AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP
OF
LOEB REALTY, L.P.
DATED AS OF ____________, 1998
TABLE OF CONTENTS
Page
ARTICLE 1 DEFINED TERMS........................................................ 2
ARTICLE 2 ORGANIZATIONAL MATTERS............................................... 12
Section 2.1 Formation............................................................ 12
Section 2.2 Name................................................................. 12
Section 2.3 Registered Office and Agent; Principal Office........................ 13
Section 2.4 Power of Attorney.................................................... 13
Section 2.5 Term................................................................. 14
ARTICLE 3 PURPOSE.............................................................. 14
Section 3.1 Purpose and Business................................................. 14
Section 3.2 Powers............................................................... 15
ARTICLE 4 CAPITAL CONTRIBUTIONS................................................ 15
Section 4.1 Capital Contributions of the Partners................................ 15
A. Initial Capital Contributions and Recapitalization of the
Partnership on the Effective Date............................... 15
B. Capital Contributions By Merger................................. 15
C. No Obligation to Make Additional Capital Contributions.......... 16
Section 4.2 Issuances of Additional Partnership Interests........................ 16
Section 4.3 Contribution of Proceeds of Issuance of REIT Shares.................. 17
Section 4.4 No Interest On Capital............................................... 17
Section 4.5 No Preemptive Rights................................................. 17
Section 4.6 Other Contribution Provisions........................................ 18
ARTICLE 5 DISTRIBUTIONS........................................................ 18
Section 5.1 Requirement and Characterization of Distributions.................... 18
Section 5.2 Amounts Withheld..................................................... 18
Section 5.3 Distributions Upon Liquidation....................................... 18
Section 5.4 Revisions to Reflect Issuance of Additional Partnership Interests.... 19
Section 5.5 Minimum Distributions if REIT Shares Not Publicly Traded............. 19
ARTICLE 6 ALLOCATIONS OF PROFITS AND LOSSES.................................... 19
Section 6.1 Profits and Losses................................................... 19
Section 6.2 Mandatory Allocations................................................ 19
Section 6.3 Other Allocation Rules............................................... 21
Section 6.4 Tax Allocations...................................................... 21
ARTICLE 7 MANAGEMENT AND OPERATIONS OF BUSINESS................................ 22
Section 7.1 Management........................................................... 22
Section 7.2 Certificate of Limited Partnership................................... 25
Section 7.3 Restrictions on General Partner Authority. .......................... 26
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Page
Section 7.4 Reimbursement of the General Partner and the Company; DRIP's
and Repurchase Programs......................................... 26
Section 7.5 Outside Activities of the General Partner....................... 27
Section 7.6 Contracts with Affiliates....................................... 27
Section 7.7 Indemnification................................................. 28
Section 7.8 Liability of the General Partner................................ 30
Section 7.9 Other Matters Concerning the General Partner.................... 30
Section 7.10 Title to Partnership Assets..................................... 31
Section 7.11 Reliance by Third Parties....................................... 32
ARTICLE 8 RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS...................... 32
Section 8.1 Limitation of Liability......................................... 32
Section 8.2 Management of Business.......................................... 32
Section 8.3 Outside Activities of Limited Partners.......................... 32
Section 8.4 Return of Capital............................................... 33
Section 8.5 Rights of Limited Partners Relating to the Partnership.......... 33
Section 8.6 Redemption Right................................................ 34
ARTICLE 9 BOOKS, RECORDS, ACCOUNTING AND REPORTS.......................... 36
Section 9.1 Records and Accounting.......................................... 36
Section 9.2 Fiscal Year..................................................... 37
Section 9.3 Reports......................................................... 37
ARTICLE 10 TAX MATTERS..................................................... 37
Section 10.1 Preparation of Tax Returns...................................... 37
Section 10.2 Tax Elections................................................... 37
Section 10.3 Tax Matters Partner............................................. 38
Section 10.4 Organizational Expenses......................................... 39
Section 10.5 Withholding..................................................... 39
ARTICLE 11 TRANSFERS AND WITHDRAWALS....................................... 40
Section 11.1 Transfer........................................................ 40
Section 11.2 Transfer of the General Partner Interest and Company's Limit.... 41
Section 11.3 Limited Partners' Rights to Transfer............................ 43
Section 11.4 Substituted Limited Partners.................................... 44
Section 11.5 Assignees....................................................... 44
Section 11.6 General Provisions.............................................. 44
ARTICLE 12 ADMISSION OF PARTNERS........................................... 47
Section 12.1 Admission of Successor General Partner.......................... 47
Section 12.2 Admission of Additional Limited Partners........................ 47
Section 12.3 Amendment of Agreement and Certificate of Limited Partnership... 48
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Page
ARTICLE 13 DISSOLUTION, LIQUIDATION AND TERMINATION............................. 48
Section 13.1 Dissolution.......................................................... 48
Section 13.2 Winding Up........................................................... 49
Section 13.3 Deemed Distribution and Recontribution............................... 50
Section 13.4 Rights of Limited Partners........................................... 51
Section 13.5 Notice of Dissolution................................................ 51
Section 13.6 Termination of Partnership and Cancellation of
Certificate of Limit................................................. 51
Section 13.7 Reasonable Time for Winding-Up....................................... 51
Section 13.8 Waiver of Partition.................................................. 51
ARTICLE 14 AMENDMENT OF PARTNERSHIP AGREEMENT;
MEETINGS............................................................. 51
Section 14.1 Amendments........................................................... 51
Section 14.2 Meetings of the Partners............................................. 53
ARTICLE 15 GENERAL PROVISIONS................................................... 54
Section 15.1 Addresses and Notice................................................. 54
Section 15.2 Titles and Captions.................................................. 54
Section 15.3 Pronouns and Plurals................................................. 54
Section 15.4 Further Action....................................................... 54
Section 15.5 Binding Effect....................................................... 54
Section 15.6 Creditors............................................................ 55
Section 15.7 Waiver............................................................... 55
Section 15.8 Counterparts......................................................... 55
Section 15.9 Applicable Law....................................................... 55
Section 15.10 Invalidity of Provisions............................................. 55
Section 15.11 Entire Agreement..................................................... 55
Section 15.12 No Rights as Stockholders............................................ 56
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AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
LOEB REALTY, L.P.
DATED AS OF ___________, 1998
THIS AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF LOEB
REALTY, L.P. (this "Agreement"), dated as of _____________, 1998, is entered
into by and among LOEB REALTY GP, INC., a Maryland [corporation or trust], (the
"General Partner"), LOEB REALTY CORPORATION, a Maryland corporation (the
"Company"), and the Persons (as defined below) whose names are set forth on
Exhibit A attached hereto (as it may be amended from time to time).
WHEREAS, this Limited Partnership was originally formed on ____________,
1998;
WHEREAS, immediately prior to or contemporaneously with the execution
hereof, the persons named on Exhibit A hereto conveyed to the Partnership all of
their right, title and interest to certain real property and other assets owned
by them and received in exchange therefor Partnership Interests and,
accordingly, the parties have determined to amend and restate the original
partnership agreement of this Limited Partnership;
WHEREAS, the Company proposes (i) to effect a public offering of its
common stock, (ii) to acquire and cause the Partnership to acquire direct and
indirect interests in certain properties and other assets, (iii) to cause the
Partnership to enter into certain financing arrangements and (iv) to contribute
the proceeds from the public offering and the other assets of the Company to the
Partnership;
WHEREAS, the parties to this Agreement have determined to admit the
General Partner to the Partnership in exchange for its Capital Contribution;
WHEREAS, the Partnership will issue Partnership Interests to the Company
in accordance with the foregoing transactions;
NOW, THEREFORE, BE IT RESOLVED, that for good and adequate
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
ARTICLE 1
DEFINED TERMS
The following definitions shall be for all purposes, unless otherwise
clearly indicated to the contrary, applied to the terms used in this Agreement.
"Act" means the Delaware Revised Uniform Limited Partnership Act, as it
may be amended from time to time, and any successor to such statute.
"Additional Limited Partner" means a Person admitted to the Partnership
as a Limited Partner pursuant to Sections 4.2 and 12.2 hereof and who is shown
as such on the books and records of the Partnership.
"Adjusted Capital Account Deficit" With respect to any Partner, the
deficit balance, if any, in such Partner's Capital Account as of the end of the
relevant Partnership Year, after giving effect to the following adjustments:
(i) Credit to such Capital Account any amounts which such
Partner is deemed to be obligated to restore to the Partnership pursuant
to the second to last sentences of Regulations 'SS''SS' 1.704-2(g)(1)
and 1.704-2(i)(5).
(ii) Debit to such Capital Account the items described in
Regulations 'SS''SS' 1.704-1(b)(2)(ii)(d)(4), (5) and (6).
Except as otherwise modified herein, the foregoing definition of Adjusted
Capital Account Deficit is intended to comply with the provisions of Regulations
'SS' 1.704-1(b)(2)(ii)(d) and shall be interpreted consistently therewith.
"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 or the Company, and any
accounting and legal expenses of the General Partner or the Company, which
expenses, the Partners have agreed, are expenses of the Partnership and not the
General Partner, and (iii) to the extent not included in clause (ii) above, REIT
Expenses.
"Affiliate" means, with respect to any Person, any Person directly or
indirectly controlling, controlled by or under common control with such Person.
For purposes of this definition, "control," when used with respect to any
Person, means the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting securities, by
contract or otherwise, and the terms "controlling" and "controlled" have
meanings correlative to the foregoing. No officer, director or stockholder of
the General Partner shall be considered an Affiliate of the General Partner
solely as a result of serving in such capacity or being a stockholder of the
General Partner.
"Agreement" means this Amended and Restated Agreement of Limited
Partnership, as it may be further amended, supplemented or restated from time to
time. Terms such as
2
"hereof," "hereto," "hereby, "hereunder" and "herein" refer to this Agreement,
unless the context otherwise requires.
"Assignee" means a Person to whom one or more Partnership Units have
been transferred in a manner permitted under this Agreement, but who has not
become a Substituted Limited Partner, and who has the rights set forth in
Section 11.5.
"Available Cash" means, with respect to any period for which such
calculation is being made, (a) all cash received by the Partnership from any
source (including borrowings by the Partnership, cash Capital Contributions and
proceeds of the sale, exchange or other disposition of all or portions of the
Partnership assets) and any cash released from working capital, capital
replacement, debt repayment or other reserves less (b) cash expended, reserved
or required for (i) debts and expenses, interest and principal payments on any
indebtedness, capital expenditures, taxes, fees, (ii) investments in the
acquisition, development, construction, expansion or redevelopment of real
estate or personal property appurtenant thereto, or entities which hold direct
or indirect interests in real estate or such personal property, or (iii) other
requirements of the Partnership, in each case as reasonably determined by the
General Partner. Notwithstanding the foregoing, Available Cash shall not include
any cash received or reductions in reserves, or take into account any
disbursements made or reserves established, after commencement of the
dissolution and liquidation of the Partnership.
"Business Day" means any day except a Saturday, Sunday or other day on
which commercial banks in New York, New York are authorized or required by law
to close.
"Capital Account" With respect to each Partner, a book account
maintained in accordance with the following provisions:
(i) To each Partner's Capital Account there shall be
credited such Partner's Capital Contributions, such Partner's
distributive share of Profits and any items in the nature of income or
gain which are allocated to such Partner pursuant to Section 6.2, and
the amount of any Partnership liabilities that are assumed by such
Partner or that are secured by any Partnership property distributed to
such Partner.
(ii) To each Partner's Capital Account there shall be
debited the amount of cash and the Gross Asset Value of any Partnership
asset distributed to such Partner pursuant to any provision of this
Agreement, such Partner's distributive share of Losses and any items in
the nature of expenses and losses which are allocated to such Partner
pursuant to Section 6.2, and the amount of any liabilities of such
Partner that are assumed by the Partnership or which are secured by any
property contributed to the Partnership by such Partner (except to the
extent already reflected in the amount of such Partner's Capital
Contributions).
In the event the Gross Asset Value of Partnership assets are adjusted
pursuant to paragraph (ii), (iii) or (iv) of the definition of Gross Asset
Value, the Capital Accounts of the Partners shall be adjusted to reflect the
aggregate net adjustments as if the Partnership sold all
3
of its assets for their fair market values, and recognized gain or loss equal to
the aggregate amount of such net adjustment.
The foregoing definition and other provisions of this Agreement relating
to the maintenance of Capital Accounts are intended to comply with Code 'SS'
704(b) and the Regulations thereunder, and shall be interpreted and applied in a
manner consistent with such regulations.
Any transferee of a Partnership Interest or a portion thereof shall
succeed to the Capital Account relating to the Partnership Interest transferred
or the corresponding portion thereof.
"Capital Contributions" With respect to any Partner, the amount of cash
and the initial Gross Asset Value of any other property contributed or deemed
contributed to the capital of the Partnership by or on behalf of such Partner,
reduced by the amount of any liability assumed by the Partnership relating to
such property and any liability to which such property is subject.
"Cash Amount" means an amount of cash per Partnership Unit equal to the
Value on the Valuation Date of the REIT Shares Amount.
"Certificate of Incorporation" means the Certificate of Incorporation or
other organizational document governing the General Partner, as amended or
restated from time to time.
"Certificate of Limited Partnership" means the Certificate of Limited
Partnership relating to the Partnership filed in the office of the Delaware
Secretary of State, as amended from time to time in accordance with the terms
hereof and the Act.
"Code" means the Internal Revenue Code of 1986, as amended and in effect
from time to time, as interpreted by the applicable regulations thereunder. Any
reference herein to a specific section or sections of the Code shall be deemed
to include a reference to any corresponding provision of future law.
"Consent" means the consent or approval of a proposed action by a
Partner given in accordance with Section 14.2 hereof.
["Consenting Partner" or "Consenting Partners" means ___________________
and ________________________, individually or collectively, as the case may be.]
"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 purpose that each such dividend, distribution, subdivision or
combination which occurred prior to such time has occurred as of such time), and
the denominator of which shall be the actual number of REIT
4
Shares (determined without the above assumption) issued and outstanding on the
record date for such dividend, distribution, subdivision or combination. Any
adjustment to the Conversion Factor shall become effective immediately after the
effective date of such event retroactive to the record date, if any, for such
event (provided, however, if a Notice of Redemption is given prior to such a
record date and the Specified Redemption Date is after such a record date, then
the adjustment to the Conversion Factor shall, with respect to such redeeming
Partner, be retroactive to the date of such Notice of Redemption). It is
intended that adjustments to the Conversion Factor are to be made in order to
avoid unintended dilution or anti-dilution as a result of transactions in which
REIT Shares are issued, redeemed or exchanged without a corresponding issuance,
redemption or exchange of Partnership Units. If, prior to a Specified Redemption
Date, Rights (other than Rights issued pursuant to an employee benefit plan or
other compensation arrangement) were issued, and such Rights were issued with an
exercise price that, together with the purchase price for such Rights, was below
fair market value in relation to the security or other property to be acquired
upon the exercise of such Rights, and such Rights were issued to all holders of
outstanding REIT Shares or the General Partner cannot in good faith represent
that the issuance of such Rights benefitted the Limited Partners, then the
Conversion Factor applicable upon a Notice of Redemption shall be equitably
adjusted in a manner consistent with antidilution provisions in warrants and
other instruments in the case of such a below market issuance or exercise price.
A similar equitable adjustment to protect the value of Partnership Units shall
be made in all events if any Rights issued under a "Shareholder Rights Plan"
became exercisable prior to a Specified Redemption Date.
"Depreciation" For each Partnership Year or other period, an amount
equal to the depreciation, amortization or other cost recovery deduction
allowable for federal income tax purposes with respect to an asset for such
Partnership Year or other period; provided, however, that if the Gross Asset
Value of an asset differs from its adjusted basis for federal income tax
purposes at the beginning of such Partnership Year or other period, Depreciation
shall be an amount which bears the same ratio to such beginning Gross Asset
Value as the federal income tax depreciation, amortization, or other cost
recovery deduction for such Partnership Year or other period bears to such
beginning adjusted tax basis; provided, further, that if the federal income tax
depreciation, amortization, or other cost recovery deduction for such
Partnership Year is zero, Depreciation shall be determined with reference to
such beginning Gross Asset Value using any reasonable method selected by the
General Partner.
"Designated Property" or "Designated Properties" has the meanings set
forth in Section 8.7 hereof.
"Effective Date" means the date of closing the initial public offering
of REIT Shares by the Company.
"Extraordinary Transaction" shall mean, with respect to the Company or
the General Partner, the occurrence of one or more of the following events: (i)
a merger (including a triangular merger), consolidation or other combination
with or into another Person; (ii) the direct or indirect sale, lease, exchange
or other transfer of all or substantially all of its assets in one transaction
or a series of transactions; (iii) any reclassification, recapitalization or
change of its outstanding equity interests (other than a change in par value, or
from par value to no par value,
5
or as a result of a split, dividend or similar subdivision); (iv) any issuance
of equity securities of the Company or the General Partner, as the case may be,
in exchange for assets (other than an issuance of securities for cash or an
issuance of securities pursuant to an employee benefit plan); (v) any Change of
Control (as defined in the Company's or the General Partner's Certificate of
Incorporation, as the case may be) or (vi) the adoption of any plan of
liquidation or dissolution of the Company, or the General Partner, as the case
may be, (whether or not in compliance with the provisions of this Agreement).
"General Partner" means [Loeb Realty GP, Inc.] in its capacity as the
general partner of the Partnership, or its successors as general partner of the
Partnership.
"General Partner Interest" means a Partnership Interest held by the
General Partner, in its capacity as general partner. A General Partner Interest
may be expressed as a number of Partnership Units.
