LIMITED PARTNERSHIP AGREEMENT
Between
MAACP, INC.
as General Partner
and
MID-AMERICA APARTMENTS, L.P.,
as Limited Partner
Relating to the
Formation of
MID-AMERICA CAPITAL PARTNERS, L.P.
(a Delaware Limited Partnership)
LIMITED PARTNERSHIP AGREEMENT
THIS LIMITED PARTNERSHIP AGREEMENT is made as of this day of October,
1997, between MAACP, INC., a Delaware corporation (the "General Partner") and
MID-AMERICA APARTMENTS, L.P., a Delaware limited partnership (the "Limited
Partner"), herein referred to collectively as the "Partners" and individually as
a "Partner," and whose names and addresses are set forth in Exhibit A.
ARTICLE I
NAME AND PURPOSE
1. FORMATION. The undersigned parties hereby form a partnership (herein
called the "Partnership") pursuant to the provisions of the Delaware Revised
Uniform Limited Partnership Act (the "Act").
2. NAME AND OFFICE. The name of the Partnership is Mid-America Capital
Partners, L.P. The principal office of the Partnership shall be located at 1209
Orange Street, Wilmington, Delaware, 19802, but the Partnership may select and
otherwise operate and conduct its business in any and all parts of the United
States as the General Partner may deem advisable.
3. PURPOSES. The Partnership has been formed solely for the limited
purposes of:
(a) holding and operating the twenty-six (26) apartment communities
listed on Exhibit B (collectively, the "Communities") and owning,
managing, renovating, improving, leasing, selling, transferring,
exchanging, mortgaging and otherwise dealing with the Communities (herein
referred to as the Partnership's "Single Purpose").
(b) except as provided in Section 3(a) above, entering into and
performing obligations pursuant to agreements necessary or desirable to
effectuate the foregoing; and
(c) engaging in any lawful act or activity that may be taken by,
exercising any powers permitted to, limited partnerships organized under
the Act that are incidental to and necessary or desirable for the
accomplishment of the above-mentioned purposes, including, without
limitation, entering into the Debt Documents (defined below) or
refinancing any indebtedness associated with the Debt Documents in
accordance with the terms of the Debt Documents.
4. TERM. The term of the Partnership shall be from the date hereof to
December 31, 2020, unless terminated earlier as hereinafter provided or as
otherwise provided by law.
ARTICLE II
RESTRICTED ACTIONS
The Partnership:
1. will not engage in any business unrelated to its Single Purpose;
2. will not own any assets other than those related to its Single
Purpose or otherwise in furtherance of the purposes of its Single
Purpose;
3. will not engage in, seek or consent to any dissolution, winding
up, liquidation, consolidation, merger, asset sale, transfer of
interests or amend this Limited Partnership Agreement, except (i)
as required by law, (ii) as permitted by the terms and conditions
of the trust indenture and related documents evidencing and
securing that certain $150 million principal amount secured
bridge note and subsequent first mortgage bonds of the
Partnership (the "Debt Documents") and (iii) as approved by the
unanimous affirmative vote of 100% of its partners, including the
vote of the Independent Director of the General Partner;
4. will not, without the unanimous affirmative vote of 100% of its
partners, including the vote of the Independent Director of the
General Partner, make any assignment for the benefit of the
Partnership=s creditors;
5. will not, without the unanimous affirmative vote of 100% of its
partners, including the vote of the Independent Director of the
General Partner, cause or consent to the filing of a bankruptcy or
insolvency petition or otherwise institute insolvency proceedings on
behalf of the Partnership or otherwise seek relief under any laws
relating to relief from debts or the protection of debtors
generally;
6. will not, without the unanimous affirmative vote of 100% of its
partners, including the vote of the Independent Director of the
General Partner, seek or consent to the appointment of a receiver,
liquidator, assignee, trustee, sequestrator, custodian or any
similar official for the Partnership or a substantial portion of its
properties;
7. will not take any action in furtherance of the events specified in
Paragraphs 3, 4, 5, and 6 of this Article II without obtaining the
vote required by such Paragraphs;
8. will not take any action requiring the unanimous affirmative vote of
100% of its partners, unless the Independent Director of the General
Partner shall have participated in such vote;
