Exhibit 4.1
AGREEMENT OF LIMITED PARTNERSHIP
OF
ORION MULTIFAMILY LP
TABLE OF CONTENTS
Page
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ARTICLE 1 DEFINED TERMS..................................................................................1
ARTICLE 2 ORGANIZATIONAL MATTERS........................................................................13
2.1 Formation.............................................................................13
2.2 Name..................................................................................13
2.3 Registered Office and Agent; Principal Office.........................................14
2.4 Power of Attorney.....................................................................14
2.5 Term..................................................................................16
ARTICLE 3 PURPOSE ......................................................................................16
3.1 Purpose and Business..................................................................16
3.2 Powers................................................................................17
ARTICLE 4 CAPITAL CONTRIBUTIONS.........................................................................17
4.1 Capital Contributions of the Partners.................................................17
4.2 Additional Funds; Restrictions on the General Partner.................................18
4.3 Issuance of Additional Partnership Interests; Admission of Additional
Limited Partners......................................................................20
4.4 Contribution of Proceeds of Issuance of REIT Stock....................................20
4.5 Repurchase of REIT Stock; Shares-In-Trust.............................................21
4.6 No Third-Party Beneficiary............................................................22
4.7 No Interest; No Return................................................................22
4.8 No Preemptive Rights..................................................................22
ARTICLE 5 DISTRIBUTIONS.................................................................................22
5.1 Regular Distributions.................................................................22
5.2 Qualification as a REIT...............................................................22
5.3 Withholding...........................................................................23
5.4 Additional Partnership Interests......................................................23
5.5 Distributions Upon Liquidation........................................................23
ARTICLE 6 ALLOCATIONS...................................................................................23
6.1 Allocations...........................................................................23
6.2 Revisions to Allocations to Reflect Issuance of Partnership Interests.................23
ARTICLE 7 MANAGEMENT AND OPERATIONS OF BUSINESS.........................................................24
7.1 Management............................................................................24
7.2 Certificate of Limited Partnership....................................................29
7.3 Reimbursement of the General Partner..................................................29
7.4 Outside Activities of the General Partner.............................................30
7.5 Contracts with Affiliates.............................................................30
7.6 Indemnification.......................................................................31
7.7 Liability of the General Partner......................................................34
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7.8 Other Matters Concerning the General Partner..........................................35
7.9 Title to Partnership Assets...........................................................36
7.10 Reliance by Third Parties.............................................................36
7.11 Loans By Third Parties................................................................37
ARTICLE 8 RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS....................................................37
8.1 Limitation of Liability...............................................................37
8.2 Management of Business................................................................37
8.3 Outside Activities of Limited Partners................................................37
8.4 Return of Capital.....................................................................38
8.5 Rights of Limited Partners Relating to the Partnership................................38
8.6 Exchange Rights Agreements............................................................39
ARTICLE 9 BOOKS, RECORDS, ACCOUNTING AND REPORTS........................................................39
9.1 Records and Accounting................................................................39
9.2 Fiscal Year...........................................................................40
9.3 Reports...............................................................................40
ARTICLE 10 TAX MATTERS..................................................................................40
10.1 Preparation of Tax Returns............................................................40
10.2 Tax Elections.........................................................................40
10.3 Tax Matters Partner...................................................................41
10.4 Organizational Expenses...............................................................42
10.5 Withholding...........................................................................43
ARTICLE 11 TRANSFERS AND WITHDRAWALS....................................................................44
11.1 Transfer..............................................................................44
11.2 Transfer of the General Partner's General Partner Interest............................44
11.3 Limited Partners' Rights to Transfer..................................................46
11.4 Substituted Limited Partners..........................................................48
11.5 Assignees.............................................................................49
11.6 General Provisions....................................................................49
ARTICLE 12 ADMISSION OF PARTNERS........................................................................51
12.1 Admission of Successor General Partner................................................51
12.2 Admission of Additional Limited Partners..............................................52
12.3 Amendment of Agreement and Certificate of Limited Partnership.........................53
ARTICLE 13 DISSOLUTION, LIQUIDATION AND TERMINATION.....................................................53
13.1 Dissolution...........................................................................54
13.2 Winding Up............................................................................55
13.3 No Obligation to Contribute Deficit...................................................56
13.4 Rights of Limited Partners............................................................57
13.5 Notice of Dissolution.................................................................57
13.6 Termination of Partnership and Cancellation of Certificate of Limited Partnership.....57
13.7 Reasonable Time for Winding-Up........................................................57
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13.8 Waiver of Partition...................................................................57
ARTICLE 14 AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS.................................................57
14.1 Amendments............................................................................57
14.2 Meetings of the Partners..............................................................58
ARTICLE 15 GENERAL PROVISIONS...........................................................................59
15.1 Addresses and Notice..................................................................59
15.2 Titles and Captions...................................................................60
15.3 Pronouns and Plurals..................................................................60
15.4 Further Action........................................................................60
15.5 Binding Effect........................................................................60
15.6 Creditors.............................................................................60
15.7 Waiver................................................................................60
15.8 Counterparts..........................................................................60
15.9 Applicable Law........................................................................61
15.10 Invalidity of Provisions..............................................................61
15.11 Entire Agreement......................................................................61
15.12 Merger................................................................................61
15.13 No Rights as Stockholders.............................................................61
EXHIBITS
Exhibit A - Partner's Contributions and Partnership Interests
Exhibit B - Allocations
Exhibit C - Exchange Rights Agreement for Partnership Units
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FOR ALL INVESTORS:
THE PARTNERSHIP UNITS ISSUED UNDER THIS AGREEMENT HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR REGISTERED OR
QUALIFIED UNDER THE APPLICABLE STATE SECURITIES LAWS, IN RELIANCE UPON
EXEMPTIONS FROM REGISTRATION AND QUALIFICATION PROVIDED IN THE SECURITIES ACT
AND THE APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE SOLD OR TRANSFERRED IN
THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND
QUALIFICATION OR REGISTRATION UNDER THE APPLICABLE STATE SECURITIES LAWS, OR AN
OPINION OF COUNSEL SATISFACTORY TO THE ISSUER THAT SUCH REGISTRATION OR
QUALIFICATION IS NOT REQUIRED.
IN ADDITION, THE PARTNERSHIP UNITS ISSUED UNDER THIS AGREEMENT MAY BE SOLD OR
TRANSFERRED ONLY IN COMPLIANCE WITH THE RESTRICTIONS ON TRANSFER SET FORTH
HEREIN.
IN MAKING AN INVESTMENT DECISION INVESTORS MUST RELY ON THEIR OWN EXAMINATION OF
THE COMPANY AND THE TERMS OF THIS OFFERING, INCLUDING THE MERITS AND RISKS
INVOLVED. THE PARTNERSHIP UNITS OFFERED HEREBY HAVE NOT BEEN RECOMMENDED BY ANY
FEDERAL OR STATE SECURITIES COMMISSION OR REGULATORY AUTHORITY. FURTHERMORE, THE
FOREGOING AUTHORITIES HAVE NOT CONFIRMED THE ACCURACY OR DETERMINED THE ADEQUACY
OF THIS MEMORANDUM. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE PARTNERSHIP UNITS OFFERED HEREBY ARE SUBJECT TO RESTRICTIONS ON
TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS
PERMITTED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND THE APPLICABLE STATE
SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. INVESTORS
SHOULD BE AWARE THAT THEY WILL BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS
INVESTMENT FOR AN INDEFINITE PERIOD OF TIME.
FOR NEW YORK INVESTORS:
THIS AGREEMENT HAS NOT BEEN REVIEWED BY THE ATTORNEY GENERAL PRIOR TO ITS
ISSUANCE AND USE. THE ATTORNEY GENERAL OF THE STATE OF NEW YORK HAS NOT PASSED
ON OR ENDORSED THE MERITS OF THIS OFFERING. ANY REPRESENTATION TO THE CONTRARY
IS UNLAWFUL.
THIS AGREEMENT DOES NOT CONTAIN AN UNTRUE STATEMENT OF A MATERIAL FACT OR OMIT
TO STATE A MATERIAL FACT NECESSARY TO MAKE THE STATEMENTS MADE, IN LIGHT OF THE
CIRCUMSTANCES UNDER WHICH THEY ARE MADE, NOT MISLEADING. STATEMENTS CONTAINED
HEREIN AS TO THE CONTENTS OF DOCUMENTS GOVERNING THIS INVESTMENT ARE SUMMARIES
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AND ARE NOT COMPLETE COPIES OF THE DOCUMENTS, AND, ACCORDINGLY, REFERENCE SHOULD
BE MADE TO THE DOCUMENTS THEMSELVES FOR A MORE COMPLETE UNDERSTANDING OF THE
INVESTMENT. HOWEVER, THIS PARTNERSHIP AGREEMENT CONTAINS A FAIR SUMMARY OF THE
MATERIAL TERMS OF DOCUMENTS PURPORTED TO BE SUMMARIZED HEREIN.
FOR FLORIDA INVESTORS:
THE PARTNERSHIP UNITS OFFERED HEREBY WILL BE SOLD TO, AND ACQUIRED BY, THE
PURCHASER IN A TRANSACTION EXEMPT UNDER SECTION 517.061(11) OF THE FLORIDA
SECURITIES AND INVESTOR PROTECTION ACT. THAT SECTION PROVIDES THAT WHEN SALES
ARE MADE TO FIVE OR MORE PERSONS, ANY SALE MADE PURSUANT TO SUCH SECTION IS
VOIDABLE AT THE OPTION OF THE PURCHASER WITHIN THREE (3) DAYS AFTER THE FIRST
TENDER OF CONSIDERATION IS MADE BY SUCH PURCHASER TO THE ISSUER, AN AGENT OF THE
ISSUER, OR AN ESCROW AGENT OR WITHIN THREE (3) DAYS AFTER THE AVAILABILITY OF
THAT PRIVILEGE IS COMMUNICATED TO SUCH PURCHASER, WHICHEVER OCCURS LATER.
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AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
ORION MULTIFAMILY LP
THIS AGREEMENT OF LIMITED PARTNERSHIP OF ORION MULTIFAMILY LP (this
"Agreement"), dated as of June 30, 2003, is entered into by and among ORION
MULTIFAMILY INVESTMENT FUND, a Maryland corporation, as general partner (the
"General Partner"), and the Limited Partners
WHEREAS, the General Partner and the Limited Partners have heretofore
formed Orion Multifamily LP (the "Partnership") as a limited partnership
pursuant to the Revised Uniform Limited Partnership Act of the State of Delaware
by filing a certificate of limited partnership with the Secretary of State of
the State of Delaware;
WHEREAS, the General Partner and the Limited Partner desire to continue the
Partnership as a limited partnership under the Delaware Revised Uniform Limited
Partnership Act and to amend and restate the Original Limited Partnership
Agreement in its entirety;
NOW THEREFORE, in consideration of the mutual covenants herein contained,
and other valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties do hereby agree that the Original Limited Partnership
Agreement is amended and restated in its entirety as follows:
ARTICLE 1
DEFINED TERMS
The following definitions shall be for all purposes, unless otherwise
clearly indicated to the contrary, applied to the terms used in this Agreement.
"Act" means the Delaware Revised Uniform Limited Partnership Act, as
amended from time to time, and any successor to such statute.
"Additional Limited Partner" means a Person that has executed and delivered
an additional limited partner signature page in the form attached hereto, has
been admitted to the Partnership as a Limited Partner pursuant to Section 4.3
hereof and that is shown as such on the books and records of the Partnership.
"Adjusted Capital Account Deficit" means with respect to any Partner, the
negative balance, if any, in such Partner's Capital Account as of the end of any
relevant fiscal year, determined after giving effect to the following
adjustments:
(a) credit to such Capital Account any portion of such negative
balance which such Partner (i) is treated as obligated to restore to the
Partnership pursuant to the provisions of Section 1.704-1(b)(2)(ii)(c) of
the Regulations, or (ii) is deemed to be
obligated to restore to the Partnership pursuant to the penultimate
sentences of Sections 1.704-2(g)(1) and 1.704-2(i)(5) of the Regulations;
and
(b) debit to such Capital Account the items described in Sections
1.704-1(b)(2)(ii)(d)(4), (5) and (6) of the Regulations.
"Adjusted Contribution" means the Capital Contributions of any Partner
reduced by the total distributions to such Partner from Capital Events. With
respect to the General Partner, the Adjusted Contribution shall include the
difference, if any, between gross proceeds from the future issuance of REIT
Stock, if any, and the proceeds actually received by the General Partner.
"Affiliate" means,
(a) with respect to any individual Person, any member of the Immediate
Family of such Person or a trust established for the benefit of such
member, or
(b) with respect to any Entity, any Person which, directly or
indirectly through one or more intermediaries, controls, is controlled by,
or is under common control with, any such Entity. For purposes of this
definition, "control," when used with respect to a 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.
"Agreement" means this Agreement of Limited Partnership, as originally
executed and as amended, modified, supplemented or restated from time to time,
as the context requires.
"Articles of Incorporation" means the General Partner's Articles of
Incorporation, filed with the Maryland State Department of Assessments and
Taxation, or other organizational document governing the General Partner, as
amended, modified, supplemented or restated from time to time.
"Assignee" means a Person to whom one or more Partnership Units have been
transferred in a manner permitted under this Agreement, but who has not become a
Substituted Limited Partner, and who has the rights set forth in Section 11.5.
"Available Cash" means, with respect to the applicable period of
measurement (i.e., any period beginning on the first day of the fiscal year,
quarter or other period commencing immediately after the last day of the fiscal
year, quarter or other applicable period for purposes of the prior calculation
of Available Cash for or with respect to which a distribution has been made, and
ending on the last day of the fiscal year, quarter or other applicable period
immediately preceding the date of the calculation), the excess, if any, as of
such date, of
(a) the gross cash receipts of the Partnership for such period from
all sources whatsoever, including, without limitation, the following:
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(i) all rents, revenues, income and proceeds derived by the
Partnership from its operations, including, without limitation,
distributions received by the Partnership from any Entity in which the
Partnership has an interest;
(ii) all proceeds and revenues received by the Partnership on
account of any sales of any Partnership property or as a refinancing
of or payment of principal, interest, costs, fees, penalties or
otherwise on account of any borrowings or loans made by the
Partnership or financings or refinancings of any property of the
Partnership;
(iii) the amount of any insurance proceeds and condemnation
awards received by the Partnership;
(iv) all capital contributions and loans received by the
Partnership from its Partners;
(v) all cash amounts previously reserved by the Partnership, to
the extent such amounts are no longer needed for the specific purposes
for which such amounts were reserved; and
(vi) the proceeds of liquidation of the Partnership's property
in accordance with this Agreement; over
(b) the sum of the following:
(i) all operating costs and expenses, including taxes and other
expenses of the properties directly and indirectly held by the
Partnership and capital expenditures made during such period (without
deduction, however, for any capital expenditures, charges for
Depreciation or other expenses not paid in cash or expenditures from
reserves described in (viii) below);
(ii) all costs and expenses expended or paid during such period
in connection with the sale or other disposition, or financing or
refinancing, of the property directly or indirectly held by the
Partnership or the recovery of insurance or condemnation proceeds;
(iii) all fees provided for under this Agreement;
(iv) all debt service, including principal and interest, paid
during such period on all indebtedness (including under any line of
credit) of the Partnership;
(v) all capital contributions, advances, reimbursements, loans
or similar payments made to any Person in which the Partnership has an
interest;
(vi) all loans made by the Partnership in accordance with the
terms of this Agreement;
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(vii) all reimbursements to the General Partner or its Affiliates
during such period; and
(viii) the amount of any new reserve or increase in reserves
established during such period which the General Partner determines is
necessary or appropriate in its sole and absolute discretion.
Notwithstanding the foregoing, Available Cash shall not include any cash
received or reductions in reserves, or take into account any disbursements made
or reserves established, after commencement of the dissolution and liquidation
of the Partnership.
"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 credited
(i) such Partner's Capital Contributions;
(ii) such Partner's distributive share of Net Income and any
items in the nature of income or gain which are specially allocated to
such Partner pursuant to Paragraphs 1 and 2 of Exhibit B and
(iii) the amount of any Partnership liabilities assumed by such
Partner or which are secured by any asset distributed to such Partner;
(b) to each Partner's Capital Account there shall be debited
(i) the amount of cash and the Gross Asset Value of any
property distributed to such Partner pursuant to any provision of this
Agreement,
(ii) such Partner's distributive share of Net Losses and any
items in the nature of expenses or losses which are specially
allocated to such Partner pursuant to Paragraphs 1 and 2 of Exhibit B
and
(iii) the amount of any liabilities of such Partner assumed by
the Partnership or which are secured by any asset contributed by such
Partner to the Partnership; and
(c) in the event all or a portion of a Partnership Interest 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 Partnership Interest.
The foregoing provisions and the other provisions of this Agreement relating to
the maintenance of Capital Accounts are intended to comply with Sections
1.704-1(b) and 1.704-2 of the Regulations, and shall be interpreted and applied
in a manner consistent with such Regulations. In the event the General Partner
shall reasonably 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
4
assets or which are assumed by the Partnership, the General Partner or any
Limited Partner) are computed in order to comply with such Regulations, the
General Partner may make such modification; provided that it would not cause the
amounts distributable to any Partner pursuant to Article 13 hereof upon the
dissolution of the Partnership to vary from the amount contemplated as set forth
in Section 2(g) of Exhibit B.
"Capital Contribution" means, with respect to any Partner, any cash, cash
equivalents or the Gross Asset Value of property which such Partner contributes
or is deemed to contribute to the Partnership pursuant to Article 4 hereof.
"Capital Event" means any Partnership transaction not in the ordinary
course of its business including, without limitation, principal payments,
prepayments, the incurrence of prepayment penalties, refinancing, sales,
exchanges, foreclosures, or other dispositions of property directly or
indirectly owned by the Partnership and recoveries of damage awards and
insurance proceeds not used to rebuild (other than the receipt of contributions
to the capital of the Partnership and business or rental interruption insurance
proceeds not used to rebuild).
"Certificate" means the Certificate of Limited Partnership relating to the
Partnership to be filed in the form of Exhibit C hereto as soon as practicable
after the date hereof in the office of the Delaware Secretary of State, as
amended from time to time in accordance with the terms hereof and the Act.
"Code" means the Internal Revenue Code of 1986, as amended and in effect
from time to time, as interpreted by the applicable regulations thereunder. Any
reference herein to a specific section or sections of the Code shall be deemed
to include a reference to any corresponding provision of future law.
"Common Stock" means a share of the common stock of the General Partner,
$.01 par value. Common Stock may be issued in one or more classes or series in
accordance with the terms of the Articles of Incorporation. If there is more
than one class or series of Common Stock, the term "Common Stock" shall, as the
context requires, be deemed to refer to the class or series of Common Stock that
correspond to the class or series of Partnership Interests for which the
reference to Common Stock is made.
"Common Stock Amount" has the meaning set forth in the Exchange Rights
Agreements.
"Consent" means the consent or approval of a proposed action by a Partner
given in accordance with Section 14.2 hereof.
"Consent of the Outside Limited Partners" means the Consent of Limited
Partners (excluding for this purpose any Partnership Interests held by the
General Partner, any other Person of which the General Partner owns or controls
more than fifty percent (50%) of the voting interests and any Person directly or
indirectly owning or controlling more than fifty percent (50%) of the
outstanding voting interests of the General Partner) holding Percentage
Interests that are greater than fifty percent (50%) of the aggregate Percentage
Interest of all Limited Partners who are not excluded for the purposes hereof.
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"Contributed Property" means each property, partnership interest, contract
right or other asset, in such form as may be permitted by the Act, contributed
or deemed contributed to the Partnership by any Partner, including any interest
in any successor partnership occurring as a result of a termination of the
Partnership pursuant to Section 708 of Code.
