AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
PSA INSTITUTIONAL PARTNERS, L.P.
A CALIFORNIA LIMITED PARTNERSHIP
This Amended and Restated Agreement of Limited Partnership (the
"AGREEMENT") is made and entered into as of March 29, 2000 by and among PS TEXAS
HOLDINGS, LTD., a Texas limited partnership (the "GENERAL PARTNER"), PS LPT
PROPERTIES INVESTORS, INC., a Maryland business trust (the "PS LIMITED PARTNER")
and BELCREST REALTY CORPORATION ("BELCREST"), BELAIR REAL ESTATE CORPORATION
("BELAIR"), BELPORT REALTY CORPORATION ("BELPORT"), BELMAR REALTY CORPORATION
("BELMAR") and MONTEBELLO REALTY CORP. ("MONTEBELLO"), each a Delaware
corporation (Belcrest, Belair, Belport, Belmar and Montebello may be
collectively referred to as the "BEL LIMITED PARTNERS") and DLJ EMERGING GROWTH
PARTNERS, L.P. ("EGP") and EDGEWATER EQUITY PARTNERS, L.P. ("EDGEWATER"), each a
Delaware limited partnership (EGP and Edgewater may be collectively referred to
as the "DLJ LIMITED PARTNERS"). This Agreement amends and restates in its
entirety the original Agreement of Limited Partnership entered into as of March
17, 2000 by all of the parties other than the DLJ Limited Partners. Unless
otherwise defined, all capitalized terms shall have the meanings given to them
in Section 1.
1. DEFINITIONS
The following terms shall, for purposes of this Agreement, have the
meanings set forth below, and it is the intent of the parties that these
definitions shall control over definitions of the same or similar terms in
Section 15611 of the Act:
"ACT" means the California Revised Limited Partnership Act as set forth
in Title 2, Chapter 3 of the California Corporations Code.
"AVAILABLE CASH" means total cash receipts of the Partnership from the
operation of the Partnership's business including reductions in previously
maintained reserves, but excludes Cash from Sales or Refinancing, less: (i) all
operating expenses other than noncash expenses such as depreciation and
amortization; (ii) all principal and interest payments on any loans or advances;
(iii) any sums expended for capital improvements or replacements and (iv) a cash
reserve for working capital or other purposes, the amount of which shall be
determined by the General Partner.
"BUSINESS DAY" shall mean any day other than a Saturday, Sunday or day
on which banking institutions in the State of New York or the State of
California are authorized or obligated by law to close, or a day which is or is
declared a national or a New York or California state holiday.
"CAPITAL ACCOUNT" is defined in Section 4.6.
"CAPITAL CONTRIBUTION" means the amount of cash and the agreed value of
other property contributed by a Partner to the Partnership.
"CASH FROM SALES OR REFINANCING" means the proceeds of any financing or
of any sale, exchange or other disposition of assets, less adequate cash
reserves from such proceeds for the payment of debts and obligations.
"COMPANY" means Public Storage, Inc., a California corporation.
"CONTRIBUTION AGREEMENTS" mean those certain Contribution Agreements by
and among: (i) the Bel Limited Partners (other than Montebello), the Partnership
and the Company dated as of March 17, 2000, (ii) Montebello, the Partnership and
the Company dated as of March 17, 2000, (iii) the DLJ Limited Partners, the
Partnership and the Company dated as of March 29, 2000, and (iv) any such
agreements subsequently entered into by and among newly admitted Limited
Partners, the Partnership and the Company specifying that the agreement is to be
treated as a Contribution Agreement for purposes of this Agreement.
"CORRESPONDING PREFERRED STOCK" means, with respect to each series of
Exchangeable Preferred Units, the particular series of Cumulative Preferred
Stock, Series __, of the Company that is designated pursuant to this Agreement
or an amendment to Exhibit A as the stock with respect to which that series of
Exchangeable Preferred Units may be exchanged pursuant to Section 12.
"EXCHANGEABLE PREFERRED UNITS" means those Parity Preferred Units that
are designated pursuant to this Agreement or an amendment to Exhibit A as
exchangeable with respect to Corresponding Preferred Stock pursuant to Section
12.
"GENERAL PARTNER" means PS Texas Holdings, Ltd., or any other person or
persons admitted as a general partner pursuant to this Agreement and their
successors.
"I.R.C." means the Internal Revenue Code of 1986, as amended.
"LIMITED PARTNERS" means the PS Limited Partner, the Bel Limited
Partners, the DLJ Limited Partners and any other person or persons who are
admitted to the Partnership as additional Limited Partners.
"LIMITED PARTNER VOTE" means the affirmative vote or written consent of
Limited Partners owning of record more than 50% of the Partnership Common Units
held by the Limited Partners.
"LIQUIDATION PREFERENCE" means, with respect to each series of Parity
Preferred Units, $25.00 per Parity Preferred Unit, plus the amount of any
accumulated and unpaid Priority Return with respect to such a Unit, whether or
not declared, minus any distributions in excess of the Priority Return that have
been paid with respect to such Unit, to the date of payment.
"NET PROFIT" or "NET LOSS" and any items of income, gain, expense, or
loss of the Partnership mean the corresponding book items of the Partnership as
determined by the General Partner incorporating the accrual method of accounting
and applying federal income tax principles, applied on a consistent basis
throughout the period for which the items are determined, excluding amounts
specially allocated pursuant to the terms of this Agreement (such as allocations
relating to partner nonrecourse deductions).
"PARITY PREFERRED UNITS" means any class or series of partnership
interests of the Partnership now or hereafter authorized, issued or outstanding
and expressly designated by the Partnership to rank on a parity with Series N
Preferred Units with respect to distributions or rights upon voluntary or
involuntary liquidation, winding-up or dissolution of the Partnership or both.
As of the date of this Agreement, the Series N Preferred Units, Series N2
Preferred Units, Series O Preferred Units and Series O2 Preferred Units are
Parity Preferred Units. Any subsequently created Parity Preferred Units shall be
so designated in an amended Exhibit A to this Agreement.
"PARTNERS" means collectively the General Partner and the Limited
Partners, and a reference to a "Partner" shall be to any one of the Partners.
"PARTNERSHIP" means the limited partnership created under this
Agreement.
"PARTNERSHIP COMMON UNIT" means the interests in the Partnership held
by the General Partner or by the Limited Partners that are not Parity Preferred
Units.
"PRIORITY RETURN" means: (i) for the Series N Preferred Units and
Series N2 Preferred Units an amount equal to nine and one half percent (9.5%)
per annum of the stated value of $25 per unit, (ii) for the Series O Preferred
Units and Series O2 Preferred Units an amount equal to nine and one eighth
percent (9.125%) per annum of the stated value of $25 per unit and (iii) for
subsequently issued Parity Preferred Units, an amount equal to the percentage
per annum of the stated value of those units as designated in an amended Exhibit
A to this Agreement, in each case commencing on the date of issuance of such
units, cumulative to the extent not distributed for any given distribution
period pursuant to Section 6.2, determined on the basis of a 360 day year of
twelve 30 day months for periods involving full calendar quarters (and for any
period shorter than a full quarterly period for which distributions are
computed, the amount of the distribution payable will be computed based on the
ratio of the actual number of days elapsed in such period to ninety (90) days).
"PTP" means a "publicly traded partnership" within the meaning of
Section 7704 of the I.R.C.
"REGULATIONS" means the Income Tax Regulations promulgated under the
I.R.C. (including temporary regulations and corresponding provisions of
succeeding regulations), as such regulations may be amended from time to time.
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"SERIES N PREFERRED UNITS" means the series of partnership interests
designated as the "9.5% Series N Cumulative Redeemable Perpetual Preferred
Units" entitled to the rights described in this Agreement. The Series N
Preferred Units are Exchangeable Preferred Units, and the Corresponding
Preferred Stock with respect to those units is the 9.5% Cumulative Preferred
Stock, Series N, of the Company.
"SERIES N2 PREFERRED UNITS" means the series of partnership interests
designated as the "9.5% Series N2 Cumulative Redeemable Perpetual Preferred
Units" entitled to the rights described in this Agreement.
"SERIES O PREFERRED UNITS" means the series of partnership interests
designated as the "9.125% Series O Cumulative Redeemable Perpetual Preferred
Units" entitled to the rights described in this Agreement. The Series O
Preferred Units are Exchangeable Preferred Units, and the Corresponding
Preferred Stock with respect to those units is the 9.125% Cumulative Preferred
Stock, Series O, of the Company.
"SERIES O2 PREFERRED UNITS" means the series of partnership interests
designated as the "9.125% Series O2 Cumulative Redeemable Perpetual Preferred
Units" entitled to the rights described in this Agreement.
"SUBSIDIARY" means with respect to any person, any corporation,
partnership, limited liability company, joint venture or other entity of which a
majority of (i) voting power of the voting equity securities or (ii) the
outstanding equity interests, is owned, directly or indirectly, by such person.
2. ORGANIZATIONAL MATTERS
2.1 FORMATION. On March 6, 2000, the date of the filing of the
Certificate of Limited Partnership on Form LP-1 with the California Secretary of
State pursuant to Section 15621 of the Act, the General Partner and the PS
Limited Partner formed a limited partnership (the "Partnership") under the name
"PSA Institutional Partners, L.P."
2.2 NAME AND PRINCIPAL PLACE OF BUSINESS. The name of the Partnership
is "PSA Institutional Partners, L.P." and its office and principal place of
business initially shall be 701 Western Avenue, Glendale, California 91201-2349,
and thereafter such other place or places as the General Partner may from time
to time determine. The General Partner shall promptly notify the Limited
Partners of any change in the Partnership's principal place of business.
2.3 TERM. The Partnership commenced as of March 6, 2000, and shall
continue for a period ending the earlier of: (a) December 31, 2050; (b) the date
on which the Partnership is dissolved by the parties in accordance with the
terms of this Agreement; and (c) the date on which the Partnership is dissolved
by judicial decree or operation of law.
2.4 PURPOSE. The principal purpose of the Partnership is to acquire,
own, develop, lease, operate and ultimately dispose of interests in self storage
properties and partnerships owning self storage properties. The Partnership may
engage in any and all general business activities related or incidental to that
purpose. This specification of particular businesses shall not be deemed a
limitation upon the general powers of the Partnership.
3. PARTNERS
3.1 GENERAL PARTNER. PS Texas Holdings, Ltd. shall be the General
Partner. The address of the General Partner is 701 Western Avenue, Glendale,
California 91201-2349. As of the date of this Agreement, the General Partner
holds 149,024 Partnership Common Units or one and three tenths percent (1.3%) of
the Partnership Common Units, as the General Partner of the Partnership.
