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EXHIBIT 10.1
AGREEMENT OF LIMITED PARTNERSHIP
OF
BAY PACIFIC NORTHWEST, L.P.
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TABLE OF CONTENTS
PAGE
ARTICLE 1
DEFINED TERMS.......................................................... 1
ARTICLE 2
ORGANIZATIONAL MATTERS................................................. 14
Section 2.1 FORMATION.................................................. 14
Section 2.2 NAME....................................................... 15
Section 2.3 REGISTERED OFFICE AND AGENT; PRINCIPAL OFFICE.............. 15
Section 2.4 POWER OF ATTORNEY.......................................... 15
Section 2.5 TERM....................................................... 17
ARTICLE 3
PURPOSE................................................................ 17
Section 3.1 PURPOSE AND BUSINESS....................................... 17
Section 3.2 POWERS..................................................... 17
ARTICLE 4
CAPITAL CONTRIBUTIONS.................................................. 18
Section 4.1 CAPITAL CONTRIBUTIONS OF THE PARTNERS...................... 18
Section 4.2 NO ISSUANCE OF ADDITIONAL PARTNERSHIP INTERESTS............ 19
Section 4.3 DISCRETIONARY CAPITAL CONTRIBUTIONS........................ 19
Section 4.4 NO GUARANTEED PAYMENT WITHIN THE MEANING OF
SECTION 707(c) OF THE INTERNAL REVENUE CODE................ 20
Section 4.5 FUNDING TO COMPENSATE FOR CERTAIN DISTRIBUTIONS............ 20
ARTICLE 5
DISTRIBUTIONS.......................................................... 20
Section 5.1 REQUIREMENT AND CHARACTERIZATION OF DISTRIBUTIONS.......... 20
Section 5.2 AMOUNTS WITHHELD........................................... 22
ARTICLE 6
ALLOCATIONS OF PROFIT AND LOSS......................................... 22
Section 6.1 CAPITAL ACCOUNTS........................................... 22
Section 6.2 PROFITS, LOSSES AND DISTRIBUTIVE SHARES.................... 23
Section 6.3 NEGATIVE CAPITAL ACCOUNTS.................................. 28
Section 6.4 APPLICATION TO ASSIGNEES................................... 28
(i)
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PAGE
ARTICLE 7
MANAGEMENT AND OPERATIONS OF BUSINESS.................................. 28
Section 7.1 MANAGEMENT............................................... 28
Section 7.2 CERTIFICATE OF LIMITED PARTNERSHIP....................... 31
Section 7.3 RESTRICTIONS ON GENERAL PARTNER AUTHORITY................ 32
Section 7.4 REIMBURSEMENT OF THE GENERAL PARTNER..................... 33
Section 7.5 CONTRACTS WITH AFFILIATES................................ 33
Section 7.6 INDEMNIFICATION.......................................... 34
Section 7.7 LIABILITY OF THE GENERAL PARTNER......................... 35
Section 7.8 OTHER MATTERS CONCERNING THE GENERAL PARTNER............. 36
Section 7.9 TITLE TO PARTNERSHIP ASSETS.............................. 37
Section 7.10 RELIANCE BY THIRD PARTIES................................ 37
Section 7.11 GENERAL PARTNER'S CAPITAL CONTRIBUTION TO FUND THE
CONTRIBUTORS' PRORATIONS AND OTHER EXPENSES
UNDER THE CONTRIBUTION AGREEMENTS........................ 38
ARTICLE 8
RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS............................. 38
Section 8.1 LIMITATION OF LIABILITY.................................. 38
Section 8.2 MANAGEMENT OF BUSINESS................................... 38
Section 8.3 OUTSIDE ACTIVITIES OF LIMITED PARTNERS AND ASSIGNEES..... 38
Section 8.4 RETURN OF CAPITAL........................................ 39
Section 8.5 EXCHANGE RIGHTS OF QUALIFYING PARTIES.................... 39
Section 8.6 THE GENERAL PARTNER'S RIGHT TO CALL LIMITED PARTNER
INTERESTS................................................ 44
Section 8.7 OTHER EXCHANGES.......................................... 44
Section 8.8 RIGHT TO NOTICE UPON SPECIAL DIVIDEND BY BAY............. 45
ARTICLE 9
BOOKS, RECORDS, ACCOUNTING AND REPORTS................................. 45
Section 9.1 RECORDS AND ACCOUNTING................................... 45
Section 9.2 FISCAL YEAR.............................................. 45
Section 9.3 REPORTS.................................................. 46
Section 9.4 CONFIDENTIAL MATERIAL.................................... 46
ARTICLE 10
TAX MATTERS............................................................ 46
Section 10.1 PREPARATION OF TAX RETURNS............................... 46
Section 10.2 TAX ELECTIONS............................................ 46
Section 10.3 TAX MATTERS PARTNER...................................... 47
Section 10.4 ORGANIZATIONAL EXPENSES.................................. 48
Section 10.5 WITHHOLDING.............................................. 49
(ii)
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PAGE
ARTICLE 11
TRANSFERS AND WITHDRAWALS.............................................. 50
Section 11.1 TRANSFER................................................. 50
Section 11.2 TRANSFER OF THE GENERAL PARTNER INTEREST................. 50
Section 11.3 LIMITED PARTNERS' RIGHTS TO TRANSFER..................... 51
Section 11.4 SUBSTITUTED LIMITED PARTNERS............................. 52
Section 11.5 ASSIGNEES................................................ 53
Section 11.6 INTENTIONALLY OMITTED.................................... 53
Section 11.7 GENERAL PROVISIONS....................................... 53
ARTICLE 12
ADMISSION OF PARTNERS.................................................. 54
Section 12.1 ADMISSION OF SUCCESSOR GENERAL PARTNER................... 54
Section 12.2 AMENDMENT OF AGREEMENT AND CERTIFICATE OF
LIMITED PARTNERSHIP...................................... 54
ARTICLE 13
DISSOLUTION, LIQUIDATION AND TERMINATION............................... 55
Section 13.1 DISSOLUTION.............................................. 55
Section 13.2 WINDING UP............................................... 56
Section 13.3 RIGHTS OF PARTNERS....................................... 57
Section 13.4 NOTICE OF DISSOLUTION.................................... 57
Section 13.5 TERMINATION OF PARTNERSHIP AND CANCELLATION OF
CERTIFICATE OF LIMITED PARTNERSHIP....................... 57
Section 13.6 REASONABLE TIME FOR WINDING-UP........................... 58
Section 13.7 WAIVER OF PARTITION...................................... 58
ARTICLE 14
AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS........................... 58
Section 14.1 AMENDMENTS............................................... 58
Section 14.2 MEETINGS OF THE PARTNERS................................. 59
ARTICLE 15
GENERAL PROVISIONS..................................................... 59
Section 15.1 ADDRESSES AND NOTICE..................................... 59
Section 15.2 TITLES AND CAPTIONS...................................... 60
Section 15.3 PRONOUNS AND PLURALS..................................... 60
Section 15.4 FURTHER ACTION........................................... 60
Section 15.5 BINDING EFFECT........................................... 60
Section 15.6 CREDITORS................................................ 60
Section 15.7 WAIVER................................................... 60
Section 15.8 COUNTERPARTS............................................. 61
Section 15.9 APPLICABLE LAW........................................... 61
(iii)
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Section 15.10 INVALIDITY OF PROVISIONS................................ 61
Section 15.11 ENTIRE AGREEMENT........................................ 61
EXHIBITS
Exhibit A - Partners Contributions and Partnership Interests
Exhibit B - Form of Guarantee
Exhibit C - Form of Notice of Exchange
Exhibit D - Form of Prospective Subscriber Questionnaire
Exhibit E - Representations and Warranties
(iv)
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AGREEMENT OF LIMITED PARTNERSHIP
OF
BAY PACIFIC NORTHWEST, L.P.
THIS AGREEMENT OF LIMITED PARTNERSHIP OF Bay Pacific Northwest, L.P. (as
it may be amended, supplemented or restated from time to time, this
"Agreement"), dated as of September 12, 1997, is entered into by Bay Apartment
Communities, Inc., a Maryland corporation (the "General Partner") and the
Persons (as defined below) whose names are set forth on EXHIBIT A attached
hereto (as it may be amended from time to time) (collectively, the "Initial
Limited Partners").
NOW THEREFORE, in consideration of the mutual covenants herein contained,
and other valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto do hereby agree as follows:
ARTICLE 1
DEFINED TERMS
The following definitions shall be for all purposes, unless otherwise
clearly indicated to the contrary, applied to the terms used in this Agreement.
"ACT" means the Delaware Revised Uniform Limited Partnership Act, as it
may be amended from time to time, and any successor to such statute.
"ADJUSTED CAPITAL ACCOUNT" means, with respect to any Partner or
Assignee, such Partner's or Assignee's Capital Account maintained in accordance
with Section 6.1 hereof, as of the end of the relevant period, after giving
effect to the following adjustments:
A. Credit to such Capital Account that portion of any deficit Capital
Account balance that such Partner or Assignee is obligated to restore under the
terms of this Agreement or any other document, such Partner's or Assignee's
share of Minimum Gain determined in accordance with Treasury Regulations Section
1.704-2(g)(1) and such Partner's or Assignee's share of Partner Nonrecourse Debt
Minimum Gain determined in accordance with Treasury Regulations Section
1.704-2(i)(5).
B. Debit to such Capital Account the items described in Treasury
Regulations Section 1.704-1(b)(2)(ii)(d)(4), (5) and (6).
The foregoing definition of "Adjusted Capital Account" is intended to comply
with the provisions of Treasury Regulations Sections 1.704-1(b)(2) and 1.704-2,
and shall be interpreted consistently therewith.
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"ADJUSTED CAPITAL ACCOUNT DEFICIT" means, with respect to any Partner or
Assignee, the deficit balance, if any, in that Partner's or Assignee's Adjusted
Capital Account as of the end of the relevant period.
"ADJUSTMENT FACTOR" means 1.0; provided, however, that in the event Bay
or its successors in interest (i) declares or pays a dividend on its outstanding
REIT Shares in REIT Shares or makes a distribution to all holders of its
outstanding REIT Shares in REIT Shares, (ii) splits or subdivides its
outstanding REIT Shares, (iii) effects a reverse stock split or otherwise
combines its outstanding REIT Shares into a smaller number of REIT Shares, or
(iv) issues REIT Shares to all holders of its outstanding REIT Shares pursuant
to a recapitalization or reclassification of outstanding REIT Shares, the
Adjustment Factor shall be adjusted by multiplying the Adjustment Factor
previously in effect by a fraction, (A) the numerator of which shall be the
number of REIT Shares issued and outstanding on the record date for such
dividend, distribution, split, subdivision, reverse split or combination
(assuming for such purposes that such dividend, distribution, split,
subdivision, reverse split or combination has occurred as of such time) and (B)
the denominator of which shall be the actual number of REIT Shares (determined
by assuming for such purposes that such dividend, distribution, split,
subdivision, reverse split or combination has not occurred as of such time)
issued and outstanding on the record date for such dividend, distribution,
split, subdivision, reverse split or combination; provided, further, that in the
event Bay or its successor in interest engages in a Transaction that results in
the Transfer of the General Partner Interest, the Adjustment Factor shall be
adjusted by multiplying the Adjustment Factor previously in effect by a fraction
(A) the numerator of which shall be the Value of a REIT Share of the predecessor
General Partner immediately prior to the effectiveness of the Transaction and
the denominator of which shall be the Value of a REIT Share of the successor
General Partner immediately prior to the effectiveness of the Transaction,
provided, further, that the Adjustment Factor shall be adjusted in the event of
a distribution pursuant to Section 5.1.B(3) and Section 5.1.B(4) of this
Agreement by multiplying the Adjustment Factor previously in effect by a
fraction (X) the numerator of which shall be the aggregate Fair Market Value of
all Limited Partner Interests held by the Limited Partners and the Assignees as
of the date of such distribution minus the aggregate distribution to the Limited
Partners and the Assignees pursuant to Section 5.1.B(3) and Section 5.1.B(4)
hereof on such date and (Y) the denominator of which shall be the aggregate Fair
Market Value of all Limited Partner Interests held by the Limited Partners and
the Assignees as of the date of such distribution. If prior to a Specified
Exchange Date, (i) REIT Share Rights (other than REIT Share Rights issued
pursuant to an employee benefit plan or other compensation arrangement) are
issued to all holders of outstanding REIT Shares without consideration, (ii)
such REIT Share Rights have not expired, and (iii) such REIT Share Rights were
issued at a conversion or exercise price that was below fair market value in
relation to the REIT Shares to be acquired upon conversion or exercise of such
REIT Share Rights, then the Adjustment Factor applicable to the exercise of an
Exchange Right on a subsequent Specified Exchange Date shall be equitably
adjusted in a manner determined by the General Partner to be consistent with
"weighted average" anti-dilution provisions in warrants and other similar
instruments providing for adjustments in the event of a below market exercise
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or issuance price, or, in the General Partner's sole and absolute discretion, in
lieu of such adjustment to the Adjustment Factor the General Partner may elect
to issue to a Limited Partner who has tendered Units equivalent REIT Share
Rights in the amount that the Limited Partner would have received with respect
to the number of REIT Shares the Limited Partner would have received had the
Limited Partner tendered the Tendered Units immediately prior to the original
record date for receiving the REIT Share Rights. Any adjustments to the
Adjustment Factor shall become effective, with respect to any events described
above, on the record date (or if no record date, the effective date for such
event) or, with respect to an adjustment to the Adjustment Factor due to a
distribution to the Limited Partners and the Assignees pursuant to Section
5.1.B(3) and Section 5.1.B(4) hereof, the earlier of the date of such
distribution or the date in which the Limited Partners and the Assignees become
entitled to such distribution (if any).
"AFFILIATE" means, with respect to any Person, (i) any Person directly or
indirectly controlling, controlled by or under common control with such Person;
(ii) any Person owning or controlling ten percent (10%) or more of the
outstanding voting interests of such Person; (iii) any Person of which such
Person owns or controls ten percent (10%) or more of the voting interests; or
(iv) any officer, director, general partner or trustee of such Person or of any
Person referred to in clauses (i), (ii), and (iii) above.
"AGREED VALUE" means, (i) in the case of any one (1) of the Contributed
Properties, the fair market value of such property at the time of contribution
as set forth in the applicable Contribution Agreement, (ii) in the case of
assets (other than cash) contributed or deemed contributed to the Partnership by
a Partner or Assignee, the value thereof listed in EXHIBIT A to this Agreement
or as otherwise agreed upon by the General Partner and the Person making the
contribution, reduced by any indebtedness either assumed by the Partnership upon
such contribution or to which the asset is subject at the time of contribution,
and (iii) in the case of Partnership assets other than cash or the REIT Shares
(which shall be valued as provided in Section 8.5 hereof) distributed to a
Partner or Assignee by the Partnership, the Partnership's Book Value of such
property at the time such property is distributed, reduced by any indebtedness
either assumed by such Partner or Assignee upon such distribution or to which
such asset is subject at the time of distribution as determined under Code
Section 752 and the Treasury Regulations thereunder.
"AGREEMENT" means this Agreement of Limited Partnership, as it may be
amended, supplemented or restated from time to time.
"ASSIGNEE" means a Person to whom all or a portion of the economic
interest appurtenant to one (1) or more Limited Partner Interests has been
transferred in a manner permitted under this Agreement. "Assignee" shall not
include a Substituted Limited Partner.
"AVAILABLE CASH" means, with respect to any period for which such
calculation is being made, (a) all cash revenues and funds received by the
Partnership from whatever source
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(excluding the proceeds of any Capital Contribution to the Partnership pursuant
to Sections 4.1, 4.3, 4.5, 7.3(C) or 8.5 hereof and excluding the gross proceeds
of any Terminating Capital Transaction) plus the amount of any reduction
(including, without limitation, a reduction resulting because the General
Partner determines in its sole and absolute discretion such amounts are no
longer necessary) in reserves of the Partnership, which reserves are referred to
in clause (b)(iv) below; less (b) the sum of the following (except to the extent
made with the proceeds of any Capital Contribution and except to the extent
taken into account in determining Terminating Capital Transaction Proceeds):
(i) all interest, principal and other debt payments made during
such period by the Partnership,
(ii) all cash expenditures (including, without limitation,
capital expenditures with respect to tangible and intangible assets) made
by the Partnership during such period,
(iii) investments in any entity (including, without limitation,
loans made thereto) to the extent that such investments are not otherwise
described in clauses (b)(i) or (ii); and
(iv) the amount of any increases in reserves established during
such period which the General Partner determines in its sole and absolute
discretion are necessary or appropriate.
Notwithstanding the foregoing, Available Cash shall not include any cash
received or reductions in reserves, or take into account any disbursements made
or reserves established, after commencement of the dissolution and liquidation
of the Partnership.
"BAY" means Bay Apartment Communities, Inc., a Maryland corporation.
"BOOK-TAX DISPARITY" means, with respect to any item of the Contributed
Properties, as of the date of determination, the difference between the Book
Value of such property and the adjusted basis of such property for federal
income tax purposes.
"BOOK VALUE" means, with respect to any of the Contributed Properties,
the Agreed Value of such property reduced (but not below zero) by all
Depreciation with respect to such property properly charged to the Capital
Accounts and, with respect to any other Partnership asset, the asset's adjusted
basis for federal income tax purposes; PROVIDED, HOWEVER, (a) the Book Value of
all Partnership assets may be adjusted in the event of a revaluation of
Partnership assets in accordance with Treasury Regulations Section
1.704(b)(2)(iv)(f) to such fair market value as shall be determined by the
General Partner in its reasonable judgment; (b) the Book Value of any
Partnership asset other than cash distributed to any Partner or Assignee shall
be the fair market value of such asset on the date of distribution as determined
by the
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General Partner in its reasonable judgment and (c) such Book Value of any
Partnership asset shall be adjusted by the Depreciation taken into account with
respect to such asset for purposes of computing Profits and Losses.
"BUILT IN TAX AMOUNT" means an assumed amount of state and federal taxes
which would be payable by the Limited Partners who have executed a guaranty as
contemplated in Section 7.3.A on the date of the Taxable Event in question at an
assumed combined federal and state tax rate of 33.5%. Notwithstanding the
foregoing, (a) with respect to a non-taxable transaction with "boot" or a
taxable sale of some but not all of the Contributed Properties, or, in the case
of a reduction in the principal balance of the debt so guaranteed, "Built in Tax
Amount" means the assumed amount of state and federal taxes that would be
payable by the Limited Partners who have executed such guarantees on account of
such transaction at an assumed combined federal and state tax rate of 33.5% and
(b) the Built in Tax Amount shall be reduced to reflect any transfer,
disposition or other event or occurrence which has caused such Limited Partners
to recognize a portion of their gain but which are not Taxable Events.
"BUSINESS DAY" means any day except a Saturday, Sunday or other day on
which commercial banks in New York, New York are authorized or required by law
to close.