"Debt" means, as to any Person, as of any date of determination, (a) all
indebtedness of such Person for borrowed money or for the deferred purchase
price of property or services; (b) all amounts owed by such Person to banks or
other Persons in respect of reimbursement obligations under letters of credit,
surety bonds and other similar instruments guaranteeing payment or other
performance of obligations by such Person; (c) 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 (d) obligations of such Person
incurred in connection with entering into a lease which, in accordance with
generally accepted accounting principles, should be capitalized.
"Depreciation" means, with respect to any asset of the Partnership for any
fiscal year or other period, the depreciation, depletion, amortization or other
cost recovery deduction, as the case may be, allowed or allowable for federal
income tax purposes in respect of such asset for such fiscal year or other
period; provided, however, that except as otherwise provided in Section 1.704-2
of the Regulations, if there is a difference between the Gross Asset Value
(including the Gross Asset Value, as increased pursuant to paragraph (d) of the
definition of Gross Asset Value) and the adjusted tax basis of such asset at the
beginning of such fiscal year or other period, Depreciation for such asset shall
be an amount that bears the same ratio to the beginning Gross Asset Value of
such asset as the federal income tax depreciation, depletion, amortization or
other cost recovery deduction for such fiscal year or other period bears to the
beginning adjusted tax basis of such asset; provided, further, that if the
federal income tax depreciation, depletion, amortization or other cost recovery
deduction for such asset for such fiscal year or other period is zero,
Depreciation of such asset shall be determined with reference to the beginning
Gross Asset Value of such asset using any reasonable method selected by the
General Partner.
"Effective Date" means the date of first closing of the offering pursuant
to the Registration Statement on Form S-11 (Registration No. _____).
"Entity" means any general partnership, limited partnership, corporation,
joint venture, trust, business trust, real estate investment trust, limited
liability company, limited liability partnership, cooperative or association.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time (or any corresponding provisions of succeeding laws).
"Exchange Factor" has the meaning set forth in the Exchange Rights
Agreements.
"Exchange Right" has the meaning set forth in the Exchange Rights
Agreements.
"Exchange Rights Agreements" has the meaning set forth in Section 8.6.
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"GAAP" means United States generally accepted accounting principles, as in
effect from time to time.
"General Partner" means Orion Multifamily Investment Fund, a Maryland
corporation, and any successor as general partner of the Partnership.
"General Partner Interest" means a Partnership Interest held by the General
Partner, in its capacity as general partner. A General Partner Interest may be
expressed as a number of Partnership Units.
"Gross Asset Value" means, with respect to any asset of the Partnership,
such 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, without reduction for liabilities, as determined by the contributing
Partner and the Partnership on the date of contribution thereof;
(b) if the General Partner determines that an adjustment is necessary
or appropriate to reflect the relative economic interests of the Partners,
the Gross Asset Values of all Partnership assets shall be adjusted in
accordance with Sections 1.704-1(b)(2)(iv)(f) and (g) of the Regulations to
equal their respective gross fair market values, without reduction for
liabilities, as reasonably determined by the General Partner, as of the
following times:
(i) a Capital Contribution (other than a de minimis Capital
Contribution) to the Partnership by a new or existing Partner as
consideration for a Partnership Interest; or
(ii) the distribution by the Partnership to a Partner of more
than a de minimis amount of Partnership assets as consideration for
the repurchase of a Partnership Interest; or
(iii) the liquidation of the Partnership within the meaning of
Section 1.704-1(b)(2)(ii)(g) of the Regulations;
(c) the Gross Asset Values of Partnership assets distributed to any
Partner shall be the gross fair market values of such assets (taking
Section 7701(g) of the Code into account) without reduction for
liabilities, as determined by the General Partner as of the date of
distribution; and
(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 Sections 734(b) or 743(b) of the Code, but only to the
extent that such adjustments are taken into account in determining Capital
Accounts pursuant to Section 1.704-1(b)(2)(iv)(m) of the Regulations (as
set forth in Exhibit B); provided, however, that Gross Asset Values shall
not be adjusted pursuant to this paragraph (d) to the extent that the
General Partner determines that an adjustment pursuant to paragraph (b)
above is
7
necessary or appropriate in connection with a transaction that would
otherwise result in an adjustment pursuant to this paragraph (d).
At all times, Gross Asset Values shall be adjusted by any Depreciation taken
into account with respect to the Partnership's assets for purposes of computing
Net Income and Net Loss.
"Incapacity" or "Incapacitated" means,
(a) as to any individual Partner, death, total physical disability or
entry by a court of competent jurisdiction adjudicating him incompetent to
manage his person or his estate;
(b) 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;
(c) as to any partnership which is a Partner, the dissolution and
commencement of winding up of the partnership;
(d) as to any estate which is a Partner, the distribution by the
fiduciary of the estate's entire interest in the Partnership;
(e) 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
(f) as to any Partner, the bankruptcy of such Partner, which shall be
deemed to have occurred when
(i) 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;
(ii) 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;
(iii) the Partner executes and delivers a general assignment for
the benefit of the Partner's creditors;
(iv) 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 (ii) above;
(v) 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;
(vi) any proceeding seeking liquidation, reorganization or other
relief of or against such Partner under any bankruptcy, insolvency or
other similar law
8
now or hereafter in effect has not been dismissed within one hundred
twenty (120) days after the commencement thereof;
(vii) 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
(viii) an appointment referred to in clause (vii) which has been
stayed is not vacated within ninety (90) days after the expiration of
any such stay.
"Indemnitee" means
(a) any Person made a party to a proceeding by reason of its status as
(i) the General Partner,
(ii) a Limited Partner,
(iii) an investment advisor to the General Partner,
(iv) a trustee, director or officer of the Partnership, the
General Partner or the investment advisor to the General Partner, or
(v) a director, trustee, member or officer of any other
Entity, each Person serving in such capacity at the request of the
Partnership or the General Partner, or
(b) his or its liabilities, pursuant to a loan guarantee or otherwise,
for any indebtedness of the Partnership or any Subsidiary of the
Partnership (including, without limitation, any indebtedness which the
Partnership or any Subsidiary of the Partnership has assumed or taken
assets subject to); and
(c) such other Persons (including Affiliates of the General Partner, a
Limited Partner or the Partnership) as the General Partner may designate
from time to time (whether before or after the event giving rise to
potential liability), in its sole and absolute discretion.
"IRS" shall mean the Internal Revenue Service of the United States.
"Lien" means any lien, security interest, mortgage, deed of trust, charge,
claim, encumbrance, pledge, option, right of first offer or first refusal and
any other right or interest of others of any kind or nature, actual or
contingent, or other similar encumbrance of any nature whatsoever.
"Limited Partner" means, prior to the admission of the first Additional
Limited Partner to the Partnership, the Initial Limited Partner, and thereafter
any Person named as a Limited Partner in Exhibit A, as such Exhibit may be
amended from time to time, upon the execution and delivery by such Person of an
additional limited partner signature page, or any Substituted
9
Limited Partner or Additional Limited Partner, in such Person's capacity as a
Limited Partner of the Partnership.
"Limited Partner Interest" means a Partnership Interest of a Limited
Partner in the Partnership representing a fractional part of the Partnership
Interests of all Partners and includes any and all benefits to which the holder
of such a Partnership Interest may be entitled, as provided in this Agreement,
together with all obligations of such Person to comply with the terms and
provisions of this Agreement. A Limited Partner Interest may be expressed as a
number of Partnership Units.
"Liquidating Event" has the meaning set forth in Section 13.1 hereof.
"Liquidator" has the meaning set forth in Section 13.2 hereof.
"Net Income" or "Net Loss" means, for each fiscal year or other applicable
period, an amount equal to the Partnership's taxable income or loss for such
year or period as determined for federal income tax purposes by the General
Partner, determined in accordance with Section 703(a) of the Code (for this
purpose, all items of income, gain, loss or deduction required to be stated
separately pursuant to Section 703(a) of the Code shall be included in taxable
income or loss), adjusted as follows:
(a) by including as an item of gross income any tax-exempt income
received by the Partnership and not otherwise taken into account in
computing Net Income or Net Loss;
(b) by treating as a deductible expense any expenditure of the
Partnership described in Section 705(a)(2)(B) of the Code (or which is
treated as a Section 705(a)(2)(B) expenditure pursuant to Section
1.704-1(b)(2)(iv)(i) of the Regulations) and not otherwise taken into
account in computing Net Income or Net Loss, including amounts paid or
incurred to organize the Partnership (unless an election is made pursuant
to Section 709(b) of the Code) or to promote the sale of interests in the
Partnership and by treating deductions for any losses incurred in
connection with the sale or exchange of Partnership property disallowed
pursuant to Section 267(a)(1) or 707(b) of the Code as expenditures
described in Section 705(a)(2)(B) of the Code;
(c) by taking into account Depreciation in lieu of depreciation,
depletion, amortization and other cost recovery deductions taken into
account in computing taxable income or loss;
(d) by computing gain or loss resulting from any disposition of
Partnership property with respect to which gain or loss is recognized for
federal income tax purposes by reference to the Gross Asset Value of such
property rather than its adjusted tax basis;
(e) in the event of an adjustment of the Gross Asset Value of any
Partnership asset which requires that the Capital Accounts of the
Partnership be adjusted pursuant to Sections 1.704-1(b)(2)(iv)(e), (f) and
(g) of the Regulations, by taking into account the amount of such
adjustment as if such adjustment represented additional Net Income or Net
Loss pursuant to Exhibit B; and
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(f) by not taking into account in computing Net Income or Net Loss
items separately allocated to the Partners pursuant to Paragraphs 1 and 2
of Exhibit B.
"Nonrecourse Deductions" has the meaning set forth in Sections
1.704-2(b)(1) and 1.704-2(c) of the Regulations.
"Nonrecourse Liabilities" has the meaning set forth in Section
1.704-2(b)(3) of the Regulations.
"Outside Limited Partners" has the meaning set forth in "Consent of the
Outside Limited Partners."
"Partner" means a General Partner or a Limited Partner, and "Partners"
means the General Partner and the Limited Partners collectively.
"Partner Minimum Gain" means an amount, with respect to each Partner
Nonrecourse Debt, equal to the Partnership Minimum Gain that would result if
such Partner Nonrecourse Debt were treated as a Nonrecourse Liability,
determined in accordance with Regulations Section 1.704-2(i)(3).
"Partner Nonrecourse Debt" has the meaning set forth in Regulations Section
1.704-2(b)(4).
"Partner Nonrecourse Deductions" has the meaning set forth in Regulations
Section 1.704-2(i)(2), and the amount of Partner Nonrecourse Deductions with
respect to a Partner Nonrecourse Debt for a Partnership taxable 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
representing a Capital Contribution by either a Limited Partner or the General
Partner and includes any and all benefits to which the holder of such a
Partnership Interest may be entitled as provided in this Agreement, together
with all obligations of such Person to comply with the terms and provisions of
this Agreement. A Partnership Interest may be expressed as a number of
Partnership Units.
"Partnership Minimum Gain" has the meaning set forth in Regulations Section
1.704-2(b)(2), and the amount of Partnership Minimum Gain, as well as any net
increase or decrease in a Partnership Minimum Gain, for a Partnership taxable
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 hereof,
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.
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"Partnership Unit" means a fractional, undivided share of the Partnership
Interests of all Partners issued pursuant to Sections 4.1, 4.2 and 4.3 and
includes any classes or series of Partnership Units established after the date
hereof. The number of Partnership Units outstanding and the Percentage Interests
in the Partnership represented by such Partnership Units are set forth in
Exhibit A, as such Exhibit may be amended from time to time. The ownership of
Partnership Units shall be evidenced by such form of certificate for Partnership
Units as the General Partner adopts from time to time unless the General Partner
determines that the Partnership Units shall be uncertificated securities.
"Partnership Year" means the fiscal year of the Partnership, as set forth
in Section 9.2 hereof.
"Percentage Interest" means, as to a Partner, the fractional part of the
Partnership Interests owned by such Partner and expressed as a percentage as
specified in Exhibit A, as such Exhibit may be amended from time to time.
"Permitted Partners" has the meaning set forth in subparagraph 1(b) of
Exhibit B.
"Permitted Transferee" means any person to whom Partnership Units are
Transferred in accordance with Section 11.3 of this Agreement.
"Person" means an individual or Entity.
"Precontribution Gain" has the meaning set forth in subparagraph 3(c) of
Exhibit B.
"Quarter" means each of the three-month periods ending on March 31, June
30, September 30 and December 31.
"Registration Statement" means the Registration Statement on Form S-11 to
be filed by the General Partner with the Securities and Exchange Commission, and
any amendments at any time made thereto.
"Regulations" means the final, temporary or proposed Income Tax Regulations
promulgated under the Code, as such regulations may be amended from time to time
(including corresponding provisions of succeeding regulations).
"REIT" means a real estate investment trust as defined in Section 856 of
the Code.
"REIT Requirements" has the meaning set forth in Section 5.2.
"REIT Stock" has the meaning set forth in the Exchange Rights Agreement.
"REIT Stock Amount" has the meaning set forth in the Exchange Rights
Agreement.
"Restricted Partner" has the meaning set forth in Section 1(b) of Exhibit
B.
"Stock Option Plans" means, collectively, any and all plans adopted from
time to time by the General Partner pursuant to which REIT Stock is issued, or
options to acquire REIT Stock
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are granted, to employees or directors of the General Partner, employees of the
Partnership or employees of their respective Affiliates in consideration for
services or future services.
"Subsidiary" means, with respect to any Person, any corporation,
partnership, limited liability company or other entity of which a majority of
(a) the voting power of the voting equity securities; and/or
(b) the outstanding equity interests (whether or not voting), is
owned, directly or indirectly, by such Person.
"Substituted Limited Partner" means a Person who is admitted as a Limited
Partner to the Partnership pursuant to Section 11.4 hereof.
"Tax Items" has the meaning set forth in Exhibit B.
"Terminating Capital Transaction" means any sale or other disposition
(other than a deemed disposition pursuant to Section 708(b)(1)(B) and the
regulations thereunder) 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.
"Transfer" as a noun, means any sale, assignment, conveyance, pledge,
hypothecation, gift, encumbrance or other transfer, and as a verb, means to
sell, assign, convey, pledge, hypothecate, give, encumber or otherwise transfer.
Certain additional terms and phrases have the meanings set forth in Exhibit
B.
ARTICLE 2
ORGANIZATIONAL MATTERS
2.1 Formation
The Partnership is a limited partnership organized pursuant to the
provision of the Act and upon the terms and conditions set forth in this
Agreement. Except as expressly provided herein to the contrary, the rights and
obligations of the Partners and the administration and termination of the
Partnership shall be governed by the Act. The Partnership Interest of each
Partner shall be personal property for all purposes.
2.2 Name
The name of the Partnership is Orion Multifamily 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 and
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shall notify the Limited Partners of such change in the next regular
communication to the Limited Partners.
2.3 Registered Office and Agent; Principal Office
The address of the registered office of the Partnership in the State of
Delaware and the name and address of the registered agent for service of process
on the Partnership in the State of Delaware is the Corporation Service Company,
0000 Xxxxxxxxxxx Xxxx Xxxxx 000, Xxxxxxxxxx, Xxxxxxxx 00000. The principal
office of the Partnership shall be 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000,
or such other place as the General Partner may from time to time designate by
notice to the Limited Partners. The Partnership may maintain offices at such
other place or places within or outside the State of Delaware as the General
Partner deems advisable.
2.4 Power of Attorney
(a) Each Limited Partner and each Assignee who accepts Partnership
Units (or any rights, benefits or privileges associated therewith) is
deemed to irrevocably constitute and appoint the General Partner, any
Liquidator, and authorized officers and attorneys-in-fact of each, and each
of those acting singly, in each case with full power of substitution, as
its true and lawful agent and attorney-in-fact, with full power and
authority in its name, place and stead to:
(i) 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 or plans to conduct business or own property, including,
without limitation, any documents necessary or advisable to convey
any Contributed Property to the Partnership;
(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;
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(D) all instruments relating to the admission, withdrawal,
removal or substitution of any Partner pursuant to, or other
events described in, Article 11, 12 or 13 hereof or the Capital
Contribution of any Partner;
(E) all certificates, documents and other instruments
relating to the determination of the rights, preferences and
privileges of Partnership Interest; and
(F) amendments to this Agreement as provided in Article 14
hereof; and
(ii) execute, swear to, seal, acknowledge and file all ballots,
consents, approvals, waivers, certificates and other instruments
appropriate or necessary, in the sole and absolute discretion of the
General Partner or any Liquidator, to make, evidence, give, confirm or
ratify any vote, consent, approval, agreement or other action which is
made or given by the Partners hereunder or is consistent with the
terms of this Agreement or appropriate or necessary, in the sole
discretion of the General Partner or any Liquidator, to effectuate the
terms or intent of this Agreement.
Nothing contained herein shall be construed as authorizing the General Partner
or any Liquidator to amend this Agreement except in accordance with Article 14
hereof or as may be otherwise expressly provided for in this Agreement.
(b) (i) The foregoing power of attorney is hereby declared to be
irrevocable and a power coupled with an interest, in recognition of
the fact that each of the Partners will be relying upon the power of
the General Partner and any Liquidator to act as contemplated by this
Agreement in any filing or other action by it on behalf of the
Partnership, and it shall survive and not be affected by the
subsequent Incapacity of any Limited Partner or Assignee and the
Transfer of all or any portion of such Limited Partner's or Assignee's
Partnership Units and shall extend to such Limited Partner's or
Assignee's heirs, successors, assigns and personal representatives.
(ii) 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.
(iii) Each Limited Partner or Assignee shall execute and deliver
to the General Partner or the Liquidator, within fifteen (15) days
after receipt of the General Partner's or Liquidator's request
therefor, such further designation, powers of attorney and other
instruments as the General Partner or the Liquidator,
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as the case may be, deems necessary to effectuate this Agreement and
the purposes of the Partnership.
2.5 Term
The term of the Partnership shall commence on the date hereof and shall
continue until December 31, 2099, unless the Partnership is dissolved sooner
pursuant to the provisions of Article 13 or as otherwise provided by law.
ARTICLE 3
PURPOSE
3.1 Purpose and Business
(a) The purpose and nature of the business to be conducted by the
Partnership is to conduct any business that may be lawfully conducted by a
limited partnership organized pursuant to the Act including, without
limitation, to engage in the following activities:
(i) to acquire, hold, own, develop, construct, improve,
maintain, operate, sell, lease, transfer, encumber, convey, exchange,
and otherwise dispose of or deal with the properties described in the
prospectus contained in the Registration Statement;
(ii) to acquire, hold, own, develop, construct, maintain,
operate, sell, lease, transfer, encumber, convey, exchange, and
otherwise dispose of or deal with real and personal property of all
kinds;
(iii) to enter into any partnership, joint venture, corporation,
limited liability company, trust or other similar arrangement to
engage in any of the foregoing;
(iv) to undertake such other activities as may be necessary,
advisable, desirable or convenient to the business of the Partnership;
and
(v) to engage in such other ancillary activities as shall be
necessary or desirable to effectuate the foregoing purposes;
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, unless the General Partner determines not to qualify as a REIT or ceases
to qualify as a REIT for any reason not related to the business conducted by the
Partnership.
(b) The Partnership shall have all powers necessary or desirable to
accomplish the purposes enumerated.
