FIRST AMENDED AND RESTATED LIMITED PARTNERSHIP AGREEMENT OF CAPLEASE, LP
FIRST
AMENDED AND RESTATED
OF
CAPLEASE,
LP
TABLE
OF CONTENTS
|
ARTICLE
I DEFINED TERMS
|
1
|
|
|
ARTICLE
II FORMATION OF PARTNERSHIP
|
8
|
|
|
2.01
|
Name,
Office and Registered Agent
|
8
|
|
2.02
|
Partners.
|
9
|
|
2.03
|
Term
and Dissolution.
|
9
|
|
2.04
|
Filing
of Certificate and Perfection of Limited Partnership
|
10
|
|
2.05
|
Certificates
Describing Partnership Units
|
10
|
|
ARTICLE
III BUSINESS OF THE PARTNERSHIP
|
10
|
|
|
ARTICLE
IV CAPITAL CONTRIBUTIONS AND ACCOUNTS
|
11
|
|
|
4.01
|
Capital
Contributions
|
11
|
|
4.02
|
Additional
Capital Contributions and Issuances of Additional Partnership
Interests
|
11
|
|
4.03
|
Additional
Funding
|
12
|
|
4.04
|
Capital
Accounts
|
12
|
|
4.05
|
Percentage
Interests
|
12
|
|
4.06
|
No
Interest on Contributions
|
13
|
|
4.07
|
Return
of Capital Contributions
|
13
|
|
4.08
|
No
Third Party Beneficiary
|
13
|
|
ARTICLE
V PROFITS AND LOSSES; DISTRIBUTIONS
|
13
|
|
|
5.01
|
Allocation
of Profit and Loss.
|
13
|
|
5.02
|
Distribution
of Cash.
|
15
|
|
5.03
|
REIT
Distribution Requirements
|
17
|
|
5.04
|
No
Right to Distributions in Kind
|
17
|
|
5.05
|
Limitations
on Return of Capital Contributions
|
17
|
|
5.06
|
Distributions
Upon Liquidation.
|
17
|
|
5.07
|
Substantial
Economic Effect
|
18
|
|
ARTICLE
VI 8.125% SERIES A CUMULATIVE REDEEMABLE PREFERRED
UNITS
|
18
|
|
|
6.01
|
Designation
and Number
|
18
|
|
6.02
|
Maturity
|
18
|
|
6.03
|
Rank
|
18
|
|
6.04
|
Allocations
and Distributions.
|
18
|
|
6.05
|
Liquidation
Rights.
|
21
|
|
6.06
|
Redemption.
|
21
|
|
6.07
|
Voting
Rights.
|
24
|
|
6.08
|
No
Conversion Rights
|
25
|
|
6.09
|
Exclusion
of Other Rights
|
25
|
|
6.10
|
Severability
of Provisions
|
25
|
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i -
|
ARTICLE
VII RIGHTS,
OBLIGATIONS AND POWERS OF THE GENERAL PARTNER
|
25
|
|
|
7.01
|
Management
of the Partnership.
|
25
|
|
7.02
|
Delegation
of Authority
|
28
|
|
7.03
|
Indemnification
and Exculpation of Indemnitees.
|
28
|
|
7.04
|
Liability
of the General Partner.
|
29
|
|
7.05
|
Partnership
Obligations.
|
30
|
|
7.06
|
Outside
Activities
|
31
|
|
7.07
|
Employment
or Retention of Affiliates.
|
31
|
|
7.08
|
Title
to Partnership Assets
|
31
|
|
ARTICLE
VIII CHANGES IN GENERAL PARTNER
|
32
|
|
|
8.01
|
Transfer
of the General Partner’s Partnership Interest.
|
32
|
|
8.02
|
Admission
of a Substitute or Additional General Partner
|
33
|
|
8.03
|
Effect
of Bankruptcy, Withdrawal, Death or Dissolution of a General
Partner.
|
34
|
|
8.04
|
Removal
of a General Partner.
|
34
|
|
ARTICLE
IX RIGHTS AND OBLIGATIONS OF THE LIMITED PARTNERS
|
35
|
|
|
9.01
|
Management
of the Partnership
|
35
|
|
9.02
|
Power
of Attorney
|
36
|
|
9.03
|
Limitation
on Liability of Limited Partners
|
36
|
|
9.04
|
Redemption
Right.
|
36
|
|
9.05
|
Registration
|
38
|
|
ARTICLE
X TRANSFERS OF PARTNERSHIP INTERESTS
|
41
|
|
|
10.01
|
Purchase
for Investment.
|
41
|
|
10.02
|
Restrictions
on Transfer of Partnership Interests.
|
42
|
|
10.03
|
Admission
of Substitute Limited Partner.
|
43
|
|
10.04
|
Rights
of Assignees of Partnership Interests.
|
44
|
|
10.05
|
Effect
of Bankruptcy, Death, Incompetence or Termination of a Limited
Partner
|
44
|
|
10.06
|
Joint
Ownership of Interests
|
44
|
|
ARTICLE
XI BOOKS AND RECORDS; ACCOUNTING; TAX MATTERS
|
45
|
|
|
11.01
|
Books
and Records
|
45
|
|
11.02
|
Custody
of Partnership Funds; Bank Accounts.
|
45
|
|
11.03
|
Fiscal
and Taxable Year
|
45
|
|
11.04
|
Annual
Tax Information and Report
|
45
|
|
11.05
|
Tax
Matters Partner; Tax Elections; Special Basis Adjustments.
|
45
|
|
11.06
|
Reports
to Limited Partners.
|
46
|
|
ARTICLE
XII AMENDMENT OF AGREEMENT; MERGER
|
46
|
|
|
ARTICLE
XIII GENERAL PROVISIONS
|
47
|
|
|
13.01
|
Notices
|
47
|
|
13.02
|
Survival
of Rights
|
47
|
-
ii -
|
13.03
|
Additional
Documents
|
47
|
|
13.04
|
Severability
|
47
|
|
13.05
|
Entire
Agreement
|
47
|
|
13.06
|
Pronouns
and Plurals
|
47
|
|
13.07
|
Headings
|
48
|
|
13.08
|
Counterparts
|
48
|
|
13.09
|
Governing
Law
|
48
|
EXHIBITS
EXHIBIT
A
-
Partners, Capital Contributions and Percentage Interests
EXHIBIT
B
- Notice
of Exercise of Redemption Right
EXHIBIT
C
-
Certification of Non-Foreign Status
-
iii -
FIRST
AMENDED AND RESTATED
OF
CAPLEASE,
LP
RECITALS
Caplease,
LP (the “Partnership”) was formed as a limited partnership under the laws of the
State of Delaware, pursuant to a Certificate of Limited Partnership filed with
the Office of the Secretary of State of the State of Delaware on March 24,
2004
and a Limited Partnership Agreement entered into as of March 24, 2004, by and
between CLF OP General Partner, LLC, a Delaware limited liability company (the
“General Partner”) and Capital Lease Funding, Inc., a Maryland corporation (the
“Original Limited Partner” or the “Company”), as amended by the First Amendment
to the Limited Partnership Agreement dated as of October 19, 2005. This First
Amended and Restated Limited Partnership Agreement is entered into this 13th
day
of June, 2006 among the General Partner and the Limited Partners set forth
on
Exhibit
A
hereto,
for the purpose of amending and restating the Limited Partnership
Agreement.
AGREEMENT
NOW,
THEREFORE, in consideration of the foregoing, of mutual covenants between the
parties hereto, and of other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree to amend
the Limited Partnership Agreement to read in its entirety as
follows:
ARTICLE
I
DEFINED
TERMS
The
following defined terms used in this Agreement shall have the meanings specified
below:
“Act”
means
the Delaware Revised Uniform Limited Partnership Act, as it may be amended
from
time to time.
“Additional
Funds”
has the
meaning set forth in Section 4.03
hereof.
“Administrative
Expenses” means
(i)
all administrative and operating costs and expenses incurred by the Partnership,
(ii) those administrative costs and expenses of the General Partner, including
any salaries or other payments to directors, officers or employees of the
General Partner, and any accounting and legal expenses of the General Partner,
which expenses, the Partners have agreed, are expenses of the Partnership and
not the General Partner, and (iii) to the extent not included in clauses (i)
or
(ii) above, REIT Expenses; provided,
however,
that
Administrative
Expenses shall not include any administrative costs and expenses incurred by
the
Company that are attributable to assets or partnership interests in a Subsidiary
Partnership that are owned by the Company other than through its ownership
interest in the Partnership.
“Affiliate”
means,
(i) any Person that, directly or indirectly, controls or is controlled by
or is under common control with such Person, (ii) any other Person that
owns, beneficially, directly or indirectly, 10% or more of the outstanding
capital stock, shares or equity interests of such Person, or (iii) any
officer, director, employee, partner, member, manager or trustee of such Person
or any Person controlling, controlled by or under common control with such
Person (excluding trustees and persons serving in similar capacities who are
not
otherwise an Affiliate of such Person). For the purposes of this definition,
“control” (including the correlative meanings of the terms “controlled by” and
“under common control with”), as used with respect to any Person, shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, through the ownership
of voting securities or partnership interests or otherwise.
“Agreed
Value”
means
the fair market value of a Partner’s non-cash Capital Contribution as of the
date of contribution as agreed to by such Partner and the General Partner.
The
names and addresses of the Partners, number of Partnership Units issued to
each
Partner, and the Agreed Value of non-cash Capital Contributions as of the date
of contribution is set forth on Exhibit
A.
“Agreement”
means
this Amended and Restated Limited Partnership Agreement.
“Articles
of Amendment and Restatement”
means
the Articles of Amendment and Restatement of the Company filed with the State
Department of Assessments and Taxation of the State of Maryland on March 15,
2004.
“Articles
Supplementary”
means
the Articles Supplementary of the Company filed with the State Department of
Assessments and Taxation of the State of Maryland on October 17, 2005,
designating the terms, rights and preferences of the shares of 8.125% Series
A
Cumulative Redeemable Preferred Stock, $0.01 par value per share, of the
Company.
“Board
of Directors”
means
the Board of Directors of the Company.
“Business
Day” means
any
day, other than a Saturday or Sunday, that is neither a legal holiday nor a
day
on which banking institutions in New York, New York are authorized or required
by law, regulation or executive order to close.
“Capital
Account”
has the
meaning provided in Section 4.04
hereof.
“Capital
Contribution”
means
the total amount of cash, cash equivalents, and the Agreed Value of any Property
or other asset contributed or agreed to be contributed, as the context requires,
to the Partnership by each Partner pursuant to the terms of the Agreement.
Any
reference to the Capital Contribution of a Partner shall include the Capital
Contribution made by a predecessor holder of the Partnership Interest of such
Partner.
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2
-
“Cash
Amount”
means an
amount of cash per Partnership Unit equal to the Value of the REIT Shares Amount
on the date of receipt by the Company of a Notice of Redemption.
“Certificate”
means
any instrument or document that is required under the laws of the State of
Delaware, or any other jurisdiction in which the Partnership conducts business,
to be signed and sworn to by the Partners of the Partnership (either by
themselves or pursuant to the power-of-attorney granted to the General Partner
in Section 9.02
hereof)
and filed for recording in the appropriate public offices within the State
of
Delaware or such other jurisdiction to perfect or maintain the Partnership
as a
limited partnership, to effect the admission, withdrawal or substitution of
any
Partner of the Partnership, or to protect the limited liability of the Limited
Partners as limited partners under the laws of the State of Delaware or such
other jurisdiction.
“Class
A Common Units”
means
the Common Units of the Partnership designated as the Class A Common Units.
“Class
A Percentage Interest”
means,
as to any holder of Class A Common Units, such Partner’s percentage ownership
interest of Class A Common Units, as determined by dividing the Class A Common
Units owned by such Partner by the total number of Class A Common Units then
outstanding. The Class A Percentage Interest of each Partner shall be set forth
on Exhibit
A,
as may
be amended from time to time.
“Class
B Common Units”
means
the Common Units of the Partnership designated as the Class B Common
Units.
“Class
B Percentage Interest”
means,
as to any holder of Class B Common Units, such Partner’s percentage ownership
interest, as determined by dividing the Class B Common Units owned by such
Partner by the total number of Class B Common Units then outstanding. The Class
B Percentage Interest of each Partner shall be set forth on Exhibit
A,
as may
be amended from time to time.
“Class
B Return”
means,
as to any holder of Class B Common Units, the amount of distributions such
Partner would have received for the quarter (or other distribution period)
from
REIT Shares if such Partner owned the number of REIT Shares equal to the product
of such Partner’s Class B Common Units and the Conversion Factor on the
Partnership Record Date pertaining to such quarter (or other distribution
period).
“Common
Units”
means
all Partnership Units that are not specifically designated as Preferred Units
pursuant to this Agreement.
“Code”
means
the Internal Revenue Code of 1986, as amended, and as hereafter amended from
time to time. Reference to any particular provision of the Code shall mean
that
provision in the Code at the date hereof and any successor provision of the
Code.
“Commission”
means
the U.S. Securities and Exchange Commission.
“Common
Share”
means
one share of common stock of the Company.
“Company”
means
Capital Lease Funding, Inc., a Maryland corporation.
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3
-
“Conversion
Factor”
means
1.0, provided that
in the
event that the Company (i) declares or pays a dividend on its outstanding REIT
Shares in REIT Shares or makes a distribution to all holders of its outstanding
REIT Shares in REIT Shares, (ii) subdivides its outstanding REIT Shares or
(iii)
combines its outstanding REIT Shares into a smaller number of REIT Shares,
the
Conversion Factor shall be adjusted by multiplying the Conversion Factor by
a
fraction, the numerator of which shall be the number of REIT Shares issued
and
outstanding on the record date for such dividend, distribution, 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 REIT Shares (determined without the above
assumption) issued and outstanding on such date and, provided further,
that in
the event that an entity other than an Affiliate of the Company shall become
General Partner pursuant to any merger, consolidation or combination of the
Company with or into another entity (the “Successor Entity”), the Conversion
Factor shall be adjusted by multiplying the Conversion Factor by the number
of
shares of the Successor Entity into which one REIT Share is converted pursuant
to such merger, consolidation or combination, determined as of the date of
such
merger, consolidation or combination. Any adjustment to the Conversion Factor
shall become effective immediately after the effective date of an event
described above, retroactive to the record date, if any, for such event;
provided,
however,
that if
the Company receives a Notice of Redemption after the record date, but prior
to
the effective date of such dividend, distribution, subdivision or combination,
the Conversion Factor shall be determined as if the Company had received the
Notice of Redemption immediately prior to the record date for such dividend,
distribution, subdivision or combination.
“Event
of Bankruptcy”
as to
any Person means the filing of a petition for relief as to such Person as debtor
or bankrupt under the Bankruptcy Code of 1978 or similar provision of law of
any
jurisdiction (except if such petition is contested by such Person and has been
dismissed within 90 days); insolvency or bankruptcy of such Person as finally
determined by a court proceeding; filing by such Person of a petition or
application to accomplish the same or for the appointment of a receiver or
a
trustee for such Person or a substantial part of his assets; commencement of
any
proceedings relating to such Person as a debtor under any other reorganization,
arrangement, insolvency, adjustment of debt or liquidation law of any
jurisdiction, whether now in existence or hereinafter in effect, either by
such
Person or by another, provided that
if such
proceeding is commenced by another, such Person indicates his approval of such
proceeding, consents thereto or acquiesces therein, or such proceeding is
contested by such Person and has not been finally dismissed within 90
days.
“General
Partner”
means
CLF OP General Partner, LLC and any Person who becomes a substitute or
additional General Partner of the Partnership as provided herein, and any of
their successors as General Partner.
“General
Partnership Interest”
means a
Partnership Interest held by the General Partner that is a general partnership
interest.
“Indemnitee”
means
(i) any Person made a party to a proceeding by reason of its status as the
Company, the General Partner or a director, officer or employee of the Company,
the Partnership or the General Partner, and (ii) such other Persons (including
Affiliates of the Company,
General Partner or the Partnership) as the General Partner may designate from
time to time, in its sole and absolute discretion.
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4
-
“Independent
Director”
means a
member of the Board of Directors who is not an officer or employee of the
Company or an Affiliate.
“Limited
Partner”
means
any Person named as a Limited Partner on Exhibit
A
attached
hereto, and any Person who becomes a Substitute or Additional Limited Partner,
in such Person’s capacity as a Limited Partner in the Partnership.
“Limited
Partnership Interest”
means
the ownership interest of a Limited Partner in the Partnership at any particular
time, including the right of such Limited Partner to any and all benefits to
which such Limited Partner may be entitled as provided in this Agreement and
in
the Act, together with the obligations of such Limited Partner to comply with
all the provisions of this Agreement and of the Act.
“Loss”
has the
meaning provided in Section 5.01(g)
hereof.
“Minimum
Limited Partnership Interest”
means
the lesser of (i) 1% or (ii) if the total Capital Contributions to the
Partnership exceed $50 million, 1% divided by the ratio of the total Capital
Contributions to the Partnership to $50 million; provided,
however,
that
the Minimum Limited Partnership Interest shall not be less than 0.2% at any
time.
“Notice
of Redemption”
means
the Notice of Exercise of Redemption Right substantially in the form attached
as
Exhibit
B
hereto.
“NYSE”
means
the New York Stock Exchange.
