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SECOND AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP
OF
DUKE REALTY SERVICES LIMITED PARTNERSHIP
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Dated as of September 30, 1994
TABLE OF CONTENTS
ARTICLE I General Provisions . . . . . . . . . . 1
Section 1.01. Name. . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.02. Place of Business . . . . . . . . . . . . . . . . 1
Section 1.03. Continuation and Term . . . . . . . . . . . . . . 1
Section 1.04. Definitions . . . . . . . . . . . . . . . . . . . 1
ARTICLE II Members and Status. . . . . . . . . . 13
Section 2.01. The Partners. . . . . . . . . . . . . . . . . . . 13
Section 2.02. Additional Partners . . . . . . . . . . . . . . . 13
Section 2.03. Liability of General Partner. . . . . . . . . . . 13
Section 2.04. Limitation Upon Liability of Limited Partners . . 15
ARTICLE III Scope of Partnership and Mode of Operation. . . . 16
Section 3.01. Scope of Partnership. . . . . . . . . . . . . . . 16
Section 3.02. Powers of the Partnership . . . . . . . . . . . . 16
Section 3.03. Management of the Partnership . . . . . . . . . . 18
Section 3.04. Limitation on Powers. . . . . . . . . . . . . . . 18
Section 3.05. Non-Participation in Management by
Limited Partners . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 3.06. Time to be Devoted to Business. . . . . . . . . . 19
Section 3.07. Dealings With Related Entities. . . . . . . . . . 19
Section 3.08. Other Business. . . . . . . . . . . . . . . . . . 20
Section 3.09. Restriction on General Partner and
Partnership Activities . . . . . . . . . . . . . . . . . . . . . 21
Section 3.10. Indemnification . . . . . . . . . . . . . . . . . 22
Section 3.11. Voting Rights of Limited Partners . . . . . . . . 25
Section 3.12. Approval Procedures . . . . . . . . . . . . . . . 25
Section 3.13. Loans to and from the Partnership . . . . . . . . 25
Section 3.14. Reimbursement of Expenses . . . . . . . . . . . . 26
Section 3.15. General Manager and Assistant General Manager . . 27
ARTICLE IV Capital Contributions, Allocations
and Distributions . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 4.01. Capital Contributions . . . . . . . . . . . . . . 28
Section 4.02. Distributable Cash. . . . . . . . . . . . . . . . 29
Section 4.03. Distributions From Terminating Capital
Transaction . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 4.04. Allocation of Gross Income and Gross Expenses . . 31
Section 4.05. Regulatory Allocations. . . . . . . . . . . . . . 33
Section 4.06. Other Allocation Rules. . . . . . . . . . . . . . 37
Section 4.07. Tax Allocations; Code Section 704(c). . . . . . . 37
Section 4.08. Deficit Make-Up Obligation. . . . . . . . . . . . 38
Section 4.09. General Provisions. . . . . . . . . . . . . . . . 38
Section 4.10. No Interest on Capital Accounts . . . . . . . . . 38
Section 4.11. Distribution of Property. . . . . . . . . . . . . 38
Section 4.12. Return of Capital Contribution. . . . . . . . . . 38
Section 4.13. Restructuring of Partnership. . . . . . . . . . . 39
ARTICLE V Accounting, Reporting and Holding of Assets . . . . . . . 39
Section 5.01. Fiscal Year . . . . . . . . . . . . . . . . . . . 39
Section 5.02. Records, Accounting and Reports . . . . . . . . . 39
Section 5.03. Right to Inspection . . . . . . . . . . . . . . . 40
Section 5.04. Holding and Transfer of Assets. . . . . . . . . . 41
Section 5.05. Bank Accounts . . . . . . . . . . . . . . . . . . 42
Section 5.06. Tax Status; Notice of Tax Controversy . . . . . . 43
Section 5.07. Tax Matters Partner; Tax Elections; Tax Returns . 43
Section 5.08. Tax Matters Partner Not Liable. . . . . . . . . . 45
Section 5.09. Withholding . . . . . . . . . . . . . . . . . . . 46
ARTICLE VI Dissolution and Continuation of Partnership. . . . . . . 47
Section 6.01. Dissolution . . . . . . . . . . . . . . . . . . . 47
Section 6.02. Deemed Distribution and Recontribution. . . . . . 47
Section 6.03 Notice of Dissolution. . . . . . . . . . . . . . . 48
Section 6.04. Continuation of Partnership . . . . . . . . . . . 48
Section 6.05. Extension of Term . . . . . . . . . . . . . . . . 48
ARTICLE VII Transfer of Units and Changes in Partners . . . . . . . 48
Section 7.01. General Partner Transfers Restricted. . . . . . . 48
Section 7.02. Limited Partner Transfers Restricted. . . . . . . 49
Section 7.03. Duke Realty Option. . . . . . . . . . . . . . . . 49
Section 7.04. Effect of Transfer. . . . . . . . . . . . . . . . 51
ARTICLE VIII Liquidation . . . . . . . . . . . . . . . . . . . . . 52
Section 8.01. Liquidation Determination . . . . . . . . . . . . 52
Section 8.02. Liquidation Procedure . . . . . . . . . . . . . . 52
Section 8.03. Allocation of Liquidation Proceeds. . . . . . . . 52
ARTICLE IX Miscellaneous . . . . . . . . . . . . . . . . . . . . . 53
Section 9.01. Notice. . . . . . . . . . . . . . . . . . . . . . 53
Section 9.02. Construction. . . . . . . . . . . . . . . . . . . 53
Section 9.03. Assigns and Successors in Interest. . . . . . . . 53
Section 9.04. Assignment. . . . . . . . . . . . . . . . . . . . 54
Section 9.05. Amendment . . . . . . . . . . . . . . . . . . . . 54
Section 9.06. Certificate of Limited Partnership. . . . . . . . 56
Section 9.07. Further Assurances. . . . . . . . . . . . . . . . 56
Section 9.08. Warranties of Representatives . . . . . . . . . . 56
Section 9.09. Computation of Time . . . . . . . . . . . . . . . 56
Section 9.10. Captions. . . . . . . . . . . . . . . . . . . . . 56
Section 9.11. Identification. . . . . . . . . . . . . . . . . . 56
Section 9.12. Counterparts. . . . . . . . . . . . . . . . . . . 56
Section 9.13. Partners' Capability. . . . . . . . . . . . . . . 57
Section 9.14. Severability. . . . . . . . . . . . . . . . . . . 57
Section 9.15. Approval or Consent . . . . . . . . . . . . . . . 57
Section 9.16. Meetings. . . . . . . . . . . . . . . . . . . . . 57
Section 9.17. Consent of Partners and Assignees . . . . . . . . 57
Section 9.18. Limitation on Benefits of this Agreement. . . . . 57
SECOND AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP
OF
DUKE REALTY SERVICES LIMITED PARTNERSHIP
The undersigned, Duke Services, Inc., an Indiana corporation, as General
Partner, and Duke Realty Limited Partnership, an Indiana limited partnership,
and DMI Partnership, an Indiana general partnership, as Limited Partners,
desiring to associate themselves as partners, hereby adopt and agree as provided
in the following Second Amended and Restated Agreement of Limited Partnership
(the "Agreement").
ARTICLE I
GENERAL PROVISIONS
SECTION 1.01. NAME. The name of the Partnership is Duke Realty Services
Limited Partnership.
SECTION 1.02. PLACE OF BUSINESS. The specified office of the Partnership
shall be 8888 Keystone Crossing, Suite 1150, Indianapolis, Indiana 46240, or at
such location as may be selected from time to time by the General Partner.
SECTION 1.03. CONTINUATION AND TERM. The Partners agree that the Amended
and Restated Agreement of Limited Partnership dated as of October 4, 1993 that
previously evidenced the Partnership is hereby amended and restated in its
entirety as provided herein, and the Partnership is continued without
interruption under and pursuant to the terms and provisions of the Act. The
term of the Partnership shall extend until December 31, 2043, subject to
extension as provided in Section 6.05, unless sooner terminated as hereinafter
provided.
SECTION 1.04. DEFINITIONS. The following terms have the following
meanings herein:
"ACT" means the Indiana Revised Uniform Limited Partnership Act, as
now or hereafter amended.
"ADJUSTED CAPITAL ACCOUNT" means, with respect to any Partner, such
Partner's Capital Account as of the end of the relevant fiscal year or
other period, after giving effect to the following adjustments:
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(i) Credit to such Capital Account any amounts which such Partner is
obligated to restore to the Partnership pursuant to
Section 1.704-1(b)(2)(ii)(C) of the Treasury Regulations or is
deemed to be obligated to restore to the Partnership pursuant to
Sections 1.704-2(g)(1) and 1.704-2(i)(5) of the Treasury
Regulations, and
(ii) Debit to such Capital Account the items described in
Sections 1.704-1(b)(2)(ii)(d)(4), (5) and (6) of the Treasury
Regulations.
"AFFILIATE" means a Person who, with respect to another person,
directly or indirectly controls, is controlled by or is under common
control with such other Person.
"AGREED VALUE" means, in the case of property other than cash
contributed to the Partnership, the fair market value of such property at
the time of contribution as determined by agreement of the Partners or, in
the absence of such an agreement, as determined by the General Partner
using such reasonable method of valuation as it may adopt, reduced in
either case by any liabilities either assumed by the Partnership upon such
contribution or to which such property is subject when contributed.
"ANNUAL PREFERRED RETURN" means, with respect to a Partner for any
year, 7.5% of the total Capital Contributions of the Partner.
"ASSIGNMENT" means any sale, assignment, transfer, pledge, encumbrance
or other disposition of, or the granting of a security interest in, a
Partnership Interest, including without limitation a transfer in connection
with a dissolution, merger, consolidation or similar action of a Partner or
an assignee. "Assign" means to effect an Assignment.
"BANKRUPTCY" means, with respect to a Person, the happening of any of
the following:
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(A) The entry by a court or governmental agency having jurisdiction
in the premises of a decree or order for relief in respect of the
Person in an involuntary case under any applicable bankruptcy,
insolvency or other similar law now or hereafter in effect or
appointing a receiver,
liquidator, assignee, custodian, trustee, sequestrator or similar
official of such Person, or for any substantial part of such
Person's property or ordering the winding up or liquidation of
such Person's affairs, and such decree or order remaining
unstayed and in effect for a period of sixty (60) consecutive
days; or
(B) The commencement by the Person of a voluntary case under any
applicable bankruptcy, insolvency or other similar law now or
hereafter in effect, or the consent by such Person to the entry
of an order for relief in an involuntary case under any such law;
or
(C) The consent by the Person to the appointment or taking possession
by a receiver, liquidator, assignee, custodian, trustee,
sequestrator or similar official of any substantial part of such
Person's property, or the filing of a pleading in any court of
record admitting in writing the inability of the Person to pay
his, her or its debts as they come due; or
(D) The making by the Person of a general assignment for the benefit
of creditors.
"CAPITAL ACCOUNT" means, as to any Partner, a book account maintained
in accordance with the following provisions:
To each Partner's Capital Account there shall be credited:
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(A) the amount of cash such Partner has contributed to the
Partnership (including any contribution pursuant to Section
4.01),
(B) the Agreed Value of any property other than cash such Partner has
contributed to the Partnership as a Capital Contribution,
(C) the amount of Gross Income allocated to such Partner and any
items in the nature of income that are allocated to such Partner
pursuant to Section 4.05, and
(D) the amount of any liabilities of the Partnership that are assumed
by the Partner or are secured by any property distributed by the
Partnership to such Partner determined in accordance with
Treasury Regulations issued under Section 752 of the Code;
To each Partner's Capital Account there shall be debited:
(X) the amount of cash and the gross fair market value of any
Partnership asset distributed to such Partner with respect to the
Partner's Partnership Interest pursuant to any provision of this
Agreement, and
(Y) the amount of Gross Expenses allocated to such Partner and any
items in the nature of expenses that are allocated to such
Partner pursuant to Section 4.05.
Each Partner's Capital Account shall be debited for the amount of its share
of Distributable Cash as of the date such amount is declared and accrued by
the General Partner pursuant to Section 4.02 of this Agreement. Each
Partner's Capital Account shall be further maintained and adjusted in
accordance with the Code and Treasury Regulations thereunder, including any
other adjustments to Capital Accounts provided in the Treasury Regulations
issued under Section 704 of the Code, such as, but not limited to,
increases or decreases to reflect a
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revaluation of Partnership property on the Partnership's books in
accordance with the rules of Treasury Regulations
Section 1.704-1(b)(2)(iv)(f). The foregoing provisions and other
provisions of this Agreement relating to the maintenance of Capital
Accounts are intended to comply with Treasury Regulations
Section 1.704-1(b), and shall be interpreted and applied in a manner
consistent with such Treasury Regulations. Any questions with respect to a
Partner's Capital Account shall be resolved by the General Partner in its
reasonable discretion, applying principles consistent with the Agreement.