"CAPITAL CONTRIBUTION" means, with respect to any Partner or Assignee,
the aggregate amount of cash and Agreed Value of any other property which such
Partner or Assignee contributes or is deemed to contribute to the Partnership
pursuant to Sections 4.1, 4.3, 4.5, 7.3(C) and 8.5 hereof.
"CASH AMOUNT" means the Value of a REIT Share on the Valuation Date.
"CASH PAYMENT" has the meaning set forth in Section 8.5.A.
"CERTIFICATE" means the Certificate of Limited Partnership relating to
the Partnership to be filed in the office of the Delaware Secretary of State
simultaneously with the effectiveness of this Agreement, as amended from time to
time in accordance with the terms hereof and the Act.
"CHARTER" means the Articles of Incorporation of the General Partner
filed with the Maryland State Department of Assessments and Taxation, as
amended, supplemented or restated from time to time.
"CODE" means the Internal Revenue Code of 1986, as amended and in effect
from time to time, as interpreted by the applicable regulations thereunder. Any
reference herein to a specific section or sections of the Code shall be deemed
to include a reference to any corresponding provision of future law.
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"CONSENT" means the consent or approval of a proposed action by a Partner
given in accordance with Section 14.2 hereof.
"CONSUMER PRICE INDEX" means The Consumer Price Index, All Urban
Consumers (CPI-U), US City Average, All-Items Index (1982-84 = 100) as published
by the Bureau of Labor Statistics, United States Department of Labor. If at any
time during the term of this Agreement, the United States Bureau of Labor
Statistics discontinues the issuance of such Index, or such Index shall be
superseded as the generally accepted cost-of-living index, then "Consumer Price
Index" shall mean the successor cost-of-living index or any other standard
nationally recognized cost-of-living index identified by the General Partner.
"CONTRIBUTED PROPERTIES" means, collectively, the properties contributed
to the Partnerships pursuant to the Contribution Agreements.
"CONTRIBUTION AGREEMENTS" means, collectively, the Agreement to Acquire
Limited Partner Interests and to Contribute, dated as of July 30, 1997, between
the General Partner and TCR #510 Kelley Limited Partnership and the Agreement to
Acquire Limited Partner Interests and to Contribute, dated as of September 8,
1997, between the General Partner and Avondale Bear Creek Limited Partnership,
in each case, as amended from time to time.
"CONTROL" means the ability, whether through ownership of partnership
interests, of voting securities, or otherwise, to direct the policies and
management of any business entity.
"DELIVERY DATE" has the meaning set forth in Section 8.5.C.
"DEPRECIATION" means, for each fiscal year or other period, an amount
equal to the depreciation, amortization or other cost recovery deduction
allowable with respect to an asset for such year or other period for federal
income tax purposes, except that if an asset has a Book-Tax Disparity at the
beginning of such year or other period (as a result of property contributions or
adjustments to such values), Depreciation shall be adjusted as necessary so as
to be an amount which bears the same ratio to such beginning Book Value as the
federal income tax depreciation, amortization or other cost recovery deduction
for such year or other period bears to the beginning adjusted tax basis;
PROVIDED, HOWEVER, that if the federal income tax depreciation, amortization or
other cost recovery deduction for such year or other period is zero,
Depreciation for such year or other period shall be determined with reference to
such beginning Book Value using any reasonable method approved by the General
Partner.
"EXCHANGE" has the meaning set forth in Section 8.5.A.
"EXCHANGE RIGHT" has the meaning set forth in Section 8.5.A.
"EXCHANGE SHARES" has the meaning set forth in Section 8.5.B hereof.
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"FAIR MARKET VALUE" means, with respect to a Limited Partner Interest or
Interests which may be exchanged for one (1) REIT Share, the average of the
daily market prices for a REIT Share (taking into account any adjustments to the
Adjustment Factor which became effective prior to a distribution under Section
5.1.B) for the ten (10) consecutive trading days immediately preceding the date
of a distribution to Limited Partners pursuant to Section 5.1.B. The market
price for any such trading day shall be the closing price on the New York Stock
Exchange on such day.
"FINAL ADJUSTMENT" has the meaning set forth in Section 10.3.B(2).
"GENERAL PARTNER" means Bay, in its capacity as the general partner of
the Partnership, or its successor as general partner of the Partnership.
"GENERAL PARTNER INTEREST" means a Partnership Interest held by the
General Partner, in its capacity as general partner.
"GENERAL PARTNER PRIORITY RETURN RATE" means (i) for the first (1st)
Priority Return Calculation Year, twenty percent (20%) per annum; (ii) for the
second (2nd) through fifth (5th) Priority Return Calculation Years, the General
Partner Priority Return Rate for the immediately preceding Priority Return
Calculation Year multiplied by 1.035; and (iii) for the sixth (6th) and all
succeeding Priority Return Calculation Years, the General Partner Priority
Return Rate for the immediately preceding Priority Return Calculation Year
multiplied by a fraction the numerator of which is the Consumer Price Index as
most recently announced on or before the first day of such Priority Return
Calculation Year and the denominator of which is the Consumer Price Index as
most recently announced on or before the first day of such preceding Priority
Return Calculation Year.
"HART-SCOTT-RODINO ACT" means the Hart-Scott-Rodino Antitrust Improvement
Act of 1976, as amended.
"IMMEDIATE FAMILY" means, with respect to any natural Person, such
Person's spouse, the natural or adoptive parents of such Person or his or her
spouse and the descendants, nephews, nieces, brothers and sisters of such
Person.
"INCAPACITY" or "INCAPACITATED" means, (i) as to any individual Partner
or Assignee, death, total physical disability or entry by a court of competent
jurisdiction adjudicating him incompetent to manage his Person or his estate;
(ii) as to any corporation which is a Partner or Assignee, the filing of a
certificate of dissolution, or its equivalent, for the corporation or the
revocation of its charter; (iii) as to any partnership which is a Partner or
Assignee, the dissolution and commencement of winding up of the partnership;
(iv) as to any estate which is a Partner or Assignee, the distribution by the
fiduciary of the estate's entire interest in the Partnership; (v) as to any
trustee of a trust which is a Partner or Assignee, the termination of the trust
(but not the substitution of a new trustee); or (vi) as to any Partner or
Assignee, the
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bankruptcy of such Partner or Assignee. For purposes of this definition,
bankruptcy of a Partner or Assignee shall be deemed to have occurred when (a)
the Partner or Assignee commences a voluntary proceeding seeking liquidation,
reorganization or other relief under any bankruptcy, insolvency or other similar
law now or hereafter in effect; (b) the Partner or Assignee is adjudged as
bankrupt or insolvent, or a final order for relief under any bankruptcy,
insolvency or similar law now or hereafter in effect has been entered against
the Partner or Assignee that is or has become nonappealable; (c) the Partner or
Assignee executes and delivers a general assignment for the benefit of the
Partner's or Assignee's creditors; (d) the Partner or Assignee files an answer
or other pleading admitting or failing to contest the material allegations of a
petition filed against the Partner or Assignee in any proceeding filed against
the Partner or Assignee seeking liquidation, reorganization or other relief
under any bankruptcy, insolvency or other similar law now or hereafter in
effect; (e) the Partner or Assignee seeks, consents to or acquiesces in the
appointment of a trustee, receiver or liquidator for the Partner or Assignee or
for all or any substantial part of the Partner's or Assignee's properties; (f)
any proceeding seeking liquidation, reorganization or other relief of or against
such Partner or Assignee under any bankruptcy, insolvency or other similar law
now or hereafter in effect has not been dismissed within one hundred twenty
(120) days after the commencement thereof; (g) the appointment, without the
Partner's or Assignee's consent or acquiescence, of a trustee, receiver or
liquidator for the Partner or Assignee or for all or a substantial part of the
Partner's or Assignee's assets has not been vacated or stayed within ninety (90)
days of such appointment; or (h) an appointment referred to in clause (g) which
has been stayed is not vacated within ninety (90) days after the expiration of
any such stay.
"INDEMNITEE" means any Person made a party to a proceeding by reason of
(i) his, or its status as the General Partner, or as a director, trustee or
officer of the Partnership or the General Partner, or (ii) his or its
liabilities, pursuant to a loan guarantee or otherwise, for any indebtedness or
obligation of the Partnership (including, without limitation, any indebtedness
or obligation which the Partnership has assumed or taken assets subject to).
"INVESTMENT DOCUMENTS" has the meaning set forth in Section 11.4 hereof.
"IRS" means the Internal Revenue Service.
"ISSUANCE DATE" shall be the fifteenth (15th) day of a calendar month
(or, if such date is not a Business Day, the next Business Day), as long as the
Notice of Exchange is received by the General Partner at any time on or before
the first (1st) Business Day of such calendar month. If a Notice of Exchange is
received by the General Partner at any time after the first (1st) Business Day
of a calendar month, then the Issuance Date shall be the fifteenth (15th) day
(or, if such day is not a Business Day, the next Business Day) of the
immediately following calendar month. For example, if a Notice of Exchange is
received by the General Partner on May 10th, the Issuance Date shall be June
15th (or, if such day is not a Business Day, the next Business Day).
Notwithstanding the foregoing, in the event that Bay elects to issue to its
shareholders a special dividend as specified in Section 8.8 hereof, the Issuance
Date in respect
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of any Notice of Exchange delivered prior to the record date for Bay's
shareholders to receive such special distribution shall be a date elected by
Bay, provided that such date shall be prior to the record date for Bay's
shareholders to receive such special dividend.
"LIMITED PARTNER" shall mean each Initial Limited Partner of the
Partnership or any Substituted Limited Partner, in such Person's capacity as a
Limited Partner of the Partnership.
"LIMITED PARTNER INTEREST" means a Partnership Interest of a Limited
Partner in the Partnership representing a fractional part of the ownership
interests in the Partnership of all Partners and includes any and all benefits
to which the holder of such a Partnership Interest may be entitled, together
with all obligations of such Person to comply with the terms and provisions of
this Agreement.
"LIMITED PARTNER PRIORITY RETURN RATE" means (i) for the first (1st)
Priority Return Calculation Year, four and one-half percent (4.5%) per annum;
(ii) for the second (2nd) through fifth (5th) Priority Return Calculation Years,
the Limited Partner Priority Return Rate for the immediately preceding Priority
Return Calculation Year multiplied by 1.035; and (iii) for the sixth (6th) and
all succeeding Priority Return Calculation Years, the Limited Partner Priority
Return Rate for the immediately preceding Priority Return Calculation Year
multiplied by a fraction the numerator of which is the Consumer Price Index as
most recently announced on or before the first day of such Priority Return
Calculation Year and the denominator of which is the Consumer Price Index as
most recently announced on or before the first day of such preceding Priority
Return Calculation Year.
"LIQUIDATING EVENT" has the meaning set forth in Section 13.1.
"LIQUIDATOR" has the meaning set forth in Section 13.2.
"MINIMUM GAIN" shall have the meaning of such term as set forth in
Treasury Regulations Section 1.704-2(d), and shall generally mean the amount by
which the nonrecourse liabilities secured by any assets of the Partnership
exceed the adjusted tax basis of such assets as of the date of determination. A
Partner's or Assignee's share of Minimum Gain (and any net decrease thereof) at
any time shall be determined in accordance with Treasury Regulations Section
1.704-2(g).
"NOTICE OF EXCHANGE" has the meaning set forth in Section 8.5.A.
"OWNERSHIP LIMIT" means the applicable restriction on ownership of shares
of the General Partner imposed under its charter.
"PARTNER" means a General Partner or a Limited Partner, and "PARTNERS"
means the General Partner and the Limited Partners collectively.
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"PARTNER NONRECOURSE DEBT" has the meaning of such term set forth in
Treasury Regulations Section 1.704-2(b)(4).
"PARTNER NONRECOURSE DEBT MINIMUM GAIN" has the meaning of such term set
forth in Treasury Regulations Section 1.704-2(i).
"PARTNER NONRECOURSE DEDUCTIONS" has the meaning of such term set forth
in Treasury Regulations Section 1.704-2(i). Generally, Partner Nonrecourse
Deductions shall consist of, with respect to any partner nonrecourse debt (as
such term is defined in Treasury Regulations Section 1.704-2(b)(4)), the
increase in Partner Nonrecourse Debt Minimum Gain during a tax year plus any
increase in Partner Nonrecourse Debt Minimum Gain for a prior tax year which has
not previously generated a Partner Nonrecourse Deduction. The determination of
which Partnership items constitute Partner Nonrecourse Deductions shall be made
in a manner consistent with the manner in which Partnership Nonrecourse
Deductions are determined.
"PARTNERSHIP" means the limited partnership formed under the Act and
pursuant to this Agreement and any successor thereto.
"PARTNERSHIP INTEREST" means an ownership interest in the Partnership
representing a fractional part of the ownership interests in the Partnership of
all Partners and includes any and all benefits to which the holder of such
Partnership Interest may be entitled, together with all obligations of such
Person to comply with the terms and provisions of this Agreement.
"PERCENTAGE INTEREST" with respect to a Partner or Assignee means the
amount determined by dividing such Partner's or Assignee's Unrecovered Capital
Amount by the aggregate Unrecovered Capital Amounts of all Partners and
Assignees.
"PERSON" means an individual or a corporation, limited liability
company, partnership, trust, unincorporated organization, association or other
entity.
"PRIORITY RETURN" means, for each Priority Return Calculation Year, with
respect to any Limited Partner or Assignee a return on the Unrecovered Capital
Amount of such Limited Partner or Assignee calculated at the Limited Partner
Priority Return Rate, as it changes from time to time, and, with respect to the
General Partner a return on the Unrecovered Capital Amount of the General
Partner equal to the General Partner Priority Return Rate.
"PRIORITY RETURN CALCULATION YEAR" means a one-year period beginning on
the date of this Agreement or a yearly anniversary of such date, as applicable,
and ending on the next following yearly anniversary of such date.
"PROFITS" AND "LOSSES" means, for each fiscal year or other period, an
amount equal to the Partnership's taxable income or loss (as the case may be)
for such year or period, determined in accordance with Code Section 703(a) (for
this purpose, all items of income,
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gain, loss or deduction required to be stated separately pursuant to Code
Section 703(a)(1) shall be included in taxable income or loss), with the
following adjustments:
(1) Any income of the Partnership that is exempt from federal income
tax and not otherwise taken into account in computing Profits or
Losses pursuant to this definition shall be added to such taxable
income or loss;
(2) Any expenditures of the Partnership described in Code Section
705(a)(2)(B) or treated as Code Section 705(a)(2)(B) expenditures
pursuant to Treasury Regulations Section 1.704-1(b)(2)(iv)(i), and
not otherwise taken into account in computing Profits or Losses
pursuant to this definition (including amounts paid or incurred to
organize the Partnership (unless an election is made pursuant to
Code Section 709(b) or to promote the sale of interests in the
Partnership), shall be subtracted from such taxable income or
loss, with deductions for any losses incurred in connection with
the sale or exchange of Partnership property disallowed pursuant
to Section 267(a)(1) or Section 707(b) of the Code treated as
expenditures described in Section 705(a)(2)(B) of the Code);
(3) Gain or loss resulting from any disposition of Partnership
property with respect to which gain or loss is recognized for
federal income tax purposes shall be computed by reference to the
Book Value of the property disposed of notwithstanding that the
adjusted tax basis of such property differs from such Book Value;
(4) In lieu of the depreciation, amortization and other cost recovery
deductions taken into account in computing such taxable income or
loss, there shall be taken into account Depreciation for such
fiscal year or other period, computed in accordance with the
definition of "Depreciation" herein;
(5) In the event that any item of income, gain, loss or deduction that
has been included in the initial computation of Profit or Loss is
subject to the special allocation rules of Section 6.2.D hereof,
Profit or Loss shall be recomputed without regard to such item;
and
(6) In the event of an adjustment of the Book Value of any Partnership
asset which requires that the Capital Accounts of the Partnership
be adjusted pursuant to Treasury Regulations Section
1.704-1(b)(2)(iv)(e), (f) and (m), the amount of such adjustment
shall be taken into account as additional Profits or Losses
pursuant to Section 6.2 hereof.
"QUALIFYING PARTY" means any Limited Partner or Assignee.
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"REGULATIONS" means the Income Tax Regulations promulgated under the
Code, as such regulations may be amended from time to time (including
corresponding provisions of succeeding regulations).
"REIT" means a real estate investment trust qualifying under Code Section
856.
"REIT SHARE" means a share of Bay's Common Stock, par value $.01 per
share, or a share of the common stock of a successor to the General Partner
pursuant to a Transaction.
"REIT SHARES AMOUNT" means a number of REIT Shares equal to the product
of (i) the number of Tendered Units and (ii) the Adjustment Factor; provided,
however, that if the General Partner issues to all holders of REIT Shares
rights, options, warrants or convertible or exchangeable securities entitling
the General Partner's shareholders to subscribe for or purchase REIT Shares or
any other securities or property (collectively, the "Rights"), with the record
date for such Rights issuance falling within the period starting on the
Specified Exchange Date but prior to the Issuance Date, then the REIT Shares
Amount shall also include such Rights that a holder of that number of REIT
Shares would be entitled to receive, expressed, where relevant hereunder, in a
number of REIT Shares determined by the General Partner in good faith; provided,
however, that in the event that in connection with the exercise of Exchange
Rights an adjustment would be made to the Adjustment Factor in respect of REIT
Share Rights issued prior to the pertinent Specified Exchange Date, no further
adjustment shall be made to the Adjustment Factor in respect of such REIT Share
Rights.
"REIT SHARE RIGHTS" shall mean any rights, options, warrants or
convertible or exchangeable securities issued by the General Partner which
entitle the holders thereof to subscribe for, purchase or otherwise acquire REIT
Shares.
"RELATED PARTY" means, with respect to any Person, any other Person whose
ownership of shares of the General Partner's capital stock would be attributed
to the first such Person under either Code Section 544 (as modified by Code
Section 856(h)(1)(B)) or Code Section 318 (as modified by Code 856(d)(5)).
"RIGHTS" has the meaning set forth in the definition of "REIT Shares
Amount."
"SEC" means the Securities and Exchange Commission.
"SECURITIES ACT" means the Securities Act of 1933, as amended, and the
rules and regulations of the SEC promulgated thereunder. Any reference herein to
a specific section or sections of the Securities Act shall be deemed to include
a reference to any corresponding provision of future law.
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"SPECIFIED EXCHANGE DATE" means the date of receipt by the General
Partner of a Notice of Exchange from a Qualifying Party pursuant to the terms
and subject to the conditions set forth in Article 8 hereof.
"SUBSTITUTED LIMITED PARTNER" means a Person who is admitted as a Limited
Partner to the Partnership from and after the date of this Agreement pursuant to
Section 11.4.
"TAXABLE EVENT" means an event described in items (i), (ii) or (iii) of
Section 7.3.A.
"TENDERED UNITS" has the meaning set forth in Section 8.5.A hereof.
