Exhibit 10.1
AGREEMENT OF LIMITED PARTNERSHIP
OF
PS BUSINESS PARKS, L.P.
[Exhibits to this Agreement have been omitted and will be furnished to the
Securities and Exchange Commission upon request.]
AGREEMENT OF LIMITED PARTNERSHIP
OF
PS BUSINESS PARKS, L.P.
This AGREEMENT OF LIMITED PARTNERSHIP ("Agreement"), dated as of March
17, 1998, of PS BUSINESS PARKS, L.P. (the "Partnership") is entered into by and
among PS BUSINESS PARKS, INC., a California corporation (the "General Partner"),
and the Persons whose names are set forth on the attached Exhibit A as the
Limited Partners, together with any other Persons who become Partners in the
Partnership as provided below.
A. Effective on March 17, 1998, the General Partner (American Office
Park Properties, Inc.) merged with and into Public Storage Properties XI, Inc.,
and the name of Public Storage Properties XI, Inc. (which became the General
Partner of the Partnership) was changed to PS Business Parks, Inc. In that
merger, each outstanding share of common stock of American Office Park
Properties, Inc. was converted into 1.18 shares of common stock of PS Business
Parks, Inc.
B. This Agreement amends and restates in its entirety that certain
Second Amended and Restated Agreement of Limited Partnership of American Office
Park Properties, L.P., dated as of February 24, 1998 in order to: reflect the
change in the General Partner, change the name of the Partnership to PS Business
Parks, L.P., and convert each outstanding Unit into 1.18 Units (as reflected on
the attached Exhibit A).
C. The Partners desire to ratify the formation of the Partnership, and
to set forth their respective rights and duties relating to the Partnership on
the terms as provided in this Agreement.
The parties agree as follows:
1. DEFINED TERMS
The following definitions shall be applied to the terms used in this
Agreement for all purposes, unless otherwise clearly indicated to the contrary.
"Act" means the California Revised Uniform Limited Partnership Act, as
it may be amended from time to time, and any successor to such statute.
"Additional Funds" shall have the meaning set forth in Section
4.1(b)(1).
"Additional Limited Partner" means a Person admitted to the Partnership
as a Limited Partner in accordance with the terms of this Agreement and who is
shown as such on the books and records of the Partnership.
"Affiliate" means, with respect to any Person, (a) any Person directly
or indirectly controlling, controlled by or under common control with such
Person, (b) any Person owning or controlling 10 percent or more of the
outstanding voting interests of such Person, (c) any Person of which such Person
owns or controls 10 percent or more of the voting interest, or (d) any officer,
director, general partner or trustee of such Person or any Person referred to in
clauses (a), (b) and (c) above.
"Agreement" means this Agreement of Limited Partnership, as it may be
amended, supplemented or restated from time to time.
"Articles of Incorporation" means the Restated Articles of Incorporation
of the General Partner filed with the Office of the Secretary of State of the
State of California on March 17, 1998, as amended or restated from time to time,
or the articles of incorporation, as amended, of any permitted successor by
merger to the General Partner.
"Assignee" means a Person to whom one or more Partnership Units (as
defined below) have been transferred in a manner permitted under this Agreement,
but who has not become a Substituted Limited Partner, and who has the rights set
forth in Section 11.5.
"Available Cash" means with respect to any period for which such
calculation is being made:
(a) all cash revenues and funds received by the Partnership from
whatever source (excluding the proceeds of any capital contribution) plus
the amount of any reduction (including, without limitation, a reduction
resulting because the General Partner determines such amounts are no longer
necessary) in reserves, working capital accounts or other cash or similar
balances of the Partnership referred to in clause (b)(iv) below;
(b) less the sum of the following (except to the extent made with the
proceeds of any capital contribution):
(i) all interest, principal and other debt payments made during such
period by the Partnership,
(ii) all cash expenditures (including capital expenditures) made by
the Partnership during such period,
(iii) investments in any entity (including loans made to the entity)
to the extent that such investments are not otherwise described in
clauses (b)(i) or (ii), and
(iv) the amount of any increase during such period in reserves,
working capital accounts or other cash or similar balances that the
General Partner determines is necessary or appropriate to meet the needs
of the Partnership in its sole and absolute discretion.
Notwithstanding the foregoing, Available Cash shall not include any cash
received or reductions in reserves, or take into account any disbursements made
or reserves established, after commencement of the dissolution and liquidation
of the Partnership.
"Business Day" means any day except a Saturday, Sunday or other day on
which commercial banks in Los Angeles, California are authorized or required by
law to close.
"Capital Account" means the Capital Account maintained for a Partner
pursuant to Section 4.4.
"Certificate" means the Certificate of Limited Partnership relating to
the Partnership filed in the office of the Secretary of State of the State of
California, as amended from time to time in accordance with the terms of this
Agreement and the Act.
"Code" means the Internal Revenue Code of 1986, as amended. Any
reference in this Agreement to a specific section or sections of the Code shall
be deemed to include a reference to any corresponding provision of future law.
"Common Shares" means the shares of Common Stock, $.01 par value per
share, of the General Partner.
"Event of Dissolution" has the meaning set forth in Section 13.1.
"General Partner" means PS Business Parks, Inc., a California
corporation, or its successors as a general partner of the Partnership.
"General Partnership Interest" means a Partnership Interest held by a
General Partner with respect to its interest as a general partner of the
Partnership. For purposes of allocations and distributions, but not for voting
purposes, a General Partnership Interest may be expressed as a number of
Partnership Units.
"IRS" means the Internal Revenue Service of the United States.
"Incapacity" or "Incapacitated" means:
(a) as to any Partner who is a natural person death or total physical
disability, as reasonably determined by the General Partner or by an entry
by a court of competent jurisdiction adjudicating such Partner as
incompetent to manage his or her Person or estate,
(b) as to any corporation that is a Partner, the filing of a certificate
of dissolution,
(c) as to any partnership or limited liability company that is a
Partner, the dissolution and commencement of winding up of the partnership
or limited liability company,
(d) as to any estate that is a Partner, the distribution by the
fiduciary of the estate's entire interest in the Partnership,
(e) as to any trustee of a trust that is a Partner, the termination of
the trust (but not the substitution of a new trustee) or
(f) as to any Partner, the bankruptcy of such Partner. For purposes of
this definition, bankruptcy of a Partner shall be deemed to have occurred
when
(i) the Partner commences a voluntary proceeding seeking
liquidation, reorganization or other relief under any bankruptcy,
insolvency or similar law now or later in effect,
(ii) the Partner executes and delivers a general assignment for the
benefit of the Partner's creditors,
(iii) the Partner files an answer or other pleading admitting or
failing to contest the material allegations of a petition filed against
the Partner in any voluntary or involuntary, proceeding under any
bankruptcy, or similar law now or later in effect,
(iv) the Partner seeks, consents to or acquiesces in the appointment
of a trustee, receiver or liquidator for the Partner or for all or any
substantial part of the Partner's properties,
(v) any involuntary proceeding seeking liquidation, reorganization
or other relief under any bankruptcy, insolvency or other similar law
now or later in effect has not been dismissed within 60 days after its
commencement,
(vi) the appointment of a trustee, receiver or liquidator that has
not been vacated or stayed within 90 days of such appointment, or
(vii) an appointment referred to in clause (vi) is not vacated
within 90 days after the expiration of any such stay.
"Indemnitee" means:
(a) any Person made a party to a proceeding by reason of his or her
status as (i) a General Partner, (ii) a Limited Partner, or (iii) an officer
of the Partnership or of the General Partner, and
(b) such other Persons (including Affiliates of the General Partner or
the Partnership) as the General Partner may designate from time to time
(whether before or after the event giving rise to potential liability), in
its sole and absolute discretion.
"Limited Partner" means any Person named as a Limited Partner in Exhibit
A attached to this Agreement, as such Exhibit may be amended from time to time,
or any Substituted Limited Partner or Additional Limited Partner, in such
Person's capacity as a Limited Partner in the Partnership.
"Limited Partnership Interest" means a Partnership Interest of a Limited
Partner (and any Partnership Interest of the General Partner other than the
General Partnership Interest) in the Partnership representing a fractional part
of the Partnership Interests of all Limited Partners.
"Liquidator" has the meaning set forth in Section 13.2.
"New Securities" has the meaning set forth in Section 4.2(c).
"Notice of Redemption" means the Notice of Redemption substantially in
the form of Exhibit B to this Agreement.
"Option Plans" means the option plans for Common Shares or Units, as the
case may be, restricted share plans or employee benefit plans established by the
General Partner or the Partnership.
"Partner" means a General Partner or a Limited Partner, and "Partners"
means the General Partner and the Limited Partners.
"Partnership" means the limited partnership formed under the Act and
pursuant to this Agreement, and any successor to that limited partnership.
"Partnership Interest" means an ownership interest in the Partnership
and includes any and all benefits to which the holder of such a Partnership
Interest may be entitled as provided in this Agreement, together with all
obligations of such Person to comply with the terms and provisions of this
Agreement. A Partnership Interest may be expressed as a number of Partnership
Units.
"Partnership Record Date" means the record date established by the
General Partner either (a) for the distribution of Available Cash pursuant to
Section 5.1, which shall be the same as the record date established by the
General Partner for a distribution to its shareholders of some or all of its
portion of such distribution, or (b) for determining the Partners entitled to
vote on or consent to any proposed action for which the consent or approval of
the Partners is sought.
"Partnership Unit" or "Unit" means a fractional, undivided share of the
Partnership Interests of all Partners issued pursuant to Sections 4.1 and 4.2,
in such number as set forth on Exhibit A, as such Exhibit may be amended from
time to time, and as such numbers may be adjusted as a result of changes in the
Unit Adjustment Factor. The ownership of Partnership Units may be evidenced by a
non-transferable, non-negotiable certificate for Units substantially in the form
attached as Exhibit C.
"Partnership Year" means the fiscal year of the Partnership, which shall
be the calendar year.
"Percentage Interest" means, as to a Partner, its interest in the
Partnership as determined by dividing the Partnership Units owned by such
Partner by the total number of Partnership Units then outstanding and as
specified in the attached Exhibit A, as such Exhibit may be amended from time to
time.
"Person" means an individual, corporation, partnership, limited
liability company, association, trust, estate or other entity or organization.
"Preferred Shares" shall mean the shares of Non-Voting Preferred Stock,
$.01 par value per share, of the General Partner.
"Profit" and "Loss" have the meaning set forth in Section 6.1(f).
"Redeeming Partner" has the meaning set forth in Section 8.6(a).
"Redemption Amount" means an amount of cash per Partnership Unit equal
to the Value on the Valuation Date of the Common Shares that the Redeeming
Partner being redeemed would have been entitled to receive if the General
Partner were to assume the Partnership's obligation to redeem Partnership Units
of such Redeeming Partner pursuant to Section 8.6(d) by issuing Common Shares.
"Redemption Right" has the meaning set forth in Section 8.6(a).
"Regulations" means the Income Tax Regulations promulgated under the
Code, as such regulations may be amended from time to time (including
corresponding provisions of succeeding regulations).
"REIT" means a real estate investment trust under Section 856 of the
Code.
"Securities Act" means the Securities Act of 1933, as the same shall be
amended from time to time.
"Shares" means any Common Shares issued to a Limited Partner upon
conversion of such Limited Partner's Units pursuant to Section 8.6(d).
"Shares Amount" means a number of Common Shares equal to the number of
Partnership Units (as appropriately adjusted pursuant to changes in the Unit
Adjustment Factor) offered for redemption by a Redeeming Partner; provided that,
if the General Partner issues to all holders of Common Shares rights, options,
warrants or convertible or exchangeable securities entitling such holders to
subscribe for or purchase Shares or any other securities or property
(collectively, the "rights"), then the Shares Amount shall also include such
rights that a holder of that number of Shares would be entitled to receive.
"Specified Redemption Date" means the tenth Business Day after receipt
by the General Partner of a Notice of Redemption.
"Subsidiary" means, with respect to any Person, any corporation or other
entity of which a majority of (a) the voting power of the voting equity
securities or (b) the outstanding equity interests is owned, directly or
indirectly, by such Person.
"Substituted Limited Partner" means a Person who is admitted as a
Limited Partner to the Partnership pursuant to Section 11.4.
"Unit Adjustment Factor" means initially 1.0 provided that in the event
that the General Partner
(a) declares or pays a dividend on its outstanding Common Shares in
Common Shares or makes a distribution to all holders of its outstanding
Common Shares in Common Shares,
(b) subdivides its outstanding Common Shares or
(c) combines its outstanding Common Shares into a smaller number of
Common Shares,
the Unit Adjustment Factor shall be adjusted to be a fraction, the numerator of
which shall be the number of Common Shares issued and outstanding on the record
date for such dividend, distribution, subdivision or combination (assuming for
such purposes that such dividend, distribution, subdivision or combination has
occurred as of such time), and the denominator of which shall be the actual
number of Common Shares (determined without the above assumption) issued and
outstanding on the record date for such dividend, distribution, subdivision or
combination. If another entity shall become the General Partner (the "Successor
Entity"), the Unit Adjustment Factor shall be adjusted to be a fraction, the
numerator of which is the value of one share of the predecessor General Partner,
determined as of the date when the Successor Entity becomes the General Partner,
and the denominator of which is the value of one share of the Successor Entity,
determined as of that same date. The Board of Directors of the General Partner
shall determine when an adjustment to the Unit Adjustment Factor is necessary.
The Board's determination as to whether an adjustment is necessary and the
amount of such adjustment shall be conclusive absent manifest error. Any
adjustment to the Unit Adjustment Factor shall become effective immediately
after the effective date of such event retroactive to the record date, if any,
for such event (provided, however, if a Notice of Redemption is given prior to
such a record date but the Specified Redemption Date is after the record date,
then the change in the Unit Adjustment Factor with respect to that Redeeming
Partner shall be retroactive to the date of the Notice of Redemption). In the
event of any change in the Unit Adjustment Factor, the number of Partnership
Units held by each Partner shall be proportionately adjusted by multiplying the
number of Partnership Units held by such Partner immediately prior to the change
in the Unit Adjustment Factor by the new Unit Adjustment Factor; the intent of
this provision is for one Partnership Unit to remain exchangeable for one Common
Share without dilution.
"Valuation Date" means the date of receipt by the General Partner of a
Notice of Redemption or, if such date is not a Business Day, the first
subsequent Business Day.
"Value" means, with respect to a Common Share, the average of the daily
market price for the ten (10) consecutive trading days immediately preceding the
Valuation Date. The market price for each such trading day shall be:
(a) if the Common Shares are listed or admitted to trading on any
securities exchange or the Nasdaq National Market, the closing price,
regular way, on such day, or if no such sale takes place on such day, the
average of the closing bid and asked prices on such day;
(b) if the Common Shares are not listed or admitted to trading on any
securities exchange or the Nasdaq National Market, the last reported sale
price on such day or, if no sale takes place on such day, the average of the
closing bid and asked prices on such day, as reported by a reliable
quotation source designated by the General Partner; or
(c) if the Common Shares are not listed or admitted to trading on any
securities exchange or the Nasdaq National Market and no such last reported
sale price or closing bid and asked prices are available, the average of the
reported high bid and low asked prices on such day, as reported by a
reliable quotation source designated by the General Partner, or if there
shall be no bid and asked prices on such day, the average of the high bid
and low asked prices, as so reported, on the most recent day (not more than
10 days prior to the date in question) for which prices have been so
reported; provided that if there are no bid and asked prices reported during
the 10 days prior to the date in question, the Value of the Common Shares
shall be determined by the General Partner acting in good faith on the basis
of such quotations and other information as it considers, in its reasonable
judgment, appropriate.
If a holder of Common Shares would be entitled to receive rights to purchase
Common Shares ("Common Share Rights") issued to all holders of Common Shares,
then the Value of such Common Share Rights shall be determined by the General
Partner acting in good faith on the basis of such quotations and other
information as it considers, in its reasonable judgment, appropriate.
2. ORGANIZATIONAL MATTERS
2.1 Organization and Formation: Application of Act.
(a) Organization and Formation of Partnership. The General Partner
and the Limited Partners ratify the formation and continuation of the
Partnership as a limited partnership according to all of the terms and
provisions of this Agreement and otherwise in accordance with the Act. The
General Partner is the sole general partner and the Limited Partners are the
sole limited partners of the Partnership.