Generally, a transferee of a Partnership interest shall succeed to the
Capital Account relating to the Partnership interest transferred or the
corresponding portion thereof. The Capital Account of a Partner may, under
certain circumstances, be an amount less than zero.
"CAPITAL CONTRIBUTION" means the total amount of cash and the Agreed
Value of any other contributed property contributed to the Partnership by a
Partner.
"CODE" means the Internal Revenue Code of l986, as amended (or any
corresponding provision of succeeding law). A reference to a section of
the Code shall be deemed to include any amendatory or successor provision
thereto.
"CODE SECTION 705(a)(2)(B) EXPENDITURES" mean expenditures described
in Code Section 705(a)(2)(B) and any amounts treated as Code Section
705(a)(2)(B) expenditures under Treasury Regulations Section
1.704-1(b)(2)(iv)(i)(2).
"DEPRECIATION" means for each fiscal year or other period, an amount
equal to the depreciation, amortization, or other cost recovery deduction
allowable for federal income tax purposes with respect to an asset for such
year or other period, except that if the Partnership asset is reflected on
the books of the Partnership at a book value that differs from the adjusted
tax basis of such asset pursuant to Section 1.704-1(b)(2)(iv)(d) or
1.704-1(b)(2)(iv)(f) of the Treasury Regulations, depreciation,
amortization, or other cost recovery deductions shall be computed for book
purposes with
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respect to such asset pursuant to Section 1.704-1(b)(2)(iv)(g) of the
Treasury Regulations.
"DISTRIBUTABLE CASH" means, with respect to any period for which such
calculation is being made, (i) the sum of:
(A) The Partnership's Gross Income minus Gross Expenses for such
period;
(B) Depreciation and all other noncash charges deducted in
determining Gross Expenses for such period;
(C) The amount of any reduction in reserves of the Partnership
referred to in clause (ii)(Y) below (including, without
limitation, reductions resulting because the General Partner
determines such amounts are no longer necessary);
(D) The excess of proceeds (net of transaction expenses) from the
sale, exchange, disposition, or financing or refinancing of
Partnership property for such period over any gain recognized
from such sale, exchange, disposition, or financing or
refinancing during such period (excluding Terminating Capital
Transactions);
(E) Any expense or loss amount included in determining Gross Expenses
for such period that was not disbursed by the Partnership during
such period; and
(F) All other cash received by the Partnership for such period that
was not included in clauses (A) to (E) with respect to such
period;
(ii) less the sum of:
(U) All principal debt payments made during such period by the
Partnership;
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(V) Capital expenditures made by the Partnership during such period;
(W) Investments in any entity (including loans made thereto) to the
extent that such investments are not otherwise described in
clauses (ii)(U) or (V);
(X) Any income or gain amount included in determining Gross Income
for such period that was not received by the Partnership during
such period;
(Y) The amount of any increase in reserves established during such
period which the General Partner determines is necessary or
appropriate in its sole and absolute discretion; and
(Z) All other expenditures and payments not included in clauses (U)
to (Y) with respect to such period;
Notwithstanding the foregoing, Distributable 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.
"DISTRIBUTION" means any cash or property distributed to a Partner or
assignee arising from its interest in the Partnership.
"DMI" means DMI Partnership, an Indiana general partnership.
"DRE" means Duke Realty Investments, Inc., an Indiana corporation of
which the General Partner is a wholly-owned subsidiary.
"DUKE REALTY" means Duke Realty Limited Partnership, an Indiana
limited partnership.
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"DUKE REALTY UNITS" means Units of partner interest in Duke Realty.
"GENERAL PARTNER" means Duke Services, Inc., an Indiana corporation.
"GROSS EXPENSES" means, for each fiscal year or other period, an
amount equal to all of the Partnership's deductions provided in Code
Section 62, as modified by Code Section 703, including, but not limited to,
losses from the sale or disposition of an asset, with the following
adjustments:
(i) Any Code Section 705(a)(2)(B) Expenditures not otherwise taken
into account in computing Gross Expenses pursuant to this
definition shall be added to such expenses;
(ii) In lieu of the depreciation, amortization, and other cost
recovery deductions taken into account in computing such Gross
Expenses, there shall be taken into account Depreciation for such
fiscal year or other period;
(iii) In the event any asset of the Partnership is distributed to any
Partner or sold by the Partnership, the excess on such date of
(a)(1) the adjusted basis of the asset for Federal income tax
purposes, or (2) if the asset is reflected on the books of the
Partnership at a book value that differs from the adjusted tax
basis of such asset pursuant to Treasury Regulations Section
1.704-1(b)(2)(iv)(d) or Section 1.704-1(b)(2)(iv)(f), the gross
fair market value on the date of the contribution of the asset to
the Partnership or the gross fair market value of the asset on
the date of the asset's revaluation on the Partnership's books,
as the case may be (as determined by the General Partner) less
Depreciation, over (b) the gross fair market value, shall be
taken into account as loss from the
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disposition of such asset for purposes of computing Gross
Expenses; and
(iv) Notwithstanding anything to the contrary in the definition of the
term "Gross Expenses", any items which are allocated pursuant to
Section 4.05 hereof shall not be taken into account in computing
Gross Expenses.
"GROSS INCOME" means, for each fiscal year or other period, an amount
equal to all of the Partnership's income from whatever source derived, as
provided in Code Section 61, including, but not limited to, gain from the
sale or disposition of an asset and any income exempt from Federal income
tax, with the following adjustments:
(i) In the event any asset of the Partnership is distributed to any
Partner or sold by the Partnership, the excess on such date of
(a) the gross fair market value over (b)(i) the adjusted basis of
the asset for federal income tax purposes, or (ii) if the asset
is reflected on the books of the Partnership at a book value that
differs from the adjusted tax basis of such asset pursuant to
Treasury Regulations Section 1.704-1(b)(2)(iv)(d) or
1.704-1(b)(2)(iv)(f), the gross fair market value on the date of
the contribution of the asset to the Partnership or the gross
fair market value of the asset on the date of the asset's
revaluation on the Partnership's books, as the case may be (as
determined by the General Partner) less Depreciation, shall be
taken into account as gain from the disposition of such asset for
purposes of computing Gross Income; and
(ii) Notwithstanding anything to the contrary in the definition of the
term "Gross Income", any items which are allocated pursuant to
Section 4.05 hereof shall not be taken into account in computing
Gross Income.
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"IRS" means the Internal Revenue Service.
"LIMITED PARTNERS" means (i) Duke Realty and DMI, and (ii) successors
or other Persons who are admitted as Partners pursuant to this Agreement,
in each case until all of the Partnership Interest owned by any such Person
is transferred under Article VII.
"NONRECOURSE DEDUCTIONS" means the nonrecourse deductions as defined
in Section 1.704-2(b)(1) of the Treasury Regulations. The amount of
Nonrecourse Deductions for a fiscal year equals the net increase, if any,
in the amount of Partnership Minimum Gain during such fiscal year reduced
by any distributions during such fiscal year of proceeds of a Nonrecourse
Liability that are allocable to an increase in Partnership Minimum Gain,
determined according to the provisions of Sections 1.704-2(c) and
1.704-2(h) of the Treasury Regulations.
"NONRECOURSE LIABILITY" means a liability as defined in
Section 1.704-2(b)(3) of the Treasury Regulations.
"PARTNER" means the General Partner or any Limited Partner.
"PARTNER NONRECOURSE DEBT" means a liability as defined in
Section 1.704-2(b)(4) of the Treasury Regulations.
"PARTNER MINIMUM GAIN" means an amount with respect to each Partner
Nonrecourse Debt, equal to the Partnership Minimum Gain that would result
if such Partner Nonrecourse Debt were treated as a Nonrecourse Liability,
determined in accordance with Section 1.704-2(i)(3) of the Treasury
Regulations.
"PARTNER NONRECOURSE DEDUCTIONS" means the partner nonrecourse
deductions defined in Section 1.704-2(i)(2) of the Treasury Regulations.
The amount of Partner Nonrecourse Deductions with respect to a Partner
Nonrecourse Debt for a fiscal year equals the net increase, if any, in the
amount of Partner Minimum Gain during such fiscal year attributable to such
Partner Nonrecourse Debt, reduced by any distributions during that
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fiscal year to the Partner that bears the economic risk of loss for such
Partner Nonrecourse Debt to the extent that such distributions are from the
proceeds of such Partner Nonrecourse Debt and are allocable to an
increase in Partner Minimum Gain attributable to such Partner Nonrecourse
Debt, determined according to the provisions of Sections 1.704-2(h) and
1.704-2(i) of the Treasury Regulations.
"PARTNERSHIP" means the partnership governed by this Agreement.
"PARTNERSHIP INTEREST" means an interest in the Partnership,
representing a Capital Contribution and/or a right to receive a share of
the Partnership's Gross Income, Gross Expenses, or Distributions, and in
all cases the rights, powers and privileges appurtenant thereto in
accordance with this Agreement.
"PARTNERSHIP MINIMUM GAIN" means the aggregate gain, if any, that
would be realized by the Partnership for purposes of computing Gross Income
or Gross Expenses with respect to each Partnership asset if each
Partnership asset subject to a Nonrecourse Liability were disposed of for
the amount outstanding on the Nonrecourse Liability by the Partnership in a
taxable transaction. Partnership Minimum Gain with respect to each
Partnership asset shall be further determined in accordance with Section
1.704-2(d) of the Treasury Regulations and any subsequent rule or
regulation governing the determination of minimum gain. A Partner's share
of Partnership Minimum Gain at the end of any Partnership year shall equal
the aggregate Nonrecourse Deductions allocated to such Partner (or his
predecessors in interest) up to that time, less such Partner's (and
predecessors') aggregate share of decreases in Partnership Minimum Gain
determined in accordance with Section 1.704-2(g) of the Treasury
Regulations.
"PERCENTAGE SHARE" means (i) with respect to the General Partner, 1%,
(ii) with respect to Duke Realty, 9%, and (iii) with respect to DMI, 90%.
"PERSON" means an individual, firm, partnership, corporation, estate,
trust, pension or profit-sharing plan or other entity.
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"REIT" means a real estate investment trust under Section 856 of the
Code.
"SECONDARY PERCENTAGE SHARE" means (i) with respect to the General
Partner, 1%, (ii) with respect to Duke Realty, 89%, and (iii) with respect
to DMI, 10%.
"SPECIAL PARTNER APPROVAL" means the approval of (i) the General
Partner and (ii) Partners holding more than fifty percent (50%) of the
Percentage Shares.
"SUBSIDIARY" means, with respect to any Person, any corporation or
other entity of which a majority of (i) the voting power of the voting
equity securities or (ii) the outstanding equity interests is owned,
directly or indirectly, by such Person.
"TAX MATTERS PARTNER" means the General Partner, or any successor
thereto appointed by the General Partner.
"TERMINATING CAPITAL TRANSACTION" means either the sale, exchange or
other disposition of all or substantially all of the assets of the
Partnership in a single transaction or a related series of transactions or
a dissolution of the Partnership under the Partnership is continued.
"TREASURY REGULATIONS" means the Income Tax Regulations promulgated
under the Code as such Treasury Regulations may be amended from time to
time (including Temporary Regulations). A reference to any Treasury
Regulation shall be deemed to include any amendatory or successor provision
thereto.
"UNAFFILIATED DRE DIRECTORS" means the members of DRE's board of
directors who satisfy the definition of "Unaffiliated Directors" in DRE's
Articles of Incorporation, as now or hereafter amended.
Such terms shall be used either in the singular or plural and may be
referred to in any gender as required by the context.
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ARTICLE II
MEMBERS AND STATUS
SECTION 2.01. THE PARTNERS. The Partners of the Partnership shall consist
of and be divided into a general partner and limited partners, with the General
Partner as the sole general partner and the Limited Partners as the limited
partners. The General Partner may, in its sole discretion, cause the
Partnership to issue certificates representing the Partnership Interests of the
Partners.
SECTION 2.02. ADDITIONAL PARTNERS. Except as provided in Section 6.04 or
Article VII, no additional partners shall be admitted.
SECTION 2.03. LIABILITY OF GENERAL PARTNER.