“Offer”
has the
meaning set forth in Section 8.01(c)
hereof.
“Original
Limited Partner”
means
Capital Lease Funding, Inc.
“Partner”
means
any General Partner or Limited Partner.
“Partner
Nonrecourse Debt Minimum Gain”
has the
meaning set forth in Regulations Section 1.704-2(i). A Partner’s share of
Partner Nonrecourse Debt Minimum Gain shall be determined in accordance with
Regulations Section 1.704-2(i)(5).
“Partnership
Interest”
means an
ownership interest in the Partnership held by either a Limited Partner or the
General Partner and includes any and all benefits to which the holder of such
a
Partnership Interest may be entitled as provided in this Agreement, together
with all obligations of such Person to comply with the terms and provisions
of
this Agreement.
“Partnership
Minimum Gain”
has the
meaning set forth in Regulations Section 1.704-2(d). In accordance with
Regulations Section 1.704-2(d), the amount of Partnership Minimum Gain is
determined by first computing, for each Partnership nonrecourse liability,
any
gain the Partnership would realize if it disposed of the property subject to
that liability for no consideration other than full satisfaction of the
liability, and then aggregating the separately computed
gains. A Partner’s share of Partnership Minimum Gain shall be determined in
accordance with Regulations Section 1.704-2(g)(1).
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5
-
“Partnership
Record Date”
means
the record date established by the General Partner for the distribution of
cash
pursuant to Section 5.02
hereof,
which record date shall be the same as the record date established by the
Company for a distribution to its shareholders of some or all of its portion
of
such distribution.
“Partnership
Unit”
means a
fractional, undivided share of the Partnership Interests of all Partners issued
hereunder. The allocation of Partnership Units among the Partners shall be
as
set forth on Exhibit
A,
as may
be amended from time to time.
“Person”
means
any individual, partnership, corporation, limited liability company, joint
venture, trust or other entity.
“Preferred
Units”
means
all Partnership Interests designated as preferred units by the General Partner
from time to time in accordance with this Agreement.
“Profit”
has the
meaning provided in Section 5.01(g)
hereof.
“Property”
means
any property or other investment in which the Partnership holds an ownership
interest.
“Redemption
Amount”
means
either the Cash Amount or the REIT Shares Amount, as selected by the Partnership
or as directed by the General Partner pursuant to Section 9.04(b)
hereof.
“Redemption
Right”
has the
meaning provided in Section 9.04(a)
hereof.
“Redeeming
Limited Partner”
has the
meaning provided in Section 9.04(a)
hereof.
“Regulations”
means
the Federal Income Tax Regulations issued under the Code, as amended and as
hereafter amended from time to time. Reference to any particular provision
of
the Regulations shall mean that provision of the Regulations on the date hereof
and any successor provision of the Regulations.
“REIT”
means a
real estate investment trust under Sections 856 through 860 of the
Code.
“REIT
Expenses”
means
(i) costs and expenses relating to the continuity of existence and operation
of
the Company and any Subsidiaries thereof (which Subsidiaries shall, for purposes
hereof, be included within the definition of Company), including taxes, fees
and
assessments associated therewith, any and all costs, expenses or fees payable
to
any director, officer or employee of, or consultants or advisors engaged by,
the
Company, (ii) costs and expenses relating to any public offering and
registration of securities by the Company and all statements, reports, fees
and
expenses incidental thereto, including, without limitation, underwriting
discounts and selling commissions applicable to any such offering of securities,
and any costs and expenses associated with any claims made by any holders of
such securities or any underwriters
or placement agents thereof, (iii) costs and expenses associated with any
repurchase of any securities by the Company, (iv) costs and expenses associated
with the preparation and filing of any periodic or other reports and
communications by the Company under federal, state or local laws or regulations,
including filings with the Commission, (v) costs and expenses associated with
compliance by the Company with laws, rules and regulations promulgated by any
regulatory body, including the Commission and any securities exchange, (vi)
costs and expenses associated with any 401(k) plan, incentive plan, bonus plan
or other plan providing for compensation for the employees of the Company,
(vii)
costs and expenses incurred by the Company or the General Partner relating
to
any issuing or redemption of Partnership Interests and (viii) all other
operating or administrative costs of the Company or the General Partner incurred
in the ordinary course of its business on behalf of or in connection with the
Partnership.
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6
-
“REIT
Share”
means a
Common Share of the Company (or Successor Entity, as the case may
be).
“REIT
Shares Amount”
means a
number of REIT Shares equal to the product of the number of Partnership Units
offered for redemption by a Redeeming Limited Partner in a Notice of Redemption,
multiplied by the Conversion Factor as adjusted to and including the Specified
Redemption Date; provided
that
in the
event the Company issues to all holders of REIT Shares rights, options, warrants
or convertible or exchangeable securities entitling the shareholders to
subscribe for or purchase REIT Shares, or any other securities or property
(collectively, the “rights”), and the rights have not expired at the Specified
Redemption Date, then the REIT Shares Amount shall also include the rights
issuable to a holder of the REIT Shares Amount on the record date fixed for
purposes of determining the holders of REIT Shares entitled to
rights.
“Securities
Act”
means
the Securities Act of 1933, as amended.
“Series
A Preferred Stock”
means
the shares of 8.125% Series A Cumulative Redeemable Preferred Stock, $0.01
par
value per share, of the Company.
“Series
A Preferred Units”
has the
meaning provided in Section 6.01
hereof.
“Series
A Redemption Right”
has the
meaning provided in Section 6.06
hereof.
“Service”
means
the Internal Revenue Service.
“Specified
Redemption Date”
means
the first business day of the month that is at least 60 calendar days after
the
receipt by the Company of a Notice of Redemption.
“Subsidiary”
means,
with respect to any Person, any corporation or other entity of which a majority
of (i) the voting power of the voting equity securities or (ii) the outstanding
equity interests is owned, directly or indirectly, by such Person.
“Subsidiary
Partnership”
means
any partnership in which the Company, a wholly-owned subsidiary of the Company
or the Partnership owns a partnership interest.
“Substitute
Limited Partner”
means
any Person admitted to the Partnership as a Limited Partner pursuant to Section
10.03
hereof.
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7
-
“Successor
Entity”
has the
meaning provided in the definition of “Conversion Factor” contained
herein.
“Surviving
General Partner”
has the
meaning set forth in Section 8.01(d)
hereof.
“Trading
Day”
means a
day on which the principal national securities exchange on which a security
is
listed or admitted to trading is open for the transaction of business or, if
a
security is not listed or admitted to trading on any national securities
exchange, shall mean any day other than a Saturday, a Sunday or a day on which
banking institutions in the State of New York are authorized or obligated by
law
or executive order to close.
“Transaction”
has the
meaning set forth in Section 8.01(c)
hereof.
“Transfer”
has the
meaning set forth in Section 10.02(a)
hereof.
“Value”
means,
with respect to any security, the average of the daily market price of such
security for the ten consecutive Trading Days immediately preceding the date
of
such valuation. The market price for each such Trading Day shall be: (i) if
the
security is listed or admitted to trading on any securities exchange or the
NYSE, the last reported sale price, regular way, on such day, or if no such
sale
takes place on such day, the average of the closing bid and asked prices,
regular way, on such day, (ii) if the security is not listed or admitted to
trading on any securities exchange or the NYSE, the last reported sale price
on
such day or, if no sale takes place on such day, the average of the closing
bid
and asked prices on such day, as reported by a reliable quotation source
designated by the Company, or (iii) if the security is not listed or admitted
to
trading on any securities exchange or the NYSE and no such last reported sale
price or closing bid and asked prices are available, the average of the reported
high bid and low asked prices on such day, as reported by a reliable quotation
source designated by the Company, or if there shall be no bid and asked prices
on such day, the average of the high bid and low asked prices, as so reported,
on the most recent day (not more than ten days prior to the date in question)
for which prices have been so reported; provided that
if there
are no bid and asked prices reported during the ten days prior to the date
in
question, the value of the security shall be determined by the Company acting
in
good faith on the basis of such quotations and other information as it
considers, in its reasonable judgment, appropriate. In the event the security
includes any additional rights, then the value of such rights shall be
determined by the Company acting in good faith on the basis of such quotations
and other information as it considers, in its reasonable judgment,
appropriate.
ARTICLE
II
FORMATION
OF PARTNERSHIP
2.01 Name,
Office and Registered Agent.
The
name of the Partnership is Caplease, LP. The specified office and place of
business of the Partnership, and where the records of the Partnership shall
be
kept, shall be 000 Xxxxxx Xxxx, Xxx Xxxx, Xxx Xxxx 00000. The General Partner
may at any time change the location of such office, provided
the
General Partner gives notice
to
the Partners of any such change. The name of the Partnership’s registered agent
is CT Corporation System, which is a resident of Delaware with its business
address at 0000 Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000.
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2.02 Partners.
(a) The
General Partner of the Partnership is CLF OP General Partner, LLC, a Delaware
limited liability company. Its principal place of business is the same as that
of the Partnership.
(b) The
Limited Partners are those Persons identified as Limited Partners on
Exhibit
A
hereto,
as amended from time to time.
2.03 Term
and Dissolution.
(a) The
term
of the Partnership shall be perpetual, except that the Partnership shall be
dissolved upon the first to occur of any of the following events:
(i) The
occurrence of an Event of Bankruptcy as to a General Partner or the dissolution,
death, removal or withdrawal of a General Partner unless the business of the
Partnership is continued pursuant to Section 8.03(b)
hereof;
provided that
if a
General Partner is on the date of such occurrence a partnership, the dissolution
of such General Partner as a result of the dissolution, death, withdrawal,
removal or Event of Bankruptcy of a partner in such partnership shall not be
an
event of dissolution of the Partnership if the business of such General Partner
is continued by the remaining partner or partners, either alone or with
additional partners, and such General Partner and such partners comply with
any
other applicable requirements of this Agreement;
(ii) The
passage of 90 days after the sale or other disposition of all or substantially
all of the assets of the Partnership (provided that
if the
Partnership receives an installment obligation as consideration for such sale
or
other disposition, the Partnership shall continue, unless sooner dissolved
under
the provisions of this Agreement, until such time as such note or notes are
paid
in full);
(iii) The
redemption of all Limited Partnership Interests (including such interests held
by the General Partner); or
(iv) The
election by the General Partner that the Partnership should be
dissolved.
(b) Upon
dissolution of the Partnership (unless the business of the Partnership is
continued pursuant to Section 8.03(b)
hereof),
the General Partner (or its trustee, receiver, successor or legal
representative) shall amend or cancel the Certificate and liquidate the
Partnership’s assets and apply and distribute the proceeds thereof in accordance
with Section 5.06
hereof.
Notwithstanding the foregoing, the liquidating General Partner may either (i)
defer liquidation of, or withhold from distribution for a reasonable time,
any
assets of the Partnership (including those necessary to satisfy the
Partnership’s debts and obligations), or (ii) distribute the assets to the
Partners in kind.
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2.04 Filing
of Certificate and Perfection of Limited Partnership.
The
General Partner shall execute, acknowledge, record and file at the expense
of
the Partnership the Certificate and any and all amendments thereto and all
requisite fictitious name statements and notices in such places and
jurisdictions as may be necessary to cause the Partnership to be treated as
a
limited partnership under, and otherwise to comply with, the laws of each state
or other jurisdiction in which the Partnership conducts business.
2.05 Certificates
Describing Partnership Units.
At the
request of a Limited Partner, the General Partner, at its option, may, but
shall
not be obligated to, issue a certificate summarizing the terms of such Limited
Partner’s interest in the Partnership, including the number of Partnership Units
owned and the Class A or Class B Percentage Interest represented by such
Partnership Units as of the date of such certificate. Any such certificate
(i)
shall be in form and substance as approved by the General Partner, (ii) shall
not be negotiable and (iii) shall bear a legend to the following
effect:
This
certificate is not negotiable. The Partnership Units represented by this
certificate are governed by and transferable only in accordance with the
provisions of the Limited Partnership Agreement of Caplease, LP, as amended
from
time to time.
ARTICLE
III
BUSINESS
OF THE PARTNERSHIP
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 Company at all times to qualify as a REIT, unless the Company otherwise
ceases to qualify as a REIT, (ii) to enter into any partnership, joint venture
or other similar arrangement to engage in any of the foregoing or the ownership
of interests in any entity engaged 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 Company’s right in its sole and absolute
discretion to cease qualifying as a REIT, the Partners acknowledge that the
Company’s current status as a REIT and the avoidance of income and excise taxes
on the Company inures to the benefit of all the Partners and not solely to
the
Company. Notwithstanding the foregoing, the Limited Partners agree that the
Company may terminate its status as a REIT under the Code at any time. The
General Partner shall also be empowered to do any and all acts and things
necessary or prudent to ensure that the Partnership will not be classified
as a
“publicly traded partnership” taxable as a corporation for purposes of Section
7704 of the Code.
While
the
above purposes clause generally permits the Partnership to engage in any lawful
business, the Limited Partners acknowledge and agree that the Partnership’s
activities are currently limited to the direct or indirect ownership of
substantially all of the owned real property investments of the Company, and
do
not include the debt business of the Company (which has been separated from
the
Partnership on or prior to the date hereof).
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ARTICLE
IV
CAPITAL
CONTRIBUTIONS AND ACCOUNTS
4.01 Capital
Contributions.
The
General Partner and the Limited Partners have made capital contributions to
the
Partnership in exchange for the Partnership Interests set forth opposite their
names on Exhibit
A,
as
amended from time to time.
4.02 Additional
Capital Contributions and Issuances of Additional Partnership
Interests.
Except
as provided in this Section 4.02
or in
Section 4.03,
the
Partners shall have no right or obligation to make any additional Capital
Contributions or loans to the Partnership. The General Partner may contribute
additional capital to the Partnership, from time to time, and receive additional
Partnership Interests in respect thereof, in the manner contemplated in this
Section 4.02.
(a) Issuances
of Additional Partnership Interests.
The
General Partner is hereby authorized to cause the Partnership to issue such
additional Partnership Interests in the form of Partnership Units for any
Partnership purpose at any time or from time to time to the Partners (including
the General Partner) or to other Persons for such consideration and on such
terms and conditions as shall be established by the General Partner in its
sole
and absolute discretion, all without the approval of any Limited Partners.
Any
additional Partnership Interests issued thereby may be issued in one or more
classes, or one or more series of any of such classes, with such designations,
preferences and relative, participating, optional or other special rights,
powers and duties, including rights, powers and duties senior to Limited
Partnership Interests, all as shall be determined by the General Partner in
its
sole and absolute discretion and without the approval of any Limited Partner,
subject to Delaware law, 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. Without limiting the foregoing, the General
Partner is expressly authorized to cause the Partnership to issue Partnership
Units for less than fair market value, so long as the General Partner concludes
in good faith that such issuance is in the best interests of the General Partner
and the Partnership.
(b) Certain
Contributions of Proceeds of Issuance of REIT Shares.
If (i)
the Company issues additional REIT Shares and contributes, through the General
Partner or otherwise, some or all of the proceeds raised in connection with
such
issuance to the Partnership and (ii) the proceeds actually received and
contributed by the Company are less than the gross proceeds of such issuance
as
a result of any underwriter’s discount or other expenses paid or incurred in
connection with such issuance, then the Company shall be deemed to have made
a
Capital Contribution to the Partnership in the aggregate amount of the
Partnership’s share of the gross proceeds of such issuance that are contributed
to the Partnership and the Partnership shall be deemed simultaneously to have
paid such offering expenses in connection with the issuance of additional
Partnership Units to the Company for such Capital Contribution pursuant to
Section 4.02(a).
Upon
any such Capital Contribution by the Company, the Company’s Capital Account
shall be increased by the actual amount of its Capital Contribution pursuant
to
Section 4.04
hereof.
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(c) Minimum
Limited Partnership Interest.
In the
event that either a redemption pursuant to Section 9.04
hereof
or additional Capital Contributions by the General Partner would result in
the
Limited Partners (other than the Company), in the aggregate, owning less than
the Minimum Limited Partnership Interest, the General Partner and the Limited
Partners shall form another partnership and contribute sufficient Limited
Partnership Interests together with such other Limited Partners so that the
limited partners (other than the Company) of such partnership own at least
the
Minimum Limited Partnership Interest.
(d) Class
A Common Units and Class B Common Units.
Under
the authority granted to it by Section 4.02(a)
hereof,
the General Partner has established a class of Partnership Units entitled “Class
A Common Units” and a class of Partnership Units entitled “Class B Common
Units.” Class A Common Units and Class B Common Units have the designations and
duties as set forth herein. Any Partnership Units acquired by the Partnership
or
the General Partner through the satisfaction of the Redemption Right pursuant
to
Section 9.04
hereof
shall automatically convert into Class A Common Units on a one for one
basis.
4.03 Additional
Funding.
If the
General Partner determines that it is in the best interests of the Partnership
to provide for additional Partnership funds (“Additional Funds”) for any
Partnership purpose, the General Partner may (i) cause the Partnership to obtain
such funds from outside borrowings, or (ii) elect to have the General Partner
or
any of its Affiliates provide such Additional Funds to the Partnership through
loans or otherwise.
4.04 Capital
Accounts.