3.2 LIMITED PARTNERS. The PS Limited Partner's address is 701 Western
Avenue, Glendale, California 91201-2349. As of the date of this Agreement, the
PS Limited Partner holds 11,753,336 Partnership Common Units or ninety-eight and
seven tenths percent (98.7%) of the Partnership Common Units, holds 9,600,000
Series N2 Preferred Units or one hundred percent (100%) of the Series N2
Preferred Units and holds 3,000,000 Series O2 Preferred Units or one hundred
percent (100%) of the Series O2 Preferred Units, each as a Limited Partner of
the Partnership. The addresses of the Bel Limited Partners (other than
Montebello) are each c/o Eaton Vance Management, The Eaton Vance Building, 255
State Street, Boston, Massachusetts 02109, Attention: Mr. Alan Dynner. The
address of Montebello is 800 Scudder's Mill Road, Special Investments, Area 2-G,
Plainsboro, New Jersey 08536, Attention: J. Timothy Ford. As of the date of this
Agreement, Belcrest holds 4,100,000 Series N Preferred Units, Belair holds
1,200,000 Series N Preferred Units, Belport holds 1,600,000 Series N Preferred
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Units, Belmar holds 1,100,000 Series N Preferred Units and Montebello holds
1,600,000 Series N Preferred Units, each as a Limited Partner of the
Partnership, which together represent one hundred percent (100%) of the Series N
Preferred Units. The address of the DLJ Limited Partners is each c/o DLJ Asset
Management Group, Inc., 277 Park Avenue, New York, New York 10172, Attention:
Peter Gaudet, Fax: (212) 892-5812. As of the date of this Agreement, EGP holds
1,200,000 Series O Preferred Units and Edgewater holds 1,800,000 Series O
Preferred Units, each as a Limited Partner of the Partnership, which together
represent one hundred percent (100%) of the Series O Preferred Units. The
address and ownership interest of subsequently admitted Limited Partners shall
be as set forth on an amended Exhibit A to this Agreement.
3.3 ISSUANCES OF ADDITIONAL PARTNERSHIP INTERESTS. The General Partner
is authorized to cause the Partnership to issue such additional partnership
units or other partnership interests for any Partnership purpose at any time or
from time to time, including units in one or more series of any classes, with
such designations, preferences and relative, participating, optional or other
special rights, powers and duties, including rights, powers and duties senior to
other partnership interests, all as shall be determined by the General Partner,
subject to California law, including, without limitation, with respect to (i)
the allocations of items of Partnership income, gain, loss, deduction and credit
to each such class or series of partnership interests, (ii) the right of each
such class or series of partnership interests to share in Partnership
distributions, and (iii) the rights of each class or series of partnership
interests upon dissolution and liquidation of the Partnership, for such
consideration and on such terms and conditions as shall be established by the
General Partner in its sole and absolute discretion, all without the approval of
any Limited Partners except to the extent specifically provided in this
Agreement.
In addition, the General Partner and affiliates may acquire partnership
interests from other Partners pursuant to this Agreement. In the event that the
Partnership issues partnership interests pursuant to this Section 3.3, the
General Partner shall make such revisions to this Agreement (without any
requirement of receiving approval of the Limited Partners, except to the extent
otherwise specifically provided in this Agreement), as it deems necessary to
reflect the issuance of such additional partnership interests and the special
rights, powers and duties associated therewith. Unless specifically set forth
otherwise by the General Partner, any partnership interest issued after the date
of this Agreement shall have the same rights, powers and duties as the
Partnership Common Units issued on the date of this Agreement.
4. CAPITAL CONTRIBUTIONS AND WITHDRAWALS
4.1 INITIAL CAPITAL CONTRIBUTIONS. At the time of execution of this
Agreement, the Partners shall make or shall have made the Capital Contributions
set forth in Exhibit A to this Agreement.
4.2 ADDITIONAL CAPITAL CONTRIBUTIONS. The Partners shall make such
additional Capital Contributions at such times and in such proportions as they
mutually shall agree.
4.3 LIABILITY FOR DISTRIBUTIONS. Any distributions pursuant to Section
6 shall be subject to return by the Partners to the Partnership, in accordance
with Section 15666 of the Act, to the extent that the sum of the Partnership's
full recourse obligations (other than those obligations owed to Partners on
account of their interest in the Partnership) immediately after such return of
capital or distribution exceeds the sum of (i) the fair value of the
Partnership's assets not subject to nonrecourse liabilities plus (ii) the fair
value, if any, of the Partnership's assets subject to nonrecourse liabilities,
but only to the extent that the fair value of such property exceeds the amount
of the nonrecourse obligation encumbering it.
4.4 RETURN OF NONUTILIZED CAPITAL. From time to time the Partnership
may have cash in excess of the amount required for the conduct of the affairs of
the Partnership, and the General Partner may, in its sole discretion, determine
that cash should, in whole or in part, be returned to the Partners, as a return
of the Capital Contributions of the Partners.
4.5 WITHDRAWAL OF CAPITAL. No Partner shall have any right to withdraw
or make a demand for withdrawal of any such Partner's Capital Contribution (or
the capital interest reflected in such Partner's capital account) until the full
and complete winding up and liquidation of the business of the Partnership
unless such withdrawal is provided for in this Agreement or under Section 15661
of the Act and otherwise satisfies the requirements of Section 15666 of the Act.
4.6 CAPITAL ACCOUNT. An individual capital account shall be maintained
for each Partner.
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4.6.1 Each Partner's capital account shall be credited with
the following items:
(a) The amount of any cash contributed to the
Partnership. In the event of any contributions of property other than
cash, the contributing Partner's capital account shall be credited with
the fair market value of the property contributed, net of liabilities
to which the property is subject or which are assumed by the
Partnership under I.R.C. Section 752.
(b) That Partner's share of any profit or gain
allocated to it under Section 5 (without regard to Section 5.6); and
(c) That Partner's share of the Partnership's
nontaxable income, if any (which shall include any upward basis
adjustments resulting under Regulation Section 1.704-1(b)(2)(iv)(J)).
4.6.2 Each Partner's capital account shall be charged with the
following items:
(a) The amount of cash distributed and the fair
market value of any property distributed (net of liabilities to which
the property is subject or which are assumed by the Partner under
I.R.C. Section 752);
(b) That Partner's share of losses allocated to it
under Section 5 (without regard to Section 5.6); and
(c) That Partner's share of the Partnership's
nontaxable losses, expenditures described in I.R.C. Section
705(a)(2)(B) or other expenses not otherwise taken into account in this
Section 4.6.2 and any downward basis adjustments resulting under
Regulation Section 1.704-1(b)(2)(iv)(J)).
4.6.3 "Capital accounts" as defined in this Section 4.6 shall
be deemed capital accounts as provided for in Section 15611(b) of the
Act.
4.6.4 Upon the transfer of all or a part of an interest in the
Partnership, the capital account of the transferor attributable to the
transferred interest shall carry over to the transferee partner, except
as otherwise specified in Regulation Section 1.704-1(b)(2)(iv)(L).
4.6.5 It is the intent of the Partnership to maintain capital
accounts and allocations in accordance with Regulation Section
1.704-1(b). Accordingly, adjustments to conform to those Regulations
(or to successor or amended provisions) or to take into account
unexpected events shall be made by the General Partner, if the General
Partner believes that such adjustments would not materially alter the
economic substance of this Agreement as it applies to any Partner.
4.7 INTEREST ON CAPITAL CONTRIBUTIONS. No interest shall be paid on a
Capital Contribution.
5. ALLOCATION OF INCOME AND PROFIT TO PARTNERS
5.1 NET PROFIT. Net Profit for each taxable year (or shorter period)
shall be allocated in the following order and priority:
5.1.1 First, to the extent of, and in the reverse order of,
any prior allocations of Net Loss pursuant to Sections 5.2.1, 5.2.2, 5.2.3 and
5.2.4.
5.1.2 Second, to the holders of Parity Preferred Units (in
accordance with the respective rights of the Parity Preferred Units) until each
such holder has been allocated cumulative amounts pursuant to this Section 5.1.2
in the current and all prior periods equal to the cumulative Priority Return
accrued with respect to that holder through the end of the current period.
5.1.3 Finally, to the holders of Common Units in proportion to
their ownership of those Common Units.
Allocations of Net Profit to the holders of Partnership Common Units may be
adjusted among those holders at such time and in such manner as they may
mutually agree.
5.2 NET LOSS. Net Loss for each taxable year (or shorter period) shall
be allocated in the following order and priority:
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5.2.1 First, to the extent of, and in the reverse order of,
any prior allocations of Net Profit pursuant to Sections 5.1.2 and 5.1.3 that
has not previously been distributed.
5.2.2 Second, to the holders of Common Units in proportion to
their positive Capital Account balances with respect to those Common Units,
until those balances have been reduced to zero.
5.2.3 Third, to the holders of Parity Preferred Units (in
accordance with the respective rights of the Parity Preferred Units) until the
positive Capital Account balance of each such holder with respect to its Parity
Preferred Units has been reduced to zero.
5.2.4 Finally, to the holders of Common Units in proportion to
their ownership of those Common Units.
Allocations of Net Loss to the holders of Partnership Common Units may be
adjusted among those holders at such time and in such manner as they may
mutually agree.
5.3 PARTNER NONRECOURSE DEDUCTIONS. Any partner nonrecourse deductions
for any taxable year or other period shall be specially allocated to the Partner
who bears the economic risk of loss with respect to the partner nonrecourse debt
to which such partner nonrecourse deductions are attributable in accordance with
Regulation Section 1.704-2(i)(1).
5.4 REGULATORY ALLOCATIONS. The allocations set forth in this Agreement
are intended to comply with the requirements of the Regulations under I.R.C.
Section 704, and the Agreement shall be construed to contain a "minimum gain
chargeback," a "qualified income offset," and such other provisions set forth in
the Regulations as appropriate for the allocations under this Agreement to be
respected for federal income tax purposes. If any allocation pursuant to the
terms of this Agreement would appear to be ineffective for income tax purposes,
the General Partner is authorized to correct the allocations, provided that any
such correction shall be made in a fashion that is otherwise consistent with the
stated plan of allocations and distributions set forth in this Agreement. Any
allocations of items of income or gain pursuant to this Section 5.4 shall be
taken into account in computing subsequent allocations of Net Profit, Net Loss
and gain or loss on sale or exchange of property under this Agreement, so that
the net amount of income or gain so allocated and the Net Profit, Net Loss and
gain or loss on sale or exchange of the property allocated to each Partner
pursuant to this Agreement shall, to the extent possible, and as promptly as
possible, be made equal to the net amount that would have been allocated to each
partner if no allocation of income or gain were made pursuant to this Section
5.4.
5.5 ALLOCATION UPON TRANSFERS OF PARTNERSHIP INTERESTS. Upon a transfer
of an interest in the Partnership, allocations between the transferee and
transferor shall be made so as to reflect their varying interests in the
Partnership during the year.
5.6 SECTION 704(C) PRINCIPLES APPLY. Any disparities between the
Partnership's taxable items and the book amounts allocated pursuant to the prior
provisions of this Section 5 shall be shared between the partners as determined
by the General Partner so as to take account of the variation between the basis
of any property contributed to the Partnership and its agreed fair market value
at the time of contribution, and the General Partner shall have the authority to
effect such or other allocations as prescribed or permitted by I.R.C. Section
704(c) or the Regulations thereunder.
