1
EXHIBIT 99.2
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THIRD AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
CAMDEN OPERATING, L.P.
DATED AS OF APRIL 15, 1997
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TABLE OF CONTENTS
ARTICLE I DEFINED TERMS ........................................................................................2
ARTICLE II ORGANIZATIONAL MATTERS ..............................................................................13
Section 2.1 Organization..........................................................................13
Section 2.2 Name..................................................................................13
Section 2.3 Registered Office and Agent; Principal Office.........................................13
Section 2.4 Power of Attorney.....................................................................13
Section 2.5 Term..................................................................................14
ARTICLE III PURPOSE............................................................................................15
Section 3.1 Purpose and Business..................................................................15
Section 3.2 Powers................................................................................15
ARTICLE IV CAPITAL CONTRIBUTIONS AND ISSUANCES
OF PARTNERSHIP INTERESTS.........................................................................................16
Section 4.1 Capital Contributions of the Partners.................................................16
Section 4.2 Issuances of Partnership Interests....................................................17
Section 4.3 Minimum Percentage Interest of General Partner........................................18
Section 4.4 No Preemptive Rights..................................................................18
Section 4.5 Other Contribution Provisions.........................................................18
Section 4.6 No Interest on Capital................................................................19
ARTICLE V DISTRIBUTIONS.........................................................................................19
Section 5.1 Requirement and Characterization of Distributions.....................................19
Section 5.2 Amounts Withheld......................................................................22
Section 5.3 Distributions Upon Liquidation........................................................22
Section 5.4 Amendments to Reflect Issuance of Additional Partnership
Interests.............................................................................22
ARTICLE VI ALLOCATIONS..........................................................................................22
Section 6.1 Allocations For Capital Account Purposes..............................................22
Section 6.2 Amendments to Allocations to Reflect Issuance of Additional
Partnership Interests.................................................................24
ARTICLE VII MANAGEMENT AND OPERATIONS OF BUSINESS ............................................................24
Section 7.1 Management ...........................................................................24
Section 7.2 Certificate of Limited Partnership....................................................27
Section 7.3 Restrictions on General Partner's Authority...........................................28
Section 7.4 Reimbursement of the General Partner..................................................28
Section 7.5 Outside Activities of the General Partner.............................................29
Section 7.6 Contracts with Affiliates.............................................................30
Section 7.7 Indemnification.......................................................................30
Section 7.8 Liability of the General Partner......................................................32
Section 7.9 Other Matters Concerning the General Partner..........................................33
(i)
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Section 7.10 Title to Partnership Assets...........................................................34
Section 7.11 Reliance by Third Parties.............................................................34
ARTICLE VIII RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS .......................................................35
Section 8.1 Limitation of Liability...............................................................35
Section 8.2 Management of Business................................................................35
Section 8.3 Outside Activities of Limited Partners................................................35
Section 8.4 Return of Capital.....................................................................35
Section 8.5 Rights of Limited Partners Relating to the Partnership................................36
Section 8.6 Redemption Right......................................................................37
ARTICLE IX BOOKS, RECORDS, ACCOUNTING AND REPORTS .............................................................39
Section 9.1 Records and Accounting................................................................39
Section 9.2 Fiscal Year...........................................................................40
Section 9.3 Reports...............................................................................40
ARTICLE X TAX MATTERS .........................................................................................40
Section 10.1 Preparation of Tax Returns............................................................40
Section 10.2 Tax Elections.........................................................................41
Section 10.3 Tax Matters Partner...................................................................41
Section 10.4 Organizational Expenses...............................................................42
Section 10.5 Withholding...........................................................................42
ARTICLE XI TRANSFERS AND WITHDRAWALS ...........................................................................43
Section 11.1 Transfer..............................................................................43
Section 11.2 Transfers of Partnership Interests of General Partner.................................43
Section 11.3 Limited Partners' Rights to Transfer..................................................44
Section 11.4 Substituted Limited Partners..........................................................45
Section 11.5 Assignees.............................................................................46
Section 11.6 General Provisions....................................................................46
ARTICLE XII ADMISSION OF PARTNERS...............................................................................47
Section 12.1 Admission of Successor General Partner................................................47
Section 12.2 Admission of Additional Limited Partners..............................................47
Section 12.3 Amendment of Agreement and Certificate of Limited Partnership.........................48
ARTICLE XIII DISSOLUTION AND LIQUIDATION........................................................................48
Section 13.1 Dissolution...........................................................................48
Section 13.2 Winding Up............................................................................49
Section 13.3 Compliance with Timing Requirements of Regulations....................................51
Section 13.4 Deemed Distribution and Recontribution................................................51
Section 13.5 Rights of Limited Partners............................................................51
Section 13.6 Notice of Dissolution.................................................................51
Section 13.7 Termination of Partnership and Cancellation of Certificate of
Limited Partnership...................................................................51
Section 13.8 Reasonable Time for Winding Up........................................................52
Section 13.9 Waiver of Partition...................................................................52
(ii)
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Section 13.10 Liability of Liquidator...............................................................52
ARTICLE XIV AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS........................................................52
Section 14.1 Amendments............................................................................52
Section 14.2 Meetings of the Partners..............................................................54
ARTICLE XV GENERAL PROVISIONS...................................................................................55
Section 15.1 Addresses and Notice..................................................................55
Section 15.2 Titles and Captions...................................................................55
Section 15.3 Pronouns and Plurals..................................................................55
Section 15.4 Further Action........................................................................55
Section 15.5 Binding Effect........................................................................55
Section 15.6 Creditors.............................................................................55
Section 15.7 Waiver................................................................................56
Section 15.8 Counterparts..........................................................................56
Section 15.9 Applicable Law........................................................................56
Section 15.10 Invalidity of Provisions..............................................................56
Section 15.11 Entire Agreement......................................................................56
Section 15.12 Guaranty by CPT.......................................................................56
Section 15.13 No Rights as Shareholders.............................................................56
Section 15.14 Limitation to Preserve REIT Status....................................................57
(iii)
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EXHIBIT A
PARTNERS AND
PARTNERSHIP INTERESTS
EXHIBIT B
CAPITAL ACCOUNT MAINTENANCE
EXHIBIT C
SPECIAL ALLOCATION RULES
EXHIBIT D
NOTICE OF REDEMPTION
(iv)
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THIRD AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
CAMDEN OPERATING, L.P.
This Third Amended and Restated Agreement of Limited Partnership,
Dated as of , 1997, is entered into by and among CPT-GP, Inc. ("CPT GP"),
a Delaware corporation and a wholly owned subsidiary of Camden Subsidiary, Inc.
("Camden Subsidiary"), a Delaware corporation, in turn a wholly owned
subsidiary of Camden Property Trust ("CPT"), a Texas real estate investment
trust, as the General Partner of the Partnership, and (i) PGI Associates, L.P.,
("PGI Associates") a Texas limited partnership, (ii) CPT-LP, Inc. ("CPT LP"), a
Delaware corporation and a wholly owned subsidiary of Camden Subsidiary, and
(iii) FWP, L.P., a Texas limited partnership, each as a Limited Partner,
together with those other Persons whose names are set forth on Exhibit A
attached hereto as additional Limited Partners and any other Persons who become
Partners in the Partnership as provided herein. CPT is a party to this
Agreement solely for purposes of Sections 4.2.B, 5.1.C, 7.4, 7.5, 7.7, 7.8,
8.6, 11.2, and 15.12.
WHEREAS, the Partnership was formed on December 31, 1993, and on July
27, 1994, the Partnership adopted the First Amended and Restated Agreement of
Limited Partnership of Paragon Group L.P. and on November 1, 1994, the
Partnership adopted the Second Amended and Restated Agreement of Limited
Partnership of Paragon Group L.P. (the "Prior Agreement"); and
WHEREAS, the Partnership desires to amend and restate the Prior
Agreement to change the name of the Partnership to Camden Operating, L.P. and
to implement various other changes in connection with the merger of Paragon
Group, Inc., the former parent corporation of CPT GP, with Camden Subsidiary
pursuant to the Merger Agreement (as defined);
WHEREAS, in connection with this amendment and restatement, the
Partnership desires to restate the number of Partnership Units held by each
Partner so that, after giving effect to this amendment and restatement, the
number of Partnership Units held by each Partner shall be equal to the product
of (i) the number of Partnership Units held by such Partner immediately prior
to the Effective Date multiplied by (ii) the fraction of a share of CPT that
each holder of one share of Paragon Group, Inc. received in connection with the
merger of Paragon Group, Inc. with Camden Subsidiary pursuant to the Merger
Agreement (determined without regard to provisions of the Merger Agreement
related to fractional shares);
NOW, THEREFORE, in consideration of the mutual covenants set forth
herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby amend
and restate the Prior Agreement in its entirety and agree to continue the
Partnership as a limited partnership under the Delaware Revised Uniform Limited
Partnership Act, as amended from time to time, as follows:
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ARTICLE I
DEFINED TERMS
The following definitions shall be for all purposes, unless otherwise
clearly indicated to the contrary, applied to the terms used in this Agreement.
"Act" means the Delaware Revised Uniform Limited Partnership Act, as
it may be amended from time to time, and any successor to such statute.
"Additional Limited Partner" means a Person admitted to the
Partnership as a Limited Partner pursuant to Section 12.2 hereof and who is
shown as such on the books and records of the Partnership.
"Adjusted Capital Account" means the Capital Account maintained for
each Partner as of the end of each Partnership Year (i) increased by any
amounts which such Partner is obligated to restore pursuant to any provision of
this Agreement or is deemed to be obligated to restore pursuant to the
penultimate sentences of Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5)
and (ii) decreased by the items described in Regulations Sections
1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5) and 1.704-1(b)(2)(ii)(d)(6).
The foregoing definition of Adjusted Capital Account is intended to comply with
the provisions of Regulations Section 1.704-1(b)(2)(ii)(d) and shall be
interpreted consistently therewith.
"Adjusted Capital Account Deficit" means, with respect to any Partner,
the deficit balance, if any, in such Partner's Adjusted Capital Account as of
the end of the relevant Partnership Year.
"Adjusted Property" means any property the Carrying Value of which has
been adjusted pursuant to Exhibit B hereto. [Once an Adjusted Property is
deemed distributed by, and recontributed to, the Partnership for federal income
tax purposes upon a termination thereof pursuant to Section 708 of the Code,
such property shall thereafter constitute a Contributed Property until the
Carrying Value of such property is further adjusted pursuant to Section 1.D of
Exhibit B hereto.] [TO BE DELETED IF PROPOSED REGULATIONS ARE ADOPTED.]
"Affiliate" means, with respect to any Person, (i) any Person directly
or indirectly controlling, controlled by or under common control with such
Person, (ii) any Person owning or controlling ten percent (10%) or more of the
outstanding voting interests of such Person, (iii) any Person of which such
Person owns or controls ten percent (10%) or more of the voting interests or
(iv) any officer, director, general partner or trustee of such Person or any
Person referred to in clauses (i), (ii), and (iii) above. For purposes of this
definition, "control," when used with respect to any Person, means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise,
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Agreed Value" means (i) in the case of any Contributed Property, the
704(c) Value of such property as of the time of its contribution to the
Partnership, reduced by any liabilities either assumed by the Partnership upon
such contribution or to which such property is subject when contributed; and
(ii) in the case of any property distributed to a Partner by the Partnership,
the Partnership's Carrying
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Value of such property at the time such property is distributed, reduced by any
indebtedness either assumed by such Partner upon such distribution or to which
such property is subject at the time of distribution as determined under
Section 752 of the Code and the Regulations thereunder.
"Agreement" means this Third Amended and Restated Agreement of Limited
Partnership, as it may be amended, supplemented or restated from time to time.
"Assignee" means a Person to whom one or more Partnership Units have
been transferred in a manner permitted under this Agreement, but who has not
become a Substituted Limited Partner, and who has the rights set forth in
Section 11.5 hereof.
"Available Cash" means, with respect to any period for which such
calculation is being made:
(a) all cash received by the Partnership from whatever source
(excluding the proceeds of any Capital Contribution) plus the amount of any
reduction (including, without limitation, a reduction resulting because the
General Partner determines such amounts are no longer necessary) in reserves of
the Partnership, which reserves are referred to in clause (b)(iv) below;
(b) less the sum of the following (except to the extent made with the
proceeds of any Capital Contribution):
(i) all interest, principal and other debt payments made
during such period by the Partnership,
(ii) all cash expenditures (including capital expenditures)
made by the Partnership during such period (including any
payments made by the Partnership as the result of the exercise
by a Limited Partner of the Redemption Right),
(iii) investments in any entity (including loans made
thereto) to the extent that such investments are permitted under
this Agreement and are not otherwise described in clauses (b)(i)
or (ii),
(iv) the amount of any increase in reserves (whether for
contingencies, working capital or otherwise) established during
such period which the General Partner determines is necessary or
appropriate in its reasonable discretion, and
(v) all distributions previously made by the Partnership
with respect to such period.
Notwithstanding the foregoing, Available Cash shall not include any
cash received or reductions in reserves, or take into account any disbursements
made or reserves established, after commencement of the dissolution and
liquidation of the Partnership.
"Book-Tax Disparities" means, with respect to any item of Contributed
Property or Adjusted Property, as of the date of any determination, the
difference between the Carrying Value of such Contributed Property or Adjusted
Property and the adjusted basis thereof for federal income tax purposes as of
such date. A Partner's share of the Partnership's Book-Tax Disparities in all
of its
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Contributed Property and Adjusted Property will be reflected by the difference
between such Partner's Capital Account balance as maintained pursuant to
Exhibit B hereto and the hypothetical balance of such Partner's Capital Account
computed as if it had been maintained, with respect to each such Contributed
Property or Adjusted Property, strictly in accordance with federal income tax
accounting principles.
"Business Day" means any day except a Saturday, Sunday or other day on
which commercial banks in New York, New York are authorized or required by law
to close.
"Capital Account" means the Capital Account maintained for a Partner
pursuant to Exhibit B hereto. The Capital Account balance of each Partner who
is a Partner on the Effective Date shall be set forth opposite such Partner's
name on Exhibit A hereto.
"Capital Contribution" means, with respect to any Partner, any cash,
cash equivalents or the Agreed Value of Contributed Property which such Partner
contributes or is deemed to contribute to the Partnership pursuant to Section
4.1, 4.2, or 4.3 hereof.
"Carrying Value" means (i) with respect to a Contributed Property or
Adjusted Property, the 704(c) Value of such property reduced (but not below
zero) by all Depreciation with respect to such Contributed Property or Adjusted
Property, as the case may be, charged to the Partners' Capital Accounts and
(ii) with respect to any other Partnership property, the adjusted basis of such
property for federal income tax purposes, all as of the time of determination.
The Carrying Value of any property shall be adjusted from time to time in
accordance with Exhibit B hereto, and to reflect changes, additions or other
adjustments to the Carrying Value for dispositions and acquisitions of
Partnership properties, as deemed appropriate by the General Partner.
"Cash Amount" means an amount of cash equal to the Value on the
Valuation Date of the Shares Amount.
"Certificate" means the Certificate of Limited Partnership relating to
the Partnership filed in the office of the Delaware Secretary of State, as
amended from time to time in accordance with the terms hereof and the Act.
"Class A" has the meaning set forth in Section 5.1.D hereof.
"Class A Share" has the meaning set forth in Section 5.1.D hereof.
"Class A Unit" means any Partnership Unit that is not specifically
designated by the General Partner as being of another specified class of
Partnership Units.
"Class B" has the meaning set forth in Section 5.1.D hereof.
"Class B Share" has the meaning set forth in Section 5.1.D hereof.
"Class B Unit" means a Partnership Unit that is specifically
designated by the General Partner as being a Class B Unit.
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"Code" means the Internal Revenue Code of 1986, as amended and in
effect from time to time, as interpreted by the applicable regulations
thereunder. Any reference herein to a specific section or sections of the Code
shall be deemed to include a reference to any corresponding provision of future
law.
"Consent" means the consent or approval of a proposed action by a
Partner given in accordance with Section 14.2 hereof.
"Consent of the Outside Limited Partners" means the Consent of Limited
Partners (excluding for this purpose any Limited Partner Interests held by the
General Partner, by CPT LP, by any Person of which either the General Partner
or CPT LP owns or controls more than fifty percent (50%) of the voting
interests, or by any Person owning or controlling, directly or indirectly, more
than fifty percent (50%) of the outstanding voting interests of either the
General Partner or CPT LP) holding Percentage Interests that are greater than
fifty percent (50%) of the aggregate Percentage Interests of all Limited
Partners who are not excluded for the purposes hereof.
"Contributed Property" means each property or other asset contributed
to the Partnership, in such form as may be permitted by the Act, but excluding
cash contributed or deemed contributed to the Partnership [(and also excluding
deemed contributions to the Partnership on termination and recontribution
thereof pursuant to Section 708 of the Code)]. [TO BE DELETED IF PROPOSED
REGULATIONS ARE ADOPTED.] Once the Carrying Value of a Contributed Property is
adjusted pursuant to Exhibit B hereto, such property shall no longer constitute
a Contributed Property for purposes of Exhibit B hereto, but shall be deemed an
Adjusted Property for such purposes.
"Conversion Factor" means 1.0; provided that in the event that the
General Partner Entity (i) declares or pays a dividend on its outstanding
Shares in Shares or makes a distribution to all holders of its outstanding
Shares in Shares, (ii) subdivides its outstanding Shares or (iii) combines its
outstanding Shares into a smaller number of Shares, the Conversion Factor shall
be adjusted by multiplying the Conversion Factor by a fraction, the numerator
of which shall be the number of Shares issued and outstanding on the record
date for such dividend, distribution, subdivision or combination (assuming for
such purposes that such dividend, distribution, subdivision or combination has
occurred as of such time) and the denominator of which shall be the actual
number of Shares (determined without the above assumption) issued and
outstanding on the record date for such dividend, distribution, subdivision or
combination and; provided further that in the event that one entity shall cease
to be the General Partner Entity (the "Predecessor Entity") and another entity
shall become the General Partner Entity (the "Successor Entity"), the
Conversion Factor shall be adjusted by multiplying the Conversion Factor by a
fraction, the numerator of which is the Value of one Share of the Predecessor
Entity, determined as of the time immediately prior to when the Successor
Entity becomes the General Partner Entity, and the denominator of which is the
Value of one Share of the Successor Entity, determined as of that same date.
(For purposes of the second proviso in the preceding sentence, in the event
that any shareholders of the Predecessor Entity will receive consideration in
connection with the transaction in which the Successor Entity becomes the
General Partner Entity, the numerator in the fraction described above for
determining the adjustment to the Conversion Factor (that is, the Value of one
Share of the Predecessor Entity) shall be the sum of the greatest amount of
cash and the fair market value of any securities and other consideration that
the holder of one Share in the Predecessor Entity could have received in such
transaction (determined without regard to any provisions governing fractional
shares)). Any adjustment to the Conversion
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Factor shall become effective immediately after the effective date of the event
giving rise thereto, retroactive to the record date, if any, for such event; it
being intended that (x) adjustments to the Conversion Factor are to be made in
order to avoid unintended dilution or anti-dilution as a result of transactions
in which Shares are issued, redeemed, or exchanged without a corresponding
issuance, redemption or exchange of Partnership Units and (y) if a Specified
Redemption Date shall fall between the record date and the effective date of
any event of the type described above, that the Conversion Factor applicable to
such redemption shall be adjusted to take into account such event.
"Debt" means, as to any Person, as of any date of determination, (i)
all indebtedness of such Person for borrowed money or for the deferred purchase
price of property or services, (ii) all amounts owed by such Person to banks or
other Persons in respect of reimbursement obligations under letters of credit,
surety bonds and other similar instruments guaranteeing payment or other
performance of obligations by such Person, (iii) all indebtedness for borrowed
money or for the deferred purchase price of property or services secured by any
lien on any property owned by such Person, to the extent attributable to such
Person's interest in such property, even though such Person has not assumed or
become liable for the payment thereof, and (iv) obligations of such Person
incurred in connection with entering into a lease which, in accordance with
generally accepted accounting principles, should be capitalized.
"Declaration of Trust" means the Amended and Restated Declaration of
Trust of CPT filed in the office of the Secretary of State of Texas on July 19,
1993, as amended, or other organizational document governing CPT or any
successor General Partner Entity, as amended or restated from time to time.
"Depreciation" means, for each Partnership Year, an amount equal to
the federal income tax depreciation, amortization, or other cost recovery
deduction allowable with respect to an asset for such year, except that if the
Carrying Value of an asset differs from its adjusted basis for federal income
tax purposes at the beginning of such year or other period, Depreciation shall
be an amount which bears the same ratio to such beginning Carrying Value as the
federal income tax depreciation, amortization, or other cost recovery deduction
for such year bears to such beginning adjusted tax basis; provided, however,
that if the federal income tax depreciation, amortization, or other cost
recovery deduction for such year is zero, Depreciation shall be determined with
reference to such beginning Carrying Value using any reasonable method selected
by the General Partner.
"Distribution Period" has the meaning set forth in Section 5.1.D
hereof.
"Effective Date" means the date on which the merger of Paragon Group,
Inc. with Camden Subsidiary, as contemplated by the Merger Agreement, is
consummated.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"General Partner" means CPT GP, a Delaware corporation, or its
successors as general partner of the Partnership.
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"General Partner Entity" means CPT; provided, however, that if (i) the
shares of beneficial interest (or other comparable common equity interests) of
CPT or any successor General Partner Entity are at any time not Publicly Traded
and (ii) the shares of common stock (or other comparable equity interests) of
an entity that owns, directly or indirectly, fifty percent (50%) or more of the
shares of common stock (or other comparable equity interests) of either the
General Partner, CPT, or any other successor General Partner Entity are
Publicly Traded, the term "General Partner Entity" shall refer to such entity
whose shares of common stock (or other comparable equity securities) are
Publicly Traded.
"General Partner Payment" has the meaning set forth in Section 15.14
hereof.