"TENDERING PARTY" has the meaning set forth in Section 8.5.A hereof.
"TERMINATING CAPITAL TRANSACTION" means any sale or other disposition of
all or substantially all of the assets of the Partnership or a related series of
transactions that, taken together, result in the sale or other disposition of
all or substantially all of the assets of the Partnership. A Terminating Capital
Transaction will occur upon the sale or other disposition of all or
substantially all of the assets of the Partnership even if the Partnership
receives in exchange consideration that consists, in whole or in part, of
proceeds other than cash and regardless of whether such sale or other
disposition results in winding up of the Partnership.
"TERMINATING CAPITAL TRANSACTION PROCEEDS" means the sum of (i) (A) all
cash, notes or publicly traded securities received in a Terminating Capital
Transaction, (B) all cash received by the Partnership in respect of, or from the
sale or disposition by the Partnership of, non-cash proceeds of a Terminating
Capital Transaction and (C) to the extent the distribution thereof is elected by
the General Partner and approved by written Consent of Limited Partners (other
than any Limited Partner who also is the General Partner or an Affiliate of the
General Partner) holding sixty percent (60%) or more by Percentage Interest of
the Partnership Interests of all Limited Partners (other than any Limited
Partner who also is the General Partner or an Affiliate of the General Partner),
non-cash proceeds of a Terminating Capital Transaction, less (ii) all costs and
expenses of the Partnership relating to such Terminating Capital Transaction and
all reserves established from the proceeds of such Terminating Capital
Transaction as are elected by the General Partner in its sole and absolute
discretion.
"TRANSACTION" has the meaning set forth in Section 11.2 hereof.
"TRANSFER," when used with respect to all or any portion of a Partnership
Interest, means, subject to the terms of this definition below, any transaction
in which a Partner assigns all or any portion of his or its Partnership Interest
to another Person and includes any sale, assignment, bequest, conveyance,
devise, gift (outright or in trust), pledge, encumbrance, hypothecation,
mortgage, exchange, transfer or other disposition or act of alienation, whether
voluntary or involuntary or by operation of law. When the term "Transfer" is
used in Article 11 hereof, Transfer shall not mean (i) any Exchange of Limited
Partner Interests by the
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Partnership or any acquisition of Tendered Units by the General Partner pursuant
to Section 8.5 hereof or (ii) any exchange of Limited Partner Interests pursuant
to Section 8.6 or Section 8.7 hereof. The terms "Transferred" and "Transferring"
have correlative meanings.
"UNITS" means, collectively, the units of Limited Partner Interests
issued to the Initial Limited Partners on the closing date for the purpose of
exercising the exchange and redemption rights pursuant to Article 8 of this
Agreement, which units are set forth on EXHIBIT A.
"UNRECOVERED CAPITAL AMOUNT" means, with respect to the General Partner,
a Limited Partner or an Assignee, the sum of (i) the aggregate of all Capital
Contributions made by the Partner or Assignee plus (ii) for each Partnership
Interest or economic interest therein transferred to such Partner or Assignee,
if any, the Unrecovered Capital Amount allocable to such Partnership Interest or
economic interest therein as of the time of transfer LESS the sum of (a) for
each Partnership Interest or economic interest therein transferred by such
Partner or Assignee, if any, the Unrecovered Capital Amount allocable to such
Partnership Interest or economic interest therein as of the time of Transfer,
(b) the aggregate distributions to such Partner or Assignee pursuant to Section
5.1B(3) and (c) for each Partnership Interest tendered for redemption by such
Partner or Assignee, if any, the Unrecovered Capital Amount allocable to such
Partnership Interest as of the Issuance Date for such tender.
"VALUATION DATE" means (a) for an Exchange, the Specified Exchange Date
or, if such date is not a Business Day, the immediately preceding Business Day
or (b) in any other case, the date specified in this Agreement.
"VALUE" means, on any Valuation Date with respect to a REIT Share, the
average of the daily market prices for ten (10) consecutive trading days
immediately preceding the Valuation Date. The market price for any such trading
day shall be the closing price on the New York Stock Exchange on such day.
ARTICLE 2
ORGANIZATIONAL MATTERS
Section 2.1 FORMATION
The Partners hereby form a limited partnership under and pursuant to the
Act. Except as expressly provided herein to the contrary, the rights and
obligations of the Partners and the Assignees and the administration and
termination of the Partnership shall be governed by the Act. The Partnership
Interest of each Partner shall be personal property for all purposes.
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Section 2.2 NAME
The name of the Partnership shall be Bay Pacific Northwest, L.P. The
General Partner in its sole and absolute discretion may change the name of the
Partnership at any time and from time to time and shall notify the Limited
Partners of such change.
Section 2.3 REGISTERED OFFICE AND AGENT; PRINCIPAL OFFICE
The address of the registered office of the Partnership in the State of
Delaware and the name and address of the registered agent for service of process
on the Partnership in the State of Delaware is The Corporation Trust Company,
Corporation Trust Center, 1209 Orange Street, Wilmington, Delaware 19801. The
principal office of the Partnership shall be c/o Bay Apartment Communities,
Inc., 4340 Stevens Creek Boulevard, Suite 275, San Jose, California 95129, or
such other place as the General Partner may from time to time designate by
notice to the Limited Partners. The Partnership may maintain offices at such
other place or places within or outside the State of Delaware as the General
Partner deems advisable.
Section 2.4 POWER OF ATTORNEY
A. Each Limited Partner and each Assignee hereby constitutes and
appoints the General Partner, any Liquidator, and authorized officers and
attorneys-in-fact of each, and each of those acting singly, in each case with
full power of substitution, as its true and lawful agent and attorney-in-fact,
with full power and authority in its name, place and stead to:
(1) execute, swear to, acknowledge, deliver, file and record in
the appropriate public offices, to the extent the joinder
therein of Limited Partners is required by the Act or other
applicable law, rules or regulations (a) all certificates,
documents and other instruments (including, without
limitation, this Agreement and the Certificate and all
amendments or restatement thereof) necessary to form,
qualify or continue the existence or qualification of the
Partnership as a limited partnership (or a partnership in
which the limited partners have limited liability) in the
State of Delaware and in all other jurisdictions in which
the Partnership may or plans to conduct business or own
property; (b) all instruments necessary to reflect any
amendment, change, modification or restatement of this
Agreement in accordance with its terms; (c) all instruments
and documents necessary to reflect the dissolution and
liquidation of the Partnership pursuant to the terms of
this Agreement, including, without limitation, a
certificate of cancellation; and (d) all instruments
relating to the admission, withdrawal, removal or
substitution of any Partner pursuant to, or other events
described in, Article 11 or 12 hereof or allocation of the
Capital Contribution of any Partner or Assignee in
connection therewith. No person may take any
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action pursuant to such power of attorney that (x) creates
liability, or the potential for liability, on the part of
any Limited Partner or Assignee for indebtedness or
obligations of any other Person (including, without
limitation, the Partnership or the General Partner), (y)
subjects any Limited Partner or Assignee to service of
process in any jurisdiction other than the state of its
residence or principal place of business and other than as
may be required by applicable law, rules or regulations or
(z) alters the rights, benefits or obligations of any
Limited Partner or Assignee in respect of the Partnership
(whether under this Agreement, the Act or otherwise),
except pursuant to amendments to this Agreement made, and
other actions taken, in accordance with the terms of this
Agreement. The General Partner or the Liquidator, as
applicable, shall provide each Limited Partner and Assignee
with a copy of each document or other instrument executed
on behalf of such Limited Partner or Assignee pursuant to
the foregoing power of attorney.
(2) execute, swear to, seal, acknowledge and file all ballots,
consents, approvals, waivers, certificates and other
instruments appropriate or necessary, in the sole and
absolute discretion of the General Partner or any
Liquidator, to evidence or confirm any vote, consent or
approval of a Limited Partner or to make, evidence, give,
confirm or ratify any, agreement or other action which is
made or given by the Partners hereunder or is consistent
with the terms of this Agreement or appropriate or
necessary, in the sole and absolute discretion of the
General Partner or any Liquidator, to effectuate the terms
or intent of this Agreement. Nothing contained in this item
(2) shall be construed to limit any vote, consent or
approval rights specifically given to the Limited Partners
elsewhere in this Agreement.
Nothing contained herein shall be construed as authorizing the General Partner
or any Liquidator to amend this Agreement except in accordance with Article 14
hereof or as may be otherwise expressly provided for in this Agreement.
B. The foregoing power of attorney is hereby declared to be
irrevocable and a power coupled with an interest, in recognition of the fact
that each of the Partners will be relying upon the power of the General Partner
and any Liquidator to act as contemplated by this Agreement in any filing or
other action by it on behalf of the Partnership, and it shall survive and not be
affected by the subsequent Incapacity of any Limited Partner or Assignee and the
transfer of all or any portion of such Limited Partner's Partnership Interest or
such Assignee's economic interest and shall extend to such Limited Partner's or
Assignee's heirs, successors, assigns and personal representatives. Each Limited
Partner or Assignee shall execute and deliver to the General Partner or the
Liquidator, within fifteen (15) days after receipt of the General Partner's or
Liquidator's request therefor, such further instruments as
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the General Partner or the Liquidator, as the case may be, requests to confirm
actions taken pursuant to the foregoing power of attorney.
Section 2.5 TERM
The term of the Partnership shall commence on the date hereof and shall
continue until December 31, 2095, unless, the Partnership is dissolved sooner
pursuant to the provisions of Article 13 or as otherwise provided by law.
ARTICLE 3
PURPOSE
Section 3.1 PURPOSE AND BUSINESS
The purpose and nature of the business to be conducted by the Partnership
is (i) to acquire the Contributed Properties (including, without limitation, all
related improvements, facilities and rights) in the manner contemplated by the
Contribution Agreements, (ii) to own, lease, operate, maintain, repair and
otherwise deal with the Contributed Properties, (iii) to carry on other business
typical for an owner or operator of apartment developments similar to the
Contributed Properties and (iii) to do other things incident to the other
purposes enumerated in this Section 3.1.
Section 3.2 POWERS
The Partnership is empowered to do any and all acts and things necessary,
appropriate, proper, advisable, incidental to or convenient for the furtherance
and accomplishment of the purposes and business described herein and for the
protection and benefit of the Partnership, including, without limitation,
borrowing money to finance one (1) or more of the Contributed Properties and the
conduct of the Partnership's business, subject to any limitations contained in
this Agreement, provided that the Partnership shall not take any action which,
in the judgment of the General Partner, in its sole and absolute discretion, (a)
could adversely affect the ability of the General Partner to continue to qualify
as a REIT, (b) could subject the General Partner to any additional taxes under
Section 857 or Section 4981 of the Code, or (c) could violate any law or
regulation of any governmental body or agency having jurisdiction over the
General Partner or securities issued by the General Partner unless such action
(or inaction) shall have been specifically consented to by the General Partner
in writing.
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ARTICLE 4
CAPITAL CONTRIBUTIONS
Section 4.1 CAPITAL CONTRIBUTIONS OF THE PARTNERS
On or about the time of the execution of this Agreement, (i) the General
Partner has made a Capital Contribution in the amount shown on EXHIBIT A, (ii)
TCR #510 Kelley Limited Partnership has contributed the Contributed Property
known as "Gallery Place Apartments" to the Partnership pursuant to the terms of
its Contribution Agreement with the General Partner. In accordance with the
terms of such Contribution Agreement, Limited Partner Interests have been issued
directly to the Initial Limited Partners in exchange for conveyance of such
Contributed Property, each of whom holds a direct or indirect ownership interest
in the TCR #510 Kelley Limited Partnership (such issuance having been treated by
TCR #510 Kelley Limited Partnership and certain entities that hold direct or
indirect ownership interests in TCR #510 Kelley Limited Partnership as an
acquisition by TCR #510 Kelley Limited Partnership of such Limited Partner
Interests and an immediate distribution of such Limited Partner Interests to
their then-existing respective equity owners). The Initial Limited Partners
shall own Limited Partner Interests in the amounts set forth on EXHIBIT A.
It is anticipated that, at a future date, (i) the General Partner will
make a further Capital Contribution to the Partnership and (ii) Avondale Bear
Creek Limited Partnership will contribute the Contributed Property known as "The
Overlook at Bear Creek" to the Partnership pursuant to its Contribution
Agreement with the General Partner. In accordance with the terms of such
Contribution Agreement, Limited Partner Interests will be issued, in exchange
for conveyance of such Contributed Property, to additional Initial Limited
Partners identified in accordance with such Contribution Agreement (who may
include the General Partner to the extent it acquires Limited Partner Interests
in Avondale Bear Creek Limited Partnership or its general partner in accordance
with the terms of such Contribution Agreement), each of which additional Initial
Limited Partners at the time will hold a direct or indirect ownership interest
in Avondale Bear Creek Limited Partnership. Such issuance is to be treated by
Avondale Bear Creek Limited Partnership and certain entities that hold direct or
indirect ownership interests in Avondale Bear Creek Limited Partnership as an
acquisition by Avondale Bear Creek Limited Partnership of such Limited Partner
Interests and an immediate distribution of such Limited Partner Interests to
their respective then-existing equity owners. The additional Initial Limited
Partners identified in accordance with the Contribution Agreement between the
General Partner and Avondale Bear Creek Limited Partnership will be admitted to
the Partnership (and EXHIBIT A to this Agreement will be amended to reflect such
admission) at the time of such contribution, and such admission may be made
without the approval or joinder (except in their respective capacities as
additional Initial Limited Partners) of any Limited Partner.
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Except as provided in Sections 4.5, 7.3C, 8.5 and 10.5, the Partners
shall have no obligation to make any additional Capital Contributions, loans or
other advances of funds to the Partnership.
Section 4.2 NO ISSUANCE OF ADDITIONAL PARTNERSHIP INTERESTS
The General Partner shall not cause or permit the Partnership to issue
additional Partnership Interests to the Partners or other Persons, except as
contemplated in Section 4.1.
Section 4.3 DISCRETIONARY CAPITAL CONTRIBUTIONS.
The General Partner shall have the right to make Capital Contributions to
the Partnership in excess of the amount set forth in EXHIBIT A to the extent
necessary as reasonably determined by the General Partner to meet the
Partnership's capital requirements, and any such Capital Contributions shall be,
as of the date contributed, included in the General Partner's Unrecovered
Capital Amount. Limited Partners shall have no preemptive or similar rights with
respect to any additional Capital Contributions to the Partnership.
Section 4.4 NO GUARANTEED PAYMENT WITHIN THE MEANING OF SECTION 707(c)
OF THE INTERNAL REVENUE CODE.
The parties agree that neither the Limited Partners' Priority Return nor
the General Partner's Priority Return is intended to be a guaranteed payment
within the meaning of Section 707(c) of the Code.
Section 4.5 FUNDING TO COMPENSATE FOR CERTAIN DISTRIBUTIONS
If any proceeds from a borrowing by the Partnership are distributed to
the General Partner (or are used to satisfy Partnership obligations so that
other funds of the Partnership become available for distribution to the General
Partner), and if upon the occurrence of a Terminating Capital Transaction the
proceeds of the Terminating Capital Transaction are not sufficient to distribute
to the Limited Partners and Assignees their entire Unrecovered Capital Amount,
then the General Partner will make a Capital Contribution in an amount equal to
the lesser of (i) the proceeds of borrowings (or funds made available through
borrowings) distributed to the General Partner or (ii) the remainder of the
Unrecovered Capital Amount of the Limited Partners and Assignees. Any such
Capital Contribution by the General Partner will be distributed to the Limited
Partners and Assignees proportionately, based on the remaining Unrecovered
Capital Amount of each of them.
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ARTICLE 5
DISTRIBUTIONS
Section 5.1 REQUIREMENT AND CHARACTERIZATION OF DISTRIBUTIONS
A. The General Partner shall distribute at least quarterly an amount
equal to 100% of Available Cash generated by the Partnership during each
calendar quarter or portion thereof during which the Partnership is in
existence. Cash distributions pursuant to this Section 5.1 for a calendar
quarter or shorter period shall be made to the Partners and Assignees who are
Partners or Assignees of record on the record date for the regular quarterly
dividend paid by the General Partner to its shareholders for such quarter
("Partner Record Date") and such distribution shall be payable to Partners and
Assignees on the payment date for such dividend for such quarter. In the event
that the General Partner does not declare a dividend with respect to any
quarter, the Partner Record Date for such quarter shall be the last day of such
quarter and such distribution shall be paid no later than the 20th day of the
next following quarter. Such distributions shall be made to the applicable
Partners and Assignees in accordance with the following order of priority:
(1) First, to the Limited Partners and Assignees in proportion
to such Limited Partners' or Assignees' aggregate accrued
and unpaid Priority Return, until each Limited Partner and
Assignee has received an amount that, when aggregated with
all previous distributions to such Limited Partner or
Assignee pursuant to this Section 5.1.A(1) and Section
5.1.A(3) below is equal to (but not in excess of) the sum
of such Limited Partner's or Assignee's aggregate accrued
but unpaid Priority Return, plus for any and all accrued
but unpaid Limited Partner's Priority Return for all
previous calendar quarters or shorter periods, a return
thereon compounded annually from the date such Priority
Return commenced accruing through the date of payment at
the applicable Limited Partner Priority Return Rate;
(2) Second, to the General Partner until the General Partner
has received an amount that, when aggregated with all
previous distributions to the General Partner pursuant to
this Section 5.1.A(2) is equal to (but not in excess of)
the sum of the General Partner's aggregate accrued but
unpaid Priority Return, plus for any and all accrued but
unpaid General Partner's Priority Return for all previous
calendar quarters or shorter periods, a return thereon
compounded annually from the date such Priority Return
commenced accruing through the date of payment at the
applicable General Partner Priority Return Rate;
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(3) Thereafter, 99% to the General Partner and 1% in the
aggregate to the Limited Partners and Assignees in
proportion to the Percentage Interests of the Limited
Partners and Assignees.
B. Terminating Capital Transaction Proceeds shall be distributed
within sixty (60) days of receipt by the Partnership to those Partners and
Assignees who are Partners or Assignees on the date of the distribution of the
Terminating Capital Transaction Proceeds in accordance with the following order
of priority:
(1) First, to the Limited Partners and Assignees in proportion
to the Limited Partners' and Assignees' aggregate accrued
and unpaid Priority Return, until each Limited Partner and
Assignee has received an amount that, when aggregated with
all previous distributions to such Limited Partner or
Assignee pursuant to Sections 5.1.A(1) and 5.1.A(3) and
this Section 5.1.B(1), is equal to (but not in excess of)
the sum of such Limited Partner's or Assignee's aggregate
accrued but unpaid Priority Return, plus for any and all
accrued but unpaid Limited Partner's Priority Return for
all previous calendar quarters or shorter periods, a return
thereon compounded annually from the date such Priority
Return commenced accruing through the date of payment at
the applicable Limited Partner Priority Return Rate;
(2) Second, to the General Partner until the General Partner
has received an amount that, when aggregated with all
previous distributions to the General Partner pursuant to
5.1.A(2) and this Section 5.1.B(2) is equal to (but not in
excess of) the sum of the General Partner's aggregate
accrued but unpaid Priority Return, plus for any and all
accrued but unpaid General Partner's Priority Return for
all previous calendar quarters or shorter periods, a return
thereon compounded annually from the date such Priority
Return commenced accruing through the date of payment at
the applicable General Partner Priority Return Rate;
(3) Third, to the Partners and Assignees in proportion to their
Unrecovered Capital Amounts until the Partners and such
Assignees have received an aggregate amount equal to their
aggregate Unrecovered Capital Amounts; and
(4) Thereafter, 1% to the Limited Partners and Assignees in
proportion to their Percentage Interests and 99% to the
General Partner.