To the extent permitted under the I.R.C. and Regulations, if the
application of I.R.C. Section 704(c) principles to the holders of Parity
Preferred Units (other than such units held by the General Partner, the PS
Limited Partner, and their affiliates) with respect to certain properties would
cause the "ceiling limitation" to apply to such holders in a fashion that would
result in an allocation to those holders of tax depreciation that would be 5%
less than the allocation of "book" depreciation that otherwise would be
allocated to those holders, depreciation with respect to those properties shall
not be taken into account in computing Net Profit or Net Loss to be allocated to
such holders.
6. DISTRIBUTIONS
6.1 TIME AND MANNER OF DISTRIBUTIONS. Except as otherwise set forth
below, Available Cash shall be distributed to the Partners as cash payments
quarterly as of the last day of each of the Partnership's fiscal quarters or at
such more frequent intervals as the General Partner, in its sole discretion, may
determine.
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If any date on which distributions are to be made on the Parity
Preferred Units is not a Business Day, then payment of the distribution to be
made on such date will be made on the next succeeding day that is a Business Day
(and without any interest or other payment in respect of any such delay) except
that, if such Business Day is in the next succeeding calendar year, such payment
shall be made on the immediately preceding Business Day, in each case with the
same force and effect as if made on such date. Distributions on the Parity
Preferred Units will be made to the holders of record of the units on the
relevant record dates to be fixed by the Partnership acting through the General
Partner, which record dates shall in no event exceed fifteen (15) Business Days
prior to the relevant Preferred Unit Distribution Payment Date (the "PREFERRED
UNIT PARTNERSHIP RECORD DATE").
6.2 AVAILABLE CASH. Except as is otherwise set forth in Section 16.1
(providing for distributions upon the dissolution and liquidation of the
Partnership) Available Cash shall be distributed first, to the holders of Parity
Preferred Units in proportion to and to the extent of their unpaid Priority
Returns, and then, to the holders of Common Units, in proportion to their
ownership of Common Units.
In the event of (A) an exchange of Parity Preferred Units into
preferred stock of the Company or depositary shares representing an interest in
shares of preferred stock of the Company, or (B) a redemption of Parity
Preferred Units (each a "PREFERRED UNIT DISTRIBUTION PAYMENT DATE"), on the
exchange date or redemption date, as applicable, Available Cash shall be
distributed to the holders of Parity Preferred Units in proportion to and to the
extent of their unpaid Priority Returns.
Notwithstanding anything to the contrary contained in this Agreement,
in no event shall 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 a share of (or a
depositary share representing an interest in) Corresponding Preferred Stock for
which such Partnership Unit has been exchanged or redeemed.
6.3 LIMITATIONS CONCERNING PRIORITY RETURN DISTRIBUTIONS. Distributions
on the Parity Preferred Units will accrue whether or not the terms and
provisions of any agreement of the Partnership, including any agreement relating
to its indebtedness at any time prohibit the declaration, setting aside for
payment or current payment of distributions, whether or not the Partnership has
earnings, whether or not there are funds legally available for the payment of
such distributions and whether or not such distributions are authorized. Accrued
but unpaid distributions on the Parity Preferred Units will accumulate as of the
Preferred Unit Distribution Payment Date on which they first become payable.
Distributions on account of arrears for any past distribution periods may be
declared and paid at any time, without reference to a regular Preferred Unit
Distribution Payment Date to holders of record of the Parity Preferred Units on
the record date fixed by the Partnership acting through the General Partner
which date shall not exceed fifteen (15) Business Days prior to the payment
date. Accumulated and unpaid distributions will not bear interest.
Except as is otherwise set forth in Section 16.1 (providing for
distributions upon the dissolution and liquidation of the Partnership):
6.3.1 So long as any Parity Preferred Units are outstanding,
no distribution of cash or other property shall be authorized, declared, paid or
set apart for payment on or with respect to any class or series of partnership
interest of the Partnership ranking junior as to the payment of distributions or
rights upon a voluntary or involuntary liquidation, dissolution or winding-up of
the Partnership to the Parity Preferred Units (collectively, "JUNIOR UNITS"),
nor shall any cash or other property be set aside for or applied to the
purchase, redemption or other acquisition for consideration of any Parity
Preferred Units or any Junior Units, unless, in each case, all distributions
accumulated on all classes and series of outstanding Parity Preferred Units have
been paid in full.
Without limiting Section 10.2, the foregoing sentence will not
prohibit (a) distributions payable solely in Junior Units, (b) the conversion of
Junior Units or Parity Preferred Units into Junior Units, or (c) the redemption
of Exchangeable Preferred Units corresponding to any depositary shares
representing interests in shares of Corresponding Preferred Stock, Company stock
that is on a parity with or junior to the Corresponding Preferred Stock as to
the payment of distributions or rights upon a voluntary or involuntary
liquidation, dissolution or winding-up of the Company to be purchased by the
Company pursuant to the Company's Restated Articles of Incorporation,
certificates of determination or Bylaws to preserve the Company's status as a
real estate investment trust.
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6.3.2 So long as distributions have not been paid in full (or
a sum sufficient for such full payment is not irrevocably deposited in trust for
immediate payment) upon all classes and series of outstanding Parity Preferred
Units, all distributions authorized and declared on the outstanding Parity
Preferred Units with respect to payment of distributions shall be authorized and
declared in proportion to the accrued and unpaid distributions in respect of
each outstanding Parity Preferred Unit (which shall not include any accumulation
in respect of unpaid distributions for prior distribution periods if such class
or series of Parity Preferred Units do not have cumulative distribution rights).
6.3.3 Holders of Parity Preferred Units shall not be entitled
to any distributions, whether payable in cash, other property or otherwise, in
excess of the full cumulative distributions described in this Agreement.
6.4 CASH FROM SALES OR REFINANCING. Except as is otherwise set forth in
Section 16.1 (providing for distributions upon the dissolution and liquidation
of the Partnership) distributions of Cash from Sales or Refinancing shall be
made first, to the holders of Parity Preferred Units in proportion to and to the
extent of their unpaid Priority Returns, and then, to the holders of Common
Units, in proportion to their ownership of Common Units.
6.5 RESERVES. The General Partner shall make provision for adequate
reserves by retention for contingencies of a reasonable percentage of Capital
Contributions and other receipts.
6.6 OPTIONAL REDEMPTION.
6.6.1 RIGHT OF OPTIONAL REDEMPTION. The Series N and Series O
Preferred Units may not be redeemed prior to the fifth (5th) anniversary of the
issuance date. On or after such date, the Partnership shall have the right to
redeem the Series N and Series O Preferred Units, in whole or in part, at any
time or from time to time, upon not less than thirty (30) nor more than sixty
(60) days' written notice, at a redemption price, payable in cash, equal to the
Liquidation Preference per Series N or Series O Preferred Unit to be redeemed
(the "REDEMPTION PRICE"). The rights of redemption of any subsequently issued
Parity Preferred Units shall be as designated in an amended Exhibit A to this
Agreement. If fewer than all of the outstanding Parity Preferred Units of a
particular series are to be redeemed, the units to be redeemed from that series
shall be selected PRO RATA (as nearly as practicable without creating fractional
units).
6.6.2 LIMITATION ON REDEMPTION. The Partnership may not redeem
fewer than all of the outstanding Exchangeable Preferred Units of any particular
series unless all accumulated and unpaid distributions have been paid on all
outstanding units of that series for all quarterly distribution periods
terminating on or prior to the date of redemption.
6.6.3 PROCEDURES FOR REDEMPTION.
(a) Notice of redemption will be (A) faxed, and (B)
mailed by the Partnership, by certified mail, postage prepaid, not less
than thirty (30) nor more than sixty (60) days prior to the redemption
date, addressed to the respective holders of record of any tseries of
Parity Preferred Units to be redeemed at their respective addresses as
they appear on the records of the Partnership. No failure to give or
defect in such notice shall affect the validity of the proceedings for
the redemption of any Parity Preferred Units except as to the holder to
whom such notice was defective or not given. In addition to any
information required by law, each such notice shall state: (1) the
redemption date, (2) the Redemption Price, (3) the aggregate number of
Parity Preferred Units of that series to be redeemed and if fewer than
all of the outstanding Parity Preferred Units of that series are to be
redeemed, the number of Parity Preferred Units to be redeemed held by
such holder, which number shall equal such holder's pro rata share
(based on the percentage of the aggregate number of outstanding Parity
Preferred Units of the series to be redeemed held by such holder) of
the aggregate number of Parity Preferred Units of the series to be
redeemed, (4) the place or places where the Parity Preferred Units are
to be surrendered for payment of the Redemption Price, (5) that
distributions on the Parity Preferred Units to be redeemed will cease
to accumulate on such redemption date and (6) that payment of the
Redemption Price will be made upon presentation and surrender of such
Parity Preferred Units.
(b) If the Partnership gives a notice of redemption
in respect of Parity Preferred Units (which notice will be irrevocable)
then, by 12:00 noon, Los Angeles, California time, on the redemption
date, the Partnership will deposit irrevocably in trust for the benefit
of the Parity Preferred Units being redeemed funds sufficient to pay
the applicable Redemption Price and will give irrevocable instructions
and authority to pay such Redemption Price to the holders of the Parity
Preferred Units upon surrender of the Parity Preferred Units by such
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holders at the place designated in the notice of redemption. If the
Parity Preferred Units are evidenced by a certificate and if fewer than
all Parity Preferred Units of a particular series evidenced by any
certificate are being redeemed, a new certificate shall be issued upon
surrender of the certificate evidencing all Parity Preferred Units,
evidencing the unredeemed Parity Preferred Units without cost to the
holder thereof. On and after the date of redemption, distributions will
cease to accumulate on the Parity Preferred Units or portions thereof
called for redemption, unless the Partnership defaults in the payment
thereof. If any date fixed for redemption of Parity Preferred Units is
not a Business Day, then payment of the Redemption Price payable on
such date will be made on the next succeeding day that is a Business
Day (and without any interest or other payment in respect of any such
delay) except that, if such Business Day falls in the next calendar
year, such payment will be made on the immediately preceding Business
Day, in each case with the same force and effect as if made on such
date fixed for redemption. If payment of the Redemption Price is
improperly withheld or refused and not paid by the Partnership,
distributions on such Parity Preferred Units will continue to
accumulate from the original redemption date to the date of payment, in
which case the actual payment date will be considered the date fixed
for redemption for purposes of calculating the applicable Redemption
Price.
6.7 NO SINKING FUND. No sinking fund shall be established for the
retirement or redemption of Series N or Series O Preferred Units.
6.8 AMOUNTS WITHHELD. Any amounts withheld pursuant to the I.R.C. or
any provisions of any state, local or foreign tax law and with respect to any
allocation, payment or distribution to any Partners or assignees shall be
treated as amounts distributed to the affected Partners or assignees for all
purposes under this Agreement.
7. MANAGEMENT OF PARTNERSHIP BY GENERAL PARTNER
7.1 MANAGEMENT. The General Partner shall conduct the business of the
Partnership. The General Partner shall devote to the Partnership so much of the
time of its personnel as is necessary or required for the effective conduct and
operation of the Partnership's business. Without limiting the generality of the
foregoing, the General Partner shall have the following rights and powers, which
it may exercise at the cost, expense and risk of the Partnership.