"General Partner Interest" means a Partnership Interest held by the
General Partner in the capacity of a general partner. A General Partner
Interest may be expressed as a number of Partnership Units.
"IRS" means the Internal Revenue Service, which administers the
internal revenue laws of the United States.
"Immediate Family" means, with respect to any natural Person, such
natural Person's spouse, parent's, descendants, nephews, nieces, brothers and
sisters.
"Incapacity" or "Incapacitated" means, (i) as to any individual
Partner, death, total physical disability or entry by a court of competent
jurisdiction adjudicating such Partner incompetent to manage such Person's
affairs or estate, (ii) as to any corporation which is a Partner, the filing of
a certificate of dissolution, or its equivalent, for the corporation or the
revocation of its charter, (iii) as to any partnership which is a Partner, the
dissolution and commencement of winding up of the partnership, (iv) as to any
trustee of a trust which is a Partner, the termination of the trust (but not
the substitution of a new trustee) or (v) as to any Partner, the bankruptcy of
such Partner. For purposes of this definition, bankruptcy of a Partner shall be
deemed to have occurred when (a) the Partner commences a voluntary proceeding
seeking liquidation, reorganization or other relief of or against such Partner
under any bankruptcy, insolvency or other similar law now or hereafter in
effect, (b) the Partner is adjudged as bankrupt or insolvent, or a final and
nonappealable order for relief under any bankruptcy, insolvency or similar law
now or hereafter in effect has been entered against the Partner, (c) the
Partner executes and delivers a general assignment for the benefit of the
Partner's creditors, (d) the Partner files an answer or other pleading
admitting or failing to contest the material allegations of a petition filed
against the Partner in any proceeding of the nature described in clause (b)
above, (e) the Partner seeks, consents to or acquiesces in the appointment of a
trustee, receiver or liquidator for the Partner or for all or any substantial
part of the Partner's properties, (f) any proceeding seeking liquidation,
reorganization or other relief of or against such Partner under any bankruptcy,
insolvency or other similar law now or hereafter in effect has not been
dismissed within one hundred twenty (120) days after the commencement thereof,
(g) the appointment without the Partner's consent or acquiescence of a trustee,
receiver or liquidator that has not been vacated or stayed within ninety (90)
days of such appointment or (h) an appointment referred to in clause (g) is not
vacated within ninety (90) days after the expiration of any such stay.
"Indemnitee" means (i) any Person made a party to a proceeding or
threatened with being made a party to a proceeding by reason of the Person's
status as (A) the General Partner, (B) a
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Limited Partner or (C) a director, officer, employee or agent of the
Partnership or the General Partner or an Affiliate and (ii) such other Persons
(including Affiliates of the General Partner, a Limited Partner or the
Partnership) as the General Partner may designate from time to time (whether
before or after the event giving rise to potential liability), in its sole and
absolute discretion.
"Limited Partner" means PGI Associates, CPT LP, FWP, L.P. and any
other Person named as a Limited Partner in Exhibit A attached hereto, as such
Exhibit may be amended and restated from time to time, or any Substituted
Limited Partner or Additional Limited Partner, in such Person's capacity as a
Limited Partner in the Partnership.
"Limited Partner Interest" means a Partnership Interest held by a
Limited Partner in the Partnership in the capacity of a limited partner
representing a fractional part of the Partnership Interests of all Limited
Partners. A Limited Partner Interest may be expressed as a number of
Partnership Units.
"Liquidating Event" has the meaning set forth in Section 13.1 hereof.
"Liquidator" has the meaning set forth in Section 13.2.A hereof.
"Merger Agreement" means the Agreement and Plan of Merger, dated as of
December 16, 1996, among Paragon Group, Inc., CPT, and Camden Subsidiary.
"Net Income" means, for any taxable period, the excess, if any, of the
Partnership's items of income and gain for such taxable period over the
Partnership's items of loss and deduction for such taxable period. The items
included in the calculation of Net Income shall be determined in accordance
with Exhibit B hereto. If an item of income, gain, loss or deduction that has
been included in the initial computation of Net Income is subjected to the
special allocation rules in Exhibit C hereto, Net Income or the resulting Net
Loss, whichever the case may be, shall be recomputed without regard to such
item.
"Net Loss" means, for any taxable period, the excess, if any, of the
Partnership's items of loss and deduction for such taxable period over the
Partnership's items of income and gain for such taxable period. The items
included in the calculation of Net Loss shall be determined in accordance with
Exhibit B hereto. If an item of income, gain, loss or deduction that has been
included in the initial computation of Net Loss is subjected to the special
allocation rules in Exhibit C hereto, Net Loss or the resulting Net Income,
whichever the case may be, shall be recomputed without regard to such item.
"New Securities" means any rights, options, warrants or convertible or
exchangeable securities having the right to subscribe for or purchase Shares or
other shares of capital stock (or other comparable equity interest) of the
General Partner Entity.
"Nonrecourse Built-in Gain" means, with respect to any Contributed
Properties or Adjusted Properties that are subject to a mortgage or negative
pledge securing a Nonrecourse Liability, the amount of any taxable gain that
would be allocated to the Partners pursuant to Section 2.B of Exhibit C hereto
if such properties were disposed of in a taxable transaction in full
satisfaction of such liabilities and for no other consideration.
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"Nonrecourse Deductions" has the meaning set forth in Regulations
Section 1.704-2(b)(1), and the amount of Nonrecourse Deductions for a
Partnership Year shall be determined in accordance with the rules of
Regulations Section 1.704-2(c).
"Nonrecourse Liability" has the meaning set forth in Regulations
Section 1.752-1(a)(2).
"Notice of Redemption" means a Notice of Redemption substantially in
the form of Exhibit D hereto.
"Partner" means the General Partner or a Limited Partner, and
"Partners" means the General Partner and the Limited Partners.
"Partner Minimum Gain" means an amount, with respect to each Partner
Nonrecourse Debt, equal to the Partnership Minimum Gain that would result if
such Partner Nonrecourse Debt were treated as a Nonrecourse Liability,
determined in accordance with Regulations Section 1.704-2(i)(3).
"Partner Nonrecourse Debt" has the meaning set forth in Regulations
Section 1.704-2(b)(4).
"Partner Nonrecourse Deductions" has the meaning set forth in
Regulations Section 1.704-2(i)(2), and the amount of Partner Nonrecourse
Deductions with respect to a Partner Nonrecourse Debt for a Partnership Year
shall be determined in accordance with the rules of Regulations Section
1.704-2(i)(2).
"Partnership" means the limited partnership formed under the Act and
continued upon the terms and conditions set forth in this Agreement, and any
successor thereto.
"Partnership Interest" means a Limited Partner Interest or the General
Partner Interest and includes any and all benefits to which the holder of such
may be entitled as provided in this Agreement, together with all obligations of
such Person to comply with the terms and provisions of this Agreement. A
Partnership Interest may be expressed as a number of Partnership Units.
"Partnership Minimum Gain" has the meaning set forth in Regulations
Section 1.704-2(b)(2), and the amount of Partnership Minimum Gain, as well as
any net increase or decrease in Partnership Minimum Gain, for a Partnership
Year shall be determined in accordance with the rules of Regulations Section
1.704-2(d).
"Partnership Record Date" means the record date established by the
General Partner either (i) for the distribution of Available Cash pursuant to
Section 5.1 hereof, which record date shall be the same as the record date
established by the General Partner Entity for a distribution to its
shareholders, or (ii) if applicable, for determining the Partners entitled to
vote on or consent to any proposed action for which the Consent or approval of
the Partners is sought pursuant to Section 14.2 hereof.
"Partnership Unit" means a fractional, undivided share of the
Partnership Interests of all Partners issued pursuant to Sections 4.1 and 4.2
hereof, and includes Class A Units, Class B Units and any other classes or
series of Partnership Units established after the date hereof. The number of
Partnership Units outstanding and the Percentage Interests in the Partnership
represented by such
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Partnership Units are set forth in Exhibit A hereto, as such Exhibit may be
amended and restated from time to time. The term Partnership Units as used in
this Agreement refers to the Partnership Units as restated on the Effective
Date pursuant to Section 4.1.A. The ownership of Partnership Units may be
evidenced by a certificate in a form approved by the General Partner.
"Partnership Year" means the fiscal year of the Partnership, which
shall be the calendar year.
"Percentage Interest" means, as to a Partner holding a class of
Partnership Interests, its interest in such class, determined by dividing the
Partnership Units of such class owned by such Partner by the total number of
Partnership Units of such class then outstanding as specified in Exhibit A
attached hereto, as such exhibit may be amended and restated from time to time,
multiplied by the aggregate Percentage Interest allocable to such class of
Partnership Interests. In the event that the Partnership shall at any time have
outstanding more than one class of Partnership Interests, the Percentage
Interest attributable to each class of Partnership Interests, relative to other
classes of Partnership Interests, shall be determined by the General Partner,
using its reasonable discretion, based upon the relative economic rights of
such classes of Partnership Interests.
"Person" means a natural person, partnership (whether general or
limited), trust, estate, association, corporation, limited liability company,
unincorporated organization, custodian, nominee or any other individual or
entity in its own or any representative capacity.
"Prior Agreement" means the Second Amended and Restated Agreement of
Limited Partnership of Paragon Group L.P., dated as of November 1, 1994, as
amended and restated prior to the date hereof, which Prior Agreement is amended
and restated in its entirety by this Agreement.
"Publicly Traded" means listed or admitted to trading on the New York
Stock Exchange, the American Stock Exchange or another national securities
exchange or designated for quotation on the NASDAQ National Market System, or
any successor to any of the foregoing.
"Recapture Income" means any gain recognized by the Partnership
(computed without regard to any adjustment required by Sections 734, 743, and
754 of the Code) upon the disposition of any property or asset of the
Partnership, which gain is characterized as ordinary income because it
represents the recapture of deductions previously taken with respect to such
property or asset.
"Redeeming Partner" has the meaning set forth in Section 8.6.A hereof.
"Redemption Amount" means either the Cash Amount or the Shares Amount,
as determined by the General Partner in its sole and absolute discretion;
provided that in the event that the Shares are not Publicly Traded at the time
a Redeeming Partner exercises its Redemption Right, the Redemption Amount shall
be paid only in the form of the Cash Amount unless the Redeeming Partner and
the General Partner agree to the contrary.
"Redemption Right" has the meaning set forth in Section 8.6.A hereof.
"Regulations" means the Income Tax Regulations promulgated under the
Code, as such regulations may be amended from time to time (including
corresponding provisions of succeeding regulations).
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"REIT" means a real estate investment trust under Sections 856 through
859 of the Code.
"Residual Gain" or "Residual Loss" means any item of gain or loss, as
the case may be, of the Partnership recognized for federal income tax purposes
resulting from a sale, exchange or other disposition of Contributed Property or
Adjusted Property, to the extent such item of gain or loss is not allocated
pursuant to Section 2.B.(1)(b) or 2.B.(2)(b) of Exhibit C hereto to eliminate
Book-Tax Disparities.
"Securities Act" means the Securities Act of 1933, as amended.
"704(c) Value" means with respect to any Contributed Property the fair
market value of such property at the time of contribution as determined by the
General Partner using such reasonable method of valuation as it may adopt.
Subject to Exhibit B hereto, the General Partner shall, in its sole and
absolute discretion, use such method as it deems reasonable and appropriate to
allocate the aggregate of the 704(c) Values of Contributed Properties in a
single or integrated transaction among each separate property on a basis
proportional to their fair market values.
"Share" means a share of beneficial interest (or other comparable
common equity interest) of the General Partner Entity. Shares may be issued in
one or more classes or series in accordance with the terms of the Declaration
of Trust (or, if CPT is not the General Partner Entity, the organizational
documents of the General Partner Entity). In the event that there is more than
one class or series of Shares, the term "Shares" shall, as the context
requires, be deemed to refer to the class or series of Shares that correspond
to the class or series of Partnership Interests, if any, for which the
reference to Shares is made.
"Shares Amount" means a number of Shares equal to the product of the
number of Partnership Units offered for redemption by a Redeeming Partner times
the Conversion Factor; provided that, in the event the General Partner Entity
issues to all holders of Shares rights, options, warrants or convertible or
exchangeable securities entitling such holders to subscribe for or purchase
Shares or any other securities or property (collectively, the "rights"), then
the Shares Amount shall also include such rights that a holder of that number
of Shares would be entitled to receive.
"Specified Redemption Date" means the tenth Business Day after receipt
by the General Partner of a Notice of Redemption; provided that if the Shares
are not Publicly Traded, the Specified Redemption Date means the thirtieth
Business Day after receipt by the General Partner of a Notice of Redemption.
"Subsidiary" means, with respect to any Person, any corporation,
limited liability company, partnership or joint venture, or other entity of
which a majority of (i) the voting power of the voting equity securities or
(ii) the outstanding equity interests is owned, directly or indirectly, by such
Person.
"Substituted Limited Partner" means a Person who is admitted as a
Limited Partner to the Partnership pursuant to Section 11.4 hereof.
"Terminating Capital Transaction" means any sale or other disposition
of all or substantially all of the assets of the Partnership for cash or a
related series of transactions that, taken together,
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result in the sale or other disposition of all or substantially all of the
assets of the Partnership for cash.
"Termination Transaction" has the meaning set forth in Section 11.2.B
hereof.
"Unrealized Gain" means, with respect to any item of Partnership
property as of any date of determination, the excess, if any, of (i) the fair
market value of such property (as determined under Exhibit B hereto) as of such
date, over (ii) the Carrying Value of such property (prior to any adjustment to
be made pursuant to Exhibit B hereto) as of such date.
"Unrealized Loss" means, with respect to any item of Partnership
property as of any date of determination, the excess, if any, of (i) the
Carrying Value of such property (prior to any adjustment to be made pursuant to
Exhibit B hereto) as of such date, over (ii) the fair market value of such
property (as determined under Exhibit B hereto) as of such date.
"Valuation Date" means the date of receipt by the General Partner of a
Notice of Redemption or, if such date is not a Business Day, the first Business
Day thereafter.
"Value" means, with respect to any outstanding Shares of the General
Partner Entity that are Publicly Traded, the average of the daily market price
for the ten (10) consecutive trading days immediately preceding the date with
respect to which value must be determined or, if such date is not a Business
Day, the immediately preceding Business Day. The market price for each such
trading day shall be the closing price, regular way, on such day, or if no such
sale takes place on such day, the average of the closing bid and asked prices
on such day. In the event that the outstanding Shares of the General Partner
Entity are Publicly Traded and the Shares Amount includes rights that a holder
of Shares would be entitled to receive, then the Value of such rights shall be
determined by the General Partner acting in good faith on the basis of such
quotations and other information as it considers, in its reasonable judgment,
appropriate. In the event that the Shares of the General Partner Entity are not
Publicly Traded, the Value of the Shares Amount per Partnership Unit offered
for redemption (which will be the Cash Amount payable pursuant to Section 8.6A
hereof) means the amount that a holder of one Partnership Unit would receive if
each of the assets of the Partnership were to be sold for its fair market value
on the Specified Redemption Date, the Partnership were to pay all of its
outstanding liabilities, and the remaining proceeds were to be distributed to
the Partners in accordance with Section 13.2. Such Value shall be determined by
the General Partner, acting in good faith and based upon a commercially
reasonable estimate of the net amount of cash that would be received by the
Partnership if each asset of the Partnership were sold to an unrelated
purchaser in an arms' length transaction where neither the purchaser nor the
seller were under economic compulsion to enter into the transaction and all
Partnership Debt was paid in full.
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ARTICLE II
ORGANIZATIONAL MATTERS
SECTION 2.1 ORGANIZATION
The Partnership is a limited partnership organized pursuant to the
provisions of the Act and upon the terms and conditions set forth in the Prior
Agreement, as amended prior to the date hereof. The Partners hereby continue
the Partnership and amend and restate the Prior Agreement, as amended prior to
the date hereof in its entirety. Except as expressly provided herein to the
contrary, the rights and obligations of the Partners and the administration and
termination of the Partnership shall be governed by the Act. The Partnership
Interest of each Partner shall be personal property for all purposes.
SECTION 2.2 NAME
The name of the Partnership is Camden Operating, L.P. The
Partnership's business may be conducted under any other name or names deemed
advisable by the General Partner, including the name of the General Partner or
any Affiliate thereof. The words "Limited Partnership," "L.P.," "Ltd." or
similar words or letters shall be included in the Partnership's name where
necessary for the purposes of complying with the laws of any jurisdiction that
so requires. The General Partner in its sole and absolute discretion may change
the name of the Partnership at any time and from time to time and shall notify
the Limited Partners of such change in the next regular communication to the
Limited Partners.
SECTION 2.3 REGISTERED OFFICE AND AGENT; PRINCIPAL OFFICE
The registered office of the Partnership in the State of Delaware
shall be located at National Registered Agents, Inc., ▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ and the registered agent for service of process on the
Partnership in the State of Delaware at such registered office shall be
National Registered Agents, Inc. The principal office of the Partnership shall
be ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, or such other
place as the General Partner may from time to time designate by notice to the
Limited Partners. The Partnership may maintain offices at such other place or
places within or outside the State of Delaware as the General Partner deems
advisable.
SECTION 2.4 POWER OF ATTORNEY
A. General. Each Limited Partner and each Assignee who
accepts Partnership Units (or any rights, benefits or privileges associated
therewith) is deemed to irrevocably constitute and appoint the General Partner,
any Liquidator and authorized officers and attorneys-in-fact of each, and each
of those acting singly, in each case with full power of substitution, as its
true and lawful agent and attorney-in-fact, with full power and authority in
its name, place and stead to:
(1) execute, swear to, acknowledge, deliver,
file and record in the appropriate public offices (a) all certificates,
documents and other instruments (including, without limitation, this Agreement
and the Certificate and all amendments or restatements thereof) that the
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General Partner or any Liquidator deems appropriate or necessary to form,
qualify or continue the existence or qualification of the Partnership as a
limited partnership (or a partnership in which the limited partners have
limited liability) in the State of Delaware and in all other jurisdictions in
which the Partnership may or plans to conduct business or own property, (b) all
instruments that the General Partner or any Liquidator deems appropriate or
necessary to reflect any amendment, change, modification or restatement of this
Agreement in accordance with its terms, (c) all conveyances and other
instruments or documents that the General Partner or any Liquidator deems
appropriate or necessary to reflect the dissolution and liquidation of the
Partnership pursuant to the terms of this Agreement, including, without
limitation, a certificate of cancellation, (d) all instruments relating to the
admission, withdrawal, removal or substitution of any Partner pursuant to, or
other events described in, Article XI, XII or XIII hereof or the Capital
Contribution of any Partner and (e) all certificates, documents and other
instruments relating to the determination of the rights, preferences and
privileges of Partnership Interests; and
(2) execute, swear to, seal, acknowledge and
file all ballots, consents, approvals, waivers, certificates and other
instruments appropriate or necessary, in the sole and absolute discretion of
the General Partner or any Liquidator, to make, evidence, give, confirm or
ratify any vote, Consent, approval, agreement or other action which is made or
given by the Partners hereunder or is consistent with the terms of this
Agreement or appropriate or necessary, in the sole discretion of the General
Partner or any Liquidator, to effectuate the terms or intent of this Agreement.
Nothing contained in this Section 2.4 shall be construed as
authorizing the General Partner or any Liquidator to amend this Agreement
except in accordance with Article XIV hereof or as may be otherwise expressly
provided for in this Agreement.
B. Irrevocable Nature. The foregoing power of attorney
is hereby declared to be irrevocable and a power coupled with an interest, in
recognition of the fact that each of the Partners will be relying upon the
power of the General Partner or any Liquidator to act as contemplated by this
Agreement in any filing or other action by it on behalf of the Partnership, and
it shall survive and not be affected by the subsequent Incapacity of any
Limited Partner or Assignee and the transfer of all or any portion of such
Limited Partner's or Assignee's Partnership Units and shall extend to such
Limited Partner's or Assignee's heirs, successors, assigns and personal
representatives. Each such Limited Partner or Assignee hereby agrees to be
bound by any representation made by the General Partner or any Liquidator,
acting in good faith pursuant to such power of attorney; and each such Limited
Partner or Assignee hereby waives any and all defenses which may be available
to contest, negate or disaffirm the action of the General Partner or any
Liquidator, taken in good faith under such power of attorney. Each Limited
Partner or Assignee shall execute and deliver to the General Partner or the
Liquidator, within fifteen (15) days after receipt of the General Partner's or
Liquidator's request therefor, such further designations, powers of attorney
and other instruments as the General Partner or the Liquidator, as the case may
be, deems necessary to effectuate this Agreement and the purposes of the
Partnership.
SECTION 2.5 TERM
The term of the Partnership commenced on December 31 1993, the date on
which the Certificate was filed in the office of the Secretary of State of the
State of Delaware in accordance
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with the Act, and shall continue until December 31, 2093, unless the
Partnership is dissolved sooner pursuant to the provisions of Article XIII
hereof or as otherwise provided by law.
ARTICLE III
PURPOSE
SECTION 3.1 PURPOSE AND BUSINESS
The purpose and nature of the business to be conducted by the
Partnership is (i) to conduct any business that may be lawfully conducted by a
limited partnership organized pursuant to the Act; provided, however, that such
business shall be limited to and conducted in such a manner as to permit the
General Partner Entity at all times to be classified as a REIT, unless the
General Partner Entity ceases to qualify, or is not qualified, as a REIT for
any reason or reasons not related to the business conducted by the Partnership;
(ii) to enter into any partnership, joint venture, limited liability company or
other similar arrangement to engage in any of the foregoing or the ownership of
interests in any entity engaged, directly or indirectly, in any of the
foregoing; and (iii) to do anything necessary or incidental to the foregoing.
In connection with the foregoing, and without limiting the General Partner
Entity's right in its sole discretion to cease qualifying as a REIT, the
Partners acknowledge that the status of the General Partner Entity as a REIT
inures to the benefit of all the Partners and not solely the General Partner or
its Affiliates.