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3.2 Powers
(a) 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 to enter into, perform, and
carry out contracts of any kind, to borrow money and to issue evidences of
indebtedness, whether or not secured by mortgage, trust deed, pledge or
other Lien, and, directly or indirectly, to acquire, own, improve, develop
and construct real property, and lease, sell, transfer and dispose of real
property; provided, that the Partnership shall not take, or refrain from
taking, any action which, in the judgment of the General Partner, in its
sole and absolute discretion,
(i) could adversely affect the ability of the General Partner to
continue to qualify as a REIT, unless the General Partner otherwise
ceases to qualify as a REIT;
(ii) could subject the General Partner to any additional taxes
under Section 857 or Section 4981 of the Code; or
(iii) could violate any law or regulation of any governmental
body or agency having jurisdiction over the General Partner or its
securities, unless such action (or inaction) shall have been
specifically consented to by the General Partner in writing.
(b) The General Partner also is empowered to do any and all acts and
things necessary, appropriate or advisable to ensure that the Partnership
will not be classified as a "publicly traded partnership" for the purposes
of Section 7704 of the Code, including but not limited to imposing
restrictions on exchanges of Partnership Units.
ARTICLE 4
CAPITAL CONTRIBUTIONS
4.1 Capital Contributions of the Partners
(a) The Partners have made or shall make at the Effective Date, if
applicable, the Capital Contributions as set forth in Exhibit A to this
Agreement.
(b) To the extent the Partnership acquires any property by the merger
of any other Person into the Partnership or the contribution of assets by
any other Person, Persons who receive Partnership Interests in exchange for
their interests in the Person merging into or contributing assets to the
Partnership shall become Partners and shall be deemed to have made Capital
Contributions as provided in the applicable merger agreement or
contribution agreement and as set forth in Exhibit A, as amended to reflect
such deemed Capital Contributions.
17
(c) Each Partner shall own Partnership Units in the amounts set forth
for such Partner in Exhibit A and shall have a Percentage Interest in the
Partnership as set forth in Exhibit A, which Percentage Interest shall be
adjusted in Exhibit A from time to time by the General Partner to the
extent necessary to reflect accurately exchanges, additional Capital
Contributions, the issuance of additional Partnership Units or similar
events having an effect on any Partner's Percentage Interest.
(d) The number of Partnership Units held by the General Partner, in
its capacity as general partner, shall be deemed to be the General Partner
Interest.
(e) Except as provided in Sections 4.2 and 10.5, the Partners shall
have no obligation to make any additional Capital Contributions or provide
any additional funding to the Partnership (whether in the form of loans,
repayments of loans or otherwise) and no Partner shall have any obligation
to restore any deficit that may exist in its Capital Account, either upon a
liquidation of the Partnership or otherwise.
4.2 Additional Funds; Restrictions on the General Partner
(a) (i) The sums of money required to finance the business and
affairs of the Partnership shall be derived from the initial Capital
Contributions made to the Partnership by the Partners as set forth in
Section 4.1 and from funds generated from the operation and business
of the Partnership, including, without limitation, rents and
distributions directly or indirectly received by the Partnership from
any Subsidiary.
(ii) In the event additional financing is needed from sources
other than as set forth in Section 4.2(a)(i) for any reason, the
General Partner may, in its sole and absolute discretion, in such
amounts and at such times as it solely shall determine to be necessary
or appropriate,
(A) cause the Partnership to issue additional Partnership
Interests and admit additional Limited Partners to the
Partnership in accordance with Section 4.3;
(B) make additional Capital Contributions to the Partnership
(subject to the provisions of Section 4.2(b));
(C) cause the Partnership to borrow money, enter into loan
arrangements, issue debt securities, obtain letters of credit or
otherwise borrow money on a secured or unsecured basis;
(D) make a loan or loans to the Partnership (subject to
Section 4.2(b)); or
(E) sell any assets or properties directly or indirectly
owned by the Partnership.
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(iii) In no event shall any Limited Partners be required to make
any additional Capital Contributions or any loan to, or otherwise
provide any financial accommodation for the benefit of, the
Partnership.
(b) The General Partner shall not issue any debt securities, any
preferred stock or any common stock (including additional REIT Stock (other
than (i) as payment of the REIT Stock Amount or (ii) in connection with the
conversion or exchange of securities of the General Partner solely in
conversion or exchange for other securities of the General Partner)) or
rights, options, warrants or convertible or exchangeable securities
containing the right to subscribe for or purchase any of the foregoing
(collectively, "Securities"), other than to all holders of REIT Stock,
unless the General Partner shall
(i) in the case of debt securities, lend to the Partnership the
proceeds of or consideration received for such Securities on the same
terms and conditions, including interest rate and repayment schedule,
as shall be applicable with respect to or incurred in connection with
the issuance of such Securities and the proceeds of, or consideration
received from, any subsequent exercise, exchange or conversion thereof
(if applicable);
(ii) in the case of equity Securities senior or junior to the
REIT Stock as to dividends and distributions on liquidation,
contribute to the Partnership the proceeds of or consideration
(including any property or other non-cash assets) received for such
Securities and the proceeds of, or consideration received from, any
subsequent exercise, exchange or conversion thereof (if applicable),
and receive from the Partnership, interests in the Partnership in
consideration therefor with the same terms and conditions, including
dividend, dividend priority and liquidation preference, as are
applicable to such Securities; and
(iii) in the case of REIT Stock or other equity Securities on a
parity with the REIT Stock as to dividends and distributions on
liquidation, (including, without limitation, REIT Stock or other
Securities issued as a stock award or upon exercise of options issued
under the Stock Option Plans), contribute to the Partnership the
proceeds of or consideration (including any property or other non-cash
assets, including services) received for such Securities and the
proceeds of, or consideration received from, any subsequent exercise,
exchange or conversion thereof (if applicable), and receive from the
Partnership a number of additional Partnership Units in consideration
therefor equal to the product of
(A) the number of shares of REIT Stock or other equity
Securities issued by the General Partner, multiplied by
(B) a fraction the numerator of which is one and the
denominator of which is the Exchange Factor in effect on the date
of such contribution.
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4.3 Issuance of Additional Partnership Interests; Admission of Additional
Limited Partners
(a) In addition to any Partnership Interests issuable by the
Partnership pursuant to Section 4.2, the General Partner is authorized to
cause the Partnership to issue additional Partnership Interests (or options
therefor) in the form of Partnership Units or other Partnership Interests
in one or more series or classes, or in one or more series of any such
class senior or junior to the Partnership Units to any Persons at any time
or from time to time, on such terms and conditions, as the General Partner
shall establish in each case in its sole and absolute discretion subject to
Delaware law, including, without limitation, (i) the allocations of items
of Partnership income, gain, loss, deduction and credit to each class or
series of Partnership Interests, (ii) the right of each class or series of
Partnership Interests to share in Partnership distributions, and (iii) the
rights of each class or series of Partnership Interest upon dissolution and
liquidation of the Partnership; provided, that, no such Partnership
Interests shall be issued to the General Partner unless either (a) the
Partnership Interests are issued in connection with the grant, award, or
issuance of REIT Stock or other equity interests in the General Partner
having designations, preferences and other rights such that the economic
interests attributable to such REIT Stock or other equity interests are
substantially similar to the designations, preferences and other rights
(except voting rights) of the Partnership Interests issued to the General
Partner in accordance with this Section 4.3(a) 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, without any approval being required from any
Limited Partner or any other Person; and provided, however, that
(i) such issuance does not cause the Partnership to become, with
respect to any employee benefit plan subject to Title I of ERISA or
Section 4975 of the Code, a "party in interest" (as defined in Section
3(14) of ERISA) or a "disqualified person" (as defined in Section
4975(e) of the Code); and
(ii) such issuance would not cause any portion of the assets of
the Partnership to constitute assets of any employee benefit plan
pursuant to Section 2510.3-101 of the regulations of the United States
Department of Labor.
(b) Subject to the limitations set forth in Section 4.3(a), the
General Partner may take such steps as it, in its sole and absolute
discretion, deems necessary or appropriate to admit any Person as a Limited
Partner of the Partnership or to issue any Partnership Interests,
including, without limitation, amending the Certificate, Exhibit A or any
other provision of this Agreement.
4.4 Contribution of Proceeds of Issuance of REIT Stock
In connection with any offering, grant, award, or issuance of REIT Stock or
securities, rights, options, warrants or convertible or exchangeable securities
pursuant to Section 4.2, the General Partner shall make aggregate Capital
Contributions to the Partnership of the proceeds raised in connection with such
offering, grant, award, or issuance, including any property issued
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to the General Partner pursuant to a merger or contribution agreement in
exchange for Common Stock; provided, however, that if the proceeds actually
received by the General Partner are less than the gross proceeds of such
offering, grant, award, or issuance as a result of any underwriter's discount,
commission, or fee or other expenses paid or incurred in connection with such
offering, grant, award, or issuance, then the General Partner shall be deemed to
have made a Capital Contribution to the Partnership in the amount of the gross
proceeds of such issuance and the Partnership shall be deemed simultaneously to
have paid pursuant to Section 7.3(c) for the amount of such underwriter's
discount or other expenses.
4.5 Repurchase of REIT Stock; Shares-In-Trust
(a) In the event that the General Partner shall elect to purchase from
its stockholders REIT Stock for the purpose of delivering such REIT Stock
to satisfy an obligation under any distribution reinvestment program
adopted by the General Partner, any employee stock purchase plan adopted by
the General Partner, or any other obligation or arrangement undertaken by
the General Partner in the future, the purchase price paid by the General
Partner for such REIT Stock and any other expenses incurred by the General
Partner in connection with such purchase shall be considered expenses of
the Partnership and shall be reimbursed to the General Partner, subject to
the condition that:
(i) if such REIT Stock subsequently is to be sold by the General
Partner, the General Partner shall pay to the Partnership any proceeds
received by the General Partner from the sale of such REIT Stock
(provided that an exchange of REIT Stock for Partnership Units
pursuant to the applicable Exchange Rights Agreement would not be
considered a sale for such purposes); and
(ii) if such REIT Stock is not re-transferred by the General
Partner within 30 days after the purchase thereof, the General Partner
shall cause the Partnership to cancel a number of Partnership Units
held by the General Partner (as applicable) equal to the product of
(x) the number of shares of such REIT Stock, multiplied by
(y) a fraction, the numerator of which is one and the
denominator of which is the Exchange Factor in effect on the date
of such cancellation.
(b) In the event the General Partner purchases Shares-in-Trust (as
from time to time defined in the Articles of Incorporation, as may be
amended from time to time), the Partnership will purchase from the General
Partner a number of Partnership Units equal to the product of
(i) the number of Shares-in-Trust purchased by the General
Partner, multiplied by
(ii) a fraction, the numerator of which is one and the
denominator of which is the Exchange Factor in effect on the date of
such purchase.
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4.6 No Third-Party Beneficiary
No creditor or other third party having dealings with the Partnership shall
have the right to enforce the right or obligations of any Partner to make
Capital Contributions or loans or to pursue any other right or remedy hereunder
or at law or in equity, it being understood and agreed that the provisions of
this Agreement shall be solely for the benefit of, and may be enforced solely
by, the parties hereto and their respective successors and assigns.
4.7 No Interest; No Return
(a) No Partner shall be entitled to interest on its Capital
Contribution or on such Partner's Capital Account.
(b) 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.
4.8 No Preemptive Rights
Subject to any preemptive rights that may be granted pursuant to Section
4.3 hereof, no Person shall have any preemptive or other similar right with
respect to
(a) additional Capital Contributions or loans to the Partnership; or
(b) issuance or sale of any Partnership Units or other Partnership
Interests.
ARTICLE 5
DISTRIBUTIONS
5.1 Regular Distributions
Except for distributions pursuant to Section 13.2 in connection with the
dissolution and liquidation of the Partnership, and subject to the provisions of
Sections 5.3, 5.4, 5.5 and 12.2(c), the General Partner shall cause the
Partnership to distribute, at such times as the General Partner shall determine,
an amount of Available Cash, determined by the General Partner in its sole
discretion to the Partners, as of the applicable Partnership Record Date, in
accordance with each Partner's respective Percentage Interest; provided,
however, that in no event may a Partner receive a distribution of Available Cash
with respect to a Partnership Unit if such Partner is entitled to receive a
distribution out of such Available Cash with respect to REIT Stock for which
such a Partnership Unit has been exchanged.
5.2 Qualification as a REIT
The General Partner shall use its best efforts to cause the Partnership to
distribute sufficient amounts under this Article 5 to enable the General Partner
to pay stockholder dividends that will enable the General Partner to
22
(a) satisfy the requirements for qualification as a REIT under the
Code and Regulations ("REIT Requirements"), and
(b) avoid any federal income or excise tax liability;
provided, however, the General Partner shall not be bound to comply with this
covenant to the extent such distributions would
(x) violate applicable Delaware law or
(y) contravene the terms of any notes, mortgages or other types
of debt obligations to which the Partnership may be subject in
conjunction with borrowed funds.
5.3 Withholding
With respect to any withholding tax or other similar tax liability or
obligation to which the Partnership may be subject as a result of any act or
status of any Partner or to which the Partnership becomes subject with respect
to any Partnership Unit, the Partnership shall have the right to withhold
amounts of Available Cash distributable to such Partner or with respect to such
Partnership Units, to the extent of the amount of such withholding tax or other
similar tax liability or obligation pursuant to the provisions contained in
Section 10.5.
5.4 Additional Partnership Interests
If the Partnership issues Partnership Interests in accordance with Section
4.2 or 4.3, the distribution priorities set forth in Section 5.1 shall be
amended, as necessary, to reflect the distribution priority of such Partnership
Interests and corresponding amendments shall be made to the provisions of
Exhibit B.
5.5 Distributions Upon Liquidation
Proceeds from a Terminating Capital Transaction and any other cash received
or reductions in reserves made after commencement of the liquidation of the
Partnership shall be distributed to the Partners in accordance with Section
13.2.
ARTICLE 6
ALLOCATIONS
6.1 Allocations
The Net Income, Net Loss and other Partnership items shall be allocated
pursuant to the provisions of Exhibit B.
6.2 Revisions to Allocations to Reflect Issuance of Partnership Interests
If the Partnership issues Partnership Interests to the General Partner or
any additional Limited Partner pursuant to Article IV, the General Partner shall
make such revisions to this
23
Article 6 and Exhibit B as it deems necessary to reflect the terms of the
issuance of such Partnership Interests, including making preferential
allocations to classes of Partnership Interests that are entitled thereto. Such
revisions shall not require the consent or approval of any other Partner.
ARTICLE 7
MANAGEMENT AND OPERATIONS OF BUSINESS
7.1 Management
(a) (i) Except as otherwise expressly provided in this Agreement,
full, complete and exclusive discretion to manage and control the
business and affairs of the Partnership are and shall be 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.
(ii) The General Partner may not be removed by the Limited
Partners with or without cause.
(iii) In addition to the powers now or hereafter granted a
general partner of a limited partnership under applicable law or which
are granted to the General Partner under any other provision of this
Agreement, the General Partner, subject to Section 7.11, shall have
full power and authority to do all things deemed necessary or
desirable by it to conduct the business of the Partnership, to
exercise all powers set forth in Section 3.2 hereof and to effectuate
the purposes set forth in Section 3.1 hereof, including, without
limitation:
(A) (I) 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 qualifies as a REIT) to avoid the payment of any federal
income tax (including, for this purpose, any excise tax pursuant
to Section 4981 of the Code) and to make distributions to its
stockholders in amounts sufficient to permit the General Partner
to maintain REIT status,
(II) the assumption or guarantee of, or other
contracting for, indebtedness and other liabilities,
(III) the issuance of evidence of indebtedness
(including the securing of the same by deed, mortgage, deed
of trust or other lien or encumbrance on the Partnership's
assets) and
(IV) the incurring of any obligations it deems
necessary for the conduct of the activities of the
Partnership, including the payment of all expenses
associated with the General Partner;
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(B) the making of tax, regulatory and other filings, or
rendering of periodic or other reports to governmental or other
agencies having jurisdiction over the business or assets of the
Partnership or the General Partner;
(C) the acquisition, disposition, mortgage, pledge,
encumbrance, hypothecation or exchange of any assets of the
Partnership (including the exercise or grant of any conversion,
option, privilege, or subscription right or other right available
in connection with any assets at any time held by the
Partnership) or the merger or other combination (a "Business
Combination") of the Partnership with or into another entity on
such terms as the General Partner deems proper, provided that the
General Partner shall be required to send to each Limited Partner
a notice of such proposed Business Combination no less than 15
days prior to the record date for the vote of the General
Partner's stockholders on such Business Combination, if any;
(D) the use of the assets of the Partnership (including,
without limitation, cash on hand) for any purpose consistent with
the terms of this Agreement and on any terms it sees fit,
including, without limitation,
(I) the financing of the conduct of the operations of
the General Partner, the Partnership or any of the
Partnership's Subsidiaries,
(II) the lending of funds to other Persons (including,
without limitation, the Subsidiaries of the Partnership
and/or the General Partner) and the repayment of obligations
of the Partnership and its Subsidiaries and any other Person
in which it has an equity investment, and
(III) the making of capital contributions to its
Subsidiaries;
(E) the expansion, development, construction, leasing,
repair, alteration, demolition or improvement of any property in
which the Partnership or any Subsidiary of the Partnership owns
an interest;
(F) the negotiation, execution, and performance of any
contracts, conveyances or other instruments that the General
Partner considers useful or necessary to the conduct of the
Partnership's 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;
25
(G) the distribution of Partnership cash or other
Partnership assets in accordance with this Agreement;
(H) holding, managing, investing and reinvesting cash and
other assets of the Partnership;
(I) the collection and receipt of revenues and income of the
Partnership;
(J) the establishment of one or more divisions of the
Partnership, the selection and dismissal of employees of the
Partnership (including, without limitation, employees having
titles such as "president," "vice president," "secretary" and
"treasurer" of the Partnership), and agents, outside attorneys,
accountants, consultants and contractors of the Partnership, and
the determination of their compensation and other terms of
employment or engagement;
(K) the maintenance of such insurance for the benefit of the
Partnership and the Partners and directors and officers thereof
as it deems necessary or appropriate;
(L) the formation of, or acquisition of an interest
(including non-voting interests in entities controlled by
Affiliates of the Partnership or third parties) in, and the
contribution of property to, any further Entities or other
relationships that it deems desirable, including, without
limitation, the acquisition of interests in, and the
contributions of funds or property to, or making of loans to, its
Subsidiaries and any other Person from time to time, or the
incurrence of indebtedness on behalf of such Persons or the
guarantee of the obligations of such Persons; provided that, as
long as the General Partner has determined to elect to qualify as
a REIT or to continue to qualify as a REIT, the Partnership may
not engage in any such formation, acquisition or contribution
that would cause the General Partner to fail to qualify as a
REIT;
(M) the control of any matters affecting the rights and
obligations of the Partnership, including
(I) 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,
(II) the commencement or defense of suits, legal
proceedings, administrative proceedings, arbitration or
other forms of dispute resolution, and
(III) the representation of the Partnership in all
suits or legal proceedings, administrative proceedings,
arbitrations or other
26
forms of dispute resolution, the incurring of legal
expenses, and the indemnification of any Person against
liabilities and contingencies to the extent permitted by
law;
(N) the undertaking of any action in connection with the
Partnership's direct or indirect investment in its Subsidiaries
or any other Person (including, without limitation, the
contribution or loan of funds by the Partnership to such
Persons);
(O) the determination of the fair market value of any
Partnership property distributed in kind using such reasonable
method of valuation as the General Partner, in its sole
discretion, may adopt;
(P) the exercise, directly or indirectly, through any
attorney-in-fact acting under a general or limited power of
attorney, of any right, including the right to vote, appurtenant
to any asset or investment held by the Partnership;
(Q) the exercise of any of the powers of the General Partner
enumerated in this Agreement on behalf of or in connection with
any Subsidiary of the Partnership or any other Person in which
the Partnership has a direct or indirect interest, or jointly
with any such Subsidiary or other Person;
(R) the exercise of any of the powers of the General Partner
enumerated in this Agreement on behalf of any Person in which the
Partnership does not have an interest pursuant to contractual or
other arrangements with such Person;
(S) the making, execution and delivery of any and all deeds,
leases, notes, mortgages, deeds of trust, security agreements,
conveyances, contracts, guarantees, warranties, indemnities,
waivers, releases or legal instruments or agreements in writing
necessary or appropriate, in the judgment of the General Partner,
for the accomplishment of any of the foregoing;
(T) the issuance of additional Partnership Units in
connection with Capital Contributions by Additional Limited
Partners and additional Capital Contributions by Partners
pursuant to Article 4 hereof;
(U) the opening of bank accounts on behalf of, and in the
name of, the Partnership and its Subsidiaries; and
(V) the amendment and restatement of Exhibit A 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 Partnership Units, the admission
of any Additional Limited Partner or any
27
Substituted Limited Partner or otherwise, which amendment and
restatement, notwithstanding anything in this Agreement to the
contrary, shall not be deemed an amendment of this Agreement, as
long as the matter or event being reflected in Exhibit A
otherwise is authorized by this Agreement.