(b) Application of Act. The Partnership is a limited partnership
subject to the provisions of the Act and the terms and conditions set forth in
this Agreement. Except as expressly provided in this Agreement to the contrary,
the rights and obligations of the Partners and the administration and
termination of the Partnership shall be governed by the Act. No Partner has any
interest in any Partnership Property, and the Partnership Interest of each
Partner shall be personal property for all purposes.
2.2 Name. The name of the Partnership is PS Business Parks, L.P. The
Partnership's business may be conducted under any other name or names deemed
advisable by the General Partner, including the name of the General Partner or
any Affiliate of the General Partner. The words "Limited Partnership," "L.P.,"
"Ltd." or similar words or letters shall be included in the Partnership's name
where necessary for the purposes of complying with the laws of any jurisdiction
that so requires. The General Partner in its sole and absolute discretion may
change the name of the Partnership at any time and from time to time and shall
notify the Limited Partners of such change in the next regular communication to
the Limited Partners; provided that the name of the Partnership may not be
changed to include the name of any Limited Partner without the written consent
of that Limited Partner.
2.3 Principal Office. The address of the principal office of the
Partnership shall be located at 701 Western Avenue, Glendale, California 91201,
or such other place as the General Partner may from time to time designate by
notice to the Limited Partners. The Partnership may maintain offices at such
other place or places within or outside the State of California as the General
Partner deems advisable.
2.4 Term. The term of the Partnership commenced as of January 1, 1997,
and shall continue until December 31, 2096, unless it is dissolved sooner
pursuant to the provisions of Article 13 or as otherwise provided by law.
3. PURPOSE
3.1 Purpose and Business. The purpose and nature of the business to be
conducted by the Partnership is:
(a) to conduct any business that may be lawfully conducted by a limited
partnership organized pursuant to the Act,
(b) to enter into any partnership, joint venture or other similar
arrangement to engage in any of the foregoing or the ownership of interests
in any entity engaged in (directly or indirectly) any of the foregoing and
(c) to do anything necessary or incidental to the foregoing;
provided, however, that each of the foregoing clauses (a), (b) and (c) shall be
limited and conducted in such a manner as to permit the General Partner at all
times to be classified as a REIT, unless the General Partner provides notice to
the Partnership that it intends to cease or has ceased to qualify as a REIT. The
Partners acknowledge that the status of the General Partner as a REIT inures to
the benefit of all Partners and not solely to the benefit of the General Partner
and its affiliates.
3.2 Powers. The Partnership is empowered to do any and all acts and
things necessary, appropriate, proper, advisable, incidental to or convenient
for the furtherance and accomplishment of the purposes and business described in
this Agreement and for the protection and benefit of the Partnership; provided
that the Partnership shall not take, or refrain from taking, any action that, in
the judgment of the General Partner, in its sole and absolute discretion, (a)
could adversely affect the ability of the General Partner to continue to qualify
as a REIT, (b) could subject the General Partner to any additional taxes under
Section 857 or Section 4981 of the Code or (c) could violate any law or
regulation of any governmental body or agency having jurisdiction over the
General Partner or its securities, unless such action (or inaction) shall have
been specifically consented to by the General Partner in writing.
3.3 Partnership Only for Purposes Specified. The Partnership shall be a
partnership only for the purposes specified in Section 3.1, and this Agreement
shall not be deemed to create a partnership among the Partners with respect to
any activities whatsoever other than the activities within the purposes of the
Partnership as specified in Section 3.1. Except as otherwise provided in this
Agreement, no Partner shall have any authority to act for, bind, commit or
assume any obligation or responsibility on behalf of the Partnership, its
properties or any other Partner. No Partner, in its capacity as a Partner under
this Agreement, shall be responsible or liable for any indebtedness or
obligation of another Partner, nor shall the Partnership be responsible or
liable for any indebtedness or obligation of any Partner, incurred either before
or after the execution and delivery of this Agreement by such Partner, except as
to those responsibilities, liabilities, indebtedness or obligations incurred
pursuant to and as limited by the terms of this Agreement and the Act.
3.4 Representations and Warranties by the Parties.
(a) Each Partner that is an individual represents and warrants to
each other Partner that:
(i) the consummation of the transactions contemplated by this
Agreement to be performed by such Partner will not result in a breach or
violation of or a default under, any agreement by which such Partner or any
of such Partner's property is or are bound, or any statute, regulation,
order or other law to which such Partner is subject, and
(ii) such Partner shall inform the Partnership whether such
Partner is a "foreign person" within the meaning of Section 1445(f) of the
Code.
(b) Each Partner that is not an individual represents and warrants
to each other Partner that:
(i) all transactions contemplated by this Agreement to be
performed by it have been duly authorized by all necessary action, including
without limitation, that of its general partner(s), committee(s),
trustee(s), beneficiaries, directors and/or shareholder(s), as the case may
be, as required,
(ii) the consummation of such transactions shall not result in a
breach or violation of, or a default under, its partnership agreement, trust
agreement, charter or by-laws, as the case may be, any agreement by which
such Partner or any of such Partner's properties or any of its partners,
beneficiaries, trustees or shareholders, as the case may be, is or are
bound, or any statute, regulation, order or other law to which such Partner
or any of its partners, trustees, beneficiaries or shareholders, as the case
may be, is or are subject and
(iii) such Partner shall inform the Partnership whether such
Partner is a "foreign person" within the meaning of Section 1445(f) of the
Code.
(c) Each Limited Partner further represents, warrants and agrees
that, it does not and will not, without the prior written consent of the General
Partner, actually own or constructively own (under the attribution rules of Code
Section 318, as modified by Code Section 856(d)(5)) stock of any corporation, or
an interest in the assets and profits of any other entity, from which the
General Partner or the Partnership, directly or indirectly, derives material
rental income from real property that would be excluded from "rents from real
property" pursuant to Code Section 856(d)(2)(B).
(d) Upon the request of the General Partner, each Limited Partner
will disclose to the General Partner the amount of Common Shares or other shares
of capital stock of the General Partner that it actually owns or constructively
owns and shall further disclose to the General Partner any ownership in the
stock, assets or net profits of any corporation or other entity from which the
General Partner or the Partnership, directly or indirectly, derives material
rental income from real property.
(e) Each Partner represents and warrants that it is an "accredited
investor" as defined in Rule 501 promulgated under the Securities Act. Each
Partner represents, warrants and agrees that it has acquired and continues to
hold its interest in the Partnership for its own account for investment only and
not for the purpose of, or with a view toward, the resale or distribution of all
or any part of that interest, nor with a view toward selling or otherwise
distributing such interest or any part of that interest at any particular time
or under any predetermined circumstances. Each Partner further represents and
warrants that it is a sophisticated investor, able and accustomed to handling
sophisticated financial matters for itself, particularly real estate
investments, and that it has a sufficiently high net worth that it does not
anticipate a need for the funds it has invested in the Partnership in what it
understands to be a highly speculative and illiquid investment.
(f) The representations and warranties contained in this Section 3.4
shall survive the execution and delivery of this Agreement by each Partner and
the dissolution, liquidation and termination of the Partnership.
(g) Each Partner acknowledges that no representations as to
potential profit, distributions, cash flows, funds from operations or yield, if
any, in respect of the Partnership or the General Partner have been made by any
Partner or any employee or representative or Affiliate of any Partner, and that
projections and any other information, including, without limitation, financial
and descriptive information and documentation, that may have been in any manner
submitted to such Partner shall not constitute any representation or warranty of
any kind or nature, express or implied.
4. CAPITAL CONTRIBUTIONS;
ISSUANCE OF UNITS;
CAPITAL ACCOUNTS
4.1 Capital Contributions of the Partners.
(a) Initial Capital Contributions. At the time of the execution of
this Agreement, the Partners shall make or shall have made the capital
contributions set forth in Exhibit A to this Agreement. The Partners shall own
Partnership Units in the amounts set forth in Exhibit A and shall have a
Percentage Interest in the Partnership as set forth in Exhibit A, which
Percentage Interest shall be adjusted in Exhibit A from time to time by the
General Partner to the extent necessary to reflect accurately redemptions,
conversions, capital contributions, the issuance of additional Partnership
Units, transfers of Partnership Interests permitted under Article 11, or similar
events having an effect on a Partner's Percentage Interest. Sixty-six Thousand,
Eight Hundred and Eighty-five (66,885) Partnership Units held by the General
Partner (representing one percent (1%) of all outstanding Partnership Units as
of the date of the initial capital contributions to the Partnership) shall be
deemed to be the General Partnership Interest.
(b) Additional Capital Contributions.
(1) No Partner shall be assessed or, except as provided for in
Sections 4.1(b)(2) below, and except for any such amounts that a Limited Partner
may be obligated to repay under Section 10.5 (withholding provision), be
required to contribute additional funds or other property to the Partnership.
Any additional funds or other property required by the Partnership, as
determined by the General Partner in its sole discretion ("Additional Funds"),
may, at the option of the General Partner and without an obligation to do so
(except as provided for in Section 4.1(b)(2)), be contributed by the General
Partner as additional capital contributions. If and as the General Partner or
any other Partner makes additional capital contributions to the Partnership,
each such Partner shall receive additional Partnership Units as provided for in
Section 4.2.
(2) The proceeds of any and all funds raised by or through the
General Partner through the issuance of additional shares of the General Partner
(whether Common Shares or Preferred Shares) shall be contributed to the
Partnership as additional capital contributions, and in such event the General
Partner shall be issued additional Partnership Units pursuant to Section 4.2
below. In any such case, if the proceeds so contributed are less than the gross
proceeds of the issuance (i.e., due to any underwriter's discount or other
expenses incurred in connection with the issuance), the General Partner's
capital contribution shall be deemed to equal the amount of the gross proceeds
(i.e., the net proceeds actually contributed, plus any underwriter's discount or
other expenses incurred, and any such discount or expense shall be deemed to
have been incurred on behalf of the Partnership).
(c) Return of Capital Contributions. Except as otherwise expressly
provided in this Agreement, the capital contribution of each Limited Partner
will be returned to that Partner only in the manner and to the extent provided
in Article 5 and Article 13, and no Partner may withdraw from the Partnership or
otherwise have any right to demand or receive the return of its capital
contribution to the Partnership (as such), except as specifically provided in
this Agreement. Under circumstances requiring a return of any capital
contribution, no Partner shall have the right to receive property other than
cash, except as specifically provided in this Agreement. No Partner shall be
entitled to interest on any capital contribution or Capital Account
notwithstanding any disproportion between the Partners in their capital
contributions or Capital Accounts. Except as specifically provided in this
Agreement, the General Partner shall not be liable for the return of any portion
of the capital contribution of any Limited Partner, and the return of such
capital contribution shall be made solely from Partnership assets.
(d) Liability of Limited Partners. No Limited Partner shall have any
further personal liability to contribute money to, or in respect of, the
liabilities or the obligations of the Partnership, nor shall any Limited Partner
be personally liable for any obligations of the Partnership, except as otherwise
provided in this Article 4 or in the Act. No Limited Partner shall be required
to make any contributions to the capital of the Partnership other than its
initial capital contribution.
(e) No Obligations for Deficit Capital Accounts. If any Partner has
a deficit balance in its Capital Account (after giving effect to all
contributions, distributions and allocations for all taxable years, including
those during any year in which a liquidation occurs), such Partner shall have no
obligation at the time of liquidation or otherwise to make any contribution to
the capital of the Partnership with respect to that deficit, and the deficit
shall not be considered a debt owed to the Partnership or to any other Person
for any purpose.
4.2 Issuances of Additional Partnership Interests.
(a) Issuances In General. 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. The General Partner may also amend the Agreement to provide for the
issuance of Partnership Units the Redemption Right of which will relate to
Preferred Shares on such terms as are determined by the General Partner.
(b) Issuance to the General Partner. In the case of the issuance of
additional Partnership Units or other Partnership Interests to the General
Partner: (i) the agreement to issue the additional Partnership Interests must
arise in connection with an issuance of or agreement to issue shares of the
General Partner, which shares have designations, preferences and other rights,
all such that the economic interests are substantially similar to the
designations, preferences and other rights of the additional Partnership
Interests that would be issued to the General Partner in accordance with this
Section 4.2(b), and (ii) the General Partner shall agree to make a capital
contribution to the Partnership in an amount equal to the proceeds raised in
connection with the issuance of such shares of the General Partner. For this
purpose, if the General Partner merges with another entity, assets of the other
entity acquired as a result of the merger shall be treated as acquired by the
General Partner in connection with the "issuance" of the shares held by the
other entities' shareholders in the surviving entity.
(c) Issuance of Additional Shares. The General Partner is explicitly
authorized to issue additional Common Shares or Preferred Shares of the General
Partner, or rights, options, warrants or convertible or exchangeable securities
containing the right to subscribe for or purchase Common Shares and Preferred
Shares ("New Securities") and in connection with the issuance: (i) the General
Partner shall contribute the proceeds from the issuance of such New Securities
and from the exercise of rights contained in such New Securities to the
Partnership or agree as provided in Section 7.6 at the option of the Partnership
to make such a contribution, and (ii) upon the contribution, the Partnership
shall issue to the General Partner, Partnership Interests or rights, options,
warrants or convertible or exchangeable securities of the Partnership having
designations, preferences and other rights, all such that the economic interests
are substantially similar to those of the New Securities. In connection with the
issuance of Partnership Interests that are substantially similar to New
Securities, the General Partner is authorized to modify or amend the
distributions or allocations under this Agreement solely to the extent necessary
to give effect to the designations, preferences and other rights pertaining to
such Partnership Interests.
(d) Forfeiture of Shares. If the Partnership or the General Partner
acquires Common Shares as a result of the forfeiture of such Common Shares under
a restricted or similar share plan, then the General Partner shall cause the
Partnership to cancel that number of Partnership Units equal to the number of
Common Shares so acquired, and, if the Partnership acquired such Common Shares,
it shall transfer such Common Shares to the General Partner for cancellation.
(e) Issuance Pursuant to Option Plans.
(1) Upon the exercise of an option to acquire Common Shares of
the General Partner that is granted by the Partnership or the General Partner,
the optionee shall transfer the exercise price to the Partnership, and the
Partnership shall purchase from the General Partner for fair market value at the
time of exercise the number of Common Shares with respect to which options were
exercised and shall transfer the shares to the optionee. The General Partner
shall immediately transfer the proceeds received for the Common Shares to the
Partnership in exchange for a number of Units equal to the number of Common
Shares sold.
(2) The General Partner shall cause the Partnership to issue
Partnership Units of the Partnership upon the exercise by any optionee of an
option to acquire Partnership Units granted by the Partnership pursuant to the
Option Plans in accordance with the terms of the Option Plans. Partnership Units
so issued shall represent Limited Partnership Interests.
4.3 No Preemptive Rights. Except to the extent expressly granted by the
General Partner pursuant to a written agreement, no Person shall have any
preemptive, preferential or other similar right with respect to (a) additional
capital contributions or loans to the Partnership, or (b) issuance or sale of
any Partnership Units.
4.4 Capital Accounts. A separate capital account (a "Capital Account")
shall be established and maintained for each Partner in accordance with
Regulations Section 1.704-1(b)(2)(iv) and the terms of this Agreement. The
General Partner is authorized to revalue the property of the Partnership to its
fair market value (as determined by the General Partner, in its sole discretion,
and taking into account Section 7701(g) of the Code) in accordance with
Regulations Section 1.704-1(b)(2)(iv)(f). When the Partnership's property is
revalued by the General Partner, the Capital Accounts of the Partners shall be
adjusted in accordance with Regulations Section 1.704-1(b)(2)(iv)(f) and (g).