SECTION 3.2 POWERS
The Partnership is empowered to do any and all acts and things
necessary, appropriate, proper, advisable, incidental to or convenient for the
furtherance and accomplishment of the purposes and business described herein
and for the protection and benefit of the Partnership, including, without
limitation, full power and authority, directly or through its ownership
interest in other entities, to enter into, perform and carry out contracts of
any kind, borrow money and issue evidences of indebtedness whether or not
secured by mortgage, deed of trust, pledge or other lien, acquire, own, manage,
improve and develop real property, and lease, sell, transfer and dispose of
real property; provided, however, that the Partnership shall not take, or shall
refrain from taking, any action which, in the judgment of the General Partner,
in its sole and absolute discretion, (i) could adversely affect the ability of
the General Partner Entity to continue to qualify as a REIT, (ii) could subject
the General Partner Entity to any additional taxes under Section 857 or Section
4981 of the Code or (iii) could violate any law or regulation of any
governmental body or agency having jurisdiction over the General Partner Entity
or its securities, unless such action (or inaction) shall have been
specifically consented to by the General Partner in writing.
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ARTICLE IV
CAPITAL CONTRIBUTIONS AND ISSUANCES
OF PARTNERSHIP INTERESTS
SECTION 4.1 CAPITAL CONTRIBUTIONS OF THE PARTNERS
A. Capital Contributions to the Partnership Prior to or
on the Effective Date. The Partners previously made Capital Contributions to
the Partnership, as set forth in the books and records of the Partnership. On
the Effective Date, the General Partner shall complete Exhibit A hereto to
reflect the Capital Accounts, the Partnership Units assigned to each Partner
and the Percentage Interest in the Partnership represented by such Partnership
Units. On the Effective Date, the Partnership shall restate the number of
Partnership Units held by each Partner so that, after giving effect to such
restatement, the number of Partnership Units held by each Partner shall be
equal to the product of (i) the number of Partnership Units held by such
Partner immediately prior to the Effective Date multiplied by (ii) the fraction
of a share of CPT that each holder of one share of Paragon Group, Inc. received
in connection with the merger of Paragon Group, Inc. with Camden Subsidiary
pursuant to the Merger Agreement (determined without regard to provisions of
the Merger Agreement related to fractional shares). The number of Partnership
Units, as restated, held by each Partner shall be set forth on Exhibit A
hereto. The Capital Accounts of the Partners and the Carrying Values of the
Partnership's Assets shall be restated as of the Effective Date pursuant to
Section I.D of Exhibit B hereto to reflect the Capital Contributions made prior
to or on the Effective Date, with each Partner having a Capital Account on the
Effective Date, after giving effect to any Capital Contributions to be made on
the Effective Date, equal to the product of (i) the number of Partnership Units
owned by such Partner multiplied by (ii) the Value, on the Effective Date, of
one (1) Share.
B. General Partner Interest. A number of Partnership
Units held by the General Partner equal to one percent (1%) of all outstanding
Partnership Units from time to time shall be deemed to be the Partnership Units
of the General Partner and shall be the General Partner Interest. All other
Partnership Units held by the General Partner shall be deemed to be Limited
Partner Interests and shall be held by the General Partner in its capacity as a
Limited Partner in the Partnership.
C. Capital Contributions By Merger. To the extent the
Partnership acquires any property by the merger of any other Person into the
Partnership, Persons who receive Partnership Interests in exchange for their
interests in the Person merging into the Partnership shall become Partners and
shall be deemed to have made Capital Contributions as provided in the
applicable merger agreement and as set forth in Exhibit A hereto, as amended by
the General Partner in good faith in connection with such merger.
D. No Obligation to Make Additional Capital
Contributions. Except as provided in Section 10.5 hereof, the Partners shall
have no obligation to make any additional Capital Contributions or provide any
additional funding to the Partnership (whether in the form of loans, repayments
of loans or otherwise). No Partner shall have any obligation to restore any
deficit that may exist in its Capital Account, either upon a liquidation of the
Partnership or otherwise.
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SECTION 4.2 ISSUANCES OF PARTNERSHIP INTERESTS
A. General. The General Partner is hereby authorized to
cause the Partnership from time to time to issue to Partners (including the
General Partner and its Affiliates) or other Persons (including, without
limitation, in connection with the contribution of property to the Partnership)
Partnership Units in one or more classes, or in one or more series of any of
such classes, with such designations, preferences and relative, participating,
optional or other special rights, powers and duties, including rights, powers
and duties senior to Limited Partner Interests, all as shall be determined by
the General Partner in its sole and absolute discretion, including, without
limitation, (i) the allocations of items of Partnership income, gain, loss,
deduction and credit to each such class or series of Partnership Interests,
(ii) the right of each such class or series of Partnership Interests to share
in Partnership distributions and (iii) the rights of each such class or series
of Partnership Interests upon dissolution and liquidation of the Partnership.
In the event that the Partnership issues Partnership Interests pursuant to this
Section 4.2.A, the General Partner shall make such amendments to this Agreement
(including but not limited to the amendments described in Section 5.4, Section
6.2 and Section 8.6.E hereof) as it deems necessary to reflect the issuance of
such additional Partnership Interests.
B. Additional Capital Contributions by the General
Partner. The General Partner may make Capital Contributions to the Partnership
at such times and in such amounts as the General Partner, in its sole and
absolute discretion, may determine to be advisable, but under no circumstances
shall the General Partner be obligated to make any such Capital Contribution.
In exchange for each such Capital Contribution, the Partnership shall issue to
the General Partner (i) that number of Class A or Class B Units equal to (a)
the amount of the Capital Contribution divided by (b) the per Partnership Unit
fair market value, as determined by the General Partner, in its reasonable
judgment, of the underlying assets of the Partnership, or (ii) additional
Partnership Units or other Partnership Interests, other than Class A or Class B
Units, in one or more classes, or one or more series of any such classes, with
such designations, preferences and relative, participating, optional or other
special rights, powers and duties, including rights, powers and duties senior
to Limited Partner Interests, all as shall be determined by the General Partner
in its reasonable judgment, including, without limitation, (x) the allocations
of items of Partnership income, gain, loss, deduction and credit to each such
class or series of Partnership Interests, (y) the rights of each such class or
series of Partnership Interests to share in Partnership distributions, and (z)
the rights of each such class or series of Partnership Interests upon
dissolution and liquidation of the Partnership; provided that in connection
with an issuance of Partnership Units and/or Partnership Interests pursuant to
clause (ii) of this Section 4.2.B, (1) such Partnership Units and/or
Partnership Interests are issued in connection with an issuance of shares of
the General Partner Entity, which shares have designations, preferences and
other rights such that the economic interests created thereby are substantially
similar to the designations, preferences and other rights of the additional
Partnership Units and/or Partnership Interests issued to the General Partner in
accordance with clause (ii) of this Section 4.2.B, and (2) the General Partner
shall make a Capital Contribution to the Partnership in an amount equal to the
proceeds raised in connection with the issuance of such Shares.
C. No Requirement that General Partner Entity
Contribute Proceeds of Equity Offerings. The General Partner Entity may issue
additional Shares or rights, options, warrants or convertible or exchangeable
securities containing the right to subscribe for or purchase Shares ("New
Securities") at such times and in such amounts and for such consideration as
the General Partner
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Entity, in its sole and absolute discretion, determines. Under no circumstances
shall the General Partner Entity be obligated to contribute to the Partnership
all or any part of the proceeds from any issuance of such New Securities or
from the exercise of rights, contained in such New Securities, and the General
Partner Entity may, in its sole and absolute discretion, retain all such
proceeds, to be used by the General Partner Entity as it determines, in its
sole and absolute discretion, to be advisable.
D. Classes of Partnership Units. Subject to Section
4.2.A above, the Partnership shall have two classes of Partnership Units
entitled "Class A Units" and "Class B Units." Either Class A Units or Class B
Units, at the election of the General Partner, in its sole and absolute
discretion, may be issued to newly admitted Partners in exchange for the
contribution by such Partners of cash, real estate partnership interests,
stock, notes or other assets or consideration; provided, that any Partnership
Unit that is not specifically designated by the General Partner as being of a
particular class shall be deemed to be a Class A Unit. Each Class B Unit shall
be converted automatically into a Class A Unit on the day immediately following
the Partnership Record Date for the Distribution Period (as defined in Section
5.1.D hereof) in which such Class B Unit was issued, without the requirement
for any action by either the Partnership or the Partner holding the Class B
Unit.
SECTION 4.3 MINIMUM PERCENTAGE INTEREST OF GENERAL PARTNER
The provisions of Section 4.2 shall be applied so that in all events
the Percentage Interest of the General Partner shall be equal to at least
1.00%. In the event the issuance of additional Partnership Units pursuant to
Section 4.2.A would (but for this Section 4.3) have the effect of reducing the
Percentage Interest of the General Partner to less than 1.00%, CPT LP shall
transfer Partnership Units to the General Partner (and, as of the effective
date of such issuance, CPT LP shall be deemed to hold Partnership Units for the
benefit of the General Partner) to the extent necessary to cause the General
Partner's Percentage Interest, after giving effect to such issuance, to be
equal to at least 1.00%. In the event any additional Capital Contributions are
made or deemed made to the Partnership by the General Partner and CPT LP
pursuant to Section 4.2.B, such additional Capital Contributions or deemed
Capital Contributions shall be allocated between the General Partner and CPT LP
in the amounts necessary to cause the General Partner's Percentage Interest,
after giving effect to such Capital Contributions, to be equal to at least
1.00%.
SECTION 4.4 NO PREEMPTIVE RIGHTS
Except to the extent expressly granted by the Partnership pursuant to
another agreement (as determined in good faith by the General Partner), no
Person shall have any preemptive, preferential or other similar right with
respect to (i) additional Capital Contributions or loans to the Partnership or
(ii) issuance or sale of any Partnership Units or other Partnership Interests.
SECTION 4.5 OTHER CONTRIBUTION PROVISIONS
In the event that any Partner is admitted to the Partnership and is
given a Capital Account in exchange for services rendered to the Partnership,
such transaction shall be treated by the Partnership and the affected Partner
as if the Partnership had compensated such Partner in cash, and the Partner
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had contributed such cash to the capital of the Partnership, unless the General
Partner and such affected Partner specifically agree otherwise.
SECTION 4.6 NO INTEREST ON CAPITAL
No Partner shall be entitled to interest on its Capital Contributions
or its Capital Account.
ARTICLE V
DISTRIBUTIONS
SECTION 5.1 REQUIREMENT AND CHARACTERIZATION OF DISTRIBUTIONS
A. General. The General Partner shall distribute at
least quarterly Available Cash in such amount as shall be determined by the
General Partner in its reasonable discretion (subject to Section 5.1.C below),
to the Partners who are Partners on the Partnership Record Date, with such
distribution to be made as provided in Sections 5.1.B, 5.1.D and 5.1.E below.
Notwithstanding anything to the contrary contained herein, in no event may a
Partner receive a distribution of Available Cash with respect to a Partnership
Unit for a quarter or shorter period if such Partner is entitled to receive a
distribution with respect to a Share for which such Partnership Unit has been
redeemed or exchanged. Unless otherwise expressly provided for herein or in an
agreement at the time a new class of Partnership Interests is created in
accordance with Article IV hereof, no Partnership Interest shall be entitled to
a distribution in preference to any other Partnership Interest. The General
Partner shall make such reasonable efforts, as determined by it in its sole and
absolute discretion and consistent with the qualification of the General
Partner Entity as a REIT, to distribute Available Cash to Limited Partners so
as to preclude any such distribution or portion thereof from being treated as
part of a sale of property of the Partnership by a Limited Partner under
Section 707 of the Code or the Regulations thereunder; provided that the
General Partner and the Partnership shall not have liability to a Limited
Partner under any circumstances as a result of any distribution to a Limited
Partner being so treated.
B. Method.
(i) Each holder of Partnership Interests that are
entitled to any preference in distribution shall be entitled
to a distribution in accordance with the rights of any such
class of Partnership Interests (and, within such class, pro
rata in proportion to the respective Percentage Interests on
such Partnership Record Date); and
(ii) To the extent there is Available Cash remaining
after the payment of any preference in distribution in
accordance with the foregoing clause (i), with respect to
Partnership Interests that are not entitled to any preference
in distribution, pro rata to each such class in accordance
with the terms of such class (and, within each such class,
pro rata in proportion to the respective Percentage Interests
on such Partnership Record Date).
C. Conduct of Partnership Operations to Maintain Level
of Distributions. The General Partner intends to use reasonable efforts to
cause the Partnership to operate in a manner
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(including, without limitation, incurring Debt, establishing and maintaining
cash reserves, and undertaking and financing recurring and non-recurring
capital expenditures) that enables the Partnership to maintain a distribution
rate per Class A Unit that is equal to the distribution rate per Share of the
General Partner Entity (after taking into account any appropriate adjustments
in Class A Units and Shares to reflect stock splits, stock dividends, and other
similar adjustments and to reflect the effect of any other transactions
resulting in a change in the Conversion Factor). The General Partner shall act
in good faith in attempting to accomplish the foregoing objective, but there is
no assurance that such objective will be accomplished, and neither the General
Partner nor the Partnership shall have any liability for the failure to achieve
such objective so long as the General Partner acts in good faith. In
furtherance of the foregoing, the General Partner and the General Partner
Entity further agree that if there is any loan or advance outstanding from the
Partnership to the General Partner Entity or to any Affiliate of the General
Partner or the General Partner Entity and the Partnership is unable to make a
distribution with respect to the Class A Units in the amount contemplated by
the first sentence of this Section 5.1.C, the General Partner and the General
Partner Entity shall immediately cause such loan(s) and advance(s) to be repaid
to the extent necessary to provide the Partnership with the funds to make such
contemplated distributions. Furthermore, in the event the General Partner
determines that the distribution rate per Class A Unit for any calendar quarter
will not at least equal the distribution rate per Share of the General Partner
Entity (as described above) for the same quarter, then, at least ten (10)
Business Days prior to the record date to determine holders of Shares of the
General Partner Entity eligible to receive such distribution, the General
Partner shall provide notice to the Limited Partners identifying the projected
distribution per Unit and the projected distribution per Share for such
calendar quarter. Such notice shall be subject to the same limitations,
restrictions, and covenants as set forth in Section 8.5.C with respect to
extraordinary transactions.
D. Distributions When Class B Units Are Outstanding.
If for any quarter or shorter period with respect to which a distribution is to
be made (a "Distribution Period") Class B Units are outstanding on the
Partnership Record Date for such Distribution Period, the General Partner shall
allocate the Available Cash with respect to such Distribution Period available
for distribution with respect to the Class A Units and Class B Units
collectively between the Partners who are holders of Class A Units ("Class A")
and the Partners who are holders of Class B Units ("Class B") as follows:
(1) Class A shall receive that portion of the
Available Cash (the "Class A Share") determined by multiplying the amount of
Available Cash by the following fraction:
A x Y
---------------
(A x Y)+(B x X)
(2) Class B shall receive that portion of the
Available Cash (the "Class B Share") determined by multiplying the amount of
Available Cash by the following fraction:
B x X
---------------
(A x Y)+(B x X)
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26
(3) For purposes of the foregoing formulas,
(i) "A" equals the number of Class A Units outstanding on the Partnership
Record Date for such Distribution Period; (ii) "B" equals the number of Class B
Units outstanding on the Partnership Record Date for such Distribution Period;
(iii) "Y" equals the number of days in the Distribution Period; and (iv) "X"
equals the number of days in the Distribution Period for which the Class B
Units were issued and outstanding.
The Class A Share shall be distributed among Partners holding Class A
Units on the Partnership Record Date for the Distribution Period in accordance
with the number of Class A Units held by each Partner on such Partnership
Record Date. In no event may a Partner receive a distribution of Available Cash
with respect to a Class A Unit if a Partner is entitled to receive a
distribution out of such Available Cash with respect to a Share for which such
Class A Unit has been redeemed or exchanged. The Class B Share shall be
distributed among the Partners holding Class B Units on the Partnership Record
Date for the Distribution Period in accordance with the number of Class B Units
held by each Partner on such Partnership Record Date. In no event shall any
Class B Units be entitled to receive any distribution of Available Cash for any
Distribution Period ending prior to the date on which such Class B Units are
issued.
E. Distributions When Class B Units Have Been Issued on
Different Dates. In the event that Class B Units which have been issued on
different dates are outstanding on the Partnership Record Date for any
Distribution Period, then the Class B Units issued on each particular date
shall be treated as a separate series of Partnership Units for purposes of
making the allocation of Available Cash for such Distribution Period among the
holders of Partnership Units (and the formula for making such allocation, and
the definitions of variables used therein, shall be modified accordingly).
Thus, for example, if two series of Class B Units are outstanding on the
Partnership Record Date for any Distribution Period, the allocation formula for
each series, "Series B1" and "Series B2" would be as follows:
(1) Series B1 shall receive that portion of the
Available Cash determined by multiplying the amount of Available Cash by the
following fraction:
B1 x X1
---------------------------
(A x Y)+(B1 x X1)+(B2 x X2)
(2) Series B2 shall receive that portion of the
Available Cash determined by multiplying the amount of Available Cash by the
following fraction:
B2 x X2
---------------------------
(A x Y)+(B1 x X1)+(B2 x X2)
(3) For purposes of the foregoing formulas the
definitions set forth in Section 5.1.C.3 above remain the same except that (i)
"B1" equals the number of Partnership Units in Series B1 outstanding on the
Partnership Record Date for such Distribution Period; (ii) "B2" equals the
number of Partnership Units in Series B2 outstanding on the Partnership Record
Date for such Distribution Period; (iii) "X1" equals the number of days in the
Distribution Period for which the Partnership Units in Series B1 were issued
and outstanding; and (iv) "X2" equals the number of days in the Distribution
Period for which the Partnership Units in Series B2 were issued and
outstanding.
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27
F. Minimum Distributions if General Partner Entity Not
Publicly Traded Entity. In addition (and without regard to the amount of
Available Cash), if the Shares of the General Partner Entity are not Publicly
Traded, the Partnership shall make cash distributions with respect to the Class
A Units at least annually for each taxable year of the Partnership beginning
prior to the fifteenth (15th) anniversary of the Effective Date in an aggregate
amount with respect to each such taxable year at least equal to 95% of the
Partnership's taxable income for such year allocable to the Class A Units, with
such distributions to be made not later than 60 days after the end of such
year; provided, however, neither the General Partner nor any of its Affiliates
shall be obligated to make any Capital Contributions, loans, advances or other
funds available to the Partnership (other than to repay any outstanding loans
or advances from the Partnership to the General Partner or its Affiliates) in
order to satisfy the distribution requirement of this Section 5.1.F.
Notwithstanding Section 14.1.C.(iii), this Section 5.1.F may be amended with
the Consent of the Outside Limited Partners.
SECTION 5.2 AMOUNTS WITHHELD
All amounts withheld pursuant to the Code or any provisions of any
state or local tax law and Section 10.5 hereof with respect to any allocation,
payment or distribution to the General Partner, the Limited Partners or
Assignees shall be treated as amounts distributed to the General Partner,
Limited Partners or Assignees pursuant to Section 5.1 above for all purposes
under this Agreement.
SECTION 5.3 DISTRIBUTIONS UPON LIQUIDATION
Proceeds from a Terminating Capital Transaction and any other cash
received or reduction in reserves made after commencement of the liquidation of
the Partnership shall be distributed to the Partners in accordance with Section
13.2 hereof.
SECTION 5.4 AMENDMENTS TO REFLECT ISSUANCE OF ADDITIONAL
PARTNERSHIP INTERESTS
In the event that the Partnership issues additional Partnership
Interests to the General Partner or any Additional Limited Partner pursuant to
Article IV hereof, the General Partner shall make such amendments to this
Article V as it deems necessary to reflect the issuance of such additional
Partnership Interests.
ARTICLE VI
ALLOCATIONS
SECTION 6.1 ALLOCATIONS FOR CAPITAL ACCOUNT PURPOSES
For purposes of maintaining the Capital Accounts and in determining
the rights of the Partners among themselves, the Partnership's items of income,
gain, loss and deduction (computed in accordance with Exhibit B hereto) shall
be allocated among the Partners in each taxable year (or portion thereof) as
provided herein below.
A. Net Income. After giving effect to the special
allocations set forth in Section 1 of Exhibit C and Section 6.2 below, Net
Income shall be allocated (i) first, to the General Partner to the extent that
Net Losses previously allocated to the General Partner pursuant to the last
sentence
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of Section 6.1.B below exceed Net Income previously allocated to the General
Partner pursuant to this clause (i) of Section 6.1.A, (ii) second, to the
holders of any Partnership Interests that are entitled to any preference in
distribution in accordance with the rights of any such class of Partnership
Interests until each such Partnership Interest has been allocated, on a
cumulative basis pursuant to this clause (ii), Net Income equal to the amount
of distributions received which are attributable to the preference of such
class of Partnership Interests (and, within such class, pro rata in proportion
to the respective Percentage Interests as of the last day of the period for
which such allocation is being made) and (iii) third, with respect to
Partnership Interests that are not entitled to any preference in the allocation
of Net Income, pro rata to each such class in accordance with the terms of such
class (and, within such class, pro rata in proportion to the respective
Percentage Interests as of the last day of the period for which such allocation
is being made).
B. Net Losses. After giving effect to the special
allocations set forth in Section 1 of Exhibit C and Section 6.2, Net Losses
shall be allocated (i) first, to the holders of any Partnership Interests that
are entitled to any preference in distribution in accordance with the rights of
any such class of Partnership Interests to the extent that any prior
allocations of Net Income to such class of Partnership Interests pursuant to
Section 6.1.A(ii) above exceed, on a cumulative basis, distributions with
respect to such Partnership Interests pursuant to clause (i) of Section 5.1.B
hereof (and, within such class, pro rata in proportion to the respective
Percentage Interests as of the last day of the period for which such allocation
is being made) and (ii) second, with respect to classes of Partnership
Interests that are not entitled to any preference in distribution, pro rata to
each such class in accordance with the terms of such class (and, within such
class, pro rata in proportion to the respective Percentage Interests as of the
last day of the period for which such allocation is being made); provided that
Net Losses shall not be allocated to any Limited Partner pursuant to this
Section 6.1.B to the extent that such allocation would cause such Limited
Partner to have an Adjusted Capital Account Deficit (or increase any existing
Adjusted Capital Account Deficit) at the end of such taxable year (or portion
thereof). All Net Losses in excess of the limitations set forth in this Section
6.1.B shall be allocated to the General Partner.