(b) (i) Each of the Limited Partners agrees that the General Partner
is authorized to execute, deliver and perform the above-mentioned
agreements and transactions on behalf of the Partnership without any
further act, approval or vote of the Partners, notwithstanding any
other provision of this Agreement to the fullest extent permitted
under the Act or other applicable law, rule or regulation.
(ii) 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
at the expense of the Partnership, may or may not, cause the Partnership to
obtain and maintain
(i) casualty, liability and other insurance on the properties of
the Partnership;
(ii) liability insurance for the Indemnitees hereunder; and
(iii) such other insurance as the General Partner, in its sole
and absolute discretion, determines to be appropriate and reasonable.
(d) At all times from and after the date hereof, the General Partner
may cause the Partnership to establish and maintain at any and all times
working capital accounts and other cash or similar balances in such amount
as the General Partner, in its sole and absolute discretion, deems
appropriate and reasonable from time to time.
(e) (i) In exercising its authority under this Agreement, the
General Partner may, but shall be under no obligation to, take into
account the tax consequences to any Partner (including the General
Partner) of any action taken (or not taken) by it. The General Partner
and the Partnership shall not have liability to a Limited Partner for
monetary damages or otherwise for losses sustained, liabilities
incurred or benefits not delivered by such Limited Partner in
connection with such decisions, provided that the General Partner has
acted in good faith pursuant to its authority under this Agreement.
The Limited Partners expressly acknowledge that the General Partner is
acting on behalf of the Partnership, the General Partner, and the
General Partner's stockholders, collectively.
(ii) The General Partner and the Partnership shall not have
liability to a Limited Partner under any circumstances as a result of
an income tax liability
28
incurred by such Limited Partner as a result of an action (or
inaction) by the General Partner taken pursuant to its authority under
and in accordance with this Agreement.
7.2 Certificate of Limited Partnership
(a) The General Partner has previously filed the Certificate with the
Secretary of State of Delaware as required by the Act.
(b) (i) The General Partner shall use all reasonable efforts to
cause to be filed such other certificates or documents as may be reasonable
and necessary or appropriate for the formation, continuation, qualification
and operation of a limited partnership (or a partnership in which the
limited partners have limited liability) in the State of Delaware and any
other state, or the District of Columbia, in which the Partnership may
elect to do business or own property.
(ii) 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 of the things to maintain the Partnership as a limited
partnership (or a partnership in which the limited partners have
limited liability) under the laws of the State of Delaware and each
other state, or the District of Columbia, in which the Partnership may
elect to do business or own property.
(iii) Subject to the terms of Section 8.5(a)(iv) hereof, the
General Partner shall not be required, before or after filing, to
deliver or mail a copy of the Certificate or any amendment thereto to
any Limited Partner.
7.3 Reimbursement of the General Partner
(a) Except as provided in this Section 7.3 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) (i) The Partnership shall be responsible for and shall pay all
expenses relating to the Partnership's organization, the ownership of
its assets and its operations. The General Partner shall be reimbursed
on a monthly basis, or such other basis as it may determine in its
sole and absolute discretion, for all expenses that it incurs on
behalf of the Partnership relating to the ownership and operation of
the Partnership's assets, or for the benefit of the Partnership,
including all expenses associated with compliance by the General
Partner and the Initial Limited Partner with laws, rules and
regulations promulgated by any regulatory body, expenses related to
the operations of the General Partner and to the management and
administration of any Subsidiaries of the General Partner or the
Partnership or Affiliates of the Partnership, such as auditing
expenses and filing fees and any and all salaries, compensation and
expenses of officers and employees of the General Partner, but
excluding any portion of expenses reasonably attributable to assets
not owned by or for the benefit of, or to operations not for the
benefit of, the
29
Partnership or Affiliates of the Partnership; 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 in its name.
(ii) Such reimbursement shall be in addition to any reimbursement
made as a result of indemnification pursuant to Section 7.6 hereof.
(iii) The General Partner shall determine in good faith the
amount of expenses incurred by it related to the ownership and
operation of, or for the benefit of, the Partnership. If 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 reasonable 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) (i) Expenses incurred by the General Partner relating to the
organization or reorganization of the Partnership and the General
Partner the issuance of Common Stock in connection with the
Consolidation and any issuance of additional Partnership Interests,
REIT Stock or rights, options, warrants, or convertible or
exchangeable securities pursuant to Section 4.2 hereof and all costs
and expenses associated with the preparation and filing of any
periodic reports by the General Partner under federal, state or local
laws or regulations (including, without limitation, all costs,
expenses, damages, and other payments resulting from or arising in
connection with litigation related to any of the foregoing) are
primarily obligations of the Partnership.
(ii) To the extent the General Partner pays or incurs such
expenses, the General Partner shall be reimbursed for such expenses.
7.4 Outside Activities of the General Partner
(a) Without the Consent of the Outside 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 and the management of the business of the
Partnership, and such activities as are incidental thereto.
(b) The General Partner and any Affiliates of the General Partner may
acquire Limited Partner Interests and shall be entitled to exercise all
rights of a Limited Partner relating to such Limited Partner Interests.
7.5 Contracts with Affiliates
(a) (i) The Partnership may lend or contribute funds or other assets
to its Subsidiaries or other Persons in which it has an equity
investment and such
30
Subsidiaries and Persons may borrow funds from the Partnership, on
terms and conditions established in the sole and absolute discretion
of the General Partner.
(ii) The foregoing authority shall not create any right or
benefit in favor of any Subsidiary or any other Person.
(b) Except as provided in Section 7.4, the Partnership may Transfer
assets to 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 and absolute
discretion, may determine.
(c) Except as expressly permitted by this Agreement, neither the
General Partner nor any of its Affiliates shall sell, Transfer or convey
any property to, or purchase any property from, the Partnership, directly
or indirectly, except pursuant to transactions that are determined by the
General Partner in good faith to be fair and reasonable.
(d) The General Partner, in its sole and absolute discretion and
without the approval of the Limited Partners, may propose and adopt, on
behalf of the Partnership, employee benefit plans, stock option plans, and
similar plans funded by the Partnership for the benefit of employees of the
Partnership, the General Partner, any 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, any
Subsidiaries of the Partnership or any Affiliate of any of them.
(e) The General Partner is expressly authorized to enter into, in the
name and on behalf of the Partnership, a "right of first opportunity" or
"right of first offer" arrangement, non-competition agreements 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.
7.6 Indemnification
(i) To the fullest extent permitted by Delaware law, the
Partnership shall indemnify each Indemnitee from and against any and
all losses, claims, damages, liabilities, joint or several, expenses
(including, without limitation, reasonable attorneys' fees and other
legal fees and expenses), judgments, fines, settlements, and other
amounts arising from any and all claims, demands, actions, suits or
proceedings, civil, criminal, administrative or investigative
(collectively, "Claims"), that relate to the operations of the
Partnership or the General Partner as set forth in this Agreement, in
which such Indemnitee may be involved, or is threatened to be
involved, as a party or otherwise, so long as (x) the course of
conduct which gave rise to the Claim was taken, in the reasonable
determination of the Indemnitee made in good faith, in the best
interests of the Partnership or the General Partner, (y) such Claim
was not the result of negligence or misconduct by the Indemnitee and
(z) such indemnification is not satisfied or recoverable from the
assets of the stockholders of the General Partner. Notwithstanding the
foregoing, no Indemnitee shall be indemnified for any Claim arising
from or out
31
of an alleged violation of federal or state securities laws unless (x)
there has been a successful adjudication on the merits of each count
involving alleged securities law violations as to such Indemnitee, (y)
such allegations have been dismissed with prejudice on the merits by a
court of competent jurisdiction as to such Indemnitee, or (z) a court
of competent jurisdiction approves a settlement of such allegations
against such Indemnitee and finds that indemnification of the
settlement and the related costs should be made, and the court
considering the request for indemnification has been advised of the
position of the Securities and Exchange Commission and of the
published position of any state securities regulatory authority in
which the REIT Stock was offered or sold as to indemnification for
violations of securities law.
(ii) Without limitation, the foregoing indemnity shall extend to
any liability of any Indemnitee, pursuant to a loan guaranty (except a
guaranty by a limited partner of nonrecourse indebtedness of the
Partnership or as otherwise provided in any such loan guaranty),
contractual obligation for any indebtedness or other obligation 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
7.6 in favor of any Indemnitee having or potentially having liability
for any such indebtedness.
(iii) Any indemnification pursuant to this Section 7.6 shall be
made only out of the assets of the Partnership, and neither the
General Partner nor any Limited Partner shall have any obligation to
contribute to the capital of the Partnership, or otherwise provide
funds, to enable the Partnership to fund its obligations under this
Section 7.6.
(b) Reasonable expenses incurred by an Indemnitee who is a party to a
proceeding shall be paid or reimbursed by the Partnership in advance of the
final disposition of any and all claims, demands, actions, suits or
proceedings, civil, criminal, administrative or investigative made or
threatened against an Indemnitee upon receipt by the Partnership of (i) a
written affirmation by the Indemnitee of the Indemnitee's good faith belief
that the standard of conduct necessary for indemnification by the
Partnership as authorized in this Section 7.6 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 7.6 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 Indemnities are indemnified.
32
(d) The Partnership may, but shall not be obligated to, purchase and
maintain insurance, on behalf of the Indemnities 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 7.6, the Partnership shall be deemed
to have requested an Indemnitee to serve as fiduciary of an employee
benefit plan whenever the performance by such Indemnitee of its duties to
the Partnership also imposes duties on, or otherwise involves services by,
such Indemnitee to the plan or participants or beneficiaries of the plan;
excise taxes assessed on an Indemnitee with respect to an employee benefit
plan pursuant to applicable law shall constitute fines within the meaning
of this Section 7.6; and actions taken or omitted by the Indemnitee with
respect to an employee benefit plan in the performance of its duties for a
purpose reasonably believed by it to be in the interest of the participants
and beneficiaries of the plan shall be deemed to be for a purpose which is
not opposed to the best interests of the Partnership.
(f) In no event may an Indemnitee subject any of the Partners (other
than the General Partner) 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 7.6 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) (i) The provisions of this Section 7.6 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.
(ii) Any amendment, modification or repeal of this Section 7.6 or
any provision hereof shall be prospective only and shall not in any way
affect the Partnership's liability to any Indemnitee under this Section
7.6, 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.
(i) If and to the extent any payments to the General Partner pursuant
to this Section 7.6 constitute gross income to the General Partner (as
opposed to the repayment of advances made on behalf of the Partnership),
such amounts shall constitute guaranteed payments within the meaning of
Section 707(c) of the Code, shall be treated consistently therewith by the
Partnership and all Partners, and shall not be treated as distributions for
purposes of computing the Partners' Capital Accounts.
(j) Notwithstanding anything to the contrary in this Agreement, the
General Partner shall not be entitled to indemnification hereunder for any
loss, claim, damage,
33
liability or expense for which the General Partner is obligated to
indemnify the Partnership under any other agreement between the General
Partner and the Partnership.
7.7 Liability of the General Partner
(a) Notwithstanding anything to the contrary set forth in this
Agreement, neither the General Partner nor the investment advisor of the
General Partner, nor any of their respective officers and directors, shall
be liable for monetary damages to the Partnership, any Partners or any
Assignees for losses sustained or liabilities incurred as a result of
errors in judgment or mistakes of fact or law or of any act or omission
unless the General Partner or its investment advisor, as the case may be,
acted in bad faith and the act or omission was material to the matter
giving rise to the loss, liability or benefit not derived.
(b) (i) The Limited Partners expressly acknowledge that the General
Partner (and its investment advisor) is acting on behalf of the
Partnership and the shareholders of the General Partner collectively,
that the General Partner (and its investment advisor), subject to the
provisions of Section 7.1(e) hereof, is under no obligation to
consider the separate interest of the Limited Partners (including,
without limitation, the tax consequences to Limited Partners or
Assignees) in deciding whether to cause the Partnership to take (or
decline to take) any actions, and that the General Partner (and its
investment advisor) shall not be liable for monetary damages for
losses sustained, liabilities incurred, or benefits not derived by
Limited Partners in connection with such decisions; provided that the
General Partner (and its investment advisor) has acted in good faith.
(ii) With respect to any indebtedness of the Partnership which
any Limited Partner may have guaranteed, the General Partner (and its
investment advisor) shall have no duty to keep such indebtedness
outstanding.
(c) (i) Subject to its obligations and duties as General Partner set
forth in Section 7.1(a) hereof, the General Partner may exercise any
of the powers granted to it by this Agreement and perform any of the
duties imposed upon it hereunder either directly or by or through its
agent, including its investment advisor.
(ii) The General Partner shall not be responsible for any
misconduct or negligence on the part of any such agent appointed by
the General Partner in good faith.
(d) The Limited Partners expressly acknowledge that in the event of
any conflict in the fiduciary duties owed by the General Partner to its
stockholders and by the General Partner, in its capacity as a general
partner of the Partnership, to the Limited Partners, the General Partner
may act in the best interests of the General Partner's stockholders without
violating its fiduciary duties to the Limited Partners, and that the
General Partner shall not be liable for monetary damages for losses
sustained, liabilities incurred, or benefits not derived by the Limited
Partners in connection with any such violation.
34
(e) 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 General Partner's and its officers' and directors'
liability to the Partnership and the Limited Partners 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.
7.8 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 in good faith 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, architects,
engineers, environmental consultants and other consultants and advisers
selected by it, and any act taken or omitted to be taken in reliance upon
the opinion of such Persons as to matters which such General Partner
reasonably believes to be within such Person's professional or expert
competence shall be conclusively presumed to have been done or omitted in
good faith and in accordance with such opinion.
(c) (i) The General Partner shall have the right, in respect of any
of its powers or obligations hereunder, to act through any of its duly
authorized officers and duly appointed attorneys-in-fact.
(ii) 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 each and every act and duty which is
permitted or required to be done by the General Partner hereunder.
(d) Notwithstanding any other provisions of this Agreement or the Act,
any action of the General Partner on behalf of the Partnership or any
decision of the General Partner to refrain from acting on behalf of the
Partnership, undertaken in the good faith belief that such action or
omission is necessary or advisable in order
(i) to protect the ability of the General Partner to continue to
qualify as a REIT; or
(ii) to 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.
35
7.9 Title to Partnership Assets
(a) Title to Partnership assets, whether real, personal or mixed and
whether tangible or intangible, shall be deemed to be owned by the
Partnership as an entity, and no Partner, individually or collectively,
shall have any ownership interest in such Partnership assets or any portion
thereof.
(b) (i) 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.
(ii) The General Partner hereby declares and warrants that any
Partnership asset 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, 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.
(iii) 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.
7.10 Reliance by Third Parties
(a) Notwithstanding anything to the contrary in this Agreement, any
Person dealing with the Partnership shall be entitled to assume that the
General Partner has full power and authority, without consent or approval
of any other Partner or Person, to encumber, sell or otherwise use in any
manner any and all assets of the Partnership and to enter into any
contracts on behalf of the Partnership, and take any and all actions on
behalf of the Partnership, and such Person shall be entitled to deal with
the General Partner as if the General Partner were the Partnership's sole
party in interest, both legally and beneficially.
(b) 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.
(c) 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
expediency of any act or action of the General Partner or its
representatives.
(d) 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
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(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.
7.11 Loans By Third Parties.
The Partnership may incur Debt, or enter into similar credit, guarantee,
financing or refinancing arrangements for any purpose (including, without
limitation, in connection with any acquisition of property) with any Person upon
such terms as the General Partner determines appropriate.
ARTICLE 8
RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS
8.1 Limitation of Liability
The Limited Partners shall have no liability under this Agreement except as
expressly provided in this Agreement, including Section 10.5 hereof, or under
the Act.
8.2 Management of Business
(a) No Limited Partner or Assignee (other than the General Partner,
any of its Affiliates or any officer, director, employee, agent or trustee
of the General Partner, the Partnership or any of their Affiliates, in
their capacity as such) shall take part in the operation, management or
control (within the meaning of the Act) of the Partnership's business,
transact any business in the Partnership's name or have the power to sign
documents for or otherwise bind the Partnership.
(b) 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.
8.3 Outside Activities of Limited Partners
(a) Subject to any agreements entered into pursuant to Section 7.5
hereof and any other agreements entered into by a Limited Partner or its
Affiliates with the Partnership or any of its Subsidiaries, any Limited
Partner and any officer, director, employee, agent, trustee, Affiliate or
shareholder of any Limited Partner shall be entitled
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to and may have business interests and engage in business activities in
addition to those relating to the Partnership, including business interests
and activities that are in direct competition with the Partnership or that
are enhanced by the activities of the Partnership.
(b) 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.
(c) None of the Limited Partners nor any other Person shall have any
rights by virtue of this Agreement or the Partnership relationship
established hereby in any business ventures of any other Person and such
Person shall have no obligation pursuant to this Agreement to offer any
interest in any such business ventures to the Partnership, any Limited
Partner or any such other Person, even if such opportunity is of a
character which, if presented to the Partnership, any Limited Partner or
such other Person, could be taken by such Person.
8.4 Return of Capital
(a) Except pursuant to the Exchange Rights Agreements, no Limited
Partner shall be entitled to the withdrawal or return of its Capital
Contribution, except to the extent of distributions made pursuant to this
Agreement or upon termination of the Partnership as provided herein.
(b) Except as otherwise expressly provided in this Agreement, no
Limited Partner or Assignee shall have priority over any other Limited
Partner or Assignee, either as to the return of Capital Contributions or as
to profits, losses or distributions.
8.5 Rights of Limited Partners Relating to the Partnership
(a) In addition to the other rights provided by this Agreement or by
the Act, and except as limited by Section 8.5(d) hereof, each Limited
Partner shall have the right, for a purpose reasonably related to such
Limited Partner's interest as a limited partner in the Partnership, upon
written demand with a statement of the purpose of such demand and at such
Limited Partner's own expense (including such reasonable copying and
administrative charges as the General Partner may establish from time to
time):
(i) 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 Securities Exchange Act of 1934;
(ii) to obtain a copy of the Partnership's federal, state and
local income tax returns for each Partnership Year;
(b) 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
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(i) the General Partner reasonably believes to be in the nature
of trade secrets or other information, the disclosure of which the
General Partner in good faith believes is not in the best interests of
the Partnership or could damage the Partnership or its business; or
(ii) the Partnership is required by law or by agreements with an
unaffiliated third party to keep confidential.