A
separate capital account (a “Capital Account”) shall be established and
maintained for each Partner in accordance with Regulations Section
1.704-1(b)(2)(iv). If (i) a new or existing Partner acquires an additional
Partnership Interest in exchange for more than a de minimis
Capital
Contribution, (ii) the Partnership distributes to a Partner more than a
de minimis
amount
of Partnership property as consideration for a Partnership Interest or (iii)
the
Partnership is liquidated within the meaning of Regulation Section
1.704-1(b)(2)(ii)(g), the General Partner shall revalue the property of the
Partnership to its fair market value (as determined by the General Partner,
in
its sole and absolute discretion, and taking into account Section 7701(g) of
the
Code) in accordance with Regulations Section 1.704-1(b)(2)(iv)(f). When the
Partnership’s property is revalued by the General Partner, the Capital Accounts
of the Partners shall be adjusted in accordance with Regulations Sections
1.704-1(b)(2)(iv)(f) and (g), which generally require such Capital Accounts
to
be adjusted to reflect the manner in which the unrealized gain or loss inherent
in such property (that has not been reflected in the Capital Accounts
previously) would be allocated among the Partners pursuant to Section
5.01
if there
were a taxable disposition of such property for its fair market value (as
determined by the General Partner, in its sole and absolute discretion, and
taking into account Section 7701(g) of the Code) on the date of the
revaluation.
4.05 Percentage
Interests.
If the
number of outstanding Partnership Units increases or decreases during a taxable
year, each Partner’s Class A or Class B Percentage Interest shall be adjusted by
the General Partner effective as of the effective date of each such increase
or
decrease to a percentage equal to the number of Class A or Class B Common Units
held by such Partner divided by the aggregate number of Class A or Class B
Common Units, as applicable, outstanding after giving effect to such increase
or
decrease. If the Partners’ Class A or Class B Percentage Interests are adjusted
pursuant to this Section 4.05,
the
Profits and Losses for the taxable
year in which the adjustment occurs shall be allocated between the part of
the
year ending on the day when the Partnership’s property is revalued by the
General Partner and the part of the year beginning on the following day either
(i) as if the taxable year had ended on the date of the adjustment or
(ii) based on the number of days in each part. The General Partner, in its
sole and absolute discretion, shall determine which method shall be used to
allocate Profits and Losses for the taxable year in which the adjustment occurs.
The allocation of Profits and Losses for the earlier part of the year shall
be
based on the Class A or Class B Percentage Interests before adjustment, and
the
allocation of Profits and Losses for the later part shall be based on the
adjusted Class A or Class B Percentage Interests.
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4.06 No
Interest on Contributions.
No
Partner shall be entitled to interest on its Capital Contribution.
4.07 Return
of Capital Contributions.
No
Partner shall be entitled to withdraw any part of its Capital Contribution
or
its Capital Account or to receive any distribution from the Partnership, except
as specifically provided in this Agreement. Except as otherwise provided herein,
there shall be no obligation to return to any Partner or withdrawn Partner
any
part of such Partner’s Capital Contribution for so long as the Partnership
continues in existence.
4.08 No
Third Party Beneficiary.
No
creditor or other third party having dealings with the Partnership shall have
the right to enforce the right or obligation of any Partner to make Capital
Contributions or loans or to pursue any other right or remedy hereunder or
at
law or in equity, it being understood and agreed that the provisions of this
Agreement shall be solely for the benefit of, and may be enforced solely by,
the
parties hereto and their respective successors and assigns. None of the rights
or obligations of the Partners herein set forth to make Capital Contributions
or
loans to the Partnership shall be deemed an asset of the Partnership for any
purpose by any creditor or other third party, nor may such rights or obligations
be sold, transferred or assigned by the Partnership or pledged or encumbered
by
the Partnership to secure any debt or other obligation of the Partnership or
of
any of the Partners. In addition, it is the intent of the parties hereto that
no
distribution to any Limited Partner shall be deemed a return of money or other
property in violation of the Act. However, if any court of competent
jurisdiction holds that, notwithstanding the provisions of this Agreement,
any
Limited Partner is obligated to return such money or property, such obligation
shall be the obligation of such Limited Partner and not of the General Partner.
Without limiting the generality of the foregoing, a deficit Capital Account
of a
Partner shall not be deemed to be a liability of such Partner nor an asset
or
property of the Partnership.
ARTICLE
V
PROFITS
AND LOSSES; DISTRIBUTIONS
5.01 Allocation
of Profit and Loss.
(a) Profit.
Subject
to Section 6.04(h)
hereof,
Profit of the Partnership for each fiscal year of the Partnership shall be
allocated as follows:
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(i) First,
if
holders of the Class A Common Units previously have been allocated Loss under
Section 5.01(b),
to such
holders in accordance with their respective Class A Percentage Interests until
the aggregate amount of Profit allocated under this Section 5.01(a)(i) equals
the aggregate amount of Loss allocated under Section 5.01(b);
(ii) Second,
to the holders of the Class B Common Units until the aggregate amount of Profit
allocated to such holders under this Section 5.01(a)(ii) for the current and
all
prior years equals the aggregate amount of cash distributed to such holders
under Section 5.02(a)(i) for the current and all prior years; and
(iii) Third,
any remaining amounts pro rata to the holders of the Class A Common Units in
accordance with their respective Class A Percentage Interests.
(b) Loss.
Loss of
the Partnership for each fiscal year of the Partnership shall be allocated
to
the holders of the Class A Common Units in accordance with their respective
Class A Percentage Interests.
(c) Minimum
Gain Chargeback.
Notwithstanding any provision to the contrary, (i) any expense of the
Partnership that is a “nonrecourse deduction” within the meaning of Regulations
Section 1.704-2(b)(1) shall be allocated in accordance with the Partners’
respective Percentage Interests, (ii) any expense of the Partnership that is
a
“partner nonrecourse deduction” within the meaning of Regulations Section
1.704-2(i)(2) shall be allocated to the Partner that bears the “economic risk of
loss” of such deduction in accordance with Regulations Section 1.704-2(i)(1),
(iii) if there is a net decrease in Partnership Minimum Gain within the meaning
of Regulations Section 1.704-2(f)(1) for any Partnership taxable year, then,
subject to the exceptions set forth in Regulations Section 1.704-2(f)(2),(3),
(4) and (5), items of gain and income shall be allocated among the Partners
in
accordance with Regulations Section 1.704-2(f) and the ordering rules contained
in Regulations Section 1.704-2(j), and (iv) if there is a net decrease in
Partner Nonrecourse Debt Minimum Gain within the meaning of Regulations Section
1.704-2(i)(4) for any Partnership taxable year, then, subject to the exceptions
set forth in Regulations Section 1.704(2)(g), items of gain and income shall
be
allocated among the Partners in accordance with Regulations Section
1.704-2(i)(4) and the ordering rules contained in Regulations Section
1.704-2(j). A Partner’s “interest in partnership profits” for purposes of
determining its share of the nonrecourse liabilities of the Partnership within
the meaning of Regulations Section 1.752-3(a)(3) shall be such Partner’s Class A
Percentage Interest.
(d) Qualified
Income Offset.
If a
Partner receives in any taxable year an adjustment, allocation or distribution
described in subparagraphs (4), (5) or (6) of Regulations Section
1.704-1(b)(2)(ii)(d) that causes or increases a deficit balance in such
Partner’s Capital Account that exceeds the sum of such Partner’s shares of
Partnership Minimum Gain and Partner Nonrecourse Debt Minimum Gain, as
determined in accordance with Regulations Sections 1.704-2(g) and 1.704-2(i),
such Partner shall be allocated specially for such taxable year (and, if
necessary, later taxable years) items of income and gain in an amount and manner
sufficient to eliminate such deficit Capital Account balance as quickly as
possible as provided in Regulations Section 1.704-1(b)(2)(ii)(d). After the
occurrence of an allocation of income or gain to a Partner in accordance with
this Section 5.01(d),
to the
extent permitted by Regulations Section 1.7041(b),
items of expense or loss shall be allocated to such Partner in an amount
necessary to offset the income or gain previously allocated to such Partner
under this Section 5.01(d).
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(e) Capital
Account Deficits.
Loss
shall not be allocated to a Limited Partner to the extent that such allocation
would cause a deficit in such Partner’s Capital Account (after reduction to
reflect the items described in Regulations Section 1.704-1(b)(2)(ii)(d)(4),
(5)
and (6)) to exceed the sum of such Partner’s shares of Partnership Minimum Gain
and Partner Nonrecourse Debt Minimum Gain. Any Loss in excess of that limitation
shall be allocated to the General Partner. After the occurrence of an allocation
of Loss to the General Partner in accordance with this Section 5.01(e),
to the
extent permitted by Regulations Section 1.704-1(b), Profit shall be allocated
to
such Partner in an amount necessary to offset the Loss previously allocated
to
each Partner under this Section 5.01(e).
(f) Allocations
Between Transferor and Transferee.
If a
Partner transfers any part or all of its Partnership Interest, the distributive
shares of the various items of Profit and Loss allocable among the Partners
during such fiscal year of the Partnership shall be allocated between the
transferor and the transferee Partner either (i) as if the Partnership’s
fiscal year had ended on the date of the transfer, or (ii) based on the
number of days of such fiscal year that each was a Partner without regard to
the
results of Partnership activities in the respective portions of such fiscal
year
in which the transferor and the transferee were Partners. The General Partner,
in its sole and absolute discretion, shall determine which method shall be
used
to allocate the distributive shares of the various items of Profit and Loss
between the transferor and the transferee Partner.
(g) Definition
of Profit and Loss.
“Profit” and “Loss” and any items of income, gain, expense or loss referred to
in this Agreement shall be determined in accordance with federal income tax
accounting principles, as modified by Regulations Section 1.704-1(b)(2)(iv),
except that Profit and Loss shall not include items of income, gain and expense
that are specially allocated pursuant to Sections 5.01(c),
5.01(d)
or
5.01(e).
All
allocations of income, Profit, gain, Loss and expense (and all items contained
therein) for federal income tax purposes shall be identical to all allocations
of such items set forth in this Section 5.01,
except
as otherwise required by Section 704(c) of the Code and Regulations Section
1.704-1(b)(4). The General Partner shall have the authority to elect the method
to be used by the Partnership for allocating items of income, gain and expense
as required by Section 704(c) of the Code with respect to such properties,
and
such election shall be binding on all Partners.
5.02 Distribution
of Cash.
(a) Subject
to Sections 5.02(c)
and
6.04
hereof,
the Partnership shall distribute cash at such times and in such amounts as
are
determined by the General Partner in its sole and absolute discretion, to the
Partners who are Partners on the Partnership Record Date with respect to such
quarter (or other distribution period). Such amounts shall be distributed to
the
Partners in the following order of priority:
(i) first,
to
the holders of Class B Common Units, in proportion to their respective Class
B
Percentage Interests on the Partnership Record Date, until each holder
of
Class B Common Units has received an amount equal to the excess, if any of
(A)
its cumulative Class B Return for the current and all prior quarters (or other
distribution period) over (B) the sum of all prior distributions to such holder
under this Section 5.02(a)(i)
such
quarter (or other distribution period);
and
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(ii) thereafter,
to the holders of Class A Common Units, in accordance with their respective
Class A Percentage Interests on the Partnership Record Date.
(b) If
a new
or existing Partner (other than the Company) acquires an additional Partnership
Interest in exchange for a Capital Contribution on any date other than a
Partnership Record Date, the cash distribution attributable to such additional
Partnership Interest relating to the Partnership Record Date next following
the
issuance of such additional Partnership Interest shall be reduced in the
proportion to (i) the number of days that such additional Partnership Interest
is held by such Partner bears to (ii) the number of days between such
Partnership Record Date and the immediately preceding Partnership Record
Date.
(c) Notwithstanding
any other provision of this Agreement, the General Partner is authorized to
take
any action that it determines to be necessary or appropriate to cause the
Partnership to comply with any withholding requirements established under the
Code or any other federal, state or local law including, without limitation,
pursuant to Sections 1441, 1442, 1445 and 1446 of the Code. To the extent that
the Partnership is required to withhold and pay over to any taxing authority
any
amount resulting from the allocation or distribution of income to a Partner
or
assignee (including by reason of Section 1446 of the Code), either (i) if
the actual amount to be distributed to the Partner (the “Distributable Amount”)
equals or exceeds the amount required to be withheld by the Partnership (the
“Withheld Amount”), the entire Distributable Amount shall be treated as a
distribution of cash to such Partner, or (ii) if the Distributable Amount is
less than the Withheld Amount, the excess of the Withheld Amount over the
Distributable Amount shall be treated as a loan (a “Partnership Loan”) from the
Partnership to the Partner on the day the Partnership pays over such amount
to a
taxing authority. A Partnership Loan shall be repaid upon the demand of the
Partnership or, alternatively, through withholding by the Partnership with
respect to subsequent distributions to the applicable Partner or assignee.
In
the event that a Limited Partner (a “Defaulting Limited Partner”) fails to pay
any amount owed to the Partnership with respect to the Partnership Loan within
15 days after demand for payment thereof is made by the Partnership on the
Limited Partner, the General Partner, in its sole and absolute discretion,
may
elect to make the payment to the Partnership on behalf of such Defaulting
Limited Partner. In such event, on the date of payment, the General Partner
shall be deemed to have extended a loan (a “General Partner Loan”) to the
Defaulting Limited Partner in the amount of the payment made by the General
Partner and shall succeed to all rights and remedies of the Partnership against
the Defaulting Limited Partner as to that amount. Without limitation, the
General Partner shall have the right to receive any distributions that otherwise
would be made by the Partnership to the Defaulting Limited Partner until such
time as the General Partner Loan has been paid in full, and any such
distributions so received by the General Partner shall be treated as having
been
received by the Defaulting Limited Partner and immediately paid to the General
Partner.
Any
amounts treated as a Partnership Loan or a General Partner Loan pursuant to
this
Section 5.02(d)
shall
bear interest at the lesser of (i) the base rate on corporate loans at large
United
States money center commercial banks, as published from time to time in
The
Wall Street Journal,
or (ii)
the maximum lawful rate of interest on such obligation, such interest to accrue
from the date the Partnership or the General Partner, as applicable, is deemed
to extend the loan until such loan is repaid in full.
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(d) In
no
event may a Partner receive a distribution of cash with respect to a Partnership
Unit if such Partner is entitled to receive a cash dividend as the holder of
record of a REIT Share for which all or part of such Partnership Unit has been
or will be redeemed.
5.03 REIT
Distribution Requirements.
The
General Partner shall use its reasonable efforts to cause the Partnership to
distribute amounts sufficient to enable the Company to pay shareholder dividends
that will allow the Company to (i) meet its distribution requirement for
qualification as a REIT as set forth in Section 857 of the Code and (ii) avoid
any federal income or excise tax liability imposed by the Code, other than
to
the extent the Company elects to retain and pay income tax on its net capital
gain.
5.04 No
Right to Distributions in Kind.
No
Partner shall be entitled to demand property other than cash in connection
with
any distributions by the Partnership.
5.05 Limitations
on Return of Capital Contributions.
Notwithstanding any of the provisions of this Article V,
no
Partner shall have the right to receive, and the General Partner shall not
have
the right to make, a distribution that includes a return of all or part of
a
Partner’s Capital Contributions, unless after giving effect to the return of a
Capital Contribution, the sum of all Partnership liabilities, other than the
liabilities to a Partner for the return of his Capital Contribution, does not
exceed the fair market value of the Partnership’s assets.
5.06 Distributions
Upon Liquidation.
(a) Subject
to Section 6.05
hereof,
upon liquidation of the Partnership, after payment of, or adequate provision
for, debts and obligations of the Partnership, including any Partner loans,
any
remaining assets of the Partnership shall be distributed to all Partners with
positive Capital Accounts in accordance with their respective positive Capital
Account balances.
(b) For
purposes of Section 5.06(a),
the
Capital Account of each Partner shall be determined after the following
adjustments: (i) all adjustments made in accordance with Sections 5.01
and
5.02
resulting from Partnership operations and from all sales and dispositions of
all
or any part of the Partnership’s assets, and (ii) allocating to the Company an
amount equal to the excess of (A) the value of the Partnership Units it received
in exchange for Capital Contributions of the proceeds of an issuance of REIT
Shares pursuant to Section 4.02(b)
hereof
over (B) the actual amount of its Capital Contributions pursuant to Section
4.02(b)
hereof
(i.e.,
as a
result of any underwriters’ discount or other expenses paid or incurred in
connection with such issuance).
(c) Any
distributions pursuant to this Section 5.06
shall be
made by the end of the Partnership’s taxable year in which the liquidation
occurs (or, if later, within 90 days after the date of the liquidation). To
the
extent deemed advisable by the General Partner, appropriate arrangements
(including the use of a liquidating trust) may be made to assure that adequate
funds are available to pay any contingent debts or obligations.
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5.07 Substantial
Economic Effect.
It is
the intent of the Partners that the allocations of Profit and Loss under the
Agreement have substantial economic effect (or be consistent with the Partners’
interests in the Partnership in the case of the allocation of losses
attributable to nonrecourse debt) within the meaning of Section 704(b) of the
Code as interpreted by the Regulations promulgated pursuant thereto. Article
V
and
other relevant provisions of this Agreement shall be interpreted in a manner
consistent with such intent.
ARTICLE
VI
8.125%
SERIES
A CUMULATIVE REDEEMABLE PREFERRED
UNITS
6.01 Designation
and Number.