C. Allocation of Nonrecourse Debt. For purposes of
Regulations Section 1.752-3(a), the Partners agree that Nonrecourse Liabilities
of the Partnership in excess of the sum of (i) the amount of Partnership
Minimum Gain and (ii) the total amount of Nonrecourse Built-in Gain shall be
allocated among the Partners in accordance with their respective Percentage
Interests.
D. Recapture Income. Any gain allocated to the
Partners upon the sale or other taxable disposition of any Partnership asset
shall, to the extent possible after taking into account other required
allocations of gain pursuant to Exhibit C hereto, be characterized as Recapture
Income in the same proportions and to the same extent as such Partners have
been allocated any deductions directly or indirectly giving rise to the
treatment of such gains as Recapture Income.
E. Allocations by General Partner to Reflect Economic
Rights. In the event the General Partner shall determine, in its good faith
judgment, that it is necessary to modify the manner in which the Partnership's
items of income, gain, loss and deduction shall be allocated among the Partners
in a taxable year (or portion thereof) in order to cause such allocation to
reflect accurately the relative economic rights of the Partners, the General
Partner may make such a modification; provided that such modification is not
reasonably expected to have an adverse effect on the amounts distributable to
any Partner pursuant to Section 13.2 hereof upon the dissolution of the
Partnership
- 23 -
29
(assuming for this purpose that such distributions are intended to be made as
set forth in Article V hereof).
SECTION 6.2 AMENDMENTS TO ALLOCATIONS TO REFLECT ISSUANCE OF
ADDITIONAL PARTNERSHIP INTERESTS
In the event that the Partnership issues additional Partnership
Interests to the General Partner or any Additional Limited Partner pursuant to
Article IV hereof, the General Partner shall make such amendments to this
Article VI as it deems necessary to reflect the terms of the issuance of such
additional Partnership Interests, including making preferential allocations to
classes of Partnership Interests that are entitled thereto.
ARTICLE VII
MANAGEMENT AND OPERATIONS OF BUSINESS
SECTION 7.1 MANAGEMENT
▇. ▇▇▇▇▇▇ of General Partner. Except as otherwise
expressly provided in this Agreement, all management powers over the business
and affairs of the Partnership are and shall be exclusively vested in the
General Partner, and no Limited Partner shall have any right to participate in
or exercise control or management power over the business and affairs of the
Partnership. The General Partner may not be removed by the Limited Partners
with or without cause. In addition to the powers now or hereafter granted a
general partner of a limited partnership under applicable law or which are
granted to the General Partner under any other provision of this Agreement, the
General Partner, subject to Sections 7.3 and 7.6 below, shall have full power
and authority to do all things deemed necessary or desirable by it to conduct
the business of the Partnership, to exercise all powers set forth in Section
3.2 hereof and to effectuate the purposes set forth in Section 3.1 hereof,
including, without limitation:
(1) the making of any expenditures, the lending
or borrowing of money (including, without limitation, making prepayments on
loans and borrowing money to permit the Partnership to make distributions to
its Partners in such amounts as will permit the General Partner Entity (as long
as the General Partner Entity qualifies as a REIT) to avoid the payment of any
federal income tax (including, for this purpose, any excise tax pursuant to
Section 4981 of the Code) and to make distributions to its shareholders
sufficient to permit the General Partner Entity to maintain REIT status), the
assumption or guarantee of, or other contracting for, indebtedness and other
liabilities, the issuance of evidences of indebtedness (including the securing
of same by deed to secure debt, mortgage, deed of trust or other lien or
encumbrance on the Partnership's assets) and the incurring of any obligations
the General Partner deems necessary for the conduct of the activities of the
Partnership;
(2) the making of tax, regulatory and other
filings, or rendering of periodic or other reports to governmental or other
agencies having jurisdiction over the business or assets of the Partnership;
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30
(3) the acquisition, disposition, mortgage,
pledge, encumbrance, hypothecation or exchange of any or all of the assets of
the Partnership (including the exercise or grant of any conversion, option,
privilege or subscription right or other right available in connection with any
assets at any time held by the Partnership) or the merger or other combination
of the Partnership with or into another entity, on such terms as the General
Partner deems proper (all of the foregoing subject to any prior approval only
to the extent required by Section 7.3 hereof);
(4) the use of the assets of the Partnership
(including, without limitation, cash on hand) for any purpose consistent with
the terms of this Agreement and on any terms it sees fit, including, without
limitation, the financing of the conduct of the operations of the Partnership
or any of the Partnership's Subsidiaries, the lending of funds to other Persons
(including, without limitation, the General Partner, the General Partner
Entity, and the Subsidiaries of either the General Partner or the General
Partner Entity) and the repayment of obligations of the Partnership and its
Subsidiaries and any other Person in which the Partnership has an equity
investment and the making of capital contributions to its Subsidiaries;
(5) the management, operation, leasing,
landscaping, repair, alteration, demolition or improvement of any real property
or improvements owned by the Partnership or any Subsidiary of the Partnership;
(6) the negotiation, execution, and performance
of any contracts, conveyances or other instruments that the General Partner
considers useful or necessary to the conduct of the Partnership's operations or
the implementation of the General Partner's powers under this Agreement,
including contracting with contractors, developers, consultants, accountants,
legal counsel, other professional advisors and other agents and the payment of
their expenses and compensation out of the Partnership's assets;
(7) the distribution of Partnership cash or
other Partnership assets in accordance with this Agreement;
(8) the holding, managing, investing and
reinvesting of cash and other assets of the Partnership;
(9) the collection and receipt of revenues and
income of the Partnership;
(10) the establishment of one or more divisions
of the Partnership, the selection and dismissal of employees of the
Partnership, any division of the Partnership, or the General Partner
(including, without limitation, employees having titles such as "president,"
"vice president," "secretary" and "treasurer") and agents, outside attorneys,
accountants, consultants and contractors of the General Partner, the
Partnership, or any division of the Partnership and the determination of their
compensation and other terms of employment or hiring;
(11) the maintenance of such insurance for the
benefit of the Partnership and the Partners as it deems necessary or
appropriate;
(12) the formation of, or acquisition of an
interest in, and the contribution of property to, any corporation, limited or
general partnerships, joint ventures, limited liability
- 25 -
31
companies or other relationships that it deems desirable (including, without
limitation, the acquisition of interests in, and the contributions of property
to its Subsidiaries and any other Person in which it has an equity investment
from time to time);
(13) the control of any matters affecting the
rights and obligations of the Partnership, including the settlement,
compromise, submission to arbitration or any other form of dispute resolution
or abandonment of any claim, cause of action, liability, debt or damages due or
owing to or from the Partnership, the commencement or defense of suits, legal
proceedings, administrative proceedings, arbitrations or other forms of dispute
resolution, the representation of the Partnership in all suits or legal
proceedings, administrative proceedings, arbitrations or other forms of dispute
resolution, the incurring of legal expense and the indemnification of any
Person against liabilities and contingencies to the extent permitted by law;
(14) the undertaking of any action in connection
with the Partnership's direct or indirect investment in its Subsidiaries or any
other Person (including, without limitation, the contribution or loan of funds
by the Partnership to such Persons), the incurrence of indebtedness on behalf
of such Persons or the guarantee of the obligations of such Persons;
(15) the determination of the fair market value
of any Partnership property distributed in kind, using such reasonable method
of valuation as the General Partner may adopt;
(16) the exercise, directly or indirectly,
through any attorney-in-fact acting under a general or limited power of
attorney, of any right, including the right to vote, appurtenant to any assets
or investment held by the Partnership;
(17) the exercise of any of the powers of the
General Partner enumerated in this Agreement on behalf of or in connection with
any Subsidiary of the Partnership or any other Person in which the Partnership
has a direct or indirect interest, individually or jointly with any such
Subsidiary or other Person;
(18) the exercise of any of the powers of the
General Partner enumerated in this Agreement on behalf of any Person in which
the Partnership does not have any interest pursuant to contractual or other
arrangements with such Person;
(19) the making, executing and delivering of any
and all deeds, leases, notes, deeds to secure debt, mortgages, deeds of trust,
security agreements, conveyances, contracts, guarantees, warranties,
indemnities, waivers, releases or other legal instruments or agreements in
writing necessary or appropriate in the judgment of the General Partner for the
accomplishment of any of the powers of the General Partner under this
Agreement;
(20) the distribution of cash to acquire
Partnership Units held by a Limited Partner in connection with a Limited
Partner's exercise of its Redemption Right under Section 8.6 hereof; and
(21) the amendment and restatement of Exhibit A
hereto to reflect accurately at all times the Capital Accounts, Partnership
Units, and Percentage Interests of the Partners as the same are adjusted from
time to time to the extent necessary to reflect redemptions, Capital
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32
Contributions, the issuance of Partnership Units, the admission of any
Additional Limited Partner or any Substituted Limited Partner or otherwise, as
long as the matter or event being reflected in Exhibit A hereto otherwise is
authorized by this Agreement.
B. No Approval by Limited Partners. Each of the Limited
Partners agrees that the General Partner is authorized to execute, deliver and
perform the above-mentioned agreements and transactions on behalf of the
Partnership without any further act, approval or vote of the Partners,
notwithstanding any other provision of this Agreement (except as provided in
Section 7.3), the Act or any applicable law, rule or regulation, to the full
extent permitted under the Act or other applicable law. The execution, delivery
or performance by the General Partner or the Partnership of any agreement
authorized or permitted under this Agreement shall not constitute a breach by
the General Partner of any duty that the General Partner may owe the
Partnership or the Limited Partners or any other Persons under this Agreement
or of any duty stated or implied by law or equity.
C. Insurance. At all times from and after the date
hereof, the General Partner, at the expense of the Partnership, may cause the
Partnership to obtain and maintain (i) casualty, liability and other insurance
on the properties of the Partnership, (ii) liability insurance for the
Indemnitees hereunder and (iii) such other insurance as the General Partner, in
its reasonable discretion, determines to be necessary.
D. Working Capital and Other Reserves. At all times
from and after the date hereof, the General Partner may cause the Partnership
to establish and maintain working capital reserves in such amounts as the
General Partner, in its sole and absolute discretion, deems appropriate and
reasonable from time to time.
E. No Obligations to Consider Tax Consequences of
Limited Partners. In exercising its authority under this Agreement, the General
Partner may, but shall be under no obligation to, take into account the tax
consequences to any Partner (including the General Partner) of any action taken
(or not taken) by it. The General Partner and the Partnership shall not have
liability to a Limited Partner for monetary damages or otherwise for losses
sustained, liabilities incurred or benefits not derived by such Limited Partner
in connection with such decisions, provided that the General Partner has acted
in good faith and pursuant to its authority under this Agreement.
SECTION 7.2 CERTIFICATE OF LIMITED PARTNERSHIP
PGI Associates, as the original general partner of the Partnership,
has previously filed the Certificate with the Secretary of State of Delaware
which Certificate was amended to reflect the admission of the General Partner
to the Partnership and the withdrawal of PGI Associates as a general partner.
The General Partner shall use all reasonable efforts to cause to be filed such
other certificates or documents as may be reasonable and necessary or
appropriate for the formation, continuation, qualification and operation of a
limited partnership (or a partnership in which the limited partners have
limited liability) in the State of Delaware and any other state, the District
of Columbia or other jurisdiction in which the Partnership may elect to do
business or own property. To the extent that such action is determined by the
General Partner to be reasonable and necessary or appropriate, the General
Partner shall file amendments to and restatements of the Certificate and do all
the things to maintain the Partnership as a limited partnership (or a
partnership in which the limited partners have limited liability) under the
laws of the State of Delaware and each other state,
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33
the District of Columbia or other jurisdiction in which the Partnership may
elect to do business or own property. Subject to the terms of Section 8.5.A(4)
hereof, the General Partner shall not be required, before or after filing, to
deliver or mail a copy of the Certificate or any amendment thereto to any
Limited Partner.
SECTION 7.3 RESTRICTIONS ON GENERAL PARTNER'S AUTHORITY
A. Consent Required. The General Partner may not take
any action in contravention of an express prohibition or limitation of this
Agreement or any action that reasonably could be expected to cause the
Partnership not to qualify as a "partnership" for federal income tax purposes
without the written Consent of (i) all of the Limited Partners (including
Limited Partner Interests held by the General Partner) or (ii) such lower
percentage of the Limited Partner Interests as may be specifically provided for
under a provision of this Agreement or the Act.
B. Sale of All Assets of the Partnership. Except as
provided in Article XIII hereof, the General Partner may not sell, exchange,
transfer or otherwise dispose of all or substantially all of the Partnership's
assets in a single transaction or a series of related transactions (including
by way of merger, consolidation or other combination with any other Persons)
(i) if such sale, merger, or other transaction is in connection with a
Termination Transaction permitted under Section 11.2.B, or if the transaction
is a merger in which the Partnership will be the surviving entity and any
changes to the Partnership Agreement resulting in connection therewith have
received the approvals of the Partners required under Section 14.1 (treating
all such changes in connection with such merger as amendments for the purposes
thereof), without the Consent of the Partners holding two-thirds (2/3) or more
of the then outstanding Partnership Units (including any Partnership Units held
by the General Partner and CPT LP), or (ii) otherwise, without the Consent of
the Outside Limited Partners.
SECTION 7.4 REIMBURSEMENT OF THE GENERAL PARTNER
A. No Compensation. Except as provided in this Section
7.4 and elsewhere in this Agreement (including the provisions of Articles V and
VI hereof regarding distributions, payments and allocations to which it may be
entitled), the General Partner shall not be compensated for its services as
general partner of the Partnership.
B. Responsibility for Partnership Expenses. The
Partnership shall be responsible for and shall pay all expenses relating to the
Partnership's organization, the ownership of its assets and its operations. The
General Partner shall be reimbursed on a monthly basis, or such other basis as
the General Partner may determine in its good faith discretion, for all
expenses it, the General Partner Entity, Camden Subsidiary and/or CPT LP incur
relating to the operation of, or for the benefit of, the Partnership. The
General Partner shall determine in good faith the amount of expenses incurred
by it related to the operation of, or for the benefit of, the Partnership. In
the event that certain expenses are incurred for the benefit of both the
Partnership and other entities (including the General Partner or the General
Partner Entity or any of their respective Subsidiaries), such expenses will be
allocated to the Partnership and such other entities in such a manner as the
General Partner in its good faith discretion deems fair and reasonable. Such
reimbursements shall be in addition to any reimbursement to the General
Partner, the General Partner Entity, Camden Subsidiary and/or CPT LP pursuant
to Section 10.3.C hereof and as a result of indemnification pursuant to Section
7.7
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34
below. All payments and reimbursements hereunder shall be characterized for
federal income tax purposes as expenses of the Partnership incurred on its
behalf, and not as expenses of the General Partner, the General Partner Entity
Camden Subsidiary and/or CPT LP.
C. Partnership Interest Issuance Expenses. The General
Partner shall also be reimbursed for all expenses it incurs relating to any
issuance of additional Partnership Interests, Debt of the Partnership, or
rights, options, warrants or convertible or exchangeable securities of the
Partnership pursuant to Article IV hereof (including, without limitation, all
costs, expenses, damages and other payments resulting from or arising in
connection with litigation related to any of the foregoing), all of which
expenses are considered by the Partners to constitute expenses of, and for the
benefit of, the Partnership.
D. Reimbursement not a Distribution. If and to the
extent any reimbursement made pursuant to this Section 7.4 is determined for
federal income tax purposes not to constitute a payment of expenses of the
Partnership, the amount so determined shall constitute a guaranteed payment
with respect to capital within the meaning of Section 707(c) of the Code, shall
be treated consistently therewith by the Partnership and all Partners and shall
not be treated as a distribution for purposes of computing the Partners'
Capital Accounts.
SECTION 7.5 OUTSIDE ACTIVITIES OF THE GENERAL PARTNER
A. General. The General Partner shall devote to the
Partnership such time as may be necessary for the proper performance of its
duties as General Partner, but the General Partner is not required, and is not
expected, to devote its full time to the performance of such duties. Subject to
any agreement entered into pursuant to Section 7.6.D hereof and any other
agreements entered into by the General Partner or its Affiliates with the
Partnership or a Subsidiary, the General Partner, the General Partner Entity,
and any officer, director, employee, agent, trustee, Affiliate or shareholder
of the General Partner or the General Partner Entity shall be entitled to and
may have business interests and engage in business activities in addition to
those relating to the Partnership (including, without limitation, owning and
operating real estate and incurring indebtedness in its own name, whether or
not the proceeds of such indebtedness are used for the benefit of the
Partnership), including, without limitation, engaging in other business
interests and activities in direct or indirect competition with the
Partnership. Neither the Partnership nor any Partners shall have any right by
virtue of this Agreement or the partnership relationship established hereby in
or to such other ventures or activities or to the income or proceeds derived
therefrom, and the pursuit of such ventures, even if competitive with the
business of the Partnership, shall not be deemed wrongful or improper. Neither
the General Partner, the General Partner Entity, nor any Affiliate of the
General Partner or the General Partner Entity shall be obligated to present any
particular opportunity to the Partnership even if such opportunity is of a
character which, if presented to the Partnership, could be taken by the
Partnership, and, regardless of whether or not such opportunity is competitive
with the Partnership, the General Partner, the General Partner Entity, or any
Affiliate of the General Partner or the General Partner Entity shall have the
right to take for its own account (individually or as a trustee, partner or
fiduciary), or to recommend to others, any such particular opportunity. The
General Partner, the General Partner Entity, and any Affiliates of the General
Partner and the General Partner Entity may acquire Limited Partner Interests
and shall be entitled to exercise all rights of a Limited Partner relating to
such Limited Partner Interests.
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B. Purchases of Shares by the General Partner or the
General Partner Entity. The General Partner and/or the General Partner Entity
may, from time to time in their/its sole and absolute discretion, purchase
and/or redeem Shares (including, without limitation, in connection with a stock
repurchase or similar program). In the event that the General Partner or the
General Partner Entity purchases and/or redeems Shares, then the General
Partner or the General Partner Entity, as the case may be, shall purchase
and/or redeem such Shares with its own funds and not from the proceeds of any
sale of Partnership Units to the Partnership; provided, however, that if the
Partnership purchases Partnership Units pro rata from all Partners, with their
consent, the General Partner or the General Partner Entity may use the proceeds
it receives from any such sale of Partnership Units to purchase and/or redeem
Shares.
SECTION 7.6 CONTRACTS WITH AFFILIATES
A. Permitted Transactions. Subject to Section 7.6.B
below, the Partnership may lend or contribute funds to, borrow funds from, and
enter into any other transactions with, the Partnership's Subsidiaries or other
Persons in which it has an equity investment, 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 in which the Partnership has an equity
investment.
B. Transactions with Certain Affiliates. Except as
expressly permitted by this Agreement, the Partnership shall not, directly or
indirectly, sell, transfer or convey any property to, or purchase any property
from, or borrow funds from, or lend funds to, any Partner or any Affiliate of
the General Partner or the General Partner Entity, except pursuant to
transactions that are on terms that are fair and reasonable and no less
favorable to the Partnership than would be obtained from an unaffiliated third
party, as determined by the General Partner in its reasonable judgment.
C. Benefit Plans. The General Partner, in its sole and
absolute discretion and without the approval of the Limited Partners, may
propose and adopt on behalf of the Partnership employee benefit plans funded by
the Partnership for the benefit of employees of the General Partner, the
Partnership, Subsidiaries of the Partnership or any Affiliate of any of them in
respect of services performed, directly or indirectly, for the benefit of the
Partnership or any of the Partnership's Subsidiaries.
D. Conflict Avoidance. The General Partner is
expressly authorized to enter into, in the name and on behalf of the
Partnership, a right of first opportunity arrangement and other conflict
avoidance agreements with various Affiliates of the Partnership and General
Partner on such terms as the General Partner, in its sole and absolute
discretion, believes are advisable.
SECTION 7.7 INDEMNIFICATION
A. General. The Partnership shall indemnify each
Indemnitee from and against any and all losses, claims, damages, liabilities,
joint or several, expenses (including, without limitation, attorneys fees and
other legal fees and expenses), judgments, fines, settlements and other amounts
arising from or in connection with any and all claims, demands, actions, suits
or proceedings, civil, criminal, administrative or investigative incurred by
the Indemnitee and relating to the Partnership, or its operations, as set forth
in this Agreement, in which any such Indemnitee
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may be involved, or is threatened to be involved, as a party or otherwise,
unless it is established by a final determination of a court of competent
jurisdiction that: (i) the act or omission of the Indemnitee was material to
the matter giving rise to the proceeding and either was committed in bad faith
or was the result of active and deliberate dishonesty, (ii) the Indemnitee
actually received an improper personal benefit in money, property or services
or (iii) in the case of any criminal proceeding, the Indemnitee had reasonable
cause to believe that the act or omission was unlawful. Without limitation, the
foregoing indemnity shall extend to any liability of any Indemnitee, pursuant
to a loan guarantee, contractual obligations for any indebtedness or other
obligations or otherwise, for any indebtedness of the Partnership or any
Subsidiary of the Partnership (including, without limitation, any indebtedness
which the Partnership or any Subsidiary of the Partnership has assumed or taken
subject to), and the General Partner is hereby authorized and empowered, on
behalf of the Partnership, to enter into one or more indemnity agreements
consistent with the provisions of this Section 7.7 in favor of any Indemnitee
having or potentially having liability for any such indebtedness. The
termination of any proceeding by judgment, order or settlement does not create
a presumption that the Indemnitee did not meet the requisite standard of
conduct set forth in this Section 7.7.A. The termination of any proceeding by
criminal conviction or upon a plea of nolo contendere or its equivalent, or an
entry of an order of probation prior to judgment, creates a rebuttable
presumption that the Indemnitee acted in a manner contrary to that specified in
this Section 7.7.A with respect to the subject matter of such proceeding. Any
indemnification pursuant to this Section 7.7 shall be made only out of the
assets of the Partnership, and any insurance proceeds from the liability policy
covering the General Partner and any Indemnitees, and neither the General
Partner nor any Limited Partner shall have any obligation to contribute to the
capital of the Partnership or otherwise provide funds to enable the Partnership
to fund its obligations under this Section 7.7.