(a) Subject to the limitations expressed in this Section, the General
Partner shall have unlimited liability for the repayment, satisfaction and
discharge of the obligations of the Partnership to third parties dealing with
the Partnership as prescribed by law, except for nonrecourse obligations of the
Partnership. The General Partner is not liable to the Partnership and the
Limited Partners (i) for return of the Capital Contribution or any portion
thereof of any Limited Partner, except with respect to a deficit make-up
obligation as provided in Section 4.08, (ii) on account of any disallowance or
adjustment by a taxing authority of the allocation of taxable income, gain,
losses, deductions or credits in Partnership income tax returns, (iii) on
account of any failure by the Partnership to achieve any forecasted financial
return or (iv) for any action or omission to act not constituting willful
misconduct or gross negligence.
(b) 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 or liabilities incurred as a
result of errors in judgment or any act or omission if the General Partner acted
in good faith.
(c) The Limited Partners (and assignees by acceptance of an Assignment)
expressly acknowledge that the General Partner is acting on behalf of DRE's
shareholders collectively, that the
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General Partner is under no obligation to consider the separate interests of the
Limited Partners or assignees (including, without limitation, the tax
consequences to Limited Partners or assignees) in deciding whether to cause the
Partnership to take (or decline to take) any actions, and that the General
Partner shall not be liable for monetary damages for losses sustained,
liabilities incurred, or benefits not derived by Limited Partners or assignees
in connection with such decisions, PROVIDED THAT the General Partner has not
acted in bad faith. The General Partner shall be conclusively presumed not to
have acted in bad faith if it reasonably believed that its actions were in the
best interests of the shareholders of DRE.
(d) Subject to its obligations and duties as General Partner set forth in
Section 3.03(a) hereof, the General Partner may exercise any of the powers
granted to it by this Agreement and perform any of the duties imposed upon it
hereunder either directly or by or through its 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.
(e) Any amendment, modification or repeal of this Section 2.03, or any
provision hereof, 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 2.03 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.
(f) 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.
(g) The General Partner may consult with legal counsel, accountants,
appraisers, management consultants, investment bankers and other consultants and
advisers selected by it, and any act taken or omitted to be taken in reliance
upon the opinion of such Persons as to matters which such General Partner
reasonably believes to be within such Person's professional or expert competence
shall be conclusively presumed to have been
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done or omitted in good faith and in accordance with such opinion.
(h) The General Partner shall have the right, in respect of any of its
powers or obligations hereunder, to act through any of its duly authorized
officers and a duly appointed attorney or attorneys-in-fact. Each such attorney
shall, to the extent provided by the General Partner in the power of attorney,
have full power and authority to do and perform all and every act and duty which
is permitted or required to be done by the General Partner hereunder.
(i) 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 DRE to continue to qualify
as a REIT, (ii) to protect the tax classification of the Partnership or any
other partnership which is an Affiliate of the Partnership as a partnership for
tax purposes, or (iii) to avoid DRE 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.
(j) The rights and limitations of liability provided by this section to
the General Partner shall extend to the directors, officers, employees and
agents of the General Partner and DRE; PROVIDED, HOWEVER, that nothing in this
section shall be construed to create or imply any liability of any director,
officer, employee or agent of the General Partner or DRE.
SECTION 2.04. LIMITATION UPON LIABILITY OF LIMITED PARTNERS. The personal
liability of each Limited Partner to the Partnership (except as provided in
Section 4.01), to the other Partners, to the creditors of the Partnership or to
any other third party for the losses, debts or liabilities of the Partnership
shall be limited to (i) the amount of its Capital Contribution which has not
theretofore been returned to it as a Distribution (including a Distribution upon
liquidation), and (ii) the amount of any liability under I.C. 23-16-7-8 for any
Capital Contribution returned to the Limited Partner. No Limited Partner shall
at any time be liable or held accountable to the Partnership, to the other
Partners, to the creditors of
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the Partnership or to any other third party for or on account of any negative
balance in its Capital Account.
ARTICLE III
SCOPE OF PARTNERSHIP AND MODE OF OPERATION
SECTION 3.01. SCOPE OF PARTNERSHIP. The purpose of the Partnership is (i)
to engage in the business of providing leasing services, property management
services, construction management services, development services and related
services (including, but not limited to, security, asset management and space
planning) for commercial real property, (ii) to do each and every thing
necessary, suitable or proper for the accomplishment of the purpose described in
(i) or the attainment of any one or more of the objects herein stated, either
alone, or in association with, or as agent or representative for, other
corporations (whether public, governmental or private), partnerships,
individuals, or entities, and (iii) to accomplish any other lawful business
incidental thereto or which shall at any time appear conducive to or expedient
for the protection of the Partnership.
SECTION 3.02. POWERS OF THE PARTNERSHIP. Subject to the limitations in
Sections 3.09(b) and 3.09(c), the Partnership shall have all the powers
permitted by law which are necessary or desirable in carrying out the purposes
and business of the Partnership, including, but not limited to, the following
powers:
(a) To acquire by purchase, exchange, lease, hire, or otherwise, real and
personal property of every kind, character and description whatsoever, and
wheresoever situated, and any interest therein, either alone or in conjunction
with others, and to hold for investment, own, use, develop, operate, lease,
mortgage, sell or otherwise dispose of, convey or otherwise deal in the same and
any interest therein;
(b) To perform all services related to the acquisition, development,
holding, management, financing, leasing and disposition of real and personal
property of every kind, character and description, including, but not limited
to, the performance of management and other services pursuant to contracts
contributed to the Partnership by DMI;
-16-
(c) To borrow or raise money for any of the purposes of the Partnership,
and from time to time, without limitation as to amount, to draw, make, accept,
endorse, execute and issue promissory notes, drafts, bills of exchange,
warrants, bonds, debentures, evidences of indebtedness and other instruments,
and to secure the payment thereof, the interest thereon and any other
obligations or liabilities relating thereto, in any manner, including without
limitation by mortgage on, security interest in or pledge, or conveyance or
assignment in trust of, the whole or any part of the assets of the Partnership,
real, personal or mixed, including contract rights and options, whether at the
time owned or thereafter acquired, and future earnings, and to sell, pledge or
otherwise dispose of such securities or other obligations of the Partnership for
the furtherance of its purpose;
(d) To act in any state or nation in which the Partnership may lawfully
act, for itself or as principal, agent or representative for any individual,
association, partnership, corporation or legal entity, respecting business of
the Partnership;
(e) To enter into, make, amend, perform and carry out, or cancel and
rescind, contracts and other obligations for any lawful purpose pertaining to
the business of the Partnership, including, but not limited to, one or more
agreements to reimburse or be reimbursed by Duke Services for employee,
administrative or other costs associated with the Partnership's properties or
properties for which services are rendered by Duke Services;
(f) To become a partner or member in, and perform the obligations of a
partner or member of, any general or limited partnership or limited liability
company or to become a shareholder of any corporation;
(g) To apply for, register, obtain, purchase or otherwise acquire
trademarks, trade names, labels and designs relating to or useful in connection
with any business of the Partnership, and to use, exercise, develop and license
the use of the same;
(h) To employ, on behalf of the Partnership, legal counsel; financial
counsel; accountants; professional advisors; and Persons or entities for the
operation and management of the business of the Partnership;
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(i) To establish accounts and deposits and maintain funds in the name of
the Partnership in banks or other financial institutions and to invest funds of
the Partnership temporarily when not required for operation of its properties or
distribution to the Partners, in short-term debt obligations, including without
limitation obligations of federal and state governments, commercial paper and
certificates of deposit of banks and other financial institutions;
(j) To pay or reimburse any and all actual fees, costs and expenses
incurred in the formation and organization of the Partnership;
(k) To do all acts which are necessary, customary or appropriate for the
protection and preservation of the Partnership's assets, including the
establishment of reserves;
(l) To loan money to, borrow money from and engage in transactions with
Affiliates, subject to Sections 3.07 and 3.13;
(m) To compromise, submit to arbitration, sue on, or defend claims in
favor of or against the Partnership; and
(n) In general, to exercise all of the general rights, privileges and
powers permitted to be had and exercised by the provisions of the Act.
SECTION 3.03. MANAGEMENT OF THE PARTNERSHIP. Subject to the limitations
of this section, of Section 3.04 and of Section 3.09, the General Partner shall
be responsible for the management of the Partnership's business and shall have
full, exclusive and complete power and discretion, without the need for consent
or approval of any other Partner, to make all decisions and to do all things
which it deems necessary or desirable on behalf of the Partnership, including
but not limited to the exercise of the powers specified in Section 3.02 on
behalf of the Partnership.
SECTION 3.04. LIMITATION ON POWERS. As between the Partners and subject
to Section 2.03(c), no Partner shall:
(i) Use the Partnership name or assets in any way except for the
transaction of legitimate Partnership business or do any
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act in contravention of these Articles of Partnership; or
(ii) Do any act which would make it impossible to carry on the
business of the Partnership.
SECTION 3.05. NON-PARTICIPATION IN MANAGEMENT BY LIMITED PARTNERS. Except
as specifically provided in this Agreement, no Limited Partner as such shall
participate in the control or management of the business of the Partnership, nor
act for and on behalf of the Partnership in any manner whatsoever. No Limited
Partner shall be deemed to be participating in the management of the business of
the Partnership merely by consulting with or advising the General Partner or any
Affiliate or Subsidiary of the General Partner or by acting as an officer,
director, employee, agent or shareholder of the General Partner or any Affiliate
or Subsidiary of the General Partner or as an employee or agent of the
Partnership or any Subsidiary of the Partnership.
SECTION 3.06. TIME TO BE DEVOTED TO BUSINESS. The General Partner and its
employees and agents shall devote such time to the Partnership's business as the
General Partner determines to be reasonably necessary to manage and supervise
the Partnership's business and affairs in an efficient manner. Nothing in this
Agreement shall preclude the employment, at the expense of the Partnership, of
any agent or third party to manage or provide other services with respect to the
Partnership's business, subject to the control of the General Partner. Unless
otherwise provided in a writing executed by the General Partner, any such
employment, or any appointment of any agent or authorization by the General
Partner shall in all cases be subject to immediate termination upon written
notice by the General Partner.
SECTION 3.07. DEALINGS WITH RELATED ENTITIES.
(a) A Partner or any Affiliate of a Partner may contract or otherwise deal
with the Partnership for the purchase or sale of goods, property or services or
for other purposes, and the Partnership shall have the power to so contract or
deal, if the transaction is in the best interests of DRE and its shareholders.
The requirements of this subsection shall be deemed to be satisfied with respect
to any contract or dealing
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for which the approval of the Unaffiliated DRE Directors has been obtained;
however, the failure to obtain such approval shall not be evidence that such
requirements are not otherwise satisfied. The validity of any transaction,
agreement, or payment involving the Partnership and an Affiliate of a Partner
otherwise permitted by this Agreement shall not be affected by reason of the
relationship between the Partner and the Affiliate or the approval of the
transaction, agreement, or payment by the Partner who is otherwise interested in
or related to the Affiliate. Specifically, and not by way of limitation, the
Partnership is permitted to contract or otherwise deal with Duke Realty, Steel
Frame Erectors, Inc. and ITI-Duke Joint Venture.
(b) If a Partner is employed by or retained by the Partnership in any
capacity, compensation to such Partner shall be deemed to be for services
rendered not in the Partner's capacity as a member of the Partnership, and it
shall be treated for federal income tax purposes as a payment described by
Section 707(a) of the Code.
(c) The General Partner, in its sole and absolute discretion and without
the approval of the Limited Partners, may propose and adopt on behalf of the
Partnership employee benefit plans funded by the Partnership for the benefit of
employees of the General Partner, the Partnership, Duke Realty, DRE,
Subsidiaries of the Partnership or the General Partner or any Affiliate of any
of them in respect of services performed, directly or indirectly, for the
benefit of the Partnership, the General Partner, Duke Realty, DRE, or any of the
Partnership's or the General Partner's Subsidiaries.
(d) The General Partner is expressly authorized to enter into, in the name
and on behalf of the Partnership, options, right of first opportunity
arrangements and other conflict avoidance agreements with various Affiliates of
the Partnership, DRE, the Limited Partners and the General Partner, on such
terms as the General Partner, in its sole and absolute discretion, believes are
advisable.
SECTION 3.08. OTHER BUSINESS. Subject to Section 3.09, nothing contained
in this Agreement shall in any way or manner prohibit or restrict the right or
freedom of any Partner, any Affiliate of any Partner or any other Person to
conduct or participate in any business or activity individually or as a partner,
shareholder or owner of any partnership, corporation or
-20-
other entity other than the Partnership without any obligation or accountability
to the Partnership or any other Partner, even if such business or activity
competes with the business of the Partnership; and subject to Section 3.09, any
entity which includes as a partner, shareholder or other owner a Partner, any
Affiliate of a Partner or any other Person shall have the right at any time to
own and operate any business whatsoever other than the business of the
Partnership, either individually or with one or more parties, and shall not be
required to obtain the consent thereto by any other Partner or offer to any
other Partner or the Partnership a participation therein.