A
series of Preferred Units, designated the “8.125% Series A Cumulative Redeemable
Preferred Units” (the “Series A Preferred Units”), is hereby established. The
number of authorized Series A Preferred Units shall be 1,610,000, 1,400,000
of
which shall be issued and outstanding as of the date hereof.
The
ownership of the Series A Preferred Units is shown on Exhibit A, as amended
from
time to time.
6.02 Maturity.
The
Series A Preferred Units have no stated maturity and will not be subject to
any
sinking fund or mandatory redemption.
6.03 Rank.
The
Series A Preferred Units will, with respect to distribution rights and rights
upon liquidation, dissolution or winding up of the Partnership, rank (a) senior
to all classes or series of Common Units and to all other Preferred Units of
the
Partnership, the terms of which provide that such units shall rank junior to
the
Series A Preferred Units; (b) on a parity with all Partnership Units issued
by
the Partnership, other than those Partnership Units referred to in clauses
(a)
and (c); and (c) junior to all Partnership Units issued by the Partnership
which
rank senior to the Series A Preferred Units that are issued in connection with
the Company’s issuance of preferred stock that is senior to the Series A
Preferred Stock in accordance with Section 6(d) of the Articles Supplementary.
The
term
“Preferred Units” does not include convertible debt securities of the
Partnership, which shall rank senior to the Series A Preferred Units prior
to
conversion.
6.04 Allocations
and Distributions.
(a) Holders
of Series A Preferred Units shall be entitled to receive, when and as authorized
by the General Partner, and declared by the Partnership out of funds legally
available for payment, cumulative preferential cash distributions at the rate
of
eight and one-eighth percent (8.125%) per annum of the Twenty-five Dollars
($25.00) per unit liquidation preference of the Series A Preferred Units
(equivalent to a fixed annual amount of $2.03125 per Series A Preferred Unit).
However,
if the Series A Preferred Stock is delisted from the New York Stock Exchange
following a Change of Control (as defined in the Articles Supplementary),
holders of Series A Preferred Units shall be entitled to receive, when and
as
authorized by the Partnership, out of funds legally available for payment,
cumulative preferential cash distributions at the rate of nine and one-eighth
percent (9.125%) per annum of the Twenty-five Dollars ($25.00) per unit
liquidation preference of the Series A Preferred Units (equivalent to a fixed
annual amount of $2.28125 per unit). Such
distributions shall accumulate on a daily basis and be cumulative
from (but excluding) the original date of issuance and be payable quarterly
in
equal amounts in arrears on or about the fifteenth (15th)
day of
each January, April, July and October of each year, beginning on
January 17, 2006 (each such day being hereinafter called a “Distribution
Payment Date”);
provided
that if
any Distribution Payment Date is not a Business Day, then the distribution
which
would otherwise have been payable on such Distribution Payment Date may be
paid
on the next succeeding Business Day with the same force and effect as if paid
on
such Distribution Payment Date, and no interest or additional distributions
or
other sums shall accrue on the amount so payable from such Distribution Payment
Date to such next succeeding Business Day. Any distribution payable on the
Series A Preferred Units for any partial distribution period shall be prorated
and computed on the basis of a 360-day year consisting of twelve 30-day months.
Distributions shall be payable to holders of record as they appear in the unit
records of the Partnership at the close of business on the applicable record
date, which shall be the last day of the calendar month that immediately
precedes the calendar month in which the applicable Distribution Payment Date
falls or such other date designated by the General Partner of the Partnership
for the payment of distributions that is not more than 30 nor less than 10
days
prior to such Distribution Payment Date (each, a “Distribution Record
Date”).
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(b) No
distributions on Series A Preferred Units shall be authorized by the General
Partner or declared or paid or set apart for payment by the Partnership at
such
time as the terms and provisions of any agreement of the General Partner or
the
Partnership, including any agreement relating to the indebtedness of either
of
them, prohibits such declaration, payment or setting apart for payment or
provides that such declaration, payment or setting apart for payment would
constitute a breach thereof or a default thereunder, or if such declaration
or
payment shall be restricted or prohibited by law.
(c) Notwithstanding
anything to the contrary contained herein, distributions on the Series A
Preferred Units shall accumulate whether or not the restrictions referred to
in
Section 6.04(b)
exist,
whether or not the Partnership has earnings, whether or not there are funds
legally available for the payment of such distributions and whether or not
such
distributions are authorized. Accumulated but unpaid distributions on the Series
A Preferred Units will accumulate as of the Distribution Payment Date on which
they first become payable or on the date of redemption as the case may be.
Accumulated and unpaid distributions will not bear interest.
(d) Except
as
provided in the next sentence, if any Series A Preferred Units are outstanding,
no distributions will be authorized or paid or set apart for payment on any
Common Units or any other Preferred Units of the Partnership ranking, as to
distributions, on a parity with or junior to the Series A Preferred Units unless
full cumulative distributions have been or contemporaneously are authorized
and
paid or authorized and a sum sufficient for the payment thereof set apart for
such payment on the Series A Preferred Units for all past distribution periods
and the then current distribution period. When distributions are not paid in
full (or a sum sufficient for such full payment is not so set apart) upon the
Series A Preferred Units and all other Preferred Units of the Partnership
ranking on a parity, as to distributions, with the Series A Preferred Units,
all
distributions authorized, paid or set apart for payment upon the Series A
Preferred Units and all other Preferred Units of the Partnership ranking on
a
parity, as to distributions, with the Series A Preferred Units shall be
authorized and paid pro rata or authorized
and set apart for payment pro rata so that the amount of distributions
authorized per Series A Preferred Unit and each such other Preferred Unit shall
in all cases bear to each other the same ratio that accumulated distributions
per Series A Preferred Unit and such other Preferred Unit (which shall not
include any accumulation in respect of unpaid distributions for prior
distribution periods if such Preferred Units do not have a cumulative
distribution) bear to each other. No interest, or sum of money in lieu of
interest, shall be payable in respect of any distribution payment or payments
on
Series A Preferred Units which may be in arrears.
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(e) Except
as
provided in Section 6.04(d),
unless
full cumulative distributions on the Series A Preferred Units have been or
contemporaneously are authorized and paid or authorized and a sum sufficient
for
the payment thereof is set apart for payment for all past distribution periods
and the then current distribution period, no distributions (other than in the
form of Common Units or other Preferred Units of the Partnership ranking junior
to the Series A Preferred Units as to distributions and upon liquidation) shall
be authorized or paid or set apart for payment nor shall any other distribution
be authorized or made upon the Common Units or other Preferred Units of the
Partnership ranking junior to or on a parity with the Series A Preferred Units
as to distributions or upon liquidation, nor shall any Common Units or other
Preferred Units of the Partnership ranking junior to or on a parity with the
Series A Preferred Units as to distributions or upon liquidation be redeemed,
purchased or otherwise acquired directly or indirectly for any consideration
(or
any monies be paid to or made available for a sinking fund for the redemption
of
any such Common Units or Preferred Units) by the Partnership (except in
accordance with the terms of this Agreement or by conversion into or exchange
for other Common Units or Preferred Units of the Partnership ranking junior
to
the Series A Preferred Units as to distributions and upon liquidation, by
redemption, purchase or acquisition of Common Units or Preferred Units of the
Partnership under any employee benefit plan of the General Partner or
Partnership, or by other redemption, purchase or acquisition of such Common
Units or Preferred Units of the Partnership pursuant to Article VII of the
Articles of Amendment and Restatement of the Company or otherwise, in order
to
ensure that the Company remains qualified as a REIT).
(f) Holders
of Series A Preferred Units shall not be entitled to any distribution, whether
payable in cash, property or units, in excess of full cumulative distributions
on the Series A Preferred Units as described above. Any distribution payment
made on the Series A Preferred Units shall first be credited against the
earliest accumulated but unpaid distribution due with respect to such units
which remains payable.
(g) In
determining whether a distribution (other than upon voluntary or involuntary
liquidation, dissolution or winding up of the Partnership) in Common Units
or
Preferred Units of the Partnership or by redemption or otherwise of the
Partnership Interests of the Partnership is permitted under Delaware law, no
effect shall be given to amounts that would be needed, if the Partnership were
to be dissolved at the time of the distribution, to satisfy the preferential
rights upon dissolution of holders of Partnership Units whose preferential
rights on dissolution are superior to those receiving the
distribution.
(h) Prior
to
any allocation of Profit pursuant to Section 5.01(a)
of this
Agreement, Profit will be allocated to
holders of Series A Preferred Units in an amount equal to the
distributions made to holders of Series A Preferred Units under Section
6.04(a)
of this
Agreement.
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6.05 Liquidation
Rights.
(a) In
the
event of any voluntary or involuntary liquidation, dissolution or winding up
of
the Partnership (referred to herein sometimes as a “liquidation”), the holders
of the Series A Preferred Units then outstanding shall be entitled to receive,
out of the assets of the Partnership legally available for distribution to
its
Partners (after payment or provision for payment of all debts and other
liabilities of the Partnership), a liquidation preference in cash of Twenty-five
Dollars ($25.00) per Series A Preferred Unit, plus an amount equal to all
accumulated and unpaid distributions through and including the date of payment,
before any distribution of assets is made to holders of Common Units or any
other Preferred Units of the Partnership that rank junior to the Series A
Preferred Units as to liquidation rights.
(b) If,
upon
any such voluntary or involuntary liquidation, dissolution or winding up of
the
Partnership, the assets of the Partnership are insufficient to make full payment
to holders of Series A Preferred Units and to the corresponding amounts payable
on all other Preferred Units of the Partnership ranking on a parity with the
Series A Preferred Units as to liquidation rights, then the holders of the
Series A Preferred Units and all other Preferred Units of the Partnership
ranking on a parity with the Series A Preferred Units as to liquidation rights
shall share ratably in any such distribution of assets in proportion to the
full
liquidating distributions to which they would otherwise be respectively
entitled.
(c) Written
notice of any such liquidation, dissolution or winding up of the Partnership,
stating the payment date or dates when, and the place or places where, the
amounts distributable in such circumstances shall be payable, shall be given
by
first class mail, postage pre-paid, not less than 30 nor more than 60 days
prior
to the payment date stated therein, to each record holder of the Series A
Preferred Units at the respective address of such holders as the same shall
appear on the share transfer records of the Partnership.
(d) After
payment of the full amount of the liquidating distributions to which they are
entitled, the holders of Series A Preferred Units will have no right or claim
to
any of the remaining assets of the Partnership.
(e) None
of a
consolidation or merger of the Partnership with or into another entity, a merger
of another entity with or into the Partnership, a statutory security exchange
by
the Partnership or a sale, lease, transfer or conveyance of all or substantially
all of the Partnership’s property or business shall be considered a liquidation,
dissolution or winding up of the Partnership.
6.06 Redemption.
(a) The
Series A Preferred Units are not redeemable prior to October 19, 2010.
Consistent with the provisions set forth in Article VII of the Articles of
Amendment and Restatement of the Company, however, the Partnership shall have
the right to purchase the amount of Series A Preferred Units necessary to ensure
that the Company remains qualified as a REIT for federal income tax purposes.
On
and after October 19, 2010, the Partnership, at its option,
upon giving notice as provided below, may redeem the Series A Preferred Units,
in whole or from time to time in part, for cash, at a redemption price of
Twenty-five Dollars ($25.00) per Series A Preferred Unit, plus all accumulated
and unpaid distributions on such Series A Preferred Units through the date
of
such redemption (the “Series A Redemption Right”).
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(b) If
fewer
than all of the outstanding Series A Preferred Units are to be redeemed pursuant
to the Series A Redemption Right, the Series A Preferred Units to be redeemed
shall be selected pro rata (as nearly as practicable without creating fractional
units) or by lot or in such other equitable method prescribed by the
Partnership.
(c) Notwithstanding
anything to the contrary contained herein, unless full cumulative distributions
on all Series A Preferred Units shall have been or contemporaneously are
authorized and paid or authorized and a sum sufficient for the payment thereof
set apart for payment for all past distribution periods and the then current
distribution period, no Series A Preferred Unit may be redeemed unless all
of
the outstanding Series A Preferred Units are simultaneously redeemed;
provided,
however,
that
the foregoing shall not prevent the purchase by the Partnership of Series A
Preferred Units necessary to ensure that the Company remains qualified as a
REIT
for federal income tax purposes or the purchase or acquisition of Series A
Preferred Units pursuant to a purchase or exchange offer made on the same terms
to holders of all of the Series A Preferred Units. In addition, unless full
cumulative distributions on all Series A Preferred Units have been or
contemporaneously are authorized and paid or authorized and a sum sufficient
for
the payment thereof set apart for payment for all past distribution periods
and
the then current distribution period, the Partnership shall not purchase or
otherwise acquire directly or indirectly for any consideration, nor shall any
monies be paid to or be made available for a sinking fund for the redemption
of,
any Series A Preferred Units (except in accordance with this Agreement or by
conversion into or exchange for Common Units or any other Preferred Units of
the
Partnership ranking junior to the Series A Preferred Units as to distributions
and upon liquidation;
provided, however,
that
the foregoing shall not prevent any purchase or acquisition of Series A
Preferred Units for the purpose of preserving the Company’s status as a REIT or
pursuant to a purchase or exchange offer made on the same terms to holders
of
all of the outstanding Series A Preferred Units).
(d) Immediately
prior to any redemption of Series A Preferred Units, the Partnership shall
pay,
in cash, any accumulated and unpaid distributions through the redemption date,
unless a redemption date falls after a Distribution Record Date and prior to
the
corresponding Distribution Payment Date, in which case each holder of Series
A
Preferred Units at the close of business on such Distribution Record Date shall
be entitled to the distribution payable on such Series A Preferred Units on
the
corresponding Distribution Payment Date (including any accrued and unpaid
distributions for prior periods) notwithstanding the redemption of such units
before such Distribution Payment Date. Except as provided above, the Partnership
will make no payment or allowance for unpaid distributions, whether or not
in
arrears, on Series A Preferred Units for which a notice of redemption has been
given.
(e) The
following provisions set forth the procedures for redemption:
(i) Notice
of
redemption shall be given to the respective holders of record of the Series
A
Preferred Units to be redeemed at their respective addresses as they appear
on
the unit transfer records of the Partnership. No failure to give such notice
or
any defect thereto or in the mailing thereof shall affect the validity of the
proceedings for the redemption of any Series A Preferred Units except as to
the
holder to whom notice was defective or not given.
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(ii) In
addition to any information required by law or by the applicable rules of any
exchange upon which the Series A Preferred Units may be listed or admitted
to
trading, such notice shall state: (A) the redemption date; (B) the redemption
price; (C) the number of Series A Preferred Units to be redeemed; (D) the place
or places where the Series A Preferred Units are to be surrendered for payment
of the redemption price; and (E) that distributions on the Series A Preferred
Units to be redeemed will cease to accumulate on such redemption date. If less
than all of the Series A Preferred Units held by any holder are to be redeemed,
the notice mailed to such holder shall also specify the number of Series A
Preferred Units held by such holder to be redeemed.
(iii) On
or
after the redemption date, each holder of the Series A Preferred Units to be
redeemed shall present and surrender any certificates representing his Series
A
Preferred Units to the Partnership
at
the
place designated in the notice of redemption and thereupon the redemption price
of such units (including all accumulated and unpaid distributions up to the
redemption date) shall be paid to or on the order of the person whose name
appears on such certificate evidencing the Series A Preferred Units as the
owner
thereof and each surrendered certificate shall be canceled. If fewer than all
the units evidenced by any such certificate evidencing the Series A Preferred
Units to be redeemed, a new certificate shall be issued evidencing the
unredeemed units.
(iv) From
and
after the redemption date (unless the Partnership defaults in payment of the
redemption price), all distributions on the Series A Preferred Units designated
for redemption in such notice shall cease to accumulate and all rights of the
holders thereof, except the right to receive the redemption price thereof
payable upon redemption without interest (including all accumulated and unpaid
distributions up to the redemption date), shall cease and terminate and such
units shall not thereafter be transferred (except with the consent of the
Partnership) on the Partnership’s unit transfer records, and such units shall
not be deemed to be outstanding for any purpose whatsoever. At its election,
the
Partnership, prior to a redemption date, may irrevocably deposit the redemption
price (including accumulated and unpaid distributions to the redemption date)
of
the Series A Preferred Units so called for redemption in trust for the holders
thereof with a bank or trust company, in which case the redemption notice to
holders of the Series A Preferred Units to be redeemed shall (A) state the
date
of such deposit, (B) specify the office of such bank or trust company as the
place of payment of the redemption price and (C) require such holders to
surrender the certificates evidencing such units at such place on or about
the
date fixed in such redemption notice (which may not be later than the redemption
date) against payment of the redemption price (including all accumulated and
unpaid distributions to the redemption date). Any monies so deposited which
remain unclaimed by the holders of the Series A Preferred Units at the end
of
two years after the redemption date shall be returned by such bank or trust
company to the Partnership.
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(f) Any
Series A Preferred Units that shall at any time have been redeemed shall, after
such redemption, have the status of authorized but unissued Preferred Units,
without designation as to series until such units are once more designated
as
part of a particular series by the Partnership.
6.07 Voting
Rights.
