any Subsidiary of the Partnership (including, without limitation,
any indebtedness which the Partnership or any Subsidiary of the Partnership has
assumed or taken subject to), and the General Partner is hereby authorized to
and empowered, on behalf of the Partnership, to enter into one or more indemnity
agreements consistent with the provisions of this Section 6.04 in favor of
Indemnitee having or potentially having liability for any such indebtedness. It
is the intention of this Section 6.04 that the Partnership indemnify each
Indemnitee to the fullest extent permitted by law. The termination of any
proceeding by judgment, order or settlement does not create a presumption that
the Indemnitee did not meet the requisite standard of conduct set forth in this
Section 6.04. The termination of any proceeding by conviction of an Indemnitee
or upon a plea of nolo contendere or its equivalent by an Indemnitee, or an
entry of an order of probation against an Indemnitee prior to judgment, does not
create a presumption that such Indemnitee acted in a manner contrary to that
specified in this Section 6.04. Any indemnification pursuant to this Section
6.04 shall be made only out of the assets of the Partnership, and neither the
General Partner nor any Limited Partner shall have any obligation to contribute
to the capital of the Partnership or otherwise provide funds to enable the
Partnership to fund its obligations under this Section 6.04.
(b) To the fullest extent permitted by law, expenses incurred by an
Indemnitee who is a party to a proceeding or otherwise subject to or the focus
of or is involved in any proceeding shall be paid or reimbursed by the
Partnership as incurred by the Indemnitee in advance of the final disposition of
the proceeding upon receipt by the Partnership of (i) a written affirmation by
the Indemnitee of the Indemnitee's good faith belief that the standard of
conduct necessary for indemnification by the Partnership as authorized in this
Section 6.04 has been met, and (ii) a written undertaking by or on behalf of the
Indemnitee to repay the amount if it shall ultimately be determined that the
standard of conduct has not been met.
(c) The indemnification provided by this Section 6.04 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, but shall not be obligated to, purchase and
maintain insurance, on behalf of the Indemnitees and such other Persons as the
General Partner shall determine, against any liability that may be asserted
against or expenses that may be incurred by such Person in connection with the
Partnership's activities, regardless of whether the Partnership would have the
power to indemnify such Person against such liability under the provisions of
this Agreement.
(e) For purposes of this Section 6.04, 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
23
constitute fines within the meaning of this Section 6.04; and actions taken or
omitted by the Indemnitee with respect to an employee benefit plan in the
performance of its duties for a purpose reasonably believed by it to be in the
interest of the participants and beneficiaries of the plan shall be deemed to be
for a purpose which is not opposed to the best interests of the Partnership.
(f) In no event may an Indemnitee subject the Limited Partners to
personal liability by reason of the indemnification provisions set forth in this
Agreement.
(g) An Indemnitee shall not be denied indemnification in whole or in
part under this Section 6.04 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 6.04 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.
6.05 LIABILITY OF THE GENERAL PARTNER.
(a) Notwithstanding anything to the contrary set forth in this
Agreement, the General Partner shall not be liable for monetary damages to the
Partnership or any Partners for losses sustained or liabilities incurred as a
result of errors in judgment or of any act or omission if the General Partner
acted in good faith. Additionally, the General Partner shall not be in breach
of any duty that the General Partner may owe to the Limited Partners or the
Partnership or any other Persons under this Agreement or of any duty stated or
implied by law or equity, provided the General Partner, acting in good faith,
abides by the terms of this Agreement.
(b) The Limited Partners expressly acknowledge that the General
Partner is acting on behalf of the Partnership, the Company and the Company's
shareholders collectively, and that the General Partner is under no obligation
to consider the separate interests of the Limited Partners (including, without
limitation, the tax consequences to the Limited Partners, except as otherwise
provided in Section 8.07 hereof) in deciding whether to cause the Partnership to
take (or decline to take) any actions. In the event of a conflict between the
interests of the shareholders of the Company on one hand and the Limited
Partners on the other, the General Partner shall endeavor in good faith to
resolve the conflict in a manner not adverse to either the shareholders of the
Company or the Limited Partners; provided the General Partner shall not be
liable for monetary damages for losses sustained, liabilities incurred, or
benefits not derived by Limited Partners in connection with such decisions,
provided that the General Partner has acted in good faith.
(c) Subject to its obligations and duties as General Partner set
forth in Section 6.01 hereof, the General Partner may exercise any of the powers
granted to it under this Agreement and perform any of the duties imposed upon it
hereunder either directly or by or
24
through its agents. The General Partner shall not be responsible for any
misconduct or negligence on the part of any such agent appointed by it in good
faith.
(d) Notwithstanding any other provisions of this Agreement or the
Act, any action of the General Partner on behalf of the Partnership or any
decision of the General Partner to refrain from acting on behalf of the
Partnership, undertaken in the good faith belief that such action or omission is
necessary or advisable in order (i) to protect the ability of the Company to
continue to qualify as a REIT or (ii) to prevent the Company from incurring any
taxes under Section 857, Section 4981, or any other provision of the Code, is
expressly authorized under this Agreement and is deemed approved by all of the
Limited Partners.
(e) Any amendment, modification or repeal of this Section 6.05 or any
provision hereof shall be prospective only and shall not in any way affect the
limitations on the General Partner's liability to the Partnership and the
Limited Partners under this Section 6.05 as in effect immediately prior to such
amendment, modification or repeal with respect to matters occurring, in whole or
in part, prior to such amendment, modification or repeal, regardless of when
claims relating to such matters may arise or be asserted.
6.06 EXPENDITURES BY THE PARTNERSHIP.
(a) The General Partner shall not be compensated for its services as
general partner of the Partnership except as provided in this Agreement
(including the provisions of Article 4 hereof regarding distributions, payments,
and allocations to which it may be entitled in its capacity as the General
Partner).
(b) The General Partner is hereby authorized to pay compensation for
accounting, administrative, legal, technical, management and other services
rendered to the Partnership. All of the aforesaid expenditures (including
Administrative Expenses) shall be obligations of the Partnership, and the
General Partner shall be entitled to reimbursement by the Partnership for any
expenditure (including Administrative Expenses) incurred by it on behalf of the
Partnership which shall be made other than out of the funds of the Partnership.
The Partnership shall also assume, and pay when due, all Administrative
Expenses.
(c) To the extent practicable, Partnership expenses shall be billed
directly to and paid by the Partnership and reimbursements to the General
Partner or any of its Affiliates by the Partnership pursuant to this Section
6.06 shall be treated as non-income reimbursements, and not as "guaranteed
payments" within the meaning of Code Section 707(c) or other forms of gross
income.
6.07 OUTSIDE ACTIVITIES. Subject to Section 6.08 hereof, it is expressly
understood and agreed that the General Partner, and any officer, director,
employee, agent, trustee, Affiliate or shareholder of the General Partner, shall
be entitled to and may have business interests and engage in business activities
in addition to those relating to the Partnership, including business interests
and activities substantially similar or identical to those of the Partnership.
Neither the Partnership nor any of the Limited Partners shall have any rights by
virtue of this Agreement in any such business ventures, interests or activities.
None of the Limited Partners nor any other Person shall have any rights by
virtue of this Agreement
25
or the partnership relationship established hereby in any such business
ventures, interests or activities, and the General Partner shall have no
obligation pursuant to this Agreement to offer any interest in any such business
ventures, interests and activities to the Partnership or any Limited Partner,
even if such opportunity is of a character which, if presented to the
Partnership or any Limited Partner, could be taken by such Person.
6.08 EMPLOYMENT OR RETENTION OF AFFILIATES.
(a) Any Affiliate of the General Partner may be employed or retained
by the Partnership and may otherwise deal with the Partnership (whether as a
buyer, lessor, lessee, manager, furnisher of goods or services, broker, agent,
lender or otherwise) and may receive from the Partnership any compensation,
price, or other payment therefor which the General Partner determines to be fair
and reasonable.