7.2 POWERS OF THE GENERAL PARTNER. The General Partner shall have full
charge of overall management, conduct and operation of the Partnership in all
respects and in all matters, and shall have the authority to act on behalf of
the Partnership in all matters respecting the Partnership, its business and its
properties, and, without limiting in any manner the foregoing, authority to:
7.2.1 Subject to any limitations otherwise set forth in this
Agreement, deal in any Partnership assets, issue and redeem partnership
interests, distribute Partnership assets and funds, lend Partnership funds, and
borrow money and as security therefore encumber all or any part of the
Partnership assets.
7.2.2 In addition to services specifically authorized
elsewhere in this Agreement, employ or engage, from time to time, at the expense
of the Partnership, persons to render the type of services generally needed to
accomplish the Partnership's purposes, including but not limited to accountants
and attorneys. Employment of such persons by the General Partner shall be on
such terms and for such reasonable compensation as are in accordance with
generally accepted business practices. Such employees may include persons who
also work on a part-time (or any other) basis for the General Partner, a Limited
Partner or any affiliate of the General Partner or a Limited Partner, provided
that the compensation paid to any such person is not in excess of the
compensation that the Partnership would be required to pay to other persons not
affiliated with the General Partner or a Limited Partner for comparable services
that reasonably could be made available to the Partnership.
7.2.3 Possess and exercise, as may be required, all of the
rights and powers of a General Partner as more particularly provided by Section
15643(a) of the Act, except to the extent that any of such rights may be limited
or restricted by the express provisions of this Agreement.
7.2.4 Execute, acknowledge and deliver any and all instruments
and take such other steps as are necessary to effectuate the foregoing.
7.2.5 Exercise its fiduciary duty for the safekeeping and use
of all funds and assets of the Partnership, whether or not in its immediate
possession or control.
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7.3 DUTIES OF THE GENERAL PARTNER. The General Partner shall perform or
cause to be performed, at the expense of the Partnership, the following
services:
7.3.1 Establish books of account, record and payment
procedures, including individual capital accounts of the Partners.
7.3.2 Provide bookkeeping and other related services for the
Partnership.
7.3.3 Disburse the Capital Contributions of the Partners for
the purposes set forth in this Agreement.
7.3.4 Provide overall management, financial and business
planning services to the Partnership.
7.3.5 Disburse all receipts and make all necessary payments
and expenditures in accordance with the terms of this Agreement.
7.3.6 Make all reports to the Partners required by this
Agreement or by law.
7.4 EXPENSES OF THE PARTNERSHIP. Except as otherwise specifically
provided by this Agreement, all expenses of the Partnership, including but not
limited to operating expenses, shall be billed directly to, and paid and borne
by, the Partnership. Some or all of the Partnership employees may be engaged on
a part-time basis and may also be engaged by one or more of the General Partner,
a Limited Partner or their affiliates. The General Partner, the Limited Partners
and their affiliates shall be reimbursed for their actual cost of any goods,
materials and services used for or by the Partnership.
7.5 NO OBLIGATIONS TO CONSIDER TAX CONSEQUENCES TO LIMITED PARTNERS. In
exercising its authority under this Agreement, the General Partner may, but
shall be under no obligation to, take into account the tax consequences to any
Partner (including the General Partner) of any action taken (or not taken) by
any of them. The General Partner and the Partnership shall not have liability to
a Limited Partner for monetary damages or otherwise for losses sustained,
liabilities incurred or benefits not derived by such Limited Partner in
connection with such decisions, provided that the General Partner has acted in
good faith and pursuant to its authority under this Agreement, and such
decisions do not result in a breach of any representation or covenant under the
Contribution Agreement to which the Partnership and such Limited Partner are
parties. Notwithstanding the foregoing, the proviso in the preceding sentence
does not (i) expand or alter any remedy set forth in any Contribution Agreement
for a breach of any such representation or covenant, or (ii) convert any such
representation into an ongoing obligation of the Partnership, General Partner,
Company or their affiliates.
7.6 INDEMNIFICATION OF THE GENERAL PARTNER AND OTHERS.
The General Partner and any person performing services on behalf of the
Partnership who (i) directly or indirectly controls, is controlled by, or is
under common control with the General Partner; (ii) owns or controls 10% or more
of the outstanding voting securities of the General Partner; or (iii) is an
officer, director or partner of the General Partner or an entity described in
clauses (i) or (ii), shall have no liability to the Partnership or to the
Limited Partners for any loss suffered by the Partnership which arises out of
any action or inaction of the General Partner if the General Partner, in good
faith, determined that such course of conduct was in the best interests of the
Partnership and such course of conduct did not constitute negligence or
misconduct of the General Partner. The General Partner and others described in
the preceding sentence shall be indemnified by the Partnership against any
losses, judgments, liabilities, expenses and amounts paid in settlement of any
claims sustained by them in connection with the Partnership, provided that the
same were not the result of negligence or misconduct on the part of the General
Partner.
The Partnership may advance funds to the General Partner for legal
expenses and other costs incurred as a result of a legal action if (i) the legal
action relates to the performance of the duties or services by the General
Partner on behalf of the Partnership; (ii) the legal action is initiated by a
third party who is not a Limited Partner of the Partnership; and (iii) the
General Partner undertakes to repay the advanced funds to the Partnership in
cases where it would not be entitled to indemnification as provided in this
Section 7.6.
If, at any time, the Partnership has insufficient funds to furnish
indemnification as provided in this Agreement, it shall provide such
indemnification if and as it generates sufficient funds and prior to any
distributions to the Partners.
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8. INDEPENDENT ACTIVITIES OF PARTNERS
Any of the Partners may engage in or possess an interest in other
business ventures of every nature and description, independently or with others,
including, but not limited to, the ownership, financing, leasing, management,
syndication, investment, brokerage and development of real and personal property
of any kind whatsoever and neither the Partnership nor any of the Partners shall
have any right by virtue of this Agreement in and to such independent ventures
or to the income or profits derived therefrom.
9. BOOKS, REPORTS AND FISCAL MATTERS
9.1 RECORDS. The General Partner shall keep at its office, to the
extent available, the following Partnership documents:
9.1.1 A current list of the full name and last known business
or residence address of each Partner, together with the contributions and share
in profits and losses of each Partner.
9.1.2 A copy of this Agreement and all amendments thereto, the
Certificate of Limited Partnership and all Certificates of Amendment, and
executed copies of any powers of attorney pursuant to which any certificate has
been executed.
9.1.3 Copies of the Partnership's federal, state and local
income tax or information returns and reports, if any, for the six most recent
taxable years.
9.1.4 Financial statements of the Partnership for the six most
recent fiscal years.
9.1.5 The Partnership's books and records for at least the
current and past three fiscal years.
9.2 DELIVERY TO LIMITED PARTNERS AND INSPECTION.
9.2.1 Each Limited Partner shall have the right, for a purpose
reasonably related to the 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 the Partnership's expense, to obtain a copy of the information required
to be maintained by Sections 9.1.1 and 9.1.2.
9.2.2 Each Limited Partner also shall have the right, for a
purpose reasonably related to the 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 the Limited Partner's own expense, to obtain a copy of the
information required to be maintained by Sections 9.1.3 and 9.1.4 and to inspect
and copy during normal business hours the Partnership records required to be
maintained by Section 9.1.5.
9.2.3 The General Partner shall send to each Partner within 90
days after the end of each taxable year the information necessary for the
Partner to complete its federal and state income tax or information return, and
shall provide an estimate of that information within 60 days after the end of
each taxable year.
9.2.4 Notwithstanding any other provision of this Agreement,
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 Partnership information that (i) the General
Partner believes to be in the nature of trade secrets or other information the
disclosure of which the General Partner in good faith believes is not in the
best interests of the Partnership or (ii) the Partnership is required by law or
by agreements with unaffiliated third parties to keep confidential.
9.3 ACCOUNTING BASIS. The books of account shall be kept on an accrual
basis for income tax purposes and for purposes of preparing periodic financial
statements and reports. The Partnership shall adopt a fiscal year beginning on
the first day of January and ending on the last day of December of each year.
9.4 ADJUSTMENT OF TAX BASIS. Upon the transfer of an interest in the
Partnership, the Partnership may, at the sole discretion of the General Partner,
elect pursuant to I.R.C. Section 754, to adjust the basis of the Partnership
properties as allowed by I.R.C. Sections 734(b) and 743(b). The election, if
made, will be filed with the Partnership information income tax return for the
first taxable year to which the election applies.
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9.5 BANK ACCOUNTS. The cash funds of the Partnership shall be deposited
in a commercial bank account at such banks or other institutions, insured by the
Federal Deposit Insurance Corporation or Federal Savings and Loan Insurance
Corporation, as the General Partner shall determine. Disbursements from the bank
account shall be made by the General Partner in conformity with this Agreement.
The funds of the Partnership shall not be commingled with the funds of any other
person.
9.6 INSURANCE. The General Partner shall at all times cause the
Partnership to maintain comprehensive insurance, including fire, liability,
flood, earthquake, and extended coverage fire insurance in amounts determined by
the General Partner to be adequate for the protection of the Partnership and
each of its Partners. In addition, the General Partner shall at all times cause
the Partnership to carry appropriate worker's compensation insurance and such
other insurance with respect to the property owned or leased by it as shall be
customary for similar property, similarly located, from time to time.
9.7 TAXATION AS PARTNERSHIP. The General Partner, while serving as
such, agrees to use its best efforts to cause the Partnership to be classified
as a partnership for federal income tax purposes, unless the General Partner
determines that it is in the best interests of the Partnership to be classified
in some other fashion.
9.8 TAX MATTERS PARTNER. The General Partner shall serve as the
Partnership's Tax Matters Partner as that term is defined in I.R.C. Section
6231.
9.9 MEETINGS AND VOTING. All issues relating to notices of meetings or
the procedures to be followed at such meetings or actions of the Partners
without a meeting shall be governed by Section 15637 of the Act.
10. POWERS OF THE LIMITED PARTNER; LIMITED LIABILITY
10.1 POWERS OF THE LIMITED PARTNERS. The Limited Partners shall not
take any part in the management of the business or transact any business for the
Partnership and shall not have any power to sign for or bind the Partnership;
provided, however, that the holders of Partnership Common Units shall have the
right to approve or disapprove the matters affecting the Partnership's basic
structure set forth in Sections 10.1.1 through 10.1.4. Except as is otherwise
set forth in this Agreement, a Limited Partner Vote shall be required to approve
these items:
10.1.1 An amendment to the Agreement as provided in Section
17.3.1.
10.1.2 Termination and dissolution of the Partnership as
provided in Section 15.1.2.
10.1.3 The election of a new General Partner or General
Partners upon the removal, retirement, death, insanity, insolvency, bankruptcy
or dissolution of a General Partner or any successor General Partner, all in
accordance with Section 15.2 of this Agreement.