(a) Holders
of the Series A Preferred Units shall not have any voting rights, except as
set
forth below. In any matter in which the holders of Series A Preferred Units
are
entitled to vote, each such holder shall have the right to one vote for each
Series A Preferred Unit held by such holder. If the holders of the Series A
Preferred Units and the holders of another series of Preferred Units are
entitled to vote together as a single class on any matter, the holders of the
Series A Preferred Units and the holders of such other Preferred Units shall
each have one vote for each $25.00 of liquidation preference.
(b) So
long
as any Series A Preferred Units remain outstanding, the Company shall not,
without the affirmative vote of the holders of at least two-thirds of the Series
A Preferred Units outstanding at the time, given in person or by proxy, either
in writing or at a meeting (such series voting separately as a class), (i)
authorize or create, or increase the authorized or issued amount of, any class
or series of Preferred Units ranking senior to the Series A Preferred Units
with
respect to distribution rights and or rights upon liquidation, dissolution
or
winding up of the Partnership, or reclassify any authorized Preferred Units
of
the Partnership into any class or series of Preferred Units ranking senior
to
the Series A Preferred Units, or create, authorize or issue any obligation
or
security convertible into or evidencing the right to purchase any such Preferred
Units; or (ii) amend, alter or repeal the provisions of this Agreement, whether
by merger or consolidation (in either case, an “Event”) or otherwise, so as to
materially and adversely affect any right, preference, privilege or voting
power
of the Series A Preferred Units or the holders thereof; provided, however,
that
with respect to the occurrence of any Event set forth in (ii) above, so long
as
any Series A Preferred Units (or any equivalent class or series of units issued
by the surviving entity in such merger or consolidation to which the Partnership
is a party) remains outstanding with the terms thereof materially unchanged,
taking into account that upon the occurrence of an Event, the Partnership may
not be the surviving entity and such surviving entity may thereafter be the
issuer of the Series A Preferred Units (or such equivalent class or series),
the
occurrence of any such Event shall not be deemed to materially and adversely
affect such rights, preferences, privileges or voting powers of the Series
A
Preferred Units or the holders thereof; and provided further that (x) any
increase in the amount of the authorized Preferred Units or the creation or
issuance of any other class or series of Preferred Units, or (y) any increase
in
the amount of authorized Series A Preferred Units or any other class or series
of Preferred Units, in the case of each of (x) or (y) above ranking on a parity
with or junior to the Series A Preferred Units with respect to distribution
rights and rights upon liquidation, dissolution or winding up of the
Partnership, shall not be deemed to materially and adversely affect such rights,
preferences, privileges or voting powers.
(c) The
foregoing voting provisions shall not apply if, at or prior to the time when
the
act with respect to which such vote would otherwise be required shall be
effected, all outstanding Series A Preferred Units shall have been redeemed
or
called for redemption upon proper
notice and sufficient funds shall have been deposited in the Partnership to
effect such redemption.
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6.08 No
Conversion Rights.
The
Series A Preferred Units shall not be convertible into or exchangeable for
any
other property or securities of the Partnership or any other
entity.
6.09 Exclusion
of Other Rights.
The
Series A Preferred Units shall not have any preferences or other rights, voting
powers, restrictions, limitations as to distributions, qualifications or terms
or conditions of redemption other than expressly set forth in this
Agreement.
6.10 Severability
of Provisions.
If any
preferences or other rights, voting powers, restrictions, limitations as to
distributions, qualifications or terms or conditions of redemption of the Series
A Preferred Units set forth in this Agreement are invalid, unlawful or incapable
of being enforced by reason of any rule of law or public policy, all other
preferences or other rights, voting powers, restrictions, limitations as to
distributions, qualifications or terms or conditions of redemption of Series
A
Preferred Units set forth in this Agreement which can be given effect without
the invalid, unlawful or unenforceable provision thereof shall, nevertheless,
remain in full force and effect and no preferences or other rights, voting
powers, restrictions, limitations as to distributions, qualifications or terms
or conditions of redemption of the Series A Preferred Units herein set forth
shall be deemed dependent upon any other provision thereof unless so expressed
therein.
ARTICLE
VII
RIGHTS,
OBLIGATIONS AND
POWERS
OF THE GENERAL PARTNER
7.01 Management
of the Partnership.
(a) Except
as
otherwise expressly provided in this Agreement, the General Partner shall have
full, complete and exclusive discretion to manage and control the business
of
the Partnership for the purposes herein stated, and shall make all decisions
affecting the business and assets of the Partnership. Subject to the
restrictions specifically contained in this Agreement, the powers of the General
Partner shall include, without limitation, the authority to take the following
actions on behalf of the Partnership:
(i) to
acquire, purchase, own, operate, lease and dispose of any real property and
any
other property or assets including, but not limited to, any property contributed
by any Limited Partner and notes and mortgages that the General Partner
determines are necessary or appropriate in the business of the
Partnership;
(ii) to
construct buildings and make other improvements on the properties owned or
leased by the Partnership;
(iii) to
authorize, issue, sell, redeem or otherwise purchase any Partnership Interests
or any securities (including secured and unsecured debt obligations of the
Partnership, debt obligations of the Partnership convertible into any class
or
series of
Partnership Interests, or options, rights, warrants or appreciation rights
relating to any Partnership Interests) of the Partnership;
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(iv) to
borrow
or lend money for the Partnership, issue or receive evidences of indebtedness
in
connection therewith, refinance, increase the amount of, modify, amend or change
the terms of, or extend the time for the payment of, any such indebtedness,
and
secure indebtedness by mortgage, deed of trust, pledge or other lien on the
Partnership’s assets;
(v) to
pay,
either directly or by reimbursement, for all operating costs and general
administrative expenses of the Partnership to third parties or to the General
Partner or its Affiliates as set forth in this Agreement;
(vi) to
guarantee or become a co-maker of indebtedness of any Subsidiary of the Company,
refinance, increase the amount of, modify, amend or change the terms of, or
extend the time for the payment of, any such guarantee or indebtedness, and
secure such guarantee or indebtedness by mortgage, deed of trust, pledge or
other lien on the Partnership’s assets;
(vii) to
use
assets of the Partnership (including, without limitation, cash on hand) for
any
purpose consistent with this Agreement, including, without limitation, payment,
either directly or by reimbursement, of all operating costs and general and
administrative expenses of the General Partner, the Partnership or any
Subsidiary of either, to third parties or to the General Partner as set forth
in
this Agreement;
(viii) to
lease
all or any portion of any of the Partnership’s assets, whether or not the terms
of such leases extend beyond the termination date of the Partnership and whether
or not any portion of the Partnership’s assets so leased are to be occupied by
the lessee, or, in turn, subleased in whole or in part to others, for such
consideration and on such terms as the General Partner may
determine;
(ix) to
prosecute, defend, arbitrate or compromise any and all claims or liabilities
in
favor of or against the Partnership, on such terms and in such manner as the
General Partner may reasonably determine, and similarly to prosecute, settle
or
defend litigation with respect to the Partners, the Partnership or the
Partnership’s assets;
(x) to
file
applications, communicate and otherwise deal with any and all governmental
agencies having jurisdiction over, or in any way affecting, the Partnership’s
assets or any other aspect of the Partnership business;
(xi) to
make
or revoke any election permitted or required of the Partnership by any taxing
authority;
(xii) to
maintain such insurance coverage for public liability, fire and casualty, and
any and all other insurance for the protection of the Partnership, for the
conservation of Partnership assets, or for any other purpose convenient or
beneficial to the Partnership, in such amounts and such types, as it shall
determine from time to time;
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(xiii) to
determine whether or not to apply any insurance proceeds for any property to
the
restoration of such property or to distribute the same;
(xiv) to
establish one or more divisions of the Partnership, to hire and dismiss
employees of the Partnership or any division of the Partnership, and to retain
legal counsel, accountants, consultants, real estate brokers and such other
persons as the General Partner may deem necessary or appropriate in connection
with the Partnership business and to pay therefor such reasonable remuneration
as the General Partner may deem reasonable and proper;
(xv) to
retain
other services of any kind or nature in connection with the Partnership
business, and to pay therefor such remuneration as the General Partner may
deem
reasonable and proper;
(xvi) to
negotiate and conclude agreements on behalf of the Partnership with respect
to
any of the rights, powers and authority conferred upon the General
Partner;
(xvii) to
maintain accurate accounting records and to file promptly all federal, state
and
local income tax returns on behalf of the Partnership;
(xviii) to
distribute Partnership cash or other Partnership assets in accordance with
this
Agreement;
(xix) to
form
or acquire an interest in, and contribute property to, any further limited
or
general partnerships, joint ventures or other relationships that it deems
desirable (including, without limitation, the acquisition of interests in,
and
the contributions of property to, its Subsidiaries and any other Person in
which
it has an equity interest from time to time);
(xx) to
establish Partnership reserves for working capital, capital expenditures,
contingent liabilities or any other valid Partnership purpose;
(xxi) to
merge,
consolidate or combine the Partnership with or into another person;
(xxii) to
do any
and all acts and things necessary or prudent to ensure that the Partnership
will
not be classified as a “publicly traded partnership” taxable as a corporation
under Section 7704 of the Code; and
(xxiii) to
take
such other action, execute, acknowledge, swear to or deliver such other
documents and instruments, and perform any and all other acts that the General
Partner deems necessary or appropriate for the formation, continuation and
conduct of the business and affairs of the Partnership (including, without
limitation, all actions consistent with allowing the Company at all times to
qualify as a REIT unless the Company voluntarily terminates its REIT status)
and
to possess and enjoy all of the rights and powers of a general partner as
provided by the Act.
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(b) Except
as
otherwise provided herein, to the extent the duties of the General Partner
require expenditures of funds to be paid to third parties, the General Partner
shall not have any obligations hereunder except to the extent that partnership
funds are reasonably available to it for the performance of such duties, and
nothing herein contained shall be deemed to authorize or require the General
Partner, in its capacity as such, to expend its individual funds for payment
to
third parties or to undertake any individual liability or obligation on behalf
of the Partnership.
7.02 Delegation
of Authority.
The
General Partner may delegate any or all of its powers, rights and obligations
hereunder, and may appoint, employ, contract or otherwise deal with any Person
for the transaction of the business of the Partnership, which Person may, under
supervision of the General Partner, perform any acts or services for the
Partnership as the General Partner may approve.
7.03 Indemnification
and Exculpation of Indemnitees.
(a) The
Partnership shall indemnify an Indemnitee from and against any and all losses,
claims, damages, liabilities, joint or several, expenses (including reasonable
legal fees and expenses), judgments, fines, settlements, and other amounts
arising from any and all claims, demands, actions, suits or proceedings, civil,
criminal, administrative or investigative, that relate to the operations of
the
Partnership as set forth in this Agreement in which any Indemnitee may be
involved, or is threatened to be involved, as a party or otherwise, unless
it is
established that: (i) the act or omission of the Indemnitee was material to
the
matter giving rise to the proceeding and either was committed in bad faith
or
was the result of active and deliberate dishonesty; (ii) the Indemnitee actually
received an improper personal benefit in money, property or services; or (iii)
in the case of any criminal proceeding, the Indemnitee had reasonable cause
to
believe that the act or omission was unlawful. The termination of any proceeding
by judgment, order or settlement does not create a presumption that the
Indemnitee did not meet the requisite standard of conduct set forth in this
Section 7.03(a).
The
termination of any proceeding by conviction or upon a plea of nolo contendere
or
its equivalent, or an entry of an order of probation prior to judgment, creates
a rebuttable presumption that the Indemnitee acted in a manner contrary to
that
specified in this Section 7.03(a).
Any
indemnification pursuant to this Section 7.03
shall be
made only out of the assets of the Partnership.
(b) The
Partnership shall reimburse an Indemnitee for reasonable expenses incurred
by an
Indemnitee who is a party to a proceeding in advance of the final disposition
of
the proceeding upon receipt by the Partnership of (i) a written affirmation
by
the Indemnitee of the Indemnitee’s good faith belief that the standard of
conduct necessary for indemnification by the Partnership as authorized in this
Section 7.03
has been
met, and (ii) a written undertaking by or on behalf of the Indemnitee to repay
the amount if it shall ultimately be determined that the standard of conduct
has
not been met.
(c) The
indemnification provided by this Section 7.03
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.
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(d) The
Partnership may purchase and maintain insurance, on behalf of the Indemnitees
and such other Persons as the General Partner shall determine, against any
liability that may be asserted against or expenses that may be incurred by
such
Person in connection with the Partnership’s activities, regardless of whether
the Partnership would have the power to indemnify such Person against such
liability under the provisions of this Agreement.
(e) For
purposes of this Section 7.03,
the
Partnership shall be deemed to have requested an Indemnitee to serve as
fiduciary of an employee benefit plan whenever the performance by it of its
duties to the Partnership also imposes duties on, or otherwise involves services
by, it to the plan or participants or beneficiaries of the plan; excise taxes
assessed on an Indemnitee with respect to an employee benefit plan pursuant
to
applicable law shall constitute fines within the meaning of this Section
7.03;
and
actions taken or omitted by the Indemnitee with respect to an employee benefit
plan in the performance of its duties for a purpose reasonably believed by
it to
be in the interest of the participants and beneficiaries of the plan shall
be
deemed to be for a purpose that is not opposed to the best interests of the
Partnership.
(f) In
no
event may an Indemnitee subject the Limited Partners to personal liability
by
reason of the indemnification provisions set forth in this
Agreement.
(g) An
Indemnitee shall not be denied indemnification in whole or in part under this
Section 7.03
because
the Indemnitee had an interest in the transaction with respect to which the
indemnification applies if the transaction was otherwise permitted by the terms
of this Agreement.
(h) The
provisions of this Section 7.03
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.
(i) Any
amendment, modification or repeal of this Section 7.03
or any
provision hereof shall be prospective only and shall not in any way affect
the
indemnification of an Indemnitee by the Partnership under this Section
7.03
as in
effect immediately prior to such amendment, modification or repeal with respect
to matters occurring, in whole or in part, prior to such amendment, modification
or repeal, regardless of when claims relating to such matters may arise or
be
asserted.
7.04 Liability
of the General Partner.
(a) Notwithstanding
anything to the contrary set forth in this Agreement, the General Partner shall
not be liable for monetary damages to the Partnership or any Partners for losses
sustained or liabilities incurred as a result of errors in judgment or of any
act or omission if the General Partner acted in good faith. The General Partner
shall not be in breach of any duty that the General Partner may owe to the
Limited Partners or the Partnership or any other Persons under this Agreement
or
of any duty stated or implied by law or equity provided the General Partner,
acting in good faith, abides by the terms of this Agreement.
(b) The
Limited Partners expressly acknowledge that the General Partner is acting on
behalf of the Partnership and the Company’s shareholders collectively, that the
General Partner is under no obligation to consider the separate interests of
the
Limited Partners (including,
without limitation, the tax consequences to Limited Partners or the tax
consequences of some, but not all, of the Limited Partners) in deciding whether
to cause the Partnership to take (or decline to take) any actions. In the event
of a conflict between the interests of the shareholders of the Company on one
hand and the Limited Partners on the other, the General Partner shall endeavor
in good faith to resolve the conflict in a manner not adverse to either the
shareholders of the Company or the Limited Partners; provided,
however,
that
for so long as the General Partner or the Company owns a controlling interest
in
the Partnership, any such conflict that the General Partner, in its sole and
absolute discretion, determines cannot be resolved in a manner not adverse
to
either the shareholders of the Company or the Limited Partners shall be resolved
in favor of the shareholders. The General Partner shall not be liable for
monetary damages for losses sustained, liabilities incurred or benefits not
derived by Limited Partners in connection with such decisions, provided that
the
General Partner has acted in good faith.
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(c) Subject
to its obligations and duties as General Partner set forth in Section
7.01
hereof,
the General Partner may exercise any of the powers granted to it under this
Agreement and perform any of the duties imposed upon it hereunder either
directly or by or through its agents. The General Partner shall not be
responsible for any misconduct or negligence on the part of any such agent
appointed by it in good faith.
(d) Notwithstanding
any other provisions of this Agreement or the Act, any action of the General
Partner on behalf of the Partnership or any decision of the General Partner
to
refrain from acting on behalf of the Partnership, undertaken in the good faith
belief that such action or omission is necessary or advisable in order (i)
to
protect the ability of the Company to continue to qualify as a REIT or (ii)
to
prevent the Company from incurring any taxes under Section 857, Section 4981,
or
any other provision of the Code, is expressly authorized under this Agreement
and is deemed approved by all of the Limited Partners.
(e) Any
amendment, modification or repeal of this Section 7.04
or any
provision hereof shall be prospective only and shall not in any way affect
the
limitations on the General Partner’s liability to the Partnership and the
Limited Partners under this Section 7.04
as in
effect immediately prior to such amendment, modification or repeal with respect
to matters occurring, in whole or in part, prior to such amendment, modification
or repeal, regardless of when claims relating to such matters may arise or
be
asserted.
7.05 Partnership
Obligations.
(a) Except
as
provided in this Section 7.05
and
elsewhere in this Agreement (including the provisions of Articles V
and
VII
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) All
Administrative Expenses shall be obligations of the Partnership, and the General
Partner shall be entitled to reimbursement by the Partnership for any
expenditure (including Administrative Expenses) incurred by it on behalf of
the
Partnership that shall be made other than out of the funds of the
Partnership.