SECTION 3.09. RESTRICTION ON GENERAL PARTNER AND PARTNERSHIP ACTIVITIES.
(a) Unless Special Partner Approval is obtained, the General Partner shall
not engage in any of the following activities:
(i) Directly or indirectly enter into or conduct any business,
other than in connection with the ownership, acquisition and
disposition of a Partnership Interest, the management of the
business of the Partnership and Duke Construction Limited
Partnership, and such activities as are incidental thereto.
(ii) Own any assets other than its Partnership Interest,
interests in entities which are entirely owned, directly or
indirectly, by one or both of the General Partner and the
Partnership, and such bank accounts or similar instruments
as it deems necessary to carry out its responsibilities
contemplated under this Agreement.
(iii) Issue equity securities to or permit any of its equity
securities to be owned by any Person other than DRE.
(b) Notwithstanding anything to the contrary herein, the Partnership shall
not, without Special Partner Approval, effect or enter into an agreement to
effect a voluntary sale, exchange or other disposition by merger, consolidation
or otherwise
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(other than a disposition occurring upon a financing or refinancing by the
Partnership) of all or substantially all of the assets of the Partnership in a
single transaction or a series of related transactions.
(c) Notwithstanding anything to the contrary herein, (i) the Partnership
shall not take, refrain from taking, or be required to take any action which, in
the judgment of the General Partner, in its sole and absolute discretion, (A)
could adversely affect the ability of DRE to continue to qualify as a REIT,
(B) subject to clause (A), could adversely affect the classification of the
Partnership or any partnership which is an Affiliate of the Partnership as a
partnership for tax purposes, (C) could subject DRE to any additional taxes
under Section 857 or Section 4981 of the Code, or (D) 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; and (ii) the
Partnership, when deemed necessary by the General Partner in its sole and
absolute discretion to continue DRE's qualification as a REIT, shall be required
to make distributions to its Partners, whether funded by available cash
revenues, borrowings or any other means, which are sufficient in amount to
enable DRE to meet the REIT distribution requirements contained in Code
Section 857(a).
SECTION 3.10. INDEMNIFICATION.
(a) Each Person who is now or in the future (i) the General Partner, or
(ii) an officer, director, shareholder, or Affiliate of the General Partner, or
(iii) an officer, employee or agent of the Partnership, or (iv) any such
Person's successors and assigns, shall be indemnified by the Partnership against
expenses (including, but not limited to, attorneys' fees, related disbursements
and removal of any liens affecting any property of the indemnitee), judgments,
fines, and amounts paid in settlement, actually and reasonably incurred by such
Person in connection with any action, suit or proceeding to which such Person
may be made a party by reason of being, or having been, (i) the General Partner
or (ii) an officer, director, shareholder, employee, agent or Affiliate of the
General Partner, or (iii) an officer, employee or agent of the Partnership, or
(iv) any such Person's successor or assign (whether or not continuing to be such
at the time of incurring such expense), if such Person acted in good faith and
in a
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manner reasonably believed by such Person to be in, or at least not opposed to,
the best interests of the Partnership, and, with respect to any criminal action
or proceeding, such Person had either reasonable cause to believe his or its
conduct was lawful or had no reasonable cause to believe his or its conduct was
unlawful. An action shall be conclusively presumed to have been reasonably
believed by a Person to be in, or at least not opposed to, the best interests of
the Partnership if it was reasonably believed by such Person to be in, or at
least not opposed to, the best interests of DRE or its Shareholders. 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 3.10(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 acted in a manner contrary to that specified in this
Section 3.10(a). If a judgment, order, settlement or any other document which
terminates a proceeding does not indicate whether the indemnitee met the
requisite standard of conduct set forth in this Section 3.10(a), such
determination shall be made by independent legal counsel unless the
disinterested Unaffiliated DRE Directors decide otherwise. Any such
indemnification shall be limited to the assets of the Partnership and shall not
impose any personal liability upon any Partner. This provision is intended to
provide such indemnification as is permitted under Indiana law; it shall not
operate to indemnify any person in any case in which such indemnification is for
any reason contrary to law.
(b) Reasonable expenses incurred by an indemnitee who is a party to a
proceeding may be paid or reimbursed by the Partnership in advance of the final
disposition of the proceeding upon receipt by the Partnership of (i) a written
affirmation by the indemnitee of the indemnitee's good faith belief that the
standard of conduct necessary for indemnification by the Partnership as
authorized in this Section 3.10 has been met, and (ii) a written undertaking by
or on behalf of the indemnitee to repay the amount if it shall ultimately be
determined that the standard of conduct has not been met.
(c) The indemnification provided by this Section 3.10 shall be in addition
to any other rights to which an indemnitee
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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.
(d) The Partnership may purchase and maintain insurance, on behalf of any
potential indemnitee and such other Persons as the General Partner shall
determine, against any liability that may be asserted against or expenses that
may be incurred by such Person in connection with the Partnership's activities,
regardless of whether the Partnership would have the power to indemnify such
Person against such liability under the provisions of this Agreement.
(e) For purposes of this Section 3.10, the Partnership shall be deemed to
have requested a Person to serve as fiduciary of an employee benefit plan, and
such Person shall be deemed to be within the class of indemnitees in
subsection (a), whenever the performance by the Person of the Person's 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 3.10(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 which is not opposed to the best interests of the
Partnership.
(f) In no event may an indemnitee subject the Limited Partners to personal
liability by reason of the indemnification provisions set forth in this
Agreement.
(g) An indemnitee shall not be denied indemnification in whole or in part
under this Section 3.10 because the indemnitee had an interest in the
transaction with respect to which the indemnification applies if the transaction
was otherwise permitted by the terms of this Agreement.
(h) The provisions of this Section 3.10 are for the benefit of the
indemnitees and their heirs, successors, assigns and administrators and shall
not be deemed to create any rights for the benefit of any other Persons.
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SECTION 3.11. VOTING RIGHTS OF LIMITED PARTNERS.
(a) Subject to subsection (b), the following matters require Special
Partner Approval:
(i) The matters described in Section 3.03(c) relating to a
disposition of all or substantially all of the Partnership's
assets.
(ii) Permitting the General Partner to engage in the actions
described in Section 3.09.
(iii) Causing a dissolution of the Partnership as described in
Section 6.01(d).
(iv) Amending this Agreement as described in Section 9.05(b).
(b) The parties intend that the exercise of any rights granted to the
Limited Partners by this Agreement shall be deemed action affecting only the
agreement among the Partners and not an action affecting the management and
control of the business or otherwise inconsistent with the Act. The exercise of
any rights of the Limited Partners under this Section shall, at the option of
the General Partner, be conditioned upon the prior receipt by the General
Partner of an opinion of legal counsel for the Partnership, satisfactory in form
and substance to the General Partner, to the effect that such exercise will not
have a material adverse federal or state income tax or other material adverse
legal impact on the Partnership. A Limited Partner may, however, and shall be
permitted to exercise any rights granted to the Limited Partners by this
Agreement relating to management and control of the business notwithstanding any
adverse effect on such Limited Partner.
SECTION 3.12. APPROVAL PROCEDURES. Any matter requiring the consent or
approval of all or any portion of the Limited Partners shall be deemed to be
approved if Limited Partners entitled to vote thereon holding the requisite
Partnership Interests consent in writing pursuant to the terms of this Agreement
to the proposed action.
SECTION 3.13. LOANS TO AND FROM THE PARTNERSHIP. In the event that
additional funds are required by the Partnership, one
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or more Partners (or any Affiliate thereof) may, at the option of the General
Partner, loan such funds to the Partnership. Each such loan shall be made upon
terms and conditions no less favorable to the Partnership than those upon which
a commercial lending institution would make such a loan to an entity with
financial and business characteristics similar to the Partnership. The
Partnership may loan funds to the General Partner or DRE only to the extent
(i) such funds are needed by DRE to make distributions to its shareholders
(A) required for DRE to qualify as a REIT or to avoid being subject to income or
excise taxes under the Code or (B) to avoid decreasing DRE's customary level of
dividends to its shareholders if maintaining such level of dividends through
receipt of distributions from Duke Realty or the Partnership at any time prior
to December 31, 1995 might result in treatment of such a distribution as a sale
of property by a Limited Partner under Section 707 of the Code, (ii) DRE cannot
satisfy its need for such funds from Duke Realty, and (iii) the Partnership
cannot then satisfy DRE's need for such funds by making distributions of
Distributable Cash either because sufficient Distributable Cash cannot
reasonably be made available or because a distribution of Distributable Cash at
any time prior to December 31, 1995 by Duke Realty or the Partnership might be
treated as a sale of property under Section 707 of the Code. Any such loan
shall be repaid (with distributions of Distributable Cash to Affiliates of DRE
or otherwise) as soon as possible, shall have a maximum term of one (1) year and
shall be made on other terms and conditions no less favorable to the Partnership
than those upon which a commercial lending institution would make such a loan to
an entity with financial and business characteristics similar to the General
Partner or DRE, as applicable. To the extent that the Partnership loans funds
to the General Partner or DRE pursuant to this section, the Partnership may
also, at the option of the General Partner, loan to any other Limited Partner
funds in an amount up to the amount loaned to the General Partner or DRE times
the ratio of such Limited Partner's Percentage Share to the General Partner's
Percentage Share, on the same terms as the loan to the General Partner or DRE,
as applicable.
SECTION 3.14. REIMBURSEMENT OF EXPENSES.
(a) Except as provided in this Section 3.14 and elsewhere in this
Agreement (including the provisions of Article IV regarding distributions,
payments, and allocations to which it
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may be entitled), the General Partner shall not be compensated for its services
as general partner of the Partnership.
(b) 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 in connection with the business of the
Partnership. Such reimbursements shall be in addition to any reimbursement to
the General Partner as a result of indemnification pursuant to Section 3.10
hereof.
(c) The General Partner shall also be reimbursed for all expenses it
incurs relating to the organization of the Partnership and the General Partner.
SECTION 3.15. GENERAL MANAGER AND ASSISTANT GENERAL MANAGER.
(a) The General Partner may in its discretion appoint (or remove) a
General Manager and one or more Assistant General Managers of the Partnership in
accordance with this section, any of whom, acting alone, shall have full power
and authority to bind the Partnership as agent of the Partnership in any manner
as provided in this Agreement. Such an appointment and grant of authority shall
not constitute the General Manager or any Assistant General Managers a Partner
under this Agreement nor relieve the General Partner from liability or
responsibility for the acts of any General Manager or Assistant General Manager.
(b) A General Manager or Assistant General Manager acting alone shall have
the full power and authority to execute any and all documents on behalf of the
Partnership including, but not limited to, contracts, notes, mortgages, deeds
and leases for and on behalf of the Partnership which, when so executed and
delivered, shall be binding upon the Partnership. Any Person dealing with the
Partnership may rely on the authority of the General Manager and Assistant
General Managers as described herein, and upon the certification of the General
Partner as to the identity of the General Manager or any Assistant General
Manager, and need not inquire further into the authority or incumbency of such
Person.
(c) The General Partner may appoint or remove any Person as General
Manager or Assistant General Manager by giving
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written notice thereof to the Partners. In the event of the death, incapacity
or adjudication of incompetence of a General Manager or an Assistant General
Manager, such Person shall be deemed removed from such position without further
action by the General Partner.
(d) The appointment of a General Manager or Assistant General Manager
shall not change the authority of the General Partner to execute documents on
behalf of the Partnership as provided in this Agreement or under the Act. A
General Manager or Assistant General Manager may execute documents in the
following manner (or in any other manner which clearly indicates that the
General Manager or Assistant General Manager is acting for the Partnership as
its agent):
DUKE REALTY SERVICES LIMITED PARTNERSHIP
By:
---------------------------
[Assistant] General Manager
(e) A General Manager or Assistant General Manager shall not be personally
liable for any liabilities or obligations of the Partnership solely as a result
of holding the position of General Manager or Assistant General Manager.
ARTICLE IV
CAPITAL CONTRIBUTIONS,
ALLOCATIONS AND DISTRIBUTIONS
SECTION 4.01. CAPITAL CONTRIBUTIONS.
(a) At the time of the execution of this Agreement, the General Partner
shall make a Capital Contribution of $111,000 in cash.
(b) At the time of the execution of this Agreement, Duke Realty shall make
a Capital Contribution of $1,000,000 in cash.