4.5 General Partner Loans or Funding. The General Partner may, or to the
extent the General Partner enters into a "Funding Debt" (i.e., any debt incurred
by or on behalf of the General Partner for the purpose of providing funds to the
Partnership), the General Partner shall, lend Additional Funds to the
Partnership or contribute the funds to the Partnership for a Partnership
Interest paying a preferred return (a "General Partner Funding"). If the General
Partner enters into such a Funding Debt, the General Partner Funding will
consist of the proceeds from such Funding Debt and if the funds are loaned to
the Partnership, the loan will be on the same terms and conditions, including
interest rate, repayment schedule and costs and expenses, incurred in connection
with such Funding Debt, and in the case of a contribution to the Partnership,
the preferred partnership interest will substantially reflect the terms of the
Funding Debt. Otherwise, any General Partner Funding made pursuant to this
Section 4.5 shall be on terms and conditions no less favorable to the
Partnership than would be available to the Partnership from any third party. If
a Funding Debt or debt issued by the Partnership is comprised, in whole or in
part, of debt convertible into or exchangeable for Common Shares or other equity
interests in the General Partner and any portion of such debt is converted into
or exchanged for Common Shares, the General Partner shall have the right, but
not the obligation, to convert the equivalent amount of the General Partner
Funding into additional Partnership Interests.
4.6 Loans by Third Parties. The Partnership may incur debt, or enter
into other similar credit, guarantee, financing or refinancing arrangements for
any purpose (including, without limitation, in connection with any further
acquisition of properties) from any Person that is not the General Partner upon
such terms as the General Partner determines appropriate; provided that, the
Partnership shall not incur any debt under which a breach, violation or default
would be deemed to occur by virtue of the transfer of any Limited Partnership
Interest.
5. DISTRIBUTIONS
5.1 Requirement and Characterization of Distributions. The General
Partner shall, commencing in 1998, distribute at least quarterly an amount equal
to all Available Cash generated by the Partnership during such quarter or
shorter period to the Partners who are Partners on the Partnership Record Date
with respect to such quarter or shorter period (i) first, with respect to any
class of Partnership Interests issued pursuant to Section 4.2 that is entitled
to a preference over other Partnership Units on the distribution of Available
Cash (and among such classes in order of the preferences designated between
those classes, and pro rata within each such class), and (ii) then, in
accordance with their respective Percentage Interests on such Partnership Record
Date; provided that in no event may a Redeeming Partner receive a distribution
of Available Cash with respect to a Unit if such Partner is entitled to receive
a distribution with respect to a Common Share for which such Unit has been
redeemed or exchanged. It will be the policy of the Partnership, commencing in
1998, to make distributions per Unit that are equal to the per share
distributions made by the General Partner with respect to its Common Shares, and
in any case the per Unit and per share distributions will be equal during the
Partnership Years 1998, 1999, and 2000. The General Partner shall make such
efforts, as it determines in its sole and absolute discretion, to cause the
Partnership to distribute its operating cash flow in a manner that would ensure
that such distributions are treated by the Limited Partners as "operating cash
flow distributions" within the meaning of Regulations Section 1.707-4(b)(2).
5.2 Amounts Withheld. All amounts withheld pursuant to the Code or any
provisions of any state, local or foreign tax law and Section 10.5 with respect
to any allocation, payment or distribution to the General Partner or any Limited
Partners or Assignees shall be treated as amounts distributed to the General
Partner or such Limited Partners or Assignees pursuant to Section 5.1 for all
purposes under this Agreement.
5.3 Distributions Upon Liquidation. Proceeds from any sale or other
disposition of all or substantially all of the assets of the Partnership or a
related series of transactions that, taken together, results in the sale or
other disposition of all or substantially all of the assets of the Partnership
shall be distributed to the Partners in accordance with Section 13.2.
5.4 Distributions in Kind. No Partner has any right to demand and
receive property other than cash. The General Partner may determine, in its sole
and absolute discretion, to make a distribution in kind to the Partners of
Partnership assets, and such assets shall be distributed in such a fashion as to
ensure that the fair market value is distributed and allocated in accordance
with Articles 5 and 6.
5.5 REIT Distribution Requirements. Notwithstanding anything to the
contrary in this Agreement, the General Partner may cause the Partnership to
distribute amounts sufficient to enable the General Partner to pay shareholder
dividends that will allow the General Partner to (i) meet its distribution
requirement for qualification as a REIT as set forth in Section 857(a)(1)of the
Code and (ii) avoid any federal income or excise tax liability imposed by the
Code.
6. ALLOCATIONS
6.1 Allocation of Profit and Loss.
(a) General. Except as otherwise set forth in this Agreement, Profit
and Loss and items of income, gain, expense, or loss of the Partnership for each
fiscal year of the Partnership shall be allocated among the Partners in
accordance with their respective Percentage Interests. The provisions of this
Section 6.1 shall be amended appropriately in the event that the General Partner
causes the Partnership to issue Units with different preferences or redemption
rights.
(b) Nonrecourse Deductions and Minimum Gain Chargeback.
Notwithstanding any provision to the contrary:
(i) any expense of the Partnership that is a "nonrecourse
deduction" within the meaning of Regulations Section 1.704-2(b)(1) shall be
allocated in accordance with the Partners' respective Percentage Interests,
(ii) any expense of the Partnership that is a "partner
nonrecourse deduction" within the meaning of Regulations Section
1.704-2(i)(2) shall be allocated in accordance with Regulations Section
1.704-2(i)(l),
(iii) if there is a net decrease in "partnership minimum gain"
within the meaning of Regulations Section 1.704-2(g)(1) that would subject a
Partner to a "minimum gain chargeback" within the meaning of Regulations
Section 1.704-2(f) for any Partnership taxable year, items of gain and
income shall be allocated among the Partners in accordance with (to the
minimum extent allowable) Regulations Section 1.704-2(f) and the ordering
rules contained in Regulations Section 1.704-2(j), and
(iv) if there is a net decrease within the meaning of
Regulations Section 1.704-2(i)(4) in "partner nonrecourse debt minimum gain"
within the meaning of Regulations Section 1.704-2(i)(5) that would subject a
Partner to a minimum gain chargeback for any Partnership taxable year, items
of gain and income shall be allocated among the Partners in accordance with
(to the minimum extent allowable) Regulations Section 1.704-2(i)(4) and the
ordering rules contained in Regulations Section 1.704-2(j).
A Partner's "interest in partnership profits" for purposes of determining its
share of the nonrecourse liabilities of the Partnership within the meaning of
Regulations Section 1.752-3(a)(3) shall be such Partner's Percentage Interest.
(c) Qualified Income Offset. If a Partner receives in any taxable
year an adjustment, allocation, or distribution described in subparagraphs
(4),(5) or (6) of Regulations Section 1.704(b)(2)(ii)(d) that causes or
increases a negative balance in such Partner's Capital Account that exceeds the
sum of such Partner's share of "partnership minimum gain" and "partner
nonrecourse debt minimum gain," as determined in accordance with Regulations
Sections 1.704-2(g) and 1.704-2(i), such Partner shall be allocated specially
for such taxable year (and, if necessary, later taxable years) items of income
and gain in an amount and manner sufficient to eliminate such negative Capital
Account balance as quickly as possible as provided in Regulations Section
1.704-1(b)(2)(ii)(d).
(d) Capital Account Deficits. Loss shall not be allocated to a
Partner to the extent that such allocation would cause (or increase) a deficit
in such Partner's Capital Account (after reduction to reflect the items
described in Regulations Section 1.704-1(b)(2)(ii)(d)(4), (5) and (6)) to exceed
the sum of such Partner's shares of "partnership minimum gain" (Regulations
Section 1.704-2(g)(1)) and "partner nonrecourse debt minimum gain" (Regulations
Section 1.704-2(i)(5)). Any Loss in excess of that limitation shall be allocated
to the General Partner.
(e) Allocations Upon Changes in Partnership Interests. If a Partner
transfers any part or all of its Partnership Interest or upon changes in the
outstanding Partnership Interests (such as the issuance or redemption of
Partnership Interests), the distributive shares of the various items of Profit
and Loss and other items attributable to those Partnership Interests allocable
among the Partners during such fiscal year of the Partnership shall be allocated
between the transferor and the transferee Partner or between the persons treated
a Partners prior to such event and those treated as Partners after the event as
the General Partner deems appropriate to take into account their varying
interests during that period (which may include interim closings of the books,
prorations of items, using daily, weekly, monthly, or quarterly proration
periods, etc.). The General Partner, in its sole discretion, shall determine the
method or methods to be used to allocate the distributive shares of items
between the Partners. In addition, allocations of items among the Partners may
be changed by agreement between the General Partner and the affected Limited
Partner or Limited Partners, without amendment of this Agreement or consent of
the other Limited Partners.
(f) Definition of Profit and Loss. "Profit" and "Loss" and any items
of income, gain, expense, or loss referred to in this Agreement shall be
determined by the General Partner in accordance with the Partnership's "book"
income computed under federal income tax accounting principles taking into
account Regulations Section 1.704-1(b)(2)(iv) and the effect of any revaluation
of Partnership property in accordance with Regulations Section
1.704-1(b)(2)(iv)(f), except that Profit and Loss shall not include items of
income, gain, expense and loss that are specifically allocated, such as pursuant
to Section 6.1(b) or 6.1(c).
(g) Tax Allocations. All allocations of income, Profit, gain, Loss,
and expense (and all components of those items) for federal income tax purposes
shall be allocated among the Partners in the same manner as such allocations of
"book" income, gain, loss or deduction are allocated pursuant to this Section
6.1, except as otherwise required by Section 704(c) of the Code and Regulations
Section 1.704-1(b)(4). The General Partner shall have the authority to elect the
method to be used by the Partnership for allocating items of income, gain, and
expense as required by Section 704(c) of the Code and such election shall be
binding on all Partners.
(h) Curative Allocation. The allocations set forth in Section
6.1(b), (c) and (d) (the "Regulatory Allocations") are intended to comply with
certain regulatory requirements, including the requirements of Regulations
Section 1.704-1(b) and 1.704-2. Notwithstanding the provisions of Section
6.1(b),(c) and (d), the Regulatory Allocations shall be taken into account in
allocating other items of income, gain, loss and deduction among the Partners so
that, to the extent possible, the net amount of such allocations of other items
and the Regulatory Allocations to each Partner shall be equal to the net amount
that would have been allocated to each such Partner if the Regulatory
Allocations had not occurred. In applying this Section 6.1(h), a Partner's share
of partnership minimum gain and partner nonrecourse debt minimum gain (within
the meaning of Regulations Sections 1.704-2(g) and 1.704-2(i), respectively) at
any point in time shall be treated as an amount of income or gain that has
already been allocated to the Partner.
6.2 Substantial Economic Effect. It is the intent of the Partners that
the allocations of Profit and Loss and items of income, gain, expense and loss
under the Agreement have substantial economic effect (or be consistent with the
Partners' interests in the Partnership in the case of the allocation of losses
attributable to nonrecourse debt) within the meaning of Section 704(b) of the
Code as interpreted by the related Regulations. Article 6 and other relevant
provisions of this Agreement shall be interpreted in a manner consistent with
that intent.
7. MANAGEMENT AND OPERATIONS OF BUSINESS
7.1 Management.
(a) Powers of General Partner. Except as otherwise expressly
provided in this Agreement, all management powers over the business and affairs
of the Partnership are exclusively vested in the General Partner, and no Limited
Partner shall have any right to participate in or exercise control or management
power over the business and affairs of the Partnership. Notwithstanding anything
to the contrary in this Agreement, the General Partner may not be removed by the
Limited Partners. In addition to the powers that are granted to the General
Partner under any other provision of this Agreement, the General Partner shall
have full power and authority to do all things deemed necessary or desirable by
it to conduct the business of the Partnership, to exercise all powers set forth
in Section 3.2 and to effectuate the purposes set forth in Section 3.1,
including, without limitation:
(1) the making of any expenditures, the lending or borrowing of
money (including, without limitation, making prepayments on loans and
borrowing money to permit the Partnership to make distributions to its
Partners in such amounts as will permit the General Partner (so long as the
General Partner qualifies as a REIT) to avoid the payment of any federal
income tax (including, for this purpose, any excise tax pursuant to Section
4981 of the Code) and to make distributions to its shareholders sufficient
to permit the General Partner to maintain REIT status), the assumption or
guarantee of, or other contracting for, indebtedness and other liabilities,
the issuance of evidences of indebtedness (including the securing of same by
mortgage, deed of trust or other lien or encumbrance on the Partnership's
assets) and the incurring of any obligations it deems necessary for the
conduct of the activities of the Partnership; provided, that all such
borrowing, incurrence of debt and prepayments shall be subject to the
limitations set forth in Sections 4.5 and 4.6;
(2) the making of tax, regulatory and other filings, or
rendering of periodic or other reports to governmental or other agencies
having jurisdiction over the business or assets of the Partnership;
(3) the acquisition, disposition, sale, conveyance, mortgage,
pledge, encumbrance, hypothecation, contribution or exchange of any assets
of the Partnership or the merger or other combination of the Partnership
with or into another entity on such terms as the General Partner deems
proper; provided, however, that: (i) no sale, exchange, disposition or other
transfer of any property of the Partnership contributed on January 2, 1997
shall occur prior to December 31, 1998 without the prior written consent of
the General Partner; (ii) the sale of all or substantially all of the assets
of the Partnership and a Business Combination (as defined in Section 8.7(a))
shall require the consent set forth in Section 8.7(b); and (iii) certain
sales of any Designated Property (as defined in Section 8.8) may require the
consent of specified persons as set forth in Section 8.8.
(4) the use of the assets of the Partnership (including, without
limitation, cash on hand) for any purpose consistent with the terms of this
Agreement and on any terms it sees fit, including, without limitation, the
financing of the conduct of the operations of the General Partner, the
Partnership or any of the Partnership's Subsidiaries, the lending of funds
to other Persons (including the Partnership's Subsidiaries) and the
repayment of obligations of the Partnership and its Subsidiaries and any
other Person in which it has an equity investment and the making of capital
contributions to its Subsidiaries, the holding of any real, personal and
mixed property of the Partnership in the name of the Partnership or in the
name of a nominee or trustee (subject to Section 7.11), the creation, by
grant or otherwise, of easements or servitudes, and the performance of any
and all acts necessary or appropriate to the operation of the Partnership
assets including, without limitation, applications for rezoning, objections
to rezoning, constructing, altering, improving, repairing, renovating,
rehabilitating, razing, demolishing or condemning any improvements or
property of the Partnership;
(5) the negotiation, execution, and performance of any
contracts, conveyances or other instruments (including with Affiliates of
the Partnership to the extent provided in Section 7.7) that the General
Partner considers useful or necessary to the conduct of the Partnership's
operations or the implementation of the General Partner's powers under this
Agreement, including, without limitation, the execution and delivery of
leases on behalf of or in the name of the Partnership (including the lease
of Partnership property for any purpose and without limit as to the term of
the lease, whether or not such term (including renewal terms) shall extend
beyond the date of termination of the Partnership and whether or not the
portion so leased is to be occupied by the lessee or, in turn, subleased in
whole or in part to others);
(6) the opening and closing of bank accounts, the investment of
Partnership funds in securities, certificates of deposit and other
instruments, and the distribution of Partnership cash or other Partnership
assets in accordance with this Agreement;
(7) the establishment of one or more divisions of the
Partnership, the selection and dismissal of employees of the Partnership or
the General Partner (including, without limitation, employees having titles
such as "president," "vice president," "secretary" and "treasurer"), and the
engagement and dismissal of agents, outside attorneys, accountants,
engineers, appraisers, consultants, contractors and other professionals on
behalf of the General Partner or the Partnership and the determination of
their compensation and other terms of employment or hiring;
(8) the maintenance of such insurance for the benefit of the
Partnership and the Partners as it deems necessary or appropriate;
(9) the formation of, or acquisition of an interest in, and the
contribution of property to, any further limited or general partnerships,
joint ventures, limited liability companies or other relationships that it
deems desirable (including, without limitation, the acquisition of interests
in, and the contribution of property to, its Subsidiaries and any other
Person in which it has an equity investment from time to time);
(10) the control of any matters affecting the rights and
obligations of the Partnership, including the conduct of litigation and the
incurring of legal expense and the settlement of claims and litigation, and
the indemnification of any Person against liabilities and contingencies to
the extent permitted by law;
(11) the undertaking of any action in connection with the
Partnership's direct or indirect investment in its Subsidiaries or any other
Person (including, without limitation, the contribution or loan of funds by
the Partnership to such Persons);
(12) the determination of the fair market value of any
Partnership property distributed in kind using such reasonable method of
valuation as it may adopt;
(13) the issuance of Partnership Units to any Subsidiary that
may be necessary for such Subsidiary to satisfy such Subsidiary's
obligations under the Option Plans, in exchange for the transfer to the
Partnership by such Subsidiary of the price per Partnership Unit required by
the Option Plans to be paid by Subsidiaries;
(14) the management, operation, leasing, landscaping, repair,
alteration, demolition or improvement of any real property or improvements
owed by the Partnership or any Subsidiary of the Partnership;
(15) the exercise, directly or indirectly, through any
attorney-in-fact acting under a general or limited power of attorney, of any
right, including the right to vote, appurtenant to any asset or investment
held by the Partnership;
(16) the exercise of any of the powers of the General Partner
enumerated in this Agreement on behalf of or in connection with any
Subsidiary of the Partnership or any other Person in which the Partnership
has a direct or indirect interest, or jointly with any such Subsidiary or
other Person;
(17) the enforcement of any rights against any Partner pursuant
to representations, warranties, covenants and indemnities relating to such
Partner's contribution of property or assets to the Partnership;
(18) the exercise of any of the powers of the General Partner
enumerated in this Agreement on behalf of any Person in which the
Partnership does not have an interest pursuant to contractual or other
arrangements with such Person; and
(19) the making, execution and delivery of any and all deeds,
leases, notes, deeds to secure debt, mortgages, deeds of trust, security
agreements, conveyances, contracts, guarantees, warranties, indemnities,
waivers, releases or legal instruments or agreements in writing necessary or
appropriate in the judgment of the General Partner for the accomplishment of
any of the powers of the General Partner enumerated in this Agreement.