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7.06 Outside
Activities.
Subject
to any agreements entered into by the General Partner or its Affiliates with
the
Partnership or a Subsidiary, any officer, director, employee, agent, trustee,
Affiliate or shareholder of the General Partner, the General Partner shall
be
entitled to and may have business interests and engage in business activities
in
addition to those relating to the Partnership, including business interests
and
activities substantially similar or identical to those of the Partnership.
Neither the Partnership nor any of the Limited Partners shall have any rights
by
virtue of this Agreement in any such business ventures, interest or activities.
None of the Limited Partners nor any other Person shall have any rights by
virtue of this Agreement or the partnership relationship established hereby
in
any such business ventures, interests or activities, and the General Partner
shall have no obligation pursuant to this Agreement to offer any interest in
any
such business ventures, interests and activities to the Partnership or any
Limited Partner, even if such opportunity is of a character that, if presented
to the Partnership or any Limited Partner, could be taken by such
Person.
7.07 Employment
or Retention of Affiliates.
(a) Any
Affiliate of the General Partner may be employed or retained by the Partnership
and may otherwise deal with the Partnership (whether as a buyer, lessor, lessee,
manager, furnisher of goods or services, broker, agent, lender or otherwise)
and
may receive from the Partnership any compensation, price or other payment
therefor that the General Partner determines to be fair and
reasonable.
(b) The
Partnership may lend or contribute to its Subsidiaries or other Persons in
which
it has an equity investment, and such Persons may borrow funds from the
Partnership, on terms and conditions established in the sole and absolute
discretion of the General Partner. The foregoing authority shall not create
any
right or benefit in favor of any Subsidiary or any other Person.
(c) The
Partnership may transfer assets to joint ventures, other partnerships,
corporations or other business entities in which it is or thereby becomes a
participant upon such terms and subject to such conditions as the General
Partner deems are consistent with this Agreement and applicable
law.
7.08 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.
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ARTICLE
VIII
CHANGES
IN GENERAL PARTNER
8.01 Transfer
of the General Partner’s Partnership Interest.
(a) The
General Partner shall not transfer all or any portion of its Partnership
Interest or withdraw as General Partner except as provided in or in connection
with a transaction contemplated by Section 8.01(c),
(d)
or
(e).
(b) The
General Partner agrees that at all times it will own in the aggregate at least
1% of the outstanding Common Units, as determined by dividing the Common Units
owned by the General Partner by the total number of Common Units then
outstanding.
(c) Except
as
otherwise provided in Section 8.01(d)
or
(e)
hereof,
the Company shall not engage in any merger, consolidation or other combination
with or into another Person or sale of all or substantially all of its assets
(other than in connection with a change in the Company’s state of incorporation
or organizational form), in each case which results in a change of control
of
the Company (a “Transaction”), unless:
(i) the
consent of Limited Partners (other than the Company or any Subsidiary) holding
more than 50% of the outstanding Common Units (other than those held by the
Company or any Subsidiary) is obtained;
(ii) as
a
result of such Transaction all Limited Partners will receive for each
Partnership Unit an amount of cash, securities or other property equal to the
product of the Conversion Factor and the greatest amount of cash, securities
or
other property paid in the Transaction to a holder of one REIT Share in
consideration of one REIT Share, provided that
if, in
connection with the Transaction, a purchase, tender or exchange offer (“Offer”)
shall have been made to and accepted by the holders of more than 50% of the
outstanding REIT Shares, each Limited Partner shall be given the option to
exchange its Partnership Units for the greatest amount of cash, securities
or
other property that a Limited Partner would have received had it (A) exercised
its Redemption Right and (B) sold, tendered or exchanged pursuant to the Offer
the REIT Shares received upon exercise of the Redemption Right immediately
prior
to the expiration of the Offer; or
(iii) the
Company is the surviving entity in the Transaction and either (A) the
holders of REIT Shares do not receive cash, securities or other property in
the
Transaction or (B) all Limited Partners (other than the Company or any
Subsidiary) receive an amount of cash, securities or other property (expressed
as an amount per REIT Share) that is no less than the product of the Conversion
Factor and the greatest amount of cash, securities or other property (expressed
as an amount per REIT Share) received in the Transaction by any holder of REIT
Shares in respect of its REIT Shares.
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(d) Notwithstanding
Section 8.01(c),
the
Company may merge with or into or consolidate with another entity if immediately
after such merger or consolidation (i) substantially all of the assets of the
successor or surviving entity (the “Survivor”), other than Partnership Units
held
by
the Company and any other assets of the Company held outside the Partnership,
are contributed, directly or indirectly, to the Partnership as a Capital
Contribution in exchange for Partnership Units with a fair market value equal
to
the value of the assets so contributed as determined by the Survivor in good
faith and (ii) the Survivor expressly agrees to assume all obligations of the
Company hereunder. Upon such contribution and assumption, the Survivor shall
have the right and duty to amend this Agreement as set forth in this Section
8.01(d).
The
Survivor shall in good faith arrive at a new method for the calculation of
the
Cash Amount, the REIT Shares Amount and Conversion Factor for a Partnership
Unit
after any such merger or consolidation so as to approximate the existing method
for such calculation as closely as reasonably possible. Such calculation shall
take into account, among other things, the kind and amount of securities, cash
and other property that was receivable upon such merger or consolidation by
a
holder of REIT Shares or options, warrants or other rights relating thereto,
and
which a holder of Partnership Units could have acquired had such Partnership
Units been exchanged immediately prior to such merger or consolidation. Such
amendment to this Agreement shall provide for adjustment to such method of
calculation, which shall be as nearly equivalent as may be practicable to the
adjustments provided for with respect to the Conversion Factor. The Survivor
also shall in good faith modify the definition of REIT Shares and make such
amendments to Section 9.04
hereof
so as to approximate the existing rights and obligations set forth in Section
9.04
as
closely as reasonably possible. The above provisions of this Section
8.01(d)
shall
similarly apply to successive mergers or consolidations permitted
hereunder.
(e) Notwithstanding
anything in this Article VIII,
(i) a
General
Partner may transfer all or any portion of its General Partnership Interest
to
(A) a wholly-owned Subsidiary of such General Partner or (B) the owner of all
of
the ownership interests of such General Partner, and following a transfer of
all
of its General Partnership Interest, may withdraw as General Partner;
and
(ii) the
General Partner may engage in a transaction required by law or by the rules
of
any national securities exchange on which the REIT Shares are
listed.
8.02 Admission
of a Substitute or Additional General Partner.
A
Person shall be admitted as a substitute or additional General Partner of the
Partnership only if the following terms and conditions are
satisfied:
(a) the
Person to be admitted as a substitute or additional General Partner shall have
accepted and agreed to be bound by all the terms and provisions of this
Agreement by executing a counterpart thereof and such other documents or
instruments as may be required or appropriate in order to effect the admission
of such Person as a General Partner, to the extent required, a certificate
evidencing the admission of such Person as a General Partner shall have been
filed for recordation and all other actions required in connection with such
admission shall have been performed;
(b) if
the
Person to be admitted as a substitute or additional General Partner is a
corporation or a partnership, it shall have provided the Partnership with
evidence satisfactory to counsel for the Partnership of such Person’s authority
to become a General Partner and to be bound by the terms and provisions of
this
Agreement; and
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(c) counsel
for the Partnership shall have rendered an opinion (relying on such opinions
from other counsel and the state or any other jurisdiction as may be necessary)
that the admission of the Person to be admitted as a substitute or additional
General Partner is in conformity with the Act, that none of the actions taken
in
connection with the admission of such Person as a substitute or additional
General Partner will cause (i) the Partnership to be classified other than
as a
partnership for federal income tax purposes, or (ii) the loss of any Limited
Partner’s limited liability.
8.03 Effect
of Bankruptcy, Withdrawal, Death or Dissolution of a General
Partner.
(a) Upon
the
occurrence of an Event of Bankruptcy as to a General Partner (and its removal
pursuant to Section 8.04(a)
hereof)
or the death, withdrawal, removal or dissolution of a General Partner (except
that, if a General Partner is on the date of such occurrence a partnership,
the
withdrawal, death, dissolution, Event of Bankruptcy as to, or removal of a
partner in, such partnership shall be deemed not to be a dissolution of such
General Partner if the business of such General Partner is continued by the
remaining partner or partners), the Partnership shall be dissolved and
terminated unless the Partnership is continued pursuant to Section 8.03(b)
hereof.
The merger of the General Partner with or into any entity that is admitted
as a
substitute or successor General Partner pursuant to Section 8.02
hereof
shall not be deemed to be the withdrawal, dissolution or removal of the General
Partner.
(b) Following
the occurrence of an Event of Bankruptcy as to a General Partner (and its
removal pursuant to Section 8.04(a)
hereof)
or the death, withdrawal, removal or dissolution of a General Partner (except
that, if a General Partner is on the date of such occurrence a partnership,
the
withdrawal, death, dissolution, Event of Bankruptcy as to, or removal of a
partner in, such partnership shall be deemed not to be a dissolution of such
General Partner if the business of such General Partner is continued by the
remaining partner or partners), the Limited Partners, within 90 days after
such
occurrence, may elect to continue the business of the Partnership for the
balance of the term specified in Section 2.03
hereof
by selecting, subject to Section 8.02
hereof
and any other provisions of this Agreement, a substitute General Partner by
consent of a majority in interest of the Limited Partners. If the Limited
Partners elect to continue the business of the Partnership and admit a
substitute General Partner, the relationship with the Partners and of any Person
who has acquired an interest of a Partner in the Partnership shall be governed
by this Agreement.
8.04 Removal
of a General Partner.
(a) Upon
the
occurrence of an Event of Bankruptcy as to, or the dissolution of, a General
Partner, such General Partner shall be deemed to be removed automatically;
provided,
however,
that if
a General Partner is on the date of such occurrence a partnership, the
withdrawal, death, dissolution, Event of Bankruptcy as to or removal of a
partner in such partnership shall be deemed not to be a dissolution of the
General Partner if the business of such General Partner is continued by the
remaining partner or partners. The Limited Partners may not remove the General
Partner, with or without cause.
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(b) If
a
General Partner has been removed pursuant to this Section 8.04
and the
Partnership is continued pursuant to Section 8.03
hereof,
such General Partner shall promptly transfer and assign its General Partnership
Interest in the Partnership to the substitute General Partner approved by a
majority in interest of the Limited Partners in accordance with Section
8.03(b)
hereof
and otherwise admitted to the Partnership in accordance with Section
8.02
hereof.
At the time of assignment, the removed General Partner shall be entitled to
receive from the substitute General Partner the fair market value of the General
Partnership Interest of such removed General Partner as reduced by any damages
caused to the Partnership by such General Partner. Such fair market value shall
be determined by an appraiser mutually agreed upon by the General Partner and
a
majority in interest of the Limited Partners within 10 days following the
removal of the General Partner. In the event that the parties are unable to
agree upon an appraiser, the removed General Partner and a majority in interest
of the Limited Partners each shall select an appraiser. Each such appraiser
shall complete an appraisal of the fair market value of the removed General
Partner’s General Partnership Interest within 30 days of the General Partner’s
removal, and the fair market value of the removed General Partner’s General
Partnership Interest shall be the average of the two appraisals; provided,
however,
that if
the higher appraisal exceeds the lower appraisal by more than 20% of the amount
of the lower appraisal, the two appraisers, no later than 40 days after the
removal of the General Partner, shall select a third appraiser who shall
complete an appraisal of the fair market value of the removed General Partner’s
General Partnership Interest no later than 60 days after the removal of the
General Partner. In such case, the fair market value of the removed General
Partner’s General Partnership Interest shall be the average of the two
appraisals closest in value.
(c) The
General Partnership Interest of a removed General Partner, during the time
after
default until transfer under Section 8.04(b),
shall
be converted to that of a special Limited Partner; provided,
however,
such
removed General Partner shall not have any rights to participate in the
management and affairs of the Partnership, and shall not be entitled to any
portion of the income, expense, profit, gain or loss allocations or cash
distributions allocable or payable, as the case may be, to the Limited Partners.
Instead, such removed General Partner shall receive and be entitled only to
retain distributions or allocations of such items that it would have been
entitled to receive in its capacity as General Partner, until the transfer
is
effective pursuant to Section 8.04(b).
(d) All
Partners shall have given and hereby do give such consents, shall take such
actions and shall execute such documents as shall be legally necessary and
sufficient to effect all the foregoing provisions of this Section.
ARTICLE
IX
RIGHTS
AND OBLIGATIONS
OF
THE LIMITED PARTNERS
9.01 Management
of the Partnership.
The
Limited Partners shall not participate in the management or control of
Partnership business nor shall they transact any business for the Partnership,
nor shall they have the power to sign for or bind the Partnership, such powers
being vested solely and exclusively in the General Partner.
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9.02 Power
of Attorney.
Each
Limited Partner hereby irrevocably appoints the General Partner its true and
lawful attorney-in-fact, who may act for each Limited Partner and in its name,
place and stead, and for its use and benefit, to sign, acknowledge, swear to,
deliver, file or record, at the appropriate public offices, any and all
documents, certificates and instruments as may be deemed necessary or desirable
by the General Partner to carry out fully the provisions of this Agreement
and
the Act in accordance with their terms, including amendments hereto, which
power
of attorney is coupled with an interest and shall survive the death, dissolution
or legal incapacity of the Limited Partner, or the transfer by the Limited
Partner of any part or all of its Partnership Interest.
9.03 Limitation
on Liability of Limited Partners.
No
Limited Partner shall be liable for any debts, liabilities, contracts or
obligations of the Partnership. A Limited Partner shall be liable to the
Partnership only to make payments of its Capital Contribution, if any, as and
when due hereunder. After its Capital Contribution is fully paid, no Limited
Partner shall, except as otherwise required by the Act, be required to make
any
further Capital Contributions or other payments or lend any funds to the
Partnership.
9.04 Redemption
Right.
(a) Subject
to the provisions of this Section 9.04
and the
provisions of any agreements between the Partnership and one or more Limited
Partners with respect to Partnership Units held by them, each Limited Partner,
other than the Company, 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 Redemption Amount to be paid by the Partnership,
provided
that
such
Partnership Units shall have been outstanding for at least two years, and
subject to any restriction agreed to in writing between the Redeeming Limited
Partner and the General Partner. 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 Limited Partner”); provided,
however,
that
the Partnership shall, in its sole and absolute discretion, have the option
to
deliver either the Cash Amount or the REIT Shares Amount upon such redemption;
provided,
further,
that
the Partnership shall not be obligated to satisfy such Redemption Right if
the
General Partner elects to purchase the Partnership Units subject to the Notice
of Redemption; and provided,
further,
that no
Limited Partner may deliver more than two Notices of Redemption during each
calendar year. A Limited Partner may not exercise the Redemption Right for
less
than 1,000 Partnership Units or, if such Limited Partner holds less than 1,000
Partnership Units, all of the Partnership Units held by such Partner. The
Redeeming Limited Partner shall have no right, with respect to any Partnership
Units so redeemed, to receive any distribution paid with respect to Partnership
Units if the record date for such distribution is on or after the Specified
Redemption Date.
(b) Notwithstanding
the provisions of Section 9.04(a),
a
Limited Partner that exercises the Redemption Right shall be deemed to have
offered to sell the Partnership Units described in the Notice of Redemption
to
the General Partner, and the General Partner may, in its sole and absolute
discretion, elect to purchase directly and acquire such Partnership Units by
paying to the Redeeming Limited Partner either the Cash Amount or the REIT
Shares Amount, as elected by the General Partner (in its sole and absolute
discretion), on the Specified Redemption
Date, whereupon the General Partner shall acquire the Partnership Units offered
for redemption by the Redeeming Limited Partner and shall be treated for all
purposes of this Agreement as the owner of such Partnership Units. If the
General Partner shall elect to exercise its right to purchase Partnership Units
under this Section 9.04(b)
with
respect to a Notice of Redemption, it shall so notify the Redeeming Limited
Partner within ten Business Days after the receipt by the General Partner of
such Notice of Redemption.
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In
the
event the General Partner shall exercise its right to purchase Partnership
Units
with respect to the exercise of a Redemption Right, the Partnership shall have
no obligation to pay any amount to the Redeeming Limited Partner with respect
to
such Redeeming Limited Partner’s exercise of such Redemption Right, and each of
the Redeeming Limited Partner, the Partnership and the General Partner shall
treat the transaction between the General Partner and the Redeeming Limited
Partner for federal income tax purposes as a sale of the Redeeming Limited
Partner’s Partnership Units to the General Partner. Each Redeeming Limited
Partner agrees to execute such documents as the General Partner may reasonably
require in connection with the issuance of REIT Shares upon exercise of the
Redemption Right.