8.6 Exchange Rights Agreements
(a) The Limited Partners have been granted the right, but not the
obligation, to exchange all or a portion of their Partnership Units for
cash or, at the option of the General Partner, for shares of REIT Stock on
the terms and subject to the conditions and restrictions contained in
certain Exchange Rights Agreements between the General Partners and the
Limited Partners (as amended from time to time, the "Exchange Rights
Agreements"). The form of Exchange Rights Agreement governing the exchange
of Partnership Units shall be substantially in the form attached hereto as
Exhibit C, with such changes as may be agreed to by the General Partner.
(b) The Limited Partners and all successors, assignees and transferees
(whether by operation of law, including by merger or consolidation,
dissolution or liquidation of an entity that is a Limited Partner, or
otherwise) shall be bound by the provisions of the Exchange Rights
Agreement to which they are parties.
ARTICLE 9
BOOKS, RECORDS, ACCOUNTING AND REPORTS
9.1 Records and Accounting
(a) The General Partner shall keep or cause to be kept at the
principal office of the Partnership those records and documents required to
be maintained by the Act and other books and records deemed by the General
Partner to be appropriate with respect to the Partnership's business,
including, without limitation, all books and records necessary for the
General Partner to comply with applicable REIT Requirements and to provide
to the Limited Partners any information, lists and copies of documents
required to be provided pursuant to Sections 8.5(a) and 9.3 hereof.
(b) Any records maintained by or on behalf of the Partnership in the
regular course of its business may be kept on, or be in the form of, punch
cards, magnetic tape, photographs, micrographics or any other information
storage device, provided that the records so maintained are convertible
into clearly legible written form within a reasonable period of time.
(c) The books of the Partnership shall be maintained, for financial
and tax reporting purposes, on an accrual basis in accordance with
generally accepted accounting principles, or such other basis as the
General Partner determines to be necessary or appropriate.
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9.2 Fiscal Year
The fiscal year of the Partnership shall be the calendar year.
9.3 Reports
(a) As soon as practicable, but in no event later than the date on
which the General Partner mails its annual report to its stockholders, the
General Partner shall cause to be mailed to each Limited Partner as of the
close of the Partnership Year, an annual report containing financial
statements of the Partnership, or of the General Partner, if such
statements are prepared on a consolidated basis with the Partnership, for
such Partnership Year, presented in accordance with GAAP, such statements
to be audited by a nationally recognized firm of independent public
accountants selected by the General Partner in its sole discretion.
(b) If and to the extent that the General Partner mails quarterly
reports to its stockholders, then as soon as practicable, but in no event
later than the date such reports are mailed, the General Partner shall
cause to be mailed to each Limited Partner a report containing unaudited
financial statements as of the last day of the calendar quarter of the
Partnership, or of the General Partner, if such statements are prepared on
a consolidated basis with the Partnership, and such other information as
may be required by applicable law or regulation, or as the General Partner
determines to be appropriate.
(c) Notwithstanding the foregoing, the General Partner may deliver to
the Limited Partners each of the reports described above, as well as any
other communications that it may provide hereunder, by E-mail or by any
other electronic means.
ARTICLE 10
TAX MATTERS
10.1 Preparation of Tax Returns
The General Partner shall arrange for the preparation and timely filing of
all returns of Partnership income, gains, deductions, losses and other items
required of the Partnership for federal and state income tax purposes and shall
use all reasonable efforts to furnish, within ninety (90) days of the close of
each taxable year, the tax information reasonably required by Limited Partners
for federal and state income tax reporting purposes.
10.2 Tax Elections
(a) 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; provided, however, that the General Partner
shall make the election under Section 754 of the Code in accordance with
applicable regulations thereunder effective for the first calendar year
following the Effective Date.
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(b) The General Partner shall elect a permissible method (which need
not be the same method for each item or property) of eliminating the
disparity between the book value and the tax basis for each item of
property contributed to the Partnership or to a Subsidiary of the
Partnership pursuant to the regulations promulgated under the provisions of
Section 704(c) of the Code.
(c) The General Partner shall have the right to seek to revoke any tax
election it makes, including, without limitation, the election under
Section 754 of the Code, upon the General Partner's determination, in its
sole and absolute discretion, that such revocation is in the best interests
of the Partners.
10.3 Tax Matters Partner
(a) (i) The General Partner shall be the "tax matters partner" of
the Partnership for federal income tax purposes.
(ii) Pursuant to Section 6230(e) of the Code, upon receipt of
notice from the Internal Revenue Service of the beginning of an
administrative proceeding with respect to the Partnership, the tax
matters partner shall furnish the Internal Revenue Service with the
name, address, taxpayer identification number, and profit interest of
each of the Limited Partners and the Assignees; provided, that such
information is provided to the Partnership by the Limited Partners and
the Assignees.
(iii) The tax matters partner is authorized, but not required:
(A) to enter into any settlement with the Internal Revenue
Service 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 Internal
Revenue Service providing that the tax matters partner shall
not have the authority to enter into a settlement agreement
on behalf of such Partner; or
(II) who is a "notice partner" (as defined in Section
6231(a)(8) of the Code) or a member of a "notice group" (as
defined in Section 6223(b)(2) of the Code);
(B) in the event that a notice of a final administrative
adjustment at the Partnership level of any item required to be
taken into account by a Partner for tax purposes (a "final
adjustment") is mailed to
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the tax matters partner, to seek judicial review of such final
adjustment, including the filing of a petition for readjustment
with the Tax Court or the filing of a complaint for refund with
the United States Claims Court or the District Court of the
United States for the district in which the Partnership's
principal place of business is located;
(C) to intervene in any action brought by any other Partner
for judicial review of a final adjustment;
(D) to file a request for an administrative adjustment with
the Internal Revenue Service and, if any part of such request is
not allowed by the Internal Revenue Service, to file an
appropriate pleading (petition or complaint) for judicial review
with respect to such request;
(E) to enter into an agreement with the Internal Revenue
Service to extend the period for assessing any tax which is
attributable to any item required to be taken account of by a
Partner for tax purposes, or an item affected by such item; and
(F) to take any other action on behalf of the Partners or
the Partnership in connection with any tax audit or judicial
review proceeding to the extent permitted by applicable law or
regulations.
The taking of any action and the incurring of any expense by the tax
matters partner in connection with any such proceeding, except to the
extent required by law, is a matter in the sole and absolute discretion of
the tax matters partner and the provisions relating to indemnification of
the General Partner set forth in Section 7.6 of this Agreement shall be
fully applicable to the tax matters partner in its capacity as such.
(b) (i) The tax matters partner shall receive no compensation for
its services.
(ii) All third party costs and expenses incurred by the tax
matters partner in performing its duties as such (including legal and
accounting fees and expenses) shall be borne by the Partnership.
(iii) 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.
10.4 Organizational Expenses
The Partnership shall elect to deduct expenses, if any, incurred by it in
organizing the Partnership ratably over a sixty (60) month period as provided in
Section 709 of the Code.
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10.5 Withholding
(a) Each Limited Partner hereby authorizes the Partnership to withhold
from, or pay on behalf of or with respect to, such Limited Partner any amount of
federal, state, local, or foreign taxes that the General Partner determines that
the Partnership is required to withhold or pay with respect to any amount
distributable or allocable to such Limited Partner pursuant to this Agreement,
including, without limitation, any taxes required to be withheld or paid by the
Partnership pursuant to Sections 1441, 1442, 1445, or 1446 of the Code.
(b) (i) Any amount paid on behalf of or with respect to a Limited Partner
shall constitute a loan by the Partnership to such Limited Partner, which
loan shall be repaid by such Limited Partner within fifteen (15) days after
notice from the General Partner that such payment must be made unless
(A) the Partnership withholds such payment from a distribution
which would otherwise be made to the Limited Partner; or
(B) the General Partner determines, in its sole and absolute
discretion, that such payment may be satisfied out of the available
funds of the Partnership which would, but for such payment, be
distributed to the Limited Partner.
(ii) Any amounts withheld pursuant to the foregoing clauses (i)(A) or
(B) shall be treated as having been distributed to such Limited Partner.
(c) (i) Each Limited Partner hereby unconditionally and irrevocably grants
to the Partnership a security interest in such Limited Partner's
Partnership Interest to secure such Limited Partner's obligation to pay to
the Partnership any amounts required to be paid pursuant to this Section
10.5.
(ii) (A) In the event that a Limited Partner fails to pay when due any
amounts owed to the Partnership pursuant to this Section 10.5, the
General Partner may, in its sole and absolute discretion, elect to
make the payment to the Partnership on behalf of such defaulting
Limited Partner, and in such event shall be deemed to have loaned such
amount to such defaulting Limited Partner and shall succeed to all
rights and remedies of the Partnership as against such defaulting
Limited Partner.
(B) Without limitation, in such event, the General Partner shall
have the right to receive distributions that would otherwise be
distributable to such defaulting Limited Partner until such time as
such loan, together with all interest thereon, has been paid in full,
and any such distributions so received by the General Partner shall be
treated as having been distributed to the defaulting Limited Partner
and immediately paid by the defaulting Limited Partner to the General
Partner in repayment of such loan.
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(iii) Any amount payable by a Limited Partner hereunder shall
bear interest at the highest base or prime rate of interest published
from time to time by any of Citibank, N.A., Chemical Bank, Xxxxxx
Guaranty Trust Company of New York and Chase Manhattan Bank, N.A.,
plus four (4) percentage points, but in no event higher than the
maximum lawful rate of interest on such obligation, such interest to
accrue from the date such amount is due (i.e., fifteen (15) days after
demand) until such amount is paid in full.
(iv) 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
11.1 Transfer
(a) (i) The term "Transfer," when used in this Article 11 with respect
to a Partnership Interest or a Partnership Unit, shall be deemed to
refer to a transaction by which the General Partner purports to assign
all or any part of its General Partner Interest to another Person or a
Limited Partner purports to assign all or any part of its Limited
Partner Interest to another Person, and includes a sale, assignment,
gift, pledge, encumbrance, hypothecation, mortgage, exchange or any
other disposition by law or otherwise.
(ii) The term "Transfer" when used in this Article 11 does not
include any exchange of Partnership Units for cash or REIT Stock
pursuant to the Exchange Rights Agreement.
(b) (i) 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.
(ii) Any Transfer or purported Transfer of a Partnership Interest
not made in accordance with this Article 11 shall be null and void.
11.2 Transfer of the General Partner's General Partner Interest
(a) The General Partner may not Transfer any of its General Partner
Interest or withdraw as General Partner, or Transfer any of its Limited
Partner Interest, except
(i) if holders of at least two-thirds of the Limited Partnership
Interests consent to such Transfer or withdrawal,
(ii) if such Transfer is to an entity which is wholly owned by
the General Partner and is a Qualified REIT Subsidiary as defined in
Section 856(i) of the Code, or
44
(iii) in connection with a transaction described in Section
11.2(c) or 11.2(d) (as applicable)
(b) In the event the General Partner withdraws as general partner of
the Partnership in accordance with Section 11.2(a), the General Partner's
General Partner Interest shall immediately be converted into a Limited
Partner Interest.
(c) Except as otherwise provided in Section 11.2(d), the General
Partner shall not engage in any merger, consolidation or other combination
of the General Partner with or into another Person (other than a merger in
which the General Partner is the surviving entity) or sale of all or
substantially all of its assets, or any reclassification, or any
recapitalization of outstanding REIT Stock (other than a change in par
value, or from par value to no par value, or as a result of a subdivision
or combination of REIT Stock) (a "Transaction"), unless
(i) in connection with the Transaction all Limited Partners will
either receive, or will have the right to elect to receive, for each
Partnership Unit an amount of cash, securities, or other property
equal to the product of the Exchange Factor and the amount of cash,
securities or other property or value paid in the Transaction to or
received by a holder of one share of REIT Stock corresponding to such
Partnership Unit in consideration of one share of REIT Stock at any
time during the period from and after the date on which the
Transaction is consummated; provided that if, in connection with the
Transaction, a purchase, tender or exchange offer ("Offer") shall have
been made to and accepted by the holders of more than 50% of the
outstanding REIT Stock, each holder of Partnership Units shall be
given the option to exchange its Partnership Units for the amount of
cash, securities, or other property which a Limited Partner would have
received had it
(A) exercised its Exchange Right and
(B) sold, tendered or exchanged pursuant to the Offer the
REIT Stock received upon exercise of the Exchange Right
immediately prior to the expiration of the Offer.
The foregoing is not intended to, and does not, affect the
ability of (i) a stockholder of the General Partner to sell its stock
in the General Partner or (ii) the General Partner to perform its
obligations (under agreement or otherwise) to such stockholders
(including the fulfillment of any obligations with respect to
registering the sale of stock under applicable securities laws).
(d)(i) Notwithstanding Section 11.2(c), the General Partner may
merge into or consolidate with another entity if immediately
after such merger or consolidation
(A) substantially all of the assets of the successor or
surviving entity (the "Surviving General Partner"), other
than Partnership Units held by the General Partner, are
contributed to the Partnership as a Capital
45
Contribution in exchange for Partnership Units with a fair
market value equal to the value of the assets so contributed
as determined by the Surviving General Partner in good faith
and
(B) the Surviving General Partner expressly agrees to
assume all obligations of the General Partner hereunder.
(ii) (A) Upon such contribution and assumption, the
Surviving General Partner shall have the right and duty to amend
this Agreement and the Exchange Rights Agreement as set forth in
this Section 11.2(d).
(B) (I) The Surviving General Partner shall in good
faith arrive at a new method for the calculation of the
Exchange Factor for a Partnership Unit after any such merger
or consolidation so as to approximate the existing method
for such calculation as closely as reasonably possible.
(II) Such calculation shall take into account,
among other things, the kind and amount of securities, cash
and other property that was receivable upon such merger or
consolidation by a holder of REIT Stock or options, warrants
or other rights relating thereto, and which a holder of
Partnership Units could have acquired had such Partnership
Units been redeemed for REIT Stock immediately prior to such
merger or consolidation.
(C) Such amendment to this Agreement shall provide for
adjustment to such method of calculation, which shall be as
nearly equivalent as may be practicable to the adjustments
provided for with respect to the Exchange Factor.
(iii) The above provisions of this Section 11.2(d) shall
similarly apply to successive mergers or consolidations permitted
hereunder.
11.3 Limited Partners' Rights to Transfer
(a) Subject to the provisions of Sections 11.3(c), 11.3(d), 11.3(e),
11.4 and 11.6, a Limited Partner may, without the consent of the General
Partner, Transfer all or any portion of its Limited Partnership Interest,
or any of such Limited Partner's economic right as a Limited Partner. In
order to effect such transfer, the Limited Partner must deliver to the
General Partner a duly executed copy of the instrument making such transfer
and such instrument must evidence the written acceptance by the assignee of
all of the terms and conditions of this Agreement and represent that such
assignment was made in accordance with all applicable laws and regulations.
(b) (i) If a Limited Partner is Incapacitated, the executor,
administrator, trustee, committee, guardian, conservator or receiver
of such Limited Partner's estate shall have all of the rights of a
Limited Partner, but not more rights than those enjoyed by other
Limited Partners, for the purpose of settling or managing
46
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.
(ii) The Incapacity of a Limited Partner, in and of itself, shall
not dissolve or terminate the Partnership.
(c) The General Partner may prohibit any Transfer by a Limited Partner
of its Partnership Units if, in the opinion of legal counsel to the
Partnership, such Transfer would require filing of a registration statement
under the Securities Act of 1933, as amended, or would otherwise violate
any federal or state securities laws or regulations applicable to the
Partnership or the Partnership Units.
(d) No Transfer by a Limited Partner of its Partnership Units may be
made to any Person if
(i) in the opinion of legal counsel of the Partnership, it would
adversely affect the ability of the General Partner to continue to
qualify as a REIT or would subject the General Partner to any
additional taxes under Section 857 or Section 4981 of the Code;
(ii) in the opinion of legal counsel for the Partnership, it
would result in the Partnership being treated as an association
taxable as a corporation for federal income tax purposes;
(iii) such Transfer would cause the Partnership to become, with
respect to any employee benefit plan subject to Title I of ERISA, a
"party-in-interest" (as defined in Section 3(14) of ERISA) or a
"disqualified person" (as defined in Section 4975(c) of the Code);
(iv) such Transfer would, in the opinion of legal counsel for the
Partnership, cause any portion of the assets of the Partnership to
constitute assets of any employee benefit plan pursuant to Department
of Labor Regulations Section 2510.2-101;
(v) such Transfer would subject the Partnership to regulation
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;
(vi) without the consent of the General Partner, which consent
may be withheld in its sole and absolute discretion, such Transfer is
a sale or exchange, and such sale or exchange would, when aggregated
with all other sales and exchanges during the 12-month period ending
on the date of the proposed Transfer, result in 50% or more of the
interests in Partnership capital and profits being sold or exchanged
during such 12-month period; or
(vii) such Transfer is effectuated through an "established
securities market" or a "secondary market (or the substantial
equivalent thereof)" within the meaning of Section 7704 of the Code.
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(e) No transfer of any Partnership Units may be made to a lender to
the Partnership or any Person who is related (within the meaning of
Regulations Section 1.752-4(b)) to any lender to the Partnership whose loan
constitutes a nonrecourse liability (within the meaning of Regulations
Section 1.752-1(a)(2)), without the consent of the General Partner, which
may be withheld in its sole and absolute discretion, provided that as a
condition to such consent the lender will be required to enter into an
arrangement with the Partnership and the General Partner to exchange for
the Cash Amount (as such term is defined in the Exchange Rights Agreement)
any Partnership Units in which a security interest is held simultaneously
with the time at which such lender would be deemed to be a partner in the
Partnership for purposes of allocating liabilities to such lender under
Section 752 of the Code.
(f) Any Transfer in contravention of any of the provisions of this
Section 11.3 shall be void and ineffectual and shall not be binding upon,
or recognized by, the Partnership.
11.4 Substituted Limited Partners
(a) (i) No Limited Partner shall have the right to substitute a
Permitted Transferee for a Limited Partner in his place.
(ii) The General Partner shall, however, have the right to
consent to the admission of a Permitted Transferee of the Partnership
Interest of a Limited Partner pursuant to this Section 11.4 as a
Substitute Limited Partner, which consent may be given or withheld by
the General Partner in its sole and absolute discretion.
(iii) The General Partner's failure or refusal to permit such
transferee to become a Substituted Limited Partner shall not give rise
to any cause of action against the Partnership or any Partner.
(b) A transferee who has been admitted as a Substituted Limited
Partner in accordance with this Article 11 shall have all the rights and
powers and be subject to all the restrictions and liabilities of a Limited
Partner under this Agreement.
(c) (i) No Permitted Transferee will be admitted as a Substituted
Limited Partner unless such transferee has furnished to the General
Partner
(A) evidence of acceptance in form satisfactory to the
General Partner of all of the terms and conditions of this
Agreement and the Exchange Rights Agreement, including, without
limitation, the power of attorney granted in Section 2.4 hereof,
and
(B) such other documents or instruments as may be required
in the reasonable discretion of the General Partner in order to
effect such Person's admission as a Substituted Limited Partner.
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(ii) Upon the admission of a Substituted Limited Partner, the
General Partner shall amend Exhibit A to reflect the name, address,
number of Partnership Units, and Percentage Interest of such
Substituted Limited Partner and to eliminate or adjust, if necessary,
the name, address and interest of the predecessor of such Substituted
Limited Partner.
11.5 Assignees
(a) If the General Partner, in its sole and absolute discretion, does
not consent to the admission of any transferee as a Substituted Limited
Partner, as described in Section 11.4(a), such transferee shall be
considered an Assignee for purposes of this Agreement.