(c) At the time of the execution of this Agreement, DMI shall make a
Capital Contribution of all of its right, title and interest in and to the
tangible and intangible assets specified in the Contribution Agreement of even
date herewith by and between the Partnership and DMI, subject to the obligations
and
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liabilities of DMI associated therewith or as listed in such Contribution
Agreement and subject to a promissory note to a financial institution in the
principal amount of $20,000,000, all of which Capital Contribution is assigned
by the Partners an agreed net fair market value of $10,000,000.00, and the
Partners agree to credit DMI's Capital Account by this amount.
(d) From and after the date hereof, except as provided in subsections (a),
(b) and (c) and in Sections 4.02(c) and 4.08, the Partners shall not be
obligated to make further contributions to the Partnership.
SECTION 4.02. DISTRIBUTABLE CASH.
(a) Distributions of Distributable Cash shall be declared and accrued as
of the last day of each calendar quarter of each taxable year or more frequently
by the General Partner in its sole discretion though not actually distributed to
the Partners until such date as the General Partner so determines with respect
to such quarter or more frequent period as follows:
(1) To the Partners pro rata in accordance with their Percentage Shares up
to the amount for each Partner of such Partner's Annual Preferred
Return for the current fiscal year;
(2) To the Partners pro rata in accordance with their Percentage Shares up
to the amount for such Partner of any Annual Preferred Return of such
Partner respecting a prior fiscal year which was not distributed to
such Partner; and
(3) Thereafter, to the Partners, in accordance with their Secondary
Percentage Shares.
(b) Notwithstanding subsection (a), if the Partnership reallocates Gross
Income pursuant to Section 4.04(a)(4), the Partnership in the second subsequent
tax year shall reallocate a corresponding amount of Distributable Cash in the
same manner.
(c)(1) Notwithstanding subsection (a), if for a fiscal year of the
Partnership (a "Loss Year"), the Gross Expenses of the
Partnership exceed the Gross Income of the Partnership for such
year (such excess being referred to as the "Loss") and at the end
of none
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of the four succeeding fiscal years of the Partnership does the
aggregate amount of Gross Income in excess of Gross Expenses of
the Partnership allocated under Section 4.04(a)(1)(A) to the
General Partner and DMI offset such Loss, then the Partnership
shall reallocate the distribution of Distributable Cash or, if
there is insufficient Distributable Cash, require the General
Partner and DMI to contribute cash to the Partnership, in an
amount equal to the lesser of (1) the amount of the Loss and
(2) the excess of the amount of the Loss plus the aggregate Gross
Expenses allocated to the General Partner and DMI for such four
fiscal year period over the aggregate Gross Income allocated to
the General Partner and DMI under Section 4.04(a)(1) for such
four year period.
(c)(2) If the distribution of Distributable Cash is reallocated or the
General Partner and DMI are required to contribute cash to the
Partnership pursuant to subsection (c)(1), and in any subsequent
year the allocation to DMI and the General Partner of Gross
Income for such year exceeds the Gross Expenses allocable to DMI
and the General Partner for such year, then notwithstanding
subsection (a), distributions of Distributable Cash in an amount
up to such excess Gross Income for such year (provided that, in
such an event, such amount of excess Gross Income shall not also
offset any prior year Loss for purposes of calculations made
under subsection (c)(1)) shall first be made 99% to DMI and 1% to
the General Partner until the aggregate amount of cash
distributed to each Partner under this subsection (c)(2) for all
fiscal years of the Partnership equals the aggregate amount of
cash reallocated away from such Partner or the aggregate amount
of cash contributed by such Partner pursuant to subsection (c)(1)
for all fiscal years of the Partnership and not previously
restored to such Partner pursuant to this subsection (c)(2) for
all fiscal years of the Partnership.
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SECTION 4.03. DISTRIBUTIONS FROM TERMINATING CAPITAL TRANSACTION. After
the occurrence of a Terminating Capital Transaction, all cash of the Partnership
from all sources shall be applied and distributed in the following order, after
adjusting Capital Accounts for all Distributions under Section 4.02 and all
allocations of Gross Income and Gross Expenses:
(a) To the payment of debts and liabilities of the Partnership deemed
appropriate by the General Partner to pay at that time in the order of priority
as provided by law (other than those to Partners) including the expenses of or
relating to sale, refinancing, exchange, condemnation, destruction or other
disposition of assets of the Partnership;
(b) To the setting up of such reserves as are reasonably necessary for any
contingent liabilities or obligations of the Partnership or for the operation of
the Partnership, as determined solely by the General Partner in good faith;
(c) To the payment of debts and liabilities of the Partnership to the
Partners other than in respect to the balances in the Capital Accounts of
Partners; and
(d) To the Partners in accordance with the positive balances in their
Capital Accounts.
SECTION 4.04. ALLOCATION OF GROSS INCOME AND GROSS EXPENSES.
(a) After giving effect to the allocations set forth in Section 4.05
hereof, for each fiscal year of the Partnership (as defined in Section 5.01) or
portion thereof:
(1) Gross Income shall be allocated: (A) 99% to DMI and 1% to the General
Partner to the extent that the aggregate amount of Gross Expenses
allocated to the Partners pursuant to subsection (a)(2) during the
term of the Partnership exceeds the aggregate amount of Gross Income
allocated to the Partners pursuant to this subsection (a)(1)(A) during
the term of the Partnership (excluding from this calculation any Gross
Income which may be reallocated pursuant to subsection (a)(4)); (B) to
the Partners in accordance with their Percentage Shares to the extent
of the excess of the sum of the cumulative Annual Preferred
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Return for all fiscal years of the Partnership, whether or not
actually distributed, over the amounts of Gross Income allocated in
all prior fiscal years pursuant to this subsection (a)(1)(B); and
(C) the balance, if any, to the Partners in accordance with their
Secondary Percentage Shares.
(2) All Gross Expenses shall be allocated 99% to DMI and 1% to the General
Partner.
(3) In the event any grant of Units in Duke Realty by DMI to former
employees as deferred compensation is required to be treated as a
deduction of the Partnership and not of DMI, all Gross Expenses
related to such compensation shall be allocated to DMI, and any Gross
Income from the issuance of such Units shall be allocated to DMI.
(4) Notwithstanding the foregoing, in no event shall the Partnership
allocate to Duke Realty and the General Partner an amount of Gross
Income in any taxable year that would result in DRE receiving an
amount of Gross Income attributable to the Partnership, which is not
specified in Code Section 856(c)(2) as qualifying income, in excess of
4-1/2% of its aggregate Gross Income from all sources for such taxable
year; instead, the Partnership shall reallocate any such excess Gross
Income from Duke Realty to DMI.
(b) In connection with any Terminating Capital Transaction treated as an
installment sale, Gross Income or Gross Expenses shall, for purposes of
adjusting the Partners' respective Capital Accounts, be allocated under the
foregoing provisions of this section as though the principal amount of the
deferred obligation were received in full at the time of sale. In connection
with any Terminating Capital Transaction properly treated as an installment sale
under the Code, the portion of the Gross Income or Gross Expenses in each
installment allocable to a given Partner shall, for federal income tax purposes,
be in proportion to the Partner's total share of Gross Income or Gross Expenses
from the Terminating Capital Transaction allocated to the Partner pursuant to
the foregoing provisions of this section.
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(c) For purposes of this Section 4.04, the determination of a Partner's
Capital Account shall be made without taking into account any liabilities
treated as a contribution of money pursuant to Treasury Regulations Section
1.704-1(b)(2)(iv)(c) (if the Partnership's payment of such liabilities would be
treated as a distribution of money pursuant to Treasury Regulations Section
1.704-1(b)(2)(iv)(c)).
(d) All allocations to specified groups of Partners under this Article
shall be made in accordance with their respective Percentage Shares or Secondary
Percentage Shares, as applicable.
SECTION 4.05. REGULATORY ALLOCATIONS.
(a)(i) MINIMUM GAIN CHARGEBACK. Notwithstanding any other provision of
this Article IV, if there is a net decrease in Partnership
Minimum Gain during any fiscal year, each Partner shall be
allocated items of Partnership income and gain for such fiscal
year (and, if necessary, subsequent fiscal years) in an amount
equal to such Partner's share of the net decrease in Partnership
Minimum Gain determined in accordance with Section 1.704-2(g) of
the Treasury Regulations. The items to be so allocated shall be
determined in accordance with Section 1.704-2(f) of the Treasury
Regulations. This Section 4.06(a)(i) is intended to comply with
the minimum gain chargeback requirements in such Section of the
Treasury Regulations and shall be interpreted consistently
therewith. Where such a chargeback would cause a distortion of
the intended distributions upon liquidation of the Partnership
and it is not expected that the Partnership will have sufficient
items of income, gain, loss and deduction to correct such
distortion, the Partnership shall apply for a waiver of the
minimum gain chargeback requirement in accordance with
Section 1.704-2(f) of the Treasury Regulations.
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(ii) PARTNER MINIMUM GAIN CHARGEBACK. Notwithstanding any other
provision of this Article IV except Section 4.05(a)(i), if there
is a net decrease in Partner Minimum Gain attributable to a
Partner Nonrecourse Debt during any fiscal year, each Partner who
has a share of the Partner Minimum Gain attributable to such
Partner Nonrecourse Debt, determined in accordance with
Section 1.704-2(i)(5) of the Treasury Regulations, shall be
specially allocated items of Partnership income and gain for
such fiscal year (and, if necessary, subsequent fiscal years)
in an amount equal to the portion of such Partner's share of
the net decrease in Partner Minimum Gain attributable to such
Partner Nonrecourse Debt, determined in accordance with
Section 1.704-2(i)(4) of the Treasury Regulations. The items
to be so allocated shall be determined in accordance with
Section 1.704-2(i)(4) of the Treasury Regulations. This
Section 4.05 (a)(ii) is intended to comply with the minimum
gain chargeback requirement in such Section of the Treasury
Regulations and shall be interpreted consistently therewith.
(b) QUALIFIED INCOME OFFSET. In the event any Partner would be allocated
Gross Expenses or other items of deduction or Code Section 705(a)(2)(B)
Expenditures hereunder or unexpectedly receives any adjustments, allocations, or
distributions described in Sections 1.704-1(b)(2)(ii)(d)(4), (5) or (6) of the
Treasury Regulations which would result in an Adjusted Capital Account deficit,
items of Partnership income and gain shall be specially allocated to such
Partner in an amount and manner sufficient to eliminate, to the extent required
by the Treasury Regulations, the Adjusted Capital Account deficit of such
Partner as quickly as possible, provided that an allocation pursuant to this
Section 4.05(b) shall be made only if and to the extent that such Partner would
have an Adjusted Capital Account deficit after all other allocations provided
for in this Article IV have been tentatively made as if this Section 4.05(b)
were not in the Agreement.
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(c) NONRECOURSE DEDUCTIONS. Nonrecourse Deductions for any fiscal year or
other period shall be allocated among the Partners in accordance with their
Percentage Shares as of the end of such fiscal year or other period.
(d) PARTNER NONRECOURSE DEDUCTIONS. Any Partner Nonrecourse Deductions
for any fiscal year or other period shall be specially allocated to the Partner
who bears the economic risk of loss with respect to the Partner Nonrecourse Debt
to which such Partner Nonrecourse Deductions are attributable in accordance
with Section 1.704-2(i) of the Treasury Regulations.
(e) SECTION 743 ADJUSTMENTS. To the extent an adjustment to the adjusted
tax basis of any Partnership asset pursuant to Code Section 734(b) or Code
Section 743(b) is required, pursuant to Section 1.704-1(b)(2)(iv)(m) of the
Treasury Regulations, to be taken into account in determining Capital Accounts,
the amount of such adjustment to the Capital Accounts shall be treated as an
item of gain (if the adjustment increases the basis of the asset) or loss (if
the adjustment decreases such basis) and such gain or loss shall be specially
allocated to the Partners in a manner consistent with the manner in which their
Capital Accounts are required to be adjusted pursuant to such Section of the
Treasury Regulations.
(f) CURATIVE ALLOCATIONS. Any allocations of items of income, gain, loss,
Code Section 705(a)(2)(B) Expenditures or deduction made pursuant to
Sections 4.05(a), 4.05(b), 4.05(d) and 4.05(e) hereof shall be taken into
account for the purpose of equitably adjusting subsequent allocations of income,
gain, loss, Code Section 7.05(a)(2)(B) Expenditures and deduction among the
Partners so that, to the extent possible, the net allocations in the aggregate,
allocated to each Partner pursuant to this Article IV and the Capital Accounts
of each Partner, shall as quickly as possible and to the extent possible
consistent with the requirements of Sections 4.05(a), 4.05(b), 4.05(d) and
4.05(e) be the same as if no allocations had been made under those sections.