(c) Notwithstanding
the provisions of Section 9.04(a)
and
9.04(b),
a
Limited Partner shall not be entitled to exercise the Redemption Right if the
delivery of REIT Shares to such Partner on the Specified Redemption Date by
the
General Partner pursuant to Section 9.04(b)
(regardless of whether or not the General Partner would in fact exercise its
rights under Section 9.04(b))
would
(i) result in such Partner or any other person owning, directly or indirectly,
REIT Shares in excess of the Ownership Limitation (as defined in the Articles
of
Amendment and Restatement) and calculated in accordance therewith, except as
provided in the Articles
of Amendment and Restatement,
(ii)
result in REIT Shares being owned by fewer than 100 persons (determined without
reference to any rules of attribution), (iii) result in the Company being
“closely held” within the meaning of Section 856(h) of the Code, (iv) cause the
Company to own, directly or constructively, 10% or more of the ownership
interests in a tenant of the Company’s, the Partnership’s or a Subsidiary
Partnership’s real property, within the meaning of Section 856(d)(2)(B) of the
Code, or (v) cause the acquisition of REIT Shares by such Partner to be
“integrated” with any other distribution of REIT Shares for purposes of
complying with the registration provisions of the Securities Act of 1933, as
amended (the “Securities Act”). The General Partner, in its sole and absolute
discretion, may waive the restriction on redemption set forth in this Section
9.04(c).
(d) Any
Cash
Amount to be paid to a Redeeming Limited Partner pursuant to this Section
9.04
shall be
paid on the Specified Redemption Date; provided,
however,
that
the General Partner may elect to cause the Specified Redemption Date to be
delayed for up to an additional 90 days to the extent required for the Company
to obtain financing for payment of the Cash Amount. Notwithstanding the
foregoing, the General Partner agrees to use commercially reasonable efforts
to
cause the closing of the acquisition of redeemed Partnership Units hereunder
to
occur as quickly as reasonably possible.
(e) Notwithstanding
any other provision of this Agreement, the General Partner is authorized to
take
any action that it determines to be necessary or appropriate to cause the
Partnership to comply with any withholding requirements established under the
Code or any other federal, state or local law that apply upon a Redeeming
Limited Partner’s exercise of the Redemption
Right. If a Redeeming Limited Partner believes that it is exempt from such
withholding upon the exercise of the Redemption Right, such Partner must furnish
the General Partner with a FIRPTA Certificate in the form attached hereto as
Exhibit
C.
If the
Partnership or the General Partner is required to withhold and pay over to
any
taxing authority any amount upon a Redeeming Limited Partner’s exercise of the
Redemption Right and if the Redemption Amount equals or exceeds the Withheld
Amount, the Withheld Amount shall be treated as an amount received by such
Partner in redemption of its Partnership Units. If, however, the Redemption
Amount is less than the Withheld Amount, the Redeeming Limited Partner shall
not
receive any portion of the Redemption Amount, the Redemption Amount shall be
treated as an amount received by such Partner in redemption of its Partnership
Units, and the Partner shall contribute the excess of the Withheld Amount over
the Redemption Amount to the Partnership before the Partnership is required
to
pay over such excess to a taxing authority.
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(f) Notwithstanding
any other provision of this Agreement, the General Partner shall place
appropriate restrictions on the ability of the Limited Partners to exercise
their Redemption Rights as and if deemed necessary to ensure that the
Partnership does not constitute a “publicly traded partnership” taxable as a
corporation under section 7704 of the Code. If and when the General Partner
determines that imposing such restrictions is necessary, the General Partner
shall give prompt written notice thereof (a “Restriction Notice”) to each of the
Limited Partners, which notice shall be accompanied by a copy of an opinion
of
counsel to the Partnership that states that, in the opinion of such counsel,
restrictions are necessary in order to avoid the Partnership being treated
as a
“publicly traded partnership” under section 7704 of the Code.
9.05 Registration.
Subject
to the terms of any agreement between the General Partner and one or more
Limited Partners with respect to Partnership Units held by them:
(a) Shelf
Registration of the Common Stock.
The
Company agrees to file with the Commission, within two years following the
date
Partnership Units are issued, a shelf registration statement under Rule 415
of
the Securities Act (a “Registration Statement”), or any similar rule that may be
adopted by the Commission, covering (i) the issuance of the Common Shares
issuable upon redemption of the Partnership Units (“Redemption Shares”) and/or
(ii) the resale of the Redemption Shares by the holder; provided,
however,
that
only two such registrations may occur each year. In connection therewith, the
Company will:
(i) use
reasonable commercial efforts to have such Registration Statement declared
effective;
(ii) furnish
to each holder of Redemption Shares such number of copies of prospectuses,
and
supplements or amendments thereto, and such other documents as such holder
reasonably requests;
(iii) register
or qualify the Redemption Shares covered by the Registration Statement under
the
securities or blue sky laws of such jurisdictions within the United States
as
any holder of Redemption Shares shall reasonably request, and do such other
reasonable acts and things as may be required of it to enable such holders
to
consummate the sale or other disposition in such jurisdictions of the Redemption
Shares; provided,
however,
that
the Company shall not be required to (i) qualify as a foreign corporation or
consent to a general or unlimited service or process in any jurisdictions in
which it would not otherwise be required to be qualified or so consent or (ii)
qualify as a dealer in securities; and
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(iv) otherwise
use commercially reasonable efforts to comply with all applicable rules and
regulations of the Commission.
The
Company further agrees to supplement or make amendments to each Registration
Statement, if required by the rules, regulations or instructions applicable
to
the registration form utilized by the Company or by the Securities Act or rules
and regulations thereunder for such Registration Statement. Each Limited Partner
agrees to furnish the Company, upon request, such information with respect
to
the Limited Partner as may be required to complete and file the Registration
Statement.
(b) Listing
on Securities Exchange.
If the
Company shall list or maintain the listing of any Common Shares on any
securities exchange or national market system, it will at its expense and as
necessary to permit the registration and sale of the Redemption Shares
hereunder, list thereon, maintain and, when necessary, increase such listing
to
include such Redemption Shares.
(c) Registration
Not Required.
Notwithstanding the foregoing, the Company shall not be required to file or
maintain the effectiveness of a registration statement relating to Redemption
Shares after the first date upon which, in the opinion of counsel to the
Company, all of the Redemption Shares covered thereby could be sold by the
holders thereof in any period of three months pursuant to Rule 144 under the
Securities Act, or any successor rule thereto.
(d) Allocation
of Expenses.
The
Partnership shall pay all expenses in connection with the Registration
Statement, including without limitation (i) all expenses incident to filing
with
the National Association of Securities Dealers, Inc., (ii) registration fees,
(iii) printing expenses, (iv) accounting and legal fees and expenses, except
to
the extent Limited Partners or holders of Redemption Shares elect to engage
accountants or attorneys in addition to the accountants and attorneys engaged
by
the Company or the Partnership, (v) accounting expenses incident to or required
by any such registration or qualification and (vi) expenses of complying with
the securities or blue sky laws of any jurisdictions in connection with such
registration or qualification; provided,
however,
the
Partnership shall not be liable for (A) any discounts or commissions to any
underwriter or broker attributable to the sale of Redemption Shares, or (B)
any
fees or expenses incurred by holders of Redemption Shares in connection with
such registration that, according to the written instructions of any regulatory
authority, the Partnership is not permitted to pay.
(e) Indemnification.
(i) In
connection with the Registration Statement, the Company and the Partnership
agree to indemnify holders of Redemption Shares within the meaning of Section
15
of the Securities Act, against all losses, claims, damages, liabilities and
expenses (including reasonable costs of investigation) caused by any untrue,
or
alleged untrue,
statement of a material fact contained in the Registration Statement,
preliminary prospectus or prospectus (as amended or supplemented if the Company
shall have furnished any amendments or supplements thereto) or caused by any
omission or alleged omission, to state therein a material fact required to
be
stated therein or necessary to make the statements therein not misleading,
except insofar as such losses, claims, damages, liabilities or expenses are
caused by any untrue statement, alleged untrue statement, omission, or alleged
omission based upon information furnished to the Company by the Limited Partner
of the holder for use therein. The Company and each officer, director and
controlling person of the Company shall be indemnified by each Limited Partner
or holder of Redemption Shares covered by the Registration Statement for all
such losses, claims, damages, liabilities and expenses (including reasonable
costs of investigation) caused by any untrue, or alleged untrue, statement
or
any omission, or alleged omission, based upon information furnished to the
Company by the Limited Partner or the holder for use therein.
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(ii) Promptly
upon receipt by a party indemnified under this Section 9.05(e)
of
notice of the commencement of any action against such indemnified party in
respect of which indemnity or reimbursement may be sought against any
indemnifying party under this Section 9.05(e),
such
indemnified party shall notify the indemnifying party in writing of the
commencement of such action, but the failure to so notify the indemnifying
party
shall not relieve it of any liability that it may have to any indemnified party
otherwise than under this Section 9.05(e)
unless
such failure shall materially adversely affect the defense of such action.
In
case notice of commencement of any such action shall be given to the
indemnifying party as above provided, the indemnifying party shall be entitled
to participate in and, to the extent it may wish, jointly with any other
indemnifying party similarly notified, to assume the defense of such action
at
its own expense, with counsel chosen by it and reasonably satisfactory to such
indemnified party. The indemnified party shall have the right to employ separate
counsel in any such action and participate in the defense thereof, but the
reasonable fees and expenses of such counsel (other than reasonable costs of
investigation) shall be paid by the indemnified party unless (i) the
indemnifying party agrees to pay the same, (ii) the indemnifying party fails
to
assume the defense of such action with counsel reasonably satisfactory to the
indemnified party or (iii) the named parties to any such action (including
any
impleaded parties) have been advised by such counsel that representation of
such
indemnified party and the indemnifying party by the same counsel would be
inappropriate under applicable standards of professional conduct (in which
case
the indemnified party shall have the right to separate counsel and the
indemnifying party shall pay the reasonable fees and expenses of such separate
counsel). No indemnifying party shall be liable for any settlement entered
into
without its consent.
(f) Contribution.
(i) If
for
any reason the indemnification provisions contemplated by Section 9.05(e)
are
either unavailable or insufficient to hold harmless an indemnified party in
respect of any losses, claims, damages or liabilities referred to therein,
then
the party that would otherwise be required to provide indemnification or the
indemnifying party (in either case, for purposes of this Section 9.05(f),
the
“Indemnifying Party”) in respect
of such losses, claims, damages or liabilities, shall contribute to the amount
paid or payable by the party that would otherwise be entitled to indemnification
or the indemnified party (in either case, for purposes of this Section
9.05(f),
the
“Indemnified Party”) as a result of such losses, claims, damages, liabilities or
expense, in such proportion as is appropriate to reflect the relative fault
of
the Indemnifying Party and the Indemnified Party, as well as any other relevant
equitable considerations. The relative fault of the Indemnifying Party and
Indemnified Party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or omission
or
alleged omission to state a material fact related to information supplied by
the
Indemnifying Party or Indemnified Party, and the parties’ relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The amount paid or payable by a party as a result of
the
losses, claims, damages, liabilities and expenses referred to above shall be
deemed to include any legal or other fees or expenses reasonably incurred by
such party.
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(ii) The
parties hereto agree that it would not be just and equitable if contribution
pursuant to this Section 9.05(f)
were
determined by pro rata allocation (even if the holders were treated as one
entity for such purpose) or by any other method of allocation that does not
take
account of the equitable considerations referred to in the immediately preceding
paragraph. No person or entity determined to have committed a fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person or entity who was not guilty
of such fraudulent misrepresentation.
(iii) The
contribution provided for in this Section 9.05(f)
shall
survive the termination of this Agreement and shall remain in full force and
effect regardless of any investigation made by or on behalf of any Indemnified
Party.
ARTICLE
X
TRANSFERS
OF PARTNERSHIP INTERESTS
10.01 Purchase
for Investment.
(a) Each
Limited Partner hereby represents and warrants to the General Partner and to
the
Partnership that the acquisition of his Partnership Interests is made as a
principal for his account for investment purposes only and not with a view
to
the resale or distribution of such Partnership Interests.
(b) Subject
to the provisions of Section 10.02,
each
Limited Partner agrees that he will not sell, assign or otherwise transfer
his
Partnership Interest or any fraction thereof, whether voluntarily or by
operation of law or at judicial sale or otherwise, to any Person who does not
make the representations and warranties to the General Partner set forth in
Section 10.01(a)
above.
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10.02 Restrictions
on Transfer of Partnership Interests.
(a) Subject
to the provisions of Sections 10.02(b),
(c),
(d),
and
(e)
no
Limited Partner may offer, sell, assign, hypothecate, pledge or otherwise
transfer all or any portion of his Partnership Interest, or any of such Limited
Partner’s economic rights as a Limited Partner, whether voluntarily or by
operation of law or at judicial sale or otherwise (collectively, a “Transfer”)
without the consent of the General Partner, which consent may be granted or
withheld in its sole and absolute discretion. The General Partner may require,
as a condition of any Transfer to which it consents, that the transferor assume
all costs incurred by the Partnership in connection therewith.
(b) No
Limited Partner may withdraw from the Partnership other than as a result of
a
permitted Transfer (i.e.,
a
Transfer consented to as contemplated by clause (a)
above or
clause (c)
below or
a Transfer pursuant to Section 10.05
below)
of all of his Partnership Units pursuant to this Article X
or
pursuant to a redemption of all of his Partnership Units pursuant to Section
9.04.
Upon
the permitted Transfer or redemption of all of a Limited Partner’s Partnership
Units, such Limited Partner shall cease to be a Limited Partner.
(c) Subject
to Sections 10.02(d)
and
(e)
below, a
Limited Partner may Transfer, with the consent of the General Partner, all
or a
portion of his Partnership Units to (i) a parent or parent’s spouse, natural or
adopted descendant or descendants, spouse of such descendant, or brother or
sister, or a trust created by such Limited Partner for the benefit of such
Limited Partner and/or any such person(s), of which trust such Limited Partner
or any such person(s) is a trustee, (ii) a corporation, partnership or limited
liability company controlled by a Person or Persons named in (i) above or (iii)
if the Limited Partner is an entity, its beneficial owners.
(d) No
Limited Partner may effect a Transfer of its Partnership Interest, in whole
or
in part, if, in the opinion of legal counsel for the Partnership, such proposed
Transfer would require the registration of the Partnership Interest under the
Securities Act or would otherwise violate any applicable federal or state
securities or blue sky law (including investment suitability
standards).
(e) No
Transfer by a Limited Partner of its Partnership Interest, in whole or in part,
may be made to any Person if (i) in the opinion of legal counsel for the
Partnership, the transfer would result in the Partnership’s being treated as an
association taxable as a corporation (other than a qualified REIT subsidiary
within the meaning of Section 856(i) of the Code), (ii) in the opinion of legal
counsel for the Partnership, it would adversely affect the ability of the
Company to continue to qualify as a REIT or subject the Company to any
additional taxes under Section 857 or Section 4981 of the Code or (iii) such
transfer is effectuated through an “established securities market” or a
“secondary market (or the substantial equivalent thereof)” within the meaning of
Section 7704 of the Code.
(f) Any
purported Transfer in contravention of any of the provisions of this Article
X
shall be
void ab
initio
and
ineffectual and shall not be binding upon, or recognized by, the General Partner
or the Partnership.
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(g) Prior
to
the consummation of any Transfer under this Article X,
the
transferor and/or the transferee shall deliver to the General Partner such
opinions, certificates and other documents as the General Partner shall request
in connection with such Transfer.
10.03 Admission
of Substitute Limited Partner.
(a) Subject
to the other provisions of this Article X,
an
assignee of the Partnership Interest of a Limited Partner (which shall be
understood to include any purchaser, transferee, donee or other recipient of
any
disposition of such Partnership Interest) shall be deemed admitted as a Limited
Partner of the Partnership only with the consent of the General Partner and
upon
the satisfactory completion of the following:
(i) The
assignee shall have accepted and agreed to be bound by the terms and provisions
of this Agreement by executing a counterpart or an amendment thereof, including
a revised Exhibit
A,
and
such other documents or instruments as the General Partner may require in order
to effect the admission of such Person as a Limited Partner.
(ii) To
the
extent required, an amended Certificate evidencing the admission of such Person
as a Limited Partner shall have been signed, acknowledged and filed for record
in accordance with the Act.
(iii) The
assignee shall have delivered a letter containing the representation set forth
in Section 10.01(a)
hereof
and the agreement set forth in Section 10.01(b)
hereof.
(iv) If
the
assignee is a corporation, partnership or trust, the assignee shall have
provided the General Partner with evidence satisfactory to counsel for the
Partnership of the assignee’s authority to become a Limited Partner under the
terms and provisions of this Agreement.
(v) The
assignee shall have executed a power of attorney containing the terms and
provisions set forth in Section 9.02
hereof.
(vi) The
assignee shall have paid all legal fees and other expenses of the Partnership
and the General Partner and filing and publication costs in connection with
its
substitution as a Limited Partner.
(vii) The
assignee shall have obtained the prior written consent of the General Partner
to
its admission as a Substitute Limited Partner, which consent may be given or
denied in the exercise of the General Partner’s sole and absolute
discretion.
(b) For
the
purpose of allocating Profits and Losses and distributing cash received by
the
Partnership, a Substitute Limited Partner shall be treated as having become,
and
appearing in the records of the Partnership as, a Partner upon the filing of
the
Certificate described in Section 10.03(a)(ii)
hereof
or, if no such filing is required, the later of the date specified in the
transfer documents or the date on which the General Partner has received all
necessary instruments of transfer and substitution.
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(c) The
General Partner shall cooperate with the Person seeking to become a Substitute
Limited Partner by preparing the documentation required by this Section and
making all official filings and publications. The Partnership shall take all
such action as promptly as practicable after the satisfaction of the conditions
in this Article X
to the
admission of such Person as a Limited Partner of the Partnership.