(b) No Approval Required for Above Powers. Each of the Limited
Partners agrees that the General Partner is authorized to execute, deliver and
perform the above-mentioned agreements and transactions on behalf of the
Partnership without any further act, approval or vote of the Partners,
notwithstanding any other provision of this Agreement (except as otherwise
specifically provided in paragraph (a)(3) of Section 7.1), the Act or any
applicable law, rule or regulation. The execution, delivery or performance by
the General Partner or the Partnership of any agreement authorized or permitted
under this Agreement shall not constitute a breach by the General Partner of any
duty that the General Partner may owe the Partnership or the Limited Partners or
any other Persons under this Agreement or of any duty stated or implied by law
or equity.
(c) Insurance. The General Partner may cause the Partnership to
obtain and maintain casualty, liability and other insurance on the properties of
the Partnership and liability insurance for the Indemnities under this Agreement
in such amounts as the General Partner, in its sole and absolute discretion,
deems appropriate and reasonable from time to time.
(d) Working Capital Reserves. The General Partner may cause the
Partnership to establish and maintain working capital reserves in such amounts
as the General Partner, in its sole and absolute discretion, deems appropriate
and reasonable from time to time.
(e) 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.
7.2 Restrictions on General Partner's Authority. The General Partner may
not, without the written consent of all of the Limited Partners, take any action
in contravention of this Agreement, including, without limitation:
(a) taking any action that would make it impossible to carry on the
ordinary business of the Partnership, except as otherwise provided in this
Agreement; or
(b) possessing Partnership property, or assigning any rights in
specific Partnership property, for other than a Partnership purpose except as
otherwise provided in this Agreement.
In addition, without the consent of any adversely affected Limited Partner, the
General Partner may not perform any act that would subject a Limited Partner to
liability as a general partner in any jurisdiction or any other liability except
as provided in this Agreement or under the Act.
7.3 Certificate of Limited Partnership. To the extent that such action
is determined by the General Partner to be reasonable and necessary or
appropriate, the General Partner shall file amendments to and restatements of
the Certificate and do all the things to maintain the Partnership as a limited
partnership (or a partnership in which the limited partners have limited
liability) under the laws of the State of California and each other jurisdiction
in which the Partnership may elect to do business or own property. Subject to
the terms of Section 8.5(a)(4) (Rights of Limited Partners to certain business
records), the General Partner shall not be required, before or after filing, to
deliver or mail a copy of the Certificate, as it may be amended or restated from
time to time, to any Limited Partner. The General Partner shall use all
reasonable efforts to cause to be filed such other certificates or documents as
may be reasonable and necessary or appropriate for the formation, continuation,
qualification and operation of a limited partnership (or a partnership in which
the limited partners have limited liability) in the State of California and any
other jurisdiction in which the Partnership may elect to do business or own
property.
7.4 Responsibility for Expenses.
(a) No Compensation. Except as provided in this Section 7.4 and
elsewhere in this Agreement (including the provisions of Articles 5 and 6
regarding distributions, payments and allocations to which it may be entitled),
the General Partner shall not be compensated for its services as general partner
of the Partnership.
(b) Responsibility for Ownership and Operation Expenses. Except as
provided in Section 7.13, the Partnership shall be responsible for and shall pay
all expenses relating to the Partnership's ownership of its assets, and the
operation of, or for the benefit of, the Partnership, and the General Partner
shall be reimbursed on a monthly basis, or such other basis as the General
Partner may determine in its sole and absolute discretion, for all expenses it
incurs relating to the Partnership's ownership of its assets and the operation
of, or for the benefit of, the Partnership. If certain expenses are incurred for
the benefit of the Partnership and other entities, those expenses will be
allocated to the Partnership and the other entities in such a manner as the
General Partner in its sole and absolute discretion deems fair and reasonable.
Such reimbursements shall be in addition to any reimbursement to the General
Partner as a result of indemnification pursuant to Section 7.8. All payments and
reimbursements under this Agreement represent expenses of the Partnership
incurred on its behalf, and not expenses of the General Partner, and shall be so
characterized for federal income tax purposes.
(c) Responsibility for Organization or Issuance Expenses. Except as
provided in Section 7.13, the Partnership shall be responsible for and shall pay
(or shall reimburse the General Partner for) all expenses incurred relating to
the organization of the Partnership (including expenses relating to the issuance
of Units), as well as other costs of capital raising or property acquisition
incurred by the Partnership or General Partner with respect to funds or
properties acquired by the Partnership or by the General Partner for prompt
contribution to the Partnership, all of which expenses are considered by the
Partners to constitute expenses of, and for the benefit of, the Partnership.
7.5 Purchases of Shares by the General Partner. If the General Partner
purchases shares in connection with a share repurchase or similar program or for
the purpose of delivering those shares to satisfy an obligation under any
dividend reinvestment or equity purchase program adopted by the General Partner,
any employee equity purchase plan adopted by the General Partner or any similar
obligation or arrangement undertaken by the General Partner in the future, the
purchase price paid by the General Partner for those shares and any other
expenses incurred by the General Partner in connection with that purchase shall
be considered expenses of the Partnership and shall be reimbursable to the
General Partner, subject to the conditions that: (i) if those shares are
subsequently sold by the General Partner, the General Partner shall pay to the
Partnership any proceeds received by the General Partner for those shares
(provided that a transfer of shares for Partnership Units pursuant to Section
8.6 would not be considered a sale for this purpose); and (ii) if the shares are
not retransferred by the General Partner within thirty (30) days after the
purchase of the shares, the General Partner shall cause the Partnership to
cancel a number of Partnership Units held by the General Partner equal to the
number of shares purchased.
7.6 Outside Activities of the General Partner. The General Partner shall
not directly or indirectly enter into or conduct any business, other than in
connection with the ownership, acquisition and disposition of Partnership
Interests as a General Partner or Limited Partner and the management of the
business of the Partnership, the General Partner's operation as a public
reporting company with securities registered under the Securities Exchange Act
of 1934, as amended, its operation as a REIT, and such activities as are
incidental to those activities. The General Partner shall not own any assets
other than Partnership Interests, the stock of an entity qualifying as a
"qualified REIT subsidiary" under Section 856(i) of the Code, all of the
interests in a limited liability company, debts owed by the Partnership and such
bank accounts or similar instruments as it deems necessary to carry out its
responsibilities contemplated under this Agreement and the Articles of
Incorporation. Notwithstanding the foregoing, the General Partner shall be
permitted to own, directly or through Subsidiaries, interests in Partnership
properties that do not exceed 1% of the economic interest of any property, and
if appropriate for regulatory, tax, or other purposes, the General Partner also
may own, directly or through Subsidiaries, interests in assets that the
Partnership otherwise could acquire, if the General Partner grants to the
Partnership the option to acquire the assets within a period not to exceed three
years in exchange for the number of Partnership Units that would be issued if
the Partnership acquired the assets at the time of acquisition by the General
Partner. The General Partner and Affiliates of the General Partner may acquire
Limited Partnership Interests and shall be entitled to exercise all rights of a
Limited Partner relating to such Limited Partnership Interests. The provisions
of this Section 7.6 shall not be construed to limit the outside activities of
Affiliates of the General Partner.
7.7 Contracts with Affiliates.
(a) Loans. The Partnership may lend or contribute to its
Subsidiaries or other Persons in which it has an equity investment, and such
Persons may borrow funds from the Partnership, on terms and conditions
established in the sole and absolute discretion of the General Partner. The
foregoing authority shall not create any right or benefit in favor of any
Subsidiary or any other Person.
(b) Transfers of Assets. The Partnership may transfer assets to
joint ventures, other partnerships, corporations or other business entities in
which it is or by so transferring the assets becomes a participant upon such
terms and subject to such conditions consistent with this Agreement and
applicable law.
(c) Contracts With General Partner. Except as expressly permitted by
this Agreement, neither the General Partner nor any of its Affiliates shall
sell, transfer or convey any property to, or purchase any property from, the
Partnership, directly or indirectly, except pursuant to transactions that are on
terms that are fair and reasonable and no less favorable to the Partnership than
would be obtained from an unaffiliated third party.
(d) Employee Benefit Plans. The General Partner, in its sole and
absolute discretion and without the approval of the Limited Partners, may
propose and adopt on behalf of the Partnership employee benefit plans funded by
the Partnership for the benefit of employees of the General Partner, the
Partnership, Subsidiaries of the Partnership or any Affiliate of any of them in
respect of services performed, directly or indirectly, for the benefit of the
Partnership, the General Partner, or any of the Partnership's Subsidiaries,
including any such plan that requires the Partnership, the General Partner or
any of the Partnership's Subsidiaries to issue or transfer Partnership Units to
employees.
(e) Conflict Avoidance Arrangements. The General Partner is
expressly authorized to enter into, in the name and on behalf of the
Partnership, a right of first opportunity arrangement, non-competition
agreements and other conflict avoidance agreements with various Affiliates of
the Partnership and the General Partner, on such terms as the General Partner,
in its sole and absolute discretion, believes are advisable.
7.8 Indemnification.
(a) General. Except as provided in Section 7.13, the Partnership
shall indemnify an Indemnitee from and against any and all losses, claims,
damages, liabilities, joint or several, expenses (including legal fees and
expenses), judgments, fines, settlements, and other amounts arising from any and
all claims, demands, actions, suits or proceedings, civil, criminal,
administrative or investigative, that relate to the operations of the
Partnership as set forth in this Agreement in which any Indemnitee may be
involved, or is threatened to be involved, as a party or otherwise, unless it is
established that: (i) the act or omission of the Indemnitee was material to the
matter giving rise to the proceeding and either was committed in bad faith or
was the result of active and deliberate dishonesty; (ii) the Indemnitee actually
received an improper personal benefit in money, property or services; or (iii)
in the case of any criminal proceeding, the Indemnitee had reasonable cause to
believe that the act or omission was unlawful. The termination of any proceeding
by judgment, order or settlement does not create a presumption that the
Indemnitee did not meet the requisite standard of conduct set forth in this
Section 7.8(a). The termination of any proceeding by conviction or upon a plea
of nolo contendere or its equivalent, or an entry of an order of probation prior
to judgment, creates a rebuttable presumption that the Indemnitee did not meet
the required standard of conduct set forth in this Section 7.8(a). Any
indemnification pursuant to this Section 7.8 shall be made only out of the
assets of the Partnership. Notwithstanding the foregoing provisions, the General
Partner shall be entitled to reimbursement by the Partnership for any amounts
paid by it in satisfaction of indemnification obligations owed by the General
Partner to present or former directors of the General Partner, as provided for
in or pursuant to the Articles of Incorporation and By-Laws of the General
Partner or any similar indemnification agreements between the General Partner
and such persons.
(b) In Advance of Final Disposition. Except as provided in Section
7.13, reasonable expenses incurred by an Indemnitee who is a party to a
proceeding may be paid or reimbursed by the Partnership in advance of the final
disposition of the proceeding upon receipt by the Partnership of (a) a written
affirmation by the Indemnitee of the Indemnitee's good faith belief that the
standard of conduct necessary for indemnification by the Partnership as
authorized in this Section 7.8 has been met, and (b) a written undertaking by or
on behalf of the Indemnitee to repay the amount if it shall ultimately be
determined that the standard of conduct was not met.
(c) No Effect on Other Rights. The indemnification provided by this
Section 7.8 shall be in addition to any other rights to which an Indemnitee or
any other Person may be entitled under any agreement, pursuant to any vote of
the Partners, as a matter of law or otherwise, and shall continue as to an
Indemnitee who has ceased to serve in such capacity unless otherwise provided in
a written agreement pursuant to which such Indemnitee is indemnified.
(d) Insurance. The Partnership may purchase and maintain insurance,
on behalf of the Indemnities and such other Persons as the General Partner shall
in its sole and absolute discretion determine, against any liability that may be
asserted against or expenses that may be incurred by such Person in connection
with the Partnership's activities, regardless of whether the Partnership would
have the power to indemnify such Person against such liability under the
provisions of this Agreement or under applicable law.
(e) Employee Benefit Plans. For purposes of this Section 7.8, the
Partnership shall be deemed to have requested an Indemnitee to serve as
fiduciary of an employee benefit plan whenever the performance by it of its
duties to the Partnership also imposes duties on, or otherwise involves services
by, it to the plan or participants or beneficiaries of the plan; excise taxes
assessed on an Indemnitee with respect to an employee benefit plan pursuant to
applicable law shall constitute fines within the meaning of Section 7.8(a); and
actions taken or omitted by the Indemnitee with respect to an employee benefit
plan in the performance of its duties for a purpose reasonably believed by it to
be in the interest of the participants and beneficiaries of the plan shall be
deemed to be for a purpose that is not opposed to the best interests of the
Partnership.
(f) No Personal Liability for Limited Partners. In no event may an
Indemnitee subject the Limited Partners to personal liability by reason of the
indemnification provisions set forth in this Agreement.
(g) Interested Transactions. An Indemnitee shall not be denied
indemnification in whole or in part under this Section 7.8 because the
Indemnitee had an interest in the transaction with respect to which the
indemnification applies if the transaction was otherwise permitted by the terms
of this Agreement.
(h) Binding Effect. The provisions of this Section 7.8 are for the
benefit of the Indemnities, their heirs, successors, assigns and administrators
and shall not be deemed to create any rights for the benefit of any other
Persons.
(i) Effect of Amendment. Any amendment, modification or repeal of
this Section 7.8 or any provision of this Agreement shall be prospective only
and shall not in any way affect the rights of an Indemnitee under this Section
7.8 as in effect immediately prior to such amendment modification or repeal with
respect to claims arising from or relating to matters occurring, in whole or in
part, prior to such amendment, modification or repeal, regardless of when such
claims may arise or be asserted.
7.9 Liability of the General Partner.
(a) General. Notwithstanding anything to the contrary set forth in
this Agreement, the General Partner shall not be liable for monetary damages to
the Partnership, any Partners or any Assignees for losses sustained, liabilities
incurred or benefits not derived as a result of errors in judgment or of any act
or omissions if the General Partner acted in good faith.
(b) No Obligation to Consider Interests of Limited Partners. The
Limited Partners expressly acknowledge that the General Partner is acting on
behalf of the Partnership and the General Partner's shareholders collectively,
that the General Partner is under no obligation to consider the separate
interests of the Limited Partners (including, without limitation, the tax
consequences to Limited Partners or Assignees) in deciding whether to cause the
Partnership to take (or decline to take) any actions that the General Partner
has undertaken in good faith on behalf of the Partnership, including the
disposition of properties of the Partnership, and that the General Partner shall
not be liable for monetary damages for losses sustained, liabilities incurred,
or benefits not derived by Limited Partners in connection with such decisions
provided the General Partner does not violate the terms of any written agreement
between the Partnership and one or more Limited Partners.