For purposes of applying the foregoing sentence, allocations pursuant to this
Section 4.05(f) shall only be made with respect to allocations pursuant to
Section 4.05(e) hereof to the extent the Tax Matters Partner reasonably
determines that such allocations will otherwise be inconsistent with the
economic agreement among the parties to this Agreement.
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(g) ADJUSTMENTS ARISING FROM RELATED PARTY TRANSACTIONS. Whenever under
Code Section 267(d), the Partnership realizes a gain, all or part of which is
not recognized due to a prior disallowance of loss under Code Section 267(a)
arising out of a transfer of property to the Partnership from a Partner or
related party to such Partner (such Partner referred to herein as "Affected
Partner"), other items of income or gain of the Partnership in an amount equal
to the unrecognized gain shall be reallocated away from the Affected Partners
and shall be allocated to Partners receiving the economic benefit associated
with the corresponding nonrecognition of gain. If there exists insufficient
income or gain in a taxable year, then income or gain from succeeding taxable
years shall be reallocated until an amount of income or gain equal to the
unrecognized gain has been reallocated. If as the result of the application of
Code Section 267, the aggregate Capital Accounts of the Partners are not equal
to the amount of Partnership capital, then pursuant to Treasury Regulations
Section 1.704-1(b)(2)(iv)(q), the Capital Accounts of the Affected Partners
shall be adjusted accordingly to maintain equality between Capital Accounts and
capital of the Partnership and to conform with the underlying economic
arrangement of the Partners. This Section 4.05(g) is intended to equitably
adjust allocations of income, gain, loss, Code Section 705(a)(2)(B) Expenditures
and deductions among the Partners so that, to the extent possible, the net
allocations in the aggregate, allocated to each Partner pursuant to this Article
IV and the Capital Accounts of each Partner, shall as quickly as possible and to
the extent possible, be the same as if the distortions created by Code Section
267 had not occurred.
(h) The Tax Matters Partner shall have reasonable discretion, with respect
to each Partnership fiscal year, to (i) divide all allocations pursuant to
Section 4.05(f) hereof among the Partners in a manner that is likely to minimize
such economic distortions, and (ii) request that the Commissioner of the
Internal Revenue Service waive the chargeback allocations of Partnership Minimum
Gain or Partner Minimum Gain, or both for such fiscal year if: (1) such
allocation would cause a distortion in the economic arrangement among the
Partners, (2) the Tax Matters Partner does not expect that the Partnership will
have sufficient other income to correct that distortion, (3) with respect to the
chargeback allocations of Partnership Minimum Gain, the Tax Matters Partner can
demonstrate the facts required by Treasury Regulations Section 1.704-2(f)(4),
and (4) with respect to the chargeback allocations of Partner Minimum
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Gain, the Tax Matters Partner can demonstrate the facts required by rules
consistent with Treasury Regulations Section 1.704-2(f)(4).
SECTION 4.06. OTHER ALLOCATION RULES. Solely for purposes of determining
a Partner's proportionate share of the "excess nonrecourse liabilities" of the
Partnership within the meaning of Section 1.752-3(a)(3) of the Treasury
Regulations, such excess nonrecourse liabilities shall be allocated among the
Partners in proportion to their respective Percentage Shares.
SECTION 4.07. TAX ALLOCATIONS; CODE SECTION 704(c).
(a) In the event any Partnership property is reflected on the books of the
Partnership at a book value that differs from the adjusted tax basis of such
property at the time of its contribution to the Partnership or its revaluation
pursuant to Treasury Regulations Section 1.704-1(b)(2)(iv)(d) or
1.704-1(b)(2)(iv)(f), respectively, income, gain, loss, and deduction with
respect to such property shall, solely for tax purposes, be allocated among the
Partners in the manner required by Code Section 704(c) and Treasury Regulations
Section 1.704-1(b)(4)(i). Consistent with the foregoing, depreciation,
amortization or other cost recovery deductions shall be allocated in accordance
with the traditional method contained in proposed Section 1.704-3(b) of the
Treasury Regulations or any similar succeeding applicable provision. For
purposes of allocating the Partnership's earnings and profits to corporate
Partners, depreciation, amortization and cost recovery deductions used in
determining earnings and profits shall be allocated among the Partners in the
same manner as allocations of depreciation, amortization and other cost recovery
deductions for regular tax purposes, adjusted for differences in earnings and
profits bases and depreciation periods.
(b) In the event the Partnership realizes gain which is not recognized
pursuant to Code Section 267(d), such gain shall be allocated to Affected
Partners solely for tax purposes. The intent of this provision is to ensure
that the taxable basis of each Affected Partner is maintained in a manner so
that each Affected Partner recognizes his appropriate share of distributions,
gain and loss as intended by the Partners in this Agreement as if the
distortions created by Code Section 267 had not occurred.
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(c) Any elections or other decisions relating to such allocations shall be
made by the Tax Matters Partner in any manner that reasonably reflects the
purpose and intention of this Agreement. Allocations pursuant to this
Section 4.07 are solely for purposes of federal, state, and local taxes and
shall not affect, or in any way be taken into account in computing, any Person's
Capital Account or share of Gross Income, Gross Expenses, other items, or
distributions pursuant to any provision of this Agreement.
SECTION 4.08. DEFICIT MAKE-UP OBLIGATION. In the event after liquidation
of the Partnership and the allocation of liquidation proceeds pursuant to
Article VIII, the General Partner or DMI has a negative balance in its Capital
Account, such Partner shall contribute to the Partnership within the time limits
specified by Treasury Regulations Section 1.704-1(b)(2)(ii)(b)(3) an amount
equal to such negative amount which shall be used to pay creditors of the
Partnership and the balance of which shall be distributed to the other Partners
in accordance with the positive balances in their Capital Accounts.
SECTION 4.09. GENERAL PROVISIONS. In the event of an increase or a
decrease in the interest of a Partner at any time after the Partnership's
initial fiscal quarter other than at the end of a fiscal quarter of the
Partnership, the share of the Gross Income and Gross Expenses and the
Distributable Cash of the Partnership shall be allocated among the Persons whose
shares are changed as determined by the General Partner pursuant to Code
Section 706(d).
SECTION 4.10. NO INTEREST ON CAPITAL ACCOUNTS. No Partner shall be
entitled to receive any interest from the Partnership on account of the amount
of its Capital Account.
SECTION 4.11. DISTRIBUTION OF PROPERTY. Unless the Partners otherwise
agree, in the event it becomes necessary to make a Distribution of Partnership
property in kind, then such property shall be transferred and conveyed to the
Partners, or their assigns, so as to vest in each of them as a tenant-in-common,
a percentage interest in the whole of said property equal to the percentage
interest he would have received had such property not been distributed in kind.
SECTION 4.12. RETURN OF CAPITAL CONTRIBUTION. Except as provided in this
Agreement, no Partner shall be entitled to
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withdraw any part of its Capital Contribution or to receive any Distributions
from the Partnership. No Partner shall have the right to demand or receive
property other than cash in return for its Capital Contribution; and if upon
dissolution the Partnership property remaining after the payment or discharge of
debts and liabilities of the Partnership is insufficient to return said
contributions, no Limited Partner shall have any recourse against the General
Partner or any other Limited Partner.
SECTION 4.13. RESTRUCTURING OF PARTNERSHIP. In the event the Unaffiliated
DRE Directors reasonably determine that Gross Income will be reallocated among
the Partners pursuant to Section 4.04(a)(4), the Partnership shall be
restructured in a manner mutually agreed upon by the Partners which will as much
as possible retain the economic benefits each Partner would have received absent
the reallocations pursuant to Section 4.04(a)(4).
ARTICLE V
ACCOUNTING, REPORTING AND HOLDING OF ASSETS
SECTION 5.01. FISCAL YEAR. The fiscal year of the Partnership shall be
the calendar year.
SECTION 5.02. RECORDS, ACCOUNTING AND REPORTS.
(a) The books of account and records of the Partnership shall be located
at such place as may be specified by the General Partner and shall be kept and
maintained on an accrual basis in accordance with generally accepted accounting
principles.
(b) Any records maintained by or on behalf of the Partnership in the
regular course of its business may be kept on, or be in the form of, punch
cards, magnetic tape, photographs, micrographics or any other information
storage device; PROVIDED THAT the records so maintained are convertible into
clearly legible written form within a reasonable period of time.
(c) As soon as practicable, but in no event later than one hundred five
(105) days after the close of each Partnership
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Year, the General Partner shall cause to be delivered to each Limited Partner as
of the close of the Partnership Year, an annual report containing financial
statements of the Partnership, or of DRE if such statements are prepared on a
consolidated basis with DRE, 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. The mailing of copies of DRE's annual report on Form 10-K to
the Limited Partners shall constitute compliance with this subsection.
(d) As soon as practicable, but in no event later than sixty (60) days
after the close of each calendar quarter (except the last calendar quarter of
each year), the General Partner shall cause to be delivered to each Limited
Partner as of the last day of the calendar quarter, a report containing
unaudited financial statements of the Partnership, or of DRE, if such statements
are prepared on a consolidated basis with DRE, and such other information as may
be required by applicable law or regulation, or as the General Partner
determines to be appropriate. The mailing of copies of DRE's quarterly report
on Form 10-Q to the Limited Partners shall constitute compliance with this
subsection.
SECTION 5.03. RIGHT TO INSPECTION.
(a) Each Partner or his duly authorized agent shall at all reasonable
times have access to and the right at his expense to inspect and copy any of the
books and records of the Partnership.
(b) In addition to other rights provided by this Agreement or by the Act,
and except as limited by subsection (d) hereof, each Limited Partner shall have
the right, for a purpose reasonably related to such Limited Partner's interest
as a limited partner in the Partnership, upon written demand with a statement of
the purpose of such demand and at such Limited Partner's own expense:
(i) to obtain a copy of the most recent annual and quarterly reports
filed with the Securities and Exchange Commission by DRE pursuant
to the Securities Exchange Act of 1934;
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(ii) to obtain a copy of the Partnership's federal, state and local
income tax returns for each Partnership Year;
(iii)to obtain a current list of the name and last known business,
residence or mailing address of each Partner;
(iv) to obtain a copy of this Agreement and the Certificate and all
amendments thereto, together with executed copies of all powers
of attorney pursuant to which this Agreement, the Certificate and
all amendments thereto have been executed; and
(v) 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.
(c) Notwithstanding any other provision of this Section 5.03, the General
Partner may keep confidential from the Limited Partners, for such period of time
as the General Partner determines in its sole and absolute discretion to be
reasonable, any information that (i) the General Partner believes to be in the
nature of trade secrets or other information the disclosure of which the
General Partner in good faith believes is not in the best interests of the
Partnership or DRE, or (ii) the Partnership or DRE is required by law or by
agreements with unaffiliated third parties to keep confidential.
SECTION 5.04. HOLDING AND TRANSFER OF ASSETS.
(a) All property, real or personal, owned by the Partnership shall be
deemed to be owned by the Partnership as an entity, and no Partner or Assignee,
individually or collectively, shall have any ownership interest in such
Partnership assets or any portion thereof. Title to any or all of the
Partnership assets may be held in the name of the Partnership, the General
Partner or one or more nominees, as the General Partner may determine, including
Affiliates of the General Partner. The General Partner hereby declares and
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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 on its books and records, notwithstanding the name in which legal
title to such assets is held.
(b) Notwithstanding anything to the contrary in this Agreement, any Person
dealing with the Partnership shall be entitled to assume that the General
Partner has full power and authority to encumber, sell or otherwise use in any
manner any and all assets of the Partnership and to enter into any contracts on
behalf of the Partnership, and such Person shall be entitled to deal with the
General Partner as if it were the Partnership's sole party in interest, both
legally and beneficially. Each Limited Partner hereby waives any and all
defenses or other remedies which may be available against such Person to
contest, negate or disaffirm any action of the General Partner in connection
with any such dealing. In no event shall any Person dealing with the General
Partner or its representatives be obligated to ascertain that the terms of this
Agreement have been complied with or to inquire into the necessity or expedience
of any act or action of the General Partner or its representatives. Each and
every certificate, document or other instrument executed on behalf of the
Partnership by the General Partner or its representatives shall be conclusive
evidence in favor of any and every Person relying thereon or claiming thereunder
that (i) at the time of the execution and delivery of such certificate, document
or instrument, this Agreement was in full force and effect, (ii) the Person
executing and delivering such certificate, document or instrument was duly
authorized and empowered to do so for and on behalf of the Partnership, and
(iii) such certificate, document or instrument was duly executed and delivered
in accordance with the terms and provisions of this Agreement and is binding
upon the Partnership.
SECTION 5.05. BANK ACCOUNTS. Funds of the Partnership may be deposited in
its name in such bank account or accounts as shall be designated from time to
time by the General Partner.