10.04 Rights
of Assignees of Partnership Interests.
(a) Subject
to the provisions of Sections 10.01
and
10.02
hereof,
except as required by operation of law, the Partnership shall not be obligated
for any purposes whatsoever to recognize the assignment by any Limited Partner
of its Partnership Interest until the Partnership has received notice
thereof.
(b) Any
Person who is the assignee of all or any portion of a Limited Partner’s Limited
Partnership Interest, but does not become a Substitute Limited Partner and
desires to make a further assignment of such Limited Partnership Interest,
shall
be subject to all the provisions of this Article X
to the
same extent and in the same manner as any Limited Partner desiring to make
an
assignment of its Limited Partnership Interest.
10.05 Effect
of Bankruptcy, Death, Incompetence or Termination of a Limited
Partner.
The
occurrence of an Event of Bankruptcy as to a Limited Partner, the death of
a
Limited Partner or a final adjudication that a Limited Partner is incompetent
(which term shall include, but not be limited to, insanity) shall not cause
the
termination or dissolution of the Partnership, and the business of the
Partnership shall continue if an order for relief in a bankruptcy proceeding
is
entered against a Limited Partner, the trustee or receiver of his estate or,
if
he dies, his executor, administrator or trustee, or, if he is finally
adjudicated incompetent, his committee, guardian or conservator, shall have
the
rights of such Limited Partner for the purpose of settling or managing his
estate property and such power as the bankrupt, deceased or incompetent Limited
Partner possessed to assign all or any part of his Partnership Interest and
to
join with the assignee in satisfying conditions precedent to the admission
of
the assignee as a Substitute Limited Partner.
10.06 Joint
Ownership of Interests.
A
Partnership Interest may be acquired by two individuals as joint tenants with
right of survivorship, provided that
such
individuals either are married or are related and share the same home as tenants
in common. The written consent or vote of both owners of any such jointly held
Partnership Interest shall be required to constitute the action of the owners
of
such Partnership Interest; provided,
however,
that
the written consent of only one joint owner will be required if the Partnership
has been provided with evidence satisfactory to the counsel for the Partnership
that the actions of a single joint owner can bind both owners under the
applicable laws of the state of residence of such joint owners. Upon the death
of one owner of a Partnership Interest held in a joint tenancy with a right
of
survivorship, the Partnership Interest shall become owned solely by the survivor
as a Limited Partner and not as an assignee. The Partnership need not recognize
the death of one of the owners of a jointly-held Partnership Interest until
it
shall have received notice of such death. Upon notice to the General Partner
from either owner, the General Partner shall cause the Partnership Interest
to
be divided into two equal Partnership Interests, which shall thereafter be
owned
separately by each of the former owners.
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ARTICLE
XI
BOOKS
AND RECORDS; ACCOUNTING; TAX MATTERS
11.01 Books
and Records.
At all
times during the continuance of the Partnership, the Partners shall keep or
cause to be kept at the Partnership’s specified office true and complete books
of account in accordance with generally accepted accounting principles,
including: (a) a current list of the full name and last known business
address of each Partner, (b) a copy of the Certificate of Limited
Partnership and all certificates of amendment thereto, (c) copies of the
Partnership’s federal, state and local income tax returns and reports,
(d) copies of this Agreement and the financial statements of the Company
for the three most recent years and (e) all documents and information
required under the Act. Any Partner or its duly authorized representative,
upon
paying the costs of collection, duplication and mailing, shall be entitled
to
inspect or copy such records during ordinary business hours.
11.02 Custody
of Partnership Funds; Bank Accounts.
(a) All
funds
of the Partnership not otherwise invested shall be deposited in one or more
accounts maintained in such banking or brokerage institutions as the General
Partner shall determine, and withdrawals shall be made only on such signature
or
signatures as the General Partner may, from time to time,
determine.
(b) All
deposits and other funds not needed in the operation of the business of the
Partnership may be invested by the General Partner in investment grade
instruments (or investment companies whose portfolio consists primarily
thereof), government obligations, certificates of deposit, bankers’ acceptances
and municipal notes and bonds. The funds of the Partnership shall not be
commingled with the funds of any other Person except for such commingling as
may
necessarily result from an investment in those investment companies permitted
by
this Section 11.02(b).
11.03 Fiscal
and Taxable Year.
The
fiscal and taxable year of the Partnership shall be the calendar
year.
11.04 Annual
Tax Information and Report.
Within
90 days after the end of each fiscal year of the Partnership, the General
Partner shall furnish to each person who was a Limited Partner at any time
during such year an estimate of such Limited Partner’s allocable share of
taxable income or loss for such fiscal year and as soon as reasonably
practicable thereafter, the tax information necessary to file such Limited
Partner’s individual tax returns as shall be reasonably required by
law.
11.05 Tax
Matters Partner; Tax Elections; Special Basis
Adjustments.
(a) The
General Partner shall be the Tax Matters Partner of the Partnership within
the
meaning of Section 6231(a)(7) of the Code. As Tax Matters Partner, the
General Partner shall have the right and obligation to take all actions
authorized and required, respectively, by the Code for the Tax Matters Partner.
The General Partner shall have the right to retain professional assistance
in
respect of any audit of the Partnership by the Service and all out-of-pocket
expenses and fees incurred by the General Partner on behalf of the Partnership
as Tax
Matters Partner shall constitute Partnership expenses. In the event the General
Partner receives notice of a final Partnership adjustment under
Section 6223(a)(2) of the Code, the General Partner shall either
(i) file a court petition for judicial review of such final adjustment
within the period provided under Section 6226(a) of the Code, a copy of
which petition shall be mailed to all Limited Partners on the date such petition
is filed, or (ii) mail a written notice to all Limited Partners, within
such period, that describes the General Partner’s reasons for determining not to
file such a petition.
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(b) All
elections required or permitted to be made by the Partnership under the Code
or
any applicable state or local tax law shall be made by the General Partner
in
its sole and absolute discretion.
(c) In
the
event of a transfer of all or any part of the Partnership Interest of any
Partner, the Partnership, at the option of the General Partner, may elect
pursuant to Section 754 of the Code to adjust the basis of the Properties.
Notwithstanding anything contained in Article V
of this
Agreement, any adjustments made pursuant to Section 754 shall affect only
the successor in interest to the transferring Partner and in no event shall
be
taken into account in establishing, maintaining or computing Capital Accounts
for the other Partners for any purpose under this Agreement. Each Partner will
furnish the Partnership with all information necessary to give effect to such
election.
11.06 Reports
to Limited Partners.
For
as
long as the Company is required to furnish an annual report to its shareholders
containing financial statements of the General Partner, the General Partner
will
upon request of a Limited Partner, at the same time and in the same manner,
furnish such annual report to the Limited Partner.
ARTICLE
XII
AMENDMENT
OF AGREEMENT; MERGER
The
General Partner’s consent shall be required for any amendment to this Agreement.
The General Partner, without the consent of the Limited Partners, may amend
this
Agreement in any respect; provided,
however,
that
the following amendments shall require the consent of Limited Partners (other
than the Company or any Subsidiary) holding more than 50% of the Class B
Percentage Interests of the Limited Partners (other than those held by the
Company or any Subsidiary):
(a) any
amendment affecting the operation of the Conversion Factor or the Redemption
Right (except as otherwise provided herein) in a manner adverse to the Limited
Partners;
(b) any
amendment that would adversely affect the rights of the Limited Partners to
receive the distributions payable to them hereunder, other than with respect
to
the issuance of additional Partnership Units pursuant to
Section 4.02
hereof;
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(c) any
amendment that would alter the Partnership’s allocations of Profit and Loss to
the Limited Partners, other than with respect to the issuance of additional
Partnership Units pursuant to Section 4.02
hereof;
(d) any
amendment that would impose on the Limited Partners any obligation to make
additional Capital Contributions to the Partnership; or
(e) any
amendment to this Article XII.
The
General Partner, without the consent of the Limited Partners, may (i) merge
or
consolidate the Partnership with or into any other domestic or foreign
partnership, limited partnership, limited liability company or corporation,
or
(ii) sell the assets of the Partnership.
ARTICLE
XIII
GENERAL
PROVISIONS
13.01 Notices.
All
communications required or permitted under this Agreement shall be in writing
and shall be deemed to have been given when delivered personally or upon deposit
in the United States mail, registered, postage prepaid return receipt requested,
to the Partners at the addresses set forth in Exhibit A
attached
hereto; provided,
however,
that
any Partner may specify a different address by notifying the General Partner
in
writing of such different address. Notices to the Partnership shall be delivered
at or mailed to its specified office.
13.02 Survival
of Rights.
Subject
to the provisions hereof limiting transfers, this Agreement shall be binding
upon and inure to the benefit of the Partners and the Partnership and their
respective legal representatives, successors, transferees and
assigns.
13.03 Additional
Documents.
Each
Partner agrees to perform all further acts and execute, swear to, acknowledge
and deliver all further documents that may be reasonable, necessary, appropriate
or desirable to carry out the provisions of this Agreement or the
Act.
13.04 Severability.
If any
provision of this Agreement shall be declared illegal, invalid or unenforceable
in any jurisdiction, then such provision shall be deemed to be severable from
this Agreement (to the extent permitted by law) and in any event such
illegality, invalidity or unenforceability shall not affect the remainder
hereof.
13.05 Entire
Agreement.
This
Agreement and exhibits attached hereto constitute the entire Agreement of the
Partners and supersede all prior written agreements and prior and
contemporaneous oral agreements, understandings and negotiations with respect
to
the subject matter hereof.
13.06 Pronouns
and Plurals.
When
the context in which words are used in the Agreement indicates that such is
the
intent, words in the singular number shall include the plural and the masculine
gender shall include the neuter or female gender as the context may
require.
-
47
-
13.07 Headings.
The
Article headings or sections in this Agreement are for convenience only and
shall not be used in construing the scope of this Agreement or any particular
Article.
13.08 Counterparts.
This
Agreement may be executed in several counterparts, each of which shall be deemed
to be an original copy and all of which together shall constitute one and the
same instrument binding on all parties hereto, notwithstanding that all parties
shall not have signed the same counterpart.
13.09 Governing
Law.
This
Agreement shall be governed by and construed in accordance with the laws of
the
State of Delaware.
-
48
-
IN
WITNESS WHEREOF, the parties hereto have hereunder affixed their signatures
to
this First Amended and Restated Limited Partnership Agreement, all as of
the 13th day of June, 2006.
|
GENERAL
PARTNER:
|
|
|
CLF
OP GENERAL PARTNER LLC
|
|
| By: |
/s/
Xxxx X. Xxxxxx
|
|
Name:
Xxxx X. Xxxxxx
|
|
|
Title:
Vice President, General Counsel
and
Corporate Secretary
|
|
|
LIMITED
PARTNERS:
|
|
|
CAPITAL
LEASE FUNDING, INC.
|
|
| By: |
/s/
Xxxx X. Xxxxxx
|
|
Name:
Xxxx X. Xxxxxx
|
|
|
Title:
Vice President, General Counsel
and
Corporate Secretary
|
|
|
JDA
MIDDLETOWN LIMITED
|
|
|
PARTNERSHIP
|
|
| By: | JDA Middletown I, LLC |
| By: |
/s/
Xxxxxx X. Xxxxxxx
|
|
Name:
Xxxxxx X. Xxxxxxx
|
|
|
Title:
Managing Member
|
|
-
49
-
EXHIBIT
A
(As
of
June 13, 2006)
|
Partner
|
Address
|
Cash
Contribution
|
Agreed
Value
of
Capital
Contribution
|
Class
A Common
Units
|
Class
B Common
Units
|
Series
A
Preferred
Units
|
Class
A
Percentage
Interest
|
Class
B Percentage Interest
|
|||||||||||||||||
|
General
Partner:
|
|||||||||||||||||||||||||
|
CLF
OP General Partner, LLC
|
000
Xxxxxx Xxxx
Xxx
Xxxx, XX 00000
|
$
|
1,995,772.83
|
178,194
|
1.015
|
%
|
0
|
%
|
|||||||||||||||||
|
Limited
Partners:
|
|||||||||||||||||||||||||
|
Capital
Lease Funding, Inc.
|
000
Xxxxxx Xxxx
Xxx
Xxxx, XX 00000
|
$
|
194,633,670.17
|
17,378,006
|
1,400,000
|
98.985
|
%
|
0
|
%
|
||||||||||||||||
|
JDA
Middletown Limited Partnership
|
00
Xxxxx Xxxx
Xxxx
Xxxxxxxx, XX 00000
|
$
|
2,999,989.80
|
263,157
|
0
|
%
|
100
|
%
|
|||||||||||||||||
|
Totals
|
17,556,200
|
263,157
|
1,400,000
|
100.00
|
%
|
100.00
|
%
|
||||||||||||||||||
Exhibit
A-1
EXHIBIT
B
NOTICE
OF EXERCISE OF REDEMPTION RIGHT
In
accordance with Section 9.04
of the
First Amended and Restated Limited Partnership Agreement (the “Agreement”) of
Caplease, LP, the undersigned hereby irrevocably (i) presents for redemption
________ Partnership Units in Caplease, LP in accordance with the terms of
the
Agreement and the Redemption Right referred to in Section 9.04
thereof,
(ii) surrenders such Partnership Units and all right, title and interest therein
and (iii) directs that the Cash Amount or REIT Shares Amount (as defined in
the
Agreement) as determined by the General Partner deliverable upon exercise of
the
Redemption Right be delivered to the address specified below, and if REIT Shares
(as defined in the Agreement) are to be delivered, such REIT Shares be
registered or placed in the name(s) and at the address(es) specified
below.
Dated:________
__, _____
Name
of
Limited Partner:
|
(Signature
of Limited Partner)
|
|
(Mailing
Address)
|
|
(City)
(State) (Zip Code)
|
|
Signature
Guaranteed by:
|
If
REIT
Shares are to be issued, issue to:
Please
insert social security or identifying number:
Name:
Exhibit
B-1
EXHIBIT
C
For
Redeeming Limited Partners that are entities:
CERTIFICATION
OF NON-FOREIGN STATUS
Under
section 1445(e) of the Internal Revenue Code of 1986, as amended (the “Code”),
in the event of a disposition by a non-U.S. person of a partnership interest
in
a partnership in which (i) 50% or more of the value of the gross assets consists
of United States real property interests (“USRPIs”), as defined in section
897(c) of the Code, and (ii) 90% or more of the value of the gross assets
consists of USRPIs, cash, and cash equivalents, the transferee will be required
to withhold 10% of the amount realized by the non-U.S. person upon the
disposition. To inform Capital Lease Funding, Inc. (the “Company”) and Caplease,
LP (the “Partnership”) that no withholding is required with respect to the
redemption by ____________ (“Partner”) of its units of limited partnership
interest in the Partnership, the undersigned hereby certifies the following
on
behalf of Partner:
1. Partner
is not a foreign corporation, foreign partnership, foreign trust, or foreign
estate, as those terms are defined in the Code and the Treasury regulations
thereunder.
2. The
U.S.
employer identification number of Partner is _____________.
3. The
principal business address of Partner is: __________________________________
_______________________ and Partner’s place of incorporation is
__________.
4. Partner
agrees to inform the Company if it becomes a foreign person at any time during
the three-year period immediately following the date of this
notice.
5. Partner
understands that this certification may be disclosed to the Internal Revenue
Service by the Company and that any false statement contained herein could
be
punished by fine, imprisonment, or both.
| PARTNER | |
|
By:
|
|
|
Name:
|
|
|
Its:
|
|
Under
penalties of perjury, I declare that I have examined this certification and,
to
the best of my knowledge and belief, it is true, correct, and complete, and
I
further declare that I have authority to sign this document on behalf of
Partner.
Date:
_________________
| [NAME] |
|
Title
|
Exhibit
C-1
For
Redeeming Limited Partners that are individuals:
CERTIFICATION
OF NON-FOREIGN STATUS
Under
section 1445(e) of the Internal Revenue Code of 1986, as amended (the “Code”),
in the event of a disposition by a non-U.S. person of a partnership interest
in
a partnership in which (i) 50% or more of the value of the gross assets consists
of United States real property interests (“USRPIs”), as defined in section
897(c) of the Code, and (ii) 90% or more of the value of the gross assets
consists of USRPIs, cash, and cash equivalents, the transferee will be required
to withhold 10% of the amount realized by the non-U.S. person upon the
disposition. To inform Capital Lease Funding, Inc. (the “Company”) and Caplease,
LP (the “Partnership”) that no withholding is required with respect to my
redemption of my units of limited partnership interest in the Partnership,
I,
___________, hereby certify the following:
1. I
am not
a nonresident alien for purposes of U.S. income taxation.
2. My
U.S.
taxpayer identification number (social security number) is
_____________.
3. My
home
address is: ____________________________________________________.
4. I
agree
to inform the Company promptly if I become a nonresident alien at any time
during the three-year period immediately following the date of this
notice.
5. I
understand that this certification may be disclosed to the Internal Revenue
Service by the Company and that any false statement contained herein could
be
punished by fine, imprisonment, or both.
|
Name:
|
Under
penalties of perjury, I declare that I have examined this certification and,
to
the best of my knowledge and belief, it is true, correct, and
complete.
|
Date:
_________________
|
|
| Name: |
Exhibit
C-2