"Gross Asset Value" With respect to any asset, the asset's adjusted
basis for federal income tax purposes, except as follows:
(i) The initial Gross Asset Value of any asset contributed
by a Partner to the Partnership shall be the gross fair market value of
such asset at the time of contribution, as reasonably determined by the
General Partners;
(ii) The Gross Asset Values of all Partnership Assets shall
be adjusted to equal their respective gross fair market values, as
reasonably determined by the General Partner, as of the following times:
(a) the acquisition of an additional interest in the Partnership by any
new or existing Partner in exchange for more than a de minimis Capital
Contribution; (b) the distribution by the Partnership to a Partner of
more than a de minimis amount of property as consideration for an
interest in the Partnership; and (c) the liquidation of the Partnership
within the meaning of Regulations 'SS' 1.704- 1(b)(2)(ii)(g); provided,
however, that adjustments pursuant to clauses (a) and (b) above shall be
made only if the General Partner reasonably determine that such
adjustments are necessary or appropriate to reflect the relative
economic interests of the Partners in the Partnership;
(iii) The Gross Asset Value of any Partnership Asset
distributed to any Partner shall be the gross fair market value of such
asset on the date of distribution; and
(iv) The Gross Asset Values of Partnership Assets shall be
increased (or decreased) to reflect any adjustments to the adjusted
basis of such assets pursuant to Code 'SS' 734(b) or Code 'SS' 743(b),
but only to the extent that such adjustments are taken into account in
determining Capital Accounts pursuant to Regulations 'SS' 1.704-
1(b)(2)(iv)(m).
If the Gross Asset Value of an asset has been determined or adjusted pursuant to
this provision, such Gross Asset Value shall thereafter be adjusted by the
Depreciation taken into account with respect to such asset for purposes of
computing Profits and Losses. Any adjustment to the Gross
6
Asset Values of Partnership Assets shall require an adjustment to the Partner's
Capital Account as provided in Section 6.2 hereof.
"IRS" means the Internal Revenue Service, which administers the internal
revenue laws of the United States.
"Incapacity" or "Incapacitated" means, (i) as to any individual Partner,
death, total physical disability or entry by a court of competent jurisdiction
adjudicating him incompetent to manage his or her Person or estate; (ii) as to
any corporation which is a Partner, the filing of a certificate of dissolution,
or its equivalent, for the corporation or the revocation of its charter; (iii)
as to any partnership which is a Partner, the dissolution and commencement of
winding up of the partnership; (iv) as to any estate which is a Partner, the
distribution by the fiduciary of the estate's entire interest in the
Partnership; (v) as to any trustee of a trust which is a Partner, the
termination of the trust (but not the substitution of a new trustee); or (vi) as
to any Partner, the bankruptcy of such Partner. For purposes of this definition,
bankruptcy of a Partner shall be deemed to have occurred when (a) the Partner
commences a voluntary proceeding seeking liquidation, reorganization or other
relief under any bankruptcy, insolvency or other similar law now or hereafter in
effect; (b) the Partner is adjudged as bankrupt or insolvent, or a final and
nonappealable order for relief under any bankruptcy, insolvency or similar law
now or hereafter in effect has been entered against the Partner; (c) the Partner
executes and delivers a general assignment for the benefit of the Partner's
creditors; (d) the Partner files an answer or other pleading admitting or
failing to contest the material allegations of a petition filed against the
Partner in any proceeding of the nature described in clause (b) above; (e) the
Partner seeks, consents to or acquiesces in the appointment of a trustee,
receiver or liquidator for the Partner or for all or any substantial part of the
Partner's properties; (f) any proceeding seeking liquidation, reorganization or
other relief of or against such Partner under any bankruptcy, insolvency or
other similar law now or hereafter in effect has not been dismissed within one
hundred twenty (120) days after the commencement thereof; (g) the appointment
without the Partner's consent or acquiescence of a trustee, receiver or
liquidator has not been vacated or stayed within ninety (90) days of such
appointment; or (h) an appointment referred to in clause (g) which has been
stayed is not vacated within ninety (90) days after the expiration of any such
stay.
"Indemnitee" means (i) any Person made a party to a proceeding by reason
of (A) his status as the General Partner, or as a director, officer or
shareholder of the Partnership or the General Partner, or (B) his or its
liabilities, pursuant to a loan guarantee or otherwise, for any indebtedness of
the Partnership or any Subsidiary of the Partnership (including, without
limitation, any indebtedness which the Partnership or any Subsidiary of the
Partnership has assumed or taken assets subject to); and (ii) such other Persons
(including Affiliates of the General Partner or the Partnership) as the General
Partner may designate from time to time (whether before or after the event
giving rise to potential liability), in its sole and absolute discretion.
"Independent Directors" has the meaning given such term in the Company's
Certificate of Incorporation.
7
"Limited Partner" means any Person (including the Company) named as a
Limited Partner in Exhibit A attached hereto, as such Exhibit may be amended
from time to time, or any Substituted Limited Partner or Additional Limited
Partner, in such Person's capacity as a Limited Partner of the Partnership.
"Limited Partner Interest" means a Partnership Interest of a Limited
Partner in the Partnership representing a fractional part of the Partnership
Interests of all Partners and includes any and all benefits to which the holder
of such a Partnership Interest may be entitled, as provided in this Agreement,
together with all obligations of such Person to comply with the terms and
provisions of this Agreement. A Limited Partner Interest may be expressed as a
number of Partnership Units.
"Liquidating Event" has the meaning set forth in Section 13.1.
"Liquidator" has the meaning set forth in Section 13.2.
"Nonrecourse Deductions" As defined in Regulations 'SS' 1.704-2(b)(1).
The amount of Nonrecourse Deductions for a Partnership Year equals the net
increase, if any, in the amount of Partnership Minimum Gain during such
Partnership Year reduced by any distributions during such Partnership Year of
proceeds of a Nonrecourse Liability that are allocable to an increase in
Partnership Minimum Gain, determined according to the provisions of Regulations
'SS''SS' 1.704- 2(c) and 1.704-2(h).
"Nonrecourse Liability" As defined in Regulations 'SS' 1.704-2(b)(3).
"Notice of Redemption" means the Notice of Redemption substantially in
the form of Exhibit B to this Agreement.
"Partner" means a General Partner or a Limited Partner, and "Partners"
means the General Partner and the Limited Partners collectively.
"Partner Minimum Gain" An amount, with respect to each Partner
Nonrecourse Debt, equal to the Partnership Minimum Gain that would result if
such Partner Nonrecourse Debt were treated as a Nonrecourse Liability,
determined in accordance with Regulations 'SS' 1.704-2(i)(3).
"Partner Nonrecourse Debt" As defined in Regulations 'SS' 1.704-2(b)(4).
"Partner Nonrecourse Deductions" As defined in Regulations 'SS'
1.704-2(i)(2). The amount of Partner Nonrecourse Deductions with respect to a
Partner Nonrecourse Debt for a Partnership Year equals the net increase, if any,
in the amount of Partner Minimum Gain during such Partnership Year attributable
to such Partner Nonrecourse Debt, reduced by any distributions during that
Partnership Year to the Partner that bears the economic risk of loss for such
Partner Nonrecourse Debt to the extent that such distributions are from the
proceeds of such Partner Nonrecourse Debt and are allocable to an increase in
Partner Minimum Gain attributable to such Partner Nonrecourse Debt, determined
according to the provisions of Regulations 'SS''SS' 1.704-2(h) and 1.704-2(i).
8
"Partnership" means the limited partnership formed under the Act and
pursuant to this Agreement, as it may be amended and/or restated, and any
successor thereto.
"Partnership Interest" means an ownership interest in the Partnership
representing a Capital Contribution 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. A Partnership Interest may be expressed as a number of
Partnership Units.
"Partnership Minimum Gain" -- As defined in Regulations 'SS' 1.704-2(d).
"Partnership Record Date" means the record date established by the
General Partner for the distribution of Available Cash pursuant to Section 5.1
hereof, which record date shall be the same as the record date established by
the Company for a distribution to its shareholders of some of all of its portion
of such distribution.
"Partnership Unit" or "Unit" means a fractional, undivided share of the
Partnership Interests of all Partners issued pursuant to Sections 4.1, 4.2 and
4.3. The number of Partnership Units outstanding and the Percentage Interest in
the Partnership represented by such Units are set forth in Exhibit A attached
hereto, as such Exhibit may be amended from time to time. The ownership of
Partnership Units shall be evidenced by such form of certificate for units as
the General Partner adopts from time to time unless the General Partner
determines that the Partnership Units shall be uncertificated securities.
"Partnership Year" means the fiscal year of the Partnership, which shall
be the calendar year.
"Percentage Interest" means, as to a Partner, its interest in the
Partnership as determined by dividing the Partnership Units owned by such
Partner by the total number of Partnership Units then outstanding and as
specified in Exhibit A attached hereto, as such Exhibit may be amended from time
to time.
"Person" means an individual or a corporation, partnership, trust,
unincorporated organization, association or other entity.
"Profits" and "Losses" For each Partnership Year or other period, an
amount equal to the Partnership's taxable income or loss for such Partnership
Year or period, determined in accordance with Code 'SS' 703(a) (for this
purpose, all items of income, gain, loss, or deduction required to be stated
separately pursuant to Code 'SS' 703(a)(1) shall be included in taxable income
or loss), with the following adjustments:
(i) Any income of the Partnership that is exempt from
federal income tax or excluded from federal gross income and not
otherwise taken into account in computing Profits or Losses pursuant to
this Section shall be added to such taxable income or loss;
9
(ii) Any expenditures of the Partnership described in Code
'SS' 705(a)(2)(B) or treated as Code 'SS' 705(a)(2)(B) expenditures
pursuant to Regulations 'SS' 1.704-1(b)(2)(iv)(i), and not otherwise
taken into account in computing Profits or Losses pursuant to this
Section, shall be subtracted from such taxable income or loss;
(iii) In the event the Gross Asset Value of any Partnership
Asset is adjusted pursuant to any provision of this Agreement in
accordance with the definition of Gross Asset Value, the amount of such
adjustment shall be taken into account as gain or loss from the
disposition of such Asset for purposes of computing Profits or Losses;
(iv) Gain or loss resulting from any disposition of any
Partnership Asset with respect to which gain or loss is recognized for
federal income tax purposes shall be computed by reference to the Gross
Asset Value of the property disposed of, notwithstanding that the
adjusted tax basis of such Asset differs from its Gross Asset Value;
(v) In lieu of the depreciation, amortization, and other
cost recovery deductions taken into account in computing such taxable
income or loss, there shall be taken into account Depreciation for such
Partnership Year or other period, computed in accordance with the
definition of Depreciation; and
(vi) Notwithstanding any other provision of this Section,
any items which are allocated pursuant to Section 6.2 shall not be taken
into account in computing Profits or Losses.
"Publicly Traded" means listed or admitted to trading on the New York
Stock Exchange, the American Stock Exchange or another national securities
exchange or designated for quotation on the NASDAQ National Market, or any
successor to any of the foregoing.
"Redeeming Partner" has the meaning set forth in Section 8.6 hereof.
"Redemption Right" shall have the meaning set forth in Section 8.6
hereof.
"Regulations" means the Income Tax Regulations promulgated under the
Code, as such regulations may be amended from time to time (including
corresponding provisions of succeeding regulations).
"REIT Expenses" means (i) costs and expenses relating to the formation
and continuity of existence and operation of the Company and all of its
Subsidiaries, including Loeb Realty GP, Inc. (which Subsidiaries shall, for
purposes hereof, be included within the definition of Company), including taxes,
fees and assessments associated therewith, and any and all costs, expenses or
fees payable to any director, officer, or employee of the Company, (ii) costs
and expenses relating to the public offering and registration of securities by
the Company and all statements, reports, fees and expenses incidental thereto,
including underwriting discounts and selling commissions applicable to any such
offering of securities, (iii) costs and expenses associated with the preparation
and filing of any periodic reports by the Company under federal,
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state or local laws or regulations, including the costs of all distributions to
stockholders, (iv) costs and expenses associated with compliance by the Company
with laws, rules and regulations promulgated by any regulatory body, and (v) all
other operating or administrative costs of the Company incurred in the ordinary
course of its business on behalf of or in connection with the Partnership.
"REIT" means a real estate investment trust under Section 856 of the
Code.
"REIT Share" shall mean a share of common stock, par value $.01 per
share, of the Company.
"REIT Shares Amount" shall mean a number of REIT Shares equal to the
product of the number of Partnership Units offered for redemption by a Redeeming
Partner, multiplied by the Conversion Factor in effect on the date of receipt by
the Company of a Notice of Redemption, 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, "Rights"), and
the Rights have not expired at the Specified Redemption Date, then the REIT
Shares Amount shall also include the Rights that were issuable to a holder of
the REIT Shares Amount of REIT Shares on the applicable record date relating to
the issuance of such Rights.
"Rights" shall have the meaning set forth in the definition of "REIT
Shares Amount."
"Specified Redemption Date" means the tenth (10th) Business Day after
receipt by the Company of a Notice of Redemption; provided that no Specified
Redemption Date shall occur before that date that is twelve (12) months after
the Effective Date.
"Subsidiary" means, with respect to any Person, any corporation,
partnership or other entity of which a majority of (i) the voting power of the
voting equity securities; or (ii) the outstanding equity interests, is owned,
directly or indirectly, by such Person.
"Substituted Limited Partner" means a Person who is admitted as a
Limited Partner to the Partnership pursuant to Section 11.4.
"Successor Designated Property" has the meaning set forth in Section 8.7
hereof.
"Terminating Capital Transaction" means any sale or other disposition of
all or substantially all of the assets of the Partnership or a related series of
transactions that, taken together, result in the sale or other disposition of
all or substantially all of the assets of the Partnership.
"Valuation Date" means the date of receipt by the General Partner of a
Notice of Redemption or, if such date is not a Business Day, the first Business
Day thereafter.
"Value" means, with respect to a REIT Share, the average of the daily
market price for the ten (10) consecutive trading days immediately preceding the
Valuation Date. The market
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price for each such trading day shall be: (i) if the REIT Shares are listed or
admitted to trading on any securities exchange or the Nasdaq National Market
System, the closing price on such day, or if no such sale takes place on such
day, the average of the closing bid and asked prices on such day; (ii) if the
REIT Shares are not listed or admitted to trading on any securities exchange or
the Nasdaq National Market System, the last reported sale price on such day or,
if no sale takes place on such day, the average of the closing bid and asked
prices on such day, as reported by a reliable quotation source designated by the
General Partner; or (iii) if the REIT Shares are not listed or admitted to
trading on any securities exchange or the Nasdaq National Market System and no
such last reported sale price or closing bid and asked prices are available, the
average of the reported high bid and low asked prices on such day, as reported
by a reliable quotation source designated by the General Partner, or if there
shall be no bid and asked prices on such day, the average of the high bid and
low asked prices, as so reported, on the most recent day (not more than ten (10)
days prior to the date in question) for which prices have been so reported;
provided that if there are no bid and asked prices reported during the ten (10)
days prior to the date in question, the Value of the REIT Shares shall be
determined by the General Partner acting in good faith on the basis of such
quotations and other information as it considers, in its reasonable judgment,
appropriate. In the event the REIT Shares Amount includes Rights, then the Value
of such Rights shall be determined by the General Partner acting in good faith
on the basis of such quotations and other information as it considers, in its
reasonable judgment, appropriate, provided that the Value of any rights issued
pursuant to a "Shareholder Rights Plan" shall be deemed to have no value unless
a "triggering event" shall have occurred (i.e., if the Rights issued pursuant
thereto are no longer "attached" to the REIT Shares and are able to trade
independently).
ARTICLE 2
ORGANIZATIONAL MATTERS
SECTION 2.1 FORMATION
The Partnership is a limited partnership organized pursuant to the
provisions of the Act. The Partners hereby agree to continue the Partnership
upon the terms and conditions set forth in this Agreement. Except as expressly
provided herein to the contrary, the rights and obligations of the Partners and
the administration and termination of the Partnership shall be governed by the
Act. The Partnership Interest of each Partner shall be personal property for all
purposes.
SECTION 2.2 NAME
The name of the Partnership is Loeb Realty, L.P. The Partnership's
business may be conducted under any other name or names deemed advisable by the
General Partner, including the name of the General Partner or any Affiliate
thereof. The words "Limited Partnership," "L.P.," "Ltd." or similar words or
letters shall be included in the Partnership's name where necessary for the
purposes of complying with the laws of any jurisdiction that so requires. The
General Partner in its sole and absolute discretion may change the name of the
Partnership at
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any time and from time to time and shall notify the Limited Partners of such
change in the next regular communication to the Limited Partners.
SECTION 2.3 REGISTERED OFFICE AND AGENT; PRINCIPAL OFFICE
The address of the registered office of the Partnership in the State of
Delaware and the name and address of the registered agent for service of process
on the Partnership in the State of Delaware is The Corporation Trust Company,
Corporation Trust Center, 0000 Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000. The
principal office of the Partnership shall be 000 Xxxxx Xxxxxx, Xxx Xxxx, XX, or
such other place as the General Partner may from time to time designate by
notice to the Limited Partners. The Partnership may maintain offices at such
other place or places within or outside the State of Delaware as the General
Partner deems advisable.
SECTION 2.4 POWER OF ATTORNEY
A. Each Limited Partner and each Assignee hereby constitutes and
appoints the General Partner, any Liquidator, and authorized officers and
attorneys-in-fact of each, and each of those acting singly, in each case with
full power of substitution, as its true and lawful agent and attorney-in-fact,
with full power and authority in its name, place and stead to:
(a) execute, swear to, acknowledge, deliver, file and record in
the appropriate public offices (a) all certificates, documents and other
instruments (including, without limitation, this Agreement and the
Certificate of Limited Partnership and all amendments or restatements
thereof) that the General Partner or the Liquidator deems appropriate or
necessary to form, qualify or continue the existence or qualification of
the Partnership as a limited partnership (or a partnership in which the
Limited Partners have limited liability) in the State of Delaware and in
all other jurisdictions in which the Partnership may or plans to conduct
business or own property; (b) all instruments that the General Partner
deems appropriate or necessary to reflect any amendment, change,
modification or restatement of this Agreement in accordance with its
terms; (c) all conveyances and other instruments or documents that the
General Partner or the Liquidator deems appropriate or necessary to
reflect the dissolution and liquidation of the Partnership pursuant to
the terms of this Agreement, including, without limitation, a
certificate of cancellation; (d) all instruments relating to the
admission, withdrawal, removal or substitution of any Partner pursuant
to, or other events described in, Article 11, 12 or 13 hereof or the
Capital Contribution of any Partner; and (e) all certificates, documents
and other instruments relating to the determination of the rights,
preferences and privileges of Partnership Interests; and
(b) execute, swear to, seal, acknowledge and file all ballots,
consents, approvals, waivers, certificates and other instruments
appropriate or necessary, in the sole and absolute discretion of the
General Partner or any Liquidator, to make, evidence, give, confirm or
ratify any vote, consent, approval, agreement or other action which is
made or given by the Partners hereunder or is consistent with the terms
of this agreement or appropriate or necessary, in the sole discretion of
the General Partner or any Liquidator, to effectuate the terms or intent
of this Agreement.
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Nothing contained herein shall be construed as authorizing the General Partner
or any Liquidator to amend this Agreement except in accordance with Article 14
hereof or as may be otherwise expressly provided for in this Agreement.
B. The foregoing power of attorney is hereby declared to be irrevocable
and a power coupled with an interest, in recognition of the fact that each of
the Partners will be relying upon the power of the General Partner and any
Liquidator to act as contemplated by this Agreement in any filing or other
action by it on behalf of the Partnership, and it shall survive and not be
affected by the subsequent Incapacity of any Limited Partner or Assignee and the
transfer of all or any portion of such Limited Partner's or Assignee's
Partnership Units and shall extend to such Limited Partner's or Assignee's
heirs, successors, assigns and personal representatives. Each such Limited
Partner or Assignee hereby agrees to be bound by any representation made by the
General Partner or any Liquidator, acting in good faith pursuant to such power
of attorney, and each such Limited Partner or Assignee hereby waives any and all
defenses which may be available to contest, negate or disaffirm the action of
the General Partner or any Liquidator, taken in good faith under such power of
attorney. Each Limited Partner or Assignee shall execute and deliver to the
General Partner or the Liquidator, within fifteen (15) days after receipt of the
General Partner's or Liquidator's request therefor, such further designation,
powers of attorney and other instruments as the General Partner or the
Liquidator, as the case may be, deems necessary to effectuate this Agreement and
the purposes of the Partnership.
SECTION 2.5 TERM
The term of the Partnership commenced on ____________, 1998, the date on
which the Certificate of Limited Partnership was filed in the office of the
Secretary of State of the State of Delaware, and shall continue until December
31, ____, unless the Partnership is dissolved sooner pursuant to the provisions
of Article 13 or as otherwise provided by law.
ARTICLE 3
PURPOSE
SECTION 3.1 PURPOSE AND BUSINESS
The purpose and nature of the business to be conducted by the
Partnership is (i) to conduct any business that may be lawfully conducted by a
limited partnership organized pursuant to the Act; provided, however, that such
business shall be limited to and conducted in such a manner as to permit the
Company at all times to be classified as a REIT, unless the Company ceases to
qualify as a REIT for reasons other than the conduct of the business of the
Partnership; (ii) to enter into any partnership, joint venture, limited
liability company or other similar arrangement to engage in any of the foregoing
or to own interests in any entity engaged, directly or indirectly, in any of the
foregoing; and (iii) to do anything necessary or incidental to the foregoing. In
connection with the foregoing, and without limiting the Company's right, in its
sole discretion, to cease qualifying as a REIT, the Partners acknowledge the
Company's current status as a REIT inures to the benefit of all of the Partners
and not solely the Company and the General Partner.
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SECTION 3.2 POWERS
The Partnership is empowered to do any and all acts and things
necessary, appropriate, proper, advisable, incidental to or convenient for the
furtherance and accomplishment of the purposes and business described herein and
for the protection and benefit of the Partnership, including, without
limitation, full power and authority, directly or through its ownership interest
in other entities, to enter into, perform and carry out contracts of any kind,
borrow money and issue evidences of indebtedness whether or not secured by
mortgage, deed of trust, pledge or other lien, acquire, own, manage, improve and
develop real property, and lease, sell, transfer and dispose of real property;
provided, however, that the Partnership shall not take, or refrain from taking,
any action which, in the judgment of the General Partner, in its sole and
absolute discretion, (i) could adversely affect the ability of the Company to
continue to qualify as a REIT; (ii) could subject the Company to any additional
taxes under Section 857 or Section 4981 of the Code; or (iii) could violate any
law or regulation of any governmental body or agency having jurisdiction over
the Company or its securities, unless such action (or inaction) shall have been
specifically consented to by the Company and the General Partner in writing.
ARTICLE 4
CAPITAL CONTRIBUTIONS
SECTION 4.1 CAPITAL CONTRIBUTIONS OF THE PARTNERS
A. Initial Capital Contributions and Recapitalization of the Partnership
on the Effective Date. The General Partner and the Company have previously made
Capital Contributions to the Partnership upon its formation. On the Effective
Date, the General Partner shall contribute additional cash to the Partnership so
that its total contribution shall be the amount set forth opposite its name on
Schedule A. The Company, as a limited partner, shall contribute $___________ and
the other Persons listed on Schedule A will make Capital Contributions to the
Partnership as set forth therein (except that certain of such Persons, as
described in the recitals hereof, were deemed to have made Capital Contributions
prior to the date hereof). The General Partner will adjust Exhibit A as
necessary from time to time to reflect redemptions, the Capital Contributions
made by each Partner, the Partnership Units assigned to each Partner and the
Percentage Interest in the Partnership represented by such Partnership Units.
The Capital Accounts of the Partners and the Gross Asset Values of the
Partnership's Assets shall be determined as of the Effective Date to reflect the
Capital Contributions made prior to and on the Effective Date.
B. Capital Contributions By Merger. To the extent the Partnership
acquires any property by the merger of any other Person into the Partnership,
Persons who receive Partnership Interests in exchange for their interests in the
Person merging into the Partnership shall become Partners and shall be deemed to
have made Capital Contributions as provided in the applicable merger agreement
and as set forth in Exhibit A, as amended to reflect such deemed Capital
Contributions.
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C. No Obligation to Make Additional Capital Contributions. Each Partner
shall own the number of Partnership Units set forth for such Partner in Exhibit
A and shall have a Percentage Interest in the Partnership as set forth in
Exhibit A, which Percentage Interest shall be adjusted in Exhibit A from time to
time by the General Partner to the extent necessary to reflect accurately
redemptions, additional Capital Contributions, the issuance of additional
Partnership Units (pursuant to any merger or otherwise), or similar events
having an effect on any Partner's Percentage Interest. The number of Partnership
Units held by the General Partner, in its capacity as general partner, (equal to
.2% of all outstanding Partnership Units from time to time) shall be deemed to
be the General Partner Interest. Except as provided in Sections 4.2, 10.5 or
elsewhere in this Agreement, the Partners shall have no obligation to make any
additional Capital Contributions or loans to the Partnership.
SECTION 4.2 ISSUANCES OF ADDITIONAL PARTNERSHIP INTERESTS
A. The General Partner is hereby authorized to cause the Partnership
from time to time to issue to the Partners (including the General Partner, the
Company and its Affiliates) or other Persons (including, without limitation, in
connection with the contribution of property to the Partnership) additional
Partnership Units or other Partnership Interests in one or more classes, or one
or more series of any of such classes, with such designations, preferences and
relative, participating, optional or other special rights, powers and duties,
including rights, powers and duties senior to the Limited Partner Interests
issued on the Effective Date, all as shall be determined by the General Partner
in its sole and absolute discretion 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;
provided that no such additional Partnership Units or other Partnership
Interests shall be issued to the General Partner or the Company, unless either
(a)(1) the additional Partnership Interests are issued in connection with the
grant, award or issuance of REIT Shares or other equity interests by the
Company, which REIT shares or other equity interests have designations,
preferences and other rights such that the economic interests attributable to
such REIT shares or other equity interests are substantially similar to the
designations, preferences and other rights of the additional Partnership
Interests issued to the General Partner or the Company in accordance with this
Section 4.2.A, and (2) the General Partner or the Company shall make a Capital
Contribution to the Partnership in an amount equal to the proceeds raised in
connection with such issuance, or (b) the additional Partnership Interests are
issued to all Partners in proportion to their respective Percentage Interests.
In addition, the General Partner or the Company may acquire Units from other
Partners pursuant to this Agreement. In the event that the Partnership issues
Partnership Interests pursuant to this Section 4.2.A, the General Partner shall
make such revisions to this Agreement including but not limited to the revisions
described in Section 5.4 and Section 8.6 hereof, as it deems necessary to
reflect the issuance of such additional Partnership Interests and the special
rights, powers and duties associated therewith. Unless specifically set forth
otherwise by the General Partner, any Partnership Interest issued after the
Effective Date shall have the same rights, powers and duties as the Partnership
Interests issued on the Effective Date.
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B. From and after the date hereof, the Company shall not issue any
additional REIT Shares [(other than REIT Shares issued pursuant to Section
8.6)], or rights, options, warrants or convertible or exchangeable securities
containing the right to subscribe for or purchase REIT Shares (collectively "New
Securities") other than to all holders of REIT Shares unless (i) the General
Partner shall cause the Partnership to issue to the Company, Partnership
Interests or rights, options, warrants or convertible or exchangeable securities
of the Partnership having designations, preferences and other rights, all such
that the economic interests are substantially similar to those of the New
Securities; and (ii) the Company contributes to the Partnership the proceeds
from the issuance of such New Securities and from the exercise of rights
contained in such New Securities. Without limiting the foregoing, the Company is
expressly authorized to issue New Securities for no tangible value or for less
than fair market value, and the General Partner is expressly authorized to cause
the Partnership to issue to the Company corresponding Partnership Interests, so
long as (x) the General Partner concludes in good faith that such issuance of
Partnership Interests is in the interests of the Partnership; and (y) the
Company contributes all proceeds, if any, from such issuance and exercise to the
Partnership.
SECTION 4.3 CONTRIBUTION OF PROCEEDS OF ISSUANCE OF REIT SHARES
In connection with the initial public offering of REIT Shares by the
Company and any other issuance of New Securities pursuant to Section 4.2, the
Company and/or the General Partner shall contribute to the Partnership any
proceeds (or a portion thereof) raised in connection with such issuance;
provided that if the proceeds actually received 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 amount equal to the sum of the net proceeds of such issuance plus the
amount of such underwriter's discount and other expenses paid by the Company
(which discount and expense shall be treated as an expense for the benefit of
the Partnership for purposes of Section 7.4). In the case of employee
acquisitions of New Securities at a discount from fair market value or for no
value in connection with a grant of New Securities, the amount of such discount
representing compensation to the employee, as determined by the General Partner,
shall be treated as an expense of the issuance of such New Securities.
SECTION 4.4 NO INTEREST ON CAPITAL
No Partner shall be entitled to interest on its Capital Contributions or
its Capital Account.
SECTION 4.5 NO PREEMPTIVE RIGHTS
Except to the extent expressly granted by the Partnership pursuant to
another agreement, no Person shall have any preemptive, preferential or other
similar right with respect to (i) additional Capital Contributions or loans to
the Partnership or (ii) issuance or sale of any Partnership Units or other
Partnership Interests.
17
SECTION 4.6 OTHER CONTRIBUTION PROVISIONS
If any Partner is admitted to the Partnership and is given a Capital
Account in exchange for services rendered to the Partnership, such transaction
shall be treated by the Partnership and the affected Partner as if the
Partnership had compensated such Partner in cash, and the Partner had
contributed such cash to the capital of the Partnership.
ARTICLE 5
DISTRIBUTIONS
SECTION 5.1 REQUIREMENT AND CHARACTERIZATION OF DISTRIBUTIONS
The General Partner shall distribute at least quarterly an amount equal
to one hundred percent (100%) of Available Cash generated by the Partnership
during such quarter or shorter period to the Partners who are Partners on the
Partnership Record Date with respect to such quarter or shorter period in
accordance with their respective Percentage Interests on such Partnership Record
Date; provided that in no event may a Partner receive a distribution of
Available Cash with respect to a Partnership Unit for a quarter if such Partner
is entitled to receive a distribution out of such Available Cash with respect to
a REIT Share for which such Partnership Unit has been exchanged and such
distribution shall be made to the Company. Unless otherwise expressly provided
for herein or in an agreement at the time a new class of Partnership Interests
is created in accordance with Article 4 hereof, no Partnership Interest shall be
entitled to a distribution in preference to any other Partnership Interest. The
General Partner shall take such reasonable efforts, as determined by it in its
sole and absolute discretion and consistent with the Company's qualification as
a REIT, to distribute Available Cash (a) to the Limited Partners so as to
preclude any such distribution or portion thereof from being treated as part of
a sale of property to the Partnership by a Limited Partner under Section 707 of
the Code or the Regulations thereunder; provided that the General Partner and
the Partnership shall not have liability to a Limited Partner under any
circumstances as a result of any distribution to a Limited Partner being so
treated and (b) to the Company in an amount that will be sufficient to enable
the Company to pay dividends that (1) to satisfy the requirements for qualifying
as a REIT under the Code and the Regulations and (2) avoid any federal income or
excise tax liability for the General Partner or the Company.
SECTION 5.2 AMOUNTS WITHHELD
All amounts withheld pursuant to the Code or any provisions of any state
or local tax law and Section 10.5 hereof with respect to any allocation, payment
or distribution to the Partners or Assignees shall be treated as amounts
distributed to the Partners or Assignees pursuant to Section 5.1 for all
purposes under this Agreement.
SECTION 5.3 DISTRIBUTIONS UPON LIQUIDATION
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Proceeds from a Terminating Capital Transaction and any other cash
received or reductions in reserves made after commencement of the liquidation of
the Partnership shall be distributed to the Partners in accordance with Section
13.2.
SECTION 5.4 REVISIONS TO REFLECT ISSUANCE OF ADDITIONAL PARTNERSHIP
INTERESTS
In the event that the Partnership issues additional Partnership
Interests to the General Partner or any Additional Limited Partner pursuant to
Article 4 hereof, the General Partner shall make such revisions to this Article
5 as it deems necessary to reflect the issuance of such additional Partnership
Interests and any special rights, duties or powers with respect thereto. Such
revisions shall not require the consent or approval of any other Partner.
SECTION 5.5 MINIMUM DISTRIBUTIONS IF REIT SHARES NOT PUBLICLY TRADED
If the REIT Shares are not Publicly Traded, the General Partner shall
(without regard to the amount of Available Cash) make cash distributions with
respect to the Partnership Units at least annually for each taxable year of the
Partnership beginning prior to the 15th anniversary of the date of the closing
of the Company's initial public offering, in an aggregate amount with respect to
each such taxable year at least equal to 95% of the Partnership's taxable income
for such year allocable to the Partnership Units, with such distributions to be
made not later than 60 days after the end of such year.
ARTICLE 6
ALLOCATIONS OF PROFITS AND LOSSES
SECTION 6.1 PROFITS AND LOSSES
After giving effect to the mandatory allocations set forth in Section
6.2, Profits and Losses for any Partnership Year or other applicable period
shall be allocated to the Partners in accordance with their Percentage
Interests.
SECTION 6.2 MANDATORY ALLOCATIONS
(a) (i) Minimum Gain Chargeback. Notwithstanding any other provision of
this Article 6, if there is a net decrease in Partnership Minimum Gain during
any Partnership Year or other applicable period, then, subject to the exceptions
set forth in Regulations 'SS' 1.704-2(f)(2), (3), (4) and (5), each Partner
shall be specially allocated items of Partnership income and gain for such
Partnership Year (and, if necessary, subsequent Partnership Years) in an amount
equal to such Partner's share of the net decrease in Partnership Minimum Gain,
as determined in accordance with Regulations 'SS' 1.704-2(g). Allocations
pursuant to the previous sentence shall be determined in accordance with
Regulations 'SS' 1.704-2(f). This Section 6.2(a)(i) is intended to comply with
the minimum gain chargeback requirement in Regulations 'SS' 1.704-2(f) shall be
interpreted consistently therewith.
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(ii) Partner Minimum Gain Chargeback. Notwithstanding any other
provision of this Article 6 except Section 6.2(a)(i), if there is a net decrease
in Partner Minimum Gain attributable to a Partner Nonrecourse Debt during any
Partnership Year or other applicable period, then, subject to the exceptions set
forth in Regulations 'SS' 1.704-2(i)(4), each Partner who has a share of the
Partner Minimum Gain attributable to such Partner Nonrecourse Debt, determined
in accordance with Regulations 'SS' 1.704-2(i)(5) shall be specially allocated
items of Partnership income and gain for such Partnership Year (and, if
necessary, subsequent Partnership Years) in an amount equal to such Partner's
share of the net decrease in Partner Minimum Gain attributable to such Partner
Nonrecourse Debt, determined in accordance with Regulations 'SS' 1.704-2(i)(4).
Allocations pursuant to the previous sentence shall be made in proportion to the
respective amounts required to be allocated to each Partner pursuant thereto.
The items to be so allocated shall be determined in accordance with Regulations
'SS' 1.704-2(i)(4). This Section 6.2(a)(ii) is intended to comply with the
minimum gain chargeback requirement in Regulations 'SS' 1.704-2(i)(4) shall be
interpreted consistently therewith.
(b) Qualified Income Offset. Notwithstanding any provision of this
Article 6, except Section 6.2(a), in the event any Partner receives any
adjustments, allocations, or distributions described in Regulations 'SS''SS'
1.704-1(b)(2)(ii)(d)(4), (5) or (6), that cause or increase an Adjusted Capital
Account Deficit of such Partner, items of Partnership income and gain shall be
specially allocated to such Partner in an amount and manner sufficient to
eliminate, to the extent required by the Regulations, the Adjusted Capital
Account Deficit of such Partner as quickly as possible. This Section 6.2(b) is
intended to comply with the qualified income offset provision of Regulations
'SS' 1.704-1(b)(2)(ii)(d) and shall be interpreted consistently therewith.
(c) No Excess Deficit. To the extent that any Partner has or would have,
as a result of an allocation of Loss (or item thereof), an Adjusted Capital
Account Deficit, such amount of Loss (or item thereof) shall be allocated to the
other Partners in accordance with Section 6.1, but in a manner which will not
produce an Adjusted Capital Account Deficit as to such Partner. To the extent
such allocation would result in all Partners having Adjusted Capital Account
Deficits, such Loss shall be allocated to the General Partner. Any allocations
of Loss pursuant to this Section 6.2(c) shall be reversed with a corresponding
amount of Profits in subsequent years.
(d) Nonrecourse Deductions. Nonrecourse Deductions for any Partnership
Year or other applicable period shall be allocated to the Partners pro rata in
accordance with their Percentage Interests.
(e) Partner Nonrecourse Deductions. Any Partner Nonrecourse Deductions
for any Partnership Year or other applicable period shall be specially allocated
to the Partner who bears the economic risk of loss with respect to the Partner
Nonrecourse Debt to which such Partner Nonrecourse Deductions are attributable
in accordance with Regulations 'SS' 1.704-2(i)(1).
(f) Code 'SS' 754 Adjustments. To the extent an adjustment to the
adjusted tax basis of any Partnership Asset pursuant to Code 'SS' 734(b) or Code
'SS' 743(b) is required, pursuant to Regulations 'SS''SS' 1.704-1(b)(2)(iv)(m),
to be taken into account in determining Capital Accounts, the amount of such
adjustment to the Capital Accounts shall be treated as an item of gain (if the
20
adjustment increases the basis of the asset) or loss (if the adjustment
decreases such basis) and such gain or loss shall be specially allocated to the
Partners in a manner consistent with the manner in which their Capital Accounts
are required to be adjusted pursuant to such Section of the Regulations.
(g) Curative Allocations. Any mandatory allocations of items of income,
gain, loss or deduction pursuant to Sections 6.2(a), (b), (c) and (f) above
shall be taken into account for the purpose of equitably adjusting subsequent
allocations of income, gain, loss or deduction so that the net allocations, in
the aggregate, allocated to each Partner pursuant to this Article 6, and the
Capital Accounts of each Partner, shall as quickly as possible and to the extent
possible, be the same as if no mandatory allocations had been made.
SECTION 6.3 OTHER ALLOCATION RULES
(a) For purposes of determining the Profits, Losses, or any other items
allocable to any period, Profits, Losses, and any such other items shall be
determined on a daily, monthly, or other basis, as determined by the General
Partners using any permissible method under Code 'SS' 706 and the Regulations
thereunder.
(b) The Partners are aware of the income tax consequences of the
allocations made by this Article 6 and hereby agree to be bound by the
provisions thereof in reporting their shares of Partnership income and loss for
income tax purposes.
SECTION 6.4 TAX ALLOCATIONS
(a) Except as otherwise provided for in this Section 6.4, for federal
income tax purposes, each item of income, gain, loss and deduction shall be
allocated among the Partners in the same manner as its correlative item of
"book" income, gain, loss or deduction is allocated pursuant to Sections 6.1,
6.2, and 6.3 above.
(b) In accordance with Code Section 704(b) and 704(c) and the
Regulations thereunder, income, gain, loss and deduction with respect to any
property contributed to the Partnership shall solely for federal income tax
purposes, be allocated among the Partners so as to take into account any
variation between the adjusted basis of such property to the Partnership for
federal income tax purposes and the initial Gross Asset Value. If the Gross
Asset Value of any Partnership Asset is adjusted as described in the definition
of Gross Asset Value, subsequent allocations of income, gain, loss and deduction
with respect to such Partnership Asset shall take into account any variation
between the adjusted basis of such Partnership Asset for federal income tax
purposes and its Gross Asset Value in the same manner as under Code 'SS' 704(c)
and the Regulations thereunder In furtherance of the foregoing, the Partnership
shall employ the method described in Regulations 'SS' 1.704-3(b) (the
"traditional method") with respect to the aspects set forth on Exhibit D.
Allocations pursuant to this Section 6.4 are solely for purposes of federal,
state, and local taxes and shall not affect, or in any way be taken into account
in computing, any Partner's Capital Account or share of Profits, Losses, other
items, or distributions pursuant to any provision of this Agreement.
21
(c) If the Partnership issues Partnership Interests to the General
Partners or any Additional Limited Partner pursuant to Article 4 hereof, the
General Partner shall make such revisions to this Article 6 as it deems
necessary to reflect the terms of the issuance of such Partnership Interests,
including making preferential allocations to classes of Partnership Interests
that are entitled thereto. Such revisions shall not require the consent or
approval of any other Partner.
ARTICLE 7
MANAGEMENT AND OPERATIONS OF BUSINESS
SECTION 7.1 MANAGEMENT
A. Except as otherwise expressly provided in this Agreement, all
management powers over the business and affairs of the Partnership are and shall
be exclusively vested in the General Partner, and no Limited Partner shall have
any right to participate in or exercise control or management power over the
business and affairs of the Partnership. The General Partner may not be removed
by the Limited Partners with or without cause. In addition to the powers now or
hereafter granted a general partner of a limited partnership under applicable
law or which are granted to the General Partner under any other provision of
this Agreement, the General Partner, subject to Section 7.3 hereof, shall have
full power and authority to do all things deemed necessary or desirable by it to
conduct the business of the Partnership, to exercise all powers set forth in
Section 3.2 hereof and to effectuate the purposes set forth in Section 3.1
hereof, including, without limitation:
(a) the making of any expenditures, including expenditures
reimbursable to the General Partner by the Partnership, the lending or
borrowing of money (including, without limitation, making prepayments on
loans and borrowing money to permit the Partnership to make
distributions to its Partners in such amounts as will permit the Company
(so long as the Company qualifies as a REIT) to avoid the payment of any
federal income tax (including, for this purpose, any excise tax pursuant
to Section 4981 of the Code) and to make distributions to its
shareholders in amounts sufficient to permit the Company to maintain
REIT status), the assumption or guarantee of, or other contracting for,
indebtedness and other liabilities, the issuance of evidence of
indebtedness (including the securing of the same by deed, mortgage, deed
of trust or other lien or encumbrance on the Partnership's assets) and
the incurring of any obligations it deems necessary for the conduct of
the activities of the Partnership;
(b) the making of tax, regulatory and other filings, or rendering
of periodic or other reports to governmental or other agencies having
jurisdiction over the business or assets of the Partnership, the
registration of any class of securities of the Partnership under the
Securities Exchange Act of 1934, as amended, and the listing of any
securities of the Partnership on any exchange;
(c) the acquisition, disposition, mortgage, pledge, encumbrance,
hypothecation or exchange of any assets of the Partnership (including
the exercise or
22
grant of any conversion, option, privilege, or subscription right or
other right available in connection with any assets at any time held by
the Partnership) or the merger or other combination of the Partnership
with or into another entity (all of the foregoing subject to any prior
approval only to the extent required by Section 7.3 hereof);
(d) the use of the assets of the Partnership (including, without
limitation, cash on hand) for any purpose consistent with the terms of
this Agreement and on any terms it sees fit, including, without
limitation, the financing of the conduct of the operations of the
Company, the Partnership or any of the Partnership's Subsidiaries, the
lending of funds to other Persons (including, without limitation, the
Subsidiaries of the Partnership and/or the Company), the incurrence of
expenditures on behalf of the Partnership or any subsidiary of the
Partnership and the repayment of obligations of the Partnership and its
Subsidiaries and any other Person in which it has an equity investment,
and the making of capital contributions to its Subsidiaries;
(e) the management, operation, leasing, landscaping, repair,
alteration, demolition or improvement of any real property or
improvements owned by the Partnership or any Subsidiary of the
Partnership;
(f) the negotiation, execution, and performance of any contracts,
conveyances or other instruments that the General Partner considers
useful or necessary to the conduct of the Partnership's or any of its
Subsidiaries' operations or the implementation of the General Partner's
powers under this Agreement, including contracting with contractors,
developers, consultants, accountants, legal counsel, other professional
advisors and other agents and the payment of their expenses and
compensation out of the Partnership's assets;
(g) the distribution of Partnership cash or other Partnership
assets in accordance with this Agreement;
(h) holding, managing, investing and reinvesting cash and other
assets of the Partnership;
(i) the collection and receipt of revenues and income of the
Partnership;
(j) the establishment of one or more divisions of the
Partnership, the selection and dismissal of employees of the Partnership
(including, without limitation, employees having titles such as
"president," "vice president," "secretary" and "treasurer" of the
Partnership), and agents, outside attorneys, accountants, consultants,
financial advisors and contractors of the Partnership, and the
determination of their compensation and other terms of employment or
hiring;
(k) the maintenance of such insurance for the benefit of the
Partnership, the Partner and directors and officers thereof as the
General Partner deems necessary or appropriate;
23
(l) the formation of, or acquisition of an interest in, and the
contribution of property to, any further limited or general
partnerships, joint ventures or other relationships that it deems
desirable (including, without limitation, the acquisition of interests
in, and the contributions of property to, its Subsidiaries and any other
Person in which it has an equity investment from time to time);
(m) the control of any matters affecting the rights and
obligations of the Partnership, including the settlement, compromise,
submission to arbitration or any other form of dispute resolution, or
abandonment of, any claim, cause of action, liability, debt or damages,
due or owing to or from the Partnership, the commencement or defense of
suits, legal proceedings, administrative proceedings, arbitration or
other forms of dispute resolution, and the representation of the
Partnership in all suits or legal proceedings, administrative
proceedings, arbitrations or other forms of dispute resolution, the
incurring of legal expense, and the indemnification of any Person
against liabilities and contingencies to the extent permitted by law;
(n) the undertaking of any action in connection with the
Partnership's direct or indirect investment in its Subsidiaries or any
other Person (including, without limitation, the contribution or loan of
funds by the Partnership to such Persons);
(o) the determination of the fair market value of any Partnership
property distributed in kind using such reasonable method of valuation
as the General Partner may adopt;
(p) the exercise, directly or indirectly, through any
attorney-in-fact acting under a general or limited power of attorney, of
any right, including the right to vote, appurtenant to any asset or
investment held by the Partnership or any of its Subsidiaries;
(q) the exercise of any of the powers of the General Partner
enumerated in this Agreement on behalf of or in connection with any
Subsidiary of the Partnership or any other Person in which the
Partnership has a direct or indirect interest, or jointly with any such
Subsidiary or other Person;
(r) the exercise of any of the powers of the General Partner
enumerated in this Agreement on behalf of any Person in which the
Partnership does not have an interest pursuant to contractual or other
arrangements with such Person;
(s) the making, execution and delivery of any and all deeds,
leases, notes, mortgages, deeds of trust, security agreements,
conveyances, contracts, guarantees, warranties, indemnities, waivers,
releases or legal instruments or agreements in writing necessary or
appropriate, in the judgment of the General Partner, for the
accomplishment of any of the powers of the General Partner enumerated in
this Agreement; and
(t) the issuance of additional Partnership Units, as appropriate,
in connection with Capital Contributions by Additional Limited Partners
and additional Capital Contributions by Partners pursuant to Article 4
hereof, and the amendment and
24
restatement of Exhibit A hereof to reflect the Capital Contributions and
Percentage Interests of the Partners as the same are adjusted from time
to time.
B. Each of the Limited Partners agrees that the General Partner is
authorized to execute, deliver and perform the above-mentioned agreements and
transactions on behalf of the Partnership without any further act, approval or
vote of the Partners, notwithstanding any other provision of this Agreement
(except as provided in Section 7.3 or Section 8.7), the Act or any applicable
law, rule or regulation, to the fullest extent permitted under the Act or other
applicable law, rule or regulation. The execution, delivery or performance by
the General Partner or the Partnership of any agreement authorized or permitted
under this Agreement shall not constitute a breach by the General Partner of any
duty that the General Partner may owe the Partnership or the Limited Partners or
any other Persons under this Agreement or of any duty stated or implied by law
or equity.
C. At all times from and after the date hereof, the General Partner may
cause the Partnership to establish and maintain at any and all times working
capital accounts and other cash or similar balances in such amounts as the
General Partner, in its sole and absolute discretion, deems appropriate and
reasonable from time to time.
D. In exercising its authority under this Agreement, the General Partner
may, but shall be under no obligation to, take into account the tax consequences
to any Partner (including the Company and the General Partner) of any action
taken (or not taken) by it. The General Partner and the Partnership shall not
have liability for money damages or otherwise to a Limited Partner under any
circumstances, as a result of an income tax liability incurred by such Limited
Partner as a result of an action (or inaction) by the General Partner taken
pursuant to its authority under this Agreement and in accordance with the terms
of Section 7.3 and Section 8.7.
E. The General Partner may cause the Partnership to obtain and maintain
(i) casualty, liability and other insurance on the properties of the
Partnership, (ii) liability insurance for the Indemnitees hereunder and (iii)
such other insurance as the General Partner, in its sole and absolute
discretion, determines to be necessary.
SECTION 7.2 CERTIFICATE OF LIMITED PARTNERSHIP
The General Partner has previously filed the Certificate of Limited
Partnership with the Secretary of State of the State of Delaware as required by
the Act. The General Partner shall use all reasonable efforts to cause to be
filed such other certificates or documents as may be reasonable and necessary or
appropriate, in the discretion of the General Partner, for the formation,
continuation, qualification and operation of a limited partnership (or a
partnership in which the limited partners have limited liability) in the State
of Delaware and any other state, or the District of Columbia, in which the
Partnership may elect to do business or own property. To the extent that such
action is determined by the General Partner to be reasonable and necessary or
appropriate, the General Partner shall file amendments to and restatements of
the Certificate of Limited Partnership and do all of the things to maintain the
Partnership as a limited partnership (or a partnership in which the limited
partners have limited liability) under the laws of the State of Delaware and
each other state, or the District of Columbia, in which the
25
Partnership may elect to do business or own property. Subject to the terms of
Section 8.5.A(d) hereof, the General Partner shall not be required, before or
after filing, to deliver or mail a copy of the Certificate of Limited
Partnership or any amendment thereto to any Limited Partner.
SECTION 7.3 RESTRICTIONS ON GENERAL PARTNER AUTHORITY.
The General Partner may not take any action in contravention of an
express prohibition or limitation of this Agreement without the written Consent
of Limited Partners holding a majority of the Percentage Interests of the
Limited Partners (including Limited Partner Interests held by the Company), or
such other percentage of the Limited Partners as may be specifically provided
for under a provision of this Agreement.
SECTION 7.4 REIMBURSEMENT OF THE GENERAL PARTNER AND THE COMPANY; DRIP'S
AND REPURCHASE PROGRAMS
A. Except as provided in this Section 7.4 and elsewhere in this
Agreement (including the provisions of Articles 5 and 6 regarding distributions,
payments, and allocations to which it may be entitled), the General Partner
shall not be compensated for its services as general partner of the Partnership.
B. The General Partner is hereby authorized to pay compensation for
accounting, administrative, legal, technical, management and other services
rendered to the Partnership. The General Partner and its Affiliates shall be
reimbursed on a monthly basis, or such other basis as the General Partner may
determine in its sole and absolute discretion, for all expenses that they incur
relating to the ownership and operation of, or for the benefit of, the
Partnership (including, without limitation, Administrative Expenses), provided
that the amount of any such reimbursement shall be reduced by any interest
earned by the General Partner with respect to bank accounts or other instruments
or accounts held by it on behalf of the Partnership. The General Partner shall
determine in good faith the amount of expenses incurred by it related to the
ownership and operation of, or for the benefit of, the Partnership. In the event
that certain expenses are incurred for the benefit of the Partnership and other
entities (including the General Partner), such expenses will be allocated to the
Partnership and such other entities in such a manner as the General Partner in
its sole and absolute discretion deems fair and reasonable. The Partners
acknowledge that all such expenses of the General Partner are deemed to be for
the benefit of the Partnership. Such reimbursements shall be in addition to any
reimbursement made pursuant to Section 10.3.C hereof or as a result of any
indemnification pursuant to Section 7.7 hereof. All payments and reimbursements
hereunder shall be characterized for federal income tax purposes as expenses of
the Partnership incurred on its behalf, and not as expenses of the General
Partner. Moreover, if and to the extent any reimbursement made pursuant to this
Section is determined for federal income tax purposes not to constitute a
payment of expenses of the Partnership, the amount so determined shall be
treated as a distribution to the General Partner and there shall be a
corresponding special allocation of gross income to the General Partner for
purposes of computing the Partners' Capital Accounts.
26
C. As set forth in Section 4.3, the Company shall be treated as having
made a Capital Contribution in the amount of all expenses that it incurs
relating to the Company's initial public offering of REIT Shares.
D. In the event that the Company shall elect to purchase from its
shareholders REIT Shares for the purpose of delivering such REIT Shares to
satisfy an obligation under any dividend reinvestment program adopted by the
Company, any employee stock purchase plan adopted by the Company, or any similar
obligation or arrangement undertaken by the Company in the future or for the
purpose of retiring such REIT Shares, the purchase price paid by the Company for
such REIT Shares and any other expenses incurred by the Company in connection
with such purchase shall be considered expenses of the Partnership and shall be
advanced to the Company or reimbursed to the Company, subject to the condition
that: (i) if such REIT Shares subsequently are sold by the Company, the Company
shall pay to the Partnership any proceeds received by the Company for such REIT
Shares (which sales proceeds shall include the amount of dividends reinvested
under any dividend reinvestment or similar program provided that a transfer of
REIT Shares for Units pursuant to Section 8.6 would not be considered a sale for
such purposes); and (ii) if such REIT Shares are not retransferred by the
Company within thirty (30) days after the purchase thereof, or the Company
otherwise determines not to retransfer such REIT Shares, the Company, as General
Partner, shall cause the Partnership to redeem a number of Partnership Units
held by the Company, as a Limited Partner, equal to the product obtained by
dividing the number of such REIT Shares by the Conversion Factor (in which case
such advancement or reimbursement of expenses shall be treated as having been
made as a distribution in redemption of such number of Units held by the
Company).
SECTION 7.5 OUTSIDE ACTIVITIES OF THE GENERAL PARTNER
The General Partner shall not directly or indirectly enter into or
conduct any business other than in connection with the ownership, acquisition
and disposition of Partnership Interests and the management of the business of
the Partnership, and such activities as are incidental thereto; provided,
however, that the Company may make an acquisition (directly or through a
wholly-owned Subsidiary) if such acquisition is made through the issuance of
REIT Shares and the acquisition has been approved by a majority of the
Independent Directors. The General Partner and any Affiliates of the General
Partner may acquire Limited Partner Interests and shall be entitled to exercise
all rights of a Limited Partner relating to such Limited Partner Interests.
SECTION 7.6 CONTRACTS WITH AFFILIATES
A. The Partnership may lend or contribute funds or other assets 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.
B. Except as provided in Section 7.5, the Partnership may transfer
assets to joint ventures, other partnerships, corporations or other business
entities in which it is or thereby becomes a participant upon such terms and
subject to such conditions consistent with this
27
Agreement and applicable law as the General Partner, in its sole and absolute
discretion, believes are advisable.
C. Except as expressly permitted by this Agreement, neither the General
Partner nor any of its Affiliates shall sell, transfer or convey any property
to, or purchase any property from, the Partnership, directly or indirectly,
except pursuant to transactions that are determined by the General Partner in
good faith to be fair and reasonable.
D. The General Partner, in its sole and absolute discretion and without
the approval of the Limited Partners, may propose and adopt, on behalf of the
Partnership, employee benefit plans, stock option plans, and similar plans
funded by the Partnership for the benefit of employees of the General Partner,
the Partnership, Subsidiaries of the Partnership or any Affiliate of any of them
in respect of services performed, directly or indirectly, for the benefit of the
Partnership, the General Partner, or any Subsidiaries of the Partnership.
E. The General Partner is expressly authorized to enter into, in the
name and on behalf of the Partnership, a right of first opportunity arrangement
and other conflict avoidance agreements with various Affiliates of the
Partnership and the General Partner, on such terms as the General Partner, in
its sole and absolute discretion, believes are advisable.
SECTION 7.7 INDEMNIFICATION
A. To the fullest extent permitted by Delaware law, the Partnership
shall indemnify each Indemnitee from and against any and all losses, claims,
damages, liabilities, joint or several, expenses (including, without limitation,
attorneys fees and other legal fees and expenses), judgments, fines,
settlements, and other amounts arising from any and all claims, demands,
actions, suits or proceedings, civil, criminal, administrative or investigative,
that relate to the operations of the Partnership or the Company as set forth in
this Agreement, in which such 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. Without limitation, the foregoing indemnity shall
extend to any liability of any Indemnitee, pursuant to a loan guaranty (except a
guaranty by a limited partner of nonrecourse indebtedness of the Partnership or
as otherwise provided in any such loan guaranty) or otherwise for any
indebtedness of the Partnership or any Subsidiary of the Partnership (including
without limitation, any indebtedness which the Partnership or any Subsidiary of
the Partnership has assumed or taken subject to), and the General Partner is
hereby authorized and empowered, on behalf of the Partnership, to enter into one
or more indemnity agreements consistent with the provisions of this Section 7.7
in favor of any Indemnitee having or potentially having liability for any such
indebtedness. The termination of any proceeding by conviction of an Indemnitee
or upon a plea of nolo contendere or its equivalent by an Indemnitee, or an
entry of an order of probation against an Indemnitee prior to judgment, creates
a rebuttable presumption that such Indemnitee acted in a manner contrary to that
specified in this Section 7.7.A. Any indemnification pursuant to this Section
7.7
28
shall be made only out of the assets of the Partnership, and neither the General
Partner nor any Limited Partner shall have any obligation to contribute to the
capital of the Partnership, or otherwise provide funds, to enable the
Partnership to fund its obligations under this Section 7.7.
B. Reasonable expenses incurred by an Indemnitee who is a party to a
proceeding shall be paid or reimbursed by the Partnership in advance of the
final disposition of the proceeding upon receipt by the Partnership of (i) a
written affirmation by the Indemnitee of the Indemnitee's good faith belief that
the standard of conduct necessary for indemnification by the Partnership as
authorized in Section 7.7.A. has been met, and (ii) a written undertaking by or
on behalf of the Indemnitee to repay the amount if it shall ultimately be
determined that the standard of conduct has not been met.
C. The indemnification provided by this Section 7.7 shall be in addition
to any other rights to which an Indemnitee or any other Person may be entitled
under any agreement, pursuant to any vote of the Partners, as a matter of law or
otherwise, and shall continue as to an Indemnitee who has ceased to serve in
such capacity unless otherwise provided in a written agreement pursuant to which
such Indemnitee is indemnified.
D. The Partnership may, but shall not be obligated to, purchase and
maintain insurance, on behalf of the Indemnitees and such other Persons as the
General Partner shall determine, against any liability that may be asserted
against or expenses that may be incurred by such Person in connection with the
Partnership's activities, regardless of whether the Partnership would have the
power to indemnify such Person against such liability under the provisions of
this Agreement.
E. For purposes of this Section 7.7, the Partnership shall be deemed to
have requested an Indemnitee to serve as fiduciary of an employee benefit plan
whenever the performance by it of its duties to the Partnership also imposes
duties on, or otherwise involves services by, it to the plan or participants or
beneficiaries of the plan; excise taxes assessed on an Indemnitee with respect
to an employee benefit plan pursuant to applicable law shall constitute fines
within the meaning of Section 7.7; and actions taken or omitted by the
Indemnitee with respect to an employee benefit plan in the performance of its
duties for a purpose reasonably believed by it to be in the interest of the
participants and beneficiaries of the plan shall be deemed to be for a purpose
which is not opposed to the best interests of the Partnership.
F. In no event may an Indemnitee subject any of the Partners to personal
liability by reason of the indemnification provisions set forth in this
Agreement.
G. An Indemnitee shall not be denied indemnification in whole or in part
under this Section 7.7 because the Indemnitee had an interest in the transaction
with respect to which the indemnification applies if the transaction was
otherwise permitted by the terms of this Agreement.
H. The provisions of this Section 7.7 are for the benefit of the
Indemnitees, their heirs, successors, assigns and administrators and shall not
be deemed to create any rights for the
29
benefit of any other Persons. Any amendment, modification or repeal of this
Section 7.7 or any provision hereof shall be prospective only and shall not in
any way affect the Partnership's liability to any Indemnitee under this Section
7.7, as in effect immediately prior to such amendment, modification, or repeal
with respect to claims arising from or relating to matters occurring, in whole
or in part, prior to such amendment, modification or repeal, regardless of when
such claims may arise or be asserted.
Moreover, if and to the extent any reimbursement made pursuant to this
Section 7.7 is determined for federal income tax purposes not to constitute a
payment of expenses of the Partnership, the amount so determined shall be
treated as a distribution to the General Partner and there shall be a
corresponding special allocation of gross income to the General Partner for
purposes of computing Partners' Capital Accounts.
SECTION 7.8 LIABILITY OF THE GENERAL PARTNER
A. Notwithstanding anything to the contrary set forth in this Agreement,
the General Partner and its officers, directors and shareholders shall not be
liable for monetary damages to the Partnership, any Partners or any Assignees
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.
B. The Limited Partners expressly acknowledge that, as stated in Section
7.1.D, the General Partner is acting on behalf of the Partnership and the
shareholders of the Company collectively, that the General Partner is under no
obligation to consider the separate interests of the Limited Partners in
deciding whether to cause the Partnership to take (or decline to take) any
actions, and that the General Partner shall not be liable for monetary damages
for losses sustained, liabilities incurred, or benefits not derived by Limited
Partners in connection with such decisions, provided that the General Partner
has acted in good faith.
C. Subject to its obligations and duties as General Partner set forth in
Section 7.1.A hereof, the General Partner may exercise any of the powers granted
to it by this Agreement and perform any of the duties imposed upon it hereunder
either directly or by or through its agents. The General Partner shall not be
responsible for any misconduct or negligence on the part of any such agent
appointed by the General Partner in good faith.
D. Any amendment, modification or repeal of this Section 7.8 or any
provision hereof shall be prospective only and shall not in any way affect the
limitations on the General Partner's and its officers' and directors' liability
to the Partnership and the Limited Partners under this Section 7.8 as in effect
immediately prior to such amendment, modification or repeal with respect to
claims arising from or relating to matters occurring, in whole or in part, prior
to such amendment, modification or repeal, regardless of when such claims may
arise or be asserted.
SECTION 7.9 OTHER MATTERS CONCERNING THE GENERAL PARTNER
30
A. The General Partner may rely and shall be protected in acting, or
refraining from acting, upon any resolution, certificate, statement, instrument,
opinion, report, notice, request, consent, order, bond, debenture, or other
paper or document believed by it in good faith to be genuine and to have been
signed or presented by the property party or parties.
B. The General Partner may consult with legal counsel, accountants,
appraisers, management consultants, investments bankers, architects, engineers,
environmental consultants and other consultants and advisers selected by it, and
any act taken or omitted to be taken in reliance upon the opinion of such
Persons as to matters which such General Partner reasonably believes to be
within such Person's professional or expert competence shall be conclusively
presumed to have been done or omitted in good faith and in accordance with such
opinion.
C. The General Partner shall have the right, in respect of any of its
powers or obligations hereunder, to act through any of its duly authorized
officers and duly appointed attorneys-in-fact. Each such attorney shall, to the
extent provided by the General Partner in the power of attorney, have full power
and authority to do and perform all and every act and duty which is permitted or
required to be done by the General Partner hereunder.
D. Notwithstanding any other provisions of this Agreement or the Act,
any action of the General Partner on behalf of the Partnership or any decision
of the General Partner to refrain from acting on behalf of the Partnership,
undertaken in the good faith belief that such action or omission is necessary or
advisable in order (i) to protect the ability of the Company to continue to
qualify as a REIT; or (ii) to avoid the Company incurring any taxes under
Section 857 or Section 4981 of the Code, is expressly authorized under this
Agreement and is deemed approved by all of the Limited Partners.
SECTION 7.10 TITLE TO PARTNERSHIP ASSETS
Title to Partnership assets, whether real, personal or mixed and whether
tangible or intangible, shall be deemed to be owned by the Partnership as an
entity, and no 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
if failure to so vest such title would have a material adverse effect on the
Partnership. 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.
31
SECTION 7.11 RELIANCE BY THIRD PARTIES
Notwithstanding anything to the contrary in this Agreement, any Person
dealing with the Partnership shall be entitled to assume that the General
Partner has full power and authority, without consent or approval of any other
Partner or Person, to encumber, sell or otherwise use in any manner any and all
assets of the Partnership and to enter into any contracts on behalf of the
Partnership, and take any and all actions on behalf of the Partnership and such
Person shall be entitled to deal with the General Partner as if the General
Partner were the Partnership's sole party in interest, both legally and
beneficially. Each Limited Partner hereby waives any and all defenses or other
remedies which may be available against such Person to contest, negate or
disaffirm any action of the General Partner in connection with any such dealing.
In no event shall any Person dealing with the General Partner or its
representatives be obligated to ascertain that the terms of this Agreement have
been complied with or to inquire into the necessity or expedience of any act or
action of the General Partner or its representatives. Each and every
certificate, document or other instrument executed on behalf of the Partnership
by the General Partner or its representatives shall be conclusive evidence in
favor of any and every Person relying thereon or claiming thereunder that (i) at
the time of the execution and delivery of such certificate, document or
instrument, this Agreement was in full force and effect; (ii) the Person
executing and delivering such certificate, document or instrument was duly
authorized and empowered to do so for and on behalf of the Partnership; and
(iii) such certificate, document or instrument was duly executed and delivered
in accordance with the terms and provisions of this Agreement and is binding
upon the Partnership.
ARTICLE 8
RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS
SECTION 8.1 LIMITATION OF LIABILITY
The Limited Partners shall have no liability under this Agreement except
as expressly provided in this Agreement, including Section 10.5 hereof, or under
the Act.
SECTION 8.2 MANAGEMENT OF BUSINESS
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.
SECTION 8.3 OUTSIDE ACTIVITIES OF LIMITED PARTNERS
Subject to any agreements entered into pursuant to Section 7.6.E hereof
and any other agreements entered into by a Limited Partner or its Affiliates
with the Partnership or any of its Subsidiaries, any Limited Partner (other than
the Company) and any officer, director, employee, agent, trustee, Affiliate or
shareholder of any Limited Partner shall be entitled to and may have business
interests and engage in business activities in addition to those relating to the
32
Partnership, including business interests and activities that are in direct
competition with the Partnership or that are enhanced by the activities of the
Partnership. Neither the Partnership nor any Partners shall have any rights by
virtue of this Agreement in any business ventures of any Limited Partner or
Assignee. None of the Limited Partners (other than the Company) nor any other
Person shall have any rights by virtue of this Agreement or the Partnership
relationship established hereby in any business ventures of any other Person and
such Person shall have no obligation pursuant to this Agreement to offer any
interest in any such business ventures to the Partnership, any Limited Partner
or any such other Person, even if such opportunity is of a character which, if
presented to the Partnership, any Limited Partner or such other Person, could be
taken by such Person.
SECTION 8.4 RETURN OF CAPITAL
Except pursuant to the right of redemption set forth in Section 8.6, no
Limited Partner shall be entitled to the withdrawal or return of its Capital
Contribution, except to the extent of distributions made pursuant to this
Agreement or upon termination of the Partnership as provided herein. Except as
expressly provided in this Agreement, no Limited Partner or Assignee shall have
priority over any other Limited Partner or Assignee, either as to the return of
Capital Contributions or as to profits, losses or distributions.
SECTION 8.5 RIGHTS OF LIMITED PARTNERS RELATING TO THE PARTNERSHIP
A. In addition to the other rights provided by this Agreement or by the
Act, and except as limited by Section 8.5.C hereof, each Limited Partner shall
have the right, for a purpose reasonably related to such Limited Partner's
interest as a limited partner in the Partnership, upon written demand with a
statement of the purpose of such demand and at such Limited Partner's own
expense (including such copying and administrative charges as the General
Partner may establish from time to time):
(a) to obtain a copy of the most recent annual and quarterly
reports filed with the Securities and Exchange Commission by the Company
pursuant to the Securities Exchange Act of 1934;
(b) to obtain a copy of the Partnership's federal, state and
local income tax returns for each Partnership Year;
(c) to obtain a current list of the name and last known business,
residence or mailing address of each Partner;
(d) to obtain a copy of this Agreement and the Certificate of
Limited Partnership and all amendments thereto, together with executed
copies of all powers of attorney pursuant to which this Agreement, the
Certificate of Limited Partnership and all amendments thereto have been
executed; and
(e) to obtain true and full information regarding the amount of
cash and a description and statement of any other property or services
contributed by each Partner
33
and which each Partner has agreed to contribute in the future, and the
date on which each became a Partner.
B. The Partnership shall notify each Limited Partner, upon request, of
the then current Conversion Factor and the REIT Shares Amount per Partnership
Unit and, with reasonable detail, how the same was determined.
C. Notwithstanding any other provision of this Section 8.5, the General
Partner may keep confidential from the Limited Partners, for such period of time
as the General Partner determines in its sole and absolute discretion to be
reasonable, any information that (i) the General Partner reasonably believes to
be in the nature of trade secrets or other information, the disclosure of which
the General Partner in good faith believes is not in the best interests of the
Partnership or could damage the Partnership or its business; or (ii) the
Partnership is required by law or by agreements with an unaffiliated third party
to keep confidential.
SECTION 8.6 REDEMPTION RIGHT
A. Subject to Sections 8.6.B and 8.6.C hereof, on or after that date
which is twelve (12) months after the Effective Date, 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 per Unit equal to and in the form of the Cash Amount to be paid by the
Partnership. The Redemption Right shall be exercised pursuant to a Notice of
Redemption delivered to the Partnership (with a copy to the General Partner and
the Company) by the Limited Partner who is exercising the redemption right (the
"Redeeming Partner"); provided, however, that the Partnership shall not be
obligated to satisfy such Redemption Right if the General Partner or the Company
elects to purchase the Partnership Units subject to the Notice of Redemption
pursuant to Section 8.6.B. A Limited Partner may not exercise the Redemption
Right for less than one thousand (1,000) Partnership Units or, if such Limited
Partner holds less than one thousand (1,000) Partnership Units, all of the
Partnership Units held by such Partner. The Redeeming Partner shall have no
right, with respect to any Partnership Units so redeemed, to receive any
distributions paid on or after the Specified Redemption Date. The Assignee of
any Limited Partner may exercise the rights of such Limited Partner pursuant to
this Section 8.6, and such Limited Partner shall be deemed to have assigned such
rights to such Assignee and shall be bound by the exercise of such rights by
such Assignee. In connection with any exercise of such rights by an Assignee on
behalf of a Limited Partner, the Cash Amount shall be paid by the Partnership
directly to such Assignee and not to such Limited Partner.
B. Notwithstanding the provisions of Section 8.6.A, a Limited Partner
that exercises the Redemption Right shall be deemed to have offered to sell the
Partnership Units described in the Notice of Redemption to the Company, and the
Company will, at the direction of the Partnership as determined in the
Partnership's sole and absolute discretion and only if so directed, elect to
purchase directly and acquire such Partnership Units by paying to the Redeeming
Partner either the Cash Amount or the REIT Shares Amount, as directed by the
Partnership, on the Specified Redemption Date, whereupon the Company shall
acquire the Partnership Units offered for redemption by the Redeeming Partner
and shall be treated for all
34
purposes of this Agreement as the owner of such Partnership Units. If the
General Partner or the Company shall elect to exercise its right to purchase
Partnership Units under this Section 8.6.B with respect to a Notice of
Redemption, it shall so notify the Redeeming Partner within five (5) Business
Days after the receipt by it of such Notice of Redemption. Unless the Company
(as directed by the Partnership in its sole and absolute discretion) shall
exercise its right to purchase Partnership Units from the Redeeming Partner
pursuant to this Section 8.6.B, the Company shall not have any obligation to the
Redeeming Partner or the Partnership with respect to the Redeeming Partner's
exercise of the Redemption Right. In the event the Company shall exercise its
right to purchase Partnership Units with respect to the exercise of a Redemption
Right in the manner described in the first sentence of this Section 8.6.B, the
Partnership shall have no obligation to pay any amount to the Redeeming Partner
with respect to such Redeeming Partner's exercise of such Redemption Right, and
each of the Redeeming Partner, the Partnership, and the Company shall treat the
transaction between the Company and the Redeeming Partner, for federal income
tax purposes, as a sale of the Redeeming Partner's Partnership Units to the
Company. Each Redeeming Partner agrees to execute such documents as the Company
may reasonably require in connection with the issuance of REIT Shares upon
exercise of the Redemption Right.
C. Notwithstanding the provisions of Section 8.6.A and Section 8.6.B, a
Partner shall not be entitled to exercise the Redemption Right pursuant to
Section 8.6.A if the delivery of REIT Shares to such Partner on the Specified
Redemption Date by the Company pursuant to Section 8.6.B (regardless of whether
or not the Company would in fact exercise its rights under Section 8.6.B) would
be prohibited under the Certificate of Incorporation of the Company.
D. In the event that the Partnership issues additional Partnership
Interests pursuant to Section 4.2.A hereof, the General Partner shall make such
revisions to this Section 8.6 as it determines are necessary to reflect the
issuance of such additional Partnership Interests.
E. Each Limited Partner covenants and agrees with the General Partner
that all Partnership Units delivered for redemption shall be delivered to the
Partnership or the General Partner, as the case may be, free and clear of all
liens, and, notwithstanding anything contained herein to the contrary, neither
the General Partner nor the Partnership shall be under any obligation to acquire
Partnership Units which are or may be subject to any liens.
F. Notwithstanding anything herein to the contrary, until the first
business day following the date which is two years after the Effective date, the
Partnership and the General Partner shall have the right, in connection with a
Limited Partner's exercise of its Redemption Right:
(1) to condition the payment of the redemption price under
Section 8.6(A) upon the General Partner's sole
satisfaction that any New York real estate transfer tax
and New York City real property transfer tax payable by
reason of such Limited Partner's redemption prior to two
years after the Effective Date shall have been paid in
full or that adequate provision has been made therefor
(as determined by the General Partner in its sole
discretion); and
35
(2) if the General Partner elects under Section 8.6.B to pay
the REIT Shares Amount, then such Limited Partner shall
be obligated, as a condition to the effective exercise of
the Redemption Right, to escrow with the General Partner
an amount equal to the New York real estate transfer tax
and New York City real property transfer tax that would
have been payable as of the exercise of the Redemption
Right, assuming such Limited Partner transferred the REIT
Shares Amount received on such date prior to two years
after the Effective Date. Such escrow may be used by the
General Partner or the Limited Partner who provided such
escrow for the payment of the taxes described in this
subparagraph (2) provided, in the latter event, the
General Partner shall have determined, in its good faith
discretion, that such tax will be paid. Such escrow shall
be released to the Limited Partner, to the extent not
used, after two years after the Effective Date if the
General Partner shall determine in its sole discretion
exercised in good faith that no such transfer tax shall
have been due and payable.
[SECTION 8.7 GUARANTEE RIGHTS OF CERTAIN LIMITED PARTNERS
A. The General Partner agrees to cause the Partnership to use its
reasonable commercial efforts to cause its lenders to permit the Consenting
Partners or any of them individually to guarantee any indebtedness of the
Partnership (including additional indebtedness or substitute indebtedness
incurred after the Effective Date) and to thereby become the guarantor or
guarantors of last resort with respect to such additional or substitute
indebtedness. Each Partner by such Partner's execution hereof agrees that the
right of each Consenting Partner under this Section 8.7.A shall include the
right to become the guarantor of last resort of any indebtedness of the
Partnership guaranteed by any other Partner of the Partnership without any
further action by or notice to or approval of any other Partner, provided that
such Consenting Partner has not expressly waived his right with respect to such
indebtedness.
B. This Section 8.7 may not be amended without the written consent of
each Consenting Partner.]
ARTICLE 9
BOOKS, RECORDS, ACCOUNTING AND REPORTS
SECTION 9.1 RECORDS AND ACCOUNTING
The General Partner shall keep or cause to be kept at the principal
office of the Partnership those records and documents required to be maintained
by the Act and other books and records deemed by the General Partner to be
appropriate with respect to the Partnership's business, including, without
limitation, all books and records necessary to provide to the Limited Partners
any information, lists and copies of documents required to be provided pursuant
to Section 9.3 hereof. Any records maintained by or on behalf of the Partnership
in the regular course of its business may be kept on, or be in the form of,
punch cards, magnetic tape,
36
photographs, micrographics or any other information storage device, provided
that the records so maintained are convertible into clearly legible written form
within a reasonable period of time. The books of the Partnership shall be
maintained, for financial and tax reporting purposes, on an accrual basis in
accordance with generally accepted accounting principles, or such other basis as
the General Partner determines to be necessary or appropriate.
SECTION 9.2 FISCAL YEAR
The fiscal year of the Partnership, including its first year, shall be
the calendar year.
SECTION 9.3 REPORTS
A. As soon as practicable, but in no event later than one hundred five
(105) days after the close of each Partnership Year, the General Partner shall
cause to be mailed to each Limited Partner as of the close of the Partnership
Year, an annual report containing financial statements of the Partnership, or of
the Company if such statements are prepared solely on a consolidated basis with
the Company, for such Partnership Year, presented in accordance with generally
accepted accounting principles, such statements to be audited by a nationally
recognized firm of independent public accountants selected by the General
Partner.
B. As soon as practicable, but in no event later than one hundred five
(105) days after the close of each calendar quarter (except the last calendar
quarter of each year), the General Partner shall cause to be mailed to each
Limited Partner as of the last day of the calendar quarter, a report containing
unaudited financial statements of the Partnership, or of the Company, if such
statements are prepared solely on a consolidated basis with the Company, and
such other information as may be required by applicable law or regulation, or as
the General Partner determines to be appropriate.
ARTICLE 10
TAX MATTERS
SECTION 10.1 PREPARATION OF TAX RETURNS
The General Partner shall arrange for the preparation and timely filing
of all returns of Partnership income, gains, deductions, losses and other items
required of the Partnership for federal and state income tax purposes and shall
use all reasonable efforts to furnish, within ninety (90) days of the close of
each taxable year, the tax information reasonably required by Limited Partners
for federal and state income tax reporting purposes.
SECTION 10.2 TAX ELECTIONS
Except as otherwise provided herein, the General Partner shall, in its
sole and absolute discretion, determine whether to make any available election
pursuant to the Code. Notwithstanding the above, in making any such tax election
the General Partner shall take into account the tax consequences to the Limited
Partners resulting from any such election. The
37
General Partner shall make such tax elections on behalf of the Partnership as
the Limited Partners holding a majority of the Percentage Interests of the
Limited Partners (excluding Limited Partner Interests held by the Company)
request, provided that the General Partner believes that such election is not
adverse to the interests of the General Partner, including its interest in
preserving its qualification as a REIT under the Code. The General Partner
intends that Section 704(c) allocations with respect to property contributed as
of the Effective Date shall be made by the election of the so-called
"traditional method" without curative allocations. The General Partner shall
have the right to seek to revoke any tax election it makes (including, without
limitation, the election under Section 754 of the Code) upon the General
Partner's determination, in its sole and absolute discretion, that such
revocation is in the best interests of the Partners.
SECTION 10.3 TAX MATTERS PARTNER
A. The General Partner shall be the "tax matters partner" of the
Partnership for federal income tax purposes within the meaning of Section
6231(a)(7) of the Code. Pursuant to Section 6230(e) of the Code, upon receipt of
notice from the IRS of the beginning of an administrative proceeding with
respect to the Partnership, the tax matters partner shall furnish the IRS with
the name, address, taxpayer identification number, and profit interest of each
of the Limited Partners and the Assignees; provided, however, that such
information is provided to the Partnership by the Limited Partners and the
Assignees.
B. The tax matters partner is authorized, but not required:
(a) to enter into any settlement with the IRS with respect to any
administrative or judicial proceedings for the adjustment of Partnership
items required to be taken into account by a Partner for income tax
purposes (such administrative proceedings being referred to as a "tax
audit" and such judicial proceedings being referred to as "judicial
review"), and in the settlement agreement the tax matters partner may
expressly state that such agreement shall bind all Partners, except that
such settlement agreement shall not bind any Partner (i) who (within the
time prescribed pursuant to the Code and Regulations) files a statement
with the IRS providing that the tax matters partner shall not have the
authority to enter into a settlement agreement on behalf of such
Partner; or (ii) who is a "notice partner" (as defined in Section
6231(a)(8) of the Code) or a member of a "notice group" (as defined in
Section 6223(b)(2) of the Code);
(b) in the event that a notice of a final administrative
adjustment at the Partnership level of any item required to be taken
into account by a Partner for tax purposes (a "final adjustment") is
mailed to the tax matters partner, to seek judicial review of such final
adjustment, including the filing of a petition for readjustment with the
Tax Court or the filing of a complaint for refund with the United States
Claims Court or the District Court of the United States for the district
in which the Partnership's principal place of business is located;
38
(c) to intervene in any action brought by any other Partner for
judicial review of a final adjustment;
(d) to file a request for an administrative adjustment with the
IRS and, if any part of such request is not allowed by the IRS, to file
an appropriate pleading (petition or complaint) for judicial review with
respect to such request;
(e) to enter into an agreement with the IRS to extend the period
for assessing any tax which is attributable to any item required to be
taken account of by a Partner for tax purposes, or an item affected by
such item; and
(f) to take any other action on behalf of the Partners or the
Partnership in connection with any tax audit or judicial review
proceeding to the extent permitted by applicable law or regulations.
The taking of any action and the incurring of any expense by the
tax matters partner in connection with any such proceeding, except to the extent
required by law, is a matter in the sole and absolute discretion of the tax
matters partner and the provisions relating to indemnification of the General
Partner set forth in Section 7.7 of this Agreement shall be fully applicable to
the tax matters partner in its capacity as such.
C. The tax matters partner shall receive no compensation for its
services. All third party costs and expenses incurred by the tax matters partner
in performing its duties as such (including legal and accounting fees and
expenses) shall be borne by the Partnership. Nothing herein shall be construed
to restrict the Partnership from engaging an accounting firm to assist the tax
matters partner in discharging its duties hereunder, so long as the compensation
paid by the Partnership for such services is reasonable.
SECTION 10.4 ORGANIZATIONAL EXPENSES
The Partnership shall elect to deduct expenses, if any, incurred by it
in organizing the Partnership ratably over a sixty (60) month period as provided
in Section 709 of the Code.
SECTION 10.5 WITHHOLDING
Each Limited Partner hereby authorizes the Partnership to withhold from,
or pay on behalf of or with respect to, such Limited Partner any amount of
federal, state, local, or foreign taxes that the General Partner determines that
the Partnership is required to withhold or pay with respect to any amount
distributable or allocable to such Limited Partner pursuant to this Agreement,
including, without limitation, any taxes required to be withheld or paid by the
Partnership pursuant to Sections 1441, 1442, 1445, or 1446 of the Code. Any
amount paid on behalf of or with respect to a Limited Partner shall constitute a
loan by the Partnership to such Limited Partner, which loan shall be repaid by
such Limited Partner within fifteen (15) days after notice from the General
Partner that such payment must be made unless (i) the Partnership withholds such
payment from a distribution which would otherwise be made to the Limited
Partner; or (ii) the General Partner determines, in its sole and absolute
discretion, that such
39
payment may be satisfied out of the available funds of the Partnership which
would, but for such payment, be distributed to the Limited Partner. Any amounts
withheld pursuant to the foregoing clauses (i) or (ii) shall be treated as
having been distributed to such Limited Partner. Each Limited Partner hereby
unconditionally and irrevocably grants to the Partnership a security interest in
such Limited Partner's Partnership Interest to secure such Limited Partner's
obligation to pay to the Partnership any amounts required to be paid pursuant to
this Section 10.5. In the event that a Limited Partner fails to pay any amounts
owed to the Partnership pursuant to this Section 10.5 when due, the General
Partner may, in its sole and absolute discretion, elect to make the payment to
the Partnership on behalf of such defaulting Limited Partner, and in such event
shall be deemed to have loaned such amount to such defaulting Limited Partner
and shall succeed to all rights and remedies of the Partnership as against such
defaulting Limited Partner. Without limitation, in such event the General
Partner shall have the right to receive distributions that would otherwise be
distributable to such defaulting Limited Partner until such time as such loan,
together with all interest thereon, has been paid in full, and any such
distributions so received by the General Partner shall be treated as having been
distributed to the defaulting Limited Partner and immediately paid by the
defaulting Limited Partner to the General Partner in repayment of such loan. Any
amounts payable by a Limited Partner hereunder shall bear interest at the lesser
of (A) the base rate on corporate loans at large United States money center
commercial banks, as published from time to time in The Wall Street Journal,
plus four (4) percentage points, or (B) the maximum lawful rate of interest on
such obligation, such interest to accrue from the date such amount is due (i.e.,
fifteen (15) days after demand) until such amount is paid in full. Each Limited
Partner shall take such actions as the Partnership or the General Partner shall
request in order to perfect or enforce the security interest created hereunder.
ARTICLE 11
TRANSFERS AND WITHDRAWALS
SECTION 11.1 TRANSFER
A. The term "transfer," when used in this Article 11 with respect to a
Partnership Unit, shall be deemed to refer to a transaction by which the General
Partner purports to assign all or any part of its General Partner Interest to
another Person or by which a Limited Partner purports to assign all or any part
of its Limited Partner Interest to another Person, and includes a sale,
assignment, gift, pledge, encumbrance, hypothecation, mortgage, exchange or any
other disposition by operation of law or otherwise. The term "transfer" when
used in this Article 11 does not include any redemption of Partnership Interests
by the Partnership from a Limited Partner or any acquisition of Partnership
Units from a Limited Partner by the Company pursuant to Section 8.6. No part of
the interest of a Limited Partner shall be subject to the claims of any
creditor, any spouse for alimony or support, or to legal process, and may not be
voluntarily or involuntarily alienated or encumbered except as may be
specifically provided for in this Agreement or consented to by the General
Partner in its sole discretion.
B. No Partnership Interest shall be transferred, in whole or in part,
except in accordance with the terms and conditions set forth in this Article 11.
Any transfer or purported
40
transfer of a Partnership Interest not made in accordance with this Article 11
shall be null and void.
SECTION 11.2 TRANSFER OF THE GENERAL PARTNER INTEREST AND COMPANY'S
LIMITED PARTNER INTEREST; EXTRAORDINARY TRANSACTIONS
A. The General Partner may not transfer any of its General Partner
Interest or withdraw as General Partner, and the Company may not transfer any of
its Limited Partner Interest, or engage in an Extraordinary Transaction, except,
in any such case, (i) if such Extraordinary Transaction is, or such transfer or
withdrawal is pursuant to an Extraordinary Transaction that is, permitted under
Section 11.2(B) or (ii) if Limited Partners holding at least fifty percent of
the Percentage Interests of the Limited Partners (other than Limited Partner
Interests held by the Company or its Affiliates) consent to such transfer or
withdrawal or Extraordinary Transaction in which case the Partnership Vote
required to be conducted under Section 11.2 need not be conducted, or (iii) if
such transfer is to an entity that is wholly-owned by the Company or the General
Partner and is a Qualified REIT Subsidiary under Section 856(i) of the Code.
B. Each of the General Partner and the Company is permitted to engage in
the following Extraordinary Transactions without the approval or vote of the
Limited Partners except as provided in Section 11.2(C):
(i) an Extraordinary Transaction in connection with which
all Limited Partners either will receive, or will have the right to
elect to receive, for each Partnership Unit an amount of cash,
securities, or other property equal to the product of the REIT Shares
Amount and the greatest amount of cash, securities or other property
paid to a holder of one REIT Share in consideration of one REIT Share
pursuant to the terms of the Extraordinary Transaction; provided that,
if, in connection with the Extraordinary Transaction, a purchase, tender
or exchange offer shall have been made to and accepted by the holders of
the outstanding REIT Shares, each holder of Partnership Units shall
receive, or shall have the right to elect to receive, the greatest
amount of cash, securities, or other property which such holder would
have received had it exercised its right to Redemption (as set forth in
Section 8.6) and received REIT Shares in exchange for its Partnership
Units immediately prior to the expiration of such purchase, tender or
exchange offer and had thereupon accepted such purchase, tender or
exchange offer and then such Extraordinary Transaction shall have been
consummated; and
(ii) a merger (including a triangular merger), consolidation
or other combination with or into another entity, or other combination
of assets, with another entity if: (w) immediately after such
Extraordinary Transaction, substantially all of the assets directly or
indirectly owned by the surviving entity, other than Partnership Units
held by the General Partner or the Company, are owned directly or
indirectly by the Partnership or another limited partnership or limited
liability company which is the survivor of a merger, consolidation or
combination of assets with the Partnership (in each case, the "Surviving
Partnership"); (x) the Limited Partners own a percentage interest
41
of the Surviving Partnership based on the relative fair market value
of the net assets of the Partnership (as determined pursuant to
Section 11.2.E) and the other net assets of the Surviving Partnership
(as determined pursuant to Section 11.2.E) immediately prior to
the consummation of such transaction; (y) the rights, preferences and
privileges of the Limited Partners in the Surviving Partnership are at
least as favorable as those in effect immediately prior to the
consummation of such transaction and as those applicable to any other
limited partners or non-managing members of the Surviving Partnership;
and (z) such rights of the Limited Partners include the right to
exchange their interests in the Surviving Partnership for at least one
of: (a) the consideration available to such Limited Partners pursuant to
Section 11.2.B(i) or (b) if the ultimate controlling person of the
Surviving Partnership has publicly traded common equity securities, such
common equity securities, with an exchange ratio based on the relative
fair market value of such securities (as determined pursuant to Section
11.2.E) and the REIT Shares.
C. Except as provided in Section 11.2(A)(ii), the Company shall not
consummate any Extraordinary Transaction in connection with which it conducted a
vote of its stockholders (a "Stockholder Vote") unless the General Partner also
conducts a vote of the Partners of the Partnership (the "Partnership Vote") in
which (i) the General Partner provides the Partners with advance notice equal in
time to the advance notice given in the case of the Stockholder Vote, (ii) in
connection with such advance notice the General Partner provides the Partners
with written materials describing the proposed Extraordinary Transaction as well
as the tax effect of the consummation thereof on the Limited Partners, (iii) in
such vote of the Partners, the General Partner and the Company vote all
Partnership Interests held by them in proportion to the manner in which all
outstanding shares of capital stock of the Company were voted at the Stockholder
Meeting (such votes to be "For," "Against," "Abstain" and "Not Present"), and
(iv) the total votes of the General and Limited Partners voted "For," "Against,"
"Abstain" and "Not Present" would be sufficient (measured in percentage terms),
if such vote were a vote by the Company's stockholders, to approve the
Extraordinary Transaction. For purposes of the Partnership Vote, each holder of
a Partnership Interest shall be entitled to a number of votes equal to the total
votes such holder would have been entitled to at the Stockholder Meeting had
such holder presented its Partnership Interest for redemption and such
Partnership Interest had been acquired by the Company for the REIT Shares Amount
of REIT Shares prior to the record date therefor.
D. Without in any way limiting the exculpation from liability set forth
in Section 7.1.D and 7.8.B, in connection with any transaction permitted by
Section 11.2.B or Section 11.2.C hereof, the General Partner and the Company
shall each use its commercially reasonable efforts to structure such
Extraordinary Transaction to avoid causing the Limited Partners to recognize
gain for federal income tax purposes by virtue of the occurrence of or their
participation in such Extraordinary Transaction.
E. In connection with any transaction permitted by Section 11.2.B or
11.2.C, the relative fair market values shall be reasonably determined by the
General Partner as of the time of such transaction and, to the extent
applicable, shall be no less favorable to the Limited Partners than the relative
values reflected in the terms of such transaction.
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SECTION 11.3 LIMITED PARTNERS' RIGHTS TO TRANSFER
A. Subject to the provisions of Sections 11.3.C, 11.3.D, 11.3.E, and
11.4, a Limited Partner (other than the Company) may transfer, with or without
the consent of the General Partner, all or any portion of its Partnership
Interest, or any of such Limited Partner's economic rights as a Limited Partner.
B. If a Limited Partner is subject to Incapacity, the executor,
administrator, trustee, committee, guardian, conservator or receiver of such
Limited Partner's estate shall have all of the rights of a Limited Partner, but
not more rights than those enjoyed by other Limited Partners, for the purpose of
settling or managing the estate and such power as the Incapacitated Limited
Partner possessed to transfer all or any part of his or its interest in the
Partnership. The Incapacity of a Limited Partner, in and of itself, shall not
dissolve or terminate the Partnership.
C. The General Partner may prohibit any transfer by a Limited Partner of
its Partnership Units if, in the opinion of legal counsel to the Partnership,
such transfer would require filing of a registration statement under the
Securities Act of 1933 or would otherwise violate any federal or state
securities laws or regulations applicable to the Partnership or the Partnership
Units.
D. No transfer by a Limited Partner of its Partnership Units may be made
to any Person if (i) in the opinion of legal counsel for the Partnership, it
would result in the Partnership being treated as an association taxable as a
corporation; (ii) it is made within one year after the consummation of the
initial public offering of the Company; (iii) such transfer is effectuated
through an "established securities market" or a "secondary market (or the
substantial equivalent thereof)" with the meaning of Section 7704 of the Code;
(iv) such transfer would cause the Partnership to become, with respect to any
employee benefit plan subject to Title I of ERISA, a "party-in-interest" (as
defined in Section 3(14) of ERISA) or a "disqualified person" (as defined in
Section 4975(c) of the Code); (v) such transfer would, in the opinion of legal
counsel for the Partnership, cause any portion of the assets of the Partnership
to constitute assets of any employee benefit plan pursuant to Department of
Labor Regulations Section 2510.2-101; or (vi) such transfer would subject the
Partnership to be regulated under the Investment Company Act of 1940, the
Investment Advisors Act of 1940 or the Employee Retirement Income Security Act
of 1974, each as amended.
E. No transfer of any Partnership Units may be made to a lender to the
Partnership or any Person who is related (within the meaning of Section
1.752-4(b) of the Regulations) to any lender to the Partnership whose loan
constitutes a Nonrecourse Liability, without the consent of the General Partner,
in its sole and absolute discretion; provided that as a condition to such
consent the lender will be required to enter into an arrangement with the
Partnership and the General Partner to redeem for the Cash Amount any
Partnership Units in which a security interest is held simultaneously with the
time at which such lender would be deemed to be a partner in the Partnership for
purposes of allocating liabilities to such lender under Section 752 of the Code.
43
SECTION 11.4 SUBSTITUTED LIMITED PARTNERS
A. No Limited Partner shall have the right to substitute a transferee as
a Limited Partner in his place. The General Partner shall, however, have the
right to consent to the admission of a transferee of the interest of a Limited
Partner pursuant to this Section 11.4 as a Substituted Limited Partner, which
consent may be given or withheld by the General Partner in its sole and absolute
discretion. The General Partner's failure or refusal to permit a transferee of
any such interests to become a Substituted Limited Partner shall not give rise
to any cause of action against the Partnership or any Partner.
B. A transferee who has been admitted as a Substituted Limited Partner
in accordance with this Article 11 shall have all the rights and powers and be
subject to all the restrictions and liabilities of a Limited Partner under this
Agreement.
C. Upon the admission of a Substituted Limited Partner, the General
Partner shall amend Exhibit A to reflect the name, address, number of
Partnership Units, and Percentage Interest of such Substituted Limited Partner
and to eliminate or adjust, if necessary, the name, address and interest of the
predecessor of such Substituted Limited Partner.
SECTION 11.5 ASSIGNEES
If the General Partner, in its sole and absolute discretion, does not
consent to the admission of any permitted transferee as a Substituted Limited
Partner, as described in Section 11.4, such transferee shall be considered an
Assignee for purposes of this Agreement. An Assignee shall be deemed to have had
assigned to it, and shall be entitled to receive distributions from the
Partnership and the share of Net Income, Net Losses, Recapture Income, and any
other items, gain, loss deduction and credit of the Partnership attributable to
the Partnership Units assigned to such transferee, but except as otherwise
provided in Section 8.6.A hereof shall not be deemed to be a holder of
Partnership Units for any other purpose under this Agreement, and shall not be
entitled to vote such Partnership Units in any matter presented to the Limited
Partners for a vote (such Partnership Units being deemed to have been voted on
such matter in the same proportion as all other Partnership Units held by
Limited Partners are voted). In the event any such transferee desires to make a
further assignment of any such Partnership Units, such transferee shall be
subject to all of the provisions of this Article 11 to the same extent and in
the same manner as any Limited Partner desiring to make an assignment of
Partnership Units.
SECTION 11.6 GENERAL PROVISIONS
A. No Limited Partner may withdraw from the Partnership other than as a
result of a permitted transfer of all of such Limited Partner's Partnership
Units in accordance with this Article 11 or pursuant to the redemption of all of
its Partnership Units under Section 8.6.
B. Any Limited Partner who shall transfer all of its Partnership Units
in a transfer permitted pursuant to this Article 11 shall cease to be a Limited
Partner upon the admission of all Assignees of such Partnership Units as
Substitute Limited Partners. Similarly, any Limited
44
Partner who shall transfer all of its Partnership Units pursuant to a redemption
of all of its Partnership Units under Section 8.6 shall cease to be a Limited
Partner.
C. Transfers pursuant to this Article 11 may only be made on the first
day of a fiscal quarter of the Partnership, unless the General Partner otherwise
agrees, in its sole and absolute discretion.
D. If any Partnership Interest is transferred or assigned during any
quarterly segment of the Partnership's fiscal year in compliance with the
provisions of this Article 11 or redeemed or transferred pursuant to Section 8.6
on any day other than the first day of a Partnership Year, then Net Income, Net
Losses, each item thereof and all other items attributable to such interest for
such Partnership Year shall be divided and allocated between the transferor
Partner and the transferee Partner by taking into account their varying
interests during the Partnership Year in accordance with Section 706(d) of the
Code, using the interim closing of the books method. Solely for purposes of
making such allocations, each of such items for the calendar month in which the
transfer or assignment occurs shall be allocated to the transferee Partner, and
none of such items for the calendar month in which a redemption occurs shall be
allocated to the Redeeming Partner; provided, however, that the General Partner
may adopt such other conventions relating to allocations in connection with
transfers, assignments or redemptions as it determines are necessary or
appropriate. All distributions of Available Cash attributable to such
Partnership Unit with respect to which the Partnership Record Date is before the
date of such transfer, assignment, or redemption shall be made to the transferor
Partner or the Redeeming Partner, as the case may be, and in the case of a
transfer or assignment other than a redemption, all distributions of Available
Cash thereafter attributable to such Partnership Unit shall be made to the
transferee Partner.
E. Additional Restrictions. In addition to any other restrictions on
transfer herein contained, including, without limitation, the provisions of this
Article II, in no event may any transfer or assignment of a Partnership Interest
by any Partner (including pursuant to Section 8.6 hereof) be made without the
express consent of the General Partner, in its sole and absolute discretion, (i)
to any person or entity who lacks the legal right, power or capacity to own a
Partnership Interest; (ii) in violation of applicable law; (iii) of any
component portion of a Partnership Interest, such as the Capital Account, or
rights to distributions, separate and apart from all other components of a
Partnership Interest; (iv) if, in the opinion of legal counsel to the
Partnership experienced in such matters such transfer would cause a termination
of the Partnership for federal or state income tax purposes (except as a result
of the redemption or exchange for Shares of all Partnership Units held by all
Limited Partners or pursuant to a transaction expressly permitted under Section
11.2; (v) if, in the opinion of counsel to the Partnership experienced in such
matters, such transfer would cause the Partnership to cease to be classified as
a partnership for federal income tax purposes (except as a result of the
redemption or exchange for Shares.of all Partnership Units held by all Limited
Partners or pursuant to a transaction expressly permitted under Section 11.2);
(vi) if such transfer would cause the Partnership to become, with respect to any
employee benefit plan subject to Title I of ERISA, a "party-in-interest" (as
defined in Section 3(14) of ERISA) or a "disqualified person" (as defined in
Section 4975(c) of the Code); (vii) if such transfer would, in the opinion of
counsel to the Partnership experienced in such matters, cause any portion of the
assets of the
45
Partnership to constitute assets of any employee benefit plan pursuant to
Department of Labor Regulations Section 25101.1-101; (viii) if such transfer
requires the registration of such Partnership Interest pursuant to any
applicable federal or state securities laws; (ix) if such transfer is
effectuated through an "established securities market" or a "secondary market"
(or the substantial equivalent thereof) within the meaning of Section 7704 of
the Code or such transfer causes the Partnership to become a "publicly traded
partnership," as such term is defined in Section 469(k)(2) or Section 7704(b) of
the Code (provided, that this clause (ix) shall not be the basis for limiting or
restricting in any manner the exercise of the Redemption Right under Section 8.6
hereof unless, and only to the extent that, outside tax counsel experienced in
such matters provides to the General Partner an opinion to the effect that, in
the absence of such limitation or restriction, there is a significant risk that
the Partnership will be treated as a "publicly traded partnership" and, by
reason thereof, taxable as a corporation); (x) if such transfer subjects the
Partnership to regulation under the Investment Company Act of 1940, the
Investment Advisors Act of 1940 or ERISA, each as amended; (xi) such transfer
could adversely affect the ability of the Company to remain qualified as a REIT;
or (xii) if in the opinion of independent legal counsel experienced in such
matters for the transferring Partner (which opinion and counsel shall be
reasonably satisfactory to the Partnership) or legal counsel for the
Partnership, such transfer would adversely affect the ability of the Company to
continue to qualify as a REIT or subject the Company or the General Partner to
any additional taxes under Section 857 or Section 4981 of the Code.
F. Avoidance of "Publicly Traded Partnership" Status. The General
Partner shall monitor the transfers of interests in the Partnership to determine
(i) if such interests are being traded on an "established securities market" or
a "secondary market (or the substantial equivalent thereof)" within the meaning
of Section 7704 of the Code and (ii) whether additional transfers of interests
would result in the Partnership being unable to qualify for at least one of the
"safe harbors" set forth in Regulations Section 1.7704-1 (or such other guidance
subsequently published by the IRS setting forth safe harbors under which
interests will not be treated as "readily tradable on a secondary market (or the
substantial equivalent thereof)" within the meaning of Section 7704 of the Code)
(the "Safe Harbors"). The General Partner shall take all steps reasonably
necessary or appropriate in its sole an absolute discretion to prevent any
trading of interests or any recognition by the Partnership of transfers made on
such markets and, except as otherwise provided herein, to insure that at least
one of the Safe Harbors is met; provided, however, that the foregoing shall not
authorize the General Partner to limit or restrict in any manner the right of
the holder of a Partnership Unit to exercise the Redemption Right in accordance
with the terms of Section 8.6 unless, and only to the extent that, outside tax
counsel experienced in such matters provides to the General Partner an opinion
to the effect that, in the absence of such limitation or restriction, there is a
significant risk that the Partnership will be treated as a "publicly traded
partnership" and, by reason thereof, taxable as a corporation.
46
ARTICLE 12
ADMISSION OF PARTNERS
SECTION 12.1 ADMISSION OF SUCCESSOR GENERAL PARTNER
A successor to all of the General Partner Interest pursuant to Section
11.2 hereof who is proposed to be admitted as a successor General Partner shall
be admitted to the Partnership as the General Partner, effective upon such
transfer. Any such transferee shall carry on the business of the Partnership
without dissolution. In each case, the admission shall be subject to the
successor General Partner executing and delivering to the Partnership an
acceptance of all of the terms and conditions of this Agreement and such other
documents or instruments as may be required to effect the admission. In the case
of such admission on any day other than the first day of a Partnership Year, all
items attributable to the General Partner Interest for such Partnership Year
shall be allocated between the transferring General Partner and such successor
as provided in Section 11.6.D hereof.
SECTION 12.2 ADMISSION OF ADDITIONAL LIMITED PARTNERS
A. After the admission to the Partnership of the initial Limited
Partners on the date hereof, a Person who makes a Capital Contribution to the
Partnership in accordance with this Agreement shall be admitted to the
Partnership as an Additional Limited Partner only upon furnishing to the General
Partner (i) evidence of acceptance in form satisfactory to the General Partner
of all of the terms and conditions of this Agreement, including, without
limitation, the power of attorney granted in Section 2.4 hereof and (ii) such
other documents or instruments as may be required in the discretion of the
General Partner in order to effect such Person's admission as an Additional
Limited Partner.
B. Notwithstanding anything to the contrary in this Section 12.2, no
Person shall be admitted as an Additional Limited Partner without the consent of
the General Partner, which consent may be given or withheld in the General
Partner's sole and absolute discretion. The admission of any Person as an
Additional Limited Partner shall become effective on the date upon which the
name of such Person is recorded on the books and records of the Partnership,
following the consent of the General Partner to such admission.
C. If any Additional Limited Partner is admitted to the Partnership on
any day other than the first day of a Partnership Year, then Net Income, Net
Losses, each item thereof and all other items allocable among Partners and
Assignees for such Partnership Year shall be allocated among such Additional
Limited Partner and all other Partners and Assignees by taking into account
their varying interests during the Partnership Year in accordance with Section
706(d) of the Code, using any convention permitted by law and selected by the
General Partner. Solely for purposes of making such allocations, each such item
for the calendar month in which an admission of any Additional Limited Partner
occurs shall be allocated among all of the Partners and Assignees, including
such Additional Limited Partner; provided, however, that the General Partner may
adopt such other conventions relating to allocations to Additional Limited
Partners as it determines are necessary or appropriate. All distributions of
Available Cash with respect to which the Partnership Record Date is before the
date of such admission shall be made
47
solely to Partners and Assignees, other than the Additional Limited Partner, and
all distributions of Available Cash thereafter shall be made to all of the
Partners and Assignees, including such Additional Limited Partner.
SECTION 12.3 AMENDMENT OF AGREEMENT AND CERTIFICATE OF LIMITED
PARTNERSHIP
For the admission to the Partnership of any Partner, the General Partner
shall take all steps necessary and appropriate under the Act to amend the
records of the Partnership and, if necessary, to prepare as soon as practical an
amendment of this Agreement (including an amendment of Exhibit A) and, if
required applicable by law, shall prepare and file an amendment to the
Certificate of Limited Partnership and may for this purpose exercise the power
of attorney granted pursuant to Section 2.4 hereof.
ARTICLE 13
DISSOLUTION, LIQUIDATION AND TERMINATION
SECTION 13.1 DISSOLUTION
The Partnership shall not be dissolved by the admission of Substituted
Limited Partners or Additional Limited Partners or by the admission of a
successor General Partner in accordance with the terms of this Agreement. Upon
the withdrawal of the General Partner, any successor General Partner shall
continue the business of the Partnership. The Partnership shall dissolve, and
its affairs shall be wound up, only upon the first to occur of any of the
following ("Liquidating Events"):
A. the expiration of its term as provided in Section 2.5 hereof;
B. an event of withdrawal of the General Partner, as defined in the Act
(other than an event of bankruptcy), unless, within ninety (90) days after such
event of withdrawal a majority in interest of the remaining Partners agree in
writing to continue the business of the Partnership and to the appointment,
effective as of the date of withdrawal, of a successor General Partner;
C. from and after the date of this Agreement through [December 31,
____,] an election to dissolve the Partnership made by the General Partner with
the Consent of Partners holding eighty-five percent (85%) of the Percentage
Interests of the Limited Partners (including Limited Partner Interests held by
the Company and its Affiliates);
D. on or after [January 1, ____], an election to dissolve the
Partnership made by the General Partner, in its sole and absolute discretion;
E. entry of a decree of judicial dissolution of the Partnership pursuant
to the provisions of the Act;
48
F. the sale of all or substantially all of the assets and properties of
the Partnership; or
G. a final and non-appealable judgment is entered by a court of
competent jurisdiction ruling that the General Partner is bankrupt or insolvent,
or a final and non-appealable order for relief is entered by a court with
appropriate jurisdiction against the General Partner, in each case under any
federal or state bankruptcy or insolvency laws as now or hereafter in effect,
unless prior to the entry of such order or judgment all of the remaining
Partners agree in writing to continue the business of the Partnership and to the
appointment, effective as of a date prior to the date of such order or judgment,
of a substitute General Partner.
SECTION 13.2 WINDING UP
A. Upon the occurrence of a Liquidating Event, the Partnership shall
continue solely for the purposes of winding up its affairs in an orderly manner,
liquidating its assets, and satisfying the claims of its creditors and Partners.
No Partner shall take any action that is inconsistent with, or not necessary to
or appropriate for, the winding up of the Partnership's business and affairs.
The General Partner, or, in the event there is no remaining General Partner, any
Person elected by a majority in interest of the Limited Partners (the General
Partner or such other Person being referred to herein as the "Liquidator"),
shall be responsible for overseeing the winding up and dissolution of the
Partnership and shall take full account of the Partnership's liabilities and
property and the Partnership property shall be liquidated as promptly as is
consistent with obtaining the fair value thereof, and the proceeds therefrom
(which may, to the extent determined by the General Partner, include shares of
common stock in the Company) shall be applied and distributed in the following
order:
(a) First, to the payment and discharge of all of the
Partnership's debts and liabilities to creditors other than the
Partners;
(b) Second, to the payment and discharge of all of the
Partnership's debts and liabilities to the General Partner;
(c) Third, to the payment and discharge of all of the
Partnership's debts and liabilities to the other Partners; and
(d) The balance, if any, to the General Partner and Partners in
accordance with their Capital Accounts, after giving effect to all
contributions, distributions, and allocations for all periods.
The General Partner shall not receive any additional compensation
for any services performed pursuant to this Article 13.
B. Notwithstanding the provisions of Section 13.2.A hereof which require
liquidation of the assets of the Partnership, but subject to the order of
priorities set forth therein, if prior to or upon dissolution of the Partnership
the Liquidator determines that an immediate sale of part or all of the
Partnership's assets would be impractical or would cause undue loss to the
Partners,
49
the Liquidator may, in its sole and absolute discretion, defer for a reasonable
time the liquidation of any assets except those necessary to satisfy liabilities
of the Partnership (including to those Partners as creditors) and/or distribute
to the Partners, in lieu of cash, as tenants in common and in accordance with
the provisions of Section 13.2.A hereof, undivided interests in such Partnership
assets as the Liquidator deems not suitable for liquidation. Any such
distributions in kind shall be made only if, in the good faith judgment of the
Liquidator, such distributions in kind are in the best interest of the Partners,
and shall be subject to such conditions relating to the disposition and
management of such properties as the Liquidator deems reasonable and equitable
and to any agreements governing the operation of such properties at such time.
The Liquidator shall determine the fair market value of any property distributed
in kind using such reasonable method of valuation as it may adopt.
C. In the discretion of the Liquidator, a pro rata portion of the
distributions that would otherwise be made to the General Partner and Limited
Partners pursuant to this Article 13 may be:
(a) distributed to a trust established for the benefit of the
General Partner and Limited Partners for the purposes of liquidating
Partnership assets, collecting amounts owed to the Partnership, and
paying any contingent or unforeseen liabilities or obligations of the
Partnership or the General Partner arising out of or in connection with
the Partnership. The assets of any such trust shall be distributed to
the General Partner and Limited Partners from time to time, in the
reasonable discretion of the Liquidator, in the same proportions as the
amount distributed to such trust by the Partnership would otherwise have
been distributed to the General Partner and Limited Partners pursuant to
this Agreement; or
(b) withheld or escrowed to provide a reasonable reserve for
Partnership liabilities (contingent or otherwise) and to reflect the
unrealized portion of any installment obligations owed to the
Partnership, provided that such withheld or escrowed amounts shall be
distributed to the General Partner and Limited Partners in the manner
and order of priority set forth in Section 13.2.A as soon as
practicable.
SECTION 13.3 DEEMED DISTRIBUTION AND RECONTRIBUTION
Notwithstanding any other provision of this Article 13, in the event the
Partnership is considered "liquidated" within the meaning of Regulations Section
1.704-1(b)(2)(ii)(g), but no Liquidating Event has occurred, the Partnership's
property shall not be liquidated, the Partnership's liabilities shall not be
paid or discharged, and the Partnership's affairs shall not be wound up.
Instead, for federal income tax purposes, the Partnership shall be deemed to
have contributed the Partnership property to a new partnership, in exchange for
an interest in the new partnership, which new partnership shall be deemed to
have assumed and taken such property subject to all Partnership liabilities.
Immediately thereafter, the Partnership shall be deemed to have distributed the
interests in the new partnership in liquidation of the Partnership, to the
General Partner and the Limited Partners, in proportion to their respective
Partnership Interests for the Continuation of the business.
50
SECTION 13.4 RIGHTS OF LIMITED PARTNERS
Except as otherwise provided in this Agreement, each Limited Partner
shall look solely to the assets of the Partnership for the return of its Capital
Contributions and shall have no right or power to demand or receive property
other than cash from the Partnership. Except as otherwise provided in this
Agreement, no Limited Partner shall have priority over any other Partner as to
the return of its Capital Contributions, distributions, or allocations.
SECTION 13.5 NOTICE OF DISSOLUTION
In the event a Liquidating Event occurs or an event occurs that would,
but for the provisions of an election or objection by one or more Partners
pursuant to Section 13.1, result in a dissolution of the Partnership, the
General Partner shall, within thirty (30) days thereafter, provide written
notice thereof to each of the Partners.
SECTION 13.6 TERMINATION OF PARTNERSHIP AND CANCELLATION OF CERTIFICATE
OF LIMITED PARTNERSHIP
Upon the completion of the liquidation of the Partnership's assets, as
provided in Section 13.2 hereof, the Partnership shall be terminated, a
certificate of cancellation shall be filed, and all qualifications of the
Partnership as a foreign limited partnership in jurisdictions other than the
State of Delaware shall be canceled and such other actions as may be necessary
to terminate the Partnership shall be taken.
SECTION 13.7 REASONABLE TIME FOR WINDING-UP
A reasonable time shall be allowed for the orderly winding-up of the
business and affairs of the Partnership and the liquidation of its assets
pursuant to Section 13.2 hereof, in order to minimize any losses otherwise
attendant upon such winding-up, and the provisions of this Agreement shall
remain in effect between the Partners during the period of liquidation.
SECTION 13.8 WAIVER OF PARTITION
Each Partner hereby waives any right to partition of the Partnership
property.
ARTICLE 14
AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS
SECTION 14.1 AMENDMENTS
A. Amendments to this Agreement may be proposed by the General Partner
or by any Limited Partners (other than the Company) holding twenty percent (20%)
or more of the Partnership Interests. Following such proposal, the General
Partner shall submit any proposed amendment to the Limited Partners. The General
Partner shall seek the written vote of the Partners on the proposed amendment or
shall call a meeting to vote thereon and to transact any
51
other business that it may deem appropriate. For purposes of obtaining a written
vote, the General Partner may require a response within a reasonable specified
time, but not less than fifteen (15) days, and failure to respond in such time
period shall constitute a vote which is consistent with the General Partner's
recommendation with respect to the proposal. Except as provided in Section
13.1.C, 14.1.B, 14.1.C or 14.1.D, a proposed amendment shall be adopted and be
effective as an amendment hereto if it is approved by the General Partner and it
receives the Consent of Partners holding a majority of the Percentage Interests
of the Limited Partners (including Limited Partner Interests held by the
Company); provided that, an action shall become effective at such time as the
requisite consents are received even if prior to such specified time.
B. Notwithstanding Section 14.1.A, the General Partner shall have the
power, without the consent of the Limited Partners, to amend this Agreement as
may be required to facilitate or implement any of the following purposes:
(a) to add to the obligations of the General Partner or surrender
any right or power granted to the General Partner or any Affiliate of
the General Partner for the benefit of the Limited Partners;
(b) to reflect the admission, substitution, termination, or
withdrawal of Partners in accordance with this Agreement;
(c) to set forth and reflect in the Agreement the designations,
rights, powers, duties, and preferences of the holders of any additional
Partnership Interests issued pursuant to Section 4.2.A hereof;
(d) to reflect a change that is of an inconsequential nature and
does not adversely affect the Limited Partners in any material respect,
or to cure any ambiguity, correct or supplement any provision in this
Agreement not inconsistent with law or with other provisions, or make
other changes with respect to matters arising under this Agreement that
will not be inconsistent with law or with the provisions of this
Agreement; and
(e) to satisfy any requirements, conditions, or guidelines
contained in any order, directive, opinion, ruling or regulation of a
federal or state agency or contained in federal or state law.
The General Partner shall provide notice to the Limited Partners when
any action under this Section 14.1.B is taken.
C. Notwithstanding Section 14.1.A and 14.1.B hereof, this Agreement
shall not be amended without the Consent of each Partner adversely affected if
such amendment would (i) convert a Limited Partner's interest in the Partnership
into a General Partner Interest; (ii) modify the limited liability of a Limited
Partner in a manner adverse to such Limited Partner; (iii) alter rights of the
Partner (other than as a result of the issuance of Partnership Interests) to
receive distributions pursuant to Article 5 or Article 13 or the allocations
specified in Article 6 (except
52
as permitted pursuant to Section 4.2 and Section 14.1.B(3) hereof); (iv) alter
or modify the Redemption Right and REIT Shares Amount as set forth in Sections
8.6 and 11.2.B, and the related definitions, in a manner adverse to such
Partner; (v) cause the termination of the Partnership prior to the time set
forth in Sections 2.5 or 13.1; or (vi) amend this Section 14.1.C. Further, no
amendment may alter the restrictions on the General Partner's authority set
forth in Section 7.3.B without the Consent specified in that section. In
addition, Section 8.7 may only be amended as provided therein.
D. Notwithstanding Section 14.1.A or Section 14.1.B hereof, the General
Partner shall not (except in connection with amendments made to reflect the
issuance of additional Partnership Interests and the relative rights, powers and
duties incident thereto) amend Sections 4.2.A, 7.5, 7.6, 11.2 or 14.2 without
the Consent of Limited Partners holding a majority of the Percentage Interests
of the Limited Partners, excluding Limited Partner Interests held by the Company
or its Affiliates.
SECTION 14.2 MEETINGS OF THE PARTNERS
A. Meetings of the Partners may be called by the General Partner and
shall be called upon the receipt by the General Partner of a written request by
Limited Partners (other than the Company) holding twenty percent (20%) or more
of the Partnership Interests. The request shall state the nature of the business
to be transacted. Notice of any such meeting shall be given to all Partners not
less than seven (7) days nor more than thirty (30) days prior to the date of
such meeting. Partners may vote in person or by proxy at such meeting. Whenever
the vote or Consent of the Partners is permitted or required under this
Agreement, such vote or Consent may be given at a meeting of the Partners or may
be given in accordance with the procedure prescribed in Section 14.1.A hereof.
Except as otherwise expressly provided in this Agreement, the Consent of holders
of a majority of the Percentage Interests held by Limited Partners (including
Limited Partnership Interests held by the Company) shall control.
B. Any action required or permitted to be taken at a meeting of the
Partners may be taken without a meeting if a written consent setting forth the
action so taken is signed by a majority of the Percentage Interests of the
Partners (or such other percentage as is expressly required by this Agreement).
Such consent may be in one instrument or in several instruments, and shall have
the same force and effect as a vote of a majority of the Percentage Interests of
the Partners (or such other percentage as is expressly required by this
Agreement). Such consent shall be filed with the General Partner. An action so
taken shall be deemed to have been taken at a meeting held on the effective date
so certified.
C. Each Limited Partner may authorize any Person or Persons to act for
him by proxy on all matters in which a Limited Partner is entitled to
participate, including waiving notice of any meeting, or voting or participating
at a meeting. Every proxy must be signed by the Limited Partner or his
attorney-in-fact. No proxy shall be valid after the expiration of twelve (12)
months from the date thereof unless otherwise provided in the proxy. Every proxy
shall be revocable at the pleasure of the Limited Partner executing it, such
revocation to be effective upon the Partnership's receipt of written notice of
such revocation from the Limited Partner executing such proxy.
53
D. Each meeting of the Partners shall be conducted by the General
Partner or such other Person as the General Partner may appoint pursuant to such
rules for the conduct of the meeting as the General Partner or such other Person
deems appropriate. Without limitation, meetings of Partners may be conducted in
the same manner as meetings of the shareholders of the Company and may be held
at the same time, and as part of, meetings of the shareholders of the Company.
ARTICLE 15
GENERAL PROVISIONS
SECTION 15.1 ADDRESSES AND NOTICE
Any notice, demand, request or report required or permitted to be given
or made to a Partner or Assignee under this Agreement shall be in writing and
shall be deemed given or made when delivered in person or when sent by first
class United States mail or by other means of written communication to the
Partner or Assignee at the address set forth in Exhibit A or such other address
of which the Partner shall notify the General Partner in writing.
SECTION 15.2 TITLES AND CAPTIONS
All article or section titles or captions in this Agreement are for
convenience only. They shall not be deemed part of this Agreement and in no way
define, limit, extend or describe the scope or intent of any provisions hereof.
Except as specifically provided otherwise, references to "Articles" and
"Sections" are to Articles and Sections of this Agreement.
SECTION 15.3 PRONOUNS AND PLURALS
Whenever the context may require, any pronoun used in this Agreement
shall include the corresponding masculine, feminine or neuter forms, and the
singular form of nouns, pronouns and verbs shall include the plural and vice
versa.
SECTION 15.4 FURTHER ACTION
The parties shall execute and deliver all documents, provide all
information and take or refrain from taking action as may be necessary or
appropriate to achieve the purposes of this Agreement.
SECTION 15.5 BINDING EFFECT
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their heirs, executors, administrators, successors, legal
representatives and permitted assigns.
54
SECTION 15.6 CREDITORS
Other than as expressly set forth herein with respect to the
Indemnities, none of the provisions of this Agreement shall be for the benefit
of, or shall be enforceable by, any creditor of the Partnership.
SECTION 15.7 WAIVER
No failure by any party to insist upon the strict performance of any
covenant, duty, agreement or condition of this Agreement or to exercise any
right or remedy consequent upon a breach thereof shall constitute waiver of any
such breach or any other covenant, duty, agreement or condition.
SECTION 15.8 COUNTERPARTS
This Agreement may be executed in counterparts, all of which together
shall constitute one agreement binding on all of the parties hereto,
notwithstanding that all such parties are not signatories to the original or the
same counterpart. Each party shall become bound by this Agreement immediately
upon affixing its signature hereto.
SECTION 15.9 APPLICABLE LAW
This Agreement shall be construed and enforced in accordance with and
governed by the laws of the State of Delaware, without regard to principles of
conflicts of law.
SECTION 15.10 INVALIDITY OF PROVISIONS
If any provision of this Agreement shall to any extent be held void or
unenforceable (as to duration, scope, activity, subject or otherwise) by a court
of competent jurisdiction, such provision shall be deemed to be modified so as
to constitute a provision conforming as nearly as possible to the original
provision while still remaining valid and enforceable. In such event, the
remainder of this Agreement (or the application of such provision to persons or
circumstances other than those in respect of which it is deemed to be void or
unenforceable) shall not be affected thereby. Each other provision of this
Agreement, unless specifically conditioned upon the voided aspect of such
provision, shall remain valid and enforceable to the fullest extent permitted by
law; any other provisions of this Agreement that are specifically conditioned on
the voided aspect of such invalid provision shall also be deemed to be modified
so as to constitute a provision conforming as nearly as possible to the original
provision while still remaining valid and enforceable to the fullest extent
permitted by law.
SECTION 15.11 ENTIRE AGREEMENT
This Agreement contains the entire understanding and agreement among the
Partners with respect to the subject matter hereof and supersedes the Prior
Agreement, any other prior written or oral understandings or agreements among
them with respect thereto.
55
SECTION 15.12 NO RIGHTS AS STOCKHOLDERS
Nothing contained in this Agreement shall be construed as conferring
upon the holders of the Partnership Units any rights whatsoever as partners or
stockholders of the General Partner or the Company, including, without
limitation, any right to receive dividends or other distributions made to
stockholders of the General Partner or the Company or to vote or to consent or
receive notice as stockholders in respect to any meeting of stockholders for the
election of directors of the General Partner or the Company or any other matter.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.
GENERAL PARTNER:
LOEB REALTY GP, INC.
By:
____________________________________________
Name:
Title:
56
LIMITED PARTNER SIGNATURE PAGE
The undersigned, desiring to become one of the within named Limited
Partners of Loeb Realty Limited Partnership, hereby becomes a party to the
Agreement of Limited Partnership of Loeb Realty Limited Partnership by and among
Loeb Realty Corp. and such Limited Partners, dated as of ________, 1998. The
undersigned agrees that this signature page may be attached to any counterpart
of said Agreement of Limited Partnership.
Signature Line for Limited Partner:
LOEB REALTY CORPORATION
By:
_________________________________
Name:
Title:
Address of Limited Partner: _________________________________
_________________________________
_________________________________
57
[OTHER SIGNATURE PAGES]
58
EXHIBIT A
PARTNERS' CONTRIBUTIONS AND PARTNERSHIP INTERESTS
A-1
EXHIBIT B
NOTICE OF REDEMPTION
The undersigned Limited Partner hereby irrevocably (i) redeems [_____]
Limited Partnership Units in Loeb Realty Limited Partnership in accordance with
the terms of the Operating Partnership Agreement of Limited Partnership of Loeb
Realty Limited Partnership and the Redemption Right referred to therein; (ii)
surrenders such Limited Partnership Units and all right, title and interest
therein; and (iii) directs that the Cash Amount or REIT Shares Amount (as
determined by the General Partner) deliverable upon exercise of the Redemption
Right be delivered to the address specified below, and if REIT Shares are to be
delivered, such REIT Shares be registered or placed in the name(s) and at the
address(es) specified below. The undersigned hereby, represents, warrants, and
certifies that the undersigned (a) has marketable and unencumbered title to such
Limited Partnership Units, free and clear of the rights or interests of any
other person or entity; (b) has the full right, power, and authority to redeem
and surrender such Limited Partnership Units as provided herein; and (c) has
obtained the consent or approval of all person or entities, if any, having the
right to consent or approve such redemption and surrender.
Dated:
_______________________
Name of Limited Partner:
_________________________________________
(Please Print)
_________________________________________
(Signature of Partner)
_________________________________________
(Xxxxxx Xxxxxxx)
_________________________________________
(City) (State) (Zip Code)
Signature Guaranteed By:
_________________________________________
B-1
If REIT Shares are to be issued, issue to:
Name:
_________________________________________
Please insert social security or identifying number:
- -
_______________ ___________ _______________
B-2
EXHIBIT C
DESIGNATED PROPERTIES
Designated Property
-------------------
_______________________________________
_______________________________________
_______________________________________
C-1