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All withdrawals from Partnership accounts shall be made upon checks signed by or
upon the authorization of the General Partner. The General Partner may
designate one or more Persons to sign checks upon its authorization.
SECTION 5.06. TAX STATUS; NOTICE OF TAX CONTROVERSY. The Partnership
shall be treated and shall file its tax returns as a partnership for federal,
state and municipal income tax and other tax purposes. If any Partner shall
receive notice of a tax examination of the Partnership by federal, state or
local authorities, it shall immediately give notice thereof to the General
Partner.
SECTION 5.07. TAX MATTERS PARTNER; TAX ELECTIONS; TAX RETURNS.
(a) The General Partner is hereby designated as the Tax Matters Partner of
the Partnership under Subchapter C of Chapter 63 as contained in subtitle F of
the Code. Pursuant to Section 6223(c)(3) 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.
(b) The Tax Matters Partner is authorized, but not required:
(i) 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
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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);
(ii) In the event that a notice of a final administrative
adjustment at the Partnership level of any item required to
be taken into account by a Partner for tax purposes (a
"final adjustment") is mailed to the Tax Matters Partner, to
seek judicial review of such final adjustment, including the
filing of a petition for readjustment with the Tax Court or
the United States Claims Court, or the filing of a complaint
for refund with the District Court of the United States for
the district in which the Partnership's principal place of
business is located;
(iii) To intervene in any action brought by any other Partner for
judicial review of a final adjustment;
(iv) To file a request for an administrative adjustment with the
IRS at any time and, if any part of such request is not
allowed by the IRS, to file an appropriate pleading
(petition or complaint) for judicial review with respect to
such request;
(v) To enter into an agreement with the IRS to extend the period
for assessing any tax which is attributable to any item
required to be taken into account by a Partner for tax
purposes, or an item affected by such item; and
(vi) To take any other action on behalf of the Partners of the
Partnership in connection with any tax audit or judicial
review
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proceeding to the extent permitted by applicable law or
regulations.
The taking of any action and the incurring of any expense by the Tax
Matters Partner in connection with any such proceeding, except to the extent
required by law, is a matter in the sole and absolute discretion of the Tax
Matters Partner, and the provisions relating to indemnification of the General
Partner set forth in Section 3.10 of this Agreement shall be fully applicable to
the Tax Matters Partner in its capacity as such.
(c) The Tax Matters Partner shall receive no compensation for its
services. All third party costs and expenses incurred by the Tax Matters
Partner in performing its duties as such (including legal and accounting fees)
shall be borne by the Partnership. Nothing herein shall be construed to
restrict the Partnership from engaging an accounting firm or legal counsel to
assist the Tax Matters Partner in discharging its duties hereunder, so long as
the compensation paid by the Partnership for such services is reasonable.
(d) The Tax Matters Partner has the authority to make or not to make any
election permitted to be made by the Partnership under the Code. Without
limiting the generality of the foregoing, the Tax Matters Partner is authorized
to make an election on behalf of the Partnership under Section 754 of the Code.
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.
(e) The General Partner shall arrange for the preparation and timely
filing of all returns of Partnership income, gains, deductions, losses and other
items required of the Partnership for federal and state income tax purposes and
shall use all reasonable efforts to furnish, within ninety (90) days of the
close of each taxable year, the tax information reasonably required by Limited
Partners for federal and state income tax reporting purposes.
SECTION 5.08. TAX MATTERS PARTNER NOT LIABLE. The Tax Matters Partner
shall not be liable to any Partner or the Partnership on account of any action
taken or not taken so long
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as it shall act in good faith in such capacity. Without limiting the generality
thereof, the Tax Matters Partner shall be deemed to have acted in good faith in
taking any action which benefits Partners holding at least [fifty percent (50%)]
of the Partnership Interests, as determined by Percentage Shares.
SECTION 5.09. WITHHOLDING. Each Limited Partner hereby authorizes the
Partnership to withhold from or pay on behalf of or with respect to such Limited
Partner any amount of federal, state, local, or foreign taxes that the General
Partner determines that the Partnership is required to withhold or pay with
respect to any amount distributable or allocable to such Limited Partner
pursuant to this Agreement, including, without limitation, any taxes required to
be withheld or paid by the Partnership pursuant to Sections 1441, 1442, 1445, or
1446 of the Code. Any amount paid on behalf of or with respect to a Limited
Partner shall constitute a loan by the Partnership to such Limited Partner,
which loan shall be repaid by such Limited Partner within fifteen (15) days
after notice from the General Partner that such payment must be made unless (i)
the Partnership withholds such payment from a Distribution which would otherwise
be made to the Limited Partner or (ii) the General Partner determines, in its
sole and absolute discretion, that such payment may be satisfied out of the
available funds of the Partnership which would, but for such payment, be
distributed to the Limited Partner. Any amounts withheld pursuant to the
foregoing clauses (i) and (ii) shall be treated as having been distributed to
such Limited Partner. Any tax credit available with respect to any withheld
amount shall be allocated to the Partner with respect to whom such amount was
withheld. Each Limited Partner hereby unconditionally and irrevocably grants to
the Partnership a security interest in such Limited Partner's Partnership
Interest to secure such Limited Partner's obligation to pay to the Partnership
any amounts required to be paid pursuant to this Section 5.09. In the event
that a Limited Partner fails to pay any amounts owed to the Partnership pursuant
to this Section 5.09 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). Any
amounts payable by a Limited Partner hereunder shall bear interest at
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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 hereunder.
ARTICLE VI
DISSOLUTION AND CONTINUATION OF PARTNERSHIP
SECTION 6.01. DISSOLUTION. The Partnership shall be dissolved and, unless
continued, its assets shall be disposed of and its affairs wound up upon the
occurrence of any of the following events:
(a) The expiration of the term in Section 1.03, including any extension
thereof.
(b) The withdrawal or dissolution of the General Partner.
(c) Special Partner Approval and approval by the General Partner of a
voluntary agreement at any time to dissolve the Partnership.
(d) Entry of a decree of judicial dissolution of the Partnership pursuant
to the provisions of the Act.
(e) The sale or other disposition (other than a disposition occurring upon
a financing or refinancing) of all or substantially all of the assets and
properties of the Partnership.
SECTION 6.02. DEEMED DISTRIBUTION AND RECONTRIBUTION. Notwithstanding any
other provisions of this Article VI, in the event the Partnership is liquidated
within the meaning of Treasury Regulations Section 1.704-1(b)(2)(ii)(g) but
where the Partnership is continued, the Partnership's assets shall not be
liquidated, the Partnership's liabilities shall not be paid or discharged, and
the Partnership's affairs shall not be wound up. Instead, the Partnership shall
be deemed to have distributed its assets in kind to the Partners, and
immediately thereafter the
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Partners shall be deemed to have recontributed the property in kind to the
Partnership without effecting any change in Percentage Shares or Secondary
Percentage Shares or in the ownership of Partnership Interests as a result of
such distribution and recontribution.
SECTION 6.03 NOTICE OF DISSOLUTION. In the event a dissolution of the
Partnership occurs pursuant to Section 6.01, the General Partner shall, within
thirty (30) days thereafter, provide written notice thereof to each of the
Partners.
SECTION 6.04. CONTINUATION OF PARTNERSHIP. In the event of the
dissolution or withdrawal of the General Partner, all powers granted to the
General Partner shall terminate and a new General Partner may be selected within
ninety (90) days of the date of dissolution and the business of the Partnership
may be continued as a successor limited partnership with the approval of Limited
Partners (other than the General Partner or DRE) holding more than 50% of the
Percentage Shares held by Partners other than the General Partner or DRE. If
the business of the Partnership is so continued, the successor limited
partnership shall be governed by the terms and provisions of this Agreement. If
the business of the Partnership is not so continued, the Partnership shall be
liquidated in accordance with Article VIII.
SECTION 6.05. EXTENSION OF TERM. The initial term of this Agreement as
set forth in Section 1.03 shall be extended to December 31, 2068 if prior to the
expiration of such initial term the extension is approved by Partners holding
more than fifty percent (50%) of the Percentage Shares.
ARTICLE VII
TRANSFER OF UNITS AND CHANGES IN PARTNERS
SECTION 7.01. GENERAL PARTNER TRANSFERS RESTRICTED. The General Partner
shall not voluntarily withdraw from the Partnership or take any action described
in item (B), (C) or (D) of the definition of "Bankruptcy" in Section 1.04, or
make an Assignment of any of its Partnership Interest, or dissolve or liquidate,
except as permitted by this Agreement or with Special Partner Approval.
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SECTION 7.02. LIMITED PARTNER TRANSFERS RESTRICTED.
(a) No Limited Partner shall make an Assignment of all or any portion of
its Partnership Interest, or any of such Limited Partner's rights as a Limited
Partner, without the prior written consent of the General Partner and, in the
case of an Assignment by Duke Realty, of DMI, which consent may be given or
withheld by the General Partner (and DMI, if applicable) in its sole and
absolute discretion, except (i) pursuant to Section 7.03 or (ii) if a Limited
Partner is a partnership, corporation or trust, the Limited Partner shall be
permitted to distribute to any of its equity owners such equity owner's PRO RATA
share of Partnership Interest (but any such distributee will have no right to
become a Partner except with Special Partner Approval).
(b) Notwithstanding the provisions of subsection (a), the Limited Partner
may grant a bona fide security interest in its Partnership Interest, and such
Partnership Interest may be assigned to the secured party pursuant to such a
security interest; PROVIDED, HOWEVER, that (i) the secured party shall be an
institutional lender (or an Affiliate of such a lender), and (ii) the secured
party will have no right to become a Partner except with Special Partner
Approval.
(c) Any purported Assignment of a Partnership interest by a Limited
Partner in violation of Section 7.02(a) shall be void AB INITIO and shall not be
given effect for any purpose by the Partnership.
SECTION 7.03. DUKE REALTY OPTION.
(a) Duke Realty shall have an option (the "Duke Realty Option") to acquire
the entire Partnership Interest of DMI at an option price (the "Option Price")
equal to and in the form of 416,667 Duke Realty Units (subject to adjustment as
provided in subsection (b) below) to be issued by Duke Realty to DMI, whereupon
Duke Realty shall acquire DMI's Partnership Interest and shall be treated for
purposes of this Agreement as the owner of such Partnership Interest. The Duke
Realty Option may only be exercised if DMI is released from all obligations and
liabilities respecting the Partnership or any assets or obligations of the
Partnership and is indemnified by Duke Realty for all such obligations and
liabilities to the same extent as described in Section 3.10. The Duke Realty
Option shall be exercised by delivery by Duke Realty of a notice of exercise to
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DMI specifying the number of Duke Realty Units comprising the Option Price and a
date not less than ten (10) days from the date of delivery of the notice to DMI
upon which the closing of the option exercise is to occur. Following exercise
of the Duke Realty Option, payment of the Option Price to DMI, securing of any
required release of DMI and execution by Duke Realty of an indemnification
agreement as required by this section, DMI shall be deemed to have withdrawn as
a Partner and this Agreement shall be deemed to have been amended to reflect
such transfer, the withdrawal of DMI and the adjustment of the Percentage Shares
and Secondary Percentage Shares of the Partners.
(b) In case Duke Realty shall subdivide or reclassify the outstanding Duke
Realty Units into a greater number of Duke Realty Units, the Option Price in
effect at the opening of business on the day following the date fixed for the
determination of Duke Realty Unit holders subject to such subdivision or
reclassification shall be proportionately adjusted so that DMI shall be entitled
to receive, upon exercise of the Duke Realty Option, the number of Duke Realty
Units which it would have owned at the opening of business on the day following
the date fixed for such determination had the Duke Realty Option been exercised
and the Option Price been paid immediately prior to such time.
(c) DMI agrees to execute such documents as Duke Realty may reasonably
require in connection with the issuance of Duke Realty Units upon exercise of
the Duke Realty Option.
(d) Upon any dissolution of Duke Realty following which Duke Realty is
liquidated rather than continued in business by its partners, DMI shall have an
option (the "DMI Option") to cause DRE to acquire, and upon exercise of the DMI
Option DRE shall acquire, the entire Partnership Interest of DMI at a price (the
"Put Price") equal to and payable in a number of shares of DRE common stock
determined by multiplying (i) 416,667 Duke Realty Units, adjusted as provided in
subsection (b), times (ii) the "Exchange Ratio" then in effect pursuant to
Section 7.07 of the Agreement of Limited Partnership of Duke Realty, as amended.