(b) An Assignee shall be deemed to have had assigned to it, and shall
be entitled to receive distributions from the Partnership and the share of
Net Income, Net Losses and any other items of gain, loss, deduction or
credit of the Partnership attributable to the Partnership Units assigned to
such transferee, but shall not be deemed to be a holder of Partnership
Units for any other purpose under this Agreement, and shall not be entitled
to vote such Partnership Units in any matter presented to the Limited
Partners for a vote (such Partnership Units being deemed to have been voted
on such matter in the same proportion as all other Partnership Units held
by Limited Partners are voted).
(c) In the event any such transferee desires to make a further
assignment of any such Partnership Units, such transferee shall be subject
to all of the provisions of this Article 11 to the same extent and in the
same manner as any Limited Partner desiring to make an assignment of
Partnership Units.
11.6 General Provisions
(a) No Limited Partner may withdraw from the Partnership other than as
a result of a permitted Transfer of all of such Limited Partner's
Partnership Units in accordance with this Article 11 or pursuant to
exchange of all of its Partnership Units pursuant to the applicable
Exchange Rights Agreement.
(b) (i) Any Limited Partner which shall Transfer all of its
Partnership Units in a Transfer permitted pursuant to this Article 11
shall cease to be a Limited Partner upon the admission of all
Assignees of such Partnership Units as Substituted Limited Partners.
(ii) Similarly, any Limited Partner which shall Transfer all of
its partnership Units pursuant to an exchange of all of its
Partnership Units pursuant to an Exchange Rights Agreement shall cease
to be a Limited Partner.
(c) Other than pursuant to the Exchange Rights Agreement or with the
consent of the General Partner, transfers pursuant to this Article 11 may
only be made as of the first day of a fiscal quarter of the Partnership.
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(d) (i) If any Partnership Interest is transferred or assigned
during the Partnership's fiscal year in compliance with the provisions
of this Article 11 or exchanged pursuant to the applicable Exchange
Rights Agreement on any day other than the first day of a Partnership
Year, then Net Income, Net Losses, each item thereof and all other
items attributable to such interest for such Partnership Year shall be
divided and allocated between the transferor Partner and the
transferee Partner by taking into account their varying interests
during the Partnership Year in accordance with Section 706(d) of the
Code, using the interim closing of the books method.
(ii) Solely for purposes of making such allocations, each of such
items for the calendar month in which the Transfer or assignment
occurs shall be allocated to the transferee Partner, and none of such
items for the calendar month in which an exchange occurs shall be
allocated to the exchanging Partner, provided, however, that the
General Partner may adopt such other conventions relating to
allocations in connection with transfers, assignments, or exchanges as
it determines are necessary or appropriate.
(iii) All distributions of Available Cash attributable to
Partnership Units, with respect to which the Partnership Record Date
is before the date of such Transfer, assignment, or exchange of such
Partnership Units, shall be made to the transferor Partner or the
exchanging Partner, as the case may be, and in the case of a Transfer
or assignment other than an exchange, all distributions of Available
Cash thereafter attributable to such Partnership Units 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 Section 8.6) be made without the express
consent of the General Partner, in its sole and absolute discretion, (i) to
any person or entity who lacks the legal right, power or capacity to own a
Partnership Interest; (ii) in violation of applicable law; (iii) of any
component portion of a Partnership Interest, such as the Capital Account,
or rights to distributions, separate and apart from all other components of
a Partnership Interest; (iv) if in the opinion of legal counsel to the
Partnership such transfer would cause a termination of the Partnership for
federal or state income tax purposes (except as a result of the exchange
for REIT Stock of all Partnership Units held by all Limited Partners or
pursuant to a transaction expressly permitted under Section 7.11 or Section
11.2); (v) if in the opinion of counsel to the Partnership, such transfer
would cause the Partnership to cease to be classified as a partnership for
federal income tax purposes (except as a result of the exchange for REIT
Stock of all Partnership Units held by all Limited Partners or pursuant to
a transaction expressly permitted under Section 7.11 or Section 11.2); (vi)
if such transfer requires the registration of such Partnership Interest
pursuant to any applicable federal or state securities laws; (vii) if such
transfer is effectuated through an "established securities market" or a
"secondary market" (or the substantial equivalent thereof) within the
meaning of Section 7704 of the Code or such transfer causes the Partnership
to become a "publicly traded partnership," as such term is defined in
Section 469(k)(2) or Section
50
7704(b) of the Code (provided that this clause (vii) shall not be the basis
for limiting or restricting in any manner the exercise of the Exchange
Right under Section 8.6 unless, and only to the extent that, outside tax
counsel provides to the General Partner an opinion to the effect that, in
the absence of such limitation or restriction, there is a significant risk
that the Partnership will be treated as a "publicly traded partnership"
and, by reason thereof, taxable as a corporation); (viii) such transfer
could adversely affect the ability of the General Partner to remain
qualified as a REIT; or (ix) if in the opinion of legal counsel of the
transferring Partner (which opinion and counsel are reasonably satisfactory
to the Partnership), or legal counsel of the Partnership, such transfer
would adversely affect the ability of the General Partner to continue to
qualify as a REIT or subject the General Partner to any additional taxes
under Section 857 or Section 4981 of the Code, in the event that the
General Partner has elected to be qualified as a REIT.
(f) The General Partner shall monitor the transfers of interests in
the Partnership to determine (i) if such interests are being traded on an
"established securities market" or a "secondary market (or the substantial
equivalent thereof)" within the meaning of Section 7704 of the Code; and
(ii) whether additional transfers of interests would result in the
Partnership being unable to qualify for at least one of the "safe harbors"
set forth in Regulations Section 1.7704-1 (or such other guidance
subsequently published by the IRS setting forth safe harbors under which
interests will not be treated as "readily tradable on a secondary market
(or the substantial equivalent thereof)" within the meaning of Section 7704
of the Code) (the "Safe Harbors"). The General Partner shall take all steps
reasonably necessary or appropriate to prevent any trading of interests or
any recognition by the Partnership of transfers made on such markets and,
except as otherwise provided herein, to insure that at least one of the
Safe Harbors is met; provided, however, that the foregoing shall not
authorize the General Partner to limit or restrict in any manner the right
of any holder of a Partnership Unit to exercise the Exchange Right in
accordance with the terms of the applicable Exchange Rights Agreement
unless, and only to the extent that, outside tax counsel provides to the
General Partner an opinion to the effect that, in the absence of such
limitation or restriction, there is a significant risk that the Partnership
will be treated as a "publicly traded partnership" and, by reason thereof,
taxable as a corporation.
ARTICLE 12
ADMISSION OF PARTNERS
12.1 Admission of Successor General Partner
(a) (i) A successor to all of the General Partner Interest pursuant
to Section 11 hereof who is proposed to be admitted as a successor
General Partner shall be admitted to the Partnership as the General
Partner, effective immediately following such transfer and the
admission of such successor General Partner as a general partner of
the Partnership upon the satisfaction of the terms and conditions set
forth in Section 12.1(b).
(ii) Any such transferee shall carry on the business of the
Partnership without dissolution.
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(b) A Person shall be admitted as a substitute or successor General
Partner of the Partnership only if the following terms and conditions are
satisfied:
(i) the Person to be admitted as a substitute or additional
General Partner shall have accepted and agreed to be bound by all the
terms and provisions of this Agreement by executing a counterpart
thereof and such other documents or instruments as may be required or
appropriate in order to effect the admission of such Person as a
General Partner;
(ii) if the Person to be admitted as a substitute or additional
General Partner is a corporation or a partnership it shall have
provided the Partnership with evidence satisfactory to counsel for the
Partnership of such Person's authority to become a General Partner and
to be bound by the terms and provisions of this Agreement; and
(iii) counsel for the Partnership shall have rendered an opinion
(relying on such opinions from other counsel as may be necessary) that
the admission of the person to be admitted as a substitute or
additional General Partner is in conformity with the Act, that none of
the actions taken in connection with the admission of such Person as a
substitute or additional General Partner will cause
(A) the Partnership to be classified other than as a
partnership for federal income tax purposes, or
(B) the loss of any Limited Partner's limited liability.
(c) In the case of such admission on any day other than the first day
of a Partnership Year, all items attributable to the General Partner
Interest for such Partnership Year shall be allocated between the
transferring General Partner and such successor as provided in Section
11.6(d) hereof.
12.2 Admission of Additional Limited Partners
(a) 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 and the
applicable Exchange Rights Agreement, including, without limitation,
the power of attorney granted in Section 2.4 hereof, and
(ii) such other documents or instruments as may be required in
the discretion of the General Partner in order to effect such Person's
admission as an Additional Limited Partner.
(b) (i) Notwithstanding anything to the contrary in this Section 12.2,
no Person shall be admitted as an Additional Limited Partner without
the consent of
52
the General Partner, which consent may be given or withheld in the
General Partner's sole and absolute discretion.
(ii) The admission of any Person as an Additional Limited Partner
shall become effective on the date upon which the name of such Person
is recorded on the books and records of the Partnership, following the
consent of the General Partner to such admission.
(c) (i) If any Additional Limited Partner is admitted to the
Partnership on any day other than the first day of a Partnership Year,
then Net Income, Net Losses, each item thereof and all other items
allocable among Partners and Assignees for such Partnership Year shall
be allocated among such Additional Limited Partner and all other
Partners and Assignees by taking into account their varying interests
during the Partnership Year in accordance with Section 706(d) of the
Code, using the interim closing of the books method.
(ii) (A) Solely for purposes of making such allocations, each of
such items for the calendar month in which an admission of any
Additional Limited Partner occurs shall be allocated among all of
the Partners and Assignees, including such Additional Limited
Partner.
(B) distributions of Available Cash with respect to which
the Partnership Record Date is before the date of such admission
shall be made solely to Partners and Assignees, other than the
Additional Limited Partner, and all distributions of Available
Cash thereafter shall be made to all of the Partners and
Assignees, including such Additional Limited Partner.
(d) Upon the admission of the first Additional Limited Partner to the
Partnership, the Initial Limited Partner's original interest in the
Partnership shall automatically, and without further action on the
part of the Initial Limited Partner or the Partnership, be withdrawn.
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
hereof.
ARTICLE 13
DISSOLUTION, LIQUIDATION AND TERMINATION
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13.1 Dissolution
(a) The Partnership shall not be dissolved by the admission of
Substituted Limited Partners or Additional Limited Partners or by the
admission of a successor General Partner in accordance with the terms of
this Agreement. Upon the withdrawal of the General Partner, any successor
General Partner shall continue the business of the Partnership.
(b) The Partnership shall dissolve, and its affairs shall be wound up,
only upon the first to occur of any of the following ("Liquidating
Events"):
(i) the expiration of its term as provided in Section 2.5
hereof;
(ii) an event of withdrawal of the General Partner, as defined in
the Act (other than an event of bankruptcy), unless, within ninety
(90) days after such event of withdrawal, a "majority in interest" (as
defined below) of the remaining Partners Consent in writing to
continue the business of the Partnership and to the appointment,
effective as of the date of withdrawal, of a successor General
Partner;
(iii) an election to dissolve the Partnership made by the General
Partner, with the Consent of Limited Partners holding at least a
majority of the Percentage Interest of the Limited Partners (including
Limited Partner Interests held by the General Partner);
(iv) entry of a decree of judicial dissolution of the Partnership
pursuant to the provisions of the Act;
(v) the sale of all or substantially all of the assets and
properties of the Partnership;
(vi) 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 a "majority in interest" (as defined below) of the
remaining Partners Consent in writing to continue the business of the
Partnership and to the appointment, effective as of a date prior to
the date of such order or judgment, of a substitute General Partner.
As used herein, a "majority in interest" shall refer to Partners (excluding
the General Partner) who hold more than fifty percent (50%) of the outstanding
Percentage Interests not held by the General Partner.
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13.2 Winding Up
(a) (i) 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.
(ii) 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.
(iii) The General Partner, or, in the event there is no remaining
General Partner, any Person elected by Limited Partners holding at
least a "majority in interest" (the General Partner or such other
Person being referred to herein as the "Liquidator"), shall be
responsible for overseeing the winding up and dissolution of the
Partnership and shall take full account of the Partnership's
liabilities and property and the Partnership property shall be
liquidated as promptly as is consistent with obtaining the fair value
thereof, and the proceeds therefrom (which may, to the extent
determined by the General Partner, include shares of common stock or
other securities of the General Partner) shall be applied and
distributed in the following order:
(A) First, to the payment and discharge of all of the
Partnership's debts and liabilities to creditors other than the
Partners;
(B) Second, to the payment and discharge of all of the
Partnership's debts and liabilities to the General Partner;
(C) Third, to the payment and discharge of all of the
Partnership's debts and liabilities to the other Partners; and
(D) The balance, if any, to the General Partner and Limited
Partners to the extent of and in accordance with the positive
balances in their Capital Accounts, after giving effect to all
contributions, distributions, and allocations for all periods.
(iv) The General Partner shall not receive any additional
compensation for any services performed pursuant to this Article 13.
(v) Any distributions pursuant to this Section 13.2(a) shall be
made by the end of the Partnership's taxable year in which the
liquidation occurs (or, if later, within 90 days after the date of the
liquidation).
(b) (i) Notwithstanding the provisions of Section 13.2(a) hereof which
require liquidation of the assets of the Partnership, but subject to
the order of priorities set forth therein, if prior to or upon
dissolution of the Partnership the Liquidator determines that an
immediate sale of part or all of the Partnership's assets would be
impractical or would cause undue loss to the Partners, the Liquidator
may, in its sole and absolute discretion, defer for a reasonable time
the
55
liquidation of any asset except those necessary to satisfy liabilities
of the Partnership (including to those Partners as creditors) or
distribute to the Partners, in lieu of cash, as tenants in common and
in accordance with the provisions of Section 13.2(a) hereof, undivided
interests in such Partnership assets as the Liquidator deems not
suitable for liquidation.
(ii) 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 interests 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.
(iii) The Liquidator shall determine the fair market value of any
property distributed in kind using such reasonable method of valuation
as it may adopt.
(c) In the discretion of the Liquidator, a pro rata portion of the
distributions that would otherwise be made to the General Partner and
Limited Partners pursuant to this Article 13 may be:
(A) distributed to a trust established for the benefit of
the General Partner and Limited Partners for the purposes of
liquidating Partnership assets, collecting amounts owed to the
Partnership, and paying any contingent or unforeseen liabilities
or obligations of the Partnership or the General Partner arising
out of or in connection with the Partnership; the assets of any
such trust shall be distributed to the General Partner and
Limited Partners from time to time, in the reasonable discretion
of the Liquidator, in the same proportions as the amount
distributed to such trust by the Partnership would otherwise have
been distributed to the General Partner and Limited Partners
pursuant to this Agreement; or
(B) withheld or escrowed to provide a reasonable reserve for
Partnership liabilities (contingent or otherwise) and to reflect
the unrealized portion of any installment obligations owed to the
Partnership, provided that such withheld or escrowed amounts
shall be distributed to the General Partner and Limited Partners
in the manner and order of priority set forth in Section 13.2(a)
as soon as practicable.
13.3 No Obligation to Contribute Deficit
If any Partner has a deficit balance in his Capital Account (after giving
effect to all contributions, distributions and allocations for all taxable
years, including the year during which such liquidation occurs), such Partner
shall have no obligation to make any contribution to the capital of the
Partnership with respect to such deficit, and such deficit shall not be
considered a debt owed to the Partnership or to any other Person for any purpose
whatsoever.
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13.4 Rights of Limited Partners
(a) Except as otherwise provided in this Agreement, each Limited
Partner shall look solely to the assets of the Partnership for the return
of its Capital Contributions and shall have no right or power to demand or
receive property other than cash from the Partnership.
(b) Except as otherwise provided in this Agreement, no Limited Partner
shall have priority over any other Partner as to the return of its Capital
Contributions, distributions, or allocations.
13.5 Notice of Dissolution
In the event a Liquidating Event occurs or an event occurs that would, but
for the provisions of an election or objection by one or more Partners pursuant
to Section 13.1, result in a dissolution of the Partnership, the General Partner
shall, within thirty (30) days thereafter, provide written notice thereof to
each of the Partners.
13.6 Termination of Partnership and Cancellation of Certificate of Limited
Partnership
Upon the completion of the liquidation of the Partnership's assets, as
provided in Section 13.2 hereof, the Partnership shall be terminated, a
certificate of cancellation shall be filed, and all qualifications of the
Partnership as a foreign limited partnership in jurisdictions other than the
state of Delaware shall be canceled and such other actions as may be necessary
to terminate the Partnership shall be taken.
13.7 Reasonable Time for Winding-Up
A reasonable time shall be allowed for the orderly winding-up of the
business and affairs of the Partnership and the liquidation of its assets
pursuant to Section 13.2 hereof in order to minimize any losses otherwise
attendant upon such winding-up, and the provisions of this Agreement shall
remain in effect among the Partners during the period of liquidation.
13.8 Waiver of Partition
Each Partner hereby waives any right to partition of the Partnership
property.
ARTICLE 14
AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS
14.1 Amendments
(a) (i) The General Partner shall have the power, without the
consent of the Limited Partners, to amend this Agreement except as set
forth in Section 14.1(b) hereof.
57
(ii) The General Partner shall provide notice to the Limited
Partners when any action under this Section 14.1(a) is taken in the
next regular communication to the Limited Partners.
(b) Notwithstanding Section 14.1(a) hereof, this Agreement shall not
be amended with respect to any Partner adversely affected without the
Consent of such Partner adversely affected if such amendment would
(i) convert a Limited Partner's interest in the Partnership into
a General Partner Interest;
(ii) modify the limited liability of a Limited Partner in a
manner adverse to such Limited Partner; or
(iii) amend this Section 14.1(c).
This Section 14.1(c) does not require unanimous consent of all Partners
adversely affected unless the amendment is to be effective against all Partners
adversely affected.
14.2 Meetings of the Partners
(a) (i) 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 25 percent or more of
the Partnership Interests.
(ii) The request shall state the nature of the business to be
transacted.
(iii) 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.
(iv) Partners may vote in person or by proxy at such meeting.
(v) Whenever the vote or Consent of the Limited Partners is
permitted or required under this Agreement, such vote or Consent may
be given at a meeting of the Partners or may be given in accordance
with the procedure prescribed in Section 14.1(a) hereof.
(vi) Except as otherwise expressly provided in this Agreement,
the Consent of holders of a majority of the Percentage Interests held
by Partners (including the General Partner) shall control.
(b) (i) Any action required or permitted to be taken at a meeting of
the Partners may be taken without a meeting if a written consent
setting forth the action so taken is signed by a majority of the
Percentage Interests of the Partners (or such other percentage as is
expressly required by this Agreement).
58
(ii) Such consent may be in one instrument or in several
instruments, and shall have the same force and effect as a vote of a
majority of the Percentage Interests of the Partners (or such other
percentage as is expressly required by this Agreement).
(iii) Such consent shall be filed with the General Partner.
(iv) An action so taken shall be deemed to have been taken at a
meeting held on the effective date of the consent as certified by the
General Partner.
(c) (i) 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.
(ii) Every proxy must be signed by the Limited Partner or his
attorney-in-fact and a copy thereof delivered to the Partnership.
(iii) No proxy shall be valid after the expiration of eleven (11)
months from the date thereof unless otherwise provided in the proxy.
(iv) Every proxy shall be revocable at the pleasure of the
Limited Partner executing it, such revocation to be effective upon the
General Partner's receipt of written notice of such revocation from
the Limited Partner executing such proxy.
(d) (i) Each meeting of the Partners shall be conducted by the
General Partner or such other Person as the General Partner may
appoint pursuant to such rules for the conduct of the meeting as the
General Partner or such other Person deems appropriate.