(c) Acts of Agents. Subject to its obligations and duties as General
Partner set forth in Section 7.1(a), the General Partner may exercise any of the
powers granted to it by this Agreement and perform any of the duties imposed
upon it under this Agreement either directly or indirectly or by or through its
agents. The General Partner shall not be responsible for any misconduct or
negligence on the part of any such agent appointed by it in good faith.
(d) Effect of Amendment. Any amendment, modification or repeal of
this Section 7.9 or any provision of this Agreement shall be prospective only
and shall not in any way affect the limitations on the General Partner's
liability to the Partnership and the Limited Partners under this Section 7.9 as
in effect immediately prior to such amendment, modification or repeal with
respect to claims arising from or relating to matters occurring, in whole or in
part, prior to such amendment, modification or repeal, regardless of when such
claims may arise or be asserted.
(e) Limitation of Liability of Shareholders, Directors and Officers
of the General Partner. Any obligation or liability of the General Partner that
may arise at any time under this Agreement or any obligation or liability that
may be incurred by it pursuant to any other instrument, transaction or
undertaking contemplated by this Agreement shall be satisfied, if at all, out of
the General Partner's assets only. No such obligation or liability shall be
personally binding upon, nor shall resort for the enforcement of any such
obligation or liability be had to, the property of any of its shareholders,
directors, officers, employees or agents, regardless of whether such obligation
or liability is in the nature of contract, tort or otherwise.
7.10 Other Matters Concerning the General Partner.
(a) Reliance on Documents. The General Partner may rely and shall be
protected in acting or refraining from acting upon any resolution, certificate,
statement, instrument, opinion, report, notice, request, consent, order, bond,
debenture, or other paper or document believed by it to be genuine and to have
been signed or presented by the proper party or parties.
(b) Reliance on Consultants and Advisers. The General Partner may
consult with legal counsel, accountants, appraisers, management consultants,
investment bankers, architects, engineers, environmental consultants, and other
consultants and advisers selected by it, and any act taken or omitted to be
taken in reliance upon the opinion of such Persons as to matters that such
General Partner reasonably believes to be within such Person's professional or
expert competence shall be conclusively presumed to have been done or omitted in
good faith and in accordance with such opinion.
(c) Action Through Officers and Attorneys. The General Partner shall
have the right, in respect of any of its powers or obligations under this
Agreement, to act through any of its duly authorized officers and a duly
appointed attorney or attorneys-in-fact. Each such attorney shall, to the extent
provided by the General Partner in the power of attorney, have full power and
authority to do and perform all and every act and duty that is permitted or
required to be done by the General Partner under this Agreement.
(d) Actions to Maintain REIT Status or Avoid Taxation of General
Partner. Notwithstanding any other provisions of this Agreement or the Act, any
action of the General Partner on behalf of the Partnership or any decision of
the General Partner to refrain from acting on behalf of the Partnership,
undertaken in the good faith belief that such action or omission is necessary or
advisable in order (i) to protect the ability of the General Partner to continue
to qualify as a REIT or (ii) to avoid the General Partner incurring any taxes
under Section 857 or Section 4981 of the Code, is expressly authorized under
this Agreement and is deemed approved by all of the Limited Partners.
7.11 Title to Partnership Assets. Title to Partnership assets, whether
real, personal or mixed and whether tangible or intangible, shall be deemed to
be owned by the Partnership as an entity, and no Partner, individually or
collectively, shall have any ownership interest in such Partnership assets or
any portion of those assets. Title to any or all of the Partnership assets may
be held in the name of the Partnership, the General Partner or one or more
nominees, as the General Partner may determine, including Affiliates of the
General Partner. The General Partner declares and warrants that any Partnership
assets for which legal title is held in the name of the General Partner or any
nominee or Affiliate of the General Partner shall be held by the General Partner
for the use and benefit of the Partnership in accordance with the provisions of
this Agreement; provided, however, that the General Partner shall use its best
efforts to cause beneficial and record title to such assets to be vested in the
Partnership as soon as reasonably practicable. All Partnership assets shall be
recorded as the property of the Partnership in its books and records,
irrespective of the name in which legal title to such Partnership assets is
held.
7.12 Reliance by Third Parties. Notwithstanding anything to the contrary
in this Agreement, any Person dealing with the Partnership shall be entitled to
assume that the General Partner has full power and authority, without consent or
approval of any other Partner or Person, to encumber, sell or otherwise use in
any manner any and all assets of the Partnership and to enter into any contracts
on behalf of the Partnership, and such Person shall be entitled to deal with the
General Partner as if it were the Partnership's sole party in interest, both
legally and beneficially. Each Limited Partner waives any and all defenses or
other remedies that may be available against such Person to contest, negate or
disaffirm any action of the General Partner in connection with any such dealing.
In no event shall any Person dealing with the General Partner or its
representatives be obligated to ascertain that the terms of this Agreement have
been complied with or to inquire into the necessity or expedience of any act or
action of the General Partner or its representatives. Each and every
certificate, document or other instrument executed on behalf of the Partnership
by the General Partner or its representatives shall be conclusive evidence in
favor of any and every Person relying on or claiming under those instruments
that (a) at the time of the execution and delivery of such certificate, document
or instrument, this Agreement was in full force and effect, (b) the Person
executing and delivering such certificate, document or instrument was duly
authorized and empowered to do so for and on behalf of the Partnership and (c)
such certificate, document or instrument was duly executed and delivered in
accordance with the terms and provisions of this Agreement and is binding upon
the Partnership.
7.13 Treatment of and Limitation on Payments to General Partner.
(a) Reimbursement and Indemnification Payments. If and to the extent
any payments to the General Partner pursuant to Sections 7.4 or 7.8 constitute
gross income to the General Partner (as opposed to the repayment of advances
made on behalf of the Partnership), those amounts shall constitute guaranteed
payments within the meaning of Section 707(c) of the Code, and shall be so
treated by the Partnership and all Partners, and shall not be treated as
distributions for purposes of computing the Partners' Capital Accounts.
(b) Limitation on Payments to General Partner. To the extent that
the amount paid or credited to the General Partner or its officers, directors,
employees or agents pursuant to Section 7.4 or Section 7.8 would constitute
gross income of the General Partner that is not described in Sections 856(c)(2)
or 856(c)(3) of the Code (a "GP Payment") then, notwithstanding any other
provisions of this Agreement, the amount of such GP Payment for any fiscal year
shall not exceed the lesser of:
(i) an amount equal to the excess, if any, of
(1) four and eight tenths percent (4.8%) of the General
Partner's total gross income (not including any GP Payments or
gross income from prohibited transactions) for the fiscal year
over
(2) the amount of gross income (within the meaning of
Section 856(c)(2) of the Code) derived by the General Partner
from sources other than those described in subsections (A)
through (H) of Section 856(c)(2) of the Code (taking into
account Section 856(c)(5)(G), but not including the amount of
any GP Payments or gross income from prohibited transactions);
or
(ii) an amount equal to the excess, if any, of
(1) twenty-four and eight tenths percent (24.8%) of the
General Partner's total gross income (not including any GP
Payments or gross income from prohibited transactions) for the
fiscal year over
(2) the amount of gross income (within the meaning of
Section 856(c)(3) of the Code) derived by the General Partner
from sources other than those described in subsections (A)
through (I) of Section 856(c)(3) of the Code (but not including
the amount of any GP Payments or gross income from prohibited
transactions);
Notwithstanding the foregoing, GP Payments in excess of the amounts set forth in
paragraphs (i) and (ii) may be made if and to the extent the General Partner, as
a condition precedent, obtains an opinion of tax counsel that the receipt of
such excess amounts would not adversely affect the General Partner's ability to
qualify as a REIT. To the extent GP Payments may not be made in a year due to
the above limitations, such GP Payments shall carry over and be treated as
arising in the following year(s) (subject again to limitation as set forth above
in those years), for a maximum of seven years (treating amounts payable as first
being paid from the earliest year such amounts were carried over, and the next
succeeding years in chronological order). If any GP Payment is carried over for
such seven-year period and not paid, such amount shall no longer be an
obligation of the Partnership. If a GP Payment is inadvertently made in an
amount in excess of the limitations in this Section 7.13(b), such excess
payments shall be treated as a permitted loan from the Partnership to the
General Partner, to be repaid as soon as practicable following discovery of the
overpayment.
8. RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS
8.1 Limitation of Liability. The Limited Partners shall have no
liability under this Agreement except as expressly provided in this Agreement,
including Section 10.5 (Partnership withholding obligations), or under the Act.
8.2 Management of Business. No Limited Partner or Assignee (other than
the General Partner, any of its Affiliates or any officer, director, employee,
partner, agent or trustee of the General Partner, the Partnership or any of
their Affiliates, in their capacity as such) shall take part in the operation,
management or control (within the meaning of the Act) of the Partnership's
business, transact any business in the Partnership's name or have the power to
sign documents for or otherwise bind the Partnership. The transaction of any
such business by the General Partner, any of its Affiliates or any officer,
director, employee, partner, agent or trustee of the General Partner, the
Partnership or any of their Affiliates, in their capacity as such, shall not
affect, impair or eliminate the limitations on the liability of the Limited
Partners or Assignees under this Agreement.
8.3 Outside Activities of Limited Partners. Subject to any agreements
entered into pursuant to Section 7.7(e) and subject to any other agreements
entered into by a Limited Partner or its Affiliates with the General Partner,
the Partnership or a Subsidiary, the following rights shall govern outside
activities of Limited Partners:
(a) any Limited Partner (other than the General Partner) and any
officer, director, employee, agent, trustee, Affiliate or shareholder of any
Limited Partner shall be entitled to and may have business interests and
engage in business activities in addition to those relating to the
Partnership, including business interests and activities in direct or
indirect competition with the Partnership;
(b) neither the Partnership nor any Partners shall have any rights
by virtue of this Agreement in any business ventures of any Limited Partner
or Assignee;
(c) none of the Limited Partners nor any other Person shall have any
rights by virtue of this Agreement or the partnership relationship
established by this Agreement in any business ventures of any other Person,
other than the General Partner, and such Persons shall have no obligation
pursuant to this Agreement to offer any interest in any such business
ventures to the Partnership, any Limited Partner or any such other Person,
even if such opportunity is of a character that, if presented to the
Partnership, any Limited Partner or such other Person, could be taken by
such Person;
(d) the fact that a Limited Partner may encounter opportunities to
purchase, otherwise acquire, lease, sell or otherwise dispose of real or
personal property and may take advantage of such opportunities or introduce
such opportunities to entities in which it has or has not any interest,
shall not subject such Partner to liability to the Partnership or any of the
other Partners on account of the lost opportunity; and
(e) except as otherwise specifically provided in this Agreement,
nothing contained in this Agreement shall be deemed to prohibit a Limited
Partner or any Affiliate of a Limited Partner from dealing, or otherwise
engaging in business, with Persons transacting business with the Partnership
or from providing services relating to the purchase, sale, rental,
management or operation of real or personal property (including real estate
brokerage services) and receiving compensation for those activities, from
any Persons who have transacted business with the Partnership or other third
parties.
8.4 Priority Among Limited Partners. No Partner (Limited or General) or
Assignee shall have priority over any other Partner (Limited or General) or
Assignee either as to the return of capital contributions or, except to the
extent provided by Article 6 or as permitted by Section 4.2, or otherwise
expressly provided in this Agreement, as to profits, losses or distributions.
8.5 Rights of Limited Partners Relating to the Partnership.
(a) Copies of Business Records. In addition to other rights provided
by this Agreement or by the Act, including rights set forth in Article 14, and
except as limited by Section 8.5(c), each Limited Partner shall have the right,
for a purpose reasonably related to such Limited Partner's interest as a limited
partner in the Partnership, upon written demand with a statement of the purpose
of such demand and at such Limited Partner's own expense:
(1) to obtain a copy of the most recent annual and quarterly
reports filed with the Securities and Exchange Commission by the General
Partner pursuant to the Securities Exchange Act of 1934, as amended;
(2) to obtain a copy of the Partnership's federal, state and
local income tax returns for each Partnership Year;
(3) to obtain a current list of the name and last known
business, residence or mailing address of each Partner;
(4) to obtain a copy of this Agreement and the Certificate and
all amendments, together with executed copies of all powers of attorney
pursuant to which this Agreement, the Certificate and all amendments have
been executed; and
(5) to obtain true and full information regarding the amount of
cash and a description and statement of any other property or services
contributed by each Partner and which each Partner has agreed to contribute
in the future, and the date on which each became a Partner.
(b) Notification of Changes in Unit Adjustment Factor. The
Partnership shall notify each Limited Partner in writing of any change to the
number of Units as a result of a change to the Unit Adjustment Factor within ten
(10) Business Days of the date such change becomes effective.
(c) Confidential Information. Notwithstanding any other provision of
this Section 8.5, the General Partner may keep confidential from the Limited
Partners, for such period of time as the General Partner determines in its sole
and absolute discretion to be reasonable, any 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.
8.6 Redemption Right.
(a) General. Beginning one year after the date on which each Limited
Partner is admitted to the Partnership (except as otherwise contractually agreed
to by the General Partner), each Limited Partner (other than the General
Partner) shall have the right (the "Redemption Right") to cause the Partnership
to purchase on the Specified Redemption Date all or any of such Limited
Partner's Units for cash equal to the Redemption Amount, provided however, that
the General Partner has the authority to establish different payment schedules
to satisfy a Limited Partner's Redemption Right at the time the Units that are
the subject of such Redemption Right are issued. The Redemption Right may be
exercised by a Limited Partner (a "Redeeming Partner") at any time and from time
to time by delivering a Notice of Redemption to the General Partner not less
than ten (10) days prior to such redemption, provided that a Limited Partner may
not exercise the Redemption Right for less than one thousand (1,000) Partnership
Units unless such Redeeming Partner then holds less than one thousand (1,000)
Partnership Units, in which event the Redeeming Partner must exercise the
Redemption Right for all of the Partnership Units held by such Redeeming
Partner. The Assignee of any Limited Partner may exercise the rights of the
Limited Partner pursuant to this Section 8.6, and the Limited Partner shall be
deemed to have assigned those rights to the Assignee and shall be bound by the
exercise of the rights by the Limited Partner's Assignee, and payments shall be
made directly to the Assignee and not to the Limited Partner.
(b) If Delivery of Common Shares Is Prohibited, Etc. Notwithstanding
the provisions of Section 8.6(a) and (d), a Partner shall not be entitled to
exercise the Redemption Right pursuant to Section 8.6(a) if (i) the delivery of
Common Shares to such Partner on the Specified Redemption Date would be
prohibited under the Articles of Incorporation, or (ii) in the opinion of
counsel to the General Partner, there is a significant risk that a delivery of
Common Shares to the Partner would cause the General Partner to no longer
qualify as a REIT, would constitute a violation of applicable securities laws,
or would result in the Partnership no longer being treated as a partnership for
federal income tax purposes. In addition, the consummation of a redemption shall
be subject to the expiration or termination of the applicable waiting period, if
any, under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.
(c) Section 16 Considerations. If a Redemption Right is exercised by
a Redeeming Partner who is a "reporting person" within the meaning of Section
16(a) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
the General Partner will promptly notify such Redeeming Partner as to whether
the Redemption Right will be satisfied with the payment of cash or through the
delivery of Common Shares. If the Partnership or the General Partner elects to
satisfy the Redemption Right with the payment of cash, the Redeeming Partner
shall have the right to either withdraw its exercise of the Redemption Right, or
delay the consummation of the redemption to the extent necessary to avoid a
"short-swing" profit under Section 16(b) of the Exchange Act.
(d) General Partner Assumption of Redemption Right.