10.1.4 The sale or exchange in a single transaction of all or
substantially all of the assets of the Partnership.
The above list (Sections 10.1.1 through 10.1.4) shall
constitute a limitation by agreement of the rights granted to limited partners
generally by Section 15636(f) of the Act, and the Limited Partners shall not
have the right to vote pursuant to Section 9.9, Section 10, or otherwise on any
matter not listed above. Without the consent of any adversely affected Limited
Partner, the General Partner may not convert any Limited Partner into a general
partner or modify or affect the limited liability of any Limited Partner.
10.2 SERIES N PREFERRED UNITS - CERTAIN VOTING RIGHTS. Holders of the
Series N Preferred Units will not have any voting rights or right to consent to
any matter requiring the consent or approval of the Limited Partners, except as
set forth below. So long as any Series N Preferred Units remain outstanding, the
Partnership shall not, without the affirmative vote of the holders of at least a
majority of the Series N Preferred Units outstanding at the time:
10.2.1 (A) authorize or create, or increase the authorized or
issued amount of, any class or series of partnership interests senior to the
Series N Preferred Units with respect to payment of distributions or rights upon
liquidation, dissolution or winding-up, or (B) reclassify any partnership
interests of the Partnership into any such senior partnership interest, or (C)
create, authorize or issue any obligations or security convertible into or
evidencing the right to purchase any such senior partnership interests,
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10.2.2 (A) authorize or create, or increase the authorized or
issued amount of any Parity Preferred Units but only to the extent such Parity
Preferred Units are issued to an affiliate of the Partnership on terms that are
on other than arms'-length or that differ in material adverse respects from the
terms of any Parity Preferred Units issued to the public or nonaffiliates of the
Partnership (for purposes of this Section 10.2.2, an issuance to the General
Partner (or its affiliates) shall not be treated as an issuance to an affiliate
of the Partnership to the extent the issuance of such partnership interests was
to allow the General Partner (or its affiliate) to issue corresponding preferred
stock to persons who are not affiliates), or (B) reclassify any partnership
interest into any such partnership interest (provided that, in connection with a
permitted issuance of Parity Preferred Units, an equal number of Common Units
held by the General Partner, the PS Limited Partner or their affiliates may be
converted into a corresponding class of Parity Preferred Units) or (C) create,
authorize or issue any obligations or security convertible into or evidencing
the right to purchase any such partnership interests, or
10.2.3 either (A) consolidate, merge into or with, or convey,
transfer or lease its assets substantially as an entirety to, any corporation or
other entity or (B) amend, alter or repeal the provisions of the Partnership
Agreement, whether by merger, consolidation or otherwise, that would materially
and adversely affect the powers, special rights, preferences, privileges or
voting power of the Series N Preferred Units or the holders thereof; provided,
however, that with respect to the occurrence of a merger, consolidation or a
sale or lease of all of the Partnership's assets as an entirety, so long as (1)
the Partnership is the surviving entity and the Series N Preferred Units remain
outstanding with the terms thereof unchanged, or (2) the resulting, surviving or
transferee entity is a partnership, limited liability company or other
pass-through entity organized under the laws of any state and substitutes the
Series N Preferred Units for other interests in such entity having substantially
the same terms and rights as the Series N Preferred Units, including with
respect to distributions, voting rights and rights upon liquidation, dissolution
or winding-up, then the occurrence of any such event shall not be deemed to
materially and adversely affect such rights, privileges or voting powers of the
holders of the Series N Preferred Units; and provided further that any increase
in the amount of partnership interests or the creation or issuance of any other
class or series of partnership interests, in each case ranking (y) junior to the
Series N Preferred Units with respect to payment of distributions and the
distribution of assets upon liquidation, dissolution or winding-up, or (z) on a
parity with the Series N Preferred Units with respect to payment of
distributions or the distribution of assets upon liquidation, dissolution or
winding-up, or both shall not be deemed to materially and adversely affect such
rights, preferences, privileges or voting powers, provided such partnership
interests are not issued to an affiliate of the Partnership, other than the
General Partner to the extent the issuance of such interests was to allow the
General Partner to issue corresponding Preferred Stock to persons who are not
affiliates of the Partnership.
10.3 SERIES O PREFERRED UNITS - CERTAIN VOTING RIGHTS. Holders of the
Series O Preferred Units will not have any voting rights or right to consent to
any matter requiring the consent or approval of the Limited Partners, except as
set forth below. So long as any Series O Preferred Units remain outstanding, the
Partnership shall not, without the affirmative vote of the holders of at least a
majority of the Series O Preferred Units outstanding at the time, take any of
the actions described above in Sections 10.2.1, 10.2.2 and 10.2.3, treating each
reference in those provisions to "Series N Preferred Units" as a reference
instead to "Series O Preferred Units."
10.4 LIMITED LIABILITY. Performance of one or more of the acts
described in Section 10 shall not in any way constitute a Limited Partner as a
general partner or impose any personal liability on a Limited Partner. A Limited
Partner shall not be liable for any debts or obligations of the Partnership in
excess of its contribution to the capital of the Partnership (which has not been
previously returned to it) plus such capital returned to it as to which, by the
terms of Section 15666 of the Act, it shall remain liable. All Available Cash
that would otherwise be distributed to the Partners, however, shall be available
to creditors to satisfy the debts and obligations of the Partnership until the
time of actual distribution.
11. ASSIGNABILITY OF GENERAL AND LIMITED PARTNERS' INTERESTS
11.1 GENERAL PARTNER'S INTERESTS; ADMISSION OF SUCCESSOR OR ADDITIONAL
GENERAL PARTNER; WITHDRAWAL OR REMOVAL OF A GENERAL PARTNER.
11.1.1 Except as provided in Section 11.1.2 and subject to the
limitations of Section 14.2, with the consent of all other General Partners, if
any, and a Limited Partner Vote, any General Partner may at any time withdraw
and designate one or more persons to be successors to such General Partner or to
be an additional General Partner, in each case with such participation in such
13
General Partner's interest as such General Partner and such successor or
additional General Partner may agree upon, provided that the interests of the
Limited Partners shall not be affected thereby.
11.1.2 Without the consent of any Partner, (i) a General
Partner may substitute in its stead as General Partner any entity that has, by
merger, consolidation or otherwise, acquired substantially all of its assets or
stock and continued its business and which has assumed all of the obligations of
the terminating General Partner; (ii) a General Partner may cause to be admitted
to the Partnership an additional General Partner or General Partners if required
to assure the continued classification of the Partnership as a partnership for
federal income tax purposes; and (iii) a General Partner may create a security
interest in its interest in the Partnership that is limited to the General
Partner's right to receive distributions. The Limited Partners hereby consent to
the admission of any additional or successor General Partner pursuant to this
Section 11.1.2, and no further consent or approval shall be required. Any other
voluntary withdrawal by any General Partner from the Partnership or any other
sale, transfer or assignment by such General Partner of its interest in the
Partnership shall be effective only (i) upon a Limited Partner Vote, and (ii) if
applicable, upon the admission in accordance with Section 11.1.1 of a successor
or additional General Partner, as the case may be.
11.2 LIMITED PARTNER'S INTEREST. Except as provided in this Section 11,
a Limited Partner may not sell, transfer, encumber or otherwise dispose of,
voluntarily or involuntarily, the whole or any part of its interest in the
Partnership without the prior written consent of the General Partner, which
consent will not be unreasonably withheld. No assignment shall be valid or
effective unless in compliance with the conditions contained in this Agreement,
and any unauthorized transfer or assignment shall be void AB INITIO. Subject to
compliance with the other provisions of Section 11, beginning one year after the
date of this Agreement, a Limited Partner shall be permitted to transfer the
whole or any part of its interest in the Partnership without the prior written
consent of the General Partner to permitted transferees as described in the
following sentence, provided that each permitted transferee acquires at least
500,000 Parity Preferred Units and no such transferee may be, or be affiliated
with, a competitor or potential competitor of the Company, the Partnership or
their affiliates. Permitted transferees for this purpose are: (i) an entity that
is controlled by, and directly or indirectly more than 50% owned by, the Limited
Partner, (ii) an entity that controls, and directly or indirectly owns more than
50% of, the Limited Partner, (iii) a so called "exchange" fund managed by Eaton
Vance Management (in the case of transfers to entities described in this clause
(iii), transfers may be made during the first year after the date of this
Agreement and the requirement that the transferee acquire at least 500,000
Parity Preferred Units shall not apply, so long as Series N Preferred Units are
held by 12 or fewer such entities), (iv) a so called "exchange" fund managed by
DLJ Asset Management Group, Inc. or one of its affiliates (in the case of
transfers to entities described in this clause (iv), transfers may be made
during the first year after the date of this Agreement and the requirement that
the transferee acquire at least 500,000 Parity Preferred Units shall not apply,
so long as Series O Preferred Units are held by 5 or fewer such entities) or (v)
any other so called "exchange" fund.
11.3 SUBSTITUTED LIMITED PARTNERS. Except as otherwise provided in this
Agreement, an assignee of the interest of a Limited Partner shall not have the
right to become a substituted Limited Partner in place of the assignor without
the consent of the General Partner, which may be withheld in its sole and
absolute discretion, and the execution of an amendment to this Agreement.
11.4 ASSIGNMENT OF LIMITED PARTNERSHIP INTEREST WITHOUT SUBSTITUTION.
Subject to Section 11.7, with the consent of the General Partner, which shall
not be unreasonably withheld, a Limited Partner shall have the right to assign
all or part of such Partner's interest in the Partnership by a written
instrument of assignment, the terms of which are not in contravention of any of
the provisions of this Agreement. The assigning Partner shall deliver to the
General Partner a written instrument of assignment in form and substance
satisfactory to the General Partner, duly executed by the Limited Partner. An
assignee shall be entitled to receive distributions from the Partnership
attributable to the Partnership interest acquired by reason of any such
assignment from and after the effective date of the assignment of such interest
to such assignee; provided, however, that the Partnership and the General
Partner shall be entitled to treat the assignor of such Partnership interest as
the absolute owner thereof in all respects, and shall incur no liability for
distributions made in good faith to the assignor until such time as the written
instrument of assignment has been received by the Partnership and recorded on
its books and the effective date of the assignment has passed. The "effective
date" of the assignment shall be that date set forth in the written instrument
of assignment, which shall in no event be earlier than the date on which all
requirements of this Section 11.5 are satisfied.
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11.5 WITHDRAWAL OF LIMITED PARTNER. Except as otherwise specifically
permitted by this Agreement, a Limited Partner shall not be entitled to withdraw
or retire from the Partnership.
11.6 DEATH, LEGAL INCOMPETENCY OR DISSOLUTION OF LIMITED PARTNER. The
death, dissolution, bankruptcy, incompetency or other legal disability of a
Limited Partner shall not dissolve or terminate the Partnership. Upon the death,
dissolution, bankruptcy, incompetency or other legal disability of a Limited
Partner, the successor in interest of such Partner shall have all the rights and
be liable for all the liabilities of the Partner in the Partnership to the
extent of such Partner's interest, subject to the terms and conditions of this
Agreement, and, with the prior written consent of the General Partner, which may
be withheld at its sole discretion, may be substituted for such Partner.