(ii) Meetings of Partners may be conducted in the same manner as
meetings of the stockholders of the General Partner and may be held at
the same time, and as part of, meetings of the stockholders of the
General Partner.
ARTICLE 15
GENERAL PROVISIONS
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 five days after being sent
by first class United States mail or by overnight delivery or via facsimile to
the Partner or Assignee at the address set forth in Exhibit A or such other
address of which the Partner shall notify the General Partner in writing.
Notwithstanding the foregoing, the General Partner may elect to deliver any such
notice,
59
demand, request or report by E-mail or by any other electronic means, in
which case such communication shall be deemed given or made one day after being
sent.
15.2 Titles and Captions
All article or section titles or captions in this Agreement are for
convenience of reference only, shall not be deemed part of this Agreement and
shall 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.
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.
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.
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.
15.6 Creditors
Other than as expressly set forth herein with respect to the Indemnities,
none of the provisions of this Agreement shall be for the benefit of, or shall
be enforceable by, any creditor of the Partnership.
15.7 Waiver
No failure by any party to insist upon the strict performance of any
covenant, duty, agreement or condition of this Agreement or to exercise any
right or remedy consequent upon a breach thereof shall constitute waiver of any
such breach or any other covenant, duty, agreement or condition.
15.8 Counterparts
This Agreement may be executed in counterparts, all of which together shall
constitute one agreement binding on all of the parties hereto, notwithstanding
that all such parties are not signatories to the original or the same
counterpart. Each party shall become bound by this Agreement immediately upon
affixing its signature hereto.
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15.9 Applicable Law
This Agreement shall be construed and enforced in accordance with and
governed by the laws of the State of Delaware, without regard to the principles
of conflicts of laws thereof.
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.
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.
15.12 Merger
Subject to Section 4.2 herein, the Partnership may merge with, or
consolidate into, any Person or Entity in accordance with Section 17-211 of the
Act.
15.13 No Rights as Stockholders
Nothing contained in this Agreement shall be construed as conferring upon
the holders of the Partnership Units any rights whatsoever as stockholders of
the General Partner, including, without limitation, any right to receive
dividends or other distributions made to shareholders or to vote or to consent
or receive notice as shareholders in respect to any meeting or shareholders for
the election of directors of the General Partner or any other matter.
[SIGNATURE PAGE FOLLOWS]
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Signature Page to Agreement of Limited Partnership of Orion Multifamily LP,
by and among the undersigned and the other parties thereto.
GENERAL PARTNER:
ORION MULTIFAMILY INVESTMENT FUND, INC.
By: /s/ Xxxxxx X. Xxxxxx
------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Chief Executive Officer
LIMITED PARTNER:
ORION MULTIFAMILY LLC
By: /s/ Xxxxxx X. Xxxxxx
------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Authorized Person
Corporate/Limited Liability Company Additional Limited Partner
Signature Page to Agreement of Limited Partnership
of Orion Multifamily LP, by and among the
undersigned and the other parties thereto.
Dated , 200 [Name of Corporation/LLC]
--------- -- ---
By:
------------------------------------
Name:
Title:
Individual Additional Limited Partner Signature Page to Agreement of
Limited Partnership of Orion Multifamily LP, by and among the
undersigned and the other parties thereto.
Dated , 200
--------- -- ---
------------------------------------
Partnership Limited Partner Signature Page to Agreement of Limited
Partnership of Orion Multifamily LP, by and among
the undersigned and the other parties thereto.
Dated , 200 [Name of LP]
--------- -- ---
By:
------------------------------------
Name:
Title:
Exhibit A
Partners' Contributions and Partnership Interests
Type of Capital Number of Partnership Units Percentage Security
Name and Address of Partner Interest Contribution ("OPUs") Interest Interests
--------------------------- -------- ------------ --------------------------- ---------- ---------
General
Orion Multifamily Partnership
Investment Fund, Inc. Interest $ 200,000 21,978 99.01%
Limited
Partnership
Orion Multifamily LLC Interest $ 2,000 219 0.99%
Exhibit B
Allocations
1. Allocation of Net Income and Net Loss.
(a) Net Income. Subject to the terms and conditions established by the
General Partner for additional Partnership Interests or Partnership Units issued
pursuant to Section 4.3(a) hereof, and except as otherwise provided in this
Exhibit B, Net Income (or items thereof) (other than Net Income, or items
thereof, arising in connection with a Terminating Capital Transaction) for any
fiscal year or other applicable period shall be allocated to the Partners in
accordance with their respective Percentage Interests.
(b) Net Loss. Subject to the terms and conditions established by the
General Partner for additional Partnership Interests or Partnership Units issued
pursuant to Section 4.3(a) hereof, and except as otherwise provided in this
Exhibit B, Net Loss (or items thereof) of the Partnership for each fiscal year
or other applicable period shall be allocated to the Partners in accordance with
the Partners' respective Percentage Interests. Notwithstanding the preceding
sentence, to the extent any Net Loss (or items thereof) allocated to a Partner
under this subparagraph (b) would cause such Partner (hereinafter, a "Restricted
Partner") to have an Adjusted Capital Account Deficit, or increase the amount of
an existing Adjusted Capital Account Deficit, as of the end of the fiscal year
or other applicable period to which such Net Loss relates, such Net Loss shall
not be allocated to such Restricted Partner and instead shall be allocated to
the other Partner(s) (hereinafter, the "Permitted Partners") pro rata in
accordance with each Permitted Partner's Percentage Interest.
(c) Terminating Capital Transaction; Liquidation. Allocations of Net Income
or Net Loss (or items thereof) in connection with a Terminating Capital
Transaction or liquidation of the Partnership shall first be made so that, to
the extent possible, and subject to the terms and conditions established by the
General Partner for additional Partnership Interests and Partnership Units
issued pursuant to Section 4.3(a) hereof, each Partner's Capital Account balance
is equal to such Partner's Adjusted Contribution, and the remainder of such Net
Income or Net Loss (or items thereof) shall be allocated to the Partners in
accordance with their Percentage Interests. Notwithstanding the preceding
sentence, to the extent any Net Loss (or items thereof) would be allocated to a
Restricted Partner under this subparagraph (c), such Net Loss shall not be
allocated to such Restricted Partner and instead shall be allocated to the
Permitted Partners pro rata in accordance with each Permitted Partner's
Percentage Interest.
(d) Rules of Construction.
(1) Capital Account Increases. For purposes of making allocations
pursuant to subparagraph 1(c) of this Exhibit B, a Partner's Capital Account
balance shall be deemed to be increased by such Partner's share of any
Partnership Minimum Gain and Partner Minimum Gain remaining at the close of the
fiscal period in respect of which such allocations are being made.
(2) Change in Percentage Interests. In the event any Partner's
Percentage Interest changes during a fiscal year for any reason, including
without limitation, the Transfer of
any interest in the Partnership, the tax allocations contained in this Exhibit B
shall be applied as necessary to reflect the varying interests of the Partners
during such year.
2. Special Allocations. Notwithstanding any provisions of paragraph 1 of this
Exhibit B, the following special allocations shall be made.
(a) Minimum Gain Chargeback (Nonrecourse Liabilities). Except as otherwise
provided in Section 1.704-2(f) of the Regulations, if there is a net decrease in
Partnership Minimum Gain for any Partnership fiscal 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 to the extent required by Regulations
Section 1.704-2(f). The items to be so allocated shall be determined in
accordance with Sections 1.704-2(f) and (i) of the Regulations. This
subparagraph 2(a) is intended to comply with the minimum gain chargeback
requirement in said section of the Regulations and shall be interpreted
consistently therewith. Allocations pursuant to this subparagraph 2(a) shall be
made in proportion to the respective amounts required to be allocated to each
Partner pursuant hereto.
(b) Partner Minimum Gain Chargeback. Except as otherwise provided in
Section 1.704-2(i)(4) of the Regulations, if there is a net decrease in Partner
Minimum Gain attributable to a Partner Nonrecourse Debt during any fiscal year,
each Partner who has a share of the Partner Minimum Gain attributable to such
Partner Nonrecourse Debt, determined in accordance with Section 1.704-2(i)(5) of
the Regulations, shall be specially allocated items of Partnership income and
gain for such year (and, if necessary, subsequent years) in an amount equal to
that Partner's share of the net decrease in the Partner Minimum Gain
attributable to such Partner Nonrecourse Debt to the extent and in the manner
required by Section 1.704-2(i) of the Regulations. The items to be so allocated
shall be determined in accordance with Sections 1.704-2(i)(4) and (j)(2) of the
Regulations. This subparagraph 2(b) is intended to comply with the minimum gain
chargeback requirement with respect to Partner Nonrecourse Debt contained in
said section of the Regulations and shall be interpreted consistently therewith.
Allocations pursuant to this subparagraph 2(b) shall be made in proportion to
the respective amounts required to be allocated to each Partner pursuant hereto.
(c) Qualified Income Offset. In the event a Partner unexpectedly receives
any adjustments, allocations or distributions described in Sections
1.704-1(b)(2)(ii)(d)(4), (5) or (6) of the Regulations, and such Partner has an
Adjusted Capital Account Deficit, items of Partnership income (including gross
income) and gain shall be specially allocated to such Partner in an amount and
manner sufficient to eliminate the Adjusted Capital Account Deficit as quickly
as possible as required by the Regulations. This subparagraph 2(c) is intended
to constitute a "qualified income offset" under Section 1.704-1(b)(2)(ii)(d) of
the Regulations and shall be interpreted consistently therewith.
(d) Other Chargeback of Impermissible Negative Capital Account. To the
extent any Partner has an Adjusted Capital Account Deficit at the end of any
Partnership fiscal year, each such Partner shall be specially allocated items of
Partnership income (including gross income) and gain in the amount of such
excess as quickly as possible, provided that an allocation pursuant to this
paragraph 2(d) shall be made if and only to the extent that such Partner would
2
have an Adjusted Capital Account Deficit after all other allocations provided
for in this Exhibit B have been tentatively made as if this paragraph 2(d) were
not in the Agreement.
(e) Nonrecourse Deductions. Nonrecourse Deductions for any fiscal year or
other applicable period shall be allocated to the Partners in accordance with
their respective Percentage Interests.
(f) Partner Nonrecourse Deductions. Partner Nonrecourse Deductions for any
fiscal year or other applicable period with respect to a Partner Nonrecourse
Debt shall be specially allocated to the Partner that bears the economic risk of
loss for such Partner Nonrecourse Debt (as determined under Sections
1.704-2(b)(4) and 1.704-2(i)(1) of the Regulations).
(g) Intent of Allocations. The parties intend that the allocation
provisions of this Exhibit B shall result in final Capital Account balances of
the Partners that initially are equal to each Partner's Adjusted Contribution
and are then in proportion to the Partners' respective Percentage Interests, so
that when liquidating distributions are made in accordance with such final
Capital Account balances under Section 13.2(a)(iii)(D) hereof, such
distributions will be able to return to each Partner its Adjusted Contribution
and then will be made in proportion to the Partners' respective Percentage
Interests. To the extent that such final Capital Account balances do not so
reflect the provisions of this Exhibit B, income and loss of the Partnership for
the current year and future years, as computed for book purposes, shall be
allocated among the Partners so as to result in final Capital Account balances
reflecting the provisions of this Exhibit B and to the extent such allocations
of items of income (including gross income) and deduction do not result in such
final Capital Account balances, then, income and loss of the Partnership for
prior open years, as computed for book purposes (or items of gross income and
deduction of the Partnership for such years, as computed for book purposes)
shall be reallocated among the Partners consistent with the foregoing. This
subparagraph shall control notwithstanding any reallocation of income, loss, or
items thereof, as computed for book purposes, by the Internal Revenue Service or
any other taxing authority.
(h) Section 754 Adjustment. To the extent an adjustment to the adjusted tax
basis of any asset of the Partnership pursuant to Section 734(b) of the Code or
Section 743(b) of the Code is required, pursuant to Section 1.704-1(b)(2)(iv)(m)
of the Regulations, to be taken into account in determining Capital Accounts,
the amount of such adjustment to the Capital Accounts shall be treated as an
item of gain (if the adjustment increases the basis of the asset) or loss (if
the adjustment decreases such basis) and such gain or loss shall be specially
allocated among the Partners in a manner consistent with the manner in which
each of their respective Capital Accounts are required to be adjusted pursuant
to such section of the Regulations.
(i) Gross Income Allocation. There shall be specially allocated to the
General Partner an amount of Partnership income and gain during each Partnership
Year or portion thereof, before any other allocations are made hereunder, which
is equal to the excess, if any, of the cumulative distributions of cash made to
the General Partner under Section 7.3(b) hereof over the cumulative allocations
of Partnership income and gain to the General Partner pursuant to this Section
2(i) of this Exhibit B.
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3. Tax Allocations.
(a) Items of Income or Loss. Except as is otherwise provided in this
Exhibit B, an allocation of Partnership Net Income or Net Loss to a Partner
shall be treated as an allocation to such Partner of the same share of each item
of income, gain, loss, deduction and item of tax-exempt income or Section
705(a)(2)(B) expenditure (or item treated as such expenditure pursuant to
Regulations Section 1.704-1(b)(2)(iv)(i)) ("Tax Items") that is taken into
account in computing Net Income or Net Loss.
(b) Section 1245/1250 Recapture. If any portion of gain from the sale of
Partnership assets is treated as gain which is ordinary income by virtue of the
application of Code Sections 1245 or 1250 ("Affected Gain"), then such Affected
Gain shall be allocated among the Partners in the same proportion that the
depreciation and amortization deductions giving rise to the Affected Gain were
allocated. This subparagraph 3(b) shall not alter the amount of Net Income (or
items thereof) allocated among the Partners, but merely the character of such
Net Income (or items thereof). For purposes hereof, in order to determine the
proportionate allocations of depreciation and amortization deductions for each
fiscal year or other applicable period, such deductions shall be deemed
allocated on the same basis as Net Income and Net Loss for such respective
period.
(c) Precontribution Gain, Revaluations. With respect to any Contributed
Property, the Partnership shall use any permissible method contained in the
Regulations promulgated under Section 704(c) of the Code selected by the General
Partner, in its sole discretion, to take into account any variation between the
adjusted basis of such asset and the fair market value of such asset as of the
time of the contribution ("Precontribution Gain"). Each Partner hereby agrees to
report income, gain, loss and deduction on such Partner's federal income tax
return in a manner consistent with the method used by the Partnership. If any
asset has a Gross Asset Value which is different from the Partnership's adjusted
basis for such asset for federal income tax purposes because the Partnership has
revalued such asset pursuant to Regulations Section 1.704-1(b)(2)(iv)(f), the
allocations of Tax Items shall be made in accordance with the principles of
Section 704(c) of the Code and the Regulations and the methods of allocation
promulgated thereunder. The intent of this subparagraph 3(c) is that each
Partner who contributed to the capital of the Partnership a Contributed Property
will bear, through reduced allocations of depreciation, increased allocations of
gain or other items, the tax detriments associated with any Precontribution
Gain. This subparagraph 3(c) is to be interpreted consistently with such intent.
(d) Excess Nonrecourse Liability Safe Harbor. Pursuant to Regulations
Section 1.752-3(a)(3), solely for purposes of determining each Partner's
proportionate share of the "excess nonrecourse liabilities" of the Partnership
(as defined in Regulations Section 1.752-3(a)(3)), the Partners' respective
interests in Partnership profits shall be determined in accordance with each
Partner's Percentage Interest; provided, however, that each Partner who has
contributed an asset to the Partnership shall be allocated, to the extent
possible, a share of "excess nonrecourse liabilities" of the Partnership which
results in such Partner being allocated nonrecourse liabilities in an amount
which is at least equal to the amount of income pursuant to Section 704(c) of
the Code and the Regulations promulgated thereunder (the "Liability Shortfall").
In the event there is an insufficient amount of nonrecourse liabilities to
allocate to each Partner an amount of nonrecourse liabilities equal to the
Liability Shortfall, then an amount of nonrecourse liabilities in proportion to,
and to the extent of, the Liability Shortfall shall be allocated to each
Partner.
4
(e) References to Regulations. Any reference in this Exhibit B or the
Agreement to a provision of proposed and/or temporary Regulations shall, in the
event such provision is modified or renumbered, be deemed to refer to the
successor provision as so modified or renumbered, but only to the extent such
successor provision applies to the Partnership under the effective date rules
applicable to such successor provision.)
(f) Successor Partners. For purposes of this Exhibit B, a transferee of a
Partnership Interest shall be deemed to have been allocated the Net Income, Net
Loss and other items of Partnership income, gain, loss, deduction and credit
allocable to the transferred Partnership Interest that previously have been
allocated to the transferor Partner pursuant to this Agreement.
5
Exhibit C
EXCHANGE RIGHTS AGREEMENT
THIS EXCHANGE RIGHTS AGREEMENT (this "Agreement"), dated as of ______,
199_, is entered into by and among Orion Multifamily Investment Fund, a Maryland
corporation (the "Company"), Orion Multifamily LP, a Delaware limited
partnership (the "Operating Partnership"), and the Persons whose names are set
forth on Exhibit A attached hereto (as it may be amended from time to time).
R E C I T A L S:
(a) The Company, together with certain other limited partners, has
formed the Operating Partnership pursuant to the Agreement of
Limited Partnership of the Operating Partnership dated _______,
2003 (as such agreement may be amended or amended and restated
from time to time, the "Partnership Agreement").
(b) Pursuant to the Partnership Agreement, the Limited Partners (as
defined below) directly or indirectly hold units of limited
partnership interest ("Partnership Units") in the Operating
Partnership.
(c) The Operating Partnership has agreed to provide the Limited
Partners with certain direct or indirect rights to exchange their
Partnership Units for cash or, at the election of the Company,
for shares of the Company's common stock, $0.01 par value per
share (the "REIT Stock").
Accordingly, the parties hereto do hereby agree as follows:
ARTICLE I
DEFINED TERMS
The following definitions shall be for all purposes, unless otherwise
clearly indicated to the contrary, applied to the terms used in this Agreement.
"Assignee" means a Person to whom one or more Partnership Units have been
transferred in a manner permitted under the Partnership Agreement, but who has
not become a substituted Limited Partner in accordance therewith.
"Business Day" means any day except a Saturday, Sunday or other day on
which commercial banks in New York, New York are authorized or required by law
to close.
"Cash Amount" means an amount of cash per Partnership Unit equal to the
Value on the Valuation Date of the REIT Stock Amount.
"Exchange Factor" means 1.0, provided, that in the event that the Company
(i) declares or pays a dividend on its outstanding REIT Stock in REIT Stock or
makes a distribution to all
holders of its outstanding REIT Stock in REIT Stock; (ii) subdivides its
outstanding REIT Stock; or (iii) combines its outstanding REIT Stock into a
smaller number of shares of REIT Stock, the Exchange Factor shall be adjusted by
multiplying the Exchange Factor by a fraction, the numerator of which shall be
the number of shares of REIT Stock issued and outstanding on the record date for
such dividend, contribution, subdivision or combination (assuming for such
purpose that such dividend, distribution, subdivision or combination has
occurred as of such time), and the denominator of which shall be the actual
number of shares of REIT Stock (determined without the above assumption) issued
and outstanding on the record date for such dividend, distribution, subdivision
or combination. Any adjustment to the Exchange Factor shall become effective
immediately after the effective date of such event retroactive to the record
date, if any, for such event.
"Exchanging Partner" has the meaning set forth in Section 2.1 hereof.
"Exchange Right" has the meaning set forth in Section 2.1 hereof.
"Lien" means any lien, security interest, mortgage, deed of trust, charge,
claim, encumbrance, pledge, option, right of first offer or first refusal and
any other right or interest of others of any kind or nature, actual or
contingent, or other similar encumbrance of any nature whatsoever.