(b) The Partnership may lend to the General Partner or any Affiliate
thereof, or lend or contribute to its Subsidiaries or other Persons in which it
has an equity investment, and such Persons may borrow funds from the Partnership
or the General Partner, on terms and conditions established in the sole and
absolute discretion of the General Partner. The foregoing authority shall not
create any right or benefit in favor of any Subsidiary or any other Person.
(c) The Partnership may transfer assets to joint ventures, other
partnerships, corporations or other business entities in which it is or thereby
becomes a participant upon such terms and subject to such conditions as the
General Partner deems are consistent with this Agreement and applicable law.
(d) Except as expressly permitted by this Agreement, neither the
General Partner nor any of its Affiliates shall sell, transfer or convey any
property to, or purchase any property from, the Partnership, directly or
indirectly, except pursuant to transactions that are on terms that are fair and
reasonable to the Partnership.
6.09 TITLE TO PARTNERSHIP ASSETS. Title to Partnership assets, whether
real, personal or mixed and whether tangible or intangible, shall be deemed to
be owned by the Partnership as an entity, and no Partner, individually or
collectively, shall have any ownership interest in such Partnership assets or
any portion thereof. Title to any or all of the Partnership assets may be held
in the name of the Partnership, the General Partner or one or more nominees, as
the General Partner may determine, including Affiliates of the General Partner.
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
26
Partnership in its books and records, irrespective of the name in which legal
title to such Partnership assets is held.
ARTICLE VII.
CHANGES IN GENERAL PARTNER
7.01 TRANSFER OF THE GENERAL PARTNER'S PARTNERSHIP INTEREST. The General
Partner may not transfer any of its General Partnership Interest or withdraw as
General Partner except (i) for transfers to a wholly-owned subsidiary of the
General Partner, or to a partnership or limited liability company controlled by
the General Partner, or (ii) in connection with a merger, consolidation or other
combination with or into another Person or a sale of all or substantially all of
its assets. In any such circumstance, such transferee shall be admitted as a
substitute General Partner hereunder.
7.02 ADMISSION OF A SUBSTITUTE OR ADDITIONAL GENERAL PARTNER. Except in
connection with a transaction described in Section 7.01, a Person shall be
admitted as a substitute or successor General Partner of the Partnership only if
the following terms and conditions are satisfied:
(a) a majority in interest of the Limited Partners shall have
consented in writing to the admission of the substitute or successor General
Partner;
(b) the Person to be admitted as a substitute or additional General
Partner shall have accepted and agreed to be bound by all the terms and
provisions of this Agreement by executing a counterpart thereof and such other
documents or instruments as may be required or appropriate in order to effect
the admission of such Person as a General Partner, and a certificate evidencing
the admission of such Person as a General Partner shall have been filed for
recordation and all other actions required by Section 2.05 hereof in connection
with such admission shall have been performed;
(c) if the Person to be admitted as a substitute or additional
General Partner is a corporation or a partnership it shall have provided the
Partnership with evidence satisfactory to counsel for the Partnership of such
Person's authority to become a General Partner and to be bound by the terms and
provisions of this Agreement; and
(d) counsel for the Partnership shall have rendered an opinion
(relying on such opinions from other counsel and the state or any other
jurisdiction as may be necessary) that the admission of the person to be
admitted as a substitute or additional General Partner is in conformity with the
Act, that none of the actions taken in connection with the admission of such
Person as a substitute or additional General Partner will cause (i) the
Partnership to be classified other than as a partnership for federal income tax
purposes, or (ii) the loss of any Limited Partner's limited liability.
27
7.03 EFFECT OF BANKRUPTCY, WITHDRAWAL, DEATH OR DISSOLUTION OF A GENERAL
PARTNER.
(a) Upon the occurrence of an Event of Bankruptcy as to a General
Partner (and its removal pursuant to Section 7.04(a) hereof) or the withdrawal,
death or dissolution of a General Partner (except that, if a General Partner is
on the date of such occurrence a partnership, the withdrawal, death,
dissolution, Event of Bankruptcy as to, or removal of a partner in, such
partnership shall be deemed not to be a dissolution of such General Partner if
the business of such General Partner is continued by the remaining partner or
partners), the Partnership shall be dissolved and terminated unless the
Partnership is continued pursuant to Section 7.03(b) hereof.
(b) Following the occurrence of an Event of Bankruptcy as to a
General Partner (and its removal pursuant to Section 7.04(a) hereof) or the
death, withdrawal, removal or dissolution of a General Partner (except that, if
a General Partner is on the date of such occurrence a partnership, the
withdrawal, death, dissolution, Event of Bankruptcy as to, or removal of a
partner in, such partnership shall be deemed not to be a dissolution of such
General Partner if the business of such General Partner is continued by the
remaining partner or partners), the Limited Partners, within 90 days after such
occurrence, may elect to reconstitute the Partnership and continue the business
of the Partnership for the balance of the term specified in Section 2.04 hereof
by selecting, subject to Section 7.02 hereof and any other provisions of this
Agreement, a substitute General Partner by unanimous consent of the Limited
Partners. If the Limited Partners elect to reconstitute the Partnership and
admit a substitute General Partner, the relationship with the Partners and of
any Person who has acquired an interest of a Partner in the Partnership shall be
governed by this Agreement.
7.04 REMOVAL OF A GENERAL PARTNER.
(a) Upon the occurrence of an Event of Bankruptcy as to, or the
dissolution of, a General Partner, such General Partner shall be deemed to be
removed automatically; PROVIDED, HOWEVER, that if a General Partner is on the
date of such occurrence a partnership, the withdrawal, death, dissolution, Event
of Bankruptcy as to or removal of a partner in such partnership shall be deemed
not to be a dissolution of the General Partner if the business of such General
Partner is continued by the remaining partner or partners.
(b) If a General Partner has been removed pursuant to this Section
7.04 and the Partnership is continued pursuant to Section 7.03 hereof, such
General Partner shall promptly transfer and assign its General Partnership
Interest in the Partnership to the substitute General Partner approved by a
majority in interest of the Limited Partners in accordance with Section 7.03(b)
hereof and otherwise admitted to the Partnership in accordance with Section 7.02
hereof. At the time of assignment, the removed General Partner shall be
entitled to receive from the substitute General Partner the fair market value of
the General Partnership Interest of such removed General Partner as reduced by
any damages caused to the Partnership Interest of such removed General Partner.
Such fair market value shall be determined by an appraiser mutually agreed upon
by the General Partner and a majority in interest of the Limited Partners within
10 days following the removal of the General Partner. In the event that the
parties are unable to
28
agree upon an appraiser, the removed General Partner and a majority in interest
of the Limited Partners each shall select an appraiser. Each such appraiser
shall complete an appraisal of the fair market value of the removed General
Partner's General Partnership Interest within 30 days of the General Partner's
removal, and the fair market value of the removed General Partner's General
Partnership Interest shall be the average of the two appraisals; PROVIDED,
HOWEVER, that if the higher appraisal exceeds the lower appraisal by more than
20% of the amount of the lower appraisal, the two appraisers, no later than 40
days after the removal of the General Partner, shall select a third appraiser
who shall complete an appraisal of the fair market value of the removed General
Partner's General Partnership Interest no later than 60 days after the removal
of the General Partner. In such case, the fair market value of the removed
General Partner's General Partnership Interest shall be the average of the two
appraisals closest in value.
(c) The General Partnership Interest of a removed General Partner,
during the time after default until transfer under Section 7.04(b), shall be
converted to that of a special Limited Partner; PROVIDED, HOWEVER, such removed
General Partner shall not have any rights to participate in the management and
affairs of the Partnership, and shall not be entitled to any portion of the
income, expense, profit, gain or loss allocations or cash distributions
allocable or payable, as the case may be, to the Limited Partners. Instead,
such removed General Partner shall receive and be entitled only to retain
distributions or allocations of such items that it would have been entitled to
receive in its capacity as General Partner, until the transfer is effective
pursuant to Section 7.04(b).