B. Advancement of Expenses. Reasonable expenses
expected to be incurred by an Indemnitee shall be paid or reimbursed by the
Partnership in advance of the final disposition of any and all claims, demands,
actions, suits or proceedings, civil, criminal, administrative or investigative
made or threatened against an Indemnitee upon receipt by the Partnership of (i)
a written affirmation by the Indemnitee of the Indemnitee's good faith belief
that the standard of conduct necessary for indemnification by the Partnership
as authorized in this Section 7.7.A has been met and (ii) a written undertaking
by or on behalf of the Indemnitee to repay the amount if it shall ultimately be
determined that the standard of conduct has not been met.
C. No Limitation of Rights. The indemnification
provided by this Section 7.7 shall be in addition to any other rights to which
an Indemnitee or any other Person may be entitled under any agreement, pursuant
to any vote of the Partners, as a matter of law or otherwise, and shall
continue as to an Indemnitee who has ceased to serve in such capacity unless
otherwise provided in a written agreement pursuant to which such Indemnitee is
indemnified.
D. Insurance. The Partnership may purchase and
maintain insurance on behalf of the Indemnitees and such other Persons as the
General Partner shall determine against any liability that may be asserted
against or expenses that may be incurred by such Person in connection with the
Partnership's activities, regardless of whether the Partnership would have the
power to indemnify such Person against such liability under the provisions of
this Agreement.
E. Benefit Plan Fiduciary. For purposes of this
Section 7.7, (i) the Partnership shall be deemed to have requested an
Indemnitee to serve as fiduciary of an employee benefit plan
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whenever the performance by it of its duties to the Partnership also imposes
duties on, or otherwise involves services by, it to the plan or participants or
beneficiaries of the plan, (ii) excise taxes assessed on an Indemnitee with
respect to an employee benefit plan pursuant to applicable law shall constitute
fines within the meaning of this Section 7.7 and (iii) actions taken or omitted
by the Indemnitee with respect to an employee benefit plan in the performance
of its duties for a purpose reasonably believed by it to be in the interest of
the participants and beneficiaries of the plan shall be deemed to be for a
purpose which is not opposed to the best interests of the Partnership.
F. No Personal Liability for Limited Partners. In no
event may an Indemnitee subject any of the Partners to personal liability by
reason of the indemnification provisions set forth in this Agreement.
G. Interested Transactions. An Indemnitee shall not be
denied indemnification in whole or in part under this Section 7.7 because the
Indemnitee had an interest in the transaction with respect to which the
indemnification applies if the transaction was otherwise permitted by the terms
of this Agreement.
H. Benefit. The provisions of this Section 7.7 are for
the benefit of the Indemnitees, their heirs, successors, assigns and
administrators and shall not be deemed to create any rights for the benefit of
any other Persons. Any amendment, modification or repeal of this Section 7.7,
or any provision hereof, shall be prospective only and shall not in any way
affect the Partnership's obligation to any Indemnitee under this Section 7.7 as
in effect immediately prior to such amendment, modification or repeal with
respect to claims arising from or related to matters occurring, in whole or in
part, prior to such amendment, modification or repeal, regardless of when such
claims may arise or be asserted.
I. Indemnification Payments Not Distributions. If and
to the extent any payments to any Partner pursuant to this Section 7.7
constitute gross income to such Partner (as opposed to the repayment of
advances made on behalf of the Partnership), such amounts shall constitute
guaranteed payments within the meaning of Section 707(c) of the Code, shall be
treated consistently therewith by the Partnership and all Partners, and shall
not be treated as distributions for purposes of computing the Partners' Capital
Accounts.
SECTION 7.8 LIABILITY OF THE GENERAL PARTNER
A. General. Notwithstanding anything to the contrary
set forth in this Agreement, neither the General Partner, the General Partner
Entity, nor the directors and officers of the General Partner, the General
Partner Entity, or any Affiliate of the foregoing, shall be liable for monetary
damages to the Partnership, any Partners or any Assignees for losses sustained,
liabilities incurred or benefits not derived as a result of errors in judgment
or mistakes of fact or law or of any act or omission if the General Partner
acted in good faith.
B. No Obligation to Consider Separate Interests of
Limited Partners or Shareholders. The Limited Partners expressly acknowledge
that the General Partner is acting on behalf of the Partnership, CPT LP, the
General Partner Entity, Camden Subsidiary and the General Partner Entity's
shareholders collectively, that the General Partner is under no obligation to
consider the separate interests of the Limited Partners (including, without
limitation, the tax consequences to
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Limited Partners or Assignees) in deciding whether to cause the Partnership to
take (or decline to take) any actions, and that none of the General Partner,
the General Partner Entity, or any Affiliate of the foregoing, shall be liable
for monetary damages or otherwise for losses sustained, liabilities incurred or
benefits not derived by Limited Partners in connection with such decisions,
provided that the General Partner has acted in good faith.
C. Actions of Agents. Subject to its obligations and
duties as General Partner set forth in Section 7.1.A above, the General Partner
may exercise any of the powers granted to it by this Agreement and perform any
of the duties imposed upon it hereunder either directly or by or through its
agents. None of the General Partner, the General Partner Entity, or any
Affiliate of the foregoing, shall be responsible for any misconduct or
negligence on the part of any such agent appointed by the General Partner in
good faith.
D. Effect of Amendment. Any amendment, modification or
repeal of this Section 7.8 or any provision hereof shall be prospective only
and shall not in any way affect the limitations on the liability of the General
Partner, the General Partner Entity, or any Affiliate of the foregoing, to the
Partnership and the Limited Partners under this Section 7.8 as in effect
immediately prior to such amendment, modification or repeal with respect to
claims arising from or relating to matters occurring, in whole or in part,
prior to such amendment, modification or repeal, regardless of when such claims
may arise or be asserted.
SECTION 7.9 OTHER MATTERS CONCERNING THE GENERAL PARTNER
A. Reliance on Documents. The General Partner may rely
and shall be protected in acting or refraining from acting upon any resolution,
certificate, statement, instrument, opinion, report, notice, request, consent,
order, bond, debenture or other paper or document believed by it in good faith
to be genuine and to have been signed or presented by the proper party or
parties.
B. Reliance on Advisors. The General Partner may
consult with legal counsel, accountants, appraisers, management consultants,
investment bankers, architects, engineers, environmental consultants and other
consultants and advisors selected by it, and any act taken or omitted to be
taken in reliance upon the opinion of such Persons as to matters which the
General Partner reasonably believes to be within such Person's professional or
expert competence shall be conclusively presumed to have been done or omitted
in good faith and in accordance with such opinion.
C. Action Through Agents. The General Partner shall
have the right, in respect of any of its powers or obligations hereunder, to
act through any of its duly authorized officers and a duly appointed attorney
or attorneys-in-fact. Each such attorney shall, to the extent provided by the
General Partner in the power of attorney, have full power and authority to do
and perform all and every act and duty which is permitted or required to be
done by the General Partner hereunder.
D. Actions to Maintain REIT Status or Avoid Taxation of
the General Partner Entity. Notwithstanding any other provisions of this
Agreement or the Act, any action of the General Partner on behalf of the
Partnership or any decision of the General Partner to refrain from acting on
behalf of the Partnership undertaken in the good faith belief that such action
or omission is necessary or advisable in order (i) to protect the ability of
the General Partner Entity to continue to qualify as
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a REIT or (ii) to allow the General Partner Entity to avoid incurring any
liability for taxes under Section 857 or 4981 of the Code, is expressly
authorized under this Agreement and is deemed approved by all of the Limited
Partners.
SECTION 7.10 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 Partnership in its books and records,
irrespective of the name in which legal title to such Partnership assets is
held.
SECTION 7.11 RELIANCE BY THIRD PARTIES
Notwithstanding anything to the contrary in this Agreement, any Person
dealing with the Partnership shall be entitled to assume that the General
Partner has full power and authority, without consent or approval of any other
Partner or Person, to encumber, sell or otherwise use in any manner any and all
assets of the Partnership, to enter into any contracts on behalf of the
Partnership and to take any and all actions on behalf of the Partnership, and
such Person shall be entitled to deal with the General Partner as if the
General Partner were the Partnership's sole party in interest, both legally and
beneficially. Each Limited Partner hereby waives any and all defenses or other
remedies which may be available against such Person to contest, negate or
disaffirm any action of the General Partner in connection with any such
dealing. In no event shall any Person dealing with the General Partner or its
representatives be obligated to ascertain that the terms of this Agreement have
been complied with or to inquire into the necessity or expedience of any act or
action of the General Partner or its representatives. Each and every
certificate, document or other instrument executed on behalf of the Partnership
by the General Partner or its representatives shall be conclusive evidence in
favor of any and every Person relying thereon or claiming thereunder that (i)
at the time of the execution and delivery of such certificate, document or
instrument, this Agreement was in full force and effect, (ii) the Person
executing and delivering such certificate, document or instrument was duly
authorized and empowered to do so for and on behalf of the Partnership, and
(iii) such certificate, document or instrument was duly executed and delivered
in accordance with the terms and provisions of this Agreement and is binding
upon the Partnership.
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ARTICLE VIII
RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS
SECTION 8.1 LIMITATION OF LIABILITY
The Limited Partners shall have no liability under this Agreement
except as expressly provided in this Agreement, including Section 10.5 hereof,
or under the Act.
SECTION 8.2 MANAGEMENT OF BUSINESS
No Limited Partner or Assignee (other than the General Partner, any of
its Affiliates or any officer, director, employee, partner, agent or trustee of
the General Partner, the Partnership or any of their Affiliates, in their
capacity as such) shall take part in the operation, management or control
(within the meaning of the Act) of the Partnership's business, transact any
business in the Partnership's name or have the power to sign documents for or
otherwise bind the Partnership. The transaction of any such business by the
General Partner, any of its Affiliates or any officer, director, employee,
partner, agent or trustee of the General Partner, the Partnership or any of
their Affiliates, in their capacity as such, shall not affect, impair or
eliminate the limitations on the liability of the Limited Partners or Assignees
under this Agreement.
SECTION 8.3 OUTSIDE ACTIVITIES OF LIMITED PARTNERS
Subject to any agreements entered into pursuant to Section 7.6.D
hereof and to any other agreements entered into by a Limited Partner or its
Affiliates with the Partnership or a Subsidiary, any Limited Partner and any
officer, director, employee, agent, trustee, Affiliate or shareholder of any
Limited Partner shall be entitled to and may have business interests and engage
in business activities in addition to those relating to the Partnership,
including business interests and activities in direct or indirect competition
with the Partnership. Neither the Partnership nor any Partners shall have any
rights by virtue of this Agreement in any business ventures of any Limited
Partner or Assignee. None of the Limited Partners nor any other Person shall
have any rights by virtue of this Agreement or the partnership relationship
established hereby in any business ventures of any other Person, and such
Person shall have no obligation pursuant to this Agreement to offer any
interest in any such business ventures to the Partnership, any Limited Partner
or any such other Person, even if such opportunity is of a character which, if
presented to the Partnership, any Limited Partner or such other Person, could
be taken by such Person.
SECTION 8.4 RETURN OF CAPITAL
Except pursuant to the right of redemption set forth in Section 8.6
below, no Limited Partner shall be entitled to the withdrawal or return of its
Capital Contribution, except to the extent of distributions made pursuant to
this Agreement or upon termination of the Partnership as provided herein.
Except to the extent provided by Exhibit C hereto or as permitted by Sections
4.2.B, 5.1.B(i), 6.1.A(ii) and 6.1.B(i) hereof or otherwise expressly provided
in this Agreement, no Limited Partner or Assignee shall have priority over any
other Limited Partner or Assignee either as to the return of Capital
Contributions or as to profits, losses, distributions or credits.
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SECTION 8.5 RIGHTS OF LIMITED PARTNERS RELATING TO THE
PARTNERSHIP
A. General. In addition to other rights provided by
this Agreement or by the Act, and except as limited by Section 8.5.D below,
each Limited Partner shall have the right, for a purpose reasonably related to
such Limited Partner's Partnership Interest, upon written demand with a
statement of the purpose of such demand and at such Limited Partner's own
expense:
(i) to obtain a copy of the most recent annual and
quarterly reports filed with the Securities and Exchange
Commission by the General Partner Entity pursuant to the
Exchange Act;
(ii) to obtain a copy of the Partnership's federal,
state and local income tax returns for each Partnership Year;
(iii) to obtain a current list of the name and last
known business, residence or mailing address of each Partner;
(iv) to obtain a copy of this Agreement and the
Certificate and all amendments thereto, together with
executed copies of all powers of attorney pursuant to which
this Agreement, the Certificate and all amendments thereto
have been executed; and
(v) to obtain true and full information regarding
the amount of cash and a description and statement of any
other property or services contributed by each Partner to the
Partnership and which each Partner has agreed to contribute
to the Partnership in the future, and the date on which each
became a Partner.
B. Notice of Conversion Factor. The Partnership shall
notify each Limited Partner upon request of the then current Conversion Factor
and any changes that have been made thereto.
C. Notice of Extraordinary Transaction of General
Partner Entity. Neither the General Partner nor the General Partner Entity
shall make any extraordinary distributions of cash or property to its
shareholders, or effect a merger (including, without limitation, a triangular
merger), a sale of all or substantially all of its assets, or any other similar
extraordinary transaction without notifying the Limited Partners of its
intention to make such distribution or effect such merger, sale, or other
extraordinary transaction at least ten (10) Business Days prior to the record
date to determine shareholders eligible to receive such distribution or to vote
upon the approval of such merger, sale, or other extraordinary transaction (or,
if no such record date is applicable, at least ten (10) business days before
consummation of such merger, sale, or other extraordinary transaction). In
addition, pursuant to Section 5.1.C, the General Partner must provide notice to
the Limited Partners prior to making a distribution per Share to the
shareholders of the General Partner Entity that is not equal to the
distribution per Unit to be made to the Limited Partners for the same calendar
quarter. This provision for such notice shall not be deemed either (i) to
permit any transaction that otherwise is prohibited by this Agreement or
requires a Consent of the Partners or (ii) to require a Consent of the Limited
Partners to a transaction that does not otherwise require Consent under this
Agreement. Each Limited Partner agrees, as a condition to the receipt of the
notice pursuant hereto, to keep confidential the information set forth therein
until such time as the General Partner Entity has made
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public disclosure thereof and to use such information during such period of
confidentiality solely for purposes of determining whether or not to exercise
the Redemption Right; provided that a Limited Partner may disclose such
information to its attorney, accountant and/or financial advisor for purposes
of obtaining advice with respect to such exercise so long as such attorney,
accountant and/or financial advisor agrees to receive and hold such information
subject to this confidentiality requirement.
D. Confidentiality. Notwithstanding any other
provision of this Section 8.5, the General Partner may keep confidential from
the Limited Partners, for such period of time as the General Partner determines
in its sole and absolute discretion to be reasonable, any information that (i)
the General Partner reasonably believes to be in the nature of trade secrets or
other information the disclosure of which the General Partner in good faith
believes is not in the best interests of the Partnership or could damage the
Partnership or its business or (ii) the Partnership is required by law or by
agreements with unaffiliated third parties to keep confidential.
SECTION 8.6 REDEMPTION RIGHT
A. General.
(i) Subject to Section 8.6.C below, a Limited
Partner, on or after the date one (1) year after the issuance
of a Partnership Unit to a Limited Partner pursuant to
Article IV hereof (or pursuant to a prior version of this
Agreement), or such other period as may be specified by the
General Partner with respect to Partnership Units issued
after the Effective Date, the holder of a Partnership Unit if
other than the General Partner, CPT LP, the General Partner
Entity or any Subsidiary of the foregoing) shall have the
right (the "Redemption Right") to require the Partnership to
redeem on a Specified Redemption Date all or a portion of the
Partnership Units held by such Limited Partner at a
redemption price equal to and in the form of the Cash Amount
to be paid by the Partnership. The Redemption Right shall be
exercised pursuant to a Notice of Redemption delivered to the
Partnership (with a copy to the General Partner) by the
Limited Partner who is exercising the Redemption Right (the
"Redeeming Partner"). A Limited Partner may not exercise the
Redemption Right for less than one thousand (1,000)
Partnership Units or, if such Redeeming Partner holds less
than one thousand (1,000) Partnership Units, for less than
all of the Partnership Units held by such Redeeming Partner.
(ii) The Redeeming Partner shall have no right with
respect to any Partnership Units so redeemed to receive any
distributions paid after the Specified Redemption Date.
(iii) The Assignee of any Limited Partner may
exercise the rights of such Limited Partner pursuant to this
Section 8.6, and such Limited Partner shall be deemed to have
assigned such rights to such Assignee and shall be bound by
the exercise of such rights by such Limited Partner's
Assignee. In connection with any exercise of the such rights
by such Assignee on behalf of such Limited Partner, the Cash
Amount shall be paid by the Partnership directly to such
Assignee and not to such Limited Partner.
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(iv) In the event that the General Partner provides
notice to the Limited Partners, pursuant to Section 8.5.C or
Section 5.1.C, with respect to Partnership Units outstanding
on the Effective Date, the Redemption Right shall be
exercisable, without regard to whether the Partnership Units
have been outstanding for one year, during the period
commencing on the date on which the General Partner provides
such notice and ending on the record date to determine
shareholders eligible to receive such distribution or to vote
upon the approval of such merger, sale, or other
extraordinary transaction (or, if no such record date is
applicable, at least ten (10) business days before the
consummation of such merger, sale, or other extraordinary
transaction). In the event that this subparagraph (iv)
applies, the Specified Redemption Date is the date on which
the Partnership and the General Partner receive notice of
exercise of the Redemption Right, rather than ten (10)
Business Days after receipt of the Notice of Redemption.
B. General Partner Assumption of Right.
(i) If a Limited Partner has delivered a Notice of
Redemption, the General Partner Entity may, in its sole and
absolute discretion (subject to any limitations on ownership
and transfer of Shares set forth in the Articles of
Incorporation), elect to assume directly and satisfy a
Redemption Right by paying to the Redeeming Partner either
the Cash Amount or the Shares Amount, as the General Partner
Entity determines in its sole and absolute discretion
(provided that payment of the Redemption Amount in the form
of Shares shall be in Shares registered under Section 12 of
the Exchange Act and listed for trading on the exchange or
national market on which the Shares are Publicly Traded, and
provided further that in the event that the Shares are not
Publicly Traded at the time a Redeeming Partner exercises its
Redemption Right, the Redemption Amount shall be paid only in
the form of the Cash Amount unless the Redeeming Partner and
the General Partner, in their sole and absolute discretion,
consent to payment of the Redemption Amount in the form of
the Shares Amount), on the Specified Redemption Date,
whereupon the General Partner Entity shall acquire the
Partnership Units offered for redemption by the Redeeming
Partner and shall be treated for all purposes of this
Agreement as the owner of such Partnership Units. Unless the
General Partner Entity, in its sole and absolute discretion,
shall exercise its right to assume directly and satisfy the
Redemption Right, neither the General Partner nor the General
Partner Entity shall have any obligation to the Redeeming
Partner or to the Partnership with respect to the Redeeming
Partner's exercise of the Redemption Right. In the event the
General Partner Entity shall exercise its right to satisfy
the Redemption Right in the manner described in the first
sentence of this Section 8.6.B and shall fully perform its
obligations in connection therewith, the Partnership shall
have no right or obligation to pay any amount to the
Redeeming Partner with respect to such Redeeming Partner's
exercise of the Redemption Right, and each of the Redeeming
Partner, the Partnership and the General Partner shall, for
federal income tax purposes, treat the transaction between
the General Partner and the Redeeming Partner as a sale of
the Redeeming Partner's Partnership Units to the General
Partner.
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(ii) In the event that the General Partner Entity
determines to pay the Redeeming Partner the Redemption Amount
in the form of Shares, the total number of Shares to be paid
to the Redeeming Partner in exchange for the Redeeming
Partner's Partnership Units shall be the applicable Shares
Amount. In the event this amount is not a whole number of
Shares, the Redeeming Partners shall be paid (i) that number
of Shares which equals the nearest whole number less than
such amount plus (ii) an amount of cash which the General
Partner determines, in its reasonable discretion, to
represent the fair value of the remaining fractional Share
which would otherwise be payable to the Redeeming Partner.
(iii) Each Redeeming Partner agrees to execute such
documents as the General Partner may reasonably require in
connection with the issuance of Shares upon exercise of the
Redemption Right.
C. Exceptions to Exercise of Redemption Right.
Notwithstanding the provisions of Sections 8.6.A and 8.6.B above, a Partner
shall not be entitled to exercise the Redemption Right pursuant to Section
8.6.A above if (but only so long as) the delivery of Shares to such Partner on
the Specified Redemption Date (i) would be prohibited under the Articles of
Incorporation or (ii) as long as the Shares are Publicly Traded, would be
prohibited under applicable federal or state securities laws or regulations (in
each case regardless of whether the General Partner would in fact assume and
satisfy the Redemption Right).
D. No Liens on Partnership Units Delivered for
Redemption. Each Limited Partner covenants and agrees with the General Partner
that all Partnership Units delivered for redemption shall be delivered to the
Partnership or the General Partner, as the case may be, free and clear of all
liens, and, notwithstanding anything contained herein to the contrary, neither
the General Partner nor the Partnership shall be under any obligation to
acquire Partnership Units which are or may be subject to any liens. Each
Limited Partner further agrees that, in the event any state or local property
transfer tax is payable as a result of the transfer of its Partnership Units to
the Partnership or the General Partner, such Limited Partner shall assume and
pay such transfer tax.