11.7 OTHER RESTRICTIONS. In addition to any other restrictions on
transfer contained in this Agreement, in no event may a transfer or assignment
of a partnership interest by any Partner be made without the consent of the
General Partner in its sole and absolute discretion:
11.7.1 to any person or entity that lacks the legal right,
power or capacity to own a partnership interest;
11.7.2 in violation of applicable law;
11.7.3 in the event such transfer adversely affects the
Company's ability to qualify as a REIT or could subject the Company to any
additional taxes under Section 857 or Section 4981 of the I.R.C.; 11.7.4 if such
transfer would cause the Partnership to become, with respect to any employee
benefit plan subject to Title I of the Employee Retirement Income Security Act
of 1974 as amended ("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
I.R.C.);
11.7.5 if such transfer would 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;
11.7.6 if such transfer subjects the Partnership to regulation
under the Investment Partnership Act of 1940, the Investment Advisors Act of
1940 or ERISA, each as amended;
11.7.7 if the General Partner believes a material adverse
effect would result from such a transfer because it would result in a
termination of the Partnership for federal or state income tax purposes or the
Partnership being treated for federal income tax purposes as an association
taxable as a corporation; or
11.7.8 if such transfer would require filing of a registration
statement under the Securities Act or would otherwise violate any federal or
state securities laws or regulations applicable to the Partnership or the
partnership interests.
12. EXCHANGEABLE PREFERRED UNITS
12.1 RIGHT TO EXCHANGE - SERIES N.
12.1.1 At any time on or after the tenth (10th) anniversary of
the date of issuance of Series N Preferred Units, each holder of Series N
Preferred Units shall have the option to exchange all, but not part, of such
holder's Series N Preferred Units, and the Company shall have the option to
cause each holder to so exchange the holder's Series N Preferred Units, for
depositary shares representing interests in authorized but previously unissued
shares of 9.5% Cumulative Preferred Stock, Series N, of the Company (the "SERIES
N PREFERRED STOCK") at an exchange rate of one depositary share representing one
thousandth (1/1000) of a share of Series N Preferred Stock for one (1) Series N
Preferred Unit, subject to adjustment as described below (the "EXCHANGE Ratio").
12.1.2 At any time prior to the tenth (10th) anniversary of
the date of issuance of Series N Preferred Units and after the third (3rd)
anniversary thereof, at the option of a majority of the holders thereof (acting
as a whole), the Series N Preferred Units shall be exchangeable in whole (but
not in part) for depositary shares representing interests in Series N Preferred
Stock based on the Exchange Ratio, if the holders of Series N Preferred Units
shall deliver to the Company either (i) a private letter ruling addressed to
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such holder of Series N Preferred Units or its counsel or (ii) an opinion of
independent counsel reasonably acceptable to the Company based on the enactment
of temporary or final Regulations or the publication of a Revenue Ruling, in
either case to the effect that an exchange of the Series N Preferred Units at
such earlier time would not cause the Series N Preferred Units to be considered
"stock and securities" within the meaning of Section 351(e) of the I.R.C. for
purposes of determining whether the holder of such Series N Preferred Units is
an "investment company" under section 721(b) of the I.R.C. if an exchange is
permitted at such earlier date.
12.1.3 In addition, at any time prior to the tenth (10th)
anniversary of the date of issuance of Series N Preferred Units, each holder of
Series N Preferred Units shall have the option to exchange all, but not part, of
such holder's Series N Preferred Units for depositary shares representing
interests in Series N Preferred Stock based on the Exchange Ratio, if:
(a) upon receipt by a holder or holders of Series N Preferred
Units of (1) notice from the General Partner that the General Partner
or a Subsidiary of the General Partner has taken the position that the
Partnership is, or upon the occurrence of a defined event in the
immediate future will be, a PTP and (2) an opinion rendered by an
outside nationally recognized independent counsel familiar with such
matters addressed to a holder or holders of Series N Preferred Units,
that the Partnership is or likely is, or upon the occurrence of a
defined event in the immediate future will be or likely will be, a PTP;
(b) if the holder is a real estate investment trust within the
meaning of Sections 856 through 859 of the I.R.C. (a "REIT") and (i)
the Partnership reasonably determines that for a taxable year after
1999 such a holder would fail to satisfy the income and asset
requirements of Section 856 of the I.R.C. if that REIT were to be
evaluated as if all of its income and assets were derived from its
Series N Preferred Units and assuming that the REIT does not actually
or constructively own a 10% or greater interest in vote or value of the
Company or (ii) any such holder of Series N Preferred Units shall
deliver to the Partnership and the General Partner an opinion of
independent counsel reasonably acceptable to the General Partner to the
effect that, based on the assets and income of the Partnership for a
taxable year after 1999, such a holder would fail to satisfy the income
and asset requirements of Section 856 of the I.R.C. if that REIT were
to be evaluated as if all of its income and assets were derived from
its Series N Preferred Units and assuming that the REIT does not
actually or constructively own a 10% or greater interest in vote or
value of the Company and that such failure would create a meaningful
risk that a holder of the Series N Preferred Units would fail to
maintain qualification as a REIT; or
(c) after December 31, 2005, if (A) the Partnership has been
notified that the holder of Series N Preferred Units is, or reasonably
anticipates that it may become, a PTP, and (B) for any taxable year
during which any Series N Preferred Units are so held, less than ninety
percent (90%) of the gross income of the Partnership for such taxable
year constitutes "qualifying income" within the meaning of Section
7704(d) of the I.R.C.
provided, however, that if an exchange pursuant to this Section 12.1.3 would
result in more than one half of the number of Series N Preferred Units
originally outstanding having been exchanged (whether pursuant to this Section
12.1.3 or otherwise), the Company shall have the option to cause all holders to
exchange their Series N Preferred Units.
12.1.4 Further, at any time prior to the tenth (10th)
anniversary of the date of issuance of Series N Preferred Units, at the option
of a majority of the holders thereof (acting as a whole), the Series N Preferred
Units shall be exchangeable in whole (but not in part) for depositary shares
representing interests in Series N Preferred Stock based on the Exchange Ratio
if:
(a) at any time full distributions shall not have been timely
made on any Series N Preferred Unit with respect to six (6) prior
quarterly distribution periods, whether or not consecutive, provided,
however, that a distribution in respect of Series N Preferred Units
shall be considered timely made if made within two (2) Business Days
after the applicable Preferred Unit Distribution Payment Date if at the
time of such late payment there shall not be any prior quarterly
distribution periods in respect of which full distributions were not
timely made;
(b) the "Net Asset Value" (as defined in the Contribution
Agreement) of the Partnership at the end of any fiscal quarter is less
than $400,000,000;
(c) if at any time after the fifth (5th) anniversary of the
date of issuance, the Company fails to maintain a Fixed Charge Coverage
Ratio (as defined in the Contribution Agreement) of 1.25 to 1.00 or
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greater in each period of four fiscal quarters ending on the last day
of each fiscal quarter commencing with the quarter ending March 31,
2000;
(d) if at any time after the fifth (5th) anniversary of the
date of issuance, the Company fails to maintain a Debt Ratio (as
defined in the Contribution Agreement) of 50% or less at the end of
each fiscal quarter commencing with the quarter ending March 31, 2000;
or
(e) the Company shall engage in any transaction, or series of
transactions, that causes the Company's common stock, par value $.10,
either (A) to be held of record by fewer than 300 persons (as
determined in accordance with Rule 12g5-1 of the Securities Exchange
Act of 1934, as amended) or (B)(1) to no longer be listed on any
national securities exchange or (2) not to be quoted on an inter-dealer
quotation system of any registered national securities association;
provided, however, that with respect to any exchange right arising pursuant to
clauses (b), (c) or (d) of this Section 12.1.4, if the exchanging holder's
Capital Account is less than $25.00 per Series N Preferred Unit, the Exchange
Ratio shall be reduced to reflect the ratio of the per unit Capital Account to
$25.00 (I.E., if such an exchanging holder's per unit capital account were
$24.00, each Series N Preferred Unit would be exchangeable for 24/25 of a
depositary share representing one thousandth (1/1000) of a share of Series N
Preferred Stock).
12.1.5 Notwithstanding anything to the contrary set forth in
Section 12.1, if an Exchange Notice (as defined in this Agreement) has been
delivered to the Company, then the Company may, at its option, elect to purchase
or cause the Partnership to redeem all or a portion of the outstanding Series N
Preferred Units for cash in an amount equal to the Liquidation Preference of the
Series N Preferred Unit to be redeemed. The Company may exercise its option to
redeem the Series N Preferred Units for cash pursuant to this Section 12.1.5 by
giving each holder of record of Series N Preferred Units notice of its election
to redeem for cash, in a fashion consistent with the procedures for redemption
in Section 6.6.3.
12.1.6 In the event an exchange of all or a portion of Series
N Preferred Units pursuant to Section 12 would violate the provisions on
ownership limitation of the Company set forth in Article XI, Section 7,
subsection (l) of the Company's Bylaws (the "OWNERSHIP LIMITATION"), the Company
shall give written notice thereof to each holder of record of Series N Preferred
Units, within five (5) Business Days following receipt of the Exchange Notice,
by (m) fax, and (n) certified mail, postage prepaid, at the address of each such
holder set forth in the records of the Partnership. In such event, each holder
of Series N Preferred Units shall be entitled to exchange, pursuant to the
provision of Section 12 a number of Series N Preferred Units that would comply
with the Ownership Limitation and any Series N Preferred Units not so exchanged
(the "EXCESS UNITS") shall be redeemed by the Partnership for cash in an amount
equal to the Liquidation Preference per Excess Unit to the date of redemption.
As a condition to such exchange, each holder of such Excess Units agrees to
provide representations and covenants reasonably requested by the Company
relating to (1) the widely held nature of the interests in such holder,
sufficient to assure the Company that the holder's ownership of stock of the
Company (without regard to the limits described above) will not cause any
individual to own in excess of the Ownership Limitation, taking into account any
waiver in the Certificate of Determination; and (2) to the extent such holder
can so represent and covenant without obtaining information from its owners, the
holder's ownership of tenants of the Company and its affiliates. The General
Partner shall proceed in a fashion consistent with the procedures for redemption
in Section 6.6.3.
12.2 RIGHT TO EXCHANGE - SERIES O. The Series O Preferred Units also
shall be exchangeable as are the Series N Preferred Units: the provisions of
Section 12.1 shall be read as if restated in this Section 12.2, but as if each
reference in those provisions to "Series N Preferred Units" instead were a
reference to "Series O Preferred Units," and by treating each reference to the
"Series N Preferred Stock" as a reference to the 9.125% Cumulative Preferred
Stock, Series O, of the Company.