(1) Subject to the other provisions of this Section 8.6 and
Section 11.3 (Limited Partners' rights to transfer), beginning on the date one
year after a Limited Partner's admission to the Partnership (except as otherwise
contractually agreed to by the General Partner), the General Partner may assume
directly and satisfy the obligations of the Partnership as to a Limited
Partner's Redemption Right by paying to a Redeeming Partner either the Shares
Amount, or cash equal to the Redemption Amount as of the Specified Redemption
Date, with the choice of consideration to be determined at the sole option of
the General Partner. If the General Partner shall exercise and perform its right
to satisfy the Redemption Right in this manner, the Partnership shall have no
obligation to pay any amount to the Redeeming Partner with respect to such
Redeeming Partner's exercise of the Redemption Right, and each of the Redeeming
Partner, the Partnership, and the General Partner shall treat the transaction
between the General Partner and the Redeeming Partner as a sale of the Redeeming
Partner's Partnership Units to the General Partner for federal and state income
tax purposes. Each Redeeming Partner agrees to execute such documents as the
General Partner may reasonably require in connection with the payment of the
Redemption Amount. The General Partner shall at all times reserve and keep
available out of its authorized but unissued Common Shares, solely for the
purpose of effecting the exchange of Partnership Units for Common Shares, such
number of Common Shares as shall from time to time be sufficient to effect the
conversion of all outstanding Partnership Units, and the exercise or conversion
of all other rights to acquire Common Shares. No Limited Partner shall, solely
by virtue of being the holder of one or more Partnership Units, be deemed to be
a shareholder of or have any other interest in the General Partner.
(2) Each Redeeming Partner agrees to execute such documents as
the General Partner may reasonably require in connection with, and as a
condition of, the issuance of Common Shares upon exercise of the Redemption
Right, including, without limitation, executing and delivering an investment
representation letter with respect to the matters set forth in Section 3.4(c)
and related matters.
8.7 Extraordinary Transactions.
(a) The General Partner may not engage in any merger, consolidation
or other combination with or into another person or sale of all or substantially
all of its assets, or any reclassification, or any recapitalization (other than
stock splits and stock dividends or other events described in the definition of
"Unit Adjustment Factor") or change of outstanding Common Shares (a "Business
Combination"), unless (i) the Limited Partners receive, or have the opportunity
to receive, the same consideration per Unit as holders of Common Shares receive
per Common Share in the transaction (without regard to tax considerations), or
(ii) Limited Partners (other than the General Partner) holding at least 60% of
the Units held by Limited Partners (other than the General Partner) vote to
approve the Business Combination.
(b) In addition to the requirements of Section 8.7(a), the General
Partner will not consummate a Business Combination in which the General Partner
conducts a vote of the shareholders of the General Partner unless the matter is
also submitted to a vote of the Partners. For purposes of the Partnership vote,
(i) each holder of Units (including the General Partner, as to its limited and
general partnership interests) shall be entitled to a number of votes equal to
the total votes to which the holder would have been entitled in the vote of the
General Partner's shareholders if the holder's Units had been exchanged for
Common Shares upon the exercise of a Redemption Right, (ii) in the Partnership
vote, the General Partner shall be deemed to vote all Units it holds
(representing both its general and limited partnership interests) in proportion
to the manner in which the General Partner's shareholders voted (disregarding
shareholders who did not vote), and (iii) the Business Combination shall be
deemed approved by the Partnership if the votes so recorded (the deemed vote
with respect to the General Partner's interest and the actual vote of the other
holders of Units) satisfy the standard for a favorable vote of the shareholders
of the General Partner.
(c) Notwithstanding the provisions of Section 8.7(a) and (b), the
General Partner shall be permitted, without compliance with the requirements of
Section 8.7(a) or (b): (i) to transfer all or part of its partnership interest
to an entity wholly owned by the General Partner, or if the General Partner is
wholly owned by another entity (the "Parent"), to transfer all or part of its
General Partner partnership interest to the Parent, (ii) to merge into any
entity wholly-owned by the General Partner or with any parent entity that wholly
owns the General Partner (in either such case no change shall be made to the
Unit Adjustment Factor as a result of that transaction and the surviving entity
shall be treated as was the General Partner), and (iii) to merge into Public
Storage Properties XI, Inc. (in which case the Unit Adjustment Factor shall be
adjusted as provided with respect to a Successor Entity to take into account the
ratio into which shares of the General Partner will be converted into shares of
Public Storage Properties XI, Inc.).
8.8 Consent of Certain Limited Partners. Each of the properties listed
on Exhibit D (as well as any subsequently acquired property, the federal income
tax basis of which is determined by reference to the federal income tax basis of
a listed property, such as a property acquired in a "like-kind exchange" for a
listed property) is referred to as a "Designated Property." The Partnership may
not sell or otherwise dispose of any Designated Property during the ten year
period commencing on the date of the contribution to the Partnership of that
Designated Property in a transaction that will cause gain recognition to the
contributing partner, without the prior written consent of Public Storage, Inc.
The limitation on disposition of the preceding sentence shall not apply if, at
the time of the disposition, Public Storage, Inc. and its affiliated
partnerships then own less than 30% of the Units owned as of the date of this
Agreement. At the time of any subsequent contributions of property to the
Partnership, the General Partner may agree with the contributor to treat the
property as a Designated Property that may not be sold or disposed of by the
Partnership without the contributor's consent for a period to be agreed upon by
the General Partner and the contributor.
9. BOOKS, RECORDS, ACCOUNTING AND REPORTS
9.1 Records and Accounting. The General Partner shall keep or cause to
be kept at the principal office of the Partnership appropriate books and records
with respect to the Partnership's business, including, without limitation, all
books and records necessary to provide to the Limited Partners any information,
lists and copies of documents required to be provided pursuant to Section 9.3.
Any records maintained by or on behalf of the Partnership in the regular course
of its business may be kept on, or be in the form of, punch cards, magnetic
tape, photographs, micrographics or any other information storage device;
provided that the records so maintained are convertible into clearly legible
written form within a reasonable period of time. The books of the Partnership
shall be maintained for financial purposes on an accrual basis in accordance
with generally accepted accounting principles and for tax reporting purposes on
the accrual basis.
9.2 Fiscal Year. The fiscal year of the Partnership shall be the
calendar year.
9.3 Reports.
(a) Annual Reports. As soon as practicable, but in no event later
than 120 days after the close of each Partnership Year, the General Partner
shall cause to be mailed to each Limited Partner as of the close of the
Partnership Year, an annual report containing financial statements of the
Partnership, or of the General Partner if such statements are prepared solely on
a consolidated basis with the General Partner, for such Partnership Year,
presented in accordance with generally accepted accounting principles, such
statements to be audited by a nationally recognized firm of independent public
accountants selected by the General Partner.
(b) Quarterly Reports. If the General Partner distributes quarterly
reports to its shareholders, as soon as practicable, but in no event later than
60 days after the close of each calendar quarter (except the last calendar
quarter of each year), the General Partner shall cause to be mailed to each
Limited Partner as of the last day of the calendar quarter, a report containing
unaudited financial statements of the Partnership, or of the General Partner, if
such statements are prepared solely on a consolidated basis with the General
Partner, and such other information as may be required by applicable law or
regulation, or as the General Partner determines to be appropriate.
10. TAX MATTERS
10.1 Preparation of Tax Returns. The General Partner shall arrange for
the preparation and timely filing of all returns of Partnership income, gains,
deductions, losses and other items required of the Partnership for federal and
state income tax purposes and shall use all reasonable efforts to furnish,
within 90 days of the close of each taxable year, the tax information reasonably
required by the General Partner and the Limited Partners for federal and state
income tax reporting purposes. The Limited Partners shall promptly provide the
General Partner with such information relating to the Contributed Properties,
including tax basis and other relevant information, as may be reasonably
requested by the General Partner from time to time.
10.2 Tax Elections. Except as otherwise provided in this Agreement, the
General Partner shall, in its sole and absolute discretion, determine whether to
make any available election pursuant to the Code; including without limitation,
the election under Section 754 of the Code in accordance with applicable
regulations. The General Partner shall have the right to seek to revoke any such
election (including, without limitation, the election under Section 754 of the
Code) upon the General Partner's determination in its sole and absolute
discretion that such revocation is in the best interests of the Partners.
10.3 Tax Matters Partner.
(a) General. The General Partner shall be the "tax matters partner"
of the Partnership for federal income tax purposes. Pursuant to Section 6223(c)
of the Code, upon receipt of notice from the IRS of the beginning of an
administrative proceeding with respect to the Partnership, the tax matters
partner shall furnish the IRS with the name, address and profit interest of each
of the Limited Partners; provided, however, that such information is provided to
the Partnership by the Limited Partners. The Limited Partners shall provide such
information to the Partnership as the General Partner shall reasonably request.
(b) Powers. The tax matters partner is authorized, but not required:
(1) to enter into any settlement with the IRS with respect to
any administrative or judicial proceedings for the adjustment of Partnership
items required to be taken into account by a Partner for income tax purposes
(such administrative proceedings being referred to as a "tax audit" and such
judicial proceedings being referred to as "judicial review"), and in the
settlement agreement the tax matters partner may expressly state that such
agreement shall bind all Partners, except that such settlement agreement
shall not bind any Partner (a) who (within the time prescribed pursuant to
the Code and Regulations) files a statement with the IRS providing that the
tax matters partner shall not have the authority to enter into a settlement
agreement on behalf of such Partner or (b) who is a "notice partner" (as
defined in Section 6231 of the Code) or a member of a "notice group" (as
defined in Section 6223(b)(2) of the Code);
(2) in the event that a notice of a final administrative
adjustment at the Partnership level of any item required to be taken into
account by a partner for tax purposes (a "final adjustment") is mailed or
otherwise given to the tax matters partner, to seek judicial review of such
final adjustment, including the filing of a petition for readjustment with
the Tax Court or the United States Claims Court, or the filing of a
complaint for refund with the District Court of the United States for the
district in which the Partnership's principal place of business is located;
(3) to intervene in any action brought by any other Partner for
judicial review of a final adjustment;
(4) to file a request for an administrative adjustment with the
IRS at any time and, if any part of such request is not allowed by the IRS,
to file an appropriate pleading (petition, complaint or other document) for
judicial review with respect to such request;
(5) to enter into an agreement with the IRS to extend the period
for assessing any tax that is attributable to any item required to be taken
into account by a Partner for tax purposes, or an item affected by such
item; and
(6) to take any other action on behalf of the Partners of the
Partnership in connection with any tax audit or judicial review proceeding
to the extent permitted by applicable law or regulations.
(c) Electing Large Partnership. The General Partner, in its sole
discretion, may cause the Partnership to elect to be an "electing large
partnership" under Section 775 of the Code. In that case, the General Partner
shall be the person authorized to act on behalf of the Partnership in any
federal or related state income tax proceeding for purposes of Section 6255 of
the Code and shall be authorized to undertake any and all actions on behalf of
the Partnership to the maximum extent contemplated under Sections 6240 through
6255 of the Code (including, without limitation, to bind the Partnership and all
Partners with respect to any settlement of any proceeding).
(d) Reimbursement. The tax matters partner shall receive no
compensation for its services. All third-party costs and expenses incurred by
the tax matters partner in performing its duties as such (including legal and
accounting fees) shall be borne by the Partnership. Nothing in this Agreement
shall be construed to restrict the Partnership from engaging an accounting firm
and a law firm to assist the tax matters partner in discharging its duties under
this Agreement, so long as the compensation paid by the Partnership for such
services is reasonable. The taking of any action and the incurring of any
expense by the General Partner pursuant to this Section 10.3, except to the
extent required by law, is a matter in the sole and absolute discretion of the
General Partner, and the provisions relating to indemnification of the General
Partner set forth in Section 7.8 shall be fully applicable to the General
Partner in its capacity as such.
10.4 Organization Expenses. The Partnership shall elect to deduct
expenses, if any, incurred by it in organizing the Partnership ratably over a
60-month period as provided in Section 709 of the Code.
10.5 Withholding. Each Limited Partner authorizes the Partnership to
withhold from or pay on behalf of or with respect to such Limited Partner any
amount of federal, state, local, or foreign taxes that the General Partner
determines that the Partnership is required to withhold or pay with respect to
any amount distributable or allocable to such Limited Partner pursuant to this
Agreement, including, without limitation, any taxes required to be withheld or
paid by the Partnership pursuant to Sections 1441, 1442, 1445 or 1446 of the
Code. Any amount paid on behalf of or with respect to a Limited Partner shall
constitute a loan by the Partnership to such Limited Partner, which loan shall
be repaid by such Limited Partner within 15 days after notice from the General
Partner that such payment must be made unless (a) the Partnership withholds such
payment from a distribution that would otherwise be made to the Limited Partner
or (b) the General Partner determines, in its sole and absolute discretion, that
such payment may be satisfied out of the available funds of the Partnership that
would, but for such payment, be distributed to the Limited Partner. Any amounts
withheld pursuant to the foregoing clauses (a) or (b) shall be treated as having
been distributed to such Limited Partner. Each Limited Partner unconditionally
and irrevocably grants to the Partnership a security interest in such Limited
Partner's Partnership Interest to secure such Limited Partner's obligation to
pay to the Partnership any amounts required to be paid pursuant to this Section
10.5. If a Limited Partner fails to pay any amounts owed to the Partnership
pursuant to this Section 10.5 when due, the General Partner may, in its sole and
absolute discretion, elect to make the payment to the Partnership on behalf of
such defaulting Limited Partner, and in such event shall be deemed to have
loaned such amount to such defaulting Limited Partner, and shall succeed to all
rights and remedies of the Partnership as against such defaulting Limited
Partner (including, without limitation, the right to receive distributions
otherwise payable by the Partnership to such defaulting Limited Partner). Any
amounts payable by a Limited Partner under this provision shall bear interest at
the base rate on corporate loans at large United States money center commercial
banks, as published from time to time in the Wall Street Journal, plus four
percentage points (but not higher than the maximum lawful rate) from the date
such amount is due (i.e., 15 days after demand) until such amount is paid in
full. Each Limited Partner shall take such actions as the Partnership or the
General Partner shall request in order to perfect or enforce the security
interest created under this provision.
11. TRANSFERS AND WITHDRAWALS
11.1 Transfer.
(a) Definition. The term "transfer," when used in this Article 11
with respect to a Partnership Unit, shall be deemed to refer to a transaction by
which the General Partner purports to assign its Partnership Interest to another
Person or by which a Limited Partner purports to assign its Limited Partnership
Interest to another Person, and includes a sale, assignment, gift, pledge,
encumbrance, hypothecation, mortgage, exchange or any other disposition by law
or otherwise. The term "transfer" when used in this Article 11 does not include
any redemption or repurchase of Partnership Units by the Partnership from a
Partner or acquisition of Partnership Units from a Limited Partner by the
General Partner pursuant to Section 8.6 or otherwise. No part of the interest of
a Limited Partner shall be subject to the claims of any creditor, any spouse for
alimony or support, or to legal process, and may not be voluntarily or
involuntarily alienated or encumbered except as may be specifically provided for
in this Agreement.
(b) Requirements. No Partnership Interest shall be transferred, in
whole or in part, except in accordance with the terms and conditions set forth
in this Article 11. Any transfer or purported transfer of a Partnership Interest
not made in accordance with this Article 11 shall be null and void.
11.2 Transfer of General Partner's Partnership Interest.
(a) General. The General Partner may not withdraw as a General
Partner or transfer its General Partnership Interest except in connection with a
transaction described in Section 8.7.
(b) Transfer to Partnership. The General Partner may transfer
Limited Partnership Interests held by it to the Partnership.
11.3 Limited Partners' Rights to Transfer.
(a) General. Except as provided in this Agreement, a Limited Partner
may not transfer its Partnership Interest without the prior written consent of
the General Partner, which consent may be given or withheld by the General
Partner in its sole and absolute discretion. Notwithstanding the foregoing,
subject to the provisions of subsections (d), (e), (f) and (g) of this Section
11.3, and Sections 11.4 and 11.6, a Limited Partner may, without the prior
written consent of the General Partner
(i) transfer all or any portion of its Partnership Interest to
the General Partner,
(ii) transfer all or any portion of its Partnership Interest to
an Affiliate, another original Limited Partner or to an "Immediate Family"
member (i.e., as to any natural Person, such natural Person's spouse,
parents, descendants, nephews, nieces, brothers and sisters),
(iii) if such Limited Partner is a natural person, transfer all
or any portion of his or her Partnership Interest upon his or her death to
such Limited Partner's estate, executor, administrator or personal
representative or to such Limited Partner's beneficiaries pursuant to a
devise or bequest or by the laws of descent and distribution or to a trust
of which such Limited Partner is a settlor or co-settlor with a member of
his or her Immediate Family and the beneficiaries of which include no Person
other than such Limited Partner and/or such Limited Partner's Immediate
Family,
(iv) transfer all or any portion of its Partnership Interest
pursuant to the exercise of the Redemption Right,
(v) pledge all or any portion of its Partnership Interest to a
lending institution, that is not an Affiliate of such Limited Partner, as
collateral or security for a bona fide loan or other extension of credit,
and transfer such pledged Partnership Interest to such lending institution
in connection with the exercise of remedies under such loan or extension or
credit, and
(vi) if such Limited Partner is a corporation, partnership or
other business entity, transfer all or any portion of its Partnership
Interest to one or more entities that are wholly owned and controlled by
such Limited Partner or by distributing Partnership Interests in a
liquidation, winding up or otherwise without consideration to the equity
owners of such corporation, partnership or business entity.