E. Additional Partnership Interests. In the event that
the Partnership issues Partnership Interests to any Additional Limited Partner
pursuant to Article IV hereof, the General Partner shall make such amendments
to this Section 8.6 as it determines are necessary to reflect the issuance of
such Partnership Interests (including setting forth any restrictions on the
exercise of the Redemption Right with respect to such Partnership Interests).
ARTICLE IX
BOOKS, RECORDS, ACCOUNTING AND REPORTS
SECTION 9.1 RECORDS AND ACCOUNTING
The General Partner shall keep or cause to be kept at the principal
office of the Partnership appropriate books and records with respect to the
Partnership's business, including, without limitation, all books and records
necessary to provide to the Limited Partners any information, lists and copies
of documents required to be provided pursuant to Section 9.3 below. Any records
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maintained by or on behalf of the Partnership in the regular course of its
business may be kept on, or be in the form of, punch cards, magnetic tape,
photographs, micrographics or any other information storage device, provided
that the records so maintained are convertible into clearly legible written
form within a reasonable period of time. The books of the Partnership shall be
maintained on an accrual basis in accordance with generally accepted accounting
principles for financial reporting purposes and in accordance with tax
accounting principles for tax reporting purposes.
SECTION 9.2 FISCAL YEAR
The fiscal year of the Partnership shall be the calendar year.
SECTION 9.3 REPORTS
A. Annual Reports. As soon as practicable, but in no
event later than the date on which the General Partner Entity mails its annual
report to its stockholders, the General Partner shall cause to be mailed to
each Limited Partner an annual report, as of the close of the most recently
ended Partnership Year, containing financial statements of the Partnership, or
of the General Partner Entity if such statements are prepared on a consolidated
basis with the Partnership, for such Partnership Year, presented in accordance
with generally accepted accounting principles, such statements to be audited by
a nationally recognized firm of independent public accountants selected by the
General Partner.
B. Quarterly Reports. If and to the extent that the
General Partner Entity mails quarterly reports to its stockholders, as soon as
practicable, but in no event later than the date on which such reports are
mailed, the General Partner shall cause to be mailed to each Limited Partner a
report containing unaudited financial statements, as of the last day of such
calendar quarter, of the Partnership, or of the General Partner Entity if such
statements are prepared solely on a consolidated basis with the Partnership,
and such other information as may be required by applicable law or regulation,
or as the General Partner determines to be appropriate.
ARTICLE X
TAX MATTERS
SECTION 10.1 PREPARATION OF TAX RETURNS
The General Partner shall arrange for the preparation and timely
filing of all returns of Partnership income, gains, deductions, losses and
other items required of the Partnership for federal and state income tax
purposes and shall use all reasonable efforts to furnish, within ninety (90)
days of the close of each taxable year, the tax information reasonably required
by Limited Partners for federal and state income tax reporting purposes.
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SECTION 10.2 TAX ELECTIONS
Except as otherwise provided herein, the General Partner shall, in its
sole and absolute discretion, determine whether to make any available election
pursuant to the Code. The General Partner shall have the right to seek to
revoke any such election (including, without limitation, the election under
Section 754 of the Code previously made) upon the General Partner's
determination in its sole and absolute discretion that such revocation is in
the best interests of the Partners.
SECTION 10.3 TAX MATTERS PARTNER
A. General. The General Partner shall be the "tax
matters partner" of the Partnership for federal income tax purposes. Pursuant
to Section 6223(c)(3) of the Code, upon receipt of notice from the IRS of the
beginning of an administrative proceeding with respect to the Partnership, the
tax matters partner shall furnish the IRS with the name, address, taxpayer
identification number and profit interest of each of the Limited Partners and
any Assignees; provided, however, that such information is provided to the
Partnership by the Limited Partners.
▇. ▇▇▇▇▇▇. The tax matters partner is authorized, but
not required:
(1) to enter into any settlement with the IRS
with respect to any administrative or judicial proceedings for the adjustment
of Partnership items required to be taken into account by a Partner for income
tax purposes (such administrative proceedings being referred to as a "tax
audit" and such judicial proceedings being referred to as "judicial review"),
and in the settlement agreement the tax matters partner may expressly state
that such agreement shall bind all Partners, except that such settlement
agreement shall not bind any Partner (i) who (within the time prescribed
pursuant to the Code and Regulations) files a statement with the IRS providing
that the tax matters partner shall not have the authority to enter into a
settlement agreement on behalf of such Partner or (ii) who is a "notice
partner" (as defined in Section 6231(a)(8) of the Code) or a member of a
"notice group" (as defined in Section 6223(b)(2) of the Code);
(2) in the event that a notice of a final
administrative adjustment at the Partnership level of any item required to be
taken into account by a Partner for tax purposes (a "final adjustment") is
mailed to the tax matters partner, to seek judicial review of such final
adjustment, including the filing of a petition for readjustment with the Tax
Court or the filing of a complaint for refund with the United States Claims
Court or the District Court of the United States for the district in which the
Partnership's principal place of business is located;
(3) to intervene in any action brought by any
other Partner for judicial review of a final adjustment;
(4) to file a request for an administrative
adjustment with the IRS at any time and, if any part of such request is not
allowed by the IRS, to file an appropriate pleading (petition or complaint) for
judicial review with respect to such request;
(5) to enter into an agreement with the IRS to
extend the period for assessing any tax which is attributable to any item
required to be taken into account by a Partner for tax purposes, or an item
affected by such item; and
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(6) to take any other action on behalf of the
Partners of the Partnership in connection with any tax audit or judicial review
proceeding to the extent permitted by applicable law or regulations.
The taking of any action and the incurring of any expense by the tax
matters partner in connection with any such proceeding, except to the extent
required by law, is a matter in the sole and absolute discretion of the tax
matters partner and the provisions relating to indemnification of the General
Partner set forth in Section 7.7 hereof shall be fully applicable to the tax
matters partner in its capacity as such.
C. Reimbursement. The tax matters partner shall receive
no compensation for its services. All third party costs and expenses incurred
by the tax matters partner in performing its duties as such (including legal
and accounting fees and expenses) shall be borne by the Partnership. Nothing
herein shall be construed to restrict the Partnership from engaging an
accounting firm or a law firm to assist the tax matters partner in discharging
its duties hereunder, as long as the compensation paid by the Partnership for
such services is reasonable.
SECTION 10.4 ORGANIZATIONAL EXPENSES
The Partnership shall elect to deduct expenses, if any, incurred by it
in organizing the Partnership ratably over a sixty (60) month period as
provided in Section 709 of the Code.
SECTION 10.5 WITHHOLDING
Each Limited Partner hereby authorizes the Partnership to withhold
from or pay on behalf of or with respect to such Limited Partner any amount of
federal, state, local, or foreign taxes that the General Partner determines
that the Partnership is required to withhold or pay with respect to any amount
distributable or allocable to such Limited Partner pursuant to this Agreement,
including, without limitation, any taxes required to be withheld or paid by the
Partnership pursuant to Section 1441, 1442, 1445, or 1446 of the Code. Any
amount paid on behalf of or with respect to a Limited Partner shall constitute
a recourse loan by the Partnership to such Limited Partner, which loan shall be
repaid by such Limited Partner within fifteen (15) days after notice from the
General Partner that such payment must be made unless (i) the Partnership
withholds such payment from a distribution which would otherwise be made to the
Limited Partner or (ii) the General Partner determines, in its sole and
absolute discretion, that such payment may be satisfied out of the available
funds of the Partnership which would, but for such payment, be distributed to
the Limited Partner. Any amounts withheld pursuant to the foregoing clauses (i)
or (ii) shall be treated as having been distributed to such Limited Partner.
Each Limited Partner hereby unconditionally and irrevocably grants to the
Partnership a security interest in such Limited Partner's Partnership Interest
to secure such Limited Partner's obligation to pay to the Partnership any
amounts required to be paid pursuant to this Section 10.5. In the event that a
Limited Partner fails to pay any amounts owed to the Partnership pursuant to
this Section 10.5 when due, the General Partner may, in its sole and absolute
discretion, elect to make the payment to the Partnership on behalf of such
defaulting Limited Partner, and in such event shall be deemed to have loaned
such amount to such defaulting Limited Partner and shall succeed to all rights
and remedies of the Partnership as against such defaulting Limited Partner. In
such event the General Partner shall have the right to receive distributions
that would otherwise be distributable to such defaulting Limited Partner until
such time as such loan, together with all interest
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thereon, has been paid in full, and any such distributions so received by the
General Partner shall be treated as having been distributed to the defaulting
Limited Partner and immediately paid by the defaulting Limited Partner to the
General Partner in repayment of such loan. Any amounts payable by a Limited
Partner hereunder shall bear interest at the lesser of (A) the base rate on
corporate loans at large United States money center commercial banks, as
published from time to time in the Wall Street Journal, plus four (4)
percentage points or (B) the maximum lawful rate of interest on such
obligation, such interest to accrue from the date such amount is due (i.e.,
fifteen (15) days after demand) until such amount is paid in full. Each Limited
Partner shall take such actions as the Partnership or the General Partner shall
request in order to perfect or enforce the security interest created hereunder.
ARTICLE XI
TRANSFERS AND WITHDRAWALS
SECTION 11.1 TRANSFER
A. Definition. The term "transfer," when used in this
Article XI with respect to a Partnership Interest or a Partnership Unit, shall
be deemed to refer to a transaction by which the General Partner purports to
assign all or any part of its General Partner Interest to another Person or by
which a Limited Partner purports to assign all or any part of its Limited
Partner Interest to another Person, and includes a sale, assignment, gift,
pledge, encumbrance, hypothecation, mortgage, exchange or any other disposition
by law or otherwise. The term "transfer" when used in this Article XI does not
include (i) any redemption or repurchase of Partnership Units by the
Partnership from a Partner (including the General Partner) otherwise permitted
under this Agreement or (ii) any acquisition of Partnership Units from a
Limited Partner (other than CPT LP) by the General Partner Entity or the
General Partner pursuant to Section 8.6 hereof or otherwise.
B. General. No Partnership Interest shall be
transferred, in whole or in part, except in accordance with the terms and
conditions set forth in this Article XI. Any transfer or purported transfer of
a Partnership Interest not made in accordance with this Article XI shall be
null and void.
SECTION 11.2 TRANSFERS OF PARTNERSHIP INTERESTS OF GENERAL
PARTNER
A. Neither the General Partner, CPT LP, nor the General
Partner Entity may transfer any of its Partnership Interest (except for a
transfer of Partnership Units by CPT LP to the General Partner pursuant to
Section 4.3 or in connection with a transaction described in Section 11.2.B
below or as otherwise expressly permitted under this Agreement), nor shall the
General Partner withdraw as General Partner except in connection with a
transaction described in Section 11.2.B below.
B. Neither the General Partner, CPT LP, nor the General
Partner Entity shall engage in any merger (including a triangular merger),
consolidation or other combination with or into another person, sale of all or
substantially all of its assets or any reclassification, recapitalization or
change of outstanding Shares (other than a change in par value, or from par
value to no par value,
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or as a result of a subdivision or combination as described in the definition
of "Conversion Factor") ("Termination Transaction"), unless either:
(i) the Termination Transaction has been
approved by the Consent of the Outside Limited Partners; or
(ii) in connection with such Termination
Transaction, all Limited Partners either will receive, or
will have the right to elect to receive, for each Partnership
Unit an amount of cash, securities, or other property equal
to the product of the Conversion Factor and the greatest
amount of cash, securities or other property paid to a holder
of Shares corresponding to such Partnership Unit in
consideration of one such Share at any time during the period
from and after the date on which the Termination Transaction
is consummated (as determined by the General Partner, in its
reasonable judgment); provided that if, in connection with
the Termination Transaction, a purchase, tender or exchange
offer shall have been made to and accepted by the holders of
more than fifty percent (50%) of the outstanding Shares, each
holder of Partnership Units must receive, or must have the
right to elect to receive, the greatest amount of cash,
securities, or other property which such holder would have
received had it exercised the Redemption Right and received
Shares in exchange for its Partnership Units immediately
prior to the expiration of such purchase, tender or exchange
offer and had thereupon accepted such purchase, tender or
exchange offer.
SECTION 11.3 LIMITED PARTNERS' RIGHTS TO TRANSFER
A. General. Except to the extent expressly permitted in
Sections 11.3.B and 11.3.C or in connection with the exercise of a Redemption
Right pursuant to Section 8.6, a Limited Partner may not transfer all or any
portion of its Partnership Interest, or any of such Limited Partner's economic
rights as a Limited Partner, without the prior written consent of the General
Partner, which consent may be withheld by the General Partner, in its sole and
absolute discretion, for any reason or for no reason. Any transfer otherwise
permitted under Section 11.3.B and 11.3.C shall be subject to the conditions
set forth in Sections 11.3.D, 11.3.E, and 11.3.F, and all permitted transfers
shall be subject to Section 11.4.
B. Incapacitated Limited Partners. If a Limited Partner
is subject to Incapacity, the executor, administrator, trustee, committee,
guardian, conservator or receiver of such Limited Partner's estate shall have
all the rights of a Limited Partner, but not more rights than those enjoyed by
other Limited Partners for the purpose of settling or managing the estate and
such power as the Incapacitated Limited Partner possessed to transfer all or
any part of its interest in the Partnership. The Incapacity of a Limited
Partner, in and of itself, shall not dissolve or terminate the Partnership.
C. Permitted Transfers. A Limited Partner (other than
CPT LP) may transfer, with or without the consent of the General Partner, all
or a portion of its Partnership Units (i) in the case of a Limited Partner who
is an individual, to a member of his Immediate Family, any trust formed solely
for the benefit of himself and/or members of his Immediate Family, or any
partnership, limited liability company, joint venture, corporation or other
business entity comprised only of himself and/or members of his Immediate
Family and entities the ownership interests in which are owned by or for the
benefit of himself and/or members of his Immediate Family, (ii) in the case of
a Limited Partner
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which is a trust, to the beneficiaries of such trust, (iii) in the case of a
Limited Partner which is a partnership, limited liability company, joint
venture, corporation or other business entity to which Partnership Units were
transferred pursuant to (i) above, to its partners, owners, or stockholders, as
the case may be, who are members of the Immediate Family of or are actually the
Person(s) who transferred Partnership Units to it pursuant to (i) above, (iv)
in the case of a Limited Partner which owned Partnership Units as of the
Effective Date and which is a partnership, limited liability company, joint
venture, corporation or other business entity, to its partners, owners, or
stockholders, as the case may be, or the Persons owning the beneficial
interests in any of its partners, owners or stockholders which are entities, in
each case, as of the Effective Date, (v) pursuant to a gift or other transfer
without consideration, (vi) pursuant to applicable laws of descent or
distribution, (vii) to another Limited Partner, and (viii) pursuant to a grant
of security interest or other encumbrance affected in a bona fide transaction
or as a result of the exercise of remedies related thereto, subject to the
provisions of Section 11.3.F hereof. A trust or other entity will be considered
formed "solely for the benefit" of a Partner's Immediate Family even though
some other Person has a remainder interest under or with respect to such trust
or other entity. A Limited Partner that makes a transfer under this Section
11.3.C, shall provide written notice to the General Partner of such transfer.
D. No Transfers Violating Securities Laws. The General
Partner may prohibit any transfer of Partnership Units by a Limited Partner if,
in the opinion of legal counsel to the Partnership, such transfer would require
filing of a registration statement under the Securities Act or would otherwise
violate any federal, or state securities laws or regulations applicable to the
Partnership or the Partnership Unit.
E. No Transfers Affecting Tax Status of Partnership. No
transfer of Partnership Units by a Limited Partner may be made to any Person if
(i) in the opinion of legal counsel for the Partnership, it would result in the
Partnership being treated as an association taxable as a corporation for
federal income tax purposes or would result in a termination of the Partnership
for federal income tax purposes, (ii) in the opinion of legal counsel for the
Partnership, it would adversely affect the ability of the General Partner
Entity to continue to qualify as a REIT or would subject the General Partner
Entity to any additional taxes under Section 857 or Section 4981 of the Code or
(iii) such transfer is effectuated through an "established securities market"
or a "secondary market (or the substantial equivalent thereof)" within the
meaning of Section 7704 of the Code.
F. No Transfers to Holders of Nonrecourse Liabilities.
No pledge or transfer of any Partnership Units may be made to a lender to the
Partnership or any Person who is related (within the meaning of Section
1.752-4(b) of the Regulations) to any lender to the Partnership whose loan
constitutes a Nonrecourse Liability without the consent of the General Partner,
in its sole and absolute discretion; provided that as a condition to such
consent the lender will be required to enter into an arrangement with the
Partnership and the General Partner to exchange or redeem for the Redemption
Amount any Partnership Units in which a security interest is held
simultaneously with the time at which such lender would be deemed to be a
partner in the Partnership for purposes of allocating liabilities to such
lender under Section 752 of the Code.
SECTION 11.4 SUBSTITUTED LIMITED PARTNERS
A. Consent of General Partner. No Limited Partner
shall have the right to substitute a transferee as a Limited Partner in its
place (whether or not the transfer of the Limited
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Partner's Partnership Interest is permitted under Section 11.3). The General
Partner shall, however, have the right to consent to the admission of a
transferee of the interest of a Limited Partner pursuant to this Section 11.4
as a Substituted Limited Partner, which consent may be given or withheld by the
General Partner in its sole and absolute discretion and for any reason or no
reason. The General Partner's failure or refusal to permit a transferee of any
such interests to become a Substituted Limited Partner shall not give rise to
any cause of action against the Partnership or any Partner.
B. Rights of Substituted Limited Partner. A transferee
who has been admitted as a Substituted Limited Partner in accordance with this
Article XI shall have all the rights and powers and be subject to all the
restrictions and liabilities of a Limited Partner under this Agreement. The
admission of any transferee as a Substituted Limited Partner shall be
conditioned upon the transferee executing and delivering to the Partnership an
acceptance of all the terms and conditions of this Agreement (including,
without limitation, the provisions of Section 2.4 and such other documents or
instruments as may be required to effect the admission).
C. Amendment and Restatement of Exhibit A. Upon the
admission of a Substituted Limited Partner, the General Partner shall amend and
restate Exhibit A hereto to reflect the name, address, Capital Account, number
of Partnership Units, and Percentage Interest of such Substituted Limited
Partner and to eliminate or adjust, if necessary, the name, address, Capital
Account and Percentage Interest of the predecessor of such Substituted Limited
Partner (and any other Partner, as necessary.)
SECTION 11.5 ASSIGNEES
If the General Partner, in its sole and absolute discretion, does not
consent to the admission of any permitted transferee under Section 11.3 above
as a Substituted Limited Partner, as described in Section 11.4 above, such
transferee shall be considered an Assignee for purposes of this Agreement. An
Assignee shall be entitled to all the rights of an assignee of a limited
partner interest under the Act, including the right to receive distributions
from the Partnership and the share of Net Income, Net Losses, gain, loss and
Recapture Income attributable to the Partnership Units assigned to such
transferee, and shall have the rights granted to the Limited Partners under
Section 8.6, but shall not be deemed to be a holder of Partnership Units for
any other purpose under this Agreement, and shall not be entitled to vote such
Partnership Units in any matter presented to the Limited Partners for a vote
(such Partnership Units being deemed to have been voted in the same manner as
CPT LP voted, or if CPT LP is not eligible to vote, then as recommended by the
General Partner). In the event any such transferee desires to make a further
assignment of any such Partnership Units, such transferee shall be subject to
all the provisions of this Article XI to the same extent and in the same manner
as any Limited Partner desiring to make an assignment of Partnership Units. The
General Partner shall have no liability under any circumstances with respect to
any Assignee as to which it does not have notice.
SECTION 11.6 GENERAL PROVISIONS
A. Withdrawal of Limited Partner. No Limited Partner
may withdraw from the Partnership other than as a result of a permitted
transfer of all of such Limited Partner's Partnership Units in accordance with
this Article XI or pursuant to redemption of all of its Partnership Units under
Section 8.6 hereof.
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B. Termination of Status as Limited Partner. Any
Limited Partner who shall transfer all of its Partnership Units in a transfer
permitted pursuant to this Article XI or pursuant to redemption of all of its
Partnership Units under Section 8.6 hereof shall cease to be a Limited Partner.
C. Timing of Transfers. Transfers pursuant to this
Article XI may only be made on the first day of a fiscal quarter of the
Partnership, unless the General Partner otherwise agrees.
D. Allocations. If any Partnership Interest is
transferred during any quarterly segment of the Partnership's fiscal year in
compliance with the provisions of this Article XI or redeemed or transferred
pursuant to Section 8.6 hereof, Net Income, Net Losses, each item thereof and
all other items attributable to such interest for such fiscal year shall be
divided and allocated between the transferor Partner and the transferee Partner
by taking into account their varying interests during the fiscal year in
accordance with Section 706(d) of the Code, using the interim closing of the
books method (unless the General Partner, in its sole and absolute discretion,
elects to adopt a daily, weekly, or a monthly proration method, in which event
Net Income, Net Losses, each item thereof and all other items attributable to
such interest for such fiscal year shall be prorated based upon the applicable
method selected by the General Partner). Solely for purposes of making such
allocations, each of such items for the calendar month in which the transfer or
redemption occurs shall be allocated to the Person who is a Partner as of
midnight on the last day of said month. All distributions of Available Cash
attributable to any Partnership Unit with respect to which the Partnership
Record Date is before the date of such transfer, assignment or redemption shall
be made to the transferor Partner or the Redeeming Partner, as the case may be,
and, in the case of a transfer or assignment other than a redemption, all
distributions of Available Cash thereafter attributable to such Partnership
Unit shall be made to the transferee Partner.