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Section 5.2 AMOUNTS WITHHELD
All amounts withheld pursuant to the Code or any provisions of any state
or local tax law and Section 10.5 hereof with respect to any allocation, payment
or distribution to the Partners or Assignees shall be treated as amounts
distributed to the Partners or Assignees pursuant to Section 5.1 for all
purposes under this Agreement.
ARTICLE 6
ALLOCATIONS OF PROFIT AND LOSS
Section 6.1 CAPITAL ACCOUNTS.
A. The Partnership shall establish and maintain a separate Capital
Account for each Partner and Assignee in accordance with Code Section 704 and
Treasury Regulations Section 1.704-1(b)(2)(iv). Subject to the immediately
preceding sentence, the Capital Account of each Partner and Assignee shall be
credited with (i) the amount of all cash Capital Contributions made or deemed
made to the Partnership by such Partner or Assignee in accordance with this
Agreement and the Agreed Value of any other property contributed or deemed
contributed to the Partnership by such Partner or Assignee pursuant to the terms
of this Agreement; plus (ii) all Profits allocated to such Partner pursuant to
Article 6 hereof (including for purposes of this Section 6.1 income and gain
exempt from tax); and shall be debited with the sum of: (x) all Losses allocated
to such Partner or Assignee pursuant to Article 6 hereof, and (y) all cash and
the Agreed Value of any other property actually distributed or deemed
distributed by the Partnership to such Partner or Assignee pursuant to the terms
of this Agreement. Any reference in any section or subsection of this Agreement
to the Capital Account of a Partner or Assignee shall be deemed to refer to such
Capital Account as the same may be credited or debited from time to time as set
forth above.
B. The foregoing provisions of this Section 6.1 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. In the event the
General Partner shall determine that it is prudent to modify the manner in which
Capital Accounts are computed hereunder in order to comply with such Treasury
Regulations, the General Partner may make such modification if such modification
will not have any effect whatsoever on the amount distributable to any Partner
or Assignee under the terms of this Agreement or the amount which any Partner or
Assignee may be obligated to advance to restore negative Capital Accounts and
the General Partner notifies the Limited Partners and Assignees in writing of
such modification prior to making such modification.
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Section 6.2 PROFITS, LOSSES AND DISTRIBUTIVE SHARES.
A. OPERATING PROFITS. Subject to Section 6.2.C below, and after
giving effect to the special allocations, if any, provided in Sections 6.2.D and
E hereof, Profits in each fiscal year or other relevant period of the
Partnership shall be allocated in the following order:
(1) First, to each Partner or Assignee in proportion to the
cumulative Losses allocated to such Partner or Assignee
under Section 6.2.B(2) and (3) hereof (in inverse order in
which they were allocated), until the cumulative Profits
allocated to such Partner or Assignee under this Section
6.2.A(1) equal the cumulative Losses allocated to such
Partner or Assignee under Section 6.2.B(2) and (3) hereof;
(2) Second, to the Limited Partners and Assignees
proportionately based in the amount, if any, by which the
cumulative prior and concurrent distributions of each
Limited Partner's or Assignee's Priority Return pursuant to
Section 5.1.A(1) hereof exceeds the cumulative amounts of
Profits previously allocated to such Limited Partner or
Assignee pursuant to this Section 6.2.A(2);
(3) Third, to the General Partner in the amount, if any, that
the cumulative prior and concurrent distributions of the
General Partner's Priority Return pursuant to Section
5.1.A(2) hereof exceeds the cumulative amounts of Profits
previously allocated to the General Partner pursuant to
this Section 6.2.A(3); and
(4) Thereafter, 99% to the General Partner and 1% to the
Limited Partners and Assignees in the aggregate and among
the Limited Partners and Assignees in proportion to their
respective Percentage Interests.
B. OPERATING LOSSES. Subject to Section 6.2.C below, and after giving
effect to the special allocations, if any, provided in Section 6.2.D and E
hereof, Losses in each fiscal year or other relevant period of the Partnership
shall be allocated in the following order:
(1) First, to each Partner or Assignee in proportion to the
cumulative Profits allocated to such Partner or Assignee
pursuant to Section 6.2A(2), (3) and (4) hereof (in inverse
order in which they were allocated) until the cumulative
Losses allocated to such Partner or Assignee under this
Section 6.2B(1) equal the cumulative Profits allocated to
such Partner or Assignee under Section 6.2A(2), (3) and
(4);
(2) Second, to and among those Partners and Assignees having
positive balances in their Capital Accounts, in proportion
to and to the extent of,
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such positive Capital Account balances after giving effect
to any Losses allowed pursuant to Section 6.2B(1); and
(3) Thereafter, 100% to the General Partner.
C. PROFITS AND LOSSES FROM TERMINATING CAPITAL TRANSACTION.
Notwithstanding anything contained in Sections 6.2.A and B hereof, after giving
effect to the special allocations, if any, provided in Sections 6.2.D and E
hereof, all items of Partnership Profits and Losses arising from a Terminating
Capital Transaction shall be allocated among the Partners and Assignees so as to
insure to the maximum extent possible that, after giving effect to the
allocation of such Profits and Losses in the Capital Accounts of the Partners
and Assignees, the Capital Account balance of each Partner or Assignee is
positive in the amount of cash that such Partner or Assignee is required to
receive pursuant to Section 5.1.B from such Terminating Capital Transaction.
D. SPECIAL ALLOCATIONS. Except as otherwise provided in this
Agreement, the following special allocations will be made in the following order
and priority:
(1) PARTNERSHIP MINIMUM GAIN CHARGEBACK. Notwithstanding any
other provision of this Article 6, if there is a net
decrease in Minimum Gain during any tax year or other
period for which allocations are made, each Partner and
Assignee will be specially allocated items of Partnership
income and gain for that period (and, if necessary,
subsequent periods) in an amount equal to such Person's
share of the net decrease in Minimum Gain during such tax
year or other period determined in accordance with Treasury
Regulations Section 1.704-2(g)(2). Allocations pursuant to
the preceding sentence shall be made in proportion to the
respective amounts required to be allocated to each Partner
and Assignee pursuant thereto. The items to be so allocated
shall be determined in accordance with Treasury Regulations
Sections 1.704- 2(f)(6) and 1.704-2(j)(2)(i). This Section
6.2.D(1) is intended to comply with the minimum gain
chargeback requirements set forth in Treasury Regulations
Section 1.704-2(f) and shall be interpreted consistently
therewith, including the exceptions to the minimum gain
chargeback requirement set forth in Treasury Regulations
Sections 1.704-2(f)(2) and (3).
(2) PARTNER NONRECOURSE DEBT MINIMUM GAIN CHARGEBACK.
Notwithstanding any other provision of this Section 6.2
(other than Section 6.2.D(1), which shall be applied before
this Section 6.2.D(2)), if there is a net decrease in
Partner Nonrecourse Debt Minimum Gain during any tax year
or other period for which allocations are made, each
Partner or Assignee with a share of Partner Nonrecourse
Debt Minimum Gain
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determined in accordance with Treasury Regulations Section
1.704- 2(i)(5) shall be specially allocated items of
Partnership income and gain for that period (and, if
necessary, subsequent periods) in an amount equal to the
Person's share of the net decrease in the Partner
Nonrecourse Debt Minimum Gain determined in accordance with
Treasury Regulation 1.704-2(i). The items to be so
allocated shall be determined in accordance with Treasury
Regulations Sections 1.704- 2(i)(4) and 1.704-2(j)(2)(ii).
This Section 6.2.D(2) is intended to comply with the
minimum gain chargeback requirements of Treasury
Regulations Section 1.704-2(i)(4) and shall be interpreted
consistently therewith, including the exceptions set forth
in Treasury Regulations Section 1.704- (f)(2) and (3) to
the extent such exception apply to Treasury Regulations
Section 1.704-2(i)(4).
(3) QUALIFIED INCOME OFFSET. If a Partner or Assignee
unexpectedly receives any adjustment, allocation or
distribution described in Treasury Regulations Section
1.704-1(b)(2)(ii)(d)(4), (5) or (6), respectively, such
Person will be specially allocated items of Partnership
income and gain (consisting of a pro rata portion of each
item of Partnership income, including gross income, and
gain for the relevant tax year or other period for which
allocations are made) in an amount and manner sufficient to
eliminate, to the extent required by the Treasury
Regulations, the Adjusted Capital Account Deficit of such
Person as quickly as possible, provided that an allocation
pursuant to this Section 6.2.D(3) shall be made only to the
extent that such Person would have an Adjusted Capital
Account Deficit after all other allocations provided for in
this Section 6.2 have been made in the first instance
without regard to this Section 6.2D(3).
(4) PARTNER NONRECOURSE DEDUCTIONS. Notwithstanding anything to
the contrary in this Agreement, any Partner Nonrecourse
Deductions for any taxable year or other period for which
allocations are made will be allocated to the Partner or
Assignee who bears the economic risk of loss with respect
to the liability to which the Partner Nonrecourse
Deductions are attributable in accordance with Treasury
Regulations Section 1.704- 2(i).
(5) CODE SECTION 754 ADJUSTMENTS. To the extent an adjustment
to the adjusted tax basis of any Partnership asset under
Code Section 734(b) or 743(b) is required to be taken into
account in determining Capital Accounts under Treasury
Regulations Section 1.704-1(b)(2) (iv)(m), the amount of
the adjustment to the Capital Accounts will be treated as
an item of gain (if the adjustment increases the basis of
the asset) or loss (if
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the adjustment decreases the basis of the asset), and the
gain or loss will be specially allocated to the Partners
and Assignees in a manner consistent with the manner in
which their Capital Accounts are required to be adjusted
under Treasury Regulations Section 1.704-1(b)(2)(iv)(m).
(6) DEPRECIATION RECAPTURE. In the event there is any recapture
of Depreciation or investment tax credit, the allocation
thereof shall be made among the Partners and Assignees in
the same proportion as the deduction for such Depreciation
or investment tax credit was allocated.
(7) INTEREST IN PARTNERSHIP. Notwithstanding any other
provision of this Agreement, no allocation of Profit or
Loss (or item of Profit or Loss) will be made to a Partner
or Assignee if the allocation would not have "economic
effect" under Treasury Regulations Section
1.704-1(b)(2)(ii) or otherwise would not be in accordance
with the Person's interest in the Partnership within the
meaning of Treasury Regulations Section 1.704- 1(b)(3) or
1.704-1(b)(4)(iv).
E. CURATIVE ALLOCATIONS. The allocations set forth in Sections
6.2.D(1) through (5) and (7) hereof (the "Regulatory Allocations") are intended
to comply with certain requirements of Treasury Regulations Sections 1.704-1(b)
and 1.704-2. The Regulatory Allocations may not be consistent with the manner in
which the Partners and Assignees intend to divide Partnership distributions.
Accordingly, the General Partner is authorized to further allocate Profits,
Losses, and other items of income, gain, loss and deduction among the Partners
and Assignees in a reasonable manner so as to prevent the Regulatory Allocations
from distorting the manner in which Partnership distributions would be divided
among the Partners and Assignees under Section 5.1 hereof, but for application
of the Regulatory Allocations. In general, such reallocation will be
accomplished by specially allocating other Profits, Losses and items of income,
gain, loss and deduction, to the extent they exist, among the Partners and
Assignees so that the net amount of the Regulatory Allocations and the special
allocations to each Partner or Assignees is zero. The General Partner may
accomplish this result in any reasonable manner that is consistent with Code
Section 704 and the related Treasury Regulations.
F. TAX ALLOCATIONS - CODE SECTION 704(C). Notwithstanding anything
contained in this Agreement to the contrary, taxable income, gain, loss, and
deduction with respect to any Partnership property (including, but not limited
to, the Contributed Properties) that is subject to Code Section 704(c), the
Treasury Regulations thereunder and/or Treasury Regulations Section
1.704-1(b)(2)(iv)(f) shall be determined and allocated among the Partners and
Assignees, and the Capital Accounts of the Partners and Assignees shall be
determined, in accordance with such Code Section and/or Treasury Regulations, as
the case may be. The General Partner hereby agrees that the Partnership shall
elect the traditional method under Treasury Regulation Section 1.704-3(b) to
eliminate the Book-Tax Disparity with respect to the Contributed Properties, and
such election shall be binding on all of the Partners and Assignees.
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G. OTHER ALLOCATION RULES. The following rules will apply to the
calculation and allocation of Profits, Losses and other items of income, gain,
loss and deduction:
(1) Unless otherwise determined by the General Partner, for
purposes of determining the Profits, Losses or any other
item of income, gain, loss and deduction allocable to any
period, Profits, Losses and other items of income, gain,
loss and deduction will be determined on a daily basis
under Code Section 706 and the related Treasury
Regulations.
(2) Except as otherwise provided in this Agreement, all items
of Partnership income, gain, loss, deduction, and other
allocations not provided for in this Agreement will be
divided among the Partners and Assignees in the same
proportions as they share Profits and Losses, provided that
any credits shall be allocated in accordance with Treasury
Regulations Section 1.704-1(b)(4)(ii).
H. PARTNER ACKNOWLEDGMENT. The Partners and Assignees agree to be
bound by the provisions of this Section 6.2 in reporting their shares of
Partnership income, gain, loss, deduction and other allocations for income tax
purposes.
I. REGULATORY COMPLIANCE. The foregoing provisions of this Section
6.2 relating to the allocation of Profits, Losses and other items of income,
gain, loss and deduction for federal income tax purposes are intended to comply
with Treasury Regulations Sections 1.704-1(b) and 1.704-2, and shall be
interpreted and applied in a manner consistent with such Treasury Regulations.
J. EFFECT OF TREASURY REGULATIONS; LIQUIDATION. In the event the
Partnership is "liquidated" within the meaning of Treasury Regulations Section
1.704-1(b)(2)(ii)(g) but there has been no dissolution of the Partnership, then
the Partnership 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, but there shall be deemed to have been a distribution of Partnership assets
in kind to the Partners and Assignees in accordance with their respective
Capital Accounts followed by a recontribution of the Partnership assets by the
Partners and Assignees.
Section 6.3 EGATIVE CAPITAL ACCOUNTS. A Partner or Assignee will not
be required to restore or to pay to the Partnership or to any other Partner or
Assignee any deficit or negative balance which may be exist in the Capital
Account of such Partner or Assignee at any time, including, without limitation,
upon the winding up of the Partnership or the transfer of liquidation of the
Partnership or economic interest therein of such Partner or Assignee.
Section 6.4 PPLICATION TO ASSIGNEES. If all or a portion of the
economic interest appurtenant to a Partnership Interest is Transferred in
accordance with the terms of this Agreement, the Capital Account of the
transferor and the Unrecovered Capital Amount
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allocable to such portion of the Partnership Interest so Transferred will be
allocated between the transferor and transferee based on the respective
Percentage Interests allocable to the portion of the Partnership Interest
retained and the portion of the Partnership Interest transferred. An Assignee of
a Partner shall be deemed to succeed to the rights and obligations of such
Partner under this Article 6 with respect to that portion of the applicable
Partnership Interest Transferred to it.
ARTICLE 7
MANAGEMENT AND OPERATIONS OF BUSINESS
Section 7.1 MANAGEMENT
A. Except as otherwise expressly provided in this Agreement, all
management powers over the business and affairs of the Partnership are and shall
be exclusively vested in the General Partner. No Limited Partner shall have any
right to participate in or exercise control or management power over the
business and affairs of the Partnership. The General Partner may not be removed
by the Limited Partners with or without cause. In addition to the powers now or
hereafter granted a general partner of a limited partnership under applicable
law or which are granted to the General Partner under any other provision of
this Agreement, the General Partner, subject to Section 7.3 hereof, shall have
full power and authority to do all things deemed necessary or desirable by it to
conduct the business of the Partnership, to exercise all powers set forth in
Section 3.2 hereof and to effectuate the purposes set forth in Section 3.1
hereof, including, without limitation:
(1) the making of any expenditures (including, without
limitation, making prepayments on loans, subject to prior
approval to the extent required by Section 7.3 hereof), the
borrowing of money, the assumption or guarantee of, or
other contracting for, indebtedness and other liabilities,
the issuance of evidence of indebtedness (including the
securing of the same by deed, mortgage, deed of trust or
other lien or encumbrance on the Partnership's assets) and
the incurring of any obligations it deems necessary for the
conduct of the activities of the Partnership;
(2) the making of tax, regulatory and other filings, or
rendering of periodic or other reports to governmental or
other agencies having jurisdiction over the business or
assets of the Partnership;
(3) the acquisition, disposition, mortgage, pledge,
encumbrance, hypothecation or exchange of any assets of the
Partnership (including the exercise or grant of any
conversion, option, privilege, or subscription right or
other right available in connection with any assets at any
time
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held by the Partnership), subject to prior approval to the
extent required by Section 7.3 hereof;
(4) the use of the assets of the Partnership (including,
without limitation, cash on hand) for any purpose
consistent with the terms of this Agreement and on any
terms it sees fit, including, without limitation, the
financing of the conduct of the operations of the
Partnership and the repayment of obligations of the
Partnership;
(5) the management, operation, leasing, landscaping, repair,
alteration, demolition or improvement of any real property
or improvements owned by the Partnership;
(6) the making, negotiation, execution, and performance of any
contracts, conveyances or other instruments that the
General Partner considers useful or necessary to the
conduct of the Partnership's operations or the
implementation of the General Partner's powers under this
Agreement, including contracting with contractors,
developers, consultants, accountants, legal counsel, other
professional advisors and other agents and the payment of
their expenses and compensation out of the Partnership's
assets;
(7) the distribution of Partnership cash or other Partnership
assets in accordance with this Agreement;
(8) holding, managing, investing and reinvesting cash and other
assets of the Partnership;
(9) the collection and receipt of revenues and income of the
Partnership;
(10) the selection and dismissal of employees of the Partnership
(including, without limitation, employees having titles
such as "president," "vice president," "secretary" and
"treasurer" of the Partnership), and agents, outside
attorneys, accountants, consultants and contractors of the
Partnership, and the determination of their compensation
and other terms of employment or hiring;
(11) the maintenance of such insurance for the benefit of the
Partnership and the Partners as it deems necessary or
appropriate;
(12) the control of any matters affecting the rights and
obligations of the Partnership, including the settlement,
compromise, submission to arbitration or any other form of
dispute resolution, or abandonment of,
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any claim, cause of action, liability, debt or damages, due
or owing to or from the Partnership, the commencement or
defense of suits, legal proceedings, administrative
proceedings, arbitration or other forms of dispute
resolution, and the representation of the Partnership in
all suits or legal proceedings, administrative proceedings,
arbitrations or other forms of dispute resolution, the
incurring of legal expense, and the indemnification of any
Person against liabilities and contingencies to the extent
permitted by this Agreement;
(13) the determination of the fair market value of any
Partnership property distributed in kind using such
reasonable method of valuation as the General Partner may
adopt;
(14) the exercise, directly or indirectly, through any
attorney-in-fact acting under a general or limited power of
attorney, of any right, including the right to vote,
appurtenant to any asset or investment held by the
Partnership; and
(15) the making, execution and delivery of any and all deeds,
leases, notes, mortgages, deeds of trust, security
agreements, conveyances, contracts, guarantees, warranties,
indemnities, waivers, releases or legal instruments or
agreements in writing necessary or appropriate, in the
judgment of the General Partner, for the accomplishment of
any of the powers of the General Partner enumerated in this
Agreement.