(d) All Partners shall have given and hereby do give such consents,
shall take such actions and shall execute such documents as shall be legally
necessary and sufficient to effect all the foregoing provisions of this Section.
ARTICLE VIII.
RIGHTS AND OBLIGATIONS OF THE LIMITED PARTNERS
8.01 MANAGEMENT OF THE PARTNERSHIP. The Limited Partners shall not
participate in the management or control of Partnership business nor shall they
transact any business for the Partnership, nor shall they have the power to sign
for or bind the Partnership, such powers being vested solely and exclusively in
the General Partner.
8.02 POWER OF ATTORNEY. Each Limited Partner hereby irrevocably appoints
the General Partner his true and lawful attorney-in-fact, who may act for each
Limited Partner and in his name, place and xxxxx, and for his use and benefit,
to sign, acknowledge, swear to, deliver, file and record, at the appropriate
public offices, any and all documents, certificates, and instruments as may be
deemed necessary or desirable by the General Partner to carry out fully the
provisions of this Agreement and the Act in accordance with their terms, which
power of attorney is coupled with an interest and shall survive the death,
dissolution or legal incapacity of the Limited Partner, or the transfer by the
Limited Partner of any part or all of his Partnership Interest.
29
8.03 LIMITATION ON LIABILITY OF LIMITED PARTNERS. No Limited Partner shall
be liable for any debts, liabilities, contracts or obligations of the
Partnership. A Limited Partner shall be liable to the Partnership only to make
payments of his Capital Contribution, if any, as and when due hereunder. After
his Capital Contribution is fully paid, no Limited Partner shall, except as
otherwise required by the Act, be required to make any further Capital
Contributions or other payments or lend any funds to the Partnership.
8.04 CONVERSION RIGHT.
(a) Subject to Sections 8.04(b)-(f), on or after the date which is
one (1) year after the Effective Date, each Limited Partner shall have the right
(the "Conversion Right") to require the General Partner to convert on a
Specified Conversion Date all or a portion of the Limited Partnership Units held
by such Limited Partner at a price equal to and in the form of the Conversion
Amount; provided that if any Common Shares are to be issued in connection
therewith they shall have been registered pursuant to a registration statement
declared effective under the Securities Act of 1933, as amended (the "Securities
Act"). The Conversion Right shall be exercised pursuant to a Notice of
Conversion delivered to the General Partner by the Limited Partner who is
exercising the Conversion Right (the "Converting Partner"); provided, however,
that the Partnership shall not be obligated to satisfy such Conversion Right if
the Company and/or the General Partner elects to purchase the Limited
Partnership Units subject to the Notice of Conversion pursuant to Section
8.04(b); and provided, further, that no Limited Partner may deliver to the
General Partner more than four (4) Notices of Conversion during each calendar
year. In addition to the restrictions on conversion set forth in Section
8.05(h), a Limited Partner may not exercise the Conversion Right for less than
ten thousand (10,000) Limited Partnership Units or, if such Limited Partner
holds less than ten thousand (10,000) Limited Partnership Units, all of the
Limited Partnership Units held by such Partner. The Converting Partner shall
have no right, with respect to any Limited Partnership Units so converted, to
receive any distribution paid with respect to Limited Partnership Units if the
record date for such distribution is on or after the Specified Conversion Date.
(b) Notwithstanding the provisions of Section 8.05(a), the General
Partner may, in its sole and absolute discretion, elect to purchase directly and
acquire Limited Partnership Units with respect to which the Conversion Right has
been exercised by paying to the Converting Partner either the Cash Amount, or,
provided that the Common Shares have been registered pursuant to a registration
statement declared effective under the Securities Act, the Common Shares Amount,
as elected by the General Partner (in its sole and absolute discretion), on the
Specified Conversion Date, whereupon the General Partner shall acquire the
Limited Partnership Units offered for conversion by the Converting Partner,
which shall upon such acquisition become a part of the General Partnership
Interest (and shall no longer be considered Limited Partnership Units
hereunder). Each Converting Partner agrees to execute such
30
documents as the General Partner may reasonably require in connection with the
issuance of Common Shares upon exercise of the Conversion Right.
(c) Any Cash Amount to be paid to a Converting Partner pursuant to
this Section 8.05 shall be paid within 30 days after the initial date of receipt
by the Company of the Notice of Conversion relating to the Limited Partnership
Units to be converted.
(d) In the event that the General Partner permits the pledge of a
Limited Partner's Partnership Units to a lender, the General Partner may agree,
in its sole discretion, to allow such lender, upon foreclosure of such Limited
Partnership Units, to convert such Limited Partnership Units prior to the
expiration of the one-year period described in Section 8.05(a); provided, that
any such conversion shall be effected in the form of the Cash Amount.
(e) Notwithstanding any other provision of this Agreement, the
General Partner shall place appropriate restrictions on the ability of the
Limited Partners to exercise their Conversion Rights as and if deemed necessary
to ensure that the Partnership does not constitute a "publicly traded
partnership" under Section 7704 of the Code.
(f) Without limiting the obligations of the General Partner to
deliver registered shares as provided in Section 8.05(b), each certificate, if
any, evidencing Common Shares that may be issued in redemption of Limited
Partnership Units under Section 8.05 above (the "Conversion Shares") shall, to
the extent such shares have not been registered pursuant to a registration
statement declared effective under the Securities Act, bear a restrictive legend
in substantially the following form:
"The shares represented by this certificate have not been registered
under the Securities Act of 1933, as amended (the "Act"), or any state
securities law. No transfer of the Shares represented by this
certificate shall be valid or effective unless (A) such transfer is
made pursuant to an effective registration statement under the Act, or
(B) the holder of the securities proposed to be transferred shall have
delivered to the Company either a no-action letter from the Securities
and Exchange Commission or an opinion of counsel (who may be an
employee of such holder) experienced in securities matters to the
effect that such proposed transfer is exempt from the registration
requirements of the Act which opinion shall be reasonably satisfactory
to the Company."
8.05 REGISTRATION.
(a) SHELF REGISTRATION. Prior to or on the first date upon which the
Limited Partnership Units owned by any Limited Partner may be converted, at the
request of a Limited Partner, the Company agrees to file with the Commission, a
shelf registration statement on Form S-3 under Rule 415 of the Securities Act,
or any similar rule that may be adopted by the Commission (the "Shelf
Registration"), with respect to all of the Common Shares issued or issuable to
the Limited Partners pursuant to Section 8.04(b) hereof (the "Conversion
Shares"). The Company will use its best efforts to have the Shelf Registration
declared effective under the
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Securities Act and to keep the Shelf Registration continuously effective until a
date agreed upon by the Company and a majority in interest of the Limited
Partners or until such time as all of the shares registered pursuant to such
Shelf Registration (i) have been disposed of pursuant to such Shelf
Registration, (ii) have otherwise been distributed pursuant to Rule 144
promulgated under the Securities Act ("Rule 144"), or (iii) may be sold in the
market without restriction under Rule 144. The Company further agrees to
supplement or make amendments to the Shelf Registration, if required by the
rules, regulations or instructions applicable to the registration form utilized
by the Company or by the Securities Act or rules and regulations thereunder for
the Shelf Registration. No provision of this Agreement shall require the
Company to file a registration statement on any form other than Form S-3. The
Company, in the exercise of its reasonable judgment, shall have the right to
delay the filing of the Shelf Registration for up to 120 days.