9. will not transfer any partnership interest such that the
transferee owns, in the aggregate, more than a 49% interest in
the Partnership, unless (i) such transfer is permitted by the
Debt Documents and approved by the unanimous vote of 100% of its
partners, including the vote of the Independent Director of the
General Partner and (ii) the Partnership shall deliver
nonconsolidation opinion with respect to such transferee as
required by the Debt Documents;
10. will maintain accounts, books and records separate from any other
person or entity;
11. will not commingle its funds or assets with those of any other
person or entity;
12. will conduct its business, and own its assets, in its own name;
13. will maintain books, financial statements, accounting records and
other entity documents separate from any other person or entity;
14. will pay its own liabilities and expenses out of its own funds;
15. will observe all partnership formalities;
16. will maintain an arm=s-length relationship with its affiliates;
17. will pay the salaries of its own employees from its own funds and
will maintain a sufficient number of employees in light of its
contemplated business operations;
18. will not guarantee or become obligated for the debts of any other
person or entity or hold out its credit as being available to
satisfy the obligations of any other person or entity;
19. will allocate fairly and reasonably any overhead expenses that are
shared with an affiliate, including, without limitation, paying for
office space and services performed by an employee of an affiliate;
20. will not pledge its assets for the benefit of any other person or
entity except as permitted by or pursuant to the Debt Documents and
as approved by 100% of its partners, including the vote of the
Independent Director of the General Partner;
21. will hold itself out as a separate entity;
22. will not incur any indebtedness other than that contemplated or
allowed by the Debt Documents and as approved by 100% of its
partners, including the vote of the Independent Director of the
General Partner;
23. will not make loans to any person or entity and will not buy or hold
evidence of indebtedness issued by any other person or entity (other
than cash and investment grade securities);
24. will not enter into or be a party to any transaction with its
partners or its affiliates except in the ordinary course of its
business on terms which are intrinsically fair, commercially
reasonable, and are not less favorable to it than would be obtained
in a transaction with an unrelated third party;
25. will maintain its accounts, books, resolutions, records and
agreements as official records;
26. will not acquire obligations or securities of its affiliates or
partners;
27. will not identify its partners or affiliates of any of them as a
division of it;
28. will hold itself out and identify itself as a separate and distinct
entity under its own name and not a division of another person or
entity;
29. will not fail to correct any known misunderstanding regarding its
separate identity;
30. will maintain adequate capital in light of its contemplated business
operations;
31. will use separate stationery, invoices, and checks bearing its own
name;
32. will cause the General Partner or such independent contractors as
may be engaged by the General Partner to perform the financial and
operational services on behalf of the Partnership including, without
limitation, maintenance of the Partnership=s books and records and
in connection therewith the Partnership will make payments to the
General Partner or such independent contractors as may be engaged by
the General Partner for the Partnership; and
33. will declare and pay all distributions to the Limited Partner in
accordance with applicable law as approved by the unanimous
affirmative vote of the board of directors of the General Partner,
including the vote of the Independent Director of the General
Partner.
ARTICLE III
CAPITAL
1. CAPITAL CONTRIBUTIONS OF PARTNERS. The capital contribution of the
Limited Partner will consist of the Communities at the value set forth in the
attached Exhibit A, which Exhibit is incorporated herein by this reference. The
capital contribution of the General Partner shall be $2,270,636. No interest
shall be paid by the Partnership to the Partners on any Capital Contribution
paid to the Partnership. The General Partner shall at all times own at least a
1% interest in the Partnership. Except as otherwise provided in the Act or in
this Agreement, no Partner shall be required to make any further contribution to
the capital of the Partnership.