B. Each of the Limited Partners agrees that the General Partner is
authorized to execute, deliver and perform the above-mentioned agreements and
transactions on behalf of the Partnership without any further act, approval or
vote of the Partners, notwithstanding any other provision of this Agreement
(except as provided in Section 7.3), the Act or any applicable law, rule or
regulation, to the fullest extent permitted under the Act or other applicable
law, rule or regulation. The execution, delivery or performance by the General
Partner or the Partnership of any agreement authorized or permitted under this
Agreement shall not constitute a breach by the General Partner of any duty that
the General Partner may owe the Partnership or the Limited Partners or any other
Persons under this Agreement or of any duty stated or implied by law or equity
so long as such execution, delivery or performance has been undertaken by the
General Partner in good faith.
C. At all times from and after the date hereof, the General Partner
may cause the Partnership to establish and maintain at any and all times working
capital accounts and other cash or similar balances in such amounts as the
General Partner, in its sole and absolute discretion, deems appropriate and
reasonable from time to time.
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D. Except as provided in Section 7.3, in exercising its authority
under this Agreement, the General Partner may, but shall be under no obligation
to, take into account the tax consequences to any Partner or Assignee of any
action taken by it. The General Partner and the Partnership shall not have
liability to a Limited Partner or Assignee under any circumstances as a result
of an income tax liability incurred by such Limited Partner or Assignee as a
result of an action (or inaction) by the General Partner taken pursuant to its
authority under this Agreement and in accordance with the terms of Section 7.3.
Section 7.2 CERTIFICATE OF LIMITED PARTNERSHIP
The General Partner shall file, simultaneously herewith, the Certificate
with the Secretary of State of Delaware as required by the Act. The General
Partner shall use all reasonable efforts to cause to be filed such other
certificates or documents as may be reasonable and necessary or appropriate for
the formation, continuation, qualification and operation of a limited
partnership (or a partnership in which the limited partners have limited
liability) in the State of Delaware, any other state or any other jurisdiction,
in which the Partnership may elect to do business or own property. The General
Partner shall file amendments to and restatements of the Certificate and do all
of the things to maintain the Partnership as a limited partnership (or a
partnership in which the limited partners have limited liability) under the laws
of the State of Delaware and each other state and each other jurisdiction in
which the Partnership may elect to do business or own property. The General
Partner shall after filing, deliver a copy of the Certificate and any amendment
thereto to each Limited Partner.
Section 7.3 RESTRICTIONS ON GENERAL PARTNER AUTHORITY
A. Except as provided in Article 11 or 13 hereof or to the extent
that the transaction is treated as a wholly tax-free exchange with no boot under
Code Section 1031, the General Partner shall not, prior to September 12, 2009,
(i) cause or permit the Partnership to engage in a sale, exchange or other
disposition with respect to any Contributed Properties or any interest therein
(including by way of taxable merger, consolidation or other combination with any
other Person), except as a result of a casualty loss, title loss or exercise of
eminent domain, (ii) cause or permit a tax termination of the Partnership within
the meaning of Section 708(b)(1)(B) of the Code; or (iii) subject to the terms
of this Section below, fail to maintain Partnership debt of at least the
following (the "Minimum Debt Amount"): (a) $8,000,000 less (b) the sum of (x)
the amount that, at the time in question, would have been retired on the
indebtedness of TCR #510 Kelley Limited Partnership to The Prudential Insurance
Company of America described in the Contribution Agreement for Gallery Place
Apartments (the "Prudential Debt") as a result of regularly scheduled principal
payments that would have been required to be made on the Prudential Debt after
the date the Contributed Property subject to the Prudential Debt was transferred
to the Partnership and on or before the time in question, (y) the amount of any
reduction in the negative capital accounts of the Limited Partners and Assignees
and (z) the reduction in the amount of Partnership indebtedness guaranteed by
the Limited Partners and Assignee other than as described in item (x) above. The
Initial Limited Partners who receive Limited Partner Interests in connection
with the contribution of Gallery Place Apartments agree that, simultaneously
with the transfer to the Partnership of the
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Contributed Property owned by TCR #510 Kelly Limited Partnership, each of them
will provide a guaranty in the form of EXHIBIT B hereto (each, a "Bottom-Dollar
Guaranty") with respect to the Prudential Debt which Bottom-Dollar Guaranties
shall be in the aggregate in an amount not less than $8,000,000 initially and
individually in such amount as is determined by each of the Initial Limited
Partners as is necessary to avoid gain recognition by each such Partner. The
General Partner shall have the right to refinance indebtedness of the
Partnership, including, without limitation, the Prudential Debt without
restriction so long as the General Partner provides the Limited Partners who
then have Bottom-Dollar Guarantees outstanding the opportunity (acceptable to
the applicable lender) to provide Bottom-Dollar Guarantees in the form of
EXHIBIT B of other debt of the Partnership on collateral having a value of not
less than forty percent (40%) of the amount to be guaranteed in an amount equal
to not less than the Minimum Debt Amount (it being understood that such Limited
Partners shall have the option either to deliver such Bottom-Dollar Guarantees
or be deemed to have agreed to a reduction in the Minimum Debt Amount by the
amount of the Bottom-Dollar Guarantees which were released on the debt which was
refinanced). Bay agrees not to take any action that would have the effect of
decreasing the amount of debt allocable to the applicable Limited Partners for
purposes of determining basis, assuming the then-existing Bottom-Dollar
Guarantees are otherwise allocable to such Limited Partnership.
B. [INTENTIONALLY OMITTED]
C. In the event that the General Partner breaches the terms of
Section 7.3.B, then the General Partner shall be obligated to pay to each
Limited Partner and Assignee an amount which, following the payment of federal
and state income tax thereon, will equal the sum of the then present value
(using a discount rate equal to the then current rate payable with respect to
United States Treasury obligations having the maturity date which most closely
approximates the period from the applicable Tax Payment Date through April 15,
2010) ofhypothetical interest at the prime rate then announced by the Union Bank
of Switzerland, New York, New York or, if such rate is not then announced by the
Union Bank of Switzerland, such other similar substitute rate as is then
published in THE WALL STREET JOURNAL, on the Built in Tax Amount for such
Limited Partner or Assignee from the date on which tax must be paid on account
of such breach to April 15, 2010. This Section 7.3.C shall be the sole and
exclusive remedy available to the Limited Partners and Assignees in the event of
the General Partner's breach of Section 7.3.A.
Section 7.4 REIMBURSEMENT OF THE GENERAL PARTNER
A. Except as provided in this Section 7.4 and elsewhere in this
Agreement (including the provisions of Articles 5 and 6 regarding distributions,
payments, and allocations to which it may be entitled), the General Partner
shall not be compensated for its services as general partner of the Partnership.
B. The General Partner shall be reimbursed on a monthly basis, or
such other basis as it may determine in its sole and absolute discretion, for
all out-of-pocket expenses to Persons who are not Affiliates of the General
Partner and, subject to the terms of Section 7.5,
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to Affiliates, in each case that it incurs relating to the ownership and
operation of, or for the benefit of, the Partnership.
Section 7.5 CONTRACTS WITH AFFILIATES
A. Except as expressly permitted by this Agreement, neither the
General Partner nor any of its Affiliates shall sell, transfer or convey any
property to, or purchase any property from, the Partnership, directly or
indirectly, or enter into any other transaction with the Partnership except
pursuant to transactions that are on terms and conditions that are fair and
reasonable for the Partnership.
B. The General Partner and its Affiliates may perform services for
the Partnership and shall be entitled to receive compensation therefore
determined on an arms length, fair market value basis.
Section 7.6 INDEMNIFICATION
A. To the fullest extent permitted by Delaware law, the Partnership
shall indemnify each Indemnitee from and against any and all losses, claims,
damages, liabilities, joint or several, expenses (including, without limitation,
attorneys fees and other legal fees and expenses), judgments, fines,
settlements, and other amounts arising from any and all claims, demands,
actions, suits or proceedings, civil, criminal, administrative or investigative,
that relate to the Partnership or its business, affairs, properties or
operations, or to indebtedness or obligations of the Partnership for which the
Indemnitees is or is alleged to be liable, in which such Indemnitee may be
involved, or is threatened to be involved, as a party or otherwise. Without
limitation, the foregoing indemnity shall extend to any liability of any
Indemnitee, pursuant to a loan guaranty or otherwise for any indebtedness or
obligations of the Partnership (including without limitation, any indebtedness
or obligations which the Partnership has assumed or taken subject to), and the
General Partner is hereby authorized and empowered, on behalf of the
Partnership, to enter into one or more indemnity agreements consistent with the
provisions of this Section 7.6 in favor of any Indemnitee having or potentially
having liability for any such indebtedness or obligations. Any indemnification
pursuant to this Section 7.6 shall be made only out of the assets of the
Partnership, and neither the General Partner nor any Limited Partner shall have
any obligation to contribute to the capital of the Partnership, or otherwise
provide funds, to enable the Partnership to fund its obligations under this
Section 7.6.
B. Reasonable expenses incurred by an Indemnitee who is a party to a
proceeding shall be paid or reimbursed by the Partnership in advance of the
final disposition of the proceeding, notwithstanding any limitation otherwise
imposed by the Act or other relevant laws.
C. The indemnification provided by this Section 7.6 shall be in
addition to any other rights to which an Indemnitee 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 a
capacity which entitles it to indemnity hereunder.
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D. The Partnership may, but shall not be obligated to, purchase and
maintain insurance on behalf of the Indemnitees against any liability covered by
Section 7.6(A) that may be asserted against one (1) or more Indemnitees or
expenses that may be incurred by one (1) or more Indemnitees.
E. In no event may an Indemnitee subject any of the Partners to
personal liability by reason of the indemnification provisions set forth in this
Agreement.
F. An Indemnitee shall not be denied indemnification in whole or in
part under this Section 7.6 because the Indemnitee had an interest in the
transaction with respect to which the indemnification applies if the transaction
was otherwise permitted by the terms of this Agreement.
G. The provisions of this Section 7.6 are for the benefit of the
Indemnities, their heirs, successors, assigns and administrators and shall not
be deemed to create any rights for the benefit of any other Persons. Any
amendment, modification or repeal of this Section 7.6 or any provision hereof
shall be prospective only and shall not in any way affect the Partnership's
liability to any Indemnitee under this Section 7.6, as in effect immediately
prior to such amendment, modification, or repeal with respect to matters
occurring or liability undertaken, in whole or in part, prior to such amendment,
modification or repeal, regardless of when claims related thereto may arise or
be asserted.
Section 7.7 LIABILITY OF THE GENERAL PARTNER
A. Notwithstanding anything to the contrary set forth in this
Agreement, the General Partner and its officers and directors 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 of any act or omission if the General Partner acted in good faith.
B. The Limited Partners, for themselves and the Assignees, expressly
acknowledge that the General Partner is acting on behalf of the Partnership and
the General Partner's shareholders collectively, that the General Partner is
under no obligation to consider the separate interests of the Limited Partners
or the Assignees, including, without limitation, the tax consequences to any
Limited Partners or Assignees (except as otherwise provided herein) in deciding
whether to cause the Partnership to take (or decline to take) any actions, and,
subject to the terms of Section 7.3.C, that the General Partner shall not be
liable for monetary damages for losses sustained, liabilities incurred, or
benefits not derived by Limited Partners or the Assignees in connection with
such decisions, provided that the General Partner has acted in good faith and
has not violated any express provision of this Agreement. In the event of a
conflict between the interests of the General Partner's shareholders on one hand
and the Limited Partners and the Assignees on the other, the General Partner
shall endeavor in good faith to resolve the conflict in a manner not adverse to
either its shareholders or the Limited Partners or the Assignees; provided,
however, that any such conflict which cannot be resolved in a manner not adverse
to either the General Partner's shareholders or the Limited Partners or the
Assignees shall be resolved in favor of the General Partner's shareholders.
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C. Subject to its obligations and duties as General Partner set forth
in Section 7.1.A hereof, the General Partner may exercise any of the powers
granted to it by this Agreement and perform any of the duties imposed upon it
hereunder either directly or by or through its agents. The General Partner shall
be responsible for all conduct on the part of any such agent.
D. Any amendment, modification or repeal of this Section 7.7 or any
provision hereof shall be prospective only and shall not in any way affect the
limitations on the General Partner's and its officers' and directors' liability
to the Partnership and the Limited Partners under this Section 7.7 as in effect
immediately prior to such amendment, modification or repeal with respect to
claims arising from or relating to matters occurring, in whole or in part, prior
to such amendment, modification or repeal, regardless of when such claims may
arise or be asserted.
Section 7.8 OTHER MATTERS CONCERNING THE GENERAL PARTNER
A. The General Partner may rely and shall be protected in acting, or
refraining from acting, upon any resolution, certificate, statement, instrument,
opinion, report, notice, request, consent, order, bond, debenture, or other
paper or document believed by it in good faith to be genuine and to have been
signed or presented by the proper party or parties.
B. The General Partner may consult with legal counsel, accountants,
appraisers, management consultants, investment bankers, architects, engineers,
environmental consultants and other consultants and advisers selected by it, and
the General Partner will not be liable for any loss, liability, damage, cost or
expense, including, without limitation, attorneys' fees and disbursements,
resulting from any act taken or omitted to be taken in good faith 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.
C. The General Partner shall have the right, in respect of any of its
powers or obligations hereunder, to act through any of its duly authorized
officers and duly appointed attorneys-in-fact. 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.
D. Subject to any written agreements other than this Agreement
entered into by the General Partner or its Affiliates with the Partnership or
any Limited Partner or Assignee or any of their respective Affiliates, the
General Partner, its Affiliates and any officer, director, employee, agent,
trustee or shareholder of the General Partner or its Affiliates shall be
entitled to and may have business interests and engage in business activities in
addition to those relating to the Partnership, including, without limitation,
business interests and activities that are in direct competition with the
Partnership or that are enhanced by the activities of the Partnership. Neither
the Partnership nor any of the Limited Partners or Assignees or any of their
respective Affiliates shall have any rights by virtue of this Agreement or the
partnership relationship established hereby in any business ventures of the
General Partner or its Affiliates, and none of the General Partner or its
Affiliates shall have any obligation pursuant to this Agreement or the
partnership relationship created hereby to offer any interest in any such
business ventures to the Partnership, any Limited Partner, any Assignee or any
Affiliate of any
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of the foregoing, even if such opportunity is of a character which, if presented
to the Partnership, any Limited Partner, any Assignee or any Affiliate of any of
the foregoing or could be taken by such Person.
E. The General Partner makes no representation that the Limited
Partners or Assignees will not recognize gain or income that would be taxable as
a result of entering into this Agreement as contemplated by the Contribution
Agreements. Any costs of administering the defense of such liability is the sole
responsibility of the Limited Partners and the Assignees and is not subject to
indemnification under this Agreement. The General Partner shall have no
liability whatsoever with respect to the effect on any Limited Partner or
Assignee of any Transfer, including, without limitation, of any economic
interest to any Assignee, of all or any portion of a Limited Partner Interest.
Section 7.9 TITLE TO PARTNERSHIP ASSETS
Title to Partnership assets, whether real, personal or mixed and whether
tangible or intangible, shall be deemed to be owned by the Partnership as an
entity, and no Partner, individually or collectively, shall have any ownership
interest in such Partnership assets or any portion thereof. Title to any or all
of the Partnership assets shall be held in the name of the Partnership. All
Partnership assets shall be recorded as the property of the Partnership in its
books and records.
Section 7.10 RELIANCE BY THIRD PARTIES
Notwithstanding anything to the contrary in this Agreement, any Person
dealing with the Partnership shall be entitled to assume that the General
Partner has full power and authority, without consent or approval of any other
Partner or Person, to encumber, sell or otherwise use in any manner any and all
assets of the Partnership and to enter into any contracts on behalf of the
Partnership, and take any and all actions on behalf of the Partnership and such
Person shall be entitled to deal with the General Partner as if the General
Partner were the Partnership's sole party in interest, both legally and
beneficially. 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. Nothing in this Section 7.10 limits the General Partner's
liability to the Partnership and the Limited Partners and the Assignees for
actions taken by the General Partner that are not authorized under this
Agreement.
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Section 7.11 GENERAL PARTNER'S CAPITAL CONTRIBUTION TO FUND THE
CONTRIBUTORS' PRORATIONS AND OTHER EXPENSES UNDER THE
CONTRIBUTION AGREEMENTS.
The General Partner's Capital Contributions made at the times of
acquisition of the Contributed Properties and interests therein shall be used by
the General Partner to repay loans and certain closing costs of the General
Partner and the Contributors, in each case as provided in the Contribution
Agreements, and, to the extent that any portion of such Capital Contributions
remains after application to such uses, the remaining funds may be used by the
General Partner for any other purpose in accordance with the terms of this
Agreement.
ARTICLE 8
RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS
Section 8.1 LIMITATION OF LIABILITY
Subject to any written agreements entered into by one (1) or more of the
Limited Partners or the Assignees, the Limited Partners and the Assignees shall
have no liability for the indebtedness or obligations of the Partnership and no
obligations or liability to the Partnership, the General Partner, or Affiliates
of the General Partner, except as expressly provided in this Agreement,
including, without limitation, Section 10.5 hereof, or under the Act.
Section 8.2 MANAGEMENT OF BUSINESS
No Limited Partner or Assignees shall take part in the operation,
management or control (within the meaning of the Act) of the Partnership's
business, transact any business in the Partnership's name or have the power to
sign documents for or otherwise bind the Partnership. The transaction of any
business by the General Partner, any of its Affiliates or any officer, director,
employee, partner, agent or trustee of the General Partner, the Partnership or
any of their Affiliates shall not affect, impair or eliminate the limitations on
the liability of the Limited Partners or the Assignees under this Agreement.