(b) REGISTRATION AND QUALIFICATION PROCEDURES. The Company, upon the
written request of a Limited Partner, is required by the provisions of Section
8.05(a) hereof to use its best efforts to have the Shelf Registration declared
effective under the Securities Act. Accordingly, the Company will:
(i) prepare and file with the Commission a registration
statement, including amendments thereof and supplements relating
thereto, with respect to the Conversion Shares;
(ii) use its best efforts to cause the Shelf Registration to
be declared effective by the Commission;
(iii) keep the Shelf Registration effective and the related
prospectus current as described in Section 8.05(a) hereof; provided,
however, that the Company shall have no obligation to file any
amendment or supplement at its own expense or the Partnership's
expense more than 90 days after the effective date of the Shelf
Registration;
(iv) furnish to each holder of Conversion Shares such numbers
of copies of prospectuses, and supplements or amendments thereto, and
such other documents as such holder reasonably requests;
(v) register or qualify the securities covered by the
registration statement under the securities or blue sky laws of such
jurisdictions within the United States as any holder of Conversion
Shares shall reasonably request, and do such other reasonable acts and
things as may be required of it to enable such holders to consummate
the sale or other disposition in such jurisdictions of the Conversion
Shares; provided, however, that the Company shall not be required to
(i) qualify as a foreign corporation or consent to a general and
unlimited service or process in any jurisdictions in which it would
not otherwise be required to be qualified or so consent or (ii)
qualify as a dealer in securities; and
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(vi) keep the holders of Conversion Shares advised as to the
initiation and progress of the registration.
(c) ALLOCATION OF EXPENSES. The Company and the Partnership shall
each pay its proportionate share of all expenses in connection with the Shelf
Registration, including without limitation (i) all expenses incident to filing
with the National Association of Securities Dealers, Inc., (ii) registration
fees, (iii) printing expenses, (iv) accounting and legal fees and expenses,
except to the extent holders of Conversion Shares elect to engage accountants or
attorneys in addition to the accountants and attorneys engaged by the
Partnership or the Company, (v) accounting expenses incident to or required by
any such registration or qualification and (vi) expenses of complying with the
securities or blue sky laws of any jurisdictions in connection with such
registration or qualification; provided, however, neither Company nor the
Partnership shall not be liable for (A) any discounts or commissions to any
broker attributable to the sale of Conversion Shares, (B) any direct
out-of-pocket costs incurred by any Limited Partner in connection with the
registration of Conversion Shares, including but not limited to the Limited
Partner's attorney and accountant's fees, travel expenses and any consulting
fees or (C) any other fees or expenses incurred by holders of Conversion Shares
in connection with such registration which, according to the written
instructions of any regulatory authority, either such person is not permitted to
pay.
(d) SALE OF CONVERSION SHARES. The Company may require in its sole
discretion that the Conversion Shares be sold in block trades through
underwriters or broker-dealers or that the sale of the Conversion Shares be
underwritten by investment banking firms selected by the Company.
(e) LISTING ON SECURITIES EXCHANGE. If the Company shall list or
maintain the listing of any Common Shares on any securities exchange or national
market system, it will at its expense and as necessary to permit the
registration and sale of the Conversion Shares hereunder, list thereon, maintain
and, when necessary, increase such listing to include such Conversion Shares.
8.06 "PIGGYBACK" REGISTRATION RIGHTS.
(a) NOTICE OF REGISTRATION. It, at any time commencing upon the date
upon which all or any portion of the Limited Partnership Units shall have been
converted into Conversion Shares (but not if such Limited Partnership Units
shall have been exchanged for cash in accordance with the provisions hereof),
the Company files a registration statement under the Securities Act with respect
to a firm commitment underwritten public offering of any securities of the
Company, the Company shall give thirty (30) days prior written notice thereof to
each Limited Partner and shall, upon the written request of any or all of the
Limited Partners, include in the underwritten public offering the number of
Conversion Shares that each such Limited Partner may request (except as set
forth in Section 8.06(b) below). The Company will keep such registration
statement effective and current under the Securities Act permitting the sale of
Conversion Shares covered thereby for the same period that the registration
statement is maintained effective for the other persons (including the Company)
selling thereunder. In any
33
underwritten offering, however, the Conversion Shares to be included will be
sold at the same time and at the same price as the Company's securities. In the
event that the Company fails to receive a written request from a Limited Partner
within thirty (30) days of its written notice, then the Company shall have no
obligation to include any of the Conversion Shares in the offering. In
connection with any registration statement or subsequent amendment or similar
document filed pursuant to this Section 8.06, the Company shall take all
reasonable steps to make the securities covered thereby eligible for public
offering and sale under the securities or blue sky laws of the applicable
jurisdictions by the effective date of such registration statement; provided
that in no event shall the Company be obligated to qualify to do business in any
jurisdiction where it is not so qualified at the time of filing such documents
or to take any action which would subject it to unlimited service of process in
any jurisdiction where it is not so subject at such time. The Company shall
keep such filing current for the length of time it must keep any registration
statement, post-effective amendment, prospectus or offering circular effective
pursuant hereto.
(b) UNDERWRITING. In the event of an offering by the Company in
which one or more Limited Partners wishes to include Conversion Shares under
this Section 8.06, and it is determined in good faith by the managing
underwriter of such offering, giving effect to the number of Conversion Shares
to be offered by the Company, that the total number of Conversion Shares that
would consequently be offered is in excess of the number of Conversion Shares
that can be sold at the proposed price, then the number of Conversion Shares of
the Limited Partners to be offered will be reduced ratably, based upon the
number of Conversion Shares each Limited Partner has requested to include in
such registration.
(c) OBLIGATION OF LIMITED PARTNERS UPON REGISTRATION. To include
Conversion Shares in any registration, each Limited Partner shall:
(i) Cooperate with the Company in preparing each such
registration and execute all such agreements as any underwriter may deem
reasonably necessary in favor of such underwriter;
(ii) Promptly supply the Company with all information,
documents, representations and agreements as such underwriter may deem
reasonably necessary in connection with such registration; and
(iii) Agree in writing not to sell or transfer any share of the
Conversion Shares not included in such underwritten offering for a period
of seven (7) days prior to and thirty (30) days after the effective date of
such registration without the underwriters' consent, but no Limited Partner
shall be required to make such agreement unless the other Limited Partners
included in any offering covered by such registration shall similarly
agree.
(d) COMPANY'S OBLIGATIONS UPON REGISTRATION. If and whenever the
Company is obligated by the provisions of this Section 8.06 to effect the
registration of any offering of
34
Common Shares under the Securities Act, as expeditiously as possible the Company
will, or will use its best efforts to, as the case may be:
(i) Prepare and file with the SEC a registration statement
with respect to such Common Shares and, use its best efforts to cause such
registration statement to become effective;
(ii) Furnish to each Limited Partner so many copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Securities Act, and such other documents, as such
Limited Partner may reasonably request; and
(iii) Register or qualify the securities covered by such
registration statement under such other securities or blue sky laws of such
jurisdictions as such Limited Partner shall reasonably request, and do any
and all other acts and things that may be reasonably necessary or advisable
to enable the Limited Partners to consummate the disposition in such
jurisdictions of such securities.
(e) EXPENSES. In connection with any filing or other registration
hereunder the Partnership shall bear its proportionate share of all the expenses
and professional fees which arise in connection with such filings or
registration (except for the Limited Partner's pro rata share of any
underwriters' discount) and all expenses incurred in making such filings and
keeping them effective and correct as provided hereunder and shall also provide
each Limited Partner with a reasonable number of printed copies of the
prospectus, offering circulars and/or supplemental prospectuses or amended
prospectuses in final and preliminary form; provided, however, each Limited
Partner will pay its own direct out-of-pocket costs incurred with the
registration of Common Shares, including but not limited to Limited Partner's
attorney and accountants fees, travel expenses and any consulting fees.