ARTICLE XII
ADMISSION OF PARTNERS
SECTION 12.1 ADMISSION OF SUCCESSOR GENERAL PARTNER
A successor to all of the General Partner's General Partner Interest
pursuant to Section 11.2 hereof who is proposed to be admitted as a successor
General Partner shall be admitted to the Partnership as the General Partner,
effective upon such transfer. Any such transferee shall carry on the business
of the Partnership without dissolution. In each case, the admission shall be
subject to the successor General Partner's executing and delivering to the
Partnership an acceptance of all of the terms and conditions of this Agreement
and such other documents or instruments as may be required by Limited Partners
holding a majority of the Percentage Interests held by the Limited Partners to
effect the admission.
SECTION 12.2 ADMISSION OF ADDITIONAL LIMITED PARTNERS
A. General. No Person shall be admitted as an
Additional Limited Partner without the consent of the General Partner, which
consent shall be given or withheld in the General Partner's sole and absolute
discretion. A Person who makes a Capital Contribution to the Partnership in
accordance with this Agreement, including, without limitation, pursuant to
Section 4.1.C hereof, or
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who exercises an option to receive Partnership Units shall be admitted to the
Partnership as an Additional Limited Partner only with the consent of the
General Partner, which consent may be given its sole and absolute discretion,
and only upon furnishing to the General Partner (i) evidence of acceptance in
form satisfactory to the General Partner of all of the terms and conditions of
this Agreement, including, without limitation, the power of attorney granted in
Section 15.11 hereof and (ii) such other documents or instruments as may be
required in the discretion of the General Partner in order to effect such
Person's admission as an Additional Limited Partner. The admission of any
Person as an Additional Limited Partner shall become effective on the date upon
which the name of such Person is recorded on the books and records of the
Partnership, following the consent of the General Partner to such admission.
B. Allocations to Additional Limited Partners. If any
Additional Limited Partner is admitted to the Partnership on any day other than
the first day of a Partnership Year, then Net Income, Net Losses, each item
thereof and all other items allocable among Partners and Assignees for such
Partnership Year shall be allocated among such Additional Limited Partner and
all other Partners and Assignees by taking into account their varying interests
during the Partnership Year in accordance with Section 706(d) of the Code,
using the interim closing of the books method (unless the General Partner, in
its sole and absolute discretion, elects to adopt a daily, weekly or monthly
proration method, in which event Net Income, Net Losses, and each item thereof
would be prorated based upon the applicable period selected by the General
Partner). Solely for purposes of making such allocations, each of such items
for the calendar month in which an admission of any Additional Limited Partner
occurs shall be allocated among all the Partners and Assignees including such
Additional Limited Partner. All distributions of Available Cash with respect to
which the Partnership Record Date is before the date of such admission shall be
made solely to Partners and Assignees other than the Additional Limited
Partner, and all distributions of Available Cash thereafter shall be made to
all the Partners and Assignees including such Additional Limited Partner.
SECTION 12.3 AMENDMENT OF AGREEMENT AND CERTIFICATE OF LIMITED
PARTNERSHIP
For the admission to the Partnership of any Partner, the General
Partner shall take all steps necessary and appropriate under the Act to amend
the records of the Partnership (including an amendment and restatement of
Exhibit A hereto) and, if necessary, to prepare as soon as practical an
amendment of this Agreement and, if required by law, shall prepare and file an
amendment to the Certificate and may for this purpose exercise the power of
attorney granted pursuant to Section 2.4 hereof.
ARTICLE XIII
DISSOLUTION AND LIQUIDATION
SECTION 13.1 DISSOLUTION
The Partnership shall not be dissolved by the admission of Substituted
Limited Partners or Additional Limited Partners or by the admission of a
successor General Partner in accordance with the terms of this Agreement. Upon
the withdrawal of the General Partner, any successor General Partner shall
continue the business of the Partnership. The Partnership shall dissolve, and
its affairs shall be wound up, upon the first to occur of any of the following
("Liquidating Events") :
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(i) the expiration of its term as provided in
Section 2.5 hereof;
(ii) an event of withdrawal of the General Partner,
as defined in the Act (other than an event of bankruptcy), unless, within
ninety (90) days after the withdrawal a "majority in interest" (as defined
below) of the remaining Partners Consent in writing to continue the business of
the Partnership and to the appointment, effective as of the date of withdrawal,
of a substitute General Partner;
(iii) through December 31, 2043, an election to
dissolve the Partnership made by the General Partner with the Consent of
Limited Partners holding two-thirds (2/3) or more of the Partnership Units then
held by Limited Partners (including Partnership Units held by the General
Partner as a Limited Partner and Units held by CPT LP);
(iv) on or after January 1, 2044, an election to
dissolve the Partnership made by the General Partner, in its sole and absolute
discretion;
(v) entry of a decree of judicial dissolution of
the Partnership pursuant to the provisions of the Act;
(vi) the sale of all or substantially all of the
assets and properties of the Partnership for cash or for marketable securities;
or
(vii) a final and non-appealable judgment is
entered by a court of competent jurisdiction ruling that the General Partner is
bankrupt or insolvent, or a final and non-appealable order for relief is
entered by a court with appropriate jurisdiction against the General Partner,
in each case under any federal or state bankruptcy or insolvency laws as now or
hereafter in effect, unless prior to or within ninety days after of the entry
of such order or judgment a "majority in interest" (as defined below) of the
remaining Partners Consent in writing to continue the business of the
Partnership and to the appointment, effective as of a date prior to the date of
such order or judgment, of a substitute General Partner.
As used herein, a "majority in interest" shall refer to Partners (excluding the
General Partner) who hold more than fifty percent (50%) of the outstanding
Percentage Interests.
SECTION 13.2 WINDING UP
A. General. Upon the occurrence of a Liquidating Event,
the Partnership shall continue solely for the purposes of winding up its
affairs in an orderly manner, liquidating its assets, and satisfying the claims
of its creditors and Partners. No Partner shall take any action that is
inconsistent with, or not necessary to or appropriate for, the winding up of
the Partnership's business and affairs. The General Partner (or, in the event
there is no remaining General Partner, any Person elected by a majority in
interest of the Limited Partners (the "Liquidator")) shall be responsible for
overseeing the winding up and dissolution of the Partnership and shall take
full account of the Partnership's liabilities and property and the Partnership
property shall be liquidated as promptly as is consistent with obtaining the
fair value thereof, and the proceeds therefrom (which may, to the
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extent determined by the General Partner, include equity or other securities of
the General Partner or any other entity) shall be applied and distributed in
the following order:
(1) First, to the payment and discharge of all of
the Partnership's debts and liabilities to creditors other than the Partners;
(2) Second, to the payment and discharge of all of
the Partnership's debts and liabilities to the Partners; and
(3) The balance, if any, to the Partners in
accordance with their Capital Accounts, after giving effect to all
contributions, distributions, and allocations for all periods.
The General Partner shall not receive any additional compensation for any
services performed pursuant to this Article XIII.
B. Deferred Liquidation. Notwithstanding the provisions
of Section 13.2.A above which require liquidation of the assets of the
Partnership, but subject to the order of priorities set forth therein, if prior
to or upon dissolution of the Partnership the Liquidator determines that an
immediate sale of part or all of the Partnership's assets would be impractical
or would cause undue loss to the Partners, the Liquidator may, in its sole and
absolute discretion, defer for a reasonable time the liquidation of any assets
except those necessary to satisfy liabilities of the Partnership (including to
those Partners as creditors) or distribute to the Partners, in lieu of cash, as
tenants in common and in accordance with the provisions of Section 13.2.A
above, undivided interests in such Partnership assets as the Liquidator deems
not suitable for liquidation. Any such distributions in kind shall be made only
if, in the good faith judgment of the Liquidator, such distributions in kind
are in the best interest of the Partners, and shall be subject to such
conditions relating to the disposition and management of such properties as the
Liquidator deems reasonable and equitable and to any agreements governing the
operation of such properties at such time. The Liquidator shall determine the
fair market value of any property distributed in kind using such reasonable
method of valuation as it may adopt.
C. Liquidating Trust. In the discretion of the General
Partner, a pro rata portion of the distributions that would otherwise be made
to the General Partner and Limited Partners pursuant to this Article XIII may
be: (A) distributed to a trust established for the benefit of the General
Partner and Limited Partners for the purposes of liquidating Partnership
assets, collecting amounts owed to the Partnership and paying any contingent or
unforeseen liabilities or obligations of the Partnership or of the General
Partner arising out of or in connection with the Partnership (in which case the
assets of any such trust shall be distributed to the General Partner and
Limited Partners from time to time, in the reasonable discretion of the General
Partner, in the same proportions as the amount distributed to such trust by the
Partnership would otherwise have been distributed to the General Partner and
Limited Partners pursuant to this Agreement); or (B) withheld to provide a
reasonable reserve for Partnership liabilities (contingent or otherwise) and to
reflect the unrealized portion of any installment obligations owed to the
Partnership, provided that such withheld amounts shall be distributed to the
General Partner and Limited Partners in the manner and order of priority set
forth in Section 13.2.A as soon as practicable.
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56
SECTION 13.3 COMPLIANCE WITH TIMING REQUIREMENTS OF REGULATIONS
Subject to Section 13.4 below, in the event the Partnership is
"liquidated" within the meaning of Regulations Section 1.704-1(b)(2)(ii)(g),
distributions shall be made pursuant to this Article XIII to the General
Partner and Limited Partners who have positive Capital Accounts in compliance
with Regulations Section 1.704-1(b)(2)(ii)(b)(2). If any Partner has a deficit
balance in its Capital Account (after giving effect to all contributions,
distributions and allocations for all taxable years, including the year during
which such liquidation occurs), such Partner shall have no obligation to make
any contribution to the capital of the Partnership with respect to such
deficit, and such deficit shall not be considered a debt owed to the
Partnership or to any other Person for any purpose whatsoever.
SECTION 13.4 DEEMED DISTRIBUTION AND RECONTRIBUTION
Notwithstanding any other provision of this Article XIII, in the event
the Partnership is deemed liquidated within the meaning of Regulations Section
1.704-1(b)(2)(ii)(g) but no Liquidating Event has occurred, the Partnership's
property shall not be liquidated, the Partnership's liabilities shall not be
paid or discharged and the Partnership's affairs shall not be wound up.
Instead, for federal income tax purposes and for purposes of maintaining
Capital Accounts pursuant to Exhibit B hereto, the Partnership shall be deemed
to have distributed its assets in kind to the General Partner and Limited
Partners, who shall be deemed to have assumed and taken such assets subject to
all Partnership liabilities, all in accordance with their respective Capital
Accounts. Immediately thereafter, the General Partner and Limited Partners
shall be deemed to have recontributed the Partnership assets in kind to the
Partnership, which shall be deemed to have assumed and taken such assets
subject to all such liabilities.
SECTION 13.5 RIGHTS OF LIMITED PARTNERS
Except as otherwise provided in this Agreement, each Limited Partner
shall look solely to the assets of the Partnership for the return of its
Capital Contributions and shall have no right or power to demand or receive
property other than cash from the Partnership. Except as otherwise provided in
this Agreement, no Limited Partner shall have priority over any other Partner
as to the return of its Capital Contributions, distributions, or allocations.
SECTION 13.6 NOTICE OF DISSOLUTION
In the event a Liquidating Event occurs or an event occurs that would,
but for provisions of an election or objection by one or more Partners pursuant
to Section 13.1 above, result in a dissolution of the Partnership, the General
Partner shall, within thirty (30) days thereafter, provide written notice
thereof to each of the Partners.
SECTION 13.7 TERMINATION OF PARTNERSHIP AND CANCELLATION OF
CERTIFICATE OF LIMITED PARTNERSHIP
Upon the completion of the liquidation of the Partnership cash and
property as provided in Section 13.2 above, all Partnership Units shall be
cancelled, including the Redemption Right associated therewith, the Partnership
shall be terminated, the Certificate and all qualifications of the
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57
Partnership as a foreign limited partnership in jurisdictions other than the
State of Delaware shall be canceled, and such other actions as may be necessary
to terminate the Partnership shall be taken.
SECTION 13.8 REASONABLE TIME FOR WINDING UP
A reasonable time shall be allowed for the orderly winding up of the
business and affairs of the Partnership and the liquidation of its assets
pursuant to Section 13.2 above, in order to minimize any losses otherwise
attendant upon such winding-up, and the provisions of this Agreement shall
remain in effect among the Partners during the period of liquidation.
SECTION 13.9 WAIVER OF PARTITION
Each Partner hereby waives any right to partition of the Partnership
property.
SECTION 13.10 LIABILITY OF LIQUIDATOR
The Liquidator shall be indemnified and held harmless by the
Partnership from and against any and all claims, liabilities, costs, damages,
and causes of action of any nature whatsoever arising out of or incidental to
the Liquidator's taking of any action authorized under or within the scope of
this Agreement; provided, however, that the Liquidator shall not be entitled to
indemnification, and shall not be held harmless, where the claim, demand,
liability, cost, damage or cause of action at issue arises out of (A) a matter
entirely unrelated to the Liquidator's action or conduct pursuant to the
provisions of this Agreement or (B) the proven willful misconduct or gross
negligence of the Liquidator.
ARTICLE XIV
AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS
SECTION 14.1 AMENDMENTS
A. General. Amendments to this Agreement may be
proposed by the General Partner or by any Limited Partners holding twenty-five
percent (25%) or more of the Partnership Interests. Following such proposal
(except an amendment pursuant to Section 14.1.B below), the General Partner
shall submit any proposed amendment to the Limited Partners. The General
Partner shall seek the written vote of the Partners on the proposed amendment
or shall call a meeting to vote thereon and to transact any other business that
it may deem appropriate. For purposes of obtaining a written vote, the General
Partner may require a response within a reasonable specified time, but not less
than fifteen (15) days, and failure to respond in such time period shall
constitute a vote which is consistent with the General Partner's recommendation
with respect to the proposal. Except as provided in Section 14.1.B, 14.1.C or
14.1.D below, a proposed amendment shall be adopted and be effective as an
amendment hereto if it is approved by the General Partner and it receives the
Consent of Partners holding a majority of the Partnership Units then held by
Limited Partners (including Limited Partner Interests held by the General
Partner and CPT LP).
B. Amendments Not Requiring Limited Partner Approval.
Notwithstanding Section 14.1.A or Section 14.1.C hereof, the General Partner
shall have the power, without the
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58
Consent of the Limited Partners, to amend this Agreement as may be required to
facilitate or implement any of the following purposes:
(1) to add to the obligations of the General
Partner or surrender any right or power granted to the General Partner or any
Affiliate of the General Partner for the benefit of the Limited Partners;
(2) to reflect the admission, substitution,
termination, or withdrawal of any Partner in accordance with this Agreement;
(3) to set forth the designations, rights, powers,
duties, and preferences of the holders of any additional Partnership Interests
issued pursuant to Article IV hereof (including, without limitation, to reflect
amendments expressly permitted under Sections 5.4, 6.2, and 8.6.E);
(4) to reflect a change that does not adversely
affect any of the Limited Partners in any material respect, or to cure any
ambiguity, correct or supplement any provision in this Agreement not
inconsistent with law or with other provisions, or make other changes with
respect to matters arising under this Agreement that will not be inconsistent
with law or with the provisions of this Agreement or as may be expressly
provided by any other provisions of this Agreement; and
(5) to satisfy any requirements, conditions, or
guidelines contained in any order, directive, opinion, ruling or regulation of
a federal, state or local agency or contained in federal, state or local law.
The General Partner shall notify the Limited Partners when any action under
this Section 14.1.B is taken.
C. Other Amendments Requiring Certain Limited Partner
Approval. Notwithstanding anything in this Section 14.1 to the contrary, this
Agreement shall not be amended without the Consent of such Partner adversely
affected if such amendment would (i) convert a Limited Partner's interest in
the Partnership into a general partner's interest, (ii) modify the limited
liability of a Limited Partner, (iii) alter rights of Partners to receive
distributions pursuant to Article V or the allocations specified in Article VI
(except as permitted pursuant to Sections 4.2, 5.1.F, 5.4, 6.2 and 14.1(B)(3)),
(iv) amend Section 8.6 or any defined terms set forth in Article I that relate
to the Redemption Right (except as permitted in Section 8.6.E), (v) cause the
termination of the Partnership prior to the time set forth in Sections 2.5 or
13.1, or (vi) amend this Section 14.1.C.
D. Amendments Requiring Limited Partner Approval
(Excluding General Partner and CPT LP). Notwithstanding Section 14.1.A or
Section 14.1.B hereof, the General Partner shall not amend Sections 4.2.A, 7.5,
7.6, 11.2, 13.1, 14.1.C or 14.2 without the Consent of the Outside Limited
Partners.
E. Amendment and Restatement of Exhibit A Not An
Amendment. Notwithstanding anything in this Article XIV or elsewhere in this
Agreement to the contrary, any amendment and restatement of Exhibit A hereto by
the General Partner to reflect events or changes otherwise authorized or
permitted by this Agreement, whether pursuant to Section 7.1.A(21) hereof
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59
or otherwise, shall not be deemed an amendment of this Agreement and may be
done at any time and from time to time, as necessary by the General Partner
without the Consent of the Limited Partners.
SECTION 14.2 MEETINGS OF THE PARTNERS
A. General. Meetings of the Partners may be called by
the General Partner and shall be called upon the receipt by the General Partner
of a written request by Limited Partners holding twenty-five percent (25%) or
more of the Partnership Interests. The call shall state the nature of the
business to be transacted. Notice of any such meeting shall be given to all
Partners not less than seven (7) days nor more than thirty (30) days prior to
the date of such meeting. Partners may vote in person or by proxy at such
meeting. Whenever the vote or Consent of Partners is permitted or required
under this Agreement, such vote or Consent may be given at a meeting of
Partners or may be given in accordance with the procedure prescribed in Section
14.1.A above. Except as otherwise expressly provided in this Agreement, the
Consent of holders of a majority of the Percentage Interests held by Limited
Partners (including Limited Partner Interests held by the General Partner)
shall control.
B. Actions Without a Meeting. Any action required or
permitted to be taken at a meeting of the Partners may be taken without a
meeting if a written consent setting forth the action so taken is signed by a
majority of the Percentage Interests of the Partners (or such other percentage
as is expressly required by this Agreement). Such consent may be in one
instrument or in several instruments, and shall have the same force and effect
as a vote of a majority of the Percentage Interests of the Partners (or such
other percentage as is expressly required by this Agreement). Such consent
shall be filed with the General Partner. An action so taken shall be deemed to
have been taken at a meeting held on the effective date so certified.
C. Proxy. Each Limited Partner may authorize any Person
or Persons to act for him by proxy on all matters in which a Limited Partner is
entitled to participate, including waiving notice of any meeting, or voting or
participating at a meeting. Every proxy must be signed by the Limited Partner
or its attorney-in-fact. No proxy shall be valid after the expiration of eleven
(11) months from the date thereof unless otherwise provided in the proxy. Every
proxy shall be revocable at the pleasure of the Limited Partner executing it,
such revocation to be effective upon the Partnership's receipt of written
notice thereof.
D. Conduct of Meeting. Each meeting of Partners shall
be conducted by the General Partner or such other Person as the General Partner
may appoint pursuant to such rules for the conduct of the meeting as the
General Partner or such other Person deems appropriate in its sole discretion.
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60
ARTICLE XV
GENERAL PROVISIONS
SECTION 15.1 ADDRESSES AND NOTICE
Any notice, demand, request or report required or permitted to be
given or made to a Partner or Assignee under this Agreement shall be in writing
and shall be deemed given or made when delivered in person or when sent by
first class United States mail or by other means of written communication to
the Partner or Assignee at the address set forth in Exhibit A hereto or such
other address as the Partners shall notify the General Partner in writing. Such
communications shall be deemed sufficiently given, served, sent or received for
all purposes at such time as delivered to the addressee (with the return
receipt or delivery receipt being deemed conclusive evidence of such delivery)
or at such time as delivery is refused by the addressee upon presentation.
SECTION 15.2 TITLES AND CAPTIONS
All article or section titles or captions in this Agreement are for
convenience only. They shall not be deemed part of this Agreement and in no way
define, limit, extend or describe the scope or intent of any provisions hereof.
Except as specifically provided otherwise, references to "Articles" and
"Sections" are to Articles and Sections of this Agreement.
SECTION 15.3 PRONOUNS AND PLURALS
Whenever the context may require, any pronoun used in this Agreement
shall include the corresponding masculine, feminine or neuter forms, and the
singular form of nouns, pronouns and verbs shall include the plural and vice
versa.
SECTION 15.4 FURTHER ACTION
The parties shall execute and deliver all documents, provide all
information and take or refrain from taking action as may be necessary or
appropriate to achieve the purposes of this Agreement.
SECTION 15.5 BINDING EFFECT
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their heirs, executors, administrators, successors, legal
representatives and permitted assigns.
SECTION 15.6 CREDITORS
Other than as expressly set forth herein with regard to any
Indemnitee, none of the provisions of this Agreement shall be for the benefit
of, or shall be enforceable by, any creditor of the Partnership.
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61
SECTION 15.7 WAIVER
No failure by any party to insist upon the strict performance of any
covenant, duty, agreement or condition of this Agreement or to exercise any
right or remedy consequent upon a breach thereof shall constitute waiver of any
such breach or any other covenant, duty, agreement or condition.
SECTION 15.8 COUNTERPARTS
This Agreement may be executed in counterparts, all of which together
shall constitute one agreement binding on all the parties hereto,
notwithstanding that all such parties are not signatories to the original or
the same counterpart. Each party shall become bound by this Agreement
immediately upon affixing its signature hereto.
SECTION 15.9 APPLICABLE LAW
This Agreement shall be construed and enforced in accordance with and
governed by the laws of the State of Delaware, without regard to the principles
of conflicts of law.
SECTION 15.10 INVALIDITY OF PROVISIONS
If any provision of this Agreement is or becomes invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein shall not be affected thereby.
SECTION 15.11 ENTIRE AGREEMENT
This Agreement contains the entire understanding and agreement among
the Partners with respect to the subject matter hereof and supersedes the Prior
Agreement and any prior written oral understandings or agreements among them
with respect thereto.