2. DISTRIBUTIONS OF CAPITAL. Under circumstances requiring a return of any
Capital Contribution, no Partner shall have the right to receive property other
than cash.
3. CAPITAL ACCOUNTS. The General Partner shall maintain a capital account
for each partner in accordance with applicable federal income tax provisions.
4. ADMISSION OF ADDITIONAL PARTNERS. Neither the Partnership nor the
General Partner on behalf of the Partnership may admit additional partners
without the consent of all of the partners, including the vote of the
Independent Director of the General Partner.
ARTICLE IV
MANAGEMENT
1. MANAGEMENT OF THE PARTNERSHIP. The parties hereto agree that the
General Partner shall have exclusive authority to make all decision relating to
the management of the business operations of the Partnership, including all
decisions relating to the acquisition, financing, operation and disposition of
the Communities. Subject to express limitations set forth in this Limited
Partnership Agreement, the General Partner is authorized to do anything
necessary and appropriate to achieve the purposes detained in Article II above.
The General Partner shall devote such time to the Partnership as shall be
reasonably required for its welfare and success. The General Partner shall use
its best efforts to enable the Partnership to carry out the purposes set forth
in Article II.
2. REMOVAL OF THE GENERAL PARTNER.
(a) The General Partner may be removed for a cause by a vote of the
Partners holding a majority interest in the Partnership but may not otherwise
dissociate or resign as General Partner without the vote of the majority
interest in the Partnership subject to the provisions of the Debt Documents.
(b) Notwithstanding subsection (a), the General Partner shall not withdraw
or dissociate from the Partnership so long as any of the obligations of the
Partnership under the Debt Documents remain outstanding.
(c) Without limiting the prohibition of subsection (b), if the General
Partner were to withdraw or dissociate from the Partnership, the remaining
partners shall immediately appoint a successor general partner, whose
organizational documents shall be substantially similar to those of the current
General Partner, and the Partnership shall deliver a non-consolidation opinion
with respect to the successor general partner as required by the Debt Documents.
(d) The General Partner and each successor to the General Partner shall
have not less than one Independent Director. An "Independent Director" shall
mean a director of the General Partner who is not and has not been at any time
during the five (5) years preceding the time of initial appointment; (a) a
stockholder, director, officer, employee, partner, attorney or counsel of the
General Partner, the Partnership, or any affiliate of either of them; (b) a
customer, supplier or other person who derives more than 10% of its purchases or
revenues from its activities with the General Partner, the Partnership or any
affiliate of either of them; (c) a person or other entity controlling or under
common control with any such stockholder, partner, customer, supplier or other
person; or (d) a member of the immediate family of any such stockholder,
director, officer, employee, partner, customer, supplier or other person. (As
used herein, the term "control" means the possession, directly or indirectly, of
the power to direct or cause the direction of management, policies or activities
of a person or entity, whether through ownership of voting securities, by
contract or otherwise.)
(e) If the Independent Director resigns, dies or becomes incapacitated, or
such position is otherwise vacant, no action requiring the unanimous affirmative
vote of the board of directors shall be taken until a successor Independent
Director is elected and qualified and approves such action. In the event of the
death, incapacity, or resignation of the Independent Director, his successor
shall be immediately appointed by the remaining directors.
3. EXPENSES. The General Partner may be reimbursed by the Partnership for
reasonable out-of-pocket expenses incurred by it in connection with the business
of the Partnership.
ARTICLE V
RIGHTS AND OBLIGATIONS OF THE LIMITED PARTNERS
1. NO MANAGEMENT AUTHORITY. (a) No Limited Partner may take part in the
management of or control of the business of the Partnership, transact any
business in the name of the Partnership, incur expenditures on behalf of the
Partnership, bind the Partnership or sign any agreement or document in the name
of the Partnership.
(b) No Limited Partner will have any power or authority with respect to
the Partnership or Partnership affairs except to the extent that the express
provisions of this Agreement or the Act require or permit the Limited Partner to
take certain actions with respect to the Partnership.