(f) INDEMNIFICATION BY THE COMPANY. The Company will indemnify each
Limited Partner, each of its officers and directors, and each person controlling
the Limited Partner, with respect to which registration, qualification or
compliance has been effected pursuant to this Section 8.06, against all claims,
losses, damages, costs, expenses and liabilities whatsoever (or actions in
respect thereof) arising out of or based on (i) any untrue statement, (or
alleged untrue statement) of a material fact contained in any registration
statement, prospectus, offering circular or other similar document (including
any related registration statement, notification or the like) incident to any
such registration, qualification or compliance, or based on any omission (or
alleged omission) to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading in the light of the
circumstances under which they were made or (ii) any violation by the Company of
the Securities Act or any state securities law or of any rule or regulation
promulgated under the Securities Act or any state securities law applicable to
the Company and relating to action or inaction required of the Company in
connection with any such registration, qualification or compliance, and will
reimburse the Limited Partner, each of its officers and directors, and each
person controlling the Limited Partner, for any legal and any other expenses
reasonably incurred in connection with investigating or defending any such
claim, loss, damage, liability or action,
35
provided, however, that (x) the Company will not be liable in any such case to
the extent that any such claim, loss, damage, liability, or action arises out of
or is based on any untrue statement (or alleged untrue statement) or omission
(or alleged omission) based upon written information furnished to the Company by
an instrument duly executed by the Limited Partner and stated to be specifically
for use therein or furnished by the Limited Partner to the Company in response
to a request by the Company stating specifically that such information will be
used by the Company therein, and (y) such indemnity agreement shall not inure to
the benefit of the Limited Partner, insofar as it relates to any such untrue
statement (or alleged untrue statement) or omission (or alleged omission) made
in the preliminary prospectus or prospectus but eliminated or remedied in the
amended prospectus on file with the Commission at the time the registration
statement becomes effective or in the amended prospectus filed with the
Commission pursuant to Rule 424(b) under the Securities Act or in any subsequent
amended prospectus filed with the Commission prior to the written confirmation
of the sale of the Registrable Securities at issue (collectively, the "Final
Prospectus"), if a copy of the Final Prospectus was not furnished to the person
or entity asserting the loss, liability, claim or damage at or prior to the time
such action is required by the Securities Act.
(g) INDEMNIFICATION BY THE LIMITED PARTNERS. The Limited Partners
will, if Conversion Shares held by or issuable to such Limited Partners are
included in the Common Shares to which such registration, qualification or
compliance is being effected, indemnify the Company, each of its directors and
officers, each underwriter, if any, of the Common Shares covered by such
registration statement, and each person who controls the Company within the
meaning of the Securities Act against all claims, losses, damages, costs,
expenses and liabilities whatsoever (or actions in respect thereof) arising out
of or based on any untrue Statement (or alleged untrue statement) of a material
fact contained in any such registration statement, prospectus, offering circular
or other similar document (including any related registration statement,
notification or the like) incident to any such registration, qualification or
compliance, or based on any omission (or alleged omission) to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances under which they were made,
and will reimburse the Company, such directors, officers, persons or
underwriters for any legal or any other expenses reasonably incurred in
connection with investigation or defending any such claim, loss, damage, costs,
expense, liability or action, in each case to the extent, but only to the
extent, that such untrue statement (or alleged untrue statement or omission (or
alleged omission) is made in such registration statement, prospectus, offering
circular or other document in reliance upon and in conformity with written
information furnished to the Company by an instrument duly executed by the
Limited Partners and stated to be specifically for use therein or furnished by
any Limited Partner to the Company in response to a request by the Company
stating specifically that such information will be used by the Company therein,
provided, however, that the foregoing indemnity agreement is subject to the
condition that, such indemnity agreement shall not inure to the benefit of the
Company or any underwriter insofar as it relates to any such untrue statements
(or alleged untrue statements) or omission (or alleged omission) made in the
preliminary prospectus or prospectus but eliminated or remedied in the Final
Prospectus, if a copy of the Final Prospectus was not furnished to the person or
entity asserting the loss, liability, claim or damage at or prior to the time
such action is required by the Securities Act.
36
(h) INDEMNIFICATION PROCEDURES. Each party entitled to
indemnification under this Section 8.06 (the "Indemnified Party") shall give
notice to the party required to provide indemnification (the "Indemnifying
Party") promptly after such Indemnified Party has actual knowledge of any claim
as to which indemnity may be sought, and shall permit the Indemnifying party to
assume the defense of any such claim or any litigation resulting therefrom,
provided that counsel for the Indemnifying Party, who shall conduct the defense
of such claim or litigation, shall be approved by the Indemnified Party (whose
approval shall not unreasonably be withheld). The failure of any Indemnified
Party to give notice as provided herein shall relieve the Indemnifying Party of
its obligations under this Agreement only to the extent that such failure to
give notice shall materially prejudice the Indemnifying Party in the defense of
any such claim or any such litigation. No Indemnifying Party, in the defense of
any such claim or litigation, shall, except with the consent of each Indemnified
Party, consent to entry of any judgment or enter into any settlement that
attributes any liability to the Indemnified Party, unless the settlement
includes as an unconditional term thereof the giving by the claimant or
plaintiff to such Indemnified Party of a release from all liability in respect
to such claim or litigation. If any such Indemnified Party shall have been
advised by counsel chosen by it that there may be one or more legal defenses
available to such Indemnified Party that are different from or additional to
those available to the Indemnifying Party, the Indemnifying Party shall not have
the right to assume the defense of such action on behalf of such Indemnified
Party and will reimburse such Indemnified Party and any person controlling such
Indemnified Party for the reasonable fees and expenses of any counsel retained
by the Indemnified Party, it being understood that the Indemnifying Party shall
not, in connection with any one action or separate but similar or related
actions in the same jurisdiction arising out of the same general allegations or
circumstances, be liable for the reasonable fees and expenses of more than one
separate firm of attorneys for each Indemnified Party or controlling person (and
all other Indemnified Parties and controlling persons which may be represented
without conflict by one counsel), which firm shall be designated in writing by
the Indemnified Party (or Indemnified Parties, if more than one Indemnified
Party is to be represented by such counsel) to the Indemnifying Party. The
Indemnifying Party shall not be subject to any liability for any settlement made
without its consent, which shall not be unreasonably withheld.
If the indemnification provided for in this Section 8.06 from the
Indemnifying Party is unavailable to an Indemnified Party hereunder in respect
of any losses, claims, damages, labilities or expenses referred to therein, then
the Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall
contribute to the amount paid or payable by such Indemnified Party as a result
of such losses, claims, damages, labilities or expenses in such proportion as is
appropriate to reflect the relative fault of the Indemnifying Party and
Indemnified Parties in connection with the actions which resulted in such
losses, claims, damages, liabilities or expenses, as well as any other relevant
equitable considerations. The relative fault of such Indemnifying Party and
Indemnified Parties shall be determined by reference to, among other things,
whether any action in question, including any untrue or alleged untrue statement
of a material fact or omission or alleged omission to state a material fact, has
been made by, or relates to information supplied by, such Indemnifying Party or
Indemnified Parties, and the parties, relative intent, knowledge, access to
information and opportunity to correct or prevent such action. The amount paid
or payable by a party as a result of the losses claims, damages,
37
liabilities and expenses referred to above shall be deemed to include any legal
or other fees or expenses reasonably incurred by such party in connection with
any investigation or proceeding.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 8.06 were determined by pro rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to in the immediately preceding paragraph.
No person guilty of fraudulent misrepresentation (within the meaning of section
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
8.07 SALE OF 704(C) ASSETS. Notwithstanding anything herein to the
contrary, if, prior to the tenth anniversary hereof, the Partnership sells or
otherwise disposes of all or a portion of the stock of Xxxxxx'x Food Stores,
Inc. contributed by a Limited Partner on the date hereof or distributes property
(other than cash) contributed by the General Partner to one or more Limited
Partners and, as a result of such disposition, the Limited Partner recognizes
gain under Section 704(c) or 737 of the Code (including, without limitation,
pursuant to a liquidation of the Partnership on or before such date), then the
General Partner will indemnify and hold harmless the Limited Partner, on an
after-tax basis, from and against the excess of (i) any federal or state income
taxes owed by such Limited Partner as a result of such disposition (including
any penalties and interest relating thereto) over (ii) the then-present value
(utilizing then-prevailing tax rates and a discount rate equal to 120 percent of
the relevant "applicable federal rate" then in effect under Section 1274 of the
Code) of the Federal and state income taxes that would have been owed by such
Limited Partner if such disposition had occurred on the tenth anniversary
hereof. The General Partner shall have the right to participate in any contest
relating to whether any such taxes are owed.