In order to effect any transfer, the Limited Partner must deliver to the General
Partner a duly executed copy of the instrument making such transfer and such
instrument must evidence the written acceptance by the assignee of, and
compliance with, all of the terms and conditions of this Agreement and represent
that such assignment was made in accordance with all applicable laws and
regulations.
(b) General Partner Right Of First Refusal. A Partner shall give to
the General Partner written notice of any proposed transfer that is not
otherwise permitted pursuant to Section 11.3(a) above, which notice shall state
(i) the identity of the proposed transferee, and (ii) the amount and type of
consideration proposed to be received for the transferred Partnership Units. The
General Partner shall have ten (10) days within which to give the transferring
Partner notice of its election to acquire the Partnership Units on the proposed
terms. If the General Partner does not so elect, the transferring Partner may
transfer such Partnership Units to a third party, on economic terms no more
favorable to the transferee than the proposed terms, subject to the other
conditions of this Section 11.3.
(c) Assumption of Obligations. It is a condition to any transfer
otherwise permitted under this Agreement (excluding Pledges of a Partnership
Interest, but including any transfer of the pledged Partnership Interest,
whether to the secured party or otherwise, pursuant to the secured party's
exercise of its remedies under such Pledge or the related loan or extension of
credit) that the transferee assumes by operation of law or express agreement all
of the obligations of the transferor Limited Partner under this Agreement with
respect to such transferred Partnership Interest and no such transfer (other
than pursuant to a statutory merger or consolidation in which all obligations
and liabilities of the transferor Partner are assumed by a successor corporation
by operation of law) shall relieve the transferor Partner of its obligations
under this Agreement without the approval of the General Partner, in its
reasonable discretion. Notwithstanding the foregoing, any transferee of any
transferred Partnership Interest shall be subject to any and all ownership
limitations contained in the Articles of Incorporation. Any transferee, whether
or not admitted as a Substituted Limited Partner, shall take subject to the
obligations of the transferor under this Agreement. Unless admitted as a
Substitute Limited Partner, no transferee, whether by a voluntary transfer, by
operation of law or otherwise, shall have rights under this Agreement, other
than the rights of an Assignee as provided in Section 11.5.
(d) Incapacitated Limited Partners. If a Limited Partner is subject
to Incapacity, the executor, administrator, trustee, committee, guardian,
conservator or receiver of such Limited Partner's estate shall have all the
rights of a Limited Partner, but not more rights than those enjoyed by other
Limited Partners for the purpose of settling or managing the estate and such
power as the Incapacitated Limited Partner possessed to transfer all or any part
of his or her interest in the Partnership. The Incapacity of a Limited Partner,
in and of itself, shall not dissolve or terminate the Partnership.
(e) Transfers Contrary to Securities Laws. The General Partner may
prohibit any transfer otherwise permitted under Section 11.3 by a Limited
Partner of its Partnership Units if, in the opinion of legal counsel to the
Partnership, such transfer would require filing of a registration statement
under the Securities Act or would otherwise violate any federal or state
securities laws or regulations applicable to the Partnership or the Partnership
Units.
(f) Transfers Affecting Tax Status. No transfer by a Limited Partner
of its Partnership Units (or any economic or other interest, right or attribute)
may be made to any Person, including a redemption or exchange pursuant to
Section 8.6, if (i) in the opinion of legal counsel for the Partnership, it
would cause a termination of the Partnership for federal or state income tax
purposes that the General Partner believes would have a material adverse effect
or result in the Partnership being treated for federal income tax purposes as an
association taxable as a corporation, or (ii) such transfer is effectuated
through an "established securities market" or a "secondary market (or the
substantial equivalent)" within the meaning of Section 7704 of the Code.
Notwithstanding anything to the contrary in this Agreement, no interests in the
Partnership shall be issued in a transaction that is (or transactions that are)
registered or required to be registered under the Securities Act.
(g) Transfers to Holders of Nonrecourse Liabilities. No transfer or
pledge of any Partnership Units may be made to a lender to the Partnership or
any Person who is related (within the meaning of Section 1.752-4(b) of the
Regulations) to any lender to the Partnership whose loan constitutes a
"nonrecourse liability" (within the meaning of Section 1.752-1(a)(2) of the
Regulations) without the consent of the General Partner, in its sole and
absolute discretion, provided that as a condition to any such consent the lender
will be required to enter into an arrangement with the Partnership and the
General Partner to exchange or redeem for the Redemption Amount any Partnership
Units that such lender or related person owns or would acquire upon foreclosure
of a security interest simultaneously with the time at which such lender would
be deemed to be a partner in the Partnership for purposes of allocating
liabilities to such lender under Section 752 of the Code.
(h) 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 (including a transfer upon exercise of
the Redemption Right) be made without the consent of the General Partner in its
sole and absolute discretion:
(i) to any person or entity who lacks the legal right, power or
capacity to own a Partnership Interest;
(ii) in violation of applicable law;
(iii) of any component portion of a Partnership Interest, such
as the Capital Account, or rights to distributions, separate and apart from
all other components of a Partnership Interest,
(iv) in the event such transfer adversely affects the General
Partner's ability to qualify as a REIT or could subject the General Partner
to any additional taxes under Section 857 or Section 4981 of the Code;
(v) if such transfer would cause the Partnership to become, with
respect to any employee benefit plan subject to Title I of ERISA, a
"party-in-interest" (as defined in Section 3(14) of ERISA) or a
"disqualified person" (as defined in Section 4975(c) of the Code);
(vi) if such transfer would, in the opinion of counsel to the
Partnership, cause any portion of the assets of the Partnership to
constitute assets of any employee benefit plan pursuant to Department of
Labor Regulations Section 2510.2-101; or
(vii) if such transfer subjects the Partnership to regulation
under the Investment Partnership Act of 1940, the Investment Advisors Act of
1940 or the Employee Retirement Income Security Act of 1974, each as
amended.
11.4 Substituted Limited Partners.
(a) Consent of General Partner Required. No Limited Partner shall
have the right to substitute a transferee as a Limited Partner in its place
without the prior written consent of the General Partner, which consent may be
given or withheld by the General Partner in its sole and absolute discretion.
The General Partner's failure or refusal to permit a transferee of any such
interests to become a Substituted Limited Partner shall not give rise to any
cause of action against the Partnership or any Partner.
(b) Rights and Duties of Substituted Limited Partners. A transferee
who has been admitted as a Substituted Limited Partner in accordance with this
Article 11 shall have all the rights and powers and be subject to all the
restrictions and liabilities of a Limited Partner under this Agreement.
(c) Amendment of Exhibit A. Upon the admission of a Substituted
Limited Partner, the General Partner shall amend Exhibit A to reflect the name,
address, number of Partnership Units, and Percentage Interest of such
Substituted Limited Partner and to eliminate or adjust, if necessary, the name,
address and interest of the predecessor of such Substituted Limited Partner.
11.5 Assignees. If the General Partner, in its sole and absolute
discretion, does not consent to the admission of any permitted transferee under
Section 11.4 as a Substituted Limited Partner, such transferee shall be
considered an Assignee for purposes of this Agreement. An Assignee shall be
entitled to all the rights of an assignee of a limited partnership interest
under the Act, including the right to receive distributions from the Partnership
and the share of Profit, Loss, and gain attributable to the Partnership Units
assigned to such transferee, but shall not be deemed to be an owner of
Partnership Units for any other purpose under this Agreement, and shall not be
entitled to vote such Partnership Units in any matter presented to the Limited
Partners for a vote (such vote remaining with the transferor Limited Partner).
If any such transferee desires to make a further assignment of any such
Partnership Units, such transferee shall be subject to all the provisions of
this Article 11 to the same extent and in the same manner as any Limited Partner
desiring to make an assignment of Partnership Units.
11.6 General Provisions.
(a) Withdrawal of Limited Partner. No Limited Partner may withdraw
from the Partnership other than as a result of a permitted transfer of all of
such Limited Partner's Partnership Units in accordance with this Article 11 or
pursuant to a redemption of all of its Partnership Units upon exercise of the
Redemption Right.
(b) Transfer of All Partnership Units by Limited Partner. Any
Limited Partner who shall transfer all of its Partnership Units in a transfer
permitted pursuant to this Article 11 or pursuant to the Redemption Right shall
cease to be a Limited Partner, except as otherwise provided in Section 11.5.
(c) Timing of Transfers. Transfers pursuant to this Article 11 may
only be made on the first day of a fiscal quarter of the Partnership, unless the
General Partner otherwise agrees.
12. ADMISSION OF PARTNERS
12.1 Admission of Successor General Partner. A successor to all of the
General Partner's General Partnership Interest pursuant to Section 8.7 who is
proposed to be admitted as a successor General Partner shall be admitted to the
Partnership as the General Partner, effective upon such transfer, provided that,
in the case of transactions other than those described in Section 8.7(c),
Limited Partners representing a majority of the Percentage Interests (including
Limited Partnership Interests held by the General Partner) vote to admit such
person as successor General Partner, which votes shall be cast by such Limited
Partners in their sole and absolute discretion. Provided such vote of the
Limited Partners is obtained, any such transferee shall carry on the business of
the Partnership without dissolution. In each case, the admission shall be
subject to the successor General Partner executing and delivering to the
Partnership an acceptance of all of the terms and conditions of this Agreement
and such other documents or instruments as may be required to effect the
admission.
12.2 Admission of Additional Limited Partners.
(a) General. A Person who makes a capital contribution to the
Partnership in accordance with this Agreement or who exercises an option to
receive Partnership Units shall be admitted to the Partnership as an Additional
Limited Partner only upon furnishing to the General Partner (a) evidence of
acceptance in form satisfactory to the General Partner of all of the terms and
conditions of this Agreement, including, without limitation, the power of
attorney granted in Article 16 and (b) such other documents or instruments as
may be required in the discretion of the General Partner in order to effect such
Person's admission as an Additional Limited Partner.
(b) Consent of General Partner Required. Notwithstanding anything to
the contrary in this Section 12.2, no Person shall be admitted as an Additional
Limited Partner without the consent of the General Partner, which consent may be
given or withheld in the General Partner's sole and absolute discretion. The
admission of any Person as an Additional Limited Partner shall become effective
on the date upon which the name of such Person is recorded on the books and
records of the Partnership, following the consent of the General Partner to such
admission.
12.3 Amendment of Agreement and Certificate. For the admission to the
Partnership of any Partner, the General Partner shall take all steps necessary
and appropriate under the Act to amend the records of the Partnership and, if
necessary, to prepare as soon as practical an amendment of this Agreement
(including an amendment of Exhibit A) and, if required by law, shall prepare and
file an amendment to the Certificate and may for this purpose exercise the power
of attorney granted pursuant to Article 16.
13. DISSOLUTION AND LIQUIDATION
13.1 Dissolution. The Partnership shall not be dissolved by the
admission of Substituted Limited Partners or Additional Limited Partners or by
the admission of a successor General Partner in accordance with the terms of
this Agreement. The Partnership shall dissolve, and its affairs shall be wound
up, upon the first to occur of any of the following ("Events of Dissolution"):
(a) the expiration of the Partnership's term as provided in Section
2.4;
(b) an event of withdrawal of the General Partner, as defined in the
Act, unless, within 90 days after the withdrawal, remaining Partners holding a
majority of the Units agree in writing to continue the business of the
Partnership and to the appointment, effective as of the date of withdrawal, of a
substitute General Partner;
(c) from and after the date of this Agreement through December 31,
2056, an election to dissolve the Partnership made by the General Partner with
the consent of the holders of a majority of the Percentage Interests (including
Limited Partnership Interests held by the General Partner), and on or after
January 1, 2056, an election to dissolve the Partnership made by the General
Partner, in its sole and absolute discretion;
(d) entry of a decree of judicial dissolution of the Partnership
pursuant to the provisions of the Act;
(e) the sale of all or substantially all of the assets and
properties of the Partnership;
(f) the merger or other combination of the Partnership with or into
another entity; or
(g) the General Partner --
(1) makes an assignment for the benefit of creditors;
(2) files a voluntary petition in bankruptcy;
(3) is adjudged a bankrupt or insolvent, or has entered against
it an order for relief in any bankruptcy or insolvency proceeding;
(4) files a petition or answer seeking for itself any
reorganization, arrangements, composition, readjustment, liquidation,
dissolution or similar relief under any statute, law or regulation;
(5) files an answer or other pleading admitting or failing to
contest the material allegations of a petition filed against it in any
proceeding of this nature; or
(6) seeks, consents to or acquiesces in the appointment of a
trustee, receiver or liquidator of the General Partner or of all or any
substantial part of its properties.
13.2 Winding Up.
(a) General. Upon the occurrence of an Event of Dissolution, the
Partnership shall continue solely for the purposes of winding up its affairs in
an orderly manner, liquidating its assets, and satisfying the claims of its
creditors and Partners. No Partner shall take any action that is inconsistent
with, or not necessary to or appropriate for, the winding up of the
Partnership's business and affairs. The General Partner (or, in the event there
is no remaining General Partner, any Person elected by a majority in interest of
the Limited Partners (the "Liquidator")) shall be responsible for overseeing the
winding up and dissolution of the Partnership and shall take full account of the
Partnership's liabilities and property and the Partnership property shall be
liquidated as promptly as is consistent with obtaining the fair value of the
property, and the proceeds shall be applied and distributed in the following
order:
(1) First, to the payment and discharge of all of the
Partnership's debts and liabilities to creditors other than the Partners;
(2) Second, to the payment and discharge of or provision for all
of the Partnership's debts and liabilities to the General Partner;
(3) Third, to the payment and discharge of all of the
Partnership's debt and liabilities to the other Partners, pro rata in
accordance with amounts owed to each such Partner; and
(4) The balance, if any, to the General Partner and Limited
Partners in accordance with their Capital Accounts, after giving effect to
all contributions, distributions, and allocations for all periods.
The General Partner shall not receive any additional compensation
for any services performed pursuant to this Article 13, other than reimbursement
of its expenses.
(b) Where Immediate Sale of Partnership's Assets Impractical.
Notwithstanding the provisions of Section 13.2(a) that require liquidation of
the assets of the Partnership, but subject to the order of priorities set forth
in that provision, if prior to or upon dissolution of the Partnership the
Liquidator determines that an immediate sale of part or all of the Partnership's
assets would be impractical or would cause undue loss to the Partners, the
Liquidator may, in its sole and absolute discretion, defer for a reasonable time
the liquidation of any assets except those necessary to satisfy liabilities of
the Partnership (including to those Partners as creditors) or, with the consent
of the Partners holding a majority of the Partnership Units, distribute to the
Partners, in lieu of cash, as tenants in common and in accordance with the
provisions of Section 13.2(a), undivided interests in such Partnership assets as
the Liquidator deems not suitable for liquidation. Any such distributions in
kind shall be made only if, in the good faith judgment of the Liquidator, such
distributions in kind are in the best interest of the Partners, and shall be
subject to such conditions relating to the disposition and management of such
properties as the Liquidator deems reasonable and equitable and to any
agreements governing the operation of such properties at such time. The
Liquidator shall determine the fair market value of any property distributed in
kind using such reasonable method of valuation as it may adopt.