Section 8.3 OUTSIDE ACTIVITIES OF LIMITED PARTNERS AND ASSIGNEES
Subject to any written agreements entered into by a Limited Partner or an
Assignee or their Affiliates with the Partnership or the General Partner, any
Limited Partner, any Assignee, any Affiliate of a Limited Partner or any
Assignee and any officer, director, employee, agent, trustee or shareholder of
any Limited Partner or any Assignee or their Affiliates shall be entitled to and
may have business interests and engage in business activities in addition to
those relating to the Partnership, including business interests and activities
that are in direct competition with the Partnership or that are enhanced by the
activities of the Partnership. Neither the Partnership nor any Partner or
Assignee nor any of their Affiliates shall have any rights by virtue of this
Agreement or the partnership relationship created hereby in any business
ventures of any Limited Partner or any Assignee or their Affiliates. No Limited
Partner or Assignee nor any of their Affiliates shall have any obligation
pursuant to this Agreement or the partnership relationship created hereby to
offer any interest in any such business ventures to the Partnership, the General
Partner, another Limited Partner or Assignee
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or any of their respective Affiliates even if such opportunity is of a character
which, if presented to the Partnership, the General Partner another Limited
Partner or Assignee or any of their respective Affiliates could be taken by such
Person.
Section 8.4 RETURN OF CAPITAL
No Partner or Assignee shall be entitled to the withdrawal or return of
its Capital Contribution, except to the extent of distributions made pursuant to
this Agreement or upon termination of the Partnership as provided herein. Except
as otherwise expressly provided in this Agreement, including, without
limitation, any amendments hereto in accordance with Section 12.2, no Partner or
Assignee shall have priority over any other Partner or Assignee, either as to
the return of Capital Contributions or as to profits, losses or distributions.
Section 8.5 EXCHANGE RIGHTS OF QUALIFYING PARTIES
A. After the first (1st) anniversary of each Closing Date (as that
term is defined in the Contribution Agreement pursuant to which such Closing
Date occurred), an Initial Limited Partner who received a Limited Partner
Interest on such Closing Date or any Qualifying Party who has succeeded to such
Limited Partner Interest or the economic interest therein shall have the right
(the "Exchange Right") (subject to the terms and conditions set forth herein) to
require (subject to the exchange rights set forth in Section 8.5.B hereof) the
Partnership to redeem all or a portion of such Limited Partner Interests (such
Limited Partner Interests being hereinafter called "Tendered Units") in exchange
for the Cash Amount multiplied by the REIT Shares Amount with respect to the
Tendered Units plus the aggregate amount of any distributions owed but unpaid in
respect of the Tendered Units pursuant to Section 5.1 hereof on the applicable
Issuance Date (the "Cash Payment"), which product shall be due and shall be paid
on the Issuance Date following the Specified Exchange Date relating to such
Tendered Units. In such event, the General Partner shall contribute to the
Partnership such Cash Payment, and the Applicable Qualifying Party's Tendered
Units shall be redeemed in exchange for such Cash Payment in the following
manner and with the following consequences: such redemption, to the extent it
does not represent distributions required to be paid pursuant to Section 5.1(B)
which are accrued but unpaid, shall be treated as a distribution to such Limited
Partner which reduces such Limited Partner's Unrecovered Capital Amount as of
the date of the redemption by the Unrecovered Capital Amount allocated to the
Tendered Units, and the General Partner's Unrecovered Capital Amount as of the
date of the redemption shall be increased by the Unrecovered Capital Amount
allocated to the Tendered Units.
Any such exchange or redemption shall be exercised pursuant to a notice
of exchange in substantially the form attached hereto as EXHIBIT C (a "Notice of
Exchange") delivered to the General Partner, Attn: Chief Financial Officer, and
Goodwin, Procter & Hoar LLP, etc., Attn: David W. Watson, Esq., by the
applicable Qualifying Party when exercising its Exchange Right (the "Tendering
Party").
B. Notwithstanding the provisions of Section 8.5.A hereof, upon an
election by a Tendering Party of its Exchange Right, the General Partner may, in
its sole and absolute discretion but subject to the Ownership Limit, acquire the
Tendered Units from the Tendering Party in exchange for REIT Shares. In the
event the General Partner elects this option, (i) the
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General Partner shall send notice of such election (the "General Partner
Election") to the Tendering Party at the address listed on the Notice of
Exchange not later than ten (10) Business Days following the applicable
Specified Exchange Date and (ii) on or before the applicable Issuance Date, the
General Partner shall cause its transfer agent to issue in exchange for the
Tendered Units (plus any distributions pursuant to Section 5.1(B) which are
accrued but unpaid) REIT Shares (the "Exchange Shares") in a number equal to (i)
the REIT Shares Amount plus (ii) the aggregate amount of any distributions owed
but unpaid to the Qualifying Party pursuant to Section 5.1 hereof with respect
the Tendered Units on the applicable Issuance Date divided by the Value of one
REIT Share; PROVIDED, HOWEVER, that in lieu of any fractional REIT Share
resulting from such calculation, the Partnership may pay the Tendering Party
cash equal to the Cash Amount attributable to the fractional REIT Share if the
General Partner contributes to the Partnership the Cash Amount attributable to
such fractional REIT Share. Such exchange shall be treated as a sale of such
Tendered Units to the General Partner for federal income tax purposes and such
exchange shall be deemed to have the following consequences hereunder: such
exchange, to the extent it does not represent distributions required to be paid
pursuant to Section 5.1(B) which are accrued but unpaid, shall be treated as a
distribution to such Limited Partner which reduces such Limited Partner's
Unrecovered Capital Amount as of the date of the exchange by the amount equal to
the Unrecovered Capital Amount allocated to the Tendered Units, and the
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General Partner's Unrecovered Capital Amount as of the date of exchange shall be
increased by the Unrecovered Capital Amount allocable to the Tendered Units for
which Exchange Shares are issued. In the event cash is used in lieu of
fractional REIT Shares, the consequences hereunder shall be identical to those
under Section 8.5.A. In determining whether to elect to exchange for REIT Shares
or in the event that the Notice of Exchange indicates to the General Partner, in
its reasonable discretion upon the advice of its counsel, the need to review
additional documentation from such Tendering Party, the General Partner may
require that the Tendering Party submit to the General Partner, in addition to
the Notice of Exchange, (i) such information, certification or affidavit as the
General Partner may reasonably require in connection with the application of the
Ownership Limit, or the Hart-Scott-Rodino Act, (ii) such other written
representations, investment letters, legal opinions or other instruments
necessary, in the General Partner's good faith opinion, to effect compliance
with the Securities Act or any other federal or state securities law or to
determine the accuracy of any representation or warranty set forth in a Notice
of Exchange and (iii) so long as the Exchange Shares are not being registered
under the applicable Registration Rights Agreement (as defined below) pursuant
to an issuance registration statement, a Prospective Subscriber Questionnaire in
the form of EXHIBIT D hereto. If the General Partner so determines that it shall
require such additional documents, affidavits, instruments and other information
referred to in the immediately preceding sentence, (i) the General Partner shall
send notice thereof (which notice shall include the General Partner Election) to
such Tendering Party not more than ten (10) days following the applicable
Specified Exchange Date; and (ii) the General Partner shall have the right to
delay the Issuance Date with respect to such Tendered Units for such time
following receipt of such requested additional documents, affidavits,
instruments and other information as the General Partner reasonably needs to
determine (A) whether the exchange complies with the Ownership Limit and all
applicable state and federal securities laws; (B) whether the Exchange would
violate, or could cause a filing under, the Hart-Scott-Rodino Act or any other
federal antitrust statute; or (C) whether the representations and warranties
made by the Tendering Party pursuant to the Notice of Exchange and the
Prospective Subscriber Questionnaire delivered therewith are true and correct as
of the date of the applicable Specified Exchange Date. Upon review of the
documents and other information requested pursuant to the previous sentence, the
General Partner shall send a final notice to the Tendering Party of whether the
General Partner will issue cash or REIT Shares to such Tendering Party or
whether the General Partner shall be unable to execute the Exchange pursuant to
the terms of this Agreement; provided that if the General Partner determines
that it cannot issue REIT Shares to a Qualifying Party without violating the
Ownership Limit or applicable federal or state securities laws or without making
a filing under the Hart-Scott-Rodino Act, the General Partner will be obligated
to redeem the Tendered Units tendered by such Qualifying Party for cash in
accordance with Section 8.5(A), subject to the condition that the total amount
the General Partner will be obligated to contribute to the Partnership for
redemption of Tendered Units under such circumstances during any 12- month
period will be limited to $1,000,000 until the Avondale Bear Creek Limited
Partnership contributes its Contributed Property to the Partnership and
$2,000,000 thereafter. The Exchange Shares shall be delivered by the General
Partner as duly authorized, validly issued, fully paid and nonassessable REIT
Shares, free of any pledge, lien, encumbrance or
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restriction, other than the Ownership Limit and other restrictions provided in
the General Partner's charter and the bylaws of the General Partner, and
restrictions on transfer consistent with the Securities Act and applicable state
and federal securities laws (taking into account the General Partner's
obligations under the applicable Registration Rights Agreement). REIT Shares
issued pursuant to this Section 8.5.B may contain such legends regarding
restrictions on transfer under the Securities Act and applicable state and
federal securities laws as the General Partner in good faith determines to be
necessary or advisable in order to ensure compliance with such laws (taking into
account the General Partner's obligations under the applicable Registration
Rights Agreement). Upon delivery by the General Partner of the REIT Shares to
the Tendering Party, the Tendering Party shall automatically be entitled to the
rights and be subject to the obligations and conditions under any applicable
Registration Rights Agreement between the General Partner and certain of the
Initial Limited Partners (a "Registration Rights Agreement").
C. If a Partner Record Date with respect to any Tendered Unit
precedes the date (the "Delivery Date") on which a Tendering Party receives cash
or REIT Shares pursuant to this Article 8, such Tendering Party shall be
entitled to distributions pursuant to this Agreement payable to holders of
Limited Partner Interests (or the economic interest therein) on such Partner
Record Date with respect to the Tendered Units. If the Partner Record Date with
respect to any Tendered Unit is on or after the applicable Delivery Date, and
the Tendering Party receives REIT Shares in connection with such exchange, the
Tendering Partner shall not be entitled to distributions pursuant to this
Agreement payable to holders of Limited Partner Interests (or the economic
interest therein) on such Partner Record Date with respect to the Tendered Units
exchanged but shall be entitled to any dividends payable with respect to any
record holder as of the record date for holders of REIT Shares that is on or
after such Delivery Date.
D. Notwithstanding anything herein to the contrary, with respect to
any exchange or redemption of Tendered Units pursuant to this Article 8:
(1) Subject to the Ownership Limit, no Tendering Party may
effect an Exchange for less than One Thousand (1,000) Limited Partner
Units or, if such Tendering Party holds less than One Thousand (1,000)
Limited Partner Units, all of the Limited Partner Units held by such
Tendering Party.
(2) The consummation of any exchange or redemption of Tendered
Units shall be subject to the expiration or termination of the applicable
waiting period, if any, under the Hart-Scott-Rodino Act as amended.
(3) Except as provided in Section 8.5 hereof, the Tendering
Party shall continue to own (subject, in the case of a Substituted
Limited Partner, to the provisions of Section 11.5 hereof) all Limited
Partner Interests subject to any Exchange or Cash Option, and be treated
as a Limited Partner or an Assignee, as applicable, with respect
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such Limited Partner Interests or the economic interest therein for all
purposes of this Agreement, until such Limited Partner Interests are
either exchanged for REIT Shares, pursuant to Section 8.5.B hereof, or
redeemed for cash pursuant to Section 8.5.A hereof. Except as otherwise
provided in this Agreement, upon the Delivery Date, all rights and
obligations of the Tendering Party (and, if the Tendering Party is an
Assignee, the Limited Partner who owns the respective Limited Partner
Interests) with respect to the Tendered Units exchanged or redeemed
hereunder shall cease and, to the extent such Tendering Party elects to
exchange all Limited Partner Interests held by such Tendering Party, the
Tendering Party (and, if the Tendering Party is an Assignee, the Limited
Partner who owns the respective Limited Partner Interests except to the
extent such Limited Partner also holds other Limited Partner Interests)
shall no longer be a Limited Partner or an Assignee, as the case may be,
with respect to this Agreement. Except as provided in Section 8.5.B
hereof, until an exchange of the Tendered Units by the General Partner
pursuant to Section 8.5.B hereof and the receipt by a Qualifying Party of
REIT Shares, the Tendering Party shall have no rights as a shareholder of
the General Partner with respect to the REIT Shares issuable in
connection with such Exchange.
E. In connection with an exercise of an Exchange Right pursuant to
this Article 8, each Tendering Party shall represent or covenant the following
to the General Partner, which representations and covenants shall be included
within the Notice of Exchange:
(1) A written affidavit disclosing to the best of its knowledge
the actual and constructive ownership, as determined for purposes of Code
Sections 856(a)(6), 856(h), 856(d)(2)(B) and 856(d)(5), of REIT Shares by
(i) such Tendering Party and (ii) any Related Party;
(2) A written representation that neither the Tendering Party
nor to the best of its knowledge any Related Party has any intention to
acquire any additional REIT Shares prior to delivery of cash or Exchange
Shares for the Tendered Units pursuant to Section 8.5; and
(3) A covenant, as a condition to the closing of an Exchange,
that until the delivery of the relevant Exchange Shares or cash the
actual and constructive ownership of REIT Shares by the Tendering Party
and any Related Party will remain unchanged from that disclosed above.
F. Notwithstanding any other provisions of this Agreement, a
Qualifying Party shall not be entitled to effect an Exchange or redemption,
whether in REIT Shares or for cash, to the extent the ownership or right to
acquire the Exchange Shares that could be issued to such Qualifying Party would
cause such Qualifying Party or any of its Related Parties to violate the
Ownership Limit. To the extent any attempted Exchange would be in violation of
this Section
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8.5.F, it shall be null and void ab initio and such Qualifying Party shall not
acquire any rights or economics interests in REIT Shares otherwise issuable upon
such Exchange.
G. If the General Partner or the Partnership is unable to consummate
an Exchange or redemption, whether in REIT Shares or for cash, pursuant to
Sections 8.5.A or 8.5.B due to operation of law or pursuant to the terms of this
Article 8 for any reason, subject to the terms of Section 8.5.B, the General
Partner shall either pay or cause to be paid to each Tendering Party the Cash
Amount attributable to such Tendered Units in the manner and with the
consequences described in Section 8.5.A hereof or, in the General Partner's sole
and absolute discretion, the General Partner shall cause the Tendered Units to
be exchanged for REIT Shares in the manner and with the consequences described
in Section 8.5.B hereof, in each case to the extent permitted by applicable law.
H. As long as any Limited Partner Interests are outstanding, the
General Partner agrees to have authorized but unissued that number of REIT
Shares equal to the number of Limited Partner Units outstanding multiplied by
the Adjustment Factor.
Section 8.6 THE GENERAL PARTNER'S RIGHT TO CALL LIMITED PARTNER
INTERESTS
A. Notwithstanding any other provision of this Agreement, on and
after the earlier of September 12, 2009 or the date on which Limited Partner
Units representing more than 70% of the Limited Partner Units issued to the
Initial Limited Partners have been exchanged or redeemed, whether in REIT Shares
or for cash, pursuant to Section 8.5 hereof, the General Partner shall have the
right, but not the obligation, from time to time and at any time to exchange or
redeem all (but not less than all) outstanding Limited Partner Interests by
treating each Qualifying Party as a Tendering Party who has delivered a Notice
of Exchange pursuant to Section 8.5.A hereof for the amount of Limited Partner
Interests held by it, by notice to such Qualifying Party that the General
Partner has elected to exercise its rights under this Section 8.6. For purposes
of this Section 8.6, any Limited Partner and Assignee (whether or not otherwise
a Qualifying Party) shall be treated as a Qualifying Party that is a Tendering
Party.
B. In the event that the General Partner exercises its rights
pursuant to Section 8.6.A, each Limited Partner and Assignee shall execute all
documents referred to in Section 8.5 hereof and requested in writing by the
General Partner (or advise the General Partner why it cannot truthfully make any
representation or warranty contained therein).
C. In the event that the General Partner exercises its rights
pursuant to Section 8.6.A hereof but such an Exchange or redemption cannot be
effected or a dispute arises with respect to the such rights, (i) the General
Partner shall have a right to specific performance and (ii) the General Partner
shall be entitled to withhold distributions under Article 5 of this Agreement
with respect to any defaulting Limited Partner or Assignee.
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Section 8.7 OTHER EXCHANGES
Notwithstanding the provisions of Sections 8.5 or 8.6 hereof, nothing in
this Agreement shall preclude the exchange, whether for REIT Shares or cash, of
Limited Partner Interests by any Qualifying Party upon such terms and conditions
as may be negotiated between the Qualifying Party holding such Limited Partner
Interests, on the one hand, and the General Partner, on the other hand, in their
sole and absolute discretion. Such an exchange may include the payment of cash
by the General Partner to the Qualifying Party, in a lump sum or in
installments, or the distribution in kind of assets of the General Partner to
such Qualifying Party (which assets may be encumbered), including assets to be
designated by the Qualifying Party and acquired (with or without debt financing)
by the General Partner. In effecting any such exchange by negotiated agreement,
neither the General Partner nor the Qualifying Party, shall incur any liability
to any other Limited Partner or Assignee or have any duty to offer the same or
similar terms for exchange of any other Qualifying Party.
Section 8.8 RIGHT TO NOTICE UPON SPECIAL DIVIDEND BY BAY. In the event
that Bay or any successor in interest makes a distribution to its shareholders
of property or securities other than REIT Shares other than as a regular
quarterly dividend at any time following the first anniversary of a Closing Date
(as such term is defined under each Contribution Agreement), (i) Bay shall give
notice to the Limited Partners of such special dividend at the same time it
notifies its shareholders of such dividend, (ii) each Limited Partner shall have
at least three business days following receipt of notice of the special dividend
to elect to exchange its Limited Partner Interests pursuant to Section 8.5 and
(iii) Bay shall execute any exchange elected by a Limited Partner following
proper notice hereunder prior to the record date for Bay's shareholders to
receive the special dividend.
ARTICLE 9
BOOKS, RECORDS, ACCOUNTING AND REPORTS
Section 9.1 RECORDS AND ACCOUNTING
The General Partner shall keep or cause to be kept at the principal
office of the Partnership those records and documents required to be maintained
by the Act and other books and records deemed by the General Partner to be
appropriate with respect to the Partnership's business, including, without
limitation, all books and records necessary to provide to the Limited Partners
any information, lists and copies of documents required to be provided pursuant
to Section 9.3 hereof. 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. The books of the Partnership shall be maintained, for financial
and tax reporting purposes, on an accrual basis in accordance with generally
accepted accounting principles, or such other basis as the General Partner
determines to be necessary or appropriate.