ARTICLE IX.
TRANSFERS OF LIMITED PARTNERSHIP INTERESTS
9.01 PURCHASE FOR INVESTMENT.
(a) Each Limited Partner hereby represents and warrants to the
General Partner and to the Partnership that the acquisition of his Partnership
Interest is made as a principal for his account for investment purposes only and
not with a view to the resale or distribution of such Partnership Interest.
(b) Each Limited Partner agrees that he will not sell, assign or
otherwise transfer his Partnership Interest or any fraction thereof, whether
voluntarily or by operation of law or at judicial sale or otherwise, to any
Person who does not make the representations and warranties to the General
Partner set forth in Section 9.01(a) above and similarly agree not to sell,
assign or transfer such Partnership Interest or fraction thereof to any Person
who does not similarly represent, warrant and agree.
38
9.02 RESTRICTIONS ON TRANSFER OF LIMITED PARTNERSHIP INTERESTS.
(a) Except as otherwise provided in Section 9.02(d) hereof and except
for the pledge rights contained in Section 9.02(f) hereof, no Limited Partner
may offer, sell, assign, hypothecate, pledge or otherwise transfer his Limited
Partnership Interest, in whole or in part, whether voluntarily or by operation
of law or at judicial sale or otherwise (collectively, a "Transfer") without the
written consent of the General Partner, which consent may be withheld in the
sole discretion of the General Partner. The General Partner may require, as a
condition of any Transfer, that the transferor assume all costs incurred by the
Partnership in connection therewith.
(b) No Limited Partner may effect a Transfer of his Limited
Partnership Interest, in whole or in part, if, in the opinion of legal counsel
for the Partnership, such proposed Transfer would require the registration of
the Limited Partnership Interest under the Securities Act or would otherwise
violate any applicable federal or state securities or "Blue Sky" law (including
investment suitability standards).
(c) No transfer by a Limited Partner of his Limited Partnership
Interest in whole or in part, may be made to any Person if such transfer is
effectuated through an "established securities market" or a "secondary market
(or the substantial equivalent thereof)" within the meaning of Section 7704 of
the Code.
(d) Section 9.02(a) shall not apply to the following transactions,
except that the General Partner may require that the transferor assume all costs
incurred by the Partnership in connection therewith:
(i) any Transfer by a Limited Partner pursuant to the
exercise of its Conversion Right under Section 8.04 hereof;
(ii) any Transfer by a Limited Partner that is a corporation
or other business entity to any of its Affiliates or subsidiaries or
to any successor in interest of such Limited Partner; or
(iii) any donative Transfer by an individual Limited Partner to
his immediate family members or any trust in which the individual or
his immediate family members own, collectively, 100% of the beneficial
interests. For purposes of this Section 9.02(d)(iii), the term
"immediate family member" shall be deemed to include only an
individual Limited Partner's spouse, children and grandchildren.
(e) Any Transfer in contravention of any of the provisions of this
Article IX shall be void and ineffectual and shall not be binding upon, or
recognized by, the Partnership.
(f) No transfer of any Limited Partnership Interest may be made to a
lender to the Partnership or to any Person who is related (within the meaning of
Regulations Section
39
1.752-4(b)) to any lender to the Partnership whose loan constitutes a
non-recourse liability (within the meaning of Regulations Section
1.752-1(a)(2)), without the consent of the General Partner, which may be
withheld in its sole and absolute discretion; PROVIDED, HOWEVER, that as a
condition to such consent the lender will be required to enter into an
arrangement with the Partnership and the General Partner to exchange or redeem
for the Cash Amount any Limited Partnership Units in which a security interest
is held simultaneously with the time at which liabilities to such lender would
be deemed to be a partner in the Partnership for purposes of allocating
liabilities to such lender under Section 752 of the Code.
9.03 ADMISSION OF SUBSTITUTE LIMITED PARTNER.
(a) Subject to the other provisions of this Article IX, an assignee
of the Limited Partnership Interest of a Limited Partner (which shall be
understood to include any purchaser, transferee, donee, or other recipient of
any disposition of such Limited Partnership Interest) shall be deemed admitted
as a Limited Partner of the Partnership only upon the satisfactory completion of
the following:
(i) The assignee shall have accepted and agreed to be bound
by the terms and provisions of this Agreement by executing a
counterpart or an amendment thereof, including a revised EXHIBIT A,
and such other documents or instruments as the General Partner may
require in order to effect the admission of such Person as a Limited
Partner.
(ii) To the extent required, an amended Certificate evidencing
the admission of such Person as a Limited Partner shall have been
signed, acknowledged and filed for record in accordance with the Act.
(iii) The assignee shall have delivered a letter containing the
representation set forth in Section 9.01(a) hereof and the agreement
set forth in Section 9.01(b) hereof.
(iv) If the assignee is a corporation, partnership or trust,
the assignee shall have provided the General Partner with evidence
satisfactory to counsel for the Partnership of the assignee's
authority to become a Limited Partner under the terms and provisions
of this Agreement.
(v) The assignee shall have executed a power of attorney
containing the terms and provisions set forth in Section 8.02 hereof.
(vi) The assignee shall have paid all reasonable legal fees of
the Partnership and the General Partner and filing and publication
costs in connection with his substitution as a Limited Partner.
40
(vii) The assignee has obtained the prior written consent of
the General Partner to its admission as a Substitute Limited Partner,
which consent may be given or denied in the exercise of General
Partner's sole and absolute discretion.
(b) For the purpose of allocating profits and losses and distributing
cash received by the Partnership, a Substitute Limited Partner shall be treated
as having become, and appearing in the records of the Partnership as, a Partner
upon the filing of the Certificate described in Section 9.03(a)(ii) hereof or,
if no such filing is required, the later of the date specified in the transfer
documents or the date on which the General Partner has received all necessary
instruments of transfer and substitution.
(c) The General Partner shall cooperate with the Person seeking to
become a Substitute Limited Partner by preparing the documentation required by
this Section and making all official filings and publications. The Partnership
shall take all such action as promptly as practicable after the satisfaction of
the conditions in this Article IX to the admission of such Person as a Limited
Partner of the Partnership.
9.04 RIGHTS OF ASSIGNEES OF PARTNERSHIP INTERESTS.
(a) Subject to the provisions of Sections 9.01 and 9.02 hereof,
except as required by operation of law, the Partnership shall not be obligated
for any purposes whatsoever to recognize the assignment by any Limited Partner
of his Partnership Interest until the Partnership has received notice thereof.
(b) Any Person who is the assignee of all or any portion of a Limited
Partner's Limited Partnership Interest, but does not become a Substitute Limited
Partner and desires to make a further assignment of such Limited Partnership
Interest, shall be subject to all the provisions of this Article IX to the same
extent and in the same manner as any Limited Partner desiring to make an
assignment of his Limited Partnership Interest.
9.05 EFFECT OF BANKRUPTCY, DEATH, INCOMPETENCE OR TERMINATION OF A LIMITED
PARTNER. The occurrence of an Event of Bankruptcy as to a Limited Partner, the
death of a Limited Partner or a final adjudication that a Limited Partner is
incompetent (which term shall include, but not be limited to, insanity) shall
not cause the termination or dissolution of the Partnership, and the business of
the Partnership shall continue if an order for relief in a bankruptcy proceeding
is entered against a Limited Partner, the trustee or receiver of his estate or,
if he dies, his executor, administrator or trustee, or, if he is finally
adjudicated incompetent, his committee, guardian or conservator, shall have the
rights of such Limited Partner for the purpose of settling or managing his
estate property and such power as the bankrupt, deceased or incompetent Limited
Partner possessed to assign all or any part of his Partnership Interest and to
join with the assignee in satisfying conditions precedent to the admission of
the assignee as a Substitute Limited Partner.