2. LIABILITY OF LIMITED PARTNERS. Except as otherwise provided in the Act
or this Agreement and irrespective of any deficit in a Limited Partners= capital
account, no Limited Partner will be required to contribute funds to the
Partnership other than its capital contribution and will not be personally
liable for any obligations of the Partnership beyond the amount of its capital
contributions and its share of undistributed income of the Partnership. No
Limited Partner in its capacity as such will be required to lend funds to the
Partnership.
ARTICLE VI
ACCOUNTING
1. BOOKS AND RECORDS. The Partnership through the General Partner shall
cause full and accurate books of the Partnership to be maintained at the
Partnership=s principal place of business. Such books and records shall include
all receipts and expenditures, assets and liabilities, profits and losses and
all other records necessary for recording the Partnership=s business and
affairs. Such books and records shall be open to inspection and examination by
all Partners, in person or by their duty authorized representatives, at
reasonable times.
2. FISCAL YEAR. The fiscal year of the Partnership will be the calendar
year.
3. REPORTS. The General Partner will provide the Limited Partner with such
financial statements and other information regarding the operation of the
Partnership and the Communities as the Limited Partner may reasonably request
from time to time.
4. TAX MATTERS. The General Partner shall cause to be prepared and filed
all necessary Partnership federal and state income tax returns. The General
Partner is hereby authorized to designate itself as tax matters partner of the
Partnership.
5. BANK ACCOUNTS AND INVESTMENT OF FUNDS. All funds of the Partnership
shall be deposited in its name in such checking and savings accounts or time
certificates as shall be designated by the General Partner. Withdrawals
therefrom shall be made upon such signature or signatures as the General Partner
may designate.
6. METHOD OF ACCOUNTING. The books of the Partnership shall be kept on the
accrual basis of accounting.
ARTICLE VII
ALLOCATIONS AND DISTRIBUTIONS
1. CASH DISTRIBUTIONS. The General Partner will have exclusive authority
to determine the timing and amount of cash distributions to the partners. Cash
flow from ongoing operations of the Partnership shall be distributed 100% to the
Limited Partner and charged to its capital account. Cash flow from the sale of
any Community (except upon liquidation and dissolution of the Partnership, which
will be governed by Article VIII, Section 2 hereof) shall be distributed among
the partners and charged to their capital accounts in accordance with the
percentages set forth in Exhibit A hereto ("Partnership Percentages").
2. PROFITS AND LOSSES. The profits and losses of the Partnership shall be
determined each year in accordance with accounting methods used for federal
income tax purposes. Profits and Losses shall be allocated among the Partners as
set forth below and credited (or charged) to their Capital Accounts (as defined
and maintained in accordance with Regulations under Section 704(b) of the
Internal Revenue Code of 1986, as amended). Profits of the Partnership shall be
allocated among the Partners in the same ratios as cash distributions are made
to the Partners pursuant to Section I above. Losses of the Partnership shall be
allocated in accordance with the Partnership Percentages.
ARTICLE VIII
TERMINATION OF THE PARTNERSHIP
1. TERMINATION. The Partnership shall be dissolved, subject to the
provisions of the Debt Documents and this Limited Partnership Agreement, upon
the first to occur of the following:
(a) subject to Article II, the unanimous consent of the partners;
provided that the partners shall not agree to dissolve the Partnership
unless permitted by the Debt Documents and Article I, Section 3(a) hereof;
and
(b) December 31, 2020
PROVIDED, HOWEVER, that the Partnership shall not dissolve so long
as at least one partner remains solvent.