12.3 PROCEDURE FOR EXCHANGE.
12.3.1 Any exchange shall be exercised pursuant to a notice of
exchange (the "EXCHANGE NOTICE") delivered to the Company by the holders
exercising such exchange right, by (A) fax and (B) by certified mail, postage
prepaid. The exchange of Exchangeable Preferred Units, or a specified portion
thereof, may be effected after the fifth (5th) Business Day following receipt by
the Company of the Exchange Notice by delivering certificates, if any,
representing such Exchangeable Preferred Units to be exchanged together with, if
applicable, written notice of exchange and a proper assignment of such
Exchangeable Preferred Units to the office of the Company. Each exchange will be
deemed to have been effected immediately prior to the close of business on the
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date on which such Exchangeable Preferred Units to be exchanged (together with
all required documentation) shall have been surrendered and notice shall have
been received by the Company as aforesaid and shares based on the Exchange Ratio
shall have been paid. Any depositary shares representing interests in shares of
Corresponding Preferred Stock issued pursuant to this Section 12 shall be
delivered as shares which are duly authorized, validly issued, fully paid and
nonassessable, free of pledge, lien, encumbrance or restriction other than those
provided in the Company's Restated Articles of Incorporation, certificates of
determination, Bylaws, the Securities Act and relevant state securities or blue
sky laws.
12.3.2 In the event of an exchange of Exchangeable Preferred
Units for depositary shares representing interests in shares of Corresponding
Preferred Stock, an amount equal to the accrued and unpaid distributions,
whether or not declared, to the date of exchange on any Exchangeable Preferred
Units tendered for exchange shall (A) accrue on the depositary shares
representing interests in shares of the Corresponding Preferred Stock into which
such Exchangeable Preferred Units are exchanged, and (B) continue to accrue on
such Exchangeable Preferred Units, which shall remain outstanding following such
exchange, with the Company as the holder of such Exchangeable Preferred Units.
Notwithstanding anything to the contrary set forth in this Agreement, in no
event shall a holder of a Exchangeable Preferred Unit that was validly exchanged
into depositary shares representing interests in shares of Corresponding
Preferred Stock pursuant to this section (other than the Company now holding
such Exchangeable Preferred Unit), receive a cash distribution out of Available
Cash of the Partnership, if such holder, after exchange, is entitled to receive
a distribution out of Available Cash with respect to the depositary shares
representing interests in shares of Corresponding Preferred Stock for which such
Exchangeable Preferred Unit was exchanged or redeemed.
12.3.3 Fractional depositary shares representing interests in
shares of Corresponding Preferred Stock are not to be issued upon exchange but,
in lieu thereof, the Company will pay a cash adjustment based upon the fair
market value of depositary shares representing interests in the shares of
Corresponding Preferred Stock on the day prior to the exchange date as
determined in good faith by the Board of Directors of the Company.
12.4 ADJUSTMENT OF EXCHANGE RATIO.
12.4.1 The Exchange Ratio is subject to adjustment upon
certain events, including, (A) subdivisions, combinations and reclassification
of the Corresponding Preferred Stock, and (B) distributions to all holders of
Corresponding Preferred Stock of evidence of indebtedness of the Company or
assets (including securities, but excluding dividends and distributions paid in
cash out of equity applicable to Corresponding Preferred Stock).
12.4.2 In case the Company shall be a party to any transaction
(including, without limitation, a merger, consolidation, statutory share
exchange, tender offer for all or substantially all of the Company's capital
stock or sale of all or substantially all of the Company's assets), in each case
as a result of which the Corresponding Preferred Stock will be converted into
the right to receive shares of capital stock, other securities or other property
(including cash or any combination thereof), each Exchangeable Preferred Unit
will thereafter be exchangeable into the kind and amount of shares of capital
stock and other securities and property receivable (including cash or any
combination thereof) upon the consummation of such transaction by a holder of
that number of depositary shares representing interests in shares of
Corresponding Preferred Stock or fraction thereof into which one Exchangeable
Preferred Unit was exchangeable immediately prior to such transaction. The
Company may not become a party to any such transaction unless the terms thereof
are consistent with the foregoing.
12.5 NO CONVERSION RIGHTS. The holders of the Exchangeable Preferred
Units shall not have any rights to convert such units into shares of any other
class or series of stock or into any other securities of, or interest in, the
Partnership.
13. LOANS TO PARTNERSHIP
13.1 AUTHORITY TO BORROW. The Partnership may from time to time borrow
such amounts from such persons (including the Partners) on such security and
payable on such terms as the General Partner may determine, subject to the
conditions in Section 13.2.
13.2 LOANS FROM PARTNERS. If a Partner shall, with the prior consent of
the General Partner, make any loan or loans to the Partnership or advance money
on its behalf, the amount of any such loan or advance shall not be an increase
in the capital account (as defined in Section 4.6) of the lending Partner or
assignee or entitle such lending Partner or assignee to an increase in its share
of the distributions of the Partnership, or subject such Partner or assignee to
18
any greater proportion of the losses which the Partnership may sustain. The
amount of any such loan or advance shall be a debt due from the Partnership to
such lending Partner or assignee, repayable upon such terms and conditions and
bearing interest at such rates as shall be mutually agreed upon by the lending
Partner or assignee and the General Partner. Notwithstanding the foregoing, no
Partner shall be under any obligation whatsoever to make any such loan or
advance to the Partnership.
13.3 REPAYMENT OF LOANS ON TERMINATION. If a General Partner (or any
affiliate of a General Partner) has made a loan to the Partnership, and that
General Partner is terminated as a general partner by action of the Limited
Partners, upon the effective date of such termination, the Partnership shall
repay to the lending General Partner (or the affiliate) the total outstanding
amount owing with respect to any such unsecured loans.
14. CERTIFICATES AND OTHER DOCUMENTS
14.1 MAKING, FILING, ETC. OF CERTIFICATES, DOCUMENTS AND INSTRUMENTS.
The General Partner shall make, file or record with the appropriate public
authority and, if required, publish, the Agreement, any amendments thereof and
such other certificates, instruments and documents as may be required or
appropriate in connection with the business and affairs of the Partnership.
14.2 REQUIRED SIGNATURES. Any writing to amend this Agreement to
reflect the removal, retirement, bankruptcy or dissolution (or death or insanity
in the case of an individual General Partner) of a General Partner in the event
the business of the Partnership is continued pursuant to the terms of this
Agreement need be signed only by a remaining General Partner or a new General
Partner and the Limited Partners. For purposes of filing amendments, dissolution
and cancellation certificates with the California Secretary of State pertaining
to the Partnership's Certificate of Limited Partnership referred to in Section
2, the signature and acknowledgment of only one General Partner is required.
15. DISSOLUTION AND TERMINATION OF THE PARTNERSHIP
15.1 DISSOLUTION. Except as otherwise provided in this Agreement, no
Partner shall have the right to cause dissolution of the Partnership before the
expiration of the term for which it is formed. The Partnership shall be
dissolved and terminated upon the happening of the following events:
15.1.1 The expiration of the term of the Partnership as
specified in Section 2.3.
15.1.2 The decision by the General Partner and by a Limited
Partner Vote to dissolve and terminate the Partnership.
15.1.3 An act as specified in Section 15642 of the Act with
respect to a General Partner; provided, however, that no dissolution shall occur
under this subsection if, within 90 days from the date of such event, (i) the
remaining General Partner, if any, elects to continue the business of the
Partnership or (ii) if there is no remaining General Partner, the Limited
Partners elect to continue the Partnership and at least one successor General
Partner is elected by the Limited Partners as provided in Section 15.2.
15.1.4 The removal of a General Partner, unless (i) there is a
remaining General Partner which elects to continue the business of the
Partnership or (ii) prior to the effective date of removal a successor General
Partner is elected by the Limited Partners as provided in Section 15.2, which
successor elects to continue the business of the Partnership.
15.1.5 The sale of all of the Partnership's assets and the
conversion into cash of any proceeds of a sale originally received in a form
other than cash.
15.1.6 The Partnership shall not be dissolved or terminated by
the admission of any new limited partner or by withdrawal, expulsion, death,
insolvency, bankruptcy or other disability of a limited partner.
Upon dissolution, the Partnership shall cause to be filed with
the California Secretary of State a Certificate of Dissolution. The signature of
any one General Partner shall be sufficient for the certificate.
15.2. LIMITED PARTNERS' RIGHT TO CONTINUE. Notwithstanding anything
contained in Section 15.1, if upon the occurrence of an event as specified in
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Section 15.1.3 or 15.1.4 there is no remaining General Partner, a meeting of the
Partners shall be held at the principal place of business of the Partnership
within forty-five (45) days after the happening of such event to consider
whether to continue the Partnership on the same terms and conditions as are
contained in this Agreement (except that the General Partner or General Partners
may be different) and to select a General Partner or General Partners for the
Partnership, or whether to wind up the affairs of the Partnership, liquidate its
assets and distribute the proceeds therefrom in accordance with Section 16. The
Partnership may be continued by the affirmative vote or written consent of all
of the Partners. If the Partnership is continued pursuant to the preceding
sentence, the Limited Partner(s) shall, by the affirmative vote or written
consent of all of the Partners, select a new General Partner or General Partners
for the Partnership. The new General Partner or General Partners shall execute,
acknowledge and file or record, as appropriate, an Amendment to Partnership
Certificate of Limited Partnership.
16. DISTRIBUTION ON TERMINATION OF PARTNERSHIP
16.1. LIQUIDATION DISTRIBUTION. Upon a dissolution and final
termination of the Partnership, the General Partner (or in the event of a
General Partner's bankruptcy, dissolution, retirement, withdrawal, death or
insanity as provided in Section 15.1 and if there is no remaining General
Partner, any other person or entity selected by the Limited Partners) shall take
account of the Partnership's assets and liabilities, and the assets shall be
liquidated as promptly as is consistent with obtaining their fair market value,
and any proceeds, together with assets distributed in kind, shall be applied and
distributed in the following order:
16.1.1 To the payment of debts and liabilities of the
Partnership to creditors in the order of priority provided by law (other than
any loans or advances that may have been made by any of the Partners to the
Partnership) and the expenses of liquidation.
16.1.2 To the establishment of any reserves that the General
Partner deems reasonably necessary for any contingent or unforeseen liabilities
or obligations of the Partnership or of the General Partner arising out of or in
connection with the Partnership. Such reserves shall be paid to a trust to be
held for the purpose of disbursing such reserves in payment of any of the
aforementioned contingencies, and, at the expiration of such period as the
General Partner shall deem advisable, to distribute the balance thereafter
remaining in the manner hereinafter provided by this Section 16.1.
16.1.3 To the repayment of any loans or advances that may have
been made by any of the Partners to the Partnership, but if the amount available
for such repayment shall be insufficient, then pro rata on account thereof
(provided that secured loans shall first be given priority, to the extent of the
value of the collateral).
16.1.4 To pay the amount of each Partner's capital account.
For purposes of Section 16.1.4, each Partner's capital account shall first be
adjusted to reflect all capital account adjustments through the date of
liquidation, including any gain or loss allocable to the Partners with respect
to any sale of Partnership property that occurs immediately prior to the
dissolution (or any deemed sale as to any property distributed in kind). Such
gain or loss shall be allocated in accordance with the provisions of Section 5.