9.06 JOINT OWNERSHIP OF INTERESTS. A Partnership Interest may be acquired
by two individuals as joint tenants with right of survivorship, provided that
such individuals either are
41
married or are related and share the same home as tenants in common. The written
consent or vote of both owners of any such jointly held Partnership Interest
shall be required to constitute the action of the owners of such Partnership
Interest; provided, however, that the written consent of only one joint owner
will be required if the Partnership has been provided with evidence satisfactory
to the counsel for the Partnership that the actions of a single joint owner can
bind both owners under the applicable laws of the state of residence of such
joint owners. Upon the death of one owner of a Partnership Interest held in a
joint tenancy with a right of survivorship, the Partnership Interest shall
become owned solely by the survivor as a Limited Partner and not as an assignee.
The Partnership need not recognize the death of one of the owners of a
jointly-held Partnership Interest until it shall have received notice of such
death.
ARTICLE X.
BOOKS AND RECORDS; ACCOUNTING; TAX MATTERS
10.01 BOOKS AND RECORDS. At all times during the continuance of the
Partnership, the Partners shall keep or cause to be kept at the Partnership's
specified office true and complete books of account in accordance with generally
accepted accounting principles, including: (a) a current list of the full name
and last known business address of each Partner, (b) a copy of the Certificate
of Limited Partnership and all certificates of amendment thereto, (c) copies of
the Partnership's federal, state and local income tax returns and reports, (d)
copies of the Agreement and any financial statements of the Partnership for the
three most recent years and (e) all documents and information required under the
Act. Any Partner or his duly authorized representative, upon paying the costs of
collection, duplication and mailing, shall be entitled to inspect or copy such
records during ordinary business hours.
10.02 CUSTODY OF PARTNERSHIP FUNDS; BANK ACCOUNTS.
(a) All funds of the Partnership not otherwise invested shall be
deposited in one or more accounts maintained in such banking or brokerage
institutions as the General Partner shall determine, and withdrawals shall be
made only on such signature or signatures as the General Partner may, from time
to time, determine.
(b) All deposits and other funds not needed in the operation of
the business of the Partnership may be invested by the General Partner in
investment grade instruments (or investment companies whose portfolio consists
primarily thereof), government obligations, certificates of deposit, bankers'
acceptances and municipal notes and bonds. The funds of the Partnership shall
not be commingled with the funds of any other Person except for such commingling
as may necessarily result from an investment in those investment companies
permitted by this Section 10.02(b).
10.03 FISCAL AND TAXABLE YEAR. The fiscal and taxable year of the
Partnership shall be the calendar year.
42
10.04 ANNUAL TAX INFORMATION AND REPORT. Within 75 days after the end of
each fiscal year of the Partnership, the General Partner shall furnish to each
person who was a Limited Partner at any time during such year the tax
information necessary to file such Limited Partner's individual tax returns as
shall be reasonably required by law.
10.05 TAX MATTERS PARTNER; TAX ELECTIONS; SPECIAL BASIS ADJUSTMENTS.
(a) The General Partner shall be the Tax Matters Partner of the
Partnership within the meaning of Section 6231(a)(7) of the Code. As Tax Matters
Partner, the General Partner shall have the right and obligation to take all
actions authorized and required, respectively, by the Code for the Tax Matters
Partner. The General Partner shall have the right to retain professional
assistance in respect of any audit of the Partnership by the Service and all
out-of-pocket expenses and fees incurred by the General Partner on behalf of the
Partnership as Tax Matters Partner shall constitute Partnership expenses. In the
event the General Partner receives notice of a final Partnership adjustment
under Section 6223(a)(2) of the Code, the General Partner shall either (i) file
a court petition for judicial review of such final adjustment within the period
provided under Section 6226(a) of the Code, a copy of which petition shall be
mailed to all Limited Partners on the date such petition is filed, or (ii) mail
a written notice to all Limited Partners, within such period, that describes the
General Partner's reasons for determining not to file such a petition. The
taking of any action and the incurring of any expense by the tax matters partner
in connection with any such matter, 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 6.04 hereof shall be fully applicable to the tax matters partner in its
capacity as such.
(b) All elections required or permitted to be made by the
Partnership under the Code or under any applicable state law shall be made by
the General Partner in its sole discretion.
(c) In the event of a transfer of all or any part of the
Partnership Interest of any Partner, the Partnership, at the option of the
General Partner, may elect pursuant to Section 754 of the Code to adjust the
basis of the Properties. Notwithstanding anything contained in Article 5 of this
Agreement, any adjustments made pursuant to Section 754 shall affect only the
successor in interest to the transferring Partner and in no event shall be taken
into account in establishing, maintaining or computing Capital Accounts for the
other Partners for any purpose under this Agreement. Each Partner will furnish
the Partnership with all information necessary to give effect to such election.
10.06 REPORTS TO LIMITED PARTNERS.
(a) As soon as practicable after the close of each fiscal
quarter, but in no event later than 45 days (other than the last quarter of the
fiscal year), the General Partner shall cause to be mailed to each Limited
Partner a quarterly report containing financial statements of the Partnership,
or of the Company if such statements are prepared solely on a consolidated basis
with the Company, for such fiscal quarter, presented in accordance with
generally accepted
43
accounting principles. As soon as practicable after the close of each fiscal
year, the General Partner shall cause to be mailed to each Limited Partner an
annual report containing financial statements of the Partnership, prepared in
accordance with generally accepted accounting principles. The annual financial
statements shall be audited by accountants selected by the General Partner.
(b) Any Partner shall further have the right to a private audit
of the books and records of the Partnership, provided such audit is made for
Partnership purposes, at the expense of the Partner desiring it and is made
during normal business hours.
ARTICLE XI.
AMENDMENT OF AGREEMENT;
SALE OF ALL OR SUBSTANTIALLY ALL OF COMPANY'S ASSETS
11.01 AMENDMENT OF AGREEMENT. The General Partner, without the consent
of the Limited Partners, may amend this Agreement in any respect; provided,
however, that the following amendments shall require the consent of Limited
Partners holding at least one half (1/2) of the Percentage Interests of the
Limited Partners:
(a) any amendment affecting the operation of the Conversion
Factor or Conversion Right (except as provided in Section 8.05(e) hereof) in a
manner adverse to the Limited Partners;
(b) any amendment that would adversely affect the rights of the
Limited Partners to receive the distributions payable to them hereunder other
than with respect to the issuance of additional Limited Partnership Units
pursuant to Section 4.02 of this Agreement;
(c) any amendment that would alter the Partnership's allocations
of Profit and Loss to the Limited Partners in a manner adverse to Limited
Partners, other than with respect to the issuance of additional Limited
Partnership Units pursuant to Section 4.02 of this Agreement;
(d) any amendment that would impose on the Limited Partners any
obligation to make additional Capital Contributions to the Partnership;
(e) any amendment to Section 8.06 above in a manner adverse to
any Limited Partner;
(f) any amendment to one or more of the following provisions, in
each case in a manner adverse to any Limited Partner: Sections 6.06(a), 6.08(d),
6.09, 7.02, 8.05, 8.07, 10.04 or 10.06 hereof; and
(g) any amendment to this Article XI.
44
11.02 SALE OF ALL OR SUBSTANTIALLY ALL OF THE ASSETS OF THE PARTNERSHIP;
CHANGE IN CONTROL. The General Partner, without the consent of the Limited
Partners holding 50% of the Percentage Interests of the Limited Partners, may
not sell, transfer, or convey all or substantially all of the assets of the
Partnership, including, without limitation, a sale, assignment or transfer to
another public or private company, or approve a merger or consolidation of the
Partnership.