"Limited Partner" means any Person, other than the Company, named as a
Limited Partner on Exhibit A, as such Exhibit may be amended from time to time.
"Notice of Exchange" means the Notice of Exchange substantially in the form
of Exhibit B to this Agreement.
"Offering" means the offering of the Company's common stock, par value $.01
per share, pursuant to a registration statement on Form S-11 filed with the
Securities and Exchange Commission.
"Person" shall mean an individual, partnership, corporation, limited
liability company, trust, estate, or unincorporated organization, or other
entity, or a government or agency or political subdivision thereof.
"REIT Stock Amount" means that number of shares of REIT Stock equal to the
product of the number of Partnership Units offered for exchange by an Exchanging
Partner, multiplied by the Exchange Factor as of the Valuation Date, provided,
that in the event the Company or the Operating Partnership issues to all holders
of REIT Stock rights, options, warrants or convertible or exchangeable
securities entitling the stockholders to subscribe for or purchase REIT Stock,
or any other securities or property (collectively, the "rights"), then the REIT
Stock Amount shall also include such rights that a holder of that number of
shares of REIT Stock would be entitled to receive.
"SEC" means the Securities and Exchange Commission.
"Specified Exchange Date" means the tenth (10th) Business Day after receipt
by the Operating Partnership and the Company of a Notice of Exchange; provided,
however, that if the
2
Operating Partnership has more than 99 partners, as determined in accordance
with the provisions of Treasury Regulation Section 1.7704-1(h), then the
Specified Exchange Date shall mean the thirty-first (31st) calendar day after
receipt by the Operating Partnership and the Company of a Notice of Exchange.
"Valuation Date" means the date of receipt by the Operating Partnership and
the Company of a Notice of Exchange or, if such date is not a Business Day, the
first Business Day thereafter.
"Value" means, with respect to shares of REIT Stock, the average of the
daily market price for the five (5) consecutive trading days immediately
preceding the Valuation Date. The market price for each such trading day shall
be:
(i) if the REIT Stock are listed or admitted to trading on the New
York Stock Exchange (the "NYSE"), any other national securities exchange or
the Nasdaq Stock Market ("Nasdaq"), the closing price on such day, or if no
such sale takes place on such day, the average of the closing bid and asked
prices on such day; or
(ii) if the REIT Stock are not listed or admitted to trading on the
NYSE, any national securities exchange or Nasdaq, the last reported sale
price on such day; or
(iii) if no sale takes place on such day, the average of the closing
bid and asked prices on such day, as reported by a reliable quotation
source designated by the Company or if the REIT Stock is not then traded on
any market, as determined in good faith by the Company's Independent
Directors (as defined by the Company's charter).
In the event the REIT Stock Amount includes rights that a holder of REIT Stock
would be entitled to receive, then the Value of such rights shall be determined
by the independent directors of the Company acting in good faith on the basis of
such quotations and other information as they consider, in their reasonable
judgment, appropriate.
ARTICLE II
EXCHANGE RIGHT
2.1 Exchange Right. (a) Subject to Sections 2.2, 2.3, 2.4 and 2.5 hereof,
and subject to any limitations under applicable law, the Operating Partnership
hereby grants to each Limited Partner and each Limited Partner hereby accepts
the right (the "Exchange Right"), exercisable (i) on or after the date that is
one (1) year after the closing of the Offering or (ii) upon the liquidation of
the Operating Partnership or the sale of all or substantially all of the assets
of the Operating Partnership, to exchange on a Specified Exchange Date all or a
portion of the Partnership Units held by such Limited Partner at an exchange
price equal to and in the form of the Cash Amount.
(b) The Exchange Right shall be exercised pursuant to a Notice of
Exchange delivered to the Operating Partnership, with a copy delivered to the
Company, by the Limited Partner who is exercising the Exchange Right (the
"Exchanging Partner"); provided, however, that the Company, on behalf of the
Operating Partnership, may elect, after a Notice of Exchange
3
is delivered, to satisfy the Exchange Right which is the subject of such notice
in accordance with Section 2.2.
(c) A Limited Partner may exercise the Exchange Right from time to
time with respect to part or all of the Partnership Units that it owns, as
selected by the Limited Partner, provided that, except as provided in the
Agreement, a Limited Partner may not exercise the Exchange Right for less than
one thousand (1,000) Partnership Units unless such Limited Partner then holds
less than one thousand (1,000) Partnership Units, in which event the Limited
Partner must exercise the Exchange Right for all of the Partnership Units held
by such Limited Partner.
(d) An Exchanging Partner shall have no right with respect to any
Partnership Units so exchanged to receive any distributions paid after the
Specified Exchange Date with respect to such Partnership Units.
(e) Any Assignee of a Limited Partner may exercise the rights of such
Limited Partner pursuant to this Article 2, and such Limited Partner shall be
deemed to have assigned such rights to such Assignee and shall be bound by the
exercise of such rights by such Assignee.
(f) In connection with any exercise of such rights by an Assignee on
behalf of a Limited Partner, the Cash Amount or the REIT Stock Amount, as the
case may be, shall be satisfied by the Operating Partnership or the Company, as
the case may be, directly to such Assignee and not to such Limited Partner.
2.2 Option of Company to Exchange for REIT Stock. (a) Notwithstanding the
provisions of Section 2.1, the Company may, on behalf of the Operating
Partnership, in its sole and absolute discretion (subject to the limitations on
ownership and transfer of REIT Stock set forth in the Company's charter), elect
to assume directly and satisfy an Exchanging Partner's Exchange Right by
exchanging REIT Stock and rights equal to the REIT Stock Amount on the Specified
Exchange Date for the Partnership Units offered for exchange by the Exchanging
Partner, whereupon the Company shall acquire the Partnership Units offered for
exchange by the Exchanging Partner and shall be treated for all purposes of the
Partnership Agreement as the owner of such Partnership Units. Unless the
Company, in its sole and absolute discretion, shall exercise its right to assume
directly and satisfy the Exchange Right, the Company shall not have any
obligation to the Exchanging Partner or to the Operating Partnership with
respect to the Exchanging Partner's exercise of the Exchange Right. If the
Company shall exercise its right to satisfy the Exchange Right in the manner
described in the first sentence of this Section 2.2 and shall fully perform its
obligations in connection therewith, the Operating Partnership shall have no
right or obligation to pay any amount to the Exchanging Partner with respect to
such Exchanging Partner's exercise of the Exchange Right, and each of the
Exchanging Partner, the Operating Partnership and the Company shall, for federal
income tax purposes, treat the transaction between the Company and the
Exchanging Partner as a sale of the Exchanging Partner's Partnership Units to
the Company. Nothing contained in this Section 2.2 shall imply any right of the
Company to require any Limited Partner to exercise the Exchange Right afforded
to such Limited Partner pursuant to Section 2.1.
4
(b) In the event the Company shall elect to satisfy, on behalf of the
Operating Partnership, an Exchanging Partner's Exchange Right by exchanging REIT
Stock for the Partnership Units offered for exchange,
(i) the Company hereby agrees so to notify the Exchanging Partner
within five (5) Business Days after the receipt by the Company of such
Notice of Exchange,
(ii) each Exchanging Partner hereby agrees to execute such documents
and instruments as the Company may reasonably require in connection with
the issuance of REIT Stock upon exercise of the Exchange Right, and
(iii) the Company hereby agrees to deliver stock certificates
representing fully paid and nonassessable shares of REIT Stock.
2.3 Prohibition of Exchange for REIT Stock. Notwithstanding anything herein
to the contrary, the Company shall not be entitled to satisfy an Exchanging
Partner's Exchange Right pursuant to Section 2.2 if the delivery of REIT Stock
to such Limited Partner by the Company pursuant to Section 2.2 (regardless of
the Operating Partnership's obligations to the Limited Partner under Section
2.1)
(a) would be prohibited under the Articles of Incorporation of the
Company,
(b) if the Company has elected REIT status, would otherwise jeopardize
the REIT status of the Company, or
(c) would cause the acquisition of the REIT Stock by the Limited
Partner to be "integrated" with any other distribution of REIT Stock by the
Company for purposes of complying with the registration provisions of the
Securities Act.
2.4 Payment Date. Any Cash Amount to be paid to an Exchanging Partner shall
be paid on the Specified Exchange Date; provided, however, that the Operating
Partnership may elect to cause the Specified Exchange Date to be delayed for up
to an additional 180 days to the extent required for the Company to cause
additional REIT Shares to be issued to provide financing to be used to make such
payment of the Cash Amount by the Operating Partnership.
2.5 Expiration of Exchange Right. The Exchange Right shall expire with
respect to any Partnership Units for which an Exchange Notice has not been
delivered to the Operating Partnership and the Company on or before December 31,
2040.
2.6 Effect of Exchange. (a) Any exchange of Partnership Units pursuant to
this Article 2 shall be deemed to have occurred as of the Specified Exchange
Date for all purposes, including without limitation the payment of distributions
or dividends in respect of Partnership Units or REIT Stock, as applicable.
(b) Any Partnership Units acquired by the Company pursuant to an
exercise by any Limited Partner of an Exchange Right shall be deemed to be
acquired by and reallocated or reissued to the Company.
5
(c) The Company, as general partner of the Operating Partnership,
shall amend the Partnership Agreement to reflect each such exchange and
reallocation or reissuance of Partnership Units and each corresponding
recalculation of the Partnership Units of the Limited Partners.
ARTICLE III
OTHER PROVISIONS
3.1 Covenants of the Company. (a) At all times during the pendency of the
Exchange Right, the Company shall reserve for issuance such number of shares of
REIT Stock as may be necessary to enable the Company to issue such shares in
full payment of the REIT Stock Amount in regard to all Partnership Units held by
Limited Partners which are from time to time outstanding.
(b) During the pendency of the Exchange Right, the Company shall
deliver to Limited Partners in a timely manner all reports filed by the Company
with the SEC to the extent the Company also transmits such reports to its
stockholders and all other communications transmitted from time to time by the
Company to its stockholders generally.
(c) The Company shall notify each Limited Partner, upon request, of
the then current Exchange Factor and such notice will include a reasonable
explanation of the Exchange Factor calculation to be applied at such time.
3.2 Fractional Shares. (a) No fractional shares of REIT Stock shall be
issued upon exchange of Partnership Units.
(b) The number of full shares of REIT Stock which shall be issuable
upon exchange of Partnership Units (or the cash equivalent amount thereof if the
Cash Amount is paid) shall be computed on the basis of the aggregate amount of
Partnership Units so surrendered.
(c) Instead of any fractional shares of REIT Stock which would
otherwise be issuable upon exchange of any Partnership Units, the Operating
Partnership shall pay a cash adjustment in respect of such fraction in an amount
equal to the Cash Amount of a Partnership Unit multiplied by such fraction.
3.3 Investment Representations and Warranties. By delivering to the Company
a Notice of Exchange, each Exchanging Partner will be deemed to represent and
warrant to the Company and the Operating Partnership that such Exchanging
Partner is aware of the Company's option to exchange such Exchanging Partner's
Partnership Units for REIT Stock pursuant to Section 2.2 hereof and that:
(a) (i) Such Exchanging Partner has received and reviewed
(A) a copy of the prospectus contained in the Registration
Statement on Form S-11 filed by the Company in connection with the
Offering, any prospectus contained in any Registration Statement
subsequently filed by the Company, and any supplement or amendment
thereto (each, a "Prospectus"), and
6
(B) if the Company is filing reports under the Securities
Exchange Act of 1934, as amended, copies of all reports and other
filings (the "SEC Reports"), including Annual Reports on Form 10-K,
Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, made
by the Company with the SEC pursuant to the Securities Exchange Act of
1934, as amended, and the rules and regulations thereunder,
and understands the risks of, and other considerations relating to, an
investment in REIT Stock.
(ii) Such Exchanging Partner, by reason of its business and financial
experience, together with the business and financial experience of those
persons, if any, retained by it to represent or advise it with respect to
its investment in REIT Stock,
(A) has such knowledge, sophistication and experience in
financial and business matters and in making investment decisions of
this type that it is capable of evaluating the merits and risks of and
of making an informed investment decision with respect to an
investment in REIT Stock,
(B) is capable of protecting its own interest or has engaged
representatives or advisors to assist it in protecting its interests
and
(C) is capable of bearing the economic risk of such investment.
(iii) (A) Such Exchanging Partner is an "accredited investor" as
defined in Rule 501 of the regulations promulgated under the Securities
Act.
(B) If such Exchanging Partner has retained or retains a person
to represent or advise it with respect to its investment in REIT
Stock, such Exchanging Partner will advise the Company of such
retention and, at the Company's request, such Exchanging Partner
shall, prior to or at delivery of the REIT Stock hereunder,
(I) acknowledge in writing such representation and
(II) cause such representative or advisor to deliver a
certificate to the Company containing such representations as may
be reasonably requested by the Company.
(b) (i) Such Exchanging Partner understands that an investment in the
Company involves substantial risks.
(ii) Such Exchanging Partner has been given the opportunity to make a
thorough investigation of the activities of the Company and has been furnished
with materials relating to the Company and its activities, including, without
limitation, each Prospectus and the SEC Reports.
(iii) Such Exchanging Partner has relied and is making its investment
decision based upon the Prospectus/Consent Solicitation Statement relating to
the Consolidation
7
and any subsequent Prospectus, the SEC Reports and other written information
provided to the Exchanging Partner by or on behalf of the Company and, as
applicable, such Exchanging Partner's position as a director or executive
officer of the Company.
(c) (i) The REIT Stock to be issued to such Exchanging Partner hereunder
will be acquired by such Exchanging Partner for its own account, for investment
only and not with a view to, or with any intention of, a distribution or resale
thereof, in whole or in part, or the grant of any participation therein.
(ii) Such Exchanging Partner was not formed for the specific purpose
of acquiring an interest in the Company.
(d) (i) Such Exchanging Partner acknowledges that
(A) the shares of REIT Stock to be issued to such Exchanging
Partner hereunder have not been registered under the Securities Act or
state securities laws by reason of a specific exemption or exemptions
from registration under the Securities Act and applicable state
securities laws and, the certificates representing such shares of REIT
Stock will bear a legend to such effect,
(B) the Company's and the Operating Partnership's reliance on
such exemptions is predicated in part on the accuracy and completeness
of the representations and warranties of such Exchanging Partner
contained herein,
(C) the REIT Stock to be issued to such Exchanging Partner
hereunder may not be resold or otherwise distributed unless registered
under the Securities Act and applicable state securities laws, or
unless an exemption from registration is available,
(D) there may be no market for unregistered shares of REIT Stock,
and
(E) the Company has no obligation or intention to register such
REIT Stock under the Securities Act or any state securities laws or to
take any action that would make available any exemption from the
registration requirements of such laws, except as provided in the
Registration Rights Agreement entered into by the Company and the
Exchanging Partner (the "Registration Rights Agreement").
(ii) Such Exchanging Partner acknowledges that because of the
restrictions on transfer or assignment of such REIT Stock to be issued
hereunder, such Exchanging Partner may have to bear the economic risk of
its investment in REIT Stock issued hereunder for an indefinite period of
time, although the holder of any such REIT Stock will be afforded certain
rights to have such REIT Stock registered under the Securities Act and
applicable state securities laws pursuant to the Registration Rights
Agreement.
(e) The address set forth under such Exchanging Partner's name in the
Notice of Exchange is the address of the Exchanging Partner's principal place of
business or, if a natural person, the address of the Exchanging Partner's
residence, and such Exchanging Partner has no
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present intention of becoming a resident of any country, state or jurisdiction
other than the country and state in which such principal place of business or
residence is situated.
ARTICLE IV
GENERAL PROVISIONS
4.1 Addresses and Notice. Any notice, demand, request or report required
or permitted to be given or made to the Operating Partnership, the Company, a
Limited Partner or Assignee, as the case may be, 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 similarly reliable means of
written communication to the Operating Partnership, the Company, a Limited
Partner or Assignee, as the case may be, (i) at the address listed on the
records of the Operating Partnership, with respect to a Limited Partner or
Assignee, and (ii) at 0000 Xxx Xxxx Xxxx Xxxx, Xxxxx 000, New Hyde Park, New
York 11042, Attn: President, with respect to the Operating Partnership or the
Company.
4.2 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.
4.3 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.
4.4 Further Action and Additional Restrictions. 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.
4.5 Binding Effect. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective heirs, executors,
administrators, successors, legal representatives and permitted assigns.
4.6 Waiver. No failure by any party to insist upon the strict performance
of any covenant, duty, agreement or condition of this Agreement or to exercise
any right or remedy consequent upon a breach thereof shall constitute waiver of
any such breach or any other covenant, duty, agreement or condition.
4.7 Counterparts. This Agreement may be executed in counterparts, all of
which together shall constitute one agreement binding on all of the parties
hereto, notwithstanding that all such parties are not signatories to the
original or the same counterpart. Each party shall become bound by this
Agreement immediately upon affixing its signature hereto.
4.8 Applicable Law. This Agreement shall be construed and enforced in
accordance with and governed by the laws of the State of Delaware, without
regard to the principles of conflicts of law thereof.
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4.9 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.
4.10 Entire Agreement. This Agreement contains the entire understanding and
agreement among the Limited Partners, the Operating Partnership and the Company
with respect to the subject matter hereof and supersedes any other prior written
or oral understandings or agreements among them with respect thereto.
4.11 Amendment. This Agreement may be amended from time to time with the
consent of the Company by a vote of the Limited Partners in the same manner as
the Partnership Agreement (in accordance with Section 14.1(a) thereof) may be
amended as provided therein, provided, however, that the Company shall vote its
limited partnership interests in proportion to the votes of the other Limited
Partners.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first written above.
THE COMPANY:
ORION MULTIFAMILY INVESTMENT FUND
By:
-------------------------------------
Name:
Title:
OPERATING PARTNERSHIP:
ORION MULTIFAMILY LP
BY: ORION MULTIFAMILY INVESTMENT FUND,
its general partner
By:
-------------------------------------
Name:
Title:
11
Exhibit A
Name and Address of Limited Partner
12
Exhibit B
Notice of Exchange
The undersigned Limited Partner hereby irrevocably (i) exchanges
___________ Partnership Units in Orion Multifamily LP, in accordance with the
terms of the Exchange Rights Agreement, dated as of _______, 200_ (the "Exchange
Rights Agreement"), and the Exchange Right referred to therein; (ii) surrenders
such Partnership Units and all right, title and interest therein; and (iii)
directs that the Cash Amount or REIT Stock Amount (as determined by the Company)
deliverable upon exercise of the Exchange Right be delivered to the address
specified below, and if REIT Stock is to be delivered, such REIT Stock will be
registered or placed in the name(s) and at the address(es) specified below.
The undersigned hereby represents, warrants, and certifies that the
undersigned (a) has marketable and unencumbered title to such Partnership Units,
free and clear, other than any encumbrance arising pursuant to the Partnership
Agreement, of the rights or interests of any other person or entity; (b) has the
full right, power, and authority to exchange and surrender such Partnership
Units as provided herein; and (c) has obtained the consent or approval of all
persons or entities, if any, (other than consent or approval that may be
required of the Company or the Operating Partnership) having the right to
consent or approve such exchange and surrender on the part of the undersigned.
The undersigned hereby makes the representations and warranties contained
in Section 3.3 of the Exchange Rights Agreement as if such representations and
warranties had been set forth in full in this Notice of Exchange.
Dated:
------------------------
----------------------------------------
Name of Limited Partner (Please Print)
Signature guaranteed by:
----------------------------------------
(Signature of Limited Partner)
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----------------------------------------
Street Address)
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(City) (State) (Zip Code)
If REIT Stock is to be issued, issue to:
Name:
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