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Section 9.2 FISCAL YEAR
The fiscal year of the Partnership shall be the calendar year.
Section 9.3 REPORTS
A. As soon as practicable, but in no event later than one hundred
five (105) days after the close of each Partnership Year, the General Partner
shall cause to be mailed to each Limited Partner and Assignee as of the close of
the Partnership Year, an annual report containing unaudited financial statements
of the Partnership, for such Partnership Year, presented in accordance with
generally accepted accounting principles.
B. As soon as practicable, but in no event later than sixty (60) days
after the close of each calendar quarter, the General Partner shall cause to be
mailed to each Limited Partner and Assignee as of the last day of the calendar
quarter, a report containing unaudited financial statements of the Partnership,
and such other information as may be required by applicable law or regulation,
or as the General Partner determines to be appropriate.
Section 9.4 CONFIDENTIAL MATERIAL.
The General Partner may keep confidential from the Limited Partners, for
such period of time as the General Partner determines to be reasonable, any
information that (i) the General Partner reasonably believes to be in the nature
of trade secrets or other information, the disclosure of which the General
Partner in good faith believes is not in the best interests of the Partnership
or could damage the Partnership or its business; or (ii) the Partnership is
required by law or by agreements with an unaffiliated third party to keep
confidential.
ARTICLE 10
TAX MATTERS
Section 10.1 PREPARATION OF TAX RETURNS
The General Partner shall arrange for the preparation and timely
(including valid extensions) 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 seventy-five (75) days of the close of each taxable year, the tax
information required to be furnished to the Limited Partners and Assignees for
federal income tax reporting purposes.
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Section 10.2 TAX ELECTIONS
Except as otherwise provided herein, the General Partner shall, in its
sole and absolute discretion, determine whether to make any available election
pursuant to the Code. The General Partner shall have the right to seek to revoke
any tax election it makes (except any election under Section 754 of the Code
made on behalf of a Limited Partner or an Assignee) upon the General Partner's
determination, in its sole and absolute discretion, that such revocation is in
the best interests of the Partners.
Section 10.3 TAX MATTERS PARTNER
A. The General Partner shall be the "tax matters partner" of the
Partnership for federal income tax purposes. Pursuant to Section 6230(e) 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, taxpayer identification number, and
profit interest of each of the Limited Partners and the Assignees; PROVIDED,
HOWEVER, that such information is provided to the Partnership by the Limited
Partners and the Assignees. Notwithstanding anything herein to the contrary, the
tax matter partner shall, upon receipt of notice from the IRS, give notice of an
administrative proceeding with respect to the Partnership to all Limited
Partners and Assignees in accordance with, and as if such Limited Partners and
Assignees were each a "notice partner" pursuant to, Section 6231(a)(8) of the
Code.
B. Except to the extent any action described below conflicts with the
General Partner's prohibition on causing a tax termination of the Partnership as
described in Section 7.3.A hereof, the tax matters partner is authorized, but
not required:
(1) to enter into any settlement with the IRS with respect to
any administrative or judicial proceedings for the
adjustment of Partnership items required to be taken into
account by a Partner or Assignee 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 and Assignees, except that such
settlement agreement shall not bind any Partner or Assignee
(i) who (within the time prescribed pursuant to the Code
and Regulations) files a statement with the IRS providing
that the tax matters partner shall not have the authority
to enter into a settlement agreement on behalf of such
Partner or Assignee; or (ii) who is a "notice partner" (as
defined in Section 6231(a)(8) of the Code) or a member of a
"notice group" (as defined in Section 6223(b)(2) of the
Code);
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(2) in the event that a notice of a final administrative
adjustment at the Partnership level of any item required to
be taken into account by a Partner or Assignee 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 filing of a
complaint for refund with the United States Claims Court or
the District Court of the United States for the district in
which the Partnership's principal place of business is
located;
(3) to intervene in any action brought by any other Partner or
Assignee for judicial review of a final adjustment;
(4) to file a request for an administrative adjustment with the
IRS 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;
(5) 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 account of by a Partner or
Assignee for tax purposes, or an item affected by such
item; and
(6) to take any other action on behalf of the Partners or
Assignees or the Partnership in connection with any tax
audit or judicial review proceeding to the extent permitted
by applicable law or regulations and not prohibited by this
Agreement.
The taking of any action and the incurring of any expense by the tax
matters partner in connection with any such proceeding, except to the extent
required by law, is a matter in the sole and absolute discretion of the tax
matters partner and the provisions relating to indemnification of the General
Partner set forth in Section 7.6 of this Agreement shall be fully applicable to
the General Partner as tax matters partner.
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 and
expenses) shall be borne by the Partnership. Nothing herein shall be construed
to restrict the Partnership from engaging an accounting firm to assist the tax
matters partner in discharging its duties hereunder, so long as the compensation
paid by the Partnership for such services is reasonable.
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Section 10.4 ORGANIZATIONAL EXPENSES
The Partnership shall elect to deduct expenses, if any, incurred by it in
organizing the Partnership ratably over a sixty (60) month period as provided in
Section 709 of the Code.
Section 10.5 WITHHOLDING
Each Limited Partner, for itself and its Assignees, hereby authorizes the
Partnership to withhold from, or pay on behalf of or with respect to, such
Limited Partner or Assignee 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 or Assignee 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 or Assignee shall constitute a
loan by the Partnership to such Limited Partner or Assignee, which loan shall be
repaid by such Limited Partner or Assignee 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 Assignee; 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 or Assignee. Any amounts withheld pursuant to
the foregoing clauses (i) or (ii) shall be treated as having been distributed to
such Limited Partner or Assignee. Each Limited Partner or Assignee hereby
unconditionally and irrevocably grants to the Partnership a security interest in
such Limited Partner's Partnership Interest or Assignee's economic interest to
secure such Limited Partner's or Assignee's obligation to pay to the Partnership
any amounts required to be paid pursuant to this Section 10.5. In the event that
a Limited Partner or Assignee fails to pay any amounts owed to the Partnership
pursuant to this Section 10.5 when due, the General Partner may, in its sole and
absolute discretion, elect to make the payment to the Partnership on behalf of
such defaulting Limited Partner or Assignee, and in such event shall be deemed
to have loaned such amount plus the amount of its attorneys' fees incurred in
connection with making and enforcing the terms of such loan, to such defaulting
Limited Partner or Assignee and shall succeed to all rights and remedies of the
Partnership as against such defaulting Limited Partner or Assignee. Without
limitation, in such event the General Partner shall have the right to receive
distributions that would otherwise be distributable to such defaulting Limited
Partner or Assignee until such time as such loan, together with all interest
thereon, has been paid in full, and any such distributions so received by the
General Partner shall be treated as having been distributed to the defaulting
Limited Partner or Assignee and immediately paid by the defaulting Limited
Partner or Assignee to the General Partner in repayment of such loan. Any
amounts payable by a Limited Partner or Assignee hereunder shall bear interest
at the lesser of (A) 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 (4) percentage points, or (B) the maximum lawful rate of
interest on such obligation, such interest to accrue from the date
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such amount is due (i.e., fifteen (15) days after demand) until such amount is
paid in full. Each Limited Partner and Assignee shall take such actions as the
Partnership or the General Partner shall request in order to perfect or enforce
the security interest created hereunder.
ARTICLE 11
TRANSFERS AND WITHDRAWALS
Section 11.1 TRANSFER
No Partnership Interest shall be Transferred, in whole or in part, except
in accordance with the terms and conditions of this Agreement. Any Transfer or
purported Transfer of a Partnership Interest not made in accordance with this
Article 11 shall be null and void. Without limiting any other term of this
Agreement, no Transfer or purported Transfer prohibited under Paragraph 4.D. of
the agreement of record by which the Partnership assumed the Prudential Debt
("Paragraph 4.D.") shall be effective, and no Transfer or purported Transfer
shall be effective unless and until the proposed transferee, including, without
limitation, lienholder, delivers to the General Partner such representations and
agreements as are required under Paragraph 4.D.
Section 11.2 TRANSFER OF THE GENERAL PARTNER INTEREST
A. The General Partner may not Transfer any of its General Partner
Interest or withdraw as General Partner except as provided in this Section 11.2
unless the Limited Partners (excluding any Limited Partner who is also the
General Partner or an Affiliate of the General Partner) holding sixty percent
(60%) of the Percentage Interests of the Limited Partners (excluding any Limited
Partner who also is the General Partner or an Affiliate of the General Partner)
consent to such transfer or withdrawal. The General Partner may Transfer its
General Partner Interest (or any portion thereof) to a qualified REIT subsidiary
of the General Partner without the consent of the Limited Partners so long as
arrangements are made so that the REIT Shares to be issued pursuant to Section
8.5(B) continue to be shares of the General Partner's common stock, par value
$0.01 per share.
B. Notwithstanding anything to the contrary contained in this
Agreement, the General Partner may engage in any merger, consolidation or other
combination with or into another Person regardless of whether such other person
is a REIT, or sell all or substantially all of its assets, or effect any
reclassification or recapitalization or change in the terms of outstanding REIT
Shares (each, a "Transaction"), all without the prior approval of any Limited
Partners, provided that following any such Transaction any Qualifying Party
continues to be entitled to exchange all or any portion of the Limited Partner
Interests held by such Qualifying Party for REIT Shares or other similar
securities, taking into account following
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such Transaction any adjustments to the Adjustment Factor, such REIT Shares are
publicly traded on the American Stock Exchange or the New York Stock Exchange
(or, if they cease to exist, a nationally recognized securities exchange) and
such Qualifying Parties continue to be entitled to the benefits of the
Registration Rights Agreement or other rights substantially the same as those
provided to them in the applicable Registration Rights Agreement.
C. If a purchase or cash tender offer shall have been made to and
accepted by the holders of more than fifty percent (50%) of the outstanding REIT
Shares, each Qualifying Party shall be entitled to elect to receive in
connection with (and prior to the Closing of) such Transaction the amount of
cash and/or the value in cash of other consideration which such holder would
have received had it exercised its Exchange Rights and received REIT Shares in
exchange for its Limited Partner Interests (or economic interests therein)
immediately prior to the expiration of such purchase or tender offer and had
thereupon accepted such purchase or tender offer. Upon such election, the
Qualifying Party shall cease to be a Limited Partner of the Partnership and its
Limited Partner Interests shall be deemed to be transferred to the General
Partner effective upon the payment of such cash or other consideration. If an
exchange offer shall have been made and accepted pursuant to which the holders
of more than fifty percent (50%) of the outstanding REIT Shares exchange their
REIT Shares for equity securities of the acquiring Person, which are publicly
traded on a nationally recognized securities exchange or quotation system, and
the General Partner Interest is Transferred, then the Adjustment Factor shall be
adjusted to reflect such Transaction and each holder of Limited Partner
Interests who is a Qualifying Party shall be entitled to exchange all or any
portion of the Limited Partner Interests (or economic interest therein) held by
such Qualifying Party for REIT Shares of such acquiring Person.
The General Partner will give each Limited Partner and each Assignee who
has provided the General Partner with its identity and address notice of any
tender offer or exchange offer to which this Section 11.2(C) would apply
promptly after the General Partner learns of the tender offer or exchange offer
(subject to limitations on disclosure dictated by applicable laws, rules and
regulations).
Section 11.3 LIMITED PARTNERS' RIGHTS TO TRANSFER
Except as provided in this Section, no Limited Partner shall have the
right to Transfer all or any portion of its Partnership Interest, including,
without limitation, all or any portion of the economic rights appurtenant
thereto, without the consent of the General Partner, which may be withheld;
provided that as long as a Transfer complies in the General Partner's reasonable
judgment with applicable federal and state securities laws, a Limited Partner
shall have the right, without the consent of the General Partner but upon not
less than five (5) Business Days' prior written notice containing the identity
and address of the proposed transferee and such other information about such
proposed transferee as the General Partner shall reasonably request to enable it
to determine that such proposed transfer is permitted hereunder without its
consent and to enable it to perform its obligations under this Agreement
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with respect to such transferee, to Transfer its Partnership Interest (or a
portion thereof) to one or more of the following (each a "Permitted Transferee")
who, subject to the terms of this Article below, shall become Substituted
Limited Partners: (i) in the case of a Limited Partner that is an individual, a
member of the Immediate Family of such Limited Partner or a trust for the
benefit of such Limited Partner and/or one or more members of its Immediate
Family, (ii) to an entity in which more than fifty-one percent (51%) of the
beneficial interests therein are owned by such Limited Partner or members of his
or her Immediate Family and which is controlled by such Limited Partner or
members of his or her Immediate Family, (iii) another Limited Partner or (iv) in
the case of a Limited Partner that is an entity, to one or more persons who hold
an equity interest in such Limited Partner as of the date of its admission to
the Partnership as a Limited Partner or to whom a Transfer would be permitted
under items (i), (ii) or (iii) above in this Section, provided that each
Permitted Transferee executes and delivers the Investment Documents. Subject to
the conditions that any assignment complies in the General Partner's reasonable
judgement with the applicable federal and state securities laws and that any
proposed assignee qualifies as an "accredited investor" under Rule 501 of the
Securities Act, the Initial Limited Partners shall have the right, without the
consent of the General Partner but upon not less than five (5) Business Days'
prior written notice containing the identity and address of the proposed
transferee and such other information about such proposed transferee as the
General Partner shall reasonably request to enable it to determine that such
proposed transfer is permitted hereunder without its consent and to enable it to
perform its obligations under this Agreement with respect to such transferee, to
assign their economic rights (or a portion thereof) appurtenant to their Limited
Partner Interests and their Exchange Rights pursuant to Section 8.5 to no more
than thirty-five assignees in the aggregate (but not the right to substitute
such assignee as a Substituted Limited Partner), and such assignee of economic
rights shall be an "Assignee" for purposes of this Agreement. By becoming an
Assignee, such transferee shall be deemed to have become bound by the terms of
this Agreement. Notwithstanding anything to the contrary contained in this
Agreement, the General Partner shall have no obligation of any kind to any
transferee of all or any portion of a Partnership Interest, including, without
limitation, any Permitted Transferee or Assignee, with respect to which the
General Partner has not received the notice required under this Agreement.
Section 11.4 SUBSTITUTED LIMITED PARTNERS
A. Other than as set forth in Section 11.3, no Limited Partner or
Assignee shall have the right to substitute a transferee (including, without
limitation, an "Assignee" under Section 11.3) as a Limited Partner in his or its
place. The General Partner shall, however, have the right to consent to the
admission of a proposed transferee of all or any portion of the Partnership
Interest of a Limited Partner pursuant to this Section 11.4 as a Substituted
Limited Partner, which consent may be given or withheld by the General Partner
in its sole and absolute discretion. Admission as a Substitute Limited Partner
shall not be effective until such transferee executes and delivers to the
General Partner the following investment documents (collectively, the
"Investment Documents"): (i) a signed copy of this Limited Partnership
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Agreement (and the Transferee agrees to be bound to all rights and
responsibilities of a Limited Partner hereof); (ii) a Prospective Subscriber
Questionnaire substantially in the form of the Prospective Subscriber
Questionnaire provided to and delivered by each of the Initial Limited Partners
and (iii) a certificate representing and warranting to the General Partner the
investment representations and warranties as set forth in EXHIBIT E to this
Agreement with respect to such Transferee. The General Partner's failure or
refusal under this Section 11.4.A to permit a transferee of any such Limited
Partner Interests (other than a Permitted Transferee) to become a Substituted
Limited Partner shall not give rise to any cause of action against the
Partnership or any Partner.
B. A transferee who has been admitted as a Substituted Limited
Partner in accordance with this Article 11 shall have all the rights and powers
and be subject to all the restrictions and liabilities of a Limited Partner
under this Agreement.
C. Upon the admission of a Substituted Limited Partner, the General
Partner shall amend EXHIBIT A to reflect the name, address, and Percentage
Interest of such Substituted Limited Partner and to eliminate or adjust, if
necessary, the name, address and interest of the predecessor of such Substituted
Limited Partner.
Section 11.5 ASSIGNEES
An Assignee shall be deemed to have had assigned to it, the share of Net
Income, Net Losses, and any other items of gain, loss deduction and credit of
the Partnership attributable to the economic interest assigned to such Assignee,
and shall be entitled to receive distributions from the Partnership attributable
to such economic interest, but, shall not be deemed to be a holder of a
Partnership Interest for any other purpose under this Agreement, and shall not
be entitled to vote such Partnership Interest in any matter presented to the
Limited Partners for a vote (the vote with respect to such Partnership Interest
being retained by the transferor of such economic interest or, if such
transferor will be unable to cast or waive such vote, such Partnership Interest
shall be deemed to have been voted on a matter in the same proportion as all
other Partnership Interests held by Limited Partners are voted).
Section 11.6 INTENTIONALLY OMITTED.
Section 11.7 GENERAL PROVISIONS
A. No Partner may withdraw from the Partnership other than as a
result of a permitted transfer of all of such Partner's Partnership Interest in
accordance with this Article 11.
B. Any Limited Partner who shall transfer all of its Partnership
Interest in a transfer permitted pursuant to this Article 11 shall cease to be a
Limited Partner upon the admission of all transferees of such Partnership
Interest as Substitute Limited Partners.
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C. INTENTIONALLY OMITTED
D. If all or any portion of a Partnership Interest, including,
without limitation, any economic interest, is transferred or assigned during any
quarterly segment of the Partnership's fiscal year in compliance with the
provisions of this Article 11 on any day other than the first day of a
Partnership fiscal years, then Net Income, Net Losses, each item of income,
gain, expense or deduction and all other items attributable to such Partnership
Interest or economic interest therein for such Partnership fiscal year shall be
divided and allocated between the transferor and the transferee by taking into
account their varying interests during the Partnership fiscal year in accordance
with Section 706(d) of the Code, using the interim closing of the books method
or such other method permitted by the Code as the General Partner considers
appropriate. Solely for purposes of making such allocations, each of such items
for the calendar month in which the transfer or assignment occurs shall be
allocated to the transferee Partner or Assignee; provided, however, that the
General Partner may adopt such other conventions relating to allocations in
connection with transfers, assignments or exchanges as it determines are
necessary or appropriate. All distributions of Available Cash attributable to
such Partnership Interest or economic interest therein before the date of such
transfer, assignment, or redemption shall be made to the transferor, and in the
case of a transfer or assignment other than a redemption, all distributions of
Available Cash thereafter attributable to such Partnership Interest or economic
interest therein shall be made to the transferee.