The DMI Option shall be exercised by delivery by DMI of a notice of exercise to
DRE specifying the number of shares of DRE common stock comprising the Put Price
and a date not less than [ten (10)] days from the date of delivery of the notice
to DRE upon which the closing of the option exercise is to occur. Upon closing
of the DMI Option,
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DMI shall be released from all obligations and liabilities respecting the
Partnership or any assets or obligations of the Partnership and shall be
indemnified by DRE for all such obligations and liabilities to the same extent
as described in Section 3.10. Following exercise of the DMI Option, payment of
the Put Price to DMI, release of DMI from obligations and liabilities as
described in this subsection and execution by DRE of an indemnification
agreement as described in this subsection, DMI shall be deemed to have withdrawn
as a Partner.
(e) Upon a determination by the Unaffiliated DRE Directors that payment of
the Option Price in the form of Duke Realty Units could cause DRE to fail to
qualify as a REIT, Duke Realty shall pay the Option Price in the form of an
amount of cash equal to the "Current Market Price" (as defined in the Agreement
of Limited Partnership of Duke Realty) of the number of shares of DRE common
stock into which the Duke Realty Units comprising the Option Price could be
exchanged pursuant to Section 7.07 of the Agreement of Limited Partnership of
Duke Realty. Upon a determination by the Unaffiliated DRE Directors that
payment of the Put Price in the form of shares of DRE common stock could cause
DRE to fail to qualify as a REIT, DRE shall pay the Put Price in the form of an
amount of cash equal to the "Current Market Price" (as defined in the Agreement
of Limited Partnership of Duke Realty) of the number of shares of DRE common
stock comprising the Put Price.
(f) DRE shall at all times reserve and keep available for issuance upon
the exercise of the DMI Option such number of shares of its authorized but
unissued common stock as will be sufficient to permit the exercise of the DMI
Option. All shares of DRE's common stock, when issued upon exercise of the DMI
Option, shall be duly and validly issued and fully paid and nonassessable, and
not subject to preemptive rights.
SECTION 7.04. EFFECT OF TRANSFER. Any assignee or other transferee of any
Partnership Interest or any interest therein shall take subject to the
restrictions and conditions to transfer imposed by this Article.
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ARTICLE VIII
LIQUIDATION
SECTION 8.01. LIQUIDATION DETERMINATION. In the event of dissolution
where the Partnership is not continued pursuant to this Agreement or otherwise,
the Partnership shall be liquidated.
SECTION 8.02. LIQUIDATION PROCEDURE. A reasonable time, as determined by
the General Partner, from the date of an event of dissolution shall be allowed
for the orderly liquidation of the assets of the Partnership and the discharge
of its liabilities. Upon the completion of dissolution in accordance with the
terms hereof, the Partnership shall terminate and the General Partner shall
execute, acknowledge and cause to be filed a certificate of cancellation of the
Partnership whereupon it shall cease to exist in all respects. In the event of
a dissolution of the Partnership, liquidation of the assets of the Partnership
and discharge of its liabilities may be carried out by a liquidation trustee or
receiver, who shall be a bank or trust company or other person or firm having
experience in managing, liquidating or otherwise handling property of the type
then owned by the Partnership. Such liquidation trustee or receiver shall be
designated by the General Partner (or in the absence of the General Partner, by
the Limited Partners holding more than 50% of the Units). A liquidation trustee
shall be not personally liable for the debts of the Partnership but otherwise
shall have such obligations and authorities as are given the General Partner
pursuant to this Agreement or as may be agreed upon between the Partners and
said liquidation trustee.
SECTION 8.03. ALLOCATION OF LIQUIDATION PROCEEDS. Upon liquidation of the
Partnership, the liquidation proceeds shall be applied and distributed in the
following manner and order of priority:
(i) To the payment of liabilities of creditors other than
Partners and to the expenses of liquidation;
(ii) To the setting up of any reserves which the General Partner
determines reasonably necessary for any contingent
liabilities of the Partnership or of any Partner arising
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out of or in connection with a Partnership liability, which
revenues shall be paid over by the Partnership to an escrow
agent or shall be held for the purpose of disbursing such
reserves in payment of any such contingent liabilities and,
at the expiration of such period as the General Partner
shall deem advisable, the balance of which shall be
distributed as otherwise provided in this section;
(iii) To the payment of any liabilities to the Partners (other
than Capital Accounts), arising out of or in connection with
a Partnership liability, or if the amount available for such
payment is insufficient, a PRO RATA portion thereof; and
(iv) The remainder to the Partners in accordance with Section
4.03 of this Agreement.
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. NOTICE. All notices, elections, consents and approvals
under this Agreement shall be in writing, and shall be effectively given to any
Partner if delivered to the Partner or if mailed by certified mail, return
receipt requested, to such Partner at the address provided to the General
Partner. Any Partner may change his or its address for notice by giving notice
of such change to the General Partner.
SECTION 9.02. CONSTRUCTION. This Agreement shall be governed by and
construed in accordance with the laws of the State of Indiana.
SECTION 9.03. ASSIGNS AND SUCCESSORS IN INTEREST. Except as otherwise
provided herein, this Agreement shall be binding upon and shall run for the
benefit of the parties executing this Agreement, and the personal
representatives, heirs, legatees, devisees, assigns and successors in interest
of the Partners.
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SECTION 9.04. ASSIGNMENT. No Partner to this Agreement may Assign its
Units or any right therein to any other Person except as expressly permitted by
this Agreement. However, in the event of any Assignment of Units in accordance
with the provisions of this Agreement, the Partners agree to execute such
documents as may be necessary to effect such change, including required changes
to this Agreement and the Certificate described in Section 9.06.
SECTION 9.05. AMENDMENT.
(a) The General Partner, without obtaining the consent of the other
Partners, may amend this Agreement at any time, in its sole and exclusive
discretion, but only to reflect:
(i) A change in the name of the Partnership;
(ii) A change in the principal place of business of the
Partnership;
(iii) The admission, substitution, termination, or withdrawal of
Partners in accordance with this Agreement, so long as any
Person admitted or substituted as a Partner executes a
written document agreeing to be bound by this Agreement;
(iv) A change that (A) is of an inconsequential nature and does
not adversely affect the Limited Partners or any assignees
in any material respect or (B) is required by this
Agreement;
(v) A change to satisfy any requirements or conditions contained
in any order, directive, opinion, ruling or regulation of a
federal or state agency or contained in federal or state
law.
(b) This Agreement may be otherwise amended with the consent of the
General Partner and Special Partner Approval. Notwithstanding the preceding
sentence, any amendment which would have any of the following effects must be
consented to in writing by each Partner whose rights or obligations as expressly
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provided in this Agreement are directly and adversely affected by such
amendment:
(i) Increase a Partner's obligation to contribute to the
Partnership or decrease the Capital Account of a Partner;
(ii) Alter the allocations of Gross Income and Gross Expenses;
(iii) Alter the manner of computing Distributions;
(iv) Alter the voting rights or status of Partners;
(v) Alter or modify the Duke Realty Option as set forth in
Section 7.03 and related definitions; or
(vi) Alter the procedures for amending this Agreement.
(c) Notwithstanding the foregoing, the unanimous consent of the Partners
is required for any amendment which, in the opinion of counsel for the
Partnership:
(i) Is in violation of the provisions of the Act; or
(ii) Would cause the Limited Partners to incur liability as
general partners.
(d) Amendments to this Agreement may be proposed by the General Partner or
by a proposal in writing signed by Partners holding ten percent (10%) or more of
the Percentage Shares, such proposal to be given to the General Partner and the
other Partners at the addresses appearing in the records of the Partnership.
(e) The General Partner shall provide written notice to the Limited
Partners when any action under subsection (a) is taken.
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SECTION 9.06. CERTIFICATE OF LIMITED PARTNERSHIPP. The Partnership shall
file a Certificate of Limited Partnership in such office or offices in such
jurisdiction or jurisdictions where such a filing is required by applicable law
or deemed desirable by the General Partner. In the event of any change
requiring the cancellation or amendment of such certificate under the Act or
such other applicable law, the General Partner shall cause the certificate to be
cancelled or amended in accordance with law by an appropriate filing, without
the necessity of first obtaining the prior consent of the other Partners.
SECTION 9.07. FURTHER ASSURANCES. The Partners will execute and deliver
such further instruments and do such further acts and things as may be necessary
to carry out the intent and purpose of this Agreement.
SECTION 9.08. WARRANTIES OF REPRESENTATIVES. Each Person executing this
Agreement on behalf of a party hereto represents and warrants that he has been
fully empowered to execute this Agreement, and that all necessary action for the
execution of this Agreement has been taken.
SECTION 9.09. COMPUTATION OF TIME. In computing any period of time
pursuant to this Agreement, the day of the act, event or default from which the
designated period of time begins to run shall not be included. The last day of
the period so computed shall be included, unless it is a Saturday, Sunday or a
legal holiday, in which event the period shall run until the end of the next day
that is not a Saturday, Sunday or legal holiday.
SECTION 9.10. CAPTIONS. Article and section titles or captions contained
in this Agreement are inserted only as a matter of convenience and for reference
and in no way define, limit, extend or describe the scope of this Agreement or
the intent of any provision hereof.
SECTION 9.11. IDENTIFICATION. Whenever the singular number is used in
this Agreement and when required by the context, the same shall include the
plural; and the masculine gender shall include the feminine and neuter genders.
SECTION 9.12. COUNTERPARTS. This Agreement may be executed in any number
of counterparts or by separate signature pages identified as such and all of
such counterparts or
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signature pages shall for all purposes constitute an agreement binding on the
parties hereto, notwithstanding that all parties are not signatory to the same
counterpart or signature page.
SECTION 9.13. PARTNERS' CAPABILITY. Anything in this Agreement to the
contrary notwithstanding, no Partner, or any Assignee of the interests thereof,
shall be a Person or organization prohibited by law from becoming such. Any
assignment of an interest in the Partnership to any Person or organization not
meeting such standard shall be void and ineffective and shall not bind the
Partnership.
SECTION 9.14. SEVERABILITY. If any provision of this Agreement shall be
declared invalid or unenforceable, the remainder of this Agreement will continue
in full force and effect so far as the intent of the parties can be carried out.
SECTION 9.15. APPROVAL OR CONSENT. Except as otherwise provided herein,
any approval or consent required in this Agreement by Partners shall be deemed
given upon the affirmative vote at a meeting, or the execution of a written
ballot or consent form indicating consent, by Partners holding more than fifty
percent (50%) of the Percentage Shares. The term "consent" shall comprise the
word "approve" as used in the Act.
SECTION 9.16. MEETINGS. Meetings of the Partnership may be called by the
General Partner and shall be called by the General Partner upon the written
request of the Partners holding more than ten percent (10%) of the Percentage
Shares.
SECTION 9.17. CONSENT OF PARTNERS AND ASSIGNEES. By acceptance of a
Partnership Interest, each Partner and each assignee expressly consents and
agrees that, whenever in this Agreement it is specified that an action may be
taken upon the affirmative vote or consent of less than all of the Partners,
such action may be so taken upon the concurrence of less than all of the
Partners, and each such Partner and assignee shall be bound by the results of
such action.
SECTION 9.18. LIMITATION ON BENEFITS OF THIS AGREEMENT. It is the
explicit intention of the Partners that no Person other than the Partners and
the Partnership (and, to the extent provided in Section 3.10, the Persons
entitled to be indemnified thereunder) is or shall be entitled to bring any
action by or on behalf of the Partnership to enforce any provision of this
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Agreement against any Partner (or its successors and assigns) or the
Partnership, and that the covenants, undertakings, and agreements set forth in
this Agreement shall be solely for the benefit of, and shall be enforceable only
by, the Partners (or their respective successors and assigns as permitted
hereunder) and the Partnership (and, to the extent provided in Section 3.10, the
Persons entitled to be indemnified thereunder).
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IN WITNESS WHEREOF, the parties hereto have executed this Second Amended
and Restated Agreement of Limited Partnership as of the 30th day of September,
1994.
GENERAL PARTNER:
DUKE SERVICES, INC.
By: /s/ John W. Wynne
----------------------------------
John W. Wynne
Chairman of the Board
LIMITED PARTNERS:
DUKE REALTY LIMITED PARTNERSHIP
By: DUKE REALTY INVESTMENTS, INC.,
General Partner
By: /s/ John W. Wynne
----------------------------------
John W. Wynne
Chairman of the Board
DMI PARTNERSHIP
By: DUKE MANAGEMENT, INC.,
General Partner
By: /s/ Darell E. Zink, Jr.
----------------------------------
Darell E. Zink, Jr.
Secretary
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DRE:
DUKE REALTY INVESTMENTS, INC., solely
with respect to its obligations under
Section 7.03 herein
By: /s/ John W. Wynne
----------------------------------
John W. Wynne
Chairman of the Board
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