ARTICLE XII.
GENERAL PROVISIONS
12.01 NOTICES. All communications required or permitted under this
Agreement shall be in writing and shall be deemed to have been given when
delivered personally or upon deposit in the United States mail, registered,
postage prepaid return receipt requested, to the Partners at the addresses set
forth in EXHIBIT A attached hereto; provided, however, that any Partner may
specify a different address by notifying the General Partner in writing of such
different address. Notices to the Partnership shall be delivered at or mailed to
its specified office.
12.02 SURVIVAL OF RIGHTS. Subject to the provisions hereof limiting
transfers, this Agreement shall be binding upon and inure to the benefit of the
Partners and the Partnership and their respective legal representatives,
successors, transferees and assigns.
12.03 ADDITIONAL DOCUMENTS. Each Partner agrees to perform all further
reasonable acts and execute, swear to, acknowledge and deliver all further
documents which may be reasonably necessary, appropriate or desirable to carry
out the provisions of this Agreement or the Act.
12.04 SEVERABILITY. If any provision of this Agreement shall be declared
illegal, invalid, or unenforceable in any jurisdiction, then such provision
shall be deemed to be severable from this Agreement (to the extent permitted by
law) and in any event such illegality, invalidity or unenforceability shall not
affect the remainder hereof.
12.05 ENTIRE AGREEMENT. This Agreement and exhibits attached hereto
constitute the entire Agreement of the Partners and supersede all prior written
agreements and prior and contemporaneous oral agreements, understandings and
negotiations with respect to the subject matter hereof.
12.06 PRONOUNS AND PLURALS. When the context in which words are used in
the Agreement indicates that such is the intent, words in the singular number
shall include the plural and the masculine gender shall include the neuter or
female gender as the context may require.
12.07 HEADINGS. The Article headings or sections in this Agreement are
for convenience only and shall not be used in construing the scope of this
Agreement or any particular Article.
45
12.08 COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original copy and all of
which together shall constitute one and the same instrument binding on all
parties hereto, notwithstanding that all parties shall not have signed the same
counterpart.
12.09 GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware.
[Signature page follows.]
46
IN WITNESS WHEREOF, the parties hereto have hereunder affixed their
signatures to this Agreement of Limited Partnership, all as of the 30th day of
October, 1998.
GENERAL PARTNER
WESTERN INVESTMENT REAL ESTATE TRUST, a
California trust
By: /s/ Xxxxxxx X. Xxxxx
---------------------------------
Xxxxxxx X. Xxxxx
Chief Executive Officer
By: /s/ Xxxxxx X. Xxxx
---------------------------------
Xxxxxx X. Xxxx
Chief Financial Officer
47
LIMITED PARTNERS
XXXXXX X. XXXXXX MARITAL TRUST, an Oregon
trust
By: /s/ Xxx X. Xxxxxx, III
---------------------------------
Xxx X. Xxxxxx, III
Co-Trustee
By: /s/ Xxxxxxxxxx X. Xxxxx
---------------------------------
Xxxxxxxxxx X. Xxxxx
Co-Trustee
/s/ X.X. XXXXXXXX
--------------------------------------
X.X. XXXXXXXX
/s/ Xxxxxxxxxx X. Xxxxx
--------------------------------------
XXXXXXXXXX X. XXXXX
/s/ Xxxxxx Xxxxxx
--------------------------------------
XXXXXX XXXXXX
/s/ Xxxx X. Xxxxx
--------------------------------------
XXXX X. XXXXX
48
EXHIBIT A
SCHEDULE OF PARTNERS,
ALLOCATION OF PARTNERSHIP UNITS, LIMITED PARTNER PERCENTAGE INTERESTS AND
THE AGREED VALUE OF NON-CASH CAPITAL CONTRIBUTIONS
=================== ======================================= ===================== ================ ==============
Approximate
Value of Non- Limited Limited Partner
Cash Capital Partnership Units Percentage
Date Admitted Name and Address of Partner Contribution Issued Interest
------------------- --------------------------------------- --------------------- ---------------- --------------
October 30, 1998 Western Investment Real Estate Trust $47,996,800.00 0 0.0%
0000 Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxxxxx 00000
------------------- --------------------------------------- --------------------- ---------------- --------------
October 30, 1998 Xxx X. Xxxxxx Marital Trust $ 9,146,822.06 752,280(1) 52.52%
Xxxxxxxxxx X. Xxxxx, co-trustee
X.X. Xxx 00000
Xxxxxxxx, Xxxxxx 00000-0000
Xxxxxx X. Xxxxxx, co-trustee
00000 X.X. 00xx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
------------------- --------------------------------------- --------------------- ---------------- --------------
October 30, 1998 Xxxxxxxxxx X. Xxxxx $ 3,906,452.22 321,286(2) 22.43%
X.X. Xxx 00000
Xxxxxxxx, Xxxxxx 00000-0000
------------------- --------------------------------------- --------------------- ---------------- --------------
October 30, 1998 Xxxxxx Xxxxxx $ 3,906,452.22 321,286(2) 22.43%
00000 00xx Xxxxxx X.X.
Xxxxxxx, Xxxxxxxxxx 00000
------------------- --------------------------------------- --------------------- ---------------- --------------
October 30, 1998 Xxxx X. Xxxxx
c/o Brownstein, Rask, Arenz, $ 381,105.43 31,344(3) 2.19%
Xxxxxxx, Xxxx & Grim LLP
0000 X.X. Xxxx Xxxxxx
Xxxxxxxx, Xxxxxx 00000
------------------- --------------------------------------- --------------------- ---------------- --------------
October 30, 0000 X.X. Xxxxxxxx $ 74,495.48 6,168 0.43%
0000 X.X. 00xx Xxxxxx
Xxxxxxxx, Xxxxxx 00000
=================== ======================================= ===================== ================ ==============
Totals $65,412,127.41 1,432,364 100.00%
=================== ======================================= ===================== ================ ==============
(1) Of this amount, 19,938 units have been designated as on deposit
with the First American Title Insurance Company of Oregon (Escrow No. 98169821)
to be held in the Purchase Price Adjustment Fund.
(2) Of this amount, 8,515 units have been designated as on deposit with
the First American Title Insurance Company of Oregon (Escrow No. 98169821) to be
held in the Purchase Price Adjustment Fund.
(3) Of this amount, 830 units have been designated as on deposit with
the First American Title Insurance Company of Oregon (Escrow No. 98169821) to be
held in the Purchase Price Adjustment Fund.
A-1
EXHIBIT B
NOTICE OF EXERCISE OF CONVERSION RIGHT
In accordance with Section 8.04 of the Agreement of Limited Partnership (the
"Agreement") of WESTERN/XXXXXX, X.X., the undersigned hereby irrevocably (i)
presents for Conversion ________ units of limited partnership interest ("Units")
in WESTERN/XXXXXX, X.X. (the "Partnership") in accordance with the terms of the
Agreement and the "Conversion Right" referred to in Section 8.05 thereof, (ii)
surrenders such Units and all right, title and interest therein, (iii)
surrenders herewith any certificate or other writing evidencing the Units (and
requests that any Units so evidenced that are not redeemed be evidenced by the
issuance of a new certificate or writing) and (iv) directs that the "Cash
Amount" or "Common Shares Amount" (as determined by the General Partner), as
defined in the Agreement, deliverable upon exercise of the Conversion Rights be
delivered to the address specified below, and if Common Shares are to be
delivered, such Common Shares be registered or placed in the name(s) and at the
address(es) specified below.
Dated:__________
Name of Limited Partner:
------------------------------
(Signature of Limited Partner)
------------------------------
(Mailing Address)
------------------------------
(City) (State) (Zip Code)
Signature Guaranteed by:
------------------------------
If Common Shares are to be issued, issue to:
------------------------------
------------------------------
------------------------------
Please insert social security or identifying number:
------------------------------
B-1