ARTICLE 12
ADMISSION OF PARTNERS
Section 12.1 ADMISSION OF SUCCESSOR GENERAL PARTNER
A successor to all of the General Partner's Partnership Interest pursuant
to Section 11.2 hereof shall be admitted to the Partnership as the General
Partner, effective upon such transfer. Any such transferee shall carry on the
business of the Partnership without dissolution. The successor General Partner
shall execute and deliver to the Partnership and the Limited Partners a signed
copy of this Limited Partnership Agreement and an agreement to be bound by all
rights and responsibilities of the General Partner hereof. In the case of such
admission on any day other than the first day of a Partnership fiscal year, all
items attributable to the General Partner's Partnership Interest for such
Partnership fiscal year shall be allocated between the transferring General
Partner and such successor as provided in Section 11.6.D hereof.
Section 12.2 AMENDMENT OF AGREEMENT AND CERTIFICATE OF LIMITED
PARTNERSHIP
For the admission to the Partnership of any Partner, the General Partner
shall take all steps necessary and appropriate under the Act to amend the
records of the Partnership and, if necessary, to prepare as soon as practical an
amendment of this Agreement (including an
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amendment of EXHIBIT A) and, if required by law, shall prepare and file an
amendment to the Certificate and may for this purpose exercise the power of
attorney granted pursuant to Section 2.4 hereof.
ARTICLE 13
DISSOLUTION, LIQUIDATION AND TERMINATION
Section 13.1 DISSOLUTION
The Partnership shall not be dissolved by the admission of Substituted
Limited Partners or by the admission of a successor General Partner in
accordance with the terms of this Agreement. Upon the withdrawal of the General
Partner, any successor General Partner shall continue the business of the
Partnership. The Partnership shall dissolve, and its affairs shall be wound up,
only upon the first to occur of any of the following ("Liquidating Events"):
A. the expiration of its term as provided in Section 2.5 hereof;
B. an event of withdrawal of the General Partner, as defined in the
Act, unless, within ninety (90) days after such event of withdrawal Limited
Partners (excluding any Limited Partner who is also the General Partner or an
Affiliate of the General Partner) who hold sixty percent (60%) or more by
Percentage Interest of the Limited Partners (excluding any Limited Partner who
also is the General Partner or an Affiliate of the General Partner) agrees in
writing to continue the business of the Partnership and to the appointment,
effective as of the date of withdrawal, of a successor General Partner;
C. an election to dissolve the Partnership made by the General
Partner with the Consent of Limited Partners (excluding any Limited Partner who
also is the General Partner or an Affiliate of the General Partner) holding
sixty percent (60%) or more of the Percentage Interests of the Limited Partners
(excluding any Limited Partner who also is the General Partner or an Affiliate
of the General Partner);
D. entry of a decree of judicial dissolution of the Partnership
pursuant to the provisions of the Act; or
E. the sale or distribution of all or substantially all of the assets
and properties of the Partnership, in the case of a sale as long as the proceeds
of such sale are distributed to the Partners in accordance with the terms of
this Agreement.
Section 13.2 WINDING UP
A. Upon the occurrence of a Liquidating Event, the Partnership shall
continue solely for the purposes of winding up its affairs in an orderly manner,
liquidating its assets,
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and satisfying the claims of its creditors and Partners and Assignees. No
Partner shall take any action that is inconsistent with, or not necessary to or
appropriate for, the winding up of the Partnership's business and affairs. The
General Partner, or, in the event there is no remaining General Partner, any
Person elected by sixty percent (60%) or more by Percentage Interest of the
Limited Partners (excluding any Limited Partner who also is the General Partner
or an Affiliate of the General Partner) (the General Partner or such other
Person being referred to herein as the "Liquidator"), shall be responsible for
overseeing the winding up and dissolution of the Partnership and shall take full
account of the Partnership's liabilities and property. The Partnership property
shall be liquidated as provided in Section 13.6, and the proceeds therefrom
shall be applied and distributed in the following order:
(1) First, to the payment and discharge of all of the
Partnership's debts and liabilities to creditors; and
(2) The balance, if any, to the General Partner, Limited
Partners and Assignees in accordance with Section 5.1.B.
The General Partner shall not receive any additional compensation for any
services performed pursuant to this Article 13.
B. Notwithstanding the provisions of Section 13.2.A hereof which
require liquidation of the assets of the Partnership, but subject to the order
of priorities set forth therein, if prior to or upon dissolution of the
Partnership the Liquidator determines that an immediate sale of part or all of
the Partnership's assets would be impractical or would cause undue loss to the
Partners, the Liquidator may, in its sole and absolute discretion, defer for a
reasonable time the liquidation of any assets except those necessary to satisfy
liabilities of the Partnership (including to Partners and Assignees as
creditors). Additionally, with the consent of sixty percent (60%) by Percentage
Interest of the Limited Partners (excluding any Limited Partner who also is the
General Partner or an Affiliate of the General Partner), the Liquidator may
distribute to the Partners and Assignees, in lieu of cash, as tenants in common
and in accordance with the provisions of Section 13.2.A hereof, undivided
interests in such Partnership assets as the Liquidator deems not suitable for
liquidation. The Liquidator shall determine the fair market value of any
property distributed in kind in accordance with the terms of this Section using
such reasonable method of valuation as it may adopt.
C. In the discretion of the Liquidator, a pro rata portion of the
distributions that would otherwise be made to the General Partner and Limited
Partners and Assignees pursuant to this Article 13 may be:
(1) distributed to a trust established for the benefit of the
General Partner, Limited Partners and Assignees for the
purposes of liquidating Partnership assets, collecting
amounts owed to the Partnership, and paying any contingent
or unforeseen liabilities or obligations of the
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Partnership or the General Partner arising out of or in
connection with the Partnership. The assets of any such
trust shall be distributed to the General Partner, Limited
Partners and Assignees from time to time, in the reasonable
discretion of the Liquidator, in the same proportions as
the amount distributed to such trust by the Partnership
would otherwise have been distributed to the General
Partner, Limited Partners and Assignees pursuant to this
Agreement; or
(2) withheld or escrowed to provide a reasonable reserve for
Partnership liabilities (contingent or otherwise) and to
reflect the unrealized portion of any installment
obligations owed to the Partnership, PROVIDED THAT such
withheld or escrowed amounts shall be distributed to the
General Partner and Limited Partners and Assignees in the
manner and order of priority set forth in Section 13.2.A as
soon as practicable.
Section 13.3 RIGHTS OF PARTNERS AND ASSIGNEES
Each Partner and Assignee shall look solely to the assets of the
Partnership for the return of its Capital Contributions and shall have no right
or power to demand or receive property other than cash from the Partnership.
Except as otherwise provided in this Agreement, as it may be amended in
accordance with the terms hereof, no Partner or Assignee shall have priority
over any other Partner or Assignee as to the return of its Capital
Contributions, distributions or allocations.
Section 13.4 NOTICE OF DISSOLUTION
In the event a Liquidating Event occurs or an event occurs that would,
but for the provisions of an election or objection by one or more Partners
pursuant to Section 13.1, result in a dissolution of the Partnership, the
General Partner shall, in time to permit exercise of Exchange Rights and the
occurrence of the applicable Issuance Date prior to final distribution, provide
written notice thereof to each of the Partners and Assignees.
Section 13.5 TERMINATION OF PARTNERSHIP AND CANCELLATION OF CERTIFICATE
OF LIMITED PARTNERSHIP
Upon the completion of the liquidation of the Partnership's assets, as
provided in Section 13.2 hereof and expiration of the period for tendering
Partnership Interests provided for in Section 13.4, the Partnership shall be
terminated, a certificate of cancellation shall be filed, and all qualifications
of the Partnership as a foreign limited partnership in jurisdictions other than
the State of Delaware shall be canceled and such other actions as may be
necessary to terminate the Partnership shall be taken.
Section 13.6 REASONABLE TIME FOR WINDING-UP
A reasonable time shall be allowed for the orderly winding-up of the
business and affairs of the Partnership and the liquidation of its assets
pursuant to Section 13.2 hereof, in order to minimize any losses otherwise
attendant upon such winding-up and to obtain the fair
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value thereof, and the provisions of this Agreement shall remain in effect
during the period of liquidation.
Section 13.7 WAIVER OF PARTITION
Each Partner hereby waives any right to partition of the Partnership
property.
ARTICLE 14
AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS
Section 14.1 AMENDMENTS
A. The General Partner shall submit any proposed amendment to this
Agreement to the Limited Partners. Any proposed amendment that is not proposed
by the General Partner shall, notwithstanding anything to the contrary contained
in this Agreement, require the consent of the General Partner. The General
Partner shall seek the written vote of the Limited Partners on the proposed
amendment or shall call a meeting to vote thereon. For purposes of obtaining a
written vote, the General Partner may require a response within a reasonable
specified time, but not less than fifteen (15) days. Subject to Section 14.1.C,
a proposed amendment shall be adopted and be effective as an amendment hereto if
it is approved by the General Partner and it receives the Consent of Limited
Partners holding sixty percent (60%) or more by Percentage Interest of the
Limited Partners (excluding any Limited Partner who also is the General Partner
or an Affiliate of the General Partner).
B. Notwithstanding the foregoing but subject to Section 14.1.C,
amendments may be made to this Agreement by the General Partner, without the
consent of any Limited Partner or Assignee, to (i) add to the representations,
duties or obligations of the General Partner or surrender any right or power
granted to the General Partner herein; (ii) cure any ambiguity, correct or
supplement any provision herein which may be inconsistent with any other
provision herein or make any other provisions with respect to matters or
questions arising hereunder which will not be inconsistent with any other
provision hereof; or (iii) reflect the admission, substitution, termination or
withdrawal of Partners in accordance with this Agreement. The General Partner
shall reasonably promptly notify the Limited Partners whenever it exercises its
authority pursuant to this Section 14.1.B.
C. No amendment shall be adopted if it would (i) convert a Limited
Partner Interest into a General Partner Interest, (ii) increase the liability of
a Limited Partner or Assignee, (iii) except as otherwise permitted in this
Agreement, alter any of the rights of the Partners or Assignees to distributions
set forth in Article 5, or the allocations set forth in Article 6, (iv) alter or
modify any aspect of the Exchange Rights as set forth in Article 8 hereof, (v)
cause the early termination of the Partnership (other than pursuant to the terms
hereof) or (vi) amend this Section 14, in each case without the consent of each
Limited Partner and Assignee adversely affected thereby.
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D. Within ten (10) days of the making of any proposal to amend this
Agreement, the General Partner shall give all Partners notice of such proposal
(along with the text of the proposed amendment and a statement of its purposes).
Section 14.2 MEETINGS OF THE PARTNERS
A. Meetings of Partners may be called by the General Partner. The
General Partner shall give all Partners Notice of the purpose of such proposed
meeting not less than seven (7) days nor more than thirty (30) days prior to the
date of the meeting. Meetings shall be held at a reasonable time and place
selected by the General Partner. Whenever the vote or consent of Limited
Partners is permitted or required hereunder, such vote or consent shall be
requested by the General Partner and may be given by the Limited Partners in the
same manner as set forth for a vote with respect to an amendment to this
Agreement in Section 14.1.A.
B. Any action required or permitted to be taken at a meeting of the
Partners may be taken without a meeting if a written consent setting forth the
action to be taken is signed by the Partners owning the Percentage Interests
required to vote in favor of such action, which consent may be evidenced in one
or more instruments. Consents need not be solicited from any other Partner if
the written consent of a sufficient number of Partners has been obtained to take
the action for which such solicitation was required.
C. Each Limited Partner may authorize any Person or Persons,
including without limitation the General Partner, to act for him by proxy on all
matters on which a Limited Partner may participate. Every proxy (i) must be
signed by the Limited Partner or his attorney-in-fact, (ii) shall expire eleven
(11) months from the date thereof unless the proxy provides otherwise and (iii)
shall be revocable at the discretion of the Limited Partner granting such proxy.
ARTICLE 15
GENERAL PROVISIONS
Section 15.1 ADDRESSES AND NOTICE
Any notice, demand, request or report required or permitted to be given
or made to a Partner or Assignee under this Agreement shall be in writing and
shall be deemed given or made when delivered in person or one (1) day following
deposit with a nationally recognized overnight courier service that issues a
receipt upon delivery, such as Federal Express, at the address set forth in
EXHIBIT A or such other address of which the Partner shall notify the General
Partner in writing.
Section 15.2 TITLES AND CAPTIONS
All article or section titles or captions in this Agreement are for
convenience only. They shall not be deemed part of this Agreement and in no way
define, limit, extend or describe the scope or intent of any provisions hereof.
Except as specifically provided
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otherwise, references to "Articles" and "Sections" are to Articles and Sections
of this Agreement.
Section 15.3 PRONOUNS AND PLURALS
Whenever the context may require, any pronoun used in this Agreement
shall include the corresponding masculine, feminine or neuter forms, and the
singular form of nouns, pronouns and verbs shall include the plural and vice
versa.
Section 15.4 FURTHER ACTION
The parties shall execute and deliver all documents, provide all
information and take or refrain from taking action as may be necessary or
appropriate to achieve the purposes of this Agreement.
Section 15.5 BINDING EFFECT
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their heirs, executors, administrators, successors, legal
representatives and permitted assigns.
Section 15.6 CREDITORS
Other than as expressly set forth herein with respect to the Indemnitees,
none of the provisions of this Agreement shall be for the benefit of, or shall
be enforceable by, any creditor of the Partnership.
Section 15.7 WAIVER
No failure by any party to insist upon the strict performance of any
covenant, duty, agreement or condition of this Agreement or to exercise any
right or remedy consequent upon a breach thereof shall constitute waiver of any
such breach or any other covenant, duty, agreement or condition.
Section 15.8 COUNTERPARTS
This Agreement may be executed in counterparts, all of which together
shall constitute one agreement binding on all of the parties hereto,
notwithstanding that all such parties are not signatories to the original or the
same counterpart. Each party shall become bound by this Agreement immediately
upon affixing its signature hereto.
Section 15.9 APPLICABLE LAW
This Agreement shall be construed and enforced in accordance with and
governed by the laws of the State of Delaware, without regard to the principles
of conflicts of law.
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Section 15.10 INVALIDITY OF PROVISIONS
If any provision of this Agreement is or becomes invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein shall not be affected thereby.
Section 15.11 ENTIRE AGREEMENT
This Agreement contains the entire understanding and agreement among the
Partners with respect to the subject matter hereof and supersedes any other
prior written or oral understandings or agreements among them with respect
thereto.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement of
Limited Partnership as of the date first written above.
GENERAL PARTNER:
BAY APARTMENT COMMUNITIES, INC.,
a Maryland corporation
By: /s/ Jeffrey B. Van Horn
-------------------------------------------------
Name: Jeffrey B. Van Horn
-------------------------------------------
Title: Vice President and Chief Financial Officer
------------------------------------------
[CORPORATE SEAL]
LIMITED PARTNER
[Signature Pages Attached]
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SIGNATURE PAGE TO
AGREEMENT OF LIMITED PARTNERSHIP
OF
BAY PACIFIC NORTHWEST, L.P.
Randy J. Pace
-------------------------------------------------------
(Name of Limited Partner)
/s/ Thomas J. Patterson
-------------------------------------------------------
(Signature of Limited Partner or Representative)
Thomas J. Patterson, Attorney-in-fact for Randy J. Pace
-------------------------------------------------------
(Title of Representative, if Applicable)
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SIGNATURE PAGE TO
AGREEMENT OF LIMITED PARTNERSHIP
OF
BAY PACIFIC NORTHWEST, L.P.
J. Ronald Terwilliger
-------------------------------------------------------
(Name of Limited Partner)
/s/ J. Ronald Terwilliger
-------------------------------------------------------
(Signature of Limited Partner or Representative)
-------------------------------------------------------
(Title of Representative, if Applicable)
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SIGNATURE PAGE TO
AGREEMENT OF LIMITED PARTNERSHIP
OF
BAY PACIFIC NORTHWEST, L.P.
-------------------------------------------------------
(Name of Limited Partner)
/s/ Robert C. Speicher
-------------------------------------------------------
(Signature of Limited Partner or Representative)
-------------------------------------------------------
(Title of Representative, if Applicable)
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SIGNATURE PAGE TO
AGREEMENT OF LIMITED PARTNERSHIP
OF
BAY PACIFIC NORTHWEST, L.P.
Paul M. Lehner
-------------------------------------------------------
(Name of Limited Partner)
/s/ Paul M. Lehner
-------------------------------------------------------
(Signature of Limited Partner or Representative)
-------------------------------------------------------
(Title of Representative, if Applicable)
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SIGNATURE PAGE TO
AGREEMENT OF LIMITED PARTNERSHIP
OF
BAY PACIFIC NORTHWEST, L.P.
TCF RESIDENTIAL PARTNERSHIP, LTD.
By: Mill Spring Holdings, Inc.
-------------------------------------------------------
(Name of Limited Partner)
/s/ Timothy J. Hogan
-------------------------------------------------------
(Signature of Limited Partner or Representative)
Timothy J. Hogan, Vice President
-------------------------------------------------------
(Title of Representative, if Applicable)
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SIGNATURE PAGE TO
AGREEMENT OF LIMITED PARTNERSHIP
OF
BAY PACIFIC NORTHWEST, L.P.
Max L. Gardner
-------------------------------------------------------
(Name of Limited Partner)
/s/ Max L. Gardner
-------------------------------------------------------
(Signature of Limited Partner or Representative)
-------------------------------------------------------
(Title of Representative, if Applicable)
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SIGNATURE PAGE TO
AGREEMENT OF LIMITED PARTNERSHIP
OF
BAY PACIFIC NORTHWEST, L.P.
Clifford A. Breining
-------------------------------------------------------
(Name of Limited Partner)
/s/ Clifford A. Breining
-------------------------------------------------------
(Signature of Limited Partner or Representative)
-------------------------------------------------------
(Title of Representative, if Applicable)
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SIGNATURE PAGE TO
AGREEMENT OF LIMITED PARTNERSHIP
OF
BAY PACIFIC NORTHWEST, L.P.
TCR Northern California 1993, Inc.
-------------------------------------------------------
(Name of Limited Partner)
/s/ Clifford A. Breining
-------------------------------------------------------
(Signature of Limited Partner or Representative)
Vice President
-------------------------------------------------------
(Title of Representative, if Applicable)
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SIGNATURE PAGE TO
AGREEMENT OF LIMITED PARTNERSHIP
OF
BAY PACIFIC NORTHWEST, L.P.
TC Residential Seattle III, Inc.
-------------------------------------------------------
(Name of Limited Partner)
/s/ Clyde P. Holland, Jr.
-------------------------------------------------------
(Signature of Limited Partner or Representative)
President
-------------------------------------------------------
(Title of Representative, if Applicable)
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SIGNATURE PAGE TO
AGREEMENT OF LIMITED PARTNERSHIP
OF
BAY PACIFIC NORTHWEST, L.P.
William W. Thompson
-------------------------------------------------------
(Name of Limited Partner)
/s/ William W. Thompson
-------------------------------------------------------
(Signature of Limited Partner or Representative)
-------------------------------------------------------
(Title of Representative, if Applicable)
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