Distributions pursuant to this Section 16.1 may be made in cash and/or
kind as the General Partner in its sole discretion shall determine, provided
that the fair market value of any property distributed in kind shall be
determined by agreement of the parties, or if no agreement is reached, by an
independent appraisal. The difference between the value of the property
distributed in kind and its book value shall be treated as a gain or loss on
sale of the property and shall be credited or charged to the Partners in the
fashion specified in Section 5.
The voluntary sale, conveyance, lease, exchange or transfer (for cash,
shares of stock, securities or other consideration) of all or substantially all
of the property or assets of the General Partner to, or the consolidation or
merger or other business combination of the Partnership with or into, any
corporation, trust, partnership, limited liability company or other entity (or
of any corporation, trust, partnership, limited liability company or other
entity with or into the Partnership) shall not be deemed to constitute a
liquidation, dissolution or winding-up of the Partnership.
16.2. TIME OF LIQUIDATION. A reasonable time shall be allowed for the
orderly liquidation of the assets of the Partnership and the discharge of
liabilities to creditors so as to enable the General Partner to minimize the
losses attendant upon a liquidation.
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16.3. LIQUIDATION STATEMENT. Each of the Partners shall be furnished
with a statement prepared or caused to be prepared by the General Partner, which
shall set forth the assets and liabilities of the Partnership as of the date of
complete liquidation. Upon compliance by the General Partner with the foregoing
distribution plan (including payment over to the trust provided for by Section
16.1 if there are sufficient funds therefor), the Limited Partners shall cease
to be such, and the General Partner, as the sole remaining Partner of the
Partnership, shall execute, acknowledge and cause to be filed a Certificate of
Cancellation of the Partnership pursuant to Section 15623 of the Act. The
signature of any one of the General Partners, if more than one, shall be
sufficient for such certificate.
16.4. NO LIABILITY FOR RETURN OF CAPITAL. The General Partner shall not
be personally liable for the return of all or any part of the Capital
Contributions of the Limited Partners. Any such return shall be made solely from
Partnership assets.
16.5. NO RIGHT OF PARTITION. The Partners and their assignees shall
have no right to receive Partnership property in kind, nor shall any such
Partners or assignees have the right to partition the Partnership property,
whether or not upon dissolution and termination of the Partnership.
17. GENERAL PROVISIONS
17.1 NOTICES. Except as otherwise provided in this Agreement, any
notice, payment, distribution or other communication that shall be required to
be given to the Limited Partners in connection with the business of the
Partnership shall be duly given if in writing and delivered personally to the
person to whom it is authorized to be given at the time of such delivery, or if
sent by mail or telegraph, to the last address furnished by the Limited Partner
for such purpose as of the time of such mailing; and if to the General Partner
or the Partnership, shall be given when actually received at the principal
office of the Partnership or at such other address as the General Partner may
hereafter specify.
17.2 SURVIVAL OF RIGHTS. This Agreement shall be binding upon and inure
to the benefit of the Partners and their respective heirs, legatees, legal
representatives, successors and assigns.
17.3 AMENDMENT.
17.3.1 This Agreement may be amended, modified and changed by
the agreement of the General Partner and by a Limited Partner Vote, except as
specified in Section 17.3.2 and as otherwise limited in this Agreement. If
mandated by Section 15622(b) of the Act, the General Partner shall (and in all
other cases the General Partner may), within 30 days of the effective date of
any such amendment, execute, acknowledge and file an amendment to the
Partnership's Certificate of Limited Partnership. If there is more than one
general partner, the signature of any one general partner shall be sufficient
for the purpose of executing any amendment to the Partnership's Certificate of
Limited Partnership.
17.3.2 The General Partner shall have the authority to amend
this Agreement without any vote or other action by the Limited Partners (i) to
reflect transfers of Partnership interests pursuant to Section 11 or to form,
qualify or continue the partnership as a limited partnership (or a partnership
in which the limited partners have limited liability) in all jurisdictions in
which the Partnership conducts or plans to conduct business, (ii) to satisfy any
requirements, conditions, guidelines or options contained in any opinion,
directive, order, ruling or regulation of the Internal Revenue Service or any
other federal or state agency, or in any federal or state statute, compliance
with which its deems to be in the best interests of the Partnership, (iii) to
cure any ambiguity, or correct or supplement any provision contained in this
Agreement that may be incomplete or inconsistent with any other provisions
contained in this Agreement, so long as such amendment under this clause (iii)
does not materially adversely affect the interest of a Limited Partner (without
the consent of such Limited Partner), and (iv) to change the principal office of
the Partnership, as set forth in Section 3.
17.4 HEADINGS. The captions of the articles and sections of this
Agreement are for convenience only and shall not be deemed part of the text of
this Agreement.
17.5 AGREEMENT IN COUNTERPARTS. This Agreement, or any amendment, may
be executed in multiple counterparts, each of which shall be deemed an original
Agreement, and all of which shall constitute one agreement.
17.6 GOVERNING LAW. This Agreement shall be governed and construed
according to the laws of the State of California.
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17.7 TIME. Time is of the essence in this Agreement.
17.8 ADDITIONAL DOCUMENTS. Each Partner, upon the request of the
General Partner, shall perform any further acts and execute and deliver any
documents that may be reasonably necessary to carry out the provisions of this
Agreement.
17.9 LIMITATION ON CREDITORS' INTERESTS. No creditor who makes a
nonrecourse loan to the Partnership shall have or acquire at any time, as a
result of making such loan, any direct or indirect interest in the profits,
capital or properties of the Partnership, other than as a secured creditor.
17.10 NO THIRD-PARTY RIGHTS CREATED. The provisions of this Agreement
are solely for the purpose of defining the interests of the Partners and others
referred to in this Agreement, and no other person, firm or entity (other than a
permitted successor to such a person) shall have any right, power, title or
interest by way of subrogation or otherwise, in and to the rights, powers, title
and provisions of this Agreement.
17.11 VALIDITY. Should any portion of this Agreement be declared
invalid and unenforceable, then such portion shall be deemed to be severable
from this Agreement and shall not affect the remainder of this Agreement.
17.12 PRONOUNS. All pronouns and any variations thereof shall be deemed
to refer to the masculine, feminine or neuter, singular or plural, as the
identity of the person, persons, entity or entities may require.
17.13 GENERAL PARTNER AS ATTORNEY-IN-FACT FOR LIMITED PARTNERS. Each
Limited Partner, by becoming a Limited Partner, constitutes and appoints the
General Partner, and any additional or successor general partners as general
partners (with full power of substitution), as the Limited Partner's true and
lawful attorney-in-fact in the Limited Partner's name, place and stead, from
time to time:
17.13.1. To execute, acknowledge, file and/or record all
agreements amending this Agreement, as now and hereafter amended, that may be
appropriate to reflect: (a) a change of the name or the location of the
principal place of business of the Partnership; (b) the disposal by any Limited
Partner of an interest in the Partnership, or any Units constituting a part
thereof, in any manner permitted by this Agreement, and any return of the
Capital Contribution of a Partner (or any part thereof) provided for by this
Agreement; (c) a person becoming a Partner of the Partnership as permitted by
this Agreement; or (d) a change in any provision of this Agreement or the
exercise by any person of any right or rights hereunder not requiring the
consent of said Partner.
17.13.2. To execute, acknowledge, file and/or record such
certificates, instruments and documents as may be required of the Limited
Partners by the laws of any state or other jurisdiction, or as may be
appropriate for the Partner to execute, acknowledge, file and/or record to
reflect: (a) a change of address of the Partners; (b) any changes in or
amendments of this Agreement, or pertaining to the Partnership, of any kind
referred to in Section 17.13.1; (c) any other changes in, or amendments of, this
agreement, but only if and when the consent of any required percentage of the
Limited Partners has been obtained.
17.13.3. Each of the agreements, certificates, instruments and
documents referred to in this Section 17.13 shall be in such form as the
attorney-in-fact and the legal counsel for the Partnership shall deem
appropriate. The powers conferred by this Section 17.13 with respect to
agreements, certificates, instruments and documents shall be deemed to include
the powers to sign, execute, acknowledge, swear to, verify, deliver, file,
record and publish the same. Each Limited Partner authorizes the
attorney-in-fact to take any further action which the attorney considers
necessary or convenient in connection with any of the foregoing, hereby giving
the attorney-in-fact full power and authority to do and perform each and every
act and thing whatsoever requisite, necessary or convenient to be done in and
about the foregoing as fully as the Partner might or could do if personally
present and hereby ratifying and confirming all that the attorney-in-fact shall
lawfully do or cause to be done by virtue hereof. The powers hereby conferred
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shall continue from the date the Partner becomes a Partner in the Partnership
until the Partner shall cease to be a Partner and, being coupled with an
interest, shall be irrevocable.
The undersigned have signed this Agreement of Limited Partnership as of
the date indicated above.
"GENERAL PARTNER:"
PS TEXAS HOLDINGS, LTD.,
a Texas limited partnership
By: PS GPT Properties, Inc., a California corporation,
its general partner
By: /s/ David Goldberg
------------------
David Goldberg
Senior Vice President
By: /s/ David P. Singelyn
---------------------
David P. Singelyn
Assistant Secretary
"LIMITED PARTNERS:"
PS LPT PROPERTIES INVESTORS,
a Maryland business trust
By: /s/ David Goldberg
------------------
David Goldberg
Senior Vice President
By: /s/ David P. Singelyn
---------------------
David P. Singelyn
Assistant Secretary
BELCREST REALTY CORPORATION,
a Delaware corporation
By: /s/ William R. Cross
--------------------
William R. Cross
Vice President
BELAIR REAL ESTATE CORPORATION,
a Delaware corporation
By: /s/ William R. Cross
--------------------
William R. Cross
Vice President
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BELPORT REALTY CORPORATION,
a Delaware corporation
By: /s/ William R. Cross
--------------------
William R. Cross
Vice President
BELMAR REALTY CORPORATION,
a Delaware corporation
By: /s/ William R. Cross
--------------------
William R. Cross
Vice President
MONTEBELLO REALTY CORP.,
a Delaware corporation
By: /s/ J. Timothy Ford
-------------------
J. Timothy Ford
Vice President
[signatures continue]
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DLJ EMERGING GROWTH PARTNERS, L.P.,
a Delaware limited partnership
By: WSW Capital, Inc., its general partner
By: /s/ Kent Covington
------------------
Kent Covington
Vice President
EDGEWATER EQUITY PARTNERS, L.P.,
a Delaware limited partnership
By: WSW Capital, Inc., its general partner
By: /s/ Kent Covington
------------------
Kent Covington
Vice President
ACKNOWLEDGED AND AGREED, AS
TO THE ISSUANCE OF COMPANY
STOCK PURSUANT TO SECTION 12:
"COMPANY"
PUBLIC STORAGE, INC.,
a California corporation
By: /s/ David Goldberg
------------------
David Goldberg
Senior Vice President
By: /s/ David P. Singelyn
---------------------
David P. Singelyn
Assistant Secretary
Exhibits to this Agreement will be furnished to the Securities and Exchange
Commission upon request.
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