13.3 Liquidation. Subject to Section 13.4, in the event the Partnership
is "liquidated" within the meaning of Regulations Section 1.704-1(b)(2)(ii)(g),
distributions shall be made pursuant to this Article 13 to the General Partner
and Limited Partners who have positive Capital Accounts in compliance with
Regulations Section 1.704-1(b)(2)(ii)(b)(2) (including any timing requirements
of those provisions). In the discretion of the General Partner, a pro rata
portion of the distributions that would otherwise be made to the General Partner
and Limited Partners pursuant to this Article 13 may be: (a) distributed to a
liquidating trust established for the benefit of the General Partner and Limited
Partners for the purpose of liquidating Partnership assets, collecting amounts
owed to the Partnership, and paying any contingent or unforeseen liabilities or
obligations of the Partnership or of the General Partner arising out of or in
connection with the Partnership (the assets of any such trust shall be
distributed to the General Partner and Limited Partners from time to time, in
the reasonable discretion of the General Partner, in the same proportions as the
amount distributed to such trust by the Partnership would otherwise have been
distributed to the General Partner and Limited Partners pursuant to this
Agreement); or (b) withheld to provide a reasonable reserve for Partnership
liabilities (contingent or otherwise) and to reflect the unrealized portion of
any installment obligations owed to the Partnership, provided that such withheld
amounts shall be distributed to the General Partner and Limited Partners as soon
as practicable.
13.4 Deemed Distribution and Recontribution. Notwithstanding any other
provision of this Article 13, in the event the Partnership is liquidated within
the meaning of Regulations Section 1.704-1(b)(2)(ii)(g) but no Event of
Dissolution has occurred, the Partnership's property shall not be liquidated,
the Partnership's liabilities shall not be paid or discharged, and the
Partnership's affairs shall not be wound up.
13.5 Rights of Limited Partners. Except as specifically provided in this
Agreement, each Limited Partner shall look solely to the assets of the
Partnership for the return of its capital contribution and shall have no right
or power to demand or receive property other than cash from the Partnership.
Except as specifically provided in this Agreement, no Limited Partner shall have
priority over any other Limited Partner as to the return of its capital
contributions, distributions, or allocations.
13.6 Notice of Dissolution. If an Event of Dissolution or an event
occurs that would, but for provisions of Section 13.1, result in a dissolution
of the Partnership, the General Partner shall, within 30 days of the event,
provide written notice of the event to each of the Partners and to all other
parties with whom the Partnership regularly conducts business (as determined in
the sole and absolute discretion of the General Partner) and shall publish
notice of the event in a newspaper of general circulation in each place in which
the Partnership regularly conducts business (as determined in the sole and
absolute discretion of the General Partner).
13.7 Cancellation of Certificate of Limited Partnership. Upon the
completion of the liquidation of the Partnership as provided in Section 13.2,
the Partnership shall be terminated and the Certificate and all qualifications
of the Partnership as a foreign limited partnership in jurisdictions other than
the State of California shall be canceled and such other actions as may be
necessary to terminate the Partnership shall be taken.
13.8 Reasonable Time for Winding-Up. A reasonable time shall be allowed
for the orderly winding-up of the business and affairs of the Partnership and
the liquidation of its assets pursuant to Section 13.2, in order to minimize any
losses otherwise attendant upon such winding-up, and the provisions of this
Agreement shall remain in effect between the Partners during the period of
liquidation.
14. AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS
14.1 Amendments.
(a) General. Amendments to this Agreement may be proposed by the
General Partner or by any Limited Partners holding 25 percent or more of the
Partnership Units. Following such proposal, the General Partner shall submit any
proposed amendment to the Limited Partners. The General Partner shall seek the
written vote of the Partners on the proposed amendment or shall call a meeting
to vote on the proposal and to transact any other business that it may deem
appropriate. For purposes of obtaining a written vote, the General Partner may
establish a Partnership Record Date and require a response within a reasonable
specified time, but not less than 15 days, and failure to respond in such time
period shall constitute a vote that is consistent with the General Partner's
recommendation with respect to the proposal. Except as provided in Section
14.1(b) or 14.1(c), a proposed amendment shall be adopted and be effective as an
amendment to this Agreement if it is approved by the General Partner and it
receives the consent of a majority of the Partnership Units held by the Limited
Partners (including Partnership Units held by the General Partner in its
capacity as a Limited Partner).
(b) General Partner's Power to Amend. Notwithstanding Section
14.1(a), the General Partner shall have the power, without the consent of the
Limited Partners, to amend this Agreement as may be required to facilitate or
implement any of the following purposes:
(1) to add to the obligations of the General Partner or
surrender any right or power granted to the General Partner or any Affiliate
of the General Partner for the benefit of the Limited Partners;
(2) to reflect the admission, substitution, termination, or
withdrawal of Partners in accordance with this Agreement;
(3) to set forth the rights, powers, duties, and preferences of
the holders of any additional Partnership Interests issued pursuant to
Section 4.2(b);
(4) to reflect a change that does not adversely affect the
Limited Partners in any material respect, or to cure any ambiguity, correct
or supplement any provision in this Agreement not inconsistent with law or
with other provisions, or make other changes with respect to matters arising
under this Agreement that will not be inconsistent with law or with the
provisions of this Agreement;
(5) to satisfy any requirements, conditions, or guidelines
contained in any order, directive, opinion, ruling or regulation of a
federal or state agency or contained in federal or state law; and
(6) to reflect such changes as are reasonably necessary for the
General Partner to maintain its status as a REIT.
The General Partner will notify the Limited Partners when any
material action under this Section 14.1(b) is taken in the next regular
communication to the Limited Partners.
(c) Consent of Adversely Affected Partner Required. Notwithstanding
Section 14.1(a), this Agreement shall not be amended without the consent of each
Partner adversely affected if such amendment would:
(1) convert a Limited Partner's interest in the Partnership into
a general partner's interest,
(2) modify the limited liability of a Limited Partner,
(3) alter rights of the Partner to receive distributions
pursuant to Article 5, or the allocations specified in Article 6 (except as
permitted pursuant to Section 4.2 and Section 14.1(b)(3)),
(4) alter or modify the Redemption Right or the Redemption
Amount as set forth in Section 8.6 and related definitions,
(5) cause the termination of the Partnership prior to the time
set forth in Sections 2.5 or 13.1,
(6) affect the operation of the Unit Adjustment Factor in a
manner adverse to the Limited Partners,
(7) impose on the Limited Partners any obligation to make
additional capital contributions to the Partnership, or
(8) amend this Section 14.1(c).
Further, no amendment may alter the restrictions of the General Partner's
authority set forth in Section 7.2 without the consent specified in that
Section.
14.2 Meetings of the Partners.
(a) General. Meetings of the Partners may be called by the General
Partner and shall be called upon the receipt by the General Partner of a written
request by Limited Partners holding 25 percent or more of the Partnership Units.
The call shall state the nature of the business to be transacted. Notice of any
such meeting shall be given to all Partners not less than seven days nor more
than 30 days prior to the date of such meeting. Partners may vote in person or
by proxy at such meeting. Whenever the vote or consent of Partners is permitted
or required under this Agreement, such vote or consent may be given at a meeting
of Partners or may be given in accordance with the procedure prescribed in
Section 14.1. Except as otherwise expressly provided in this Agreement, the
consent of holders of a majority of the Percentage Interests (including Limited
Partnership Interests held by the General Partner) shall control.
(b) Action By Written Consent. Any action required or permitted to
be taken at a meeting of the Partners may be taken without a meeting if a
written consent setting forth the action so taken is signed by a majority of the
Percentage Interests of the Partners (or such other percentage as is expressly
required by this Agreement for such action to be taken at a meeting). Such
consent may be in one instrument or in several instruments, and shall have the
same force and effect as a vote of a majority of the Percentage Interests of the
Partners (or such other percentage as is expressly required by this Agreement
for such action to be taken at a meeting). Such consent shall be filed with the
General Partner. An action so taken shall be deemed to have been taken at a
meeting held on the effective date so certified.
(c) Proxies. Each Limited Partner may authorize any Person or
Persons to act for him by proxy on all matters in which a Limited Partner is
entitled to participate, including waiving notice of any meeting, or voting or
participating at a meeting. Every proxy must be signed by the Limited Partner or
its attorney-in-fact. No proxy shall be valid after the expiration of 11 months
from the date of the proxy unless otherwise provided in the proxy. Every proxy
shall, unless otherwise specifically provided in the proxy, be revocable at the
pleasure of the Limited Partner executing it.
(d) Conduct of Meeting. Each meeting of Partners shall be conducted
by the General Partner or such other Person as the General Partner may appoint
pursuant to such rules for the conduct of the meeting as the General Partner or
such other Person deems appropriate, including establishment of a Partnership
Record Date for such meeting.
15. GENERAL PROVISIONS
15.1 Addresses and Notice. All notices and demands under this Agreement
shall be in writing, and may be either delivered personally (which shall include
deliveries by courier) by telefax, telex or other wire transmission (with
request for evidence of receipt in a manner appropriate with respect to
communications of that type, provided that a confirmation copy is concurrently
sent by a nationally recognized express courier for overnight delivery) or
mailed, postage prepaid, by certified or registered mail, return receipt
requested, directed to the parties at their respective addresses set forth on
Exhibit A, as it may be amended from time to time, and, if to the Partnership,
such notices and demands sent in the foregoing manner must be delivered at its
principal place of business set forth above. Notices delivered personally or by
telefax, telex or other wire transmission shall be effective on the first
Business Day following the date of delivery or transmission. Notices that are
mailed shall be deemed to have been received three (3) Business Days following
the date so mailed. Any party may designate a different address to which notices
and demands shall subsequently be directed by written notice given in the same
manner and directed to the Partnership at its office.
15.2 Titles and Captions. All article or Section titles or captions in
this Agreement are for convenience only. They shall not be deemed part of this
Agreement and in no way define, limit, extend or describe the scope or intent of
any provisions of this Agreement. Except as specifically provided otherwise,
references to "Articles" and "Sections" are to Articles and Sections of this
Agreement.
15.3 Pronouns and Plurals. Whenever the context may require, any pronoun
used in this Agreement shall include the corresponding masculine, feminine or
neuter forms, and the singular form of nouns, pronouns and verbs shall include
the plural and vice versa.
15.4 Further Action. The parties shall execute and deliver all
documents, provide all information and take or refrain from taking action as may
be necessary or appropriate to achieve the purposes of this Agreement.
15.5 Binding Effect. This Agreement shall be binding upon and inure to
the benefit of the parties and their heirs, executors, administrators,
successors, legal representatives and permitted assigns.
15.6 Waiver of Partition. The Partners agree that the Partnership
properties are not and will not be suitable for partition. Accordingly, each of
the Partners irrevocably waives any and all rights (if any) that it may have to
maintain any action for partition of any of the Partnership properties.
15.7 Entire Agreement. This Agreement constitutes the entire agreement
among the parties with respect to the matters contained in this Agreement; it
supersedes any prior agreements or understandings among them and it may not be
modified or amended in any manner other than pursuant to Article 14.
15.8 Securities Law Provisions. The Partnership Units have not been
registered under the federal or state securities laws of any state and,
therefore, may not be resold unless appropriate federal and state securities
laws, as well as the provisions of Article 11, have been complied with.
15.9 Remedies Not Exclusive. Any remedies contained in this Agreement
for breaches of obligations under this Agreement shall not be deemed to be
exclusive and shall not impair the right of any party to exercise any other
right or remedy, whether for damages, injunction or otherwise.
15.10 Time. Time is of the essence of this Agreement.
15.11 Creditors. None of the provisions of this Agreement shall be for
the benefit of, or shall be enforceable by, any creditor of the Partnership.
15.12 Waiver. No failure by any party to insist upon the strict
performance of any covenant, duty, agreement or condition of this Agreement or
to exercise any right or remedy consequent upon a breach of this Agreement shall
constitute waiver of any such breach or any other covenant, duty, agreement or
condition.
15.13 Execution Counterparts. This Agreement may be executed in
counterparts, all of which together shall constitute one agreement binding on
all the parties to this Agreement, notwithstanding that all such parties are not
signatories to the original or the same counterpart. Each party shall become
bound by this Agreement immediately upon affixing its signature to this
Agreement.
15.14 Applicable Law. This Agreement shall be construed in accordance
with and governed by the laws (other than the law governing the choice of law)
of the State of California, without regard to the principles of conflicts of
law. In the event of a conflict between any provision of this Agreement and any
nonmandatory provision of the Act, the provisions of this Agreement shall
control and take precedence.
15.15 Invalidity of Provisions. If any provision of this Agreement is or
becomes invalid, illegal or unenforceable in any respect, the validity, legality
and enforceability of the remaining provisions contained in this Agreement shall
not be affected.
15.16 No Third-Party Rights Created. The provisions of this Agreement
are solely for the purpose of defining the interests of the Partners, inter se;
and no other person, firm or entity (i.e., a party who is not a signatory to
this Agreement or a permitted successor to such a signatory) 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.
16. POWER OF ATTORNEY
16.1 Power of Attorney.
(a) Scope. Each Limited Partner and each Assignee constitutes and
appoints the General Partner, any Liquidator, and authorized officers and
attorneys-in-fact of each, and each of those acting singly, in each case with
full power of substitution, as its true and lawful agent and attorney-in-fact,
with full power and authority in its name, place and stead to:
(1) execute, swear to, acknowledge, deliver, file and record in
the appropriate public offices
(i) all certificates, documents and other instruments
(including, without limitation, this Agreement and the Certificate and
all amendments or restatements of the Agreement or the Certificate) that
the General Partner or the Liquidator deems appropriate or necessary to
form, qualify or continue the existence or qualification of the
Partnership as a limited partnership (or a partnership in which the
limited partners have limited liability) in the State of California and
in all other jurisdictions in which the Partnership may conduct business
or own property;
(ii) all instruments that the General Partner deems
appropriate or necessary to reflect any amendment, change, modification
or restatement of this Agreement in accordance with its terms;
(iii) all conveyances and other instruments or documents
that the General Partner deems appropriate or necessary to reflect the
dissolution and liquidation of the Partnership pursuant to the terms of
this Agreement, including, without limitation, a certificate of
cancellation;
(iv) all instruments relating to the admission, withdrawal,
removal or substitution of any Partner pursuant to, or other events
described in, Articles 11, 12 or 13 or the capital contribution of any
Partner; and
(v) all certificates, documents and other instruments
relating to the determination of the rights, preferences and privileges
of Partnership Interests; and
(2) execute, swear to, acknowledge and file all ballots,
consents, approvals, waivers, certificates and other instruments appropriate
or necessary, in the sole and absolute discretion of the General Partner, to
make, evidence, give, confirm or ratify any vote, consent, approval,
agreement or other action that is made or given by the Partners under this
Agreement or is consistent with the terms of this Agreement or appropriate
or necessary, in the sole discretion of the General Partner, to effectuate
the terms or intent of this Agreement.
Nothing contained in this Agreement shall be construed as
authorizing the General Partner to amend this Agreement except in accordance
with Article 14 or as may be otherwise expressly provided for in this Agreement.
(b) Irrevocability. The foregoing power of attorney is declared to
be irrevocable and a power coupled with an interest, in recognition of the fact
that each of the Partners will be relying upon the power of the General Partner
to act as contemplated by this Agreement in any filing or other action by it on
behalf of the Partnership, and it shall survive and not be affected by the
subsequent Incapacity of any Limited Partner or Assignee and the transfer of all
or any portion of such Limited Partner's or Assignee's Partnership Units and
shall extend to such Limited Partner's or Assignee's heirs, successors, assigns
and personal representatives. Each such Limited Partner or Assignee agrees to be
bound by any representation made by the General Partner, acting in good faith
pursuant to such power of attorney; and each such Limited Partner or Assignee
waives any and all defenses that may be available to contest, negate or
disaffirm the action of the General Partner, taken in good faith under such
power of attorney. Each Limited Partner or Assignee shall execute and deliver to
the General Partner or the Liquidator, within 15 days after receipt of the
General Partner's request, such further designation, powers of attorney and
other instruments as the General Partner or the Liquidator, as the case may be,
deems necessary to effectuate this Agreement and the purposes of the
Partnership.
The parties have signed this Agreement as of the date specified in the
introductory paragraph of this Agreement.
GENERAL PARTNER:
PS BUSINESS PARKS, INC.,
a California corporation
By: s/ Ronald L. Havner, Jr.
-------------------------------------
Ronald L. Havner, Jr., President and
Chief Executive Officer
LIMITED PARTNERS:
All of those Limited Partners set forth on
Exhibit A
By: PS BUSINESS PARKS, INC.,
a California corporation, their
attorney-in-fact
By: s/ Ronald L. Havner, Jr.
--------------------------------
Ronald L. Havner, Jr., President
and Chief Executive Officer