2. DISSOLUTION. Subject to the provisions of the Debt Documents and this
Limited Partnership Agreement, upon the occurrence of any one of the above
events, the Partnership will be dissolved, the affairs of the Partnership wound
up and the assets liquidated, allocated and distributed, as realized, in the
following order:
(a) to creditors of the Partnership; and
(b) to the Partners in accordance with and to the extent of their
positive capital account balances and then in accordance with the
Partnership Percentages. If, upon liquidation, the General Partner has a
deficit capital account balance, the General Partner shall be required to
contribute cash to the Partnership in an amount equal to the lesser of (i)
such deficit capital account balance or (ii) the excess of 1.01% of the
total capital contributions of the Limited Partner over the capital
previously contributed by the General Partner.
ARTICLE IX
TRANSFER OF INTEREST
No Partner may sell, transfer or otherwise assign its interest in the
Partnership.
ARTICLE X
GENERAL PROVISIONS
1. INDEMNIFICATION. If the General Partner shall violate any of the terms,
provisions and conditions of this Limited Partnership Agreement, it shall, in
addition to being subjected to the other remedies, liabilities and obligations
herein imposed upon it therefor, keep and save harmless the Partnership property
and indemnify the other Partners from any and all claims, demands and actions
that may arise out of or by reason of such a violation of any of the terms,
provisions and conditions thereof.
2. AMENDMENTS. This Limited Partnership Agreement may not be modified or
amended except with the written consent of all partners, including the
affirmative vote of the Independent Director of the General Partner, and subject
to the provisions of the Debt Documents and furthermore shall not be amended
until the Partnership has received confirmation from all applicable rating
agencies that such amendment would not result in the qualification, withdrawal
or downgrade of any securities rating.
3. GOVERNING LAW; BINDING. This Limited Partnership Agreement shall be
construed and enforceable in accordance with the laws of the State of Delaware
and shall be binding upon all the parties and their assigns, successors,
estates, heirs or legatees.
4. COUNTERPARTS. This Limited Partnership Agreement may be executed in any
number of counterparts, each of which shall be deemed to constitute an original
and all of which together shall constitute one instrument.
IN WITNESS WHEREOF, we have hereunto set our hands to this Limited
Partnership Agreement the day and year heretofore mentioned.
GENERAL PARTNER:
MAACP, INC.
By SIMON R.C. WADSWORTH
Its President
LIMITED PARTNER:
MID-AMERICA APARTMENTS, L.P.
By: Mid-America Apartment Communities, Inc.
Its: General Partner
By: SIMON R.C. WADSWORTH
Its: Executive Vice President and
Chief Financial Officer
EXHIBIT A
Initial Capital
GENERAL PARTNER/ADDRESS INTEREST CONTRIBUTION
MAACP, Inc. 1% $2,270,636.00
1209 Orange Street
Wilmington, Delaware 19802
LIMITED PARTNER/ADDRESS
Mid-America Apartments, L.P. 99% $See Exhibit A-1
1209 Orange Street
Wilmington, Delaware 19802
EXHIBIT A-1
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COMMUNITY VALUE
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Hidden Lake II $5,980,000.00
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High Ridge 6,717,000.00
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Park Place 6,223,000.00
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Southland Station I 7,010,000.00
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Willow Creek 8,191,000.00
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Belmere 8,730,000.00
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Crosswinds 16,712,000.00
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Fairways at Royal Oaks 9,057,000.00
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Hermitage at Beechtree 8,936,000.00
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Howell Commons 11,259,000.00
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Kirby Station 16,843,000.00
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Lakepointe 4,192,000.00
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Lakeside 14,034,000.00
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Marsh Oaks 4,225,000.00
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Napa Valley 7,830,000.00
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Park Haywood 6,061,000.00
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Pear Orchard 15,491,000.00
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Savannah Creek 9,096,000.00
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Shenandoah Petersburg 6,767,000.00
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Somerset 4,430,000.00
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Steeplechase 3,662,000.00
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Sutton Place 10,698,000.00
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Tiffany Oaks 11,620,000.00
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Village 9,871,000.00
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Westside Creek I 5,644,000.00
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Williamsburg 5,514,000.00
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TOTAL $224,793,000.00
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