SECTION 15.12 GUARANTY BY CPT
CPT hereby unconditionally and irrevocably guarantees to the Limited
Partners the performance by the General Partner of the General Partner's
obligations under this Agreement. This guarantee, which shall be binding upon
the successors and assigns of CPT, is exclusively for the benefit of the
Limited Partners and shall not extend to the benefit of any creditor of the
Partnership.
SECTION 15.13 NO RIGHTS AS SHAREHOLDERS
Nothing contained in this Agreement shall be construed as conferring
upon the holders of the Partnership Units any rights whatsoever as shareholders
of the General Partner Entity, including, without limitation, any right to
receive dividends or other distributions made to shareholders of the General
Partner Entity or to vote or to consent or receive notice as shareholders in
respect to any meeting of shareholders for the election of directors of the
General Partner Entity or any other matter.
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62
SECTION 15.14 LIMITATION TO PRESERVE REIT STATUS
To the extent that any amount paid or credited to the General Partner
or its officers, directors, employees or agents pursuant to Section 7.4 or
Section 7.7 hereof would constitute gross income to the General Partner Entity
for purposes of Section 856(c)(2) or 856(c)(3) of the Code (a "General Partner
Payment"), as determined by the General Partner, then, notwithstanding any
other provision of this Agreement, the amount of such General Partner Payments
for any fiscal year shall not exceed the lesser of:
(i) an amount equal to the excess, if any, of (a)
4.20% of the General Partner Entity's total gross income (but
not including the amount of any General Partner Payments) for
the fiscal year which is described in subsections (A) though
(H) of Section 856(c)(2) of the Code over (b) the amount of
gross income (within the meaning of Section 856(c)(2) of the
Code) derived by the General Partner Entity from sources
other than those described in subsections (A) through (H) of
Section 856(c)(2) of the Code (but not including the amount
of any General Partner Payments); or
(ii) an amount equal to the excess, if any of (a)
25% of the General Partner Entity's total gross income (but
not including the amount of any General Partner Payments) for
the fiscal year which is described in subsections (A) through
(I) of Section 856(c)(3) of the Code over (b) the amount of
gross income (within the meaning of Section 856(c)(3) of the
Code) derived by the General Partner Entity from sources
other than those described in subsections (A) through (I) of
Section 856(c)(3) of the Code (but not including the amount
of any General Partner Payments);
provided, however, that General Partner Payments in excess of the amounts set
forth in subparagraphs (i) and (ii) above may be made if the General Partner
Entity, as a condition precedent, obtains an opinion of tax counsel that the
receipt of such excess amounts would not adversely affect the General Partner
Entity's ability to qualify as a REIT. To the extent General Partner Payments
may not be made in a year due to the foregoing limitations, such General
Partner Payments shall carry over and be treated as arising in the following
year, provided, however, that such amounts shall not carry over for more than
five years, and if not paid within such five year period, shall expire;
provided further, that (i) as General Partner Payments are made, such payments
shall be applied first to carry over amounts outstanding, if any, and (ii) with
respect to carry over amounts for more than one Partnership Year, such payments
shall be applied to the earliest Partnership Year first.
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63
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.
GENERAL PARTNER:
CPT-GP, INC.
By: /s/ D. ▇▇▇▇▇ ▇▇▇▇
------------------------------------
Name: D. ▇▇▇▇▇ ▇▇▇▇
Title: President
LIMITED PARTNERS:
By: CPT-GP, Inc., as Attorney-in-Fact
for the Limited Partners
By: /s/ D. ▇▇▇▇▇ ▇▇▇▇
--------------------------------
Name: D. ▇▇▇▇▇ ▇▇▇▇
Title: President
CAMDEN PROPERTY TRUST, for purposes of
Section 4.2.B, 5.1.C, 7.4, 7.5, 7.7,
7.8, 8.6, 11.2 and 15.12
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Chairman of the Board and Chief
Executive Officer
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64
EXHIBIT A
PARTNERS AND PARTNERSHIP INTERESTS
Name and Class A Class B Agreed Capital Percentage
Address of Partner Partnership Units* Partnership Units* Account** Interest
------------------------------------------------------------------------------------------------------------------
GENERAL PARTNER:
CPT-GP, Inc. 118,185.60 $ 3,173,283.36 1.00%
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇
LIMITED PARTNERS:
CPT-LP, Inc. 9,348,160.00 250,998,096.00 79.10%
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
PGI Associates, L.P. 1,407,494.40 37,791,224.64 11.91%
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
FWP, L.P. 571,278.08 15,338,816.45 4.83%
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Gateway Mall 240,941.44 6,469,277.66 2.04%
Associates I, L.P.
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ Financial Corporation 26,955.52 723,755.75 0.23%
▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 22,972.16 616,802.50 0.19%
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇. ▇▇▇▇▇ 22,972.16 616,802.50 0.19%
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
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65
Name and Class A Class B Agreed Capital Percentage
Address of Partner Partnership Units* Partnership Units* Account** Interest
-------------------------------------------------------------------------------------------------------------------
Fulcor Investment Co. 21,899.52 588,002.11 0.19%
▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
WRC Holdings, Inc. 21,978.24 590,115.74 0.19%
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇ 8,131.84 218,339.90 0.07%
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ 5,521.91 148,263.28 .05%
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 1,276.80 34,282.08 0.01%
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇ 743.04 19,950.63 0.01%
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
-----------------------------------------------------------------------------
TOTAL 11,818,510.71 -0- $317,327,012.56 100.00%
* The Partnership Units are as restated as of the Effective Date, as set
forth in Section 4.1.A. Such restatement was applied in the same
manner to each Partner and did not result in a change to any Partner's
Percentage Interest.
** As of the Effective Date.
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66
EXHIBIT B
CAPITAL ACCOUNT MAINTENANCE
1. Capital Accounts of the Partners
A. The Partnership shall maintain for each Partner a separate Capital
Account in accordance with the rules of Regulations Section l.704-l(b)(2)(iv).
Such Capital Account shall be increased by (i) the amount of all Capital
Contributions and any other deemed contributions made by such Partner to the
Partnership pursuant to this Agreement and (ii) all items of Partnership income
and gain (including income and gain exempt from tax) computed in accordance
with Section 1.B hereof and allocated to such Partner pursuant to Section 6.1
of the Agreement and Exhibit C hereof, and decreased by (x) the amount of cash
or Agreed Value of all actual and deemed distributions of cash or property made
to such Partner pursuant to this Agreement and (y) all items of Partnership
deduction and loss computed in accordance with Section 1.B hereof and allocated
to such Partner pursuant to Section 6.1 of the Agreement and Exhibit C hereof.
B. For purposes of computing the amount of any item of income, gain,
deduction or loss to be reflected in the Partners' Capital Accounts, unless
otherwise specified in this Agreement, the determination, recognition and
classification of any such item shall be the same as its determination,
recognition and classification for federal income tax purposes determined in
accordance with Section 703(a) of the Code (for this purpose all items of
income, gain, loss or deduction required to be stated separately pursuant to
Section 703(a)(1) of the Code shall be included in taxable income or loss),
with the following adjustments:
(1) Except as otherwise provided in Regulations Section
1.704-1(b)(2)(iv)(m), the computation of all items of income, gain, loss and
deduction shall be made without regard to any election under Section 754 of the
Code which may be made by the Partnership, provided that the amounts of any
adjustments to the adjusted bases of the assets of the Partnership made
pursuant to Section 734 of the Code as a result of the distribution of property
by the Partnership to a Partner (to the extent that such adjustments have not
previously been reflected in the Partners' Capital Accounts) shall be reflected
in the Capital Accounts of the Partners in the manner and subject to the
limitations prescribed in Regulations Section l.704-1(b)(2)(iv) (m)(4).
(2) The computation of all items of income, gain, and deduction
shall be made without regard to the fact that items described in Sections
705(a)(l)(B) or 705(a)(2)(B) of the Code are not includable in gross income or
are neither currently deductible nor capitalized for federal income tax
purposes.
(3) Any income, gain or loss attributable to the taxable
disposition of any Partnership property shall be determined as if the adjusted
basis of such property as of such date of disposition were equal in amount to
the Partnership's Carrying Value with respect to such property as of such date.
(4) In lieu of the depreciation, amortization, and other cost
recovery deductions taken into account in computing such taxable income or
loss, there shall be taken into account Depreciation for such fiscal year.
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67
(5) In the event the Carrying Value of any Partnership Asset
is adjusted pursuant to Section 1.D hereof, the amount of any such adjustment
shall be taken into account as gain or loss from the disposition of such asset.
(6) Any items specially allocated under Section 2 of Exhibit C
hereof shall not be taken into account.
C. Generally, a transferee (including any Assignee) of a Partnership
Unit shall succeed to a pro rata portion of the Capital Account of the
transferor [; provided, however, that if the transfer causes a termination of
the Partnership under Section 708(b)(1)(B) of the Code, the Partnership's
properties shall be deemed, solely for federal income tax purposes, to have
been distributed in liquidation of the Partnership to the holders of the
Partnership Units (including transferees) and recontributed by such Partnership
in reconstitution of the Partnership. In such event, the Carrying Value of
Partnership properties shall be adjusted immediately prior to such deemed
distribution pursuant to Section 1.D (2) hereof]. [TO BE DELETED IF PROPOSED
REGULATIONS ARE ADOPTED.] The Capital Accounts of such reconstituted
Partnership shall be maintained in accordance with the principles of this
Exhibit B.
D.
(1) Consistent with the provisions of Regulations Section
1.704-1(b)(2)(iv)(f), and as provided in Section 1.D(2), the Carrying Values of
all Partnership assets shall be adjusted upward or downward to reflect any
Unrealized Gain or Unrealized Loss attributable to such Partnership property,
as of the times of the adjustments provided in Section 1.D(2) hereof, as if
such Unrealized Gain or Unrealized Loss had been recognized on an actual sale
of each such property and allocated pursuant to Section 6.1 of the Agreement.
(2) Such adjustments shall be made as of the following times:
(a) immediately prior to the acquisition of an additional interest in the
Partnership by any new or existing Partner in exchange for more than a de
minimis Capital Contribution; (b) immediately prior to the distribution by the
Partnership to a Partner of more than a de minimis amount of property as
consideration for an interest in the Partnership; and (c) immediately prior to
the liquidation of the Partnership within the meaning of Regulations Section
1.704-l(b)(2)(ii)(g), provided however that adjustments pursuant to clauses (a)
and (b) above shall be made only if the General Partner determines that such
adjustments are necessary or appropriate to reflect the relative economic
interests of the Partners in the Partnership.
(3) In accordance with Regulations Section 1.704-l(b)(2)(iv)(e),
the Carrying Value of Partnership assets distributed in kind shall be adjusted
upward or downward to reflect any Unrealized Gain or Unrealized Loss
attributable to such Partnership property, as of the time any such asset is
distributed.
(4) In determining Unrealized Gain or Unrealized Loss for purposes
of this Exhibit B, the aggregate cash amount and fair market value of all
Partnership assets (including cash or cash equivalents) shall be determined by
the General Partner using such reasonable method of valuation as it may adopt,
or in the case of a liquidating distribution pursuant to Article XIII of the
Agreement, shall be determined and allocated by the Liquidator using such
reasonable methods of valuation as it may adopt. The General Partner, or the
Liquidator, as the case may be, shall allocate such
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aggregate fair market value among the assets of the Partnership in such manner
as it determines in its sole and absolute discretion to arrive at a fair market
value for individual properties.
E. The provisions of the Agreement (including this Exhibit B and the
other Exhibits to the Agreement) relating to the maintenance of Capital
Accounts are intended to comply with Regulations Section 1.704-1(b), and shall
be interpreted and applied in a manner consistent with such Regulations. In the
event the General Partner shall determine that it is prudent to modify the
manner in which the Capital Accounts, or any debits or credits thereto
(including, without limitation, debits or credits relating to liabilities which
are secured by contributed or distributed property or which are assumed by the
Partnership, the General Partner, or the Limited Partners) are computed in
order to comply with such Regulations, the General Partner may make such
modification without regard to Article XIV of the Agreement, provided that it
is not likely to have a material effect on the amounts distributable to any
Person pursuant to Article XIII of the Agreement upon the dissolution of the
Partnership. The General Partner also shall (i) make any adjustments that are
necessary or appropriate to maintain equality between the Capital Accounts of
the Partners and the amount of Partnership capital reflected on the
Partnership's balance sheet, as computed for book purposes, in accordance with
Regulations Section l.704-l(b)(2)(iv)(q), and (ii) make any appropriate
modifications in the event unanticipated events might otherwise cause this
Agreement not to comply with Regulations Section l.704-1(b).
2. No Interest
No interest shall be paid by the Partnership on Capital Contributions
or on balances in Partners' Capital Accounts.
3. No Withdrawal
No Partner shall be entitled to withdraw any part of its Capital
Contribution or Capital Account or to receive any distribution from the
Partnership, except as provided in Articles IV, V, VII and XIII of the
Agreement.
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EXHIBIT C
SPECIAL ALLOCATION RULES
1. Special Allocation Rules.
Notwithstanding any other provision of the Agreement or this Exhibit
C, the following special allocations shall be made in the following order:
A. Minimum Gain Chargeback. Notwithstanding the provisions of Section
6.1 of the Agreement or any other provisions of this Exhibit C, if there is a
net decrease in Partnership Minimum Gain during any Partnership Year, each
Partner shall be specially allocated items of Partnership income and gain for
such year (and, if necessary, subsequent years) in an amount equal to such
Partner's share of the net decrease in Partnership Minimum Gain, as determined
under Regulations Section 1.704-2(g). Allocations pursuant to the previous
sentence shall be made in proportion to the respective amounts required to be
allocated to each Partner pursuant thereto. The items to be so allocated shall
be determined in accordance with Regulations Section 1.704-2(f)(6). This
Section 1.A is intended to comply with the minimum gain chargeback requirements
in Regulations Section 1.704-2(f) and for purposes of this Section 1.A only,
each Partner's Adjusted Capital Account Deficit shall be determined prior to
any other allocations pursuant to Section 6.1 of this Agreement with respect to
such Partnership Year and without regard to any decrease in Partner Minimum
Gain during such Partnership Year.
B. Partner Minimum Gain Chargeback. Notwithstanding any other
provision of Section 6.1 of this Agreement or any other provisions of this
Exhibit C (except Section 1.A hereof), if there is a net decrease in Partner
Minimum Gain attributable to a Partner Nonrecourse Debt during any Partnership
Year, each Partner who has a share of the Partner Minimum Gain attributable to
such Partner Nonrecourse Debt, determined in accordance with Regulations
Section 1.704-2(i) (5), shall be specially allocated items of Partnership
income and gain for such year (and, if necessary, subsequent years) in an
amount equal to such Partner's share of the net decrease in Partner Minimum
Gain attributable to such Partner Nonrecourse Debt, determined in accordance
with Regulations Section 1.704-2(i) (5). Allocations pursuant to the previous
sentence shall be made in proportion to the respective amounts required to be
allocated to each General Partner and Limited Partner pursuant thereto. The
items to be so allocated shall be determined in accordance with Regulations
Section 1.704-2(i) (4). This Section 1.B is intended to comply with the minimum
gain chargeback requirement in such Section of the Regulations and shall be
interpreted consistently therewith. Solely for purposes of this Section 1.B,
each Partner's Adjusted Capital Account Deficit shall be determined prior to
any other allocations pursuant to Section 6.1 of the Agreement or this Exhibit
with respect to such Partnership Year, other than allocations pursuant to
Section 1.A hereof.
C. Qualified Income Offset. In the event any Partner unexpectedly
receives any adjustments, allocations or distributions described in Regulations
Sections 1.704-l(b)(2)(ii)(d)(4), l.704-1(b)(2)(ii)(d)(5), or
1.704-l(b)(2)(ii)(d)(6), and after giving effect to the allocations required
under Sections 1.A and 1.B hereof with respect to such Partnership Year, such
Partner has an Adjusted Capital Account Deficit, items of Partnership income
and gain (consisting of a pro rata portion of each item of Partnership income,
including gross income and gain for the Partnership Year) shall be specially
allocated to such Partner in an amount and manner sufficient to eliminate, to
the extent required by the Regulations, its Adjusted Capital Account Deficit
created by such
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adjustments, allocations or distributions as quickly as possible. This Section
1.C is intended to constitute a "qualified income offset" under Regulations
Section 1.704-1(b)(2)(ii)(d) and shall be interpreted consistently therewith.
▇. ▇▇▇▇▇ Income Allocation. In the event that any Partner has an
Adjusted Capital Account Deficit at the end of any Partnership Year (after
taking into account allocations to be made under the preceding paragraphs
hereof with respect to such Partnership Year), each such Partner shall be
specially allocated items of Partnership income and gain (consisting of a pro
rata portion of each item of Partnership income, including gross income and
gain for the Partnership Year) in an amount and manner sufficient to eliminate,
to the extent required by the Regulations, its Adjusted Capital Account
Deficit.
E. Nonrecourse Deductions. Nonrecourse Deductions for any Partnership
Year shall be allocated to the Partners in accordance with their respective
Percentage Interests. If the General Partner determines in its good faith
discretion that the Partnership's Nonrecourse Deductions must be allocated in a
different ratio to satisfy the safe harbor requirements of the Regulations
promulgated under Section 704(b) of the Code, the General Partner is
authorized, upon notice to the Limited Partners, to revise the prescribed ratio
for such Partnership Year to the numerically closest ratio which would satisfy
such requirements.
F. Partner Nonrecourse Deductions. Any Partner Nonrecourse Deductions
for any Partnership Year shall be specially allocated to the Partner who bears
the economic risk of loss with respect to the Partner Nonrecourse Debt to which
such Partner Nonrecourse Deductions are attributable in accordance with
Regulations Sections 1.704-2(b)(4) and 1.704-2(i).
G. Code Section 754 Adjustments. To the extent an adjustment to the
adjusted tax basis of any Partnership asset pursuant to Section 734(b) or
743(b) of the Code is required, pursuant to Regulations Section
1.704-l(b)(2)(iv)(m), to be taken into account in determining Capital Accounts,
the amount of such adjustment to the Capital Accounts shall be treated as an
item of gain (if the adjustment increases the basis of the asset) or loss (if
the adjustment decreases such basis), and such item of gain or loss shall be
specially allocated to the Partners in a manner consistent with the manner in
which their Capital Accounts are required to be adjusted pursuant to such
Section of the Regulations.
2. Allocations for Tax Purposes
A. Except as otherwise provided in this Section 2, for federal income
tax purposes, each item of income, gain, loss and deduction shall be allocated
among the Partners in the same manner as its correlative item of "book" income,
gain, loss or deduction is allocated pursuant to Section 6.1 of the Agreement
and Section 1 of this Exhibit C.
B. In an attempt to eliminate Book-Tax Disparities attributable to a
Contributed Property or Adjusted Property, items of income, gain, loss, and
deduction shall be allocated for federal income tax purposes among the Partners
as follows:
(1)(a) In the case of a Contributed Property, such items
attributable thereto shall be allocated among the
Partners consistent with the principles of
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Section 704(c) of the Code to take into account the
variation between the 704(c) Value of such property
and its adjusted basis at the time of contribution
(taking into account Section 2.C of this Exhibit C);
and
(b) any item of Residual Gain or Residual Loss
attributable to a Contributed Property shall be
allocated among the Partners in the same manner as its
correlative item of "book" gain or loss is allocated
pursuant to Section 6.1 of the Agreement and Section 1
of this Exhibit C.
(2)(a) In the case of an Adjusted Property, such items shall
(i) first, be allocated among the Partners in a
manner consistent with the principles of Section
704(c) of the Code to take into account the Unrealized
Gain or Unrealized Loss attributable to such property
and the allocations thereof pursuant to Exhibit B;
(ii) second, in the event such property was
originally a Contributed Property, be allocated among
the Partners in a manner consistent with Section
2.B(1) of this Exhibit C; and
(b) any item of Residual Gain or Residual Loss
attributable to an Adjusted Property shall be
allocated among the Partners in the same manner its
correlative item of "book" gain or loss is allocated
pursuant to Section 6.1 of the Agreement and Section 1
of this Exhibit C.
C. To the extent Regulations promulgated pursuant to Section 704(c) of
the Code permit a Partnership to utilize alternative methods to eliminate the
disparities between the Carrying Value of property and its adjusted basis, the
General Partner shall, subject to the following, have the authority to elect
the method to be used by the Partnership and such election shall be binding on
all Partners. With respect to any Contributed Properties held by the
Partnership on the Effective Date, the Partnership shall elect to use the
"traditional method" set forth in Treasury Regulation ss. 1.704- 3(b).
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EXHIBIT D
NOTICE OF REDEMPTION
The undersigned hereby irrevocably (i) redeems _________ Partnership
Units in Camden Operating, L.P. in accordance with the terms of the Third
Amended and Restated Agreement of Limited Partnership of Camden Operating,
L.P., as amended, and the Redemption Right referred to therein, (ii) surrenders
such Partnership Units and all right, title and interest therein and (iii)
directs that the Cash Amount or Shares Amount (as determined by the General
Partner) deliverable upon exercise of the Redemption Right be delivered to the
address specified below, and if Shares are to be delivered, such Shares be
registered or placed in the name(s) and at the address(es) specified below. The
undersigned hereby represents, warrants, and certifies that the undersigned (a)
has marketable and unencumbered title to such Partnership Units, free and clear
of the rights of or interests of any other person or entity, (b) has the full
right, power and authority to redeem and surrender such Partnership Units as
provided herein and (c) has obtained the consent or approval of all persons or
entities, if any, having the right to consult or approve such redemption and
surrender.
Dated: Name of Limited Partner:
---------------------
----------------------------------------
(Signature of Limited Partner)
----------------------------------------
(Street Address)
----------------------------------------
(City) (State) (Zip Code)
Signature Guaranteed by:
----------------------------------------
IF SHARES ARE TO BE ISSUED, ISSUE TO:
Name:
--------------------------------
Please insert social security or identifying number:
