AGREEMENT OF LIMITED PARTNERSHIP OF CWI OP, LP
Exhibit 10.2
AGREEMENT OF LIMITED PARTNERSHIP
OF
CWI OP, LP
OF
CWI OP, LP
THIS AGREEMENT OF LIMITED PARTNERSHIP OF CWI OP, LP, a Delaware limited partnership (the
“Partnership”), dated as of September 15, 2010 (the “Effective Date”), is entered into by
and among ▇▇▇▇▇ Watermark Investors Incorporated, a Maryland corporation holding both general
partner and limited partner interests in the Partnership (the “General Partner”), and ▇▇▇▇▇
Watermark Holdings, LLC, a Delaware limited liability company holding a special general partner
interest in the Partnership (the “Special General Partner”), together with any other
Persons who become Partners in the Partnership as provided herein.
WHEREAS, the Partnership was formed when a Certificate of Limited Partnership was filed and
accepted by the Secretary of State of the State of Delaware; and
WHEREAS, the General Partner proposes to effect an initial offering of its common stock and to
contribute the net proceeds of the offering to the Partnership to cause the Partnership to fund (i)
certain acquisitions and investments, (ii) working capital requirements, (iii) redemptions of
interests in the Partnership, and (iv) repayment of indebtedness incurred under various financing
instruments.
NOW, THEREFORE, BE IT RESOLVED, that for good and adequate consideration, the receipt of which
is hereby acknowledged, the parties hereto agree as follows:
ARTICLE 1.
DEFINED TERMS
DEFINED TERMS
Section 1.1 Definitions.
The following definitions shall be for all purposes, unless otherwise clearly indicated to the
contrary, applied to the terms used in this Agreement.
“Act” means the Delaware Revised Uniform Limited Partnership Act (6 Del. C. § 17-101
et seq.), as it may be amended from time to time, and any successor to such statute.
“Additional Funds” shall have the meaning set forth in Section 4.3.A.
“Additional Limited Partner” means a Person admitted to the Partnership as a Limited
Partner pursuant to Section 12.2 and who is shown as such on the books and records of the
Partnership.
“Adjusted Capital Account Deficit” means, with respect to any Partner, the deficit
balance, if any, in such Partner’s Capital Account as of the end of the relevant fiscal year, after
giving effect to the following adjustments:
| (i) | such deficit shall be decreased by any amounts which such Partner is obligated to restore pursuant to this Agreement or is deemed to be obligated to restore pursuant to Regulations Section 1.704-1(b)(2)(ii)(c) or the penultimate sentence of each of Regulations Sections 1.704-2(i)(5) and 1.704-2(g)(1); and | ||
| (ii) | such deficit shall be increased by the items described in Regulations Section 1.704-1(b)(2)(ii)(d)(4), (5) and (6). |
The foregoing definition of Adjusted Capital Account Deficit is intended to comply with the
provisions of Regulations Section 1.704-1(b)(2)(ii)(d) and shall be interpreted consistently
therewith. A positive balance in a Partner’s Capital Account, after giving effect to the
adjustments described above in clauses (i) and (ii), is referred to in this Agreement as an
“Adjusted Capital Account Balance.”
“Adjustment Date” means, with respect to any Capital Contribution, the close of
business on the Business Day last preceding the date of the Capital Contribution, provided,
that if such Capital Contribution is being made by the General Partner in respect of the
proceeds from the issuance of REIT Shares (or the issuance of the General Partner’s securities
exercisable for, convertible into or exchangeable for REIT Shares), then the Adjustment Date shall
be as of the close of business on the Business Day last preceding the date of the issuance of such
securities.
“Advisor” means ▇▇▇▇▇ Lodging Advisors, LLC, a Delaware limited liability company.
“Advisory Agreement” means that certain Advisory Agreement between the Advisor and the
General Partner entered into contemporaneously with this Agreement, as the same may be amended from
time to time.
“Affiliate” means, with respect to any Person, any Person directly or indirectly
controlling, controlled by or under common control with such Person. Control of any Person means
the power to direct the management and policies of such Person, directly or indirectly, whether
through the ownership of voting securities, by contract or otherwise, and the terms “controlling”
and “controlled” have meanings correlative to the foregoing.
“Agreed Value” means (i) in the case of any Contributed Property set forth in Exhibit
A and as of the Adjustment Date, the Agreed Value of such property as set forth in Exhibit A; (ii)
in the case of any Contributed Property not set forth in Exhibit A and as of the Adjustment Date,
the fair market value of such property or other consideration as determined by the General Partner,
reduced by any liabilities either assumed by the Partnership upon such contribution or to which
such property is subject when contributed; and (iii) in the case of any property distributed to a
Partner by the Partnership, the fair market value of such property as determined by the General
Partner at the time such property is distributed, reduced by any liabilities either assumed by such
Partner upon such distribution or to which such property is subject at the time of the distribution
as determined under Section 752 of the Code and the Regulations thereunder.
“Agreement” means this Agreement of Limited Partnership, as it may be amended,
modified, supplemented or restated from time to time.
“Appraisal” means with respect to any assets, the opinion of an independent third
party experienced in the valuation of similar assets, selected by the General Partner and the
Special General Partner in good faith; such opinion may be in the form of an opinion by such
independent third party that the value for such property or asset as set by the General Partner is
fair, from a financial point of view, to the Partnership.
“Assignee” means a Person to whom one or more OP 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, the cash flow generated by Partnership operations and investments as determined in the
reasonable discretion of the General Partner taking into account all cash available for
distribution from all sources excluding Capital Proceeds, after the payment of regular debt
payments (including, without limitation, regularly scheduled payments of interest and amortization,
but excluding balloon payments and early prepayment of debt principal) and Operating Expenses of
the Partnership (as defined in the Advisory Agreement) but before the payment of distributions to
Partners. Notwithstanding the foregoing, the operating cash flow of any entity in which the
Partnership owns, directly or indirectly, less than a 100% interest shall be multiplied by the
percentage ownership of such entity held, directly or indirectly, by 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 be closed.
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“Capital Account” means, with respect to any Partner, the Capital Account maintained
for such Partner in accordance with the following provisions:
(a) To each Partner’s Capital Account there shall be added such Partner’s Capital
Contributions, such Partner’s share of Net Income and any items in the nature of income or gain
which are specially allocated pursuant to Section 6.3, and the amount of any Partnership
liabilities assumed by such Partner or which are secured by any property distributed to such
Partner.
(b) From each Partner’s Capital Account there shall be subtracted the amount of cash and the
Gross Asset Value of any property distributed to such Partner pursuant to any provision of this
Agreement, such Partner’s distributive share of Net Loss and any items in the nature of expenses or
losses which are specially allocated pursuant to Section 6.3, and the amount of any
liabilities of such Partner assumed by the Partnership or which are secured by any property
contributed by such Partner to the Partnership (except to the extent already reflected in the
amount of such Partner’s Capital Contribution).
(c) In the event any interest in the Partnership is transferred in accordance with the terms
of this Agreement, the transferee shall succeed to the Capital Account of the transferor to the
extent it relates to the transferred interest.
(d) In determining the amount of any liability for purposes of subsections (a) and (b) hereof,
there shall be taken into account Code Section 752(c) and any other applicable provisions of the
Code and Regulations.
(e) The foregoing provisions and the other provisions of this Agreement relating to the
maintenance of Capital Accounts are intended to comply with Regulations Sections 1.704-1(b) and
1.704-2, and shall be interpreted and applied in a manner consistent with such Regulations. In the
event the General Partner shall determine that it is prudent to modify the manner in which the
Capital Accounts, or any debits or credits thereto (including, without limitation, debits or
credits relating to liabilities which are secured by contributed or distributed property or which
are assumed by the Partnership, the General Partner, or the Limited Partners) are computed in order
to comply with such Regulations, the General Partner may make such modification, provided
that it is not likely to have a material effect on the amounts distributable to any Person
pursuant to Article 13 of this Agreement upon the dissolution of the Partnership. The
General Partner also shall (i) make any adjustments that are necessary or appropriate to maintain
equality between the Capital Accounts of the Partners and the amount of Partnership capital
reflected on the Partnership’s balance sheet, as computed for book purposes, in accordance with
Regulations Section 1.704-1(b)(2)(iv)(q), and (ii) make any appropriate modifications in the event
unanticipated events might otherwise cause this Agreement not to comply with Regulations Section
1.704-1(b) or Section 1.704-2.
“Capital Contribution” means, with respect to any Partner, the amount of money and the
initial Gross Asset Value of any property (other than money) contributed to the Partnership by such
Partner (net of any liabilities assumed by the Partnership relating to such property and any
liability to which such property is subject).
“Capital Proceeds” means the gross receipts received by the Partnership from a Capital
Transaction, Change of Control Event or a Listing Event (including any borrowing or other
transaction entered into in connection with, or as a part of, a Capital Transaction, Change of
Control Event or Listing Event), less any expenses related to the Capital Transaction, Change of
Control Event or Listing Event.
“Capital Transaction” means any transaction outside the ordinary course of the
Partnership’s business involving the sale, exchange, other disposition, or refinancing of any
Partnership asset.
“Cash Amount” means, with respect to any OP Units subject to a Redemption, an amount
of cash equal to the Deemed Partnership Interest Value attributable to such OP Units.
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“Certificate” means the Certificate of Limited Partnership relating to the Partnership
filed in the office of the Secretary of the State of the State of Delaware, as amended from time to
time in accordance with the terms hereof and the Act.
“Change of Control” shall be deemed to have occurred at such time as (i) the date a
“person” or “group” (within the meaning of Sections 13(d) and 14(d) of the Exchange Act) becomes
the ultimate “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except
that a person or group shall be deemed to have beneficial ownership of all shares of voting stock
that such person or group has the right to acquire regardless of when such right is first
exercisable), directly or indirectly, of voting stock representing more than fifty percent (50%) of
the total voting power of the total voting stock of the General Partner; (ii) the date the General
Partner sells, transfers or otherwise disposes of all or substantially all of its assets; or (iii)
the date of the consummation of a merger or share exchange of the General Partner with another
entity where the General Partner’s stockholders immediately prior to the merger or share exchange
would not beneficially own, immediately after the merger or share exchange, shares representing
fifty percent (50%) or more of all votes (without consideration of the rights of any class of stock
to elect directors by a separate group vote) to which all stockholders of the corporation issuing
cash or securities in the merger or share exchange would be entitled in the election of directors,
or where members of the board of directors of the General Partner immediately prior to the merger
or share exchange would not immediately after the merger or share exchange constitute a majority of
the board of directors of the corporation issuing cash or securities in the merger or share
exchange.
“Change of Control Event” means (i) the date on which another Person acquires more
than fifty percent (50%) of the aggregate ordinary voting power represented by the equity
securities of the General Partner by purchase or by merger provided that the indirect ownership of
the General Partner immediately after the acquisition differs from the direct ownership of the
General Partner immediately before the acquisition by more than a de minimis amount; or (ii) the
date on which the General Partner merges with another Person provided that the ownership of the
entity surviving the merger immediately after the merger differs from the ownership of the General
Partner immediately before the merger by more than a de minimis amount.
“Charter” means the Articles of Incorporation of the General Partner filed with the
State Department of Assessments and Taxation of Maryland on March 10, 2008, as amended or restated
from time to time.
“Code” means the Internal Revenue Code of 1986, as amended from time to time or any
successor statute thereto. Any reference herein to a specific section or sections of the Code shall
be deemed to include a reference to any corresponding provision of future law.
“Consent” means the consent to, approval of, or vote on a proposed action by a Partner
given in accordance with Article 14.
“Consent of the Limited Partners” means the Consent of a Majority in Interest of the
Limited Partners, which Consent shall be obtained prior to the taking of any action for which it is
required by this Agreement and may be given or withheld by a Majority in Interest of the Limited
Partners, unless otherwise expressly provided herein, in their sole and absolute discretion.
“Consent of the Partners” means the Consent of Partners holding Percentage Interests
that in the aggregate are equal to or greater than fifty percent (50%) of the aggregate Percentage
Interests of all Partners, which Consent shall be obtained prior to the taking of any action for
which it is required by this Agreement and may be given or withheld by such Partners, in their sole
and absolute discretion.
“Constructively Own” means ownership under the constructive ownership rules described
in the Charter.
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“Contributed Property” means each property or other asset, in such form as may be
permitted by the Act, but excluding cash, contributed or deemed contributed to the Partnership.
“Debt” means, as to any Person, as of any date of determination, (i) all indebtedness
of such Person for borrowed money or for the deferred purchase price of property or services; (ii)
all amounts owed by such Person to banks or other Persons in respect of reimbursement obligations
under letters of credit, surety bonds, guarantees and other similar instruments guaranteeing
payment or other performance of obligations by such Person; (iii) all indebtedness for borrowed
money or for the deferred purchase price of property or services secured by any lien on any
property owned by such Person, to the extent attributable to such Person’s interest in such
property, even though such Person has not assumed or become liable for the payment thereof; and
(iv) lease obligations of such Person which, in accordance with generally accepted accounting
principles, should be capitalized.
“Deemed Partnership Interest Value” means, as of any date with respect to any class of
Partnership Interests, the Deemed Value of the Partnership Interests attributable to such class
multiplied by the Partner’s relative Percentage Interest of such class.
“Deemed Value of the Partnership Interests” means, as of any date with respect to any
class or series of Partnership Interests, (i) the total number of OP Units of the General Partner
issued and outstanding as of the close of business on such date multiplied by the Fair Market Value
determined as of such date of a share of common stock of the General Partner which corresponds to
such Partnership Interest, as adjusted (x) pursuant to Section 7.5 (in the event the
General Partner acquires material assets, other than on behalf of the Partnership) and (y) for
stock dividends and distributions, stock splits and subdivisions, reverse stock splits and
combinations, distribution of warrants or options and distributions of evidences of indebtedness or
assets not received by the General Partner pursuant to a pro rata distribution by the Partnership;
(ii) divided by the Percentage Interest of the General Partner on such date;
provided, that if no outstanding shares of capital stock of the General Partner
correspond to a class or series of Partnership Interests, the Deemed Value of the Partnership
Interests with respect to such class or series shall be equal to an amount reasonably determined by
the General Partner.
“Depreciation” means, for each fiscal year or other period, an amount equal to the
depreciation, amortization or other cost recovery deduction allowable with respect to an asset for
such year or other period, except that if the Gross Asset Value of an asset differs from its
adjusted basis for federal income tax purposes at the beginning of such year or other period,
Depreciation shall be an amount which bears the same ratio to such beginning Gross Asset Value as
the federal income tax depreciation, amortization or other cost recovery deduction for such year or
other period bears to such beginning adjusted tax basis; provided, however, that if
the federal income tax depreciation, amortization or other cost recovery deduction for such year is
zero, Depreciation shall be determined with reference to such beginning Gross Asset Value using any
reasonable method selected by the General Partner.
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.
“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules
and regulations of the Securities and Exchange Commission promulgated thereunder and any successor
statute thereto.
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“Fair Market Value” means, with respect to any share of capital stock of the General
Partner, (i) if such shares are listed or admitted to trading on any securities exchange or
automated quotation system, the average of the daily market price for the ten (10) consecutive
trading days immediately preceding the date with respect to which “Fair Market Value” must be
determined hereunder or, if such date is not a Business Day, the immediately preceding Business
Day, using as the market price for each such trading day the closing price, regular way, on such
day, or if no such sale takes place on such day, the average of the closing bid and asked prices on
such day, or (ii) if such shares are not listed or admitted to trading on any securities exchange
or automated quotation system, the price at which such shares are then being offered to
the public pursuant to any public offering of the General Partner or pursuant to its distribution
reinvestment plan (before giving effect to any discounts in effect and made available to
participants in such plan); provided that, if there is no ongoing public offering
or if the General Partner is not then offering its shares pursuant to a distribution reinvestment
plan, the Fair Market Value of such shares shall be determined by the General Partner acting in
good faith on the basis of the most recent, publicly reported net asset value of the General
Partner and other information as it considers, in its reasonable judgment, appropriate. In the
event the REIT Shares Amount for such shares includes rights that a holder of such shares would be
entitled to receive, then the Fair Market Value of such rights shall be determined by the General
Partner acting in good faith on the basis of such quotations and other information as it considers,
in its reasonable judgment, appropriate; and provided, further that, in
connection with determining the Deemed Value of the Partnership Interests for purposes of
determining the number of additional OP Units issuable upon a Capital Contribution funded by an
underwritten public offering of shares of capital stock of the General Partner, the Fair Market
Value of such shares shall be the public offering price per share of such class of capital stock
sold. Notwithstanding the foregoing, the General Partner in its reasonable discretion may use a
different “Fair Market Value” for purposes of making the determinations under subparagraph (b) of
the definition of “Gross Asset Value” and Section 4.3.D in connection with the contribution
of Property or cash to the Partnership by a third party, provided such value shall be based
upon the value per REIT Share (or per OP Unit) agreed upon by the General Partner and such third
party for purposes of such contribution.
“General Partner Interest” means a Partnership Interest held by the General Partner. A
General Partner Interest may be expressed as a number of OP Units.
“General Partner Net Current Investment” means the General Partner’s total Capital
Contributions then paid to the Partnership, plus the amount of any Partnership liabilities assumed
by the General Partner (or which are secured by Partnership property distributed to the General
Partner), less (i) the amount of any liabilities of the General Partner assumed by the Partnership
(or which are secured by property contributed by the General Partner to the Partnership), (ii) all
amounts actually distributed to the General Partner pursuant to Section 5.1.B(2), and (iii)
all amounts representing a return of capital to the General Partner, including, but not limited to,
the portion of any redemption proceeds distributed to the General Partner pursuant to Section
11.8 which represents a return of capital to the General Partner.
“General Partner Priority Return” means an amount equal to six percent (6%) per annum
of the Weighted Average General Partner Net Current Investment, payable to the General Partner
annually on a cumulative basis.
“General Partner Unpaid Priority Return” means the excess, if any, of the General
Partner Priority Return over all amounts previously paid to the General Partner under Section
5.1.A, or paid in respect of the General Partner Priority Return under Section 5.1.B(1)
as of the time in question.
“Gross Asset Value” means, with respect to any asset, the asset’s adjusted basis for
federal income tax purposes, except as follows:
(a) The initial Gross Asset Value of any asset contributed by a Partner to the Partnership
shall be the gross fair market value of such asset, as determined by the contributing Partner and
the General Partner (as set forth on Exhibit A attached hereto, as such Exhibit may be amended from
time to time); provided, that if the contributing Partner is the General Partner,
then, except with respect to the General Partner’s initial Capital Contribution which shall be
determined as set forth on Exhibit A, the determination of the fair market value of the contributed
asset shall be determined (i) by the price paid by the General Partner if the asset is acquired by
the General Partner contemporaneously with its contribution to the Partnership, (ii) by Appraisal,
if otherwise acquired by the General Partner, (iii) by the amount of cash if the asset is cash, and
(iv) as reasonably determined by the General Partner if the asset is REIT Shares or other shares of
capital stock of the General Partner.
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(b) The Gross Asset Values of all Partnership assets shall be adjusted to equal their
respective gross fair market values, as determined by the General Partner using such reasonable
method of valuation as it may adopt, provided, however, that for such purpose, the
net value of all of the Partnership assets, in the aggregate, shall be equal to the Deemed Value of
the Partnership Interests of all classes of Partnership Interests then outstanding, regardless of
the method of valuation adopted by the General Partner, immediately prior to the times listed
below:
| (i) | the acquisition of an additional interest in the Partnership by a new or existing Partner in exchange for more than a de minimis Capital Contribution, if the General Partner reasonably determines that such adjustment is necessary or appropriate to reflect the relative economic interests of the Partners in the Partnership; | ||
| (ii) | the distribution by the Partnership to a Partner of more than a de minimis amount of Partnership property as consideration for an interest in the Partnership if the General Partner reasonably determines that such adjustment is necessary or appropriate to reflect the relative economic interests of the Partners in the Partnership; | ||
| (iii) | the liquidation of the Partnership within the meaning of Regulations Section 1.704-1(b)(2)(ii)(g); | ||
| (iv) | at such other times as the General Partner shall reasonably determine necessary or advisable in order to comply with Regulations Sections 1.704-1(b) and 1.704-2; and | ||
| (v) | in connection with the grant of an interest in the Partnership (other than a de minimis interest) as consideration for the provision of services to or for the benefit of the Partnership by an existing Partner acting in a partner capacity or by a new Partner acting in a partner capacity or in anticipation of becoming a Partner. |
(c) The Gross Asset Value of any Partnership asset distributed to a Partner shall be the gross
fair
market value of such asset on the date of distribution as determined by the distributee and the
General Partner, or if the distributee and the General Partner cannot agree on such a
determination, by Appraisal.
(d) The Gross Asset Values of Partnership assets shall be increased (or decreased) to reflect
any adjustments to the adjusted basis of such assets pursuant to Code Section 734(b) or Code
Section 743(b), but only to the extent that such adjustments are taken into account in determining
Capital Accounts pursuant to Regulations Section 1.704-1(b)(2)(iv)(m); provided,
however, that Gross Asset Values shall not be adjusted pursuant to this subparagraph (d) to
the extent that the General Partner reasonably determines that an adjustment pursuant to
subparagraph (b) is necessary or appropriate in connection with a transaction that would otherwise
result in an adjustment pursuant to this subparagraph (d).
(e) If the Gross Asset Value of a Partnership asset has been determined or adjusted pursuant
to subparagraph (a), (b) or (d), such Gross Asset Value shall thereafter be adjusted by the
Depreciation taken into account with respect to such asset for purposes of computing Net Income and
Net Loss.
“Immediate Family” means, with respect to any natural Person, such natural Person’s
estate or heirs or current spouse or former spouse, parents, parents-in-law, children (whether
natural, adopted or by marriage), siblings and grandchildren and any trust or estate, all of the
beneficiaries of which consist of such Person or such Person’s spouse or former spouse, parents,
parents-in-law, children, siblings or grandchildren.
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“Incapacity” or “Incapacitated” means, (i) as to any individual Partner,
death, total physical disability or entry by a court of competent jurisdiction adjudicating him or
her incompetent to manage his or her Person or his or her 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
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) is not vacated within ninety (90) days after the expiration of any such stay.
“Indemnitee” means (i) any Person subject to a claim or demand or made or threatened
to be made a party to, or involved or threatened to be involved in, an action, suit or proceeding
by reason of his or her status as (A) the General Partner or (B) a director, officer or employee of
the Partnership or the General Partner, and (ii) such other Persons (including Affiliates of the
General Partner or the Partnership) as the General Partner may designate from time to time (whether
before or after the event giving rise to potential liability), in its sole and absolute discretion.
“Investments” means investments made by the Partnership, directly or indirectly, in a
Property, Loan or Other Permitted Investment Asset.
“IRS” means the United States Internal Revenue Service.
“Limited Partner” means any Person named as a Limited Partner in Exhibit A attached
hereto, as such Exhibit may be amended from time to time, or any Substituted Limited Partner or
Additional Limited Partner, in such Person’s capacity as a Limited Partner in the Partnership.
“Limited Partner Interest” means a Partnership Interest of a Limited Partner
representing a fractional part of the Partnership Interests of all Limited Partners and includes
any and all benefits to which the holder of such a Partnership Interest may be entitled as provided
in this Agreement, together with all obligations of such Person to comply with the terms and
provisions of this Agreement. A Limited Partner Interest may be expressed as a number of OP Units.
“Liquidating Event” shall have the meaning set forth in Section 13.1.
“Liquidator” shall have the meaning set forth in Section 13.2.A.
“Listing Event” means the date on which the General Partner’s common equity securities
are first listed on a securities exchange or admitted for trading in an automated quotation system.
“Listed Market Value” means the average closing price of the common equity securities
of the General Partner as reported by the primary securities exchange or automated quotations
system in which such securities are then listed or admitted to trading for the thirty (30) trading
days beginning with the first trading day after the one hundred and eightieth (180th)
day after such securities are first listed or admitted to trading; provided, however, that if no
sales take place on any of such thirty (30) days, the average of the closing bid and asked prices
on such day shall be used.
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“Loan” means any note and other evidence of indebtedness or obligation acquired,
originated or entered into, directly or indirectly, by the Partnership as lender, noteholder,
participant, note purchaser or other capacity, including but not limited to a first or subordinate
mortgage loan, construction loan, development loan, loan participation, B note, loan secured by
capital stock or any other assets or form of equity interest and any other type of loan or
financial arrangement, such as providing or arranging for a letter of credit, providing a guarantee
of obligations to third parties, or providing a commitment for loans. Loan shall not include any
leases which are not recognized as leases for federal income tax reporting purposes.
“Majority in Interest of the Limited Partners” means Limited Partners holding in the
aggregate Percentage Interests that are greater than fifty percent (50%) of the aggregate
Percentage Interests of all Limited Partners.
“Net Income” or “Net Loss” means for each fiscal year of the Partnership, an
amount equal to the Partnership’s taxable income or loss for such fiscal year, determined in
accordance with Code Section 703(a) (for this purpose, all items of income, gain, loss, or
deduction required to be stated separately pursuant to Code Section 703(a)(1) shall be included in
taxable income or loss), with the following adjustments:
(a) Any income of the Partnership that is exempt from federal income tax and not otherwise
taken into account in computing Net Income or Net Loss pursuant to this definition of Net Income or
Net Loss shall be added to such taxable income or loss;
(b) Any expenditures of the Partnership described in Code Section 705(a)(2)(B) or treated as
Code Section 705(a)(2)(B) expenditures pursuant to Regulations Section 1.704-1(b)(2)(iv)(i), and
not otherwise taken into account in computing Net Income or Net Loss pursuant to this definition of
Net Income or Net Loss shall be subtracted from such taxable income or loss;
(c) In the event the Gross Asset Value of any Partnership asset is adjusted pursuant to
subparagraph (b) or subparagraph (c) of the definition of Gross Asset Value, the amount of such
adjustment shall be taken into account as gain or loss from the disposition of such asset for
purposes of computing Net Income or Net Loss;
(d) Gain or loss resulting from any disposition of property with respect to which gain or loss
is recognized for federal income tax purposes shall be computed by reference to the Gross Asset
Value of the property disposed of, notwithstanding that the adjusted tax basis of such property
differs from its Gross Asset Value;
(e) In lieu of the depreciation, amortization, and other cost recovery deductions taken into
account in computing such taxable income or loss, there shall be taken into account Depreciation
for such fiscal year;
(f) To the extent an adjustment to the adjusted tax basis of any Partnership asset pursuant to
Code Section 734(b) or Code Section 743(b) is required pursuant to Regulations Section
1.704-1(b)(2)(iv)(m)(4) to be taken into account in determining Capital Accounts as a result of a
distribution other than in liquidation of a Partner’s interest in the Partnership, the amount of
such adjustment shall be treated as an item of gain (if the adjustment increases the basis of the
asset) or loss (if the adjustment decreases the basis of the asset) from the disposition of the
asset and shall be taken into account for purposes of computing Net Income or Net Loss; and
(g) Notwithstanding any other provision of this definition of Net Income or Net Loss, any
items which are specially allocated pursuant to Section 6.3 shall not be taken into account
in computing Net Income or Net Loss. The amounts of the items of Partnership income, gain, loss, or
deduction available to
be specially allocated pursuant to Section 6.3 shall be determined by applying rules
analogous to those set forth in this definition of Net Income or Net Loss.
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“Net Income from a Capital Transaction” means that portion of Net Income attributable
to a Capital Transaction.
“Net Loss from a Capital Transaction” means that portion of Net Loss attributable to a
Capital Transaction.
“New Securities” means (i) any rights, options, warrants or convertible or
exchangeable securities having the right to subscribe for or purchase REIT Shares or other shares
of common stock of the General Partner, or (ii) any Debt issued by the General Partner that
provides any of the rights described in clause (i).
“Nonrecourse Deductions” shall have the meaning set forth in Regulations Section
1.704-2(b)(1), and the amount of Nonrecourse Deductions for a Partnership Year shall be determined
in accordance with the rules of Regulations Section 1.704-2(c).
“Nonrecourse Liability” shall have the meaning set forth in Regulations Section
1.752-1(a)(2).
“Notice of Redemption” means the Notice of Redemption substantially in the form of
Exhibit B to this Agreement.
“OP Unit” means a fractional share of the Partnership Interests of all Partners issued
pursuant to Article 4.
“Other Permitted Investment Asset” means assets, other than cash, cash equivalents,
short term bonds, auction rate securities and similar short term investments, acquired by the
Partnership for investment purposes that is not a Loan or a Property and is consistent with the
investment objectives and policies of the Partnership.
“Partner” means a General Partner, a Special General Partner, or a Limited Partner,
and “Partners” means the General Partner, the Special General Partner and the Limited
Partners.
“Partner Minimum Gain” means an amount, with respect to each Partner Nonrecourse Debt,
equal to the Partnership Minimum Gain that would result if such Partner Nonrecourse Debt was
treated as a Nonrecourse Liability, determined in accordance with Regulations Section
1.704-2(i)(3).
“Partner Nonrecourse Debt” shall have the meaning set forth in Regulations Section
1.704-2(b)(4).
“Partner Nonrecourse Deductions” shall have the meaning set forth in Regulations
Section 1.704-2(i)(2), and the amount of Partner Nonrecourse Deductions with respect to a Partner
Nonrecourse Debt for a Partnership Year shall be determined in accordance with the rules of
Regulations Section 1.704-2(i)(2).
“Partnership” means the limited partnership formed under the Act and pursuant to this
Agreement, and any successor thereto.
“Partnership Interest” means, an ownership interest in the Partnership of either a
Limited Partner, the Special General 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. There may be one or more classes or series of Partnership Interests as provided in
Section 4.3. Except as otherwise provided for in this Agreement, a Partnership Interest may
be expressed as a number of OP Units. Unless otherwise expressly provided for in this Agreement or
by the General Partner at the time of the original issuance of any
Partnership Interests, all Partnership Interests (whether of a Limited Partner, a Special General
Partner or a General Partner) shall be of the same class or series.
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“Partnership Minimum Gain” shall have the meaning set forth in Regulations Section
1.704-2(b)(2), and the amount of Partnership Minimum Gain, as well as any net increase or decrease
in Partnership Minimum Gain, for a Partnership Year shall be determined in accordance with the
rules of Regulations Section 1.704-2(d).
“Partnership Record Date” means the record date established by the General Partner for
the distribution of Available Cash pursuant to Section 5.1 which record date shall be the
same as the record date established by the General Partner for a distribution to its stockholders
of some or all of its portion of such distribution.
“Partnership Year” means the fiscal year of the Partnership, which shall be the
calendar year.
“Percentage Interest” means, as to a Partner holding a class or series of Partnership
Interests, its interest as determined, as of the first day of each Partnership Year, by dividing
such Partner’s Adjusted Capital Account Balance by aggregate Adjusted Capital Account Balances of
all Partners. For purposes of the preceding sentence, the Adjusted Capital Account Balances of the
Partners shall be determined after giving effect to all allocations of Net Income and Net Loss for
all preceding Partnership Years, including allocations of Net Income and Net Loss resulting from
adjustments to the Gross Asset Value of the Partnership’s assets pursuant to the definition of
Gross Asset Value.
“Permitted Transfer” means a transfer of a Limited Partner Interest in accordance with
Section 11.3.
“Person” means an individual, corporation, partnership, limited liability company,
trust, unincorporated organization, association or other entity.
“Plan Asset Regulation” means the regulations promulgated by the United States
Department of Labor in Title 29, Code of Federal Regulations, Part 2510, Section 101.3, and any
successor regulations thereto.
“Pledge” shall have the meaning set forth in Section 11.3.A.
“Property” or “Properties” means a partial or entire interest in real property
(including leasehold interests) and personal or mixed property connected therewith. An Investment
which obligates the Partnership to acquire a Property will be treated as a Property for purposes of
this Agreement.
“Qualifying Party” means (a) an Additional Limited Partner; (b) a member of the
Immediate Family of a Member (a “Family Member”), or a lending institution as the pledgee of a
Pledge, who is the transferee in a Permitted Transfer; or (c) a Substituted Limited Partner
succeeding to all or part of the Limited Partner Interest of (i) an Additional Limited Partner or
(ii) a Family Member, or a lending institution who is the pledgee of a Pledge, who is the
transferee in a Permitted Transfer.
“Qualified REIT Subsidiary” means any Subsidiary of the General Partner that is a
“qualified REIT subsidiary” within the meaning of Section 856(i) of the Code.
“Qualified Transferee” means an “Accredited Investor” as such term is defined in Rule
501 promulgated under the Securities Act.
“Redemption” shall have the meaning set forth in Section 8.6.A.
“Regulations” means the Treasury Regulations promulgated under the Code, as such
regulations may be amended from time to time (including corresponding provisions of succeeding
regulations).
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“Regulatory Allocations” shall have the meaning set forth in Section 6.3.
“REIT” means a real estate investment trust, as defined under Sections 856 through 860
of the Code.
“REIT Requirements” shall have the meaning set forth in Section 5.1.
“REIT Share” means a share of common stock, par value $0.001 per share, of the General
Partner.
“REIT Shares Amount” means, as of any date, an aggregate number of REIT Shares equal
to the number of Tendered Units, as adjusted (x) pursuant to Section 7.5 (in the event the
General Partner acquires material assets, other than on behalf of the Partnership) and (y) for
stock dividends and distributions, stock splits and subdivisions, reverse stock splits and
combinations, distributions of rights, warrants or options, and distributions of evidences of
indebtedness or assets relating to assets not received by the General Partner pursuant to a
pro rata distribution by the Partnership.
“Securities Act” means the Securities Act of 1933, as amended, and the rules and
regulations of the Securities and Exchange Commission promulgated thereunder and any successor
statute thereto.
“Special General Partner Interest” means a Partnership Interest held by the Special
General Partner. A Special General Partner Interest may be expressed as a number of OP Units, but
only to the extent that the Special General Partner makes Capital Contributions to the Partnership.
“Specified Redemption Date” means the day of receipt by the General Partner of a
Notice of Redemption.
“Subsidiary” means, with respect to any Person, any corporation, partnership, limited
liability company, joint venture or other entity of which a majority of (i) the voting power of the
voting equity securities or (ii) the outstanding equity interests is owned, directly or indirectly,
by such Person.
“Subsidiary Partnership” means any partnership or limited liability company that is a
Subsidiary of the Partnership.
“Substituted Limited Partner” means a Person who is admitted as a Limited Partner to
the Partnership pursuant to Section 11.4.
“Tax Items” shall have the meaning set forth in Section 6.4.A.
“Tenant” means any tenant from which the General Partner derives rent either directly
or indirectly through partnerships, including the Partnership, or Qualified REIT Subsidiaries.
“Tendered Units” shall have the meaning set forth in Section 8.6.A.
“Tendering Partner” shall have the meaning set forth in Section 8.6.A.
“Weighted Average General Partner Net Current Investment” means the annual average
balance of the General Partner Net Current Investment computed on a daily basis.
ARTICLE 2.
ORGANIZATIONAL MATTERS
ORGANIZATIONAL MATTERS
Section 2.1 Organization
The Partnership is a limited partnership formed pursuant to the provisions of the Act and upon
the terms and conditions set forth in this Agreement. Except as expressly provided herein, 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.
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Section 2.2 Name
The name of the Partnership is CWI OP, LP. The Partnership’s business may be conducted under
any other name or names deemed advisable by the General Partner, including the name of the General
Partner or any Affiliate thereof. The words “Limited Partnership,” “L.P.,” “Ltd.” or similar words
or letters shall be included in the Partnership’s name where necessary for the purposes of
complying with the laws of any jurisdiction that so requires. The General Partner in its sole and
absolute discretion may change the name of the Partnership at any time and from time to time and
shall notify the Limited Partners of such change in the next regular communication to the Limited
Partners.
Section 2.3 Registered Office and Agent; Principal Office
The name and address of the registered office and registered agent of the Partnership is
Corporation Service Company, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇. The principal
office of the Partnership is located at ▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, or such
other place as the General Partner may from time to time designate by notice to the other Partners.
The Partnership may maintain offices at such other place or places within or outside the State of
Delaware as the General Partner deems advisable.
Section 2.4 Power of Attorney
A. Each Limited Partner and each Assignee constitutes and appoints the General Partner, any
Liquidator, and authorized officers and attorneys-in-fact of each, and each of those acting singly,
in each case with full power of substitution, as its true and lawful agent and attorney-in-fact,
with full power and authority in its name, place and stead to:
(1) execute, swear to, acknowledge, deliver, file and record in the appropriate public offices
(a) all certificates, documents and other instruments (including, without limitation, this
Agreement and the Certificate and all amendments or restatements thereof) that the General Partner
or the Liquidator deems appropriate or necessary to form, qualify or continue the existence or
qualification of the Partnership as a limited partnership (or a partnership in which the Limited
Partners have limited liability) in the State of Delaware and in all other jurisdictions in which
the Partnership may conduct business or own property; (b) all instruments that the General Partner
or any Liquidator deems appropriate or necessary to reflect any amendment, change, modification or
restatement of this Agreement in accordance with its terms; (c) all conveyances and other
instruments or documents that the General Partner or any Liquidator deems appropriate or necessary
to reflect the dissolution and liquidation of the Partnership pursuant to the terms of this
Agreement, including, without limitation, a certificate of cancellation; (d) all instruments
relating to the admission, withdrawal, removal or substitution of any Partner pursuant to, or other
events described in, Articles 11, 12 or 13 or the Capital Contribution of
any Partner; and (e) all certificates, documents and other instruments relating to the
determination of the rights, preferences and privileges of Partnership Interests; and
(2) execute, swear to, acknowledge and file all ballots, consents, approvals, waivers,
certificates and other instruments appropriate or necessary, in the sole and absolute discretion of
the General Partner or any Liquidator, to make, evidence, give, confirm or ratify any vote,
consent, approval, agreement or other action which is made or given by the Partners hereunder or is
consistent with the terms of this Agreement or appropriate or necessary, in the sole discretion of
the General Partner or any Liquidator, to effectuate the terms or intent of this Agreement.
Nothing contained herein shall be construed as authorizing the General Partner or any Liquidator to
amend this Agreement except in accordance with Article 14 or as may be otherwise expressly
provided for in this Agreement.
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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 OP 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
any 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 the date of its formation and the Partnership shall
have a perpetual existence unless it is dissolved pursuant to the provisions of Article 13
or as otherwise provided by law.
ARTICLE 3.
PURPOSE
PURPOSE
Section 3.1 Purpose and Business
The purpose and nature of the business to be conducted by the Partnership is to (i) conduct
any business that may be lawfully conducted by a limited partnership organized pursuant to the Act,
(ii) enter into any partnership, joint venture or other similar arrangement to engage in any
business described in the foregoing clause (i) or to own interests in any entity engaged, directly
or indirectly, in any such business and (iii) do anything necessary or incidental to the foregoing,
provided, however, that such business shall be limited to and conducted in such a
manner as to permit the General Partner at all times to be classified as a REIT for federal income
tax purposes, unless the General Partner ceases to qualify as a REIT for reasons other than the
conduct of the business of the Partnership. In connection with the foregoing, and without limiting
the General Partner’s right in its sole discretion to cease qualifying as a REIT, the Limited
Partners acknowledge that the General Partner’s current status as a REIT inures to the benefit of
all the Limited Partners and not solely the General Partner. Without limiting the generality of
the foregoing, it is understood that the Partnership will hold lodging and lodging-related
properties and will generally lease such properties to one or more “taxable REIT subsidiaries” (or
to subsidiary entities of such taxable REIT subsidiaries) within the meaning of Code Section
856(l).
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, notwithstanding anything to the contrary in this
Agreement, the Partnership shall not take, or refrain from taking, any action which, in the
judgment of the General Partner, in its sole and absolute discretion, (i) could adversely affect
the ability of the General Partner to continue to qualify as a REIT, (ii) absent the consent of the
General Partner, which may be given or withheld in its sole and absolute discretion, could subject
the General Partner to any taxes
under Section 857 or Section 4981 of the Code, or (iii) could violate any law or regulation of any
governmental body or agency having jurisdiction over the General Partner or its securities, unless
any such action (or inaction) under the foregoing clauses (i), (ii) or (iii) shall have been
specifically consented to by the General Partner in writing.
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Section 3.3 Partnership Only for Purposes Specified
The Partnership shall be a partnership only for the purposes specified in Section 3.1,
and this Agreement shall not be deemed to create a partnership among the Partners with respect to
any activities whatsoever other than the activities within the purposes of the Partnership as
specified in Section 3.1. Except as otherwise provided in this Agreement, no Partner shall
have any authority to act for, bind, commit or assume any obligation or responsibility on behalf of
the Partnership, its properties or any other Partner. No Partner, in its capacity as a Partner
under this Agreement, shall be responsible or liable for any indebtedness or obligation of another
Partner, nor shall the Partnership be responsible or liable for any indebtedness or obligation of
any Partner, incurred either before or after the execution and delivery of this Agreement by such
Partner, except as to those responsibilities, liabilities, indebtedness or obligations incurred
pursuant to and as limited by the terms of this Agreement and the Act.
Section 3.4 Representations and Warranties by the Parties
A. Each Partner that is an individual represents and warrants to each other Partner that (i)
such Partner has the legal capacity to enter into this Agreement and perform such Partner’s
obligations hereunder, (ii) the consummation of the transactions contemplated by this Agreement to
be performed by such Partner will not result in a breach or violation of, or a default under, any
agreement by which such Partner or any of such Partner’s property is or are bound, or any statute,
regulation, order or other law to which such Partner is subject, (iii) such Partner is a “United
States person” within the meaning of Section 7701(a)(30) of the Code, and (iv) this Agreement is
binding upon, and enforceable against, such Partner in accordance with its terms.
B. Each Partner that is not an individual represents and warrants to each other Partner that
(i) its execution and delivery of this Agreement and all transactions contemplated by this
Agreement to be performed by it have been duly authorized by all necessary action, including
without limitation, that of its general partner(s), committee(s), trustee(s), beneficiaries,
directors and/or stockholder(s), as the case may be, as required, (ii) the consummation of such
transactions shall not result in a breach or violation of, or a default under, its certificate of
limited partnership, partnership agreement, trust agreement, limited liability company operating
agreement, charter or bylaws, as the case may be, any agreement by which such Partner or any of
such Partner’s properties or any of its partners, beneficiaries, trustees or stockholders, as the
case may be, is or are bound, or any statute, regulation, order or other law to which such Partner
or any of such Partner’s properties or any of its partners, trustees, beneficiaries or
stockholders, as the case may be, is or are subject, (iii) such Partner is a “United States person”
within the meaning of Section 7701(a)(30) of the Code and (iv) this Agreement is binding upon, and
enforceable against, such Partner in accordance with its terms.
C. Each Partner represents, warrants, and agrees that it has acquired and continues to hold
its interest in the Partnership for its own account for investment only and not for the purpose of,
or with a view toward, the resale or distribution of all or any part thereof, nor with a view
toward selling or otherwise distributing such interest or any part thereof at any particular time
or under any predetermined circumstances. Each Partner further represents and warrants that it is a
sophisticated investor, able and accustomed to handling sophisticated financial matters for itself,
particularly real estate investments, and that it has a sufficiently high net worth that it does
not anticipate a need for the funds it has invested in the Partnership in what it understands to be
a highly speculative and illiquid investment. Each Partner represents, warrants and agrees that
such Partner is an “accredited investor” (as such term is defined in Rule 501(a) of Regulation D
under the Securities Act).
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D. Each Partner acknowledges that (i) the OP Units (and any REIT Shares that might be
exchanged therefor) have not been registered under the Securities Act and may not be transferred
unless they are subsequently registered under the Securities Act or an exemption from such
registration is available (it being understood that the Partnership has no intention of so
registering the OP Units), (ii) a restrictive legend in the form set forth in Exhibit D shall be
placed on the certificates representing the OP Units, and (iii) a notation shall be made in the
appropriate records of the Partnership indicating that the OP Units are subject to restrictions on
transfer.
E. Each Limited Partner further represents, warrants, covenants and agrees as follows:
(1) Except as provided in Exhibit E, at any time such Partner actually or Constructively Owns
a twenty-five percent (25%) or greater capital interest or profits interest in the Partnership, it
does not and will not, without the prior written consent of the General Partner, actually own or
Constructively Own (a) with respect to any Tenant that is a corporation, any stock of such Tenant,
and (b) with respect to any Tenant that is not a corporation, any interests in either the assets or
net profits of such Tenant.
(2) Except as provided in Exhibit F, at any time such Partner actually or Constructively Owns
a twenty-five percent (25%) or greater capital interest or profits interest in the Partnership, it
does not, and agrees that it will not without the prior written consent of the General Partner,
actually own or Constructively Own, any stock in the General Partner, other than any REIT Shares or
other shares of capital stock of the General Partner such Partner may acquire as a result of an
exchange of Tendered Units pursuant to Section 8.6, subject to the ownership limitations
set forth in the General Partner’s Charter.
(3) Upon request of the General Partner, it will disclose to the General Partner the amount of
REIT Shares or other shares of capital stock of the General Partner that it actually owns or
Constructively Owns.
(4) It understands that if, for any reason, (a) the representations, warranties or agreements
set forth in E(1) or (2) above are violated, or (b) the Partnership’s actual or
Constructive Ownership of REIT Shares or other shares of capital stock of the General Partner
violates the limitations set forth in the Charter, then (x) some or all of the Redemption rights of
the Partners may become non-exercisable, and (y) some or all of the REIT Shares owned by the
Partners may be automatically transferred to a trust for the benefit of a charitable beneficiary,
as provided in the Charter.
(5) Without the consent of the General Partner, which may be given or withheld in its sole
discretion, no Partner shall take any action that would cause the Partnership at any time to have
more than one hundred (100) partners (including as partners those persons indirectly owning an
interest in the Partnership through a partnership, limited liability company, S corporation or
grantor trust (such entity, a “flow through entity”), but only if substantially all of the
value of such person’s interest in the flow through entity is attributable to the flow through
entity’s interest (direct or indirect) in the Partnership).
F. The representations and warranties contained in this Section 3.4 shall survive the
execution and delivery of this Agreement by each Partner and the dissolution and winding-up of the
Partnership.
G. Each Partner hereby acknowledges that no representations as to potential profit, cash
flows, funds from operations or yield, if any, in respect of the Partnership or the General Partner
have been made by any Partner or any employee or representative or Affiliate of any Partner, and
that projections and any other information, including, without limitation, financial and
descriptive information and documentation, which may have been in any manner submitted to such
Partner shall not constitute any representation or warranty of any kind or nature, express or
implied.
Section 3.5 Certain ERISA Matters
Each Partner acknowledges that the Partnership is intended to qualify as a “real estate
operating company” (as such term is defined in the Plan Asset Regulation). The General Partner may
structure
investments in, relationships with and conduct with respect to Investments and any other assets of
the Partnership so that the Partnership will be a “real estate operating company” (as such term is
defined in the Plan Asset Regulation).
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ARTICLE 4.
CAPITAL CONTRIBUTIONS
CAPITAL CONTRIBUTIONS
Section 4.1 Capital Contributions of the Partners
At the time of their respective execution of this Agreement, the Partners shall make or shall
have made Capital Contributions as set forth in Exhibit A to this Agreement. The Partners shall own
OP Units of the class or series and in the amounts set forth 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 exchanges, redemptions, Capital Contributions, the issuance of additional OP
Units or similar events having an effect on a Partner’s Percentage Interest. Except as required by
law, as otherwise provided in Sections 4.3, 4.4 and 10.5, or as otherwise
agreed to by a Partner and the Partnership, no Partner shall be required or permitted to make any
additional Capital Contributions or loans to the Partnership.
Section 4.2 Loans by Third Parties
Subject to Section 4.3, the Partnership may incur Debt, or enter into other similar
credit, guarantee, financing or refinancing arrangements for any purpose (including, without
limitation, in connection with any further acquisition of Investments) with any Person that is not
the General Partner upon such terms as the General Partner determines appropriate; provided
that, the Partnership shall not incur any Debt that is recourse to the General Partner,
except to the extent otherwise agreed to by the General Partner in its sole discretion.
Section 4.3 Additional Funding and Capital Contributions
A. General. The General Partner may, at any time and from time to time determine that
the Partnership requires additional funds (“Additional Funds”) for the acquisition of
additional Investments or for such other Partnership purposes as the General Partner may determine.
Additional Funds may be raised by the Partnership, at the election of the General Partner, in any
manner provided in, and in accordance with, the terms of this Section 4.3. No Person shall
have any preemptive, preferential or similar right or rights to subscribe for or acquire any
Partnership Interest, except as set forth in this Section 4.3.
B. Issuance of Additional Partnership Interests. The General Partner, in its sole and
absolute discretion, may raise all or any portion of the Additional Funds by accepting additional
Capital Contributions of cash. The General Partner may also accept additional Capital Contributions
of real property or any other non-cash assets. In connection with any such additional Capital
Contributions (of cash or property), the General Partner is hereby authorized to cause the
Partnership from time to time to issue to Partners (including the General Partner) or other Persons
additional OP 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 then
existing Limited Partner Interests, all as shall be determined by the General Partner in its sole
and absolute discretion subject to Delaware law, and as set forth by amendment to this Agreement,
including without limitation, (i) the allocations of items of Partnership income, gain, loss,
deduction, and credit to such class or series of Partnership Interests; (ii) the right of each such
class or series of Partnership Interests to share in Partnership distributions; (iii) the rights of
each such class or series of Partnership Interests upon dissolution and liquidation of the
Partnership; and (iv) the right to vote, including, without limitation, the Limited Partner
approval rights set forth in Section 11.2.A; provided, that no such
additional OP Units or other Partnership Interests shall be issued to the General Partner unless
either (a) (1) the additional Partnership Interests are issued in connection with the grant, award,
or issuance of shares of the General
Partner pursuant to Section 4.3.C below, which shares have designations, preferences, and
other rights (except voting rights) such that the economic interests attributable to such shares
are substantially similar to the designations, preferences and other rights of the additional
Partnership Interests issued to the General Partner in accordance with this Section 4.3.B,
and (2) the General Partner shall make a Capital Contribution to the Partnership in an amount equal
to the net proceeds raised in connection with such issuance, or (b) the additional Partnership
Interests are issued to all Partners holding Partnership Interests in the same class in proportion
to their respective Percentage Interests in such class. The General Partner’s determination that
consideration is adequate shall be conclusive insofar as the adequacy of consideration relates to
whether the Partnership Interests are validly issued and paid. In the event that the Partnership
issues additional Partnership Interests pursuant to this Section 4.3.B, 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) as it determines are necessary to reflect the
issuance of such additional Partnership Interests. Without limiting the foregoing, the General
Partner is expressly authorized to cause the Partnership to issue OP Units for less than fair
market value, so long as the General Partner concludes in good faith that such issuance of
Partnership Interests is in the best interests of the Partnership.
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C. Issuance of REIT Shares or Other Securities by the General Partner. The General
Partner shall not issue any additional REIT Shares, other shares of capital stock of the General
Partner or New Securities (other than REIT Shares issued pursuant to Section 8.6 or such
shares, stock or securities pursuant to a dividend or distribution (including any stock split) to
all of its stockholders or all of its stockholders who hold a particular class of stock of the
General Partner) unless (i) the General Partner shall cause the Partnership to issue to the General
Partner, 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 thereof are substantially similar to those of the REIT Shares, other shares of
capital stock of the General Partner or New Securities issued by the General Partner and (ii) the
General Partner shall make a Capital Contribution of the net proceeds from the issuance of such
additional REIT Shares, other shares of capital stock or New Securities, as the case may be, and
from the exercise of the rights contained in such additional New Securities, as the case may be.
Without limiting the foregoing, the General Partner is expressly authorized to issue REIT Shares,
other shares of capital stock of the General Partner or 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 General Partner 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 General Partner contributes all proceeds, if any, from
such issuance and exercise to the Partnership. In connection with the General Partner’s initial
offering of REIT Shares, any other issuance of REIT Shares, other capital stock of the General
Partner or New Securities, the General Partner shall contribute to the Partnership, any net
proceeds raised in connection with such issuance; provided, that the General
Partner may use a portion of the net proceeds from any offering to acquire OP Units or other assets
(provided such other assets are contributed to the Partnership pursuant to the terms of this
Agreement; and provided further that if the net proceeds actually received by the
General Partner 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, except to the
extent such net proceeds are used to acquire OP Units, the General Partner 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
General Partner (which discount and expense shall be treated as an expense for the benefit of the
Partnership for purposes of Section 7.4)).
D. Percentage Interest Adjustments in the Case of Capital Contributions for OP Units.
Upon the acceptance of additional Capital Contributions in exchange for OP Units, the Percentage
Interest in such OP Units shall be equal to a fraction, the numerator of which is equal to the
amount of cash and the Agreed Value of the Property contributed as of the Adjustment Date and the
denominator of which is equal to the sum of (i) the Deemed Value of the Partnership Interests of
such class or series (computed as of the Business Day immediately preceding the Adjustment Date)
and (ii) the aggregate Agreed Value of additional Capital Contributions contributed by all Partners
and/or third parties to the Partnership on such Adjustment Date in such class or series of
Partnership Interests. The Percentage Interest of each other
Partner holding Partnership Interests of such class or series not making a full pro
rata Capital Contribution shall be adjusted to equal a fraction, the numerator of which is
equal to the sum of (i) the Deemed Partnership Interest Value of such Limited Partner in respect of
such class or series (computed as of the Business Day immediately preceding the Adjustment Date)
and (ii) the Agreed Value of additional Capital Contributions, if any, made by such Partner to the
Partnership in such class or series of Partnership Interests as of such Adjustment Date, and the
denominator of which is equal to the sum of (i) the Deemed Value of the Partnership Interests of
such class or series (computed as of the Business Day immediately preceding the Adjustment Date),
plus (ii) the aggregate Agreed Value of additional Capital Contributions contributed by all
Partners and/or third parties to the Partnership on such Adjustment Date in such class or series.
Provided, however, solely for purposes of calculating a Partner’s Percentage Interest pursuant to
this Section 4.3.D, (i) in the case of cash Capital Contributions by the General Partner
funded by an offering of REIT Shares or other shares of capital stock of the General Partner and
(ii) in the case of the contribution of properties by the General Partner which were acquired by
the General Partner in exchange for REIT Shares or other shares of capital stock of the General
Partner immediately prior to such contribution, the General Partner shall be issued a number of OP
Units equal and corresponding to the number of such shares issued by the General Partner in
exchange for such cash or Investments, the OP Units held by the other Partners shall not be
adjusted, and the Partners’ Percentage Interests shall be adjusted accordingly. The General Partner
shall promptly give each Partner written notice of its Percentage Interest, as adjusted.
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▇. ▇▇▇▇▇▇▇▇▇▇▇▇ of Special General Partner Distributions. The Special General
Partner, in its sole and absolute discretion, may elect, on an annual basis, to reinvest all, or
any portion, of the distributions of Available Cash and Capital Proceeds it receives under
Section 5.1 in the Partnership in exchange for the issuance of OP Units. If the Special
General Partner elects to reinvest any portion of Available Cash and Capital Proceeds distributed
to the Special General Partner under this Agreement, the Special General Partner shall be treated
no differently than any Limited Partner making a Capital Contribution to the Partnership under
Section 4.3.
Section 4.4 Other Contribution Provisions
With the consent of the General Partner, in its sole discretion, one or more Limited Partners
may enter into agreements with the Partnership, in the form of a guarantee or contribution
agreement, which have the effect of providing a guarantee of certain obligations of the
Partnership.
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) providing
funds to the Partnership or (ii) issuance or sale of any OP Units or other Partnership Interests.
Section 4.6 No Interest; No Return.
No Partner shall be entitled to interest on its Capital Contribution or on such Partner’s
Capital Account. Except as provided herein or by law, no Partner shall have any right to demand or
receive the return of its Capital Contribution from the Partnership.
Section 4.7 Profits Interest of Special General Partner
To the extent that the Special General Partner receives a Partnership Interest with a
disproportionate interest in Partnership Net Income or Net Loss, such Partnership Interest shall be
treated as a “profits interest” received for services rendered, or to be rendered, within the
meaning of IRS Rev. Proc. 93-27, 1993-2 C.B. 343.
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ARTICLE 5.
DISTRIBUTIONS
DISTRIBUTIONS
Section 5.1 Requirement and Characterization of Distributions
The General Partner shall cause the Partnership to distribute at least quarterly all, or such
portion as the General Partner may in its discretion determine, Available Cash and Capital Proceeds
generated by the Partnership to the Partners who are Partners on the applicable Partnership Record
Date with respect to such distribution, in the following order and priority:
A. Available Cash. Available Cash shall be distributed ten percent (10%) to the
Special General Partner and ninety percent (90%) to the Partners in proportion to their respective
Percentage Interests.
B. Distribution of Capital Proceeds. Subject to Section 5.1.C, Section
5.1.D and Section 13.2, distributions of Capital Proceeds shall be made as follows:
(1) First, Capital Proceeds shall be distributed one hundred percent (100%) to the General
Partner until the General Partner has received distributions under this Section 5.1.B(1)
equal to the General Partner Unpaid Priority Return;
(2) Second, Capital Proceeds shall be distributed one hundred percent (100%) to the General
Partner until the General Partner Net Current Investment has been reduced to zero (0); and
(3) Third, any remaining Capital Proceeds shall be distributed fifteen percent (15%) to the
Special General Partner and eighty-five percent (85%) to the Partners in proportion to their
respective Percentage Interests.
C. Distribution of Capital Proceeds — Listing Event. As soon as possible following
the determination of the Listed Market Value following a Listing Event, the General Partner shall
cause the Partnership to make a special distribution of Capital Proceeds to the Special General
Partner in an amount equal to the Capital Proceeds distributable solely to the Special General
Partner under Section 5.1.B if the Partnership sold all of its assets on the date of the
Listing Event for its Listed Market Value and distributed the net proceeds from such sale to the
Partners pursuant to Section 5.1.B. To avoid duplicating distributions to the Special
General Partner, the General Partner shall take into account distributions made to the Special
General Partner pursuant to this Section 5.1.C in determining the appropriate amount of any
subsequent distributions of Capital Proceeds to the Special General Partner under Section
5.1.B(3) and Section 5.1.D.
D. Distribution of Capital Proceeds — Change of Control Event. As soon as possible
following the occurrence of a Change of Control Event, the General Partner, or its successor in
interest, shall cause the Partnership, or its successor in interest, to make a special distribution
of Capital Proceeds to the Special General Partner in an amount equal to the Capital Proceeds
distributable solely to the Special General Partner under Section 5.1.B if the Partnership
sold all of its assets for their fair value (less the amount of all indebtedness secured by such
assets and less any fees payable to the Advisor under the Advisory Agreement) immediately prior to
the Change of Control Event and distributed the net proceeds from such sale to the Partners
pursuant to Section 5.1.B. The fair value of any Property shall be its value as determined
by an Appraisal. To avoid duplicating distributions to the Special General Partner, the General
Partner shall take into account distributions made to the Special General Partner pursuant to this
Section 5.1.D in determining the appropriate amount of any subsequent distributions of
Capital Proceeds to the Special General partner under Section 5.1.B(3) and Section
5.1.C.
Notwithstanding any other provision of this Article 5 to the contrary, the General Partner
shall take such reasonable efforts, as determined by it in its sole and absolute discretion and
consistent with its
qualification as a REIT, to cause the Partnership to distribute sufficient amounts to enable the
General Partner, for so long as the General Partner has determined to qualify as a REIT, to pay
stockholder dividends that will (a) satisfy the requirements for qualifying as a REIT under the
Code and Regulations (“REIT Requirements”), and (b) except to the extent otherwise determined by
the General Partner, avoid the imposition of any federal income or excise tax liability on the
General Partner.
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Section 5.2 Distributions in Kind
Except as expressly provided herein, no right is given to any Partner to demand and receive
property other than cash. The General Partner may determine, in its sole and absolute discretion,
to make a distribution in-kind to the Partners of Partnership assets, and such assets shall be
distributed in such a fashion as to ensure that the fair market value is distributed and allocated
in accordance with Articles 5, 6 and 10.
Section 5.3 Distributions Upon Liquidation
Notwithstanding Section 5.1, proceeds from a Liquidating Event shall be distributed to
the Partners in accordance with Section 13.2.
Section 5.4 Distributions to Reflect Issuance of Additional Partnership Interests
In the event that the Partnership issues additional Partnership Interests to the General
Partner, the Special General Partner, or any Additional Limited Partner pursuant to Section
4.3.B, 4.3.C, or 4.3E, the General Partner shall make such revisions to this
Article 5 as it determines are necessary to reflect the issuance of such additional
Partnership Interests. In the absence of any agreement to the contrary, an Additional Limited
Partner shall be entitled to the distributions set forth in Section 5.1 (without regard to
this Section 5.4) with respect to the period during which the closing of its contribution
to the Partnership occurs, multiplied by a fraction the numerator of which is the number of days
from and after the date of such closing through the end of the applicable period, and the
denominator of which is the total number of days in such period.
Section 5.5 Distribution Limitation
Notwithstanding any other provision in this Article 5, the General Partner shall have
the power, in its reasonable discretion, to adjust the distributions to the Special General Partner
to the extent necessary to avoid violations of the “2%/25% Guidelines” as described in the Advisory
Agreement.
ARTICLE 6.
ALLOCATIONS
ALLOCATIONS
Section 6.1 Timing and Amount of Allocations of Net Income and Net Loss
Net Income and Net Loss of the Partnership shall be determined and allocated with respect to
each Partnership Year of the Partnership as of the end of each such year. Subject to the other
provisions of this Article 6, an allocation to a Partner of a share of Net Income or Net
Loss shall be treated as an allocation of the same share of each item of income, gain, loss or
deduction that is taken into account in computing Net Income or Net Loss.
Section 6.2 General Allocations
A. Allocation of Net Income and Net Loss Other Than From a Capital Transaction.
(1) Net Income other than from a Capital Transaction. Except as otherwise provided in
Section 6.3, Net Income other than from a Capital Transaction for any Partnership Year
shall be allocated ten percent
(10%) to the Special General Partner and ninety percent (90%) to the Partners in proportion to
their respective Percentage Interests.
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(2) Net Loss other than from a Capital Transaction. Except as otherwise provided in
Section 6.3, Net Loss other than from a Capital Transaction for any Partnership Year shall
be allocated to the Partners in the following manner and order of priority:
(a) First, to the Partners, in proportion to their relative allocations of Net Income other
than from a Capital Transaction pursuant to Section 6.2.A(1) until the aggregate
allocations of Net Loss other than from a Capital Transaction pursuant to this Section
6.2.A(2) for all Partnership Years equal the aggregate allocations of Net Income other than
from a Capital Transaction pursuant to Section 6.2.A(1) for all prior Partnership Years;
(b) Second, to the Partners in proportion to their respective Adjusted Capital Account
Balances until the Adjusted Capital Account Balance of each such Partner is zero (0); and
(c) Third, to each of the Partners in proportion to their respective Percentage Interests.
B. Allocation of Net Income and Net Loss From a Capital Transaction
(1) Net Income from a Capital Transaction. Except as otherwise provided in Section
6.2.D and Section 6.3, Net Income from a Capital Transaction for any Partnership Year
shall be allocated to the Partners in the following manner and order of priority:
(a) First, to the Partners, in proportion to their relative allocations of Net Loss from a
Capital Transaction pursuant to Section 6.2.B(2)(b) and (c) until the aggregate allocations
of Net Income from a Capital Transaction pursuant to this Section 6.2.B(1)(a) for all
Partnership Years equal the aggregate allocations of Net Loss from a Capital Transaction pursuant
to Section 6.2.B(2)(b) and (c) for all prior Partnership Years;
(b) Second, one hundred percent (100%) to the General Partner until the Adjusted Capital
Account Balance of the General Partner equals the sum of the General Partner Net Current Investment
and the General Partner Unpaid Priority Return; and
(c) Third, fifteen percent (15%) to the Special General Partner and eighty-five percent (85%)
to the Partners in proportion to their respective Percentage Interests.
(2) Net Loss from a Capital Transaction. Except as otherwise provided in Section
6.3, Net Loss from a Capital Transaction for any Partnership Year shall be allocated to the
Partners in the following manner and order of priority:
(a) First, to the Partners, in proportion to their relative allocations of Net Income from a
Capital Transaction pursuant to Section 6.2.B(1)(c) until the aggregate allocations of Net
Loss from a Capital Transaction pursuant to this Section 6.2.B(2)(a) for all Partnership
Years equal the aggregate allocations of Net Income from a Capital Transaction pursuant to
Section 6.2.B(1)(c) for all prior Partnership Years;
(b) Second, to the Partners in proportion to their respective Adjusted Capital Account
Balances until the Adjusted Capital Account Balance of each such Partner is zero (0); and
(c) Third, to the Partners in proportion to their respective Percentage Interests.
C. Allocations to Reflect Issuance of Additional Partnership Interests. In the event
that the Partnership issues additional Partnership Interests to the General Partner, the Special
General Partner, a Limited Partner
or any Additional Limited Partner pursuant to Section 4.3, the General Partner shall make
such revisions to this Section 6.2 as it determines are necessary to reflect the terms of
the issuance of such additional Partnership Interests, including making preferential allocations to
certain classes of Partnership Interests, in accordance with any method selected by the General
Partner.
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D. Allocations Related to a Listing Event. If a Listing Event occurs, the Partnership
shall allocate Net Income from a Capital Transaction first to the Special General Partner in an
amount equal to the Net Income from a Capital Transaction allocable to the Special General Partner
under Section 6.2.B(1) if the Partnership sold all of its assets on the date of the Listing
Event for its Listed Market Value and allocated the gain from such sale to the Partners pursuant to
Section 6.2.B(1). To avoid duplicating allocations to the Special General Partner, the
General Partner shall take into account allocations made to the Special General Partner pursuant to
this Section 6.2.D in determining the appropriate amount of any subsequent allocations of
Net Income from a Capital Transaction to the Special General Partner under Section 6.2.B(1)
and Section 6.2.E.
E. Allocations Related to a Change of Control Event. If a Change of Control Event
occurs, the Partnership shall allocate Net Income from a Capital Transaction first to the Special
General Partner in an amount equal to the Net Income from a Capital Transaction allocable to the
Special General Partner under Section 6.2.B(1) if the Partnership sold all of its assets on
the date of the Change of Control Event for their fair value (less the amount of all indebtedness
secured by such assets and less any fees payable to the Advisor under the Advisory Agreement)
immediately prior to the Change of Control Event and allocated the gain from such sale to the
Partners pursuant to Section 6.2.B(1). To avoid duplicating allocations to the Special
General Partner, the General Partner shall take into account allocations made to the Special
General Partner pursuant to this Section 6.2.E in determining the appropriate amount of any
subsequent allocations of Net Income from a Capital Transaction to the Special General Partner
under Section 6.2.B(1) and Section 6.2.D.
Section 6.3 Regulatory Allocations
Notwithstanding the foregoing provisions of this Article 6:
(i) Minimum Gain Chargeback. Except as otherwise provided in Regulations Section
1.704-2(f), notwithstanding the provisions of Section 6.2, or any other provision of this
Article 6, if there is a net decrease in Partnership Minimum Gain during any Partnership
Year, each Partner shall be specially allocated items of Partnership income and gain for such year
(and, if necessary, subsequent years) in an amount equal to such Partner’s share of the net
decrease in Partnership Minimum Gain, as determined under Regulations Section 1.704-2(g).
Allocations pursuant to the previous sentence shall be made in proportion to the respective amounts
required to be allocated to each Partner pursuant thereto. The items to be allocated shall be
determined in accordance with Regulations Sections 1.704-2(f)(6) and 1.704-2(j)(2). This
Section 6.3(i) is intended to qualify as a “minimum gain chargeback” within the meaning of
Regulation Section 1.704-2(f) which shall be controlling in the event of a conflict between such
Regulation and this Section 6.3(i).
(ii) Partner Minimum Gain Chargeback. Except as otherwise provided in Regulations
Section 1.704-2(i)(4), and notwithstanding the provisions of Section 6.2, or any other
provision of this Article 6 (except Section 6.3(i)), if there is a net decrease in
Partner Minimum Gain attributable to a Partner Nonrecourse Debt during any Partnership Year, each
Partner who has a share of the Partner Minimum Gain attributable to such Partner Nonrecourse Debt,
determined in accordance with Regulations Section 1.704-2(i)(5), shall be specially allocated items
of Partnership income and gain for such year (and, if necessary, subsequent years) in an amount
equal to such Partner’s share of the net decrease in Partner Minimum Gain attributable to such
Partner Nonrecourse Debt, determined in accordance with Regulations Section 1.704-2(i)(4).
Allocations pursuant to the previous sentence shall be made in proportion to the respective amounts
required to be allocated to each Partner pursuant thereto. The items to be so allocated shall be
determined in accordance with Regulations Sections 1.704-2(i)(4) and 1.704-2(j)(2). This
Section 6.3(ii) is intended to
qualify as a “chargeback of partner nonrecourse debt minimum gain” within the meaning of Regulation
Section 1.704-2(i) which shall be controlling in the event of a conflict between such Regulation
and this Section 6.3(ii).
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(iii) Nonrecourse Deductions and Partner Nonrecourse Deductions. Any Nonrecourse
Deductions for any Partnership Year shall be specially allocated to the Partners in accordance with
their respective Percentage Interests. Any Partner Nonrecourse Deductions for any Partnership Year
shall be specially allocated to the Partner(s) who bears the economic risk of loss with respect to
the Partner Nonrecourse Debt to which such Partner Nonrecourse Deductions are attributable, in
accordance with Regulations Sections 1.704-2(b)(4) and 1.704-2(i).
(iv) Qualified Income Offset. If any Partner unexpectedly receives an adjustment,
allocation or distribution described in Regulations Section 1.704-1(b)(2)(ii)(d)(4), (5) or (6),
items of Partnership income and gain shall be allocated, in accordance with Regulations Section
1.704-1(b)(2)(ii)(d), to the Partner in an amount and manner sufficient to eliminate, to the extent
required by such Regulations, the Adjusted Capital Account Deficit of the Partner as quickly as
possible provided that an allocation pursuant to this Section 6.3(iv) shall be made if and
only to the extent that such Partner would have an Adjusted Capital Account Deficit after all other
allocations provided in this Article 6 have been tentatively made as if this Section
6.3(iv) were not in this Agreement. It is intended that this Section 6.3(iv) qualify
and be construed as a “qualified income offset” within the meaning of Regulations
1.704-1(b)(2)(ii)(d), which shall be controlling in the event of a conflict between such
Regulations and this Section 6.3(iv).
(v) Gross Income Allocation. In the event any Partner has a deficit Capital Account at
the end of any Partnership Year which is in excess of the sum of (1) the amount (if any) such
Partner is obligated to restore to the Partnership, and (2) the amount such Partner is deemed to be
obligated to restore pursuant to Regulations Section 1.704-1(b)(2)(ii)(c) or the penultimate
sentences of Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5), each such Partner shall be
specially allocated items of Partnership income and gain in the amount of such excess as quickly as
possible, provided, that an allocation pursuant to this Section 6.3(v)
shall be made if and only to the extent that such Partner would have a deficit Capital Account in
excess of such sum after all other allocations provided in this Article 6 have been
tentatively made as if this Section 6.3(v) and Section 6.3(iv) were not in this
Agreement.
(vi) Limitation on Allocation of Net Loss. To the extent any allocation of Net Loss
would cause or increase an Adjusted Capital Account Deficit as to any Partner, such allocation of
Net Loss shall be reallocated among the other Partners in accordance with their respective
Percentage Interests, subject to the limitations of this Section 6.3(vi).
(vii) Section 754 Adjustment. To the extent an adjustment to the adjusted tax basis of
any Partnership asset pursuant to Code Section 734(b) or Code Section 743(b) is required, pursuant
to Regulations Section 1.704-1(b)(2)(iv)(m)(2) or Regulations Section 1.704-1(b)(2)(iv)(m)(4), to
be taken into account in determining Capital Accounts as the result of a distribution to a Partner
in complete liquidation of his interest in the Partnership, the amount of such adjustment to the
Capital Accounts shall be treated as an item of gain (if the adjustment increases the basis of the
asset) or loss (if the adjustment decreases such basis) and such gain or loss shall be specially
allocated to the Partners in accordance with their interests in the Partnership in the event that
Regulations Section 1.704-1(b)(2)(iv)(m)(2) applies, or to the Partners to whom such distribution
was made in the event that Regulations Section 1.704-1(b)(2)(iv)(m)(4) applies.
(viii) Curative Allocation. The allocations set forth in Sections 6.3(i),
(ii), (iii), (iv), (v), (vi), and (vii) (the
“Regulatory Allocations”) are intended to comply with certain regulatory requirements,
including the requirements of Regulations Sections 1.704-1(b) and 1.704-2. Notwithstanding the
provisions of Sections 6.1 and 6.2, the Regulatory Allocations shall be taken into
account in allocating other items of income, gain, loss and deduction among the Partners so that,
to the extent possible, the net amount of such allocations of other items and the Regulatory
Allocations to each Partner shall be equal to the net amount
that would have been allocated to each such Partner if the Regulatory Allocations had not occurred.
For purposes of determining a Partner’s proportional share of the “excess nonrecourse liabilities”
of the Partnership within the meaning of Regulations Section 1.752-3(a)(3), each Partner’s interest
in Partnership profits shall be such Partner’s Percentage Interest.
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Section 6.4 Tax Allocations
A. In General. Except as otherwise provided in this Section 6.4, for income
tax purposes each item of income, gain, loss and deduction (collectively, “Tax Items”)
shall be allocated among the Partners in the same manner as its correlative item of “book” income,
gain, loss or deduction is allocated pursuant to Sections 6.2 and 6.3.
B. Allocations Respecting Section 704(c) Revaluations. Notwithstanding Section
6.4.A, Tax Items with respect to Partnership property that is contributed to the Partnership by
a Partner with a Gross Asset Value that differs from its adjusted tax basis in the hands of the
Contributing Partner immediately preceding the date of contribution shall be allocated among the
Partners for income tax purposes pursuant to Regulations promulgated under Section 704(c) of the
Code, so as to take into account the variation between book Capital Accounts and tax capital
accounts. The Partnership shall account for such variation under the “traditional method” under
Regulations Section 1.704-3(b) with respect to Partnership property that is contributed to the
Partnership in connection with the General Partner’s initial offering. With respect to other
properties contributed to the Partnership, the Partnership shall account for such variation under
any reasonable method consistent with Section 704(c) of the Code and the applicable regulations as
chosen by the General Partner. In the event the Gross Asset Value of any Partnership asset is
adjusted pursuant to subparagraph (b) of the definition of Gross Asset Value (provided in Article
1), subsequent allocations of Tax Items with respect to such asset shall take account of the
variation, if any, between the adjusted basis of such asset and its Gross Asset Value in the same
manner as under Section 704(c) of the Code and the applicable regulations consistent with the
requirements of Regulations Section 1.704-1(b)(2)(iv)(g) using any method approved under Section
704(c) of the Code and the applicable regulations as chosen by the General Partner.
ARTICLE 7.
MANAGEMENT AND OPERATIONS OF BUSINESS
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, except with the consent of the General Partner. In
addition to the powers now or hereafter granted a general partner of a limited partnership under
applicable law or which are granted to the General Partner under any other provision of this
Agreement, the General Partner, subject to the other provisions hereof including Sections
7.3 and 11.2, shall have full power and authority to do all things deemed necessary or
desirable by it to conduct the business of the Partnership (including, without limitation, all
actions consistent with allowing the General Partner at all times to qualify as a REIT unless the
General Partner voluntarily terminates its REIT status), to exercise all powers set forth in
Section 3.2 and to effectuate the purposes set forth in Section 3.1, including,
without limitation:
(1) the making of any expenditures, the lending or borrowing of money (including, without
limitation, making prepayments on loans and borrowing money to permit the Partnership to make
distributions to its Partners in such amounts as will permit the General Partner (so long as the
General Partner has determined to qualify as a REIT) to avoid the payment of any federal income tax
(including, for this purpose, any excise tax pursuant to Section 4981 of the Code) and to make
distributions to its stockholders sufficient to permit the General Partner to maintain REIT
status), the assumption or guarantee
of, or other contracting for, indebtedness and other liabilities, the issuance of evidences of
indebtedness (including the securing of same by mortgage, deed of trust or other lien or
encumbrance on all or any of the Partnership’s assets) and the incurring of any obligations it
deems necessary for the conduct of the activities of the Partnership;
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(2) the making of tax, regulatory and other filings, or rendering of periodic or other reports
to governmental or other agencies having jurisdiction over the business or assets of the
Partnership, the registration of any class of securities of the Partnership under the Exchange Act,
and the listing of any debt securities of the Partnership on any exchange;
(3) subject to the provisions of Section 11.2, the acquisition, disposition, mortgage,
pledge, encumbrance, hypothecation or exchange of any assets of the Partnership or the merger or
other combination of the Partnership with or into another entity;
(4) the acquisition, disposition, mortgage, pledge, encumbrance or hypothecation of all or any
assets of the Partnership, and the use of the assets of the Partnership (including, without
limitation, cash on hand) for any purpose consistent with the terms of this Agreement and on any
terms it sees fit, including, without limitation, the financing of the conduct or the operations of
the General Partner or the Partnership, the lending of funds to other Persons (including, without
limitation, the General Partner or any Subsidiaries of the Partnership) and the repayment of
obligations of the Partnership, any of its Subsidiaries and any other Person in which it has an
equity investment, and the making of capital contributions to its Subsidiaries;
(5) the management, operation, leasing, landscaping, repair, alteration, demolition or
improvement of any real property or improvements owned by the Partnership or any Subsidiary of the
Partnership;
(6) the negotiation, execution, and performance of any contracts, leases, conveyances or other
instruments that the General Partner considers useful or necessary to the conduct of the
Partnership’s operations or the implementation of the General Partner’s powers under this
Agreement, including contracting with contractors, developers, consultants, accountants, legal
counsel, other professional advisors and other agents and the payment of their expenses and
compensation out of the Partnership’s assets;
(7) the distribution of Partnership cash or other Partnership assets in accordance with this
Agreement;
(8) the 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”), and agents, outside attorneys,
accountants, consultants and contractors of the Partnership, the determination of their
compensation and other terms of employment or hiring, including waivers of conflicts of interest
and the payment of their expenses and compensation out of the Partnership’s assets;
(9) the maintenance of such insurance for the benefit of the Partnership and the Partners and
directors and officers of the Partnership or the General Partner as it deems necessary or
appropriate;
(10) the formation of, or acquisition of an interest in, and the contribution of property to,
any further limited or general partnerships, limited liability companies, joint ventures,
corporations or other relationships that it deems desirable (including, without limitation, the
acquisition of interests in, and the contributions of property to any Subsidiary and any other
Person in which it has an equity investment from time to time); provided, that, as
long as the General Partner has determined to continue to qualify as a REIT, the Partnership may
not engage in any such formation, acquisition or contribution that could cause the General Partner
to fail to qualify as a REIT;
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(11) 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;
(12) the undertaking of any action in connection with the Partnership’s direct or indirect
investment in any Person (including, without limitation, contributing or loaning Partnership funds
to, incurring indebtedness on behalf of, or guarantying the obligations of any such Persons);
(13) subject to the other provisions in this Agreement, the determination of the fair market
value of any Partnership property distributed in kind using such reasonable method of valuation as
it may adopt, provided, that such methods are otherwise consistent with
requirements of this Agreement;
(14) 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 or any Person in which the Partnership has made a direct or indirect equity investment;
(15) holding, managing, investing and reinvesting cash and other assets of the Partnership;
(16) the collection and receipt of revenues and income of the Partnership;
(17) 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;
(18) 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;
(19) 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;
(20) the making, execution and delivery of any and all deeds, leases, notes, deeds to secure
debt, mortgages, deeds of trust, security agreements, conveyances, contracts, guarantees,
warranties, indemnities, waivers, releases or 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;
(21) the issuance of additional Partnership Interests, as appropriate, in connection with the
contribution of Additional Funds pursuant to Section 4.3;
(22) the distribution of cash to acquire OP Units held by a Limited Partner in connection with
a Limited Partner’s exercise of its Redemption Right under Section 8.6 hereof;
(23) the amendment and restatement of Exhibit A hereto to reflect accurately at all times the
Capital Contributions and Percentage Interests of the Partners as the same are adjusted from time
to time to the extent necessary to reflect redemptions, Capital Contributions, the issuance of OP
Units, the admission of any Additional Limited Partner or any Substituted Limited Partner or
otherwise, which amendment and restatement, notwithstanding anything in this Agreement to the
contrary, shall not be deemed an amendment to this Agreement, as long as the matter or event being
reflected in Exhibit A hereto otherwise is authorized by this Agreement;
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(24) the taking of any and all acts and things necessary or prudent to ensure that the
Partnership will not be classified as a “publicly traded partnership” under Section 7704 of the
Code; and
(25) the delegation to another Person of any powers now or hereafter granted to the General
Partner.
B. Each of the Limited Partners agrees that the General Partner is authorized to execute,
deliver and perform the above-mentioned agreements and transactions on behalf of the Partnership
without any further act, approval or vote of the Partners, notwithstanding any other provisions of
this Agreement (except as provided in Section 7.3 or 11.2), 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 obtain and maintain (i) casualty, liability and other insurance on the Investments and (ii)
liability insurance for the Indemnities hereunder.
D. At all times from and after the date hereof, the General Partner may cause the Partnership
to establish and maintain working capital and other reserves in such amounts as the General
Partner, in its sole and absolute discretion, deems appropriate and reasonable from time to time.
E. Each of the Limited Partners acknowledges that, in exercising its authority under this
Agreement, the General Partner may, but shall be under no obligation to, take into account the tax
consequences to any Partner (including the General Partner) of any action taken (or not taken) by
the General Partner. The General Partner and the Partnership shall not have liability to a Partner
under this Agreement as a result of any income tax liability incurred by a Limited Partner as a
result of an action (or inaction) by the General Partner pursuant to its authority under this
Agreement. There may be circumstances in which the fiduciary duties that the General Partner owes
to the Limited Partners conflicts with any duties that the officers and directors of the General
Partner owe to its stockholders. For so long as the General Partner owns a controlling interest in
the Partnership, any such conflict that cannot be resolved in a manner not adverse to either the
stockholders or the Limited Partners shall be resolved in favor of the General Partner’s
stockholders.
F. Except as otherwise provided herein, to the extent the duties of the General Partner
require expenditures of funds to be paid to third parties, the General Partner shall not have any
obligations hereunder except to the extent that Partnership funds are reasonably available to it
for the performance of such duties, and nothing herein contained shall be deemed to authorize or
require the General Partner, in its capacity as such, to expend its individual funds for payment to
third parties or to undertake any individual liability or obligation on behalf of the Partnership.
Section 7.2 Certificate of Limited Partnership
To the extent that such action is determined by the General Partner to be reasonable and
necessary or appropriate, the General Partner shall file amendments to and restatements of the
Certificate and do all the things to maintain the Partnership as a limited partnership (or a
partnership in which the limited partners have limited liability) under the laws of the State of
Delaware and to maintain the Partnership’s qualification to do business as a foreign limited
partnership in each other state, the District of Columbia or other jurisdiction, in which the
Partnership may elect to do business or own property. Subject to the terms of Section
8.5.A(4), the General Partner shall not be required, before or after filing, to deliver or mail
a copy of the Certificate or any amendment thereto to any Limited Partner. The General Partner
shall use all reasonable efforts to cause to be filed such other certificates or documents as may
be reasonable and necessary or appropriate for the formation, continuation, qualification and
operation of a limited
partnership (or a partnership in which the limited partners have limited liability) in the State of
Delaware, any other state, or the District of Columbia or other jurisdiction, in which the
Partnership may elect to do business or own property.
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Section 7.3 Restrictions on General Partner’s Authority
A. The General Partner may not take any action in contravention of an express prohibition or
limitation of this Agreement without the written Consent of the Limited Partners and the Special
General Partner, and may not (i) perform any act that would subject a Limited Partner to liability
as a general partner in any jurisdiction or any other liability except as provided herein or under
the Act; or (ii) enter into any contract, mortgage, loan or other agreement that prohibits or
restricts, or has the effect of prohibiting or restricting, the ability of a Limited Partner to
exercise its rights to a Redemption in full, except in each case with the written consent of such
Limited Partner.
B. The General Partner shall not, without the prior Consent of the Partners (in addition to
any Consent of the Limited Partners required by any other provision hereof), or except as provided
in Section 7.3.D, amend, modify or terminate this Agreement.
C. The General Partner may not cause the Partnership to take any action which the General
Partner would be prohibited from taking directly under the General Partner’s bylaws as in effect
from time to time.
D. Notwithstanding Section 7.3.B, the General Partner shall have the exclusive power
to amend this Agreement as may be required to facilitate or implement any of the following
purposes:
(1) to add to the obligations of the General Partner or surrender any right or power granted
to the General Partner or any Affiliate of the General Partner for the benefit of the Limited
Partners;
(2) to reflect the issuance of additional Partnership Interests pursuant to Sections
4.3.B, 5.4 and 6.2.C. or the admission, substitution, termination, or withdrawal of
Partners in accordance with this Agreement (which may be effected through the replacement of
Exhibit A with an amended Exhibit A);
(3) to set forth or amend the designations, rights, powers, duties and preferences of the
holders of any additional Partnership Interests issued pursuant to Article 4;
(4) 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;
(5) 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;
(6) to reflect such changes as are reasonably necessary for the General Partner to maintain
its status as a REIT, including changes which may be necessitated due to a change in applicable law
(or an authoritative interpretation thereof) or a ruling of the IRS;
(7) to modify, as set forth in the definition of “Capital Account,” the manner in
which Capital Accounts are computed; and
(8) to amend or modify any provision of this Agreement to reflect a statutory or regulatory
change regarding the federal income tax treatment of the “profits interest” of the Special General
Partner or to ensure that the receipt of the Special General Partner’s profits interest will not
result in taxation to the Special General Partner.
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The General Partner will provide notice to the Limited Partners when any action under this
Section 7.3.D is taken.
E. Notwithstanding Sections 7.3.B and 7.3.D, this Agreement shall not be
amended with respect to any Partner adversely affected, and no action may be taken by the General
Partner, without the Consent of such Partner adversely affected if such amendment or action would
(i) convert a Limited Partner’s interest in the Partnership into a general partner’s interest
(except as the result of the General Partner acquiring such interest), (ii) modify the limited
liability of a Limited Partner, (iii) alter rights of the Partner to receive distributions pursuant
to Article 5 or Section 13.2.A(4), or the allocations specified in Article
6 (except as permitted pursuant to Sections 4.3, 5.4, 6.2.C and
Section 7.3.D(2)), (iv) materially alter or modify the rights to a Redemption or the REIT
Shares Amount as set forth in Section 8.6, and related definitions hereof, or (v) amend
this Section 7.3.E. Further, no amendment may alter the restrictions on the General
Partner’s authority set forth elsewhere in this Section 7.3 or in Section 11.2.A
without the Consent specified in such section. This Section 7.3.E does not require
unanimous consent of all Partners adversely affected unless the amendment is to be effective
against all partners adversely affected.
Section 7.4 Reimbursement of the General Partner
A. Except as provided in this Section 7.4 and elsewhere in this Agreement (including
the provisions of Articles 5 and 6 regarding distributions, payments and
allocations to which it may be entitled), the General Partner shall not be compensated for its
services as general partner of the Partnership.
B. The Partnership shall be responsible for and shall pay all expenses relating to the
Partnership’s and the General Partner’s organization, the ownership of its assets and its
operations. The General Partner is hereby authorized to pay compensation for accounting,
administrative, legal, technical, management and other services rendered to the Partnership. Except
to the extent provided in this Agreement, 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 the General Partner and its Affiliates 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 Partners
acknowledge that all such expenses of the General Partner are deemed to be for the benefit of the
Partnership. Such reimbursement shall be in addition to any reimbursement made as a result of
indemnification pursuant to Section 7.7 hereof. 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. 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.
C. If the General Partner shall elect to purchase from its stockholders REIT Shares for the
purpose of delivering such REIT Shares to satisfy an obligation under any dividend reinvestment
program adopted by the General Partner, any employee stock purchase plan adopted by the General
Partner, or any similar obligation or arrangement undertaken by the General Partner in the future
or for the purpose of retiring such REIT Shares, the purchase price paid by the General Partner for
such REIT Shares and any other expenses incurred by the General Partner in connection with such
purchase shall be considered expenses of the Partnership and shall be advanced to the General
Partner or reimbursed to the General Partner, subject to the condition that: (i) if such REIT
Shares subsequently are sold by the General Partner, the General Partner shall pay to the
Partnership any proceeds received by the General Partner 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 OP 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 General Partner within thirty (30) days after the purchase thereof, or
the General Partner otherwise determines not
to retransfer such REIT Shares, the General Partner, shall cause the Partnership to redeem a number
of OP Units held by the General Partner equal to the number of such REIT Shares, as adjusted (x)
pursuant to Section 7.5 (in the event the General Partner acquires material assets, other
than on behalf of the Partnership) and (y) for stock dividends and distributions, stock splits and
subdivisions, reverse stock splits and combinations, distributions of rights, warrants or options,
and distributions of evidences of indebtedness or assets relating to assets not received by the
General Partner pursuant to a pro rata distribution by the Partnership (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 OP Units held by the General Partner).
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D. As set forth in Section 4.3, the General Partner shall be treated as having made a
Capital Contribution in the amount of all expenses that it incurs relating to the General Partner’s
offering of REIT Shares, other shares of capital stock of the General Partner or New Securities.
E. If and to the extent any reimbursements to the General Partner pursuant to this Section
7.4 constitute gross income of the General Partner (as opposed to the repayment of advances
made by the General Partner on behalf of the Partnership), such amounts shall constitute guaranteed
payments within the meaning of Section 707(c) of the Code, shall be treated consistently therewith
by the Partnership and all Partners, and shall not be treated as distributions for purposes of
computing the Partners’ Capital Accounts.
Section 7.5 Outside Activities of the General Partner
A. Except in connection with a transaction authorized in Section 11.2, without the
Consent of the Limited Partners, the General Partner shall not, directly or indirectly, enter into
or conduct any business, other than in connection with the ownership, acquisition and disposition
of Partnership Interests as a General Partner and the management of the business of the
Partnership, its operation as a public reporting company with a class (or classes) of securities
registered under the Exchange Act, its operation as a REIT and such activities as are incidental to
the same. Without the Consent of the Limited Partners, the General Partner shall not, directly or
indirectly, participate in or otherwise acquire any interest in any real or personal property,
except its General Partner Interest, its minority interest in any Subsidiary Partnership(s) that
the General Partner holds in order to maintain such Subsidiary Partnership’s status as a
partnership, and such bank accounts, similar instruments or other short term investments as it
deems necessary to carry out its responsibilities contemplated under this Agreement and the
Charter. In the event the General Partner desires to contribute cash to any Subsidiary Partnership
to acquire or maintain an interest of 1% or less in the capital of such partnership, the General
Partner may acquire or maintain an interest of 1% or less in the capital of such partnership, and
the General Partner may acquire such cash from the Partnership as a loan or in exchange for a
reduction in the General Partner’s OP Units, in an amount equal to the amount of such cash divided
by the Fair Market Value of a REIT Share on the day such cash is received by the General Partner.
Notwithstanding the foregoing, the General Partner may acquire Investments or other assets in
exchange for REIT Shares or cash, to the extent such Investments or other assets are immediately
contributed by the General Partner to the Partnership, pursuant to the terms described in
Section 4.3.D. Any Limited Partner Interests acquired by the General Partner, whether
pursuant to exercise by a Limited Partner of its right of Redemption, or otherwise, shall be
automatically converted into a General Partner Interest comprised of an identical number of OP
Units with the same rights, priorities and preferences as the class or series so acquired. The
General Partner may also own one hundred percent (100%) of the stock or interests of one or more
Qualified REIT Subsidiaries or limited liability companies, respectively, provided that any such
entity shall be subject to the limitations of this Section 7.5.A. If, at any time, the General
Partner acquires material assets (other than Partnership Interests or other assets on behalf of the
Partnership) the definition of “REIT Shares Amount” and the definition of “Deemed Value of
Partnership Interests” shall be adjusted, as reasonably determined by the General Partner, to
reflect the relative Fair Market Value of a share of capital stock of the General Partner relative
to the Deemed Partnership Interest Value of the related Partnership Unit. The General Partner’s
General Partner Interest in the Partnership, its minority interest in any Subsidiary Partnership(s)
(held directly or indirectly through a Qualified REIT Subsidiary) that the General Partner holds in
order to maintain such Subsidiary Partnership’s status as a
partnership, and interests in such short-term liquid investments, bank accounts or similar
instruments as the General Partner deems necessary to carry out its responsibilities contemplated
under this Agreement and the Charter are interests which the General Partner is permitted to
acquire and hold for purposes of this Section 7.5.A.
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B. In the event the General Partner exercises its rights under the Charter to purchase REIT
Shares, other common stock of the General Partner or New Securities, as the case may be, then the
General Partner shall cause the Partnership to purchase from it a number of OP Units equal to the
number of REIT Shares, other capital stock of the General Partner or New Securities, as the case
may be, so purchased on the same terms that the General Partner purchased such REIT Shares, other
capital stock of the General Partner or New Securities, as the case may be.
Section 7.6 Contracts with Affiliates
A. The Partnership may lend or contribute to Persons in which it has an equity investment, and
such Persons may borrow funds from the Partnership, on terms and conditions established in the sole
and absolute discretion of the General Partner. The foregoing authority shall not create any right
or benefit in favor of any Person.
B. Except as provided in Section 7.5.A, the Partnership may transfer assets to joint
ventures, other partnerships, corporations or other business entities in which it is or thereby
becomes a participant upon such terms and subject to such conditions consistent with this Agreement
and applicable law as the General Partner in its sole discretion deems advisable.
C. The General Partner, in its sole and absolute discretion and without the approval of the
Limited Partners, may propose and adopt on behalf of the Partnership employee benefit plans funded
by the Partnership for the benefit of employees of the General Partner, the Partnership,
Subsidiaries of the Partnership or any Affiliate of any of them in respect of services performed,
directly or indirectly, for the benefit of the Partnership, the General Partner, or any of the
Partnership’s Subsidiaries.
D. 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.
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 law, the Partnership shall indemnify an Indemnitee from
and against any and all losses, claims, damages, liabilities, joint or several, expenses (including
legal fees and expenses), judgments, fines, settlements, and other amounts arising from any and all
claims, demands, actions, suits or proceedings, civil, criminal, administrative or investigative,
that relate to the operations of the Partnership as set forth in this Agreement in which any
Indemnitee may be involved, or is threatened to be involved, as a party or otherwise, unless (1)
Section 12.2.2 of the Charter of the General Partner prohibits the corporation from indemnifying
the Indemnitee for a matter, in which case the Partnership shall likewise be prohibited from
indemnifying the Indemnitee for the matter, or (2) 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, fraud 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
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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 or otherwise, for any indebtedness of the Partnership or any Subsidiary
of the Partnership (including, without limitation, any indebtedness which the Partnership or any
Subsidiary of the Partnership has assumed or taken subject to), and the General Partner is hereby
authorized and empowered, on behalf of the Partnership, to enter into one or more indemnity
agreements consistent with the provisions of this Section 7.7 in favor of any Indemnitee
having or potentially having liability for any such indebtedness. The termination of any proceeding
by judgment, order, settlement, conviction or upon a plea of nolo contendere or its equivalent, or
any entry of an order of probation prior to judgment, does not create a presumption that the
Indemnitee did not meet the requisite standard of conduct set forth in this Section 7.7.A.
Any indemnification pursuant to this Section 7.7 shall be made only out of the assets of
the Partnership, and any insurance proceeds from the liability policy covering the General Partner
and any Indemnitee, 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, except to the extent otherwise
expressly agreed to by such Partner and the Partnership.
B. Reasonable expenses incurred by an Indemnitee who is a party to a proceeding may be paid or
reimbursed by the Partnership in advance of the final disposition of the proceeding upon receipt by
the Partnership of (i) a written affirmation by the Indemnitee of the Indemnitee’s good faith
belief that the standard of conduct necessary for indemnification by the Partnership as authorized
in this Section 7.7 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 the Limited Partners to personal liability by reason
of the indemnification provisions set forth in this Agreement.
G. An Indemnitee shall not be denied indemnification in whole or in part under this
Section 7.7 because the Indemnitee had an interest in the transaction with respect to which
the indemnification applies if the transaction was otherwise permitted by the terms of this
Agreement.
H. The provisions of this Section 7.7 are for the benefit of the Indemnitees, their
heirs, successors, assigns and administrators and shall not be deemed to create any rights for the
benefit of any other Persons. 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 limitations on
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.
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I. If and to the extent any reimbursements to the General Partner pursuant to this Section
7.7 constitute gross income of the General Partner (as opposed to the repayment of advances
made by the General Partner on behalf of the Partnership) such amounts shall constitute guaranteed
payments within the meaning of Section 707(c) of the Code, shall be treated consistently therewith
by the Partnership and all Partners, and shall not be treated as distributions for purposes of
computing the Partners’ Capital Accounts.
J. Any indemnification hereunder is subject to, and limited by, the provisions of Section
17-108 of the Act and Section 12.2.2 of the Charter.
K. In the event the Partnership is made a party to any litigation or otherwise incurs any loss
or expense as a result of or in connection with any Partner’s personal obligations or liabilities
unrelated to Partnership business, such Partner shall indemnify and reimburse the Partnership for
all such loss and expense incurred, including legal fees, and the Partnership interest of such
Partner may be charged therefor. The liability of a Partner under this Section 7.7.K shall
not be limited to such Partner’s Partnership Interest, but shall be enforceable against such
Partner personally.
Section 7.8 Liability of the General Partner
A. Notwithstanding anything to the contrary set forth in this Agreement, none of the General
Partner nor any of its officers, directors, agents or employees shall be liable or accountable in
damages or otherwise to the Partnership, any Partners or any Assignees, or their successors or
assigns, for losses sustained, liabilities incurred or benefits not derived as a result of errors
in judgment or mistakes of fact or law or any act or omission if the General Partner acted in good
faith.
B. The Limited Partners expressly acknowledge that the General Partner is acting for the
benefit of the Partnership, the Limited Partners and the General Partner’s stockholders
collectively. The General Partner is under no obligation to give priority to the separate interests
of the Limited Partners or the General Partner’s stockholders (including, without limitation, the
tax consequences to Limited Partners or Assignees or to stockholders) in deciding whether to cause
the Partnership to take (or decline to take) any actions. If there is a conflict between the
interests of the stockholders of the General Partner on one hand and the Limited Partners on the
other, the General Partner shall endeavor in good faith to resolve the conflict in a manner not
adverse to either the stockholders of the General Partner or the Limited Partners;
provided, however, that for so long as the General Partner, owns a controlling
interest in the Partnership, any such conflict that cannot be resolved in a manner not adverse to
either the stockholders of the General Partner or the Limited Partners shall be resolved in favor
of the stockholders. The General Partner shall not be liable under this Agreement to the
Partnership or to any Partner 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, the General Partner may exercise any of the powers granted to it by this Agreement and
perform any of the duties imposed upon it hereunder either directly or by or through its agents.
The General Partner shall not be responsible for any misconduct or negligence on the part of any
such agent appointed by it in good faith.
D. Any amendment, modification or repeal of this Section 7.8 or any provision hereof
shall be prospective only and shall not in any way affect the limitations on the liability of the
General Partner and any of its officers, directors, agents and employee’s 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.
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Section 7.9 Other Matters Concerning the General Partner
A. The General Partner may rely and shall be protected in acting or refraining from acting
upon any resolution, certificate, statement, instrument, opinion, report, notice, request, consent,
order, bond, debenture, or other paper or document believed by it to be genuine and to have been
signed or presented by the proper party or parties.
B. The General Partner may consult with legal counsel, accountants, appraisers, management
consultants, investment bankers and other consultants and advisers selected by it, and any act
taken or omitted to be taken in reliance upon the opinion of such Persons as to matters which such
General Partner reasonably believes to be within such Person’s professional or expert competence
shall be conclusively presumed to have been done or omitted in good faith and in accordance with
such opinion.
C. The General Partner shall have the right, in respect of any of its powers or obligations
hereunder, to act through any of its duly authorized officers and a duly appointed attorney or
attorneys-in-fact. Each such attorney shall, to the extent provided by the General Partner in the
power of attorney, have full power and authority to do and perform all and every act and duty which
is permitted or required to be done by the General Partner hereunder.
D. Notwithstanding any other provisions of this Agreement or any non-mandatory provision of
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 to protect the ability of
the General Partner, for so long as the General Partner has determined to qualify as a REIT, to (i)
continue to qualify as a REIT or (ii) avoid the General Partner incurring any taxes under Section
857 or Section 4981 of the Code, is expressly authorized under this Agreement and is deemed
approved by all of the Limited Partners.
Section 7.10 Title to Partnership Assets
Title to Partnership assets, whether real, personal or mixed and whether tangible or
intangible, shall be deemed to be owned by the Partnership as an entity, and no Partners,
individually or collectively, shall have any ownership interest in such Partnership assets or any
portion thereof. Title to any or all of the Partnership assets may be held in the name of the
Partnership, the General Partner or one or more nominees, as the General Partner may determine,
including Affiliates of the General Partner. The General Partner hereby declares and warrants that
any Partnership assets for which legal title is held in the name of the General Partner or any
nominee or Affiliate of the General Partner shall be held by the General Partner for the use and
benefit of the Partnership in accordance with the provisions of this Agreement; provided,
however, that the General Partner shall use its best efforts to cause beneficial and record
title to such assets to be vested in the Partnership as soon as reasonably practicable. All
Partnership assets shall be recorded as the property of the Partnership in its books and records,
irrespective of the name in which legal title to such Partnership assets is held.
Section 7.11 Reliance by Third Parties
Notwithstanding anything to the contrary in this Agreement, any Person dealing with the
Partnership shall be entitled to assume that the General Partner has full power and authority to
encumber, sell or otherwise use in any manner any and all assets of the Partnership and to enter
into any contracts on behalf of the Partnership, and such Person shall be entitled to deal with the
General Partner as if it were the Partnership’s sole party in interest, both legally and
beneficially. Each Limited Partner hereby waives any and all defenses or other remedies which may
be available against such Person to contest, negate or disaffirm any action of the General Partner
in connection with any such dealing. In no event shall any Person dealing with the General Partner
or its representatives be obligated to ascertain that the terms of this Agreement have been
complied with or to inquire into the necessity or expedience of any act or action of
the General Partner or its representatives. Each and every certificate, document or other
instrument executed on behalf of the Partnership by the General Partner or its representatives
shall be conclusive evidence in favor of any and every Person relying thereon or claiming
thereunder that (i) at the time of the execution and delivery of such certificate, document or
instrument, this Agreement was in full force and effect, (ii) the Person executing and delivering
such certificate, document or instrument was duly authorized and empowered to do so for and on
behalf of the Partnership and (iii) such certificate, document or instrument was duly executed and
delivered in accordance with the terms and provisions of this Agreement and is binding upon the
Partnership.
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Section 7.12 Management Assistance Provided by Special General Partner
In addition to the requirement to obtain the Consent of the Special General Partner with
respect to certain matters as provided for in this Agreement, the Special General Partner shall
provide consulting services and assistance to the Partnership at various times, in conjunction with
the Advisor, for no additional consideration, on matters relating to the following:
| (1) | the strategic planning of the Partnership; | ||
| (2) | the creation of business plans of the Partnership; | ||
| (3) | the sale, merger, or the sale of substantially all of the assets, of the Partnership; and | ||
| (4) | any other matters concerning the Partnership as determined appropriate by the General Partner and the Special General Partner. |
ARTICLE 8.
RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS
RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS
Section 8.1 Limitation of Liability
The Limited Partners shall have no liability under this Agreement except as expressly provided
in this Agreement or under the Act.
Section 8.2 Management of Business
No Limited Partner or Assignee (other than the General Partner, any of its Affiliates or any
officer, director, employee, partner, agent or trustee of the General Partner, the Partnership or
any of their Affiliates, in their capacity as such) shall take part in the operations, management
or control (within the meaning of the Act) of the Partnership’s business, transact any business in
the Partnership’s name or have the power to sign documents for or otherwise bind the Partnership.
The transaction of any such business by the General Partner, any of its Affiliates or any officer,
director, employee, partner, agent or trustee of the General Partner, the Partnership or any of
their Affiliates, in their capacity as such, shall not affect, impair or eliminate the limitations
on the liability of the Limited Partners or Assignees under this Agreement.
Section 8.3 Outside Activities of Limited Partners
Subject to any agreements entered into by a Limited Partner or its Affiliates with the General
Partner, Partnership or a Subsidiary, any Limited Partner and any officer, director, employee,
agent, trustee, Affiliate or stockholder of any Limited Partner shall be entitled to and may have
business interests and engage in business activities in addition to those relating to the
Partnership, including business interests and activities in direct competition with the Partnership
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. Subject to such agreements, none of the Limited Partners nor any other Person shall
have any rights by virtue of this Agreement or the partnership relationship
established hereby in any business ventures of any other Person, other than the Limited Partners
benefiting from the business conducted by the General Partner, and such Person shall have no
obligation pursuant to this Agreement to offer any interest in any such business ventures to the
Partnership, any Limited Partner or any such other Person, even if such opportunity is of a
character which, if presented to the Partnership, any Limited Partner or such other Person, could
be taken by such Person.
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Section 8.4 Return of Capital
Except pursuant to the rights of Redemption set forth in Section 8.6, no Limited
Partner shall be entitled to the withdrawal or return of his or her Capital Contribution, except to
the extent of distributions made pursuant to this Agreement or upon termination of the Partnership
as provided herein. No Limited Partner or Assignee shall have priority over any other Limited
Partner or Assignee either as to the return of Capital Contributions, or as otherwise expressly
provided in this Agreement, or as to profits, losses, distributions or credits.
Section 8.5 Rights of Limited Partners Relating to the Partnership
A. In addition to other rights provided by this Agreement or by the Act, and except as limited
by Section 8.5.C, 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 expense:
(1) to obtain a copy of the most recent annual and quarterly reports filed with the Securities
and Exchange Commission by the General Partner pursuant to the Exchange Act, and each communication
sent to the stockholders of the General Partner;
(2) to obtain a copy of the Partnership’s federal, state and local income tax returns for each
Partnership Year;
(3) to obtain a current list of the name and last known business, residence or mailing address
of each Partner;
(4) to obtain a copy of this Agreement and the Certificate and all amendments thereto,
together with executed copies of all powers of attorney pursuant to which this Agreement, the
Certificate and all amendments thereto have been executed; and
(5) 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 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 in writing of any adjustment made in the
calculation of the REIT Shares Amount within a reasonable time after the date such change becomes
effective.
C. Notwithstanding any other provision of this Section 8.5, the General Partner may
keep confidential from the Limited Partners, for such period of time as the General Partner
determines in its sole and absolute discretion to be reasonable, any information that (i) the
General Partner believes to be in the nature of trade secrets or other information the disclosure
of which the General Partner in good faith believes is not in the best interests of the Partnership
or (ii) the Partnership or the General Partner is required by law or by agreements with
unaffiliated third parties to keep confidential.
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Section 8.6 Redemption Rights
A. At any time after one year following the date of issuance of any OP Units to a Limited
Partner or a Special General Partner, such Partner shall have the right (subject to the terms and
conditions set forth herein and in any other such agreement, as applicable) to require the
Partnership to redeem all or a portion of the OP Units held by such Partner (such OP Units being
hereafter referred to as “Tendered Units”) in exchange for the Cash Amount (a
“Redemption”); provided that the terms of such OP Units do not provide that such OP Units
are not entitled to a right of Redemption. Unless otherwise expressly provided in this Agreement or
in a separate agreement entered into between the Partnership and the holders of such OP Units, all
OP Units shall be entitled to a right of Redemption hereunder. The Tendering Partner shall have no
right, with respect to any OP Units so redeemed, to receive any distributions paid on or after the
Specified Redemption Date. Any Redemption shall be exercised pursuant to a Notice of Redemption
delivered to the General Partner by the Special General Partner or Limited Partner who is
exercising the right (the “Tendering Partner”). The Cash Amount shall be payable to the
Tendering Partner within ten (10) days of the Specified Redemption Date in accordance with the
instructions set forth in the Notice of Redemption.
B. Notwithstanding Section 8.6.A above, if the Special General Partner or a Limited
Partner has delivered to the General Partner a Notice of Redemption then the General Partner may,
in its sole and absolute discretion (subject to the limitations on ownership and transfer of REIT
Shares set forth in the Charter), elect to acquire some or all of the Tendered Units from the
Tendering Partner in exchange for the REIT Shares Amount (as of the Specified Redemption Date) and,
if the General Partner so elects, the Tendering Partner shall sell the Tendered Units to the
General Partner in exchange for the REIT Shares Amount. In such event, the Tendering Partner shall
have no right to cause the Partnership to redeem such Tendered Units. The General Partner shall
promptly give such Tendering Partner written notice of its election, and the Tendering Partner may
elect to withdraw its redemption request at any time prior to the acceptance of the cash or REIT
Shares Amount by such Tendering Partner.
C. The REIT Shares Amount, if applicable, shall be delivered as duly authorized, validly
issued, fully paid and nonassessable REIT Shares and, if applicable, free of any pledge, lien,
encumbrance or restriction, other than those provided in the Charter, the Bylaws of the General
Partner, the Securities Act, relevant state securities or blue sky laws and any applicable
registration rights agreement with respect to such REIT Shares entered into by the Tendering
Partner. Notwithstanding any delay in such delivery (but subject to Section 8.6.E), the
Tendering Partner shall be deemed the owner of such REIT Shares for all purposes, including without
limitation, rights to vote or consent, and receive dividends, as of the Specified Redemption Date.
D. The Special General Partner and each Limited Partner covenants and agrees with the General
Partner that all Tendered Units shall be delivered to the General Partner free and clear of all
liens, claims and encumbrances whatsoever and should any such liens, claims and/or encumbrances
exist or arise with respect to such Tendered Units, the General Partner shall be under no
obligation to acquire the same. The Special General Partner and each Limited Partner further
agrees that, in the event any state or local property transfer tax is payable as a result of the
transfer of its Tendered Units to the General Partner (or its designee), such Partner shall assume
and pay such transfer tax.
E. Notwithstanding the provisions of Section 8.6.A, 8.6.B, 8.6.C or
any other provision of this Agreement, the Special General Partner or a Limited Partner (i) shall
not be entitled to effect a Redemption for cash or an exchange for REIT Shares to the extent the
ownership or right to acquire REIT Shares pursuant to such exchange by such Partner on the
Specified Redemption Date could cause such Partner or any other Person, or, in the opinion of
counsel selected by the General Partner, may cause such Partner or any other Person, to violate the
restrictions on ownership and transfer of REIT Shares set forth in the Charter and (ii) shall have
no rights under this Agreement to acquire REIT Shares which would otherwise be prohibited under the
Charter. To the extent any attempted Redemption or exchange for REIT Shares would be in violation
of this Section 8.6.E, it shall be null and void ab initio and such Partner shall not
acquire any rights or economic interest in the cash otherwise payable upon such Redemption or the
REIT Shares otherwise issuable upon such exchange.
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F. Notwithstanding anything herein to the contrary (but subject to Section 8.6.E),
with respect to any Redemption or exchange for REIT Shares pursuant to this Section 8.6:
(1) All OP Units acquired by the General Partner pursuant thereto shall automatically, and
without further action required, be converted into and deemed to be Limited Partner Interests
comprised of the same number and class of OP Units.
(2) The Special General Partner and each Limited Partner may not effect a Redemption for less
than one thousand (1,000) OP Units or, if such Partner holds less than one thousand (1,000) OP
Units, such Partner may effect a Redemption only with respect to all OP Units held by such Partner.
(3) A Tendering Partner may not effect more than two (2) Redemptions in a single calendar
year.
(4) Without the consent of the General Partner, the Special General Partner and each Limited
Partner may not effect a Redemption during the period after the Partnership Record Date with
respect to a distribution and before the record date established by the General Partner for a
distribution to its stockholders of some or all of its portion of such distribution.
(5) The consummation of any Redemption or exchange for REIT Shares shall be subject to the
expiration or termination of the applicable waiting period, if any, under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇
Antitrust Improvements Act of 1976, as amended.
(6) Each Tendering Partner shall continue to own all OP Units subject to any Redemption or
exchange for REIT Shares, and be treated as a Partner with respect to such OP Units for all
purposes of this Agreement, until such OP Units are transferred to the General Partner and paid for
or exchanged on the Specified Redemption Date. Until a Specified Redemption Date, the Tendering
Partner shall have no rights as a stockholder of the General Partner with respect to such Tendering
Partner’s OP Units.
G. In the event that the Partnership issues additional Partnership Interests to any Additional
Limited Partner pursuant to Section 4.3.B, 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.
H. Notwithstanding any other provision of this Agreement, the General Partner is authorized to
take any action that it determines to be necessary or appropriate to cause the partnership to
comply with any withholding requirements established under the Code or any other federal, state or
local law that apply upon a Redemption or exchange of Tendered Units. If a Tendering Partner
believes that it is exempt from withholding upon a Redemption or exchange of Tendered Units, such
Partner must furnish the General Partner a FIRPTA certificate or other documentation requested by
the General Partner is a form acceptable to the General Partner. If the Partnership or the General
Partner is required to withhold and pay over to any taxing authority any amount upon a Redemption
or exchange of Tendered Units and the Cash Amount or the REIT Shares Amount, as the case may be,
equals or exceeds the amount of tax required to be withheld, the amount withheld shall be treated
as an amount received by such Partner in redemption of its Tendered Units. If the Cash Amount or
the REIT Shares Amount, as the case may be, is less than the amount of tax required to be withheld,
the Tendering Partner shall not receive any Cash Amount or REIT Shares Amount, and the Tendering
Partner shall contribute the excess of the amount of tax required to be withheld over the Cash
Amount or REIT Shares Amount before such excess taxes are required to be paid to the taxing
authority.
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ARTICLE 9.
BOOKS, RECORDS, ACCOUNTING AND REPORTS
BOOKS, RECORDS, ACCOUNTING AND REPORTS
Section 9.1 Records and Accounting
The General Partner shall keep, or cause to be kept, at the principal office of the
Partnership appropriate books and records with respect to the Partnership’s business, including
without limitation, all books and records necessary to provide to the Special General Partner and
the Limited Partners any information, lists and copies of documents required to be provided
pursuant to Section 9.3. 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 any information storage device,
provided, that the records so maintained are convertible into clearly legible
written form within a reasonable period of time. The books of the Partnership shall be maintained,
for financial and tax reporting purposes, on an accrual basis in accordance with generally accepted
accounting principles.
Section 9.2 Fiscal Year
The fiscal year of the Partnership shall be the calendar year.
Section 9.3 Reports
A. As soon as practicable, but in no event later than one hundred and five (105) days after
the close of each Partnership Year, or such earlier date as they are filed with the Securities and
Exchange Commission, the General Partner shall cause to be delivered to the Special General Partner
and each Limited Partner as of the close of the Partnership Year, an annual report containing
financial statements of the Partnership, or of the General Partner if such statements are prepared
solely on a consolidated basis with the General Partner, for such Partnership Year, presented in
accordance with generally accepted accounting principles, such statements to be audited by a
nationally recognized firm of independent public accountants selected by the General Partner.
B. As soon as practicable, but in no event later than forty five (45) days after the close of
each calendar quarter (except the last calendar quarter of each year), or such earlier date as they
are filed with the Securities and Exchange Commission, the General Partner shall cause to be
delivered to the Special General Partner and each Limited Partner as of the last day of the
calendar quarter, a report containing unaudited financial statements of the Partnership, or of the
General Partner, if such statements are prepared solely on a consolidated basis with the applicable
law or regulation, or as the General Partner determines to be appropriate.
Section 9.4 Nondisclosure of Certain Information
Notwithstanding the provisions of Sections 9.1 and 9.3, the General Partner
may keep confidential from the Special General Partner and the Limited Partners any information
that the General Partner believes to be in the nature of trade secrets or other information the
disclosure of which the General Partner in good faith believes is not in the best interest of the
Partnership or which the Partnership is required by law or by agreements with unaffiliated third
parties to keep confidential.
ARTICLE 10.
TAX MATTERS
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 applicable 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 the Special General Partner and the
Limited Partners for federal and applicable state income tax reporting purposes. The Special
General Partner and each Limited Partner shall promptly provide the General Partner with any
information reasonably requested by the General Partner relating to any Contributed Property
contributed (directly or indirectly) by such Partner to the Partnership.
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Section 10.2 Tax Elections
Except as otherwise provided herein, the General Partner shall, in its sole and absolute
discretion, determine whether to make any available election pursuant to the Code, including the
election under Section 754 of the Code. The General Partner shall have the right to seek to revoke
any such election (including without limitation, any election under Section 754 of the Code) upon
the General Partner’s determination in its sole and absolute discretion that such revocation is the
best interests of the Partners.
Section 10.3 Tax Matters Partner
A. The General Partner shall be the “tax matters partner” of the Partnership for
federal income tax purposes. Pursuant to Section 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 and profit interest of the Special
General Partner and each of the Limited Partners and Assignees; provided, however,
that such information is provided to the Partnership by the Partners and Assignees.
B. The tax matters partner is authorized, but not required:
(1) to enter into any settlement with the IRS with respect to any administrative or judicial
proceedings for the adjustment of Partnership items required to be taken into account by a Partner
for income tax purposes (such administrative proceedings being referred to as a “tax audit”
and such judicial proceedings being referred to as “judicial review”), and in the
settlement agreement the tax matters partner may expressly state that such agreement shall bind all
Partners, except that such settlement agreement shall not bind any Partner (i) who (within the time
prescribed pursuant to the Code and Regulations) files a statement with the IRS providing that the
tax matters partner shall not have the authority to enter into a settlement agreement on behalf of
such Partner or (ii) who is a “notice partner” (as defined in Section 6231 of the Code) or
a member of a “notice group” (as defined in Section 6223(b)(2) of the Code);
(2) in the event that a notice of a final administrative adjustment at the Partnership level
of any item required to be taken into account by a Partner for tax purposes (a “final
adjustment”) is mailed to the tax matters partner, to seek judicial review of such final
adjustment, including the filing of a petition for readjustment with the Tax Court or the United
States Claims Court, or the filing of a complaint for refund with the District Court of the United
States for the district in which the Partnership’s principal place of business is located;
(3) to intervene in any action brought by any other Partner for judicial review of a final
adjustment;
(4) to file a request for an administrative adjustment with the IRS at any time and, if any
part of such request is not allowed by the IRS, to file an appropriate pleading (petition or
complaint) for judicial review with respect to such request;
(5) to enter into an agreement with the IRS to extend the period for assessing any tax which
is attributable to any item required to be taken into account by a Partner for tax purposes, or an
item affected by such item; and
(6) to take any other action on behalf of the Partners of the Partnership in connection with
any tax audit or judicial review proceeding to the extent permitted by applicable law or
regulations.
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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 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) 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 as provided in Section 709 of the Code.
Section 10.5 Withholding
The Special General Partner and each Limited Partner hereby authorize the Partnership to
withhold from or pay on behalf of or with respect to such 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 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 the Special General Partner or a Limited Partner shall constitute a receivable
of the Partnership from such Partner, which receivable shall be paid by such 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 Partner
or (ii) the General Partner determines, in its sole and absolute discretion, that such payment may
be satisfied out of the available funds of the Partnership which would, but for such payment, be
distributed to the Partner. Any amounts withheld pursuant to the foregoing clauses (i) or (ii)
shall be treated as having been distributed to such Partner. The Special General Partner and each
Limited Partner hereby unconditionally and irrevocably grants to the Partnership a security
interest in such Partner’s Partnership Interest to secure such Partner’s obligation to pay to the
Partnership any amounts required to be paid pursuant to this Section 10.5. Any amounts
payable by the Special General Partner or a Limited Partner hereunder shall bear interest at the
base rate on corporate loans at large United States money center commercial banks, as published
from time to time in the Wall Street Journal, plus two percentage points (but not higher
than the maximum lawful rate) from the date such amount is due (i.e., fifteen (15) days
after demand) until such amount is paid in full. The Special General Partner and 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
TRANSFERS AND WITHDRAWALS
Section 11.1 Transfer
A. The term “transfer,” when used in this Article 11 with respect to a
Partnership Interest, shall be deemed to refer to a transaction by which a Partner purports to
assign its Partnership Interest to another Person and includes a sale, assignment, gift (outright
or in trust), pledge, encumbrance, hypothecation, mortgage, exchange or any other disposition by
law or otherwise. The term “transfer” when used in this Article 11 does not include any
Redemption or exchange for REIT Shares pursuant to Section 8.6, except as otherwise
provided herein. 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 and the Special General Partner.
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B. No Partnership Interest shall be transferred, in whole or in part, except in accordance
with the terms and conditions set forth in this Article 11. Any transfer or purported
transfer of a Partnership Interest not made in accordance with this Article 11 shall be
null and void ab initio unless otherwise consented to by the General Partner and the Special
General Partner in their sole and absolute discretion.
Section 11.2 Transfer of the Partnership Interest of the General Partner and the Special
General Partner
A. The General Partner shall not (i) voluntarily withdraw from the Partnership, (ii) directly
or indirectly transfer all or any portion of its interest in the Partnership (except to an entity
wholly owned by the General Partner), or (iii) engage in any merger, consolidation, or other
combination with or into another Person, sale of all or substantially all of its assets or any
reclassification or recapitalization of its outstanding equity interests or undertake any Listing
Event (an “Extraordinary Transaction”), without the Consent of the Partners, which may be given or
withheld by each Partner in his, her or its sole and absolute discretion. In addition, if an
Extraordinary Transaction would result in the termination of the Advisory Agreement, the
Partnership must either (i) exercise its right to redeem the Special General Partner Interest as
provided under Section 11.7, or (ii) obtain the Consent of the Special General Partner.
Upon any transfer of a Partnership Interest in accordance with the provisions of this Section
11.2, the transferee shall become a Substitute General Partner for all purposes herein, and
shall be vested with the powers and rights of the transferor General Partner, and shall be liable
for all obligations and responsible for all duties of the General Partner, once such transferee has
executed such instruments as may be necessary to effectuate such admission and to confirm the
agreement of such transferee to be bound by all the terms and provisions of this Agreement with
respect to the Partnership Interest so acquired. It is a condition to any transfer otherwise
permitted hereunder that the transferee assumes, by operation of law or express agreement, all of
the obligations of the transferor General Partner under this Agreement with respect to such
transferred Partnership Interest, and no such transfer (other than pursuant to a statutory merger
or consolidation wherein all obligations and liabilities of the transferor General Partner are
assumed by a successor corporation by operation of law) shall relieve the transferor General
Partner of its obligations under this Agreement without the Consent of the Limited Partners, in
their reasonable discretion. In the event the General Partner withdraws from the Partnership in
violation of this Agreement or otherwise, or otherwise dissolves or terminates, or upon the
Incapacity of the General Partner, all of the remaining Partners may elect to continue the
Partnership business by selecting a Substitute General Partner in
accordance with the Act.
B. Notwithstanding any other provision of this Agreement, the Special General Partner shall
not transfer all or any portion of its Partnership Interest to any transferee without the consent
of the General Partner, which consent may be withheld in the sole and absolute discretion of the
General Partner. Notwithstanding the preceding sentence, however, the Special General Partner
shall have the right, at any time, to transfer its Partnership Interest to the General Partner, an
Affiliate of the General Partner, W. P. ▇▇▇▇▇ & Co. LLC (“W. P. ▇▇▇▇▇”), Watermark Capital
Partners, LLC (“Watermark Capital Partners”), or an Affiliate of W. P. ▇▇▇▇▇ or Watermark Capital
Partners.
Section 11.3 Limited Partners’ Rights to Transfer
A. Prior to the first anniversary of the Effective Date, no Limited Partner shall transfer all
or any portion of its Partnership Interest to any transferee without the consent of the General
Partner and the Special General Partner, which consent may be withheld in their sole and absolute
discretion; provided, however, that any Limited Partner may, at any time, without
the consent of the General Partner and the Special General Partner, (i) transfer all or any portion
of its Partnership Interest to the General Partner, (ii) transfer all or any portion of its
Partnership Interest to an Affiliate, another original Limited Partner or to a Family Member,
subject to the provisions of Section 11.6, (iii) transfer all or any portion of its
Partnership Interest to a trust for the benefit of a charitable beneficiary or to a charitable
foundation, subject to the provisions of Section 11.6, and (iv) subject to the provisions
of Section 11.6, pledge
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(a “Pledge”) all or any portion of its Partnership Interest to a lending institution, which is not an Affiliate of such Limited Partner,
as collateral or security for a bona fide loan or other extension of credit, and transfer such
pledged Partnership Interest to such lending institution in connection with the exercise of
remedies under such loan or extension or credit, and the transfer of such pledged Partnership
Interest by the lender to any transferee. After such anniversary, each Limited Partner or Assignee
(resulting from a transfer made pursuant to clauses (i)-(iv) of the proviso of the preceding
sentence) shall have the right to transfer all or any portion of its Partnership Interest, subject
to the provisions of Section 11.6 and the satisfaction of each of the following conditions
(in addition to the right of each such Limited Partner or Assignee to continue to make any such
transfer permitted by clauses (i)-(iv) of such proviso without satisfying either of the following
conditions):
(1) General Partner Right of First Refusal. The transferring Partner shall give
written notice of the proposed transfer to the General Partner, which notice shall state (i) the
identity of the proposed transferee, and (ii) the amount and type of consideration proposed to be
received for the transferred OP Units. The General Partner shall have ten (10) business days upon
which to give the transferring Partner notice of its election to acquire the OP Units on the
proposed terms. If it so elects, it shall purchase the OP Units on such terms within ten (10)
business days after giving notice of such election. If it does not so elect, the transferring
Partner may transfer such OP Units to a third party, on economic terms no more favorable to the
transferee than the proposed terms, subject to the other conditions of this Section 11.3.
(2) Qualified Transferee. Any transfer of a Partnership Interest shall be made only to
Qualified Transferees. It is a condition to any transfer otherwise permitted hereunder that the
transferee assumes by operation of law or express agreement all of the obligations of the
transferor Limited Partner under this Agreement with respect to such transferred Partnership
Interest and no such transfer (other than pursuant to a statutory merger or consolidation wherein
all obligations and liabilities of the transferor Partner are assumed by a successor corporation by
operation of law) shall relieve the transferor Partner of its obligations under this Agreement
without the approval of the General Partner, in its reasonable discretion. Notwithstanding the
foregoing, any transferee of any transferred Partnership Interest shall be subject to any and all
ownership limitations contained in the Charter, which may limit or restrict such transferee’s
ability to exercise its Redemption rights, and to the representations in Section 3.4.D. Any
transferee, whether or not admitted as a Substituted Limited Partner, shall take subject to the
obligations of the transferor hereunder. Unless admitted as a Substituted Limited Partner, no
transferee, whether by a voluntary transfer, by operation of law or otherwise, shall have any
rights hereunder, other than the rights of an Assignee as provided in Section 11.5.
B. If a Limited Partner is subject to Incapacity, the executor, administrator, trustee,
committee, guardian, conservator, or receiver of such Limited Partner’s estate shall have all the
rights of a Limited Partner, but not more rights than those enjoyed by other Limited Partners, for
the purpose of settling or managing the estate, and such power as the Incapacitated Limited Partner
possessed to transfer all or any part of his or its interest in the Partnership. The Incapacity of
a Limited Partner, in and of itself, shall not dissolve or terminate the Partnership.
C. The General Partner may prohibit any transfer otherwise permitted under Section
11.3 by a Limited Partner of his or her OP Units if, in the opinion of legal counsel to the
Partnership, such transfer would require the filing of a registration statement under the
Securities Act by the Partnership or would otherwise violate any federal or state securities laws
or regulations applicable to the Partnership or the Partnership Unit.
Section 11.4 Substituted Limited Partners
A. No Limited Partner shall have the right to substitute a transferee as a Limited Partner in
his or her place (including any transferee permitted by Section 11.3). The General Partner
shall, however, have the right to consent to the admission of a transferee of the interest of a
Limited Partner pursuant to this Section 11.4 as a Substituted Limited Partner, which
consent may be given or withheld by the General Partner in its sole and absolute discretion. The
General Partner’s failure or refusal to permit a transferee of any such
interests to become a Substituted Limited Partner shall not give rise to any cause of action,
whether at law or in equity, against the Partnership or any Partner.
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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. The admission of any transferee as a
Substituted Limited Partner shall be subject to the transferee executing and delivering to the
General Partner an acceptance of all of the terms and conditions of this Agreement (including
without limitation, the provisions of Section 2.4 and such other documents or instruments
as may be required to effect the admission), each in form and substance satisfactory to the General
Partner) and the acknowledgment by such transferee that each of the representations and warranties
set forth in Section 3.4 are true and correct with respect to such transferee as of the
date of the transfer of the Partnership Interest to such transferee and will continue to be true to
the extent required by such representations and warranties.
C. Upon the admission of a Substituted Limited Partner, the General Partner shall amend
Exhibit A to reflect the name, address, number of OP 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 under Section 11.3 as a Substituted Limited Partner, as
described in Section 11.4, such transferee shall be considered an Assignee for purposes of
this Agreement. An Assignee shall be entitled to all the rights of an assignee of a limited
partnership interest under the Act, including the right to receive distributions from the
Partnership and the share of Net Income, Net Loss, gain and loss attributable to the OP Units
assigned to such transferee, the rights to transfer the OP Units provided in this Article
11, the right of Redemption provided in Section 8.6, but shall not be deemed to be a
holder of OP Units for any other purpose under this Agreement, and shall not be entitled to effect
a Consent with respect to such OP Units on any matter presented to the Limited Partners for
approval (such Consent remaining with the transferor Limited Partner). In the event any such
transferee desires to make a further assignment of any such Partnership Units, such transferee
shall be subject to all the provisions of this Article 11 to the same extent and in the
same manner as any Limited Partner desiring to make an assignment of OP Units. Notwithstanding
anything contained in this Agreement to the contrary, as a condition to becoming an Assignee, any
prospective Assignee must first execute and deliver to the Partnership an acknowledgment that each
of the representations and warranties set forth in Section 3.4 are true and correct with
respect to such prospective Assignee as of the date of the prospective assignment of the
Partnership Interest to such prospective Assignee and will continue to be true to the extent
required by such representations or warranties.
Section 11.6 General Provisions
A. No Limited Partner may withdraw from the Partnership other than as a result of (i) a
permitted transfer of all of such Limited Partner’s OP Units in accordance with this Article
11 and the transferee(s) of such Partnership Units being admitted to the Partnership as a
Substituted Limited Partner or (ii) pursuant to the exercise of its right of Redemption of all of
such Limited Partner’s OP Units under Section 8.6; provided that after such transfer,
exchange or redemption such Limited Partner owns no Partnership Interest.
B. Any Limited Partner who shall transfer all of such Limited Partner’s OP Units in a transfer
permitted pursuant to this Article 11 where such transferee was admitted as a Substituted
Limited Partner or pursuant to the exercise of its rights of Redemption of all of such Limited
Partner’s OP Units under Section 8.6 shall cease to be a Limited Partner; provided that
after such transfer, exchange or redemption such Limited Partner owns no Partnership Interest.
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C. Transfers pursuant to this Article 11 may only be made on the first day of a fiscal
quarter of the Partnership, unless the General Partner otherwise agrees.
D. If any Partnership Interest is transferred, assigned or redeemed during any quarterly
segment of the Partnership’s Partnership Year in compliance with the provisions of this Article
11 or transferred or redeemed pursuant to Section 8.6, on any day other than the first
day of a Partnership Year, then Net Income, Net Loss, each item thereof and all other items
attributable to such Partnership 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 using a method selected by the General Partner that is in
accordance with Section 706(d) of the Code. Except as otherwise agreed by the General Partner, all
distributions of Available Cash with respect to which the Partnership Record Date is before the
date of such transfer, assignment, exchange or redemption shall be made to the transferor Partner,
and all distributions of Available Cash thereafter, in the case of a transfer or assignment other
than a redemption, shall be made to the transferee Partner.
E. In addition to any other restrictions on transfer herein contained, including without
limitation the provisions of this Article 11, in no event may any transfer or assignment of
a Partnership Interest by any Partner (including pursuant to a Redemption or exchange for REIT
Shares by the Partnership or the General Partner) be made (i) to any person or entity who lacks the
legal right, power or capacity to own a Partnership Interest; (ii) in violation of applicable law;
(iii) except with the consent of the General Partner, which may be given or withheld in its sole
and absolute discretion, 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) except with the consent of the General Partner, which may be given or withheld in
its sole and absolute discretion, if in the opinion of legal counsel to the Partnership such
transfer could cause a termination of the Partnership for federal or state income tax purposes
(except as a result of the Redemption or exchange for REIT Shares of all Partnership Interests 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 such transfer could 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 REIT Shares of all Partnership Interests held by all
Limited Partners); (vi) if such transfer could, in the opinion of counsel to the Partnership, 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 could, in the opinion of counsel to the
Partnership, cause any portion of the assets of the Partnership to constitute assets of any
employee benefit plan pursuant to Department of Labor Regulations Section 2510.2-101; (viii) if
such transfer requires the registration of such Partnership Interest pursuant to any applicable
federal or state securities laws; (ix) except with the consent of the General Partner, which may be
given or withheld in its sole and absolute discretion, if such transfer (1) could be treated as
effectuated through an “established securities market” or a “secondary market” (or the substantial
equivalent thereof) within the meaning of Section 7704 of the Code, (2) could cause the Partnership
to become a “publicly traded partnership,” as such term is defined in Sections 469(k)(2) or 7704(b)
of the Code, (3) could be in violation of Section 3.4.E(5), or (4) could cause the
Partnership to fail one or more of the Safe Harbors (as defined below); (x) if such transfer
subjects 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; (xi)
except with the consent of the General Partner, which may be given or withheld in its sole
discretion, if the transferee or assignee of such Partnership Interest is unable to make the
representations set forth in Section 3.4.C; (xii) if such transfer is 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,
except with the consent of the General Partner, which may be given or withheld in its sole and
absolute discretion; and provided, that, as a condition to granting such consent the lender may be
required to enter into an arrangement with the Partnership and the General Partner to redeem or
exchange for the REIT Shares Amount any OP 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; or (xiii) if in the opinion of
legal counsel for the Partnership such transfer could adversely affect the ability of the General
Partner to continue to qualify as a REIT or, except with the consent of the General Partner, which
may be given or withheld in its sole and absolute discretion, subject the General Partner to any
additional taxes under Section 857 or Section 4981 of the Code.
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F. The General Partner shall monitor the transfers of interests in the Partnership (including
any acquisition of OP Units by the Partnership or the General Partner) to determine (i) if such
interests could be treated as 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 such transfers of interests could result in the Partnership being unable to qualify
for 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
have the authority (but shall not be required) to take any steps it determines are necessary or
appropriate in its sole and absolute discretion to prevent any trading of interests which could
cause the Partnership to become a “publicly traded partnership” within the meaning of Code Section
7704, or any recognition by the Partnership of such transfers, or to ensure that one or more of the
Safe Harbors is met.
Section 11.7 Call Right Attributable to the Special General Partner Interest
A. In the event of a “Trigger Event” (as defined in Section 11.7.B hereof),
the Partnership shall have the right (the “Call Right”) to redeem all, or any portion, of the
Special General Partner Interest. The Partnership shall exercise the Call Right by providing the
Special General Partner with written notice of its desire to exercise the Call Right within sixty
(60) days of the occurrence of a Trigger Event. The purchase price to be paid by the Partnership
for the portion of the Special General Partner Interest that is subject to the Call Right shall
equal the fair market value of such Interest as determined by Appraisal, and, subject to
Section 11.7.C below, shall be paid in cash or in REIT Shares (at the option of the Special
General Partner) within one hundred twenty (120) days after the Partnership provides the written
notice required under this Section 11.7.A.
B. For purposes of this Section 11.7, a Trigger Event means, at any time after the
second anniversary of the Effective Date, the:
| (1) | non-renewal of the Advisory Agreement upon the expiration of its then-current term; | ||
| (2) | termination of the Advisory Agreement for any reason under circumstances where an Affiliate of the Advisor does not serve as the advisor under any replacement advisory agreement; or | ||
| (3) | resignation of the Advisor under the Advisory Agreement. |
C. In the event that the Partnership exercises the Call Right as a result of a termination of
the Advisory Agreement for “Cause” (as defined in the Advisory Agreement), the Partnership shall
have the option to redeem all or a portion of the Special General Partner Interest by issuing its
promissory note with (i) a term of five (5) years; (ii) annual installments of principal payable
ratably over the term of the note; and (iii) a market rate of interest.
Section 11.8 Put Right of General Partner
The General Partner shall have the right at any time (the “GP Put Right”) to require the
Partnership to redeem any portion of the General Partner Interest for the purpose of providing the
General Partner with
sufficient funds to enable it to make redemptions of its stock. The General Partner shall exercise
the GP Put Right at any time by providing the Partnership with written notice of its desire to
exercise the GP Put Right. The purchase price to be paid by the Partnership for the portion of the
General Partner Interest that the General Partner desires to be redeemed shall equal the fair
market value of such portion as determined by Appraisal, and shall be paid in cash within one
hundred twenty (120) days after the General Partner provides the written notice required under this
Section 11.8. In the event that the General Partner exercises the GP Put Right, the OP
Units held by the General Partner shall be reduced as appropriate.
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ARTICLE 12.
ADMISSION OF PARTNERS
ADMISSION OF PARTNERS
Section 12.1 Admission of Successor General Partner
A successor to all of the General Partner’s General Partner Interest pursuant to Section
11.2 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 Article 11.
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 and (ii) such other documents or instruments as may be required in
the discretion of the General Partner in order to effect such Person’s admission as an Additional
Limited Partner.
B. Notwithstanding anything to the contrary in this Section 12.2, no Person shall be
admitted as an Additional Limited Partner without the consent of the General Partner, which consent
may be given or withheld in the General Partner’s sole and absolute discretion. The admission of
any Person as an Additional Limited Partner shall become effective on the date upon which the name
of such Person is recorded on the books and records of the Partnership, following the receipt of
the Capital Contribution in respect of such Limited Partner and the consent of the General Partner
to such admission. 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 Loss, each item thereof and
all other items allocable among Partners and Assignees for such Partnership Year shall be allocated
among such Limited Partner and all other Partners and Assignees by taking into account their
varying interests during the Partnership Year using a method selected by the General Partner that
is in accordance with Section 706(d) of the Code. All distributions of Available Cash with respect
to which the Partnership Record Date is before the date of such admission shall be made solely to
Partners and Assignees other than the Additional Limited Partner (other than in its capacity as an
Assignee) and, except as otherwise agreed to by the Additional Limited Partners and the General
Partner, all distributions of Available Cash thereafter shall be made to all 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
by law, shall prepare and file an amendment to the Certificate and may for this purpose exercise
the power of attorney granted pursuant to Section 2.4.
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ARTICLE 13.
DISSOLUTION AND LIQUIDATION
DISSOLUTION AND LIQUIDATION
Section 13.1 Dissolution
The Partnership shall not be dissolved by the admission of Substituted Limited Partners or
Additional Limited Partners or by the admission of a successor General Partner in accordance with
the terms of this Agreement. Upon the withdrawal of the General Partner, any successor General
Partner (selected as described in Section 13.1.B below) shall continue the business of the
Partnership. The Partnership shall dissolve, and its affairs shall be wound up, upon the first to
occur of any of the following (each a “Liquidating Event”):
A. the expiration of its term as provided in Section 2.5;
B. an event of withdrawal of the General Partner, as defined in the Act, unless, within ninety
(90) days after the withdrawal, all of the remaining Partners agree in writing, in their sole and
absolute discretion, to continue the business of the Partnership and to the appointment, effective
as of the date of withdrawal, of a substitute General Partner;
C. subject to compliance with Section 11.2 an election to dissolve the Partnership
made by the General Partner, in its sole and absolute discretion;
D. entry of a decree of judicial dissolution of the Partnership pursuant to the provisions of
the Act;
E. 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;
F. the Incapacity of the General Partner, unless all of the remaining Partners in their sole
and absolute discretion 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 Incapacity, of a substitute General
Partner;
G. the redemption or exchange for REIT Shares of all Partnership Interests (other than those
of the General Partner) pursuant to this Agreement; or
H. 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.
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Section 13.2 Winding Up
A. Upon the occurrence of a Liquidating Event, the Partnership shall continue solely for the
purposes of winding up its affairs in an orderly manner, liquidating its assets, and satisfying the
claims of its creditors and Partners. No Partner shall take any action that is inconsistent with,
or not necessary to or appropriate for, the winding up of the Partnership’s business and affairs.
The General Partner (or, in the event there is no remaining General Partner, any Person elected by
a Majority in Interest of the Limited Partners (the “Liquidator”)) shall be responsible for
overseeing the winding up and dissolution of the Partnership and
shall take full account of the Partnership’s liabilities and property and the Partnership property
shall be liquidated as promptly as is consistent with obtaining the fair value thereof, and the
proceeds therefrom (which may, to the extent determined by the General Partner, include shares of
stock in the General Partner) shall be applied and distributed in the following order:
(1) First, to the payment and discharge of all of the Partnership’s debts and liabilities to
creditors other than the Partners;
(2) Second, to the payment and discharge of all of the Partnership’s debts and liabilities to
the General Partner;
(3) Third, to the payment and discharge of all of the Partnership’s debts and liabilities to
the other Partners; and
(4) The balance, if any, to the General Partner, the Special General Partner and the Limited
Partners in proportion to their positive Capital Account balances, determined after taking into
account all Capital Account adjustments for all prior periods and the Partnership taxable year
during which the liquidation occurs (other than those made as a result of the liquidating
distribution set forth in this Section 13.2.A(4)).
B. Notwithstanding the provisions of Section 13.2.A which require liquidation of the
assets of the Partnership, but subject to the order of priorities set forth therein, if prior to or
upon dissolution of the Partnership the Liquidator determines that an immediate sale of part or all
of the Partnership’s assets would be impractical or would cause undue loss to the Partners, the
Liquidator may, in its sole and absolute discretion, defer for a reasonable time the liquidation of
any assets except those necessary to satisfy liabilities of the Partnership (including to those
Partners as creditors) and/or distribute to the Partners, in lieu of cash, as tenants in common and
in accordance with the provisions of Section 13.2.A, 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.
Section 13.3 Capital Contribution Obligation
If any Partner has a deficit balance in his, her, or its Capital Account (after giving effect
to all contributions, distributions and allocations for the taxable years, including the year
during which such liquidation occurs), such Partner shall have no obligation to make any
contribution to the capital of the Partnership with respect to such deficit, and such deficit at
any time shall not be considered a debt owed to the Partnership or to any other Person for any
purpose whatsoever, except to the extent otherwise expressly agreed to by such Partner and the
Partnership.
Section 13.4 Compliance with Timing Requirements of Regulations
In the discretion of the Liquidator or the General Partner, a pro rata portion of the
distributions that would otherwise be made to the General Partner and Limited Partners pursuant to
this Article 13 may be:
(1) distributed to a trust established for the benefit of the General Partner and Limited
Partners for the purposes of liquidating Partnership assets, collecting amounts owed to the
Partnership, and paying any contingent or unforeseen liabilities or obligations of the Partnership
or of the General Partner arising out of or in connection with the Partnership. The assets of any
such trust shall be distributed to the General Partner and Limited Partners from time to time, in
the reasonable discretion of the Liquidator or the
General Partner, in the same proportions and 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
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(2) 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 priority set forth in
Section 13.2.A as soon as practicable.
Section 13.5 Deemed Contribution and Distribution
Notwithstanding any other provision of this Article 13, in the event the Partnership
is liquidated within the meaning of Regulations Section 1.704-1(b)(2)(ii)(g) but no Liquidating
Event has occurred, the Partnership’s property shall not be liquidated, the Partnership’s
liabilities shall not be paid or discharged, and the Partnership’s affairs shall not be wound up.
Instead, the Partnership shall be deemed to have contributed all of its assets and liabilities to a
new partnership in exchange for an interest in the new partnership. Immediately thereafter, the
Partnership shall be deemed to distribute interests in the new partnership to the General Partner
and Limited Partners in proportion to their respective interests in the Partnership in liquidation
of the Partnership.
Section 13.6 Rights of Limited Partners
Except as otherwise provided in this Agreement, each Limited Partner shall look solely to the
assets of the Partnership for the return of his Capital Contribution and shall have no right or
power to demand or receive property from the General Partner. No Limited Partner shall have
priority over any other Limited Partner as to the return of his Capital Contributions,
distributions or allocations.
Section 13.7 Notice of Dissolution
In the event a Liquidating Event occurs or an event occurs that would, but for provisions of
Section 13.1, result in a dissolution of the Partnership, the General Partner shall, within
thirty (30) days thereafter, provide written notice thereof to each of the Partners and to all
other parties with whom the Partnership regularly conducts business (as determined in the
discretion of the General Partner) and shall publish notice thereof in a newspaper of general
circulation in each place in which the Partnership regularly conducts business (as determined in
the discretion of the General Partner).
Section 13.8 Cancellation of Certificate of Limited Partnership
Upon the completion of the liquidation of the Partnership cash and property as provided in
Section 13.2, the Partnership shall be terminated and the Certificate and all
qualifications of the Partnership as a foreign limited partnership in jurisdictions shall be
cancelled and such other actions as may be necessary to terminate the Partnership shall be taken.
Section 13.9 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, 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 13.10 Waiver of Partition
Each Partner hereby waives any right to partition of the Partnership property.
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ARTICLE 14.
AMENDMENT OF PARTNERSHIP AGREEMENT; CONSENTS
AMENDMENT OF PARTNERSHIP AGREEMENT; CONSENTS
Section 14.1 Amendments
A. The actions requiring consent or approval of the Partners or of the Limited Partners
pursuant to this Agreement, including Section 7.3, or otherwise pursuant to applicable law,
are subject to the procedures in this Article 14.
B. Amendments to this Agreement requiring the consent or approval of Limited Partners may be
proposed by the General Partner or by Limited Partners holding twenty-five percent (25%) or more of
the Partnership Interests held by Limited Partners. Following such proposal, the General Partner
shall submit any proposed amendment to the Partners or to the Limited Partners, as applicable. The
General Partner shall seek the written consent of the Limited Partners on the proposed amendment or
shall call a meeting to vote thereon and to transact any other business that it may deem
appropriate. For purposes of obtaining a written consent, the General Partner may require a
response within a reasonable specified time, but not less than fifteen (15) days, and failure to
respond in such time period shall constitute a consent which is consistent with the General
Partner’s recommendation (if so recommended) with respect to the proposal; provided,
that, an action shall become effective at such time as requisite consents are received even
if prior to such specified time.
C. No amendment to this Agreement that would adversely affect the rights and interests of the
Special General Partner may be made without the prior written consent of the Special General
Partner.
Section 14.2 Action by the Partners
A. Meetings of the Partners may be called by the General Partner and shall be called upon the
receipt by the General Partner of a written request by Limited Partners holding twenty-five percent
(25%) or more of the Partnership Interests held by Limited Partners. The notice 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
Limited Partners or of the Partners is permitted or required under this Agreement, such vote or
Consent may be given at a meeting of Partners or may be given in accordance with the procedure
prescribed in Section 14.1.
B. Any action required or permitted to be taken at a meeting of the Partners may be taken
without a meeting if a written consent setting forth the action so taken is signed by the
percentage as is expressly required by this Agreement for the action in question. Such consent may
be in one instrument or in several instruments, and shall have the same force and effect as a vote
of the Percentage Interests of the Partners (expressly required by this Agreement). Such consent
shall be filed with the General Partner. An action so taken shall be deemed to have been taken at a
meeting held on the effective date so certified.
C. Each Limited Partner may authorize any Person or Persons to act for him by proxy on all
matters in which a Limited Partner is entitled to participate, including waiving notice of any
meeting, or voting or participating at a meeting. Every proxy must be signed by the Limited Partner
or his attorney-in-fact. No proxy shall be valid after the expiration of 11 months from the date
thereof unless otherwise provided in the proxy. Every proxy shall be revocable at the pleasure of
the Limited Partner executing it.
D. Each meeting of Partners shall be conducted by the General Partner or such other Person as
the General Partner may appoint pursuant to such rules for the conduct of the meeting as the
General Partner or such other Person deems appropriate.
E. On matters on which Limited Partners are entitled to vote, each Limited Partner shall have
a vote equal to the number of OP Units held.
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ARTICLE 15.
GENERAL PROVISIONS
GENERAL PROVISIONS
Section 15.1 Addresses and Notice
Any notice, demand, request or report required or permitted to be given or made to a Partner
or Assignee under this Agreement shall be in writing and shall be deemed given or made when
delivered in person or when sent by first class United States mail or by other means of written
communication to the Partner or Assignee at the address set forth in Exhibit A or such other
address as the Partners shall notify the General Partner in writing.
Section 15.2 Titles and Captions
All article or section titles or captions in this Agreement are for convenience only. They
shall not be deemed part of this Agreement and in no way define, limit, extend or describe the
scope or intent of any provisions hereof. Except as specifically provided otherwise, references to
“Articles” and “Sections” are to Articles and Sections of this Agreement.
Section 15.3 Pronouns and Plurals
Whenever the context may require, any pronoun used in this Agreement shall include the
corresponding masculine, feminine or neuter forms, and the singular form of nouns, pronouns and
verbs shall include the plural and vice versa.
Section 15.4 Further Action
The parties shall execute and deliver all documents, provide all information and take or
refrain from taking action as may be necessary or appropriate to achieve the purposes of this
Agreement.
Section 15.5 Binding Effect
This Agreement shall be binding upon and inure to the benefit of the parties hereto and their
heirs, executors, administrators, successors, legal representatives and permitted assigns.
Section 15.6 Creditors
Other than as expressly set forth herein with respect to Indemnitees, 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 or delay by any party to insist upon the strict performance of any covenant, duty,
agreement or condition of this Agreement or to exercise any right or remedy consequent upon any
breach thereof shall constitute waiver of any such breach or any other covenant, duty, agreement or
condition.
Section 15.8 Counterparts
This Agreement may be executed in counterparts, all of which together shall constitute one
agreement binding on all the parties hereto, notwithstanding that all such parties are not
signatories to the original or the same counterpart. Each party shall become bound by this
Agreement immediately upon affixing its signature hereto.
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Section 15.9 Applicable Law
This Agreement shall be construed in accordance with and governed by the laws of the State of
Delaware, without regard to the principles of conflicts of law.
Section 15.10 Invalidity of Provisions
If any provision of this Agreement is or becomes invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining provisions contained herein
shall not be affected thereby.
Section 15.11 Entire Agreement
This Agreement contains the entire understanding and agreement among the Partners with respect
to the subject matter hereof and supersedes any other prior written or oral understandings or
agreements among them with respect thereto.
Section 15.12 No Rights as Stockholders
Nothing contained in this Agreement shall be construed as conferring upon the holders of OP
Units any rights whatsoever as stockholders of the General Partner, including without limitation
any right to receive dividends or other distributions made to stockholders of the General Partner
or to vote or to consent or to receive notice as stockholders in respect of any meeting of
stockholders for the election of directors of the General Partner or any other matter.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement of Limited Partnership as
of the date first written above.
| General Partner: | ▇▇▇▇▇ WATERMARK INVESTORS INCORPORATED, a Maryland corporation |
|||
| By: | /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ | |||
| Name: | ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ | |||
| Title: | Chief Operating Officer | |||
| Special General Partner: | ▇▇▇▇▇ WATERMARK HOLDINGS, LLC, a Delaware limited liability company |
|||
| By: | CLA HOLDINGS, LLC, its Managing Member | |||
| /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ | ||||
| Name: | ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ | |||
| Title: | Chief Financial Officer | |||
Signature Page to OP Agreement